37990 Federal Register / Vol. 87, No. 122 / Monday, June 27, 2022 / Rules and Regulations 

no extraordinary circumstances exist 

that warrant preparation of an 

environmental assessment. 

Lists of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

Adoption of the Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

amends 14 CFR part 71 as follows: 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

■ 1. The authority citation for part 71 

continues to read as follows: 

Authority: 49 U.S.C. 106(f), 106(g); 40103, 

40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 

1959–1963 Comp., p. 389. 

71.1 [Amended] 

■ 2. The incorporation by reference in 

14 CFR 71.1 of FAA Order JO 7400.11F, 

Airspace Designations and Reporting 

Points, dated August 10, 2021, and 

effective September 15, 2021, is 

amended as follows: 

Paragraph 6005 Class E Airspace Areas 

Extending Upward From 700 Feet or More 

Above the Surface of the Earth. 

* * * * * 

AGL SD E5 Milbank, SD [Amended] 

Milbank Municipal Airport, SD, 

(Lat. 45°13′50′′ N, long. 96°33′58′′ W) 

That airspace extending upward from 700 

feet or more above the surface within a 6.4- 

mile radius of the Milbank Municipal 

Airport. 

* * * * * 

AGL SD E5 South Dakota, SD [Amended] 

That airspace extending upward from 

1,200 feet above the surface within the 

boundary of the State of South Dakota. 

Issued in Fort Worth, Texas, on June 21, 

2022. 

Wayne L. Eckenrode, 

Acting Manager, Operations Support Group, 

ATO Central Service Center. 

[FR Doc. 2022–13507 Filed 6–24–22; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Parts 880, 881, 883, 884, 886, 

and 891 

[Docket No. FR–5654–F–03] 

RIN 2502–AJ22 

Streamlining Management and 

Occupancy Reviews for Section 8 

Housing Assistance Programs 

AGENCY: Office of the Assistant 

Secretary for Housing—Federal Housing 

Commissioner. 

ACTION: Final rule. 

SUMMARY: This final rule amends 

existing project-based Section 8 

regulations related to Management and 

Occupancy Reviews (MORs) for the 

following seven project-based Section 8 

programs administered by the Office of 

Multifamily Housing Programs: the 

Section 8 Housing Assistance Payments 

(HAP) Programs for New Construction, 

Substantial Rehabilitation, State 

Housing Agencies, New Construction 

financed under Section 515 of the 

Housing Act of 1949, the Loan 

Management Set-Aside Program, the 

HAP Program for the Disposition of 

HUD-Owned Projects, and the Section 

202/8 Program. Under this final rule, 

MORs will be conducted in accordance 

with a performance-based schedule 

published in the Federal Register, 

following a notice and comment period. 

The first such schedule is being 

published concurrently with this final 

rule and can be found elsewhere in this 

issue of the Federal Register. HUD is 

making this move to a performancebased MOR schedule to establish a riskbased scheduling protocol, reduce the 

frequency of MORs for projects that 

consistently perform well, and provide 

consistency across programs with 

respect to MOR frequency. Additionally, 

HUD is correcting a regulatory citation 

in its regulations concerning the Section 

8 Housing Assistance Program for the 

Disposition of HUD-Owned Projects. 

DATES: The effective date of this final 

rule is September 26, 2022. 

FOR FURTHER INFORMATION CONTACT: 

Jennifer Lavorel, Director, Program 

Administration Office, Office of 

Multifamily Asset Management, Office 

of Housing, Department of Housing and 

Urban Development, 451 7th Street SW, 

Washington, DC 20410–7000; telephone 

number 202–402–2515 (this is not a tollfree number). Hearing- and speechimpaired persons may access this 

number through TTY by calling the 

Federal Relay Service at 800–877–8339 

(this is a toll-free number). 

SUPPLEMENTARY INFORMATION: 

I. Background 

On January 14, 2015, HUD published 

for public comment a proposed rule (80 

FR 1860) to amend the regulations that 

govern seven project-based Section 8 

HAP programs administered by the 

Office of Multifamily Housing Programs: 

the HAP program for New Construction 

(24 CFR part 880) and the HAP program 

for Substantial Rehabilitation (24 CFR 

part 881), which provide rental 

assistance in connection with the 

development of newly constructed or 

substantially rehabilitated privately 

owned rental housing; the HAP Program 

for State Housing Agencies (24 CFR part 

883), which applies to newly 

constructed or substantially 

rehabilitated housing financed by State 

agencies; the HAP program for New 

Construction financed under Section 

515 of the Housing Act of 1949 (24 CFR 

part 884), which applies to U.S. 

Department of Agriculture rural rental 

housing projects; the Loan Management 

Set Aside Program (24 CFR part 886, 

subpart A), which provides rental 

subsidies to HUD-insured or HUD-held 

multifamily properties experiencing 

immediate or potential financial 

difficulties; the HAP for the Disposition 

of HUD-Owned Projects (24 CFR part 

886, subpart C), which provides Section 

8 assistance in connection with the sale 

of HUD-owned multifamily rental 

housing projects and the foreclosure of 

HUD-held mortgages on rental housing 

projects; and the Section 202/8 Program 

(24 CFR part 891, subpart E), which 

provides assistance for housing projects 

serving the elderly or households 

headed by persons with disabilities. 

For the above-described programs, 

contract administrators (CAs) conduct 

Management and Occupancy Reviews 

(MORs) to assess project performance. 

MORs evaluate management, provide 

oversight of HUD-assisted projects, and 

assure owner compliance with HAP 

contract requirements. Under existing 

regulations, the frequency of MORs 

across programs is inconsistent. For 

example, some programs require CAs to 

perform MORs at least annually, while 

others require an MOR only as 

necessary. The proposed rule sought to 

provide for consistency across 

programs. 

Existing regulations also fail to take 

into consideration project performance. 

In fact, many projects assisted under the 

above-described programs consistently 

receive high MOR scores. For example, 

in FY 2018, 90.4 percent of projects 

received a score of ‘‘Satisfactory,’’ 

‘‘Above Average,’’ or ‘‘Superior’’; the 

number of projects receiving such scores 


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1 ‘‘Section 8 Housing Assistance Programs 

Proposed Management and Occupancy Review 

Schedule’’ (80 FR 1930, Jan. 14, 2015). 

increased to 92.1 percent in FY 2019, 

93.1 percent in FY 2020, and 94.1 

percent in FY 2021. 

CAs are required to visit each project 

as part of the MOR, expending staff time 

and resources to prepare for and 

conduct each review. In order to devote 

relatively fewer resources to higherperforming projects, the proposed rule 

called for the adoption by Federal 

Register Notice, subject to public 

comment, of an MOR schedule that 

takes project performance into account. 

The first such performance-based MOR 

proposed schedule 1 was published 

concurrently with the proposed rule. 

As proposed, the performance-based 

MOR schedule also takes HUD’s riskrating of each project into account. 

Under HUD’s risk-rating system, each 

project is rated as ‘‘Not Troubled,’’ 

‘‘Potentially Troubled,’’ or ‘‘Troubled.’’ 

This risk-rating system is discussed in 

more detail in paragraph III.D, below. 

The proposed performance-based MOR 

schedule considers both a project’s riskrating and its MOR score to establish 

whether the project’s next MOR will be 

scheduled within 12, 24, or 36 months 

of the previous MOR. 

The proposed rule also sought to 

amend the permitted duration of 

vacancy payments to owners of the 

above-described projects and of projects 

assisted under the Section 162 Project 

Assistance Contract program. Lastly, the 

proposed rule included a technical 

correction to § 886.309, replacing a 

citation to § 886.327 with a citation to 

§ 886.328. 

Members of the public interested in 

more detail about the proposed rule or 

the proposed MOR schedule may refer 

to the January 14, 2015, edition of the 

Federal Register. 

II. This Final Rule 

This final rule follows publication of 

the January 14, 2015, proposed rule as 

well as the proposed performance-based 

MOR schedule and takes into 

consideration public comments received 

on both documents. HUD has decided to 

adopt without substantive change the 

portion of the proposed rule that 

provides for an MOR schedule to be 

established via Federal Register Notice, 

subject to public comment. Likewise, 

HUD is adopting without change its 

proposed methodology for MOR 

scheduling, basing project schedules on 

both the project’s risk rating and its 

MOR score. HUD has adopted the 

following changes based on public 

comments: 

(1) HUD has decided against 

proceeding with the proposed changes 

regarding the permitted duration of 

vacancy payments; 

(2) HUD’s proposed rule provided that 

HUD could inspect a project at any time. 

HUD at the final rule stage requires that 

an MOR be performed within 6 months 

following a change in ownership or 

management irrespective of a project’s 

performance-based MOR schedule. HUD 

believes adding an inspection at a 

change in ownership or management is 

appropriate to ensure that the MOR is 

based on the current management at the 

time; 

(3) HUD is requiring that the CA 

review all tenant files for each sampled 

file going back to the previous MOR. In 

other words, if an MOR is taking place 

36 months from the previous MOR, the 

CA must assess the current year’s tenant 

files and tenant files going back to the 

previous MOR, for each sampled file; 

and 

(4) HUD is making changes to the 

final MOR schedule, which is published 

elsewhere in this issue of the Federal 

Register. 

The effective date of this rule is 90 

days after the date of publication, which 

means that CAs will not begin 

conducting reviews pursuant to the 

performance-based MOR schedule until 

90 days from the date of publication in 

the Federal Register. 

III. Discussion of Public Comments 

HUD received 23 public comments on 

the proposed rule and 16 public 

comments on the proposed MOR 

schedule from management 

associations, public housing authorities, 

homebuilders’ associations, residents of 

public housing, and other interested 

parties. A number of comments on the 

proposed rule were identical to 

comments received on the proposed 

performance-based MOR schedule; 

other comments on the proposed rule 

addressed both documents. HUD is 

therefore responding to the comments 

received on both documents in this 

preamble to the final rule. 

In general, many commenters 

expressed support for both the proposed 

rule and the proposed performancebased MOR schedule. These 

commenters supported basing MOR 

frequency on project performance, 

noting the associated reduction in 

burden, improvements in efficiency, 

and targeting of resources. Some 

commenters expressed opposition to 

both the proposed rule and the 

proposed performance-based MOR 

schedule, citing concerns about 

potential decreases in rates of 

compliance and other issues that are 

discussed in more detail below. 

A. Compliance Concerns 

Comment: Reducing the frequency of 

MORs could affect compliance. 

Commenters stated that a reduction in 

the frequency of MORs could result in 

increased improper payments. These 

comments took two general views. 

One view focused on the potential for 

payments where a project had fallen out 

of compliance. For example, 

commenters wrote that a property can 

deteriorate quickly as a result of on-site 

staff issues or changes in ownership or 

management, or due to an owner 

relaxing upkeep and housing 

maintenance standards. One commenter 

stated that the reduced frequency of 

MORs may ultimately result in 

additional HUD time and resources 

being expended later to revise the MOR 

schedule once again to reverse the 

effects of the change to a performancebased MOR schedule. 

Another view focused on the role of 

the MOR in discovering erroneous 

assistance payments that result from 

either a tenant, property owner, or 

management agent making an error. One 

commenter stated that errors in day-today certifications and recertifications 

have an immediate impact, resulting in 

the over- or underpayment of HAP. 

With respect to such errors, one 

commenter stated that, each year, new 

interpretations of the HUD Occupancy 

Handbook are emphasized, and the 

process of qualifying applicants gets 

increasingly complicated. The 

commenter stated that, as a result, the 

MOR becomes a training opportunity for 

staff, who often review requirements 

with and ask questions of CAs. The 

commenter stated that even the best 

management companies make mistakes 

and need checks and balances to ensure 

they are on track. Another commenter 

noted that some owners and 

management agents struggle to 

understand Enterprise Income 

Verification (EIV) reports or how to 

reconcile income discrepancies. 

Another commenter stated that annual 

reviews are much more important with 

the advent of EIV, because many owners 

and agents do not understand EIV 

reports or how to reconcile income 

discrepancies and are not therefore 

properly identifying underpayments. 

Because EIV income discrepancy and 

error information stays in the system for 

only 1 year after the most recent 

recertification, and because tenants 

move frequently, it will be difficult to 

catch errors and collect underpaid HAP 

amounts if the property files are being 

reviewed less frequently than annually. 


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2Public Law 111–204, enacted July 22, 2010. 

Finally, one commenter stated that 

moving away from annual MORs poses 

a risk to HUD with respect to HUD’s 

goals under the Improper Payments 

Elimination and Recovery Act (IPERA).2

Among other things, IPERA requires 

HUD to identify and reduce improper 

payments. 

HUD response: HUD believes that the 

likelihood of payments being made to 

an owner who has failed to maintain 

their project in a satisfactory condition 

is unlikely to increase as a result of 

moving to a performance-based MOR 

schedule. Under this new schedule, 

only properties with a satisfactory or 

higher performance score and a risk 

rating of ‘‘Not Troubled’’ will move to 

a bi- or triennial MOR schedule. 

Nonetheless, this final rule provides 

HUD with a means of increasing the 

frequency of MORs if merited, after 

notice and comment. In addition, this 

final rule affirms that, irrespective of a 

project’s performance-based MOR 

schedule, HUD or a CA may inspect a 

project or assess its operations at any 

time, as merited based on documented 

concerns. 

With respect to the issue of owner or 

management agent errors resulting in 

over- or underpayment of HAP, HUD 

does not view the MOR as a tool for 

training owners or their agents on 

HUD’s Occupancy Handbook, EIV, or 

other guidance or systems that owners 

and their agents must understand and 

employ to administer their projects in 

compliance with HUD requirements. 

The MOR is a tool employed by HUD to 

assess management performance vis-a`- 

vis HUD requirements. Owners and 

agents bear the responsibility for 

administering projects in compliance 

with such requirements and, as such, 

must assure that staff receive the 

training they need. On the question of 

system updates of EIV reports, HUD 

Handbook 4350.3 requires both the 

Income Report (subparagraph 9–11.B) 

and the Income Discrepancy Report 

(subparagraph 9–11.C.3) to be 

maintained in the tenant file. In this 

final rule, HUD requires that the CA 

review all tenant files for each sampled 

file going back to the previous MOR, 

relying as needed on reports maintained 

in tenant files. HUD will not be 

precluded, therefore, from recovering 

improper payments under the 

performance-based MOR schedule. This 

requirement addresses the comment 

specific to HUD’s goals under IPERA. 

Comment: Reducing MORs could 

result in the loss of Federal funds. A 

commenter stated that MORs often 

result in the recovery of assistance 

payments as a result of either the tenant 

or property owner and management 

agent making an error. Another 

commenter stated that errors in day-today certifications and re-certifications 

have an immediate effect, resulting in 

HAP over- or underpayment. One 

commenter noted that property owners 

and management agents would lose 

additional funds, because they would 

err on the side of reducing the 

overpayment of subsidy so as not to 

outweigh the cost of continued 

compliance. 

HUD response: HUD believes that the 

final schedule strikes an appropriate 

cost-benefit balance and that the 

concerns raised by commenters will be 

resolved once property owners and 

management agents adapt to the new 

schedule. HUD notes as well that this 

rule provides HUD with the ability to 

amend the MOR schedule, if needed, via 

Federal Register Notice, following 

public comment. Having the ability to 

amend the MOR schedule in this way 

enables HUD to address relatively 

quickly any issues related to the 

frequency with which MORs are 

conducted. 

B. Scheduling Concerns 

Comment: Adequate staffing, 

scheduling, and compensation. One 

commenter expressed concerns about 

the effect of the proposed performancebased MOR schedule on the ability of 

Performance-Based Contract 

Administrators (PBCAs) to assure 

adequate staffing, as the number of 

MORs scheduled could vary widely 

from one year to the next. The 

commenter asked whether PBCAs will 

be compensated for MORs outside the 

scope of the Annual Contributions 

Contract (ACC) if HUD requires 

additional MORs outside of this 

schedule. 

HUD response: PBCA staffing is based 

on schedules adopted by PBCAs, as 

approved by HUD. This final rule has an 

effective date of September 26, 2022 in 

order to provide PBCAs with adequate 

time to assess all Section 8 projects in 

their portfolios and develop a schedule 

for the completion of MORs consistent 

with this final rule and the 

performance-based MOR schedule. This 

‘‘MOR Plan’’ will be submitted to HUD 

for review. In evaluating each PBCA’s 

MOR Plan, HUD will consider historical 

data on projects’ MOR dates and scores. 

Among the factors HUD will take into 

consideration is the amount of time 

since each project’s previous MOR, 

recognizing that, due to a lack of 

funding to support MORs on 100 

percent of the portfolio annually, MORs 

since April of 2016 have been 

conducted on only approximately 2⁄3 of 

projects annually. PBCAs are aware that 

HUD may require an MOR sooner than 

reflected in the performance-based MOR 

schedule if merited based on a change 

in conditions at the project, a 

congressional inquiry, a report from a 

unit of State or local government, or 

complaints from project residents. 

C. Initial and Ongoing Implementation 

Comment: Clarify how HUD will 

approach the initial implementation of 

the new MOR schedule. One commenter 

supported the change to a 3-, 2-, 1-year 

schedule and suggested that HUD 

require a baseline inspection to 

establish each project’s risk rating. 

Another commenter recommended that 

upon implementation of the new 

performance-based schedule, any 

property that has gone 3 or more years 

without an MOR should receive an 

MOR within the first year, suggesting 

that a large number of properties have 

not received an MOR in more than 3 

years. Another commenter 

recommended that HUD adopt 

additional parameters, such as requiring 

a review within 12 months for a change 

of ownership, management agent, or onsite personnel. Generally, commenters 

sought clarification regarding how HUD 

will implement the new MOR schedule. 

HUD response: In implementing the 

performance-based MOR schedule, HUD 

will establish a time frame for each 

project’s next MOR at the first MOR 

following the effective date of this final 

rule. Based upon a project’s MOR score 

following that first MOR and the 

project’s risk rating at the time, HUD 

will determine the date of each project’s 

next MOR according to the 

performance-based MOR schedule. 

If a project’s condition or risk rating 

worsens following an MOR, either HUD 

or the CA may move up the date of the 

project’s next scheduled MOR, 

irrespective of the performance-based 

MOR schedule for the project. If a 

project’s condition or risk rating 

improves between MORs, the project 

will remain subject to its schedule as 

determined pursuant to the 

performance-based MOR schedule. In 

other words, HUD will not entertain 

requests to reduce the frequency of 

MORs based upon an improvement in a 

project’s condition or risk rating 

between scheduled MORs but instead 

encourages owners to maintain their 

projects at a level that will merit a 

decrease in MOR frequency based on 

the project’s risk rating and MOR score 

at the next scheduled MOR. 

HUD agrees with the comment to 

require an MOR following a change in 

ownership or management and will 


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require that an MOR be conducted 

within 6 months of such a change. 

D. HUD’s Risk Rating System 

Comment: Clarify the process of 

determining a project’s initial and 

ongoing risk rating. Commenters asked 

how project owners and property 

managers can ascertain a project’s risk 

rating. A few commenters asked what 

parameters are used in determining risk 

ratings. 

HUD response: Under HUD’s riskrating system, each project is rated as 

‘‘Not Troubled,’’ ‘‘Potentially 

Troubled,’’ or ‘‘Troubled.’’ At a high 

level, HUD’s risk-rating system helps 

HUD to focus resources on projects that 

are most in need of attention. At the 

individual project level, the risk-rating 

criteria are intended to assist HUD staff 

in assessing the likelihood that a project 

will decline, considering both 

quantitative and qualitative factors. 

Individual project risk ratings are not 

made available publicly, as the property 

rating is part of HUD’s deliberative 

process and because a released rating 

such as ‘‘Troubled’’ or ‘‘Potentially 

Troubled’’ could impair a project’s 

ability to obtain the resources needed to 

improve. HUD will however make 

available to an owner or an authorized 

agent of the owner an individual 

project’s risk rating upon request. 

With respect to the parameters used to 

determine each project’s risk rating, 

HUD considers both quantitative and 

qualitative measures and has adopted 

some measures unique to insured 

projects and others unique to noninsured projects. As of the effective date 

of this final rule, the following examples 

of criteria are considered: 

• For insured projects: the likelihood 

of a claim within 12 months or sooner; 

whether a partial payment of claim or 

debt restructuring is in process; the 

project’s Qualitative Assessment Score, 

which takes into account qualitative 

factors such as tenant complaints and 

local code violations; the project’s 

vacancy rate, debt service coverage 

ratio, Real Estate Assessment Center 

(REAC) score; whether, for a new 

construction project, underwriting 

assumptions have been met. 

• For non-insured projects: whether a 

HAP termination or foreclosure is 

pending; whether a transfer of budget 

authority or of HAP, debt, and use 

restrictions is in process; whether a 

change in ownership is required; 

whether the project has problems that 

make it eligible for a conversion to 

Housing Choice Voucher assistance that 

has not yet begun; the project’s vacancy 

rate, REAC score; whether the project is 

in compliance with any applicable use 

agreement. 

Note that the criteria that factor into 

a project’s risk rating and the weighting 

of such criteria are subject to change. 

Comment: Risk-rating changes. A 

commenter stated that there appear to 

be two items for CAs to monitor to 

determine the frequency of future 

MORs—risk rating and previous MOR 

score. The commenter asked if the risk 

rating is based on when the current 

MOR is complete, and, if not, how CAs 

will be notified of changes to the risk 

rating between MORs. Another 

commenter asked how the CA will be 

advised about changes in MOR 

schedules and recommended that HUD 

implement a standard protocol for 

informing the CA when a property’s risk 

rating changes to ensure that the CA 

adheres to the correct schedule. 

HUD response: As stated previously, 

at the time an MOR is completed, HUD 

will establish a timeframe for the next 

MOR based on the project’s MOR score 

and its risk rating at that point in time. 

Changes in a project’s risk rating will 

not always trigger a change in a project’s 

performance-based MOR schedule. For 

example, as described earlier, HUD will 

not extend the timeframe between 

scheduled MORs based on 

improvements in a project’s condition 

or risk rating between MORs. On the 

other hand, HUD or the CA may 

determine that an MOR is needed 

sooner than scheduled if a project’s 

condition or risk-rating worsens (CAs 

have access to each property’s riskrating through HUD’s Integrated Real 

Estate Management System (iREMS)). If 

HUD determines that an MOR is needed 

sooner than scheduled, HUD will make 

this known to the CA as part of HUD’s 

review of the CA’s next successive 

quarterly MOR Plan. 

Comment: Scope and availability of 

risk classifications. Commenters 

requested how project owners and 

property managers can ascertain the risk 

classification given to properties. A few 

commenters asked what parameters are 

used in determining the risk 

classification. Another commenter 

asked if the risk classification is 

financially based, and, if so, suggested 

that a property considered ‘‘Troubled’’ 

should be reviewed more often than 

annually regardless of the last MOR 

rating. One commenter suggested that 

HUD should provide information about 

how input from residents is obtained 

and used in determining a property’s 

risk score. Another commenter 

suggested that HUD provide additional 

clarification and guidance on assessing 

overall ratings as it relates to risk-based 

monitoring cycles for MORs. The 

commenter also asked if this schedule 

would apply to a traditional CA. 

HUD response: HUD’s asset risk-rating 

process uses an objective scale that 

considers financial characteristics (e.g., 

low debt service coverage ratio (DSCR)), 

recent occurrences (e.g., default, 

excessive vacancies, low Real Estate 

Assessment Center’s (REAC) score), 

tenant input (as assessed during MORs 

and as provided directly to HUD), and 

pending transactions with HUD (e.g., 

foreclosure, partial payment of claim). 

The criteria are granular, and there is 

little room for error/ambiguity in the 

ratings. If changes in a property’s risk 

classification necessitate an accelerated 

review, HUD will make this known to 

the CA as part of HUD’s review of the 

CA’s next successive quarterly MOR 

Plan. 

The new schedule will apply to all 

project-based Section 8 projects, 

regardless of whether the contract is 

administered by a PBCA, HUD, or a 

Traditional Contract Administrator. 

Comment: Pools and data. One 

commenter requested clarification on 

the pool of properties that are included 

in the percentages that HUD has rated 

‘‘above average,’’ ‘‘superior,’’ and 

‘‘satisfactory’’ 92 percent of the time. 

The commenter stated that if the data is 

coming from iREMs, it may reflect only 

properties that are currently receiving 

MORs, which represent only a portion 

of the country. One commenter stated 

that the data provided by the MOR 

Notice was subjective and not based on 

the number and severity of actual 

findings. Some commenters requested a 

breakdown of MOR ratings for the past 

5, 10, and 15 years and information 

about whether the data provided in the 

MOR Notice is a nationally 

representative sampling of properties, 

including the size of the properties. 

HUD response: The data on 

percentages was derived from a sample 

of more than 22,000 MORs completed 

from 2011 through 2013 on all Section 

8–assisted properties; this includes a 

period of time during which MORs were 

being completed annually. HUD 

believes that the data is sufficiently 

representative to inform its policy 

development. A review of MORs 

completed from 2014 through 2015 

showed a similar scoring distribution as 

the 2011–2013 sample, though the total 

number of completed reviews was 

smaller. In each of the years from 2011 

through 2015, a majority of properties 

(average of 53 percent) has been rated 

‘‘satisfactory,’’ with roughly 41 percent 

receiving an ‘‘above average’’ or 

‘‘superior’’ rating, and 6 percent 

receiving a ‘‘below average’’ or 

‘‘unsatisfactory’’ score. More recently, 


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3Audit Report 2010–LA–0001: ‘‘HUD’s 

Performance-Based Contract Administration 

Contract Was Not Cost Effective.’’ See ‘‘Conclusion’’ 

on page 19. 

for the years 2016 through 2020, 47 

percent of properties received a 

‘‘satisfactory’’ rating, with 45 percent 

rated ‘‘above average’’ or ‘‘superior,’’ 

and 8 percent rated ‘‘below average’’ or 

‘‘unsatisfactory.’’ 

E. Other Comments 

Comment: Changes to MOR schedule. 

One commenter recommended that 

properties that are ‘‘Not Troubled’’ and 

have a ‘‘Superior’’ score should be 

rewarded with a 48-month time frame 

before scheduling another MOR, which 

would incentivize owners and agents to 

achieve a higher score. Another 

commenter suggested that all properties 

with a rating of ‘‘Satisfactory’’ or below 

be reviewed every 12 months and those 

with a ‘‘Not Troubled’’ risk rating and 

a score of ‘‘Above Average’’ or higher be 

reviewed every 24 months. One 

commenter wrote that a building with a 

‘‘Below Average’’ or ‘‘Unsatisfactory’’ 

rating should have an MOR once per 

year and a ‘‘Satisfactory’’ or ‘‘Above 

Average’’ or ‘‘Superior’’ rating should 

have an MOR once every 2 years. One 

commenter suggested reviewing any 

property that is considered ‘‘Troubled’’ 

or ‘‘Potentially Troubled’’ every 12 

months regardless of the previous MOR 

rating and stipulating that no property 

will go longer than 24 months without 

a review. Another commenter 

recommended that HUD maintain the 

current MOR schedule. One commenter 

stated that a project with a rating of 

‘‘Not Troubled’’ and an MOR score of 

‘‘Satisfactory’’ would have little 

incentive to improve if that is all that is 

needed to receive an MOR 36 months 

from the previous MOR. 

HUD response: HUD adopted changes 

to the proposed schedule based on its 

consideration of these comments. The 

final schedule is considered to present 

the minimum burden to owners while 

maintaining adequate oversight of 

management operations and owner 

compliance. Scheduling MORs based on 

past performance and establishing riskrating protocols constitutes a major step 

in HUD’s efforts to streamline its 

management of assets. HUD believes the 

final schedule is a good compromise 

that strikes the right balance. 

Comment: Use limited reviews in lieu 

of fewer reviews. The commenter wrote 

that although some strain is put on HUD 

and project resources in conducting 

limited reviews, HUD does not explain 

how a ‘‘limited review’’ puts an undue 

strain on HUD and project resources to 

justify restructuring the MOR schedule. 

The commenter suggested that HUD 

should avoid risking the widespread 

deterioration and decline in housing 

projects due to a lack of adequate 

oversight, which could also ultimately 

result in the need for increased 

compensatory resources. The 

commenter requested that HUD provide 

the reasons behind its assumption that 

a more limited review of housing 

projects alone would not ease the strain 

on resources while retaining the virtue 

of regular oversight. 

HUD response: The proposed 

streamlining of management reviews 

represents HUD’s effort to respond to 

OIG recommendations 3 and criticisms 

from industry partners. Future research 

may suggest other adjustments to the 

frequency and scope of reviews, but 

given the consistent ‘‘Above Average,’’ 

‘‘Superior,’’ and ‘‘Satisfactory’’ ratings 

for most projects, HUD believes that 

moving to fewer reviews for such 

projects is justified. 

Comment: Require properties to 

submit a report to HUD annually that 

assesses the current level of compliance 

and add incentives for compliance. A 

commenter stated that in conjunction 

with the new performance-based MOR 

schedule, HUD should require 

properties to submit a report to HUD 

annually that assesses their current level 

of compliance, which will help HUD 

reduce costs while allowing HUD to 

focus its staff and resources on areas 

that require greater attention. The 

commenter explained that the report 

need not be burdensome to those 

properties that qualify to forgo 

scheduling an MOR with HUD annually, 

but the report should consist of enough 

relevant data that HUD can determine a 

property’s compliance by means of a 

quick review. The commenter wrote that 

the report could provide HUD with a 

consistent form of documentation and 

help to ensure that properties with 

consistently high marks do not lower 

their standards inadvertently or out of 

convenience or apathy due to the new 

MOR schedule. The commenter 

submitted that depending on the cost 

savings HUD realizes, HUD could 

include an incentive process for those 

properties that remain accountable by 

submitting reports to HUD on an annual 

basis. The commenter suggested that by 

providing an incentive to properties that 

remain compliant, other properties may 

actively seek high ratings, which will 

further alleviate costs to HUD and allow 

even more staff and resources to be used 

in areas that need greater attention. 

HUD response: HUD’s view is that an 

owner would have little incentive to 

report anything other than full 

compliance when less than full 

compliance would likely induce another 

review. Thus, HUD believes that such 

certifications would have little if any 

substantive impact on project 

performance. In contrast, HUD believes 

that the promise of less frequent MORs 

will incentivize property owners to 

strive for higher performance. HUD and 

CAs will continue to perform additional 

MORs when warranted. 

Comment: Eliminate redundancies. 

One commenter recommended that 

HUD eliminate the physical inspection 

part of the MOR, because REAC 

conducts extensive inspections on a 1- 

to 3-year schedule. The commenter also 

recommended removing the financial 

management/procurement portion of the 

MOR, since REAC evaluates financial 

statement data. The commenter noted 

that eliminating redundancies would 

increase efficiency and reduce costs. 

One commenter stated that MORs 

should focus exclusively on areas that 

are not covered by other reviews— 

specifically, eliminating excess HUD 

subsidy payments. The commenter 

believes that the prospect of discovering 

overpayment of subsidy merits a 

continuation of annual MORs. 

HUD response: Although some 

elements of the REAC and MOR 

assessments overlap, each serves a 

distinct and valuable purpose with 

respect to HUD’s asset management 

oversight responsibilities. REAC 

physical inspections provide an 

objective assessment of a property’s 

physical condition and are not meant to 

consider housekeeping issues that may 

also affect the physical condition of the 

property. The physical assessment 

component of the MOR supplements the 

REAC physical inspection and provides 

additional insight into the physical 

condition of the property. The MOR is 

meant to assess the overall management 

of the property, including management’s 

ability to maintain a property in decent, 

safe, and sanitary condition. The 

financial management/procurement 

elements analyzed in an MOR are 

supplemental to those assessed via an 

audited financial statement. The MOR 

provides an assessment of the day-today financial management of a property, 

often resulting in recommendations for 

improvements to such things as cash 

controls. In addition, a review 

performed by HUD staff or the CA, who 

are experienced in multifamily property 

management, provides a necessary 

perspective that is different from that of 

a REAC inspector. The MOR also 

evaluates ‘‘rent readiness,’’ enabling 

HUD staff and CAs to determine where 

improvements may be warranted. The 

MOR results help to inform REAC 


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inspection scheduling and the 

determination of whether other 

financial reporting or follow up may be 

required. 

Comment: Need for staff training. One 

commenter noted that CAs often 

identify needed improvements to 

management as part of the MOR. The 

commenter explained that in situations 

where a new property owner or 

management company has been hired at 

a project that is in a 3-year MOR cycle, 

training may be needed to assure that 

the project does not deteriorate. 

HUD response: HUD agrees with the 

commenter and has revised the 

regulation to require an MOR within 6 

months of a change in ownership or 

management. 

Comment: Other suggestions. A 

commenter stated that HUD should 

consider a quantitative and qualitative 

evaluation of the costs and benefits to 

properties from MORs and how 

properties’ MOR ratings are likely to be 

affected with less-frequent monitoring. 

The commenter also suggested that HUD 

consider a delay in implementing the 

performance-based approach until an 

evaluation on the outcomes of not 

performing MORs can be conducted. 

The commenter recommended that HUD 

consider evaluating the impacts based 

on the portion of the portfolio that is 

currently not being monitored by CAs to 

validate their assumptions. Another 

commenter suggested using the 

prevalence of EIV discrepancies, 

voucher programs, and development 

types (e.g., elderly) when determining 

the frequency of site reviews. 

HUD response: Several alternatives 

for MOR procedures to reduce the 

burden of annual reviews on 

satisfactorily operating properties were 

considered. The proposed schedule is 

considered to present the minimum 

burden to owners, while maintaining 

adequate oversight of management 

operations and owner compliance. The 

Department will monitor and evaluate 

the impact of the new performancebased schedule on property compliance 

and revisit the schedule, if needed. 

F. Scope 

Comment: Mark-to-Market projects. 

One commenter questioned whether 

HUD intends to adopt the proposed 

MOR schedule for projects subject to 

renewal under Mark-to-Market. The 

commenter suggested that HUD could 

provide a 36-month, 24-month, and 12- 

month schedule for such projects by 

allowing scaled-back limited reviews 

between the full MORs for highperformance properties, which could 

include analyses of properties’ financial 

statements, surplus cash analysis, the 

risk-rating system, and/or other 

information that HUD collects to ensure 

regulatory compliance. Another 

commenter requested clarification as to 

whether the MOR schedule would 

change for restructured Mark-to-Market 

properties under Section 519 of the 

Multifamily Assisted Housing Reform 

and Affordability Act of 1997 (MAHRA), 

for which HUD had previously provided 

guidance that MORs would be required 

annually. The commenter also 

recommended that the inspections for 

such properties align with the new 

proposed schedule. 

HUD response: Section 519(b)(1) of 

MAHRA requires CAs to monitor the 

status of projects renewed under Markto-Market at least annually. Therefore, 

this schedule would not and could not 

apply to restructured Mark-to-Market 

properties. 

Comment: Other programs. One 

commenter requested clarification about 

the applicability of the regulatory 

changes to other programs, noting that 

the instructions and applicability of 

form HUD–9834 indicate that properties 

other than those with a Section 8 HAP 

contract utilize the form for monitoring 

and oversight. 

HUD response: The performancebased MOR schedule and the associated 

regulatory changes apply only to 

projects covered by this Final 

Regulation. 

G. Other Suggested Changes and 

Questions 

Comment: Codify the schedule by 

regulations. Some commenters 

recommended that HUD should write a 

permanent schedule in the regulations. 

One commenter recommended that 

HUD use the physical inspection 

schedule at 24 Code of Federal 

Regulations (CFR) § 200.855 and 

§ 200.857 as a model for writing a 

permanent schedule in regulations that 

permit 3-, 2-, and 1-year reviews. 

HUD response: If HUD determines a 

change in the schedule is needed, a new 

schedule will be established via Federal 

Register Notice, following a review and 

comment period. Use of a Federal 

Register Notice to dictate the schedule 

rather than codifying the schedule in 

regulation provides HUD with greater 

latitude to modify the schedule going 

forward, if merited. 

Comment: Additional reviews conflict 

with State and local laws. Commenters 

wrote that providing for HUD to inspect 

project operation and units at any time 

may conflict with State and local laws, 

which often require notice before 

entering a resident’s unit. The 

commenters suggested that HUD revise 

the language to clarify that notice is 

required. 

HUD response: HUD Account 

Executives and CAs are generally 

familiar with local requirements. All 

independent inspections performed by 

HUD will continue to be in compliance 

with State and local laws. 

Comment: Other applications. One 

commenter recommended that HUD 

consider similar reduction principles 

when developing the next iteration of 

the Public Housing Assessment System 

and the Section 8 Management 

Assessment Program. 

HUD response: While HUD 

appreciates this comment, this 

recommendation is outside the scope of 

this rulemaking as the Public Housing 

Assessment System and the Section 8 

Management Assessment Program fall 

under the purview of the Assistant 

Secretary for Public and Indian 

Housing. 

Comment: The Notice fails to provide 

adequate notice for certain persons to 

comment on the proposed Paperwork 

Reduction Act (PRA) changes. One 

commenter asked how HUD will ensure 

that the solicitation of comments, as 

required under the PRA in accordance 

with 5 CFR 1320.8, is adequately 

provided to certain persons, especially 

those who are elderly or lack computers. 

HUD response: The Paperwork 

Reduction Act of 1995 (PRA) (44 U.S.C. 

3501–3520) and regulations at 5 CFR 

1320 require that agencies publish 

requests for comments on paperwork in 

the Federal Register, which HUD has 

done for HUD’s form HUD–9834, 

‘‘Management Review for Multifamily 

Housing Projects.’’ HUD will also ensure 

updates are processed in accordance 

with applicable notice and comment 

procedures set forth by the PRA. As for 

the ‘‘certain persons, including those 

who are elderly or lack computers,’’ 

referenced by the commenter, HUD 

notes that public libraries provide 

access to computers. 

IV. Findings and Certifications 

Regulatory Review—Executive Orders 

12866, 13563, and 13771 

Under Executive Order 12866 

(Regulatory Planning and Review), a 

determination must be made whether a 

regulatory action is significant and, 

therefore, subject to review by the Office 

of Management and Budget (OMB) in 

accordance with the requirements of the 

order. This rule was determined to be a 

non-significant regulatory action under 

section 3(f) of Executive Order 12866. 

Executive Order 13563 (Improving 

Regulation and Regulatory Review) 

directs executive agencies to analyze 


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regulations that are ‘‘outmoded, 

ineffective, insufficient, or excessively 

burdensome, and to modify, streamline, 

expand, or repeal them in accordance 

with what has been learned.’’ Executive 

Order 13563 also directs that where 

relevant, feasible, and consistent with 

regulatory objectives, and to the extent 

permitted by law, agencies are to 

identify and consider regulatory 

approaches that reduce burdens and 

maintain flexibility and freedom of 

choice for the public. This rule is part 

of HUD’s retrospective review carried 

out under Executive Order 13563. 

Need for Regulatory Action 

Executive Order 12866 emphasizes 

that ‘‘Federal agencies should 

promulgate only such regulations as are 

required by law, are necessary to 

interpret the law or are made necessary 

by compelling public need, such as 

material failures of private markets to 

protect or improve the health and safety 

of the public, the environment, or the 

well-being of the American people.’’ 

Because the schedule for MORs was 

established by regulation, HUD must 

use rulemaking to reduce the burden of 

annual MORs. Moreover, HUD has 

determined that the current MOR 

schedule places a strain on HUD 

resources and on projects that 

consistently receive high marks on their 

MORs. This fact, and the costs placed 

on projects to prepare for an MOR and 

that result from the interruption in 

normal operations caused by an MOR, 

makes reducing this burden an 

important topic for rulemaking. As a 

result, consistent with Executive Order 

13563, this rulemaking is intended to 

modify, streamline, or repeal 

burdensome regulations. 

Discussion of Costs and Benefits 

This final rule will provide 

consistency across the project-based 

Section 8 programs administered by the 

Office of Multifamily Housing Programs 

for the scheduling of MORs and allow 

HUD to issue the schedule by 

publishing it in the Federal Register, 

subject to public comment. The purpose 

of an MOR is to verify property 

compliance with the terms of the HAP 

contract. The MOR process is a lengthy 

and resource-heavy process, involving 

the inspection of residents’ units; a 

review of owner compliance with civil 

rights regulations; a review of 

complaints from residents, 

congressional inquiries, and media 

reports; and a review of any contractual 

violations and imposed sanctions. 

Because many of the properties that 

receive assistance under a Section 8 

HAP contract have consistently received 

high marks on their MORs, reducing the 

frequency of MORs will result in fewer 

interruptions in project operations. HUD 

also concludes that deficiencies 

discovered as part of the MOR of a 

property that receives a high mark are 

typically less than the costs to the 

project of preparing for and 

participating in the MOR. 

Information Collection Requirements 

The information collection 

requirements for this rule have been 

approved by the Office of Management 

and Budget (OMB) under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3520) and assigned OMB control 

numbers 2502–0178. In accordance with 

the Paperwork Reduction Act, an agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information, unless the 

collection displays a currently valid 

OMB control number. The overall 

burden of this collection will be 

reduced, however, by reducing the 

frequency of MORs for properties that 

perform well. 

Environmental Impact 

A Finding of No Significant Impact 

(FONSI) with respect to the 

environment was made as part of the 

proposed rule 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 

remains applicable to this final rule and 

is available for inspection on 

Regulations.gov. 

Unfunded Mandates Reform Act 

The Unfunded Mandates Reform Act 

of 1995 (2 U.S.C. 1531–1538) (UMRA) 

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 rule does not impose a 

Federal mandate on any State, local, or 

tribal government, or on the private 

sector, within the meaning of UMRA. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) generally requires an 

agency to conduct a regulatory 

flexibility analysis of any rule subject to 

notice and comment rulemaking 

requirements, unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. It is HUD’s 

position that the burden reduction 

measures provided by this rule would 

not have a significant economic impact 

(beneficial or adverse) on a substantial 

number of small entities. 

As noted earlier in this preamble, this 

rule is one of the regulatory actions 

being undertaken as part of HUD’s 

Retrospective Review Plan, established 

in accordance with Executive Order 

13563. The primary focus of this rule is 

to reduce burden across all project 

owners regardless of size. The focus of 

MORs is on ensuring that the units that 

HUD subsidizes are decent, safe, and 

sanitary and are made available to 

eligible tenants in a nondiscriminatory 

manner. These are not requirements that 

HUD can alter on the basis that a project 

owner is a small entity. However, as 

noted above, this rule reduces burden 

for all project owners, large or small, 

that manage their properties well in 

accordance with HUD regulations and 

score well under the MOR rating 

system. 

Executive Order 13132, Federalism 

Executive Order 13132 (‘‘Federalism’’) 

prohibits an agency from publishing any 

rule that has federalism implications if 

the rule either (1) imposes substantial 

direct compliance costs on State and 

local governments and is not required 

by statute, or (2) 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 nor 

preempt State law within the meaning 

of the Executive Order. 

Catalog of Federal Domestic Assistance. 

The Catalog of Federal Domestic 

Assistance number applicable to the 

programs that would be affected by this 

rule is 14.195. 

List of Subjects 

24 CFR Part 880 

Annual contributions contract, Audit, 

Construction, Contract administration, 

Financing, Grant programs—housing 

and community development, Housing 

assistance, Housing assistance payments 

contract, Management, New 

construction, Owner, Public housing 

agency, Property standards, Rent 

subsidies, Reporting and recordkeeping 

requirements, Section 8, Tenants, Units. 

24 CFR Part 881 

Annual contributions contract, audit, 

contract administration, conversion, 

housing assistance, Grant programs— 

housing and community development, 

housing assistance payments contract, 

inspections, low-income family, owner, 

public housing agency, Rent subsidies, 

Reporting and recordkeeping 


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requirements, Section 8, Substantial 

rehabilitation, Tenants, Units. 

24 CFR Part 883 

Annual contributions contract, Audit, 

Contract administration, Housing 

finance agencies, Grant programs— 

housing and community development, 

Housing assistance, Housing assistance 

payments contract, Low-income family, 

Owner, Rent subsidies, Reporting and 

recordkeeping requirements, Section 8, 

Substantial rehabilitation, State 

agencies, Tenants, Units. 

24 CFR Part 884 

Annual contributions contract, Audit, 

Contract administration, Conversion, 

Grant programs—housing and 

community development, Housing 

assistance, Housing assistance payments 

contract, Income limit, Inspections, 

Low-income family, Maintenance, New 

construction, Owner, Public housing 

agency, Rent subsidies, Reporting and 

recordkeeping requirements, Rural 

areas, Rural housing, Section 8, Security 

deposits, Tenants, Units, Utility 

deposits. 

24 CFR Part 886 

Audit, Contract administration, Grant 

programs—housing and community 

development, Housing assistance, 

Housing assistance payments contract, 

Income, Inspection, Lead poisoning, 

Maintenance, Marketing, Mortgages, 

Owner, Rehabilitation, Rent subsidies, 

Reporting and recordkeeping 

requirements, Section 8, Security 

deposits, Special allocations, Tenants, 

Units, Utility deposits. 

24 CFR Part 891 

Aged, Grant programs—housing and 

community development, Capital 

advances, Individuals with disabilities, 

Loan programs—housing and 

community development, Project rental 

assistance, Rent subsidies, Reporting 

and recordkeeping requirements, 

Section 8, Supportive housing for 

persons with disabilities, Supportive 

services, Tenants, Units. 

Accordingly, for the reasons described 

in the preamble, HUD amends 24 CFR 

part 880, 881, 883, 884, 886, and 891 as 

follows: 

PART 880—SECTION 8 HOUSING 

ASSISTANCE PAYMENTS PROGRAM 

FOR NEW CONSTRUCTION 

■ 1. The authority citation for 24 CFR 

part 880 continues to read as follows: 

Authority: 42 U.S.C. 1437a, 1437c, 1437f, 

3535(d), 12701, and 13611–13619. 

■ 2. Revise § 880.612 to read as follows: 

§ 880.612 Management and occupancy 

reviews. 

(a) The contract administrator will 

conduct management and occupancy 

reviews to determine whether the owner 

is in compliance with the Contract. 

Such reviews will be conducted in 

accordance with a schedule set out by 

the Secretary and published in the 

Federal Register, following notice and 

the opportunity to comment. Where a 

change in ownership or management 

occurs, a management and occupancy 

review must be conducted within six 

months following the change in 

ownership or management. 

(b) HUD or the Contract Administrator 

may inspect project operations and 

units at any time. 

(c) Equal Opportunity reviews may be 

conducted by HUD at any time. 

PART 884—SECTION 8 HOUSING 

ASSISTANCE PAYMENTS PROGRAM, 

NEW CONSTRUCTION SET–ASIDE 

FOR SECTION 515 RURAL RENTAL 

HOUSING PROJECTS 

■ 3. The authority citation for 24 CFR 

part 884 continues to read as follows: 

Authority: 42 U.S.C. 1437a, 1437c, 1437f, 

3535(d), and 13611–13619. 

■ 4. Revise § 884.224 to read as follows: 

§ 884.224 Management and occupancy 

reviews. 

(a) The contract administrator will 

conduct management and occupancy 

reviews to determine whether the owner 

is in compliance with the Contract. 

Such reviews will be conducted in 

accordance with a schedule set out by 

the Secretary and published in the 

Federal Register, following notice and 

the opportunity to comment. Where a 

change in ownership or management 

occurs, a management and occupancy 

review must be conducted within six 

months. 

(b) HUD or the Contract Administrator 

may inspect project operations and 

units at any time. 

(c) Equal Opportunity reviews may be 

conducted by HUD at any time. 

PART 886—SECTION 8 HOUSING 

ASSISTANCE PAYMENTS 

PROGRAM—SPECIAL ALLOCATIONS 

■ 5. The authority citation for 24 CFR 

part 886 continues to read as follows: 

Authority: 42 U.S.C. 1437a, 1437c, 1437f, 

3535(d), and 13611–13619. 

■ 6. Revise § 886.130 to read as follows: 

§ 886.130 Management and occupancy 

reviews. 

(a) The contract administrator will 

conduct management and occupancy 

reviews to determine whether the owner 

is in compliance with the Contract. 

Such reviews will be conducted in 

accordance with a schedule set out by 

the Secretary and published in the 

Federal Register, following notice and 

the opportunity to comment. Where a 

change in ownership or management 

occurs, a management and occupancy 

review must be conducted within six 

months. 

(b) HUD or the Contract Administrator 

may inspect project operations and 

units at any time. 

(c) Equal Opportunity reviews may be 

conducted by HUD at any time. 

§ 886.309 [Amended] 

■ 7. In § 886.309, in paragraph (e), 

remove ‘‘§ 886.327’’ and add in its place 

‘‘§ 886.328’’. 

■ 8. Revise § 886.335 to read as follows: 

§ 886.335 Management and occupancy 

reviews. 

(a) The contract administrator will 

conduct management and occupancy 

reviews to determine whether the owner 

is in compliance with the Contract. 

Such reviews will be conducted in 

accordance with a schedule set out by 

the Secretary and published in the 

Federal Register, following notice and 

the opportunity to comment. Where a 

change in ownership or management 

occurs, a management and occupancy 

review must be conducted within six 

months. 

(b) HUD or the Contract Administrator 

may inspect project operations and 

units at any time. 

(c) Equal Opportunity reviews may be 

conducted by HUD at any time. 

PART 891—SUPPORTIVE HOUSING 

FOR THE ELDERLY AND PERSONS 

WITH DISABILITIES 

■ 9. The authority citation for 24 CFR 

part 891 continues to read as follows: 

Authority: 12 U.S.C. 1701q; 42 U.S.C. 

1437f, 3535(d), and 8013. 

■ 10. Add § 891.582 to read as follows: 

§ 891.582 Management and occupancy 

reviews. 

(a) The contract administrator will 

conduct management and occupancy 

reviews to determine whether the owner 

is in compliance with the HAP Contract. 

Such reviews will be conducted in 

accordance with a schedule set out by 

the Secretary and published in the 

Federal Register, following notice and 

the opportunity to comment. Where a 

change in ownership or management 

occurs, a management and occupancy 

review must be conducted within six 

months. 


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(b) HUD or the Contract Administrator 

may inspect project operations and 

units at any time. 

(c) Equal Opportunity reviews may be 

conducted by HUD at any time. 

Julia R. Gordon, 

Assistant Secretary for Housing–Federal 

Housing Commissioner. 

[FR Doc. 2022–13426 Filed 6–24–22; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF DEFENSE 

Office of the Secretary 

32 CFR Part 310 

[Docket ID: DoD–2022–OS–0067] 

RIN 0790–AL32 

Privacy Act of 1974; Implementation 

AGENCY: Office of the Secretary of 

Defense, Department of Defense (DoD). 

ACTION: Direct final rule with request for 

comments. 

SUMMARY: The DoD is amending this 

part to remove the exemption rules 

associated with three systems of records 

notices (SORNs) established for the 

Department of the Air Force and two 

SORNs established for the Office of the 

Secretary of Defense under the Privacy 

Act of 1974, as amended. Elsewhere in 

this issue of the Federal Register, the 

DoD is giving concurrent notice of the 

rescindment of these same five SORNs 

as part of a notice rescinding numerous 

other SORNs. The DoD is also amending 

this part to remove an exemption rule 

associated with one SORN established 

for the Marine Corps that was 

previously rescinded by the DoD. This 

rule is being published as a direct final 

rule as the Department does not expect 

to receive any adverse comments. If 

such comments are received, this direct 

final rule will be withdrawn and a 

proposed rule for comments will be 

published. 

DATES: The rule is effective on 

September 6, 2022 unless comments are 

received that would result in a contrary 

determination. Comments will be 

accepted on or before August 26, 2022. 

If adverse comment is received, the 

Department will publish a timely 

withdrawal of the direct final rule. 

ADDRESSES: You may submit comments, 

identified by docket number, Regulatory 

Identifier Number (RIN), and title, by 

any of the following methods. 

* Federal eRulemaking Portal: 

https://www.regulations.gov. 

Follow the instructions for submitting 

comments. 

* Mail: Department of Defense, Office 

of the Assistant to the Secretary of 

Defense for Privacy, Civil Liberties, and 

Transparency, Regulatory Directorate, 

4800 Mark Center Drive, Attn: Mailbox 

24, Suite 08D09, Alexandria, VA 22350– 

1700. 

Instructions: All submissions received 

must include the agency name and 

docket number or RIN for this Federal 

Register document. The general policy 

for comments and other submissions 

from members of the public is to make 

these submissions available for public 

viewing on the internet at https://

www.regulations.gov as they are 

received without change, including any 

personal identifiers or contact 

information. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Rahwa Keleta, Defense Privacy and Civil 

Liberties Division, Directorate for 

Privacy, Civil Liberties and Freedom of 

Information, Office of the Assistant to 

the Secretary of Defense for Privacy, 

Civil Liberties, and Transparency, 

Department of Defense, 4800 Mark 

Center Drive, Mailbox #24, Suite 08D09, 

Alexandria, VA 22350–1700; 

OSD.DPCLTD@mail.mil; (703) 571– 

0070. 

SUPPLEMENTARY INFORMATION: 

Privacy Act Exemption 

The Privacy Act permits Federal 

agencies to exempt eligible records in a 

system of records from certain 

provisions of the Act, including the 

provisions providing individuals with a 

right to request access to and 

amendment of their own records and 

accountings of disclosures of such 

records. If an agency intends to exempt 

a particular system of records, it must 

first go through the rulemaking process 

to provide public notice and an 

opportunity to comment on the 

proposed exemptions. The rule explains 

why exemptions are being claimed for 

the associated system of records. During 

the rule-making process, the public are 

invited to comment, which DoD will 

consider before the issuance of a final 

rule implementing those exemptions. 

The final rules implementing 

exemptions for DoD systems of records 

are codified in DoD’s privacy regulation 

at 32 CFR part 310. 

When a system of records is no longer 

required to be collected or maintained, 

the system of records may be 

discontinued. The notice for that system 

of record is rescinded in the Federal 

Register, and the records covered by the 

rescinded system of records are lawfully 

transferred or disposed of in accordance 

with applicable requirements. At the 

time of rescindment or following 

rescindment for the system of records 

notice, Federal agencies will seek to also 

rescind the associated exemption rules 

within the Code of Federal Regulations. 

Direct Final Rulemaking 

This rule is being published as a 

direct final rule as the Department does 

not expect to receive any significant 

adverse comments. If such comments 

are received, this direct final rule will 

be withdrawn and a proposed rule for 

comments will be published. If no such 

comments are received, this direct final 

rule will become effective ten days after 

the comment period expires. 

For purposes of this rule, a significant 

adverse comment is one that explains 

(1) why the rule is inappropriate, 

including challenges to the rule’s 

underlying premise or approach; or (2) 

why the direct final rule will be 

ineffective or unacceptable without a 

change. In determining whether a 

significant adverse comment 

necessitates withdrawal of this direct 

final rule, the Department will consider 

whether the comment raises an issue 

that would have warranted a substantive 

response had it been submitted in 

response to a standard notice of a 

proposed rule. A comment 

recommending an addition to the rule 

will not be considered significant and 

adverse unless the comment explains 

how this direct final rule would be 

ineffective without the addition. 

The DoD is amending 32 CFR part 310 

by rescinding the following regulation 

provisions (in their entirety) due to the 

underlying SORNs being rescinded 

(concurrently by associated public 

notice) or having been previously 

rescinded through public notice: 

• 32 CFR 310.14(f)(12), System 

identifier and name. F031 497IG A, 

Sensitive Compartmented Information 

Personnel Records. 

• 32 CFR 310.14(f)(14) System 

identifier and name. F031 497IG B, 

Special Security Case Files. 

• 32 CFR 310.14(f)(15) System 

identifier and name. F031 AF SP N, 

Special Security Files. 

• 32 CFR 310.29(c)(2), System 

identifier and name. DWHS P28, 

Personnel Security Operations Files. 

• 32 CFR 310.29(c)(8), System 

identifier and name. DWHS P29, 

Personnel Security, Suitability, and 

Homeland Security Presidential 

Directive 12 (HSPD–12) Adjudications. 

• 32 CFR 310.17, consisting of 

paragraph (a)(1), System identifier and 

name. MIN00001, Personnel and 

Security Eligibility and Access 

Information System. 


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