Community development block grants: Expenditure documentation; clarification,

[Federal Register: November 22, 1999 (Volume 64, Number 224)]

[Rules and Regulations]

[Page 63680-63681]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr22no99-22]

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 570

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

RIN 2506-AC00

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

AGENCY: Office of the Assistant Secretary for Community Planning and Development, HUD.

ACTION: Final rule.

SUMMARY: On July 15, 1999, HUD published an interim rule that clarifies the level of expenditure documentation that Community Development Block Grant (CDBG) grantees and subrecipients must maintain to identify the use of CDBG funds provided for assisted activities. This change provides the public with more assurance that CDBG funds are used only for allowable purposes. This rule makes final the amendments made by the July 15, 1999 interim rule, and takes into consideration the public comment received on the interim rule. HUD has adopted the interim rule without change.

DATES: Effective Date: December 22, 1999.

FOR FURTHER INFORMATION CONTACT: Sue Miller, Entitlement Communities Division, Office of Community Planning and Development, Department of Housing and Urban Development, 451 Seventh Street, SW, Room 7282, Washington, DC 20410; telephone (202) 708-1577 (this number is not toll-free). Persons with hearing or speech-impairments may access this number via TTY by calling the toll-free Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

[[Page 63681]]

1. The July 19, 1999 Interim Rule

   On July 19, 1999 (64 FR 38812), HUD published an interim rule that clarified the level of expenditure documentation that Community Development Block Grant (CDBG) grantees and subrecipients must maintain to identify the use of CDBG funds provided for assisted activities. The lack of appropriate documentation increases the potential for misuse of CDBG funds. The change made by the July 19, 1999 interim rule provides the public with more assurance that CDBG funds are used only for allowable purposes.

   OMB Uniform Administrative Requirements for grants to local governments and nonprofit organizations have long required that grantees and subrecipients maintain records which adequately identify the source and application of funds provided for financially-assisted activities. This requirement is found at 24 CFR 85.20(b)(2) for local governments and at 24 CFR 84.21(b)(2) for nonprofit organizations. These requirements are specifically made applicable to the CDBG program by 24 CFR 570.502(a)(4) and 24 CFR 570.502(b)(3), respectively. The CDBG regulations at Sec. 570.506(h) also require maintaining financial records in accordance with the applicable requirements listed in Sec. 570.502.

   The interim rule amended Sec. 570.506(h) to clarify the level of documentation that is needed for grantees and subrecipients to demonstrate compliance with the existing financial management requirements in 24 CFR parts 84 and 85 relating to maintaining adequate records to identify the use of funds provided for assisted activities. A broad range of types of documentation is described in an effort to reflect the myriad of different activities and financing mechanisms that can be undertaken with CDBG funds.

   The preamble to the July 19, 1999 interim rule provides additional details regarding the amendment to HUD's CDBG program regulations at Sec. 570.506(h).

2. Discussion of Public Comment Received on the July 19, 1999 Interim Rule

   The public comment period on the July 19, 1999 interim rule closed on September 17, 1999. By close of business on that date, HUD had received a single public comment on the interim rule. The public commenter expressed support of the interim regulatory amendment. The commenter wrote that ``[g]rantees should not have difficulty maintaining evidence to support how CDBG funds provided to for-profit entities are expended.'' Accordingly, HUD has adopted the amendments made by the interim rule without change.

3. Findings and Certifications

   Paperwork Reduction Act Statement

   The information collection requirements contained in this rule have been approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501- 3520), and assigned OMB control number 2506-0077. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a valid control number.

   Regulatory Flexibility Act

   The Secretary, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed and approved this final rule, and in so doing certifies that this rule will not have a substantial economic impact on small entities. This final rule will have no economic impact on small entities since it is a clarification of existing policy.

   Environmental Impact

   This amendment is categorically excluded from environmental review under the National Environmental Policy Act (42 U.S.C. 4321). In keeping with the exclusion provided for in 24 CFR 50.19(c)(1), this amendment does not direct, provide for assistance or loan and mortgage insurance for, or otherwise govern or regulate, real property acquisition, disposition, leasing, rehabilitation, alteration, demolition, or new construction; or establish, revise, or provide for standards for construction or construction materials, manufactured housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(2), this amendment is categorically excluded because it amends an existing document where the existing document as a whole would not fall under the exclusion in 24 CFR 50.19 (c)(1), but the amendment by itself would do so.

   Executive Order 13132, Federalism

   Executive Order 13132 (entitled ``Federalism'') prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial direct compliance costs on State and local governments and is not required by statute, or the rule preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This final rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive Order.

   Catalog of Federal Domestic Assistance

   The Catalog of Federal Domestic Assistance numbers for the Community Development Block Grants program are 14.218, 14.219, 14.225, 14.227, 14.246, and 14.248.

   List of Subjects in 24 CFR Part 570

   Administrative practice and procedure, American Samoa, Community development block grants, Grant programs--education, Grant programs-- housing and community development, Guam, Indians, Lead poisoning, Loan programs--housing and community development, Low and moderate income housing, New communities, Northern Mariana Islands, Pacific Islands Trust Territory, Pockets of poverty, Puerto Rico, Reporting and recordkeeping requirements, Small cities, Student aid, Virgin Islands.

   PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS

   Accordingly, the interim rule amending 24 CFR part 570, which was published at 64 FR 38812 on July 19, 1999, is adopted as a final rule without change.

   Dated: November 16, 1999. Cardell Cooper, Assistant Secretary for Community Planning and Development.

   [FR Doc. 99-30366Filed11-19-99; 8:45 am]

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