68786 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

programs—housing and community 

development, Mortgage insurance, 

Reporting and recordkeeping 

requirements, Solar energy.

■ Accordingly, for the reasons stated in 

the preamble, the interim rule for part 

203 of subpart B of Title 24 of the Code 

of Federal Regulations, published on 

November 21, 2003, at 68 FR 65824, as 

corrected on January 2, 2004, at 69 FR 4, 

is promulgated as final, without change.

Dated: November 19, 2004. 

John C. Weicher, 

Assistant Secretary for Housing—Federal 

Housing Commissioner.

[FR Doc. 04–26113 Filed 11–24–04; 8:45 am] 

BILLING CODE 4210–27–P

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 960 and 966

[Docket No. FR–4824–F–02] 

RIN 2577–AC42

PHA Discretion in Treatment of OverIncome Families

AGENCY: Office of the Assistant 

Secretary for Public and Indian 

Housing, HUD.

ACTION: Final rule.

SUMMARY: This final rule gives public 

housing agencies (PHAs) the discretion, 

in accordance with federal law and 

regulations, to establish occupancy 

policies that include the eviction of 

public housing tenants who are over the 

income limit for eligibility to participate 

in public housing programs. PHAs may 

decide that such families should be able 

to find other housing and that public 

housing units should be made available 

for eligible low-income families with 

greater housing need. This final rule 

takes into consideration the public 

comments received on the proposed 

rule. After careful review of the 

comments, HUD has decided to adopt 

the proposed rule with minor revision.

DATES: Effective Date: December 27, 

2004.

FOR FURTHER INFORMATION CONTACT:

Patricia Arnaudo, Director, Public 

Housing Occupancy and Management 

Division, Office of Public and Indian 

Housing, Department of Housing and 

Urban Development, Room 4116, 451 

Seventh Street, SW., Washington, DC 

20410–5000 telephone (202) 708–0744 

(this is not a toll-free number). Persons 

with hearing or speech impairments 

may access this number through TTY by 

calling the toll-free Federal Information 

Relay Service at 800–877–8339.

SUPPLEMENTARY INFORMATION: 

I. Background 

On August 1, 2003 (68 FR 45734), 

HUD published a notice of proposed 

rulemaking (NPRM) that proposed to 

grant PHAs the discretion to evict a 

family that is over the eligible income 

limit, with exceptions for families 

entitled to EID (addressed at 42 U.S.C. 

1437a(d)) or with valid contracts of 

participation under the Family Self 

Sufficiency (FSS) program (42 U.S.C. 

1437u). In submitting this proposed rule 

for public comment, HUD stated its 

view that public housing should be 

available to eligible low-income families 

and that it is inappropriate to limit the 

ability of a PHA to move over-income 

families out of public housing to make 

room for low-income families on 

waiting lists. 

The current rule on eviction at 24 CFR 

960.261 limits the ability of PHAs to 

evict over-income families unless (1) the 

PHA has determined that there is other 

decent, safe, and sanitary housing 

available to the tenant at a rent not 

exceeding the then-current tenant rent, 

or (2) the PHA is required to evict the 

family by local law. 

This final rule does not require PHAs 

to evict over-income residents, but 

rather gives PHAs the discretion to do 

so and thereby make units available for 

applicants who are income-eligible. 

II. This Final Rule 

This final rule follows publication of 

the August 1, 2003, proposed rule. The 

public comment period for the proposed 

rule closed on September 30, 2003. 

Sixteen public comments were received 

from a variety of individuals and groups 

during the comment period. 

Commenters included tenant 

organizations, housing authority trade 

associations, public housing tenants, 

and PHAs. Three of the public 

comments were in the form of petitions 

signed by multiple public housing 

residents from one city, and gathered 

and submitted by a single organization. 

After consideration of these comments, 

HUD has decided to adopt a final rule 

that, like the proposed rule, provides an 

exception to eviction for over-income 

tenants who are receiving the earned 

income disallowance or have active 

contracts of participation in a family 

supportive services program. In 

addition, this rule makes a conforming 

technical change to 24 CFR 

966.4(l)(2)(ii). 

III. Discussion of Public Comments 

Comment: The rule properly grants 

discretion to the PHAs regarding overincome residents. One PHA commenter 

agreed with the rule so long as 

implementation is voluntary and ‘‘with 

no penalty for non-participation.’’

Similarly, another PHA did not oppose 

the concept of the proposed rule that 

will grant ‘‘public housing agencies ‘‘

the discretion to evict over income 

families from public housing, as long as 

this rule remains a PHA option.’’ ‘‘In an 

effort to increase accountability and 

ensure that public housing participants 

are not being evicted prematurely before 

reaching self-sufficiency,’’ this 

commenter would prefer PHAs be given 

discretion to regulate this policy, rather 

than being subject to a mandatory 

regulation. 

Observing that there may be widely 

divergent local strategies ranging from 

targeting only households most in need 

to retaining some over-income 

households as role models and to 

maintain the marketability of public 

housing, one commenter, also a PHA, 

agreed with the discretion the rule 

would grant to PHAs, and states that 

‘‘local communities deserve federal 

respect for the diverse implementation 

strategies they devise to accomplish 

broadly stated national policy goals.’’

Another commenter stated, ‘‘We 

appreciate and support the 

Department’s recognition of the 

importance of local-level discretion in 

setting housing policies’’ and ‘‘LHAs 

[local housing agencies] must retain true 

discretion to establish policies that suit 

their communities.’’ However, this 

commenter, a housing association, 

stated that ‘‘a more useful formulation 

of the notice would be one that gives 

PHAs the discretion to formulate local 

policies with regard to families who 

have increased their incomes while 

residing in public housing.’’ Another 

PHA stated that ‘‘ultimate discretion’’

on if, how and when it is applied 

should be left to the individual PHA. 

Local PHAs should be allowed to set the 

over-income ‘‘target’’ for triggering the 

eviction based on local market 

conditions.’’

Response: HUD agrees with these 

commenters in their desire for PHAs to 

act with discretion. This rule gives 

PHAs the discretion to make decisions 

concerning their local housing market 

needs. HUD will not penalize PHAs for 

not incorporating this rule into their 

admission and continued occupancy 

policies.

Comment: The rule would have a 

negative effect on deconcentration of 

poverty and income-mixing goals.

Several commenters specifically 

commented on the rule’s effect on 

income-mixing and deconcentration of 

poverty. One PHA stated that having a 

range of incomes is preferable to having 

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 68787

a concentration of low-income families, 

observing that the presence of higherincome families under the flat-rent 

system serves as role models and as the 

core homeownership clientele. Another 

PHA stated that this rule would conflict 

with the goals of deconcentrating 

poverty (24 CFR 903.1), income 

targeting (24 CFR 960.202), and choice 

of income-based or flat rent (24 CFR 

960.253). This commenter stated that 

the rule would ‘‘negatively impact the 

ability of PHAs to move toward 

socioeconomic diversity in public 

housing’’ and that due to the conflicts, 

the rule should not be implemented. A 

PHA-related trade association 

commented, ‘‘The wisdom of evicting 

over income families or encouraging 

them to take advantage of other housing 

options is contingent on local policy 

preferences * * * retention [of some 

over-income families] may also 

contribute to whatever mixed income 

character public housing apartments 

may retain.’’ Another trade association 

stated that, ‘‘Families with increasing 

incomes can also play a vital role in 

local strategies to create mixed-income 

communities and deconcentrate poverty 

in public housing. The presence of 

working families in public housing 

provides role models that contribute to 

a healthy, stable community. The 

presence of relatively higher-income 

families could help PHAs secure private 

funding for development purposes, 

helping both residents as well as the 

broader community.’’ An individual 

petition signer made a similar point. 

Other commenters cited similar 

concerns. One individual commenter 

stated:

In 1998, Congress passed the law stating 

that PHAs could admit higher-income 

tenants into low-income public housing 

project, because having a high concentrations 

of poor people had a negative effect on the 

neighborhoods. By adding higher-income 

tenants, Congress hoped to stabilize the 

neighborhoods. 

One of the problems the [HOPE VI] 

Revitalization grants may be used for, is 

demolition of drug-infested, severely 

distressed low-income public housing. 

HUD’s proposal perpetuates the problem by 

recreating high concentrations of poor people 

all over again.

This commenter cited the example of 

the commenter’s own development, 

which lost most of its moderate-income 

tenants in favor of lower-income 

tenants. Two commenters opposed to 

the rule stated that ‘‘the proposed rule 

works against deconcentration 

objectives.’’ These commenters further 

stated, ‘‘Under the 1998 Quality 

Housing and Work Responsibility Act 

[QHWRA], PHA’s are required to plan 

for deconcentration, in order to promote 

a comparable mix of incomes in all 

developments’’ and ‘‘by evicting overincome households, PHAs may be 

promoting higher concentrations of low 

income residents in some 

developments, thereby defeating the 

purposes of deconcentration.’’

These commenters further stated that 

high turnover in a neighborhood can 

lessen the capacity of a community to 

address its needs and interests, and 

when the turnover occurs among higherincome households who demonstrate 

self-sufficiency and represent positive 

role models, the community can lose its 

strongest leaders and be significantly 

destabilized. 

Some individual petition signers also 

stated that the rule would contradict 

income-mixing and HOPE VI goals. 

Response: HUD believes that this rule 

does not contradict deconcentration or 

income-mixing policies, because those 

policies can be successfully achieved by 

a PHA while implementing this rule. 

Specifically, deconcentration can occur 

within tenant populations that are 

within 80 percent of area median 

income (AMI), since PHAs are required 

to target only 40 percent of extremely 

low-income families in the public 

housing program. Public housing is 

intended for low-income families (at or 

below 80 percent of AMI). Therefore, 

the resources of public housing should 

not be used by those who are not lowincome while many who are lowincome remain on the waiting list. 

Comment: PHA commenters raised 

issues regarding how much pre-eviction 

notice to give.

One commenter suggested ‘‘a one-to 

two-year minimum time limit to allow 

families to prepare for their move into 

the private market’’ as not all PHAs 

have the resources to help residents 

become independent of public housing 

assistance. One commenter suggested a 

6-month ‘‘stabilization or grace period’’

at the ‘‘ ‘top rent’ level for people 

‘exiting poverty,’ ’’ with a mutually 

agreed termination of tenancy at the end 

of the six months. Another commenter 

suggested a 60-day advance notice to 

allow families time to enroll in a 

supportive services program. Another 

commenter, citing an example of a 

family that had borrowed heavily during 

a period of unemployment due to 

injury, questioned whether a PHA could 

establish a one-year post-employment 

grace period to allow families to ‘‘get 

back on their feet and pay off some 

debt? ’’ One commenter observed that 

the length of notice is not covered in the 

rule. 

Response: This rule will provide 

PHAs the discretion to determine the 

time frame needed to execute an 

eviction notice, as long as the PHA’s 

decision complies with HUD’s 

regulations and state and local laws. 

Comment: Other issues regarding 

eviction. In a comment, a PHA stated 

that eviction might create a blemish on 

the family’s record that could make it 

difficult for it to find other housing. 

This commenter stated that an eviction 

policy would require the support of 

local courts, cause the PHA to incur 

legal expenses, and should be a last 

resort. The commenter suggested that a 

better option might be to permit PHAs 

not to renew the lease, allowing the 

‘‘PHA to notify the over-income family 

that this would be the last year they 

would be able to lease from the PHA 

and provide an interim step before 

eviction.’’ One trade association 

commenter stated that it has generally 

supported initiatives that encourage 

public housing residents to increase 

their earned income and decrease their 

dependence on housing assistance. The 

commenter disagreed with ‘‘the rule’s 

encouragement of punishing assisted 

housing families who succeed.’’ The 

commenter believed that the rule 

expresses a preference for eviction, and 

would prefer that PHAs make 

discretionary use of their existing tools 

to encourage over-income families to 

seek to move, instead of the punitive 

measure of eviction. In another 

comment, a PHA stated that ‘‘eviction is 

a rather serious step that cannot be 

taken lightly and should only occur 

when there is clear evidence that 

affordable rental opportunities are 

available in the open market to the 

household against which the action is 

being taken.’’ An individual petition 

signer expressed fear of eviction if the 

rule becomes final. Another petition 

signer added a comment that the rule 

would ‘‘penalize’’ and ‘‘dissuade people 

from moving up and out of poverty.’’

Response: This rule does not require 

PHAs to evict, but gives PHAs the 

flexibility to evict or terminate the 

tenancies of over-income families, 

where it deems it appropriate, so long 

as its policy complies with HUD’s 

regulations and state and local law 

governing tenant and landlord relations. 

Therefore, a PHA could take into 

account mitigating factors such as the 

family’s self-sufficiency efforts. 

Comment: Five commenters (three 

PHAs and two trade associations) 

disagree with, or suggest changes in, the 

proposed rule’s exemptions for families 

participating in a Family SelfSufficiency program under 24 part 984 

(FSS) and families entitled to the 

earned-income disallowance. One 

commenter stated that the exemptions 

68788 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

are invitations to ‘‘play the system,’’ and 

suggested that the rule should require 

FSS families also to be eligible for the 

earned-income disallowance ‘‘to ensure 

reversion of funds to PHA’s by those 

who do not meet their commitment.’’

After the 24-month period for the 

disallowance ends, there should be a 

mutual termination of tenancy with an 

option for eviction. 

One commenter believed that working 

families and FSS recipients will be 

negatively affected if forced to leave 

after the end of the moratorium on the 

rent increase, and that the rule will be 

a disincentive to work if the residents’

income results in the possibility of an 

eviction. 

A trade association commenter 

disagreed as a matter of law that either 

the FSS program or the earned-income 

disallowance under 42 U.S.C. 1437a(d) 

protects over-income families from 

eviction. The earned-income 

disallowance speaks only to rent 

increases, not to continued tenancy, and 

FSS families have no right to remain in 

the program once their income exceeds 

the eligibility limits. This commenter 

stated that some of its members see the 

Quality Housing and Work 

Responsibility Act’s favorable treatment 

of these classes of over-income tenants 

over other working families in public 

housing as troubling, and complained 

that the rule would ‘‘aggravate this 

disparate statutory treatment’’ by 

placing certain working families at risk 

of eviction while protecting others. This 

commenter would prefer HUD to grant 

PHAs broad discretion in connection 

with the retention or eviction of all 

classes of over-income households, or at 

least remain silent as to the proposed 

excluded classes, and leave their 

treatment up to PHAs as well. 

Another trade association commenter 

similarly stated that the proposed rule’s 

exemptions would exclude ‘‘working 

families who have increasing incomes 

but have not participated in FSS or met 

the limited EID qualification criteria.’’

The commenter described this different 

treatment of working families as a 

‘‘potential incongruity.’’ This 

commenter also agreed that the 

exemptions are not required by statute. 

This commenter stated that ‘‘PHAs 

should establish exemption categories 

as part of their local strategies.’’

An individual housing authority 

commenter stated that ‘‘FSS participants 

should be exempted from this rule as 

long as they are enrolled in the program 

and are actively pursuing the goals 

included in their contract. Over-income 

families should also be notified of the 

availability of the program and given the 

opportunity to enroll in the FSS 

program with reasonable notice before 

eviction proceedings are commenced.’’

Response: The purpose of the Earned 

Income Disallowance in 42 U.S.C. 

1437a(d), implemented at 24 CFR 

960.255, is to encourage families to 

increase their annual income through 

participation in self-sufficiency and job 

training programs and employment by 

allowing the PHA to exclude the 

resulting increase in income for one 12-

month period and exclude 50 percent of 

the increase in the second 12-month 

period. The total lifetime availability of 

any individual is limited to 48 months. 

To evict families properly qualified for 

and receiving the disallowance would 

clearly be contrary to the statutory 

purpose and to the regulation providing 

for the exclusion of such income. Since 

the earned income disallowance is 

available only for a limited time, and 

since it applies upon the 

commencement of employment of a 

qualifying family member, HUD does 

not believe there would be wide latitude 

to use the exemption improperly to 

avoid eviction. Therefore, HUD is 

including the exception to eviction for 

families receiving EID in this final rule. 

FSS is a contractual agreement 

between the participant and the PHA. 

Because FSS involves contractual 

agreements, it is HUD’s policy and rule 

to exempt participants in FSS programs 

until their contract of participation has 

ended. Otherwise, PHAs may continue 

to apply their admissions and continued 

occupancy policies except as they are 

modified by this rule. 

Comment: One commenter states that 

this rule would increase program 

complexity. This commenter, a trade 

association, stated that this rule would 

‘‘make program implementation more 

complex rather than less complex.’’

PHAs would have to identify FSS 

families and families entitled to the 

earned income disregard. Additionally, 

a PHA’s determination of household 

eligibility for FSS or an earned income 

disregard ‘‘may affect the amount of rent 

a family pays or the availability of 

support services to the family. If a PHA 

elects to implement a local discretionary 

policy to evict over-income households, 

these determinations of eligibility may 

come to affect a household’s eligibility 

for continued occupancy in public 

housing. ***.’’

Response: PHAs are currently 

required to monitor FSS families and to 

apply the earned income disallowance 

in appropriate cases; therefore, this rule 

will not add additional complexity to 

the program. 

Comment: HUD should support PHAs 

in enforcing a time limit for over-income 

families. This commenter agreed that a 

family making above 80 percent of the 

median ‘‘should be evicted if that family 

is not making an effort to obtain housing 

in the private sector,’’ and that PHAs 

should receive support from HUD to 

enforce a time limit not exceeding one 

year of housing for over-income 

families. 

Response: HUD supports a PHA’s 

discretion, as provided by this rule, to 

determine the appropriate time limit, if 

allowed to remain in public housing at 

all, for families that have reached the 80 

percent AMI threshold. 

Comment: Two PHA commenters 

support exemptions for elderly and 

disabled residents. One commenter, 

citing a particular case of an elderly 

resident whose income suddenly rose, 

asked whether a PHA could allow for an 

exemption for elderly or disabled 

persons. Another commenter stated that 

the only exceptions to eviction should 

be for elderly and disabled families who 

remain in public housing for a variety 

of reasons. ‘‘If PHAs’’ must evict an 

elderly or disable family, it should be 

for failure to comply with state laws and 

housing laws, not for being over income; 

otherwise, elderly/disable families will 

suffer.’’ Also, ‘‘More elderly families 

may become houseless or choose to rent 

from the private market. PHAs cannot 

compete with private market budgets.’’

Response: This rule will provide 

PHAs the flexibility to exempt from 

eviction specific classes of families, 

including elderly and persons with 

disabilities, as long as the exemption is 

implemented fairly, does not violate 

civil rights laws, and is included in the 

PHA’s admission and continued 

occupancy policies. 

Comment: The type of increased 

income should be considered. One 

commenter, in addition to concerns 

about elderly and disabled residents, 

asked whether PHAs would be 

permitted to ‘‘incorporate this proposal 

based on increased employment income 

only? ’’

Response: PHAs will have the 

flexibility to set and enforce overincome policy, including distinguishing 

employment income, so long as the 

distinction does not violate any other 

law. 

Comment: Two commenters 

questioned whether perceived 

‘‘loopholes’’ could be closed. One 

commenter, a PHA, stated that it is 

interested in implementing such a rule, 

while asking whether the final rule will 

include language to assure that PHAs 

have the authority to proceed with 

termination despite intentional or afterthe-fact reductions in income in order to 

divert the termination process and, if 

not, what discretion PHAs would have 

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 68789

to ‘‘close this easily-manipulated 

loophole.’’

Another commenter stated that to be 

successful, this program would require 

that ‘‘interim recertifications should be 

performed and rents adjusted 

accordingly (when the cumulative 

increase passes some baseline amount 

such as $100 per month to avoid the 

inefficient expense of [recertifications] 

for a few dollars)’’ and that ‘‘any six 

months (cumulative, not necessarily 

continuous) require the cessation of 

housing subsidy benefits.’’ HUD needs 

to ‘‘continually close the loopholes’’ or 

‘‘creative tenant workarounds’’ that 

divert resources from assisting the truly 

needy. 

Response: This rule will allow PHAs 

to have the flexibility, within the 

parameters of state and local law, to set 

interim rent policies and other ways to 

ensure that the policies operate 

effectively. 

Comment: The rule would result in 

hardship or homelessness. One 

commenter stated, ‘‘I do not feel a 

family especially with children should 

be punished and put out just because 

their parents are working.’’ The 

commenter stated that rents in her 

locality are ‘‘out of control,’’ and that 

families evicted under this rule would 

likely become homeless. 

Two commenters stated that ‘‘in 

localities with low vacancy rates and 

high rents, the proposed rule, if applied, 

will result in displacement and severe 

hardship for evicted families.’’ These 

comments stated that the rule does not 

distinguish between localities with tight 

rental markets, such as New York and 

San Francisco, and those where 

vacancies are more plentiful. In tight 

rental markets, eviction under the rule 

may result in displacement of families 

with children, disruption of their social 

and community networks, access to 

work and other opportunities, and cause 

stress and hardship. 

A number of individual petition 

signers also stated that the rule would 

cause displacement or homelessness 

among families that cannot afford the 

private rental market. 

Response: Public housing is intended 

for low-income families. This rule is 

being implemented so that PHAs may, 

if it deems appropriate, require families 

with incomes higher than 80 percent 

AMI to find housing in the unassisted 

market so that the PHA may tend to its 

mission of serving truly low-income 

families on the waiting list. 

Comment: Relationship with PHA 

plan. A commenter asked whether, 

should this rule become final, PHAs 

would have to wait until approval of 

their next agency plan to incorporate it 

into their policies and practices. Two 

commenters stated that PHAs intending 

to use the discretion granted by this rule 

should so state in their annual plan so 

that the PHA would be open to public 

comment under the annual public 

hearing required by QHWRA. These 

commenters stated that ‘‘use of this 

discretion should not bypass the 

accountability requirements under the 

law.’’

Response: PHAs that implement this 

rule must state their policy in an 

attachment to their annual plan required 

under section 5A of the U.S. Housing 

Act of 1937 (42 U.S.C. 1437c–1), or 

submit a plan amendment if necessary 

under local guidelines. A PHA may 

proceed with eviction actions up to 

presentation to the court pending the 

certification of the plan. 

Comment: One commenter, a public 

interest group, submitted petitions 

signed by public housing residents. 

One petition text submitted stated the 

following:

Mi entendimiento es que esta propuesta/

regla le dara el derecho a la Autoridad de 

Viviendas Publicas de Boston de desalojar 

residentes de viviendas publicas que estan 

sobre el limite de ingreso para hacer eligible 

para participar en programas de viviendas 

publicas. BHA puede hacer la decision que 

familias sobre ingresos pueden encontrar 

viviendas alternativa y viviendas publicas 

solamente deben hacer disponible para 

familias que tengan una gran necesidad para 

viviendas publicas. 

Sinceramente le pido a HUD que mantega 

sus restricciones en el desalojamiento de 

familias que estan sobre el limite de ingreso 

y la Autoridad de vivienda publica no pueda 

desalojar esas familias que estan sobre el 

limite de ingreso o terminar su contrato de 

arrendimiento.

31 persons signed this petition. 

This commenter also submitted a 

similar petition in English, which reads 

as follows:

My understanding is that this proposed 

rule would give the Boston Housing 

Authority the right to evict public housing 

tenants who are over the income limit for 

eligibility to participate in public housing 

programs. BHA may decide that such 

families should be able to find other housing 

and that public housing units should be 

made available for families with greater 

housing need.

One hundred fifty-four persons signed 

this petition. Some of these signers 

appended substantive individual 

comments. The issues raised in those 

comments are noted elsewhere in this 

preamble. 

The same commenter also submitted 

a petition with a different text, which 

reads as follows:

I am a resident of Massachusetts where the 

cost of rental housing is the highest in the 

nation, a studio apartment averages $900 per 

month and a four bedroom can run $2400 in 

my neighborhood (A copy of the Boston 

Globe classified is attached for your review.) 

Public housing residents are America’s 

working poor. It takes two, three and even 

four combined incomes to just live decently. 

Over income is based on adult children who 

will some day leave, spouses who may leave, 

get laid off or even die. Every month we read 

about another company closing down or 

leaving the state; employment is not stable 

here. Left alone we would shortly return to 

homelessness if evicted for over income 

during our stable times. I want decent, safe, 

and sanitary housing. I respectfully ask HUD 

to maintain its restriction on eviction of 

families based on income which state that a 

PHA may not evict or terminate the tenancy 

of a family solely because the family is over 

income.

Sixty-three persons signed this 

petition. Some of these signers 

appended substantive individual 

comments. The issues raised in those 

comments are noted elsewhere in this 

preamble. 

Response: It is HUD’s position that 

PHAs should have the discretion to 

implement this rule. Local discretionary 

policies can address variances in rental 

markets as well as potential 

displacement of over-income families. 

As long as a PHA complies with state 

and local law, it will have the right to 

determine all housing requirements.

Comment: Fluctuations in earned 

income need to be taken into account. 

The proposed rule should take into 

account fluctuations in income. An 

over-income family may be evicted 

under the rule, then suffer a reversal 

that makes it impossible to afford decent 

housing in the open rental market. The 

result will be to ‘‘lock out’’ these 

families until their turn comes up again 

in the waiting list. These commenters, 

public interest groups, propose that an 

‘‘over-income family’’ be defined as one 

that is over-income for five consecutive 

years, and has little risk of suffering a 

significant income reversal in the next 

five years. Several of the individual 

petition signers make a similar point, 

that employment income is not 

necessarily stable and that the rule 

could result in eviction followed by a 

decrease in income. 

Response: This rule provides PHAs 

with the flexibility to deal with the 

changes in a family’s earned income 

status in terms of eviction. 

Comment: Self-sufficiency planning 

should begin early. One PHA 

commented that ‘‘With the exception of 

seniors and truly disabled persons, the 

day someone begins to receive 

assistance is the day self-sufficiency 

planning needs to begin.’’ HUD 

assistance should be temporary. 

68790 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

Response: HUD agrees with the 

commenter’s views. In fact, residents are 

made aware as they enter public 

housing of the availability of selfsufficiency programs that will allow 

them to become self-sufficient and make 

the transition out of public housing and 

possibly to homeownership. One of 

HUD’s strategic goals is to increase 

homeownership opportunities and help 

residents make the transition out of 

public housing and possibly on to 

homeownership. HUD’s 

homeownership programs are intended 

to assist in this process. 

Comment: Asset limitations for 

seniors should be considered. With 

regard to senior citizens, a reasonable 

asset limitation in addition to income 

should be considered. 

Response: PHAs have the discretion 

to consider asset limitations in their 

policies, as long as the limitations meet 

state and local legal requirements. 

Comment: Government should 

increase available resources for lowincome housing. A public interest group 

commented that HUD increase the 

funding of the public housing capital 

fund and support a national housing 

trust fund to finance expanded 

development of affordable low-income 

housing. This commenter also stated 

that HUD should increase the minimum 

income targeting requirement of PHAs 

from 40 percent of admissions to 60 

percent of admissions for extremely 

low-income families. 

Another public interest group 

similarly stated that HUD should 

increase federal commitments to 

adequate funding of public housing, 

including enabling high-performing 

housing authorities in tight rental 

markets to expand the inventory of 

public housing, and that HUD should 

recommend that the provision of 

prohibiting expansion of public housing 

stock be repealed. This commenter also 

agreed with the prior commenter that 

HUD should increase the admissions of 

extremely low income families from 40 

to 60 percent, and added that HUD 

should propose an amendment to 

QHWRA to accomplish this. 

Response: This rule addresses the 

public housing program only, not other 

available low-income housing funding 

sources, which are outside the scope of 

this rulemaking. 

Comment: Concerns about flat rents 

and overall high rents. A number of 

signers of the petition submitted as 

comments disagree with increases in, or 

express concerns with, the flat rent. 

Other petition signers stated generally 

that rents are too high in relation to 

their income and other expenses. Others 

also stated that rents are too high in 

relation to the condition of public 

housing units. 

Response: HUD regulations at 24 CFR 

960.253(2)(b) set the standard for flat 

rents. Flat rents are statutorily required 

and must be set by comparable market 

rents. Any concern about the level of 

flat rents should be raised to either the 

PHA or local HUD office. 

Comment: Petition signers suggest 

giving a homeownership option to overincome public housing residents who 

cannot afford rent in the private market.

One commenter stated that ‘‘if 

someone’s income is to high place them 

in their own home build by the state so 

they would only need to pay a mortgage 

[sic].’’ Another asked why the 

government does not allow PHAs to 

build or buy and refurbish old housing 

for over-income residents, and give 

them an option to buy after a certain 

length of time with no down-payment. 

This would free up an overly saturated 

market and help alleviate homelessness. 

Response: HUD programs are 

intended for eligible families—those 

with incomes below 80 percent of AMI. 

Various homeownership options are 

available to those above this level.

Comment: Length of time for upperincome families to remain. One petition 

signer asked: If over-income residents 

are moved out, will a new standard be 

established as to how long upper 

income families replacing them can 

remain in the development? 

Response: This rule provides the PHA 

flexibility to determine if over-income 

families should remain in public 

housing. 

IV. Findings and Certifications 

Environmental Impact 

This rule concerns a statutorily 

required or discretionary establishment 

and review of income limits and 

exclusions with regard to eligibility for 

or calculation of HUD housing 

assistance or rental assistance. As such, 

this rule is categorically excluded from 

the provisions of the National 

Environmental Policy Act (42 U.S.C. 

4332 et seq.), under 24 CFR 50.19(c)(6) 

of HUD’s regulations. 

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 is concerned only with 

granting PHAs the discretion to evict 

over-income families. It does not 

mandate that any PHA take such action. 

Furthermore, the rule preserves the 

ability that small PHAs have to admit 

over-income families in cases where 

there is no demand for a unit by an 

eligible family, thus preventing such 

small PHAs from having to support 

vacant units. 

Therefore, the undersigned certifies 

that this proposed rule will not have a 

significant economic impact on a 

substantial number of small entities, 

and an initial regulatory flexibility 

analysis is not required. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531–

1538) (UMRA) establishes requirements 

for federal agencies to assess the effects 

of their regulatory actions on state, 

local, and tribal governments, and on 

the private sector. This final rule does 

not impose any federal mandate on any 

state, local, or tribal government, or on 

the private sector, within the meaning of 

UMRA. 

Executive Order 13132, Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits, to the extent 

practicable and permitted by law, an 

agency from promulgating a regulation 

that has federalism implications and 

either imposes substantial direct 

compliance costs on state and local 

governments and is not required by 

statute, or preempts state law, unless the 

relevant requirements of section 6 of the 

Executive Order are met. This rule does 

not have federalism implications and 

does not impose substantial direct 

compliance costs on state and local 

governments or preempt state law 

within the meaning of the Executive 

Order. 

Regulatory Planning and Review 

The Office of Management and Budget 

(OMB) reviewed this rule under 

Executive Order 12866 (entitled 

‘‘Regulatory Planning and Review’’). 

OMB determined that this rule is a 

‘‘significant regulatory action,’’ as 

defined in section 3(f) of the Order 

(although not economically significant, 

as provided in section 3(f)(1) of the 

Order). Any changes made to the rule 

subsequent to its submission to OMB 

are identified in the docket file, which 

is available for public inspection in the 

Regulations Division, Office of the 

General Counsel, Room 10276, 451 

Seventh Street, SW., Washington, DC 

20410–0500. 

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 68791

1The Board’s use of a majority-vote procedure 

was required by former DC Code § 24–201.2 

(renumbered § 24–401.02), but this law and others 

regarding the creation, powers, and rulemaking 

authority of the Board were abolished by section 

11231(b) of the Revitalization Act.

Catalog of Federal Domestic Assistance 

The Catalog of Federal Domestic 

Assistance number applicable to the 

program affected by this rule is 14.850.

List of Subjects 

24 CFR 960

Aged, Grant programs—housing and 

community development, Individuals 

with disabilities, Pets, Public housing. 

24 CFR 966

Grant programs—housing and 

community development, Public 

housing.

■ Accordingly, HUD amends 24 CFR 

parts 960 and 966 to read as follows:

PART 960—ADMISSION TO, AND 

OCCUPANCY OF, PUBLIC HOUSING

■ 1. The authority citation for part 960 

continues to read as follows:

Authority: 42 U.S.C. 1437a, 1437c, 1437d, 

1437n, 1437z–3, and 3535(d).

Subpart C—Rent and Reexamination

■ 2. Revise § 960.261 to read as follows:

§ 960.261 Restriction on eviction of 

families based on income. 

(a) PHAs may evict or terminate the 

tenancies of families who are over 

income, subject to paragraph (b) of this 

section. 

(b) Unless it is required to do so by 

local law, a PHA may not evict or 

terminate the tenancy of a family solely 

because the family is over the income 

limit for public housing, if the family 

has a valid contract for participation in 

an FSS program under 24 part 984. A 

PHA may not evict a family for being 

over the income limit for public housing 

if the family currently receives the 

earned income disallowance provided 

by 42 U.S.C. 1437a(d) and 24 CFR 

960.255.

PART 966—PUBLIC HOUSING LEASE 

AND GRIEVANCE PROCEDURE

■ 3. The authority citation for part 966 

continues to read as follows:

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

Subpart A—Dwelling Leases, 

Procedures and Requirements

■ 4. Amend § 966.4 by redesignating 

paragraph (l)(2)(ii) as (l)(2)(iii) and 

adding a new paragraph (l)(2)(ii) to read 

as follows:

§ 966.4 Lease requirements.

* * * * *

(l) * * *

(2) * * *

(ii) Being over the income limit for the 

program, as provided in 24 CFR 

960.261.

* * * * *

Dated: November 19, 2004. 

Michael Liu, 

Assistant Secretary for Public and Indian 

Housing.

[FR Doc. 04–26114 Filed 11–24–04; 8:45 am] 

BILLING CODE 4210–27–U

DEPARTMENT OF JUSTICE

Parole Commission 

28 CFR Part 2

Paroling, Recommitting, and 

Supervising Federal Prisoners: 

Prisoners Serving Sentences Under 

the United States and District of 

Columbia Codes

AGENCY: Parole Commission, Justice.

ACTION: Final rule.

SUMMARY: The U.S. Parole Commission 

is adding a procedural rule to provide 

that parole revocation and reparole 

decisions resulting from a revocation 

hearing for a District of Columbia Code 

offender may be administratively 

appealed. With this change, the 

Commission is also amending several 

rules to permit the initial decisions in 

DC parole revocation cases to be made 

by one Commissioner. Extending an 

appeal procedure to revoked DC 

parolees provides an avenue for these 

parolees to seek administrative 

correction of alleged errors in revocation 

proceedings and to present their views 

before a second Commissioner. The rule 

changes further the Commission’s goal 

of greater uniformity in decision-making 

procedures for all cases within the 

Commission’s jurisdiction.

DATES: Effective Date: December 27, 

2004.

FOR FURTHER INFORMATION CONTACT:

Office of General Counsel, U.S. Parole 

Commission, 5550 Friendship Blvd., 

Chevy Chase, Maryland 20815, 

telephone (301) 492–5959. Questions 

about this publication are welcome, but 

inquiries concerning individual cases 

cannot be answered over the telephone.

SUPPLEMENTARY INFORMATION: Since the 

Parole Commission assumed the 

revocation functions of the former 

District of Columbia Board of Parole in 

August 2000 under the National Capital 

Revitalization and Self-Government 

Improvement Act of 1997, Public Law 

105–33, the Commission has required 

that parole revocation and reparole 

decisions for District of Columbia 

offenders be made by the concurrence of 

two Commissioners. The Commission 

adopted this requirement to replicate 

the voting procedures of the former DC 

Board, which made its decisions on the 

basis of a majority of the quorum of 

Board members (i.e., two out of three).1

The Board did not provide for an appeal 

of any of its decisions, and, when the 

Commission took on DC revocation 

functions, neither did the Commission. 

(The Commission is required by statute 

to afford an appeal procedure to U.S. 

Code offenders.) In response to 

recommendations that the Commission 

allow DC offenders to submit appeals, 

the Commission has explained that staff 

resources were not sufficient to justify 

increasing the agency’s workload by 

allowing appeals for DC offenders, and 

that the two-vote requirement was an 

acceptable substitute for an appeal 

procedure. See 65 FR 45885, 45886 (July 

26, 2000).

Last year the Commission began 

modifying its procedures for posthearing voting and appeals in DC cases. 

The Commission promulgated a rule 

permitting appeals of revocation 

decisions for DC supervised releasees, 

and made a corresponding amendment 

that allowed the initial revocation 

decision for these releasees to be made 

by one Commissioner. See 68 FR 41696–

41714 (July 15, 2003). Now the 

Commission is adopting similar changes 

for DC offenders who have had parole 

revocation hearings. DC parolees will 

now have a formal avenue for seeking 

administrative correction of alleged 

errors in revocation proceedings. By 

extending an appeal procedure to DC 

parole violators, the Commission will 

provide for cumulative review of the 

case by two Commissioners for those 

offenders who file an appeal. Under the 

Commission’s long-standing practice, an 

appeal is, whenever possible, reviewed 

by a Commissioner who did not 

participate in the decision under 

review. See 28 CFR 2.26(b)(1). For 

appeals from revoked DC parolees, the 

Commission will employ the same 

policies and practices that the 

Commission identified in the 

publication of the rule granting an 

appeal procedure for revoked DC 

supervised releasees. See 68 FR 41698.

In adding an appeal procedure for 

revoked DC parolees, the Commission 

must also ensure that the initial 

dispositions in these cases continue to 

be made in a timely manner. The