24 C.F.R. § 576.303 – Territories.

(a) General. Grant funds returned by a territory will be reallocated to other territories, then if funds remain, to States.
(b) Allocation method. The funds will be allocated as follows:
1. (1) For territories, the funds will be allocated among the territories in direct proportion with each territory's share of the total population of all of the eligible territories. If HUD determines that a territory failed to spend its funds in accordance with ESG requirements, then HUD may exclude the territory from the allocation of reallocation amounts under this section.
2. (2) For States, the funds will be allocated to each State in direct proportion with each State's share of the total amount of funds allocated to States under § 576.3.
(c) Notification of availability. HUD will notify eligible recipients of the availability of the fund by a letter or Federal Register notice, which will specify how the awards of funds will be made.
(d) Application requirements. Within 45 days after the date of notification, the eligible recipient must submit to HUD a substantial amendment to its consolidated plan in accordance with 24 CFR part 91.
(e) Restrictions that apply to reallocated amounts. The same requirements that apply to grant funds allocated under § 576.3 apply to grant funds reallocated under this section.