National Housing Law Project Housing Law Bulletin

Streamlining and Consolidating HUD’s Regulations

These latest reinvention regulations fall into different categories. Many times HUD is simply consolidating in one place virtually identical regulations that have been promulgated separately for different programs. For example, HUD has removed all of the federal preference regulations for public housing, project-based Section 8 and certificates and vouchers and created a new consolidated preference regulation that will apply to all of the programs. In other situations, HUD has stripped out of the current regulations all provisions that merely repeat statutory language. HUD's reasoning is that the statutes are binding on program participants on their own, and if Congress amends the statute HUD will not have to amend its regulations to reflect statutory changes. Other regulations are removed because they are obsolete, in most cases because authorizations for the programs they relate to have expired or no new funding is being appropriated.

This article will briefly describe the changes made to several sets of regulations. The first are the regulations on preferences, pets, Social Security numbers, authorizations for the release of information, and definitions which are all being moved to a new Part 5.² Next is a streamlined Part 791 on the allocation of appropriations. Third are revisions made by the Office of Public and Indian Housing regarding family self-sufficiency, modernization, prevailing wages, energy audits and utilities. Fourth are the streamlining efforts of HUD's Community Planning and Development division that cover the HOME, Housing Opportunities for People with AIDS (HOPWA), Section 312, Rental Rehabilitation and Urban Homesteading programs.³

The New 24 C.F.R. Part 5

Preferences

In 1994, HUD completed a major rewriting of the rules on federal preferences and codified 10 separate sets of them for various HUD programs, including all forms of project-based Section 8, certificates and vouchers, Indian housing, and public housing.⁶ On March 6, 1996, HUD consolidated all those 10 sets of preference regulations into a single regulation promulgated at 24 C.F.R. Part 5, Subpart D (1996), and changing the cross-references to the old preference regulations that had been spread throughout Title 24. Ironically, in January, Congress had already suspended the federal preferences for Fiscal Year 1996 in the Balanced Budget Downpayment Act. HUD's consolidated preference regulations will nevertheless be on the books ready for action on October 1, 1996, if Congress does not permanently repeal the preference statute or extend the suspension into Fiscal Year 1997.

In the process of consolidating the rules, HUD did make some changes, whether deliberate or inadvertent. For example, the old, separate rules for the Section 8 Moderate Rehabilitation program prohibited public housing authorities (PHAs) from offering a preference to anyone who, during the preceding three years, had been evicted from HUD-assisted housing for drug-related activity,⁷ even though the governing statute contained no such prohibition for Section 8 Moderate Rehabilitation.⁸ The consolidated regulations do not apply that prohibition to the Section 8 Moderate Rehabilitation program.⁹ That change brings the regulations into conformity with the statute.

More significant changes relate to residency preferences and requirements. The consolidated regulations prohibit residency requirements only for the project-based Section 8 programs, not for public housing or certificates and vouchers, including project-based certificates.¹⁰ The old, separate rules for the public housing program prohibited residency requirements for public housing (24 C.F.R. § 960.204(d)(1) (1995)), but HUD removed the previous prohibition against public housing residency requirements¹¹ when it consolidated the preference rules.¹² In contrast, the rules for the certificate and voucher programs still provide that an applicant's eligibility may not be based upon where the applicant lives.¹³

The other change on residency preferences relates to HUD approval requirements. The old, separate rules required HUD approval of residency preferences for the certificate and voucher programs, reserved the question about how HUD approval would be handled for such preferences in the project-based Section 8 programs, and did not require HUD approval at all for the public housing program.¹⁴ The consolidated rules retain the requirement of HUD approval for the certificate and voucher programs, but do not repeat the provision that reserved the questions about HUD approval for the project-based Section 8 programs.¹⁵ Since the rules on residency preferences are not based upon the federal preference statute that has been suspended,¹⁶ these changes have immediate and ongoing consequences.

Pets

Because Congress allowed tenants living in housing developments for the elderly and for people with disabilities to have pets, HUD had issued two sets of regulations regarding pet ownership. One, at 24 C.F.R. Part 942, covered public housing, and the other, 24 C.F.R. Part 243, with a cross-reference at 24 C.F.R. § 842, was for FHA-subsidized housing and project-based Section 8. The regulations differed in that HUD conferred more discretion on PHAs than on private owners in the development of pet rules.

HUD has now consolidated its pet rules in one place, Subpart C of its new Part 5, but it still retains the distinction between public housing and private, HUD-assisted housing as far as the amount of discretion allowed is concerned.¹⁷ In this case, the consolidation may not have saved many lines of type, if any, but it does cause more confusion with the repeated references to rules for the "housing" programs and then rules for the public housing program.

Social Security Numbers and Authorizations for the Release of Information

HUD previously had two sets of regulations that covered all programs, one at 24 C.F.R. Part 750 regarding disclosure of Social Security numbers, and another at 24 C.F.R. Part 760 regarding the release of information by third parties. As part of its streamlining movement, HUD has now consolidated sets into its new Part 5.¹⁸

This consolidation is not of great significance, because there had previously been only one set of regulations for each of these two topics for all of HUD's programs. But there is at least one problematic aspect of the change, i.e., substituting references to governing statutory provisions for previous regulatory language that paraphrased the governing statutes or repeated the statutes verbatim. For example, the old regulations stated what the criminal and civil penalties were if a manager improperly used or disclosed information secured from third parties.¹⁹ The new regulations merely refer to cited provisions of the United State Code that state the penalties.²⁰ For the manager who does not have a copy of the United States Code in his or her office, this change will be inconvenient. But HUD is right when it claims that deleting the language from the regulations will be more convenient from the Department's perspective, because it will not have to amend the regulations each time the statute changes.

Allocation of Appropriations

Public and Indian Housing

Family Self-Sufficiency

HUD also has had two separate, but virtually identical sets of regulations for the Family Self-Sufficiency program. One was for public housing (24 C.F.R. Part 962) and one for Section 8 certificates and vouchers at 24 C.F.R. Part 984. HUD has now consolidated them by eliminating Part 962 and adding to Part 984 the few provisions that are unique to public housing.²¹

HUD mentioned in the introductory comments that it was also removing from Part 984 any provisions that merely provided nonbinding guidance or explanations that were not required by the regulations. Instead, such provisions would be provided by Handbooks. That seemed a bit ironic, coming from the same division of HUD that canceled many of its handbooks last year in order to cut back on its regulation of PHAs.²² However, a quick perusal of the new Part 984 revealed very little that had been deleted from the previous regulations.

Modernization

One of the first efforts of Secretary Cisneros' administration when it took over HUD was to speed up the spending of public housing modernization funds, by getting appropriated funds out of HUD more expeditiously, and by having PHAs spend the funds more quickly once they got them. Part of that effort included revising the regulations for the Comprehensive Improvement Assistance Program (CIAP) and the Comprehensive Grant Program (Comp Grant). Those revisions involved four steps. First, an interim rule for CIAP was issued on March 15, 1993.²³ Next, a proposed rule to revise the Comp Grant regulations was issued on March 8, 1994,²⁴ and finalized on August 30, 1994.²⁵ Now, HUD has issued a final rule, making revisions to the March 1993 interim rule for CIAP and consolidating some of the separate provisions for Comp Grant and CIAP.²⁶

Prevailing Wages

The revisions to the modernization rules mentioned above also consolidated rules on preemption of state laws on prevailing wage rates that had previously been stated separately for the development and operations and modernization. Now the preemption is contained in 24 C.F.R. § 965.101 (1996) and covers development, maintenance and modernization.²⁷

Energy Audits

Deregulation aptly characterizes the changes HUD has made in its regulations requiring PHAs to conduct energy audits.²⁸ The new regulations eliminate detailed provisions in the old regulations that specified particular energy conservation practices the PHAs had to follow, like setting the hot water temperature to 120 degrees, and that dictated the types of appliances the PHA had to purchase.²⁹ Fortunately, the new regulations keep the provision barring PHAs from installing individual meters in units that need substantial weatherization, when doing so would cause economic hardship for the tenants.³⁰

Utilities

At the same time that HUD streamlined the rules on energy audits, it also revised the regulations on conversions to tenant-paid utilities and the setting of utility allowances. These changes were first published in a proposed rule in September 1995.³¹ On conversions to tenant-paid and check-metered systems, the new regulations again deregulate.³² They still require a cost-benefit analysis, but they delete the detailed specifications about how PHAs are to do the calculations. They eliminate the tables dictating the assumptions about reduced consumption that would result from conversions and that had been found wanting in Massachusetts Union of Pub. Hous. Tenants v. Landrieu, 656 F.2d 899 (D.C. Cir. 1981). Fortunately, at least, they keep the requirement that PHAs must work closely with tenants in making plans for a conversion, and that PHAs must allow tenants six months to adjust to the new allowances before making the new charges effective.³³

In revising the utility allowance regulations, HUD made some changes that will have greater or lesser impact. PHAs will no longer be required to send copies of their utility allowance schedules to HUD, and the language stating that HUD has the power to require PHAs to change their allowances has been deleted.³⁴ The regulations no longer specify that there must be different allowances for units with different numbers of bedrooms, although the categories chosen by the PHA still must include only units that are reasonably comparable as to factors affecting utility usage.³⁵ The second articulation of the standard for setting utility allowances — that consumption above the allowance should be reasonably within the control of the tenant household to avoid — has been deleted.³⁶ The recommended sources of data for PHAs to consider in setting utility allowances, including data on current resident consumption, have also been deleted.³⁷

The most significant change concerns air conditioning. Until now, HUD's regulations on utility allowances did not deal with air conditioning. In 1987, HUD had proposed a rule under which tenants in most cases would have to pay for air conditioning out of their own pockets.³⁸ These new regulations provide that PHAs must surcharge tenants for use of air conditioning where PHAs provide the electricity or exclude air conditioning from the calculations of allowances for tenant-paid utilities, unless the tenant is not given the option not to use the air conditioner.³⁹

Community Planning and Development

HOME

For the HOME program, HUD's major action was to remove regulatory provisions that paraphrased or repeated verbatim the governing statutory provisions.⁴⁰ In their place, HUD substituted references to the governing sections of the HOME legislation. As a result, the HOME regulations no longer have extensive sections setting out the purposes of the program, the types of support that HUD will provide to community housing development organizations, and the assistance in formulating housing strategies that HUD will provide to participating jurisdictions.

The same tactic, eliminating guidelines, examples, and other helpful information in the name of simplification, was followed on more specific statutory requirements as well. Thus, for example, the new regulations remove the specific regulatory language stating which statutory provisions may not be waived in disasters, obligating HUD to allocate funds within 20 days after it receives them, prohibiting the use of HOME funds to pay the costs of remedying adjudicated violations of non-discrimination provisions, and the rules on flood plains.

HOPWA

Most of HUD's changes for the Housing Opportunities for Persons with AIDS program involve the removal of language that merely repeats the statute, the insertion of statutory citations and the elimination of language that duplicates regulations set out elsewhere.⁴¹ Nonetheless, there are some major differences, including elimination from the regulations the provisions prescribing the contents of the applications and HUD's process for selecting applications for funding.

Rehabilitation Loans

HUD removes virtually all the regulations for the Section 312 rehabilitation loan program because the authority for making new Section 312 loans expired in 1991. All that remains is a provision about how to collect loan payments.

Rental Rehabilitation and Urban Homesteading

Almost all of the revisions to the rental rehabilitation program regulations involve removal of regulatory provisions because the program is no longer being funded.⁴² The remaining regulations are only those needed to regulate the previously funded buildings that are still operating under the program. The same is true with the changes to the regulations for the urban homesteading program.⁴³

1. 60 Fed. Reg. 47,260 (Sept. 11, 1995).
2. In the last issue, we discussed the initial regulations that were put in Part 5 which changed the rules on eligibility of single persons for housing assistance. See HUD Revises and Reorganizes Eligibility Definitions, 26 HOUS. L. BULL. 39 (Mar. 1996).
3. HUD has also "reinvented" the regulations for the Community Development Block Grant program (24 C.F.R. Part 570, 61 Fed. Reg. 11,474 (Mar. 20, 1995)), and reinvented and consolidated the regulations for the Fair Housing Assistance Program and for determining the equivalency of state fair housing laws (24 C.F.R. Part 115, 61 Fed. Reg. 7,674 (Feb. 28, 1996)).
4. 61 Fed. Reg. 5,198 (Feb. 9, 1996).
5. 24 C.F.R. § 5.110 (1996).
6. 59 Fed. Reg. 36,616 and 36,662 (July 18, 1994), promulgating rules in 24 C.F.R. Parts 880, 881, 882, 883, 884, 886, 889, 905, 960 and 982 (1995).
7. Former 24 C.F.R. § 882.517(c)(3) (1995).
8. 42 U.S.C.A. § 1437f(d)(1)(A)(iii) (West 1994).
9. 24 C.F.R. § 5.410(d)(3) (1996).
10. 24 C.F.R. § 5.410(h)(1) (1996).
11. Former 24 C.F.R. § 960.204(d)(1) (1995).
12. 61 Fed. Reg. 9,048 (Mar. 6, 1996).
13. 24 C.F.R. § 982.202(b)(2) (1995).
14. Former 24 C.F.R. §§ 880.613(e)(2), 960.204(d) and 982.208 (1995).
15. 24 C.F.R. § 5.410(h)(2) (1996).
16. Pub. L. No. 104-99, § 402, 110 Stat. 40 (1996).
17. 24 C.F.R. §§ 5.300-5.363 (1996), 61 Fed. Reg. 9,536 (Mar. 8, 1996).
18. 24 C.F.R. §§ 5.210-5.238 (1996), 61 Fed. Reg. 11,112 (Mar. 18, 1996).
19. Former 24 C.F.R. § 760.35 (1995).
20. 24 C.F.R. § 5.238 (1996).
21. 24 C.F.R. Part 984, 61 Fed. Reg. 8,814 (Mar. 5, 1996).
22. See HUD Transmittal from Joseph Shuldiner, Assistant Secretary for Public and Indian Housing, to State/Area Coordinators, etc. (Jan. 23, 1995).
23. 58 Fed. Reg. 13,916.
24. 59 Fed. Reg. 10,876.
25. 59 Fed. Reg. 44,810.
26. 61 Fed. Reg. 8,712 (Mar. 5, 1996).
27. 61 Fed. Reg. 8,736 (Mar. 5, 1996).
28. 24 C.F.R. §§ 965.301-965.308 (1996), 61 Fed. Reg. 7,966 (Feb. 29, 1996).
29. See former 24 C.F.R. §§ 965.308 and 965.309 (1995).
30. 24 C.F.R. § 965.304 (1996).
31. 60 Fed. Reg. 49,480 (Sept. 25, 1995).
32. 24 C.F.R. § 965.402 (1996), 61 Fed. Reg. 7,970 (Feb. 29, 1996).
33. 24 C.F.R. § 965.405 (1996).
34. 24 C.F.R. § 965.502(d) (1996), 61 Fed. Reg. 7,971 (Feb. 29, 1996).
35. 24 C.F.R. § 965.503 (1996).
36. See former 24 C.F.R. § 965.476(a) (1995).
37. See former 24 C.F.R. § 965.476(c) (1995).
38. 52 Fed. Reg. 38,470 (Oct. 16, 1987).
39. 24 C.F.R. § 965.505(e) (1996).
40. 24 C.F.R. Part 92 (1996), 61 Fed. Reg. 7,966 (Feb. 29, 1996).
41. 24 C.F.R. Part 574 (1996), 61 Fed. Reg. 7,962 (Feb. 29, 1996).
42. 24 C.F.R. Part 511 (1996), 61 Fed. Reg. 7,061 (Feb. 23, 1996).
43. 24 C.F.R. Part 590 (1996), 61 Fed. Reg. 7,062 (Feb. 23, 1996).