38706 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 24

[Docket No. FR–4505–F–01]

RIN 2501–AC61

Debarment, Suspension, and Limited

Denial of Participation; Clarification of

Procedures

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

SUMMARY: This final rule clarifies two

aspects of HUD’s debarment,

suspension, and limited denial of

participation procedures. First, the rule

clarifies that a debarring or suspending

official may refer either disputed

material facts or issues of law, or both

to a hearing officer. Second, the rule

clarifies the jurisdictional and

procedural posture of a Limited Denial

of Participation (LDP) when HUD

subsequently issues a proposed

debarment or suspension based on the

same transaction(s) or conduct.

DATES: Effective Date: July 21, 2000.

FOR FURTHER INFORMATION CONTACT:

Dane M. Narode, Deputy Chief Counsel

for Administrative Proceedings,

Departmental Enforcement Center, U.S.

Department of Housing and Urban

Development, 1250 Maryland Avenue,

Suite 200, Washington, DC 20024;

telephone (202) 708–2350 (this is not a

toll-free number). Hearing- or speechimpaired persons may access this

number via TTY by calling the toll-free

Federal Information Relay Service at

(800) 877–8339.

SUPPLEMENTARY INFORMATION:

I. Background Information

HUD’s current regulations at 24 CFR

part 24, subparts C, D, and G, cover the

administration of the debarment,

suspension, and limited denial of

participation (LDP) administrative

remedies, respectively. Recent

administrative decisions interpreting

aspects of these regulations have

indicated a need for additional

clarification as to their intent and

operation.

a. Scope of Referral

24 CFR 314(b)(2)(i) provides that a

debarring official may refer ‘‘disputed

material facts and issues of law to a

hearing officer for findings of fact and

conclusions of law.’’ Section 413(b)(3)

provides similar authority to a

suspending official. This rule clarifies

that under § 24.314(b)(2)(i) and

§ 24.413(b)(3), the debarring or

suspending official, or a designee, has

complete discretion to: (1) refer only

disputed material facts to a hearing

officer for resolution; (2) provide facts to

a hearing officer and request that the

hearing officer only make conclusions of

law based on those facts; or (3) request

a hearing officer to make findings of fact

and conclusions of law. The hearing

officer’s findings of fact or conclusions

of law must then conform to the scope

of the debarring or suspending official’s

referral.

b. Transfer of Jurisdiction

HUD’s current regulation at 24 CFR

24.713(c) (entitled ‘‘Effect of suspension

or debarment on limited denial of

participation’’) covers the situation

where HUD issues an LDP and then

subsequently issues a proposed

debarment or suspension based on the

same transaction(s) or conduct. If a

respondent contests the proposed

debarment or suspension, § 24.713(c)(2)

requires the consolidation of the LDP

proceeding with the proposed

debarment or suspension proceeding

and requires the debarring or

suspending official to issue a final

decision for both causes. If the

respondent does not contest the

proposed debarment or suspension,

§ 24.713(c)(1) makes the final

imposition of a debarment or

suspension a final decision with respect

to the LDP as well.

The intent of § 24.713(c) is to avoid

separate LDP and debarment or

suspension hearings, based on the same

transaction(s) or conduct, coexisting for

any period of time and to ensure that

the consolidated proceeding is heard

and decided under the debarment/

suspension procedures. HUD revised its

regulations governing debarments and

suspensions in 1995 (60 FR 33049, June

26, 1995) to conform its procedures with

other Federal agencies implementing

the governmentwide common rule on

debarments and suspensions. The intent

of the 1995 revisions was to reduce the

regulatory burden on HUD and

participants in its programs by applying

the revised procedures to all debarments

and suspensions. Continuing to apply

LDP procedures to a debarment or

suspension into which an LDP had been

consolidated under § 24.712(c)(2) would

be inconsistent with that intent.

This final rule clarifies that if HUD

issues an LDP and then subsequently

issues a proposed debarment or

suspension, which the debarring or

suspending official determines is based

on the same transaction(s) or conduct,

and the respondent contests the

proposed debarment or suspension,

then the hearing officer responsible for

hearing the LDP must immediately

divest jurisdiction over the LDP and

transfer the administrative record of the

case to the debarring or suspending

official. The debarring or suspending

official will then issue a final decision

for both the LDP and the proposed

debarment or suspension, pursuant to

the hearing procedures governing

debarments and suspensions.

This rule also clarifies that, when a

proposed debarment or suspension is

issued following an LDP, during the 30

day period that a respondent is given

under the regulations to contest the

proposed debarment or suspension, all

administrative proceedings on the LDP,

including discovery, are automatically

stayed. This again clarifies the intent of

the regulations that at no time should

there be two proceedings occurring on

separate procedural tracks—one for an

LDP and another for a debarment or

suspension—based on the same

transaction(s) or conduct.

II. Small Entities and HUD Enforcement

Actions

The Small Business Regulatory

Enforcement Fairness Act of 1996 (Pub.

L. 104–121, 110 Stat. 847, approved

March 29, 1996) (‘‘SBREFA’’) provides,

among other things, for agencies to

establish specific policies or programs

to assist small entities. Small entities

include small businesses, nonprofit

organizations, and small governmental

jurisdictions. On May 31, 1998 (63 FR

28214), HUD published a Federal

Register notice describing HUD’s

actions on implementation of SBREFA.

Section 223 of SBREFA requires

agencies that regulate the activities of

small entities to establish a policy or

program to reduce or, under appropriate

circumstances, waive civil penalties

when a small entity violates a statute or

regulation. Where penalties are

determined appropriate, HUD’s policy is

to consider: (1) The nature of the

violation (the violation must not be one

that is repeated or multiple, willful,

criminal or poses health or safety risks);

(2) whether the entity has shown a good

faith effort to comply with the

regulations; and (3) the resources of the

regulated entity. Depending upon the

circumstances surrounding the

violation, it is not HUD’s intent to put

any individual or entity out of business

by the penalties or settlement amounts

paid to the Federal Government.

With respect to the issuance of an

LDP, debarment, or suspension, HUD is

cognizant that section 222 of the

SBREFA requires the Small Business

and Agriculture Regulatory Enforcement

Ombudsman to ‘‘work with each agency

with regulatory authority over small

businesses to ensure that small business

Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations 38707

concerns that receive or are subject to an

audit, on-site inspection, compliance

assistance effort or other enforcement

related communication or contact by

agency personnel are provided with a

means to comment on the enforcement

activity conducted by this personnel.’’

To implement this statutory provision,

the Small Business Administration has

requested that agencies include the

following language on agency

publications and notices which are

provided to small businesses concerns

at the time the enforcement action is

undertaken. The language is as follows:

Your Comments Are Important

The Small Business and Agriculture

Regulatory Enforcement Ombudsman and 10

Regional Fairness Boards were established to

receive comments from small businesses

about federal agency enforcement actions.

The Ombudsman will annually evaluate the

enforcement activities and rate each agency’s

responsiveness to small business. If you wish

to comment on the enforcement actions of

[insert agency name], call 1–888–REG–FAIR

(1–888–734–3247).

As HUD stated in its May 21, 1998

notice, HUD intends to work with the

Small Business Administration to

provide small entities with information

on the Fairness Boards and National

Ombudsman program, at the time

enforcement actions are taken, to ensure

that small entities have the full means

to comment on the enforcement activity

conducted by HUD.

III. Justification for Final Rulemaking

In general, HUD publishes a rule for

public comment before issuing the rule

for effect, in accordance with our

regulations on rulemaking at 24 CFR

part 10. Part 10, however, provides for

an exception to this general rule when

HUD finds good cause to omit advance

notice and public participation. The

good cause requirement is satisfied

when prior public procedure is

‘‘impracticable, unnecessary, or contrary

to the public interest’’ (24 CFR 10.1).

HUD finds that good cause exists to

publish this final rule for effect without

first soliciting public comment because

prior public procedure is unnecessary.

This final rule only clarifies two aspects

of HUD’s debarment, suspension, and

limited denial of participation

procedures. This rule does not

implement any substantive changes to

these procedures.

IV. Findings and Certifications

Environmental Impact

The clarifying revisions contained in

this final rule do 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. Therefore, this

rule is categorically excluded from the

requirements of the National

Environmental Policy Act of 1969 (42

U.S.C. 4321).

Regulatory Flexibility Act

The Secretary has reviewed this final

rule before publication and by

approving it certifies, in accordance

with the Regulatory Flexibility Act (5

U.S.C. 605(b)), that this final rule would

not have a significant economic impact

on a substantial number of small

entities. This final rule only clarifies

two aspects of HUD’s debarment,

suspension, and limited denial of

participation procedures. This rule does

not implement any substantive changes

to these procedures.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates

Reform Act of 1995 (2 U.S.C. 1531–

1538) (UMRA) requires 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, within

the meaning of the UMRA, any Federal

mandates on any State, local, or tribal

governments or on the private sector.

Federalism Impact

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 Executive Order 13132 (entitled

‘‘Federalism’’).

List of Subjects in 24 CFR Part 24

Administrative practice and

procedure, Drug abuse, Government

contracts, Government procurement,

Grant programs, Loan programs,

Reporting and recordkeeping

requirements.

For the reasons discussed in the

preamble, HUD amends 24 CFR part 24

as follows:

PART 24—GOVERNMENT

DEBARMENT AND SUSPENSION AND

GOVERNMENTWIDE REQUIREMENTS

FOR DRUG-FREE WORK-PLACE

(GRANTS)

1. The authority citation for part 24

continues to read as follows:

Authority: 41 U.S.C. 701 et seq.; 42 U.S.C.

3535(d); E.O. 12549, 51 FR 6370, 3 CFR, 1986

Comp., p. 189; E.O. 12689, 54 FR 34131, 3

CFR, 1989 Comp., p. 235.

2. Revise paragraph (b)(2)(i) of

§ 24.314 to read as follows:

§ 24.314 Debarring official’s decision.

* * * * *

(b) * * *

(2) * * *

(i) The debarring official may refer

either disputed material facts or issues

of law, or both to a hearing officer for

either findings of fact or conclusions of

law, or both.

3. Revise paragraph (b)(3) of § 24.413

to read as follows:

§ 24.413 Suspending official’s decision.

* * * * *

(b) * * *

(3) The suspending official may refer

either disputed material facts or issues

of law, or both to a hearing officer for

either findings of fact or conclusions of

law, or both.

4. Revise paragraph (c) of § 24.713 to

read as follows:

§ 24.713 Opportunity to contest the limited

denial of participation.

* * * * *

(c) Effect of suspension or debarment

on limited denial of participation. If a

respondent has submitted a request for

a hearing pursuant to paragraph (a) of

this section, and if the respondent has

also received, pursuant to subpart C or

D of this part, a notice of proposed

debarment or suspension based on the

same transaction(s) or conduct as the

limited denial of participation, as

determined by the debarring or

suspending official, the following rules

apply:

(1) During the 30 day period after the

respondent receives a proposed

debarment or suspension during which

the respondent may elect to contest the

debarment under § 24.314(a), or the

suspension under § 24.412(a), all

proceedings in the limited denial or

participation, including discovery, are

automatically stayed.

(2) If the respondent does not contest

the proposed debarment pursuant to

§ 24.313(a), or the suspension pursuant

to § 24.412(a), the final imposition of the

debarment or suspension shall also

constitute a final decision with respect

to those parts of the limited denial of

participation based on the same

transaction(s) or conduct as the

debarment or suspension, as determined

by the debarring or suspending official.

(3) If the respondent does contest the

proposed debarment pursuant to

§ 24.313(a), or the suspension pursuant

to § 24.412(a), then:

(i) Those parts of the limited denial of

participation based on the same

38708 Federal Register / Vol. 65, No. 120 / Wednesday, June 21, 2000 / Rules and Regulations

transaction(s) or conduct as the

debarment or suspension, as determined

by the debarring or suspending official,

and the debarment or suspension shall

be immediately consolidated before the

debarring or suspending official;

(ii) Jurisdiction of the hearing officer

under 24 CFR part 24, subpart G, to hear

those parts of the limited denial of

participation based on the same

transaction(s) or conduct as the

debarment or suspension, as determined

by the debarring or suspending official,

shall be divested, and the hearing officer

responsible for hearing the limited

denial of participation shall transfer the

administrative record to the debarring or

suspending official; and

(iii) The debarring or suspending

official shall hear the entire

consolidated case under the procedures

governing debarments and suspensions,

and shall issue a final decision as to

both the limited denial of participation

and the debarment or suspension.

Dated: June 14, 2000.

Andrew Cuomo,

Secretary.

[FR Doc. 00–15684 Filed 6–20–00; 8:45 am]

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