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received under this part, at a rate which indicates substantial conformance with the recipient's planned rate of expenditure or utilization. In making determinations concerning a recipient's continuing capacity, the Secretary will be guided by the experience of other recipients o similar size with similar entitlement amounts as judged by the above factors. Where a recipient's performance with respect to the above factors lags substantially behind that of similar recipients, or for any other reason, the Secretary desires further information, the Secretary may require submission of additional information concerning the administrative, planning, budgeting, management, and evaluation functions of the recipient to determine whether a lack of capacity is the source of the recipient's substantial nonperformance. The Secretary shall further determine by this review if action on the part of the recipient to eliminate the causes of substantial nonperformance will satisfy the requirement of a finding that the necessary capacity to carry out in a timely manner its community development program in succeeding years exists.

(c) Basis for Review. Each recipient shall assist the Secretary in performing his review function with respect to:

(1) Review of reports and records of recipients;

(2) Review of certification by the recipient of conformance to applicable laws and regulations;

(3) Site visits and inspections on a routine sampling basis including interviews with citizens and local officials. $ 570.910 Evaluation by HUD.

(a) The Secretary shall, in addition to his annual reviews and audits, evaluate programs conducted under this part and their effectiveness in meeting the objectives of this part.

(b) The Secretary may conduct such evaluation using HUD personnel, or by contract or other arrangement with public or private agencies.

(c) Recipients under this part may be required to supply data or make available such records as are necessary for the accurate completion of these evaluations. $ 570.911 Secretarial adjustment of an

nual grants. When the Secretary determines on the basis of such reviews and audits

as may be necessary or appropriate, that the recipient has not carried out a program substantially as described in its application, that the program did not conform to the requirements of the Act and other applicable laws, or that the recipient does not have a continuing capacity to carry out in a timely manner the approved community development program, he then may make appropriate adjustment in the amount of the annual grants in accordance with his findings pursuant to such reviews and audits. Adjustments may be made in annual grants for the current program period, the forthcoming program period, or both. Where the determination involves a failure to comply substantially with any provision of the Act, the provisions of

570.913 shall apply. $ 570.912 Nondiscrimination compli

ance, Whenever the Secretary determines that a State or unit of general local government which is a recipient of either grant or loan assistance under this Part has failed to comply with the provisions of $ 570.601, he shall notify the Governor of such State or the chief executive officer of such unit of general local government of the noncompliance and shall request the Governor or the chief executive officer to secure compliance. If within a reasonable period of time, not to exceed sixty days, the Governor or the chief executive officer fails or refuses to secure compliance, the Secretary is authorized to (a) refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted; (b) exercise the powers and functions provided by Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d); (c) exercise the powers and functions provided for in $ 570.913; or (d) take such other action as may be provided by law. When a matter is referred to the Attorney General pursuant to the preceding sentence, or whenever he has reason to believe that a State government or unit of general local government is engaged in a pattern or practice in violation of the provisions of $ 570.601(a), the Attorney General may bring a civil action in any appropriate United States district court for such relief as may be appropriate, including injunctive relief.

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§ 570.913 Other remedies for noncom- shall give reasonable notice and opporpliance.

tunity of hearing to such recipient prior (a) Secretarial referral to the Attor

to the invocation of any sanction under ney General. The Secretary may, if he

the Act. has reason to believe that a recipient

(2) Except in proceedings involving has failed to comply substantially with

willfulness or those in which the pubany provision of the Act, refer the mat

lic interest requires otherwise, a proter to the Attorney General of the United

ceeding under this part will not be inStates with a recommendation that an

stituted until such facts or conduct appropriate civil action be instituted.

which may warrant such action have Upon such a referral the Attorney

been called to the attention of the chief General may bring a civil action in any

executive oficer of the recipient in writUnited States district court having venue

ing and he has been accorded an opthereof for such relief as may be appro

portunity to demonstrate or achieve priate, including an action to recover the

compliance with the requirements of the amount of the assistance furnished

Act and of this part. If the recipient under this part which was not expended

fails to meet the requirements of the in accordance with it, or for mandatory

Act and regulations within such reasonor injunctive relief.

able time as may be specified by the (b) Secretarial actions on payments.

Secretary, a proceeding shall be initiIf the Secretary finds a recipient has

ated. Such proceeding shall be instituted failed to comply substantially with any

by the Secretary by a complaint which provision of this part, he may, provided

names the recipient as the respondent. his finding of failure to comply is made

(3) A complaint shall give a plain and after reasonable notice and opportunity

concise description of the allegations for hearing,

which constitute the basis for the pro(1) Terminate payments to the recip

ceeding. A complaint shall be deemed ient; or

sufficient if it fairly informs the respond(2) Reduce payments to the recipient

ent of the charges against it so that it by an amount equal to the amount of

is able to prepare a defense to the such payments which were not

charges. Notification shall be given in pended in accordance with this Part;

the complaint as to the place and time

within which the respondent shall file its (3) Limit the availability of pay

answer, which time shall be not less than ments to programs, projects, or activi

30 days from the date of service of the ties not affected by such failure to

complaint. The complaint shall also concomply.

tain notice that a decision by default

will be rendered against the respondent The following regulations govern the

in the event it fails to file its answer as procedure and practice requirements

required. involving adjudications where the Secre

(4) (i) Service of Complaint. The tary desires to take action requiring rea

complaint or a true copy therefore may sonable notice and opportunity for

be served upon the respondent registered hearing. The regulations in this part or by certified mail, return receipt reshall be liberally construed to secure quested; or it may be served in any other just, expeditious, and efficient determi

manner which has been agreed to in nation of the issues presented. The Ad- writing by the respondent. Where the ministrative Procedure Act (5 U.S.C. 551 service is by certified mail, the return et seq.) where applicable shall be a guide Postal Service receipt duly signed on bein any situation not provided for or con- half of the respondent shall be proof of trolled by this subpart, but shall be lib- service. erally construed or relaxed when neces- (11) Service of papers other than comsary.

plaint. Any paper other than the com(c) Reasonable notice and opportu- plaint may be served upon the respondent nity for hearing. (1) Whenever the Sec- or upon its attorney of record by regisretary has reason to believe that a tered or certified mall, return receipt rerecipient has failed to comply substan- quested. Such mailing shall constitute tially with any section of the Act or of complete service. the provisions of this part, and that (iii) Filing of papers. Whenever the Alltermination, reduction, or limiting the ing of a paper is required or permitted in availability of payments is required, he connection with a proceeding under this

or

Part, and the place of filing is not speci- deemed necessary, or upon failure of the fied in this subpart or by role or order respondent to file an answer within the of the administrative law judge, the time prescribed in the complaint or as paper shall be filled with the Secretary, extended under $ 570.913(c) (5) (1), the Washington, D.C. 20410. All papers shall complaint (and answer, if one is filled) be filed in duplicate.

shall be referred to the administrative (iv) Motions and Requests. Motions law judge. Where an answer has been and requests shall be filled with the des- filled, the administrative law judge shall ignated administrative law judge, ex- set a time and place for hearing and cept that an application to extend the shall serve notice thereof upon the partime for filing an answer shall be filled ties at least 15 days in advance of the with the Secretary pursuant to $ 570.913 hearing date. (c) (4) (i).

(6) (1) If it appears to the Secretary (5) (1) Filing. The respondent's an- that the respondent in its answer falsely swer shall be filed in writing within the and in bad faith, denies & material alletime specified in the complaint, unless gation of fact in the complaint or states on application the time is extended by that it has no knowledge sufficient to the Secretary. The respondent's answer form a belief, when in fact it does possess shall be filed in duplicate with the such information, or if it appears that Secretary.

the respondent has knowingly introduced (1) Contents. The answer shall con- false testimony during the proceedings, tain a statement of facts which consti- the Secretary may thereupon file suppletute the grounds of defense, and it shall mental charges against the respondent. specifically admit or deny each allegation Such supplemental charges may be tried set forth in the complaint, except that with other charges in the case, provided the respondent shall not deny a material the respondent is given due notice allegation in the complaint which it thereof and is afforded an opportunity knows to be true; nor shall a respondent to prepare its defense thereto. state that it is without sufficient Infor- (id) In the case of a variance between mation to form a belief when in fact the allegations in a pleading and the it possesses such information. The re- evidence adduced in support of the pleadspondent may also state affirmatively ing, the administrative law judge may special matters of defense.

order or authorize amendment of the (1) Failure to deny or answer allega- pleading to conform to the evidence: tion in the complaint. Every allegation Provided, The party that would otherin the complaint which is not denied in wise be prejudiced by the amendment is the answer shall be deemed to be ad- given reasonable opportunity to meet the mitted and may be considered as proved, allegation of the pleading as amended. and no further evidence in respect of The administrative law judge shall make such allegation need be adduced at a findings on any issue presented by the hearing.

pleadings as so amended. (iv) Failure to file answer. Failure to (111) A respondent may appear in perfile an answer within the time prescribed son through its chief executive officer in the complaint, except as the time for and must be represented by counsel. Reanswer is extended under $ 570.913(c) (5) spondent's counsel may also appear as a (1), shall constitute an admission of the witness in the proceeding. The Secretary allegations of the complaint and a waiver shall be represented by the General of hearing, and the administrative law Counsel of HUD. judge shall make his findings and deci- (d) Administrative Law judge; powers. sion by default without a hearing or (1) Appointment. An administrative law further procedure.

judge, appointed as provided by Section (V) Reply to answer. No reply to the 11 of the Administrative Procedure Act respondent's answer is required unless (5 U.S.C. 3105), shall conduct proceedthe administrative law judge so requests. ings upon complaints filed under this Otherwise, the Secretary may file a reply subpart. in his discretion, but in any event within (2) Powers of administrative law 10 days from his receipt of respondent's judge. Among other powers provided by answer.

law, the administrative law judge's au(vi) Referral to administrative law thority, in connection with any proceedjudge. Upon receipt of the answer by the ing under this subpart, shall include Secretary or upon filing a reply if one is authority to:

(i) Administer oaths and affirmations; hearing require that the parties attempt

(ii) Making ruling upon motions and to arrive at such stipulations as will requests. Prior to the close of the hear- eliminate the necessity of taking evidence ing no appeal shall lie from any such with respect to allegations of facts conruling except, at the discretion of the cerning which there is no substantial administrative law judge, in extraordi- dispute. The administrative law judge nary circumstances;

shall take similar action, where it ap(iii) Determine the time and place of pears appropriate, throughout the hearhearing and regulate its course and con- ing and shall call and conduct any conduct. In determining the place of hear- ferences which he deems advisable with a ing the administrative law judge may view to the simplification, clarification, take into consideration the requests and and disposition of any of the issues convenience of the respondent or its involved. counsel;

(f) Evidence. (1) Any evidence which (iv) Adopt rules of procedure and would be admissible under the rules of modify the same from time to time as evidence governing proceedings in matoccasion requires for the orderly dis- ters not involving trial by jury in the position of proceedings;

Courts of the United States, shall be ad(v) Rule upon offers of proof, receive missible and controlling as far as possirelevant evidence, and examine wit- ble. Provided that, the administrative law nesses;

judge may relax such rules in any hear(vi) Take or authorize the taking of ing when in his judgment, such relaxadispositions;

tion would not impair the rights of either (vii) Receive and consider oral or party and would more speedily conclude written arguments on facts or law;

the hearing, or would better serve the (viii) Hold or provide for the holding ends of justice. Evidence which is irreleof conferences for the settlement or sim- vant, immaterial or unduly repetitious plification of the issues by consent of shall be excluded by the administrative the parties;

law judge. (ix) Perform such acts and take such (2) Depositions. The deposition of any measures as are necessary or appropriate witness may be taken pursuant to to the efficient conduct of any proceed

$ 570.913(g) and the deposition may be ing; and

admitted. (x) Make initial findings and decision. (3) Proof of documents. Official doc(e) Hearings. (1) In general: The ad

uments, records and papers of a reministrative law judge shall preside at

spondent shall be admissible as evidence the hearing on a complaint. Testimony

without the production of the original of witnesses shall be given under oath provided that such documents, records or affirmation. The hearing shall be

and papers are evidenced as the original stenographically recorded and tran- by a copy attested to or identified by the

chief executive officer of the respondent scribed. Hearings will be conducted pursuant to section 7 of the Administrative

or the custodian of the document, and Procedure Act (5 U.S.C. 556).

contain the seal of the respondent. (2) Failure to appear: If, after proper

(4) Exhibits. If any document, record, service and notice, a respondent fails to

paper, or other tangible or material thing

is introduced in evidence as an exhibit, appear at the hearings, it shall be

the adminstratve law judge may authordeemed to have waived the right to a

ize the withdrawal of the exhibit subject hearing and the administrative law judge shall make his findings and de

to any conditions he deems proper. An

original document, paper or record need cision against the respondent by default.

not be introduced and a copy duly cer(3) Waiver of hearing: A respondent

tified (pursuant to paragraph (b) of this may waive the hearing by informing the

section) shall be deemed sufficient. administrative law judge, in writing on or before the date set for hearing, that

(5) Objections. Except as requested by it desires to waive hearing. In such

counsel or the administrative law judge, event the administrative law judge shall

oral or written objections to evidence make his findings and decision based

shall be in short form, stating the upon the pleadings before him. The de- grounds of objection relied upon, and the cision shall plainly show that the re- record shall not include subsequent arspondent waived hearing.

gument thereon, except as permitted by (4) The administrative law judge the administrative law judge. Rulings on shall prior to or at the beginning of the such objections shall be a part of the record. No exception to the ruling is of duplication. Copies of exhibits intronecessary to preserve the right of either duced at the hearings or at the taking of party to the proceeding.

depositions will be supplied to the parties (g) Depositions. (1) In general. Depo- upon the payment of a reasonable fee sitions for use at a hearing may, with the (31 U.S.C. 483(a)). written approval of the administrative (i) Proposed findings and conclusions. law judge, be taken by either the Secre- Except in cases where a respondent has tary or the respondent or their duly au- failed to appear to answer the complaint thorized representatives. Depositions or has failed at the hearings, or has may be taken upon oral or written waived the hearing, the administrative interrogatories, upon not less than 15 law judge, prior to making his initial dedays written notice to the other party, cision, shall afford the parties a reasonbefore any officer duly authorized able opportunity to submit proposed to administer an oath for general pur- findings and conclusions and supporting poses. Such written notice shall state the reasons therefor. names of the witnesses and the time and (j) Initial decision of the Administraplace where the depositions are to be tive Law Judge. Within 30 days after the taken. The requirement of 15 days writ- conclusion of a hearing, the administraten notice may be waived by the parties tive law judge shall make his initial dein writing, and depositions may then be cision. However, where proposed findings taken from the persons and at times and and conclusions are timely submitted by places mutually agreed to by the parties. the parties, such decision shall be made

(2) Written interrogatories. When a within 30 days after receipt of the finddeposition is taken upon written inter- ings and conclusions. The initial decision rogatories, any cross-examination shall shall include a statement of the findings be upon written interrogatories. Copies of of fact and the conclusions therefrom, such written interrogatories shall be as well as the reasons or basis therefor, served upon the other party with the upon all the material issues of fact, law notice, and copies of any written cross- or discretion preserved on the record, interrogatories shall be mailed by first and may provide for one of the followclass mail or delivered to the opposing ing orders: party at least 10 days before the date of (1) An order that the respondent's taking the depositions, unless the parties payments be terminated, or mutually agree otherwise. A party upon

(2) An order that the respondent's whose behalf a deposition is taken must payments be reduced, or file with the administrative law judge (3) An order that the Secretary limit and serve one copy upon the opposing the availability of payments to activities party. Expenses in the reporting of depo- not affected by respondent's failure to sitions shall be borne by the party at

comply, or whose instance the deposition is taken.

(4) An order in favor of respondent. (h) Stenographic record; oath of re- After reaching his initial decision the adporter, transcript. (1) In general. A

ministrative law judge shall certify to the stenographic record shall be made of the complete record, together with a certified testimony and proceedings, including

copy of his initial decision, to the Secstipulations and admissions of fact in all retary. The administrative law judge proceedings. Arguments of counsel may

shall serve also a copy of the initial decibe heard on request. A transcript of sion upon the Secretary and the respondthe proceedings (and evidence) at the ent. The administrative law judge shall hearing shall be made in all cases.

serve also a copy of the initial decision (2) Oath of reporter. The reporter by certified mail to the chief executive making the stenographic record shall officer of the respondent or to its attorney subscribe an oath before the administra- of record. tive law judge, to be filed in the record (k) What constitutes record. The of the case, that he (or she) will truly transcript of testimony, pleadings and and correctly report the oral testimony exhibits, all papers and requests filed in and proceedings at such hearing and the proceeding together with all findings, accurately transcribe the same to the decisions and orders, shall constitute the best of his (or her) ability.

exclusive record in the matter. (3) Transcript. Copies of the trans- (1) Procedure on review of decision cript may be obtained from the reporter of administrative law judge-(1) Appeal at rates not to exceed the actual cost to the Secretary. Within 30 days from the

39-082-75-6

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