[Federal Register Volume 72, Number 72 (Monday, April 16, 2007)]
[Rules and Regulations]
[Pages 19070-19083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-7087]



[[Page 19069]]

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Part II





Department of Housing and Urban Development





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24 CFR Part 115



Certification and Funding of State and Local Fair Housing Enforcement 
Agencies; Final Rule

Federal Register / Vol. 72, No. 72 / Monday, April 16, 2007 / Rules 
and Regulations

[[Page 19070]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 115

 [Docket No. FR-4748-F-02]
RIN 2529-AA90


Certification and Funding of State and Local Fair Housing 
Enforcement Agencies

AGENCY: Office of the Assistant Secretary for Fair Housing and Equal 
Opportunity, HUD.

ACTION: Final rule.

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SUMMARY: This final rule revises and updates HUD's regulation 
implementing section 810(f) of the federal Fair Housing Act. This 
regulation establishes the criteria for certification of state and 
local fair housing laws that are substantially equivalent to the 
federal Fair Housing Act, as well as for decertification of state and 
local fair housing laws that are deemed no longer substantially 
equivalent. This final rule also revises the funding criteria for 
agencies participating in the Fair Housing Assistance Program (FHAP).

DATES: Effective Date: May 16, 2007.

FOR FURTHER INFORMATION CONTACT: Bryan Greene, Deputy Assistant 
Secretary for Enforcement and Programs, Office of Fair Housing and 
Equal Opportunity, Department of Housing and Urban Development, 451 
Seventh Street, SW., Room 5204, Washington, DC 20410-2000; telephone 
(202) 402-7078 (this is not a toll-free number). Hearing- or speech-
impaired persons may contact the FHAP Division by calling (800) 290-
1617, or the toll-free Federal Information Relay Service at (800) 877-
8339.

SUPPLEMENTARY INFORMATION:

I. Background

    On May 18, 2005, HUD published a proposed rule (70 FR 28748) for 
public comment that would clarify numerous issues related to 
substantial equivalency certification and the FHAP. Under the FHAP, a 
state or local agency applies for substantial equivalency certification 
and the Department determines whether the agency enforces a law that 
provides substantive rights, procedures, remedies, and judicial review 
provisions that are substantially equivalent to the federal Fair 
Housing Act. The FHAP provides support for complaint processing, 
training, technical assistance, education and outreach, data and 
information systems, and other activities that will further fair 
housing within the state or local agency's jurisdiction.
    The proposed rule provided a comprehensive revision of 24 CFR part 
115 to provide greater clarity and guidance to FHAP agencies. Among the 
proposed revisions were new definitions, revised and additional 
performance standards, and timeframes. The proposed rule also added 
procedures for renewal of certification and procedures for requests 
after withdrawal. HUD also proposed the addition of Sec.  115.309, 
titled FHAP and the First Amendment, which provided that no funding 
made available under the FHAP may be used to investigate or prosecute 
any activity that may be protected by the First Amendment of the United 
States Constitution. Finally, HUD added Sec.  115.310, which provided 
requirements for fair housing testing activities funded under the FHAP. 
A detailed description of the proposed rule can be found at 70 FR 
28748-28751.
    In addition to inviting comments on the proposed rule generally, 
HUD sought comment from the public on three issues in particular. 
First, HUD requested that FHAP agencies of varying sizes provide 
insight into what would constitute reasonable complaint numbers. 
Second, HUD sought comment on the appropriateness of enumerating 
timeframes by which interim and certified agencies must comply in 
sending out letters notifying parties of a failure to meet the 100-day 
(completion of investigation) or the one-year (final administrative 
disposition) requirements. Third, HUD invited comments from the public 
on whether 100 cases is still a reasonable number an agency must 
acceptably process in order to obtain 10 percent of the agency's total 
FHAP payment amount. See section III of this preamble for a summary of 
the issues raised by the public commenters and HUD's responses.

II. This Final Rule

    This rule follows publication of the May 18, 2005, proposed rule 
and takes into consideration the public comments received on the 
proposed rule. HUD received five comments related to the May 18, 2005, 
proposed rule. After careful review of the public comments, HUD has 
made four noteworthy changes to the proposed rule.
    First, this final rule adds a timeframe for FHAP agencies to send 
100-day letters. Performance Standard 1, at Sec.  115.206, requires 
that an agency unable to complete investigative activities with respect 
to a complaint within 100 days must send written notification to the 
parties within 110 days of the filing of a complaint.
    Second, this rule revises Sec.  115.210 of the proposed rule to 
clarify that HUD may suspend all types of funding (not just complaint 
processing funds) during suspension and withdrawal because of FHAP 
agency performance deficiencies.
    Third, HUD proposed to remove Sec.  115.305, the special 
enforcement effort (SEE) fund provisions, from the regulations but has 
retained the provision in this final rule. In addition to retaining the 
current regulatory provision, this final rule includes examples of 
meritorious mention, which is one of the criteria for obtaining SEE 
funds.
    Fourth, in this final rule, HUD has further clarified the 
requirement that a FHAP agency spend at least 20 percent of its total 
annual budget on fair housing activities. Section 115.307(a)(5) of this 
final rule clarifies that this requirement applies only to FHAP 
agencies that enforce antidiscrimination laws other than a fair housing 
law.

III. Discussion of Public Comments on the May 18, 2005, Proposed Rule

    The public comment period on the May 18, 2005, proposed rule ended 
on July 18, 2005. HUD received five comments. Commenters included one 
private fair housing organization, two current FHAP agencies, one local 
community affairs department, and one local housing authority. The 
summary of comments that follows presents the major issues and 
questions raised by the public comments on the proposed rule. HUD's 
response follows each comment.
    Comment: One commenter wrote that, although some provisions 
strengthen FHAP agencies, the majority create unnecessary infringements 
that exceed HUD's authority and are better left to state agencies.
    HUD Response. The commenter did not include any specific examples 
of provisions that create unnecessary infringements that exceed HUD's 
authority. Therefore, HUD cannot respond because of the lack of 
specificity. The authority to make the revisions contained in the 
proposed rule is set forth at 42 U.S.C. 3610(f) and 42 U.S.C. 3608(a).
    Comment: The same commenter recommended that no agency remain 
certified if it processes fewer than 20 complaints in any given year 
after its first year of operation.
    HUD Response. After careful consideration, HUD has determined that 
it is inappropriate to identify in a regulation a specific number of 
housing discrimination complaints that agencies must process. A one-
size-fits-all approach is impracticable because, among other 
considerations, FHAP

[[Page 19071]]

agencies serve populations of varying sizes. An agency-by-agency 
analysis is a more reasonable approach. As provided in the proposed 
rule, this final rule identifies factors HUD will consider in 
determining what constitutes a reasonable number of housing 
discrimination complaints that a given agency should receive and 
process. Those factors include, but are not limited to, the 
jurisdiction's population; the length of time the agency has 
participated in the FHAP; and the number of housing discrimination 
complaints that the agency has received and processed in the past. If 
an agency fails to receive and process a reasonable number of housing 
discrimination complaints during a year of FHAP participation, given 
education and outreach efforts conducted and receipts of complaints, 
the final rule gives the Office of Fair Housing and Equal Opportunity 
(FHEO) regional director the authority to put the agency on a 
Performance Improvement Plan (PIP). The PIP will set forth the number 
of housing discrimination complaints that the agency must receive and 
process during subsequent years of FHAP participation.
    Comment: Another commenter wrote that the determination of a 
reasonable number of complaints be a joint determination by HUD and the 
FHAP agency.
    HUD Response. As noted in response to a similar comment, the 
determination of what constitutes a reasonable number of housing 
discrimination cases will be made on an agency-by-agency basis. The 
final rule identifies factors that HUD will consider in making such a 
determination for a given agency. This commenter also recommended that 
the determination be based on the historical number of complaints that 
the FHAP agency has processed. This is one of the factors HUD has 
enumerated in this final rule.
    Comment: One commenter recommended that HUD establish a 10-day 
timeframe for sending out 100-day letters.
    HUD Response. HUD agrees and has amended Performance Standard 1 in 
Sec.  115.206 of the proposed regulation to add paragraph (e)(1)(vi), 
which sets forth a timeframe within which FHAP agencies must issue 100-
day letters. HUD's Title VIII Complaint Intake, Investigation, and 
Conciliation Handbook requires HUD to prepare case status reports for a 
complaint at the 85th day after the complaint is filed. The completion 
of a case status report triggers HUD's automated complaint processing 
system to generate 100-day letters. Supervisors then review the case 
status report, followed by the issuance of the 100-day letter. Using 
HUD's procedure as a guide, Performance Standard 1, in Sec.  
115.206(e)(1)(vi) establishes that 100-day letters be issued within 110 
days of the filing of the complaint.
    Comment: A commenter wrote that granting authority to regional FHEO 
directors may be an improvement; however, the authority should be 
accompanied by consistent national guidance about performance 
assessment requirements and standards to avoid inconsistent outcomes.
    HUD Response. The proposed regulation and the final regulation are 
clear, stating that HUD may utilize the performance deficiency 
procedures at any time that the agency does not meet one or more of the 
ten performance standards enumerated in Sec.  115.206. The Department 
believes that these enumerated standards compose the consistent 
national guidance sought by the commenter. The final regulation further 
states that the performance deficiency procedures may be applied to 
agencies with either interim certification or certification. At this 
time, HUD will not set forth further guidance regarding deficiency 
procedures. HUD will, however, monitor the implementation of the 
performance standards and consider developing additional guidance on 
this issue as necessary.
    Comment: Another commenter recommended that HUD provide an appeal 
process so that an agency that has been placed on a PIP can appeal the 
decision of the FHEO regional director if they have a basis to believe 
that they were wrongly placed on a performance improvement plan (PIP).
    HUD Response. After careful consideration, HUD has determined that 
it will not provide in the regulation an appeal process for an agency 
placed on a PIP. HUD believes that an agency's interests are 
sufficiently protected within the performance deficiency process set 
forth in the final rule, which provides several opportunities for an 
under-performing agency to avoid involuntary withdrawal from the 
program. The fact that an agency has been placed on a PIP will not, in 
and of itself, result in an agency's inability to participate in the 
FHAP. If an agency fails to improve after being placed on a PIP, HUD 
may move to suspend the agency. If suspension is proposed, an agency is 
given an opportunity to respond within 30 days of receipt of the 
suspension notification. Suspension also does not result in an agency's 
inability to participate in the FHAP. If an agency fails to improve 
after a period of suspension, the Assistant Secretary for Fair Housing 
and Equal Opportunity may propose withdrawal. If withdrawal is 
proposed, the agency is given the opportunity to provide information 
and documentation that establishes that the administration of its law 
meets all of the substantial equivalency certification criteria set 
forth in 24 CFR part 115.
    Comment: A commenter suggested that HUD add mandated, on-site 
performance assessments at least every 24 months and a requirement that 
FHEO seek public input before certifying an agency. The commenter also 
recommended that HUD be required to investigate complaints from the 
public about performance.
    HUD Response. The language of the final rule regarding on-site 
assessments, which in this respect is unchanged from the proposed rule, 
provides HUD with all of the authority necessary to accomplish its 
oversight responsibilities, while at the same time allowing HUD the 
flexibility to match available resources to identified priorities.
    With regard to the second issue identified by the commenter, the 
final rule indicates, as did the proposed rule, that HUD will seek 
public input before certifying an agency. Section 115.102(b) states:

    On an annual basis, the Assistant Secretary may publish in the 
Federal Register a notice that identifies all agencies that have 
received interim certification during the prior year. The notice 
will invite the public to comment on the state and local laws of the 
new interim agencies, as well as on the performance of the agencies 
in enforcing their laws.

    With regard to the third issue, while the final rule does not 
require HUD to investigate public complaints about the performance of 
an agency, Sec.  115.206 does require that ``[A]ll [public] comments 
will be considered before a final decision on certification is made.'' 
Moreover, complaints about a FHAP agency will be considered and 
examined as part of an agency's performance assessment.
    Comment: Another commenter recommended that HUD not recognize 
prohibited bases in any manner because these are state, county, and 
city rules that are ``completely foreign'' to HUD.
    HUD Response. The proposed rule did not recognize any prohibited 
bases that have not already been recognized in the federal Fair Housing 
Act. Rather, Sec.  115.204 simply sets forth the long-standing HUD 
policy that the inclusion of additional prohibited bases in a state or 
local law does not preclude HUD from determining that a given law is 
substantially equivalent to the Fair Housing Act. While a state or 
local law

[[Page 19072]]

that has additional prohibited bases may be found substantially 
equivalent, it is important to note that HUD has not, and will not, pay 
FHAP agencies for cases that are not cognizable under the federal Fair 
Housing Act.
    Comment: A commenter recommended that HUD not change current HUD 
standards for administrative closures. This commenter also recommended 
that no more than 12 percent of cases be closed administratively.
    HUD Response. Because administrative closure standards for FHAP 
agencies do not exist under the current regulation, HUD is in the 
process of developing such standards and will provide further guidance. 
Section 115.206 of this final rule adds Performance Standard 2, which 
requires that administrative closures be utilized only in appropriate 
and limited circumstances. In response to the second part of the 
comment, HUD believes it is inappropriate to mandate an across-the-
board cap on administrative closures, as FHAP agencies often have 
little control over circumstances that may warrant administrative 
closures. HUD's objective in developing administrative closure guidance 
is not to prevent the use of administrative closures in cases in which 
they are warranted, but rather to prevent their use in cases where a 
finding on the merits would be more appropriate.
    Comment: The same commenter recommended that the final rule require 
that FHAP agencies follow the procedures and standards for 
investigation set forth in the Title VIII Handbook (HUD Handbook 8024-
1).
    HUD Response. The Fair Housing Act, at Sec.  810(f)(3)(A), states 
that the Secretary of HUD ``may certify an agency * * * only if the 
Secretary determines that * * * the substantive rights protected by 
such agency * * *; the procedures followed by such agency; the remedies 
available to such agency; and the availability of judicial review of 
such agency's action * * * are substantially equivalent to those 
created by and under this title'' (emphasis added). The Fair Housing 
Act does not require an agency's law and procedures to be identical to 
the Fair Housing Act. Although HUD makes the Title VIII Handbook 
available to FHAP agencies and recommends that it be utilized in the 
processing of dual-filed housing discrimination complaints, HUD has 
stopped short of requiring its usage. The Title VIII Handbook is based 
on the Fair Housing Act and its implementing regulations. Because 
substantially equivalent state and local laws may deviate from the Fair 
Housing Act to a certain extent, certain aspects of the Title VIII 
Handbook might prove impracticable for some FHAP agencies.
    Comment: A commenter recommended that the complaint be closed and 
the complainant advised to proceed through the courts if the 
complainant rejects an offer by the respondent to conciliation that 
represents full relief.
    HUD Response. HUD did not accept this suggestion. The goal of 
conciliation is to reach a resolution of a complaint that is mutually 
acceptable to all parties, including the complainant, the respondent, 
and the FHAP agency. A conciliator may educate parties about settlement 
and the realities of a case. However, a conciliator must never 
threaten, or appear to threaten, a party with adverse consequences for 
failing to conciliate a complaint. In addition, a FHAP agency must 
never close a complaint and advise a complainant to proceed to court if 
a complainant rejects a respondent's offer during conciliation, even if 
the FHAP agency believes the offer represents full relief. Instead, if 
either party rejects an offer by the other party, the FHAP agency 
should proceed with its appropriate investigation and disposition of 
the complaint.
    Comment: A commenter stated that, if there is a disagreement on the 
determination issued by the FHAP agency, HUD should pay the FHAP agency 
for substantial work done and reactivate the complaint for HUD's 
investigation.
    HUD Response. If HUD disagrees with the determination, the 
government technical representative (GTR) may deny payment to the 
agency for the case, or return the case to the agency for additional 
work. All cases in which HUD has denied payment will be considered as 
factors that affect the continued interim certification and 
certification.
    Whenever complainants or respondents disagree with the 
determination, they are bound by the FHAP agency's procedures. HUD has 
no authority to reactivate a case or reverse a decision once the FHAP 
agency has rendered a determination.
    Comment: A commenter recommended that HUD move immediately to 
withdraw certification if a statutory change or judicial action 
``limits the effectiveness of the law'' rather than wait to determine 
if the law is going to be changed and let cases be processed by the 
FHAP agency during the meantime.
    HUD Response. In most cases, HUD will not immediately withdraw 
certification after learning that a change to the law impacts 
substantial equivalence. Rather than proceeding directly to withdrawal, 
HUD will proceed with the progressive scheme identified in Sec.  
115.211 of the proposed rule and this final rule. It is important to 
note, however, that at each stage of the progressive scheme, HUD may 
decline to refer some or all complaints to the agency, and elect not to 
provide payments for complaints to the agency, as provided in Sec.  
115.211. Moreover, it is important to note that a change limiting the 
effectiveness of an agency's law may not necessarily impair its ability 
to process all types of housing discrimination complaints.
    Comment: The same commenter wrote that partnerships with private 
fair housing organizations, including qualified fair housing 
organizations, be added to the list of proper partnership funds usage.
    HUD Response. HUD believes that the language of the proposed rule 
sufficiently addressed this concern. Section 115.304(d) states, 
``[s]ome examples of proper P fund usage include, but are not limited 
to * * * contracting with qualified organizations to conduct fair 
housing testing in appropriate cases * * *.'' The language in this 
final rule is unchanged from that of the proposed rule.
    Comment: A commenter suggested that HUD add a provision that states 
that agencies under a PIP, suspension or withdrawal status are not 
eligible for Partnership ``P'' funding.
    HUD Response. After considering this comment, HUD revised Sec.  
115.210. The section previously indicated that HUD may suspend only 
complaint processing funds during a period of suspension and/or 
withdrawal. Section 115.210 in this final rule is revised to state that 
HUD may suspend all types of funding under the FHAP during a period of 
suspension and withdrawal.
    Comment: A commenter recommended that HUD reinstate SEE (Special 
Enforcement Effort) funding.
    HUD Response. After considering this comment, HUD has decided to 
retain SEE funds in this final rule. It is important to recognize, 
however, that identifying funding in the final regulation does not 
guarantee that it will be available to FHAP agencies, since funding is 
subject to the annual congressional appropriations process.
    In reincorporating SEE funds at Sec.  115.305, HUD has added 
examples to clarify the current regulation. This final rule more fully 
defines what is meant by the meritorious mention criteria (which is one 
of the criteria for obtaining SEE funds identified in the regulation).

[[Page 19073]]

    Comment: A commenter suggested that HUD remove the deduction 
provision or change it to specify that training funds will be deducted 
if the agency does not participate in HUD-approved training.
    HUD Response. HUD agrees with this commenter and has revised Sec.  
115.306(b) of the final rule to state, ``* * * [i]f the agency does not 
participate in mandatory HUD-approved or HUD-sponsored training, 
training funds will be deducted from the agency's overall training 
amount.''
    Comment: Several commenters noted that funding for other agency 
components is often beyond a FHAP agency's control. The commenters 
suggested that if an agency performs adequately, it should not matter 
what the percentage of its budget is for fair housing.
    HUD Response. It is important to HUD that a substantially 
equivalent state or local agency demonstrate a commitment to fair 
housing enforcement by devoting financial resources to its fair housing 
program and that those resources be comparable to amounts devoted to 
the enforcement of other antidiscrimination laws. Therefore, HUD will 
not eliminate the 20 percent requirement. HUD has, however, revised 
Sec.  115.306(a)(5) to further clarify that this requirement applies 
only when an agency enforces antidiscrimination laws other than a fair 
housing law.
    Comment: A commenter wrote that HUD should not, and does not, fund 
local agencies to enforce HUD's fair housing responsibilities and 
suggested that the funds would be better used for the operating fund.
    HUD Response. Under section 810(f) of the Fair Housing Act, 42 
U.S.C. 3610(f) (``the Act''), the Secretary of HUD is required to refer 
housing discrimination complaints to state and local agencies that 
administer fair housing laws certified as substantially equivalent to 
the Act. The Secretary is further authorized by Sec.  817 of the Act, 
42 U.S.C. 3616, to reimburse such agencies for services rendered in 
assisting HUD's enforcement of the Act.
    Comment: A commenter wrote that First Amendment provisions should 
not be incorporated into this rule because some agencies will have 
different state constitutional provisions.
    HUD Response. The provision at Sec.  115.310 is unchanged in this 
final rule. The purpose of FHAP is to provide assistance and 
reimbursement to certified state and local fair housing enforcement 
agencies. The intent of this funding program is to build a coordinated 
intergovernmental enforcement effort to further fair housing, within 
constitutional limitations. HUD will not accept for filing any housing 
discrimination complaint in which the alleged discriminatory acts are 
protected by the First Amendment to the Constitution of the United 
States. This necessarily means that such complaints will not be dual-
filed, and concomitantly, that FHAP agencies cannot and will not be 
reimbursed by HUD for any work related to the processing, 
investigation, or enforcement of such complaints.

Findings and Certifications

Paperwork Reduction Act

    The information collection requirements contained in this rule have 
been approved by the Office of Management and Budget (OMB) in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520) and assigned OMB control number 2529-0005. This rule does not 
revise these information collection requirements. An agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information, unless the collection displays a valid 
control number.

Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866 (entitled ``Regulatory Planning and Review''). 
OMB determined that this rule is a ``significant regulatory action'' as 
defined in section 3(f) of the Order (although not economically 
significant, as provided in section 3(f)(1) of the Order). Any changes 
made to the rule subsequent to its submission to OMB are identified in 
the docket file, which is available for public inspection in the 
Regulations Division, Office of General Counsel, Department of Housing 
and Urban Development, 451 Seventh Street, SW, Room 10276, Washington, 
DC 20410-0500. Due to security measures at the HUD Headquarters 
building, please schedule an appointment to review the docket file by 
calling the Regulations Division at (202) 708-3055 (this is not a toll-
free number).

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments and the private sector. This final rule does not 
impose any federal mandates on any state, local, or tribal governments 
or the private sector within the meaning of the Unfunded Mandates 
Reform Act of 1995.

Executive Order 13132, Federalism

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

Environmental Impact

    This final rule involves a policy document that sets out 
enforcement procedures and provides for fair housing enforcement 
assistance. Accordingly, under 24 CFR 50.19(c)(3), this final rule is 
categorically excluded from environmental review under the National 
Environmental Policy Act (42 U.S.C. 4321).

Impact on Small Entities

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally 
requires an agency to conduct a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. This final rule 
revises and makes clarifying changes related to substantial equivalency 
certification and the FHAP. Specifically, this rule is limited to 
providing clear timeframes, procedures, and concise explanations to 
assist FHAP agencies in complying with the regulations and successfully 
administering their agencies. Accordingly, the undersigned certifies 
that this rule will not have a significant economic impact on a 
substantial number of small entities.

Catalog of Federal Domestic Assistance Number

    The Catalog of Federal Domestic Assistance Number is 14.401.

List of Subjects in 24 CFR Part 115

    Administrative practice and procedure, Aged, Fair housing, Grant 
programs--housing and community development, Individuals with 
disabilities, Intergovernmental relations, Mortgages, Reporting and 
recordkeeping requirements.


[[Page 19074]]



0
For the reasons stated in the preamble, HUD revises 24 CFR part 115 to 
read as follows:

PART 115--CERTIFICATION AND FUNDING OF STATE AND LOCAL FAIR HOUSING 
ENFORCEMENT AGENCIES

Subpart A--General
Sec.
115.100 Definitions.
115.101 Program administration.
115.102 Public notices.
Subpart B--Certification of Substantially Equivalent Agencies
115.200 Purpose.
115.201 The two phases of substantial equivalency certification.
115.202 Request for interim certification.
115.203 Interim certification procedures.
115.204 Criteria for adequacy of law.
115.205 Certification procedures.
115.206 Performance assessments; Performance standards.
115.207 Consequences of interim certification and certification.
115.208 Procedures for renewal of certification.
115.209 Technical assistance.
115.210 Performance deficiency procedures; Suspension; Withdrawal.
115.211 Changes limiting effectiveness of agency's law; Corrective 
actions; Suspension; Withdrawal; Consequences of repeal; Changes not 
limiting effectiveness.
115.212 Request after withdrawal.
Subpart C--Fair Housing Assistance Program
115.300 Purpose.
115.301 Agency eligibility criteria; Funding availability.
115.302 Capacity building funds.
115.303 Eligible activities for capacity building funds.
115.304 Agencies eligible for contributions funds.
115.305 Special enforcement effort (SEE) funds.
115.306 Training funds.
115.307 Requirements for participation in the FHAP; Corrective and 
remedial action for failing to comply with requirements.
115.308 Reporting and recordkeeping requirements.
115.309 Subcontracting under the FHAP.
115.310 FHAP and the First Amendment.
115.311 Testing.

    Authority: 42 U.S.C. 3601-19; 42 U.S.C. 3535(d).

Subpart A--General


Sec.  115.100  Definitions.

    (a) The terms ``Fair Housing Act,'' ``HUD,'' and ``the 
Department,'' as used in this part, are defined in 24 CFR 5.100.
    (b) The terms ``aggrieved person,'' ``complainant,'' 
``conciliation,'' ``conciliation agreement,'' ``discriminatory housing 
practice,'' ``dwelling,'' ``handicap,'' ``person,'' ``respondent,'' 
``secretary,'' and ``state,'' as used in this part, are defined in 
Section 802 of the Fair Housing Act (42 U.S.C. 3602).
    (c) Other definitions. The following definitions also apply to this 
part:
    Act means the Fair Housing Act, as defined in 24 CFR 5.100.
    Assistant Secretary means the Assistant Secretary for Fair Housing 
and Equal Opportunity.
    Certified agency is an agency that has been granted certification 
by the Assistant Secretary in accordance with the requirements of this 
part.
    Cooperative agreement is the instrument HUD will use to provide 
funds. The Cooperative Agreement includes attachments and/or appendices 
establishing requirements relating to the operation and performance of 
the agency.
    Cooperative agreement officer (CAO) is the administrator of the 
funds awarded pursuant to this part and is a regional director of the 
Office of Fair Housing and Equal Opportunity.
    Dual-filed complaint means a housing discrimination complaint that 
has been filed with both HUD and the agency that has been granted 
interim certification or certification by the Assistant Secretary.
    FHAP means the Fair Housing Assistance Program.
    FHEO means HUD's Office of Fair Housing and Equal Opportunity.
    FHEO regional director means a regional director of the Office of 
Fair Housing and Equal Opportunity.
    Fair housing law or Law refers to both state fair housing laws and 
local fair housing laws.
    Final administrative disposition means an agency's completion of a 
case following a reasonable cause finding, including, but not limited 
to, an agency-approved settlement or a final, administrative decision 
issued by commissioners, hearing officers or administrative law judges. 
Final administrative disposition does not include dispositions in 
judicial proceedings resulting from election or appeal.
    Government Technical Monitor (GTM) means the HUD staff person who 
has been designated to provide technical and financial oversight and 
evaluation of the FHAP grantee's performance.
    Government Technical Representative (GTR) means the HUD staff 
person who is responsible for the technical administration of the FHAP 
grant, the evaluation of performance under the FHAP grant, the 
acceptance of technical reports or projects, the approval of payments, 
and other such specific responsibilities as may be stipulated in the 
FHAP grant.
    Impracticable, as used in this part, is when complaint processing 
is delayed by circumstances beyond the control of the interim or 
certified agency. Those situations include, but are not limited to, 
complaints involving complex issues requiring extensive investigations, 
complaints involving new and complicated areas of law that need to be 
analyzed, and where a witness is discovered late in the investigation 
and needs to be interviewed.
    Interim agency is an agency that has been granted interim 
certification by the Assistant Secretary.
    Ordinance, as used in this part, means a law enacted by the 
legislative body of a municipality.
    Statute, as used in this part, means a law enacted by the 
legislative body of a state.
    Testing refers to the use of an individual or individuals 
(``testers'') who, without a bona fide intent to rent or purchase a 
house, apartment, or other dwelling, pose as prospective renters or 
purchasers for the purpose of gathering information that may indicate 
whether a housing provider is complying with fair housing laws.


Sec.  115.101  Program administration.

    (a) Authority and responsibility. The Secretary has delegated the 
authority and responsibility for administering this part to the 
Assistant Secretary.
    (b) Delegation of Authority. The Assistant Secretary retains the 
right to make final decisions concerning the granting and withdrawal of 
substantial equivalency interim certification and certification. The 
Assistant Secretary delegates the authority and responsibility for 
administering the remainder of this part to the FHEO regional director. 
This includes assessing the performance of interim and certified 
agencies as described in Sec.  115.206. This also includes the offering 
of a Performance Improvement Plan (PIP) as described in Sec.  115.210 
and the suspension of interim certification or certification due to 
performance deficiencies as described in Sec.  115.210.


Sec.  115.102  Public notices.

    (a) Periodically, the Assistant Secretary will publish the 
following public notices in the Federal Register:
    (1) A list of all interim and certified agencies; and
    (2) A list of agencies to which a withdrawal of interim 
certification or certification has been proposed.
    (b) On an annual basis, the Assistant Secretary may publish in the 
Federal Register a notice that identifies all agencies that have 
received interim certification during the prior year. The

[[Page 19075]]

notice will invite the public to comment on the state and local laws of 
the new interim agencies, as well as on the performance of the agencies 
in enforcing their laws. All comments will be considered before a final 
decision on certification is made.

Subpart B--Certification of Substantially Equivalent Agencies


Sec.  115.200  Purpose.

    This subpart implements section 810(f) of the Fair Housing Act. The 
purpose of this subpart is to set forth:
    (a) The basis for agency interim certification and certification;
    (b) Procedures by which a determination is made to grant interim 
certification or certification;
    (c) How the Department will evaluate the performance of an interim 
and certified agency;
    (d) Procedures that the Department will utilize when an interim or 
certified agency performs deficiently;
    (e) Procedures that the Department will utilize when there are 
changes limiting the effectiveness of an interim or certified agency's 
law;
    (f) Procedures for renewal of certification; and
    (g) Procedures when an agency requests interim certification or 
certification after a withdrawal.


Sec.  115.201  The two phases of substantial equivalency certification.

    Substantial equivalency certification is granted if the Department 
determines that a state or local agency enforces a law that is 
substantially equivalent to the Fair Housing Act with regard to 
substantive rights, procedures, remedies, and the availability of 
judicial review. The Department has developed a two-phase process of 
substantial equivalency certification.
    (a) Adequacy of Law. In the first phase, the Assistant Secretary 
will determine whether, on its face, the fair housing law that the 
agency administers provides rights, procedures, remedies, and the 
availability of judicial review that are substantially equivalent to 
those provided in the federal Fair Housing Act. An affirmative 
conclusion may result in the Department offering the agency interim 
certification. An agency must obtain interim certification prior to 
obtaining certification.
    (b) Adequacy of Performance. In the second phase, the Assistant 
Secretary will determine whether, in operation, the fair housing law 
that the agency administers provides rights, procedures, remedies, and 
the availability of judicial review that are substantially equivalent 
to those provided in the federal Fair Housing Act. An affirmative 
conclusion will result in the Department offering the agency 
certification.


Sec.  115.202  Request for interim certification.

    (a) A request for interim certification under this subpart shall be 
filed with the Assistant Secretary by the state or local official 
having principal responsibility for the administration of the state or 
local fair housing law. The request shall be supported by the text of 
the jurisdiction's fair housing law, the law creating and empowering 
the agency, all laws referenced in the jurisdiction's fair housing law, 
any regulations and directives issued under the law, and any formal 
opinions of the State Attorney General or the chief legal officer of 
the jurisdiction that pertain to the jurisdiction's fair housing law. A 
request shall also include organizational information of the agency 
responsible for administering and enforcing the law.
    (b) The request and supporting materials shall be filed with the 
Assistant Secretary for Fair Housing and Equal Opportunity, Department 
of Housing and Urban Development, 451 Seventh Street, SW., Washington, 
DC 20410-2000. The Assistant Secretary shall forward a copy of the 
request and supporting materials to the appropriate FHEO regional 
director. A copy of the request and supporting materials will be kept 
available for public examination and copying at:
    (1) The office of the Assistant Secretary; and
    (2) The office of the state or local agency charged with 
administration and enforcement of the state or local fair housing law.
    (c) Upon receipt of a request, HUD will analyze the agency's fair 
housing law to determine whether it meets the criteria identified in 
Sec.  115.204.
    (d) HUD shall review a request for interim certification from a 
local agency located in a state with an interim certified or certified 
substantially equivalent state agency. However, in the request for 
interim certification, the local agency must certify that the 
substantially equivalent state law does not prohibit the local agency 
from administering and enforcing its own fair housing law within the 
locality.


Sec.  115.203  Interim certification procedures.

    (a) Upon receipt of a request for interim certification filed under 
Sec.  115.202, the Assistant Secretary may request further information 
necessary for a determination to be made under this section. The 
Assistant Secretary may consider the relative priority given to fair 
housing administration, as compared to the agency's other duties and 
responsibilities, as well as the compatibility or potential conflict of 
fair housing objectives with these other duties and responsibilities.
    (b) If the Assistant Secretary determines, after application of the 
criteria set forth in Sec.  115.204, that the state or local law, on 
its face, provides substantive rights, procedures, remedies, and 
judicial review procedures for alleged discriminatory housing practices 
that are substantially equivalent to those provided in the Act, the 
Assistant Secretary may offer to enter into an Agreement for the 
Interim Referral of Complaints and Other Utilization of Services 
(interim agreement). The interim agreement will outline the procedures 
and authorities upon which the interim certification is based.
    (c) Such interim agreement, after it is signed by all appropriate 
signatories, will result in the agency receiving interim certification. 
Appropriate signatories include the Assistant Secretary, the FHEO 
regional director, and the state or local official having principal 
responsibility for the administration of the state or local fair 
housing law.
    (d) Interim agreements shall be for a term of no more than three 
years.
    (e) All regulations, rules, directives, and/or opinions of the 
State Attorney General or the jurisdiction's chief legal officer that 
are necessary for the law to be substantially equivalent on its face 
must be enacted and effective in order for the Assistant Secretary to 
offer the agency an interim agreement.
    (f) Interim certification required prior to certification. An 
agency is required to obtain interim certification prior to obtaining 
certification.


Sec.  115.204  Criteria for adequacy of law.

    (a) In order for a determination to be made that a state or local 
fair housing agency administers a law, which, on its face, provides 
rights and remedies for alleged discriminatory housing practices that 
are substantially equivalent to those provided in the Act, the law 
must:
    (1) Provide for an administrative enforcement body to receive and 
process complaints and provide that:
    (i) Complaints must be in writing;
    (ii) Upon the filing of a complaint, the agency shall serve notice 
upon the complainant acknowledging the filing and advising the 
complainant of the time limits and choice of forums provided under the 
law;
    (iii) Upon the filing of a complaint, the agency shall promptly 
serve notice on the respondent or person charged with the commission of 
a discriminatory housing practice advising of his or her

[[Page 19076]]

procedural rights and obligations under the statute or ordinance, 
together with a copy of the complaint;
    (iv) A respondent may file an answer to a complaint.
    (2) Delegate to the administrative enforcement body comprehensive 
authority, including subpoena power, to investigate the allegations of 
complaints, and power to conciliate complaints, and require that:
    (i) The agency commences proceedings with respect to the complaint 
before the end of the 30th day after receipt of the complaint;
    (ii) The agency investigates the allegations of the complaint and 
complete the investigation within the timeframe established by section 
810(a)(1)(B)(iv) of the Act or comply with the notification 
requirements of section 810(a)(1)(C) of the Act;
    (iii) The agency make final administrative disposition of a 
complaint within one year of the date of receipt of a complaint, unless 
it is impracticable to do so. If the agency is unable to do so, it 
shall notify the parties, in writing, of the reasons for not doing so;
    (iv) Any conciliation agreement arising out of conciliation efforts 
by the agency shall be an agreement between the respondent, the 
complainant, and the agency and shall require the approval of the 
agency;
    (v) Each conciliation agreement shall be made public, unless the 
complainant and respondent otherwise agree and the agency determines 
that disclosure is not required to further the purpose of the law.
    (3) Not place excessive burdens on the aggrieved person that might 
discourage the filing of complaints, such as:
    (i) A provision that a complaint must be filed within any period of 
time less than 180 days after an alleged discriminatory practice has 
occurred or terminated;
    (ii) Anti-testing provisions;
    (iii) Provisions that could subject an aggrieved person to costs, 
criminal penalties, or fees in connection with the filing of 
complaints.
    (4) Not contain exemptions that substantially reduce the coverage 
of housing accommodations as compared to section 803 of the Act.
    (5) Provide the same protections as those afforded by sections 804, 
805, 806, and 818 of the Act, consistent with HUD's implementing 
regulations found at 24 CFR part 100.
    (b) In addition to the factors described in paragraph (a) of this 
section, the provisions of the state or local law must afford 
administrative and judicial protection and enforcement of the rights 
embodied in the law.
    (1) The agency must have the authority to:
    (i) Grant or seek prompt judicial action for appropriate temporary 
or preliminary relief pending final disposition of a complaint, if such 
action is necessary to carry out the purposes of the law;
    (ii) Issue and seek enforceable subpoenas;
    (iii) Grant actual damages in an administrative proceeding or 
provide adjudication in court at agency expense to allow the award of 
actual damages to an aggrieved person;
    (iv) Grant injunctive or other equitable relief, or be specifically 
authorized to seek such relief in a court of competent jurisdiction;
    (v) Provide an administrative proceeding in which a civil penalty 
may be assessed or provide adjudication in court, at agency expense, 
allowing the assessment of punitive damages against the respondent.
    (2) If an agency's law offers an administrative hearing, the agency 
must also provide parties an election option substantially equivalent 
to the election provisions of section 812 of the Act.
    (3) Agency actions must be subject to judicial review upon 
application by any party aggrieved by a final agency order.
    (4) Judicial review of a final agency order must be in a court with 
authority to:
    (i) Grant to the petitioner, or to any other party, such temporary 
relief, restraining order, or other order as the court determines is 
just and proper;
    (ii) Affirm, modify, or set aside, in whole or in part, the order, 
or remand the order for further proceeding; and
    (iii) Enforce the order to the extent that the order is affirmed or 
modified.
    (c) The requirement that the state or local law prohibit 
discrimination on the basis of familial status does not require that 
the state or local law limit the applicability of any reasonable local, 
state, or federal restrictions regarding the maximum number of 
occupants permitted to occupy a dwelling.
    (d) The state or local law may assure that no prohibition of 
discrimination because of familial status applies to housing for older 
persons, as described in 24 CFR part 100, subpart E.
    (e) A determination of the adequacy of a state or local fair 
housing law ``on its face'' is intended to focus on the meaning and 
intent of the text of the law, as distinguished from the effectiveness 
of its administration. Accordingly, this determination is not limited 
to an analysis of the literal text of the law. Regulations, directives, 
rules of procedure, judicial decisions, or interpretations of the fair 
housing law by competent authorities will be considered in making this 
determination.
    (f) A law will be found inadequate ``on its face'' if it permits 
any of the agency's decision-making authority to be contracted out or 
delegated to a non-governmental authority. For the purposes of this 
paragraph, ``decision-making authority'' includes but is not limited 
to:
    (1) Acceptance of a complaint;
    (2) Approval of a conciliation agreement;
    (3) Dismissal of a complaint;
    (4) Any action specified in Sec.  115.204(a)(2)(iii) or (b)(1); and
    (5) Any decision-making regarding whether a particular matter will 
or will not be pursued.
    (g) The state or local law must provide for civil enforcement of 
the law by an aggrieved person by the commencement of an action in an 
appropriate court at least one year after the occurrence or termination 
of an alleged discriminatory housing practice. The court must be 
empowered to:
    (1) Award the plaintiff actual and punitive damages;
    (2) Grant as relief, as it deems appropriate, any temporary or 
permanent injunction, temporary restraining order or other order; and
    (3) Allow reasonable attorney's fees and costs.
    (h) If a state or local law is different than the Act in a way that 
does not diminish coverage of the Act, including, but not limited to, 
the protection of additional prohibited bases, then the state or local 
law may still be found substantially equivalent.


Sec.  115.205  Certification procedures.

    (a) Certification. (1) If the Assistant Secretary determines, after 
application of criteria set forth in Sec. Sec.  115.204, 115.206, and 
this section, that the state or local law, both ``on its face'' and 
``in operation,'' provides substantive rights, procedures, remedies, 
and judicial review procedures for alleged discriminatory housing 
practices that are substantially equivalent to those provided in the 
Act, the Assistant Secretary may enter into a Memorandum of 
Understanding (MOU) with the agency.
    (2) The MOU is a written agreement providing for the referral of 
complaints to the agency and for communication procedures between the 
agency and HUD that are adequate to permit the Assistant Secretary to 
monitor the agency's continuing substantial equivalency certification.

[[Page 19077]]

    (3) The MOU, after it is signed by all appropriate signatories, may 
authorize an agency to be a certified agency for a period of not more 
than five years. Appropriate signatories include the Assistant 
Secretary, the FHEO regional director, and the authorized employee(s) 
of the agency.
    (b) In order to receive certification, during the 60 days prior to 
the expiration of the agency's interim agreement, the agency must 
certify to the Assistant Secretary that the state or local fair housing 
law, ``on its face,'' continues to be substantially equivalent to the 
Act (i.e., there have been no amendments to the state or local fair 
housing law, adoption of rules or procedures concerning the fair 
housing law, or judicial or other authoritative interpretations of the 
fair housing law that limit the effectiveness of the agency's fair 
housing law).


Sec.  115.206  Performance assessments; Performance standards.

    (a) Frequency of on-site performance assessment during interim 
certification. The Assistant Secretary, through the appropriate FHEO 
regional office, may conduct an on-site performance assessment not 
later than six months after the execution of the interim agreement. An 
on-site performance assessment may also be conducted during the six 
months immediately prior to the expiration of the interim agreement. 
HUD has the discretion to conduct additional performance assessments 
during the period of interim certification, as it deems necessary.
    (b) Frequency of on-site performance assessment during 
certification. During certification, the Assistant Secretary through 
the FHEO regional office, may conduct on-site performance assessments 
every 24 months. HUD has the discretion to conduct additional 
performance assessments during the period of certification, as it deems 
necessary.
    (c) In conducting the performance assessment, the FHEO regional 
office shall determine whether the agency engages in timely, 
comprehensive, and thorough fair housing complaint investigation, 
conciliation, and enforcement activities. In the performance assessment 
report, the FHEO regional office may recommend to the Assistant 
Secretary whether the agency should continue to be interim certified or 
certified. In conducting the performance assessment, the FHEO regional 
office shall also determine whether the agency is in compliance with 
the requirements for participation in the FHAP enumerated in Sec. Sec.  
115.307, 115.308, 115.309, 115.310, and 115.311 of this part. In the 
performance assessment report, the FHEO regional office shall identify 
whether the agency meets the requirements of Sec. Sec.  115.307, 
115.308, 115.309, 115.310, and 115.311 of this part, and, therefore, 
should continue receiving funding under the FHAP.
    (d) At a minimum, the performance assessment will consider the 
following to determine the effectiveness of an agency's fair housing 
complaint processing, consistent with such guidance as may be issued by 
HUD:
    (1) The agency's case processing procedures;
    (2) The thoroughness of the agency's case processing;
    (3) A review of cause and no cause determinations for quality of 
investigations and consistency with appropriate standards;
    (4) A review of conciliation agreements and other settlements;
    (5) A review of the agency's administrative closures; and
    (6) A review of the agency's enforcement procedures, including 
administrative hearings and judicial proceedings.
    (e) Performance standards. HUD shall utilize the following 
performance standards while conducting performance assessments. If an 
agency does not meet one or more performance standard(s), HUD shall 
utilize the performance deficiency procedures enumerated in Sec.  
115.210.
    (1) Performance Standard 1. Commence complaint proceedings, carry 
forward such proceedings, complete investigations, issue 
determinations, and make final administrative dispositions in a timely 
manner. To meet this standard, the performance assessment will consider 
the timeliness of the agency's actions with respect to its complaint 
processing, including, but not limited to:
    (i) Whether the agency began its processing of fair housing 
complaints within 30 days of receipt;
    (ii) Whether the agency completes the investigative activities with 
respect to a complaint within 100 days from the date of receipt or, if 
it is impracticable to do so, notifies the parties in writing of the 
reason(s) for the delay;
    (iii) Whether the agency makes a determination of reasonable cause 
or no reasonable cause with respect to a complaint within 100 days from 
the date of receipt or, if it is impracticable to do so, notifies the 
parties in writing of the reason(s) for the delay;
    (iv) Whether the agency makes a final administrative disposition of 
a complaint within one year from the date of receipt or, if it is 
impracticable to do so, notifies the parties in writing of the 
reason(s) for the delay; and
    (v) Whether the agency completed the investigation of the complaint 
and prepared a complete, final investigative report.
    (vi) When an agency is unable to complete investigative activities 
with respect to a complaint within 100 days, the agency must send 
written notification to the parties, indicating the reason(s) for the 
delay, within 110 days of the filing of the complaint.
    (2) Performance Standard 2. Administrative closures are utilized 
only in limited and appropriate circumstances. Administrative closures 
should be distinguished from a closure on the merits and may not be 
used instead of making a recommendation or determination of reasonable 
or no reasonable cause. HUD will provide further guidance to interim 
and certified agencies on the appropriate circumstances for 
administrative closures.
    (3) Performance Standard 3. During the period beginning with the 
filing of a complaint and ending with filing of a charge or dismissal, 
the agency will, to the extent feasible, attempt to conciliate the 
complaint. After a charge has been issued, the agency will, to the 
extent feasible, continue to attempt settlement until a hearing or a 
judicial proceeding has begun.
    (4) Performance Standard 4. The agency conducts compliance reviews 
of settlements, conciliation agreements, and orders resolving 
discriminatory housing practices. The performance assessment shall 
include, but not be limited to:
    (i) An assessment of the agency's procedures for conducting 
compliance reviews; and
    (ii) Terms and conditions of agreements and orders issued.
    (5) Performance Standard 5. The agency must consistently and 
affirmatively seek and obtain the type of relief designed to prevent 
recurrences of discriminatory practices. The performance assessment 
shall include, but not be limited to:
    (i) An assessment of the agency's use of its authority to seek 
actual damages, as appropriate;
    (ii) An assessment of the agency's use of its authority to seek and 
assess civil penalties or punitive damages, as appropriate;
    (iii) An assessment of the types of relief sought by the agency 
with consideration for the inclusion of affirmative provisions designed 
to protect the public interest;

[[Page 19078]]

    (iv) A review of all types of relief obtained;
    (v) A review of the adequacy of the relief sought and obtained in 
light of the issues raised by the complaint;
    (vi) The number of complaints closed with relief and the number 
closed without relief;
    (vii) The number of complaints that proceed to administrative 
hearing and the result; and
    (viii) The number of complaints that proceed to judicial 
proceedings and the result.
    (6) Performance Standard 6. The agency must consistently and 
affirmatively seek to eliminate all prohibited practices under its fair 
housing law. An assessment under this standard will include, but not be 
limited to, an identification of the education and outreach efforts of 
the agency.
    (7) Performance Standard 7. The agency must demonstrate that it 
receives and processes a reasonable number of complaints cognizable 
under both the federal Fair Housing Act and the agency's fair housing 
statute or ordinance. The reasonable number will be determined by HUD 
and based on all relevant circumstances including, but not limited to, 
the population of the jurisdiction that the agency serves, the length 
of time that the agency has participated in the FHAP, and the number of 
complaints that the agency has received and processed in the past. If 
an agency fails to receive and process a reasonable number of 
complaints during a year of FHAP participation, given education and 
outreach efforts conducted and receipts of complaints, then the FHEO 
regional director may offer the agency a Performance Improvement Plan 
(PIP), as described in Sec.  115.210(a)(2). The PIP will set forth the 
number of complaints the agency must process during subsequent years of 
FHAP participation. After issuing the PIP, the FHEO regional office 
will provide the agency with technical assistance on ways to increase 
awareness of fair housing rights and responsibilities in the 
jurisdiction.
    (8) Performance Standard 8. The agency must report to HUD on the 
final status of all dual-filed complaints where a determination of 
reasonable cause was made. The report must identify, at a minimum, how 
complaints were resolved (e.g., settlement, judicial proceedings, or 
administrative hearing), when they were resolved, the forum in which 
they were resolved, and types and amounts of relief obtained.
    (9) Performance Standard 9. The agency must conform its performance 
to the provisions of any written agreements executed by the agency and 
the Department related to substantial equivalency certification, 
including, but not limited to, the interim agreement or MOU.


Sec.  115.207  Consequences of interim certification and certification.

    (a) Whenever a complaint received by the Assistant Secretary 
alleges violations of a fair housing law administered by an agency that 
has been interim certified or certified as substantially equivalent, 
the complaint will be referred to the agency, and no further action 
shall be taken by the Assistant Secretary with respect to such 
complaint except as provided for by the Act, this part, 24 CFR part 
103, subpart C, and any written agreements executed by the Agency and 
the Assistant Secretary. HUD shall make referrals to interim certified 
and certified local agencies in accordance with this section even when 
the local agency is located in a state with an interim certified or 
certified state agency.
    (b) If HUD determines that a complaint has not been processed in a 
timely manner in accordance with the performance standards set forth in 
Sec.  115.206, HUD may reactivate the complaint, conduct its own 
investigation and conciliation efforts, and make a determination 
consistent with 24 CFR part 103.
    (c) Notwithstanding paragraph (a) of this section, whenever the 
Assistant Secretary has reason to believe that a complaint demonstrates 
a basis for the commencement of proceedings against any respondent 
under section 814(a) of the Act or for proceedings by any governmental 
licensing or supervisory authorities, the Assistant Secretary shall 
transmit the information upon which such belief is based to the 
Attorney General, federal financial regulatory agencies, other federal 
agencies, or other appropriate governmental licensing or supervisory 
authorities.


Sec.  115.208  Procedures for renewal of certification.

    (a) If the Assistant Secretary affirmatively concludes that the 
agency's law and performance have complied with the requirements of 
this part in each of the five years of certification, the Assistant 
Secretary may renew the certification of the agency.
    (b) In determining whether to renew the certification of an agency, 
the Assistant Secretary's review may include, but is not limited to:
    (1) Performance assessments of the agency conducted by the 
Department during the five years of certification;
    (2) The agency's own certification that the state or local fair 
housing law continues to be substantially equivalent both ``on its 
face'' and ``in operation;'' (i.e., there have been no amendments to 
the state or local fair housing law, adoption of rules or procedures 
concerning the fair housing law, or judicial or other authoritative 
interpretations of the fair housing law that limit the effectiveness of 
the agency's fair housing law); and
    (3) Any and all public comments regarding the relevant state and 
local laws and the performance of the agency in enforcing the law.
    (c) If the Assistant Secretary decides to renew an agency's 
certification, the Assistant Secretary will offer the agency either a 
new MOU or an Addendum to the Memorandum of Understanding (addendum). 
The new MOU or addendum will extend and update the MOU between HUD and 
the agency.
    (d) The new MOU or addendum, when signed by all appropriate 
signatories, will result in the agency's certification being renewed 
for five years from the date on which the previous MOU was to expire. 
Appropriate signatories include the Assistant Secretary, the FHEO 
regional director, and the authorized employee(s) of the agency.
    (e) The provisions of this section may be applied to an agency that 
has an expired MOU or an expired addendum.


Sec.  115.209  Technical assistance.

    (a) The Assistant Secretary, through the FHEO regional office, may 
provide technical assistance to the interim and certified agencies at 
any time. The agency may request such technical assistance or the FHEO 
regional office may determine the necessity for technical assistance 
and require the agency's cooperation and participation.
    (b) The Assistant Secretary, through FHEO headquarters or regional 
staff, will require that the agency participate in training conferences 
and seminars that will enhance the agency's ability to process 
complaints alleging discriminatory housing practices.


Sec.  115.210  Performance deficiency procedures; Suspension; 
Withdrawal.

    (a) HUD may utilize the following performance deficiency procedures 
if it determines at any time that the agency does not meet one or more 
of the performance standards enumerated in Sec.  115.206. The 
performance deficiency procedures may be applied to agencies with 
either interim certification or certification. If an agency fails to 
meet performance standard 7, HUD may bypass the technical assistance

[[Page 19079]]

performance deficiency procedure and proceed to the PIP.
    (1) Technical assistance. After discovering the deficiency, the 
FHEO regional office should immediately inform the agency and provide 
the agency with technical assistance.
    (2) Performance improvement plan. If, following technical 
assistance, the agency does not bring its performance into compliance 
with Sec.  115.206 within a time period identified by the FHEO regional 
director, the FHEO regional director may offer the agency a PIP.
    (i) The PIP will outline the agency's performance deficiencies, 
identify the necessary corrective actions, and include a timetable for 
completion.
    (ii) If the agency receives a PIP, funding under the FHAP may be 
suspended for the duration of the PIP.
    (iii) Once the agency has implemented the corrective actions to 
eliminate the deficiencies, and such corrective actions are accepted by 
the FHEO regional director, funding may be restored.
    (iv) The FHEO regional office may provide the agency with technical 
assistance during the period of the PIP, if appropriate.
    (b) Suspension. If the agency does not agree to implement the PIP 
or does not implement the corrective actions identified in the PIP 
within the time allotted, then the FHEO regional director may suspend 
the agency's interim certification or certification.
    (1) The FHEO regional director shall notify the agency in writing 
of the specific reasons for the suspension and provide the agency with 
an opportunity to respond within 30 days.
    (2) Suspension shall not exceed 180 days.
    (3) During the period of suspension, HUD will not refer complaints 
to the agency.
    (4) If an agency is suspended, the FHEO regional office may elect 
not to provide funding under the FHAP to the agency during the period 
of suspension, unless and until the Assistant Secretary determines that 
the agency is fully in compliance with Sec.  115.206.
    (5) HUD may provide the agency with technical assistance during the 
period of suspension, if appropriate.
    (6) No more than 60 days prior to the end of suspension, the FHEO 
regional office shall conduct a performance assessment of the agency.
    (c) Withdrawal. If, following the performance assessment conducted 
at the end of suspension, the Assistant Secretary determines that the 
agency has not corrected the deficiencies, the Assistant Secretary may 
propose to withdraw the interim certification or certification of the 
agency.
    (1) The Assistant Secretary shall proceed with withdrawal, unless 
the agency provides information or documentation that establishes that 
the agency's administration of its law meets all of the substantial 
equivalency certification criteria set forth in 24 CFR part 115.
    (2) The Assistant Secretary shall inform the agency in writing of 
the reasons for the withdrawal.
    (3) During any period after which the Assistant Secretary proposes 
withdrawal, until such time as the agency establishes that 
administration of its law meets all of the substantial equivalency 
certification criteria set forth in 24 CFR part 115, the agency shall 
be ineligible for funding under the FHAP.


Sec.  115.211  Changes limiting effectiveness of agency's law; 
Corrective actions; Suspension; Withdrawal; Consequences of repeal; 
Changes not limiting effectiveness.

    (a) Changes limiting effectiveness of agency's law. (1) If a state 
or local fair housing law that HUD has previously deemed substantially 
equivalent to the Act is amended; or rules or procedures concerning the 
fair housing law are adopted; or judicial or other authoritative 
interpretations of the fair housing law are issued, the interim-
certified or certified agency must inform the Assistant Secretary of 
such amendment, adoption, or interpretation within 60 days of its 
discovery.
    (2) The requirements of this section shall apply equally to the 
amendment, adoption, or interpretation of any related law that bears on 
any aspect of the effectiveness of the agency's fair housing law.
    (3) The Assistant Secretary may conduct a review to determine if 
the amendment, adoption, or interpretation limits the effectiveness of 
the interim agency's fair housing law.
    (b) Corrective actions. (1) If the review indicates that the 
agency's law no longer meets the criteria identified in Sec.  115.204, 
the Assistant Secretary will so notify the agency in writing. Following 
notification, HUD may take appropriate actions, including, but not 
limited to, any or all of the following:
    (i) Declining to refer some or all complaints to the agency unless 
and until the fair housing law meets the criteria identified in Sec.  
115.204;
    (ii) Electing not to provide payment for complaints processed by 
the agency unless and until the fair housing law meets the criteria 
identified in Sec.  115.204;
    (iii) Providing technical assistance and/or guidance to the agency 
to assist the agency in curing deficiencies in its fair housing law.
    (2) Suspension based on changes in the law. If the corrective 
actions identified in paragraph (b)(1)(i) through (iii) of this section 
fail to bring the state or local fair housing law back into compliance 
with the criteria identified in Sec.  115.204 within the timeframe 
identified in HUD's notification to the agency, the Assistant Secretary 
may suspend the agency's interim certification or certification based 
on changes in the law or a related law.
    (i) The Assistant Secretary will notify the agency in writing of 
the specific reasons for the suspension and provide the agency with an 
opportunity to respond within 30 days.
    (ii) During the period of suspension, the Assistant Secretary has 
the discretion to not refer some or all complaints to the agency unless 
and until the agency's law meets the criteria identified in Sec.  
115.204.
    (iii) During suspension, HUD may elect not to provide payment for 
complaints processed unless and until the agency's law meets the 
criteria identified in Sec.  115.204.
    (iv) During the period of suspension, if the fair housing law is 
brought back into compliance with the criteria identified in Sec.  
115.204, and the Assistant Secretary determines that the fair housing 
law remains substantially equivalent to the Act, the Assistant 
Secretary will rescind the suspension and reinstate the agency's 
interim certification or certification.
    (3) Withdrawal based on changes in the law. If the Assistant 
Secretary determines that the agency has not brought its law back into 
compliance with the criteria identified in Sec.  115.204 during the 
period of suspension, the Assistant Secretary may propose to withdraw 
the agency's interim certification or certification.
    (i) The Assistant Secretary will proceed with withdrawal unless the 
agency provides information or documentation that establishes that the 
agency's current law meets the criteria of substantial equivalency 
certification identified in Sec.  115.204.
    (ii) The Assistant Secretary will inform the agency in writing of 
the reasons for the withdrawal.
    (c) (1) If, following notification from HUD that its fair housing 
law no longer meets the criteria identified in Sec.  115.204, an 
interim-certified or certified agency unequivocally expresses to HUD 
that its fair housing law will not be brought back into compliance, the 
Assistant Secretary may forgo suspension and proceed directly

[[Page 19080]]

to withdrawal of the agency's interim certification or certification.
    (2) During any period after which the Assistant Secretary proposes 
withdrawal, until such time as the agency establishes that 
administration of its law meets all of the substantial equivalency 
certification criteria set forth in 24 CFR part 115, the agency shall 
be ineligible for funding under the FHAP.
    (d) Consequences of repeal. If a state or local fair housing law 
that HUD has previously deemed substantially equivalent to the Act is 
repealed, in whole or in part, or a related law that bears on any 
aspect of the effectiveness of the agency's fair housing law is 
repealed, in whole or in part, the Assistant Secretary may immediately 
withdraw the agency's interim certification or certification.
    (e) Changes not limiting effectiveness. Nothing in this section is 
meant to limit the Assistant Secretary's authority to determine that a 
change to a fair housing law does not jeopardize the substantial 
equivalency interim certification or certification of an agency.
    (1) Under such circumstances, the Assistant Secretary may proceed 
in maintaining the existing relationship with the agency, as set forth 
in the interim agreement or MOU.
    (2) Alternatively, the Assistant Secretary may decide not to refer 
certain types of complaints to the agency. The Assistant Secretary may 
elect not to provide payment for these complaints and may require the 
agency to refer such complaints to the Department for investigation, 
conciliation, and enforcement activities.
    (3) When the Assistant Secretary determines that a change to a fair 
housing law does not jeopardize an agency's substantial equivalency 
certification, the Assistant Secretary need not proceed to suspension 
or withdrawal if the change is not reversed.


Sec.  115.212  Request after withdrawal.

    (a) An agency that has had its interim certification or 
certification withdrawn, either voluntarily or by the Department, may 
request substantial equivalency interim certification or certification.
    (b) The request shall be filed in accordance with Sec.  115.202.
    (c) The Assistant Secretary shall determine whether the state or 
local law, on its face, provides substantive rights, procedures, 
remedies, and judicial review procedures for alleged discriminatory 
housing practices that are substantially equivalent to those provided 
in the federal Fair Housing Act. To meet this standard, the state or 
local law must meet the criteria enumerated in Sec.  115.204.
    (d) Additionally, if the agency had documented performance 
deficiencies that contributed to the past withdrawal, then the 
Department shall consider the agency's performance and any steps the 
agency has taken to correct performance deficiencies and to prevent 
them from recurring in determining whether to grant interim 
certification or certification. The review of the agency's performance 
shall include HUD conducting a performance assessment in accordance 
with Sec.  115.206.

Subpart C--Fair Housing Assistance Program


Sec.  115.300  Purpose.

    The purpose of the Fair Housing Assistance Program (FHAP) is to 
provide assistance and reimbursement to state and local fair housing 
enforcement agencies. The intent of this funding program is to build a 
coordinated intergovernmental enforcement effort to further fair 
housing and to encourage the agencies to assume a greater share of the 
responsibility for the administration and enforcement of fair housing 
laws.
    The financial assistance is designed to provide support for:
    (a) The processing of dual-filed complaints;
    (b) Training under the Fair Housing Act and the agencies' fair 
housing law;
    (c) The provision of technical assistance;
    (d) The creation and maintenance of data and information systems; 
and
    (e) The development and enhancement of fair housing education and 
outreach projects, special fair housing enforcement efforts, fair 
housing partnership initiatives, and other fair housing projects.


Sec.  115.301  Agency eligibility criteria; Funding availability.

    An agency with certification or interim certification under subpart 
B of this part, and which has entered into a MOU or interim agreement, 
is eligible to participate in the FHAP. All FHAP funding is subject to 
congressional appropriation.


Sec.  115.302  Capacity building funds.

    (a) Capacity building (CB) funds are funds that HUD may provide to 
an agency with interim certification.
    (b) CB funds will be provided in a fixed annual amount to be 
utilized for the eligible activities established pursuant to Sec.  
115.303. When the fixed annual amount will not adequately compensate an 
agency in its first year of participation in the FHAP due to the large 
number of fair housing complaints that the agency reasonably 
anticipates processing, HUD may provide the agency with additional 
funds.
    (c) HUD may provide CB funds during an agency's first three years 
of participation in the FHAP. However, in the second and third year of 
the agency's participation in the FHAP, HUD has the option to permit 
the agency to receive contribution funds under Sec.  115.304, instead 
of CB funds.
    (d) In order to receive CB funding, agencies must submit a 
statement of work prior to the signing of the cooperative agreement. 
The statement of work must identify:
    (1) The objectives and activities to be carried out with the CB 
funds received;
    (2) A plan for training all of the agency's employees involved in 
the administration of the agency's fair housing law;
    (3) A statement of the agency's intention to participate in HUD-
sponsored training in accordance with the training requirements set out 
in the cooperative agreement;
    (4) A description of the agency's complaint processing data and 
information system, or, alternatively, whether the agency plans to use 
CB funds to purchase and install a data system;
    (5) A description of any other fair housing activities that the 
agency will undertake with its CB funds. All such activities must 
address matters affecting fair housing enforcement that are cognizable 
under the Fair Housing Act. Any activities that do not address the 
implementation of the agency's fair housing law, and that are therefore 
not cognizable under the Fair Housing Act, will be disapproved.


Sec.  115.303  Eligible activities for capacity building funds.

    The primary purposes of capacity-building funding are to provide 
for complaint activities and to support activities that produce 
increased awareness of fair housing rights and remedies. All such 
activities must support the agency's administration and enforcement of 
its fair housing law and address matters affecting fair housing that 
are cognizable under the Fair Housing Act.


Sec.  115.304  Agencies eligible for contributions funds.

    (a) An agency that has received CB funds for one to three 
consecutive years may be eligible for contributions funding. 
Contributions funding consists of five categories:
    (1) Complaint processing (CP) funds;

[[Page 19081]]

    (2) Special enforcement effort (SEE) funds (see Sec.  115.305);
    (3) Training funds (see Sec.  115.306);
    (4) Administrative cost (AC) funds; and
    (5) Partnership (P) funds.
    (b) CP funds. (1) Agencies receiving CP funds will receive such 
support based solely on the number of complaints processed by the 
agency and accepted for payment by the FHEO regional director during a 
consecutive, specifically identified, 12-month period. The 12-month 
period will be identified in the cooperative agreement between HUD and 
the agency. The FHEO regional office shall determine whether or not 
cases are acceptably processed based on requirements enumerated in the 
cooperative agreement and its attachments/appendices, performance 
standards set forth in 24 CFR 115.206, and provisions of the interim 
agreement or MOU.
    (2) The amount of funding to agencies that are new to contributions 
funding will be based on the number of complaints acceptably processed 
by the agency during the specifically identified 12-month period 
preceding the signing of the cooperative agreement.
    (c) AC funds. (1) Agencies that acceptably process 100 or more 
cases will receive no less than 10 percent of the agency's total FHAP 
payment amount for the preceding year, in addition to CP funds, 
contingent on fiscal year appropriations. Agencies that acceptably 
process fewer than 100 cases will receive a flat rate, contingent on 
fiscal year appropriations.
    (2) Agencies will be required to provide HUD with a statement of 
how they intend to use the AC funds. HUD may require that some or all 
AC funding be directed to activities designed to create, modify, or 
improve local, regional, or national information systems concerning 
fair housing matters (including the purchase of state-of-the-art 
computer systems, obtaining and maintaining Internet access, etc.).
    (d) P funds. The purpose of P funds is for an agency participating 
in the FHAP to utilize the services of individuals and/or public, 
private, for-profit, or not-for-profit organizations that have 
expertise needed to effectively carry out the provisions of the 
agency's fair housing law. P funds are fixed amounts and shall be 
allocated based on the FHAP appropriation. Agencies must consult with 
the CAO and GTR in identifying appropriate usage of P funds for the 
geographical area that the agency services. Some examples of proper P 
fund usage include, but are not limited to:
    (1) Contracting with qualified organizations to conduct fair 
housing testing in appropriate cases;
    (2) Hiring experienced, temporary staff to assist in the 
investigation of complex or aged cases;
    (3) Partnering with grassroots, faith-based or other community-
based organizations to conduct education and outreach to people of 
different backgrounds on how to live together peacefully in the same 
housing complex, neighborhood, or community;
    (4) Contracting with individuals outside the agency who have 
special expertise needed for the investigation of fair housing cases 
(e.g., architects for design and construction cases or qualified 
individuals from colleges and universities for the development of data 
and statistical analyses).


Sec.  115.305  Special enforcement effort (SEE) funds.

    (a) SEE funds are funds that HUD may provide to an agency to 
enhance enforcement activities of the agency's fair housing law. SEE 
funds will be a maximum of 20 percent of the agency's total FHAP 
cooperative agreement for the previous contract year, based on approval 
of eligible activity or activities, and contingent upon the 
appropriation of funds. All agencies receiving contributions funds are 
eligible to receive SEE funds if they meet three of the six criteria 
set out in paragraphs (a)(1) through (a)(6) of this section:
    (1) The agency enforced a subpoena or made use of its prompt 
judicial action authority within the past year;
    (2) The agency has held at least one administrative hearing or has 
had at least one case on a court's docket for civil proceedings during 
the past year;
    (3) At least ten percent of the agency's fair housing caseload 
resulted in written conciliation agreements providing monetary relief 
for the complainant as well as remedial action, monitoring, reporting, 
and public interest relief provisions;
    (4) The agency has had in the most recent three years, or is 
currently engaged in, at least one major fair housing systemic 
investigation requiring an exceptional amount of funds expenditure;
    (5) The agency's administration of its fair housing law received 
meritorious mention for its fair housing complaint processing or other 
fair housing activities that were innovative. The meritorious mention 
criterion may be met by an agency's successful fair housing work being 
identified and/or published by a reputable source. Examples of 
meritorious mention include, but are not limited to:
    (i) An article in a minority newspaper or a newspaper of general 
circulation that identifies the agency's role in the successful 
resolution of a housing discrimination complaint;
    (ii) A letter from a sponsoring organization of a fair housing 
conference or symposium that identifies the agency's successful 
participation and presentation at the conference or symposium;
    (iii) A letter of praise, proclamation, or other formal 
documentation from the mayor, county executive, or governor recognizing 
the fair housing achievement of the agency.
    (6) The agency has completed the investigation of at least 10 fair 
housing complaints during the previous funding year.
    (b) Regardless of whether an agency meets the eligibility criteria 
set forth in paragraph (a) of this section, an agency is ineligible for 
SEE funds if:
    (1) Twenty percent or more of an agency's fair housing complaints 
result in administrative closures; or
    (2) The agency is currently on a PIP, or its interim certification 
or certification has been suspended during the federal fiscal year in 
which SEE funds are sought.
    (c) SEE funding amounts are subject to the FHAP appropriation by 
Congress and will be described in writing in the cooperative agreements 
annually. HUD will periodically publish a list of activities eligible 
for SEE funding in the Federal Register.


Sec.  115.306  Training funds.

    (a) All agencies, including agencies that receive CB funds, are 
eligible to receive training funds. Training funds are fixed amounts 
based on the number of agency employees to be trained. Training funds 
shall be allocated based on the FHAP appropriation. Training funds may 
be used only for HUD-approved or HUD-sponsored training. Agency-
initiated training or other formalized training may be included in this 
category. However, such training must first be approved by the CAO and 
the GTR. Specifics on the amount of training funds that an agency will 
receive and, if applicable, amounts that may be deducted, will be set 
out in the cooperative agreement each year.
    (b) Each agency must send staff to mandatory FHAP training 
sponsored by HUD, including, but not necessarily limited to, the 
National Fair Housing Training Academy and the National Fair Housing 
Policy Conference. If the agency does not participate in mandatory HUD-
approved and HUD-sponsored training, training funds will be deducted 
from the agency's overall

[[Page 19082]]

training amount. All staff of the agency responsible for the 
administration and enforcement of the fair housing law must participate 
in HUD-approved or HUD-sponsored training each year.


Sec.  115.307  Requirements for participation in the FHAP; Corrective 
and remedial action for failing to comply with requirements.

    (a) Agencies that participate in the FHAP must meet the 
requirements enumerated in this section. The FHEO regional office shall 
review the agency's compliance with the requirements of this section 
when it conducts on-site performance assessments in accordance with 
Sec.  115.206. The requirements for participation in the FHAP are as 
follows:
    (1) The agency must conform to all reporting and record maintenance 
requirements set forth in Sec.  115.308, as well as any additional 
reporting and record maintenance requirements identified by the 
Assistant Secretary.
    (2) The agency must agree to on-site technical assistance and 
guidance and implementation of corrective actions set out by the 
Department in response to deficiencies found during the technical 
assistance or performance assessment evaluations of the agency's 
operations.
    (3) The agency must use the Department's official complaint data 
information system and must input all relevant data and information 
into the system in a timely manner.
    (4) The agency must agree to implement and adhere to policies and 
procedures (as the agency's laws allow) provided to the agency by the 
Assistant Secretary, including, but not limited to, guidance on 
investigative techniques, case file preparation and organization, and 
implementation of data elements for complaint tracking.
    (5) If an agency that participates in the FHAP enforces 
antidiscrimination laws other than a fair housing law (e.g., 
administration of a fair employment law), the agency must annually 
provide a certification to HUD stating that it spends at least 20 
percent of its total annual budget on fair housing activities. The term 
``total annual budget,'' as used in this subsection, means the entire 
budget assigned by the jurisdiction to the agency for enforcing and 
administering antidiscrimination laws, but does not include FHAP funds.
    (6) The agency may not co-mingle FHAP funds with other funds. FHAP 
funds must be segregated from the agency's and the state or local 
government's other funds and must be used for the purpose that HUD 
provided the funds.
    (7) An agency may not unilaterally reduce the level of financial 
resources currently committed to fair housing activities (budget and 
staff reductions or other actions outside the control of the agency 
will not, alone, result in a negative determination for the agency's 
participation in the FHAP).
    (8) The agency must comply with the provisions, certifications, and 
assurances required in any and all written agreements executed by the 
agency and the Department related to participation in the FHAP, 
including, but not limited to, the cooperative agreement.
    (9) The agency must draw down its funds in a timely manner.
    (10) The agency must be audited and receive copies of the audit 
reports in accordance with applicable rules and regulations of the 
state and local government in which it is located.
    (11) The agency must participate in all required training, as 
described in Sec.  115.306(b).
    (12) If the agency subcontracts any activity for which the 
subcontractor will receive FHAP funds, the agency must conform to the 
subcontracting requirements of Sec.  115.309.
    (13) If the agency receives a complaint that may implicate the 
First Amendment of the United States Constitution, then the agency must 
conform to the requirements of Sec.  115.310.
    (14) If the agency utilizes FHAP funds to conduct fair housing 
testing, then the agency must conform to the requirements of Sec.  
115.311.
    (b) Corrective and remedial action for failing to comply with 
requirements. The agency's refusal to provide information, assist in 
implementation, or carry out the requirements of this section may 
result in the denial or interruption of its receipt of FHAP funds. 
Prior to denying or interrupting an agency's receipt of FHAP funds, HUD 
will put the agency on notice of its intent to deny or interrupt. HUD 
will identify its rationale for the denial or interruption and provide 
the agency with an opportunity to respond within a reasonable period of 
time. If, within the time period requested, the agency does not provide 
information or documentation indicating that the requirement(s) 
enumerated in this section is/are met, HUD may proceed with the denial 
or interruption of FHAP funds. If, at any time following the denial or 
interruption, HUD learns that the agency meets the requirements 
enumerated in this section, HUD may opt to reinstate the agency's 
receipt of FHAP funds.


Sec.  115.308  Reporting and recordkeeping requirements.

    (a) The agency shall establish and maintain records demonstrating:
    (1) Its financial administration of FHAP funds; and
    (2) Its performance under the FHAP.
    (b) The agency will provide to the FHEO regional director reports 
maintained pursuant to paragraph (a) of this section. The agency will 
provide reports to the FHEO regional director in accordance with the 
frequency and content requirements identified in the cooperative 
agreement. In addition, the agency will provide reports on the final 
status of complaints following reasonable cause findings, in accordance 
with Performance Standard 8 identified in Sec.  115.206.
    (c) The agency will permit reasonable public access to its records 
consistent with the jurisdiction's requirements for release of 
information. Documents relevant to the agency's participation in the 
FHAP must be made available at the agency's office during normal 
working hours (except that documents with respect to ongoing fair 
housing complaint investigations are exempt from public review 
consistent with federal and/or state law).
    (d) The Secretary, Inspector General of HUD, and the Comptroller 
General of the United States or any of their duly authorized 
representatives shall have access to all pertinent books, accounts, 
reports, files, and other payments for surveys, audits, examinations, 
excerpts, and transcripts as they relate to the agency's participation 
in FHAP.
    (e) All files will be kept in such fashion as to permit audits 
under applicable Office of Management and Budget circulars, procurement 
regulations and guidelines, and the Single Audit requirements for state 
and local agencies.


Sec.  115.309  Subcontracting under the FHAP.

    If an agency subcontracts to a public or private organization any 
activity for which the organization will receive FHAP funds, the agency 
must ensure and certify in writing that the organization is:
    (a) Using services, facilities, and electronic information 
technologies that are accessible in accordance with the Americans with 
Disability Act (ADA) (42 U.S.C. 12101), Section 504 of the 1973 
Rehabilitation Act (29 U.S.C. 701), and Section 508(a)(1) of the 
Rehabilitation Act amendments of 1998;
    (b) Complying with the standards of Section 3 of the Housing and 
Urban Development Act of 1968 (42 U.S.C. 1441);

[[Page 19083]]

    (c) Affirmatively furthering fair housing in the provision of 
housing and housing-related services; and
    (d) Not presently debarred, suspended, proposed for debarment, 
declared ineligible, or voluntarily excluded from covered transactions 
by any federal debarment or agency.


Sec.  115.310  FHAP and the First Amendment.

    None of the funding made available under the FHAP may be used to 
investigate or prosecute any activity engaged in by one or more 
persons, including the filing or maintaining of a non-frivolous legal 
action, that may be protected by the First Amendment of the United 
States Constitution. HUD guidance is available that sets forth the 
procedures HUD will follow when it is asked to accept and dual-file a 
case that may implicate the First Amendment of the United States 
Constitution.


Sec.  115.311  Testing.

    The following requirements apply to testing activities funded under 
the FHAP:
    (a) The testing must be done in accordance with a HUD-approved 
testing methodology;
    (b) Testers must not have prior felony convictions or convictions 
of any crimes involving fraud or perjury.
    (c) Testers must receive training or be experienced in testing 
procedures and techniques.
    (d) Testers and the organizations conducting tests, and the 
employees and agents of these organizations may not:
    (1) Have an economic interest in the outcome of the test, without 
prejudice to the right of any person or entity to recover damages for 
any cognizable injury;
    (2) Be a relative or acquaintance of any party in a case;
    (3) Have had any employment or other affiliation, within five 
years, with the person or organization to be tested; or
    (4) Be a competitor of the person or organization to be tested in 
the listing, rental, sale, or financing of real estate.

    Dated: April 5, 2007.
Kim Kendrick,
Assistant Secretary for Fair Housing and Equal Opportunity.
[FR Doc. E7-7087 Filed 4-13-07; 8:45 am]
BILLING CODE 4210-67-P