Revision of HUD's Fair Housing Complaint Processing

SUMMARY: On August 8, 1996 (61 FR 41480), HUD published an interim rule

amending its regulations governing fair housing complaint processing.

Specifically, the rule removed a provision allowing a respondent to

request a subpoena during a fair housing investigation. This rule

finalizes the policies and procedures set forth in the August 8, 1996

interim rule and takes into consideration the public comments received

on the interim rule. HUD has decided to adopt the interim rule without

change.

EFFECTIVE DATE: May 2, 1997.

FOR FURTHER INFORMATION CONTACT: Susan Forward, Deputy Assistant

Secretary for Enforcement and Investigations, Room 5106, Department of

Housing and Urban Development, 451 Seventh Street, SW, Washington, DC

20410, telephone number (202) 708-4211. For hearing or speech-impaired

persons, this number may be accessed via TTY by calling the Federal

Information Relay Service at 1-800-877-8339. (With the exception of the

``800'' number, these numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Interim Rule Finalized Without Change

The public comment period on the August 8, 1996 interim rule

expired on October 7, 1996. Only ten public comments were received. HUD

has decided not to make any changes as a result of public comment.

Section III. of the preamble presents a summary of the significant

issues raised by the public commenters on the interim rule, and HUD's

responses to these comments.

II. The August 8, 1996 Interim Rule

The Fair Housing Amendments Act of 1988 (Pub. L. 100-430, 102 Stat.

1619) (1988 Act) amended section 811 of the Fair Housing Act (Title

VIII of the Civil Rights Act of 1968, as amended, 42 U.S.C. 3601 et

seq.). Section 811, as amended, authorizes the Secretary of HUD to

issue subpoenas and order discovery in aid of fair housing

investigations and hearings. Prior to the 1988 Act, section 811(b) of

the Fair Housing Act permitted a respondent to request the issuance of

a subpoena during a fair housing investigation:

Upon written application to the Secretary, a respondent shall be

entitled to the issuance of a reasonable number of subpoenas by and

in the name of the Secretary to the same extent and subject to the

same limitations as subpoenas issued by the Secretary himself.

42 U.S.C. 3611(b) (1969).

The 1988 Act removed the above-quoted provision for the Fair

Housing Act and granted the Secretary sole authority for conducting

discovery during fair housing investigations. HUD's regulations at 24

CFR part 103 (Fair Housing Complaint Processing), however, included a

provision which permitted a respondent to request a subpoena during an

investigation. On August 8, 1996 (61 FR 41480), HUD published an

interim rule amending Sec. 103.215(b) to remove this provision. This

rule finalizes the policies and procedures set forth in the August 8,

1996 interim rule and takes into consideration the public comments

received on the interim rule. The August 8, 1996 interim rule provided

additional details on the amendments to 24 CFR 103.215(b).

III. Discussion of Public Comments on the August 8, 1996 Interim

Rule

Statutory Support for Subpoena Requests by Respondents

Comment. Four commenters believe that revised section 811 of the

Fair Housing Act does not prohibit a respondent from requesting the

issuance of a subpoena during a fair housing investigation. These

commenters noted in support of this argument that section 811 refers to

witness fees which are payable by a party requesting a subpoena.

These commenters also cited language from the House Judiciary

Committee Report on the 1988 Act: ``The Committee intends that the

Secretary will subpoena all relevant witnesses and that in most

instances parties will not have to request subpoenas'' (House Report

No. 100-711, 100th Cong., 2d Sess. 36 (1988)). The commenters believe

that the language of the statute, as well as its legislative history,

supports their contention that the Congress intended to permit parties

to request subpoenas during both investigations and hearings under the

Fair Housing Act.

HUD response. Section 811(a) of the Fair Housing Act states:

The Secretary may, in accordance with this subsection, issue

subpoenas and order discovery in aid of investigations and hearings

under this title. Such subpoenas and discovery may be ordered to the

same extent and subject to the same limitations as would apply if

the subpoenas or discovery were ordered or served in aid of a civil

action in the United States district court for the district in which

the investigation is taking place.

42 U.S.C. 3611 (1996).

As the commenters noted, section 811 does not prohibit the issuance

of subpoenas to complainants or respondents during investigations;

however, neither does it provide complainants or respondents the right

to request subpoenas or conduct discovery during investigations.

Section 811 grants to the Secretary the right to issue subpoenas and

order discovery in the same manner as such subpoenas could be granted

or discovery ordered by a United States district court. In granting

this authority to the Secretary, the Congress authorized the issuance

of subpoenas upon the request of a party to a hearing before an

administrative law judge, as provided for in section 812(c) of the Fair

Housing Act: ``At a hearing under this section, each party may appear

in person, be represented by counsel, present evidence, cross-examine

witnesses, and obtain the issuance of subpoenas under section 811'' (42

U.S.C. 3612(c) (1996)).

The language of the House Report relied upon by the commenters

further supports HUD's interpretation of section 811. The sentence in

the House Report immediately prior to the one cited by the commenters

states: ``The Committee intends that subpoenas and discovery be

available and ordered to the same extent as allowed in the U.S.

district courts.''

Had the Congress intended to provide respondents with the right to

request subpoenas during investigations, it could have retained the

original text of section 811(b) of the Fair Housing Act, which

expressly established such a right. The deletion of that provision by

the 1988 Act indicates that the Congress did not intend to create such

a right.

The statement from the House Committee Report, which sets forth the

Committee's intent to make subpoenas and discovery available to the

same extent as in Federal district court, the language of section 811,

as amended in 1988 to eliminate the provisions allowing respondents to

request subpoenas, and section 812, which authorizes parties to an

administrative hearing to obtain the issuance of subpoenas, clearly

indicate that the Congress intended that parties to a hearing before an

administrative law judge under the Fair Housing Act have

[[Page 15795]]

the same rights to discovery that would be available were the action to

be brought in Federal district court. By amending its regulations to

restrict the issuance of subpoenas in support of discovery to the

enforcement proceeding itself, HUD is complying with the expressed

intent of the Congress.

Furthermore, to allow respondents to conduct and compel discovery

during an investigation as well as during a hearing before an

administrative law judge or a trial in Federal district court would, in

effect, allow respondents ``double discovery'' during investigations

and enforcement. HUD believes that formal judicial discovery is more

properly limited to the judicial proceeding occurring after a Charge

has been issued. HUD interprets the Fair Housing Act's delegation of

judicial authority to provide for discovery by complainants and

respondents during an enforcement hearing before an administrative law

judge only.

Respondent's Ability To Prepare Defense

Comment. The preamble to the August 8, 1996 interim rule emphasized

that the interim rule did not compromise a respondent's ability to

conduct its own investigation of the facts and prepare its own defense.

Four commenters disagreed with this point. These commenters believe

that the interim rule would prevent a respondent from requesting that

HUD obtain information which could lead to a Determination of No

Reasonable Cause in that respondent's case. The commenters believe that

it would be improper for respondents to have no opportunity to

challenge the accuracy of the allegations underlying a complaint. One

commenter complained that it would be unfair ``to allow one side, the

complainant, to gather information through the use of [HUD's]

investigative powers,'' without providing similar investigative means

to the respondent.

HUD response. HUD has responsibility for conducting a fair and

impartial investigation into the facts surrounding alleged violations

of the Fair Housing Act. To that end, it will consider and evaluate all

information received, from whatever source. If a respondent knows of

information that will be of assistance to HUD in reaching its

determination, the respondent should make that information known to the

investigator. Similarly, should a respondent wish to challenge the

accuracy of information possessed by HUD, it may present all

information at its disposal to do so. This rule does not affect a

respondent's ability to make HUD aware of information for its own

investigative purposes or challenge information possessed by HUD, and

it authorizes HUD to act on information provided by complainants and

respondents in determining whether HUD should issue a subpoena.

Delays in HUD's Investigation Process

Comment. The preamble to the August 8, 1996 interim rule stated HUD

was issuing this rule in part to eliminate delays in investigations

which are associated with subpoena requests and streamline the

investigative process. Two commenters disagreed that the interim rule

would expedite HUD's investigation of fair housing complaints. One of

these commenters referred to statistical data included in the report on

the enforcement of the 1988 Amendments Act prepared by the United

States Commission on Civil Rights (Report): 1

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\1\ United States Commission on Civil Rights, The Fair Housing

Amendments Act of 1988: The Enforcement Report (1994).

During fiscal year 1990, 64 percent of the complaints were

closed in more than the target 100 days; in 1991 the figure dropped

to 62 percent; in 1992, it dropped further to 40 percent; and in

1993, the last year reported, it dropped to 39 percent. Accordingly,

over these years, while the respondent had the ability to request

subpoenas, HUD's performance in closing cases was improved. Report

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at 41. (Emphasis in the original.)

The commenter wrote that the cited Report language demonstrated

that there are other reasons for the delay in fair housing

investigations.

Another commenter disagreed, stating that processing subpoena

requests can delay the investigative process. This commenter

acknowledged that it is in the interest of both complainants and

respondents to avoid such delays.

HUD response. As the commenters recognized, HUD has made a serious

effort to reduce the amount of time involved in investigations and to

improve its own performance in expeditiously closing cases. In

accordance with the President's initiative on regulatory reform, HUD

has undertaken to streamline further its complaint processing

procedures. In the past, subpoena processing has significantly affected

case closing periods in only a limited number of cases; however, HUD

believes that the public interest in reducing regulatory burdens is

best served by eliminating obstacles to the prompt processing of

complaints wherever those obstacles may be found. While there are other

considerations that support amending this rule, such as fairness to

both complainants and respondents, the proper role of HUD in

investigations, and conforming Departmental practice to that of other

agencies enforcing civil rights laws, HUD has also determined that this

final rule will improve HUD's performance and reduce the overall burden

of its regulations on respondents and complainants alike.

Appearance of Conflict of Interest

Comment. HUD promulgated this rule in part to prevent the

appearance of a conflict between the Department's dual roles as

investigator and as arbiter of discovery disputes between complainants

and respondents. One commenter acknowledged that the current rule

creates the improper appearance that the investigation is an

adversarial process in which HUD and the complainant share the same

interest. The commenter recognized that this is not the case and that

HUD conducts each investigation to determine objectively whether the

Fair Housing Act has been violated. For this reason, the commenter

supported amending the rule to correct that improper appearance of

partiality.

Five commenters expressed their doubt that the interim rule would

prevent the appearance of such a conflict. These commenters believe

that the rule, by not granting to respondents the right to request a

subpoena during investigations, created the appearance that HUD was

conducting investigations, not as an impartial arbiter, but as an

advocate of the complainant. One commenter noted that many complaints

are filed by ``testers'' funded by HUD through programs such as the

Fair Housing Initiatives Program (FHIP). The commenter believes that in

cases where HUD has played such an active role in generating the

complaint, the impartiality of HUD's investigation would benefit from

having the full participation of the respondent when inquiring into the

testing procedures used.

HUD response. HUD provides funding under the FHIP program to state

and local governments and public or private nonprofit organizations to

conduct fair housing education, outreach, and enforcement activities

throughout the country. (See 42 U.S.C. 3616 note.) Complaints submitted

by organizations receiving such grants are investigated with the same

impartial consideration as all other alleged Fair Housing Act

violations.

Hindrance to Conciliation Efforts

Comment. Three commenters believe the interim rule would hinder

HUD's efforts to conciliate fair housing

[[Page 15796]]

complaints. These commenters noted that some fair housing complaints do

not provide sufficient information regarding the substance of the

particular alleged discriminatory behavior. The commenters wrote that

most respondents would be hesitant to conciliate or settle a fair

housing complaint before having the opportunity to investigate fully

its underlying facts.

HUD response. This amendment in no way limits any person's ability

to conduct an investigation of the facts surrounding any alleged

violation of the Fair Housing Act. This rule only limits a respondent's

ability to use HUD's authority to compel discovery during an

investigation. Nothing prevents respondents from conducting their own

investigations of the underlying facts and respondents may choose to

delay conciliating complaints until their own investigations are

completed. In the vast majority of complaints that have been

conciliated, conciliation has been accomplished without respondents

resorting to formal discovery measures or requesting subpoenas. This

rule will not significantly affect the resolution of Fair Housing Act

complaints through conciliation, which will continue to be an important

tool for resolving complaints.

Respondent's Right to Conduct Discovery

Comment. Four of the commenters objected to the description of the

interim rule as announced in its preamble. The commenters believe that

HUD should have announced more clearly that the interim rule

effectively eliminated all discovery rights of the respondent during

the investigative stage, not merely the right to have a subpoena issued

at its request.

HUD response. HUD intends this rule to conform its investigative

process to the practice of other Federal agencies enforcing civil

rights laws and to simplify and streamline the investigative process;

therefore, this rule no longer provides that respondents may use HUD's

resources to compel formal discovery during an investigation. However,

it should be noted that both complainants and respondents retain the

ability to conduct their own investigations of the facts surrounding

any complaint. Only the use of formal compulsory discovery procedures

during an administrative investigation has been eliminated by this

rule. HUD has emphasized in this Preamble that the effect of this final

rule is to end ``double discovery'' and limit a respondent's ability to

request subpoenas or conduct discovery to hearings before

administrative law judges or civil trials in Federal district court.

In deciding whether to amend the existing rule, HUD looked to the

experience of other Federal agencies enforcing civil rights laws for

guidance on this issue. A review of the relevant regulations of such

other agencies, including the Equal Employment Opportunity Commission,

the Department of Education, and the Department of Justice, revealed

that none of them provide for such ``double discovery'' during both

investigations and enforcement proceedings as was provided for in HUD's

existing regulation. The Department believes that the experience of

other Federal administrative agencies provides positive guidance for

this decision to streamline and simplify the investigation process.

Department of Justice Memorandum

Comment. The preamble to the August 8, 1996 interim rule referred

to a Department of Justice opinion to support the amendments made to

Sec. 103.215(b) (61 FR 41480).2 Three commenters questioned HUD's

reliance on this opinion. These commenters believe that the opinion was

not directed to the issues contained in the interim rule, but rather

was directed to the narrow question of whether an attorney-client

relationship exists between Department of Justice attorneys and

complainants under the Fair Housing Act. According to the commenters,

the memorandum does not address the question of HUD's role in fair

housing investigations, nor does it define the relationship between HUD

and a complainant during the investigation stage of a fair housing

proceeding.

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\2\ Assistant Attorney General Walter Dellinger, memorandum to

Deval L. Patrick, Assistant Attorney General for Civil Rights, The

Relationship Between Department Attorneys and Persons on Whose

Behalf the United States Initiates Cases Under the Fair Housing Act

(January 20, 1995).

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HUD response. The commenters are correct in stating that the

opinion did not reach the nature of HUD's relationship with a

complainant during Fair Housing Act investigations. To the extent that

the opinion supported HUD's interpretation of its role in the

investigation as being neutral and impartial, it did so only by

analogy. HUD relies on that opinion in support of this rule only to the

extent that it states that even after a Charge of Discrimination has

been issued and the government is prosecuting a case on the

complainant's behalf, a government attorney's obligation is to enforce

the law, not to advocate for either complainants or respondents. This

is consistent with the current investigatory procedure of HUD and that

of other agencies enforcing civil rights laws. HUD's duty in both

investigations and enforcement proceedings is to enforce the law, not

to advocate for either side, and its regulations must reflect that

role.

HUD's Justification for Interim Rulemaking

Comment. Five of the commenters believe that HUD should have

solicited public comment prior to issuing the August 8, 1996 rule for

effect. These commenters questioned the justification for interim

rulemaking provided by HUD in the preamble to the August 8, 1996 rule.

HUD response. HUD's regulations at 24 CFR part 10 (Rulemaking

Policy and Procedures) authorize HUD to issue a rule for immediate

effect 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). In this case, the public interest in

reducing the burdens of HUD's regulations and expediting Fair Housing

Act investigations has been served through promulgation of the interim

rule.

HUD has not received any requests for subpoenas by respondents

subsequent to the effective date of the August 8, 1996 interim rule.

HUD carefully reviewed and considered all comments received on the

interim rule. Accordingly, the interim rule has not impacted a

respondent's ability to request a subpoena prior to HUD's consideration

of the public comments and the publication of this final rule.

III. Findings and Certifications

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 streamlines HUD's regulations governing fair

housing complaint processing (24 CFR part 103). Specifically, the final

rule removes a provision which allows a respondent to request a

subpoena during a fair housing investigation. The removal of this

provision will eliminate the delays associated with subpoena requests

and expedite the investigation process. The rule will also conform

HUD's investigative practices with those of other Federal

administrative agencies. The rule will have no adverse or

[[Page 15797]]

disproportionate economic impact on small businesses.

Environmental Impact. In accordance with 24 CFR 50.19(c)(3) of the

HUD regulations, the policies and procedures contained in this rule set

out nondiscrimination standards and, therefore, are categorically

excluded from the requirements of the National Environmental Policy

Act.

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. This final rule is solely concerned with HUD's processing

of complaints under the Fair Housing Act. 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. The only amendments made

by this final rule are to HUD's regulations governing fair housing

complaint processing. This final rule streamlines these regulations by

removing the provision which authorizes a respondent to request the

issuance of a subpoena during an investigation. No significant change

in existing HUD policies or programs would result from promulgation of

this final rule, as those policies and programs relate to family

concerns.

Executive Order 12866, Regulatory Planning and Review. The Office

of Management and Budget (OMB) reviewed this rule under Executive Order

12866, Regulatory Planning and Review. OMB determined that this rule is

a ``significant regulatory action,'' as defined in section 3(f) of the

Order (although not economically significant, as provided in section

3(f)(1) of the Order). Any changes made to the final rule subsequent to

its submission to OMB are identified in the docket file, which is

available for public inspection in the office of the Department's Rules

Docket Clerk, Room 10276, 451 Seventh Street, SW, Washington, DC 20410-

0500.

Unfunded Mandates Reform Act. The Secretary has reviewed this rule

before publication and by approving it certifies, in accordance with

the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532), that this

rule does not impose a Federal mandate that will result in the

expenditure of State, local, and tribal governments, in the aggregate,

or by the private sector, of $100 million or more in any one year.

List of Subjects in 24 CFR Part 103

Administrative practice and procedure, Aged, Fair housing,

Individuals with disabilities, Intergovernmental relations,

Investigations, Mortgages, Penalties, Reporting and recordkeeping

requirements.

Accordingly, the interim rule published at 61 FR 41480, August 8,

1996, amending 24 CFR part 103 is adopted as final without change.

Dated: February 13, 1997.

Susan M. Forward,

Deputy Assistant Secretary for Enforcement and Investigations.

[FR Doc. 97-8212 Filed 4-1-97; 8:45 am]

BILLING CODE 4210-28-P