[Federal Register Volume 86, Number 117 (Tuesday, June 22, 2021)]
[Notices]
[Pages 32681-32700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12934]



[[Page 32681]]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6261-N-01]


Allocations, Common Application, Waivers, and Alternative 
Requirements for Community Development Block Grant Disaster Recovery 
Grantees; Electrical Power Systems in Puerto Rico and the U.S. Virgin 
Islands

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Notice.

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SUMMARY: On April 10, 2018, HUD allocated nearly $28 billion in 
Community Development Block Grant disaster recovery (CDBG-DR) funds 
appropriated by the Further Additional Supplemental Appropriations for 
Disaster Relief Requirements Act, 2018. HUD allocated $10.03 billion 
for the purpose of addressing unmet needs from disasters that occurred 
in 2017; $2 billion for enhanced or improved electrical power systems 
in Puerto Rico and the U.S. Virgin Islands; and $15.9 billion for 
mitigation activities. This notice governs the use of the $2 billion 
CDBG-DR allocation for enhanced or improved electrical power systems in 
Puerto Rico and the U.S. Virgin Islands.

DATES: Applicability Date: June 28, 2021.

FOR FURTHER INFORMATION CONTACT: Jessie Handforth Kome, Director, 
Office of Block Grant Assistance, Department of Housing and Urban 
Development, 451 7th Street SW, Room 7282, Washington, DC 20410, 
telephone number 202-708-3587. Persons with hearing or speech 
impairments may access this number via TTY by calling the Federal Relay 
Service at 800-877-8339. Facsimile inquiries may be sent to Ms. Kome at 
202-708-0033. (Except for the ''800'' number, these telephone numbers 
are not toll-free). Email inquiries may be sent to 
<a href="/cdn-cgi/l/email-protection#43272a3022303726311c3126202c3526313a032b36276d242c35"><span class="__cf_email__" data-cfemail="e98d809a889a9d8c9bb69b8c8a869f8c9b90a9819c8dc78e869f">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Overview and Policy Objectives
II. Allocation
III. Use of Funds
IV. Overview of the Grant Process
V. Applicable Rules, Statutes, Waivers, and Alternative Requirements
    A. Grant Administration
    B. Infrastructure and Other Nonresidential Structures
    C. Certifications and Collection of Information
VI. Duration of Funding
VII. Catalog of Federal Domestic Assistance
VIII. Finding of No Significant Impact

I. Overview and Policy Objectives

    The Further Additional Supplemental Appropriations for Disaster 
Relief Requirements Act, 2018 (Division B, Subdivision 1 of the 
Bipartisan Budget Act of 2018), (Pub. L. 115-123 approved February 9, 
2018) (the ``Appropriations Act''), made available nearly $28 billion 
in Community Development Block Grant disaster recovery (CDBG-DR) funds. 
Of this amount, the Appropriations Act directed HUD to allocate not 
less than $2 billion for electrical power system enhancements and 
improvements for Puerto Rico and the U.S. Virgin Islands (USVI). This 
notice establishes requirements for necessary expenses of electrical 
power system enhancements and improvements (``electrical power system 
improvements'') in the most impacted and distressed area as defined by 
HUD in section II of this notice and as previously identified in the 
allocation methodology published by HUD in the August 14, 2018 Federal 
Register (83 FR 40314, 40323).
    In 2017, Hurricanes Irma and Maria damaged significant elements of 
the electricity systems in Puerto Rico and the USVI. Following the 
hurricanes, five months of repairs were required in order to restore 
power to the USVI, and approximately eleven months of repairs were 
needed to restore power to Puerto Rico. CDBG-DR funds for electrical 
power system improvements provide a unique and significant opportunity 
for these grantees to carry out strategic and high-impact activities to 
address necessary expenses and mitigate disaster risks to their 
electrical power systems, improve system reliability, resiliency, 
efficiency, sustainability and address each system's long-term 
financial viability (electrical power system and electrical power 
system improvements are defined in section V.A.8.a. in this notice). 
The Department seeks to maximize the impact of these CDBG-DR funds by 
encouraging the formation of public-private partnerships, partnerships 
with local, community and neighborhood organizations, and through 
enhanced coordination with other Federal programs. In the action plan 
governing the use of these funds, grantees are also required to 
describe how the funds will be used to address the needs of vulnerable 
populations, protected classes, and underserved communities, how the 
funded activities primarily benefit low- and moderate-income persons, 
and how the planned improvements will be designed and implemented to 
address the impacts of climate change.
    The use of CDBG-DR funds for electrical power system improvements 
requires careful planning, robust oversight, and coordination with 
other Federal disaster recovery, mitigation, and sustainability efforts 
to enhance the resiliency of grantee's electrical power systems, as an 
integral component of the grantee's energy infrastructure. The 
Department places great focus on and will give increased attention to 
the financial and operational capacity of each grantee's subrecipients 
and the departments and divisions of the grantee that may receive 
funds, including public utilities that currently operate and maintain 
each grantee's electrical power system. As described in section 
V.A.1.b.(2), grantees must identify any management and operational 
reforms that have been or will be implemented to improve the outcomes 
associated with the use of CDBG-DR funds for electrical power system 
improvements. The Administration also seeks to encourage private, 
community, and philanthropic sector investments in electrical power 
system improvements, and to maximize the long-term benefits of this 
CDBG-DR funding to each grantee's jurisdiction.

II. Allocation

    The Appropriations Act provides that grants shall be awarded 
directly to a State, local government, or Indian tribe at the 
discretion of the Secretary. To comply with statutory direction that 
funds be used for disaster-related expenses in the most impacted and 
distressed areas, HUD has identified the most impacted and distressed 
areas based on the best available data for all eligible affected areas. 
A detailed explanation of HUD's allocation methodology was previously 
published in HUD's August 14, 2018 Federal Register notice at 83 FR 
40323. For Puerto Rico and the USVI, all components of each 
jurisdiction are considered most impacted and distressed for purposes 
of the allocation identified in Table 1.

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    Table 1--Allocations for Electrical Power System Enhancements and
                  Improvements Under Public Law 115-123
------------------------------------------------------------------------
                                                 Electrical power system
      Disaster No.               Grantee         allocation under Public
                                                       Law 115-123
------------------------------------------------------------------------
4339...................  Commonwealth of Puerto           $1,932,347,000
                          Rico.
4340...................  U.S. Virgin Islands...               67,653,000
------------------------------------------------------------------------

III. Use of Funds

    As required by the Appropriations Act, prior to HUD's obligation of 
the funds to the grantee, a grantee shall submit a plan to HUD for 
approval detailing the proposed use of all funds. The action plan 
submitted in response to this notice must describe uses that (1) are 
electrical power system improvements and satisfy all requirements for 
electrical power system improvement activities as described in V.A.8.; 
and (2) meet the criteria for a national objective, as established by 
this notice.
    Section V.A.8. of this notice establishes a waiver and alternative 
requirement that creates electrical power system improvements as a 
CDBG-DR eligible activity. As described in section V.A.2.a.(1) of this 
notice, in the action plan, a grantee must assess the unmet needs for 
the enhancement or improvement of their respective electrical power 
system. The unmet needs assessment must inform the action plan and 
guide the development and prioritization of planned activities to 
improve each grantee's electrical power system. The action plan must 
include the criteria to be used by the grantee to prioritize the 
expenditure of CDBG-DR funds identified in this notice for the specific 
components of its electrical power system and describe how the use of 
these CDBG-DR funds will improve the cost-effectiveness, reliability, 
resilience, efficiency, sustainability, and long-term financial 
viability of its electrical power systems.
    Puerto Rico is subject to the requirements of the State CDBG 
program, as modified by applicable waivers and alternative 
requirements. Section 102(a)(2) of the HCDA defines ``state'' to 
include the Commonwealth of Puerto Rico (42 U.S.C. 5302(a)(2)). HUD 
waives the provisions of 24 CFR part 570, subpart F to authorize the 
USVI to administer its CDBG-DR allocation in accordance with the 
regulatory and statutory provisions governing the State CDBG program, 
as modified by this notice. This includes the requirement that the 
aggregate total for administrative and technical assistance 
expenditures by the USVI must not exceed 5 percent of any CDBG-DR grant 
made pursuant to the Appropriations Act, plus 5 percent of program 
income generated by the grant.
    Funds allocated pursuant to this notice shall not be subject to 
previous notices that govern CDBG-DR or CDBG Mitigation (CDBG-MIT) 
funds awarded to Puerto Rico or the USVI. The use of other CDBG-DR 
funds or CDBG-MIT funds, allocated pursuant to other notices for 
electrical power system improvements, shall be subject to the 
requirements of the notices governing the use of those funds and to the 
requirements established in section V.B.4 of this notice.
    All references in this notice pertaining to timelines and/or 
deadlines are in terms of calendar days unless otherwise noted.

IV. Overview of Grant Process

    The grant process outlined below aligns with the typical process 
for awarding CDBG-DR grants. To begin expending CDBG-DR funds pursuant 
to this notice, the following steps are required:
    <bullet> Grantee develops or amends its citizen participation plan 
for disaster recovery to include the grant for electrical power system 
improvements in accordance with the requirements in section V.A.3 of 
this notice.
    <bullet> Grantee consults with stakeholders, including the required 
consultation with the Federal members of the Energy Technical 
Coordination Team (TCT) described in section V.A.2.e.(1) of this 
notice, affected local government public utilities, rural electrical 
cooperatives, regulators, commercial and industrial users of the 
system, residential customers and public interest groups representing 
residential customers of the system and others pursuant to section 
V.A.6 of this notice.
    <bullet> Grantees under this notice have previously submitted 
materials in support of the Department's certification of the 
proficiency of its financial controls and procurements processes and 
the adequacy of its procedures to prevent any duplication of benefits 
as defined by section 312 of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (Stafford Act), 42 U.S.C. 5155, to ensure 
timely expenditure of funds, maintain a comprehensive website regarding 
all assisted mitigation activities, and detect and prevent waste, 
fraud, and abuse of funds for purposes of its CDBG-MIT grant. 
Accordingly, as described in section V.A.1.a., for CDBG-DR grants 
governed by this notice, HUD will rely on the grantees' submissions and 
certifications in support of the CDBG-MIT certifications, provided, 
however, that each grantee shall be required to submit updates to 
reflect any material changes in its certification submissions, as 
necessary. Grantees must submit the required information within 60 days 
of the applicability date of this notice.
    <bullet> Grantee publishes its action plan for electrical power 
system improvements on the grantee's required disaster recovery website 
for no less than 45 calendar days to solicit public comment and 
convenes not less than two public hearings on the proposed plan. The 
grantee may convene virtual hearings in lieu of in-person hearings, 
pursuant to section V.A.3.b. of this notice.
    <bullet> Grantee responds to public comments and submits its action 
plan within 120 days of the applicability date of this notice (which 
includes Standard Form 424 (SF-424) and certifications), its 
implementation plan and capacity assessment in accordance with the 
requirements in section V.A.1.b, and projection of expenditures and 
outcomes to HUD in accordance with V.A.2.g.
    <bullet> Grantee may begin to enter activities into the Disaster 
Recovery Grant Reporting (DRGR) system before or after submission of 
the action plan to HUD. Any activities that are changed as a result of 
HUD's review must be updated once HUD approves the action plan.
    <bullet> HUD reviews (within 60 days from the date of receipt) the 
action plan according to criteria identified in this notice, and either 
approves or disapproves the plan.
    <bullet> HUD will send an action plan approval letter, grant 
conditions, and an unsigned grant agreement to the grantee. If the 
action plan is not approved, HUD will notify the grantee of the 
deficiencies. The grantee must then

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resubmit the action plan within 45 days of the notification.
    <bullet> Grantee must sign and return the grant agreement to HUD.
    <bullet> HUD will sign the grant agreement and establish the 
grantee's CDBG-DR line of credit amount to reflect the total amount of 
available funds. Grantee posts the final HUD-approved action plan on 
its official website.
    <bullet> Grantee enters the activities from its approved action 
plan into the DRGR system if it has not previously done so and submits 
its DRGR action plan to HUD (funds can be drawn from the line of credit 
only for activities that are established in the DRGR system).
    <bullet> Grantee may draw down CDBG-DR funds from its line of 
credit after the Responsible Entity completes applicable environmental 
review(s) pursuant to 24 CFR part 58 or adopts another Federal agency's 
environmental review as authorized under the Appropriations Act, and, 
as applicable, receives from HUD the Authority to Use Grant Funds 
(AUGF) form.
    <bullet> Substantial amendments are subject to requirements in 
V.A.2.d., including a 30-day public comment period and posting the 
substantial amendment to the grantee's website followed by a 60-day 
review period for HUD.

V. Applicable Rules, Statutes, Waivers, and Alternative Requirements

    This section of the notice describes requirements established by 
the Appropriations Act, as well as waivers and alternative requirements 
that apply to the CDBG-DR funds for electrical power system 
improvements. These waivers and alternative requirements provide 
flexibility in program design and implementation to support the 
grantees' prudent implementation of activities to address necessary 
expenses and mitigate disaster risks to their electrical power systems, 
improve system reliability, resiliency, efficiency, sustainability and 
address each system's long-term financial viability, while ensuring 
that statutory requirements are met. For each waiver and alternative 
requirement, the Secretary has determined that good cause exists and 
that the waivers and alternative requirements are not inconsistent with 
the overall purpose of title I of the HCDA.
    The Appropriations Act authorizes the Secretary to waive or specify 
alternative requirements for any provision of any statute or regulation 
that the Secretary administers in connection with the obligation by the 
Secretary, or use by the recipient, of these funds, except for 
requirements related to fair housing, nondiscrimination, labor 
standards, and the environment. HUD also has regulatory waiver 
authority under 24 CFR 5.110, 91.600, and 570.5.
    Grantees may request additional waivers and alternative 
requirements from the Department as needed to address specific needs 
related to their electrical power system improvement activities. 
Grantee requests for waivers and alternative requirements must be 
accompanied by relevant data to support the request and must 
demonstrate to the satisfaction of the Department that there is good 
cause for the waiver or alternative requirement. Grantees must work 
with their assigned HUD CPD representative to request additional 
waivers or alternative requirements and such waivers and alternative 
requirements shall be subject to approval by HUD headquarters. Except 
when noted, the waivers and alternative requirements described below 
apply only to CDBG-DR funds subject to the requirements of this notice. 
Waivers and alternative requirements must be published in the Federal 
Register and are effective five (5) days after publication.
    Except as described for CDBG-DR funds, statutory and regulatory 
provisions governing the State CDBG program shall apply to both Puerto 
Rico and the USVI including but not limited to, the principle of 
maximum feasible deference as provided at 24 CFR 570.480. Statutory 
provisions for the State CDBG program (title I of the HCDA) can be 
found at 42 U.S.C. 5301 et seq. State CDBG regulations can be found at 
24 CFR part 570. References to the action plan in these regulations 
refer to the action plan required by this notice.

V.A. Grant Administration and Action Plan Requirements

    V.A.1. Pre-award evaluation of management and oversight of funds. 
HUD plans to work with other Federal agencies and the grantee to 
closely consult with and provide coordinated federal technical 
assistance to the grantee in its planning and implementation of all 
aspects of the electrical power system improvements to be funded with 
CDBG-DR grants described in this notice. This coordinated Federal 
technical assistance aligns with the view that these electrical power 
system improvements by grantees will require a high level of 
interaction between HUD, the grantee, and other Federal agencies in 
order to ensure long-term performance and compliance. In establishing 
an alternative eligible activity for electrical power system 
improvements in section V.A.8.a. of this notice, HUD recognizes the 
unique nature of the activities to be funded with this allocation, the 
extent to which implementation of this activity is dependent upon each 
grantee's public utility, and the financial management and program 
risks to grantees that are presented by the on-going operational and 
financial challenges of their respective public utilities. Accordingly, 
HUD will also give increased attention to the financial and operational 
capacity of each grantee's subrecipients, subgrantees, and any other 
departments and divisions of the grantee that will carry out activities 
funded with this grant, including each of the public utilities that 
currently operate and maintain each grantee's electrical power system.
    Consistent with 2 CFR part 200, HUD will use grant conditions to 
reduce risk, to contribute to improved outcomes in the use of this 
CDBG-DR funding, and to help strengthen grantee management practices 
and improve the grantee's capacity to respond to future disasters. 
Among the conditions which may be established are requirements for 
notifying HUD of the planned disposition of components of the 
electrical power system acquired or improved with CDBG-DR funds and for 
the management of any program income resulting from such disposition 
and standards for the procurement of electrical power system 
improvements, including those established by the U.S. Department of 
Agriculture's Rural Utility Service.
    As electrical power system improvements necessarily rely on the 
grantee's public utility, and for grantees that are considered by HUD 
to have ``unmitigated high risks,'' that impact their ability to carry 
out large-scale projects, HUD, in consultation with the U.S. Department 
of Treasury, may consider possible grant conditions. These grant 
conditions may include but are not limited to requiring the grantee to 
provide periodic reports on how the expenditure of CDBG-DR funds is 
contributing to the financial stability of the public utility including 
steps the utility is taking (e.g., cost-cutting measures, increases in 
operational efficiency, increases to customer base and investments of 
public utility funds in the system).
    The Department may, based on its assessment of risk, restrict the 
availability of funds until such time as various grant conditions are 
met by a grantee. Grantees are reminded that HUD may, at any time, 
establish new grant conditions based on the risk arising from the 
performance of a grantee or its subrecipients or may

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pursue remedies based on performance consistent with subpart O of the 
CDBG regulations (including corrective and remedial actions in 24 CFR 
570.910, 570.911, and 570.913) or under subpart I of the CDBG 
regulations at 24 CFR part 570 in accordance with the waiver and 
alternative requirement in V.A.20.
    V.A.1.a. Certification of financial controls and procurement 
processes, and adequate procedures for proper grant management. The 
Appropriations Act requires that the Secretary certify, in advance of 
signing a grant agreement, that the grantee has in place proficient 
financial controls and procurement processes and has established 
adequate procedures to prevent any duplication of benefits as defined 
by section 312 of Stafford Act, 42 U.S.C. 5155, to ensure timely 
expenditure of funds, maintain a comprehensive website regarding all 
disaster recovery activities assisted with these funds, and detect and 
prevent waste, fraud, and abuse of funds. Sections V.A.1.a. and VI.1.k. 
of the August 30, 2019 CDBG-MIT Federal Register notice (84 FR 45844-45 
and 45869) required CDBG-MIT grantees to provide submissions that offer 
evidence that its controls, processes, and procedures are proficient 
and adequate, and a related certification from the grantee to the 
Secretary. To enable the Secretary to make this certification, HUD will 
rely on the grantee's submissions and certifications to the Secretary 
previously provided for the grantee's CDBG-MIT grant, provided, 
however, that HUD's approval will be conditioned on the requirement 
that the grantee must update its previous submissions to reflect any 
material changes.
    If this CDBG-DR grant is to be administered by an agency that does 
not administer a grantee's CDBG-MIT grant, the administering agency for 
this CDBG-DR grant must submit the documentation for the certification 
of financial controls and procurement processes, and adequate 
procedures for proper grant management as described in Sections 
V.A.1.a. of the August 30, 2019 CDBG-MIT Federal Register notice (84 FR 
45844-45).
    Grantees must submit the required information within 60 days of the 
applicability date of this notice.
    V.A.1.b. Implementation plan and capacity assessment. CDBG-DR funds 
typically require grantees to adopt new roles and responsibilities 
within their organization and to establish new working relationships 
with other entities external to the organization. The use of CDBG-DR 
funds for electrical power system improvements presents unique risks 
for grantees, requiring enhanced levels of technical expertise and 
close coordination among multiple agencies of the grantee, federal 
agencies, public utilities, local governments, and other stakeholders. 
Before signing a grant agreement, HUD requires each grantee to 
demonstrate that it has sufficient capacity to manage these funds and 
the associated risks.
    Evidence of grantee management capacity must be provided through 
the grantee's implementation plan and capacity assessment submitted 
with the grantee's action plan. These submissions must meet the 
criteria in (1) and (2) below. A grantee has sufficient management 
capacity if it submits documentation showing that each of the following 
criteria are satisfied:
    (1) Timely information on applications. A grantee has adequate 
procedures to enable applicants to determine the status of their 
applications for CDBG-DR assistance, at all phases, if its procedures 
indicate methods for communication (i.e., website, telephone, case 
managers, letters, etc.), ensure the accessibility and privacy of 
individualized information for all applicants, indicate the frequency 
of applicant status updates, and identify which personnel or unit is 
responsible for informing applicants of the status of CDBG-DR 
applications.
    (2) Implementation plan. To enable HUD to assess risk as described 
in 2 CFR 200.206, the grantee must submit an implementation plan to the 
Department. The plan must describe the grantee's capacity to carry out 
electrical power system improvement activities, how it will address any 
capacity gaps, and how agency staff of the grantee that administers 
other CDBG-DR funds and CDBG-MIT funds will work with other agencies of 
the grantee that administer the Federal Emergency Management Agency 
(FEMA) funded mitigation and public assistance funds and other 
Federally funded activities that support electrical power system 
improvements. Additionally, grantees must identify any management and 
operational reforms that have been or will be implemented by the 
grantee or its planned subrecipients, subgrantees, and any other 
agencies of the grantee that will carry out a portion of the grant, in 
order to improve operational efficiency, accountability, and the 
outcomes associated with the use of CDBG-DR funds for electrical power 
system improvements. HUD will determine a plan is adequate to reduce 
risk if, at a minimum, it adequately addresses (a) through (f) below:
    (a) Capacity assessment. The grantee has assessed its capacity to 
carry out electrical power system improvement activities and has 
developed a timeline with milestones describing when and how the 
grantee will address all capacity gaps that are identified. The 
assessment must include a list of any open CDBG-DR or CDBG-MIT findings 
by HUD or its Office of the Inspector General and an update on the 
corrective actions undertaken to address each finding. HUD may include 
additional requirements in the grantee's grant conditions to prevent 
similar findings for this grant.
    (b) Staffing. The plan shows that the grantee has accurately 
assessed staff capacity and identified adequate personnel who have 
documented experience in the timely development and implementation of 
electrical power system improvements, including in particular, the 
distribution, substation, and communication components of the system; 
staff that are responsible for procurement and contract management, 
including compliance with the regulations implementing Section 3 of the 
Housing and Urban Development Act of 1968 (24 CFR part 75) (Section 3); 
staff with experience and capacity in compliance with fair housing and 
environmental requirements; and personnel responsible for monitoring, 
quality assurance, and proper financial management. The grantee's 
staffing plan may include the procurement of external consulting 
services with expertise in the development and implementation of 
electrical power system improvements. An adequate plan must also 
describe the grantee's internal audit function and the extent to which 
the internal audit function has been enhanced to account for the 
technical and specialized nature of the electrical power system 
improvements to be funded, including responsible audit staff reporting 
independently to the chief elected official or executive officer or 
governing board of the designated administering entity. To help 
complete this staffing exercise, grantees may choose to use the 
``Staffing Analysis Worksheet'' available on the HUD Exchange at 
https://www.hudexchange.info/programs/cdbg-dr/toolkits/program-launch/#capacity.
    (c) Internal and interagency coordination. The plan describes how 
the grantee will ensure effective communication and coordination 
between different departments and divisions within the grantee's 
organizational structure and other grantee agencies and governmental 
entities involved in the design and implementation of electrical power 
system improvement planning and projects; agencies or divisions

[[Page 32685]]

responsible for environmental reviews; grantee agencies responsible for 
the development and implementation of components of the planned 
electrical power system improvements; local and regional planning as 
well as other agencies to be engaged by the grantee in order to ensure 
consistency and the integration of CDBG-DR electrical power system 
improvements with local and regional planning and development 
activities. This includes the required consultation with the Federal 
members of the TCT on the action plan as described in section 
V.A.2.e.(1) of this notice. In order to illustrate compliance with the 
requirement at V.A.2.e.(1), each grantee shall document in its 
implementation plan its required consultations with the Federal members 
of the TCT and its efforts to coordinate the various sources of federal 
assistance provided for electrical power system improvements.
    (d) Subrecipients, public utilities, and other entities. The 
implementation plan must describe the criteria to be used by the 
grantee to evaluate the capacity of all potential subrecipients or 
other agencies of the grantee that will receive a subaward or otherwise 
carry out activities funded with this grant, including criteria 
specific to the designation of any public utility that is anticipated 
to receive funding to implement electrical power system improvements. 
These criteria shall include an evaluation of the capacity of 
subrecipient or other entities to coordinate electrical power system 
improvements with other infrastructure activities of the grantee.
    The plan must also indicate how the grantee will monitor other 
agencies of the grantee that will administer the funds, how the grantee 
will enhance its monitoring of subrecipients, other agencies of the 
grantee, contractors, and other program participants, how and why 
monitoring is to be conducted, and which items are to be monitored.
    (e) Technical assistance. The grantee's implementation plan 
describes how it will procure and provide technical assistance for any 
personnel that the grantee does not employ at the time of action plan 
submission, and to fill their gaps in knowledge or technical expertise 
required for successful and timely implementation where identified in 
the capacity assessment.
    (f) Accountability. The grantee's plan identifies the lead agency 
responsible for implementation of the CDBG-DR grant and indicates that 
the head of that agency will report directly to the chief executive 
officer of the grantee.
    HUD will monitor the grantee's use of funds for consistency with 
the action plan, implementation plan and capacity assessment, and 
whether a grantee meets the performance and timeliness objectives 
established therein. A material failure to comply with the grantee's 
approved action plan or implementation plan and capacity assessment 
will prompt HUD to exercise any of the corrective or remedial actions 
described in section V.A.20.
    V.A.2. CDBG-DR Action Plan waiver and alternative requirement. 
Requirements for CDBG action plans, in 42 U.S.C. 5304(a)(1), 42 U.S.C. 
5304(m), 42 U.S.C. 5306(d)(2)(C)(iii), 42 U.S.C. 5306(a)(1), 42 U.S.C. 
12705(a)(2), 24 CFR 91.320, and 24 CFR 91.220, are waived for these 
CDBG-DR grants. Instead, grantees must submit to HUD a disaster 
recovery action plan for electrical power system improvements which 
will describe activities that conform to applicable requirements as 
specified in this notice. The Secretary may disapprove an action plan 
as substantially incomplete if it is determined that the plan does not 
satisfy all the required elements identified in this notice.
    V.A.2.a. Action Plan. The action plan must identify the proposed 
use of all grant funds, including criteria of eligibility to be used by 
the grantee to prioritize the expenditure of CDBG-DR funds for the 
specific components of its electrical power system; how the uses 
address necessary expenses related to disaster relief, long-term 
recovery, restoration of infrastructure and housing, and economic 
revitalization; and how the uses are to be determined to improve the 
cost-effectiveness, reliability, resilience, efficiency, sustainability 
and long-term financial viability of electrical power systems.
    The use of funds shall be consistent with the electrical power 
system unmet needs identified by the grantee in its action plan. Funds 
dedicated for uses not described in accordance with this section will 
not be obligated until the grantee submits, and HUD approves, an action 
plan amendment programming the use of those funds, at the necessary 
level of detail to allow the public and HUD to identify and understand 
the use of all funds for specific activities. In the unmet needs 
assessment and in its description of the connection of electrical power 
system improvements to unmet needs, grantees shall reference any long-
term infrastructure plan of the grantee's public utility developed in 
consultation with the FEMA, for the use of FEMA funds for electrical 
power system improvements; or with any utility integrated resource plan 
or other strategic plan adopted by the grantee for the development of 
its energy infrastructure, as such plans may be amended from time to 
time. The action plan must consider and incorporate, as appropriate, 
electrical power system industry standards established by relevant 
Federal agencies and related bodies, including, but not limited to, 
requirements set by the USDA Rural Utilities Service (RUS), National 
Institute of Standards and Technology, and North American Electrical 
Reliability Corporation. In drafting the action plan, grantees shall 
consult with the Federal members of the TCT as provided in section 
V.A.2.e. of this notice. HUD will review and consider the comments from 
the Federal members of the TCT, obtained by the grantee, on the action 
plan.
    HUD is establishing an additional alternative requirement that 
grantees shall implement CDBG-DR electrical power system improvement 
activities in accordance with their action plans and pursuant to the 
descriptions provided by the grantee in the action plan in response to 
elements (1) through (12) below. To the extent that the terms of any 
concessionary agreement or receivership governing a public utility of 
the grantee are not consistent with the requirements of this notice, 
the terms of this notice shall continue to govern the CDBG-DR funds 
subject to this notice and their use for electrical power system 
improvements.
    (1) Electrical Power System Unmet Needs Assessment. Each grantee 
must develop an unmet needs assessment to inform the use of CDBG-DR 
funds for electrical power system improvements. The action plan must 
include an estimate of unmet needs based on planned electrical power 
system improvements, including mitigation and resilience measures, that 
are not likely to be addressed by other sources of funds. Grantees must 
account for the various forms of assistance available to, or likely to 
be available for such improvements, using the most recent available 
data to estimate the portion of need unlikely to be addressed by 
insurance proceeds, other Federal assistance, or any other funding 
sources (thus producing an estimate of unmet need). Grantees must cite 
data sources for the assessment. At a minimum, the unmet needs 
assessment must: (i) Evaluate all aspects of the electrical power 
system that were damaged by the disaster and that are at greatest risk 
from future disasters; (ii) estimate unmet needs to ensure that CDBG-DR 
funds are planned for uses that meet electrical power system needs that 
are not likely to be addressed by FEMA or other sources of funds by 
accounting for the various forms of assistance available to,

[[Page 32686]]

or likely to be available to, the grantee or its subrecipients (e.g., 
obligated and projected FEMA funds, public utility resources, other 
grantee funds); and (iii) account for the costs of incorporating 
mitigation and resilience measures to protect against the anticipated 
effects of future extreme weather events and other natural hazards and 
long-term risks and the costs of incorporating improvements to address 
long term carbon reduction goals.
    CDBG-DR funds may be used to reimburse planning and administrative 
costs for developing the action plan, including the needs assessment, 
environmental review, and citizen participation requirements. Although 
the needs assessment for these CDBG-DR funds necessarily differs 
somewhat from what is conducted by grantees for CDBG-DR allocations 
provided for housing, infrastructure, and economic revitalization 
needs, HUD has developed a Disaster Impact and Unmet Needs Assessment 
Kit that may be helpful to grantees as a guide through a process for 
identifying and prioritizing critical unmet needs for electrical power 
system improvements. The Kit is available on the HUD Exchange website 
at: https://www.hudexchange.info/resource/2870/disaster-impact-and-unmet-needs-assessment-kit/. In preparing the needs assessment, 
grantees are advised to review the process and methodology previously 
used to assess the grantee's unmet infrastructure needs for its recent 
allocations of CDBG-DR funds for disaster recovery.
    Electrical power system improvement needs evolve over time, and 
grantees must amend the needs assessment and action plan as additional 
resources become available, including through any additional needs that 
may be identified through an infrastructure plan developed for the use 
of FEMA Public Assistance funds for electrical power system 
improvements, through any utility integrated resource plan for Puerto 
Rico, and through any equivalent strategy or development plan adopted 
by the USVI for its energy sector, as such strategy or plans may be 
amended from time to time.
    (2) Connection of Electrical Power System Improvements to Unmet 
Needs and Expenditures. The grantee must address how the proposed 
expenditures for each distinct functional component of its planned 
electrical power system improvements, as identified in the definition 
in section V.A.8.a.(ii) of this notice, addresses an estimated unmet 
need identified in its electrical power system unmet needs assessment. 
For each functional component, the grantee shall also identify the 
amount of funds to be used as non-federal match for that component.
    The grantee's action plan (and subsequent amendments) must include 
a single chart or table that illustrates, at the most practical level, 
how all funds are budgeted (e.g., by program, subrecipient, grantee-
administered activity, or other category) and that identifies each 
component of the electrical power system to be funded. The budget shall 
identify the pre-development, planning, construction, and installation 
costs of each component; the percentage of funds to be expended for 
each component; the percentage of funds for each component that are to 
be expended as the non-Federal match for other Federal funds; and a 
timeline for the full expenditure of each system component and for the 
full grant allocation. Each grantee shall describe how its proposed 
expenditures are consistent with any infrastructure plan developed by 
the grantee's public utility in consultation with FEMA for the 
expenditure of Public Assistance funds for electrical power system 
improvements, with any utility integrated resource plan adopted by 
Puerto Rico, and any strategy or development plan adopted by the USVI 
for its energy sector, as such plans may be amended from time to time.
    (3) Long-term Planning Considerations. The grantee must describe 
how it plans to promote local and regional long-term planning and 
development as informed by its electrical power system needs 
assessment.
    (4) Coordination of Electrical Power System Improvements and 
Planned Leverage. Each grantee must describe how it will align its 
electrical power system improvements with other planned improvements to 
its other energy systems and its other infrastructure development 
efforts and foster the potential for additional electrical power system 
funding from multiple sources, such as leveraging other existing 
capital improvement projects and the potential for private investment. 
Grantees must describe how it plans to foster the potential to leverage 
these CDBG-DR funds with other funding provided through public-private 
partnerships and by other Federal, State, local, public utility, 
private, and nonprofit sources to generate more effective and 
comprehensive mitigation and electrical power system improvement 
outcomes.
    Examples of other Federal sources include funding provided by HUD, 
FEMA (specifically the Public Assistance Program and the Hazard 
Mitigation Grant Program), the Economic Development Administration, 
U.S. Army Corps of Engineers (USACE), the Department of Transportation, 
and the Department of Agriculture. The grantee must describe how it 
will seek to maximize the outcomes of electrical power system 
improvements and the degree to which CDBG-DR funds are effectively 
leveraged, for example through public-private partnerships or 
partnerships with local, community and neighborhood organizations and a 
commitment of funding by the grantee. The grantee shall identify any 
leveraged funds for each electrical power system improvement activity 
in the DRGR system.
    (5) Plans to Minimize Displacement and Ensure Accessibility. The 
grantee must describe how it plans to minimize displacement of persons 
or entities, and assist any persons or entities displaced through its 
electrical power system improvement activities. This description shall 
focus on proposed activities that may directly or indirectly result in 
displacement and the assistance that shall be required for those 
displaced. The grantee is reminded that it must take into consideration 
the functional needs of persons with disabilities in the relocation 
process. Guidance on relocation considerations for persons with 
disabilities may be found in Chapter 3 of HUD's Relocation Handbook 
1378.0 available on the HUD Exchange website at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/cpd/13780.
    (6) Construction and Resiliency Standards. Each grantee must 
describe how it plans to: (a) Emphasize quality, durability, 
resiliency, energy efficiency and sustainability in its electrical 
power system improvements; (b) promote sound, sustainable long-term 
recovery planning informed by a post-disaster evaluation of hazard 
risk, especially construction standards and land-use decisions that 
reflect responsible floodplain and wetland management and take into 
account continued sea level rise--this information should be based on 
the history of FEMA flood mitigation efforts and take into account 
projected increase in sea level (if applicable) and the frequency and 
intensity of precipitation events; and (c) adhere to the elevation 
requirements established in section V.B.1. of this notice, if 
applicable. For grantees addressing flood risks, the grantee must 
describe how it will document its decision to elevate structures 
associated with its electrical power system improvements and how it 
evaluated and

[[Page 32687]]

determined the elevation to be cost reasonable relative to other 
alternatives or strategies, such as the demolition of substantially 
damaged structures with reconstruction of an elevated structure on the 
same site or infrastructure improvements to reduce the risk of loss of 
life and property.
    (7) Operation and Maintenance Plans. Each grantee must describe its 
plan for ensuring the long-term operation and maintenance (O&M) of the 
electrical power system improvements funded with CDBG-DR funds. The 
grantee shall specify the non-CDBG sources of funding to be used for 
the O&M of the electrical power system improvements, and the grantee's 
plan and plans of its intended subrecipients to contribute to the 
proposed electrical power system improvements with non-CDBG sources of 
funding. The grantee shall describe how it will use reserve funds, 
borrowing authority or retargeting of existing financial resources to 
support the O&M plan, and how it plans to ensure that public utility 
resources and other source of funding, as applicable, are committed to 
the O&M of improvements assisted with CDBG-DR funds, over the useful 
life of the improvements. The grantee must also describe in its action 
plan how it plans to ensure and monitor funding of long-term O&M for 
CDBG-DR electrical power system improvements. Funding options might 
include grantee funds, local and public utility resources, borrowing 
authority, or retargeting of other existing financial resources.
    Grantees must describe any proposed changes to existing taxation 
policies or collection practices, or changes to public utility revenue 
billing and collection and other financing policies that are to be used 
to support the O&M plan. If operations and maintenance plans are 
reliant on any proposed changes to existing taxation policies, tax 
collection practices, or changes to public utility revenue billing and 
collection, those changes and relevant milestones should be expressly 
included in the action plan. Additionally, the grantee must describe 
any State, local, or other resources (e.g., public utility financing) 
that have been identified for the operation and maintenance costs of 
electrical power system improvements assisted with CDBG-DR funds.
    With respect to this element of the action plan, HUD advises 
grantee and subrecipients that HUD may impose a grant condition based 
on risk that requires the grantee to establish or adopt standards for 
O&M of the functional components of the electrical power system, 
including recognized standards for vegetation management.
    (8) Cost Verification. Each grantee must describe its controls for 
assuring that electrical power system improvement costs, including 
acquisition and construction costs, are reasonable and consistent with 
market costs at the time and place of the acquisition or construction.
    Grantees are encouraged to consider the use of an independent, 
qualified third-party engineer, construction manager, or other 
professional (e.g., a cost estimator) to verify the planned project 
specifications and costs and any significant changes to the 
specifications or costs of the contract (e.g., change orders) during 
implementation are reasonable. The method and degree of analysis may 
vary dependent upon the circumstances surrounding a particular project 
(e.g., project type, risk, costs), but the description, at a minimum, 
must address controls for CDBG-DR electrical power system improvements 
above a certain total project cost threshold identified by the 
grantee's cost verification requirements.
    (9) Intergovernmental Coordination. Grantees must describe how it 
will coordinate with other relevant governmental agencies of Puerto 
Rico or the USVI, as applicable, units of local government, public 
utilities and rural electrical cooperatives, and other entities, to 
assure the consistency of all CDBG-DR funded electrical power system 
improvements with other disaster recovery and mitigation planning and 
development activities.
    (10) Integration with Disaster Recovery and Mitigation Funds. 
Grantees must describe how they will integrate the electrical power 
system improvements into on-going and planned rebuilding, recovery, and 
mitigation activities, and the extent to which the proposed electrical 
power system improvement activities are consistent with the objectives 
outlined in other CDBG-DR or CDBG-MIT action plans, and in regionally 
or locally established plans and policies that are designed to reduce 
future risks to the jurisdiction.
    (11) Vulnerable Populations, Underserved Communities, and Low- and 
Moderate-Income Persons. The grantee must assess how the use of the 
CDBG-DR funds and its planning decisions will impact vulnerable 
populations, protected classes under fair housing and civil rights 
laws, and underserved communities that were economically distressed 
prior to the disaster. Based on this assessment, grantees must describe 
in the action plan whether their programs and projects will provide 
electrical power system improvements to communities with concentrations 
of vulnerable populations, including low-income rural areas, racially 
and ethnically concentrated areas as well as concentrated areas of 
poverty, and specify the activities that the grantees plans to 
undertake to assist in providing lower electricity rates or increasing 
reliability, quality, and durability of electrical infrastructure for 
these populations or areas.
    HUD generally defines vulnerable populations as a group or 
community whose circumstances present barriers to obtaining or 
understanding information or accessing resources, and grantees must 
identify those populations in the action plan through their assessment. 
The term ``underserved communities'' refers to populations sharing a 
particular characteristic, as well as geographic communities, that have 
been systematically denied a full opportunity to participate in aspects 
of economic, social, and civic life.
    The grantee shall also describe how the planned electrical power 
system improvements will meet the overall benefit requirement for low- 
and moderate-income benefit as provided in section V.A.8.c. of this 
notice.
    (12) Climate Considerations. Grantees must describe how the 
electrical power system improvements will be designed and implemented 
to address the impacts of climate change, including any nature-based 
solutions and other improvements that will enhance the ability of the 
grantee to implement renewable and clean energy sources and strategies, 
and align with long-term goals for decarbonizing the electricity 
sector. Nature-based solutions and improvements shall mean natural 
processes or systems, or engineered systems that mimic natural systems 
and processes, that are integrated into investments in electrical power 
system improvements to enhance the resilience of the electrical power 
system to future disasters.
    V.A.2.b. Review and Approval of Action Plan. The action plan 
(including SF-424 and certifications) must be submitted to HUD for 
review and approval. Grantees must submit an action plan within 120 
days of the applicability date of this notice, unless the grantee has 
requested, and HUD has approved an extension of the submission 
deadline. HUD will review each action plan within 60 days from the date 
of receipt. The Secretary may disapprove an action plan as 
substantially incomplete if it is determined that the action plan does 
not meet the requirements of this notice.

[[Page 32688]]

    V.A.2.c. Clarity of action plan. Every grantee must include 
sufficient information so that all interested parties will be able to 
understand and comment on the action plan and, if applicable, be able 
to prepare responsive applications to the grantee.
    V.A.2.d. Amending the action plan. The grantee must amend its 
action plan to update its electrical power system needs assessment, 
modify, or create new activities, or reprogram funds. Each amendment 
must be highlighted, or otherwise identified, within the context of the 
entire action plan. The beginning of every action plan amendment must 
include: (1) A section that identifies exactly what content is being 
added, deleted, or changed; (2) a chart or table that clearly 
illustrates where funds are coming from and where they are moving to; 
(3) a revised budget allocation table that reflects the entirety of all 
funds, as amended; and (4) a description of how the amendment is 
consistent with a grantee's electrical power system needs assessment. 
Every amendment to the action plan (substantial and non-substantial) 
must be numbered sequentially and posted on the grantee's website. A 
grantee's current version of its entire action plan must be accessible 
for viewing as a single document at any given point in time, rather 
than the public or HUD having to view and cross-reference changes among 
multiple amendments.
    (1) Substantial amendment. The grantee must provide a 30-day public 
comment period and reasonable method(s) (including electronic 
submission) for receiving comments on such amendments. In its action 
plan, each grantee must specify criteria for determining what changes 
in the grantee's plan constitute a substantial amendment to the plan. 
At a minimum, the following modifications will constitute a substantial 
amendment: A change in program benefit or eligibility criteria; the 
addition or deletion of an activity or of a component of the electrical 
power system improvements; or the allocation or reallocation of a 
monetary threshold specified by the grantee in its action plan. The 
grantee may substantially amend the action plan if it follows the same 
procedures required for CDBG-DR funds for the preparation and 
submission of an action plan in this notice, provided, however, that a 
substantial action plan amendment shall require a 30-day public comment 
period and does not require public hearings.
    (2) Non-substantial amendment. The grantee must notify HUD, but is 
not required to seek public comment, when it makes any plan amendment 
that is not substantial. HUD must be notified at least 5 business days 
before the amendment becomes effective. The Department will acknowledge 
receipt of the notification of non-substantial amendments via email 
within 5 business days. Non-substantial amendments shall be numbered in 
sequence with other non-substantial and substantial amendments and 
incorporated into the action plan.
    V.A.2.e. Additional consultation requirements. To encourage 
effective coordination between the grantees and their Federal partners 
in the planning and implementation of electrical power system 
improvements, the alternative requirement in paragraph V.A.6. requires 
the grantee to comply with the consultation requirements in this 
section. Each grantee must consult not less than quarterly with the 
Federal members of the Energy Technical Coordination Team (TCT), co-led 
by FEMA and the U.S. Department of Energy (DOE). Such consultation 
shall be required during the grant period of performance unless HUD 
notifies the grantee that consultation is no longer required. HUD will 
provide the grantee with instructions for consultation.
    A grantee's consultation with the TCT must include soliciting and 
considering input from the TCT's Federal members on one or more of the 
areas defined below:
    (1) The action plan required by this notice prior to the grantee's 
publication of the plan and on any subsequent substantial amendments to 
the action plan, including the grantee's proposed budget for electrical 
power system improvements to be funded with CDBG-DR funds as described 
in section V.A.2.a.(2) of this notice;
    (2) The evaluation of the capacity of any public utility that will 
receive a subaward or otherwise carry out a portion of the grant and 
the mitigation of risk associated with the public utility's use of 
CDBG-DR funds. Consultation with the TCT Federal members shall occur 
before entering a subaward or other agreement with the public utility, 
and shall include: (a) Providing the TCT Federal members with the 
grantee's assessment of the public utility's financial and operational 
capacity; (b) a request for recommendations for appropriate controls to 
mitigate the financial management, program, and other risks of 
noncompliance related to the public utility's use of Federal funding 
for electrical power system improvements; and (c) a request for the 
TCT's recommendations for improving the public utility's operational 
capacity;
    (3) The identification of opportunities to sequence and coordinate 
permits and approvals necessary to carry out CDBG-DR funded electrical 
power system improvement activities, including environmental reviews;
    (4) The technical evaluation of proposed electrical power system 
improvements using models and other sources of expert assistance 
available through TCT Federal members; and
    (5) The implementation of applicable electrical power system 
industry standards and the commercial availability of system components 
that the grantee proposes to fund.
    HUD may engage with the individual federal agencies in the TCT to 
provide additional technical support for grantee electrical power 
system improvements, as needed. Notwithstanding the consultation and 
advisory roles that may be provided by FEMA and DOE as co-agency TCT 
leads, the Department of the Treasury as financial lead, and other 
federal partner agencies, each federal agency shall retain the 
authorities and responsibilities provided to that agency pursuant to 
federal laws and regulations.
    V.A.2.f. Waiver of 45-day review period for action plan and 
substantial action plan amendments. The Department recognizes the 
unique purposes and complex requirements of this CDBG-DR allocation for 
electrical power system improvements and that these funds represent an 
opportunity for grantees to use this assistance in areas impacted by 
the 2017 disasters. While HUD may disapprove an action plan or 
substantial action plan amendment if it is substantially incomplete or 
for other reasons identified in 24 CFR 91.500, HUD works with grantees 
to resolve or provide additional information during the review period 
to avoid the need to disapprove an action plan or substantial action 
plan amendments. There are often many issues related to the action plan 
or substantial action plan amendments that can be fully resolved via 
further discussion and revision during an extended review period, 
rather than through HUD's disapproval of the action plan or amendments, 
which in turn would require grantees to take additional time to revise 
and resubmit their action plan or respective amendments and delay 
recovery. As such, the Secretary has determined that good cause exists 
and waives 24 CFR 91.500(a) to extend HUD's review period for action 
plan and substantial amendments from 45 days to 60 days.
    V.A.2.g. Projection of expenditures and outcomes. Each grantee must 
submit projected expenditures and outcomes as part of the action plan. 
The

[[Page 32689]]

projections must be based on each quarter's expected performance--
beginning with the quarter funds are available to the grantee and 
continuing each quarter until all funds are expended. The projections 
will enable HUD, the public, and the grantee to track proposed versus 
actual performance. The projections must also be clearly and 
conspicuously displayed on the grantee's website. If a grantee's 
performance indicates a pattern of deviation from projected 
expenditures and outcomes, HUD may review the grantee's capacity 
assessment and implementation plan and require an update to that plan 
or impose corrective actions to mitigate the risks associated with 
failure to meet projections. The published action plan must be amended 
for any subsequent changes, updates, or revision of the projections. 
Guidance on the preparation of projections is available here: https://www.hudexchange.info/resource/5734/cdbg-dr-grantee-projections-of-expenditures-and-outcomes/.
    V.A.3. Citizen participation waiver and alternative requirement. To 
permit a more robust process and ensure that electrical power system 
improvement activities are developed through methods that allow all 
stakeholders to participate, and because citizens that are continuing 
to recover from disasters are best suited to ensure that grantees will 
be advised of any missed opportunities and additional risks that need 
to be addressed, provisions of 42 U.S.C. 5304(a)(2) and (3), 42 U.S.C. 
12707, 24 CFR 570.486, 24 CFR 91.105(b) and (c), and 24 CFR 91.115(b) 
and (c), with respect to citizen participation requirements, are waived 
and replaced by the requirements below. The grantee is required to 
provide a reasonable opportunity (at least 45 days) for citizen comment 
and ongoing citizen access to information about the use of grant funds. 
The revised citizen participation requirements for this notice include 
sections V.A.3.a to V.A.3.e. below.
    V.A.3.a. Publication of the action plan and opportunity for public 
comment. HUD continues to emphasize the importance of a robust citizen 
participation process, which shall include at least two public hearings 
on the proposed action plan. The grantee must either amend its existing 
citizen participation plan or adopt a new plan that incorporates the 
electrical power system improvements through CDBG-DR funds with the 
specific citizen participation requirements outlined in this section. 
At least one of these public hearings is to occur prior to a grantee's 
publication of its action plan on its website for public comment, and 
unless the grantee conducts a virtual hearing pursuant to section 
V.A.3.b. below, all hearings are to be convened at different locations 
that reflect geographic balance and ensure maximum accessibility.
    Before the grantee submits the action plan for this grant to HUD or 
any substantial amendment to the action plan as provided in section 
V.A.2.d. of this notice, the grantee will publish the proposed action 
plan or amendment. The manner of publication must include prominent 
posting on the grantee's official website and must afford citizens, 
affected local governments, and other interested parties a reasonable 
opportunity to examine the plan or amendment's contents. The topic of 
electrical power system improvements, as part of the grantee's broader 
disaster recovery efforts, must be navigable by citizens from the 
grantee's (or relevant agency's) homepage.
    Grantees are also encouraged to notify affected citizens through 
electronic mailings, press releases, statements by public officials, 
media advertisements, public service announcements, and/or contacts 
with neighborhood organizations. Grantees should also consider 
recording public hearings and making them available online for live 
viewing and creating archival video of the public meetings on the 
grantee's website. Plan publication efforts and public hearings must 
comply with civil rights requirements, including meeting the effective 
communications requirements under Section 504 of the Rehabilitation Act 
(see, 24 CFR 8.6) and the Americans with Disabilities Act (see 28 CFR 
35.160); and must provide meaningful access for persons with Limited 
English Proficiency (LEP) (see HUD's LEP Guidance, 72 FR 2732 (2007)).
    Grantees are responsible for ensuring that all citizens have equal 
access to information about the CDBG-DR programs, including persons 
with disabilities and persons with limited English proficiency (LEP). 
Each grantee must ensure that electrical power system improvement 
funding and program information is available in the appropriate 
languages for the geographic areas to be served (see HUD's LEP 
Guidance, March 16, 2007, 72 FR 2732) and take appropriate steps to 
ensure effective communications with persons with disabilities under 
Section 504 (see, 24 CFR 8.6) and the Americans with Disabilities Act 
(see 28 CFR 35.106).
    Since grantees receiving CDBG-DR funds may make grants throughout 
the state, including to Entitlement communities, grantees should 
carefully evaluate the needs of persons with disabilities and those 
with limited English proficiency. In assessing its language needs for 
translation of notices and other vital documents for non-English 
speaking residents, the grantee should consult the Final Guidance to 
Federal Financial Assistance Recipients Regarding Title VI, Prohibition 
Against National Origin Discrimination Affecting Limited English 
Proficient Persons, published on January 22, 2007, in the Federal 
Register (72 FR 2732) and at: https://www.lep.gov/sites/lep/files/resources/HUD_guidance_Jan07.pdf.
    V.A.3.b. Clarification on public hearings and consideration of 
public comments. Public hearings required by this notice may include 
virtual public hearings (alone, or in concert with an in-person 
hearing) if the virtual hearing allows for questions in real time, with 
answers coming directly from the grantee's representatives to all 
``attendees,'' subject to the requirements of this paragraph. Virtual 
hearings provide grantees with additional flexibility in the 
implementation of CDBG-DR funds during the Coronavirus Disease (COVID-
19) pandemic to enable social distancing during the public health 
emergency. Grantees subject to this notice may hold virtual hearings in 
lieu of in-person public hearings to fulfill the public hearing 
requirements in section V.A.3.a. of this notice.
    For each virtual hearing, the grantee shall provide reasonable 
notification and access for citizens in accordance with the grantee's 
certifications, timely responses to all citizen questions and issues, 
and public access to all questions and responses.
    The grantee must consider all comments, received orally or in 
writing, on the action plan or any substantial amendment. A summary of 
these comments or views, and the grantee's response to each must be 
submitted to HUD with the action plan or substantial amendment. Grantee 
responses shall address the substance of the comment rather than merely 
acknowledge that the comment was received.
    V.A.3.c. Public website. HUD is requiring grantees to maintain a 
public website which provides information accounting for how all CDBG-
DR funds for electrical power system improvements are used, managed, 
and administered, including links to all action plans, action plan 
amendments, performance reports, CDBG-DR citizen participation 
requirements, and activity/program information for activities described 
in the action plan, including details of all contracts and ongoing 
procurement policies. To meet this requirement, each grantee must make 
the following items available on its website: The action plan 
(including all

[[Page 32690]]

amendments); each Quarterly Performance Report (QPR) (as created using 
the DRGR system); procurement policies and procedures; all executed 
contracts that will be paid with CDBG-DR funds; and the status of 
services or goods currently being procured (e.g., a summary list of 
procurements, the phase of the procurement, requirements for proposals, 
and any liquidation of damages associated with a contractor's failure 
or inability to implement the contract, etc.). The grantee should post 
only contracts as defined in 2 CFR 200.1.
    V.A.3.d. Application status and funding criteria. The grantee must 
provide multiple methods of communication, such as websites, toll-free 
numbers, or other means that provide applicants for CDBG-DR assistance 
with timely information to determine the status of their application, 
as provided for in section V.A.1.b.(1) of this notice.
    When applications are solicited for programs carried out directly 
by the grantee, all criteria used to select applications for funding, 
including the relative importance of each criterion and the time frame 
for consideration of applications must be included in the action plan. 
When funds are subgranted to local governments or Indian tribes, 
grantees must include all criteria used to distribute funds to local 
governments or Indian tribes including the relative importance of each 
criterion. The grantee shall maintain documentation to demonstrate that 
each funded and unfunded application or response was reviewed and acted 
upon by the grantee in accordance with the published eligibility 
requirements and funding criteria in its action plan.
    V.A.3.e. Citizen complaints. The grantee will provide a timely 
written response to every citizen complaint. The response must be 
provided within 15 working days of the receipt of the complaint. 
Complaints regarding fraud, waste, or abuse of government funds should 
be forwarded to the HUD OIG Fraud Hotline (phone: 1-800-347-3735 or 
email: <a href="/cdn-cgi/l/email-protection#c9a1a6bda5a0a7ac89a1bcada6a0aee7aea6bf"><span class="__cf_email__" data-cfemail="ed85829981848388ad85988982848ac38a829b">[email protected]</span></a>).
    V.A.4. HUD performance review authorities and grantee reporting 
requirements in the Disaster Recovery Grant Reporting (DRGR) System.
    V.A.4.a. Performance review authorities. 42 U.S.C. 5304(e) requires 
that the Secretary shall, at least on an annual basis, make such 
reviews and audits as may be necessary or appropriate to determine 
whether the grantee has carried out its activities in a timely manner, 
whether the grantee's activities and certifications are carried out in 
accordance with the requirements and the primary objectives of the HCDA 
and other applicable laws, and whether the grantee has the continuing 
capacity to carry out those activities in a timely manner.
    This notice waives the requirements for submission of a performance 
report pursuant to 42 U.S.C. 12708(a), and 24 CFR 91.520. 
Alternatively, HUD is requiring that grantees enter information in the 
DRGR system in sufficient detail to permit the Department's review of 
grantee performance on a quarterly basis through the QPR and to enable 
remote review of grantee data to allow HUD to assess compliance and 
risk. HUD-issued general and appropriation-specific guidance for DRGR 
reporting requirements can be found on the HUD Exchange at: https://www.hudexchange.info/programs/drgr/.
    V.A.4.b. DRGR action plan. Each grantee must enter its action plan 
for disaster recovery, including performance measures, into HUD's DRGR 
system. As more detailed information about uses of funds is identified 
by the grantee, it must be entered into the DRGR system at a level of 
detail that is sufficient to serve as the basis for acceptable 
performance reports and permits HUD review of compliance requirements. 
The action plan must also be entered into the DRGR system so that the 
grantee is able to draw its CDBG-DR funds. The grantee may enter 
activities into the DRGR system before or after submission of the 
written action plan to HUD but will not be able to budget grant funds 
to these activities until after the grant agreement has been signed. To 
enter an activity into the DRGR system, the grantee must know the 
activity type, national objective, and the organization that will be 
responsible for the activity. In addition, a Data Universal Numbering 
System (DUNS) number must be entered into the system for each 
Responsible Organization identified in DRGR as carrying out a CDBG-DR 
funded activity.
    A grantee will gain access to its line of credit upon review and 
approval of the initial DRGR action plan. Each activity entered into 
the DRGR system must also be categorized under a ``project.'' 
Typically, projects are based on groups of activities that accomplish a 
similar, broad purpose (e.g., housing, infrastructure, or economic 
development) or are based on an area of service (e.g., Community A). If 
a grantee describes only one program within a broader category (e.g., 
microgrids), that program is entered as a project in the DRGR system. 
Further, the budget of the program would be identified as the project's 
budget. If a grantee has only identified the Method of Distribution 
(MOD) upon HUD's approval of the published action plan, the MOD 
categories typically serve as the projects in the DRGR system, rather 
than activity groupings. Activities are added to MOD projects as 
specific CDBG-DR programs and projects are identified for funding.
    V.A.4.c. Tracking oversight activities in the DRGR system; use of 
DRGR data for HUD review and dissemination. Each grantee must also 
enter into the DRGR system summary information on monitoring visits and 
reports, audits, and technical assistance it conducts as part of its 
oversight of its disaster recovery programs. The grantee's QPR will 
include a summary indicating the number of grantee oversight visits and 
reports (see V.A.4.e. for more information on the QPR). HUD will use 
data entered into the DRGR action plan and the QPR, transactional data 
from the DRGR system, and other information provided by the grantee, to 
provide reports to Congress and the public, as well as to: (1) Monitor 
for anomalies or performance problems that suggest fraud, abuse of 
funds, and duplication of benefits; (2) reconcile budgets, obligations, 
funding draws, and expenditures; (3) calculate expenditures to 
determine compliance with administrative and public service caps and 
the overall percentage of funds that benefit low- and moderate-income 
persons; and (4) analyze the risk of grantee programs to determine 
priorities for the Department's monitoring. Grantees must establish 
internal controls to ensure that no personally identifiable information 
shall be reported in DRGR.
    V.A.4.d. Tracking program income in the DRGR system. Grantees must 
use the DRGR system to draw grant funds. Grantees must also use the 
DRGR system to track program income receipts, disbursements, revolving 
loan funds, and leveraged funds (if applicable). If a grantee permits 
subrecipients to retain program income prior to grant closeout, the 
grantee must establish program income accounts in the DRGR system. The 
DRGR system requires grantees to use program income before drawing 
additional grant funds and ensures that program income retained by one 
organization will not affect grant draw requests for other 
organizations.
    V.A.4.e. DRGR system Quarterly Performance Report (QPR). Each 
grantee must submit a QPR through the DRGR system no later than 30 days 
following the end of each calendar quarter. Within 3 days of submission 
to HUD, each QPR must be posted on the grantee's official website. In 
the event the QPR is rejected by HUD, the grantee must post the

[[Page 32691]]

revised version, as approved by HUD, within 3 days of HUD approval. The 
grantee's first QPR is due after the first full quarter after HUD signs 
the grant agreement. For example, a grant agreement signed in April 
requires a QPR to be submitted by October 30. QPRs must be submitted on 
a quarterly basis until all funds have been expended and all 
expenditures and accomplishments have been reported. If a satisfactory 
report is not submitted in a timely manner, HUD may suspend access to 
CDBG-DR funds until a satisfactory report is submitted, or may withdraw 
and reallocate funding if HUD determines, after notice and opportunity 
for a hearing, that the jurisdiction did not submit a satisfactory 
report.
    Each QPR will include information about the uses of funds in 
activities identified in the DRGR action plan during the applicable 
quarter. This includes, but is not limited to, the project name, 
activity, location, and national objective; funds budgeted, obligated, 
drawn down, and expended; the funding source and total amount of any 
non-CDBG-DR funds to be expended on each activity; beginning and actual 
completion dates of completed activities; achieved performance 
outcomes, such as the number of low- and moderate-income persons 
served; and the race and ethnicity of persons assisted under direct-
benefit activities. For electrical power system improvements installed 
or applied on private lands, the address of each CDBG-DR assisted 
property must be recorded in the QPR. Grantees must not include such 
addresses in its public QPR; when entering addresses in the QPR, the 
grantee must select ``Not Visible on PDF'' to exclude them from the 
report required to be posted on its website. The DRGR system will 
automatically display the amount of program income receipted, the 
amount of program income reported as disbursed, and the amount of grant 
funds disbursed in the QPR. In the section titled ``Overall Progress 
Narrative'' in the DRGR system, the grantee must report on its 
activities and progress in that quarter to implement steps necessary to 
meet the low- and moderate-income national objective for electrical 
power system improvements as provided in section V.A.8. of this notice. 
Each grantee must also include a description of active steps it has 
taken to affirmatively further fair housing, within the ``Overall 
Progress Narrative'' section.
    V.A.5. Direct grant administration and means of carrying out 
eligible activities. Requirements at 42 U.S.C. 5306(d) are waived to 
the extent necessary to allow each grantee to use its CDBG-DR grant 
directly to carry out CDBG-DR eligible activities, rather than 
distribute all funds to local governments. Pursuant to this waiver, the 
standard at 24 CFR 570.480(c) and the provisions at 42 U.S.C. 
5304(e)(2) will also include activities that the grantee carries out 
directly. Eligible CDBG-DR activities may be carried out by the 
grantee, subject to the grantee's laws and consistent with the 
requirement of 24 CFR 570.200(f), through its employees, through 
procurement contracts, or through assistance provided under agreements 
with subrecipients. Each grantee continues to be responsible for civil 
rights, labor standards, and environmental protection requirements, for 
compliance with 24 CFR 570.489 (g) and (h) relating to conflicts of 
interest and for compliance with 24 CFR 570.489(m) relating to 
monitoring and management of subrecipients.
    V.A.5.a. Use of administrative funds across multiple grants. The 
Additional Supplemental Appropriations for Disaster Relief Act, 2019 
(Pub. L. 116-20, approved June 6, 2019), authorizes special treatment 
of grant administrative funds for grantees that receive grants under 
certain CDBG-DR appropriations acts. Accordingly, grantees that 
received CDBG-DR or CDBG-MIT funds under Public Laws 114-113, 114-223, 
114-254, 115-31, 115-56, 115-123, and 115-254, or any future act may 
use eligible administrative funds (up to 5 percent of each grant award 
plus up to 5 percent of program income generated by the grant) 
appropriated by these acts without regard to the particular disaster 
appropriation from which such funds originated. If the grantee chooses 
to exercise this authority, the grantee must ensure that it has 
appropriate financial controls to ensure that the amount of grant 
administration expenditures for each of the aforementioned grants will 
not exceed 5 percent of the total grant award for each grant (plus 5 
percent of program income generated by the grant), review and modify 
its financial management policies and procedures regarding the tracking 
and accounting of administration costs, as necessary, and address the 
adoption of this treatment of administrative costs in the applicable 
portions of the submissions it makes to HUD to support HUD's 
certifications as required by subsection V.A.1.a.
    Grantees are reminded that all costs incurred for administration 
must still qualify as an eligible administration expense. HUD will 
issue additional guidance on this provision that grantees will be 
required to follow to ensure compliance and maintain proper financial 
controls.
    V.A.6. Requirements for consultation. Currently, the HCDA and HUD 
regulations require a state grantee to consult with affected local 
governments in nonentitlement areas of the state in determining the 
state's proposed method of distribution. HUD is waiving 42 U.S.C. 
5306(d)(2)(C)(iv), 42 U.S.C. 5306(d)(2)(D), 24 CFR 91.325(b)(2), and 24 
CFR 91.110, and instituting the following alternative requirements. 
Each grantee that will receive an electrical power system improvement 
grant under Public Law 115-123 shall consult with all disaster-affected 
local governments (including any CDBG Entitlement grantees), Indian 
tribes, and local public housing authorities in determining the use of 
funds. This ensures that each grantee sufficiently assesses the impacts 
of all areas affected by the disaster. Additionally, each grantee must 
complete consultation with the Federal members of the TCT required by 
section V.A.2.e. of this notice. Grantees must maintain documentation 
of all consultations required by this paragraph to demonstrate 
compliance with this requirement.
    V.A.7. Grant Administration responsibilities and general 
administration cap.
    V.A.7.a. Grantee responsibilities. Each grantee shall administer 
its award in compliance with all applicable laws and regulations and 
shall be financially accountable for the use of all funds provided for 
CDBG-DR funds.
    V.A.7.b. General administration cap. For this allocation, the CDBG 
program administration requirements must be modified to be consistent 
with the Appropriations Act. Accordingly, 5 percent of the grant and 5 
percent of program income generated by the grant may be used for 
administrative costs by the grantee or by subrecipients. Thus, the 
total of all costs classified as administrative for the grantee must be 
less than or equal to the 5 percent cap.
    (1) Combined technical assistance and administrative expenditures 
cap. The provisions of 42 U.S.C. 5306(d), 24 CFR 570.489(a)(1)(i) and 
(iii), and 24 CFR 570.489(a)(2) will not apply to the extent that they 
cap administration and technical assistance expenditures, limit the 
ability of each grantee to charge a nominal application fee for grant 
applications for activities it carries out directly, and require a 
dollar-for-dollar match of grantee funds for administrative costs 
exceeding $100,000. 42 U.S.C. 5306(d)(5) and (6) are waived and 
replaced with the alternative requirement that the aggregate total for 
administrative and

[[Page 32692]]

technical assistance expenditures must not exceed 5 percent of the 
grant amount plus 5 percent of program income generated by the grant. 
Under this alternative requirement, the grantee is limited to spending 
a maximum of 15 percent of its total grant on planning costs. Planning 
costs subject to this cap are those defined in 42 U.S.C. 5305(a)(12).
    V.A.8. Purpose, eligibility, overall benefit, and national 
objective alternative requirements.
    V.A.8.a. Purpose. As stated in section III, the Appropriations Act 
requires grantees to use funds for electrical power system 
improvements. HUD encourages grantees to use CDBG-DR funds for 
electrical power system improvements in a manner that leverages other 
sources of federal and public utility funds to increase the long-term 
impact of Federal investments on the electrical power system.
    For purposes of this notice:
    (i) An electrical power system shall be defined as an 
interconnected or autonomous set of transmission lines, distribution 
lines, substations, central power generation stations, other sources of 
power, distributed energy resources, or enabling technologies and 
services, such as industry standard billing, accounting information 
technology, cybersecurity enhancements, microgrids and fuel transfer 
delivery systems, that are necessary for the provision of reliable, 
resilient, stable, and cost-effective electrical service; and
    (ii) electrical power system improvements shall be defined as the 
acquisition, construction, reconstruction, rehabilitation or 
installation of facilities, improvements, or other components 
(including interim assistance, and financing public or private 
acquisition for reconstruction or rehabilitation, and reconstruction or 
rehabilitation, of privately owned property) that are undertaken to 
extend, upgrade, and otherwise enhance and improve the cost-
effectiveness, reliability, efficiency, sustainability, or long-term 
financial viability of the grantee's electrical power system including 
activities to increase the resilience of the electrical power system to 
future disasters and to address the impacts of climate change.
    The refinancing or paying down of debt shall be an electrical power 
system improvement only for the purpose of acquiring a facility and 
subject to the requirements of section V.B.3 of this notice.
    To align with long term decarbonization goals, the term electrical 
power system improvements, as applied to central power generating 
stations, shall only include an improvement or replacement of a central 
power generating station operating on the applicability date of this 
notice if HUD, in consultation with DOE and EPA, determines that such 
improvement or replacement will result in a net decrease in carbon 
emissions from that generating power station at comparable levels of 
operation. A central power generating station is defined as a large-
scale centralized facility for the generation of electricity that 
qualifies as a ``major stationary source of air pollutants'' per the 
requirements of 40 CFR part 70.
    V.A.8.b. Eligibility. A grantee must use grant funds for electrical 
power system improvements that satisfy all requirements for an 
electrical power system improvement activity as described in V.A.8.a. 
above. HUD will consider grantee requests for additional waivers and 
alternative requirements if needed to carry out other activities that 
enhance or improve their electrical power systems. All requests must 
include supporting data that demonstrates the need for the waiver and 
alternative requirement. Grantees should work with the assigned CPD 
representative to request any additional waivers or alternative 
requirements from HUD headquarters.
    HUD is granting the following waiver and alternative requirement to 
establish a new eligible activity, the electrical power systems 
improvements activity. The Department has determined that the aggregate 
of electrical power system improvements to be completed with CDBG-DR 
funds subject to this notice are together, critical components of the 
region's long-term recovery from Hurricane Maria and to the resilience 
of the region to future weather events. HUD recognizes that the broad 
scope of these activities may limit the ability of grantees to 
categorize these CDBG-DR funds into discrete categories of CDBG 
eligibility and to appropriately assign a CDBG national objective to 
each component of the planned improvements. For grants under other 
appropriations acts, HUD has established similar waivers to create an 
eligible activity for large complex projects that are composed of 
multiple activities that, in and of themselves, may not all be CDBG-
eligible, but which nonetheless contribute to the mitigation of 
disaster risk and to long-term disaster recovery. This waiver will 
similarly ease administration and facilitate the use of grant funds for 
their intended purpose.
    Accordingly, HUD is waiving section 105(a) (42 U.S.C. 5305(a)) of 
the HCDA and establishing an alternative requirement only to the extent 
necessary to create a new eligible activity, electrical power system 
improvements, which shall be applicable only for the grant funded 
pursuant to this notice. Under this activity, all uses of funds that 
meet the definition of electrical power system improvements above and 
comply with the alternative requirements below are both eligible under 
this waiver and alternative requirement and meet the statutory purpose 
of the funds. This activity includes the use of funds for payment of 
the non-Federal share required in connection with a Federal grant-in-
aid program undertaken as part of an activity that meets the definition 
of electrical power system improvements and otherwise complies with 
grant requirements. This activity also includes relocation payments and 
assistance for displaced individuals, families, businesses, 
organizations, and farm operations, when determined by the grantee to 
be appropriate.
    Electrical power system improvements that can be demonstrated to 
have a public benefit may be installed or applied on private lands. The 
definition of an electrical power system and the use of funds for 
electrical power system improvements shall not include ineligible 
activities as provided at 24 CFR 570.207, including costs for the 
operation and maintenance of the system. This definition and the use of 
funds for electrical power system improvements shall also not include 
the use of CDBG-DR funds for the operation and maintenance costs of a 
public utility or the costs of fuel or energy purchase contracts in 
effect prior to the applicability date of this notice. HUD encourages 
grantees to use CDBG-DR funds for electrical power system improvements 
in a manner that leverages other sources of federal and public utility 
funds to increase the long-term impact of Federal investments on the 
electrical power system.
    V.A.8.c. Overall benefit and national objective requirements. The 
primary objective of the HCDA is the ``development of viable urban 
communities, by providing decent housing and a suitable living 
environment and expanding economic opportunities, principally for 
persons of low and moderate income'' (42 U.S.C. 5301(c)). Consistent 
with the HCDA, this notice requires grantees to comply with the overall 
benefit requirements in the HCDA and 24 CFR 570.484 that 70 percent of 
funds be used for activities that benefit low- and moderate-income 
persons. For purposes of this grant, HUD is establishing an alternative 
requirement that the overall benefit test shall apply only to the use 
of CDBG-DR

[[Page 32693]]

funds provided under the Appropriations Act for electrical power system 
improvements and related program income, and not to all CDBG funds 
received by the grantee during another period selected by the grantee 
in accordance with 570.484(a).
    CDBG-DR electrical power system improvements will be considered to 
meet the criteria for activities benefitting low- and moderate-income 
persons--area benefit activities at 24 CFR 570.483(b)(1) if, at grant 
closeout, they meet the following criteria unless there is substantial 
evidence to the contrary. In assessing any such evidence, the full 
range of direct effects of the assisted activity will be considered. 
(The recipient shall appropriately ensure that activities that meet 
these criteria do not benefit moderate income persons to the exclusion 
of low-income persons.) The criteria are that at least 70 percent of 
the grant funds allocated by this notice, not including planning and 
administrative costs, have been used to:
    (i) Provide at least fifty-one percent of the grantee's low- and 
moderate-income residents with either a subsidized rate for electricity 
below that charged to other residential ratepayers or a lower rate for 
electricity than was charged prior to complete implementation of the 
CDBG-DR funding electrical power system improvements; or
    (ii) measurably improve the reliability of the electrical power 
system in low- and moderate-income areas that are primarily 
residential. For purposes of this paragraph, measurably improved 
reliability shall mean a documented decrease in power supply 
interruptions, excluding planned interruptions and interruptions caused 
by major events. To document compliance with this national objective 
criterion, a grantee's policies and procedures shall provide for the 
measurement of improved reliability in low- and moderate income areas 
that are primarily residential, using relevant legal and regulatory 
standards, as amended from time to time, including those identified by 
Puerto Rico Act 17-2019 (for Puerto Rico only), FEMA Section 1235(b) 
Consensus-Based Codes and Standards, RUS Bulletins for Electric Power, 
Institute of Electrical and Electronics Engineers (IEEE) standards and 
guidance, EPA environmental protections, and, as appropriate, North 
American Electric Reliability Corporation (NERC) standards and 
guidance.
    HUD will monitor the grantee and its subrecipients for the duration 
of the grant to substantiate that the grantee is demonstrating adequate 
progress in documenting CDBG-DR expenditures that will result in 
subsidized or lower electricity costs of low- and moderate-income 
residents, or improved reliability for low- and moderate-income areas, 
as applicable.
    Grantees may also use CDBG-DR funds allocated pursuant to this 
notice to meet the urgent need national objective, pursuant to the 
waiver and alternative requirement provided below. Unless a grantee has 
received prior approval from HUD, CDBG-DR funds for electrical power 
system improvements cannot meet the CDBG national objective for the 
elimination of slum and blight as provided at 24 CFR 570.208(b) and 24 
CFR 570.483(c). Grantees shall not rely on the national objective 
criteria for elimination of slum and blighting conditions without 
approval from HUD because this national objective generally is not 
appropriate in the context of electrical power system improvements.
    The CDBG certification requirements for documentation of urgent 
need, located at 24 CFR 570.483(d), are waived for the grants under 
this notice and replaced with the following alternative requirement. In 
the context of disaster recovery, the standard urgent need 
certification requirements may impede recovery. Since the Department 
only provides CDBG-DR awards to grantees with documented disaster-
related impacts and each grantee is limited to spending funds only for 
the benefit of areas that received a presidential disaster declaration 
as identified in Table 1 of this notice, the following streamlined 
alternative requirement recognizes the urgency in addressing serious 
threats to community welfare following a major disaster. A grantee need 
not issue formal certification statements to qualify an activity as 
meeting the urgent need national objective. Instead, it must document 
how each program and/or activity funded under the urgent need national 
objective responds to a disaster-related impact. For each activity that 
will meet an urgent need national objective, the grantee must reference 
in its action plan needs assessment the type, scale, and location of 
the disaster-related impacts that each program and/or activity is 
addressing over the course of the applicable deadline for the 
expenditure of obligated grant funds.
    To meet the 70 percent overall benefit requirement, grantees may 
also use the low- and moderate-income benefit national objective 
criteria at 24 CFR 570.483(b) to the extent that an eligible activity 
authorized by this notice qualifies under the criteria for that 
national objective. At least 70 percent of the entire CDBG-DR grant 
must be used for activities that benefit low- and moderate-income 
persons.
    V.A.9. Use of subrecipients. The State CDBG program rule does not 
make specific provisions for the treatment of entities that the CDBG 
Entitlement program calls ``subrecipients.'' The waiver allowing the 
state to directly carry out activities creates a situation in which the 
state may use subrecipients to carry out activities in a manner similar 
to an entitlement community. Therefore, in taking advantage of the 
waiver to carry out activities directly, grantees shall be subject to 
the requirements at 24 CFR 570.503 and 570.500(c), except that in 
compliance with 570.489(g), grantees shall establish procurement 
requirements for local governments and subrecipients (which may or may 
not include procurement provisions of 2 CFR part 200 that are 
applicable to a grantee's subrecipients).
    V.A.10. Recordkeeping. When a grantee receiving CDBG-DR grants for 
electrical power system improvements under Public Law 115-123 carries 
out activities directly, 24 CFR 570.490(b) is waived, and the following 
alternative provision shall apply: The grantee shall establish and 
maintain such records as may be necessary to facilitate review and 
audit by HUD of the grantee's administration of CDBG-DR funds, under 24 
CFR 570.493. Consistent with applicable statutes, regulations, waivers 
and alternative requirements, and other Federal requirements, the 
content of records maintained by the grantee shall be sufficient to: 
(1) Enable HUD to make the applicable determinations described at 24 
CFR 570.493; (2) make compliance determinations for activities carried 
out directly by the grantee; and (3) show how activities funded are 
consistent with the descriptions of activities proposed for funding in 
the action plan and/or DRGR system. For fair housing and equal 
opportunity (FHEO) purposes, as applicable, such records shall include 
data on the racial, ethnic, and gender characteristics of persons who 
are applicants for, participants in, or beneficiaries of the program. 
The grantee must report FHEO data in the DRGR system at the activity 
level.
    V.A.11. Responsibility for review and handling of noncompliance. 
This change is in conformance with the waiver allowing the grantee to 
carry out activities directly. 24 CFR 570.492 is waived and the 
following alternative requirement applies to grantees receiving CDBG-DR 
grants for electrical power system improvements under Public Law 115-
123: The grantee shall make reviews and audits, including on-

[[Page 32694]]

site reviews of any subrecipients, designated public agencies, local 
governments and other entities as may be necessary or appropriate to 
meet the requirements of section 104(e)(2) of the HCDA, as amended, and 
as modified by this notice. In the case of noncompliance with these 
requirements, the grantee shall take such actions as may be appropriate 
to prevent a continuance of the deficiency, mitigate any adverse 
effects or consequences, and prevent a recurrence. The grantee shall 
establish remedies for noncompliance by any designated subrecipients, 
public agencies, or local governments.
    Each CDBG-DR grantee shall attend and require subrecipients to 
attend fraud-related training provided by HUD OIG to assist in the 
proper management of CDBG-DR grant funds. The prior participation of 
the grantee or a subrecipient in this training for purposes of the 
grantee's CDBG-MIT grant or CDBG-DR grants provided pursuant to Public 
Laws 115-56 and 115-123 shall satisfy this requirement.
    V.A.12. Relocation, and real property acquisition requirements. 
Activities and projects undertaken with CDBG-DR funds are subject to 
the Uniform Relocation Assistance and Real Property Acquisition 
Policies Act of 1970, as amended, (42 U.S.C. 4601 et seq.) (``URA'') 
and section 104(d) of the HCDA (42 U.S.C. 5304(d)) (Section 104(d)). 
The implementing regulations for the URA are at 49 CFR part 24. The 
regulations for section 104(d) are at 24 CFR part 42, subpart C. The 
Department recognizes that these waivers and alternative requirements 
are likely to have limited application in a grantee's implementation of 
electrical power system improvements. Nonetheless, in the course of 
implementing electrical power system improvements, these waivers and 
alternative requirements may continue to be necessary. For the purpose 
of promoting the availability of decent, safe, and sanitary housing, 
HUD is waiving the following URA and section 104(d) requirements with 
respect to the use of CDBG-DR funds:
    V.A.12.a. Relocation assistance. The relocation assistance 
requirements at section 104(d)(2)(A) of the HCDA and 24 CFR 42.350 are 
waived to the extent that they differ from the requirements of the URA 
and implementing regulations at 49 CFR part 24, as modified by this 
notice, for activities related to electrical power system improvements. 
Without this waiver, disparities exist in relocation assistance 
associated with activities typically funded by HUD and FEMA (e.g., 
acquisition and relocation). Both FEMA and CDBG funds are subject to 
the requirements of the URA; however, CDBG funds are subject to section 
104(d), while FEMA funds are not. The URA provides at 49 CFR 24.402(b) 
that a displaced person is eligible to receive a rental assistance 
payment that is calculated to cover a period of 42 months. By contrast, 
section 104(d) allows a lower-income displaced person to choose between 
the URA rental assistance payment and a rental assistance payment 
calculated over a period of 60 months. This waiver of the section 
104(d) relocation assistance requirements assures uniform and equitable 
treatment by setting the URA and its implementing regulations as the 
sole standard for relocation assistance for CDBG-DR funds.
    V.A.12.b. Arm's length voluntary purchase. The requirements at 49 
CFR 24.101(b)(2)(i) and (ii) are waived to the extent that they apply 
to an arm's length voluntary purchase carried out by a person who was 
allocated CDBG-DR funds and does not have the power of eminent domain, 
in connection with the purchase and occupancy of a principal residence 
by that person. Given the often-large-scale acquisition needs of 
grantees, this waiver is necessary to reduce burdensome administrative 
requirements to implement electrical improvement activities. Grantees 
are reminded that tenants occupying real property acquired through 
voluntary purchase may be eligible for relocation assistance.
    V.A.12.c. Optional relocation policies. The regulation at 24 CFR 
570.606(d) is waived to the extent that it requires optional relocation 
policies to be established at the grantee level. Unlike the regular 
CDBG program, States may carry out electrical improvement activities 
directly or through subrecipients, but 24 CFR 570.606(d) does not 
account for this distinction. This waiver makes clear that grantees 
receiving CDBG-DR funds may establish optional relocation policies or 
permit their subrecipients to establish separate optional relocation 
policies. This waiver is intended to provide grantees with maximum 
flexibility in developing optional relocation policies with CDBG-DR 
funds.
    V.A.12.d. Waiver of Section 414 of the Stafford Act. Section 414 of 
the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 
U.S.C. 5121 et seq.). Section 414 of the Stafford Act (42 U.S.C. 5181) 
provides that ``Notwithstanding any other provision of law, no person 
otherwise eligible for any kind of replacement housing payment under 
the Uniform Relocation Assistance and Real Property Acquisition 
Policies Act of 1970 (Pub. L. 91-646) [42 U.S.C. 4601 et seq.] 
[``URA''] shall be denied such eligibility as a result of his being 
unable, because of a major disaster as determined by the President, to 
meet the occupancy requirements set by [the URA].'' Accordingly, 
homeowner occupants and tenants displaced from their homes as a result 
of the identified disaster and who would have otherwise been displaced 
as a direct result of any acquisition, rehabilitation, or demolition of 
real property for a Federally funded program or project may become 
eligible for a replacement housing payment notwithstanding their 
inability to meet occupancy requirements prescribed in the URA.
    Section 414 of the Stafford Act (including its implementing 
regulation at 49 CFR 24.403(d)(1)), is waived to the extent that it 
would apply to real property acquisition, rehabilitation, or demolition 
of real property for a CDBG-DR funded project, undertaken by the 
grantee or subrecipient, commencing more than one year after the 
Presidentially declared disaster, provided that the project was not 
planned, approved, or otherwise underway prior to the disaster. For 
purposes of this paragraph, a CDBG-DR funded project shall be 
determined to have commenced on the earliest of: (1) The date of an 
approved Request for Release of Funds and certification, (RROF/C), or 
(2) the date of completion of the site-specific review when a program 
utilizes tiered environmental reviews, or (3) the date of sign-off by 
the Responsible Entity Agency Official when a project converts to 
exempt under 24 CFR 58.34(a)(12). The Secretary has the authority to 
waive provisions of the Stafford Act and its implementing regulations 
that the Secretary administers in connection with the obligation of 
CDBG-DR funds covered under this waiver and alternative requirement, or 
the grantee's use of these funds. The Department has determined that 
good cause exists for a waiver and that such waiver is not inconsistent 
with the overall purposes of title I of the HCDA.
    The waiver will simplify the administration of the disaster 
recovery process and reduce the administrative burden associated with 
the implementation of Stafford Act Section 414 requirements for 
projects commencing more than one year after the date of the 
Presidentially declared disaster, considering the majority of such 
persons displaced by the disaster will have returned to their dwellings 
or found another place of permanent residence. This waiver does not 
apply with respect to persons that meet the

[[Page 32695]]

occupancy requirements to receive a replacement housing payment under 
the URA nor does it apply to persons displaced or relocated temporarily 
by other HUD-funded programs or projects. Such persons' eligibility for 
relocation assistance and payments under the URA is not impacted by 
this waiver.
    V.A.13. Environmental requirements.
    V.A.13.a. Clarifying note on the process for environmental release 
of funds when a state carries out activities directly. Usually, a state 
distributes CDBG funds to units of general local government and takes 
on HUD's role in receiving environmental certifications from the grant 
subrecipients and approving releases of funds. For this grant, HUD will 
allow a grantee to also carry out activities directly, in addition to 
distributing funds to subrecipients. Thus, per 24 CFR 58.4, when a 
grantee carries out activities directly, the grantee must submit the 
Certification and Request for Release of Funds to HUD for approval.
    V.A.13.b. Adoption of another agency's environmental review. In 
accordance with the Appropriations Act, grant recipients of Federal 
funds that use such funds to supplement Federal assistance provided 
under sections 402, 403, 404, 406, 407, 408(c)(4) or 502 of the 
Stafford Act may adopt, without review or public comment, any 
environmental review, approval, or permit performed by a Federal 
agency, and such adoption shall satisfy the responsibilities of the 
recipient with respect to such environmental review, approval, or 
permit that is required by the HCDA.
    The grant recipient must notify HUD in writing of its decision to 
adopt another agency's environmental review. The notification must be 
stated on an RROF/C Form 7015.15 and indicate that another Federal 
agency's review is being adopted and include the name of the Federal 
agency, the name of the project, and the date of the project's review. 
In accordance with the Appropriations Act, and notwithstanding 42 
U.S.C. 5304(g)(2), the Secretary may, upon receipt of a RROF/C, 
immediately approve the release of funds for an activity or project 
assisted with CDBG-DR funds if the recipient has adopted an 
environmental review, approval, or permit, or the activity or project 
is categorically excluded from review under the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321 et seq.). The grant recipient must 
retain a completed electronic or paper copy of the review in the 
grantee's environmental records.
    V.A.13.c. Unified federal review. Section 1106 of the Sandy 
Recovery Improvement Act of 2013 (Div. B of Pub. L. 113-2, enacted 
January 29, 2013) directed the establishment of an ``expedited and 
unified interagency review process to ensure compliance with 
environmental and historic requirements under Federal law relating to 
disaster recovery projects, in order to expedite the recovery process, 
consistent with applicable law.'' The process aims to coordinate 
environmental and historic preservation reviews to expedite planning 
and decision-making for disaster recovery projects. This can improve 
the Federal Government's assistance to States, local, and tribal 
governments; communities; families; and individual citizens as they 
recover from future Presidentially declared disasters. Grantees 
receiving an allocation of funds under this notice are encouraged to 
participate in this process. Tools for the unified Federal review 
process (UFR) process can be found here: https://www.fema.gov/emergency-managers/practitioners/environmental-historic/review/library.
    V.A.13.d. Historic preservation reviews. To facilitate expedited 
historic preservation reviews under section 106 of the National 
Historic Preservation Act of 1966 (54 U.S.C. Section 306108), HUD 
strongly encourages grantees to allocate general administration funds 
to retain a qualified historic preservation professional and support 
the capacity of the State Historic Preservation Officer/Tribal Historic 
Preservation Officer to review CDBG-DR projects. For more information 
on qualified historic preservation professional qualifications 
standards see https://www.nps.gov/history/local-law/arch_stnds_9.htm.
    As appropriate, grantees may use provisions in existing Section 106 
Programmatic Agreements (PAs), i.e., the HUD Addendum to the FEMA PA 
for Puerto Rico and the HUD Addendum to the FEMA PA for USVI, to 
expedite Section 106 reviews. HUD and the grantee may also participate 
in an interagency PA developed for the electric grid effort.
    V.A.13.e. Tiered environmental reviews. HUD encourages grantees as 
Responsible Entities to develop a Tiered approach to streamline the 
environmental review process, as appropriate, for whenever the action 
plan contains a program with multiple, similar activities that will 
result in similar impacts. Tiering, as defined in 40 CFR 1508.1(ff), is 
a means of making the environmental review process more efficient by 
allowing parties to ``eliminate repetitive discussions of the same 
issues, focus on the actual issues ripe for decision, and exclude from 
consideration issues already decided or not yet ripe at each level of 
environmental review'' (40 CFR 1501.11). In addition, ``[t]iering is 
appropriate when there is a requirement to evaluate a policy or 
proposal in the early stages of development or when site-specific 
analysis or mitigation is not currently feasible and a more narrow or 
focused analysis is better done at a later date'' (24 CFR 58.15).
    A tiered review consists of two stages: A broad-level review and 
subsequent site-specific reviews. The broad-level review will identify 
and evaluate the issues that can be fully addressed and resolved, 
notwithstanding possible limited knowledge of the project. In addition, 
it must establish the standards, constraints, and processes to be 
followed in the site-specific reviews. As individual sites are selected 
for review, the site-specific reviews evaluate the remaining issues 
based on the policies established in the broad-level review. Together, 
the broad-level review and all site-specific reviews will collectively 
comprise a complete environmental review addressing all required 
elements. Public notice and the Request for Release of Funds (HUD-Form 
7015.15) are processed at the broad level. However, funds cannot be 
spent or committed on a specific site or activity until the site-
specific review has been completed for the site.
    V.A.14. Duplication of benefits. Section 312 of the Stafford Act, 
as amended, generally prohibits any person, business concern, or other 
entity from receiving financial assistance with respect to any part of 
a loss resulting from a major disaster for which such person, business 
concern, or other entity has received financial assistance under any 
other program or from insurance or any other source. To comply with 
Section 312 and the requirement that all costs are necessary and 
reasonable, each grantee must ensure that each activity provides 
assistance to a person or entity only to the extent that the person or 
entity has an electrical power system improvement need that has not 
been fully met. Accordingly, grantees must comply with the requirements 
of the Federal Register notice published on June 20, 2019, entitled, 
``Updates to Duplication of Benefits Requirements Under the Stafford 
Act for Community Development Block Grant (CDBG) Disaster Recovery 
Grantees'' (2019 DOB Notice) (84 FR 28836). Requirements on CDBG-DR 
funds and CDBG-DR grants in the 2019 DOB Notice shall apply equally to 
CDBG-DR funds for electrical power system improvements. All CDBG-DR 
grants for electrical power system improvements under the 
Appropriations Act are subject to the

[[Page 32696]]

requirement under the tenth proviso following the Community Development 
Fund heading of Public Law 115-123 (Declined Loans Provision) and the 
requirements for its implementation in the 2019 DOB Notice. The 
Declined Loan Provision states: ``Provided further, That with respect 
to any such duplication of benefits, the Secretary and any grantee 
under this section shall not take into consideration or reduce the 
amount provided to any applicant for assistance from the grantee where 
such applicant applied for and was approved, but declined assistance 
related to such major disasters that occurred in 2014, 2015, 2016, and 
2017 from the Small Business Administration under section 7(b) of the 
Small Business Act (15 U.S.C. 636(b)).''
    The 2019 DOB Notice also implements requirements regarding the 
treatment of loans resulting from recent amendments to section 312 of 
the Stafford Act that apply to CDBG-DR grants for electrical power 
system improvements under the Appropriations Act until those provisions 
sunset in 2023 as described in the 2019 DOB notice. FEMA, the agency 
that administers the Stafford Act, has advised that pursuant to recent 
amendments to Section 312 of the Stafford Act in the Disaster Recovery 
Reform Act (Pub. L. 115-254, Division D), for disasters occurring 
between 2016 and 2021, a loan is not a duplication of other forms of 
financial assistance, provided that all Federal assistance is used 
toward a loss suffered as a result of a major disaster or emergency.
    V.A.15. Use of CDBG-DR funds as match for electrical power system 
improvements. Pursuant to the waiver and alternative requirement in 
section V.A.8. of this notice, CDBG-DR funds for electrical power 
system improvements, may be used to meet a matching requirement, share, 
or contribution for any other Federal program when used to carry out an 
eligible CDBG-DR activity permitted by this notice. This includes 
Public Assistance and other grants administered by FEMA as well as 
grants provided by the U.S. Army Corps of Engineers (USACE) (by law, as 
codified in the HCDA as a note to 42 U.S.C. 5305, the maximum amount of 
CDBG-DR funds that may be contributed to a project funded by the USACE 
is $250,000).
    Grantees may only use CDBG-DR funds allocated pursuant to this 
notice to meet the match requirement of an activity that meets the 
definition of an electrical power system improvement and other 
requirements of this notice. In considering the use of CDBG-DR funds as 
match, grantees are further advised that the Appropriations Act 
prohibits the use of CDBG-DR funds for any activity that is 
reimbursable by, or for which funds are also made available by FEMA or 
the USACE. The Department notes the substantial amount of FEMA Public 
Assistance funding that has also been committed to electrical power 
system improvements. Accordingly, grantees are advised that when CDBG-
DR funds for electrical power system improvements are used in 
combination with FEMA or USACE funds, the grantee must document that 
such CDBG-DR funds were not used to pay for costs that could be charged 
to the FEMA or USACE award (although CDBG-DR funds may be used for 
CDBG-DR eligible costs of the other Federal agency-funded award up to 
the amount required for the non-Federal match and for costs that cannot 
be charged to the FEMA or USACE award). Statutory order of assistance 
provisions also prohibit the use of CDBG-DR funds to ``front'' costs 
that will later be reimbursed with FEMA or USACE funds. CDBG-DR funds 
may be used for the costs of compliance with CDBG-DR requirements that 
cannot be charged to the FEMA or USACE grant. The grantee shall be 
required to record in DRGR the expenditure of funds for the activity 
for which the match is provided and to indicate that the funds were 
used to meet a non-Federal match share requirement.
    V.A.16. Procurement. Grantees must adhere to the following 
procurement regulation and additional alternative requirement: Grantees 
must comply with the procurement requirements at 24 CFR 570.489(g) and 
evaluate the cost or price of the product or service. Grantees shall 
establish requirements for procurement policies and procedures for 
subrecipients based on full and open competition consistent with the 
requirements of 24 CFR 570.489(g), and shall require an evaluation of 
the cost or price of the product or service (including professional 
services such as engineering).
    Additionally, if the agency of the grantee that is designated as 
the administering agency chooses to provide funding to another agency 
of the grantee, the administering agency must specify in its 
procurement policies and procedures whether the agency implementing the 
program must follow the procurement policies and procedures that the 
administering agency is subject to, or whether the agency must follow 
the same policies and procedures to which other subrecipients are 
subject.
    V.A.17. Timely distribution of funds. The Appropriations Act, as 
amended, requires that funds provided under the Act be expended within 
two years of the date that HUD obligates funds to a grantee and 
authorizes the Office of Management and Budget (OMB) to provide a 
waiver of this requirement. OMB has provided HUD with a waiver of this 
two-year expenditure requirement. HUD is also waiving the provisions at 
24 CFR 570.494 and 24 CFR 570.902 regarding timely distribution and 
expenditure of funds and establishing an alternative requirement, 
providing that each grantee must expend one hundred percent of its 
allocation within six years of HUD's execution of the grant agreement 
absent a waiver and alternative requirement as requested by the grantee 
and approved by HUD. A grantee request for a waiver of an expenditure 
deadline must document the grantee's progress in the implementation of 
the grant; outline the long-term nature and complexity of the 
electrical power system improvement programs and projects that have yet 
to be fully implemented; and propose an alternative deadline for the 
expenditure of the funds.
    V.A.18. Program income waiver and alternative requirement. The 
Department is waiving applicable program income rules at 42 U.S.C. 
5304(j) and 24 CFR 570.489(e), only to the extent necessary to provide 
additional flexibility to grantees described below. The alternative 
requirements include requirements regarding the use of program income 
received before and after grant close out and address revolving loan 
funds.
    V.A.18.a. Definition of program income. For purposes of this 
notice, ``program income'' is defined as gross income generated from 
the use of CDBG-DR funds, except as provided in V.A.18.a(iv) and 
V.A.18.b. and received by a grantee or a subrecipient (including Indian 
tribes). When income is generated by an activity that is only partially 
assisted with CDBG-DR funds, the income shall be prorated to reflect 
the percentage of CDBG-DR funds used (e.g., a single loan supported by 
CDBG-DR funds and other funds; a single parcel of land purchased with 
CDBG funds and other funds). Program income includes, but is not 
limited to, the following:
    (i) Proceeds from the disposition by sale or long-term lease of 
real property purchased or improved with CDBG-DR funds.
    (ii) Proceeds from the disposition of equipment purchased with 
CDBG-DR funds.

[[Page 32697]]

    (iii) Gross income from the use or rental of real or personal 
property acquired by a State, local government, or subrecipient thereof 
with CDBG-DR funds, less costs incidental to generation of the income 
(i.e., net income).
    (iv) Net income from the use or rental of real property owned by a 
State, local government, or subrecipient thereof, that was constructed 
or improved with CDBG-DR funds.
    (v) Payments of principal and interest on loans made using CDBG-DR 
funds.
    (vi) Proceeds from the sale of loans made with CDBG-DR funds.
    (vii) Proceeds from the sale of obligations secured by loans made 
with CDBG-DR funds.
    (viii) Interest earned on program income pending disposition of the 
income, including interest earned on funds held in a revolving fund 
account.
    (ix) Funds collected through special assessments made against 
nonresidential properties and properties owned and occupied by 
households not low- and moderate-income, where the special assessments 
are used to recover all or part of the CDBG-DR portion of a public 
improvement.
    (x) Gross income paid to a state, local government, or a 
subrecipient thereof, from the ownership interest in a for-profit 
entity in which the income is in return for the provision of CDBG-DR 
assistance.
    V.A.18.b. Program income--does not include:
    (i) The total amount of funds that is less than $35,000 received in 
a single year and retained by a state, local government, or a 
subrecipient thereof.
    V.A.18.c. Retention of program income. Grantees may permit a local 
government that receives or will receive program income to retain the 
program income but are not required to do so.
    V.A.18.d. Program income--use, close out, and transfer.
    (i) Program income received (and retained, if applicable) before or 
after close out of the grant that generated the program income, and 
used to continue disaster recovery activities, is treated as additional 
CDBG-DR funds subject to the requirements of this notice and must be 
used in accordance with the grantee's action plan for disaster 
recovery. To the maximum extent feasible, program income shall be used 
or distributed before additional withdrawals from the U.S. Treasury are 
made, except as provided V.A.18.e. below.
    (ii) In addition to the regulations dealing with program income 
found at 24 CFR 570.489(e) and 570.504(c) (for subrecipients), as 
modified by the waivers and alternative requirements in this paragraph 
V.A.18., the following rule applies:
    (1) All program income received from CDBG-DR-funded electrical 
power system improvements under this notice, including proceeds from 
the disposition by sale or long-term lease of any component of the 
electrical power system, remain subject to the requirements of this 
notice and shall be used only for electrical power system improvements. 
Program income, however, received after grant closeout pursuant to this 
notice, may be held in trust by the grantee for the exclusive benefit 
of low-income residents for the purpose of reducing electricity costs 
to those residents through a subsidized electricity rate that is below 
that provided to other residents, or through electricity rates that are 
lower than was previously charged prior to completion of the electrical 
power system improvements.
    V.A.18.e. Revolving funds. A grantee may establish revolving funds 
to carry out specific, identified activities. Grantees may also 
establish a revolving fund to distribute funds to local governments or 
tribes to carry out specific, identified activities. A revolving fund, 
for this purpose, is a separate fund (with a set of accounts that are 
independent of other program accounts) established to carry out 
specific activities. These activities must generate payments used to 
support similar activities going forward. These payments to the 
revolving fund are program income and must be substantially disbursed 
from the revolving fund before additional grant funds are drawn from 
the U.S. Treasury for payments that could be funded from the revolving 
fund. Such program income is not required to be disbursed for 
nonrevolving fund activities. A revolving fund established by a CDBG-DR 
grantee shall not be directly funded or capitalized with CDBG-DR grant 
funds, pursuant to 24 CFR 570.489(f)(3).
    V.A.19. Review of continuing capacity to carry out CDBG-funded 
activities in a timely manner. If HUD determines that the grantee has 
not carried out its CDBG-DR activities and certifications in accordance 
with the requirements for CDBG-DR funds, HUD will undertake a further 
review to determine whether or not the grantee has the continuing 
capacity to carry out its activities in a timely manner. In making the 
determination, the Department will consider the nature and extent of 
the recipient's performance deficiencies, types of corrective actions 
the recipient has undertaken, and the success or likely success of such 
actions, and apply the corrective and remedial actions specified in 
section V.A.20. below.
    V.A.20. Corrective and remedial actions. To ensure compliance with 
the requirements of the Appropriations Act and to effectively 
administer CDBG-DR grants in a manner that facilitates resilience, 
particularly the alternative requirements permitting the grantee to act 
directly to carry out eligible activities, HUD is waiving 42 U.S.C. 
5304(e) to the extent necessary to establish the following alternative 
requirement: HUD may undertake corrective and remedial actions for the 
grantee in accordance with the authorities applicable to entitlement 
grantees in subpart O (including corrective and remedial actions in 24 
CFR 570.910, 570.911, and 570.913) or under subpart I of the CDBG 
regulations at 24 CFR part 570. In response to a deficiency, HUD may 
issue a warning letter followed by a corrective action plan that may 
include a management plan which assigns responsibility for further 
administration of the grant to specific entities or persons. Failure to 
comply with a corrective action may result in the termination, 
reduction, or limitation of payments to a grantee receiving CDBG-DR 
funds.
    V.A.21. Noncompliance and grant conditions. Failure to implement a 
CDBG-DR grant in accordance with a grantee's approved financial 
certification, the capacity and implementation plan, the action plan, 
as well as grant conditions established by the Department or other 
applicable requirements, shall constitute a performance deficiency. To 
correct that deficiency, the Department may exercise any of the 
corrective and remedial actions authorized in subpart O of the CDBG 
regulations (including corrective and remedial actions in 24 CFR 
570.910, 570.911, and 570.913) or under subpart I of the CDBG 
regulations at 24 CFR part 570. Grantees are advised that such remedies 
may include suspension of administrative funds as well as a reduction 
of the grantee's CDBG-DR grant or its annual CDBG grant.
    The Department may also establish special grant conditions for 
individual CDBG-DR grants to mitigate the risks posed by the grantee, 
including risks related to the grantee's capacity to carry out the 
specific programs and projects proposed in its action plan. These 
conditions will be designed to provide additional assurances that 
electrical power system improvements are implemented in a manner to 
prevent waste, fraud, and abuse and that the funded electrical power 
system improvements are effectively operated and maintained.

[[Page 32698]]

    V.A.22. Reduction, withdrawal, or adjustment of a grant, or other 
appropriate action. Prior to a reduction, withdrawal, or adjustment of 
a CDBG-DR grant, or other actions taken pursuant to this section, the 
recipient shall be notified of the proposed action and be given an 
opportunity for an informal consultation. Consistent with the 
procedures described for CDBG-DR funds, the Department may adjust, 
reduce, or withdraw the CDBG-DR grant or take other actions as 
appropriate, except for funds that have been expended for eligible, 
approved activities.
    V.A.23. Federal accessibility requirements. Grantees are reminded 
that the use of CDBG-DR funds must meet accessibility standards, 
including, but not limited to, the Fair Housing Act, Section 504 of the 
Rehabilitation Act, and Titles II and III of the Americans with 
Disabilities Act. Grantees should review the Fair Housing Act 
Accessibility Guidelines at https://www.hud.gov/program_offices/fair_housing_equal_opp/disabilities/fhefhag, the Uniform Federal 
Accessibility Standards (UFAS) at https://www.hudexchange.info/resource/796/ufas-accessibility-checklist/, and the 2010 ADA Standards. 
The HUD notice on ``Nondiscrimination on the Basis of Disability in 
Federally Assisted Programs and Activities,'' 79 FR 29671 (May 23, 
2014), explains when HUD recipients can use 2010 ADA Standards with 
exceptions, as an alternative to UFAS to comply with Section 504.

V.B. Infrastructure and Other Nonresidential Structures

    V.B.1. Construction standard alternative requirement for elevation 
of nonresidential structures. Nonresidential structures must be 
elevated to the standards described in this paragraph or floodproofed, 
in accordance with FEMA floodproofing standards at 44 CFR 
60.3(c)(3)(ii) or successor standard, up to at least two feet above the 
100-year (or 1 percent annual chance) floodplain. In addition, 
structural or nonstructural methods may be used to reduce or prevent 
damage, and the structure may be designed to adapt to, withstand and 
rapidly recover from a flood event. All Critical Actions, as defined at 
24 CFR 55.2(b)(3), within the 500-year (or 0.2 percent annual chance) 
floodplain must be elevated or floodproofed (in accordance with the 
FEMA standards) to the higher of the 500-year floodplain elevation or 
three feet above the 100-year floodplain elevation. If the 500-year 
floodplain or elevation is unavailable, and the Critical Action is in 
the 100-year floodplain, then the structure must be elevated or 
floodproofed at least three feet above the 100-year floodplain 
elevation. Critical Actions are defined as an ``activity for which even 
a slight chance of flooding would be too great, because such flooding 
might result in loss of life, injury to persons or damage to 
property.'' For example, Critical Actions include principal utility 
lines, hospitals, nursing homes, police stations, and fire stations.
    Grantee may, in the alternative, use a FEMA-approved flood standard 
when each of the following conditions is in place: (i) CDBG-DR funds 
are used as the non-federal match for FEMA assistance; (ii) the FEMA-
assisted activity, for which CDBG-DR funds will be used as match, 
commenced prior to HUD's obligation of CDBG-DR funds to the grantee; 
and (iii) the grantee has determined and demonstrated with records in 
the activity file that implementation costs of the required CDBG-DR 
elevation or flood proofing up to two feet (or three feet for critical 
actions) is not reasonable as that term is defined in the applicable 
cost principles at 2 CFR 200.404. Under this provision and criterion 
(ii) above, HUD considers the FEMA-assisted activity to have 
``commenced'' on the date on which the HUD grantee has incurred a 
project cost that has been or will be charged to an approved FEMA PW. 
This may include pre-award costs if FEMA determines that the costs are 
eligible.
    Non-structural infrastructure must be resilient to flooding. The 
vertical flood elevation establishes the level to which a facility must 
be resilient. This may include using structural or nonstructural 
methods to reduce or prevent damage; or, designing it to withstand and 
rapidly recover from a flood event. In selecting the appropriate 
resilience approach, grantees should consider several factors such as 
flood depth, velocity, rate of rise of floodwater, duration of 
floodwater, erosion, subsidence, the function or use and type of 
facility, and other factors.
    Applicable state and local codes and standards for floodplain 
management that exceed these requirements, including elevation, 
setbacks, and cumulative substantial damage requirements, will be 
followed. Grantees are reminded that the elevation of structures must 
comply with all applicable Federal accessibility standards outlined in 
section V.A.22.
    Grantees, recipients, and subrecipients must implement procedures 
and mechanisms to ensure that assisted property owners comply with all 
flood insurance requirements, prior to providing assistance. For 
additional information, please consult with the field environmental 
officer in the local HUD field office or review the guidance on flood 
insurance requirements on HUD's website.
    V.B.2. Limitation of use of eminent domain. CDBG-DR funds may not 
be used to support any Federal, state, or local projects that seek to 
use the power of eminent domain, unless eminent domain is employed only 
for a public use. For purposes of this paragraph, public use shall not 
be construed to include economic development that primarily benefits 
private entities. Any use of funds for mass transit, railroad, airport, 
seaport or highway projects, as well as utility projects which benefit 
or serve the general public (including energy related, communication-
related, water related, and wastewater-related infrastructure), other 
structures designated for use by the general public or which have other 
common-carrier or public-utility functions that serve the general 
public and are subject to regulation and oversight by the government, 
and projects for the removal of an immediate threat to public health 
and safety or brownfields as defined in the Small Business Liability 
Relief and Brownfields Revitalization Act (Pub. L. 107-118) shall be 
considered a public use for purposes of eminent domain.
    V.B.3. Refinancing or payment of debt for acquisition. Pursuant to 
the definition of electrical power system improvements established in 
section V.A.8.a.(ii) of this notice, the refinancing or paying down of 
debt shall be eligible only for the purpose of acquiring a facility 
only upon HUD's consultation with the federal agencies that comprise 
the TCT, and a demonstration by the grantee that such acquisition is 
critical to the improvement of the grantee's electrical power system 
and to long term financial stability of the grantee's public utility 
and will allow the grantee to meet a low- and moderate-income national 
objective as established by this notice.
    V.B.4. HUD consultation on use of other CDBG-DR and CDBG-MIT funds. 
The unprecedented levels of HUD and other federal funding for disaster 
recovery and mitigation provided to Puerto Rico and the USVI and the 
specialized nature of the electrical power system improvement activity 
funded pursuant to this notice, warrant additional consultation by HUD 
with its federal partners when a grantee proposes to use other CDBG-DR 
funds or CDBG-MIT funds for electrical power system improvement to 
ensure that all funds are used for necessary expenses, as required by 
the Appropriations Act.

[[Page 32699]]

Accordingly, grantees are prohibited from using CDBG-DR funds 
previously obligated for recovery from a 2017 disaster or CDBG-MIT 
funds for activities to enhance or improve electrical power systems 
until HUD properly consults and coordinates with its Federal members 
through the TCT on other Federally funded investments for this purpose. 
This limitation includes a prohibition on the use of CDBG-DR or CDBG-
MIT funds to meet the matching requirement, share, or contribution for 
any Federally funded project that is providing funding for electrical 
power systems until HUD completes its consultation. HUD will inform the 
grantee when its consultation has been completed.
    V.B.5. Prohibiting assistance to private utilities. Funds made 
available under this notice may not be used to assist privately-owned 
utilities. A CDBG-DR grantee may seek a waiver of this prohibition when 
it has identified an electrical power system improvement project that 
is a priority and where assistance to a privately-owned utility is 
demonstrated to be necessary to implement the project.

V.C. Certifications and Collection of Information

    V.C.1. Certifications' waiver and alternative requirement. 24 CFR 
91.325 is waived. Each grantee receiving a direct allocation under this 
notice must make the following certifications with its action plan:
    a. The grantee certifies that it has in effect and is following a 
residential anti-displacement and relocation assistance plan in 
connection with any activity assisted with funding under the CDBG 
program.
    b. The grantee certifies its compliance with restrictions on 
lobbying required by 24 CFR part 87, together with disclosure forms, if 
required by part 87.
    c. The grantee certifies that the action plan for disaster recovery 
is authorized under State and local law (as applicable) and that the 
grantee, and any entity or entities designated by the grantee, and any 
contractor, subrecipient, or designated public agency carrying out an 
activity with CDBG-DR funds, possess(es) the legal authority to carry 
out the program for which it is seeking funding, in accordance with 
applicable HUD regulations and this notice. The grantee certifies that 
activities to be undertaken with funds under this notice are consistent 
with its action plan.
    d. The grantee certifies that it will comply with the acquisition 
and relocation requirements of the URA, as amended, and implementing 
regulations at 49 CFR part 24, except where waivers or alternative 
requirements are provided for in this notice.
    e. The grantee certifies that it will comply with section 3 of the 
Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and 
implementing regulations at 24 CFR part 135.
    f. The grantee certifies that it is following a detailed citizen 
participation plan that satisfies the requirements of 24 CFR 91.115 
(except as provided for in notices providing waivers and alternative 
requirements for this grant). Also, each local government receiving 
assistance from a State grantee must follow a detailed citizen 
participation plan that satisfies the requirements of 24 CFR 570.486 
(except as provided for in notices providing waivers and alternative 
requirements for this grant).
    g. State grantee certifies that it has consulted with affected 
local governments in counties designated in covered major disaster 
declarations in the non-entitlement, entitlement, and tribal areas of 
the State in determining the uses of funds, including the method of 
distribution of funding, or activities carried out directly by the 
State.
    h. The grantee certifies that it is complying with each of the 
following criteria:
    (1) Funds will be used solely for necessary expenses of electrical 
power system enhancements and improvements in the most impacted and 
distressed areas as defined by HUD in section II of this notice.
    (2) With respect to activities expected to be assisted with CDBG-DR 
funds, the action plan has been developed so as to give the maximum 
feasible priority to activities that will benefit low- and moderate-
income families.
    (3) The aggregate use of CDBG-DR funds shall principally benefit 
low- and moderate-income families in a manner that ensures that at 
least 70 percent (or another percentage permitted by HUD in a waiver 
published in an applicable Federal Register notice) of the grant amount 
is expended for activities that benefit such persons.
    (4) The grantee will not attempt to recover any capital costs of 
public improvements assisted with CDBG-DR grant funds, by assessing any 
amount against properties owned and occupied by persons of low- and 
moderate-income, including any fee charged or assessment made as a 
condition of obtaining access to such public improvements, unless: (a) 
Disaster recovery grant funds are used to pay the proportion of such 
fee or assessment that relates to the capital costs of such public 
improvements that are financed from revenue sources other than under 
this title; or (b) for purposes of assessing any amount against 
properties owned and occupied by persons of moderate income, the 
grantee certifies to the Secretary that it lacks sufficient CDBG funds 
(in any form) to comply with the requirements of clause (a).
    i. The grantee certifies that the grant will be conducted and 
administered in conformity with title VI of the Civil Rights Act of 
1964 (42 U.S.C. 2000d), the Fair Housing Act (42 U.S.C. 3601-3619), and 
implementing regulations, and that it will affirmatively further fair 
housing. An Indian tribe grantee certifies that the grant will be 
conducted and administered in conformity with the Indian Civil Rights 
Act.
    j. The grantee certifies that it has adopted and is enforcing the 
following policies, and, in addition, must certify that they will 
require local governments that receive grant funds to certify that they 
have adopted and are enforcing:
    (1) A policy prohibiting the use of excessive force by law 
enforcement agencies within its jurisdiction against any individuals 
engaged in nonviolent civil rights demonstrations; and
    (2) A policy of enforcing applicable State and local laws against 
physically barring entrance to or exit from a facility or location that 
is the subject of such nonviolent civil rights demonstrations within 
its jurisdiction.
    k. The grantee certifies that it (and any subrecipient or 
administering entity) currently has or will develop and maintain the 
capacity to carry out disaster recovery activities in a timely manner 
and that the grantee has reviewed the requirements of this notice. The 
grantee certifies to the accuracy of its previously submitted CDBG-MIT 
Financial Management and Grant Compliance certification checklist and 
addendums, or other recent certification submission, if approved by 
HUD, and related supporting documentation referenced at V.A.1.a. in 
this notice and Implementation Plan and Capacity Assessment and related 
submissions to HUD referenced at V.A.1.b. of this notice.
    l. The grantee certifies that it will not use CDBG-DR funds for any 
activity in an area identified as flood prone for land use or hazard 
mitigation planning purposes by the State, local, or tribal government 
or delineated as a Special Flood Hazard Area (or 100-year floodplain) 
in FEMA's most current flood advisory maps, unless it also ensures that 
the action is designed or modified to minimize harm to or within the 
floodplain, in accordance with Executive Order 11988 and 24 CFR part 
55. The relevant data source for this provision is the State, local, 
and tribal

[[Page 32700]]

government land use regulations and current hazard mitigation plans and 
the latest-issued FEMA data or guidance, which includes advisory data 
(such as Advisory Base Flood Elevations) or preliminary and final Flood 
Insurance Rate Maps.
    m. The grantee certifies that its activities concerning lead-based 
paint will comply with the requirements of 24 CFR part 35, subparts A, 
B, J, K, and R.
    n. The grantee certifies that it will comply with environmental 
requirements at 24 CFR part 58.
    o. The grantee certifies that it will comply with applicable laws.
    Warning: Any person who knowingly makes a false claim or statement 
to HUD may be subject to civil or criminal penalties under 18 U.S.C. 
287, 1001 and 31 U.S.C. 3729.

VI. Duration of Funding

    The Appropriations Act makes the funds available for obligation by 
HUD until expended. This notice requires each grantee to expend 100 
percent of its CDBG-DR grant on eligible activities within 6 years of 
HUD's obligation of funds under Public Law 115-123 for electrical power 
system improvements. HUD may extend the period of performance 
administratively, if good cause for such an extension exists at that 
time, as requested by the grantee, and approved by HUD. When the period 
of performance has ended, HUD will close out the grant and any 
remaining funds not expended by the grantee on appropriate programmatic 
purposes will be recaptured by HUD.

VII. Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers for the grants 
under this notice are as follows: 14.218 and 14.228.

VIII. Finding of No Significant Impact

    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made in accordance with HUD regulations at 24 CFR 
part 50, which implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is 
available for inspection on HUD's website and in-person for public 
inspection between 8 a.m. and 5 p.m. weekdays in the Regulations 
Division, Office of General Counsel, Department of Housing and Urban 
Development, 451 7th Street SW, Room 10276, Washington, DC 20410-0500. 
Due to security measures at the HUD Headquarters building, an advance 
appointment to review the docket file must be scheduled by calling the 
Regulations Division at 202-708-3055 (this is not a toll-free number). 
Hearing- or speech-impaired individuals may access this number through 
TTY by calling the Federal Relay Service at 800-877-8339 (this is a 
toll-free number).

James Arthur Jemison II,
Principal Deputy Assistant Secretary for Community Planning and 
Development.
[FR Doc. 2021-12934 Filed 6-21-21; 8:45 am]
BILLING CODE 4210-67-P


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