HUD's Implementation of OMB's Guidance for Federal Financial Assistance

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT <CFR>24 CFR Parts 4, 5, 75, 92, 93, 200, 570, 574, 576, 578, 700, 880, 881, 883, 884, 886, 905, 964, 965, 970, 990, 1000, 1003, 1005, 1006, and 1007</CFR> <DEPDOC>[Docket No. FR-6266-P-01]</DEPDOC> <RIN>RIN 2501-AE01</RIN> <SUBJECT>HUD's Implementation of OMB's Guidance for Federal Financial Assistance</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of General Counsel, HUD. <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The U.S. Department of Housing and Urban Development (HUD) is proposing to amend its regulations on Federal financial assistance to conform with 2020 and 2024 changes to Office of Management and Budget (OMB) guidance governing Federal financial assistance (previously called grants and agreements). The proposed amendments would implement the guidance and update cross-references to OMB provisions that have been renumbered or reorganized. HUD is also proposing changes to improve some grant management and administrative program regulations based on HUD's experience implementing OMB's regulations and guidance in existing entitlement, discretionary, and other programs involving grant management and administration. Finally, HUD is proposing changes to its Title VI, Section 108, Section 184, and Section 184A loan guarantee program regulations to address OMB's changes for loan guarantee programs regarding System for Award Management ( <E T="03">SAM.gov</E> ) registration and to clarify that the Section 184 and Section 184A programs are subject to audit requirements in OMB's regulations and final guidance. All these changes will improve HUD's processes for awarding Federal financial assistance and align HUD's regulations with governmentwide efforts to adopt consistent and standardized terms and data elements, implement data- and risk-based frameworks, reduce Federal agency and recipient burdens, promote consistent interpretations of OMB's regulations and guidance, and improve and maximize agencies' ability to assess performance of recipients. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Comment Due Date:</E> March 3, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> There are two methods for submitting public comments. All submissions must refer to the above docket number and title. 1. Electronic Submission of Comments. Comments may be submitted electronically through the Federal eRulemaking Portal at <E T="03">www.regulations.gov.</E> 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 comments immediately available to the public. Comments submitted electronically through <E T="03">www.regulations.gov</E> can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that website to submit comments electronically. 2. 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 7th Street SW, Room 10276, Washington, DC 20410-0500. Note: To receive consideration as a public comment, comments must be submitted through one of the two methods specified above. Public Inspection of Public Comments. HUD will make all properly submitted comments and communications available for public inspection and copying during regular business hours at the above address. Due to security measures at the HUD Headquarters building, you must schedule an appointment in advance to review the public comments by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit <E T="03">https://www.fcc.gov/consumers/guides/</E> telecommunications-relay-service-trs. Copies of all comments submitted are available for inspection and downloading at <E T="03">www.regulations.gov.</E> In accordance with 5 U.S.C. 553(b)(4), a summary of this proposed rule may be found at <E T="03">www.regulations.gov.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Aaron Santa Anna, Office of General Counsel, Office of Legislation and Regulations, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410-8000; telephone number 202-708-1793 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit <E T="03">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1"> I. Background  <E T="51">1</E> <FTREF/> </HD> <FTNT> <SU>1</SU>  Through OMB's 2024 round of revisions to its regulations and final guidance, OMB has indicated its preference for the use of the terms “Federal financial assistance,” “recipient,” and “subrecipient” over other terms. 89 FR 30046. This preamble sometimes uses the term “Federal financial assistance,” which is now used throughout OMB's regulations and guidance, in place of “grant” or “Federal award,” but this preamble also uses “grant” or “Federal award” where appropriate for a given program, when discussing prior rounds of OMB revisions (which used “grant” or “Federal award”), when discussing updated OMB provisions that use “grant” or “Federal award,” or when used as part of a quote. Also in this preamble, HUD uses “recipient” and “subrecipient” interchangeably with “grantee” and “subgrantee,” respectively, as those terms are defined in OMB's regulations and guidance. See 2 CFR 200.1. </FTNT> <HD SOURCE="HD2">OMB's 2013 Uniform Guidance and HUD's Implementation</HD> On December 26, 2013, the Office of Management and Budget (OMB) issued the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), parts of which are codified in 2 CFR part 200. This Uniform Guidance “set standard requirements for financial management of Federal awards across the entire [F]ederal government.”  <SU>2</SU> <FTREF/> OMB promulgated the Uniform Guidance to (1) streamline guidance in making Federal awards to ease administrative burden and (2) strengthen financial oversight over Federal funds to reduce risks of fraud, waste, and abuse. <SU>3</SU> <FTREF/> <FTNT> <SU>2</SU>  78 FR 78590, 78590 (Dec. 26, 2013). </FTNT> <FTNT> <SU>3</SU>  78 FR 78590, 78950; <E T="03">see also</E> 85 FR 3766 (Jan. 22, 2020) (providing additional explanation of OMB's 2013 final guidance). </FTNT> The requirements at 2 CFR part 200 derive from previously issued policies: Executive Order (E.O.) 13520 titled Reducing Improper Payments and Eliminating Waste in Federal Programs  <SU>4</SU> <FTREF/> and a related Presidential Memorandum on Administrative Flexibility, Lower Costs, and Better Results for State, Local, and Tribal Governments. <SU>5</SU> <FTREF/> The E.O. required agencies to improve accountability by “intensifying efforts to eliminate payment error, waste, fraud, and abuse” in Federal programs. <SU>6</SU> <FTREF/> The Presidential Memorandum directed OMB to “review and where appropriate revise guidance concerning cost principles, burden minimizations, and audits for State, local, and tribal governments in order to eliminate, to the extent permitted by law, unnecessary, unduly burdensome, duplicative, or low-priority recordkeeping requirements and effectively tie such requirements to achievement of outcomes.”  <SU>7</SU> <FTREF/> OMB's 2013 Uniform Guidance added a new 2 CFR part 200 based on work done by the Federal and non-Federal financial assistance community in response to these directives. <SU>8</SU> <FTREF/> <FTNT> <SU>4</SU>  74 FR 62201 (Nov. 25, 2009). </FTNT> <FTNT> <SU>5</SU>  Admin. of Barack Obama, 2011, Presidential Memorandum on Administrative Flexibility, Lower Costs, and Better Results for State, Local, and Tribal Governments (2011) [hereinafter Presidential Memo 2011], <E T="03">https://www.gpo.gov/fdsys/pkg/DCPD-201100123/pdf/DCPD-201100123.pdf.</E> </FTNT> <FTNT> <SU>6</SU>  74 FR 62201, 62201. </FTNT> <FTNT> <SU>7</SU>  Presidential Memo 2011, at 2. </FTNT> <FTNT> <SU>8</SU>  78 FR 78590, 78591. </FTNT> In a joint interim final rule published December 19, 2014, and titled “Federal Awarding Agency Regulatory Implementation of Office of Management and Budget's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UAR)”, all Federal award-making departments and agencies, including HUD, implemented OMB's 2013 Uniform Guidance. <SU>9</SU> <FTREF/> HUD adopted and codified the Uniform Guidance as requirements for Federal awards at 2 CFR part 2400 and, amended 24 CFR parts 84 and 85 by removing substantive provisions implementing OMB circulars issued prior to OMB's Uniform Guidance in 2013. <SU>10</SU> <FTREF/> Implementation of the Uniform Guidance became effective on December 26, 2014. <SU>11</SU> <FTREF/> Shortly after, HUD published a notice that provided guidance to internal and external stakeholders on HUD's transition to the new UAR provisions. <SU>12</SU> <FTREF/> On December 7, 2015, HUD published a final rule (HUD's 2015 rulemaking) to conform title 24 of the CFR to OMB's 2013 Uniform Guidance by removing references in title 24, including in HUD program regulations, to 24 CFR parts 84 and 85 an ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 201k characters. 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