[Code of Federal Regulations]
[Title 24, Volume 3]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR570.496]

[Page 127-129]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER V--OFFICE OF ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND 
        DEVELOPMENT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 570_COMMUNITY DEVELOPMENT BLOCK GRANTS--Table of Contents
 
        Subpart I_State Community Development Block Grant Program
 
Sec. 570.496  Remedies for noncompliance; opportunity for hearing.

    (a) General. Action pursuant to this section will be taken only 
after at least one of the corrective or remedial actions specified in 
Sec. 570.495 has been taken, and only then if the State or unit of 
general local government has not made an appropriate or timely response.
    (b) Remedies. (1) If HUD finds after reasonable notice and 
opportunity for hearing that a State or unit of general local government 
has failed to comply with any provision of this subpart, until HUD is 
satisfied that there is no longer failure to comply, HUD shall:
    (i) Terminate payments to the state;
    (ii) Reduce payments for current or future grants to the state by an 
amount equal to the amount of CDBG funds distributed or used without 
compliance with the requirements of this subpart;
    (iii) Limit the availability of payments to the state to activities 
not affected by the failure to comply or to activities designed to 
overcome the failure to comply;
    (iv) Based on the state's failure to comply with a requirement of 
this subpart (other than the state's current failure to comply which 
will affect the use of the succeeding year grant), condition the use of 
the grant funds upon appropriate corrective action by the state 
specified by HUD; or
    (v) With respect to a CDBG grant awarded by the state to a unit of 
general local government, withhold, reduce, or withdraw the grant, 
require the state to withhold, reduce, or withdraw the grant, or take 
other action as appropriate, except that CDBG funds expended on eligible 
activities shall not be recaptured or deducted from future CDBG grants 
to such unit of general local government.
    (2) HUD may on due notice suspend payments at any time after the 
issuance of a notice of opportunity for hearing pursuant to paragraph 
(d) of this section, pending such hearing and a final decision, to the 
extent HUD determines such action necessary to prevent a continuation of 
the noncompliance.
    (c) In lieu of, or in addition to, the action authorized by 
paragraph (b) of this section, if HUD has reason to believe that the 
state or unit of general local government has failed to comply 
substantially with any provision of this subpart, HUD may:
    (1) Refer the matter to the Attorney General of the United States 
with a recommendation that an appropriate civil action be instituted; 
and
    (2) Upon such a referral, the Attorney General may bring a civil 
action in any United States district court having venue thereof for such 
relief as may be appropriate, including an action to recover the amount 
of the CDBG funds

[[Page 128]]

which was not expended in accordance with this subpart, or for mandatory 
or injunctive relief.
    (d) Proceedings. When HUD proposes to take action pursuant to this 
section, the respondent in the proceedings will be the state. At the 
option of HUD, a unit of general local government may also be a 
respondent. These procedures are to be followed before imposition of a 
sanction described in paragraph (b)(1) of this section:
    (1) Notice of opportunity for hearing. HUD shall notify the 
respondent in writing of the proposed action and of the opportunity for 
a hearing. The notice shall be sent to the respondent by first class 
mail and shall provide notice:
    (i) In a manner which is adequate to allow the respondent to prepare 
its response, the basis upon which HUD determined that the respondent 
failed to comply with a provision of this subpart;
    (ii) That the hearing procedures are governed by these rules;
    (iii) That the respondent has 14 days from receipt of the notice 
within which to provide a written request for a hearing to the Chief 
Docket Clerk, Office of Administrative Law Judges, and the address and 
telephone number of the Chief Docket Clerk;
    (iv) Of the action which HUD proposes to take and that the authority 
for this action is Sec. 570.496 of this subpart;
    (v) That if the respondent fails to request a hearing within the 
time specified, HUD's determination that the respondent failed to comply 
with a provision of this subpart shall be final and HUD may proceed to 
take the proposed action.
    (2) Initiation of hearing. The respondent shall be allowed 14 days 
from receipt of the notice within which to notify HUD in writing of its 
request for a hearing. If no request is received within the time 
specified, HUD's determination that the respondent failed to comply with 
a provision of this subpart shall be final and HUD may proceed to take 
the proposed action.
    (3) Administrative Law Judge. Proceedings conducted under these 
rules shall be presided over by an Administrative Law Judge (ALJ), 
appointed as provided by section 11 of the Administrative Procedure Act 
(5 U.S.C. 3105). The case shall be referred to the ALJ by HUD at the 
time a hearing is requested. The ALJ shall promptly notify the parties 
of the time and place at which the hearing will be held. The ALJ 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 
ALJ shall have all powers necessary to those ends, including but not 
limited to the power:
    (i) To administer oaths and affirmations;
    (ii) To issue subpoenas as authorized by law;
    (iii) To rule upon offers of proof and receive relevant evidence;
    (iv) To order or limit discovery before the hearing as the interests 
of justice may require;
    (v) To regulate the course of the hearing and the conduct of the 
parties and their counsel;
    (vi) To hold conferences for the settlement or simplification of the 
issues by consent of the parties;
    (vii) To consider and rule upon all procedural and other motions 
appropriate in adjudicative proceedings; and
    (viii) To make and file initial determinations.
    (4) Ex parte communications. An ex parte communication is any 
communication with an ALJ, direct or indirect, oral or written, 
concerning the merits or procedures of any pending proceeding which is 
made by a party in the absence of any other party. Ex parte 
communications are prohibited except where the purpose and content of 
the communication have been disclosed in advance or simultaneously to 
all parties, or the communication is a request for information 
concerning the status of the case. Any ALJ who receives an ex parte 
communication which the ALJ 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.

[[Page 129]]

    (5) The hearing. All parties shall have the right to be represented 
at the hearing by counsel. The ALJ shall conduct the proceedings in an 
expeditious manner while allowing the parties to present all oral and 
written evidence which tends to support their respective positions, but 
the ALJ shall exclude irrelevant, immaterial or unduly repetitious 
evidence. HUD has the burden of proof in showing by a preponderance of 
evidence that the respondent failed to comply with a provision of this 
subpart. Each party shall be allowed to cross-examine adverse witnesses 
and to rebut and comment upon evidence presented by the other party. 
Hearings shall be open to the public. So far as the orderly conduct of 
the hearing permits, interested persons other than the parties may 
appear and participate in the hearing.
    (6) Transcripts. Hearings shall be recorded and transcribed only by 
a reporter under the supervision of the ALJ. The original transcript 
shall be a part of the record and shall constitute the sole official 
transcript. Respondents and the public, at their own expense, shall 
obtain copies of the transcript.
    (7) The ALJ's decisions. At the conclusion of the hearing, the ALJ 
shall give the parties a reasonable opportunity to submit proposed 
findings and conclusions and supporting reasons therefor. Generally, 
within 60 days after the conclusion of the hearing, the ALJ shall 
prepare a written decision which includes a Statement of findings and 
conclusions, and the reasons or basis therefor, on all the material 
issues of fact, law or discretion presented on the record and the 
appropriate sanction or denial thereof. The decision shall be based on 
consideration of the whole record or those parts thereof cited by a 
party and supported by and in accordance with the reliable, probative, 
and substantial evidence. A copy of the decision shall be furnished to 
the parties immediately by first class mail and shall include a notice 
that any requests for review by the Secretary must be made in writing to 
the Secretary within 30 days of the receipt of the decision.
    (8) Record. The transcript of testimony and exhibits, together with 
the decision of the ALJ and all papers and requests filed in the 
proceeding, constitutes the exclusive record for decision and, on 
payment of its reasonable cost, shall be made available to the parties. 
After reaching the initial decision, the ALJ shall certify to the 
complete record and forward the record to the Secretary.
    (9) Review by the Secretary. The decision by the ALJ shall 
constitute the final decision of HUD unless, within 30 days after the 
receipt of the decision, either the respondent or the Assistant 
Secretary for Community Planning and Development files an exception and 
request for review by the Secretary. The excepting party must transmit 
simultaneously to the Secretary and the other party the request for 
review and the bases of the party's exceptions to the findings of the 
ALJ. The other party shall be allowed 30 days from receipt of the 
exception to provide the Secretary and the excepting party with a 
written reply. The Secretary shall then review the record of the case, 
including the exceptions and the reply. On the basis of such review, the 
Secretary shall issue a written determination, including a Statement of 
the rationale therefor, affirming, modifying or revoking the decision of 
the ALJ. The Secretary's decision shall be made and transmitted to the 
parties within 60 days after the decision of the ALJ was furnished to 
the parties.
    (10) Judicial review. The respondent may seek judicial review of 
HUD's decision pursuant to section 111(c) of the Act.