Implementation of OMB Guidance on Nonprocurement Debarment and Suspension, 73484-73497 [E7-24908]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 72, Number 247 (Thursday, December 27, 2007)]
[Rules and Regulations]
[Pages 73484-73497]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-24908]



[[Page 73483]]

-----------------------------------------------------------------------

Part III





Department of Housing and Urban Development





-----------------------------------------------------------------------



2 CFR Part 2424

24 CFR Parts 5, 6, et al.



Implementation of OMB Guidance on Nonprocurement Debarment and 
Suspension; Final Rule

Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / 
Rules and Regulations

[[Page 73484]]


-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

2 CFR Part 2424

24 CFR Parts 5, 6, 8, 15, 21, 24, 25, 26, 84, 85, 91, 92, 103, 107, 
135, 200, 202, 203, 206, 245, 291, 401, 402, 570, 572, 585, 941, 
954, 982, 983, 1000, 1003, 1005, 1006, 3282, and 3500

[Docket No. FR-5071-F-02]
RIN 2501-AD29


Implementation of OMB Guidance on Nonprocurement Debarment and 
Suspension

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: Following publication of a March 23, 2007, proposed rule, this 
final rule relocates HUD's regulations governing nonprocurement 
debarment and suspension to a new part in title 2 of the Code of 
Federal Regulations (CFR). The relocation is part of a governmentwide 
initiative to create one location where the public can access both the 
Office of Management and Budget (OMB) guidance for grants and 
agreements and the associated Federal agency implementing regulations. 
The new part adopts the OMB guidance on nonprocurement debarment and 
suspension and supplements it with HUD-specific clarifications and 
additions. The rule also makes conforming changes to HUD regulations 
referencing the nonprocurement debarment and suspension regulations. 
This regulatory action is an administrative simplification that would 
make no substantive change in HUD policy or procedures for 
nonprocurement debarment and suspension. This final rule takes into 
consideration the one public comment received on the March 23, 2007, 
proposed rule. To conform the rule to reflect the establishment of 
HUD's Office of Hearings and Appeals and more closely track the 
language of the OMB guidelines, this final rule adopts the proposed 
rule with minor changes.

DATES: Effective Date: January 28, 2008.

FOR FURTHER INFORMATION CONTACT: Dane Narode, Acting Associate General 
Counsel, Office of Program Enforcement, Administrative Proceedings 
Division, Department of Housing and Urban Development, 1250 Maryland 
Avenue, SW., Suite 200, Washington DC 20024-0500; telephone number 
(202) 708-2350 (this is not a toll-free number); e-mail address 
DaneM.Narode@hud.gov. Hearing- or speech-impaired individuals may 
access the telephone number listed above by calling the toll-free 
Federal Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: 

I. Background

    OMB is undertaking to restructure the framework of Federal 
government policies for grants, other financial assistance, and 
nonprocurement agreements in an effort to make it easier for applicants 
and recipients to locate and comply with such policies. On May 11, 2004 
(69 FR 26276), OMB established a new title 2 of the CFR, which is 
comprised of two subtitles. Subtitle A, entitled ``Government-wide 
Grants and Agreements,'' contains OMB policy guidance to Federal 
agencies on grants and agreements. Subtitle B, entitled ``Federal 
Agency Regulations for Grants and Agreements,'' will contain the 
regulations of Federal agencies implementing the OMB guidance, as it 
applies to grants and other financial assistance agreements and 
nonprocurement transactions.
    On August 31, 2005, at 70 FR 51862, OMB continued its initiative to 
create a single location where OMB guidance and Federal agency 
implementing regulations could be found by incorporating guidance 
documents into 2 CFR, subtitle A, and making conforming changes. OMB is 
engaging in a process by which it will relocate and revise guidance 
documents including, but not limited to, OMB circulars and OMB guidance 
for Federal agencies on governmentwide debarment and suspension.
    On March 23, 2007, at 72 FR 14015, HUD published a proposed rule to 
adopt the OMB guidance in subparts A through I of 2 CFR part 180, as 
supplemented by HUD's policies and procedures for nonprocurement 
debarment and suspension. HUD's rule proposed to create a new part at 2 
CFR part 2424 that adopts, by reference, the baseline provisions of 2 
CFR part 180 and includes HUD-specific supplements, clarifications, and 
modifications to 2 CFR part 180. Accordingly, HUD's regulations at 24 
CFR part 24, entitled ``Government-wide Debarment and Suspension 
(Nonprocurement),'' are being supplanted by 2 CFR part 2424. It is 
important to note that the OMB rule promulgating 2 CFR 180 (70 FR 
51863, August 31, 2005) re-codified the existing common rule on 
nonprocurement debarment and suspension issued by 33 Federal agencies, 
including HUD, on November 26, 2003 (68 FR 66534). As a result, this 
rule does not change existing HUD policy or procedures.
    To reflect the new location of HUD's suspension and debarment 
regulations at 2 CFR part 2424, the March 23, 2007, rule proposed 
numerous conforming regulatory changes throughout HUD's regulation in 
title 24 of the CFR. Various parts of title 24 have cross-references to 
the nonprocurement suspension and debarment provisions contained at 24 
CFR part 24; therefore, the rule proposed to replace them with 
references to 2 CFR part 2424. HUD also proposed to revise references 
to the Drug Free Workplace Act, which were originally included within 
24 CFR part 24. Neither the conforming regulatory changes nor the 
revision of references to the Drug Free Workplace Act have substantive 
effect on the Department's regulations.
    HUD's March 23, 2007, rule also proposed revisions to its Limited 
Denial of Participation (LDP) regulations currently codified at 24 CFR 
part 24. These revisions included changes to account for the relocation 
of the nonprocurement debarment and suspension rules, as well as to 
clarify that included within the causes for imposing an LDP under new 2 
CFR 2424.1110(a)(8) are any acts or omissions that would be cause for 
debarment under 2 CFR 180.800. HUD also proposed amending 2 CFR 
2424.1130 by adding paragraph (c) to specify that the applicable 
factors found in 2 CFR 180.860 may be considered by the Departmental 
official or designee in deciding whether to terminate, modify, or 
affirm an LDP. Finally, HUD proposed clarifying changes to 24 CFR 
5.105, to add the term ``participant,'' to 24 CFR 21.605(a)(2); to 
refer to OMB Circular A-102, as implemented at 24 CFR part 85; and to 
amend 24 CFR 84.13 by removing HUD as a regulated entity under part 
84.\1\ This final rule adopts these changes without further 
modification.
---------------------------------------------------------------------------

    \1\ For a more detailed description of the proposed regulatory 
changes, please see the preamble to the March 23, 2007, proposed 
rule.
---------------------------------------------------------------------------

    In this final rule, HUD has also removed the delegation of 
authority to the Director of the Departmental Enforcement Center from 
proposed 24 CFR 2424.137. The section now found in the final rule 
mirrors HUD's previous promulgation of the nonprocurement suspension 
and debarment rule. HUD has made slight modifications to 24 CFR 
2424.747 and 2424.842 in order to more closely track the language of 
the OMB guidelines. HUD has also modified 24 CFR 2424.952 to reflect 
the establishment of HUD's Office of Hearings and Appeals and the 
dissolution of HUD's Board of Contract

[[Page 73485]]

Appeals. None of the above changes make substantial modifications to 
the rule as proposed, or to HUD debarment and suspension practice.

II. Summary of the Public Comment Received on the March 23, 2007, 
Proposed Rule

    This final rule follows publication of the March 23, 2007, proposed 
rule and takes into consideration the one public comment received on 
the proposed rule. After careful consideration of the issue raised by 
the commenter, HUD has decided to adopt the proposed rule with minor 
changes, as discussed above.
    The public comment period on the March 23, 2007, proposed rule 
closed on May 22, 2007. HUD received one comment. The comment, from a 
national nonprofit organization that represents housing and 
redevelopment officials, expressed concern about the LDP sanction as a 
HUD-specific procedure and requested that HUD examine and reconsider 
its use of the LDP sanction. The commenter wrote that because the LDP 
sanction takes effect immediately for a limited duration, the sanction 
may run its course prior to the completion of the administrative review 
process. The commenter also questioned whether the existence of the LDP 
sanction creates an ``undesirable imbalance'' in the relationship 
between the local HUD officials authorized to impose the LDP and local 
officials who may be subject to the sanction. The commenter did not 
comment directly on the proposed regulatory change regarding LDPs, and 
wrote that it was not ``suggesting at this time that the LDP 
regulations should be removed.'' Rather, the commenter asked HUD to 
explain the continued use of LDPs.
    As noted above, HUD has not revised the proposed rule in response 
to this comment. In response to the questions raised by the commenter, 
HUD notes first that the proposed change to the LDP provision was 
limited to a clarification, and was not a substantive change. Further, 
the LDP sanction is not new, but has been relied upon by HUD for more 
than two decades in order to protect the public and HUD from future 
harm. Rather than creating any undue imbalance in the relationship 
between the Federal government and program participants, the LDP has 
been an effective tool in immediately curtailing program abuse. Absent 
the availability of the LDP sanction, the misuse of scarce Federal 
resources would continue pending the completion of a potentially 
lengthy administrative process. Accordingly, HUD continues to believe 
that the LDP sanction provides a valuable safeguard to the public and 
the Federal government.

III. Findings and Certifications

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally 
requires an agency to conduct a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. The regulatory 
amendments that would be made by this rule are procedural. This rule 
relocates HUD's regulations governing nonprocurement debarment and 
suspension to a new part in title 2 of the CFR. The relocation is part 
of a governmentwide initiative to create one location where the public 
can find both the OMB requirements for grants and agreements and the 
associated Federal agency implementing regulations. The rule also makes 
conforming changes to HUD regulations referencing the nonprocurement 
debarment and suspension regulations. This regulatory action is an 
administrative simplification that makes no substantive change in HUD 
policy or procedures for nonprocurement debarment and suspension. The 
rule does not have any impact on the substantive rights or duties of 
small entities, because the policies and procedures are being 
relocated, while remaining substantively the same. Accordingly, the 
undersigned certifies that this rule will not have a significant 
economic impact on a substantial number of small entities.

Environmental Impact

    This rule 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)(1), this rule 
is categorically excluded from the requirements of the National 
Environmental Policy Act (42 U.S.C. 4321 et seq.).

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 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.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on State, local, and 
tribal governments, and on the private sector. This rule does not 
impose any Federal mandates on any State, local, or tribal governments, 
or on the private sector, within the meaning of UMRA.

List of Subjects

2 CFR Part 2424

    Administrative practice and procedure, Debarment and suspension, 
Grant programs, Reporting and recordkeeping requirements.

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs--housing and community 
development, Individuals with disabilities, Intergovernmental 
relations, Loan programs--housing and community development, Low and 
moderate income housing, Mortgage insurance, Penalties, Pets, Public 
housing, Rent subsidies, Reporting and recordkeeping requirements, 
Social security, Unemployment compensation, Wages.

24 CFR Part 6

    Administrative practice and procedure, Civil rights, Equal 
employment opportunity, Grant programs--housing and community 
development, Investigations, Loan programs--housing and community 
development, Reporting and recordkeeping requirements.

24 CFR Part 8

    Administrative practice and procedure, Civil rights, Equal 
employment opportunity, Grant programs--housing and community 
development, Individuals with disabilities, Loan programs--housing and 
community development, Reporting and recordkeeping requirements.

[[Page 73486]]

24 CFR Part 15

    Classified information, Courts, Freedom of information, Government 
employees, Reporting and recordkeeping requirements.

24 CFR Part 21

    Administrative practice and procedure, Drug abuse, Grant programs, 
Loan programs, Reporting and recordkeeping requirements.

24 CFR Part 24

    Administrative practice and procedure, Government contracts, Grant 
programs, Loan programs, Technical assistance, Reporting and 
recordkeeping requirements.

24 CFR Part 25

    Administrative practice and procedure, Loan programs--housing and 
community development, Organization and functions (Government 
agencies), Reporting and recordkeeping requirements.

24 CFR Part 26

    Administrative practice and procedure.

24 CFR Part 84

    Accounting, Colleges and universities, Grant programs, Hospitals, 
Nonprofit organizations, Reporting and recordkeeping requirements.

24 CFR Part 85

    Accounting, Grant programs, Indians, Intergovernmental relations, 
Reporting and recordkeeping requirements.

24 CFR Part 91

    Aged, Grant programs--housing and community development, Homeless, 
Individuals with disabilities, Low and moderate income housing, 
Reporting and recordkeeping requirements.

24 CFR Part 92

    Administrative practice and procedure, Grant programs--housing and 
community development, Low and moderate income housing, Manufactured 
homes, Rent subsidies, Reporting and recordkeeping requirements.

24 CFR Part 103

    Administrative practice and procedure, Aged, Fair housing, 
Individuals with disabilities, Intergovernmental relations, 
Investigations, Mortgages, Penalties, Reporting and recordkeeping 
requirements.

24 CFR Part 107

    Administrative practice and procedure, Fair housing, Grant 
programs--housing and community development, Loan programs--housing and 
community development, Religious discrimination, Reporting and 
recordkeeping requirements, Sex discrimination.

24 CFR Part 135

    Administrative practice and procedure, Community development, Equal 
employment opportunity, Government contracts, Grant programs--housing 
and community development, Housing, Loan programs--housing and 
community development, Reporting and recordkeeping requirements, Small 
businesses.

24 CFR Part 200

    Administrative practice and procedure, Claims, Equal employment 
opportunity, Fair housing, Housing standards, Lead poisoning, Loan 
programs--housing and community development, Mortgage insurance, 
Organization and functions (Government agencies), Penalties, Reporting 
and recordkeeping requirements, Social security, Unemployment 
compensation, Wages.

24 CFR Part 202

    Administrative practice and procedure, Home improvement, 
Manufactured homes, Mortgage insurance, Reporting and recordkeeping 
requirements.

24 CFR Part 203

    Hawaiian Natives, Home improvement, Indians--lands, Loan programs--
housing and community development, Mortgage insurance, Reporting and 
recordkeeping requirements, Solar energy.

24 CFR Part 206

    Aged, Condominiums, Loan programs--housing and community 
development, Mortgage insurance, Reporting and recordkeeping 
requirements.

24 CFR Part 245

    Condominiums, Cooperatives, Grant programs--housing and community 
development, Loan programs--housing and community development, Low and 
moderate income housing, Rent subsidies, Reporting and recordkeeping 
requirements, Utilities.

24 CFR Part 291

    Community facilities, Homeless, Low and moderate income housing, 
Mortgages, Reporting and recordkeeping requirements, Surplus government 
property.

24 CFR Part 401

    Grant programs--housing and community development, Loan programs--
housing and community development, Low and moderate income housing, 
Mortgage insurance, Mortgages, Rent subsidies, Reporting and 
recordkeeping requirements.

24 CFR Part 402

    Low and moderate income housing, Rent subsidies.

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, Loan programs--
housing and community development, Low and moderate income housing, 
Northern Mariana Islands, Pacific Islands Trust Territory, Puerto Rico, 
Reporting and recordkeeping requirements, Student aid, Virgin Islands.

24 CFR Part 572

    Government property, Grant programs--housing and community 
development, Low and moderate income housing, Nonprofit organizations, 
Reporting and recordkeeping requirements.

24 CFR Part 585

    Community facilities, Grant programs--housing and community 
development, Homeless, Low and moderate income housing, Reporting and 
recordkeeping requirements.

24 CFR Part 941

    Grant programs--housing and community development, Loan programs--
housing and community development, Public housing.

24 CFR Part 954

    Administrative practice and procedure, Grant programs--housing and 
community development, Grant programs--Indians, Indians, Low and 
moderate income housing, Manufactured homes, Rent subsidies, Reporting 
and recordkeeping requirements.

24 CFR Part 982

    Grant programs--housing and community development, Grant programs--
Indians, Indians, Public housing, Rent subsidies, Reporting and 
recordkeeping requirements.

24 CFR Part 983

    Grant programs--housing and community development, Rent

[[Page 73487]]

subsidies, Reporting and recordkeeping requirements.

24 CFR Part 1000

    Aged, Community development block grants, Grant programs--housing 
and community development, Grant programs--Indians, Indians, 
Individuals with disabilities, Public housing, Reporting and 
recordkeeping requirements.

24 CFR Part 1003

    Alaska, Community development block grants, Grant programs--housing 
and community development, Grant programs--Indians, Indians, Reporting 
and recordkeeping requirements.

24 CFR Part 1005

    Indians, Loan programs--Indians, Reporting and recordkeeping 
requirements.

24 CFR Part 1006

    Community development block grants, Grant programs--housing and 
community development, Grant programs--Indians, Hawaiian Natives, Low 
and moderate income housing, Reporting and recordkeeping requirements.

24 CFR Part 3282

    Administrative practice and procedure, Consumer protection, 
Intergovernmental relations, Investigations, Manufactured homes, 
Reporting and recordkeeping requirements.

24 CFR Part 3500

    Consumer protection, Housing, Mortgages, Reporting and 
recordkeeping requirements.

0
Accordingly, for the reasons discussed in the preamble, HUD amends 2 
CFR part 2424 and 24 CFR parts 5, 6, 8, 15, 21, 24, 25, 26, 84, 85, 91, 
92, 103, 107, 135, 200, 202, 203, 206, 245, 291, 401, 402, 570, 572, 
585, 941, 954, 982, 983, 1000, 1003, 1005, 1006, 3282, and 3500 to read 
as follows:

TITLE 2--GRANTS AND AGREEMENTS

SUBTITLE B--FEDERAL AGENCY REGULATIONS FOR GRANTS AND AGREEMENTS

PART 2424--NONPROCUREMENT DEBARMENT AND SUSPENSION; DEPARTMENT OF 
HOUSING AND URBAN DEVELOPMENT

0
1. Under the authority of 42 U.S.C. 3535(d), add Chapter XXIV 
consisting of part 2424 to Subtitle B to read as follows:

CHAPTER XXIV--DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

PART 2424--NONPROCUREMENT DEBARMENT AND SUSPENSION

Sec.
2424.10 What does this part do?
2424.20 Does this part apply to me?
2424.30 What policies and procedures must I follow?
Subpart A--General
2424.137 Who in HUD may grant an exception to let an excluded person 
participate in a covered transaction?
Subpart B--Covered Transactions
2424.220 What contracts and subcontracts, in addition to those 
listed in 2 CFR 180.220, are covered transactions?
Subpart C--Responsibilities of Participants Regarding Transactions
2424.300 What must I do before I enter into a covered transaction 
with another person at the next lower tier (HUD supplement to 
governmentwide definition at 2 CFR 180.300)?
2424.332 What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?
Subpart D--Responsibilities of Federal Agency Officials Regarding 
Transactions
2424.437 What method do I use to communicate to a participant the 
requirements described in the OMB guidance at 2 CFR 180.435?
Subpart E--[Reserved]
Subpart F--[Reserved]
Subpart G--Suspension
2424.747 Who conducts fact finding for HUD suspensions?
Subpart H--Debarment
2424.842 Who conducts fact finding for HUD debarments?
Subpart I--Definitions
2424.952 Hearing officer.
2424.970 Nonprocurement transaction (HUD supplement to 
governmentwide definition at 2 CFR 180.970).
2424.995 Principal (HUD supplement to governmentwide definition at 2 
CFR 180.995).
2424.1017 Ultimate beneficiary.
Subpart J--Limited Denial of Participation
2424.1100 What is a limited denial of participation?
2424.1105 Who may issue a limited denial of participation?
2424.1110 When may a HUD official issue a limited denial of 
participation?
2424.1115 When does a limited denial of participation take effect?
2424.1120 How long may a limited denial of participation last?
2424.1125 How does a limited denial of participation start?
2424.1130 How may I contest my limited denial of participation?
2424.1135 Do Federal agencies coordinate limited denial of 
participation actions?
2424.1140 What is the scope of a limited denial of participation?
2424.1145 May HUD impute the conduct of one person to another in a 
limited denial of participation?
2424.1150 What is the effect of a suspension or debarment on a 
limited denial of participation?
2424.1155 What is the effect of a limited denial of participation on 
a suspension or a debarment?
2424.1160 May a limited denial of participation be terminated before 
the term of the limited denial of participation expires?
2424.1165 How is a limited denial of participation reported?

    Authority: Sec. 2455, Pub. L. 103-355, 108 Stat. 3327; E.O. 
12549, 3 CFR, 1986 Comp., p. 189; E.O. 12689, 3 CFR, 1989 Comp., p. 
235.


Sec.  2424.10  What does this part do?

    In this part, HUD adopts, as HUD policies, procedures, and 
requirements for nonprocurement debarment and suspension, the OMB 
guidance in subparts A through I of 2 CFR part 180, as supplemented by 
this part. This adoption thereby gives regulatory effect for HUD to the 
OMB guidance, as supplemented by this part. This part satisfies the 
requirements in section 3 of Executive Order 12549, ``Debarment and 
Suspension'' (3 CFR 1986 Comp., p. 189), Executive Order 12689, 
``Debarment and Suspension'' (3 CFR 1989 Comp., p. 235) and 31 U.S.C. 
6101 note (Section 2455, Pub. L. 103-355, 108 Stat. 3327).


Sec.  2424.20  Does this part apply to me?

    This part and, through this part, pertinent portions of subparts A 
through I of 2 CFR part 180 (see table at 2 CFR 180.100(b)), apply to 
you if you are a--
    (a) Participant or principal in a ``covered transaction'' (see 
subpart B of 2 CFR part 180 and the definition of ``nonprocurement 
transaction'' at 2 CFR 180.970, as supplemented by Sec.  2424.970 of 
this part);
    (b) Respondent in a HUD suspension or debarment action;
    (c) HUD debarment or suspension official; or
    (d) HUD grants officer, agreements officer, or other official 
authorized to enter into any type of nonprocurement transaction that is 
a covered transaction.


Sec.  2424.30  What policies and procedures must I follow?

    The HUD policies and procedures that you must follow are the 
policies and procedures specified in each applicable section of the OMB 
guidance in subparts

[[Page 73488]]

A through I of 2 CFR part 180, as that section is supplemented by the 
section in this part with the same section number. The contracts that 
are covered transactions, for example, are specified by section 220 of 
the OMB guidance (i.e., 2 CFR 180.220), as supplemented by section 220 
in this part (i.e., Sec.  2424.220). For any section of OMB guidance in 
subparts A through I of 2 CFR 180 that has no corresponding section in 
this part, HUD policies and procedures are those in the OMB guidance.

Subpart A--General


Sec.  2424.137  Who in HUD may grant an exception to let an excluded 
person participate in a covered transaction?

    The Secretary or designee may grant an exception permitting an 
excluded person to participate in a particular covered transaction. If 
the Secretary or a designee grants an exception, the exception must be 
in writing and state the reason(s) for deviating from the 
governmentwide policy in Executive Order 12549.

Subpart B--Covered Transactions


Sec.  2424.220  What contracts and subcontracts, in addition to those 
listed in 2 CFR 180.220, are covered transactions?

    In addition to the contracts covered under 2 CFR 180.220(b) of the 
OMB guidance, this part applies to any contract, regardless of tier, 
that is awarded by a contractor, subcontractor, supplier, consultant, 
or its agent or representative in any transaction, if the contract is 
to be funded or provided by HUD under a covered nonprocurement 
transaction and the amount of the contract is expected to equal or 
exceed $25,000. This extends the coverage of the HUD nonprocurement 
suspension and debarment requirements to all lower tiers of 
subcontracts under covered nonprocurement transactions, as permitted 
under the OMB guidance at 2 CFR 180.220(c) (see optional lower-tier 
coverage in the figure in the Appendix to 2 CFR part 180).

Subpart C--Responsibilities of Participants Regarding Transactions


Sec.  2424.300  What must I do before I enter into a covered 
transaction with another person at the next lower tier (HUD supplement 
to governmentwide definition at 2 CFR 180.300)?

    (a) You, as a participant, are responsible for determining whether 
you are entering into a covered transaction with an excluded or 
disqualified person. You may decide the method by which you do so.
    (i) You may, but are not required to, check the Excluded Parties 
List System (EPLS).
    (ii) You may, but are not required to, collect a certification from 
that person.
    (b) In the case of an employment contract, HUD does not require 
employers to check the EPLS prior to making salary payments pursuant to 
that contract.


Sec.  2424.332  What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?

    To communicate the requirements to lower-tier participants, you 
must include a term or condition in the transaction requiring 
compliance with subpart C of the OMB guidance in 2 CFR part 180, as 
supplemented by this subpart.

Subpart D--Responsibilities of Federal Agency Officials Regarding 
Transactions


Sec.  2424.437  What method do I use to communicate to a participant 
the requirements described in the OMB guidance at 2 CFR 180.435?

    To communicate to a participant the requirements described in 2 CFR 
180.435 of the OMB guidance, you must include a term or condition in 
the transaction that requires the participant to: comply with subpart C 
of 2 CFR part 180, as supplemented by subpart C of this part, and 
include a similar term or condition in lower-tier covered transactions.

Subpart E--[Reserved]

Subpart F--[Reserved]

Subpart G--Suspension


Sec.  2424.747  Who conducts fact finding for HUD suspensions?

    In all HUD suspensions, the official who shall conduct additional 
proceedings where disputed material facts are challenged shall be a 
hearing officer.

Subpart H--Debarment


Sec.  2424.842  Who conducts fact finding for HUD debarments?

    In all HUD debarments, the official who shall conduct additional 
proceedings where disputed material facts are challenged shall be a 
hearing officer.

Subpart I--Definitions


Sec.  2424.952  Hearing officer.

    Hearing Officer means an Administrative Law Judge or Office of 
Appeals Judge authorized by HUD's Secretary or by the Secretary's 
designee to conduct proceedings under this part.


Sec.  2424.970  Nonprocurement transaction (HUD supplement to 
governmentwide definition at 2 CFR 180.970).

    In the case of employment contracts that are covered transactions, 
each salary payment under the contract is a separate covered 
transaction.


Sec.  2424.995  Principal (HUD supplement to governmentwide definition 
at 2 CFR 180.995).

    A person who has a critical influence on, or substantive control 
over, a covered transaction, whether or not employed by the 
participant. Persons who have a critical influence on, or substantive 
control over, a covered transaction may include, but are not limited 
to:
    (a) Loan officers;
    (b) Staff appraisers and inspectors;
    (c) Underwriters;
    (d) Bonding companies;
    (e) Borrowers under programs financed by HUD or with loans 
guaranteed, insured, or subsidized through HUD programs;
    (f) Purchasers of properties with HUD-insured or Secretary-held 
mortgages;
    (g) Recipients under HUD assistance agreements;
    (h) Ultimate beneficiaries of HUD programs;
    (i) Fee appraisers and inspectors;
    (j) Real estate agents and brokers;
    (k) Management and marketing agents;
    (l) Accountants, consultants, investment bankers, architects, 
engineers, and attorneys who are in a business relationship with 
participants in connection with a covered transaction under a HUD 
program;
    (m) Contractors involved in the construction or rehabilitation of 
properties financed by HUD, with HUD-insured loans or acquired 
properties, including properties held by HUD as mortgagee-in-
possession;
    (n) Closing agents;
    (o) Turnkey developers of projects financed by or with financing 
insured by HUD;
    (p) Title companies;
    (q) Escrow agents;
    (r) Project owners;
    (s) Administrators of hospitals, nursing homes, and projects for 
the elderly financed or insured by HUD; and
    (t) Developers, sellers, or owners of property financed with loans 
insured under Title I or Title II of the National Housing Act.

[[Page 73489]]

Sec.  2424.1017  Ultimate beneficiary.

    Ultimate beneficiaries of HUD programs include, but are not limited 
to, subsidized tenants and subsidized mortgagors, such as those 
assisted under Section 8 Housing Assistance Payment contracts, by 
Section 236 Rental Assistance, or by Rent Supplement payments.

Subpart J--Limited Denial of Participation


Sec.  2424.1100  What is a limited denial of participation?

    A limited denial of participation excludes a specific person from 
participating in a specific program, or programs, within a HUD field 
office's geographic jurisdiction, for a specific period of time. A 
limited denial of participation is normally issued by a HUD field 
office, but may be issued by a Headquarters office. The decision to 
impose a limited denial of participation is discretionary and based on 
the best interests of the federal government.


Sec.  2424.1105  Who may issue a limited denial of participation?

    The Secretary designates HUD officials who are authorized to impose 
a limited denial of participation, affecting any participant and/or 
their affiliates, except mortgagees approved by the Federal Housing 
Administration (FHA).


Sec.  2424.1110  When may a HUD official issue a limited denial of 
participation?

    (a) An authorized HUD official may issue a limited denial of 
participation against a person, based upon adequate evidence of any of 
the following causes:
    (1) Approval of an applicant for insurance would constitute an 
unsatisfactory risk;
    (2) There are irregularities in a person's past performance in a 
HUD program;
    (3) The person has failed to maintain the prerequisites of 
eligibility to participate in a HUD program;
    (4) The person has failed to honor contractual obligations or to 
proceed in accordance with contract specifications or HUD regulations;
    (5) The person has failed to satisfy, upon completion, the 
requirements of an assistance agreement or contract;
    (6) The person has deficiencies in ongoing construction projects;
    (7) The person has falsely certified in connection with any HUD 
program, whether or not the certification was made directly to HUD;
    (8) The person has committed any act or omission that would be 
cause for debarment under 2 CFR 180.800;
    (9) The person has violated any law, regulation, or procedure 
relating to the application for financial assistance, insurance, or 
guarantee, or to the performance of obligations incurred pursuant to a 
grant of financial assistance or pursuant to a conditional or final 
commitment to insure or guarantee;
    (10) The person has made or procured to be made any false statement 
for the purpose of influencing in any way an action of the Department; 
or
    (11) Imposition of a limited denial of participation by any other 
HUD office.
    (b) Filing of a criminal Indictment or Information shall constitute 
adequate evidence for the purpose of limited denial of participation 
actions. The Indictment or Information need not be based on offenses 
against HUD.
    (c) Imposition of a limited denial of participation by any other 
HUD office shall constitute adequate evidence for a concurrent limited 
denial of participation. Where such a concurrent limited denial of 
participation is imposed, participation may be restricted on the same 
basis without the need for an additional conference or further hearing.
    (d) An affiliate or organizational element may be included in a 
limited denial of participation solely on the basis of its affiliation, 
and regardless of its knowledge of or participation in the acts 
providing cause for the sanction. The burden of proving that a 
particular affiliate or organizational element is currently responsible 
and not controlled by the primary sanctioned party (or by an entity 
that itself is controlled by the primary sanctioned party) is on the 
affiliate or organizational element.


Sec.  2424.1115  When does a limited denial of participation take 
effect?

    A limited denial of participation is effective immediately upon 
issuance of the notice.


Sec.  2424.1120  How long may a limited denial of participation last?

    A limited denial of participation may remain in effect up to 12 
months.


Sec.  2424.1125  How does a limited denial of participation start?

    A limited denial of participation is made effective by providing 
the person, and any specifically named affiliate, with notice:
    (a) That the limited denial of participation is being imposed;
    (b) Of the cause(s) under Sec.  2424.1110 for the sanction;
    (c) Of the potential effect of the sanction, including the length 
of the sanction and the HUD program(s) and geographic area affected by 
the sanction;
    (d) Of the right to request, in writing, within 30 days of receipt 
of the notice, a conference under Sec.  2424.1130; and
    (e) Of the right to contest the limited denial of participation 
under Sec.  2424.1130.


Sec.  2424.1130  How may I contest my limited denial of participation?

    (a) Within 30 days after receiving a notice of limited denial of 
participation, you may request a conference with the official who 
issued such notice. The conference shall be held within 15 days after 
the Department's receipt of the request for a conference, unless you 
waive this time limit. The official or designee who imposed the 
sanction shall preside. At the conference, you may appear with a 
representative and may present all relevant information and materials 
to the official or designee. Within 20 days after the conference, or 
within 20 days after any agreed-upon extension of time for submission 
of additional materials, the official or designee shall, in writing, 
advise you of the decision to terminate, modify, or affirm the limited 
denial of participation. If all or a portion of the remaining period of 
exclusion is affirmed, the notice of affirmation shall advise you of 
the opportunity to contest the notice and to request a hearing before a 
Departmental Hearing Officer. You have 30 days after receipt of the 
notice of affirmation to request this hearing. If the official or 
designee does not issue a decision within the 20-day period, you may 
contest the sanction before a Departmental Hearing Officer. Again, you 
have 30 days from the expiration of the 20-day period to request this 
hearing. If you request a hearing before the Departmental Hearing 
Officer, you must submit your request to the Debarment Docket Clerk, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
B-133 Portals 200, Washington DC 20410-0500.
    (b) You may skip the conference with the official and you may 
request a hearing before a Departmental Hearing Officer. This must also 
be done within 30 days after receiving a notice of limited denial of 
participation. If you opt to have a hearing before a Departmental 
Hearing Officer, you must submit your request to the Debarment Docket 
Clerk, Department of Housing and Urban Development, 451 Seventh Street, 
SW., B-133 Portals 200, Washington DC 20410-0500. The hearing before 
the Departmental Hearing Officer is more formal than the conference 
before the sanctioning official described above. The Departmental 
Hearing Officer will

[[Page 73490]]

conduct the hearing in accordance with 24 CFR part 26, subpart A. The 
Departmental Hearing Officer will issue findings of fact and make a 
recommended decision. The sanctioning official will then make a final 
decision, as promptly as possible, after the Departmental Hearing 
Officer's recommended decision is issued. The sanctioning official may 
reject the recommended decision or any findings of fact, only after 
specifically determining that the decision or any of the facts are 
arbitrary, capricious, or clearly erroneous.
    (c) In deciding whether to terminate, modify, or affirm a limited 
denial of participation, the Departmental official or designee may 
consider the factors listed at 2 CFR 180.860. The Departmental Hearing 
Officer may also consider the factors listed at 2 CFR 180.860 in making 
any recommended decision.


Sec.  2424.1135  Do Federal agencies coordinate limited denial of 
participation actions?

    Federal agencies do not coordinate limited denial of participation 
actions. As stated in Sec.  2424.1100, a limited denial of 
participation is a HUD-specific action and applies only to HUD 
activities.


Sec.  2424.1140  What is the scope of a limited denial of 
participation?

    The scope of a limited denial of participation is as follows:
    (a) A limited denial of participation generally extends only to 
participation in the program under which the cause arose. A limited 
denial of participation may, at the discretion of the authorized 
official, extend to other programs, initiatives, or functions within 
the jurisdiction of an Assistant Secretary. The authorized official, 
however, may determine that where the sanction is based on an 
indictment or conviction, the sanction shall apply to all programs 
throughout HUD.
    (b) For purposes of this subpart, participation includes receipt of 
any benefit or financial assistance through grants or contractual 
arrangements; benefits or assistance in the form of loan guarantees or 
insurance; and awards of procurement contracts.
    (c) The sanction may be imposed for a period not to exceed 12 
months, and shall be effective within the geographic jurisdiction of 
the office imposing it, unless the sanction is imposed by an Assistant 
Secretary or Deputy Assistant Secretary, in which case the sanction may 
be imposed on either a nationwide or a more restricted basis.


Sec.  2424.1145  May HUD impute the conduct of one person to another in 
a limited denial of participation?

    For purposes of determining a limited denial of participation, HUD 
may impute conduct as follows:
    (a) Conduct imputed from an individual to an organization. HUD may 
impute the fraudulent, criminal, or other improper conduct of any 
officer, director, shareholder, partner, employee, or other individual 
associated with an organization, to that organization when the improper 
conduct occurred in connection with the individual's performance of 
duties for or on behalf of that organization, or with the 
organization's knowledge, approval, or acquiescence. The organization's 
acceptance of the benefits derived from the conduct is evidence of 
knowledge, approval, or acquiescence.
    (b) Conduct imputed from an organization to an individual or 
between individuals. HUD may impute the fraudulent, criminal, or other 
improper conduct of any organization to an individual, or from one 
individual to another individual, if the individual to whom the 
improper conduct is imputed participated in, had knowledge of, or had 
reason to know of the improper conduct.
    (c) Conduct imputed from one organization to another organization. 
HUD may impute the fraudulent, criminal, or other improper conduct of 
one organization to another organization when the improper conduct 
occurred in connection with a partnership, joint venture, joint 
application, association, or similar arrangement, or when the 
organization to whom the improper conduct is imputed has the power to 
direct, manage, control, or influence the activities of the 
organization responsible for the improper conduct. Acceptance of the 
benefits derived from the conduct is evidence of knowledge, approval, 
or acquiescence.


Sec.  2424.1150  What is the effect of a suspension or debarment on a 
limited denial of participation?

    If you have submitted a request for a hearing pursuant to Sec.  
2424.1130 of this subpart, and you also receive, pursuant to subpart G 
or H of this part, a notice of proposed debarment or suspension that is 
based on the same transaction(s) or the same conduct as the limited 
denial of participation, as determined by the debarring or suspending 
official, the following rules shall apply:
    (a) During the 30-day period after you receive a notice of proposed 
debarment or suspension, during which you may elect to contest the 
debarment under 2 CFR 180.815, or the suspension pursuant to 2 CFR 
180.720, all proceedings in the limited denial of participation, 
including discovery, are automatically stayed.
    (b) If you do not contest the proposed debarment pursuant to 2 CFR 
180.815, or the suspension pursuant to 2 CFR 180.720, the final 
imposition of the debarment or suspension shall also constitute a final 
decision with respect to the limited denial of participation, to the 
extent that the debarment or suspension is based on the same 
transaction(s) or conduct as the limited denial of participation.
    (c) If you contest the proposed debarment pursuant to 2 CFR 
180.815, or the suspension pursuant to 2 CFR 180.720, then:
    (1) Those parts of the limited denial of participation and the 
debarment or suspension based on the same transaction(s) or conduct, as 
determined by the debarring or suspending official, shall be 
immediately consolidated before the debarring or suspending official;
    (2) Proceedings under the consolidated portions of the limited 
denial of participation shall be stayed before the hearing officer 
until the suspending or debarring official makes a determination as to 
whether the consolidated matters should be referred to a hearing 
officer. Such a determination must be made within 90 days of the date 
of the issuance of the suspension or proposed debarment, unless the 
suspending/debarring official extends the period for good cause.
    (i) If the suspending or debarring official determines that there 
is a genuine dispute as to material facts regarding the consolidated 
matter, the entire consolidated matter will be referred to the hearing 
officer hearing the limited denial of participation, for additional 
proceedings pursuant to 2 CFR 180.750 or 180.845.
    (ii) If the suspending or debarring official determines that there 
is no dispute as to material facts regarding the consolidated matter, 
jurisdiction of the hearing officer under 2 CFR part 2424, subpart J, 
to hear those parts of the limited denial of participation based on the 
same transaction[s] or conduct as the debarment or suspension, as 
determined by the debarring or suspending official, will be transferred 
to the debarring or suspending official, and the hearing officer 
responsible for hearing the limited denial of participation shall 
transfer the administrative record to the debarring or suspending 
official.
    (3) The suspending or debarring official shall hear the entire 
consolidated case under the procedures

[[Page 73491]]

governing suspensions and debarments, and shall issue a final decision 
as to both the limited denial of participation and the suspension or 
debarment.


Sec.  2424.1155  What is the effect of a limited denial of 
participation on a suspension or a debarment?

    The imposition of a limited denial of participation does not affect 
the right of the Department to suspend or debar any person under this 
part.


Sec.  2424.1160  May a limited denial of participation be terminated 
before the term of the limited denial of participation expires?

    If the cause for the limited denial of participation is resolved 
before the expiration of the 12-month period, the official who imposed 
the sanction may terminate it.


Sec.  2424.1165  How is a limited denial of participation reported?

    When a limited denial of participation has been made final, or the 
period for requesting a conference pursuant to Sec.  2424.1130 has 
expired without receipt of such a request, the official imposing the 
limited denial of participation shall notify the Director of the 
Compliance Division in the Departmental Enforcement Center of the scope 
of the limited denial of participation.

TITLE 24--HOUSING AND URBAN DEVELOPMENT

SUBTITLE B--REGULATIONS RELATING TO HOUSING AND URBAN DEVELOPMENT

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

0
2. The authority citation for part 5 continues to read as follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437d, 1437f, 1437n, 3535(d), 
and Sec. 327, Pub. L. 109-115, 119 Stat. 2936.

0
3. Revise Sec.  5.105(c) and (d) to read as follows:


Sec.  5.105  Other federal requirements.

* * * * *
    (c) Debarred, suspended, or ineligible contractors and 
participants. The prohibitions at 2 CFR part 2424 on the use of 
debarred, suspended, or ineligible contractors and participants.
    (d) Drug-Free Workplace. The Drug-Free Workplace Act of 1988 (41 
U.S.C. 701, et seq.) and HUD's implementing regulations at 24 CFR part 
21.

PART 6--NONDISCRIMINATION IN PROGRAMS AND ACTIVITIES RECEIVING 
ASSISTANCE UNDER TITLE I OF THE HOUSING AND COMMUNITY DEVELOPMENT 
ACT OF 1978

0
4. The authority citation for part 6 continues to read as follows:

    Authority: 42 U.S.C. 3535(d); 42 U.S.C. 5309


0
5. Revise Sec.  6.12(a)(4) to read as follows:


Sec.  6.12  Procedure for effecting compliance.

    (a) * * *
    (4) Take such other actions as may be provided by law, including, 
but not limited to, the initiation of proceedings under 2 CFR part 2424 
or any applicable proceeding under State or local law.
* * * * *

PART 8--NONDISCRIMINATION BASED ON HANDICAP IN FEDERALLY ASSISTED 
PROGRAMS AND ACTIVITIES OF THE DEPARTMENT OF HOUSING AND URBAN 
DEVELOPMENT

0
6. The authority citation for part 8 continues to read as follows:

    Authority: 29 U.S.C. 794; 42 U.S.C. 3535(d) and 5309.


0
7. Revise Sec.  8.57(a)(2) to read as follows:


Sec.  8.57  Procedure for effecting compliance.

    (a) * * *
    (2) The initiation of debarment proceedings pursuant to 2 CFR part 
2424; and
* * * * *

PART 15--PUBLIC ACCESS TO HUD RECORDS UNDER THE FREEDOM OF 
INFORMATION ACT AND TESTIMONY AND PRODUCTION OF INFORMATION BY HUD 
EMPLOYEES

0
8. The authority citation for part 15 continues to read as follows:

    Authority: 42 U.S.C. 3535(d). Subpart A also issued under 5 
U.S.C. 552. Section 15.107 also issued under E.O. 12958, 60 FR 
19825, 3 CFR Comp., p. 333. Subparts C and D also issued under 5 
U.S.C. 301.


0
9. Revise Sec.  15.109(d) to read as follows:


Sec.  15.109  How will HUD respond to a request for information from 
form HUD-92410 (Statement of Profit and Loss)?

* * * * *
    (d) What sanctions are available for improper disclosure of such 
information? An eligible potential purchaser or a potential investor 
(who has received the information from a potential purchaser and has 
been notified by that entity of its obligations under paragraph (b) of 
this section), who discloses information from form HUD-92410 in 
violation of this section, may be subject to sanctions under 2 CFR part 
2424.

PART 21--GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE 
(GRANTS)

0
10. The authority citation for part 21 continues to read as follows:

    Authority: 41 U.S.C. 701; 42 U.S.C. 3535(d).

0
11. Revise Sec.  21.510(c) to read as follows:


Sec.  21.510  What actions will the Federal government take against a 
recipient determined to have violated this part?

* * * * *
    (c) Suspension or debarment of the recipient under 2 CFR part 2424, 
for a period not to exceed five years.

0
12. Revise Sec.  21.605(a)(2) to read as follows:


Sec.  21.605  Award.

* * * * *
    (a) * * *
    (2) A block grant or a grant in an entitlement program, whether or 
not the grant is exempted from coverage under the governmentwide rule 
24 CFR part 85 that implements OMB Circular A-102 and specifies uniform 
administrative requirements.
* * * * *

0
13-14. Revise Part 24 to read as follows:

PART 24--GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT)

    Authority: 42 U.S.C. 3535(d).


Sec.  24.1  Debarment and Suspension (Nonprocurement).

    The policies, procedures, and requirements for debarment, 
suspension, and limited denial of participation are set forth in 2 CFR 
part 2424.

PART 25--MORTGAGEE REVIEW BOARD

0
15. The authority citation for part 25 continues to read as follows:

    Authority: 12 U.S.C. 1708(c), 1708(d), 1709(s), 1715(b) and 
1715(f)-14; 42 U.S.C. 3535(d).

[[Page 73492]]

Sec.  25.2  [Amended]

0
16. In Sec.  25.2, revise the reference to ``part 24 of this subtitle 
A'' to read ``2 CFR part 2424.''

0
17. Revise Sec.  25.9(n) to read as follows:


Sec.  25.9  Grounds for an administrative action.

* * * * *
    (n) Employing or retaining:
    (1) An officer, partner, director, or principal at such time when 
such person was suspended, debarred, ineligible, or subject to a 
limited denial of participation under 2 CFR part 2424 or otherwise 
prohibited from participation in HUD programs, where the mortgagee knew 
or should have known of the prohibition;
    (2) An employee who is not an officer, partner, director, or 
principal and who is or will be working on HUD/FHA program matters at a 
time when such person was suspended, debarred, ineligible, or subject 
to a limited denial of participation under 2 CFR part 2424 or otherwise 
prohibited from participation in HUD programs, where the mortgagee knew 
or should have known of the prohibition;
* * * * *

PART 26--HEARING PROCEDURES

0
18. The authority citation for part 26 continues to read as follows:

    Authority: 42 U.S.C. 3535(d).


0
19. Revise Sec.  26.1 to read as follows:


Sec.  26.1  Purpose.

    This part sets forth rules of procedure in certain proceedings of 
the Department of Housing and Urban Development presided over by a 
hearing officer. These rules of procedure apply to hearings with 
respect to determinations by the Multifamily Participation Review 
Committee pursuant to 24 CFR part 200, subpart H, to hearings conducted 
pursuant to referrals by debarring or suspending officials under 2 CFR 
part 2424, and to hearings conducted pursuant to referrals by a hearing 
official under 24 CFR part 25, unless such regulations at 2 CFR part 
2424, 24 CFR parts 25 or 200 provide otherwise. They also apply in any 
other case where a hearing is required by statute or regulation, to the 
extent that rules adopted under such statute or regulation are not 
inconsistent.

0
20. Revise Sec.  26.9 to read as follows:


Sec.  26.9  Notice of administrative action.

    In every case, there shall be a notice of administrative action. 
The notice shall be in writing and inform the party of the 
determination. The notice shall state the reasons for the proposed or 
imposed action, except where general terms are permitted by 2 CFR part 
2424. The notice shall inform the party of any right to a hearing to 
challenge the determination, and the manner and time in which to 
request such a hearing. A supplemental notice may be issued, at the 
discretion of the initiating official, to add to or modify the reasons 
for the action.

PART 84--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND 
AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND 
OTHER NON-PROFIT ORGANIZATIONS

0
21. The authority citation for part 84 continues to read as follows:

    Authority: 42 U.S.C. 3535(d).


0
22. In Sec.  84.2, revise the definition of ``Suspension'' to read as 
follows:


Sec.  84.2  Definitions.

* * * * *
    Suspension means an action by HUD that temporarily withdraws HUD 
sponsorship under an award, pending corrective action by the recipient 
or pending a decision to terminate the award by HUD. Suspension of an 
award is a separate action from suspensions under HUD regulations 
implementing E.O. 12549 and E.O. 12689, ``Debarment and Suspension,'' 
at 2 CFR part 2424.
* * * * *

0
23. Revise Sec.  84.13 to read as follows:


Sec.  84.13  Debarment and suspension; Drug-Free Workplace.

    (a) Recipients and subrecipients shall comply with the 
governmentwide nonprocurement debarment and suspension requirements in 
2 CFR part 2424. These governmentwide requirements restrict subawards 
and contracts with certain parties that are debarred, suspended, or 
otherwise excluded from or ineligible for participation in federal 
assistance programs or activities.
    (b) Recipients and subrecipients shall comply with the requirements 
of the Drug-Free Workplace Act of 1988 (42 U.S.C. 701), as set forth at 
24 CFR part 21.


0
24. Revise Sec.  84.44(d) to read as follows:


Sec.  84.44  Procurement procedures.

* * * * *
    (d) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be 
given to such matters as contractor integrity; compliance with public 
policy, including, where applicable, Section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u); record of past performance; 
and financial and technical resources or accessibility to other 
necessary resources. In certain circumstances, contracts with certain 
parties are restricted by implementation of Executive Orders 12549 and 
12689, ``Debarment and Suspension,'' at 2 CFR part 2424.
* * * * *


0
25. Revise Sec.  84.62(d) to read as follows:


Sec.  84.62  Enforcement.

* * * * *
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to 
debarment and suspension under HUD's regulations at 2 CFR part 2424 
(see Sec.  84.13).

0
26. Revise Sec.  84.84(e)(4) to read as follows:


Sec.  84.84  Procurement standards.

* * * * *
    (e) * * *
    (4) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be 
given to such matters as contractor integrity; compliance with public 
policy, including, where applicable, Section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u); record of past performance; 
and financial and technical resources or accessibility to other 
necessary resources. In certain circumstances, contracts with certain 
parties are restricted, as set forth at 2 CFR part 2424.
* * * * *

0
27. Revise Sec.  84.86(b)(4) to read as follows:


Sec.  84.86  Termination and enforcement.

* * * * *
    (b) * * *
    (4) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to 
debarment and suspension under HUD's regulations at 2 CFR part 2424 
(see Sec.  84.13).

[[Page 73493]]

Appendix A to Part 84--[Amended]

0
28. Remove paragraphs 8 and 9 from Appendix A.

PART 85--ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE 
AGREEMENTS TO STATE, LOCAL, AND FEDERALLY RECOGNIZED INDIAN TRIBAL 
GOVERNMENTS

0
29. The authority citation for part 85 continues to read as follows:

    Authority: 42 U.S.C. 3535(d).


0
30. In Sec.  85.3, revise the definition of ``Suspension'' to read as 
follows:


Sec.  85.3  Definitions.

* * * * *
    Suspension means, depending on the context, either temporary 
withdrawal of the authority to obligate grant funds pending corrective 
action by the grantee or subgrantee or a decision to terminate the 
grant, or an action taken by a suspending official in accordance with 2 
CFR part 2424, to immediately exclude a person from participating in 
grant transactions for a period, pending completion of an investigation 
and such legal or debarment proceedings as may ensue.
* * * * *

0
31. Revise Sec.  85.35 to read as follows:


Sec.  85.35  Subawards to debarred and suspended parties.

    Grantees and subgrantees must not make any award or permit any 
award (subgrant or contract) at any tier to any party that is debarred 
or suspended or is otherwise excluded from or ineligible for 
participation in federal assistance programs subject to 2 CFR part 
2424.
0
32. Revise Sec.  85.43(d) to read as follows:


Sec.  85.43  Enforcement.

* * * * *
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a grantee or subgrantee from being subject 
to 2 CFR part 2424 (see Sec.  85.35).

PART 91--CONSOLIDATED SUBMISSIONS FOR COMMUNITY PLANNING AND 
DEVELOPMENT PROGRAMS

0
33. The authority citation for part 91 continues to read as follows:

    Authority: 42 U.S.C. 3535(d), 3601-3619, 5301-5315, 11331-11388, 
12701-12711, 12741-12756, and 12901-12912.


Sec.  91.225  [Amended]

0
34. Remove Sec.  91.225(a)(3) and redesignate paragraphs (a)(4), (5), 
(6), (7), and (8) as (a)(3), (4), (5), (6), and (7), respectively.


Sec.  91.325  [Amended]

0
35. Remove Sec.  91.325(a)(3) and redesignate paragraphs (a)(4), (5), 
(6), (7), and (8) as (a)(3), (4), (5), (6), and (7), respectively.


Sec.  91.425  [Amended]

0
36. Remove Sec.  91.425(a)(1)(iii) and redesignate paragraphs 
(a)(1)(iv), (v), (vi), (vii), and (viii) as (a)(1)(iii), (iv), (v), 
(vi), and (vii), respectively.

PART 92--HOME INVESTMENT PARTNERSHIP PROGRAM

0
37. The authority citation for part 92 continues to read as follows:

    Authority: 42 U.S.C. 3535(d) and 12701-12839.


Sec.  92.61  [Amended]

0
38. Remove Sec.  92.61(c)(6) and redesignate paragraph (c)(7) as 
paragraph (c)(6).

0
39. In Sec.  92.508, revise paragraph (a)(7)(viii) to read as follows:


Sec.  92.508  Recordkeeping.

    (a) * * *
    (7) * * *
    (viii) Records demonstrating compliance with debarment and 
suspension requirements in 2 CFR part 2424.
* * * * *

PART 103--FAIR HOUSING COMPLAINT PROCESS

0
40. The authority citation for part 103 continues to read as follows:

    Authority: 42 U.S.C. 3535(d), 3600-3619.


0
41. Revise Sec.  103.510(b) to read as follows:


Sec.  103.510  Other action by HUD.

* * * * *
    (b) Take appropriate steps to initiate proceedings leading to the 
debarment of the respondent under 2 CFR part 2424, or initiate other 
actions leading to the imposition of administrative sanctions, where 
HUD determines that such actions are necessary to the effective 
operation and administration of federal programs or activities.
* * * * *

PART 107--NONDISCRIMINATION AND EQUAL OPPORTUNITY IN HOUSING UNDER 
EXECUTIVE ORDER 11063

0
42. The authority citation for part 107 continues to read as follows:

    Authority: 42 U.S.C. 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.


0
43. Revise Sec.  107.60(b) to read as follows:


Sec.  107.60  Sanctions and penalties.

* * * * *
    (b) Such sanctions as are specified by E.O. 11063, the contract 
through which federal assistance is provided, and such sanctions as are 
specified by the rules or regulations of the Department governing the 
program under which federal assistance to the project is provided shall 
be applied in accordance with the relevant regulations. Actions that 
may be taken include: cancellation or termination, in whole or in part, 
of the contract or agreement; refusal to approve a lender or withdrawal 
of approval; or a determination of ineligibility, suspension, or 
debarment from any further assistance or contracts; provided, however, 
that sanctions of debarment, suspension, and ineligibility are subject 
to the Department's regulations under 2 CFR part 2424, and, further, 
that no sanction under section 302 (a), (b), and (c) of Executive Order 
11063 shall be applied by the Assistant Secretary for Fair Housing and 
Equal Opportunity without the concurrence of the Secretary.
* * * * *

PART 135--ECONOMIC OPPORTUNITIES FOR LOW-AND VERY LOW-INCOME 
PERSONS

0
44. The authority citation for part 135 continues to read as follows:

    Authority: 12 U.S.C. 1701u; 42 U.S.C. 3535(d).


0
45. Revise Sec.  135.72(b) to read as follows:


Sec.  135.72  Cooperation in achieving compliance.

* * * * *
    (b) The recipient shall refrain from entering into a contract with 
any contractor after notification to the recipient by HUD that the 
contractor has been found in violation of the regulations in this part. 
The provisions of 2 CFR part 2424 apply to the employment, engagement 
of services, awarding of contracts, or funding of any contractors or 
subcontractors during any

[[Page 73494]]

period of debarment, suspension, or otherwise ineligible status.
0
46. Revise Sec.  135.74(d) to read as follows:


Sec.  135.74  Section 3 compliance review procedures.

* * * * *
    (d) Continuing noncompliance by recipient or contractor. A 
continuing failure or refusal by the recipient or contractor to comply 
with the regulati