52112 Federal Register / Vol. 73, No. 174 / Monday, September 8, 2008 / Proposed Rules 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 26 

[Docket No. FR–5084–P–01] 

RIN 2501–AD24 

Revision of Hearing Procedures 

AGENCY: Office of the Secretary, HUD. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

amend the hearing procedures before 

hearing officers who have the 

responsibility for adjudicating those 

matters that do not raise issues under 

the Administrative Procedure Act 

(APA). This proposed rule would also 

amend the hearing procedures before 

Administrative Law Judges (ALJs) who 

have the responsibility for adjudicating 

those matters that are subject to the 

requirements of the APA. Specifically, 

the proposed rule would modify 

pleading and motion requirements of 

the hearing procedures. It would also 

amend the discovery and deposition 

requirements to clarify the hearing 

officers’ discovery procedures and to 

specifically allow for written 

interrogatories, in addition to 

depositions, requests for production of 

documents, and requests for admissions. 

A new provision allowing for written 

interrogatories would be added to the 

hearing procedures, and the proposed 

rule would also modify the procedures 

for the review of hearing officers’ 

determinations. Additionally, the 

proposed rule would amend the 

discovery, appeal, and judicial review 

procedures related to hearings that are 

conducted pursuant to the APA. The 

proposed changes to the regulations 

would better reflect current practice and 

would conform the regulations more 

closely to statutory requirements. 

DATES: Comment Due Date: November 7, 

2008. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this proposed rule to the Regulations 

Division, Office of General Counsel, 

Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

Room 10276, Washington, DC 20410– 

0500. Communications must refer to the 

above docket number and title. There 

are two methods for submitting public 

comments. All submissions must refer 

to the above docket number and title. 

1. Submission of Comments by Mail. 

Comments may be submitted by mail to 

the Regulations Division, Office of 

General Counsel, Department of 

Housing and Urban Development, 451 

Seventh Street, SW., Room 10276, 

Washington, DC 20410–0001. 

2. Electronic Submission of 

Comments. Interested persons may 

submit comments electronically through 

the Federal eRulemaking Portal at 

www.regulations.gov. HUD strongly 

encourages commenters to submit 

comments electronically. Electronic 

submission of comments allows the 

commenter maximum time to prepare 

and submit a comment, ensures timely 

receipt by HUD, and enables HUD to 

make them immediately available to the 

public. Comments submitted 

electronically through the 

www.regulations.gov Web site can be 

viewed by other commenters and 

interested members of the public. 

Commenters should follow the 

instructions provided on that site to 

submit comments electronically. 

Note: To receive consideration as public 

comments, comments must be submitted 

through one of the two methods specified 

above. Again, all submissions must refer to 

the docket number and title of the rule. 

No Facsimile Comments. Facsimile 

(FAX) comments are not acceptable. 

Public Inspection of Public Comments. 

All properly submitted comments and 

communications submitted to HUD will 

be available for public inspection and 

copying between 8 a.m. and 5 p.m. 

weekdays at the above address. Due to 

security measures at the HUD 

Headquarters building, an advance 

appointment to review the public 

comments must be scheduled by calling 

the Regulations Division at 202–708– 

3055 (this is not a toll-free number). 

Individuals with speech or hearing 

impairments may access this number 

via TTY by calling the Federal 

Information Relay Service at 800–877– 

8339. Copies of all comments submitted 

are available for inspection and 

downloading at www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Dane Narode, Acting Associate General 

Counsel, Office of Program 

Enforcement, Administrative 

Proceedings Division, Department of 

Housing and Urban Development, 1250 

Maryland Avenue, Suite 200, 

Washington, DC 20024–0500; telephone 

202–708–2350 (this is not a toll-free 

number); e-mail address: 

Dane.M.Narode@hud.gov. Hearing- or 

speech-impaired individuals may access 

the voice telephone number listed above 

by calling the toll-free Federal 

Information Relay Service during 

working hours at 800–877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

HUD’s regulations implementing rules 

of procedure for hearings are located at 

24 CFR part 26. Subpart A of part 26 

applies to those hearing procedures 

before hearing officers who have the 

responsibility for adjudicating those 

matters that do not raise issues under 

the APA. HUD utilizes these rules of 

procedure with respect to 

determinations by the Multifamily 

Participation Review Committee, to: 

(1) Hearings conducted pursuant to 

referrals by debarring or suspending 

officials under 2 CFR part 2424; (2) 

hearings conducted pursuant to 24 CFR 

17.150–17.170; and (3) other 

administrative disputes. Subpart B of 

part 26 applies to those hearing 

procedures before ALJs who have the 

responsibility for adjudicating those 

matters that are subject to the 

requirements of the APA. 

II. This Proposed Rule 

This proposed rule would amend 

HUD’s hearing procedures to reflect 

current practice and to more closely 

conform to applicable statutes; the 

hearing provisions of the APA; and 

parts 25, 28, and 30 of this title. 

Additionally, the sections would be 

reordered to better track the normal 

course of a hearing conducted under 

this part. The sections would be revised 

as follows: 

Current part 26 Proposed part 26 

26 .1 26 .1 

26 .2 26 .2 

26 .3 26 .4 

26 .4 26 .3 

26 .5 26 .5 

26 .6 26 .6 

26 .7 26 .7 

26 .8 26 .8 

26 .9 26 .12 

26 .10 26 .13 

26 .11 26 .14 

26 .12 26 .15 

26 .13 26 .16 

26 .14 26 .9 

26 .15 26 .10 

26 .16 26 .11 

26 .17 26 .18 

26 .18 26 .20 

26 .19 26 .19 

26 .20 26 .22 

26 .21 26 .17 

26 .22 26 .23 

26 .23 26 .24 

26 .24 26 .25 

26 .25 26 .26 

26 .26 26 .27 

26 .27 26 .28 

26 .28 26 .29 

26 .29 26 .32 

26 .30 26 .33 

26 .31 26 .35 

26 .32 26 .36 

26 .33 26 .37 

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Federal Register / Vol. 73, No. 174 / Monday, September 8, 2008 / Proposed Rules 52113 

Current part 26 Proposed part 26 

26 .34 26 .31 

26 .35 26 .30 

26 .36 26 .34 

26 .37 26 .38 

26 .38 26 .40 

26 .39 26 .41 

26 .40 26 .39 

26 .41 26 .42 

26 .42 26 .43 

26 .43 26 .44 

26 .44 26 .45 

26 .45 26 .46 

26 .46 26 .47 

26 .47 26 .49 

26 .48 26 .48 

26 .49 26 .50 

26 .50 26 .52 

26 .51 26 .53 

26 .52 26 .54 

26 .53 26 .55 

26 .54 26 .56 

This section of the preamble discusses 

the proposed regulatory changes. 

A. Amendments to Subpart A— 

Hearings Before Hearing Officers 

Subpart A of part 26 contains the 

procedures for hearings before hearing 

officers. This proposed rule would 

amend subpart A to make the following 

revisions: 

In § 26.1, the proposed rule would 

remove references to hearings 

conducted in matters arising under 24 

CFR part 25, since those hearings would 

now be conducted in accordance with 

the provisions of subpart B of this part. 

A new paragraph (10) would be added 

to § 26.2 to clarify that the hearing 

officer shall have the authority 

necessary to carry out the duties of the 

hearing officer conducting hearings 

under this subpart. 

The title of the newly designated 

§ 26.4 would be changed to ‘‘Sanctions’’

to more clearly indicate the section 

contents and would be revised to 

include more specific guidance on the 

imposition of sanctions. For clarity and 

ease of use, § 26.5 would be divided into 

several paragraphs. Section 26.6 would 

be clarified to state that the attorneys 

within the Office of General Counsel 

will serve as the Department’s 

representatives. 

Newly designated § 26.9 would be 

divided into several paragraphs and 

minor changes would be made to clarify 

the form and filing requirements. 

Additionally, redesignated § 26.10 

would be revised to update the methods 

and clarify the provisions concerning 

service. Newly designated § 26.11 

would be revised to more closely track 

the similar provisions in subpart B. 

The newly designated § 26.13 would 

be amended to provide the hearing 

officer with additional flexibility to 

designate a time period within which a 

complaint must be served and would be 

revised to clarify that the complaint 

must set forth both the factual and legal 

grounds for the action. 

Newly designated § 26.14 would be 

broken into sections for clarity. 

Redesignated § 26.15 would clarify that 

Respondents may amend without leave 

under the provisions of amendment by 

right in paragraph (a). 

The newly designated § 26.16 would 

be amended to state that, whenever 

possible, requests for action by the 

hearing officer should be made by 

motion. This revised section would also 

revise the name of the response to the 

motion for clarity and would extend the 

time period for response to 10 days. 

Additionally, this revised section would 

more clearly provide for motions to 

extend deadlines, would allow for the 

submission of proposed orders with 

written motions, would clarify the 

provisions concerning extensions of 

time, and would specifically provide for 

motions for summary judgment. 

The discovery provisions in 

redesignated §§ 26.18–26.22 would be 

revised to more closely track the 

provisions of the Federal Rules of Civil 

Procedure, which have always been 

used as guidance in the conduct of 

hearings under this part. Specifically, 

the redesignated § 26.18 would revise 

and expand the discovery provisions to 

allow the use of written interrogatories, 

in addition to depositions, requests for 

production of documents, and requests 

for admissions. The newly designated 

§§ 26.19 and 26.20 would be revised to 

incorporate more definite requirements 

for requesting the production of 

documents and for depositions and 

objections to depositions. A new § 26.21 

would be added to allow for a limited 

number of interrogatories in discovery. 

The redesignated § 26.22 would be 

revised to clarify the procedure for 

objections to admissions of facts and 

documents, and the title of that section 

would be changed to ‘‘Requests for 

admissions’’ to more clearly indicate the 

section contents. 

The newly designated § 26.24 would 

be revised to encourage the parties to 

enter into stipulations whenever 

possible. Redesignated § 26.25 would 

clarify: (1) That the hearing officer’s 

determination and order is final unless 

a party timely appeals it in accordance 

with redesignated § 26.26, and (2) 

would require the determination to 

provide information on such review, if 

any. The redesignated § 26.26 would 

modify the provisions regarding 

Secretarial review of the determinations 

of hearing officers by specifically 

providing that the Debarring Official 

shall have authority to review 

determinations in suspension and 

debarment proceedings, not the 

Secretary, by incorporating more 

detailed requirements for the briefs both 

in support of and in opposition to the 

appeal and by providing for the 

Secretary’s discretion to extend 

deadlines. Furthermore, redesignated 

§ 26.26 would include additional 

provisions about evidence in the record 

and ex parte communications, and 

combine and expand upon provisions 

concerning the final, written 

determination. 

Redesignated § 26.27 would be broken 

down into sections, for clarity. 

B. Amendments to Subpart B—Hearings 

Pursuant to the Administrative 

Procedure Act 

Subpart B of part 26 contains the 

procedures for hearings conducted on 

the record pursuant to the APA. This 

proposed rule would amend subpart B 

to make the following revisions: 

The redesignated § 26.29 will include 

a definition of ‘‘Respondent’’ in the 

regulations and would modify the title 

of the docket clerk. 

A new subheading titled 

‘‘Administrative Law Judge’’ would be 

inserted before the newly designated 

§ 26.32. The newly designated § 26.32 

would be revised to redesignate 

paragraph (n) as (o) and to include a 

new paragraph (n) clarifying the ALJ’s 

authority to extend deadlines. Minor 

clarifications to the specific language of 

the section would be made to the new 

§§ 26.34 and 26.35. 

A new subheading titled ‘‘Parties’’

would be inserted before the 

redesignated § 26.36. 

Redesignated § 26.38 would require 

the complaint to be filed with the Office 

of Administrative Law Judges upon 

issuance and would require the 

Respondent’s response to be filed with 

the same office, with a copy served 

upon the Department in accordance 

with the procedures set forth in the 

complaint. 

Redesignated § 26.40 would be 

revised to specifically provide for 

motions for summary judgment, would 

be revised to extend the time period for 

response to a motion to 10 days, and 

would more clearly provide for motions 

for time extensions. The newly 

designated § 26.42 would be amended to 

include more specific provisions for 

conduct of discovery under this subpart. 

As a result, the discovery procedures of 

subpart B will substantially conform to 

those of subpart A, and parties will be 

able to understand all applicable 

discovery procedures without having to 

reference the Federal Rules of Civil 

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52114 Federal Register / Vol. 73, No. 174 / Monday, September 8, 2008 / Proposed Rules 

Procedure. Additionally, § 26.42 would 

provide that in discovery in Program 

Fraud Civil Remedies Act (PFCRA) 

actions, the defendant may review 

documents that relate to the allegations 

set out in the complaint. 

The redesignated § 26.44 would be 

divided into additional paragraphs for 

clarity. The newly designated § 26.45 

would be amended to clarify the 

commencement dates and location of 

the hearing in PFCRA matters. 

Redesignated § 26.47 would be revised 

to provide additional guidance and 

clarity. 

Section 26.49 would be amended to 

require that the hearing be recorded by 

a HUD-designated reporter and that the 

parties may obtain copies of the 

transcript. 

Section 26.50(a) would clarify that the 

initial decision of the ALJ does not 

become effective unless it becomes final 

agency action on its own under 

§ 26.50(c) or 26.52(l) or if it is 

incorporated into the final agency action 

by the Secretary’s decision under 

§ 26.52(l). Redesignated § 26.52 would 

be amended to provide that all parties 

may request Secretarial review of 

determinations in PFCRA matters. 

Redesignated § 26.52 would also be 

amended to incorporate more detailed 

requirements for the briefs both in 

support of and in opposition to the 

appeal, to provide for the discretion to 

extend deadlines, and to combine and 

expand upon provisions concerning the 

final written decision. 

A new § 26.51 would establish 

procedures for seeking interlocutory 

Secretarial review of the rulings of an 

ALJ by motion for certification or by 

petition to the Secretary. 

Redesignated § 26.54 would be 

revised to eliminate the prohibition that 

the Government cannot seek judicial 

review of an adverse determination in 

PFCRA matters. The revision would 

bring the Government’s right to review 

into conformity with that in non-PFCRA 

matters. 

III. Small Business Concerns Related to 

Board Enforcement Actions 

With respect to enforcement actions 

undertaken pursuant to the procedures 

provided in this proposed rule, HUD is 

cognizant that section 222 of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (Pub. L. 104–121) 

(SBREFA) requires the Small Business 

and Agriculture Regulatory Enforcement 

Ombudsman to ‘‘work with each agency 

with regulatory authority over small 

businesses to ensure that small business 

concerns that receive or are subject to an 

audit, on-site inspection, compliance 

assistance effort, or other enforcement 

related communication or contact by 

agency personnel are provided with a 

means to comment on the enforcement 

activity conducted by this personnel.’’

To implement this statutory provision, 

the Small Business Administration has 

requested that federal agencies include 

the following language on agency 

publications and notices that are 

provided to small business concerns at 

the time the enforcement action is 

undertaken. The language is as follows: 

Your Comments Are Important 

The Small Business and Agriculture 

Regulatory Enforcement Ombudsman and 10 

Regional Fairness Boards were established to 

receive comments from small businesses 

about federal agency enforcement actions. 

The Ombudsman will annually evaluate the 

enforcement activities and rate each agency’s 

responsiveness to small business. If you wish 

to comment on the enforcement actions of 

[insert agency name], you will find the 

necessary comment forms at www.sba.gov/ 

ombudsman or call 1–888–REG–FAIR 

(1–888–734–3247). 

In accordance with its notice 

describing HUD’s actions on the 

implementation of SBREFA, which was 

published on May 21, 1998 (63 FR 

28214), HUD will include the language 

cited above on notices implementing 

enforcement actions, to ensure that 

small entities have the full means to 

comment on the enforcement activity 

conducted by HUD. 

IV. Findings and Certifications 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(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. This proposed 

rule would clarify pleading, discovery, 

and motion requirements that apply to 

hearings before HUD hearing officers 

and ALJs, respectively, by codifying 

current practice and by eliminating the 

need for parties to refer to outside 

sources, such as the Federal Rules of 

Civil Procedure, for routine 

requirements. Procedures that apply to 

parties in matters adjudicated in such 

hearings will not change significantly as 

a result of this rule, whether or not 

parties are small entities. These 

revisions impose no significant 

economic impact on a substantial 

number of small entities. Therefore, the 

undersigned certifies that this rule will 

not have a significant impact on a 

substantial number of small entities. 

Notwithstanding HUD’s 

determination that this rule will not 

have a significant economic impact on 

a substantial number of small entities, 

HUD specifically invites comments 

regarding less burdensome alternatives 

to this rule that will meet HUD’s 

program responsibilities. 

Environmental Impact 

This proposed rule does 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. Accordingly, 

under 24 CFR 50.19(c)(1), this proposed 

rule is categorically excluded from 

environmental review under the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321 et seq.) 

Executive Order 13132, Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits, to the extent 

practicable and permitted by law, an 

agency from promulgating a regulation 

that has federalism implications and 

either imposes substantial direct 

compliance costs on state and local 

governments and is not required by 

statute, or preempts state law, unless the 

relevant requirements of Section 6 of the 

Executive Order are met. This 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. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA) (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 the private 

sector. This proposed rule would not 

impose any federal mandates on any 

state, local, or tribal government or the 

private sector within the meaning of 

UMRA. 

List of Subjects for 24 CFR Part 26 

Administrative practice and 

procedure. 

Accordingly, for the reasons 

discussed in the preamble, HUD 

proposes to revise 24 CFR part 26 to 

read as follows: 

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Federal Register / Vol. 73, No. 174 / Monday, September 8, 2008 / Proposed Rules 52115 

PART 26—HEARING PROCEDURES 

Subpart A—Hearings Before Hearing 

Officers 

Sec. 

26.1 Purpose and scope. 

Hearing Officer 

26.2 Hearing officer, powers, and duties. 

26.3 Ex parte communications. 

26.4 Sanctions. 

26.5 Disqualification of hearing officer. 

Representation of the Parties 

26.6 Department representative. 

26.7 Respondent’s representative. 

26.8 Standards of practice. 

Pleadings and Motions 

26.9 Form and filing requirements. 

26.10 Service. 

26.11 Time computation. 

26.12 Notice of administrative action. 

26.13 Complaint. 

26.14 Answer. 

26.15 Amendments and supplemental 

pleadings. 

26.16 Motions. 

Discovery 

26.17 Prehearing conference. 

26.18 Discovery. 

26.19 Request for production of documents. 

26.20 Depositions. 

26.21 Written interrogatories. 

26.22 Requests for admissions. 

Hearings 

26.23 Public nature and timing of hearings; 

transcripts. 

26.24 Rules of evidence. 

26.25 Hearing officer’s determination and 

order. 

Secretarial Review 

26.26 Review of determination of hearing 

officers. 

26.27 Interlocutory rulings. 

Subpart B—Hearings Pursuant to the 

Administrative Procedure Act 

26.28 Purpose and scope. 

26.29 Definitions. 

26.30 Service and filing. 

26.31 Time computations. 

Administrative Law Judge 

26.32 Powers and duties of the 

Administrative Law Judge (ALJ). 

26.33 Ex parte communications. 

26.34 Sanctions. 

26.35 Disqualification of ALJ. 

Parties 

26.36 Parties to the hearing. 

26.37 Separation of functions. 

Prehearing Procedures 

26.38 Commencement of action. 

26.39 Prehearing conferences. 

26.40 Motions. 

26.41 Default. 

Discovery 

26.42 Discovery. 

26.43 Subpoenas. 

26.44 Protective orders. 

Hearings 

26.45 General. 

26.46 Witnesses. 

26.47 Evidence. 

26.48 Posthearing briefs. 

26.49 The record. 

26.50 Initial decision. 

26.51 Interlocutory rulings. 

26.52 Appeal to the Secretary. 

26.53 Exhaustion of administrative 

remedies. 

26.54 Judicial review. 

26.55 Collection of civil penalties and 

assessments. 

26.56 Right to administrative offset. 

Authority: 42 U.S.C. 3535(d). 

Subpart A—Hearings Before Hearing 

Officers 

§ 26.1 Purpose and scope. 

This part sets forth rules of procedure 

in certain proceedings of the 

Department of Housing and Urban 

Development presided over by a hearing 

officer. These rules of procedure apply 

to administrative sanction hearings 

pursuant to 2 CFR part 2424 and to 

hearings with respect to determinations 

by the Multifamily Participation Review 

Committee pursuant to 24 CFR part 200, 

subpart H, to the extent that these 

regulations are not inconsistent and 

unless these regulations provide 

otherwise. They also apply in any other 

case where a hearing is required by 

statute or regulation, to the extent that 

rules adopted under such statute or 

regulation are not inconsistent. 

Hearing Officer 

§ 26.2 Hearing officer, powers, and duties. 

(a) Hearing officer. Proceedings 

conducted under these rules shall be 

presided over by a hearing officer who 

shall be an Administrative Law Judge or 

Office of Appeals Administrative Judge 

authorized by the Secretary or designee 

to conduct proceedings under this part. 

(b) Time and place of hearing. The 

hearing officer shall set the time and 

place of any hearing and shall give 

reasonable notice to the parties. 

(c) Powers of hearing officers. The 

hearing officer shall conduct a fair and 

impartial hearing and take all action 

necessary to avoid delay in the 

disposition of proceedings and to 

maintain order. The hearing officer shall 

have all powers necessary to those ends, 

including, but not limited to, the power: 

(1) To administer oaths and 

affirmations; 

(2) To cause subpoenas to be issued 

as authorized by law; 

(3) To rule upon offers of proof and 

receive evidence; 

(4) To order or limit discovery as the 

interests of justice may require; 

(5) To regulate the course of the 

hearing and the conduct of the parties 

and their counsel; 

(6) To hold conferences for the 

settlement or simplification of the issues 

by consent of the parties; 

(7) To consider and rule upon all 

procedural and other motions 

appropriate in adjudicative proceedings; 

(8) To take notice of any material fact 

not appearing in evidence in the record 

that is properly a matter of judicial 

notice; 

(9) To make and file determinations; 

and 

(10) To exercise such other authority 

as is necessary to carry out the 

responsibilities of the hearing officer 

under subpart A of this part. 

§ 26.3 Ex parte communications. 

(a) Definition. An ex parte 

communication is any communication 

with a hearing officer, direct or indirect, 

oral or written, concerning the merits or 

procedures of any pending proceeding 

that is made by a party in the absence 

of any other party. 

(b) Prohibition of ex parte 

communications. Ex parte 

communications are prohibited except 

where: 

(1) The purpose and content of the 

communication have been disclosed in 

advance or simultaneously to all parties; 

or 

(2) The communication is a request 

for information concerning the status of 

the case. 

(c) Procedure after receipt of ex parte 

communication. Any hearing officer 

who receives an ex parte 

communication that the hearing officer 

knows or has reason to believe is 

unauthorized shall promptly place the 

communication, or its substance, in all 

files and shall furnish copies to all 

parties. Unauthorized ex parte 

communications shall not be taken into 

consideration in deciding any matter in 

issue. 

§ 26.4 Sanctions. 

(a) The hearing officer may sanction a 

person, including any party or 

representative, for failing to comply 

with an order, rule, or procedure 

governing the proceeding; failing to 

prosecute or defend an action; or 

engaging in other misconduct that 

interferes with the speedy, orderly, or 

fair conduct of the hearing. 

(b) Any sanction, including, but not 

limited to, those listed in paragraphs (c), 

(d), and (e) of this section, shall 

reasonably relate to the severity and 

nature of the failure or misconduct. 

(c) If a party refuses or fails to comply 

with an order of the hearing officer, 

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52116 Federal Register / Vol. 73, No. 174 / Monday, September 8, 2008 / Proposed Rules 

including an order compelling 

discovery, the hearing officer may enter 

any appropriate order necessary to the 

disposition of the hearing including a 

determination against the noncomplying 

party, including but not limited to, the 

following: 

(1) Draw an inference in favor of the 

requesting party with regard to the 

information sought; 

(2) In the case of requests for 

admission, regard each matter about 

which an admission is requested to be 

admitted; 

(3) Prohibit the party failing to 

comply with the order from introducing 

evidence concerning, or otherwise 

relying upon, testimony relating to the 

information sought; or 

(4) Strike any part of the pleadings or 

other submissions of the party failing to 

comply with the order. 

(d) If a party fails to prosecute or 

defend an action brought under subpart 

A of this part, the hearing officer may 

dismiss the action or may issue an 

initial decision against the nonprosecuting or defending party. 

(e) The hearing officer may refuse to 

consider any motion, request, response, 

brief, or other document that is not filed 

in a timely fashion. 

§ 26.5 Disqualification of hearing officer. 

(a) When a hearing officer believes 

there is a basis for disqualification in a 

particular proceeding, the hearing 

officer shall withdraw by notice on the 

record and shall notify the Secretary 

and the official initiating the action 

under appeal. 

(b) Whenever any party believes that 

the hearing officer should be 

disqualified from presiding in a 

particular proceeding, the party may file 

a motion with the hearing officer 

requesting the hearing officer to 

withdraw from presiding over the 

proceedings. This motion shall be 

supported by affidavits setting forth the 

alleged grounds for disqualification. 

(c) Upon the filing of a motion and 

affidavit, the hearing officer shall 

proceed no further in the case until the 

matter of disqualification is resolved. 

(d) If the hearing officer does not 

withdraw, a written statement of his or 

her reasons shall be incorporated in the 

record and the hearing shall proceed, 

unless the decision is appealed in 

accordance with the procedures set 

forth in § 26.27. 

Representation of the Parties 

§ 26.6 Department representative. 

In each case heard before a hearing 

officer under this part, the Department 

shall be represented by attorneys from 

the Office of General Counsel. 

§ 26.7 Respondent’s representative. 

The party against whom the 

administrative action is taken may be 

represented at hearing, as follows: 

(a) Individuals may appear on their 

own behalf; 

(b) A member of a partnership or joint 

venture may appear on behalf of the 

partnership or joint venture; 

(c) A bona fide officer may appear on 

behalf of a corporation or association 

upon a showing of adequate 

authorization; 

(d) An attorney who files a notice of 

appearance with the hearing officer may 

represent any party. For purposes of this 

paragraph, an attorney is defined as a 

member of the bar of a federal court or 

of the highest court of any state or 

territory of the United States; or 

(e) An individual not included within 

paragraphs (a) through (d) of this section 

may represent the respondent upon an 

adequate showing, as determined by the 

hearing officer, that the individual 

possesses the legal, technical, or other 

qualifications necessary to advise and 

assist in the presentation of the case. 

§ 26.8 Standards of practice. 

Attorneys shall conform to the 

standards of professional and ethical 

conduct required of practitioners in the 

courts of the United States and by the 

bars of which the attorneys are 

members. Any attorney may be 

prohibited by the hearing officer from 

representing a party if the attorney is 

not qualified under § 26.7 or if such 

action is necessary to maintain order in 

or the integrity of the pending 

proceeding. 

Pleadings and Motions 

§ 26.9 Form and filing requirements. 

(a) Filing. Unless otherwise provided 

by statute, rule, or regulation: 

(1) Requests for hearings shall be filed 

with the Office of General Counsel’s 

Docket Clerk, Department of Housing 

and Urban Development, 451 Seventh 

Street, SW., Washington, DC 20410. The 

OGC Docket Clerk shall assign the 

docket number and forward the case to 

HUD’s Office of Appeals. 

(2) All other pleadings, submissions, 

and documents should be filed directly 

with the appropriate hearing officer. 

(3) Filing may be made by first class 

mail, delivery, facsimile transmission, 

or electronic means; however, the 

hearing officer may place reasonable 

limits on filing by facsimile or 

electronic means. Duplicate copies are 

not required unless so ordered by the 

hearing officer. A document is 

considered timely filed if postmarked 

on or before the date due or delivered 

to the appropriate person by the date 

due. 

(b) Title. Documents shall show 

clearly the title of the action and the 

docket number assigned by the Docket 

Clerk. 

(c) Form. To the fullest extent 

possible, all documents shall be printed 

or typewritten in clear, legible form. 

§ 26.10 Service. 

(a) Method of Service. One copy of all 

pleadings, motions, and other 

documents required or permitted under 

these rules shall be served upon all 

parties by the person filing them and 

shall be accompanied by a certificate of 

service stating how and when such 

service has been made. Whenever these 

rules require or permit service to be 

made upon a party represented by an 

attorney, the service shall be made upon 

the attorney, unless service upon the 

party is ordered by the hearing officer. 

Service shall be made by delivery, by 

first class mail or overnight delivery to 

that person’s last known address, by 

facsimile transmission, or by electronic 

means; however, the hearing officer may 

place reasonable limits on service by 

facsimile transmission or electronic 

means. Delivery of a copy within this 

rule means: Handing it to the person to 

be served; or leaving it at that person’s 

office with a clerk or other person in 

charge; or, if there is no one in charge, 

leaving it in a conspicuous place in the 

office; or, if the office is closed or the 

person to be served has no office, 

leaving it at that person’s residence or 

usual place of abode with some person 

of suitable age and discretion who 

resides there. Service by mail, overnight 

delivery, facsimile transmission, or 

electronic means is complete upon 

deposit in a mail box, or upon posting, 

or upon electronic transmission. 

(b) Proof of Service. Proof of service 

shall not be required unless the fact of 

service is put in issue by appropriate 

motion or objection on the part of the 

person allegedly served. In these cases, 

service may be established by written 

receipt signed by or on behalf of the 

person to be served, or may be 

established prima facie by affidavit, 

certificate of service of mailing, or 

electronic receipt of sending. 

§ 26.11 Time computation. 

(a) Generally. Computation of any 

period of time prescribed or allowed by 

this part shall begin with the first 

business day following the day on 

which the act, event, development, or 

default initiating the period of time 

occurred. When the last day of the 

period computed is a Saturday, Sunday, 

national holiday, or other day on which 

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the Department of Housing and Urban 

Development is closed, the period shall 

run until the end of the next following 

business day. When any prescribed or 

allowed period of time is 7 days or less, 

each of the Saturdays, Sundays, and 

national holidays shall be excluded 

from the computation of the prescribed 

or allowed period. 

(b) Entry of orders. In computing any 

time period involving the date of the 

issuance of an order or decision by a 

hearing officer, the date of the issuance 

is the date the order or decision is 

served on the parties by the hearing 

officer or Docket Clerk. 

(c) Service by mail. If a document is 

served by mail, 3 days shall be added 

to the time permitted for a response. 

(d) Extensions of time periods. Except 

where mandated by statute, the hearing 

officer (or in the case of a review under 

§§ 26.26 and 26.27, the Secretary or 

designee) may upon motion enlarge the 

time within which any act required by 

these rules must be performed where 

necessary to avoid prejudicing the 

public interest or the rights of the 

parties. 

§ 26.12 Notice of administrative action. 

In every case, there shall be a notice 

of administrative action. The notice 

shall be in writing and inform the party 

of the nature of that administrative 

action. The notice shall state the reasons 

for the proposed or imposed action, 

except where general terms are 

permitted by 2 CFR part 2424, and shall 

inform the party of any right to a 

hearing to challenge the administrative 

action, and the manner and time in 

which to request such hearing. A 

supplemental notice may be issued in 

the discretion of the initiating official to 

add to or modify the reasons for the 

action. 

§ 26.13 Complaint. 

(a) Respondent. A complaint shall be 

served upon the party against whom an 

administrative action is taken, who shall 

be called the respondent. 

(b) Grounds. The complaint shall state 

the legal and factual grounds upon 

which the administrative action is 

based. The grounds set forth in the 

complaint may not contain allegations 

beyond the scope of the notice of 

administrative action or any amendment 

thereto. 

(c) Notice of administrative action as 

complaint. A notice of administrative 

action may serve as a complaint 

provided the notice states it is also a 

complaint and complies with paragraph 

(b) of this section. 

(d) Timing. When the notice does not 

serve as a complaint, the complaint 

shall be served on or before the 30th day 

after the referral to a hearing officer or 

a request for hearing is made, or within 

any other time period designated by the 

hearing officer. 

§ 26.14 Answer. 

(a) Respondent shall file an answer 

within 30 days of receipt of the 

complaint, unless otherwise specified in 

this title or ordered by the hearing 

officer. 

(b) The answer shall: 

(1) Respond specifically to each 

factual allegation contained in the 

complaint; 

(2) Specifically plead any affirmative 

defense; and 

(3) Set forth any mitigating factors or 

extenuating circumstances. 

(c) A general denial shall not be 

permitted. Allegations are admitted 

when not specifically denied in 

respondent’s answer. 

§ 26.15 Amendments and supplemental 

pleadings. 

(a) Amendments. (1) By right: The 

Department may amend its complaint 

without leave at any time within 30 

days of the date the complaint is filed 

or at any time before respondent’s 

responsive pleading is filed, whichever 

is later. Respondent may amend its 

answer without leave at any time within 

30 days of filing of its answer. A party 

shall plead in response to an amended 

pleading within 15 days of receipt of the 

amended pleading. 

(2) By leave: Upon conditions as are 

necessary to avoid prejudicing the 

public interest and the rights of the 

parties, the hearing officer may allow 

amendments to pleadings upon motion 

of any party. 

(3) Conformance to evidence: When 

issues not raised by the pleadings, but 

reasonably within the scope of the 

proceeding initiated by the complaint, 

are tried by express or implied consent 

to the parties, they shall be treated in all 

respects as if they had been raised in the 

pleadings, and amendments of the 

pleadings necessary to make them 

conform to the evidence shall be 

allowed at any time. 

(b) Supplemental pleadings. The 

hearing officer may, upon reasonable 

notice, permit service of a supplemental 

pleading concerning transactions, 

occurrences, or events that have 

happened or been discovered since the 

date of prior pleadings. 

§ 26.16 Motions. 

(a) Motions. Requests for rulings or 

actions to be taken by the hearing officer 

should be made, wherever appropriate, 

in the form of a motion. All motions 

from the commencement of the action 

until the issuance of a decision shall be 

addressed to the hearing officer, and 

shall be served upon all parties to the 

proceeding. 

(b) Content. All written motions shall 

state the particular order, ruling, or 

action desired and the grounds for 

granting the motion. The parties may 

submit a proposed order with any 

motion. 

(c) Responses to motions. Within 10 

days after receipt of any written motion, 

or within any other period as may be 

designated by the hearing officer, the 

opposing party shall respond to the 

motion and set forth any objections to 

the motion. Failure to file a timely 

response to the motion may constitute a 

party’s consent to the granting of the 

motion. The moving party shall have no 

right to reply, except as permitted by the 

hearing officer. 

(d) Motions for extensions of time. 

Either party may file a motion for 

extension. At the discretion of the 

hearing officer, a motion for an 

extension of time may be granted for 

good cause at any time, notwithstanding 

an objection or any reply to the motion 

consistent with the provisions of 

§ 26.2(c)(5) and (7). The hearing officer 

may waive the requirements of this 

section as to motions for extensions of 

time. 

(e) Oral argument. The hearing officer 

may order oral argument on any motion. 

(f) Motions for summary judgment. 

(1) A party claiming relief or a party 

against whom relief is sought may 

timely move, with or without 

supporting affidavits, for summary 

judgment on all or part of the claim. 

(2) Objections in the consideration of 

summary judgment motions or answers 

thereto based upon a failure to strictly 

comply with the provisions of Rule 56 

of the Federal Rules of Civil Procedure 

may, at the discretion of the hearing 

officer, be overruled. 

(g) Motions for dismissal. When a 

motion to dismiss the proceeding is 

granted, the hearing officer shall issue a 

determination and order in accordance 

with the provisions of § 26.25. 

Discovery 

§ 26.17 Prehearing conference. 

(a) Prehearing conference. The 

hearing officer may, sua sponte or at the 

request of any party, direct counsel for 

all parties to confer with the hearing 

officer before the hearing for the 

purpose of considering: 

(1) Simplification and clarification of 

the issues; 

(2) Stipulations and admissions of fact 

and of the contents and authenticity of 

documents; 

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(3) The disclosure of the names of 

witnesses; 

(4) Matters of which official notice 

will be taken; 

(5) Other matters as may aid in the 

orderly disposition of the proceeding, 

including disclosure of the documents 

or other physical exhibits that will be 

introduced into evidence in the course 

of the proceeding. 

(b) Recordation of prehearing 

conference. The prehearing conference 

shall, at the request of any party, be 

recorded or transcribed. 

(c) Order on prehearing conference. 

The hearing officer shall enter in the 

record an order that states the rulings 

upon matters considered during the 

conference, together with appropriate 

directions to the parties. The order shall 

control the subsequent course of the 

proceeding, subject to modifications 

upon good cause shown. 

§ 26.18 Discovery. 

(a) General. The parties are 

encouraged to engage in voluntary 

discovery procedures, which may 

commence at any time after an answer 

has been filed. Parties may obtain 

discovery regarding any matter, not 

privileged, that is relevant to the claim 

or defense of any party, including the 

existence, description, nature, custody, 

condition, and location of any books, 

documents, or other tangible things and 

the identity and location of persons 

having knowledge of any discoverable 

matter. For good cause, the hearing 

officer may order discovery of any 

matter relevant to the subject matter 

involved in the action. To be relevant, 

information need not be admissible at 

the hearing, if the discovery appears 

reasonably calculated to lead to the 

discovery of admissible evidence. Each 

party shall bear its own expenses 

associated with discovery. Discovery 

may include: 

(1) Requests for production of 

documents as set forth in § 26.19; 

(2) Depositions as set forth in § 26.20; 

(3) Written interrogatories as set forth 

in § 26.21; and 

(4) Requests for admissions as set 

forth in § 26.22. 

(b) Supplementation of responses. A 

party who has responded to a request 

for discovery with a response is under 

a duty to timely amend a prior response 

to an interrogatory, request for 

production, or request for admission if 

so ordered by the hearing officer, or if 

the party learns that the response is in 

some material respect incomplete or 

incorrect and if the additional or 

corrective information has not otherwise 

been made known to the other parties 

during the discovery process or in 

writing. 

(c) Requesting an order. In connection 

with any discovery procedure, by 

motion addressed to the hearing officer 

and upon a showing of a good faith 

attempt to resolve the issue without the 

hearing officer’s intervention, either 

party may: 

(1) Request an order compelling a 

response with respect to any objection 

to or other failure to respond to the 

discovery requested or any part thereof, 

or any failure to respond as specifically 

requested, or 

(2) Request a protective order limiting 

the scope, methods, time and place for 

discovery, and provisions for protecting 

privileged information or documents. 

(d) Limitations. (1) By order, the 

hearing officer may set or alter limits on 

the number of document requests, 

depositions, and interrogatories, or the 

length of depositions. 

(2) Orders compelling discovery shall 

be issued only where such discovery 

will not compel the disclosure of 

privileged information, unduly delay 

the hearing, or result in prejudice to the 

public interest or the rights of the 

parties, and upon a showing of good 

cause. 

(3) Protective orders may be issued by 

a hearing officer if the hearing officer 

determines such an order is necessary to 

protect a party or other person from 

annoyance, embarrassment, oppression, 

or undue burden or expense because: 

(i) The discovery sought is 

unreasonably cumulative or duplicative, 

or is obtainable from some other source 

that is more convenient, less 

burdensome, or less expensive; 

(ii) The party seeking discovery has 

had ample opportunity by discovery in 

the action to obtain the information 

sought; or 

(iii) The burden or expense of the 

proposed discovery outweighs its likely 

benefit, taking into account the needs of 

the case, the amount in controversy, the 

parties’ resources, the importance of the 

issues at stake in the litigation, and the 

importance of the proposed discovery in 

resolving the issues. 

(4) A party need not provide 

discovery of electronically stored 

information from sources that the party 

identifies as not reasonably accessible 

because of undue burden or cost. On 

motion to compel discovery or for a 

protective order, the party from whom 

discovery is sought must show that the 

information is not reasonably accessible 

because of undue burden or cost. If that 

showing is made, the hearing officer 

may nonetheless order discovery from 

such sources if the requesting party 

shows good cause or, when the party’s 

refusal to provide the information 

sought is solely due to undue expense, 

if the party seeking the discovery agrees 

to bear the expense associated with the 

request. 

(e) Refusal to honor discovery order. 

When a party refuses to honor a 

discovery order, the hearing officer may 

issue such orders in regard to the refusal 

as justice shall require. 

§ 26.19 Request for production of 

documents. 

(a) Request to produce. Any party may 

serve upon any other party a written 

request to produce, and permit the party 

making the request, or someone acting 

on the requestor’s behalf, to inspect, 

copy, test, or sample any designated 

documents—including writings, 

drawings, graphs, charts, photographs, 

sound recordings, images, and other 

data or data compilations stored in any 

medium from which information can be 

obtained—translated, if necessary, by 

the respondent into reasonably usable 

form, or to inspect, copy, test, or sample 

any designated tangible things that 

constitute or contain matters within the 

scope of § 26.18(a) and which are in the 

possession, custody, or control of the 

party upon whom the request is served. 

(b) Procedure. The request shall set 

forth, either by individual item or by 

category, the items to be inspected, and 

describe each with reasonable 

particularity. The request shall specify a 

reasonable time, place, and manner of 

making the inspection and performing 

the related acts. The request may specify 

the form or forms in which 

electronically stored information is to be 

produced. 

(c) Response to request to produce. 

The party upon whom the request is 

served shall serve a written response 

within 20 days after service of the 

request. A shorter or longer time may be 

directed by the hearing officer, or in the 

absence of such an order, agreed to by 

the parties in a written document that 

shall be timely submitted to the hearing 

officer. The response shall state, with 

respect to each item or category, 

whether inspection and related 

activities will be permitted as requested. 

If there are any objections to any 

requests, including objections to the 

requested form or forms for producing 

electronically stored information, the 

response shall state the reasons for such 

objections. If objection is made to part 

of an item or category, the part shall be 

specified and inspection of the 

remaining parts shall be permitted. If 

objection is made to the requested 

format or forms for producing 

electronically stored information—or if 

no form was specified in the request—

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the responding party must state the form 

or forms it intends to use. The party 

submitting the request may move for an 

order under § 26.18(c)(1) with respect to 

any objection to or other failure to 

respond to the request or any part 

thereof, or any failure to permit 

inspection as requested. 

(d) Form of production. Unless the 

parties otherwise agree, or the hearing 

officer otherwise orders: 

(1) A party who produces documents 

for inspection shall produce them as 

they are kept in the usual course of 

business or shall organize and label 

them to correspond with the categories 

in the request; 

(2) If a request does not specify the 

format or forms for producing 

electronically stored information, a 

responding party must produce the 

information in a form or forms in which 

it is ordinarily maintained or in a form 

or forms that are reasonably usable; and 

(3) A party need not produce the same 

electronically stored information in 

more than one form. 

§ 26.20 Depositions. 

(a) Taking oral deposition. A party 

may take the oral deposition of any 

person. Reasonable written notice of 

deposition shall be served upon the 

opposing party and the deponent. The 

attendance of a deponent may be 

compelled by subpoena where 

authorized by law or by other order of 

the hearing officer. 

(b) Testifying on oral deposition. Each 

person testifying on oral deposition 

shall be placed under oath by the person 

before whom the deposition is taken. 

The deponent may be examined and 

cross-examined. The questions and the 

answers, together with all objections 

made, shall be recorded by the person 

before whom the deposition is to be 

taken, or under that person’s direction. 

(c) Objections. Objection may be made 

to questions or answers for any reason 

that would require the exclusion of the 

testimony under § 26.24 as if the 

witness were present and testifying at 

hearing. Objections shall be in short 

form, stating every ground for objection. 

Failure to object to any question or 

answer shall be considered a waiver of 

objection, unless the parties agree 

otherwise. Rulings on any objections 

shall be made by the hearing officer at 

hearing, or at such other time requested 

by motion. The examination shall 

proceed, with the testimony being taken 

subject to the objections; the deponent 

may be instructed not to answer only 

when necessary to preserve a privilege, 

to enforce a limitation directed by the 

hearing officer, or to present a motion 

for a protective order under 

§ 26.18(c)(2). 

(d) Submission to deponent. A 

transcript of the deposition shall be 

submitted to the deponent for 

examination and signature, unless 

submission is waived by the deponent 

and the parties. Any changes in form or 

substance that the deponent desires to 

make shall be entered upon the 

transcript by the person before whom 

the deposition was taken, with a 

statement of reasons given by the 

deponent for making them. The 

transcript shall then be signed by the 

deponent, unless the parties by 

stipulation waive the signing or the 

deponent is ill, cannot be found, or 

refuses to sign. If the transcript is not 

signed, the person before whom the 

deposition was taken shall sign it and 

state on the record the reason that it is 

not signed. 

(e) Certification and filing. The person 

before whom the deposition was taken 

shall make a certification on the 

transcript as to its accuracy. Interested 

parties shall make their own 

arrangements with the person recording 

the testimony for copies of the 

testimony and the exhibits. 

(f) Deposition as evidence. Subject to 

appropriate rulings by the hearing 

officer on objections, the deposition or 

any part may be introduced into 

evidence for any purpose if the 

deponent is unavailable. Only that part 

of a deposition that is received in 

evidence at a hearing shall constitute a 

part of the record in the proceeding 

upon which a decision may be based. 

Nothing in this rule is intended to limit 

the use of a deposition for impeachment 

purposes. 

(g) Payment of fees. Fees shall be paid 

by the person upon whose application 

the deposition is taken. 

§ 26.21 Written interrogatories. 

(a) Service of interrogatories. Any 

party may serve upon any other party 

written interrogatories, not to exceed 25 

in number, including all discrete 

subparts, unless additional 

interrogatories are agreed to by the 

parties or leave to serve additional 

interrogatories is granted by the hearing 

officer. 

(b) Response to interrogatories. 

Within 20 days after service of the 

request, the party upon whom the 

interrogatories are served shall serve a 

written response, unless the parties 

agree in a written document submitted 

to the hearing officer or the hearing 

officer determines that a shorter or 

longer period is appropriate under the 

circumstances. The response shall 

specifically answer each interrogatory, 

separately and fully in writing, unless it 

is objected to, in which event the 

objecting party shall state the reasons 

for any objections with specificity. Any 

ground not stated in a timely objection 

is waived unless the party’s failure to 

object is excused by the hearing officer 

for good cause shown. If objection is 

made to only part of an interrogatory, 

the objectionable part shall be specified 

and the party shall answer to the extent 

that the interrogatory is not 

objectionable. 

(c) Option to produce business 

records. Where the answer to an 

interrogatory may be derived or 

ascertained from the business records, 

including electronically stored 

information, of the party upon whom 

the interrogatory has been served or 

from an examination, audit, or 

inspection of such business records, 

including a compilation, abstract, or 

summary thereof, and the burden of 

deriving or ascertaining the answer is 

substantially the same for the party 

serving the interrogatory as for the party 

served, it is a sufficient answer to such 

interrogatory to specify the records from 

which the answer may be derived or 

ascertained and to afford to the party 

serving the interrogatory reasonable 

opportunity to examine, audit, or 

inspect such records and to make 

copies, compilations, abstracts, or 

summaries. A specification shall be in 

sufficient detail to permit the 

interrogating party to locate and to 

identify, as readily as can by the party 

served, the records from which the 

answer may be ascertained. 

§ 26.22 Requests for admissions. 

(a) Any party may serve upon any 

other party a written request for the 

admission of the genuineness of any 

relevant documents described in the 

request or of the truth of any relevant 

matters of fact. Copies of documents 

shall be delivered with the request 

unless copies have already been 

furnished. Each requested admission 

shall be considered admitted, unless 

within 30 days after service of the 

request, or within such other time as the 

parties may agree, or the hearing officer 

determines, the party from whom the 

admission is sought serves upon the 

party making the request either: 

(1) A statement that: 

(i) Denies specifically the relevant 

matters for which an admission is 

requested, or sets forth in detail the 

reasons why the party can neither 

truthfully admit nor deny them; 

(ii) Fairly meets the substance of the 

requested admission and, when good 

faith requires that a party qualify an 

answer or deny only a part of the matter 

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of which an admission is requested, 

specifies as much of it as is true and 

qualifies or denies the remainder; and 

(iii) Does not assert lack of 

information or knowledge as a reason 

for failure to admit or deny, unless the 

party states that the party has made 

reasonable inquiry, and that the 

information known or readily obtainable 

by the party is insufficient to enable the 

party to admit or deny; or 

(2) Written objections to a requested 

admission that: 

(i) State the grounds for the objection; 

and 

(ii) Object to a requested admission, if 

necessary, either in whole or in part, on 

the basis of privilege or relevance. 

(b) Responses to the request for 

admission on matters to which 

objections have been made may be 

deferred until the objection is ruled 

upon, but if written objections are made 

only to a part of a request, a response 

to the remainder of the request shall be 

provided. 

(c) Any matter admitted under this 

rule is conclusively established unless 

the hearing officer, on motion, permits 

withdrawal or amendment of the 

admission. Admissions obtained 

pursuant to this procedure may be used 

in evidence only for the purposes of the 

pending action. The use of obtained 

admissions as evidence is permitted to 

the same extent and subject to the same 

objections as other evidence. 

Hearings 

§ 26.23 Public nature and timing of 

hearings; transcripts. 

(a) Public hearings. All hearings in 

adjudicative proceedings shall be 

public. 

(b) Conduct of hearing. Hearings shall 

proceed with all reasonable speed. The 

hearing officer may order recesses for 

good cause, stated on the record. The 

hearing officer may, for convenience of 

the parties or witnesses, or in the 

interests of justice, order that hearings 

be conducted outside of Washington, 

DC, and, if necessary, in more than one 

location. 

(c) Transcripts. Hearings shall be 

recorded and transcribed only by a 

reporter designated by the Department 

under the supervision of the hearing 

officer. The original transcript shall be 

a part of the record and shall constitute 

the sole official transcript. Any party or 

a member of the public, at his own 

expense, may obtain copies of 

transcripts from the reporter. 

§ 26.24 Rules of evidence. 

(a) Evidence. Every party shall have 

the right to present its case or defense 

by oral and documentary evidence, 

unless otherwise limited by law or 

regulation, to conduct such crossexamination and to submit rebuttal 

evidence as may be required for a full 

and true disclosure of the facts. 

Irrelevant, immaterial, privileged, or 

unduly repetitious evidence shall be 

excluded. Unless otherwise provided for 

in this part, the Federal Rules of 

Evidence shall provide guidance to the 

hearing officer in the conduct of 

proceedings under this part, but shall 

not be binding. Parties may object to 

clearly irrelevant material, but technical 

and hearsay objections to testimony as 

used in a court of law will not be 

sustained. 

(b) Testimony under oath or 

affirmation. All witnesses shall testify 

under oath or affirmation. 

(c) Objections. Objections to the 

admission or exclusion of evidence 

shall be in short form, stating the 

grounds of objections. Rulings on 

objections shall be a part of the 

transcript. Failure to object to admission 

or exclusion of evidence or to any 

evidentiary ruling shall be considered a 

waiver of objection, but no exception to 

a ruling on an objection is necessary in 

order to preserve it for appeal. 

(d) Authenticity of documents. Unless 

specifically challenged, it shall be 

presumed that all relevant documents 

are authentic. An objection to the 

authenticity of a document shall not be 

sustained merely on the basis that it is 

not the original. 

(e) Stipulations. The parties may 

stipulate as to any relevant matters of 

fact. Stipulations may be received in 

evidence at a hearing, and when 

received shall be binding on the parties 

with respect to the matters stipulated. 

The parties are encouraged to enter into 

stipulations of fact whenever possible. 

(f) Official notice. All matters 

officially noticed by the hearing officer 

shall appear on the record. 

(g) Burden of proof. The burden of 

proof shall be upon the proponent of an 

action or affirmative defense, including, 

where applicable, mitigating factors, 

unless otherwise provided by law or 

regulation. 

§ 26.25 Hearing officer’s determination 

and order. 

(a) Scope of review. The hearing 

officer shall conduct a de novo review 

of the administrative action to 

determine whether it is supported by a 

preponderance of the evidence, unless a 

different standard of proof is required 

by law or regulation. Each and every 

charge alleged by the Department need 

not be proven to support the 

administrative action. The hearing 

officer may modify or vacate the 

administrative action under review only 

upon a particularized finding of facts 

that justifies a deviation from the 

administrative action. 

(b) Closing of hearing. At the 

discretion of the hearing officer, the 

closing of the record may be postponed 

in order to permit the admission of 

other evidence into the record. In the 

event further evidence is admitted, each 

party shall be given an opportunity to 

respond to such evidence. 

(c) Briefs. Upon conclusion of the 

hearing, the hearing officer may request 

the parties to file proposed findings of 

fact and legal briefs. The hearing officer 

shall make a written determination and 

order based upon evidence and 

arguments presented by the parties. The 

determination shall be founded upon 

reliable and probative evidence. This 

determination and order shall be served 

upon all parties. 

(d) Bench decisions. Where the parties 

agree and where appropriate in the 

judgment of the hearing officer, a bench 

decision will be issued. 

(e) Time period for issuance of 

decision. The hearing officer shall 

endeavor to issue a determination 

within 60 days from the date of the 

closing of the record. 

(f) Finality of determination. The 

determination and order shall be final 

unless a party timely appeals the 

determination in accordance with 

§ 26.26. The determination shall inform 

the parties that, if provided for and 

consistent with Departmental 

regulations, any party may request, in 

writing, Secretarial review of the 

determination within 30 days after the 

hearing officer issues the determination, 

in accordance with § 26.26 of this part. 

The determination shall include the 

mailing address, facsimile number, and 

electronic submission information to 

which the request for Secretarial review 

should be sent. A request for Secretarial 

review may be made by mail, delivery, 

facsimile, or electronic submission. 

Secretarial Review 

§ 26.26 Review of determination of hearing 

officers. 

(a) Except in matters arising under 2 

CFR part 2424, any party may file with 

the Secretary an appeal within 30 days 

after the date that the hearing officer 

issues a determination or order. The 

Secretary or designee may extend the 

30-day period, in the Secretary’s sole 

discretion, for good cause. 

(b) Brief in support of appeal. The 

appeal shall be accompanied by a 

written brief, not to exceed 15 pages, 

setting forth the party’s specific 

objections to the determination or order 

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of the hearing officer and the party’s 

supporting reasons for any objections. 

The appealing party may request leave 

to file a brief in excess of 15 pages for 

good cause shown. Alternative proposed 

findings and conclusions, if any, may be 

appended as an exhibit. 

(c) Briefs in opposition. Any opposing 

party may submit a brief in opposition 

to the appeal, not to exceed 15 pages, 

within 20 days of receiving a copy of the 

appeal and accompanying brief. The 

opposing party may request leave to file 

a brief in excess of 15 pages for good 

cause shown. The brief in opposition 

shall specifically state the opposing 

party’s reasons for supporting the 

hearing officer’s determination, or for 

objecting to any part of the hearing 

officer’s determination. 

(d) Service. The appeal and all briefs 

shall be served on all parties and on the 

Docket Clerk. 

(e) Forwarding of the record. Upon 

request by the Office of the Secretary, 

the hearing officer shall forward the 

record of the proceeding to the Secretary 

or the Secretary’s designee. 

(f) Time extensions. The Secretary, or 

designee, in his or her sole discretion, 

may extend the deadlines or page 

limitations set forth in paragraphs (b) 

and (c) of this section. The Secretary or 

designee may also permit the filing of 

additional briefs, in his or her sole 

discretion. 

(g) Personal appearance. There is no 

right to appear personally before the 

Secretary or designee. 

(h) Interlocutory rulings. There is no 

right to appeal any interlocutory ruling 

by the hearing officer, except as 

provided for in § 26.27. 

(i) Objection not raised before hearing 

officer. In reviewing the determination 

or order, the Secretary, or designee, 

shall not consider any objection that 

was not raised before the hearing officer 

unless a demonstration is made of 

extraordinary circumstances causing the 

failure to raise the objection. 

(j) Evidence in the record. The 

Secretary or designee shall consider 

only evidence contained in the record 

forwarded by the hearing officer. 

However, if any party demonstrates to 

the satisfaction of the Secretary or 

designee that additional evidence not 

presented at the hearing is material, and 

that there were reasonable grounds for 

the failure to present such evidence at 

the hearing, the Secretary or designee 

shall remand the matter to the hearing 

officer for reconsideration in light of the 

additional evidence. 

(k) Ex parte communications. The 

prohibitions of ex parte 

communications in § 26.3 shall apply to 

contacts with the Secretary or the 

Secretary’s designee. 

(l) Determination. The Secretary or 

designee may affirm, modify, reverse, 

remand, reduce, compromise, or settle 

any determination made or action 

ordered in the initial determination or 

order. The Secretary or designee shall 

consider, and include in any final 

determination, such factors as may be 

set forth in applicable statutes or 

regulations. 

(m) Written determination. Where a 

request for Secretarial review has been 

timely made, the Secretary, or designee, 

shall issue a written determination 

within 30 days after receipt of the 

request for review, and shall serve it 

upon the parties to the hearing and the 

hearing officer. The Secretary, or 

designee, may extend the time in which 

a written determination must be issued 

by an additional 60 days for good cause 

shown in a written justification issued 

to the parties. The written 

determination of the Secretary shall be 

final. If the Secretary, or designee, does 

not act upon the request for review of 

a determination within 90 days of 

service of the request, then the initial 

determination shall be the final agency 

action. 

§ 26.27 Interlocutory rulings. 

(a) Interlocutory rulings by the hearing 

officer. A party seeking review of an 

interlocutory ruling shall file a motion 

with the hearing officer within 10 days 

of the ruling requesting certification of 

the ruling for review by the Secretary, 

or in cases arising under 2 CFR part 

2424, with the Debarring Official. 

Certification may be granted if the 

hearing officer believes that: 

(1) It involves an important issue of 

law or policy as to which there is 

substantial ground for difference of 

opinion; and 

(2) An immediate appeal from the 

order may materially advance the 

ultimate termination of the litigation. 

(b) Petition for review. Any party may 

file a petition for review of an 

interlocutory ruling within 10 days of 

the hearing officer’s determination 

regarding certification. 

(c) Secretarial review. The Secretary, 

or designee, or Debarring Official shall 

review a certified ruling. The Secretary, 

designee, or Debarring Official has the 

discretion to grant or deny a petition for 

review from an uncertified ruling. 

(d) Continuation of hearing. Unless 

otherwise ordered by the hearing officer 

or the Secretary, designee, or Debarring 

Official, the hearing shall proceed 

pending the determination of any 

interlocutory appeal, and the order or 

ruling of the hearing officer shall be 

effective pending review. 

Subpart B—Hearings Pursuant to the 

Administrative Procedure Act 

§ 26.28 Purpose and scope. 

Unless otherwise specified in this 

title, the rules in this subpart B of this 

part apply to hearings that HUD is 

required by statute to conduct pursuant 

to the Administrative Procedure Act (5 

U.S.C. 554 et seq.) 

§ 26.29 Definitions. 

The following definitions apply to 

subpart B of this part: 

Complaint means the notice from 

HUD alleging violations of a HUD 

statute and/or regulation, citing the legal 

authority upon which it is issued, 

stating the relief HUD seeks, and 

informing a respondent of his or her 

right to submit a response to a 

designated office and to request an 

opportunity for a hearing before an 

Administrative Law Judge. 

Docket Clerk means the Docket Clerk 

of the Office of Administrative Law 

Judges at the following address: 409 

Third Street, SW., Second Floor, 

Washington, DC 20024. 

Respondent, unless otherwise 

identified by other governing statute, 

rule, or regulation, is the party against 

whom the administrative action is 

taken. 

Response means the written response 

to a complaint, admitting or denying the 

allegations in the complaint and setting 

forth any affirmative defense and any 

mitigating factors or extenuating 

circumstances. The response shall be 

submitted to the division of the Office 

of General Counsel that initiates the 

complaint or to such other office as may 

be designated in the complaint. A 

response is deemed a request for a 

hearing. 

§ 26.30 Service and filing. 

(a) Filing. Unless otherwise provided 

by statute, rule, or regulation, all 

documents shall be filed with the 

Docket Clerk. Filing may be by delivery, 

first class mail, overnight delivery, 

facsimile transmission, or electronic 

means; however, the ALJ may place 

reasonable limits on filing by facsimile 

transmission or electronic means. All 

documents shall clearly designate the 

docket number and title of the 

proceeding. Duplicate copies are not 

required unless ordered by the ALJ. 

(b) Service. One copy of all 

documents filed with the Docket Clerk 

shall be served upon each party by the 

persons filing them and shall be 

accompanied by a certificate of service 

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stating how and when such service has 

been made. Service may be made by 

delivery, first class mail, overnight 

delivery, facsimile transmission, or 

electronic means; however, the ALJ may 

place reasonable limits on service by 

facsimile transmission or electronic 

means. Documents shall be served upon 

a party’s address of residence or 

principal place of business, or, if the 

party is represented by counsel, upon 

counsel of record at the address of 

counsel. Service is complete when 

handed to the person or delivered to the 

person’s office or residence and 

deposited in a conspicuous place. If 

service is by first-class mail, overnight 

delivery, facsimile transmission, or 

electronic means, service is complete 

upon deposit in the mail or upon 

electronic transmission. 

§ 26.31 Time computations. 

(a) General. In computing any period 

of time under subpart B of this part, the 

time period begins the day following the 

act, event, or default, and includes the 

last day of the period, unless the last 

day is a Saturday, Sunday, or legal 

holiday observed by the Federal 

Government, in which case the time 

period includes the next business day. 

When the prescribed time period is 7 

days or less, intermediate Saturdays, 

Sundays, and legal holidays shall be 

excluded from the computation. 

(b) Entry of orders. In computing any 

time period involving the date of the 

issuance of an order or decision by an 

Administrative Law Judge, the date of 

issuance is the date the order or 

decision is served by the Docket Clerk. 

(c) Service by mail. If a document is 

served by mail, 3 days shall be added 

to the time permitted for a response. 

Administrative Law Judge 

§ 26.32 Powers and duties of the 

Administrative Law Judge (ALJ). 

The ALJ shall conduct a fair and 

impartial hearing, avoid delay, maintain 

order, and ensure that a record of the 

proceeding is made. The ALJ is 

authorized to: 

(a) Set and change the date, time, and 

place of the hearing upon reasonable 

notice to the parties; 

(b) Continue or recess the hearing, in 

whole or in part, for a reasonable period 

of time; 

(c) Hold conferences to identify or 

simplify the issues, or to consider other 

matters that may aid in the expeditious 

disposition of the proceeding; 

(d) Administer oaths and affirmations; 

(e) Issue subpoenas requiring the 

attendance of witnesses and the 

production of documents at depositions 

or at hearings; 

(f) Rule on motions and other 

procedural matters; 

(g) Regulate the scope and timing of 

discovery; 

(h) Regulate the course of the hearing 

and the conduct of representatives and 

parties; 

(i) Examine witnesses; 

(j) Receive, rule on, exclude, or limit 

evidence; 

(k) Upon motion of a party, take 

official notice of facts; 

(l) Upon motion of a party, decide 

cases, in whole or in part, by summary 

judgment where there is no disputed 

issue of material fact; 

(m) Conduct any conference, 

argument, or hearing on motions in 

person or by telephone; 

(n) Upon motion, except where 

mandated by statute, extend the time 

within which any act required by these 

rules must be performed where 

necessary to avoid prejudicing the 

public interest or the rights of the 

parties, or upon showing of good cause; 

and 

(o) Exercise such other authority as is 

necessary to carry out the 

responsibilities of the ALJ under subpart 

B of this part. 

§ 26.33 Ex parte communications. 

No party or person (except employees 

of the ALJ’s office) shall communicate 

in any way with the ALJ on any matter 

at issue in a case, unless on notice and 

opportunity for all parties to participate. 

This provision does not prohibit a 

person or party from inquiring about the 

status of a case or asking routine 

questions concerning administrative 

functions or procedures. 

§ 26.34 Sanctions. 

(a) The ALJ may sanction a person, 

including any party or representative, 

for failing to comply with an order, rule, 

or procedure governing the proceeding; 

failing to prosecute or defend an action; 

or engaging in other misconduct that 

interferes with the speedy, orderly, or 

fair conduct of the hearing. 

(b) Any sanction, including, but not 

limited to, those listed in paragraphs (c), 

(d), and (e) of this section, shall 

reasonably relate to the severity and 

nature of the failure or misconduct. 

(c) When a party fails to comply with 

an order, including an order compelling 

discovery, the ALJ may impose an 

appropriate sanction for such 

noncompliance, including, but not 

limited to, the following: 

(1) Drawing an inference in favor of 

the requesting party with regard to the 

information sought; 

(2) In the case of requests for 

admission, deeming any matter about 

which an admission is requested to be 

admitted; 

(3) Prohibiting the party failing to 

comply with the order from introducing 

evidence concerning, or otherwise 

relying upon, testimony relating to the 

information sought; or 

(4) Striking any part of the pleadings 

or other submissions of the party failing 

to comply with the order. 

(d) If a party fails to prosecute or 

defend an action brought under subpart 

B of this part, the ALJ may dismiss the 

action or may issue a decision against 

the non-prosecuting or defending party. 

Such decision of the ALJ shall 

constitute final agency action and shall 

not be appealable to the Secretary under 

§ 26.52 of this part. 

(e) The ALJ may refuse to consider 

any motion, request, response, brief, or 

other document that is not filed in a 

timely fashion. 

§ 26.35 Disqualification of ALJ. 

(a) An ALJ in a particular case may 

disqualify himself or herself. 

(b) A party may file with the ALJ a 

motion for the ALJ’s disqualification. 

The motion shall be accompanied by an 

affidavit alleging the grounds for 

disqualification. 

(c) Upon the filing of a motion and 

affidavit, the ALJ shall proceed no 

further in the case until the matter of 

disqualification is resolved. 

(d) If the ALJ does not withdraw from 

the proceedings, a written statement of 

his or her reasons for electing not to 

withdraw shall be incorporated into the 

record and the hearing shall proceed. 

Parties 

§ 26.36 Parties to the hearing. 

(a) General. The parties to the hearing 

shall be the respondent and HUD. 

(b) Rights of parties. Except as 

otherwise limited by subpart B of this 

part, all parties may: 

(1) Be accompanied, represented, and 

advised by a representative; 

(2) Participate in any conference held 

by the ALJ; 

(3) Conduct discovery; 

(4) Agree to stipulations of fact or law, 

which shall be made part of the record; 

(5) Present evidence relevant to the 

issues at the hearing; 

(6) Present and cross-examine 

witnesses; 

(7) Present oral arguments at the 

hearing as permitted by the ALJ; and 

(8) Submit written briefs and 

proposed findings of fact and 

conclusions of law after the hearing, as 

permitted by the ALJ. 

§ 26.37 Separation of functions. 

No officer, employee, or agent of the 

Federal Government engaged in the 

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performance of investigative, 

conciliatory, or prosecutorial functions 

in connection with the proceeding shall, 

in that proceeding or any factually 

related proceeding under subpart B of 

this part, participate or advise in the 

decision of the Administrative Law 

Judge, except as a witness or counsel 

during the proceeding, or in its 

appellate review. 

Prehearing Procedures 

§ 26.38 Commencement of action. 

Proceedings under subpart B of this 

part shall commence with the 

Government’s filing of a complaint, as 

that term is defined in § 26.29, with the 

Docket Clerk. The respondent’s 

response to the complaint shall be 

timely filed with the Docket Clerk and 

served upon the Government in 

accordance with the procedures set 

forth in the complaint. If the respondent 

fails to submit a response to the Docket 

Clerk, then the Government may file a 

motion for a default judgment in 

accordance with § 26.41. 

§ 26.39 Prehearing conferences. 

(a) The ALJ may schedule prehearing 

conferences as appropriate. 

(b) Upon the motion of any party or 

sua sponte, the ALJ may schedule a 

prehearing conference at a reasonable 

time in advance of the hearing. 

(c) The ALJ may consider the 

following at a prehearing conference: 

(1) Simplification of the issues; 

(2) Stipulations of fact and of the 

authenticity, accuracy, and 

admissibility of documents; 

(3) Submission of the case on briefs in 

lieu of an oral hearing; 

(4) Limitation of the number of 

witnesses; 

(5) The exchange of witness lists and 

of proposed exhibits; 

(6) Discovery; 

(7) The time and place for the hearing; 

and 

(8) Such other matters as may tend to 

expedite the fair and just disposition of 

the proceedings. 

§ 26.40 Motions. 

(a) General. All motions shall state the 

specific relief requested and the basis 

therefore and, except during a 

conference or the hearing, shall be in 

writing. Written motions shall be filed 

and served in accordance with § 26.30. 

Either party may submit a proposed 

order with any motion. 

(b) Response to motions. Unless 

otherwise ordered by the ALJ, a 

response to a written motion may be 

filed within 10 days after service of the 

motion. A party failing to respond 

timely to a motion may be deemed to 

have waived any objection to the 

granting of the motion. 

(c) Motions for extensions. Either 

party may file a motion for extension. At 

the discretion of the ALJ, a motion for 

an extension of time may be granted for 

good cause at any time, notwithstanding 

an objection or any reply to the motion, 

consistent with § 26.32(f). The ALJ may 

waive the requirements of this section 

as to motions for extensions of time or 

any page limits. 

(d) Right to reply. The moving party 

shall have no right to reply, except as 

permitted by the ALJ. 

(e) Oral Argument. Either party may 

request oral argument on any motion, 

but such argument shall be available at 

the sole discretion of the ALJ. 

(f) Motions for summary judgment. (1) 

A party claiming relief or a party against 

whom relief is sought may timely move, 

with or without supporting affidavits, 

for summary judgment on all or part of 

the claim. 

(2) Objections in the consideration of 

summary judgment motions or answers 

thereto based upon a failure to strictly 

comply with the provisions of Rule 56 

of the Federal Rules of Civil Procedure 

may, at the discretion of the ALJ, be 

overruled. 

(g) Motions for dismissal. When a 

motion to dismiss the proceeding is 

granted, the ALJ shall make and file a 

determination and order in accordance 

with the provisions of § 26.50. 

§ 26.41 Default. 

(a) General. The respondent may be 

found in default, upon motion, for 

failure to file a timely response to the 

Government’s complaint. The motion 

shall include a copy of the complaint 

and a proposed default order, and shall 

be served upon all parties. The 

respondent shall have 10 days from 

such service to respond to the motion. 

(b) Default order. The ALJ shall issue 

a decision on the motion within 15 days 

after the expiration of the time for filing 

a response to the default motion. If a 

default order is issued, it shall 

constitute the final agency action. 

(c) Effect of default. A default shall 

constitute an admission of all facts 

alleged in the Government’s complaint 

and a waiver of respondent’s right to a 

hearing on such allegations. The penalty 

proposed in the complaint shall be set 

forth in the default order and shall be 

immediately due and payable by 

respondent without further proceedings. 

Discovery 

§ 26.42 Discovery. 

(a) General. The parties are 

encouraged to engage in voluntary 

discovery procedures, which may 

commence at any time after an answer 

has been filed. Parties may obtain 

discovery regarding any matter, not 

privileged, that is relevant to the claim 

or defense of any party, including the 

existence, description, nature, custody, 

condition, and location of any books, 

documents, or other tangible things and 

the identity and location of persons 

having knowledge of any discoverable 

matter. For good cause, the ALJ may 

order discovery of any matter relevant to 

the subject matter of the action. To be 

relevant, information need not be 

admissible at the hearing, if the 

discovery appears reasonably calculated 

to lead to the discovery of admissible 

evidence. Each party shall bear its own 

expenses associated with discovery. 

(b) Discovery in Program Fraud Civil 

Remedies Actions. (1) Upon receipt of a 

complaint, the defendant may, upon 

written request to the Office of General 

Counsel, review any relevant and 

material nonprivileged documents, 

including any exculpatory documents, 

that relate to the allegations set out in 

the complaint. Exculpatory information 

that is contained in a privileged 

document must be disclosed; however, 

the privileged document need not be 

provided. 

(2) With the exception of the limited 

discovery permitted under paragraph 

(b)(1) of this section, unless agreed to by 

the parties, discovery shall be available 

only as ordered by the ALJ. The ALJ 

shall order only that discovery that he 

or she determines is necessary for the 

expeditious, fair, and reasonable 

consideration of the issues, is not 

unduly costly or burdensome, and will 

not unduly delay the proceeding. 

Discovery of privileged information 

shall not be permitted. The request for 

approval sent to the Attorney General 

from the General Counsel or designee, 

as described in 31 U.S.C. 3803(a)(2), is 

not discoverable under any 

circumstances. The ALJ may grant 

discovery subject to a protective order 

under § 26.44. 

(c) Authorized discovery. The 

following types of discovery are 

authorized: 

(1) Requests for production of 

documents. (i) Any party may serve 

upon any other party a written request 

to produce and permit the party making 

the request, or someone acting on the 

requestor’s behalf, to inspect, copy, test, 

or sample any designated documents or 

electronically stored information—

including writings, drawings, graphs, 

charts, photographs, sound recordings, 

images, and other data or data 

compilations stored in any medium 

from which information can be 

obtained—translated, if necessary, by 

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the respondent into reasonably usable 

form, or to inspect, copy, test, or sample 

any designated tangible things that 

constitute or contain matters within the 

scope of § 26.42(a) and which are in the 

possession, custody, or control of the 

party upon whom the request is served. 

(ii) The request shall set forth, either 

by individual item or by category, the 

items to be inspected, and describe each 

with reasonable particularity. The 

request shall specify a reasonable time, 

place, and manner of making the 

inspection and performing the related 

acts. The request may specify the form 

or forms in which electronically stored 

information is to be produced. 

(iii) The party upon whom the request 

is served shall serve a written response 

within 20 days after the service of the 

request. A shorter or longer time may be 

directed by the ALJ or, in the absence 

of such an order, agreed to in a written 

document by the parties, which shall be 

submitted to the ALJ in a timely 

manner. The response shall state, with 

respect to each item or category, 

whether inspection and related 

activities will be permitted as requested. 

If there are any objections to any 

requests, including objections to the 

requested form or forms for producing 

electronically stored information, the 

response shall state the reasons for such 

objections. If objection is made to part 

of an item or category, the part shall be 

specified and inspection permitted of 

the remaining parts. If objection is made 

to the requested format for producing 

electronically stored information—or if 

no format was specified in the request—

the responding party must state the 

format it intends to use. The party 

submitting the request may move for an 

order under paragraph (e) of this section 

with respect to any objection to or other 

failure to respond to the request or any 

part thereof, or any failure to permit 

inspection as requested. 

(iv) Unless the parties otherwise 

agree, or the ALJ otherwise orders: 

(A) A party who produces documents 

for inspection shall produce them as 

they are kept in the usual course of 

business or shall organize and label 

them to correspond with the categories 

in the request; 

(B) If a request does not specify the 

form or forms for producing 

electronically stored information, a 

responding party must produce the 

information in a format in which it is 

ordinarily maintained or in a format that 

is reasonably usable; and 

(C) A party need not produce the 

same electronically stored information 

in more than one form. 

(2) Requests for admissions. Any 

party may serve upon any other party a 

written request for the admission of the 

genuineness of any documents 

described in the request or of the truth 

of any relevant matters of fact. Copies of 

documents shall be delivered with the 

request unless copies have already been 

furnished. Each requested admission 

shall be considered admitted, unless, 

within 30 days after service of the 

request, or within such other time as the 

parties may agree to or the ALJ 

determines, the party from whom the 

admission is sought serves upon the 

party making the request either: 

(i) A statement, which: 

(A) Denies specifically the relevant 

matters for which an admission is 

requested, or sets forth in detail the 

reasons why the party can neither 

truthfully admit nor deny them; 

(B) Fairly meets the substance of the 

requested admission, and when good 

faith requires that a party qualify an 

answer or deny only a part of the matter 

of which an admission is requested, the 

party specifies as much of it as is true 

and qualifies or denies the remainder; 

and 

(C) Does not assert lack of information 

or knowledge as a reason for failure to 

admit or deny, unless the party states 

that the party has made reasonable 

inquiry, and that the information known 

or readily obtainable by the party is 

insufficient to enable the party to admit 

or deny; or 

(ii) Written objections to a requested 

admission, which state the grounds for 

the objection and which object to a 

requested admission, if necessary, either 

in whole or in part, on the basis of 

privilege or relevance. Responses to the 

request for admission on matters to 

which objections have been made may 

be deferred until each objection is ruled 

upon, but if written objections are made 

only to a part of a request, a response 

to the remainder of the request shall be 

provided. 

(iii) Any matter admitted under this 

rule is conclusively established unless 

the ALJ, on motion, permits withdrawal 

or amendment of the admission. 

Admissions obtained pursuant to this 

procedure may be used in evidence only 

for the purposes of the pending action. 

The use of obtained admissions as 

evidence is permitted to the same extent 

and subject to the same objections as 

other evidence. 

(3) Written interrogatories—(i) Service 

of written interrogatories. Any party 

may serve upon any other party written 

interrogatories, not exceeding 25 in 

number, including all discrete subparts, 

unless additional interrogatories are 

agreed to by the parties or leave to serve 

additional interrogatories is granted by 

the ALJ. 

(ii) Response to interrogatories. 

Within 20 days after service of the 

request, the party upon whom the 

interrogatories are served shall serve a 

written response, unless the parties 

agree in a written document submitted 

to the ALJ or the ALJ determines that a 

shorter or longer period is appropriate 

under the circumstances. The response 

shall specifically answer each 

interrogatory separately and fully in 

writing, unless it is objected to, in 

which event the objecting party shall 

state the reasons for objection with 

specificity. Any ground not stated in a 

timely objection is waived unless the 

party’s failure to object is excused by 

the ALJ for good cause shown. If 

objection is made to only part of an 

interrogatory, the objectionable part 

shall be specified and the party shall 

answer to the extent the interrogatory is 

not objectionable. 

(iii) Option to produce business 

records. Where the answer to an 

interrogatory may be derived or 

ascertained from the business records, 

including electronically stored 

information, of the party upon whom 

the interrogatory has been served or 

from an examination, audit, or 

inspection of such business records, 

including a compilation, abstract, or 

summary thereof, and the burden of 

deriving or ascertaining the answer is 

substantially the same for the party 

serving the interrogatory as for the party 

served, it is a sufficient answer to such 

interrogatory to specify the records from 

which the answer may be derived or 

ascertained and to afford to the party 

serving the interrogatory reasonable 

opportunity to examine, audit, or 

inspect such records and to make 

copies, compilations, abstracts, or 

summaries. A specification shall be in 

sufficient detail to permit the 

interrogating party to locate and to 

identify, as readily as can the party 

served, the records from which the 

answer may be ascertained. 

(4) Depositions. (i) A party may take 

the oral deposition of any person. 

Reasonable written notice of deposition 

shall be served upon the opposing party 

and the deponent. The attendance of a 

deponent may be compelled by 

subpoena where authorized by law or 

other order by the ALJ. 

(ii) Each person testifying on oral 

deposition shall be placed under oath 

by the person before whom the 

deposition is taken. The deponent may 

be examined and cross-examined. The 

questions and the answers, together 

with all objections made, shall be 

recorded by the person before whom the 

deposition is to be taken or under that 

person’s direction. 

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(iii) Objections. Objection may be 

made to questions or answers for any 

reason that would require the exclusion 

of the testimony under § 26.47 as if the 

witness were present and testifying at 

hearing. Objections shall be in short 

form, stating every ground for objection. 

Failure to object to any question or 

answer shall be considered a waiver of 

objection, unless the parties agree 

otherwise. Rulings on any objections 

shall be made by the ALJ at hearing, or 

at such other time as is requested by 

motion. The examination shall proceed, 

with the testimony being taken subject 

to the objections; a person may instruct 

a deponent not to answer only when 

necessary to preserve a privilege, to 

enforce a limitation directed by the ALJ, 

or to present a motion under § 26.44. 

(iv) Submission to deponent. A 

transcript of the deposition shall be 

submitted to the deponent for 

examination and signature, unless 

submission is waived by the deponent 

and the parties. Any changes in form or 

substance that the deponent desires to 

make shall be entered upon the 

transcript by the person before whom 

the deposition was taken, with a 

statement of reasons given by the 

deponent for making them. The 

transcript shall then be signed by the 

deponent, unless the parties by 

stipulation waive the signing or the 

deponent is ill, cannot be found, or 

refuses to sign. If the transcript is not 

signed, the person before whom the 

deposition was taken shall sign it and 

state on the record the reason that it is 

not signed by the deponent. 

(v) Certification and filing. The person 

before whom the deposition was taken 

shall make a certification on the 

transcript as to its accuracy. Interested 

parties shall make their own 

arrangements with the person recording 

the testimony for copies of the 

testimony and the exhibits. 

(vi) Deposition as evidence. Subject to 

appropriate rulings by the ALJ on 

objections, the deposition or any part 

may be introduced into evidence for any 

purpose if the deponent is unavailable. 

Only that part of a deposition that is 

received in evidence at hearing shall 

constitute a part of the record in the 

proceeding upon which a decision may 

be based. Nothing in this rule is 

intended to limit the use of a deposition 

for impeachment purposes. 

(vii) Payment of fees. Fees shall be 

paid by the person upon whose 

application the deposition is taken. 

(d) Supplementation of responses. A 

party who has responded to a request 

for discovery by providing a response is 

under a duty to timely amend any prior 

response to an interrogatory, request for 

production, or request for admission if 

so ordered by the ALJ, or if the party 

learns that the response is in some 

material respect incomplete or incorrect 

and if the additional or corrective 

information has not otherwise been 

made known to all other parties during 

the discovery process or in writing. 

(e) Motions to compel. (1) In 

connection with any discovery 

procedure, by motion addressed to the 

ALJ and upon a showing of a good faith 

attempt to resolve the issue without the 

ALJ’s intervention, either party may file 

a motion to compel a response with 

respect to any objection or other failure 

to respond to the discovery requested or 

to any part thereof, or any failure to 

respond as specifically requested. An 

evasive or incomplete answer to a 

request for discovery is treated as a 

failure to answer. 

(2) The motion shall describe the 

information sought, cite the opposing 

party’s objection, and provide 

arguments supporting the motion. 

(3) The opposing party may file a 

response to the motion, including a 

request for a protective order in 

accordance with § 26.44. 

(4) Orders compelling discovery shall 

be issued only where such discovery 

will not compel the disclosure of 

privileged information, unduly delay 

the hearing, or result in prejudice to the 

public interest or the rights of the 

parties, and upon a showing of good 

cause. 

(5) A party need not provide 

discovery of electronically stored 

information from sources that the party 

identifies as not reasonably accessible 

because of undue burden or cost. On 

motion to compel discovery, the party 

from whom discovery is sought must 

show that the information is not 

reasonably accessible because of undue 

burden or cost. If that showing is made, 

the ALJ may nonetheless order 

discovery from such sources if the 

requesting party shows good cause or, 

when the party’s refusal to provide the 

information sought is solely due to 

undue expense, the party seeking the 

discovery agrees to bear the expense 

associated with the request. 

(f) Refusal to honor discovery order. 

When a party refuses to honor a 

discovery order, the ALJ may issue such 

orders in regard to the refusal as justice 

shall require, including the imposition 

of sanctions pursuant to § 26.34. 

§ 26.43 Subpoenas. 

(a) General. Upon written request of a 

party, the ALJ may issue a subpoena 

requiring the attendance of a witness at 

a deposition or hearing, and/or the 

production of documents. The request 

shall specify any documents to be 

produced and shall list the names and 

addresses of the witnesses. 

(b) Time of request. A request for a 

subpoena in aid of discovery shall be 

filed in time to permit the conclusion of 

discovery 15 days before the date fixed 

for the hearing. A request for a subpoena 

to testify at the hearing shall be filed at 

least 3 days prior to the hearing, unless 

otherwise allowed by the ALJ for good 

cause shown. 

(c) Content. The subpoena shall 

specify the time and place at which the 

witness is to appear and any documents 

the witness is to produce. 

(d) Service and fees. Subpoenas shall 

be served, and fees and costs paid to 

subpoenaed witnesses, in accordance 

with Rule 45(b)(1) of the Federal Rules 

of Civil Procedure. 

(e) Motion to quash. The individual to 

whom the subpoena is directed or a 

party may file a motion to quash the 

subpoena within 10 days after service, 

or on or before the time specified in the 

subpoena for compliance if it is less 

than 10 days after service. 

§ 26.44 Protective orders. 

(a) A party, a prospective witness, or 

a deponent may file a motion for a 

protective order with respect to 

discovery sought by an opposing party 

or with respect to the hearing, seeking 

to limit the availability or disclosure of 

evidence. 

(b) Protective orders may be issued by 

an ALJ if the ALJ determines such an 

order is necessary to protect a party or 

other person from annoyance, 

embarrassment, oppression, or undue 

burden or expense because: 

(1) The discovery sought is 

unreasonably cumulative or duplicative, 

or is obtainable from some other source 

that is more convenient, less 

burdensome, or less expensive; 

(2) The party seeking discovery has 

had ample opportunity by discovery in 

the action to obtain the information 

sought; or 

(3) The burden or expense of the 

proposed discovery outweighs its likely 

benefit, taking into account the needs of 

the case, the amount in controversy, the 

parties’ resources, the importance of the 

issues at stake in the litigation, and the 

importance of the proposed discovery in 

resolving the issues. 

Hearings 

§ 26.45 General. 

(a) Time of hearing. The hearing shall 

commence not later than 90 days 

following the date of the Government’s 

filing of the complaint and response 

with the Chief Docket Clerk under 

§ 26.38, unless the time is extended for 

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good cause. The ALJ shall provide 

written notice to all parties of the 

reasons for any extension of time. 

(b) Location of hearing. The hearing 

shall be held in a place most convenient 

for the respondent and witnesses, or in 

such other place as may be agreed upon 

by the parties and the ALJ. 

(c) Notice of hearing. The ALJ shall 

issue a notice of hearing to all parties 

specifying the time and location of the 

hearing, the matters of fact and law to 

be heard, the legal authority under 

which the hearing is to be held, a 

description of the procedures for the 

conduct of the hearing, and such other 

matters as the ALJ determines to be 

appropriate. 

(d) Exceptions for Program Fraud 

Civil Remedies Act matters. For Program 

Fraud Civil Remedies actions, the 

hearing is commenced by the issuance 

of a notice of hearing and order by the 

ALJ, as set forth in 31 U.S.C. 

3803(d)(2)(B). Hearings for Program 

Fraud Civil Remedies Act matters shall 

be located in accordance with 31 U.S.C. 

3803(g)(4). 

(e) Burden and standard of proof. 

HUD shall prove the respondent’s 

liability and any aggravating factors by 

a preponderance of the evidence. 

Respondent shall prove any affirmative 

defenses and any mitigating factors by a 

preponderance of the evidence. 

(f) Public hearings. Unless otherwise 

ordered by the ALJ for good cause 

shown, the hearing shall be open to the 

public. 

§ 26.46 Witnesses. 

(a) Except as provided in paragraph 

(b) of this section, testimony at the 

hearing shall be given orally by 

witnesses under oath or affirmation. 

(b) At the discretion of the ALJ, 

testimony may be admitted in the form 

of a written statement or deposition. In 

order to be admissible, any written 

statement must be provided to all other 

parties along with the last known 

address of the witness, in a manner that 

allows sufficient time for other parties 

to subpoena the witness for crossexamination at the hearing. 

§ 26.47 Evidence. 

The ALJ shall admit any relevant oral 

or documentary evidence that is not 

privileged. Unless otherwise provided 

for in this part, the Federal Rules of 

Evidence shall provide guidance to the 

ALJ’s evidentiary ruling, but shall not be 

binding. Parties may object to clearly 

irrelevant material, but technical and 

hearsay objections to testimony as used 

in a court of law will not be sustained. 

The ALJ may, however, exclude 

evidence if its probative value is 

substantially outweighed by confusion 

of the issues, or by considerations of 

undue delay, waste of time, or needless 

presentation of cumulative evidence. 

§ 26.48 Posthearing briefs. 

Posthearing briefs shall be filed only 

upon order by the ALJ. 

§ 26.49 The record. 

The hearing will be recorded and 

transcribed by a reporter designated by 

the Department under the supervision of 

the ALJ. The parties and the public, at 

their own expense, may obtain copies of 

transcripts from the reporter. A copy of 

the transcript shall be made available at 

cost to the parties upon request. The 

transcript of testimony, exhibits, and 

other evidence admitted at the hearing 

and all papers and requests filed in the 

proceeding constitute the record for the 

decision by the ALJ and the Secretary or 

designee. 

§ 26.50 Initial decision. 

(a) The ALJ shall issue an initial 

decision based only on the record, 

which shall contain findings of fact, 

conclusions of law, and the relief 

granted. The ALJ’s initial decision shall 

not become effective unless it becomes 

or is incorporated into final agency 

action in accordance with §§ 26.50(c) or 

26.52(l). 

(b) The ALJ shall serve the initial 

decision on all parties within 60 days 

after either the close of the record or the 

expiration of time permitted for 

submission of posthearing briefs, 

whichever is later. The ALJ may extend 

the 60-day period for serving the initial 

decision in writing for good cause. The 

initial decision shall inform the parties 

that, if provided for and consistent with 

Departmental regulations, any party 

may request, in writing, Secretarial 

review of the determination within 30 

days after the ALJ issues the initial 

decision, in accordance with § 26.52 of 

this part. The determination shall 

include the mailing address, facsimile 

number, and electronic submission 

information to which the request for 

Secretarial review should be sent. A 

request for Secretarial review may be 

made by mail, delivery, facsimile, or 

electronic submission. 

(c) If no appeal is timely filed with the 

Secretary or designee, the initial 

decision shall become the final agency 

action. 

§ 26.51 Interlocutory rulings. 

(a) Interlocutory rulings by the ALJ. A 

party seeking review of an interlocutory 

ruling shall file a motion with the ALJ 

within 10 days of the ruling requesting 

certification of the ruling for review by 

the Secretary. Certification may be 

granted if the ALJ believes that: 

(1) It involves an important issue of 

law or policy as to which there is 

substantial ground for difference of 

opinion; and 

(2) An immediate appeal from the 

order may materially advance the 

ultimate termination of the litigation. 

(b) Petition for review. Any party may 

file a petition for review of an 

interlocutory ruling within 10 days of 

the ALJ’s determination regarding 

certification. 

(c) Secretarial review. The Secretary, 

or designee, shall review a certified 

ruling. The Secretary, or designee, has 

the discretion to grant or deny a petition 

for review from an uncertified ruling. 

(d) Continuation of hearing. Unless 

otherwise ordered by the ALJ or the 

Secretary, or designee, the hearing shall 

proceed pending the determination of 

any interlocutory appeal, and the order 

or ruling of the ALJ shall be effective 

pending review. 

§ 26.52 Appeal to the Secretary. 

(a) General. Either party may file with 

the Secretary an appeal within 30 days 

after the date that the ALJ issues an 

initial decision. The Secretary or the 

Secretary’s designee may extend the 30- 

day period in his or her sole discretion, 

for good cause. 

(b) Brief in support of appeal. The 

appeal shall be accompanied by a 

written brief, not to exceed 15 pages, 

specifically identifying the party’s 

objections to the initial decision or 

order of the ALJ and the party’s 

supporting reasons for any objections. 

The appealing party may request leave 

to file a brief in excess of 15 pages for 

good cause shown. Alternative proposed 

findings and conclusions, if any, may be 

appended as an exhibit. 

(c) Briefs in opposition. Any opposing 

party may submit a brief in opposition 

to the appeal, not to exceed 15 pages, 

within 20 days of the date a copy of the 

appeal and accompanying brief were 

received. The opposing party may 

request leave to file a brief in excess of 

15 pages for good cause shown. The 

brief in opposition shall specifically 

state the opposing party’s reasons for 

supporting the ALJ’s determination or 

taking exceptions to any part of the 

ALJ’s determination. 

(d) Extensions and additional briefs. 

The Secretary or Secretary’s designee 

may extend the deadlines or page 

limitations set forth in paragraphs (b), 

(c), and (d) of this section, in his or her 

sole discretion. The Secretary may also 

permit the filing of additional briefs, in 

his or her sole discretion. 

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(e) Forwarding of the record. Upon 

request by the Office of the Secretary, 

the ALJ shall forward the record of the 

proceeding to the Secretary or designee. 

(f) Personal appearance. There is no 

right to appear personally before the 

Secretary or designee. 

(g) ALJ decisions upon failure to 

prosecute or defend. There is no right to 

appeal any decision issued by an ALJ in 

accordance with § 26.37(d) of this part. 

(h) Objections not raised before ALJ. 

In reviewing the initial decision, the 

Secretary or designee shall not consider 

any objection that was not raised before 

the ALJ, unless a demonstration is made 

of extraordinary circumstances causing 

the failure to raise the objection. 

(i) Evidence considered. The Secretary 

or designee shall consider only evidence 

contained in the record forwarded by 

the ALJ. However, if any party 

demonstrates to the satisfaction of the 

Secretary or designee that additional 

evidence not presented at the hearing is 

material and that there were reasonable 

grounds for the failure to present such 

evidence at the hearing, the Secretary or 

designee shall remand the matter to the 

ALJ for reconsideration in light of the 

additional evidence. 

(j) Ex parte communications. The 

prohibitions of ex parte 

communications in § 26.33 shall apply 

to contacts with the Secretary or 

designee. 

(k) Relief. The Secretary or designee 

may affirm, modify, reduce, reverse, 

compromise, remand, or settle any relief 

granted in the initial decision. The 

Secretary or designee shall consider, 

and include in any final determination, 

such factors as may be set forth in 

applicable statutes or regulations. 

(l) Decision—(1) Generally. Where a 

Secretarial appeal has been timely 

made, the Secretary, or designee, shall 

issue a written determination within 30 

days after receipt of the brief in 

opposition, if any, and shall serve it 

upon the parties to the hearing. The 

Secretary, or designee, may extend the 

time in which a written determination 

must be issued by an additional 60 days 

for good cause shown in a written 

justification issued to the parties. The 

written decision of the Secretary shall 

be the final agency action. If the 

Secretary, or designee, does not act 

upon the appeal of an initial decision 

within 90 days of service of the appeal, 

then the initial determination shall be 

the final agency action. 

(2) Exception for cases brought under 

the Program Fraud Civil Remedies Act. 

Where a Secretarial appeal has been 

timely made in a case brought under the 

Program Fraud Civil Remedies Act, the 

Secretary, or designee, shall issue a 

written determination within 30 days 

after receipt of appeal and shall serve it 

upon the parties to the hearing. The 

written decision of the Secretary shall 

be the final agency action. If the 

Secretary, or designee, does not act 

upon the appeal of an initial decision 

within 30 days of service of the appeal, 

the initial decision shall become final 

and the Respondent will be served with 

a statement describing the right to seek 

judicial review, if any. 

§ 26.53 Exhaustion of administrative 

remedies. 

In order to fulfill the requirement of 

exhausting administrative remedies, a 

party must seek Secretarial review 

under § 26.52 prior to seeking judicial 

review of any initial decision issued 

under subpart B of this part. 

§ 26.54 Judicial review. 

Judicial review shall be available in 

accordance with applicable statutory 

procedures and the procedures of the 

appropriate federal court. 

§ 26.55 Collection of civil penalties and 

assessments. 

Collection of civil penalties and 

assessments shall be in accordance with 

applicable statutory provisions. 

§ 26.56 Right to administrative offset. 

The amount of any penalty or 

assessment that has become final under 

§§ 26.50 or 26.52, or for which a 

judgment has been entered after action 

under §§ 26.54 or 26.55, or agreed upon 

in a compromise or settlement among 

the parties, may be collected by 

administrative offset under 31 U.S.C. 

3716 or other applicable law. In 

Program Fraud Civil Remedies Act 

matters, an administrative offset may 

not be collected against a refund of an 

overpayment of federal taxes then or 

later owing by the United States to the 

Respondent. 

Dated: August 13, 2008. 

Roy A. Bernardi, 

Deputy Secretary. 

[FR Doc. E8–20761 Filed 9–5–08; 8:45 am] 

BILLING CODE 4210–67–P 

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