§1437z–1 — Title 42 The Public Health and Welfare | U.S. Code

Summary

The rule lets the Secretary fine owners, certain partners, or managing agents of properties that get project-based rental help when they knowingly and seriously break their housing contract. The fines are extra to any other civil or criminal penalties and can be used even if other punishments are applied. The Secretary cannot fine someone if the main cause of the problem was the Secretary, a Secretary’s agent, or a public housing agency failing to follow an existing agreement. Money penalties can be charged for things like failing to provide decent, safe, and sanitary housing or knowingly submitting false claims. Each fine can be up to $25,000 for each violation. Before a fine is finally imposed, the person must get written notice and a chance for a formal hearing. If no hearing is asked for within 15 days after the notice, the penalty becomes final and cannot be appealed. The Secretary may review hearing results and must decide within 90 days, or the result becomes final. When deciding the amount, the Secretary will consider factors such as how serious the offense was, past offenses, ability to pay, harm to tenants or the public, any benefit from the violation, and deterrence. Fines may not be paid from project income. If someone refuses to pay after the decision is final, the Secretary can ask the U.S. Attorney General to sue in federal court to get the money, and the court may award the United States its legal costs. The Secretary can also reduce, change, or cancel penalties. Definitions: an “agent with an identity of interest” is a manager who is owned or controlled by the same owners and has effective control; “knowing” means having actual knowledge, deliberately ignoring, or acting with reckless disregard of the rule.

Title 42, §1437z–1

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(a)(1)The penalties set forth in this section shall be in addition to any other available civil remedy or any available criminal penalty, and may be imposed regardless of whether the Secretary imposes other administrative sanctions.

(2)The Secretary may not impose penalties under this section for a violation, if a material cause of the violation is the failure of the Secretary, an agent of the Secretary, or a public housing agency to comply with an existing agreement.

(b)(1)The Secretary may impose a civil money penalty under this section on—

(A)any owner of a property receiving project-based assistance under section 8 [42 U.S.C. 1437f];

(B)any general partner of a partnership owner of that property; and

(C)any agent employed to manage the property that has an identity of interest with the owner or the general partner of a partnership owner of the property.

(2)A penalty may be imposed under this section for a knowing and material breach of a housing assistance payments contract, including the following—

(A)failure to provide decent, safe, and sanitary housing pursuant to section 8 [42 U.S.C. 1437f]; or

(B)knowing or willful submission of false, fictitious, or fraudulent statements or requests for housing assistance payments to the Secretary or to any department or agency of the United States.

(3)The amount of a penalty imposed for a violation under this subsection, as determined by the Secretary, may not exceed $25,000 per violation.

(c)(1)The Secretary shall issue regulations establishing standards and procedures governing the imposition of civil money penalties under subsection (b). These standards and procedures—

(A)shall provide for the Secretary or other department official to make the determination to impose the penalty;

(B)shall provide for the imposition of a penalty only after the liable party has received notice and the opportunity for a hearing on the record; and

(C)may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from a hearing and judicial review, as provided under subsection (d).

(2)(A)If a hearing is not requested before the expiration of the 15-day period beginning on the date on which the notice of opportunity for hearing is received, the imposition of a penalty under subsection (b) shall constitute a final and unappealable determination.

(B)If the Secretary reviews the determination or order, the Secretary may affirm, modify, or reverse that determination or order.

(C)If the Secretary does not review that determination or order before the expiration of the 90-day period beginning on the date on which the determination or order is issued, the determination or order shall be final.

(3)In determining the amount of a penalty under subsection (b), the Secretary shall take into consideration—

(A)the gravity of the offense;

(B)any history of prior offenses by the violator (including offenses occurring before the enactment of this section);

(C)the ability of the violator to pay the penalty;

(D)any injury to tenants;

(E)any injury to the public;

(F)any benefits received by the violator as a result of the violation;

(G)deterrence of future violations; and

(H)such other factors as the Secretary may establish by regulation.

(4)No payment of a civil money penalty levied under this section shall be payable out of project income.

(d)Judicial review of determinations made under this section shall be carried out in accordance with section 1735f–15(e) of title 12.

(e)(1)(A)If a person or entity fails to comply with the determination or order of the Secretary imposing a civil money penalty under subsection (b), after the determination or order is no longer subject to review as provided by subsections (c) and (d), the Secretary may request the Attorney General of the United States to bring an action in an appropriate United States district court to obtain a monetary judgment against that person or entity and such other relief as may be available.

(B)Any monetary judgment awarded in an action brought under this paragraph may, in the discretion of the court, include the attorney’s fees and other expenses incurred by the United States in connection with the action.

(2)In an action under this subsection, the validity and appropriateness of the determination or order of the Secretary imposing the penalty shall not be subject to review.

(f)The Secretary may compromise, modify, or remit any civil money penalty which may be, or has been, imposed under this section.

(g)(1)Notwithstanding any other provision of law, if the mortgage covering the property receiving assistance under section 8 [42 U.S.C. 1437f] is insured or was formerly insured by the Secretary, the Secretary shall apply all civil money penalties collected under this section to the appropriate insurance fund or funds established under this chapter, as determined by the Secretary.

(2)Notwithstanding any other provision of law, if the mortgage covering the property receiving assistance under section 8 [42 U.S.C. 1437f] is neither insured nor formerly insured by the Secretary, the Secretary shall make all civil money penalties collected under this section available for use by the appropriate office within the Department for administrative costs related to enforcement of the requirements of the various programs administered by the Secretary.

(h)In this section—

(1)the term “agent employed to manage the property that has an identity of interest” means an entity—

(A)that has management responsibility for a project;

(B)in which the ownership entity, including its general partner or partners (if applicable), has an ownership interest; and

(C)over which such ownership entity exerts effective control; and

(2)the term “knowing” means having actual knowledge of or acting with deliberate ignorance of or reckless disregard for the prohibitions under this section.

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 105–65, title V, § 562(b), Oct. 27, 1997, 111 Stat. 1419, provided that: “The

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made by subsection (a) [enacting this section and amending section 1437z of this title] shall apply only with respect to— “(1) violations that occur on or after the

Effective Date

of final

Regulations

implementing the

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made by this section; and “(2) in the case of a continuing violation (as determined by the Secretary of Housing and Urban Development), any portion of a violation that occurs on or after such date.”

Regulations

Pub. L. 105–65, title V, § 562(c), Oct. 27, 1997, 111 Stat. 1419, provided that: “(1)

Regulations

.—“(A) In general.—The Secretary shall implement the

Amendments

made by this section [enacting this section and amending section 1437z of this title] by regulation issued after notice and opportunity for public comment. “(B) Comments sought.—The notice under subparagraph (A) shall seek comments as to the definitions of the terms ‘ownership interest in’ and ‘effective control’, as such terms are used in the definition of the term ‘agent employed to manage such property that has an identity of interest’. “(2) Timing.—A proposed rule implementing the

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made by this section shall be published not later than 1 year after the date of enactment of this Act [Oct. 27, 1997].”

§1437z–1 Civil money penalties against section 1437f owners

Summary

Title 42, §1437z–1

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Amendments

Effective Date

Regulations

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Regulations

Regulations

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Amendments

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