24 C.F.R. § 576.501 – Enforcement.

(a) Performance reviews.
1. (1) HUD will review the performance of each recipient in carrying out its responsibilities under this part whenever determined necessary by HUD, but at least annually. In conducting performance reviews, HUD will rely primarily on information obtained from the records and reports from the recipient and, when appropriate, its subrecipients, as well as information from onsite monitoring, audit reports, and information from IDIS and HMIS. Where applicable, HUD may also consider relevant information pertaining to the recipient's performance gained from other sources, including citizen comments, complaint determinations, and litigation. Reviews to determine compliance with specific requirements of this part will be conducted as necessary, with or without prior notice to the recipient.
2. (2) If HUD determines preliminarily that the recipient or one of its subrecipients has not complied with an ESG program requirement, HUD will give the recipient notice of this determination and an opportunity to demonstrate, within the time prescribed by HUD and on the basis of substantial facts and data, that the recipient has complied with Emergency Solutions Grant (ESG) requirements. HUD may change the method of payment to require the recipient to obtain HUD's prior approval each time the recipient draws down Emergency Solutions Grant (ESG) funds. To obtain prior approval, the recipient may be required to manually submit its payment requests and supporting documentation to HUD in order to show that the funds to be drawn down will be expended on eligible activities in accordance with all ESG program requirements.
3. (3) If the recipient fails to demonstrate to HUD's satisfaction that the activities were carried out in compliance with ESG program requirements, HUD will take one or more of the remedial actions or sanctions specified in paragraph (b) of this section.
(b) Remedial actions and sanctions. Remedial actions and sanctions for a failure to meet an ESG program requirement will be designed to prevent a continuation of the deficiency; mitigate, to the extent possible, its adverse effects or consequences; and prevent its recurrence.
1. (1) HUD may instruct the recipient to submit and comply with proposals for action to correct, mitigate, and prevent noncompliance with ESG requirements, including:
  1. (i) Preparing and following a schedule of actions for carrying out activities affected by the noncompliance, including schedules, timetables, and milestones necessary to implement the affected activities;
  2. (ii) Establishing and following a management plan that assigns responsibilities for carrying out the remedial actions;
  3. (iii) Canceling or revising activities likely to be affected by the noncompliance, before expending ESG funds for the activities;
  4. (iv) Reprogramming ESG funds that have not yet been expended from affected activities to other eligible activities;
  5. (v) Suspending disbursement of ESG funds for some or all activities;
  6. (vi) Reducing or terminating the remaining grant of a subrecipient and reallocating those funds to other subrecipients; and
  7. (vii) Making matching contributions before or as draws are made from the recipient's ESG grant.
2. (2) HUD may change the method of payment to a reimbursement basis.
3. (3) HUD may suspend payments to the extent HUD deems it necessary to preclude the further expenditure of funds for affected activities.
4. (4) HUD may remove the recipient from participation in reallocations of funds under subpart D of this part.
5. (5) HUD may deny matching credit for all or part of the cost of the affected activities and require the recipient to make further matching contributions to make up for the contribution determined to be ineligible.
6. (6) HUD may require the recipient to reimburse its line of credit in an amount equal to the funds used for the affected activities.
7. (7) HUD may reduce or terminate the remaining grant of a recipient and reallocate those funds to other recipients in accordance with subpart D of this part.
8. (8) HUD may condition a future grant.
9. (9) HUD may take other remedies that are legally available.
(c) Recipient sanctions. If the recipient determines that a subrecipient is not complying with an ESG program requirement or its subgrant agreement, the recipient must take appropriate actions, as prescribed for HUD in paragraphs (a) and (b) of this section. If the recipient is a State and funds become available as a result of an action under this section, the recipient must reallocate those funds to other subrecipients as soon as practicable. If the recipient is a unit of general purpose local government of territory, it must either reallocate those funds to other subrecipients or reprogram the funds for other activities to be carried out by the recipient as soon as practicable. The recipient must amend its Consolidated Plan in accordance with its citizenship participation plan if funds become available and are reallocated or reprogrammed under this section. The reallocated or reprogrammed funds must be used by the expenditure deadline in § 576.203.