4578 Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 1003

[Docket No. FR–4612–F–02]

RIN 2577–AC22

Revision to the Application Process for

Community Development Block Grants

for Indian Tribes and Alaska Native

Villages

AGENCY: Office of the Assistant

Secretary for Public and Indian

Housing, HUD.

ACTION: Final rule.

SUMMARY: This final rule amends HUD’s

regulations for Community

Development Block Grants for Indian

Tribes and Alaska Native Villages (the

‘‘ICDBG’’ program). These amendments

will permit the incorporation of the

ICDBG grant application and selection

procedures into HUD’s SuperNOFA

process. The SuperNOFA approach, in

which the great majority of HUD’s

competitive funds are announced in one

document, is designed to simplify the

application process, bring consistency

and uniformity to the application and

selection process, and accelerate the

availability of funding. In addition to

the SuperNOFA-related amendments,

this final rule amends the ICDBG

program regulations to remove certain

obsolete regulatory provisions and to

clarify program requirements. This final

rule follows publication of a November

2000 proposed rule and takes into

consideration the public comments

received on the proposed rule. After

careful review of all of the public

comments, HUD has decided to adopt

the proposed regulatory amendments

without change.

DATES: Effective Date: February 16,

2001.

FOR FURTHER INFORMATION CONTACT:

Jacqueline Kruszek, Office of Grants

Management, Office of Native American

Programs, Department of Housing and

Urban Development, Suite 3390, 1999

Broadway, Denver, CO 80202; telephone

1–800–561–5913 (this is a toll-free

number). Hearing or speech-impaired

persons may access this telephone

number via TTY by calling the Federal

Information Relay Service at 1–800–

877–8339. Ms. Kruszek may also be

contacted via e-mail at:

Jacqueline_A._Kruszek@hud.gov.

SUPPLEMENTARY INFORMATION:

I. Background—The November 6, 2000,

Proposed Rule

The Community Development Block

Grants program for Indian Tribes and

Alaska Native Villages (the ‘‘ICDBG’’

program) provides eligible grantees with

direct grants for use in developing

viable Indian and Alaskan Native

communities, including decent housing,

a suitable living environment, and

economic opportunities, primarily for

low- and moderate-income persons. On

November 6, 2000 (65 FR 66592), HUD

published a proposed rule to amend the

ICDBG program regulations at 24 CFR

part 1003. The principal reason for the

proposed changes was to allow the

integration of the ICDBG program

application process into HUD’s Super

Notice of Funding Availability

(SuperNOFA) approach. HUD, through

letter dated July 12, 2000, provided

Indian tribes and Alaska Native Villages

with the opportunity to comment on the

substance of the proposed regulatory

changes during the development of the

November 6, 2000 proposed rule. HUD

received 7 comments on the proposed

revisions, all in support of the

regulatory changes and the

incorporation of the ICDBG program

requirements in the SuperNOFA

process.

The SuperNOFA process, in which

the great majority of HUD’s competitive

funds are announced in one document,

is designed to simplify the application

process, bring consistency and

uniformity to the application and

selection process, and accelerate the

availability of funding. Unlike those

HUD programs included in the

SuperNOFA, the application process for

funding under the ICDBG program has

been implemented through separate

stand-alone NOFAs. This was based, in

part, on a determination that the

considerations for grant award were

substantially different for the ICDBG

program when compared with those

included in the SuperNOFA. Based

upon closer review, HUD has

determined that the SuperNOFA

process, especially as it has evolved in

the last two years, affords the degree of

flexibility necessary to address

important distinctions in funding

considerations (such as project specific

thresholds), while at the same time

providing a framework within which

application simplification procedures

may be implemented. Certain regulatory

changes, however, are required in order

to permit the incorporation of the

ICDBG program in the SuperNOFA

process. Accordingly, HUD issued the

November 6, 2000 proposed rule to

revise the ICDBG program regulations

application selection and rating

procedures.

In addition to the SuperNOFA-related

amendments, HUD took the opportunity

provided by the November 6, 2000

proposed rule to make several

streamlining and clarifying amendments

to 24 CFR part 1003. These proposed

amendments were non-substantive, but

proposed to remove obsolete regulatory

language and clarify existing program

requirements. In addition, these

proposed changes were designed to

provide additional flexibility to address

eligible activities under the ICDBG

program.

The preamble to the November 6,

2000 proposed rule provides additional

details regarding the proposed

amendments to the ICDBG programs

regulations at 24 CFR part 1003.

II. This Final Rule; Discussion of the

Public Comments Received on the

November 6, 2000, Proposed Rule

This final rule makes effective the

policies and procedures contained in

the November 6, 2000 proposed rule

and takes into consideration the public

comments received on the proposed

rule. The public comment period on the

proposed rule closed on December 6,

2000. By close of business on that date,

HUD had received 9 public comments

on the proposed regulatory

amendments, all from Indian tribes.

After careful review of all the public

comments, HUD has decided to adopt

the proposed regulatory amendments

without change. This section of the

preamble presents a summary of the

significant issues raised by the public

commenters, and HUD’s responses to

the comments.

A. Comments Regarding National Rating

of ICDBG Applications

Comment: Final rule should provide

that Area ONAPs will continue to rate

ICDBG applications. The November 6,

2000, rule proposed to remove the

requirement that applications be rated

by each Area Office of Native American

Programs (ONAP). The public

commenters objected to this proposed

change. The commenters wrote that

each Area ONAP has the advantage of

being intimately familiar with local

tribes and local conditions that may

affect ICDBG project costs (such as

weather patterns, the availability of

construction materials, and the local

labor market). Several of the

commenters also disagreed that a

national rating panel would help to

expedite the funding process, and wrote

they were unaware of any funding

delays necessitating the proposed

change. For these reasons, the

commenters believe that national ratings

would be less accurate and fair than

those performed by the Area ONAPs.

HUD response. HUD is sensitive to

the concerns expressed by these public

Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Rules and Regulations 4579

commenters, and assures them that a

national review panel will not be used

during the Fiscal Year (FY) 2001 ICDBG

funding round. Applications for FY

2001 ICDBG funding will continue to be

rated by the Area ONAPs. HUD

continues to believe that the use of a

national rating panel may assist in

expediting the ICDBG funding approval

process, and wishes to have the

regulatory flexibility to consider such an

option for future ICDBG funding rounds.

The final rule provides HUD with this

flexibility, but also continues to permit

the rating of ICDBG applications by the

Area ONAPs. HUD agrees with the

commenters that there are several issues

that need to be addressed before

implementation of a national review

panel. HUD will work with its tribal

partners to address these issues of

concern before establishing a national

ICDBG review panel. HUD also wishes

to note that, even if a national rating

panel is established, ICDBG fund

allocation and competition for these

funds would continue to be made for

and limited to each Area ONAP

jurisdiction.

B. Comments Regarding Tribal

Consultation/Comment Period

Comment: The reduced 30-day

comment period was insufficient. Two

commenters did not agree that the need

to incorporate the ICDBG program in the

FY 2001 SuperNOFA process justified

reducing the customary 60-day public

comment period for proposed rules to

30-days. One of the commenters wrote

that delaying this incorporation would

provide Indian tribes (and particularly

small tribes) with the necessary time to

become better acquainted with the

SuperNOFA process.

HUD response. HUD agrees that

public comment is essential to the

success of the rulemaking process. In

general, it is HUD’s policy to provide

the public with at least 60 days to

submit comments on its proposed rules.

However, HUD continues to believe that

good cause existed to provide a reduced

30-day comment period for the

November 6, 2000, proposed rule. The

30-day public comment period was

necessary to ensure the inclusion of the

ICDBG funding process in the FY 2001

SuperNOFA. Incorporation in the

SuperNOFA will greatly benefit ICDBG

program applicants. Among other

benefits, the SuperNOFA’s promotion of

coordination and comprehensive

planning will provide potential ICDBG

grantees with greater flexibility in

meeting local housing and community

development needs, and will allow for

the delivery of a wider, more integrated

array of services. Provision of the

customary 60-day public comment

period had the potential to delay the

rulemaking process and might have

jeopardized the incorporation of the

ICDBG program in the FY 2001

SuperNOFA process.

Further, HUD, through letter dated

July 12, 2000, provided Indian tribes

and Alaska Native Villages with the

opportunity to comment on the

substance of the proposed regulatory

changes during the development of the

proposed rule. HUD received 7

comments on the proposed revisions, all

in support of the regulatory changes and

the incorporation of the ICDBG program

requirements in the SuperNOFA

process. Accordingly, the reduced 30-

day comment period did not unduly

restrict the ability of ICDBG program

participants to express their views on

the proposed rule, since they had

already been afforded an opportunity to

comment on the regulatory changes.

Comment: HUD failed to consult with

Indian Tribes prior to issuing the

proposed rule. Several commenters

objected to the perceived lack of tribal

consultation in the development of the

proposed rule. The commenters wrote

that HUD was required to consult with

Indian tribes before issuing these

proposed amendments, in accordance

with Executive Order 13084 regarding

consultation and coordination with

Indian tribes (published in the Federal

Register on May 19, 1998 (63 FR

27655)). Two of the commenters

however, acknowledged that the

proposed incorporation of the ICDBG

program in the SuperNOFA process

‘‘has been known and discussed among

the tribes for a period of time.’’

HUD response. As noted above, HUD

consulted with Indian tribes and Alaska

Native Villages during the development

of the proposed regulatory amendments.

HUD received 7 comments on the

proposed revisions, all in support of the

regulatory changes and the

incorporation of the ICDBG program

requirements in the SuperNOFA

process. HUD is committed to continue

its consultation efforts with Indian

tribes and Alaska Native Villages in the

implementation of these regulatory

changes to the ICDBG program. For

example, HUD will work with its tribal

partners to address issues of concern

before implementing a national ICDBG

review panel. HUD has also scheduled

a series of meetings with Indian tribes

during the week of January 8, 2000 to

solicit additional input on the

implementation of, and possible future

changes to, these regulatory

amendments to the ICDBG program.

Further, and in accordance with the

requirements of Executive Order 13084,

HUD has also been working closely with

Indian tribes in the development of its

tribal consultation policy. The purpose

of the consultation policy will be to

enhance communication and

coordination between HUD and

federally recognized Indian tribes, and

to outline guiding principles and

procedures under which all HUD

employees are to operate with regard to

federally recognized Indian or Alaska

Native tribes.

C. Other Comments

Comment: How will HUD determine

the ‘‘reasonableness’’ of project costs?

The November 6, 2000 rule proposed to

revise 24 CFR 1003.100(b), which

identifies the factors that an Area ONAP

may take into account in approving a

grant amount less than the requested

amount. Specifically, HUD proposed to

revise § 1003.100(b)(2) to clarify that the

Area ONAP may consider the

reasonableness of the project costs in

making this determination. One

commenter requested clarification on

how HUD will determine whether

proposed project costs are reasonable.

HUD response. The requirement that

project costs be reasonable is not a new

requirement, but is one of the threshold

requirements for community

appropriateness currently located at

§ 1003.301. As in previous years,

information regarding how HUD will

determine the reasonableness of project

costs will be provided in the application

kit for the FY 2001 ICDBG NOFA.

Comment: Clarification is needed

regarding outstanding obligations

threshold requirement. The November 6,

2000 rule proposed to continue to

provide that an applicant that has an

outstanding ICDBG obligation to HUD

that is in arrears, or has not agreed to

a repayment schedule, will be

disqualified from the ICDBG

competition (see proposed

§ 1003.301(a)). One commenter

requested clarification of this provision.

Specifically, the commenter asked

whether this provision refers ‘‘only to

an outstanding financial payment due to

HUD.’’ The commenter was concerned

that this provision could be interpreted

to include any prior grants that are

simply behind schedule or past the

desired two year time frame for

completion. The commenter wrote that

‘‘[m]any obstacles in the construction

industry are unpredictable, beyond the

control of the grantee, and are the result

of completely reasonable dynamics

specific to the industry, with

compelling justification.’’

HUD response. The regulatory

language in question was not revised by

the November 6, 2000, proposed rule.

4580 Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Rules and Regulations

Rather, the quoted language is an

existing requirement currently located

at § 1000.301(a)(3)(iii). The language

was repeated in the proposed rule solely

for purposes of clarity and to place other

proposed regulatory changes in context.

This requirement has been consistently

interpreted by HUD to refer only to

outstanding financial debts or payments

due to HUD as a result of ineligible costs

or repayments.

Comment: Clarification is needed

regarding the SuperNOFA rating factors.

Current § 1003.303 (entitled ‘‘Project

rating’’) establishes three separate rating

categories: housing, community

facilities, and economic development.

Further, § 1003.303 establishes specific

rating criteria for these categories

(although some categories share similar

criteria). The requirements for separate

rating categories and related criteria

based on the type of project are

inconsistent with SuperNOFA

requirements and procedures.

Therefore, the November 6, 2000 rule

proposed to amend § 1003.303 to

provide for the use of the five uniform

rating factors used in the SuperNOFA—

Capacity, Need/Extent of the Problem,

Soundness of Approach, Leveraging of

Resources, and Comprehensiveness and

Coordination. One of the commenters

requested clarification on how HUD

would measure need and the soundness

of approach.

HUD response. Many of the criteria

addressed by the SuperNOFA rating

factors (such as need/extent of the

problem, and soundness of approach)

are currently addressed under the

existing ICDBG rating factors, and will

therefore be familiar to most ICDBG

applicants. Additional details regarding

the new rating factors will be provided

in the ICDBG component of the

SuperNOFA and the accompanying

application kit.

III. Findings and Certifications

Environmental Impact

In accordance with 24 CFR 50.19(c)(2)

of the Department’s regulations, the

amendments made by this final rule do

not direct, provide for assistance or loan

and mortgage insurance for, or

otherwise govern or regulate, real

property acquisition, disposition,

leasing, rehabilitation, alteration,

demolition, or new construction, or

establish, revise, or provide for

standards for construction or

construction materials, manufactured

housing, or occupancy. Therefore, this

final rule is categorically excluded from

the requirements of the National

Environmental Policy Act (42 U.S.C.

4321 et seq.).

Regulatory Flexibility Act

The Secretary has reviewed this final

rule before publication, and by

approving it certifies, in accordance

with the Regulatory Flexibility Act (5

U.S.C. 605(b)), that this final rule will

not have a significant economic impact

on a substantial number of small

entities. To the extent that the final rule

has an impact on small Indian tribes

and Alaskan Native Villages, it will be

to reduce burden and expedite the

ICDBG funding process. As described

more fully in the preamble, the

amendments made by this final rule will

permit the incorporation of the ICDBG

program application and selection

procedures into HUD’s highly

successful SuperNOFA process. The

inclusion of the ICDBG program in the

SuperNOFA will simplify the ICDBG

application process, conform the ICDBG

application and selection procedures

with those of other HUD competitive

grant programs, and accelerate the

availability of funding.

Executive Order 13132, Federalism

Executive Order 13132 (entitled

‘‘Federalism’’) prohibits an agency from

publishing any rule that has federalism

implications if the rule either imposes

substantial direct compliance costs on

State and local governments and is not

required by statute, or the rule preempts

State law, unless the agency meets the

consultation and funding requirements

of section 6 of the Executive Order. This

final rule does not have federalism

implications and does not impose

substantial direct compliance costs on

State and local governments or preempt

State law within the meaning of the

Executive Order.

Consultation with Indian Tribal

Governments

In accordance with Executive Order

13084, Consultation and Coordination

With Indian Tribal Governments, issued

on May 14, 1998, HUD has consulted

with representatives of tribal

governments concerning the subject of

this rule. HUD, through letter dated July

12, 2000, provided Indian tribes and

Alaska Native Villages the opportunity

to comment on the substance of the

proposed regulatory changes during the

development of the November 6, 2000

proposed rule. HUD received 7

comments on the proposed revisions, all

in support of the regulatory changes and

the incorporation of the ICDBG program

requirements in the SuperNOFA

process. The comments received by

HUD indicate that the regulatory

changes are not controversial, and are

supported by most Indian tribes and

Alaska Native Villages. Additionally,

the November 6, 2000, proposed rule

provided Indian tribes with an

additional opportunity to comment on

the proposed regulatory changes. HUD

has fully considered the public

comments received on the proposed

rule in the development of this final

rule. HUD has also scheduled a series of

meetings with Indian tribes during the

week of January 8, 2000 to discuss

implementation of, and possible future

changes to, these regulatory

amendments to the ICDBG program.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates

Reform Act of 1995 (2 U.S.C. 1531–

1538) establishes requirements for

Federal agencies to assess the effects of

their regulatory actions on State, local,

and tribal governments, and on the

private sector. This final rule does not

impose any Federal mandates on any

State, local, or tribal governments, or on

the private sector, within the meaning of

the Unfunded Mandates Reform Act of

1995.

Catalog of Federal Domestic Assistance

Numbers

The Catalog of Federal Domestic

Assistance Number for the Community

Development Block Grant Program for

Indian Tribes and Alaska Native

Villages is 14.862.

List of Subjects in 24 CFR Part 1003

Alaska, Community development

block grants, Grant programs—housing

and community development, Indians,

Reporting and recordkeeping

requirements.

Accordingly, for the reasons described

in the preamble, HUD amends 24 CFR

part 1003 as follows:

PART 1003—COMMUNITY

DEVELOPMENT BLOCK GRANTS FOR

INDIAN TRIBES AND ALASKA NATIVE

VILLAGES

1. The authority citation for 24 CFR

part 1003 continues to read as follows:

Authority: 42 U.S.C. 3535(d) and 5301 et

seq.

2. Revise 1003.100(b)(2) to read as

follows:

§ 1003.100 General.

* * * * *

(b) * * *

(2) Individual grant amounts. An Area

ONAP may approve a grant amount less

than the amount requested. In doing so,

the Area ONAP may take into account

the size of the applicant, the level of

demand, the scale of the activity

proposed relative to need and

Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / Rules and Regulations 4581

operational capacity, the number of

persons to be served, the amount of

funds required to achieve project

objectives, the reasonableness of the

project costs, and the administrative

capacity of the applicant to complete

the activities in a timely manner.

3. Revise § 1003.301 to read as

follows:

§ 1003.301 Selection process.

(a) Threshold requirement. An

applicant that has an outstanding

ICDBG obligation to HUD that is in

arrears, or one that has not agreed to a

repayment schedule, will be

disqualified from the competition.

(b) Application rating. NOFAs will

define and establish weights for the

selection criteria, will specify the

maximum points available, and will

describe how point awards will be

made.

4. Revise § 1003.303 to read as

follows:

§ 1003.303 Project rating.

Each project included in an

application that meets the threshold

requirements shall be competitively

rated within each Area ONAP’s

jurisdiction under the five following

rating factors. Additional details

regarding the rating factors will be

provided in the periodic NOFAs.

(a) Capacity. This factor will address

the applicant’s organizational resources

necessary to successfully implement the

proposed activities in a timely manner.

(b) Need/Extent of the problem. This

factor will address the extent to which

there is a need for the proposed project

to address a documented problem

among the intended beneficiaries.

(c) Soundness of Approach. This

factor will address the quality and cost

effectiveness of the proposed project,

the commitment to sustain the proposed

activities, and the degree to which the

proposed project provides other benefits

to community members.

(d) Leveraging of resources. This

factor will address the level of tribal

resources and resources from other

entities that are used in conjunction

with ICDBG funds to support the

proposed project. HUD will evaluate the

level of non-ICDBG resources based on

the percentage of non-ICDBG resources

provided relative to project costs.

(e) Comprehensiveness and

coordination. This factor will address

the extent to which the applicant’s

proposed activities are consistent with

the strategic plans or policy goals of the

community and further on-going

priorities and activities of the

community.

Dated: January 9, 2001.

Harold Lucas,

Assistant Secretary for Public and Indian

Housing.

[FR Doc. 01–1206 Filed 1–16–01; 8:45 am]

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