15794 Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 103

[Docket No. FR–4031–F–02]

RIN 2529–AA79

Revision of HUD’s Fair Housing

Complaint Processing

AGENCY: Office of the Assistant

Secretary for Fair Housing and Equal

Opportunity, HUD.

ACTION: Final rule.

SUMMARY: On August 8, 1996 (61 FR

41480), HUD published an interim rule

amending its regulations governing fair

housing complaint processing.

Specifically, the rule removed a

provision allowing a respondent to

request a subpoena during a fair housing

investigation. This rule finalizes the

policies and procedures set forth in the

August 8, 1996 interim rule and takes

into consideration the public comments

received on the interim rule. HUD has

decided to adopt the interim rule

without change.

EFFECTIVE DATE: May 2, 1997.

FOR FURTHER INFORMATION CONTACT:

Susan Forward, Deputy Assistant

Secretary for Enforcement and

Investigations, Room 5106, Department

of Housing and Urban Development,

451 Seventh Street, SW, Washington,

DC 20410, telephone number (202) 708–

4211. For hearing or speech-impaired

persons, this number may be accessed

via TTY by calling the Federal

Information Relay Service at 1–800–

877–8339. (With the exception of the

‘‘800’’ number, these numbers are not

toll-free.)

SUPPLEMENTARY INFORMATION:

I. Interim Rule Finalized Without

Change

The public comment period on the

August 8, 1996 interim rule expired on

October 7, 1996. Only ten public

comments were received. HUD has

decided not to make any changes as a

result of public comment. Section III. of

the preamble presents a summary of the

significant issues raised by the public

commenters on the interim rule, and

HUD’s responses to these comments.

II. The August 8, 1996 Interim Rule

The Fair Housing Amendments Act of

1988 (Pub. L. 100–430, 102 Stat. 1619)

(1988 Act) amended section 811 of the

Fair Housing Act (Title VIII of the Civil

Rights Act of 1968, as amended, 42

U.S.C. 3601 et seq.). Section 811, as

amended, authorizes the Secretary of

HUD to issue subpoenas and order

discovery in aid of fair housing

investigations and hearings. Prior to the

1988 Act, section 811(b) of the Fair

Housing Act permitted a respondent to

request the issuance of a subpoena

during a fair housing investigation:

Upon written application to the Secretary,

a respondent shall be entitled to the issuance

of a reasonable number of subpoenas by and

in the name of the Secretary to the same

extent and subject to the same limitations as

subpoenas issued by the Secretary himself.

42 U.S.C. 3611(b) (1969).

The 1988 Act removed the abovequoted provision for the Fair Housing

Act and granted the Secretary sole

authority for conducting discovery

during fair housing investigations.

HUD’s regulations at 24 CFR part 103

(Fair Housing Complaint Processing),

however, included a provision which

permitted a respondent to request a

subpoena during an investigation. On

August 8, 1996 (61 FR 41480), HUD

published an interim rule amending

§ 103.215(b) to remove this provision.

This rule finalizes the policies and

procedures set forth in the August 8,

1996 interim rule and takes into

consideration the public comments

received on the interim rule. The

August 8, 1996 interim rule provided

additional details on the amendments to

24 CFR 103.215(b).

III. Discussion of Public Comments on

the August 8, 1996 Interim Rule

Statutory Support for Subpoena

Requests by Respondents

Comment. Four commenters believe

that revised section 811 of the Fair

Housing Act does not prohibit a

respondent from requesting the issuance

of a subpoena during a fair housing

investigation. These commenters noted

in support of this argument that section

811 refers to witness fees which are

payable by a party requesting a

subpoena.

These commenters also cited language

from the House Judiciary Committee

Report on the 1988 Act: ‘‘The

Committee intends that the Secretary

will subpoena all relevant witnesses and

that in most instances parties will not

have to request subpoenas’’ (House

Report No. 100–711, 100th Cong., 2d

Sess. 36 (1988)). The commenters

believe that the language of the statute,

as well as its legislative history,

supports their contention that the

Congress intended to permit parties to

request subpoenas during both

investigations and hearings under the

Fair Housing Act.

HUD response. Section 811(a) of the

Fair Housing Act states:

The Secretary may, in accordance with this

subsection, issue subpoenas and order

discovery in aid of investigations and

hearings under this title. Such subpoenas and

discovery may be ordered to the same extent

and subject to the same limitations as would

apply if the subpoenas or discovery were

ordered or served in aid of a civil action in

the United States district court for the district

in which the investigation is taking place.

42 U.S.C. 3611 (1996).

As the commenters noted, section 811

does not prohibit the issuance of

subpoenas to complainants or

respondents during investigations;

however, neither does it provide

complainants or respondents the right to

request subpoenas or conduct discovery

during investigations. Section 811

grants to the Secretary the right to issue

subpoenas and order discovery in the

same manner as such subpoenas could

be granted or discovery ordered by a

United States district court. In granting

this authority to the Secretary, the

Congress authorized the issuance of

subpoenas upon the request of a party

to a hearing before an administrative

law judge, as provided for in section

812(c) of the Fair Housing Act: ‘‘At a

hearing under this section, each party

may appear in person, be represented by

counsel, present evidence, crossexamine witnesses, and obtain the

issuance of subpoenas under section

811’’ (42 U.S.C. 3612(c) (1996)).

The language of the House Report

relied upon by the commenters further

supports HUD’s interpretation of section

811. The sentence in the House Report

immediately prior to the one cited by

the commenters states: ‘‘The Committee

intends that subpoenas and discovery be

available and ordered to the same extent

as allowed in the U.S. district courts.’’

Had the Congress intended to provide

respondents with the right to request

subpoenas during investigations, it

could have retained the original text of

section 811(b) of the Fair Housing Act,

which expressly established such a

right. The deletion of that provision by

the 1988 Act indicates that the Congress

did not intend to create such a right.

The statement from the House

Committee Report, which sets forth the

Committee’s intent to make subpoenas

and discovery available to the same

extent as in Federal district court, the

language of section 811, as amended in

1988 to eliminate the provisions

allowing respondents to request

subpoenas, and section 812, which

authorizes parties to an administrative

hearing to obtain the issuance of

subpoenas, clearly indicate that the

Congress intended that parties to a

hearing before an administrative law

judge under the Fair Housing Act have
Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules and Regulations 15795

1 United States Commission on Civil Rights, The

Fair Housing Amendments Act of 1988: The

Enforcement Report (1994).

the same rights to discovery that would

be available were the action to be

brought in Federal district court. By

amending its regulations to restrict the

issuance of subpoenas in support of

discovery to the enforcement

proceeding itself, HUD is complying

with the expressed intent of the

Congress.

Furthermore, to allow respondents to

conduct and compel discovery during

an investigation as well as during a

hearing before an administrative law

judge or a trial in Federal district court

would, in effect, allow respondents

‘‘double discovery’’ during

investigations and enforcement. HUD

believes that formal judicial discovery is

more properly limited to the judicial

proceeding occurring after a Charge has

been issued. HUD interprets the Fair

Housing Act’s delegation of judicial

authority to provide for discovery by

complainants and respondents during

an enforcement hearing before an

administrative law judge only.

Respondent’s Ability To Prepare

Defense

Comment. The preamble to the

August 8, 1996 interim rule emphasized

that the interim rule did not

compromise a respondent’s ability to

conduct its own investigation of the

facts and prepare its own defense. Four

commenters disagreed with this point.

These commenters believe that the

interim rule would prevent a

respondent from requesting that HUD

obtain information which could lead to

a Determination of No Reasonable Cause

in that respondent’s case. The

commenters believe that it would be

improper for respondents to have no

opportunity to challenge the accuracy of

the allegations underlying a complaint.

One commenter complained that it

would be unfair ‘‘to allow one side, the

complainant, to gather information

through the use of [HUD’s] investigative

powers,’’ without providing similar

investigative means to the respondent.

HUD response. HUD has

responsibility for conducting a fair and

impartial investigation into the facts

surrounding alleged violations of the

Fair Housing Act. To that end, it will

consider and evaluate all information

received, from whatever source. If a

respondent knows of information that

will be of assistance to HUD in reaching

its determination, the respondent

should make that information known to

the investigator. Similarly, should a

respondent wish to challenge the

accuracy of information possessed by

HUD, it may present all information at

its disposal to do so. This rule does not

affect a respondent’s ability to make

HUD aware of information for its own

investigative purposes or challenge

information possessed by HUD, and it

authorizes HUD to act on information

provided by complainants and

respondents in determining whether

HUD should issue a subpoena.

Delays in HUD’s Investigation Process

Comment. The preamble to the

August 8, 1996 interim rule stated HUD

was issuing this rule in part to eliminate

delays in investigations which are

associated with subpoena requests and

streamline the investigative process.

Two commenters disagreed that the

interim rule would expedite HUD’s

investigation of fair housing complaints.

One of these commenters referred to

statistical data included in the report on

the enforcement of the 1988

Amendments Act prepared by the

United States Commission on Civil

Rights (Report): 1

During fiscal year 1990, 64 percent of the

complaints were closed in more than the

target 100 days; in 1991 the figure dropped

to 62 percent; in 1992, it dropped further to

40 percent; and in 1993, the last year

reported, it dropped to 39 percent.

Accordingly, over these years, while the

respondent had the ability to request

subpoenas, HUD’s performance in closing

cases was improved. Report at 41. (Emphasis

in the original.)

The commenter wrote that the cited

Report language demonstrated that there

are other reasons for the delay in fair

housing investigations.

Another commenter disagreed, stating

that processing subpoena requests can

delay the investigative process. This

commenter acknowledged that it is in

the interest of both complainants and

respondents to avoid such delays.

HUD response. As the commenters

recognized, HUD has made a serious

effort to reduce the amount of time

involved in investigations and to

improve its own performance in

expeditiously closing cases. In

accordance with the President’s

initiative on regulatory reform, HUD has

undertaken to streamline further its

complaint processing procedures. In the

past, subpoena processing has

significantly affected case closing

periods in only a limited number of

cases; however, HUD believes that the

public interest in reducing regulatory

burdens is best served by eliminating

obstacles to the prompt processing of

complaints wherever those obstacles

may be found. While there are other

considerations that support amending

this rule, such as fairness to both

complainants and respondents, the

proper role of HUD in investigations,

and conforming Departmental practice

to that of other agencies enforcing civil

rights laws, HUD has also determined

that this final rule will improve HUD’s

performance and reduce the overall

burden of its regulations on respondents

and complainants alike.

Appearance of Conflict of Interest

Comment. HUD promulgated this rule

in part to prevent the appearance of a

conflict between the Department’s dual

roles as investigator and as arbiter of

discovery disputes between

complainants and respondents. One

commenter acknowledged that the

current rule creates the improper

appearance that the investigation is an

adversarial process in which HUD and

the complainant share the same interest.

The commenter recognized that this is

not the case and that HUD conducts

each investigation to determine

objectively whether the Fair Housing

Act has been violated. For this reason,

the commenter supported amending the

rule to correct that improper appearance

of partiality.

Five commenters expressed their

doubt that the interim rule would

prevent the appearance of such a

conflict. These commenters believe that

the rule, by not granting to respondents

the right to request a subpoena during

investigations, created the appearance

that HUD was conducting

investigations, not as an impartial

arbiter, but as an advocate of the

complainant. One commenter noted that

many complaints are filed by ‘‘testers’’

funded by HUD through programs such

as the Fair Housing Initiatives Program

(FHIP). The commenter believes that in

cases where HUD has played such an

active role in generating the complaint,

the impartiality of HUD’s investigation

would benefit from having the full

participation of the respondent when

inquiring into the testing procedures

used.

HUD response. HUD provides funding

under the FHIP program to state and

local governments and public or private

nonprofit organizations to conduct fair

housing education, outreach, and

enforcement activities throughout the

country. (See 42 U.S.C. 3616 note.)

Complaints submitted by organizations

receiving such grants are investigated

with the same impartial consideration

as all other alleged Fair Housing Act

violations.

Hindrance to Conciliation Efforts

Comment. Three commenters believe

the interim rule would hinder HUD’s

efforts to conciliate fair housing
15796 Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules and Regulations

2Assistant Attorney General Walter Dellinger,

memorandum to Deval L. Patrick, Assistant

Attorney General for Civil Rights, The Relationship

Between Department Attorneys and Persons on

Whose Behalf the United States Initiates Cases

Under the Fair Housing Act (January 20, 1995).

complaints. These commenters noted

that some fair housing complaints do

not provide sufficient information

regarding the substance of the particular

alleged discriminatory behavior. The

commenters wrote that most

respondents would be hesitant to

conciliate or settle a fair housing

complaint before having the opportunity

to investigate fully its underlying facts.

HUD response. This amendment in no

way limits any person’s ability to

conduct an investigation of the facts

surrounding any alleged violation of the

Fair Housing Act. This rule only limits

a respondent’s ability to use HUD’s

authority to compel discovery during an

investigation. Nothing prevents

respondents from conducting their own

investigations of the underlying facts

and respondents may choose to delay

conciliating complaints until their own

investigations are completed. In the vast

majority of complaints that have been

conciliated, conciliation has been

accomplished without respondents

resorting to formal discovery measures

or requesting subpoenas. This rule will

not significantly affect the resolution of

Fair Housing Act complaints through

conciliation, which will continue to be

an important tool for resolving

complaints.

Respondent’s Right to Conduct

Discovery

Comment. Four of the commenters

objected to the description of the

interim rule as announced in its

preamble. The commenters believe that

HUD should have announced more

clearly that the interim rule effectively

eliminated all discovery rights of the

respondent during the investigative

stage, not merely the right to have a

subpoena issued at its request.

HUD response. HUD intends this rule

to conform its investigative process to

the practice of other Federal agencies

enforcing civil rights laws and to

simplify and streamline the

investigative process; therefore, this rule

no longer provides that respondents

may use HUD’s resources to compel

formal discovery during an

investigation. However, it should be

noted that both complainants and

respondents retain the ability to conduct

their own investigations of the facts

surrounding any complaint. Only the

use of formal compulsory discovery

procedures during an administrative

investigation has been eliminated by

this rule. HUD has emphasized in this

Preamble that the effect of this final rule

is to end ‘‘double discovery’’ and limit

a respondent’s ability to request

subpoenas or conduct discovery to

hearings before administrative law

judges or civil trials in Federal district

court.

In deciding whether to amend the

existing rule, HUD looked to the

experience of other Federal agencies

enforcing civil rights laws for guidance

on this issue. A review of the relevant

regulations of such other agencies,

including the Equal Employment

Opportunity Commission, the

Department of Education, and the

Department of Justice, revealed that

none of them provide for such ‘‘double

discovery’’ during both investigations

and enforcement proceedings as was

provided for in HUD’s existing

regulation. The Department believes

that the experience of other Federal

administrative agencies provides

positive guidance for this decision to

streamline and simplify the

investigation process.

Department of Justice Memorandum

Comment. The preamble to the

August 8, 1996 interim rule referred to

a Department of Justice opinion to

support the amendments made to

§ 103.215(b) (61 FR 41480).2 Three

commenters questioned HUD’s reliance

on this opinion. These commenters

believe that the opinion was not

directed to the issues contained in the

interim rule, but rather was directed to

the narrow question of whether an

attorney-client relationship exists

between Department of Justice attorneys

and complainants under the Fair

Housing Act. According to the

commenters, the memorandum does not

address the question of HUD’s role in

fair housing investigations, nor does it

define the relationship between HUD

and a complainant during the

investigation stage of a fair housing

proceeding.

HUD response. The commenters are

correct in stating that the opinion did

not reach the nature of HUD’s

relationship with a complainant during

Fair Housing Act investigations. To the

extent that the opinion supported

HUD’s interpretation of its role in the

investigation as being neutral and

impartial, it did so only by analogy.

HUD relies on that opinion in support

of this rule only to the extent that it

states that even after a Charge of

Discrimination has been issued and the

government is prosecuting a case on the

complainant’s behalf, a government

attorney’s obligation is to enforce the

law, not to advocate for either

complainants or respondents. This is

consistent with the current investigatory

procedure of HUD and that of other

agencies enforcing civil rights laws.

HUD’s duty in both investigations and

enforcement proceedings is to enforce

the law, not to advocate for either side,

and its regulations must reflect that role.

HUD’s Justification for Interim

Rulemaking

Comment. Five of the commenters

believe that HUD should have solicited

public comment prior to issuing the

August 8, 1996 rule for effect. These

commenters questioned the justification

for interim rulemaking provided by

HUD in the preamble to the August 8,

1996 rule.

HUD response. HUD’s regulations at

24 CFR part 10 (Rulemaking Policy and

Procedures) authorize HUD to issue a

rule for immediate effect if the agency

finds good cause to omit advance notice

and public participation. The good

cause requirement is satisfied when

prior public procedure is

‘‘impracticable, unnecessary, or contrary

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

this case, the public interest in reducing

the burdens of HUD’s regulations and

expediting Fair Housing Act

investigations has been served through

promulgation of the interim rule.

HUD has not received any requests for

subpoenas by respondents subsequent

to the effective date of the August 8,

1996 interim rule. HUD carefully

reviewed and considered all comments

received on the interim rule.

Accordingly, the interim rule has not

impacted a respondent’s ability to

request a subpoena prior to HUD’s

consideration of the public comments

and the publication of this final rule.

III. Findings and Certifications

Regulatory Flexibility Act. The

Secretary, in accordance with the

Regulatory Flexibility Act (5 U.S.C.

605(b)), has reviewed and approved this

final rule, and in so doing certifies that

this rule will not have a significant

economic impact on a substantial

number of small entities. This rule

streamlines HUD’s regulations

governing fair housing complaint

processing (24 CFR part 103).

Specifically, the final rule removes a

provision which allows a respondent to

request a subpoena during a fair housing

investigation. The removal of this

provision will eliminate the delays

associated with subpoena requests and

expedite the investigation process. The

rule will also conform HUD’s

investigative practices with those of

other Federal administrative agencies.

The rule will have no adverse or
Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules and Regulations 15797

disproportionate economic impact on

small businesses.

Environmental Impact. In accordance

with 24 CFR 50.19(c)(3) of the HUD

regulations, the policies and procedures

contained in this rule set out

nondiscrimination standards and,

therefore, are categorically excluded

from the requirements of the National

Environmental Policy Act.

Executive Order 12612, Federalism.

The General Counsel, as the Designated

Official under section 6(a) of Executive

Order 12612, Federalism, has

determined that this rule will not have

substantial direct effects on States or

their political subdivisions, or the

relationship between the Federal

government and the States, or on the

distribution of power and

responsibilities among the various

levels of government. This final rule is

solely concerned with HUD’s processing

of complaints under the Fair Housing

Act. No programmatic or policy changes

will result from this rule that would

affect the relationship between the

Federal government and State and local

governments.

Executive Order 12606, The Family.

The General Counsel, as the Designated

Official under Executive Order 12606,

The Family, has determined that this

rule will not have the potential for

significant impact on family formation,

maintenance, or general well-being, and

thus is not subject to review under the

Order. The only amendments made by

this final rule are to HUD’s regulations

governing fair housing complaint

processing. This final rule streamlines

these regulations by removing the

provision which authorizes a

respondent to request the issuance of a

subpoena during an investigation. No

significant change in existing HUD

policies or programs would result from

promulgation of this final rule, as those

policies and programs relate to family

concerns.

Executive Order 12866, Regulatory

Planning and Review. The Office of

Management and Budget (OMB)

reviewed this rule under Executive

Order 12866, Regulatory Planning and

Review. OMB determined that this rule

is a ‘‘significant regulatory action,’’ as

defined in section 3(f) of the Order

(although not economically significant,

as provided in section 3(f)(1) of the

Order). Any changes made to the final

rule subsequent to its submission to

OMB are identified in the docket file,

which is available for public inspection

in the office of the Department’s Rules

Docket Clerk, Room 10276, 451 Seventh

Street, SW, Washington, DC 20410–

0500.

Unfunded Mandates Reform Act. The

Secretary has reviewed this rule before

publication and by approving it

certifies, in accordance with the

Unfunded Mandates Reform Act of 1995

(2 U.S.C. 1532), that this rule does not

impose a Federal mandate that will

result in the expenditure of State, local,

and tribal governments, in the aggregate,

or by the private sector, of $100 million

or more in any one year.

List of Subjects in 24 CFR Part 103

Administrative practice and

procedure, Aged, Fair housing,

Individuals with disabilities,

Intergovernmental relations,

Investigations, Mortgages, Penalties,

Reporting and recordkeeping

requirements.

Accordingly, the interim rule

published at 61 FR 41480, August 8,

1996, amending 24 CFR part 103 is

adopted as final without change.

Dated: February 13, 1997.

Susan M. Forward,

Deputy Assistant Secretary for Enforcement

and Investigations.

[FR Doc. 97–8212 Filed 4–1–97; 8:45 am]

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