Regulatory Reinvention; Certification and Funding of State and Local Fair Housing Enforcement Agencies

SUMMARY: This interim rule represents another step in HUD's continuing

efforts to reinvent and streamline its regulations. The Fair Housing

Act provides that the Secretary of HUD shall refer complaints alleging

a discriminatory housing practice to State or local enforcement

agencies certified by the Secretary. Currently, HUD's regulations at 24

CFR part 115 set forth the criteria the Secretary will utilize to

certify such agencies. HUD's regulations at 24 CFR part 111 establish

the requirements for the Fair Housing Assistance Program (FHAP),

through which HUD provides assistance to certified fair housing

enforcement agencies. This interim rule consolidates parts 111 and 115,

thus providing all necessary requirements in a single part and

eliminating unnecessary or repetitive regulatory provisions.

DATES: Effective date: March 29, 1996.

Comments due date: April 29, 1996.

ADDRESSES: Interested persons are invited to submit comments regarding

the interim rule to the Office of the General Counsel, Rules Docket

Clerk, Room 10276, Department of Housing and Urban Development, 451

Seventh Street, SW, Washington, DC 20410-0500. Communications should

refer to the above docket number and title. Facsimile (FAX) comments

are not acceptable. A copy of each communication submitted will be

available for public inspection and copying during regular business

hours (7:30 a.m. to 5:30 p.m. Eastern Time) at the above address.

FOR FURTHER INFORMATION CONTACT: Marcella Brown, Director, Fair Housing

Assistance Program Division, Office of Fair Housing and Equal

Opportunity, Room 5218, Department of Housing and Urban Development,

451 Seventh Street, SW, Washington, DC 20410, telephone (202) 708-0455.

Hearing- or speech-impaired individuals may call HUD's TDD number (202)

708-0113 or 1-800-877-8339 (Federal Information Relay Service TDD).

(Except for the ``800'' number, these are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

I. Background

The Fair Housing Act (42 U.S.C. 3600-3620) (the Act) provides that

whenever a complaint alleges a discriminatory housing practice, arising

in the jurisdiction of a State or local agency which has been certified

by the Secretary under section 810(f) of the Act, HUD shall refer the

complaint to that State or local agency. HUD has implemented section

810(f) at 24 CFR part 115, which establishes the criteria the Secretary

will utilize to certify State and local fair housing enforcement

agencies.

Section 817 of the Act provides that the Secretary may reimburse

State and local fair housing enforcement agencies which assist the

Secretary in enforcing the Act. HUD has implemented section 817 at 24

CFR part 111, which sets forth the requirements for the Fair Housing

Assistance Program (FHAP). Through the FHAP, HUD provides assistance to

certified State and local fair housing enforcement agencies. This

assistance is designed to provide support for complaint processing,

training, technical assistance, data and information systems, and other

fair housing projects.

Pursuant to President Clinton's memorandum of March 4, 1995,

Regulatory Reinvention, HUD conducted a comprehensive, page-by-page

review of its regulations. This interim rule marks another step in

HUD's continuing efforts to streamline, update and generally improve

its regulations. Specifically, the rule consolidates parts 111 and 115,

thus providing all necessary requirements for certification and FHAP

participation in part 115. This interim rule also eliminates burdensome

or redundant regulatory provisions currently located in parts 111 and

115. The Department welcomes comments on how this interim rule may be

made more understandable and less burdensome.

II. Justification for Interim Rulemaking

It is HUD's policy to publish rules for public comment before their

issuance for effect, in accordance with its own regulations on

rulemaking found at 24 CFR part 10. However, part 10 provides that

prior public comment will be omitted if HUD determines that it is

``impracticable, unnecessary, or contrary to the public interest'' (24

CFR 10.1). HUD finds that in this case prior public comment is contrary

to the public interest, since immediate implementation of this interim

rule will benefit the public. Specifically, this interim rule will

assist FHAP participants by providing all necessary requirements in a

single part and eliminating burdensome and redundant provisions.

Further, the streamlining amendments made by this interim rule will

allow HUD to administer the FHAP in a more efficient manner, thus

strengthening its ability to enforce the Fair Housing Act.

III. Other Matters

A. Environmental Impact

This rulemaking does not have an environmental impact. This

rulemaking simply amends an existing regulation by consolidating and

streamlining provisions and does not alter the environmental effect of

the regulations being amended. A Finding of No Significant Impact with

respect to the environment was made in accordance with HUD regulations

in 24 CFR part 50 that implement section 102(2)(C) of the National

Environmental Policy Act of 1969 (42 U.S.C. 4332) at the time of

development of regulations implementing Section 214 of the Housing and

Community Development Act of 1980. That Finding remains applicable to

this rule, and is available for public inspection between 7:30 a.m. and

5:30 p.m. weekdays in the Office of the Rules Docket Clerk, room 10276,

Department of Housing and Urban Development, 451 Seventh Street, SW,

Washington, DC 20410-0500.

B. 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 interim 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. This

interim rule merely consolidates in a single part the requirements for

``substantially equivalent'' certification and participation in the

FHAP. It effects no changes in the current relationships between the

Federal government, the States and their political subdivisions in

connection with HUD programs.

C. Executive Order 12606, the Family

The General Counsel, as the Designated Official under Executive

[[Page 7675]]

Order 12606, The Family, has determined that this interim rule will not

have a potential significant impact on family formation, maintenance,

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

Order. This interim rule only affects State and local fair housing

enforcement agencies which seek certification under section 810(f) of

the Act and participation in the FHAP. No significant change in

existing HUD policies or programs will result from promulgation of this

interim rule, as those policies and programs relate to family concerns.

D. Regulatory Flexibility Act

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

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

doing certifies that this interim rule will not have a significant

economic impact on a substantial number of small entities.

List of Subjects

24 CFR Part 111

Fair housing, Grant programs--housing and community development,

Reporting and recordkeeping requirements.

24 CFR Part 115

Administrative practice and procedure, Aged, Fair housing,

Individuals with disabilities, Intergovernmental relations, Mortgages,

Reporting and recordkeeping requirements.

Accordingly, under the authority at 42 U.S.C. 3535(d) 24 CFR parts

111 and 115 are amended as follows:

PART 111--[REMOVED]

1. Part 111 is removed.

2. Part 115 is revised to read as follows:

PART 115--CERTIFICATION AND FUNDING OF STATE AND LOCAL FAIR HOUSING

ENFORCEMENT AGENCIES

Subpart A--General

Sec.

115.100 Definitions.

115.101 Program administration.

115.102 Public notices.

Subpart B--Certification of Substantially Equivalent Agencies

115.200 Purpose.

115.201 Basis of determination.

115.202 Criteria for Adequacy of Law.

115.203 Performance standards.

115.204 Consequences of Certification.

115.205 Technical assistance.

115.206 Request for certification.

115.207 Procedure for interim certification.

115.208 Suspension of interim certification.

115.209 Denial of interim certification.

115.210 Procedure for certification.

115.211 Suspension of certification.

115.212 Withdrawal of certification.

Subpart C--Fair Housing Assistance Program (FHAP)

115.300 Purpose.

115.301 Agency eligibility criteria.

115.302 Capacity Building Funds.

115.303 Eligible activities for Capacity Building Funds.

115.304 Agencies eligible for contributions funds.

115.305 Special Enforcement Effort (SEE) funds.

115.306 Training funds.

115.307 Additional requirements for participation in the FHAP.

115.308 Standards for FHAP program review.

115.309 Reporting and recordkeeping requirements.

115.310 Subcontracting under the FHAP.

115.311 Corrective and remedial action.

Authority: 42 U.S.C. 3600-3620 and 3535(d).

Subpart A--General

Sec. 115.100 Definitions.

(a) The terms ``Fair Housing Act'' and ``HUD'', as used in this

part, are defined in 24 CFR 5.100.

(b) The terms ``Aggrieved person'', ``Complainant'',

``Conciliation'', ``Conciliation agreement'', ``Discriminatory housing

practice'', ``Dwelling'', ``Handicap'', ``Person'', ``Respondent'',

``Secretary'', and ``State'', as used in this part, are set forth in

section 802 of the Fair Housing Act.

(c) Other definitions. The following definitions also apply to this

part:

Act means the Fair Housing Act, as defined in 24 CFR 5.100.

Assistant Secretary means the Assistant Secretary for Fair Housing

and Equal Opportunity.

Certified Agency is an agency to which the Assistant Secretary for

Fair Housing and Equal Opportunity has granted interim certification or

certification, in accordance with the requirements of this part.

Cooperative Agreement is the assistance instrument HUD will use to

provide funds. The Cooperative Agreement will contain attachments and

appendices establishing requirements relating to the operation or

performance of the agency.

Cooperative Agreement Officer (CAO) is the administrator of the

funds awarded pursuant to this part and is the Director of a Fair

Housing Enforcement Center in the Office of Fair Housing and Equal

Opportunity.

Director of FHEO means a Director of a Fair Housing Enforcement

Center.

Dual-Filed Complaint means a housing discrimination complaint which

has been filed with both the Fair Housing Enforcement Center and the

certified agency.

FHEO means the Office of Fair Housing and Equal Opportunity.

FHAP means the Fair Housing Assistance Program.

Sec. 115.101 Program administration.

(a) Authority and Responsibility. The Secretary has delegated the

authority and responsibility for administering this part to the

Assistant Secretary.

(b) Delegation of Authority. The Assistant Secretary delegates the

authority and responsibility for administering this part to each

Director of a Fair Housing Enforcement Center. However, with respect to

the duties and responsibilities for administering subpart B of this

part, the Assistant Secretary retains the right to make final decisions

concerning the granting and maintenance of substantial equivalency

certification and interim certification.

Sec. 115.102 Public notices.

(a) Periodically, the Assistant Secretary will publish the

following public notices in the Federal Register:

(1) A list of all agencies which have interim certification or

certification; and

(2) A list of agencies to which a notice of denial of interim

certification has been issued or for which withdrawal of certification

is being proposed.

(b) The Assistant Secretary will publish in the Federal Register a

notice soliciting public comment before granting certification to a

State or local agency. The notice will invite the public to comment on

the relevant State and local laws, as well as on the performance of the

agency in enforcing its law. All comments will be considered before a

final decision on certification is made.

Subpart B--Certification of Substantially Equivalent Agencies

Sec. 115.200 Purpose.

This subpart implements section 810(f) of the Fair Housing Act. The

purpose of this subpart is to set forth:

(a) The basis for agency interim certification and certification;

(b) The procedure by which a determination to certify is made by

the Assistant Secretary;

(c) The basis and procedures for denial of interim certification;

(d) The basis and procedures for withdrawal of certification;

(e) The consequences of certification;

(f) The basis and procedures for suspension of interim

certification or certification; and

(g) The funding criteria for interim certified and certified

agencies.

[[Page 7676]]

Sec. 115.201 Basis of determination.

A determination to certify an agency as substantially equivalent

involves a two-phase procedure. The determination requires examination

and an affirmative conclusion by the Assistant Secretary on two

separate inquiries:

(a) Whether the law, administered by the agency, on its face,

satisfies the criteria set forth in section 810(f)(3)(A) of the Act;

and

(b) Whether the current practices and past performance of the

agency demonstrate that, in operation, the law in fact provides rights

and remedies which are substantially equivalent to those provided in

the Act.

Sec. 115.202 Criteria for Adequacy of Law.

(a) In order for a determination to be made that a State or local

fair housing agency administers a law which, on its face, provides

rights and remedies for alleged discriminatory housing practices that

are substantially equivalent to those provided in the Act, the law or

ordinance must:

(1) Provide for an administrative enforcement body to receive and

process complaints and provide that:

(i) Complaints must be in writing;

(ii) Upon the filing of a complaint the agency shall serve notice

upon the complainant acknowledging the filing and advising the

complainant of the time limits and choice of forums provided under the

law;

(iii) Upon the filing of a complaint the agency shall promptly

serve notice on the respondent or person charged with the commission of

a discriminatory housing practice advising of his or her procedural

rights and obligations under the law or ordinance together with a copy

of the complaint;

(iv) A respondent may file an answer to a complaint.

(2) Delegate to the administrative enforcement body comprehensive

authority, including subpoena power, to investigate the allegations of

complaints, and power to conciliate complaints, and require that:

(i) The agency commence proceedings with respect to the complaint

before the end of the 30th day after receipt of the complaint;

(ii) The agency investigate the allegations of the complaint and

complete the investigation within the time-frame established by section

810(a)(1)(B)(iv) of the Act or comply with the notification

requirements of section 810(a)(1)(C) of the Act.

(iii) The agency make final administrative disposition of a

complaint within one year of the date of receipt of a complaint, unless

it is impracticable to do so. If the agency is unable to do so it shall

notify the parties, in writing, of the reasons for not doing so;

(iv) Any conciliation agreement arising out of conciliation efforts

by the agency shall be an agreement between the respondent, the

complainant, and the agency and shall require the approval of the

agency;

(v) Each conciliation agreement shall be made public unless the

complainant and respondent otherwise agree and the agency determines

that disclosure is not required to further the purposes of the law or

ordinance.

(3) Not place any excessive burdens on the complainant that might

discourage the filing of complaints, such as:

(i) A provision that a complaint must be filed within any period of

time less than 180 days after an alleged discriminatory housing

practice has occurred or terminated;

(ii) Anti-testing provisions;

(iii) Provisions that could subject a complainant to costs,

criminal penalties or fees in connection with filing of complaints.

(4) Not contain exemptions that substantially reduce the coverage

of housing accommodations as compared to section 803 of the Act.

(5) Provide the same protections as those afforded by sections 804,

805, 806, and 818 of the Act, consistent with HUD's implementing

regulations found at 24 CFR part 100.--

(i) As used in section 804(f)(3)(C) of the Act, the term ``covered

multifamily dwellings'' means buildings consisting of four or more

units if such buildings have one or more elevators and ground floor

units in other buildings consisting of four or more units.

(ii) The law or ordinance administered by the State or local fair

housing agency may provide that compliance with the appropriate

requirements of the American National Standard for buildings and

facilities providing accessibility and usability for physically

handicapped people (commonly cited as ``ANSI A117.1-1986'') suffices to

satisfy the requirements of section 804(f)(3)(C)(iii) of the Act.

(b) In addition to the factors described in paragraph (a) of this

section, the provisions of the State or local law must afford

administrative and judicial protection and enforcement of the rights

embodied in the law.

(1) The agency must have authority to:

(i) Grant or seek prompt judicial action for appropriate temporary

or preliminary relief pending final disposition of a complaint if such

action is necessary to carry out the purposes of the law or ordinance;

(ii) Issue and seek enforceable subpoenas;

(iii) Grant actual damages in an administrative proceeding or

provide adjudication in court at agency expense to allow the award of

actual damages to an aggrieved person;

(iv) Grant injunctive or other equitable relief, or be specifically

authorized to seek such relief in a court of competent jurisdiction;

(v) Provide an administrative proceeding in which a civil penalty

may be assessed or provide an adjudication in court at agency expense,

allowing the assessment of punitive damages against the respondent.

(2) Agency actions must be subject to judicial review upon

application by any party aggrieved by a final agency order.

(3) Judicial review of a final agency order must be in a court with

authority to grant to the petitioner, or to any other party, such

temporary relief, restraining order, or other order as the court

determines is just and proper; affirm, modify, or set aside, in whole

or in part, the order, or remand the order for further proceedings; and

enforce the order to the extent that the order is affirmed or modified.

(c) The requirement that the state or local law prohibit

discrimination on the basis of familial status does not require that

the state or local law limit the applicability of any reasonable local,

state or Federal restrictions regarding the maximum number of occupants

permitted to occupy a dwelling.

(d) The state or local law may assure that no prohibition based on

discrimination because of familial status applies to housing for older

persons substantially as described in 24 CFR part 100, subpart E.

(e) A determination of the adequacy of a state or local fair

housing law ``on its face'' is intended to focus on the meaning and

intent of the text of the law, as distinguished from the effectiveness

of its administration. Accordingly, this determination is not limited

to an analysis of the literal text of the law but must take into

account all relevant matters of state or local law. Regulations,

directives, rules of procedure, judicial decisions, or interpretations

of the fair housing law by competent authorities will be considered in

making this determination.

(f) A law will be found inadequate ``on its face'' if it permits

any of the agency's decision-making authority to be contracted out or

delegated to a non-governmental authority. For the

[[Page 7677]]

purposes of this paragraph, ``decision-making authority'' shall

include:

(1) Acceptance of the complaint;

(2) Approval of the conciliation agreement;

(3) Dismissal of a complaint;

(4) Any action specified in Secs. 115.202(a)(2)(iii) or

115.202(b)(1); and

(5) Any decision-making regarding whether the matter will or will

not be pursued.

(g) The state or local law must provide for civil enforcement of

the law or ordinance by an aggrieved person by the commencement of an

action in an appropriate court at least one year after the occurrence

or termination of an alleged discriminatory housing practice. The court

must be empowered to:

(1) Award the plaintiff actual and punitive damages;

(2) Grant as relief, as it deems appropriate, any temporary or

permanent injunction, temporary restraining order or other order;

(3) Allow reasonable attorney's fees and costs.

Sec. 115.203 Performance standards.

A state or local fair housing enforcement agency must meet all of

the performance standards listed below in order to obtain or maintain

certification.

(a) Engage in timely, comprehensive and thorough fair housing

complaint investigation, conciliation and enforcement activities. The

performance assessment will consider the following to determine the

effectiveness of an agency's fair housing complaint processing,

consistent with such guidance as may be issued by HUD:

(1) The agency's case processing procedures;

(2) The thoroughness of the agency's case processing;

(3) A review of cause and no cause determinations for quality of

investigations and consistency with appropriate standards;

(4) A review of conciliation agreements and other settlements; and

(5) A review of the agency's administrative closures; and

(6) A review of the agency's enforcement procedures.

(b)(1) Commence proceedings with respect to a complaint:

(i) Before the end of the 30th day after receipt;

(ii) Carry forward such proceedings with reasonable promptness;

(iii) Make final administrative disposition within one year; and

(iv) Within 100 days of receipt of the complaint complete the

identified proceedings.

(2) To meet this standard, the performance assessment will consider

the timeliness of the agency's actions with respect to its complaint

processing, including, but not limited to:

(i) Whether the agency began its processing of fair housing

complaints within 30 days of receipt;

(ii) Whether the agency completes the investigative activities with

respect to a complaint within 100 days from the date of receipt or, if

it is impracticable to do so, notifies the parties in writing of the

reason(s) for the delay;

(iii) Whether the agency administratively disposes of a complaint

within one year from the date of receipt or, if it is impracticable to

do so, notifies the parties in writing of the reasons for the delay;

and

(iv) Whether the agency completed the investigation of the

complaint and prepared a complete final investigative report.

(3) The performance assessment will also consider documented

conciliation attempts and activities and a review of the bases for

administrative disposition of complaints.

(c) Conduct compliance reviews of settlements, conciliation

agreements and orders issued by or entered into to resolve

discriminatory housing practices. The performance assessment will

include, but not be limited to:

(1) An assessment of the agency's procedures for conducting

compliance reviews;

(2) Terms and conditions of agreements and orders issued;

(3) application of its authority to seek actual damages, as

appropriate; and

(4) Application of its authority to seek and assess civil penalties

or punitive damages.

(d) Consistently and affirmatively seek and obtain the type of

relief designed to prevent recurrences of such practices. The

performance assessment will include, but not be limited to:

(1) An assessment of the types of relief sought and obtained by the

agency with consideration of the inclusion of affirmative provisions

designed to protect the public interest;

(2) The adequacy of the disposition of the complaint;

(3) The relief sought and awarded;

(4) The number of complaints closed with relief and the number

closed without relief; and

(5) Whether all the issues and bases were investigated adequately

and appropriately disposed of.

(e) Consistently and affirmatively seek the elimination of all

prohibited practices under its fair housing law. An assessment under

this standard will include, but not be limited to:

(1) A discussion and confirmation of the law or ordinance

administered by the agency;

(2) The identification of any amendments, court decisions or other

rulings or documentation that may affect the agency's ability to carry

out provisions of its fair housing law or ordinance;

(3) Identification of the education and outreach efforts of the

agency; and

(4) Identification and discussion of any special requirements of

the fair housing law or ordinance.

Sec. 115.204 Consequences of Certification.

(a) Whenever a complaint received by the Assistant Secretary

alleges violations of a state or local fair housing law or ordinance

administered by an agency that has been certified as substantially

equivalent, the complaint will be referred to the agency, and no

further action shall be taken by the Assistant Secretary with respect

to such complaint except as provided for by the Act, this part, 24 CFR

part 103, subpart C, and any written agreements executed by the Agency

and the Assistant Secretary.

(b) If HUD determines that a complaint has not been processed in a

timely manner in accordance with the performance standards set forth in

Sec. 115.203, HUD may reactivate the complaint, conduct its own

investigation and conciliation efforts, and make a determination

consistent with 24 CFR part 103.

(c) Notwithstanding paragraph (a) of this section, whenever the

Assistant Secretary has reason to believe that a complaint demonstrates

a basis for the commencement of proceedings against any respondent

under section 814(a) of the Act or for proceedings by any governmental

licensing or supervisory authorities, the Assistant Secretary shall

transmit the information upon which such belief is based to the

Attorney General, Federal financial regulatory agencies, other Federal

agencies, or other appropriate governmental licensing or supervisory

authorities.

Sec. 115.205 Technical assistance.

(a) The Assistant Secretary, through the FHEO Field Office, may

provide technical assistance to the agencies. The agency may request

such technical assistance or the FHEO Field Office may determine the

necessity for technical assistance and require the agency's cooperation

and participation.

(b) The Assistant Secretary, through FHEO Headquarters or Field

staff, will require that the agency participate in training conferences

and seminars that will enhance the agency's ability to process

complaints alleging discriminatory housing practices.

[[Page 7678]]

Sec. 115.206 Request for certification.

(a) A request for certification under this subpart B shall be filed

with the Assistant Secretary by the State or local official having

principal responsibility for administration of the State or local fair

housing law. The request shall be supported by the following materials

and information:

(1) The text of the jurisdiction's fair housing law, the law

creating and empowering the agency, any regulations and directives

issued under the law, and any formal opinions of the State Attorney

General or the chief legal officer of the jurisdiction that pertain to

the jurisdiction's fair housing law.

(2) Organizational information of the agency responsible for

administering and enforcing the law.

(3) Funding and personnel made available to the agency for

administration and enforcement of the fair housing law during the

current operating year, and not less than the preceding three operating

years (or such lesser number during which the law was in effect).

(4) If available, data demonstrating that the agency's current

practices and past performance comply with the performance standards

described in Sec. 115.203.

(5) Any additional information which the submitting official may

wish to be considered.

(b) The request and supporting materials shall be filed with the

Assistant Secretary for Fair Housing and Equal Opportunity, Department

of Housing and Urban Development, 451 7th Street, SW., Washington, DC

20410. A copy of the request and supporting materials will be kept

available for public examination and copying at:

(1) The office of the Assistant Secretary; and

(2) The HUD Field Office in whose jurisdiction the State or local

jurisdiction seeking recognition is located; and

(3) The office of the State or local agency charged with

administration and enforcement of the State or local law.

Sec. 115.207 Procedure for interim certification.

(a) Upon receipt of a request for certification filed under

Sec. 115.206 of this part, the Assistant Secretary may request further

information necessary for a determination to be made under this

section. The Assistant Secretary may consider the relative priority

given to fair housing administration, as compared to the agency's other

duties and responsibilities, as well as the compatibility or potential

conflict of fair housing objectives with these other duties and

responsibilities.

(b) Interim certification. If the Assistant Secretary determines,

after application of the criteria set forth in Sec. 115.202 that the

State or local law or ordinance, on its face, provides substantive

rights, procedures, remedies, and judicial review procedures for

alleged discriminatory housing practices that are substantially

equivalent to those provided in the Act, the Assistant Secretary may

offer to enter into an Agreement for the Interim Referral of Complaints

and Other Utilization of Services (Interim Agreement). The interim

agreement will outline the procedures and authorities upon which the

interim certification is based.

(c) Such interim agreement, after it is signed by all appropriate

signatories, will result in the agency receiving interim certification.

(d)(1) Interim agreements shall be for a term of no more than three

years. The Assistant Secretary, through the FHEO Field Office, will

conduct one or more on-site assessments to determine whether the agency

administers its fair housing law or ordinance in a manner that is

substantially equivalent to the Act.

(2) Performance Improvement Plan. If the agency is not

administering its law or ordinance in a manner that is substantially

equivalent, the Assistant Secretary, may, but need not, offer a

Performance Improvement Plan (PIP) to the agency. The PIP will outline

the agency's deficiencies, identify necessary corrective actions, and

include a timetable for completion.

(3) If the agency receives a PIP, funding under the FHAP may be

suspended for the duration of the PIP. Once the agency has implemented

corrective actions to eliminate the deficiencies, and such corrective

actions are accepted by the Assistant Secretary, funding may be

reinstated.

Sec. 115.208 Suspension of interim certification.

(a)(1) The Assistant Secretary will suspend the agency's interim

certification if the Assistant Secretary has reason to believe that the

State or locality may have limited the effectiveness of the agency's

implementation of the fair housing law or ordinance by:

(i) Amending the fair housing law or ordinance;

(ii) Adopting rules or procedures concerning the fair housing law

or ordinance; or

(iii) Issuing judicial or other authoritative interpretations of

the fair housing law or ordinance.

(2) If the Assistant Secretary suspends interim certification under

paragraph (a)(1) of this section, such suspension will remain in effect

until the Assistant Secretary conducts a review of the changes in

language and/or interpretation and determines whether the law or

ordinance remains substantially equivalent to the Act on its face or in

its operations.

(i) If the Assistant Secretary determines that, notwithstanding the

actions taken by the State or locality as described in paragraph (a)(1)

of this section, the law or ordinance remains substantially equivalent

on its face and in operation to the Act, the Assistant Secretary will

rescind the suspension and reinstate the agency's interim certification

and/or recommend the agency for certification. HUD will provide

reimbursement for cases processed during the period of the suspension.

(ii) If the Assistant Secretary determines that the actions taken

by the State or locality do limit the agency's effectiveness interim

certification will be denied pursuant to Sec. 115.209.

(b)(1) The Assistant Secretary will suspend the interim

certification of an agency charged with the administration of a fair

housing law or ordinance if the Assistant Secretary has reason to

believe that the agency's performance does not comply with the criteria

set forth by this part. Such suspension shall not exceed 180 days.

(2) If the agency is suspended pursuant to paragraph (b) of this

section, the FHEO Field Office will not provide payment for complaints

processed within that period of time unless and until the Assistant

Secretary determines that the agency is fully in compliance with

Sec. 115.203. The FHEO Field Office will provide technical assistance

to the agency during this period of time.--

(i) During the period of a suspension the Assistant Secretary shall

not refer complaints to the agency.

(ii) Suspension under this section also renders the agency

ineligible to receive Fair Housing Assistance Program Funds under

subpart C of this part, pending correction of the deficiencies by the

agency.

(3) Before the end of the suspension, a final performance

assessment will be provided to the Assistant Secretary upon which a

determination will be made as to the adequacy of the agency's

performance.

[[Page 7679]]

Sec. 115.209 Denial of interim certification.

(a) If the Assistant Secretary determines, after application of the

criteria set forth in this Part that the State and local law or

ordinance, on its face or in its operation, does not provide

substantive rights, procedures, remedies, and availability of judicial

review for alleged discriminatory housing practices which are

substantially equivalent to those provided in the Fair Housing Act, the

Assistant Secretary shall inform the State or local official in writing

of the reasons for that determination.

(b) The agency, within 20 days from the date of the receipt of this

notice, may submit, in writing, any opposition to the planned denial of

Interim Certification to the Assistant Secretary. The Assistant

Secretary will evaluate all pertinent written comments, information,

and documentation. If, after reviewing all materials submitted by the

agency, the Assistant Secretary is still of the opinion that interim

certification should be denied, the Assistant Secretary will inform the

agency in writing of that determination.

(c) If the agency does not, within 20 days of receipt of the

Assistant Secretary's notice of denial of interim certification, make a

request of the Assistant Secretary under paragraph (b) of this section

to submit additional data, views, or comments, no further action shall

be required of the Assistant Secretary and denial of interim

certification shall occur.

Sec. 115.210 Procedure for certification.

(a)(1) Certification. If the Assistant Secretary determines, after

application of the criteria set forth in Secs. 115.202, 115.203 and

this section, that the State or local law or ordinance, both ``on its

face'' and ``in operation,'' provides substantive rights, procedures,

remedies, and judicial review procedures for alleged discriminatory

housing practices that are substantially equivalent to those provided

in the Act, the Assistant Secretary may enter into a Memorandum of

Understanding (MOU) with the agency. The MOU is a written agreement

providing for the referral of complaints to the agency and for

communication procedures between the agency and HUD that are adequate

to permit the Assistant Secretary to monitor the agency's continuing

substantial equivalency certification. A MOU, after it is signed by all

appropriate signatories, may authorize an agency to be a certified

agency for a period of not more than five years.

(2) Performance Improvement Plan. If the agency is not

administering its law or ordinance in a manner that is substantially

equivalent, the Assistant Secretary, may, but need not, offer a

Performance Improvement Plan (PIP) to the agency. The PIP will outline

the agency's deficiencies, identify necessary corrective actions, and

include a timetable for completion.

(3) If the agency receives a PIP, funding under the FHAP may be

suspended for the duration of the PIP. Once the agency has implemented

corrective actions to eliminate the deficiencies, and such corrective

actions are accepted by the Assistant Secretary, funding may be

reinstated.

(b) The Assistant Secretary shall annually assess the performance

of an agency to determine whether it continues to qualify for

certification under this part. If the Assistant Secretary affirmatively

concludes that the agency's law and performance have complied with the

requirements of this part in each of the five years, the Assistant

Secretary may offer the agency an updated Memorandum of Understanding.

(c) An agency shall receive interim certification prior to

receiving certification.

Sec. 115.211 Suspension of certification.

(a)(1) The Assistant Secretary will suspend the agency's

certification if the Assistant Secretary has reason to believe that the

State or locality may have limited the effectiveness of the agency's

implementation of the fair housing law or ordinance by:

(i) Amending the fair housing law or ordinance;

(ii) Adopting rules or procedures concerning the fair housing law

or ordinance; or

(iii) Issuing judicial or other authoritative interpretations of

the fair housing law or ordinance.

(2) If the Assistant Secretary suspends certification under

paragraph (a)(1) of this section, such suspension will remain in effect

until the Assistant Secretary conducts a review of the changes in

language and/or interpretation and determines whether the law or

ordinance remains substantially equivalent on its face and in its

operation to the Act.--

(i) If the Assistant Secretary determines that the law or ordinance

remains substantially equivalent on its face and in operation to the

Act, the Assistant Secretary will rescind the suspension and reinstate

the agency's interim certification and/or recommend the agency for

certification. HUD will provide reimbursement for cases processed

during the period of the suspension.

(ii) If the Assistant Secretary determines that the actions taken

by the State or locality do limit the agency's effectiveness,

certification will be withdrawn pursuant to Sec. 115.212.

(b)(1) The Assistant Secretary will suspend the certification of an

agency charged with the administration of a fair housing law or

ordinance, if the Assistant Secretary has reason to believe that the

agency's performance does not comply with the criteria set forth by

this part. Such suspension shall not exceed 180 days.

(2) If the agency is suspended pursuant to paragraph (b) of this

section, the FHEO Field Office will not provide payment for complaints

processed within that period of time unless and until the Assistant

Secretary determines that the agency is fully in compliance with

115.202 of this part. The FHEO Field Office will provide technical

assistance to the agency during this period of time.--

(i) During the period of a suspension the Assistant Secretary shall

not refer complaints to the agency.

(ii) Suspension under this section also renders the agency

ineligible to receive Fair Housing Assistance Program Funds under

subpart C of this part, pending correction of the deficiencies by the

agency.

(3) Before the end of the suspension, a final performance

assessment will be provided to the Assistant Secretary upon which a

determination will be made as to the adequacy of the agency's

performance.

Sec. 115.212 Withdrawal of certification.

(a) If the Assistant Secretary finds, as a result of a review

undertaken in accordance with this part, that the agency's fair housing

law or ordinance no longer meets the requirements of this part, the

Assistant Secretary shall propose to withdraw the certification

previously granted.

(b) The Assistant Secretary will propose withdrawal of

certification under paragraph (a) of this section unless further review

and information or documentation establishes that the current law and/

or the agency's administration of the law meets the criteria set out in

this part.

(c) If the Assistant Secretary determines, after application of the

criteria set forth in this Part, that the state or local law or

ordinance, in operation, does not provide substantive rights,

procedures, remedies, and availability of judicial review for alleged

discriminatory housing practices which are substantially equivalent to

those provided in the Fair Housing Act, the Assistant Secretary shall

inform the

[[Page 7680]]

State or local official in writing of the reasons for that

determination.

Subpart C--Fair Housing Assistance Program (FHAP)

Sec. 115.300 Purpose.

The purpose of the Fair Housing Assistance Program (FHAP) is to

provide assistance to State and local fair housing enforcement

agencies. The intent of this funding program is to build a coordinated

intergovernmental enforcement effort to further fair housing and to

encourage the agencies to assume a greater share of the responsibility

for the administration and enforcement of their fair housing laws and

ordinances. This financial assistance is designed to provide support

for:

(a) The processing of dual-filed complaints;

(b) Training under the Fair Housing Act and the agencies' fair

housing law;

(c) The provision of technical assistance;

(d) The creation and maintenance of data and information systems;

and

(e) The development and enhancement of other fair housing

enforcement projects.

Sec. 115.301 Agency eligibility criteria.

Any agency with certification or interim certification under

subpart A of this part, and which has entered into a MOU or interim

agreement, is eligible to participate in the FHAP.

Sec. 115.302 Capacity Building Funds.

(a) Capacity Building Funds (CBF) are funds that HUD may provide to

an agency with interim certification during the agency's first three

years of participation in the FHAP. Agencies receiving CBF are not

eligible to receive contributions funds under Sec. 115.304.

(b) Capacity Building Funds will be provided in a fixed annual

amount to be utilized for the eligible activities established pursuant

to Sec. 115.303. However, in the second and third year of the agency's

participation in the FHAP, HUD has the option to permit the agency to

receive Capacity Building funding on a per case basis, rather than in a

single annual amount.

(c) In order to receive capacity building funds, agencies will be

required to submit a statement of work which identifies:

(1) The objectives and activities to be carried out with the CBFs

received;

(2) A plan for training all of the agency's employees involved in

the administration of the agency's fair housing law or ordinance;

(3) A statement of the agency's intention to participate in HUD-

sponsored training in accordance with the training requirements set out

in the cooperative agreement;

(4) A description of the agency's complaint processing data and

information system or, alternatively, whether the agency plans to use

capacity building funds to purchase and install a data system; and

(5) A description of any other fair housing activities that the

agency will undertake with its capacity building funds.--

(i) All such activities must address matters affecting fair housing

enforcement which are cognizable under the Fair Housing Act. Any

activities which do not address the implementation of the agency's fair

housing law or ordinance, and which are therefore not cognizable under

the Fair Housing Act, will be disapproved.

(ii) Reserved.

Sec. 115.303 Eligible activities For Capacity Building Funds.

The primary purposes of capacity building funding is to provide for

complaint activities and to support activities that produce increased

awareness of fair housing rights and remedies. All such activities must

support the agency's administration of its fair housing law or

ordinance and address matters affecting fair housing which are

cognizable under the Fair Housing Act. HUD will periodically publish a

list of eligible activities in the Federal Register.

Sec. 115.304 Agencies Eligible for Contributions Funds.

(a) An agency that has received Capacity Building Funds for three

consecutive years is eligible for contributions funding. Contributions

funding consists of three categories:

(1) Complaint Processing (CP) Funds;

(2) Administrative Costs (AC) Funds; and

(3) Special Enforcement Efforts (SEE) Funds (Sec. 115.305 sets

forth the requirements for SEE funding).

(b) Complaint Processing Funds. (1) Agencies receiving CP funds

will receive such support based solely on the number of complaints

processed by the agency and accepted for payment by the Director of

FHEO during a consecutive, specifically identified, 12-month period.

Normally this period will be the previous year's funding cycle.

(2) Funding for agencies in their fourth year of participation in

the FHAP will be based on the number of complaints acceptably processed

by the agency during the agency's third year of participation in the

FHAP.

(c) Administrative Cost (AC) Funds. Agencies which acceptably

process 100 or more cases will receive no less than 10 percent of the

agency's annual FHAP payment amount for the preceding year, in addition

to case processing funds, contingent on fiscal year appropriations.

Agencies that acceptably process fewer than 100 cases will receive a

flat rate contingent on fiscal year appropriations.

(1) Agencies will be required to provide HUD with a statement of

how they intend to use the AC funds. HUD may require that some or all

AC funding be directed to activities designed to create, modify, or

improve local, regional, or national information systems concerning

fair housing matters (including the purchase of state of the art

computer systems and getting on line or internet access, etc.).

(2) [Reserved.]

Sec. 115.305 Special Enforcement Effort (SEE) funds.

(a) SEE funds are funds that HUD will provide to an agency to

enhance enforcement activities of the agency's fair housing law or

ordinance. SEE funds will be a maximum of 20% of the agency's total

FHAP cooperative agreement for the previous contract year, based on

approval of eligible activity or activities, and based on the

appropriation of funds. All agencies receiving contributions funds are

eligible to receive SEE funds if they meet three of the six criteria

set out below:

(1) The agency has taken action to enforce a subpoena or make use

of its prompt judicial action authority within the past year;

(2) The agency has held at least one administrative hearing or has

had at least one case on a court's docket for civil proceedings during

the past year;

(3) At least ten percent of the agency's fair housing caseload

resulted in written conciliation agreements providing monetary relief

for the complainant as well as remedial action, monitoring, reporting

and public interest relief provisions;

(4) The agency has had in the most recent three years, or is

currently handling, at least one major fair housing systemic

investigation requiring an exceptional amount of expenditure of funds;

(5) The agency's administration of its fair housing law or

ordinance received meritorious mention for its complaint processing or

other fair housing activities that were innovative; or

(6) The agency must have fully investigated 10 fair housing

complaints during the previous funding year.

(b) Notwithstanding the eligibility criteria set forth in paragraph

(a) of this section, an agency will be ineligible for

[[Page 7681]]

SEE funds if 20% or more of an agency's fair housing complaints result

in administrative closures.

(c) SEE funding amounts are subject to the FHAP appropriation by

Congress and will be described in writing in the cooperative agreements

annually. HUD will periodically publish a list of activities eligible

for SEE funding in the Federal Register.

Sec. 115.306 Training funds.

(a) All agencies are eligible to receive training funds. Training

funds are fixed amounts based on the number of agency employees to be

trained and shall be allocated based on the FHAP appropriation.

Training funds may be used only for HUD-approved or HUD-sponsored

training. Agency initiated training or other formalized training may be

included in this category. However, such training must first be

approved by the Cooperative Agreement Officer (CAO) and the Government

Technical Representative (GTR). Specifics on the amount of training

funds that an agency will receive and, if applicable, amounts that may

be deducted, will be set out in the cooperative agreement each year.

(b) All staff of the agency responsible for the administration of

the fair housing law or ordinance must participate in mandatory FHAP

training sponsored by HUD at the national and field office levels. If

the agency does not participate in the mandatory national and field

office HUD-sponsored training, training funds will be deducted from

their overall training amount.

Sec. 115.307 Additional requirements for participation in the FHAP.

(a) Agencies which participate in the FHAP must:

(1) Conform to reporting and record maintenance requirements

determined by the Assistant Secretary;

(2) Agree to on-site technical assistance and guidance and

implementation of corrective actions set out by the Department in

response to deficiencies found during the technical assistance or

performance assessment evaluations of the agency's operations;

(3) Agree to implement and adhere to policies and procedures (as

their laws and ordinances will allow) provided to the agencies by the

Assistant Secretary, including but not limited to guidance on

investigative techniques, case file preparation and organization,

implementation of data elements for complaint tracking, etc.;

(4) Spend at least twenty (20) percent of its total annual budget

on fair housing activities; and

(5) Not unilaterally reduce the level of financial resources

currently committed to fair housing complaint processing (budget and

staff reductions or other actions outside the control of the agency

will not, alone, result in a negative determination for the agency's

participation in the FHAP).

(b) The agency's refusal to provide information, assist in

implementation, or carry out the requirements of paragraph (a) of this

section may result in the denial or interruption of its receipt of FHAP

funds.

Sec. 115.308 Standards for FHAP program review.

HUD will conduct reviews of the agency's cooperative agreement

implementation. This review will also identify:

(a) How the agency used the FHAP funds received;

(b) Whether its draw-down of funds was timely;

(c) Whether the agency has been audited and received copies of the

audit reports in accordance with applicable rules and regulations for

State and local governmental entities; and

(d) If the agency complied with all certifications and assurances

required by HUD in the cooperative agreement.

Sec. 115.309 Reporting and recordkeeping requirements.

(a) The agency shall establish and maintain records demonstrating:

(1) Its financial administration of the FHAP funds; and

(2) Its performance under the FHAP.

(b) In accordance with the cooperative agreement in effect between

the agency and HUD, the agency will provide to HUD the agency reports

maintained pursuant to paragraph (a) of this section. The agency will

provide reports to HUD in accordance with the cooperative agreement in

effect between the agency and HUD for frequency and content, regarding

complaint processing, training, data and information systems,

enforcement and other activities explaining how FHAP funds were

expended and used.

(c) The agency will permit reasonable public access to its records,

consistent with the jurisdiction's requirements for release of

information. Documents relevant to the agency's participation in FHAP

must be made available at the agency's office during normal working

hours (except that documents with respect to ongoing fair housing

complaint investigations are exempt from public review consistent with

Federal and/or State law).

(d) The Secretary, the Inspector General of HUD, and the

Comptroller General of the United States, or any of their duly

authorized representatives, shall have access to all pertinent books,

accounts, reports, files, and other payments for surveys, audits,

examinations, excerpts, and transcripts as they relate to the agency's

participation in FHAP.

(e) All files will be kept in such fashion as to permit audits

under applicable procurement regulations and guidelines and the Single

Audit requirements for State and local agencies.

(f) The FHAP financial records and files will be kept at least

three years on-site after any cooperative agreement has terminated.

Sec. 115.310 Subcontracting under the FHAP.

If an agency subcontracts to a public or private agency any

activity for which the subcontractor will receive FHAP funds, the

agency must ensure and certify in writing that the subcontractor is:

(a) Using services and facilities that are accessible in accordance

with the Americans with Disability Act (ADA) (29 U.S.C. 706) and

Section 504 of the 1973 Rehabilitation Act (29 U.S.C. 792);

(b) Complying with the standards of Section 3 of the Housing and

Urban Development Act (12 U.S.C. 1701u); and

(c) Furthering fair housing.

Sec. 115.311 Corrective and remedial action.

(a) If HUD makes a preliminary determination that an agency has not

complied with Sec. 115.309, the agency will be given written notice of

this determination and an opportunity to show, through demonstrable

facts and data, that it has done so within a time prescribed by HUD.

(b) If an agency fails to demonstrate to HUD's satisfaction that it

has met program review standards, HUD will request the agency to submit

and comply with proposals for action to correct, mitigate, or prevent

performance deficiencies, including, but not limited to:

(1) Preparing and/or following a schedule of actions for carrying

out the affected fair housing activities;

(2) Establishing and/or following a management plan that assigns

responsibilities for carrying out the actions required;

(3) Canceling or revising activities likely to be affected by a

performance deficiency before expending FHAP funds for the activities;

and

(4) Redistributing or suspending disbursement of FHAP funds that

have not yet been disbursed.

(c) HUD may condition the use of FHAP award amounts with respect to

an agency's succeeding fiscal year's allocation on the satisfactory

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completion by the agency of appropriate corrective actions. When the

use of funds is so conditioned, HUD will specify the deficiency(ies),

the required corrective action(s), and the time allowed for taking

these actions. Failure of the agency to complete the actions as

specified will result in a reduction or withdrawal of the FHAP

allocation in an amount not to exceed the amount conditionally granted.

Dated: January 31, 1996.

Elizabeth K. Julian,

Acting Assistant Secretary for Fair Housing and Equal Opportunity.

[FR Doc. 96-4437 Filed 2-27-96; 8:45 am]

BILLING CODE 4210-28-P