44860 Federal Register / Vol. 71, No. 151 / Monday, August 7, 2006 / Proposed Rules 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Parts 91 and 570 

[Docket No. FR–5012–P–01] 

RIN 2501–AD15 

Proposed Timeliness Expenditure 

Standards for the Insular Areas 

Program 

AGENCY: Office of the Assistant 

Secretary for Community Planning and 

Development, HUD. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

implement a regulatory timeliness 

standard for the Insular Areas Program, 

as established by the Housing and 

Community Development Act of 1974 

(HCD Act). This proposed rule follows 

publication of a February 22, 2005, final 

rule implementing a 2003 amendment 

to the HCD Act. This amendment moved 

the Community Development Block 

Grant (CDBG) program assistance for 

Insular Areas from section 107 to 

section 106 of the HCD Act. The 

expenditure standards proposed ensure 

that grantees carry out their programs in 

a timely manner. These standards take 

into consideration and reflect the 

unique circumstances faced by Insular 

Areas in their ability to expend CDBG 

allocations. This proposed rule would 

also establish provisions for the 

distribution of assistance made available 

either as a result of reductions or if an 

Insular Area fails to submit a final 

statement for CDBG funds. This 

proposed rule also makes technical and 

conforming changes to the Insular Areas 

Program. 

DATES: Comment Due Date: October 6, 

2006. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this proposed rule to the Office of the 

General Counsel, Rules Docket Clerk, 

Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

Room 10276, Washington, DC 20410– 

0001. Communications should refer to 

the above docket number and title and 

should contain the information 

specified in the ‘‘Request for 

Comments’’ section. 

Electronic Submission of Comments. 

Interested persons may submit 

comments electronically through the 

Federal eRulemaking Portal at http:// 

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 them immediately available to the 

public. Comments submitted 

electronically through the 

www.regulations.gov Web site can be 

viewed by other commenters and 

interested members of the public. 

Commenters should follow the 

instructions provided on that site to 

submit comments electronically. 

No Facsimile Comments. Facsimile 

(FAX) comments are not acceptable. In 

all cases, communications must refer to 

the docket number and title. 

Public Inspection of Public 

Comments. All comments and 

communications submitted to HUD will 

be available, without charge, for public 

inspection and copying between 8 a.m. 

and 5 p.m. weekdays at the above 

address. Due to security measures at the 

HUD Headquarters building, an advance 

appointment to review the public 

comments must be scheduled by calling 

the Regulations Division at (202) 708– 

3055 (this is not a toll-free number). 

Copies of all comments submitted are 

available for inspection and 

downloading at http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Steve Rhodeside, Senior Program 

Officer, State and Small Cities Division, 

Office of Block Grant Assistance, Office 

of Community Planning and 

Development, Department of Housing 

and Urban Development, 451 Seventh 

Street, SW., Room 7184, Washington, 

DC 20410–7000, telephone (202) 708– 

1322 (this is not a toll-free number). 

Individuals with speech or hearing 

impairments may access this number 

through TTY by calling the toll-free 

Federal Information Relay Service at 

(800) 877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The CDBG program authorized by the 

Housing and Community Development 

Act of 1974 (HCD Act) (42 U.S.C. 5301, 

et seq.) provides flexible funding for 

communities across the nation, 

including Insular Areas, to develop and 

implement community and economic 

development strategies that primarily 

benefit low- and moderate-income 

individuals. 

Title V of the American Dream 

Downpayment Act (Pub. L. 108–186, 

117 Stat. 2685, approved December 16, 

2003) (Title V) amended the HCD Act, 

moving the Insular Areas funding 

authorization from section 107(a) (42 

U.S.C. 5307(a)) to section 106(a) (42 

U.S.C. 5306(a)). This amendment to the 

HCD Act provided for a specific portion 

of the CDBG allocation to be distributed 

to Insular Areas, separate from the 

distribution for special purpose grants 

as well as from the entitlement and state 

formula distribution. The change 

provides the Insular Areas of Guam, the 

Northern Mariana Islands, the Virgin 

Islands, and American Samoa with 

greater assurance of annual CDBG 

program funding. On June 10, 2004, the 

Department published interim 

regulations (69 FR 32774) to implement 

the statutory change. The Department 

adopted the interim rule without change 

on February 22, 2005 (70 FR 8705). 

The preamble of the June 10, 2004, 

interim rule stated that ‘‘HUD will 

establish timeliness standards for the 

Insular Areas Program under section 

106 by regulation at a later date. Until 

then, Insular Area jurisdictions that will 

be funded under section 106 are 

encouraged to adopt and achieve the 

timeliness standards for § 570.902(a) 

currently applicable to entitlement 

jurisdictions. In the meantime, HUD 

specifically invites comments on the 

idea of adopting the § 570.902(a) 

standards as the Insular Areas Program 

timeliness standards under section 

106.’’ In response to the interim rule, no 

comments were received concerning 

timeliness standards. 

II. This Proposed Rule 

This proposed rule would establish a 

new § 570.902(c), which would 

establish the timeliness standards for 

the Insular Areas Program. As of 60 days 

prior to the conclusion of the Insular 

Areas’ most recent program years, the 

amount of grant funds available but 

undisbursed was 3.39 times the amount 

of American Samoa’s most recent grant, 

1.63 times Guam’s most recent grant, 

1.63 times the Commonwealth of the 

Northern Mariana Islands’ most recent 

grant, and 2.57 times the Virgin Islands’ 

most recent grant. Although there is a 

clear need to improve the expenditure 

rate for the Insular Areas Program, the 

Department recognizes that Insular 

Areas Program grantees face unique 

geographic and administrative 

challenges in implementing their CDBG 

program. For example, due to the 

islands’ remoteness, it takes much 

longer for supplies to reach the Insular 

Areas than other CDBG grantees. As a 

result, HUD believes that it should set 

a standard for the Insular Areas 

Program, but that the standard should 

be less stringent than that for the 

Entitlement Grant Program. 

HUD therefore proposes that the 

timeliness standard for the Insular Areas 

Program be that 60 days prior to the 

conclusion of an Insular Area’s most 

recent program year, the amount of 

grant funds available but undisbursed 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 71, No. 151 / Monday, August 7, 2006 / Proposed Rules 44861 

should be no more than two times the 

amount of the Insular Areas grantee’s 

most recent grant. If the grantee fails to 

demonstrate to HUD’s satisfaction that 

the lack of timeliness has resulted from 

factors beyond the grantee’s reasonable 

control, the grantee shall be deemed to 

be untimely. A grantee that has less than 

two times its most recent grant in its 

CDBG line of credit 60 days prior to the 

conclusion of its most recent program 

year shall also be deemed to be 

untimely if the amount of CDBG 

program income the recipient has on 

hand 60 days prior to the end of the 

program year, together with the amount 

of funds in its CDBG line of credit, 

exceeds twice the amount of the 

grantee’s most recent grant, unless the 

grantee is able to demonstrate to HUD’s 

satisfaction that the lack of timeliness 

has resulted from factors beyond the 

grantee’s reasonable control. In 

determining the corrective action for 

untimely expenditure, HUD will 

consider the likelihood that the 

recipient will expend a sufficient 

amount of funds over the next program 

year to bring the grantee into 

compliance with the timeliness 

requirements. 

The first timeliness review under 

these standards will take place 60 days 

prior to the conclusion of the 2006 

funding year. As a result, the first 

review would take place on August 2, 

2007, for Insular Areas that do not 

change their program year start dates. 

This will give the Insular Areas 

transition time to adjust to the new 

policy. In keeping with the policy that 

is used for entitlement grantees, once a 

grantee is deemed to be untimely under 

the new standard, the grantee will be 

given 12 months, to the grantee’s next 

60-day test, to reach the timeliness 

standard. Failure to meet the standard 

may cause HUD to reduce the next grant 

by 100 percent of the amount in excess 

of twice the Insular Area’s most recent 

CDBG grant, unless HUD determines 

that the untimeliness resulted from 

factors outside of the grantee’s 

reasonable control. The earliest that 

HUD will reduce grants under this 

regulation will be in Fiscal Year (FY) 

2008, should an Insular Areas grantee be 

untimely 60 days prior to the 

conclusion of its FY 2006 and 2007 

program years. 

A new § 570.442 entitled 

‘‘Reallocations’’ would be added to 

subpart F of part 570. This provision 

would provide that amounts that 

become available as a result of 

reductions under subpart O, or as a 

result of an Insular Area not submitting 

a final statement for CDBG funds, shall 

be reallocated to the remaining eligible 

Insular Areas on a pro rata basis. 

III. Technical Corrections 

Subpart O of part 570 would be 

revised to reference the Insular Areas 

Program in §§ 570.900, 570.901, 

570.903, 570.910, and 570.911. This 

revision would implement the changes 

enacted by Title V. In addition, the 

reference to § 570.304(d) would be 

deleted from § 570.910(b)(8), since 

§ 570.304(d) was previously removed 

from the regulations (60 FR 56891). In 

addition, the references to the Housing 

Assistance Plan would be deleted from 

§ 570.900, since the Housing Assistance 

Plan would no longer be required. 

Section 570.903(d) would also be 

deleted, since the Department is no 

longer funding new Small Cities grants 

in the State of New York. 

Section 570.600 would be revised to 

reflect the fact that § 570.612 does not 

apply to Insular Areas grants. Section 

570.209(b)(2) would be revised to have 

§ 570.209(b)(2) apply to Insular Areas by 

program year for all Insular Areas grants 

that are made from section 106 of the 

HCD Act. 

IV. Consolidated Plan 

Section 570.440(a) of the interim 

regulation published on June 10, 2004, 

permitted Insular Areas grantees to 

either submit an abbreviated 

consolidated plan under § 91.235, or a 

complete consolidated plan in 

accordance with subpart C of part 91 of 

the regulations. HUD specifically 

requested comments on whether Insular 

Areas grantees should continue to have 

the choice of submitting an abbreviated 

consolidated plan or whether they 

should be required to submit a full 

consolidated plan. The Department has 

received no comments to date on this 

requirement. This proposed rule would 

revise § 570.903 to state that an 

abbreviated consolidated plan would be 

considered to be a consolidated plan for 

the purposes of § 570.903. This revision 

would specifically make the section 

applicable to Insular Areas grantees that 

choose to submit an abbreviated 

consolidated plan. Section 91.235(a) 

would be revised to permit Insular 

Areas receiving HOME funding to 

submit abbreviated consolidated plans. 

Section 91.235(c)(4) would require 

Insular Areas that submit an abbreviated 

consolidated plan to follow the 

Submissions, Certifications, 

Amendments, and Performance Reports 

requirements of § 570.440. Section 

91.235(e) would be revised to require 

Insular Areas submitting an abbreviated 

consolidated plan to follow the citizen 

participation requirements of § 570.441. 

If submission of a full consolidated plan 

would help a grantee integrate its CDBG, 

HOME and Emergency Shelter Grant 

programs, the grantee should strongly 

consider submitting a full consolidated 

plan. 

V. Findings and Certifications 

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 an economically 

significant regulatory action, as 

provided under section 3(f)(1) of the 

order). The docket file is available for 

public inspection in the Regulations 

Division, Office of General Counsel, 

Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

Room 10276, Washington, DC 20410–

0500. Due to security measures at the 

HUD Headquarters building, please 

schedule an appointment to review the 

docket file by calling the Regulations 

Division at (202) 708–3055 (this is not 

a toll-free number). 

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 interim rule does 

not impose any federal mandates on any 

state, local, or tribal government or 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 Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601 et seq.) generally requires 

an agency to conduct regulatory 

flexibility analysis of any rule subject to 


sroberts on PROD1PC70 with PROPOSALS
44862 Federal Register / Vol. 71, No. 151 / Monday, August 7, 2006 / Proposed Rules 

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 will 

not have a significant economic impact 

on a substantial number of small entities 

for the following reasons. This rule only 

codifies in HUD’s regulations 

procedures that will enable the 

Department to enforce its timeliness 

policy for the Insular Areas Program. As 

such, the rule does not significantly 

differ from the current status in terms of 

the impact on the number of entities, 

the amount of funding, or the governing 

requirements applicable. 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. 

Notwithstanding HUD’s 

determination that this rule will not 

have a significant economic impact on 

a substantial number of small entities, 

HUD specifically invites comments 

regarding any less burdensome 

alternatives to this rule that will meet 

HUD’s objectives as described in this 

preamble. 

Environmental Impact 

A Finding of No Significant Impact 

with respect to the environment has 

been made in accordance with HUD 

regulations at 24 CFR part 50, which 

implement section 102(2)(C) of the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4332(2)(C)). The 

Finding of No Significant Impact is 

available for public inspection between 

the hours of 8 a.m. and 5 p.m. weekdays 

in the Regulations Division, Office of 

General Counsel, Department of 

Housing and Urban Development, 451 

Seventh Street, SW., Room 10276, 

Washington, DC 20410–0500. Due to 

security measures at the HUD 

Headquarters building, please schedule 

an appointment to review the finding by 

calling the Regulations Division at (202) 

708–3055 (this is not a toll-free 

number). 

Catalog of Federal Domestic Assistance 

The Catalog of Federal Domestic 

Assistance number for the Insular Areas 

Program is 14.225. 

List of Subjects 

24 CFR Part 91 

Aged, Grant programs-housing and 

community development, Homeless, 

Individuals with disabilities, Low and 

moderate income housing, Reporting 

and recordkeeping requirements. 

24 CFR Part 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. 

Accordingly, HUD proposes to amend 

24 CFR parts 91 and 570 as follows: 

PART 91—CONSOLIDATED 

SUBMISSIONS FOR COMMUNITY 

PLANNING AND DEVELOPMENT 

PROGRAMS 

1. The authority citation for 24 CFR 

part 91 continues to read as follows: 

Authority: 42 U.S.C. 3535(d), 3601–3619, 

5301–5315, 11331–11388, 12701–12711, 

12741–12756, and 12901–12912. 

2. In § 91.235 revise paragraphs (a), 

(b)(3), and (e) and add paragraph (c)(4) 

to read as follows: 

§ 91.235 Special case; abbreviated 

consolidated plan. 

(a) Who may submit an abbreviated 

plan? A jurisdiction that is not a CDBG 

entitlement community under 24 CFR 

part 570, subpart D, and is not expected 

to be a participating jurisdiction in the 

HOME program under 24 CFR part 92, 

as well as an Insular Area that is a 

HOME grantee, may submit an 

abbreviated consolidated plan that is 

appropriate to the types and amounts of 

assistance sought from HUD, instead of 

a full consolidated plan. 

(b) * * * 

(3) Limitation. For the HOME 

program, an abbreviated consolidated 

plan is permitted only with respect to 

reallocations to other than participating 

jurisdictions (see 24 CFR part 92, 

subpart J), and for Insular Areas that 

submit an abbreviated consolidated plan 

pursuant to 24 CFR part 570.440. For 

the CDBG program, an abbreviated plan 

may be submitted for the HUDadministered Small Cities program 

(except that an abbreviated plan may 

not be submitted for the HUDadministered Small Cities program in 

the State of Hawaii), and for Insular 

Areas pursuant to 24 CFR 570.440. 

(c) * * * 

(4) Submissions, Certifications, 

Amendments and Performance Reports. 

An Insular Area that submits an 

abbreviated consolidated plan under 

this section must comply with the 

submission, certification amendment, 

and performance report requirements of 

§ 570.440. 

* * * * * 

(e) Citizen Participation. An Insular 

Area that submits an abbreviated 

consolidated plan under this section 

must comply with the citizen 

participation requirements of § 570.441. 

* * * * * 

PART 570—COMMUNITY 

DEVELOPMENT BLOCK GRANTS 

3. The authority citation for 24 CFR 

part 570 continues to read as follows: 

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

5320. 

4. Revise § 570.209(b)(2)(i) to read as 

follows: 

§ 570.209 Guidelines for evaluating and 

selecting economic development projects. 

* * * * * 

(b) * * * 

(2) Applying the aggregate standards. 

(i) A metropolitan city, an urban county, 

or an Insular Area shall apply the 

aggregate standards under paragraph 

(b)(1) of this section to all applicable 

activities for which CDBG funds are first 

obligated within each single CDBG 

program year, without regard to the 

source year of the funds used for the 

activities. For Insular Areas, the 

preceding sentence applies to grants 

received in program years after Fiscal 

Year 2004. A grantee under the HUDadministered Small Cities program in 

New York, or Insular Areas CDBG 

programs grants prior to Fiscal Year 

2005, shall apply the aggregate 

standards under paragraph (b)(1) of this 

section to all funds obligated for 

applicable activities from a given grant; 

program income obligated for applicable 

activities will, for these purposes, be 

aggregated with the most recent open 

grant. For any time period in which a 

community has no open HUDadministered grant, the aggregate 

standards shall be applied to all 

applicable activities for which program 

income is obligated during that period. 

* * * * * 

5. Add § 570.442 to read as follows: 

§ 570.442 Reallocations—Insular Areas. 

(a) Any Insular Area funds that 

become available as a result of 

reductions under subpart O of this part, 

shall be reallocated in the same or 

future fiscal year to any remaining 

eligible Insular Areas grantees pro rata 

according to population. 

(b) Any Insular Areas grant funds for 

a fiscal year reserved for an applicant 

that chooses not to submit a final 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 71, No. 151 / Monday, August 7, 2006 / Proposed Rules 44863 

statement in accordance with § 570.440 

to receive such funds, shall be 

reallocated in the same or future fiscal 

year to any remaining eligible Insular 

Areas grantees pro rata according to 

population. 

(c) No amounts shall be reallocated 

under this section in any fiscal year to 

any applicant whose grant amount in 

such fiscal year was reduced under 

subpart O of this part or who did not 

submit a final statement in accordance 

with § 570.440 for that fiscal year. 

(d) Insular Areas grantees receiving 

additional funds under this section will 

be evaluated for timeliness under 

§ 570.902 based upon the original grant 

amount plus the additional funds 

received. Accordingly, references in 

§ 570.902 to an Insular Area’s grant 

amount for its current program year 

include such additional funds, and 

references to unexpended or 

undisbursed funds include such 

additional funds. 

6. Revise § 570.600(a) to read as 

follows: 

§ 570.600 General. 

(a) This subpart K enumerates laws 

that the Secretary will treat as 

applicable to grants made under section 

106 of the Act, other than grants to 

States made pursuant to section 106(d) 

of the Act, for purposes of the 

Secretary’s determinations under 

section 104(e)(1) of the Act, including 

statutes expressly made applicable by 

the Act and certain other statutes and 

Executive Orders for which the 

Secretary has enforcement 

responsibility. This subpart K applies to 

grants made under the Insular Areas 

Program in § 570.405 and § 570.440 with 

the exception of § 570.612. The absence 

of mention herein of any other statute 

for which the Secretary does not have 

direct enforcement responsibility is not 

intended to be taken as an indication 

that, in the Secretary’s opinion, such 

statute or Executive Order is not 

applicable to activities assisted under 

the Act. For laws that the Secretary will 

treat as applicable to grants made to 

States under section 106(d) of the Act 

for purposes of the determination 

required to be made by the Secretary 

pursuant to section 104(e)(2) of the Act, 

see § 570.487. 

* * * * * 

7. In § 570.900, revise paragraphs 

(a)(1) and (b)(1) to read as follows: 

§ 570.900 General. 

(a) Performance review authorities— 

(1) Entitlement, Insular Areas, and 

HUD-administered Small Cities 

performance reviews. Section 104(e)(1) 

of the Act requires that the Secretary 

shall, at least on an annual basis, make 

such reviews and audits as may be 

necessary or appropriate to determine 

whether the recipient has carried out its 

activities in a timely manner, whether 

the recipient has carried out those 

activities and its certifications in 

accordance with the requirements and 

the primary objectives of the Act and 

with other applicable laws, and whether 

the recipient has a continuing capacity 

to carry out those activities in a timely 

manner. 

* * * * * 

(b) * * * 

(1) The Department will determine 

the performance of each entitlement, 

Insular Areas, and HUD-administered 

small cities recipient in accordance with 

section 104(e)(1) of the Act by reviewing 

for compliance with the requirements 

described in § 570.901 and by applying 

the performance criteria described in 

§§ 570.902 and 570.903 relative to 

carrying out activities in a timely 

manner. The review criteria in § 570.904 

will be used to assist in determining if 

the recipient’s program is being carried 

out in compliance with civil rights 

requirements. 

8. In § 570.901, revise the 

introductory paragraph, redesignate 

existing paragraphs (f), (g), and (h), as 

paragraphs (g), (h), and (i) respectively, 

and add a new paragraph (f) to read as 

follows: 

§ 570.901 Review for compliance with the 

primary and national objectives and other 

program requirements. 

HUD will review each entitlement, 

Insular Areas, and HUD-administered 

small cities recipient’s program to 

determine if the recipient has carried 

out its activities and certifications in 

compliance with: 

* * * * * 

(f) For Insular Areas Program grants 

only, the application and amendment 

requirements at § 570.440, the citizen 

participation requirements at § 570.441, 

the displacement policy requirements of 

§ 570.606, and the lead-based paint 

requirements of § 35.940; 

* * * * * 

9. In § 570.902, revise the 

introductory paragraph, and add a new 

paragraph (c) to read as follows: 

§ 570.902 Review to determine if CDBGfunded activities are being carried out in a 

timely manner. 

HUD will review the performance of 

each entitlement, HUD-administered 

small cities, and Insular Areas recipient 

to determine whether each recipient is 

carrying out its CDBG-assisted activities 

in a timely manner. 

* * * * * 

(c) Insular Areas recipients. (1) Before 

the funding of the next annual grant and 

absent contrary evidence satisfactory to 

HUD, HUD will consider an Insular 

Areas recipient to be failing to carry out 

its CDBG activities in a timely manner 

if: 

(i) Sixty days prior to the end of the 

grantee’s current program year, the 

amount of Insular Areas grant funds 

available to the recipient under grant 

agreements but undisbursed by the U.S. 

Treasury is more than 2.0 times the 

Insular Area’s grant amount for its 

current program year; and 

(ii) The grantee fails to demonstrate to 

HUD’s satisfaction that the lack of 

timeliness has resulted from factors 

beyond the grantee’s reasonable control. 

(2) Notwithstanding that the amount 

of funds in the line of credit indicates 

that the Insular Areas recipient is 

carrying out its activities in a timely 

manner pursuant to paragraph (c)(1) of 

this section, HUD may determine that 

the recipient is not carrying out its 

activities in a timely manner if: 

(i) The amount of CDBG program 

income the recipient has on hand 60 

days prior to the end of its current 

program year, together with the amount 

of funds in its CDBG line of credit, 

exceeds 2.0 times the Insular Area’s 

grant amount for its current program 

year; and 

(ii) The grantee fails to demonstrate to 

HUD’s satisfaction that the lack of 

timeliness has resulted from factors 

beyond the grantee’s reasonable control. 

(3) In determining the appropriate 

corrective action to take with respect to 

a HUD determination that a recipient is 

not carrying out its activities in a timely 

manner pursuant to paragraphs (c)(1) or 

(c)(2) of this section, HUD will consider 

the likelihood that the recipient will 

expend a sufficient amount of funds 

over the next program year to reduce the 

amount of unexpended funds to a level 

that will fall within the standard 

described in paragraphs (c)(1) and (2) of 

this section when HUD next measures 

the grantee’s timeliness performance. 

For these purposes, HUD will take into 

account the extent to which funds on 

hand have been obligated by the 

recipient and its sub-recipients for 

specific activities at the time the finding 

is made and other relevant information. 

(4) If a recipient is determined to be 

untimely pursuant to paragraphs (c)(1) 

or (c)(2) of this section in one year, and 

the recipient is again determined to be 

untimely in the following year, HUD 

may reduce the recipient’s next grant by 

100 percent of the amount in excess of 

twice the Insular Area’s most recent 

CDBG grant, unless HUD determines 

that the untimeliness resulted from 


sroberts on PROD1PC70 with PROPOSALS
44864 Federal Register / Vol. 71, No. 151 / Monday, August 7, 2006 / Proposed Rules 

factors outside of the grantee’s 

reasonable control. 

(5) The first review under paragraphs 

(c)(1) and (c)(2) will take place 60 days 

prior to the conclusion of the Fiscal 

Year 2006 program year. 

10. In § 570.903, revise the 

introductory paragraph, paragraph (a), 

and remove paragraph (d) to read as 

follows: 

§ 570.903 Review to determine if the 

recipient is meeting its consolidated plan 

responsibilities. 

The consolidated plan, action plan, 

and amendment submission 

requirements referred to in this section 

are in 24 CFR part 91. For the purpose 

of this section, the term consolidated 

plan includes an abbreviated 

consolidated plan that is submitted 

pursuant to 24 CFR part 91.235. 

(a) Review timing and purpose. HUD 

will review the consolidated plan 

performance of each entitlement, Insular 

Areas, and Hawaii HUD-administered 

Small Cities grant recipient prior to 

acceptance of a grant recipient’s annual 

certification under 24 CFR part 

91.225(b)(3) to determine whether the 

recipient followed its HUD-approved 

consolidated plan for the most recently 

completed program year, and whether 

activities assisted with CDBG funds 

during that period were consistent with 

that consolidated plan, except that 

grantees are not bound by the 

consolidated plan with respect to the 

use or distribution of CDBG funds to 

meet non-housing community 

development needs. 

* * * * * 

11. In § 570.910, revise paragraphs 

(b)(2)(iii) and (b)(8) to read as follows: 

§ 570.910 Corrective and remedial actions. 

* * * * * 

(b) * * * 

(2) * * * 

(iii) For entitlement and Insular Areas 

recipients, canceling or revising affected 

activities that are no longer feasible to 

implement due to the deficiency and reprogramming funds from such affected 

activities to other eligible activities 

(pursuant to the citizen participation 

requirements in 24 CFR part 91); or 

* * * * * 

(8) In the case of an entitlement or 

Insular Areas recipient, condition the 

use of funds from a succeeding fiscal 

year’s allocation upon appropriate 

corrective action by the recipient. The 

failure of the recipient to undertake the 

actions specified in the condition may 

result in a reduction, pursuant to 

§ 570.911, of the entitlement or Insular 

Areas recipient’s annual grant by up to 

the amount conditionally granted. 

12. Revise § 570.911(b) to read as 

follows: 

§ 570.911 Reduction, withdrawal, or 

adjustment of a grant or other appropriate 

action. 

* * * * * 

(b) Entitlement and Insular Areas 

grants. Consistent with the procedures 

described in § 570.900(b), the Secretary 

may make a reduction in the entitlement 

grant amount either for the succeeding 

program year or, if the grant had been 

conditioned, up to the amount that had 

been conditioned. The amount of the 

reduction shall be based on the severity 

of the deficiency and may be for the 

entire grant amount. 

* * * * * 

Dated: July 12, 2006. 

Pamela H. Patenaude, 

Assistant Secretary for Community Planning 

and Development. 

[FR Doc. 06–6702 Filed 8–4–06; 8:45 am] 

BILLING CODE 4210–67–P 


sroberts on PROD1PC70 with PROPOSALS