Thursday, March 15, 2007

Part III

Department of Housing and Urban Development 24 CFR Parts 91 and 570 Timeliness Expenditure Standards for the Insular Areas Program; Final Rule

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DEPARTMENT OF HOUSING AND assistance sought from HUD, instead of Insular Area grantee be untimely 60 URBAN DEVELOPMENT a full consolidated plan. The proposed days prior to the conclusion of its FY rule also sought to make technical and 2006 and FY 2007 program years. 24 CFR Parts 91 and 570 conforming changes to the regulations. Additionally, HUD proposed to add a [Docket No. FR–5012–F–02] The Insular Areas program is a provision that would allow funds to be component of the Community reallocated to the remaining eligible RIN 2501–AD15 Development Block Grant (CDBG) Insular Areas on a pro rata basis should program, authorized by the Housing and an Insular Area grantee have its funding Timeliness Expenditure Standards for Community Development Act of 1974 reduced for failing to submit a final the Insular Areas Program (HCD Act) (42 U.S.C. 5301, et seq.). statement for CDBG funds. The AGENCY: Office of the Assistant Under the CDBG program, Insular Area proposed rule also addressed the issue Secretary for Community Planning and grantees are provided flexible funding to of Insular Area grantees’ submission of Development, HUD. develop and implement community and abbreviated consolidated plans. economic development strategies that ACTION: Final rule. Abbreviated consolidated plans primarily benefit low- and moderate- submitted by Insular Areas grantees will SUMMARY: This final rule implements income individuals. be considered to be full consolidated regulatory timeliness standards for the The August 7, 2006, rule proposed plans, provided the Insular Area grantee Insular Areas Program, as established by timeliness standards for the Insular complies with the submissions, the Housing and Community Areas Program. Under the proposed certifications, amendments, and Development Act of 1974. The standards, the amount of grant funds performance reports requirements of expenditure standards will ensure that available but undisbursed 60 days prior § 570.440 and citizen participation grantees carry out their programs in a to the conclusion of the Insular Area requirements of § 570.441. However, if timely manner. The standards take into grantee’s most recent program year must submission of a full consolidated plan consideration and reflect the unique be no more than two times the amount would help a grantee integrate its CDBG, circumstances faced by Insular Area of the Insular Area grantee’s most recent HOME and Emergency Shelter Grant grantees in their ability to expend CDBG grant. If the grantee fails to demonstrate programs, the grantee should strongly allocations. The final rule provides that to HUD’s satisfaction that the lack of consider submitting a full consolidated an Insular Area grantee may submit an timeliness has resulted from factors plan. Various technical changes were abbreviated consolidated plan rather beyond the grantee’s reasonable control, proposed to reflect statutory than a full consolidated plan. This final the grantee shall be deemed to be amendments, remove outdated cross- rule also makes technical and untimely. A grantee that has less than references, and delete provisions that conforming changes to the Insular Areas two times its most recent grant in its are no longer required or applicable. CDBG line of credit 60 days prior to the program. The final rule follows For more detailed information conclusion of its most recent program publication of an August 7, 2006, regarding the regulatory changes, please year shall also be deemed to be proposed rule on which HUD did not refer to the preamble of the August 7, untimely if the amount of CDBG receive any public comments. 2006, proposed rule. Accordingly, HUD is adopting the program income the recipient has on August 7, 2006, proposed rule without hand at that time, together with the II. This Final Rule change. amount of funds in its CDBG line of This final rule follows the publication credit, exceeds twice the amount of the of the August 7, 2006, proposed rule. DATES: Effective Date: April 16, 2007. grantee’s most recent grant, unless the FOR FURTHER INFORMATION CONTACT: The public comment period on the grantee is able to demonstrate to HUD’s proposed rule closed on October 6, Stephen Rhodeside, Senior Program satisfaction that the lack of timeliness 2006. HUD did not receive any public Officer, State and Small Cities Division, has resulted from factors beyond the comments on the proposed rule. HUD, Office of Block Grant Assistance, Office grantee’s reasonable control. of Community Planning and In determining the corrective action therefore, is issuing this final rule Development, Department of Housing for untimely expenditure, HUD will without change from the proposed rule. and Urban Development, 451 Seventh consider the likelihood that the III. Findings and Certifications Street, SW., Room 7184, Washington, recipient will expend a sufficient DC 20410–7000, telephone (202) 708– amount of funds over the next program Unfunded Mandates Reform Act 1322 (this is not a toll-free number). year to bring the grantee into Title II of the Unfunded Mandates Individuals with speech or hearing compliance with the timeliness Reform Act of 1995 (2 U.S.C. 1531– impairments may access this number requirements. The first timeliness 1538) (UMRA) establishes requirements through TTY by calling the toll-free review under these standards will take for federal agencies to assess the effects Federal Information Relay Service at place 60 days prior to the conclusion of of their regulatory actions on state, (800) 877–8339. the 2006 funding year, which would local, and tribal governments and the SUPPLEMENTARY INFORMATION: take place on August 2, 2007, for Insular private sector. This final rule does not Area grantees that do not change their impose any federal mandates on any I. Background program year start dates. Failure to meet state, local, or tribal government or the On August 7, 2006, HUD published a the standards may cause HUD to reduce private sector within the meaning of proposed rule (71 FR 44860) for public the next grant by 100 percent of the UMRA. comment to establish timeliness amount in excess of twice the Insular standards and procedures for the Area grantee’s most recent CDBG grant, Executive Order 13132, Federalism reallocation of funds for the Insular unless HUD determines that the Executive Order 13132 (entitled Areas Program. In addition, the August untimeliness resulted from factors ‘‘Federalism’’) prohibits, to the extent 7, 2006, rule proposed to provide that outside of the grantee’s reasonable practicable and permitted by law, an an Insular Area grantee may submit an control. The earliest that HUD will agency from promulgating a regulation abbreviated consolidated plan that is reduce grants under this final rule will that has federalism implications and appropriate to the types and amounts of be in Fiscal Year (FY) 2008, should an either imposes substantial direct

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compliance costs on state and local Catalog of Federal Domestic Assistance the CDBG program, an abbreviated plan governments and is not required by The Catalog of Federal Domestic may be submitted for the HUD- statute, or preempts state law, unless the Assistance number for the Insular Areas administered Small Cities program relevant requirements of section 6 of the Program is 14.225. (except that an abbreviated plan may executive order are met. This rule does not be submitted for the HUD- not have federalism implications and List of Subjects administered Small Cities program in does not impose substantial direct 24 CFR Part 91 the state of Hawaii), and for Insular Area grantees pursuant to 24 CFR 570.440. compliance costs on state and local Aged, Grant programs-housing and governments or preempt state law (c) * * * community development, Homeless, (4) Submissions, Certifications, within the meaning of the executive Individuals with disabilities, Low and order. Amendments, and Performance Reports. moderate income housing, Reporting An Insular Area grantee that submits an Regulatory Flexibility Act and recordkeeping requirements. abbreviated consolidated plan under 24 CFR Part 570 this section must comply with the The Regulatory Flexibility Act (RFA) submission, certification, amendment, (5 U.S.C. 601 et seq.) generally requires Administrative practice and and performance report requirements of an agency to conduct regulatory procedure, American Samoa, 24 CFR 570.440. This includes flexibility analysis of any rule subject to Community development block grants, certification that the grantee will notice and comment rulemaking Grant programs—education, Grant affirmatively further fair housing, which requirements, unless the agency certifies programs—housing and community means it will conduct an analysis of that the rule will not have a significant development, Guam, Indians, Lead impediments to fair housing choice and economic impact on a substantial poisoning, Loan programs—housing and undertake other activities required for number of small entities. This rule will community development, Low and fair housing planning, in accordance not have a significant economic impact moderate income housing, New with 24 CFR 91.225(a)(1) and on a substantial number of small entities communities, Northern Mariana Islands, 570.601(a)(2). Pacific Islands Trust Territory, Pockets because the rule only codifies in HUD’s of poverty, Puerto Rico, Reporting and * * * * * regulations procedures that will enable recordkeeping requirements, Small (e) Citizen Participation. An Insular the Department to enforce its timeliness cities, Student aid, Virgin Islands. Area grantee that submits an policy for the Insular Areas Program. As abbreviated consolidated plan under such, the rule does not significantly I Accordingly, HUD amends 24 CFR this section must comply with the differ from the current status in terms of parts 91 and 570 as follows: citizen participation requirements of 24 CFR 570.441. the impact on the number of entities, PART 91—CONSOLIDATED the amount of funding, or the governing SUBMISSIONS FOR COMMUNITY * * * * * requirements applicable. Therefore, the PLANNING AND DEVELOPMENT PART 570—COMMUNITY undersigned certifies that this final rule PROGRAMS will not have a significant economic DEVELOPMENT BLOCK GRANTS impact on a substantial number of small I 1. The authority citation for 24 CFR I 3. The authority citation for 24 CFR entities, and an initial regulatory part 91 continues to read as follows: part 570 continues to read as follows: flexibility analysis is not required. Authority: 42 U.S.C. 3535(d), 3601–3619, 5301–5315, 11331–11388, 12701–12711, Authority: 42 U.S.C. 3535(d) and 5301– Environmental Impact 12741–12756, and 12901–12912. 5320. A Finding of No Significant Impact I 2. In § 91.235 revise paragraphs (a), I 4. Revise § 570.209(b)(2)(i) to read as with respect to the environment was (b)(3), and (e) and add paragraph (c)(4) follows: made at the proposed rule stage in to read as follows: § 570.209 Guidelines for evaluating and accordance with HUD regulations at 24 selecting economic development projects. CFR part 50, which implement section § 91.235 Special case; abbreviated consolidated plan. * * * * * 102(2)(C) of the National Environmental (a) Who may submit an abbreviated (b) * * * Policy Act of 1969 (42 U.S.C. plan? A jurisdiction that is not a CDBG (2) Applying the aggregate standards. 4332(2)(C)). The Finding of No entitlement community under 24 CFR (i) A metropolitan city, an urban county, Significant Impact remains applicable to part 570, subpart D, and is not expected or an Insular Area shall apply the this final rule and is available for public to be a participating jurisdiction in the aggregate standards under paragraph inspection between the hours of 8 a.m. HOME program under 24 CFR part 92, (b)(1) of this section to all applicable and 5 p.m. weekdays in the Regulations as well as an Insular Area that is a activities for which CDBG funds are first Division, Office of General Counsel, HOME or CDBG grantee, may submit an obligated within each single CDBG Department of Housing and Urban abbreviated consolidated plan that is program year, without regard to the Development, 451 Seventh Street, SW., appropriate to the types and amounts of source year of the funds used for the Room 10276, Washington, DC 20410– assistance sought from HUD, instead of activities. For Insular Areas, the 0500. Due to security measures at the a full consolidated plan. preceding sentence applies to grants HUD Headquarters building, please (b) * * * received in program years after Fiscal schedule an appointment to review the (3) Limitation. For the HOME Year 2004. A grantee under the HUD- finding by calling the Regulations program, an abbreviated consolidated administered Small Cities program in Division at (202) 708–3055 (this is not plan is permitted only with respect to New York, or Insular Areas CDBG a toll-free number). Hearing or speech- reallocations to other than participating programs grants prior to Fiscal Year challenged individuals may access this jurisdictions (see 24 CFR part 92, 2005, shall apply the aggregate number through TTY by calling the toll- subpart J), and for Insular Area grantees standards under paragraph (b)(1) of this free Federal Information Relay Service that submit an abbreviated consolidated section to all funds obligated for at (800) 877–8339. plan pursuant to 24 CFR 570.440. For applicable activities from a given grant;

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program income obligated for applicable the exception of § 570.612. The absence small cities recipient’s program to activities will, for these purposes, be of mention herein of any other statute determine if the recipient has carried aggregated with the most recent open for which the Secretary does not have out its activities and certifications in grant. For any time period in which a direct enforcement responsibility is not compliance with: community has no open HUD- intended to be taken as an indication * * * * * administered grant, the aggregate that, in the Secretary’s opinion, such (f) For Insular Areas Program grants standards shall be applied to all statute or Executive Order is not only, the application and amendment applicable activities for which program applicable to activities assisted under requirements at § 570.440, the citizen income is obligated during that period. the Act. For laws that the Secretary will participation requirements at § 570.441, * * * * * treat as applicable to grants made to the displacement policy requirements of I 5. Add § 570.442 to subpart F to read states under section 106(d) of the Act for § 570.606, and the lead-based paint as follows: purposes of the determination required requirements of 24 CFR 35.940; to be made by the Secretary pursuant to * * * * * § 570.442 Reallocations-Insular Areas. section 104(e)(2) of the Act, see I § 570.487. 9. In § 570.902, revise the introductory (a) Any Insular Area funds that paragraph, and add a new paragraph (c) become available as a result of * * * * * to read as follows: reductions under subpart O of this part, I 7. In § 570.900, revise paragraphs shall be reallocated in the same or (a)(1) and (b)(1) to read as follows: § 570.902 Review to determine if CDBG- future fiscal year to any remaining funded activities are being carried out in a eligible Insular Area grantees pro rata § 570.900 General. timely manner. according to population. (a) Performance review authorities— HUD will review the performance of (b) Any Insular Area grant funds for (1) Entitlement, Insular Areas, and each entitlement, HUD-administered a fiscal year reserved for an applicant HUD-administered Small Cities small cities, and Insular Areas recipient that chooses not to submit a final performance reviews. Section 104(e)(1) to determine whether each recipient is statement in accordance with § 570.440 of the Act requires that the Secretary carrying out its CDBG-assisted activities to receive such funds, shall be shall, at least on an annual basis, make in a timely manner. reallocated in the same or future fiscal such reviews and audits as may be * * * * * year to any remaining eligible Insular necessary or appropriate to determine (c) Insular Areas recipients. (1) Before Area grantees pro rata according to whether the recipient has carried out its the funding of the next annual grant and population. activities in a timely manner, whether absent contrary evidence satisfactory to (c) No amounts shall be reallocated the recipient has carried out those HUD, HUD will consider an Insular under this section in any fiscal year to activities and its certifications in Areas recipient to be failing to carry out any applicant whose grant amount in accordance with the requirements and its CDBG activities in a timely manner such fiscal year was reduced under the primary objectives of the Act and if: subpart O of this part or who did not with other applicable laws, and whether (i) Sixty days prior to the end of the submit a final statement in accordance the recipient has a continuing capacity grantee’s current program year, the with § 570.440 for that fiscal year. to carry out those activities in a timely amount of Insular Area grant funds (d) Insular Area grantees receiving manner. available to the recipient under grant additional funds under this section will * * * * * agreements but undisbursed by the U.S. be evaluated for timeliness under (b) * * * Treasury is more than 2.0 times the § 570.902 based upon the original grant (1) The Department will determine Insular Area’s grant amount for its amount plus the additional funds the performance of each entitlement, current program year; and received. Accordingly, references in Insular Areas, and HUD-administered (ii) The grantee fails to demonstrate to § 570.902 to an Insular Area’s grant small cities recipient in accordance with HUD’s satisfaction that the lack of amount for its current program year section 104(e)(1) of the Act by reviewing timeliness has resulted from factors include such additional funds, and for compliance with the requirements beyond the grantee’s reasonable control. references to unexpended or described in § 570.901 and by applying (2) Notwithstanding that the amount undisbursed funds include such the performance criteria described in of funds in the line of credit indicates additional funds. §§ 570.902 and 570.903 relative to that the Insular Area recipient is I 6. Revise § 570.600(a) to read as carrying out activities in a timely carrying out its activities in a timely follows: manner. The review criteria in § 570.904 manner pursuant to paragraph (c)(1) of will be used to assist in determining if this section, HUD may determine that § 570.600 General. the recipient’s program is being carried the recipient is not carrying out its (a) This subpart K enumerates laws out in compliance with civil rights activities in a timely manner if: that the Secretary will treat as requirements. (i) The amount of CDBG program applicable to grants made under section * * * * * income the recipient has on hand 60 106 of the Act, other than grants to I 8. In § 570.901, revise the introductory days prior to the end of its current states made pursuant to section 106(d) paragraph, redesignate existing program year, together with the amount of the Act, for purposes of the paragraphs (f), (g), and (h), as of funds in its CDBG line of credit, Secretary’s determinations under paragraphs (g), (h), and (i) respectively, exceeds 2.0 times the Insular Area’s section 104(e)(1) of the Act, including and add a new paragraph (f) to read as grant amount for its current program statutes expressly made applicable by follows: year; and the Act and certain other statutes and (ii) The grantee fails to demonstrate to Executive Orders for which the § 570.901 Review for compliance with the HUD’s satisfaction that the lack of Secretary has enforcement primary and national objectives and other timeliness has resulted from factors responsibility. This subpart K applies to program requirements. beyond the grantee’s reasonable control. grants made under the Insular Areas HUD will review each entitlement, (3) In determining the appropriate Program in § 570.405 and § 570.440 with Insular Areas, and HUD-administered corrective action to take with respect to

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a HUD determination that a recipient is § 570.903 Review to determine if the programming funds from such affected not carrying out its activities in a timely recipient is meeting its consolidated plan activities to other eligible activities manner pursuant to paragraphs (c)(1) or responsibilities. (pursuant to the citizen participation (c)(2) of this section, HUD will consider The consolidated plan, action plan, requirements in 24 CFR part 91); or the likelihood that the recipient will and amendment submission * * * * * expend a sufficient amount of funds requirements referred to in this section (8) In the case of an entitlement or over the next program year to reduce the are in 24 CFR part 91. For the purpose Insular Areas recipient, condition the amount of unexpended funds to a level of this section, the term consolidated use of funds from a succeeding fiscal plan includes an abbreviated that will fall within the standards year’s allocation upon appropriate consolidated plan that is submitted described in paragraphs (c)(1) and (2) of corrective action by the recipient. The pursuant to 24 CFR 91.235. this section when HUD next measures failure of the recipient to undertake the (a) Review timing and purpose. HUD actions specified in the condition may the grantee’s timeliness performance. will review the consolidated plan For these purposes, HUD will take into result in a reduction, pursuant to performance of each entitlement, Insular § 570.911, of the entitlement or Insular account the extent to which funds on Areas, and Hawaii HUD-administered hand have been obligated by the Areas recipient’s annual grant by up to Small Cities grant recipient prior to the amount conditionally granted. recipient and its sub-recipients for acceptance of a grant recipient’s annual I specific activities at the time the finding certification under 24 CFR 91.225(b)(3) 12. Revise § 570.911(b) to read as is made and other relevant information. to determine whether the recipient follows: (4) If a recipient is determined to be followed its HUD-approved § 570.911 Reduction, withdrawal, or untimely pursuant to paragraphs (c)(1) consolidated plan for the most recently adjustment of a grant or other appropriate or (c)(2) of this section in one year, and completed program year, and whether action. the recipient is again determined to be activities assisted with CDBG funds * * * * * untimely in the following year, HUD during that period were consistent with (b) Entitlement and Insular Areas may reduce the recipient’s next grant by that consolidated plan, except that grants. Consistent with the procedures 100 percent of the amount in excess of grantees are not bound by the described in § 570.900(b), the Secretary consolidated plan with respect to the twice the Insular Area’s most recent may make a reduction in the entitlement use or distribution of CDBG funds to CDBG grant, unless HUD determines or insular areas grant amount either for meet non-housing community that the untimeliness resulted from the succeeding program year or, if the development needs. factors outside of the grantee’s grant had been conditioned, up to the reasonable control. * * * * * amount that had been conditioned. The I 11. In § 570.910, revise paragraphs amount of the reduction shall be based (5) The first review under paragraphs (b)(2)(iii) and (b)(8) to read as follows: on the severity of the deficiency and (c)(1) and (c)(2) of this section will take may be for the entire grant amount. § 570.910 Corrective and remedial actions. place 60 days prior to the conclusion of * * * * * the Fiscal Year 2006 program year. * * * * * (b) * * * Dated: March 7, 2007. I 10. In § 570.903, revise the (2) * * * Pamela H. Patenaude, introductory paragraph, paragraph (a), (iii) For entitlement and Insular Areas Assistant Secretary for Community Planning and remove paragraph (d) to read as recipients, canceling or revising affected and Development. follows: activities that are no longer feasible to [FR Doc. E7–4681 Filed 3–14–07; 8:45 am] implement due to the deficiency and re- BILLING CODE 4210–67–P

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