National Housing Law Project Housing Law Bulletin

HUD Withdraws from Planned Rulemaking Activity

HUD's most recent Semiannual Agenda of Regulations and Regulatory Plan is unusual in the significant number of withdrawals of previously announced rulemakings.¹

As required by federal law, twice a year HUD publishes a schedule of proposed regulatory actions in progress or anticipated.² The current agenda, which covers actions during the past six months, represents a significant retrenchment from regulatory goals by the Department in several areas of importance to low-income people. On the other hand, in several areas, HUD has projected publication dates for rulemakings to make revisions that will streamline and reduce the regulatory burden for grantees consistent with the Department's reinvention mandate. Some of HUD's most recent planned actions are set out below.

Scheduled Rulemaking

Fair Housing

The General Counsel's Office has had under development a rule on occupancy standards under the Fair Housing Act to regulate the adoption in the private rental market of restrictive requirements that exclude persons protected by the Fair Housing Act from certain housing. The rule would set out the permissible parameters of restrictions on the number of persons who can occupy units of various sizes. The proposed rule is set for publication by November 1996.³

In the last regulatory agenda,⁴ HUD projected a June 1995 rulemaking to revise existing regulations on nondiscrimination in HUD's federally assisted housing programs pursuant to Title VI of the Civil Rights Act of 1964. The purpose of the expected revision was to clarify Title VI coverage consistent with the Civil Rights Restoration Act, make changes mandated by the Justice Department, and revise the complaint investigation and compliance review procedures. This rulemaking was withdrawn in the current regulatory agenda without explanation.⁵

Several proposed rulemakings with fair housing implications have been included in HUD's Regulatory Plan. The Regulatory Plan, for HUD and all federal agencies, is the defining statement of the Administration's regulatory policies and priorities which describes the agencies' most important significant regulatory actions.⁶

HUD plans a notice of proposed rulemaking by February 1996 on "Methods of Proof of Discrimination under the Fair Housing Act." The rule will set out the standards for determination of whether real estate policies and practices violate the Fair Housing Act, including those that constitute overt discrimination, reflect disparate treatment, and/or have a discriminatory effect.

The Department plans to issue a notice of proposed rulemaking to develop a new policy for site and neighborhood standards for HUD-assisted rental housing designed to foster housing choice and eliminate siting decisions that result in economic and racial discrimination. Among other changes, coverage under the site and neighborhood standards rule is to be extended to the Community Development Block Grant programs.⁷

Section 3 Job Opportunities

The final rule on Section 3⁸ is projected for publication in mid-winter. The rule is designed to assure that expenditure of HUD monies in communities results in the creation of economic opportunities for low- and very low-income persons, particularly for residents of the low-income community. An interim final rule was published in June 1994. A subsequent draft of the final rule raised concerns among advocates regarding what percentage of an individual project must be HUD-funded in order for Section 3 requirements to apply. Indications from HUD staff are that the final rule will closely follow the interim rule which, by omission, infers that any HUD funds received would make the project fall under Section 3 guidelines.

Community Planning and Development

HUD had been working on consolidating residential anti-displacement and relocation plan requirements for CDBG, HOME and some other programs administered by the Office of Community Development and Planning, with a projected June 1995 date for final action.⁹ According to HUD staff, the rulemaking was temporarily withdawn pending incorporation into a general simplification of a number of anti-displacement and relocation plan requirements affecting a range of HUD programs.¹⁰

Among the regulations HUD plans to publish as final is the rule that governs the Department of Defense and HUD in implementing the Base Closure and Community Redevelopment Act of 1994, including a community-based process for homeless representatives to work with local redevelopment authorities on reuse of former military installations that balances the needs of homeless people with other community economic and development needs.¹¹ The interim rule presently in effect requires assessment of proposed redevelopment plans based upon whether the plan addresses needs within the existing comprehensive homeless service system — HUD's "continuum of care" model.

Rulemaking Withdrawn

Fair Housing

The Department had committed to publication of a notice of proposed rulemaking by May 1995 to establish criteria for HUD in determining whether a particular locality's residency preference guidelines meets Fair Housing Act requirements. The purpose of the rulemaking was to aid communities in developing non-discriminatory local residency preferences.¹² Despite HUD's characterization of it as "significant," the rule has been withdrawn.¹³ Abandonment of this rulemaking effort is particularly troublesome at this time. A great deal of authority is likely to be legislatively ceded to localities to establish their own preferences, and HUD guidance on the permissible limitations of any exclusionary policies is needed.

Occupancy Task Force Recommendations

Similarly, a notice of proposed rulemaking was projected for April 1995 to implement recommendations of the Occupancy Task Force established in the Housing and Community Development Act of 1992. The Task Force's charge was a comprehensive review of all HUD guidelines on the standards and obligations related to residency in HUD-assisted housing.¹⁴ Both the Office of Public and Indian Housing and the Office of Housing were to undertake the rulemaking.

Although the rulemaking has been designated significant under the Department' priority scheme, HUD has withdrawn it and has no plans to take consolidated action to implement the Occupancy Task Force recommendations.¹⁵

HUD's withdrawal from significant rulemakings may possibly anticipate the substantial staff reductions — both self-imposed and congressionally mandated — expected in the coming years as HUD shrinks its staff from around 11,000 employees to approximately 7,000 and devolves to state and local government much of the authority previously vested in the federal government.

1. See, e.g., 60 Fed. Reg. 23,002 (May 8, 1995).
2. The Regulatory Flexibility Act, 5 U.S.C. §§ 601-612; Executive Order 12866, "Regulatory Planning and Review" (Sept. 30, 1993), 58 Fed. Reg. 51,735 (Oct. 4, 1993).
3. Although the Regulatory Agenda indicates a November 1995 publication for the draft rule, the draft is currently under review by the Office of Management and Budget.
4. 60 Fed. Reg. 23,375 (May 8, 1995).
5. 60 Fed. Reg. 60,088 (Nov. 28, 1995).
6. See Executive Order 12,866, supra note 2, Executive Order 12,866.
7. 60 Fed. Reg. 60,099 (Nov. 28, 1995).
8. 12 U.S.C.A. § 1701u (West 1989).
9. 60 Fed. Reg. 23,378 (May 8, 1995).
10. 60 Fed. Reg. 60,088 (Nov. 28, 1995).
11. HUD's interim rule is published at 60 Fed. Reg. 42,972 (Aug. 17, 1995).
12. 60 Fed. Reg. 23,377 (May 8, 1995).
13. 60 Fed. Reg. 60,089 (Nov. 28, 1995).
14. 42 U.S.C.A. § 3535(d) (West 1994). For background about the Occupancy Task Force, see HUD Occupancy Task Force Issues Preliminary Report, 23 HOUS. L. BULL. 26 (May/June 1993).
15. 60 Fed. Reg. 60,090 (Nov. 28, 1995).