HUD's Implementation of OMB's Guidance for Federal Financial Assistance, 107072-107099 [2024-30260]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 89, Number 250 (Tuesday, December 31, 2024)]
[Proposed Rules]
[Pages 107072-107099]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30260]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 4, 5, 75, 92, 93, 200, 570, 574, 576, 578, 700, 880, 
881, 883, 884, 886, 905, 964, 965, 970, 990, 1000, 1003, 1005, 
1006, and 1007

[Docket No. FR-6266-P-01]
RIN 2501-AE01


HUD's Implementation of OMB's Guidance for Federal Financial 
Assistance

AGENCY: Office of General Counsel, HUD.

ACTION: Proposed rule.

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SUMMARY: The U.S. Department of Housing and Urban Development (HUD) is 
proposing to amend its regulations on Federal financial assistance to 
conform with 2020 and 2024 changes to Office of Management and Budget 
(OMB) guidance governing Federal financial assistance (previously 
called grants and agreements). The proposed amendments would implement 
the guidance and update cross-references to OMB provisions that have 
been renumbered or reorganized. HUD is also proposing changes to 
improve some grant management and administrative program regulations 
based on HUD's experience implementing OMB's

[[Page 107073]]

regulations and guidance in existing entitlement, discretionary, and 
other programs involving grant management and administration. Finally, 
HUD is proposing changes to its Title VI, Section 108, Section 184, and 
Section 184A loan guarantee program regulations to address OMB's 
changes for loan guarantee programs regarding System for Award 
Management (SAM.gov) registration and to clarify that the Section 184 
and Section 184A programs are subject to audit requirements in OMB's 
regulations and final guidance. All these changes will improve HUD's 
processes for awarding Federal financial assistance and align HUD's 
regulations with governmentwide efforts to adopt consistent and 
standardized terms and data elements, implement data- and risk-based 
frameworks, reduce Federal agency and recipient burdens, promote 
consistent interpretations of OMB's regulations and guidance, and 
improve and maximize agencies' ability to assess performance of 
recipients.

DATES: Comment Due Date: March 3, 2025.

ADDRESSES: There are two methods for submitting public comments. All 
submissions must refer to the above docket number and title.
    1. Electronic Submission of Comments. Comments may be submitted 
electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make comments immediately available 
to the public. Comments submitted electronically through 
www.regulations.gov can be viewed by other commenters and interested 
members of the public. Commenters should follow the instructions 
provided on that website to submit comments electronically.
    2. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500.
    Note: To receive consideration as a public comment, comments must 
be submitted through one of the two methods specified above.
    Public Inspection of Public Comments. HUD will make all properly 
submitted comments and communications available for public inspection 
and copying during regular business hours at the above address. Due to 
security measures at the HUD Headquarters building, you must schedule 
an appointment in advance to review the public comments by calling the 
Regulations Division at 202-708-3055 (this is not a toll-free number). 
HUD welcomes and is prepared to receive calls from individuals who are 
deaf or hard of hearing, as well as individuals with speech or 
communication disabilities. To learn more about how to make an 
accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.
    Copies of all comments submitted are available for inspection and 
downloading at www.regulations.gov.
    In accordance with 5 U.S.C. 553(b)(4), a summary of this proposed 
rule may be found at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Aaron Santa Anna, Office of General 
Counsel, Office of Legislation and Regulations, Department of Housing 
and Urban Development, 451 7th Street SW, Washington, DC 20410-8000; 
telephone number 202-708-1793 (this is not a toll-free number). HUD 
welcomes and is prepared to receive calls from individuals who are deaf 
or hard of hearing, as well as individuals with speech or communication 
disabilities. To learn more about how to make an accessible telephone 
call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

I. Background 1
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    \1\ Through OMB's 2024 round of revisions to its regulations and 
final guidance, OMB has indicated its preference for the use of the 
terms ``Federal financial assistance,'' ``recipient,'' and 
``subrecipient'' over other terms. 89 FR 30046. This preamble 
sometimes uses the term ``Federal financial assistance,'' which is 
now used throughout OMB's regulations and guidance, in place of 
``grant'' or ``Federal award,'' but this preamble also uses 
``grant'' or ``Federal award'' where appropriate for a given 
program, when discussing prior rounds of OMB revisions (which used 
``grant'' or ``Federal award''), when discussing updated OMB 
provisions that use ``grant'' or ``Federal award,'' or when used as 
part of a quote. Also in this preamble, HUD uses ``recipient'' and 
``subrecipient'' interchangeably with ``grantee'' and 
``subgrantee,'' respectively, as those terms are defined in OMB's 
regulations and guidance. See 2 CFR 200.1.
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OMB's 2013 Uniform Guidance and HUD's Implementation

    On December 26, 2013, the Office of Management and Budget (OMB) 
issued the Uniform Administrative Requirements, Cost Principles, and 
Audit Requirements for Federal Awards (Uniform Guidance), parts of 
which are codified in 2 CFR part 200. This Uniform Guidance ``set 
standard requirements for financial management of Federal awards across 
the entire [F]ederal government.'' \2\ OMB promulgated the Uniform 
Guidance to (1) streamline guidance in making Federal awards to ease 
administrative burden and (2) strengthen financial oversight over 
Federal funds to reduce risks of fraud, waste, and abuse.\3\
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    \2\ 78 FR 78590, 78590 (Dec. 26, 2013).
    \3\ 78 FR 78590, 78950; see also 85 FR 3766 (Jan. 22, 2020) 
(providing additional explanation of OMB's 2013 final guidance).
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    The requirements at 2 CFR part 200 derive from previously issued 
policies: Executive Order (E.O.) 13520 titled Reducing Improper 
Payments and Eliminating Waste in Federal Programs \4\ and a related 
Presidential Memorandum on Administrative Flexibility, Lower Costs, and 
Better Results for State, Local, and Tribal Governments.\5\ The E.O. 
required agencies to improve accountability by ``intensifying efforts 
to eliminate payment error, waste, fraud, and abuse'' in Federal 
programs.\6\ The Presidential Memorandum directed OMB to ``review and 
where appropriate revise guidance concerning cost principles, burden 
minimizations, and audits for State, local, and tribal governments in 
order to eliminate, to the extent permitted by law, unnecessary, unduly 
burdensome, duplicative, or low-priority recordkeeping requirements and 
effectively tie such requirements to achievement of outcomes.'' \7\ 
OMB's 2013 Uniform Guidance added a new 2 CFR part 200 based on work 
done by the Federal and non-Federal financial assistance community in 
response to these directives.\8\
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    \4\ 74 FR 62201 (Nov. 25, 2009).
    \5\ Admin. of Barack Obama, 2011, Presidential Memorandum on 
Administrative Flexibility, Lower Costs, and Better Results for 
State, Local, and Tribal Governments (2011) [hereinafter 
Presidential Memo 2011], https://www.gpo.gov/fdsys/pkg/DCPD-201100123/pdf/DCPD-201100123.pdf.
    \6\ 74 FR 62201, 62201.
    \7\ Presidential Memo 2011, at 2.
    \8\ 78 FR 78590, 78591.
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    In a joint interim final rule published December 19, 2014, and 
titled ``Federal Awarding Agency Regulatory Implementation of Office of 
Management and Budget's Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards (UAR)'', all 
Federal award-making departments and agencies, including HUD, 
implemented OMB's 2013 Uniform Guidance.\9\ HUD adopted and codified 
the Uniform Guidance as requirements for Federal awards at 2 CFR part 
2400 and, amended 24 CFR parts 84 and 85 by

[[Page 107074]]

removing substantive provisions implementing OMB circulars issued prior 
to OMB's Uniform Guidance in 2013.\10\ Implementation of the Uniform 
Guidance became effective on December 26, 2014.\11\ Shortly after, HUD 
published a notice that provided guidance to internal and external 
stakeholders on HUD's transition to the new UAR provisions.\12\ On 
December 7, 2015, HUD published a final rule (HUD's 2015 rulemaking) to 
conform title 24 of the CFR to OMB's 2013 Uniform Guidance by removing 
references in title 24, including in HUD program regulations, to 24 CFR 
parts 84 and 85 and replacing them with corresponding references to 2 
CFR part 200 in HUD program regulations.\13\ These changes took effect 
January 6, 2016.\14\
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    \9\ 79 FR 75871 (Dec. 19, 2014).
    \10\ 79 FR 75871, 76078; 80 FR 75931, 75931-32 (Dec. 7, 2015).
    \11\ 79 FR 75871, 75871.
    \12\ U.S. Dep't of Hous. & Urban Dev., Notice SD-2015-01: 
Transition to 2 CFR part 200, Uniform Administrative Requirements, 
Cost Principles, and Audit Requirements for Federal Awards, Final 
Guidance, (2015), https://www.hudexchange.info/resource/4444/notice-sd201501-transition-to-2-cfr-part-200-uniform-administrative-requirements-cost-principles-and-audit-requirements-for-Federal-awards-final-guidance/.
    \13\ 80 FR 75931, 75931-32.
    \14\ 80 FR 75931, 75931.
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    OMB's 2013 Uniform Guidance and the 2014 UAR apply to the 
recipients (and, as provided, subrecipients) of Federal financial 
assistance from HUD, whether such assistance is provided in the form of 
grants or cooperative agreements, with such recipients and 
subrecipients.\15\
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    \15\ OMB has used terms such as ``non-Federal entities'' in the 
past to collectively refer to recipients and subrecipients. E.g., 85 
FR 49506. However, under OMB's 2024 changes, OMB is replacing the 
term ``non-Federal entity'' with ``recipients,'' ``subrecipients,'' 
or both. See 89 FR 30046, 30047. HUD is adopting this terminology 
for this preamble and in HUD's regulations in title 24 of the Code 
of Federal Regulations.
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OMB's 2020 Updated Uniform Guidance: Summary of Changes

    OMB reviews its Uniform Guidance periodically per 2 CFR 200.109. On 
August 13, 2020, OMB published final guidance titled ``Guidance for 
Grants and Agreements'', 85 FR 49506 (OMB's 2020 final guidance), which 
amended 2 CFR parts 25, 170, 183, and 200.\16\ (Although OMB amended 2 
CFR parts 25, 170, and 183, the changes made to these provisions do not 
require modifications to HUD's regulations at this time and thus are 
not the subject of this rulemaking.) OMB's 2020 final guidance, among 
other things, added new sections, such as the new 2 CFR 200.322, 
Domestic preferences for procurements; changed section numbers for 
several existing sections of 2 CFR part 200; revised and reorganized 
definitions; shifted requirements away from monitoring compliance to 
creating a ``risk-based, data-driven framework that balances compliance 
with demonstrating successful results''; implemented statutory 
requirements; and clarified areas to improve consistent 
interpretation.\17\ For ease of reference, this preamble uses ``OMB's 
2020 changes'' or ``2020 changes'' when referring to changes made by 
OMB's 2020 final guidance.
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    \16\ As explained in section II of this proposed rule, while OMB 
amended 2 CFR parts 25, 170, and 183, in its 2020 final guidance, 
the changes made to these parts do not require modifications to 
HUD's regulations at this time.
    \17\ 85 FR 49506, 49506.
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    According to OMB's 2020 final guidance, the revisions were intended 
to support four strategies identified by the Results-Oriented 
Accountability for Grants Cross Agency Priority Goal Executive Steering 
Committee in the President's Management Agenda on March 20, 2018. Those 
strategies are to (1) operationalize the grants management standards, 
(2) establish a robust marketplace of modern solutions, (3) manage 
risk, and (4) achieve program goals and objectives. To further these 
strategies, OMB modified 2 CFR part 200, among other parts, to require 
Federal agencies to adopt standard data elements for the information 
recipients are required to report (in support of strategies 1 and 2), 
as well as to strengthen governmentwide approaches to performance and 
risk (in support of strategies 3 and 4).\18\ OMB issued a reference 
document instructing agencies on the new revisions prior to the 
effective date of August 13, 2020.\19\ This document stated that OMB's 
clarifying changes also meant to address areas of misinterpretation and 
reduce burdens on recipients by improving consistency in interpretation 
of the guidance.\20\ For more information on the 2020 changes to 2 CFR 
part 200 and the previously mentioned strategies, see OMB's final 
guidance, 85 FR 49506, and OMB's reference document.\21\
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    \18\ 85 FR 49506, 49506.
    \19\ Office of Mgmt. & Budget, Reference Document for Federal 
Register Document Number: 2020-17468 (2020), https://www.trumpadministration.archives.performance.gov/CAP/20200812-2-CFR-Revision-Redline_Final.pdf.
    \20\ Id. at 46-53.
    \21\ https://www.trumpadministration.archives.performance.gov/CAP/20200812-2-CFR-Revision-Redline_Final.pdf.
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    Relevant to this proposed rulemaking are the following changes made 
by OMB's 2020 final guidance to 2 CFR part 200:
     OMB revised 2 CFR 200.318(a) and 200.319(a) to add 
language clarifying that those sections' (and other sections') 
requirements apply to procurement ``for the acquisition of property or 
services required under a Federal award.'' In Sec.  200.318(a), the 
last phrase was revised to read, ``under a Federal award or subaward.'' 
OMB also reorganized 2 CFR 200.319 and separated paragraph (a) into two 
paragraphs (a) and (b). Therefore, where HUD's 2 CFR part 200 cross 
references refer to 2 CFR 200.319(a)(5), they should refer to paragraph 
(b)(5) under OMB's 2020 changes.
     OMB added a new section 2 CFR 200.322, Domestic 
preferences for procurements, to align with prior administration policy 
and E.O. 13788, Buy American and Hire American (April 18, 2017), and 
E.O. 13858, Strengthening Buy-American Preferences for Infrastructure 
Projects (January 31, 2019). Under OMB's 2020 changes, this provision 
stated non-Federal entities (and others subject to the requirement), as 
appropriate and to the extent permitted by law, should, to the greatest 
extent practicable under a Federal award, provide a preference for the 
purchase, acquisition, or use of goods, products, or materials produced 
in the United States (including but not limited to iron, aluminum, 
steel, cement, and other manufactured products). E.O. 14005, Ensuring 
the Future Is Made in All of America by All of America's Workers 
(January 25, 2021), revoked E.O. 13788 and E.O. 13858. OMB made changes 
to 2 CFR 200.322 through OMB's 2024 final rule and notification of 
final guidance, 89 FR 30046. These changes are discussed in more detail 
later in this preamble.
     At 2 CFR 200.340, Termination, OMB made changes to ensure 
that Federal awarding agencies could terminate a grant in whole or in 
part, to the greatest extent authorized by law, when the grant no 
longer effectuates the program goals or Federal awarding agency 
priorities. However, OMB also made changes focused on the need for 
agencies to communicate clearly to recipients, such as those changes at 
2 CFR 200.211(c)(1)(v), which requires that recipients be clearly and 
unambiguously informed of the termination provisions at 2 CFR 200.340. 
OMB made further changes to 2 CFR 200.340 through OMB's 2024 final rule 
and notification of final guidance, 89 FR 30046. These changes are 
discussed in more detail later in this preamble.
     OMB revised 2 CFR 200.344, Closeout, ``to support timely 
closeout of awards, improve the accuracy of final

[[Page 107075]]

closeout reporting, and reduce recipient burden.'' \22\ At Sec.  
200.344(a), OMB revised language to extend the deadline for report 
submission by recipients, established a deadline for subrecipients to 
submit reports to pass-through entities, and made changes such as 
changing ``non-Federal entity'' to ``recipient'' and adding ``or an 
earlier date as agreed upon by the pass-through entity and 
subrecipient.'' OMB made further changes to 2 CFR 200.344 through OMB's 
2024 final rule and notification of final guidance, 89 FR 30046. These 
changes are discussed in more detail later in this preamble.
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    \22\ Id. at 32.
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     OMB added a new paragraph (h) to 2 CFR 200.403, Factors 
affecting allowability of costs. Section 200.403 lists general criteria 
for costs to be allowed under Federal awards. New paragraph (h) states 
that costs must be incurred during the approved budget period, and it 
authorizes Federal awarding agencies to waive prior written approvals 
for carrying forward unobligated balances to later budget periods per 
Sec.  200.308(e)(3). OMB made further changes to 2 CFR 200.403 through 
OMB's 2024 final rule and notification of final guidance, 89 FR 30046. 
These changes are discussed in more detail later in this preamble.
     OMB revised 2 CFR 200.414(f) to change the requirement 
permitting use of the 10 percent de minimis rate election for 
recovering indirect costs. Previously, a non-Federal entity was 
permitted to use the 10 percent de minimis option only if it had never 
received a negotiated indirect cost rate. The new rule permits use of 
the de minimis rate of 10 percent if the non-Federal entity does not 
have a current negotiated rate. OMB clarified that no documentation is 
required to justify the 10 percent de minimis indirect cost rate. OMB 
made further changes to 2 CFR 200.414(f) through OMB's 2024 final rule 
and notification of final guidance, 89 FR 30046. These changes are 
discussed in more detail later in this preamble.
     OMB revised 2 CFR 200.465, Rental costs of real property 
and equipment, by redesignating paragraph (c)(5) as paragraph (d), 
revising the text of paragraph (d), and adding a new paragraph (e). 
Revisions to paragraph (d) replace the reference to ``leases which are 
required to be treated as capital leases'' (in accordance with 
generally accepted accounting principles, GAAP) with ``leases which are 
required to be accounted for as a financed purchase under [Governmental 
Accounting Standards Board (GASB)] standards or a finance lease under 
[Financial Accounting Standards Board (FASB)] standards[.]'' New 
paragraph (e) provides for general allowability of rental or lease 
payments under lease contracts where the non-Federal entity must 
recognize an intangible right-to-use lease asset (per GASB) or right of 
use operating lease asset (per FASB) for purposes of financial 
reporting in accordance with generally accepted accounting principles. 
OMB made further changes to 2 CFR 200.465 through OMB's 2024 final rule 
and notification of final guidance, 89 FR 30046. These changes are 
discussed in more detail later in this preamble.
     OMB revised 2 CFR 200.515, Audit reporting, to better 
align the regulation with the Federal Audit Clearinghouse's audit form 
and collections on financial statements. Section 200.515 requires 
auditors to determine and provide an opinion on whether an auditee's 
financial statements ``are presented fairly in all material respects.'' 
Section 200.515 permits use of GAAP to make such determinations. OMB 
revised Sec.  200.515 to permit use of a special purpose framework, 
such as cash, modified cash, or regulatory as required by State law, in 
addition to GAAP. OMB made further changes to 2 CFR 200.515 through 
OMB's 2024 final rule and notification of final guidance, 89 FR 30046. 
These changes are discussed in more detail later in this preamble.

OMB's 2024 Final Rulemaking and Notification of Final Guidance for 
Federal Financial Assistance

    On October 5, 2023, OMB published another proposed rule to revise 
OMB's guidance and its regulations in title 2 of the Code of Federal 
Regulations, including, among other parts, part 200. 88 FR 69390 
(October 2023 proposed rule). OMB's proposed rule sought to further 
streamline, clarify, and update the guidance, including raising certain 
thresholds, where permissible under law, in recognition of inflation 
over time. The proposals were based on four objectives: (1) 
incorporating statutory requirements and administration priorities 
related to Federal financial assistance; (2) reducing agency and 
recipient burden; (3) clarifying sections that recipients or agencies 
have interpreted in different ways; and (4) rewriting applicable 
sections in plain language, improving flow, and addressing inconsistent 
use of terms.
    OMB partially based its proposed changes on Federal agency input 
from ongoing engagement with Federal agencies and the broader Federal 
financial assistance community, and from Federal agency comments and 
public comments on a previously issued Request for Information (RFI) 
that OMB published on February 9, 2023. 88 FR 8480. The RFI announced 
that OMB would be proposing revisions to chapters I and II of subtitle 
A of title 2 of the Code of Federal Regulations, which includes 2 CFR 
part 200 among other parts, and requested public comment on 2 CFR and 
several specific questions. OMB also published a proposed rule on the 
same date proposing to revise OMB Guidance for Grants and Agreements 
and soliciting public comment on the rule's proposals. 88 FR 8374 
(OMB's 2023 proposed rule).\23\ OMB proposed to create a new part 184 
in 2 CFR chapter I and revise 2 CFR 200.322 to support implementation 
of the Build America, Buy America Act provisions of the Infrastructure 
Investment and Jobs Act (IIJA) \24\ and to clarify existing 
requirements.\25\
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    \23\ The public comment period for this proposed rule ended on 
March 13, 2023.
    \24\ The Build America, Buy America Act (``BABA'' or ``the 
Act'') was enacted on November 15, 2021, as part of the 
Infrastructure Investment and Jobs Act (``IIJA'') (Pub. L. 117-58).
    \25\ Under the proposed rule, the new part 184 would address the 
Buy America Preference for all awards with infrastructure 
expenditures set forth in section 70914 of the Act, generally align 
with OMB guidance M-22-11, provide definitions for the purposes of 2 
CFR part 184 and a common framework for applying Buy America 
Preferences to Federal Financial Assistance, include guidance for 
determining the cost of manufactured products and use the definition 
of ``cost of components'' in the Federal Acquisition Regulation 
(FAR) (48 CFR 25.003) that is used for Federal procurement, and 
include OMB's proposed standards for ``all manufacturing processes'' 
for the manufacture of construction materials. OMB's rule also 
proposed to modify 2 CFR 200.322 to direct Federal agencies to the 
new part in chapter I (2 CFR part 184) for guidance on all awards 
that include infrastructure projects.
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    After consideration of further public and Federal agency comments 
on the October 2023 proposed rule, OMB published a final rule on April 
22, 2024, to finalize changes to guidance and OMB regulations in title 
2 of the CFR, 89 FR 30046 (OMB's 2024 final rule), parts 1, 25, 170, 
175, 180, 182, 183, 184, and 200.\26\ OMB finalized these changes for 
purposes related to the four objectives stated in the October 2023 
proposed rule, and to improve Federal financial assistance management, 
transparency, and oversight through more accessible and comprehensible 
guidance. OMB largely retained the overall structure and part, subpart, 
and section number organization from prior

[[Page 107076]]

iterations of its guidance and regulations. OMB made many plain 
language revisions to simplify text, reduce technical verbiage, and 
increase consistency and brevity, but largely did not change the 
substantive content of the guidance and regulations. The changes from 
OMB's 2024 final rule became effective October 1, 2024.\27\
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    \26\ As explained in section II. of this proposed rule, while 
OMB amended 2 CFR parts 1, 170, 175, 180, 182, 183, and 184 in its 
2024 final guidance, the changes made to these parts do not require 
modifications to HUD's regulations at this time. Some provisions in 
2 CFR part 25 are relevant to this rulemaking, as explained later in 
this preamble.
    \27\ This rulemaking is part of HUD's effort to implement OMB's 
changes for HUD regulations and programs. ``Consistent with 2 CFR 
200.106 and applicable law, Federal agencies must take appropriate 
steps to ensure the 2024 Revisions are effective for all Federal 
awards issued on or after October 1, 2024.'' OMB Memorandum M-24-11, 
https://www.whitehouse.gov/wp-content/uploads/2024/04/M-24-11-Revisions-to-2-CFR.pdf.
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    Relevant to this proposed rulemaking are the following changes made 
by OMB's 2024 final guidance to 2 CFR part 25:
     OMB amended 2 CFR 25.105, Applicability, which now 
provides in paragraph (a) that 2 CFR part 25 applies to all applicants 
for and recipients of Federal financial assistance as defined in 2 CFR 
25.400 unless exempted by Federal statute or 2 CFR 25.110. Under 
revised paragraph (b), subrecipients must obtain a unique entity 
identifier (UEI) by registering with the System for Award Management 
(SAM.gov) and acquiring a UEI through that website, as discussed below, 
in accordance with 2 CFR part 25, subpart C. OMB also clarified in a 
new paragraph (d) that recipients of the guarantee from the Federal 
agency, including for-profit lenders participating in loan guarantee 
programs, are required to register in SAM.gov. These lenders are also 
required to complete entity validations and acquire a UEI. Finally, a 
Federal agency may require non-individual beneficiary borrowers, 
including small businesses or corporations, to obtain a UEI or register 
in SAM.gov. There is no change to the underlying requirements, but OMB 
has clarified that applicability extends to lenders participating in 
loan guarantee programs.
     OMB revised 2 CFR 25.200, Requirements for notice of 
funding opportunities, regulations, and application instructions, to 
reorganize, provide clarity, and make plain language changes, but did 
not make substantive changes.\28\
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    \28\ 89 FR 30052.
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     OMB revised 2 CFR 25.205, Effect of noncompliance with a 
requirement to obtain a UEI or register in SAM.gov, to make plain 
language revisions and provide minor clarifications, including that the 
requirement to have an active UEI does not apply to amendments to 
terminate or close a Federal award.
     OMB revised 2 CFR 25.300, Requirement for recipients to 
ensure subrecipients have a unique entity identifier, to make plain 
language changes, but did not make substantive changes.
     OMB amended the definition of Federal financial assistance 
in 2 CFR 25.400, Definitions, by adding ``loan guarantee'' as a form of 
assistance that constitutes Federal financial assistance. Read together 
with revised 2 CFR 25.105, OMB's changes clarify that 2 CFR part 25 
applies to loan guarantee assistance.
     OMB amended Appendix A to 2 CFR part 25, Award Term, to 
make plain language revisions and minor clarifying edits, but did not 
make substantive changes. Appendix A to 2 CFR part 25 requires, among 
other things, that recipients to maintain current and active 
registration in SAM.gov until the recipient submits all final reports 
required under a Federal award or receives final payment, whichever is 
later; that recipients notify potential subrecipients that no entity 
may receive a subaward until the entity has provided its UEI to the 
recipient; and that recipients must not make subawards to an entity 
unless the entity has provided its UEI to the recipient.
    Relevant to this proposed rulemaking are the following changes made 
by OMB's 2024 final guidance to 2 CFR part 200:
     OMB revised the definition of Cost sharing in 2 CFR 200.1 
by removing ``or matching'' from the previously defined term ``Cost 
sharing or matching''. Instead, OMB has clarified that cost sharing 
includes matching, meaning the required levels of cost share that must 
be provided by entities such as recipients, subrecipients, and third 
parties. The definition continues to cross-reference 2 CFR 200.306, 
Cost sharing.
     OMB revised the definition of Modified Total Direct Cost 
(MTDC), in 2 CFR 200.1, by changing the two dollar amounts of $25,000 
in the definition to $50,000. The MTDC definition now provides that 
MTDC includes up to the first $50,000 of each subaward, and that MTDC 
excludes the portion of each subaward in excess of $50,000.
     OMB revised the definition of Federal financial assistance 
in 2 CFR 200.1 by replacing ``non-Federal entities'' and with 
``recipients or subrecipients'' throughout. The revised definition now 
specifies that 2 CFR part 200 provisions, including, under paragraph 
(2) of the definition of Federal financial assistance, 2 CFR 200.203 
and subpart F of 2 CFR part 200, apply to loan guarantee program 
assistance that goes to or is administered by recipients and 
subrecipients. Under the previously existing definition of ``Non-
Federal entity'' under 2 CFR 200.1, for-profit entities were not 
included.
     OMB made several revisions to 2 CFR 200.101, 
Applicability. Of relevance to this rulemaking's proposed changes to 
HUD regulations in 24 CFR parts 5, 1005, and 1007: OMB removed the 
table 1 for paragraph (b), and reorganized and clarified text 
describing the applicability of 2 CFR part 200 subparts and provisions 
for different types of Federal financial assistance, including loan 
guarantee program assistance. The items under revised paragraph (b)(5), 
including agreements for loan guarantees, are subject to 2 CFR part 
200, subpart F, Audit Requirements only when awarded to a non-Federal 
entity as defined in 2 CFR 200.1.\29\
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    \29\ Non-Federal entity under 2 CFR 200.1 ``means a State, local 
government, Indian Tribe, Institution of Higher Education (IHE), or 
nonprofit organization that carries out a Federal award as a 
recipient or subrecipient.''
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     Under 2 CFR 200.208, Specific conditions, paragraph (d), 
before OMB's 2024 changes, if a Federal awarding agency or pass-through 
entity was imposing additional requirements through specific 
conditions, they were required to notify the applicant or non-Federal 
entity without specification as to when this notice must be provided. 
Under revised paragraph (d), the Federal agency or pass-through entity 
must notify the recipient or subrecipient prior to imposing specific 
conditions. Notification must include the nature of and reason for the 
specific conditions, the action needed to remove them, the time allowed 
for completing such actions, and the method for requesting the Federal 
agency or pass-through entity to reconsider imposing a specific 
condition. 2 CFR 200.208(d)(1) through (5).
     OMB reorganized and revised 2 CFR 200.307. The previous 
paragraph (e), concerning use of program income, has been moved to new 
paragraph (b)(2). Additionally, OMB simplified language by revising all 
paragraphs in Sec.  200.307(b), but the substantive requirements did 
not change. For purposes of cross-reference updates in this rulemaking, 
HUD notes that preexisting paragraph (e)(2) is now in paragraph (b)(2).
     OMB revised 2 CFR 200.317 by, among other things, adding 
``Indian Tribes'' where States are mentioned in the regulation. This 
means that, if applicable, Indian Tribes receiving HUD Federal 
financial assistance must use their own procurement policies and 
procedures when conducting procurement transactions under a

[[Page 107077]]

Federal award. If these policies and procedures do not exist, then a 
Tribe must follow the procurement standards in 2 CFR 200.318 through 
200.327. Applicability does not extend to Tribally Designated Housing 
Entities under OMB's revisions.
     OMB revised 2 CFR 200.318 by, among other things, removing 
the term ``non-Federal entity'' and replacing it with ``recipient or 
subrecipient''. Paragraph (c) of this section concerns conflicts of 
interest, including organizational conflicts of interest, and is of 
relevance to this rulemaking. (Paragraph (c) was not changed 
substantively other than the addition of a ``board member with a real 
or apparent conflict of interest'' to the list of persons who may not 
participate in the selection, award, or administration of a contract 
supported by the Federal award.)
     After its 2020 changes to 2 CFR 200.319, OMB further 
reorganized and revised this section in its 2024 round of changes. Of 
relevance to this rulemaking is the requirement under what was, prior 
to OMB's 2020 and 2024 changes, paragraph (a)(5): To ensure objective 
contractor performance and eliminate unfair competitive advantage, 
contractors that develop or draft specifications, requirements, 
statements of work, or invitations for bids or requests for proposals 
must be excluded from competing for such procurements. One situation 
``considered to be'' restrictive of competition is organizational 
conflicts of interest; this example was, prior to OMB's 2020 and 2024 
changes, provided in Sec.  200.319(a)(5). These requirements are now 
found in paragraph (b), which speaks to the exclusions for procurement 
competition, and (c)(5), which contains the organizational conflicts of 
interest example. Therefore, where HUD's regulations cross reference 2 
CFR 200.319(a)(5), they should now cross reference 2 CFR 200.319(b) and 
(c)(5) following OMB's 2020 and 2024 changes.
     OMB revised 2 CFR 200.321, Contracting with small 
businesses, minority businesses, women's business enterprises, veteran-
owned businesses, and labor surplus area firms, such that this section 
(as of October 1, 2024) no longer requires but instead recommends 
actions to ensure consideration of minority, women, and veteran-owned 
businesses and labor surplus area firms. OMB added qualifying language, 
``When possible,'' to the beginning of paragraph (a), changed the 
language of requirement ``must'' in paragraph (a) to discretionary 
language ``should'' to state that a recipient or subrecipient ``should 
ensure'' that such businesses and firms are considered, and replaced 
the term ``Affirmative steps must include'' with ``Such consideration 
means''. OMB also added the category of ``veteran-owned business'' to 
this section for the first time. Finally, OMB made several changes for 
simplification of language and clarification.
     In 2 CFR 200.322, OMB added a new paragraph (c) stating 
that Federal agencies providing Federal financial assistance for 
infrastructure projects must implement the Buy America preferences set 
forth in 2 CFR part 184. While HUD is not proposing that any of its 
regulations specifically cross-reference 2 CFR part 184, where HUD's 
regulations do require applicability or compliance with 2 CFR 200.322 
and/or 2 CFR part 200, subpart D (which contains 2 CFR 200.322), this 
also necessarily includes 2 CFR part 184 where Federal financial 
assistance is provided for infrastructure projects.
     OMB revised 2 CFR 200.331 by, among other things, 
clarifying in paragraph (b) that a contract is for the purpose of 
obtaining goods and services for the recipient's or subrecipient's 
(previously ``the non-Federal entity's own'') use and creates a 
procurement relationship with a contractor.
     OMB revised 2 CFR 200.403(h) to add language clarifying 
that administrative closeout costs may be incurred until the due date 
of the final report(s) and, if incurred, these costs must be liquidated 
prior to the due date of the final report(s) and charged to the final 
budget period of the award unless otherwise specified by the Federal 
agency. OMB also made minor edits to the existing language of paragraph 
(h) for plain language and clarification.
     Through its 2024 final guidance, OMB amended 2 CFR 
200.414(f) by:
    [cir] Providing that recipients and subrecipients that do not have 
a current negotiated indirect cost rate may elect to charge a de 
minimis rate;
    [cir] Removing the exception for non-Federal entities described in 
2 CFR part 200 appendix VII, paragraph D.1.b;
    [cir] Increasing the amount of the de minimis indirect cost rate 
from 10 to 15 percent of MTDC, and expressly authorizing the recipient 
or subrecipient to determine the appropriate rate up to this limit;
    [cir] Specifying that Federal agencies and pass-through entities 
cannot require recipients and subrecipients to use a de minimis rate 
lower than the negotiated indirect cost rate or the rate chosen 
pursuant to Sec.  200.414, unless required by Federal statute or 
regulation;
    [cir] Prohibiting application of the de minimis rate to cost 
reimbursement contracts issued directly by the Federal government in 
accordance with the Federal Acquisition Regulation (FAR);
    [cir] Specifying that recipients and subrecipients are not required 
to use the de minimis rate;
    [cir] Clarifying that if a recipient or subrecipient elects to use 
the de minimis rate or a lower rate, or if it is required to use a 
lower rate by Federal statute or regulation, it must use the de minimis 
rate for all Federal awards until the recipient or subrecipient choose 
to receive a negotiated rate; and
    [cir] Removing language that permitted a non-Federal entity to 
apply to negotiate a rate at any time.
    OMB retained (but moved, within Sec.  200.414(f)) language stating 
that the de minimis rate does not require documentation to justify its 
use and may be used indefinitely.
     OMB revised 2 CFR 200.445(b) by removing the phrase 
``regardless of whether reported as taxable income to the employees'' 
in the provision stating that housing costs, housing allowances, and 
personal living expenses for the recipient's or subrecipient's 
employees are only allowable as direct costs and must be approved in 
advance by the Federal agency.
     OMB revised 2 CFR 200.472 by, among other things, adding a 
new paragraph (b) that states that administrative costs related to 
closeout activities of a Federal award are allowable and the recipient 
or subrecipient may charge the Federal award during the closeout for 
the necessary administrative costs of that Federal award. Section 
200.472(b) provides examples including salaries of personnel preparing 
final reports, publication and printing costs, costs associated with 
the disposition of equipment and property, and related indirect costs. 
The provision also repeats requirements stated in 2 CFR 200.403(h): The 
administrative costs may be incurred until the due date of the final 
report(s) and, if incurred, the costs must be liquidated prior to the 
due date of the final report(s) and charged to the final budget period 
of the award unless otherwise specified by the Federal agency.

II. This Proposed Rule

    This proposed rule is necessary to incorporate into HUD's 
regulations and bring into effect the updated Uniform Guidance issued 
by OMB in 2020 (OMB's 2020 final guidance),\30\ and

[[Page 107078]]

OMB's Guidance for Federal Financial Assistance issued in 2024 (OMB's 
2024 final guidance).\31\ Implementation of this guidance will reduce 
administrative burden and decrease risk of waste, fraud, and abuse for 
HUD's management of Federal financial assistance. Because HUD 
previously implemented OMB's guidance into HUD's Federal financial 
assistance management regulations throughout title 24 of the CFR, OMB's 
2020 and 2024 amendments require that HUD review those regulations and 
incorporate changes made in 2 CFR part 200 and, as applicable, the 
other parts in title 2 of the CFR amended by OMB. During this process 
HUD has also identified instances where technical corrections to HUD 
regulations are necessary. Although OMB also amended 2 CFR parts 25, 
170, and 183 in OMB's 2020 final guidance, and OMB amended 2 CFR parts 
1, 25, 170, 175, 180, 182, 183, and 184 in OMB's 2024 final guidance, 
the changes being made to these provisions do not require modifications 
to HUD's regulations at this time, with the exception of changes to 2 
CFR part 25 made through OMB's 2024 final guidance, which is explained 
in more detail elsewhere in this preamble.
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    \30\ 85 FR 49506 (Aug. 13, 2020). Some of OMB's changes and the 
updated Uniform Guidance are already in effect based on language in 
a Federal award or through another implementation method.
    \31\ 89 FR 30046 (April 22, 2024). OMB's changes go into effect 
October 1, 2024.
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    Specifically, through this proposed rule HUD is proposing to make 
technical changes to 2 CFR part 200 cross-references to conform HUD's 
regulations with revisions made by OMB. OMB also made substantive 
changes to certain 2 CFR part 200 provisions that HUD previously 
implemented in its regulations, and HUD is proposing conforming changes 
to implement new or changed requirements in relevant 2 CFR part 200 
provisions. HUD is also proposing to amend its regulations based on its 
experience implementing 2 CFR part 200 to improve clarity and 
consistency in HUD regulations that cross-reference 2 CFR part 200 or 
specific subparts or provisions. HUD's proposed changes are explained 
in more detail below. This includes proposed changes to HUD's Housing 
Trust Fund (HTF) program regulations to establish program-specific 
procedures and better align programmatic and administrative 
requirements for HTF grant closeout. Additionally, HTF program 
regulations are modeled off of HUD's HOME Investment Partnership 
program regulations, so HUD is proposing some changes in this 
rulemaking that would align HTF regulations with changes related to 2 
CFR part 200 proposed in HUD's recent proposed rule for the HOME 
program.\32\ Finally, because some of OMB's 2024 changes affect loan 
guarantee programs, and because HUD has yet to codify in regulation 
some requirements that have applied to loan guarantee programs even 
before OMB's 2020 changes, HUD is proposing to amend its Section 184 
and 184A program regulations (24 CFR parts 1005 and 1007, respectively) 
to implement the relevant requirements. HUD is seeking public comment 
on its proposed changes.
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    \32\ 89 FR 46618.
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Conforming Technical Changes Based on OMB's 2020 and 2024 Updates to 
Uniform Guidance

Cross Reference Updates
    Through this proposed rulemaking, HUD is proposing to make 
technical changes to 2 CFR part 200 cross-references to conform HUD's 
regulations with revisions made by OMB in its two rounds of changes, 
2020 and 2024. For example, through its 2020 final guidance, OMB 
removed all 2 CFR part 200 sections containing specific definitions, 
sections 2 CFR 200.2 through 200.99, and added all the definitions in 
those sections into a general ``Definitions'' section, 2 CFR 200.1. 
Therefore, in its regulations at title 24, HUD proposes replacing any 
cross-references to sections 2 CFR 200.2 through 200.99 (which no 
longer exist) with a cross-reference to 2 CFR 200.1. For example, HUD 
proposes to revise 24 CFR 4.9(a)(iii) by removing the cross-reference 
``2 CFR 200.80,'' which previously contained the definition of 
``program income,'' and adding in its place a cross-reference to 2 CFR 
200.1, which now contains the definition for ``program income.''
    Through its 2020 and 2024 final guidance, OMB revised and 
reorganized some sections, such as 2 CFR 200.319. This created new 
paragraph and regulatory text organization and some new paragraph 
designations within these 2 CFR provisions. Therefore, through this 
rulemaking, HUD is proposing to update cross-references in HUD's 
existing regulations, such as 24 CFR 700.175(b) and 1003.606(a)(1), 
which cross-reference 2 CFR 200.319(a)(5), to reference the new, 
correct paragraph(s). In this example, the cross-reference to 2 CFR 
200.319(a)(5) would be updated to 2 CFR 200.319(b) and (c)(5), since 
the information previously contained in 2 CFR 200.319(a)(5) is now 
split into several paragraphs with new paragraph designations because 
of changes from both OMB's 2020 and 2024 final guidance.
    HUD is also proposing updates to cross-references to point to more 
specific 2 CFR part 200 subparts or provisions. For example, 24 CFR 
75.31 provides for recordkeeping requirements and states that 
documentation must be maintained for a time period in accordance with 
applicable program regulations or, in the absence of such regulations, 
``in accordance with 2 CFR part 200.'' For clarity, HUD proposes to 
replace the cross-reference in 24 CFR 75.31(c) to 2 CFR part 200 with a 
reference to 2 CFR 200.334, which specifies a three-year requirement 
and exceptions to this requirement. In addition, HUD proposes changes 
to cross-reference more specific 2 CFR part 200 subparts or provisions 
in Sec.  75.33(a), to cross-reference 2 CFR 200.334; and Sec.  
570.509(b)(3), to cross-reference 2 CFR part 200, subpart F.
    Finally, some of HUD's regulations, 24 CFR 570.502(a) for example, 
cross reference 2 CFR provisions by only section number (not CFR title 
number 2) and then by section title: in Sec.  570.502(a)(1), ``Section 
200.305 `Payment' ''. This could refer to Sec.  200.305 in any title of 
the CFR. HUD is proposing to clarify that the cross-references are to 
title 2 provisions by revising these cross-references to read, e.g., 
``2 CFR 200.305.'' OMB's 2024 changes also changed the section titles 
of some of these 2 CFR part 200 provisions. For example, 2 CFR 200.306, 
which 24 CFR 570.502(a)(2) cross-references as ``Section 200.306 `Cost 
sharing or matching,' '' is no longer ``Cost sharing or matching'' but 
``Cost sharing''. HUD is proposing to remove the section titles from 
the 2 CFR part 200 cross-references in its regulations to remove the 
need to update HUD's regulations to account for any future change in 
section titles of 2 CFR part 200 provisions. HUD is therefore proposing 
for 24 CFR 570.502(a)(1) to simply cross-reference ``2 CFR 200.305,'' 
and, for paragraph (a)(2), ``2 CFR 200.306,'' and so on. HUD is 
proposing these technical changes in 24 CFR 570.502(a), 1000.26(a), and 
1003.501(a).
Section 570.489 Program Administrative Requirements
    Through OMB's 2020 changes to 2 CFR part 200, OMB removed section 2 
CFR 200.88, which contained the definition of ``simplified acquisition 
threshold'' (SAT), and moved the SAT definition into the new 
definitions section 2 CFR 200.1. OMB also revised the definition of 
``simplified acquisition threshold'' to cross-reference 2 CFR 200.320 
and clarify that the SAT ``for

[[Page 107079]]

procurement activities administered under Federal awards'' is set by 
the Federal Acquisition Regulation at 48 CFR subpart 2.1.\33\ In Sec.  
570.489(j), HUD is proposing to remove the language ``the threshold for 
small purchase procurement (2 CFR 200.88),'' and replace it with ``the 
simplified acquisition threshold (2 CFR 200.1) set by the FAR at 48 CFR 
part 2, subpart 2.1.'' This will incorporate OMB's renumbering of 2 CFR 
part 200 definitions and make HUD's regulatory language consistent with 
the language in the SAT definition in 2 CFR 200.1.
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    \33\ On July 2, 2020, the Department of Defense, the General 
Services Administration (GSA), and the National Aeronautics and 
Space Administration (NASA) finalized changes to the Federal 
Acquisition Regulation at 48 CFR part 2, subpart 2.1, in a final 
rule titled ``Federal Acquisition Regulation; Federal Acquisition 
Circular 2020-07; Introduction.'' 85 FR 40060; see also FAR Case 
2018-004, titled ``Federal Acquisition Regulation: Increased Micro-
Purchase and Simplified Acquisition Thresholds,'' at 85 FR 40064. 
That final rule, among other things, increased the general 
simplified acquisition threshold amount from $150,000 to $250,000. 
These changes are not directly relevant to HUD's reasoning for 
proposing changes to 24 CFR 570.489(j), but are worth noting.
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Conforming Substantive Changes Based on OMB's 2020 and 2024 Updates to 
Uniform Guidance

    Some of OMB's changes to the Uniform Guidance add new requirements 
or changes to existing requirements. HUD has reviewed these substantive 
changes and seeks to implement OMB's permissive requirement for 
consideration of small, minority, veteran-owned, and women's business 
enterprises and labor surplus area firms in 2 CFR 200.321; OMB's 
indirect cost requirements in section 2 CFR 200.414(f); and OMB's audit 
reporting requirements in 2 CFR 200.515. The relevant substantive 
changes to OMB's Uniform Guidance and HUD's corresponding proposed 
changes are outlined in this section. HUD is proposing to make these 
changes to align its program regulations with OMB's regulations and 
2020 and 2024 final rules and final guidance. Doing so will help HUD 
regulations and programs to achieve or better achieve the objectives 
outlined in the preambles of OMB's rulemakings: align with statutory 
requirements and administration priorities, reduce agency and recipient 
burden, and strengthen Federal agency approaches to performance and 
risk.
Application, Registration, and Submission Requirements: Sec. Sec.  
5.1001 Through 5.1005
    Following OMB's 2024 changes to 2 CFR 25.105, 2 CFR part 25 applies 
to applicants for and recipients of Federal financial assistance as 
defined in 2 CFR 25.400 unless a Federal statute or 2 CFR 25.110 
provides for an exemption. OMB's changes to the definition of Federal 
financial assistance in 2 CFR 25.400 clarify that loan guarantees 
constitute Federal financial assistance for purposes of 2 CFR part 25. 
The changes to 2 CFR 25.105 and 25.400 together mean that 2 CFR part 25 
applies to loan guarantee assistance. HUD is proposing conforming 
changes to 24 CFR 5.1001 that would incorporate OMB's new applicability 
language and include loan guarantees as a form of Federal financial 
assistance subject to the requirements of HUD regulations that 
implement 2 CFR part 25: 24 CFR 5.1001 through 5.1005 (24 CFR part 5, 
subpart K).
    HUD regulations at Sec. Sec.  5.1003 and 5.1004 implement OMB's 
preexisting provisions in title 2 of the Code of Federal Regulations 
related to use of a unique entity identifier and the System of Award 
Management (SAM), 2 CFR 25.200 and 25.205. HUD implemented these OMB 
provisions as part of its prior 2 CFR rulemaking effort to implement 
OMB's 2013 uniform guidance, and HUD's regulations currently only 
expressly incorporate these requirements for applicants of Federal 
financial assistance, not recipients and subrecipients.\34\ HUD is 
proposing conforming changes to 24 CFR 5.1003 and 5.1004 to align them 
with the revised OMB provisions and to clarify that certain 
requirements extend to applicants, in Sec.  5.1003, and also to 
recipients and subrecipients, in Sec.  5.1004. HUD is proposing 
conforming changes to Sec.  5.1003 to incorporate the revised language 
in OMB's revised 2 CFR 25.200 and 25.205. HUD is also proposing to 
maintain some of the structure and language in current 24 CFR 5.1003 
related to consortium arrangements. HUD is similarly proposing 
conforming changes to 24 CFR 5.1004 to align it with revised 2 CFR 
25.200, 25.205, 25.300, and appendix A to 2 CFR part 25. HUD is 
proposing to incorporate 2 CFR 25.205(d) in Sec.  5.1004(c) to clarify 
UEI and SAM.gov requirements for recipients of loan guarantee 
assistance.\35\
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    \34\ 80 FR 75931.
    \35\ HUD's proposed 24 CFR 5.1004(b) incorporates provisions in 
2 CFR part 25, Appendix A, Award Term.
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    Section 5.1005 of title 24 of the CFR currently incorporates HUD's 
requirements for electronic submission of applications for HUD 
assistance.\36\ These requirements apply only for applications 
submitted in response to any application that HUD has placed on the 
www.grants.gov website. This website, grants.gov, is only applicable 
for awards made via competition, and not all HUD programs use 
grants.gov for electronic submission of applications. Additionally, in 
response to public comment, OMB stated in its 2024 final rulemaking 
that it would not implement a single, centralized application system or 
related provisions.\37\ HUD is therefore proposing to remove the 
existing requirements in 24 CFR 5.1005.
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    \36\ See 70 FR 77292. HUD's requirements originate from goals 
set by the President in the President's Management Agenda for Fiscal 
Year 2002, which furthered the objectives of the Federal Financial 
Assistance Management Improvement Act of 1999 and the Government 
Paperwork Elimination Act. 69 FR 68218. The Federal Financial 
Assistance Management Improvement Act of 1999, which required 
Federal agencies to streamline and simplify the application, 
administrative, and reporting procedures for Federal financial 
assistance programs, ceased to be effective on Nov. 20, 2007.
    \37\ 89 FR 30072.
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    OMB's regulations at 2 CFR 25.220(a), as revised through OMB's 2024 
changes, require all awards of Federal financial assistance to include 
the award term in appendix A to 2 CFR part 25. This was a preexisting 
requirement; OMB's 2024 changes did not alter its substance, but this 
requirement has only been included indirectly via cross-reference in 
HUD's regulations up to this point.\38\ HUD is therefore proposing a 
new Sec.  5.1005 that would provide that every agreement for Federal 
financial assistance executed by HUD with a recipient on or after 
October 1, 2024, is subject to the Award Term in appendix A to 2 CFR 
part 25.
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    \38\ See existing 24 CFR 5.1004, ``Applicants for HUD financial 
assistance that are subject to this subpart are required to register 
with the System of Award Management (SAM) and have an active 
registration in SAM in accordance with 2 CFR part 25, appendix A in 
order for HUD to obligate funds and for an awardee to receive an 
award of funds from HUD.''
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Section 92.508 Recordkeeping
    Through OMB's 2024 changes, OMB revised 2 CFR 200.321 by removing 
the requirement that non-Federal entities ``must take all necessary 
affirmative steps to assure'' use of minority businesses, women's 
business enterprises, and labor surplus area firms, and replacing it 
with a statement that ``[w]hen possible, the recipient or subrecipient 
should ensure'' (emphasis added) consideration of small businesses, 
minority businesses, women's business enterprises, veteran-owned 
businesses, and labor surplus area firms, for contracting purposes. 
Affirmative steps to ensure use of these entities is no longer a 
requirement, and, instead, consideration of these entities

[[Page 107080]]

is now an option that OMB regulations encourage ``when possible''. 
Additionally, the list of entities has expanded and now includes small 
businesses and veteran-owned businesses. Through this rulemaking, HUD 
is proposing to add a new paragraph (a)(7)(ii)(C) to 24 CFR 92.508 to 
require participating jurisdictions to establish and maintain records 
of any efforts to consider small businesses, minority businesses, 
women's business enterprises, veteran-owned businesses, and labor 
surplus area firms, as described in 2 CFR 200.321. HUD's current 
recordkeeping requirements in this section only address HOME statutory 
requirements; HUD is proposing this change to clarify that the 
recordkeeping requirements include records for groups mentioned within 
2 CFR part 200 even if not mentioned within the HOME statute.
Indirect Costs: Sec. Sec.  570.206, 576.109, and 578.63
    Through its 2020 final guidance, OMB amended 2 CFR 200.414(f) to 
expand use of the de minimis indirect cost rate of 10 percent of 
modified total direct costs (MTDC), defined in 2 CFR 200.1. Under OMB's 
2020 changes, Sec.  200.414(f) stated that any non-Federal entity that 
does not have a current negotiated indirect cost rate, except for a 
non-Federal entity described in paragraph D.1.b of appendix VII to 2 
CFR part 200,\39\ may elect to charge the de minimis rate.
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    \39\ Under OMB's 2020 changes, these non-Federal entities 
described in appendix VII in paragraph D.1.b. were defined as a 
State or local governmental department or agency unit that receives 
more than $35 million in direct Federal funding or is specifically 
requested to submit an indirect cost rate proposal by the cognizant 
agency for indirect costs. State or local governments receiving more 
than $35 million in direct Federal funding were required to submit 
an indirect cost rate proposal to its cognizant agency for indirect 
costs.
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    Through its 2024 final guidance, OMB further amended 2 CFR 
200.414(f) by, among other things, increasing the amount of the de 
minimis indirect cost rate from 10 to up to 15 percent of MTDC, and as 
otherwise described previously in the ``OMB's 2024 Final Rulemaking and 
Notification of Final Guidance for Federal Financial Assistance'' 
section in the ``Background'' section of this preamble.
    HUD's regulation at 24 CFR 578.63(b) currently states that indirect 
costs may be allocated to eligible activities ``consistent with an 
indirect cost rate proposal developed in accordance with 2 CFR part 
200, subpart E,'' (emphasis added). This does not contemplate use of 
the de minimis rate, which is included under 2 CFR part 200, subpart E, 
but is not considered an indirect cost rate proposal. Other HUD 
regulations state that direct costs may be allocated to eligible 
activities ``consistent with 2 CFR part 200, subpart E,'' without 
reference to an indirect cost rate proposal.\40\ Therefore, HUD 
proposes to revise language in Sec.  578.63(b) to state that indirect 
costs may be allocated consistent with 2 CFR part 200, subpart E, and 
remove reference to an ``indirect cost rate proposal.'' This will end 
confusion over the permissible use of a de minimis rate as contemplated 
by 2 CFR 200.414 and improve consistency with other HUD regulations.
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    \40\ See, e.g., 24 CFR 576.109(b).
---------------------------------------------------------------------------

    Under the regulations for several of HUD's Community Planning and 
Development (CPD) programs, the programs' administrative cost caps do 
not limit costs directly related to carrying out eligible activities, 
because HUD considers those costs part of the activity delivery costs. 
For example, where rental assistance is the eligible activity, the 
costs of writing out and mailing the rental assistance checks to each 
property owner are costs of providing rental assistance and therefore 
chargeable under the ``rental assistance'' activity. Because some of 
these ``activity delivery costs'' may be classified as indirect costs 
under 2 CFR part 200, some of CPD's program rules (24 CFR parts 576 and 
578) include provisions to clarify the conditions under which indirect 
costs can be charged to eligible activities. These conditions are to 
ensure (1) the applicable indirect cost rate and direct cost base allow 
for activity-level allocation of indirect costs, and (2) the sum of 
direct and indirect costs charged to a specific activity category or to 
administrative costs is within with the program's cost caps.
    However, when reviewing OMB's changes to the part 200 definitions 
and the de minimis indirect cost rate requirements, HUD determined that 
a further condition is needed where indirect costs are determined using 
modified total direct cost (MTDC). Specifically, because part 200 
defines MTDC at 2 CFR 200.1 to include ``up to the first $50,000 of 
each subaward (regardless of the period of performance of the subawards 
under the award),'' and the portion of indirect costs determined based 
on that specific amount can only be considered program administration 
costs, HUD proposes to amend 24 CFR 576.109(b) and 578.63(b) to make 
sure that the portion of indirect costs can only be charged as program 
administration costs, when indirect costs are allocated and charged at 
the activity level.
    In addition, HUD invites public comments on whether similar 
conditions should be added to other CPD program regulations that 
distinguish activity delivery costs from program administration costs 
for purposes of determining compliance with applicable cost caps (e.g., 
parts 92, 93, 570, and 574).
Section 574.500 Responsibility for Grant Administration
    Through its 2024 changes, OMB amended 2 CFR 200.342 to require 
Federal agencies to, upon initiating a remedy for noncompliance 
including disallowed costs, a corrective action plan, or termination, 
provide a recipient an opportunity to object and provide information 
challenging the action. Through this rulemaking, HUD is proposing 
conforming amendments to its Housing Opportunities for Persons With 
AIDS (HOPWA) program enforcement regulation at 24 CFR 574.500(c) to 
directly incorporate the language and procedure laid out in OMB's 
revised regulations. HUD is not proposing any changes to the first 
sentence of existing paragraph (c). HUD's proposed language replacing 
the second sentence would provide that, upon initiating a remedy for 
noncompliance (for example, disallowed costs, a corrective action plan, 
or termination), HUD will provide the grantee with an opportunity for 
informal consultation, in which the grantee may object and provide 
information challenging the action.
Section 574.540 Deobligation of Funds
    As explained earlier in this preamble, OMB revised 2 CFR 200.403(h) 
to allow administrative costs to be incurred until the due date of the 
final report(s) for that Federal award. This allows Federal financial 
assistance funds to be used for such costs after the period of 
performance. For consistency with this revised requirement, HUD is 
proposing to revise 24 CFR 574.540. Rather than provide that HUD may 
deobligate any amount of grant funds that have not been expended within 
a three-year period from the date of the signing of the grant 
agreement, which is the language in HUD's existing regulation, revised 
Sec.  574.540 would provide that the period of performance for the 
grant will be 36 months after the date that HUD executes the grant 
agreement with the recipient, unless the grant agreement provides for a 
longer period. The proposed change would retain the default three-year 
period of performance and HUD's discretion to amend grant

[[Page 107081]]

agreements to provide for a longer period of performance without 
needing to waive the regulation. HUD is also proposing to clarify that 
``the requirements of this regulation'' in Sec.  574.540 means 24 CFR 
part 574, and to reorganize the sentences in this section. HUD is not 
proposing any other changes to existing requirements in Sec.  574.540.
Section 576.200 Submission Requirements and Grant Approval
    Section 576.200(a) of the Emergency Solutions Grants (ESG) program 
regulation currently includes the following statement with respect to 
the specific award conditions provision in 2 CFR 200.207, ``As provided 
under 2 CFR 200.207, HUD may impose special conditions or restrictions 
on a grant, if the recipient is determined to be high risk.'' HUD is 
proposing to revise this statement to accommodate the changes OMB made 
to the criteria for imposing specific conditions as well as to reflect 
OMB's renumbering of the specific conditions provision in part 200 from 
2 CFR 200.207 to 2 CFR 200.208. The proposed revision would state that 
HUD may include specific conditions in the grant agreement for a State, 
urban county, or metropolitan city as provided by 2 CFR 200.208.
Section 576.201 Matching Requirement
    Section 576.201(b) of title 24 of the CFR provides the requirements 
for contributions to be recognized as match for HUD's ESG program.
    Through this rulemaking, HUD is seeking to provide its prior 
approval of ESG grant recipients to use unrecovered indirect costs as 
match for the ESG grant, as permitted by 2 CFR 200.306(c). As revised 
by OMB's 2020 and 2024 changes, 2 CFR 200.306(c) provides that 
unrecovered indirect costs may be included as part of cost sharing 
(which includes matching, per OMB's 2024 changes to the definition of 
``cost sharing'' in 2 CFR 200.1 \41\) with prior approval of the 
Federal agency or pass-through entity. Section 200.306(c) of title 2 of 
the CFR defines ``unrecovered indirect cost'' to mean the difference 
between the amount charged to the Federal award and the amount which 
could have been charged to the Federal award under the recipient's or 
subrecipient's approved indirect cost rate. Accordingly, HUD is 
proposing to add a new paragraph (d) in 24 CFR 576.201 that would 
permit matching contributions to include unrecovered indirect costs as 
described in 2 CFR 200.306(c). This provision would clarify that 
unrecovered indirect costs may be used to satisfy the ESG matching 
requirements.
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    \41\ OMB's 2024 changes removed the use of the term ``match'' 
throughout 2 CFR part 200 provisions, and ``cost sharing'' as 
defined by 2 CFR 200.1 now includes matching, which refers to 
required levels of cost share that must be provided. HUD is 
retaining the use of the word ``matching'' throughout ESG program 
regulations in 24 CFR part 576, as this is more accurate and 
consistent with the ESG program statute. See 42 U.S.C. 11375.
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    HUD is also proposing to remove the existing paragraphs (d) through 
(f) in Sec.  576.201. In HUD's 2015 final rule, HUD revised Sec.  
576.201 by revising paragraphs (a) through (c) as part of HUD's efforts 
to update, substitute, or correct cross-references and make other 
conforming changes to implement OMB's 2013 Uniform Guidance. 80 FR 
75932. HUD's amendatory instruction number 86 stated, ``Revise Sec.  
576.201(a), (b), and (c) to read as follows,'' 80 FR 75939, and it 
should have stated ``Revise Sec.  576.201 to read as follows,'' to 
remove paragraphs (d) through (f). Paragraph (d)(1) refers to OMB 
circulars A-87 and A-122 and former parts of 2 CFR, which were 
superseded by 2 CFR part 200. See 78 FR 7283. Paragraphs (d)(2) and (e) 
contradict the application of 2 CFR 200.306 in Sec.  576.201(b) and 
(c), as amended by HUD's 2015 final rule. Paragraph (f) was made 
redundant by another amendment (number 89) of HUD's 2015 final rule. 80 
FR75939. HUD is therefore proposing in this rulemaking to correct this 
inadvertent error by removing the obsolete, redundant, and 
contradictory paragraphs (d) through (f) from Sec.  576.201.
Section 576.203 Obligation, Expenditure, and Payment Requirements
    OMB's 2024 changes to 2 CFR 200.403(h) and 200.472(b) permit 
administrative costs associated with closeout activities to be charged 
to the Federal award during closeout, and such costs may be incurred 
until the due date of the final report(s). HUD is proposing to revise 
Sec.  576.203(b) to provide for an exception for funds used for 
administrative closeout costs as provided by 2 CFR 200.403(h) within 
the sentence stating that the recipient's grant must be expended for 
eligible activity costs within 24 months after the date HUD signs the 
grant agreement with the recipient. HUD is also proposing minor 
technical edits to the language in this sentence for clarity and plain 
language, but otherwise is not proposing further changes to this 
paragraph and section.
Section 964.230 Audit and Administrative Requirements, and Sec.  
965.205, Qualified PHA-Owned Insurance Entity
    Through its 2020 final guidance, OMB amended 2 CFR 200.515 to 
permit auditors to review and make determinations regarding auditees' 
financial statements in accordance with a special purpose framework, 
such as cash, modified cash, or regulatory as required by State law, in 
addition to generally accepted accounting principles (GAAP). OMB's 2024 
final guidance made technical revisions to 2 CFR 200.515, but did not 
alter the underlying substantive requirements. HUD's regulation at 24 
CFR 964.230(b) currently provides that resident management corporations 
managing a development(s) must be audited annually by a licensed 
certified public accountant, designated by the corporation, in 
accordance with generally accepted auditing standards. HUD's regulation 
at 24 CFR 965.205(d)(1) similarly provides that certain nonprofit 
insurance entities must prepare and submit (to HUD) audits and 
actuarial reviews, and that the annual financial statement must be 
audited by an independent auditor in accordance with generally accepted 
auditing standards. HUD is proposing to revise Sec.  964.230(a)(2) and 
(b) and Sec.  965.205(d)(1) to add language that permits auditing in 
accordance with a special purpose framework as described in 2 CFR 
200.515, in addition to generally accepted auditing standards. This 
proposed change would conform HUD's regulations to OMB's change to 2 
CFR 200.515.
Section 1006.370 Uniform Administrative, Requirements, Cost Principles, 
and Audit Requirements for Federal Awards
    HUD's regulation at 24 CFR 1006.370(b)(1)(iii) directly 
incorporates the language from 2 CFR 200.445(b). OMB revised 2 CFR 
200.445(b) through OMB's 2024 final rule by removing the phrase 
``regardless of whether reported as taxable income to the employees'' 
because OMB, upon further review, found this to be an unnecessary 
clarification. For consistency with OMB's changes, HUD is proposing to 
remove this phrase from the language in Sec.  1006.370(b)(1)(iii). It 
is sufficient to state that housing costs, housing allowances, and 
personal living expenses are only allowable as direct costs and must be 
approved by HUD.

[[Page 107082]]

Conforming Technical Changes Based on HUD's Experience Implementing 2 
CFR Part 200

    HUD proposes technical, conforming amendments to its regulations 
based on its experience implementing 2 CFR part 200 in programs 
involving Federal financial assistance management and administration. 
These technical, conforming changes would improve clarity in some of 
HUD's regulations that cross-reference 2 CFR part 200 or specific 
subparts or provisions.
Section 5.1006 Certifications and Assurances
    In HUD's existing regulations, e.g., 24 CFR 1.5(a)(1), there are 
existing requirements that applicable contracts and applications for 
Federal financial assistance must include certifications and assurances 
of compliance with various cross-cutting Federal requirements, 
including relevant civil rights obligations and requirements, as a 
condition for approval and extension of any Federal financial 
assistance. See also 24 CFR 3.115, 8.50, and 146.25. Currently, these 
assurances requirements are only contained in those respective cross-
cutting subject regulations and not in HUD's general program 
requirement regulations. HUD is therefore proposing to add a new 
section 24 CFR 5.1006 that would, in one place, state that every 
agreement for Federal financial assistance that HUD executes on or 
after October 1, 2024, with a recipient, including recipients provided 
an exemption to the requirements of 2 CFR 25.110, must contain or be 
accompanied by the appropriate assurances and certifications.
    HUD developed its own Assurances and Certifications form, HUD-424B, 
to tailor assurances and certifications to HUD programs and to 
consolidate the SF-424B and SF-424D. The new Sec.  5.1006 would state 
that HUD has specified the form HUD-424B be used for purposes of 
meeting requirements in relevant regulations, 24 CFR 1.5, 3.115, 8.50, 
and 146.25. New Sec.  5.1006 would also provide that HUD \42\ may 
require specific civil rights assurances be provided consistent with 
those authorities, in which case HUD will specify the form on which 
such assurances must be made.
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    \42\ In HUD's proposed regulatory text, HUD uses the term 
``Responsible Civil Rights Official.'' This means the Assistant 
Secretary for Fair Housing and Equal Opportunity (FHEO). See 76 FR 
73984 and https://www.hud.gov/sites/dfiles/FHEO/documents/2021_Sep_Amended_Consolidated_Delegation_Authority%20_FHEO.pdf.
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Conflicts of Interest: Sec. Sec.  92.356, 93.353, 570.611, 574.625, 
576.404, 578.95, 1000.30, 1003.606, 1006.360
    Several of HUD's existing conflict of interest regulations require 
technical revisions to include a more complete scope of applicable 
conflict of interest provisions in 2 CFR part 200 and to reflect which 
2 CFR part 200 conflict of interest requirements have traditionally 
applied, or should apply, in practice for procurement by recipients and 
subrecipients of HUD Federal financial assistance.
    Section 200.317 of 2 CFR requires States and, now under OMB's 2024 
changes, Indian Tribes, to apply the conflict of interest requirements 
that are required under their State or Tribe procurement policies when 
conducting procurement transactions under a Federal award. If a State 
or Tribe does not have its own procurement policies, then it must 
follow the procurement standards in 2 CFR 200.318 through 200.327. 
Additionally, under 2 CFR 200.317, non-State and non-Tribe recipients 
and subrecipients, including subrecipients of a State or Indian Tribe, 
must follow the procurement standards in 2 CFR 200.318 through 200.327.
    Two sections within this range of 2 CFR provisions, 2 CFR 200.318 
and 200.319, contain applicable conflict of interest provisions. 
Section 200.318 of 2 CFR, paragraph (c), includes the requirement for 
recipients and subrecipients to maintain written standards covering 
conflicts of interest and actions of employees participating in 
contract selection, award, and administration; a prohibition on the 
participation of individuals with conflicts of interest in the 
selection, award, and administration of a contract supported by a 
Federal award; a definition of conflict of interest; and other 
requirements. Section 200.319 of 2 CFR describes the requirements for 
competition for non-State/non-Tribe recipients, subrecipients, and 
States that have chosen to adopt the 2 CFR 200.317 through 200.327 
requirements or similar procurement policies. Paragraph (b) of Sec.  
200.319 prohibits certain conflicts, and paragraph (c)(5) provides that 
organizational conflicts of interest are an example of a situation that 
may restrict competition in procurement.\43\
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    \43\ Paragraphs (b) and (c)(5) were previously organized under 
paragraph (a) and (a)(5) of Sec.  200.319 until OMB's 2020 and 2024 
rounds of changes.
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    Through this rulemaking, HUD is seeking to provide greater clarity 
about where in 2 CFR part 200 any applicable conflict of interest 
provisions are located and to provide recipients and subrecipients with 
accurate notice about 2 CFR part 200 conflict of interest requirements 
that apply to their procurement actions. HUD is proposing to revise 
some of its conflict of interest regulations to more accurately cite 
the relevant conflict of interest provisions in 2 CFR part 200, and to 
standardize language across various HUD program regulations.
    Specifically, HUD is proposing changes in 24 CFR 92.356(a), 
93.353(a), 570.611(a)(1), 574.625(a), 576.404(a) and (b), 578.95(a), 
1000.30(a), 1003.606(a), and 1006.360. HUD is proposing to update 
cross-references to refer to 2 CFR 200.317 through 200.319, with 
language stating that recipients and subrecipients must comply with the 
``applicable'' conflict of interest requirements in these three 
sections. HUD is proposing to use the section numbers, e.g., 2 CFR 
200.317 through 200.319, and not specific paragraphs within these 
sections, e.g., 2 CFR 200.319(b)(5) and (c), to accommodate any further 
reorganization by OMB of the paragraphs in these sections. HUD is also 
proposing to make the lead-in language for these regulations \44\ 
consistently begin with, ``When procuring goods and services in 
accordance with 2 CFR part 200, . . . .'' This change will reduce 
confusion by eliminating needless differences in the wording of 
different program regulations' references to the conflict of interest 
requirements 2 CFR part 200 applies to procurement of goods and 
services under a Federal award. Sections 24 CFR 92.356(a), 93.353(a), 
570.611(a)(2), 574.625(a), 576.404(b), 1000.30(a), and 1003.606(a) 
would also state, ``[i]n all other situations, the provisions of this 
section apply,'' or similar language. These proposed changes would 
provide, consistently across certain HUD program regulations, that 
recipients and subrecipients must follow one set of requirements (i.e., 
the applicable conflict of interest requirements under 2 CFR 200.317 
through 200.319) when procuring goods and services under a Federal 
award and must follow another set of requirements (i.e., the additional 
requirements spelled out in the conflict of interest section of the 
program regulations) in all other situations.
---------------------------------------------------------------------------

    \44\ Including all the sections and paragraphs listed in the 
first sentence of this preamble paragraph except 24 CFR 576.404(a).
---------------------------------------------------------------------------

    HUD is also proposing minor technical changes in some of the 
conflict of interest provisions. HUD is proposing, in Sec.  574.625(a), 
(b), (c), and (d) to include program-specific terminology by changing 
``recipient'' to ``grantee'' and ``subrecipient'' to

[[Page 107083]]

``project sponsor.'' In Sec.  578.95(b), HUD is proposing changes to 
add the phrase ``or collaborative applicant'' after ``No Continuum of 
Care'' and before ``board member.'' The Department is revising Sec.  
578.95(b) to include collaborative applicants because collaborative 
applicants and Continuum of Care board members are statutorily 
prohibited from participating in or influencing discussions or 
decisions concerning the award of a grant or other financial benefits 
to the organization that the member represents. HUD is also proposing 
to add a sentence to the end of Sec.  578.95(c) that would prohibit 
recipients and subrecipients from having organizational conflicts of 
interests and require these entities to maintain standards of conduct 
covering organizational conflicts of interest described in 2 CFR 
200.318. The Department is revising Sec.  578.95(c) to clarify that 
under the CoC program recipients and subrecipients are prohibited from 
having organizational conflicts of interest, consistent with applicable 
2 CFR part 200 requirements.
Section 92.505 Applicability of Uniform Administrative Requirements
    In a proposed rule published May 29, 2024, titled ``HOME Investment 
Partnerships Program: Program Updates and Streamlining,'' 89 FR 46618 
(``HUD's proposed HOME rule''), HUD proposed amendments to 24 CFR 
92.505 to revise the applicability of 2 CFR part 200 to participating 
jurisdictions, State recipients, and subrecipients receiving HOME 
funds, to exclude 2 CFR 200.328 and 200.344. For more information on 
why HUD proposed to exclude these provisions from applicability to HOME 
program assistance, see HUD's proposed HOME rule.\45\
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    \45\ 89 FR 46618, 46652.
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    HUD is, through this rulemaking, not changing the proposal to 
exclude applicability of 2 CFR 200.328 and 200.344. HUD is additionally 
proposing to exclude applicability of 2 CFR 200.329(c) because 2 CFR 
200.329(c) requires reporting on a different cycle than is required 
under the HOME program regulations and HUD is seeking to provide a more 
flexible reporting than the annual reporting of non-construction 
performance requirements in that regulation.
Income From Equipment Sales: Sec. Sec.  570.502, 1000.26, 1003.501
    Several sections in title 24 of the CFR state that 2 CFR 200.313, 
Equipment, applies except that when the equipment is sold, the proceeds 
shall be considered and treated as program income. For the Entitlement 
Community Development Block Grant program, see Sec.  570.502(a)(6); for 
Native American housing activities, see Sec.  1000.26(a)(8); and for 
the Community Development Block Grant program for Indian tribes and 
Alaska native villages, see Sec.  1003.501(a)(6). These sections do not 
account for other sections in title 24 of the CFR that state that 
income received by a recipient and its subrecipients in a single year 
that, in total, is less than $25,000 does not constitute program 
income. For the Entitlement Community Development Block Grant program, 
see Sec.  570.500(a)(4)(i); for Native American housing activities, see 
Sec.  1000.62(b); and for the Community Development Block Grant program 
for Indian tribes and Alaska native villages, see Sec.  1003.503(b)(4). 
HUD proposes to revise Sec. Sec.  570.502(a)(6), 1000.26(a)(8), and 
1003.501(a)(6), to provide for a $25,000 de minimis exception. In other 
words, proceeds from equipment sales shall not be considered and 
treated as program income if the total income, including income from 
equipment sales, of a recipient and its subrecipients totals less than 
$25,000. HUD also proposes to revise Sec.  570.502(a)(6) by 
reorganizing the two sentences in existing paragraph (a)(6) into two 
paragraphs (a)(6)(i) and (ii) for clarity.
Recordkeeping: Sec. Sec.  574.530 and 576.500
    HUD's consolidated plan regulations require access to records 
related to a jurisdiction's records related to the consolidated plan 
and use of assistance under the applicable programs during the 
preceding five years. See 24 CFR 91.105(h) and 91.115(g). Section 
574.530 in title 24 of the CFR currently provides for a four-year 
record retention period. Following OMB's changes to 2 CFR part 200, 2 
CFR 200.334 now states that the recipient and subrecipient must retain 
all Federal award records for three years from the date of final 
financial report submission. To resolve these discrepancies, HUD is 
proposing to reorganize and revise 24 CFR 574.530, regarding 
recordkeeping for HUD's HOPWA program. New proposed paragraph (a)(1) 
would provide that, for formula grants, grantees ensure that all grant 
records are maintained for the longer of five years or the applicable 
record retention period provided in 2 CFR 200.334. Paragraph (a)(2) 
would provide that for all other grants, grantees must ensure that all 
grant records are maintained for the applicable record retention period 
provided in 2 CFR 200.334. Paragraph (a)(3) would require grantees to 
ensure maintenance of all records for real property subject to minimum 
use requirements are maintained for at least three years after final 
disposition. This language would account both for HUD's consolidated 
plan access to records requirements and OMB's requirements in 2 CFR 
200.334, including for recipients and subrecipients to retain all 
Federal award records from three years from the date of submission of 
their final financial report. (This has been a longstanding 
requirement; OMB did not substantively revise 2 CFR 200.334 in its 2020 
and 2024 changes.)
    Existing paragraphs (a) through (c) of Sec.  574.530, which 
describe the types of data and information that grantees must maintain 
in records, would not be substantively changed. HUD is only proposing 
to reorganize these paragraphs into a new (b)(1) through (3).
    HUD is also proposing changes to Sec.  576.500 to bring the 
recordkeeping requirements for HUD's ESG program into greater alignment 
with 2 CFR part 200, where the recordkeeping requirements in 2 CFR part 
200 would not undermine HUD's implementation of the statutory 
requirements for ESG program. For example, 2 CFR part 200 requires 
records to be kept for longer periods to account for certain 
circumstances or special purposes, and it is possible to satisfy both 
the minimum period 2 CFR part 200 would require the records to be 
retained and the minimum period HUD currently requires the records to 
be retained to implement the statutory requirements for ESG. So, HUD is 
proposing to revise the introductory text for Sec.  576.500(y) to state 
that all records related to a recipient's grant must be kept for the 
longer of 5 years, the minimum period described in Sec.  576.500(y)(1) 
through (3), or the minimum period provided by 2 CFR part 200 (2 CFR 
200.334) for the specific situation or record. Likewise, HUD is 
proposing to change the language in Sec.  576.500(y)(1) through (3) 
from ``records must be retained for 5 years'' to ``records must be kept 
for at least 5 years.'' In addition, HUD proposes to update a cross-
reference to 2 CFR 200.336, to 2 CFR 200.337, in Sec.  576.500(z) to 
account for OMB's changes to 2 CFR part 200 section numbers. Finally, 
HUD is also proposing to remove the sentence, ``Copies made by 
microfilming, photocopying, or similar methods may be substituted for 
their original records,'' because it is no longer necessary or useful, 
considering what 2 CFR 200.336 provides on methods for collection, 
transmission, and storage of information.

[[Page 107084]]

Section 574.605 Applicability of Uniform Administrative Requirements, 
Cost Principles, and Audit Requirements for Federal Awards
    Section 574.605 currently states that 2 CFR part 200 provisions 
apply to Housing Opportunities for Persons With AIDS (HOPWA) grants, 
but it does not specify any exceptions. As a practical matter, 2 CFR 
part 200 provisions do not apply to HOPWA grants without exception. 
Section 200.101(d) of title 2 of the CFR contemplates this and states 
that where Federal statutes or regulations conflict with 2 CFR part 200 
provisions, Federal statutes or regulations govern. Therefore, HUD is 
revising Sec.  574.605 to clarify this point and add language that 
states 2 CFR part 200 provisions apply except where they are 
inconsistent with relevant HOPWA statutes--the AIDS Housing Opportunity 
Act and title I of the Cranston-Gonzalez National Affordable Housing 
Act--or implementing regulations in 24 CFR part 574 or 91. This also 
improves consistency with other HUD regulations for other programs, 
which specify that the relevant Federal statutes and regulations govern 
where 2 CFR part 200 provisions conflict with those statutes and 
regulations,\46\ and with 2 CFR part 200 provisions that speak to the 
precedence of Federal statutes over 2 CFR part 200 provisions.\47\
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    \46\ See, e.g., 24 CFR 578.99(e).
    \47\ E.g., 2 CFR 200.100(a)(1), 200.102(b), 200.106.
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Section 970.1 Purpose
    Section 970.1 of title 24 of the CFR currently provides that the 
regulations in 2 CFR part 200 are not applicable to 24 CFR part 970, 
HUD's regulations for the Public Housing Program--Demolition or 
Disposition of Public Housing Projects. However, the Office of Public 
and Indian Housing (PIH) Notice 2016-20 \48\ provides that, as an 
alternative to disposition of public housing property under section 18 
of the United States Housing Act of 1937 and 24 CFR part 970, with PIH 
Special Application Center approval, public housing authorities (PHAs) 
are permitted to retain public housing property in accordance with 2 
CFR 200.311. This rulemaking provides the 2 CFR part 200 disposition 
instructions for PHAs' retention of certain public housing real 
property. Therefore, in this rulemaking, HUD is proposing to revise the 
last sentence of Sec.  970.1 to state that the regulations in 2 CFR 
part 200 are not applicable except where the PHA requests to retain the 
public housing property, in which case 2 CFR 200.311(d)(1) applies; and 
where the PHA disposes of equipment or supplies, in which case 2 CFR 
200.313 and 200.314 apply.
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    \48\ https://www.hud.gov/sites/dfiles/PIH/documents/PIH-2016-20.pdf.
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Applicability of Administrative Requirements: Sec. Sec.  1000.26 and 
1003.501
    Through this rulemaking, HUD is proposing to add a new paragraph 
(a)(1) to Sec.  1000.26 to clarify that the definition for ``Indian 
Tribe'' in section 104 of NAHASDA (25 U.S.C. 4103) will apply instead 
of the definition of ``Indian Tribe'' in 2 CFR 200.1. As provided in 2 
CFR 200.1, definitions in Federal statutes or regulations that apply to 
specific programs take precedence over the definitions in 2 CFR 200.1. 
HUD is proposing such a change with the definition of ``Indian Tribe'' 
to ensure the use of the broader definition under NAHASDA. HUD is 
proposing a similar change to Sec.  1003.501, by adding a new paragraph 
(a)(1), to ensure the broader definition of ``Indian tribe'' under the 
Housing and Community Development Act of 1974 is used when applying 
part 200 to the Indian Community Development Block Grant program.
    HUD's Indian Housing Block Grant (IHBG) program regulation at 24 
CFR 1000.26(a)(10) currently excepts 2 CFR 200.317 from the 
requirements of 2 CFR part 200 that recipients of IHBG assistance must 
comply with. Through its 2024 changes, OMB revised 2 CFR 200.317 and 
made the provision applicable to Indian tribes as well as States. Under 
OMB's 2024 changes, applicability of 2 CFR 200.317 does not extend to 
Tribally Designated Housing Entities, which are also eligible to be 
direct recipients of IHBG funds. To align HUD's IHBG program 
regulations with OMB's change, HUD is proposing to revise existing 
Sec.  1000.26(a)(10) (which this rule proposes to renumber as paragraph 
(a)(11) due to the proposed addition of a new Sec.  1000.26(a)(1)) to 
state that 2 CFR 200.317 does apply to Indian tribes, as that term is 
defined under NAHASDA, but does not apply to TDHEs receiving grants on 
an Indian tribe's behalf. Additionally, to align OMB's changes to 
200.317 with NAHASDA, HUD is proposing new paragraphs (a)(11)(i) and 
(ii) in Sec.  1000.26 to clarify that statutory requirements under 
NAHASDA limiting competitive procurements when the value of goods and 
services is less than $5,000 and authorization for the use of Federal 
supply sources in procurement apply to the procurements by tribes under 
2 CFR 200.317.
    Paragraph (a)(11) of Sec.  1000.26 currently applies 2 CFR 200.318 
through 200.327 as modified by that paragraph (a)(11). HUD is proposing 
to renumber this paragraph as (a)(12) (due to the proposed addition of 
a new Sec.  1000.26(a)(1)) and, as discussed later in this 
preamble,\49\ to add a new paragraph (a)(12)(i) that would state that 2 
CFR 200.318 through 200.327 apply when a Tribe does not have their own 
policies and procedures for procurement with non-Federal funds or when 
a TDHE does not follow the policies and procedures for procurement with 
non-Federal funds of the Tribe they serve.
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    \49\ See part III. Questions for Public Comment, question 2, in 
this proposed rule's preamble.
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    Existing paragraph (a)(11)(i), which would become paragraph 
(a)(12)(ii) through this proposed rule, provides that a recipient is 
not required to comply with 2 CFR 200.318 through 200.326 (2 CFR 
200.326 is now 2 CFR 200.327 after OMB's 2020 changes) with respect to 
procurements, using grants under NAHASDA, of goods and services with a 
value of less than $5,000. HUD is proposing to add language that would 
except application of 2 CFR 200.318 through 200.327 for such 
procurements of an ``other higher amount as may be established in 
NAHASDA,'' in addition to those valued under $5,000. This change would 
accommodate any future increases to the amount in NAHASDA's statutory 
de minimis procurement exemption.\50\
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    \50\ 25 U.S.C. 4133(g).
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Income From Sales of Supplies: Sec. Sec.  1000.26, 1003.501
    Several sections in title 24 of the CFR state that 2 CFR 200.314, 
Supplies, applies except that when the supplies are sold, the proceeds 
shall be considered and treated as program income. For Native American 
housing activities, see existing Sec.  1000.26(a)(9); for the Community 
Development Block Grant program for Indian tribes and Alaska native 
villages, see existing Sec.  1003.501(a)(7). These sections do not 
account for other sections in title 24 of the CFR that state that 
income received by a recipient and its subrecipients in a single year 
that, in total, is less than $25,000 does not constitute program 
income. For Native American housing activities, see Sec.  1000.62(b); 
and for the Community Development Block Grant program for Indian tribes 
and Alaska native villages, see Sec.  1003.503(b)(4). For consistency, 
HUD is proposing to revise Sec.  1000.26(a)(9), which would be 
designated paragraph (a)(10) under this proposed rule, and Sec.  
1003.501(a)(7), which would be designated paragraph (a)(8) under this 
proposed rule, to provide for a $25,000 de minimis

[[Page 107085]]

exception, as in existing Sec. Sec.  1000.62(b) and 1003.503(b)(4).
Section 1006.370 Uniform Administrative, Requirements, Cost Principles, 
and Audit Requirements for Federal Awards
    To correct a drafting error in HUD's 2015 rulemaking,\51\ and to 
make Sec.  1006.370(b)(2) more consistent with other HUD program 
regulations regarding compensation for consultant services, for 
example, 24 CFR 570.200(d)(1), HUD is proposing to amend Sec.  
1006.370(b)(2) to add the phrase ``more than a reasonable rate of 
compensation for personal services paid with NHHBG'' after the word 
``receive'' and before the word ``funds.'' This amendment would mean 
that Sec.  1006.370(b)(2) requires that no person providing consultant 
services in an employer-employee type of relationship shall receive 
more than a reasonable rate of compensation for personal services paid 
with NHHBG funds.
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    \51\ Id.
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    HUD is also proposing to update an outdated aspect of NHHBG program 
regulations. HUD's NHHBG program regulations are modeled off its IHBG 
program regulations. HUD is proposing to add a new paragraph (c) to 
Sec.  1006.370 that would provide that 2 CFR 200.305 applies except HUD 
must not require the sole recipient of NHHBG assistance, the Department 
of Hawaiian Home Lands (DHHL), to expend retained program income before 
drawing down or expending NHHBG funds. This proposed change would align 
NHHBG program regulations with the corresponding Indian Housing Block 
Grant regulation, existing 24 CFR 1000.26(a)(3),\52\ which permits 
Tribes and TDHEs to spend grant funds before spending down all their 
program income. To enable this change to take effect, HUD is proposing 
to remove Sec.  1006.340(b)(3), which provides that, as part of DHHL's 
authority to retain program income, DHHL must disburse program income 
before disbursing additional NHHBG funds in accordance with 2 CFR 
200.305. HUD is also proposing to add language to existing Sec.  
1006.370(a) that would provide that DHHL and its subrecipients 
receiving NHHBG funds must comply with the requirements and standards 
in 2 CFR part 200 ``except as otherwise provided by this section,'' to 
clarify that paragraphs (b) and (c) of Sec.  1006.370 provide for 
exceptions to 2 CFR part 200 requirements.
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    \52\ Under this proposed rule, Sec.  1000.26(a)(3) would become 
Sec.  1000.26(a)(4).
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Substantive Changes Based on HUD's Experience Implementing 2 CFR Part 
200 and the Housing Trust Fund (HTF) Program

Describing Period of Performance in the HTF Program, Closeout of HTF 
Grant Awards: Sec. Sec.  93.400 and 93.409
    HUD is proposing HTF closeout regulations at Sec.  93.409 to 
establish program-specific procedures and better align programmatic and 
administrative requirements for grant closeout. HUD's existing 
regulation at Sec.  93.405 applies the 2 CFR part 200 closeout 
requirements at 2 CFR 200.344, which are very specific as to the timing 
of closeouts and reporting by grantees after the end of the grant's 
period of performance, as set forth in the grant agreement. Rather than 
adopt the specific requirements of 2 CFR 200.344 for the HTF program, 
HUD is instead proposing program-specific closeout requirements at 
Sec.  93.409 to provide HTF grantees greater flexibility to request 
additional time, if needed, to meet certain program requirements, such 
as meeting project completion requirements. (As discussed elsewhere in 
this preamble, HUD is also proposing in Sec.  93.405 to add 2 CFR 
200.344 as one of the 2 CFR part 200 provisions that would not apply to 
grantees and subgrantees receiving HTF funds.)
    HUD recognizes that there are many things that could disrupt an HTF 
grantee's intended timeline for activity completion. To complete all 
program activities, including, but not limited to, satisfying reporting 
requirements, grantees are permitted to request an extension of one 
year beyond the nine-year period of performance, as identified in the 
grant agreement, for good cause.
    The proposed rule at Sec.  93.409(a) would include elements from 
the current closeout process for HTF grants. The proposed rule at Sec.  
93.409(a) describes the closeout process, and states that HUD will 
close out a grant after the period of performance has ended. A grantee 
must complete all the required activities and closeout actions for the 
grant, as required by HUD. Otherwise, proposed Sec.  93.409(a)(1) 
states that HUD will close out the grant based on the information 
available, including individual grants or multiple grants.
    Proposed Sec.  93.409(a)(2) explains that to prepare for closeout, 
before the budget period of the grant ends, the grantee must review all 
the eligible activities under the grant and reconcile in accordance 
with proposed Sec.  93.409(a)(2)(i) and (ii). Proposed Sec.  
93.409(a)(2)(i) requires that for all eligible costs incurred under the 
grant and not yet drawn down, the grantee must draw the funds down in a 
timely manner. Proposed Sec.  93.40(a)(2)(ii) states that the grantee 
must promptly refund to the proper accounts any previously disbursed 
balances of unobligated case paid in advance. These refunds must be 
completed before the reports in the proposed Sec.  93.409(b). 
Additionally, unlike other programs, since the HTF funds are not 
appropriated and are not required to be returned to the U.S. Treasury, 
proposed Sec.  93.409(a)(3) requires HUD to reallocate the grant funds 
in accordance with the regulation at Sec.  93.54.
    In Sec.  93.409(a)(4)(i), HUD is proposing a nine-year period of 
performance for the HTF program, with the ability to extend the period 
of performance by a year. Given that HUD is proposing this period of 
performance in 24 CFR 93.409(a)(4)(i) in this rulemaking and that 
period of performance is not consistent with the current expenditure 
deadline in Sec.  93.400(d)(2), HUD is proposing to revise the 
expenditure deadline to avoid misalignment of program requirements and 
grantee responsibilities. HUD is also proposing that Sec.  93.400(d)(2) 
be revised to state that HUD will reduce or recapture HTF grants that 
remain unexpended after the date of expiration of the grant's period of 
performance, as described in 24 CFR 93.409(a)(4). Due to the HTF 
program's unique source of funding, which is through an allocation of a 
set-aside of funds earned by the Federal Home Loan Mortgage Corporation 
and the Federal National Mortgage Association,\53\ HUD is not required 
to cancel HTF grants under 31 U.S.C. 1552(a) after a certain time 
period, and instead is reallocating any recaptured funds to HTF 
grantees in accordance with Sec.  93.54. The revisions to Sec. Sec.  
93.409 and 93.400(d)(2) would enable consistent application of 
recapture and reallocation requirements including better defining the 
HTF grantee's period of performance and closeout responsibilities. 
These changes will avoid burdensome and misaligned expenditure, budget 
period, and period of performance requirements and will prevent 
inconsistent application of reporting and closeout requirements. These 
proposed regulatory revisions would better enable HTF grantees to 
administer the HTF program in their jurisdictions.
---------------------------------------------------------------------------

    \53\ See sections 1337 and 1338 of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 
4567 and 4568), the statutes establishing the HTF program and its 
funding mechanism.
---------------------------------------------------------------------------

    Proposed Sec.  93.409(a)(4)(ii) would also establish that HUD may 
report an HTF

[[Page 107086]]

grantee's material failure to comply with the terms and conditions of 
the Federal award or closeout requirements in SAM.gov and pursue other 
enforcement actions in 2 CFR 200.339. Under proposed Sec.  
93.409(a)(5), a grantee may request, and HUD may provide, an extension 
of the performance period or closeout deadlines for good cause. Even if 
HUD approves an extension pursuant to the proposed Sec.  93.409, an HTF 
grantee must still expend its funds by the end of the grant's budget 
period. If the grantee fails to expend all its funds by the end of the 
grant's budget period, HUD shall recapture and reallocate the grant 
funds. Further, the proposed rule would clarify that certain 
requirements survive grant closeout. While this is not a change from 
the current requirements, HUD is taking the opportunity to clarify that 
closeout of a HTF grant does not relieve a grantee from project 
oversight in accordance with 24 CFR part 93 for as long as specified in 
the requirements applicable to the assisted project and grantee.
    Proposed Sec.  93.409(b) specifies the actions that must be taken 
for closeout of a grant, including:
     submitting a Federal Financial Report;
     demonstrating that the grantee has fulfilled all 
programmatic and administrative requirements for the project within the 
period of performance;
     entering all data into the computerized disbursement and 
information system, demonstrating that all HTF units were occupied by 
eligible occupants (including inputting correct beneficiary data) 
within one year of the end of the period of performance;
     resolving all finding associated with the grant;
     carrying out all responsibilities under the grant 
agreement and applicable laws; and
     completing a closeout certification that
    [cir] identifies the grant being closed out,
    [cir] any funds being returned to HUD,
    [cir] certifies compliance with recordkeeping requirements, 
monitoring and enforcement of HUD requirements,
    [cir] certifies compliance with program income,
    [cir] states that all actions required under 2 CFR 2003.44 for both 
the grantee and subgrantee have been taken,
    [cir] explains any other provisions appropriate to special 
circumstances of the grant closeout,
    [cir] acknowledges future monitoring, and
    [cir] certifies that unless otherwise provided the Consolidated 
Plan for the grantee remains in effect until expiration of the program 
year covered by the most recent Consolidated Plan.
    Proposed paragraph Sec.  93.409(c) explains that regardless of 
closeout of the grant, the rights and requirements under 2 CFR 200.345 
remain in effect. These include the ability for HUD to disallow costs 
based on future audits, the requirement that the grantee comply with 
Sec.  93.407 and Sec.  93.408, record retention policies in 2 CFR 
200.345, monitoring and enforcement of all requirements in 24 CFR part 
93 that apply to the grant for the period of affordability specified in 
the written agreement with the owner, compliance with program income 
requirements in Sec.  93.403, compliance with the requirement that the 
grantee return any funds due as a result of later refunds, corrections 
or other transactions, and compliance with audit requirements.
Section 93.405 Applicability of Uniform Administrative Requirements, 
Cost Principles, and Audits
    HUD's existing regulation at Sec.  93.405 applies 2 CFR part 200 to 
grantees and subgrantees receiving HTF funds, except for certain 
provisions. In this rulemaking, HUD is proposing to add five provisions 
to the list of exceptions: 2 CFR 200.308, 200.312, 200.328, 200.335, 
and 200.344 (except as provided in Sec.  93.409). HUD is proposing some 
of these exceptions because, among other reasons, doing so would align 
the HTF program regulations with the proposed HOME program regulations 
in HUD's recent proposed rule for the HOME program.\54\ The specific 
reasoning for each provision is as follows:
---------------------------------------------------------------------------

    \54\ 89 FR 46618.
---------------------------------------------------------------------------

     HUD is proposing to except application of 2 CFR 200.308 
because its requirements are inconsistent with HTF program rules 
governing downpayment assistance and application of those requirements 
would prove unduly burdensome given the current reporting requirements 
in 24 CFR 93.407 and 93.408.
     HUD is proposing to except application of 2 CFR 200.312 
because Federally owned and exempt real property are not features of 
the HTF program. Additionally, HUD is proposing this exception to align 
with HOME program regulations at 24 CFR 92.205; the HOME and HTF 
programs treat acquired real property similarly, and HTF's approach is 
modeled after the HOME program's approach.
     HUD is proposing to except application of 2 CFR 200.328 to 
align HTF program requirements and regulations with those of the HOME 
program. Both programs have the same Integrated Disbursement and 
Information System (IDIS) financial reporting requirements, and those 
requirements do not align with the annual or quarterly cycle described 
in 2 CFR 200.328. Instead, the HOME and HTF financial reporting 
requirements are performed as needed and pursuant to programmatic or 
regulatory milestones, such as project completion.
     HUD is proposing to except application of 2 CFR 200.335 to 
align HOME and HTF program requirements and because the 2 CFR provision 
conflicts with existing recordkeeping requirements in 24 CFR part 93.
     As explained earlier in this preamble, the requirements at 
2 CFR 200.344 are very specific as to the timing of closeouts and 
reporting by grantees after the end of the grant's period of 
performance, as set forth in the grant agreement. HUD is proposing to 
except application of 2 CFR 200.344 for the HTF program and, in lieu, 
apply program-specific requirements under this rule's proposed 
revisions to 24 CFR 93.400 and 93.409, to provide grantees more 
flexibility and time, where needed, to meet program requirements such 
as project completion requirements, and to align HTF regulations with 
HOME program regulations.
    As explained elsewhere in this preamble, HUD is proposing to except 
application of 2 CFR 200.329(c) in the HOME program regulations. For 
the HTF program, Sec.  93.405 already excludes application of this 
provision, which was previously numbered 2 CFR 200.328(b) before OMB's 
2020 and 2024 changes. As under the HOME program, 2 CFR 200.329(c)'s 
reporting requirements conflict with those for the HTF program 
regulations and HUD is seeking to provide a more flexible reporting 
than the annual reporting of non-construction performance requirements 
under 2 CFR 200.329(c). Therefore, HUD is proposing to continue to 
exclude application of 2 CFR 200.329(c)'s requirements for the HTF 
program, and to update the cross-reference consistent with OMB's 
changes.

Changes to HUD's Title VI, Section 108, Section 184, and 184A Loan 
Guarantee Program Regulations

SAM.gov Registration and Acquiring a UEI Under 2 CFR 25.105: Sec. Sec.  
570.707, 1000.438, 1005.219(b), and 1007.50(e)
    As explained earlier in this preamble, through its 2024 final 
guidance, OMB revised 2 CFR 25.105 by clarifying that for-profit 
lenders participating in loan

[[Page 107087]]

guarantee programs are required to register with SAM.gov and acquire a 
UEI. The revised provisions applying the UEI requirements and 
registration in the System of Award Management (SAM) in 2 CFR part 25 
apply to lenders and holders of notes guaranteed under various HUD 
programs, including the Title VI,\55\ Section 184, and Section 184A 
Loan Guarantee Programs. Through this rulemaking, HUD is proposing 
conforming amendments to its Community Development Block Grant program 
regulations (24 CFR part 570), Native American Housing Activities 
regulations (24 CFR part 1000), Loan Guarantee for Indian Housing 
program regulations (24 CFR part 1005) and Loan Guarantee for Native 
Hawaiian Housing program regulations (24 CFR part 1007), to add 
language specifying that certain entities, such as holders and lenders, 
must complete entity validations and acquire a UEI in SAM.gov per 2 CFR 
25.105. HUD is proposing to add a new paragraph (d) in 24 CFR 570.707, 
add a new Sec.  1000.438 in 24 CFR part 1000, add a new paragraph (b) 
to 24 CFR 1005.219, and add a new paragraph (e) to 24 CFR 1007.50 to 
clarify which entities must complete entity validations and acquire a 
UEI in SAM.gov per 2 CFR 25.105.
---------------------------------------------------------------------------

    \55\ Title VI in this NPRM refers to the Title VI of NAHASDA and 
not Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d-1 et 
seq.; 24 CFR part 1.
---------------------------------------------------------------------------

    For the Community Development Block Program and Sec.  570.707, 
applying the UEI and SAM registration requirements to lenders and 
holders of notes under the Section 108 Loan Guarantee program would 
conflict with the statutory provisions of section 108(r)(4) of the 
Housing and Community Development Act of 1974 (42 U.S.C. 5308(r)(4)) 
\56\ because it would impair the Secretary's ability to issue freely 
marketable securities through issuance of a public offering. Requiring 
each holder of a Note issued through a public offering to obtain a UEI 
and register in SAM before purchasing a security on the open market 
would limit the eligible pool of investors for the security and 
negatively affect pricing. This would be expressly against the 
statutory intent for the Section 108 Loan Guarantee program.
---------------------------------------------------------------------------

    \56\ 42 U.S.C. 5308(r)(4) states:
    (4) Effect of laws
    No State or local law, and no Federal law, shall preclude or 
limit the exercise by the Secretary of--
    (A) the power to contract with respect to public offerings and 
other sales of notes, trust certificates, and other obligations 
guaranteed under this section upon such terms and conditions as the 
Secretary deems appropriate;
    (B) the right to enforce any such contract by any means deemed 
appropriate by the Secretary; and
    (C) any ownership rights of the Secretary, as applicable, in 
notes, certificates, or other obligations guaranteed under this 
section, or constituting the trust or pool against which trust 
certificates, or other obligations guaranteed under this section, 
are offered.
---------------------------------------------------------------------------

    Moreover, HUD has determined that the beneficiary of a loan 
guaranteed under section 108 is properly the public entity or State 
that applies for the loan and not the interim lender or the holder of 
the Note after a public offering. Section 108 of the Housing and 
Community Development Act (42 U.S.C. 5308), and the program regulations 
at 24 CFR part 570, subpart M, were written to require that the public 
entity or State apply for the loan and contract directly with the 
Secretary to provide necessary security to enable the Secretary to 
guarantee the Loan. This has also been how the Department has treated 
the obligation to obtain a UEI and register in SAM. Only the borrower 
of a loan guaranteed under section 108 must obtain a UEI and register 
in SAM.
    Therefore, HUD is proposing to add a new paragraph (d) to Sec.  
570.707 that would require public entities and States to complete 
entity validations and acquire a UEI in SAM.gov in accordance with 2 
CFR 25.105 in order to apply for and obtain a loan guaranteed under 24 
CFR part 570, subpart M. The lender or holder of a note guaranteed 
under that subpart would not be subject to this requirement, and HUD's 
proposed regulation states this directly.
Compliance With Audit Requirements Under 2 CFR Part 200, Subpart F: 
Sec. Sec.  1005.219(c) and 1007.50(f)
    Prior to OMB's 2020 and 2024 changes, 2 CFR part 200, subpart F, 
applied to ``[A]greements for loans, loans guarantees, interest 
subsidies, and insurance and other forms of Federal Financial 
Assistance as defined by the Single Audit Act Amendment of 1996.'' \57\ 
Under the Single Audit Act, Federal financial assistance is defined to 
mean assistance that ``non-Federal entities receive or administer in 
the form of . . . loan guarantees . . .,'' 31 U.S.C. 7501(a)(5), and 
non-Federal entity is defined to include States, local governments, or 
nonprofit organizations. 31 U.S.C. 7501(a)(13). OMB's 2020 and 2024 
changes do not substantively alter this applicability. OMB's 2024 
changes at 2 CFR 200.101(b)(5) provide that 2 CFR part 200, subpart F, 
applies to agreements for loan guarantees only when awarded to a non-
Federal entity. Non-Federal entity as defined by 2 CFR 200.1 includes 
more entity types than does the Single Audit Act, and means a State, 
local government, Indian Tribe, Institution of Higher Education, or 
nonprofit organization that carries out a Federal award as a recipient 
or subrecipient.
---------------------------------------------------------------------------

    \57\ See 2 CFR 200.101(b) and table 1 to paragraph (b), https://www.trumpadministration.archives.performance.gov/CAP/20200812-2-CFR-Revision-Redline_Final.pdf.
---------------------------------------------------------------------------

    Prior to this rulemaking, HUD's Section 184 and 184A program 
regulations did not specify that these programs must comply with the 
audit requirements under 2 CFR part 200, subpart F, despite the 
applicability of subpart F to these programs. HUD is seeking to clarify 
in its Section 184 and 184A program regulations that lenders and 
holders of loan guarantees that are States, local governments, Tribes 
(for section 184 program only), or nonprofit organizations, must comply 
with the audit requirements of 2 CFR part 200, subpart F but that this 
requirement does not extend to for-profit entities. HUD is proposing, 
in this rulemaking, to add new Sec. Sec.  1005.219(c) and 1007.50(f) 
with language to this effect.
    As explained earlier in this preamble, OMB revised the definition 
of Federal financial assistance in 2 CFR 200.1. The change from ``non-
Federal entities'' to ``recipients and subrecipients,'' means that for-
profit entities are now included for purposes of the definition of 
Federal financial assistance. With this definition alone, OMB's changes 
would mean that the 2 CFR part 200 provisions listed in paragraphs (2) 
and (3) of the Federal financial assistance definition, 2 CFR 200.203 
and subpart F, and 2 CFR 200.216, respectively, apply to Section 184 
and 184A loan guarantee program assistance received or administered by 
for-profit entities. However, after review of 2 CFR 200.203; \58\ 2 CFR 
200.101(b)(5) and the preamble of OMB's 2024 final rule and final 
guidance, for 2 CFR part 200, subpart F; \59\ and 2 CFR 
200.101(b)(3)(ii) and section 889 of the John S. McCain National 
Defense Authorization Act for Fiscal Year 2019, for 2 CFR 200.216; \60\ 
HUD has

[[Page 107088]]

concluded that OMB's changes in the definition of Federal financial 
assistance do not result in any substantive changes for for-profit 
entities. Therefore, for-profit entities are not included in the 
regulatory text proposed in 24 CFR 1005.219(c) and 1007.50(f).
---------------------------------------------------------------------------

    \58\ As 2 CFR 200.203 requires HUD to ensure Federal programs 
are listed under the Federal Assistance Listings, and HUD already 
complies with this provision for HUD's Section 184 and 184A loan 
guarantee programs, the change in entities covered for purposes of 2 
CFR 200.203 does not result in any actual change for these programs.
    \59\ 2 CFR 200.101(b)(5) provides, ``(5) Subpart F (Audit 
Requirements) only applies to the following items when awarded to a 
non-Federal entity: . . . (iii) Agreements for loans, loan 
guarantees, interest subsidies, and insurance; . . . .'' The Single 
Audit Act as codified may be found at 31 U.S.C. chapter 75. OMB's 
2024 final rule and final guidance may be found at 89 FR 30046.
    \60\ 2 CFR 200.101(b)(3)(ii) provides, ``(ii) Section 200.216 
(Prohibition on certain telecommunications and video surveillance 
equipment or services) applies to loans and grants (see Pub. L. 115-
232, Div. A, Title VIII, Sec.  889, as amended).'' The John S. 
McCain National Defense Authorization Act for Fiscal Year 2019 may 
be found at Public Law 115-232.
---------------------------------------------------------------------------

Cross-Reference Updates
    Because the changes described above add new paragraphs (b) and (c) 
to 24 CFR 1005.219, and there are already existing paragraphs (b) and 
(c) in that section, HUD is proposing to redesignate existing 
paragraphs (b) through (e) as paragraphs (d) through (g) in Sec.  
1005.219. Additionally, this change requires updates to cross-
references to existing paragraphs in Sec.  1005.219 made throughout 24 
CFR part 1005. In Sec. Sec.  1005.217(b)(7), 1005.739(h), and 
1005.803(a), HUD is proposing to update the cross-references as 
follows, respectively:
     In Sec.  1005.217(b)(7), update the cross-reference 
1005.219(d)(3) to 1005.219(f)(3);
     In Sec.  1005.739(h), update the cross-reference 
1005.219(d)(2) to 1005.219(f)(2); and
     In Sec.  1005.803(a), update the cross-reference 
1005.219(d)(2) to 1005.219(f)(2).

III. Questions for Public Comment

    HUD welcomes comments on all aspects of this proposed rule. In 
addition, HUD specifically requests public comments on the following:
    1. Section 200.300 of title 2 of the CFR requires that agencies or 
pass-through entities manage and administer Federal awards in a manner 
to ensure compliance with applicable Federal nondiscrimination and 
environmental protection provisions. OMB also added paragraphs 
clarifying that sex discrimination encompasses sexual orientation and 
gender identity. Are these provisions, along with HUD regulations, such 
as those in 24 CFR part 5, sufficiently clear to make recipients aware 
of their civil rights and environmental protection obligations? What 
additional provisions, if any, should HUD add to program and cross-
cutting regulations that would help ensure that Federal awards are 
administered in compliance with Federal nondiscrimination and 
environmental protection requirements?
    2. HUD has requested an exception from OMB under 2 CFR 200.102 that 
would authorize HUD to treat Tribally Designated Housing Entities 
(TDHEs) and Tribal organizations like Indian Tribes for purposes of 2 
CFR part 200 procurement requirements in the Indian Housing Block Grant 
and Indian Community Development Block Grant programs. HUD is seeking 
this exception to conform with 2 CFR 200.313, which now states, 
``Indian Tribes must use, manage, and dispose of equipment acquired 
under a Federal award in accordance with tribal laws and procedures,'' 
and 2 CFR 200.317, which now requires that Indian Tribes, like States, 
must follow the same policies and procedures that Tribes use for 
procurements with non-Federal funds. The structure of HUD's Indian 
Housing Block Grant (IHBG) and the Indian Community Development Block 
Grant (ICDBG) programs treats Tribally Designated Housing Entities 
(TDHEs) and Tribal Organizations as instrumentalities of the Tribe. HUD 
has proposed regulatory text in this proposed rule that would account 
for the requested exception, at proposed 24 CFR 1000.26(a)(9), 
(a)(11)(i), and (a)(12)(i),\61\ and 1003.501(a)(7) and (a)(9).\62\ The 
proposed changes for proposed Sec. Sec.  1000.26(a)(9) and (a)(11)(i) 
and 1003.501(a)(7) and (9) would provide that the 2 CFR provision, 
either 2 CFR 200.313 or 200.317, applies except as modified by HUD's 
regulations. HUD's proposed regulations would permit a TDHE or Tribal 
Organization to follow the Tribal laws, policies, and procedures of the 
Indian Tribe they serve, instead of 2 CFR part 200 requirements. 
Proposed 24 CFR 1000.26(a)(12)(i) would require 2 CFR 200.318 through 
200.327 to apply when a Tribe does not have their own policies and 
procedures for procurement with non-Federal funds or when a TDHE does 
not follow the policies and procedures for procurement with non-Federal 
funds of the Tribe they serve. HUD is seeking public comment on these 
proposals pending OMB's approval of the requested exception.
---------------------------------------------------------------------------

    \61\ HUD is proposing changes to capture the exception by 
revising Sec.  1000.26(a)(9), (11), and (12) in this proposed rule, 
which are currently designated as paragraphs (a)(8), (10), and (11) 
in HUD's existing regulations.
    \62\ HUD is proposing changes to capture the exception by 
revising existing paragraph (a)(6) in Sec.  1003.501, which would 
become designated paragraph (a)(7) under this proposed rule, and by 
adding a new paragraph (a)(9) to that section.
---------------------------------------------------------------------------

IV. Findings and Certifications

Regulatory Review--Executive Orders 12866, 13563, and 14094

    Pursuant to Executive Order 12866 (Regulatory Planning and Review), 
a determination must be made whether a regulatory action is 
significant, and therefore, subject to review by OMB in accordance with 
the requirements of the order. Executive Order 13563 (Improving 
Regulations and Regulatory Review) directs executive agencies to 
analyze regulations that are ``outmoded, ineffective, insufficient, or 
excessively burdensome, and to modify, streamline, expand, or repeal 
them in accordance with what has been learned.'' Executive Order 13563 
also directs, where relevant, feasible, and consistent with regulatory 
objectives, and to the extent permitted by law, agencies to identify 
and consider regulatory approaches that reduce burdens and maintain 
flexibility and freedom of choice for the public. Executive Order 
14094, entitled ``Modernizing Regulatory Review'' (hereinafter referred 
to as the ``Modernizing E.O.''), amends section 3(f) of Executive Order 
12866 (Regulatory Planning and Review), among other things. This 
proposed rule was determined to not be a significant regulatory action 
under section 3(f) of Executive Order 12866, Regulatory Planning and 
Review.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (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. 
This rule proposes to amend HUD regulations to make necessary technical 
updates to cross-references to sections of 2 CFR part 200 and other 
conforming changes that align HUD's regulations with revisions made by 
OMB to 2 CFR parts 25 and 200. This rule also proposes to amend HUD 
regulations based on HUD's experience implementing 2 CFR part 200 to 
improve clarity and consistency in HUD regulations that cross-reference 
2 CFR part 200 or specific subparts or provisions; to establish 
program-specific procedures for the Housing Trust Fund (HTF) program 
and better align programmatic and administrative requirements for HTF 
grant closeout; to align HTF regulations with changes related to 2 CFR 
part 200 proposed in HUD's recent proposed rule for the HOME program; 
\63\ to update HUD's Title VI, Section 108, Section 184, and Section 
184A loan guarantee program regulations to address OMB's changes for 
loan guarantee programs regarding System for Award Management (SAM.gov) 
registration; and to update

[[Page 107089]]

HUD's Section 184 and 184A loan guarantee programs to explicitly state 
requirements that apply to these programs both prior to and because of 
OMB's recent changes. These amendments impose no significant economic 
impact on a substantial number of small entities. Therefore, the 
undersigned certifies that this rulemaking will not have a significant 
impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \63\ 89 FR 46618.
---------------------------------------------------------------------------

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 the private sector. This proposed rule does not 
impose any Federal mandates on any State, local, or Tribal governments 
or the private sector within the meaning of the UMRA.

Environmental Review

    This proposed 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 
proposed rule is categorically excluded from environmental review under 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

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 Order. This proposed rule does not have federalism 
implications and would not impose substantial direct compliance costs 
on State and local governments nor preempt State law within the meaning 
of the Order.

List of Subjects

24 CFR Part 4

    Administrative practice and procedure, Government employees, Grant 
programs--housing and community development, Investigations, Loan 
programs--housing and community development, Penalties, Reporting and 
recordkeeping requirements.

24 CFR Part 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 75

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

24 CFR Part 92

    Administrative practice and procedure, Low and moderate income 
housing, Manufactured homes, Rent subsidies, Reporting and 
recordkeeping requirements.

24 CFR Part 93

    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 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 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 574

    Community facilities, Grant programs--housing and community 
development, Grant programs--social programs, HIV/AIDS, Low and 
moderate income housing, Reporting and recordkeeping requirements.

24 CFR Part 576

    Community facilities, Grant programs--housing and community 
development, Grant programs--social programs, Homeless, Reporting and 
recordkeeping requirements.

24 CFR Part 578

    Community development, Community facilities, Grant programs--
housing and community development, Grant programs--social programs, 
Homeless, Reporting and recordkeeping requirements.

24 CFR Part 700

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

24 CFR Parts 880, 881, and 883

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

24 CFR Part 884

    Accounting, Administrative practice and procedure, Grant programs--
housing and community development, Home improvement, Housing, Low and 
moderate income housing, Public assistance programs, Public housing, 
Rent subsidies, Reporting and recordkeeping requirements, Rural areas, 
Utilities.

24 CFR Part 886

    Grant programs--housing and community development, Lead poisoning, 
Rent subsidies, Reporting and recordkeeping requirements.

24 CFR Parts 905 and 964

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

24 CFR Part 965

    Government procurement, Grant programs--housing and community 
development, Lead poisoning, Loan

[[Page 107090]]

programs--housing and community development, Public housing, Reporting 
and recordkeeping requirements, Utilities.

24 CFR Part 970

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

24 CFR Part 990

    Accounting, Grant programs--housing and community development, 
Public housing, 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 1007

    Hawaiian Natives, Loan programs--housing and community development, 
Loan programs--Indians, Reporting and recordkeeping requirements.

    For the reasons described in the preamble, and under the authority 
of 42 U.S.C. 3535(d), the Department of Housing and Urban Development 
proposes to amend 24 CFR parts 4, 5, 75, 92, 93, 200, 570, 574, 576, 
578, 700, 880, 881, 883, 884, 886, 905, 964, 965, 970, 990, 1000, 1003, 
1005, 1006, and 1007, as set forth below:

PART 4--HUD REFORM ACT

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

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


Sec.  4.9  [Amended]

0
2. In Sec.  4.9(a)(1)(iii), remove ``2 CFR 200.80'' and add in its 
place ``2 CFR 200.1''.

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

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

    Authority:  12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437f, 
1437n, 3535(d); 42 U.S.C. 2000bb et seq.; 34 U.S.C. 12471 et seq.; 
Sec. 327, Pub. L. 109-115, 119 Stat. 2396; E.O. 13279, 67 FR 77141, 
3 CFR, 2002 Comp., p. 258; E.O. 13559, 75 FR 71319, 3 CFR, 2010 
Comp., p. 273; E.O. 14015, 86 FR 10007, 3 CFR, 2021 Comp., p. 517.


Sec.  5.801  [Amended]

0
4. In Sec.  5.801(a)(1):
0
a. Remove ``5, 9, or 14'' and add in its place ``5 or 9''; and
0
b. Remove ``(42 U.S.C. 1437c, 1437g, and 1437l)'' and add in its place 
``(42 U.S.C. 1437c, 1437g)''.
0
5. Revise Sec.  5.1001 to read as follows:


Sec.  5.1001  Applicability.

    This subpart applies to all applicants for and recipients of 
Federal financial assistance provided under HUD programs, unless a 
Federal statute or an exception under 2 CFR part 25 provides otherwise. 
See 2 CFR 25.400 for the definitions that apply to ``Federal financial 
assistance'' and other terms in this subpart.
0
6. Revise Sec.  5.1003 to read as follows:


Sec.  5.1003  System for Award Management (SAM) and Unique entity 
identifier (UEI) requirements for applicants.

    (a) General requirement. Each applicant for Federal financial 
assistance must:
    (1) Be registered in SAM.gov before submitting an application;
    (2) Maintain a current and active registration in SAM.gov at all 
times during which it has an active Federal award as a recipient or an 
application under consideration by a Federal awarding agency. The 
applicant must review and update its information in SAM.gov annually 
from the date of initial registration or later updates to ensure the 
information is current, accurate, and complete. If applicable, this 
includes identifying the applicant's immediate and highest-level owner 
and subsidiaries, as well as providing information on all predecessors 
that have received a Federal award or contract within the last 3 years; 
and
    (3) Include its UEI in each application it submits to HUD, 
including applications for renewal of a Federal award.
    (b) Special cases. (1) Applicants or groups of applicants under a 
consortium arrangement:
    (i) If one organization is submitting the application for Federal 
assistance as the lead applicant on behalf of the other applicants, 
that organization must comply with the requirements in paragraph (a) of 
this section.
    (ii) If each organization is submitting a separate application as 
part of a group of applications, then each organization must comply 
with the requirements in paragraph (a) of this section.
    (2) If an organization is submitting an application as a sponsor or 
on behalf of other applicants, and the other entities will be receiving 
funds directly from HUD, then each entity that would receive funds 
directly from HUD must comply with the requirements in paragraphs 
(a)(1) and (2) of this section, and the application submitted to HUD 
must include the UEI of each of those entities.
    (3) If an organization is managing funds for a group of 
organizations and will be drawing down funds directly from HUD, that 
organization must comply with the requirements in paragraph (a) of this 
section.
    (c) Issuing or amending a Federal award. Unless an entity is exempt 
under 2 CFR 25.110, HUD may not issue a Federal award or amend an 
existing Federal award to provide additional Federal funds if the 
entity is not in compliance with the requirements of this part.
    (d) Awarding another applicant. When HUD is ready to make a Federal 
award, if the intended recipient has not complied with the requirements 
to obtain a UEI and maintain an active registration in SAM.gov with 
current information, HUD may make a Federal award to another applicant.
0
7. Revise Sec.  5.1004 to read as follows:


Sec.  5.1004  System for Award Management (SAM) and Unique entity 
identifier (UEI) requirements for recipients and other entities.

    (a) Each recipient of Federal financial assistance must maintain a 
current and active registration in SAM.gov at all times during which it 
has an active Federal award as a recipient or an application under 
consideration by a Federal awarding agency. The recipient must review 
and update its information in SAM.gov annually from the date of initial 
registration or later updates to ensure the information is current, 
accurate, and complete. If applicable, this includes identifying the 
recipient's immediate and highest-level owner and subsidiaries, as well 
as providing information on all predecessors that

[[Page 107091]]

have received a Federal award or contract within the last 3 years.
    (b) Each recipient of Federal financial assistance must notify any 
potential subrecipients that the recipient cannot make a subaward to a 
subrecipient that has not obtained a UEI and provided it to the 
recipient. Subrecipients are not required to complete full registration 
in SAM.gov to obtain a UEI.
    (c) For purposes of loan guarantees and other guaranteed programs, 
recipients of the guarantee from the Federal agency (for example, 
lenders of guaranteed loans) are required to complete entity 
validations and acquire a UEI. In addition, HUD may require non-
individual beneficiary borrowers (for example, small businesses or 
corporations) to obtain a UEI or register in SAM.gov.
0
8. Revise Sec.  5.1005 to read as follows:


Sec.  5.1005  Incorporation of required Award Term.

    Every agreement for Federal financial assistance that HUD executes 
with a recipient on or after October 1, 2024, is subject to the Award 
Term in appendix A to 2 CFR part 25.
0
9. Add Sec.  5.1006 to read as follows:


Sec.  5.1006  Certifications and assurances.

    Every agreement for Federal financial assistance that HUD executes 
with a recipient on or after October 1, 2024, must contain or be 
accompanied by the appropriate assurances and certifications (e.g., 
HUD-424B). This applies to recipients provided an exemption to the 
requirements of 2 CFR 25.110. The Responsible Civil Rights Official has 
specified the form HUD-424B for use for purposes of meeting the 
requirements of Sec. Sec.  1.5, 3.115, 8.50, and 146.25 of this title, 
as applicable. The Responsible Civil Rights Official may require 
specific civil rights assurances to be furnished consistent with those 
authorities and will specify the form on which such assurances must be 
made.

PART 75--ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME 
PERSONS

0
10. The authority citation for part 75 continues to read as follows:

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


Sec.  75.5  [Amended]

0
11. In Sec.  75.5, remove ``2 CFR 200.93'' wherever it appears and add 
in its place ``2 CFR 200.1''.


Sec.  75.31  [Amended]

0
12. In Sec.  75.31(c), remove ``2 CFR part 200'' and add in its place 
``2 CFR 200.334''.


Sec.  75.33  [Amended]

0
13. In Sec.  75.33(a), remove ``2 CFR part 200'' and add in its place 
``2 CFR 200.334''.

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

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

    Authority:  42 U.S.C. 3535(d) and 12701-12839, 12 U.S.C. 1701x.


Sec.  92.220  [Amended]

0
15. In Sec.  92.220(a)(1)(ii), remove ``2 CFR 200.80'' and add in its 
place ``2 CFR 200.1''.
0
16. In Sec.  92.356, revise paragraph (a) to read as follows:


Sec.  92.356  Conflict of interest.

    (a) Applicability. When procuring goods and services in accordance 
with 2 CFR part 200, the participating jurisdiction, State recipient, 
or subrecipient must comply with the applicable conflict of interest 
requirements in 2 CFR 200.317 through 200.319. In all other situations, 
the provisions of this section apply.
* * * * *


Sec.  92.502  [Amended]

0
17. In Sec.  92.502(c)(2), remove ``2 CFR 200.305(b)(9)'' and add in 
its place ``2 CFR 200.305(b)(12)''.


Sec.  92.504  [Amended]

0
18. In Sec.  92.504:
0
a. In paragraph (c)(1)(x):
0
i. Remove ``2 CFR 200.338'' and add in its place ``2 CFR 200.339''; and
0
ii. Remove ``2 CFR 200.339'' and add in its place ``2 CFR 200.340''; 
and
0
b. In paragraph (c)(2)(ix):
0
i. Remove ``2 CFR 200.338'' and add in its place ``2 CFR 200.339''; and
0
ii. Remove ``2 CFR 200.339'' and add in its place ``2 CFR 200.340''.
0
19. Revise Sec.  92.505 to read as follows:


Sec.  92.505  Applicability of uniform administrative requirements.

    The requirements of 2 CFR part 200 apply to participating 
jurisdictions, State recipients, and subrecipients receiving HOME 
funds, except for the following provisions: Sec. Sec.  200.306 through 
200.308 (not applicable to participating jurisdictions), 200.311 
(except as provided in Sec.  92.257), 200.312, 200.328, 200.329(c), 
200.330, 200.334, 200.335, and 200.344. The provisions of 2 CFR 200.305 
apply as modified by Sec.  92.502(c). If there is a conflict between 
definitions in 2 CFR part 200 and this part, the definitions in this 
part govern.
0
20. In Sec.  92.508, add paragraph (a)(7)(ii)(C) to read as follows:


Sec.  92.508  Recordkeeping.

    (a) * * *
    (7) * * *
    (ii) * * *
    (C) Records of any efforts to consider small businesses, minority 
businesses, women's business enterprises, veteran-owned businesses, and 
labor surplus area firms, as described in 2 CFR 200.321.
* * * * *


Sec.  92.551  [Amended]

0
21. In Sec.  92.551:
0
a. In paragraph (c)(2):
0
i. Remove ``2 CFR 200.207'' and add in its place ``2 CFR 200.208''; and
0
ii. Remove ``2 CFR 200.338'' and add in its place ``2 CFR 200.339''.

PART 93--HOUSING TRUST FUND

0
22. The authority citation for part 93 continues to read as follows:

    Authority:  42 U.S.C. 3535(d), 12 U.S.C. 4568.
0
23. In Sec.  93.353, revise paragraph (a) to read as follows:


Sec.  93.353  Conflict of interest.

    (a) Applicability of procurement standards. When procuring goods 
and services in accordance with 2 CFR part 200, the grantee or 
subgrantee must comply with the applicable conflict of interest 
requirements in 2 CFR 200.317 through 200.319. In all other situations, 
the provisions of this section apply.
* * * * *
0
24. In Sec.  93.400, revise paragraph (d)(2) to read as follows:


Sec.  93.400  Housing Trust Fund (HTF) accounts.

* * * * *
    (d) * * *
    (2) Any fiscal year grant funds in the HTF Treasury account that 
are not expended after the date of expiration of the grant's period of 
performance, as described in Sec.  93.409(a)(3);
* * * * *


Sec.  93.404  [Amended]

0
25. In Sec.  93.404:
0
a. In paragraph (c)(1)(v), remove ``2 CFR 200.331'' and add in its 
place ``2 CFR 200.332''; and
0
b. In paragraph (c)(1)(xi):
0
i. Remove ``2 CFR 200.338'' and add in its place ``2 CFR 200.339''; and
0
ii. Remove ``2 CFR 200.339'' and add in its place ``2 CFR 200.340''.
0
26. Revise Sec.  93.405 to read as follows:


Sec.  93.405  Applicability of uniform administrative requirements, 
cost principles, and audits.

    The requirements of 2 CFR part 200 apply to the grantees and 
subgrantees

[[Page 107092]]

receiving HTF funds, except for the following provisions: Sec. Sec.  
200.307, 200.308, 200.311, 200.312, 200.328, 200.329(c), 200.330, 
200.334, 200.335, and 200.344 (except as provided in Sec.  93.409). If 
there is a conflict between the definitions in 2 CFR part 200 and this 
part, the definitions in this part govern.


Sec.  93.407  [Amended]

0
27. In Sec.  93.407:
0
a. In paragraph (a)(2)(ii):
0
i. Remove ``2 CFR 200.333'' and add in its place ``2 CFR 200.334''; and
0
ii. Remove ``200.337'' and add in its place ``200.338''; and
0
b. In paragraph (a)(3)(iv), remove ``2 CFR part 200,'' and add in its 
place ``2 CFR 200.302''.
0
28. Add Sec.  93.409 to read as follows:


Sec.  93.409  Closeout.

    This section specifies the procedure and actions that must be 
completed by a HTF grantees and HUD to close out a grant. The 
requirements of 2 CFR 200.344 apply to closeouts, except to the extent 
that such requirements conflict with the following:
    (a) Closeout process. (1) HUD will close out a grant after the 
period of performance has ended. A grantee must complete all required 
activities and closeout actions for the grant, as required by HUD. If 
the grantee fails to complete the requirements in accordance with this 
section, HUD may close out the Federal award with the information 
available. HUD may closeout individual grants or multiple grants 
simultaneously.
    (2) To prepare for closeout, before the end of the budget period of 
the grant, the grantee must review all eligible activities under the 
grant and reconcile its accounts as follows:
    (i) For any eligible costs incurred under the grant and not yet 
drawn down from the U.S. Treasury account, the grantee must draw down 
those funds in a timely manner.
    (ii) The grantee must promptly refund to the proper accounts any 
previously disbursed balances of unobligated cash paid in advance. All 
such refunds must be completed prior to submission of the information 
and reports required in paragraph (b) of this section.
    (3) After the end of the grant budget period, no additional 
eligible activities may be undertaken by the grantee using the grant 
funds and no additional eligible costs incurred after the budget period 
may be submitted by the grantee. Unused funds remaining on the grant 
will be returned to HUD. The grantee must promptly refund any unused 
grant funds not authorized to be retained, consistent with HUD's 
instructions. HUD shall reallocate the grant funds by formula in 
accordance with Sec.  93.54.
    (4) HUD will initiate closeout actions in the computerized 
disbursement and information system when the grantee has met the 
requirements established in paragraph (b) of this section.
    (i) If the grantee does not submit and enter all required data, 
information, and reports or complete the actions described in paragraph 
(b) of this section, HUD will proceed to close out the grant with the 
information available within one year of the period of performance end 
date. Each grant shall have a 9-year period of performance beginning 
after the date of HUD's execution of the HTF grant agreement. The date 
of HUD's execution of the HTF grant agreement is also the point of 
obligation for the HTF grant.
    (ii) HUD may report the grantee's material failure to comply with 
the terms and conditions of the Federal award or requirements in this 
section in SAM.gov. HUD may also pursue other enforcement actions in 2 
CFR 200.339.
    (5) A grantee may request, and HUD may provide an extension of the 
period of performance or closeout deadlines provided good cause is 
demonstrated.
    (b) Actions required for closeout. A grantee must complete the 
following actions for closeout of the grant:
    (1) Submit a complete and final Federal Financial Report for the 
grant to HUD within 120 days of the end date of the period of 
performance, as indicated in the grant agreement;
    (2) Demonstrate that it has fulfilled all programmatic and 
administrative requirements for the project (i.e., property 
inspections, obtaining certificates of occupancy, etc.) within the 
period of performance in accordance with 2 CFR 200.344(a);
    (3) Enter all data for activities in the computerized disbursement 
and information system established by HUD, within one year from the end 
of the period of performance as required by the grant agreement;
    (4) Demonstrate that all HTF-assisted units are occupied by 
eligible occupants by entering accurate beneficiary data in the 
computerized disbursement and information system established by HUD, 
within one year from the end of the period of performance, as required 
by the grant agreement;
    (5) Comply with the requirements in 2 CFR 200.313(e) for the 
disposition of any equipment acquired under one or more HTF grants, 
that is no longer needed for the HTF program, or for other activities 
previously supported by a Federal agency;
    (6) Resolve and close all HTF monitoring findings for the grant (if 
applicable);
    (7) Resolve and close all OIG audit findings for the grant (if 
applicable);
    (8) Resolve and close all Single Audit findings for the grant (if 
applicable);
    (9) Carry out all other responsibilities under the grant agreement 
and applicable laws and regulations satisfactorily; and
    (10) Complete a closeout certification prepared by HUD. The 
certification shall identify the grant being closed out and include 
provisions with respect to the following:
    (i) Identification of any unused grant funds that were returned to 
HUD;
    (ii) Compliance with the recordkeeping requirements in Sec.  
93.407, including maintaining program, project, financial, program 
administration, records concerning other Federal requirements, and such 
other records as necessary to carry out responsibilities for the grant 
by the grantee and its subgrantees;
    (iii) Monitoring and enforcement of the requirements for all HTF-
assisted units set forth in this part for the period specified in the 
HTF written agreement with the property owner;
    (iv) Compliance with use of program income, recaptured funds, and 
repayments in accordance with Sec.  92.403. If the grantee is not a 
grantee when it receives funds, the funds may be retained and used for 
other affordable housing purposes;
    (v) All actions required in 2 CFR 200.344 applicable to the grant 
have been taken by the grantee;
    (vi) All actions required in 2 CFR 200.344 applicable to the 
grantee's subgrantees have been taken;
    (vii) Other provisions appropriate to any special circumstances of 
the grant closeout, in modification of or in addition to the 
obligations in paragraphs (c)(1) and (2) of this section;
    (viii) Acknowledge future monitoring by HUD, including that 
findings of noncompliance may be taken into account by HUD as 
unsatisfactory performance of the grantee and in any risk-based 
assessment of a future grant award under this part; and
    (ix) Unless otherwise provided in a closeout certification, the 
Consolidated Plan will remain in effect after closeout until the 
expiration of the program year covered by the most recent Consolidated 
Plan.
    (c) Post closeout adjustments and continuing responsibilities. The 
closeout of a grant does not affect any of the obligations required 
under this part and under 2 CFR 200.345, including:

[[Page 107093]]

    (1) The right of HUD to disallow costs and recover funds on the 
basis of a later audit or other review. HUD must make any cost 
disallowance determination and notify the grantee within the record 
retention period;
    (2) Compliance with the requirements in Sec.  93.407;
    (3) Compliance with the requirements in Sec.  93.408;
    (4) Records retention as required in 2 CFR 200.345, as applicable;
    (5) Monitoring and enforcement of the requirements for all HTF-
assisted units set forth in this part for the period of affordability 
specified in the HTF written agreement with the property owner;
    (6) Compliance with use of program income, recaptured funds, and 
repayments in accordance with Sec.  93.403. If the grantee is not a 
grantee when it receives funds, the funds may be retained and used for 
other affordable housing purposes;
    (7) Compliance with the requirement in 2 CFR 200.345(a)(2) that the 
grantee return any funds due as a result of a later refund, 
corrections, or other transactions including final indirect cost rate 
adjustments; and
    (8) Compliance with the audit requirements at 2 CFR part 200, 
subpart F.


Sec.  93.452  [Amended]

0
29. In Sec.  93.452:
0
a. In paragraph (c)(2):
0
i. Remove ``2 CFR 200.207'' and add in its place ``2 CFR 200.208''; and
0
ii. Remove ``200.338'' and add in its place ``200.339''.

PART 200--INTRODUCTION TO FHA PROGRAMS

0
30. The authority citation for part 200 continues to read as follows:

    Authority:  12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).
0
31. Revise Sec.  200.11 to read as follows:


Sec.  200.11  Audit requirements for State and local governments as 
mortgagees.

    Requirements set forth in 2 CFR part 200, subpart F, apply to State 
and local governments (as defined at 2 CFR 200.1) that receive mortgage 
insurance as mortgagees.

PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS

0
32. The authority citation for part 570 continues to read as follows:

    Authority:  12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d) and 
5301-5320.
0
33. In Sec.  570.206, revise paragraph (e) to read as follows:


Sec.  570.206  Program administrative costs.

* * * * *
    (e) Indirect costs. The amount of indirect costs determined by 
applying the indirect cost rate to the portion of modified total direct 
costs (as defined at 2 CFR 200.1) that represents up to $50,000 of each 
subaward may only be charged to the grant as a program administrative 
cost.
* * * * *


Sec.  570.485  [Amended]

0
34. In Sec.  570.485(d), remove ``2 CFR 200.207'' and add in its place 
``2 CFR 200.208''.


Sec.  570.489  [Amended]

0
35. In Sec.  570.489:
0
a. In paragraph (g), remove ``2 CFR 200.330'' and add in its place ``2 
CFR 200.331;
0
b. Revise paragraph (j) introductory text;
0
c. In paragraph (m):
0
i. Remove ``2 CFR 200.330'' and add in its place ``2 CFR 200.331''; and
0
ii. Remove ``200.332'' and add in its place ``200.333''; and
0
d. In paragraph (o), remove ``2 CFR 200.343'' and add in its place ``2 
CFR 200.344''.
    The revision reads as follows:


Sec.  570.489  Program administrative requirements.

* * * * *
    (j) Change of use of real property. The standards described in this 
section apply to real property within the unit of general local 
government's control (including activities undertaken by subrecipients) 
that was acquired or improved in whole or in part using CDBG funds in 
excess of the simplified acquisition threshold (2 CFR 200.1) set by the 
FAR at 48 CFR part 2, subpart 2.1. These standards shall apply from the 
date CDBG funds are first spent for the property until 5 years after 
closeout of the unit of general local government's grant.
* * * * *
0
36. In Sec.  570.502, revise paragraph (a) to read as follows:


Sec.  570.502  Applicability of uniform administrative requirements.

    (a) Grantees and subrecipients shall comply with 2 CFR part 200, 
``Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards'', except that:
    (1) 2 CFR 200.305 is modified for lump sum drawdown for financing 
of property rehabilitation activities, in accordance with Sec.  
570.513.
    (2) 2 CFR 200.306 does not apply.
    (3) 2 CFR 200.307 does not apply. Program income is governed by 
Sec.  570.504.
    (4) 2 CFR 200.308 does not apply.
    (5) 2 CFR 200.311 does not apply, except as provided in Sec.  
570.200(j). Real property is governed by Sec.  570.505.
    (6)(i) 2 CFR 200.313 applies, except that in all cases in which the 
equipment is sold, the proceeds shall be considered and treated as 
program income unless Sec.  570.500(a)(4)(i) provides otherwise.
    (ii) Equipment not needed by the subrecipient for CDBG activities 
shall be transferred to the recipient for the CDBG program or shall be 
retained after compensating the recipient.
    (7) 2 CFR 200.334 applies except that:
    (i) For recipients:
    (A) The period shall be 4 years from the date of execution of the 
closeout agreement for a grant, as further described in this part;
    (B) Records for individual activities subject to the reversion of 
assets provisions at Sec.  570.503(b)(7) or the change of use 
provisions at Sec.  570.505 must be maintained for 3 years after those 
provisions no longer apply to the activity;
    (C) Records for individual activities for which there are 
outstanding loan balances, other receivables, or contingent liabilities 
must be retained for 3 years after the receivables or liabilities have 
been satisfied.
    (ii) For subrecipients:
    (A) The retention period for individual CDBG activities shall be 
the longer of 3 years after the expiration or termination of the 
subrecipient agreement under Sec.  570.503, or 3 years after the 
submission of the annual performance and evaluation report, as 
prescribed in Sec.  91.520 of this title, in which the specific 
activity is reported on for the final time;
    (B) Records for individual activities subject to the reversion of 
assets provisions at Sec.  570.503(b)(7) or change of use provisions at 
Sec.  570.505 must be maintained for as long as those provisions 
continue to apply to the activity; and
    (C) Records for individual activities for which there are 
outstanding loan balances, other receivables, or contingent liabilities 
must be retained until such receivables or liabilities have been 
satisfied.
    (8) 2 CFR 200.344 applies to closeout of subrecipients.
* * * * *


Sec.  570.508  [Amended]

0
37. In Sec.  570.508, remove ``2 CFR 200.337'' and add in its place ``2 
CFR 200.338''.

[[Page 107094]]

Sec.  570.509   [Amended]

0
38. In Sec.  570.509:
0
a. In paragraph (b)(3), remove ``2 CFR part 200'' and add in its place 
``2 CFR part 200, subpart F'';
0
b. In paragraph (e), remove ``2 CFR 200.339'' and add in its place ``2 
CFR 200.340''; and
0
c. In paragraph (f), remove ``2 CFR 200.342)'' and add in its place ``2 
CFR 200.343''.
0
39. In Sec.  570.611, revise paragraph (a) to read as follows:


Sec.  570.611  Conflict of interest.

    (a) Applicability. (1) When procuring goods and services in 
accordance with 2 CFR part 200, the recipient or subrecipient must 
comply with the applicable conflict of interest requirements in 2 CFR 
200.317 through 200.319.
    (2) In all cases where the provisions of 2 CFR 200.317 through 
200.319 do not apply, the provisions of this section shall apply. Such 
cases include the acquisition and disposition of real property and the 
provision of assistance by the recipient or by its subrecipients to 
individuals, businesses, and other private entities under eligible 
activities that authorize such assistance (e.g., rehabilitation, 
preservation, and other improvements of private properties or 
facilities pursuant to Sec.  570.202; or grants, loans, and other 
assistance to businesses, individuals, and other private entities 
pursuant to Sec.  570.203, 570.204, 570.455, or 570.703(i)).
0
40. In Sec.  570.707, add paragraph (d) to read as follows:


Sec.  570.707  Applicability of rules and regulations.

* * * * *
    (d) Registration in SAM.gov. Public entities and States must 
complete entity validations and acquire a unique entity identifier 
(UEI) in SAM.gov in accordance with 2 CFR 25.105 in order to apply for 
and obtain a loan guaranteed under this subpart. The lender or holder 
of a note guaranteed under this subpart is not required to complete 
entity validations and acquire a UEI in SAM.gov in accordance with 2 
CFR 25.105 in order to obtain the benefit of the loan guarantee.

PART 574--HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS

0
41. The authority citation for part 574 continues to read as follows:

    Authority:  12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d) and 
5301-5320.

0
42. In Sec.  574.500, revise paragraph (c) to read as follows:


Sec.  574.500  Responsibility for grant administration.

* * * * *
    (c) Enforcement. HUD will enforce the obligations in the grant 
agreement in accordance with the provisions of 2 CFR part 200, subpart 
D. Upon initiating a remedy for noncompliance (for example, disallowed 
costs, a corrective action plan, or termination), HUD will provide the 
grantee with an opportunity for informal consultation, in which the 
grantee may object and provide information challenging the action.
0
43. Revise Sec.  574.530 to read as follows:


Sec.  574.530  Recordkeeping.

    (a)(1) For formula grants, each grantee must ensure that all grant 
records are maintained for the longer of five years or the applicable 
record retention period provided in 2 CFR part 200 (2 CFR 200.334).
    (2) For all other grants, grantees must ensure that all grant 
records are maintained for the applicable record retention period 
provided in 2 CFR part 200 (2 CFR 200.334).
    (3) For all grants, grantees must ensure that all records for real 
property subject to minimum use requirements are maintained for at 
least three years after final disposition.
    (b) Grantees must maintain the following:
    (1) Current and accurate data on the race and ethnicity of program 
participants.
    (2) Documentation of the actions the grantee has taken to 
affirmatively further fair housing, pursuant to Sec. Sec.  5.151 and 
5.152 of this title.
    (3) Data on emergency transfers requested under Sec.  5.2005(e) of 
this title, pertaining to victims of domestic violence, dating 
violence, sexual assault, or stalking, including data on the outcomes 
of such requests.
0
44. Revise Sec.  574.540 to read as follows:


Sec.  574.540  Deobligation of funds.

    The period of performance for the grant will be 36 months after the 
date that HUD executes the grant agreement with the recipient, unless 
the grant agreement provides for a longer period. HUD may deobligate 
all or a portion of the amounts approved for eligible activities if the 
amounts are not expended in a timely manner, or the proposed activity 
for which funding was approved is not in accordance with the approved 
application or action plan and requirements of this part. The grant 
agreement may set forth other circumstances under which funds may be 
deobligated or sanctions imposed.
0
45. Revise Sec.  574.605 to read as follows:


Sec.  574.605  Applicability of uniform administrative requirements, 
cost principles, and audit requirements for Federal awards.

    The requirements of 2 CFR part 200, ``Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards,'' apply, except where inconsistent with the AIDS Housing 
Opportunity Act, title I of the Cranston-Gonzalez National Affordable 
Housing Act, or the implementing regulations in this part or part 91 of 
this title.
0
46. Revise Sec.  574.625 to read as follows:


Sec.  574.625  Conflict of interest.

    (a) Applicable requirements. When procuring goods and services in 
accordance with 2 CFR part 200, the grantee or project sponsor must 
comply with the applicable conflict of interest requirements under 2 
CFR 200.317 through 200.319. In all other situations, the prohibition 
in paragraph (b) of this section applies.
    (b) Conflicts prohibited. No person who is an employee, agent, 
consultant, officer, or elected or appointed official of the grantee or 
project sponsor and who exercises or has exercised any functions or 
responsibilities with respect to assisted activities, or who is in a 
position to participate in a decision making process or gain inside 
information with regard to such activities, may obtain a financial 
interest or benefit from the activity, or have an interest in any 
contract, subcontract, or agreement with respect thereto, or the 
proceeds thereunder, either for himself or herself or for those with 
whom he or she has family or business ties, during his or her tenure or 
for one year thereafter.
    (c) Exceptions: Threshold requirements. Upon the written request of 
the grantee, HUD may grant an exception to the prohibition in paragraph 
(b) of this section when it determines that the exception will serve to 
further the purposes of the HOPWA program and the effective and 
efficient administration of the grantee's program or project. An 
exception may be considered only after the grantee has provided the 
following:
    (1) A disclosure of the nature of the conflict, accompanied by an 
assurance that there has been public disclosure of the conflict and a 
description of how the public disclosure was made; and
    (2) An opinion of the grantee's attorney that the interest for 
which the exception is sought would not violate State or local law.

[[Page 107095]]

    (d) Factors to be considered for exceptions. In determining whether 
to grant a requested exception after the grantee has satisfactorily met 
the requirements of paragraph (c) of this section, HUD will consider 
the cumulative effect of the following factors, where applicable:
    (1) Whether the exception would provide a significant cost benefit 
or an essential degree of expertise to the program or project that 
would otherwise not be available;
    (2) Whether the person affected is a member of a group or class of 
eligible persons and the exception will permit such person to receive 
generally the same interests or benefits as are being made available or 
provided to the group or class;
    (3) Whether the affected person has withdrawn from his or her 
functions or responsibilities, or the decision making process with 
respect to the specific assisted activity in question;
    (4) Whether the interest or benefit was present before the affected 
person was in a position as described in paragraph (b) of this section;
    (5) Whether undue hardship will result to the grantee, the project 
sponsor, or the person affected when weighed against the public 
interest served by avoiding the prohibited conflict; and
    (6) Any other relevant considerations.

PART 576--EMERGENCY SOLUTIONS GRANTS PROGRAM

0
47. The authority citation for part 576 continues to read as follows:

    Authority:  12 U.S.C. 1701x, 1701x-1; 42 U.S.C. 11371 et seq., 
42 U.S.C. 3535(d).


Sec.  576.2  [Amended]

0
50. In Sec.  576.2, remove ``2 CFR 200.80'' wherever it appears and add 
in its place ``2 CFR 200.1''.
0
51. In Sec.  576.109, revise paragraphs (b) and (c) to read as follows:


Sec.  576.109  Indirect Costs.

* * * * *
    (b) Allocation to eligible activities under Sec. Sec.  576.101 
through 576.107. Indirect costs may be allocated to an eligible 
activity under Sec. Sec.  576.101 through 576.107, provided that:
    (1) The applicable indirect cost methodology and requirements under 
2 CFR part 200, subpart E, would allow for allocation of indirect costs 
to a specific activity by applying the indirect cost rate to only the 
allowable direct costs of that activity that are included within the 
applicable direct cost base; and
    (2) The sum of direct costs and indirect costs charged for street 
outreach and emergency shelter activities would not exceed the 
expenditure limit in Sec.  576.100(b).
    (c) Allocation to administrative costs under Sec.  576.108. 
Indirect costs that cannot be allocated to an eligible activity under 
Sec. Sec.  576.101 through 576.107, but can otherwise be allocated to 
the ESG grant under 2 CFR part 200, subpart E, may be charged to the 
grant as administrative costs under Sec.  576.108, provided the sum of 
direct and indirect costs charged as administrative costs does not 
exceed the expenditure limit in Sec. Sec.  576.100(c) and 576.108(a). 
Costs that may only be charged in this manner include any amount of 
indirect costs that is determined by applying the indirect cost rate to 
``up to the first $50,000 of each subaward'' as provided by the MTDC 
definition in 2 CFR 200.1, where indirect costs are determined by 
applying the indirect cost rate to MTDC.
0
52. In Sec.  576.200, revise paragraph (a) to read as follows:


Sec.  576.200  Submission requirements and grant approval.

    (a) Application submission and approval. In addition to meeting the 
requirements in part 5, subpart K of this title, each State, urban 
county, or metropolitan city must submit and obtain HUD approval of a 
consolidated plan in accordance with the requirements in part 91 of 
this title, and each territory must submit and obtain HUD approval of a 
consolidated plan in accordance with the requirements that apply to 
local governments under part 91 of this title. HUD may include specific 
conditions in the grant agreement for a State, urban county, or 
metropolitan city as provided by 2 CFR 200.208.
* * * * *
0
53. In Sec.  576.201, revise paragraph (d) and remove paragraphs (e) 
and (f) to read as follows:


Sec.  576.201  Matching requirement.

* * * * *
    (d) Matching contributions may include unrecovered indirect costs 
as described in 2 CFR 200.306(c).
0
54. In Sec.  576.203, revise the second sentence of paragraph (b) to 
read as follows:


Sec.  576.203  Obligation, expenditure, and payment requirements.

* * * * *
    (b) * * * The recipient's entire grant must be expended for 
eligible costs within 24 months after the date HUD signs the grant 
agreement with the recipient (``period of performance''), except for 
funds used for administrative closeout costs as provided by 2 CFR 
200.403(h). * * *
* * * * *
0
55. In Sec.  576.404, revise the last sentence of paragraph (a) and the 
introductory text for paragraph (b) to read as follows:


Sec.  576.404  Conflicts of interest.

    (a) * * * Recipients and subrecipients must also comply with the 
applicable organizational conflicts of interest requirements under 2 
CFR 200.317 through 200.319.
    (b) Individual conflicts of interest. When procuring goods and 
services in accordance with 2 CFR part 200, the recipient or 
subrecipient must comply with the applicable conflict of interest 
requirements under 2 CFR 200.317 and 200.318. For all other 
transactions and activities, the following provisions apply:
* * * * *
0
56. In Sec.  576.500, revise paragraphs (y) and (z)(1) to read as 
follows:


Sec.  576.500  Recordkeeping and reporting requirements.

* * * * *
    (y) Period of record retention. All records related to the 
recipient's ESG grant must be kept for the longer of 5 years, the 
minimum period described in paragraphs (y)(1) through (3) of this 
section, or the minimum period that 2 CFR part 200 (2 CFR 200.334) 
provides for specific situations or records.
    (1) Documentation of each program participant's qualification as a 
family or individual at risk of homelessness or as a homeless family or 
individual and other program participant records must be kept for at 
least 5 years after the expenditure of all funds from the grant under 
which the program participant was served;
    (2) Where ESG funds are used for the renovation of an emergency 
shelter involves costs charged to the ESG grant that exceed 75 percent 
of the value of the building before renovation, records must be kept 
for at least 10 years after the date that ESG funds are first obligated 
for the renovation; and
    (3) Where ESG funds are used to convert a building into an 
emergency shelter and the costs charged to the ESG grant for the 
conversion exceed 75 percent of the value of the building after 
conversion, records must be kept for at least 10 years after the date 
that ESG funds are first obligated for the conversion.
    (z) * * *
    (1) Federal Government rights. Notwithstanding the confidentiality 
procedures established under paragraph (x) of this section, the 
recipient and its

[[Page 107096]]

subrecipients must comply with the requirements for access to records 
in 2 CFR 200.337.
* * * * *

PART 578--CONTINUUM OF CARE

0
57. The authority citation for part 578 continues to read as follows:

    Authority:  12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 11381 et seq., 
42 U.S.C. 3535(d).

0
58. In Sec.  578.63:
0
a. Revise paragraph (b);
0
b. Redesignate paragraph (c) as paragraph (d); and
0
c. Add a new paragraph (c).
    The revision and addition read as follows:


Sec.  578.63  Indirect costs.

* * * * *
    (b) Allocation to eligible activities under Sec. Sec.  578.39 
through 578.57 and 578.61. Indirect costs may be allocated to an 
eligible activity under Sec. Sec.  578.39 through 578.57 and 578.61, 
provided that:
    (1) The applicable indirect cost methodology and requirements under 
2 CFR part 200, subpart E, would allow for allocation of indirect costs 
to a specific activity by applying the indirect cost rate to only the 
allowable direct costs of that activity that are included within the 
applicable direct cost base; and
    (2) The sum of direct costs and indirect costs charged for eligible 
activities under Sec. Sec.  578.39 and 578.41 would not exceed the 
expenditure limits in Sec. Sec.  578.39(a) and 578.41(a) respectively.
    (c) Allocation to administrative costs under Sec.  578.59. Indirect 
costs that cannot be allocated to an eligible activity under paragraph 
(b) of this section, but can otherwise be allocated to the CoC program 
grant under 2 CFR part 200, subpart E, may be charged to the grant as 
administrative costs under Sec.  578.59, provided the sum of direct and 
indirect costs charged as administrative costs does not exceed the 
applicable expenditure limit in Sec.  578.59. Costs that may only be 
charged in this manner include any amount of indirect costs that is 
determined by applying the indirect cost rate to ``up to the first 
$50,000 of each subaward'' as provided by the MTDC definition in 2 CFR 
200.1, where indirect costs are determined by applying the indirect 
cost rate to MTDC.
* * * * *
0
59. In Sec.  578.95:
0
a. Revise paragraphs (a) and (b); and
0
b. Add a sentence to the end of paragraph (c).
    The revision and addition read as follows:


Sec.  578.95  Conflicts of interest.

    (a) Procurement. When procuring goods and services in accordance 
with 2 CFR part 200, the recipient or subrecipient must comply with the 
applicable conflict of interest requirements in 2 CFR 200.317 through 
200.319.
    (b) Continuum of Care board members. No Continuum of Care or 
collaborative applicant board member may participate in or influence 
discussions or resulting decisions concerning the award of a grant or 
other financial benefits to the organization that the member 
represents.
    (c) * * * No recipient or subrecipient may have an organizational 
conflict of interest. Recipients and subrecipients must also maintain 
standards of conduct covering organizational conflicts of interest 
described in 2 CFR 200.318.

PART 700--CONGREGATE HOUSING SERVICES PROGRAM

0
60. The authority citation for part 700 continues to read as follows:

    Authority:  42 U.S.C. 3535(d) and 8011.


Sec.  700.175  [Amended]

0
61. In Sec.  700.175(b), remove ``and 200.319(a)(5)'' and add in its 
place ``and 200.319(b) and (c)(5).''

PART 880--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW 
CONSTRUCTION

0
62. The authority citation for part 880 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and 
13611-13619.


Sec.  880.211  [Amended]

0
63. In Sec.  880.211, remove ``2 CFR 200.69'' and add in its place ``2 
CFR 200.1''.

PART 881--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR 
SUBSTANTIAL REHABILITATION

0
64. The authority citation for part 881 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and 
13611-13619.


Sec.  881.211  [Amended]

0
65. In Sec.  881.211(a), remove ``2 CFR 200.69'' and add in its place 
``2 CFR 200.1''.

PART 883--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--STATE 
HOUSING AGENCIES

0
66. The authority citation for part 883 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.


Sec.  883.313  [Amended]

0
67. In Sec.  883.313, remove ``2 CFR 200.69'' and add in its place ``2 
CFR 200.1''.

PART 884--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM, NEW 
CONSTRUCTION SET-ASIDE FOR SECTION 515 RURAL RENTAL HOUSING 
PROJECTS

0
68. The authority citation for part 884 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.


Sec.  884.124  [Amended]

0
69. In Sec.  884.124, remove ``2 CFR 200.69'' and add in its place ``2 
CFR 200.1''.

PART 886--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--SPECIAL 
ALLOCATIONS

0
70. The authority citation for part 886 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.


Sec.  886.131  [Amended]

0
71. In Sec.  886.131, remove ``2 CFR 200.69'' and add in its place ``2 
CFR 200.1''.


Sec.  886.336  [Amended]

0
72. In Sec.  886.336, remove ``2 CFR 200.69'' and add in its place ``2 
CFR 200.1''.

PART 905--THE PUBLIC HOUSING CAPITAL FUND PROGRAM

0
73. The authority citation for part 905 continues to read as follows:

    Authority:  42 U.S.C. 1437g, 42 U.S.C. 1437z-2, 42 U.S.C. 1437z-
7 and 3535(d).

0
74. In Sec.  905.322 revise the first sentence in paragraphs (a) and 
(b)(1)(i) and (ii) to read as follows:


Sec.  905.322  Fiscal closeout.

    (a) General. Each Capital Fund grant and/or development project is 
subject to fiscal closeout in accordance with 2 CFR 200.344. * * *
    (b) * * *
    (1) * * *
    (i) Actual Development Cost Certificate (ADCC) is to be submitted 
according with 2 CFR 200.344. * * *
    (ii) Actual Modernization Cost Certificate (AMCC) for each grant, 
is to be submitted according with 2 CFR 200.344, but no earlier than 
the obligation end date. * * *
* * * * *

[[Page 107097]]

PART 964--TENANT PARTICIPATION AND TENANT OPPORTUNITIES IN PUBLIC 
HOUSING

0
75. The authority citation for part 964 continues to read as follows:

    Authority:  42 U.S.C. 1437d, 1437g, 1437r, 3535(d).


Sec.  964.230  [Amended]

0
76. In Sec.  964.230:
0
a. In paragraph (a)(2), add ``or a special purpose framework as 
approved by HUD'' after ``generally accepted government audit 
standards''; and
0
b. In paragraph (b), add ``or a special purpose framework as approved 
by HUD'' after ``generally accepted government audit standards''.

PART 965--PHA-OWNED OR LEASED PROJECTS--GENERAL PROVISIONS

0
77. The authority citation for part 965 continues to read as follows:

    Authority:  42 U.S.C. 1437, 1437a, 1437d, 1437g, and 3535(d). 
Subpart H is also issued under 42 U.S.C. 4821-4846.


Sec.  965.205  [Amended]

0
78. In Sec.  965.205(d)(1), add ``or a special purpose framework as 
approved by HUD'' after ``generally accepted accounting principles'' 
wherever it appears.


Sec.  965.308  [Amended]

0
79. In Sec.  965.308:
0
a. In paragraph (a)(1), remove ``2 CFR 200.320(d)'' wherever it appears 
and add in its place ``2 CFR 200.320(b)(2)''; and
0
b. In paragraph (a)(2), remove ``2 CFR 200.320(f)'' and add in its 
place ``2 CFR 200.320(c)''.

PART 970--PUBLIC HOUSING PROGRAM--DEMOLITION OR DISPOSITION OF 
PUBLIC HOUSING PROJECTS

0
80. The authority citation for part 970 continues to read as follows:

    Authority:  42 U.S.C. 1437p and 3535(d).

0
81. In Sec.  970.1, revise the last sentence to read as follows:


Sec.  970.1  Purpose.

    * * * The regulations in 2 CFR part 200 are not applicable to this 
part except: if the PHA requests to retain the public housing property, 
in which case, 2 CFR 200.311(d)(1) applies; and if the PHA disposes of 
equipment or supplies, 2 CFR 200.313 and 200.314 apply.

PART 990--THE PUBLIC HOUSING OPERATING FUND PROGRAM

0
82. The authority citation for part 990 continues to read as follows:

    Authority:  42 U.S.C. 1437g; 42 U.S.C. 3535(d).


Sec.  990.280  [Amended]

0
83. In Sec.  990.280(b)(2), remove ``2 CFR part 200it'' and add in its 
place ``2 CFR part 200), it''.

PART 1000--NATIVE AMERICAN HOUSING ACTIVITIES

0
84. The authority citation for part 1000 continues to read as follows:

    Authority:  25 U.S.C. 4101 et seq.; 42 U.S.C. 3535(d).

0
85. In Sec.  1000.26:
0
a. Revise paragraph (a); and
0
b. Add a heading to paragraph (b).
    The revision and addition read as follows:


Sec.  1000.26  What are the administrative requirements under NAHASDA?

    (a) Uniform Administrative Requirements. Except as addressed in 
Sec.  1000.28, recipients shall comply with the requirements and 
standards of 2 CFR part 200, ``Uniform Administrative Requirements, 
Cost Principles, And Audit Requirements for Federal Awards'', except 
for the following sections:
    (1) 2 CFR 200.1 applies, except that, in lieu of the definition for 
Indian Tribe, the definition for Indian Tribe in section 104 of NAHASDA 
(25 U.S.C. 4103) will apply.
    (2) 2 CFR 200.113 applies, except that, in lieu of the remedies 
described in 2 CFR 200.339, HUD shall be authorized to seek remedies 
under subpart F of this part.
    (3) 2 CFR 200.302(a).
    (4) 2 CFR 200.305 applies, except that HUD shall not require a 
recipient to expend retained program income before drawing down or 
expending IHBG funds.
    (5) 2 CFR 200.306.
    (6) 2 CFR 200.307.
    (7) 2 CFR 200.308.
    (8) 2 CFR 200.311, except as provided in Sec.  5.109 of this title.
    (9) 2 CFR 200.313 applies except that a TDHE may follow the Tribal 
laws and procedures contemplated in 2 CFR 200.313(b) of the Indian 
Tribe they serve.
    (10) 2 CFR 200.314 applies, except in all cases in which the 
supplies are sold, the proceeds shall be program income.
    (11) 2 CFR 200.317 applies except as modified in this paragraph 
(a)(11):
    (i) Procurement policies and procedures. A TDHE may follow the same 
policies and procedures on procurement used by the Indian tribe they 
serve.
    (ii) De minimis procurement. Regardless of the Tribe's policies and 
procedures for procurement, procurements using a grant provided under 
NAHASDA cannot be subject to competitive procurement requirements when 
the value of the goods and services is less than $5,000, or such other 
higher amount as may be established in NAHASDA.
    (iii) Utilizing Federal supply sources in procurement. In 
accordance with section 101(j) of NAHASDA, recipients may use Federal 
supply sources made available by the General Services Administration 
pursuant to 40 U.S.C. 501.
    (12) 2 CFR 200.318 through 200.327 apply, as modified in this 
paragraph (a)(12):
    (i) General. These provisions apply when a Tribe does not have 
their own policies and procedures for procurement with non-Federal 
funds or when a TDHE does not follow the policies and procedures for 
procurement with non-Federal funds of the Tribe they serve.
    (ii) De minimis procurement. A recipient shall not be required to 
comply with 2 CFR 200.318 through 200.327 with respect to any 
procurement, using a grant provided under NAHASDA, of goods and 
services with a value of less than $5,000, or such other higher amount 
as may be established in NAHASDA.
    (iii) Utilizing Federal supply sources in procurement. In 
accordance with section 101(j) of NAHASDA, recipients may use Federal 
supply sources made available by the General Services Administration 
pursuant to 40 U.S.C. 501.
    (13) 2 CFR 200.326 applies. There may be circumstances under which 
the bonding requirements of 2 CFR 200.326 are inconsistent with other 
responsibilities and obligations of the recipient. In such 
circumstances, acceptable methods to provide performance and payment 
assurance may include:
    (i) Deposit with the recipient of a cash escrow of not less than 20 
percent of the total contract price, subject to reduction during the 
warranty period, commensurate with potential risk;
    (ii) Letter of credit for 25 percent of the total contract price, 
unconditionally payable upon demand of the recipient, subject to 
reduction during any warranty period commensurate with potential risk; 
or
    (iii) Letter of credit for 10 percent of the total contract price, 
unconditionally payable upon demand of the recipient, subject to 
reduction during any warranty period commensurate with potential risk, 
and compliance with the

[[Page 107098]]

procedures for monitoring of disbursements by the contractor.
    (14) 2 CFR 200.329(c) through (e) and (g), ``Monitoring and 
reporting program performance.''
    (15) 2 CFR 200.334.
    (16) 2 CFR 200.339.
    (17) 2 CFR 200.344.
    (b) Cost principles.
* * * * *
0
86. In Sec.  1000.30, revise paragraph (a) to read as follows:


Sec.  1000.30   What prohibitions regarding conflict of interest are 
applicable?

    (a) Applicability. When procuring goods and services in accordance 
with 2 CFR part 200, the recipient or subrecipient must comply with the 
applicable conflict of interest requirements in 2 CFR 200.317 through 
200. 319. In all other situations, the provisions of this section 
apply.
* * * * *


Sec.  1000.52  [Amended]

0
87. In Sec.  1000.52(c)(2)(iii), remove ``through 200.326'' and add in 
its place ``through 200.327''.
0
88. Add Sec.  1000.438 to read as follows:


Sec.  1000.438  Are Title VI lenders and holders of Title VI guarantee 
certificates required to register for the System for Award Management 
(SAM) and obtain a Unique entity identifier (UEI)?

    Yes. All Title VI lenders and holders of Title VI guarantee 
certificates must complete entity validations and acquire a unique 
entity identifier (UEI) in SAM.gov per 2 CFR 25.105.

PART 1003--COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND 
ALASKA NATIVE VILLAGES

0
89. The authority citation for part 1003 continues to read as follows:

    Authority:  42 U.S.C. 3535(d) and 5301 et seq.


Sec.  1003.4  [Amended]

0
90. In Sec.  1003.4, in the definition for ``Subrecipient'', remove 
``through 200.326'' and add in its place ``through 200.327''.
0
91. In Sec.  1003.501, revise paragraphs (a) and (b)(1)(iii) to read as 
follows:


Sec.  1003.501  Applicability of uniform administrative requirements 
and cost principles.

    (a) Uniform Administrative Requirements. Grantees and subrecipients 
shall comply with the requirements and standards of 2 CFR part 200, 
except for the following sections:
    (1) 2 CFR 200.1 applies, except that, in lieu of the definition for 
Indian Tribe, the definition for Indian tribe in section 102 of the 
Housing and Community Development Act of 1974 (42 U.S.C. 5302) will 
apply, and in lieu of the definition for Subrecipient, the definition 
for Subrecipient at Sec.  1003.4 will apply.
    (2) 2 CFR 200.302(a).
    (3) 2 CFR 200.306.
    (4) 2 CFR 200.307 applies as modified by Sec.  1003.503.
    (5) 2 CFR 200.308.
    (6) 2 CFR 200.311 except as provided in Sec.  1003.600.
    (7) 2 CFR 200.313 applies, except that Tribal Organizations may 
follow the Tribal laws and procedures used by the Indian tribe it 
serves. In all cases in which the equipment is sold, the proceeds shall 
be program income in accordance with Sec.  1003.503.
    (8) 2 CFR 200.314 applies, except in all cases in which the 
supplies are sold, the proceeds shall be program income in accordance 
with Sec.  1003.503.
    (9) 2 CFR 200.317 applies, except that Tribal Organization may 
follow the same policies and procedures on procurement used by the 
Indian tribe it serves.
    (10) 2 CFR 200.326 applies. However, there may be circumstances 
under which the bonding requirements of 2 CFR 200.326 are inconsistent 
with other responsibilities and obligations of the grantee. In such 
circumstances, acceptable methods to provide performance and payment 
assurance may include:
    (i) Deposit with the grantee of a cash escrow of not less than 20 
percent of the total contract price, subject to reduction during the 
warranty period, commensurate with potential risk; or
    (ii) Letter of credit for 25 percent of the total contract price, 
unconditionally payable upon demand of the grantee, subject to 
reduction during the warranty period commensurate with potential risk.
    (11) 2 CFR 200.329(c) through (e) and (g).
    (12) 2 CFR 200.334 applies. However, the retention period 
referenced in 2 CFR 200.334 pertaining to individual ICDBG activities 
starts from the date of the submission of the final status and 
evaluation report as prescribed in Sec.  1003.506(a) in which the 
specific activity is reported.
    (13) 2 CFR 200.344.
    (b) * * *
    (1) * * *
    (iii) Costs of housing (e.g., depreciation, maintenance, utilities, 
furnishings, rent), housing allowances, and personal living expenses 
(goods or services for personal use, 2 CFR 200.445) require prior HUD 
approval.
* * * * *


Sec.  1003.503  [Amended]

0
92. In Sec.  1003.503(b)(7), remove ``2 CFR 200.307(e)(2)'' and add in 
its place ``2 CFR 200.307(b)(2)''.


Sec.  1003.507  [Amended]

0
93. In Sec.  1003.507, remove ``2 CFR 200.337'' and add in its place 
``2 CFR 200.338''.


Sec.  1003.508  [Amended]

0
94. In Sec.  1003.508:
0
a. In paragraph (d), remove ``2 CFR 200.339'' and add in its place ``2 
CFR 200.340''; and
0
b. In paragraph (e), remove ``2 CFR 200.342'' and add in its place ``2 
CFR 200.343''.


Sec.  1003.510  [Amended]

0
95. In Sec.  1003.510(d)(3), remove ``of 2 CFR 200.320.'' and add in 
its place ``of 2 CFR 200.320.''.
0
96. In Sec.  1003.606, revise paragraph (a) to read as follows:


Sec.  1003.606  Conflict of interest.

    (a) Applicability. When procuring goods and services in accordance 
with 2 CFR part 200, the grantee or subrecipient must comply with the 
applicable conflict of interest requirements in 2 CFR 200.317 through 
200.319. In all other situations, the provisions of this section apply.
* * * * *

PART 1005--LOAN GUARANTEES FOR INDIAN HOUSING

0
97. The authority citation for part 1005 continues to read as follows:

    Authority:  12 U.S.C. 1715z-13a; 15 U.S.C. 1639c; 42 U.S.C. 
3535(d).


Sec.  1005.217  [Amended]

0
98. In Sec.  1005.217(b)(7), remove ``1005.219(d)(3)'' and add in its 
place ``1005.219(f)(3)''.
0
99. In Sec.  1005.219:
0
a. Redesignate paragraphs (b) through (e) as paragraphs (d) through 
(g); and
0
b. Add new paragraphs (b) and (c).
    The additions read as follows:


Sec.  1005.219  Other requirements.

* * * * *
    (b) Registration in SAM.gov. All Holders and Direct Guarantee 
Lenders must complete entity validations and acquire a UEI in SAM.gov 
per 2 CFR 25.105.
    (c) Compliance with 2 CFR part 200, subpart F. All Holders and 
Direct Guarantee Lenders that are States, local governments, Tribes, or 
nonprofit

[[Page 107099]]

organizations must comply with the audit requirements of 2 CFR part 
200, subpart F.
* * * * *


Sec.  1005.739  [Amended]

0
100. In Sec.  1005.739(h), remove ``1005.219(d)(2)'' and add in its 
place ``1005.219(f)(2)''.


Sec.  1005.803  [Amended]

0
101. In Sec.  1005.803(a), remove ``1005.219(d)(2)'' and add in its 
place ``1005.219(f)(2)''.

PART 1006--NATIVE HAWAIIAN HOUSING BLOCK GRANT PROGRAM

0
102. The authority citation for part 1006 continues to read as follows:

    Authority:  12 U.S.C. 1701x, 1701x-1; 25 U.S.C. 4221 et seq.; 42 
U.S.C. 3535(d), Pub. L. 115-141, Pub. L. 116-6, Pub. L. 116-94, Pub. 
L. 116-260, Pub. L. 117-103, Pub. L. 117-328.

0
103. In Sec.  1006.340, revise paragraph (b) to read as follows:


Sec.  1006.340  Treatment of program income.

* * * * *
    (b) Authority to retain. The DHHL may retain any program income 
that is realized from any NHHBG funds if:
    (1) That income was realized after the initial disbursement of the 
NHHBG funds received by the DHHL; and
    (2) The DHHL agrees to use the program income for affordable 
housing activities in accordance with the provisions of the Act and 
this part.
* * * * *
0
104. Revise Sec.  1006.360 to read as follows:


Sec.  1006.360  Conflict of interest.

    When procuring goods and services in accordance with 2 CFR part 
200, DHHL and its contractors must comply with the applicable conflict 
of interest requirements in 2 CFR 200.317 through 200.319.
0
105. In Sec.  1006.370:
0
a. Revise paragraph (a);
0
b. Add a heading to paragraph (b);
0
c. Revise paragraphs (b)(1)(iii) and (b)(2); and
0
d. Add paragraph (c).
    The revisions and additions read as follows:


Sec.  1006.370  Uniform administrative, requirements, cost principles, 
and audit requirements for Federal awards.

    (a) Uniform Administrative Requirements. The DHHL and subrecipients 
receiving NHHBG funds shall comply with the requirements and standards 
of 2 CFR part 200, ``Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards'' except as 
otherwise provided by this section.
    (b) Cost principles.
    (1) * * *
    (iii) Costs of housing (e.g., depreciation, maintenance, utilities, 
furnishings, rent), housing allowances, and personal living expenses 
(goods or services for personal use, 2 CFR 200.445).
* * * * *
    (2) In addition, no person providing consultant services in an 
employer-employee type of relationship shall receive more than a 
reasonable rate of compensation for personal services paid with NHHBG 
funds. In no event, however, shall such compensation exceed the 
equivalent of the daily rate paid for Level IV of the Executive 
Schedule. The Executive Pay Schedule can be obtained by visiting 
https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages.
    (c) Section 200.305 applies, except that HUD shall not require DHHL 
to expend retained program income before drawing down or expending 
NHHBG funds.


Sec.  1006.420  [Amended]

0
106. In Sec.  1006.420(b)(3), remove ``2 CFR 200.333'' and add in its 
place ``2 CFR 200.334''.

PART 1007--SECTION 184A LOAN GUARANTEES FOR NATIVE HAWAIIAN HOUSING

0
107. The authority citation for part 1007 continues to read as follows:

    Authority:  12 U.S.C. 1715z-13b; 15 U.S.C. 1639c; 42 U.S.C. 
3535(d).
0
108. In Sec.  1007.50, add paragraphs (e) and (f) to read as follows:


Sec.  1007.50  Certificate of guarantee.

* * * * *
    (e) Registration in SAM.gov. All lenders and subsequent holders of 
the loan guarantee must complete entity validations and acquire a UEI 
in SAM.gov per 2 CFR 25.105.
    (f) Compliance with 2 CFR part 200, subpart F. All lenders and 
subsequent holders of the loan guarantee that are States, local 
governments, or nonprofit organizations must comply with the audit 
requirements of 2 CFR part 200, subpart F.

Damon Y. Smith,
General Counsel.
[FR Doc. 2024-30260 Filed 12-30-24; 8:45 am]
BILLING CODE 4210-67-P