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[Federal Register Volume 89, Number 235 (Friday, December 6, 2024)]
[Rules and Regulations]
[Pages 96857-96860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28168]

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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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Federal Register / Vol. 89, No. 235 / Friday, December 6, 2024 / 
Rules and Regulations

[[Page 96857]]

DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Parts 1942, 3560, 3570, and 5001

[Docket Number: RHS-24-ADMIN-0040]

Multi-Family Housing and Community Facilities Updates to Federal 
Financial Assistance Guidance

AGENCY: Rural Housing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Housing Service (RHS or Agency), an agency in the 
United States Department of Agriculture (USDA) Rural Development (RD) 
Mission area, is issuing a final rule to update the Multi-Family 
Housing (MFH) and Community Facility (CF) regulations by updating the 
audit and financial statement language to align with the Office of 
Management and Budget (OMB) 2024 revisions.

DATES: Effective December 6, 2024.

FOR FURTHER INFORMATION CONTACT: 
    Julie Felhofer, Policy & Budget Branch Chief, United States 
Department of Agriculture, 1400 Independence Avenue SW, Washington, DC 
20250-1548. Telephone: (715) 295-4069. Email: [email protected].
    Nathan Chitwood, Director, Community Facilities, United States 
Department of Agriculture, 1400 Independence Avenue SW, Washington, DC 
20250-1548. Telephone: (573) 876-0965. Email: 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    RD is a mission area within USDA comprised of the RHS, the Rural 
Business-Cooperative Service, and Rural Utilities Service, that strives 
to increase economic opportunity and improve the quality of life for 
all rural Americans. RD invests in rural America with loan, grant, and 
loan guarantee programs to help drive economic security and prosperity.
    USDA's RHS offers a variety of programs to build or improve housing 
and essential community facilities in rural areas. The Agency offers 
loans, grants and loan guarantees for single- and multi-family housing, 
childcare centers, fire and police stations, hospitals, libraries, 
nursing homes, schools, first responder vehicles and equipment, housing 
for farm laborers and much more.
    Multi-Family housing programs assist rural property owners through 
loans, loan guarantees, and grants that enable owners to develop and 
rehabilitate properties for low-income, elderly, and disabled 
individuals and families as well as domestic farm laborers.
    Community Facilities Programs offer direct loans, loan guarantees 
and grants to develop or improve essential public services and 
facilities in communities across rural America. These amenities help 
increase the competitiveness of rural communities in attracting and 
retaining businesses that provide employment and services for their 
residents.
    OMB revised several parts of OMB Guidance for Grants and Agreements 
which is now called OMB Guidance for Federal Financial Assistance which 
are applicable to all federal agencies. This guidance can be found in 
Title 2 of the Code of Federal Regulations (CFR) (2 CFR part 200). The 
revisions were published in the Federal Register on April 22, 2024, at 
89 FR 30046, and are required to be implemented by October 1, 2024. 
This final rule is being published as a technical-administrative 
correction to ensure the Agency's audit and financial statement 
requirements align with the OMB revisions made to 2 CFR part 200.

II. Summary of Changes

    This rulemaking makes the following changes:
    (1) Updates Sec.  1942.17 to increase the $750,000 audit threshold 
to $1,000,000.
    (2) Updates Sec.  3560.308 to increase the $750,000 audit threshold 
to $1,000,000.
    (3) Updates Sec.  3570.51 to remove the 2 CFR issue date.
    (4) Updates Sec.  3570.80 to replace the term ``applicant'' with 
``recipient'' or ``subrecipient.''

III. Executive Orders

Executive Order 12372--Intergovernmental Consultation

    These loans are subject to the provisions of Executive Order 12372, 
which requires intergovernmental consultation with State and local 
officials. RHS conducts intergovernmental consultations for each loan 
in accordance with 2 CFR part 415, subpart C.

Executive Order 12866--Regulatory Planning and Review

    This final rule is exempt from OMB review for purposes of Executive 
Order 12866 and, therefore, has not been reviewed by OMB.

Executive Order 12988--Civil Justice Reform

    This final 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 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 bringing suit in 
court that challenges action taken under this rule.

Executive Order 13132--Federalism

    The policies contained in this final 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. Nor does this 
final rule impose substantial direct compliance costs on State and 
local governments. Therefore, consultation with the States is not 
required.

Executive Order 13175--Consultation and Coordination With Indian Tribal 
Governments

    This final 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

[[Page 96858]]

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 final rule does not, to its 
knowledge, have tribal implications that require formal tribal 
consultation under Executive Order 13175. If a Tribe requests 
consultation, the RHS 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.

Congressional Review Act

    This final rule is not subject to the Congressional Review Act 
(``CRA'') (5 U.S.C. 801 et seq.), as the CRA provides an exemption for 
any rule relating to agency management or personnel and for rules 
relating to agency organization, procedure, or practice that does not 
substantially affect the rights or obligations of non-agency parties.

Assistance Listing Number

    The Assistance Listing Numbers assigned to the programs affected by 
this final rule are 10.405--``Farm Labor Housing Loans and Grants,'' 
10.415--``Rural Rental Housing Loans,'' 10.427--``Rural Rental 
Assistance Payments,'' and 10.766--``Community Facilities Loans and 
Grants.'' The Assistance Listings are available at SAM.gov.

Paperwork Reduction Act

    This final rule contains no reporting or recordkeeping provisions 
under OMB Control Numbers 0575-0015 and 0575-0089 requiring OMB 
approval under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 
35).

National Environmental Policy Act

    In accordance with the National Environmental Policy Act of 1969, 
Public Law 91-190, this final 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 this 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 Certification

    This final 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 
final 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.

Administrative Pay-As-You-Go Act of 2023

    Section 270 of the Administrative Pay-As-You-Go Act of 2023 (Pub. 
L. 118-5, div. B, title III, 137 Stat 31) amended 5 U.S.C. 801(a)(2)(A) 
to require U.S. Government Accountability Office (GAO) to assess agency 
compliance with the Act, which establishes requirements for 
administrative actions that affect direct spending, in GAO's major rule 
reports. The Act does not apply to this rule because it does not 
increase direct spending.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act (UMRA), Public Law 
104-4 (2 U.S.C. 1501 et seq.), 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, most cost-
effective, or least burdensome alternative that achieves the objectives 
of the rule.
    This final 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 final rule is 
not subject to the requirements of sections 202 and 205 of the UMRA.

E-Government Act Compliance

    RD is committed to the E-Government Act (44 U.S.C. 101 et seq.), 
which requires Government agencies in general to provide the public the 
option of submitting information or transacting business electronically 
to the maximum extent possible and to promote the use of the internet 
and other information technologies to provide increased opportunities 
for citizen access to Government information and services, and for 
other purposes.

Civil Rights Impact Analysis

    RD has reviewed this final 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, disability, or marital or 
familial status. Based on the review and analysis of this final rule 
and all available data, issuance of this final rule is not likely to 
negatively impact low and moderate-income populations, minority 
populations, women, Indian tribes, or persons with disability, by 
virtue of their age, race, color, national origin, sex, disability, or 
marital or familial status. No major civil rights impact is likely to 
result from this final rule.

USDA Non-Discrimination Statement

    In accordance with Federal civil rights laws and 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,

[[Page 96859]]

audiotape, American Sign Language) should contact the responsible 
Mission Area, agency, or staff office; or the 711 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 www.usda.gov/sites/default/files/documents/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].

List of Subjects

7 CFR Part 1942

    Business and industry, Community facilities, Fire prevention, Grant 
programs--business, Grant programs--housing and community development, 
Grant programs--Indians, Indians, Loan programs--agriculture, Loan 
programs--housing and community development, Loan programs--Indians, 
Loan programs--natural resources, Reporting and recordkeeping 
requirements, Rural areas, Soil conservation, Waste treatment and 
disposal, Water supply, Watersheds.

7 CFR Part 3560

    Accounting, Administrative practice and procedure, Aged, Conflicts 
of interest, Government property management, Grant programs--housing 
and community development, Insurance, Loan programs--agriculture, Loan 
programs--housing and community development, Low- and moderate-income 
housing, Migrant labor, Mortgages, Nonprofit organizations, Public 
housing, Rent subsidies, Reporting and recordkeeping requirements, 
Rural areas.

7 CFR Part 3570

    Administrative practice and procedure, Fair housing, Grant 
programs--housing and community development, Housing, Low- and 
moderate-income housing, Reporting and recordkeeping requirements, 
Rural areas.

7 CFR Part 5001

    Business and industry, Community development, Community facilities, 
Energy conservation, Fees, Loan programs--natural resources, Renewable 
energy, Rural areas, Rural development, Water and waste disposal.

    Accordingly, for the reasons set forth in the preamble, the Agency 
amends 7 CFR parts 1942, 3560, 3570, and 5001 as follows:

PART 1942--ASSOCIATIONS

0
1. The authority citation for part 1942 continues to read as follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989.

Subpart A--Community Facility Loans

Sec.  1942.17  Community facilities.

0
2. Revise and republish Sec.  1942.17 paragraphs (q)(4) and (5) to read 
as follows:
* * * * *
    (q) * * *
    (4) Audits. Any applicant that expends $1 million or more in 
Federal financial assistance during their fiscal year must submit an 
audit report conducted in accordance with 2 CFR part 200, subpart F, 
``Audit Requirements.'' Applicants expending less than $1 million in 
Federal financial assistance per fiscal year are exempt from 2 CFR part 
200 audit requirements. All audits are to be performed in accordance 
with the latest revision of the Generally Accepted Government 
Accounting Standards (GAGAS), developed by the Comptroller General of 
the United States. Further guidance on preparing an acceptable audit 
can be obtained from any Agency office. It is not intended that audits 
required by this part be separate and apart from audits performed in 
accordance with State and local laws. To the extent feasible, the audit 
work should be done in conjunction with those audits. Audits should be 
supplied to the Processing Official within the timeframes stated in 
paragraph (f) of this section. OMB Circulars and Agency Compliance 
Supplements are available in any USDA/Agency office or OMB's website. 
Any state, local government, or Indian tribe that is required by 
constitution or state statute, in effect on January 1, 1987, to undergo 
its audits less frequently than annually, is permitted to undergo its 
audits biennially, pursuant to 2 CFR 200.504(a). This requirement must 
still be in effect for the biennial period. Any nonprofit organization 
that had biennial audits for all biennial periods ending between July 
1, 1992, and January 1, 1995, is permitted to undergo its audits 
biennially, pursuant to 2 CFR 200.504(b). All biennial audits must 
cover both years within the biennial period.
    (5) Exemption from audits. Except as noted in 2 CFR 200.503, 
``Relation to other audit requirement,'' public bodies or nonprofits 
expending less than $1 million in Federal awards during its fiscal 
year, whose payments are current, and are having no signs of 
operational or financial difficulty may submit a management report. A 
management report, at a minimum, will include a balance sheet and 
income and expense statement. Financial information may be reported on 
Form RD 442-2, ``Statement of Budget, Income and Equity'' and RD Form 
442-3, ``Balance Sheet'', or similar. The following management data 
will be submitted by the borrower to the servicing office. Records must 
be available for review or audit by appropriate officials of the 
Federal agency, pass-through entity, and Government Accountability 
Office (GAO).
* * * * *

PART 3560--DIRECT MULTI-FAMILY HOUSING LOANS AND GRANTS

0
3. The authority citation for part 3560 continues to read as follows:

    Authority: 42 U.S.C. 1480.

Subpart G--Financial Management

0
4. Revise and republish Sec.  3560.308 paragraphs (a)(2) and (3) to 
read as follows:

Sec.  3560.308  Annual financial reports.

* * * * *
    (a) * * *
    (2) Non-profit borrowers that receive $1 million or more in 
combined Federal financial assistance must meet the audit requirements 
set forth by OMB, Uniform Administrative Requirements, Cost Principles, 
and Audit Requirements for Federal Awards, found at 2 CFR parts 200 and 
400. Borrowers must provide a copy of this audit to RHS in compliance 
with these financial reporting requirements.
    (3) Non-profit borrowers that receive less than $1 million, and 
for-profit borrowers that receive less than $500,000 in combined 
Federal financial assistance will submit annual owner certified 
prescribed forms on the accrual method of accounting in accordance with 
the Statements on Standards for Accounting and Review Services 
promulgated by the Accounting and

[[Page 96860]]

Review Services Committee of the American Institute of Certified Public 
Accountants (AICPA). Borrowers may use a CPA to prepare this 
compilation report of the prescribed forms.
* * * * *

PART 3570--COMMUNITY PROGRAMS

0
5. The authority citation for part 3570 continues to read as follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989.

Subpart B--Community Facilities Grant Program

0
6. Revise and republish Sec.  3570.51 paragraph (j) to read as follows:

Sec.  3570.51  General.

* * * * *
    (j) The Office of Management and Budget (OMB) issued guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards at 2 CFR part 200. In 2 CFR part 400.1, 
the Department adopted OMB's guidance in subparts A through F of 2 CFR 
part 200, as supplemented by 2 CFR part 400, as the Department's 
policies and procedures for uniform administrative requirements, cost 
principles, and audit requirements for federal awards. As a result, 
this regulation contains references to 2 CFR part 200 as it has 
regulatory effect for the Department's programs and activities.
* * * * *

0
8. Revise and republish Sec.  3570.80 to read as follows:

Sec.  3570.80  Grant closing and delivery of funds.

    (a) ``Community Facilities Grant Agreement'' will be used as the 
grant agreement between the Agency and the grantee and will be signed 
by the grantee before grant funds are advanced.
    (b) Approval officials may require recipients to record liens or 
other appropriate notices of record to indicate that personal or real 
property has been acquired or improved with Federal grant funds and 
that use and disposition conditions apply to the property as provided 
by 2 CFR part 200, as subsequently modified.
    (c) Approval officials may require recipients to record liens or 
other appropriate notices of record to indicate that personal or real 
property has been acquired or improved with Federal grant funds and 
that use and disposition conditions apply to the property as provided 
by 2 CFR part 200 as adopted by USDA through 2 CFR part 400 as 
subsequently modified.
    (d) Grant funds will not be disbursed until they are actually 
needed by the recipient and all borrower or other funds are expended, 
except when:
    (1) Interim financing of the total estimated amount of loan funds 
needed during construction is arranged,
    (2) All interim funds have been disbursed, and
    (3) Agency grant funds are needed before RHS or other loans can be 
closed.
    (e) If grant funds are available from other agencies and are 
transferred for disbursement by RHS, these grant funds will be 
disbursed in accordance with the agreement governing such other 
agencies' participation in the project.

PART 5001--GUARANTEED LOANS

0
7. The authority citation for part 5001 continues to read as follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1926(a); 7 U.S.C. 1932(a); 7 
U.S.C. 8107.

Subpart F--Servicing Provisions

0
8. Revise and republish Sec.  5001.504 paragraph (c) to read as 
follows:

Sec.  5001.504  Financial reports.

* * * * *
    (c) Annual financial statements must be in accordance with 
accounting practices acceptable to the Agency as prescribed in Sec.  
5001.9 for all borrowers with a guaranteed loan balance in excess of 
$600,000. The lender may determine the type and frequency of financial 
statements for borrowers with a total guaranteed loan balance below 
$600,000 upon notification and justification to the Agency. This 
section does not supersede the borrower financial statement 
requirements of 2 CFR part 200, subpart F.
* * * * *

Joaquin Altoro,
Administrator, Rural Housing Service.

[FR Doc. 2024-28168 Filed 12-5-24; 8:45 am]
BILLING CODE 3410-XV-P
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