14016 Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Proposed Rules 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

2 CFR Part 2424 and 24 CFR Parts 5, 

6, 8, 15, 21, 24, 25, 26, 84, 85, 91, 92, 

103, 107, 135, 200, 202, 203, 206, 245, 

291, 401, 402, 570, 572, 585, 941, 954, 

982, 983, 1000, 1003, 1005, 1006, 3282, 

and 3500 

[Docket No. FR–5071–P–01] 

RIN 2501–AD29 

Implementation of OMB Guidance on 

Nonprocurement Debarment and 

Suspension 

AGENCY: Office of the Secretary, HUD. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

relocate HUD’s regulations governing 

nonprocurement debarment and 

suspension to a new part in Title 2 of 

the Code of Federal Regulations. The 

relocation is part of a governmentwide 

initiative to create one location where 

the public can locate both the Office of 

Management and Budget (OMB) 

guidance for grants and agreements and 

the associated federal agency 

implementing regulations. The 

proposed new part would adopt the 

OMB guidance on nonprocurement 

debarment and suspension and 

supplement it with HUD-specific 

clarifications and additions. The 

proposed rule would also make 

conforming changes to HUD regulations 

referencing the nonprocurement 

debarment and suspension regulations. 

This proposed regulatory action is an 

administrative simplification that would 

make no substantive change in HUD 

policy or procedures for 

nonprocurement debarment and 

suspension. 

DATES: Comment Due Date: May 22, 

2007. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this proposed rule to the Office of 

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 

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 on 

www.regulations.gov for viewing 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). 

Persons with hearing or speech 

impairments may access this number 

via TTY by calling the toll-free Federal 

Information Relay Service at (800) 877– 

8339. Copies of all comments submitted 

are available for inspection and 

downloading at www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Dane Narode, Assistant General 

Counsel, Office of Program 

Enforcement, Administrative 

Proceedings Division, Department of 

Housing and Urban Development, 1250 

Maryland Avenue, SW., Suite 200, 

Washington DC 20024–0500; telephone 

(202) 708–2350 (this is not a toll-free 

number); e-mail address 

Dane_M._Narode@hud.gov. Hearing- or 

speech-impaired individuals may access 

the telephone number listed above by 

calling the toll-free Federal Information 

Relay Service at (800) 877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

OMB is undertaking to restructure the 

framework of federal government 

policies for grants, other financial 

assistance, and nonprocurement 

agreements in an effort to make it easier 

for applicants and recipients to locate 

and comply with such policies. On May 

11, 2004, OMB established a new Title 

2 of the Code of Federal Regulations 

(CFR) (69 FR 26276), which is 

comprised of two subtitles. Subtitle A, 

entitled ‘‘Government-wide Grants and 

Agreements,’’ contains OMB policy 

guidance to federal agencies on grants 

and agreements. Subtitle B, entitled 

‘‘Federal Agency Regulations for Grants 

and Agreements,’’ will contain the 

regulations of federal agencies 

implementing the OMB guidance, as it 

applies to grants and other financial 

assistance agreements and 

nonprocurement transactions. The HUD 

regulations governing nonprocurement 

debarment and suspension would be 

located in Subtitle B at 2 CFR part 2424. 

Consolidating the OMB guidance and 

co-locating the agency regulations 

provides a good foundation for 

streamlining and simplifying the 

policies governing grants and 

agreements. 

On August 31, 2005, OMB continued 

its initiative to create a single location 

where OMB guidance and federal 

agency implementing regulations could 

be found by incorporating four guidance 

documents into 2 CFR, Subtitle A, and 

making conforming changes (70 FR 

51862). OMB is engaging in a multiphase process by which it will relocate 

and revise guidance documents. In the 

first phase, OMB is relocating its 

circulars, in their current form, into 

chapter II of subtitle A. In the second 

phase, OMB will publish guidance in 

chapter I of subtitle A after OMB: (1) 

Proposes for public comment any 

changes to streamline and simplify the 

guidance based on recommendations 

from interagency working groups; and 

(2) Resolves the comments and finalizes 

the guidance with the help of the 

working groups. Part 180 of 2 CFR, 

entitled ‘‘OMB Guidelines to Agencies 

on Government-wide Debarment and 

Suspension (Nonprocurement),’’ has 

been immediately incorporated into 

subtitle A, chapter I, because the 

substance of the guidance is up to date 

and is not expected to change in the 

near future. The other three guidance 

documents have been located in subtitle 

A, chapter II, pending review and 

revision. 

II. This Proposed Rule 

A. Adoption of OMB Guidance 

This proposed rule would adopt the 

OMB guidance in subparts A through I 

of 2 CFR part 180, as supplemented by 

HUD’s policies and procedures for 

nonprocurement debarment and 

suspension at 2 CFR part 2424. This 

implementation would give regulatory 

effect to the OMB guidance for HUD. 

The provisions of 2 CFR part 180 are 

supplemented and clarified to address 

HUD-specific issues at 2 CFR part 2424. 

The nonprocurement debarment and 

suspension standards being codified at 

2 CFR part 180 will serve as 

governmentwide guidance having effect 

for those federal agencies that adopt 

them. 


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Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Proposed Rules 14017 

Through this proposed rule, HUD is 

creating a new part at 2 CFR part 2424 

that adopts, by reference, the baseline 

provisions of 2 CFR part 180 and 

includes HUD-specific supplements, 

clarifications, and modifications to 2 

CFR part 180. Accordingly, HUD’s 

regulations at 24 CFR part 24, entitled 

‘‘Government-wide Debarment and 

Suspension (Nonprocurement),’’ are 

being supplanted by 2 CFR part 2424. It 

is important to note that this does not 

result in a change in HUD policy or 

procedures since the August 31, 2005, 

rule promulgating 2 CFR part 180 

conformed those OMB requirements to 

the federal agencies’ November 26, 

2003, updated version of the 

nonprocurement debarment and 

suspension common rule (68 FR 66534), 

which HUD adopted. The proposed rule 

would result in entities following the 

policies and procedures specified in 

each applicable section of the OMB 

guidance in subparts A through I of 2 

CFR part 180, because that section has 

been implemented in part 2424. 

B. Conforming Changes 

This proposed rule would make 

conforming regulatory changes 

throughout Title 24 to reflect the new 

location of HUD’s suspension and 

debarment regulations at 2 CFR part 

2424. Various parts of Title 24 have 

cross-references to the nonprocurement 

suspension and debarment provisions 

contained at 24 CFR part 24. This 

proposed rule replaces the references to 

24 CFR part 24 with 2 CFR part 2424. 

HUD is also revising all references to the 

Drug Free Workplace Act (the Act). The 

requirements of the Act were originally 

included within 24 CFR part 24. The 

November 26, 2003, final common rule 

created a new part, 24 CFR part 21, 

which is where the Act’s requirements 

can now be found. This proposed rule 

is revising outdated references regarding 

the Act, replacing references to 24 CFR 

part 24 with 24 CFR part 21. Neither the 

conforming regulatory changes nor the 

revision of references to the Act are 

intended to have substantive effect on 

the Department’s regulations. 

Prior to 1995, HUD required entities 

to certify that they would comply with 

the requirements of the Act. The 

certification requirements, which were 

contained in the appendices of 24 CFR 

part 24, were eliminated by HUD in a 

September 11, 1995, final rule (60 FR 

47260) as part of a governmentwide 

streamlining effort. The elimination of 

the certification requirement does not 

absolve entities of complying with the 

requirements of the Act, as 

implemented by HUD at 24 CFR part 21. 

HUD is taking advantage of the 

opportunity afforded by this proposed 

rule in order to revise and remove those 

parts of Title 24 where the regulations 

still refer to this certification 

requirement. 

C. Revisions to the Limited Denial of 

Participation Regulations 

HUD is taking the opportunity 

afforded by this proposed rulemaking to 

revise its Limited Denial of Participation 

(LDP) Regulations. The regulations 

governing LDPs were formerly found at 

24 CFR part 24, subpart J. Due to the 

relocation of part 24, the LDP 

regulations will now be found at 2 CFR 

part 2424, subpart J. The LDP 

regulations are a HUD-specific 

supplement to the governmentwide 

nonprocurement debarment and 

suspension regulations. An LDP is an 

action taken to immediately exclude a 

person or entity from participating in a 

specific program, within a limited 

geographical area, for a specified period 

not to exceed 12 months. 

HUD is proposing to revise 24 CFR 

24.1110 in order to clarify one of the 

enumerated causes for an LDP. 

Currently, § 24.1110(a)(8) lists a cause 

for imposing an LDP as the 

‘‘commission of an offense listed in 

§ 24.800.’’ The language of the current 

regulation could be misinterpreted as 

limiting the incorporated causes to just 

§ 24.800(a), which sets forth causes for 

debarment based on a conviction or 

civil judgment for the commission of 

certain offenses. The proposed change 

would avoid such confusion by 

amending the regulation to account for 

the relocation of the nonprocurement 

debarment and suspension rules, as well 

as to clarify that included within the 

causes for imposing an LDP under new 

2 CFR 2424.1110(a)(8) are any acts or 

omissions that would be cause for 

debarment under 2 CFR 180.800. 

Additionally, this proposed rule would 

remove 24 CFR 24.1110(a)(12), which 

provides debarment or suspension by 

another federal agency as a basis for an 

LDP. That provision is unnecessary in 

light of the governmentwide effect of the 

suspension and debarment procedures. 

When the governmentwide 

nonprocurement debarment and 

suspension regulations were amended 

on November 26, 2003, HUD 

inadvertently removed reference to the 

information that is to be considered in 

deciding whether to terminate, modify, 

or affirm an LDP. This proposed rule 

would redesignate the provision at 24 

CFR 24.1130 to 2 CFR 24.1130 and 

amend it by reincorporating paragraph 

(c) to specify that the applicable factors 

found in 2 CFR 180.860 may be 

considered by the Departmental official 

or designee in deciding whether to 

terminate, modify, or affirm an LDP. In 

addition, the Departmental Hearing 

Officer may also consider the factors 

listed at 2 CFR 180.860 in making any 

recommended decision. 

D. Technical and Clarifying Changes 

HUD proposes to make a clarifying 

change to § 5.105, in which the term 

‘‘participant’’ is being added. This 

modification is consistent with HUD’s 

current usage and interpretation of 

entities and activities covered by the 

suspension and debarment regulations. 

HUD is making a technical correction 

to 24 CFR 21.605, which currently 

contains an incorrect reference. Section 

21.605(a)(2) currently states that OMB 

circular A–102 is implemented at 24 

CFR part 24. The reference would state 

that OMB Circular A–102 is 

implemented at 24 CFR part 85. 

HUD would also make a technical 

amendment to § 84.13 to remove HUD 

as a regulated entity under part 84. In 

serving as HUD’s implementation of 

OMB circulars, part 84 applies to federal 

grants and agreements awarded to 

institutions of higher education, 

hospitals, and other non-profit 

organizations. This technical 

amendment would not alter HUD’s 

obligations under 2 CFR part 2424 or 24 

CFR part 21. 

III. Specific Invitation To Comment 

HUD is proposing the new part 2424 

in 2 CFR in order to adopt the OMB 

guidelines, by making the same 

additions and clarifications as were 

made to HUD’s codification of the 

common rule on nonprocurement 

suspension and debarment in the 

November 26, 2003, final common rule. 

HUD’s clarification of the term ‘‘covered 

transaction,’’ adding that each salary 

payment under an employment contract 

constitutes a separate covered 

transaction, has been relocated to the 

definition of ‘‘Nonprocurement 

Transaction’’ for ease of use. All other 

clarifications and additions remain as 

described in the November 26, 2003, 

final rule. HUD has added a new 

§ 2424.137, which codifies existing 

agency practice as required by the OMB 

Guidelines at 2 CFR 180.25(b)(1). 

Therefore, in soliciting comments on 

this proposed rule, HUD is not seeking 

to revisit substantive issues that were 

addressed during the preparation of the 

2003 final common rule. However, 

because the new part is not intended to 

make any changes in current policies 

and procedures, HUD specifically 

invites comments on any unintended 

changes in substantive content that the 


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14018 Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Proposed Rules 

new part in 2 CFR would make relative 

to 24 CFR part 24. 

IV. Findings and Certifications 

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. The regulatory 

amendments that would be made by this 

proposed rule are procedural. This 

proposed rule would relocate HUD’s 

regulations governing nonprocurement 

debarment and suspension to a new part 

in Title 2 of the Code of Federal 

Regulations. The relocation is part of a 

governmentwide initiative to create one 

location where the public can find both 

the OMB requirements for grants and 

agreements and the associated federal 

agency implementing regulations. The 

proposed rule would also make 

conforming changes to HUD regulations 

referencing the nonprocurement 

debarment and suspension regulations. 

This proposed regulatory action is an 

administrative simplification that would 

make no substantive change in HUD 

policy or procedures for 

nonprocurement debarment and 

suspension. The rule would not have 

any impact on the substantive rights or 

duties of small entities because the 

policies and procedures are being 

relocated, while remaining 

substantively the same. Accordingly, the 

undersigned certifies that this rule will 

not have a significant economic impact 

on a substantial number of small 

entities. 

Notwithstanding HUD’s 

determination that this rule will not 

have a significant effect 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 

This proposed rule does not direct, 

provide for assistance or loan and 

mortgage insurance for, or otherwise 

govern or regulate, real property 

acquisition, disposition, leasing, 

rehabilitation, alteration, demolition, or 

new construction, or establish, revise, or 

provide for standards for construction or 

construction materials, manufactured 

housing, or occupancy. Accordingly, 

under 24 CFR 50.19(c)(1), this proposed 

rule is categorically excluded from the 

requirements of the National 

Environmental Policy Act (42 U.S.C. 

4321 et seq.). 

Executive Order 13132, Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits an agency from 

publishing any rule that has federalism 

implications if the rule either imposes 

substantial direct compliance costs on 

state and local governments and is not 

required by statute, or the rule preempts 

state law, unless the agency meets the 

consultation and funding requirements 

of section 6 of the Executive Order. This 

proposed 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. 

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 proposed rule 

does not impose any federal mandates 

on any state, local, or tribal 

governments, or on the private sector, 

within the meaning of UMRA. 

List of Subjects 

2 CFR Part 2424 

Administrative practice and 

procedure, Debarment and suspension, 

Grant programs, Reporting and 

recordkeeping requirements. 

24 CFR Part 5 

Administrative practice and 

procedure, Aged, Claims, Crime, 

Government contracts, Grant 

programs—housing and community 

development, Individuals with 

disabilities, Intergovernmental relations, 

Loan programs—housing and 

community development, Low and 

moderate income housing, Mortgage 

insurance, Penalties, Pets, Public 

housing, Rent subsidies, Reporting and 

recordkeeping requirements, Social 

security, Unemployment compensation, 

Wages. 

24 CFR Part 6 

Administrative practice and 

procedure, Civil rights, Equal 

employment opportunity, Grant 

programs—housing and community 

development, Investigations, Loan 

programs—housing and community 

development, Reporting and 

recordkeeping requirements. 

24 CFR Part 8 

Administrative practice and 

procedure, Civil rights, Equal 

employment opportunity, Grant 

programs—housing and community 

development, Individuals with 

disabilities, Loan programs—housing 

and community development, Reporting 

and recordkeeping requirements. 

24 CFR Part 15 

Classified information, Courts, 

Freedom of information, Government 

employees, Reporting and 

recordkeeping requirements. 

24 CFR Part 21 

Administrative practice and 

procedure, Drug abuse, Grant programs, 

Loan programs, Reporting and 

recordkeeping requirements. 

24 CFR Part 24 

Administrative practice and 

procedure, Government contracts, Grant 

programs, Loan programs, Technical 

assistance, Reporting and recordkeeping 

requirements. 

24 CFR Part 25 

Administrative practice and 

procedure, Loan programs—housing 

and community development, 

Organization and functions 

(Government agencies), Reporting and 

recordkeeping requirements. 

24 CFR Part 26 

Administrative practice and 

procedure. 

24 CFR Part 84 

Accounting, Colleges and universities, 

Grant programs, Hospitals, Nonprofit 

organizations, Reporting and 

recordkeeping requirements. 

24 CFR Part 85 

Accounting, Grant programs, Indians, 

Intergovernmental relations, Reporting 

and recordkeeping requirements. 

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 92 

Administrative practice and 

procedure, Grant programs—housing 

and community development, Low and 

moderate income housing, 

Manufactured homes, Rent subsidies, 

Reporting and recordkeeping 

requirements. 


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24 CFR Part 103 

Administrative practice and 

procedure, Aged, Fair housing, 

Individuals with disabilities, 

Intergovernmental relations, 

Investigations, Mortgages, Penalties, 

Reporting and recordkeeping 

requirements. 

24 CFR Part 107 

Administrative practice and 

procedure, Fair housing, Grant 

programs—housing and community 

development, Loan programs—housing 

and community development, Religious 

discrimination, Reporting and 

recordkeeping requirements, Sex 

discrimination. 

24 CFR Part 135 

Administrative practice and 

procedure, Community development, 

Equal employment opportunity, 

Government contracts, Grant 

programs—housing and community 

development, Housing, Loan 

programs—housing and community 

development, Reporting and 

recordkeeping requirements, Small 

businesses. 

24 CFR Part 200 

Administrative practice and 

procedure, Claims, Equal employment 

opportunity, Fair housing, Housing 

standards, Lead poisoning, Loan 

programs—housing and community 

development, Mortgage insurance, 

Organization and functions 

(Government agencies), Penalties, 

Reporting and recordkeeping 

requirements, Social security, 

Unemployment compensation, Wages. 

24 CFR Part 202 

Administrative practice and 

procedure, Home improvement, 

Manufactured homes, Mortgage 

insurance, Reporting and recordkeeping 

requirements. 

24 CFR Part 203 

Hawaiian Natives, Home 

improvement, Indians—lands, Loan 

programs—housing and community 

development, Mortgage insurance, 

Reporting and recordkeeping 

requirements, Solar energy. 

24 CFR Part 206 

Aged, Condominiums, Loan 

programs—housing and community 

development, Mortgage insurance, 

Reporting and recordkeeping 

requirements. 

24 CFR Part 245 

Condominiums, Cooperatives, Grant 

programs—housing and community 

development, Loan programs—housing 

and community development, Low and 

moderate income housing, Rent 

subsidies, Reporting and recordkeeping 

requirements, Utilities. 

24 CFR Part 291 

Community facilities, Homeless, Low 

and moderate income housing, 

Mortgages, Reporting and recordkeeping 

requirements, Surplus government 

property. 

24 CFR Part 401 

Grant programs—housing and 

community development, Loan 

programs—housing and community 

development, Low and moderate 

income housing, Mortgage insurance, 

Mortgages, Rent subsidies, Reporting 

and recordkeeping requirements. 

24 CFR Part 402 

Low and moderate income housing, 

Rent subsidies. 

24 CFR Part 570 

Administrative practice and 

procedure, American Samoa, 

Community development block grants, 

Grant programs—education, Grant 

programs—housing and community 

development, Guam, Indians, Loan 

programs—housing and community 

development, Low and moderate 

income housing, Northern Mariana 

Islands, Pacific Islands Trust Territory, 

Puerto Rico, Reporting and 

recordkeeping requirements, Student 

aid, Virgin Islands. 

24 CFR Part 572 

Government property, Grant 

programs—housing and community 

development, Low and moderate 

income housing, Nonprofit 

organizations, Reporting and 

recordkeeping requirements. 

24 CFR Part 585 

Community facilities, Grant 

programs—housing and community 

development, Homeless, Low and 

moderate income housing, Reporting 

and recordkeeping requirements. 

24 CFR Part 941 

Grant programs—housing and 

community development, Loan 

programs—housing and community 

development, Public housing. 

24 CFR Part 954 

Administrative practice and 

procedure, Grant programs—housing 

and community development, Grant 

programs—Indians, Indians, Low and 

moderate income housing, 

Manufactured homes, Rent subsidies, 

Reporting and recordkeeping 

requirements. 

24 CFR Part 982 

Grant programs—housing and 

community development, Grant 

programs—Indians, Indians, Public 

housing, Rent subsidies, Reporting and 

recordkeeping requirements. 

24 CFR Part 983 

Grant programs—housing and 

community development, Rent 

subsidies, Reporting and recordkeeping 

requirements. 

24 CFR Part 1000 

Aged, Community development block 

grants, Grant programs—housing and 

community development, Grant 

programs—Indians, Indians, Individuals 

with disabilities, Public housing, 

Reporting and recordkeeping 

requirements. 

24 CFR Part 1003 

Alaska, Community development 

block grants, Grant programs—housing 

and community development, Grant 

programs—Indians, Indians, Reporting 

and recordkeeping requirements. 

24 CFR Part 1005 

Indians, Loan programs—Indians, 

Reporting and recordkeeping 

requirements. 

24 CFR Part 1006 

Community development block 

grants, Grant programs—housing and 

community development, Grant 

programs—Indians, Hawaiian Natives, 

Low and moderate income housing, 

Reporting and recordkeeping 

requirements. 

24 CFR Part 3282 

Administrative practice and 

procedure, Consumer protection, 

Intergovernmental relations, 

Investigations, Manufactured homes, 

Reporting and recordkeeping 

requirements. 

24 CFR Part 3500 

Consumer protection, Housing, 

Mortgages, Reporting and recordkeeping 

requirements. 

Accordingly, for the reasons 

discussed in the preamble, HUD 

proposes to amend 2 CFR part 2424 and 

24 CFR parts 5, 6, 8, 15, 21, 24, 25, 26, 

84, 91, 92, 103, 107, 135, 200, 202, 203, 

206, 245, 291, 401, 402, 570, 572, 585, 

941, 954, 982, 983, 1000, 1003, 1005, 

1006, 3282, and 3500 to read as follows: 


sroberts on PROD1PC70 with PROPOSALS
14020 Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Proposed Rules 

TITLE 2—GRANTS AND 

AGREEMENTS 

Subtitle B—Federal Agency Regulations 

for Grants and Agreements 

PART 2424—NONPROCUREMENT 

DEBARMENT AND SUSPENSION; 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

1. Under the authority of 42 U.S.C. 

3535(d), add Chapter XXIV consisting of 

part 2424 to Subtitle B to read as 

follows: 

CHAPTER XXIV—DEPARTMENT OF 

HOUSING AND URBAN DEVELOPMENT 

PART 2424—NONPROCUREMENT 

DEBARMENT AND SUSPENSION 

Sec. 

2424.10 What does this part do? 

2424.20 Does this part apply to me? 

2424.30 What policies and procedures must 

I follow? 

Subpart A—General 

2424.137 Who in HUD may grant an 

exception to let an excluded person 

participate in a covered transaction? 

Subpart B—Covered Transactions 

2424.220 What contracts and subcontracts, 

in addition to those listed in 2 CFR 

180.220, are covered transactions? 

Subpart C—Responsibilities of Participants 

Regarding Transactions 

2424.300 What must I do before I enter into 

a covered transaction with another 

person at the next lower tier (HUD 

supplement to governmentwide 

definition at 2 CFR 180.300)? 

2424.332 What methods must I use to pass 

requirements down to participants at 

lower tiers with whom I intend to do 

business? 

Subpart D—Responsibilities of Federal 

Agency Officials Regarding Transactions 

2424.437 What method do I use to 

communicate to a participant the 

requirements described in the OMB 

guidance at 2 CFR 180.435? 

Subpart E—[Reserved] 

Subpart F—[Reserved] 

Subpart G—Suspension 

2424.747 Who conducts fact finding for 

HUD suspensions? 

Subpart H—Debarment 

2424.842 Who conducts fact finding for 

HUD debarments? 

Subpart I—Definitions 

2424.952 Hearing officer. 

2424.970 Nonprocurement transaction 

(HUD supplement to governmentwide 

definition at 2 CFR 180.970). 

2424.995 Principal (HUD supplement to 

governmentwide definition at 2 CFR 

180.995). 

2424.1017 Ultimate beneficiary. 

Subpart J—Limited Denial of Participation 

2424.1100 What is a limited denial of 

participation? 

2424.1105 Who may issue a limited denial 

of participation? 

2424.1110 When may a HUD official issue 

a limited denial of participation? 

2424.1115 When does a limited denial of 

participation take effect? 

2424.1120 How long may a limited denial 

of participation last? 

2424.1125 How does a limited denial of 

participation start? 

2424.1130 How may I contest my limited 

denial of participation? 

2424.1135 Do Federal agencies coordinate 

limited denial of participation actions? 

2424.1140 What is the scope of a limited 

denial of participation? 

2424.1145 May HUD impute the conduct of 

one person to another in a limited denial 

of participation? 

2424.1150 What is the effect of a 

suspension or debarment on a limited 

denial of participation? 

2424.1155 What is the effect of a limited 

denial of participation on a suspension 

or a debarment? 

2424.1160 May a limited denial of 

participation be terminated before the 

term of the limited denial of 

participation expires? 

2424.1165 How is a limited denial of 

participation reported? 

Authority: Sec. 2455, Pub. L. 103–355, 108 

Stat. 3327; E.O. 12549, 3 CFR, 1986 Comp., 

p. 189; E.O. 12689, 3 CFR, 1989 Comp., p. 

235. 

§ 2424.10 What does this part do? 

In this part, HUD adopts, as HUD 

policies, procedures, and requirements 

for nonprocurement debarment and 

suspension, the OMB guidance in 

subparts A through I of 2 CFR part 180, 

as supplemented by this part. This 

adoption thereby gives regulatory effect 

for HUD to the OMB guidance as 

supplemented by this part. This part 

satisfies the requirements in section 3 of 

Executive Order 12549, ‘‘Debarment and 

Suspension’’ (3 CFR 1986 Comp., p. 

189), Executive Order 12689, 

‘‘Debarment and Suspension’’ (3 CFR 

1989 Comp., p. 235) and 31 U.S.C. 6101 

note (Section 2455, Pub. L. 103–355, 

108 Stat. 3327). 

§ 2424.20 Does this part apply to me? 

This part and, through this part, 

pertinent portions of subparts A through 

I of 2 CFR part 180 (see table at 2 CFR 

180.100(b)), apply to you if you are a—

(a) Participant or principal in a 

‘‘covered transaction’’ (see subpart B of 

2 CFR part 180 and the definition of 

‘‘nonprocurement transaction’’ at 2 CFR 

180.970, as supplemented by § 2424.970 

of this part); 

(b) Respondent in a HUD suspension 

or debarment action; 

(c) HUD debarment or suspension 

official; or 

(d) HUD grants officer, agreements 

officer, or other official authorized to 

enter into any type of nonprocurement 

transaction that is a covered transaction. 

§ 2424.30 What policies and procedures 

must I follow? 

The HUD policies and procedures that 

you must follow are the policies and 

procedures specified in each applicable 

section of the OMB guidance in subparts 

A through I of 2 CFR part 180, as that 

section is supplemented by the section 

in this part with the same section 

number. The contracts that are covered 

transactions, for example, are specified 

by section 220 of the OMB guidance 

(i.e., 2 CFR 180.220) as supplemented 

by section 220 in this part (i.e., 

§ 2424.220). For any section of OMB 

guidance in subparts A through I of 2 

CFR part 180 that has no corresponding 

section in this part, HUD policies and 

procedures are those in the OMB 

guidance. 

Subpart A—General 

§ 2424.137 Who in HUD may grant an 

exception to let an excluded person 

participate in a covered transaction? 

The Secretary, the Director of the 

Enforcement Center, or a designee may 

grant an exception permitting an 

excluded person to participate in a 

particular covered transaction. If the 

Secretary, the Director of the 

Enforcement Center, or a designee 

grants an exception, the exception must 

be in writing and state the reason(s) for 

deviating from the governmentwide 

policy in Executive Order 12549. 

Subpart B—Covered Transactions 

§ 2424.220 What contracts and 

subcontracts, in addition to those listed in 

2 CFR 180.220, are covered transactions? 

In addition to the contracts covered 

under 2 CFR 180.220(b) of the OMB 

guidance, this part applies to any 

contract, regardless of tier, that is 

awarded by a contractor, subcontractor, 

supplier, consultant, or its agent or 

representative in any transaction, if the 

contract is to be funded or provided by 

HUD under a covered nonprocurement 

transaction and the amount of the 

contract is expected to equal or exceed 

$25,000. This extends the coverage of 

the HUD nonprocurement suspension 

and debarment requirements to all 

lower tiers of subcontracts under 

covered nonprocurement transactions, 

as permitted under the OMB guidance at 

2 CFR 180.220(c) (see optional lowertier coverage in the figure in the 

Appendix to 2 CFR part 180). 


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Subpart C—Responsibilities of 

Participants Regarding Transactions 

§ 2424.300 What must I do before I enter 

into a covered transaction with another 

person at the next lower tier (HUD 

supplement to governmentwide definition at 

2 CFR 180.300)? 

(a) You, as a participant, are 

responsible for determining whether 

you are entering into a covered 

transaction with an excluded or 

disqualified person. You may decide the 

method by which you do so. 

(1) You may, but are not required to, 

check the Excluded Parties List System 

(EPLS). 

(2) You may, but are not required to, 

collect a certification from that person. 

(b) In the case of an employment 

contract, HUD does not require 

employers to check the EPLS prior to 

making salary payments pursuant to 

that contract. 

§ 2424.332 What methods must I use to 

pass requirements down to participants at 

lower tiers with whom I intend to do 

business? 

To communicate the requirements to 

lower-tier participants, you must 

include a term or condition in the 

transaction requiring compliance with 

subpart C of the OMB guidance in 2 CFR 

part 180, as supplemented by this 

subpart. 

Subpart D—Responsibilities of Federal 

Agency Officials Regarding 

Transactions 

§ 2424.437 What method do I use to 

communicate to a participant the 

requirements described in the OMB 

guidance at 2 CFR 180.435? 

To communicate to a participant the 

requirements described in 2 CFR 

180.435 of the OMB guidance, you must 

include a term or condition in the 

transaction that requires the participant 

to: comply with subpart C of 2 CFR part 

180, as supplemented by subpart C of 

this part, and include a similar term or 

condition in lower-tier covered 

transactions. 

Subpart E—[Reserved] 

Subpart F—[Reserved] 

Subpart G—Suspension 

§ 2424.747 Who conducts fact finding for 

HUD suspensions? 

In all HUD suspensions, the official 

receiving the referral for findings of fact 

regarding disputed material facts must 

be a hearing officer. 

Subpart H—Debarment 

§ 2424.842 Who conducts fact finding for 

HUD debarments? 

In all HUD debarments, the official 

receiving the referral for findings of fact 

regarding disputed material facts must 

be a hearing officer. 

Subpart I—Definitions 

§ 2424.952 Hearing officer. 

Hearing Officer means an 

Administrative Law Judge or Board of 

Contract Appeals Judge authorized by 

HUD’s Secretary or by the Secretary’s 

designee to conduct proceedings under 

this part. 

§ 2424.970 Nonprocurement transaction 

(HUD supplement to governmentwide 

definition at 2 CFR 180.970). 

In the case of employment contracts 

that are covered transactions, each 

salary payment under the contract is a 

separate covered transaction. 

§ 2424.995 Principal (HUD supplement to 

governmentwide definition at 2 CFR 

180.995). 

A person who has a critical influence 

on, or substantive control over, a 

covered transaction, whether or not 

employed by the participant. Persons 

who have a critical influence on, or 

substantive control over, a covered 

transaction may include, but are not 

limited to: 

(a) Loan officers; 

(b) Staff appraisers and inspectors; 

(c) Underwriters; 

(d) Bonding companies; 

(e) Borrowers under programs 

financed by HUD or with loans 

guaranteed, insured, or subsidized 

through HUD programs; 

(f) Purchasers of properties with HUDinsured or Secretary-held mortgages; 

(g) Recipients under HUD assistance 

agreements; 

(h) Ultimate beneficiaries of HUD 

programs; 

(i) Fee appraisers and inspectors; 

(j) Real estate agents and brokers; 

(k) Management and marketing 

agents; 

(l) Accountants, consultants, 

investment bankers, architects, 

engineers, and attorneys who are in a 

business relationship with participants 

in connection with a covered 

transaction under a HUD program; 

(m) Contractors involved in the 

construction or rehabilitation of 

properties financed by HUD, with HUDinsured loans or acquired properties, 

including properties held by HUD as 

mortgagee-in-possession; 

(n) Closing agents; 

(o) Turnkey developers of projects 

financed by or with financing insured 

by HUD; 

(p) Title companies; 

(q) Escrow agents; 

(r) Project owners; 

(s) Administrators of hospitals, 

nursing homes, and projects for the 

elderly financed or insured by HUD; 

and 

(t) Developers, sellers, or owners of 

property financed with loans insured 

under Title I or Title II of the National 

Housing Act. 

§ 2424.1017 Ultimate beneficiary. 

Ultimate beneficiaries of HUD 

programs include, but are not limited to, 

subsidized tenants and subsidized 

mortgagors, such as those assisted under 

Section 8 Housing Assistance Payment 

contracts, by Section 236 Rental 

Assistance, or by Rent Supplement 

payments. 

Subpart J—Limited Denial of 

Participation 

§ 2424.1100 What is a limited denial of 

participation? 

A limited denial of participation 

excludes a specific person from 

participating in a specific program, or 

programs, within a HUD field office’s 

geographic jurisdiction, for a specific 

period of time. A limited denial of 

participation is normally issued by a 

HUD field office, but may be issued by 

a Headquarters office. The decision to 

impose a limited denial of participation 

is discretionary and based on the best 

interests of the Federal government. 

§ 2424.1105 Who may issue a limited 

denial of participation? 

The Secretary designates HUD 

officials who are authorized to impose 

a limited denial of participation, 

affecting any participant and/or their 

affiliates, except mortgagees approved 

by the Federal Housing Administration 

(FHA). 

§ 2424.1110 When may a HUD official 

issue a limited denial of participation? 

(a) An authorized HUD official may 

issue a limited denial of participation 

against a person, based upon adequate 

evidence of any of the following causes: 

(1) Approval of an applicant for 

insurance would constitute an 

unsatisfactory risk; 

(2) There are irregularities in a 

person’s past performance in a HUD 

program; 

(3) The person has failed to maintain 

the prerequisites of eligibility to 

participate in a HUD program; 

(4) The person has failed to honor 

contractual obligations or to proceed in 


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accordance with contract specifications 

or HUD regulations; 

(5) The person has failed to satisfy, 

upon completion, the requirements of 

an assistance agreement or contract; 

(6) The person has deficiencies in 

ongoing construction projects; 

(7) The person has falsely certified in 

connection with any HUD program, 

whether or not the certification was 

made directly to HUD; 

(8) The person has committed any act 

or omission that would be cause for 

debarment under 2 CFR 180.800; 

(9) The person has violated any law, 

regulation, or procedure relating to the 

application for financial assistance, 

insurance, or guarantee, or to the 

performance of obligations incurred 

pursuant to a grant of financial 

assistance or pursuant to a conditional 

or final commitment to insure or 

guarantee; 

(10) The person has made or procured 

to be made any false statement for the 

purpose of influencing in any way an 

action of the Department; or 

(11) Imposition of a limited denial of 

participation by any other HUD office. 

(b) Filing of a criminal Indictment or 

Information shall constitute adequate 

evidence for the purpose of limited 

denial of participation actions. The 

Indictment or Information need not be 

based on offenses against HUD. 

(c) Imposition of a limited denial of 

participation by any other HUD office 

shall constitute adequate evidence for a 

concurrent limited denial of 

participation. Where such a concurrent 

limited denial of participation is 

imposed, participation may be restricted 

on the same basis without the need for 

additional conference or further hearing. 

(d) An affiliate or organizational 

element may be included in a limited 

denial of participation solely on the 

basis of its affiliation, and regardless of 

its knowledge of or participation in the 

acts providing cause for the sanction. 

The burden of proving that a particular 

affiliate or organizational element is 

currently responsible and not controlled 

by the primary sanctioned party (or by 

an entity that itself is controlled by the 

primary sanctioned party) is on the 

affiliate or organizational element. 

§ 2424.1115 When does a limited denial of 

participation take effect? 

A limited denial of participation is 

effective immediately upon issuance of 

the notice. 

§ 2424.1120 How long may a limited denial 

of participation last? 

A limited denial of participation may 

remain in effect up to 12 months. 

§ 2424.1125 How does a limited denial of 

participation start? 

A limited denial of participation is 

made effective by providing the person, 

and any specifically named affiliate, 

with notice: 

(a) That the limited denial of 

participation is being imposed; 

(b) Of the cause(s) under § 2424.1110 

for the sanction; 

(c) Of the potential effect of the 

sanction, including the length of the 

sanction and the HUD program(s) and 

geographic area affected by the sanction; 

(d) Of the right to request, in writing, 

within 30 days of receipt of the notice, 

a conference under § 2424.1130; and 

(e) Of the right to contest the limited 

denial of participation under 

§ 2424.1130. 

§ 2424.1130 How may I contest my limited 

denial of participation? 

(a) Within 30 days after receiving a 

notice of limited denial of participation, 

you may request a conference with the 

official who issued such notice. The 

conference shall be held within 15 days 

after the Department’s receipt of the 

request for a conference, unless you 

waive this time limit. The official or 

designee who imposed the sanction 

shall preside. At the conference, you 

may appear with a representative and 

may present all relevant information 

and materials to the official or designee. 

Within 20 days after the conference, or 

within 20 days after any agreed-upon 

extension of time for submission of 

additional materials, the official or 

designee shall, in writing, advise you of 

the decision to terminate, modify, or 

affirm the limited denial of 

participation. If all or a portion of the 

remaining period of exclusion is 

affirmed, the notice of affirmation shall 

advise you of the opportunity to contest 

the notice and to request a hearing 

before a Departmental Hearing Officer. 

You have 30 days after receipt of the 

notice of affirmation to request this 

hearing. If the official or designee does 

not issue a decision within the 20-day 

period, you may contest the sanction 

before a Departmental Hearing Officer. 

Again, you have 30 days from the 

expiration of the 20-day period to 

request this hearing. If you request a 

hearing before the Departmental Hearing 

Officer, you must submit your request to 

the Debarment Docket Clerk, 

Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

B–133 Portals 200, Washington, DC 

20410–0500. 

(b) You may skip the conference with 

the official and you may request a 

hearing before a Departmental Hearing 

Officer. This must also be done within 

30 days after receiving a notice of 

limited denial of participation. If you 

opt to have a hearing before a 

Departmental Hearing Officer, you must 

submit your request to the Debarment 

Docket Clerk, Department of Housing 

and Urban Development, 451 Seventh 

Street, SW., B–133 Portals 200, 

Washington, DC 20410–0500. The 

hearing before the Departmental Hearing 

Officer is more formal than the 

conference before the sanctioning 

official described above. The 

Departmental Hearing Officer will 

conduct the hearing in accordance with 

24 CFR part 26, subpart A. The 

Departmental Hearing Officer will issue 

findings of fact and make a 

recommended decision. The sanctioning 

official will then make a final decision, 

as promptly as possible, after the 

Departmental Hearing Officer’s 

recommended decision is issued. The 

sanctioning official may reject the 

recommended decision or any findings 

of fact, only after specifically 

determining that the decision or any of 

the facts are arbitrary, capricious, or 

clearly erroneous. 

(c) In deciding whether to terminate, 

modify, or affirm a limited denial of 

participation, the Departmental official 

or designee may consider the factors 

listed at 2 CFR 180.860. The 

Departmental Hearing Officer may also 

consider the factors listed at 2 CFR 

180.860 in making any recommended 

decision. 

§ 2424.1135 Do Federal agencies 

coordinate limited denial of participation 

actions? 

Federal agencies do not coordinate 

limited denial of participation actions. 

As stated in § 2424.1100, a limited 

denial of participation is a HUD-specific 

action and applies only to HUD 

activities. 

§ 2424.1140 What is the scope of a limited 

denial of participation? 

The scope of a limited denial of 

participation is as follows: 

(a) A limited denial of participation 

generally extends only to participation 

in the program under which the cause 

arose. A limited denial of participation 

may, at the discretion of the authorized 

official, extend to other programs, 

initiatives, or functions within the 

jurisdiction of an Assistant Secretary. 

The authorized official, however, may 

determine that where the sanction is 

based on an indictment or conviction, 

the sanction shall apply to all programs 

throughout HUD. 

(b) For purposes of this subpart, 

participation includes receipt of any 

benefit or financial assistance through 


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grants or contractual arrangements; 

benefits or assistance in the form of loan 

guarantees or insurance; and awards of 

procurement contracts. 

(c) The sanction may be imposed for 

a period not to exceed 12 months, and 

shall be effective within the geographic 

jurisdiction of the office imposing it, 

unless the sanction is imposed by an 

Assistant Secretary or Deputy Assistant 

Secretary, in which case the sanction 

may be imposed on either a nationwide 

or a more restricted basis. 

§ 2424.1145 May HUD impute the conduct 

of one person to another in a limited denial 

of participation? 

For purposes of determining a limited 

denial of participation, HUD may 

impute conduct as follows: 

(a) Conduct imputed from an 

individual to an organization. HUD may 

impute the fraudulent, criminal, or 

other improper conduct of any officer, 

director, shareholder, partner, 

employee, or other individual 

associated with an organization, to that 

organization when the improper 

conduct occurred in connection with 

the individual’s performance of duties 

for or on behalf of that organization, or 

with the organization’s knowledge, 

approval, or acquiescence. The 

organization’s acceptance of the benefits 

derived from the conduct is evidence of 

knowledge, approval, or acquiescence. 

(b) Conduct imputed from an 

organization to an individual or 

between individuals. HUD may impute 

the fraudulent, criminal, or other 

improper conduct of any organization to 

an individual, or from one individual to 

another individual, if the individual to 

whom the improper conduct is imputed 

participated in, had knowledge of, or 

had reason to know of the improper 

conduct. 

(c) Conduct imputed from one 

organization to another organization. 

HUD may impute the fraudulent, 

criminal, or other improper conduct of 

one organization to another organization 

when the improper conduct occurred in 

connection with a partnership, joint 

venture, joint application, association, 

or similar arrangement, or when the 

organization to whom the improper 

conduct is imputed has the power to 

direct, manage, control, or influence the 

activities of the organization responsible 

for the improper conduct. Acceptance of 

the benefits derived from the conduct is 

evidence of knowledge, approval, or 

acquiescence. 

§ 2424.1150 What is the effect of a 

suspension or debarment on a limited 

denial of participation? 

If you have submitted a request for a 

hearing pursuant to § 2424.1130 of this 

subpart, and you also receive, pursuant 

to subpart G or H of this part, a notice 

of proposed debarment or suspension 

that is based on the same transaction(s) 

or the same conduct as the limited 

denial of participation, as determined 

by the debarring or suspending official, 

the following rules shall apply: 

(a) During the 30-day period after you 

receive a proposed debarment or 

suspension, during which you may elect 

to contest the debarment under 2 CFR 

180.815, or the suspension pursuant to 

2 CFR 180.720, all proceedings in the 

limited denial of participation, 

including discovery, are automatically 

stayed. 

(b) If you do not contest the proposed 

debarment pursuant to 2 CFR 180.815, 

or the suspension pursuant to 2 CFR 

180.720, the final imposition of the 

debarment or suspension shall also 

constitute a final decision with respect 

to the limited denial of participation, to 

the extent that the debarment or 

suspension is based on the same 

transaction(s) or conduct as the limited 

denial of participation. 

(c) If you contest the proposed 

debarment pursuant to 2 CFR 180.815, 

or the suspension pursuant to 2 CFR 

180.720, then: 

(1) Those parts of the limited denial 

of participation and the debarment or 

suspension based on the same 

transaction(s) or conduct, as determined 

by the debarring or suspending official, 

shall be immediately consolidated 

before the debarring or suspending 

official; 

(2) Proceedings under the 

consolidated portions of the limited 

denial of participation shall be stayed 

before the hearing officer until the 

suspending or debarring official makes 

a determination as to whether the 

consolidated matters should be referred 

to a hearing officer. Such a 

determination must be made within 90 

days of the date of the issuance of the 

suspension or proposed debarment, 

unless the suspending/debarring official 

extends the period for good cause. 

(i) If the suspending or debarring 

official determines that there is a 

genuine dispute as to material facts 

regarding the consolidated matter, the 

entire consolidated matter will be 

referred to the hearing officer hearing 

the limited denial of participation, for 

additional proceedings pursuant to 2 

CFR 180.750 or 180.845. 

(ii) If the suspending or debarring 

official determines that there is no 

dispute as to material facts regarding the 

consolidated matter, jurisdiction of the 

hearing officer under 2 CFR part 2424, 

subpart J, 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, will be transferred 

to the debarring or suspending official, 

and the hearing officer responsible for 

hearing the limited denial of 

participation shall transfer the 

administrative record to the debarring or 

suspending official. 

(3) The suspending or debarring 

official shall hear the entire 

consolidated case under the procedures 

governing suspensions and debarments, 

and shall issue a final decision as to 

both the limited denial of participation 

and the suspension or debarment. 

§ 2424.1155 What is the effect of a limited 

denial of participation on a suspension or 

a debarment? 

The imposition of a limited denial of 

participation does not affect the right of 

the Department to suspend or debar any 

person under this part. 

§ 2424.1160 May a limited denial of 

participation be terminated before the term 

of the limited denial of participation 

expires? 

If the cause for the limited denial of 

participation is resolved before the 

expiration of the 12-month period, the 

official who imposed the sanction may 

terminate it. 

§ 2424.1165 How is a limited denial of 

participation reported? 

When a limited denial of participation 

has been made final, or the period for 

requesting a conference pursuant to 

§ 2424.1130 has expired without receipt 

of such a request, the official imposing 

the limited denial of participation shall 

notify the Director of the Compliance 

Division in the Departmental 

Enforcement Center of the scope of the 

limited denial of participation. 

TITLE 24—HOUSING AND URBAN 

DEVELOPMENT 

Subtitle B—Regulations Relating To 

Housing and Urban Development 

PART 5—GENERAL HUD PROGRAM 

REQUIREMENTS; WAIVERS 

2. The authority citation for part 5 

continues to read as follows: 

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

1437f, 1437n, 3535(d), and Sec. 327, Pub. L. 

109–115, 119 Stat. 2936. 

3. Revise § 5.105(c) and (d) to read as 

follows: 

§ 5.105 Other Federal requirements. 

* * * * * 

(c) Debarred, suspended, or ineligible 

contractors and participants. The 

prohibitions at 2 CFR part 2424 on the 


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use of debarred, suspended, or ineligible 

contractors and participants. 

(d) Drug-Free Workplace. The DrugFree Workplace Act of 1988 (41 U.S.C. 

701, et seq.) and HUD’s implementing 

regulations at 24 CFR part 21. 

PART 6—NONDISCRIMINATION IN 

PROGRAMS AND ACTIVITIES 

RECEIVING ASSISTANCE UNDER 

TITLE I OF THE HOUSING AND 

COMMUNITY DEVELOPMENT ACT OF 

1978 

4. The authority citation for part 6 

continues to read as follows: 

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

5309. 

5. Revise § 6.12(a)(4) to read as 

follows: 

§ 6.12 Procedure for effecting compliance. 

(a) * * * 

(4) Take such other actions as may be 

provided by law, including, but not 

limited to, the initiation of proceedings 

under 2 CFR part 2424 or any applicable 

proceeding under State or local law. 

* * * * * 

PART 8—NONDISCRIMINATION 

BASED ON HANDICAP IN FEDERALLY 

ASSISTED PROGRAMS AND 

ACTIVITIES OF THE DEPARTMENT OF 

HOUSING AND URBAN 

DEVELOPMENT 

6. The authority citation for part 8 

continues to read as follows: 

Authority: 29 U.S.C. 794; 42 U.S.C. 3535(d) 

and 5309. 

7. Revise § 8.57(a)(2) to read as 

follows: 

§ 8.57 Procedure for effecting compliance. 

(a) * * * 

(2) The initiation of debarment 

proceedings pursuant to 2 CFR part 

2424; and 

* * * * * 

PART 15—PUBLIC ACCESS TO HUD 

RECORDS UNDER THE FREEDOM OF 

INFORMATION ACT AND TESTIMONY 

AND PRODUCTION OF INFORMATION 

BY HUD EMPLOYEES 

8. The authority citation for part 15 

continues to read as follows: 

Authority: 42 U.S.C. 3535(d). Subpart A 

also issued under 5 U.S.C. 552. Section 

15.107 also issued under E.O. 12958, 60 FR 

19825, 3 CFR Comp., p. 333. Subparts C and 

D also issued under 5 U.S.C. 301. 

9. Revise § 15.109(d) to read as 

follows: 

§ 15.109 How will HUD respond to a 

request for information from form HUD–

92410 (Statement of Profit and Loss)? 

* * * * * 

(d) What sanctions are available for 

improper disclosure of such 

information? An eligible potential 

purchaser or a potential investor (who 

has received the information from a 

potential purchaser and has been 

notified by that entity of its obligations 

under paragraph (b) of this section), 

who discloses information from form 

HUD–92410 in violation of this section, 

may be subject to sanctions under 2 CFR 

part 2424. 

PART 21—GOVERNMENTWIDE 

REQUIREMENTS FOR DRUG-FREE 

WORKPLACE (GRANTS) 

10. The authority citation for part 21 

continues to read as follows: 

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

3535(d). 

11. Revise § 21.510(c) to read as 

follows: 

§ 21.510 What actions will the Federal 

Government take against a recipient 

determined to have violated this part? 

* * * * * 

(c) Suspension or debarment of the 

recipient under 2 CFR part 2424, for a 

period not to exceed five years. 

12. Revise § 21.605(a)(2) to read as 

follows: 

§ 21.605 Award. 

* * * * * 

(a) * * * 

(2) A block grant or a grant in an 

entitlement program, whether or not the 

grant is exempted from coverage under 

the governmentwide rule 24 CFR part 85 

that implements OMB Circular A–102 

and specifies uniform administrative 

requirements. 

* * * * * 

PART 24—GOVERNMENTWIDE 

DEBARMENT AND SUSPENSION 

(NONPROCUREMENT) 

13. The authority citation for part 24 

would be revised to read as follows: 

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

14. Revise part 24 to read as follows: 

PART 24—GOVERNMENTWIDE 

DEBARMENT AND SUSPENSION 

(NONPROCUREMENT) 

§ 24.1 Debarment and suspension 

(nonprocurement). 

The policies, procedures, and 

requirements for debarment, 

suspension, and limited denial of 

participation are set forth in 2 CFR part 

2424. 

PART 25—MORTGAGEE REVIEW 

BOARD 

15. The authority citation for part 25 

continues to read as follows: 

Authority: 12 U.S.C. 1708(c), 1708(d), 

1709(s), 1715(b) and 1715(f)–14; 42 U.S.C. 

3535(d). 

§ 25.2 [Amended] 

16. In § 25.2, revise the reference to 

‘‘part 24 of this subtitle A’’ to read ‘‘2 

CFR part 2424.’’

17. Revise § 25.9(n) to read as follows: 

§ 25.9 Grounds for an administrative 

action. 

* * * * * 

(n) Employing or retaining: 

(1) An officer, partner, director, or 

principal at such time when such 

person was suspended, debarred, 

ineligible, or subject to a limited denial 

of participation under 2 CFR part 2424 

or otherwise prohibited from 

participation in HUD programs, where 

the mortgagee knew or should have 

known of the prohibition; 

(2) An employee who is not an officer, 

partner, director, or principal and who 

is or will be working on HUD/FHA 

program matters at a time when such 

person was suspended, debarred, 

ineligible, or subject to a limited denial 

of participation under 2 CFR part 2424 

or otherwise prohibited from 

participation in HUD programs, where 

the mortgagee knew or should have 

known of the prohibition; 

* * * * * 

PART 26—HEARING PROCEDURES 

18. The authority citation for part 26 

continues to read as follows: 

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

19. Revise § 26.1 to read as follows: 

§ 26.1 Purpose. 

This part sets forth rules of procedure 

in certain proceedings of the 

Department of Housing and Urban 

Development presided over by a hearing 

officer. These rules of procedure apply 

to hearings with respect to 

determinations by the Multifamily 

Participation Review Committee 

pursuant to 24 CFR part 200, subpart H, 

to hearings conducted pursuant to 

referrals by debarring or suspending 

officials under 2 CFR part 2424, and to 

hearings conducted pursuant to referrals 

by a hearing official under 24 CFR part 

25, unless such regulations at 2 CFR 

part 2424, 24 CFR parts 25, or 200, 

provide otherwise. They also apply in 

any other case where a hearing is 

required by statute or regulation, to the 

extent that rules adopted under such 


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statute or regulation are not 

inconsistent. 

20. Revise § 26.9 to read as follows: 

§ 26.9 Notice of administrative action. 

In every case, there shall be a notice 

of administrative action. The notice 

shall be in writing and inform the party 

of the determination. The notice shall 

state the reasons for the proposed or 

imposed action, except where general 

terms are permitted by 2 CFR part 2424. 

The notice shall inform the party of any 

right to a hearing to challenge the 

determination, and the manner and time 

in which to request such a hearing. A 

supplemental notice may be issued, in 

the discretion of the initiating official, to 

add to or modify the reasons for the 

action. 

PART 84—UNIFORM ADMINISTRATIVE 

REQUIREMENTS FOR GRANTS AND 

AGREEMENTS WITH INSTITUTIONS 

OF HIGHER EDUCATION, HOSPITALS, 

AND OTHER NON-PROFIT 

ORGANIZATIONS 

21. The authority citation for part 84 

continues to read as follows: 

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

22. In § 84.2, revise the definition of 

‘‘Suspension’’ to read as follows: 

§ 84.2 Definitions. 

* * * * * 

Suspension means an action by HUD 

that temporarily withdraws HUD 

sponsorship under an award, pending 

corrective action by the recipient or 

pending a decision to terminate the 

award by HUD. Suspension of an award 

is a separate action from suspensions 

under HUD regulations implementing 

E.O. 12549 and E.O. 12689, ‘‘Debarment 

and Suspension,’’ at 2 CFR part 2424. 

* * * * * 

23. Revise § 84.13 to read as follows: 

§ 84.13 Debarment and suspension; DrugFree Workplace. 

(a) Recipients and subrecipients shall 

comply with the governmentwide 

nonprocurement debarment and 

suspension requirements in 2 CFR part 

2424. These governmentwide 

requirements restrict subawards and 

contracts with certain parties that are 

debarred, suspended, or otherwise 

excluded from or ineligible for 

participation in federal assistance 

programs or activities. 

(b) Recipients and subrecipients shall 

comply with the requirements of the 

Drug-Free Workplace Act of 1988 (42 

U.S.C. 701), as set forth at 24 CFR part 

21. 

24. Revise § 84.44(d) to read as 

follows: 

§ 84.44 Procurement procedures. 

* * * * * 

(d) Contracts shall be made only with 

responsible contractors who possess the 

potential ability to perform successfully 

under the terms and conditions of the 

proposed procurement. Consideration 

shall be given to such matters as 

contractor integrity; compliance with 

public policy, including, where 

applicable, Section 3 of the Housing and 

Urban Development Act of 1968 (12 

U.S.C. 1701u); record of past 

performance; and financial and 

technical resources or accessibility to 

other necessary resources. In certain 

circumstances, contracts with certain 

parties are restricted by implementation 

of Executive Orders 12549 and 12689, 

‘‘Debarment and Suspension,’’ at 2 CFR 

part 2424. 

* * * * * 

25. Revise § 84.62(d) to read as 

follows: 

§ 84.62 Enforcement. 

* * * * * 

(d) Relationship to debarment and 

suspension. The enforcement remedies 

identified in this section, including 

suspension and termination, do not 

preclude a recipient from being subject 

to debarment and suspension under 

HUD’s regulations at 2 CFR part 2424 

(see § 84.13). 

26. Revise § 84.84(e)(4) to read as 

follows: 

§ 84.84 Procurement standards. 

* * * * * 

(e) * * * 

(4) Contracts shall be made only with 

responsible contractors who possess the 

potential ability to perform successfully 

under the terms and conditions of the 

proposed procurement. Consideration 

shall be given to such matters as 

contractor integrity; compliance with 

public policy, including, where 

applicable, Section 3 of the Housing and 

Urban Development Act of 1968 (12 

U.S.C. 1701u); record of past 

performance; and financial and 

technical resources or accessibility to 

other necessary resources. In certain 

circumstances, contracts with certain 

parties are restricted, as set forth at 2 

CFR part 2424. 

* * * * * 

27. Revise § 84.86(b)(4) to read as 

follows: 

§ 84.86 Termination and enforcement. 

* * * * * 

(b) * * * 

(4) Relationship to debarment and 

suspension. The enforcement remedies 

identified in this section, including 

suspension and termination, do not 

preclude a recipient from being subject 

to debarment and suspension under 

HUD’s regulations at 2 CFR part 2424 

(see § 84.13). 

Appendix A to Part 84 [Amended] 

28. Remove paragraphs 8 and 9 from 

Appendix A. 

PART 85—ADMINISTRATIVE 

REQUIREMENTS FOR GRANTS AND 

COOPERATIVE AGREEMENTS TO 

STATE, LOCAL AND FEDERALLY 

RECOGNIZED INDIAN TRIBAL 

GOVERNMENTS 

29. The authority citation for part 85 

continues to read as follows: 

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

30. In § 85.3, revise the definition of 

‘‘Suspension’’ to read as follows: 

§ 85.3 Definitions. 

* * * * * 

Suspension means, depending on the 

context, either: temporary withdrawal of 

the authority to obligate grant funds 

pending corrective action by the grantee 

or subgrantee or a decision to terminate 

the grant, or an action taken by a 

suspending official in accordance with 

2 CFR part 2424, to immediately 

exclude a person from participating in 

grant transactions for a period, pending 

completion of an investigation and such 

legal or debarment proceedings as may 

ensue. 

* * * * * 

31. Revise § 85.35 to read as follows: 

§ 85.35 Subawards to debarred and 

suspended parties. 

Grantees and subgrantees must not 

make any award or permit any award 

(subgrant or contract) at any tier to any 

party that is debarred or suspended or 

is otherwise excluded from or ineligible 

for participation in federal assistance 

programs subject to 2 CFR part 2424. 

32. Revise § 85.43(d) to read as 

follows: 

§ 85.43 Enforcement. 

* * * * * 

(d) Relationship to debarment and 

suspension. The enforcement remedies 

identified in this section, including 

suspension and termination, do not 

preclude a grantee or subgrantee from 

being subject to 2 CFR part 2424 (see 

§ 85.35). 

PART 91—CONSOLIDATED 

SUBMISSIONS FOR COMMUNITY 

PLANNING AND DEVELOPMENT 

PROGRAMS 

33. The authority citation for part 91 

continues to read as follows: 


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

5301–5315, 11331–11388, 12701–12711, 

12741–12756, and 12901–12912. 

§ 91.225 [Amended] 

34. Remove § 91.225(a)(3) and 

redesignate paragraphs (a)(4), (5), (6), 

(7), and (8) as (a)(3), (4), (5), (6), and (7), 

respectively. 

§ 91.325 [Amended] 

35. Remove § 91.325(a)(3) and 

redesignate paragraphs (a)(4), (5), (6), 

(7), and (8) as (a)(3), (4), (5), (6), and (7), 

respectively. 

§ 91.425 [Amended] 

36. Remove § 91.425(a)(1)(iii) and 

redesignate paragraphs (a)(1)(iv), (v), 

(vi), (vii), and (viii) as (a)(1)(iii), (iv), (v), 

(vi), and (vii), respectively. 

PART 92—HOME INVESTMENT 

PARTNERSHIP PROGRAM 

37. The authority citation for part 92 

continues to read as follows: 

Authority: 42 U.S.C. 3535(d) and 12701–

12839. 

§ 92.61 [Amended] 

38. Remove § 92.61(c)(6) and 

redesignate (c)(7) as (c)(6). 

39. In § 92.508, revise paragraph 

(a)(7)(viii) to read as follows: 

§ 92.508 Recordkeeping. 

(a) * * * 

(7) * * * 

(viii) Records demonstrating 

compliance with debarment and 

suspension requirements in 2 CFR part 

2424. 

* * * * * 

PART 103—FAIR HOUSING 

COMPLAINT PROCESS 

40. The authority citation for part 103 

continues to read as follows: 

Authority: 42 U.S.C. 3535(d), 3600–3619. 

41. Revise § 103.510(b) to read as 

follows: 

§ 103.510 Other action by HUD. 

* * * * * 

(b) Take appropriate steps to initiate 

proceedings leading to the debarment of 

the respondent under 2 CFR part 2424, 

or initiate other actions leading to the 

imposition of administrative sanctions, 

where HUD determines that such 

actions are necessary to the effective 

operation and administration of Federal 

programs or activities. 

* * * * * 

PART 107—NONDISCRIMINATION AND 

EQUAL OPPORTUNITY IN HOUSING 

UNDER EXECUTIVE ORDER 11063 

42. The authority citation for part 107 

continues to read as follows: 

Authority: 42 U.S.C. 3535(d); E.O. 11063, 

27 FR 11527, 3 CFR, 1958–1963 Comp., p. 

652; E.O. 12892, 59 FR 2939, 3 CFR, 1994 

Comp., p. 849. 

43. Revise § 107.60(b) to read as 

follows: 

§ 107.60 Sanctions and penalties. 

* * * * * 

(b) Such sanctions as are specified by 

E.O. 11063, the contract through which 

federal assistance is provided, and such 

sanctions as are specified by the rules or 

regulations of the Department governing 

the program under which federal 

assistance to the project is provided, 

shall be applied in accordance with the 

relevant regulations. Actions that may 

be taken include: cancellation or 

termination, in whole or in part, of the 

contract or agreement; refusal to 

approve a lender or withdrawal of 

approval; or a determination of 

ineligibility, suspension, or debarment 

from any further assistance or contracts; 

provided, however, that sanctions of 

debarment, suspension, and ineligibility 

are subject to the Department’s 

regulations under 2 CFR part 2424, and, 

further, that no sanction under section 

302 (a), (b), and (c) of Executive Order 

11063 shall be applied by the Assistant 

Secretary for Fair Housing and Equal 

Opportunity without the concurrence of 

the Secretary. 

* * * * * 

PART 135—ECONOMIC 

OPPORTUNITIES FOR LOW- AND 

VERY LOW-INCOME PERSONS 

44. The authority citation for part 135 

continues to read as follows: 

Authority: 12 U.S.C. 1701u; 42 U.S.C. 

3535(d) 

45. Revise § 135.72(b) to read as 

follows: 

§ 135.72 Cooperation in achieving 

compliance. 

* * * * * 

(b) The recipient shall refrain from 

entering into a contract with any 

contractor after notification to the 

recipient by HUD that the contractor has 

been found in violation of the 

regulations in this part. The provisions 

of 2 CFR part 2424 apply to the 

employment, engagement of services, 

awarding of contracts, or funding of any 

contractors or subcontractors during any 

period of debarment, suspension or 

otherwise ineligible status. 

46. Revise § 135.74(d) to read as 

follows: 

§ 135.74 Section 3 compliance review 

procedures. 

* * * * * 

(d) Continuing noncompliance by 

recipient or contractor. A continuing 

failure or refusal by the recipient or 

contractor to comply with the 

regulations in this part may result in the 

application of sanctions specified in the 

contract through which HUD assistance 

is provided, or the application of 

sanctions specified in the regulations 

governing the HUD program under 

which HUD financial assistance is 

provided. HUD will notify the recipient 

of any continuing failure or refusal by 

the contractor to comply with the 

regulations in this part for possible 

action under any procurement contract 

between the recipient and the 

contractor. Where appropriate, 

debarment, suspension, and limited 

denial of participation may be applied 

to the recipient or the contractor, 

pursuant to HUD’s regulations at 2 CFR 

part 2424. 

* * * * * 

PART 200—INTRODUCTION TO FHA 

PROGRAMS 

47. The authority citation for part 200 

continues to read as follows: 

Authority: 12 U.S.C. 1702–1715z–21; 42 

U.S.C. 3535(d). 

48. Revise § 200.31 to read as follows: 

§ 200.31 Debarment and suspension. 

The requirements set forth in 2 CFR 

part 2424 apply to these programs. 

49. Revise § 200.172(d) to read as 

follows: 

§ 200.172 Removal from the Inspector 

Roster. 

* * * * * 

(d) Other action. Nothing in this 

section prohibits HUD from taking such 

other action against an inspector, as 

provided in 2 CFR part 2424, or from 

seeking any other remedy against an 

inspector, available to HUD by statute or 

otherwise. 

50. Revise § 200.192(d) to read as 

follows: 

§ 200.192 Removal of 203(k) consultant. 

* * * * * 

(d) Other action. Nothing in this 

section prohibits HUD from taking such 

other action against a consultant, as 

provided in 2 CFR part 2424, or from 

seeking any other remedy against a 

consultant, available to HUD by statute 

or otherwise. 

51. Revise § 200.195(d) to read as 

follows: 


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§ 200.195 Removal of nonprofit 

organization from Nonprofit Organization 

Roster. 

* * * * * 

(d) Other action. Nothing in this 

section prohibits HUD from taking such 

other action against a nonprofit 

organization, as provided in 2 CFR part 

2424, or from seeking any other remedy 

against a nonprofit organization, 

available to HUD by statute or 

otherwise. 

52. Revise § 200.204(a) introductory 

text and (e) to read as follows: 

§ 200.204 What actions may HUD take 

against unsatisfactory appraisers on the 

Appraiser Roster? 

* * * * * 

(a) Removal from the Appraiser 

Roster. HUD officials, as designated by 

the Secretary, may at any time remove 

a listed appraiser from the Appraiser 

Roster for cause, in accordance with 

paragraphs (a)(1) through (a)(3) of this 

section. The provisions of paragraphs 

(a)(1) through (a)(3) of this section do 

not apply to removal actions taken 

under any section in 2 CFR part 2424 or 

to any other remedy against an 

appraiser, available to HUD by statute or 

otherwise. 

* * * * * 

(e) Other action. Nothing in this 

section prohibits HUD from taking any 

other action against an appraiser, as 

provided under 2 CFR part 2424, or 

from seeking any other remedy against 

an appraiser, available to HUD by 

statute or otherwise. 

§ 200.226 [Amended] 

53. In § 200.226(a)(2)(i), revise the 

reference to ‘‘24 CFR part 24’’ to read ‘‘2 

CFR part 2424.’’

§ 200.230 [Amended] 

54. In § 200.230(a), revise the 

reference to ‘‘part 24 of this title’’ to 

read ‘‘2 CFR part 2424.’’

55. Revise § 200.236 to read as 

follows: 

§ 200.236 Modification or withdrawal of 

certain approvals. 

Approvals will not be modified or 

withdrawn except in cases where the 

principal is subsequently suspended or 

debarred from further participation in 

any HUD programs under 2 CFR part 

2424, or is found by the Review 

Committee to have obtained approval 

based upon submission to HUD of a 

false, fraudulent, or incomplete report 

or certificate. In such cases, the Review 

Committee may take such action, 

including modification or withdrawal of 

approval, as it determines to be in the 

best interest of the Department and the 

public. For the purpose of this section, 

the term ‘‘approval’’ includes 

conditional approval. 

56. Revise § 200.243(b) to read as 

follows: 

§ 200.243 Hearing rules—How and when to 

apply. 

* * * * * 

(b) Hearings and review of 

determination by the Hearing Officer 

shall be governed by the procedures 

contained in 2 CFR part 2424, except as 

modified in paragraph (a) of this section 

and by § 200.245. 

57. Revise § 200.935(c)(3) to read as 

follows: 

§ 200.935 Administrator qualifications and 

procedures for HUD building products 

certification programs. 

* * * * * 

(c) * * * 

(3) Acceptance. HUD shall review 

each submission and notify the 

applicant whether or not they are 

accepted or rejected. HUD shall be 

notified immediately of any change(s) in 

the administrator’s submission 

regarding program procedures and/or 

major personnel associated with the 

program. HUD reserves the right to 

suspend or debar an administrator in 

accordance with 2 CFR part 2424. 

* * * * * 

58. Revise § 200.1500(b) to read as 

follows: 

§ 200.1500 Sanctions against a MAP 

lender. 

* * * * * 

(b) The actions listed in paragraphs 

(a)(1) through (a)(4) of this section are 

carried out in accordance with the 

requirements of this subpart. An LDP is 

a sanction applied in accordance with 

subpart J of 2 CFR part 2424 to 

participants in loan transactions other 

than FHA-insured lenders. The 

Mortgagee Review Board procedures are 

found at 24 CFR part 25. 

59. Revise § 200.1530(b)(14) and (15) 

to read as follows: 

§ 200.1530 Bases for sanctioning a MAP 

lender. 

* * * * * 

(b) * * * 

(14) Employing or retaining an officer, 

partner, director, or principal at the time 

when the person was suspended, 

debarred, ineligible, or subject to an 

LDP under 2 CFR part 2424, or 

otherwise prohibited from participation 

in HUD programs, when the MAP 

lender knew or should have known of 

the prohibition; 

(15) Employing or retaining an 

employee who is not an officer, partner, 

director, or principal, and who is or will 

be working on HUD-FHA program 

matters, at a time when that person was 

suspended, debarred, ineligible, or 

subject to an LDP under 2 CFR part 

2424, or otherwise prohibited from 

participation in HUD programs, when 

the MAP lender knew or should have 

known of the prohibition; 

* * * * * 

PART 202—APPROVAL OF LENDING 

INSTITUTIONS AND MORTGAGEES 

60. The authority citation for part 202 

continues to read as follows: 

Authority: 12 U.S.C. 1703, 1709, and 

1715b; 42 U.S.C. 3535(d). 

61. Revise § 202.5(j)(1) to read as 

follows: 

§ 202.5 General approval standards. 

* * * * * 

(j) * * * 

(1) Be suspended, debarred, or 

otherwise restricted under 2 CFR part 

2424 or part 25 of this title, or under 

similar procedures of any other Federal 

agency; 

* * * * * 

PART 203—SINGLE FAMILY 

MORTGAGE INSURANCE 

62. The authority citation for part 203 

continues to read as follows: 

Authority: 12 U.S.C. 1709, 1710, 1715b, 

1715z–16, and 1715u; 42 U.S.C. 3535(d). 

63. Revise § 203.202(b) and (d) to read 

as follows: 

§ 203.202 Plan acceptability and 

acceptance renewal criteria—general. 

* * * * * 

(b) In evaluating applications for 

renewal of Plan acceptance, HUD will 

take into consideration such reliable 

evidence, as is made available to the 

Department, of a Plan issuer’s failure to 

fulfill its obligations. Where HUD has 

credible evidence of a Plan issuer’s 

failure to correct covered homeowner 

problems, or there are justifiable 

homeowner complaints about untimely 

problem resolution by a Plan issuer, 

HUD will consider this as cause for 

termination of a Plan’s acceptance and 

as grounds for initiation of sanctions 

against a Plan issuer or insurance 

backer, in accordance with 2 CFR part 

2424. If HUD proposes to terminate a 

Plan’s acceptance, the issuer of the Plan 

will be advised of the reason therefore, 

and the procedural safeguards of 2 CFR 

part 2424 will apply. 

* * * * * 

(d) After a Plan has been accepted by 

HUD, there shall be no change in, or 

modification to, its provisions, or in its 

insurance backers or insurance 

contract(s), without prior written HUD 


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acceptance of such change or 

modification, except that changes 

mandated by other applicable laws may 

not require HUD’s prior approval. A 

violation of this condition may be cause 

for termination of a Plan’s acceptance, 

and may be grounds for initiation of 

sanctions against the Plan issuer, in 

accordance with 2 CFR part 2424. 

Insofar as practicable, HUD will respond 

to a Plan issuer’s request for acceptance 

of a change within 30 days of receipt of 

the request. Plan acceptance by HUD 

will be for a two-year period. 

* * * * * 

PART 206—HOME EQUITY 

CONVERSION MORTGAGE 

INSURANCE 

64. The authority citation for part 206 

continues to read as follows: 

Authority: 12 U.S.C. 1715b, 1715z–1720; 

42 U.S.C. 3535(d). 

65. Revise § 206.201(b) to read as 

follows: 

§ 206.201 Mortgage servicing generally; 

sanctions. 

* * * * * 

(b) Importance of timely payments. 

The paramount servicing responsibility 

is the need to make timely payments in 

full as required by the mortgage. Any 

failure of a mortgagee to make all 

payments required by the mortgage in a 

timely manner will be grounds for 

administrative sanctions authorized by 

regulations, including 2 CFR part 2424 

(Debarment, Suspension and Limited 

Denial of Participation), and part 25 of 

this title (Mortgagee Review Board). 

* * * * * 

PART 245—TENANT PARTICIPATION 

IN MULTIFAMILY HOUSING PROJECTS 

66. The authority citation for part 245 

continues to read as follows: 

Authority: 12 U.S.C. 1715z–1b; 42 U.S.C. 

3535(d). 

67. Revise § 245.135 to read as 

follows: 

§ 245.135 Enforcement. 

(a) Owners of housing identified in 

§ 245.10, and their agents, as well as any 

principals thereof (as defined in 2 CFR 

part 2424), who violate any provision of 

this subpart so as to interfere with the 

organizational and participatory rights 

of tenants, may be liable for sanctions 

under 2 CFR part 2424. Such sanctions 

may include: 

(1) Debarment. A person who is 

debarred is prohibited from future 

participation in federal programs for a 

period of time. The specific rules and 

regulations relating to debarment are 

found at 2 CFR part 2424. 

(2) Suspension. Suspension is a 

temporary action with the same effect as 

debarment, to be taken when there is 

adequate evidence that a cause for 

debarment may exist and immediate 

action is needed to protect the public 

interest. The specific rules and 

regulations relating to suspension are 

found at 2 CFR part 2424. 

(3) Limited Denial of Participation. 

An LDP generally excludes a person 

from future participation in the federal 

program under which the cause arose. 

The duration of an LDP is generally up 

to 12 months. The specific rules and 

regulations relating to LDPs are found at 

2 CFR part 2424, subpart J. 

(b) These sanctions may also apply to 

affiliates (as defined in 2 CFR part 2424) 

of these persons or entities. 

(c) The procedures in 2 CFR part 2424 

shall apply to actions under this 

subpart. 

PART 291—DISPOSITION OF HUDACQUIRED SINGLE FAMILY 

PROPERTY 

68. The authority citation for part 291 

continues to read as follows: 

Authority: 12 U.S.C. 1701 et seq.; 42 U.S.C 

1441, 1441a, 1551a, and 3535(d). 

69. Revise § 291.200(b) to read as 

follows: 

§ 291.200 Future REO acquisition method. 

* * * * * 

(b) Eligible entities. An individual, 

partnership, corporation, or other legal 

entity will not be eligible to participate 

in this process if at the time of the sale, 

that individual or entity is debarred, 

suspended, or otherwise precluded from 

doing business with HUD under 2 CFR 

part 2424. 

70. Revise § 291.303 to read as 

follows: 

§ 291.303 Eligible bidders. 

HUD will provide information on the 

eligibility of bidders in the bid package, 

a notice in the Federal Register, or other 

means, at the Secretary’s full discretion. 

However, an individual, partnership, 

corporation, or other legal entity will 

not be eligible to bid for any loan pool, 

either as an individual or a participant, 

if, at the time of the sale, that individual 

or entity is debarred or suspended from 

doing business with HUD under 2 CFR 

part 2424. 

PART 401—MULTIFAMILY MORTGAGE 

AND HOUSING ASSISTANCE 

RESTRUCTURING PROGRAM (MARKTO-MARKET) 

71. The authority citation for part 401 

continues to read as follows: 

Authority: 12 U.S.C. 1715z–1 and 1735f–

19(b); 42 U.S.C. 1437(c)(8), 1437f(t), 1437f 

note, and 3535(d). 

72. Revise § 401.101(a) and (b)(1) to 

read as follows: 

§ 401.101 Which owners are ineligible to 

request Restructuring Plans? 

(a) Mandatory rejection. The request 

of an owner of an eligible project will 

not be considered for a Restructuring 

Plan if the owner is debarred or 

suspended under 2 CFR part 2424. 

(b) * * * 

(1) An affiliate is debarred or 

suspended under 2 CFR part 2424; or 

* * * * * 

73. Revise § 401.403(b)(1) and (b)(2)(i) 

to read as follows: 

§ 401.403 Rejection of a request for a 

Restructuring Plan because of actions or 

omissions of owner, or affiliate or project 

condition. 

* * * * * 

(b) * * * 

(1) Suspension or debarment. Neither 

a PAE nor HUD will continue to 

develop or consider a Restructuring 

Plan if, at any time before a closing 

under § 401.407, the owner is debarred 

or suspended under 2 CFR part 2424. 

(2) * * * 

(i) An affiliate is debarred or 

suspended under 2 CFR part 2424; 

* * * * * 

PART 402—SECTION 8 PROJECTBASED CONTRACT RENEWAL UNDER 

SECTION 524 OF MAHRA 

74. The authority citation for part 402 

continues to read as follows: 

Authority: 42 U.S.C. 1437(c)(8), 1437f note, 

and 3535(d). 

75. In § 402.7, revise the introductory 

text of paragraph (a) and paragraph 

(a)(1) to read as follows: 

§ 402.7 Refusal to consider an owner’s 

request for a section 8 contract renewal 

because of actions or omissions of owner 

or affiliate. 

(a) Determination of eligibility. 

Notwithstanding 2 CFR part 2424, HUD 

may elect to not consider a request for 

renewal of project-based assistance, if at 

any time before contract renewal: 

(1) The owner or an affiliate is 

debarred or suspended under part 2 CFR 

part 2424; 

* * * * * 


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Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Proposed Rules 14029 

PART 570—COMMUNITY 

DEVELOPMENT BLOCK GRANTS 

76. The authority citation for part 570 

continues to read as follows: 

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

5320. 

77. Revise § 570.489(l) to read as 

follows: 

§ 570.489 Program administrative 

requirements. 

* * * * * 

(l) Debarment and suspension. The 

requirements in 2 CFR part 2424 are 

applicable. CDBG funds may not be 

provided to excluded or disqualified 

persons. 

* * * * * 

§ 570.704 [Amended] 

78. Remove and reserve 

§ 570.704(b)(5) and (6). 

PART 572—HOPE FOR 

HOMEOWNERSHIP OF SINGLE 

FAMILY HOMES PROGRAM (HOPE 3) 

79. The authority citation for part 572 

continues to read as follows: 

Authority: 42 U.S.C. 3535(d) and 12891. 

80. Revise § 572.225(b)(2)(v) to read as 

follows: 

§ 572.225 Grant agreements; corrective 

and remedial actions. 

* * * * * 

(b) * * * 

(2) * * * 

(v) Taking action against the recipient 

under 2 CFR part 2424 with respect to 

future HOPE 3, HUD, or Federal grant 

awards; and 

* * * * * 

PART 585—YOUTHBUILD PROGRAM 

81. The authority citation for part 585 

continues to read as follows: 

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

§ 585.502 [Amended] 

82. In § 585.502, remove paragraph (c) 

and redesignate paragraphs (d) through 

(j) as (c) through (i), respectively. 

83. Revise § 585.504 to read as 

follows: 

§ 585.504 Use of debarred, suspended, or 

ineligible contractors. 

The provisions of 2 CFR part 2424 

apply to the employment of, 

engagement of services from, awarding 

of contracts to, or funding of any 

contractors or subcontractors during any 

period of debarment, suspension, or 

placement in ineligibility status. 

PART 941—PUBLIC HOUSING 

DEVELOPMENT 

84. The authority citation for part 941 

continues to read as follows: 

Authority: 42 U.S.C. 1437b, 1437c, 1437g, 

and 3535(d). 

85. Revise § 941.205(d) to read as 

follows: 

§ 941.205 PHA contracts. 

* * * * * 

(d) Each PHA shall certify before 

executing any contract with a contractor 

that the contractor is not suspended, 

debarred, or otherwise ineligible under 

2 CFR part 2424. Each PHA also shall 

ensure that all subgrantees, contractors, 

and subcontractors select only 

contractors who are not listed as 

suspended, debarred, or otherwise 

ineligible under 2 CFR part 2424. 

PART 954—INDIAN HOME PROGRAM 

86. The authority citation for part 954 

continues to read as follows: 

Authority: 42 U.S.C. 3535(d) and 12701–

12839. 

§ 954.4 [Amended] 

87. Remove § 954.4(i). 

PART 982—SECTION 8 TENANTBASED ASSISTANCE: HOUSING 

CHOICE VOUCHER PROGRAM 

88. The authority citation for part 982 

continues to read as follows: 

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

89. Revise § 982.306(a) to read as 

follows: 

§ 982.306 PHA disapproval of owner. 

(a) The PHA must not approve an 

assisted tenancy if the PHA has been 

informed (by HUD or otherwise) that the 

owner is debarred, suspended, or 

subject to a limited denial of 

participation under 2 CFR part 2424. 

* * * * * 

90. Revise § 982.628(c) to read as 

follows: 

§ 982.628 Homeownership option: Eligible 

units. 

* * * * * 

(c) PHA disapproval of seller. The 

PHA may not commence 

homeownership assistance for 

occupancy of a home if the PHA has 

been informed (by HUD or otherwise) 

that the seller of the home is debarred, 

suspended, or subject to a limited denial 

of participation under 2 CFR part 2424. 

* * * * * 

§ 982.631 [Amended] 

91. Remove § 982.631(c)(2)(v). 

PART 983—PROJECT-BASED 

VOUCHER (PBV) PROGRAM 

92. The authority citation for part 983 

continues to read as follows: 

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

93. In § 983.4, revise the undesignated 

paragraph captioned ‘‘Debarment’’ to 

read as follows: 

§ 983.4 Cross-reference to other Federal 

requirements. 

* * * * * 

Debarment. Prohibition on use of 

debarred, suspended, or ineligible 

contractors. See 24 CFR 5.105(c) and 2 

CFR part 2424. 

* * * * * 

PART 1000—NATIVE AMERICAN 

HOUSING ACTIVITIES 

94. The authority citation for part 

1000 continues to read as follows: 

Authority: 25 U.S.C. 4101 et seq.; 42 U.S.C. 

3535(d). 

95. Revise § 1000.44 to read as 

follows: 

§ 1000.44 What prohibitions on the use of 

debarred, suspended, or ineligible 

contractors apply? 

In addition to any tribal requirements, 

the prohibitions in 2 CFR part 2424 on 

the use of debarred, suspended, or 

ineligible contractors apply. 

96. Revise § 1000.46 to read as 

follows: 

§ 1000.46 Do drug-free workplace 

requirements apply? 

Yes. In addition to any tribal 

requirements, the Drug-Free Workplace 

Act of 1988 (41 U.S.C. 701, et seq.) and 

HUD’s implementing regulations in 24 

CFR part 21 apply. 

PART 1003—COMMUNITY 

DEVELOPMENT BLOCK GRANTS FOR 

INDIAN TRIBES AND ALASKA NATIVE 

VILLAGES 

97. The authority citation for part 

1003 continues to read as follows: 

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

seq. 

98. Revise § 1003.608 to read as 

follows: 

§ 1003.608 Debarment and suspension. 

The requirements in 2 CFR part 2424 

are applicable. ICDBG funds cannot be 

provided to excluded or disqualified 

persons. 

PART 1005—LOAN GUARANTEES 

FOR INDIAN HOUSING 

99. The authority citation for part 

1005 continues to read as follows: 


sroberts on PROD1PC70 with PROPOSALS
14030 Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Proposed Rules 

Authority: 12 U.S.C. 1715z–13a; 42 U.S.C. 

3535(d). 

100. Revise § 1005.107(b)(5)(ii) to read 

as follows: 

§ 1005.107 What is eligible collateral? 

* * * * * 

(b) * * * 

(5) * * * 

(ii) Review. If the Department ceases 

to issue guarantees in accordance with 

paragraph (b)(5)(i) of this section, HUD 

will notify the tribe of the reasons for 

such action and that the tribe may, 

within 30 days after notification of 

HUD’s action, file a written appeal with 

the Director, Office of Loan Guarantee 

(OLG), Office of Native American 

Programs (ONAP). Within 30 days after 

notification of an adverse decision by 

the OLG Director, the tribe may file a 

written request for review with the 

Deputy Assistant Secretary for ONAP. 

Upon notification of an adverse decision 

by the Deputy Assistant Secretary, the 

tribe has 30 additional days to file an 

appeal with the Assistant Secretary for 

Public and Indian Housing. The 

determination of the Assistant Secretary 

shall be final, but the tribe may resubmit 

the issue to the Assistant Secretary for 

review at any subsequent time, if new 

evidence or changed circumstances 

warrant reconsideration. (Any other 

administrative actions determined to be 

necessary to debar a tribe from 

participating in this program will be 

subject to the formal debarment 

procedures contained in 2 CFR part 

2424.) 

PART 1006—NATIVE HAWAIIAN 

HOUSING BLOCK GRANT PROGRAM 

101. The authority citation for part 

1006 continues to read as follows: 

Authority: 25 U.S.C. 4221 et seq.; 42 U.S.C. 

3535(d). 

102. Revise § 1006.375(b) to read as 

follows: 

§ 1006.375 Other Federal requirements. 

* * * * * 

(b) Drug-free workplace. The DrugFree Workplace Act of 1988 (41 U.S.C. 

701, et seq.) and HUD’s implementing 

regulations in 24 CFR part 21 apply to 

the use of assistance under this part. 

* * * * * 

PART 3282—MANUFACTURED HOME 

PROCEDURAL AND ENFORCEMENT 

REGULATIONS 

103. The authority citation for part 

3282 continues to read as follows: 

Authority: 28 U.S.C. 2461 note; 42 U.S.C. 

5424; and 42 U.S.C. 3535(d). 

104. Revise § 3282.151(d) to read as 

follows: 

§ 3282.151 Applicability and scope. 

* * * * * 

(d) To the extent that these 

regulations provide for Formal or 

Informal Presentations of Views for 

parties that would otherwise qualify for 

hearings under 2 CFR part 2424, the 

procedures of 2 CFR part 2424 shall not 

be available and shall not apply. 

PART 3500—REAL ESTATE 

SETTLEMENT PROCEDURES ACT 

105. The authority citation for part 

3500 continues to read as follows: 

Authority: 12 U.S.C. 2601 et seq.; 42 U.S.C. 

3535(d). 

106. Revise § 3500.19(a) to read as 

follows: 

§ 3500.19 Enforcement. 

(a) Enforcement policy. It is the policy 

of the Secretary regarding RESPA 

enforcement matters to cooperate with 

Federal, State, or local agencies having 

supervisory powers over lenders or 

other persons with responsibilities 

under RESPA. Federal agencies with 

supervisory powers over lenders may 

use their powers to require compliance 

with RESPA. In addition, failure to 

comply with RESPA may be grounds for 

administrative action by the Secretary 

under 2 CFR part 2424 concerning 

debarment, suspension, ineligibility of 

contractors and grantees, or under part 

25 of this title concerning the HUD 

Mortgagee Review Board. Nothing in 

this paragraph is a limitation on any 

other form of enforcement that may be 

legally available. 

* * * * * 

Dated: February 20, 2007. 

Roy A. Bernardi, 

Deputy Secretary. 

[FR Doc. E7–5167 Filed 3–22–07; 8:45 am] 

BILLING CODE 4210–67–P 


sroberts on PROD1PC70 with PROPOSALS