Consolidated Drug Elimination Program Requirements for Assisted Housing and Public Housing

SUMMARY: This final rule consolidates and streamlines HUD's regulations

for the Assisted Housing Drug Elimination Program and the Public

Housing Drug Elimination Program. This rule is part of HUD's efforts to

comply with the President's regulatory reform initiatives. Since the

requirements for the two programs are very similar, this consolidation

will eliminate redundant and unnecessary provisions in HUD's

regulations.

EFFECTIVE DATE: April 29, 1996.

FOR FURTHER INFORMATION CONTACT: For questions concerning the Assisted

Housing Drug Elimination Program (AHDEP), contact: Michael E. Diggs,

Office of Multifamily Housing Programs, Office of Housing, Room 6130,

telephone number (202) 708-0614, ext. 2514.

For questions concerning the Public Housing Drug Elimination

Program (PHDEP), contact: Malcolm E. (Mike) Main, Crime Prevention and

Security Division, Office of Community Relations and Involvement,

Office of Public and Indian Housing, Room 4116, telephone (202) 708-

1197, ext. 4232.

The address for the above persons is: Department of Housing and

Urban Development, 451 Seventh Street, SW., Washington, DC 20410.

Hearing- or speech-impaired persons may call (800) 877-8339 (Federal

Information Relay Service TDD). (Except for the ``800'' number, these

telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Background

The Public Housing Drug Elimination Program was first authorized by

chapter 2, subtitle C, title V of the Anti-Drug Abuse Act of 1988 (42

U.S.C. 11901-11908). The purpose of the Drug Elimination Program is to

make grants for use in eliminating drug-related crime and the problems

associated with it. HUD first issued implementing regulations for this

program in 24 CFR part 961 on July 3, 1990 (55 FR 27598). Under this

original authorization, public housing agencies (PHAs) and Indian

housing authorities (IHAs) were eligible to apply for and receive

grants under the program. (IHAs and PHAs will be collectively referred

to as HAs.)

Section 581 of the National Affordable Housing Act (NAHA) (Pub. L.

101-625, approved November 28, 1990) amended the Public Housing Drug

Elimination Program in a number of ways, and HUD implemented these

amendments through a final rule published on January 7, 1993 (58 FR

3160). As described in the preamble to the January 7, 1993 final rule,

that rule also implemented two amendments to the program from the

Housing and Community Development Act of 1992 (Pub. L. 102-550,

approved October 28, 1992).

In addition to enhancing the Public Housing Drug Elimination

Program, the National Affordable Housing Act included the authorization

for the Assisted Housing Drug Elimination Program. Under the Assisted

Housing Program, HUD can provide grants to private for-profit and

nonprofit owners of Federally assisted low-income housing. For purposes

of the Assisted Housing Drug Elimination Program, NAHA also permits HUD

to establish other criteria, in addition to those applicable to the

Public Housing Drug Elimination Program, for the evaluation of funding

applications submitted by owners of Federally assisted low-income

housing. HUD issued a final rule implementing the Assisted Housing Drug

Elimination Program on January 26, 1995 (60 FR 5280). The January 26,

1995 final rule followed the regulations for the Public Housing Drug

Elimination Program very closely. The main difference from the Public

Housing Program's regulations reflected the flexibility in the

submission requirements and eligible activities provided by NAHA for

the Assisted Housing Program.

II. Regulatory Reinvention

In response to Executive Order 12866 and President Clinton's

memorandum of March 4, 1995 to all Federal departments and agencies on

the subject of regulatory reinvention, HUD has reviewed all its

regulations to determine whether certain regulations can be eliminated,

streamlined, or consolidated with other regulations. As part of this

review, HUD determined that the regulations for the Assisted Housing

Drug Elimination Program and the Public Housing Drug Elimination

Program are very similar, and HUD can consolidate them into one part.

Therefore, this final rule will consolidate the regulations in

parts 261 (Assisted Housing Drug Elimination Program) and 961 (Public

Housing Drug Elimination Program), into one set of regulations in part

761 (in chapter VII of title 24 of the Code of Federal Regulations

(CFR)). Chapter VII of HUD's regulations is an appropriate place for

the Drug Elimination Program regulations, since that chapter has

historically contained those regulations common to programs under the

authority of the Assistant Secretary for Housing--Federal Housing

Commissioner (such as the Assisted Housing Drug Elimination Program)

and to programs under the authority of the Assistant Secretary for

Public and Indian Housing (such as the Public Housing Drug Elimination

Program).

This final rule also streamlines the Drug Elimination Program

regulations to the extent possible. For example, some of the provisions

merely repeat language in the authorizing statute (42 U.S.C. 11901-

11908). It is unnecessary to maintain statutory requirements in the

CFR, since those requirements are otherwise fully accessible and

binding. Furthermore, if regulations contain statutory language, HUD

must amend the regulations whenever Congress amends the statute.

Therefore, this final rule will remove repetitious statutory language

and replace it with a citation to the specific statutory section for

easy reference.

This rule also removes information in the regulations that is

nonregulatory and would more appropriately appear in the separate

Notices of Funding Availability (NOFAs) for the two programs, such as

details about the selection criteria and examples of eligible

activities. This final rule streamlines the regulations to provide that

specific information on these topics will be included in the annual

NOFAs.

Specifically, this final rule accomplishes the following:

1. Consolidates the regulations from parts 261 and 961 into part

761;

2. Removes the definitions of terms that are either not used in the

regulations or are defined in the statute;

3. Removes the nonregulatory examples from the definition of

``program income'' and from the new Sec. 761.15--Applicants and

activities; and

4. Removes statutory language from the new Sec. 761.15--Applicants

and activities.

As a result of the streamlining efforts in this rule, HUD will

eliminate approximately 7 pages of unnecessary regulations from the

CFR.

[[Page 13987]]

II. Justification for Final Rulemaking

HUD generally publishes a rule for public comment before issuing a

rule for effect, in accordance with HUD's regulations on rulemaking

found in 24 CFR part 10. However, part 10 provides for exceptions from

the general rule if the agency finds good cause to omit advance notice

and public participation. The good cause requirement is satisfied when

prior public procedure is ``impracticable, unnecessary, or contrary to

the public interest'' (24 CFR 10.1). HUD finds that good cause exists

to publish this rule for effect without first soliciting public

comment, in that prior public procedure is unnecessary. This final rule

merely consolidates and streamlines two sets of similar regulations; it

does not change HUD's policies or substantive requirements.

III. Other Matters

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 rule will not have a significant economic

impact on a substantial number of small entities. This rule merely

streamlines regulations by removing unnecessary provisions. The rule

will have no adverse or disproportionate economic impact on small

businesses.

Environmental Impact

This rulemaking does not have an environmental impact. This

rulemaking simply amends existing regulations by consolidating and

streamlining provisions and does not alter the environmental effect of

the regulations being amended. Separate Findings of No Significant

Impact with respect to the environment were 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 initial development of the regulations for the Drug Elimination

Programs. The findings remain applicable to this rule, and are

available for public inspection between 7:30 a.m. and 5:30 p.m.

weekdays in the Office of the Rules Docket Clerk, Office of General

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

Seventh Street, SW, Washington, DC.

Executive Order 12612, Federalism

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

of Executive Order 12612, Federalism, has determined that this 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. No programmatic or policy changes

will result from this rule that would affect the relationship between

the Federal Government and State and local governments.

Executive Order 12606, The Family

The General Counsel, as the Designated Official under Executive

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

the potential for significant impact on family formation, maintenance,

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

Order. No significant change in existing HUD policies or programs will

result from promulgation of this rule.

List of Subjects

24 CFR Part 261

Drug abuse, Drug traffic control, Grant programs--housing and

community development, Grant programs--low and moderate income housing,

Reporting and recordkeeping requirements.

24 CFR Part 761

Drug abuse, Drug traffic control, Grant programs--housing and

community development, Grant programs--Indians, Grant programs--low and

moderate income housing, Indians, Public housing, Reporting and

recordkeeping requirements.

24 CFR Part 961

Drug abuse, Drug traffic control, Grant programs--housing and

community development, Grant programs--Indians, Grant programs--low and

moderate income housing, Indians, Public housing, Reporting and

recordkeeping requirements.

Accordingly, under the authority of 42 U.S.C. 3535(d), for the

reasons stated in the preamble, in title 24 of the Code of Federal

Regulations, parts 261 and 961 are removed, and part 761 is added as

follows:

PART 261--[REMOVED]

1. Part 261 is removed.

2. In chapter VII, the heading is revised to read as follows:

CHAPTER VII--OFFICE OF THE SECRETARY, DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT (HOUSING ASSISTANCE PROGRAMS AND PUBLIC AND INDIAN HOUSING

PROGRAMS)

3. A new part 761 is added to read as follows:

PART 761--DRUG ELIMINATION PROGRAMS

Subpart A--General

Sec.

761.1 Purpose and scope.

761.5 Public and Indian housing; encouragement of resident

participation.

761.10 Definitions.

Subpart B--Use of Grant Funds

761.15 Applicants and activities.

Subpart C--Application and Selection

761.20 Application selection and requirements.

761.25 Resident comments on grant application.

Subpart D--Grant Administration

761.30 Grant administration.

761.35 Periodic grantee reports.

761.40 Other Federal requirements.

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

Subpart A--General

Sec. 761.1 Purpose and scope.

This part 761 contains the regulatory requirements for the Assisted

Housing Drug Elimination Program and the Public Housing Drug

Elimination Program. The purposes of these programs are to:

(a) Eliminate drug-related crime and problems associated with it in

and around the premises of Federally assisted low-income housing, and

public and Indian housing developments;

(b) Encourage owners of Federally assisted low-income housing,

public housing agencies and Indian housing authorities (collectively

referred to as HAs), and resident management corporations to develop a

plan that includes initiatives that can be sustained over a period of

several years for addressing drug-related crime and problems associated

with it in and around the premises of housing proposed for funding

under this part; and

(c) Make available Federal grants to help owners of Federally

assisted low-income housing, HAs, and RMCs carry out their plans.

Sec. 761.5 Public and Indian housing; encouragement of resident

participation.

For the purposes of the Public Housing Drug Elimination Program,

the elimination of drug-related crime and problems associated with it

within public housing developments requires the active involvement and

commitment of public housing residents and their organizations. To

enhance the ability of HAs to combat drug-related crime and problems

associated with it within their developments, Resident Councils (RCs),

[[Page 13988]]

Resident Management Corporations (RMCs), and Resident Organizations

(ROs) will be permitted to undertake management functions specified in

this part, notwithstanding the otherwise applicable requirements of 24

CFR parts 950 and 964.

Sec. 761.10 Definitions.

The definitions ``Department'', ``HUD'', ``Indian'', ``Indian

Housing Authority (IHA)'', and ``Public Housing Agency (PHA)'' are

defined in 24 CFR part 5.

Controlled substance shall have the meaning provided in section 102

of the Controlled Substance Act (21 U.S.C. 802).

Drug intervention means a process to identify assisted housing or

public housing resident drug users, to assist them in modifying their

behavior, and/or to refer them to drug treatment to reduce or eliminate

drug abuse.

Drug prevention means a process to provide goods and services

designed to alter factors, including activities, environmental

influences, risks, and expectations, that lead to drug abuse.

Drug-related crime shall have the meaning provided in 42 U.S.C.

11905(2).

Drug treatment means a program for the residents of an applicant's

development that strives to end drug abuse and to eliminate its

negative effects through rehabilitation and relapse prevention.

Federally assisted low-income housing, or assisted housing, shall

have the meaning provided in 42 U.S.C. 11905(4). However, sections

221(d)(3) and 221(d)(4) market rate projects with tenant-based

assistance contracts and section 8 projects with tenant-based

assistance are not considered federally assisted low-income housing and

are not eligible for funding under this part 761.

Governmental jurisdiction means the unit of general local

government, State, or area of operation of an Indian tribe in which the

housing development administered by the applicant is located.

In and around means within, or adjacent to, the physical boundaries

of a housing development.

Indian tribe means any tribe, band, pueblo, group, community, or

nation of Indians, or Alaska Natives.

Local law enforcement agency means a police department, sheriff's

office, or other entity of the governmental jurisdiction that has law

enforcement responsibilities for the community at large, including the

housing developments owned or administered by the applicant. In Indian

jurisdictions, this includes tribal prosecutors that assume law

enforcement functions analogous to a police department or the Bureau of

Indian Affairs (BIA). More than one law enforcement agency may have

these responsibilities for the jurisdiction that includes the

applicant's developments.

Problems associated with drug-related crime means the negative

physical, social, educational, and economic impact of drug-related

crime on assisted housing residents or public and Indian housing

residents, and the deterioration of the assisted housing or public and

Indian housing environment because of drug-related crime.

Program income means gross income received by a grantee and

directly generated from the use of program funds. When program income

is generated by an activity only partially assisted with program funds,

the income shall be prorated to reflect the percentage of program funds

used.

Resident council (RC), for purposes of the Public Housing Program,

means an incorporated or unincorporated nonprofit organization or

association that meets each of the following requirements:

(1) It must be representative of the residents it purports to

represent;

(2) It may represent residents in more than one development or in

all of the developments of a HA, but it must fairly represent residents

from each development that it represents;

(3) It must adopt written procedures providing for the election of

specific officers on a regular basis (but at least once every three

years); and

(4) It must have a democratically elected governing board. The

voting membership of the board must consist of residents of the

development or developments that the resident organization or resident

council represents.

Resident Management Corporation (RMC), for purposes of the Public

Housing Program, means the entity that proposes to enter into, or that

enters into, a management contract with a PHA under 24 CFR part 964 in

accordance with the requirements of that part, or with an IHA under 24

CFR part 950, or with an IHA in accordance with the requirements of

this part 761. The corporation must have each of the following

characteristics:

(1) It must be a nonprofit organization that is incorporated under

the laws of the State or the Indian tribe in which it is located;

(2) It may be established by more than one resident organization or

resident council, so long as each such organization or council:

(i) Approves the establishment of the corporation, and;

(ii) Has representation on the Board of Directors of the

corporation;

(3) It must have an elected Board of Directors;

(4) Its by-laws must require the Board of Directors to include

representatives of each resident organization or resident council

involved in establishing the corporation;

(5) Its voting members must be residents of the development or

developments it manages;

(6) It must be approved by the resident council or resident

organization. If there is no council or organization, a majority of the

households of the development must approve the establishment of such an

organization to determine the feasibility of establishing a corporation

to manage the development; and

(7) It may serve as both the resident management corporation and

the resident council or the resident organization, so long as the

corporation meets the requirements of part 964 of this chapter for a

resident council or the requirements of this part for a resident

organization.

Resident organization (RO) shall have the same meaning as Resident

council (RC), as defined in this Sec. 761.10.

State means any of the several States of the United States, the

District of Columbia, the Commonwealth of Puerto Rico, any territory or

possession of the United States, or any agency or instrumentality of a

State exclusive of local governments. The term does not include any

public or Indian housing agency under the United States Housing Act of

1937 (42 U.S.C. 1437 note).

Unit of general local government means any city, county, town,

municipality, township, parish, village, local public authority

(including any public or Indian housing agency under the United States

Housing Act of 1937) or other general purpose political subdivision of

a State.

Subpart B--Use of Grant Funds

Sec. 761.15 Applicants and activities.

In any particular funding round, the separate Notices of Funding

Availability (NOFAs) published in the Federal Register will contain

specific information concerning eligible and ineligible applicants and

activities.

(a) Eligible applicants. (1) Under the Public Housing Drug

Elimination Program (PHDEP), specific information with regard to

eligible applicants will appear in the NOFA for each funding round.

(2) Under the Assisted Housing Program (AHDEP), eligible applicants

[[Page 13989]]

are owners of federally assisted low-income housing, as the term

``Federally assisted low-income housing'' is defined in Sec. 761.10.

(b) Eligible activities. An application for funding under the

Assisted Housing Program or the Public Housing Program may be for one

or more of the eligible activities described in 42 U.S.C. 11903, as

further explained or limited in paragraph (b) of this section and in

the separate annual Notices of Funding Availability (NOFAs) for each

program. All personnel funded by these programs in accordance with an

eligible activity must meet, and demonstrate compliance with, all

relevant Federal, State, tribal, or local government insurance,

licensing, certification, training, bonding, or other similar law

enforcement requirements.

(1) Employment of security personnel, as provided in 42 U.S.C.

11903(a)(1). For purposes of the Public Housing Program, the following

provisions in paragraphs (b)(1)(i) and (b)(1)(ii) of this section

apply:

(i) Security guard personnel. (A) Contract security personnel

funded by this program must perform services not usually performed by

local law enforcement agencies on a routine basis.

(B) The applicant, the cooperating local law enforcement agency,

and the provider (contractor) of the security personnel are required,

as a part of the security personnel contract, to enter into and execute

a written agreement that describes the following:

(1) The activities to be performed by the security personnel, their

scope of authority, and how they will coordinate their activities with

the local law enforcement agency;

(2) The types of activities that the security personnel are

expressly prohibited from undertaking.

(ii) Employment of HA police. (A) If additional HA police are to be

employed for a service that is also provided by a local law enforcement

agency, the applicant must provide a cost analysis that demonstrates

the employment of HA police is more cost efficient than obtaining the

service from the local law enforcement agency.

(B) Additional HA police services to be funded under this program

must be over and above those that the existing HA police, if any,

provides, and the tribal, State or local government is contractually

obligated to provide under its Cooperation Agreement with the applying

HA (as required by the HA's Annual Contributions Contract). An

applicant seeking funding for this activity must first establish a

baseline by describing the current level of services provided by both

the local law enforcement agency and the HA police, if any (in terms of

the kinds of services provided, the number of officers and equipment

and the actual percent of their time assigned to the developments

proposed for funding), and then demonstrate to what extent the funded

activity will represent an increase over this baseline.

(C) The applicant and the cooperating local law enforcement agency

are required to enter into and execute a written agreement that

describes the following:

(1) The activities to be performed by the HA police, their scope of

authority, and how they will coordinate their activities with the local

law enforcement agency;

(2) The types of activities that the HA police are expressly

prohibited from undertaking.

(2) Reimbursement of local law enforcement agencies for additional

security and protective services, as provided in 42 U.S.C. 11903(a)(2).

For purposes of the Public Housing Program, the following provisions in

paragraphs (b)(2)(i) and (b)(2)(ii) of this section apply:

(i) Additional security and protective services to be funded must

be over and above those that the tribal, State, or local government is

contractually obligated to provide under its Cooperation Agreement with

the applying HA (as required by the HA's Annual Contributions

Contract). An application seeking funding for this activity must first

establish a baseline by describing the current level of services (in

terms of the kinds of services provided, the number of officers and

equipment, and the actual percent of their time assigned to the

developments proposed for funding) and then demonstrate to what extent

the funded activity will represent an increase over this baseline.

(ii) Communications and security equipment to improve the

collection, analysis, and use of information about drug-related

criminal activities in a public housing community may be eligible items

if used exclusively in connection with the establishment of a law

enforcement substation on the funded premises or scattered site

developments of the applicant. Funds for activities under this section

may not be drawn until the grantee has executed a contract for the

additional law enforcement services.

(3) Physical improvements to enhance security, as provided in 42

U.S.C. 11903(a)(3). For purposes of the Public Housing Program, the

following provisions in paragraphs (b)(3)(i) through (b)(3)(iv) of this

section apply:

(i) An activity that is funded under any other HUD program shall

not also be funded by this program.

(ii) Funding is not permitted for physical improvements that

involve the demolition of any units in a development.

(iii) Funding is not permitted for any physical improvements that

would result in the displacement of persons.

(iv) Funding is not permitted for the acquisition of real property.

(4) Employment of investigating individuals, as provided in 42

U.S.C. 11903(a)(4). For purposes of the Public Housing Program, the

following provisions in paragraphs (b)(4)(i) and (b)(4)(ii) of this

section apply:

(i) If one or more investigators are to be employed for a service

that is also provided by a local law enforcement agency, the applicant

must provide a cost analysis that demonstrates the employment of

investigators is more cost efficient than obtaining the service from

the local law enforcement agency.

(ii) The applicant, the cooperating local law enforcement agency,

and the investigator(s) are required, before any investigators are

employed, to enter into and execute a written agreement that describes

the following:

(A) The nature of the activities to be performed by the

investigators, their scope of authority, and how they will coordinate

their activities with the local law enforcement agency;

(B) The types of activities that the investigators are expressly

prohibited from undertaking.

(5) Voluntary tenant patrols, as provided in 42 U.S.C. 11903(a)(5).

For purposes of the Public Housing Program, the following provisions in

paragraphs (b)(5)(i) through (b)(5)(iv) of this section apply:

(i) The provision of training, communications equipment, and other

related equipment (including uniforms), for use by voluntary tenant

patrols acting in cooperation with officials of local law enforcement

agencies is permitted. Grantees are required to obtain liability

insurance to protect themselves and the members of the voluntary tenant

patrol against potential liability for the activities of the patrol.

The cost of this insurance will be considered an eligible program

expense.

(ii) The applicant, the cooperating local law enforcement agency,

and the members of the tenant patrol are required, before putting the

tenant patrol into effect, to enter into and execute a written

agreement that describes the following:

(A) The nature of the activities to be performed by the tenant

patrol, the patrol's scope of authority, and how the

[[Page 13990]]

patrol will coordinate its activities with the local law enforcement

agency;

(B) The types of activities that a tenant patrol is expressly

prohibited from undertaking, to include but not limited to, the

carrying or use of firearms or other weapons, nightsticks, clubs,

handcuffs, or mace in the course of their duties under this program;

(C) The type of initial tenant patrol training and continuing

training the members receive from the local law enforcement agency

(training by the local law enforcement agency is required before

putting the tenant patrol into effect).

(iii) Tenant patrol members must be advised that they may be

subject to individual or collective liability for any actions

undertaken outside the scope of their authority and that such acts are

not covered under a HA's or RMC's liability insurance.

(iv) Grant funds may not be used for any type of financial

compensation for voluntary tenant patrol participants. However, the use

of program funds for a grant coordinator for volunteer tenant foot

patrols is permitted.

(6) Drug prevention, intervention, and treatment programs, as

provided in 42 U.S.C. 11903(a)(6).

(7) Funding resident management corporations (RMCs), resident

councils (RCs), and resident organizations (ROs). For purposes of the

Public Housing Program, funding may be provided for HAs that receive

grants to contract with RMCs and incorporated RCs and ROs to develop

security and drug abuse prevention programs involving site residents,

as provided in 42 U.S.C. 11903(a)(7).

(8) Eliminating drug-related crime in HA-owned housing, under the

Public Housing Program, as provided in 42 U.S.C. 11903(b).

(c) Continuation of current program activities. For purposes of

both drug elimination programs, the Department will evaluate an

applicant's performance under any previous Drug Elimination Program

grants within the past five years. Subject to evaluation and review are

the applicant's financial and program performance; reporting and

special condition compliance; accomplishment of stated goals and

objectives under the previous grant; and program adjustments made in

response to previous ineffective performance. If the evaluation

discloses a pattern under past grants of ineffective performance with

no corrective measures attempted, it will result in a deduction of

points from the current application.

(d) Ineligible activities. For purposes of the Public Housing

Program, the following provisions in paragraph (d) of this section

apply:

(1) Joint applications are not eligible for funding under this

program.

(2) Funding is not permitted for costs incurred before the

effective date of the grant agreement, including, but not limited to,

consultant fees for surveys related to the application or the actual

writing of the application.

(3) Funding is not permitted for the costs related to screening or

evicting residents for drug-related crime. However, investigators

funded under this program may participate in judicial and

administrative proceedings.

Subpart C--Application and Selection

Sec. 761.20 Application selection and requirements.

(a) Selection criteria. HUD will review each application that it

determines meets the requirements of this part 761 and evaluate it by

assigning points in accordance with the selection criteria in 42 U.S.C.

11904 and in the separate NOFAs published for each program.

(b) Plan requirement. Each application must include a plan for

addressing the problem of drug-related crime and/or the problems

associated with it on the premises of the housing for which the

application is being submitted. For applications that cover more than

one development, the plan does not have to address each development

separately if the same activities will apply to each development. The

plan must address each development separately only where program

activities will differ from one development to another.

(c) Notices of Funding Availability. HUD will publish specific

Notices of Funding Availability (NOFAs) in the Federal Register as

appropriate for each program to inform the public of the availability

of grant amounts under this part 761. The NOFAs will provide specific

guidance with respect to the grant process, including the deadlines for

the submission of grant applications; the limits (if any) on maximum

grant amounts; the information that must be submitted to permit HUD to

score each of the selection criteria; the maximum number of points to

be awarded for each selection criterion; the contents of the plan for

addressing drug-related crime and problems associated with it that must

be included with the application; the listing of any certifications and

assurances that must be submitted with the application; and the process

for ranking and selecting applicants. NOFAs will also include any

additional information, factors, and requirements that HUD has

determined to be necessary and appropriate to provide for the

implementation and administration of the program under this part 761.

(d) Environmental review. Grants under this part 761 are

categorically excluded from review under the National Environmental

Policy Act of 1969 (NEPA) (42 U.S.C. 4321), in accordance with 24 CFR

50.20(p). However, prior to an award of grant funds under this part,

HUD will perform an environmental review to the extent required by

HUD's environmental regulations in 24 CFR part 50, including the

applicable related authorities in 24 CFR 50.4.

Sec. 761.25 Resident comments on grant application.

The applicant must provide the residents of developments proposed

for funding under this part 761, as well as any RMCs, RCs, or ROs that

represent those residents (including any HA-wide RMC, RC, or RO), if

applicable, with a reasonable opportunity to comment on its application

for funding under these programs. The applicant must give these

comments careful consideration in developing its plan and application,

as well as in the implementation of funded programs. Grantees must

maintain copies of all written comments submitted for three years.

Subpart D--Grant Administration

Sec. 761.30 Grant administration.

(a) General. Each grantee is responsible for ensuring that grant

funds are administered in accordance with the requirements of this part

761, any specific Notices of Funding Availability (NOFAs) issued for

these programs, 24 CFR part 85 (as applicable), applicable laws and

regulations, applicable OMB circulars, HUD fiscal and audit controls,

grant agreements, grant special conditions, the grantee's approved

budget (SF-424A), budget narrative, plan, and activity timetable.

(b) Grant term extensions. (1) Grant term. Terms of the grant

agreement may not exceed 12 months for the Assisted Housing Program,

and 24 months for the Public Housing Program, unless an extension is

approved by the local HUD Office or local HUD Office of Native American

Programs. Any funds not expended at the end of the grant term shall be

remitted to HUD.

(2) Extension. HUD may grant an extension of the grant term in

response to a written request for an extension stating the need for the

extension and indicating the additional time required. HUD will not

consider requests for retroactive extension of program periods. HUD

will permit only one

[[Page 13991]]

extension. HUD will only consider extensions if the grantee meets the

extension criteria of paragraph (b)(5) of this section at the time the

grantee submits for approval the request for the extension.

(3) Receipt. The request must be received by the local HUD Office

or local HUD Office of Native American Programs prior to the

termination of the grant, and requires approval by the local HUD Office

or local HUD Office of Native American Programs with jurisdiction over

the grantee.

(4) Term. The maximum extension allowable for any program period is

6 months.

(5) Extension criteria. The following criteria must be met by the

grantee when submitting a request to extend the expenditure deadline

for a program or set of programs.

(i) Financial status reports. There must be on file with the local

HUD Office or local HUD Office of Native American Programs current and

acceptable Financial Status Reports, SF-269As.

(ii) Grant agreement special conditions. The grantee must have

satisfied all grant agreement special conditions except those

conditions that the grantee must fulfill in the remaining period of the

grant. This also includes the performance and resolution of audit

findings in a timely manner.

(iii) Justification. The grantee must submit a narrative

justification with the program extension request. The justification

must provide complete details, including the circumstances that require

the proposed extension, and an explanation of the impact of denying the

request.

(6) HUD action. The local HUD Office or local HUD Office of Native

American Programs will attempt to take action on any proposed extension

request within 15 days after receipt of the request.

(c) Duplication of funds. To prevent duplicate funding of any

activity, the grantee must establish controls to assure that an

activity or program that is funded by other HUD programs, or programs

of other Federal agencies, shall not also be funded by the Drug

Elimination Program. The grantee must establish an auditable system to

provide adequate accountability for funds that it has been awarded. The

grantee is responsible for ensuring that there is no duplication of

funds.

(d) Insurance. Each grantee shall obtain adequate insurance

coverage to protect itself against any potential liability arising out

of the eligible activities under this part. In particular, applicants

shall assess their potential liability arising out of the employment or

contracting of security personnel, law enforcement personnel,

investigators, and drug treatment providers, and the establishment of

voluntary tenant patrols; evaluate the qualifications and training of

the individuals or firms undertaking these functions; and consider any

limitations on liability under tribal, State, or local law. Grantees

shall obtain liability insurance to protect the members of the

voluntary tenant patrol against potential liability as a result of the

patrol's activities under Sec. 761.15(b)(5). Voluntary tenant patrol

liability insurance costs are eligible program expenses. Subgrantees

shall obtain their own liability insurance.

(e) Failure to implement program. If the grant plan, approved

budget, and timetable, as described in the approved application, are

not operational within 60 days of the grant agreement date, the grantee

must report by letter to the local HUD Office or the local HUD Office

of Native American Programs the steps being taken to initiate the plan

and timetable, the reason for the delay, and the expected starting

date. Any timetable revisions that resulted from the delay must be

included. The local HUD Office or local HUD Office of Native American

Programs will determine if the delay is acceptable, approve/disapprove

the revised plan and timetable, and take any additional appropriate

action.

(f) Sanctions. (1) HUD may impose sanctions if the grantee:

(i) Is not complying with the requirements of this part 761, or of

other applicable Federal law;

(ii) Fails to make satisfactory progress toward its drug

elimination goals, as specified in its plan and as reflected in its

performance and financial status reports;

(iii) Does not establish procedures that will minimize the time

elapsing between drawdowns and disbursements;

(iv) Does not adhere to grant agreement requirements or special

conditions;

(v) Proposes substantial plan changes to the extent that, if

originally submitted, the applications would not have been selected for

funding;

(vi) Engages in the improper award or administration of grant

subcontracts;

(vii) Does not submit reports; or

(viii) Files a false certification.

(2) HUD may impose the following sanctions:

(i) Temporarily withhold cash payments pending correction of the

deficiency by the grantee or subgrantee;

(ii) Disallow all or part of the cost of the activity or action not

in compliance;

(iii) Wholly or partly suspend or terminate the current award for

the grantee's or subgrantee's program;

(iv) Require that some or all of the grant amounts be remitted to

HUD;

(v) Condition a future grant and elect not to provide future grant

funds to the grantee until appropriate actions are taken to ensure

compliance;

(vi) Withhold further awards for the program; or

(vii) Take other remedies that may be legally available.

Sec. 761.35 Periodic grantee reports.

Grantees are responsible for managing the day-to-day operations of

grant and subgrant supported activities. Grantees must monitor grant

and subgrant supported activities to assure compliance with applicable

Federal requirements and that performance goals are being achieved.

Grantee monitoring must cover each program, function or activity of the

grant.

(a) Semi-annual (nonconstruction) performance reports. For purposes

of the Public Housing Program only, the following provisions in

paragraph (a) of this section apply:

(1) In accordance with 24 CFR 85.40(b)(1)(2) and 85.50(b), grantees

are required to provide the local HUD Office or the local HUD Office of

Native American Programs with a semi-annual performance report that

evaluates the grantee's performance against its plan. These reports

shall include (but are not limited to) the following in summary form:

(i) Any change or lack of change in crime statistics or other

indicators drawn from the applicant's plan assessment and an

explanation of any difference;

(ii) Successful completion of any of the strategy components

identified in the applicant's plan;

(iii) A discussion of any problems encountered in implementing the

plan and how they were addressed;

(iv) An evaluation of whether the rate of progress meets

expectations;

(v) A discussion of the grantee's efforts in encouraging resident

participation; and

(vi) A description of any other programs that may have been

initiated, expanded, or deleted as a result of the plan, with an

identification of the resources and the number of people involved in

the programs and their relation to the plan.

(2) Reporting period. Semi-annual performance reports (for periods

ending June 30 and December 31) are due to the local HUD Office or the

local HUD Office of Native American Programs on July 30 and January 31

of each year. If

[[Page 13992]]

the reports are not received by the local HUD Office or the local HUD

Office of Native American Programs on or before the due date, grant

funds will not be advanced until the reports are received.

(b) Final performance report. For purposes of both the Assisted

Housing Program and the Public Housing Program, the following

provisions in paragraph (b) of this section apply:

(1) Evaluation. Grantees are required to provide the local HUD

Office or the local HUD Office of Native American Programs, as

applicable, with a final cumulative performance report that evaluates

the grantee's overall performance against its plan. This report shall

include (but is not limited to) the information listed in paragraphs

(a)(1)(i) through (a)(1)(vi) of this section, in summary form.

(2) Reporting period. The final performance report shall cover the

period from the date of the grant agreement to the termination date of

the grant agreement. The report is due to the local HUD Office or the

local HUD Office of Native American Programs, as applicable, within 90

days after termination of the grant agreement.

(c) Semi-annual financial status reporting requirements. For

purposes of both the Assisted Housing Program and the Public Housing

Program, the following provisions in paragraph (c) of this section

apply, as specified below:

(1) Forms. The grantee shall provide a semi-annual financial status

report. For purposes of the Public Housing Program, this report shall

be in accordance with 24 CFR 85.41 (b) and (c). For both the Assisted

Housing and Public Housing Programs, the grantee shall use the form SF-

269A, Financial Status Report-Long Form, to report the status of funds

for nonconstruction programs. The grantee shall use SF-269A, block 12,

``Remarks,'' to report on the status of programs, functions, or

activities within the program.

(2) Reporting period. Semi-annual financial status reports (SF-

269A) must be submitted as follows:

(i) For purposes of the Assisted Housing Program, semi-annual

financial status reports covering the first 180 days of funded

activities must be submitted to the local HUD Office between 190 and

210 days after the date of the grant agreement. If the SF-269A is not

received on or before the due date (210 days after the date of the

grant agreement) by the local HUD Office, grant funds will not be

advanced until the reports are received.

(ii) For purposes of the Public Housing Program, semi-annual

financial status reports (for periods ending June 30 and December 31)

must be submitted to the local HUD Office or the local Office of Indian

Programs, as applicable, by July 30 and January 31 of each year. If the

local HUD Office or the local HUD Office of Native American Programs,

as applicable, does not receive the SF-269A on or before the due date,

the grant funds will not be advanced until the reports are received.

(d) Final financial status report (SF-269A). For purposes of both

the Assisted Housing Program and the Public Housing Program, the

following provisions in paragraph (d) of this section apply:

(1) Cumulative summary. The final report will be a cumulative

summary of expenditures to date and must indicate the exact balance of

unexpended funds. The grantee shall remit all Drug Elimination Program

funds owed to HUD, including any unexpended funds, as follows:

(i) For purposes of the Assisted Housing Program, the grantee must

remit such funds to HUD within 90 days after the termination of the

grant agreement.

(ii) For purposes of the Public Housing Program, the local HUD

Office or the local HUD Office of Native American Programs shall notify

the grantee, in writing, of the requirement to remit such funds to HUD.

The grantee shall remit such funds prior to or upon receipt of the

notice.

(2) Reporting period. The final financial status report shall cover

the period from the date of the grant agreement to the termination date

of the grant agreement. The report is due to the local HUD Office or

the local HUD Office of Native American Programs, as applicable, within

90 days after the termination of the grant agreement.

Sec. 761.40 Other Federal requirements.

In addition to the nondiscrimination and equal opportunity

requirements set forth in 24 CFR part 5, subpart A, use of grant funds

requires compliance with the following Federal requirements:

(a) Labor standards. (1) When grant funds are used to undertake

physical improvements to increase security under Sec. 761.15(b)(3), the

following labor standards apply:

(i) The grantee and its contractors and subcontractors must pay the

following prevailing wage rates, and must comply with all related

rules, regulations and requirements:

(A) For laborers and mechanics employed in the program, the wage

rate determined by the Secretary of Labor pursuant to the Davis-Bacon

Act (40 U.S.C. 276a et seq.) to be prevailing in the locality with

respect to such trades;

(B) For laborers and mechanics employed in carrying out nonroutine

maintenance in the program, the HUD-determined prevailing wage rate. As

used in paragraph (a) of this section, nonroutine maintenance means

work items that ordinarily would be performed on a regular basis in the

course of upkeep of a property, but have become substantial in scope

because they have been put off, and that involve expenditures that

would otherwise materially distort the level trend of maintenance

expenses. Nonroutine maintenance may include replacement of equipment

and materials rendered unsatisfactory because of normal wear and tear

by items of substantially the same kind. Work that constitutes

reconstruction, a substantial improvement in the quality or kind of

original equipment and materials, or remodeling that alters the nature

or type of housing units is not nonroutine maintenance.

(ii) The employment of laborers and mechanics is subject to the

provisions of the Contract Work Hours and Safety Standards Act (40

U.S.C. 327-333).

(2) The provisions of paragraph (a)(1) of this section shall not

apply to labor contributed under the following circumstances:

(i) Upon the request of any resident management corporation, HUD

may, subject to applicable collective bargaining agreements, permit

residents (for purposes of the Public Housing Program, residents of a

program managed by the resident management corporation) to volunteer a

portion of their labor.

(ii) An individual may volunteer to perform services if:

(A) The individual does not receive compensation for the voluntary

services, or is paid expenses, reasonable benefits, or a nominal fee

for voluntary services; and

(B) Is not otherwise employed at any time in the work subject to

paragraphs (a)(1)(i)(A) or (a)(1)(i)(B) of this section.

(b) Flood insurance. Grants will not be awarded for proposed

activities that involve acquisition, construction, reconstruction,

repair or improvement of a building or mobile home located in an area

that has been identified by the Federal Emergency Management Agency

(FEMA) as having special flood hazards unless:

(1) The community in which the area is situated is participating in

the National Flood Insurance Program in accordance with 44 CFR parts 59

through 79; or

(2) Less than a year has passed since FEMA notification to the

community regarding such hazards; and

[[Page 13993]]

(3) Flood insurance on the structure is obtained in accordance with

section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C.

4001).

(c) Lead-based paint. The provisions of section 302 of the Lead-

Based Paint Poisoning Prevention Act, 42 U.S.C. 4821-4846, and

implementing regulations in 24 CFR part 965, subpart H apply to

activities under these programs as set out in this paragraph (c).

Paragraph (c) of this section is promulgated pursuant to the authority

granted in 24 CFR 35.24(b)(4) and supersedes, with respect to all

housing to which it applies, the requirements (not including

definitions) prescribed by subpart C of 24 CFR part 35.

(1) Applicability. The provisions of paragraph (c) of this section

shall apply to all developments constructed or substantially

rehabilitated before January 1, 1978, and for which assistance under

this part is being used for physical improvements to enhance security

under Sec. 761.15(b)(3).

(2) Definitions. The term ``applicable surfaces'' means all intact

and nonintact interior and exterior painted surfaces of a residential

structure.

(3) Exceptions. The following activities are not covered by this

section:

(i) Installation of security devices;

(ii) Other similar types of single-purpose programs that do not

involve physical repairs or remodeling of applicable surfaces of

residential structures; or

(iii) Any non-single-purpose rehabilitation that does not involve

applicable surfaces and that does not exceed $3,000 per unit.

(d) Conflicts of interest. In addition to the conflict of interest

requirements in 24 CFR part 85 for the Public Housing Program, no

person, as described in paragraphs (d)(1) and (d)(2) of this section,

may obtain a personal or financial interest or benefit from an activity

funded under these drug elimination programs, or have an interest in

any contract, subcontract, or agreement with respect thereto, or the

proceeds thereunder, either for him or herself or for those with whom

he or she has family or business ties, during his or her tenure, or for

one year thereafter:

(1) Who is an employee, agent, consultant, officer, or elected or

appointed official of the grantee, that receives assistance under the

program and who exercises or has exercised any functions or

responsibilities with respect to assisted activities; or

(2) Who is in a position to participate in a decisionmaking process

or gain inside information with regard to such activities.

(e) For IHAs, Sec. 950.115 of this title, ``Applicability of civil

rights requirements,'' and Sec. 950.120 of this title, ``Compliance

with other Federal requirements,'' apply and control to the extent they

may differ from other requirements of this section;

(f) Indian preference. For purposes of the Public Housing Program,

applicants are subject to the Indian Civil Rights Act (24 U.S.C. 1301),

the provisions of section 7(b) of the Indian Self-Determination and

Education Assistance Act (25 U.S.C. 450e(b)), and the Indian preference

rules in the IHA procurement regulations at 24 CFR 950, subpart B.

These provisions require that, to the greatest extent feasible,

preference and opportunities for training and employment be given to

Indians, and that preference in the award of subcontracts and subgrants

be given to Indian Organizations and Indian Owned Economic Enterprises.

(g) Intergovernmental Review. The requirements of Executive Order

12372 (3 CFR, 1982 Comp., p. 197) and the regulations issued under the

Order in 24 CFR part 52, to the extent provided by Federal Register

notice in accordance with 24 CFR 52.3, apply to these programs.

PART 961--[REMOVED]

4. Part 961 is removed.

Dated: March 15, 1996.

Henry G. Cisneros,

Secretary.

[FR Doc. 96-7272 Filed 3-27-96; 8:45 am]

BILLING CODE 4210-32-P