Compliance Procedures for Affirmative Fair Housing Marketing; Nomenclature Change

SUMMARY: HUD's regulations at 24 CFR part 108 cover compliance

procedures for affirmative fair housing marketing. As a result of

internal HUD organizational changes, the offices referred to in these

regulations no longer exist as they did when the regulations were

issued. This final rule updates these references. This final rule also

incorporates language that all correspondence that could lead to an

enforcement action against a small entity (such as audits,

investigations, or compliance reviews) will notify the small entity of

its right to comment to the National Small Business Ombudsman. This

requirement is added in accordance with the Small Business Regulatory

Enforcement Fairness Act.

DATES: Effective date: September 13, 1999.

FOR FURTHER INFORMATION CONTACT: Pamela D. Walsh, Office of Fair

Housing and Equal Opportunity, Room 5224, U.S. Department of Housing

and Urban Development, 451 Seventh Street, SW, Washington, DC, 20410-

2000; telephone (202) 708-2288 (this is not a toll-free number).

Hearing-or speech-impaired individuals may access this number via TTY

by calling the toll-free Federal Information Relay Service at (800)

877-8339.

SUPPLEMENTARY INFORMATION:

I. Background Information

HUD's regulations at 24 CFR part 108 cover compliance procedures

for affirmative fair housing marketing. These regulations were

published in 1979. Since then, HUD and the Office of Fair Housing and

Equal Opportunity have experienced several reorganizations. As

currently promulgated, the regulations define a compliance process that

requires two offices to perform complementary monitoring and reviewing

functions. An Area Office is primarily responsible for monitoring

functions and a Regional Office is primarily responsible for reviewing

functions. As a result of recent internal HUD organizational changes,

however, these offices no longer exist as they did when the regulations

were issued in 1979.

This final rule replaces references to Area Office and Regional

Office with the terms monitoring office and civil rights/compliance

reviewing office, respectively. These terms do not correspond to actual

offices within HUD, but are intended to reflect the functions of each

office within the compliance process. HUD will publish concurrently

with this final rule a notice in the Federal Register that designates

the specific offices within HUD that will act as monitoring and civil

rights/compliance reviewing offices under this part. In the future,

should HUD's internal organizational structure change again, the

specific offices that will act as monitoring and civil rights/

compliance reviewing offices will again be designated through a notice

published in the Federal Register.

With respect to compliance reviews, which are addressed in 24 CFR

part 108, HUD is cognizant that section 222 of the Small Business

Regulatory Enforcement Fairness Act (SBREFA) requires the Small

Business and Agriculture Regulatory Enforcement Ombudsman to ``work

with each agency with regulatory authority over small businesses to

ensure that small business concerns that receive or are subject to an

audit, on-site inspection, compliance assistance effort or other

enforcement related communication or contact by agency personnel are

provided with a means to comment on the enforcement activity conducted

by this personnel.'' To implement this statutory provision, the Small

Business Administration has requested that agencies include the

following language on agency publications and notices that are provided

to small businesses concerns at the time the enforcement action is

undertaken. The language is as follows:

Your Comments Are Important

The Small Business and Agriculture Regulatory Enforcement

Ombudsman and 10 Regional Fairness Boards were established to

receive comments from small businesses about federal agency

enforcement actions. The Ombudsman will annually evaluate the

enforcement activities and rate each agency's responsiveness to

small business. If you wish to comment on the enforcement actions of

[insert agency name], call 1-888-REG-FAIR (1-888-734-3247).

As HUD stated in its notice describing HUD's actions on

implementation of SBREFA, which was published on May 21, 1998 (63 FR

28214), HUD intends to work with the Small Business Administration

(SBA) to provide small entities with information on the Fairness Boards

and National Ombudsman program, at the time enforcement actions are

taken, to ensure that small entities have the full means to comment on

the enforcement activity conducted by HUD. Accordingly, this rule

adopts the language requested by the SBA and it is included in

Sec. 108.25(b).

II. Justification for Final Rulemaking

HUD generally publishes a rule for public comment before issuing a

rule for effect, in accordance with its own regulations on rulemaking

at 24 CFR part 10. Part 10 provides for exceptions to 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). For the following reasons, HUD finds

that good cause exists to publish this rule for effect without first

soliciting public comment.

This final rule makes nomenclature changes to 24 CFR part 108. As a

result of internal HUD organizational changes the offices referred to

in the current regulations no longer exist as they did when the

regulations were issued. This final rule merely replaces references to

Area Office and Regional Office with the terms monitoring office and

civil rights/compliance reviewing office, respectively. This rule also

amends 24 CFR part 108 to include ``notification'' language to small

entities, consistent with SBREFA, which the SBA has requested Federal

agencies adopt in their enforcement regulations, and which HUD has

agreed to adopt in its enforcement regulations. Neither of these two

amendments make any substantive changes to the compliance procedures

contained in part 108. Therefore, we have determined that it is

unnecessary to publish this rule for public comment prior to publishing

the rule for effect.

III. Findings and Certifications

Environmental Impact

This final rule involves regulations that set out fair housing or

nondiscrimination standards or enforcement procedures. Accordingly,

under 24 CFR 50.19(c)(3), this final rule is categorically excluded

from environmental review under the National Environmental Policy Act

of 1969 (Public Law 91-190, 83 Stat. 852, codified as amended at 42

U.S.C. 4321-4347).

[[Page 44095]]

Regulatory Flexibility Act

Section 605(b). The Secretary has reviewed this final rule before

publication and by approving it certifies, in accordance with the

Regulatory Flexibility Act (5 U.S.C. 605(b)), that this final rule

would not have a significant economic impact on a substantial number of

small entities. This final rule implements a nomenclature change only

and does not make any substantive changes to the regulations at 24 CFR

part 108. Therefore, the action taken by this rule (the nomenclature

change) does not create any additional burden.

Section 610. HUD notes, however, that changes were last made to

this rule in 1985. Section 610 of the Regulatory Flexibility Act

requires Federal Agencies to review every ten years existing

regulations that have or will have a significant economic impact on a

substantial number of small entities. The purpose of the review is to

determine whether existing rules should be left unchanged, or whether

they should be revised or rescinded in order to minimize significant

economic impacts on a substantial number of small entities. In deciding

whether change is necessary, the Regulatory Flexibility Act establishes

several factors that must be considered:

(1) Whether the rule is still needed;

(2) What type of complaints or comments were received from the

public concerning the rule;

(3) The complexity of the rule;

(4) How much the rule overlaps, duplicates or conflicts with other

Federal rules, and, to the extent feasible, with State and local

governmental rules; and

(5) How long it has been since the rule has been evaluated or how

much the technology, economic conditions, or other factors have changed

in the area affected by the rule.

During the years that the regulations in 24 CFR part 108 have been

in effect, HUD has not received any data that indicates that the

requirements of this part have had a significant economic impact on a

substantial number of small entities. Nevertheless, HUD has reviewed

this rule in accordance with the principles of section 610.

(1) This rule is only applicable to participants in certain HUD

programs, as specified in Sec. 108.1. Because HUD's mission is to

provide a decent, safe and sanitary home and suitable living

environment for every American, and this mission encompasses fighting

for fair housing and increasing affordable housing and homeownership,

HUD believes that this rule is needed for HUD's programs. HUD's

programs should provide the leadership in marketing sales and rentals

of homes that affirmatively furthers fair housing.

(2) HUD has not received complaints about this rule.

(3) The rule is not complex.

(4) The rule does not overlap, duplicate or conflict with other

Federal rules, nor, to the extent feasible, with State and local

governmental rules. Again, this rule is only applicable to HUD

programs.

(5) The rule was last evaluated in 1995 as part of President

Clinton's directive to all Federal agencies to review all existing

regulations and determine which regulations were obsolete, no longer

necessary or could be consolidated with other regulations. In 1995, HUD

determined, as it has now, that this rule is needed, and that the rule

did not duplicate other HUD regulations, and therefore consolidation

with other regulations was not appropriate.

The marketing techniques addressed by this rule have changed given

the change in technology. The rule, however, does not regulate the type

of marketing techniques used. Rather, the rule provides that whatever

marketing techniques the HUD program participant commits to utilize in

its Affirmative Fair Housing Marketing (AFHM) plan, the participant

utilizes such techniques to affirmatively further fair housing.

As noted earlier, although this rule makes no substantive changes

to 24 CFR part 108, only nomenclature changes, HUD welcomes comments

from its program participants about its part 108 regulation and their

experience with its requirements to date. Comments that provide a

factual basis for any views or suggestions presented are particularly

helpful to HUD in its evaluation of this regulation. Comments should be

submitted to: Office of the General Counsel, Rules Docket Clerk, Room

10276, U.S. Department of Housing and Urban Development, 451 Seventh

Street, SW, Washington, DC 20410-0500. Comments should refer to the

docket number of FR-4514-F-01.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (Public Law

104-4, 109 Stat. 48, 64, codified at 2 U.S.C. 1531-1538) (UMRA)

requires Federal agencies to assess the effects of their regulatory

actions on State, local, and tribal governments and on the private

sector. This final rule does not impose, within the meaning of the

UMRA, any Federal mandates on any State, local, or tribal governments

or on the private sector.

Federalism Impact

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

of Executive Order 12612 (entitled ``Federalism''), has determined that

the policies contained in this rule will not have substantial direct

effects on States or their political subdivisions, on the relationship

between the Federal Government and the States, or on the distribution

of power and responsibilities among various levels of government.

List of Subjects in 24 CFR Part 108

Fair housing, Reporting and recordkeeping requirements.

For the reasons discussed in the preamble, HUD proposes to amend 24

CFR part 108 as follows:

PART 108--COMPLIANCE PROCEDURES FOR AFFIRMATIVE FAIR HOUSING

MARKETING

1. The authority citation for part 108 is revised to read as

follows:

Authority: 42 U.S.C. 3608, 3535(d); E.O. 11063, 27 FR 11527, 3

CFR, 1958-1963 Comp., p. 652; E.O. 12892, 59 FR 2939, 3 CFR, 1994

Comp., p. 849.

2. Add new paragraphs (e) and (f) to Sec. 108.1 to read as follows:

Sec. 108.1 Purpose and application.

* * * * *

(e) The term monitoring office includes any office within HUD

designated by HUD to act as a monitoring office. As necessary, HUD will

designate specific offices within HUD to act as monitoring offices

through a notice published in the Federal Register.

(f) The term civil rights/compliance reviewing office includes any

office within HUD designated by HUD to act as a civil rights/compliance

reviewing office. As necessary, HUD will designate specific offices

within HUD to act as civil rights/compliance reviewing offices through

a notice published in the Federal Register.

3. Revise the first and second sentences of Sec. 108.15 to read as

follows:

Sec. 108.15 Pre-occupancy conference.

Applicants shall submit a Notification of Intent to Begin Marketing

to the monitoring office no later than 90 days prior to engaging in

sales or rental marketing activities. Upon receipt of the Notification

of Intent to Begin Marketing from the applicant, the monitoring office

shall review any previously approved plan and may schedule a pre-

occupancy conference. * * *

[[Page 44096]]

4. Revise Sec. 108.20 to read as follows:

Sec. 108.20 Monitoring office responsibility for monitoring plans and

reports.

(a) Submission of documentation. Pursuant to initiation of

marketing, the applicant shall submit to the monitoring office reports

documenting the implementation of the AFHM plan, including sales or

rental reports, as required by the Department. Copies of such

documentation shall be forwarded to the civil rights/compliance

reviewing office by the monitoring office as requested.

(b) Monitoring of AFHM plan. The monitoring office is responsible

for monitoring AFHM plans and providing technical assistance to the

applicant in preparation or modification of such plans during the

period of development and initial implementation.

(c) Review of applicant's reports. Each sales or rental report

shall be reviewed by the monitoring office as it is received. When

sales or rental reports show that 20% of the units covered by the AFHM

plan have been sold or rented, or whenever it appears that the plan may

not accomplish its intended objective, the monitoring office shall

notify the civil rights/compliance reviewing office.

(d) Failure of applicant to file documentation. If the applicant

fails to file required documentation, the applicant shall be sent a

written notice indicating that if the delinquent documentation is not

submitted to the monitoring office within 10 days from date of receipt

of the notice, the matter will be referred to the civil rights/

compliance reviewing office by the monitoring office for action which

may lead to the imposition of sanctions.

5. Revise Sec. 108.21 to read as follows:

Sec. 108.21 Civil rights/compliance reviewing office compliance

responsibility.

The civil rights/compliance reviewing office shall be responsible

for determining whether an applicant's actions are in apparent

compliance with its approved AFHM plan, the AFHM regulations, and this

part and for determining changes or modifications necessary in the plan

after initiation of marketing.

6. Revise paragraphs (a), (b), (d), (e), (f), (g), and (h) of

Sec. 108.25 to read as follows:

Sec. 108.25 Compliance meeting.

(a) Scheduling meeting. If an applicant fails to comply with

requirements under Sec. 108.15 or Sec. 108.20 or it appears that the

goals of the AFHM plan may not be achieved, or that the implementation

of the Plan should be modified, the civil rights/compliance reviewing

office shall schedule a meeting with the applicant. The meeting shall

be held at least ten days before the next sales or rental report is

due. The purpose of the compliance meeting is to review the applicant's

compliance with AFHM requirements and the implementation of the AFHM

Plan and to indicate any changes or modifications which may be required

in the Plan.

(b) Notice of Compliance Meeting. A Notice of Compliance Meeting

shall be sent to the last known address of the applicant, by certified

mail or through personal service. The Notice will advise the applicant

of the right to respond within seven (7) days to the matters identified

as subjects of the meeting and to submit information and relevant data

evidencing compliance with the AFHM regulations, the AFHM Plan,

Executive Order 11063 and title VIII of the Civil Rights Act of 1968,

when appropriate. If the applicant is a small entity, as defined by the

regulations of the Small Business Administration, the Notice shall

include notification that the entity may submit comment on HUD's

actions to the Small Business and Agriculture Regulatory Enforcement

Ombudsman, and shall include the appropriate contact information.

* * * * *

(d) Preparation for the compliance meeting. The monitoring office

will provide information concerning the status of the project or

housing involved to be presented to the applicant at the meeting. The

monitoring office shall be notified of the meeting and may send

representatives to the meeting.

(e) Resolution of matters. Where matters raised in the compliance

meetings are resolved through revision to the plan or its

implementation, the terms of the resolution shall be reduced to writing

and submitted to the civil rights/compliance reviewing office within 10

days of the date of the compliance meeting.

(f) Determination of compliance. If the evidence shows no violation

of the AFHM regulations and that the applicant is complying with its

approved AFHM plan and this part, the civil rights/compliance reviewing

office shall so notify the applicant within 10 days of the meeting.

(g) Determination of possible noncompliance. If the evidence

indicates an apparent failure to comply with the AFHM plan or the AFHM

regulation, or if the matters raised cannot be resolved, the civil

rights/compliance reviewing office shall so notify the applicant no

later than ten (10) days after the date the compliance meeting is held,

in writing by certified mail, return receipt requested, and shall

advise the applicant that the Department will conduct a comprehensive

compliance review or refer the matter to the Assistant Secretary for

Fair Housing and Equal Opportunity for consideration of action

including the imposition of sanctions. The purpose of a compliance

review is to determine whether the applicant has complied with the

provisions of Executive Order 11063, title VIII of the Civil Rights Act

of 1968, and the AFHM regulations in conjunction with the applicant's

specific AFHM plan previously approved by HUD.

(h) Failure of applicant to attend the meeting. If the applicant

fails to attend the meeting scheduled pursuant to this section, the

civil rights/compliance reviewing office shall so notify the applicant

no later than ten (10) days after the date of the scheduled meeting, in

writing by certified mail, return receipt requested, and shall advise

the applicant as to whether the civil rights/compliance reviewing

office will conduct a comprehensive compliance review or refer the

matter to the Assistant Secretary for Fair Housing and Equal

Opportunity for consideration of action including the imposition of

sanctions.

7. Revise the first and second sentences of Sec. 108.35 to read as

follows:

Sec. 108.35 Complaints.

Individuals and private and public entities may file complaints

alleging violations of the AFHM regulations or an approved AFHM plan

with any monitoring office, civil rights/compliance reviewing office,

or with the Assistant Secretary for FH&EO. Complaints will be referred

to the civil rights/compliance reviewing office. * * *

8. Revise paragraphs (a) and (b) of Sec. 108.40 to read as follows:

Sec. 108.40 Compliance reviews.

(a) General. All compliance reviews shall be conducted by the civil

rights/compliance reviewing office. Complaints alleging a violation(s)

of the AFHM regulations, or information ascertained in the absence of a

complaint indicating an applicant's failure to comply with an AFHM

plan, shall be referred immediately to the civil rights/compliance

reviewing office. The monitoring office shall be notified as

appropriate of all alleged violations of the AFHM regulations or

alleged failure to comply with an AFHM plan.

(b) Initiation of compliance reviews. Even in the absence of a

complaint or other information indicating

[[Page 44097]]

noncompliance pursuant to paragraph (a), the civil rights/compliance

reviewing office may conduct periodic compliance reviews throughout the

life of the mortgage in the case of multi-family projects and

throughout the duration of the Housing Assistance Payments Contract

with the Department in the case of housing assisted under section 8 of

the United States Housing Act of 1937, as amended, 42 U.S.C. 1437.

* * * * *

Sec. 108.45 [Amended]

9. Remove the last sentence of Sec. 108.45.

Dated: July 26, 1999.

Eva M. Plaza,

Assistant Secretary for Fair Housing and Equal Opportunity.

[FR Doc. 99-20801 Filed 8-11-99; 8:45 am]

BILLING CODE 4210-28-P