[Title 24 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2000 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          
          
                    24


          Parts 0 to 199

                         Revised as of April 1, 2000

Housing and Urban Development





          Containing a Codification of documents of general 
          applicability and future effect
          As of April 1, 2000
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

As a Special Edition of the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2000



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 24:
          Subtitle A--Office of the Secretary, Department of 
          Housing and Urban Development                              3
          Subtitle B--Regulations Relating to Housing and 
          Urban Development                                        591
          Chapter I--Office of Assistant Secretary for Equal 
          Opportunity, Department of Housing and Urban 
          Development                                              593
  Finding Aids:
      Material Approved for Incorporation by Reference........     705
      Table of CFR Titles and Chapters........................     707
      Alphabetical List of Agencies Appearing in the CFR......     725
      List of CFR Sections Affected...........................     735



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                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  24 CFR 0.1 refers 
                       to title 24, part 0, 
                       section 1.

                     ----------------------------

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, April 1, 2000), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call (202) 523-4534.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

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REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408.

SALES

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ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Weekly Compilation of Presidential Documents and 
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site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

April 1, 2000.



[[Page ix]]



                               THIS TITLE

    Title 24--Housing and Urban Development is composed of five volumes. 
The first four volumes containing parts 0-199, parts 200-499, parts 500-
699, parts 700-1699, represent the regulations of the Department of 
Housing and Urban Development. The fifth volume, containing part 1700 to 
end continues with regulations of the Department of Housing and Urban 
Development and also includes regulations of the Neighborhood 
Reinvestment Corporation. The contents of these volumes represent all 
current regulations codified under this title of the CFR as of April 1, 
2000.

    For this volume, Lisa N. Morris was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page x]]




[[Page 1]]



                 TITLE 24--HOUSING AND URBAN DEVELOPMENT




                   (This book contains parts 0 to 199)

  --------------------------------------------------------------------
                                                                    Part

SUBTITLE A--Office of the Secretary, Department of Housing 
  and Urban Development.....................................           0


SUBTITLE B--Regulations Relating to Housing and Urban 
  Development:..............................................

chapter i--Office of Assistant Secretary for Equal 
  Opportunity, Department of Housing and Urban Development..         100

Cross References: Farmers Home Administration, Department of 
  Agriculture: For agricultural credit, see 7 CFR chapter XVIII.

  Office of Thrift Supervision, Department of the Treasury, 12 CFR 
chapter V.

  Department of Veterans Affairs regulations on assistance to certain 
veterans in acquiring specially adapted housing and guaranty of loans on 
homes: See Pensions, Bonuses, and Veteran Relief, 38 CFR part 36.

[[Page 3]]

  Subtitle A--Office of the Secretary, Department of Housing and Urban 
                               Development

  --------------------------------------------------------------------

Part                                                                Page
0               Standards of conduct........................           7
1               Nondiscrimination in federally assisted 
                    programs of the Department of Housing 
                    and Urban Development--effectuation of 
                    Title VI of the Civil Rights Act of 1964           7
4               HUD Reform Act..............................          14
5               General HUD program requirements; waivers...          21
6               Nondiscrimination in programs and activities 
                    receiving assistance under Title I of 
                    the Housing and Community Development 
                    Act of 1974.............................          89
7               Equal employment opportunity; policy and 
                    procedures..............................          96
8               Nondiscrimination based on handicap in 
                    federally assisted programs and 
                    activities of the Department of Housing 
                    and Urban Development...................         102
9               Enforcement of nondiscrimination on the 
                    basis of disability in programs or 
                    activities conducted by the Department 
                    of Housing and Urban Development........         123
10              Rulemaking: Policy and procedures...........         134
13              Use of penalty mail in the location and 
                    recovery of missing children............         137
14              Implementation of the Equal Access to 
                    Justice Act in administrative 
                    proceedings.............................         138
15              Testimony, production and disclosure of 
                    material or information by HUD employees         145
16              Implementation of the Privacy Act of 1974...         159
17              Administrative claims.......................         172

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18              Indemnification of HUD employees............         198
20              Board of Contract Appeals...................         199
24              Government debarment and suspension and 
                    governmentwide requirements for drug-
                    free workplace (grants).................         209
25              Mortgagee Review Board......................         231
26              Hearing procedures..........................         237
27              Nonjudicial foreclosure of multifamily and 
                    single family mortgages.................         252
28              Implementation of the Program Fraud Civil 
                    Remedies Act of 1986....................         260
30              Civil money penalties: certain prohibited 
                    conduct.................................         264
35              Lead-based paint poisoning prevention in 
                    certain residential structures..........         270
40              Accessibility standards for design, 
                    construction, and alteration of publicly 
                    owned residential structures............         319
41              Policies and procedures for the enforcement 
                    of standards and requirements for 
                    accessibility by the physically 
                    handicapped.............................         321
42              Displacement, relocation assistance, and 
                    real property acquisition for HUD and 
                    HUD-assisted programs...................         323
43-45           [Reserved]

50              Protection and enhancement of environmental 
                    quality.................................         328
51              Environmental criteria and standards........         337
52              Intergovernmental review of Department of 
                    Housing and Urban Development programs 
                    and activities..........................         354
55              Floodplain management.......................         357
58              Environmental review procedures for entities 
                    assuming HUD environmental 
                    responsibilities........................         366
60              Protection of human subjects................         384
70              Use of volunteers on projects subject to 
                    Davis-Bacon and HUD-determined wage 
                    rates...................................         384
81              The Secretary of HUD's regulation of the 
                    Federal National Mortgage Association 
                    (Fannie Mae) and the Federal Home Loan 
                    Mortgage Corporation (Freddie Mac)......         387
84              Grants and agreements with institutions of 
                    higher education, hospitals, and other 
                    non-profit organizations................         419
85              Administrative requirements for grants and 
                    cooperative agreements to State, local 
                    and federally recognized Indian tribal 
                    governments.............................         456
87              New restrictions on lobbying................         483

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91              Consolidated submissions for community 
                    planning and development programs.......         494
92              Home Investment Partnerships Program........         527

  

Appendixes A-C to Subtitle A [Reserved]


  Editorial Note: For nomenclature changes to chapter I see 59 FR 14092, 
Mar. 25, 1994.

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PART 0--STANDARDS OF CONDUCT--Table of Contents




Sec. 0.1  Cross-reference to employees ethical conduct standards and financial disclosure regulations.

    Employees of the Department of Housing and Urban Development 
(Department) are subject to the executive branch-wide standards of 
ethical conduct at 5 CFR part 2635, the Department's regulation at 5 CFR 
part 7501 which supplements the executive branch-wide standards, and the 
executive branch-wide financial disclosure regulation at 5 CFR part 
2634.

5 U.S.C. 301, 7301; 42 U.S.C. 3535(d)

[61 FR 36251, July 9, 1996]



PART 1--NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--EFFECTUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 
1964--Table of Contents




Sec.
1.1  Purpose.
1.2  Definitions.
1.3  Application of part 1.
1.4  Discrimination prohibited.
1.5  Assurances required.
1.6  Compliance information.
1.7  Conduct of investigations.
1.8  Procedure for effecting compliance.
1.9  Hearings.
1.10  Effect on other regulations; forms and instructions.

    Authority: 42 U.S.C. 2000d-1 and 3535(d).

    Source: 38 FR 17949, July 5, 1973, unless otherwise noted.



Sec. 1.1  Purpose.

    The purpose of this part 1 is to effectuate the provisions of title 
VI of the Civil Rights Act of 1964 (hereafter referred to as the Act) to 
the end that no person in the United States shall, on the ground of 
race, color, or national origin, be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under any program or activity receiving Federal financial assistance 
from the Department of Housing and Urban Development.



Sec. 1.2  Definitions.

    As used in this part 1--
    (a) The term Department means the Department of Housing and Urban 
Development.
    (b) The term Secretary means the Secretary of Housing and Urban 
Development.
    (c) The term responsible Department official means the Secretary or, 
to the extent of any delegation of authority by the Secretary to act 
under this part 1, any other Department official to whom the Secretary 
may hereafter delegate such authority.
    (d) The term United States means the States of the United States, 
the District of Columbia, Puerto Rico, the Virgin Islands, American 
Samoa, Guam, Wake Island, the Canal Zone, and the territories and 
possessions of the United States, and the term State means any one of 
the foregoing.
    (e) The term Federal financial assistance includes: (1) Grants, 
loans, and advances of Federal funds, (2) the grant or donation of 
Federal property and interests in property, (3) the detail of Federal 
personnel, (4) the sale and lease of, and the permission to use (on 
other than a casual or transient basis), Federal property or any 
interest in such property without consideration or at a nominal 
consideration, or at a consideration which is reduced for the purpose of 
assisting the recipient, or in recognition of the public interest to be 
served by such sale or lease to the recipient, and (5) any Federal 
agreement, arrangement, or other contract which has as one of its 
purposes the provision of assistance. The term Federal financial 
assistance does not include a contract of insurance or guaranty.
    (f) The term recipient means any State, political subdivision of any 
State, or instrumentality of any State or political subdivision, any 
public or private agency, institution, organization, or other entity, or 
any individual, in any State, to whom Federal financial assistance is 
extended, directly or through another recipient, for any program or 
activity, or who otherwise participates in carrying out such program or 
activity (such as a redeveloper in the Urban Renewal Program), including 
any successor, assign, or transferee thereof, but such term does not 
include

[[Page 8]]

any ultimate beneficiary under any such program or activity.
    (g) The term applicant means one who submits an application, 
contract, request, or plan requiring Department approval as a condition 
to eligibility for Federal financial assistance, and the term 
application means such an application, contract, request, or plan.



Sec. 1.3  Application of part 1.

    This part 1 applies to any program or activity for which Federal 
financial assistance is authorized under a law administered by the 
Department, including any program or activity assisted under the 
statutes listed in appendix A of this part 1. It applies to money paid, 
property transferred, or other Federal financial assistance extended to 
any such program or activity on or after January 3, 1965. This part 1 
does not apply to: (a) Any Federal financial assistance by way of 
insurance or guaranty contracts, (b) money paid, property transferred, 
or other assistance extended to any such program or activity before 
January 3, 1965, (c) any assistance to any person who is the ultimate 
beneficiary under any such program or activity, or (d) any employment 
practice, under any such program or activity, of any employer, 
employment agency, or labor organization, except to the extent described 
in Sec. 1.4(c). The fact that certain financial assistance is not listed 
in appendix A shall not mean, if title VI of the Act is otherwise 
applicable, that such financial assistance is not covered. Other 
financial assistance under statutes now in force or hereinafter enacted 
may be added to this list by notice published in the Federal Register.



Sec. 1.4  Discrimination prohibited.

    (a) General. No person in the United States shall, on the ground of 
race, color, or national origin, be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under any program or activity to which this part 1 applies.
    (b) Specific discriminatory actions prohibited. (1) A recipient 
under any program or activity to which this part 1 applies may not, 
directly or through contractual or other arrangements, on the ground of 
race, color, or national origin:
    (i) Deny a person any housing, accommodations, facilities, services, 
financial aid, or other benefits provided under the program or activity;
    (ii) Provide any housing, accommodations, facilities, services, 
financial aid, or other benefits to a person which are different, or are 
provided in a different manner, from those provided to others under the 
program or activity;
    (iii) Subject a person to segregation or separate treatment in any 
matter related to his receipt of housing, accommodations, facilities, 
services, financial aid, or other benefits under the program or 
activity;
    (iv) Restrict a person in any way in access to such housing, 
accommodations, facilities, services, financial aid, or other benefits, 
or in the enjoyment of any advantage or privilege enjoyed by others in 
connection with such housing, accommodations, facilities, services, 
financial aid, or other benefits under the program or activity;
    (v) Treat a person differently from others in determining whether he 
satisfies any occupancy, admission, enrollment, eligibility, membership, 
or other requirement or condition which persons must meet in order to be 
provided any housing, accommodations, facilities, services, financial 
aid, or other benefits provided under the program or activity;
    (vi) Deny a person opportunity to participate in the program or 
activity through the provision of services or otherwise, or afford him 
an opportunity to do so which is different from that afforded others 
under the program or activity (including the opportunity to participate 
in the program or activity as an employee but only to the extent set 
forth in paragraph (c) of this section).
    (vii) Deny a person the opportunity to participate as a member of a 
planning or advisory body which is an integral part of the program.
    (2)(i) A recipient, in determining the types of housing, 
accommodations, facilities, services, financial aid, or other benefits 
which will be provided under any such program or activity, or the

[[Page 9]]

class of persons to whom, or the situations in which, such housing, 
accommodations, facilities, services, financial aid, or other benefits 
will be provided under any such program or activity, or the class of 
persons to be afforded an opportunity to participate in any such program 
or activity, may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration which have 
the effect of subjecting persons to discrimination because of their 
race, color, or national origin, or have the effect of defeating or 
substantially impairing accomplishment of the objectives of the program 
or activity as respect to persons of a particular race, color, or 
national origin.
    (ii) A recipient, in operating low-rent housing with Federal 
financial assistance under the United States Housing Act of 1937, as 
amended (42 U.S.C. 1401 et seq.), shall assign eligible applicants to 
dwelling units in accordance with a plan, duly adopted by the recipient 
and approved by the responsible Department official, providing for 
assignment on a community-wide basis in sequence based upon the date and 
time the application is received, the size or type of unit suitable, and 
factors affecting preference or priority established by the recipient's 
regulations, which are not inconsistent with the objectives of title VI 
of the Civil Rights Act of 1964 and this part 1. The plan may allow an 
applicant to refuse a tendered vacancy for good cause without losing his 
standing on the list but shall limit the number of refusals without 
cause as prescribed by the responsible Department official.
    (iii) The responsible Department official is authorized to prescribe 
and promulgate plans, exceptions, procedures, and requirements for the 
assignment and reassignment of eligible applicants and tenants 
consistent with the purpose of paragraph (b)(2)(ii) of this section, 
this part 1, and title VI of the Civil Rights Act of 1964, in order to 
effectuate and insure compliance with the requirements imposed 
thereunder.
    (3) In determining the site or location of housing, accommodations, 
or facilities, an applicant or recipient may not make selections with 
the purpose or effect of excluding individuals from, denying them the 
benefits of, or subjecting them to discrimination under any program to 
which this part 1 applies, on the ground of race, color, or national 
origin; or with the purpose or effect of defeating or substantially 
impairing the accomplishment of the objectives of the Act or this part 
1.
    (4) As used in this part 1 the housing, accommodations, facilities, 
services, financial aid, or other benefits provided under a program or 
activity receiving Federal financial assistance shall be deemed to 
include any housing, accommodations, facilities, services, financial 
aid, or other benefits provided in or through a facility provided with 
the aid of Federal financial assistance.
    (5) The enumeration of specific forms of prohibited discrimination 
in paragraphs (b) and (c) of this section does not limit the generality 
of the prohibition in paragraph (a) of this section.
    (6)(i) In administering a program regarding which the recipient has 
previously discriminated against persons on the ground of race, color, 
or national origin, the recipient must take affirmative action to 
overcome the effects of prior discrimination.
    (ii) Even in the absence of such prior discrimination, a recipient 
in administering a program should take affirmative action to overcome 
the effects of conditions which resulted in limiting participation by 
persons of a particular race, color, or national origin.

Where previous discriminatory practice or usage tends, on the ground of 
race, color, or national origin, to exclude individuals from 
participation in, to deny them the benefits of, or to subject them to 
discrimination under any program or activity to which this part 1 
applies, the applicant or recipient has an obligation to take reasonable 
action to remove or overcome the consequences of the prior 
discriminatory practice or usage, and to accomplish the purpose of the 
Act.
    (c) Employment practices. (1) Where a primary objective of the 
Federal financial assistance to a program or activity to which this part 
1 applies is to provide employment, a recipient may not, directly or 
through contractual or other arrangements, subject a person to 
discrimination on the ground of race, color, or national origin in its

[[Page 10]]

employment practices under such program or activity (including 
recruitment or recruitment advertising, employment, layoff, termination, 
upgrading, demotion, transfer, rates of pay or other forms of 
compensation and use of facilities). The requirements applicable to 
construction employment under such program or activity shall be those 
specified in or pursuant to part III of Executive Order 11246 or any 
executive order which supersedes or amends it.
    (2) Where a primary objective of the Federal financial assistance is 
not to provide employment, but discrimination on the ground of race, 
color, or national origin in the employment practices of the recipient 
or other persons subject to this part 1 tends, on the ground of race, 
color, or national origin, to exclude individuals from participation in, 
to deny them the benefits of, or to subject them to discrimination under 
any program to which this part 1 applies, the provisions of this 
paragraph (c) shall apply to the employment practices of the recipient 
or other persons subject to this part 1 to the extent necessary to 
assure equality of opportunity to, and nondiscriminatory treatment of, 
beneficiaries.



Sec. 1.5  Assurances required.

    (a) General. (1) Every contract for Federal financial assistance to 
carry out a program or activity to which this part 1 applies, executed 
on or after January 3, 1965, and every application for such Federal 
financial assistance submitted on or after January 3, 1965, shall, as a 
condition to its approval and the extension of any Federal financial 
assistance pursuant to such contract or application, contain or be 
accompanied by an assurance that the program or activity will be 
conducted and the housing, accommodations, facilities, services, 
financial aid, or other benefits to be provided will be operated and 
administered in compliance with all requirements imposed by or pursuant 
to this part 1. In the case of a contract or application where the 
Federal financial assistance is to provide or is in the form of personal 
property or real property or interest therein or structures thereon, the 
assurance shall obligate the recipient or, in the case of a subsequent 
transfer, the transferee, for the period during which the property is 
used for a purpose for which the Federal financial assistance is 
extended or for another purpose involving the provision of similar 
services or benefits, or for as long as the recipient retains ownership 
or possession of the property, whichever is longer. In all other cases 
the assurance shall obligate the recipient for the period during which 
Federal financial assistance is extended pursuant to the contract or 
application. The responsible Department official shall specify the form 
of the foregoing assurance for such program or activity, and the extent 
to which like assurances will be required of subgrantees, contractors 
and subcontractors, transferees, successors in interest, and other 
participants in the program or activity. Any such assurance shall 
include provisions which give the United States a right to seek its 
judicial enforcement.
    (2) In the case of real property, structures or improvements 
thereon, or interests therein, acquired through a program of Federal 
financial assistance the instrument effecting any disposition by the 
recipient of such real property, structures or improvements thereon, or 
interests therein, shall contain a covenant running with the land 
assuring nondiscrimination for the period during which the real property 
is used for a purpose for which the Federal financial assistance is 
extended or for another purpose involving the provision of similar 
services or benefits. In the case where Federal financial assistance is 
provided in the form of a transfer of real property or interests therein 
from the Federal Government, the instrument effecting or recording the 
transfer shall contain such a covenant.
    (3) In program receiving Federal financial assistance in the form, 
or for the acquisition, of real property or an interest in real 
property, to the extent that rights to space on, over, or under any such 
property are included as part of the program receiving such assistance, 
the nondiscrimination requirements of this part 1 shall extend to any 
facility located wholly or in part in such space.
    (b) Preexisting contracts--funds not disbursed. In any case where a 
contract for Federal financial assistance, to carry

[[Page 11]]

out a program or activity to which this part 1 applies, has been 
executed prior to January 3, 1965, and the funds have not been fully 
disbursed by the Department, the responsible Department official shall, 
where necessary to effectuate the purposes of this part 1, require an 
assurance similar to that provided in paragraph (a) of this section as a 
condition to the disbursement of further funds.
    (c) Preexisting contracts--periodic payments. In any case where a 
contract for Federal financial assistance, to carry out a program or 
activity to which this part 1 applies, has been executed prior to 
January 3, 1965, and provides for periodic payments for the continuation 
of the program or activity, the recipient shall, in connection with the 
first application for such periodic payments on or after January 3, 
1965: (1) Submit a statement that the program or activity is being 
conducted in compliance with all requirements imposed by or pursuant to 
this part 1 and (2) provide such methods of administration for the 
program or activity as are found by the responsible Department official 
to give reasonable assurance that the recipient will comply with all 
requirements imposed by or pursuant to this part 1.
    (d) Assurances from institutions. (1) In the case of any application 
for Federal financial assistance to an institution of higher education, 
the assurance required by this section shall extend to admission 
practices and to all other practices relating to the treatment of 
students.
    (2) The assurance required with respect to an institution of higher 
education, hospital, or any other institution, insofar as the assurance 
relates to the institution's practices with respect to admission or 
other treatment of persons as students, patients, or clients of the 
institution or to the opportunity to participate in the provision of 
services or other benefits to such persons, shall be applicable to the 
entire institution unless the applicant establishes, to the satisfaction 
of the responsible Department official, that the institution's practices 
in designated parts or programs of the institution will in no way affect 
its practices in the program of the institution for which Federal 
financial assistance is sought, or the beneficiaries of or participants 
in such program. If in any such case the assistance sought is for the 
construction of a facility or part of a facility, the assurance shall in 
any event extend to the entire facility and to facilities operated in 
connection therewith.
    (e) Elementary and secondary schools. The requirements of this 
section with respect to any elementary or secondary school or school 
system shall be deemed to be satisfied if such school or school system 
(1) is subject to a final order of a court of the United States for the 
desegregation of such school or school system, and provides an assurance 
that it will comply with such order, including any future modification 
of such order, or (2) submits a plan for the desegregation of such 
school or school system which the responsible official of the Department 
of Health and Human Services determines is adequate to accomplish the 
purposes of the Act and this part 1 within the earliest practicable 
time, and provides reasonable assurance that it will carry out such 
plan.

[38 FR 17949, July 5, 1973, as amended at 50 FR 9269, Mar. 7, 1985]



Sec. 1.6  Compliance information.

    (a) Cooperation and assistance. The responsible Department official 
and each Department official who by law or delegation has the principal 
responsibility within the Department for the administration of any law 
extending financial assistance subject to this part 1 shall to the 
fullest extent practicable seek the cooperation of recipients in 
obtaining compliance with this part 1 and shall provide assistance and 
guidance to recipients to help them comply voluntarily with this part 1.
    (b) Compliance reports. Each recipient shall keep such records and 
submit to the responsible Department official or his designee timely, 
complete, and accurate compliance reports at such times, and in such 
form and containing such information, as the responsible Department 
official or his designee may determine to be necessary to enable him to 
ascertain whether the recipient has complied or is complying with this 
part 1. In general, recipients should have available for the department 
racial and ethnic data showing

[[Page 12]]

the extent to which members of minority groups are beneficiaries of 
federally assisted programs.
    (c) Access to sources of information. Each recipient shall permit 
access by the responsible Department official or his designee during 
normal business hours to such of its books, records, accounts, and other 
sources of information, and its facilities as may be pertinent to 
ascertain compliance with this part 1. Where any information required of 
a recipient is in the exclusive possession of any other agency, 
institution, or person and this agency, institution, or person shall 
fail or refuse to furnish this information, the recipient shall so 
certify in its report and shall set forth what efforts it has made to 
obtain the information.
    (d) Information to beneficiaries and participants. Each recipient 
shall make available to participants, beneficiaries, and other 
interested persons such information regarding the provisions of this 
part 1 and its applicability to the program or activity under which the 
recipient receives Federal financial assistance, and make such 
information available to them in such manner, as the responsible 
Department official finds necessary to apprise such persons of the 
protections against discrimination assured them by the Act and this part 
1.



Sec. 1.7  Conduct of investigations.

    (a) Periodic compliance reviews. The responsible Department official 
or his designee shall from time to time review the practices of 
recipients to determine whether they are complying with this part 1.
    (b) Complaints. Any person who believes himself or any specific 
class of persons to be subjected to discrimination prohibited by this 
part 1 may by himself or by a representative file with the responsible 
Department official or his designee a written complaint. A complaint 
must be filed not later than 180 days from the date of the alleged 
discrimination, unless the time for filing is extended by the 
responsible Department official or his designee.
    (c) Investigations. The responsible Department official or his 
designee shall make a prompt investigation whenever a compliance review, 
report, complaint, or any other information indicates a possible failure 
to comply with this part 1. The investigation should include, where 
appropriate, a review of the pertinent practices and policies of the 
recipient, the circumstances under which the possible noncompliance with 
this part 1 occurred, and other factors relevant to a determination as 
to whether the recipient has failed to comply with this part .
    (d) Resolution of matters. (1) If an investigation pursuant to 
paragraph (c) of this section indicates a failure to comply with this 
part 1, the responsible Department official or his designee will so 
inform the recipient and the matter will be resolved by informal means 
whenever possible. If it has been determined that the matter cannot be 
resolved by informal means, action will be taken as provided for in 
Sec. 1.8.
    (2) If an investigation does not warrant action pursuant to 
paragraph (d)(1) of this section the responsible Department official or 
his designee will so inform the recipient and the complainant, if any, 
in writing.
    (e) Intimidatory or retaliatory acts prohibited. No recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any person for the purpose of interfering with any right or privilege 
secured by title VI of the Act or this part 1, or because he has made a 
complaint, testified, assisted, or participated in any manner in an 
investigation, proceeding, or hearing under this part. The identity of 
complainants shall be kept confidential except to the extent necessary 
to carry out the purposes of this part, including the conduct of any 
investigation, hearing, or judicial proceeding arising thereunder.



Sec. 1.8  Procedure for effecting compliance.

    (a) General. If there appears to be a failure or threatened failure 
to comply with this part 1, and if the noncompliance or threatened 
noncompliance cannot be corrected by informal means, compliance with 
this part 1 may be effected by the suspension or termination of or 
refusal to grant or to continue Federal financial assistance, or by any 
other means authorized by law. Such other means may include, but are not 
limited to: (1) A reference to the

[[Page 13]]

Department of Justice with a recommendation that appropriate proceedings 
be brought to enforce any rights of the United States under any law of 
the United States (including other titles of the Act), or any assurance 
or other contractual undertaking, and (2) any applicable proceeding 
under State or local law.
    (b) Noncompliance with Sec. 1.5. If an applicant fails or refuses to 
furnish an assurance required under Sec. 1.5 or otherwise fails or 
refuses to comply with the requirement imposed by or pursuant to that 
section, Federal financial assistance may be refused in accordance with 
the procedures of paragraph (c) of this section. The Department shall 
not be required to provide assistance in such a case during the pendency 
of the administrative proceedings under such paragraph, except that the 
Department shall continue assistance during the pendency of such 
proceedings where such assistance is due and payable pursuant to a 
contract therefor approved prior to January 3, 1965.
    (c) Termination of or refusal to grant or to continue Federal 
financial assistance. No order suspending, terminating, or refusing to 
grant or continue Federal financial assistance shall become effective 
until (1) the responsible Department official has advised the applicant 
or recipient of his failure to comply and has determined that compliance 
cannot be secured by voluntary means, (2) there has been an express 
finding on the record, after opportunity for hearing, of a failure by 
the applicant or recipient to comply with a requirement imposed by or 
pursuant to this part 1, (3) the action has been approved by the 
Secretary, and (4) the expiration of 30 days after the Secretary has 
filed with the committees of the House and Senate having legislative 
jurisdiction over the program or activity involved a full written report 
of the circumstances and the grounds for such action. Any action to 
suspend or terminate or to refuse to grant or to continue Federal 
financial assistance shall be limited to the particular political 
entity, or part thereof, or other recipient as to whom such a finding 
has been made and shall be limited in its effect to the particular 
program, or part thereof, in which such noncompliance has been so found.
    (d) Other means authorized by law. No action to effect compliance by 
any other means authorized by law shall be taken until (1) the 
responsible Department official has determined that compliance cannot be 
secured by voluntary means, (2) the recipient or other person has been 
notified of its failure to comply and of the action to be taken to 
effect compliance, and (3) the expiration of at least 10 days from the 
mailing of such notice to the applicant or recipient. During this period 
of at least 10 days additional efforts shall be made to persuade the 
applicant or recipient to comply with this part 1 and to take such 
corrective action as may be appropriate.



Sec. 1.9  Hearings.

    (a) Opportunity for hearing. Whenever an opportunity for a hearing 
is required by Sec. 1.8(c), reasonable notice shall be given by 
registered or certified mail, return receipt requested, to the affected 
applicant or recipient. This notice shall advise the applicant or 
recipient of the action proposed to be taken, the specific provision 
under which the proposed action against it is to be taken, and the 
matters of fact or law asserted as the basis for this action, and 
either:
    (1) Fix a date not less than 20 days after the date of such notice 
within which the applicant or recipient may request of the responsible 
Department official that the matter be scheduled for hearing, or (2) 
advise the applicant or recipient that the matter in question has been 
set down for hearing at a stated time and place. The time and place so 
fixed shall be reasonable and shall be subject to change for cause. The 
complainant, if any, shall be advised of the time and place of the 
hearing. An applicant or recipient may waive a hearing and submit 
written information and argument for the record. The failure of an 
applicant or recipient to request a hearing under this paragraph (a) or 
to appear at a hearing for which a date has been set shall be deemed to 
be a waiver of the right to a hearing under section 602 of the Act and 
Sec. 1.8(c) and consent to the making

[[Page 14]]

of a decision on the basis of such information as is available.
    (b) Hearing procedures. Hearings shall be conducted in accordance 
with 24 CFR part 180.

38 FR 17949, July 5, 1973, as amended at 61 FR 52217, Oct. 4, 1996]



Sec. 1.10  Effect on other regulations; forms and instructions.

    (a) Effect on other regulations. All regulations, orders, or like 
directions heretofore issued by any officer of the Department which 
impose requirements designed to prohibit any discrimination against 
persons on the ground of race, color, or national origin under any 
program or activity to which this part applies, and which authorize the 
suspension or termination of or refusal to grant or to continue Federal 
financial assistance to any applicant or recipient for failure to comply 
with such requirements, are hereby superseded to the extent that such 
discrimination is prohibited by this part, except that nothing in this 
part shall be deemed to relieve any person of any obligation assumed or 
imposed under any such superseded regulation, order, instruction, or 
like direction prior to January 3, 1965. Nothing in this part, however, 
shall be deemed to supersede any of the following (including future 
amendments thereof):
    (1) Executive Orders 11246 and 11375 and regulations issued 
thereunder, or
    (2) Executive Order 11063 and regulations issued thereunder, or any 
other order, regulations or instructions, insofar as such order, 
regulations, or instructions, prohibit discrimination on the ground of 
race, color, or national origin in any program or activity or situation 
to which this part is inapplicable, or prohibit discrimination on any 
other ground.
    (b) Forms and instructions. The responsible Department official 
shall assure that forms and detailed instructions and procedures for 
effectuating this part are issued and promptly made available to 
interested persons.
    (c) Supervision and coordination. The Secretary may from time to 
time assign to officials of the Department, or to officials of other 
departments or agencies of the Government with the consent of such 
department or agency, responsibilities in connection with the 
effectuation of the purposes of title VI of the Act and this part (other 
than responsibility for final decision as provided in Sec. 1.10), 
including the achievement of effective coordination and maximum 
uniformity within the Department and within the Executive Branch of the 
Government in the application of title VI and this part to similar 
programs or activities and in similar situations. Any action taken, 
determination made, or requirement imposed by an official of another 
department or agency acting pursuant to an assignment of responsibility 
under this paragraph shall have the same effect as though such action 
had been taken by the responsible official of this Department.

[38 FR 17949, July 5, 1973. Redesignated at 61 FR 52217, Oct. 4, 1996]



PART 4--HUD REFORM ACT--Table of Contents




      Subpart A--Accountability in the Provision of HUD Assistance

Sec.
4.1  Purpose.
4.3  Definitions.
4.5  Notice and documentation of assistance subject to section 102(a).
4.7  Notice of funding decisions.
4.9  Disclosure requirements for assistance subject to section 102(b).
4.11  Updating of disclosure.
4.13  Limitation of assistance subject to section 102(d).

    Subpart B--Prohibition of Advance Disclosure of Funding Decisions

4.20  Purpose.
4.22  Definitions.
4.24  Scope.
4.26  Permissible and impermissible disclosures.
4.28  Civil penalties.
4.30  Procedure upon discovery of a violation.
4.32  Investigation by Office of Inspector General.
4.34  Review of Inspector General's report by the Ethics Law Division.
4.36  Action by the Ethics Law Division.
4.38  Administrative remedies.

    Authority: 42 U.S.C. 3535(d), 3537a, 3545.

    Source: 61 FR 14449, Apr. 1, 1996, unless otherwise noted.

[[Page 15]]



      Subpart A--Accountability in the Provision of HUD Assistance



Sec. 4.1  Purpose.

    The provisions of this subpart A are authorized under section 102 of 
the Department of Housing and Urban Development Reform Act of 1989 (Pub. 
L. 101-235, approved December 15, 1989) (42 U.S.C. 3537a) (hereinafter, 
Section 102). Both the provisions of Section 102 and this subpart A 
apply for the purposes of Section 102. Section 102 contains a number of 
provisions designed to ensure greater accountability and integrity in 
the way in which the Department makes assistance available under certain 
of its programs.



Sec. 4.3  Definitions.

    Applicant includes a person whose application for assistance must be 
submitted to HUD for any purpose including approval, environmental 
review, or rent determination.
    Assistance under any program or discretionary fund administered by 
the Secretary is subject to Section 102(a), and means any assistance, 
under any program administered by the Department, that provides by 
statute, regulation or otherwise for the competitive distribution of 
funding.
    Assistance within the jurisdiction of the Department is subject to 
Section 102(b), and means any contract, grant, loan, cooperative 
agreement, or other form of assistance, including the insurance or 
guarantee of a loan or mortgage, that is provided with respect to a 
specific project or activity under a program administered by the 
Department, whether or not it is awarded through a competitive process.
    Assistance within the jurisdiction of the Department to any housing 
project is subject to Section 102(d), and means:
    (1) Assistance which is provided directly by HUD to any person or 
entity, but not to subrecipients. It includes assistance for the 
acquisition, rehabilitation, operation conversion, modernization, 
renovation, or demolition of any property containing five or more 
dwelling units that is to be used primarily for residential purposes. It 
includes assistance to independent group residences, board and care 
facilities, group homes and transitional housing but does not include 
primarily nonresidential facilities such as intermediate care 
facilities, nursing homes and hospitals. It also includes any change 
requested by a recipient in the amount of assistance previously 
provided, except changes resulting from annual adjustments in Section 8 
rents under Section 8(c)(2)(A) of the United States Housing Act of 1937 
(42 U.S.C. 1437f);
    (2) Assistance to residential rental property receiving a tax credit 
under Federal, State or local law.
    (3) For purposes of this definition, assistance includes assistance 
resulting from annual adjustments in Section 8 rents under Section 
8(c)(2)(A) of the United States Housing Act of 1937, unless the initial 
assistance was made available before April 15, 1991, and no other 
assistance subject to this subpart A was made available on or after that 
date.
    Housing project means: (1) Property containing five or more dwelling 
units that is to be used for primarily residential purposes, including 
(but not limited to) living arrangements such as independent group 
residences, board and care facilities, group homes, and transitional 
housing, but excluding facilities that provide primarily non-residential 
services, such as intermediate care facilities, nursing homes, and 
hospitals.
    (2) Residential rental property receiving a tax credit under 
Federal, State, or local law.
    Interested party means any person involved in the application for 
assistance, or in the planning, development or implementation of the 
project or activity for which assistance is sought and any other person 
who has a pecuniary interest exceeding the lower of $50,000 or 10 
percent in the project or activity for which assistance is sought.
    Selection criteria includes, in addition to any objective measures 
of housing and other need, project merit, or efficient use of resources, 
the weight or relative importance of each published selection criterion 
as well as any other factors that may affect the selection of 
recipients.

[[Page 16]]



Sec. 4.5  Notice and documentation of assistance subject to section 102(a).

    (a) Notice. Before the Department solicits an application for 
assistance subject to Section 102(a), it will publish a Notice in the 
Federal Register describing application procedures. Not less than 30 
calendar days before the deadline by which applications must be 
submitted, the Department will publish selection criteria in the Federal 
Register.
    (b) Documentation of decisions. HUD will make available for public 
inspection, for at least five (5) years, and beginning not less than 30 
calendars days after it provides the assistance, all documentation and 
other information regarding the basis for the funding decision with 
respect to each application submitted to HUD for assistance. HUD will 
also make available any written indication of support that it received 
from any applicant. Recipients of HUD assistance must ensure, in 
accordance with HUD guidance, the public availability of similar 
information submitted by subrecipients of HUD assistance.



Sec. 4.7  Notice of funding decisions.

    HUD will publish a Notice in the Federal Register at least quarterly 
to notify the public of all decisions made by the Department to provide:
    (a) Assistance subject to Section 102(a); and
    (b) Assistance that is provided through grants or cooperative 
agreements on a discretionary (non-formula, non-demand) basis, but that 
is not provided on the basis of a competition.



Sec. 4.9  Disclosure requirements for assistance subject to section 102(b).

    (a) Receipt and reasonable expectation of receipt. (1) In 
determining the threshold of applicability of Section 102(b), an 
applicant will be deemed to have received or to have a reasonable 
expectation of receiving:
    (i) The total amount of assistance received during the Federal 
fiscal year during which the application was submitted;
    (ii) The total amount of assistance requested for the fiscal year in 
which any pending application, including the current application, was 
submitted; and
    (iii) For the fiscal year described in paragraph (a)(1)(ii) of this 
section, the total amount of assistance from the Department or any other 
entity that is likely to be made available on a formula basis or in the 
form of program income as defined in 24 CFR part 85.
    (2) In the case of assistance that will be provided pursuant to 
contract over a period of time (such as project-based assistance under 
Section 8 of the United States Housing Act of 1937), all amounts that 
are to be provided over the term of the contract, irrespective of when 
they are to be received.
    (b) Content of disclosure. Applicants that receive or can reasonably 
be expected to receive, as defined in paragraph (a) of this section, an 
aggregate amount of assistance that is in excess of $200,000 must 
disclose the following information:
    (1) Other governmental assistance that is or is expected to be made 
available, based upon a reasonable assessment of the circumstances, with 
respect to the project or activities for which the assistance is sought;
    (2) The name and pecuniary interest of any interested party; and
    (3) A report of the expected sources and uses of funds for the 
project or activity which is the subject of the application, including 
governmental and non-governmental sources of funds and private capital 
resulting from tax benefits.
    (c) In the case of mortgage insurance under 24 CFR subtitle B, 
chapter II, the mortgagor is responsible for making the disclosures 
required under Section 102(b) and this section, and the mortgagee is 
responsible for furnishing the mortgagor's disclosures to the 
Department.

(Approved by the Office of Management and Budget under control number 
2510-0011)



Sec. 4.11  Updating of disclosure.

    (a) During the period in which an application for assistance covered 
under Section 102(b) is pending, or in which such assistance is being 
provided, the applicant must report to the Department, or to the State 
or unit of general local government, as appropriate:

[[Page 17]]

    (1) Any information referred to in Section 102(b) that the applicant 
should have disclosed with respect to the application, but did not 
disclose;
    (2) Any information referred to in Section 102(b) that initially 
arose after the time for making disclosures under that subsection, 
including the name and pecuniary interest of any person who did not have 
a pecuniary interest in the project or activity that exceeded the 
threshold in Section 102(b) at the time of the application, but that 
subsequently exceeded the threshold.
    (b) With regard to changes in information that was disclosed under 
Sections 102(b) or 102(c):
    (1) For programs administered by the Assistant Secretary for 
Community Planning and Development:
    (i) Any change in other government assistance covered by Section 
102(b) that exceeds the amount of all assistance that was previously 
disclosed by the lesser of $250,000 or 10 percent of the assistance;
    (ii) Any change in the expected sources or uses of funds that exceed 
the amount of all previously disclosed sources or uses by the lesser of 
$250,000 or 10 percent of previously disclosed sources;
    (2) For all other programs:
    (i) Any change in other government assistance under Section 
102(b)(1) that exceeds the amount of assistance that was previously 
disclosed;
    (ii) Any change in the pecuniary interest of any person under 
Section 102(b)(2) that exceeds the amount of all previously disclosed 
interests by the lesser of $50,000 or 10 percent of such interest;
    (iii) For all projects receiving a tax credit under Federal, Sate or 
local law, any change in the expected sources or uses of funds that were 
previously disclosed;
    (iv) For all other projects:
    (A) Any change in the expected source of funds from a single source 
that exceeds the lesser of the amount previously disclosed for that 
source of funds by $250,000 or 10 percent of the funds previously 
disclosed for that source;
    (B) Any change in the expected sources of funds from all sources 
previously disclosed that exceeds the lesser of $250,000 or 10 percent 
of the amounts previously disclosed from all sources of funds;
    (C) Any change in a single expected use of funds that exceeds the 
lesser of $250,000 or 10 percent of the previously disclosed use;
    (D) Any change in the use of all funds that exceeds the lesser of 
$250,000 or 10 percent of the previously disclosed uses for all funds.
    (c) Period of coverage. For purposes of updating of Section 102(c), 
an application for assistance will be considered to be pending from the 
time the application is submitted until the Department communicates its 
decision with respect to the selection of the applicant.

(Approved by the Office of Management and Budget under control number 
2510-0011)



Sec. 4.13  Limitation of assistance subject to section 102(d).

    (a) In making the certification for assistance subject to Section 
102(d), the Secretary will consider the aggregate amount of assistance 
from the Department and from other sources that is necessary to ensure 
the feasibility of the assisted activity. The Secretary will take into 
account all factors relevant to feasibility, which may include, but are 
not limited to, past rates of returns for owners, sponsors, and 
investors; the long-term needs of the project and its tenants; and the 
usual and customary fees charged in carrying out the assisted activity.
    (b) If the Department determines that the aggregate of assistance 
within the jurisdiction of the Department to a housing project from the 
Department and from other governmental sources exceeds the amount that 
the Secretary determines is necessary to make the assisted activity 
feasible, the Department will consider all options available to enable 
it to make the required certification, including reductions in the 
amount of Section 8 subsidies. The Department also may impose a dollar-
for-dollar, or equivalent, reduction in the amount of HUD assistance to 
offset the amount of other government assistance. In grant programs, 
this could result in a reduction of any grant amounts not yet drawn 
down. The Department may make these adjustments immediately, or in 
conjunction with

[[Page 18]]

servicing actions anticipated to occur in the near future (e.g., in 
conjunction with the next annual adjustment of Section 8 rents).
    (c) If an applicant does not meet the $200,000 disclosure 
requirement in Sec. 4.7(b), an applicant must certify whether there is, 
or is expected to be made, available with respect to the housing project 
any other governmental assistance. The Department may also require any 
applicant subject to this subpart A to submit such a certification in 
conjunction with the Department's processing of any subsequent servicing 
action on that project. If there is other government assistance for 
purposes of the two preceding sentences, the applicant must submit such 
information as the Department deems necessary to make the certification 
and subsequent adjustments under Section 102(d).
    (d) The certification under Section 102(d) shall be retained in the 
official file for the housing project.



    Subpart B--Prohibition of Advance Disclosure of Funding Decisions



Sec. 4.20  Purpose.

    The provisions of this subpart B are authorized under section 103 of 
the Department of Housing and Urban Development Reform Act of 1989 (Pub. 
L. 101-235, approved December 15, 1989) (42 U.S.C. 3537a) (hereinafter, 
Section 103). Both the provisions of Section 103 and this subpart B 
apply for the purposes of Section 103. Section 103 proscribes direct or 
indirect communication of certain information during the selection 
process by HUD employees to persons within or outside of the Department 
who are not authorized to receive that information. The purpose of the 
proscription is to preclude giving an unfair advantage to applicants who 
would receive information not available to other applicants or to the 
public. Section 103 also authorizes the Department to impose a civil 
money penalty on a HUD employee who knowingly discloses protected 
information, if such a violation of Section 103 is material, and 
authorizes the Department to sanction the person who received 
information improperly by, among other things, denying assistance to 
that person.



Sec. 4.22  Definitions.

    Application means a written request for assistance regardless of 
whether the request is in proper form or format.
    Assistance does not include any contract (e.g., a procurement 
contract) that is subject to the Federal Acquisition Regulation (FAR) 
(48 CFR ch. 1).
    Disclose means providing information directly or indirectly to a 
person through any means of communication.
    Employee includes persons employed on a full-time, part-time, or 
temporary basis, and special government employees as defined in 18 
U.S.C. 202. The term applies whether or not the employee is denoted as 
an officer of the Department. ``Employee'' is to be construed broadly to 
include persons who are retained on a contractual or consultative basis 
under an Office of Human Resources appointment. However, ``employee'' 
does not include an independent contractor, e.g., a firm or individual 
working under the authority of a procurement contract.
    Material or materially means in some influential or substantial 
respect or having to do more with substance than with form.
    Person means an individual, corporation, company, association, 
authority, firm, partnership, society, State, local government, or any 
other organization or group of people.
    Selection process means the period with respect to a selection for 
assistance that begins when the HUD official responsible for awarding 
the assistance involved, or his or her designee, makes a written request 
(which includes the selection criteria to be used in providing the 
assistance) to the Office of General Counsel (OGC) to prepare the NOFA, 
solicitation, or request for applications for assistance for publication 
in the Federal Register. The period includes the evaluation of 
applications, and concludes with the announcement of the selection of 
recipients of assistance.



Sec. 4.24  Scope.

    (a) Coverage. The prohibitions against improper disclosure of 
covered selection information apply to any person

[[Page 19]]

who is an employee of the Department. In addition, the Department will 
require any other person who participates at the invitation of the 
Department in the selection process to sign a certification that he or 
she will be bound by the provisions of this part.
    (b) Applicability. The prohibitions contained in this part apply to 
conduct occurring on or after June 12, 1991.



Sec. 4.26  Permissible and impermissible disclosures.

    (a) Notwithstanding the provisions of Section 103, an employee is 
permitted to disclose information during the selection process with 
respect to:
    (1) The requirements of a HUD program or programs, including 
unpublished policy statements and the provision of technical assistance 
concerning program requirements, provided that the requirements or 
statements are disclosed on a uniform basis to any applicant or 
potential applicant. For purposes of this part, the term ``technical 
assistance'' includes such activities as explaining and responding to 
questions about program regulations, defining terms in an application 
package, and providing other forms of technical guidance that may be 
described in a NOFA. The term ``technical assistance'' also includes 
identification of those parts of an application that need substantive 
improvement, but this term does not include advising the applicant how 
to make those improvements.
    (2) The dates by which particular decisions in the selection process 
will be made;
    (3) Any information which has been published in the Federal Register 
in a NOFA or otherwise;
    (4) Any information which has been made public through means other 
than the Federal Register;
    (5) An official audit, inquiry or investigation, if the disclosure 
is made to an auditor or investigator authorized by the HUD Inspector 
General to conduct the audit or investigation;
    (6) Legal activities, including litigation, if the disclosure is 
made to an attorney who is representing or is otherwise responsible to 
the Department in connection with the activities; or
    (7) Procedures that are required to be performed to process an 
application, e.g., environmental or budget reviews, and technical 
assistance from experts in fields who are regularly employed by other 
government agencies, provided that the agency with which the expert is 
employed or associated is not an applicant for HUD assistance during the 
pending funding cycle.
    (b) An authorized employee, during the selection process, may 
contact an applicant for the purpose of:
    (1) Communication of the applicant's failure to qualify, after a 
preliminary review for eligibility and completeness with respect to his 
or her application, and the reasons for the failure to qualify, or the 
fact of the applicant's failure to be determined to be technically 
acceptable after a full review; or
    (2) Clarification of the terms of the applicant's application. A 
clarification, for the purpose of this paragraph (b), may include a 
request for additional information consistent with regulatory 
requirements.
    (c) Prohibition of advance disclosure of funding decisions. During 
the selection process an employee shall not knowingly disclose any 
covered selection information regarding the selection process to any 
person other than an employee authorized to receive that information.
    (1) The following disclosures of information are, at any time during 
the selection process, a violation of Section 103:
    (i) Information regarding any applicant's relative standing;
    (ii) The amount of assistance requested by any applicant;
    (iii) Any information contained in an application;
    (2) The following disclosures of information, before the deadline 
for the submission of applications, shall be a violation of Section 103:
    (i) The identity of any applicant; and
    (ii) The number of applicants.



Sec. 4.28  Civil penalties.

    Whenever any employee knowingly and materially violates the 
prohibition in Section 103, the Department may impose a civil money 
penalty on the employee in accordance with the provisions of 24 CFR part 
30.

[[Page 20]]



Sec. 4.30  Procedure upon discovery of a violation.

    (a) In general. When an alleged violation of Section 103 or this 
subpart B comes to the attention of any person, including an employee, 
he or she may either:
    (1) Contact the HUD Ethics Law Division to provide information about 
the alleged violation; or
    (2) Contact the HUD Office of Inspector General to request an 
inquiry or investigation into the matter.
    (b) Ethics Law Division. When the Ethics Law Division receives 
information concerning an alleged violation of Section 103, it shall 
refer the matter to the Inspector General stating the facts of the 
alleged violation and requesting that the Inspector General make an 
inquiry or investigation into the matter.
    (c) Inspector General. When the Inspector General receives 
information concerning an alleged violation of Section 103 or this 
subpart B, he or she shall notify the Ethics Law Division when the 
Inspector General begins an inquiry or investigation into the matter.
    (d) Protection of employee complainants. (1) No official of the 
Ethics Law Division, after receipt of information from an employee 
stating the facts of an alleged violation of this part, shall disclose 
the identity of the employee without the consent of that employee. The 
Inspector General, after receipt of information stating the facts of an 
alleged violation of this part, shall not disclose the identity of the 
employee who provided the information without the consent of that 
employee, unless the Inspector General determines that disclosure of the 
employee's identity is unavoidable during the course of an 
investigation. However, any employee who knowingly reports a false 
alleged violation of this part is not so protected and may be subject to 
disciplinary action.
    (2) Any employee who has authority to take, direct others to take, 
recommend or approve a personnel action is prohibited from threatening, 
taking, failing to take, recommending, or approving any personnel action 
as reprisal against another employee for providing information to 
investigating officials.



Sec. 4.32  Investigation by Office of Inspector General.

    The Office of Inspector General shall review every alleged violation 
of Section 103. If after a review the Office of Inspector General 
determines that further investigation is not warranted, it shall notify 
the Ethics Law Division of that determination. If, after a review, the 
Office of Inspector General determines that additional investigation is 
warranted, it shall conduct the investigation and upon completion issue 
a report of the investigation to the Ethics Law Division as to each 
alleged violation.



Sec. 4.34  Review of Inspector General's report by the Ethics Law Division.

    After receipt of the Inspector General's report, the Ethics Law 
Division shall review the facts and circumstances of the alleged 
violations. In addition, the Ethics Law Division may:
    (a) Return the report to the Inspector General with a request for 
further investigation;
    (b) Discuss the violation with the employee alleged to have 
committed the violation; or
    (c) Interview any other person, including employees who it believes 
will be helpful in furnishing information relevant to the inquiry.



Sec. 4.36  Action by the Ethics Law Division.

    (a) After review of the Inspector General's report, the Ethics Law 
Division shall determine whether or not there is sufficient information 
providing a reasonable basis to believe that a violation of Section 103 
or this subpart B has occurred.
    (b) If the Ethics Law Division determines that there is no 
reasonable basis to believe that a violation of Section 103 or this 
subpart B has occurred, it shall close the matter and send its 
determination to the Office of Inspector General.
    (c) If the Ethics Law Division determines that there is sufficient 
information to provide a reasonable basis to believe that a violation of 
Section 103 or this subpart B has occurred, it shall:
    (1) Send its determination to the Office of Inspector General; and

[[Page 21]]

    (2) Refer the matter to the appropriate official for review as to 
whether to impose a civil money penalty in accordance with 24 CFR part 
30; provided, however, that the Ethics Law Division shall not make a 
civil money penalty recommendation unless it finds the violation to have 
been knowing and material. The decision to impose a civil money penalty 
in a particular matter may be made only upon referral from the Ethics 
Law Division.
    (d) In determining whether a violation is material, the Ethics Law 
Division shall consider the following factors, as applicable:
    (1) The content of the disclosure and its significance to the person 
to whom the disclosure was made;
    (2) The time during the selection process when the disclosure was 
made;
    (3) The person to whom the disclosure was made;
    (4) The dollar amount of assistance requested by the person to whom 
the disclosure was made;
    (5) The dollar amount of assistance available for a given 
competition or program;
    (6) The benefit, if any, received or expected by the employee, the 
employee's relatives or friends, or any other person with whom the 
employee is affiliated;
    (7) The potential injury to the Department.
    (e) If the Ethics Law Division determines that there is sufficient 
information to provide a reasonable basis to believe that a violation of 
Section 103 or this subpart B has occurred, it may, in addition to 
referring the matter under 24 CFR part 30, refer the matter to an 
appropriate HUD official for consideration of any other available 
disciplinary action. Any referral authorized by this paragraph (e) shall 
be reported to the Inspector General and may be reported to the 
employee's supervisor.



Sec. 4.38  Administrative remedies.

    (a) If the Department receives or obtains information providing a 
reasonable basis to believe that a violation of Section 103 has 
occurred, the Department may impose a sanction, as determined to be 
appropriate, upon an applicant for or a recipient of assistance who has 
received covered selection information.
    (b) In determining whether a sanction is appropriate and if so which 
sanction or sanctions should be sought, the Secretary shall give 
consideration to the applicant's conduct with respect to the violation. 
In so doing, the Secretary shall consider the factors listed at 
Sec. 4.36(d), as well as any history of prior violations in any HUD 
program, the benefits received or expected, deterrence of future 
violations and the extent of any complicity in the violation.
    (c) The Secretary may impose a sanction authorized by this section 
whether or not the Ethics Law Division refers a case under 24 CFR part 
30, and whether or not a civil money penalty is imposed.



PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS--Table of Contents




 Subpart A--Generally Applicable Definitions and Federal Requirements; 
                                 Waivers

Sec.
5.100  Definitions.
5.105  Other Federal requirements.
5.107  Audit requirements for non-profit organizations.
5.110  Waivers.

 Subpart B--Disclosure and Verification of Social Security Numbers and 
    Employer Identification Numbers; Procedures for Obtaining Income 
                               Information

5.210  Purpose, applicability, and Federal preemption.
5.212  Compliance with the Privacy Act and other requirements.
5.214  Definitions.

  Disclosure and Verification of Social Security Numbers and Employer 
 Identification Numbers for Applicants and Participants in Certain HUD 
                                Programs

5.216  Disclosure and verification of Social Security and Employer 
          Identification Numbers.
5.218  Penalties for failing to disclose and verify Social Security and 
          Employer Identification Numbers.

    Procedures for Obtaining Income Information About Applicants and 
                              Participants

5.230  Consent by assistance applicants and participants.
5.232  Penalties for failing to sign consent forms.

[[Page 22]]

5.234  Requests for information from SWICAs and Federal agencies; 
          restrictions on use.
5.236  Procedures for termination, denial, suspension, or reduction of 
          assistance based on information obtained from a SWICA or 
          Federal agency.
5.238  Criminal and civil penalties.
5.240  Family disclosure of income information to the responsible entity 
          and verification.

  Subpart C--Pet Ownership for the Elderly or Persons With Disabilities

                          General Requirements

5.300  Purpose.
5.303  Exclusion for animals that assist persons with disabilities.
5.306  Definitions.
5.309  Prohibition against discrimination.
5.312  Notice to tenants.
5.315  Content of pet rules: General requirements.
5.318  Discretionary pet rules.
5.321  Lease provisions.
5.324  Implementation of lease provisions.
5.327  Nuisance or threat to health or safety.

             Pet Ownership Requirements for Housing Programs

5.350  Mandatory pet rules for housing programs.
5.353  Housing programs: Procedure for development of pet rules.
5.356  Housing programs: Pet rule violation procedures.
5.359  Housing programs: Rejection of units by applicants for tenancy.
5.360  Housing programs: Additional lease provisions.
5.363  Housing programs: Protection of the pet.

         Pet Ownership Requirements for Public Housing Programs

5.380  Public housing programs: Procedure for development of pet rules.

Subpart D--Definitions for Section 8 and Public Housing Assistance Under 
                  the United States Housing Act of 1937

5.400  Applicability.
5.403  Definitions.
5.405  Basic eligibility; preference over single persons; and housing 
          assistance limitation for single persons.
5.410  Selection preferences.
5.415  Federal preferences: General.
5.420  Federal preference: Involuntary displacement.
5.425  Federal preference: Substandard housing.
5.430  Federal preference: Rent burden.

          Subpart E--Restrictions on Assistance to Noncitizens

5.500  Applicability.
5.502  Requirements concerning documents.
5.504  Definitions.
5.506  General provisions.
5.508  Submission of evidence of citizenship or eligible immigration 
          status.
5.510  Documents of eligible immigration status.
5.512  Verification of eligible immigration status.
5.514  Delay, denial, reduction or termination of assistance.
5.516  Availability of preservation assistance to mixed families and 
          other families.
5.518  Types of preservation assistance available to mixed families and 
          other families.
5.520  Proration of assistance.
5.522  Prohibition of assistance to noncitizen students.
5.524  Compliance with nondiscrimination requirements.
5.526  Protection from liability for responsible entities and State and 
          local government agencies and officials.
5.528  Liability of ineligible tenants for reimbursement of benefits.

   Subpart F--Section 8 and Public Housing: Family Income and Family 
 Payment; Occupancy Requirements for Section 8 Project-Based Assistance

5.601  Purpose and applicability.
5.603  Definitions.
5.605  Overall income eligibility for assistance.
5.607  Income limits for admission.

                              Family Income

5.609  Annual income.
5.611  Adjusted income.
5.613  Public housing program and Section 8 tenant-based assistance 
          program: PHA cooperation with welfare agency.
5.615  Public housing program and Section 8 tenant-based assistance 
          program: How welfare benefit reduction affects family income.
5.617  Reexamination and verification.

                             Family Payment

5.628  Total tenant payment.
5.630  Minimum rent.
5.632  Utility reimbursements.
5.634  Tenant rent.

       Section 8 Project-Based Assistance: Occupancy Requirements

5.653  Section 8 project-based assistance programs: Admission--Income-
          eligibility and income-targeting.

[[Page 23]]

5.655  Section 8 project-based assistance programs: Owner preferences in 
          selection for a project or unit.
5.657  Section 8 project-based assistance programs: Reexamination of 
          family income and composition.
5.659  Family information and verification.
5.661  Section 8 project-based assistance programs: Approval for police 
          or other security personnel to live in project.

   Subpart G--Physical Condition Standards and Inspection Requirements

5.701  Applicability.
5.703  Physical condition standards for HUD housing that is decent, 
          safe, sanitary and in good repair (DSS/GR).
5.705  Uniform physical inspection requirements.

            Subpart H--Uniform Financial Reporting Standards

5.801  Uniform financial reporting standards.

    Authority: 42 U.S.C. 3535(d), unless otherwise noted.

    Source: 61 FR 5202, Feb. 9, 1996, unless otherwise noted.

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, part 5 was 
amended by changing all references to the term ``HA'' to read ``PHA'', 
effective Apr. 28, 2000.



 Subpart A--Generally Applicable Definitions and Federal Requirements; 
                               Waivers



Sec. 5.100  Definitions.

    The following definitions apply to this part and also in other 
regulations, as noted:
    1937 Act means the United States Housing Act of 1937 (42 U.S.C. 1437 
et seq.)
    ADA means the Americans with Disabilities Act of 1990 (42 U.S.C. 
12101 et seq.).
    ALJ means an administrative law judge appointed to HUD pursuant to 5 
U.S.C. 3105 or detailed to HUD pursuant to 5 U.S.C. 3344.
    Department means the Department of Housing and Urban Development.
    Elderly Person means an individual who is at least 62 years of age.
    Fair Housing Act means title VIII of the Civil Rights Act of 1968, 
as amended by the Fair Housing Amendments Act of 1988 (42 U.S.C. 3601 et 
seq.).
    Fair Market Rent (FMR) means the rent that would be required to be 
paid in the particular housing market area in order to obtain privately 
owned, decent, safe and sanitary rental housing of modest (non-luxury) 
nature with suitable amenities. This Fair Market Rent includes utilities 
(except telephone). Separate Fair Market Rents will be established by 
HUD for dwelling units of varying sizes (number of bedrooms) and will be 
published in the Federal Register in accordance with part 888 of this 
title.
    General Counsel means the General Counsel of HUD.
    Grantee means the person or legal entity to which a grant is awarded 
and that is accountable for the use of the funds provided.
    Housing agency (HA) means a State, county, municipality or other 
governmental entity or public body (or agency or instrumentality 
thereof) authorized to engage in or assist in the development or 
operation of low-income housing. (``PHA'' and ``HA'' mean the same 
thing.)
    HUD means the same as Department.
    MSA means a metropolitan statistical area.
    NAHA means the Cranston-Gonzalez National Affordable Housing Act (42 
U.S.C. 12701 et seq.).
    NEPA means the National Environmental Policy Act of 1969 (42 U.S.C. 
4321).
    NOFA means Notice of Funding Availability.
    OMB means the Office of Management and Budget.
    Organizational Unit means the jurisdictional area of each Assistant 
Secretary, and each office head or field administrator reporting 
directly to the Secretary.
    Public housing means housing assisted under the 1937 Act, other than 
under Section 8. ``Public housing'' includes dwelling units in a mixed 
finance project that are assisted by a PHA with capital or operating 
assistance.
    Public Housing Agency (PHA) means any State, county, municipality, 
or other governmental entity or public body, or agency or 
instrumentality of these entities, that is authorized to engage or 
assist in the development or

[[Page 24]]

operation of low-income housing under the 1937 Act.
    Responsible entity means:
    (1) For the public housing program, the Section 8 tenant-based 
assistance program (part 982 of this title), and the Section 8 project-
based certificate or voucher programs (part 983 of this title), and the 
Section 8 moderate rehabilitation program (part 882 of this title), 
responsible entity means the PHA administering the program under an ACC 
with HUD;
    (2) For all other Section 8 programs, responsible entity means the 
Section 8 project owner.
    Section 8 means section 8 of the United States Housing Act of 1937 
(42 U.S.C. 1437f).
    Secretary means the Secretary of Housing and Urban Development.
    URA means the Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970 (42 U.S.C. 4201-4655).

[61 FR 5202, Feb. 9, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 65 
FR 16715, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, Sec. 5.100 was 
amended by revising the introductory text, removing the definition of 
``housing agency (HA)'' and adding definitions of the terms ``public 
housing'', and ``responsible entity'', effective Apr. 28, 2000. For the 
convenience of the user, the superseded text is set forth as follows:

Sec. 5.100  Definitions.

    The following definitions apply as noted in the respective program 
regulations:

                                * * * * *



Sec. 5.105  Other Federal requirements.

    The following Federal requirements apply as noted in the respective 
program regulations:
    (a) Nondiscrimination and equal opportunity. The Fair Housing Act 
(42 U.S.C. 3601-19) and implementing regulations at 24 CFR part 100 et 
seq.; Executive Order 11063, as amended by Executive Order 12259 (3 CFR, 
1959-1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal 
Opportunity in Housing Programs) and implementing regulations at 24 CFR 
part 107; title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-
2000d-4) (Nondiscrimination in Federally Assisted Programs) and 
implementing regulations at 24 CFR part 1; the Age Discrimination Act of 
1975 (42 U.S.C. 6101-6107) and implementing regulations at 24 CFR part 
146; section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and 
implementing regulations at part 8 of this title; title II of the 
Americans with Disabilities Act, 42 U.S.C. 12101 et seq.; 24 CFR part 8; 
section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 
1701u) and implementing regulations at 24 CFR part 135; Executive Order 
11246, as amended by Executive Orders 11375, 11478, 12086, and 12107 (3 
CFR, 1964-1965 Comp., p. 339; 3 CFR, 1966-1970 Comp., p. 684; 3 CFR, 
1966-1970 Comp., p. 803; 3 CFR, 1978 Comp., p. 230; and 3 CFR, 1978 
Comp., p. 264, respectively) (Equal Employment Opportunity Programs) and 
implementing regulations at 41 CFR chapter 60; Executive Order 11625, as 
amended by Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 
CFR, 1977 Comp., p. 139) (Minority Business Enterprises); Executive 
Order 12432 (3 CFR, 1983 Comp., p. 198) (Minority Business Enterprise 
Development); and Executive Order 12138, as amended by Executive Order 
12608 (3 CFR, 1977 Comp., p. 393 and 3 CFR, 1987 Comp., p. 245) (Women's 
Business Enterprise).
    (b) Disclosure requirements. The disclosure requirements and 
prohibitions of 31 U.S.C. 1352 and implementing regulations at 24 CFR 
part 87; and the requirements for funding competitions established by 
the Department of Housing and Urban Development Reform Act of 1989 (42 
U.S.C. 3531 et seq.).
    (c) Debarred, suspended or ineligible contractors. The prohibitions 
at 24 CFR part 24 on the use of debarred, suspended or ineligible 
contractors.
    (d) Drug-Free Workplace. The Drug-Free Workplace Act of 1988 (41 
U.S.C. 701 et seq.) and HUD's implementing regulations at 24 CFR part 
24.

[61 FR 5202, Feb. 9, 1996, as amended at 65 FR 16715, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, Sec. 5.105 was 
amended by adding, after the phrase ``section 504 of the Rehabilitation 
Act of 1973 (29 U.S.C. 794) and implementing regulations at'', the 
phrase ``part 8 of this title; title II of the Americans with 
Disabilities Act, 42 U.S.C. 12101 et seq.;'', effective Apr. 28, 2000.

[[Page 25]]



Sec. 5.107  Audit requirements for non-profit organizations.

    Non-profit organizations subject to regulations in the part 200 and 
part 800 series of title 24 of the CFR shall comply with the audit 
requirements of revised OMB Circular A-133, ``Audits of States, Local 
Governments, and Non-profit Organizations'' (see 24 CFR 84.26). For HUD 
programs, a non-profit organization is the mortgagor or owner (as these 
terms are defined in the regulations in the part 200 and part 800 
series) and not a related or affiliated organization or entity.

[62 FR 61617, Nov. 18, 1997]



Sec. 5.110  Waivers.

    Upon determination of good cause, the Secretary may, subject to 
statutory limitations, waive any provision of this title and delegate 
this authority in accordance with section 106 of the Department of 
Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3535(q)).



 Subpart B--Disclosure and Verification of Social Security Numbers and 
    Employer Identification Numbers; Procedures for Obtaining Income 
                               Information

    Authority: 42 U.S.C. 3535(d), 3543, 3544, and 11901 et seq.

    Source: 61 FR 11113, Mar. 18, 1996, unless otherwise noted.



Sec. 5.210  Purpose, applicability, and Federal preemption.

    (a) Purpose. This subpart B requires applicants for and participants 
in covered HUD programs to disclose, and submit documentation to verify, 
their Social Security Numbers (SSNs). This subpart B also enables HUD 
and PHAs to obtain income information about applicants and participants 
in the covered programs through computer matches with State Wage 
Information Collection Agencies (SWICAs) and Federal agencies, in order 
to verify an applicant's or participant's eligibility for or level of 
assistance. The purpose of this subpart B is to enable HUD to decrease 
the incidence of fraud, waste, and abuse in the covered programs.
    (b) Applicability. (1) This subpart B applies to mortgage and loan 
insurance and coinsurance and housing assistance programs contained in 
chapter II, subchapter B, and chapters VIII and IX of this title.
    (2) The information covered by consent forms described in this 
subpart involves income information from SWICAs, and wages, net earnings 
from self-employment, payments of retirement income, and unearned income 
as referenced at 26 U.S.C. 6103. In addition, consent forms may 
authorize the collection of other information from applicants and 
participants to determine eligibility or level of benefits.
    (c) Federal preemption. This subpart B preempts any State law, 
including restrictions and penalties, that governs the collection and 
use of income information to the extent State law is inconsistent with 
this subpart.

[61 FR 11113, Mar. 18, 1996, as amended at 65 FR 16715, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, Sec. 5.210(b)(2) 
was amended in the last sentence by removing after the word 
``benefits'', the phrase ``, as provided in parts 813 and 913 of this 
title'', effective Apr. 28, 2000.



Sec. 5.212  Compliance with the Privacy Act and other requirements.

    (a) Compliance with the Privacy Act. The collection, maintenance, 
use, and dissemination of SSNs, EINs, any information derived from SSNs 
and Employer Identification Numbers (EINs), and income information under 
this subpart shall be conducted, to the extent applicable, in compliance 
with the Privacy Act (5 U.S.C. 552a) and all other provisions of 
Federal, State, and local law.
    (b) Privacy Act notice. All assistance applicants shall be provided 
with a Privacy Act notice at the time of application. All participants 
shall be provided with a Privacy Act notice at each annual income 
recertification.



Sec. 5.214  Definitions.

    In addition to the definitions in Sec. 5.100, the following 
definitions apply to this subpart B:
    Assistance applicant. Except as excluded pursuant to 42 U.S.C. 
3543(b) and

[[Page 26]]

3544(a)(2), this term means the following:
    (1) For any program under 24 CFR parts 215, 221, 236, 290, or 891, 
or any program under Section 8 of the 1937 Act: A family or individual 
that seeks rental assistance under the program.
    (2) For the public housing program: A family or individual that 
seeks admission to the program.
    (3) For any program under 24 CFR part 235: A homeowner or 
cooperative member seeking homeownership assistance (including where the 
individual seeks to assume an existing mortgage).
    Computer match means the automated comparison of data bases 
containing records about individuals.
    Computer matching agreement means the agreement that describes the 
responsibilities and obligations of the parties participating in a 
computer match.
    Consent form means any consent form approved by HUD to be signed by 
assistance applicants and participants for the purpose of obtaining 
income information from employers and SWICAs; return information from 
the Social Security Administration (including wages, net earnings from 
self-employment, and payments of retirement income), as referenced at 26 
U.S.C. 6103(l)(7)(A); and return information for unearned income from 
the Internal Revenue Service, as referenced at 26 U.S.C. 6103(l)(7)(B). 
The consent forms expire after a certain time and may authorize the 
collection of other information from assistance applicants or 
participants to determine eligibility or level of benefits as provided 
in Secs. 813.109, 913.109, and 950.315 of this title.
    Employer Identification Number (EIN) means the nine-digit taxpayer 
identifying number that is assigned to an individual, trust, estate, 
partnership, association, company, or corporation pursuant to sections 
6011(b), or corresponding provisions of prior law, or 6109 of the 
Internal Revenue Code.
    Entity applicant. (1) Except as excluded pursuant to 42 U.S.C. 
3543(b), 3544(a)(2), and paragraph (2) of this definition, this term 
means a partnership, corporation, or any other association or entity, 
other than an individual owner applicant, that seeks to participate as a 
private owner in any of the following:
    (i) The project-based assistance programs under Section 8 of the 
1937 Act;
    (ii) The programs in 24 CFR parts 215, 221, or 236; or
    (iii) The other mortgage and loan insurance programs in 24 CFR parts 
201 through 267, except that the term ``entity applicant'' does not 
include a mortgagee or lender.
    (2) The term does not include a public entity, such as a PHA, IHA, 
or State Housing Finance Agency.
    Federal agency means a department of the executive branch of the 
Federal Government.
    Income information means information relating to an individual's 
income, including:
    (1) All employment income information known to current or previous 
employers or other income sources that HUD or the processing entity 
determines is necessary for purposes of determining an assistance 
applicant's or participant's eligibility for, or level of assistance in, 
a covered program;
    (2) All information about wages, as defined in the State's 
unemployment compensation law, including any Social Security Number; 
name of the employee; quarterly wages of the employee; and the name, 
full address, telephone number, and, when known, Employer Identification 
Number of an employer reporting wages under a State unemployment 
compensation law;
    (3) With respect to unemployment compensation:
    (i) Whether an individual is receiving, has received, or has applied 
for unemployment compensation;
    (ii) The amount of unemployment compensation the individual is 
receiving or is entitled to receive; and
    (iii) The period with respect to which the individual actually 
received such compensation;
    (4) Unearned IRS income and self-employment, wages and retirement 
income as described in the Internal Revenue Code, 26 U.S.C. 6103(l)(7); 
and
    (5) Wage, social security (Title II), and supplemental security 
income (Title XVI) data obtaied from the Social Security Administration.

[[Page 27]]

    Individual owner applicant. Except as excluded pursuant to 42 U.S.C. 
3543(b), 3544(a)(2), or paragraph (2) of this definition, this term 
means:
    (1) An individual who seeks to participate as a private owner in any 
of:
    (i) The project-based assistance programs under Section 8 of the 
1937 Act; or
    (ii) The programs in 24 CFR parts 215, 221, 235 (without 
homeownership assistance), or 236, including where the individual seeks 
to assume an existing mortgage; or
    (2) An individual who:
    (i) Either: (A) Applies for a mortgage or loan insured or coinsured 
under any of the programs referred to in paragraph (1)(iii) of the 
definition of ``entity applicant'' in this section; or
    (B) Seeks to assume an existing mortgage or loan; and
    (ii) Intends to hold the mortgaged property in his or her individual 
right.
    IRS means the Internal Revenue Service.
    Owner means the person or entity (or employee of an owner) that 
leases an assisted dwelling unit to an eligible family and includes, 
when applicable, a mortgagee.
    Participant. Except as excluded pursuant to 42 U.S.C. 3543(b) and 
3544(a)(2), this term has the following meaning:
    (1) For any program under 24 CFR part 891, or Section 8 of the 1937 
Act: A family receiving rental assistance under the program;
    (2) For the public housing program: A family or individual that is 
assisted under the program;
    (3) For 24 CFR parts 215, 221, 236, and 290: A tenant or qualified 
tenant under any of the programs; and
    (4) For 24 CFR part 235: A homeowner or a cooperative member 
receiving homeownership assistance.
    Processing entity means the person or entity that, under any of the 
programs covered under this subpart B, is responsible for making 
eligibility and related determinations and an income reexamination. (In 
the Section 8 and public housing programs, the ``processing entity'' is 
the ``responsible entity'' as defined in Sec. 5.100.)
    Social Security Number (SSN) means the nine-digit number that is 
assigned to a person by the Social Security Administration and that 
identifies the record of the person's earnings reported to the Social 
Security Administration. The term does not include a number with a 
letter as a suffix that is used to identify an auxiliary beneficiary.
    SSA means the Social Security Administration.
    State Wage Information Collection Agency (SWICA) means the State 
agency, including any Indian tribal agency, receiving quarterly wage 
reports from employers in the State, or an alternative system that has 
been determined by the Secretary of Labor to be as effective and timely 
in providing employment-related income and eligibility information.

[61 FR 11113, Mar. 18, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 
65 FR 16715, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, Sec. 5.214 was 
amended by revising paragraph (2) in the definitions for ``assistance 
applicant'' and ``participant'', and by revising the definition for 
``processing entity'', effective Apr. 28, 2000. For the convenience of 
the user, the superseded text is set forth as follows:

Sec. 5.214  Definitions.

                                * * * * *

    Assistance applicant. * * *
    (2) For any program under 24 CFR parts 904, 950, and 960: A 
prospective tenant or homebuyer seeking the benefit of the program.

                                * * * * *

    Participant. * * *
    (2) For 24 CFR parts 904, 950, 960: A tenant or homebuyer under the 
program;

                                * * * * *

    Processing entity means the person or entity that, under any of the 
programs covered under this subpart B, is responsible for making 
eligibility and related determinations and any income reexamination.

                                * * * * *

[[Page 28]]

  Disclosure and Verification of Social Security Numbers and Employer 
 Identification Numbers for Applicants and Participants in Certain HUD 
                                Programs



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

    (a) Disclosure: assistance applicants. Each assistance applicant 
must submit the following information to the processing entity when the 
assistant applicant's eligibility under the program involved is being 
determined:
    (1)(i) The complete and accurate SSN assigned to the assistant 
applicant and to each member of the assistant applicant's household who 
is at least six years of age; and
    (ii) The documentation referred to in paragraph (f)(1) of this 
section to verify each such SSN; or
    (2) If the assistance applicant or any member of the assistance 
applicant's household who is at least six years of age has not been 
assigned an SSN, a certification executed by the individual involved 
that meets the requirements of paragraph (j) of this section.
    (b) Disclosure: 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)(i) The complete and accurate SSNs assigned to the individual 
owner applicant and to each member of the individual owner applicant's 
household who will be obligated to pay the debt evidenced by the 
mortgage or loan documents; and
    (ii) The documentation referred to in paragraph (f)(1) of this 
section to verify the SSNs; or
    (2) If any person referred to in paragraph (b)(1)(i) of this section 
has not been assigned an SSN, a certification executed by the individual 
involved that meets the requirements of paragraph (j) of this section.
    (c) Disclosure: certain officials of entity applicants. As explained 
more fully in HUD administrative instructions, 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 (f)(1) of this 
section to verify each SSN.
    (d) Disclosure: participants--(1) Initial disclosure. Each 
participant whose initial determination of eligibility under the program 
involved was begun before November 6, 1989, must submit the following 
information to the processing entity at the next regularly scheduled 
income reexamination for the program involved:
    (i)(A) The complete and accurate SSN assigned to the participant and 
to each member of the participant's family who is at least six years of 
age; and
    (B) The documentation referred to in paragraph (f)(1) of this 
section to verify each such SSN; or
    (ii) If the participant or any member of the participant's household 
who is at least six years of age has not been assigned an SSN, a 
certification executed by the individual(s) involved that meets the 
requirements of paragraph (j) of this section.
    (2) Subsequent disclosure. Once a participant has disclosed and 
verified every SSN, or submitted any certification that an SSN has not 
been assigned, as provided by paragraph (a) of this section (for an 
assistance applicant) or paragraph (d)(1) (for a preexisting 
participant) of this section, the following rules apply:
    (i) If the participant's household adds a new member who is at least 
six years of age, the participant must submit to the processing entity, 
at the next interim or regularly scheduled income reexamination that 
includes the new members:
    (A) The complete and accurate SSNs assigned to each new member and 
the documentation referred to in paragraph (f)(1) of this section to 
verify the SSNs for each new member; or
    (B) If the new member has not been assigned an SSN, a certification 
executed by the individual involved that meets the requirements of 
paragraph (j) of this section.
    (ii) If the participant or any member of the participant's household 
who is at

[[Page 29]]

least six years of age obtains a previously undisclosed SSN, or has been 
assigned a new SSN, the participant must submit the following to the 
processing entity at the next regularly scheduled income reexamination:
    (A) The complete and accurate SSN assigned to the participant or 
household member involved; and
    (B) The documentation referred to in paragraph (f)(1) of this 
section to verify the SSN of each such individual.
    (iii) Additional SSN disclosure and verification requirements, 
including the nature of the disclosure and the verification required and 
the time and manner for making the disclosure and verification, may be 
specified in administrative instructions by:
    (A) HUD; and
    (B) In the case of the public housing program or the programs under 
parts 882 and 887 of this title, the PHA.
    (e) Disclosure: 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 (f)(2) of this 
section to verify the EIN.
    (f) Required documentation--(1) Social Security Numbers. The 
documentation necessary to verify the SSN of an individual who is 
required to disclose his or her SSN under paragraphs (a) through (d) of 
this section is a valid SSN card issued by the SSA, or such other 
evidence of the SSN as HUD and, where applicable, the PHA may prescribe 
in administrative instructions.
    (2) Employer Identification Numbers. The documentation necessary to 
verify any EIN of an entity applicant that is required to disclose its 
EIN under paragraph (e) of this section is the official, written 
communication from the IRS assigning the EIN to the entity applicant, or 
such other evidence of the EIN as HUD may prescribe in administrative 
instructions.
    (g) Special documentation rules for assistance applicants and 
participants--(1) Certification of inability to meet documentation 
requirements. If an individual who is required to disclose his or her 
SSN under paragraph (a) (assistance applicants) of this section or 
paragraph (d) (participants) of this section is able to disclose the 
SSN, but cannot meet the documentation requirements of paragraph (f)(1) 
of this section, the assistance applicant or participant must submit to 
the processing entity the individual's SSN and a certification executed 
by the individual that the SSN submitted has been assigned to the 
individual, but that acceptable documentation to verify the SSN cannot 
be provided.
    (2) Acceptance or certification by processing entity. Except as 
provided by paragraph (h) of this section, the processing entity must 
accept the certification referred to in paragraph (g)(1) of this section 
and continue to process the assistant applicant's or participant's 
eligibility to participate in the program involved.
    (3) Effect on assistance applicants. If the processing entity 
determines that the assistance applicant is otherwise eligible to 
participate in the program, the assistance applicant may not become a 
participant in the program, unless it submits to the processing entity 
the documentation required under paragraph (f)(1) of this section within 
the time period specified in paragraph (g)(5) of this section. During 
such period, the assistance applicant will retain the position that it 
occupied in the program at the time the determination of eligibility was 
made, including its place on any waiting list maintained for the 
program, if applicable.
    (4) Effect on participants. If the processing entity determines that 
the participant otherwise continues to be eligible to participate in the 
program, participation will continue, provided that the participant 
submits to the processing entity the documentation required under 
paragraph (f)(1) of this section within the time period specified in 
paragraph (g)(5) of this section.
    (5) Time for submitting documentation. The time period referred to 
in paragraphs (g)(4) and (5) of this section is 60 calendar days from 
the date on which the certification referred to in paragraph (g)(1) of 
this section is executed, except that the processing entity may, in its 
discretion, extend this period for

[[Page 30]]

up to an additional 60 days if the individual is at least 62 years of 
age and is unable to submit the required documentation within the 
initial 60-day period.
    (h) Rejection of documentation or certification. The processing 
entity may reject documentation referred to in paragraph (f) of this 
section, or a certification provided under paragraphs (a)(2), (b)(2), 
(d), or (g)(1) of this section, only for such reasons as HUD and the PHA 
may prescribe in applicable administrative instructions.
    (i) Information on SSNs and EINs. (1) Information regarding SSNs and 
SSN cards may be obtained by contacting the local SSA Office or 
consulting the SSA regulations at 20 CFR chapter III (see, particularly, 
part 422).
    (2) Information regarding EINs may be obtained by contacting the 
local office of the IRS or consulting the appropriate regulations for 
the IRS.
    (j) Form and manner of certifications. The certifications referred 
to in paragraphs (a)(2), (b)(2), (d), and (g)(1) of this section must be 
in the form and manner that HUD and the PHA prescribe in applicable 
administrative instructions. If an individual who is required to execute 
a certification is less than 18 years of age, the certification must be 
executed by his or her parent or guardian or, in accordance with 
administrative instructions, by the individual or another person.

(Approved by the Office of Management and Budget under control number 
2502-0204)



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

    (a) Denial of eligibility: 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, and certification requirements specified 
in Sec. 5.216.
    (b) Denial of eligibility: 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 applicable EIN disclosure 
and verification requirements specified in Sec. 5.216; or
    (2) Any of the officials of the entity applicant referred to in 
Sec. 5.216(c) does not meet the applicable SSN disclosure, and 
documentation and verification requirements specified in Sec. 5.216.
    (c) Termination of assistance or tenancy: participants. The 
processing entity must terminate the assistance or tenancy, or both, of 
a participant, in accordance with the provisions governing the program 
involved, if the participant does not meet the applicable SSN 
disclosure, documentation and verification, and certification 
requirements specified in Sec. 5.216.
    (d) Cross reference. Individuals should consult the regulations and 
administrative instructions for the programs covered under this subpart 
B for further information on the use of SSNs and EINs in determinations 
regarding eligibility.

    Procedures for Obtaining Income Information About Applicants and 
                              Participants



Sec. 5.230  Consent by assistance applicants and participants.

    (a) Required consent by assistance applicants and participants. Each 
member of the family of an assistance applicant or participant who is at 
least 18 years of age, and each family head and spouse regardless of 
age, shall sign one or more consent forms.
    (b) Consent authorization--(1) To whom and when. The assistance 
applicant shall submit the signed consent forms to the processing entity 
when eligibility under a covered program is being determined. A 
participant shall sign and submit consent forms at the next regularly 
scheduled income reexamination. Assistance applicants and participants 
shall be responsible for the signing and submitting of consent forms by 
each applicable family member.
    (2) Subsequent consent forms--special cases. Participants are 
required to sign and submit consent forms at the next interim or 
regularly scheduled income

[[Page 31]]

reexamination under the following circumstances:
    (i) When any person 18 years or older becomes a member of the 
family;
    (ii) When a member of the family turns 18 years of age; and
    (iii) As required by HUD or the PHA in administrative instructions.
    (c) Consent form--contents. The consent form required by this 
section shall contain, at a minimum, the following:
    (1) A provision authorizing HUD and PHAs to obtain from SWICAs any 
information or materials necessary to complete or verify the application 
for participation and to maintain continued assistance under a covered 
program; and
    (2) A provision authorizing HUD, PHAs, or the owner responsible for 
determining eligibility for or the level of assistance to verify with 
previous or current employers income information pertinent to the 
assistance applicant's or participant's eligibility for or level of 
assistance under a covered program;
    (3) A provision authorizing HUD to request income return information 
from the IRS and the SSA for the sole purpose of verifying income 
information pertinent to the assistance applicant's or participant's 
eligibility or level of benefits; and
    (4) A statement that the authorization to release the information 
requested by the consent form expires 15 months after the date the 
consent form is signed.



Sec. 5.232  Penalties for failing to sign consent forms.

    (a) Denial or termination of benefits. In accordance with the 
provisions governing the program involved, if the assistance applicant 
or participant, or any member of the assistance applicant's or 
participant's family, does not sign and submit the consent form as 
required in Sec. 5.230, then:
    (1) The processing entity shall deny assistance to and admission of 
an assistance applicant;
    (2) Assistance to, and the tenancy of, a participant may be 
terminated.
    (b) Cross references. Individuals should consult the regulations and 
administrative instructions for the programs covered under this subpart 
B for further information on the use of income information in 
determinations regarding eligibility.



Sec. 5.234  Requests for information from SWICAs and Federal agencies; restrictions on use.

    (a) Information available from SWICAs and Federal agencies--to whom 
and what. Income information will generally be obtained through computer 
matching agreements between HUD and a SWICA or Federal agency, or 
between a PHA and a SWICA, as described in paragraph (c) of this 
section. Certification that the applicable assistance applicants and 
participants have signed appropriate consent forms and have received the 
necessary Privacy Act notice is required, as follows:
    (1) When HUD requests the computer match, the processing entity 
shall certify to HUD; and
    (2) When the PHA requests the computer match, the PHA shall certify 
to the SWICA.
    (b) Restrictions on use of information. The restrictions of 42 
U.S.C. 3544(c)(2)(A) apply to the use by HUD or a PHA of income 
information obtained from a SWICA. The restrictions of 42 U.S.C. 
3544(c)(2)(A) and of 26 U.S.C. 6103(l)(7) apply to the use by HUD or a 
PHA of income information obtained from the IRS or SSA.
    (c) Computer matching agreements. Computer matching agreements shall 
specify the purpose and the legal authority for the match, and shall 
include a description of the records to be matched, a statement 
regarding disposition of information generated through the match, a 
description of the administrative and technical safeguards to be used in 
protecting the information obtained through the match, a description of 
the use of records, the restrictions on duplication and redisclosure, a 
certification, and the amount that will be charged for processing a 
request.

(Approved by the Office of Management and Budget under control number 
2508-0008)

[[Page 32]]



Sec. 5.236  Procedures for termination, denial, suspension, or reduction of assistance based on information obtained from a SWICA or Federal agency.

    (a) Termination, denial, suspension, or reduction of assistance. The 
provisions of 42 U.S.C. 3544(c)(2)(B) and (C) shall govern the 
termination, denial, suspension, or reduction of benefits for an 
assistance applicant or participant based on income information obtained 
from a SWICA or a Federal agency. Procedures necessary to comply with 
these provisions are provided in paragraph (b) of this section.
    (b) Procedures for independent verification. (1) Any determination 
or redetermination of family income verified in accordance with this 
paragraph must be carried out in accordance with the requirements and 
procedures applicable to the individual covered program. Independent 
verification of information obtained from a SWICA or a Federal agency 
may be:
    (i) By HUD;
    (ii) In the case of the public housing program, by a PHA; or
    (iii) In the case of any Section 8 program, by a PHA acting as 
contract administrator under an ACC.
    (2) Upon receiving income information from a SWICA or a Federal 
agency, HUD or, when applicable, the PHA shall compare the information 
with the information about a family's income that was:
    (i) Provided by the assistance applicant or participant to the PHA; 
or
    (ii) Obtained by the owner (or mortgagee, as applicable) from the 
assistance applicant or participant or from his or her employer.
    (3) When the income information reveals an employer or other income 
source that was not disclosed by the assistance applicant or 
participant, or when the income information differs substantially from 
the information received from the assistance applicant or participant or 
from his or her employer:
    (i) HUD or, as applicable or directed by HUD, the PHA shall request 
the undisclosed employer or other income source to furnish any 
information necessary to establish an assistance applicant's or 
participant's eligibility for or level of assistance in a covered 
program. This information shall be furnished in writing, as directed to:
    (A) HUD, with respect to programs under parts 215, 221, 235, 236, or 
290 of this title;
    (B) The responsible entity (as defined in Sec. 5.100) in the case of 
the public housing program or any Section 8 program.
    (C) The owner or mortgagee, as applicable, with respect to the rent 
supplement, Section 221(d)(3) BMIR, Section 235 homeownership 
assistance, or Section 236 programs.
    (ii) HUD or the PHA may verify the income information directly with 
an assistance applicant or participant. Such verification procedures 
shall not include any disclosure of income information prohibited under 
paragraph (b)(6) of this section.
    (4) HUD and the PHA shall not be required to pursue these 
verification procedures when the sums of money at issue are too small to 
raise an inference of fraud or justify the expense of independent 
verification and the procedures related to termination, denial, 
suspension, or reduction of assistance.
    (5) Based on the income information received from a SWICA or Federal 
agency, HUD or the PHA, as appropriate, may inform an owner (or 
mortgagee) that an assistance applicant's or participant's eligibility 
for or level of assistance is uncertain and needs to be verified. The 
owner (or mortgagee) shall then confirm the assistance applicant's or 
participant's income information by checking the accuracy of the 
information with the employer or other income source, or directly with 
the family.
    (6) Nondisclosure of Income information. Neither HUD nor the PHA may 
disclose income information obtained from a SWICA directly to an owner 
(unless a PHA is the owner). Disclosure of income information obtained 
from the SSA or IRS is restricted under 26 U.S.C. Sec. 6103(l)(7) and 42 
U.S.C. 3544.
    (c) Opportunity to contest. HUD, the PHA, or the owner (or 
mortgagee, as applicable) shall promptly notify any assistance applicant 
or participant in writing of any adverse findings made on the basis of 
the information verified in accordance with paragraph (b) of this 
section. The assistance applicant

[[Page 33]]

or participant may contest the findings in the same manner as applies to 
other information and findings relating to eligibility factors under the 
applicable program. Termination, denial, suspension, or reduction of 
assistance shall be carried out in accordance with requirements and 
procedures applicable to the individual covered program, and shall not 
occur until the expiration of any notice period provided by the statute 
or regulations governing the program.

[61 FR 11113, Mar. 18, 1996, as amended at 65 FR 16715, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, Sec. 5.236 was 
amended by revising paragraphs (b)(1), (b)(3)(i)(B), and (C), effective 
Apr. 28, 2000. For the convenience of the user, the superseded text is 
set forth as follows:

Sec. 5.236  Procedures for termination, denial, suspension, or reduction 
          of assistance based on information obtained from a SWICA or 
          Federal agency.

                                * * * * *

    (b) * * * (1) Any determination or redetermination of family income 
made on the basis of information verified in accordance with paragraph 
(b) of this section shall be carried out in accordance with the 
requirements and procedures applicable to the individual covered 
program. Independent verification of information obtained from a SWICA 
or a Federal agency may be:
    (i) By HUD; and
    (ii) By a HA, when the benefit to be provided to the assistance 
applicant or participant is under a program in parts 880, 882, 886, 887, 
891, 904, 950, or 960 of this title, including when the HA is the 
contract administrator for the owner.

                                * * * * *

    (3) * * *
    (i) * * *
    (B) The HA, with respect to programs under parts 880, 882, 886, 887, 
891, 904, 950, or 960 of this title for which the HA is responsible for 
determining eligibility or level of benefits; or
    (C) The owner (or mortgagee, as applicable), with respect to 
programs under parts 215, 221, 235, 236, or 290 of this title, or when 
the owner is responsible under parts 880, 882, 886, 887, 891, 904, 950, 
or 960 of this title for determining eligibility or the level of 
assistance; or

                                * * * * *



Sec. 5.238  Criminal and civil penalties.

    Persons who violate the provisions of 42 U.S.C. 3544 or 26 U.S.C. 
6103(l)(7) with respect to the use and disclosure of income information 
may be subject to civil or criminal penalties under 42 U.S.C. 
3544(c)(3), 26 U.S.C. 7213(a), or 18 U.S.C. 1905.



Sec. 5.240  Family disclosure of income information to the responsible entity and verification.

    (a) This section applies to families that reside in dwelling units 
with assistance under the public housing program, the Section 8 tenant-
based assistance programs, or for which project-based assistance is 
provided under the Section 8, Section 202, or Section 811 program.
    (b) The family must promptly furnish to the responsible entity any 
letter or other notice by HUD to a member of the family that provides 
information concerning the amount or verification of family income.
    (c) The responsible entity must verify the accuracy of the income 
information received from the family, and change the amount of the total 
tenant payment, tenant rent or Section 8 housing assistance payment, or 
terminate assistance, as appropriate, based on such information.

[65 FR 16715, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, Sec. 5.240 was 
added, effective Apr. 28, 2000.



  Subpart C--Pet Ownership for the Elderly or Persons With Disabilities

    Authority: 42 U.S.C. 1701r-1 and 3535(d).

                          General Requirements



Sec. 5.300  Purpose.

    (a) This subpart implements section 227 of the Housing and Urban-
Rural Recovery Act of 1983 (12 U.S.C. 1701r-1) as it pertains to 
projects for the elderly or persons with disabilities under:
    (1) The housing programs administered by the Assistant Secretary for 
Housing-Federal Housing Commissioner;

[[Page 34]]

    (2) Projects assisted under the programs contained in chapter VIII 
of this title 24; and
    (3) The public housing program.
    (b) [Reserved]

[61 FR 5202, Feb. 9, 1996, as amended at 65 FR 16715, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, Sec. 5.300 was 
amended by revising paragraph (a)(3), effective Apr. 28, 2000. For the 
convenience of the user, the superseded text is set forth as follows:

Sec. 5.300  Purpose.

    (a) * * *
    (3) The public housing programs administered by the Assistant 
Secretary for Public and Indian Housing under title I of the United 
States Housing Act of 1937 (42 U.S.C. 1437, et seq.). This part does not 
apply to Indian housing administered under title II of that Act.

                                * * * * *



Sec. 5.303  Exclusion for animals that assist persons with disabilities.

    (a) This subpart C does not apply to animals that are used to assist 
persons with disabilities. Project owners and PHAs may not apply or 
enforce any pet rules developed under this subpart against individuals 
with animals that are used to assist persons with disabilities. This 
exclusion applies to animals that reside in projects for the elderly or 
persons with disabilities, as well as to animals that visit these 
projects.
    (1) A project owner may require resident animals to qualify for this 
exclusion. Project owners must grant this exclusion if:
    (i) The tenant or prospective tenant certifies in writing that the 
tenant or a member of his or her family is a person with a disability;
    (ii) The animal has been trained to assist persons with that 
specific disability; and
    (iii) The animal actually assists the person with a disability.
    (2) [Reserved]
    (b) Nothing in this subpart C:
    (1) Limits or impairs the rights of persons with disabilities;
    (2) Authorizes project owners or PHAs to limit or impair the rights 
of persons with disabilities; or
    (3) Affects any authority that project owners or PHAs may have to 
regulate animals that assist persons with disabilities, under Federal, 
State, or local law.



Sec. 5.306  Definitions.

    Common household pet means:
    (1) For purposes of Housing programs: A domesticated animal, such as 
a dog, cat, bird, rodent (including a rabbit), fish, or turtle, that is 
traditionally kept in the home for pleasure rather than for commercial 
purposes. Common household pet does not include reptiles (except 
turtles). If this definition conflicts with any applicable State or 
local law or regulation defining the pets that may be owned or kept in 
dwelling accommodations, the State or local law or regulation shall 
apply. This definition shall not include animals that are used to assist 
persons with disabilities.
    (2) For purposes of Public Housing programs: PHAs may define the 
term ``common household pet'' under Sec. 5.318.
    Elderly or disabled family means:
    (1) For purposes of Housing programs: An elderly person, a person 
with a disability, or an elderly or disabled family for purposes of the 
program under which a project for the elderly or persons with 
disabilities is assisted or has its mortgage insured.
    (2) For purposes of Public Housing programs: (i) An elderly person, 
a person with a disability, or an elderly or disabled family as defined 
in Sec. 5.403 in subpart A of this part.
    (ii) [Reserved]
    Housing programs means:
    (1) The housing programs administered by the Assistant Secretary for 
Housing-Federal Housing Commissioner; and
    (2) The programs contained in chapter VIII of this title 24 that 
assist rental projects that meet the definition of project for the 
elderly or persons with disabilities in this subpart C.
    Project for the elderly or persons with disabilities means:
    (1) For purposes of Housing programs: (i) A specific rental or 
cooperative multifamily property that, unless currently owned by HUD, is 
subject to a first mortgage, and:
    (A) That is assisted under statutory authority identified by HUD 
through notice;

[[Page 35]]

    (B) That was designated for occupancy by elderly or disabled 
families when funds for the project were reserved, or when the 
commitment to insure the mortgage was issued or, of not then so 
designated, that is designated for such occupancy in an effective 
amendment to the regulatory agreement covering the project, made 
pursuant to the project owner's request, and that is assisted or insured 
under one of the programs identified by HUD through notice; or
    (C) For which preference in tenant selection is given for all units 
in the project to elderly or disabled families and that is owned by HUD 
or assisted under one of the programs identified by HUD through notice.
    (ii) This term does not include health and care facilities that have 
mortgage insurance under the National Housing Act. This term also does 
not include any of the project owner's other property that does not meet 
the criteria contained in any one of paragraphs (1)(i)(A) through (C) of 
this definition, even if the property is adjacent to or under joint or 
common management with such specific property.
    (2) For purposes of Public Housing programs: Any project assisted 
under title I of the United States Housing Act of 1937 (other than under 
section 8 or 17 of the Act), including any building within a mixed-use 
project, that was designated for occupancy by the elderly or persons 
with disabilities at its inception or, although not so designated, for 
which the PHA gives preference in tenant selection (with HUD approval) 
for all units in the project (or for a building within a mixed-use 
project) to elderly or disabled families. For purposes of this part, 
this term does not include projects assisted the Low-Rent Housing 
Homeownership Opportunity program or under title II of the United States 
Housing Act of 1937.
    Project owner means an owner (including HUD, where HUD is the owner) 
or manager of a project for the elderly or persons with disabilities, or 
an agent authorized to act for an owner or manager of such housing.
    Public Housing Agency (PHA) is defined in Sec. 5.100.
    Public Housing programs means the public housing programs 
administered by the Assistant Secretary for Public and Indian Housing 
under title I of the United States Housing Act of 1937.

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, Sec. 5.306 was 
amended by removing the definition for ``Public Housing programs'', 
effective Apr. 28, 2000.



Sec. 5.309  Prohibition against discrimination.

    Except as otherwise specifically authorized under this subpart no 
project owner or PHA that owns or manages a project for the elderly or 
persons with disabilities may:
    (a) As a condition of tenancy or otherwise, prohibit or prevent any 
tenant of such housing from owning common household pets or having such 
pets living in the tenant's dwelling unit; or
    (b) Restrict or discriminate against any person in connection with 
admission to, or continued occupancy of, such housing by reason of the 
person's ownership of common household pets or the presence of such pets 
in the person's dwelling unit.



Sec. 5.312  Notice to tenants.

    (a) During the development of pet rules as described in Secs. 5.353 
or 5.380, the project owner or PHA shall serve written notice on all 
tenants of projects for the elderly or persons with disabilities in 
occupancy at the time of service, stating that:
    (1) Tenants are permitted to own and keep common household pets in 
their dwelling units, in accordance with the pet rules (if any) 
promulgated under this subpart C;
    (2) Animals that are used to assist persons with disabilities are 
excluded from the requirements of this subpart C, as provided in 
Sec. 5.303;
    (3) Tenants may, at any time, request a copy of any current pet rule 
developed under this subpart C (as well as any current proposed rule or 
proposed amendment to an existing rule); and
    (4) Tenants may request that their leases be amended under 
Sec. 5.321 to permit common household pets.
    (b) The project owner or PHA shall provide to each applicant for 
tenancy when he or she is offered a dwelling

[[Page 36]]

unit in a project for the elderly or persons with disabilities, the 
written notice specified in paragraphs (a) (1), (2), and (3) of this 
section.
    (c) If a PHA chooses not to promulgate pet rules, the notice shall 
be served within 60 days of the effective date of this part. PHAs shall 
serve notice under this section in accordance with their normal service 
of notice procedures.



Sec. 5.315  Content of pet rules: General requirements.

    (a) Housing programs. The project owner shall prescribe reasonable 
rules to govern the keeping of common household pets. The pet rules must 
include the mandatory rules described in Sec. 5.350 and may, unless 
otherwise noted in this subpart C, include other discretionary 
provisions as provided in Sec. 5.318.
    (b) Public Housing programs. (1) PHAs may choose not to promulgate 
rules governing the keeping of common household pets or may include 
rules as provided in Sec. 5.318. PHAs may elect to include provisions 
based on those in Sec. 5.350. If they so choose, the PHAs may modify the 
provisions in Sec. 5.350 in any manner consistent with this subpart C.
    (2) If PHAs choose to promulgate pet rules, tenants must be 
permitted to own and keep pets in their units in accordance with the 
terms and conditions of their leases, the provisions of this subpart C, 
and any applicable State or local law or regulation governing the owning 
or keeping of pets in dwelling accommodations.
    (3) PHAs that choose not to promulgate pet rules, shall not impose, 
by lease modification or otherwise, any requirement that is inconsistent 
with the provisions of this subpart C.
    (c) Use of discretion. (1) This subpart C does not define with 
specificity the limits of the project owners' or PHAs' discretion to 
promulgate pet rules. Where a project owner or PHA has discretion to 
prescribe pet rules under this subpart C, the pet rules should be:
    (i) Reasonably related to furthering a legitimate interest of the 
project owner or PHA, such as the owner's or PHA's interest in providing 
a decent, safe, and sanitary living environment for existing and 
prospective tenants and in protecting and preserving the physical 
condition of the project and the owner's or PHA's financial interest in 
it; and
    (ii) Drawn narrowly to achieve the owner's or PHA's legitimate 
interests, without imposing unnecessary burdens and restrictions on pet 
owners and prospective pet owners.
    (2) Where a project owner or PHA has discretion to prescribe pet 
rules under this subpart C, the owner or PHA may vary the rules' content 
among projects and within individual projects, based on factors such as 
the size, type, location, and occupancy of the project or its units, 
provided that the applicable rules are reasonable and do not conflict 
with any applicable State or local law or regulation governing the 
owning or keeping of pets in dwelling accommodations.
    (d) Conflict with State or local law. The pet rules adopted by the 
project owner or PHA shall not conflict with applicable State or local 
law or regulations. If such a conflict may exist, the State and local 
law or regulations shall apply.



Sec. 5.318  Discretionary pet rules.

    Pet rules promulgated by project owners and PHAs may include, but 
are not limited to, consideration of the following factors:
    (a) Definitions of ``common household pet''--(1) For Public Housing 
programs. The pet rules established by a PHA may contain a reasonable 
definition of a common household pet.
    (2) For Housing programs. Project owners wishing to define ``common 
household pet'' in their pet rules must use the Housing programs 
definition of the term in Sec. 5.306.
    (b) Density of tenants and pets. (1)(i) The pet rules established 
under this section may take into account tenant and pet density. The pet 
rules may place reasonable limitations on the number of common household 
pets that may be allowed in each dwelling unit. In the case of group 
homes, the pet rules may place reasonable limitations on the number of 
common household pets that may be allowed in each home.
    (ii) For Housing programs. Under these rules, project owners may 
limit the number of four-legged, warm-blooded

[[Page 37]]

pets to one pet in each dwelling unit or group home.
    (iii) Other than the limitations described in this paragraph (b)(1), 
the pet rules may not limit the total number of pets allowed in the 
project.
    (2) As used in paragraph (b)(1) of this section, the term ``group 
home'' means:
    (i) For purposes of Housing programs. A small, communal living 
arrangement designed specifically for individuals who are chronically 
mentally ill, developmentally disabled, or physically disabled who 
require a planned program of continual supportive services or 
supervision (other than continual nursing, medical or psychiatric care).
    (ii) For purposes of Public Housing programs. A dwelling or dwelling 
unit for the exclusive residential use of elderly persons or persons 
with disabilities who are not capable of living completely independently 
and who require a planned program of continual supportive services or 
supervision (other than continual nursing, medical or psychiatric care).
    (c) Pet size and pet type. The pet rules may place reasonable 
limitations on the size, weight, and type of common household pets 
allowed in the project.
    (d) Potential financial obligations of tenants--(1) Pet deposits. 
The pet rules may require tenants who own or keep pets in their units to 
pay a refundable pet deposit. In the case of project owners, this pet 
deposit shall be limited to those tenants who own or keep cats or dogs 
in their units. This deposit is in addition to any other financial 
obligation generally imposed on tenants of the project. The project 
owner or PHA may use the pet deposit only to pay reasonable expenses 
directly attributable to the presence of the pet in the project, 
including (but not limited to) the cost of repairs and replacements to, 
and fumigation of, the tenant's dwelling unit and, for project owners, 
the cost of animal care facilities under Sec. 5.363. The project owner 
or PHA shall refund the unused portion of the pet deposit to the tenant 
within a reasonable time after the tenant moves from the project or no 
longer owns or keeps a pet (or a cat or dog in the case of project 
owners) in the dwelling unit.
    (2) Housing programs: Maximum pet deposit. (i) Pet deposits for the 
following tenants shall not exceed an amount periodically fixed by HUD 
through notice.
    (A) Tenants whose rents are subsidized (including tenants of a HUD-
owned project, whose rents were subsidized before HUD acquired it) under 
one of the programs identified by HUD through notice.
    (B) Tenants who live in a project assisted (including tenants who 
live in a HUD-owned project that was assisted before HUD acquired it) 
under one of the programs identified by HUD through notice.
    (C) For all other tenants of projects for the elderly or persons 
with disabilities, the pet deposit shall not exceed one month's rent at 
the time the pet is brought onto the premises.
    (ii) In establishing the maximum amount of pet deposit under 
paragraph (d)(2)(i) of this section, HUD will consider factors such as:
    (A) Projected, estimated expenses directly attributable to the 
presence of pets in the project;
    (B) The ability of project owners to offset such expenses by use of 
security deposits or HUD-reimbursable expenses; and
    (C) The low income status of tenants of projects for the elderly or 
persons with disabilities.
    (iii) For pet deposits subject to paragraph (d)(2)(i)(A) of this 
section, the pet rules shall provide for gradual accumulation of the 
deposit by the pet owner through an initial payment not to exceed $50 
when the pet is brought onto the premises, and subsequent monthly 
payments not to exceed $10 per month until the amount of the deposit is 
reached.
    (iv) For pet deposits subject to paragraphs (d)(2)(i)(B) and (C) of 
this section, the pet rules may provide for gradual accumulation of the 
deposit by the pet owner.
    (v) The project owner may (subject to the HUD-prescribed limits) 
increase the amount of the pet deposit by amending the house pet rules 
in accordance with Sec. 5.353.
    (A) For pet deposits subject to paragraph (d)(2)(i)(A) of this 
section, the house pet rules shall provide for gradual accumulation of 
any such increase

[[Page 38]]

not to exceed $10 per month for all deposit amounts that are being 
accumulated.
    (B) [Reserved]
    (vi) Any pet deposit that is established within the parameters set 
forth by paragraph (d)(2) of this section shall be deemed reasonable for 
purposes of this subpart C.
    (3) Public Housing programs: Maximum pet deposit. The maximum amount 
of pet deposit that may be charged by the PHA, on a per dwelling unit 
basis, shall not exceed the higher of the Total Tenant Payment (as 
defined in 24 CFR 913.102) or such reasonable fixed amount as the PHA 
may require. The pet rules may permit gradual accumulation of the pet 
deposit by the pet owner.
    (4) Housing programs: Waste removal charge. The pet rules may permit 
the project owner to impose a separate waste removal charge of up to 
five dollars ($5) per occurrence on pet owners that fail to remove pet 
waste in accordance with the prescribed pet rules. Any pet waste removal 
charge that is within this five dollar ($5) limitation shall be deemed 
to be a reasonable amount for the purposes of this subpart C.
    (5) The pet deposit (for Housing and Public Housing programs) and 
waste removal charge (for Housing programs) are not part of the rent 
payable by the tenant. Except as provided in paragraph (d) of this 
section for Housing programs and, paragraph (d) of this section and 24 
CFR 966.4(b) for Public Housing programs, project owners or PHAs may not 
prescribe pet rules that impose additional financial obligations on pet 
owners that are designed to compensate the project owner or PHA for 
costs associated with the presence of pets in the project, including 
(but not limited to) requiring pet owners:
    (i) To obtain liability or other insurance to cover damage caused by 
the pet;
    (ii) To agree to be strictly liable for all damages caused by the 
pet where this liability is not otherwise imposed by State or local law, 
or
    (iii) To indemnify the project owner for pet-related litigation and 
attorney's fees.
    (e) Standards of pet care. The pet rules may prescribe standards of 
pet care and handling, but must be limited to those necessary to protect 
the condition of the tenant's unit and the general condition of the 
project premises, or to protect the health or safety of present tenants, 
project employees, and the public. The pet rules may not require pet 
owners to have any pet's vocal cords removed. Permitted rules may:
    (1) Bar pets from specified common areas (such as lobbies, laundry 
rooms, and social rooms), unless the exclusion will deny a pet 
reasonable ingress and egress to the project or building.
    (2) Require the pet owner to control noise and odor caused by a pet.
    (3) Housing programs: Project owners may also:
    (i) Require pet owners to have their dogs and cats spayed or 
neutered; and
    (ii) Limit the length of time that a pet may be left unattended in a 
dwelling unit.
    (f) Pet licensing. The pet rules may require pet owners to license 
their pets in accordance with applicable State and local laws and 
regulations. (Failure of the pet rules to contain this requirement does 
not relieve the pet owner of responsibility for complying with 
applicable State and local pet licensing requirements.)
    (g) Public Housing programs: Designated pet areas. (1) PHAs may 
designate buildings, floors of buildings, or sections of buildings as 
no-pet areas where pets generally may not be permitted. Similarly, the 
pet rules may designate buildings, floors of buildings, or sections of 
buildings for residency generally by pet-owning tenants. The PHA may 
direct such initial tenant moves as may be necessary to establish pet 
and no-pet areas. The PHA may not refuse to admit (or delay admission 
of) an applicant for tenancy on the grounds that the applicant's 
admission would violate a pet or no-pet area. The PHA may adjust the pet 
and no-pet areas or may direct such additional moves as may be necessary 
(or both) to accommodate such applicants for tenancy or to meet the 
changing needs of existing tenants.
    (2) Project owners may not designate pet areas in buildings in their 
pet rules.

[[Page 39]]

    (h) Pets temporarily on the premises. The pet rules may exclude from 
the project pets not owned by a tenant that are to be kept temporarily 
on the project premises. For the purposes of paragraph (h) of this 
section, pets are to be kept ``temporarily'' if they are to be kept in 
the tenant's dwelling accommodations for a period of less than 14 
consecutive days and nights. HUD, however, encourages project owners and 
PHAs to permit the use of a visiting pet program sponsored by a humane 
society, or other nonprofit organization.



Sec. 5.321  Lease provisions.

    (a) Lease provisions. (1) PHAs which have established pet rules and 
project owners shall ensure that the leases for all tenants of projects 
for the elderly or persons with disabilities:
    (i) State that tenants are permitted to keep common household pets 
in their dwelling units (subject to the provisions of this subpart and 
the pet rules);
    (ii) Shall incorporate by reference the pet rules promulgated by the 
project owner or PHA;
    (iii) Shall provide that the tenant agrees to comply with these 
rules; and
    (iv) Shall state that violation of these rules may be grounds for 
removal of the pet or termination of the pet owner's tenancy (or both), 
in accordance with the provisions of this subpart and applicable 
regulations and State or local law.
    (2) [Reserved]
    (b) Where a PHA has not established pet rules, the leases of all 
tenants of such projects shall not contain any provisions prohibiting 
the owning or keeping of common household pets, and shall state that 
owning and keeping of such pets will be subject to the general 
obligations imposed on the PHA and tenants in the lease and any 
applicable State or local law or regulation governing the owning or 
keeping of pets in dwelling accommodations.



Sec. 5.324  Implementation of lease provisions.

    The lease for each tenant of a project for the elderly or persons 
with disabilities who is admitted on or after the date on which this 
subpart C is implemented shall contain the lease provisions described in 
Sec. 5.321 and, if applicable, Sec. 5.360. The lease for each tenant who 
occupies a unit in such a project under lease on the date of 
implementation of this part shall be amended to include the provisions 
described in Sec. 5.321 and, if applicable, Sec. 5.360:
    (a) For Housing programs:
    (1) Upon renewal of the lease and in accordance with any applicable 
regulation; and
    (2) When a Housing program tenant registers a common household pet 
under Sec. 5.350
    (b) For Public Housing programs:
    (1) Upon annual reexamination of tenant income in accordance with 
any applicable regulation; and
    (2) When a Public Housing program tenant wishes to own or keep a 
common household pet in his or her unit.



Sec. 5.327  Nuisance or threat to health or safety.

    Nothing in this subpart C prohibits a project owner, PHA, or an 
appropriate community authority from requiring the removal of any pet 
from a project, if the pet's conduct or condition is duly determined to 
constitute, under the provisions of State or local law, a nuisance or a 
threat to the health or safety of other occupants of the project or of 
other persons in the community where the project is located.

             Pet Ownership Requirements for Housing Programs



Sec. 5.350  Mandatory pet rules for housing programs.

    Mandatory rules. The project owner must prescribe the following pet 
rules:
    (a) Inoculations. The pet rules shall require pet owners to have 
their pets inoculated in accordance with State and local laws.
    (b) Sanitary standards. (1) The pet rules shall prescribe sanitary 
standards to govern the disposal of pet waste. These rules may:
    (i) Designate areas on the project premises for pet exercise and the 
deposit of pet waste;
    (ii) Forbid pet owners from exercising their pets or permitting 
their pets to deposit waste on the project premises outside the 
designated areas;

[[Page 40]]

    (iii) Require pet owners to remove and properly dispose of all 
removable pet waste; and
    (iv) Require pet owners to remove pets from the premises to permit 
the pet to exercise or deposit waste, if no area in the project is 
designated for such purposes.
    (2) In the case of cats and other pets using litter boxes, the pet 
rules may require the pet owner to change the litter (but not more than 
twice each week), may require pet owners to separate pet waste from 
litter (but not more than once each day), and may prescribe methods for 
the disposal of pet waste and used litter.
    (c) Pet restraint. The pet rules shall require that all cats and 
dogs be appropriately and effectively restrained and under the control 
of a responsible individual while on the common areas of the project.
    (d) Registration. (1) The pet rules shall require pet owners to 
register their pets with the project owner. The pet owner must register 
the pet before it is brought onto the project premises, and must update 
the registration at least annually. The project owner may coordinate the 
annual update with the annual reexamination of tenant income, if 
applicable. The registration must include:
    (i) A certificate signed by a licensed veterinarian or a State or 
local authority empowered to inoculate animals (or designated agent of 
such an authority) stating that the pet has received all inoculations 
required by applicable State and local law;
    (ii) Information sufficient to identify the pet and to demonstrate 
that it is a common household pet; and
    (iii) The name, address, and phone number of one or more responsible 
parties who will care for the pet if the pet owner dies, is 
incapacitated, or is otherwise unable to care for the pet.
    (2) The project owner may require the pet owner to provide 
additional information necessary to ensure compliance with any 
discretionary rules prescribed under Sec. 5.318, and shall require the 
pet owner to sign a statement indicating that he or she has read the pet 
rules and agrees to comply with them.
    (3) The pet rules shall permit the project owner to refuse to 
register a pet if:
    (i) The pet is not a common household pet;
    (ii) The keeping of the pet would violate any applicable house pet 
rule;
    (iii) The pet owner fails to provide complete pet registration 
information or fails annually to update the pet registration; or
    (iv) The project owner reasonably determines, based on the pet 
owner's habits and practices, that the pet owner will be unable to keep 
the pet in compliance with the pet rules and other lease obligations. 
The pet's temperament may be considered as a factor in determining the 
prospective pet owner's ability to comply with the pet rules and other 
lease obligations.
    (4) The project owner may not refuse to register a pet based on a 
determination that the pet owner is financially unable to care for the 
pet or that the pet is inappropriate, based on the therapeutic value to 
the pet owner or the interests of the property or existing tenants.
    (5) The pet rules shall require the project owner to notify the pet 
owner if the project owner refuses to register a pet. The notice shall 
state the basis for the project owner's action and shall be served on 
the pet owner in accordance with the requirements of Sec. 5.353(f)(1)(i) 
or (ii). The notice of refusal to register a pet may be combined with a 
notice of pet violation as required in Sec. 5.356.



Sec. 5.353  Housing programs: Procedure for development of pet rules.

    (a) General. Project owners shall use the procedures specified in 
this section to promulgate the pet rules referred to in Secs. 5.318 and 
5.350.
    (b) Development and notice of proposed pet rules. Project owners 
shall develop proposed rules to govern the owning or keeping of common 
household pets in projects for the elderly or persons with disabilities. 
Notice of the proposed pet rules shall be served on each tenant of the 
project as provided in paragraph (f) of this section. The notice shall:
    (1) Include the text of the proposed rules;

[[Page 41]]

    (2) State that tenants or tenant representatives may submit written 
comments on the rules; and
    (3) State that all comments must be submitted to the project owner 
no later than 30 days from the effective date of the notice of the 
proposed rules.
    (4) The notice may also announce the date, time, and place for a 
meeting to discuss the proposed rules (as provided in paragraph (c) of 
this section).
    (c) Tenant consultation. Tenants or tenant representatives may 
submit written comments on the proposed pet rules to the project owner 
by the date specified in the notice of proposed rules. In addition, the 
owner may schedule one or more meetings with tenants during the comment 
period to discuss the proposed rules. Tenants and tenant representatives 
may make oral comments on the proposed rules at these meetings. The 
project owner must consider comments made at these meetings only if they 
are summarized, reduced to writing, and submitted to the project owner 
before the end of the comment period.
    (d) Development and notice of final pet rules. The project owner 
shall develop the final rules after reviewing tenants' written comments 
and written summaries of any owner-tenant meetings. The project owner 
may meet with tenants and tenant representatives to attempt to resolve 
issues raised by the comments. Subject to this subpart C, the content of 
the final pet rules, however, is within the sole discretion of the 
project owner. The project owner shall serve on each tenant of the 
project, a notice of the final pet rules as provided in paragraph (f) of 
this section. The notice must include the text of the final pet rules 
and must specify the effective date of the final pet rules.
    (e) Amendment of pet rules. The project owner may amend the pet 
rules at any time by following the procedure for the development of pet 
rules specified in paragraphs (b) through (d) of this section.
    (f) Service of notice. (1) The project owner must serve the notice 
required under this section by:
    (i) Sending a letter by first class mail, properly stamped and 
addressed to the tenant at the dwelling unit, with a proper return 
address; or
    (ii) Serving a copy of the notice on any adult answering the door at 
the tenant's leased dwelling unit, or if no adult responds, by placing 
the notice under or through the door, if possible, or else by attaching 
the notice to the door; or
    (iii) For service of notice to tenants of a high-rise building, 
posting the notice in at least three conspicuous places within the 
building and maintaining the posted notices intact and in legible form 
for 30 days. For purposes of paragraph (f) of this section, a high-rise 
building is a structure that is equipped with an elevator and has a 
common lobby.
    (2) For purposes of computing time periods following service of the 
notice, service is effective on the day that all notices are delivered 
or mailed, or in the case of service by posting, on the day that all 
notices are initially posted.



Sec. 5.356  Housing programs: Pet rule violation procedures.

    (a) Notice of pet rule violation. If a project owner determines on 
the basis of objective facts, supported by written statements, that a 
pet owner has violated a rule governing the owning or keeping of pets; 
the project owner may serve a written notice of pet rule violation on 
the pet owner in accordance with Sec. 5.353(f)(1)(i) or (ii). The notice 
of pet rule violation must:
    (1) Contain a brief statement of the factual basis for the 
determination and the pet rule or rules alleged to be violated;
    (2) State that the pet owner has 10 days from the effective date of 
service of the notice to correct the violation (including, in 
appropriate circumstances, removal of the pet) or to make a written 
request for a meeting to discuss the violation;
    (3) State that the pet owner is entitled to be accompanied by 
another person of his or her choice at the meeting; and
    (4) State that the pet owner's failure to correct the violation, to 
request a meeting, or to appear at a requested meeting may result in 
initiation of procedures to terminate the pet owner's tenancy.

[[Page 42]]

    (b)(1) Pet rule violation meeting. If the pet owner makes a timely 
request for a meeting to discuss an alleged pet rule violation, the 
project owner shall establish a mutually agreeable time and place for 
the meeting but no later than 15 days from the effective date of service 
of the notice of pet rule violation (unless the project owner agrees to 
a later date). At the pet rule violation meeting, the pet owner and 
project owner shall discuss any alleged pet rule violation and attempt 
to correct it. The project owner may, as a result of the meeting, give 
the pet owner additional time to correct the violation.
    (2) Notice for pet removal. If the pet owner and project owner are 
unable to resolve the pet rule violation at the pet rule violation 
meeting, or if the project owner determines that the pet owner has 
failed to correct the pet rule violation within any additional time 
provided for this purpose under paragraph (b)(1) of this section, the 
project owner may serve a written notice on the pet owner in accordance 
with Sec. 5.353(f)(1) (i) or (ii) (or at the meeting, if appropriate), 
requiring the pet owner to remove the pet. The notice must:
    (i) Contain a brief statement of the factual basis for the 
determination and the pet rule or rules that have been violated;
    (ii) State that the pet owner must remove the pet within 10 days of 
the effective date of service of the notice of pet removal (or the 
meeting, if notice is served at the meeting); and
    (iii) State that failure to remove the pet may result in initiation 
of procedures to terminate the pet owner's tenancy.
    (c) Initiation of procedures to remove a pet or terminate the pet 
owner's tenancy. (1) The project owner may not initiate procedures to 
terminate a pet owner's tenancy based on a pet rule violation, unless:
    (i) The pet owner has failed to remove the pet or correct a pet rule 
violation within the applicable time period specified in this section 
(including any additional time permitted by the owner); and
    (ii) The pet rule violation is sufficient to begin procedures to 
terminate the pet owner's tenancy under the terms of the lease and 
applicable regulations.
    (2) The project owner may initiate procedures to remove a pet under 
Sec. 5.327 at any time, in accordance with the provisions of applicable 
State or local law.



Sec. 5.359  Housing programs: Rejection of units by applicants for tenancy.

    (a) An applicant for tenancy in a project for the elderly or persons 
with disabilities may reject a unit offered by a project owner if the 
unit is in close proximity to a dwelling unit in which an existing 
tenant of the project owns or keeps a common household pet. An 
applicant's rejection of a unit under this section shall not adversely 
affect his or her application for tenancy in the project, including (but 
not limited to) his or her position on the project waiting list or 
qualification for any tenant selection preference.
    (b) Nothing in this subpart C imposes a duty on project owners to 
provide alternate dwelling units to existing or prospective tenants 
because of the proximity of common household pets to a particular unit 
or the presence of such pets in the project.



Sec. 5.360  Housing programs: Additional lease provisions.

    (a) Inspections. In addition to other inspections permitted under 
the lease, the leases for all Housing program tenants of projects for 
the elderly or persons with disabilities may state that the project 
owner may, after reasonable notice to the tenant and during reasonable 
hours, enter and inspect the premises. The lease shall permit entry and 
inspection only if the project owner has received a signed, written 
complaint alleging (or the project owner has reasonable grounds to 
believe) that the conduct or condition of a pet in the dwelling unit 
constitutes, under applicable State or local law, a nuisance or a threat 
to the health or safety of the occupants of the project or other persons 
in the community where the project is located.
    (b) Emergencies. (1) If there is no State or local authority (or 
designated agent of such an authority) authorized under applicable State 
or local law to

[[Page 43]]

remove a pet that becomes vicious, displays symptoms of severe illness, 
or demonstrates other behavior that constitutes an immediate threat to 
the health or safety of the tenancy as a whole, the project owner may 
place a provision in tenant leases permitting the project owner to enter 
the premises (if necessary), remove the pet, and take such action with 
respect to the pet as may be permissible under State and local law, 
which may include placing it in a facility that will provide care and 
shelter for a period not to exceed 30 days.
    (2) The lease shall permit the project owner to enter the premises 
and remove the pet or take such other permissible action only if the 
project owner requests the pet owner to remove the pet from the project 
immediately, and the pet owner refuses to do so, or if the project owner 
is unable to contact the pet owner to make a removal request. The lease 
may not contain a provision relieving the project owner from liability 
for wrongful removal of a pet. The cost of the animal care facility 
shall be paid as provided in Sec. 5.363.
    (3) The project owner may place a provision in tenant leases 
permitting the project owner to enter the premises, remove the pet, and 
place the pet in a facility that will provide care and shelter, in 
accordance with the provisions of Sec. 5.363. The lease may not contain 
a provision relieving the project owner from liability for wrongful 
removal of a pet.



Sec. 5.363  Housing programs: Protection of the pet.

    (a) If the health or safety of a pet is threatened by the death or 
incapacity of the pet owner, or by other factors that render the pet 
owner unable to care for the pet, the project owner may contact the 
responsible party or parties listed in the pet registration required 
under Sec. 5.350(d)(1)(iii).
    (b) If the responsible party or parties are unwilling or unable to 
care for the pet, or the project owner, despite reasonable efforts, has 
been unable to contact the responsible party or parties, the project 
owner may contact the appropriate State or local authority (or 
designated agent of such an authority) and request the removal of the 
pet.
    (c) If there is no State or local authority (or designated agent of 
such an authority) authorized to remove a pet under these circumstances 
and the project owner has placed a provision in the lease agreement (as 
described in Sec. 5.360(c)(2)), the project owner may enter the pet 
owner's unit, remove the pet, and place the pet in a facility that will 
provide care and shelter until the pet owner or a representative of the 
pet owner is able to assume responsibility for the pet, but not longer 
than 30 days.
    (d) The cost of the animal care facility provided under this section 
shall be borne by the pet owner. If the pet owner (or the pet owner's 
estate) is unable or unwilling to pay, the cost of the animal care 
facility may be paid from the pet deposit, if imposed under the pet 
rules.

         Pet Ownership Requirements for Public Housing Programs



Sec. 5.380  Public housing programs: Procedure for development of pet rules.

    PHAs that choose to promulgate pet rules shall consult with tenants 
of projects for the elderly or persons with disabilities administered by 
them with respect to their promulgation and subsequent amendment. PHAs 
shall develop the specific procedures governing tenant consultation, but 
these procedures must be designed to give tenants (or, if appropriate, 
tenant councils) adequate opportunity to review and comment upon the pet 
rules before they are issued for effect. PHAs are solely responsible for 
the content of final pet rules, but must give consideration to tenant 
comments. PHAs shall send to the responsible HUD field office, copies of 
the final (or amended) pet rules, as well as summaries or copies of all 
tenant comments received in the course of the tenant consultation.



Subpart D--Definitions for Section 8 and Public Housing Assistance Under 
                  the United States Housing Act of 1937

    Authority: 42 U.S.C. 1437a and 3535(d).

[[Page 44]]


    Source: 61 FR 5665, Feb. 13, 1996, unless otherwise noted.



Sec. 5.400  Applicability.

    This part applies to public housing and Section 8 programs.

[61 FR 5665, Feb. 13, 1996, as amended at 65 FR 16715, Mar. 29. 2000]

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, Sec. 5.400 was 
amended after the words ``public housing'' by removing the phrase 
``(other than Indian housing under 24 CFR part 950)'', effective Apr. 
28, 2000.



Sec. 5.403  Definitions.

    (a) The terms displaced person, elderly person, low income family, 
near-elderly person, person with disabilities, and very low income 
family are defined in section 3(b) of the 1937 Act (42 U.S.C. 1437a(b)). 
For purposes of reasonable accommodation and program accessibility for 
persons with disabilities, the term ``person with disabilities'' means 
``individual with handicaps'' as defined in 24 CFR 8.3.
    (b) In addition to the terms listed in paragraph (a) of this 
section, the following definitions apply:
    Annual contributions contract (ACC) means the written contract 
between HUD and a PHA under which HUD agrees to provide funding for a 
program under the 1937 Act, and the PHA agrees to comply with HUD 
requirements for the program.
    Applicant means a person or a family that has applied for housing 
assistance.
    Disabled family means a family whose head, spouse, or sole member is 
a person with disabilities. It may include two or more persons with 
disabilities living together, or one or more persons with disabilities 
living with one or more live-in aides.
    Displaced family means a family in which each member, or whose sole 
member, is a person displaced by governmental action, or a person whose 
dwelling has been extensively damaged or destroyed as a result of a 
disaster declared or otherwise formally recognized pursuant to Federal 
disaster relief laws.
    Elderly family means a family whose head, spouse, or sole member is 
a person who is at least 62 years of age. It may include two or more 
persons who are at least 62 years of age living together, or one or more 
persons who are at least 62 years of age living with one or more live-in 
aides.
    Family includes but is not limited to:
    (1) A family with or without children (the temporary absence of a 
child from the home due to placement in foster care shall not be 
considered in determining family composition and family size);
    (2) An elderly family;
    (3) A near-elderly family;
    (4) A disabled family;
    (5) A displaced family;
    (6) The remaining member of a tenant family; and
    (7) A single person who is not an elderly or displaced person, or a 
person with disabilities, or the remaining member of a tenant family.
    Live-in aide means a person who resides with one or more elderly 
persons, or near-elderly persons, or persons with disabilities, and who:
    (1) Is determined to be essential to the care and well-being of the 
persons;
    (2) Is not obligated for the support of the persons; and
    (3) Would not be living in the unit except to provide the necessary 
supportive services.
    Near-elderly family means a family whose head, spouse, or sole 
member is a person who is at least 50 years of age but below the age of 
62; or two or more persons, who are at least 50 years of age but below 
the age of 62, living together; or one or more persons who are at least 
50 years of age but below the age of 62 living with one or more live-in 
aides.
    Person with disabilities:
    (1) Means a person who:
    (i) Has a disability, as defined in 42 U.S.C. 423;
    (ii) Is determined, pursuant to HUD regulations, to have a physical, 
mental, or emotional impairment that:
    (A) Is expected to be of long-continued and indefinite duration;
    (B) Substantially impedes his or her ability to live independently, 
and
    (C) Is of such a nature that the ability to live independently could 
be improved by more suitable housing conditions; or
    (iii) Has a developmental disability as defined in 42 U.S.C. 6001.

[[Page 45]]

    (2) Does not exclude persons who have the disease of acquired 
immunodeficiency syndrome or any conditions arising from the etiologic 
agent for acquired immunodeficiency syndrome;
    (3) For purposes of qualifying for low-income housing, does not 
include a person whose disability is based solely on any drug or alcohol 
dependence; and
    (4) Means ``individual with handicaps'', as defined in Sec. 8.3 of 
this title, for purposes of reasonable accommodation and program 
accessibility for persons with disabilities.

[61 FR 5665, Feb. 13, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 65 
FR 16715, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16715, Mar. 29, 2000, Sec. 5.403 was 
amended by removing paragraph (a), by removing the introductory text of 
paragraph (b) along with the paragraph designation, by revising the 
definitions of ``disabled family'' and ``elderly family'', and by adding 
the definition of ``person with disabilities'', effective Apr. 28, 2000. 
For the convenience of the user, the superseded text is set forth as 
follows:

Sec. 5.403  Definitions.

                                * * * * *

    Disabled family means a family whose head, spouse, or sole member is 
a person with disabilities; or two or more persons with disabilities 
living together; or one or more persons with disabilities living with 
one or more live-in aides.

                                * * * * *

    Elderly family means a family whose head, spouse, or sole member is 
a person who is at least 62 years of age; or two or more persons who are 
at least 62 years of age living together; or one or more persons who are 
at least 62 years of age living with one or more live-in aides.

                                * * * * *



Sec. 5.405  Basic eligibility; preference over single persons; and housing assistance limitation for single persons.

    (a) Basic eligibility. An applicant must meet all of the eligibility 
requirements of the housing assistance for which an application is made 
in order to obtain the housing assistance. At a minimum, the applicant 
must be a family, and must be income-eligible. Eligible applicants 
include single persons who are not elderly persons, or displaced 
persons, or persons with disabilities.
    (b) Preference over single persons. An applicant that is a one- or 
two-person elderly, disabled or displaced family, must be given a 
preference over an applicant that is a single person who is not an 
elderly or displaced person, or a person with disabilities, regardless 
of the applicant's Federal or local preferences.
    (c) Housing assistance limitation for single persons. A single 
person who is not an elderly or displaced person, or a person with 
disabilities, or the remaining member of a tenant family may not be 
provided:
    (1) For public housing and other project-based assistance, a housing 
unit with two or more bedrooms; or
    (2) For tenant-based assistance, housing assistance for which the 
family unit size as determined by the HA subsidy standard exceeds the 
one bedroom level.
    (d) This section shall not apply to the Section 8 Moderate 
Rehabilitation Program for Single Room Occupancy Dwellings for Homeless 
Individuals set forth at 24 CFR part 882, subpart H.

[61 FR 5665, Feb. 13, 1996, as amended at 61 FR 13616, Mar. 27, 1996]

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.405 was 
removed, effective Apr. 28, 2000.



Sec. 5.410  Selection preferences.

    (a) Applicability. The selection preferences that are described in 
this part are applicable to public housing and housing assisted under 
the Section 8 Housing Assistance Payments program. (Corresponding 
provisions applicable to the Indian housing program are found in 24 CFR 
part 950.) These preferences are administered by the entity responsible 
for admission functions in the programs covered (``responsible 
entity''), i.e., the public housing agency (``HA'') in the public 
housing and Section 8 Certificate/Voucher and Moderate Rehabilitation 
programs and the owner in all other Section 8 programs.
    (b) Types of preference. There are three types of admission 
preferences:
    (1) ``Federal preferences'' are admission preferences for three 
categories of

[[Page 46]]

families, as prescribed in 42 U.S.C. 1437d(c)(4)(A), 1437f(d)(1)(A), 
1437f(o)(3), and 1437f note. Federal preference is given for selection 
of families that are:
    (i) Involuntarily displaced;
    (ii) Living in substandard housing (including families that are 
homeless or living in a shelter for the homeless); or
    (iii) Paying more than 50 percent of family income for rent.
    (2) ``Ranking preferences'' are preferences that may be established 
by the responsible entity to use in selecting among applicants that 
qualify for federal preferences.
    (3) ``Local preferences'' are preferences for use in selecting among 
applicants without regard to their federal preference status. (See 42 
U.S.C. 1437d(c)(4)(A), 1437f(d)(1)(A), 1437f(o)(3), and 1437f note.)
    (c) System. In the Section 8 programs other than the Certificate/
Voucher and Moderate Rehabilitation programs, the owner must establish a 
system for selection of applicants from the waiting list that includes 
the following:
    (1) How the federal preferences will be used;
    (2) How any ranking preferences will be used;
    (3) How any local preferences will be used; and
    (4) How any residency preference will be used.
    (d) Use of preference in selection process--(1) Factors other than 
federal and local preferences--(i) Characteristics of the unit. For 
developments administered under the Section 8 programs and for public 
housing, the responsible entity may, in selecting a family for a 
particular unit, match other characteristics of the applicant family 
with the type of unit available, e.g., number of bedrooms. In selection 
of a family for a unit that has special accessibility features, the 
responsible entity must give preference to families that include persons 
with disabilities who can benefit from those features of the unit (see 
24 CFR 8.27 and 24 CFR 100.202(c)(3)). Also, in selection of a family 
for a unit in a mixed population project, the responsible entity will 
give preference to elderly families and disabled families (see subpart D 
of part 960 or Sec. 880.612a or Sec. 881.612a of this title).
    (ii) Singles preference. See Sec. 5.405.
    (2) Local preference admissions. (i) Local preferences may be 
adopted or amended by an HA to respond to local housing needs and 
priorities after the HA has conducted a public hearing.
    (ii) For Section 8 programs other than the Section 8 Certificate/
Voucher, Project-Based Certificate, and Moderate Rehabilitation programs 
operated under 24 CFR part 982, 983, and 882, respectively, if the owner 
wants to use preferences to select among applicants without regard to 
their federal preference status, it must use the local preference system 
adopted for use in the Section 8 Certificate/Voucher programs by the 
housing agency for the jurisdiction. If there is more than one HA for 
the jurisdiction, the owner shall use the local preference system of the 
HA for the lowest level of government that has jurisdiction where the 
project is located. For the public housing program, the HA may use a 
local preference system it adopts for that program.
    (iii) In the Section 8 programs other than the Certificate/Voucher, 
Project-Based Certificate, and Moderate Rehabilitation programs operated 
under 24 CFR parts 982, 983 and 882, respectively, before an owner 
implements the HA's local preferences, the owner must receive approval 
from the HUD Field Office. HUD shall review these preferences to ensure 
that they are applicable to any tenant eligibility limitations for the 
subject housing and that they are consistent with HUD requirements 
pertaining to nondiscrimination and the Affirmative Fair Housing 
Marketing objectives. If HUD determines that the local preferences are 
in violation of those requirements, the owner will not be permitted to 
admit applicants on the basis of any local preferences.
    (iv) In any year, the number of families given preference in 
admission pursuant to a local preference over families with a federal 
preference may not exceed the local preference limit. ``Local preference 
limit'' means the following:
    (A) For an HA's Section 8 Certificate/Voucher program operated under 
24 CFR part 982, ten percent of annual waiting list admissions;

[[Page 47]]

    (B) For an HA's public housing program, fifty percent of annual 
admissions;
    (C) For an HA's Section 8 Moderate Rehabilitation program, thirty 
percent of annual admissions;
    (D) For Section 8 New Construction, Substantial Rehabilitation, and 
Loan Management/Property Disposition projects, thirty percent of annual 
admissions to each project; and
    (E) For the Section 8 Project-Based Certificate program, thirty 
percent of total annual waiting list admissions to the HA's Project-
Based Certificate program (including admissions pursuant to 24 CFR 
983.203(c)(3)).
    (3) Prohibition of preference if applicant was evicted for drug-
related criminal activity. With respect to the Section 8 Certificate, 
Voucher, Loan Management, and Property Disposition programs and the 
public housing program, the HA may not give a preference (federal 
preference, local preference, or ranking preference) to an applicant if 
any member of the family is a person who was evicted during the past 
three years from housing assisted under a 1937 Housing Act program 
because of drug-related criminal activity. However, the HA may give an 
admission preference in any of the following cases:
    (i) If the HA determines that the evicted person has successfully 
completed a rehabilitation program approved by the HA;
    (ii) If the HA determines that the evicted person clearly did not 
participate in or know about the drug-related criminal activity; or
    (iii) If the HA determines that the evicted person no longer 
participates in any drug-related criminal activity.
    (4) Retention of federal preference status. With respect to 
determining the preference status of an applicant for the Section 8 
Certificate/Voucher programs, an applicant who is receiving tenant-based 
assistance under the HOME program (24 CFR part 92) and an applicant who 
resides in public or Indian housing of the same HA (and was on the 
tenant-based program waiting list when admitted to the HA's public or 
Indian housing on or after April 26, 1993), the HA determines whether 
the applicant qualifies for federal preference based on the situation of 
the applicant at the time the applicant began to receive tenant-based 
assistance under the HOME program or was admitted to the HA's public or 
Indian housing program (beginning of initial public or Indian housing 
lease).
    (e) Income-based admission. (1) In public housing, the HA may only 
give preference to select a relatively higher income family for 
admission if the preference is pursuant to a ``local preference'' 
admission. (For other income-related restrictions on selection, see 24 
CFR 913.105.)
    (2) In Section 8 programs, the responsible entity may not select a 
family for admission in an order different from the order on the waiting 
list for the purpose of selecting a relatively higher income family for 
admission.
    (f) Informing applicants about admission preferences. (1) The 
responsible entity must inform all applicants about available 
preferences and must give applicants an opportunity to show that they 
qualify for available preferences (federal preference, ranking 
preference, or local preference).
    (2) If the responsible entity determines that the notification to 
all applicants on a waiting list required by paragraph (f)(1) of this 
section is impracticable because of the length of the list, the 
responsible entity may provide this notification to fewer than all 
applicants on the list at any given time. The responsible entity must, 
however, have notified a sufficient number of applicants at any given 
time that, on the basis of the entity's determination of the number of 
applicants on the waiting list who already claim a federal preference 
and the anticipated number of project admissions:
    (i) There is an adequate pool of applicants who are likely to 
qualify for a federal preference; and
    (ii) It is unlikely that, on the basis of the responsible entity's 
framework for applying the preferences under paragraph (c) of this 
section and the federal preferences claimed by those already on the 
waiting list, any applicant who has not been so notified would receive 
assistance before those who have received notification.
    (g) Notice and opportunity for a meeting where preference is denied. 
(1) If the

[[Page 48]]

responsible entity determines that an applicant does not qualify for a 
federal preference, ranking preference, or local preference claimed by 
the applicant, the responsible entity must promptly give the applicant 
written notice of the determination. The notice must contain a brief 
statement of the reasons for the determination, and state that the 
applicant has the right to meet with a representative of the responsible 
entity to review the determination. The meeting may be conducted by any 
person or persons designated by the responsible entity, who may be an 
officer or employee of the responsible entity, including the person who 
made or reviewed the determination or a subordinate employee.
    (2) The applicant may exercise other rights if the applicant 
believes that the applicant has been discriminated against on the basis 
of race, color, religion, sex, national origin, age, disability or 
familial status.
    (h) Residency preferences. A ``residency preference'' is a 
preference for admission of families that reside anywhere in a specified 
``residency preference area.'' A residency preference may be used as a 
ranking or local preference.
    (1) Section 8 programs other than Certificate/Voucher and Project-
Based Certificate. In these developments, local residency requirements 
are prohibited.
    (2) Section 8 Certificate/Voucher and Project-Based Certificate 
programs. Any residency preference must be approved by HUD.
    (i) A county or municipality may be used as a residency preference 
area.
    (ii) An area smaller than a county or municipality may not be used 
as a residency preference area.
    (3) All projects. With respect to any residency preference, 
applicants who are working or who have been notified that they are hired 
to work in the residency preference area shall be treated as residents 
of the residency preference area. A residency preference may not be 
based on how long the applicant has resided in or worked in the 
residency preference area.
    (i) Nondiscrimination. (1) Any selection preferences must be 
established and administered in accordance with the following 
authorities:
    (i) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) and 
the implementing regulations at 24 CFR part 1;
    (ii) The Fair Housing Act (42 U.S.C. 3601-3619) and the implementing 
regulations at 24 CFR parts 100, 108, 109, and 110;
    (iii) Executive Order 11063 on Equal Opportunity in Housing and the 
implementing regulations at 24 CFR part 107;
    (iv) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) 
and the implementing regulations at 24 CFR part 8;
    (v) The Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and the 
implementing regulations at 24 CFR part 146; and
    (vi) The Americans with Disabilities Act (42 U.S.C. 12101-12213) to 
the extent applicable.
    (2) Such preferences also must be consistent with HUD's affirmative 
fair housing objectives and (where applicable) the owner's HUD-approved 
affirmative fair housing marketing plan.

(Approved by the Office of Management and Budget under OMB control 
numbers 2577-0105 and 2502-0372)

[61 FR 9041, Mar. 6, 1996, as amended at 62 FR 27125, May 16, 1997]

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.410 was 
removed, effective Apr. 28, 2000.



Sec. 5.415  Federal preferences: General.

    (a) Definitions. The definitions of these preference categories 
stated in Secs. 5.420, 5.425, and 5.430 must be used by the responsible 
entity, except that an HA may use its own alternative definitions if 
they have been approved by HUD.
    (b) Ranking preferences: selection among federal preference holders. 
The responsible entity's system of administering the federal preferences 
(its admission policy, in the case of the Section 8 Certificate/Voucher 
programs) may provide for use of ranking preference for selecting among 
applicants who qualify for federal preference.
    (1) The responsible entity may give preference to working families--
so long as the prohibition of Sec. 5.410 against selection based on 
income and the nondiscrimination provisions that protect against 
discrimination on the basis of age or disability are not violated. (If a

[[Page 49]]

responsible entity adopts such a preference, it may not give greater 
weight to an applicant based on the amount of employment income, and an 
applicant household shall be given the benefit of the preference if the 
head and spouse, or sole member, are age 62 or older or are receiving 
social security disability, supplemental security income disability 
benefits, or any other payments based on an individual's inability to 
work.) A responsible entity may give preference to graduates of, as well 
as active participants in, educational and training programs that are 
designed to prepare individuals for the job market. The responsible 
entity also may use the housing agency's ``local preferences'' for the 
Section 8 Certificate and Voucher programs to rank federal preference 
holders.
    (2) The ranking preferences may give different weight to the federal 
preferences, through such means as:
    (i) Aggregating the federal preferences (e.g., provide that two 
federal preferences outweigh one);
    (ii) Giving greater weight to holders of a particular category of 
federal preference; or
    (iii) Giving greater weight to a federal preference holder who fits 
a particular category of federal preference.
    (c) Qualifying for a federal preference--(1) Certification of 
preference. An applicant may claim qualification for a federal 
preference by certifying to the responsible entity that the family 
qualifies for federal preference. The responsible entity must accept 
this certification, unless the responsible entity verifies that the 
applicant is not qualified for federal preference.
    (2) Verification of preference. (i) Before admitting an applicant on 
the basis of a federal preference, the responsible entity must require 
the applicant to provide information needed by the responsible entity to 
verify that the applicant qualifies for a federal preference because of 
the applicant's current status. The applicant's current status must be 
determined without regard to whether there has been a change in the 
applicant's qualification for a federal preference between the time of 
application and selection for admission, including a change from one 
federal preference category to another.
    (ii) In the case of Section 8 programs other than the Section 8 
Certificate/Voucher, Project-Based Certificate, and Moderate 
Rehabilitation programs, the owner must use the verification procedures 
specified in Sec. 5.420(c) (involuntary displacement); Sec. 5.425(c) 
(substandard housing); and Sec. 5.430(b) (rent burden). In the case of 
the Section 8 Certificate/Voucher, Project-Based Certificate, and 
Moderate Rehabilitation programs and the public housing program, the HA 
may adopt its own verification procedure.
    (iii) Once the responsible entity has verified an applicant's 
qualification for a federal preference, the responsible entity need not 
require the applicant to provide information needed by the responsible 
entity to verify such qualification again unless:
    (A) The responsible entity determines reverification is desirable 
because a long time has passed since verification; or
    (B) The responsible entity has reasonable grounds to believe that 
the applicant no longer qualifies for a federal preference.
    (3) Effect of current residence in assisted housing. No applicant is 
to be denied a federal preference for which the family otherwise 
qualifies on the basis that the applicant already resides in assisted 
housing; for example, the actual condition of the housing unit must be 
considered, or the possibility of involuntary displacement resulting 
from domestic violence must be evaluated.
    (d) Approval of special conditions satisfying preference 
definitions. With respect to Section 8 programs other than the Section 8 
Certificate/Voucher, Project-Based Certificate and Moderate 
Rehabilitation programs, HUD may specify additional conditions under 
which the federal preferences, as described in Secs. 5.420, 5.425, and 
5.430, can be satisfied. In such cases, appropriate certification of 
qualification must be provided. (See HUD Handbook 4350.3, which is 
available at HUD field offices.)

(Approved by the Office of Management and Budget under OMB control 
number 2502-0372 and 2577-0105)

[61 FR 9043, Mar. 6, 1996]

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.415 was 
removed, effective Apr. 28, 2000.

[[Page 50]]



Sec. 5.420  Federal preference: Involuntary displacement.

    (a) How applicant qualifies for displacement preference. (See 
Sec. 5.415(a)(2) and (c)(2)(ii) for applicability of this section to the 
Section 8 Certificate/Voucher, Project-Based Certificate, and Moderate 
Rehabilitation programs and the public housing program.)
    (1) An applicant qualifies for a federal preference on the basis of 
involuntary displacement if either of the following apply:
    (i) The applicant has been involuntarily displaced and is not living 
in standard, permanent replacement housing; or
    (ii) The applicant will be involuntarily displaced within no more 
than six months from the date of preference status certification by the 
family or verification by the responsible entity.
    (2)(i) ``Standard, permanent replacement housing'' is housing:
    (A) That is decent, safe, and sanitary;
    (B) That is adequate for the family size; and
    (C) That the family is occupying pursuant to a lease or occupancy 
agreement.
    (ii) ``Standard, permanent replacement housing'' does not include:
    (A) Transient facilities, such as motels, hotels, or temporary 
shelters for victims of domestic violence or homeless families; or
    (B) In the case of domestic violence, the housing unit in which the 
applicant and the applicant's spouse or other member of the household 
who engages in such violence live.
    (b) Meaning of involuntary displacement. An applicant is or will be 
involuntarily displaced if the applicant has vacated or will have to 
vacate the unit where the applicant lives because of one or more of the 
following:
    (1) Displacement by disaster. An applicant's unit is uninhabitable 
because of a disaster, such as a fire or flood.
    (2) Displacement by government action. Activity carried on by an 
agency of the United States or by any State or local governmental body 
or agency in connection with code enforcement or a public improvement or 
development program.
    (3) Displacement by action of housing owner. (i) Action by a housing 
owner forces the applicant to vacate its unit.
    (ii) An applicant does not qualify as involuntarily displaced 
because action by a housing owner forces the applicant to vacate its 
unit unless:
    (A) The applicant cannot control or prevent the owner's action;
    (B) The owner action occurs although the applicant met all 
previously imposed conditions of occupancy; and
    (C) The action taken by the owner is other than a rent increase.
    (iii) To qualify as involuntarily displaced because action by a 
housing owner forces the applicant to vacate its unit, reasons for an 
applicant's having to vacate a housing unit include, but are not limited 
to, conversion of an applicant's housing unit to non-rental or non-
residential use; closing of an applicant's housing unit for 
rehabilitation or for any other reason; notice to an applicant that the 
applicant must vacate a unit because the owner wants the unit for the 
owner's personal or family use or occupancy; sale of a housing unit in 
which an applicant resides under an agreement that the unit must be 
vacant when possession is transferred; or any other legally authorized 
act that results or will result in the withdrawal by the owner of the 
unit or structure from the rental market.
    (iv) Such reasons do not include the vacating of a unit by a tenant 
as a result of actions taken by the owner because the tenant refuses:
    (A) To comply with HUD program policies and procedures for the 
occupancy of under-occupied or overcrowded units; or
    (B) To accept a transfer to another housing unit in accordance with 
a court decree or in accordance with policies and procedures under a 
HUD-approved desegregation plan.
    (4) Displacement by domestic violence. (i) An applicant is 
involuntarily displaced if:
    (A) The applicant has vacated a housing unit because of domestic 
violence; or
    (B) The applicant lives in a housing unit with a person who engages 
in domestic violence.

[[Page 51]]

    (ii) ``Domestic violence'' means actual or threatened physical 
violence directed against one or more members of the applicant family by 
a spouse or other member of the applicant's household.
    (iii) To qualify as involuntarily displaced because of domestic 
violence:
    (A) The responsible entity must determine, in accordance with HUD's 
administrative instructions, that the domestic violence occurred 
recently or is of a continuing nature; and
    (B) The applicant must certify that the person who engaged in such 
violence will not reside with the applicant family unless the 
responsible entity has given advance written approval. If the family is 
admitted, the responsible entity may deny or terminate assistance to the 
family for breach of this certification.
    (5) Displacement to avoid reprisals. (i) An applicant family is 
involuntarily displaced if:
    (A) Family members provided information on criminal activities to a 
law enforcement agency; and
    (B) Based on a threat assessment, a law enforcement agency 
recommends rehousing the family to avoid or minimize a risk of violence 
against family members as a reprisal for providing such information.
    (ii) The responsible entity may establish appropriate safeguards to 
conceal the identity of families requiring protection against such 
reprisals.
    (6) Displacement by hate crimes. (i) An applicant is involuntarily 
displaced if:
    (A) One or more members of the applicant's family have been the 
victim of one or more hate crimes; and
    (B) The applicant has vacated a housing unit because of such crime, 
or the fear associated with such crime has destroyed the applicant's 
peaceful enjoyment of the unit.
    (ii) ``Hate crime'' means actual or threatened physical violence or 
intimidation that is directed against a person or his or her property 
and that is based on the person's race, color, religion, sex, national 
origin, handicap, or familial status.
    (iii) The responsible entity must determine, in accordance with 
HUD's administrative instructions, that the hate crime involved occurred 
recently or is of a continuing nature.
    (7) Displacement by inaccessibility of unit. An applicant is 
involuntarily displaced if:
    (i) A member of the family has a mobility or other impairment that 
makes the person unable to use critical elements of the unit; and
    (ii) The owner is not legally obligated to make the changes to the 
unit that would make critical elements accessible to the disabled person 
as a reasonable accommodation.
    (8) Displacement because of HUD disposition of multifamily project. 
Involuntary displacement includes displacement because of disposition of 
a multifamily rental housing project by HUD under section 203 of the 
Housing and Community Development Amendments of 1978.
    (c) Involuntary displacement preference: Verification. A private 
owner's verification of an applicant's involuntary displacement is 
established by the following documentation:
    (1) Displacement by disaster. Certification, in a form prescribed by 
the Secretary, from a unit or agency of government that an applicant has 
been or will be displaced as a result of a disaster that results in the 
uninhabitability of an applicant's unit.
    (2) Displacement by government action. Certification, in a form 
prescribed by the Secretary, from a unit or agency of government that an 
applicant has been or will be displaced by activity carried on by an 
agency of the United States or by any State or local governmental body 
or agency in connection with code enforcement or a public improvement or 
development program.
    (3) Displacement by owner action. Certification, in a form 
prescribed by the Secretary, from an owner or owner's agent that an 
applicant had to or will have to vacate a unit by a date certain because 
of owner action.
    (4) Displacement because of domestic violence. Certification, in a 
form prescribed by the Secretary, of displacement because of domestic 
violence from the local police department, social services agency, or 
court of competent jurisdiction, or a clergyman, physician, or public or 
private facility

[[Page 52]]

that provides shelter or counseling to the victims of domestic violence.
    (5) Displacement to avoid reprisals. A threat assessment by a law 
enforcement agency.
    (6) Displacement by hate crime. Certification by a law enforcement 
agency or other reliable information.
    (7) Displacement by inaccessibility of unit. Certification by a 
health care professional that a family member has a mobility or other 
impairment that makes critical elements of the current unit 
inaccessible, and statement by the owner that it is unable to make 
necessary changes to the unit to make it accessible.
    (8) Displacement by HUD disposition of multifamily project. 
Certification by HUD with respect to the disposition.

[61 FR 9044, Mar. 6, 1996]

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.420 was 
removed, effective Apr. 28, 2000.



Sec. 5.425  Federal preference: Substandard housing.

    (a) When unit is substandard. (See Sec. 5.415(a)(2) and (c)(2)(ii) 
for applicability of this section to the Section 8 Certificate/Voucher, 
Project-Based Certificate, Moderate Rehabilitation programs and the 
public housing program.) A unit is substandard if it:
    (1) Is dilapidated;
    (2) Does not have operable indoor plumbing;
    (3) Does not have a usable flush toilet inside the unit for the 
exclusive use of a family;
    (4) Does not have a usable bathtub or shower inside the unit for the 
exclusive use of a family;
    (5) Does not have electricity, or has inadequate or unsafe 
electrical service;
    (6) Does not have a safe or adequate source of heat;
    (7) Should, but does not, have a kitchen; or
    (8) Has been declared unfit for habitation by an agency or unit of 
government.
    (b) Other definitions--(1) Dilapidated unit. A housing unit is 
dilapidated if:
    (i) The unit does not provide safe and adequate shelter, and in its 
present condition endangers the health, safety, or well-being of a 
family; or
    (ii) The unit has one or more critical defects, or a combination of 
intermediate defects in sufficient number or extent to require 
considerable repair or rebuilding. The defects may involve original 
construction, or they may result from continued neglect or lack of 
repair or from serious damage to the structure.
    (2) Homeless family. (i) An applicant that is a ``homeless family'' 
is considered to be living in substandard housing.
    (ii) A ``homeless family'' includes:
    (A) Any person or family that lacks a fixed, regular, and adequate 
nighttime residence; and
    (B) Any person or family that has a primary nighttime residence that 
is:
    (1) A supervised publicly or privately operated shelter designed to 
provide temporary living accommodations (including welfare hotels, 
congregate shelters, and transitional housing);
    (2) An institution that provides a temporary residence for 
individuals intended to be institutionalized; or
    (3) A public or private place not designed for, or ordinarily used 
as, a regular sleeping accommodation for human beings.
    (iii) A ``homeless family'' does not include any person imprisoned 
or otherwise detained pursuant to an Act of Congress or a State law.
    (3) Status of SRO housing. In determining whether an individual 
living in single room occupancy (SRO) housing qualifies for federal 
preference, SRO housing is not considered substandard solely because it 
does not contain sanitary or food preparation facilities.
    (c) Substandard housing preference: verification. The following 
provisions are applicable to private owners:
    (1) Verification that an applicant is living in substandard housing 
consists of certification, in a form prescribed by the Secretary, from a 
unit or agency of government or from an applicant's present landlord 
that the applicant's unit is ``substandard housing'' (as described in 
this section).
    (2) In the case of a ``homeless family'' (as described in this 
section), verification consists of certification, in a form prescribed 
by the Secretary, of

[[Page 53]]

this status from a public or private facility that provides shelter for 
such individuals, or from the local police department or social services 
agency.

[61 FR 9045, Mar. 6, 1996]

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.425 was 
removed, effective Apr. 28, 2000.



Sec. 5.430  Federal preference: Rent burden.

    (a) Rent burden preference: how determined. (See Sec. 5.415(a)(2) 
and (c)(2)(ii) for applicability of this section to the Section 8 
Certificate/Voucher, Project-Based Certificate, and Moderate 
Rehabilitation programs and the public housing program.)
    (1) ``Rent burden preference'' means the federal preference for 
admission of applicants that pay more than 50 percent of family income 
for rent.
    (2) For purposes of determining whether an applicant qualifies for 
the rent burden preference:
    (i) ``Family income'' means Monthly Income, as defined in 24 CFR 
813.102.
    (ii) ``Rent'' means:
    (A) The actual monthly amount due under a lease or occupancy 
agreement between a family and the family's current landlord; and
    (B) For utilities purchased directly by tenants from utility 
providers:
    (1) The utility allowance for family-purchased utilities and 
services that is used in the HA tenant-based program; or
    (2) If the family chooses, the average monthly payments that the 
family actually made for these utilities and services for the most 
recent 12-month period or, if information is not obtainable for the 
entire period, for an appropriate recent period.
    (iii) Amounts paid to or on behalf of a family under any energy 
assistance program must be subtracted from the otherwise applicable 
rental amount, to the extent that they are not included in the family's 
income.
    (iv) For purposes of the Section 8 Certificate/Voucher programs, 
rent for an applicant who owns a manufactured home, but rents the space 
upon which it is located, includes the monthly payment to amortize the 
purchase price of the home, calculated in accordance with HUD's 
requirements. In addition, for this program, rent for members of a 
cooperative means the charges under the occupancy agreement between the 
members and the cooperative.
    (3) An applicant does not qualify for a rent burden preference if 
either of the following is applicable:
    (i) The applicant has been paying more than 50 percent of income for 
rent for less than 90 days.
    (ii) The applicant is paying more than 50 percent of family income 
to rent a unit because the applicant's housing assistance for occupancy 
of the unit under any of the following programs has been terminated 
because of the applicant's refusal to comply with applicable program 
policies and procedures on the occupancy of underoccupied and 
overcrowded units:
    (A) The Section 8 programs or public and Indian housing programs 
under the United States Housing Act of 1937;
    (B) The rent supplement program under section 101 of the Housing and 
Urban Development Act of 1965; or
    (C) Rental assistance payments under section 236(f)(2) of the 
National Housing Act.
    (b) Rent burden preference: verification of income and rent. The 
owner must verify that an applicant is paying more than 50 percent of 
family income for rent, as follows:
    (1) How to verify income. The owner must verify a family's income by 
using the standards and procedures that it uses to verify family income 
under 24 CFR part 813.
    (2) How to verify rent. The owner must verify the amount due to the 
family's landlord (or cooperative) under the lease or occupancy 
agreement:
    (i) By requiring the family to furnish copies of its most recent 
rental (or cooperative charges) receipts (which may include canceled 
checks or money order receipts) or a copy of the family's current lease 
or occupancy agreement; or
    (ii) By contacting the landlord (or cooperative) or its agent 
directly.
    (3) Utilities. To verify the actual amount that a family paid for 
utilities and other housing services, the owner must require the family 
to provide copies of the appropriate bills or receipts,

[[Page 54]]

or must obtain the information directly from the utility or service 
supplier.

[61 FR 9045, Mar. 6, 1996]

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.430 was 
removed, effective Apr. 28, 2000.



          Subpart E--Restrictions on Assistance to Noncitizens

    Authority: 42 U.S.C. 1436a and 3535(d).



Sec. 5.500  Applicability.

    (a) Covered programs/assistance. This subpart E implements Section 
214 of the Housing and Community Development Act of 1980, as amended (42 
U.S.C. 1436a). Section 214 prohibits HUD from making financial 
assistance available to persons who are not in eligible status with 
respect to citizenship or noncitizen immigration status. This subpart E 
is applicable to financial assistance provided under:
    (1) Section 235 of the National Housing Act (12 U.S.C. 1715z) (the 
Section 235 Program);
    (2) Section 236 of the National Housing Act (12 U.S.C. 1715z-1) 
(tenants paying below market rent only) (the Section 236 Program);
    (3) Section 101 of the Housing and Urban Development Act of 1965 (12 
U.S.C. 1701s) (the Rent Supplement Program); and
    (4) The United States Housing Act of 1937 (42 U.S. C. 1437 et seq.) 
which covers:
    (i) HUD's Public Housing Programs;
    (ii) The Section 8 Housing Assistance Programs; and
    (iii) The Housing Development Grant Programs (with respect to low 
income units only).
    (b) Covered individuals and entities--(1) Covered individuals/
persons and families. The provisions of this subpart E apply to both 
applicants for assistance and persons already receiving assistance 
covered under this subpart E.
    (2) Covered entities. The provisions of this subpart E apply to 
Public Housing Agencies (PHAs), project (or housing) owners, and 
mortgagees under the Section 235 Program. The term ``responsible 
entity'' is used in this subpart E to refer collectively to these 
entities, and is further defined in Sec. 5.504.



Sec. 5.502  Requirements concerning documents.

    For any notice or document (decision, declaration, consent form, 
etc.) that this subpart E requires the responsible entity to provide to 
an individual, or requires the responsible entity to obtain the 
signature of an individual, the responsible entity, where feasible, must 
arrange for the notice or document to be provided to the individual in a 
language that is understood by the individual if the individual is not 
proficient in English. (See 24 CFR 8.6 of HUD's regulations for 
requirements concerning communications with persons with disabilities.)



Sec. 5.504  Definitions.

    (a) The definitions 1937 Act, HUD, Public Housing Agency (PHA), and 
Section 8 are defined in subpart A of this part.
    (b) As used in this subpart E:
    Child means a member of the family other than the family head or 
spouse who is under 18 years of age.
    Citizen means a citizen or national of the United States.
    Evidence of citizenship or eligible status means the documents which 
must be submitted to evidence citizenship or eligible immigration 
status. (See Sec. 5.508(b).)
    Family has the same meaning as provided in the program regulations 
of the relevant Section 214 covered program.
    Head of household means the adult member of the family who is the 
head of the household for purposes of determining income eligibility and 
rent.
    Housing covered programs means the following programs administered 
by the Assistant Secretary for Housing:
    (1) Section 235 of the National Housing Act (12 U.S.C. 1715z) (the 
Section 235 Program);
    (2) Section 236 of the National Housing Act (12 U.S.C. 1715z-1) 
(tenants paying below market rent only) (the Section 236 Program); and
    (3) Section 101 of the Housing and Urban Development Act of 1965 (12 
U.S.C. 1701s) (the Rent Supplement Program).

[[Page 55]]

    INS means the U.S. Immigration and Naturalization Service.
    Mixed family means a family whose members include those with 
citizenship or eligible immigration status, and those without 
citizenship or eligible immigration status.
    National means a person who owes permanent allegiance to the United 
States, for example, as a result of birth in a United States territory 
or possession.
    Noncitizen means a person who is neither a citizen nor national of 
the United States.
    Project owner means the person or entity that owns the housing 
project containing the assisted dwelling unit.
    Public Housing covered programs means the public housing programs 
administered by the Assistant Secretary for Public and Indian Housing 
under title I of the 1937 Act. This definition does not encompass HUD's 
Indian Housing programs administered under title II of the 1937 Act. 
Further, this term does not include those programs providing assistance 
under section 8 of the 1937 Act. (See definition of ``Section 8 Covered 
Programs'' in this section.)
    Responsible entity means the person or entity responsible for 
administering the restrictions on providing assistance to noncitizens 
with ineligible immigrations status. The entity responsible for 
administering the restrictions on providing assistance to noncitizens 
with ineligible immigration status under the various covered programs is 
as follows:
    (1) For the Section 235 Program, the mortgagee.
    (2) For Public Housing, the Section 8 Rental Certificate, the 
Section 8 Rental Voucher, and the Section 8 Moderate Rehabilitation 
programs, the PHA administering the program under an ACC with HUD.
    (3) For all other Section 8 programs, the Section 236 Program, and 
the Rent Supplement Program, the owner.
    Section 8 covered programs means all HUD programs which assist 
housing under Section 8 of the 1937 Act, including Section 8-assisted 
housing for which loans are made under section 202 of the Housing Act of 
1959.
    Section 214 means section 214 of the Housing and Community 
Development Act of 1980, as amended (42 U.S.C. 1436a).
    Section 214 covered programs is the collective term for the HUD 
programs to which the restrictions imposed by Section 214 apply. These 
programs are set forth in Sec. 5.500.
    Tenant means an individual or a family renting or occupying an 
assisted dwelling unit. For purposes of this subpart E, the term tenant 
will also be used to include a homebuyer, where appropriate.



Sec. 5.506  General provisions.

    (a) Restrictions on assistance. Financial assistance under a Section 
214 covered program is restricted to:
    (1) Citizens; or
    (2) Noncitizens who have eligible immigration status under one of 
the categories set forth in Section 214 (see 42 U.S.C. 1436a(a)).
    (b) Family eligibility for assistance. (1) A family shall not be 
eligible for assistance unless every member of the family residing in 
the unit is determined to have eligible status, as described in 
paragraph (a) of this section, or unless the family meets the conditions 
set forth in paragraph (b)(2) of this section.
    (2) Despite the ineligibility of one or more family members, a mixed 
family may be eligible for one of the three types of assistance provided 
in Secs. 5.516 and 5.518. A family without any eligible members and 
receiving assistance on June 19, 1995 may be eligible for temporary 
deferral of termination of assistance as provided in Secs. 5.516 and 
5.518.



Sec. 5.508  Submission of evidence of citizenship or eligible immigration status.

    (a) General. Eligibility for assistance or continued assistance 
under a Section 214 covered program is contingent upon a family's 
submission to the responsible entity of the documents described in 
paragraph (b) of this section for each family member. If one or more 
family members do not have citizenship or eligible immigration status, 
the

[[Page 56]]

family members may exercise the election not to contend to have eligible 
immigration status as provided in paragraph (e) of this section, and the 
provisions of Secs. 5.516 and 5.518 shall apply.
    (b) Evidence of citizenship or eligible immigration status. Each 
family member, regardless of age, must submit the following evidence to 
the responsible entity.
    (1) For U.S. citizens or U.S. nationals, the evidence consists of a 
signed declaration of U.S. citizenship or U.S. nationality. The 
responsible entity may request verification of the declaration by 
requiring presentation of a United States passport or other appropriate 
documentation, as specified in HUD guidance.
    (2) For noncitizens who are 62 years of age or older or who will be 
62 years of age or older and receiving assistance under a Section 214 
covered program on September 30, 1996 or applying for assistance on or 
after that date, the evidence consists of:
    (i) A signed declaration of eligible immigration status; and
    (ii) Proof of age document.
    (3) For all other noncitizens, the evidence consists of:
    (i) A signed declaration of eligible immigration status;
    (ii) One of the INS documents referred to in Sec. 5.510; and
    (iii) A signed verification consent form.
    (c) Declaration. (1) For each family member who contends that he or 
she is a U.S. citizen or a noncitizen with eligible immigration status, 
the family must submit to the responsible entity a written declaration, 
signed under penalty of perjury, by which the family member declares 
whether he or she is a U.S. citizen or a noncitizen with eligible 
immigration status.
    (i) For each adult, the declaration must be signed by the adult.
    (ii) For each child, the declaration must be signed by an adult 
residing in the assisted dwelling unit who is responsible for the child.
    (2) For Housing covered programs: The written declaration may be 
incorporated as part of the application for housing assistance or may 
constitute a separate document.
    (d) Verification consent form--(1) Who signs. Each noncitizen who 
declares eligible immigration status (except certain noncitizens who are 
62 years of age or older as described in paragraph (b)(2) of this 
section) must sign a verification consent form as follows.
    (i) For each adult, the form must be signed by the adult.
    (ii) For each child, the form must be signed by an adult residing in 
the assisted dwelling unit who is responsible for the child.
    (2) Notice of release of evidence by responsible entity. The 
verification consent form shall provide that evidence of eligible 
immigration status may be released by the responsible entity without 
responsibility for the further use or transmission of the evidence by 
the entity receiving it, to:
    (i) HUD, as required by HUD; and
    (ii) The INS for purposes of verification of the immigration status 
of the individual.
    (3) Notice of release of evidence by HUD. The verification consent 
form also shall notify the individual of the possible release of 
evidence of eligible immigration status by HUD. Evidence of eligible 
immigration status shall only be released to the INS for purposes of 
establishing eligibility for financial assistance and not for any other 
purpose. HUD is not responsible for the further use or transmission of 
the evidence or other information by the INS.
    (e) Individuals who do not contend that they have eligible status. 
If one or more members of a family elect not to contend that they have 
eligible immigration status, and other members of the family establish 
their citizenship or eligible immigration status, the family may be 
eligible for assistance under Secs. 5.516 and 5.518, or Sec. 5.520, 
despite the fact that no declaration or documentation of eligible status 
is submitted for one or more members of the family. The family, however, 
must identify in writing to the responsible entity, the family member 
(or members) who will elect not to contend that he or she has eligible 
immigration status.
    (f) Notification of requirements of Section 214--(1) When notice is 
to be issued. Notification of the requirement to submit evidence of 
citizenship or eligible

[[Page 57]]

immigration status, as required by this section, or to elect not to 
contend that one has eligible status as provided by paragraph (e) of 
this section, shall be given by the responsible entity as follows:
    (i) Applicant's notice. The notification described in paragraph 
(f)(1) of this section shall be given to each applicant at the time of 
application for assistance. Applicants whose applications are pending on 
June 19, 1995, shall be notified of the requirement to submit evidence 
of eligible status as soon as possible after June 19, 1995.
    (ii) Notice to tenants. The notification described in paragraph 
(f)(1) of this section shall be given to each tenant at the time of, and 
together with, the responsible entity's notice of regular reexamination 
of income, but not later than one year following June 19, 1995.
    (iii) Timing of mortgagor's notice. A mortgagor receiving Section 
235 assistance must be provided the notification described in paragraph 
(f)(1) of this section and any additional requirements imposed under the 
Section 235 Program.
    (2) Form and content of notice. The notice shall:
    (i) State that financial assistance is contingent upon the 
submission and verification, as appropriate, of evidence of citizenship 
or eligible immigration status as required by paragraph (a) of this 
section;
    (ii) Describe the type of evidence that must be submitted, and state 
the time period in which that evidence must be submitted (see paragraph 
(g) of this section concerning when evidence must be submitted); and
    (iii) State that assistance will be prorated, denied or terminated, 
as appropriate, upon a final determination of ineligibility after all 
appeals have been exhausted (see Sec. 5.514 concerning INS appeal, and 
informal hearing process) or, if appeals are not pursued, at a time to 
be specified in accordance with HUD requirements. Tenants also shall be 
informed of how to obtain assistance under the preservation of families 
provisions of Secs. 5.516 and 5.518.
    (g) When evidence of eligible status is required to be submitted. 
The responsible entity shall require evidence of eligible status to be 
submitted at the times specified in paragraph (g) of this section, 
subject to any extension granted in accordance with paragraph (h) of 
this section.
    (1) Applicants. For applicants, responsible entities must ensure 
that evidence of eligible status is submitted not later than the date 
the responsible entity anticipates or has knowledge that verification of 
other aspects of eligibility for assistance will occur (see 
Sec. 5.512(a)).
    (2) Tenants. For tenants, evidence of eligible status is required to 
be submitted as follows:
    (i) For financial assistance under a Section 214 covered program, 
with the exception of Section 235 assistance payments, the required 
evidence shall be submitted at the first regular reexamination after 
June 19, 1995, in accordance with program requirements.
    (ii) For financial assistance in the form of Section 235 assistance 
payments, the mortgagor shall submit the required evidence in accordance 
with requirements imposed under the Section 235 Program.
    (3) New occupants of assisted units. For any new occupant of an 
assisted unit (e.g., a new family member comes to reside in the assisted 
unit), the required evidence shall be submitted at the first interim or 
regular reexamination following the person's occupancy.
    (4) Changing participation in a HUD program. Whenever a family 
applies for admission to a Section 214 covered program, evidence of 
eligible status is required to be submitted in accordance with the 
requirements of this subpart unless the family already has submitted the 
evidence to the responsible entity for a Section 214 covered program.
    (5) One-time evidence requirement for continuous occupancy. For each 
family member, the family is required to submit evidence of eligible 
status only one time during continuously assisted occupancy under any 
Section 214 covered program.
    (h) Extensions of time to submit evidence of eligible status--(1) 
When extension must be granted. The responsible entity shall extend the 
time, provided in paragraph (g) of this section, to submit evidence of 
eligible immigration status if the family member:

[[Page 58]]

    (i) Submits the declaration required under Sec. 5.508(a) certifying 
that any person for whom required evidence has not been submitted is a 
noncitizen with eligible immigration status; and
    (ii) Certifies that the evidence needed to support a claim of 
eligible immigration status is temporarily unavailable, additional time 
is needed to obtain and submit the evidence, and prompt and diligent 
efforts will be undertaken to obtain the evidence.
    (2) Thirty-day extension period. Any extension of time, if granted, 
shall not exceed thirty (30) days. The additional time provided should 
be sufficient to allow the individual the time to obtain the evidence 
needed. The responsible entity's determination of the length of the 
extension needed shall be based on the circumstances of the individual 
case.
    (3) Grant or denial of extension to be in writing. The responsible 
entity's decision to grant or deny an extension as provided in paragraph 
(h)(1) of this section shall be issued to the family by written notice. 
If the extension is granted, the notice shall specify the extension 
period granted (which shall not exceed thirty (30) days). If the 
extension is denied, the notice shall explain the reasons for denial of 
the extension.
    (i) Failure to submit evidence or to establish eligible status. If 
the family fails to submit required evidence of eligible immigration 
status within the time period specified in the notice, or any extension 
granted in accordance with paragraph (h) of this section, or if the 
evidence is timely submitted but fails to establish eligible immigration 
status, the responsible entity shall proceed to deny, prorate or 
terminate assistance, or provide continued assistance or temporary 
deferral of termination of assistance, as appropriate, in accordance 
with the provisions of Secs. 5.514, 5.516, and 5.518.
    (ii) [Reserved]

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60538, Nov. 29, 1996; 
64 FR 25731, May 12, 1999]



Sec. 5.510  Documents of eligible immigration status.

    (a) General. A responsible entity shall request and review original 
documents of eligible immigration status. The responsible entity shall 
retain photocopies of the documents for its own records and return the 
original documents to the family.
    (b) Acceptable evidence of eligible immigration status. Acceptable 
evidence of eligible immigration status shall be the original of a 
document designated by INS as acceptable evidence of immigration status 
in one of the six categories mentioned in Sec. 5.506(a) for the specific 
immigration status claimed by the individual.

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 
64 FR 25731, May 12, 1999]



Sec. 5.512  Verification of eligible immigration status.

    (a) General. Except as described in paragraph (b) of this section 
and Sec. 5.514, no individual or family applying for assistance may 
receive such assistance prior to the verification of the eligibility of 
at least the individual or one family member. Verification of 
eligibility consistent with Sec. 5.514 occurs when the individual or 
family members have submitted documentation to the responsible entity in 
accordance with Sec. 5.508.
    (b) PHA election to provide assistance before verification. A PHA 
that is a responsible entity under this subpart may elect to provide 
assistance to a family before the verification of the eligibility of the 
individual or one family member.
    (c) Primary verification--(1) Automated verification system. Primary 
verification of the immigration status of the person is conducted by the 
responsible entity through the INS automated system (INS Systematic 
Alien Verification for Entitlements (SAVE)). The INS SAVE system 
provides access to names, file numbers and admission numbers of 
noncitizens.
    (2) Failure of primary verification to confirm eligible immigration 
status. If the INS SAVE system does not verify eligible immigration 
status, secondary verification must be performed.
    (d) Secondary verification--(1) Manual search of INS records. 
Secondary verification is a manual search by the

[[Page 59]]

INS of its records to determine an individual's immigration status. The 
responsible entity must request secondary verification, within 10 days 
of receiving the results of the primary verification, if the primary 
verification system does not confirm eligible immigration status, or if 
the primary verification system verifies immigration status that is 
ineligible for assistance under a Section 214 covered program.
    (2) Secondary verification initiated by responsible entity. 
Secondary verification is initiated by the responsible entity forwarding 
photocopies of the original INS documents required for the immigration 
status declared (front and back), attached to the INS document 
verification request form G-845S (Document Verification Request), or 
such other form specified by the INS to a designated INS office for 
review. (Form G-845S is available from the local INS Office.)
    (3) Failure of secondary verification to confirm eligible 
immigration status. If the secondary verification does not confirm 
eligible immigration status, the responsible entity shall issue to the 
family the notice described in Sec. 5.514(d), which includes 
notification of the right to appeal to the INS of the INS finding on 
immigration status (see Sec. 5.514(d)(4)).
    (e) Exemption from liability for INS verification. The responsible 
entity shall not be liable for any action, delay, or failure of the INS 
in conducting the automated or manual verification.

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 
64 FR 25731, May 12, 1999]



Sec. 5.514  Delay, denial, reduction or termination of assistance.

    (a) General. Assistance to a family may not be delayed, denied, 
reduced or terminated because of the immigration status of a family 
member except as provided in this section.
    (b) Restrictions on delay, denial, reduction or termination of 
assistance. (1) Restrictions on reduction, denial or termination of 
assistance for applicants and tenants. Assistance to an applicant or 
tenant shall not be delayed, denied, reduced, or terminated, on the 
basis of ineligible immigration status of a family member if:
    (i) The primary and secondary verification of any immigration 
documents that were timely submitted has not been completed;
    (ii) The family member for whom required evidence has not been 
submitted has moved from the assisted dwelling unit;
    (iii) The family member who is determined not to be in an eligible 
immigration status following INS verification has moved from the 
assisted dwelling unit;
    (iv) The INS appeals process under Sec. 5.514(e) has not been 
concluded;
    (v) Assistance is prorated in accordance with Sec. 5.520; or
    (vi) Assistance for a mixed family is continued in accordance with 
Secs. 5.516 and 5.518; or
    (vii) Deferral of termination of assistance is granted in accordance 
with Secs. 5.516 and 5.518.
    (2) Restrictions on delay, denial, reduction or termination of 
assistance pending fair hearing for tenants. In addition to the factors 
listed in paragraph (b)(1) of this section, assistance to a tenant 
cannot be delayed, denied, reduced or terminated until the completion of 
the informal hearing described in paragraph (f) of this section.
    (c) Events causing denial or termination of assistance. (1) General. 
Assistance to an applicant shall be denied, and a tenant's assistance 
shall be terminated, in accordance with the procedures of this section, 
upon the occurrence of any of the following events:
    (i) Evidence of citizenship (i.e., the declaration) and eligible 
immigration status is not submitted by the date specified in 
Sec. 5.508(g) or by the expiration of any extension granted in 
accordance with Sec. 5.508(h);
    (ii) Evidence of citizenship and eligible immigration status is 
timely submitted, but INS primary and secondary verification does not 
verify eligible immigration status of a family member; and
    (A) The family does not pursue INS appeal or informal hearing rights 
as provided in this section; or
    (B) INS appeal and informal hearing rights are pursued, but the 
final appeal

[[Page 60]]

or hearing decisions are decided against the family member; or
    (iii) The responsible entity determines that a family member has 
knowingly permitted another individual who is not eligible for 
assistance to reside (on a permanent basis) in the public or assisted 
housing unit of the family member. Such termination shall be for a 
period of not less than 24 months. This provision does not apply to a 
family if the ineligibility of the ineligible individual was considered 
in calculating any proration of assistance provided for the family.
    (2) Termination of assisted occupancy. For termination of assisted 
occupancy, see paragraph (i) of this section.
    (d) Notice of denial or termination of assistance. The notice of 
denial or termination of assistance shall advise the family:
    (1) That financial assistance will be denied or terminated, and 
provide a brief explanation of the reasons for the proposed denial or 
termination of assistance;
    (2) That the family may be eligible for proration of assistance as 
provided under Sec. 5.520;
    (3) In the case of a tenant, the criteria and procedures for 
obtaining relief under the provisions for preservation of families in 
Secs. 5.514 and 5.518;
    (4) That the family has a right to request an appeal to the INS of 
the results of secondary verification of immigration status and to 
submit additional documentation or a written explanation in support of 
the appeal in accordance with the procedures of paragraph (e) of this 
section;
    (5) That the family has a right to request an informal hearing with 
the responsible entity either upon completion of the INS appeal or in 
lieu of the INS appeal as provided in paragraph (f) of this section;
    (6) For applicants, the notice shall advise that assistance may not 
be delayed until the conclusion of the INS appeal process, but 
assistance may be delayed during the pendency of the informal hearing 
process.
    (e) Appeal to the INS. (1) Submission of request for appeal. Upon 
receipt of notification by the responsible entity that INS secondary 
verification failed to confirm eligible immigration status, the 
responsible entity shall notify the family of the results of the INS 
verification, and the family shall have 30 days from the date of the 
responsible entity's notification, to request an appeal of the INS 
results. The request for appeal shall be made by the family 
communicating that request in writing directly to the INS. The family 
must provide the responsible entity with a copy of the written request 
for appeal and proof of mailing.
    (2) Documentation to be submitted as part of appeal to INS. The 
family shall forward to the designated INS office any additional 
documentation or written explanation in support of the appeal. This 
material must include a copy of the INS document verification request 
form G-845S (used to process the secondary verification request) or such 
other form specified by the INS, and a cover letter indicating that the 
family is requesting an appeal of the INS immigration status 
verification results.
    (3) Decision by INS--(i) When decision will be issued. The INS will 
issue to the family, with a copy to the responsible entity, a decision 
within 30 days of its receipt of documentation concerning the family's 
appeal of the verification of immigration status. If, for any reason, 
the INS is unable to issue a decision within the 30 day time period, the 
INS will inform the family and responsible entity of the reasons for the 
delay.
    (ii) Notification of INS decision and of informal hearing 
procedures. When the responsible entity receives a copy of the INS 
decision, the responsible entity shall notify the family of its right to 
request an informal hearing on the responsible entity's ineligibility 
determination in accordance with the procedures of paragraph (f) of this 
section.
    (4) No delay, denial, reduction, or termination of assistance until 
completion of INS appeal process; direct appeal to INS. Pending the 
completion of the INS appeal under this section, assistance may not be 
delayed, denied, reduced or terminated on the basis of immigration 
status.
    (f) Informal hearing. (1) When request for hearing is to be made. 
After notification of the INS decision on appeal, or in lieu of request 
of appeal to the INS,

[[Page 61]]

the family may request that the responsible entity provide a hearing. 
This request must be made either within 30 days of receipt of the notice 
described in paragraph (d) of this section, or within 30 days of receipt 
of the INS appeal decision issued in accordance with paragraph (e) of 
this section.
    (2) Informal hearing procedures--(i) Tenants assisted under a 
Section 8 covered program: For tenants assisted under a Section 8 
covered program, the procedures for the hearing before the responsible 
entity are set forth in:
    (A) For Section 8 Moderate Rehabilitation assistance: 24 CFR part 
882;
    (B) For Section 8 tenant-based assistance: 24 CFR part 982; or
    (C) For Section 8 project-based certificate program: 24 CFR part 
983.
    (ii) Tenants assisted under any other Section 8 covered program or a 
Public Housing covered program: For tenants assisted under a Section 8 
covered program not listed in paragraph (f)(3)(i) of this section or a 
Public Housing covered program, the procedures for the hearing before 
the responsible entity are set forth in 24 CFR part 966.
    (iii) Families under Housing covered programs and applicants for 
assistance under all covered programs. For all families under Housing 
covered programs (applicants as well as tenants already receiving 
assistance) and for applicants for assistance under all covered 
programs, the procedures for the informal hearing before the responsible 
entity are as follows:
    (A) Hearing before an impartial individual. The family shall be 
provided a hearing before any person(s) designated by the responsible 
entity (including an officer or employee of the responsible entity), 
other than a person who made or approved the decision under review, and 
other than a person who is a subordinate of the person who made or 
approved the decision;
    (B) Examination of evidence. The family shall be provided the 
opportunity to examine and copy at the individual's expense, at a 
reasonable time in advance of the hearing, any documents in the 
possession of the responsible entity pertaining to the family's 
eligibility status, or in the possession of the INS (as permitted by INS 
requirements), including any records and regulations that may be 
relevant to the hearing;
    (C) Presentation of evidence and arguments in support of eligible 
status. The family shall be provided the opportunity to present evidence 
and arguments in support of eligible status. Evidence may be considered 
without regard to admissibility under the rules of evidence applicable 
to judicial proceedings;
    (D) Controverting evidence of the responsible entity. The family 
shall be provided the opportunity to controvert evidence relied upon by 
the responsible entity and to confront and cross-examine all witnesses 
on whose testimony or information the responsible entity relies;
    (E) Representation. The family shall be entitled to be represented 
by an attorney, or other designee, at the family's expense, and to have 
such person make statements on the family's behalf;
    (F) Interpretive services. The family shall be entitled to arrange 
for an interpreter to attend the hearing, at the expense of the family, 
or responsible entity, as may be agreed upon by the two parties to the 
proceeding; and
    (G) Hearing to be recorded. The family shall be entitled to have the 
hearing recorded by audiotape (a transcript of the hearing may, but is 
not required to, be provided by the responsible entity).
    (3) Hearing decision. The responsible entity shall provide the 
family with a written final decision, based solely on the facts 
presented at the hearing, within 14 days of the date of the informal 
hearing. The decision shall state the basis for the decision.
    (g) Judicial relief. A decision against a family member, issued in 
accordance with paragraphs (e) or (f) of this section, does not preclude 
the family from exercising the right, that may otherwise be available, 
to seek redress directly through judicial procedures.
    (h) Retention of documents. The responsible entity shall retain for 
a minimum of 5 years the following documents that may have been 
submitted to the responsible entity by the family, or provided to the 
responsible entity as part of the INS appeal or the informal hearing 
process:

[[Page 62]]

    (1) The application for financial assistance;
    (2) The form completed by the family for income reexamination;
    (3) Photocopies of any original documents (front and back), 
including original INS documents;
    (4) The signed verification consent form;
    (5) The INS verification results;
    (6) The request for an INS appeal;
    (7) The final INS determination;
    (8) The request for an informal hearing; and
    (9) The final informal hearing decision.
    (i) Termination of assisted occupancy. (1) Under Housing covered 
programs, and in the Section 8 covered programs other than the Section 8 
Rental Certificate, Rental Voucher, and Moderate Rehabilitation 
programs, assisted occupancy is terminated by:
    (i) If permitted under the lease, the responsible entity notifying 
the tenant that because of the termination of assisted occupancy the 
tenant is required to pay the HUD-approved market rent for the dwelling 
unit.
    (ii) The responsible entity and tenant entering into a new lease 
without financial assistance.
    (iii) The responsible entity evicting the tenant. While the tenant 
continues in occupancy of the unit, the responsible entity may continue 
to receive assistance payments if action to terminate the tenancy under 
an assisted lease is promptly initiated and diligently pursued, in 
accordance with the terms of the lease, and if eviction of the tenant is 
undertaken by judicial action pursuant to State and local law. Action by 
the responsible entity to terminate the tenancy and to evict the tenant 
must be in accordance with applicable HUD regulations and other HUD 
requirements. For any jurisdiction, HUD may prescribe a maximum period 
during which assistance payments may be continued during eviction 
proceedings and may prescribe other standards of reasonable diligence 
for the prosecution of eviction proceedings.
    (2) In the Section 8 Rental Certificate, Rental Voucher, and 
Moderate Rehabilitation programs, assisted occupancy is terminated by 
terminating assistance payments. (See provisions of this section 
concerning termination of assistance.) The PHA shall not make any 
additional assistance payments to the owner after the required 
procedures specified in this section have been completed. In addition, 
the PHA shall not approve a lease, enter into an assistance contract, or 
process a portability move for the family after those procedures have 
been completed.

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 
64 FR 25731, May 12, 1999]



Sec. 5.516  Availability of preservation assistance to mixed families and other families.

    (a) Assistance available for tenant mixed families--(1) General. 
Preservation assistance is available to tenant mixed families, following 
completion of the appeals and informal hearing procedures provided in 
Sec. 5.514. There are three types of preservation assistance:
    (i) Continued assistance (see paragraph (a) of Sec. 5.518);
    (ii) Temporary deferral of termination of assistance (see paragraph 
(b) of Sec. 5.518); or
    (iii) Prorated assistance (see Sec. 5.520, a mixed family must be 
provided prorated assistance if the family so requests).
    (2) Availability of assistance--(i) For Housing covered programs: 
One of the three types of assistance described is available to tenant 
mixed families assisted under a National Housing Act or 1965 HUD Act 
covered program, depending upon the family's eligibility for such 
assistance. Continued assistance must be provided to a mixed family that 
meets the conditions for eligibility for continued assistance.
    (ii) For Section 8 or Public Housing covered programs. One of the 
three types of assistance described may be available to tenant mixed 
families assisted under a Section 8 or Public Housing covered program.
    (b) Assistance available for applicant mixed families. Prorated 
assistance is also available for mixed families applying for assistance 
as provided in Sec. 5.520.
    (c) Assistance available to other families in occupancy. Temporary 
deferral of termination of assistance may be

[[Page 63]]

available to families receiving assistance under a Section 214 covered 
program on June 19, 1995, and who have no members with eligible 
immigration status, as set forth in paragraphs (c)(1) and (2) of this 
section.
    (1) For Housing covered programs: Temporary deferral of termination 
of assistance is available to families assisted under a Housing covered 
program.
    (2) For Section 8 or Public Housing covered programs: The 
responsible entity may make temporary deferral of termination of 
assistance to families assisted under a Section 8 or Public Housing 
covered program.
    (d) Section 8 covered programs: Discretion afforded to provide 
certain family preservation assistance--(1) Project owners. With respect 
to assistance under a Section 8 Act covered program administered by a 
project owner, HUD has the discretion to determine under what 
circumstances families are to be provided one of the two statutory forms 
of assistance for preservation of the family (continued assistance or 
temporary deferral of assistance). HUD is exercising its discretion by 
specifying the standards in this section under which a project owner 
must provide one of these two types of assistance to a family. However, 
project owners and PHAs must offer prorated assistance to eligible mixed 
families.
    (2) PHAs. The PHA, rather than HUD, has the discretion to determine 
the circumstances under which a family will be offered one of the two 
statutory forms of assistance (continued assistance or temporary 
deferral of termination of assistance). The PHA must establish its own 
policy and criteria to follow in making its decision. In establishing 
the criteria for granting continued assistance or temporary deferral of 
termination of assistance, the PHA must incorporate the statutory 
criteria, which are set forth in paragraphs (a) and (b) of Sec. 5.518. 
However, the PHA must offer prorated assistance to eligible families.

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 
64 FR 25732, May 12, 1999]



Sec. 5.518  Types of preservation assistance available to mixed families and other families.

    (a) Continued assistance. (1) General. A mixed family may receive 
continued housing assistance if all of the following conditions are met 
(a mixed family assisted under a Housing covered program must be 
provided continued assistance if the family meets the following 
conditions):
    (i) The family was receiving assistance under a Section 214 covered 
program on June 19, 1995;
    (ii) The family's head of household or spouse has eligible 
immigration status as described in Sec. 5.506; and
    (iii) The family does not include any person (who does not have 
eligible immigration status) other than the head of household, any 
spouse of the head of household, any parents of the head of household, 
any parents of the spouse, or any children of the head of household or 
spouse.
    (2) Proration of continued assistance. A family entitled to 
continued assistance before November 29, 1996 is entitled to continued 
assistance as described in paragraph (a) of this section. A family 
entitled to continued assistance after November 29, 1996 shall receive 
prorated assistance as described in Sec. 5.520.
    (b) Temporary deferral of termination of assistance--(1) Eligibility 
for this type of assistance. If a mixed family qualifies for prorated 
assistance (and does not qualify for continued assistance), but decides 
not to accept prorated assistance, or if a family has no members with 
eligible immigration status, the family may be eligible for temporary 
deferral of termination of assistance if necessary to permit the family 
additional time for the orderly transition of those family members with 
ineligible status, and any other family members involved, to other 
affordable housing. Other affordable housing is used in the context of 
transition of an ineligible family from a rent level that reflects HUD 
assistance to a rent level that is unassisted; the term refers to 
housing that is not substandard, that is of appropriate size for the 
family and that can be rented for an amount not exceeding the amount 
that the family pays for rent, including utilities, plus 25 percent.

[[Page 64]]

    (2) Housing covered programs: Conditions for granting temporary 
deferral of termination of assistance. The responsible entity shall 
grant a temporary deferral of termination of assistance to a mixed 
family if the family is assisted under a Housing covered program and one 
of the following conditions is met:
    (i) The family demonstrates that reasonable efforts to find other 
affordable housing of appropriate size have been unsuccessful (for 
purposes of this section, reasonable efforts include seeking information 
from, and pursuing leads obtained from the State housing agency, the 
city government, local newspapers, rental agencies and the owner);
    (ii) The vacancy rate for affordable housing of appropriate size is 
below five percent in the housing market for the area in which the 
project is located; or
    (iii) The consolidated plan, as described in 24 CFR part 91 and if 
applicable to the covered program, indicates that the local 
jurisdiction's housing market lacks sufficient affordable housing 
opportunities for households having a size and income similar to the 
family seeking the deferral.
    (3) Time limit on deferral period. If temporary deferral of 
termination of assistance is granted, the deferral period shall be for 
an initial period not to exceed six months. The initial period may be 
renewed for additional periods of six months, but the aggregate deferral 
period for deferrals provided after November 29, 1996 shall not exceed a 
period of eighteen months. The aggregate deferral period for deferrals 
granted prior to November 29, 1996 shall not exceed 3 years. These time 
periods do not apply to a family which includes a refugee under section 
207 of the Immigration and Nationality Act or an individual seeking 
asylum under section 208 of that Act.
    (4) Notification requirements for beginning of each deferral period. 
At the beginning of each deferral period, the responsible entity must 
inform the family of its ineligibility for financial assistance and 
offer the family information concerning, and referrals to assist in 
finding, other affordable housing.
    (5) Determination of availability of affordable housing at end of 
each deferral period. (i) Before the end of each deferral period, the 
responsible entity must satisfy the applicable requirements of either 
paragraph (b)(5)(i)(A) or (B) of this section. Specifically, the 
responsible entity must:
    (A) For Housing covered programs: Make a determination that one of 
the two conditions specified in paragraph (b)(2) of this section 
continues to be met (note: affordable housing will be determined to be 
available if the vacancy rate is five percent or greater), the owner's 
knowledge and the tenant's evidence indicate that other affordable 
housing is available; or
    (B) For Section 8 or Public Housing covered programs: Make a 
determination of the availability of affordable housing of appropriate 
size based on evidence of conditions which when taken together will 
demonstrate an inadequate supply of affordable housing for the area in 
which the project is located, the consolidated plan (if applicable, as 
described in 24 CFR part 91), the responsible entity's own knowledge of 
the availability of affordable housing, and on evidence of the tenant 
family's efforts to locate such housing.
    (ii) The responsible entity must also:
    (A) Notify the tenant family in writing, at least 60 days in advance 
of the expiration of the deferral period, that termination will be 
deferred again (provided that the granting of another deferral will not 
result in aggregate deferral periods that exceeds the maximum deferral 
period). This time period does not apply to a family which includes a 
refugee under section 207 of the Immigration and Nationality Act or an 
individual seeking asylum under section 208 of that Act, and a 
determination was made that other affordable housing is not available; 
or
    (B) Notify the tenant family in writing, at least 60 days in advance 
of the expiration of the deferral period, that termination of financial 
assistance will not be deferred because either granting another deferral 
will result in aggregate deferral periods that exceed the maximum 
deferral period (unless the family includes a refugee under section 207 
of the Immigration and Nationality Act or an individual seeking asylum 
under section 208 of that Act), or a determination has been made that 
other affordable housing is available.

[[Page 65]]

    (c) Option to select proration of assistance at end of deferral 
period. A family who is eligible for, and receives temporary deferral of 
termination of assistance, may request, and the responsible entity shall 
provide proration of assistance at the end of the deferral period if the 
family has made a good faith effort during the deferral period to locate 
other affordable housing.
    (d) Notification of decision on family preservation assistance. A 
responsible entity shall notify the family of its decision concerning 
the family's qualification for family preservation assistance. If the 
family is ineligible for family preservation assistance, the 
notification shall state the reasons, which must be based on relevant 
factors. For tenant families, the notice also shall inform the family of 
any applicable appeal rights.

[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 
64 FR 25732, May 12, 1999]



Sec. 5.520  Proration of assistance.

    (a) Applicability. This section applies to a mixed family other than 
a family receiving continued assistance, or other than a family who is 
eligible for and requests and receives temporary deferral of termination 
of assistance. An eligible mixed family who requests prorated assistance 
must be provided prorated assistance.
    (b) Method of prorating assistance for Housing covered programs--(1) 
Proration under Rent Supplement Program. If the household participates 
in the Rent Supplement Program, the rent supplement paid on the 
household's behalf shall be the rent supplement the household would 
otherwise be entitled to, multiplied by a fraction, the denominator of 
which is the number of people in the household and the numerator of 
which is the number of eligible persons in the household;
    (2) Proration under Section 235 Program. If the household 
participates in the Section 235 Program, the interest reduction payments 
paid on the household's behalf shall be the payments the household would 
otherwise be entitled to, multiplied by a fraction the denominator of 
which is the number of people in the household and the numerator of 
which is the number of eligible persons in the household;
    (3) Proration under Section 236 Program without the benefit of 
additional assistance. If the household participates in the Section 236 
Program without the benefit of any additional assistance, the 
household's rent shall be increased above the rent the household would 
otherwise pay by an amount equal to the difference between the market 
rate rent for the unit and the rent the household would otherwise pay 
multiplied by a fraction the denominator of which is the number of 
people in the household and the numerator of which is the number of 
ineligible persons in the household;
    (4) Proration under Section 236 Program with the benefit of 
additional assistance. If the household participates in the Section 236 
Program with the benefit of additional assistance under the rent 
supplement, rental assistance payment or Section 8 programs, the 
household's rent shall be increased above the rent the household would 
otherwise pay by:
    (i) An amount equal to the difference between the market rate rent 
for the unit and the basic rent for the unit multiplied by a fraction, 
the denominator of which is the number of people in the household, and 
the numerator of which is the number of ineligible persons in the 
household, plus;
    (ii) An amount equal to the rent supplement, housing assistance 
payment or rental assistance payment the household would otherwise be 
entitled to multiplied by a fraction, the denominator of which is the 
number of people in the household and the numerator of which is the 
number of ineligible persons in the household.
    (c) Method of prorating assistance for Section 8 covered programs--
(1) Section 8 assistance other than assistance provided for a tenancy 
under the Section 8 Rental Voucher Program or for an over-FMR tenancy in 
the Section 8 Rental Certificate Program. For Section 8 assistance other 
than assistance for a tenancy under the voucher program or an over-FMR 
tenancy under the certificate program, the PHA must prorate the family's 
assistance as follows:
    (i) Step 1. Determine gross rent for the unit. (Gross rent is 
contract rent

[[Page 66]]

plus any allowance for tenant paid utilities).
    (ii) Step 2. Determine total tenant payment in accordance with 
section 5.613(a). (Annual income includes income of all family members, 
including any family member who has not established eligible immigration 
status.)
    (iii) Step 3. Subtract amount determined in paragraph (c)(1)(ii), 
(Step 2), from amount determined in paragraph (c)(1)(i), (Step 1).
    (iv) Step 4. Multiply the amount determined in paragraph 
(c)(1)(iii), (Step 3) by a fraction for which:
    (A) The numerator is the number of family members who have 
established eligible immigration status; and
    (B) The denominator is the total number of family members.
    (v) Prorated housing assistance. The amount determined in paragraph 
(c)(1)(iv), (Step 4) is the prorated housing assistance payment for a 
mixed family.
    (vi) No effect on contract rent. Proration of the housing assistance 
payment does not affect contract rent to the owner. The family must pay 
as rent the portion of contract rent not covered by the prorated housing 
assistance payment.
    (2) Assistance for a Section 8 voucher tenancy or over-FMR tenancy. 
For a tenancy under the voucher program or for an over-FMR tenancy under 
the certificate program, the PHA must prorate the family's assistance as 
follows:
    (i) Step 1. Determine the amount of the pre-proration housing 
assistance payment. (Annual income includes income of all family 
members, including any family member who has not established eligible 
immigration status.)
    (ii) Step 2. Multiply the amount determined in paragraph (c)(2)(i), 
(Step 1) by a fraction for which:
    (A) The numerator is the number of family members who have 
established eligible immigration status; and
    (B) The denominator is the total number of family members.
    (iii) Prorated housing assistance. The amount determined in 
paragraph (c)(2)(ii), (Step 2) is the prorated housing assistance 
payment for a mixed family.
    (iv) No effect on rent to owner. Proration of the housing assistance 
payment does not affect rent to owner. The family must pay the portion 
of rent to owner not covered by the prorated housing assistance payment.
    (d) Method of prorating assistance for Public Housing covered 
programs. The PHA shall prorate the family's assistance by:
    (1) Step 1. Determining total tenant payment in accordance with 24 
CFR 913.107(a). (Annual income includes income of all family members, 
including any family member who has not established eligible immigration 
status.)
    (2) Step 2. Subtracting the total tenant payment from a HUD-supplied 
``public housing maximum rent'' applicable to the unit or the PHA. (This 
``maximum rent'' shall be determined by HUD using the 95th percentile 
rent for the PHA.) The result is the maximum subsidy for which the 
family could qualify if all members were eligible (``family maximum 
subsidy'').
    (3) Step 3. Dividing the family maximum subsidy by the number of 
persons in the family (all persons) to determine the maximum subsidy per 
each family member who has citizenship or eligible immigration status 
(``eligible family member''). The subsidy per eligible family member is 
the ``member maximum subsidy''.
    (4) Step 4. Multiplying the member maximum subsidy by the number of 
family members who have citizenship or eligible immigration status 
(``eligible family members'').
    (5) Step 5. The product of steps 1 through 4, as set forth in 
paragraph (d)(2) of this section is the amount of subsidy for which the 
family is eligible (``eligible subsidy''). The family's rent is the 
``public housing maximum rent'' minus the amount of the eligible 
subsidy.

[61 FR 5202, Feb. 9, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 64 
FR 13056, Mar. 16, 1999]



Sec. 5.522  Prohibition of assistance to noncitizen students.

    (a) General. The provisions of Secs. 5.516 and 5.518 permitting 
continued assistance or temporary deferral of termination of assistance 
for certain families do not apply to any person who is determined to be 
a noncitizen student as in paragraph (c)(2)(A) of Section 214 (42 U.S.C. 
1436a(c)(2)(A)). The family of

[[Page 67]]

a noncitizen student may be eligible for prorated assistance, as 
provided in paragraph (b)(2) of this section.
    (b) Family of noncitizen students. (1) The prohibition on providing 
assistance to a noncitizen student as described in paragraph (a) of this 
section extends to the noncitizen spouse of the noncitizen student and 
minor children accompanying the student or following to join the 
student.
    (2) The prohibition on providing assistance to a noncitizen student 
does not extend to the citizen spouse of the noncitizen student and the 
children of the citizen spouse and noncitizen student.



Sec. 5.524  Compliance with nondiscrimination requirements.

    The responsible entity shall administer the restrictions on use of 
assisted housing by noncitizens with ineligible immigration status 
imposed by this part in conformity with all applicable nondiscrimination 
and equal opportunity requirements, including, but not limited to, title 
VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-5) and the 
implementing regulations in 24 CFR part 1, section 504 of the 
Rehabilitation Act of 1973 (29 U.S.C. 794) and the implementing 
regulations in 24 CFR part 8, the Fair Housing Act (42 U.S.C. 3601-3619) 
and the implementing regulations in 24 CFR part 100.



Sec. 5.526  Protection from liability for responsible entities and State and local government agencies and officials.

    (a) Protection from liability for responsible entities. Responsible 
entities are protected from liability as set forth in Section 214(e) (42 
U.S.C 1436a(e)).
    (b) Protection from liability for State and local government 
agencies and officials. State and local government agencies and 
officials shall not be liable for the design or implementation of the 
verification system described in Sec. 5.512, as long as the 
implementation by the State and local government agency or official is 
in accordance with prescribed HUD rules and requirements.

[64 FR 25732, May 12, 1999]



Sec. 5.528  Liability of ineligible tenants for reimbursement of benefits.

    Where a tenant has received the benefit of HUD financial assistance 
to which the tenant was not entitled because the tenant intentionally 
misrepresented eligible status, the ineligible tenant is responsible for 
reimbursing HUD for the assistance improperly paid. If the amount of the 
assistance is substantial, the responsible entity is encouraged to refer 
the case to the HUD Inspector General's office for further 
investigation. Possible criminal prosecution may follow based on the 
False Statements Act (18 U.S.C. 1001 and 1010).



   Subpart F--Section 8 and Public Housing: Family Income and Family 
 Payment; Occupancy Requirements for Section 8 Project-Based Assistance

    Authority: 42 U.S.C. 1437a, 1437c, 1437d, 1437f, 1437n, and 3535(d).

    Source: 61 FR 54498, Oct. 18, 1996, unless otherwise noted.



Sec. 5.601  Purpose and applicability.

    This subpart states HUD requirements on these subjects:
    (a) Determining annual and adjusted income of families who apply for 
or receive assistance in the Section 8 and public housing programs;
    (b) Determining payments by and utility reimbursements to families 
assisted in these programs;
    (c) Additional occupancy requirements that apply to the Section 8 
project-based assistance programs. These additional requirements 
concern:
    (1) Income-eligibility and income-targeting when a Section 8 owner 
admits families to a Section 8 project or unit;
    (2) Owner selection preferences;
    (3) Owner reexamination of family income and composition.

[65 FR 16716, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.601 was 
revised, effective Apr. 28, 2000. For the convenience of the user, the 
superseded text is set forth as follows:

[[Page 68]]

Sec. 5.601  Purpose and applicability.

    (a) This subpart establishes definitions and requirements concerning 
income limits for admission, annual income, adjusted income, total 
tenant payment, utility allowances and reimbursements, and reexamination 
of income and family composition for:
    (1) HUD's public housing programs, including its public housing 
homeownership programs.
    (2) Housing assisted under section 8 of the United States Housing 
Act of 1937 (the 1937 Act) (42 U.S.C. 1437f).
    (i) Section 5.613 (Total tenant payment) and the definitions of 
``tenant rent'' and ``total tenant payment'' found in Sec. 5.603 do not 
apply to the Section 8 Rental Voucher Program.
    (ii) Section 5.615 (Utility reimbursement) and the definition of 
utility reimbursement found in Sec. 5.603 also do not apply to the 
Section 8 Rental Voucher Program. For the Voucher Program, in cases 
where the amount of the HAP payment exceeds the rent to owner, the 
excess will be paid to the family.
    (iii) Section 5.607 (Income limits for admission) does not apply to 
the Section 8 Rental Voucher and Rental Certificate Programs.
    (3) Applicants and tenants assisted under sections 10(c) and 23 of 
the 1937 Act as in effect before amendment by the Housing and Community 
Development Act of 1974 (42 U.S.C. 1410 and 1421b (1970 ed.)).
    (b) This subpart does not apply to HUD's Indian housing programs. 
The analogous rule that applies to Indian housing is located at 24 CFR 
part 950.



Sec. 5.603  Definitions.

    As used in this subpart:
    (a) Terms found elsewhere in part 5--(1) Subpart A. The terms 1937 
Act, elderly person, public housing, public housing agency (PHA), and 
Section 8 are defined in Sec. 5.100.
    (2) Subpart D. The terms ``disabled family'', ``elderly family'', 
``family'', ``live-in aide'', and ``person with disabilities'' are 
defined in Sec. 5.403.
    (b) The following terms shall have the meanings set forth below:
    Adjusted income. See Sec. 5.611.
    Annual income. See Sec. 5.609.
    Child care expenses. Amounts anticipated to be paid by the family 
for the care of children under 13 years of age during the period for 
which annual income is computed, but only where such care is necessary 
to enable a family member to actively seek employment, be gainfully 
employed, or to further his or her education and only to the extent such 
amounts are not reimbursed. The amount deducted shall reflect reasonable 
charges for child care. In the case of child care necessary to permit 
employment, the amount deducted shall not exceed the amount of 
employment income that is included in annual income.
    Dependent. A member of the family (except foster children and foster 
adults) other than the family head or spouse, who is under 18 years of 
age, or is a person with a disability, or is a full-time student.
    Disability assistance expenses. Reasonable expenses that are 
anticipated, during the period for which annual income is computed, for 
attendant care and auxiliary apparatus for a disabled family member and 
that are necessary to enable a family member (including the disabled 
member) to be employed, provided that the expenses are neither paid to a 
member of the family nor reimbursed by an outside source.
    Economic self-sufficiency program. Any program designed to 
encourage, assist, train, or facilitate the economic independence of 
HUD-assisted families or to provide work for such families. These 
programs include programs for job training, employment counseling, work 
placement, basic skills training, education, English proficiency, 
workfare, financial or household management, apprenticeship, and any 
program necessary to ready a participant for work (including a substance 
abuse or mental health treatment program), or other work activities.
    Extremely low income family. A family whose annual income does not 
exceed 30 percent of the median income for the area, as determined by 
HUD, with adjustments for smaller and larger families, except that HUD 
may establish income ceilings higher or lower than 30 percent of the 
median income for the area if HUD finds that such variations are 
necessary because of unusually high or low family incomes.
    Full-time student. A person who is attending school or vocational 
training on a full-time basis.
    Imputed welfare income. See Sec. 5.615.
    Low income family. A family whose annual income does not exceed 80 
percent of the median income for the area,

[[Page 69]]

as determined by HUD with adjustments for smaller and larger families, 
except that HUD may establish income ceilings higher or lower than 80 
percent of the median income for the area on the basis of HUD's findings 
that such variations are necessary because of unusually high or low 
family incomes.
    Medical expenses. Medical expenses, including medical insurance 
premiums, that are anticipated during the period for which annual income 
is computed, and that are not covered by insurance.
    Monthly adjusted income. One twelfth of adjusted income.
    Monthly income. One twelfth of annual income.
    Net family assets. (1) Net cash value after deducting reasonable 
costs that would be incurred in disposing of real property, savings, 
stocks, bonds, and other forms of capital investment, excluding 
interests in Indian trust land and excluding equity accounts in HUD 
homeownership programs. The value of necessary items of personal 
property such as furniture and automobiles shall be excluded.
    (2) In cases where a trust fund has been established and the trust 
is not revocable by, or under the control of, any member of the family 
or household, the value of the trust fund will not be considered an 
asset so long as the fund continues to be held in trust. Any income 
distributed from the trust fund shall be counted when determining annual 
income under Sec. 5.609.
    (3) In determining net family assets, PHAs or owners, as applicable, 
shall include the value of any business or family assets disposed of by 
an applicant or tenant for less than fair market value (including a 
disposition in trust, but not in a foreclosure or bankruptcy sale) 
during the two years preceding the date of application for the program 
or reexamination, as applicable, in excess of the consideration received 
therefor. In the case of a disposition as part of a separation or 
divorce settlement, the disposition will not be considered to be for 
less than fair market value if the applicant or tenant receives 
important consideration not measurable in dollar terms.
    Owner has the meaning provided in the relevant program regulations. 
As used in this subpart, where appropriate, the term ``owner'' shall 
also include a ``borrower'' as defined in part 891 of this title.
    Tenant rent. The amount payable monthly by the family as rent to the 
unit owner (Section 8 owner or PHA in public housing). (This term is not 
used in the Section 8 voucher program.)
    Total tenant payment. See Sec. 5.613.
    Utility allowance. If the cost of utilities (except telephone) and 
other housing services for an assisted unit is not included in the 
tenant rent but is the responsibility of the family occupying the unit, 
an amount equal to the estimate made or approved by a PHA or HUD of the 
monthly cost of a reasonable consumption of such utilities and other 
services for the unit by an energy-conservative household of modest 
circumstances consistent with the requirements of a safe, sanitary, and 
healthful living environment.
    Utility reimbursement. The amount, if any, by which the utility 
allowance for a unit, if applicable, exceeds the total tenant payment 
for the family occupying the unit. (This definition is not used in the 
Section 8 voucher program, or for a public housing family that is paying 
a flat rent.)
    Very low income family. A family whose annual income does not exceed 
50 percent of the median family income for the area, as determined by 
HUD with adjustments for smaller and larger families, except that HUD 
may establish income ceilings higher or lower than 50 percent of the 
median income for the area if HUD finds that such variations are 
necessary because of unusually high or low family incomes.
    Welfare assistance. Welfare or other payments to families or 
individuals, based on need, that are made under programs funded, 
separately or jointly, by Federal, State or local governments.
    Work activities. See definition at section 407(d) of the Social 
Security Act (42 U.S.C. 607(d)).

[61 FR 54498, Oct. 18, 1996, as amended at 65 FR 16716, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.603 was 
amended by revising paragraph (a), by removing paragraphs (b) and (c), 
and by redesignating paragraph (d) as paragraph (b); newly designated 
paragraph (b) was amended by revising the definitions

[[Page 70]]

of ``full-time student'', ``tenant rent'', and ``utility 
reimbursement'', and by adding definitions of ``economic self-
sufficiency program'', ``extremely low income family'', ``imputed 
welfare income'', ``low income family'', ``very low income family'', and 
``work activities'', and in the definition of ``owner'', by removing the 
phrase ``24 CFR part 885'' and replacing it with ``part 891 of this 
title'', effective Apr. 28, 2000. For the convenience of the user, the 
superseded text is set forth as follows:

Sec. 5.603  Definitions.

                                * * * * *

    (a) The terms elderly person, low-income family, person with 
disabilities, State, and very low-income family are defined in section 
3(b) of the 1937 Act (42 U.S.C. 1437a(b)).
    (b) The terms 1937 Act and public housing agency (PHA) are defined 
in Sec. 5.100.
    (c) The terms disabled family, elderly family, family, and live-in 
aide are defined in Sec. 5.403.

                                * * * * *

    Full-time student. A person who is carrying a subject load that is 
considered full-time for day students under the standards and practices 
of the educational institution attended. An educational institution 
includes a vocational school with a diploma or certificate program, as 
well as an institution offering a college degree.

                                * * * * *

    Tenant rent. The amount payable monthly by the family as rent to the 
PHA or owner, as applicable. Where all utilities (except telephone) and 
other essential housing services are supplied by the PHA or owner, 
tenant rent equals total tenant payment. Where some or all utilities 
(except telephone) and other essential housing services are supplied by 
the PHA or owner and the cost thereof is not included in the amount paid 
as rent, tenant rent equals total tenant payment less the utility 
allowance.

                                * * * * *

    Utility reimbursement. The amount, if any, by which the utility 
allowance for the unit, if applicable, exceeds the total tenant payment 
for the family occupying the unit.



Sec. 5.605  Overall income eligibility for assistance.

    No family other than a low-income family shall be eligible for 
admission to a program covered by this part.

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.605 was 
removed, effective Apr. 28, 2000.



Sec. 5.607  Income limits for admission.

    (a) General--(1) Admission to units available before October 1, 
1981. Not more than 25 percent of the dwelling units that were available 
for occupancy under Annual Contributions Contracts (ACC) and Section 8 
Housing Assistance Payments (HAP) Contracts taking effect before October 
1, 1981 and that are leased on or after that date shall be available for 
leasing by low-income families other than very low-income families. HUD 
reserves the right to limit the admission of low-income families other 
than very low-income families to these units.
    (2) Admission to units available on or after October 1, 1981. Not 
more than 15 percent of the dwelling units that initially become 
available for occupancy under Annual Contributions Contracts (ACC) and 
Section 8 Housing Assistance Payments (HAP) Contracts on or after 
October 1, 1981 shall be available for leasing by low-income families 
other than very low-income families. Except with the prior approval of 
HUD under paragraphs (b) and (c) of this section, no low-income family, 
other than a very low-income family shall be admitted to these units.
    (b) Request for exception. A request by a PHA or owner for approval 
of admission of low-income families other than very low-income families 
to units described in paragraph (a)(2) of this section must state the 
basis for requesting the exception and provide supporting data. Bases 
for exceptions that may be considered include the following:
    (1) For Section 8 Programs. (i) Low-income families that would 
otherwise be displaced from Section 8 Substantial Rehabilitation or 
Moderate Rehabilitation projects;
    (ii) Low-income families that are displaced as a result of Rental 
Rehabilitation or Development activities assisted under section 17 of 
the 1937 Act (42 U.S.C. 1437o), or as a result of activities under the 
Rental Rehabilitation Demonstration Program;
    (iii) Need for admission of a broader range of tenants to preserve 
the financial or management viability of a

[[Page 71]]

project because there is an insufficient number of potential applicants 
who are very low-income families;
    (iv) Commitment of an owner to attaining occupancy by families with 
a broad range of incomes, as evidenced in the application for 
development. An application citing this basis should be supported by 
evidence that the owner is pursuing this goal throughout its assisted 
projects in the community; and
    (v) Project supervision by a State Housing Finance Agency having a 
policy of occupancy by families with a broad range of incomes, supported 
by evidence that the Agency is pursuing this goal throughout its 
assisted projects in the community, or a project with financing through 
Section 11(b) of the 1937 Act (42 U.S.C. 1437i) or under Section 103 of 
the Internal Revenue Code (26 U.S.C. 103).
    (2) For public housing only. (i) Need for admission of a broader 
range of tenants to obtain full occupancy;
    (ii) Local commitment to attaining occupancy by families with a 
broad range of incomes. An application citing this basis should be 
supported by evidence that the PHA is pursuing this goal throughout its 
housing program in the community;
    (iii) Need for higher incomes to sustain homeownership eligibility 
in a homeownership project; and
    (iv) Need to avoid displacing low-income families from a project 
acquired by the PHA for rehabilitation.
    (c) Action on request for exception. Whether to grant any request 
for exception is a matter committed by law to HUD's sole discretion, and 
no implication is intended to be created that HUD will seek to grant 
approvals up to the maximum limits permitted by statute, nor is any 
presumption of an entitlement to an exception created by the 
specification of certain grounds for exception that HUD may consider. 
HUD will review exceptions granted to owners and PHAs at regular 
intervals. HUD may withdraw permission to exercise those exceptions for 
program applicants at any time that exceptions are not being used or 
after a periodic review, based on the findings of the review.
    (d) Reporting. PHAs and owners shall comply with HUD-prescribed 
reporting requirements that will permit HUD to maintain the reasonably 
current data necessary to monitor compliance with the income eligibility 
restrictions described in paragraph (a) of this section.
    (e) Inapplicability to certain scattered site housing. The income 
eligibility restrictions described in paragraph (a) of this section do 
not apply to scattered site public housing dwelling units sold or 
intended to be sold to public housing tenants under section 5(h) of the 
1937 Act (42 U.S.C. 1437c(h)).
    (f) Inapplicability to the Section 8 Rental Voucher and Rental 
Certificate Programs. The provisions of this section do not apply to the 
Section 8 Rental Voucher and Section 8 Rental Certificate Programs.

(Approved by the Office of Management and Budget under Control number 
2502-0204.)

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.607 was 
removed, effective Apr. 28, 2000.

                              Family Income



Sec. 5.609  Annual income.

    (a) Annual income means all amounts, monetary or not, which:
    (1) Go to, or on behalf of, the family head or spouse (even if 
temporarily absent) or to any other family member; or
    (2) Are anticipated to be received from a source outside the family 
during the 12-month period following admission or annual reexamination 
effective date; and
    (3) Which are not specifically excluded in paragraph (c) of this 
section.
    (4) Annual income also means amounts derived (during the 12-month 
period) from assets to which any member of the family has access.
    (b) Annual income includes, but is not limited to:
    (1) The full amount, before any payroll deductions, of wages and 
salaries, overtime pay, commissions, fees, tips and bonuses, and other 
compensation for personal services;
    (2) The net income from the operation of a business or profession. 
Expenditures for business expansion or amortization of capital 
indebtedness shall not be used as deductions in determining net income. 
An allowance for depreciation of assets used in a

[[Page 72]]

business or profession may be deducted, based on straight line 
depreciation, as provided in Internal Revenue Service regulations. Any 
withdrawal of cash or assets from the operation of a business or 
profession will be included in income, except to the extent the 
withdrawal is reimbursement of cash or assets invested in the operation 
by the family;
    (3) Interest, dividends, and other net income of any kind from real 
or personal property. Expenditures for amortization of capital 
indebtedness shall not be used as deductions in determining net income. 
An allowance for depreciation is permitted only as authorized in 
paragraph (b)(2) of this section. Any withdrawal of cash or assets from 
an investment will be included in income, except to the extent the 
withdrawal is reimbursement of cash or assets invested by the family. 
Where the family has net family assets in excess of $5,000, annual 
income shall include the greater of the actual income derived from all 
net family assets or a percentage of the value of such assets based on 
the current passbook savings rate, as determined by HUD;
    (4) The full amount of periodic amounts received from Social 
Security, annuities, insurance policies, retirement funds, pensions, 
disability or death benefits, and other similar types of periodic 
receipts, including a lump-sum amount or prospective monthly amounts for 
the delayed start of a periodic amount (except as provided in paragraph 
(c)(14) of this section);
    (5) Payments in lieu of earnings, such as unemployment and 
disability compensation, worker's compensation and severance pay (except 
as provided in paragraph (c)(3) of this section);
    (6) Welfare assistance. If the welfare assistance payment includes 
an amount specifically designated for shelter and utilities that is 
subject to adjustment by the welfare assistance agency in accordance 
with the actual cost of shelter and utilities, the amount of welfare 
assistance income to be included as income shall consist of:
    (i) The amount of the allowance or grant exclusive of the amount 
specifically designated for shelter or utilities; plus
    (ii) The maximum amount that the welfare assistance agency could in 
fact allow the family for shelter and utilities. If the family's welfare 
assistance is ratably reduced from the standard of need by applying a 
percentage, the amount calculated under this paragraph (b)(6)(ii) shall 
be the amount resulting from one application of the percentage;
    (7) Periodic and determinable allowances, such as alimony and child 
support payments, and regular contributions or gifts received from 
organizations or from persons not residing in the dwelling;
    (8) All regular pay, special pay and allowances of a member of the 
Armed Forces (except as provided in paragraph (c)(7) of this section).
    (c) Annual income does not include the following:
    (1) Income from employment of children (including foster children) 
under the age of 18 years;
    (2) Payments received for the care of foster children or foster 
adults (usually persons with disabilities, unrelated to the tenant 
family, who are unable to live alone);
    (3) Lump-sum additions to family assets, such as inheritances, 
insurance payments (including payments under health and accident 
insurance and worker's compensation), capital gains and settlement for 
personal or property losses (except as provided in paragraph (b)(5) of 
this section);
    (4) Amounts received by the family that are specifically for, or in 
reimbursement of, the cost of medical expenses for any family member;
    (5) Income of a live-in aide, as defined in Sec. 5.403;
    (6) The full amount of student financial assistance paid directly to 
the student or to the educational institution;
    (7) The special pay to a family member serving in the Armed Forces 
who is exposed to hostile fire;
    (8)(i) Amounts received under training programs funded by HUD;
    (ii) Amounts received by a person with a disability that are 
disregarded for a limited time for purposes of Supplemental Security 
Income eligibility and benefits because they are set aside for use under 
a Plan to Attain Self-Sufficiency (PASS);

[[Page 73]]

    (iii) Amounts received by a participant in other publicly assisted 
programs which are specifically for or in reimbursement of out-of-pocket 
expenses incurred (special equipment, clothing, transportation, child 
care, etc.) and which are made solely to allow participation in a 
specific program;
    (iv) Amounts received under a resident service stipend. A resident 
service stipend is a modest amount (not to exceed $200 per month) 
received by a resident for performing a service for the PHA or owner, on 
a part-time basis, that enhances the quality of life in the development. 
Such services may include, but are not limited to, fire patrol, hall 
monitoring, lawn maintenance, resident initiatives coordination, and 
serving as a member of the PHA's governing board. No resident may 
receive more than one such stipend during the same period of time;
    (v) Incremental earnings and benefits resulting to any family member 
from participation in qualifying State or local employment training 
programs (including training programs not affiliated with a local 
government) and training of a family member as resident management 
staff. Amounts excluded by this provision must be received under 
employment training programs with clearly defined goals and objectives, 
and are excluded only for the period during which the family member 
participates in the employment training program;
    (9) Temporary, nonrecurring or sporadic income (including gifts);
    (10) Reparation payments paid by a foreign government pursuant to 
claims filed under the laws of that government by persons who were 
persecuted during the Nazi era;
    (11) Earnings in excess of $480 for each full-time student 18 years 
old or older (excluding the head of household and spouse);
    (12) Adoption assistance payments in excess of $480 per adopted 
child;
    (13) For public housing only: (i) The earnings and benefits to any 
family member resulting from the participation in a program providing 
employment training and supportive services in accordance with the 
Family Support Act of 1988, section 22 of the 1937 Act (42 U.S.C. 
1437t), or any comparable Federal, State, or local law during the 
exclusion period.
    (ii) For purposes of this paragraph, the following definitions 
apply:
    (A) Comparable Federal, State or local law means a program providing 
employment training and supportive services that--
    (1) Is authorized by a Federal, State or local law;
    (2) Is funded by the Federal, State or local government;
    (3) Is operated or administered by a public agency; and
    (4) Has as its objective to assist participants in acquiring 
employment skills.
    (B) Exclusion period means the period during which the family member 
participates in a program described in this section, plus 18 months from 
the date the family member begins the first job acquired by the family 
member after completion of such program that is not funded by public 
housing assistance under the 1937 Act. If the family member is 
terminated from employment with good cause, the exclusion period shall 
end.
    (C) Earnings and benefits means the incremental earnings and 
benefits resulting from a qualifying employment training program or 
subsequent job;
    (14) Deferred periodic amounts from supplemental security income and 
social security benefits that are received in a lump sum amount or in 
prospective monthly amounts.
    (15) Amounts received by the family in the form of refunds or 
rebates under State or local law for property taxes paid on the dwelling 
unit;
    (16) Amounts paid by a State agency to a family with a member who 
has a developmental disability and is living at home to offset the cost 
of services and equipment needed to keep the developmentally disabled 
family member at home; or
    (17) Amounts specifically excluded by any other Federal statute from 
consideration as income for purposes of determining eligibility or 
benefits under a category of assistance programs that includes 
assistance under any program to which the exclusions set forth in 24 CFR 
5.609(c) apply. A notice will be published in the Federal Register

[[Page 74]]

and distributed to PHAs and housing owners identifying the benefits that 
qualify for this exclusion. Updates will be published and distributed 
when necessary.
    (d) Annualization of income. If it is not feasible to anticipate a 
level of income over a 12-month period (e.g., seasonal or cyclic 
income), or the PHA believes that past income is the best available 
indicator of expected future income, the PHA may annualize the income 
anticipated for a shorter period, subject to a redetermination at the 
end of the shorter period.
    (e) If it is not feasible to anticipate a level of income over a 12-
month period, the income anticipated for a shorter period may be 
annualized, subject to a redetermination at the end of the shorter 
period.

[61 FR 54498, Oct, 18, 1996, as amended at 65 FR 16716, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16716, Mar. 29, 2000, Sec. 5.609 was 
amended by removing and reserving paragraph (c)(13), by revising 
paragraphs (c)(8)(iv) and (d), and by removing paragraph (e), effective 
Apr. 28, 2000. For the convenience of the user, the superseded text is 
set forth as follows:

Sec. 5.609  Annual income.

                                * * * * *

    (c) * * *
    (8) * * *
    (iv) Amounts received under a resident service stipend. A resident 
service stipend is a modest amount (not to exceed $200 per month) 
received by a resident for performing a service for the PHA or owner, on 
a part-time basis, that enhances the quality of life in the development. 
Such services may include, but are not limited to, fire patrol, hall 
monitoring, lawn maintenance, and resident initiatives coordination. No 
resident may receive more than one such stipend during the same period 
of time;

                                * * * * *

    (d) For public housing only. In addition to the exclusions from 
annual income covered in paragraph (c) of this section, a PHA may adopt 
additional exclusions for earned income pursuant to an established 
written policy.
    (1) In establishing such a policy, a PHA must adopt one or more of 
the following types of earned income exclusions, including variations 
thereof:
    (i) Exclude all or part of the family's earned income;
    (ii) Apply the exclusion only to new sources of earned income or 
only to increases in earned income;
    (iii) Apply the exclusion to the earned income of the head, the 
spouse, or any other family member age 18 or older;
    (iv) Apply the exclusion only to the earned income of persons other 
than the primary earner;
    (v) Apply the exclusion to applicants, newly admitted families, 
existing tenants, or persons joining the family;
    (vi) Make the exclusion temporary or permanent, for the PHA, the 
family, or the affected family member;
    (vii) Make the exclusion graduated, so that more earned income is 
excluded at first and less earned income is excluded after a period of 
time;
    (viii) Exclude any or all of the costs that are incurred in order to 
go to work but are not compensated, such as the cost of special tools, 
equipment, or clothing;
    (ix) Exclude any or all of the costs that result from earning 
income, such as social security taxes or other items that are withheld 
in payroll deductions;
    (x) Exclude any portion of the earned income that is not available 
to meet the family's own needs, such as amounts that are paid to someone 
outside the family for alimony or child support; and
    (xi) Exclude any portion of the earned income that is necessary to 
replace benefits lost because a family member becomes employed, such as 
amounts that the family pays for medical costs or to obtain medical 
insurance.
    (2) Any amounts that are excluded from annual income under this 
paragraph (d) may not also be deducted in determining adjusted income, 
as defined in Sec. 5.611.
    (3) Housing agencies do not need HUD approval to adopt optional 
earned income exclusions.
    (4) In the calculation of Performance Funding System operating 
subsidy eligibility, housing agencies will have to absorb any loss in 
rental income that results from the adoption of any of the optional 
earned income exclusions discussed in paragraph (d)(1) of this section, 
including any variations of the listed options.

                                * * * * *



Sec. 5.611  Adjusted income.

    Adjusted income means annual income (as determined by the 
responsible entity) of the members of the family residing or intending 
to reside in the dwelling unit, after making the following deductions:

[[Page 75]]

    (a) Mandatory deductions. In determining adjusted income, the 
responsible entity must deduct the following amounts from annual income:
    (1) $480 for each dependent;
    (2) $400 for any elderly family or disabled family;
    (3) The sum of the following, to the extent the sum exceeds three 
percent of annual income:
    (i) Unreimbursed medical expenses of any elderly family or disabled 
family; and
    (ii) Unreimbursed reasonable attendant care and auxiliary apparatus 
expenses for each member of the family who is a person with 
disabilities, to the extent necessary to enable any member of the family 
(including the member who is a person with disabilities) to be employed, 
but this allowance may not exceed the earned income received by family 
members who are 18 years of age or older who are able to work because of 
such attendant care or auxiliary apparatus; and
    (4) Any reasonable child care expenses necessary to enable a member 
of the family to be employed or to further his or her education.
    (b) Permissive deductions--for public housing only. For public 
housing only, a PHA may adopt additional deductions from annual income. 
The PHA must establish a written policy for such deductions.

[65 FR 16717, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16717, Mar. 29, 2000, Sec. 5.611 was 
revised, effective Apr. 28, 2000. For the convenience of the user, the 
superseded text is set forth as follows:

Sec. 5.611  Adjusted income.

    Adjusted income means annual income less the following deductions:
    (a) $480 for each dependent;
    (b) $400 for any elderly family or disabled family;
    (c) For any family that is not an elderly family or disabled family 
but has a member (other than the head of household or spouse) who is a 
person with a disability, disability assistance expenses in excess of 
three percent of annual income, but this allowance may not exceed the 
employment income received by family members who are 18 years of age or 
older as a result of the assistance to the person with disabilities;
    (d) For any elderly family or disabled family:
    (1) That has no disability assistance expenses, an allowance for 
medical expenses equal to the amount by which the medical expenses 
exceed three percent of annual income;
    (2) That has disability assistance expenses greater than or equal to 
three percent of annual income, an allowance for disability assistance 
expenses computed in accordance with paragraph (c) of this section, plus 
an allowance for medical expenses that is equal to the family's medical 
expenses;
    (3) That has disability assistance expenses that are less than three 
percent of annual income, an allowance for combined disability 
assistance expenses and medical expenses that is equal to the amount by 
which the sum of these expenses exceeds three percent of annual income; 
and
    (e) Child care expenses.



Sec. 5.613  Public housing program and Section 8 tenant-based assistance program: PHA cooperation with welfare agency.

    (a) This section applies to the public housing program and the 
Section 8 tenant-based assistance program.
    (b) The PHA must make best efforts to enter into cooperation 
agreements with welfare agencies under which such agencies agree:
    (1) To target public assistance, benefits and services to families 
receiving assistance in the public housing program and the Section 8 
tenant-based assistance program to achieve self-sufficiency;
    (2) To provide written verification to the PHA concerning welfare 
benefits for families applying for or receiving assistance in these 
housing assistance programs.

[65 FR 16717, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16717, Mar. 29, 2000, Sec. 5.613 was 
revised, effective Apr. 28, 2000. For the convenience of the user, the 
superseded text is set forth as follows:

Sec. 5.613  Total tenant payment.

    (a) Total tenant payment for families whose initial lease is 
effective on or after August 1, 1982. (1) Total tenant payment is the 
amount calculated under section 3(a)(1) of the 1937 Act (42 U.S.C. 
1437a(a)(1)). If the family's welfare assistance is ratably reduced from 
the standard of need by applying a percentage, the amount calculated 
under paragraph (C) of section 3(a)(1) of the 1937 Act (42 U.S.C. 
1437a(a)(1)(C)) shall be the amount resulting from one application of 
the percentage.

[[Page 76]]

    (2) For public housing only. Total tenant payment for families 
residing in public housing does not include charges for excess utility 
consumption or other miscellaneous charges (see Sec. 966.4 of this 
chapter).
    (b) Total tenant payment for families residing in public housing 
whose initial lease was effective before August 1, 1982. Paragraphs (b) 
and (c) of 24 CFR 913.107, as it existed immediately before November 18, 
1996 (contained in the April 1, 1995 edition of 24 CFR, parts 900 to 
1699), will continue to govern the total tenant payment of families, 
under a public housing program, whose initial lease was effective before 
August 1, 1982.
    (c) Inapplicability to the Section 8 Rental Voucher Program. The 
provisions of this section do not apply to the Section 8 Rental Voucher 
Program.



Sec. 5.615  Public housing program and Section 8 tenant-based assistance program: How welfare benefit reduction affects family income.

    (a) Applicability. This section applies to covered families who 
reside in public housing (part 960 of this title) or receive Section 8 
tenant-based assistance (part 982 of this title).
    (b) Definitions. The following definitions apply for purposes of 
this section:
    Covered families. Families who receive welfare assistance or other 
public assistance benefits (``welfare benefits'') from a State or other 
public agency (``welfare agency'') under a program for which Federal, 
State, or local law requires that a member of the family must 
participate in an economic self-sufficiency program as a condition for 
such assistance.
    Economic self-sufficiency program. See definition at Sec. 5.603.
    Imputed welfare income. The amount of annual income not actually 
received by a family, as a result of a specified welfare benefit 
reduction, that is nonetheless included in the family's annual income 
for purposes of determining rent.
    Specified welfare benefit reduction.
    (1) A reduction of welfare benefits by the welfare agency, in whole 
or in part, for a family member, as determined by the welfare agency, 
because of fraud by a family member in connection with the welfare 
program; or because of welfare agency sanction against a family member 
for noncompliance with a welfare agency requirement to participate in an 
economic self-sufficiency program.
    (2) ``Specified welfare benefit reduction'' does not include a 
reduction or termination of welfare benefits by the welfare agency:
    (i) at expiration of a lifetime or other time limit on the payment 
of welfare benefits;
    (ii) because a family member is not able to obtain employment, even 
though the family member has complied with welfare agency economic self-
sufficiency or work activities requirements; or
    (iii) because a family member has not complied with other welfare 
agency requirements.
    (c) Imputed welfare income.
    (1) A family's annual income includes the amount of imputed welfare 
income (because of a specified welfare benefits reduction, as specified 
in notice to the PHA by the welfare agency), plus the total amount of 
other annual income as determined in accordance with Sec. 5.609.
    (2) At the request of the PHA, the welfare agency will inform the 
PHA in writing of the amount and term of any specified welfare benefit 
reduction for a family member, and the reason for such reduction, and 
will also inform the PHA of any subsequent changes in the term or amount 
of such specified welfare benefit reduction. The PHA will use this 
information to determine the amount of imputed welfare income for a 
family.
    (3) A family's annual income includes imputed welfare income in 
family annual income, as determined at the PHA's interim or regular 
reexamination of family income and composition, during the term of the 
welfare benefits reduction (as specified in information provided to the 
PHA by the welfare agency).
    (4) The amount of the imputed welfare income is offset by the amount 
of additional income a family receives that commences after the time the 
sanction was imposed. When such additional income from other sources is 
at least equal to the imputed welfare income, the imputed welfare income 
is reduced to zero.
    (5) The PHA may not include imputed welfare income in annual income 
if the family was not an assisted resident at the time of sanction.

[[Page 77]]

    (d) Review of PHA decision. (1) Public housing. If a public housing 
tenant claims that the PHA has not correctly calculated the amount of 
imputed welfare income in accordance with HUD requirements, and if the 
PHA denies the family's request to modify such amount, the PHA shall 
give the tenant written notice of such denial, with a brief explanation 
of the basis for the PHA determination of the amount of imputed welfare 
income. The PHA notice shall also state that if the tenant does not 
agree with the PHA determination, the tenant may request a grievance 
hearing in accordance with part 966, subpart B of this title to review 
the PHA determination. The tenant is not required to pay an escrow 
deposit pursuant to Sec. 966.55(e) for the portion of tenant rent 
attributable to the imputed welfare income in order to obtain a 
grievance hearing on the PHA determination.
    (2) Section 8 participant. A participant in the Section 8 tenant-
based assistance program may request an informal hearing, in accordance 
with Sec. 982.555 of this title, to review the PHA determination of the 
amount of imputed welfare income that must be included in the family's 
annual income in accordance with this section. If the family claims that 
such amount is not correctly calculated in accordance with HUD 
requirements, and if the PHA denies the family's request to modify such 
amount, the PHA shall give the family written notice of such denial, 
with a brief explanation of the basis for the PHA determination of the 
amount of imputed welfare income. Such notice shall also state that if 
the family does not agree with the PHA determination, the family may 
request an informal hearing on the determination under the PHA hearing 
procedure.
    (e) PHA relation with welfare agency. (1) The PHA must ask welfare 
agencies to inform the PHA of any specified welfare benefits reduction 
for a family member, the reason for such reduction, the term of any such 
reduction, and any subsequent welfare agency determination affecting the 
amount or term of a specified welfare benefits reduction. If the welfare 
agency determines a specified welfare benefits reduction for a family 
member, and gives the PHA written notice of such reduction, the family's 
annual incomes shall include the imputed welfare income because of the 
specified welfare benefits reduction.
    (2) The PHA is responsible for determining the amount of imputed 
welfare income that is included in the family's annual income as a 
result of a specified welfare benefits reduction as determined by the 
welfare agency, and specified in the notice by the welfare agency to the 
PHA. However, the PHA is not responsible for determining whether a 
reduction of welfare benefits by the welfare agency was correctly 
determined by the welfare agency in accordance with welfare program 
requirements and procedures, nor for providing the opportunity for 
review or hearing on such welfare agency determinations.
    (3) Such welfare agency determinations are the responsibility of the 
welfare agency, and the family may seek appeal of such determinations 
through the welfare agency's normal due process procedures. The PHA 
shall be entitled to rely on the welfare agency notice to the PHA of the 
welfare agency's determination of a specified welfare benefits 
reduction.

[65 FR 16717, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16717, Mar. 29, 2000, Sec. 5.615 was 
revised, effective Apr. 28, 2000. For the convenience of the user, the 
superseded text is set forth as follows:

Sec. 5.615  Utility reimbursements.

    (a) General. Where applicable, the utility reimbursement shall be 
paid to the family in the manner provided in the pertinent program 
regulations. If the family and the utility company consent, a PHA or 
owner may pay the utility reimbursement jointly to the family and the 
utility company, or directly to the utility company.
    (b) Inapplicability to the Section 8 Rental Voucher Program. The 
provisions of this section do not apply to the Section 8 Rental Voucher 
Program. For the Voucher Program, in cases where the amount of the HAP 
payment exceeds the rent to owner, the excess will be paid to the 
family.



Sec. 5.617  Reexamination and verification.

    (a) Responsibility for initial determination and reexamination. The 
PHA or owner, as applicable, must conduct a reexamination of family 
income and

[[Page 78]]

composition at least annually. The ``effective date'' of an examination 
or reexamination refers to:
    (1) In the case of an examination for admission, the effective date 
of the lease; and
    (2) In the case of a reexamination of an existing participant, the 
effective date of the redetermined housing assistance payment with 
respect to the Rental Voucher program and the effective date of the 
redetermined total tenant payment in all other cases.
    (b) Verification. (1) As a condition of admission to, or continued 
occupancy of, any assisted unit, the PHA or owner, as applicable, shall 
require the family head and other such family members as it designates 
to execute a HUD-approved release and consent form (including any 
release and consent as required under 24 CFR part 760) authorizing any 
depository or private source of income, or any Federal, State or local 
agency, to furnish or release to the PHA or owner, as applicable, and to 
HUD such information as the HA or owner, as applicable, and HUD 
determines to be necessary.
    (2) The PHA or owner shall also require the family to submit 
directly documentation determined to be necessary. Information or 
documentation shall be considered necessary if it is required for 
purposes of determining or auditing a family's eligibility to receive 
housing assistance, for determining the family's annual income, adjusted 
income or total tenant payment.
    (3) The use or disclosure of information obtained from a family or 
from another source pursuant to this release and consent shall be 
limited to purposes directly connected with administration of this 
subpart or applying for assistance.

(Approved by the Office of Management and Budget under control numbers 
2502-0204 and 2577-0083.)

[61 FR 54498, Oct. 18, 1996, as amended at 62 FR 27125, May 16, 1997]

    Effective Date Note: At 65 FR 16718, Mar. 29, 2000, Sec. 5.617 was 
removed, effective Apr. 28, 2000.

                             Family Payment



Sec. 5.628  Total tenant payment.

    (a) Determining total tenant payment (TTP). Total tenant payment is 
the highest of the following amounts, rounded to the nearest dollar:
    (1) 30 percent of the family's monthly adjusted income;
    (2) 10 percent of the family's monthly income;
    (3) If the family is receiving payments for welfare assistance from 
a public agency and a part of those payments, adjusted in accordance 
with the family's actual housing costs, is specifically designated by 
such agency to meet the family's housing costs, the portion of those 
payments which is so designated; or
    (4) The minimum rent, as determined in accordance with Sec. 5.630.
    (b) Determining TTP if family's welfare assistance is ratably 
reduced. If the family's welfare assistance is ratably reduced from the 
standard of need by applying a percentage, the amount calculated under 
paragraph (a)(3) of this section is the amount resulting from one 
application of the percentage.

[65 FR 16718, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16718, Mar. 29, 2000, Sec. 5.628 was 
added, effective Apr. 28, 2000.



Sec. 5.630  Minimum rent.

    (a) Minimum rent. (1) The PHA must charge a family no less than a 
minimum monthly rent established by the responsible entity, except as 
described in paragraph (b) of this section.
    (2) For the public housing program and the section 8 moderate 
rehabilitation, and certificate or voucher programs, the PHA may 
establish a minimum rent of up to $50.
    (3) For other section 8 programs, the minimum rent is $25.
    (b) Financial hardship exemption from minimum rent. (1) When is 
family exempt from minimum rent? The responsible entity must grant an 
exemption from payment of minimum rent if the family is unable to pay 
the minimum rent

[[Page 79]]

because of financial hardship, as described in the responsible entity's 
written policies. Financial hardship includes these situations:
    (i) When the family has lost eligibility for or is awaiting an 
eligibility determination for a Federal, State, or local assistance 
program, including a family that includes a member who is a noncitizen 
lawfully admitted for permanent residence under the Immigration and 
Nationality Act who would be entitled to public benefits but for title 
IV of the Personal Responsibility and Work Opportunity Act of 1996;
    (ii) When the family would be evicted because it is unable to pay 
the minimum rent;
    (iii) When the income of the family has decreased because of changed 
circumstances, including loss of employment;
    (iv) When a death has occurred in the family; and
    (v) Other circumstances determined by the responsible entity or HUD.
    (2) What happens if family requests a hardship exemption? (i) Public 
housing. (A) If a family requests a financial hardship exemption, the 
PHA must suspend the minimum rent requirement beginning the month 
following the family's request for a hardship exemption, and continuing 
until the PHA determines whether there is a qualifying financial 
hardship and whether it is temporary or long term.
    (B) The PHA must promptly determine whether a qualifying hardship 
exists and whether it is temporary or long term.
    (C) The PHA may not evict the family for nonpayment of minimum rent 
during the 90-day period beginning the month following the family's 
request for a hardship exemption.
    (D) If the PHA determines that a qualifying financial hardship is 
temporary, the PHA must reinstate the minimum rent from the beginning of 
the suspension of the minimum rent. The PHA must offer the family a 
reasonable repayment agreement, on terms and conditions established by 
the PHA, for the amount of back minimum rent owed by the family.
    (ii) All section 8 programs. (A) If a family requests a financial 
hardship exemption, the responsible entity must suspend the minimum rent 
requirement beginning the month following the family's request for a 
hardship exemption until the responsible entity determines whether there 
is a qualifying financial hardship, and whether such hardship is 
temporary or long term.
    (B) The responsible entity must promptly determine whether a 
qualifying hardship exists and whether it is temporary or long term.
    (C) If the responsible entity determines that a qualifying financial 
hardship is temporary, the PHA must not impose the minimum rent during 
the 90-day period beginning the month following the date of the family's 
request for a hardship exemption. At the end of the 90-day suspension 
period, the responsible entity must reinstate the minimum rent from the 
beginning of the suspension. The family must be offered a reasonable 
repayment agreement, on terms and conditions established by the 
responsible entity, for the amount of back rent owed by the family.
    (iii) All programs. (A) If the responsible entity determines there 
is no qualifying financial hardship exemption, the responsible entity 
must reinstate the minimum rent, including back rent owed from the 
beginning of the suspension. The family must pay the back rent on terms 
and conditions established by the responsible entity.
    (B) If the responsible entity determines a qualifying financial 
hardship is long term, the responsible entity must exempt the family 
from the minimum rent requirements so long as such hardship continues. 
Such exemption shall apply from the beginning of the month following the 
family's request for a hardship exemption until the end of the 
qualifying financial hardship.
    (C) The financial hardship exemption only applies to payment of the 
minimum rent (as determined pursuant to Sec. 5.628(a)(4) and 
Sec. 5.630), and not to the other elements used to calculate the total 
tenant payment (as determined pursuant to Sec. 5.628(a)(1), (a)(2) and 
(a)(3)).
    (3) Public housing: Grievance hearing concerning PHA denial of 
request for hardship exemption. If a public housing

[[Page 80]]

family requests a hearing under the PHA grievance procedure, to review 
the PHA's determination denying or limiting the family's claim to a 
financial hardship exemption, the family is not required to pay any 
escrow deposit in order to obtain a grievance hearing on such issues.

[65 FR 16718, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16718, Mar. 29, 2000, Sec. 5.630 was 
added, effective Apr. 28, 2000.



Sec. 5.632  Utility reimbursements.

    (a) Applicability. This section is applicable to:
    (1) The Section 8 programs other than the Section 8 voucher program 
(for distribution of a voucher housing assistance payment that exceeds 
rent to owner, see Sec. 982.514(b) of this title);
    (2) A public housing family paying an income-based rent (see 
Sec. 960.253 of this title). (Utility reimbursement is not paid for a 
public housing family that is paying a flat rent.)
    (b) Payment of utility reimbursement. (1) The responsible entity 
pays a utility reimbursement if the utility allowance (for tenant-paid 
utilities) exceeds the amount of the total tenant payment.
    (2) In the public housing program (where the family is paying an 
income-based rent), the Section 8 moderate rehabilitation program and 
the Section 8 certificate or voucher program, the PHA may pay the 
utility reimbursement either to the family or directly to the utility 
supplier to pay the utility bill on behalf of the family. If the PHA 
elects to pay the utility supplier, the PHA must notify the family of 
the amount paid to the utility supplier.
    (3) In the other Section 8 programs, the owner must pay the utility 
reimbursement either:
    (i) To the family, or
    (ii) With consent of the family, to the utility supplier to pay the 
utility bill on behalf of the family.

[65 FR 16719, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16719, Mar. 29, 2000, Sec. 5.632 was 
added, effective Apr. 28, 2000.



Sec. 5.634  Tenant rent.

    (a) Section 8 programs. For Section 8 programs other than the 
Section 8 voucher program, tenant rent is total tenant payment minus any 
utility allowance.
    (b) Public housing. See Sec. 960.253 of this title for the 
determination of tenant rent.

[65 FR 16719, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16719, Mar. 29, 2000, Sec. 5.634 was 
added, effective Apr. 28, 2000.

       Section 8 Project-Based Assistance: Occupancy Requirements



Sec. 5.653  Section 8 project-based assistance programs: Admission--Income-eligibility and income-targeting.

    (a) Applicability. This section describes requirements concerning 
income-eligibility and income-targeting that apply to the Section 8 
project-based assistance programs, except for the moderate 
rehabilitation and the project-based certificate or voucher programs.
    (b) Who is eligible?
    (1) Basic eligibility. An applicant must meet all eligibility 
requirements in order to receive housing assistance. At a minimum, the 
applicant must be a family, as defined in Sec. 5.403, and must be 
income-eligible, as described in this section. Such eligible applicants 
include single persons.
    (2) Low income limit. No family other than a low income family is 
eligible for admission to the Section 8 project-based assistance 
programs. (This paragraph (b) does not apply to the Section 8 project-
based voucher program under part 983 of this title.)
    (c) Targeting to extremely low income families. For each project 
assisted under a contract for project-based assistance, of the dwelling 
units that become available for occupancy in any fiscal year that are 
assisted under the contract, not less than 40 percent shall be available 
for leasing only by families that are extremely low income families at 
the time of admission.
    (d) Limitation on admission of non-very low income families.
    (1) Admission to units available before October 1, 1981. Not more 
than 25 percent of the Section 8 project-based

[[Page 81]]

dwelling units that were available for occupancy under Section 8 Housing 
Assistance Payments Contracts effective before October 1, 1981 and that 
are leased on or after that date shall be available for leasing by low 
income families other than very low income families. HUD reserves the 
right to limit the admission of low income families other than very low 
income families to these units.
    (2) Admission to units available on or after October 1, 1981. Not 
more than 15 percent of the Section 8 project-based dwelling units that 
initially become available for occupancy under Section 8 Housing 
Assistance Payments (HAP) Contracts on or after October 1, 1981 shall be 
available for leasing by low income families other than families that 
are very low income families at the time of admission to the Section 8 
program. Except with the prior approval of HUD under paragraphs (d)(3) 
and (d)(4) of this section, the owner may only lease such units to very 
low income families.
    (3) Request for exception. A request by an owner for approval of 
admission of low income families other than very low income families to 
section 8 project-based units must state the basis for requesting the 
exception and provide supporting data. Bases for exceptions that may be 
considered include the following:
    (i) Need for admission of a broader range of tenants to preserve the 
financial or management viability of a project because there is an 
insufficient number of potential applicants who are very low income 
families;
    (ii) Commitment of an owner to attaining occupancy by families with 
a broad range of incomes;
    (iii) Project supervision by a State Housing Finance Agency having a 
policy of occupancy by families with a broad range of incomes supported 
by evidence that the Agency is pursuing this goal throughout its 
assisted projects in the community, or a project with financing through 
Section 11(b) of the 1937 Act (42 U.S.C. 1437i) or under Section 103 of 
the Internal Revenue Code (26 U.S.C. 103); and
    (iv) Low-income families that otherwise would be displaced from a 
Section 8 project.
    (4) Action on request for exception. Whether to grant any request 
for exception is a matter committed by law to HUD's discretion, and no 
implication is intended to be created that HUD will seek to grant 
approvals up to the maximum limits permitted by statute, nor is any 
presumption of an entitlement to an exception created by the 
specification of certain grounds for exception that HUD may consider. 
HUD will review exceptions granted to owners at regular intervals. HUD 
may withdraw permission to exercise those exceptions for program 
applicants at any time that exceptions are not being used or after a 
periodic review, based on the findings of the review.
    (e) Income used for eligibility and targeting. Family annual income 
(see Sec. 5.609) is used both for determination of income-eligibility 
and for income-targeting under this section.
    (f) Reporting. The Section 8 owner must comply with HUD-prescribed 
reporting requirements, including income reporting requirements that 
will permit HUD to maintain the data necessary to monitor compliance 
with income-eligibility and income-targeting requirements.

[65 FR 16719, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16719, Mar. 29, 2000, Sec. 5.653 was 
added, effective Apr. 28, 2000.



Sec. 5.655  Section 8 project-based assistance programs: Owner preferences in selection for a project or unit.

    (a) Applicability. This section applies to the section 8 project-
based assistance programs. The section describes requirements concerning 
the Section 8 owner's selection of residents to occupy a project or 
unit, except for the moderate rehabilitation and the project-based 
certificate or voucher programs.
    (b) Selection. (1) Selection for owner's project or unit. Selection 
for occupancy of a project or unit is the function of the Section 8 
owner. However, selection is subject to the income-eligibility and 
income-targeting requirements in Sec. 5.653.
    (2) Tenant selection plan. The owner must adopt a written tenant 
selection plan in accordance with HUD requirements.

[[Page 82]]

    (3) Amount of income. The owner may not select a family for 
occupancy of a project or unit in an order different from the order on 
the owner's waiting list for the purpose of selecting a relatively 
higher income family. However, an owner may select a family for 
occupancy of a project or unit based on its income in order to satisfy 
the targeting requirements of Sec. 5.653(c).
    (4) Selection for particular unit. In selecting a family to occupy a 
particular unit, the owner may match family characteristics with the 
type of unit available, for example, number of bedrooms. If a unit has 
special accessibility features for persons with disabilities, the owner 
must first offer the unit to families which include persons with 
disabilities who require such features (see Secs. 8.27 and 100.202 of 
this title).
    (5) Housing assistance limitation for single persons. A single 
person who is not an elderly or displaced person, a person with 
disabilities, or the remaining member of a resident family may not be 
provided a housing unit with two or more bedrooms.
    (c) Particular owner preferences. The owner must inform all 
applicants about available preferences and must give applicants an 
opportunity to show that they qualify for available preferences.
    (1) Residency requirements or preferences. (i) Residency 
requirements are prohibited. Although the owner is not prohibited from 
adopting a residency preference, the owner may only adopt or implement 
residency preferences in accordance with non-discrimination and equal 
opportunity requirements listed at Sec. 5.105(a).
    (ii) A residency preference is a preference for admission of persons 
who reside in a specified geographic area (``residency preference 
area'').
    (iii) An owner's residency preference must be approved by HUD in one 
of the following methods:
    (A) Prior approval of the housing market area in the Affirmative 
Fair Housing Marketing plan (in accordance with Sec. 108.25 of this 
title) as a residency preference area;
    (B) Prior approval of the residency preference area in the PHA plan 
of the jurisdiction in which the project is located;
    (C) Modification of the Affirmative Fair Housing Marketing Plan, in 
accordance with Sec. 108.25 of this title,
    (iv) Use of a residency preference may not have the purpose or 
effect of delaying or otherwise denying admission to a project or unit 
based on the race, color, ethnic origin, gender, religion, disability, 
or age of any member of an applicant family.
    (v) A residency preference must not be based on how long an 
applicant has resided or worked in a residency preference area.
    (vi) Applicants who are working or who have been notified that they 
are hired to work in a residency preference area must be treated as 
residents of the residency preference area. The owner may treat 
graduates of, or active participants in, education and training programs 
in a residency preference area as residents of the residency preference 
area if the education or training program is designed to prepare 
individuals for the job market.
    (2) Preference for working families. (i) The owner may adopt a 
preference for admission of working families (families where the head, 
spouse or sole member is employed). However, an applicant shall be given 
the benefit of the working family preference if the head and spouse, or 
sole member, is age 62 or older, or is a person with disabilities.
    (ii) If the owner adopts a preference for admission of working 
families, the owner must not give a preference based on the amount of 
earned income.
    (3) Preference for person with disabilities. The owner may adopt a 
preference for admission of families that include a person with 
disabilities. However, the owner may not adopt a preference for 
admission of persons with a specific disability.
    (4) Preference for victims of domestic violence. The owner should 
consider whether to adopt a preference for admission of families that 
include victims of domestic violence.
    (5) Preference for single persons who are elderly, displaced, 
homeless or persons with disabilities over other single persons. The 
owner may adopt a preference for admission of single persons who are age

[[Page 83]]

62 or older, displaced, homeless, or persons with disabilities over 
other single persons.

[65 FR 16720, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16720, Mar. 29, 2000, Sec. 5.655 was 
added, effective Apr. 28, 2000.



Sec. 5.657  Section 8 project-based assistance programs: Reexamination of family income and composition.

    (a) Applicability. This section states requirements for 
reexamination of family income and composition in the Section 8 project-
based assistance programs, except for the moderate rehabilitation and 
the project-based certificate or voucher programs.
    (b) Regular reexamination. The owner must conduct a reexamination 
and redetermination of family income and composition at least annually.
    (c) Interim reexaminations. A family may request an interim 
reexamination of family income because of any changes since the last 
examination. The owner must make the interim reexamination within a 
reasonable time after the family request. The owner may adopt policies 
prescribing when and under what conditions the family must report a 
change in family income or composition.

[65 FR 16720, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16720, Mar. 29, 2000, Sec. 5.657 was 
added, effective Apr. 28, 2000.



Sec. 5.659  Family information and verification.

    (a) Applicability. This section states requirements for 
reexamination of family income and composition in the Section 8 project-
based assistance programs, except for the moderate rehabilitation 
program and the project-based certificate or voucher programs.
    (b) Family obligation to supply information. (1) The family must 
supply any information that HUD or the owner determines is necessary in 
administration of the Section 8 program, including submission of 
required evidence of citizenship or eligible immigration status (as 
provided by part 5, subpart E of this title). ``Information'' includes 
any requested certification, release or other documentation.
    (2) The family must supply any information requested by the owner or 
HUD for use in a regularly scheduled reexamination or an interim 
reexamination of family income and composition in accordance with HUD 
requirements.
    (3) For requirements concerning the following, see part 5, subpart B 
of this title:
    (i) Family verification and disclosure of social security numbers;
    (ii) Family execution and submission of consent forms for obtaining 
wage and claim information from State Wage Information Collection 
Agencies (SWICAs).
    (4) Any information supplied by the family must be true and 
complete.
    (c) Family release and consent. (1) As a condition of admission to 
or continued occupancy of a unit with Section 8 assistance, the owner 
must require the family head, and such other family members as the owner 
designates, to execute a HUD-approved release and consent form 
(including any release and consent as required under Sec. 5.230 of this 
title) authorizing any depository or private source of income, or any 
Federal, State or local agency, to furnish or release to the owner or 
HUD such information as the owner or HUD determines to be necessary.
    (2) The use or disclosure of information obtained from a family or 
from another source pursuant to this release and consent shall be 
limited to purposes directly connected with administration of the 
Section 8 program.
    (d) Owner responsibility for verification. The owner must obtain and 
document in the family file third party verification of the following 
factors, or must document in the file why third party verification was 
not available:
    (1) Reported family annual income;
    (2) The value of assets;
    (3) Expenses related to deductions from annual income; and
    (4) Other factors that affect the determination of adjusted income.

[65 FR 16721, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16721, Mar. 29, 2000, Sec. 5.659 was 
added, effective Apr. 28, 2000.

[[Page 84]]



Sec. 5.661  Section 8 project-based assistance programs: Approval for police or other security personnel to live in project.

    (a) Applicability. This section describes when a Section 8 owner may 
lease a Section 8 unit to police or other security personnel with 
continued Section 8 assistance for the unit. This section applies to the 
Section 8 project-based assistance programs.
    (b) Terms. (1) Security personnel means:
    (i) A police officer, or
    (ii) A qualified security professional, with adequate training and 
experience to provide security services for project residents.
    (2) Police officer means a person employed on a full-time basis as a 
duly licensed professional police officer by a Federal, State or local 
government or by any agency of these governments.
    (3) Security includes the protection of project residents, including 
resident project management from criminal or other activity that is a 
threat to person or property, or that arouses fears of such threat.
    (c) Owner application. (1) The owner may submit a written 
application to the contract administrator (PHA or HUD) for approval to 
lease an available unit in a Section 8 project to security personnel who 
would not otherwise be eligible for Section 8 assistance, for the 
purpose of increasing security for Section 8 families residing in the 
project. (2) The owner's application must include the following 
information:
    (i) A description of criminal activities in the project and the 
surrounding community, and the effect of criminal activity on the 
security of project residents.
    (ii) Qualifications of security personnel who will reside in the 
project, and the period of residence by such personnel. How owner 
proposes to check backgrounds and qualifications of any security 
personnel who will reside in the project.
    (iii) Full disclosure of any family relationship between the owner 
and any security personnel. For this purpose, ``owner'' includes a 
principal or other interested party.
    (iv) How residence by security personnel in a project unit will 
increase security for Section 8 assisted families residing in the 
project.
    (v) The amount payable monthly as rent to the unit owner by security 
personnel residing in the project (including a description of how this 
amount is determined), and the amount of any other compensation by the 
owner to such resident security personnel.
    (vi) The terms of occupancy by such security personnel. The lease by 
owner to the approved security personnel may provide that occupancy of 
the unit is authorized only while the security personnel is 
satisfactorily performing any agreed responsibilities and functions for 
project security.
    (vii) Other information as requested by the contract administrator.
    (d) Action by contract administrator. (1) The contract administrator 
shall have discretion to approve or disapprove owner's application, and 
to impose conditions for approval of occupancy by security personnel in 
a section 8 project unit.
    (2) Notice of approval by the contract administrator shall specify 
the term of such approved occupancy. Such approval may be withdrawn at 
the discretion of the contract administrator, for example, if the 
contract administrator determines that such occupancy is not providing 
adequate security benefits as proposed in the owner's application; or 
that security benefits from such occupancy are not a sufficient return 
for program costs.
    (e) Housing assistance payment and rent. (1) During approved 
occupancy by security personnel as provided in this section, the amount 
of the monthly housing assistance payment to the owner shall be equal to 
the contract rent (as determined in accordance with the HAP contract and 
HUD requirements) minus the amount (as approved by the contract 
administrator) of rent payable monthly as rent to the unit owner by such 
security personnel. The owner shall bear the risk of collecting such 
rent from such security personnel, and the amount of the housing 
assistance payment shall not be increased because of non-payment by such 
security personnel. The owner shall not be entitled to receive any 
vacancy payment for the period following occupancy by such security 
personnel.

[[Page 85]]

    (2) In approving the amount of monthly rent payable by security 
personnel for occupancy of a contract unit, the contract administrator 
may consider whether security services to be performed are an adequate 
return for housing assistance payments on the unit, or whether the cost 
of security services should be borne by the owner from other project 
income.

[65 FR 16721, Mar. 29, 2000]

    Effective Date Note: At 65 FR 16721, Mar. 29, 2000, Sec. 5.661 was 
added. This section contains information collection and recordkeeping 
requirements and will not become effective until approval has been given 
by the Office of Management and Budget.



   Subpart G--Physical Condition Standards and Inspection Requirements

    Source: 63 FR 46577, Sept. 1, 1998, unless otherwise noted.



Sec. 5.701  Applicability.

    (a) This subpart applies to housing assisted by HUD under the 
following programs:
    (1) All Section 8 project-based assistance. ``Project-based 
assistance'' means Section 8 assistance that is attached to the 
structure (see Sec. 982.1(b)(1) of this title regarding the distinction 
between ``project-based'' and ``tenant-based'' assistance);
    (2) Section 202 Program of Supportive Housing for the Elderly;
    (3) Section 811 Program of Supportive Housing for Persons with 
Disabilities;
    (4) Section 202 loan program for projects for the elderly and 
handicapped (including 202/8 projects and 202/162 projects).
    (b) This subpart also applies to housing with mortgages insured or 
held by HUD, or housing that is receiving assistance from HUD, under the 
following authorities:
    (1) Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701 et 
seq.) (Rental Housing Insurance);
    (2) Section 213 of the NHA (Cooperative Housing Insurance);
    (3) Section 220 of the NHA (Rehabilitation and Neighborhood 
Conservation Housing Insurance);
    (4) Section 221(d)(3) and (5) of the NHA (Housing for Moderate 
Income and Displaced Families);
    (5) Section 221(d)(4) of the NHA (Housing for Moderate Income and 
Displaced Families);
    (6) Section 231 of the NHA (Housing for Elderly Persons);
    (7) Section 232 of the NHA (Mortgage Insurance for Nursing Homes, 
Intermediate Care Facilities, Board and Care Homes);
    (8) Section 234(d) of the NHA (Rental) (Mortgage Insurance for 
Condominiums);
    (9) Section 236 of the NHA (Rental and Cooperative Housing for Lower 
Income Families);
    (10) Section 241 of the NHA (Supplemental Loans for Multifamily 
Projects); and
    (11) Section 542(c) of the Housing and Community Development Act of 
1992 (12 U.S.C. 1707 note) (Housing Finance Agency Risk Sharing 
Program).
    (c) This subpart also applies to Public Housing (housing receiving 
assistance under the U.S. Housing Act of 1937, other than under section 
8 of the Act).
    (d) For purposes of this subpart, the term ``HUD housing'' means the 
types of housing listed in paragraphs (a), (b), and (c) of this section.



Sec. 5.703  Physical condition standards for HUD housing that is decent, safe, sanitary and in good repair (DSS/GR).

    HUD housing must be decent, safe, sanitary and in good repair. 
Owners of housing described in Sec. 5.701(a), mortgagors of housing 
described in Sec. 5.701(b), and PHAs and other entities approved by HUD 
owning housing described in Sec. 5.701(c), must maintain such housing in 
a manner that meets the physical condition standards set forth in this 
section in order to be considered decent, safe, sanitary and in good 
repair. These standards address the major areas of the HUD housing: the 
site; the building exterior; the building systems; the dwelling units; 
the common areas; and health and safety considerations.
    (a) Site. The site components, such as fencing and retaining walls, 
grounds, lighting, mailboxes/project signs, parking lots/driveways, play 
areas and equipment, refuse disposal, roads,

[[Page 86]]

storm drainage and walkways must be free of health and safety hazards 
and be in good repair. The site must not be subject to material adverse 
conditions, such as abandoned vehicles, dangerous walks or steps, poor 
drainage, septic tank back-ups, sewer hazards, excess accumulations of 
trash, vermin or rodent infestation or fire hazards.
    (b) Building exterior. Each building on the site must be 
structurally sound, secure, habitable, and in good repair. Each 
building's doors, fire escapes, foundations, lighting, roofs, walls, and 
windows, where applicable, must be free of health and safety hazards, 
operable, and in good repair.
    (c) Building systems. Each building's domestic water, electrical 
system, elevators, emergency power, fire protection, HVAC, and sanitary 
system must be free of health and safety hazards, functionally adequate, 
operable, and in good repair.
    (d) Dwelling units. (1) Each dwelling unit within a building must be 
structurally sound, habitable, and in good repair. All areas and aspects 
of the dwelling unit (for example, the unit's bathroom, call-for-aid (if 
applicable), ceiling, doors, electrical systems, floors, hot water 
heater, HVAC (where individual units are provided), kitchen, lighting, 
outlets/switches, patio/porch/balcony, smoke detectors, stairs, walls, 
and windows) must be free of health and safety hazards, functionally 
adequate, operable, and in good repair.
    (2) Where applicable, the dwelling unit must have hot and cold 
running water, including an adequate source of potable water (note for 
example that single room occupancy units need not contain water 
facilities).
    (3) If the dwelling unit includes its own sanitary facility, it must 
be in proper operating condition, usable in privacy, and adequate for 
personal hygiene and the disposal of human waste.
    (4) The dwelling unit must include at least one battery-operated or 
hard-wired smoke detector, in proper working condition, on each level of 
the unit.
    (e) Common areas. The common areas must be structurally sound, 
secure, and functionally adequate for the purposes intended. The 
basement/garage/carport, restrooms, closets, utility, mechanical, 
community rooms, day care, halls/corridors, stairs, kitchens, laundry 
rooms, office, porch, patio, balcony, and trash collection areas, if 
applicable, must be free of health and safety hazards, operable, and in 
good repair. All common area ceilings, doors, floors, HVAC, lighting, 
outlets/switches, smoke detectors, stairs, walls, and windows, to the 
extent applicable, must be free of health and safety hazards, operable, 
and in good repair. These standards for common areas apply, to a varying 
extent, to all HUD housing, but will be particularly relevant to 
congregate housing, independent group homes/residences, and single room 
occupancy units, in which the individual dwelling units (sleeping areas) 
do not contain kitchen and/or bathroom facilities.
    (f) Health and safety concerns. All areas and components of the 
housing must be free of health and safety hazards. These areas include, 
but are not limited to, air quality, electrical hazards, elevators, 
emergency/fire exits, flammable materials, garbage and debris, handrail 
hazards, infestation, and lead-based paint. For example, the buildings 
must have fire exits that are not blocked and have hand rails that are 
undamaged and have no other observable deficiencies. The housing must 
have no evidence of infestation by rats, mice, or other vermin, or of 
garbage and debris. The housing must have no evidence of electrical 
hazards, natural hazards, or fire hazards. The dwelling units and common 
areas must have proper ventilation and be free of mold, odor (e.g., 
propane, natural gas, methane gas), or other observable deficiencies. 
The housing must comply with all requirements related to the evaluation 
and reduction of lead-based paint hazards and have available proper 
certifications of such (see 24 CFR part 35).
    (g) Compliance with State and local codes. The physical condition 
standards in this section do not supersede or preempt State and local 
codes for building and maintenance with which HUD housing must comply. 
HUD housing must continue to adhere to these codes.

[[Page 87]]



Sec. 5.705  Uniform physical inspection requirements.

    (a) Any entity responsible for conducting a physical inspection of 
HUD housing, to determine compliance with this subpart, must inspect 
such HUD housing annually (unless otherwise specifically notified by 
HUD), in accordance with HUD-prescribed physical inspection procedures. 
For Public Housing, PHAs have the option to inspect Public Housing units 
using the procedures prescribed in accordance with this section.
    (b) Inspections in accordance with the physical inspection 
procedures identified in paragraph (a) of this section shall not be 
required until HUD has issued the inspection software and accompanying 
guidebook. When the software and guidebook have been issued, HUD will 
publish a notice in the Federal Register to inform the public when the 
software and guidebook are available. The notice will provide 30 days 
within which covered entities must prepare to conduct inspections in 
accordance with this subpart. Until the date that is 30 days after HUD 
publishes such notice, any entity responsible for conducting a physical 
inspection of HUD housing, to determine compliance with this subpart, 
must continue to comply with inspection requirements in effect 
immediately prior to that date.



            Subpart H--Uniform Financial Reporting Standards



Sec. 5.801  Uniform financial reporting standards.

    (a) Applicability. This subpart H implements uniform financial 
reporting standards for:
    (1) Public housing agencies (PHAs) receiving assistance under 
sections 5, 9, or 14 of the 1937 Act (42 U.S.C. 1437c, 1437g, and 1437l) 
(Public Housing);
    (2) PHAs as contract administrators for any Section 8 project-based 
or tenant-based housing assistance payments program, which includes 
assistance under the following programs:
    (i) Section 8 project-based housing assistance payments programs, 
including, but not limited to, the Section 8 New Construction, 
Substantial Rehabilitation, Loan Management Set-Aside, Property 
Disposition, and Moderate Rehabilitation (including the Single Room 
Occupancy program for homeless individuals);
    (ii) Section 8 Project-Based Certificate programs;
    (iii) Any program providing Section 8 project-based renewal 
contracts; and
    (iv) Section 8 tenant-based assistance under the Section 8 
Certificate and Voucher program.
    (3) Owners of housing assisted under any Section 8 project-based 
housing assistance payments program:
    (i) Including, but not limited to, the Section 8 New Construction, 
Substantial Rehabilitation, Loan Management Set-Aside, and Property 
Disposition programs;
    (ii) Excluding the Section 8 Moderate Rehabilitation Program (which 
includes the Single Room Occupancy program for homeless individuals) and 
the Section 8 Project-Based Certificate Program;
    (4) Owners of multifamily projects receiving direct or indirect 
assistance from HUD, or with mortgages insured, coinsured, or held by 
HUD, including but not limited to housing under the following HUD 
programs:
    (i) Section 202 Program of Supportive Housing for the Elderly;
    (ii) Section 811 Program of Supportive Housing for Persons with 
Disabilities;
    (iii) Section 202 loan program for projects for the elderly and 
handicapped (including 202/8 projects and 202/162 projects);
    (iv) Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701 
et seq.) (Rental Housing Insurance);
    (v) Section 213 of the NHA (Cooperative Housing Insurance);
    (vi) Section 220 of the NHA (Rehabilitation and Neighborhood 
Conservation Housing Insurance);
    (vii) Section 221(d) (3) and (5) of the NHA (Housing for Moderate 
Income and Displaced Families);
    (viii) Section 221(d)(4) of the NHA (Housing for Moderate Income and 
Displaced Families);
    (ix) Section 231 of the NHA (Housing for Elderly Persons);

[[Page 88]]

    (x) Section 232 of the NHA (Mortgage Insurance for Nursing Homes, 
Intermediate Care Facilities, Board and Care Homes);
    (xi) Section 234(d) of the NHA (Rental) (Mortgage Insurance for 
Condominiums);
    (xii) Section 236 of the NHA (Rental and Cooperative Housing for 
Lower Income Families);
    (xiii) Section 241 of the NHA (Supplemental Loans for Multifamily 
Projects); and
    (xiv) Section 542(c) of the Housing and Community Development Act of 
1992 (12 U.S.C. 1707 note) (Housing Finance Agency Risk-Sharing 
Program).
    (b) Submission of financial information. Entities (or individuals) 
to which this subpart is applicable must provide to HUD, on an annual 
basis, such financial information as required by HUD. This financial 
information must be:
    (1) Prepared in accordance with Generally Accepted Accounting 
Principles as further defined by HUD in supplementary guidance;
    (2) Submitted electronically to HUD through the internet, or in such 
other electronic format designated by HUD, or in such non-electronic 
format as HUD may allow if the burden or cost of electronic reporting is 
determined by HUD to be excessive; and
    (3) Submitted in such form and substance as prescribed by HUD.
    (c) Annual financial report filing dates. (1) For entities listed in 
paragraphs (a)(1) and (2) of this section, the financial information to 
be submitted to HUD in accordance with paragraph (b) of this section, 
must be submitted to HUD annually, no later than 60 days after the end 
of the fiscal year of the reporting period, and as otherwise provided by 
law (for public housing agencies, see also 24 CFR 903.33).
    (2) For entities listed in paragraphs (a)(3) and (4) of this 
section, the financial information to be submitted to HUD in accordance 
with paragraph (b) of this section, must be submitted to HUD annually, 
no later than 90 days after the end of the fiscal year of the reporting 
period, and as otherwise provided by law.
    (d) Reporting compliance dates. Entities (or individuals) that are 
subject to the reporting requirements in this section must commence 
compliance with these requirements as follows:
    (1) For PHAs listed in paragraphs (a)(1) and (a)(2) of this section, 
the requirements of this section will begin with those PHAs with fiscal 
years ending September 30, 1999 and later. Unaudited financial 
statements will be required 60 days after the PHA's fiscal year end, and 
audited financial statements will then be required no later than 9 
months after the PHA's fiscal year end, in accordance with the Single 
Audit Act and OMB Circular A-133 (See 24 CFR 84.26). A PHA with a fiscal 
year ending September 30, 1999 that elects to submit its unaudited 
financial report earlier than the due date of November 30, 1999 must 
submit its report as required in this section. On or after September 30, 
1998, but prior to November 30, 1999 (except for a PHA with its fiscal 
year ending September 30, 1999), PHAs may submit their financial reports 
in accordance with this section.
    (2) For entities listed in paragraphs (a)(3) and (a)(4) of this 
section, the requirements of this section will begin with those entities 
with fiscal years ending December 31, 1998 and later. Entities listed in 
paragraphs (a)(3) and (a)(4) of this section with fiscal years ending 
December 31, 1998 that elect to submit their reports earlier than the 
due date must submit their financial reports as required in this 
section. On or after September 30, 1998 but prior to January 1, 1999, 
these entities may submit their financial reports in accordance with 
this section.
    (e) Limitation on changing fiscal years. To allow for a period of 
consistent assessment of the financial reports submitted to HUD under 
this subpart part, PHAs listed in paragraphs (a)(1) and (a)(2) of this 
section will not be allowed to change their fiscal years for their first 
three full fiscal years following October 1, 1998.
    (f) Responsibility for submission of financial report. The 
responsibility for submission of the financial report due to HUD under 
this section rests with the individuals and entities listed in paragraph 
(a) of this section.

[63 FR 46591, Sept. 1, 1998, as amended at 64 FR 1505, Jan. 11, 1999; 64 
FR 33755, June 24, 1999; 65 FR 16295, Mar. 27, 2000]

[[Page 89]]


    Effective Date Note: At 65 FR 16295, Mar. 27, 2000, Sec. 5.801, 
paragraph (a)(4)(xiv) was removed and paragraph (c) was revised, 
effective Apr. 26, 2000. For the convenience of the user, the superseded 
text is set forth as follows:

Sec. 5.801  Uniform financial reporting standards.

                                * * * * *

    (c) Annual financial report filing dates. (1) The financial 
information to be submitted to HUD in accordance with paragraph (b) of 
this section, must be submitted to HUD annually, no later than 60 days 
after the end of the fiscal year of the reporting period, and as 
otherwise provided by law.
    (2) For entities listed in paragraphs (a) (3) and (4) of this 
section, the first annual financial report shall be due on the date 
provided in this paragraph (2), or at such later date that HUD may 
provide through notice. This delayed submission date is only for the 
first year of compliance with the requirements of this section:
    (i) For entities with fiscal years ending December 31, 1998, the 
first annual financial report shall be due August 31, 1999;
    (ii) For entities with fiscal years ending in January through April 
1999, the first annual financial report shall be due August 31, 1999;
    (iii) For entities with fiscal years ending in May through November 
1999, the first annual financial report shall be due 120 days after the 
end of the applicable fiscal year end date.

                                * * * * *



PART 6--NONDISCRIMINATION IN PROGRAMS AND ACTIVITIES RECEIVING ASSISTANCE UNDER TITLE I OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974--Table of Contents




                      Subpart A--General Provisions

Sec.
6.1  Purpose.
6.2  Applicability.
6.3  Definitions.
6.4  Discrimination prohibited.
6.5  Discrimination prohibited--employment.
6.6  Records to be maintained.

                         Subpart B--Enforcement

6.10  Compliance information.
6.11  Conduct of investigations.
6.12  Procedure for effecting compliance.
6.13  Hearings and appeals.

    Authority: 42 U.S.C. 3535(d) 42 U.S.C. 5309.

    Source: 64 FR 3797, Jan. 25, 1999, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 6.1  Purpose.

    The purpose of this part is to implement the provisions of section 
109 of title I of the Housing and Community Development Act of 1974 
(Title I) (42 U.S.C. 5309). Section 109 provides that no person in the 
United States shall, on the ground of race, color, national origin, 
religion, or sex, be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination under any program or 
activity funded in whole or in part with Federal financial assistance. 
Section 109 does not directly prohibit discrimination on the bases of 
age or disability, and the regulations in this part 6 do not apply to 
age or disability discrimination in Title I programs. Instead, section 
109 directs that the prohibitions against discrimination on the basis of 
age under the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) (Age 
Discrimination Act) and the prohibitions against discrimination on the 
basis of disability under section 504 of the Rehabilitation Act of 1973 
(29 U.S.C. 794) (Section 504) apply to programs or activities funded in 
whole or in part with Federal financial assistance. Thus, the 
regulations of 24 CFR part 8, which implement Section 504 for HUD 
programs, and the regulations of 24 CFR part 146, which implement the 
Age Discrimination Act for HUD programs, apply to disability and age 
discrimination in Title I programs.



Sec. 6.2  Applicability.

    (a) This part applies to any program or activity funded in whole or 
in part with funds under title I of the Housing and Community 
Development Act of 1974, including Community Development Block Grants--
Entitlement, State and HUD-Administered Small Cities, and Section 108 
Loan Guarantees; Urban Development Action Grants; Economic Development 
Initiative Grants; and Special Purpose Grants.
    (b) The provisions of this part and sections 104(b)(2) and 109 of 
Title I that

[[Page 90]]

relate to discrimination on the basis of race shall not apply to the 
provision of Federal financial assistance by grantees under this title 
to the Hawaiian Homelands (42 U.S.C. 5309).
    (c) The provisions of this part and sections 104(b)(2) and 109 of 
Title I that relate to discrimination on the basis of race and national 
origin shall not apply to the provision of Federal financial assistance 
to grant recipients under the Native American Housing Assistance and 
Self-Determination Act (25 U.S.C. 4101). See also, 24 CFR 1003.601(a).



Sec. 6.3  Definitions.

    The terms Department, HUD, and Secretary are defined in 24 CFR part 
5. Other terms used in this part 6 are defined as follows:
    Act means the Housing and Community Development Act of 1974, as 
amended (42 U.S.C. 5301-5320).
    Assistant Secretary means the Assistant Secretary for Fair Housing 
and Equal Opportunity.
    Award Official means the HUD official who has been delegated the 
Secretary's authority to implement a Title I funded program and to make 
grants under that program.
    Complete complaint means a written statement that contains the 
complainant's name and address, identifies the Recipient against which 
the complaint is made, and describes the Recipient's alleged 
discriminatory action in sufficient detail to inform HUD of the nature 
and date of the alleged violation of section 109. It shall be signed by 
the complainant or by someone authorized to do so on his or her behalf. 
Complaints filed on behalf of classes or third parties shall describe or 
identify (by name, if possible) the alleged victims of discrimination.
    Federal financial assistance means: (1) Any assistance made 
available under title I of the Housing and Community Development Act of 
1974, as amended, and includes income generated from such assistance, 
and any grant, loan, contract, or any other arrangement, in the form of:
    (i) Funds;
    (ii) Services of Federal personnel; or
    (iii) Real or personal property or any interest in or use of such 
property, including:
    (A) Transfers or leases of the property for less than fair market 
value or for reduced consideration; and
    (B) Proceeds from a subsequent transfer or lease of the property if 
the Federal share of its fair market value is not returned to the 
Federal Government.
    (2) Any assistance in the form of proceeds from loans guaranteed 
under section 108 of the Act, but does not include assistance made 
available through direct Federal procurement contracts or any other 
contract of insurance or guaranty.
    Program or activity (funded in whole or in part) means all of the 
operations of--
    (1)(i) A department, agency, special purpose district, or other 
instrumentality of a State or local government; or
    (ii) The entity of a State or local government that distributes 
Federal financial assistance, and each department or agency (and each 
State or local government entity) to which the assistance is extended, 
in the case of assistance to a State or local government;
    (2)(i) A college, university, or other post-secondary institution, 
or a public system of higher education; or
    (ii) A local educational agency (as defined in section 198(a)(10) of 
the Elementary and Secondary Education Act of 1965), system of 
vocational education or other school system;
    (3)(i) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (A) If assistance is extended to the corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (B) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (ii) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or

[[Page 91]]

    (4) Any other entity that is described in paragraphs (1), (2), or 
(3) of this definition, any part of which is extended Federal financial 
assistance.
    Recipient means any State, political subdivision of any State, or 
instrumentality of any State or political subdivision; any public or 
private agency, institution, organization, or other entity; or any 
individual, in any State, to whom Federal financial assistance is 
extended, directly or through another Recipient, for any program or 
activity, or who otherwise participates in carrying out such program or 
activity, including any successor, assign, or transferee thereof. 
Recipient does not include any ultimate beneficiary under any program or 
activity.
    Responsible Official means the Assistant Secretary for Fair Housing 
and Equal Opportunity or his or her designee.
    Section 109 means section 109 of the Housing and Community 
Development Act of 1974, as amended.
    Title I means title I of the Housing and Community Development Act 
of 1974 (42 U.S.C. 5301-5321).



Sec. 6.4  Discrimination prohibited.

    (a) Section 109 requires that no person in the United States shall 
be excluded from participation in, be denied the benefits of, or be 
subjected to discrimination under any program or activity funded in 
whole or in part with Federal financial assistance, on the grounds of 
race, color, national origin, religion, or sex.
    (1) A Recipient under any program or activity to which this part 
applies may not, directly or through contractual, licensing, or other 
arrangements, take any of the following actions on the grounds of race, 
color, national origin, religion, or sex:
    (i) Deny any individual any facilities, services, financial aid, or 
other benefits provided under the program or activity;
    (ii) Provide any facilities, services, financial aid, or other 
benefits that are different, or are provided in a different form, from 
that provided to others under the program or activity;
    (iii) Subject an individual to segregated or separate treatment in 
any facility, or in any matter of process related to the receipt of any 
service or benefit under the program or activity;
    (iv) Restrict an individual's access to, or enjoyment of, any 
advantage or privilege enjoyed by others in connection with facilities, 
services, financial aid or other benefits under the program or activity;
    (v) Treat an individual differently from others in determining 
whether the individual satisfies any admission, enrollment, eligibility, 
membership, or other requirements or conditions that the individual must 
meet in order to be provided any facilities, services, or other benefit 
provided under the program or activity;
    (vi) Deny an individual an opportunity to participate in a program 
or activity as an employee;
    (vii) Aid or otherwise perpetuate discrimination against an 
individual by providing Federal financial assistance to an agency, 
organization, or person that discriminates in providing any housing, 
aid, benefit, or service;
    (viii) Otherwise limit an individual in the enjoyment of any right, 
privilege, advantage, or opportunity enjoyed by other individuals 
receiving the housing, aid, benefit, or service;
    (ix) Use criteria or methods of administration that have the effect 
of subjecting persons to discrimination or have the effect of defeating 
or substantially impairing accomplishment of the objectives of the 
program or activity with respect to persons of a particular race, color, 
national origin, religion, or sex; or
    (x) Deny a person the opportunity to participate as a member of 
planning or advisory boards.
    (2) In determining the site or location of housing, accommodations, 
or facilities, a Recipient may not make selections that have the effect 
of excluding persons from, denying them the benefits of, or subjecting 
them to discrimination on the ground of race, color, national origin, 
religion, or sex. The Recipient may not make selections that have the 
purpose or effect of defeating or substantially impairing the 
accomplishment of the objectives of section 109 and of this part 6.
    (3)(i) In administering a program or activity in which the Recipient 
has discriminated on the grounds of race,

[[Page 92]]

color, national origin, religion or sex, the Recipient must take any 
necessary steps to overcome the effects of prior discrimination.
    (ii) In the absence of discrimination, a Recipient, in administering 
a program or activity, may take any steps necessary to overcome the 
effects of conditions that resulted in limiting participation by persons 
of a particular race, color, national origin, religion, or sex.
    (iii) After a finding of noncompliance, or after a Recipient has 
reasonable cause to believe that discrimination has occurred, a 
Recipient shall not be prohibited by this section from taking any action 
eligible under subpart C of 24 CFR part 570 to ameliorate an imbalance 
in benefits, services or facilities provided to any geographic area or 
specific group of persons within its jurisdiction, where the purpose of 
such action is to remedy discriminatory practices or usage.
    (iv)(A) Notwithstanding anything to the contrary in this part, 
nothing contained in this section shall be construed to prohibit any 
Recipient from maintaining or constructing separate living facilities or 
restroom facilities for the different sexes in order to protect personal 
privacy or modesty concerns. Furthermore, selectivity on the basis of 
sex is not prohibited when institutional or custodial services can, in 
the interest of personal privacy or modesty, only be performed by a 
member of the same sex as those receiving the services.
    (B) Section 109 of the Act does not directly prohibit discrimination 
on the basis of age or disability, but directs that the prohibitions 
against discrimination on the basis of age under the Age Discrimination 
Act and the prohibitions against discrimination on the basis of 
disability under Section 504 apply to Title I programs and activities. 
Accordingly, for programs or activities receiving Federal financial 
assistance, the regulations in this part 6 apply to discrimination on 
the bases of race, color, national origin, religion, or sex; the 
regulations at 24 CFR part 8 apply to discrimination on the basis of 
disability; and the regulations at 24 CFR part 146 apply to 
discrimination on the basis of age.
    (b) [Reserved]



Sec. 6.5  Discrimination prohibited--employment.

    (a) General. A Recipient may not, under any program or activity 
funded in whole or in part with Federal financial assistance, directly 
or through contractual agents or other arrangements including contracts 
and consultants, subject a person to discrimination in the terms and 
conditions of employment. Terms and conditions of employment include 
advertising, interviewing, selection, promotion, demotion, transfer, 
recruitment and advertising, layoff or termination, pay or other 
compensation, including benefits, and selection for training.
    (b) Determination of compliance status. The Assistant Secretary will 
follow the procedures set forth in this part and 29 CFR part 1691 and 
look to the substantive guidelines and policy of the Equal Employment 
Opportunity Commission when reviewing employment practices under Section 
109.



Sec. 6.6  Records to be maintained.

    (a) General. Recipients shall maintain records and data as required 
by 24 CFR 91.105, 91.115, 570.490, and 570.506.
    (b) Employment. Recipients shall maintain records and data as 
required by the Equal Employment Opportunity Commission at 29 CFR part 
1600.
    (c) Recipients shall make available such records and any supporting 
documentation upon request of the Responsible Official.

(Approved by the Office of Management and Budget under control numbers 
2506-0117 and 2506-0077.)



                         Subpart B--Enforcement



Sec. 6.10  Compliance information.

    (a) Cooperation and assistance. The Responsible Official and the 
Award Official will provide assistance and guidance to Recipients to 
help them comply voluntarily with this part.
    (b) Access to data and other sources of information. Each Recipient 
shall permit access by authorized representatives of HUD to its 
facilities, books, records, accounts, minutes and audio tapes of 
meetings, personnel, computer disks and tapes, and other sources of

[[Page 93]]

information as may be pertinent to a determination of whether the 
Recipient is complying with this part. Where information required of a 
Recipient is in the exclusive possession of any other agency, 
institution, or person, and that agency, institution, or person fails or 
refuses to furnish this information, the Recipient shall so certify in 
any requested report and shall set forth what efforts it has made to 
obtain the information. Failure or refusal to furnish pertinent 
information (whether maintained by the Recipient or some other agency, 
institution, or person) without a credible reason for the failure or 
refusal will be considered to be noncompliance under this part.
    (c) Compliance data. Each Recipient shall keep records and submit to 
the Responsible Official, timely, complete, and accurate data at such 
times and in such form as the Responsible Official may determine to be 
necessary to ascertain whether the Recipient has complied or is 
complying with this part.
    (d) Notification to employees, beneficiaries, and participants. Each 
Recipient shall make available to employees, participants, 
beneficiaries, and other interested persons information regarding the 
provisions of this part and its applicability to the program or activity 
under which the Recipient receives Federal financial assistance and make 
such information available to them in such manner as the Responsible 
Official finds necessary to apprise such persons of the protections 
against discrimination assured them by Section 109 and this part.



Sec. 6.11  Conduct of investigations.

    (a) Filing a complaint--(1) Who may file. Any person who believes 
that he or she has been subjected to discrimination prohibited by this 
part may file, or may have an authorized representative file on his or 
her behalf, a complaint with the Responsible Official. Any person who 
believes that any specific class of persons has been subjected to 
discrimination prohibited by this part and who is a member of that class 
or who is the authorized representative of a member of that class may 
file a complaint with the Responsible Official.
    (2) Confidentiality. Generally, the Responsible Official shall hold 
in confidence the identity of any person submitting a complaint, unless 
the person submits written authorization otherwise. However, an 
exception to maintaining confidentiality of the identity of the person 
may be required to carry out the purposes of this part, including the 
conduct of any investigation, hearing, or proceeding under this part.
    (3) When to file. Complaints shall be filed within 180 days of the 
alleged act of discrimination, unless the Responsible Official waives 
this time limit for good cause. For purposes of determining when a 
complaint is filed under this part, a complaint mailed to the 
Responsible Official via the U.S. Postal Service will be deemed filed on 
the date it is postmarked. A complaint delivered to the Responsible 
Official in any other manner will be deemed filed on the date it is 
received by the Responsible Official.
    (4) Where to file complaints. Complaints must be in writing, signed, 
addressed to the Responsible Official, and filed with (mailed to or 
otherwise delivered to) the Office of Fair Housing and Equal Opportunity 
at any HUD Office.
    (5) Content of complaints. Each complaint should contain the 
complainant's name, address, and phone number; a description or name, if 
available, of the Recipient alleged to have violated this part; an 
address where the violation occurred; and a description of the 
Recipient's alleged discriminatory action in sufficient detail to inform 
the Responsible Official of the nature and date of the alleged violation 
of this part.
    (6) Amendments to complaints. Amendments to complaints, such as 
clarification and amplification of allegations in a complaint or the 
addition of other Recipients, may be made by the complainant or the 
complainant's authorized representative at any time while the complaint 
is being considered, and any amendment shall be deemed to be made as of 
the original filing date.
    (7) Notification. To the extent practicable, the Responsible 
Official will notify the complainant and the Recipient of the 
Responsible Official's receipt of a complaint within 10 calendar days

[[Page 94]]

of receipt of a complete complaint. If the Responsible Official receives 
a complaint that is not complete, the Responsible Official will notify 
the complainant and specify the additional information that is needed to 
make the complaint complete. If the complainant fails to complete the 
complaint, the Responsible Official will close the complaint without 
prejudice and notify the complainant. When a complete complaint has been 
received, the Responsible Official, or his or her designee, will assess 
the complaint for acceptance, rejection, or referral to an appropriate 
Federal agency within 20 calendar days.
    (8) Resolution of complaints. After the acceptance of a complete 
complaint, the Responsible Official will investigate the complaint, 
attempt informal resolution, and, if resolution is not achieved, the 
Responsible Official will notify the Recipient and complainant, to the 
extent practicable within 180 days of the receipt of the complete 
complaint, of the results of the investigation in a letter of findings 
sent by certified mail, return receipt requested, containing the 
following:
    (i) Findings of fact and a finding of compliance or noncompliance;
    (ii) A description of an appropriate remedy for each violation 
believed to exist; and
    (iii) A notice of the right of the Recipient and the complainant to 
request a review of the letter of findings by the Responsible Official. 
A copy of the final investigative report will be made available upon 
request.
    (b) Compliance reviews--(1) Periodic compliance reviews. The 
Responsible Official may periodically review the practices of Recipients 
to determine whether they are complying with this part and may conduct 
on-site reviews. The Responsible Official will initiate an on-site 
review by sending to the Recipient a letter advising the Recipient of 
the practices to be reviewed; the programs affected by the review; and 
the opportunity, at any time before a final determination, to submit 
information that explains, validates, or otherwise addresses the 
practices under review. In addition, the Award Official will include, in 
normal program compliance reviews and monitoring procedures, appropriate 
actions to review and monitor compliance with general or specific 
program requirements designed to implement the requirements of this 
part.
    (2) Time period of the review. (i) For the Entitlement program, 
compliance reviews will cover the three years before the date of the 
review.
    (ii) For the Urban Development Action Grant (UDAG) program, the 
compliance review is applicable only to UDAG loan repayments or other 
payments or revenues classified as program income. UDAG repayments or 
other payments or revenues classified as miscellaneous revenue are not 
subject to compliance review under this part. (See 24 CFR 570.500(a).) 
The compliance review will cover the time period that program income is 
being repaid.
    (iii) For the State and HUD-Administered Small Cities programs, the 
compliance review will cover the four years before the date of the 
review.
    (iv) For all other programs, the time period covered by the review 
will be four years before the date of the review.
    (v) On a case-by-case basis, at the discretion of the Responsible 
Official, the above time frames for review can be expanded where facts 
or allegations warrant further investigation.
    (3) Early compliance resolution. On the last day of the on-site 
visit, after the compliance review, the Recipient will be given an 
opportunity to supplement the record. Additionally, a prefinding 
conference may be held and a summary of the proposed findings may be 
presented to the Recipient. In those instances where the issue(s) cannot 
be resolved at a prefinding conference or with the supplemental 
information, a meeting will be scheduled to attempt a voluntary 
settlement.
    (4) Notification of findings. (i) The Assistant Secretary will 
notify the Recipient of Federal financial assistance of the results of 
the compliance review in a letter of findings sent by certified mail, 
return receipt requested.
    (ii) Letter of findings. The letter of findings will include the 
findings of fact and the conclusions of law; a description of a remedy 
for each violation found; and a notice that a copy of

[[Page 95]]

HUD's final report concerning its compliance review will be made 
available, upon request, to the Recipient.
    (c) Right to a review of the letter of findings. (1) Within 30 days 
of receipt of the letter of findings, any party may request that a 
review be made of the letter of findings, by mailing or delivering to 
the Responsible Official, Room 5100, Office of Fair Housing and Equal 
Opportunity, HUD, Washington, DC 20410, a written statement of the 
reasons why the letter of findings should be modified.
    (2) The Responsible Official will send by certified mail, return 
receipt requested, a copy of the request for review to all parties. 
Parties other than the party requesting review and HUD shall have 20 
days from receipt to respond to the request for review.
    (3) The Responsible Official will either sustain or modify the 
letter of findings or require that further investigation be conducted, 
within 60 days of the request for review. The Responsible Official's 
decision shall constitute the formal determination of compliance or 
noncompliance.
    (4) If no party requests that the letter of findings be reviewed, 
the Responsible Official, within 14 calendar days of the expiration of 
the time period in paragraph (a)(9)(i) of this section, will send a 
formal written determination of compliance or noncompliance to all 
parties.
    (d) Voluntary compliance time limits. The Recipient will have 10 
calendar days from receipt of the letter of findings of noncompliance, 
or such other reasonable time as specified in the letter, within which 
to agree, in writing, to come into voluntary compliance or to contact 
the Responsible Official for settlement discussions. If the Recipient 
fails to meet this deadline, HUD will proceed in accordance with 
Secs. 6.12 and 6.13.
    (e) Informal resolution/voluntary compliance--(1) General. It is the 
policy of HUD to encourage the informal resolution of matters. A 
complaint or a compliance review may be resolved by informal means at 
any time. If a letter of findings is issued, and the letter makes a 
finding of noncompliance, the Responsible Official will attempt to 
resolve the matter through a voluntary compliance agreement.
    (2) Objectives of informal resolution/voluntary compliance. In 
attempting informal resolution, the Responsible Official will attempt to 
achieve a just resolution of the matter and to obtain assurances, where 
appropriate, that the Recipient will satisfactorily remedy any 
violations of the rights of any complainant, and will take such action 
as will assure the elimination of any violation of this part or the 
prevention of the occurrence of such violation in the future. If a 
finding of noncompliance has been made, the terms of such an informal 
resolution shall be reduced to a written voluntary compliance agreement, 
signed by the Recipient and the Responsible Official, and be made part 
of the file. Such voluntary compliance agreements shall seek to protect 
the interests of the complainant (if any), other persons similarly 
situated, and the public.
    (3) Right to file a private civil action. At any time in the 
process, the complainant has the right to file a private civil action. 
If the complainant does so, the Responsible Official has the discretion 
to administratively close the investigation or continue the 
investigation, if he or she decides that it is in the best interests of 
the Department to do so. If the Responsible Official makes a finding of 
noncompliance and an agreement to voluntarily comply is not obtained 
from the Recipient, the procedures at Secs. 6.12 and 6.13 for effecting 
compliance shall be followed.
    (f) Intimidatory or retaliatory acts prohibited. No Recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any person for the purpose of interfering with any right or privilege 
secured by this part, or because he or she has made a complaint, 
testified, assisted, or participated in any manner in an investigation, 
compliance review, proceeding, or hearing under this part.



Sec. 6.12  Procedure for effecting compliance.

    (a) Whenever the Assistant Secretary determines that a Recipient of 
Federal financial assistance has failed to comply with Section 109(a) or 
this part and voluntary compliance efforts have

[[Page 96]]

failed, the Secretary will notify the Governor of the State or the Chief 
Executive Officer of the unit of general local government of the 
findings of noncompliance and will request that the Governor or the 
Chief Executive Officer secure compliance. If within a reasonable period 
of time, not to exceed 60 days, the Governor or the Chief Executive 
Officer fails or refuses to secure compliance, the Secretary will:
    (1) Refer the matter to the Attorney General with a recommendation 
that an appropriate civil action be instituted;
    (2) Exercise the powers and functions provided by Title VI;
    (3) Terminate or reduce payments under Title I, or limit the 
availability of payments under Title I to programs or activities not 
affected by the failure to comply; or
    (4) Take such other actions as may be provided by law, including but 
not limited to, the initiation of proceedings under 24 CFR part 24 or 
any applicable proceeding under State or local law.
    (b) Termination, reduction, or limitation of the availability of 
Title I payments. No order terminating, reducing, or limiting the 
availability of Title I payments under this part shall become effective 
until:
    (1) The Secretary has notified the Governor of the State or the 
Chief Executive Officer of the unit of general local government of the 
Recipient's failure to comply in accordance with paragraph (a) of this 
section and of the termination, reduction or limitation of the 
availability of Title I payments to be taken;
    (2) The Secretary has determined that compliance cannot be secured 
by voluntary means;
    (3) The Recipient has been extended an opportunity for a hearing in 
accordance with Sec. 6.13(a); and
    (4) A final agency notice or decision has been rendered in 
accordance with paragraph (c) of this section or 24 CFR part 180.
    (c) If a Recipient does not respond to the notice of opportunity for 
a hearing or does not elect to proceed with a hearing within 20 days of 
the issuance of the Secretary's actions listed in paragraphs (b)(1), (2) 
and (3) of this section, then the Secretary's approval of the 
termination, reduction or limitation of the availability of Title I 
payments is considered a final agency notice and the Recipient may seek 
judicial review in accordance with section 111(c) of the Act.



Sec. 6.13  Hearings and appeals.

    (a) When a Recipient requests an opportunity for a hearing, in 
accordance with Sec. 6.12(b)(3), the General Counsel will follow the 
notification procedures set forth in 24 CFR 180.415. The hearing, and 
any petition for review, will be conducted in accordance with the 
procedures set forth in 24 CFR part 180.
    (b) After a hearing is held and a final agency decision is rendered 
under 24 CFR part 180, the Recipient may seek judicial review in 
accordance with section 111(c) of the Act.



PART 7--EQUAL EMPLOYMENT OPPORTUNITY; POLICY AND PROCEDURES--Table of Contents




 Subpart A--Equal Employment Opportunity Without Regard to Race, Color, 
           Religion, Sex, National Origin, Age, or Disability

                           General Provisions

Sec.
7.1  Policy.
7.2  Definitions.
7.3  Designations.
7.4  Affirmative employment programs.

                            Responsibilities

7.10  Responsibilities of the Director and Deputy Director of EEO.
7.11  Responsibilities of the EEO Officers.
7.12  Responsibilities of the EEO Counselors.
7.13  Responsibilities of the Assistant Secretary for Administration.
7.14  Responsibilities of Human Resources Officers.
7.15  Responsibilities of managers and supervisors.
7.16  Responsibilities of employees.

                         Precomplaint Processing

7.25  Precomplaint processing.

                               Complaints

7.30  Presentation of complaint.
7.31  Who may file a complaint, with whom filed, and time limits.
7.32  Contents.
7.33  Acceptability.
7.34  Processing.
7.35  Hearing.
7.36  Decision by Director of EEO.

[[Page 97]]

7.37  Rights of appeal.
7.38  Relationship to other HUD appellate procedures.

Subpart B [Reserved]

    Authority: 42 U.S.C. 3535(d); E.O. 11478, 3 CFR, 1969 Comp. p. 306; 
42 U.S.C. 2000e note.

    Source: 61 FR 14228, Mar. 29, 1996, unless otherwise noted.



 Subpart A--Equal Employment Opportunity Without Regard to Race, Color, 
           Religion, Sex, National Origin, Age, or Disability

                           General Provisions



Sec. 7.1  Policy.

    In conformity with the policy expressed in Executive Order 11478 (34 
FR 12985, 3 CFR, 1966-1970 Comp., p. 803) and with implementing 
regulations of the Equal Employment Opportunity Commission, codified 
under 29 CFR part 1614, it is the policy and the intent of the 
Department of Housing and Urban Development to provide equality of 
opportunity in employment in the Department for all persons; to prohibit 
discrimination because of race, color, religion, sex, national origin, 
age or disability in all aspects of its personnel policies, program, 
practices, and operations and in all its working conditions and 
relationships with employees and applicants for employment; and to 
promote the full realization of equal opportunity in employment through 
continuing programs of affirmative employment at every management level 
within the Department.



Sec. 7.2  Definitions.

    For purposes of this subpart A--
    AE means Affirmative Employment.
    EEO means Equal Employment Opportunity.
    Organizational unit means the jurisdictional area of the Office of 
the Secretary, the Assistant to the Deputy Secretary for Field 
Management, each Assistant Secretary, the General Counsel, the Inspector 
General, the President of the Government National Mortgage Association, 
the Chief Financial Officer, the Director of Lead-Based Paint Abatement 
and Poisoning Prevention, and the Office of Federal Housing Enterprise 
Oversight.
    Person with a disability means the same as handicap under EEOC's 
regulations at 29 CFR part 1614.



Sec. 7.3  Designations.

    (a) Director of Equal Employment Opportunity. The Director of the 
Office of Departmental Equal Employment Opportunity is designated the 
Director of EEO, except that with respect to complaints naming the 
Director and/or Deputy Director of Departmental EEO as the alleged 
discriminating official(s) and complaints arising in the Office of 
Departmental EEO, the Chief of Staff shall be Director of EEO.
    (b) Deputy Director of Equal Employment Opportunity. The Deputy 
Director of the Office of Departmental Equal Employment Opportunity is 
designated as the Deputy Director of Equal Employment Opportunity and 
acts for the Director of EEO.
    (c) Equal Employment Opportunity Officers. The Director of Equal 
Employment Opportunity shall designate appropriate HUD officials to be 
Equal Employment Opportunity Officers for their respective 
organizational units.



Sec. 7.4  Affirmative employment programs.

    The Office of the Secretary, the Assistant to the Deputy Secretary 
for Field Management, each Assistant Secretary, the General Counsel, the 
Inspector General, the President of the Government National Mortgage 
Association, the Chief Financial Officer, the Director of Lead-Based 
Paint Abatement and Poisoning Prevention, and the Director, Office of 
Federal Housing Enterprise Oversight shall establish, maintain and carry 
out a plan of affirmative employment to promote equal opportunity in 
every aspect of employment policy and practice. Each plan shall identify 
instances of under-representation of minorities, women and persons with 
disabilities, recognize situations or barriers that impede equality of 
opportunity, and include objectives and action items targeted to 
eliminate any employment, training, advancement, and retention issues 
which adversely affect minorities, women and persons with disabilities.

[[Page 98]]

Each plan must be consistent with 29 CFR part 1614 and the governing 
Management Directive issued by the Equal Employment Opportunity 
Commission, and is subject to approval by the Director of Equal 
Employment Opportunity and shall be developed within the framework of 
Departmentwide guidelines published by the Director of EEO.

                            Responsibilities



Sec. 7.10  Responsibilities of the Director and Deputy Director of EEO.

    The Director and Deputy Director of EEO are assigned the functions 
of:
    (a) Advising the Secretary with respect to the preparation of plans, 
procedures, regulations, reports, and other matters pertaining to the 
Government's equal employment opportunity policy and the Department's 
EEO/AE programs;
    (b) In coordination with other officials, developing and maintaining 
plans, procedures, and regulations necessary to carry out the 
Department's EEO programs, including a Departmentwide program of 
affirmative employment developed in coordination with other officials; 
approving programs of affirmative employment established throughout the 
Department;
    (c) Evaluating from time to time the sufficiency of the Department's 
EEO/AE programs and reporting thereon to the Secretary with 
recommendations as to any improvement or correction needed, including 
remedial or disciplinary action with respect to managerial or 
supervisory employees who have failed in their responsibility;
    (d) Appraising the Department's personnel operations at regular 
intervals to insure their conformity with the policy of the Government 
and the Department's equal employment opportunity program;
    (e) Making changes in programs and procedures designed to eliminate 
discriminatory practices and improve the Department's EEO/AE programs;
    (f) Selecting EEO Counselors;
    (g) Providing for counseling by an EEO Counselor of an aggrieved 
employee or applicant for employment who believes that he or she has 
been discriminated against because of race, color, religion, sex, 
national origin, age or disability and for attempting to resolve on an 
informal basis or through a formal alternative dispute resolution 
process, the matter raised by the employee or applicant before a 
complaint of discrimination may be filed under Sec. 7.31;
    (h) Providing for the prompt, fair and impartial processing of 
individual complaints involving issues of discrimination within the 
Department subject to 29 CFR part 1614;
    (i) Making the final decision on discrimination complaints and 
ordering such corrective measures as may be necessary, including 
disciplinary action as is warranted by the circumstances when an 
employee has been found to have engaged in a discriminatory practice; 
and
    (j) Executing settlement agreements to resolve EEO complaints.



Sec. 7.11  Responsibilities of the EEO Officers.

    Each EEO Officer shall:
    (a) Advise the Director of EEO on all matters affecting the 
implementation of the Department's EEO/AE policies and programs in the 
organizational unit;
    (b) Develop and maintain a program of affirmative employment for the 
organizational unit and insure that it is carried out in an exemplary 
manner;
    (c) Publicize to all employees of the organizational unit the name 
and address of the Director of EEO, the EEO Officer, and the EEO 
Counselor(s), the EEO Discrimination Complaint Manager, the Affirmative 
Employment Program (AEP) Manager, the Diversity Program Manager, and the 
EEO complaint procedures;
    (d) Inform all supervisors in the organizational unit of the 
responsibilities and objectives of the EEO Counselors and the EEO 
complaint process and the importance of cooperating with the Counselors 
to informally find solutions to problems brought to the officer's 
attention by employees and applicants;
    (e) Evaluate the performance by the managers and supervisors in the 
organizational unit in carrying out their responsibilities under this 
subpart and taking appropriate action;
    (f) Seek a resolution of EEO matters alleging discrimination within 
their

[[Page 99]]

organization brought to their attention;
    (g) Designate a high level Affirmative Employment Program (AEP) 
Manager in Headquarters responsible for the preparation of the AEP plan; 
the management of the plan; providing advice and guidance to managers 
and supervisors in removing barriers to EEO/AE and in implementing all 
their EEO/AE responsibilities; and reviewing all recruitment and 
personnel actions taken by managers and supervisors to ensure the 
achievement of AEP objectives;
    (h) Designate a senior level EEO Discrimination Complaint Manager in 
Headquarters to manage and direct the organization's EEO 
responsibilities; and
    (i) Designate a senior level Diversity Program Manager in 
Headquarters to manage and direct the organization's Diversity Program 
and provide resources for Diversity activities for its employees.



Sec. 7.12  Responsibilities of the EEO Counselors.

    The EEO Counselors are responsible for counseling and attempting 
resolution of matters brought to the counselor's attention pursuant to 
Sec. 7.26 and 29 CFR part 1614 by any employee or applicant for 
employment who believes that he or she has been discriminated against 
because of race, color, religion, sex, national origin, age, or 
disability.



Sec. 7.13  Responsibilities of the Assistant Secretary for Administration.

    The Assistant Secretary for Administration shall:
    (a) Provide leadership in developing and maintaining personnel 
management policies, programs, automated systems and procedures which 
will promote continuing affirmative employment to insure equal 
opportunity in the recruitment, selection, placement, training, awards, 
recognition and promotion of employees, including an applicant flow 
tracking system;
    (b) Provide positive assistance and guidance to organizational units 
and personnel offices to insure the effective implementation of the 
personnel management policies, programs, automated systems, and 
procedures on equal employment opportunity;
    (c) Participate at the national level with other Government 
departments and agencies, other employers, and other public and private 
groups, in cooperative action to improve employment opportunities and 
community conditions which effect employability;
    (d) Prepare and implement plans for recruitment and reports in 
accordance with the Federal Equal Opportunity Recruitment Program and 
the Disabled Veterans Affirmative Action Program;
    (e) Make reasonable accommodation to the known physical or mental 
limitations of qualified applicants and employees with disabilities 
unless the accommodation would impose an undue hardship on the operation 
of the agency's program; and
    (f) Designate a senior level Disability Program Manager to promote 
EEO/AE for persons with disabilities; to assure the accessibility of all 
HUD facilities and programs; and to manage the resources for providing 
reasonable accommodation.



Sec. 7.14  Responsibilities of Human Resources Officers.

    In conformity with guidelines issued by the Assistant Secretary for 
Administration, Human Resources Officers shall:
    (a) Appraise job structure and employment practices to insure 
genuine equality of opportunity for all employees to participate fully 
on the basis of merit in all occupations and levels of responsibility;
    (b) Communicate the Department's equal employment opportunity policy 
and program and its employment needs to all sources of job candidates 
without regard to race, color, religion, sex, national origin, 
disability or age and solicit their recruitment assistance on a 
continuing basis;
    (c) As appropriate, provide personnel information to EEO counselors 
and others who are involved in the decision on a discrimination 
complaint;
    (d) Evaluate hiring methods and practices to insure impartial 
consideration for all job applicants;
    (e) Ensure that new employee orientation programs contain 
appropriate

[[Page 100]]

references to the Department's EEO/AE policies and programs;
    (f) Participate in the preparation and distribution of such 
educational materials as may be necessary to inform adequately all 
employees of their rights and responsibilities as described in this 
part, including the Department's directives issued to carry out the 
Equal Employment Opportunity Program;
    (g) In coordination with the Director of the Training Academy, 
develop an on-going training program for various levels of 
administration and supervision, to ensure understanding of the 
Departmental EEO/AE programs, policy and requirements which fosters 
effective teamwork and high morale, and provide communication with 
employees on any matter related to equal employment opportunity;
    (h) Decide all personnel actions on merit principles in a manner 
which will demonstrative affirmative equal employment opportunity for 
the organization;
    (i) Ensure the greatest possible utilization and development of the 
skills and potential ability of all employees;
    (j) Track applicant flow and promptly take or recommend appropriate 
action to overcome any impediment to the achievement of the objectives 
of the EEO/AE programs; and
    (k) Provide recognition to employees, supervisors, managers and 
units demonstrating superior accomplishment in equal employment 
opportunity.



Sec. 7.15  Responsibilities of managers and supervisors.

    All managers and supervisors of the Department are responsible for:
    (a) Removing barriers to EEO and ensuring that Affirmative 
Employment objectives are accomplished in their areas of responsibility;
    (b) Evaluating subordinate managers and supervisors on their 
performance of EEO/AE responsibilities;
    (c) Encouraging and taking positive steps to ensure respect for and 
acceptance of minorities, women and persons with disabilities, veterans 
and others of diverse characteristics in the work force;
    (d) Providing for the non-discriminatory treatment of all employees 
and for providing full and fair opportunity for all employees in 
obtaining employment and career advancement, including support for 
F.A.I.R., the Upward Mobility Program, the Mentoring Program and the 
Individual Development Plan;
    (e) Encouraging and authorizing staff participation in the various 
Diversity Program observances;
    (f) Being proactive in addressing EEO/AE issues, and for work 
environments that encourage and support complaint avoidance through 
sound management and personnel practices;
    (g) Resolving complaints of discrimination early in the EEO process 
either independently, or through the use of alternate dispute resolution 
techniques, when it is the right thing to do and when it represents a 
sound business decision; and
    (h) Making reasonable accommodation to the religious and disability 
needs of applicants and employees when those accommodations can be made 
without undue hardship on the business of the agency.



Sec. 7.16  Responsibilities of employees.

    All employees of the Department are responsible for:
    (a) Being informed as to the Department's EEO/AE programs;
    (b) Adopting an attitude of full acceptance of minority, female and 
disabled group associates, and support of F.A.I.R.;
    (c) Providing equality of treatment of, and service to, all citizens 
with whom they come in contact in carrying out their job 
responsibilities; and
    (d) Providing assistance to supervisors and managers in carrying out 
their responsibilities in the EEO/AE programs.

                         Precomplaint Processing



Sec. 7.25  Precomplaint processing.

    The regulations in 29 CFR 1614.105, concerning precomplaint 
processing shall apply.

                               Complaints



Sec. 7.30  Presentation of complaint.

    At any stage in the presentation of a complaint, including the 
counseling stage, the Complainant shall be free

[[Page 101]]

from restraint, interference, coercion, discrimination, or reprisal and 
shall have the right to be accompanied, represented, and advised by a 
representative of the Complainant's own choosing, except as limited by 
29 CFR 1614.605. If the Complainant is an employee of the Department, 
the employee shall have a reasonable amount of official time to present 
the complaint if the employee is otherwise in an active duty status. If 
the Complainant is an employee of the Department and designates another 
employee of the Department as Complainant's representative, the 
representative shall be free from restraint, interference, coercion, 
discrimination, or reprisal, and shall have a reasonable amount of 
official time, if the representative is otherwise in an active duty 
status, to present the complaint.



Sec. 7.31  Who may file a complaint, with whom filed, and time limits.

    Any aggrieved person (hereafter referred to as the Complainant) who 
has observed the provisions of Sec. 7.25 may file a complaint if the 
matter of discrimination was not resolved to the complainant's 
satisfaction. The complaint must be filed with the Director of EEO 
within fifteen (15) days of receipt of the Notice of Right to File a 
Complaint issued by the EEO Counselor. The Department may accept a 
complaint only if the Complainant has met the appropriate requirements 
contained in 29 CFR 1614.605.



Sec. 7.32  Contents.

    (a) The complaint filed should include the following information:
    (1) The specific action or personnel matter which is alleged to be 
discriminatory;
    (2) The date the act or matter occurred;
    (3) The protected basis or bases on which the alleged discrimination 
occurred;
    (4) Facts and other pertinent information to support the allegation 
of discrimination; and
    (5) The relief desired.
    (b) To expedite the processing of complaints of discrimination, the 
Complainant should use HUD EEO-1 form to file the complaint.



Sec. 7.33  Acceptability.

    The Director of EEO shall determine whether the complaint comes 
within the purview of the EEO regulations at 29 CFR part 1614 and shall 
advise the Complainant and Complainant's representative in writing of 
the acceptance or dismissal of the allegation(s) of the complaint. 
Should the Director of EEO dismiss the complaint or any allegations 
contained in the complaint, the written decision to the Complainant 
shall inform Complainant of the complainant's right to appeal the 
decision and of the time limit applicable to the right of appeal, if 
Complainant believes the dismissal improper.



Sec. 7.34  Processing.

    (a) The Director of EEO will process complaints filed under 29 CFR 
part 1614 for the Department. The Director or the Director's designee 
has jurisdiction of any case.
    (b) The Director of EEO shall provide for the development of a 
complete and impartial record on which to decide the merits of the 
allegations accepted for investigation.
    (1) The person assigned to develop the factual record for the 
complaint shall occupy a position in the Department which is not, 
directly or indirectly, under the jurisdiction of the head of the part 
of the Department in which the complaint arose, or the person shall 
develop the record under a contract with the Department.
    (2) The Department will develop a complete and impartial factual 
record, subject to the requirements of 29 CFR part 1614, upon which to 
make findings on the matters raised in the complaint and accepted for 
processing.
    (3) The Director of EEO will provide the Complainant and the EEO 
Officer a copy of the record developed.



Sec. 7.35  Hearing.

    (a) The Director of EEO will notify the Complainant of the 
Complainant's right to request an administrative hearing before the 
Equal Employment Opportunity Commission or a Final Agency Decision from 
the Department and the timeframes for executing the right to request an 
administrative hearing.

[[Page 102]]

    (b) The Director of EEO will notify the appropriate EEOC office of 
Complainant's timely request for a hearing and request the appointment 
of an administrative judge to conduct the hearing pursuant to 29 CFR 
1614.109.



Sec. 7.36  Decision by Director of EEO.

    Following consultation with the General Counsel and the Assistant 
Secretary for Administration, the Director of EEO shall make the final 
agency decision for the Department based on the record developed through 
the processing of the complaint. The decision shall require the remedial 
and corrective action necessary to ensure that the Department is in 
compliance with the EEO statutes and to promote the Department's policy 
of equal employment opportunity.



Sec. 7.37  Rights of appeal.

    The provisions of 29 CFR part 1614, subpart D, shall govern rights 
of appeal.



Sec. 7.38  Relationship to other HUD appellate procedures.

    (a) An aggrieved individual covered by a collective bargaining 
agreement that permits allegations of discrimination to be raised in a 
negotiated grievance procedure can file a complaint under these 
procedures or a negotiated grievance, but not both. An election to 
proceed under this part is indicated only by filing of a written 
complaint. An election to proceed under a negotiated grievance procedure 
is indicated by the filing of a timely grievance.
    (b) An aggrieved individual alleging discrimination on the basis of 
race, color, religion, sex, national origin, age or disability related 
to or stemming from an action that can be appealed to the Merit Systems 
Protection Board (MSPB) can file a complaint under these procedures, or 
an appeal with the MSPB, but not both. Whichever is filed first, the 
complaint or the appeal, is considered an election to proceed in that 
forum.

Subpart B [Reserved]



PART 8--NONDISCRIMINATION BASED ON HANDICAP IN FEDERALLY ASSISTED PROGRAMS AND ACTIVITIES OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--Table of Contents




                      Subpart A--General Provisions

Sec.
8.1  Purpose.
8.2  Applicability.
8.3  Definitions.
8.4  Discrimination prohibited.
8.5  [Reserved]
8.6  Communications.

                          Subpart B--Employment

8.10  General prohibitions against employment discrimination.
8.11  Reasonable accommodation.
8.12  Employment criteria.
8.13  Preemployment inquiries.

                    Subpart C--Program Accessibility

8.20  General requirement concerning program accessibility.
8.21  Non-housing facilities.
8.22  New construction--housing facilities.
8.23  Alterations of existing housing facilities.
8.24  Existing housing programs.
8.25  Public housing and multi-family Indian housing.
8.26  Distribution of accessible dwelling units.
8.27  Occupancy of accessible dwelling units.
8.28  Housing certificate and housing voucher programs.
8.29  Homeownership programs (sections 235(i) and 235(j), Turnkey III 
          and Indian housing mutual self-help programs).
8.30  Rental rehabilitation program.
8.31  Historic properties.
8.32  Accessibility standards.
8.33  Housing adjustments.

                         Subpart D--Enforcement

8.50  Assurances required.
8.51  Self-evaluation.
8.52  Remedial and affirmative action.
8.53  Designation of responsible employee and adoption of grievance 
          procedures.
8.54  Notice.
8.55  Compliance information.
8.56  Conduct of investigations.
8.57  Procedure for effecting compliance.
8.58  Hearings.

    Authority: 29 U.S.C. 794; 42 U.S.C. 3535(d) and 5309.

    Source: 53 FR 20233, June 2, 1988, unless otherwise noted.

[[Page 103]]



                      Subpart A--General Provisions



Sec. 8.1  Purpose.

    (a) The purpose of this part is to effectuate section 504 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C 794), to the end that 
no otherwise qualified individual with handicaps in the United States 
shall, solely by reason of his or her handicap, be excluded from the 
participation in, be denied the benefits of, or be subjected to 
discrimination under any program or activity receiving Federal financial 
assistance from the Department of Housing and Urban Development. This 
part also implements section 109 of the Housing and Community 
Development Act of 1974, as amended (42 U.S.C. 5309). This part does not 
effectuate section 504 as it applies to any program or activity 
conducted by the Department. Compliance with this part does not assure 
compliance with requirements for accessibility by physically-handicapped 
persons imposed under the Architectural Barriers Act of 1968 (42 U.S.C. 
4151-4157; 24 CFR part 40).
    (b) The policies and standards for compliance established by this 
part are established in contemplation of, and with a view to enforcement 
through, the Department's administration of programs or activities 
receiving Federal financial assistance and the administrative procedures 
described in subparts D and E (including, without limitation, judicial 
enforcement under Sec. 8.57(a)).



Sec. 8.2  Applicability.

    This part applies to all applicants for, and recipients of, HUD 
assistance in the operation of programs or activities receiving such 
assistance. Such assistance includes, but is not limited to, that which 
is listed in appendix A of this part.



Sec. 8.3  Definitions.

    As used in this part:
    Accessible, when used with respect to the design, construction, or 
alteration of a facility or a portion of a facility other than an 
individual dwelling unit, means that the facility or portion of the 
facility when designed, constructed or altered, can be approached, 
entered, and used by individuals with physical handicaps. The phrase 
accessible to and usable by is synonomous with accessible.
    Accessible, when used with respect to the design, construction, or 
alteration of an individual dwelling unit, means that the unit is 
located on an accessible route and when designed, constructed, altered 
or adapted can be approached, entered, and used by individuals with 
physical handicaps. A unit that is on an accessible route and is 
adaptable and otherwise in compliance with the standards set forth in 
Sec. 8.32 is accessible within the meaning of this paragraph. When a 
unit in an existing facility which is being made accessible as a result 
of alterations is intended for use by a specific qualified individual 
with handicaps (e.g., a current occupant of such unit or of another unit 
under the control of the same recipient, or an applicant on a waiting 
list), the unit will be deemed accessible if it meets the requirements 
of applicable standards that address the particular disability or 
impairment of such person.
    Accessible route means a continuous unobstructed path connecting 
accessible elements and spaces in a building or facility that complies 
with the space and reach requirements of applicable standards prescribed 
by Sec. 8.32. An accessible route that serves only accessible units 
occupied by persons with hearing or vision impairments need not comply 
with those requirements intended to effect accessibility for persons 
with mobility impairments.
    Adaptability means the ability of certain elements of a dwelling 
unit, such as kitchen counters, sinks, and grab bars, to be added to, 
raised, lowered, or otherwise altered, to accommodate the needs of 
persons with or without handicaps, or to accommodate the needs of 
persons with different types or degrees of disability. For example, in a 
unit adaptable for a hearing-impaired person, the wiring for visible 
emergency alarms may be installed but the alarms need not be installed 
until such time as the unit is made ready for occupancy by a hearing-
impaired person.
    Alteration means any change in a facility or its permanent fixtures 
or

[[Page 104]]

equipment. It includes, but is not limited to, remodeling, renovation, 
rehabilitation, reconstruction, changes or rearrangements in structural 
parts and extraordinary repairs. It does not include normal maintenance 
or repairs, reroofing, interior decoration, or changes to mechanical 
systems.
    Applicant for assistance means one who submits an application, 
request, plan, or statement required to be approved by a Department 
official or by a primary recipient as a condition of eligibility for 
Federal financial assistance. An application means such a request, plan 
or statement.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities receiving Federal financial assistance. For example, 
auxiliary aids for persons with impaired vision may include readers, 
Brailled materials, audio recordings, and other similar services and 
devices. Auxiliary aids for persons with impaired hearing may include 
telephone handset amplifiers, telephones compatible with hearing aids, 
telecommunication devices for deaf persons (TDD's), interpreters, 
notetakers, written materials, and other similar services and devices.
    Department or HUD means the Department of Housing and Urban 
Development.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other real or 
personal property or interest in the property.
    Federal financial assistance means any assistance provided or 
otherwise made available by the Department through any grant, loan, 
contract or any other arrangement, in the form of:
    (a) Funds;
    (b) Services of Federal personnel; or
    (c) Real or personal property or any interest in or use of such 
property, including:
    (1) Transfers or leases of the property for less than fair market 
value or for reduced consideration; and
    (2) Proceeds from a subsequent transfer or lease of the property if 
the Federal share of its fair market value is not returned to the 
Federal Government.
    Federal financial assistance includes community development funds in 
the form of proceeds from loans guaranteed under section 108 of the 
Housing and Community Development Act of 1974, as amended, but does not 
include assistance made available through direct Federal procurement 
contracts or payments made under these contracts or any other contract 
of insurance or guaranty.
    Handicap means any condition or characteristic that renders a person 
an individual with handicaps.
    Historic preservation programs or activities means programs or 
activities receiving Federal financial assistance that have preservation 
of historic properties as a primary purpose.
    Historic properties means those properties that are listed or are 
eligible for listing in the National Register of Historic Places, or 
such properties designated as historic under a statute of the 
appropriate State or local government body.
    Individual with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities; has a record of such an impairment; or is regarded as having 
such an impairment. For purposes of employment, this term does not 
include: Any individual who is an alcoholic or drug abuser whose current 
use of alcohol or drugs prevents the individual from performing the 
duties of the job in question, or whose employment, by reason of current 
alcohol or drug abuse, would constitute a direct threat to property or 
the safety of others; or any individual who has a currently contagious 
disease or infection and who, by reason of such disease or infection, 
would constitute a direct threat to the health or safety of other 
individuals or who, by reason of the currently contagious disease or 
infection, is unable to perform the duties of the job. For purposes of 
other programs and activities, the term does not include any individual 
who is an alcoholic or drug abuser whose current use of alcohol or drugs 
prevents the individual from participating in the program or activity in 
question, or whose

[[Page 105]]

participation, by reason of such current alcohol or drug abuse, would 
constitute a direct threat to property or the safety of others. As used 
in this definition, the phrase:
    (a) Physical or mental impairment includes:
    (1) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genito-urinary; hemic and lymphatic; skin; and endocrine; or
    (2) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term physical or mental impairment 
includes, but is not limited to, such diseases and conditions as 
orthopedic, visual, speech and hearing impairments, cerebral palsy, 
autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart 
disease, diabetes, mental retardation, emotional illness, drug addiction 
and alcoholism.
    (b) Major life activities means functions such as caring for one's 
self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning and working.
    (c) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (d) Is regarded as having an impairment means:
    (1) Has a physical or mental impairment that does not substantially 
limit one or more major life activities but that is treated by a 
recipient as constituting such a limitation;
    (2) Has a physical or mental impairment that substantially limits 
one or more major life activities only as a result of the attitudes of 
others toward such impairment; or
    (3) Has none of the impairments defined in paragraph (a) of this 
section but is treated by a recipient as having such an impairment.
    Multifamily housing project means a project containing five or more 
dwelling units.
    Primary recipient means a person, group, organization, State or 
local unit of government that is authorized or required to extend 
Federal financial assistance to another recipient for the purpose of 
carrying out a program or activity.
    Program or activity means all of the operations of:
    (a)(1) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (2) The entity of such State or local government that distributes 
such assistance and each such department or agency (and each other State 
or local government entity) to which the assistance is extended, in the 
case of assistance to a State or local government;
    (b)(1) A college, university, or other post-secondary institution, 
or a public system of higher education; or
    (2) A local educational agency (as defined in section 198(a)(10) of 
the Elementary and Secondary Education Act of 1965), system of 
vocational education, or other school system;
    (c)(1) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (i) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (ii) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (2) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or
    (d) Any other entity which is established by two or more of the 
entities described in paragraphs (a), (b), or (c) of this section;

any part of which is extended Federal financial assistance.
    Project means the whole of one or more residential structures and 
appurtenant structures, equipment, roads, walks, and parking lots which 
are covered by a single contract for Federal financial assistance or 
application for assistance, or are treated as a whole

[[Page 106]]

for processing purposes, whether or not located on a common site.
    Qualified individual with handicaps means:
    (a) With respect to employment, an individual with handicaps who, 
with reasonable accommodation, can perform the essential functions of 
the job in question; and
    (b) With respect to any non-employment program or activity which 
requires a person to perform services or to achieve a level of 
accomplishment, an individual with handicaps who meets the essential 
eligibility requirements and who can achieve the purpose of the program 
or activity without modifications in the program or activity that the 
recipient can demonstrate would result in a fundamental alteration in 
its nature; or
    (c) With respect to any other non-employment program or activity, an 
individual with handicaps who meets the essential eligibility 
requirements for participation in, or receipt of benefits from, that 
program or activity. Essential eligibility requirements include stated 
eligibility requirements such as income as well as other explicit or 
implicit requirements inherent in the nature of the program or activity, 
such as requirements that an occupant of multifamily housing be capable 
of meeting the recipient's selection criteria and be capable of 
complying with all obligations of occupancy with or without supportive 
services provided by persons other than the recipient. For example, a 
chronically metally ill person whose particular condition poses a 
significant risk of substantial interference with the safety or 
enjoyment of others or with his or her own health or safety in the 
absence of necessary supportive services may be qualified for occupancy 
in a project where such supportive services are provided by the 
recipient as part of the assisted program. The person may not be 
qualified for a project lacking such services.
    Recipient means any State or its political subdivision, any 
instrumentality of a State or its political subdivision, any public or 
private agency, institution, organization, or other entity, or any 
person to which Federal financial assistance is extended for any program 
or activity directly or through another recipient, including any 
successor, assignee, or transferee of a recipient, but excluding the 
ultimate beneficiary of the assistance. An entity or person receiving 
housing assistance payments from a recipient on behalf of eligible 
families under a housing assistance payments program or a voucher 
program is not a recipient or subrecipient merely by virtue of receipt 
of such payments.
    Replacement cost of the completed facility means the current cost of 
construction and equipment for a newly constructed housing facility of 
the size and type being altered. Construction and equipment costs do not 
include the cost of land, demolition, site improvements, non-dwelling 
facilities and administrative costs for project development activities.
    Secretary means the Secretary of Housing and Urban Development.
    Section 504 means section 504 of the Rehabilitation Act of 1973, as 
amended, 29 U.S.C. 794, as it applies to programs or activities 
receiving Federal financial assistance.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.

[53 FR 20233, June 2, 1988; 54 FR 8188, Feb. 27, 1989]



Sec. 8.4  Discrimination prohibited.

    (a) No qualified individual with handicaps shall, solely on the 
basis of handicap, be excluded from participation in, be denied the 
benefits of, or otherwise be subjected to discrimination under any 
program or activity that receives Federal financial assistance from the 
Department.
    (b)(1) A recipient, in providing any housing, aid, benefit, or 
service in a program or activity that receives Federal financial 
assistance from the Department may not, directly or through contractual, 
licensing, or other arrangements, solely on the basis of handicap:
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in, or benefit from, the housing, aid, benefit, or service;

[[Page 107]]

    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in, or benefit from, the housing, aid, benefit, or service 
that is not equal to that afforded to others;
    (iii) Provide a qualified individual with handicaps with any 
housing, aid, benefit, or service that is not as effective in affording 
the individual an equal opportunity to obtain the same result, to gain 
the same benefit, or to reach the same level of achievement as that 
provided to others;
    (iv) Provide different or separate housing, aid, benefits, or 
services to individuals with handicaps or to any class of individuals 
with handicaps from that provided to others unless such action is 
necessary to provide qualified individuals with handicaps with housing, 
aid, benefits, or services that are as effective as those provided to 
others.
    (v) Aid or perpetuate discrimination against a qualified individual 
with handicaps by providing significant assistance to an agency, 
organization, or person that discriminates on the basis of handicap in 
providing any housing, aid, benefit, or service to beneficiaries in the 
recipient's federally assisted program or activity;
    (vi) Deny a qualified individual with handicaps the opportunity to 
participate as a member of planning or advisory boards;
    (vii) Deny a dwelling to an otherwise qualified buyer or renter 
because of a handicap of that buyer or renter or a person residing in or 
intending and eligible to reside in that dwelling after it is sold, 
rented or made available; or
    (viii) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
other qualified individuals receiving the housing, aid, benefit, or 
service.
    (2) For purposes of this part, housing, aids, benefits, and 
services, to be equally effective, are not required to produce the 
identical result or level of achievement for individuals with handicaps 
and non-handicapped persons, but must afford individuals with handicaps 
equal opportunity to obtain the same result, to gain the same benefit, 
or to reach the same level of achievement.
    (3) A recipient may not deny a qualified individual with handicaps 
the opportunity to participate in any federally assisted program or 
activity that is not separate or different despite the existence of 
permissibly separate or different programs or activities.
    (4) In any program or activity receiving Federal financial 
assistance from the Department, a recipient may not, directly or through 
contractual or other arrangements, utilize criteria or methods of 
administration the purpose or effect of which would:
    (i) Subject qualified individuals with handicaps to discrimination 
solely on the basis of handicap;
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of the recipient's federally assisted program or activity for 
qualified individuals with a particular handicap involved in the program 
or activity, unless the recipient can demonstrate that the criteria or 
methods of administration are manifestly related to the accomplishment 
of an objective of a program or activity; or
    (iii) Perpetuate the discrimination of another recipient if both 
recipients are subject to common administrative control or are agencies 
of the same State.
    (5) In determining the site or location of a federally assisted 
facility, an applicant for assistance or a recipient may not make 
selections the purpose or effect of which would:
    (i) Exclude qualified individuals with handicaps from, deny them the 
benefits of, or otherwise subject them to discrimination under, any 
program or activity that receives Federal financial assistance from the 
Department, or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of the program or activity with respect to qualified 
individuals with handicaps.
    (6) As used in this section, the housing, aid, benefit, or service 
provided under a program or activity receiving Federal financial 
assistance includes any housing, aid, benefit, or service provided in or 
through a facility that has been constructed, altered, leased or rented, 
or otherwise acquired, in whole or in part, with Federal financial 
assistance.

[[Page 108]]

    (c)(1) Non-handicapped persons may be excluded from the benefits of 
a program if the program is limited by Federal statute or executive 
order to individuals with handicaps. A specific class of individuals 
with handicaps may be excluded from a program if the program is limited 
by Federal statute or Executive order to a different class of 
individuals.
    (2) Certain Department programs operate under statutory definitions 
of handicapped person that are more restrictive than the definition of 
individual with handicaps contained in Sec. 8.3 (see appendix B). Those 
definitions are not superseded or otherwise affected by this regulation.
    (d) Recipients shall administer programs and activities receiving 
Federal financial assistance in the most integrated setting appropriate 
to the needs of qualified individuals with handicaps.
    (e) The obligation to comply with this part is not obviated or 
alleviated by any State or local law or other requirement that, based on 
handicap, imposes inconsistent or contradictory prohibitions or limits 
upon the eligibility of qualified individuals with handicaps to receive 
services or to practice any occupation or profession.
    (f) The enumeration of specific forms of prohibited discrimination 
in paragraphs (b) through (e) of this section does not limit the general 
prohibition in paragraph (a) of this section.

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988]



Sec. 8.5  [Reserved]



Sec. 8.6  Communications.

    (a) The recipient shall take appropriate steps to ensure effective 
communication with applicants, beneficiaries, and members of the public.
    (1) The recipient shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
receiving Federal financial assistance.
    (i) In determining what auxiliary aids are necessary, the recipient 
shall give primary consideration to the requests of the individual with 
handicaps.
    (ii) The recipient is not required to provide individually 
prescribed devices, readers for personal use or study, or other devices 
of a personal nature.
    (2) Where a recipient communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf persons (TDD's) or 
equally effective communication systems shall be used.
    (b) The recipient shall adopt and implement procedures to ensure 
that interested persons (including persons with impaired vision or 
hearing) can obtain information concerning the existence and location of 
accessible services, activities, and facilities.
    (c) This section does not require a recipient to take any action 
that the recipient can demonstrate would result in a fundamental 
alteration in the nature of a program or activity or in undue financial 
and administrative burdens. If an action would result in such an 
alteration or burdens, the recipient shall take any other action that 
would not result in such an alteration or such burdens but would 
nevertheless ensure that, to the maximum extent possible, individuals 
with handicaps receive the benefits and services of the program or 
activity receiving HUD assistance.



                          Subpart B--Employment



Sec. 8.10  General prohibitions against employment discrimination.

    (a) No qualified individual with handicaps shall, solely on the 
basis of handicap, be subjected to discrimination in employment under 
any program or activity that receives Federal financial assistance from 
the Department.
    (b) A recipient may not limit, segregate, or classify applicants or 
employees in any way that adversely affects their opportunities or 
status because of handicap.
    (c) The prohibition against discrimination in employment applies to 
the following activities:
    (1) Recruitment, advertising, and the processing of applications for 
employment;
    (2) Hiring, upgrading, promotion, award of tenure, demotion, 
transfer, layoff, termination, right of return

[[Page 109]]

from layoff, injury or illness, and rehiring;
    (3) Rates of pay or any other form of compensation and changes in 
compensation;
    (4) Job assignments, job classifications, organizational structures, 
position descriptions, lines of progression, and seniority lists;
    (5) Leaves of absence, sick leave, or any other leave;
    (6) Fringe benefits available by virtue of employment, whether or 
not administered by the recipient;
    (7) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences, and other related 
activities, and selection for leaves of absence for training;
    (8) Employer sponsored activities, including social or recreational 
programs; and
    (9) Any other term, condition, or privilege of employment.
    (d) A recipient may not participate in a contractual or other 
relationship that has the effect of subjecting qualified applicants with 
handicaps or employees with handicaps to discrimination prohibited by 
this subpart. The relationships referred to in this paragraph (d) 
include relationships with employment and referral agencies, labor 
unions, organizations providing or administering fringe benefits to 
employees of the recipient, and organizations providing training and 
apprenticeship programs.



Sec. 8.11  Reasonable accommodation.

    (a) A recipient shall make reasonable accommodation to the known 
physical or mental limitations of an otherwise qualified applicant with 
handicaps or employee with handicaps, unless the recipient can 
demonstrate that the accommodation would impose an undue hardship on the 
operation of its program.
    (b) Reasonable accommodation may include:
    (1) Making facilities used by employees accessible to and usable by 
individuals with handicaps and
    (2) Job restructuring, job relocation, part-time or modified work 
schedules, acquisitions or modification of equipment or devices, the 
provision of readers or interpreters, and other similar actions.
    (c) In determining, under paragraph (a) of this section, whether an 
accommodation would impose an undue hardship on the operation of a 
recipient's program, factors to be considered include:
    (1) The overall size of the recipient's program with respect to 
number of employees, number and type of facilities, and size of budget;
    (2) The type of the recipient's operation, including the composition 
and structure of the recipient's workforce; and
    (3) The nature and cost of the accommodation needed.
    (d) A recipient may not deny any employment opportunity to a 
qualified handicapped employee or applicant if the basis for the denial 
is the need to make reasonable accommodation to the physical or mental 
limitations of the employee or applicant.



Sec. 8.12  Employment criteria.

    (a) A recipient may not use any employment test or other selection 
criterion that screens out or tends to screen out individuals with 
handicaps or any class of individuals with handicaps unless:
    (1) The recipient demonstrates that the test score or other 
selection criterion, as used by the recipient, is job-related for the 
position in question; and
    (2) The appropriate HUD official demonstrates that alternative job-
related tests or criteria that tend to screen out fewer individuals with 
handicaps are unavailable.
    (b) A recipient shall select and administer tests concerning 
employment to ensure that, when administered to an applicant or employee 
who has a handicap that impairs sensory, manual, or speaking skills, the 
test results accurately reflect the applicant's or employee's job 
skills, aptitude, or whatever other factor the test purports to measure, 
rather than the applicant's or employee's impaired sensory, manual, or 
speaking skills (except where those skills are the factors that the test 
purports to measure).

[[Page 110]]



Sec. 8.13  Preemployment inquiries.

    (a) Except as provided in paragraphs (b) and (c) of this section, a 
recipient may not make a preemployment inquiry or conduct a 
preemployment medical examination of an applicant to determine whether 
the applicant is an individual with handicaps or the nature or severity 
of a handicap. A recipient may, however, make preemployment inquiry into 
an applicant's ability to perform job-related functions.
    (b) When a recipient is undertaking affirmative action efforts, 
voluntary or otherwise, the recipient may invite applicants for 
employment to indicate whether and to what extent they are handicapped, 
if the following conditions are met:
    (1) The recipient states clearly on any written questionnaire used 
for this purpose, or makes clear orally if no written questionnaire is 
used, that the information requested is intended for use solely in 
connection with its remedial action obligations, or its voluntary or 
affirmative action efforts; and
    (2) The recipient states clearly that the information is being 
requested on a voluntary basis, that it will be kept confidential (as 
provided in paragraph (d) of this section), that refusal to provide the 
information will not subject the applicant or employee to any adverse 
treatment, and that the information will be used only in accordance with 
this part.
    (c) Nothing in this section shall prohibit a recipient from 
conditioning an offer of employment on the results of a medical 
examination conducted before the employee's entrance on duty if all 
entering employees in that category of job classification must take such 
an examination regardless of handicap, and the results of such 
examination are used only in accordance with the requirements of this 
part.
    (d) Information obtained under this section concerning the medical 
condition or history of the applicant is to be collected and maintained 
on separate forms that are accorded confidentiality as medical records, 
except that:
    (1) Supervisors and managers may be informed of restrictions on the 
work or duties of individuals with handicaps and informed of necessary 
accommodations;
    (2) First aid and safety personnel may be informed if the condition 
might require emergency treatment; and
    (3) Government officials investigating compliance with section 504 
shall be provided relevant information upon request.



                    Subpart C--Program Accessibility



Sec. 8.20  General requirement concerning program accessibility.

    Except as otherwise provided in Secs. 8.21(c)(1), 8.24(a), 8.25, and 
8.31, no qualified individual with handicaps shall, because a 
recipient's facilities are inaccessible to or unusable by individuals 
with handicaps, be denied the benefits of, be excluded from 
participation in, or otherwise be subjected to discrimination under any 
program or activity that receives Federal financial assistance.



Sec. 8.21  Non-housing facilities.

    (a) New construction. New non-housing facilities shall be designed 
and constructed to be readily accessible to and usable by individuals 
with handicaps.
    (b) Alterations to facilities. Alterations to existing non-housing 
facilities shall, to the maximum extent feasible, be made to be readily 
accessible to and usable by individuals with handicaps. For purposes of 
this paragraph, the phrase to the maximum extent feasible shall not be 
interpreted as requiring that a recipient make a non-housing facility, 
or element thereof, accessible if doing so would impose undue financial 
and administrative burdens on the operation of the recipient's program 
or activity.
    (c) Existing non-housing facilities--(1) General. A recipient shall 
operate each non-housing program or activity receiving Federal financial 
assistance so that the program or activity, when viewed in its entirety, 
is readily accessible to and usable by individuals with handicaps. This 
paragraph does not--
    (i) Necessarily require a recipient to make each of its existing 
non-housing facilities accessible to and usable by individuals with 
handicaps;
    (ii) In the case of historic preservation programs or activities, 
require the recipient to take any action that would

[[Page 111]]

result in a substantial impairment of significant historic features of 
an historic property; or
    (iii) Require a recipient to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of its program or 
activity or in undue financial and administrative burdens. If an action 
would result in such an alteration or such burdens, the recipient shall 
take any action that would not result in such an alteration or such 
burdens but would nevertheless ensure that individuals with handicaps 
receive the benefits and services of the program or activity.
    (2) Methods--(i) General. A recipient may comply with the 
requirements of this section in its programs and activities receiving 
Federal financial assistance through such means as location of programs 
or services to accessible facilities or accessible portions of 
facilities, assignment of aides to beneficiaries, home visits, the 
addition or redesign of equipment (e.g., appliances or furnishings) 
changes in management policies or procedures, acquisition or 
construction of additional facilities, or alterations to existing 
facilities on a selective basis, or any other methods that result in 
making its program or activity accessible to individuals with handicaps. 
A recipient is not required to make structural changes in existing 
facilities where other methods are effective in achieving compliance 
with this section. In choosing among available methods for meeting the 
requirements of this section, the recipient shall give priority to those 
methods that offer programs and activities to qualified individuals with 
handicaps in the most integrated setting appropriate.
    (ii) Historic preservation programs or activities. In meeting the 
requirements of Sec. 8.21(c) in historic preservation programs or 
activities, a recipient shall give priority to methods that provide 
physical access to individuals with handicaps. In cases where a physical 
alteration to an historic property is not required because of 
Sec. 8.21(c)(1)(ii) or (iii), alternative methods of achieving program 
accessibility include using audio-visual materials and devices to depict 
those portions of an historic property that cannot otherwise be made 
accessible; assigning persons to guide individuals with handicaps into 
or through portions of historic properties that cannot otherwise be made 
accessible; or adopting other innovative methods.
    (3) Time period for compliance. The recipient shall comply with the 
obligations established under this section within sixty days of July 11, 
1988, except that where structural changes in facilities are undertaken, 
such changes shall be made within three years of July 11, 1988, but in 
any event as expeditiously as possible.
    (4) Transition plan. If structural changes to non-housing facilities 
will be undertaken to achieve program accessibility, a recipient shall 
develop, within six months of July 11, 1988, a transition plan setting 
forth the steps necessary to complete such changes. The plan shall be 
developed with the assistance of interested persons, including 
individuals with handicaps or organizations representing individuals 
with handicaps. A copy of the transition plan shall be made available 
for public inspection. The plan shall, at a minimum--
    (i) Identify physical obstacles in the recipient's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (ii) Describe in details the methods that will be used to make the 
facilities accessible;
    (iii) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period;
    (iv) Indicate the official responsible for implementation of the 
plan; and
    (v) Identify the persons or groups with whose assistance the plan 
was prepared.

(Approved by the Office of Management and Budget under control number 
2529-0034)

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988, as amended at 54 
FR 37645, Sept. 12, 1989]



Sec. 8.22  New construction--housing facilities.

    (a) New multifamily housing projects (including public housing and 
Indian

[[Page 112]]

housing projects as required by Sec. 8.25) shall be designed and 
constructed to be readily accessible to and usable by individuals with 
handicaps.
    (b) Subject to paragraph (c) of this section, a minimum of five 
percent of the total dwelling units or at least one unit in a 
multifamily housing project, whichever is greater, shall be made 
accessible for persons with mobility impairments. A unit that is on an 
accessible route and is adaptable and otherwise in compliance with the 
standards set forth in Sec. 8.32 is accessible for purposes of this 
section. An additional two percent of the units (but not less than one 
unit) in such a project shall be accessible for persons with hearing or 
vision impairments.
    (c) HUD may prescribe a higher percentage or number than that 
prescribed in paragraph (b) of this section for any area upon request 
therefor by any affected recipient or by any State or local government 
or agency thereof based upon demonstration to the reasonable 
satisfaction of HUD of a need for a higher percentage or number, based 
on census data or other available current data (including a currently 
effective Housing Assistance Plan or Comprehensive Homeless Assistance 
Plan), or in response to evidence of a need for a higher percentage or 
number received in any other manner. In reviewing such request or 
otherwise assessing the existence of such needs, HUD shall take into 
account the expected needs of eligible persons with and without 
handicaps.

[53 FR 20233, June 2, 1988, as amended at 56 FR 920, Jan. 9, 1991]



Sec. 8.23  Alterations of existing housing facilities.

    (a) Substantial alteration. If alterations are undertaken to a 
project (including a public housing project as required by 
Sec. 8.25(a)(2)) that has 15 or more units and the cost of the 
alterations is 75 percent or more of the replacement cost of the 
completed facility, then the provisions of Sec. 8.22 shall apply.
    (b) Other alterations. (1) Subject to paragraph (b)(2) of this 
section, alterations to dwelling units in a multifamily housing project 
(including public housing) shall, to the maximum extent feasible, be 
made to be readily accessible to and usable by individuals with 
handicaps. If alterations of single elements or spaces of a dwelling 
unit, when considered together, amount to an alteration of a dwelling 
unit, the entire dwelling unit shall be made accessible. Once five 
percent of the dwelling units in a project are readily accessible to and 
usable by individuals with mobility impairments, then no additional 
elements of dwelling units, or entire dwelling units, are required to be 
accessible under this paragraph. Alterations to common areas or parts of 
facilities that affect accessibility of existing housing facilities 
shall, to the maximum extent feasible, be made to be accessible to and 
usable by individuals with handicaps. For purposes of this paragraph, 
the phrase to the maximum extent feasible shall not be interpreted as 
requiring that a recipient (including a PHA) make a dwelling unit, 
common area, facility or element thereof accessible if doing so would 
impose undue financial and administrative burdens on the operation of 
the multifamily housing project.
    (2) HUD may prescribe a higher percentage or number than that 
prescribed in paragraph (b)(1) of this section for any area upon request 
therefor by any affected recipient or by any State or local government 
or agency thereof based upon demonstration to the reasonable 
satisfaction of HUD of a need for a higher percentage or number, based 
on census data or other available current data (including a currently 
effective Housing Assistance Plan or Comprehensive Homeless Assistance 
Plan), or in response to evidence of a need for a higher percentage or 
number received in any other manner. In reviewing such request or 
otherwise assessing the existence of such needs, HUD shall take into 
account the expected needs of eligible persons with and without 
handicaps.



Sec. 8.24  Existing housing programs.

    (a) General. A recipient shall operate each existing housing program 
or activity receiving Federal financial assistance so that the program 
or activity, when viewed in its entirety, is

[[Page 113]]

readily accessible to and usable by individuals with handicaps. This 
paragraph does not--
    (1) Necessarily require a recipient to make each of its existing 
facilities accessible to and usable by individuals with handicaps;
    (2) Require a recipient to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of its program or 
activity or in undue financial and administrative burdens. If an action 
would result in such an alteration or such burdens, the recipient shall 
take any action that would not result in such an alteration or such 
burdens but would nevertheless ensure that individuals with handicaps 
receive the benefits and services of the program or activity.
    (b) Methods. A recipient may comply with the requirements of this 
section through such means as reassignment of services to accessible 
buildings, assignment of aides to beneficiaries, provision of housing or 
related services at alternate accessible sites, alteration of existing 
facilities and construction of new facilities, or any other methods that 
result in making its programs or activities readily accessible to and 
usable by individuals with handicaps. A recipient is not required to 
make structural changes in existing housing facilities where other 
methods are effective in achieving compliance with this section or to 
provide supportive services that are not part of the program. In 
choosing among available methods for meeting the requirements of this 
section, the recipient shall give priority to those methods that offer 
programs and activities to qualified individuals with handicaps in the 
most integrated setting appropriate.
    (c) Time period for compliance. The recipient shall comply with the 
obligations established under this section within sixty days of July 11, 
1988 except that--
    (1) In a public housing program where structural changes in 
facilities are undertaken, such changes shall be made within the 
timeframes established in Sec. 8.25(c).
    (2) In other housing programs, where structural changes in 
facilities are undertaken, such changes shall be made within three years 
of July 11, 1988, but in any event as expeditiously as possible.
    (d) Transition plan and time period for structural changes. Except 
as provided in Sec. 8.25(c), in the event that structural changes to 
facilities will be undertaken to achieve program accessibility, a 
recipient shall develop, within six months of July 11, 1988, a 
transition plan setting forth the steps necessary to complete such 
changes. The plan shall be developed with the assistance of interested 
persons, including individuals with handicaps or organizations 
representing individuals with handicaps. A copy of the transition plan 
shall be made available for public inspection. The plan shall, at a 
minimum--
    (1) Identify physical obstacles in the recipient's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period;
    (4) Indicate the official responsible for implementation of the 
plan; and
    (5) Identify the persons or groups with whose assistance the plan 
was prepared.

(Approved by the Office of Management and Budget under control number 
2529-0034)

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988, as amended at 54 
FR 37645, Sept. 12, 1989]



Sec. 8.25  Public housing and multi-family Indian housing.

    (a) Development and alteration of public housing and multi-family 
Indian housing. (1) The requirements of Sec. 8.22 shall apply to all 
newly constructed public housing and multi-family Indian housing.
    (2) The requirements of Sec. 8.23 shall apply to public housing and 
multi-family Indian housing developed through rehabilitation and to the 
alteration of public housing and multi-family Indian housing.
    (3) In developing public housing and multi-family Indian housing 
through

[[Page 114]]

the purchase of existing properties PHAs and IHAs shall give priority to 
facilities which are readily accessible to and usable by individuals 
with handicaps.
    (b) Existing public housing and multi-family Indian housing--
general. The requirements of Sec. 8.24(a) shall apply to public housing 
and multi-family Indian housing programs.
    (c) Existing public housing and multi-family Indian housing--needs 
assessment and transition plan. As soon as possible, each PHA (for the 
purpose of this paragraph, this includes an Indian Housing Authority) 
shall assess, on a PHA-wide basis, the needs of current tenants and 
applicants on its waiting list for accessible units and the extent to 
which such needs have not been met or cannot reasonably be met within 
four years through development, alterations otherwise contemplated, or 
other programs administered by the PHA (e.g., Section 8 Moderate 
Rehabilitation or Section 8 Existing Housing or Housing Vouchers). If 
the PHA currently has no accessible units or if the PHA or HUD 
determines that information regarding the availability of accessible 
units has not been communicated sufficiently so that, as a result, the 
number of eligible qualified individuals with handicaps on the waiting 
list is not fairly representative of the number of such persons in the 
area, the PHA's assessment shall include the needs of eligible qualified 
individuals with handicaps in the area. If the PHA determines, on the 
basis of such assessment, that there is no need for additional 
accessible dwelling units or that the need is being or will be met 
within four years through other means, such as new construction, Section 
8 or alterations otherwise contemplated, no further action is required 
by the PHA under this paragraph. If the PHA determines, on the basis of 
its needs assessment, that alterations to make additional units 
accessible must be made so that the needs of eligible qualified 
individuals with handicaps may be accommodated proportionally to the 
needs of non-handicapped individuals in the same categories, then the 
PHA shall develop a transition plan to achieve program accessibility. 
The PHA shall complete the needs assessment and transition plan, if one 
is necessary, as expeditiously as possible, but in any event no later 
than two years after July 11, 1988. The PHA shall complete structural 
changes necessary to achieve program accessibility as soon as possible 
but in any event no later than four years after July 11, 1988. The 
Assistant Secretary for Fair Housing and Equal Opportunity and the 
Assistant Secretary for Public and Indian Housing may extend the four 
year period for a period not to exceed two years, on a case-by-case 
determination that compliance within that period would impose undue 
financial and administrative burdens on the operation of the recipient's 
public housing and multi-family Indian housing program. The Secretary or 
the Undersecretary may further extend this time period in extraordinary 
circumstances, for a period not to exceed one year. The plan shall be 
developed with the assistance of interested persons including 
individuals with handicaps or organizations representing individuals 
with handicaps. A copy of the needs assessment and transition plan shall 
be made available for public inspection. The transition plan shall, at a 
minimum--
    (1) Identify physical obstacles in the PHA's facilities (e.g., 
dwelling units and common areas) that limit the accessibility of its 
programs or activities to individuals with handicaps;
    (2) Describe in detail the methods that will be used to make the 
PHA's facilities accessible. A PHA may, if necessary, provide in its 
plan that it will seek HUD approval, under 24 CFR part 968, of a 
comprehensive modernization program to meet the needs of eligible 
individuals with handicaps;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time of the transition plan is 
longer than one year, identify steps that will be taken during each year 
of the transition period;
    (4) Indicate the official responsible for implementation of the 
plan; and

[[Page 115]]

    (5) Identify the persons or groups with whose assistance the plan 
was prepared.

(Approved by the Office of Management and Budget under control number 
2529-0034)

[53 FR 20233, June 2, 1988, as amended at 54 FR 37645, Sept. 12, 1989; 
56 FR 920, Jan. 9, 1991]



Sec. 8.26  Distribution of accessible dwelling units.

    Accessible dwelling units required by Sec. 8.22, 8.23, 8.24 or 8.25 
shall, to the maximum extent feasible and subject to reasonable health 
and safety requirements, be distributed throughout projects and sites 
and shall be available in a sufficient range of sizes and amenities so 
that a qualified individual with handicaps' choice of living 
arrangements is, as a whole, comparable to that of other persons 
eligible for housing assistance under the same program. This provision 
shall not be construed to require provision of an elevator in any 
multifamily housing project solely for the purpose of permitting 
location of accessible units above or below the accessible grade level.



Sec. 8.27  Occupancy of accessible dwelling units.

    (a) Owners and managers of multifamily housing projects having 
accessible units shall adopt suitable means to assure that information 
regarding the availability of accessible units reaches eligible 
individuals with handicaps, and shall take reasonable nondiscriminatory 
steps to maximize the utilization of such units by eligible individuals 
whose disability requires the accessibility features of the particular 
unit. To this end, when an accessible unit becomes vacant, the owner or 
manager before offering such units to a non-handicapped applicant shall 
offer such unit:
    (1) First, to a current occupant of another unit of the same 
project, or comparable projects under common control, having handicaps 
requiring the accessibility features of the vacant unit and occupying a 
unit not having such features, or, if no such occupant exists, then
    (2) Second, to an eligible qualified applicant on the waiting list 
having a handicap requiring the accessibility features of the vacant 
unit.
    (b) When offering an accessible unit to an applicant not having 
handicaps requiring the accessibility features of the unit, the owner or 
manager may require the applicant to agree (and may incorporate this 
agreement in the lease) to move to a non-accessible unit when available.



Sec. 8.28  Housing certificate and housing voucher programs.

    (a) In carrying out the requirements of this subpart, a recipient 
administering a Section 8 Existing Housing Certificate program or a 
housing voucher program shall:
    (1) In providing notice of the availability and nature of housing 
assistance for low-income families under program requirements, adopt 
suitable means to assure that the notice reaches eligible individuals 
with handicaps;
    (2) In its activities to encourage participation by owners, include 
encouragement of participation by owners having accessible units;
    (3) When issuing a Housing Certificate or Housing Voucher to a 
family which includes an individual with handicaps include a current 
listing of available accessible units known to the PHA and, if 
necessary, otherwise assist the family in locating an available 
accessible dwelling unit;
    (4) Take into account the special problem of ability to locate an 
accessible unit when considering requests by eligible individuals with 
handicaps for extensions of Housing Certificates or Housing Vouchers; 
and
    (5) If necessary as a reasonable accommodation for a person with 
disabilities, approve a family request for an exception rent under 
Sec. 982.504(b)(2) for a regular tenancy under the Section 8 certificate 
program so that the program is readily accessible to and usable by 
persons with disabilities.
    (b) In order to ensure that participating owners do not discriminate 
in the recipient's federally assisted program, a recipient shall enter 
into a

[[Page 116]]

HUD-approved contract with participating owners, which contract shall 
include necessary assurances of nondiscrimination.

[53 FR 20233, June 2, 1988, as amended at 63 FR 23853, Apr. 30, 1998]



Sec. 8.29  Homeownership programs (sections 235(i) and 235(j), Turnkey III and Indian housing mutual self-help programs).

    Any housing units newly constructed or rehabilitated for purchase or 
single family (including semi-attached and attached) units to be 
constructed or rehabilitated in a program or activity receiving Federal 
financial assistance shall be made accessible upon request of the 
prospective buyer if the nature of the handicap of an expected occupant 
so requires. In such case, the buyer shall consult with the seller or 
builder/sponsor regarding the specific design features to be provided. 
If accessibility features selected at the option of the homebuyer are 
ones covered by the standards prescribed by Sec. 8.32, those features 
shall comply with the standards prescribed in Sec. 8.32. The buyer shall 
be permitted to depart from particular specifications of these standards 
in order to accommodate his or her specific handicap. The cost of making 
a facility accessible under this paragraph may be included in the 
mortgage amount within the allowable mortgage limits, where applicable. 
To the extent such costs exceed allowable mortgage limits, they may be 
passed on to the prospective homebuyer, subject to maximum sales price 
limitations (see 24 CFR 235.320.)



Sec. 8.30  Rental rehabilitation program.

    Each grantee or state recipient in the rental rehabilitation program 
shall, subject to the priority in 24 CFR 511.10(l) and in accordance 
with other requirements in 24 CFR part 511, give priority to the 
selection of projects that will result in dwelling units being made 
readily accessible to and usable by individuals with handicaps.

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988]



Sec. 8.31  Historic properties.

    If historic properties become subject to alterations to which this 
part applies the requirements of Sec. 4.1.7 of the standards of 
Sec. 8.32 of this part shall apply, except in the case of the Urban 
Development Action Grant (UDAG) program. In the UDAG program the 
requirements of 36 CFR part 801 shall apply. Accessibility to historic 
properties subject to alterations need not be provided if such 
accessibility would substantially impair the significant historic 
features of the property or result in undue financial and administrative 
burdens.



Sec. 8.32  Accessibility standards.

    (a) Effective as of July 11, 1988, design, construction, or 
alteration of buildings in conformance with sections 3-8 of the Uniform 
Federal Accessibility Standards (UFAS) shall be deemed to comply with 
the requirements of Secs. 8.21, 8.22, 8.23, and 8.25 with respect to 
those buildings. Departures from particular technical and scoping 
requirements of the UFAS by the use of other methods are permitted where 
substantially equivalent or greater access to and usability of the 
building is provided. The alteration of housing facilities shall also be 
in conformance with additional scoping requirements contained in this 
part. Persons interested in obtaining a copy of the UFAS are directed to 
Sec. 40.7 of this title.
    (b) For purposes of this section, section 4.1.6(1)(g) of UFAS shall 
be interpreted to exempt from the requirements of UFAS only mechanical 
rooms and other spaces that, because of their intended use, will not 
require accessibility to the public or beneficiaries or result in the 
employment or residence therein of individuals with physical handicaps.
    (c) This section does not require recipients to make building 
alterations that have little likelihood of being accomplished without 
removing or altering a load-bearing structural member.
    (d) For purposes of this section, section 4.1.4(11) of UFAS may not 
be used to waive or lower the minimum of five percent accessible units 
required by Sec. 8.22(b) or to apply the minimum only to projects of 15 
or more dwelling units.
    (e) Except as otherwise provided in this paragraph, the provisions 
of Secs. 8.21 (a) and (b), 8.22 (a) and (b), 8.23, 8.25(a)

[[Page 117]]

(1) and (2), and 8.29 shall apply to facilities that are designed, 
constructed or altered after July 11, 1988. If the design of a facility 
was commenced before July 11, 1988, the provisions shall be followed to 
the maximum extent practicable, as determined by the Department. For 
purposes of this paragraph, the date a facility is constructed or 
altered shall be deemed to be the date bids for the construction or 
alteration of the facility are solicited. For purposes of the Urban 
Development Action Grant (UDAG) program, the provisions shall apply to 
the construction or alteration of facilities that are funded under 
applications submitted after July 11, 1988. If the UDAG application was 
submitted before July 11, 1988, the provisions shall apply, to the 
maximum extent practicable, as determined by the Department.

[53 FR 20233, June 2, 1988, as amended at 61 FR 5203, Feb. 9, 1996]



Sec. 8.33  Housing adjustments.

    A recipient shall modify its housing policies and practices to 
ensure that these policies and practices do not discriminate, on the 
basis of handicap, against a qualified individual with handicaps. The 
recipient may not impose upon individuals with handicaps other policies, 
such as the prohibition of assistive devices, auxiliary alarms, or 
guides in housing facilities, that have the effect of limiting the 
participation of tenants with handicaps in the recipient's federally 
assisted housing program or activity in violation of this part. Housing 
policies that the recipient can demonstrate are essential to the housing 
program or activity will not be regarded as discriminatory within the 
meaning of this section if modifications to them would result in a 
fundamental alteration in the nature of the program or activity or undue 
financial and administrative burdens.



                         Subpart D--Enforcement



Sec. 8.50  Assurances required.

    (a) Assurances. An applicant for Federal financial assistance for a 
program or activity to which this part applies shall submit an assurance 
to HUD, or in the case of a subrecipient to a primary recipient, on a 
form specified by the responsible civil rights official, that the 
program or activity will be operated in compliance with this part. An 
applicant may incorporate these assurances by reference in subsequent 
applications to the Department.
    (b) Duration of obligation. (1) In the case of Federal financial 
assistance extended in the form of real property or to provide real 
property or structures on the property, the assurance will obligate the 
recipient or, in the case of a subsequent transfer, the transferee, for 
the period during which the real property or structures are used for the 
purpose for which Federal financial assistance is extended or for 
another purpose involving the provision of similar services or benefits.
    (2) In the case of Federal financial assistance extended to provide 
personal property, the assurance will obligate the recipient for the 
period during which it retains ownership or possession of the property.
    (3) In all other cases the assurance will obligate the recipient for 
the period during which Federal financial assistance is extended.
    (c) Covenants. (1) Where Federal financial assistance is provided in 
the form of real property or interest in the property from the 
Department, the instrument effecting or recording this transfer shall 
contain a covenant running with the land to assure nondiscrimination for 
the period during which the real property is used for a purpose for 
which the Federal financial assistance is extended or for another 
purpose involving the provision of similar services or benefits.
    (2) Where no transfer of property is involved but property is 
purchased or improved with Federal financial assistance, the recipient 
shall agree to include the covenant described in paragraph (b)(2) of 
this section in the instrument effecting or recording any subsequent 
transfer of the property.
    (3) Where Federal financial assistance is provided in the form of 
real property or interest in the property from the Department, the 
covenant shall also include a condition coupled

[[Page 118]]

with a right to be reserved by the Department to revert title to the 
property in the event of a breach of the covenant. If a transferee of 
real property proposes to mortgage or otherwise encumber the real 
property as security for financing construction of new, or improvement 
of existing, facilities on the property for the purposes for which the 
property was transferred, the Secretary may, upon request of the 
transferee and if necessary to accomplish such financing and upon such 
conditions as he or she deems appropriate, agree to forbear the exercise 
of such right to revert title for so long as the lien of such mortgage 
or other encumbrance remains effective.



Sec. 8.51  Self-evaluation.

    (a) Each recipient shall, within one year of July 11, 1988, and 
after consultation with interested persons, including individuals with 
handicaps or organizations representing individuals with handicaps:
    (1) Evaluate its current policies and practices to determine 
whether, in whole or in part, they do not or may not meet the 
requirements of this part;
    (2) Modify any policies and practices that do not meet the 
requirements of this part; and
    (3) Take appropriate corrective steps to remedy the discrimination 
revealed by the self-evaluation.
    (b) A recipient that employs fifteen or more persons shall, for at 
least three years following completion of the evaluation required under 
paragraph (a)(1) of this section, maintain on file, make available for 
public inspection, and provide to the responsible civil rights official, 
upon request: (1) A list of the interested persons consulted; (2) a 
description of areas examined and any problems identified; and (3) a 
description of any modifications made and of any remedial steps taken.

(Approved by the Office of Management and Budget under control number 
2529-0034)

[53 FR 20233, June 2, 1988, as amended at 54 FR 37645, Sept. 12, 1989]



Sec. 8.52  Remedial and affirmative action.

    (a) Remedial action. (1) If the responsible civil rights official 
finds that a recipient has discriminated against persons on the basis of 
handicap in violation of section 504 or this part, the recipient shall 
take such remedial action as the responsible civil rights official deems 
necessary to overcome the effects of the discrimination.
    (2) The responsible civil rights official may, where necessary to 
overcome the effects of discrimination in violation of section 504 or 
this part, require a recipient to take remedial action--
    (i) With respect to individuals with handicaps who are no longer 
participants in the program but who were participants in the program 
when such discrimination occurred or
    (ii) With respect to individuals with handicaps who would have been 
participants in the program had the discrimination not occurred.
    (b) Voluntary action. A recipient may take nondiscriminatory steps, 
in addition to any action that is required by this part, to overcome the 
effects of conditions that resulted in limited participation in the 
recipient's program or activity by qualified individuals with handicaps.



Sec. 8.53  Designation of responsible employee and adoption of grievance procedures.

    (a) Designation of responsible employee. A recipient that employs 
fifteen or more persons shall designate at least one person to 
coordinate its efforts to comply with this part.
    (b) Adoption of grievance procedures. A recipient that employees 
fifteen or more persons shall adopt grievance procedures that 
incorporate appropriate due process standards and that provide for the 
prompt and equitable resolution of complaints alleging any action 
prohibited by this part. Such procedures need not be established with 
respect to complaints from applicants for employment or from applicants 
for admission to housing covered by this part.



Sec. 8.54  Notice.

    (a) A recipient that employs fifteen or more persons shall take 
appropriate initial and continuing steps to notify participants, 
beneficiaries, applicants, and employees, including those with impaired 
vision or hearing, and unions or professional organizations holding

[[Page 119]]

collective bargaining or professional agreements with the recipient that 
it does not discriminate on the basis of handicap in violation of this 
part. The notification shall state, where appropriate, that the 
recipient does not discriminate in admission or access to, or treatment 
or employment in, its federally assisted programs and activities. The 
notification shall also include an identification of the responsible 
employee designated pursuant to Sec. 8.53. A recipient shall make the 
initial notification required by this paragraph within 90 days of July 
11, 1988. Methods of initial and continuing notification may include the 
posting of notices, publication in newspapers and magazines, placement 
of notices in recipients' publications, and distribution of memoranda or 
other written communications.
    (b) If a recipient publishes or uses recruitment materials or 
publications containing general information that it makes available to 
participants, beneficiaries, applicants, or employees, it shall include 
in those materials or publications a statement of the policy described 
in paragraph (a) of this section. A recipient may meet the requirement 
of this paragraph either by including appropriate inserts in existing 
materials and publications or by revising and reprinting the materials 
and publications.
    (c) The recipient shall ensure that members of the population 
eligible to be served or likely to be affected directly by a federally 
assisted program who have visual or hearing impairments are provided 
with the information necessary to understand and participate in the 
program. Methods for ensuring participation include, but are not limited 
to, qualified sign language and oral interpreters, readers, or the use 
of taped and Braille materials.



Sec. 8.55  Compliance information.

    (a) Cooperation and assistance. The responsible civil rights 
official and the award official shall, to the fullest extent 
practicable, seek the cooperation of recipients in obtaining compliance 
with this part and shall provide assistance and guidance to recipients 
to help them comply voluntarily with this part.
    (b) Compliance reports. Each recipient shall keep such records and 
submit to the responsible civil rights official or his or her designee 
timely, complete, and accurate compliance reports at such times, and in 
such form and containing such information, as the responsible civil 
rights official or his or her designee may determine to be necessary to 
enable him or her to ascertain whether the recipient has complied or is 
complying with this part. In general, recipients should have available 
for the Department data showing the extent to which individuals with 
handicaps are beneficiaries of federally assisted programs.
    (c) Access to sources of information. Each recipient shall permit 
access by the responsible civil rights official during normal business 
hours to such of its books, records, accounts, and other sources of 
information, and its facilities, as may be pertinent to ascertain 
compliance with this part. Where any information required of a recipient 
is in the exclusive possession of any other agency, institution, or 
person and this agency, institution, or person shall fail or refuse to 
furnish this information, the recipient shall so certify in its report 
and shall set forth what efforts it has made to obtain the information.
    (d) Information to beneficiaries and participants. Each recipient 
shall make available to participants, beneficiaries, and other 
interested persons such information regarding the provisions of this 
part and its applicability to the program or activity under which the 
recipient receives Federal financial assistance, and make such 
information available to them in such manner as the responsible civil 
rights official finds necessary to apprise such persons of the 
protections against discrimination assured them by this part.

(Approved by the Office of Management and Budget under control number 
2529-0034)

[53 FR 20233, June 2, 1988, as amended at 54 FR 37645, Sept. 12, 1989]



Sec. 8.56  Conduct of investigations.

    (a) Periodic compliance reviews. The responsible civil rights 
official or designee may periodically review the practices of recipients 
to determine whether they are complying with this part and where he or 
she has a reasonable

[[Page 120]]

basis to do so may conduct on-site reviews. Such basis may include any 
evidence that a problem exists or that programmatic matters exist that 
justify on-site investigation in selected circumstances. The responsible 
civil rights official shall initiate an on-site review by sending to the 
recipient a letter advising the recipient of the practices to be 
reviewed; the programs affected by the review; and the opportunity, at 
any time prior to receipt of a final determination, to make a 
documentary or other submission that explains, validates, or otherwise 
addresses the practices under review. In addition, each award official 
shall include in normal program compliance reviews and monitoring 
procedures appropriate actions to review and monitor compliance with 
general or specific program requirements designed to effectuate the 
requirements of this part.
    (b) Investigations. The responsible civil rights official shall make 
a prompt investigation whenever a compliance review, report, complaint 
or any other information indicates a possible failure to comply with 
this part.
    (c) Filing a complaint--(1) Who may file. Any person who believes 
that he or she has been subjected to discrimination prohibited by this 
part may by himself or herself or by his or her authorized 
representative file a complaint with the responsible civil rights 
official. Any person who believes that any specific class of persons has 
been subjected to discrimination prohibited by this part and who is a 
member of that class or who is the authorized representative of a member 
of that class may file a complaint with the responsible civil rights 
official.
    (2) Confidentiality. The responsible civil rights official shall 
hold in confidence the identity of any person submitting a complaint, 
unless the person submits written authorization otherwise, and except to 
the extent necessary to carry out the purposes of this part, including 
the conduct of any investigation, hearing, or proceeding under this 
part.
    (3) When to file. Complaints shall be filed within 180 days of the 
alleged act of discrimination, unless the responsible civil rights 
official waives this time limit for good cause shown. For purposes of 
determining when a complaint is filed under this paragraph, a complaint 
mailed to the Department shall be deemed filed on the date it is 
postmarked. Any other complaint shall be deemed filed on the date it is 
received by the Department.
    (4) Where to file complaints. Complaints may be filed by mail with 
the Office of Fair Housing and Equal Opportunity, Department of Housing 
and Urban Development, Washington, DC 20410, or any Regional or Field 
Office of the Department.
    (5) Contents of complaints. Each complaint should contain the 
complainant's name and address, the name and address of the recipient 
alleged to have violated this part, and a description of the recipient's 
alleged discriminatory action in sufficient detail to inform the 
Department of the nature and date of the alleged violation of this part.
    (6) Amendments of complaints. Complaints may be reasonably and 
fairly amended at any time. Amendments to complaints such as 
clarification and amplification of allegations in a complaint or the 
addition of other recipients may be made at any time during the pendency 
of the complaint and any amendment shall be deemed to be made as of the 
original filing date.
    (d) Notification. The responsible civil rights official will notify 
the complainant and the recipient of the agency's receipt of the 
complaint within ten (10) calendar days.
    (e) Complaint processing procedures. After acknowledging receipt of 
a complaint, the responsible civil rights official will immediately 
initiate complaint processing procedures.
    (1) Preliminary investigation.
    (i) Within twenty (20) calendar days of acknowledgement of the 
complaint, the responsible civil rights official will review the 
complaint for acceptance, rejection, or referral to the appropriate 
Federal agency.

[[Page 121]]

    (ii) If the complaint is accepted, the responsible civil rights 
official will notify the complainant and the award official. The 
responsible civil righs official will also notify the applicant or 
recipient complained against of the allegations and give the applicant 
or recipient an opportunity to make a written submission responding to, 
rebutting, or denying the allegations raised in the complaint.
    (iii) The party complained against may send the responsible civil 
rights official a response to the notice of complaint within thirty (30) 
calendar days of receiving it. With leave of the responsible civil 
rights official, an answer may be amended at any time. The responsible 
civil rights official will permit answers to be amended for good cause 
shown.
    (2) Informal resolution. In accordance with paragraph (j) of this 
section, the responsible civil rights official shall attempt to resolve 
complaints informally whenever possible.
    (f) Dismissal of complaint. If the investigation reveals no 
violation of this part, the responsible civil rights offical will 
dismiss the complaint and notify the complainant and recipient.
    (g) Letter of findings. If an informal resolution of the complaint 
is not reached the responsible civil rights official or his or her 
designee shall, within 180 days of receipt of the complaint, notify the 
recipient and the complainant (if any) of the results of the 
investigation in a letter sent by certified mail, return receipt 
requested, containing the following:
    (1) Preliminary findings of fact and a preliminary finding of 
compliance or noncompliance;
    (2) A description of an appropriate remedy for each violation 
believed to exist;
    (3) A notice that a copy of the Final Investigative Report of the 
Department will be made available, upon request, to the recipient and 
the complainant (if any); and
    (4) A notice of the right of the recipient and the complainant (if 
any) to request a review of the letter of findings by the reviewing 
civil rights official.
    (h) Right to review of the letter of findings. (1) A complainant or 
recipient may request that a complete review be made of the letter of 
findings within 30 days of receipt, by mailing or delivering to the 
reviewing civil rights official, Office of Fair Housing and Equal 
Opportunity, Washington, DC 20410, a written statement of the reasons 
why the letter of findings should be modified in light of supplementary 
information.
    (2) The reviewing civil rights official shall send by certified 
mail, return receipt requested, a copy of the request for review to the 
other party, if any. Such other party shall have 20 days to respond to 
the request for review.
    (3) The reviewing civil rights official shall either sustain or 
modify the letter of findings within 60 days of the request for review. 
The reviewing civil rights official's decision shall constitute the 
formal determination.
    (4) If neither party requests that the letter of findings be 
reviewed, the responsibile civil rights official shall, within fourteen 
(14) calendar days of the expiration of the time period in paragraph 
(h)(1) of this section, send a formal written determination of 
compliance or noncompliance to the recipient and copies to the award 
official.
    (i) Voluntary compliance time limits. The recipient will have ten 
(10) calendar days from receipt of the formal determination of 
noncompliance within which to come into voluntary compliance. If the 
recipient fails to meet this deadline, HUD shall proceed under 
Sec. 8.57.
    (j) Informal resolution/voluntary compliance--(1) General. It is the 
policy of the Department to encourage the informal resolution of 
matters. The responsible civil rights official may attempt to resolve a 
matter through informal means at any stage of processing. A matter may 
be resolved by informal means at any time. If a letter of findings 
making a preliminary finding of noncompliance is issued, the responsible 
civil rights official shall attempt to resolve the matter by informal 
means.
    (2) Objectives of informal resolution/voluntary compliance. In 
attempting informal resolution, the responsible civil rights official 
shall attempt to achieve a just resolution of the matter and to obtain 
assurances where appropriate, that the recipient will satisfactorily

[[Page 122]]

remedy any violations of the rights of any complainant and will take 
such action as will assure the elimination of any violation of this part 
or the prevention of the occurrence of such violation in the future. The 
terms of such an informal resolution shall be reduced to a written 
voluntary compliance agreement, signed by the recipient and the 
responsible civil rights official, and be made part of the file for the 
matter. Such voluntary compliance agreements shall seek to protect the 
interests of the complainant (if any), other persons similary situated, 
and the public interest.
    (k) Intimidatory or retaliatory acts prohibited. No recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any person for the purpose of interfering with any right or privilege 
secured by this part, or because he or she has made a complaint, 
testified, assisted, or participated in any manner in an investigation, 
proceeding, or hearing under this part. The identity of complainants 
shall be kept confidential except to the extent necessary to carry out 
the purposes of this part, including the conduct of investigation, 
hearing or judicial proceeding arising thereunder.

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988; 53 FR 34634, 
Sept. 7, 1988]



Sec. 8.57  Procedure for effecting compliance.

    (a) General. If there appears to be a failure or threatened failure 
to comply with this part and if the noncompliance or threatened 
noncompliance cannot be corrected by informal means, compliance with 
this part may be effected by the suspension or termination of or refusal 
to grant or to continue Federal financial assistance, or by other means 
authorized by law. Such other means may include, but are not limited to:
    (1) A referral to the Department of Justice with a recommendation 
that appropriate proceedings be brought to enforce any rights of the 
United States under any law of the United States, or any assurance or 
other contractual undertaking;
    (2) The initiation of debarment proceedings pursuant to part 24 of 
this title; and
    (3) Any applicable proceeding under State or local law.
    (b) Noncompliance with Sec. 8.50. If an applicant or a recipient of 
assistance under a contract which is extended or amended on or after 
July 11, 1988, fails or refuses to furnish an assurance required under 
Sec. 8.50 or otherwise fails or refuses to comply with the requirements 
imposed by that section, Federal financial assistance may be refused 
under paragraph (c) of this section. The Department is not required to 
provide assistance during the pendency of the administrative proceeding 
under such paragraph (c), except where the assistance is due and payable 
under a contract approved before July 11, 1988.
    (c) Termination of or refusal to grant or to continue Federal 
financial assistance. No order suspending, terminating, or refusing to 
grant or continue Federal financial assistance shall become effective 
until:
    (1) The responsible civil rights official has advised the applicant 
or recipient of its failure to comply and has determined that compliance 
cannot be secured by voluntary means;
    (2) There has been an express finding on the record, after 
opportunity for hearing, of a failure by the applicant or recipient to 
comply with a requirement imposed under this part;
    (3) The action has been approved by the Secretary; and
    (4) The expiration of 30 days after the Secretary has filed with the 
committees of the House and Senate having legislative jurisdiction over 
the program or activity involved a full written report of the 
circumstances and the grounds for such action. Any action to suspend or 
terminate, or to refuse to grant or to continue Federal financial 
assistance shall be limited to the particular political entity, or part 
thereof, or other applicant or recipient as to whom such a finding has 
been made and shall be limited in its effect to the particular program, 
or part thereof, in which such noncompliance has been so found.
    (d) Notice to State or local government. Whenever the Secretary 
determines that a State or unit of general local government which is a 
recipient of Federal financial assistance under title

[[Page 123]]

I of the Housing and Community Development Act of 1974, as amended (42 
U.S.C. 5301-5318) has failed to comply with a requirement of this part 
with respect to a program or activity funded in whole or in part with 
such assistance, the Secretary shall notify the Governor of the State or 
the chief executive officer of the unit of general local government of 
the noncompliance and shall request the Governor or the chief executive 
officer to secure compliance. The notice shall be given at least sixty 
days before:
    (1) An order suspending, terminating, or refusing to grant or 
continue Federal financial assistance becomes effective under paragraph 
(c) of this section; or
    (2) Any action to effect compliance by any other means authorized by 
law is taken under paragraph (a) of this section.
    (e) Other means authorized by law. No action to effect compliance by 
any other means authorized by law shall be taken until:
    (1) The responsible civil rights official has determined that 
compliance cannot be secured by voluntary means;
    (2) The recipient or other person has been notified of its failure 
to comply and of the action to be taken to effect compliance; and
    (3) At least 10 days have elapsed since the mailing of such notice 
to the applicant or recipient. During this period, additional efforts 
shall be made to persuade the applicant or recipient to comply with this 
part and to take such corrective action as may be appropriate.

However, this paragraph shall not be construed to prevent an award 
official from utilizing appropriate procedures and sanctions established 
under the program to assure or secure compliance with a specific 
requirement of the program designed to effectuate the objectives of this 
part.

[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988]



Sec. 8.58  Hearings.

    (a) Opportunity for hearing. Whenever an opportunity for a hearing 
is required by Sec. 8.57(c), reasonable notice shall be given by 
registered or certified mail, return receipt requested, to the affected 
applicant or recipient. This notice shall advise the applicant or 
recipient of the action proposed to be taken, the specific provision 
under which the proposed action against it is to be taken, and the 
matters of fact or law asserted as the basis for this action. The notice 
shall:
    (1) Fix a date not less than 20 days after the date of the notice 
for the applicant or recipient to request the administrative law judge 
to schedule a hearing, or
    (2) Advise the applicant or recipient that the matter has been 
scheduled for hearing at a stated time and place. The time and place so 
fixed shall be reasonable and shall be subject to change for cause. The 
complainant, if any, shall be advised of the time and place of the 
hearing. An applicant or recipient may waive a hearing and submit 
written information and argument for the record. The failure of an 
applicant or recipient to request a hearing under this paragraph or to 
appear at a hearing for which a date has been set is a waiver of the 
right to a hearing under Sec. 8.57(c) and consent to the making of a 
decision on the basis of available information.
    (b) Hearing procedures. Hearings shall be conducted in accordance 
with 24 CFR part 180.

[53 FR 20233, June 2, 1988, as amended at 61 FR 52218, Oct. 4, 1996]



PART 9--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF DISABILITY IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT--Table of Contents




Sec.
9.101  Purpose.
9.102  Applicability.
9.103  Definitions.
9.110  Self-evaluation.
9.111  Notice.
9.112--9.129  [Reserved]
9.130  General prohibitions against discrimination.
9.131  Direct threat.
9.132--9.139  [Reserved]
9.140  Employment.
9.141--9.148  [Reserved]
9.149  Program accessibility: discrimination prohibited.

[[Page 124]]

9.150  Program accessibility: existing facilities.
9.151  Program accessibility: new construction and alterations.
9.152  Program accessibility: alterations of Property Disposition 
          Program multifamily housing facilities.
9.153  Distribution of accessible dwelling units.
9.154  Occupancy of accessible dwelling units.
9.155  Housing adjustments.
9.160  Communications.
9.170  Compliance procedures.

    Authority: 29 U.S.C. 794; 42 U.S.C. 3535(d).

    Source: 59 FR 31047, June 16, 1994, unless otherwise noted.



Sec. 9.101  Purpose.

    The purpose of this part is to effectuate section 119 of the 
Rehabilitation, Comprehensive Services, and Developmental Disabilities 
Amendments of 1978, which amended section 504 of the Rehabilitation Act 
of 1973 to prohibit discrimination on the basis of disability in 
programs or activities conducted by Executive agencies or the United 
States Postal Service.



Sec. 9.102  Applicability.

    This part applies to all programs or activities conducted by the 
agency, except for programs or activities conducted outside the United 
States that do not involve individuals with disabilities in the United 
States.



Sec. 9.103  Definitions.

    For purposes of this part:
    Accessible: (1) When used with respect to the design, construction, 
or alteration of a facility or a portion of a facility other than an 
individual dwelling unit, means that the facility or portion of the 
facility when designed, constructed or altered, complies with applicable 
accessibility standards and can be approached, entered, and used by 
individuals with physical disabilities. The phrase ``accessible to and 
usable by'' is synonymous with accessible.
    (2) When used with respect to the design, construction, or 
alteration of an individual dwelling unit, means that the unit is 
located on an accessible route and, when designed, constructed, altered 
or adapted, complies with applicable accessibility standards, and can be 
approached, entered, and used by individuals with physical disabilities. 
A unit that is on an accessible route and is adaptable and otherwise in 
compliance with the standards set forth in Sec. 9.151 is ``accessible'' 
within the meaning of this definition. When a unit in an existing 
facility which is being made accessible as a result of alterations is 
intended for use by a specific qualified individual with disabilities 
(e.g., a current occupant of such unit or of another unit under the 
control of the same agency, or an applicant on a waiting list), the unit 
will be deemed accessible if it meets the requirements of applicable 
standards that address the particular disability or impairment of such 
person.
    Accessible route means a continuous unobstructed path connecting 
accessible elements and spaces of a building or facility. Interior 
accessible routes may include corridors, floors, ramps, elevators, 
lifts, and clear floor space at fixtures. Exterior accessible routes may 
include parking access aisles, curb ramps, crosswalks at vehicular ways, 
walks, ramps and lifts.
    ADA means the Americans with Disabilities Act of 1990 (42 U.S.C. 
12101 through 12213)
    ADA Accessibility Guidelines (ADAAG) means the Accessibility 
Guidelines issued under the ADA, and which are codified in the Appendix 
to 39 CFR part 1191.
    Adaptability means the ability of certain building, spaces and 
elements, such as kitchen counters, sinks, and grab bars, to be added or 
altered, to accommodate the needs of persons with or without 
disabilities, or to accommodate the needs of persons with different 
types or degrees of disability. For example, in a unit adaptable for a 
person with impaired hearing, the wiring for visible emergency alarms 
may be installed but the alarms need not be installed until such time as 
the unit is made ready for occupancy by a person with impaired hearing.
    Agency means the Department of Housing and Urban Development.
    Alteration means a change to a building or facility or its permanent 
fixtures or equipment that affects or

[[Page 125]]

could affect the usability of the building or facility or part thereof. 
Alterations include, but are not limited to, remodeling, renovation, 
rehabilitation, reconstruction, historic restoration, changes or 
rearrangements of the structural parts and changes or rearrangements in 
the plan configuration of walls and full-height partitions. Normal 
maintenance, re-roofing, painting, or wallpapering or changes to 
mechanical and electrical systems are not alterations unless they affect 
the usability of the building or facility.
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Assistant Secretary means the Assistant Secretary of Housing and 
Urban Development for Fair Housing and Equal Opportunity.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or communication skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings, and other similar services and devices. Auxiliary aids 
useful for persons with impaired hearing include telephone handset 
amplifiers, telephones compatible with hearing aids, telecommunication 
devices for deaf persons (TDD's), interpreters, note takers, written 
materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Current illegal use of drugs means illegal use of drugs that 
occurred recently enough to justify a reasonable belief that a person's 
drug use is current or that continuing use is a real and ongoing 
problem.
    Drug means a controlled substance, as defined in schedules I through 
V of section 202 of the Controlled Substances Act (21 U.S.C. 812).
    Facility means all or any portion of buildings, structures, site 
improvements, complexes, equipment, roads, walks, passageways, parking 
lots, rolling stock or other conveyances, or other real or personal 
property located on a site.
    Historic properties means those properties that are listed or are 
eligible for listing in the National Register of Historic Places, or 
such properties designated as historic under a statute of the 
appropriate State or local government body.
    Illegal use of drugs means the use of one or more drugs, the 
possession or distribution of which is unlawful under the Controlled 
Substances Act (21 U.S.C. 812). The term ``illegal use of drugs'' does 
not include the use of a drug taken under supervision by a licensed 
health care professional, or other uses authorized by the Controlled 
Substances Act or other provisions of Federal law.
    Individual with disabilities means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment. As used in this definition, the phrase:
    (1) ``Physical or mental impairment'' includes:
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genito-urinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, autism, epilepsy, muscular dystrophy,

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multiple sclerosis, cancer, heart disease, diabetes, Human 
Immunodeficiency Virus disease (symptomatic or asymptomatic), mental 
retardation, emotional illness, drug addiction and alcoholism.
    (2) The term ``individual with disabilities'' does not include:
    (i) An individual who is currently engaging in the illegal use of 
drugs, when the agency acts on the basis of such use. This exclusion, 
however, does not exclude an individual with disabilities who--
    (A) Has successfully completed a supervised drug rehabilitation 
program, and is no longer engaging in the illegal use of drugs, or has 
otherwise been rehabilitated successfully, and is no longer engaging in 
such use;
    (B) Is participating in a supervised rehabilitation program, and is 
no longer engaging in such use; or
    (C) Is erroneously regarded as engaging in such use, but is not 
engaging in such use.
    (ii) Except that it shall not violate this part for the agency to 
adopt or administer reasonable policies and procedures, including but 
not limited to drug testing, designed to ensure than an individual 
described in paragraphs (2)(i) (A) and (B) of this definition is no 
longer engaging in the illegal use of drugs.
    (iii) Nothing in paragraph (2) of this definition shall be construed 
to encourage, prohibit, restrict or authorize the conduct of testing for 
illegal use of drugs.
    (iv) The agency shall not deny health services provided under titles 
I, II and III of the Rehabilitation Act of 1973 (29 U.S.C. 701 through 
777f) to an individual with disabilities on the basis of that 
individual's current illegal use of drugs, if the individual is 
otherwise entitled to such services.
    (3) For purposes of employment, the term ``individual with 
disabilities'' does not include:
    (i) An individual who has a currently contagious disease or 
infection and who, by reason of such disease or infection--
    (A) Has been determined, in accordance with the provisions of 
Sec. 9.131, to pose a direct threat to the health or safety of other 
individuals, which threat cannot be eliminated or reduced by reasonable 
accommodation, or
    (B) Is unable to perform the essential duties of the job, with or 
without reasonable accommodation; or
    (ii) An individual who is an alcoholic and whose current use of 
alcohol prevents him or her from performing the duties of the job in 
question or whose employment would constitute a direct threat to the 
property or the safety of others by reason of his or her current alcohol 
abuse.
    (4) ``Major life activities'' means functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (5) ``Has a record of such an impairment'' means has a history of, 
or has been misclassified as having, a mental or physical impairment 
that substantially limits one or more major life activities.
    (6) ``Is regarded as having an impairment'' means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the agency as having such an impairment.
    Multifamily housing project means a project containing five or more 
dwelling units.
    Official or Responsible Official means the Assistant Secretary of 
HUD for Fair Housing and Equal Opportunity.
    PDP housing facility means a housing facility administered under 
HUD's Property Disposition Program.
    Project means the whole of one or more residential structures and 
appurtenant structures, equipment, roads, walks, and parking lots which 
are covered by a single mortgage or contract or otherwise treated as a 
whole by the agency for processing purposes, whether or not located on a 
common site.

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    Property Disposition Program (PDP) means the HUD program which 
administers the housing facilities that are either owned by the 
Secretary or where, even though the Secretary has not obtained title, 
the Secretary is mortgagee-in-possession. Such properties are deemed to 
be in the possession or control of the agency.
    Qualified individual with disabilities means:
    (1) With respect to any agency non-employment program or activity 
under which a person is required to perform services or to achieve a 
level of accomplishment, an individual with disabilities who meets the 
essential eligibility requirements and who can achieve the purpose of 
the program or activity without modifications in the program or activity 
that the agency can demonstrate would result in a fundamental alteration 
in its nature; or
    (2) With respect to any other agency non-employment program or 
activity, an individual with disabilities who meets the essential 
eligibility requirements for participation in, or receipt of benefits 
from, that program or activity.
    (3) ``Essential eligibility requirements'' include stated 
eligibility requirements such as income, as well as other explicit or 
implicit requirements inherent in the nature of the program or activity, 
such as requirements that an occupant of a PDP multifamily housing 
facility be capable of meeting selection criteria and be capable of 
complying with all obligations of occupancy with or without supportive 
services provided by persons other than the agency.
    (4) ``Qualified person with disabilities'' as that term is defined 
for purposes of employment in 29 CFR 1613.702(f), which is made 
applicable to this part by Sec. 9.140.
    Replacement cost of the completed facility means the current cost of 
construction and equipment for a newly constructed housing facility of 
the size and type being altered. Construction and equipment costs do not 
include the cost of land, demolition, site improvements, non-dwelling 
facilities and administrative costs for project development activities.
    Secretary means the Secretary of Housing and Urban Development.
    Section 504 means section 504 of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 794). As used in this part, section 504 applies only 
to programs or activities conducted by the agency and not to federally 
assisted programs.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.
    UFAS means the Uniform Federal Accessibility Standards, which 
implement the accessibility standards required by the Architectural 
Barriers Act (42 U.S.C. 4151 through 4157), and which are established at 
24 CFR part 40, Appendix A for residential structures, and 41 CFR 101-
19.600 through 101-19.607, and Appendix A to these sections, for non-
residential structures.



Sec. 9.110  Self-evaluation.

    (a) The agency shall, within one year of the effective date of this 
part, evaluate its current policies and practices, and the effects of 
those policies and practices, including regulations, handbooks, notices 
and other written guidance, that do not or may not meet the requirements 
of this part. To the extent modification of any such policies is 
required, the agency shall take the necessary corrective actions.
    (b) The agency shall provide an opportunity to interested persons, 
including individuals with disabilities or organizations representing 
individuals with disabilities, to participate in the self-evaluation 
process by submitting comments (both oral and written).
    (c) The agency shall, for at least three years following the 
completion of the self-evaluation, maintain on file and make available 
for public inspection:
    (1) A list of interested persons;
    (2) A description of the areas examined and any problems identified; 
and
    (3) A description of any modifications made or to be made.



Sec. 9.111  Notice.

    The agency shall make available to employees, applicants, 
participants,

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beneficiaries, and other interested persons information regarding the 
provisions of this part and its applicability to the programs or 
activities conducted by the agency. The agency shall make such 
information available to such persons in such manner as the Secretary 
finds necessary to apprise them of the protections against 
discrimination assured them by section 504 and this part. All 
publications and recruitment materials distributed to participants, 
beneficiaries, applicants or employees shall include a statement that 
the agency does not discriminate on the basis of disability. The notice 
shall include the name of the person or office responsible for the 
implementation of section 504.



Secs. 9.112-9.129  [Reserved]



Sec. 9.130  General prohibitions against discrimination.

    (a) No qualified individual with disabilities shall, on the basis of 
disability, be excluded from participation in, be denied the benefits 
of, or otherwise be subjected to discrimination under any program or 
activity conducted by the agency.
    (b)(1) The agency, in providing any housing, aid, benefit, or 
service, may not, directly or through contractual, licensing, or other 
arrangements, on the basis of disability--
    (i) Deny a qualified individual with disabilities the opportunity to 
participate in or benefit from the housing, aid, benefit, or service;
    (ii) Afford a qualified individual with disabilities an opportunity 
to participate in or benefit from the housing, aid, benefit, or service 
that is not equal to that afforded others;
    (iii) Provide a qualified individual with disabilities with any 
housing, aid, benefit, or service that is not as effective in affording 
equal opportunity to obtain the same result, to gain the same benefit, 
or to reach the same level of achievement as that provided to others;
    (iv) Provide different or separate housing, aid, benefits, or 
services to individuals with disabilities or to any class of individuals 
with disabilities than is provided to others unless such action is 
necessary to provide qualified individuals with disabilities with 
housing, aid, benefits, or services that are as effective as those 
provided to others;
    (v) Deny a qualified individual with disabilities the opportunity to 
participate as a member of planning or advisory boards;
    (vi) Deny a dwelling to an otherwise qualified buyer or renter 
because of a disability of that buyer or renter or a person residing in 
or intending to reside in that dwelling after it is sold, rented or made 
available; or
    (vii) Otherwise limit a qualified individual with disabilities in 
the enjoyment of any right, privilege, advantage, or opportunity enjoyed 
by others receiving the housing, aid, benefit, or service.
    (2) For purposes of this part, housing, aids, benefits, and 
services, to be equally effective, are not required to produce the 
identical result or level of achievement for individuals with 
disabilities and for persons without disabilities, but must afford 
individuals with disabilities equal opportunity to obtain the same 
result, to gain the same benefit, or to reach the same level of 
achievement.
    (3) The agency may not deny a qualified individual with disabilities 
the opportunity to participate in programs or activities that are not 
separate or different, despite the existence of programs or activities 
that are permissibly separate or different for persons with 
disabilities.
    (4) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would:
    (i) Subject qualified individuals with disabilities to 
discrimination on the basis of disability; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with disabilities.
    (5) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would:
    (i) Exclude individuals with disabilities from, deny them the 
benefits of, or otherwise subject them to discrimination under any 
program or activity conducted by the agency; or

[[Page 129]]

    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
disabilities.
    (6) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified individuals with disabilities to 
discrimination on the basis of disability.
    (7) The agency may not administer a licensing or certification 
program in a manner that subjects qualified individuals with 
disabilities to discrimination on the basis of disability, nor may the 
agency establish requirements for the programs or activities of 
licensees or certified entities that subject qualified individuals with 
disabilities to discrimination on the basis of disability. However, the 
programs or activities of entities that are licensed or certified by the 
agency are not, themselves, covered by this part.
    (c)(1) Notwithstanding any other provision of this part, persons 
without disabilities may be excluded from the benefits of a program if 
the program is limited by Federal statute or Executive order to 
individuals with disabilities. A specific class of individuals with 
disabilities may be excluded from a program if the program is limited by 
Federal statute or Executive order to a different class of individuals.
    (2) Certain agency programs operate under statutory definitions of 
``persons with disabilities'' that are more restrictive than the 
definition of ``individual with disabilities'' contained in Sec. 9.103. 
Those definitions are not superseded or otherwise affected by this 
regulation.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified individuals 
with disabilities.
    (e) The obligation to comply with this part is not obviated or 
alleviated by any State or local law or other requirement that, based on 
disability, imposes inconsistent or contradictory prohibitions or limits 
upon the eligibility of qualified individuals with disabilities to 
receive services or to practice any occupation or profession.
    (f) The enumeration of specific forms of prohibited discrimination 
in paragraphs (b) and (d) of this section does not limit the general 
prohibition in paragraph (a) of this section.



Sec. 9.131  Direct threat.

    (a) This part does not require the agency to permit an individual to 
participate in, or benefit from the goods, services, facilities, 
privileges, advantages and accommodations of that agency when that 
individual poses a direct threat to the health or safety of others.
    (b) ``Direct threat'' means a significant risk to the health or 
safety of others that cannot be eliminated by a modification of 
policies, practices, or procedures, or by the provision of auxiliary 
aids or services.
    (c) In determining whether an individual poses a direct threat to 
the health or safety of others, the agency must make an individualized 
assessment, based on reasonable judgment that relies on current medical 
knowledge or on the best available objective evidence to ascertain: the 
nature, duration, and severity of the risk; the probability that the 
potential injury will actually occur; and whether reasonable 
modifications of policies, practices, or procedures will mitigate the 
risk.



Secs. 9.132--9.139  [Reserved]



Sec. 9.140  Employment.

    No qualified individual with disabilities shall, on the basis of 
disability, be subjected to discrimination in employment under any 
program or activity conducted by the agency. The definitions, 
requirements, and procedures of section 501 of the Rehabilitation Act of 
1973 (29 U.S.C. 791), as established by the Equal Employment Opportunity 
Commission in 29 CFR part 1613 (subpart G), shall apply to employment in 
federally conducted programs or activities.



Secs. 9.141--9.148  [Reserved]



Sec. 9.149  Program accessibility: discrimination prohibited.

    Except as otherwise provided in Sec. 9.150, no qualified individual 
with disabilities shall, because the agency's facilities are 
inaccessible to or unusable by individuals with disabilities, be denied 
the benefits of, be excluded from

[[Page 130]]

participation in, or otherwise be subjected to discrimination under any 
program or activity conducted by the agency.



Sec. 9.150  Program accessibility: existing facilities.

    (a) General. Except as otherwise provided in paragraph (e) of this 
section, the agency shall operate each program or activity so that the 
program or activity, when viewed in its entirety, is readily accessible 
to and usable by individuals with disabilities. This section does not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by individuals with disabilities;
    (2) In the case of historic properties, require the agency to take 
any action that would result in a substantial impairment of significant 
historic features of an historic property; or
    (3) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 9.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the Secretary or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that would not result in 
such an alteration or such burdens but would nevertheless ensure that 
individuals with disabilities receive the benefits and services of the 
program or activity.
    (b) Methods. The agency may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
home visits, delivery of services at alternate accessible sites, 
alteration of existing facilities and construction of new facilities, 
use of accessible rolling stock, or any other methods that result in 
making its programs or activities readily accessible to and usable by 
individuals with disabilities. The agency is not required to make 
structural changes in existing facilities where other methods are 
effective in achieving compliance with this section. The agency, in 
making alterations to existing buildings, also shall meet accessibility 
requirements to the extent compelled by the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151 through 4157), and any regulations 
implementing it. In choosing among available methods for meeting the 
requirements of this section, the agency shall give priority to those 
methods that offer programs and activities to qualified individuals with 
disabilities in the most integrated setting appropriate.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section within sixty days of July 18, 
1994 except that where structural changes in facilities are undertaken, 
such changes shall be made within three years of July 18, 1994, but in 
any event as expeditiously as possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, within six months of July 18, 1994, a transition 
plan setting forth the steps necessary to complete such changes. The 
agency shall provide an opportunity to interested persons, including 
individuals with disabilities or organizations representing individuals 
with disabilities, to participate in the development of the transition 
plan by submitting comments (both oral and written). A copy of the 
transition plan shall be made available for public inspection. The plan 
shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to individuals 
with disabilities;

[[Page 131]]

    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.
    (e) The requirements of paragraphs (a), (b), and (c) of this section 
shall apply to the Property Disposition Programs. However, this section 
does not require HUD to make alterations to existing facilities that are 
part of the Property Disposition Programs unless such alterations are 
necessary to meet the needs of a current or prospective tenant during 
the time when HUD expects to retain legal possession of the facilities, 
and there is no alternative method to meet the needs of that current or 
prospective tenant. Nothing in this section shall be construed to 
require alterations to make facilities accessible to persons with 
disabilities who are expected to occupy the facilities only after HUD 
relinquishes legal possession.



Sec. 9.151  Program accessibility: new construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered and provide emergency egress so as to be readily 
accessible to and usable by individuals with disabilities. The 
definitions, requirements, and accessibility standards that apply to 
buildings covered by this section are those contained in the UFAS, 
except where the ADAAG provides for greater accessibility for the type 
of construction or alteration being undertaken, and in this case, the 
definitions, requirements and standards of the ADAAG shall apply.



Sec. 9.152  Program accessibility: alterations of Property Disposition Program multifamily housing facilities.

    (a) Substantial alteration. If the agency undertakes alterations to 
a PDP multifamily housing project that has 15 or more units and the cost 
of the alterations is 75 percent or more of the replacement cost of the 
completed facility, then the project shall be designed and altered to be 
readily accessible to and usable by individuals with disabilities. 
Subject to paragraph (c) of this section, a minimum of five percent of 
the total dwelling units, or at least one unit, whichever is greater, 
shall be made accessible for persons with mobility impairments. A unit 
that is on an accessible route and is adaptable and otherwise in 
compliance with the standards set forth in paragraph (d) of this section 
is accessible for purposes of this section. An additional two percent of 
the units (but not less that one unit) in such a project shall be 
accessible for persons with hearing or vision impairments. If state or 
local requirements for alterations require greater action than this 
paragraph, those requirements shall prevail.
    (b) Other alteration. (1) Subject to paragraph (c) of this section, 
alterations to dwelling units in a PDP multifamily housing project 
shall, to the maximum extent feasible, be made to be readily accessible 
to and usable by individuals with disabilities. If alterations of single 
elements or spaces of a dwelling unit, when considered together, amount 
to an alteration of a dwelling unit, the entire dwelling unit shall be 
made accessible. Once five percent of the dwelling units in a project 
are readily accessible to and usable by individuals with mobility 
impairments, then no additional elements of dwelling units, or entire 
dwelling units, are required to be accessible under this paragraph. Once 
two percent of the dwelling units in a project are readily accessible to 
or usable by individuals with hearing or vision impairments, then no 
additional elements of dwelling units, or entire dwelling units, are 
required to be accessible under this paragraph.
    (2) Alterations to common areas or parts of facilities that affect 
accessibility of existing housing facilities, shall, to the maximum 
extent feasible, be made to be accessible to and usable by individuals 
with disabilities.
    (c) The agency may establish a higher percentage or number of 
accessible

[[Page 132]]

units than that prescribed in paragraphs (a) or (b) of this section if 
the agency determines that there is a need for a higher percentage or 
number, based on census data or other available current data. In making 
such a determination, HUD shall take into account the expected needs of 
eligible persons with and without disabilities.
    (d) The definitions, requirements, and accessibility standards that 
apply to PDP multifamily housing projects covered by this section are 
those contained in the UFAS, except where the ADAAG provides for greater 
accessibility for the type of alteration being undertaken, and, in this 
case, the definitions, requirements and standards of the ADAAG shall 
apply.
    (e) With respect to multifamily housing projects operated by HUD, 
but in which HUD does not have an ownership interest, alterations under 
this section need not be made if doing so would impose undue financial 
and administrative burdens on the operation of the multifamily housing 
project.



Sec. 9.153  Distribution of accessible dwelling units.

    Accessible dwelling units required by Sec. 9.152 shall, to the 
maximum extent feasible, be distributed throughout projects and sites 
and shall be available in a sufficient range of sizes and amenities so 
that a qualified individual with disabilities' choice of living 
arrangements is, as a whole, comparable to that of other persons 
eligible for housing assistance under the same agency conducted program. 
This provision shall not be construed to require (but does allow) the 
provision of an elevator in any multifamily housing project solely for 
the purpose of permitting location of accessible units above or below 
the accessible grade level.



Sec. 9.154  Occupancy of accessible dwelling units.

    (a) The agency shall adopt suitable means to assure that information 
regarding the availability of accessible units in PDP housing facilities 
reaches eligible individuals with disabilities, and shall take 
reasonable nondiscriminatory steps to maximize the utilization of such 
units by eligible individuals whose disability requires the 
accessibility features of the particular unit. To this end, when an 
accessible unit becomes vacant, the agency (or its management agent) 
before offering such units to an applicant without disabilities shall 
offer such unit:
    (1) First, to a current occupant of another unit of the same 
project, or comparable projects under common control, having 
disabilities requiring the accessibility features of the vacant unit and 
occupying a unit not having such features, or, if no such occupant 
exists, then
    (2) Second, to an eligible qualified applicant on the waiting list 
having a disability requiring the accessibility features of the vacant 
unit.
    (b) When offering an accessible unit to an applicant not having 
disabilities requiring the accessibility features of the unit, the 
agency may require the applicant to agree (and may incorporate this 
agreement in the lease) to move to a non-accessible unit when available.



Sec. 9.155  Housing adjustments.

    (a) The agency shall modify its housing policies and practices as 
they relate to PDP housing facilities to ensure that these policies and 
practices do not discriminate, on the basis of disability, against a 
qualified individual with disabilities. The agency may not impose upon 
individuals with disabilities other policies, such as the prohibition of 
assistive devices, auxiliary aids, alarms, or guides in housing 
facilities, that have the effect of limiting the participation of 
tenants with disabilities in any agency conducted housing program or 
activity in violation of this part. Housing policies that the agency can 
demonstrate are essential to the housing program or activity will not be 
regarded as discriminatory within the meaning of this section if 
modifications would result in a fundamental alteration in the nature of 
the program or activity or undue financial and administrative burdens.
    (b) The decision that compliance would result in such alteration or 
burdens must be made by the Secretary or his or her designee after 
considering all agency resources available for use in

[[Page 133]]

the funding and operation of the conducted program or activity, and must 
be accompanied by a written statement of the reasons for reaching that 
conclusion. If an action required to comply with this section would 
result in such an alteration or such burdens, the agency shall take any 
other action that would not result in such an alteration or such burdens 
but would nevertheless ensure that, to the maximum extent possible, 
individuals with disabilities receive the benefits and services of the 
program or activity.



Sec. 9.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford an individual with disabilities an equal opportunity 
to participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
individual with disabilities.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
or members of the public by telephone, telecommunication devices for 
deaf persons (TDD's) or equally effective telecommunication systems 
shall be used to communicate with persons with impaired hearing.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with this section would result 
in such alteration or burdens. The decision that compliance would result 
in such alteration or burdens must be made by the Secretary or his or 
her designee after considering all agency resources available for use in 
the funding and operation of the conducted program or activity and must 
be accompanied by a written statement of the reasons for reaching that 
conclusion. If an action required to comply with Sec. 9.160 would result 
in such an alteration or such burdens, the agency shall take any other 
action that would not result in such an alteration or such burdens but 
would nevertheless ensure that, to the maximum extent possible, 
individuals with disabilities receive the benefits and services of the 
program or activity.



Sec. 9.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
disability in programs or activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 under section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 
791).
    (c) The Responsible Official shall coordinate implementation of this 
section.
    (d) Persons may submit complete complaints to the Assistant 
Secretary for Fair Housing and Equal Opportunity, 451 Seventh St., SW., 
Washington, DC 20410, or to any HUD Area Office. The agency shall accept 
and investigate all complete complaints for which the agency has 
jurisdiction. All

[[Page 134]]

complete complaints shall be filed within 180 days of the alleged act of 
discrimination. The agency may extend this time period for good cause. 
For purposes of determining when a complaint is filed, a complaint 
mailed to the agency shall be deemed filed on the date it is postmarked. 
Any other complaint shall be deemed filed on the date it is received by 
the agency. The agency shall acknowledge all complaints, in writing, 
within ten (10) working days of receipt of the complaint.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate Government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151 through 4157), is not readily 
accessible to and usable by individuals with disabilities. The agency 
shall delete the identity of the complainant from the copy of the 
complaint.
    (g)(1) Within 180 days of the receipt of a complete complaint for 
which it has jurisdiction, the Office of Fair Housing and Equal 
Opportunity shall complete the investigation of the complaint, attempt 
informal resolution, and if no informal resolution is achieved, issue a 
letter of findings. If a complaint is filed against the Office of Fair 
Housing and Equal Opportunity, the Secretary or a designee of the 
Secretary shall investigate and resolve the complaint through informal 
agreement or letter of findings.
    (2) If a complaint is resolved informally, the terms of the 
agreement shall be reduced to writing and made part of the complaint 
file, with a copy of the agreement provided to the complainant and the 
agency. The written agreement may include a finding on the issue of 
discrimination and shall describe any corrective action to which the 
complainant and the respondent have agreed.
    (3) If a complaint is not resolved informally, the Office of Fair 
Housing and Equal Opportunity or a person designated under this 
paragraph shall notify the complainant of the results of the 
investigation in a letter containing--
    (i) Findings of fact and conclusions of law;
    (ii) A description of a remedy for each violation found;
    (iii) A notice of the right to appeal to the Secretary;
    (h)(1) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 9.170(g). The Assistant 
Secretary or the person designated by the Secretary to decide an appeal 
of a complaint filed against the Office of Fair Housing and Equal 
Opportunity may extend this time for good cause.
    (2) Timely appeals shall be accepted and processed by the Assistant 
Secretary. Decisions on an appeal shall not be issued by the person who 
made the initial determination.
    (i) The Assistant Secretary or the person designated by the 
Secretary to decide an appeal of a complaint filed against the Office of 
Fair Housing and Equal Opportunity shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the agency determines that it needs additional information from the 
complainant, it shall have 60 days from the date it receives the 
additional information to make its determination on the appeal.
    (j) The time limits cited in paragraphs (g) and (i) of this section 
may be extended with the permission of the Assistant Attorney General.
    (k) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.



PART 10--RULEMAKING: POLICY AND PROCEDURES--Table of Contents




                           Subpart A--General

Sec.
10.1  Policy.
10.2  Definitions.
10.3  Applicability.
10.4  Rules docket.

[[Page 135]]

                          Subpart B--Procedures

10.6  Initiation of rulemaking.
10.7  Advance Notice of Proposed Rulemaking.
10.8  Notice of proposed rulemaking.
10.10  Participation by interested persons.
10.12  Additional rulemaking proceedings.
10.14  Hearings.
10.16  Adoption of a final rule.
10.18  Petitions for reconsideration.
10.20  Petition for rulemaking.

    Authority: 42 U.S.C. 3535(d).

    Source: 44 FR 1606, Jan. 5, 1979, unless otherwise noted.



                           Subpart A--General



Sec. 10.1  Policy.

    It is the policy of the Department of Housing and Urban Development 
to provide for public participation in rulemaking with respect to all 
HUD programs and functions, including matters that relate to public 
property, loans, grants, benefits, or contracts even though such matters 
would not otherwise be subject to rulemaking by law or Executive policy. 
The Department therefore publishes notices of proposed rulemaking in the 
Federal Register and gives interested persons an opportunity to 
participate in the rulemaking through submission of written data, views, 
and arguments with or without opportunity for oral presentation. It is 
the policy of the Department that its notices of proposed rulemaking are 
to afford the public not less than sixty days for submission of 
comments. For some rules the Secretary will employ additional methods of 
inviting public participation. These methods include, but are not 
limited to, publishing Advance Notices of Proposed Rulemaking (ANPR), 
conducting public surveys, and convening public forums or panels. An 
ANPR will be used to solicit public comment early in the rulemaking 
process for significant rules unless the Secretary grants an exception 
based upon legitimate and pressing time constraints. Unless required by 
statute, notice and public procedure will be omitted if the Department 
determines in a particular case or class of cases that notice and public 
procedure are impracticable, unnecessary or contrary to the public 
interest. In a particular case, the reasons for the determination shall 
be stated in the rulemaking document. Notice and public procedure may 
also be omitted with respect to statements of policy, interpretative 
rules, rules governing the Department's organization or its own internal 
practices or procedures, or if a statute expressly so authorizes. A 
final substantive rule will be published not less than 30 days before 
its effective date, unless it grants or recognizes an exemption or 
relieves a restriction or unless the rule itself states good cause for 
taking effect upon publication or less than 30 days thereafter. 
Statements of policy and interpretative rules will usually be made 
effective on the date of publication.

[44 FR 1606, Jan. 5, 1979, as amended at 47 FR 56625, Dec. 20, 1982]



Sec. 10.2  Definitions.

    (a) Rule or Regulation means all or part of any Departmental 
statement of general or particular applicability and future effect 
designed to: (1) Implement, interpret, or prescribe law or policy, or 
(2) describe the Department's organization, or its procedure or practice 
requirements. The term regulation is sometimes applied to a rule which 
has been published in the Code of Federal Regulations.
    (b) Rulemaking means the Departmental process for considering and 
formulating the issuance, modification, or repeal of a rule.
    (c) Secretary means the Secretary or the Under Secretary of Housing 
and Urban Development, or an official to whom the Secretary has 
expressly delegated authority to issue rules.



Sec. 10.3  Applicability.

    (a) This part prescribes general rulemaking procedures for the 
issuance, amendment, or repeal of rules in which participation by 
interested persons is required by 5 U.S.C. or by Department policy.
    (b) The authority to issue rules, delegated by the Secretary, may 
not be redelegated unless expressly permitted.
    (c) This part is not applicable to a determination by HUD under 24 
CFR part 966 (public housing) or 24 CFR part 950 (Indian housing) that 
the law of a jurisdiction requires that, prior to eviction, a tenant be 
given a hearing in court

[[Page 136]]

which provides the basic elements of due process (``due process 
determination'').

[44 FR 1606, Jan. 5, 1979, as amended at 61 FR 13273, Mar. 26, 1996]



Sec. 10.4  Rules docket.

    (a) All documents relating to rulemaking procedures including but 
not limited to advance notices of proposed rulemaking, notices of 
proposed rulemaking, written comments received in response to notices, 
withdrawals or terminations of proposed rulemaking, petitions for 
rulemaking, requests for oral argument in public participation cases, 
requests for extension of time, grants or denials of petitions or 
requests, transcripts or minutes of informal hearings, final rules and 
general notices are maintained in the Rules Docket Room (Room 5218), 
Department of Housing and Urban Development, 451 7th Street, SW., 
Washington, DC 20410. All public rulemaking comments should refer to the 
docket number which appears in the heading of the rule and should be 
addressed to the Rules Docket Clerk, Room 5218, Department of Housing 
and Urban Development, 451 7th Street, SW., Washington, DC 20410.
    (b) Documents relating to rulemaking proceedings are public records. 
After a docket is established, any person may examine docketed material 
at any time during regular business hours, and may obtain a copy of any 
docketed material upon payment of the prescribed fee. (See part 15 of 
this title).



                          Subpart B--Procedures



Sec. 10.6  Initiation of rulemaking.

    Rulemaking proceedings may be initiated on the Secretary's motion, 
or on the recommendation of a Federal, State, or local government or 
government agency, or on the petition of any interested person.



Sec. 10.7  Advance Notice of Proposed Rulemaking.

    An Advance Notice of Proposed Rulemaking issued in accordance with 
Sec. 10.1 of this part is published in the Federal Register and briefly 
outlines:
    (a) The proposed new program or program changes, and why they are 
needed;
    (b) The major policy issues involved;
    (c) A request for comments, both specific and general, as to the 
need for the proposed rule and the provisions that the rule might 
include;
    (d) If appropriate, a list of questions about the proposal that will 
elicit detailed comments;
    (e) If known, an estimate of the reporting or recordkeeping 
requirements, if any, that the rule would impose; and
    (f) Where comments should be addressed and the time within which 
they must be submitted.



Sec. 10.8  Notice of proposed rulemaking.

    Each notice of proposed rulemaking required by statute or by 
Sec. 10.1 is published in the Federal Register and includes:
    (a) The substance or terms of the proposed rule or a description of 
the subject matter and issues involved;
    (b) A statement of how and to what extent interested persons may 
participate in the proceeding;
    (c) Where participation is limited to written comments, a statement 
of the time within which such comments must be submitted;
    (d) A reference to the legal authority under which the proposal is 
issued; and
    (e) In a proceeding which has provided Advance Notice of Proposed 
Rulemaking, an analysis of the principal issues and recommendations 
raised by the comments, and the manner in which they have been addressed 
in the proposed rulemaking.



Sec. 10.10  Participation by interested persons.

    (a) Unless the notice otherwise provides, any interested person may 
participate in rulemaking proceedings by submitting written data, views 
or arguments within the comment time stated in the notice. In addition, 
the Secretary may permit the filing of comments in response to original 
comments.
    (b) In appropriate cases, the Secretary may provide for oral 
presentation of views in additional proceedings described in Sec. 10.12.

[[Page 137]]



Sec. 10.12  Additional rulemaking proceedings.

    The Secretary may invite interested persons to present oral 
arguments, appear at informal hearings, or participate in any other 
procedure affording opportunity for oral presentation of views. The 
transcript or minutes of such meetings, as appropriate, will be kept and 
filed in the Rules Docket.



Sec. 10.14  Hearings.

    (a) The provisions of 5 U.S.C. 556 and 557, which govern formal 
hearings in adjudicatory proceedings, do not apply to informal rule 
making proceedings described in this part. When opportunity is afforded 
for oral presentation, such informal hearing is a nonadversary, fact-
finding proceeding. Any rule issued in a proceeding under this part in 
which a hearing is held is not based exclusively on the record of such 
hearing.
    (b) When a hearing is provided, the Secretary will designate a 
representative to conduct the hearing, and if the presence of a legal 
officer is desirable, the General Counsel will designate a staff 
attorney to serve as the officer.



Sec. 10.16  Adoption of a final rule.

    All timely comments are considered in taking final action on a 
proposed rule. Each preamble to a final rule will contain a short 
analysis and evaluation of the relevant significant issues set forth in 
the comments submitted, and a clear concise statement of the basis and 
purpose of the rule.



Sec. 10.18  Petitions for reconsideration.

    Petitions for reconsideration of a final rule will not be 
considered. Such petitions, if filed, will be treated as peitions for 
rulemaking in accordance with Sec. 10.20.



Sec. 10.20  Petition for rulemaking.

    (a) Any interested person may petition the Secretary for the 
issuance, amendment, or repeal of a rule. Each petition shall:
    (1) Be submitted to the Rules Docket Clerk, Room 5218, Department of 
Housing and Urban Development, Washington, DC 20410;
    (2) Set forth the text of substance of the rule or amendment 
proposed or specify the rule sought to be repealed;
    (3) Explain the interest of the petitioner in the action sought; and
    (4) Set forth all data and arguments available to the petitioner in 
support of the action sought.
    (b) No public procedures will be held directly on the petition 
before its disposition. If the Secretary finds that the petition 
contains adequate justification, a rulemaking proceeding will be 
initiated or a final rule will be issued as appropriate. If the 
Secretary finds that the petition does not contain adequate 
justification, the petition will be denied by letter or other notice, 
with a brief statement of the ground for denial. The Secretary may 
consider new evidence at any time; however, repetitious petitions for 
rulemaking will not be considered.



PART 13--USE OF PENALTY MAIL IN THE LOCATION AND RECOVERY OF MISSING CHILDREN--Table of Contents




Sec.
13.1  Purpose.
13.2  Procedures for obtaining and disseminating data.
13.3  Withdrawal of data.
13.4  Reports.

    Authority: 39 U.S.C. 3220(a)(2); 5 U.S.C. 301.

    Source: 51 FR 19830, June 3, 1986, unless otherwise noted.



Sec. 13.1  Purpose.

    To support the national effort to locate and recover missing 
children, the Department of Housing and Urban Development (HUD) joins 
other executive departments and independent establishments of the 
Government of the United States in using penalty mail to disseminate 
photographs and biographical information on hundreds of missing 
children.

[51 FR 19830, June 3, 1986; 51 FR 43608, Dec. 3, 1986]



Sec. 13.2  Procedures for obtaining and disseminating data.

    (a) HUD shall insert, manually and via automated inserts, pictures 
and biographical data related to missing children in domestic penalty 
mail directed

[[Page 138]]

to members of the public in the United States, its territories and 
possessions. These include:
    (1) Standard letter-size envelopes (4\1/2\" X 9\1/2\");
    (2) Document-size envelopes (9\1/2\" X 12", 9\1/2\" X 11\1/2\", 10" 
X 13"); and
    (3) Other envelopes (miscellaneous size).
    (b) Missing children information shall not be placed on the Penalty 
Indicia, OCR Read Area, Bar Code Read Area, and Return Address areas of 
letter-size envelopes.
    (c) Posters containing pictures and biographical data shall be 
placed on bulletin boards in Headquarters and Field offices.
    (d) HUD shall accept camera-ready and other photographic and 
biographical materials solely from the National Center for Missing and 
Exploited Children (National Center). Photographs that were reasonably 
current as of the time of the child's disappearance shall be the only 
acceptable form of visual media or pictorial likeness used in penalty 
mail or posters.



Sec. 13.3  Withdrawal of data.

    HUD shall remove all printed penalty mail envelopes and other 
materials from circulation or other use within a three month period from 
the date the National Center receives information or notice that a 
child, whose picture and biographical information have been made 
available to HUD, has been recovered or that the parent or guardian's 
permission to use the child's photograph and biographical information 
has been withdrawn. The HUD contact person shall be notified immediately 
and in writing by the National Center of the need to withdraw from 
circulation penalty mail envelopes and other materials related to a 
particular child.



Sec. 13.4  Reports.

    HUD shall compile and submit to Office of Juvenile Justice and 
Deliquency Prevention (OJJDP), by June 30, 1987, a consolidated report 
on its experience in implementing S. 1195 Official Mail Use in the 
Location and Recovery of Missing Children along with recommendations for 
future Departmental action.



PART 14--IMPLEMENTATION OF THE EQUAL ACCESS TO JUSTICE ACT IN ADMINISTRATIVE PROCEEDINGS--Table of Contents




                      Subpart A--General Provisions

Sec.
14.50  Definitions.
14.100  Time computation.
14.105  Purpose of these rules.
14.110  When the Act applies.
14.115  Proceedings covered.
14.120  Eligibility of applicants.
14.125  Standards for awards.
14.130  Allowable fees and expenses.
14.135  Rulemaking on maximum rates for attorney fees.
14.140  Awards against other agencies.

             Subpart B--Information Required From Applicants

14.200  Contents of application.
14.205  Net worth exhibit.
14.210  Documentation of fees and expenses.
14.215  When an application may be filed.

           Subpart C--Procedures for Considering Applications

14.300  Jurisdiction of adjudicative officer.
14.305  Filing and service of documents.
14.310  Answer to application.
14.315  Comments by other parties.
14.320  Settlement.
14.325  Extensions of time and further proceedings.
14.330  Decision.
14.335  Departmental review.
14.340  Judicial review.
14.345  Payment of award.

    Authority: Sec. 504(c)(1) of the Equal Access to Justice Act (5 
U.S.C. 504(c)(1); sec. 7(d) of the Department of Housing and Urban 
Development Act (42 U.S.C. 3535(d)).

    Source: 52 FR 27126, July 17, 1987, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 14.50  Definitions.

    Act. The Equal Access to Justice Act, 5 U.S.C. 504, title II of Pub. 
L. 96-481, as amended by Pub. L. 99-80.
    Adjudicative officer. The hearing examiner, administrative law 
judge, administrative judge of the HUD Board of Contract Appeals, or 
other officer designated by the Secretary or other responsible 
Department official, who presided at the adversary adjudication.

[[Page 139]]

    Adversary adjudication. (a) An adjudication under 5 U.S.C. 554 in 
which the position of the United States is represented by counsel or 
otherwise, but not including an adjudication for the purpose of 
establishing or fixing a rate or for the purpose of granting or renewing 
a license; and
    (b) Appeals of decisions of contracting officers made pursuant to 
section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605) before 
agency boards of contract appeals as provided in section 8 of that Act 
(41 U.S.C. 607).
    Agency counsel (a) When the position of the Department is being 
represented, the attorney or attorneys designated by the Department's 
General Counsel to represent the Department in a proceeding covered by 
this part, and
    (b) When the position of another agency of the United States is 
being represented, the representative as designated by that agency.
    Department. The Department of Housing and Urban Development, or the 
organizational unit within the Department responsible for conducting an 
adversary adjudication subject to this part.
    Proceeding. An adversary adjudication as defined above.
    Secretary. The Secretary of Housing and Urban Development.



Sec. 14.100  Time computation.

    Time periods stated in this part shall be computed in accordance 
with the Department's rules with respect to computation of time which 
apply to the underlying proceeding.



Sec. 14.105  Purpose of these rules.

    The Act provides for the award of attorney fees and other expenses 
to eligible individuals and entities who are parties to certain 
administrative proceedings (adversary adjudications) before the 
Department. An eligible party may receive an award when it prevails over 
an agency, unless the agency's position was substantially justified or 
special circumstances make an award unjust. The rules in this part 
described the parties eligible for awards and the proceedings that are 
covered. They also explain how to apply for awards and the procedures 
and standards that the Department will use to make them.



Sec. 14.110  When the Act applies.

    The Act applies to any adversary adjudication pending or commenced 
before this Department on or after August 5, 1985. It also applies to 
any adversary adjudication commenced on or after October 1, 1984, and 
finally disposed of before August 5, 1985, provided that an application 
for fees and expenses, as described in subpart B of these rules, has 
been filed with the Department no later than 30 days after August 5, 
1985, and to any adversary adjudication pending on or commenced on or 
after October 1, 1981, in which an application for fees and other 
expenses was timely filed and was dismissed for lack of jurisdiction.



Sec. 14.115  Proceedings covered.

    (a) The proceedings to which this part applies are adversary 
adjudications conducted by the Department under:
    (1) The Interstate Land Sales Full Disclosure Act, as amended, 15 
U.S.C. 1701 et seq., pursuant to 15 U.S.C. 1715 and 24 CFR part 1720;
    (2) Section 602 of the Civil Rights Act of 1964, 42 U.S.C. 2000d-1, 
and 24 CFR parts 1 and 2;
    (3) Section 505(a) of the Rehabilitation Act of 1973, as amended, 29 
U.S.C. 794a, 28 CFR part 41, and any applicable HUD regulations;
    (4) Section 305(a) of the Age Discrimination Act of 1975, 42 U.S.C. 
6104(a), 45 CFR part 90 and any applicable HUD regulations;
    (5) Section 3 of the HUD Act of 1968, 12 U.S.C. 170lu (Employment 
Opportunities for Business and Lower Income Persons in Connection with 
Assisted Projected), and 24 CFR part 135;
    (6) Debt Collection Act of 1982 (Salary Offset), 5 U.S.C. 5514, and 
24 CFR 17.125-.140;
    (7) Manufactured Home Construction and Safety Standards Act of 1974, 
42 U.S.C. 5401 et seq., and 24 CFR part 3280;
    (8) Section 111 of title I of the Housing and Community Development 
Act of 1974, 42 U.S.C. 5311, and 24 CFR 570.913;
    (9) Appeals of decisions of contracting officers made pursuant to 
section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605) before 
the HUD Board of Contract Appeals as provided

[[Page 140]]

in section 8 of that Act (41 U.S.C. 607); or
    (10) Title VIII of the Civil Rights Act of 1968 (42 U.S.C. 3600-
3620) and 24 CFR part 104.
    (b) The Department's failure to identify a type of proceeding as an 
adversary adjudication shall not preclude the filing of an application 
by a party who believes the proceeding is covered by the Act; whether 
the proceeding is covered will then be an issue for resolution in 
proceedings on the application.
    (c) If a proceeding includes both matters covered by the Act and 
matters specifically excluded from coverage, any award made will include 
only fees and expenses related to covered issues.

[52 FR 27126, July 17, 1987, as amended at 54 FR 3283, Jan. 23, 1989]



Sec. 14.120  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under the Act, the applicant must be a party to the adversary 
adjudication for which it seeks an award. The term party is defined in 5 
U.S.C. 551(3). The applicant must show that it meets all conditions of 
eligibility set out in this subpart and in subpart B.
    (b) The types of eligible applicants are as follows:
    (1) An individual with a net worth of not more than $2 million;
    (2) The sole owner of an unincorporated business who has a net worth 
of not more than $7 million, including both personal and business 
interests, and not more than 500 employees;
    (3) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), 
with not more than 500 employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act, 12 U.S.C. 1141j(a), with not more than 500 
employees; or
    (5) Any other partnership, corporation, association, unit of local 
government, or organization with a net worth of not more than $7 million 
and not more than 500 employees.
    (c) For the purpose of eligibility, the net worth and number of 
employees of an applicant shall be determined as of the date the 
proceeding was initiated. For the purpose of eligibility of applicants 
before the HUD Board of Contract Appeals, the net worth and number of 
employees of an applicant shall be determined as of the date the 
applicant filed its appeal under 41 U.S.C. 606.
    (d) An applicant who owns an unincorporated business will be 
considered as an individual rather than a sole owner of an 
unincorporated business if the issues on which the application prevails 
are related primarily to personal interests rather than to business 
interests.
    (e) The employees of an applicant include all persons who regularly 
perform services for remuneration for the applicant, under the 
applicant's direction and control. Part-time employees shall be included 
on a proportional basis.
    (f) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interests of 
the applicant, or any corporation or other entity of which the applicant 
directly or indirectly owns or controls a majority of the voting shares 
or other interest, will be considered an affiliate for purposes of this 
part, unless the adjudicative officer determines that such treatment 
would be unjust and contrary to the purposes of the Act in light of the 
actual relationship between the affiliated entities. In addition, the 
adjudicative officer may determine that financial relationshsips of the 
applicant other than those described in this paragraph constitute 
special circumstances that would make an award unjust.
    (g) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.



Sec. 14.125  Standards for awards.

    (a) A prevailing applicant may receive an award for fees and 
expenses incurred in connection with a proceeding, or in a significant 
and discrete substantive portion of the proceeding, unless the position 
of the agency over which the applicant has prevailed was substantially 
justified. The position of

[[Page 141]]

the agency includes, in addition to the position taken by the agency in 
the adversary adjudication, the action or failure to act by the agency 
upon which the adversary adjudication is based. The burden of proof that 
an award should not be made to an ineligible prevailing applicant 
because the agency's position was substantially justified is on the 
agency counsel, who may avoid an award by showing that its position was 
reasonable in law and fact.
    (b) An award will be reduced or denied if the applicant has unduly 
or unreasonably protracted the proceeding, if the applicant has 
falsified the application (including documentation) or net worth exhibit 
or if special circumstances make the award sought unjust.



Sec. 14.130  Allowable fees and expenses.

    (a) No award for the fee of an attorney or agent under these rules 
may exceed $75.00 per hour. However, an award may also include the 
reasonable expenses of the attorney, agent or witness as a separate 
item, if the attorney, agent or witness ordinarily charges clients 
separately for such expenses.
    (b) In determining the reasonableness of the fee sought for an 
attorney, agent or expert witness, the adjudicative officer shall 
consider the following:
    (1) If the attorney, agent or witness is in private practice, his or 
her customary fee for similar services, or, if an employee of the 
applicant, the fully allocated cost of the services;
    (2) The prevailing rate for the kind and quality of services 
furnished in the community in which the attorney, agent or witness 
ordinarily performs services;
    (3) The time actually spent in the representation of the applicant;
    (4) The time reasonably spent in the light of the difficulty or 
complexity of the issues in the proceeding; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (c) The reasonable cost of any study, analysis, engineering report, 
test, project, or similar matter prepared on behalf of a party may be 
awarded, to the extent that the charge for the services does not exceed 
the prevailing rate for similar services, and the study or other matter 
was necessary for preparation of the applicant's case.



Sec. 14.135  Rulemaking on maximum rates for attorney fees.

    Any person may file with the Department a petition for rulemaking to 
increase the maximum rate for attorney fees as provided in 5 U.S.C. 
504(b)(1)(A)(ii), in accordance with 24 CFR part 10. The petition should 
identify the rate the petitioner believes the Department should 
establish and the types of proceedings in which the rate should be used. 
It should also explain fully the reasons why the higher rate is 
warranted. The Department will respond to the petition in accordance 
with 24 CFR 10.20(b).



Sec. 14.140  Awards against other agencies.

    If an applicant is entitled to an award because it prevails over 
another agency of the United States that participates in a proceeding 
before the Department and takes a position that is not substantially 
justified, the award or an appropriate portion of the award shall be 
made against that agency.



             Subpart B--Information Required From Applicants



Sec. 14.200  Contents of application.

    (a) An application for an award of fees and expenses under the Act 
shall identify the applicant and the proceeding for which an award is 
sought. The application shall show that the applicant has prevailed and 
identify the position of the Department or other agencies that the 
applicant alleges was not substantially justified. Unless the applicant 
is an individual, the application shall also state the number of 
employees of the applicant and describe briefly the type and purpose of 
its organization or business.
    (b) The application shall also include a statement that the 
applicant's net worth does not exceed $2 million (if an individual) or 
$7 million (for all other applicants, including their affiliates). 
However, an applicant may omit this statement if:
    (1) It attaches a copy of a ruling by the Internal Revenue Service 
that it qualifies as an organization described

[[Page 142]]

in section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), 
or, in the case of a tax-exempt organization not required to obtain a 
ruling from the Internal Revenue Service on its exempt status, a 
statement that describes the basis for the applicant's belief that it 
qualifies under such section; or
    (2) It states that it is a cooperative association as defined in 
section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 1141j(a).
    (c) If the applicant is a partnership, corporation, association, or 
organization, or a sole owner of an unincorporated business, the 
applicant shall state that it did not have more than 500 employees at 
the time the proceeding was initiated, giving the number of its 
employees and describing briefly the type and purpose of its 
organization or business.
    (d) The application shall also itemize the amount of fees and 
expenses for which an award is sought.
    (e) The application also may include any other matters that the 
applicant wishes the Department to consider in determining whether and 
in what amount an award should be made.
    (f) The application shall be signed by the applicant or an 
authorized officer with respect to the eligibility of the applicant and 
by the attorney of the applicant with respect to fees and expenses 
sought. The application shall contain or be accompanied by a written 
verification under oath or affirmation under penalty of perjury that the 
information provided in the application and all accompanying material is 
true and complete to the best of the applicant's or authorized officer's 
information and belief.

(Approved by the Office of Management and Budget under control number 
2510-0001)



Sec. 14.205  Net worth exhibit.

    (a) Each applicant except a qualified tax-exempt organization or a 
qualified cooperative association must submit with its application a 
detailed exhibit showing the net worth of the applicant and any 
affiliates (as defined in Sec. 14.120(f) of this part) when the 
proceeding was initiated. The exhibit may be in any form convenient to 
the applicant that provides full disclosure of the applicant's and its 
affiliates' assets and liabilities, and is sufficient to determine 
whether the applicant qualifies under the standards of the Act and this 
part. The adjudicative officer may require an applicant to file 
additional information to determine its eligibility for an award.
    (b) The net worth exhibit shall describe any transfers of assets 
from, or obligations incurred by, the applicant or any affiliate, 
occurring in the one-year period before the date on which the proceeding 
was initiated, that reduced the net worth of the applicant and its 
affiliates below the applicable net worth ceiling. If there were no such 
transactions, the applicant shall so state.
    (c) Ordinarily, the net worth exhibit will be included in the public 
record of the proceeding. However, an applicant that objects to public 
disclosure of information in any portion of the exhibit and believes 
there are legal grounds for withholding it from disclosure may submit 
that portion of the exhibit directly to the adjudicative officer in a 
sealed envelope labeled ``Confidential Financial Information,'' 
accompanied by a motion to withhold the information from public 
disclosure. The motion shall describe the information sought to be 
withheld and explain, in detail, why it falls within one or more of the 
specific exemptions from mandatory disclosure under the Freedom of 
Information Act (5 U.S.C. 552(b) (1)-(9)), why public disclosure of the 
information would adversely affect the applicant, and why disclosure is 
not required in the public interest. The material in question shall be 
served on counsel representing the agency against which the applicant 
seeks an award, but need not be served on any other party to the 
proceeding. If the adjudicative officer finds that the information 
should not be withheld from disclosure, it shall be placed in the public 
record of the proceeding. Otherwise, any request to inspect or copy the 
exhibit shall be disposed of in accordance with the Department's 
established procedures under the Freedom of Information Act, 24 CFR part 
15. In either case, disclosure shall be subject to the provisions of the 
Privacy Act of

[[Page 143]]

1974, 5 U.S.C. 552a, and the Department's procedures implementing the 
Privacy Act of 1974 at 24 CFR part 16.

(Approved by the Office of Management and Budget under control number 
2510-0001)



Sec. 14.210  Documentation of fees and expenses.

    (a) The application shall be accompanied by full and itemized 
documentation of the fees and expenses, including the cost of any study, 
analysis, engineering report, test, project or similar matter, for which 
an award is sought.
    (b) The documentation shall include an affidavit from any attorney, 
agent or expert witness representing or appearing in behalf of the 
party, stating the actual time expended and the rate at which fees and 
other expenses were computed and describing the specific services 
performed.
    (c) The documentation shall also include a description of any 
expenses for which reimbursement is sought and a statement of the 
amounts paid and payable by the applicant or by any other person or 
entity for the services provided. Vouchers, receipts, logs, or other 
substantiation for any expenses paid or payable shall be provided.
    (d) The adjudicative officer may require the applicant to provide 
additional substantiation for any expenses claimed.

(Approved by the Office of Management and Budget under control number 
2510-0001)



Sec. 14.215  When an application may be filed.

    (a) An application may be filed whenever the applicant has prevailed 
in the proceeding or in a significant and discrete substantive portion 
of the proceeding, but in no case later than 30 days after the 
Department's final disposition of the proceeding.
    (b) For purposes of this rule, final disposition means the date on 
which a decision or order disposing of the merits of the proceeding or 
any other complete resolution of the proceeding, such as a settlement of 
voluntary dismissal, become final and unappealable, both within the 
Department and to the courts.
    (c) If review or reconsideration (under HUD Board of Contract 
Appeals Rule 29, 24 CFR 20.10) is sought or taken of a decision as to 
which an applicant believes it has prevailed, proceedings for the award 
of fees shall be stayed pending final disposition of the underlying 
controversy. When the United States appeals the underlying merits of an 
adversary adjudication to a court, no decision on an application for 
fees and other expenses in connection with that adversary adjudication 
shall be made until a final and unreviewable decision is rendered by the 
court on the appeal or until the underlying merits of the case have been 
finally determined pursuant to the appeal.



           Subpart C--Procedures for Considering Applications



Sec. 14.300  Jurisdiction of adjudicative officer.

    Any provision in the Department's rules and regulations other than 
this part which limits or terminates the jurisdiction of an adjudicative 
officer upon the effective date of his or her decision in the underlying 
proceeding shall not in any way affect his or her jurisdiction to render 
a decision under this part.



Sec. 14.305  Filing and service of documents.

    Any application for an award or other pleading or document related 
to an application shall be filed and served on all parties to the 
proceeding in the same manner as other pleadings in the proceeding, 
except as provided in Sec. 14.205(c) for confidential financial 
information.



Sec. 14.310  Answer to application.

    (a) Within 30 days after service of an application, agency counsel 
may file an answer to the application. Agency counsel may request an 
extension of time for filing. If agency counsel fails to answer or 
otherwise fails to contest or settle the application, the adjudicative 
officer, upon a satisfactory showing of entitlement by the applicant, 
may make an award for the applicant's fees and other expenses under the 
Act.
    (b) If agency counsel and the applicant believe that the issues in 
the fee application can be settled, they may jointly file a statement of 
their intent

[[Page 144]]

to negotiate a settlement. The filing of this statement shall extend the 
time for filing an answer for an additional 30 days, and further 
extensions may be granted by the adjudicative officer upon request by 
agency counsel and the applicant.
    (c) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of agency 
counsel's position. If the answer is based on any alleged facts not 
already in the record of the proceeding, agency counsel shall include 
with the answer either supporting affidavits or a request for further 
proceedings under Sec. 14.325.



Sec. 14.315  Comments by other parties.

    Any party to a proceeding other than the applicant and agency 
counsel may file comments on an application within 30 days after it is 
served, or on an answer within 15 days after it is served. A commenting 
party may not participate further in proceedings on the application 
unless the adjudicative officer determines that the public interest 
requires such participation in order to permit full exploration of 
matters raised in the comments.



Sec. 14.320  Settlement.

    The applicant and agency counsel may agree on a proposed settlement 
of the award before final action on the application, either in 
connection with a settlement of the underlying proceeding, or after the 
underlying proceeding has been concluded, in accordance with the 
settlement procedure applicable to the underlying proceeding. If a 
prevailing party and agency counsel agree on a proposed settlement of an 
award before an application has been filed, the application shall be 
filed with the proposed settlement.



Sec. 14.325  Extensions of time and further proceedings.

    (a) The adjudicative officer on motion and for good cause shown may 
grant extensions of time other than for filing an application for fees 
and expenses after final disposition in the adversary adjudication.
    (b) Ordinarily, the determination of an award will be made on the 
basis of the written record. However, on request of either the applicant 
or agency counsel, or on his or her own initiative, the adjudicative 
officer may order further proceedings, such as an informal conference, 
oral argument, additional written submissions, or as to issues other 
than substantial justification (such as the applicant's eligibility or 
substantiation of fees and expenses), pertinent discovery or an 
evidentiary hearing. Such further proceedings shall be held only when 
necessary for full and fair resolution of the issues arising from the 
application, and shall be conducted as promptly as possible. Whether or 
not the position of the agency was substantially justified shall be 
determined on the basis of the administrative record, as a whole, which 
is made in the adversary adjudication for which fees and other expenses 
are sought.
    (c) A request that the adjudicative officer order further 
proceedings under this section shall specifically identify the 
information sought or the disputed issues and shall explain why the 
additional proceedings are necessary to resolve the issues.



Sec. 14.330  Decision.

    The adjudicative officer shall issue an initial decision on the 
application within 30 days after completion of proceedings on the 
application. The decision shall include written findings and conclusions 
on such of the following as are relevant to the decision:
    (a) The applicant's status as a prevailing party;
    (b) The applicant's qualification as a party under 5 U.S.C. 
504(b)(1)(B);
    (c) Whether the agency's position was substantially justified;
    (d) Whether special circumstances make an award unjust;
    (e) Whether the applicant during the course of the proceedings 
engaged in conduct that unduly and unreasonably protracted the final 
resolution of the matter in controversy; and
    (f) The amounts, if any, awarded for fees and other expenses, with 
reasons for any difference between the amount requested and the amount 
awarded.

If the applicant has sought an award against more than one agency, the 
decision shall allocate responsibility for payment of any award made 
among the

[[Page 145]]

agencies, and shall explain the reasons for the allocation made.



Sec. 14.335  Departmental review.

    (a) Either the applicant or agency counsel may seek review of the 
initial decision on the fee application, or the Secretary (or his or her 
delegate, if any) may decide to review the decision on his or her own 
initiative, in accordance with the Department's review or appeals 
procedures applicable to the underlying proceeding. If neither the 
applicant nor agency counsel seeks review and the Secretary (or his or 
her delegate, if any) does not take review on his or her own initiative, 
the initial decision on the application shall become a final decision of 
the Department in the same manner as a decision in the underlying 
proceeding becomes final. Whether to review a decision is a matter 
within the discretion of the Secretary (or his or her delegate, if any). 
If review is taken, the Department will issue a final decision on the 
application or remand the application to the adjudicative officer for 
further proceedings.
    (b) Either party may seek reconsideration of the decision on the fee 
application in accordance with Rule 29, 24 CFR 20.10.



Sec. 14.340  Judicial review.

    Judicial review of final departmental decisions on awards may be 
sought as provided in 5 U.S.C. 504(c)(2).



Sec. 14.345  Payment of award.

    An applicant seeking payment of an award shall submit a copy of the 
final decision granting the award to: Director, Office of Finance and 
Accounting, Room 2202, Department of Housing and Urban Development, 
Washington, DC 20410, with a copy to: Associate General Counsel for 
Equal Opportunity and Administrative Law, Room 10244, Department of 
Housing and Urban Development, Washington, DC 20410. A statement that 
review of the underlying decision is not being sought in the United 
States courts, or that the process for seeking review of the award, if 
initiated, has been completed, must also be included. The agency will 
pay the amount awarded to the applicant within 60 days, unless judicial 
review of the award or of the underlying decision of the adversary 
adjudication has been sought by the applicant or any other party to the 
proceeding.



PART 15--TESTIMONY, PRODUCTION AND DISCLOSURE OF MATERIAL OR INFORMATION BY HUD EMPLOYEES--Table of Contents




                      Subpart A--Purpose and Policy

Sec.
15.1  Definitions.
15.2  Purpose and applicability.
15.3  Statement of policy.

             Subpart B--Production and Disclosure of Records

15.11  Publication in the Federal Register.
15.12  Materials not published in Federal Register.
15.13  Records produced upon request when reasonably described.

                          Subpart C--Exemptions

15.14  Fees.
15.15  Fees to be charged--categories of requesters.
15.16  Review of records, aggregating requests and waiving or reducing 
          fees.
15.17  Charges for interest and for unsuccessful searches; Utilization 
          of Debt Collection Act.
15.18  Advance payments.
15.21  Exemptions authorized by 5 U.S.C. 552.

Subpart D [Reserved]

         Subpart E--Procedures for Requesting Access to Records

15.41  Requests for records.
15.42  Time limitations.

        Subpart F--Disclosure of Records and Refusal To Disclose

15.51  Authority to release records or copies.
15.52  Authority to deny requests for records.
15.54  Business information.

   Subpart G--Administrative Review of Denial of Requests for Records

15.61  Administrative appeal.

 Subpart H--Production in Response to Subpoenas or Demands of Courts or 
                            Other Authorities

15.71  Purpose and scope.

[[Page 146]]

15.72  Production or disclosure prohibited unless approved by the 
          Secretary.
15.73  Procedure in the event of a demand for production or disclosure.
15.74  Procedure in the event of an adverse ruling.

Subpart I--Testimony of Employees of the Department in Legal Proceedings

15.81  Purpose.
15.82  Testimony in proceedings in which the United States is a party.
15.83  Legal proceedings among private litigants; general rule.
15.84  Legal proceedings among private litigants; subpoenas.
15.85  Legal proceedings among private litigants; expert or opinion 
          testimony.

   Subpart J--Processing Request for Declassification and Release of 
                           Classified Material

15.91  Authority for release or denial of classified material.

    Authority: 5 U.S.C. 552; 42 U.S.C. 3535(d).

    Source: 40 FR 48123, Oct. 14, 1975, unless otherwise noted.



                      Subpart A--Purpose and Policy



Sec. 15.1  Definitions.

    As used in this part.

    Editorial Note: At 61 FR 5203, Feb. 9, 1996, in Sec. 15.1, the 
following introductory text was added; however, introductory text 
already exists.
    The terms Department, Secretary, and Organizational unit are defined 
in 24 CFR part 5.

    Act means section 552 of title 5 U.S.C., as amended by Pub. L. 90-
23, 81 Stat. 54, June 5, 1967, and Pub. L. 93-502, 88 Stat. 1561, 
November 21, 1974.
    Person means person as defined in 5 U.S.C. 551(2) to include 
corporations and organizations as well as individuals.
    Information center means library, reading room, desk, or other 
facility, or any combination of places established and maintained by the 
Department, where the public may request and obtain information and 
records concerning the Department's operations and business.
    Legal proceeding includes any proceeding before a court of law or 
other authority, i.e., administrative board or commission, hearing 
officer, arbitrator or other body conducting a quasi-judicial or 
legislative proceeding.
    Legal proceeding in which the United States is a party means any 
legal proceeding including as a named party the United States, the 
Department of Housing and Urban Development, or any other Federal 
executive or administrative agency or department, or any official 
thereof in his official capacity.
    Legal proceeding among private litigants means any legal proceeding 
in which the United States is not a party.

[40 FR 48123, Oct. 14, 1975, as amended at 52 FR 12160, Apr. 15, 1987; 
60 FR 11903, Mar. 3, 1995; 61 FR 5203, Feb. 9, 1996]



Sec. 15.2  Purpose and applicability.

    (a) This part contains the regulations of the Department 
implementing 5 U.S.C. 552 and prescribing the Department's policies and 
procedures with respect to testimony of its employees as witnesses in 
legal proceedings. It informs the public about where and how the 
Department's records and information may be obtained from its 
organizational units as defined in Sec. 15.1(d), and about the 
Department's policy concerning allowing its employees to testify in 
legal proceedings.
    (b) All subparts of part 15, other than subpart I, apply to all 
organizational units, except that their applicability to the Office of 
Inspector General is subject to the provisions of parts 2002 and 2004 of 
this title, and their applicability to the Office of Interstate Land 
Sales Registration is subject to the provisions of Sec. 1700.30 of this 
title. Subpart I applies to all organizational units other than the 
Office of Inspector General.

[52 FR 12160, Apr. 15, 1987]



Sec. 15.3  Statement of policy.

    The Department's policy is one of full and responsible disclosure of 
its identifiable records and information consistent with such competing 
public interests concerning the national security, personal privacy, and 
obligations of confidentiality as are recognized by 5 U.S.C. 552.

[[Page 147]]



             Subpart B--Production and Disclosure of Records



Sec. 15.11  Publication in the Federal Register.

    Subject to the exemptions in Sec. 15.21, the Department shall 
separately state and currently publish in the Federal Register for the 
guidance of the public:
    (a) Descriptions of its central and field organization and the 
established places at which, the employees from whom and the methods 
whereby, the public may obtain information, make submittals or requests, 
or obtain decisions;
    (b) Statements of the general course and method by which its 
functions are channeled and determined, including the nature and 
requirements of all formal and informal procedures available;
    (c) Rules of procedure, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports, or examinations;
    (d) Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by the Department; and
    (e) Each amendment, revision, or repeal of the foregoing.

Except to the extent that a person has actual and timely notice of the 
terms thereof, no person shall in any manner be required to resort to or 
be adversely affected by any matter required to be published in the 
Federal Register and not so published. For purposes of this section, 
matter which is reasonably available to the class of persons affected 
thereby shall be deemed published in the Federal Register when 
incorporated by reference therein with the approval of the Director of 
the Office of the Federal Register, as provided in 1 CFR part 51.



Sec. 15.12  Materials not published in Federal Register.

    (a) Subject to the exemptions in Sec. 15.21, the Department, in 
accordance with this part, shall make available for public inspection 
and copying:
    (1) Final opinions, including concurring and dissenting opinions, as 
well as orders, made in the adjudication of cases;
    (2) Statements of policy and interpretations which have been adopted 
by the Department and are not published in the Federal Register; and
    (3) Administrative staff manuals and instructions to staff that 
affect a member of the public.
    (b) To prevent a clearly unwarranted invasion of personal privacy, 
the Department may delete identifying details when it makes available or 
publishes any material. Whenever such deletions are required, the record 
or copy will be made available with the space formerly occupied by such 
identifying details left blank, and the justification for the deletion 
shall be explained fully in writing.
    (c) The Department shall also maintain and make available for public 
inspection and copying current indexes providing identifying information 
for the public as to any matter issued, adopted, or promulgated after 
July 4, 1967, and required by this section to be made available or 
published. The Department shall promptly publish quarterly and 
distribute (by sale or otherwise) copies of each index or supplements 
thereto unless it determines by order published in the Federal Register 
that the publication would be unnecessary and impracticable, in which 
case the Department shall nonetheless provide copies of such index on 
request at a cost not to exceed the direct cost of duplication.



Sec. 15.13  Records produced upon request when reasonably described.

    (a) The procedures for requesting access to records are set forth in 
subpart E of this part.
    (b) When a request is made that reasonably describes a record of the 
Department that has been stored in a record center of the National 
Archives and Record Administration, this record will be requested from 
the Records Center by the Department and made available to the requester 
if the record would otherwise be available under this part. Records 
accessioned by the National Archives will not be made available by the 
Department, but may be requested directly from the National Archives.

[[Page 148]]

    (c) Every effort will be made to make a record in use by the staff 
of the Department available when requested, and such availability will 
be deferred only to the extent necessary to avoid serious interference 
with the business of the Department.
    (d) Copies of a requested record need not be furnished if the record 
is published in the Federal Register or is available for purchase from 
the Superintendent of Documents of the Government Printing Office. Such 
records may, however, be examined in one of the Department's information 
centers.

[40 FR 48123, Oct. 14, 1975, as amended at 60 FR 11903, Mar. 3, 1995]



                          Subpart C--Exemptions



Sec. 15.14  Fees.

    (a) Copies of records. HUD will charge $0.15 per page for 
photocopies of documents. For copies prepared by computer, HUD will 
charge the actual cost of the tape or disk plus $25.00 per minute for 
central processing unit (CPU) time, so as to recoup reasonable direct 
costs of duplicating. For other methods of reproduction or duplication 
of documents, HUD will charge the actual direct costs of producing the 
documents.
    (b) Manual searches for records. HUD will charge $16.35 per hour per 
person for searches/reviews performed by clerical staff, and $37.00 per 
hour per person for searches/reviews performed by professional staff. 
Charges for search/review time will be billed in 1/2 hour segments.
    (c) Computer searches for records. HUD will charge $35.00 per hour 
for computer programming relating to a search, plus $25.00 per minute 
for central processing unit (CPU) time.
    (d) Contract services. HUD will contract with private sector sources 
to locate, reproduce and disseminate records in response to FOIA 
requests when that is the most efficient and least costly method. When 
doing so, however, HUD will ensure that the ultimate cost to the 
requester is no greater than it would be if HUD itself had performed 
these tasks. In no case will HUD contract out responsibilities which the 
FOIA provides that HUD alone may discharge, such as determining the 
applicability of an exemption, or determining whether to waive or reduce 
fees. HUD will ensure that when documents that would be responsive to a 
request are maintained for distribution by agencies operating statutory-
based fee schedule programs such as the National Technical Information 
Service, HUD will inform requesters of the steps necessary to obtain 
records from those sources. Information provided routinely in the normal 
course of business will be provided at no charge.
    (e) Restrictions on assessing fees. HUD will provide the first 100 
pages of duplication and the first two hours of search time, manual or 
computer, free of charge to noncommercial use requesters. There is no 
charge to noncommercial use requesters for time needed for review, as 
defined in paragraph (g)(4) of this section. Review time is chargeable 
only to commercial use requesters. HUD will only assess fees for amounts 
in excess of $25.00.
    (f) Payment of fees. Payment of fees under this section and under 
Sec. 15.16(a) shall be made by check or money order, payable to the 
Treasurer of the United States. Cash payments may be made in person at 
Headquarters or the Field Offices. The fees shall be sent to the Office 
of Executive Secretariat at Headquarters or to the appropriate Field 
Office.
    (g) Definitions. As used in this subpart:
    (1) Direct costs means those expenditures which HUD actually incurs 
in searching for and duplicating (and, in the case of commercial 
requesters, reviewing) documents to respond to a FOIA request. Direct 
costs include, for example, the salary of the employee performing work 
(the basic rate of pay for the employee plus 16 percent of that rate to 
cover benefits) and the cost of operating duplicating machinery. Not 
included in direct costs are overhead expenses such as costs of space, 
and heating or lighting the facility in which the records are stored.
    (2) Search includes all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within documents. Such activity is 
distinguished from review of material in

[[Page 149]]

order to determine whether the material is exempt from disclosure.
    (3) Duplication means the process of making a copy of a document 
necessary to respond to a FOIA request. Such copies can take the form of 
paper copy, microform, audio-visual materials, or machine readable 
documentation (e.g., magnetic tape or disk), among others.
    (4) Review means the process of examining a document located in 
response to a request that is for a commercial use to determine whether 
any portion of it may be withheld, excising portions to be withheld and 
otherwise preparing the document for release. Review does not include 
time spent resolving general legal or policy issues regarding the 
application of exemptions.

[53 FR 37547, Sept. 27, 1988, as amended at 60 FR 11903, Mar. 3, 1995]



Sec. 15.15  Fees to be charged--categories of requesters.

    There are four categories of FOIA requesters: Commercial use 
requesters; educational and non-commercial scientific institutions; 
representatives of the news media; and all other requesters. Specific 
levels of fees are prescribed for each of these categories:
    (a) Commercial use requesters. (1) HUD will assess charges which 
recover the full direct costs of searching for, reviewing for release, 
and duplicating records sought for commercial use. Requesters must 
reasonably describe the records sought. Commercial use requesters are 
not entitled to two hours of free search time or 100 free pages of 
reproduction of documents.
    (2) Commercial use refers to a request from or on behalf of one who 
seeks information for a use or purpose that furthers the commercial, 
trade, or profit interests of the requester or the person on whose 
behalf the request is made. In determining whether a requester properly 
belongs in this category, HUD must determine the use to which a 
requester will put the documents requested. Moreover, where HUD has 
reasonable cause to doubt the use to which a requester will put the 
records sought, or where that use is not clear from the request itself, 
HUD will seek additional clarification before assigning the request to a 
specific category.
    (b) Educational and non-commercial scientific institution 
requesters. (1) HUD will provide documents to educational and non-
commercial scientific institutions for the cost of reproduction alone, 
excluding charges for the first 100 pages. To be eligible for inclusion 
in this category, requesters must show that the request is being made as 
authorized by and under the auspices of a qualifying institution and 
that the records are not sought for a commercial use, but are sought for 
furtherance of scholarly (if the request is from an educational 
institution) or scientific (if the request is from a non-commerical 
scientific institution) research. Requesters must reasonably describe 
the records sought.
    (2) Educational institution means a preschool, a public or private 
elementary or secondary school, an institution of graduate higher 
education, an institution of undergraduate higher education, an 
institution of professional education, and an institution of vocational 
education, which operates a program or programs of scholarly research.
    (3) Non-commercial scientific institution means an institution that 
is not operated on a commercial basis as that term is referenced in 
Sec. 15.15(a) and which is operated solely for the purpose of conducting 
scientific research the results of which are not intended to promote any 
particular product or industry.
    (c) Requesters who are representatives of the news media. (1) HUD 
will provide documents to representatives of the news media for the cost 
of reproduction alone, excluding charges for the first 100 pages. In 
reference to this class of requester, a request for records supporting 
the news dissemination function of the requester shall not be considered 
to be a request that is for a commercial use. Requesters must reasonable 
describe the records sought.
    (2) Representative of the news media means any person actively 
gathering news for an entity that is organized and operated to publish 
or broadcast news to the public. The term news means information that is 
about current events or that would be of current interest to the public. 
Examples of

[[Page 150]]

news media entities include television or radio stations broadcasting to 
the public at large, and publishers of periodicals (but only in those 
instances when they can qualify as disseminators of news) who make their 
products available for purchase or subscription by the general public. 
Freelance journalists may be regarded as working for a news organization 
if they can demonstrate a solid basis for expecting publication through 
that organization, even though not actually emloyed by it. A publication 
contract would be the clearest proof, but HUD may also look to the past 
publication record of a requester in making this determination.
    (d) All other requesters. HUD will charge requesters who do not fit 
into any of the categories above fees which recover the full reasonable 
direct cost of searching for and reproducing records that are responsive 
to the request, except that the first 100 pages of reproduction and the 
first two hours of search time shall be furnished without charge. 
Requests from subjects for records about themselves filed in agencies' 
systems of records will continue to be treated under the fee provisions 
of the Privacy Act of 1974 which permit fees only for reproduction. 
Requesters must reasonably describe the records sought.

[53 FR 37548, Sept. 27, 1988]



Sec. 15.16  Review of records, aggregating requests and waiving or reducing fees.

    (a) Review of records. Only requesters who are seeking documents for 
commercial use may be charged for time HUD spends reviewing records to 
determine whether they are exempt from mandatory disclosure. Charges may 
be assessed only for the initial review; i.e., the review undertaken the 
first time HUD analyzes the applicability of a specific exemption to a 
particular record or portion of a record. HUD will not charge for review 
at the administrative appeal level of an exemption already applied. 
However, records or portions of records withheld in full under an 
exemption which is subsequently determined not to apply may be reviewed 
again to determine the applicability of other exemptions not previously 
considered. The costs for such a subsequent review would be properly 
assessable. Review time will be assessed at the same rates established 
for search time in Sec. 15.14.
    (b) Aggregating requests. A requester may not file multiple requests 
at the same time, each seeking portions of a document or documents, 
solely in order to avoid payment of fees. When HUD reasonably believes 
that a requester or a group of requesters acting in concert, is 
attempting to break a request down into a series of requests for the 
purpose of evading the assessment of fees, HUD may aggregate any such 
requests and charge accordingly.
    (c) Waiving or reducing fees. HUD will furnish documents without 
charge or at reduced charge if disclosure of the information is in the 
public interest because it is likely to contribute significantly to 
public understanding of the operations or activities of the government 
and is not primarily in the commercial interest of the requester. The 
official authorized to grant access to records may waive or reduce the 
applicable fee where requested. The determination not to waive or reduce 
the fee will be subject to administrative review as provided in 
Sec. 15.61 after the decision on the request for access has been made. 
Six factors shall be used in determining whether the requirements for a 
fee waiver or reduction are met. These factors are as follows:
    (1) The subject of the request: Whether the subject of the requested 
records concerns the operations or activities of the government;
    (2) The informative value of the information to be disclosed: 
Whether the disclosure is likely to contribute to an understanding of 
government operations or activities;
    (3) The contribution to an understanding of the subject by the 
general public likely to result from disclosure: Whether disclosure of 
the requested information will contribute to public understanding;
    (4) The significance of the contribution to public understanding: 
Whether the disclosure is likely to contribute significantly to public 
understanding of government operations or activities;
    (5) The existence and magnitude of a commercial interest: Whether 
the requester has a commercial interest that

[[Page 151]]

would be furthered by the requested disclosure; and, if so
    (6) The primary interest in disclosure: Whether the magnitude of the 
identified commercial interest of the requester is sufficiently large, 
in comparison with the public interest in disclosure, that disclosure is 
primarily in the commercial interest of the requester.

[53 FR 37549, Sept. 27, 1988]



Sec. 15.17  Charges for interest and for unsuccessful searches; Utilization of Debt Collection Act.

    (a) Charging interest. HUD will begin assessing interest charges on 
an upaid bill starting on the 31st day following the day on which the 
billing was sent. A fee received by HUD, even if not processed, will 
suffice to stay the accrual of interest. Interest will be at the rate 
prescribed in section 3717 of title 31 U.S.C. and will accrue from the 
date of the billing.
    (b) Charge for unsuccessful search. Ordinarily no charge for search 
time will be assessed when the records requested are not found or when 
the records located are withheld as exempt. However, if the requester 
has been notified of the esimated cost of the search time and has been 
advised specifically that the requested records may not exist or may be 
withheld as exempt, fees shall be charged.
    (c) Use of Debt Collection Act of 1982. When a requester has failed 
to pay a fee charged in a timely fashion (i.e., within 30 days of the 
date of the billing), HUD may, under the authority of the Debt 
Collection Act and part 17, subpart C of this title, use consumer 
reporting agencies and collection agencies, where appropriate, to 
recover the indebtedness owed the Department.

[53 FR 37549, Sept. 27, 1988]



Sec. 15.18  Advance payments.

    (a) HUD may not require a requester to make an advance payment, 
i.e., payment before work is commenced or continued on a request, 
unless:
    (1) HUD estimates or determines that allowable charges that a 
requester may be required to pay are likely to exceed $250. Then, HUD 
will notify the requester of the likely cost and obtain satisfactory 
assurance of full payment where the requester has a history of prompt 
payment of FOIA fees, or require an advance payment of an amount up to 
the full estimated charges in the case of requesters with no history of 
payment; or
    (2) Where a requester has previously failed to pay a fee charged in 
a timely fashion (i.e., within 30 days of the date of the billing), HUD 
may require the requester to pay the full amount owed plus any 
applicable interest as provided by Sec. 15.17(a) or demonstrate that he 
has, in fact, paid the fees, and to make an advance payment of the full 
amount of the estimated fee before HUD begins to process a new request 
or a pending request from that requester.
    (b) When HUD acts under paragraphs (a)(1) or (a)(2) of this section, 
the administrative time limits prescribed in subsection (a)(6) of the 
FOIA (i.e., 10 working days from receipt of initial requests and 20 
working days from receipt of appeals from initial denial, plus 
permissible extensions of these time limits) will begin only after HUD 
has received fee payments described above.
    (c) Where it is anticipated that either the duplication fee 
individually, the search fee individually, or a combination of the two 
exceeds $25.00 over and above the free search time and duplication 
costs, where applicable, and the requesting party has not indicated in 
advance a willingness to pay so high a fee, the requesting party shall 
be promptly informed of the amount of the anticipated fee or such 
portion thereof as can readily be estimated. The notification shall 
offer the requesting party the opportunity to confer with agency 
representatives for the purpose of reformulating the request so as to 
meet that party's needs at a reduced cost.

[53 FR 37549, Sept. 27, 1988]



Sec. 15.21  Exemptions authorized by 5 U.S.C. 552.

    A requested record shall not be withheld from inspection or copying 
unless it both: Comes within one of the classes of records exempted by 5 
U.S.C. 552; and there is need in the public interest to withhold it. In 
determining the scope of the classes of records described in paragraph 
(a) of this section,

[[Page 152]]

the Attorney General's Memorandum on the Public Information Act, June 
1967, will be used as a guide.
    (a) The classes of records authorized to be exempted from disclosure 
by 5 U.S.C. 552 are those which concern matters that are:
    (1) Specifically authorized under criteria established by an 
Executive order to be kept secret in the interest of national defense or 
foreign policy and are in fact properly classified pursuant to such 
Executive order;
    (2) Related solely to the internal personnel rules and practices of 
the Department;
    (3) Specifically exempted from disclosure by statute;
    (4) Except as otherwise provided in paragraph (c) of this section, 
trade secrets and commercial or financial information obtained from a 
person and privileged or confidential;
    (5) Interagency or intra-agency memorandums or letters which would 
not be available by law to a party other than an agency in litigation 
with the Department;
    (6) Personnel and medical files and similar files the disclosure of 
which would constitute a clearly unwarranted invasion of personal 
privacy;
    (7) Records or information compiled for law enforcement purposes, 
but only to the extent that the production of such law enforcement 
records or information:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trial or an 
impartial adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a state, local or foreign agency or 
authority or any private institution which furnished information on a 
confidential basis, and, in the case of a record or information compiled 
by a criminal law enforcement authority in the course of a criminal 
investigation or by an agency conducting a lawful national security 
intelligence investigation, information furnished by a confidential 
source;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual.
    (8) Contained in or related to examination, operating, or condition 
reports prepared by, on behalf of, or for the use of the Department in 
connection with its responsibility for the regulation or supervision of 
financial institutions; or
    (9) Geological and geophysical information and data, including maps, 
concerning wells.
    (b) Any reasonably segregable portion of a record shall be provided 
to any person requesting such record after deletion of the portions 
which are exempt under this section.
    (c) Subject to the following conditions, financial and related 
information submitted by a mortgagor and contained in Form HUD-92410 
(Statement of Profit and Loss), or a HUD-approved substitute form that 
the mortgagor may have submitted, may be disclosed to eligible potential 
purchasers of HUD-held multifamily mortgages.
    (1) Information from Form HUD-92410 concerning a project may be made 
available in conjunction with the sale of a HUD-held mortgage covering 
that project conducted under the authority of sections 207 (k) and (l) 
of the National Housing Act, 12 U.S.C. 1713 (k) and (l), or section 
7(i)(3) of the Department of Housing and Urban Development Act, 42 
U.S.C. 3535(i)(3).
    (2) The release of this information by HUD to eligible potential 
purchasers shall be limited to the period specified by HUD for the 
mortgage sale.
    (3) Eligible potential purchasers who have received this information 
shall agree to keep the information confidential, to disclose the 
information only to potential investors in the mortgage, to use the 
information for the sole purpose of their evaluation of the mortgage in 
connection with the mortgage sale, and to follow disclosure procedures 
for that sale that have been established by the Secretary.

[[Page 153]]

    (4) Any disclosure by eligible potential purchasers to potential 
investors in the mortgage shall be limited to the period specified by 
HUD for the mortgage sale. Similar, potential investors in the mortgage 
shall agree to keep the information confidential and to use the 
information for the sole purpose of their evaluation of the mortgage in 
connection with their investment decision. In addition, potential 
investors in the mortgage may not disclose the information to other 
entities, unless the disclosure is necessary for the investor's 
evaluation of the mortgage, is in accordance with disclosure procedures 
for the specific sale that have been established by the Secretary, and 
is limited to the period specified by HUD for the mortgage sale. Any 
potential purchaser is responsible for notifying potential investors in 
the mortgage who receive this information from that entity of the 
investors' obligations under this section.
    (5) Disclosure of information from Form HUD-92410 by an eligible 
potential purchaser or by a potential investor (who has received the 
information from a potential purchaser and has been notified by that 
entity of its obligations under paragraph (c)(3) of this section) that 
is not in accordance with this section is a violation of this regulation 
and may subject the entity making the unauthorized disclosure to 
administrative sanctions under 24 CFR part 24.

(Approved by the Office of Management and Budget under control number 
2502-0052)

[40 FR 48123, Oct. 14, 1975, as amended at 51 FR 44286, Dec. 9, 1986; 60 
FR 11903, Mar. 3, 1995]

Subpart D [Reserved]



         Subpart E--Procedures for Requesting Access to Records



Sec. 15.41  Requests for records.

    (a) Requests for copies of records may be made in person during 
normal business hours at information centers listed in Sec. 15.31 or by 
mail addressed to such centers. Although oral requests may be honored, a 
requester may be asked to submit his request in writing.
    (b) Each request must reasonably describe the desired record 
including the name, subject matter, and number or date, where possible, 
so that the record may be identified and located. In order to enable the 
Department to comply with the time limitations set forth in Sec. 15.42, 
the envelope containing a written request and the letter itself should 
both clearly indicate that the subject is a Freedom of Information Act 
request.
    (c) The request shall be accompanied by an agreement to pay a fee to 
be determined in accordance with Sec. 15.14. Under the circumstances 
enumerated in Sec. 15.18, the Department may refuse to furnish records 
before receipt of the appropriate fee. A requester may specify a limit 
for fees, above which the requester is not willing to pay without 
advance consultation with the Department.
    (d) Copies of available records shall be made as promptly as 
possible. Copying service shall be limited to not more than 10 copies of 
any single page. Records which are published or available for sale need 
not be reproduced.

[40 FR 48123, Oct. 14, 1975, as amended at 60 FR 11904, Mar. 3, 1995]



Sec. 15.42  Time limitations.

    (a) Upon receipt of a request for records, the appropriate office 
will determine within ten working days whether to comply with such 
requests. The office will either agree to provide the requested 
documents, or will notify the requester, in writing, of an adverse 
determination, the reasons therefor, and the right to appeal the denial 
to the:
    (1) General Counsel, with respect to a denial issued by the Office 
of the Executive Secretariat or by the offices in which there is a Field 
Assistant General Counsel; or
    (2) Field Assistant General Counsel, with respect to a denial issued 
by the Field Offices.
    (b) When a request for records is misdirected by the requester, the 
office receiving the request shall:
    (1) Promptly refer it to the appropriate office; and
    (2) Advise the requester that the time of receipt by the appropriate 
office will

[[Page 154]]

be the time of receipt for processing purposes.
    (c) A determination by the General Counsel or the Field Assistant 
General Counsel with respect to an appeal under Sec. 15.61 shall be made 
within 20 working days after receipt of the appeal, and shall be 
communicated to the appellant, in writing.
    (d) In unusual circumstances, the General Counsel, or the 
appropriate Field Assistant General Counsel, may extend the time limits 
prescribed in paragraphs (a) and (c) of this section, by written notice 
to the requester setting forth the reasons for the extension and the 
date on which a determination is expected to be dispatched. An extension 
shall not exceed ten working days. As used in this paragraph, unusual 
circumstances means that there is a need:
    (1) To search for and collect the requested records from field 
facilities or other establishments that are separate from the office 
processing the request;
    (2) To search for, collect, and examine appropriately a voluminous 
amount of separate and distinct records that are demanded in a single 
request; or
    (3) For consultation, which shall be conducted with all practicable 
speed, with another agency having a substantial interest in the 
determination of the request, or among two or more organizational units 
of the Department having a substantial interest in the subject matter of 
the request.

[60 FR 11904, Mar. 3, 1995]



        Subpart F--Disclosure of Records and Refusal To Disclose



Sec. 15.51  Authority to release records or copies.

    The Office of the Executive Secretariat in Headquarters and the FOIA 
liaisons in each Field Office are authorized to release copies of any 
Department records upon written request unless disclosure is clearly not 
appropriate under this part.

[60 FR 11904, Mar. 3, 1995]



Sec. 15.52  Authority to deny requests for records.

    The officers described in Sec. 15.51, or other official designated 
by the Secretary's Representative, may deny a request for a record only 
with the concurrence of the appropriate program counsel in Headquarters 
or counsel in the Field Offices. Any denial shall:
    (a) Be made in writing, describing the documents denied and, if 
fewer than 21, listing them specifically;
    (b) Contain a simple reason for the denial, stating the appropriate 
exemption used; and
    (c) Advise of the right to appeal the adverse determination, in 
accordance with Sec. 15.61, to the:
    (1) General Counsel, with respect to a denial issued by the Office 
of Executive Secretariat or by offices in which there is a Field 
Assistant General Counsel; and
    (2) Field Assistant General Counsel, with respect to a denial issued 
by Field Offices.

[60 FR 11904, Mar. 3, 1995]



Sec. 15.54  Business information.

    (a) In general. Business information provided to the Department by a 
submitter shall not be disclosed pursuant to a FOIA request except in 
accordance with this section.
    (b) Definitions. As used in this section:
    Business information means commercial or financial information 
provided to the Department by a submitter that arguably is protected 
from disclosure under Exemption 4 (42 U.S.C. 552(b)(4)) of the Act.
    Submitter means any person or entity who provides business 
information, directly or indirectly, to the Department. The term 
includes, but is not limited to, corporations, State governments, and 
foreign governments.
    (c) Designation of business information. A submitter's claim that 
certain information is confidential or proprietary should be supported 
by a statement or certification by an officer or authorized 
representative of the submitter that the information is, in fact, 
confidential or proprietary and has not been disclosed to the public. 
All information considered confidential or proprietary by a submitter 
should be clearly designated with a prominent stamp, typed legend, or 
other suitable form of notice, stating ``Confidential Treatment 
Requested by [insert name of submitter]'', which should appear on

[[Page 155]]

each page or segregable portion of the page. If such marking is 
impractical, a cover sheet prominently marked ``Confidential Treatment 
Requested by [insert name of submitter]'' should be securely attached to 
the information for which confidential treatment is requested. These 
designations shall be deemed to have expired 10 years after the date of 
the submission, unless the submitter requests, and provides reasonable 
justification for, a longer period of designation.
    (d) Notice to submitter. To the extent permitted by law, the 
Department shall provide a submitter with prompt written notice of a 
FOIA request or administrative appeal encompassing its business 
information, unless notice is excused under paragraph (h) of this 
section. Such notice shall afford the submitter an opportunity to object 
to disclosure pursuant to paragraph (f) of this section. The notice 
shall either describe the exact nature of the business information 
requested or provide copies of the records or portions thereof 
containing the business information. The Department will provide this 
notice whenever:
    (1) The information has been designated in good faith by the 
submitter as information deemed protected under Exemption 4; or
    (2) The Department has reason to believe that the information may be 
protected from disclosure under Exemption 4.
    (e) Notice to requester. At the same time the Department notifies 
the submitter, the Department shall also notify the requester that the 
request is subject to the provisions of this section and that the 
submitter is being afforded an opportunity to object to disclosure of 
the information.
    (f) Opportunity to object to disclosure. Through the notice 
described in paragraph (d) of this section, the Department shall afford 
a submitter or its designee 10 Federal working days to provide the 
Department a detailed written statement of the submitter's objection to 
disclosure of any portion of the information it submitted to the 
Department. Such statement shall specify all grounds for withholding any 
of the information and shall demonstrate why the information is a trade 
secret or commercial or financial information that is privileged or 
confidential. Conclusory statements that particular information would be 
useful to competitors or would impair sales, or similar statements, 
generally will not be considered sufficient to justify confidential 
treatment. Information provided by a submitter or its designee pursuant 
to this paragraph may itself be subject to disclosure under the FOIA.
    (g) Notice of intent to disclose. The Department shall consider 
carefully a submitter's objections and specific grounds for 
nondisclosure, before determining whether to disclose business 
information. If the Department decides to disclose business information 
over the objection of a submitter, the Department shall forward to both 
the submitter and the requester a written notice of intent to disclose. 
The written notice shall be forwarded 10 Federal working days before the 
specified disclosure date and shall include:
    (1) A statement of the reasons for which the submitter's disclosure 
objections were not sustained;
    (2) A description of the business information to be disclosed; and
    (3) A specified disclosure date.
    (h) Exceptions to the notice requirement. The notice requirements of 
paragraphs (d) and (g) of this section shall not apply if:
    (1) The Department determines that the information should not be 
disclosed;
    (2) The information has been published lawfully or has been made 
available officially to the public;
    (3) Disclosure of the information is required by law (other than the 
Act);
    (4) Disclosure of the information is required by a departmental 
regulation that:
    (i) Was adopted pursuant to notice and public comment;
    (ii) Specifies narrow classes of records submitted to the Department 
that are to be released under the FOIA; and
    (iii) Provides for notice in exceptional circumstances when the 
submitter provides, at the time the information is submitted or a 
reasonable time thereafter, written justification that disclosure of the 
information

[[Page 156]]

could reasonably be expected to cause substantial competitive harm;
    (5) The information requested was not designated by the submitter as 
exempt from disclosure in accordance with paragraph (c) of this section 
at the time of the submission of the information or a reasonable time 
thereafter, unless the Department has substantial reason to believe that 
the disclosure of the information would cause competitive harm; or
    (6) The designation made by the submitter in accordance with 
paragraph (c) of this section appears obviously frivolous. In such 
circumstances, the Department shall forward to the submitter, 10 Federal 
working days before a specified disclosure date, written notice of any 
final administrative decision to disclose business information.
    (i) Notice of FOIA lawsuit. Whenever a requester brings suit seeking 
to compel disclosure of business information, the Department shall 
promptly notify the submitter.
    (j) Determination of confidentiality. HUD will make no determination 
as to the validity of any request for confidentiality until a request 
for disclosure of the information is received.
    (k) Current mailing address for the submitter. Each submitter shall 
provide to the Department:
    (1) A mailing address for receipt of any notices under this section; 
and
    (2) Notice of any change of address.
    (l) Treatment of confidential information by HUD employees. (1) HUD 
officers and employees shall not, directly or indirectly, use or allow 
the use of business information obtained through or in connection with 
Government employment that has not been made available to the general 
public.
    (2) Except as otherwise provided in this section, HUD officers and 
employees may not disclose business information, except to other HUD 
officers or employees who are properly entitled to such information for 
the performance of their official duties.

[60 FR 11904, Mar. 3, 1995]



   Subpart G--Administrative Review of Denial of Requests for Records



Sec. 15.61  Administrative appeal.

    (a) Appeal shall be available only from a written denial of a 
request issued under Sec. 15.52, and only when the appeal is filed 
within 30 days of issuance of the denial. An appeal from a denial issued 
by the Office of Executive Secretariat or by offices in which there is a 
Field Assistant General Counsel must be mailed to the Assistant General 
Counsel for Training and Administrative Law, Room 10246, 451 Seventh 
Street, SW, Washington, DC, 20410. An appeal from a denial issued by a 
Field Office must be mailed to the appropriate Field Assistant General 
Counsel. An appeal must include a copy of the original request for 
records; a copy of the written denial of access to those records, and a 
statement of the reasons, circumstances, or arguments advanced in 
support of, or in opposition to, disclosure of the records. The envelope 
containing the appeal should be clearly marked as a Freedom of 
Information Act appeal, so that the Department can comply with the time 
limitations set forth in Sec. 15.42.
    (b) When an appeal is misdirected by the requester, the Office 
receiving the appeal shall:
    (1) Promptly refer it to the:
    (i) Assistant General Counsel for Training and Administrative Law, 
if the denial was issued by the Office of Executive Secretariat or by an 
office in which there is a Field Assistant General Counsel, or
    (ii) Appropriate Field Assistant General Counsel, if the denial was 
issued by a Field Office; and
    (2) Advise the appellant that the time of receipt for processing 
purposes will be the time the appeal is received by the appropriate 
office.
    (c) The appeal determination shall be in writing; constitute final 
administrative action by the Department; and, if the denial is upheld in 
full or in part, include notification of the right to judicial review.

[60 FR 11905, Mar. 3, 1995]

[[Page 157]]



 Subpart H--Production in Response to Subpoenas or Demands of Courts or 
                            Other Authorities



Sec. 15.71  Purpose and scope.

    This subpart contains the regulations of the Department concerning 
procedures to be followed when a subpoena, order, or other demand 
(hereinafter referred to in this subpart as a demand) of a court or 
other authority is issued for the production or disclosure of: (a) Any 
material contained in the files of the Department, (b) any information 
relating to material contained in the files of the Department, or (c) 
any information or material acquired by any person while such person was 
an employee of the Department as a part of the performance of his or her 
official duties or because of his or her official status. For purposes 
of this subpart, the term employee of the Department includes current 
and former officers and employees of the United States appointed by or 
subject to the supervision of the Secretary, but does not include 
officers and employees covered by part 2004 of this title. Also for 
purposes of this subpart, files of the Department do not include files 
of the Office of Inspector General covered by part 2004 of this title.

[49 FR 11160, Mar. 26, 1984, as amended at 60 FR 58456, Nov. 27, 1995]



Sec. 15.72  Production or disclosure prohibited unless approved by the Secretary.

    (a) Any demand of a court or other authority or any request to an 
employee of the Department to produce any material contained in the 
files of the Department, or to disclose any information relating to 
material contained in the files of the Department, or to disclose any 
information or produce any material acquired as a part of the 
performance of the employee's official duties or because of the 
employee's official status for use in a legal proceeding, shall state 
with particularity the material sought to be obtained or the information 
sought to be disclosed.
    (b) No employee of the Department shall comply with any such demand 
or request without the prior approval of the Secretary.
    (c) In determining whether to grant approval for an employee of the 
Department to testify in a legal proceeding, the Secretary shall follow 
the standards set forth in subpart I.
    (d) Where the demand or request seeks only the production of 
documents, the Department's procedure for authentricating documents by a 
keeper of the records shall be the Department's method for response. 
That authentication shall be evidence that the documents are true copies 
of documents in the Department's files.

[52 FR 12160, Apr. 15, 1987]



Sec. 15.73  Procedure in the event of a demand for production or disclosure.

    (a) Whenever a demand is made upon an employee of the Department for 
the production of material or the disclosure of information described in 
Sec. 15.71, the employee shall immediately notify the Secretary and 
either the General Counsel or the appropriate Regional Counsel. The 
appropriate Regional Counsel shall mean the Regional Counsel for the 
Regional Office having delegated authority over the project or activity 
with respect to which the information is sought. If possible, the 
Secretary shall be notified before the employee concerned replies to or 
appears before the court or other authority.
    (b) If response to the demand is required before the instructions 
from the Secretary are received, the U.S. Attorney or such other 
attorney as may be designated for the purpose, will appear with the 
employee of the Department upon whom the demand has been made, and will 
furnish the court or other authority with a copy of the regulations 
contained in this subpart and inform the court or other authority that 
the demand has been or is being, as the case may be, referred for prompt 
consideration of the Secretary. The court or other authority shall be 
requested respectfully to stay the demand pending receipt of the 
requested instructions from the Secretary.

[52 FR 12160, Apr. 15, 1987]

[[Page 158]]



Sec. 15.74  Procedure in the event of an adverse ruling.

    If the court or other authority declines to stay the effect of the 
demand in response to a request made in accordance with Sec. 15.73(b) 
pending receipt of instructions from the Secretary, or if the court or 
other authority rules that the demand must be complied with irrespective 
of the instructions from the Secretary not to produce the material or 
disclose the information sought, the employee upon whom the demand has 
been made shall respectfully decline to comply with the demand (United 
States ex rel. Toughy v. Ragen, 340 U.S. 462).

[52 FR 12161, Apr. 15, 1987]



Subpart I--Testimony of Employees of the Department in Legal Proceedings

    Source: 52 FR 12161, Apr. 15, 1987, unless otherwise noted.



Sec. 15.81  Purpose.

    (a) This subpart prescribes the policies and procedures of the 
Department with respect to testimony of its employees as witnesses in 
legal proceedings with respect to material contained in the files of the 
Department or information learned as part of the performance of the 
their official duties or because of their official status.
    (b) For purposes of this subpart, the term employee of the 
Department includes current and former officers and employees of the 
United States appointed by or subject to the supervision of the 
Secretary, but does not include officers and employees covered by part 
2004 of this title.

[52 FR 12161, Apr. 15, 1987, as amended at 60 FR 58457, Nov. 27, 1995]



Sec. 15.82  Testimony in proceedings in which the United States is a party.

    (a) In any legal proceeding in which the United States is a party, 
an employee of the Department may not be called to testify as an expert 
or opinion witness by any party other than the United States, but may be 
called by such non-federal party to testify as to facts.
    (b) Whenever, in any legal proceeding in which the United States is 
a party, the attorney in charge of presenting the case for the United 
States requests it, the Secretary shall arrange for an employee of the 
Department to testify as a witness for the United States.



Sec. 15.83  Legal proceedings among private litigants; general rule.

    In any legal proceeding exclusively among private litigants, no 
employee of the Department may testify as an expert or opinion witness 
as to any matter related to his or her duties or the functions of the 
Department, including the meaning of Departmental documents.



Sec. 15.84  Legal proceedings among private litigants; subpoenas.

    Whenever, in a legal proceeding exclusively among private litigants, 
an employee of the Department is served with a subpoena or is requested 
to testify, the procedures set forth in Secs. 15.72--15.74 shall be 
applicable.



Sec. 15.85  Legal proceedings among private litigants; expert or opinion testimony.

    If, while testifying in a legal proceeding exclusively among private 
litigants, an employee of the Department is asked for expert or opinion 
testimony, the employee shall decline to answer on the grounds that he 
or she is forbidden to do so by this part.



   Subpart J--Processing Request for Declassification and Release of 
                           Classified Material



Sec. 15.91  Authority for release or denial of classified material.

    (a) All requests by the public, Government employees, or other 
Government agencies, for the release of classified information shall be 
directed to the Inspector General, who will ensure that:
    (1) All requests are acknowledged within 10 working days.
    (2) The request is immediately coordinated with the original 
classification authority to determine whether the association of that 
authority with the classification of the information requires 
protection.

[[Page 159]]

    (3) In those instances when the answer to paragraph (a)(2) of this 
section is no, requests will be referred, along with the requested 
document and if appropriate any recommendations to withhold, for direct 
handling by the original classification authority. The requester shall 
be advised in writing of this action.
    (4) Whenever it is necessary, by either the original classification 
authority or HUD to deny the declassification and release, in whole or 
part, of the requested information, the requester shall be notified, in 
accordance with Executive Order 12356, of:
    (i) The reason for the denial,
    (ii) The requesters' right to appeal the denial, and
    (iii) The name, title, and address of the appellate authority.

[44 FR 54478, Sept. 20, 1979, as amended at 48 FR 15895, Apr. 13, 1983. 
Redesignated at 52 FR 12161, Apr. 15, 1987]



PART 16--IMPLEMENTATION OF THE PRIVACY ACT OF 1974--Table of Contents




Sec.
16.1  Purpose and statement of policy.
16.2  Definitions.
16.3  Procedures for inquiries.
16.4  Requests for access; requirements.
16.5  Disclosure of requested information to individuals.
16.6  Initial denial of access.
16.7  Administrative review of initial denial of access.
16.8  Request for correction or amendment to record.
16.9  Agency procedures upon request for correction or amendment of 
          record.
16.10  Appeal of initial adverse agency determination on correction or 
          amendment.
16.11  Disclosure of record to person other than the individual to whom 
          it pertains.
16.12  Fees.
16.13  Penalties.
16.14  General exemptions.
16.15  Specific exemptions.

    Authority: 5 U.S.C. 552(a); 42 U.S.C. 3535(d).

    Source: 40 FR 39729, Aug. 28, 1975, unless otherwise noted.



Sec. 16.1  Purpose and statement of policy.

    (a) The purpose of this part is to establish policies and procedures 
for implementing the Privacy Act of 1974 (Pub. L. 93-579), 5 U.S.C. 
552(a). The main objectives are to facilitate full exercise of rights 
conferred on individuals under the Act and to insure the protection of 
privacy as to individuals about whom the Department maintains records in 
systems of records under the Act. The Department accepts the 
responsibility to act promptly and in accordance with the Act upon 
receipt of any inquiry, request or appeal from a citizen of the United 
States or an alien lawfully admitted for permanent residence into the 
United States, regardless of the age of the individual.
    (b) Further, the Department accepts the obligations to maintain only 
such information on individuals as is relevant and necessary to the 
performance of its lawful functions, to maintain that information with 
such accuracy, relevancy, timeliness and completeness as is reasonably 
necessary to assure fairness in determinations made by the Department 
about the individual, to obtain information from the individual to the 
extent practicable, and to take every reasonable step to protect that 
information from unwarranted disclosure. The Department will maintain no 
record describing how an individual exercises rights guaranteed by the 
First Amendment unless expressly authorized by statute or by the 
individual about whom the record is maintained or unless pertinent to 
and within the scope of an authorized law enforcement activity.
    (c) This part applies to all organizational components in the 
Department in order to assure the maximum amount of uniformity and 
consistency within the Department in its implementation of the Act.
    (d) The Assistant Secretary for Administration shall be responsible 
for carrying out the requirements of this part, for issuing such orders 
and directives internal to the Department as are necessary for full 
compliance with the Act, and for effecting publication of all required 
notices concerning systems of records.
    (e) Requests involving information pertaining to an individual which 
is in a record or file but not within the scope of a System of Records 
Notice published in the Federal Register are outside the scope of this 
part. Requests

[[Page 160]]

for departmental records will be considered to determine whether 
processing under this part, part 15, or both is most appropriate, 
notwithstanding the requester's characterization of the request, as 
follows:
    (1) A Privacy Act request from an individual for records about that 
individual and not contained in a Privacy Act Records System shall be 
considered a Freedom of Information Act request and processed under HUD 
Freedom of Information Act regulations (24 CFR part 15) to the extent 
that the requester has provided the Department a reasonable description 
of the documents requested. When a request for records is so considered 
as a Freedom of Information Act request, the Privacy Act Officer shall 
promptly refer it to the head of the appropriate organizational unit in 
accordance with HUD FOIA Regulations and shall advise the requester that 
time of receipt for processing purposes will be the time when it is 
received by the appropriate official.
    (2) A Freedom of Information Act request from an individual for 
records about that individual contained in a Privacy Act Records System 
shall be processed as follows:
    (i) If the request in whole or in part contains a reasonable 
description of any HUD document, processing shall be carried out 
pursuant to HUD FOIA Regulations.
    (ii) If the request in whole or in part does not contain a 
reasonable description of any HUD document, but does provide sufficient 
information under HUD Privacy Act Regulations to undertake a Privacy Act 
Records System search, the Department will provide full access under HUD 
Privacy Act Regulations. In this situation, the Department will comply 
with the deadlines for response set forth in the Privacy Act and HUD 
implementing regulations. In that event, an explanation will be provided 
to the requester advising that the request did not contain a reasonable 
description of a particular document as required under the FOIA and 
offering to process the request under FOIA procedures upon receipt of 
additional information sufficient to constitute a reasonable 
description.
    (3) A Freedom of Information Act request from an individual for 
records about another individual contained in a Privacy Act Records 
System shall be processed as follows: When an exemption under subsection 
(b) of FOIA is available, the Privacy Act governs the public interest 
determination under HUD FOIA Regulations (24 CFR 15.21) and compels the 
withholding of such documents unless: (i) The subject of those records 
consents to their release or (ii) disclosure comes within one of the 
subsections of 5 U.S.C. Sec. 552a(b).
    (4) A Privacy Act request from an individual for records about 
another individual shall be processed as follows: Except as expressly 
permitted in this part, requests by persons who are not the subject of a 
record contained in a Privacy Act Records System shall be outside the 
scope of this part. If the request satisfies the Freedom of Information 
Act requirement that requested records be reasonably described, the 
Privacy Act Officer shall consider the requests as a Freedom of 
Information Act request and shall proceed as in Sec. 16.1(e)(1) of this 
section.

[40 FR 39729, Aug. 28, 1975, as amended at 41 FR 13917, Apr. 1, 1976]



Sec. 16.2  Definitions.

    (a) The definitions of 5 U.S.C. 552a apply in this part.
    (b) As used in this part:
    (1) Act means the Privacy Act of 1974, Pub. L. 93-579.
    (2) Privacy Act Officer means those officials, identified in 
Appendix A to this part, or their designees, who are authorized to 
receive and act upon inquiries, requests for access, and requests for 
correction or amendment.
    (3) Privacy Appeals Officer means the General Counsel.
    (4) Inquiry means a request by an individual that the Department 
determine whether it has any record in a system of records which 
pertains to that individual.
    (5) Request for access means a request by an individual or guardian 
to inspect and/or copy and/or obtain a copy of a record which is in a 
particular system of records and which pertains to that individual.
    (6) Request for correction or amendment means the request by an 
individual or

[[Page 161]]

guardian that the Department change (either by correction, addition or 
deletion) a particular record in a system of records which pertains to 
that individual.
    (7) Appeal means the request by an individual that an initial denial 
of a request for access or correction or amendment by that individual be 
reviewed and reversed.

[40 FR 39729, Aug. 28, 1975, as amended at 41 FR 13917, Apr. 1, 1976; 61 
FR 5204, Feb. 9, 1996]



Sec. 16.3  Procedures for inquiries.

    (a) Any individual, regardless of age, may submit an inquiry to the 
Department. The inquiry should be made either in person at the office 
of, or by mail addressed to, the appropriate Privacy Act Officer. 
Although oral requests may be honored, a requester may be asked to 
submit his request in writing. The envelope containing the request and 
the letter itself should both clearly indicate that the subject is a 
``PRIVACY ACT INQUIRY''. If an individual believes the Department 
maintains a record pertaining to that individual but does not know which 
system of records might contain such a record and/or which 
organizational component of the Department maintains the system of 
records, assistance in person or by mail will be provided at the first 
address listed in Appendix A to this part.
    (b)(1) An inquiry should contain the following information:
    (i) Name, address and telephone number of the individual making the 
request;
    (ii) Name, address and telephone number of the individual to whom 
the record pertains, if the requesting individual is either the parent 
of a minor or the legal guardian of the individual to whom the record 
pertains;
    (iii) A certified or authenticated copy of documents establishing 
parentage or guardianship;
    (iv) Whether the individual to whom the record pertains is a citizen 
of the United States or an alien lawfully admitted for permanent 
residence in to the United States;
    (v) Name of the system of records, as published in the Federal 
Register;
    (vi) Location of the system of records, as published in the Federal 
Register;
    (vii) Such additional information as the individual knows will or 
believes might assist the Department in responding to the inquiry (for 
example, the individual's past or present relationship with the 
Department, e.g. mortgagor, contractor, employee, including relevant 
dates) and in verifying the individual's identity (for example, date of 
birth, place of birth, names of parents, place of work, dates of 
employment, position title, etc.);
    (viii) Date of inquiry; and,
    (ix) Individual's signature.

The Department reserves the right to require compliance with the 
identification procedures appearing at Sec. 16.4(d) where circumstances 
warrant.
    (2) In compliance with 5 U.S.C. 552a (e)(3) each individual 
supplying the information in accordance with paragraph (b)(1) of this 
section hereby is informed that:
    (i) The authority authorizing solicitation of the information is 5 
U.S.C. 552a, disclosure is voluntary, and no penalty is attached for 
failure to respond;
    (ii) The principal purpose for which the information is intended to 
be used is processing the inquiry under the Act;
    (iii) The routine uses which may be made of the information are the 
routine uses appearing as a prefatory statement to the Department's 
notice of systems of records published in the Federal Register; and,
    (iv) The effects of not providing all or any part of the information 
may delay, or in some cases make impossible, the Department's processing 
of the action on the request under the Act.
    (3) If, having been made aware of the contents of paragraph (b)(2) 
of this section, an individual submits the information listed in 
paragraph (b)(1) of this section, he or she will be deemed to have made 
the submission on a purely voluntary and consentual basis.
    (c) When an inquiry is misdirected by the requester, or not 
addressed as specified in paragraph (a) of this section, the Department 
official receiving same

[[Page 162]]

shall make reasonable effort to identify, and promptly refer it to, the 
appropriate Privacy Act Officer and the time of receipt for processing 
purposes will be the time when it is received by the Privacy Act 
Officer.
    (d) When an inquiry fails to provide necessary information as set 
forth in paragraph (b) of this section, the requester shall be advised 
that the time of receipt for processing purposes will be the time when 
the additional necessary information is received by the Privacy Act 
Officer.
    (e) Each inquiry received shall be acted upon promptly by the 
responsible Privacy Act Officer. Every effort will be made to respond 
within ten days (excluding Saturdays, Sundays and holidays) of the date 
of receipt. If a response cannot be made within ten days, the Privacy 
Act Officer shall send an acknowledgement during that period providing 
information on the status of the inquiry. The Privacy Act Officer may 
indicate that additional information would facilitate processing or that 
further information is necessary to process the inquiry.



Sec. 16.4  Requests for access; requirements.

    (a) Any individual, regardless of age, may submit to the Department 
a request for access to records of the Department. The request should be 
made either in person at the Office of, or by mail addressed to, the 
responsible Privacy Act Officer identified in Appendix A to this part. 
Although oral requests may be honored, a requester may be asked to 
submit his request in writing. The envelope containing the request and 
the letter itself should both clearly indicate that the subject is a 
PRIVACY ACT REQUEST FOR ACCESS TO RECORDS.
    (b) When a request for access to records is misdirected by the 
requester, or not addressed as specified in paragraph (a) of this 
section, the Department official receiving same shall promptly refer it 
to the appropriate Privacy Act Officer and the time of receipt for 
processing purposes will be the time when it is received by that 
official.
    (c) When a request for access to records fails to provide necessary 
information as set forth in paragraph (b) of this section the requester 
shall be advised that the time of receipt for processing purposes will 
be the time when the additional necessary information is received by the 
appropriate official.
    (d) The requirements for identification of individuals seeking 
access to records are as follows:
    (1) In person. Each individual making a request in person shall be 
required to present satisfactory proof of identity. The means of proof, 
in the order of preference and priority, are:
    (i) A document bearing the individual's photograph (for example, 
passport or military or civilian identification card);
    (ii) A document bearing the individual's signature (for example, 
driver's license, social security card, unemployment insurance book, 
employer's identification card, national credit card and professional, 
craft or union membership card); and
    (iii) A document bearing neither the photograph nor the signature of 
the individual (for example, a Medicaid card). In the event the 
individual can provide no suitable documentation of identity, the 
Department will require a signed statement asserting the individual's 
identity and stipulating that the individual understands the penalty 
provision of 5 U.S.C. 552a(i)(3). That penalty provision also appears at 
Sec. 16.13(a). In order to avoid any unwarranted disclosure of an 
individual's records, the Department reserves the right to determine to 
its satisfaction whether proof of identity offered by any individual is 
adequate.
    (2) Not in person. If the individual making a request does not 
appear in person before a Privacy Act Officer, the information set forth 
in Sec. 16.3(b)(1) and a certificate of a notary public or equivalent 
officer empowered to administer oaths must accompany the request. The 
certificate within or attached to the letter must be substantially in 
accord with the following text:

City of --------------------
County of --------------------:

    ss -------------------- (name of individual), who affixed (his) 
(her) signature below in my presence, came before me, a ---------------- 
(title), in and for the aforesaid County and

[[Page 163]]

State, this ------------ day of ------------, 19--, and established 
(his) (her) identity to my satisfaction.

    My commission expires --------------------.

------------------------------------
            (signature)


If the request follows inquiry under Sec. 16.3, this should be indicated 
in the request for access in order to facilitate processing.
    (3) Parents of minors and legal guardians. An individual acting as 
the parent of a minor or the legal guardian of the individual to whom a 
record pertains shall establish his or her personal identity in the same 
manner prescribed in either paragraph (d) (1) or (2) of this section. In 
addition, such other individual shall establish his or her 
representative capacity of parent or legal guardian. In the case of the 
parent of a minor, the proof of identity shall be a certified or 
authenticated copy of the minor's birth certificate. In the case of a 
legal guardian of an individual who has been declared incompetent due to 
physical or mental incapacity or age by a court of competent 
jurisdiction, the proof of identity shall be a certified or 
authenticated copy of the court's order. A parent or legal guardian may 
act only for a living individual, not for a decedent. A parent or legal 
guardian may be accompanied during personal access to a record by 
another individual, provided the provisions of Sec. 16.5(e) are 
satisfied.
    (e) When the provisions of this part are alleged to have the effect 
of impeding an individual in exercising his or her right to access, the 
Department will consider alternative suggestions from an individual 
making a request, regarding proof of identity and access to records.
    (f) An individual shall not be required to state a reason or 
otherwise justify his or her request for access to a record.



Sec. 16.5  Disclosure of requested information to individuals.

    (a) Each request received shall be acted upon promptly by the 
responsible Privacy Act Officer. Every effort will be made to respond 
within ten days (excluding Saturdays, Sundays and holidays) of the date 
of receipt. If a response cannot be made within ten days due to unusual 
circumstances, the Privacy Act Officer shall send an acknowledgement 
during that period providing information on the status of the request 
and asking for such further information as may be necessary to process 
the request. Unusual circumstances shall include circumstances where a 
search for and collection of requested records from inactive storage, 
field facilities or other establishments are required, cases where a 
voluminous amount of data is involved, instances where information on 
other individuals must be separated or expunged from the particular 
record, and cases where consultations with other agencies having a 
substantial interest in the determination of the request are necessary.
    (b) Grant of access--(1) Notification. An individual shall be 
granted access to a record pertaining to him or her, except where the 
provisions of Sec. 16.6 apply. The Privacy Act Officer shall notify the 
individual of such determination and provide the following information:
    (i) The methods of access, as set forth in paragraph (b)(2) of this 
section;
    (ii) The place at which the record may be inspected;
    (iii) The earliest date on which the record may be inspected and the 
period of time that the records will remain available for inspection 
and/or the estimated date by which a copy of the record could be mailed 
and the estimate of fees pursuant to Sec. 16.12;
    (iv) The fact that the individual, if he or she wishes, may be 
accompanied by another individual during personal access, subject to 
procedures set forth in paragraph (e) of this section; and
    (v) Any additional requirements needed to grant access to a specific 
record.
    (2) Methods of access. The following methods of access to records by 
an individual may be available depending on the circumstances of a given 
situation:
    (i) Inspection in person may be had in the office specified by the 
Privacy Act Officer granting access during hours indicated by the 
Privacy Act Officer;
    (ii) Transfer of records to a Federal facility more convenient to 
the individual may be arranged, but only if the Privacy Act Officer 
determines that a suitable facility is available, that the

[[Page 164]]

individual's access can be properly supervised at the facility, and that 
transmittal of the records to that facility will not unduly interfere 
with operations of the Department or involve unreasonable costs, in 
terms of both money and manpower; and
    (iii) Copies may be mailed at the request of the individual, subject 
to payment of the fees prescribed in Sec. 16.12. The Department, at its 
own initiative, may elect to provide a copy by mail, in which case no 
fee will be charged the individual.
    (c) The Department shall supply such other information and 
assistance at the time of access as to make the record intelligible to 
the individual.
    (d) The Department reserves the right to limit access to copies and 
abstracts of original records, rather than the original records. This 
election would be appropriate, for example, when the record is in an 
automated data media such as tape or disc, when the record contains 
information on other individuals, and when deletion of information is 
permissible under exemptions (for example, 5 U.S.C. 552a(k)(2)). In no 
event shall original records of the Department be made available to the 
individual except under the immediate supervision of the Privacy Act 
Officer or his designee. It is a crime to conceal, mutilate, obliterate, 
or destroy any record filed in a public office, or to attempt to do any 
of the foregoing, Title 18, United States Code, 2701(a).
    (e) Any individual who requests access to a record pertaining to 
that individual may be accompanied by another individual of his or her 
choice. Accompanied includes discussion of the record in the presence of 
the other individual. The individual to whom the record pertains shall 
authorize the presence of the other individual by a signed and dated 
document which includes the name of the other individual and 
specifically describes the record to which access is sought. The other 
individual shall sign the authorization in the presence of the Privacy 
Act Officer. An individual shall not be required to state a reason or 
otherwise justify his or her decision to be accompanied by another 
individual during personal access to a record.



Sec. 16.6  Initial denial of access.

    (a) Grounds. Access by an individual to a record which pertains to 
that individual will be denied only upon a determination by the Privacy 
Act Officer that:
    (1) The record is subject to an exemption under Sec. 16.14, 
Sec. 16.15 or to an exemption determined by another agency noticing the 
system of records;
    (2) The record is information compiled in reasonable anticipation of 
a civil action or proceeding; or
    (3) The individual unreasonably has failed to comply with the 
procedural requirements of this part.
    (b) Notification. The Privacy Act Officer shall give notice of 
denial of access to records to the individual in writing and shall 
include the following information:
    (1) The Privacy Act Officer's name and title or position;
    (2) The date of the denial;
    (3) The reasons for the denial, including citation to the 
appropriate section of the Act and/or this part;
    (4) The individual's opportunities, if any, for further 
administrative consideration, including the identity and address of the 
appropriate Privacy Appeals Officer. If no further administrative 
consideration within the Department is available, the notice shall state 
that the denial is administratively final; and,
    (5) If stated to be administratively final; and, within the 
Department, the individual's right to judicial review under 5 U.S.C. 
552a(g)(1), as amended by 5 U.S.C. 552a(g)(5).

[40 FR 39729, Aug. 28, 1975, as amended at 42 FR 20297, Apr. 19, 1977]



Sec. 16.7  Administrative review of initial denial of access.

    (a) Review shall be available only from a written denial of a 
request for access issued under Sec. 16.6(a) (2) or (3) and only if a 
written request for review is filed within thirty calendar days after 
the issuance of the written denial.
    (b) A request for review shall be addressed to the Privacy Appeals 
Officer identified in the initial denial, which official is authorized 
to make final determinations. The envelope containing the request for 
review and the letter

[[Page 165]]

itself should both clearly indicate that the subject is a PRIVACY ACT 
REQUEST FOR REVIEW.
    (c) When a request for review is misdirected by the requester, or 
not addressed as specified in paragraph (b) of this section, the 
Department official receiving same shall promptly refer it to the 
Privacy Appeals Officer and the time of receipt for processing purposes 
will be the time when it is received by the appropriate official.
    (d) When a request for review fails to provide necessary information 
as set forth in paragraph (e) of this section, the requester shall be 
given reasonable opportunity to amend the request and shall be advised 
that the time of receipt for processing purposes will be the time when 
the additional necessary information is received by the appropriate 
official.
    (e) The filing of a request for review may be accomplished by 
mailing to the Privacy Appeals Officer a copy of the request for access, 
if in writing; a copy of the written denial issued under Sec. 16.6; and 
a statement of the reasons why the initial denial is believed to be in 
error. The appeal shall be signed by the individual.
    (f) No hearing will be allowed in connection with administrative 
review of an initial denial of access.
    (g) The Privacy Appeals Officer shall act upon the appeal and issue 
a final determination in writing not later than thirty days (excluding 
Saturdays, Sundays and holidays) from the date on which the appeal is 
received; provided, that the Privacy Appeals officer may extend the 
thirty days upon deciding that a fair and equitable review cannot be 
made within that period, but only if the individual is advised in 
writing of the reason for the extension and the estimated date by which 
a final determination will issue, which estimated date should not be 
later than the sixtieth day (excluding Saturdays, Sundays and holidays) 
after receipt of the appeal unless there exist unusual circumstances, as 
described in Sec. 16.5(a).
    (h) The decision after review will be in writing, will constitute 
final action of the Department on a request for access, and, if the 
denial of the request is in whole or part upheld, the Department shall 
notify the person making the request of his right to judicial review 
under 5 U.S.C. 552a(g)(1), as amended by 5 U.S.C. 552a(g)(5).



Sec. 16.8  Request for correction or amendment to record.

    (a) Any individual, regardless of age, may submit to the Department 
a request for correction or amendment of a record pertaining to that 
individual. The request should be made either in person at the office 
of, or by mail addressed to, the Privacy Act Officer who processed the 
individual's request for access to the record. Although an oral request 
may be honored, a requester may be asked to submit his or her request in 
writing. The envelope containing the request and the letter itself 
should both clearly indicate that the subject is a PRIVACY ACT REQUEST 
FOR CORRECTION OR AMENDMENT.
    (b) When a request for correction or amendment is misdirected by the 
requester, or not addressed as specified in paragraph (a) of this 
section, the Department official receiving same shall make reasonable 
effort to identify, and promptly refer it to, the appropriate Privacy 
Act Officer and the time of receipt for processing purposes will be the 
time when it is received by the appropriate official.
    (c) When a request for correction or amendment fails to provide 
necessary information as set forth in paragraph (e) of this section, the 
requester shall be given reasonable opportunity to answer the request 
and shall be advised that the time of receipt for processing purposes 
will be the time when the additional necessary information is received 
by the appropriate official.
    (d) Since the request, in all cases, will follow a request for 
access under Sec. 16.4, the individual's identity will be established by 
his or her signature on the request.
    (e) A request for correction or amendment should include the 
following:
    (1) A specific identification of the record sought to be corrected 
or amended (for example, description, title, date, paragraph, sentence, 
line and words);
    (2) The specific wording to be deleted, if any;

[[Page 166]]

    (3) The specific wording to be inserted or added, if any, and the 
exact place at which it is to be inserted or added; and
    (4) A statement of the basis for the requested correction or 
amendment, with all available supporting documents and materials which 
substantiate the statement.
    (f) The provisions of Sec. 16.3(b) (2) and (3) apply to the 
information obtained under paragraph (e) of this section.



Sec. 16.9  Agency procedures upon request for correction or amendment of record.

    (a)(1) Not later than ten days (excluding Saturdays, Sundays and 
holidays) after receipt of a request to correct or amend a record, the 
Privacy Act Officer shall send an acknowledgment providing an estimate 
of time within which action will be taken on the request and asking for 
such further information as may be necessary to process the request. The 
estimate of time may take into account unusual circumstances as 
described in Sec. 16.5(a). No acknowledgment will be sent if the request 
can be reviewed, processed, and the individual notified of the results 
of review (either compliance or denial) within the ten days. Requests 
filed in person will be acknowledged at the time submitted.
    (2) Promptly after acknowledging receipt of a request, or after 
receiving such further information as might have been requested, or 
after arriving at a decision within the time prescribed in 
Sec. 16.9(a)(1), the Privacy Act Officer shall either:
    (i) Make the requested correction or amendment and advise the 
individual in writing of such action, providing either a copy of the 
corrected or amended record or a statement as to the means whereby the 
correction or amendment was effected in cases where a copy cannot be 
provided; or,
    (ii) Inform the individual in writing that his or her request is 
denied and provide the following information:
    (A) The Privacy Act Officer's name and title and position;
    (B) The date of the denial;
    (C) The reasons for the denial, including citation to the 
appropriate sections of the Act and this part; and,
    (D) The procedures for appeal of the denial as set forth in 
Sec. 16.10, including the name and address of the Privacy Appeals 
Officer. The term promptly in this Sec. 16.9 means within thirty days 
(excluding Saturdays, Sundays and holidays). If the Privacy Act Officer 
cannot make the determination within thirty days, the individual will be 
advised in writing of the reason therefor and of the estimated date by 
which the determination will be made.
    (b) Whenever an individual's record is corrected or amended pursuant 
to a request by that individual, the Privacy Act Officer shall see to 
the notification of all persons and agencies to which the corrected or 
amended portion of the record had been disclosed prior to its correction 
or amendment, if an accounting of such disclosure was made as required 
by the Act. The notification shall require a recipient agency 
maintaining the record to acknowledge receipt of the notification, to 
correct or amend the record and to appraise any agency or person to 
which it had disclosed the record of the substance of the correction or 
amendment.
    (c) The following criteria will be considered by the Privacy Act 
Officer in reviewing a request for correction or amendment:
    (1) The sufficiency of the evidence submitted by the individual;
    (2) The factual accuracy of the information;
    (3) The relevance and necessity of the information in terms of the 
purpose for which it was collected;
    (4) The timeliness and currency of the information in terms of the 
purpose for which it was collected:
    (5) The completeness of the information in terms of the purpose for 
which it was collected:
    (6) The possibility that denial of the request could unfairly result 
in determinations adverse to the individual;
    (7) The character of the record sought to be corrected or amended; 
and
    (8) The propriety and feasibility of complying with the specific 
means of correction or amendment requested by the individual.
    (d) The Department will not undertake to gather evidence for the 
individual, but does reserve the right to

[[Page 167]]

verify the evidence which the individual submits.
    (e) Correction or amendment of a record requested by an individual 
will be denied only upon a determination by the Privacy Act Officer 
that:
    (1) There has been a failure to establish, by the evidence 
presented, the propriety of the correction or amendment in light of the 
criteria set forth in paragraph (c) of this section;
    (2) The record sought to be corrected or amended was compiled in a 
terminated judicial, quasi-judicial, legislative or quasi-legislative 
proceeding to which the individual was a party or participant;
    (3) The information in the record sought to be corrected or amended, 
or the record sought to be corrected or amended, is the subject of a 
pending judicial, quasi-judicial or quasi-legislative proceeding to 
which the individual is a party or participant;
    (4) The correction or amendment would violate a duly enacted statute 
or promulgated regulation; or,
    (5) The individual unreasonably has failed to comply with the 
procedural requirements of this part.
    (f) If a request is partially granted and partially denied, the 
Privacy Act Officer shall follow the appropriate procedures of this 
section as to the records within the grant and the records within the 
denial.



Sec. 16.10  Appeal of initial adverse agency determination on correction or amendment.

    (a) Appeal shall be available only from a written denial of a 
request for correction or amendment of a record issued under Sec. 16.9, 
and only if a written appeal is filed within thirty calendar days after 
the issuance of the written denial.
    (b) Each appeal shall be addressed to the Privacy Appeals Officer 
identified in the written denial. The envelope containing the appeal and 
the letter itself should both clearly indicate that the subject is 
PRIVACY ACT APPEAL.
    (c) When an appeal is misdirected by the requester, or not addressed 
as specified in paragraph (b) of this section, the Department official 
receiving same shall promptly refer it to the appropriate Privacy 
Appeals Officer and the time of receipt for processing purposes will be 
the time when it is received by the appropriate official.
    (d) When an appeal fails to provide the necessary information as set 
forth in paragraph (e) of this section, the requester shall be advised 
that the time for receipt for processing purposes will be the time when 
the additional necessary information is received by the appropriate 
official.
    (e) The individual's appeal papers shall include the following: A 
copy of the original request for correction or amendment; a copy of the 
initial denial; and a statement of the reasons why the initial denial is 
believed to be in error. The appeal shall be signed by the individual. 
The record which the individual requests be corrected or amended will be 
supplied by the Privacy Act Officer who issued the initial denial. While 
the foregoing normally will comprise the entire record on appeal, the 
Privacy Appeals Officer may seek additional information necessary to 
assure that the final determination is fair and equitable and, in such 
instances, the additional information will be disclosed to the 
individual to the greatest extent possible and an opportunity provided 
for comment thereon.
    (f) No hearing on appeal will be allowed.
    (g) The Privacy Appeals Officer shall act upon the appeal and issue 
a final Department determination in writing not later than thirty days 
(excluding Saturdays, Sundays and holidays) from the date on which the 
appeal is received; provided, that the Privacy Appeals Officer may 
extend the thirty days upon deciding that a fair and equitable review 
cannot be made within that period, but only if the individual is advised 
in writing of the reason for the extension and the estimated date by 
which a final determination will issue (which estimated date should not 
be later than the sixtieth day (excluding Saturdays, Sundays and 
holidays) after receipt of the appeal unless unusual circumstances, as 
described in Sec. 16.5(a), are met).
    (h) If the appeal is determined in favor of the individual, the 
final determination shall include the specific corrections or amendments 
to be made

[[Page 168]]

and a copy thereof shall be transmitted promptly both to the individual 
and to the Privacy Act Officer who issued the initial denial. Upon 
receipt of such final determination, the Privacy Act Officer promptly 
shall take the actions set forth in Sec. 16.9(a)(2)(i) and Sec. 16.9(b).
    (i) If the appeal is denied, the final determination shall be 
transmitted promptly to the individual and shall state the reasons for 
the denial. The notice of final determination also shall inform the 
individual of the following information:
    (1) The right of the individual to file a concise statement of 
reasons for disagreeing with the final determination. The statement 
ordinarily should not exceed one page and the Department reserves the 
right to reject a statement of excessive length. Such a statement shall 
be filed with the Privacy Appeals Officer. It should identify the date 
of the final determination and be signed by the individual. The Privacy 
Appeals Officer shall acknowledge receipt of such statement and inform 
the individual of the date on which it was received;
    (2) The fact that any such disagreement statement filed by the 
individual will be noted in the disputed record and that a copy of the 
statement will be provided to persons and agencies to which the record 
is disclosed subsequent to the date of receipt of such statement;
    (3) The fact that prior recipients of the disputed record will be 
provided a copy of any statement of the dispute to the extent that an 
accounting of disclosures, as required by the Act, was made;
    (4) The fact that the Department will append to any such 
disagreement statement filed by the individual, a copy of the final 
determination or summary thereof which also will be provided to persons 
and agencies to which the disagreement statement is disclosed; and,
    (5) The right of the individual to judicial review of the final 
determination under 5 U.S.C. 552a(g)(1)(A), as limited by 5 U.S.C. 
552a(g)(5).
    (j) In making the final determination, the Privacy Appeals Officer 
shall employ the criteria set forth in paragraph 16.9(c) and shall deny 
an appeal only on the grounds set forth in Sec. 16.9(e).
    (k) If an appeal is partially granted and partially denied, the 
Privacy Appeals Officer shall follow the appropriate procedures of this 
section as to the records within the grant and the records within the 
denial.
    (l) Although a copy of the final determination or a summary thereof 
will be treated as part of the individual's record for purposes of 
disclosure in instances where the individual has filed a disagreement 
statement, it will not be subject to correction or amendment by the 
individual.
    (m) The provisions of Sec. 16.3(b) (2) and (3) apply to the 
information obtained under paragraphs (e) and (i)(1) of this section.



Sec. 16.11  Disclosure of record to person other than the individual to whom it pertains.

    (a) The Department may disclose a record pertaining to an individual 
to a person other than the individual only in the following instances:
    (1) Upon written request by the individual, including authorization 
under Sec. 16.5(e);
    (2) With the prior written consent of the individual;
    (3) To a parent or legal guardian under 5 U.S.C. 552a(h); and,
    (4) When required by the Act and not covered explicitly by the 
provisions of 5 U.S.C. 552a(b); and,
    (5) When permitted under 5 U.S.C. 552a(b) (1) through (11), which 
read as follows:

    (1) To those officers and employees of the agency which maintains 
the record who have a need for the record in the performance of their 
duties;
    (2) Required under section 552 of this title;
    (3) For a routine use as defined in subsection (a)(7) of this 
section and described under subsection (e)(4)(D) of this section;
    (4) To the Bureau of the Census for purposes of planning or carrying 
out a census or survey or related activity pursuant to the provisions of 
title 13;
    (5) To a recipient who has provided the agency with advance adequate 
written assurance that the record will be used solely as a statistical 
research or reporting record, and the record is to be transferred in a 
form that is not individually identifiable;

[[Page 169]]

    (6) To the National Archives of the United States as a record which 
has sufficient historical or other value to warrant its continued 
preservation by the United States Government, or for evaluation by the 
Administrator of General Services or his designee to determine whether 
the record has such value;
    (7) To another agency or to an instrumentality of any governmental 
jurisdiction within or under the control of the United States for a 
civil or criminal law enforcement activity if the activity is authorized 
by law, and if the head of the agency or instrumentality has made a 
written request to the agency which maintains the record specifying the 
particular portion desired and the law enforcement activity for which 
the record is sought;
    (8) To a person pursuant to a showing of compelling circumstances 
affecting the health or safety of an individual if upon such disclosure 
notification is transmitted to the last known address of such 
individual;
    (9) To either House of Congress, or, to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, any joint 
committee of Congress or subcommittee of any such joint committee;
    (10) To the Comptroller General, or any of his authorized 
representatives, in the course of the performance of the duties of the 
General Accounting Office; or
    (11) Pursuant to the order of a court of competent jurisdiction.

    (b) The situations referred to in paragraph (a)(4) of this section 
include the following:
    (1) 5 U.S.C. 552a(c)(4) requires dissemination of a corrected or 
amended record or notation of a disagreement statement by the Department 
in certain circumstances:
    (2) 5 U.S.C. 552(a)(g) authorizes civil action by an individual and 
requires disclosure by the Department or the court;
    (3) Section 5(e)(2) of the Act authorizes release of any records or 
information by the Department to the Privacy Protection Study Commission 
upon request of the Chairman; and
    (4) Section 6 of the Act authorizes the Office of Management and 
Budget to provide the Department with continuing oversight and 
assistance in implementation of the Act.
    (c) The Department shall make an accounting of each disclosure of 
any record contained in a system of records in accordance with 5 U.S.C. 
552a(c) (1) and (2). Except for a disclosure made under 5 U.S.C. 
552a(b)(7), the Privacy Act Officer shall make such accounting available 
to any individual, insofar as it pertains to that individual, on request 
submitted in accordance with Sec. 16.4. The Privacy Act Officer shall 
make reasonable efforts to notify any individual when any record in a 
system of records is disclosed to any person under compulsory legal 
process, promptly upon being informed that such process has become a 
matter of public record.



Sec. 16.12  Fees.

    (a) The only fees to be charged to or collected from an individual 
under the provisions of this part are for copying records at the request 
of the individual.
    (1) No fees shall be charged or collected for the following: Search 
for and retrieval of the records; review of the records; copying at the 
initiative of the Department without a request from the individual; 
transportation of records and personnel; and first class postage.
    (2) It is the policy of the Department to provide an individual with 
one copy of each record corrected or amended pursuant to his or her 
request without charge as evidence of the correction or amendment.
    (3) As requested by the United States Civil Service Commission in 
its published regulations implementing the Act, the Department will 
charge no fee to an individual who requests copies of a personnel record 
covered by that Commission's Government-wide published notice of systems 
of records. However, when such records are voluminous and the cost of 
copying would be in excess of five dollars ($5) the Department may, in 
its discretion, charge a fee.
    (b) The copying fees prescribed by paragraph (a) of this section 
are:

$0.10 Each copy of each page, up to 8 \1/2\" x 14" made by photocopy or 
similar process.
$0.20 Each page of computer printout without regard to the number of 
carbon copies concurrently printed.

    (c) Payment of fees under this section shall be made in cash, or 
preferably by check or money order payable to the ``Treasurer of the 
United States.'' Payment shall be delivered or sent to the office stated 
in the billing

[[Page 170]]

notice or, if none is stated, to the Privacy Act Officer processing the 
request. Payment may be required in the form of a certified check in 
appropriate circumstances. Postage stamps will not be accepted.
    (d) A copying fee totaling $1 or less shall be waived, but the 
copying fees for contemporaneous requests by the same individual shall 
be aggregated to determine the total fee. A copying fee shall not be 
charged or collected, or alternatively, it may be reduced when such 
action is determined by the Privacy Act Officer to be in the public 
interest.
    (e) Special and additional services provided at the request of the 
individual, such as certification or authentication, postal insurance 
and special mailing arrangement costs, will be charged to the individual 
in accordance with other published regulations of the Department 
pursuant to statute (for example, 31 U.S.C. 433a).
    (f) This section applies only to individuals making requests under 
this part. All other persons shall remain subject to fees and charges 
prescribed by other and appropriate authorities.

[40 FR 39729, Aug. 28, 1975, as amended at 42 FR 29479, June 9, 1977]



Sec. 16.13  Penalties.

    (a) The Act provides, in pertinent part:

    Any person who knowingly and willfully requests or obtains any 
record concerning an individual from an agency under false pretences 
shall be guilty of a misdemeanor and fined not more than $5,000. (5 
U.S.C. 552a(i)(3))

    (b) A person who falsely or fraudulently attempts to obtain records 
under the Act may also be subject to prosecution under such other 
criminal statutes as 18 U.S.C. 494, 495 and 1001.



Sec. 16.14  General exemptions.

    (a) Individuals may not have access to records maintained by the 
Department but which were provided by another agency which has 
determined by regulation that such information is subject to general 
exemption under 5 U.S.C. 552a(j). If such exempt records are within a 
request for access, the Department will advise the individual of their 
existence and of the name and address of the source agency. For any 
further information concerning the record and the exemption, the 
individual must contact that source agency.
    (b) The Secretary of Housing and Urban Development has determined 
that the Office of the Assistant Inspector General for Investigation 
performs, as its principal function, activities pertaining to the 
enforcement of criminal laws. The records maintained by that office in a 
system identified as ``HUD/DEPT-24, Investigation Files,'' primarily 
consist of information compiled for the purpose of criminal 
investigations and are associated with identifiable individuals. 
Therefore, the Secretary has determined that this system of records 
shall be exempt, consistent with 5 U.S.C. 552a(j)(2), from all 
requirements of the Privacy Act except 5 U.S.C. 552a (b), (c) (1) and 
(2), (e)(4) (A) through (F), (e) (6), (7), (9), (10), and (11), and (i) 
unless elsewhere exempted.

[40 FR 39729, Aug. 28, 1975, as amended at 49 FR 20486, May 15, 1984]



Sec. 16.15  Specific exemptions.

    Whenever the Secretary of Housing and Urban Development determines 
it to be necessary and proper, with respect to any system of records 
maintained by the Department, to exercise the right to promulgate rules 
to exempt such systems in accordance with the provisions of 5 U.S.C. 
552a(k), each specific exemption, including the parts of each system to 
be exempted, the provisions of the Act from which they are exempted, and 
the justification for each exemption shall be published in the Federal 
Register as part of the Department's Notice of Systems of Records.
    (a) Exempt under 5 U.S.C. 552a(k)(2) from the requirements of 5 
U.S.C. 552a (c)(3), (d), (e)(1), (e)(4) (G), (H), (I), and (f). This 
exemption allows the Department to withhold records compiled for law 
enforcement purposes. The reasons for adopting this exemption are to 
prevent individuals, who are the subjects of investigation, from 
frustrating the investigatory process, to ensure the integrity of the 
investigatory process, to ensure the integrity of law enforcement 
activities, to prevent disclosure

[[Page 171]]

of investigative techniques, and to protect the confidentiality of 
sources of information. The names of systems correspond to those 
published in the Federal Register as part of the Department's Notice of 
Systems of Records.
    (1) HUD/DEPT-15. Equal Opportunity Housing Complaints.
    (2) HUD/DEPT-24. Investigation Files in the Office of the Inspector 
General.
    (3) HUD/DEPT-25. Legal Action Files.
    (b) Exempt under 5 U.S.C. 552(k)(5) from the requirements of 5 
U.S.C. 552a (c)(3), (d), (e)(1), (e)(4), (G), (H), and (I), and (f). 
This exemption allows the Department to withhold records compiled solely 
for the purpose of determining suitability, eligibility, or 
qualifications for Federal contracts, or access to classified material. 
The reasons for adopting this exemption are to insure the proper 
functioning of the investigatory process, to insure effective 
determination of suitability, eligibility and qualification for 
employment and to protect the confidentiality of sources of information. 
The names of systems correspond to those published in the Federal 
Register as part of the Department's Notice of Systems of Records.
    (1) HUD/DEPT-24. Investigation Files in the Office of the Inspector 
General.
    (2) HUD/DEPT-25. Legal Action Files.
    (c) The system of records entitled ``HUD/PIH-1. Tenant Eligibility 
Verification Files'' consists in part of investigatory material compiled 
for law enforcement purposes. Relevant records will be used by 
appropriate Federal, state or local agencies charged with the 
responsibility for investigating or prosecuting violations of law. 
Therefore, to the extent that information in the system falls within the 
coverage of subsection (k)(2) of the Privacy Act, 5 U.S.C. 552a(k)(2), 
the system is exempt from the requirements of the following subsections 
of the Privacy Act, for the reasons stated below.
    (1) From subsection (c)(3) because release of an accounting of 
disclosures to an individual who may be the subject of an investigation 
could reveal the nature and scope of the investigation and could result 
in the altering or destruction of evidence, improper influencing of 
witnesses, and other evasive actions that could impede or compromise the 
investigation.
    (2) From subsection (d)(1) because release of the records to an 
individual who may become or has become the subject of an investigation 
could interfere with pending or prospective law enforcement proceedings, 
constitute an unwarranted invasion of the personal privacy of third 
parties, reveal the identity of confidential sources, or reveal 
sensitive investigative techniques and procedures.
    (3) From subsection (d)(2) because amendment or correction of the 
records could interfere with pending or prospective law enforcement 
proceedings, or could impose an impossible administrative and 
investigative burden by requiring the office that maintains the records 
to continuously retrograde its verifications of tenant eligibility 
attempting to resolve questions of accuracy, relevance, timeliness and 
completeness.
    (4) From subsection (e)(1) because it is often impossible to 
determine relevance or necessity of information in pre-investigative 
early stages. The value of such information is a question of judgment 
and timing; what appears relevant and necessary when collected may 
ultimately be evaluated and viewed as irrelevant and unnecessary to an 
investigation. In addition, the Assistant Secretary for Public and 
Indian Housing, or investigators, may obtain information concerning the 
violation of laws other than those within the scope of its jurisdiction. 
In the interest of effective law enforcement, the Assistant Secretary 
for Public and Indian Housing, or investigators, should retain this 
information because it may aid in establishing patterns of unlawful 
activity and provide leads for other law enforcement agencies. Further, 
in obtaining the evidence, information may be provided which relates to 
matters incidental to the main purpose of the inquiry or investigation 
but which may be pertinent to the investigative jurisdiction of another 
agency. Such information cannot readily be identified.
    (d) The system of records entitled ``HUD/PIH-1. Tenant Eligibility 
Verification Files'' consists in part of

[[Page 172]]

material that may be used for the purpose of determining suitability, 
eligibility, or qualifications for Federal civilian employment or 
Federal contracts, the release of which would reveal the identity of a 
source who furnished information to the Government under an express 
promise that the identity of the source would be held in confidence. 
Therefore, to the extent that information in this system falls within 
the coverage of subsection (k)(5) of the Privacy Act, 5 U.S.C. 
552a(k)(5), the system is exempt from the requirements of the following 
subsection of the Privacy Act, for the reasons stated below.
    (1) From subsection (d)(1) because release would reveal the identity 
of a source who furnished information to the Government under an express 
promise of confidentiality. Revealing the identity of a confidential 
source could impede future cooperation by sources, and could result in 
harassment or harm to such sources.

[42 FR 49810, Sept. 28, 1977, as amended at 59 FR 9407, Feb. 28, 1994]



PART 17--ADMINISTRATIVE CLAIMS--Table of Contents




   Subpart A--Claims Against Government Under Federal Tort Claims Act

                           General Provisions

Sec.
17.1  Scope; definitions.

                               Procedures

17.2  Administrative claim; when presented; appropriate HUD office.
17.3  Administrative claim; who may file.
17.4  Administrative claim; evidence and information to be submitted.
17.5  Investigations.
17.6  Claims investigation.
17.7  Authority to adjust, determine, compromise, and settle claims.
17.8  Limitations on authority.
17.9  Referral to Department of Justice.
17.11  Final denial of claim.
17.12  Action on approved claim.

 Subpart B--Claims Under the Military Personnel and Civilian Employees 
                           Claims Act of 1964

17.40  Scope and purpose.
17.41  Claimants.
17.42  Time limitations.
17.43  Allowable claims.
17.44  Restrictions on certain claims.
17.45  Unallowable claims.
17.46  Claims involving carriers or insurers.
17.47  Settlement of claims.
17.48  Computation of amount of award.
17.49  Attorney's fees.
17.50  Claims procedures.

  Subpart C--Procedures for the Collection of Claims by the Government

                           General Provisions

17.60  Scope and definitions.
17.61  Incorporation of joint standards by reference.
17.62  Subdivision and joining of claims.
17.63  Authority of offices to attempt collection of claims.
17.64  Referral of claims to the Assistant Secretary for Administration.
17.65  Authority of offices to compromise claims or suspend or terminate 
          collection action.
17.66  Department claims officer.
17.67  Claims files.
17.68  Monthly report of collection action.
17.69  Accounting control.
17.70  Record retention.
17.71  Suspension or revocation of eligibility.
17.72  Methods of collection and imposition of late charges.
17.73  Standards for compromise of claims.
17.74  Standards for suspension or termination of collection action.
17.75  Referral to GAO or Justice Department.
17.76  Disclosure to a consumer reporting agency.
17.77  Contracts for collection services.

                    Administrative Offset Provisions

17.100  Scope.
17.101  Coordinating administrative offset with another Federal agency.
17.102  Notice requirements before offset.
17.103  Exceptions to notice requirements.
17.104  Review within the Department of a determination of indebtedness.
17.105  Review of departmental records related to the debt.
17.106  Written agreement to repay debt as alternative to administrative 
          offset.
17.107  Stay of offset.
17.108  Types of review.
17.109  Review procedures.
17.110  Determination of indebtedness and appeal from determination.
17.111  Procedures for administrative offset: single debt.
17.112  Procedures for administrative offset: multiple debts.
17.113  Procedures for administrative offset: interagency cooperation.
17.114  Procedures for administrative offset: time limitation.
17.115  Procedures for administrative offset: offset against amounts 
          payable from

[[Page 173]]

          Civil Service Retirement and Disability Fund.
17.116  Procedures for administrative offset: offset of debtor's 
          judgment against the United States.
17.117  Procedures for administrative offset: imposition of interest.
17.118  Miscellaneous provisions: correspondence with the Department.

                        Salary Offset Provisions

17.125  Scope.
17.126  Coordinating offset with another Federal agency.
17.127  Determination of indebtedness.
17.128  Notice requirements before offset.
17.129  Request for a hearing.
17.130  Result if employee fails to meet deadlines.
17.131  Written decision following a hearing.
17.132  Review of departmental records related to the debt.
17.133  Written agreement to repay debt as alternative to salary offset.
17.134  Procedures for salary offset: when deductions may begin.
17.135  Procedures for salary offset: types of collection.
17.136  Procedures for salary offset: methods of collection.
17.137  Procedures for salary offset: imposition of interest.
17.138  Non-waiver of rights.
17.139  Refunds.
17.140  Miscellaneous provisions: correspondence with the Department.

                    IRS Tax Refund Offset Provisions

17.150  Scope.
17.151  Notice requirements before offset.
17.152  Review within the Department of a determination that an amount 
          is past-due and legally enforceable.
17.153  Determination of the Administrative Judge.
17.154  Postponements, withdrawals and extensions of time.
17.155  Review of departmental records related to the debt.
17.156  Stay of offset.
17.157  Application of offset funds: Single debt.
17.158  Application of offset funds: Multiple debts.
17.159  Application of offset funds: Tax refund insufficient to cover 
          amount of debt.
17.160  Time limitation for notifying the IRS to request offset of tax 
          refunds due.
17.161  Correspondence with the Department.

    Authority: 28 U.S.C. 2672; 31 U.S.C. 3711, 3716-18, 3721, and 5 
U.S.C. 5514; 42 U.S.C. 3535(d).



   Subpart A--Claims Against Government Under Federal Tort Claims Act

    Authority: 5 U.S.C. 5514; 28 U.S.C. 2672; 31 U.S.C. 3711, 3716-3718, 
3721; 42 U.S.C. 3535(d).

    Source: 36 FR 24427, Dec. 22, 1971, unless otherwise noted.

                           General Provisions



Sec. 17.1  Scope; definitions.

    (a) This subpart applies to claims asserted under the Federal Tort 
Claims Act, as amended, accruing on or after January 18, 1967, for money 
damages against the United States for injury to or loss of property or 
personal injury or death caused by the negligent or wrongful act or 
omission of an officer or employee of the Department while acting within 
the scope of his office or employment.
    (b) This subpart is issued subject to and consistent with applicable 
regulations on administrative claims under the Federal Tort Claims Act 
issued by the Attorney General (31 FR 16616; 28 CFR part 14).
    (c) The terms Department and Organizational unit are defined in 24 
CFR part 5.

[36 FR 24427, Dec. 22, 1971, as amended at 61 FR 5204, Feb. 9, 1996]

                               Procedures



Sec. 17.2  Administrative claim; when presented; appropriate HUD office.

    (a) For purposes of this subpart, a claim shall be deemed to have 
been presented when the Department receives, at a place designated in 
paragraph (b) of this section, an executed Claim for Damages or Injury, 
Standard Form 95, or other written notification of an incident, 
accompanied by a claim for money damages in a sum certain for injury to 
or loss of property, for personal injury, or for death alleged to have 
occurred by reason of the incident. A claim which should have been 
presented to the Department, but which was mistakenly addressed to or 
filed with another Federal agency, is deemed to be presented to the 
Department as of the date that the claim is received by the Department. 
If a claim

[[Page 174]]

is mistakenly addressed to or filed with the Department, the Department 
shall forthwith transfer it to the appropriate Federal agency, if 
ascertainable, or return it to the claimant.
    (b) A claimant shall mail or deliver his claim to the office of 
employment of the Department employee or employees whose negligent or 
wrongful act or omission is alleged to have caused the loss or injury 
complained of. Where such office of employment is the Department Central 
Office in Washington, or is not reasonably known and not reasonably 
ascertainable, claimant shall file his claim with the Assistant 
Secretary for Administration, Department of Housing and Urban 
Development, 451 Seventh Street SW., Washington, DC 20410. In all other 
cases, claimant shall address his claim to the head of the appropriate 
office, the address of which will generally be found listed in the local 
telephone directory.



Sec. 17.3  Administrative claim; who may file.

    (a) A claim for injury to or loss of property may be presented by 
the owner of the property, his duly authorized agent, or his legal 
representative.
    (b) A claim for personal injury may be presented by the injured 
person, his duly authorized agent, or his legal representative.
    (c) A claim based on death may be presented by the executor or 
administrator of the decedent's estate, or by any other person legally 
entitled to assert such a claim in accordance with applicable State law.
    (d) A claim for loss wholly compensated by an insurer with the 
rights of a subrogee may be presented by the insurer. A claim for loss 
partially compensated by an insurer with the rights of a subrogee may be 
presented by the insurer or the insured individually, as their 
respective interests appear, or jointly. Whenever an insurer presents a 
claim asserting the rights of a subrogee, he shall present with his 
claim appropriate evidence that he has the rights of a subrogee.
    (e) A claim presented by an agent or legal representative shall be 
presented in the name of the claimant, be signed by the agent or legal 
representative, show the title or legal capacity of the person signing, 
and be accompanied by evidence of his authority to present a claim on 
behalf of the claimant as agent, executor, administrator, parent, 
guardian, or other representative.



Sec. 17.4  Administrative claim; evidence and information to be submitted.

    (a) Personal injury. In support of a claim for personal injury, 
including pain and suffering, the claimant may be required to submit the 
following evidence or information:
    (1) A written report by his attending physician or dentist setting 
forth the nature and extent of the injury, nature and extent of 
treatment, any degree of temporary or permanent disability, the 
prognosis, period of hospitalization, and any diminished earning 
capacity. In addition, the claimant may be required to submit to a 
physical or mental examination by a physician employed or designated by 
the Department or another Federal agency. A copy of the report of the 
examining physician shall be made available to the claimant upon the 
claimant's written request provided that he has, upon request, furnished 
the report referred to in the first sentence of this subparagraph and 
has made or agrees to make available to the Department any other 
physician's report previously or thereafter made of the physical or 
mental condition which is the subject matter of his claim;
    (2) Itemized bills for medical, dental, and hospital expenses 
incurred, or itemized receipts of payment for such expenses;
    (3) If the prognosis reveals the necessity for future treatment, a 
statement of expected expenses for such treatment;
    (4) If a claim is made for loss of time from employment, a written 
statement from his employer showing actual time lost from employment, 
whether he is a full- or part-time employee, and wages or salary 
actually lost;
    (5) If a claim is made for loss of income and the claimant is self-
employed, documentary evidence showing the amount of earnings actually 
lost;
    (6) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for

[[Page 175]]

the personal injury or the damages claimed.
    (b) Death. In support of a claim based on death, the claimant may be 
required to submit the following evidence or information:
    (1) An authenticated death certificate or other competent evidence 
showing cause of death, date of death, and age of the decedent;
    (2) Decedent's employment or occupation at time of death, including 
his monthly or yearly salary or earnings (if any), and the duration of 
his last employment or occupation;
    (3) Full names, addresses, birth dates, kinship, and marital status 
of the decedent's survivors, including identification of those survivors 
who were dependent for support upon the decedent at the time of his 
death;
    (4) Degree of support afforded by the decedent to each survivor 
dependent upon him for support at the time of his death;
    (5) Decedent's general physical and mental condition before death;
    (6) Itemized bills for medical and burial expenses incurred by 
reason of the incident causing death, or itemized receipts of payment 
for such expenses;
    (7) If damages for pain and suffering prior to death are claimed, a 
physician's detailed statement specifying the injuries suffered, 
duration of pain and suffering, any drugs administered for pain, and the 
decedent's physical condition in the interval between injury and death;
    (8) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the death or the 
damages claimed.
    (c) Property damage. In support of a claim for injury to or loss of 
property, real or personal, the claimant may be required to submit the 
following evidence or information:
    (1) Proof of ownership;
    (2) A detailed statement of the amount claimed with respect to each 
item of property;
    (3) An itemized receipt of payment for necessary repairs or itemized 
written estimates of the cost of such repairs;
    (4) A statement listing date of purchase, purchase price, and 
salvage value where repair is not economical;
    (5) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the injury to or loss 
of property or the damages claimed.



Sec. 17.5  Investigations.

    The Department may investigate, or may request any other Federal 
agency to investigate, a claim filed under this subpart.



Sec. 17.6  Claims investigation.

    (a) When a claim has been filed with the Department, the head of the 
organizational unit concerned or his designee shall designate one 
employee in that unit who shall act as, and who shall be referred to 
herein as, the Claims Investigating Officer for that particular claim. 
When a claim is received by the head of an organizational unit to which 
this subpart applies, it shall be forwarded with or without comment to 
the designated Claims Investigating Officer, who shall:
    (1) Investigate as completely as is practicable the nature and 
circumstances of the occurrence causing the loss or damage of the 
claimant's property;
    (2) Ascertain the extent of loss or damage to the claimant's 
property;
    (3) Assemble the necessary forms with required data contained 
therein;
    (4) Prepare a brief statement setting forth the facts relative to 
the claim, a statement whether the claim satisfies the requirements of 
this subpart, and a recommendation as to the amount to be paid in 
settlement of the claim;
    (5) Submit such forms, statements, and all necessary supporting 
papers to the head of the organizational unit having jurisdiction over 
the employee involved, who will be responsible for assuring that all 
necessary data has been obtained for the file. The head of the 
organizational unit will transmit the entire file to the General 
Counsel.



Sec. 17.7  Authority to adjust, determine, compromise, and settle claims.

    The General Counsel, the Deputy General Counsel, and such employees 
of the Office of the General Counsel as may be designated by the General

[[Page 176]]

Counsel, are authorized to consider, ascertain, adjust, determine, 
compromise, and settle claims pursuant to the Federal Tort Claims Act, 
28 U.S.C. 2671, and the regulations contained in 28 CFR part 14 and in 
this subpart.



Sec. 17.8  Limitations on authority.

    (a) An award, compromise, or settlement of a claim under section 
2672 of Title 28, United States Code, and this subpart in excess of 
$25,000 may be effected only with the prior written approval of the 
Attorney General or his designee. For the purpose of this paragraph, a 
principal claim and any derivative or subrogated claim shall be treated 
as a single claim.
    (b) An administrative claim may be adjusted, determined, 
compromised, or settled only after consultation with the Department of 
Justice when, in the opinion of the General Counsel or his designee:
    (1) A new precedent or a new point of law is involved; or
    (2) A question of policy is or may be involved; or
    (3) The United States is or may be entitled to indemnity or 
contribution from a third party, and the Department is unable to adjust 
the third party claim; or
    (4) The compromise of a particular claim, as a practical matter, 
will or may control the disposition of a related claim in which the 
amount to be paid may exceed $25,000.
    (c) An administrative claim may be adjusted, determined, 
compromised, or settled only after consultation with the Department of 
Justice when the Department is informed or is otherwise aware that the 
United States or an officer, employee, agent, or cost-type contractor of 
the United States is involved in litigation based on a claim arising out 
of the same incident or transaction.



Sec. 17.9  Referral to Department of Justice.

    When Department of Justice approval or consultation is required 
under Sec. 17.8, the referral or request shall be transmitted to the 
Department of Justice by the General Counsel of the Department or his 
designee.



Sec. 17.11  Final denial of claim.

    Final denial of an administrative claim shall be in writing, and 
notification of denial shall be sent to the claimant, his attorney, or 
legal representative by certified or registered mail. The notification 
of final denial may include a statement of the reasons for the denial 
and shall include a statement that, if the claimant is dissatisfied with 
the Department action, he may file suit in an appropriate U.S. District 
Court not later than 6 months after the date of mailing of the 
notification.



Sec. 17.12  Action on approved claim.

    (a) Payment of a claim approved under this subpart is contingent on 
claimant's execution of: (1) A Claim for Damage or Injury, Standard Form 
95; (2) a claims settlement agreement; and (3) a Voucher for Payment, 
Standard Form 1145, as appropriate. When a claimant is represented by an 
attorney, the voucher for payment shall designate both the claimant and 
his attorney as payees, and the check shall be delivered to the 
attorney, whose address shall appear on the voucher.
    (b) Acceptance by the claimant, his agent, or legal representative 
of an award, compromise, or settlement made under section 2672 or 2677 
of Title 28, United States Code, is final and conclusive on the 
claimant, his agent or legal representative, and any other person on 
whose behalf or for whose benefit the claim has been presented, and 
constitutes a complete release of any claim against the United States 
and against any officer or employee of the Government whose act or 
omission gave rise to the claim, by reason of the same subject matter.



 Subpart B--Claims Under the Military Personnel and Civilian Employees 
                           Claims Act of 1964

    Authority: Sec. 3, 78 Stat. 767 (31 U.S.C. 3721).

    Source: 36 FR 24427, Dec. 22, 1971, unless otherwise noted.



Sec. 17.40  Scope and purpose.

    (a) This subpart applies to all claims filed by or on behalf of 
employees of

[[Page 177]]

the Department of Housing and Urban Development for loss of or damage to 
personal property which occurs incident to their service with HUD under 
the Military Personnel and Civilian Employees' Claims Act of 1964. A 
claim must be substantiated and the possession of the property 
determined to be reasonable, useful, or proper. The maximum amount that 
can be paid under any claim under the Act is $25,000 and property may be 
replaced in kind at the option of the Government. Nothing in this 
subpart shall be construed to bar claims payable under statutory 
authority.
    (b) HUD is not an insurer and does not underwrite all personal 
property losses that an employee may sustain. Employees are encouraged 
to carry private insurance to the maximum extent practicable to avoid 
large losses or losses which may not be recoverable from HUD. The 
procedures set forth in this section are designed to enable the claimant 
to obtain the maximum amount of compensation for his loss or damage. 
Failure of the claimant to comply with these procedures may reduce or 
preclude payment of his claim under this subpart.

[36 FR 24427, Dec. 22, 1971, as amended at 48 FR 6536, Feb. 14, 1983]



Sec. 17.41  Claimants.

    (a) A claim pursuant to this subpart may only be made by:
    (1) An employee of HUD.
    (2) A former employee of HUD whose claim arises out of an incident 
occurring before his separation from HUD.
    (3) Survivors of a person named in paragraph (a) (1) or (2) of this 
section, in the following order of precedence:
    (i) Spouse.
    (ii) Children.
    (iii) Father or mother, or both.
    (iv) Brothers or sisters, or both.
    (4) The authorized agent or legal representative of a person named 
in paragraphs (a) (1), (2), and (3) of this section.
    (b) A claim may not be presented by or for the benefit of a 
subrogee, assignee, conditional vendor, or other third party.



Sec. 17.42  Time limitations.

    A claim under this part may be allowed only if:
    (a) Except as provided in paragraph (b) of this section, it is filed 
in writing within 2 years after accrual. For purposes of this part, a 
claim accrues at the time of the accident or incident causing the loss 
or damage, or at such time as the loss or damage should have been 
discovered by the claimant by the exercise of due diligence.
    (b) It cannot be filed within the time limits of paragraph (a) of 
this section, because it accrues in time of war or in time of armed 
conflict in which any armed force of the United States is engaged or if 
such a war or armed conflict intervenes within 2 years after it accrues, 
and if good cause is shown, and if it is filed not later than 2 years 
after that cause ceases to exist, or 2 years after the war or armed 
conflict is terminated, whichever is earlier.



Sec. 17.43  Allowable claims.

    (a) A claim may be allowed only if:
    (1) The damage or loss was not caused wholly or partly by the 
negligent or wrongful act of the claimant, his agent, the members of his 
family, or his private employee (the standard to be applied is that of 
reasonable care under the circumstances); and
    (2) The possession of the property lost or damaged and the quantity 
possessed is determined to have been reasonable, useful, or proper under 
the circumstances; and
    (3) The claim is substantiated by proper and convincing evidence.
    (b) Claims which are otherwise allowable under this part shall not 
be disallowed solely because the property was not in the possession of 
the claimant at the time of the damage or loss, or solely because the 
claimant was not the legal owner of the property for which the claim is 
made. For example, borrowed property may be the subject of a claim.
    (c) Subject to the conditions in paragraph (a) of this section, and 
the other provisions of this subpart, any claim for damage to, or loss 
of, personal property incident to service with HUD may be considered and 
allowed. The following are examples of the principal types of claims 
which may be allowed,

[[Page 178]]

but these examples are not exclusive and other types of claims may be 
allowed, unless excluded by Secs. 17.44 and 17.45:
    (1) Property loss or damage in quarters or other authorized places. 
Claims may be allowed for damage to, or loss of, property arising from 
fire, flood, hurricane, other natural disaster, theft, or other unusual 
occurrence, while such property is located at:
    (i) Quarters within the 50 States or the District of Columbia that 
were assigned to the claimant or otherwise provided in kind by the 
United States;
    (ii) Quarters outside the 50 States and the District of Columbia 
that were occupied by the claimant, whether or not they were assigned or 
otherwise provided in kind by the United States, except when the 
claimant is a civilian employee who is a local inhabitant; or
    (iii) Any warehouse, office, working area, or other place (except 
quarters) authorized or apparently authorized for the reception or 
storage of property.
    (2) Transportation or travel losses. Claims may be allowed for 
damage to, or loss of, property incident to transportation or storage 
pursuant to orders, or in connection with travel under orders, including 
property in the custody of a carrier, an agent or agency of the 
Government, or the claimant.
    (3) Manufactured homes. Claims may be allowed for damage to, or loss 
of, manufactured homes and their contents under the provisions of 
paragraph (c)(2) of this section. Claims for structural damage to 
manufactured homes, other than that caused by collision, and damage to 
contents of manufactured homes resulting from such structural damage, 
must contain conclusive evidence that the damage was not caused by 
structural deficiency of the manufactured home and that it was not 
overloaded. Claims for damage to, or loss of, tires mounted on 
manufactured homes will not be allowed, except in cases of collision, 
theft, or vandalism.
    (4) Enemy action or public service. Claims may be allowed for damage 
to, or loss of, property as a direct consequence of:
    (i) Enemy action or threat thereof, or combat, guerrilla, 
brigandage, or other belligerent activity, or unjust confiscation by a 
foreign power or its nationals;
    (ii) Action by the claimant to quiet a civil disturbance or to 
alleviate a public disaster; or
    (iii) Efforts by the claimant to save human life or Government 
property.
    (5) Property used for benefit of the Government. Claims may be 
allowed for damage to, or loss of, property when used for the benefit of 
the Government at the request of, or with the knowledge and consent of, 
superior authority.
    (6) Clothing and accessories. Claims may be allowed for damage to, 
or loss of, clothing or accessories customarily worn on the person, such 
as eyeglasses, hearing aids, or dentures.

[36 FR 24427, Dec. 22, 1971, as amended at 50 FR 9268, Mar. 7, 1985]



Sec. 17.44  Restrictions on certain claims.

    Claims of the type described in this section are only allowable 
subject to the restrictions noted:
    (a) Money or currency. Claims may be allowed for loss of money or 
currency only when lost incident to fire, flood, hurricane, other 
natural disaster, or by theft from quarters (as limited by paragraph (a) 
of Sec. 17.45). In instances of theft from quarters, it must be 
conclusively shown that the quarters were locked at the time of the 
theft. Reimbursement for loss of money or currency is limited to an 
amount which is determined to have been reasonable for the claimant to 
have had in his possession at the time of the loss.
    (b) Government property. Claims may only be allowed for property 
owned by the United States for which the claimant is financially 
responsible to any agency of the Government other than HUD.
    (c) Estimate fees. Claims may include fees paid to obtain estimates 
of repair only when it is clear that an estimate could not have been 
obtained without paying a fee. In that case, the fee may be allowed only 
in an amount determined to be reasonable in relation to the value of the 
property or the cost of the repairs.
    (d) Automobiles and other motor vehicles. Claims may only be allowed 
for damage to, or loss of, automobiles and other motor vehicles if:

[[Page 179]]

    (1) Such motor vehicles were required to be used for official 
Government business (official Government business, as used here, does 
not include travel, or parking incident thereto, between quarters and 
office, or use of vehicles for the convenience of the owner. However, it 
does include travel, and parking incident thereto, between quarters and 
assigned place of duty specifically authorized by the employee's 
supervisor as being more advantageous to the Government); or
    (2) Shipment of such motor vehicles was being furnished or provided 
by the Government, subject to the provisions of Sec. 17.46.



Sec. 17.45  Unallowable claims.

    Claims are not allowable for the following:
    (a) Unassigned quarters in United States. Property loss or damage in 
quarters occupied by the claimant within the 50 States or the District 
of Columbia that were not assigned to him or otherwise provided in kind 
by the United States.
    (b) Business property. Property used for business or profit.
    (c) Unserviceable property. Wornout or unserviceable property.
    (d) Illegal possession. Property acquired, possessed, or transported 
in violation of law or in violation of applicable regulations or 
directives.
    (e) Articles of extraordinary value. Valuable articles, such as 
cameras, watches, jewelry, furs, or other articles of extraordinary 
value, when shipped with household goods or as unaccompanied baggage 
(shipment includes storage). This prohibition does not apply to articles 
in the personal custody of the claimant or articles properly checked, 
provided that reasonable protection or security measures have been taken 
by claimant.
    (f) Minimum amount. Loss or damage amounting to less than $10.



Sec. 17.46  Claims involving carriers or insurers.

    In the event the property which is the subject of a claim was lost 
or damaged while in the possession of a carrier or was insured, the 
following procedures will apply:
    (a) Whenever property is damaged, lost, or destroyed while being 
shipped pursuant to authorized travel orders, the owner must file a 
written claim for reimbursement with the last commercial carrier known 
or believed to have handled the goods, or the carrier known to be in 
possession of the property when the damage or loss occurred, according 
to the terms of its bill of lading or contract, before submitting a 
claim against the Government under this subpart.
    (1) If more than one bill of lading or contract was issued, a 
separate demand should be made against the last carrier on each such 
document.
    (2) The demand should be made within 9 months of the date that 
delivery was made, or within 9 months of the date that delivery should 
ordinarily have been made.
    (3) If it is apparent that the damage or loss is attributable to 
packing, storage, or unpacking while in the custody of the Government, 
no demand need be made against the carrier.
    (b) Whenever property which is damaged, lost, or destroyed incident 
to the claimant's service is insured in whole or in part, the claimant 
must make demand in writing against the insurer for reimbursement under 
the terms and conditions of the insurance coverage, prior to the filing 
of the concurrent claim against the Government.
    (c) Failure to make a demand on a carrier or insurer or to make all 
reasonable efforts to protect and prosecute rights available against a 
carrier or insurer and to collect the amount recoverable from the 
carrier or insurer may result in reducing the amount recoverable from 
the Government by the maximum amount which would have been recoverable 
from the carrier or insurer, had the claim been timely or diligently 
prosecuted. However, no deduction will be made where the circumstances 
of the claimant's service preclude reasonable filing of such a claim or 
diligent prosecution, or the evidence indicates a demand was 
impracticable or would have been unavailing.
    (d) Following the submission of the claim against the carrier or 
insurer, the claimant may immediately submit his claim against the 
Government in

[[Page 180]]

accordance with the provisions of this subpart, without waiting until 
either final approval or denial of his claim is made by the carrier or 
insurer.
    (1) Upon submitting his claim, he will certify in his claim that he 
has or has not gained any recovery from a carrier or insurer, and 
enclose all correspondence pertinent thereto.
    (2) If final action has not been taken by the carrier or insurer on 
his claim, he will immediately notify them to address all correspondence 
in regard to his claim to him, in care of the General Counsel of HUD.
    (3) The claimant shall advise the General Counsel of any action 
taken by the carrier or insurer on his claim and upon request shall 
furnish all correspondence documents, and other evidence pertinent to 
the matter.
    (e) The claimant will assign to the United States to the extent of 
any payment on his claim accepted by him, all his right, title and 
interest in any claim he may have against any carrier, insurer, or other 
party arising out of the incident on which the claim against the United 
States is based. After payment of his claim by the United States, the 
claimant will, upon receipt of any payment from a carrier or insurer, 
pay the proceeds to the United States to the extent of the payment 
received by him from the United States.
    (f) Where a claimant recovers for the loss from the carrier or 
insurer before his claim under this subpart is settled, the amount or 
recovery shall be applied to his claim as follows:
    (1) When the amount recovered from a carrier, insurer, or other 
third party is greater than or equal to the claimant's total loss as 
determined under this part, no compensation is allowable under this 
part.
    (2) When the amount recovered is less than such total loss, the 
allowable amount is determined by deducting the recovery from the amount 
of such total loss.
    (3) For the purpose of this paragraph (f) the claimant's total loss 
is to be determined without regard to the $6,500 maximum set forth 
above. However, if the resulting amount, after making this deduction, 
exceeds $6,500, the claimant will be allowed only $6,500.



Sec. 17.47  Settlement of claims.

    (a) The General Counsel, HUD, is authorized to settle (consider, 
ascertain, adjust, determine, and dispose of, whether by full or partial 
allowance or disallowance) any claim under this subpart.
    (b) The General Counsel may formulate such procedures and make such 
redelegations as may be required to fulfill the objectives of this 
subpart.
    (c) The General Counsel shall conduct such investigation as may be 
appropriate in order to determine the validity of a claim.
    (d) The General Counsel shall notify a claimant in writing of action 
taken on his claim, and if partial or full disallowance is made, the 
reasons therefor.
    (e) In the event a claim submitted against a carrier under 
Sec. 17.46 has not been settled before settlement of the claim against 
the Government pursuant to this subpart, the General Counsel shall 
notify such carrier or insurer to pay the proceeds of the claim to HUD 
to the extent HUD has paid such to claimant in settlement.



Sec. 17.48  Computation of amount of award.

    (a) The amount allowed for damage to or loss of any item of property 
may not exceed the cost of the item (either the price paid in cash or 
property, or the value at the time of acquisition if not acquired by 
purchase or exchange); and there will be no allowance for replacement 
cost or for appreciation in the value of the property. Subject to these 
limitations, the amount allowable is either:
    (1) The depreciated value, immediately prior to the loss or damage, 
of property lost or damaged beyond economical repair, less any salvage 
value; or
    (2) The reasonable cost of repairs, when property is economically 
repairable, provided that the cost of repairs does not exceed the amount 
allowable under paragraph (a)(1) of this section.
    (b) Depreciation in value is determined by considering the type of 
article involved, its cost, its condition when damaged or lost, and the 
time elapsed between the date of acquisition and the date of damage or 
loss.

[[Page 181]]

    (c) Replacement of lost or damaged property may be made in kind 
whenever appropriate.



Sec. 17.49  Attorney's fees.

    No more than 10 per centum of the amount paid in settlement of each 
individual claim submitted and settled under this subpart shall be paid 
or delivered to or received by any agent or attorney on account of 
services rendered in connection with that claim.



Sec. 17.50  Claims procedures.

    (a) Claims by, or on behalf of, employees of field offices shall be 
filed in writing with the appropriate Regional Counsel. Claims by, or on 
behalf of, employees of Department Headquarters shall be filed in 
writing with the General Counsel, Department of Housing and Urban 
Development, 451 7th Street, SW., Washington, DC 20410.
    (b) Each written claim shall contain, as a minimum:
    (1) Name, address, place of employment of claimant.
    (2) Place and date of loss or damage.
    (3) A brief statement of the facts and circumstances surrounding 
loss or damage.
    (4) Cost, date, and place of acquisition of each piece of property 
lost or damaged.
    (5) Two itemized repair estimates, or value estimates, whichever is 
applicable.
    (6) Copies of police reports, if applicable.
    (7) With respect to claims involving thefts or losses in quarters or 
other places where the property was reasonably kept, a statement as to 
what security precautions were taken to protect the property involved.
    (8) With respect to claims involving property being used for the 
benefit of the Government, a statement by the employee's supervisor 
evidencing that the claimant was required to provide such property or 
that his providing it was in the interest of the Government.
    (9) Other evidence as may be required by the General Counsel.

[36 FR 24427, Dec. 22, 1971, as amended at 48 FR 6536, Feb. 14, 1983]



  Subpart C--Procedures for the Collection of Claims by the Government

    Authority: 31 U.S.C. 3711, 3716-18, and 5 U.S.C. 5514; 42 U.S.C. 
3535(d).

    Source: 36 FR 24427, Dec. 22, 1971, unless otherwise noted. 
Redesignated at 49 FR 32349, Aug. 14, 1984.

                           General Provisions



Sec. 17.60  Scope and definitions.

    (a) Scope. This subpart sets forth the regulations of the Secretary 
of Housing and Urban Development implementing the Federal Claims 
Collection Act of 1966, as amended by the Federal Debt Collection Act of 
1982 (31 U.S.C. 3701 et seq.) (the Act), in conformity with the 
standards jointly promulgated by the Attorney General and the 
Comptroller General in 4 CFR parts 101 through 105. The Act:
    (1) Requires the Secretary or his designee to attempt collection of 
all claims of the United States for money or property arising out of the 
activities of the Department; and
    (2) Authorizes the Secretary or his designee to compromise claims 
that have not been referred to another executive or legislative agency 
for further collection action where the claim does not exceed $100,000 
exclusive of interest, or to suspend or terminate collection action 
where it appears that no person liable on the claim has the present or 
prospective financial ability to pay any significant sum thereon or that 
the cost of collecting the claim is likely to exceed the amount of 
recovery.
    (b) Definitions. As used in this subpart:
    Administrative offset means withholding money payable by the United 
States Government to, or held by the Government for, a person to satisfy 
a debt the person owes the Government
    Agency means:
    (1) An Executive department, military department, Government 
corporation, or independent establishment as defined in 5 U.S.C. 101, 
102, 103, or 104, respectively;
    (2) The United States Postal Service; or
    (3) The Postal Rate Commission.

[[Page 182]]

    Claim means the same as Debt.
    Consumer Reporting Agency means:
    (1) Any person, that for monetary fees, dues, or on a cooperative 
nonprofit basis, regularly engages in whole or in part in the practice 
of assembling or evaluating consumer (individual) credit information or 
other information on consumers for the purpose of providing consumer 
reports to third parties, and that uses any means or facility of 
interstate commerce for the purpose of preparing or furnishing consumer 
reports. (15 U.S.C. 1681a(f)); or
    (2) Any person who, for monetary fees, dues, or on a cooperative 
basis, regularly engages in whole or in part in the practice of (i) 
obtaining credit or other information on consumers for the purpose of 
furnishing such information to consumer reporting agencies (as defined 
in paragraph (1) of this definition), or (ii) serving as a marketing 
agent under arrangements enabling third parties to obtain such 
information from such reporting agencies.
    Debt means an amount owed to the United States and past due, from 
sources which include loans insured or guaranteed by the United States 
and all other amounts due the United States from assigned mortgages or 
deeds of trust, direct loans, advances, repurchase demands, fees, 
leases, rents, royalties, services, sale of real or personal property, 
overpayments, penalties, damages, interest, fines and forfeitures 
(except those arising under the Uniform Code of Military Justice), and 
all other similar sources.
    Debtor means the same as person.
    Department means the Department of Housing and Urban Development.
    Department Claims Officer: (see Sec. 17.66).
    Determination means the point at which the Secretary decides that 
the debt is valid.
    Disposable pay means that part of current basic pay, special pay, 
incentive pay, retired pay, retainer pay, or in the case of an employee 
not entitled to basic pay, other authorized pay remaining after 
deductions required by law. Deductions from pay include:
    (1) Amounts owed by the individual to the United States;
    (2) Amounts withheld for Federal employment taxes;
    (3) Amounts properly withheld for Federal, State, or local income 
tax purposes, if the withholding of the amount is authorized or required 
by law and if amounts withheld are not greater than would be the case if 
the individual claimed all dependent to which he or she were entitled. 
The withholding of additional amounts under 26 U.S.C. 3402(i) may be 
permitted only when the individual presents evidence of tax obligation 
which supports the additional withholding;
    (4) Amounts deducted as health insurance premiums, including, but 
not limited to, amounts deducted from civil service annuities for 
Medicare where such deductions are requested by the Health Care 
Financing Administration;
    (5) Amounts deducted as normal retirement contributions, not 
including amounts deducted for supplementary coverage. Amounts withheld 
as Survivor Benefit Plan or Retired Serviceman's Family Protection Plan 
payments are considered to be normal retirement contributions. Amounts 
voluntarily contributed toward additional civil service annuity benefits 
are considered to be supplementary;
    (6) Amounts deducted as normal life insurance premiums from salary 
or other remuneration for employment, not including amounts deducted for 
supplementary coverage. Both Servicemen's Group Life Insurance and 
``Basic Life'' Federal Employees' Group Life Insurance premiums are 
considered to be normal life insurance premiums; all optional Federal 
Employees' Group Life Insurance premiums and life insurance premiums 
paid for by allotment, such as National Service Life Insurance, are 
considered to be supplementary;
    (7) Amounts withheld from benefits payable under title II of the 
Social Security Act where the withholding is required by law;
    (8) Amounts mandatorily withheld for the U.S. Soldiers' and Airmen's 
Home; and
    (9) Fines and forfeitures ordered by a court-martial or by a 
commanding officer.
    Employee means a current employee of a Federal agency, including a 
current member of the Armed Forces or

[[Page 183]]

Reserve of the Armed Forces of the United States.
    Office means the organization of each Assistant Secretary, the 
Government National Mortgage Association (GNMA), the Solar Energy and 
Energy Conservation Bank and each Field Office.
    Pay means basic pay, special pay, income pay, retired pay, retainer 
pay, or, in case of an employee not entitled to basic pay, other 
authorized pay.
    Person means any natural person or persons, profit or nonprofit 
corporations, partnership, association, trust, estate, government or 
government subdivision or other entity which is capable of owing a debt 
to the Government. For purposes of the interest provisions, person does 
not include an agency of the United States Government, a State 
government, or a unit of general local government.
    Salary offset means a deduction from the pay of an employee without 
his or her consent to satisfy a debt. Salary offset is one type of 
administrative offset which may be used by the Department in the 
collection of claims.
    Secretary means the Secretary of the Department of Housing and Urban 
Development or his or her designee.
    United States includes an agency of the United States.
    Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt allegedly owed by an employee of an agency as 
permitted or required by 5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C. 716, 
or 5 U.S.C. 8346(b), or any other law.

[36 FR 24427, Dec. 22, 1971. Redesignated and amended at 49 FR 32349, 
Aug. 14, 1984; 59 FR 34579, July 6, 1994]



Sec. 17.61  Incorporation of joint standards by reference.

    All administrative actions to collect claims arising out of the 
activities of the Department shall be performed in accordance with the 
applicable standards prescribed in 4 CFR parts 101 through 105, which 
are incorporated by reference and supplemented in this subpart.



Sec. 17.62  Subdivision and joining of claims.

    (a) A debtor's liability arising from a particular transaction or 
contract shall be considered as a single claim in determining whether 
the claim is one not exceeding $100,000 exclusive of interest for the 
purpose of compromise or termination of collection action. Such a claim 
may not be subdivided to avoid the monetary ceiling established by the 
Act.
    (b) Joining of two or more single claims in a demand upon a 
particular debtor for payment totaling more than $100,000 does not 
preclude compromise or termination of collection action with respect to 
any one of such claims that does not exceed $100,000 exclusive of 
interest.

[59 FR 34579, July 6, 1994]



Sec. 17.63  Authority of offices to attempt collection of claims.

    The head of each office shall designate a claims collection officer, 
who shall attempt to collect in full all claims of the Department for 
money or property arising out of the activities of such office. Each 
claims collection officer shall establish and currently maintain a file 
with regard to each claim for which collection activities are 
undertaken.

[40 FR 28599, July 7, 1975. Redesignated at 49 FR 32349, Aug. 14, 1984]



Sec. 17.64  Referral of claims to the Assistant Secretary for Administration.

    (a) Authority of the Assistant Secretary for Administration. The 
Assistant Secretary for Administration shall exercise the powers and 
perform the duties of the Secretary to compromise, or to suspend or 
terminate collection action on all Department claims not exceeding 
$100,000 exclusive of interest, except as provided in Sec. 17.65 and 
paragraph (b) of this section. When initial attempts at collection by 
the office having responsibility for such claims have not been fully 
successful, the claim file shall be forwarded to the Assistant Secretary 
for Administration for further administrative collection procedures. 
Claims shall be referred to the Assistant Secretary for Administration 
well within the applicable statute of

[[Page 184]]

limitations (28 U.S.C. 2415 and 2416), but in no event more than 2 years 
after the claims accrued.
    (b) Exclusions. There shall be no compromised or terminated 
collection action with respect to any claim: (1) As to which there is an 
indication of fraud, the presentation of a false claim, or 
misrepresentation on the part of the debtor or any other party having an 
interest in the claim; (2) based in whole or in part on conduct in 
violation of the anti-trust laws; (3) based on tax statutes; or (4) 
arising from an exception made by the General Accounting Office in the 
account of an accountable officer. Such claims shall be promptly 
referred to the Justice Department or GAO, as appropriate.

[36 FR 24427, Dec. 22, 1971. Redesignated at 49 FR 32349, Aug. 14, 1984 
(interim), as amended at 59 FR 34580, July 6, 1994]



Sec. 17.65  Authority of offices to compromise claims or suspend or terminate collection action.

    (a) Small claims. The Assistant Secretary for Administration 
periodically shall establish and disseminate to claims collection 
officers a maximum dollar amount up to which claims collection officers 
are authorized to compromise a claim or suspend or terminate collection 
action on a claim.
    (b) Claims arising under certain programs. (1) The office primarily 
responsible for the following programs of the Department is authorized, 
in those cases where initial collection attempts are not wholly 
successful, to compromise or to suspend or terminate collection action 
on claims not exceeding $100,000 with respect to:
    (i) A claim under title I of the National Housing Act;
    (ii) A claim on a rehabilitation loan account under section 312 of 
the Housing Act of 1964;
    (iii) A claim against tenants or former tenants of properties 
acquired by, or under the custody of, the Secretary or held by him as 
mortgagee in possession; or
    (iv) A claim arising out of the operational (nonadministrative) 
activities of the Government National Mortgage Association (GNMA).
    (2) However, no office shall undertake to compromise or terminate 
any collection action excluded under Sec. 17.64(b).

[36 FR 24427, Dec. 22, 1971. Redesignated at 49 FR 32349, Aug. 14, 1984, 
and amended at 52 FR 35414, Sept. 21, 1987; 59 FR 34580, July 6, 1994]



Sec. 17.66  Department claims officer.

    The Assistant Secretary for Administration shall designate a 
subordinate official as Department Claims Officer, who shall be 
responsible for the establishment and maintenance of procedures within 
the Department relating to the collection of claims and the co-
ordination of all collection activities in all Department offices.

[40 FR 28599, July 7, 1975. Redesignated at 49 FR 32349, Aug. 14, 1984]



Sec. 17.67  Claims files.

    Each claims collection officer is responsible for obtaining current 
credit data about each person against whom a claim is pending in his 
office. The file shall be kept reasonably up to date by the Department 
Claims Officer for claims referred to the Assistant Secretary for 
Administration for collection. Such credit data may take the form of: 
(a) A commercial credit report, (b) an agency investigative report 
showing the debtor's assets and liabilities and his income and expenses, 
(c) the individual debtor's own financial statement executed under 
penalty of perjury reflecting his assets and liabilities and his income 
and expenses, or (d) an audited balance sheet of a corporate debtor. The 
file should also contain a checklist or brief summary of actions taken 
to collect or comprise a claim.



Sec. 17.68  Monthly report of collection action.

    The Department Claims Officer shall make a monthly report to the 
Assistant Secretary for Administration and all offices that have 
referred claims for collection. The report should contain the following 
information as a minimum:
    (a) All outstanding claims referred to the Assistant Secretary for 
Administration for administrative collection, including the name and 
address of the debtor, the amount of the claim, the

[[Page 185]]

date the claim accrued, the basis of the claim, the office referring the 
claim, and the current progress of collection activities.
    (b) All claims compromised or on which collection has been suspended 
or terminated or referred to GAO or Justice for further collection 
action during the month. The collection action taken and the basis for 
the action should be indicated.
    (c) All claims referred to the Department of Justice under 
Sec. 17.64(a).
    (d) Claims returned to this Department by the Justice Department for 
further collection action because Justice's handling was not warranted.



Sec. 17.69  Accounting control.

    Each office and the Department Claims Officer shall process all 
claims collections through the appropriate accounting office and report 
the collection, compromise, suspension and termination of all claims to 
the appropriate accounting office for recording.



Sec. 17.70  Record retention.

    The file of each claim on which administrative collection action has 
been completed shall be retained by the appropriate office or the 
Assistant Secretary for Administration not less than 1 year after the 
applicable statute of limitations has run.



Sec. 17.71  Suspension or revocation of eligibility.

    (a) Where a contractor, grantee, or other participant in programs 
sponsored by the Department fails to pay his debts to the Department 
within a reasonable time after demand, the fact shall be reported by the 
Assistant Secretary for Administration to the Inspector General, who 
shall place such defaulting participant's name on the Department's list 
of debarred, suspended and ineligible contractors and grantees and the 
participant will be so advised.
    (b) The failure of any surety to honor its obligations in accordance 
with 6 U.S.C. 11 is to be reported at once to the Assistant Secretary 
for Administration who shall so advise the Treasury Department. The 
Treasury Department will notify this Department when a surety's 
certificate of authority to do business with the Government has been 
revoked or forfeited.



Sec. 17.72  Methods of collection and imposition of late charges.

    (a) Demand for payment. Appropriate written demands shall be made 
upon the debtor which shall include information relating to the 
consequences of his failure to cooperate.
    (b) Methods of collection: Administrative and salary offset. The 
Department may use administrative offset and salary offset procedures as 
alternative methods for the collection of money owed the Department from 
those set out in this section. For specific procedures on administrative 
offset see Secs. 17.100 through 17.118. For specific procedures on 
salary offset see Secs. 17.125 through 17.140.
    (c) Method of collection: Liquidation of collateral. Where the 
Department holds security or collateral that may be liquidated and the 
proceeds applied on debts due it through the exercise of a power of sale 
in the security instrument, such procedures will be followed if the 
debtor fails to pay his or her debt within a reasonable time after 
demand, unless the cost of disposing of the collateral will be 
disproportionate to its value, or unless special circumstances require 
judicial foreclosure.
    (d) Collection in installments. Claims with accrued interest should 
be collected in full in one lump sum whenever this is possible. However, 
if the debtor is financially unable to pay the indebtedness in one lump 
sum, payment may be accepted in regular installments.
    (e) Interest. Where prejudgment interest is not mandated by statute, 
contract or regulation, the minimum rate of interest to be charged on 
delinquent debts is the Tax and Loan Account Rate for the U.S. Treasury 
(also known as the Current Value of Funds rate) as prescribed and 
published semiannually by the Secretary of the Treasury in the Federal 
Register, in accordance with 31 U.S.C. 3717. Prejudgment interest may be 
waived as an inducement to voluntary payment. In such cases demand 
letters should inform the debtor that prejudgment interest will be 
collected if suit becomes necessary. When

[[Page 186]]

a debt is paid in installments and interest is collected, installment 
payments will first be applied to the payment of accrued interest and 
then to principal unless a different rule is prescribed by statute, 
contract or regulation. Prejudgment interest shall not be demanded or 
collected on civil penalty and forfeiture claim unless the statute under 
which the claim arises authorizes the collection of such interest.
    (f) Omission not a defense. Failure of HUD to comply with any 
standard prescribed in 4 CFR parts 101 through 105 or in this subpart 
shall not be available as a defense to any debtor.

[36 FR 24427, Dec. 22, 1971. Redesignated and amended at 49 FR 32349, 
32350, Aug. 14, 1984; 59 FR 34580, July 6, 1994]



Sec. 17.73  Standards for compromise of claims.

    (a) Compromise offer. An offer to compromise may be accepted: (1) If 
there is real doubt concerning the Department's ability to prove its 
case in court for the full amount claimed; (2) if the cost of collecting 
the claim does not justify the enforced collection of the full amount; 
(3) if in connection with statutory penalties of forfeitures established 
as an aid to enforcement and to compel compliance, the Department's 
enforcement policy will be adequately served by acceptance of the sum to 
be agreed upon, or (4) for other reasons deemed valid by the Assistant 
Secretary for Administration (or other designee) and made a part of the 
claim record.
    (b) Documentary evidence of compromise. No compromise of a claim 
shall be final or binding on the Department unless it is in writing and 
signed by the appropriate officer who has authority to compromise the 
claim pursuant to this subpart.



Sec. 17.74  Standards for suspension or termination of collection action.

    (a) Suspension of collection action. Collection action shall be 
suspended temporarily on a claim when the debtor cannot be located after 
diligent effort but there is reason to believe that future collection 
action may be sufficiently productive to justify periodic review and 
action on the claim, having consideration for its size and the amount 
which may be realized. Collection action may be suspended temporarily on 
a claim when the debtor owns no substantial equity in realty and is 
presently unable to make payment on the Department's claim or effect a 
compromise, but his future prospects justify retention of the claim for 
periodic review and action and (1) the applicable statute of limitations 
has been tolled or started anew or (2) future collection can be effected 
by offset notwithstanding the statute of limitations. Suspension as to a 
particular debtor should not defer the early liquidation of security for 
the debt.
    (b) Termination of collection action. Collection action may be 
terminated and the Department file closed for the following reasons: (1) 
No substantial amount can be collected; (2) the debtor cannot be 
located; (3) the cost will exceed recovery; (4) the claim is legally 
without merit; or (5) the claim cannot be substantiated by evidence.



Sec. 17.75  Referral to GAO or Justice Department.

    (a) Claims referred. Claims which cannot be collected, compromised, 
or terminated in accordance with 4 CFR parts 101 to 105 will be referred 
to the General Accounting Office in accordance with 31 U.S.C. 71 or to 
the Department of Justice if this Department has been granted an 
exception from referrals to the General Accounting Office. Also, if 
there is doubt as to whether collection action should be suspended or 
terminated on a claim, the claim may be referred to the General 
Accounting Office for advice. When recovery of a judgment is 
prerequisite to imposition of administrative sanctions, the claim may be 
referred to the Justice Department for litigation even though 
termination of collection activity might otherwise be considered.
    (b) Prompt referral. Such referrals shall be made as early as 
possible consistent with aggressive collection action, and in any event, 
well within the statute of limitations for bringing suit against the 
debtor.

[[Page 187]]



Sec. 17.76  Disclosure to a consumer reporting agency.

    (a) Definition. For purposes of this section, individual means a 
natural person.
    (b) Conditions for disclosure. The Secretary may disclose to a 
Consumer Reporting Agency information from a system of records to the 
effect that an individual is responsible for a debt. Before doing so, 
the Secretary will ensure that:
    (1) The notice for the system of records required by the Privacy Act 
of 1974 (5 U.S.C. 552a(e)(4)) indicates that the information in the 
system may be disclosed to a Consumer Reporting Agency;
    (2) There has been Departmental review of the debt and a 
determination that the debt is valid and overdue;
    (3) There has been written notice sent to the individual informing 
the individual:
    (i) That payment of the debt is overdue;
    (ii) That the Department intends to disclose to a Consumer Reporting 
Agency, within not less than 60 days after sending the notice, that the 
individual is responsible for the debt;
    (iii) Of the specific information intended to be disclosed to the 
Consumer Reporting Agency; and
    (iv) Of the rights of the individual to a full explanation of the 
debt, to dispute any information in the records of the Department 
concerning the debt, as determined by the Secretary, and to 
administrative appeal or review with respect to the debt; and
    (4) The individual has neither repaid or agreed to repay the debt 
under a written repayment plan signed by the individual and agreed to by 
the Secretary nor has filed for review of the claim under paragraph (c) 
of this section.
    (c) Limitations on disclosure. The Secretary may not disclose 
information to a Consumer Reporting Agency unless the Department has:
    (1) Obtained satisfactory assurances from each Consumer Reporting 
Agency that the agency is complying with the Fair Credit Reporting Act 
(15 U.S.C. 1681) and any other Federal laws governing the provision of 
consumer credit information;
    (2) Provided, upon request by the individual alleged to be 
responsible for the claim, the opportunity to review the claim, 
including an opportunity for reconsideration of the initial decision on 
the claim; and
    (3) Taken reasonable action to locate an individual for whom the 
Secretary does not have a current address to send a notice under 
paragraph (b)(3) of this section.
    (d) Additional responsibilities of the Department. In providing 
information to a Consumer Reporting Agency, the Department will only 
disclose:
    (1) Information necessary to establish the identity of the 
individual, including name, address and taxpayer identification number;
    (2) The amount, status, and history of the claim; and
    (3) The program under which the claim arose.

In all cases, the Department will notify each Consumer Reporting Agency 
to which the original disclosure was made of any substantial change in 
the condition or amount of the claim. This includes promptly correcting 
or verifying information about the claim requested by the Consumer 
Reporting Agency.

[49 FR 32350, Aug. 14, 1984]



Sec. 17.77  Contracts for collection services.

    The Secretary may enter into a contract or contracts for collection 
services to recover indebtedness owed the Department. Any such contract 
will include the following provisions:
    (a) The Secretary retains the authority to resolve a dispute, 
compromise a claim, end collection action or refer a matter to the 
Attorney General to bring civil action;
    (b) The person contracted with by the Secretary is subject to the 
Privacy Act of 1974 to the extent provided for in 5 U.S.C. 552a(m), the 
section on government contractors;
    (c) The person contracted with by the Secretary is subject to State 
and Federal laws governing debt collection practices, such as the Debt 
Collection Practices Act, 15 U.S.C. 1692; and
    (d) The person contracted with agrees to provide to the Secretary, 
if asked to return the file to the Department so

[[Page 188]]

that the Secretary may refer the account to the Department of Justice 
for litigation, any data contained in the files relating to actions 
previously taken to collect the debt, the current address of the debtor, 
as well as the current credit data of the debtor or any current other 
information requested and available.

[49 FR 32350, Aug. 14, 1984]

                    Administrative Offset Provisions

    Source: Sections 17.100 through 17.118, 49 FR 32351, appear at Aug. 
14, 1984, unless otherwise noted.



Sec. 17.100  Scope.

    (a) The standards set forth in Secs. 17.100 through 17.118 are the 
Department's procedures for the collection of money owed to the 
government by means of administrative offset. These procedures apply to 
the collection of debts as authorized by common law, by 31 U.S.C. 3716, 
or under other statutory authority. These procedures will not be used 
when a statute provides its own collection procedure, for procedures for 
grant reduction as a remedial action in grant programs (including the 
CDBG program), when explicitly prohibited by a statute, or when the 
United States has a judgment against the debtor. Unless otherwise 
provided for by statute, these procedures do not apply to an agency of 
the United States, a State government, or unit of general local 
government. In addition, these procedures do not apply to debts arising 
under the Internal Revenue Code of 1954 (26 U.S.C. 1-9602), the Social 
Security Act (42 U.S.C. 301-1397f), or the tariff laws of the United 
States.
    (b) The Secretary will use administrative offset to collect claims 
which are certain in amount in every instance in which collection is 
determined to be feasible and not prohibited by law. The Secretary will 
determine feasibility on a case-by-case basis, exercising sound 
discretion. In determining feasibility the Secretary will consider:
    (1) The debtor's financial condition;
    (2) Whether offset would substantially interfere with or defeat the 
purposes of the program authorizing the payments against which offset is 
contemplated; and
    (3) Whether offset best serves to further and protect all of the 
interests of the United States.



Sec. 17.101  Coordinating administrative offset with another Federal agency.

    (a) When HUD is owed the debt. When the Department is owed a debt, 
but another Federal agency is responsible for making the payment to the 
debtor against which administrative offset is sought, the other agency 
shall not initiate the requested administrative offset until the 
Department provides the agency with a written certification that the 
debtor owes the Department a debt (including the amount and basis of the 
debt and the due date of the payment) and that the Department has 
complied with these regulations.
    (b) When another agency is owed the debt. The Department may 
administratively offset money it owes to a person who is indebted to 
another agency if requested to do so by that agency. Such a request must 
be accompanied by a certification by the requesting agency that the 
person owes the debt (including the amount) and that the person has been 
given the procedural rights required by 31 U.S.C. 3716 and 4 CFR part 
102.



Sec. 17.102  Notice requirements before offset.

    Except as provided in Sec. 17.103, deductions will be made only 
after the Secretary makes a determination that an amount is owed and 
past due and provides the debtor with a minimum of 30 calendar days 
written notice. This Notice of Intent to Collect by Administrative 
Offset (Notice of Intent) will state:
    (a) The nature and amount of the debt:
    (b) That the Secretary intends to collect the debt by administrative 
offset until the debt and all accumulated interest and other charges are 
paid in full;
    (c) That the debtor has a right to obtain review within the 
Department of the Secretary's initial determination of indebtedness (see 
Sec. 17.104);
    (d) That the debtor has a right to inspect and copy Department 
records related to the debt, as determined by the

[[Page 189]]

Secretary, and will be informed as to where and when the inspection and 
copying can be done after the Department receives notice from the debtor 
that inspection and copying are requested. (see Sec. 17.105); and
    (e) That the debtor may enter into a written agreement with the 
Secretary to repay the debt, so long as the terms of the repayment 
agreement proposed by the debtor are agreeable to the Secretary (see 
Sec. 17.106).



Sec. 17.103  Exceptions to notice requirements.

    (a) In cases where the notice requirements specified in Sec. 17.102 
already have been provided to the debtor in connection with the same 
debt under some other proceeding, the Secretary is not required to 
duplicate those requirements before effecting administrative offset.
    (b) The Secretary may effect administrative offset against a payment 
to be made to a debtor before completion of the procedures required by 
Sec. 17.102 if (1) failure to make the offset would substantially 
prejudice the Government's ability to collect the debt, and (2) the time 
before the payment is to be made does not reasonably permit the 
completion of those procedures. Such prior offset must be followed 
promptly by the completion of those procedures. Amounts recovered by 
offset but later found not to be owed to the Secretary will be refunded 
promptly.



Sec. 17.104  Review within the Department of a determination of indebtedness.

    (a) Notification by debtor. A debtor who receives a Notice of Intent 
has the right to request Departmental review of the determination of 
indebtedness. To exercise this right, the debtor must send a letter 
requesting review to the Secretary. The letter must explain why the 
debtor seeks review and must be received by the Secretary within 20 
calendar days of the date of the Department's Notice of Intent.
    (b) Secretary's response. In response to a timely request for review 
of the initial determination of indebtedness, the Secretary will notify 
the debtor whether review will be by review of the record or by hearing. 
The notice to the debtor will include the procedures used for reviewing 
the record or will include information on the date, location and 
procedures to be used if review is by a hearing.



Sec. 17.105  Review of departmental records related to the debt.

    (a) Notification by debtor. A debtor who intends to inspect or copy 
Departmental records related to the debt as determined by the Secretary 
must send a letter to the Secretary stating his or her intention. The 
letter must be received by the Secretary within 20 calendar days of the 
date of the Department's Notice of Intent.
    (b) Secretary's response. In response to timely notification by the 
debtor as described in paragraph (a) of this section, the Secretary will 
notify the debtor of the location and time when the debtor may inspect 
or copy Department records related to the debt.



Sec. 17.106  Written agreement to repay debt as alternative to administrative offset.

    (a) Notification by debtor. The debtor may, in response to a Notice 
of Intent, propose a written agreement to repay the debt as an 
alternative to administrative offset. Any debtor who wishes to do this 
must submit a proposed written agreement to repay the debt. This 
proposed written agreement must be received by the Secretary within 20 
calendar days of the date of the Department's Notice of Intent.
    (b) Secretary's response. In response to timely notification by the 
debtor as described in paragraph (a) of this section, the Secretary will 
notify the debtor whether the debtor's proposed written agreement for 
repayment is acceptable. It is within the Secretary's discretion to 
accept a repayment agreement instead of proceeding by offset. In making 
this determination the Secretary will balance the Department's interest 
in collecting the debt against hardship to the debtor. If the debt is 
delinquent and the debtor has not disputed its existence or amount, the 
Secretary will accept a repayment agreement instead of offset only if 
the debtor is able to establish that offset would result in undue 
financial hardship or would be against equity and good conscience.

[[Page 190]]



Sec. 17.107  Stay of offset.

    If the debtor timely notifies the Secretary that he or she is 
exercising a right described in Sec. 17.104 or Sec. 17.106, the offset 
will be stayed until the Secretary either makes a determination 
concerning the debtor's proposal to repay the debt or issues a written 
decision following review of the record or, where appropriate, a 
hearing. However, interest continues to run during any stay.



Sec. 17.108  Types of review.

    (a) Hearing. The Secretary will provide the debtor with a reasonable 
opportunity for hearing if:
    (1) An applicable statute authorizes or requires the Secretary to 
consider waiver of the indebtedness and the waiver determination turns 
on credibility or veracity; or
    (2) The debtor requests reconsideration of the debt and the 
Secretary determines that the question of the indebtedness cannot be 
resolved by review of the documentary evidence.
    (b) Review of the record. Unless the Secretary determines that a 
hearing is required (see paragraph (a) of this section), the Secretary 
will provide for a review of the record (a review of the documentary 
evidence).



Sec. 17.109  Review procedures.

    (a) Hearings. (1) The appropriate Deputy Assistant Secretary (DAS) 
or designee conducts the hearing. The DAS or designee will take steps 
necessary to ensure that the hearing is conducted in a fair and 
expeditious manner. If necessary, the DAS or designee may administer 
oaths of affirmations.
    (2) The DAS or designee does not use the formal rules of evidence 
with regard to admissibility of evidence or the use of evidence once 
admitted. However, parties may object to clearly irrelevant material.
    (3) The DAS or designee records all significant matters discussed at 
the hearing. There is no ``official'' record or transcript provided for 
these hearings.
    (4) A debtor may represent himself or herself or may be represented 
by an attorney or other person. The Secretary is represented by the 
General Counsel or his or her designee.
    (5) The Secretary proceeds first by presenting evidence on the 
relevant issues. The debtor then presents his or her evidence regarding 
these issues. The Secretary then may offer evidence to rebut or clarify 
the evidence introduced by the debtor.
    (b) Review of the record. The appropriate DAS or designee will 
review all material related to the debt which is in the possession of 
the Department. The DAS or designee makes a determination based upon a 
review of this written record, which may include a request for 
reconsideration of the determination of indebtedness, or such other 
relevant material submitted by the debtor.



Sec. 17.110  Determination of indebtedness and appeal from determination.

    (a) Following the hearing or the review of the record, the DAS or 
designee will issue a written decision which includes the supporting 
rationale for the decision. The decision of the DAS or designee is the 
final agency action with regard to the particular administrative offset.
    (b) Copies of the DAS decision will be distributed to the debtor and 
the debtor's attorney or other representative, if applicable.

[36 FR 24427, Dec. 22, 1971. Redesignated at 49 FR 32349, Aug. 14, 1984 
(interim), as amended at 59 FR 34580, July 6, 1994]



Sec. 17.111  Procedures for administrative offset: single debt.

    (a) Offset will commence 31 days after the debtor receives the 
Notice of Intent, unless the debtor has requested a hearing (see 
Sec. 17.104) or has entered into a repayment agreement (see 
Sec. 17.106).
    (b) When there is review of the debt within the Department, offset 
will begin after the DAS determination has been issued under Sec. 17.110 
and a copy of the determination is received by the Department's Office 
of Finance and Accounting.



Sec. 17.112  Procedures for administrative offset: multiple debts.

    The Secretary will use the procedures identified in Sec. 17.111 for 
the offset of multiple debts. However, when collecting multiple debts 
the Secretary

[[Page 191]]

will apply the recovered amounts to those debts in accordance with the 
best interests of the United States, as determined by the facts and 
circumstances of the particular case, paying special attention to 
applicable statutes of limitations.



Sec. 17.113  Procedures for administrative offset: interagency cooperation.

    The Department will make use of all possible methods of cooperating 
with other Federal agencies in effecting collections by offset.



Sec. 17.114  Procedures for administrative offset: time limitation.

    (a) The Secretary may not initiate administrative offset to collect 
a debt under 31 U.S.C. 3716 more than 10 years after the Secretary's 
right to collect the debt first accrued, unless facts material to the 
Secretary's right to collect the debt were not known and could not 
reasonably have been known by the officials of the Department who were 
responsible for discovering and collecting such debts.
    (b) When the debt first accrued is determined according to existing 
law regarding the accrual of debts. (See, for example, 28 U.S.C. 2415.)



Sec. 17.115  Procedures for administrative offset: offset against amounts payable from Civil Service Retirement and Disability Fund.

    (a) Unless otherwise prohibited by law, the Secretary may request 
that moneys which are due and payble to a debtor from the Civil Service 
Retirement and Disability Fund be administratively offset in one or more 
payments to collect debts owed to the Secretary by the debtor. The 
Secretary submits the request to the appropriate officials of the Office 
of Personnel Management (OPM) in accordance with OPM regulations and 
procedures.
    (b) To request administrative offset under paragraph (a) of this 
section, the Secretary will provide a written certification that:
    (1) The debtor owes the Secretary a debt, including the amount of 
the debt;
    (2) The Secretary has complied with the applicable statutes, 
regulations, and procedures of the Office of Personnel Management; and
    (3) The Secretary has complied with the Department's regulations 
contained in these regulations.
    (c) Once the decision is made to request administrative offset under 
paragraph (a) of this section, the Secretary will make the request as 
soon as practical after completion of the applicable procedures 
necessary for the Office of Personnel Management to identify the 
debtor's account and to add a notation in the debtor's file in 
anticipation of the time when the debtor requests or becomes eligible to 
receive payments from the Fund. (This notation will satisfy any 
requirement that offset be initiated before the applicable statute of 
limitations expires.)
    (d) If, at the time the debtor makes a claim for payments from the 
Fund, at least one year has elapsed since the offset was originally 
made, the debtor may offer a satisfactory repayment plan instead of 
offset upon establishing that changed financial circumstances would 
render the offset unjust.
    (e) If the Department collects part or all of the debt by other 
means before deductions are made or completed under paragraph (a) of 
this section, the Secretary will act promptly to modify or terminate the 
Department's request for offset under paragraph (a) of this section.



Sec. 17.116  Procedures for administrative offset: offset of debtor's judgment against the United States.

    Collection by offset against a judgment obtained by a debtor against 
the United States will be accomplished in accordance with 31 U.S.C. 
3728.



Sec. 17.117  Procedures for administrative offset: imposition of interest.

    Interest will be charged in accordance with Sec. 17.72.



Sec. 17.118  Miscellaneous provisions: correspondence with the Department.

    (a) All correspondence from the debtor to the Secretary shall be 
addressed to the Department Claims Officer, Office of Finance and 
Accounting, Department of HUD, Washington, DC 20410.
    (b) The Department Claims Officer will deliver any correspondence to 
the

[[Page 192]]

appropriate Deputy Assistant Secretary within four working days.

                        Salary Offset Provisions

    Source: Sections 17.125 through 17.140, appear at 49 FR 32353, Aug. 
14, 1984, unless otherwise noted.



Sec. 17.125  Scope.

    (a) The provisions set forth in Secs. 17.125 through 17.140 are the 
Department's procedures for the collection by salary offset of a Federal 
employee's pay to satisfy certain debts owed the government.
    (b) These regulations apply to collections by the Secretary from:
    (1) Current employees of the Department and other agencies who owe 
debts to the Department; and
    (2) Current employees of the Department who owe debts to other 
agencies.
    (c) These regulations do not apply to debts or claims arising under 
the Internal Revenue Code of 1954 (26 U.S.C. 1-9602); the Social 
Security Act (42 U.S.C. 301-1397f); the tariff laws of the United 
States; or to any case where collection of a debt by salary offset is 
explicitly provided for or prohibited by another statute.
    (d) These regulations identify the types of salary offset available 
to the Department, as well as certain rights provided to the employee, 
which include a written notice before deductions begin, the opportunity 
to petition for a hearing and to receive a written decision if a hearing 
is granted. These employee rights do not apply to any adjustment to pay 
arising out of an employee's election of coverage or a change in 
coverage under a Federal benefits program requiring periodic deductions 
from pay, if the amount to be recovered was accumulated over four pay 
periods or less.
    (e) Nothing in these regulations precludes the compromise, 
suspension or termination of collection actions where appropriate under 
the Department's regulations contained elsewhere in this subpart (see 24 
CFR 17.60 through 17.77).



Sec. 17.126  Coordinating offset with another Federal agency.

    (a) When HUD is owed the debt. When the Department is owed a debt by 
an employee of another agency, the other agency shall not initiate the 
requested offset until the Department provides the agency with a written 
certification that the debtor owes the Department a debt (including the 
amount and basis of the debt and the due date of the payment) and that 
the Department has complied with these regulations.
    (b) When another agency is owed the debt. The Department may use 
salary offset against one of its employees who is indebted to another 
agency if requested to do so by that agency. Such a request must be 
accompanied by a certification by the requesting agency that the person 
owes the debt (including the amount) and that the employee has been 
given the procedural rights required by 5 U.S.C. 5514 and 5 CFR part 
550, subpart K.



Sec. 17.127  Determination of indebtedness.

    In determining that an employee is indebted, the Secretary will 
review the debt to make sure that it is valid and past due.



Sec. 17.128  Notice requirements before offset.

    Except as provided in Sec. 17.125(d), deductions will not be made 
unless the Secretary first provides the employee with a minimum of 30 
calendar days written notice. This Notice of Intent to Offset Salary 
(Notice of Intent) will state:
    (a) That the Secretary has reviewed the records relating to the 
claim and has determined that a debt is owed, the amount of the debt, 
and the facts giving rise to the debt;
    (b) The Secretary's intention to collect the debt by means of 
deduction from the employee's current disposable pay account until the 
debt and all accumulated interest are paid in full;
    (c) The amount, frequency, approximate beginning date, and duration 
of the intended deductions;
    (d) An explanation of the Department's requirements concerning 
interest, unless such payments are excused in accordance with 
Sec. 17.72;
    (e) The employee's right to inspect and copy Department records 
relating to the debt;

[[Page 193]]

    (f) The employee's right to enter into a written agreement with the 
Secretary for a repayment schedule differing from that proposed by the 
Secretary, so long as the terms of the repayment schedule proposed by 
the employee are agreeable to the Secretary;
    (g) The right to a hearing, conducted by an administrative law judge 
of the Department or a hearing official of another agency, on the 
Secretary's determination of the debt, the amount of the debt, or 
percentage of disposable pay to be deducted each pay period, so long as 
a petition is filed by the employee as prescribed by the Secretary;
    (h) That the timely filing of a petition for hearing will stay the 
collection proceedings; (See Sec. 17.129).
    (i) That a final decision on the hearing will be issued at the 
earliest practical date, but not later than 60 calendar days after the 
filing of the petition requesting the hearing, unless the employee 
requests and the hearing officer grants a delay in the proceedings;
    (j) That any knowingly false or frivolous statements, 
representations, or evidence may subject the employee to:
    (1) Disciplinary procedures appropriate under 5 U.S.C. Ch. 75, 5 CFR 
part 752, or any other applicable statutes or regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable statutory authority; or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or 
any other applicable statutory authority.
    (k) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made;
    (l) Unless there are applicable contractual or statutory provisions 
to the contrary, that amounts paid on or deducted for the debt which are 
later waived or found not owed to the United States will be promptly 
refunded to the employee; and
    (m) The method and time period for requesting a hearing.



Sec. 17.129  Request for a hearing.

    (a) Except as provided in paragraph (d) of this section, an employee 
must file a petition for a hearing, that is received by the Secretary 
not later than 20 calendar days from the date of the Department's notice 
described in Sec. 17.128 if an employee wants a hearing concerning--
    (1) The existence or amount of the debt; or
    (2) The Secretary's proposed offset schedule.
    (b) The petition must be signed by the employee and should admit or 
deny the existence of or the amount of the debt, or any part of the 
debt, briefly setting forth any basis for a denial. If the employee 
objects to the percentage of disposable pay to be deducted from each 
check, the petition should state the objection and the reasons for it. 
The petition should identify and explain with reasonable specificity and 
brevity the facts, evidence and witnesses which the employee believes 
support his or her position.
    (c) Upon receipt of the petition, the Department will send the 
employee a copy of the Salary Offset Hearing Procedures Manual of the 
Department of Housing and Urban Development.
    (d) If the employee files a petition for hearing later than the 20 
calendar days as described in paragraph (a) of this section, the hearing 
officer may accept the request if the employee can show that the delay 
was because of circumstances beyond his or her control or because of 
failure to receive notice of the filing deadline (unless the employee 
has actual notice of the filing deadline).



Sec. 17.130  Result if employee fails to meet deadlines.

    An employee waives the right to a hearing, and will have his or her 
disposable pay offset in accordance with the Secretary's offset 
schedule, if the employee:
    (a) Fails to file a petition for a hearing as prescribed in 
Sec. 17.129; or
    (b) Is scheduled to appear and fails to appear at the hearing.



Sec. 17.131  Written decision following a hearing.

    Written decisions provided after a request for a hearing will 
include:
    (a) A statement of the facts presented to support the nature and 
origin of the alleged debt;

[[Page 194]]

    (b) The hearing officer's analysis, findings and conclusions, in 
light of the hearing, concerning the employee's or the Department's 
grounds;
    (c) The amount and validity of the alleged debt; and
    (d) The repayment schedule, if applicable.



Sec. 17.132  Review of departmental records related to the debt.

    (a) Notification by employee. An employee who intends to inspect or 
copy departmental records related to the debt must send a letter to the 
Secretary stating his or her intention. The letter must be received by 
the Secretary within 20 calendar days of the date of the Notice of 
Intent.
    (b) Secretary's response. In response to timely notice submitted by 
the debtor as described in paragraph (a) of this section, the Secretary 
will notify the employee of the location and time when the employee may 
inspect and copy Department records related to the debt.



Sec. 17.133  Written agreement to repay debt as alternative to salary offset.

    (a) Notification by employee. The employee may propose, in response 
to a Notice of Intent, a written agreement to repay the debt as an 
alternative to salary offset. Any employee who wishes to do this must 
submit a proposed written agreement to repay the debt which is received 
by the Secretary within 20 calendar days of the date of the Notice of 
Intent.
    (b) Secretary's response. In response to timely notice by the debtor 
as described in paragraph (a) of this section, the Secretary will notify 
the employee whether the employee's proposed written agreement for 
repayment is acceptable. It is within the Secretary's discretion to 
accept a repayment agreement instead of proceeding by offset. In making 
this determination, the Secretary will balance the Department's interest 
in collecting the debt against hardship to the employee. If the debt is 
delinquent and the employee has not disputed its existence or amount, 
the Secretary will accept a repayment agreement instead of offset only 
if the employee is able to establish that offset would result in undue 
financial hardship or would be against equity and good conscience.



Sec. 17.134  Procedures for salary offset: when deductions may begin.

    (a) Deductions to liquidate an employee's debt will be by the method 
and in the amount stated in the Secretary's Notice of Intent to collect 
from the employee's current pay.
    (b) If the employee filed a petition for hearing with the Secretary 
before the expiration of the period provided for in Sec. 17.129, then 
deductions will begin after the hearing officer has provided the 
employee with a hearing, and the final written decision is in favor of 
the Secretary.
    (c) If an employee retires or resigns before collection of the 
amount of the indebtedness is completed, the remaining indebtedness will 
be collected according to the procedures for administrative offset (see 
Secs. 17.100 through 17.118).



Sec. 17.135  Procedures for salary offset: types of collection.

    A debt will be collected in a lump-sum or in installments. 
Collection will be by lump-sum collection unless the employee is 
financially unable to pay in one lump-sum, or if the amount of the debt 
exceeds 15 percent of disposable pay. In these cases, deduction will be 
by installments.



Sec. 17.136  Procedures for salary offset: methods of collection.

    (a) General. A debt will be collected by deductions at officially-
established pay intervals from an employee's current pay account, unless 
the employee and the Secretary agree to alternative arrangements for 
repayment. The alternative arrangement must be in writing, signed by 
both the employee and the Secretary.
    (b) Installment deductions. Installment deductions will be made over 
a period not greater than the anticipated period of employment. The size 
and frequency of installment deductions will bear a reasonable relation 
to the size of the debt and the employee's ability to pay. However, the 
amount deducted for any period will not exceed 15 percent of the 
disposable pay from which the deduction is made, unless the employee has

[[Page 195]]

agreed in writing to the deduction of a greater amount. If possible, the 
installment payment will be sufficient in size and frequency to 
liquidate the debt in three years. Installment payments of less than $25 
per pay period or $50 a month will be accepted only in the most unusual 
circumstances.
    (c) Sources of deductions. The Department will make deductions only 
from basic pay, special pay, incentive pay, retired pay, retainer pay, 
or in the case of an employee not entitled to basic pay, other 
authorized pay.



Sec. 17.137  Procedures for salary offset: imposition of interest.

    Interest will be charged in accordance with Sec. 17.72.



Sec. 17.138  Non-waiver of rights.

    So long as there are no statutory or contractual provisions to the 
contrary, no employee involuntary payment (of all or a portion of a 
debt) collected under these regulations will be interpreted as a waiver 
of any rights that the employee may have under 5 U.S.C. 5514.



Sec. 17.139  Refunds.

    The Department will refund promptly to the appropriate individual 
amounts offset under these regulations when:
    (a) A debt is waived or otherwise found not owing the United States 
(unless expressly prohibited by statute or regulation); or
    (b) The Department is directed by an administrative or judicial 
order to refund amounts deducted from the employee's current pay.



Sec. 17.140  Miscellaneous provisions: correspondence with the Department.

    The employee shall file an original and two copies of a request for 
a hearing with the Clerk, Office of the Chief Administrative Law Judge, 
Room 2158, Department of HUD, Washington, DC 20410, on official work 
days between the hours of 8:45 a.m. and 5:15 p.m. All other 
correspondence shall be submitted to the Department Claims Officer, 
Department of Housing and Urban Development, Washington, DC 20410. 
Documents may be filed by personal delivery or mail. All documents shall 
be printed, typewritten, or otherwise processed in clear, legible form 
and on letter-size paper.

                    IRS Tax Refund Offset Provisions

    Source: Sections 17.150 through 17.161 appear at 51 FR 39750, Oct. 
31, 1986, unless otherwise noted.



Sec. 17.150  Scope.

    (a) The standards set forth in Secs. 17.150 through 17.161 are the 
Department's procedures for requesting the Internal Revenue Service 
(IRS) to offset tax refunds due taxpayers who have a past-due debt 
obligation to the Department. These procedures are authorized by the 
Deficit Reduction Act of 1984 (31 U.S.C. 3720A) and apply to the 
collection of debts as authorized by common law, by 31 U.S.C. 3716, or 
under other statutory authority.
    (b) The Secretary will use the IRS tax refund offset to collect 
claims which are certain in amount, past due and legally enforceable, 
and which are eligible for tax refund offset under regulations issued by 
the Secretary of the Treasury.
    (c) The Secretary will not report debts to the IRS except for the 
purpose of using the offset procedures described in Secs. 17.150 through 
17.161. Debts of less than $100.00, exclusive of interest and other 
charges, will not be reported.
    (d) If not legally enforceable because of lapse of statute of 
limitations but otherwise valid, the debt will be reported to the IRS as 
a forgiven debt on Form 1099G. (Form 1099G is an information return 
which Government agencies file with the IRS to report forgiven debt, and 
the forgiven amount is considered income to the taxpayer.) (See 
Sec. 17.159.)



Sec. 17.151  Notice requirements before offset.

    A request for deduction from an IRS tax refund will be made only 
after the Secretary makes a determination that an amount is owed and 
past due and provides the debtor with 65 calendar days written notice. 
This Notice of Intent to Collect by IRS Tax Refund Offset (Notice of 
Intent) will state:
    (a) The nature and amount of the debt;

[[Page 196]]

    (b) That unless the debt is repaid within 65 days from the date of 
the Notice, the Secretary intends to collect the debt by requesting the 
IRS to reduce any amounts payable to the debtor as refunds of Federal 
taxes paid by amount equal to the amount of the debt and all accumulated 
interest and other charges;
    (c) That the debtor has a right to obtain review within the 
Department of the Secretary's initial determination that the debt is 
past due and legally enforceable (see Sec. 17.152);
    (d) That the debtor has a right to inspect and copy departmental 
records related to the debt as determined by the Secretary and will be 
informed as to where and when the inspection and copying can be done 
after the Department receives notice from the debtor that inspection and 
copying are requested. (See Sec. 17.155.)



Sec. 17.152  Review within the Department of a determination that an amount is past-due and legally enforceable.

    (a) Notification by debtor. A debtor who receives a Notice of Intent 
has the right to present evidence that all or part of the debt is not 
past-due or not legally enforceable. The debtor should send a copy of 
the Notice of Intent with a letter notifying the HUD Board of Contract 
Appeals within 25 calendar days from the date of the Department's Notice 
of Intent that he or she intends to present evidence. (See 
Sec. 17.161(a) for address of the Board.) Failure to give this advance 
notice will not jeopardize the debtor's right to present evidence within 
the 65 days provided for in paragraph (b) of this section. If the HUD 
Board of Contract Appeals has additional procedures governing the review 
process, a copy of the procedures will be mailed to the debtor after his 
request for review is received and docketed by the Board.
    (b) Submission of evidence. The debtor may submit evidence showing 
that all or part of the debt is not past-due or not legally enforceable 
along with the notification requested by paragraph (a) of this section, 
but in any event the evidence must be submitted to the Board of Contract 
Appeals within 65 calendar days from the date of the Department's Notice 
of Intent. Failure to submit evidence within 65 calendar days will 
result in a dismissal of the request for review by the HUD Board of 
Contract Appeals.
    (c) Review of the record. After a timely submission of evidence by 
the debtor, an Administrative Judge from the HUD Board of Contract 
Appeals will review the evidence submitted by the Department which shows 
that all or part of the debt is past-due and legally enforceable. 
(Administrative Judges are appointed in accordance with 41 U.S.C. 
607(b)(1)). The Administrative Judge shall make a determination based 
upon a review of the written record, except that the Administrative 
Judge may order an oral hearing if he or she finds that:
    (1) An applicable statute authorizes or requires the Secretary to 
consider waiver of the indebtedness and the waiver determination turns 
on credibility or veracity; or
    (2) The question of indebtedness cannot be resolved by review of the 
documentary evidence.
    (d) Previous decision by Board of Contract Appeals. The debtor is 
not entitled to a review of the Department's intent to offset it, in a 
previous year the HUD Board of Contract Appeals has issued a decision on 
the merits that the debt is past-due and legally enforceable, except 
when the debt has become legally unenforceable since the issuance of 
that decision, or the debtor can submit newly discovered material 
evidence that the debt is presently not legally enforceable.



Sec. 17.153  Determination of the Administrative Judge.

    (a) Following the hearing or the review of the record, the 
Administrative Judge shall issue a written decision which includes the 
supporting rationale for the decision. The decision of the 
Administrative Judge concerning whether a debt or part of a debt is 
past-due and legally enforceable is the final agency decision with 
respect to the past-due status and enforceability of the debt.
    (b) Copies of the Administrative Judge's decision will be 
distributed to

[[Page 197]]

the General Counsel of the Department, the Department's Office of 
Finance and Accounting, the debtor, and the debtor's attorney or other 
representative, if any.
    (c) If the Administrative Judge's decision affirms that all or part 
of the debt is past due and legally enforceable, the Secretary will 
notify the IRS after the Administrative Judge's determination has been 
issued under paragraph (a) of this section and a copy of the 
determination is received by the Department's Office of Finance and 
Accounting. No referral will be made to the IRS if review of the debt by 
the Administrative Judge reverses the initial decision that the debt is 
past due and legally enforceable.



Sec. 17.154  Postponements, withdrawals and extensions of time.

    (a) Postponements and withdrawals. The Secretary may, for good 
cause, postpone or withdraw referral of the debt to the IRS. (For 
example, a delay in the mail between the debtor and the Secretary could 
normally warrant a postponement; a mathematical error or computer 
malfunction could be the reason for a withdrawal.)
    (b) Extensions of time. At the discretion of the Administrative 
Judge, time limitations required in these procedures may be extended in 
appropriate circumstances for good cause shown.



Sec. 17.155  Review of departmental records related to the debt.

    (a) Notification by debtor. A debtor who intends to inspect or copy 
departmental records related to the debt as determined by the Secretary 
must send a letter to the Title I Representative stating his or her 
intention. The letter must be received by the Title I Representative 
within 25 calendar days from the date of the Department's Notice of 
Intent.
    (b) Department's response. In response to timely notification by the 
debtor as described in paragraph (a) of this section, the Title I 
Representative will notify the debtor of the location and time when the 
debtor may inspect or copy departmental records related to the debt.



Sec. 17.156  Stay of offset.

    If the debtor timely notifies the Secretary that he or she is 
exercising a right described in Sec. 17.152(a) and timely submits 
evidence in accordance with Sec. 17.152(b), any notice to the IRS will 
be stayed until the issuance of a written decision by the Administrative 
Judge which determines that a debt or part of a debt is past-due and 
legally enforceable.



Sec. 17.157  Application of offset funds: Single debt.

    If the debtor does not timely notify the Secretary that he or she is 
exercising a right described in Sec. 17.152, the Secretary will notify 
the IRS of the debt no earlier than 65 calendar days from the date of 
the Department's Notice of Intent, and will request that the amount of 
the debt be offset against any amount payable by the IRS as refund of 
Federal taxes paid. Normally, recovered funds will be applied first to 
costs of collection, then to any special charges provided for in HUD 
regulations or contracts, then to interest and finally, to the principal 
owed by the debtor.



Sec. 17.158  Application of offset funds: Multiple debts.

    The Secretary will use the procedures set out in Sec. 17.157 for the 
offset of multiple debts. However, when collecting on multiple debts the 
Secretary will apply the recovered amounts against the debts in the 
order in which the debts accrued.



Sec. 17.159  Application of offset funds: Tax refund insufficient to cover amount of debt.

    If a tax refund is insufficient to satisfy a debt in a given tax 
year, the Secretary will recertify to the IRS the following year to 
collect further on the debt. If, in the following year, the debt has 
become legally unenforceable because of the lapse of the statute of 
limitations, the debt will be reported to the IRS as a forgiven debt in 
accordance with Sec. 17.150(d).

[[Page 198]]



Sec. 17.160  Time limitation for notifying the IRS to request offset of tax refunds due.

    (a) The Secretary may not initiate offset of tax refunds due to 
collect a debt for which authority to collect arises under 31 U.S.C. 
3716 more than 10 years after the Secretary's right to collect the debt 
first accrued, unless facts material to the Secretary's right to collect 
the debt were not known and could not reasonably have been known by the 
officials of the Department who were responsible for discovering and 
collecting such debts.
    (b) When the debt first accrued is determined according to existing 
law regarding the accrual of debts. (See, for example, 28 U.S.C. 2415.)



Sec. 17.161  Correspondence with the Department.

    (a) All correspondence from the debtor to the Board concerning the 
right to review as described in Sec. 17.152 shall be addressed to the 
HUD Board of Contract Appeals, Room 2131, 451 Seventh Street SW., 
Washington, DC 20410-0500.
    (b) The request for review of Departmental records should be 
addressed to the Title I Representative whose address appears in the 
Notice of Intent of Offset. All requests for review of departmental 
records must be marked: Attention: Records Inspection Request.
    (c) All other correspondence shall be addressed to the Department 
Claims Officer, Office of Finance and Accounting, Department of Housing 
and Urban Development, room 2202, Washington, DC 20410.

[51 FR 39750, Oct. 31, 1986, as amended at 59 FR 59647, Nov. 18, 1994]



PART 18--INDEMNIFICATION OF HUD EMPLOYEES--Table of Contents




    Authority: 5 U.S.C. 301; 42 U.S.C. 3535(d).

    Source: 62 FR 6096, Feb. 10, 1997, unless otherwise noted.



Sec. 18.1  Policy.

    (a) The Department of Housing and Urban Development may indemnify, 
in whole or in part, a Department employee (which for the purpose of 
this part includes a former Department employee) for any verdict, 
judgment or other monetary award which is rendered against any such 
employee, provided the Secretary or his or her designee determines that:
    (1) The conduct giving rise to the verdict, judgment or award was 
taken within the scope of his or her employment with the Department; and
    (2) Such indemnification is in the interest of the United States.
    (b) The Department of Housing and Urban Development may settle or 
compromise a personal damage claim against a Department employee by the 
payment of available funds, at any time, provided the Secretary or his 
or her designee determines that:
    (1) The alleged conduct giving rise to the personal damage claim was 
taken within the scope of employment; and
    (2) That such settlement or compromise is in the interest of the 
United States.
    (c) Absent exceptional circumstances, as determined by the Secretary 
or his or her designee, the Department will not entertain a request 
either to agree to indemnify or to settle a personal damage claim before 
entry of an adverse verdict, judgment or monetary award.
    (d) When an employee of the Department becomes aware that an action 
has been filed against the employee in his or her individual capacity as 
a result of conduct taken within the scope of his or her employment, the 
employee should immediately notify his or her supervisor that such an 
action is pending. The supervisor shall promptly notify the head of his 
or her operating component and the Associate General Counsel for 
Litigation and Fair Housing Enforcement, if the supervisor is located at 
headquarters, or Field Assistant General Counsel--who shall promptly 
notify the Associate General Counsel for Litigation and Fair Housing 
Enforcement--if the supervisor is located in the field. As used in this 
section, the term ``principal operating component'' means an office in 
the Department headed by an Assistant Secretary, the General Counsel, 
the Inspector General, or an equivalent departmental officer who reports 
directly to the Secretary. Questions regarding representation of the 
employee will be

[[Page 199]]

determined by the Department of Justice pursuant to 28 CFR 50.15 
(Representation of Federal officials and employees by Department of 
Justice attorneys or by private counsel furnished by the Department in 
civil, criminal, and congressional proceedings in which Federal 
employees are sued, subpoenaed, or charged in their individual 
capacities).
    (e) The employee may, thereafter, request indemnification to satisfy 
a verdict, judgment or monetary award entered against the employee or to 
compromise a claim pending against the employee. The employee shall 
submit a written request, with appropriate documentation including a 
copy of the verdict, judgment, award or other order or settlement 
proposal, in a timely manner to the head of the employee's principal 
operating component. The head of the employee's principal operating 
component shall submit the written request and accompanying 
documentation, together with a recommended disposition of the request, 
in a timely manner to the General Counsel.
    (f) The General Counsel shall seek the views of the Department of 
Justice on the request. Where the Department of Justice has rendered a 
decision denying representation of the employee pursuant to 28 CFR 
50.15, the General Counsel shall seek the concurrence of the Department 
of Justice on the request. If the Department of Justice does not concur 
in the request, the General Counsel shall so advise the employee and no 
further action on the employee's request shall be taken.
    (g) In all instances except those where the Department of Justice 
has non-concurred in the request, the General Counsel shall forward for 
decision to the Secretary or his or her designee the employee's request, 
the recommendation of the head of the employee's principal operating 
component, the views of the Department of Justice, and the General 
Counsel's recommendation.
    (h) Any payment under this part, either to indemnify a Department 
employee or to settle a personal damage claim, is contingent upon the 
availability of appropriated funds of the Department that are permitted 
by law to be utilized for this purpose.



PART 20--BOARD OF CONTRACT APPEALS--Table of Contents




    Subpart A--Development of Housing and Urban Development Board of 
                            Contract Appeals

Sec.
20.1  Scope of part.
20.2  Establishment of Board.
20.3  Organization and location of the Board.
20.4  Jurisdiction of the Board.
20.5  Board powers.

  Subpart B--Rules of the Department of Housing and Urban Development 
                        Board of Contract Appeals

20.10  Rules.

                         Preliminary Procedures

Rules
1. Appeals, how taken.
2. Notice of appeal, contents of.
3. Docketing of appeals.
4. Preparation, content, organization, forwarding, and status of appeal 
          file.
5. Dismissal for lack of jurisdiction.
6. Pleadings.
7. Amendments of pleadings or record.
8. Hearing election and motions.
9. Prehearing briefs.
10. Prehearing or presubmission conference.
11. Submission without a hearing.
12. Optional small claims (expedited) and accelerated procedures. (These 
          procedures are available solely at the election of the 
          appellant.)
12.1  Elections to utilize small claims (expedited) and accelerated 
          procedure.
12.2  The small claims (expedited) procedure.
12.3  The accelerated procedure.
12.4  Motions for reconsideration in Rule 12 cases.
13. Settling the record.
14. Discovery--depositions.
15. Interrogatories to parties, admission of facts, and production and 
          inspection of documents.
16. Filing and service of papers other than subpoenas.

                                Hearings

17. Where and when held.
18. Notice of hearings.
19. Unexcused absence of a party.
20. Hearings: conduct; examination of witnesses.
21. Subpoenas.
22. Copies of papers.
23. Posthearing briefs.
24. Transcript of proceedings.
25. Withdrawal of exhibits.

[[Page 200]]

                             Representation

26. Appellant.
27. Government.

                                Decisions

28. Decisions.

                       Motion for Reconsideration

29. Motion for reconsideration.

                         Dismissals and Defaults

30. Dismissal without prejudice.
31. Dismissal or default for failure to prosecute or defend.

                                 Remand

32. Remand from court.

                                Sanctions

33. Sanctions.

                        Miscellaneous Procedures

34. Applicability.
35. Time, computation, and extensions.
36. Ex parte communications.

    Authority: 41 U.S.C. 601-613; 42 U.S.C. 3535(d).



Subpart A--Department of Housing and Urban Development Board of Contract 
                                 Appeals

    Source: 50 FR 45911, Nov. 5, 1985, unless otherwise noted.



Sec. 20.1  Scope of part.

    This part establishes a Board of Contract Appeals, sets forth its 
function, policies and procedures regarding matters to be considered by 
the Board, and prescribes the rules of the Board.



Sec. 20.2  Establishment of Board.

    There is established in the Office of the Secretary, the Housing and 
Urban Development Board of Contract Appeals (``the Board'').



Sec. 20.3  Organization and location of the Board.

    (a) Location. The Board's mailing address is: Board of Contract 
Appeals, U.S. Department of Housing and Urban Development, Room 2131, 
451 Seventh Street, S.W., Washington, DC 20410-0001. For items requiring 
non-postal delivery, the Board is located in Room 3229, 1201 
Constitution Ave., N.W. 20001. The telephone number of the Board is 
(202) 927-5110. (This is not a toll-free number.) For learning- or 
speech-impaired persons, this number may be accessed via TTY by 
contacting the Federal Information Relay Service at 1-800-877-8339. The 
facsimile number is (202) 927-6257.
    (b) Organization. The Board shall be comprised of a Chief 
Administrative Judge, who shall be the Chair, an Administrative Judge, 
who shall be the Vice-Chair, and such other Administrative Judges as may 
be appointed by the Secretary. All members of the Board shall be 
attorneys at law duly licensed by any State, commonwealth, territory, or 
the District of Columbia. All members shall be selected and appointed to 
serve in accordance with section 8(b)(1) of the Contract Disputes Act of 
1978 (41 U.S.C. 608(b)(1)). Except as otherwise provided, appeals are 
assigned to a panel of at least three members who decide the case by a 
majority vote. The Chair shall assign one member of the panel to preside 
over the appeal and to conduct necessary conferences and hearings, 
supervise discovery and the development of the record for the Board, and 
to make such procedural determinations as are necessary to the proper 
disposition of the appeal.

[50 FR 45911, Nov. 5, 1985, as amended at 61 FR 13280, Mar. 26, 1996]



Sec. 20.4  Jurisdiction of the Board.

    (a) Contract appeals. The Board shall consider and determine appeals 
from decisions of contracting officers under the Contract Disputes Act 
of 1978 (41 U.S.C. 601-613) relating to contracts entered into by (1) 
the Department of Housing and Urban Development or (2) any other 
executive agency when that agency or the Administrator for Federal 
Procurement Policy has designated the Board to decide the appeal.
    (b) Other matters. The Board or its individual members shall have 
jurisdiction over other matters assigned to it by the Secretary or 
designee. Determinations in other matters shall have the finality 
provided by the applicable statute, regulation or agreement.



Sec. 20.5  Board powers.

    (a) Board powers. The Board shall employ support personnel, as 
needed, and

[[Page 201]]

shall have all powers necessary and incident to the proper performance 
of the duties assigned to it.
    (b) Disqualification. No Administrative Judge may act for the Board 
or participate in a decision if, prior to the time the appeal was filed, 
he or she had participated in the matter in any manner on behalf of an 
interested party.



  Subpart B--Rules of the Department of Housing and Urban Development 
                        Board of Contract Appeals

    Source: 50 FR 45912, Nov. 5, 1985, unless otherwise noted.



Sec. 20.10  Rules.

    (a) These rules govern the procedure in all matters before the 
Department of Housing and Urban Development Board of Contract Appeals, 
unless otherwise provided by applicable law or regulation. The Federal 
Rules of Civil Procedure may be applied where procedures are not 
otherwise provided in these rules. For applications and proceedings 
involving award of attorney fees and other expenses, the rules set forth 
in 24 CFR part 14 shall apply.
    (b) Filing Requirements. A party shall file with the Board one 
original of any pleading or motion. That party shall simultaneously 
serve upon the other party of record one copy of that pleading or motion 
filed with the Board. Filings may be transmitted to the Board via 
facsimile. However, the original of any document transmitted to the 
Board by facsimile shall simultaneously be mailed to the Board.
    (c) Alternative Disputes Resolution. The Administrative Dispute 
Resolution Act authorizes and encourages Federal agencies to use 
mediation, conciliation, arbitration, and other techniques for the 
prompt and informal resolution of disputes. With the mutual consent of 
the parties, the Board may assist in the resolution of disputes by 
Alternative Dispute Resolution (ADR) procedures. The utilization of ADR 
procedures shall not relieve the parties from the filing requirements or 
other orders of the Board relating to a contract appeal duly docketed 
before the Board.
    (d) Equal Access to Justice Act. The Equal Access to Justice Act 
provides that agencies which conduct adversary adjudications ``shall 
award, to a prevailing party other than the United States, fees and 
other expenses incurred by that party in connection with that 
proceeding, unless the adjudicative officer of the agency finds that the 
position of the agency was substantially justified or that special 
circumstances make an award unjust.'' 5 U.S.C. Sec. 504. Prevailing 
parties in proceedings before the Board may apply for an award under the 
Act following the issuance by the Board of its final decision in the 
appeal.

                         Preliminary Procedures

                       Rule 1. Appeals, how taken.

    (a) General. Notice of an appeal shall be in writing and mailed or 
otherwise furnished to the Board within 90 days from the date of receipt 
of a final written decision of the contracting officer.
    (b) Contracting officer's failure to act-claim of $100,000 or less. 
Where the contractor has submitted a claim of $100,000 or less to the 
contracting officer and has requested a written decision within 60 days 
from receipt of the request, and the contracting officer has not issued 
the decision, the contractor may file a notice of appeal as provided in 
paragraph (a) of this section, citing the failure of the contracting 
officer to issue a decision.
    (c) Contracting officer's failure to act-claim in excess of 
$100,000. Where the contractor has submitted a claim in excess of 
$100,000 to the contracting officer and the contracting officer has 
failed, within 60 days of submission of the claim, to issue a final 
written decision, or to advise the contractor of a date when the final 
written decision will be issued, the contractor may file a notice of 
appeal as provided in paragraph (a) of this section, citing the failure 
to issue a decision.
    (d) Unreasonable delay by contracting officer. A contractor may 
request the Board to direct a contracting officer to issue a final 
written decision within a specified period of time, as determined by the 
Board, in the event of an unreasonable delay on the part of the 
contracting officer.
    (e) Stay of proceedings. Upon docketing of appeals filed under 
paragraph (b) or (c) of this section, the Board may stay further 
proceedings pending issuance of a final decision by the contracting 
officer within the period of time determined by the Board.

                 Rule 2. Notice of appeal, contents of.

    A notice of appeal shall indicate that an appeal is being taken and 
shall identify the

[[Page 202]]

contract (by number), the department and agency involved in the dispute, 
the final written decision from which the appeal is taken, and the 
amount in dispute, if known. The notice of appeal shall be signed by the 
appellant (the contractor making the appeal), or by the appellant's duly 
authorized representative or attorney. The complaint referred to in Rule 
6 may be filed with the notice of appeal, or the appellant may designate 
the notice of appeal as a complaint, if it otherwise fulfills the 
requirements of a complaint. A notice of appeal from a final written 
decision of a contracting officer involving a claim in excess of 
$100,000 shall state that certification has been made as required under 
section 6(c)(1) of the Contract Disputes Act of 1978 [41 U.S.C. 
606(c)(1)].

                      Rule 3. Docketing of appeals.

    When a notice of appeal in any form has been received by the Board, 
it shall be docketed promptly. A written notice of docketing shall be 
transmitted to the appellant with a copy of these rules, to the 
contracting officer, and to HUD's Office of General Counsel.

 Rule 4. Preparation, content, organization, forwarding, and status of 
                              appeal file.

    (a) Duties of contracting officer. Within 30 days of receipt of 
notice from the Board that an appeal has been docketed, the contracting 
officer shall assemble and transmit to the Board (through HUD's Office 
of General Counsel) three copies of an appeal file consisting of all 
documents relevant to the appeal, including:
    (1) The decision from which the appeal is taken;
    (2) The contract including specifications and relevant amendments, 
plans, and drawings;
    (3) All correspondence between the parties relevant to the appeal, 
including the appellant's letter or letters of claim;
    (4) Transcripts of any testimony and affidavits or statements of any 
witnesses on the matter in dispute made prior to the filing of the 
notice of appeal with the Board; and
    (5) Any additional information considered relevant to the appeal.

Upon receipt of the appeals file, the Board shall furnish the appellant 
and HUD's Office of General Counsel with true and exact copies of the 
appeal file.
    (b) Duties of appellant. Within 30 days after receipt of a copy of 
the appeal file assembled by the contracting officer, the appellant 
shall transmit to the Board any documents not contained in the appeal 
file which are relevant to the appeal, and furnish two copies of these 
documents to the government trial attorney.
    (c) Organization of appeal file. Documents in the appeal file may be 
originals, legible facsimiles, or authenticated copies, and shall be 
arranged in chronological order where practicable, numbered 
sequentially, tabbed, and indexed to identify the contents of the file.
    (d) Unusual documents. Upon request by either party, the Board may 
waive the requirement to furnish to the other party copies of bulky, 
lengthy, or out-of-size documents in the appeal file when inclusion 
would be burdensome. At the time a party files with the Board a document 
for which waiver has been granted, he or she shall notify the other 
party that the document or a copy is available for inspection at the 
offices of the Board or of the party filing the document.
    (e) Status of documents in appeal file. Documents contained in the 
appeal file are, without further action by the parties, part of the 
record upon which the Board will render its decision. However, a party 
may object, for reasons stated, to consideration of a particular 
document or documents within 30 days of receipt, unless good cause is 
shown for later objection. If an objection is made, the Board shall 
remove the document or documents from the appeal file and permit the 
party offering the document to move its admission as evidence in 
accordance with Rules 13 and 20.
    (f) Waiver of filing of documents. Notwithstanding the foregoing, 
the filing of the Rule 4 (a) and (b) documents may be dispensed with by 
the Board either upon request of the appellant in the notice of appeal 
or thereafter upon stipulation of the parties.

               Rule 5. Dismissal for lack of jurisdiction.

    Any motion addressed to the jurisdiction of the Board shall be 
promptly filed. Hearing on the motion shall be afforded on application 
of either party. However, the Board may defer its decision on the motion 
pending hearing on both the merits and the motion. The Board may at any 
time raise the issue of its jurisdiction to proceed with a particular 
case by an appropriate order, affording the parties an opportunity to be 
heard on the issue.

                           Rule 6. Pleadings.

    (a) Appellant. Within 30 days after receipt of notice of docketing 
of the appeal, the appellant shall file a complaint with the Board. The 
complaint shall set forth simple, concise and direct statements of each 
of the appellant's claims. Appellant shall also set forth the basis, 
with appropriate reference to contract provisions, of each claim and the 
dollar amount claimed, to the extent known. This pleading shall fulfill 
the generally recognized requirements of a complaint, although no 
particular form is required. Should the complaint not be received within 
30 days, appellant's notice of appeal may, if in the opinion of the 
Board the issues before the Board

[[Page 203]]

are sufficiently defined, be deemed its complaint and the Government 
shall be so notified.
    (b) Government. Within 30 days from receipt of the complaint, the 
Government shall file an answer with the Board. The answer shall set 
forth simple, concise and direct statements of Government's defenses to 
each claim asserted by appellant, including any affirmative defenses 
available.

               Rule 7. Amendments of pleadings or record.

    The Board, upon its own initiative or upon application by a party, 
may order a party to make a more definite statement of the complaint or 
answer, or to reply to an answer. The Board may, within the proper scope 
of the appeal, permit either party to amend its pleading upon conditions 
fair to both parties. When issues within the proper scope of the appeal, 
but not raised by the pleadings, are tried by express or implied consent 
of the parties, with the permission of the Board, they shall be treated 
in all respects as if they have been raised in the pleadings. In such 
instances, motions to amend the pleadings to conform to the proof may be 
entered, but are not required. If evidence is objected to at a hearing 
on the ground that it is not within the issues raised by the pleadings, 
it may be admitted within the proper scope of the appeal, provided, 
however, that the objecting party may be granted a continuance if 
necessary to enable it to meet this evidence.

                  Rule 8. Hearing election and motions.

    (a) Hearing election. After the filing of the Government's answer or 
notice from the Board that it has entered a general denial on behalf of 
the Government, each party shall advise whether it desires a hearing as 
prescribed in Rules 17 through 25, or whether it elects to submit its 
case on the record without a hearing, as prescribed in Rule 11.
    (b) Motions. (1) The Board may entertain any timely motion for an 
appropriate order. Application to the Board for an order shall be by 
motion which, unless made during a hearing, shall be made in writing, 
shall state with particularity the grounds for the motion and shall set 
forth the relief or order sought.
    (2) The Board may, on its own motion, initiate any action by notice 
to the parties.
    (3) Unless otherwise specified by the Board, a party who receives a 
motion shall file any answering material within 20 days after the date 
of receipt of the motion. The Board may require the presentation of 
briefs or arguments. The Board shall issue a decision on each motion 
that is appropriate and just to the parties.
    (4) Affidavits in support of motions shall set forth such facts as 
would be admissible in evidence and shall show affirmatively that the 
affiant is competent to testify to the matters stated in the affidavit. 
When a motion is made and supported as provided in this rule, a party 
opposing the motion who is represented by counsel may not rest upon the 
mere allegations or denials of his pleading; his response, by affidavits 
or as otherwise provided in this rule, must show that there is a genuine 
issue of fact or of law for decision. Should it appear from the 
affidavits of a party opposing the motion that for reasons stated he 
cannot present by affidavit facts essential to justify his opposition, 
the Board may deny the motion or may order a continuance to permit 
affidavits to be obtained or discovery to be had or may make such order 
as is just.

                       Rule 9. Prehearing briefs.

    Based on an examination of the pleadings, and its determination of 
whether the arguments and authorities addressed to the issues are 
adequately set forth in the pleadings, the Board may require the parties 
to submit prehearing briefs. If the Board does not require prehearing 
briefs, either party may upon appropriate and sufficient notice to the 
other party, furnish a prehearing brief to the Board. In any case where 
a prehearing brief is submitted, it shall be furnished so as to be 
received by the Board at least 15 days prior to the date set for 
hearing, and a copy shall simultaneously be furnished to the other 
party.

            Rule 10. Prehearing or presubmission conference.

    (a) Conference. Whether the case is to be submitted under Rule 11, 
or heard under Rules 17 through 25, the Board may upon its own 
initiative, or upon the application of either party, arrange a telephone 
conference or call upon the parties to appear before an Administrative 
Judge for a conference to consider:
    (1) Simplification, clarification, or severing of the issues;
    (2) The possibility of obtaining stipulations, admissions, 
agreements and rulings on admissibility of documents, understandings on 
matters already on record, or similar agreements that will avoid 
unnecessary proof;
    (3) Agreements and rulings to facilitate discovery;
    (4) Limitation of the number of expert witnesses or avoidance of 
cumulative evidence;
    (5) The possibility of agreement disposing of any or all of the 
issues in dispute; and
    (6) Such other matters as may aid in the disposition of the appeal.
    (b) Results of conference. The Administrative Judge shall make such 
rulings and orders as may be appropriate to achieve settlement by 
agreement of the parties or to aid in the disposition of the appeal. The 
results of

[[Page 204]]

the conference, including any rulings and orders, shall be reduced to 
writing by the Administrative Judge or the conference shall be 
transcribed. The writing or the transcript shall constitute a part of 
the record.

                 Rule 11. Submission without a hearing.

    Either party may elect to waive its right to appear at a hearing and 
to submit its case upon the record before the Board, as settled under 
Rule 13. Submission of a case without hearing does not relieve the 
parties from the necessity of proving the facts supporting their 
allegations or defenses. Affidavits, depositions, admissions, answers to 
interrogatories, and stipulations may be employed to supplement other 
documentary evidence in the record. The Board may permit submissions to 
be supplemented by oral argument, which may be transcribed if requested, 
and by briefs in accordance with Rule 9 or Rule 23.

 Rule 12. Optional small claims (expedited) and accelerated procedures. 
     (These procedures are available solely at the election of the 
                               appellant.)

Rule 12.1 Elections to utilize small claims (expedited) and accelerated 
                               procedure.

    (a) Election-dispute involving $50,000 or less. In appeals where the 
amount in dispute is $50,000 or less, the appellant may elect to have 
the appeal processed under a Small Claims (Expedited) procedure 
requiring decision of the appeal, whenever possible, within 120 days 
after the Board receives written notice of the appellant's election. The 
details of this procedure appear in section 12.2 of this Rule.
    (b) Election-dispute involving $100,000 or less. In appeals where 
the amount in dispute is $100,000 or less, the appellant may elect to 
have the appeal processed under an Accelerated procedure requiring 
decision of the appeal, whenever possible, within 180 days after the 
Board receives written notice of the apellant's election. The details of 
this procedure appear in section 12.3 of this Rule.
    (c) Notice of election. The appellant's election of either the Small 
Claims (Expedited) procedure or the Accelerated procedure may be made by 
written notice within 60 days after receipt of notice of docketing the 
appeal unless this period is extended by the Board for good cause. The 
election may not be withdrawn except with permission of the Board and 
for good cause.
    (d) Determination of amount in dispute. In deciding whether the 
Small Claims (Expedited) procedure or the Accelerated procedure is 
applicable to a given appeal, the Board shall determine the amount in 
dispute.

            Rule 12.2 The small claims (expedited) procedure.

    (a) Document submission and prehearing conference. In cases 
proceeding under the Small Claims (Expedited) procedure, the following 
time periods shall apply: (1) Within ten days from the Government's 
first receipt from either the appellant or the Board of a copy of the 
appellant's notice of election of the Small Claims (Expedited) 
procedure, the Government shall send the Board a copy of the contract, 
the contracting officer's final decision, and the appellant's letter or 
letters of claim, if any; remaining documents required under Rule 4 
shall be submitted in accordance with times specified in that rule 
unless the Board otherwise directs;
    (2) Within 15 days after the Board has acknowledged receipt of 
appellant's notice of election, the assigned Administrative Judge shall 
take the following actions, if feasible, in an informal meeting or a 
telephone conference with both parties: (i) Identify and simplify the 
issues; (ii) establish a simplified procedure appropriate to the 
particular appeal; (iii) determine whether the appellant wants a 
hearing, and if so, fix a time and place for the hearing; (iv) require 
the Government to furnish all the additional documents relevant to the 
appeal, and (v) establish an expedited schedule for resolution of the 
appeal.
    (b) Pleadings, discovery and other prehearing activity. Pleadings, 
discovery and other prehearing activity will be allowed only as 
consistent with the requirement to conduct the hearing on the date 
scheduled, or if no hearing is scheduled, to close the record on a date 
that will allow decisions within the 120-day limit. The Board may impose 
shortened time periods for any actions prescribed or allowed under these 
rules, as necessary to enable the Board to decide the appeal within the 
120-day limit, allowing whatever time, up to 30 days, that the Board 
considers necessary for the preparation of the decision after closing 
the record and the filing of briefs, if any.
    (c) Decision. The written decision by the Board in cases processed 
under the Small Claims (Expedited) procedure will be short and contain 
only summary findings of fact and conclusions. Decisions will be 
rendered for the Board by a single Administrative Judge. If there has 
been a hearing, the Administrative Judge presiding at the hearing may at 
the conclusion of the hearing and after entertaining oral arguments as 
deemed appropriate, render on the record oral summary findings of fact, 
conclusions, and a decision of the Appeal. Whenever an oral decision is 
rendered, the Board will subsequently furnish the parties a typed copy 
of the oral decision (or a copy of the transcript of the hearing) for 
record and payment purposes

[[Page 205]]

and to establish the starting date for the period for filing a motion 
for reconsideration under Rule 29.
    (d) Effect of decision. A decision issued under the Small Claims 
(Expedited) procedure shall have no value as precedent and, in the 
absence of fraud shall be final and conclusive and may not be appealed 
or set aside.

                  Rule 12.3  The accelerated procedure.

    (a) Waiver of pleadings, discovery and briefs. In cases proceeding 
under the Accelerated procedure, the parties are encouraged, to the 
extent possible consistent with adequate presentation of their factual 
and legal positions, to waive pleadings, discovery, and briefs.
    (b) Pleadings, discovery, and other prehearing activity. Pleadings, 
discovery and other prehearing activity will be allowed only as 
consistent with the requirement to conduct the hearing on the dates 
scheduled or, if no hearing is scheduled, to close the record on a date 
that will allow decision within the 180-day limit. The Board may shorten 
time periods for any actions prescribed or allowed under these rules, as 
necessary to enable the Board to decide the appeal within the 180-day 
limit, and may reserve up to 30 days for preparation of the decision.
    (c) Decision. Written decisions by the Board in cases processed 
under the Accelerated procedure will normally be short and contain only 
summary findings of fact and conclusions. In cases where the amount in 
dispute is $50,000 or less where the Accelerated procedure has been 
elected and where there has been a hearing, the single Administrative 
Judge presiding at the hearing may, with the concurrence of both 
parties, at the conclusion of the hearing and after entertaining such 
oral arguments as deemed appropriate, render on the record oral summary 
findings of fact, conclusions, and a decision of the appeal. Whenever an 
oral decision is rendered, the Board will subsequently furnish the 
parties a typed copy of the oral decision (or a copy of the transcript 
of the hearing) for record and payment purposes, and to establish the 
starting date for the period for filing a motion for reconsideration 
under Rule 29.

        Rule 12.4  Motions for reconsideration in Rule 12 cases.

    Motions for Reconsideration of cases decided under either the Small 
Claims (Expedited) procedure or the Accelerated procedure need not be 
decided within the original 120-day or 180-day limit, but all such 
motions shall be processed and decided rapidly to fulfill the intent of 
this Rule.

                     Rule 13.  Settling the record.

    (a) Contents of record. The record upon which the Board's decision 
will be rendered consists of the documents in the appeal file furnished 
under Rule 4 or 12 (unless removed by the Board) and the following 
items, if any: Pleadings, prehearing conference memoranda or orders, 
prehearing briefs, depositions or interrogatories admitted into 
evidence, admissions, stipulations, transcripts of conferences and 
hearings, exhibits admitted into evidence, posthearing briefs, orders of 
the Board, and documents which the Board has specifically designated to 
be made a part of the record. The record will, at all reasonable times, 
be available for inspection by the parties at the office of the Board.
    (b) Closing of record. Except as the Board may otherwise order, no 
proof shall be received in evidence after completion of an oral hearing 
or, in cases submitted on the record, after notification by the Board 
that the case is ready for decision.
    (c) Weight of evidence. The weight to be attached to any evidence of 
record will rest within the sound discretion of the Board. The Board may 
in any case require either party, with appropriate notice to the other 
party, to submit additional evidence on any matter relevant to the 
appeal.

                    Rule 14.  Discovery--depositions.

    (a) General policy and protective orders. The parties are encouraged 
to engage in voluntary discovery procedures. In connection with any 
discovery procedure under this rule or rule 15, the Board may make any 
order required to protect a party or person from annoyance, 
embarrassment, or undue burden or expense. Those orders may include 
limitations on the scope, method, time and place for discovery, and 
provisions for protecting the secrecy of confidential information or 
documents.
    (b) When depositions permitted. After an appeal has been docketed 
and complaint filed, the parties may mutually agree to, or the Board 
may, upon application of either party, order the taking of testimony of 
any person by deposition upon oral examination or written 
interrogatories before any officer authorized to administer oaths at the 
place of examination.
    (c) Orders on depositions. The time, place, and manner of taking 
depositions shall be as mutually agreed by the parties, or failing such 
agreement, governed by order of the Board.
    (d) Use as evidence. No testimony taken by depositions shall be 
considered as part of the evidence in the hearing of an appeal until the 
testimony is offered and received in evidence at the hearing. It will 
not ordinarily be received in evidence if the deponent is present and 
can testify at the hearing. In these instances, however, the deposition 
may be used to contradict or impeach the testimony of the deponent given 
at the hearing. In cases submitted on the record, the Board may receive 
depositions to supplement the record.

[[Page 206]]

    (e) Expenses. Each party shall bear its own expenses associated with 
the taking of any depositions.

Rule 15.  Interrogatories to parties, admission of facts, and production 
                      and inspection of documents.

    After an appeal has been docketed and complaint filed with the 
Board, a party may serve on the other party: (a) Written interrogatories 
to be answered separately in writing, signed under oath and answered or 
objected to within 30 days; (b) a request for the admission of specified 
facts or the authenticity of any documents, to be answered or objected 
to within 30 days after service; the factual statements and the 
authenticity of the documents to be deemed admitted upon failure of a 
party to respond to the request; and (c) a request for the production, 
inspection and copying of any documents or objects not privileged, which 
reasonably may lead to the discovery of admissible evidence.

      Rule 16.  Filing and service of papers other than subpoenas.

    Papers shall be considered filed with the Board when mailed or 
otherwise furnished to the Board. Papers shall be served upon parties 
personally or by mail, addressed to the party upon whom service is to be 
made. Timely filing and service by facsimile transmission (telecopier) 
is permissible provided that the original telecopied document is 
promptly mailed or served thereafter in the manner specified by this 
rule. Except as provided in rule 4(a), the party filing any paper with 
the Board shall simultaneously serve a copy of the paper upon the 
opposing party, and shall file a certificate of service with the Board 
indicating that a copy has been so served. Subpoenas shall be served as 
provided in rule 21.

                                Hearings

                     Rule 17.  Where and when held.

    Hearings will be held at places determined by the Board to best 
serve the interest of the parties and the Board. Hearings will be 
scheduled at the discretion of the Board with due consideration to the 
regular order of appeals, Rule 12 requirements, the convenience of the 
parties, the requirement for just and inexpensive determination of 
appeals without necessary delay, and other pertinent factors. On request 
or motion by either party and for good cause, the Board may adjust the 
date of a hearing.

                      Rule 18.  Notice of hearings.

    Parties shall be given not less than 20 days notice of the time and 
place for hearing, unless otherwise agreed. The notice of hearing shall 
be sent by certified mail (return receipt requested).

                 Rule 19.  Unexcused absence of a party.

    The unexcused absence of a party at the time and place set for 
hearing will not be occasion for delay. Notwithstanding the provisions 
of Rule 31, in the event of an unexcused absence: (a) The appeal will be 
dismissed with prejudice for want of prosecution; or (b) the hearing 
will proceed and the case will be regarded as submitted on the record by 
the absent party.

         Rule 20.  Hearings: conduct; examination of witnesses.

    (a) Conduct of hearings. Hearings shall be as informal as may be 
reasonable and appropriate under the circumstances. Appellant and the 
Government may offer such evidence as would be admissible under the 
Federal Rules of Evidence or as otherwise determined to be reliable and 
relevant by the presiding Administrative Judge. Stipulations of fact 
agreed upon by the parties may be regarded and used as evidence at the 
hearing. The parties may stipulate the testimony that would be given by 
a witness if the witness were present. The Board may require evidence in 
addition to that offered by the parties.
    (b) Examination of witnesses. Oral testimony before the Board shall 
generally be given under oath or affirmation. However, if the testimony 
of a witness is not given under oath or affirmation, the Board shall 
advise the witness that his statements may be subject to the provisions 
of title 18 U.S.C., sections 287 and 1001, and any other provision of 
law imposing penalties for knowingly making false representations in 
connection with claims against the United States or in any matter within 
the jurisdiction of any department or agency.

                          Rule 21.  Subpoenas.

    (a) General. Upon written request of either party filed with the 
Board or on the Administrative Judge's initiative, the Administrative 
Judge to whom a case is assigned or who is otherwise designated by the 
Chairman may issue a subpoena requiring:
    (1) Testimony at a deposition--the deposing of a witness in the city 
or county where he or she resides, is employed or transacts business in 
person, or at another location convenient for the witness that is 
specifically determined by the Board;
    (2) Testimony at a hearing--the attendance of a witness for the 
purpose of taking testimony at a hearing; and
    (3) Production of books and papers--the production by the witness at 
the deposition or hearing of books and papers designated in the 
subpoena.
    (b) Voluntary cooperation. Each party is expected (1) to cooperate 
and make available witnesses and evidence under its control as requested 
by the other party, without

[[Page 207]]

issuance of a subpoena, and (2) to secure voluntary attendance of 
desired third-party witnesses and production of desired third-party 
books, papers, documents, or tangible things whenever possible.
    (c) Requests for subpoenas. (1) A request for a subpoena shall 
normally be filed at least:
    (i) 15 days before a scheduled deposition where the attendance of a 
witness at a deposition is sought;
    (ii) 30 days before a scheduled hearing where the attendance of a 
witness at a hearing is sought.
    In its discretion the Board may honor requests for subpoenas not 
made within these time limitations.
    (2) A request for a subpoena shall state the reasonable scope and 
general relevance to the case of the testimony and of any books and 
papers sought.
    (d) Requests to quash or modify. Upon written request by the person 
subpoenaed or by a party, made within 10 days after service but in any 
event not later than the time specified in the subpoena for compliance, 
the Board may (1) quash or modify the subpoena if it is unreasonable and 
oppressive or for other good cause shown, or (2) require the person in 
whose behalf the subpoena was issued to advance the reasonable cost of 
producing subpoenaed books and papers. Where circumstances require, the 
Board may act upon such a request at any time after a copy of the 
request has been served upon the opposing party.
    (e) Form; issuance. (1) Every subpoena shall state the name of the 
Board and the title of the appeal, and shall command each person to whom 
it is directed to attend and give testimony, and if appropriate, to 
produce specified books and papers at the time and place specified in 
the subpoena. In issuing a subpoena to a requesting party, the 
Administrative Judge shall sign the subpoena and may, in his discretion, 
enter the name of the witness and otherwise leave it blank. The party to 
whom the subpoena is issued shall complete the subpoena before service.
    (2) Where the witness is located in a foreign county, a letter 
rogatory or subpoena may be issued and served under the circumstances 
and in the manner provided in 28 U.S.C. 1781-1784.
    (f) Service. (1) The party requesting issuance of a subpoena shall 
be responsible for service.
    (2) A subpoena requiring the attendance of a witness at a deposition 
or hearing may be served (i) by sending a copy of the subpoena by 
certified mail (return receipt requested) to the last known address of 
the party named in the subpoena, or (ii) by personal delivery of a copy 
of the subpoena to the party named in the subpoena, by a United States 
marshal or deputy marshal, or by any other person who is not a party and 
not less than 18 years of age. Service shall include the tender of the 
fees for one day's attendance and the mileage provided by 28 U.S.C. 1821 
or other applicable law; however, where the subpoena is issued on behalf 
of the Government, money payments need not be tendered in advance of 
attendance.
    (3) The party at whose instance a subpoena is issued shall be 
responsible for the payment of fees and mileage of the witness and for 
the costs of service of the subpoena.
    (g) Contumacy or refusal to obey subpoena. In case of contumacy or 
refusal to obey a subpoena by a person who resides, is found, or 
transacts business within the jurisdiction of a United States District 
Court, the Board will apply to the Court through the Attorney General of 
the United States for an order requiring the person to appear before the 
Board or a member of the Board to give testimony or produce evidence or 
both.

                       Rule 22. Copies of papers.

    When books, records, papers, or documents have been received in 
evidence, a true copy of this evidence or a copy of any material or 
relevant part of this evidence may be substituted during or at the 
conclusion of the hearing.

                      Rule 23. Posthearing briefs.

    The presiding Administrative Judge may order the parties to submit 
post hearing briefs to the Board.

                   Rule 24. Transcript of proceedings.

    Testimony and argument at hearings shall be reported verbatim, 
unless the Board otherwise orders. Extra transcripts or copies of the 
proceedings in the possession of the board may be supplied to the 
parties. Otherwise, the parties may obtain transcripts or copies of the 
proceedings from the hearing reporter.

                    Rule 25. Withdrawal of exhibits.

    After a decision has become final the Board may, upon request and 
after notice to the other party, permit the withdrawal of original 
exhibits, or any part of original exhibits by the party entitled to the 
exhibits. The subsitution of true copies of exhibits or any part of 
exhibits may be required by the Board as a condition of granting 
permission for the withdrawal.

                             Representation

                           Rule 26. Appellant.

    An individual appellant may appear before the Board in person; a 
corporation by one of its duly authorized officers; and a partnership or 
joint venture by one of its duly authorized members; or any of these by 
an attorney at law duly licensed in any State, commonwealth, territory, 
the District of Columbia, or in a foreign country. An attorney

[[Page 208]]

representing an appellant shall file a written notice of appearance with 
the Board.

                          Rule 27. Government.

    Government counsel may, in accordance with their authority, 
represent the interests of the Government before the Board. They shall 
file notices of appearance with the Board. This notice of appearance 
will be given appellant or appellant's attorney in the form specified by 
the Board from time to time. Whenever an appellant and the Government 
are in agreement as to disposition of the controversy, the Board may 
suspend further processing of the appeal. However, if the Board is 
advised by either party that the controversy has not been disposed of by 
agreement, the case shall be restored to the Board's calendar without 
loss of position.

                                Decisions

                           Rule 28. Decisions.

    Decisions of the Board shall be made in writing. Copies of the 
decision shall be forwarded simultaneously to both parties. The rules of 
the Board and all final orders and decisions (except those required for 
good cause to be held confidential and not cited as precedents) shall be 
open for public inspection at the offices of the Board in Washington, 
DC. Decisions of the Board shall be made solely upon the record, as 
described in Rule 13. Oral decisions shall be rendered in accordance 
with Rules 12.2(c) and 12.3(c).

                       Motion for Reconsideration

                  Rule 29. Motion for reconsideration.

    A motion for reconsideration may be filed by either party. It shall 
set forth specifically the grounds relied upon to sustain the motion. 
The motion shall be filed within 30 days from the date of the receipt of 
a copy of the decision of the Board by the party filing the motion.

                         Dismissals and Defaults

                  Rule 30. Dismissal without prejudice.

    In certain cases, appeals docketed before the Board are required to 
be placed in a suspended status and the Board is unable to proceed with 
disposition for reasons not within the control of the Board. Where the 
suspension has continued, or may continue, for an inordinate length of 
time, the Board may dismiss such appeals from its docket without 
prejudice to their restoration to the docket when the cause of 
suspension has been removed. Unless either party or the Board acts 
within three years to reinstate any appeal dismissed without prejudice, 
the dismissal shall be considered to be with prejudice.

    Rule 31. Dismissal or default for failure to prosecute or defend.

    Whenever a record discloses the failure of either party to file 
documents required by these rules, respond to notices or correspondence 
from the Board, comply with orders of the Board, or otherwise indicates 
an intention not to continue the prosecution or defense of an appeal, 
the Board may, in the case of such a default by the appellant, issue an 
order to show cause why the appeal should not be dismissed with 
prejudice or, in the case of a default by the Government, issue an order 
to show cause why the Board should not act under Rule 33. If good cause 
is not shown, the Board may take appropriate action.

                                 Remand

                       Rule 32. Remand from court.

    Whenever any court remands a case to the Board for further 
proceedings, each of the parties shall, within 20 days of the remand, 
submit a report to the Board recommending procedures to be followed to 
comply with the court's order. The Board shall consider any timely filed 
reports and enter special orders governing the handling of the remanded 
case. To the extent the court's directive and time limitations permit, 
these orders shall conform to these rules.

                                Sanctions

                           Rule 33. Sanctions.

    If any party fails or refuses to obey an order issued by the Board, 
the Board may then make such order as it considers necessary to the just 
and expeditious conduct or dismissal of the appeal.

                        Miscellaneous Procedures

                        Rule 34.  Applicability.

    These rules shall apply to all appeals relating to contracts entered 
into on or after March 1, 1979, and, to appeals relating to earlier 
contracts, with respect to claims pending before the contracting officer 
on March 1, 1979 or initiated thereafter, if the contractor elects to 
proceed under the Act.

              Rule 35.  Time, computation, and extensions.

    (a) General. Where possible, procedural actions should be taken in 
less time than the maximum time allowed. Where appropriate and 
justified, extensions of time shall be granted. All requests for 
extensions of time shall be in writing and shall be filed before the due 
date, unless excused.
    (b) Computation. In computing any period of time, the day of the 
event from which the designated period of time begins to run shall not 
be included, but the last day of the period shall be included unless it 
is a Saturday,

[[Page 209]]

Sunday, or a legal holiday, in which event the period shall run to the 
end of the next business day.

                   Rule 36.  Ex parte communications.

    (a) Definition. An ex parte communication is any communication with 
a member of the Board, direct or indirect, oral or written, concerning 
the merits of matters in issue of any pending proceeding which is made 
by a party in the absence of any other party. Ex parte communications do 
not include communications where:
    (1) The purpose and content of the communication have been disclosed 
in advance or simultaneously to all parties;
    (2) The communication is a request for information concerning the 
status of the case; or
    (3) The communication involves the Board's administrative functions 
or procedures.
    (b) Prohibition of ex parte communications. Ex parte communications 
are prohibited.
    (c) Procedure after receipt of ex parte communications. Any member 
of the Board who receives an ex parte communication that the member of 
the Board knows or has reason to believe is unauthorized shall promptly 
place the communication, or its substance, in all files and shall 
furnish copies to all parties. Unauthorized ex parte communications 
shall not be taken into consideration in deciding any matter in issue.

[50 FR 45912, Nov. 5, 1985, as amended at 52 FR 27130, July 17, 1987; 57 
FR 20201, May 12, 1992; 61 FR 13280-13281, Mar. 26, 1996]



PART 24--GOVERNMENT DEBARMENT AND SUSPENSION AND GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (GRANTS)--Table of Contents




                           Subpart A--General

Sec.
24.100  Purpose.
24.105  Definitions.
24.110  Coverage.
24.115  Policy.

                       Subpart B--Effect of Action

24.200  Debarment or suspension.
24.205  Ineligible persons.
24.210  Voluntary exclusion.
24.215  Exception provision.
24.220  Continuation of covered transactions.
24.225  Failure to adhere to restrictions.

                          Subpart C--Debarment

24.300  General.
24.305  Causes for debarment.
24.310  Procedures.
24.311  Investigation and referral.
24.312  Notice of proposed debarment.
24.313  Opportunity to contest proposed debarment.
24.314  Debarring official's decision.
24.315  Settlement and voluntary exclusion.
24.320  Period of debarment.
24.325  Scope of debarment.

                          Subpart D--Suspension

24.400  General.
24.405  Causes for suspension.
24.410  Procedures.
24.411  Notice of suspension.
24.412  Opportunity to contest suspension.
24.413  Suspending official's decision.
24.415  Period of suspension.
24.420  Scope of suspension.

       Subpart E--Responsibilities of GSA, Agency and Participants

24.500  GSA responsibilities.
24.505  HUD responsibilities.
24.510  Participants' responsibilities.

          Subpart F--Drug-Free Workplace Requirements (Grants)

24.600  Purpose.
24.605  Definitions.
24.610  Coverage.
24.615  Grounds for suspension of payments, suspension or termination of 
          grants, or suspension or debarment.
24.620  Effect of violation.
24.625  Exception provision.
24.630  Certification requirements and procedures.
24.635  Reporting of and employee sanctions for convictions of criminal 
          drug offenses.

               Subpart G--Limited Denial of Participation

24.700  General.
24.705  Causes for a limited denial of participation.
24.710  Period and scope of a limited denial of participation.
24.711  Notice of limited denial of participation.
24.712  Conference.
24.713  Opportunity to contest the limited denial of participation.
24.714  Reporting of limited denial of participation.

    Authority: 41 U.S.C. 701 et seq.; 42 U.S.C. 3535(d); E.O. 12549, 51 
FR 6370, 3 CFR, 1986 Comp., p. 189; E.O. 12689, 54 FR 34131, 3 CFR, 1989 
Comp., p. 235.

    Source: 53 FR 19182 and 19204, May 26, 1988, unless otherwise noted.

    Cross Reference: See also Office of Management and Budget notice 
published at 55

[[Page 210]]

FR 21679, May 25, 1990, and 60 FR 33036, June 26, 1995.



                           Subpart A--General



Sec. 24.100  Purpose.

    (a) Executive Order (E.O.) 12549 provides that, to the extent 
permitted by law, Executive departments and agencies shall participate 
in a governmentwide system for nonprocurement debarment and suspension. 
A person who is debarred or suspended shall be excluded from Federal 
financial and nonfinancial assistance and benefits under Federal 
programs and activities. Debarment or suspension of a participant in a 
program by one agency shall have governmentwide effect.
    (b) These regulations implement section 3 of E.O. 12549 and the 
guidelines promulgated by the Office of Management and Budget under 
section 6 of the E.O. by:
    (1) Prescribing the programs and activities that are covered by the 
governmentwide system;
    (2) Prescribing the governmentwide criteria and governmentwide 
minimum due process procedures that each agency shall use;
    (3) Providing for the listing of debarred and suspended 
participants, participants declared ineligible (see definition of 
``ineligible'' in Sec. 24.105), and participants who have voluntarily 
excluded themselves from participation in covered transactions;
    (4) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion; and
    (5) Offering such other guidance as necessary for the effective 
implementation and administration of the governmentwide system.
    (c) These regulations also implement Executive Order 12689 (3 CFR, 
1989 Comp., p. 235) and 31 U.S.C. 6101 note (Public Law 103-355, sec. 
2455, 108 Stat. 3327) by--
    (1) Providing for the inclusion in the List of Parties Excluded from 
Federal Procurement and Nonprocurement Programs all persons proposed for 
debarment, debarred or suspended under the Federal Acquisition 
Regulation, 48 CFR part 9, subpart 9.4; persons against which 
governmentwide exclusions have been entered under this part; and persons 
determined to be ineligible; and
    (2) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion.
    (d) Although these regulations cover the listing of ineligible 
participants and the effect of such listing, they do not prescribe 
policies and procedures governing declarations of ineligibility.
    (e) These regulations also:
    (1) Prescribe policies and procedures governing the debarment and 
suspension of contractors and the limited denial of participation of 
participants and contractors;
    (2) Provide for the listing of debarred, suspended and ineligible 
contractors; and
    (3) Set forth the consequences of such listing.
    (f) Although this part covers the listing of ineligible contractors, 
it does not prescribe policies and procedures governing declarations of 
ineligibility.

[60 FR 33040, 33048, June 26, 1995, as amended at 60 FR 33048, June 26, 
1995]



Sec. 24.105  Definitions.

    The following definitions apply to this part:
    Adequate evidence. Information sufficient to support the reasonable 
belief that a particular act or omission has occurred.
    Affiliate. Persons are affiliates of each other if, directly or 
indirectly, either one controls or has the power to control the other, 
or, a third person controls or has the power to control both. Indicia of 
control include, but are not limited to: interlocking management or 
ownership, identity of interests among family members, shared facilities 
and equipment, common use of employees, or a business entity organized 
following the suspension or debarment of a person which has the same or 
similar management, ownership, or principal employees as the suspended, 
debarred, ineligible, or voluntarily excluded person.
    Agency. Any executive department, military department or defense 
agency or other agency of the executive branch, excluding the 
independent regulatory agencies.

[[Page 211]]

    Benefits. Money or any other thing of value provided by, or realized 
because of the Department. Thing of value includes insurance or 
guarantees of any kind.
    Civil judgment. The disposition of a civil action by any court of 
competent jurisdiction, whether entered by verdict, decision, 
settlement, stipulation, or otherwise creating a civil liability for the 
wrongful acts complained of; or a final determination of liability under 
the Program Fraud Civil Remedies Act of 1988 (31 U.S.C. 3801-12).
    Contractor. As used in this part, contractor means any individual or 
other legal entity that:
    (1) Submits offers for, or is awarded, or reasonably may be expected 
to submit offers for or be awarded, a Government contract (or a 
subcontract under a Government contract); or
    (2) Conducts business with the Government as an agent or 
representative of another contractor;
    Conviction. A judgment or conviction of a criminal offense by any 
court of competent jurisdiction, whether entered upon a verdict or a 
plea, including a plea of nolo contendere.
    Debarment. An action taken by a debarring official in accordance 
with these regulations to exclude a person from participating in covered 
transactions. A person so excluded is debarred.
    Debarring official. An official authorized to impose debarment. The 
debarring official is either:
    (1) The agency head, or
    (2) An official designated by the agency head.
    Hearing officer. An Administrative Law Judge or Board of Contract 
Appeals Judge authorized by HUD's Secretary, or by the Secretary's 
designee, to conduct proceedings under this part.
    HUD. Department of Housing and Urban Development.
    Indictment. Indictment for a criminal offense. An information or 
other filing by competent authority charging a criminal offense shall be 
given the same effect as an indictment.
    Ineligible. Excluded from participation in Federal nonprocurement 
programs pursuant to a determination of ineligibility under statutory, 
executive order, or regulatory authority, other than Executive Order 
12549 and its agency implementing regulations; for exemple, excluded 
pursuant to the Davis-Bacon Act and its implementing regulations, the 
equal employment opportunity acts and executive orders, or the 
environmental protection acts and executive orders. A person is 
ineligible where the determination of ineligibility affects such 
person's eligibility to participate in more than one covered 
transaction.
    Legal proceedings. Any criminal proceeding or any civil judicial 
proceeding to which the Federal Government or a State or local 
government or quasi-governmental authority is a party. The term includes 
appeals from such proceedings.
    Limited denial of participation. An action taken by a HUD official, 
in accordance with subpart G of these regulations, that immediately 
excludes or restricts a person from participating in HUD program(s) 
within a defined geographic area.
    List of Parties Excluded from Federal Procurement and Nonprocurement 
Programs. A list compiled, maintained and distributed by the General 
Services Administration (GSA) containing the names and other information 
about persons who have been debarred, suspended, or voluntarily excluded 
under Executive Orders 12549 and 12689 and these regulations or 48 CFR 
part 9, subpart 9.4, persons who have been proposed for debarment under 
48 CFR part 9, subpart 9.4, and those persons who have been determined 
to be ineligible.
    Notice. A written communication served in person or sent by 
certified mail, return receipt requested, or its equivalent, to the last 
known address of a party, its identified counsel, its agent for service 
of process, or any partner, officer, director, owner, or joint venturer 
of the party. Notice, if undeliverable, shall be considered to have been 
received by the addressee five days after being properly sent to the 
last address known by the agency.
    Participant. Any person who submits a proposal for, enters into, or 
reasonably may be expected to enter into a covered transaction. This 
term also includes any person who acts on behalf of or is authorized to 
commit a participant in a covered transaction as an

[[Page 212]]

agent or representative of another participant.
    Person. Any individual, corporation, partnership, association, unit 
of government or legal entity, however organized, except: foreign 
governments or foreign governmental entities, public international 
organizations, foreign government owned (in whole or in part) or 
controlled entities, and entities consisting wholly or partially of 
foreign governments or foreign governmental entities.
    Preponderance of the evidence. Proof by information that, compared 
with that opposing it, leads to the conclusion that the fact at issue is 
more probably true than not.
    Principal. Officer, director, owner, partner, key employee, or other 
person within a participant with primary management or supervisory 
responsibilities; or a person who has a critical influence on or 
substantive control over a covered transaction, whether or not employed 
by the participant. Persons who have a critical influence on or 
substantive control over a covered transaction are:
    (1) Principal investigators.
    (2) Loan officers;
    (3) Staff appraisers and inspectors;
    (4) Underwriters;
    (5) Bonding companies;
    (6) Borrowers under programs financed by HUD or with loans 
guaranteed, insured or subsidized through HUD programs;
    (7) Purchasers of properties with HUD-insured or Secretary-held 
mortgages;
    (8) Recipients under HUD assistance agreements;
    (9) Ultimate beneficiaries of HUD programs;
    (10) Fee appraisers and inspectors;
    (11) Real estate agents and brokers;
    (12) Management and marketing agents;
    (13) Accountants, consultants, investment bankers, architects, 
engineers, attorneys and others in a business relationship with 
participants in connection with a covered transaction under a HUD 
program;
    (14) Contractors involved in the construction or rehabilitation of 
properties financed by HUD, with HUD insured loans, or acquired 
properties including properties held by HUD as mortgagee-in-possession;
    (15) Closing agents;
    (16) Turnkey developers of projects financed by or with financing 
insured by HUD;
    (17) Title companies;
    (18) Escrow agents;
    (19) Project owners;
    (20) Administrators of nursing homes and projects for the elderly 
financed or insured by HUD;
    (21) Developers, sellers or owners of property financed with loans 
insured under title I or title II of the National Housing Act; and
    (22) Employees or agents of any of the above.
    Procurement List. A list compiled, maintained, and distributed by 
the General Services Administration (GSA) (see Sec. 24.500(c)), 
containing the names and other information regarding contractors 
debarred or suspended or declared ineligible by agencies under the 
procedures of this part as well as under other statutory or regulatory 
authority.
    Proposal. A solicited or unsolicited bid, application, request, 
invitation to consider or similar communication by or on behalf of a 
person seeking to participate or to receive a benefit, directly or 
indirectly, in or under a covered transaction.
    Respondent. A person against whom a debarment or suspension action 
has been initiated.
    (1) A respondent is also a person against whom a limited denial of 
participation has been initiated.
    (2) [Reserved]
    State. Any of the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, any territory or possession 
of the United States, or any agency of a State, exclusive of 
institutions of higher education, hospitals, and units of local 
government. A State instrumentality will be considered part of the State 
government if it has a written determination from a State government 
that such State considers that instrumentality to be an agency of the 
State government.
    Suspending official. An official authorized to impose suspension. 
The suspending official is either:

[[Page 213]]

    (1) The agency head, or
    (2) An official designated by the agency head.
    Suspension. An action taken by a suspending official in accordance 
with these regulations that immediately excludes a person from 
participating in covered transactions for a temporary period, pending 
completion of an investigation and such legal, debarment, or Program 
Fraud Civil Remedies Act proceedings as may ensue. A person so excluded 
is suspended.
    Ultimate beneficiaries. Ultimate beneficiaries of HUD programs 
include, but are not limited to, subsidized tenants and subsidized 
mortgagors such as those assisted under Section 8 Housing Assistance 
Payments Contracts, by Section 236 Rental Assistance, or by Rent 
Supplement payments.
    Voluntary exclusion or voluntarily excluded. A status of 
nonparticipation or limited participation in covered transactions 
assumed by a person pursuant to the terms of a settlement.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19182, May 26, 
1988, 53 FR 30051, Aug. 10, 1988; 60 FR 33040, 33048, June 26, 1995]



Sec. 24.110  Coverage.

    (a) These regulations apply to all persons who have participated, 
are currently participating or may reasonably be expected to participate 
in transactions under Federal nonprocurement programs. For purposes of 
these regulations such transactions will be referred to as covered 
transactions.
    (1) Covered transaction. For purposes of these regulations, a 
covered transaction is a primary covered transaction or a lower tier 
covered transaction. Covered transactions at any tier need not involve 
the transfer of Federal funds.
    (i) Primary covered transaction. Except as noted in paragraph (a)(2) 
of this section, a primary covered transaction is any nonprocurement 
transaction between an agency and a person, regardless of type, 
including: grants, cooperative agreements, scholarships, fellowships, 
contracts of assistance, loans, loan guarantees, subsidies, insurance, 
payments for specified use, donation agreements and any other 
nonprocurement transactions between a Federal agency and a person. 
Primary covered transactions also include those transactions specially 
designated by the U.S. Department of Housing and Urban Development in 
such agency's regulations governing debarment and suspension.
    (A) Specially designated transactions are:
    (1) Transactions regulated by the Interstate Land Sales Act (15 
U.S.C. 1701);
    (2) Transactions regulated by the National Manufactured Housing 
Construction and Safety Standards Act of 1974 (42 U.S.C. 5401);
    (3) Any procurement transaction between HUD and a person.
    (ii) Lower tier covered transaction. A lower tier covered 
transaction is:
    (A) Any transaction between a participant and a person other than a 
procurement contract for goods or services, regardless of type, under a 
primary covered transaction.
    (B) Any procurement contract for goods or services between a 
participant and a person, regardless of type, expected to equal or 
exceed the Federal procurement small purchase threshold fixed at 10 
U.S.C. 2304(g) and 41 U.S.C. 253(g) (currently $25,000) under a primary 
covered transaction.
    (C) Any procurement contract for goods or services between a 
participant and a person under a covered transaction, regardless of 
amount, under which that person will have a critical influence on or 
substantive control over that covered transaction. Such persons are:
    (1) Principal investigators.
    (2) Providers of federally-required audit services.
    (3) Bonding companies;
    (4) Borrowers;
    (5) Purchasers of a property with a HUD-insured or Secretary-held 
mortgage;
    (6) Recipients under HUD assistance agreements;
    (7) Ultimate beneficiaries of HUD programs;
    (8) Fee appraisers and inspectors;
    (9) Real estate agents and brokers;
    (10) Management and marketing agents;
    (11) Accountants, consultants, investment bankers; architects, 
engineers,

[[Page 214]]

attorneys and others in a business relationship with participants in 
connection with a covered transaction under a HUD program;
    (12) Contractors involved in the construction or rehabilitation of 
properties financed by HUD, with HUD insured loans, or acquired 
properties including properties held by HUD as mortgagee-in-possession;
    (13) Closing agents;
    (14) Turnkey developers of projects financed with or insured by HUD;
    (15) Title companies;
    (16) Escrow agents;
    (17) Project owners;
    (18) Administrators of nursing homes and projects for the elderly 
financed or insured by HUD;
    (19) Developers, sellers or owners of property financed with loans 
insured under title I or title II of the National Housing Act; and
    (20) Employees or agents of any of the above.
    (2) Exceptions. The following transactions are not covered:
    (i) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (ii) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, entities 
consisting wholly or partially of foreign governments or foreign 
governmental entities;
    (iii) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted);
    (iv) Federal employment;
    (v) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (vi) Incidental benefits derived from ordinary governmental 
operations; and
    (vii) Other transactions where the application of these regulations 
would be prohibited by law.
    (3) Other exceptions. (i) Sanctions against participants whose only 
involvement in HUD programs is as ultimate beneficiaries, such as 
subsidized tenants and subsidized mortgagors, may be taken only upon 
commission of one of the offenses set forth in Sec. 24.305(a), unless 
the participant has otherwise been debarred or suspended by another 
Federal agency.
    (ii) Sanctions under this part against mortgagees and lenders 
approved by HUD to participate in Federal Housing Administration 
programs may be initiated only with the approval of the Mortgagee Review 
Board.
    (b) Relationship to other sections. This section describes the types 
of transactions to which a debarment or suspension under the regulations 
will apply. Subpart B, ``Effect of Action,'' Sec. 24.200, ``Debarment or 
suspension,'' sets forth the consequences of a debarment or suspension. 
Those consequences would obtain only with respect to participants and 
principals in the covered transactions and activities described in 
Sec. 24.110(a). Sections 24.325, ``Scope of debarment,'' and 24.420, 
``Scope of suspension,'' govern the extent to which a specific 
participant or organizational elements of a participant would be 
automatically included within a debarment or suspension action, and the 
conditions under which affiliates or persons associated with a 
participant may also be brought within the scope of the action.
    (c) Relationship to Federal procurement activities. In accordance 
with E.O. 12689 and section 2455 of Public Law 103-355, any debarment, 
suspension, proposed debarment or other governmentwide exclusion 
initiated under the Federal Acquisition Regulation (FAR) on or after 
August 25, 1995 shall be recognized by and effective for Executive 
Branch agencies and participants as an exclusion under this regulation. 
Similarly, any debarment, suspension or other governmentwide exclusion 
initiated under this regulation on or after August 25, 1995 shall be 
recognized by and effective for those agencies as a debarment or 
suspension under the FAR.
    (d) These regulations also apply to all persons who have 
participated, are currently participating or may reasonably be expected 
to participate in Federal procurement programs. For purposes of these 
regulations, such persons will be referred to as contractors and

[[Page 215]]

such transactions will be referred to as procurement contracts. The 
consequences of a debarment or suspension as set forth in Sec. 24.200 
apply to contractors in Federal procurement programs, and Secs. 24.325 
and 24.420 govern the extent to which a specific contractor or its 
organizational elements would be included within a debarment or 
suspension action.
    (e) Retroactivity. Limitations on participation in HUD programs 
proposed or imposed prior to the effective date of these regulations 
under an ancillary procedure shall not be affected by this part. This 
part shall apply to sanctions initiated after the effective date of 
these regulations (October 1, 1988) regardless of the date of the cause 
giving rise to the sanction.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19183, May 26, 
1988, 53 FR 30051, Aug. 10, 1988; 60 FR 33041, 33048, June 26, 1995; 62 
FR 20081, Apr. 24, 1997]



Sec. 24.115  Policy.

    (a) In order to protect the public interest, it is the policy of the 
Federal Government to conduct business only with responsible persons. 
Debarment and suspension are discretionary actions that, taken in 
accordance with Executive Order 12549 and these regulations, are 
appropriate means to implement this policy.
    (b) Debarment and suspension are serious actions which shall be used 
only in the public interest and for the Federal Government's protection 
and not for purposes of punishment. Agencies may impose debarment or 
suspension for the causes and in accordance with the procedures set 
forth in these regulations.
    (c) When more than one agency has an interest in the proposed 
debarment or suspension of a person, consideration shall be given to 
designating one agency as the lead agency for making the decision. 
Agencies are encouraged to establish methods and procedures for 
coordinating their debarment or suspension actions.

[53 FR 19182 and 19204, May 26, 1988, as amended at 60 FR 33048, June 
26, 1995]



                       Subpart B--Effect of Action



Sec. 24.200  Debarment or suspension.

    (a) Primary covered transactions. Except to the extent prohibited by 
law, persons who are debarred or suspended shall be excluded from 
primary covered transactions as either participants or principals 
throughout the Executive Branch of the Federal Government for the period 
of their debarment, suspension, or the period they are proposed for 
debarment under 48 CFR part 9, subpart 9.4. Accordingly, no agency shall 
enter into primary covered transactions with such excluded persons 
during such period, except as permitted pursuant to Sec. 24.215.
    (b) Lower tier covered transactions. Except to the extent prohibited 
by law, persons who have been proposed for debarment under 48 CFR part 
9, subpart 9.4, debarred or suspended shall be excluded from 
participating as either participants or principals in all lower tier 
covered transactions (see Sec. 24.110(a)(1)(ii)) for the period of their 
exclusion.
    (c) Exceptions. Debarment or suspension does not affect a person's 
eligibility for--
    (1) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (2) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, and 
entities consisting wholly or partially of foreign governments or 
foreign governmental entities;
    (3) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted);
    (4) Federal employment;
    (5) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (6) Incidental benefits derived from ordinary governmental 
operations; and

[[Page 216]]

    (7) Other transactions where the application of these regulations 
would be prohibited by law.
    (8) Debarment for any of the causes set forth in Sec. 24.305(f) 
shall have no governmentwide effect.
    (9) Sanctions imposed on an individual participant under this part 
shall not preclude the participant from selling his or her principal 
residence to a purchaser using HUD/FHA financing.
    (d) Relationship to HUD administrative sanction procedures--(1) 
Sanctions provided pursuant to contract provisions. Nothing in this part 
shall impair or limit the right to impose any sanction provided for by 
contract, including guaranty agreements with the Government National 
Mortgage Association.
    (2) Other Departmental sanctions. Where an office of the Department 
is required by statute, regulation, or Executive Order to follow 
administrative sanction procedures that may differ from the requirements 
of this part, the requirements of the statute, regulation, or Executive 
Order shall take precedence. These alternative procedures include, but 
are not limited to: 24 CFR part 200 Previous Participation Review and 
Clearance procedures, 24 CFR part 25 Mortgagee Review Board 
administrative actions, and 24 CFR part 570 Community Development Block 
Grant corrective and remedial actions.

[60 FR 33041, 33048, June 26, 1995]



Sec. 24.205  Ineligible persons.

    Persons who are ineligible, as defined in Sec. 24.105(i), are 
excluded in accordance with the applicable statutory, executive order, 
or regulatory authority.



Sec. 24.210  Voluntary exclusion.

    Persons who accept voluntary exclusions under Sec. 24.315 are 
excluded in accordance with the terms of their settlements. HUD shall, 
and participants may, contact the original action agency to ascertain 
the extent of the exclusion.



Sec. 24.215  Exception provision.

    HUD may grant an exception permitting a debarred, suspended, or 
voluntarily excluded person, or a person proposed for debarment under 48 
CFR part 9, subpart 9.4, to participate in a particular covered 
transaction upon a written determination by the agency head or an 
authorized designee stating the reason(s) for deviating from the 
Presidential policy established by Executive Order 12549 and 
Sec. 24.200. However, in accordance with the President's stated 
intention in the Executive Order, exceptions shall be granted only 
infrequently. Exceptions shall be reported in accordance with 
Sec. 24.505(a).

[60 FR 33041, 33048, June 26, 1995]



Sec. 24.220  Continuation of covered transactions.

    (a) Notwithstanding the debarment, suspension, proposed debarment 
under 48 CFR part 9, subpart 9.4, determination of ineligibility, or 
voluntary exclusion of any person by an agency, agencies and 
participants may continue covered transactions in existence at the time 
the person was debarred, suspended, proposed for debarment under 48 CFR 
part 9, subpart 9.4, declared ineligible, or voluntarily excluded. A 
decision as to the type of termination action, if any, to be taken 
should be made only after thorough review to ensure the propriety of the 
proposed action.
    (b) Agencies and participants shall not renew or extend covered 
transactions (other than no-cost time extensions) with any person who is 
debarred, suspended, proposed for debarment under 48 CFR part 9, subpart 
9.4, ineligible or voluntary excluded, except as provided in 
Sec. 24.215.

[60 FR 33041, 33048, June 26, 1995]



Sec. 24.225  Failure to adhere to restrictions.

    (a) Except as permitted under Sec. 24.215 or Sec. 24.220, a 
participant shall not knowingly do business under a covered transaction 
with a person who is--
    (1) Debarred or suspended;
    (2) Proposed for debarment under 48 CFR part 9, subpart 9.4; or
    (3) Ineligible for or voluntarily excluded from the covered 
transaction.
    (b) Violation of the restriction under paragraph (a) of this section 
may result in disallowance of costs, annulment or termination of award, 
issuance

[[Page 217]]

of a stop work order, debarment or suspension, or other remedies as 
appropriate.
    (c) A participant may rely upon the certification of a prospective 
participant in a lower tier covered transaction that it and its 
principals are not debarred, suspended, proposed for debarment under 48 
CFR part 9, subpart 9.4, ineligible, or voluntarily excluded from the 
covered transaction (See appendix B of these regulations), unless it 
knows that the certification is erroneous. An agency has the burden of 
proof that a participant did knowingly do business with a person that 
filed an erroneous certification.

[60 FR 33041, 33048, June 26, 1995]



                          Subpart C--Debarment



Sec. 24.300  General.

    The debarring official may debar a person for any of the causes in 
Sec. 24.305, using procedures established in Secs. 24.310 through 
24.314. The existence of a cause for debarment, however, does not 
necessarily require that the person be debarred; the seriousness of the 
person's acts or omissions and any mitigating factors shall be 
considered in making any debarment decision.



Sec. 24.305  Causes for debarment.

    Debarment may be imposed in accordance with the provisions of 
Secs. 24.300 through 24.314 for:
    (a) Conviction of or civil judgment for:
    (1) Commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public or private 
agreement or transaction;
    (2) Violation of Federal or State antitrust statutes, including 
those proscribing price fixing between competitors, allocation of 
customers between competitors, and bid rigging;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, 
receiving stolen property, making false claims, or obstruction of 
justice; or
    (4) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects the 
present responsibility of a person.
    (b) Violation of the terms of a public agreement or transaction so 
serious as to affect the integrity of an agency program, such as:
    (1) A willful failure to perform in accordance with the terms of one 
or more public agreements or transactions;
    (2) A history of failure to perform or of unsatisfactory performance 
of one or more public agreements or transactions; or
    (3) A willful violation of a statutory or regulatory provision or 
requirement applicable to a public agreement or transaction.
    (c) Any of the following causes:
    (1) A nonprocurement debarment by any Federal agency taken before 
October 1, 1988, the effective date of these regulations, or a 
procurement debarment by any Federal agency taken pursuant to 48 CFR 
subpart 9.4;
    (2) Knowingly doing business with a debarred, suspended, ineligible, 
or voluntarily excluded person, in connection with a covered 
transaction, except as permitted in Sec. 24.215 or Sec. 24.220;
    (3) Failure to pay a single substantial debt, or a number of 
outstanding debts (including disallowed costs and overpayments, but not 
including sums owed the Federal Government under the Internal Revenue 
Code) owed to any Federal agency or instrumentality, provided the debt 
is uncontested by the debtor or, if contested, provided that the 
debtor's legal and administrative remedies have been exhausted;
    (4) Violation of a material provision of a voluntary exclusion 
agreement entered into under Sec. 24.315 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of any requirement of subpart F of this part, relating 
to providing a drug-free workplace, as set forth in Sec. 24.615 of this 
part.
    (d) Any other cause of so serious or compelling a nature that it 
affects the present responsibility of a person.
    (e) Debarment of a contractor may be imposed for any of the causes 
in paragraphs (a), (b), and (d). For purposes of this section, agreement 
is deemed to include contracts or subcontracts.
    (f) In addition to the causes set forth above, HUD may debar a 
person from

[[Page 218]]

participating in any programs or activities of the Department for 
material violation of a statutory or regulatory provision or program 
requirement applicable to a public agreement or transaction including 
applications for grants, financial assistance, insurance or guarantees, 
or to the performance of requirements under a grant, assistance award or 
conditional or final commitment to insure or guarantee.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19184, May 26, 
1988, 54 FR 4950 and 4957, Jan. 31, 1989; 60 FR 33049, June 26, 1995]



Sec. 24.310  Procedures.

    HUD shall process debarment actions as informally as practicable, 
consistent with the principles of fundamental fairness, using the 
procedures in Secs. 24.311 through 24.314.



Sec. 24.311  Investigation and referral.

    Information concerning the existence of a cause for debarment from 
any source shall be promptly reported, investigated, and referred, when 
appropriate, to the debarring official for consideration. After 
consideration, the debarring official may issue a notice of proposed 
debarment.



Sec. 24.312  Notice of proposed debarment.

    A debarment proceeding shall be initiated by notice to the 
respondent advising:
    (a) That debarment is being considered;
    (b) Of the reasons for the proposed debarment in terms sufficient to 
put the respondent on notice of the conduct or transaction(s) upon which 
it is based;
    (c) Of the cause(s) relied upon under Sec. 24.305 for proposing 
debarment;
    (d) Of the provisions of Sec. 24.311 through Sec. 24.314, and any 
other HUD procedures, if applicable, governing debarment decisionmaking; 
and
    (e) Of the potential effect of a debarment.



Sec. 24.313  Opportunity to contest proposed debarment.

    (a) Submission in opposition. Within 30 days after receipt of the 
notice of proposed debarment, the respondent may submit, in person, in 
writing, or through a representative, information and argument in 
opposition to the proposed debarment.
    (1) The information and argument should be addressed to the 
Debarment Docket Clerk, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410.
    (2) If the respondent does not contest the proposed debarment within 
the 30 day period, the proposed debarment shall become final.
    (3) If the respondent desires a hearing, it shall submit a written 
request to the Debarment Docket Clerk within the 30-day period following 
receipt of the notice of proposed debarment.
    (4) The parties may agree to engage in an alternative dispute 
resolution, including informal conference, mediation, conciliation, 
summary trial with binding decision, minitrial, or use of a settlement 
judge.
    (b) Additional proceedings as to disputed material facts. (1) In 
actions not based upon a conviction or civil judgment, if the debarring 
official finds that the respondent's submission in opposition raises a 
genuine dispute over facts material to the proposed debarment, 
respondent(s) shall be afforded an opportunity to appear with a 
representative, submit documentary evidence, present witnesses, and 
confront any witness the agency presents.
    (2) A transcribed record of any additional proceedings shall be made 
available at cost to the respondent, upon request, unless the respondent 
and the agency, by mutual agreement, waive the requirement for a 
transcript.
    (i) Upon the agreement of the parties, the additional proceedings 
may be recorded using audiotape without transcription. The audiotape 
shall be made available at cost to the respondent.
    (ii) [Reserved]

[60 FR 33049, June 26, 1995]



Sec. 24.314  Debarring official's decision.

    (a) No additional proceedings necessary. In actions based upon a 
conviction or civil judgment, or in which there is no genuine dispute 
over material facts, the debarring official shall make a decision on the 
basis of all the information in the administrative record, including any 
submission made by the respondent. The decision shall be made

[[Page 219]]

within 45 days after receipt of any information and argument submitted 
by the respondent, unless the debarring official extends this period for 
good cause.
    (1) The debarring official may, in his or her discretion, refer 
actions based upon a conviction or civil judgment, or in which there is 
no genuine dispute over material facts, to a hearing officer or other 
official for review of the administrative record and appropriate 
findings. The hearing officer or other official shall issue such 
findings within 45 days after the referral, and the debarring official 
shall issue a decision within 15 days after the date of the findings, 
unless such periods are extended for good cause.
    (2) [Reserved]
    (b) Additional proceedings necessary. (1) In actions in which 
additional proceedings are necessary to determine disputed material 
facts, written findings of fact shall be prepared. The debarring 
official shall base the decision on the facts as found, together with 
any information and argument submitted by the respondent and any other 
information in the administrative record.
    (2) The debarring official may refer disputed material facts to 
another official for findings of fact. The debarring official may reject 
any such findings, in whole or in part, only after specifically 
determining them to be arbitrary and capricious or clearly erroneous.
    (i) The debarring official may refer disputed material facts and 
issues of law to a hearing officer for findings of fact and conclusions 
of law.
    (A) No appeal to the Secretary may be taken under Secs. 26.24 
through 26.26 of this title with respect to any order or decision by a 
hearing officer or other official.
    (B) The debarring official shall provide the hearing officer or 
other official with all the information in the administrative record, 
including any information and argument submitted by the respondent. The 
administrative record and any documents admitted at the hearing shall 
constitute the exhibits in evidence.
    (ii) Unless the parties mutually agree to extend this period, a 
proceeding before a hearing officer or other official shall commence 
within 45 days after referral of the case by the debarring official. The 
hearing officer or other official shall issue findings of fact within 30 
days after the conclusion of such additional proceedings. The time 
limitations of this subparagraph may be extended upon issuance, by the 
debarring official, hearing officer or other official, of a written 
notice describing good cause for such extension.
    (3) The debarring official's decision shall be made after the 
conclusion of the proceedings with respect to the disputed facts.
    (i) Such decision shall be made within 15 days after the hearing 
officer or other official issues findings of fact.
    (ii) [Reserved]
    (c)(1) Standard of proof. In any debarment action, the cause for 
debarment must be established by a preponderance of the evidence. Where 
the proposed debarment is based upon a conviction or civil judgment, the 
standard shall be deemed to have been met.
    (2) Burden of proof. The burden of proof is on the agency proposing 
debarment.
    (d) Notice of debarring official's decision. (1) If the debarring 
official decides to impose debarment, the respondent shall be given 
prompt notice:
    (i) Referring to the notice of proposed debarment;
    (ii) Specifying the reasons for debarment;
    (iii) Stating the period of debarment, including effective dates; 
and
    (iv) Advising that the debarment is effective for covered 
transactions throughout the executive branch of the Federal Government 
unless an agency head or an authorized designee makes the determination 
referred to in Sec. 24.215.
    (A) Where a debarment is based solely on Sec. 24.305(f), the notice 
of the debarring official's decision shall advise that the debarment is 
effective for programs or activities of the Department.
    (B) [Reserved]
    (2) If the debarring official decides not to impose debarment, the 
respondent shall be given prompt notice of that decision. A decision not 
to impose debarment shall be without prejudice

[[Page 220]]

to a subsequent imposition of debarment by any other agency.

[60 FR 33049, June 26, 1995]



Sec. 24.315  Settlement and voluntary exclusion.

    (a) When in the best interest of the Government, HUD may, at any 
time, settle a debarment or suspension action.
    (b) If a participant and the agency agree to a voluntary exclusion 
of the participant, such voluntary exclusion shall be entered on the 
Nonprocurement List (see subpart E).



Sec. 24.320  Period of debarment.

    (a) Debarment shall be for a period commensurate with the 
seriousness of the cause(s). If a suspension precedes a debarment, the 
suspension period shall be considered in determining the debarment 
period.
    (1) Debarment for causes other than those related to a violation of 
the requirements of subpart F of this part generally should not exceed 
three years. Where circumstances warrant, a longer period of debarment 
may be imposed.
    (2) In the case of a debarment for a violation of the requirements 
of subpart F of this part (see Sec. 24.305(c)(5)), the period of 
debarment shall not exceed five years.
    (b) The debarring official may extend an existing debarment for an 
additional period, if that official determines that an extension is 
necessary to protect the public interest. However, a debarment may not 
be extended solely on the basis of the facts and circumstances upon 
which the initial debarment action was based. If debarment for an 
additional period is determined to be necessary, the procedures of 
Secs. 24.311 through 24.314 shall be followed to extend the debarment.
    (c) The respondent may request the debarring official to reverse the 
debarment decision or to reduce the period or scope of debarment. Such a 
request shall be in writing and supported by documentation. The 
debarring official may grant such a request for reasons including, but 
not limited to:
    (1) Newly discovered material evidence;
    (2) Reversal of the conviction or civil judgment upon which the 
debarment was based;
    (3) Bona fide change in ownership or management;
    (4) Elimination of other causes for which the debarment was imposed; 
or
    (5) Other reasons the debarring official deems appropriate.
    (d) Where respondent's request to reduce the period or scope of 
debarment is based on reasons set forth in paragraphs (c)(4) or (5) of 
this section, such request may not be submitted earlier than six months 
after the final decision to debar. In no event may more than one such 
request be submitted within any 12-month period.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19185, May 26, 
1988, 54 FR 4950 and 4957, Jan 31, 1989]



Sec. 24.325  Scope of debarment.

    (a) Scope in general. (1) Debarment of a person under these 
regulations constitutes debarment of all its divisions and other 
organizational elements from all covered transactions, unless the 
debarment decision is limited by its terms to one or more specifically 
identified individuals, divisions or other organizational elements or to 
specific types of transactions.
    (2) The debarment action may include any affiliate of the 
participant that is specifically named and given notice of the proposed 
debarment and an opportunity to respond (see Secs. 24.311 through 
24.314).
    (3) Debarment of a contractor under these regulations, or by another 
Federal agency pursuant to 48 CFR subpart 9.4, constitutes debarment of 
all its divisions and other organizational elements from all Federal 
procurement, unless the debarment is limited by its terms to one or more 
specifically identified individuals, divisions, or other organizational 
elements or to specific types of contracts. The debarment may be 
extended to include any affiliates of the contractor, if they are 
specifically named, given written notice of the proposed debarment, and 
provided with an opportunity to respond.
    (b) Imputing conduct. For purposes of determining the scope of 
debarment, conduct may be imputed as follows:

[[Page 221]]

    (1) Conduct imputed to participant. The fraudulent, criminal or 
other seriously improper conduct of any officer, director, shareholder, 
partner, employee, or other individual associated with a participant may 
be imputed to the participant when the conduct occurred in connection 
with the individual's performance of duties for or on behalf of the 
participant, or with the participant's knowledge, approval, or 
acquiescence. The participant's acceptance of the benefits derived from 
the conduct shall be evidence of such knowledge, approval, or 
acquiescence.
    (2) Conduct imputed to individuals associated with participant. The 
fraudulent, criminal, or other seriously improper conduct of a 
participant may be imputed to any officer, director, shareholder, 
partner, employee, or other individual associated with the participant 
who participated in, knew of, or had reason to know of the participant's 
conduct.
    (3) Conduct of one participant imputed to other participants in a 
joint venture. The fraudulent, criminal, or other seriously improper 
conduct of one participant in a joint venture, grant pursuant to a joint 
application, or similar arrangement may be imputed to other participants 
if the conduct occurred for or on behalf of the joint venture, grant 
pursuant to a joint application, or similar arrangement may be imputed 
to other participants if the conduct occurred for or on behalf of the 
joint venture, grant pursuant to a joint application, or similar 
arrangement or with the knowledge, approval, or acquiescence of these 
participants. Acceptance of the benefits derived from the conduct shall 
be evidence of such knowledge, approval, or acquiescence.
    (4) The provisions of paragraphs (b)(1) through (3) of this section 
are also applicable for purposes of imputing conduct to a contractor.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19185, May 26, 
1988]



                          Subpart D--Suspension



Sec. 24.400  General.

    (a) The suspending official may suspend a person for any of the 
causes in Sec. 24.405 using procedures established in Secs. 24.410 
through 24.413.
    (b) Suspension is a serious action to be imposed only when:
    (1) There exists adequate evidence of one or more of the causes set 
out in Sec. 24.405, and
    (2) Immediate action is necessary to protect the public interest.
    (c) In assessing the adequacy of the evidence, the agency should 
consider how much information is available, how credible it is given the 
circumstances, whether or not important allegations are corroborated, 
and what inferences can reasonably be drawn as a result. This assessment 
should include an examination of basic documents such as grants, 
cooperative agreements, loan authorizations, and contracts.

[53 FR 19182 and 19204, May 26, 1988, as amended at 60 FR 33050, June 
26, 1995]



Sec. 24.405  Causes for suspension.

    (a) Suspension may be imposed in accordance with the provisions of 
Secs. 24.400 through 24.413 upon adequate evidence:
    (1) To suspect the commission of an offense listed in 
Sec. 24.305(a); or
    (2) That a cause for debarment under Sec. 24.305 may exist.
    (b) Indictment shall constitute adequate evidence for purposes of 
suspension actions.



Sec. 24.410  Procedures.

    (a) Investigation and referral. Information concerning the existence 
of a cause for suspension from any source shall be promptly reported, 
investigated, and referred, when appropriate, to the suspending official 
for consideration. After consideration, the suspending official may 
issue a notice of suspension.
    (b) Decisionmaking process. HUD shall process suspension actions as 
informally as practicable, consistent with principles of fundamental 
fairness, using the procedures in Sec. 24.411 through Sec. 24.413.

[53 FR 19182 and 19204, May 26, 1988, as amended at 60 FR 33050, June 
26, 1995]



Sec. 24.411  Notice of suspension.

    When a respondent is suspended, notice shall immediately be given:
    (a) That the suspension has been imposed;

[[Page 222]]

    (b) That the suspension is based on an indictment, conviction, or 
other adequate evidence that the respondent has committed irregularities 
seriously reflecting on the propriety of further Federal Government 
dealings with the respondent;
    (c) Describing any such irregularities in terms sufficient to put 
the respondent on notice without disclosing the Federal Government's 
evidence;
    (d) Of the cause(s) relied upon under Sec. 24.405 for imposing 
suspension;
    (e) That the suspension is for a temporary period pending the 
completion of an investigation or ensuing legal, debarment or Program 
Fraud Civil Remedies Act proceedings;
    (f) Of the provisions of Secs. 24.411 through 24.413 and any other 
HUD procedures, if applicable, governing suspension decisionmaking; and
    (g) Of the effect of the suspension.

[60 FR 33050, June 26, 1995]



Sec. 24.412  Opportunity to contest suspension.

    (a) Submission in opposition. Within 30 days after receipt of the 
notice of suspension, the respondent may submit, in person, in writing, 
or through a representative, information and argument in opposition to 
the suspension.
    (1) The information and argument should be addressed to the 
Debarment Docket Clerk, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410.
    (2) If the respondent does not contest the suspension within the 30 
day period, the suspension shall become final.
    (3) If the respondent desires a hearing, it shall submit a written 
request to the Debarment Docket Clerk within the 30-day period following 
receipt of the notice of suspension.
    (4) The parties may agree to engage in an alternative dispute 
resolution, including informal conference, mediation, conciliation, 
summary trial with binding decision, minitrial, or use of a settlement 
judge.
    (b) Additional proceedings as to disputed material facts. (1) If the 
suspending official finds that the respondent's submission in opposition 
raises a genuine dispute over facts material to the suspension, 
respondent(s) shall be afforded an opportunity to appear with a 
representative, submit documentary evidence, present witnesses, and 
confront any witnesses the agency presents, unless:
    (i) The action is based on an indictment, conviction or civil 
judgment; or
    (ii) A determination is made, on the basis of Department of Justice 
advice, that the substantial interests of the Federal Government in 
pending or contemplated legal proceedings based on the same facts as the 
suspension would be prejudiced.
    (2) A transcribed record of any additional proceedings shall be 
prepared and made available at cost to the respondent, unless the 
respondent and the agency, by mutual agreement, waive the requirement 
for a transcript.
    (i) Upon the agreement of the parties, the additional proceedings 
may be recorded using audiotape without transcription. The audiotape 
shall be made available at cost to the respondent.
    (ii) [Reserved]

[60 FR 33050, June 26, 1995]



Sec. 24.413  Suspending official's decision.

    The suspending official may modify or terminate the suspension (see 
Sec. 24.320(c) for reasons for reducing the period or scope of 
debarment) or may leave it in force. However, a decision to modify or 
terminate the suspension shall be without prejudice to the subsequent 
imposition of suspension by any other agency or debarment by any agency. 
The decision shall be rendered in accordance with the following 
provisions:
    (a) No additional proceedings necessary. In actions based upon an 
indictment, conviction, or civil judgment, in which there is no genuine 
dispute over material facts, or in which additional proceedings to 
determine disputed material facts have been denied on the basis of 
Department of Justice advice, the suspending official shall make a 
decision on the basis of all the information in the administrative 
record, including any submission made by the respondent. The decision 
shall be made within 45 days after receipt of any information and 
argument submitted by the respondent, unless the suspending official 
extends this period for good cause.
    (1) The suspending official may, in his or her discretion, refer 
actions

[[Page 223]]

based upon an indictment, conviction or civil judgment, or in which 
there is no genuine dispute over material facts, to a hearing officer or 
other official for review of the administrative record and appropriate 
findings. The hearing officer or other official shall issue such 
findings within 45 days after the referral, and the suspending official 
shall issue a decision within 15 days after the date of such findings, 
unless such periods are extended for good cause.
    (2) [Reserved]
    (b) Additional proceedings necessary. (1) In actions in which 
additional proceedings are necessary to determine disputed material 
facts, written findings of fact shall be prepared. The suspending 
official shall base the decision on the facts as found, together with 
any information and argument submitted by the respondent and any other 
information in the administrative record.
    (2) The suspending official may refer matters involving disputed 
material facts to another official for findings of fact. The suspending 
official may reject any such findings, in whole or in part, only after 
specifically determining them to be arbitrary or capricious or clearly 
erroneous.
    (3) The suspending official may refer disputed material facts and 
issues of law to a hearing officer for findings of fact and conclusions 
of law.
    (i) No appeal to the Secretary may be taken under Secs. 26.24 
through 26.26 of this title with respect to any order or decision by a 
hearing officer or other official.
    (ii) The suspending official shall provide the hearing officer or 
other official with all the information in the administrative record, 
including any information and argument submitted by the respondent. The 
administrative record and any documents admitted at the hearing shall 
constitute the exhibits in evidence.
    (4) Unless the parties mutually agree to extend this period, a 
proceeding before a hearing officer or other official shall commence 
within 45 days after referral of disputed material facts and issues of 
law by the suspending official. The hearing officer or other official 
shall issue findings of fact within 30 days after the conclusion of such 
additional proceedings. The time limitations of this subparagraph may be 
extended upon issuance, by the suspending official, other official or 
hearing officer, of a written notice describing good cause for such 
extension.
    (5) The suspending official's decision shall be made within 15 days 
after the hearing officer or other official issues findings of fact.
    (c) Notice of suspending official's decision. Prompt written notice 
of the suspending official's decision shall be sent to the respondent.

[60 FR 33050, June 26, 1995]



Sec. 24.415  Period of suspension.

    (a) Suspension shall be for a temporary period pending the 
completion of an investigation or ensuing legal, debarment, or Program 
Fraud Civil Remedies Act proceedings, unless terminated sooner by the 
suspending official or as provided in paragraph (b) of this section.
    (b) If legal or administrative proceedings are not initiated within 
12 months after the date of the suspension notice, the suspension shall 
be terminated unless an Assistant Attorney General or United States 
Attorney requests its extension in writing, in which case it may be 
extended for an additional six months. In no event may a suspension 
extend beyond 18 months, unless such proceedings have been initiated 
within that period.
    (c) The suspending official shall notify the Department of Justice 
of an impending termination of a suspension, at least 30 days before the 
12-month period expires, to give that Department an opportunity to 
request an extension.

[53 FR 19182 and 19204, May 26, 1988, as amended at 60 FR 33051, June 
26, 1995]



Sec. 24.420  Scope of suspension.

    The scope of a suspension is the same as the scope of a debarment 
(see Sec. 24.325), except that the procedures of Secs. 24.410 through 
24.413 shall be used in imposing a suspension.

[[Page 224]]



       Subpart E--Responsibilities of GSA, Agency and Participants



Sec. 24.500  GSA responsibilities.

    (a) In accordance with the OMB guidelines, GSA shall compile, 
maintain, and distribute a list of all persons who have been debarred, 
suspended, or voluntarily excluded by agencies under Executive Order 
12549 and these regulations, and those who have been determined to be 
ineligible.
    (b) At a minimum, this list shall indicate:
    (1) The names and addresses of all debarred, suspended, ineligible, 
and voluntarily excluded persons, in alphabetical order, with cross-
references when more than one name is involved in a single action;
    (2) The type of action;
    (3) The cause for the action;
    (4) The scope of the action;
    (5) Any termination date for each listing; and
    (6) The agency and name and telephone number of the agency point of 
contact for the action.
    (c) In accordance with 48 CFR 9.404, GSA shall compile and 
distribute a list of contractors who are debarred, suspended or 
ineligible.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19186, May 26, 
1988]



Sec. 24.505  HUD responsibilities.

    (a) The agency shall provide GSA with current information concerning 
debarments, suspension, determinations of ineligibility, and voluntary 
exclusions it has taken. Until February 18, 1989, the agency shall also 
provide GSA and OMB with information concerning all transactions in 
which HUD has granted exceptions under Sec. 24.215 permitting 
participation by debarred, suspended, or voluntarily excluded persons.
    (b) Unless an alternative schedule is agreed to by GSA, the agency 
shall advise GSA of the information set forth in Sec. 24.500(b) and of 
the exceptions granted under Sec. 24.215 within five working days after 
taking such actions.
    (c) The agency shall direct inquiries concerning listed persons to 
the agency that took the action.
    (d) Agency officials shall check the Nonprocurement List before 
entering covered transactions to determine whether a participant in a 
primary transaction is debarred, suspended, ineligible, or voluntarily 
excluded (Tel. -).
    (e) Agency officials shall check the Nonprocurement List before 
approving principals or lower tier participants where agency approval of 
the principal or lower tier participant is required under the terms of 
the transaction, to determine whether such principals or participants 
are debarred, suspended, ineligible, or voluntarily excluded.
    (f) The agency shall notify GSA within 5 working days after 
modifying or rescinding an action;
    (g) The agency shall, in accordance with internal retention 
procedures, maintain records relating to each suspension or debarment 
action taken by the agency;
    (h) Contracting Officers shall check the Procurement List before 
entering into any contract or before approving any subcontract to 
determine whether a contractor is debarred, suspended, ineligible or 
voluntarily excluded.

[53 FR 19182 and 19204, May 26, 1988, as amended at 53 FR 19186, May 26, 
1988]



Sec. 24.510  Participants' responsibilities.

    (a) Certification by participants in primary covered transactions. 
Each participant shall submit the certification in appendix A to this 
part for it and its principals at the time the participant submits its 
proposal in connection with a primary covered transaction, except that 
States need only complete such certification as to their principals. 
Participants may decide the method and frequency by which they determine 
the eligibility of their principals. In addition, each participant may, 
but is not required to, check the Nonprocurement List for its principals 
(Tel. -). Adverse information on the certification will not necessarily 
result in denial of participation. However, the certification, and any 
additional information pertaining to the certification submitted by the 
participant, shall be considered in the administration of covered 
transactions.
    (b) Certification by participants in lower tier covered 
transactions. (1) Each

[[Page 225]]

participant shall require participants in lower tier covered 
transactions to include the certification in appendix B to this part for 
it and its principals in any proposal submitted in connection with such 
lower tier covered transactions.
    (2) A participant may rely upon the certification of a prospective 
participant in a lower tier covered transaction that it and its 
principals are not debarred, suspended, ineligible, or voluntarily 
excluded from the covered transaction by any Federal agency, unless it 
knows that the certification is erroneous. Participants may decide the 
method and frequency by which they determine the eligiblity of their 
principals. In addition, a participant may, but is not required to, 
check the Nonprocurement List for its principals and for participants 
(Tel. -).
    (c) Changed circumstances regarding certification. A participant 
shall provide immediate written notice to HUD if at any time the 
participant learns that its certification was erroneous when submitted 
or has become erroneous by reason of changed circumstances. Participants 
in lower tier covered transactions shall provide the same updated notice 
to the participant to which it submitted its proposals.



          Subpart F--Drug-Free Workplace Requirements (Grants)

    Source: 55 FR 21688, 21695, May 25, 1990, unless otherwise noted.



Sec. 24.600  Purpose.

    (a) The purpose of this subpart is to carry out the Drug-Free 
Workplace Act of 1988 by requiring that--
    (1) A grantee, other than an individual, shall certify to the agency 
that it will provide a drug-free workplace;
    (2) A grantee who is an individual shall certify to the agency that, 
as a condition of the grant, he or she will not engage in the unlawful 
manufacture, distribution, dispensing, possession or use of a controlled 
substance in conducting any activity with the grant.
    (b) Requirements implementing the Drug-Free Workplace Act of 1988 
for contractors with the agency are found at 48 CFR subparts 9.4, 23.5, 
and 52.2.



Sec. 24.605  Definitions.

    (a) Except as amended in this section, the definitions of 
Sec. 24.105 apply to this subpart.
    (b) For purposes of this subpart--
    (1) Controlled substance means a controlled substance in schedules I 
through V of the Controlled Substances Act (21 U.S.C. 812), and as 
further defined by regulation at 21 CFR 1308.11 through 1308.15;
    (2) Conviction means a finding of guilt (including a plea of nolo 
contendere) or imposition of sentence, or both, by any judicial body 
charged with the responsibility to determine violations of the Federal 
or State criminal drug statutes;
    (3) Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance;
    (4) Drug-free workplace means a site for the performance of work 
done in connection with a specific grant at which employees of the 
grantee are prohibited from engaging in the unlawful manufacture, 
distribution, dispensing, possession, or use of a controlled substance;
    (5) Employee means the employee of a grantee directly engaged in the 
performance of work under the grant, including:
    (i) All direct charge employees;
    (ii) All indirect charge employees, unless their impact or 
involvement is insignificant to the performance of the grant; and,
    (iii) Temporary personnel and consultants who are directly engaged 
in the performance of work under the grant and who are on the grantee's 
payroll.

This definition does not include workers not on the payroll of the 
grantee (e.g., volunteers, even if used to meet a matching requirement; 
consultants or independent contractors not on the payroll; or employees 
of subrecipients or subcontractors in covered workplaces);

[[Page 226]]

    (6) Federal agency or agency means any United States executive 
department, military department, government corporation, government 
controlled corporation, any other establishment in the executive branch 
(including the Executive Office of the President), or any independent 
regulatory agency;
    (7) Grant means an award of financial assistance, including a 
cooperative agreement, in the form of money, or property in lieu of 
money, by a Federal agency directly to a grantee. The term grant 
includes block grant and entitlement grant programs, whether or not 
exempted from coverage under the grants management government-wide 
common rule on uniform administrative requirements for grants and 
cooperative agreements. The term does not include technical assistance 
that provides services instead of money, or other assistance in the form 
of loans, loan guarantees, interest subsidies, insurance, or direct 
appropriations; or any veterans' benefits to individuals, i.e., any 
benefit to veterans, their families, or survivors by virtue of the 
service of a veteran in the Armed Forces of the United States;
    (8) Grantee means a person who applies for or receives a grant 
directly from a Federal agency (except another Federal agency);
    (9) Individual means a natural person;
    (10) State means any of the States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency of a State, exclusive of 
institutions of higher education, hospitals, and units of local 
government. A State instrumentality will be considered part of the State 
government if it has a written determination from a State government 
that such State considers the instrumentality to be an agency of the 
State government.



Sec. 24.610  Coverage.

    (a) This subpart applies to any grantee of the agency.
    (b) This subpart applies to any grant, except where application of 
this subpart would be inconsistent with the international obligations of 
the United States or the laws or regulations of a foreign government. A 
determination of such inconsistency may be made only by the agency head 
or his/her designee.
    (c) The provisions of subparts A, B, C, D and E of this part apply 
to matters covered by this subpart, except where specifically modified 
by this subpart. In the event of any conflict between provisions of this 
subpart and other provisions of this part, the provisions of this 
subpart are deemed to control with respect to the implementation of 
drug-free workplace requirements concerning grants.



Sec. 24.615  Grounds for suspension of payments, suspension or termination of grants, or suspension or debarment.

    A grantee shall be deemed in violation of the requirements of this 
subpart if the agency head or his or her official designee determines, 
in writing, that--
    (a) The grantee has made a false certification under Sec. 24.630;
    (b) With respect to a grantee other than an individual--
    (1) The grantee has violated the certification by failing to carry 
out the requirements of paragraphs (A)(a)-(g) and/or (B) of the 
certification (Alternate I to appendix C) or
    (2) Such a number of employees of the grantee have been convicted of 
violations of criminal drug statutes for violations occurring in the 
workplace as to indicate that the grantee has failed to make a good 
faith effort to provide a drug-free workplace.
    (c) With respect to a grantee who is an individual--
    (1) The grantee has violated the certification by failing to carry 
out its requirements (Alternate II to appendix C); or
    (2) The grantee is convicted of a criminal drug offense resulting 
from a violation occurring during the conduct of any grant activity.



Sec. 24.620  Effect of violation.

    (a) In the event of a violation of this subpart as provided in 
Sec. 24.615, and in accordance with applicable law, the grantee shall be 
subject to one or more of the following actions:

[[Page 227]]

    (1) Suspension of payments under the grant;
    (2) Suspension or termination of the grant; and
    (3) Suspension or debarment of the grantee under the provisions of 
this part.
    (b) Upon issuance of any final decision under this part requiring 
debarment of a grantee, the debarred grantee shall be ineligible for 
award of any grant from any Federal agency for a period specified in the 
decision, not to exceed five years (see Sec. 24.320(a)(2) of this part).



Sec. 24.625  Exception provision.

    The agency head may waive with respect to a particular grant, in 
writing, a suspension of payments under a grant, suspension or 
termination of a grant, or suspension or debarment of a grantee if the 
agency head determines that such a waiver would be in the public 
interest. This exception authority cannot be delegated to any other 
official.



Sec. 24.630  Certification requirements and procedures.

    (a)(1) As a prior condition of being awarded a grant, each grantee 
shall make the appropriate certification to the Federal agency providing 
the grant, as provided in appendix C to this part.
    (2) Grantees are not required to make a certification in order to 
continue receiving funds under a grant awarded before March 18, 1989, or 
under a no-cost time extension of such a grant. However, the grantee 
shall make a one-time drug-free workplace certification for a non-
automatic continuation of such a grant made on or after March 18, 1989.
    (b) Except as provided in this section, all grantees shall make the 
required certification for each grant. For mandatory formula grants and 
entitlements that have no application process, grantees shall submit a 
one-time certification in order to continue receiving awards.
    (c) A grantee that is a State may elect to make one certification in 
each Federal fiscal year. States that previously submitted an annual 
certification are not required to make a certification for Fiscal Year 
1990 until June 30, 1990. Except as provided in paragraph (d) of this 
section, this certification shall cover all grants to all State agencies 
from any Federal agency. The State shall retain the original of this 
statewide certification in its Governor's office and, prior to grant 
award, shall ensure that a copy is submitted individually with respect 
to each grant, unless the Federal agency has designated a central 
location for submission.
    (d)(1) The Governor of a State may exclude certain State agencies 
from the statewide certification and authorize these agencies to submit 
their own certifications to Federal agencies. The statewide 
certification shall name any State agencies so excluded.
    (2) A State agency to which the statewide certification does not 
apply, or a State agency in a State that does not have a statewide 
certification, may elect to make one certification in each Federal 
fiscal year. State agencies that previously submitted a State agency 
certification are not required to make a certification for Fiscal Year 
1990 until June 30, 1990. The State agency shall retain the original of 
this State agency-wide certification in its central office and, prior to 
grant award, shall ensure that a copy is submitted individually with 
respect to each grant, unless the Federal agency designates a central 
location for submission.
    (3) When the work of a grant is done by more than one State agency, 
the certification of the State agency directly receiving the grant shall 
be deemed to certify compliance for all workplaces, including those 
located in other State agencies.
    (e)(1) For a grant of less than 30 days performance duration, 
grantees shall have this policy statement and program in place as soon 
as possible, but in any case by a date prior to the date on which 
performance is expected to be completed.
    (2) For a grant of 30 days or more performance duration, grantees 
shall have this policy statement and program in place within 30 days 
after award.
    (3) Where extraordinary circumstances warrant for a specific grant, 
the grant officer may determine a different date on which the policy

[[Page 228]]

statement and program shall be in place.



Sec. 24.635  Reporting of and employee sanctions for convictions of criminal drug offenses.

    (a) When a grantee other than an individual is notified that an 
employee has been convicted for a violation of a criminal drug statute 
occurring in the workplace, it shall take the following actions:
    (1) Within 10 calendar days of receiving notice of the conviction, 
the grantee shall provide written notice, including the convicted 
employee's position title, to every grant officer, or other designee on 
whose grant activity the convicted employee was working, unless a 
Federal agency has designated a central point for the receipt of such 
notifications. Notification shall include the identification number(s) 
for each of the Federal agency's affected grants.
    (2) Within 30 calendar days of receiving notice of the conviction, 
the grantee shall do the following with respect to the employee who was 
convicted.
    (i) Take appropriate personnel action against the employee, up to 
and including termination, consistent with requirements of the 
Rehabilitation Act of 1973, as amended; or
    (ii) Require the employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for such purposes by 
a Federal, State, or local health, law enforcement, or other appropriate 
agency.
    (b) A grantee who is an individual who is convicted for a violation 
of a criminal drug statute occurring during the conduct of any grant 
activity shall report the conviction, in writing, within 10 calendar 
days, to his or her Federal agency grant officer, or other designee, 
unless the Federal agency has designated a central point for the receipt 
of such notices. Notification shall include the identification number(s) 
for each of the Federal agency's affected grants.

(Approved by the Office of Management and Budget under control number 
0991-0002)



               Subpart G--Limited Denial of Participation

    Source: 53 FR 19186, May 26, 1988. Redesignated at 54 FR 4950 and 
4957, Jan. 31, 1989, unless otherwise noted.



Sec. 24.700  General.

    Officials who may order a limited denial of participation. HUD 
officials, as designated by the Secretary, are authorized to order a 
limited denial of participation affecting any participant or contractor 
and its affiliates, except HUD-FHA approved mortgagees. In each case, 
even if the offense or violation is of a criminal, fraudulent or other 
serious nature, the decision to order a limited denial of participation 
shall be discretionary and in the best interests of the Government.

[59 FR 18482, Apr. 19, 1994]



Sec. 24.705  Causes for a limited denial of participation.

    (a) Causes. A limited denial of participation shall be based upon 
adequate evidence of any of the following causes:
    (1) Approval of an applicant for insurance would constitute an 
unsatisfactory risk;
    (2) Irregularities in a participant's or contractor's past 
performance in a HUD program;
    (3) Failure of a participant or contractor to maintain the 
prerequisites of eligibility to participate in a HUD program;
    (4) Failure to honor contractual obligations or to proceed in 
accordance with contract specifications or HUD regulations;
    (5) Failure to satisfy, upon completion, the requirements of an 
assistance agreement or contract;
    (6) Deficiencies in ongoing construction projects;
    (7) Falsely certifying in connection with any HUD program, whether 
or not the certification was made directly to HUD;
    (8) Commission of an offense listed in Sec. 24.305;
    (9) Violation of any law, regulation, or procedure relating to the 
application for financial assistance, insurance

[[Page 229]]

or guarantee, or to the performance of obligations incurred pursuant to 
a grant of financial assistance or pursuant to a conditional or final 
commitment to insure or guarantee.
    (10) Making or procuring to be made any false statement for the 
purpose of influencing in any way an action of the Department.
    (11) Imposition of a limited denial of participation by any other 
HUD regional or field office.
    (12) Debarment or suspension by another Federal agency for any cause 
substantially the same as provided in Sec. 24.305.
    (b) Indictment. Indictment or Information shall constitute adequate 
evidence for the purpose of limited denial of participation actions.
    (c) Limited denial of participation. Imposition of a limited denial 
of participation by any other HUD office shall constitute adequate 
evidence for a concurrent limited denial of participation. Where such a 
concurrent limited denial of participation is imposed, participation may 
be restricted on the same basis without the need for additional 
conference or further hearing.

[53 FR 19186, May 26, 1988. Redesignated at 54 FR 4950 and 4957, Jan. 
31, 1989, as amended at 60 FR 33051, June 26, 1995]



Sec. 24.710  Period and scope of a limited denial of participation.

    (a) The scope of a limited denial of participation shall be as 
follows:
    (1) A limited denial of participation generally extends only to 
participation in the program under which the cause arose, except: Where 
it is based on an indictment, conviction, or suspension or debarment by 
another agency, it need not be based on offenses against HUD and it may 
apply to all programs.
    (2) For purposes of this subpart, participation includes receipt of 
any benefit or financial assistance through grants or contractual 
arrangements; benefits or assistance in the form of loan guarantees or 
insurance; and awards of procurement contracts, notwithstanding any quid 
pro quo given and whether the Department gives anything in return. 
Program may, in the discretion of the authorized official, include any 
or all of the functions within the jurisdiction of an Assistant 
Secretary.
    (3) The sanction may be imposed for a period not to exceed 12 
months, is limited to specific HUD programs, and shall be effective 
within the geographic jurisdiction of the office imposing it, unless the 
sanction is imposed by an Assistant Secretary or Deputy Assistant 
Secretary in which case the sanction may be imposed on a nationwide 
basis or a more restricted basis.
    (b) Effectiveness. This sanction shall be effective immediately upon 
issuance, and shall remain effective up to 12 months thereafter. If the 
cause for the limited denial of participation is resolved before the 
expiration of the 12-month period, the official who imposed the sanction 
may terminate it. The imposition of a limited denial of participation 
shall not affect the right of the Department to suspend or debar any 
person under this part.
    (c) Affiliates. An affiliate or organizational element may be 
included in a limited denial of participation solely on the basis of its 
affiliation, and regardless of its knowledge of or participation in the 
acts providing cause for the sanction. The burden of proving that a 
particular affiliate or organizational element is currently responsible 
and not controlled by the primary sanctioned party (or by an entity that 
itself is controlled by the primary sanctioned party) is on the 
affiliate or organizational element.

[53 FR 19186, May 26, 1988. Redesignated at 54 FR 4950 and 4957, Jan. 
31, 1989, as amended at 57 FR 58339, Dec. 9, 1992; 60 FR 33051, June 26, 
1995]



Sec. 24.711  Notice of limited denial of participation.

    A limited denial of participation shall be made effective by 
advising the participant or contractor, and any specifically named 
affiliate, by mail, return receipt requested:
    (a) That the limited denial of participation is being imposed;
    (b) Of the cause(s) under Sec. 24.705 for the sanction;
    (c) Of the potential effect of the sanction, including the length of 
the sanction and the HUD program(s) and geographic area affected by the 
sanction;

[[Page 230]]

    (d) Of the right to request, in writing, within 30 days of receipt 
of the notice, a conference under Sec. 24.712; and
    (e) Of the right to contest the limited denial of participation 
under Sec. 24.713.

[60 FR 33051, June 26, 1995]



Sec. 24.712  Conference.

    Within 30 days after receiving a notice of limited denial of 
participation, the respondent may request a conference with the official 
who issued such notice. If the respondent does not request a conference, 
the respondent shall nevertheless have the right to contest the limited 
denial of participation under the provisions of Sec. 24.713. The 
conference shall be held within 15 days after the Department's receipt 
of the request for a conference, unless the respondent waives this time 
limit. The official who imposed the sanction, or his or her designee, 
shall preside. At the conference, the respondent may appear with a 
representative and may present all relevant information and materials to 
the official or designee. Within 20 days after the conference, or within 
20 days after any agreed upon extension of time for submission of 
additional materials by the respondent, the official or designee shall, 
in writing, advise the respondent of the decision to terminate, modify, 
or affirm the limited denial of participation. If all or a portion of 
the remaining period of exclusion is affirmed, the notice of affirmation 
shall advise the respondent of the opportunity to contest the notice 
pursuant to Sec. 24.713. If the official or designee does not issue a 
decision within the 20-day period, the respondent may contest the 
sanction under Sec. 24.713.

[60 FR 33051, June 26, 1995]



Sec. 24.713  Opportunity to contest the limited denial of participation.

    (a) Submission in opposition. (1) The respondent may request a 
hearing before a hearing officer:
    (i) Within 30 days after receipt of a notice of affirmation of all 
or a portion of the remaining period of exclusion under a limited denial 
of participation; or
    (ii) Within 30 days after receipt of a notice of a limited denial of 
participation where the respondent elects not to request a conference 
under Sec. 24.712.
    (2) The request must be addressed to the Debarment Docket Clerk, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Washington, DC 20410.
    (3) If the respondent does not submit the request within the 30-day 
period, the sanction shall become final.
    (b) Procedures. The hearing shall be conducted in accordance with 
the procedures of Secs. 24.313 and 24.314 Within 15 days of the hearing 
officer's issuance of findings of fact and a recommended decision, the 
official who issued the limited denial of participation shall issue a 
decision.
    (c) Effect of suspension or debarment on limited denial of 
participation. If a respondent has submitted a request for a hearing 
pursuant to paragraph (a) of this section, and if the respondent has 
also received, pursuant to subpart C or D of this part, a notice of 
proposed debarment or suspension that is based on the same 
transaction(s) or conduct as the limited denial of participation, the 
following rules shall apply:
    (1) If the respondent has not contested the proposed debarment 
pursuant to Sec. 24.313(a) or the suspension pursuant to Sec. 24.412(a), 
the final imposition of the debarment or suspension shall also 
constitute a final decision with respect to the limited denial of 
participation to the extent that the debarment or suspension is based on 
the same transaction(s) or conduct as the limited denial of 
participation.
    (2) If the respondent has contested the proposed debarment pursuant 
to Sec. 24.313(a), or the suspension pursuant to Sec. 24.412(a), the 
proceedings shall be consolidated and the debarring or suspending 
official shall issue a final decision as to both the limited denial of 
participation and the debarment or suspension.

[60 FR 33051, June 26, 1995]



Sec. 24.714  Reporting of limited denial of participation.

    When a limited denial of participation has been made final, or the 
period for requesting a conference pursuant to Sec. 24.712 has expired 
without receipt of such a request, the official imposing the limited 
denial of participation

[[Page 231]]

shall notify the Director of the Participation and Compliance Division 
in the Office of Housing of the scope of the limited denial of 
participation.

[60 FR 33051, June 26, 1995]



PART 25--MORTGAGEE REVIEW BOARD--Table of Contents




Sec.
25.1  Scope of rules in this part.
25.2  Establishment of Board.
25.3  Definitions.
25.4  Operation of the Mortgagee Review Board.
25.5  Administrative actions.
25.6  Notice of violation.
25.7  Notice of administrative action.
25.8  Hearings and hearing request.
25.9  Grounds for an administrative action.
25.10  Publication in Federal Register of actions.
25.11  Notification to other agencies.
25.12  Civil money penalties.
25.13  Notifying GNMA of withdrawal actions.
25.14  Prohibition against modification of Board orders.
25.15  Retroactive application of Board regulations.
25.17  [Reserved]

    Authority: 12 U.S.C. 1708(c), 1708(d), 1709(s), 1715b and 1735(f)-
14; 42 U.S.C. 3535(d).

    Source: 57 FR 31051, July 13, 1992, unless otherwise noted.



Sec. 25.1  Scope of rules in this part.

    The rules in this part are applicable to the operation of the 
Mortgagee Review Board and to proceedings arising from administrative 
actions of the Mortgagee Review Board.



Sec. 25.2  Establishment of Board.

    The Mortgagee Review Board (the Board) was established in the 
Federal Housing Administration, which is in the Office of the Assistant 
Secretary for Housing--Federal Housing Commissioner, by section 
202(c)(1) of the National Housing Act (12 U.S.C. 1708(c)(1)), as added 
by section 142 of the Department of Housing and Urban Development Reform 
Act of 1989 (Pub. L. 101-235, approved December 15, 1989). Except as 
limited by this part, the Board shall exercise all of the functions of 
the Secretary with respect to administrative actions against mortgagees 
and lenders and such other functions as are provided in this part. The 
Board may, in its discretion, approve the initiation of a suspension or 
debarment action against a mortgagee or lender by any Suspending or 
Debarring Official under part 24 of this subtitle A. The Board shall 
have all powers necessary and incident to the performance of these 
functions. The Board may redelegate its authority to review submissions 
and conduct hearings under Sec. 25.8. The Board may also redelegate its 
authority to impose administrative sanctions on the grounds specified in 
Secs. 25.9 (e), (h), and (u), and to take all other nondiscretionary 
acts. With respect to actions taken against Title I lenders and loan 
correspondents, the Board may redelegate its authority to take 
administrative actions for failure to remain in compliance with the 
requirements for approval in 24 CFR 202.5(i), 202.5(n), 202.7(b)(4), 
202.8(b)(1) and 202.8(b)(3).

[60 FR 39237, Aug. 1, 1995, as amended at 62 FR 20081, Apr. 24, 1997]



Sec. 25.3  Definitions.

    Adequate evidence. Information sufficient to support the reasonable 
belief that a particular act or omission has occurred.
    Board. The Mortgagee Review Board.
    Hearing officer. An Administrative Law Judge or Board of Contract 
Appeals judge authorized by the Secretary, or by the Secretary's 
designee, to issue findings of fact or other appropriate findings under 
Sec. 25.8(d)(2).
    Hearing official. An official designated by the Board to conduct 
hearings under Sec. 25.8.
    Lender. A financial institution as defined in paragraphs (a) and (b) 
of the definition of lender in Sec. 202.2 of this title.
    Loan correspondent. A financial institution as defined in paragraph 
(c) of the definition of lender in Sec. 202.2 of this title.
    Mortgagee. For purposes of the regulations in this part, the term 
``mortgagee'' includes:
    (1) The original lender
    under the mortgage, as that term is defined at sections 201(a) and 
207(a)(1) of the National Housing Act (12 U.S.C. 1707(a), 1713(a)(1));

[[Page 232]]

    (2) A lender or loan correspondent as defined in this section;
    (3) A branch office or subsidiary of the mortgagee, lender, or loan 
correspondent; or
    (4) Successors and assigns of the mortgagee, lender, or loan 
correspondent, as are approved by the Commissioner.
    Person. Any individual, corporation, partnership, association, unit 
of government or legal entity, however organized.
    Secretary. The Secretary of the Department of Housing and Urban 
Development or a person designated by the Secretary.

[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992, as amended at 
60 FR 13835, Mar. 14, 1995; 60 FR 39237, Aug. 1, 1995; 61 FR 685, Jan. 
9, 1996; 62 FR 20081, Apr. 24, 1997]



Sec. 25.4  Operation of the Mortgagee Review Board.

    (a) Members. The Board consists of the following voting members: The 
Assistant Secretary for Housing--Federal Housing Commissioner who serves 
as chairperson; the General Counsel; the President of the Government 
National Mortgage Association (GNMA); the Assistant Secretary for 
Administration; the Chief Financial Officer of the Department; and, in 
cases involving violations of nondiscrimination requirements, the 
Assistant Secretary for Fair Housing and Equal Opportunity; or their 
designees.
    (b) Advisors. The Inspector General or his or her designee, and the 
Director of the Office of Lender Activities and Land Sales Registration 
(or such other position as may be assigned such duties), and such other 
persons as the Board may appoint, shall serve as nonvoting advisors to 
the Board.
    (c) Quorum. Four members of the Board or their designees shall 
constitute a quorum.
    (d) Determination by the Board. Any administrative action taken by 
the Board shall be determined by a majority vote of the quorum.

[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992]



Sec. 25.5  Administrative actions.

    (a) General. The Board is authorized to take the following 
administrative actions: letter of reprimand, probation, suspension, 
withdrawal, or settlement agreement. These actions are described at 12 
U.S.C. 1708(c)(3), and as further set out in this section.
    (b) Letter of reprimand. A letter of reprimand shall be effective 
upon receipt of the letter by the mortgagee. Failure to comply with a 
directive in the letter of reprimand may result in any other 
administrative action under this part that the Board finds appropriate.
    (c) Probation. Probation shall be effective upon receipt of the 
notice of probation by the mortgagee. Failure to comply with the terms 
of probation may result in any other administrative action under this 
part that the Board finds appropriate.
    (d) Suspension. (1) Cause for suspension. The Board may issue a 
suspension if there is adequate evidence of violation(s) under 
Sec. 25.9, and if continuation of the mortgagee's HUD/FHA approval 
pending the completion of any audit, investigation, or other review, or 
other administrative or legal proceedings as may ensue, would not be in 
the public interest or in the best interests of HUD.
    (2) Effect of suspension. (i) During the period of suspension, HUD 
will not endorse any mortgage originated by the suspended mortgagee 
under the Title II program unless prior to the date of suspension:
    (A) A firm commitment has been issued relating to any such mortgage; 
or
    (B) A Direct Endorsement underwriter has approved the mortgagor for 
any such mortgage.
    (ii) During the period of suspension, a lender or loan correspondent 
may not originate new Title I loans under its Title I Contract of 
Insurance or apply for a new Contract of Insurance.
    (3) Effective date of suspension. A suspension issued pursuant to 
Sec. 25.6(c) is effective upon issuance. Any other suspension is 
effective upon receipt of the notice of suspension by the mortgagee.
    (e) Withdrawal. (1) Effect of withdrawal. (i) During the period of 
withdrawal, HUD will not endorse any mortgage originated by the 
withdrawn mortgagee under the Title II program unless prior to the date 
of withdrawal:

[[Page 233]]

    (A) A firm commitment has been issued relating to any such mortgage; 
or
    (B) A Direct Endorsement underwriter has approved the mortgagor for 
any such mortgage.
    (ii) During the period of withdrawal, a lender or loan correspondent 
may not originate new Title I loans under its Title I Contract of 
insurance or apply for a new Contract of Insurance. The Board may limit 
the geographical extent of the withdrawal, or limit its scope (e.g., to 
either the single family or multifamily activities of a withdrawn 
mortgagee). Upon the expiration of the period of withdrawal, the 
mortgagee may file a new application for approval under 24 CFR part 202.
    (2) Effective date of withdrawal. (i) If the Board determines that 
immediate action is in the public interest or in the best interests of 
the Department, then withdrawal shall be effective upon receipt of the 
Board's notice of withdrawal.
    (ii) If the Board does not determine that immediate action is 
necessary according to paragraph (e)(2)(i) of this section, then 
withdrawal shall be effective either:
    (A) Upon the expiration of the 30-day period specified in Sec. 25.8, 
if the mortgagee has not requested a hearing; or
    (B) Upon receipt of the Board's decision under Sec. 25.8, if the 
mortgagee requests a hearing.

[60 FR 685, Jan. 9, 1995, as amended at 65 FR 9087, Feb. 23, 2000]



Sec. 25.6  Notice of violation.

    (a) General. The Chairperson of the Board, or the Chairperson's 
designee, shall issue a written notice to the mortgagee at least thirty 
days prior to taking any probation, suspension or withdrawal action 
against a mortgagee. The notice shall state the specific violations that 
have been alleged, and shall direct the mortgagee to reply in writing to 
the Board within thirty days after receipt of the notice by the 
mortgagee. The notice shall also provide the address to which the 
response shall be sent. If the mortgagee fails to reply during such time 
period, the Board may make a determination without considering any 
comments of the mortgagee.
    (b) Mortgagee's response. The mortgagee's response to the Board 
shall be in a format prescribed by the Secretary and shall not exceed 15 
double-spaced typewritten pages. The response shall include an executive 
summary, a statement of the facts surrounding the matter, an argument 
and a conclusion. A more lengthy submission, including documents and 
other exhibits, may be simultaneously submitted to Board staff for 
review.
    (c) Exception for immediate suspension. If the Board determines that 
there exists adequate evidence that immediate action is required to 
protect the financial interests of the Department or the public, the 
Board may take a suspension action without having previously issued a 
notice of violation.

(Approved by the Office of Management and Budget under Control Number 
2502-0450)

[57 FR 31051, July 13, 1992, as amended at 65 FR 9087, Feb. 23, 2000]



Sec. 25.7  Notice of administrative action.

    Whenever the Board takes an action to issue a letter of reprimand, 
to place a mortgagee on probation, or to suspend or withdraw a 
mortgagee's approval, the Board shall promptly notify the mortgagee in 
writing of the determination. Except for a letter of reprimand, the 
notice shall describe the nature and duration of the administrative 
action, shall specifically state the violations, and shall set forth the 
findings of the Board. The notice shall inform the mortgagee of its 
right to a hearing, pursuant to Sec. 25.8, regarding the administrative 
action (except for a letter of reprimand) and of the manner and time in 
which to request a hearing. A supplemental notice may be issued in the 
discretion of the Board to add or modify the reasons for the action.

[60 FR 39237, Aug. 1, 1995]



Sec. 25.8  Hearings and hearing request.

    (a) Hearing request. A mortgagee that is issued a probation, 
suspension, or withdrawal action is entitled to a hearing on the record. 
The mortgagee shall submit its request for a hearing within 30 days of 
receiving the Board's notice of administrative action. The request shall 
be addressed to the Board Docket Clerk, Department of Housing and

[[Page 234]]

Urban Development, 451 7th Street SW., Washington, DC 20410. The request 
shall specifically respond to the violations set forth in the notice of 
administrative action. If the mortgagee fails to request a hearing 
within 30 days after receiving the notice of administrative action, the 
Board's action shall become final.
    (b) Procedural rules. The hearing official shall hold a de novo 
hearing within 30 days of HUD's receipt of the mortgagee's request, 
unless the mortgagee requests a later hearing date. The mortgagee or its 
representative shall be afforded an opportunity to appear, submit 
documentary evidence, present witnesses, and confront any witness the 
agency presents. The parties shall not be allowed to present members of 
the Board as witnesses. At the mortgagee's request, a transcribed record 
of the hearing shall be made available at cost to the mortgagee.
    (c) Hearing location. The hearing shall generally be held in 
Washington, DC However, upon a showing of undue hardship or other cause, 
the hearing official may, in his or her discretion, order the hearing to 
be held in a location other than Washington, DC.
    (d) Hearing official's recommendation. (1) The hearing official 
shall issue written findings and a recommended decision to the Board 
within 45 days after the conclusion of the hearing, unless the hearing 
official extends this period for good cause or refers a matter for 
findings of fact or other appropriate findings pursuant to paragraph 
(d)(2)(i) of this section. The findings and recommendation shall be 
based upon the facts as found, together with any information and 
argument submitted by the parties and any other information in the 
administrative record.
    (2) Referral to a hearing officer or other independent official. (i) 
The hearing official may, at his or her discretion, refer disputed 
material facts to a hearing officer or other independent official for 
findings of fact. The hearing official may also, at his or her 
discretion, refer other issues to a hearing officer or other independent 
official for appropriate findings. The hearing official shall provide 
the parties with notice of the referral. The hearing official may reject 
the findings, in whole or in part, only after specifically determining 
them to be arbitrary and capricious or clearly erroneous.
    (ii) The provisions of part 26 of this subtitle A shall be 
applicable to proceedings before a hearing officer, with the following 
limitations:
    (A) No appeal to the Secretary may be taken under Secs. 26.24 
through 26.26 of this subtitle A with respect to any order or decision 
by the hearing officer.
    (B) Discovery shall be limited to exclude requests for answers to 
interrogatories, requests for admissions, and production of documents 
that either do not pertain to the appealing mortgagee, or pertain to 
reviews or audits by the Department or administrative actions by the 
Board against mortgagees other than the appealing mortgagee. Members of 
the Board shall not be subject to deposition, nor shall they be required 
to testify at any hearing.
    (iii) Proceedings before a hearing officer or other independent 
official shall commence within 45 days after referral by the hearing 
official, unless the parties agree to an extension of time. The hearing 
officer or other independent official shall issue the requested findings 
of fact or other appropriate findings to the hearing official within 30 
days after the conclusion of such proceedings. The time limitations of 
this paragraph may be extended upon issuance of a written notice 
describing good cause for such extension.
    (iv) The hearing official shall provide a recommended decision to 
the Board within 15 days after the findings are issued.
    (v) [Reserved]
    (e) Decision by the Board. The Board shall issue its decision within 
15 days after the hearing official issues the recommended decision. The 
Board's decision shall be mailed to the mortgagee, and shall serve as 
the final agency action concerning the mortgagee.

[60 FR 39238, Aug. 1, 1995]



Sec. 25.9  Grounds for an administrative action.

    One or more of the following violations by a mortgagee may result in 
an administrative action by the Board under Sec. 25.5. Except in cases 
where the Board's authority has been delegated in accordance with 
Sec. 25.2, the Board will

[[Page 235]]

consider, among other factors, the seriousness and extent of the 
violations, the degree of mortgagee responsibility for the occurrences 
and any mitigating factors, in determining which administrative action, 
if any, is appropriate. Any administrative action imposed under 
Sec. 25.5 shall be based upon one or more of the following grounds:
    (a) The transfer of an insured mortgage to non-approved mortgagee, 
except pursuant to 24 CFR 203.433 or 203.435;
    (b) The failure of a mortgagee to segregate all escrow funds 
received from mortgagors on account of ground rents, taxes, assessments 
and insurance premiums, or failure to deposit these funds with one or 
more financial institutions in a special account or accounts that are 
fully insured by the Federal Deposit Insurance Corporation or by the 
National Credit Union Administration except as otherwise provided in 
writing by the Assistant Secretary for Housing--Federal Housing 
Commissioner;
    (c) The use of escrow funds for any purpose other than that for 
which they are received;
    (d) The termination of a mortgagee's supervision by a governmental 
agency;
    (e) The failure of a nonsupervised mortgagee to submit the required 
annual audit report of its financial condition prepared in accordance 
with instructions issued by the Secretary within 90 days of the close of 
its fiscal year, or such longer period as the Assistant Secretary of 
Housing--Federal Housing Commissioner may authorize in writing prior to 
the expiration of 90 days;
    (f) The payment by a mortgagee of a referral fee to any person or 
organization; or payment of any thing of value, directly or indirectly, 
in connection with any insured mortgage transaction or transactions to 
any person, including but not limited to an attorney, escrow agent, 
title company, consultant, mortgage broker, seller, builder or real 
estate agent, if that person has received any other compensation from 
the mortgagor, the seller, the builder or any other person for services 
related to such transactions or from or related to the purchase or sale 
of the mortgaged property, except compensation paid for the actual 
performance of such services as may be approved by the Assistant 
Secretary for Housing--Federal Housing Commissioner;
    (g) Failure to comply with any agreement, certification, 
undertaking, or condition of approval listed on either a mortgagee's 
application for approval or on an approved mortgagee's branch office 
notification;
    (h) Failure of an approved mortgagee to meet or maintain the 
applicable net worth, liquidity or warehouse line of credit requirements 
of 24 CFR part 202 pertaining to net worth, liquid assets, and warehouse 
line of credit or other acceptable funding plan;
    (i) Failure or refusal of an approved mortgagee to comply with an 
order of the Board, the Secretary, the hearing official, hearing officer 
or other independent official to whom matters are referred under 
Sec. 25.8(d)(2).
    (j) Violation of the requirements of any contract with the 
Department, or violation of the requirements set forth in any statute, 
regulation, handbook, mortgagee letter, or other written rule or 
instruction;
    (k) Submission of false information to HUD in connection with any 
HUD/FHA insured mortgage transaction;
    (l) Failure of a mortgagee to respond to inquiries from the Board;
    (m) Indictment or conviction of a mortgagee or any of its officers, 
directors, principals or employees for an offense which reflects upon 
the responsibility, integrity, or ability of the mortgagee to 
participate in HUD/FHA programs as an approved mortgagee;
    (n) Employing or retaining:
    (1) An officer, partner, director or principal at such time when 
such person was suspended, debarred, ineligible, or subject to a limited 
denial of participation under 24 CFR part 24 or otherwise prohibited 
from participation in HUD programs, where the mortgagee knew or should 
have known of the prohibition;
    (2) An employee who is not an officer, partner, director, or 
principal and who is or will be working on HUD/FHA program matters at a 
time when such person was suspended, debarred, ineligible, or subject to 
a limited denial of participation under 24 CFR part 24 or otherwise 
prohibited from participation in

[[Page 236]]

HUD programs, where the mortgagee knew or should have known of the 
prohibition;
    (o) Violation by an approved mortgagee of the nondiscrimination 
requirements of the Equal Credit Opportunity Act (15 U.S.C. 1691-1691f), 
Fair Housing Act (42 U.S.C. 3601-3619), Executive Order 11063 (27 FR 
11527), and all regulations issued pursuant thereto;
    (p) Business practices which do not conform to generally accepted 
practices of prudent mortgagees or which demonstrate irresponsibility;
    (q) Failure to cooperate with an audit or investigation by the 
Department's Office of Inspector General or an inquiry by HUD/FHA into 
the conduct of the mortgagee's HUD/FHA insured business or any other 
failure to provide information to the Secretary or a representative 
related to the conduct of the mortgagee's HUD/FHA business;
    (r) Violation by an approved mortgagee of the requirements or 
prohibitions of the Real Estate Settlement Procedures Act (12 U.S.C. 
2601-2617);
    (s) Without regard to the date of the insurance of the mortgage, 
failure to service an insured mortgage in accordance with the 
regulations and any other requirements of the Secretary which are in 
effect at the time the act or omission occurs;
    (t) Failure to administer properly an assistance payment contract 
under section 235 of the National Housing Act (12 U.S.C. 1715z);
    (u) Failure to pay the application and annual fees required by 24 
CFR part 202;
    (v) The failure of a coinsuring mortgagee:
    (1) To properly perform underwriting, servicing or property 
disposition functions in accordance with instructions and standards 
issued by the Commissioner;
    (2) To make full payment to an investing mortgagee as required by 24 
CFR part 204;
    (3) To discharge responsibilities under a contract for coinsurance;
    (4) To comply with restrictions concerning the transfer of a 
coinsured mortgage to an agency not approved under 24 CFR part 250;
    (5) To maintain additional net worth requirements, as applicable;
    (w) Failure to remit, or timely remit, mortgage insurance premiums, 
loan insurance charges, late charges, or interest penalties to the 
Department;
    (x) Failure to submit a report required under 24 CFR 202.12(c) 
within the time determined by the Commissioner, or to commence or 
complete a plan for corrective action under that section within the time 
agreed upon by the Commissioner.
    (y) Failure to properly perform underwriting functions in accordance 
with instructions and standards issued by the Department;
    (z) Failure to fund mortgage loans or any other misuse of mortgage 
loan proceeds;
    (aa) Permitting the use of strawbuyer mortgagors in an insured 
mortgage transaction where the mortgagee knew or should have known of 
such use of strawbuyers;
    (bb) Breach by the mortgagee of a fiduciary duty owed by it to any 
person as defined in Sec. 25.3, including GNMA and the holder of any 
mortgage-backed security guaranteed by GNMA, with respect to an insured 
loan or mortgage transaction.
    (cc) Violation by a Title I lender or loan correspondent of any of 
the applicable provisions of this section or 24 CFR 202.11(a)(2).
    (dd) Failure to pay any civil money penalty, but only after all 
administrative appeals requested by the mortgagee have been exhausted.
    (ee) Any other reason the Board or the Secretary determines to be so 
serious as to justify an administrative sanction.

(Approved by the Office of Management and Budget under Control Number 
2502-0450)

[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992, as amended at 
57 FR 58339, Dec. 9, 1992; 60 FR 13836, Mar. 14, 1995; 60 FR 39238, Aug. 
1, 1995; 61 FR 685, Jan. 9, 1996; 62 FR 20081, Apr. 24, 1997]



Sec. 25.10  Publication in Federal Register of actions.

    The Secretary shall publish, in the Federal Register, a description 
of and the cause for each administrative action taken by the Board 
against a mortgagee. Such publication shall be

[[Page 237]]

made quarterly or more frequently in the discretion of the Secretary.



Sec. 25.11  Notification to other agencies.

    Whenever the Board has taken any discretionary action to suspend 
and/or withdraw the approval of a mortgagee, the Secretary shall provide 
prompt notice of the action and a statement of the reasons for the 
action to the Secretary of Veterans Affairs; the chief executive officer 
of the Federal National Mortgage Association; the chief executive 
officer of the Federal Home Loan Mortgage Corporation; the Administrator 
of the Farmers Home Administration; the Comptroller of the Currency, if 
the mortgagee is a National Bank or District Bank or subsidiary or 
affiliate of such a bank; the Board of Governors of the Federal Reserve 
System, if the mortgagee is a State bank that is a member of the Federal 
Reserve System or a subsidiary or affiliate of such a bank, or a bank 
holding company or a subsidiary or affiliate of such a company; the 
Board of Directors of the Federal Deposit Insurance Corporation if the 
mortgagee is a State bank that is not a member of the Federal Reserve 
System, or is a subsidiary or affiliate of such a bank; and the Director 
of the Office of Thrift Supervision, if the mortgagee is a Federal or 
State savings association or a subsidiary or affiliate of a savings 
association.



Sec. 25.12  Civil money penalties.

    The Board is authorized pursuant to section 536 of the National 
Housing Act (12 U.S.C. 1735(f)-14) to impose civil money penalties on 
mortgagees and Title I lenders, as set forth in 24 CFR part 30. The 
violations for which a civil money penalty may be imposed are listed at 
24 CFR 30.320. Hearings to challenge the imposition of civil money 
penalties shall be conducted according to the applicable rules of 24 CFR 
part 30.

[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992. Redesignated at 
61 FR 685, Jan. 9, 1996]



Sec. 25.13  Notifying GNMA of withdrawal actions.

    When the Board issues a notice of violation that could lead to 
withdrawal of a mortgagee's approval, or is notified by GNMA of an 
action that could lead to withdrawal of GNMA approval, the Board shall 
proceed in accordance with 12 U.S.C. 1708(d).

(Approved by the Office of Management and Budget under Control Number 
2502-0450)

[61 FR 685, Jan. 9, 1996]



Sec. 25.14  Prohibition against modification of Board orders.

    No hearing official, hearing officer, or other independent official 
before whom proceedings are conducted under Sec. 25.8 shall modify or 
otherwise disturb in any way an order or notice by the Board.

[60 FR 39238, Aug. 1, 1995. Redesignated at 61 FR 685, Jan. 9, 1996]



Sec. 25.15  Retroactive application of Board regulations.

    Limitations on participation in HUD mortgage insurance programs 
proposed or imposed prior to August 12, 1992, under an ancillary 
procedure shall not be affected by this part. This part shall apply to 
sanctions initiated after the effective date of the Department of 
Housing and Urban Development Reform Act of 1989 (December 15, 1989) 
regardless of the date of the cause giving rise to the sanction.

[57 FR 31051, July 13, 1992. Redesignated at 61 FR 685, Jan. 9, 1996]



Sec. 25.17  [Reserved]



PART 26--HEARING PROCEDURES--Table of Contents




               Subpart A--Hearings Before Hearing Officers

Sec.
26.1  Purpose.

                             Hearing Officer

26.2  Hearing officer, powers and duties.
26.3  Failure to comply with an order of the hearing officer.
26.4  Ex parte communications.
26.5  Disqualification of hearing officer.

                      Representation of the Parties

26.6  Department representative.
26.7  Respondent's representative.
26.8  Standards of practice.

                          Pleadings and Motions

26.9  Notice of administrative action.

[[Page 238]]

26.10  Complaint.
26.11  Answer.
26.12  Amendments and supplemental pleadings.
26.13  Motions.
26.14  Form and filing requirements.
26.15  Service.
26.16  Time computation.

                                Discovery

26.17  Discovery.
26.18  Depositions.
26.19  Request for production of documents.
26.20  Admissions as to facts and documents.
26.21  Prehearing conference.

                                Hearings

26.22  Public nature and timing of hearings, transcripts.
26.23  Rules of evidence.
26.24  Hearing officer's determination and order.

                           Secretarial Review

26.25  Review of determination of hearing officers.
26.26  Interlocutory rulings.

    Subpart B--Hearings Pursuant to the Administrative Procedure Act

                                 General

26.27  Purpose and scope.
26.28  Definitions.
26.29  Powers and duties of the Administrative Law Judge (ALJ).
26.30  Ex parte contacts.
26.31  Disqualification of ALJ.
26.32  Parties to the hearing.
26.33  Separation of functions.
26.34  Time computations.
26.35  Service and filing.
26.36  Sanctions.

                          Prehearing Procedures

26.37  Commencement of action.
26.38  Motions.
26.39  Default.
26.40  Prehearing conferences.
26.41  Discovery.
26.42  Subpoenas.
26.43  Protective order.

                                Hearings

26.44  General.
26.45  Witnesses.
26.46  Evidence.
26.47  The record.
26.48  Posthearing briefs.
26.49  Initial decision.
26.50  Appeal to the Secretary.
26.51  Exhaustion of administrative remedies.
26.52  Judicial review.
26.53  Collection of civil penalties and assessments.
26.54  Right to administrative offset.

    Authority: 42 U.S.C. 3535(d).

    Source: 48 FR 43304, Sept. 23, 1983, unless otherwise noted.



               Subpart A--Hearings Before Hearing Officers



Sec. 26.1  Purpose.

    This part sets forth rules of procedure in certain proceedings of 
the Department of Housing and Urban Development presided over by a 
hearing officer. These rules of procedure apply to hearings with respect 
to determinations by the Multifamily Participation Review Committee 
pursuant to 24 CFR part 200, subpart H, to hearings conducted pursuant 
to referrals by debarring or suspending officials under 24 CFR part 24, 
and to hearings conducted pursuant to referrals by a hearing official 
under 24 CFR part 25, unless such regulations at 24 CFR parts 24, 25, or 
200, provide otherwise. They also apply in any other case where a 
hearing is required by statute or regulation, to the extent that rules 
adopted under such statute or regulation are not inconsistent.

[48 FR 43304, Sept. 23, 1983, as amended at 60 FR 39239, Aug. 1, 1995]

                             Hearing Officer



Sec. 26.2  Hearing officer, powers and duties.

    (a) Hearing officer. Proceedings conducted under these rules shall 
be presided over by a hearing officer who shall be an Administrative Law 
Judge or Board of Contract Appeals Judge authorized by the Secretary or 
designee to conduct proceedings under this part.
    (b) Time and place of hearing. The hearing officer shall set the 
time and place of any hearing and shall give reasonable notice to the 
parties.
    (c) Powers of hearing officers. The hearing officer shall conduct a 
fair and impartial hearing and take all action necessary to avoid delay 
in the disposition of proceeding and to maintain order. The hearing 
officer shall have all powers necessary to those ends, including but not 
limited to the power:
    (1) To administer oaths and affirmations;

[[Page 239]]

    (2) To cause subpoenas to be issued as authorized by law;
    (3) To rule upon offers of proof and receive evidence;
    (4) To order or limit discovery as the interests of justice may 
require;
    (5) To regulate the course of the hearing and the conduct of the 
parties and their counsel;
    (6) To hold conferences for the settlement or simplification of the 
issues by consent of the parties;
    (7) To consider and rule upon all procedural and other motions 
appropriate in adjudicative proceedings;
    (8) To take notice of any material fact not appearing in evidence in 
the record which is properly a matter of judicial notice; and
    (9) To make and file determinations.



Sec. 26.3  Failure to comply with an order of the hearing officer.

    If a party refuses or fails to comply with an order of the hearing 
officer, the hearing officer may enter any appropriate order necessary 
to the disposition of the hearing including a determination against the 
noncomplying party.



Sec. 26.4  Ex parte communications.

    (a) Definition. An ex parte communication is any communication with 
a hearing officer, direct or indirect, oral or written, concerning the 
merits of procedures of any pending proceeding which is made by a party 
in the absence of any other party.
    (b) Prohibition of ex parte communications. Ex parte communications 
are prohibited except where:
    (1) The purpose and content of the communication have been disclosed 
in advance or simultaneously to all parties; or
    (2) The communication is a request for information concerning the 
status of the case.
    (c) Procedure after receipt of ex parte communication. Any hearing 
officer who receives an ex parte communication which the hearing officer 
knows or has reason to believe is unauthorized shall promptly place the 
communication, or its substance, in all files and shall furnish copies 
to all parties. Unauthorized ex parte communications shall not be taken 
into consideration in deciding any matter in issue.

[48 FR 43304, Sept. 23, 1983; 48 FR 46980, Oct. 17, 1983]



Sec. 26.5  Disqualification of hearing officer.

    When a hearing officer believes there is a basis for 
disqualification in a particular proceeding, the hearing officer shall 
withdraw by notice on the record and shall notify the Secretary and the 
official initiating the action under appeal. Whenever any party believes 
that the hearing officer should be disqualified from presiding in a 
particular proceeding, the party may file a motion with the hearing 
officer requesting the hearing officer to withdraw from presiding over 
the proceedings. This motion shall be supported by affidavits setting 
forth the alleged grounds for disqualification. If the hearing officer 
does not withdraw, a written statement of his or her reasons shall be 
incorporated in the record and the hearing shall proceed.

                      Representation of the Parties



Sec. 26.6  Department representative.

    In each case heard before a hearing officer under this part, the 
Department shall be represented by the General Counsel or designee.



Sec. 26.7  Respondent's representative.

    The party against whom the administrative action is taken may be 
represented at hearing as follows:
    (a) Individuals may appear on their own behalf;
    (b) A member of a partnership or joint venture may appear on behalf 
of the partnership or joint venture;
    (c) A bona fide officer may appear on behalf of a corporation or 
association upon a showing of adequate authorization;
    (d) An attorney who files a notice of appearance with the hearing 
officer may represent any party. For purposes of this paragraph, an 
attorney is defined as a member of the bar of a Federal court or of the 
highest court of any State; or
    (e) An individual not included within paragraphs (a) through (d) of 
this section may represent the respondent

[[Page 240]]

upon an adequate showing, as determined by the hearing officer, that the 
individual possesses the legal, technical or other qualifications 
necessary to advise and assist in the presentation of the case.



Sec. 26.8  Standards of practice.

    Attorneys shall conform to the standards of professional and ethical 
conduct required of practitioners in the courts of the United States and 
by the bars of which the attorneys are members. Any attorney may be 
prohibited by the Hearing Officer from representing a party if the 
attorney is not qualified under Sec. 26.7 or if such action is necessary 
to maintain order in or the integrity of the pending proceeding.

                          Pleadings and Motions



Sec. 26.9  Notice of administrative action.

    In every case, there shall be a notice of administrative action. The 
notice shall be in writing and inform the party of the determination. 
The notice shall state the reasons for the proposed or imposed action 
except where general terms are permitted by 24 CFR part 24. The notice 
shall inform the party of any right to a hearing to challenge the 
determination, and the manner and time in which to request such hearing. 
A supplemental notice may be issued in the discretion of the initiating 
official to add to or modify the reasons for the action.



Sec. 26.10  Complaint.

    (a) Respondent. A complaint shall be served upon the party against 
whom an administrative action is taken, who shall be called the 
respondent.
    (b) Grounds. The complaint shall state the grounds upon which the 
administrative action is based. The grounds set forth in the complaint 
may not contain allegations beyond the scope of the notice of 
administrative action or any amendment thereto.
    (c) Notice of administrative action as complaint. A notice of 
administrative action may serve as a complaint provided the notice 
states it is also a complaint and complies with paragraph (b) of this 
section.
    (d) Timing. When the notice does not serve as a complaint, the 
complaint shall be served on or before the thirtieth day after a request 
for hearing is made.



Sec. 26.11  Answer.

    Respondent shall file an answer within thirty days of receipt of the 
complaint. The answer shall respond specifically to each factual 
allegation. A general denial shall not be permitted. Where a respondent 
intends to rely on an affirmative defense it shall be pleaded 
specifically. Allegations are admitted when not specifically denied in 
respondent's answer.



Sec. 26.12  Amendments and supplemental pleadings.

    (a) Amendments. (1) By right: The Department may amend its complaint 
without leave at any time within thirty days of the date the complaint 
is filed or at any time before respondent's responsive pleading is 
filed, whichever is later. Respondent may amend its answer at any time 
within thirty days of filing of its answer. A party shall plead in 
response to an amended pleading within fifteen days of receipt of the 
amended pleading.
    (2) By leave: Upon conditions as are necessary to avoid prejudicing 
the public interest and the rights of the parties, the hearing officer 
may allow amendments to pleadings upon motion of any party.
    (3) Conformance to evidence: When issues not raised by the pleadings 
but reasonably within the scope of the proceeding initiated by the 
complaint are tried by express or implied consent to the parties, they 
shall be treated in all respects as if they had been raised in the 
pleadings, and amendments of the pleadings necessary to make them 
conform to the evidence shall be allowed at any time.
    (b) Supplemental pleadings. The hearing officer may, upon reasonable 
notice, permit service of a supplemental pleading concerning 
transactions, occurrences, or events which have happened or been 
discovered since the date of prior pleadings.

[[Page 241]]



Sec. 26.13  Motions.

    (a) Motions. All motions after the commencement of the action until 
decision shall be addressed to the hearing officer.
    (b) Content. All written motions shall state the particular order, 
ruling, or action desired and the grounds for granting the motion.
    (c) Answers. Within seven (7) days after receipt of any written 
motion, or within any other period as may be designated by the hearing 
officer, the opposing party shall answer the motion. Failure to make a 
timely answer shall constitute a party's consent to the granting of the 
motion. The moving party shall have no right to reply, except as 
permitted by the hearing officer.
    (d) Oral argument. The hearing officer may order oral argument on 
any motion.
    (e) Motions for extensions. The hearing officer may waive the 
requirements of this section as to motions for extensions of time.
    (f) Rulings on motions for dismissal. When a motion to dismiss the 
proceeding is granted, the hearing officer shall make and file a 
determination and order in accordance with the provisions of Sec. 26.24.



Sec. 26.14  Form and filing requirements.

    (a) Filing. An original and two copies of a request for a hearing 
shall be filed with the Docket Clerk, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410, on official 
business days between 8:45 a.m. and 5:15 p.m. The Clerk shall assign the 
docket number and designate a hearing officer. An original and two 
copies of all other pleadings, submissions and documents should be filed 
directly with the appropriate hearing officer. A document is considered 
timely filed if postmarked on or before the date due or delivered to the 
appropriate person by close of business on the date due.
    (b) Title. Documents shall show clearly the title of the action and 
the docket number.
    (c) Form. Except as otherwise permitted, all documents shall be 
printed or typewritten in clear, legible form.



Sec. 26.15  Service.

    (a) Method of service. Pleadings, motions, and other documents 
required or permitted under these rules shall be served upon all 
parties. Whenever these rules require or permit service to be made upon 
a party represented by an attorney, the service shall be made upon the 
attorney unless service upon the party is ordered by the hearing 
officer. Service shall be made by delivering a copy to the person to be 
served or by mailing it to that person at the last known address. 
Delivery of a copy within this rule means: handing it to the person to 
be served; or leaving it at that person's office with a clerk or other 
person in charge; or, if there is no one in charge, leaving it in a 
conspicuous place in the office; or, if the office is closed or the 
person to be served has no office, leaving it at that person's residence 
of usual place of abode with some person of suitable age and discretion 
who resides there. Service by mail is complete upon deposit in a mail 
box or upon posting.
    (b) Proof of service. Proof of service shall not be required unless 
the fact of service is put in issue by appropriate motion or objection 
on the part of the person allegedly served. In these cases, service may 
be established by written receipt signed by or on behalf of the person 
to be served, or may be established prima facie by affidavit or 
certificate of service of mailing.



Sec. 26.16  Time computation.

    (a) Generally. Computation of any period of time prescribed or 
allowed by this part shall begin with the first business day following 
the day on which the act, event, development or default initiating the 
period of time occurred. When the last day of the period computed is a 
Saturday, Sunday, or national holiday, or other day on which the 
Department of Housing and Urban Development is closed, the period shall 
run until the end of the next following business day. Except when any 
prescribed or allowed period of time is seven days or less, each of the 
Saturdays, Sundays, and national holidays shall be included in the 
computation of the prescribed or allowed period.

[[Page 242]]

    (b) Extensions of time periods. The hearing officer (or in the case 
of a review under Sec. 26.25, the Secretary or designee) may upon motion 
enlarge the time within which any act required by these rules must be 
performed where necessary to avoid prejudicing the public interest or 
the rights of the parties.

                                Discovery



Sec. 26.17  Discovery.

    The parties are encouraged to engage in voluntary discovery 
procedures. Parties may seek an order compelling discovery only upon 
good cause shown. Discovery shall not be permitted where it will unduly 
delay the hearing, thereby resulting in prejudice to the public interest 
or the rights of the parties. Every request for discovery, objection to 
request for discovery, and request for admissions shall be in the form 
of a motion addressed to the hearing officer. In connection with any 
discovery procedure, the hearing officer may make any order required to 
protect a party or other person from annoyance, embarrassment, 
oppression, or undue burden or expense. Those orders may include 
limitations on the scope, methods, time and place for discovery, and 
provisions for protecting privileged information or documents. Where a 
party refuses to honor an order for discovery, the hearing officer may 
issue such orders in regard to the refusal as justice shall require. 
Each party shall bear its own expenses associated with discovery.



Sec. 26.18  Depositions.

    (a) General. A party may take the oral deposition of any person. 
Upon refusal and, after a showing of good cause, a hearing officer may 
issue an order compelling a party or its agents to appear for 
deposition.
    (b) Procedure. Reasonable written notice of deposition shall be 
served upon the opposing party and the deponent. The attendance of a 
deponent may be compelled by subpoena where authorized by law.
    (c) Objections. Each person testifying on oral deposition shall be 
placed under oath by the person before whom the deposition is taken. The 
deponent may be examined and cross-examined. Objection may be made at 
hearing to receiving in evidence any deposition or part of it for any 
reason which would require the exclusion if the witness were then 
present and testifying. The questions and the answers, together with all 
objections made, shall be recorded by the person before whom the 
deposition is to be taken, or under that person's direction.
    (d) Submission to deponent. A transcript of the deposition shall be 
submitted to the deponent for examination and signature, unless 
submission is waived. Any changes in form or substance which the 
deponent desires to make shall be entered upon the transcript by the 
person before whom the deposition was taken, with a statement of reasons 
given by the deponent for making them. The transcript shall then be 
signed by the deponent, unless the parties by stipulation waive the 
signing or the deponent is ill, cannot be found, or refuses to sign. If 
the transcript is not signed, the person before whom the deposition was 
taken shall sign it and state on the record the reason that it is not 
signed.
    (e) Certification and filing. The person before whom the deposition 
was taken shall certify on the transcript as to its accuracy. The 
original transcript and exhibits shall be sent by mail to the hearing 
officer unless otherwise directed in the order authorizing the taking of 
the deposition. Interested parties shall make their own arrangements 
with the person recording the testimony for copies of the testimony and 
the exhibits.
    (f) Deposition as evidence. Subject to appropriate rulings by the 
hearing officer on objections, the deposition or any part may be 
introduced into evidence for any purpose if the deponent is unavailable. 
Only that part of a deposition which is received in evidence at a 
hearing shall constitute a part of the record in the proceeding upon 
which a decision may be based. Nothing in this rule is intended to limit 
the use of a deposition for impeachment purposes.
    (g) Payment of fees. Fees shall be paid by the person upon whose 
application the deposition is taken.

[[Page 243]]



Sec. 26.19  Request for production of documents.

    (a) Request to produce. At any time after a request for hearing has 
been filed, any party may serve upon any other party a written request 
to produce, and permit the party making the request to inspect and copy, 
any relevant designated documents (including writings, drawings, graphs, 
charts, and other data compilations). The request shall set forth the 
items to be inspected either by individual item or by category with 
reasonable particularity. The request shall specify a reasonable time, 
place, and manner of making the inspection and performing the related 
acts.
    (b) Response to request to produce. The party upon whom the request 
is served shall serve a written response within twenty days after 
service of the request unless the Hearing Officer determines that a 
shorter or longer period is appropriate under the circumstances. The 
response shall state, with respect to each item or category, that 
inspection and related activities will be permitted as requested, unless 
the request is objected to, in which case the reasons for the objection 
shall be stated. If objection is made to part of an item or category, 
the part shall be specified. The party submitting the request may move 
for an order under Sec. 26.17 with respect to any objection to or other 
failure to respond to the request or any part thereof, or any failure to 
permit inspection as requested.



Sec. 26.20  Admissions as to facts and documents.

    (a) Request for admissions. At any time after an answer has been 
filed, any party may serve upon any other party a written request for 
the admission of the genuineness of any relevant documents described in 
the request or of the truth of any relevant matters of fact. Copies of 
documents shall be delivered with the request unless copies have already 
been furnished. No order of the hearing officer is necessary.
    (b) Objection. Each requested admission shall be considered admitted 
unless, within fifteen days after service of the request, the party from 
whom the admission is sought serves upon the party making the request 
either (1) a statement denying specificallly the relevant matters of 
which an admission is requested or setting forth in detail the reasons 
why the party can neither truthfully admit nor deny them, or (2) written 
objections on the ground that some or all of the matters involved are 
previleged or irrelevant. Answers on matters to which objections are 
made may be deferred until the objections are ruled upon, but if written 
objections are made only to a part of a request, the remainder of the 
request shall be answered.
    (c) Limitation. Admissions obtained pursuant to this procedure may 
be used in evidence only for the purposes of the pending action to the 
same extent and subject to the same objections as other evidence.



Sec. 26.21  Prehearing conference.

    (a) Prehearing conference. The hearing officer may, on the hearing 
officer's own motion or at the request of any party, direct counsel for 
all parties to confer with the hearing officer before the hearing for 
the purpose of considering:
    (1) Simplification and clarification of the issues;
    (2) Stipulations and admissions of fact and of the contents and 
authenticity of documents;
    (3) The disclosure of the names of witnesses;
    (4) Matters of which official notice will be taken;
    (5) Other matters as may aid in the orderly disposition of the 
proceeding, including disclosure of the documents or other physical 
exhibits which will be introduced in evidence in the course of the 
proceeding.
    (b) Recordation of prehearing conference. The prehearing conference 
shall, at the request of any party, be recorded or transcribed.
    (c) Order on prehearing conference. The hearing officer shall enter 
in the record an order which states the rulings upon matters considered 
during the conference, together with appropriate directions to the 
parties. The order shall control the subsequent course of the 
proceeding, subject to modifications upon good cause shown.

[[Page 244]]

                                Hearings



Sec. 26.22  Public nature and timing of hearings, transcripts.

    (a) Public hearings. All hearings in adjudicative proceedings shall 
be public.
    (b) Conduct of hearing. Hearings shall proceed with all reasonable 
speed. The hearing officer may order recesses for good cause, stated on 
the record. The hearing officer may, for convenience of the parties or 
in the interests of justice, order that hearings be conducted outside 
Washington, DC, and, if necessary, at more than one place.
    (c) Transcripts. Hearings shall be recorded and transcribed only by 
a reporter designated by the Department under the supervision of the 
hearing officer. The original transcript shall be a part of the record 
and shall constitute the sole official transcript. Respondents and the 
public, at their own expense, may obtain copies of transcripts from the 
reporter.



Sec. 26.23  Rules of evidence.

    (a) Evidence. Every party shall have the right to present its case 
or defense by oral and documentary evidence, unless otherwise limited by 
law or regulation, to submit rebuttal evidence and to conduct such 
cross-examination as may be required for a full and true disclosure of 
the facts. Irrelevant, immaterial, privileged, or unduly repetitious 
evidence shall be excluded.

Unless otherwise provided for in this part, the Federal Rules of 
Evidence shall provide guidance for the conduct of proceedings under 
this part. Parties may object to clearly irrelevant material, but 
technical objections to testimony as used in a court of law will not be 
sustained.
    (b) Testimony under oath or affirmation. All witnesses shall testify 
under oath or affirmation.
    (c) Objections. Objections to the admission or exclusion of evidence 
shall be in short form, stating the grounds of objections. Rulings on 
objections shall be a part of the transcript. Failure to object to 
admission or exclusion of evidence or to any evidentiary ruling shall be 
considered a waiver of objection, but no exception to a ruling on an 
objection is necessary in order to preserve it for appeal.
    (d) Authenticity of documents. Unless specifically challenged, it 
shall be presumed that all relevant documents are authentic. An 
objection to the authenticity of a document shall not be sustained 
merely on the basis that it is not the original.
    (e) Stipulations. The parties may stipulate as to any relevant 
matters of fact. Stipulations may be received in evidence at a hearing, 
and when received shall be binding on the parties with respect to the 
matters stipulated.
    (f) Official notice. All matters officially noticed by the hearing 
officer shall appear on the record.
    (g) Burden of proof. The burden of proof shall be upon the proponent 
of an action or affirmative defense unless otherwise provided by law or 
regulation.



Sec. 26.24  Hearing officer's determination and order.

    (a) Scope of review. The hearing officer shall conduct a de novo 
review of the administrative action to determine whether it is supported 
by a preponderance of the evidence unless a different standard of proof 
is required by law or regulation. Each and every charge alleged by the 
Department need not be proven to support the administrative action. The 
hearing officer may modify or vacate the administrative action under 
review only upon a particularized finding of facts which justifies a 
deviation from the administrative action.
    (b) Closing of hearing. At the discretion of the hearing officer, 
the closing of the record may be postponed in order to permit the 
admission of other evidence into the record. In the event further 
evidence is admitted, each party shall be given an opportunity to 
respond to such evidence.
    (c) Briefs. Upon conclusion of the hearing, the hearing officer may 
request the parties to file proposed findings of fact and legal briefs. 
The hearing officer shall make a written determination and order based 
upon evidence and arguments presented by the parties. The determination 
shall be founded upon reliable and probative evidence. This 
determination and order shall be served upon all parties.

[[Page 245]]

    (d) Bench decisions. Where the parties agree and where appropriate 
in the judgment of the hearing officer, a bench decision will be issued.
    (e) Time period for issuance of decision. The hearing officer shall 
endeavor to issue a determination within sixty days from the date of the 
closing of the record.
    (f) Finality of decision. The determination and order shall be final 
unless a party timely appeals the decision and within forty days the 
Secretary decides to review the determination in accordance with 
Sec. 26.25, or to have the determination reviewed by a designee.

                           Secretarial Review



Sec. 26.25  Review of determination of hearing officers.

    (a) Petition for review. Any party may request review of the hearing 
officer's determination or order by filing a written petition for review 
with the Secretary within fifteen days of receipt of the hearing 
officer's determination or order. A petition for review may be granted 
or denied in the discretion of the Secretary or designee. This petition 
shall not exceed ten pages and shall specifically state the issues and 
basis upon which the party seeks review. This petition shall be served 
on all parties and the Secretary simultaneously, in accordance with 
Sec. 26.15.
    (b) Briefs by opposing parties. Opposing parties may submit briefs, 
not to exceed ten pages, opposing review. These briefs must be filed 
within fifteen days of the party's receipt of a petition for review.
    (c) Secretarial action. Upon granting any petition for review, the 
Secretary or designee, may require further briefs. Secretarial review 
shall be limited to the factual record produced before the hearing 
officer. The Secretary, or designee, shall issue a written determination 
and shall serve it upon the parties and the hearing officer.



Sec. 26.26  Interlocutory rulings.

    (a) Interlocutory rulings by the hearing officer. A party seeking 
review of an interlocutory ruling shall file a motion with the hearing 
officer within ten days of the ruling requesting certification of the 
ruling for review by the Secretary. Certification may be granted if the 
hearing officer believes that (1) it involves an important issue of law 
or policy as to which there is substantial ground for difference of 
opinion and (2) an immediate appeal from the order may materially 
advance the ultimate termination of the litigation.
    (b) Petition for review. Any party may file a petition for review of 
an interlocutory ruling within ten days of the hearing officer's 
determination regarding certification.
    (c) Secretarial review. The Secretary, or designee, shall review a 
certified ruling. The Secretary, or designee, has the discretion to 
grant or deny a petition for review from an uncertified ruling.
    (d) Continuation of hearing. Unless otherwise ordered by the hearing 
officer or the Secretary, or designee, the hearing shall proceed pending 
the determination of any interlocutory appeal and the order or ruling of 
the hearing officer shall be effective pending review.



    Subpart B--Hearings Pursuant to the Administrative Procedure Act

    Source: 61 FR 50210, Sept. 24, 1996, unless otherwise noted.

                                 General



Sec. 26.27  Purpose and scope.

    Unless otherwise specified in this title, the rules in this subpart 
B of this part apply to hearings that HUD is required by statute to 
conduct pursuant to the Administrative Procedure Act (5 U.S.C. 554 et 
seq.).



Sec. 26.28  Definitions.

    The following definitions apply to subpart B of this part:
    Chief Docket Clerk means the Chief Docket Clerk of the Office of 
Administrative Law Judges at the following address: 409 3rd Street, 
S.W., Suite 320, Washington, DC 20024.
    Complaint means the notice from HUD alleging violations of a HUD 
statute and/or regulation, citing the legal authority upon which it is 
issued, stating the relief HUD seeks, and informing a respondent of his 
or her right to submit a response to a designated office and to request 
an opportunity for a

[[Page 246]]

hearing before an administrative law judge.
    Response means the written response to a complaint, admitting or 
denying the allegations in the complaint and setting forth any 
affirmative defense and/or any mitigating factors or extenuating 
circumstances. The response shall be submitted to the Office of General 
Counsel that initiates the complaint or to such other office as may be 
designated in the complaint. A response is deemed a request for a 
hearing.



Sec. 26.29  Powers and duties of the Administrative Law Judge (ALJ).

    The ALJ shall conduct a fair and impartial hearing, avoid delay, 
maintain order, and ensure that a record of the proceeding is made. The 
ALJ is authorized to:
    (a) Set and change the date, time, and place of the hearing upon 
reasonable notice to the parties;
    (b) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (c) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding;
    (d) Administer oaths and affirmations;
    (e) Issue subpoenas requiring the attendance of witnesses and the 
production of documents at depositions or at hearings;
    (f) Rule on motions and other procedural matters;
    (g) Regulate the scope and timing of discovery;
    (h) Regulate the course of the hearing and the conduct of 
representatives and parties;
    (i) Examine witnesses;
    (j) Receive, rule on, exclude, or limit evidence;
    (k) Upon motion of a party, take official notice of facts;
    (l) Upon motion of a party, decide cases, in whole or in part, by 
summary judgment where there is no disputed issue of material fact;
    (m) Conduct any conference, argument, or hearing on motions in 
person or by telephone; and
    (n) Exercise such other authority as is necessary to carry out the 
responsibilities of the ALJ under subpart B of this part.



Sec. 26.30  Ex parte contacts.

    No party or person (except employees of the ALJ's office) shall 
communicate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for all parties to participate. This 
provision does not prohibit a person or party from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.



Sec. 26.31  Disqualification of ALJ.

    (a) An ALJ in a particular case may disqualify himself or herself.
    (b) A party may file with the ALJ a motion for the ALJ's 
disqualification. The motion shall be accompanied by an affidavit 
alleging the grounds for disqualification.
    (c) Upon the filing of a motion and affidavit, the ALJ shall proceed 
no further in the case until the matter of disqualification is resolved.



Sec. 26.32  Parties to the hearing.

    (a) General. The parties to the hearing shall be the respondent and 
HUD.
    (b) Rights of parties. Except as otherwise limited by subpart B of 
this part, all parties may:
    (1) Be accompanied, represented, and advised by a representative;
    (2) Participate in any conference held by the ALJ;
    (3) Conduct discovery;
    (4) Agree to stipulations of fact or law, which shall be made part 
of the record;
    (5) Present evidence relevant to the issues at the hearing;
    (6) Present and cross-examine witnesses;
    (7) Present oral arguments at the hearing as permitted by the ALJ; 
and
    (8) Submit written briefs and proposed findings of fact and 
conclusions of law after the hearing, as permitted by the ALJ.



Sec. 26.33  Separation of functions.

    No officer, employee, or agent of the Federal Government engaged in 
the performance of investigative, conciliatory, or prosecutorial 
functions in connection with the proceeding shall, in

[[Page 247]]

that proceeding or any factually related proceeding under subpart B of 
this part, participate or advise in the decision of the administrative 
law judge, except as a witness or counsel during the proceeding, or in 
its appellate review.



Sec. 26.34  Time computations.

    (a) In computing any period of time under subpart B of this part, 
the time period begins the day following the act, event, or default, and 
includes the last day of the period, unless the last day is a Saturday, 
Sunday, or legal holiday observed by the Federal Government, in which 
case the time period includes the next business day. When the prescribed 
time period is seven days or less, intermediate Saturdays, Sundays, and 
legal holidays shall be excluded from the computation.
    (b) Entry of orders. In computing any time period involving the date 
of the issuance of an order or decision by an administrative law judge, 
the date of issuance is the date the order or decision is served by the 
Chief Docket Clerk.
    (c) Service by mail. If a document is served by mail, 3 days shall 
be added to the time permitted for a response.



Sec. 26.35  Service and filing.

    (a) Filing. All documents shall be filed with the Chief Docket 
Clerk, at the address listed in Sec. 26.28. Filing may be by first class 
mail, delivery, facsimile transmission, or electronic means; however, 
the ALJ may place appropriate limits on filing by facsimile transmission 
or electronic means. All documents shall clearly designate the docket 
number and title of the proceeding.
    (b) Service. One copy of all documents filed with the Chief Docket 
Clerk shall be served upon each party by the persons filing them and 
shall be accompanied by a certificate of service stating how and when 
such service has been made. Service may be made by delivery, first class 
mail, facsimile transmission, or electronic means; however, the ALJ may 
place appropriate limits on service by facsimile transmission or 
electronic means. Documents shall be served upon a party's address of 
residence or principal place of business, or, if the party is 
represented by counsel, upon counsel of record at the address of 
counsel. Service is complete when handed to the person or delivered to 
the person's office or residence and deposited in a conspicuous place. 
If service is by first-class mail, facsimile transmission, or electronic 
means, service is complete upon deposit in the mail or upon electronic 
transmission.



Sec. 26.36  Sanctions.

    (a) The ALJ may sanction a person, including any party or 
representative, for failing to comply with an order, rule, or procedure 
governing the proceeding; failing to prosecute or defend an action; or 
engaging in other misconduct that interferes with the speedy, orderly, 
or fair conduct of the hearing.
    (b) Any sanction, including but not limited to those listed in 
paragraphs (c), (d), and (e) of this section, shall reasonably relate to 
the severity and nature of the failure or misconduct.
    (c) Failure to comply with an order. When a party fails to comply 
with an order, including an order compelling discovery, the ALJ may:
    (1) Draw an inference in favor of the requesting party with regard 
to the information sought;
    (2) In the case of requests for admission, regard each matter about 
which an admission is requested to be admitted;
    (3) Prohibit the party failing to comply with the order from 
introducing evidence concerning, or otherwise relying upon, testimony 
relating to the information sought; or
    (4) Strike any part of the pleadings or other submissions of the 
party failing to comply with the order.
    (d) If a party fails to prosecute or defend an action brought under 
subpart B of this part, the ALJ may dismiss the action or may issue an 
initial decision against the respondent.
    (e) The ALJ may refuse to consider any motion, request, response, 
brief, or other document that is not filed in a timely fashion.

[[Page 248]]

                          Prehearing Procedures



Sec. 26.37  Commencement of action.

    An action under subpart B of this part shall commence with the 
Government's filing of a complaint, together with the response thereto, 
as those terms are defined in Sec. 26.28, with the Chief Docket Clerk. 
If the respondent fails to submit a response to the Office of General 
Counsel or such other office as designated in the complaint, then the 
Government may file a motion for a default judgment, together with a 
copy of the complaint, in accordance with Sec. 26.39.



Sec. 26.38  Motions.

    (a) General. All motions shall state the specific relief requested 
and the basis therefor and, except during a conference or the hearing, 
shall be in writing. Written motions shall be filed and served in 
accordance with Sec. 26.35.
    (b) Response to motions. Unless otherwise ordered by the ALJ, a 
response to a written motion may be filed within 7 days after service of 
the motion. A party failing to respond timely to a motion shall be 
deemed to have waived any objection to the granting of the motion.



Sec. 26.39  Default.

    (a) General. The respondent may be found in default, upon motion, 
for failure to file a timely response to the Government's complaint. The 
motion shall include a copy of the complaint and a proposed default 
order, and shall be served upon all parties. The respondent shall have 7 
days from such service to respond to the motion.
    (b) Default order. The ALJ shall issue a decision on the motion 
within 15 days after the expiration of the time for filing a response to 
the default motion. If a default order is issued, it shall constitute 
the final agency action.
    (c) Effect of default. A default shall constitute an admission of 
all facts alleged in the Government's complaint and a waiver of 
respondent's right to a hearing on such allegations. The penalty 
proposed in the complaint shall be set forth in the default order and 
shall be immediately due and payable by respondent without further 
proceedings.



Sec. 26.40  Prehearing conferences.

    (a) The ALJ may schedule prehearing conferences as appropriate.
    (b) Upon the motion of any party, the ALJ shall schedule at least 
one prehearing conference at a reasonable time in advance of the 
hearing.
    (c) The ALJ may consider the following at a prehearing conference:
    (1) Simplification of the issues;
    (2) Stipulations of fact and of the authenticity, accuracy, and 
admissibility of documents;
    (3) Submission of the case on briefs in lieu of an oral hearing;
    (4) Limitation of the number of witnesses;
    (5) The exchange of witness lists and of proposed exhibits;
    (6) Discovery;
    (7) The time and place for the hearing; and
    (8) Such other matters as may tend to expedite the fair and just 
disposition of the proceedings.



Sec. 26.41  Discovery.

    (a) Parties may obtain discovery regarding any matter, not 
privileged, that is relevant to the subject matter involved in the 
adjudication, whether it relates to the case or defense of the party 
seeking discovery or to the case or defense of any other party. It is 
not grounds for objection that the information sought will be 
inadmissible at the hearing, if such information appears reasonably 
calculated to lead to the discovery of admissible evidence.
    (b) Discovery in Program Fraud Civil Remedies actions (24 CFR part 
28), unless agreed to by the parties, shall be available only as ordered 
by the ALJ. The party opposing discovery shall have 10 days to respond 
to a motion for discovery. The ALJ shall grant a motion for discovery 
only if he or she finds that discovery is necessary for the expeditious, 
fair, and reasonable consideration of the issues, is not unduly costly 
or burdensome, will not unduly delay the proceeding, and does not seek 
privileged information. The ALJ may grant discovery subject to a 
protective order under Sec. 26.43. The request for approval sent to the 
Attorney General from the General Counsel or designee, as described in 
Sec. 28.20 of this

[[Page 249]]

title, is not discoverable under any circumstances.
    (c) The following types of discovery are authorized:
    (1) Requests for production of documents for inspection and copying. 
Nothing contained herein shall be interpreted to require the creation of 
a document.
    (2) Requests for admissions.
    (3) Written interrogatories. Such interrogatories shall be limited 
in number to 25, unless otherwise ordered by the ALJ.
    (4) Depositions.
    (d) Motions to compel. A party may file a motion to compel 
discovery. The motion shall describe the information sought, cite the 
opposing party's objection, and provide arguments supporting the motion. 
The opposing party may file a response to the motion, including a 
request for a protective order. The ALJ may issue an order compelling a 
response, issue sanctions pursuant to Sec. 26.36, or issue a protective 
order. For purposes of paragraph (d) of this section, an evasive or 
incomplete answer to a request for discovery is treated as a failure to 
answer.
    (e) Each party shall bear its own costs of discovery.



Sec. 26.42  Subpoenas.

    (a) General. Upon written request of a party, the ALJ may issue a 
subpoena requiring the attendance of a witness at a deposition or 
hearing, and/or the production of documents. The request shall specify 
any documents to be produced and shall list the names and addresses of 
the witnesses.
    (b) Time of request. A request for a subpoena in aid of discovery 
shall be filed in time to permit the conclusion of discovery 15 days 
before the date fixed for the hearing. A request for a subpoena to 
testify at the hearing shall be filed at least 3 days prior to the 
hearing, unless otherwise allowed by the ALJ for good cause shown.
    (c) Content. The subpoena shall specify the time and place at which 
the witness is to appear and any documents the witness is to produce.
    (d) Service and fees. Subpoenas shall be served, and fees and costs 
paid to subpoenaed witnesses, in accordance with Rule 45(b)(1) of the 
Federal Rules of Civil Procedure.
    (e) Motion to quash. The individual to whom the subpoena is directed 
or a party may file a motion to quash the subpoena within 10 days after 
service, or on or before the time specified in the subpoena for 
compliance if it is less than 10 days after service.



Sec. 26.43  Protective order.

    (a) A party, a prospective witness, or a deponent may file a motion 
for a protective order with respect to discovery sought by an opposing 
party or with respect to the hearing, seeking to limit the availability 
or disclosure of evidence.
    (b) In issuing a protective order, the ALJ may issue any order that 
justice requires to protect a party or person from annoyance, 
embarrassment, oppression, or undue burden or expense, as provided in 
Rule 26(c) of the Federal Rules of Civil Procedure.

                                Hearings



Sec. 26.44  General.

    (a) Time of hearing. The hearing shall commence not later than 90 
days following the Government's filing of the complaint and response 
under Sec. 26.37, unless the time is extended for good cause. The ALJ 
shall provide written notice to all parties of the reasons for any 
extension of time.
    (b) Location of hearing. The hearing shall be held where the 
respondent resides or transacts business, or in such other place as may 
be agreed upon by the parties and the ALJ. Hearings for Program Fraud 
Civil Remedies Act cases shall be located in accordance with 31 U.S.C. 
3803(g)(4).
    (c) Notice of hearing. The ALJ shall issue a notice of hearing to 
all parties specifying the time and location of the hearing, the matters 
of fact and law to be heard, the legal authority under which the hearing 
is to be held, a description of the procedures for the conduct of the 
hearing, and such other matters as the ALJ determines to be appropriate.
    (d) Limitations for Program Fraud Civil Remedies Act cases. The 
notice of hearing must be served upon the respondent within 6 years 
after the date on which

[[Page 250]]

the claim or statement is made. If the respondent fails to file a timely 
response to the Government's complaint, service of a default judgment 
under Sec. 26.39 shall be regarded as a notice of hearing for purposes 
of this section. The statute of limitations may be waived by agreement 
of the parties.
    (e) Burden and standard of proof. HUD shall prove the respondent's 
liability and any aggravating factors by a preponderance of the 
evidence. Respondent shall prove any affirmative defenses and any 
mitigating factors by a preponderance of the evidence.
    (f) Public hearings. Unless otherwise ordered by the ALJ for good 
cause shown, the hearing shall be open to the public.



Sec. 26.45  Witnesses.

    (a) Except as provided in paragraph (b) of this section, testimony 
at the hearing shall be given orally by witnesses under oath or 
affirmation.
    (b) At the discretion of the ALJ, testimony may be admitted in the 
form of a written statement or deposition. In order to be admissible, 
any written statement must be provided to all other parties along with 
the last known address of the witness, in a manner that allows 
sufficient time for other parties to subpoena the witness for cross-
examination at the hearing.



Sec. 26.46  Evidence.

    The ALJ shall admit any relevant oral or documentary evidence that 
is not privileged. The ALJ may, however, exclude evidence if its 
probative value is substantially outweighed by confusion of the issues, 
or by considerations of undue delay, waste of time, or needless 
presentation of cumulative evidence.



Sec. 26.47  The record.

    The hearing will be recorded and transcribed. The transcript of 
testimony, exhibits, and other evidence admitted at the hearing and all 
papers and requests filed in the proceeding constitute the record for 
the decision by the ALJ and the Secretary or designee.



Sec. 26.48  Posthearing briefs.

    Posthearing briefs shall be filed only upon order by the ALJ.



Sec. 26.49  Initial decision.

    (a) The ALJ shall issue an initial decision based only on the 
record, which shall contain findings of fact, conclusions of law, and 
the relief granted.
    (b) The ALJ shall serve the initial decision on all parties within 
60 days after either the close of the record or the expiration of time 
permitted for submission of posthearing briefs, whichever is later. The 
initial decision shall include a statement of each party's right to file 
a request for Secretarial review. The ALJ may extend the 60-day period 
for serving the initial decision in writing for good cause.
    (c) If no appeal is timely filed with the Secretary or designee, the 
initial decision shall become the final agency action.



Sec. 26.50  Appeal to the Secretary.

    (a) Except as otherwise set forth in paragraph (b) of this section, 
either party may file with the Secretary a petition for review within 30 
days after the ALJ issues an initial decision. The Secretary or designee 
may extend the 30-day period for good cause. If the Secretary or 
designee does not act upon the petition for review within 90 days of its 
service, then the initial decision shall become final.
    (b) Appeals of Program Fraud Civil Remedies Act decisions (24 CFR 
part 28). Only the respondent may file a petition for Secretarial 
review. The petition must be filed within 30 days after the ALJ issues 
the initial decision. The Secretary or designee may extend the 30-day 
period for good cause. If the Secretary or designee does not act upon 
the petition for review within 30 days of its service, then the initial 
decision shall become final.
    (c) Brief in support of petition. The petition for review shall be 
accompanied by a written brief, not to exceed 10 pages, specifying 
exceptions to the initial decision and reasons supporting the 
exceptions.
    (d) Service. The party submitting the petition for review shall 
serve a copy of the petition and brief in support of the

[[Page 251]]

petition on the other parties and on the Chief Docket Clerk.
    (e) Forwarding of the record. Upon request by the Office of the 
Secretary, the ALJ shall forward the record of the proceeding to the 
Secretary or designee.
    (f) Brief in opposition. Any opposing party may file a brief 
opposing review, not to exceed 10 pages, within 20 days of receiving the 
petition for review and accompanying brief. The brief in opposition 
shall be served on all parties.
    (g) Additional briefs. If the petition is granted, then the 
Secretary or designee may order the filing of additional briefs.
    (h) There is no right to appear personally before the Secretary or 
designee.
    (i) There is no right to appeal any interlocutory ruling by the ALJ.
    (j) In reviewing the initial decision, the Secretary or designee 
shall not consider any objection that was not raised before the ALJ 
unless a demonstration is made of extraordinary circumstances causing 
the failure to raise the objection.
    (k) The Secretary or designee shall consider only evidence contained 
in the record forwarded by the ALJ. However, if any party demonstrates 
to the satisfaction of the Secretary or designee that additional 
evidence not presented at the hearing is material and that there were 
reasonable grounds for the failure to present such evidence at such 
hearing, the Secretary or designee shall remand the matter to the ALJ 
for consideration of such additional evidence.
    (l) The prohibitions of ex parte contacts in Sec. 26.30 shall apply 
to contacts with the Secretary or designee.
    (m) The Secretary or designee may affirm, reduce, reverse, 
compromise, remand, or settle any relief granted in the initial 
decision. The Secretary or designee shall consider, and include in any 
final determination, such factors as may be set forth in applicable 
statutes or regulations.
    (n) The Secretary or designee shall promptly serve each party to the 
appeal with a copy of his or her decision and a statement describing the 
right to seek judicial review.
    (o) Judicial review. A party must generally file a petition for 
judicial review within 20 days of service of the Secretary's 
determination, or the Secretary's determination shall become final and 
not subject to judicial review. In Program Fraud Civil Remedies Act 
matters (24 CFR part 28), the respondent shall have 60 days from the 
date that the determination is sent to the respondent in which to file a 
petition. See also Sec. 26.52.



Sec. 26.51  Exhaustion of administrative remedies.

    In order to fulfill the requirement of exhausting administrative 
remedies, a party must seek Secretarial review under Sec. 26.50 prior to 
seeking judicial review of any initial decision issued under subpart B 
of this part.



Sec. 26.52  Judicial review.

    Judicial review shall be in accordance with applicable statutory 
procedures and the procedures of the appropriate Federal court. The 
Government may not seek judicial review of an adverse determination of a 
Program Fraud Civil Remedies Act matter.



Sec. 26.53  Collection of civil penalties and assessments.

    Collection of civil penalties and assessments shall be in accordance 
with applicable statutory provisions.



Sec. 26.54  Right to administrative offset.

    The amount of any penalty or assessment that has become final under 
Sec. 26.49, or for which a judgment has been entered after action under 
Secs. 26.52 or 26.53, or agreed upon in a compromise or settlement among 
the parties, may be collected by administrative offset under 31 U.S.C. 
3716 or other applicable law. In Program Fraud Civil Remedies Act 
matters, an administrative offset may not be collected against a refund 
of an overpayment of Federal taxes then or later owing by the United 
States to the respondent.

[[Page 252]]



PART 27--NONJUDICIAL FORECLOSURE OF MULTIFAMILY AND SINGLE FAMILY MORTGAGES--Table of Contents




       Subpart A--Nonjudicial Foreclosure of Multifamily Mortgages

Sec.
27.1  Purpose.
27.2  Scope and applicability.
27.3  Definitions.
27.5  Prerequisites to foreclosure.
27.10  Designation of a foreclosure commissioner.
27.15  Notice of default and foreclosure sale.
27.20  Conditions of foreclosure sale.
27.25  Termination or adjournment of foreclosure sale.
27.30  Conduct of the sale.
27.35  Foreclosure costs.
27.40  Disposition of sale proceeds.
27.45  Transfer of title and possession.
27.50  Management and disposition by the Secretary.

      Subpart B--Nonjudicial Foreclosure of Single Family Mortgages

27.100  Purpose, scope and applicability.
27.101  Definitions.
27.102  Designation of foreclosure commissioner and substitute 
          commissioner.
27.103  Notice of default and foreclosure sale.
27.105  Service of Notice of Default and Foreclosure Sale.
27.107  Presale reinstatement.
27.109  Conduct of sale.
27.111  Adjournment or cancellation of sale.
27.113  Foreclosure costs.
27.115  Disposition of sales proceeds.
27.117  Transfer of title and possession.
27.119  Redemption rights.
27.121  Record of foreclosure and sale.
27.123  Deficiency judgment.

    Authority: 12 U.S.C. 1715b, 3701-3717, 3751-3768; 42 U.S.C. 1452b, 
3535(d).

    Source: 61 FR 48548, Sept. 13, 1996, unless otherwise noted.



       Subpart A--Nonjudicial Foreclosure of Multifamily Mortgages



Sec. 27.1  Purpose.

    The purpose of this subpart is to implement requirements for the 
administration of the Multifamily Mortgage Foreclosure Act of 1981 (the 
Act) (12 U.S.C. 3701-3717), that clarify, or are in addition to, the 
requirements contained in the Act, which are not republished here and 
must be consulted in conjunction with the requirements of this subpart. 
The Act creates a uniform Federal remedy for foreclosure of multifamily 
mortgages. Under a delegation of authority published on February 5, 1982 
(47 FR 5468), the Secretary has delegated to the HUD General Counsel his 
powers under the Act to appoint a foreclosure commissioner or 
commissioners and to substitute therefor, to fix the compensation of 
commissioners, and to promulgate implementing regulations.



Sec. 27.2  Scope and applicability.

    (a) Under the Act and this subpart, the Secretary may foreclose on 
any defaulted Secretary-held multifamily mortgage encumbering real 
estate in any State. The Secretary may use the provisions of these 
regulations to foreclose on any multifamily mortgage regardless of when 
the mortgage was executed.
    (b) The Secretary may, at the Secretary's option, use other 
procedures to foreclose defaulted multifamily mortgages, including 
judicial foreclosure in Federal court and nonjudicial foreclosure under 
State law. This subpart applies only to foreclosure procedures 
authorized by the Act and not to any other foreclosure procedures the 
Secretary may use.



Sec. 27.3  Definitions.

    The definitions contained in the Act (at 12 U.S.C. 3702) shall apply 
to this subpart, in addition to and as further clarified by the 
following definitions. As used in this subpart:
    General Counsel means the General Counsel of the Department of 
Housing and Urban Development;
    Multifamily mortgage does not include a mortgage covering a property 
on which there is located a one- to four-family residence, except when 
the one- to four-family residence is subject to a mortgage pursuant to 
section 202 of the Housing Act of 1959 (12 U.S.C. 1701q), or section 811 
(42 U.S.C. 8013) of the National Affordable Housing Act. The definition 
of multifamily mortgage also includes a mortgage taken by the Secretary 
in connection with the previous sale of the project by the Secretary 
(purchase money mortgage).

[[Page 253]]



Sec. 27.5  Prerequisites to foreclosure.

    Before commencement of a foreclosure under the Act and this subpart, 
HUD will provide to the mortgagor an opportunity informally to present 
reasons why the mortgage should not be foreclosed. Such opportunity may 
be provided before or after the designation of the foreclosure 
commissioner but before service of the notice of default and 
foreclosure.