1. Short title This Act may be cited as the HUD Inspection Process and Enforcement Reform Act of 2017 . 2. Reduction in grade or pay or removal for misconduct or performance of employees of the Department of Housing and Urban Development (a) In general Section 7(c) of the Department of Housing and Urban Development Act ( 42 U.S.C. 3535(c) ), is amended— (1) by striking The Secretary is authorized and inserting the following: “ Employment, compensation, authority, and duties of personnel .— (1) In general The Secretary is authorized ; and (2) by adding at the end the following: (2) Reduction in grade or pay or removal for misconduct or performance of employees (A) Definitions For purposes of this paragraph— (i) the term covered employee — (I) means an individual holding a position in the civil service in the Department; and (II) does not include any individual— (aa) holding in a position described under sections 5312 through 5316 of title 5, United States Code (relating to the Executive Schedule); (bb) holding a position as a limited term appointee, limited emergency appointee, or noncareer appointee in the Senior Executive Service, as defined under paragraphs (5), (6), and (7), respectively, of section 3132(a) of title 5, United States Code; or (cc) holding a position of a confidential or policy-determining character under schedule C of subpart C of part 213 of title 5, Code of Federal Regulations; (ii) the term grade means a level of classification under a position classification system; (iii) the term misconduct includes neglect of duty, malfeasance, or failure to accept a directed reassignment or to accompany a position in a transfer of function; and (iv) the term pay means the rate of basic pay fixed by law or administrative action for the position held by a covered employee. (B) Actions covered This paragraph— (i) applies to a reduction in grade or pay or removal; and (ii) does not apply to— (I) a reduction in grade or pay or removal under section 7512 of title 5, United States Code