Community Development Block Grant (CDBG) Program; Clarification of the Nature of Required CDBG Expenditure Documentation; Final Rule

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 570

[Docket No. FR-4449-F-02]

RIN 2506-AC00

Community Development Block Grant (CDBG) Program; Clarification

of the Nature of Required CDBG Expenditure Documentation; Final Rule

AGENCY: Office of the Assistant Secretary for Community Planning and

Development, HUD.

ACTION: Final rule.

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SUMMARY: On July 15, 1999, HUD published an interim rule that clarifies

the level of expenditure documentation that Community Development Block

Grant (CDBG) grantees and subrecipients must maintain to identify the

use of CDBG funds provided for assisted activities. This change

provides the public with more assurance that CDBG funds are used only

for allowable purposes. This rule makes final the amendments made by

the July 15, 1999 interim rule, and takes into consideration the public

comment received on the interim rule. HUD has adopted the interim rule

without change.

DATES: Effective Date: December 22, 1999.

FOR FURTHER INFORMATION CONTACT: Sue Miller, Entitlement Communities

Division, Office of Community Planning and Development, Department of

Housing and Urban Development, 451 Seventh Street, SW, Room 7282,

Washington, DC 20410; telephone (202) 708-1577 (this number is not

toll-free). Persons with hearing or speech-impairments may access this

number via TTY by calling the toll-free Federal Information Relay

Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

[[Page 63681]]

I. The July 19, 1999 Interim Rule

On July 19, 1999 (64 FR 38812), HUD published an interim rule that

clarified the level of expenditure documentation that Community

Development Block Grant (CDBG) grantees and subrecipients must maintain

to identify the use of CDBG funds provided for assisted activities. The

lack of appropriate documentation increases the potential for misuse of

CDBG funds. The change made by the July 19, 1999 interim rule provides

the public with more assurance that CDBG funds are used only for

allowable purposes.

OMB Uniform Administrative Requirements for grants to local

governments and nonprofit organizations have long required that

grantees and subrecipients maintain records which adequately identify

the source and application of funds provided for financially-assisted

activities. This requirement is found at 24 CFR 85.20(b)(2) for local

governments and at 24 CFR 84.21(b)(2) for nonprofit organizations.

These requirements are specifically made applicable to the CDBG program

by 24 CFR 570.502(a)(4) and 24 CFR 570.502(b)(3), respectively. The

CDBG regulations at Sec. 570.506(h) also require maintaining financial

records in accordance with the applicable requirements listed in

Sec. 570.502.

The interim rule amended Sec. 570.506(h) to clarify the level of

documentation that is needed for grantees and subrecipients to

demonstrate compliance with the existing financial management

requirements in 24 CFR parts 84 and 85 relating to maintaining adequate

records to identify the use of funds provided for assisted activities.

A broad range of types of documentation is described in an effort to

reflect the myriad of different activities and financing mechanisms

that can be undertaken with CDBG funds.

The preamble to the July 19, 1999 interim rule provides additional

details regarding the amendment to HUD's CDBG program regulations at

Sec. 570.506(h).

II. Discussion of Public Comment Received on the July 19, 1999

Interim Rule

The public comment period on the July 19, 1999 interim rule closed

on September 17, 1999. By close of business on that date, HUD had

received a single public comment on the interim rule. The public

commenter expressed support of the interim regulatory amendment. The

commenter wrote that ``[g]rantees should not have difficulty

maintaining evidence to support how CDBG funds provided to for-profit

entities are expended.'' Accordingly, HUD has adopted the amendments

made by the interim rule without change.

III. Findings and Certifications

Paperwork Reduction Act Statement

The information collection requirements contained in this rule have

been approved by the Office of Management and Budget (OMB) in

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

3520), and assigned OMB control number 2506-0077. 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.

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 substantial economic

impact on small entities. This final rule will have no economic impact

on small entities since it is a clarification of existing policy.

Environmental Impact

This amendment is categorically excluded from environmental review

under the National Environmental Policy Act (42 U.S.C. 4321). In

keeping with the exclusion provided for in 24 CFR 50.19(c)(1), this

amendment does not direct, provide for assistance or loan and mortgage

insurance for, or otherwise govern or regulate, real property

acquisition, disposition, leasing, rehabilitation, alteration,

demolition, or new construction; or establish, revise, or provide for

standards for construction or construction materials, manufactured

housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(2), this

amendment is categorically excluded because it amends an existing

document where the existing document as a whole would not fall under

the exclusion in 24 CFR 50.19 (c)(1), but the amendment by itself would

do so.

Executive Order 13132, Federalism

Executive Order 13132 (entitled ``Federalism'') prohibits an agency

from publishing any rule that has federalism implications if the rule

either imposes substantial direct compliance costs on State and local

governments and is not required by statute, or the rule preempts State

law, unless the agency meets the consultation and funding requirements

of section 6 of the Executive Order. This final rule does not have

federalism implications and does not impose substantial direct

compliance costs on State and local governments or preempt State law

within the meaning of the Executive Order.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance numbers for the

Community Development Block Grants program are 14.218, 14.219, 14.225,

14.227, 14.246, and 14.248.

List of Subjects in 24 CFR Part 570

Administrative practice and procedure, American Samoa, Community

development block grants, Grant programs--education, Grant programs--

housing and community development, Guam, Indians, Lead poisoning, Loan

programs--housing and community development, Low and moderate income

housing, New communities, Northern Mariana Islands, Pacific Islands

Trust Territory, Pockets of poverty, Puerto Rico, Reporting and

recordkeeping requirements, Small cities, Student aid, Virgin Islands.

PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS

Accordingly, the interim rule amending 24 CFR part 570, which was

published at 64 FR 38812 on July 19, 1999, is adopted as a final rule

without change.

Dated: November 16, 1999.

Cardell Cooper,

Assistant Secretary for Community Planning and Development.

[FR Doc. 99-30366 Filed 11-19-99; 8:45 am]

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