Prohibition of Advance Disclosure of Funding; Accountability in the Provision of HUD Assistance

SUMMARY: This rule streamlines 24 CFR parts 4, regarding prohibition of

advance disclosure of funding decisions, and 12, regarding

accountability in the provision of HUD assistance, in the context of

HUD's regulatory reinvention process by combining them into a single,

revised part 4 and removing unnecessary and repetitious language.

EFFECTIVE DATE: May 1, 1996.

FOR FURTHER INFORMATION CONTACT: Aaron Santa Anna, Assistant General

Counsel, Ethics Law Division, at (202) 708-3815, or Sam E. Hutchinson,

Associate General Counsel, Office of Human Resources Law, (202) 708-

2947; 451 Seventh Street, SW., Washington, DC 20810. Hearing or speech-

impaired individuals may call HUD's TDD number (202) 708-3259.

(Telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act Statement

The information collection requirements contained in Secs. 4.7 and

4.9 have been approved by the Office of Management and Budget in

accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-

3520), and assigned OMB control number 2510-0011. An agency may not

conduct or sponsor, and a person is not required to respond to, a

collection of information unless the collection displays a valid

control number.

II. Background--Regulatory Reinvention

Consistent with Executive Order 12866 and President Clinton's

memorandum of March 4, 1995 to all Federal Departments and Agencies on

regulatory reinvention, HUD has reviewed all its regulations to

determine whether certain regulations can be eliminated, streamlined,

or consolidated with other regulations. In keeping with the President's

mandate to reinvent and reform regulations, the Department is

streamlining parts 4 and 12. These parts have been re-drafted to

eliminate text that only repeats statutory language, or provisions that

are advisory or non-exclusive, such as lists of examples.

One goal of reinventing regulations is to remove rule text that

repeats statutory language. Besides resulting in considerable

streamlining of regulations, such a practice will remove the problems

that result when a rule that repeats the language of a statute becomes

inconsistent with new statutory amendments. The final rule promulgated

here does not, therefore, repeat any statutory language; it contains

only those provisions that are necessary for clarification of the

statutory procedures, or provisions that address those areas that give

the Secretary discretion to act.

The remaining regulatory text is further pruned to eliminate

provisions that are advisory or non-exclusive. For example, the term

``assistance'' in Sec. 4.5, Definitions, of the current rule, includes

a long list of programs that provide for the competitive distribution

of assistance. Since such a list is subject to change, it is not likely

to remain current and is therefore being removed from the rule.

The same procedures described above (the removal of: statutory

language, lists subject to change, and text that is only advisory) are

applied to part 12, leaving a streamlined rule that retains only the

regulatory provisions that do not repeat the statutory requirements,

which remain in effect.

Both parts 4 and 12 are substantially restructured by this rule.

All of the subparts in the current versions of both parts are

eliminated, and the remaining provisions of part 4 are designated as

subpart B of the revised part 4. The remaining provisions of part 12

are redesignated as subpart A of part 4, and part 12 is removed. Each

subpart cites the statutory provision being interpreted and under which

it is authorized (subpart A of part 4 under section 102 of the

Department of Housing and Urban Development Reform Act of 1989 [HUD

Reform Act]; subpart B of part 4 under section 103 of the HUD Reform

Act). However, the changes made by this rule are only structural and

not substantive; the implementation of the HUD Reform Act remains

consistent with its implementation before the changes made by this

rule.

III. Findings and Certifications

Justification for Final Rulemaking

The Department has determined that this rule should be adopted

without the delay occasioned by requiring prior notice and comment.

This final rule only makes a number of streamlining changes to existing

provisions, as discussed above in section II. of this preamble. As

such, prior notice and comment are unnecessary under 24 CFR Part 10.

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.

Regulatory Flexibility Act

The Secretary, in accordance with provisions of the Regulatory

Flexibility Act (5 U.S.C. 605(b)), has reviewed this rule before

publication and by approving it certifies that it will not have a

significant economic impact on a substantial number of small entities

because the parts amended by this rule are streamlined but not

substantively changed.

Executive Order 12612, Federalism

HUD has determined, in accordance with Executive Order 12612,

Federalism, that this rule will not have a substantial, direct effect

on the States or on the relationship between the Federal government and

the States, or on the distribution of power or responsibilities among

the various levels of government, since the rule merely streamlines the

affected parts without substantively changing them.

Executive Order 12606, The Family

HUD has determined that this rule will not have a significant

impact on family formation, maintenance, and general well-being within

the meaning of Executive Order 12606, The Family, because no

significant change in existing HUD policies or programs will result

from promulgation of this rule, as those policies and programs relate

to family concerns.

List of Subjects

24 CFR Part 4

Administrative practice and procedure; Government employees, Grant

programs--housing and community development, Investigations, Loan

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

recordkeeping requirements.

24 CFR Part 12

Administrative practice and procedure, Grant programs--housing and

community development, Loan programs--housing and community

[[Page 14449]]

development, Reporting and recordkeeping requirements.

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

reasons stated in the preamble, 24 CFR subtitle A is amended as

follows:

1. Part 4 is revised to read as follows:

PART 4--HUD REFORM ACT

Subpart A--Accountability in the Provision of HUD Assistance

Sec.

4.1 Purpose.

4.3 Definitions.

4.5 Notice and documentation of assistance subject to Section

102(a).

4.7 Notice of funding decisions.

4.9 Disclosure requirements for assistance subject to Section

102(b).

4.11 Updating of disclosure.

4.13 Limitation of assistance subject to Section 102(d).

Subpart B--Prohibition of Advance Disclosure of Funding Decisions

4.20 Purpose.

4.22 Definitions.

4.24 Scope.

4.26 Permissible and impermissible disclosures.

4.28 Civil penalties.

4.30 Procedure upon discovery of a violation.

4.32 Investigation by Office of Inspector General.

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

Division.

4.36 Action by the Ethics Law Division.

4.38 Administrative remedies.

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

Subpart A--Accountability in the Provision of HUD Assistance

Sec. 4.1 Purpose.

The provisions of this subpart A are authorized under section 102

of the Department of Housing and Urban Development Reform Act of 1989

(Pub. L. 101-235, approved December 15, 1989) (42 U.S.C. 3537a)

(hereinafter, Section 102). Both the provisions of Section 102 and this

subpart A apply for the purposes of Section 102. Section 102 contains a

number of provisions designed to ensure greater accountability and

integrity in the way in which the Department makes assistance available

under certain of its programs.

Sec. 4.3 Definitions.

Applicant includes a person whose application for assistance must

be submitted to HUD for any purpose including approval, environmental

review, or rent determination.

Assistance under any program or discretionary fund administered by

the Secretary is subject to Section 102(a), and means any assistance,

under any program administered by the Department, that provides by

statute, regulation or otherwise for the competitive distribution of

funding.

Assistance within the jurisdiction of the Department is subject to

Section 102(b), and means any contract, grant, loan, cooperative

agreement, or other form of assistance, including the insurance or

guarantee of a loan or mortgage, that is provided with respect to a

specific project or activity under a program administered by the

Department, whether or not it is awarded through a competitive process.

Assistance within the jurisdiction of the Department to any housing

project is subject to Section 102(d), and means:

(1) Assistance which is provided directly by HUD to any person or

entity, but not to subrecipients. It includes assistance for the

acquisition, rehabilitation, operation conversion, modernization,

renovation, or demolition of any property containing five or more

dwelling units that is to be used primarily for residential purposes.

It includes assistance to independent group residences, board and care

facilities, group homes and transitional housing but does not include

primarily nonresidential facilities such as intermediate care

facilities, nursing homes and hospitals. It also includes any change

requested by a recipient in the amount of assistance previously

provided, except changes resulting from annual adjustments in Section 8

rents under Section 8(c)(2)(A) of the United States Housing Act of 1937

(42 U.S.C. 1437f);

(2) Assistance to residential rental property receiving a tax

credit under Federal, State or local law.

(3) For purposes of this definition, assistance includes assistance

resulting from annual adjustments in Section 8 rents under Section

8(c)(2)(A) of the United States Housing Act of 1937, unless the initial

assistance was made available before April 15, 1991, and no other

assistance subject to this subpart A was made available on or after

that date.

Housing project means:

(1) Property containing five or more dwelling units that is to be

used for primarily residential purposes, including (but not limited to)

living arrangements such as independent group residences, board and

care facilities, group homes, and transitional housing, but excluding

facilities that provide primarily non-residential services, such as

intermediate care facilities, nursing homes, and hospitals.

(2) Residential rental property receiving a tax credit under

Federal, State, or local law.

Interested party means any person involved in the application for

assistance, or in the planning, development or implementation of the

project or activity for which assistance is sought and any other person

who has a pecuniary interest exceeding the lower of $50,000 or 10

percent in the project or activity for which assistance is sought.

Selection criteria includes, in addition to any objective measures

of housing and other need, project merit, or efficient use of

resources, the weight or relative importance of each published

selection criterion as well as any other factors that may affect the

selection of recipients.

Sec. 4.5 Notice and documentation of assistance subject to Section

102(a).

(a) Notice. Before the Department solicits an application for

assistance subject to Section 102(a), it will publish a Notice in the

Federal Register describing application procedures. Not less than 30

calendar days before the deadline by which applications must be

submitted, the Department will publish selection criteria in the

Federal Register.

(b) Documentation of decisions. HUD will make available for public

inspection, for at least five (5) years, and beginning not less than 30

calendars days after it provides the assistance, all documentation and

other information regarding the basis for the funding decision with

respect to each application submitted to HUD for assistance. HUD will

also make available any written indication of support that it received

from any applicant. Recipients of HUD assistance must ensure, in

accordance with HUD guidance, the public availability of similar

information submitted by subrecipients of HUD assistance.

Sec. 4.7 Notice of funding decisions.

HUD will publish a Notice in the Federal Register at least

quarterly to notify the public of all decisions made by the Department

to provide:

(a) Assistance subject to Section 102(a); and

(b) Assistance that is provided through grants or cooperative

agreements on a discretionary (non-formula, non-demand) basis, but that

is not provided on the basis of a competition.

Sec. 4.9 Disclosure requirements for assistance subject to Section

102(b).

(a) Receipt and reasonable expectation of receipt. (1) In

determining the threshold of applicability of Section 102(b), an

[[Page 14450]]

applicant will be deemed to have received or to have a reasonable

expectation of receiving:

(i) The total amount of assistance received during the Federal

fiscal year during which the application was submitted;

(ii) The total amount of assistance requested for the fiscal year

in which any pending application, including the current application,

was submitted; and

(iii) For the fiscal year described in paragraph (a)(1)(ii) of this

section, the total amount of assistance from the Department or any

other entity that is likely to be made available on a formula basis or

in the form of program income as defined in 24 CFR part 85.

(2) In the case of assistance that will be provided pursuant to

contract over a period of time (such as project-based assistance under

Section 8 of the United States Housing Act of 1937), all amounts that

are to be provided over the term of the contract, irrespective of when

they are to be received.

(b) Content of disclosure. Applicants that receive or can

reasonably be expected to receive, as defined in paragraph (a) of this

section, an aggregate amount of assistance that is in excess of

$200,000 must disclose the following information:

(1) Other governmental assistance that is or is expected to be made

available, based upon a reasonable assessment of the circumstances,

with respect to the project or activities for which the assistance is

sought;

(2) The name and pecuniary interest of any interested party; and

(3) A report of the expected sources and uses of funds for the

project or activity which is the subject of the application, including

governmental and non-governmental sources of funds and private capital

resulting from tax benefits.

(c) In the case of mortgage insurance under 24 CFR subtitle B,

chapter II, the mortgagor is responsible for making the disclosures

required under Section 102(b) and this section, and the mortgagee is

responsible for furnishing the mortgagor's disclosures to the

Department.

(Approved by the Office of Management and Budget under control

number 2510-0011.)

Sec. 4.11 Updating of disclosure.

(a) During the period in which an application for assistance

covered under Section 102(b) is pending, or in which such assistance is

being provided, the applicant must report to the Department, or to the

State or unit of general local government, as appropriate:

(1) Any information referred to in Section 102(b) that the

applicant should have disclosed with respect to the application, but

did not disclose;

(2) Any information referred to in Section 102(b) that initially

arose after the time for making disclosures under that subsection,

including the name and pecuniary interest of any person who did not

have a pecuniary interest in the project or activity that exceeded the

threshold in Section 102(b) at the time of the application, but that

subsequently exceeded the threshold.

(b) With regard to changes in information that was disclosed under

Sections 102(b) or 102(c):

(1) For programs administered by the Assistant Secretary for

Community Planning and Development:

(i) Any change in other government assistance covered by Section

102(b) that exceeds the amount of all assistance that was previously

disclosed by the lesser of $250,000 or 10 percent of the assistance;

(ii) Any change in the expected sources or uses of funds that

exceed the amount of all previously disclosed sources or uses by the

lesser of $250,000 or 10 percent of previously disclosed sources;

(2) For all other programs:

(i) Any change in other government assistance under Section

102(b)(1) that exceeds the amount of assistance that was previously

disclosed;

(ii) Any change in the pecuniary interest of any person under

Section 102(b)(2) that exceeds the amount of all previously disclosed

interests by the lesser of $50,000 or 10 percent of such interest;

(iii) For all projects receiving a tax credit under Federal, Sate

or local law, any change in the expected sources or uses of funds that

were previously disclosed;

(iv) For all other projects:

(A) Any change in the expected source of funds from a single source

that exceeds the lesser of the amount previously disclosed for that

source of funds by $250,000 or 10 percent of the funds previously

disclosed for that source;

(B) Any change in the expected sources of funds from all sources

previously disclosed that exceeds the lesser of $250,000 or 10 percent

of the amounts previously disclosed from all sources of funds;

(C) Any change in a single expected use of funds that exceeds the

lesser of $250,000 or 10 percent of the previously disclosed use;

(D) Any change in the use of all funds that exceeds the lesser of

$250,000 or 10 percent of the previously disclosed uses for all funds.

(c) Period of coverage. For purposes of updating of Section 102(c),

an application for assistance will be considered to be pending from the

time the application is submitted until the Department communicates its

decision with respect to the selection of the applicant.

(Approved by the Office of Management and Budget under control

number 2510-0011.)

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

(a) In making the certification for assistance subject to Section

102(d), the Secretary will consider the aggregate amount of assistance

from the Department and from other sources that is necessary to ensure

the feasibility of the assisted activity. The Secretary will take into

account all factors relevant to feasibility, which may include, but are

not limited to, past rates of returns for owners, sponsors, and

investors; the long-term needs of the project and its tenants; and the

usual and customary fees charged in carrying out the assisted activity.

(b) If the Department determines that the aggregate of assistance

within the jurisdiction of the Department to a housing project from the

Department and from other governmental sources exceeds the amount that

the Secretary determines is necessary to make the assisted activity

feasible, the Department will consider all options available to enable

it to make the required certification, including reductions in the

amount of Section 8 subsidies. The Department also may impose a dollar-

for-dollar, or equivalent, reduction in the amount of HUD assistance to

offset the amount of other government assistance. In grant programs,

this could result in a reduction of any grant amounts not yet drawn

down. The Department may make these adjustments immediately, or in

conjunction with servicing actions anticipated to occur in the near

future (e.g., in conjunction with the next annual adjustment of Section

8 rents).

(c) If an applicant does not meet the $200,000 disclosure

requirement in Sec. 4.7(b), an applicant must certify whether there is,

or is expected to be made, available with respect to the housing

project any other governmental assistance. The Department may also

require any applicant subject to this subpart A to submit such a

certification in conjunction with the Department's processing of any

subsequent servicing action on that project. If there is other

government assistance for purposes of the two preceding sentences, the

[[Page 14451]]

applicant must submit such information as the Department deems

necessary to make the certification and subsequent adjustments under

Section 102(d).

(d) The certification under Section 102(d) shall be retained in the

official file for the housing project.

Subpart B--Prohibition of Advance Disclosure of Funding Decisions

Sec. 4.20 Purpose.

The provisions of this subpart B are authorized under section 103

of the Department of Housing and Urban Development Reform Act of 1989

(Pub. L. 101-235, approved December 15, 1989) (42 U.S.C. 3537a)

(hereinafter, Section 103). Both the provisions of Section 103 and this

subpart B apply for the purposes of Section 103. Section 103 proscribes

direct or indirect communication of certain information during the

selection process by HUD employees to persons within or outside of the

Department who are not authorized to receive that information. The

purpose of the proscription is to preclude giving an unfair advantage

to applicants who would receive information not available to other

applicants or to the public. Section 103 also authorizes the Department

to impose a civil money penalty on a HUD employee who knowingly

discloses protected information, if such a violation of Section 103 is

material, and authorizes the Department to sanction the person who

received information improperly by, among other things, denying

assistance to that person.

Sec. 4.22 Definitions.

Application means a written request for assistance regardless of

whether the request is in proper form or format.

Assistance does not include any contract (e.g., a procurement

contract) that is subject to the Federal Acquisition Regulation (FAR)

(48 CFR ch. 1).

Disclose means providing information directly or indirectly to a

person through any means of communication.

Employee includes persons employed on a full-time, part-time, or

temporary basis, and special government employees as defined in 18

U.S.C. 202. The term applies whether or not the employee is denoted as

an officer of the Department. ``Employee'' is to be construed broadly

to include persons who are retained on a contractual or consultative

basis under an Office of Human Resources appointment. However,

``employee'' does not include an independent contractor, e.g., a firm

or individual working under the authority of a procurement contract.

Material or materially means in some influential or substantial

respect or having to do more with substance than with form.

Person means an individual, corporation, company, association,

authority, firm, partnership, society, State, local government, or any

other organization or group of people.

Selection process means the period with respect to a selection for

assistance that begins when the HUD official responsible for awarding

the assistance involved, or his or her designee, makes a written

request (which includes the selection criteria to be used in providing

the assistance) to the Office of General Counsel (OGC) to prepare the

NOFA, solicitation, or request for applications for assistance for

publication in the Federal Register. The period includes the evaluation

of applications, and concludes with the announcement of the selection

of recipients of assistance.

Sec. 4.24 Scope.

(a) Coverage. The prohibitions against improper disclosure of

covered selection information apply to any person who is an employee of

the Department. In addition, the Department will require any other

person who participates at the invitation of the Department in the

selection process to sign a certification that he or she will be bound

by the provisions of this part.

(b) Applicability. The prohibitions contained in this part apply to

conduct occurring on or after June 12, 1991.

Sec. 4.26 Permissible and impermissible disclosures.

(a) Notwithstanding the provisions of Section 103, an employee is

permitted to disclose information during the selection process with

respect to:

(1) The requirements of a HUD program or programs, including

unpublished policy statements and the provision of technical assistance

concerning program requirements, provided that the requirements or

statements are disclosed on a uniform basis to any applicant or

potential applicant. For purposes of this part, the term ``technical

assistance'' includes such activities as explaining and responding to

questions about program regulations, defining terms in an application

package, and providing other forms of technical guidance that may be

described in a NOFA. The term ``technical assistance'' also includes

identification of those parts of an application that need substantive

improvement, but this term does not include advising the applicant how

to make those improvements.

(2) The dates by which particular decisions in the selection

process will be made;

(3) Any information which has been published in the Federal

Register in a NOFA or otherwise;

(4) Any information which has been made public through means other

than the Federal Register;

(5) An official audit, inquiry or investigation, if the disclosure

is made to an auditor or investigator authorized by the HUD Inspector

General to conduct the audit or investigation;

(6) Legal activities, including litigation, if the disclosure is

made to an attorney who is representing or is otherwise responsible to

the Department in connection with the activities; or

(7) Procedures that are required to be performed to process an

application, e.g., environmental or budget reviews, and technical

assistance from experts in fields who are regularly employed by other

government agencies, provided that the agency with which the expert is

employed or associated is not an applicant for HUD assistance during

the pending funding cycle.

(b) An authorized employee, during the selection process, may

contact an applicant for the purpose of:

(1) Communication of the applicant's failure to qualify, after a

preliminary review for eligibility and completeness with respect to his

or her application, and the reasons for the failure to qualify, or the

fact of the applicant's failure to be determined to be technically

acceptable after a full review; or

(2) Clarification of the terms of the applicant's application. A

clarification, for the purpose of this paragraph (b), may include a

request for additional information consistent with regulatory

requirements.

(c) Prohibition of advance disclosure of funding decisions. During

the selection process an employee shall not knowingly disclose any

covered selection information regarding the selection process to any

person other than an employee authorized to receive that information.

(1) The following disclosures of information are, at any time

during the selection process, a violation of Section 103:

(i) Information regarding any applicant's relative standing;

(ii) The amount of assistance requested by any applicant;

(iii) Any information contained in an application;

(2) The following disclosures of information, before the deadline

for the submission of applications, shall be a violation of Section

103:

(i) The identity of any applicant; and

[[Page 14452]]

(ii) The number of applicants.

Sec. 4.28 Civil penalties.

Whenever any employee knowingly and materially violates the

prohibition in Section 103, the Department may impose a civil money

penalty on the employee in accordance with the provisions of 24 CFR

part 30.

Sec. 4.30 Procedure upon discovery of a violation.

(a) In general. When an alleged violation of Section 103 or this

subpart B comes to the attention of any person, including an employee,

he or she may either:

(1) Contact the HUD Ethics Law Division to provide information

about the alleged violation; or

(2) Contact the HUD Office of Inspector General to request an

inquiry or investigation into the matter.

(b) Ethics Law Division. When the Ethics Law Division receives

information concerning an alleged violation of Section 103, it shall

refer the matter to the Inspector General stating the facts of the

alleged violation and requesting that the Inspector General make an

inquiry or investigation into the matter.

(c) Inspector General. When the Inspector General receives

information concerning an alleged violation of Section 103 or this

subpart B, he or she shall notify the Ethics Law Division when the

Inspector General begins an inquiry or investigation into the matter.

(d) Protection of employee complainants. (1) No official of the

Ethics Law Division, after receipt of information from an employee

stating the facts of an alleged violation of this part, shall disclose

the identity of the employee without the consent of that employee. The

Inspector General, after receipt of information stating the facts of an

alleged violation of this part, shall not disclose the identity of the

employee who provided the information without the consent of that

employee, unless the Inspector General determines that disclosure of

the employee's identity is unavoidable during the course of an

investigation. However, any employee who knowingly reports a false

alleged violation of this part is not so protected and may be subject

to disciplinary action.

(2) Any employee who has authority to take, direct others to take,

recommend or approve a personnel action is prohibited from threatening,

taking, failing to take, recommending, or approving any personnel

action as reprisal against another employee for providing information

to investigating officials.

Sec. 4.32 Investigation by Office of Inspector General.

The Office of Inspector General shall review every alleged

violation of Section 103. If after a review the Office of Inspector

General determines that further investigation is not warranted, it

shall notify the Ethics Law Division of that determination. If, after a

review, the Office of Inspector General determines that additional

investigation is warranted, it shall conduct the investigation and upon

completion issue a report of the investigation to the Ethics Law

Division as to each alleged violation.

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

Division.

After receipt of the Inspector General's report, the Ethics Law

Division shall review the facts and circumstances of the alleged

violations. In addition, the Ethics Law Division may:

(a) Return the report to the Inspector General with a request for

further investigation;

(b) Discuss the violation with the employee alleged to have

committed the violation; or

(c) Interview any other person, including employees who it believes

will be helpful in furnishing information relevant to the inquiry.

Sec. 4.36 Action by the Ethics Law Division.

(a) After review of the Inspector General's report, the Ethics Law

Division shall determine whether or not there is sufficient information

providing a reasonable basis to believe that a violation of Section 103

or this subpart B has occurred.

(b) If the Ethics Law Division determines that there is no

reasonable basis to believe that a violation of Section 103 or this

subpart B has occurred, it shall close the matter and send its

determination to the Office of Inspector General.

(c) If the Ethics Law Division determines that there is sufficient

information to provide a reasonable basis to believe that a violation

of Section 103 or this subpart B has occurred, it shall:

(1) Send its determination to the Office of Inspector General; and

(2) Refer the matter to the appropriate official for review as to

whether to impose a civil money penalty in accordance with 24 CFR part

30; provided, however, that the Ethics Law Division shall not make a

civil money penalty recommendation unless it finds the violation to

have been knowing and material. The decision to impose a civil money

penalty in a particular matter may be made only upon referral from the

Ethics Law Division.

(d) In determining whether a violation is material, the Ethics Law

Division shall consider the following factors, as applicable:

(1) The content of the disclosure and its significance to the

person to whom the disclosure was made;

(2) The time during the selection process when the disclosure was

made;

(3) The person to whom the disclosure was made;

(4) The dollar amount of assistance requested by the person to whom

the disclosure was made;

(5) The dollar amount of assistance available for a given

competition or program;

(6) The benefit, if any, received or expected by the employee, the

employee's relatives or friends, or any other person with whom the

employee is affiliated;

(7) The potential injury to the Department.

(e) If the Ethics Law Division determines that there is sufficient

information to provide a reasonable basis to believe that a violation

of Section 103 or this subpart B has occurred, it may, in addition to

referring the matter under 24 CFR part 30, refer the matter to an

appropriate HUD official for consideration of any other available

disciplinary action. Any referral authorized by this paragraph (e)

shall be reported to the Inspector General and may be reported to the

employee's supervisor.

Sec. 4.38 Administrative remedies.

(a) If the Department receives or obtains information providing a

reasonable basis to believe that a violation of Section 103 has

occurred, the Department may impose a sanction, as determined to be

appropriate, upon an applicant for or a recipient of assistance who has

received covered selection information.

(b) In determining whether a sanction is appropriate and if so

which sanction or sanctions should be sought, the Secretary shall give

consideration to the applicant's conduct with respect to the violation.

In so doing, the Secretary shall consider the factors listed at

Sec. 4.36(d), as well as any history of prior violations in any HUD

program, the benefits received or expected, deterrence of future

violations and the extent of any complicity in the violation.

(c) The Secretary may impose a sanction authorized by this section

whether or not the Ethics Law Division refers a case under 24 CFR part

30, and

[[Page 14453]]

whether or not a civil money penalty is imposed.

PART 12--[REMOVED]

2. Part 12 is removed.

Dated: March 27, 1996.

Henry G. Cisneros,

Secretary.

[FR Doc. 96-7921 Filed 3-29-96; 8:45 am]

BILLING CODE 4210-32-P