Participant's Consent To Release of Information

Federal RegisterMar 20, 1995

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Parts 200 and 760

[Docket No. R-95-1750; FR-3468-F-02]

RIN 2501-AB83

Participant's Consent To Release of Information

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: This final rule implements the amendments made to Section 904

of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988

(the McKinney Act) by Section 903 of the Housing and Community

Development Act of 1992, and Section 3003 of the Omnibus Budget

Reconciliation Act of 1993. Section 904 of the McKinney Act authorizes

HUD to require applicants or participants in any HUD program involving

review of an applicant's or participant's income to sign a consent form

authorizing HUD, the Housing Agency/Authority, or the owner to verify

income information by requesting wage and claim data from employers and

the State agency responsible for the administration of the State

unemployment laws.

EFFECTIVE DATE: April 19, 1995.

FOR FURTHER INFORMATION CONTACT: Edward Whipple, Director, Occupancy

Division, Office of Assisted Housing, Room 4206, concerning occupancy

matters; Barbara D. Hunter, Acting Division Director, Planning and

Procedures Division, Office of Multifamily Housing Management, Room

6180 concerning housing assistance programs administered by this

office; and David L. Decker, Director, Computer Matching Activities,

Room 5156, concerning computer matching/tenant income verification

matters. They may be contacted at the Department of Housing and Urban

Development, 451 Seventh Street, S.W., Washington, D.C. 20410,

telephone (202) 708-0744, (202) 708-3944 and (202) 708-0099,

respectively. Hearing or speech-impaired individuals may call

[[Page 14633]] HUD's TDD number (202) 708-0850. (These telephone

numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Background

A. October 12, 1994 Proposed Rule

On October 12, 1994 (59 FR 51519) HUD published a rule which

proposed to implement the amendments made to Section 904 of the Stewart

B. McKinney Homeless Assistance Amendments Act of 1988 (42 U.S.C. 3544)

(the McKinney Act) by Section 903 of the Housing and Community

Development Act of 1992 (Pub. L. 102-550, approved October 28, 1992)

(the 1992 Act) and Section 3003 of the Omnibus Budget Reconciliation

Act of 1993 (Pub. L. 103-66, approved August 10, 1993).

Section 904 of the McKinney Act authorizes HUD to require

applicants and participants and adult members of their families in any

HUD program involving initial and periodic review of an applicant's or

participant's income to sign a consent form authorizing: (1) HUD, the

Housing Authority/Agency (HA),1 or the owner to verify employee

income information from current or previous employers; and (2) HUD or

the HA to request wage and claim information from the State agency

responsible for the administration of the State unemployment laws. In

accordance with section 904(b) of the McKinney Act, HUD regulations

make signing the consent form an explicit condition of initial or

continuing eligibility for participation in the covered programs.

\1\The preamble to the October 12, 1994 proposed rule referred

only to Public Housing Agencies (PHAs). Section 903 of the 1992 Act

required that HUD develop a new consent form. This consent form,

applicable to Indian Housing Authorities (IHAs) as well as PHAs, was

released on June 13, 1994 (HUD Notice PIH-94-36 (HA)). IHAs were

made aware of this new consent form and have utilized it since its

issuance. Accordingly, the language in the preamble to this final

rule and in the rule includes PHAs as well as IHAs (collectively

referred to as HAs).

Among other revisions, the statutory amendments to Section 904

limited the scope of the consent form by requiring that it only cover

information relevant and necessary to meet the requirements of Section

904. The amendments also authorized the Secretary of HUD to request

that the Commissioner of Social Security and the Secretary of the

Treasury release information pursuant to Section 6103 (1)(7)(D)(ix) of

the Internal Revenue Code of 1986 (26 U.S.C. 6103).

The preamble to the proposed rule listed the specific changes made

to Section 904 of the McKinney Act by section 903 of the 1992 Act,

section 3003 of the Omnibus Budget Reconciliation Act of 1993, and the

regulatory amendments proposed to be made as a result of the statutory

changes (see 59 FR 51519-51521). HUD solicited public comments on the

proposed amendments to parts 200 and 760. By the expiration of the

public comment period on December 12, 1994, four comments had been

received.

The following section of the preamble presents a summary of the

comments raised by the commenters, and HUD's responses to these

comments.

B. Comments on the October 12, 1994 Proposed Rule

Comment. One of the commenters expressed concern over proposed

Secs. 200.1203 and 200.1205, which permit HUD to require consent to the

release of ``other information as provided in 24 CFR 813.109 and 24 CFR

913.109.'' The commenter interpreted the McKinney Act as limiting the

consent form to the three categories of information listed in Section

904: (1) Salary and wage information from employers; (2) wage and

benefit information from State unemployment insurance agencies; and (3)

income information from the Social Security Administration and the

Department of the Treasury. The commenter contended that Section 904's

requirement that HUD independently verify information provided by

applicants and participants is an insufficient basis for requiring

consent to release ``other information.'' Furthermore, the commenter

stated that it is indefensible for HUD to require consent to release

``other information'' before there is any adverse information to

verify. Finally, the commenter believed that 24 CFR 813.109 and 24 CFR

913.109 conflict with 42 U.S.C 3544(b) and should be ``amended or

repealed accordingly.''

HUD Response. HUD believes proposed Secs. 200.1203 and 200.1205 are

necessary to its compliance with statutory mandates. The Omnibus Budget

Reconciliation Act of 1993 and the McKinney Act require that HUD verify

information affecting eligibility for, and the level of, assisted

housing benefits. Furthermore, the Privacy Act, as amended by Public

Law 100-503, the Computer Matching and Privacy Protection Act of 1988,

requires that agencies may not suspend, terminate, reduce or make a

final denial of assistance or payment under a Federal benefit program

until information is verified.

HUD notes that the language in proposed Secs. 200.1203 and 200.1205

only permits consent to the release of ``other information'' necessary

to determine eligibility or level of benefits. HUD believes that the

consent form it has implemented, permitting HAs to obtain ``financial

information'', is consistent with the ``other information'' language,

since the information needed to determine eligibility or the level of

benefits frequently is financial in nature.

Congress intended that the computer matching permitted by the

consent form result in savings. If an HA or owner were prevented from

obtaining an applicant's or participant's consent until after acquiring

adverse information through computer matching, its ability to recoup

funds or take other administrative or legal action would be seriously

impaired. Many participants who receive excessive housing assistance

will not sign the consent form after the HA or owner has obtained

adverse information. By preventing the verification of the adverse

information, these participants hinder the HA or owner from taking

action against the participants and realizing program savings.

Finally, HUD disagrees with the commenter's statement that 24 CFR

813.109 and 24 CFR 913.109 need to be amended or repealed. Many recent

and past laws require verification of information concerning

applicants' and participants' eligibility for, and levels of, benefits.

Comment. One commenter questioned the basis for the proposed rule's

placement of a 15-month limit on the effectiveness of the participant's

consent for release of information. The commenter felt that the time

limit would prove burdensome to local HAs, which would be required to

have the consent form signed at each annual re-examination. The

commenter suggested that HUD issue a blanket authorization which would

permit the HA to verify information for the duration of the resident's

tenancy.

HUD Response. HUD agrees that making the consent form effective for

only 15 months increases the paperwork burden on HAs. However, Section

903(a) of the 1992 Act requires that the consent to release of

information be limited with respect to time, and only cover information

relevant and necessary to meet the requirements of Section 904 of the

McKinney Act.

Given tenant concerns that the consent form might be used

improperly to obtain private information, Congress required that HUD

place a time limit on the consent form's effectiveness. A blanket

authorization that would be valid for the duration of the resident's

tenancy, like the one suggested by the [[Page 14634]] commenter, would

be inconsistent with the explicit instructions given by Congress.

Congress suggested that the consent for release of information be

effective for 12 months, the normal period for tenant re-certification

for continued occupancy. However, the law allows HUD discretion in

choosing the effective period for the consent form. In order to provide

leeway for unexpected delays in re-certification, HUD has chosen to

make the consent form effective for 15 months from the date of

execution.

Comment. Two commenters recommended that HUD develop a new

regulation to accompany the issuance of this final rule. Specifically,

the commenters urged the issuance of a regulation that would ``clearly

and unambiguously prohibit the release of [Housing Assistance Program]

contracts or any other information which might lead to the identity of

a recipient of Section 8 subsidy assistance, including the addresses of

properties in which such recipients reside or the names of their

landlords.'' Neither of the commenters expressed any objection to the

proposed rule.

HUD Response. Although the rule recommended by the commenters and

the proposed rule both have privacy implications, a clear nexus does

not exist between them. Accordingly, HUD views the issuance of this

final rule and the commenters' recommendation as independent issues.

C. Adoption of Proposed Rule

HUD adopts as its final rule the proposed rule published on October

12, 1994, without change.

II. Other Matters

A. Executive Order 12866

This rule was reviewed by the Office of Management and Budget under

Executive Order 12866, Regulatory Planning and Review. Any changes made

to the rule as a result of that review are clearly identified in the

docket file, which is available for public inspection in the Office of

the Department's Rules Docket Clerk, Room 10276, 451 Seventh St., SW.,

Washington, DC 20410.

B. Environmental Impact

In accordance with 40 CFR 1508.4 of the regulations of the Council

on Environmental Quality and 24 CFR 50.20(k) of the HUD regulations,

the policies and procedures contained in this final rule relate to

internal administrative procedures whose content does not constitute a

development decision nor affect the physical condition of project areas

or building sites and, therefore, are categorically excluded from the

requirements of the National Environmental Policy Act.

C. Executive Order 12612, Federalism

The General Counsel, as the Designated Official under section 6(a)

of Executive Order 12612, Federalism, has determined that the policies

contained in this final rule will not have substantial direct effects

on States or their political subdivisions, or the relationship between

the Federal government and the States, or on the distribution of power

and responsibilities among the various levels of government.

Specifically, the requirements of this final rule are directed toward

applicants and participants in federally assisted housing programs. It

effects no significant changes in the current relationships between the

Federal government, the States and their political subdivisions in

connection with these programs.

D. Executive Order 12606, the Family

The General Counsel, as the Designated Official under Executive

Order 12606, The Family, has determined that this final rule does not

have potential for significant impact on family formation, maintenance,

and general well-being, and, thus, is not subject to review under the

Order. Under this final rule, applicants and participants, and adult

members of their families, are required to sign and submit consent

forms authorizing the verification or collection of certain information

necessary for determining eligibility for or level of assistance under

the covered programs. Consent forms to permit verification of

information provided by the family are already required. This rule

change prohibits the collection of information which is not necessary

to verify the income of an applicant or participant, and makes the

consent form valid for 15 months. No significant change in existing HUD

policies or programs will result from promulgation of this final rule,

as those policies and programs relate to family concerns.

E. Regulatory Flexibility Act

The Secretary, in accordance with the Regulatory Flexibility Act (5

U.S.C. 605(b)) has reviewed and approved this final rule, and in so

doing certifies that this final rule will not have a significant

economic impact on a substantial number of small entities. This final

rule relates to applicants and participants in federally assisted

housing projects but should not have a meaningful economic impact on

these entities.

F. Regulatory Agenda

This final rule was not listed in HUD's Semiannual Agenda of

Regulations published on November 14, 1994 (59 FR 57632) in accordance

with Executive Order 12866 and the Regulatory Flexibility Act.

List of Subjects

24 CFR Part 200

Administrative practice and procedure, Claims, Equal employment

opportunity, Fair housing, Home improvement, Housing standards,

Incorporation by reference, Lead poisoning, Loan programs--housing and

community development, Minimum property standards, Mortgage insurance,

Organization and functions (Government agencies), Penalties, Reporting

and recordkeeping requirements, Social security, Unemployment

compensation, Wages.

24 CFR Part 760

Grant programs--housing and community development, Income

verification procedures, Indians, Intergovernmental relations, Loan

programs--housing and community development, Penalties, Public housing,

Rent subsidies, Reporting and recordkeeping requirements, Wages.

Accordingly, 24 CFR parts 200 and 760 are amended as follows:

PART 200--INTRODUCTION

1. The authority citation for 24 CFR part 200 continues to read as

follows:

Authority: 12 U.S.C. 1701-1715z-18, 1701s, and 1715z-11; 42

U.S.C. 3535(d), 3543, and 3544.

2. Section 200.1203 is amended by revising paragraph (a), to read

as follows:

Sec. 200.1203 Applicability.

(a) Information to be covered by consent forms. The information

covered by consent forms described in this part involves: wage and

claim information from SWICAs; and wages, net earnings from self-

employment, payments of retirement income and unearned income as

referenced at sections 6103(l)(7)(A) and 6103(l)(7)(B) of the Internal

Revenue Code (26 U.S.C. 6103). In addition, the consent forms may

authorize the collection of other information from applicants or

participants to determine eligibility or level of benefits as provided

in 24 CFR 813.109 and 24 CFR 913.109.

* * * * * [[Page 14635]]

3. Section 200.1205 is amended by revising the definition for

``Consent form'', to read as follows:

Sec. 200.1205 Definitions.

* * * * *

Consent form means a consent form or forms approved by HUD to be

signed by applicants and participants for the purpose of obtaining

employee income information from employers; wage and claim information

from SWICAs; return information from the Social Security Administration

(including wages, net earnings from self-employment, payments of

retirement income as referenced at section 6103(l)(7)(A) of the

Internal Revenue Code (26 U.S.C. 6103); and return information for

unearned income (i.e., interest and dividends) from the Internal

Revenue Service as referenced at section 6103(l)(7)(B) (26 U.S.C.

6103). Also, the consent forms may authorize the collection of other

information from applicants or participants to determine eligibility or

level of benefits as provided in 24 CFR 813.109 and 24 CFR 913.109. The

consent form expires after a limited amount of time.

* * * * *

4. Section 200.1210 is amended by revising paragraph (c), to read

as follows:

Sec. 200.1210 Consent by applicants and participants.

* * * * *

subpart V shall contain, at a minimum, the following:

(1) A provision authorizing HUD to obtain from SWICAs any

information or materials necessary to complete or verify the

application for participation and/or to maintain continued assistance

under a program referred to in Sec. 200.1203;

(2) A provision authorizing HUD or the owner (or mortgagee as

applicable) responsible for determining eligibility for or level of

assistance, to verify with previous or current employers employee

income information pertinent to the applicant's or participant's

eligibility for or level of assistance under a program referred to in

Sec. 200.1203;

(3) A provision authorizing HUD to request tax return information

from the Internal Revenue Service and the Social Security

Administration for the sole purpose of verifying income information

pertinent to the 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 consent form

was signed.

(5) These requirements may be contained in more than one consent

form.

PART 760--PROCEDURES FOR OBTAINING WAGE AND CLAIM INFORMATION ABOUT

APPLICANTS AND PARTICIPANTS IN HUD'S SECTION 8 AND PUBLIC HOUSING

PROGRAMS FROM STATE WAGE INFORMATION COLLECTION AGENCIES (SWICAs)

5. The authority citation for part 760 is revised to read as

follows:

Authority: 12 U.S.C. 1701q; 42 U.S.C. 1437a, 1437d, 1437ee,

1437f, 3535(d), and 3544.

6. Section 760.3 is amended by revising paragraph (a), to read as

follows:

Sec. 760.3 Applicability.

(a) information to be covered by consent forms. The information

covered by consent forms described in this part involves wage and claim

information from SWICAs; and wages, net earnings from self-employment,

payments of retirement income, and unearned income as referenced at

sections 6103(l)(7)(A) and 6103(l)(7)(B) of the Internal Revenue Code

(26 U.S.C. 6103). In addition, consent forms may authorize the

collection of other information as identified in 24 CFR 813.109(b) and

24 CFR 913.109(b) for current verification procedures, including

requirements regarding signing and submitting consent forms, for the

covered programs.

* * * * *

7. Section 760.5 is amended by revising the definition for

``Consent form'', to read as follows:

Sec. 760.5 Definitions.