`[Federal Register Volume 89, Number 233 (Wednesday, December 4, 2024)]
[Proposed Rules]
[Pages 96130-96143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28032]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 1944

[Docket No. RHS-24-SFH-0037]
RIN 0575-AD37


Self-Help Technical Assistance Grants: Technical Corrections and 
Program Updates

AGENCY: Rural Housing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Housing Service (RHS or the Agency), a Rural 
Development (RD) agency of the United States Department of Agriculture 
(USDA), proposes to update and streamline the Single-Family Housing 
(SFH) Self-Help Technical Assistance Grant Program. The Self-Help 
Program has evolved, and the current regulations as codified restrict 
the Agency's ability to be flexible with market changes. The intent of 
this proposed rule is to reduce the regulatory burdens in the current 
regulation, to assist the Agency to better achieve the program 
objectives, streamline administrative regulatory requirements and make 
the program more effective in serving rural Americans by increasing 
decent, safe, and sanitary housing stock across the Nation.

DATES: Comments on the proposed rule must be received on or before 
February 3, 2025.
    The comment period for the information collection under the 
Paperwork Act of 1995 must be received on or before February 3, 2025.

ADDRESSES: Comments may be submitted electronically by the Federal 
eRulemaking Portal: Go to http://www.regulations.gov and, in the 
``Search Field'' box, labeled ``Search for dockets and documents on 
agency actions,'' enter the following docket number: (RHS-24-SFH-0037) 
or Regulation Identifier Number (RIN): (0575-AD37). To submit or view 
public comments, click the ``Search'' button, select the ``Documents'' 
tab, then select the following document title: ``Self-Help Technical 
Assistance Grants: Technical Corrections and Program Updates'' from the 
``Search Results,'' and select the ``Comment'' button. Before inputting 
your comments, you may also review the ``Commenter's Checklist'' 
(optional). Insert your comments under the ``Comment'' title, click 
``Browse'' to attach files (if available). Input your email address and 
select ``Submit Comment.'' Information on using Regulations.gov, 
including instructions for accessing documents, submitting comments, 
and viewing the docket after the close of the comment period, is 
available through the site's ``FAQ'' link.
    All comments will be available for public inspection online at the 
Federal eRulemaking Portal (http://www.regulations.gov).
    Other Information: Additional information about Rural Development 
and its programs is available on the internet at http://www.rurdev.usda.gov/index.html.
    In accordance with 5 U.S.C. 553(b)(4), a summary of this proposed 
rule may be found by going to http://www.regulations.gov and in the 
``Search for dockets and documents on agency actions'' box, enter the 
following docket number RHS-24-SFH-0037.

FOR FURTHER INFORMATION CONTACT: Sunceri Dade, Finance & Loan Analyst, 
SFH Direct Division, Rural Housing Service, Rural Development, United 
States Department of Agriculture, 1400 Independence Avenue SW, 
Washington, DC 20250, Phone: 202-720-1485, Email: 
[email protected].

SUPPLEMENTARY INFORMATION:

Statutory Authority

    Section 510(k) of Title V the Housing Act of 1949 [42 U.S.C. 
1480(k)], as amended, authorizes the Secretary of the Department of 
Agriculture to promulgate rules and regulations as deemed necessary to 
carry out the purpose of that title. The Self-Help program is 
authorized under Section 523 of Title V the Housing Act of 1949 (42 
U.S.C. 1490(c)), as amended, authorizes the Secretary of the Department 
of Agriculture to promulgate rules and regulations as deemed necessary 
to carry out the purpose of that title. The program is implemented 
under 7 CFR part 1944, subpart I.

I. Background

    The RHS offers a variety of programs to build or improve housing 
and essential community facilities in rural areas. RHS offers loans, 
grants, and loan guarantees for single- and multifamily housing, 
childcare centers, fire and police stations, hospitals, libraries, 
nursing homes, schools, first responder vehicles and equipment, housing 
for farm laborers. RHS also provides technical assistance loans and 
grants in partnership with non-profit organizations, Indian Tribes, 
state and federal government agencies, and local communities.
    Well built, affordable housing is essential to the vitality of 
communities in rural America. RD SFH Programs give families and 
individuals the opportunity to buy, build, or repair affordable homes 
located in rural America. Eligibility for these loans, loan guarantees, 
and grants is based on income and varies according to the average 
median income for each area.
    Section 510(k) of Title V the Housing Act of 1949 [42 U.S.C. 
1480(k)], as amended, authorizes the Secretary of the Department of 
Agriculture to promulgate rules and regulations as deemed necessary to 
carry out the purpose of that title. The Self-Help program is 
authorized under Section 523 of Title V the Housing Act of 1949 (42 
U.S.C. 1490(c)), as amended, authorizes the Secretary of the Department 
of Agriculture to promulgate rules and regulations as deemed necessary 
to carry out the purpose of that title. The RHS administers the Section 
523 Self-Help Housing Technical Assistance Grant Program which is 
implemented under 7 CFR 1944, Subpart I and authorized by the Housing 
Act of 1949, as amended (42 U.S.C. 1490c). The purpose of the program 
is to provide grants to qualified organizations to help them carry out 
local self-help housing construction projects. Grant recipients 
supervise groups of very low- and low-income individuals and families 
as they construct or rehabilitate their homes in rural areas. The group 
members provide most of the construction labor on each other's homes, 
and rehabilitation project participants contribute construction hours 
based on the amount of work

[[Page 96131]]

being completed, all with technical assistance from the organization 
overseeing the project. Eligible applicants include government 
nonprofit organizations, federally recognized Tribes, and private 
nonprofit organizations.
    The SFH program undertook a systematic review of its current 
regulation at 7 CFR 1944 Subpart I and the procedures to administer its 
programs. It was determined that several technical corrections and 
program updates are needed.

II. Discussion of the Proposed Rule

    The SFH program routinely meets with staff and partners to provide 
them with the opportunity to discuss suggestions for process 
improvement(s) to reduce the burden on grantees and borrowers, increase 
the flexibility of the program and improve overall customer 
satisfaction. As a result of these consultations, SFH has identified 
several processes and regulatory improvements which are described in 
the next section. Continued stakeholder input is vital to ensure the 
proposed changes would support the Self-Help Program's mission, while 
ensuring that regulation changes are reasonable and do not overly 
burden the Agency's staff and their customers.

III. Summary of Proposed Changes

    The following information details the changes in the proposed rule:
    (1) Make general revisions to streamline and update 7 CFR part 
1944, subpart I:
    a. Remove/replace outdated references (e.g., County Office, County 
Supervisor, and District Director).
    State personnel and office locations have changed over the years, 
and the terms ``County Office'', ``County Supervisor'', and ``District 
Director'' are no longer used by the Agency. The Agency personnel 
assigned to review Self-help Program applications, and the person 
assigned to service the grant, could be different people in different 
parts of the State. The term ``Authorized Agency Official'' will be 
used to generalize assignments and allow states the flexibility to 
assign work for the program as needed.
    b. Replace references to ``FmHA or its successor agency under 
Public law 103-354'' with ``Rural Housing Service'' or ``Agency.''
    In 2006, the FmHA was fully terminated, and its housing and 
community programs were transferred to the newly formed USDA Rural 
Development. The proposed rule intends to replace the term ``Farmers 
Home Administration'' with the terms ``Agency'' and ``Rural Housing 
Service.''
    c. Replace references to ``SF-269A'' with ``SF-425.''
    The Standard Form (SF 269A) was obsoleted several years ago. It 
will be replaced with the Federal Financial Report, Standard Form (SF)-
425.
    d. Remove paragraph (d) from 7 CFR 1944.406 ``Prohibited use of 
grant funds.''
    Removing 7 CFR 1944.406(d) will align the regulation with 2 CFR 
part 200 language which allows grant funds to be used for employee 
training.
    e. Remove requirements to submit a preapplication or application in 
an original and one copy.
    The Agency has moved to Electronic Customer Files (ECF) and no 
longer requires hard copy paper preapplication or applications. This 
update will streamline and modernize the program while also reducing 
environmental impact.
    f. Revise 7 CFR 1944.424 ``Dwelling construction standards.''
    The Agency intends to update the paragraph to replace ``local 
codes'' with ``State, Tribal, or local requirements.''
    g. Remove requirement to submit an Affirmative Fair Housing 
Marketing Plan (AFHMP).
    The Agency has determined that the AFHMP is unnecessary considering 
marketing materials are collected and reviewed along with a very-low 
outreach plan. The Agency does not have its own AFHMP form, and the 
Housing and Urban Development form being used by Single-Family Housing 
has not been kept updated. This action will cause the removal of 
1944.410(a)(10) and 1944.410(b)(1)(iv). Self-help organizations are 
must still comply with all civil right laws as directed in the grant 
agreement.
    (2) Revise 7 CFR 1944.401 ``Objectives'' to remove outdated and 
incorrect statements.
    The Agency intends to update the introductory paragraph to reflect 
the program's current objectives and represent the population it is 
designed to serve.
    (3) Revise 7 CFR 1944.403 ``Definitions.''
    Definitions will be added which are intended to provide additional 
clarity to stakeholders about the program.
    (4) Revise 7 CFR 1944.404(d) to allow `Board of Directors' to be 
defined at 7 CFR 1944.403 ``Definitions.''
    SFH has determined that the language in this part of the regulation 
is out of place and should be moved to the definitions section. In 
addition, the requirement for all organizations to have a specific 
number of board members has been overly restrictive in some extremely 
rural areas. The Agency proposes to provide organizations with more 
flexibility related to the required number of board members in the 
regulatory definitions section.
    (5) Revise 7 CFR 1944.407 ``Limitations.''
    This section of the regulation limits the amount of technical 
assistance (TA) an organization may apply for. The Agency proposes that 
the limitations in paragraphs (a), (b), (c), and (d) should be as 
follows:
    Remove the following sentence in paragraph (a), ``Upon request, the 
County Supervisor will provide the grantee the average cost of modest 
homes for the area.'' The equivalent value of a modest home will be 
established by the Agency on an annual basis as described in the 
definition at 7 CFR 1944.403. The National Office will use a percentage 
of the area loan limit to establish the equivalent value of a modest 
home annually.
    Revise paragraph (b) ``An average TA cost per equivalent unit that 
does not exceed the difference between the equivalent value of modest 
homes in the area and the average mortgage of the participating 
families minus $1,000'' to increase to `. . . minus $10,000' which will 
reduce the historically higher than necessary amount that can be 
charged to the grant.
    Revise paragraph (c) and move to paragraph (d) to remove the State 
Director's approval of a technical assistance cost above the limits set 
in paragraphs (a) and (b) in favor of this approval being at the 
National Office level. Add other limitations may apply which will be 
released in an annual funding policy. As program funding remains 
unchanged or decreases annually, funding limitations may be necessary 
to manage program funds.
    The revised paragraph (c) will add a maximum TA cost per equivalent 
unit for rehabilitation-type programs. The maximum TA cost per 
equivalent unit will be no more than a percentage of the cost of the 
equivalent value of modest homes built in the area. The levels will be 
set in the regulation as not to exceed 12 percent for acquisition 
rehab, and 9 percent for owner-occupied.
    (6) Revise 7 CFR 1944.409 ``Intergovernmental Consultation, 
Executive Order 12372.''
    The Agency intends to update the title and paragraph language of 
this section.
    (7) Revise 7 CFR 1944.410 ``Processing preapplications, 
applications, and completing grant dockets.''
    As a consequence of historically limited funding for the Self-help 
Program, funds have not been available

[[Page 96132]]

for predevelopment grant awards. Proposed changes to the regulation 
will include items typically collected during the preapplication phase 
being incorporated into a part of the application docket.
    Other proposed changes/clarifications to Sec.  1944.410 include:
    Add the requirement to submit the organization's previous years 
financial audit in paragraph (a)(3).
    Remove the current requirement in paragraph (a)(5) ``. . . living 
in houses that are deteriorated, dilapidated, overcrowded, and/or 
lacking plumbing facilities.''
    Specify in paragraph (b) that a preapplication review will only be 
completed when preapplications are accepted by the Agency. Typically, 
the full application docket will be reviewed.
    Remove references to Form AD 622, ``Notice of Preapplication Review 
Action'' in paragraphs (b)(4)(i), (ii), and (e) in favor of issuing a 
letter of conditions for eligible preapplications/applications or 
denial letter with appeal rights for those found to be ineligible.
    Remove the $10,000 limit in paragraph (d), and the up to six-month 
period of performance stipulation for predevelopment grants. Should 
funding allow for predevelopment grants these limitations will be set 
in an annual funding policy or other public release announcing the 
acceptance of preapplications.
    In paragraph (e)(2) at the time of application, specify that the 
first group can be determined eligible by the Agency or the 
organization; and in paragraph (3) lots do not need to be optioned; 
however, both will be a condition of closing. The Agency does not have 
funding for predevelopment grants to aid organizations in meeting these 
requirements, and in many cases, it is unreasonable to have a group 
ready to begin construction prior to the approval of the application.
    In paragraph (e)(7) clarify that a detailed budget is required in 
addition to SF 424A.
    Remove paragraph (c) and renumber paragraphs (d) and (e) 
accordingly.
    (8) Update 7 CFR 1944.411 paragraphs (e) and (g) requirements for 
fidelity bonding and to establish an interest-bearing checking account.
    The regulation currently prohibits Grantees from drawing funding 
beyond a 30-day advancement, thus fidelity bonding is not needed. The 
Agency proposes to revise this section to read ``The grantee has 
established an interest-bearing checking account in accordance with 2 
CFR 200.305(b)(8).''
    (9) Remove 7 CFR 1944.412 ``Docket preparation'' chart in favor of 
an application checklist to be provided by the program office.
    Remove the chart currently in this section and include a complete 
application checklist provided by the program office. Electronic 
applications will be accepted.
    (10) Revise 7 CFR 1944.413 ``Grant approval'' to reflect the 
current practices.
    The National Office reviews, approves, and obligates all funding 
for the Self-help Program. The current process for application review 
is the docket will first be reviewed by the Technical and Management 
Assistance (T&MA) Contractor before submission to the RD Office 
designated by the State. After the field review and recommendation, the 
docket is submitted to the National Office for final review, approval, 
and funding. In addition to outlining this process, paragraph (a)(2) 
will be edited to remove reference to the Finance Office, as the 
Finance Office no longer processes obligations or fund disbursements as 
described. Reference to and use of Form RD 440-57 will be removed.
    (11) Revise 7 CFR 1944.415 ``Grant approval and other approving 
authorities.''
    Funding for the Self-help Program remains limited, and the National 
Office must retain grant approval authority to manage the allocation of 
funds. SFH proposes to remove the State Director grant approval limits 
in paragraphs (a) and (b), and to combine the new paragraphs into one 
paragraph (a).
    Renumber paragraph (d) to be paragraph(c), and update the former 
paragraph (d), (1), (2) and (3) regarding the Agency official 
authorized to approve monthly expenditures when a grantee serves more 
than one county or state. The monthly expenditures should normally be 
approved by the Housing Program Director or designee and update the 
options for grantees working in multiple states. Should an organization 
propose to operate in more than one state the National Office will 
determine the appropriate approval official.
    (12) Update 7 CFR 1944.416 ``Grant closing.''
    Revise the paragraph to replace `Agreement' with `Grant Agreement' 
and remove the reference to 7 CFR 1944.403(a);
    Add that cost may not be allocated to the Grant Agreement prior to 
execution; and Authorize the State Director or designee to execute the 
Grant Agreement on behalf of the Agency.
    (13) Update 7 CFR 1944.417 ``Servicing actions after grant 
closing.''
    Revise paragraph (a) to state that draws may be requested as needed 
but no more than monthly, and that funding requests must be accompanied 
by an actual or projected budget.
    Update paragraph (a)(1) to remove references to Form RD 440-57, 
``Acknowledgment of Obligated Funds/Check Request'' which is no longer 
in use. Form RD 440-57 ``Acknowledgment of Obligated Funds/Check 
Request'' will also be removed from paragraph (a) (2)(i) and (ii).
    Revise paragraph (b) to specify quarterly reports are based on the 
grant start date instead of listing the 15th day of January, April, 
July, and October; change reference to Exhibit B to Subpart I of Part 
1944 ``Evaluation Report of Self-Help Technical Assistance (TA) 
Grants'' to state that generally a `progress report' and/or `quarterly 
report' will be submitted to allow for automated reporting systems to 
be used instead of Exhibit B to Subpart I of Part 1944 ``Evaluation 
Report of Self-Help Technical Assistance (TA) Grants'' which will 
remain in the instruction as a guide where it can be easily updated as 
needed; replace `should' with `will' in reference to grant oversight 
quarterly meetings; and add language to allow the option to require 
more frequent reporting if problems are identified.
    In paragraph (b)(1)(iv), remove specific reference to Exhibit B-2 
to Subpart I of Part 1944 ``Breakdown of Construction Development for 
Determining Percentage Construction Completed'' in favor of the general 
term `construction development breakdown'.
    Add paragraph (b)(1)(v) to reference the new grant goal proposed in 
7 CFR 1944.419(a)(5).
    Add paragraph (b)(1)(vi) to reference grant goal at 7 CFR 
1944.419(a)(6).
    (14) Update 7 CFR 1944.419 ``Final grantee evaluation.''
    The requirements for obtaining a grant rating of `successful' are 
minimal and do not accurately reflect rating a rehabilitation program. 
Update the grant goals to establish a minimum sweat equity/cost savings 
goal as part of the application process.
    (15) Update 7 CFR 1944.420 ``Extension or revisions of the grant 
agreement.''
    This change updates the grant extension period from a ceiling of no 
more than one year to less restrictive language of a period that is 
``reasonable''. Reasonability will be determined based on consideration 
of grant goals completed, and the timeline to complete the remaining 
goals. Typically, this will be from one to two years.

[[Page 96133]]

    (16) Update 7 CFR 1944.421 ``Refunding of an existing grantee'' to 
establish a process for `Carry-over' equivalent units.
    High producing grantees often start homes in one grant cycle but 
finish them in another. Language is purposed to allow this practice 
with parameters.
    (17) Revise and update 7 CFR 1944.422 ``Audit and other reporting 
requirements.''
    Remove special provisions for nonprofits, State and local 
governments, and Indian Tribes found at 7 CFR 1944.422 (a) and (b). 2 
CFR part 200 does not have these exemptions listed which were 
previously authorized. All grantees will have the same reporting 
requirements as defined in 2 CFR part 200.
    Add language regarding auditing requirements for 502/504 borrowers 
supervised or custodial accounts. Direction regarding the audit 
requirements for 502/504 borrowers supervised or custodial accounts 
when managed by the grantee is needed. While a separate audit is not 
necessary, these accounts should be reviewed under an agreed-upon 
procedures format, not a single audit, as the grantee only manages 
these funds in trust.
    (18) Revise 7 CFR 1944.423 ``Loan/grant packaging and application 
submittal.''
    This change updates the title of the section and adds reference to 
Section 504.
    (19) Revise 7 CFR 1944.424 ``Dwelling construction standards''
    This change adds State and Tribal requirements to the dwelling 
construction standards versus just local codes.
    (20) Update 7 CFR 1944.425 ``Handling and accounting for borrower 
loan funds.''
    This section's updates include stating that the Agency is 
responsible for the administration of borrower loan funds. Grantee 
involvement such as holding a custodial or supervised account to manage 
these funds will be approved at the State level with minimum approval 
guidelines for staff to be defined in the program Instruction.
    (21) Revise 7 CFR 1944.426 ``Grant closeout.''
    This change modifies the number of days, from 7 to 30, that the 
agency has to respond to the grantee regarding notification of 
termination and updates information on grant suspension appeal 
guidance.
    (22) Remove Subpart I of Part 1944 Exhibits A, B, B-1, B-2, B-3, C, 
D, and E. Subpart I of Part 1944 Exhibits A, C, D, and E will be 
published as Forms.
    References to Exhibits B, B-1, B-2, and B-3 will be eliminated from 
the CFR in favor of publishing them in the program Instruction with 
updates. These Exhibits will be provided to organizations by the 
program offices.
    Exhibit A to Subpart I of Part 1944 ``Self-Help Technical 
Assistance Grant Agreement'' will be published as a Form and revised to 
include the new goals established with this proposed rule and add 
language to reference any closing conditions letter attached.
    Exhibit C to Subpart I of Part 1944 ``Amendment to Self-Help 
Technical Assistance Grant Agreement'' and Exhibit D to Subpart I of 
Part 1944 ``Self-Help Technical Assistance Grant Predevelopment 
Agreement'' will be published as Forms and revised to update the year 
from `19_ to `20_.
    Exhibit E to Subpart I of Part 1944 ``Guidance for Recipients of 
Self-Help Technical Assistance Grants (Section 523 of Housing Act of 
1949)'' will be published as a Form and updated to remove outdated 
questions such as B.5. related to long distance phone call logs, B.8. 
regarding families being charged for the use of tools which is 
confusing given some grantees do rent tools to families when they are 
able to offer the best value, amongst other revisions.
    (23) Revise instruction in Exhibit F to Subpart I of Part 1944 
``Site Option Loan to Technical Assistance Grantees'' and add it as a 
new section in 7 CFR 1944.428.
    The limitations provided for in this exhibit are a barrier to 
applicants in the current market in which larger loan amounts and 
longer repayment terms are necessary. There has not been a Section 523 
Site Loan awarded in many years because the program parameters are not 
feasible (e.g. low loan limit, revolving loan fund requirements, 
interest rate disparity, and short repayment terms).
    Revise Section IV. `Limitations' to remove the $10,000 loan limit 
in item (A) in favor of publishing limits as necessary (based on 
funding availability) in an annual funding policy and removing the loan 
limitation of fifteen percent of the purchase price in item (B); 
section V Rates and Terms to change item (A) so that the interest rate 
will be the lower of 3 percent or the current RHS monthly published 
rate, item (B) to revise the repayment period to allow for multiple 
payments.
    The revision would align the program with current market trends and 
reference the Section 524 program requirements to ease the application 
process and promote the utilization of program funds. Program 
information will also be moved to the body of the regulation under 
1944.428 as a new section.

Request for Comment

    Stakeholder input is vital to ensure the proposed changes in the 
proposed rule would support the Agency's mission, while ensuring that 
new regulations and policies are reasonable and do not overly burden 
the Agency's staff and their customers. Comments must be submitted on 
or before February 3, 2025 and may be submitted electronically by going 
to the Federal eRulemaking Portal: http://www.regulations.gov. Details 
on how to submit comments to the Federal eRulemaking Portal are in the 
ADDRESSES section of this proposed rule.

IV. Regulatory Information

Executive Order 12372, Intergovernmental Review of Federal Programs

    Intergovernmental Review of Federal Programs,'' applies to this 
program. This E.O. requires that Federal agencies provide opportunities 
for consultation on proposed assistance with State and local 
governments. Many states have established a Single Point of Contact 
(SPOC) to facilitate this consultation. For a list of States that 
maintain a SPOC, please see the White House website: https://www.whitehouse.gov/omb/management/office-federal-financial-management/. 
If your State has a SPOC, you may submit a copy of the application 
directly for review. Any comments obtained through the SPOC must be 
provided to your State Office for consideration as part of your 
application. If your state has not established a SPOC, you may submit 
your application directly to the Agency. Applications from Federally 
recognized Indian Tribes are not subject to this requirement. RHS 
conducts intergovernmental consultations for each loan in accordance 
with 2 CFR part 415, subpart C.

Executive Order 12866, Regulatory Planning and Review

    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866 and, therefore, was not reviewed by 
the Office of Management and Budget (OMB).

Executive Order 12988, Civil Justice Reform

    This proposed rule has been reviewed under Executive Order 12988. 
In accordance with this rule: (1) Unless otherwise specifically 
provided, all State and local laws that conflict with this rule will be 
preempted; (2) no

[[Page 96134]]

retroactive effect will be given to this rule except as specifically 
prescribed in the rule; and (3) administrative proceedings of the 
National Appeals Division of the Department of Agriculture (7 CFR part 
11) must be exhausted before suing in court that challenges action 
taken under this proposed rule.

Executive Order 13132, Federalism

    The policies contained in this proposed rule do not have any 
substantial direct effect on States, on the relationship between the 
National Government and the States, or on the distribution of power and 
responsibilities among the various levels of Government. This proposed 
rule does not impose substantial direct compliance costs on State and 
local Governments; therefore, consultation with States is not required.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This proposed rule has been reviewed in accordance with the 
requirements of Executive Order 13175, ``Consultation and Coordination 
with Indian Tribal Governments.'' Executive Order 13175 requires 
Federal agencies to consult and coordinate with Tribes on a government-
to-government basis on policies that have Tribal implications, 
including regulations, legislative comments or proposed legislation, 
and other policy statements or actions that have substantial direct 
effects on one or more Indian Tribes, on the relationship between the 
Federal Government and Indian Tribes or on the distribution of power 
and responsibilities between the Federal Government and Indian Tribes. 
Consultation is also required for any regulation that preempts Tribal 
law or that imposes substantial direct compliance costs on Indian 
Tribal governments and that is not required by statute.
    The Agency has determined that this proposed rule does not, to our 
knowledge, have Tribal implications that require formal Tribal 
consultation under Executive Order 13175. If a Tribe requests 
consultation, the Rural Housing Service will work with the Office of 
Tribal Relations to ensure meaningful consultation is provided where 
changes, additions and modifications identified herein are not 
expressly mandated by Congress.

National Environmental Policy Act

    In accordance with the National Environmental Policy Act of 1969, 
Public Law 91-190, this proposed rule has been reviewed in accordance 
with 7 CFR part 1970 (``Environmental Policies and Procedures''). The 
Agency has determined that i) this action meets the criteria 
established in 7 CFR 1970.53(f); ii) no extraordinary circumstances 
exist; and iii) the action is not ``connected'' to other actions with 
potentially significant impacts, is not considered a ``cumulative 
action'' and is not precluded by 40 CFR 1506.1. Therefore, the Agency 
has determined that the action does not have a significant effect on 
the human environment, and therefore neither an Environmental 
Assessment nor an Environmental Impact Statement is required.

Regulatory Flexibility Act

    This proposed rule has been reviewed with regard to the 
requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). The 
undersigned has determined and certified by signature on this document 
that this rule will not have a significant economic impact on a 
substantial number of small entities since this rulemaking action does 
not involve a new or expanded program nor does it require any more 
action on the part of a small business than required of a large entity.

Unfunded Mandate Reform Act (UMRA)

    Title II of the UMRA, Public Law 104-4, establishes requirements 
for Federal Agencies to assess the effects of their regulatory actions 
on State, local, and Tribal Governments and on the private sector. 
Under section 202 of the UMRA, Federal Agencies generally must prepare 
a written statement, including cost-benefit analysis, for proposed and 
Final Rules with ``Federal mandates'' that may result in expenditures 
to State, local, or Tribal Governments, in the aggregate, or to the 
private sector, of $100 million or more in any one year. When such a 
statement is needed for a rule, section 205 of the UMRA generally 
requires a Federal Agency to identify and consider a reasonable number 
of regulatory alternatives and adopt the least costly, more cost-
effective, or least burdensome alternative that achieves the objectives 
of the rule.
    This proposed rule contains no Federal mandates (under the 
regulatory provisions of title II of the UMRA) for State, local, and 
Tribal Governments or for the private sector. Therefore, this rule is 
not subject to the requirements of sections 202 and 205 of the UMRA.

Paperwork Reduction Act

    The information collection requirements contained in this 
regulation have been approved by OMB and have been assigned OMB control 
number 0575-0043. This proposed rulemaking contains new reporting 
requirements that would require approval under the Paperwork Reduction 
Act of 1995 (44 U.S.C. chapter 35).
    In accordance with the Paperwork Reduction Act of 1995, the Agency 
announces its intention to request a revision to a currently approved 
information collection for the Self-Help Technical Assistance Grant 
program and hereby open a 60-day public commenting period.
    Title: 7 CFR 1944-I, Self-Help Technical Assistance Grants.
    OMB Docket Number: 0575-0043.
    Expiration Date of Approval: May 31, 2027.
    Type of Request: Revision of currently approved information 
collection.
    Abstract: This subpart set forth the policies and procedures and 
delegates authority for providing technical assistance funds to 
eligible applicants to finance programs of technical and supervisory 
assistance for self-help housing loan program, as authorized under 
section 523 of the Housing Act of 1949 under 42 U.S.C. 1472. This 
financial assistance may pay part or all of the cost of developing, 
administering, or coordinating a program of technical and supervisory 
assistance to aid very low- and low-income families in carrying out 
self-help housing efforts in rural areas. The primary purpose is to 
locate and work with low-income families to secure decent, safe, and 
sanitary housing. RHS will be collecting information from non-profit 
organizations to enter into grant agreements. These non-profit 
organizations will give technical and supervisory assistance, and in 
doing so, they must develop a final application for section 523 grant 
funds. This application includes Agency forms that contain essential 
information for deciding eligibility.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average .99 hours per response.
    Respondents: Public or private nonprofit organizations, State, 
Local or Tribal Governments.
    Estimated Number of Respondents: 70.
    Estimated Number of Responses per Respondent: 29.
    Estimated Number of Responses: 2,046.
    Estimated Reporting Burden Hours on Respondents: 1,865.
    Estimated Recordkeeping Burden Hours on Respondents: 170.
    Estimated Total Annual Burden on Respondents: 2,035.

[[Page 96135]]

    Copies of this information collection can be obtained from Kimble 
Brown, Innovation Center--Regulations Management Division, at 
[email protected].
    Comments: Comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the RHS, including whether the information will have 
practical utility; (b) the accuracy of RHS's estimate of the burden of 
the proposed collection of information including the validity of the 
methodology and assumptions used; (c) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (d) ways 
to minimize the burden of the collection of information on those who 
are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology. All responses to this notice 
will be summarized and included in the request for OMB approval. All 
comments will become a matter of public record.

E-Government Act Compliance

    RHS is committed to complying with the E-Government Act by 
promoting the use of the internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information, services, and other purposes.

Civil Rights Impact Analysis

    Rural Development has reviewed this rule in accordance with USDA 
Regulation 4300-4, Civil Rights Impact Analysis,'' to identify any 
major civil rights impacts the rule might have on program participants 
on the basis of age, race, color, national origin, sex, or disability. 
After review and analysis of the rule and available data, it has been 
determined that implementation of the rule will not adversely or 
disproportionately impact very low, low- and moderate-income 
populations, minority populations, women, Indian Tribes, or persons 
with disability by virtue of their race, color, national origin, sex, 
age, disability, or marital or familiar status. No major civil rights 
impact is likely to result from this rule.

Assistance Listing

    The program affected by this regulation is listed in the Assistance 
Listing Catalog (formerly Catalog of Federal Domestic Assistance) under 
number 10.420, Rural Self-Help Housing Technical Assistance.

Non-Discrimination Statement

    In accordance with Federal civil rights laws and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its 
Mission Areas, agencies, staff offices, employees, and institutions 
participating in or administering USDA programs are prohibited from 
discriminating based on race, color, national origin, religion, sex, 
gender identity (including gender expression), sexual orientation, 
disability, age, marital status, family/parental status, income derived 
from a public assistance program, political beliefs, or reprisal or 
retaliation for prior civil rights activity, in any program or activity 
conducted or funded by USDA (not all bases apply to all programs). 
Remedies and complaint filing deadlines vary by program or incident.
    Program information may be made available in languages other than 
English. Persons with disabilities who require alternative means of 
communication to obtain program information (e.g., Braille, large 
print, audiotape, American Sign Language) should contact the 
responsible Mission Area, agency, staff office; or the 711 Federal 
Relay Service.
    To file a program discrimination complaint, a complainant should 
complete a Form AD-3027, USDA Program Discrimination Complaint Form, 
which can be obtained online at https://www.usda.gov/sites/default/files/document/ad-3027.pdf, from any USDA office, by calling (866) 632-
9992, or by writing a letter addressed to USDA. The letter must contain 
the complainant's name, address, telephone number, and a written 
description of the alleged discriminatory action in sufficient detail 
to inform the Assistant Secretary for Civil Rights (ASCR) about the 
nature and date of an alleged civil rights violation. The completed AD-
3027 form or letter must be submitted to USDA by:
    (1) Mail: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 
20250-9410; or
    (2) Fax: (833) 256-1665 or (202) 690-7442; or
    (3) Email: [email protected]
    USDA is an equal opportunity provider, employer, and lender.

List of Subjects in 7 CFR 1944

    Administrative practice and procedure, Aged, Cooperatives, Fair 
housing, Grant programs--housing and community development, Home 
improvement, Individuals with disabilities, Loan programs--housing and 
community development, Low and moderate income housing, Manufactured 
homes, Migrant labor, Rent subsidies, Reporting and recordkeeping 
requirements, Rural areas.
    For the reasons set forth in the preamble, the Rural Housing 
Service proposes to amend 7 CFR part 1944 as set forth below:

PART 1944--HOUSING

0
1. The authority citation for part 1944 continues to read as follows:

    Authority:  5 U.S.C. 301; 42 U.S.C. 1480.

Subpart I--Self-Help Technical Assistance Grants

0
2. Revise Sec.  1944.401 to read as follows:


Sec.  1944.401  Objective.

    This subpart sets forth the policies and procedures and delegates 
authority for providing Technical Assistance (TA) funds to eligible 
applicants to finance programs of technical and supervisory assistance 
for self-help housing, as authorized under section 523 of the Housing 
Act of 1949. Any processing or servicing activity conducted pursuant to 
this subpart involving authorized assistance to Rural Development 
employees, members of their families, known close relatives, or 
business or close personal associates, is subject to the provisions of 
subpart D of part 1900 of this chapter. Applicants for this assistance 
are required to identify any known relationship or association with a 
Rural Development employee. This financial assistance may pay part or 
all of the cost of developing, administering, or coordinating programs 
of technical and supervisory assistance to aid very low- and low-income 
families in carrying out self-help housing efforts in rural areas. Very 
low-income families must receive a priority for recruitment and 
participation and may not comprise less than the percentage stated in 
Section 502 of the Housing Act of 1949, as amended, of those assisted 
in any grant. The primary purpose is to fund organizations that are 
willing to locate and work with low-income families to secure decent, 
safe, and sanitary housing. Grantees will comply with the 
nondiscrimination regulation subpart E of part 1901 of this chapter 
which states that no person in the United States shall, on the grounds 
of race, color, national origin, sex, religion, marital status, mental 
or physical handicap, or age, be excluded from participating in, be 
denied the benefits of, or be subject to discrimination in connection 
with the

[[Page 96136]]

use of grant funds and all provisions of the Fair Housing Act of 1988, 
as amended.
0
3. Revise and republish Sec.  1944.403 to read as follows:


Sec.  1944.403  Definitions.

    (a) Agency. The Rural Housing Service within the Rural Development 
mission area of the U.S. Department of Agriculture (or its successor 
agency) which administers Section 523 grants.
    (b) Administrator. The official of the Rural Housing Service within 
the Rural Development mission area (or official of its successor 
agency) delegated authority by the Secretary of the U.S. Department of 
Agriculture to administer the Agency and its programs.
    (c) Applicant. An organization that submits an application for a 
Section 523 technical assistance or predevelopment grant.
    (d) Acquisition Rehabilitation. The method of self-help housing 
rehabilitation that assists a participant in acquiring and 
rehabilitating a home through the program.
    (e) Authorized Agency Official. An individual within a Rural 
Development Office designated with responsibility for a Self-Help 
Program function (e.g. application reviewer, approval official, grant 
servicer, etc.).
    (f) Board of Directors. The governing body of an organization and 
its members. Typically, a board of directors will consist of no less 
than five members. For smaller organizations (i.e., less than 5 staff 
members) a board of 3 or 4 is authorized.
    (g) Borrower. An applicant who has received a Section 502 Home 
Purchase Loan or Section 504 Home Repair Loan or Grant.
    (h) Closeout. The process of taking final action connected with a 
completed or terminated grant, including closing of grantee accounts, 
auditing grantee expenditures, and completing final reports. See also 
``Final Grantee Evaluation''.
    (i) Cost savings. The value gained by the program participant 
through the contribution of their own labor to the project. This value 
is calculated as follows:
    (1) Acquisition Rehab. The cost savings is the difference between 
the appraised values before and after project completion.
    (2) Owner-Occupied Rehab. The cost savings is difference between 
the cost to have a contractor make the repair(s) and the self-help cost 
to the participant.
    (j) Custodial account. An account with the project funding for the 
participating families that is managed by the Self-Help Grantee.
    (k) Date of completion. The date when all work under a grant is 
completed or the expiration date in the TA grant agreement, or any 
supplement or amendment to it, when Federal assistance ends.
    (l) Debarment. A determination that a party is ineligible to 
participate in, or receive assistance under, Federal programs made in 
accordance with 2 CFR parts 180 and 417.
    (m) Direct costs. Those costs that are specifically identified with 
a particular project or activity. Grantees receiving funds from a 
single grant source would typically consider all costs as direct costs.
    (n) Disallowed costs. Those charges to a grant which Rural 
Development determines cannot be authorized (see also 7 CFR 1944.406 
Prohibited use of grant funds).
    (o) Environmental review. An analysis of the impacts that an 
activity funded with Agency funds may have on the natural or manmade 
environment. See 7 CFR part 1970.
    (p) Equivalent units. Equivalent units represent the ``theoretical 
number of units'' arrived at by adding the equivalent percentage of 
completion figure for each family in the self-help program (pre-
construction and actual construction) together at any given date during 
program operations. The sum of the percentage of completion figures for 
all participant families represent the total number of ``theoretical 
units'' completed at any point in time. Equivalent units are useful in 
measuring progress during the period of the grant and are not a 
measurement of actual accomplishments. The number of equivalent units 
for any group can never exceed the number of planned or completed 
houses for that group.
    (q) Equivalent value of a modest house. The typical cost of a 
recent contractor-built modest home in the area financed by the Agency 
plus the actual or projected costs of an acceptable site and site 
development. If the Agency has not financed a contractor-built house 
during the last twelve months, the value is established by use of 
online home sales sites; or as a percentage of the Area Loan Limits as 
published on the Agency website. The Equivalent value of a modest house 
is established by the Agency.
    (r) Existing grantee. A grantee that is currently operating a grant 
from the Agency or that has operated a grant within the past two years.
    (s) Family Labor Contribution. The value of labor contributed by a 
participating family to the process of constructing or rehabilitating 
their home. For new construction, each family in the group must 
contribute labor on each other's homes to accomplish the 65 percent of 
the total 100 percent of tasks defined to complete the dwelling. A 
participating family may use a substitute to perform the labor with 
prior approval of the Grantee and Rural Development. For rehabilitation 
type grants, participating families must complete a proportional amount 
of labor to the amount of rehabilitation tasks being completed but not 
less than 10 hours for owner occupied rehab, and 50 hours for 
acquisition rehab. Volunteer labor may be used in rehabilitation type 
projects.
    (t) Final grantee evaluation. An Agency evaluation performed in 
accordance with 7 CFR 1944.419 at the end of the grant period to 
determine if the grantee met its projected performance goals and 
complied with program requirements.
    (u) Grant Agreement. The legal document signed by the Self-Help 
grantee and the Agency that sets forth the terms and conditions under 
which technical assistance funds will be made available. The grant 
agreement will typically be for a period of 24 months but may be 
authorized for longer or shorter periods to accommodate the production 
of grantees (i.e., larger grantees may require longer grant period and 
vice versa).
    (v) Grantee. An organization for which the Agency has closed a 
Section 523 technical assistance or predevelopment grant.
    (w) Group. Newly constructed homes under the Self-Help program are 
typically built by families working together in groups of five or more. 
State Director approval of groups less than five is required and may be 
granted only when it is determined the requirements of the Self-Help 
Program can be met (e.g. group labor, reduced building costs from bulk 
ordering, etc.).
    (x) Household. One or more persons who maintain residency together 
in a home.
    (y) High Risk. The designation given to a grantee by the State 
Office when a grantee is at risk of or currently is not meeting the 
self-help program's requirements.
    (z) Indirect costs. Those costs that are incurred for common or 
joint objectives and therefore, cannot be readily and specifically 
identified with a particular project or activity, (e.g., self-help).
    (aa) Low-income. An adjusted income standard developed in 
accordance with the requirements of Section 501(b)(4) of the Housing 
Act of 1949.
    (bb) Membership Agreement. The document signed by a grantee and a 
participating family that establishes

[[Page 96137]]

each party's responsibilities and obligations.
    (cc) Modest. A property that is considered modest for the area, 
with a market value that does not exceed the applicable area loan limit 
as established by Rural Housing Service in accordance with 7 CFR 
3550.63.
    (dd) Mutual Self-Help Method. Refers to the contributory nature of 
homebuilding in the Self-Help Program. Each family contributes to the 
building of each home such that the total amount of labor contributed 
by each family is approximately equal. (See also family labor 
contribution.)
    (ee) Organization.
    (1) A State, political subdivision, or public nonprofit corporation 
(including Indian Tribes or Tribal corporations); or
    (2) A private nonprofit corporation that is owned and controlled by 
private persons or interests and is organized and operated for purposes 
other than making gains or profits for the corporation and is legally 
precluded from distributing any gains or profits to its members.
    (ff) Owner-Occupied Rehabilitation. The method of self-help housing 
rehabilitation that serves a participant that owns and occupies the 
home in need of repair at the time of application. Owners need not 
occupy the homes while repairs are being made, provided there is a plan 
for them to return to the home once the project is complete.
    (gg) Participating family. Individuals and/or their families who 
agree to build homes by the mutual self-help method and rehabilitate 
homes by the self-help method. Participants are families with very low- 
or low-incomes who have the ability to furnish their share of the 
required labor input regardless of the handicap, age, race, color, 
national origin, religion, family status, or sex of the head of 
household.
    (hh) Program requirements. Requirements set forth in any grant 
document, agreement, statute, or regulation applicable to Section 523 
grants.
    (ii) Quarterly review. A formal assessment conducted quarterly by 
those parties involved in the grant program (e.g., Grantee staff, 
Agency staff including grant oversight official, field staff processing 
the grantees packages, etc., and Technical and Management Assistance 
contractor of a grantee's progress in meeting its Grant Agreement goals 
and program requirements).
    (jj) Reasonable costs. A cost is reasonable if, in its nature and 
amount, it does not exceed that which would be incurred by a prudent 
person under the circumstances prevailing at the time the decision was 
made to incur the cost. To be considered reasonable, costs must meet 
the following conditions:
    (1) The cost is of a type generally recognized as ordinary and 
necessary for the operation of the organization or the performance of 
the Federal award.
    (2) The cost meets the restraints or requirements imposed by such 
factors as sound business practices; arms-length bargaining; Federal, 
state, Tribal, and other laws and regulations; and terms and conditions 
of the award.
    (3) Market prices for similar goods or services are comparable.
    (4) The individuals concerned acted with prudence in the 
circumstances considering their responsibilities to the organization, 
its members, employees, clients, the public at large, and the Federal 
Government.
    (5) In incurring the cost, the organization did not deviate 
significantly from its established practices and, thereby, 
unjustifiably increase the award's cost.
    (kk) Rural Housing Service. The Agency within the Rural Development 
mission area of the U.S. Department of Agriculture which administers 
the Section 523 Mutual Self-Help grant program.
    (ll) Self-help Method. The construction method by which an 
individual family utilizes their labor to reduce the construction cost 
of their home without an exchange of labor between participating 
families. Unless otherwise authorized by the National Office, this 
method is only funded for repair and rehabilitation type construction 
(owner occupied or acquisition rehabilitation).
    (mm) SHARES (Self-Help Automated Reporting and Evaluation System). 
The primary monitoring tool used by the Agency. The information 
accessible on SHARES includes data on construction, recruiting, and 
budgetary data for each grantee, their participating families, and the 
homes they are building.
    (nn) Site inspections. Construction site inspections may be 
conducted by the mortgage lender, or a qualified third party to ensure 
the construction/repair work is being completed adequately, and 
according to approved plans and specifications. At a minimum, 
inspection must be conducted three times during the construction of a 
house-after the footers are in place, once the framing is complete and 
mechanical, electrical, and plumbing are roughed in, and when the local 
authority has certified the house for occupancy.
    (oo) Specialty tools. Specialty tools are those tools needed to 
complete the construction of a home, not including hand tools that are 
commonly needed to maintain a home, such as hammers, screwdrivers, tape 
measures, pliers, and wrenches. Specialty tools include, but are not 
limited to, power saws, electric drills, saber saws, ladders, and 
scaffolds.
    (pp) Sponsor. An existing entity that is willing and able to assist 
an applicant, with or without charge, in applying for a grant and in 
carrying out responsibilities under the agreement. Examples of sponsors 
are local rural electric cooperatives, institutions of higher 
education, community action agencies and other self-help grantees. 
Also, when available, regional technical and management assistance 
contractors may qualify to serve as a sponsor at no charge.
    (qq) Supervised bank account. An account with a financial 
institution established through a deposit agreement entered into 
between the borrower, the Agency or Grantee, and the financial 
institution.
    (rr) Sweat equity. The benefit earned by the Mutual Self-Help 
program participant for the contribution of their own labor to the 
project construction. This value is calculated by subtracting the self-
help construction cost of the homes from the appraised value of the 
homes.
    (ss) Technical assistance. The organizing and supervising of groups 
of families in the construction of their own homes including but not 
limited to:
    (1) Recruiting families who are interested in contributing labor in 
the construction or rehabilitation of their homes and assisting such 
families in obtaining housing loans.
    (2) Conducting meetings with the participants to explain the self-
help program and subjects related to home ownership, such as loan 
payments, taxes, insurance, maintenance, and upkeep of the property.
    (3) Helping families in planning and developing activities that 
lead to the acquisition and development of suitable building sites or 
existing homes in the case of acquisition rehabilitation.
    (4) Assisting families in selecting or developing house plans for 
homes which will meet their needs and which they can afford. For 
rehabilitation type projects, assisting families in assessing need 
repairs.
    (5) Assisting families in obtaining cost estimates for construction 
materials and any contracting that may be required.
    (6) Providing assistance in the preparation of loan and/or grant 
applications.
    (7) Providing construction supervision and training for families 
while they construct or rehabilitate their homes.

[[Page 96138]]

    (8) Providing financial supervision to individual families with 
loans and/or grants which will minimize the time and effort required by 
Rural Development in processing borrower expenditures for materials and 
contract services.
    (tt) Technical and Management Assistance (T&MA) contractor. An 
organization which receives Agency funding to provide services to the 
Agency and training and management assistance to grantees and 
prospective grantees.
    (uu) Termination. The Agency may terminate grantees when the 
grantee fails to meet certain requirements or when the grantee requests 
termination. A terminated grantee is ineligible for another Self-Help 
program TA grant for at least two years.
    (vv) Very low-income. An adjusted income standard developed in 
accordance with the requirements of Section 501(b)(4) of the Housing 
Act of 1949.
0
4. Amend Sec.  1944.404 by revising paragraph (d)(4) to read as 
follows:


Sec.  1944.404  Eligibility.

* * * * *
    (d) * * *
    (4) Has a board of directors as defined in Sec.  1944.403 of this 
subpart.


Sec.  1944.406  [Amended]

0
5. Amend Sec.  1944.406 by removing paragraph (d) and redesignating 
paragraph (e) as new paragraph (d).
0
6. Amend Sec.  1944.407 by revising paragraphs (a), (b), (c), and (d) 
to read as follows:


Sec.  1944.407  Limitations.

* * * * *
    (a) An average TA cost per equivalent unit of no more than 15 
percent of the cost of equivalent value of modest homes built in the 
area; or
    (b) An average TA cost per equivalent unit that does not exceed the 
difference between the equivalent value of modest homes in the area and 
the average mortgage of the participating families minus $10,000; or
    (c) For rehabilitation type programs, the maximum TA cost per 
equivalent unit will be no more than the provided percentage of the 
cost of equivalent value of modest homes built in the area:
    (i) For acquisition rehabilitation, 12 percent;
    (ii) For owner-occupied rehabilitation, 9 percent; or
    (d) A TA per equivalent unit cost that does not exceed an amount 
established by the National Office. The National Office may establish 
other limitations as necessary that will be released in a notice 
published in the Federal Register.
0
7. Revising Sec.  1944.409 to read as follows:


Sec.  1944.409  Intergovernmental Consultation, Executive Order 12372.

    The self-help program is subject to the provision of Executive 
Order 12372 which requires consultation with State and local officials 
to foster an intergovernmental partnership and strengthened federalism 
by relying on State and local processes for the State and local 
government coordination and review of proposed Federal financial 
assistance and direct Federal development.
    Applicants for the self-help program are required to contact their 
state's Single Point of Contact (SPOC) to submit their Statement of 
Activities and find out more information on how to comply with the 
state's process under Executive Order 12372. To locate a SPOC for your 
state, the Office of Management and Budget (OMB) has an official SPOC 
list on their website. For those States that have a home page for their 
designated SPCO, a direct link has been provided by clicking on the 
State name.
    States that are not listed on the OMB website page have chosen not 
to participate in the intergovernmental review process, and therefore 
do not have a SPOC. If you are located within a State that does not 
have a SPOC, you may send application materials directly to the 
awarding agency.
0
8. Revise and republish Sec.  1944.410 to read as follows:


Sec.  1944.410  Processing preapplications, applications, and 
completing grant dockets.

    (a) Form SF-424, ``Application for Federal Assistance.'' Form SF-
424 ``Application for Federal Assistance'' must be submitted by the 
applicant to the Agency. It will be used to establish communication 
between the applicant and RHS, determine the applicant's eligibility, 
determine how well the project can compete with similar applications 
from other organizations and eliminate any proposals which have little 
or no chance for Federal funding before applicants incur significant 
expenditures for preparing an application. In addition, the following 
information will be attached to and become a part of the preapplication 
or application:
    (1) Complete information about the applicant's previous experience 
and capacity to carry out the objective of the agreement.
    (2) If the applicant organization is already formed, a copy of or 
an accurate reference to the specific provisions of State or Tribal law 
under which the applicant is organized; a certified copy of the 
applicant's Articles of Incorporation and Bylaws or other evidence of 
corporate existence; certificate of incorporation for other than public 
bodies; evidence of good standing from the State or Tribe when the 
corporation has been in existence 1 year or more; the names and 
addresses of the applicant's members, directors, and officers; and, if 
another organization is a member of the applicant-organization, its 
name, address, and principal business. If the applicant is not already 
formed, attach copies of the proposed organizational documents 
demonstrating compliance with Sec.  1944.404(d) of this subpart.
    (3) The organization's previous year's financial audit, and a 
current (no more than 12 months old), dated and signed financial 
statement showing the amounts and specific nature of assets and 
liabilities together with information on the repayment schedule and 
status of any debt owed by the applicant. If the applicant is being 
sponsored by another organization, the same type of financial statement 
also must be provided by the applicant's sponsor. Newly formed 
organizations must have a sponsor.
    (4) A narrative statement which includes information about the 
amount of the grant funds being requested, area(s) to be served, need 
for self-help housing in the area(s), the number of self-help units 
proposed to be built, rehabilitated or repaired during the agreement 
period, housing conditions of low-income families in the area and 
reasons why families need self-help assistance. Evidence should be 
provided that the communities support the activity and that there are 
low- income families willing to contribute their labor in order to 
obtain adequate housing. Evidence of community support may be letters 
of support from local officials, individuals and community 
organizations. The pre-application or application may contain 
information such as census materials, local planning studies, surveys, 
or other readily available information which indicates a need in the 
area for housing of the type and cost to be provided by the proposed 
self-help TA program.
    (5) A plan of how the organization proposes to reach very low-
income families.
    (6) A proposed budget which will be prepared on Form SF-424A, 
``Budget Information (Non-Construction Programs)'' and accompanied by 
the detailed budget being used by the organization will be completed to 
address applicable assurances as

[[Page 96139]]

outlined in 2 CFR part 200 as adopted by USDA through 2 CFR part 400. 
State and local Government will include an assurance that the grantee 
shall comply with all applicable Federal statutes and regulations in 
effect with respect to the periods for which it receives grant funding. 
The State and local governments shall also comply with 2 CFR part 200 
as adopted by USDA through 2 CFR part 400.
    (7) A preliminary survey as to the availability of lots and 
projected cost of the sites.
    (8) A list of other activities the applicant is engaged in and 
expects to continue, and a statement as to other sources of funding and 
whether it will have sufficient funds to assure continued operation of 
the other activities for at least the period of the agreement. If 
multi-funded, its cost allocation plan or indirect cost rate must be 
part of the pre-application or application.
    (9) Whether assistance under paragraph (d) of this section is 
requested and a brief narrative identifying the need, amount of funds 
needed, and projected time period.
    (b) Pre-application or application review. When program funding 
does not allow the Agency to consider pre-application requests the 
following steps will apply to the full application:
    (1) Rural Development, within 30 days of receipt of the 
application, Form SF-424 ``Application for Federal Assistance'', and 
all other required information and material will complete a thorough 
review for completeness, accuracy, and conformance to program policy 
and regulations. Incomplete applications will be returned to the 
applicant for completion. The Authorized Agency Official in the 
prospective county will be contacted as to the need for the program in 
the proposed area and if the necessary resources are available to the 
grantee. This will include a discussion of the number of 502 and 504 
units that will need to be committed to the grantee and the potential 
work impact on the office during the grant period. If it is determined 
that the Office lacks the resources (either personnel or funds) to 
process all loan/grant requests in a timely manner, the local office 
will communicate this need to the State Office along with a recommended 
solution. (Lack of resources at the local level are not grounds to deny 
a request). After the Agency has determined that the application is 
complete and accurate, the materials in an applicant case file will be 
assembled and forward it to the State Director. The case file, as a 
minimum, must contain the following:
    (i) Form SF-424 ``Application for Federal Assistance'',
    (ii) Documentation required in accordance with 7 CFR part 1970, and
    (iii) Eligibility recommendations.
    (2) The State Director may, if needed, submit the organizational 
documents with any comments or questions to the Office of General 
Counsel (OGC) for a preliminary opinion as to whether the applicant is 
or will be a legal organization of the type required by these 
regulations and for advice on any other aspects of the preapplication 
or application.
    (3) The State Director, if unable to determine eligibility or 
qualifications with the advice of the OGC, may submit the 
preapplication to the National Office for review. The preapplication or 
application will contain all memoranda from OGC giving the results of 
its review. The State Director will identify in the transmittal 
memorandum to the National Office the specific problem and will 
recommend possible solutions and any information about the applicant 
which would be helpful to the National Office in reaching a decision.
    (4) After an eligibility determination has been made, which should 
be completed within 30 days unless OGC is involved, the State Director 
will:
    (i) If the applicant is eligible, contact the National Office as to 
the availability of funds or submit the proposal to the National Office 
for authorization. If funds are available, the Deputy Administrator or 
designee for Single Family Housing will issue a letter of conditions 
that the applicant must meet.
    (ii) If the applicant is determined ineligible, the Agency will 
issue a denial letter that will inform the applicant that an appeal of 
the decision may be made to the National Appeals Division under 7 CFR 
part 11.
    (c) Self-help technical assistance grant predevelopment agreement. 
If funding is available, the applicant requested predevelopment 
assistance, and the Agency determines that the applicant lacks the 
financial resources to meet the conditions of grant approval, a grant 
can be made for the applicant to provide what is required by paragraph 
(d) of this section. Existing grantees proposing to operate in an area 
different from the area that they are currently funded to operate are 
eligible for this grant. However, this grant is available only once for 
a defined area. This grant is available only after the letter of 
conditions has been issued. Denial of this assistance is an appealable 
decision under 7 CFR part 11.
    (d) Form SF-424, ``Application for Federal Assistance.'' The 
applicant will submit Form SF-424 ``Application for Federal 
Assistance'' to the Agency. The application should provide a detailed 
proposal of its goals including:
    (1) Names, addresses, number in household, and total annual 
household income of families who have been contacted by the applicant 
and are interested in participating in a self-help housing project. 
Community organizations including minority organizations may be used as 
a source of names of people interested in self-help housing.
    (2) Proof that the first group of prospective participating self-
help families have qualified for financial assistance by the 
organization or Rural Development.
    (3) Evidence that lots are available for the groups.
    (4) Detailed cost estimates of houses to be built by the mutual 
self-help method. Plans and specifications should be submitted with the 
cost estimates.
    (5) Proposed staffing need, including qualifications, experience, 
proposed hiring schedule, and availability of any prospective 
employees.
    (6) Name, address, and official position of the applicant's 
representative or representatives authorized to act for the applicant 
and work with Rural Development.
    (7) Budget information including a detailed budget for the Grant 
Agreement period based upon the needs outlined in the proposal. The 
detailed budget will be attached to a completed Form SF 424A 
``Application for Federal Assistance.''
* * * * *
0
9. Amend Sec.  1944.411 by revising paragraphs (b), (d), (e), (g), and 
(h) to read as follows:


Sec.  1944.411  Conditions for approving a grant.

* * * * *
    (b) The applicant has met all of the conditions listed in Sec.  
1944.410(d) of this subpart.
* * * * *
    (d) A resolution has been adopted by the board of directors which 
authorizes the appropriate officer to execute the required Grant 
Agreement and Form RD 400-4, ``Assurance Agreement.''
    (e) The grantee has insurance against employee dishonesty and 
theft.
* * * * *
    (g) The grantee has established an interest-bearing checking 
account in accordance with 2 CFR part 200.
    (h) The grantee has developed a membership agreement to be executed 
by the grantee and the self-help participants which clearly sets forth 
what is expected of each and has

[[Page 96140]]

incorporated a construction development breakdown negotiated with the 
program office that clearly shows what work is expected of the 
participating family.
0
10. Revise Sec.  1944.412 to read as follows:


Sec.  1944.412  Docket preparation.

    When the application and all items required for the complete docket 
have been received, the Agency will conduct a thorough review to ensure 
the application has been properly and accurately prepared and that it 
includes the required dates and signatures. The docket items will be 
assembled in the order identified by the checklist provided to the 
applicant by the program office.
0
11. Revise and republish Sec.  1944.413 to read as follows:


Sec.  1944.413  Grant approval.

    (a) Approval of grant. Within 30 days of receiving a complete 
application including recommendation from the T&MA Contractor and State 
Authorized Official, the National Office will:
    (1) Execute and distribute Form RD 1940-1 ``Request for Obligation 
of Funds.''
    (2) Process the obligation of funds and issue an approval letter of 
conditions to the state.
    (b) Cancellation of an approved grant. An approved grant may be 
canceled before closing if the applicant is no longer eligible, the 
proposal is no longer feasible, or the applicant requests cancellation. 
Cancellation will be accomplished as follows:
    (1) The State Authorized Agency Official will prepare Form RD 1940-
10, ``Cancellation of U.S. Treasury Check and/or Obligation,'' and send 
it to the State Director with the reasons for cancellation. If the 
State Director approves the request, Form RD 1940-10 ``Cancellation of 
U.S. Treasury Check and/or Obligation'' will be returned to the 
National Office for processing.
    (2) The Agency will notify the applicant of the cancellation and 
the right to appeal under 7 CFR part 11. If the applicant requested the 
cancellation, no appeal rights are provided, but the applicant will 
still be notified of the cancellation.
    (c) Disapproval of grant. If a grant is disapproved after the 
docket has been developed, the Agency will state the reason on the 
original Form RD 1940-1 ``Request for Obligation of Funds'', or in a 
letter to the applicant with appeal rights under 7 CFR part 11.
0
12. Revise and republish Sec.  1944.415 to read as follows:


Sec.  1944.415  Grant approval and other approving authorities.

    (a) All application dockets, along with the T&MA Contractor and 
State Authorized Agency Official's recommendations must be submitted to 
the National Office for approval.
    (b) The authority to contract for services is limited to the 
Administrator of Rural Housing Service (RHS).
    (c) Monthly expenditures of the grantee will normally be approved 
by the Housing Program Director unless:
    (1) The grantee operates in only one county; in which case the 
authority may be delegated by the Housing Program Director.
    (2) The grantee operates in more than one county; in which case the 
State Director will designate the approving official.
    (3) The grantee operates in more than one State, in which case the 
National Office will designate the approving official.
    (4) The expenditure is under contract authority, in which case the 
Contracting Official Representative will approve the monthly 
expenditure.
0
13. Revise and republish Sec.  1944.416 to read as follows:


Sec.  1944.416  Grant Closing.

    The grant is closed on the date the Grant Agreement is executed by 
the applicant and the Agency. Cost may not be allocated to, nor may 
funds be advanced prior to the signing of the Agreement. The State 
Director or designee is authorized to execute the agreement on behalf 
of the Agency. Person(s) authorized by resolution may sign for the 
applicant.
0
14. Revise and republish Sec.  1944.417 to read as follows:


Sec.  1944.417  Servicing actions after grant closing.

    The Agency has a responsibility to help the grantee be successful 
and avoid cases of fraud and abuse. Servicing actions also include 
correlating activities between the grantee and Agency to the benefit of 
the participating families. The amount of servicing actions needed will 
vary in accordance with the experience of the grantee, but as minimum 
the following actions are required:
    (a) As needed, but no more than Monthly, the grantee will provide 
the Agency with a request for additional funds on Form SF-270, 
``Request for Advance or Reimbursement,'' and must be accompanied by a 
working budget. This request need only show the amount of funds used 
during the previous month, amount of unspent funds, projected need for 
the next 30 days, and written justification if the request exceeds the 
projected need for the next 30 days. Upon receipt of the grantee's 
request, the Agency will:
    (1) If the request appears to be in order, process the request and 
make the payment by automatic transfer.
    (2) If the request does not appear to be in order, immediately 
contact the grantee to resolve the problem. After the contact:
    (i) If the grantee's explanation is acceptable, process the 
request, or
    (ii) If the grantee's explanation is not acceptable, immediately 
notify the grantee and order the amount of funds that appear reasonable 
for the next 30 days. Unapproved funds that are later approved will be 
added to the next month's request.
    (b) Quarterly, after the grant start date, the grantee will submit 
a progress report to the Authorized Agency Official which will verify 
its progress toward meeting the objectives stated in the Agreement and 
the application. A quarterly meeting will be scheduled between the 
grantee, T&MA Contractor, and Agency and will be used as an opportunity 
to review progress to date and make necessary adjustments for the 
future. More frequent meetings may be required if the grantee was 
previously identified as a High Risk grantee or will be identified as a 
High Risk grantee at this time. As part of the quarterly meeting the 
following will be done:
    (1) The quarterly report and other information will be evaluated to 
determine progress made to date. The Agency will comment on the 
quarterly report as to whether the grantee is ahead or behind schedule 
in each of the following areas:
    (i) Assisting the projected number of families.
    (ii) Serving very low-income applicants. Is the grantee reaching a 
minimum of very low-income families as required in 42 U.S.C. 1472?
    (iii) Equivalent units (EUs). Is the number of EUs completed 
representative of lapse of time of the grant? For example, if 25 
percent of the grant period has elapsed, are 25 percent of the number 
of EUs completed?
    (iv) Labor contributions by the family. Are the families working 
together and are they completing the labor tasks as established on the 
construction or rehabilitation development breakdown?
    (v) Meeting the approved sweat equity (new construction), or family 
cost savings goal. Are the families receiving the amount of sweat 
equity or costing savings as described in the application?
    (vi) Meeting other objectives in the Agreement. Is the grantee 
submitting timely quarterly reports, audits, or other

[[Page 96141]]

required information. Are their issues with the construction/
rehabilitation projects or loan/grant packaging?
    (2) The Agency will determine if the grantee is progressing 
satisfactorily. However, if the Agency determines the grantee is not 
performing satisfactorily, the Agency will notify the grantee that it 
has been classified a ``High Risk'' grantee. The notice will specify 
the deficiencies and inform the grantee of proposed remedies for 
noncompliance. The notice will advise the grantee that the Agency is 
available to assist and provide the name and address of an organization 
that is under contract with the Agency to assist them. The State Office 
will forward a copy of the report with comments, and the reasons for 
classifying them as ``High Risk'' to the National Office. When the 
period of time provided for corrective action has expired, an 
assessment will be made of the progress by the grantee toward 
correcting the situation. If the Agency determines:
    (i) The situation has been corrected or reasonable progress has 
been made toward correcting the situation, then the ``High Risk'' 
status will be lifted, and the grantee so notified.
    (ii) The situation has not been corrected, but it is correctable if 
additional time is granted, then an extension will be issued.
    (iii) The situation has not been corrected and it is unlikely to be 
corrected if given additional time, then the grant will be terminated 
under Sec.  1944.426(b)(1) of this subpart.
0
15. Revise and republish Sec.  1944.419 to read as follows:


Sec.  1944.419  Final grantee evaluation.

    At the end of the grant period, an evaluation of the grantee will 
be conducted by the Agency. The Agency may use employees or an 
organization under contract to provide the evaluation. The evaluation 
is to determine how successful the grantee was in meeting goals and 
objectives as defined in the agreement, application, this regulation, 
and any amendments.
    (a) This is a quantitative evaluation of the grantee to determine 
if it met its goals in:
    (1) Assisting the projected number of families in obtaining 
adequate housing as proposed by the organization in the approved 
application.
    (2) Meeting the goal of assisting very low-income families stated 
in section 502 of the Housing Act of 1949, and in Sec.  1944.401 of 
this subpart.
    (3) Meeting the Family Labor Contribution requirement specified in 
under Sec.  1944.403(s) of this subpart, as applicable.
    (4) Keeping costs within the approved budget in the application.
    (5) Meeting the approved sweat equity (new construction), or family 
cost savings goal (rehabilitation) stated in section Sec.  1944.403 of 
this subpart.
    (6) Meeting other objectives in the Grant Agreement including, but 
not limited to timely reporting, construction standards, loan packaging 
standards, etc.
    (b) The evaluation is a narrative addressed to the grantee and 
written in 3 parts, namely, findings, recommendations, and an overall 
rating. The rating will be either unacceptable, acceptable, or 
outstanding, as follows:
    (1) Outstanding if the grantee met or exceeded all of the goals in 
paragraph (a) of this section.
    (2) Acceptable if the grantee met or exceeded three of the grant 
goals.
    (3) Unacceptable if the grantee failed to obtain an acceptable 
rating. An unacceptable rating may cause the organization to be 
ineligible for grant assistance should this say the following the 
proceeding 2 years.
    (c) After the State Director has reviewed the evaluation, a copy 
will be mailed to the grantee. The grantee may request a review of the 
evaluation with the Agency. This review is for clarification of the 
material and to dispute the findings if they are known to be wrong. The 
rating is not open for discussion except to the extent it can be proven 
that the findings do not support the rating. If this is the case, the 
Agency may amend the rating.
0
16. Revise and republish Sec.  1944.420 to read as follows:


Sec.  1944.420  Extension or revisions of the grant agreement.

    The State Director or designee may execute an extension or 
revision, at any time during the grant period, provided:
    (a) The extension period is reasonable. The extension period is 
reasonable if the goals can be completed within the timeline without 
additional cost being incurred. Typically, an reasonable extension will 
not exceed two years.
    (b) The need for the extension is clearly justified.
    (c) If additional funds are needed, a revised budget is submitted 
with complete justification, and
    (d) The grantee is within the guidelines in Sec.  1944.407 of this 
subpart or the Agency determines that the best interest of the 
Government will be served by the extension.
0
17. Revise and republish Sec.  1944.421 to read as follows:


Sec.  1944.421  Refunding of an existing grantee.

    Grantees wishing to continue with self-help efforts after the end 
of the current grant plus any extensions should file Form SF-424 
``Application for Federal Assistance,'' in accordance with Sec.  
1944.410. It is recommended that it be filed at least 6 months before 
the end of the current grant period. Funds from the existing grant may 
be used to meet the conditions of a new grant and equivalent units may 
be split between two grant cycles. In addition to meeting the 
conditions of an applicant as defined in Sec.  1944.411 of this 
subpart, the grantee must also have received or will receive an 
acceptable rating on its current grant unless an exception is granted 
by the Agency. The Agency may grant an exception to the rating if it is 
determined that the reasons causing the previous unacceptable rating 
have been removed or will be removed with the approval of this grant.
0
18. Revise and republish Sec.  1944.422 to read as follows:


Sec.  1944.422  Audit and other report requirements.

    The grantee must submit an audit to the Agency annually (or 
biennially if a State or local government with authority to do a less 
frequent audit requests it) and the earlier of 30 calendar days after 
receipt of the auditor's report or nine months after the end of the 
grantee's audit period. The audit, conducted by the grantee's auditors, 
is to be performed in accordance with Generally Accepted Government 
Auditing Standards (GAGAS), using the publication ``Standards for Audit 
of Governmental Organizations, Programs, Activities and Functions'' 
developed by the Comptroller General of the United States in 1981, and 
any subsequent revisions. In addition, the audits are also to be 
performed in accordance with 2 CFR part 200, as adopted by USDA through 
2 CFR part 400, and Agency requirements as specified in this subpart.
    Audits of borrower loan funds will be required when the grantee 
manages these funds during construction in a supervised or custodial 
bank account. These funds are not awarded to the grantee; therefore, 
they should not be shown on a Schedule of Federal Awards nor have the 
same auditing requirements. Instead, an agreed upon procedures audit 
that, at a minimum, includes a review of the draw down request to 
ensure charges listed can be traced back to source documents, and 
reconciliation of the bank account record. The number of borrower 
accounts audited will be determined by

[[Page 96142]]

the auditor. In incidences where it is difficult to determine the 
appropriate number of accounts to be audited, auditors should be 
authorized by the State Director to audit the lesser of 10 loans or 10 
percent of total loans.
0
19. Revise and republish Sec.  1944.423 to read as follows:


Sec.  1944.423  Loan/grant packaging and application submittal.

    A grantee is required to assist 502/504 program applicants in 
submitting their application for a loan and/or grant. Loan/grant 
packaging will be performed in accordance with 7 CFR part 3550; 
therefore, it is important that the grantee be trained at an early 
date. Typically, this training should take place before the first 
applications are submitted to the Agency Office and before the grant is 
closed. A grantee should become very knowledgeable of the Agency's 
eligibility requirements but must understand that only the Agency can 
approve or deny an applicant assistance. The Grantee must work 
cooperatively with the Agency in the loan approval process and must 
work within the regulations for the program and recognize the Agency's 
ultimate decision-making authority to approve or deny loans.
    However, the grantee may ask for clarification that may be helpful 
in working with future applicants. Grant funds may not be used to pay 
any expense in connection with an appeal that the applicant may file or 
pursue.
0
20. Revise and republish Sec.  1944.424 to read as follows:


Sec.  1944.424  Dwelling construction standards.

    All construction will be performed in accordance with subpart A of 
part 1924 of this chapter. The planned work must meet the building 
requirements of 7 CFR part 3550 and meet the Development Standards as 
defined in subpart A of part 1924 of this chapter and State, Tribal, or 
local requirements. Sites and site developments must conform to the 
requirements of subpart C of part 1924 of this chapter.
0
21. Revise and republish Sec.  1944.425 to read as follows:


Sec.  1944.425  Handling and accounting for borrower loan funds.

    The Agency is responsible for administering borrower loan funds 
during the construction phases. The extent of grantee involvement will 
depend on the experience of the grantee and the amount of authority 
delegated to them by the Authorized Agency Official in accordance with 
Agency guidelines available in any Rural Development Office.
0
22. Revise and republish Sec.  1944.426 to read as follows:


Sec.  1944.426  Grant closeout.

    (a) Grant purposes completed. Promptly after the date of 
completion, grant closeout actions will be taken to allow the orderly 
discontinuance of grantee activity.
    (1) The grantee will immediately refund to the Agency any balance 
of grant funds that are not committed for the payment of authorized 
expenses.
    (2) The grantee will furnish Form SF-425, ``Financial Status 
Report'' and detailed final budget to the Agency within 90 days after 
the date of completion of the grant. All other financial, performance, 
and other reports required as a condition of the grant also will be 
completed.
    (3) After the grant closeout, the Agency retains the right to 
recover any disallowed costs. 7 CFR part 3550 will be used by the 
Agency to recover any unauthorized expenditures.
    (4) The grantee will provide the Agency an audit conforming to 
those requirements established in this part, including audits of self-
help borrower accounts.
    (5) Upon request from the recipient, any allowable reimbursable 
cost not covered by previous payments shall be promptly paid by the 
Agency.
    (b) Grant purposes not completed.
    (1) Notification of termination. The State Director will promptly 
notify the grantee and the National Office in writing of the 
termination action including the specific reasons for the decision and 
the effective date of the termination. The notification to the grantee 
will specify that if the grantee believes the reason for the proposed 
termination can be resolved, the grantee should, within 15 calendar 
days of the date of this notification, contact the Agency in writing 
requesting a meeting for further consideration. The meeting will be an 
informal proceeding at which the grantee will be given the opportunity 
to provide whatever additional information it believes should be 
considered in reaching a decision concerning the case. The grantee may 
have an attorney, or any other person present at the meeting if 
desired. Within 30 calendar days of the meeting, the Agency will 
determine what action to take.
    (i) If the Agency determines that termination is not necessary, the 
grantee will be informed in writing.
    (ii) If the Agency determines that termination of the grant is 
appropriate, the grantee will be notified in accordance with 7 CFR part 
11.
    (2) National Office review.
    (i) Upon receipt of a request from a grantee that the decision of 
the State Director be reconsidered, the National Office will make a 
preliminary decision concerning the continued funding of the grantee 
during the appeal period. Written notification of the decision will be 
given to the State Director and grantee.
    (ii) The National Office will then obtain a comprehensive report on 
the matter from the State Office. This information will be considered 
together with any additional information that may be provided by the 
grantee.
    (c) Grant suspension. When the grantee has failed to comply with 
the terms of the agreement, the Agency will consider termination or 
suspension of the grant usually only after a Grantee has been 
classified as ``high risk'' in accordance with 7 CFR 1944.417(b)(2). 
When the Agency determines that the grantee has a reasonable potential 
to correct deficiencies the grant may be suspended. The suspension will 
adhere to 2 CFR part 200 as adopted by USDA through 2 CFR part 400. The 
grantee will be notified of the grant suspension in writing by the 
Agency. The Agency will promptly inform the grantee of its rights to 
appeal the decision in accordance with 7 CFR part 11.
    (d) Grant termination. The State Director may terminate the grant 
agreement whenever Rural Development determines that the grantee has 
failed to comply with terms of the Agreement. The reasons for 
termination may include, but are not limited to, such problems as 
listed in paragraph (e)(3)(i) of the Grant Agreement. The State 
Director may also withhold further disbursement of grant funds and 
prohibit the grantee from incurring additional obligations of grant 
funds with written approval of the National Office. Rural Development 
will allow all necessary and proper costs which grantee could not 
reasonably avoid.
    (1) Termination for cause. The grant agreement may be terminated in 
whole, or in part, at any time before date of completion, whenever 
Rural Development determines that the grantee has failed to comply with 
terms of the Agreement. The State Director will notify the grantee in 
writing giving the reasons for the action and inform the grantee of its 
rights of appeal by use of Exhibit B-3 to Subpart B of part 1900 
``Letter for Notifying Applicants, Lender, Holders and Borrowers of 
Adverse Decisions Where the Decision Involves an Appraisal (Not To Be 
Used in Cases Involving Farmer Program Primary Loan Servicing 
Actions.)''
    (2) Termination for convenience. RHS, or its successor agency, or 
the grantee

[[Page 96143]]

may terminate the grant in whole, or in part, when both parties agree 
that the continuation of the grant would not produce beneficial 
results. The two parties will agree in writing to the termination 
conditions including the effective date. No notice of rights of appeal 
will be issued by Rural Development.
0
23. Add Sec.  1944.428 to read as follows:


Sec.  1944.428  Site Loan to Technical Assistance Grantees

    The objective of a Site Option (SO) loan under Section 523(b)(1)(B) 
of Title V of the Housing Act of 1949 is to enable technical assistance 
(TA) grantees or contractors to establish revolving fund accounts to 
obtain options on land needed to make sites available to families that 
will build their own homes by the self-help method. Loans may be made 
only as necessary to enable eligible applicants to establish revolving 
accounts with which to obtain options on land that will be needed as 
building sites by self-help families participating in the TA self-help 
housing program.
    To be eligible for an SO loan, the applicant must be a TA grantee 
that is currently operating in a satisfactory manner under a TA grant 
agreement. If the SO loan applicant has applied for TA funds but is not 
already a TA grantee and it appears that the TA grant will be made, the 
SO loan may be approved but not closed until the TA grant is closed. 
Applications will be processed, approved or disapproved, and closed in 
accordance with 7 CFR 1822, subpart G, 1822.271 through 1822.275 and 
adhere to the special requirements for RHS section 523 loans at 7 CFR 
1822.278.
0
24. Revise and republish Sec.  1944.450 to read as follows:


Sec.  1944.450  OMB control number.

    The information collection requirements contained in this 
regulation has been approved by OMB and have been assigned OMB control 
number 0575-0043. This proposed rulemaking contains new reporting 
requirements that would require approval under the Paperwork Reduction 
Act of 1995 (44 U.S.C. chapter 35).

Subpart I [Amended]

0
25. Amend Subpart I by removing Exhibits A through F.

Joaquin Altoro,
Administrator, Rural Housing Service.
[FR Doc. 2024-28032 Filed 12-3-24; 8:45 am]
BILLING CODE 3410-XV-P`