issue-1996-03-06•Federal Register final rules — 1996-03-06
Federal Register final rules — 1996-03-06
issue-1996-03-06Federal Register final rules — 1996-03-06Regulation
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FR Doc. 96-5383 Common Crop Insurance Regulations; Malting Barley Price and Quality Endorsement Crop Insurance Provisions
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8851-8858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5383]
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Rules and Regulations
Federal Register
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having general applicability and legal effect, most of which are keyed
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Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 /
Rules and Regulations
[[Page 8851]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 457
RIN 0563-AB24
Common Crop Insurance Regulations; Malting Barley Price and
Quality Endorsement Crop Insurance Provisions
AGENCY: Federal Crop Insurance Corporation, USDA.
ACTION: Final rule.
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SUMMARY: The Federal Crop Insurance Corporation (``FCIC'') hereby
issues additional regulations for provisions to insure malting barley.
This action will add a second endorsement, the Malting Barley Price and
Quality Endorsement, under which malting barley may be insured. The
current malting barley endorsement will remain in effect for the 1996
crop only and, effective with the 1997 crop year, will be replaced by
the new Malting Barley Price and Quality Endorsement. The intended
effect of this rule is to improve the insurance coverage now available
for producers who grow malting barley under contract and provide a new
option that will allow producers without contracts (open market
producers) to obtain insurance for their malting barley.
EFFECTIVE DATE: March 4, 1996.
ADDRESSES: For information concerning submission of comments on
information collection, see SUPPLEMENTARY INFORMATION.
FOR FURTHER INFORMATION CONTACT: For further information and a copy of
the Cost-Benefit Analysis to the Malting Barley Price and Quality
Endorsement Crop Insurance provisions, contact Diana Moslak, United
States Department of Agriculture, Federal Crop Insurance Corporation,
Washington, D.C. 20250. Telephone (202) 720-0713.
SUPPLEMENTARY INFORMATION:
Executive Order 12866 and Departmental Regulation 1512-1
This action has been reviewed under United States Department of
Agriculture (``USDA'') procedures established by Executive Order 12866
and Departmental Regulation 1512-1. This action constitutes a review as
to the need, currency, clarity, and effectiveness of these regulations
under those procedures. The sunset review date established for these
regulations is July 1, 2000.
This rule has been determined to be ``significant'' for the
purposes of Executive Order 12866 and, therefore, has been reviewed by
the Office of Management and Budget (``OMB'').
Cost-Benefit Analysis
A Cost-Benefit Analysis has been completed and is available to
interested persons at the address listed above. In summary, the
analysis finds that the expected benefits of this action outweigh the
costs. The new Malting Barley Price and Quality Endorsement will
simplify program operations, benefit FCIC and reinsured companies, and
enhance the insurance coverage for malting barley producers.
Paperwork Reduction Act of 1995
Following publication of the proposed rule, the public was afforded
60 days to submit written comments, data, and opinions on information
collection requirements previously approved by OMB under OMB control
number 0563-0003 through September 30, 1998. No public comments were
received.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Pub. L.
104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, FCIC
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, or tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. When such a statement is needed for a rule, section 205 of
the UMRA generally requires FCIC to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, more
cost-effective or least burdensome alternative that achieves the
objectives of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, and tribal
governments or the private sector. Thus, this rule is not subject to
the requirements of sections 202 and 205 of the UMRA.
Executive Order 12612
It has been determined under section 6(a) of Executive Order 12612,
Federalism, that this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
provisions contained in this rule will not have a substantial direct
effect on states or their political subdivisions, or on the
distribution of power and responsibilities among the various levels of
government.
Regulatory Flexibility Act
This regulation will not have a significant impact on a substantial
number of small entities. The impact of obtaining or delivering these
policies will not vary significantly from that required to obtain or
deliver the present policy. Therefore, this action is determined to be
exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C.
Sec. 605 ) and no Regulatory Flexibility Analysis was prepared.
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372 which require intergovernmental consultation with state and local
officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12778
The Office of the General Counsel has determined that these
regulations meet the applicable standards provided in subsections 2(a)
and 2(b)(2) of Executive Order 12778. The provisions of this rule will
preempt state and local laws to the extent such state and local laws
are inconsistent herewith. The
[[Page 8852]]
administrative appeal provisions at 7 CFR part 11, must be exhausted
before action for judicial review may be brought.
Environmental Evaluation
This action is not expected to have any significant impact on the
quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review program to eliminate unnecessary or duplicative
regulations and improve those that remain in force.
Background
On Monday, December 11, 1995, FCIC published a proposed rule in the
Federal Register at 60 FR 63457 to amend the Common Crop Insurance
Regulations (7 CFR part 457) by revising 7 CFR 457.103, Malting Barley
Option Provisions, effective for the 1996 and succeeding crop years.
However, the December 31, 1995, date by which contract changes must be
made for the 1996 crop year passed before the provisions could be
published as a final rule. Therefore, for the 1996 crop year only, FCIC
will make both the current Malting Barley Endorsement (Sec. 457.103)
and this new Malting Barley Price and Quality Endorsement
(Sec. 457.118) available. The new endorsement will make insurance
coverage available to malting barley producers who do not hold a
production contract with a malting or brewing company, and to improve
coverage for those producers who do have such a contract. Beginning
with the 1997 crop year, the Malting Barley Price and Quality
Endorsement will replace the current Malting Barley Endorsement.
Following publication of the proposed rule, the public was afforded
15 days to submit written comments, data, and opinions. FCIC received
33 comments. The comments received and FCIC responses are as follows:
Comment: One comment received from a State Commissioner of
Agriculture recommended adding the following to the supplementary
information in the preamble: ``FCIC must offer producers the right to
mediation as required under Pub. L. No. 103-354, as part of the
informal administrative appeal process.''
Response: FCIC agrees that mediation may be required in some
instances but that requirement is contained in the appeal regulations.
Comment: Three comments were received regarding the length of the
comment period for the proposed rule. One received from the legal
counsel of a reinsured company stated that FCIC's proposed rulemaking
is in violation of the Administrative Procedure Act. Two comments, one
from the insurance industry and one from a State Commissioner of
Agriculture, indicated that the comment period was too short.
Response: FCIC published its proposed regulation with a shortened
comment period in order to allow sufficient time to consider all
comments and publish the final rule with sufficient time before the
sales closing date to permit the sale of the insurance policies and
training of insurance providers. Further, interested parties were kept
apprised of the proposed changes to the malting barley program, and the
date of its publication, in order to facilitate their ability to
provide meaningful comments within the short time period. No violation
of the Administrative Procedure Act has occurred.
Comment: One comment received from the insurance industry
recommended that implementation of this rule be delayed until the 1997
crop year. The comment indicated that it is too late to implement the
proposed program changes for the 1996 crop year because: (1) The
Standard Reinsurance Agreement (SRA) is already in place and approved;
(2) Agent training is completed in many areas, and procedures for 1996
are in place; and (3) Little time for training and marketing will be
available. The comment states that changing the endorsement for the
1996 crop year will require FCIC to allow companies to make changes to
the SRA fund and percentage elections; and that reimbursement of
company costs associated with marketing, training, and reissuance of
procedures will need to be addressed under the 1996 SRA.
Response: There is nothing in the SRA that precludes FCIC from
changing the terms of an insurance contract prior to the contract
change date or offering new insurance products after implementation of
the current years' SRA. FCIC is offering the new Malting Barley Price
and Quality Endorsement as a new insurance product to be sold in
conjunction with the currently available malting barley endorsement.
Nothing requires any company to sell the endorsement. The Company may
do so if it believes that making the option available is good business.
Comment: One comment received from a barley industry organization
indicated that the new endorsement will offer an important option to
many North Dakota open-market barley producers. The comment further
stated that these producers now will be afforded the opportunity to
insure against quality losses at representative prices.
Response: FCIC agrees.
Comment: One comment received from the Farm Service Agency (FSA)
asked if the endorsement will be available in all counties that
currently have a feed barley insurance program or only in counties that
currently have malting barley insurance.
Response: The new endorsement will initially be available only in
counties that currently have a malting barley insurance program in
place.
Comment: One comment received from the insurance industry indicated
it would be advantageous for producers to elect Option A or B on a
yearly basis rather than the initial selection being continuous. The
comment stated that insureds with Option B will think they have an
endorsement in effect even if they fail to execute a malting barley
contract.
Response: This recommendation would result in unnecessary
additional paperwork and administrative expense each crop year. The
endorsement is clear that there is no coverage when the producer fails
to obtain a malting barley contract. Further, a producer can cancel an
Option and select another, provided it is done prior to the sales
closing date. Also, there are large malt barley growing areas in which
there is very little, if any, contracted production. Requiring
producers to affirmatively select option A each year is unnecessary in
these areas. No changes in the proposed provisions have been made.
Comment: One comment received from a State Commissioner of
Agriculture suggested adding the following language to section 2 of the
endorsement: ``Producers who sign up for coverage Option A at the time
of the sales closing date, and subsequently enter into a contract with
some or all of their malting barley production will retain the Option A
malting barley coverage. The malting barley production guarantee for
the producer then will be the same as the coverage guaranteed under the
Option A insurance contract.'' The comment indicated that malting
barley contracts can be entered into in the late spring and that
growers with Option A coverage should not forego their insurance
coverage if they do enter into such a contract.
Response: FCIC agrees with the comment. Section 2 and language in
the heading of Option A have been amended accordingly.
Comment: Two comments were received, one from FSA and one from
[[Page 8853]]
the insurance industry, that recommended clarifying whether the
additional value price election percentage can vary from that selected
for feed barley or if the percentages must be the same.
Response: It is intended that producers be allowed to select a
price election percentage for malting barley that varies from that
selected for feed barley. FCIC agrees that clarification is needed and
has amended the provisions in section 3 accordingly.
Comment: One comment received from the insurance industry indicated
that the provision requiring a producer to select an additional value
price election at the time of application would work the first year of
insurance, but would be a problem in succeeding years. The comment also
asked what procedure would be followed to change price elections from
year to year.
Response: Under any crop insurance policy, the producer is required
to select a price election. There is greater uncertainty under Option B
because the price upon which the election is based is not established
prior to the sales closing date. However, there is too great a risk of
adverse selection associated with permitting producers to select their
price elections after their prices have been established by contract.
The maximum price election is stated in Option B. Procedures to change
price elections from year to year will be the same as those in effect
for other crops. No change has been made to the proposed provision.
Comment: One comment received from a State Commissioner of
Agriculture recommended providing prevented planting coverage under the
terms of the endorsement.
Response: Determining a producer's intentions would make prevented
planting difficult to administer. Under other insurance products, all
terms of the contract are known on or before the sales closing date.
However, under this endorsement, a producer may not know if the malting
barley will be under contract, the number of acres insurable under the
endorsement or the price until the acreage reporting date. This
uncertainty makes it difficult to establish an actuarially sound
premium rate. Therefore, FCIC finds it appropriate to provide prevented
planting coverage on the basis of the feed barley production guarantee
and price election. If reliable methods to administer a prevented
planting program can be devised, then the endorsement can later be
amended. No change to the proposed provision has been made.
Comment: One comment received from a producer organization
indicated that the proposed ``cap'' of 200% of the maximum additional
value price election shown on the Special Provisions is too low to
cover the contract prices received for malting barley. The comment
suggested ``capping'' the additional value price election under Option
B at $2.00 per bushel.
Response: FCIC agrees and has revised the provisions as
recommended.
Comment: One comment received from the insurance industry
recommended changing the time by which a producer must submit a claim
for indemnity to the earlier of the date of final disposition of all
production or May 31 of the calendar year following the year the crop
is normally harvested.
Response: FCIC agrees that the time of disposition of all
production should be considered and has amended the provisions in
section 7 accordingly.
Comment: Two comments received from the insurance industry
indicated concern regarding the extended date for settling claims. One
comment stated that keeping claims open until May 31 places the
insurance provider well into the following crop year when early losses
are being worked, and increases the likelihood of errors. This comment
also recommended using a system of discount factors to allow claims to
be worked at harvest time. The other comment indicated that the
settlement date will delay needed benefits to producers and complicate
settlement under the Standard Reinsurance Agreement.
Response: Losses will have initially been adjusted as soon as
possible after the notice of loss. It is only when there is production
that fails to meet the quality criteria that the claim remains open. If
the claim remains open, adjustment only occurs if, and when, the
producer is able to sell such production. If such production is later
sold, there is little or no economic loss to producers. Even though
settlement of claims may be delayed, the use of discount factors or
settlement of claims at harvest time is not actuarially sound since it
will allow the producer to receive payments to which he may not be
entitled. Further, since the May 31 deadline still falls under the same
Standard Reinsurance Agreement, settlement should not be complicated by
this delay. Therefore, no change has been made to the proposed
provisions.
Comment: One comment received from the insurance industry indicated
that some producers may contract the production from some acreage but
also grow additional acreage for open-market sales. The comment
indicated that it would be difficult to track the acreage separately
and that the problem might be rectified by allowing the uncontracted
acreage to be insured under Option A.
Response: The endorsement already requires producers who grow both
contracted and non-contracted production within the same crop year to
insure such production under Option A. As indicated in the comment, it
is difficult to track the specific acreage from which malting barley
production is harvested. Therefore, no change is required.
Comment: Two comments received from the insurance industry
recommended using the same Actual Production History (APH) database for
both feed and malting barley. One of the comments recommended using a
temporary yield in the malting barley APH database to avoid a one year
difference in the databases between malting and feed barley. This
comment also recommended making reference to the APH crop year in
section 1 of Option A to avoid confusion.
Response: FCIC considered using temporary yields in malting barley
databases but elected not to do so because of the extra paperwork and
administrative expense involved with replacing the temporary yields
each year. FCIC agrees that adding a reference to APH in section 1 of
Option A may help clarify record requirements and has amended the
section accordingly.
Comment: One comment received from the insurance industry
recommended that the malting barley APH database reflect only acreage
from which malting barley was actually sold. The comment indicated that
a guarantee based on the total acreage planted to malting varieties and
the production sold for malting purposes would misrepresent potential
production.
Response: Since all acreage planted to approved malting varieties
is insured and the production available for sale, it must be considered
in the database. Otherwise, FCIC would be providing insurance for
changes in the market, which is not an insured cause of loss. No
changes have been made to the proposed provisions.
Comment: One comment received from a State Commissioner of
Agriculture recommended changing the number of yearly records of sale
of malting barley that are required from at least four years to three
out of the previous five years. The comment further recommended that
``acceptable records'' be defined.
Response: Allowing the producer to select the years for which
production
[[Page 8854]]
records are provided might result in the poorest production years not
being reflected in the data base. This would result in excessive
production guarantees, losses, and loss ratios. Specific production
record requirements are statutory and will be contained in procedural
handbooks. No change has been made to the proposed provision.
Comment: One comment received from a State Commissioner of
Agriculture recommended removing provisions that limit the malting
barley production guarantee to that determined for feed barley. The
comment recommends using only the malting barley records to determine
coverage under Option A, and only the contracted amount of production
to determine coverage under Option B.
Response: The production guarantee is intended to determine that
portion of the expected production that will be insured. Producers
should not receive a guarantee in excess of what the acreage could
reasonably be expected to produce. Under Option A, the best indicator
of the expected production is using the APH for feed barley because it
takes into consideration all the actual production from the insured
acreage, whether or not sold as malting barley. Under Option B, the
producer's insurance is limited to contracted acreage or production.
However, the contracted amount may differ from the actual production of
the acreage. Therefore, the actual production must be taken into
consideration. No change has been made to the proposed provisions.
Comment: One comment received from the insurance industry
recommended changing the date by which a producer must submit a copy of
the malting barley contract from the acreage reporting date to the
sales closing date. The comment stated that adverse selection would be
reduced by changing this requirement to an earlier date.
Response: In many cases, malting barley contracts are not completed
until April or May. Changing the contract submission date to the March
15 sales closing date would cause many growers who normally complete
contracts after this date to be ineligible for coverage under Option B.
No change has been made in the proposed provisions.
Comment: One comment received from the insurance industry stated
that the insurance guarantee under Option B would be underestimated
when a grower plants more acreage to approved malting varieties than
the number of acres grown under contract.
Response: Option B is not available to producers who grow more
acreage of malting barley than is under contract. Option A should be
used by producers who grow all open-market production or a combination
of contracted and open-market production.
Comment: One comment received from the insurance industry asked if
an additional data base would have to be established for malting
barley.
Response: Separate production data bases will be required for any
acreage planted to approved malting barley varieties and acreage
planted for feed barley.
Comment: One comment received from the FSA recommended expanding
the premium computation contained in Option B, section 3(b)
(redesignated as 3(c) in the final rule) to include the factors to be
applied, whether or not a separate liability is to be calculated, and
the applicable premium rate (feed barley or a separate rate).
Response: The comment misinterprets the term ``premium'' in this
subsection. As used in Option B, section 3(c), the term refers to an
additional dollar amount (above the base) paid to the producer for
barley production meeting contractual requirements rather than the
premium amount charged for insurance. The provision has been clarified
by using the term ``premium price per bushel.''
Comment: One comment received from the FSA recommended that the
definition of unit be clarified to indicate that units by share will be
available. The comment stated that the proposed provisions indicate
that basic units will not be available.
Response: All acreage of malting barley is insurable under a single
unit; basic units are not available. All insurable shares in the
malting barley will be designated on the acreage report for the single
unit. No changes have been made in the proposed provisions.
Comment: One comment received from a State Commissioner of
Agriculture recommended that producers have the option of designating,
on an acre by acre basis, either feed barley insurance coverage or
malting barley insurance coverage. The comment further suggested that
producers have the option of designating separate insurance units.
Response: To prevent selecting against the insurance provider, all
acreage planted to approved malting varieties must be insured as
malting barley. Allowing malting barley insurance only on acreage
selected by the producers would allow them to designate malting barley
insurance only on acreage where they have had difficulty producing
barley meeting malting barley standards and, thus, receiving a larger
indemnity than would be available for feed barley. Allowing units would
create situations in which growers could deliver 100 percent or more of
the malting barley guarantee and still receive an indemnity for a
malting barley loss on one or more units. This not only violates an
accepted principle of insurance that the insured should not profit by a
loss, it also makes it difficult to develop an adequate premium rate
for the coverage. No changes in the provisions have been made.
Comment: One comment received from a State Commissioner of
Agriculture recommended removing the requirement that potential
unharvested production be counted against the insurance guarantee. The
comment indicated that the intent of provisions in section 4(a)(2) of
Option B is unclear.
Response: This section may be unclear because of a drafting error.
Section 4(a)(2) of Option B should not begin with the word ``either.''
This correction has been made. This section is intended to require that
all harvested production and all production that is not harvested be
considered when determining the amount of production to count against
the production guarantee.
Comment: One comment received from the FSA pointed out a
typographical error in the second sentence of section 7 (redesignated
as section 6 in this final rule) in Option B. The sentence should read
as follows: Assume that each unit contains....
Response: The correction has been made.
Comment: One comment received from the insurance industry asked for
clarification of the 2,100 bushel guarantee reference in section 7
(redesignated as section 6 in this final rule) of Option B.
Response: This provision has been revised to clarify how an
indemnity will be paid.
Comment: One comment received from the crop insurance industry
indicated that the producer's share needs to be added to the provisions
regarding calculation of the claim amount.
Response: FCIC agrees and has amended the provisions as
recommended.
In addition to the changes indicated above, FCIC has determined
that it is necessary to:
(1) Modify the definition of ``Malting barley contract'' for the
purpose of clarification;
(2) Add provisions in section 9 to indicate that production of
approved malting varieties and any production of
[[Page 8855]]
feed barley varieties must not be commingled prior to the insurance
provider making all necessary determinations for the purposes of this
coverage; Failure to keep production separate may result in denial of
indemnity under the endorsement;
(3) Delete the definition of ``Value per bushel.'' This definition
was used to describe how production not meeting quality standards
contained in the endorsement was to be valued if such production was
ultimately sold as malting barley. The definition is unnecessary
because the value of such production will simply be the sale price per
bushel of the damaged production;
(4) Add provisions in section 4(b) of both Options A and B to allow
conditioning costs to be subtracted from the value of production that
could not be sold for malting purposes without conditioning; and
(5) Relocate provisions regarding delayed settlement of claims from
section 5 of both Options to section 7 of the provisions that apply to
both Options. These provisions were identical in the proposed rule and
should not be duplicated. Provisions 6 and 7 of both Options have been
redesignated as sections 5 and 6, respectively.
Good cause is shown to make this rule effective upon publication in
the Federal Register and without the 30-day period required by the
Administrative Procedure Act. This rule substantially improves the
malting barley insurance coverage. Public interest requires the agency
to act immediately to make this endorsement available for the 1996 crop
year. The rule expands coverage availability to producers who do not
hold a production contract with a malting or brewing company and
improves coverage for those producers who do have such a contract,
Therefore, good cause is shown to make this final rule effective in
less than 30 days after publication.
List of Subjects in 7 CFR Part 457
Crop insurance, Malting Barley Price and Quality Endorsement Crop
Provisions.
Final Rule
Pursuant to the authority contained in the Federal Crop Insurance
Act, as amended (7 U.S.C. Sec. 1501 et seq.), the Federal Crop
Insurance Corporation hereby amends the Common Crop Insurance
Regulations (7 CFR part 457) by adding a new Sec. 457.118, effective
for the 1996 and succeeding crop years, to read as follows:
PART 457--[AMENDED]
1. The authority citation for 7 CFR part 457 continues to read as
follows:
Authority: 7 U.S.C. 1506(1), 1506(p).
2. 7 CFR part 457 is amended by adding a new Sec. 457.118 to read
as follows:
Sec. 457.118 Malting Barley Crop Insurance.
The malting barley crop insurance provisions for the 1996 and
succeeding crop years are as follows:
United States Department of Agriculture Federal Crop Insurance
Corporation Small Grains Crop Insurance Malting Barley Price and
Quality Endorsement
(This is a continuous endorsement. Refer to section 2 of the Common
Crop Insurance Policy.)
In return for your payment of premium for the coverage contained
herein, this endorsement will be attached to and made part of the
Common Crop Insurance Policy (Sec. 457.8) and Small Grains Crop
Provisions (Sec. 457.101), subject to the terms and conditions
described herein.
1. You must have the Common Crop Insurance Policy (Sec. 457.8)
and the Small Grains Crop Insurance Provisions (Sec. 457.101) in
force to elect to insure malting barley under this endorsement.
2. You must select either Option A or Option B on or before the
sales closing date. Failure to select either Option A or Option B,
or if you elect Option B but fail to have a malting barley contract
in effect by the acreage reporting date, will result in no coverage
under this endorsement for the applicable crop year. If you elect
coverage under Option A, and subsequently enter into a malting
barley contract, your coverage will continue under the terms of
Option A. Your selection (Option A or B) will continue from year to
year unless you cancel or change your selection on or before the
sales closing date.
3. You must select either an additional value price election or
a percentage of the maximum additional value price election on or
before the sales closing date. The percentage of the maximum
additional value price election you select does not have to be the
same as that selected under the Small Grains Crop Provisions for
feed barley. In the event that you choose a percentage of the
maximum additional value price election, we will multiply that
percentage by the maximum additional value price election specified
in Option A or B to determine the additional value price election
that pertains to your contract.
4. The additional premium amount for this coverage will be
determined by multiplying your malting barley production guarantee
per acre by your selected additional value price election, times the
premium rate stated in the Actuarial Table, times the acreage
planted to approved malting barley varieties, times your share at
the time coverage begins.
5. In addition to the reporting requirements contained in
section 6 of the Common Crop Insurance Policy (Sec. 457.8), you must
provide the information required by the Option you select.
6. In lieu of the provisions regarding units and unit division
in the Common Crop Insurance Policy (Sec. 457.8) and the Small
Grains Crop Provisions (Sec. 457.101), all barley acreage in the
county that is planted to malting varieties that is insurable under
the Small Grains Crop Provisions for feed barley and your selected
Option must be insured under this endorsement and will be considered
as one unit regardless of whether such acreage is owned, rented for
cash, or rented for a share of the crop. The producer's shares in
the malting barley acreage to be insured under this endorsement must
be designated on the acreage report.
7. In lieu of the provisions in the Common Crop Insurance Policy
(Sec. 457.8) that requires us to pay your loss within 30 days after
we reach agreement with you, whenever any production fails one or
more of the quality criteria specified herein, the claim may not be
settled until the earlier of:
(a) The date you sell, feed, donate, or otherwise utilize such
production for any purpose; or
(b) May 31 of the calendar year immediately following the
calendar year in which the insured malting barley is normally
harvested.
If the production meets all quality criteria contained herein or
grades U.S. No. 4 or lower in accordance with the grades and grade
requirements for the subclasses Six-rowed and Two-rowed barley, and
for the class Barley in accordance with the Official United States
Standards for Grain, the claim will be settled within 30 days in
accordance with the Common Crop Insurance Policy (Sec. 457.8).
8. This endorsement does not provide additional prevented
planting coverage. Such coverage is only provided in accordance with
the provisions of the Small Grain Crop Provisions for feed barley.
9. Production from all acreage insured under this endorsement
and any production of feed barley varieties must not be commingled
prior to our making all determinations necessary for the purposes of
this insurance. Failure to keep production separate may result in
denial of your claim for indemnity.
10. Definitions:
(a) APH--Actual production history as determined in accordance
with 7 CFR part 400, subpart G.
(b) Approved malting variety--A variety of barley specified as
such in the Special Provisions.
(c) Brewery--A facility where malt beverages are commercially
produced for human consumption.
(d) Contracted production--A quantity of barley the producer
agrees to grow and deliver, and the buyer agrees to accept, under
the terms of the malting barley contract.
(e) Licensed grain grader--A person authorized by the U.S.
Department of Agriculture to inspect and grade barley under the U.S.
Standards for malt barley.
(f) Malting barley contract--An agreement in writing between the
producer and a brewery or a business enterprise that produces or
sells malt or processed mash to a brewery, or a business enterprise
owned by such brewery or business, that contains the
[[Page 8856]]
amount of contracted production, the purchase price, or a method to
determine such price, and other such terms that establish the
obligations of each party to the agreement.
(g) Objective test--A determination made by a qualified person
using standardized equipment that is widely used in the malting
industry, and following a procedure approved by the American Society
of Brewing Chemists when determining percent germination or protein
content; grading performed by following a procedure approved by the
Federal Grain Inspection Service when determining quality factors
other than percent germination or protein content; or by the Food
and Drug Administration when determining concentrations of
mycotoxins or other substances or conditions that are identified as
being injurious to human or animal health.
(h) Subjective test--A determination made by a person using
olfactory, visual, touch or feel, masticatory, or other senses
unless performed by a licensed grain grader; or that uses non-
standardized equipment; or that does not follow a procedure approved
by the American Society of Brewing Chemists, the Federal Grain
Inspection Service, or the Food and Drug Administration.
(i) Unit--All insurable acreage of approved malting varieties in
the county on the date coverage begins for the crop year.
Option A--(Available for Producers of Production Contracted After the
Sales Closing Date, Non-Contracted Production, or a Combination of
Contracted and Non-Contracted Production)
This option provides coverage for malting barley production and
quality losses at a price per bushel greater than that offered under
the Small Grains Crop Provisions.
1. To be eligible for coverage under this option, you must
provide us acceptable records of your sales of malting barley and
the number of acres planted to malting varieties for at least the
four crop years in your APH database prior to the crop year
immediately preceding the current crop year. For example, to
determine your production guarantee for the 1996 crop year, records
must be provided for the 1991 through the 1994 crop years, if
malting barley varieties were planted in each of those crop years.
Failure to provide acceptable records or reports as required herein
will make you ineligible for coverage under this endorsement. You
must provide these records to us no later than the production
reporting date specified in the Common Crop Insurance Policy
(Sec. 457.8).
2. Your malting barley production guarantee per acre will be the
lesser of:
(a) The production guarantee for feed barley for acreage planted
to approved malting varieties calculated in accordance with the
Small Grains Crop Provisions and APH regulations; or
(b) A production guarantee calculated in accordance with APH
procedures using the malting barley sales and acreage records
provided by you.
3. The additional value price per bushel elected cannot exceed
the maximum price designated in the Special Provisions.
4. The amount of production to count against your malting barley
production guarantee will be determined as follows:
(a) Production to count will include all:
(1) Appraised production determined in accordance with sections
11(c)(1) (i) and (ii) of the Small Grains Crop Provisions;
(2) Harvested production and potential unharvested production
that meets, or would meet if properly handled;
(i) Tolerances established by the Food and Drug Administration
or other public health organization of the United States for
substances or conditions, including mycotoxins, that are identified
as being injurious to human health; and
(ii) The following quality standards, as applicable:
------------------------------------------------------------------------
Six-rowed malting Two-rowed malting
barley (percent) barley (percent)
------------------------------------------------------------------------
Protein (dry basis)............. 14.0 maximum...... 14.0 maximum
Plump kernels................... 65.0 minimum...... 75.0 minimum
Thin kernels.................... 10.0 maximum...... 10.0 maximum
Germination..................... 95.0 minimum...... 95.0 minimum
Blight damaged.................. 4.0 maximum....... 4.0 maximum
Injured by mold................. 5.0 maximum....... 5.0 maximum
Mold damaged.................... 0.4 maximum....... 0.4 maximum
Sprout damaged.................. 1.0 maximum....... 1.0 maximum
Injured by frost................ 5.0 maximum....... 5.0 maximum
Frost damaged................... 0.4 maximum....... 0.4 maximum
------------------------------------------------------------------------
(3) Harvested production that does not meet the quality
standards contained in section 4(a)(2) of this Option, but is
accepted by a buyer for malting purposes. For such production, the
production to count may be reduced or the price used to settle the
claim may be adjusted in accordance with sections 4 (b), (c), and
(d) of this Option.
(b) The quantity of production that initially fails any quality
standard contained in section 4(a)(2), but is sold as malting barley
(except production included in section 4(c)), may be reduced as
described in this subsection, provided the failure of such
production to meet these standards is due to insurable causes. The
production to count of production sold under section 4(a)(3) will be
determined by:
(1) Adding the maximum barley price election under the Small
Grains Crop Provisions and the maximum additional value price;
(2) Dividing the result of paragraph (1) by the price per bushel
received for the damaged production; and
(3) Multiplying the result of paragraph (2) (not to exceed
1.000) by the number of bushels of damaged production.
(c) The production to count for production that initially fails
any quality standard contained in section 4 (a)(2), sold as malting
barley, but is conditioned before the sale will not be reduced under
section 4(b). Such production will be considered separately from all
other production to count. (See section 5(d).)
(d) The additional value price election per bushel used to
determine the value of the production to count for production that
initially fails any quality standard contained in section 4(a)(2),
but is sold as malting barley, may be reduced by the cost incurred
for any conditioning required to improve the quality of production
so that it is marketable as malting barley, provided the failure of
such production to meet these standards is due to insurable causes.
(e) No reduction in the production to count or the additional
value price election will be allowed for moisture content, damage
due to uninsured causes; costs or reduced value associated with
drying, handling, processing, or quality factors other than those
contained in section 4(a)(2) of this Option; or any other costs
associated with normal handling and marketing of malting barely.
(f) All grade and quality determinations must be based on the
results of objective tests. No indemnity will be paid for any loss
established by subjective tests. We may obtain one or more samples
of the insured crop and have tests performed at an official grain
inspection location established under the U.S. Grain Standards Act
or laboratory of our choice to verify the results of any test. In
the event of a conflict in the test results, our results will
determine the amount of production to count.
5. In the event of loss or damage covered by this policy, we
will settle your claim by:
(a) Multiplying the insured acreage times your malting barley
production guarantee per acre;
(b) Multiplying the result in subsection (a) of this section
times your additional value price election per bushel;
(c) Multiplying the number of bushels of production to count
determined in accordance with sections 4(a) and (b) of this Option
times your elected additional value price per bushel;
(d) Multiplying the production to count determined under section
4(c) of this Option times the additional value price per bushel
determined in section 4(d) of the Option;
(e) Adding the results of subsections (c) and (d) of this
section;
(f) Subtracting the result of subsection (e) of this section
from the result in subsection (b); and
(g) Multiplying the result of subsection (f) of this section
times your share.
6. For example, assume you insure two units of barley under the
Small Grains Crop Provisions in which you have a 100% share and that
are planted to approved malting varieties. Assume the following:
(a) Each unit contains 40 acres;
(b) You have sold an average of 20 bushels per acre of malting
barley for each of the last 6 years;
(c) You have selected the 70 percent coverage level;
(d) Your production guarantee under the Small Grains Crop
Provisions and the APH regulations for feed barley is 30 bushels per
acre;
(e) Your total production from all units under the Small Grains
Crop Provisions is
[[Page 8857]]
1,000 bushels, all of which fails to meet the quality standards
specified by this Option. Two hundred bushels are sold for malting
purposes after conditioning. Conditioning costs are $0.05 per
bushel; and
(f) Your additional value price election is $0.40 per bushel.
Your malting barley production guarantee is 1120.0 bushels (the
lesser of 20 or 30 x 70 percent coverage level x 80 acres). The
value of your production guarantee is $448.00 (1120 bushels x $0.40
per bushel). Your production to count is 200 bushels. The value of
your production to count is $70.00 (200 bushels x $0.35 ($0.40--
$0.05)). Your indemnity for the malting barley unit is $378.00
(($448.00--$70.00) x 100 percent share). Any remaining loss is paid
under the Small Grains Crop Provisions for feed barley.
Option B--(Available for Producers of Contracted Production Only)
This option provides coverage for malting barley production and
quality losses at a price per bushel greater than that offered under
the Small Grains Crop Provisions provided you have a malting barley
contract.
1. If you elect this option you must provide us a copy of your
malting barley contract on or before the acreage reporting date. All
terms and conditions of the contract, including the contract price
or futures contract premium price, must be specified in the contract
and be effective on or before the acreage reporting date. If you
fail to timely provide the contract, or any terms are omitted, we
may elect to determine the relevant information necessary for
insurance under this Option (B), or deny liability. Only contracted
production or acreage is covered by this Option (B).
2. Your malting barley guarantee per acre will be the lesser of:
(a) The production guarantee for feed barley for acreage planted
to approved malting barley varieties calculated in accordance with
the Small Grains Crop Provisions and APH regulations; or
(b) The number of bushels obtained by:
(1) Dividing the number of bushels of contracted production by
the number of acres planted to approved malting varieties in the
current crop year; and
(2) Multiplying the result by the percentage for the coverage
level you elected under the Small Grains Crop Provisions.
3. The additional value price election per bushel will be the
lesser of, as applicable:
(a) The guaranteed sale price per bushel established in the
malting barley contract (without regard to discounts or incentives
that may apply) minus the maximum price election for feed barley; or
(b) The premium price per bushel (without regard to discounts or
incentives) if the sale price is based on a future market price as
specified in the malting barley contract.
Under no circumstances will the additional value price election
per bushel exceed $2.00 per bushel.
4. The amount of production to count against your malting barley
production guarantee will be determined as follows:
(a) Production to count will include all:
(1) Appraised production determined in accordance with sections
11(c)(1) (i) and (ii) of the Small Grains Crop Provisions;
(2) Harvested production and potential unharvested production
that meets, or would meet if properly handled, the minimum
acceptance standards contained in the malting barley contract for
protein, plump kernels, thin kernels, germination, blight damage,
mold injury or damage, sprout damage, frost injury or damage, and
mycotoxins or other substances or conditions identified by the Food
and Drug Administration or other public health organization of the
United States as being injurious to human health, or the following
quality standards as applicable:
------------------------------------------------------------------------
Six-rowed malting Two-rowed malting
barley barley
---------------------------------------
(percent) (percent)
------------------------------------------------------------------------
Protein (dry basis)............. 14.0 maximum...... 14.0 maximum
Plump kernels................... 65.0 minimum...... 75.0 minimum
Thin kernels.................... 10.0 maximum...... 10.0 maximum
Germination..................... 95.0 minimum...... 95.0 minimum
Blight damaged.................. 4.0 maximum....... 4.0 maximum
Injured by mold................. 5.0 maximum....... 5.0 maximum
Mold damaged.................... 0.4 maximum....... 0.4 maximum
Sprout damaged.................. 1.0 maximum....... 1.0 maximum
Injured by frost................ 5.0 maximum....... 5.0 maximum
Frost damaged................... 0.4 maximum....... 0.4 maximum
------------------------------------------------------------------------
(3) Harvested production that does not meet the quality
standards contained in section 4(a)(2) of this Option, but is
accepted by a buyer for malting purposes. For such production, the
production to count may be reduced or the price used to settle the
claim may be adjusted in accordance with sections 4 (b), (c), and
(d) of this Option.
(b) The quantity of production that initially fails any quality
standard contained in section 4(a)(2), but is sold as malting barley
(except production included in section 4(c)), may be reduced as
described in this subsection, provided the failure of such
production to meet these standards is due to insurable causes. The
production to count of production sold under section 4(a)(3) will be
determined by:
(1) Adding the maximum barley price election under the Small
Grains Crop Provisions and the maximum additional value price;
(2) Dividing the result of paragraph (1) by the price per bushel
received for the damaged production; and
(3i) Multiplying the result of paragraph (2) (not to exceed
1.000) by the number of bushels of damaged production.
(c) The production to count for production that initially fails
any quality standard contained in section 4(a)(2), sold as malting
barley, but is conditioned before the sale will not be reduced under
section 4(b). Such production will be considered separately from all
other production to count. (See section 5(d).)
(d) The additional value price election per bushel used to
determine the value of the production to count for production that
initially fails any quality standard contained in section 4(a)(2),
but is sold as malting barley, may be reduced by the cost incurred
for any conditioning required to improve the quality of production
so that it is marketable as malting barley, provided the failure of
such production to meet these standards is due to insurable causes.
(e) No reduction in the production to count or the additional
value price election will be allowed for moisture content, damage
due to uninsured causes; costs or reduced value associated with
drying, handling, processing, or quality factors other than those
contained in section 4(a)(2) of this Option; or any other costs
associated with normal handling and marketing of malting barely.
(f) All grade and quality determinations must be based on the
results of objective tests. No indemnity will be paid for any loss
established by subjective tests. We may obtain one or more samples
of the insured crop and have tests performed at an official grain
inspection location established under the U.S. Grain Standards Act
or laboratory of our choice to verify the results of any test. In
the event of a conflict in the test results, our results will
determine the amount of production to count.
5. In the event of loss or damage covered by this policy, we
will settle your claim by:
(a) Multiplying the insured acreage times your malting barley
production guarantee per acre;
(b) Multiplying the result in subsection (a) of this section
times your additional value price election per bushel;
(c) Multiplying the number of bushels of production to count
determined in accordance with sections 4 (a) and (b) of this Option
times your elected additional value price per bushel;
(d) Multiplying the production to count determined under section
4(c) of this Option times the additional value price per bushel
determined in section 4(d) of the Option;
(e) Adding the results of subsections (c) and (d) of this
section;
(f) Subtracting the result of subsection (e) of this section
from the result in subsection (b); and
(g) Multiplying the result of subsection (f) of this section
times your share.
6. For example, assume you insure two units of barley under the
Small Grains Crop Provisions in which you have a 100% share and that
are planted to approved malting varieties. Assume the following:
(a) Each unit contains 40 acres;
(b) You have a contract for the sale of 2500 bushels of malting
barley;
(c) You have selected the 70 percent coverage level;
(d) Your production guarantee under the Small Grains Crop
Provisions and the APH regulations for feed barley is 35 bushels per
acre;
(e) Your total production from all units under the Small Grains
Crop Provisions is 1,000 bushels, all of which fails to meet the
quality standards specified by this Option.
[[Page 8858]]
Two hundred bushels are sold for malting purposes after conditioning.
Conditioning cost $0.05 per bushel; and
(f) Your additional value price election is $0.60 per bushel.
Your malting barley production guarantee is 1750.0 bushels (the
lesser of 35 or 21.875 (2500 contracted bushels 80 acres x
70 percent coverage) x 80 acres). The value of your production
guarantee is $1050.00 (1750 bushels x $0.60 per bushel). Your
production to count is 200 bushels. The value of your production to
count is $110.00 (200 bushels x $0.55 ($0.60--$0.05)). Your
indemnity for the malting barley unit is $940.00 (($1050.00--
$110.00) x 100 percent share). Any remaining loss is paid under the
Small Grains Crop Provisions for feed barley.
Done in Washington, D.C., on March 1, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-5383 Filed 3-4-96; 1:01 pm]
BILLING CODE 3410-FA-P
Complete official Federal Register PDF
FR Doc. 96-5243 Lead; Requirements for Disclosure of Known Lead-Based Paint and/ or Lead-Based Paint Hazards in Housing
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 9064-9088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5243]
[[Page 9063]]
_______________________________________________________________________
Part VIII
Department of Housing and Urban Development
Environmental Protection Agency
_______________________________________________________________________
24 CFR Part 35
40 CFR Part 745
Lead; Requirements for Disclosure of Known Lead-Based Paint and/or
Lead-Based Paint Hazards in Housing; Final Rule
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules
and Regulations
[[Page 9064]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 35
RIN 2501-AB58
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 745
[OPPTS-62130A; FRL-5347-9]
RIN 2070-AC75
Lead; Requirements for Disclosure of Known Lead-Based Paint and/
or Lead-Based Paint Hazards in Housing
Agencies: Department of Housing and Urban Development (HUD) and the
Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: As a result of past Federal, State, and local efforts to
reduce lead in the environment, the percentage of children with
elevated levels of lead in their blood has declined considerably over
the last 20 years. Approximately 1.7 million children, however, still
have blood-lead levels high enough to raise health concerns. Studies
suggest that lead exposure from deteriorated residential lead-based
paint, contaminated soil, and lead in dust are among the major existing
sources of lead exposure among children in the United States. Section
1018 of the Residential Lead-Based Paint Hazard Reduction Act of 1992
directs EPA and HUD to jointly issue regulations requiring disclosure
of known lead-based paint and/or lead-based paint hazards by persons
selling or leasing housing constructed before the phaseout of
residential lead-based paint use in 1978. Under that authority, EPA and
HUD are establishing the following requirements: (1) Sellers and
lessors of most residential housing built before 1978 must disclose the
presence of known lead-based paint and/or lead-based paint hazards in
the housing; (2) sellers and lessors must provide purchasers and
lessees with any available records or reports pertaining to the
presence of lead-based paint and/or lead-based paint hazards; (3)
sellers and lessors must provide purchasers and lessees with a
federally approved lead hazard information pamphlet; (4) sellers must
provide purchasers with a 10-day opportunity to conduct a risk
assessment or inspection for the presence of lead-based paint and/or
lead-based paint hazards before the purchaser is obligated under any
purchase contract; (5) sales and leasing contracts must include certain
disclosure and acknowledgment language; and (6) agents must ensure
compliance with these requirements. These provisions ensure that
families receive both specific information on the housing's lead
history and general information on lead exposure prevention. With this
information, consumers can make more informed decisions concerning home
purchase, lease, and maintenance to protect their families from lead
hazard exposure.
DATES: Effective date: March 6, 1996 except for 24 CFR 35.88, 35.90,
35.92, and 35.94 and 40 CFR 745.107, 745.110, 745.113, and 745.115
which contain information collection requirements that have not been
approved by OMB. Once OMB has approved these information collection
requirements, EPA and HUD will publish a document giving notice of the
effective date and adding the OMB approval number to 24 CFR part 35 and
40 CFR part 9.
The requirements in this final rule are applicable in the following
manner: (1) For owners of more than four residential dwellings, the
requirements are applicable on September 6, 1996 and (2) For owners of
one to four residential dwellings, the requirements are applicable on
December 6, 1996.
FOR FURTHER INFORMATION CONTACT: For general information or to obtain
copies of the final rule, pamphlet, or background materials, contact
the National Lead Information Clearinghouse (NLIC), toll free, at (800)
424-LEAD or fax requests to the NLIC at (202) 659-1192. Copies of the
final rule, a brief question-and-answer document, and the pamphlet
Protect Your Family From Lead In Your Home, are available on the
Internet at the National Safety Council's gopher at cais.com and on the
World Wide Web at http://www.nsc.org/nsc/ehc/ehc.html. For technical
information: At HUD, contact Conrad C. Arnolts, Office of Lead-Based
Paint Abatement and Poisoning Prevention, Department of Housing and
Urban Development, 451 7th St., SW., Washington, DC 20410, Telephone:
(202) 755-1810, E-mail: [email protected] (use underscore
characters), or John B. Shumway, Office of General Counsel, Telephone:
(202) 708-9988, E-mail: John--B.--S[email protected] (use underscore
characters). Persons who are hearing impaired may access these
telephone numbers by calling the Federal Information Relay Service at
1-800-877-TDDY.
At EPA, contact Charles Franklin, Chemical Management Division,
Office of Pollution Prevention and Toxics, Environmental Protection
Agency, 401 M St., SW., Washington, DC 20460, Telephone: (202) 260-
1781, E-mail: [email protected].
For general information or to obtain copies of the final rule,
pamphlet, or background materials, contact the National Lead
Information Clearinghouse (NLIC), toll free, at (800) 424-LEAD or fax
requests to the NLIC at (202) 659-1192.
Copies of the final rule, a brief question-and-answer document, and
the pamphlet Protect Your Family From Lead In Your Home, are available
on the Internet at the National Safety Council's gopher at cais.com and
on the World Wide Web at http://www.nsc.org/nsc/ehc/ehc.html.
SUPPLEMENTARY INFORMATION:
I. Authority
This final rule is issued under the authority of section 1018 of
the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42
U.S.C. 4852d). The Residential Lead-Based Paint Hazard Reduction Act is
Title X of the Housing and Community Development Act of 1992, Pub. L.
102-550.
II. Background
A. Legal Background
Congress passed the Residential Lead-Based Paint Hazard Reduction
Act of 1992 (hereafter referred to as Title X or the Act) to address
the need to control exposure to lead-based paint hazards. In addition
to amending the Toxic Substances Control Act (TSCA) and the Lead-Based
Paint Poisoning Prevention Act (LBPPPA), Title X established the
infrastructure and standards necessary to reduce lead-based paint
hazards in housing. Within this law, Congress recognized lead poisoning
as a particular threat to children under age 6 and emphasized the needs
of this vulnerable population (section 1003 of Title X).
Section 1018 of Title X requires EPA and HUD to promulgate joint
regulations for disclosure of any known lead-based paint or any known
lead-based paint hazards in target housing offered for sale or lease.
(Target housing is defined in section 1004(27) of Title X, section
401(17) of TSCA, and is discussed in Unit IV.C. of this preamble.)
Specifically, section 1018 requires the following activities before a
purchaser or lessee is obligated under a contract to purchase or lease
target housing: (1) Sellers and lessors must provide purchasers and
lessees with a lead hazard information pamphlet, as developed under
section 406(a) of TSCA; (2) sellers and lessors must
[[Page 9065]]
disclose the presence of known lead-based paint and/or lead-based paint
hazards in such housing and provide purchasers and lessees with any
lead hazard evaluation report available to the seller or lessor; (3)
sellers must permit purchasers a 10-day opportunity to conduct a risk
assessment or inspection for the presence of lead-based paint hazards;
and (4) sales contracts must include an attached Lead Warning Statement
and acknowledgment, signed by the purchaser.
Violation of section 1018 may result in civil and criminal
penalties and potential triple damages in a private civil suit.
Section 1018 mandated that EPA and HUD promulgate these
requirements no later than 2 years after the date of enactment of Title
X (October 28, 1994), to take effect 3 years after enactment of Title X
(October 28, 1995). Due to promulgation delays, EPA and HUD have
revised the effective date provisions for this rule.
This rule represents one of a broad range of interrelated lead
exposure reduction activities mandated under Title X. Many of these
other activities support and affect the development of the section 1018
rule. Several of the activities most closely related to the disclosure
requirements are briefly discussed below.
The statutory provision most closely tied to section 1018 is
section 406(a) of TSCA. Section 406(a) directs EPA to develop and
publish, after notice and comment, a lead hazard information pamphlet
on lead-based paint hazards in the home. EPA developed the pamphlet in
consultation with HUD, the Centers for Disease Control and Prevention
(CDC), and the Consumer Product Safety Commission (CPSC), which has
joined as a co-sponsor of the pamphlet. EPA issued a notice of
availability in the Federal Register of August 1, 1995 (60 FR 39167),
to announce the pamphlet's completion. As mandated under section 1018
of Title X, this lead hazard information pamphlet must be given to
purchasers and lessees of target housing.
Under section 403 of TSCA, EPA is charged with issuing regulations
that identify lead-based paint hazards, lead-contaminated dust, and
lead-contaminated soil, based on the definitions provided in section
401 of TSCA. In July 1994, EPA released an interim guidance document to
provide public and private decisionmakers with guidance on identifying
and prioritizing lead-based paint hazards for control before the
issuance of the final section 403 standards. EPA subsequently issued
the interim guidance document in the Federal Register of September 11,
1995 (60 FR 47248). EPA is in the process of developing the proposed
section 403 standards.
Section 402 of TSCA directs EPA (in consultation with HUD, the
Department of Labor (DOL), and the Department of Health and Human
Services (HHS)) to promulgate regulations on accreditation of training
programs and training and certification of individuals and contractors
engaging in lead-based paint evaluation and reduction activities. This
section also requires that EPA, in consultation with the above
agencies, develop standards for performance of such lead-based paint
evaluation and reduction activities. EPA issued the proposed section
402 rule on September 2, 1994 (59 FR 45872), and expects to issue the
final rule shortly. Under the section 1018 disclosure requirements
issued today, available reports resulting from such evaluation and
reduction activities must be provided to the purchaser or lessee.
Pursuant to sections 1012 and 1013 of Title X, HUD is drafting
regulations setting out procedures for all federally owned residential
property and housing receiving Federal assistance. These procedures
concern occupant notification as well as evaluation (such as inspection
and risk assessment) and reduction (such as interim controls and
abatement) of lead-based paint and/or lead-based paint hazards. The
regulations implementing sections 1012 and 1013 will not address the
provision of a lead hazard information pamphlet to new purchasers and
lessees of target housing, nor any of the other requirements under
section 1018. HUD will release these regulations in proposed form as
soon as possible for public comment.
Pursuant to section 1015 of Title X, HUD and EPA established a Task
Force on Lead-Based Paint Hazard Reduction and Financing, made up of
private and public organizations representing the spectrum of interests
affected by the lead-based paint issue. The Task Force developed
recommendations on evaluating and reducing lead-based paint hazards in
private housing. The Task Force released its recommendations on July
11, 1995, in a report entitled Putting the Pieces Together: Controlling
Lead Hazards in the Nation's Housing. A copy of this report has been
entered into the public record for this rule.
Pursuant to section 1017 of Title X, HUD and EPA, in cooperation
with other Federal Agencies, have revised HUD's guidelines for lead-
based paint hazard evaluation and reduction activities. These revised
guidelines, entitled Guidelines for the Evaluation and Control of Lead-
Based Paint Hazards in Housing (hereafter referred to as the ``HUD
Guidelines''), were released to the public in June 1995. A copy of the
HUD Guidelines is included in the public record for this rule.
B. Lead Poisoning in the United States
Lead affects virtually every system of the body. While it is
harmful to individuals of all ages, lead exposure can be especially
damaging to children, fetuses, and women of childbearing age. As recent
studies have identified previously unrecognized effects, there has been
increasing concern about blood-lead levels once thought to be safe.
Since 1978, CDC has lowered the blood-lead level of concern from 60
g/dL (micrograms per deciliter) to 10 g/dL (Ref. 2).
Lead poisoning has been called ``the silent disease'' because its
effects may occur gradually and imperceptibly, often showing no obvious
symptoms. Blood-lead levels as low as 10 g/dL have been
associated with learning disabilities, growth impairment, permanent
hearing and visual impairment, and other damage to the brain and
nervous system. In large doses, lead exposure can cause brain damage,
convulsions, and even death. Lead exposure before or during pregnancy
can also alter fetal development and cause miscarriages.
In 1991, the Secretary of HHS characterized lead poisoning as the
``number one environmental threat to the health of children in the
United States'' (Ref. 1). Although the percentage of children with
elevated blood-lead levels has declined over the last 20 years,
millions of U.S. children still have blood-lead levels high enough to
threaten their health (Ref. 1). The Third National Health and Nutrition
Examination Survey (NHANES III) indicates that over the past two
decades, the average child's blood-lead level has decreased from 12.8
g/dL to 2.8 g/dL (Ref. 8). NHANES III also indicates,
however, that in 1991 approximately 1.7 million U.S. children under the
age of 6 still had blood-lead levels that exceeded the CDC 10
g/dL level of concern (Ref. 8).
C. Hazards from Past Uses of Lead-Based Paint
Efforts to reduce exposure to lead from sources like gasoline and
food cans have played a large role in the past reductions of blood-lead
levels in the United States. Despite these successes, a significant
human health hazard remains from improperly managed lead-based paint.
From the turn of the
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century through the 1940's, paint manufacturers used lead as a primary
ingredient in many oil-based interior and exterior house paints. Usage
gradually decreased through the 1950's and 1960's, as largely lead-free
latex paints became more popular. Although the CPSC banned lead-based
paints from residential use in 1978 (currently, paints may not have
greater than 0.06 percent lead by weight (Ref. 3)), EPA and HUD
estimate that 83 percent of the privately owned housing units built in
the United States before 1980 contain some lead-based paint. By these
estimations, approximately 64 million homes may contain lead-based
paint that may pose a hazard to the occupants if not managed properly
(Ref. 4).
Lead from exterior house paint can flake off or leach into the soil
around the outside of a home, contaminating children's playing areas.
Dust caused during normal lead-based paint wear (especially around
windows and doors) can create a hard-to-see film over surfaces in a
house. In some cases, cleaning and renovation activities can increase
the threat of lead-based paint exposure by dispersing fine lead dust
particles in the air and over accessible household surfaces. If managed
improperly, both adults and children can receive hazardous exposures by
inhaling the fine dust or by ingesting paint dust during hand-to-mouth
activities. Children under age 6 are especially susceptible to lead
poisoning (Ref. 2).
III. Summary of Proposed Rule and Public Comments
Under the authority of Title X, EPA and HUD issued a proposed rule
in the Federal Register of November 2, 1994 (59 FR 54984). The proposed
rule described the basic approach for implementing the requirements
under section 1018, including draft regulatory text, definitions, and
standardized form language for use in all transactions. In many cases,
EPA and HUD also included a range of options for implementing the rule
along with requests for comment on specific implementation issues.
In response to the proposed rule, identified by docket number
OPPTS-62130A, EPA and HUD received responses from 198 commenters during
the 60-day comment period. The largest number of responses
(approximately 25 percent) came from the real estate industry. Other
commenter groups included representatives from the banking/financial
industry (9 percent), letters from State and local officials involved
with public health or environmental protection (8 percent), comments
from advocacy groups (8 percent), letters from attorneys representing
various groups (9 percent), and concerned private citizens (23
percent). Approximately 10 percent of the responses came from education
officials, housing authorities, and groups involved with real estate
development and construction. The paragraphs that follow briefly
describe some of the key areas that were addressed by the commenters.
A number of comments addressed the scope and applicability of the
rule. Commenters discussed a range of transaction types for specific
exclusion or inclusion.
While numerous comments addressed the various definitions contained
in the rule, most suggestions involved revisions and modifications to
existing terms as opposed to requests that additional terms be defined.
A prevalent theme was consistency of terminology across different rules
such as those for sections 402, 404, and 406 of TSCA.
Comments concerning the disclosure requirement targeted issues such
as the scope of disclosed information; the precise stage at which
disclosures should be made; recordkeeping parameters; and the ways in
which common areas of multi-unit buildings will be affected by
disclosure.
The lead hazard information pamphlet requirements generated
comments in the following three categories: strategies for States and
tribes (hereafter, all references to States include Indian tribes) with
their own notification materials; making the pamphlet available in
other languages; and requests for more varied and active distribution
strategies.
The proposed disclosure and acknowledgment form generated requests
for simplification and availability in non-English languages. Some
suggestions involved revising portions of the Lead Warning Statement.
The section of the proposed rule that received the most comments
concerned the proposed 10-day evaluation period. Of particular concern
were the commencement and length of the evaluation period; the
practical availability of certified inspectors or risk assessors to do
the testing; and the practicality and logistics of obligating
purchasers to provide a report to sellers.
Other topics that elicited some comment included the role of the
agent, the effective date of the rule, and potential penalties for
noncompliance.
A more complete summary of the comments received, along with EPA's
and HUD's responses, is available in the public record for this
rulemaking.
IV. Final Rule Provisions and Key Comments Addressed
EPA and HUD have revised the proposed rule to reflect the Agencies'
desire to maximize the rule's clarity, flexibility, consistency with
other Federal activities, and consistency with existing real estate
practice. These goals are important considerations to ensure quick and
widespread implementation of the rule.
In particular, many of the changes to the final rule fall into five
general categories. These areas include: (1) Clarifications of the
rule's applicability, (2) modification of key definitions, (3)
establishment of a clear and common sense disclosure process, (4)
development of a concise disclosure record, and (5) development of a
flexible framework for the 10-day evaluation period.
Throughout the preamble for this final rule, there are citations to
24 CFR part 35 and 40 CFR part 745. These references reflect the
location that the final regulatory text will occupy in the Code of
Federal Regulations (CFR) following the rule's promulgation. EPA and
HUD are adding this final joint EPA/HUD regulation to both titles to
ensure that the public can easily locate the requirements. Where the
preamble references the actual rule language, therefore, it will
regularly include references to the requirements as they appear in each
title. While the requirements are identical, in some cases the
nomenclature for the two titles may be slightly different.
A. Clarifying the Rule's Scope and Applicability
Section 1018 mandated that the rule apply to sales and leases of
target housing. The proposed rule also discussed certain unique types
of housing transactions that deserved special attention in implementing
the regulations. For example, the preamble of the proposed rule
explained the rule's exclusion of the following from the statutory
definition of target housing: housing built after 1977, housing for the
elderly, housing for the disabled, 0-bedroom dwellings, and commercial
lodging. Many commenters recommended that the regulatory text of the
final rule clearly designate types of transactions that are included
and excluded.
EPA and HUD have expanded the scope and applicability section of
the regulatory text to better define the rule's impact on certain types
of transactions. Below is a brief discussion of the unique transactions
addressed under the scope and applicability section and the
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rationale for including or excluding them.
1. Transactions to sell properties at foreclosure. The final rule
retains the exclusion for foreclosure sales presented in the proposed
rule. While some commenters opposed exempting foreclosure transactions
due to the lack of protection for the purchaser, EPA and HUD believe
that the circumstances typically surrounding foreclosure transactions
make pre-sale disclosure and evaluation unworkable and impractical.
Access to properties during foreclosure proceedings is often limited,
making evaluations impossible. Such properties typically are sold on an
``as is'' basis with regard to all structural and environmental
factors. Further, these transactions do not necessarily involve direct
interaction between the property owner and the purchaser, and the
mortgage holder or trustee is unlikely to have information on the
presence of lead-based paint and/or lead-based paint hazards. In light
of these circumstances, EPA and HUD believe that it would be
inappropriate to extend Federal disclosure and evaluation requirements
to foreclosure transactions.
This exclusion does not apply, however, to the sale of housing
originally acquired through a foreclosure sale and subsequently resold
(an expansion of the exclusion recommended by some commenters). In such
cases, EPA and HUD believe that the rule's provisions can be
incorporated into the sales process since many of the extenuating
circumstances of foreclosure sales no longer apply.
2. Rental housing found to be free of lead-based paint. The final
rule exempts from coverage leasing transactions involving target
housing that is free of lead-based paint, as determined by a certified
inspector. For the purposes of this rule, EPA and HUD have defined
``lead-based paint free'' as the absence of paint with lead levels
above those provided in Title X.
In addition to receiving support by many public commenters, this
exclusion was recommended by the Task Force on Lead Hazard Reduction
and Financing. EPA and HUD strongly encourage the concept of lead-based
paint evaluation in rental housing. Evaluations can help lessors to
detect the presence of lead-based paint and to determine whether
certain management practices and occupant education efforts are
necessary. Where evaluations discover lead-based paint, such results
will provide lessors and/or lessees with the information necessary to
take appropriate hazard reduction steps. EPA and HUD also believe that
the exemption will provide a valuable incentive to building owners to
conduct inspections and remove lead-based paint where present.
Under the provisions of the regulation, disclosure during rental
transactions is limited to the disclosure of known lead-based paint
and/or lead-based paint hazards, provision of available records and
reports, provision of a lead hazard information pamphlet, and creation
and retention of lead warning and acknowledgment language. These
activities provide substantially fewer benefits in cases where reliable
information indicates that the housing is lead-based paint free. At the
same time, EPA and HUD expect that the exemption for lead-based paint
free units will not dissuade many lessors from providing their
inspection reports to prospective lessees on a voluntary basis. Given
the value that lead-safe housing would have to an informed consumer,
EPA and HUD expect that owners will see a great benefit in informing
lessees of the housing's lead-based paint free status.
Because of the distinct disclosure obligations the statute imposes
on sellers, obligations that purchasers assume upon purchase of the
housing, EPA and HUD are not allowing the lead-based paint free
exemption for sales transactions. Unlike lessees, purchasers take on
new obligations to comply with the disclosure provisions during all
subsequent sales or leasing transactions. Exempting sales transactions
could disrupt the flow of information from owner to owner regarding the
status of the target housing and the purchaser's potential disclosure
obligations. Further, Title X guarantees purchasers more than just
known information and available reports. Title X guarantees each
purchaser the opportunity to conduct an evaluation for lead-based paint
and/or lead-based paint hazards, regardless of the information
disclosed by the seller. Exempting sales transactions based on the
information in the possession of the seller would deny the purchaser
that evaluation right. While many purchasers will accept the seller's
information and waive their evaluation opportunity (especially if the
seller provides an evaluation by a certified inspector), some
purchasers may prefer to have their own evaluation performed.
Because the Federal training and certification program will not
take effect until some time after the effective date of this rule, EPA
and HUD recognize the need for a process to allow property owners to
seek exclusions for lead-based paint free housing in States without
federally authorized certification programs. In the interim period
before the Federal certification program (to be issued under subpart L
of 40 CFR part 745) takes effect, inspectors qualified under any
existing State certification program, and using State-approved methods,
are considered qualified to conduct inspections for the purpose of
determining whether housing is lead-based paint free. In States without
existing certification programs, lessors may use the services of
inspectors certified in other States. Once the Federal or federally
authorized State certification program has taken effect in a particular
State, however, this interim provision will expire and subsequent
inspections for the purposes of this exclusion will have to be
performed by inspectors with Federal or federally authorized State
certification.
Some commenters asked whether lessors hoping to meet the lead-free
exemption could correct for possible false (or outdated) positive
findings during lead-based paint inspections. The lessor always retains
the option of having additional tests performed by certified
inspectors. Nothing in either the law or the regulation is intended to
revoke or restrict that right. An additional test can sometimes clarify
whether or not lead-based paint is present. For example, if a lessor
believed that a previous inspection had rendered a false-positive
result (all measurement techniques involve some small degree of
sampling and analytical error), the lessor could choose to have a
certified inspector retest the area in question. If the additional
testing by a certified inspector indicated that the initial positive
results were false (i.e., that there was in fact no lead-based paint
present), then the lessor would qualify for the lead-based paint free
exemption. Similarly, suppose a lessor first had a test done in 1982
using an X-ray fluorescence (XRF) device that indicated the presence of
lead-based paint. Because testing procedures were less reliable at that
time (standard practice often failed to consider the effect of the
substrate underneath the paint on the accuracy of the measurement and
instrument calibration checks were often deficient), the lessor might
choose to conduct a new test using the improved methodology available
today. If this second test indicated that lead-based paint was not
present, then the lessor would qualify for the lead-based paint free
exemption. As a third example, a lessor who had all lead-based paint
removed from a rental property following an earlier inspection could
choose to have a new inspection or
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clearance examination conducted on the abated property. If the new
information indicated that lead-based paint was no longer present, then
the lessor would qualify for the lead-based paint free exemption. In
all three cases, if the second test confirmed the original findings, or
if the test was not conducted by a certified inspector, the exemption
would not be available.
3. Short-term leases of 100 days or less. Many commenters
recommended that the final rule clarify the distinction between short-
term lodgings and longer term residential housing. The final rule
addresses these comments by excluding housing transactions involving
leasing agreements of 100 days or less, where no lease renewal or
extension can occur. This time period is intended to capture all
leasing transactions of 3 months or less, while providing several
additional days to allow flexibility in the transaction. Building upon
the logic discussed in the proposed rule, the final rule's short-term
lease exclusion captures most seasonal vacation rentals and hotel and
motel transactions, as well as other forms of short-term lodging.
During such transactions, which are typified by short stays and quick
occupant turnover, EPA and HUD believe that the disclosure provisions
are impractical and counter to Congressional intent. The notification
requirements of this rule would apply to vacation rentals in cases
where the stay extends beyond a 100-day period. Under such
circumstances, EPA and HUD believe that the potential for occupant
exposure to lead-based paint and/or lead-based paint hazards merits the
disclosure of information required by the rule, regardless of whether
the stated purpose of the lease is temporary or permanent housing.
In addition, EPA and HUD have placed a limitation on extensions and
renewals of such short-term leases to ensure that month-to-month
leasing transactions remain covered by the final rule. Commenters noted
that many rental transactions incorporate an open-ended month-to-month
leasing agreement. These transactions will still be covered by the
final rule unless the parties establish in advance that the term of
rental will be no longer than 100 days. In an open-ended month-to-month
lease arrangement, for example, the rule still applies since the
leasing agreement fails to limit the lease term to 100 days or less,
i.e., the lease agreement could possibly be extended beyond 100 days.
If both parties wish to extend a previously exempted short-term lease
beyond the 100-day limit, all provisions of this rule must be satisfied
in full before any such ``extension'' occurs.
4. Lease renewals. The final rule does not require repeated
disclosure during the renewal of existing leases in which the lessor
has previously disclosed all information required under 24 CFR 35.88
and 40 CFR 745.107 and where no new information has come into the
possession of the lessor. As stated in the proposed rule, EPA and HUD
do not believe that duplicative disclosure provides significant
benefits.
Several commenters noted that in many residential leasing
transactions, leasing arrangements switch to month-to-month ``at-will''
arrangements after an initial period of occupancy. In such cases, the
leasing arrangement may continue indefinitely without any ``renewal
process.'' Under such circumstances, EPA and HUD interpret renewal to
occur at the point when the parties agree to a significant written
change in the terms of the lease, such as a rental rate adjustment.
Following such alteration of terms, the disclosure requirements apply
to any new information obtained subsequent to the original disclosure.
5. The purchase, sale, or servicing of mortgages. The final rule
does not cover, and was never intended to cover, the purchase, sale, or
servicing of mortgages. During the comment period, many commenters
expressed concern that the proposed rule could be interpreted to hold
liable persons involved in the purchase, sale, or servicing of
mortgages where the title of the housing does not change hands as part
of the transaction.
6. The sale or lease of 0-bedroom dwellings. The final rule does
not apply to transactions involving 0-bedroom dwellings, in keeping
with the definition of ``target housing'' provided in section 1004 of
Title X. This definition, at the heart of the section 1018 provisions,
specifically excludes 0-bedroom dwellings of all types.
7. Informal rental agreements. In the proposed rule, EPA and HUD
proposed excluding ``informal rental agreements which do not involve a
lease'' (a phrase meant to capture oral leases) because ``such
arrangements, by virtue of their informality, make the administration
and enforcement of these requirements extremely difficult.'' EPA and
HUD have removed any implied exclusion for oral leases. In deciding not
to exclude such leases, EPA and HUD drew heavily upon the public
comments. Many of these comments suggested that the absence of a
written lease may not have bearing on the ``formality'' of the housing
arrangement. Commenters noted that oral leases make up a significant
portion of the housing arrangements in certain areas, especially those
that lack rental housing codes.
Further, although the absence of a written lease provides
challenges for certain Federal enforcement and compliance monitoring
approaches, EPA and HUD now believe that enforcement is possible. Other
evidence may exist, for example, to demonstrate that a leasing
agreement exists between two parties. Congress also provided lessees
with opportunities for redress under its civil penalty provisions at
section 1018(b)(3). These safeguards are not dependent upon Agency
actions and therefore should not be constrained by EPA and HUD
limitations.
EPA and HUD have also considered policy reasons for not excluding
oral leases. First, EPA and HUD are sympathetic to commenter concerns
that an explicit exclusion for oral leasing transactions could create
incentives for lessors to avoid written leases. If the rule's exclusion
were to indirectly discourage the use of written leases, lessees would
lose both their right to information on lead-based paint poisoning
prevention and the many other protections afforded by written leases.
Commenters also noted that a disproportionate number of oral
transactions occur in low-income, disadvantaged communities. These
communities are already at greater risk of exposure to lead-based paint
hazards.
Nevertheless, while the final rule does not provide an explicit
exclusion for oral leasing arrangements, EPA and HUD expect that many
oral lease transactions may be excluded for other reasons (length of
arrangements, rental of 0-bedroom dwelling, etc.).
B. Effective Date
In the proposed rule, EPA and HUD requested comment on the issue of
extending the effective date for the final rule beyond October 28,
1995, in light of the promulgation delays. EPA and HUD noted Congress'
inclusion of a 1-year window between the statutory promulgation
deadline and the statutorily mandated effective deadline. EPA and HUD
received comments in support of and in opposition to an extension.
Commenters opposed to delaying the effective date generally argued
that any delay in implementation would increase the number of
preventable exposures to lead-based paint hazards. According to these
commenters, given the importance of educating consumers about their
options for reducing lead hazards, the positive effects of early
implementation outweigh the practical difficulties.
While agreeing that this rule addresses an important consumer
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protection and empowerment goal, EPA and HUD believe that the rule's
effective implementation requires an informed and prepared general
public and regulated community. EPA and HUD believe that a phase-in
period is necessary to provide adequate time for the real estate
industry, private lessors, and independent housing sellers and lessors
to become familiar with the rule requirements and to set up procedures
for compliance.
Sellers and lessors who own more than four residential dwellings
will have 6 months from the final rule's promulgation to implement full
disclosure during sales and leasing transactions. This phase-in
schedule ensures that all such property owners, sellers, lessors, and
agents will have adequate notice of the new requirements before they
take effect. Believing that property owners with four or fewer
dwellings are more likely to be non-professional sellers and lessors,
EPA and HUD are providing a 9-month phase-in period for such owners.
EPA and HUD encourage all sellers and lessors to begin voluntary
disclosure in advance of their relevant effective date.
EPA and HUD also received comments recommending delaying the
effective date until after EPA issues its standards for lead hazards in
paint, dust, and soil. These commenters stated that the regulated
community would be unable to disclose adequately the presence of lead-
based paint and lead-based paint hazards in the absence of Federal
standards.
EPA and HUD do not believe that this rule requires Federal lead
hazard standards to be effective. In section 1018, Congress mandated
that sellers and lessors disclose not just lead-based paint hazards but
also the presence of lead-based paint, a far more inclusive mandate
(since not all lead-based paint is necessarily a hazard).
Further, EPA and HUD expect that records will likely provide
purchasers and lessees with information on lead-based paint and, where
they exist, lead-based paint hazards. Accordingly, if records
pertaining to lead-based paint are fully disclosed, disclosure of lead-
based paint hazards should also be accomplished.
The statute and now this rule provide a clear definition for the
levels of lead in paint that constitute lead-based paint. The statute
also provides a qualitative definition of lead-based paint hazard,
including certain exposures to lead-based paint that is peeling or
chipping; lead-based paint that is on friction, impact, or chewable
surfaces; and lead-contaminated dust and soil.
EPA and HUD have augmented these definitions by providing guidance
on identifying lead hazards in paint, dust, and soil (60 FR 47248).
Regarding the need for guidance to help prospective purchasers and
lessees with the interpretation of disclosed information, EPA and HUD
believe that the statutory definition of ``lead-based paint hazard,''
combined with EPA's lead hazard guidance and the HUD Guidelines,
provides sellers, purchasers, lessors, and lessees with valuable
information for interpreting any disclosed information.
Some commenters have also recommended delaying the effective date
of the final rule until after the activation of the Federal standards
for training and certifying lead workers, being developed under section
402 of TSCA. After considering the comments and reexamining the
statute, EPA and HUD have determined that such a delay is unnecessary.
EPA and HUD believe that the HUD Guidelines will provide adequate
interim guidance for the evaluation and management of lead-based paint
hazards in target housing, prior to the release of the section 402
training and certification standards.
C. Definitions
EPA and HUD received comments on many of the proposed definitions.
Below is a brief discussion of the significant definitions being
promulgated under this final rule.
1. Agent means any party who enters into a contract with a seller
or lessor, including any party who enters into a contract with a
representative of the seller or lessor, for the purpose of selling or
leasing target housing. This term does not apply to purchasers or any
purchaser's representative who receives all compensation from the
purchaser.
EPA and HUD initially defined ``agent'' to be ``any party who
enters into a contract with a seller or lessor to represent the seller
or lessor for the purpose of selling or leasing target housing.''
Several commenters stated that the language in this definition was
needlessly vague. Listing agents typically enter into a contract with
the seller and represent the seller. ``Buyer'' agents, however, often
enter into a contractual relationship with a seller or the seller's
agent but may represent both the seller and the purchaser in the real
estate transaction. EPA and HUD have revised this definition so that
any party entering into a contractual relationship directly with the
seller or lessor (or indirectly with a representative of the seller or
lessor) for the purpose of selling or leasing the target housing, is an
``agent'' for the purposes of this rule. As a consequence, listing
agents, selling agents, and buyer agents (if paid by the seller or
through a cooperative brokerage agreement with the listing agent), are
``agents'' and are responsible for ensuring compliance under the rule.
Since section 1018 refers only to agents having entered into a contract
with the seller or lessor, buyer's agents paid entirely by the
purchaser are not considered ``agents'' under this rule.
2. Available means in the seller's or lessor's possession or
reasonably obtainable by the seller or lessor at the time of the
disclosure.
Section 1018(a)(1) requires that sellers and lessors provide the
purchasers and lessees with ``any lead hazard evaluation reports
available to the seller or lessor.'' EPA and HUD interpret available
lead hazard evaluation reports to mean records and reports that pertain
to lead-based paint and/or lead-based paint hazards in the target
housing and that are in the possession of the seller or lessor or that
are reasonably obtainable by the seller or lessor at the time of the
disclosure.
EPA and HUD expect that most sellers and lessors will retain copies
of relevant information in their possession along with other important
housing files (title, outstanding leases, etc.). In some cases,
however, the seller or lessor may no longer have possession of the
records but may have reasonable access to the information. Examples of
``reasonably obtainable'' records include records retained by a
separate or outside entity on behalf of the seller or lessor and copies
of reports retained by the original inspector or risk assessor that
would be available to the owner in cases where the original records
were destroyed or lost. The term ``reasonably obtainable'' is not
intended to impose an obligation on the seller or lessor to conduct
further evaluation of the housing.
3. Common area means a portion of a building generally accessible
to all residents/users including, but not limited to, hallways,
stairways, laundry and recreational rooms, playgrounds, community
centers, and boundary fences.
This definition is unchanged from the proposed rule. The term
``common area'' will be used in other TSCA Title IV regulations, some
of which may require a broader interpretation of common area. The final
rule provides one broadly interpreted term applicable under all of the
TSCA rules, to avoid the confusion of multiple rule-specific
definitions. Though several commenters recommended minor changes to
adjust the scope of the definition, EPA and HUD believe that other
regulatory
[[Page 9070]]
provisions adequately clarify the relevant scope of the term ``common
area'' as it relates to target housing.
4. Foreclosure means any of the various methods, statutory or
otherwise, known in different jurisdictions, of enforcing payment of a
debt, by the taking and selling of real property.
EPA and HUD added this definition in response to requests that the
final rule include a regulatory definition of the term. EPA and HUD
believe that this definition will help property owners determine the
applicability of the foreclosure exemption to their transactions.
Recognizing that different jurisdictions may have differing
interpretations of what constitutes ``foreclosure,'' EPA and HUD have
developed a general definition that provides flexibility to work within
established local laws and customs.
5. Housing for the elderly means retirement communities or similar
types of housing specifically designed for households composed of one
or more persons 62 years of age or more at the time of initial
occupancy.
In response to public comments, EPA and HUD have added a definition
for this term to the regulatory text. This definition is consistent
with the definition used by HUD's Supportive Housing for the Elderly
Program (See 24 CFR 277.1(f)). While some commenters recommended the
use of a ``55 years or older'' standard (as used to define ``older
person'' in the Fair Housing Act), HUD believes that the current
definition is more consistent with HUD's other programs for the
elderly.
6. Lead-based paint means paint or other surface coatings that
contain lead equal to or in excess of 1.0 milligram per square
centimeter or 0.5 percent by weight.
This term has been modified slightly from the language provided in
Title X and TSCA to retain consistency with the many HUD programs
already using the levels defined under section 302(c) of the Lead-Based
Paint Poisoning Prevention Act.
7. Lead-based paint free housing means target housing that has been
found to be free of paint or other surface coatings that contain lead
equal to or in excess of 1.0 milligram per square centimeter or 0.5
percent by weight.
EPA and HUD have added this definition in support of the provision
of the rule that allows rental transactions in ``lead-based paint
free'' rental housing to be excluded from the section 1018
requirements. EPA and HUD provide further discussion of this provision
in unit IV.A.2. of this preamble.
8. Lead-based paint hazard means any condition that causes exposure
to lead from lead-contaminated dust, lead-contaminated soil, or lead-
contaminated paint that is deteriorated or present in accessible
surfaces, friction surfaces, or impact surfaces that would result in
adverse human health effects as established by the appropriate Federal
agency.
This term, defined in section 1004 of Title X, is unchanged from
the proposed rule. EPA has released guidance on identifying lead
hazards in paint, dust, and soil (60 FR 47248) and is currently
developing Federal standards. In addition, HUD has released
comprehensive guidelines for evaluation and control of lead-based paint
hazards in housing (Ref. 7).
9. Lessee means any entity that enters into an agreement to lease,
rent, or sublease target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
EPA and HUD received limited comments on this definition and have
made minor revisions to the language of the definition to clarify its
applicability to trusts and subleases.
10. Lessor means any entity that offers target housing for lease,
rent, or sublease, including but not limited to individuals,
partnerships, corporations, trusts, government agencies, housing
agencies, Indian tribes, and nonprofit organizations.
EPA and HUD received limited comments on this definition and have
made minor revisions to the language of the definition to clarify its
applicability to trusts and subleases.
11. Owner means any entity that has legal title to target housing,
including but not limited to individuals, partnerships, corporations,
trusts, government agencies, housing agencies, Indian tribes, and
nonprofit organizations, except where a mortgagee holds legal title to
property serving as collateral for a mortgage loan, in which case the
owner is considered the mortgagor.
EPA and HUD have revised the definition provided in the proposed
rule to clarify its applicability to trusts and to clarify one
situation in which mortgage lenders (mortgagees), rather than borrowers
(mortgagors), hold title and are therefore owners.
12. Purchaser means an entity that enters into an agreement to
purchase an interest in target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
EPA and HUD received limited comments on this definition and have
made minor revisions to the language of the definition to clarify its
applicability to trusts.
13. Risk assessment means an on-site investigation to determine and
report the existence, nature, severity, and location of lead-based
paint hazards in residential dwellings, including: (1) Information
gathering regarding the age and history of the housing and occupancy by
children under age 6; (2) visual inspection; (3) limited wipe sampling
or other environmental sampling techniques; (4) other activity as may
be appropriate; and (5) provision of a report explaining the results of
the investigation.
This definition, provided in section 1004 of Title X, is unchanged
from the proposed rule. Under section 402 of TSCA, EPA will promulgate
separate regulations regarding the conduct of such activities, as well
as a program for training and certifying workers engaged in these
activities. Under section 404 of TSCA, these regulations will also
include a process for authorizing States to implement their own
training and certification programs.
14. Seller means any entity that transfers legal title to target
housing, in whole or in part, in return for consideration, including
but not limited to individuals, partnerships, corporations, trusts,
government agencies, housing agencies, Indian tribes, and nonprofit
organizations. The term ``seller'' also includes: (1) An entity that
transfers shares in a cooperatively owned project, in return for
consideration and (2) an entity that transfers its interest in a
leasehold in jurisdictions or circumstances where it is legally
permissible to separate the fee title from the title to the
improvement, in return for consideration.
EPA and HUD received limited comments on this definition and have
made minor revisions to the language of the definition to clarify its
applicability to trusts.
15. Target housing means any housing constructed prior to 1978,
except housing for the elderly or persons with disabilities (unless any
child who is less than 6 years of age resides or is expected to reside
in such housing) or any 0-bedroom dwelling.
This definition was provided by section 1004 of Title X and is
unchanged. Where commenters provided recommendations for revising or
clarifying the definition, EPA and HUD have addressed those comments
within the scope and applicability section of the final rule.
Commenters also noted that the proposed rule
[[Page 9071]]
misstated the statutory definition by limiting the 0-bedroom dwelling
exception to housing where no children under 6 reside or are expected
to reside. EPA and HUD have modified the definition to reflect the
statutory language.
16. 0-bedroom dwelling means any residential dwelling in which the
living area is not separated from the sleeping area. Such term includes
efficiencies, studio apartments, dormitory housing, military barracks,
and rentals of individual rooms in residential dwellings.
In the preamble of the proposed rule, EPA and HUD clarified their
interpretation of this term by identifying efficiencies, studio
apartments, dormitory housing, military barracks, and other such
housing in which the living area is unseparated from the sleeping area
as types of dwellings that are not covered under the rule. EPA and HUD
have added rentals of individual rooms in a residential dwelling to the
types of transactions that would involve a 0-bedroom dwelling. All of
these clarifications are included in the regulatory definition in the
final rule's regulatory text.
D. Changes to the Disclosure Requirements
Section 1018(a)(1)(B) requires that ``before the purchaser or
lessee is obligated under any contract to purchase or lease the
housing, . . .the seller or lessor shall. . .disclose to the purchaser
or lessee the presence of any known lead-based paint or any lead-based
paint hazards, in such housing, and provide any lead hazard evaluation
report available to the seller or lessor.''
EPA and HUD received more than 150 comments on their proposed
requirements for such information disclosure, addressing both the
proposed disclosure process and the issue of what information should be
covered. In particular, recurring themes among the comments included:
(1) The need for greater specificity regarding the necessary timing for
disclosure activities; (2) concerns over which activities should
constitute disclosure; and (3) what kinds of information should be
disclosed under this rule. The following is a brief discussion of these
key points and a summary of the regulatory requirements.
1. Timing of disclosure events. In addressing the need for greater
clarity regarding the timing of disclosure activities, EPA and HUD have
attempted to maximize the parties' flexibility in incorporating these
requirements during negotiations. EPA and HUD believe that this
flexibility is important given the many types of transactions covered
by these provisions and the existence of distinct local requirements
and customs. Therefore, the final rule identifies only the latest point
at which full disclosure must occur. Using the statute as a guide, EPA
and HUD have identified this point as before the purchaser or lessee
becomes obligated under any contract to purchase or lease the housing.
Some commenters raised the concern, however, that without
additional clarification regarding how and when information must be
disclosed, the final rule could cause unnecessary confusion regarding
how the requirements will work in actual practice. After reviewing the
framework set out in the proposed rule, EPA and HUD have revised and
clarified the requirements in a number of ways. First, the final rule
contains numerous minor changes to the wording of definitions and
requirements to clarify that the rule does not require mass disclosure
to all prospective purchasers, regardless of their degree of interest.
Second, the rule requires that certain disclosure and acknowledgment
language become part of the final sale or lease contract. In making
these changes, EPA and HUD have considered the typical negotiation
process involved in leasing and sales transactions.
During sales transactions, for example, purchasers often take the
first step toward formalizing a sales agreement by providing a written
offer to purchase the housing. If accepted and signed by the seller,
this offer typically becomes the sales contract. The statute's mandate
that disclosure and notification take place before the purchaser is
obligated imposes a requirement on the seller to disclose information
before accepting the purchaser's offer, thereby allowing the purchaser
an opportunity to review the information and to possibly amend the
offer. If a seller were to accept a purchaser's offer and obligate the
purchaser before disclosing known information, such a seller would be
in violation of Title X and this rule. Of course, the parties can
always agree to conduct the disclosure activities in advance of
contract discussions, provided that the final contract includes the
signed and dated disclosure elements mandated by this rule.
In leasing transactions, the disclosure process is even simpler.
While the parties are free to negotiate when the disclosure process
occurs, lessors must provide the information and complete the
disclosure portions of the lease (or attachment) before the lessee
becomes obligated under a contract to lease the housing. By requiring
that the disclosure information be included in or as an attachment to
the lease, EPA and HUD seek to ensure that the disclosure process
automatically occurs during lease negotiations.
The requirement that the contract or an attachment include
disclosure language fulfills two additional functions. First, the
process of completing and signing these sections ensures that all
parties are aware of their rights and obligations and are able to
confirm that the appropriate actions have already occurred. Second,
this disclosure language provides a clear record of compliance.
While sections 1018(a)(2) and (3) mandate lead warning language for
all sales transactions, the inclusion of such language as an attachment
to leases is not specifically mandated by Title X. EPA and HUD,
however, believe that it is necessary to include the warning language
in leases as well. Further, the completion and retention of disclosure
and acknowledgment language is a necessary component of any effective,
enforceable disclosure requirement for leasing transactions.
2. Components of full disclosure. EPA and HUD consider full
disclosure to have occurred when the seller or lessor has provided the
following items to the purchaser or lessee.
a. A lead hazard information pamphlet approved by EPA. As required
by TSCA section 406, EPA has developed a lead hazard information
pamphlet, entitled Protect Your Family from Lead in Your Home, and has
made it available through government channels and private sources. EPA
issued the final notice of the pamphlet's availability in the Federal
Register of August 1, 1995 (60 FR 39167). In addition to providing
detailed information on how to obtain copies (individually, in bulk,
and as camera-ready reprints), the notice describes the process of
developing the pamphlet, including considerable public review and
comment.
The statute also allows States to develop their own lead hazard
information pamphlets under section 406, provided that they obtain
authorization and approval from EPA. Several States that already have
disclosure provisions have expressed their desire to seek approval to
use their own pamphlets in lieu of the Federal pamphlet. EPA and HUD
encourage States interested in developing their own materials to seek
approval of their pamphlets for distribution under the section 1018
regulations.
b. Notice of the presence of known lead-based paint and/or lead-
based paint hazards. Sellers and lessors must disclose, based on their
actual knowledge, whether the target housing
[[Page 9072]]
is known to contain lead-based paint and/or lead-based paint hazards.
EPA and HUD received many comments on the types of information under
consideration for disclosure under these requirements. Many of the
commenters expressed concern that the proposed rule was too vague about
what constituted ``known information.'' For example, did EPA and HUD
intend for the disclosure requirements to distinguish between
information already in the possession of the seller or lessor and
information that could be obtained only by some further investigation
or inference? Several commenters described this distinction in terms of
actual knowledge (knowledge stemming from existing facts and
information) versus constructive knowledge (knowledge that could be
inferred or obtained by further inquiry). An expectation that the
property owners meet a constructive standard for knowledge could create
an implied testing requirement.
While the Agencies hope to encourage lead hazard evaluation and
reduction efforts through all of their regulatory and non-regulatory
programs, neither Agency believes that Congress intended to mandate
additional lead hazard evaluation activities in private housing. EPA
and HUD believe that Congress intended to limit the disclosure
obligation to actual knowledge. The final rule, therefore, embraces an
actual knowledge standard as well. With this clear standard, property
owners and their agents will be able to take affirmative steps to
comply fully with the rule and be confident that they have met the
requirements of the law and its implementing regulations. EPA and HUD
believe that such finality is a necessary part of this regulation,
given the diverse makeup of the regulated community.
c. Provision of records and reports on lead-based paint and/or
lead-based paint hazards available to the seller or lessor. As mandated
by section 1018(a)(1)(B), sellers and lessors must ``provide to the
purchaser or lessee any lead hazard evaluation report available to the
seller or lessor.'' EPA and HUD have interpreted ``available evaluation
reports'' to mean records and reports that pertain to lead-based paint
and/or lead-based paint hazards in the target housing and that are in
the possession of the seller or lessor or that are reasonably
obtainable by the seller or lessor at the time of the disclosure.
During the proposed rule phase, EPA and HUD requested comment
regarding the disclosure of known lead-based paint and/or lead-based
paint hazards in other units within target housing. EPA and HUD
received both supporting and opposing comments on this requirement.
Opponents argued that distinct dwelling units can have very different
painting histories, making information on one unit an unreliable
indicator of other units. Proponents argued that regardless of
differences that may exist, the painting histories of different units
in a building are usually similar enough to provide valuable
information for individuals considering whether lead hazard exposure
precautions are prudent.
EPA and HUD believe that information and reports on other units in
the target housing are directly relevant to prospective purchasers and
lessees if the information stems from evaluation or reduction efforts
in the target housing as a whole. In large multifamily properties,
evaluations do not necessarily examine every dwelling unit in the
housing. Rather, inspectors or risk assessors examine a representative
sample of the dwelling units and apply the findings to the housing as a
whole. While such evaluations might not include data on a specific
unit, the fact that the evaluation was designed to provide information
on the housing as a whole makes the report's findings relevant.
The proposed rule also requested comment on whether sellers and
lessors should have to disclose information on past elevated blood-lead
levels in other occupants of target housing. Based on the comments and
further deliberation, EPA and HUD decided against requiring disclosure
of medical information for several reasons. As commenters pointed out,
lead exposure, elevated blood-lead levels, or lead poisoning may come
from sources other than lead-based paint hazards in the housing. Where
elevated blood-lead levels were determined to stem from lead-based
paint hazards in the housing, the follow-up environmental assessment
activities in the affected person's housing will likely generate more
germane records regarding lead-based paint exposure hazards in the
housing.
Commenters also questioned whether disclosure requires the actual
transfer of all documentation from the seller or lessor, or whether
simply making the information accessible for the purchaser's or
lessee's evaluation is adequate. Based on the mandate in section
1018(a)(1)(B), EPA and HUD believe that Congress clearly intended for
purchasers and lessees to receive their own copies of the records and
reports available to the seller or lessor. Therefore, the seller or
lessor remains obligated to provide copies of all relevant materials to
the purchaser or lessee.
d. Completed Lead Warning Statement and acknowledgment language,
attached to the sales or lease contract. This information, set out in
24 CFR 35.92 and 40 CFR 745.113, documents the disclosure and
acknowledgment process, and serves as the primary confirmation tool for
all parties in ensuring full compliance with the regulatory
requirements. This information is especially important in cases where
purchasers or lessees conduct contract negotiations through their own
representatives (requiring sellers, lessors, or their agents to provide
documents to the representative instead of the purchaser or lessee). In
such cases, the attachment provides a record that sellers, lessors, and
agents can use to confirm that purchasers and lessees have received the
necessary disclosure materials.
The proposed rule required the use of disclosure forms as
attachments to each contract to purchase or lease target housing. These
forms would have served as the key mechanisms for documenting
compliance with the requirements. EPA and HUD carefully considered the
merits of each element, limiting the rule to information necessary for
demonstrating full compliance.
The final rule includes some changes to the information that must
be included in the contract. Where the proposed rule required that
sellers and lessors use federally developed disclosure forms, the final
rule provides greater flexibility for negotiating parties to develop
their own language, provided that it contains the mandated elements.
EPA and HUD eliminated the requirement that parties use a single form.
Instead, the final rule mandates only the information elements that
must be included without mandating specific formats or forms.
This flexibility is especially important to States that have
developed, or are considering developing, their own disclosure
requirements. During the comment period, several States requested that
the final rule provide flexibility for States to merge their forms with
the Federal form, eliminating unnecessary duplication. Under the final
rule, States and jurisdictions will be able to make changes to the
format as necessary to retain consistency with State and local laws and
customs.
The following is a discussion of the required elements.
(i) Seller, agent, and purchaser requirements. The final rule
requires that each contract to sell target housing include an
attachment containing specific disclosure and acknowledgment
[[Page 9073]]
elements, in the language of the contract (e.g., English, Spanish). The
elements required are described below:
(A) The first required element is the Lead Warning Statement,
consisting of the following language:
Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified
that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities, reduced
intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to
provide the buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's possession and
notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is
recommended prior to purchase.
Congress mandated this language in section 1018(a)(3) of Title X.
While several commenters recommended providing simpler language, EPA
and HUD are constrained by the mandate and have retained the statement
as proposed.
(B) The second required element is a statement disclosing the
presence of any known lead-based paint and/or lead-based paint hazards
in the target housing or indicating no knowledge of the presence of
lead-based paint and/or lead-based paint hazards. The seller must also
provide any additional information available concerning the known lead-
based paint and/or lead-based paint hazards, such as the basis for the
determination that lead-based paint and/or lead-based paint hazards
exist in the housing, the location of the lead-based paint and/or lead-
based paint hazards, and the condition of the painted surfaces. The
statement must also list all records and reports pertaining to lead-
based paint and/or lead-based paint hazards that are available to the
seller and that have been provided to the purchaser. If no such records
or reports are available to the seller, the statement must so indicate.
(C) The third element is a statement affirming that the purchaser
has received the information noted in paragraph (B) above and the lead
hazard information pamphlet required under section 406 of TSCA (15
U.S.C. 2696). The pamphlet described above may be the Federal pamphlet
entitled Protect Your Family from Lead in Your Home or a State-
developed pamphlet that has been approved by EPA.
(D) The fourth required element is a statement that the purchaser
has received a 10-day opportunity to conduct a risk assessment or
inspection for the presence of lead-based paint and/or lead-based paint
hazards (unless the parties have mutually agreed to a different period
of time), before becoming obligated under the contract to purchase the
housing. Alternatively, a purchaser who chooses to waive the risk
assessment or inspection opportunity must so indicate in writing.
(E) The fifth required element is a statement by any agent involved
in the transaction that the agent has informed the seller of the
seller's obligations under 42 U.S.C. 4852d and that the agent is aware
of his/her duty to ensure compliance with the requirements of this
rule.
(F) The sixth required element is the signatures of the seller(s),
agent(s), and purchaser(s), certifying the accuracy of their statements
on the attachment, along with their dates of signature. These
signatures document the acceptance by the parties of the information
they have provided on the attachment as a whole and alert the various
parties to their respective roles and responsibilities.
(ii) Lessor, agent, and lessee requirements. Each contract to lease
target housing must include the following elements, as an attachment or
within the contract, in the language of the contract (e.g., English,
Spanish).
(A) The first required element is a Lead Warning Statement with the
following language:
Housing built before 1978 may contain lead-based paint. Lead
from paint, paint chips, and dust can pose health hazards if not
managed properly. Lead exposure is especially harmful to young
children and pregnant women. Before renting pre-1978 housing,
lessors must disclose the presence of known lead-based paint and/or
lead-based paint hazards in the dwelling. Lessees must also receive
a federally approved pamphlet on lead poisoning prevention.
EPA and HUD received a considerable amount of comment regarding the
language of the Lead Warning Statement used in the leasing disclosure
attachment. EPA and HUD have developed a modified Lead Warning
Statement for leasing transactions that uses simpler words and syntax
than the purchase warning statement required by Title X.
(B) The second required element is a statement disclosing the
presence of any known lead-based paint and/or lead-based paint hazards
in the target housing or indicating no knowledge of the presence of
lead-based paint and/or lead-based paint hazards. The lessor shall also
provide any additional information available concerning the known lead-
based paint and/or lead-based paint hazards, such as the basis for the
determination that lead-based paint and/or lead-based paint hazards
exist; the location of the lead-based paint and/or lead-based paint
hazards; and the condition of the painted surfaces. The statement must
also list any records or reports pertaining to lead-based paint and/or
lead-based paint hazards that are available to the lessor and that have
been provided to the lessee. If no such records or reports are
available to the lessor, the statement must so indicate.
(C) The third required element is a statement affirming that the
lessee received the information noted in paragraph (B) above and the
lead hazard information pamphlet required under section 406 of TSCA (15
U.S.C. 2686).
(D) The fourth required element is a statement by any agent
involved in the transaction that the agent has informed the lessor of
the lessor's obligations under the law and that the agent is aware of
his/her duty to ensure compliance with the requirements of this rule.
(E) The fifth required element is the signatures of the lessor(s),
agent(s), and lessee(s), certifying the accuracy of their statements,
along with their dates of signatur
FR Doc. 96-5243 Lead; Requirements for Disclosure of Known Lead-Based Paint and/ or Lead-Based Paint Hazards in Housing
e. These signatures document the
acceptance by the parties of the information they have provided as a
whole and alert the various parties to the roles and responsibilities
of each party.
3. Sample disclosure attachments. Recognizing that many parties may
prefer having access to a sample format, EPA and HUD have developed
sample disclosure formats for sales and leasing contracts for public
reference. These samples are not included in the regulatory text
itself. Nothing in the rule requires the use of these specific formats
if a seller or lessor wishes to develop a separate format that includes
all of the required elements.
[[Page 9074]]
(Sample Disclosure Format for Target Housing Sales)
------------------------------------------------------------------------
Disclosure of Information on Lead-Based Paint
and/or Lead-Based Paint Hazards
Lead Warning Statement
Every purchaser of any interest in residential real
property on which a residential dwelling was built prior
to 1978 is notified that such property may present
exposure to lead from lead-based paint that may place
young children at risk of developing lead poisoning.
Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities,
reduced intelligence quotient, behavioral problems, and
impaired memory. Lead poisoning also poses a particular
risk to pregnant women. The seller of any interest in
residential real property is required to provide the
buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's
possession and notify the buyer of any known lead-based
paint hazards. A risk assessment or inspection for
possible lead-based paint hazards is recommended prior
to purchase.
Seller's Disclosure
(a) Presence of lead-based paint and/or lead-based paint
(i)---- Known lead-based paint and/or lead-based paint
hazards are present in the housing (explain).
-------------------------------------------------------
-----------------------------------
(ii)----Seller has no knowledge of lead-based paint and/
(b) Records and reports available to the seller (check
(i) or (ii) below):
(i)----Seller has provided the purchaser with all
available records and reports pertaining to lead-based
paint and/or lead-based paint hazards in the housing
(list documents below).
-------------------------------------------------------
-----------------------------------
(ii)---- Seller has no reports or records pertaining to
lead-based paint and/or lead-based paint hazards in the
housing.
Purchaser's Acknowledgment (initial)
(c)----Purchaser has received copies of all information
listed above.
(d)----Purchaser has received the pamphlet Protect Your
Family from Lead in Your Home.
(e)----Purchaser has (check (i) or (ii) below):
(i)---- received a 10-day opportunity (or mutually
agreed upon period) to conduct a risk assessment or
inspection for the presence of lead-based paint and/or
lead-based paint hazards; or
(ii)---- waived the opportunity to conduct a risk
assessment or inspection for the presence of lead-based
paint and/or lead-based paint hazards.
Agent's Acknowledgment (initial)
(f)----Agent has informed the seller of the seller's
obligations under 42 U.S.C. 4852d and is aware of his/
her responsibility to ensure compliance.
Certification of Accuracy
The following parties have reviewed the information
above and certify, to the best of their knowledge, that
the information they have provided is true and accurate.
-------------------- -------------------- -----
------------- ------------------
Seller Date Sel
ler Date
-------------------- -------------------- -----
------------- ------------------
Purchaser Date Purc
haser Date
-------------------- -------------------- -----
------------- ------------------
Agent Date Agen
t Date
------------------------------------------------------------------------
[[Page 9075]]
(Sample Disclosure Format for Target Housing Rentals and Leases)
------------------------------------------------------------------------
Disclosure of Information on Lead-Based Paint
and/or Lead-Based Paint Hazards
Lead Warning Statement
Housing built before 1978 may contain lead-based paint.
Lead from paint, paint chips, and dust can pose health
hazards if not managed properly. Lead exposure is
especially harmful to young children and pregnant women.
Before renting pre-1978 housing, lessors must disclose
the presence of known lead-based paint and/or lead-based
paint hazards in the dwelling. Lessees must also receive
a federally approved pamphlet on lead poisoning
prevention.
Lessor's Disclosure
(a) Presence of lead-based paint and/or lead-based paint
hazards (Check (i) or (ii) below):
(i)---- Known lead-based paint and/or lead-based paint
hazards are present in the housing (explain).
--------------------------------------------------------
---------------
(ii)----Lessor has no knowledge of lead-based paint and/
or lead-based paint hazards in the housing.
(b) Records and reports available to the lessor (Check
(i) or (ii) below):
(i)---- Lessor has provided the lessee with all
available records and reports pertaining to lead-based
paint and/or lead-based paint hazards in the housing
(list documents below).
-------------------------------------------------------
-------------------
(ii)----Lessor has no reports or records pertaining to
lead-based paint and/or lead-based paint hazards in the
housing.
Lessee's Acknowledgment (initial)
(c)----Lessee has received copies of all information
listed above.
(d)----Lessee has received the pamphlet Protect Your
Family from Lead in Your Home.
Agent's Acknowledgment (initial)
(e)------ Agent has informed the lessor of the lessor's
obligations under 42 U.S.C. 4852d and is aware of his/
her responsibility to ensure compliance.
Certification of Accuracy
The following parties have reviewed the information above
and certify, to the best of their knowledge, that the
information they have provided is true and accurate.
-------------------- -------------------- -----
--------------- ------------------
Lessor Date Lesso
r Date
-------------------- -------------------- -----
--------------- ----------------
Lessee Date Lesse
e Date
-------------------- -------------------- -----
--------------- ------------------
Agent Date Agen
t Date
------------------------------------------------------------------------
[[Page 9076]]
4. Recordkeeping requirements. EPA and HUD have retained the
recordkeeping requirements under this rule largely as proposed. The
seller and any agent are required to retain a copy of the completed
disclosure and acknowledgment contract attachment (discussed below),
required under Secs. 35.92(a) and 745.113(a), for 3 years from the
completion date of the sale. Similarly, the lessor and any agent are
required to retain a copy of the completed lease or attachment,
required under Sec. 35.92(b) and Sec. 745.113(b) of this rule for 3
years from the commencement of the leasing period. EPA and HUD have
determined that a 3-year period is an appropriate amount of time to
ensure compliance with the requirements of Title X and to support
Federal compliance monitoring efforts. This recordkeeping requirement
is not intended to place any limitations on civil suits under Title X
or to otherwise affect a lessee's or purchaser's rights under the civil
penalty provisions of section 1018(b)(3) of Title X.
EPA and HUD requested comment on whether the rule should include an
additional recordkeeping provision requiring that property owners
retain all records and reports of lead-based paint and/or lead-based
paint hazards in the housing for the length of their ownership. Based
on the statute's use of the term ``available'' lead hazard evaluation
reports, EPA and HUD have determined that a specific recordkeeping
requirement for such reports is beyond the scope of this regulation.
EPA and HUD have, however, clarified ``available'' lead hazard
evaluation reports to encompass records and reports in the possession
of the seller or lessor or reasonably obtainable by the seller or
lessor at the time of the disclosure. This approach recognizes that
third parties may in some cases play an independent recordkeeping role
for the seller or lessor.
While the Agencies do not mandate the retention of these records,
EPA and HUD encourage sellers and lessors to retain relevant records in
anticipation of future sale or lease. The information provided can help
purchasers and occupants take exposure prevention precautions during
later ownership or occupancy. The requirement to disclose the presence
of known lead-based paint and/or lead-based paint hazards remains even
if the seller or lessor is unable to locate the original reports
quantifying the data. Section 1018 requires sellers and lessors to both
(1) disclose the presence of known lead-based paint and/or lead-based
paint hazards in the housing and (2) provide available written records
and reports to the purchaser or lessee. By mandating that both actions
occur, Congress recognized the distinction between the two actions, and
the fact that the seller or lessor might have actual knowledge of lead-
based paint and/or lead-based paint hazards above and beyond that
present in available reports.
5. Failure to fully disclose before ratification of contracts. As
mandated by Title X, the disclosure of information, the provision of
the lead hazard information pamphlet, and the purchaser's opportunity
to conduct a risk assessment or inspection must occur before the
purchaser or lessee becomes obligated under any contract to purchase or
lease the dwelling. Section 1018(c) prohibits regulatory provisions
that would ``affect the validity or enforceability of any sale or
contract for the purchase and sale or lease of any interest in
residential real property or any loan, loan agreement, mortgage, or
lien made or arising in connection with a mortgage loan'' and states
that nothing in the rule ``shall create a defect in title.'' The
disclosure requirements contained in this rule must occur prior to
contract ratification and, as such, do not affect the validity of the
subsequent contract. Nor does failure to conduct full disclosure before
sale or lease affect the validity of the sales or leasing contract
itself. Rather, purchasers seeking remedy for the non-disclosure may
avail themselves of the civil remedies afforded by section 1018 of
Title X.
6. Opportunity to conduct a risk assessment or inspection. Section
1018(a) requires that sellers provide purchasers with a 10-day
opportunity to conduct a risk assessment or inspection for the presence
of lead-based paint and/or lead-based paint hazards before becoming
obligated under a purchase contract. The length of time may be
shortened or lengthened by mutual agreement. In the proposed rule, EPA
and HUD offered several approaches for implementing this provision of
section 1018: (1) Establishing Federal standards for the implementation
of the evaluation period, providing flexibility for adjustment by
mutual consent; (2) limiting the regulatory text to the statutory
language, thereby maximizing the discretion of the two parties in
negotiating the terms; (3) codifying contract contingency language for
use in complying with the final rule; and (4) establishing requirements
for providing evaluation opportunities before the preparation of
contracts.
Recognizing that home inspections for various hazards and housing
defects are common occurrences during housing transactions around the
country, EPA and HUD believe that the market can incorporate this
requirement into future transactions without detailed regulatory
language. The final rule, therefore, steers away from the proposed
rule's preferred approach of codifying Federal standards for the
performance of the 10-day evaluation period provision.
However, EPA and HUD also recognize that some private sellers may
choose to conduct their housing sales without the aid of a trained
agent and may lack familiarity with the standard processes for
conducting such evaluations in the sales transaction. For such persons,
EPA and HUD are providing the following discussion of several likely
approaches for implementing this provision.
First, some purchasers may choose to waive the opportunity for a
risk assessment or inspection. Purchasers may be especially inclined to
waive the opportunity in cases where the seller provides significant
amounts of relevant information on the property during the disclosure
process, or in cases where no children are expected to reside in the
housing. If the purchaser chooses to waive the evaluation opportunity,
the purchaser is still obligated to acknowledge receipt of the
evaluation opportunity on the attachment, documenting this voluntary
decision to waive the opportunity.
EPA and HUD expect that in most cases where the purchaser chooses
to exercise his or her evaluation opportunity, the parties will develop
and incorporate into the contract mutually agreeable terms for the
conduct and completion of the evaluation opportunity. The final rule
provides sellers and purchasers with broad flexibility to develop terms
for performing the risk assessment or inspection.
As many commenters noted, home inspections are already common
aspects of housing transactions. Frequently, these inspections are
incorporated into the sales contracts as contingency clauses, providing
mutual agreement on the timing, terms, and conduct of the inspection.
Common terms addressed in these clauses include: (i) The starting and
ending day of the inspection period; (ii) any contingencies and
conditions tied to the contract regarding the inspection period; (iii)
the process for removing any contingency or condition following the
completion of the inspection; and (iv) the disposition of any earnest
money provided by the purchaser before the opportunity to inspect. This
general framework is one possible approach that parties can consider
when developing mutually
[[Page 9077]]
agreeable terms for the evaluation period required by section 1018(a)
of Title X.
While most commenters stressed the importance of providing
flexibility for the parties to develop mutually agreeable evaluation
terms, many also recommended the inclusion of sample language as a
reference. For the purpose of providing guidance on creating contract
language, EPA and HUD have included the following sample contract
contingency clause for optional use. This language is offered as a
sample only, and nothing in this rule imposes a requirement on either
party to accept or reject this language in the current or modified
form.
------------------------------------------------------------------------
Sample Contract Contingency
Language
This contract is contingent upon a risk assessment or
inspection of the property for the presence of lead-
based paint and/or lead-based paint hazards at the
Purchaser's expense until 9 p.m. on the tenth calendar-
day after ratification [Insert date 10 days after
contract ratification or a date mutually agreed upon].
(Intact lead-based paint that is in good condition is
not necessarily a hazard. See the EPA pamphlet Protect
Your Family From Lead in Your Home for more
information.) This contingency will terminate at the
above predetermined deadline unless the Purchaser (or
Purchaser's agent) delivers to the Seller (or Seller's
agent) a written contract addendum listing the specific
existing deficiencies and corrections needed, together
with a copy of the inspection and/or risk assessment
report. The Seller may, at the Seller's option, within --
---- days after Delivery of the addendum, elect in
writing whether to correct the condition(s) prior to
settlement. If the Seller will correct the condition,
the Seller shall furnish the Purchaser with
certification from a risk assessor or inspector
demonstrating that the condition has been remedied
before the date of the settlement. If the Seller does
not elect to make the repairs, or if the Seller makes a
counter-offer, the Purchaser shall have ------ days to
respond to the counter-offer or remove this contingency
and take the property in ``as is'' condition or this
contract shall become void. The Purchaser may remove
this contingency at any time without cause.
------------------------------------------------------------------------
E. Agent Responsibilities
Title X specifically addresses the responsibilities of agents,
requiring them to ensure compliance with the provisions of the law.
Agents fulfill this requirement by informing sellers or lessors of
their obligations and by making sure that these activities are
completed either by the seller or lessor or by the agent personally.
Accordingly, 24 CFR 35.94(b) and 40 CFR 745.107(c) identify the
seller's affirmative duty to disclose to the agent any known lead-based
paint and/or lead-based paint hazards on the property. Provided that
the agent has actually informed the seller or lessor of his/her
obligation, the final rule notes that the agent will not be responsible
for information withheld from the agent by the seller or lessor.
V. Non-Compliance and Enforcement
EPA and HUD received considerable comment on the enforcement
provisions discussed in the statute and the proposed rule. Many
commenters requested more guidance regarding the Agencies' plans for
enforcement of the provisions, as well as assurances that the Agencies
recognize the importance of active education and outreach to the
regulated community. As all enforcement authority for EPA and HUD
derives directly from the authorizing statutory language, both the
proposed rule and the final rule contain enforcement language that is
essentially the same as language provided in Title X and TSCA. The
following is a discussion of the general enforcement authority provided
by Congress, along with some discussion of the process that EPA and HUD
will use in developing a sensible, effective enforcement approach.
A. HUD Authority
Section 1018(b)(1) of Title X authorizes HUD to impose civil
monetary penalties on any person who knowingly violates section 1018.
This authority applies to violations of this final rule as well. HUD
can impose penalties under section 102 of the Department of Housing and
Urban Development Reform Act of 1989 (42 U.S.C. 3545). These penalties
may be up to $10,000 for each violation. In addition, section
1018(b)(2) of Title X authorizes the Secretary to ``take such lawful
action as may be necessary to enjoin any violation'' of the law's
provisions.
B. EPA Authority
1. Civil. Section 1018(b)(5) of Title X provides that failure or
refusal to comply with section 1018 or its implementing regulations is
a violation of TSCA section 409. Violations of TSCA section 409 are
subject to TSCA section 16 penalties. Thus, a violator of section 1018
can be subject to the penalty provisions under TSCA section 16 of up to
$10,000 for each violation.
2. Criminal. TSCA section 16(b) provides that any person who
knowingly or willfully violates section 409 (and thus section 1018)
could, in addition to or instead of any civil penalty, be subject, upon
conviction, to a fine of not more than $25,000 for each day of
violation or to imprisonment for not more than 1 year, or both. For the
purposes of enforcement under section 1018, Congress has modified the
application of TSCA section 16, limiting the fine to $10,000 ``for each
violation.''
C. Enforcement Responses
Because the enforcement provisions of section 1018 are clearly set
forth in the statute, the final rule retains largely unchanged the
discussion of the enforcement authority.
However, it is EPA's and HUD's intent that outreach and compliance
assistance
[[Page 9078]]
will be a major component of the section 1018 compliance program so
that individuals are fully informed of the new requirements and their
obligations. EPA and HUD also intend to bring clarity and
predictability to the enforcement process for section 1018, in
acknowledgment of the large and diverse population affected by this
rule. Concurrent with this rule's release, EPA will issue a short
``Statement of Approach'' as it relates to ensuring compliance with the
requirements of section 1018, for the information of the general
public. This informational document will discuss the Agency's approach
to the section 1018 compliance assurance program. EPA is also
developing a policy for use by EPA enforcement personnel to achieve a
common sense result between a particular violation of section 1018 and
a particular enforcement response. This policy includes, but is not
limited to, issuing notices of warning (without penalties) as
appropriate to let people know that they are out of compliance and to
give them an opportunity to come into compliance, while maintaining
provisions that will ensure that willful and repeat violators are
appropriately penalized. This result is reached in the context of an
``Enforcement Response Policy'' (ERP), which EPA is developing
separately for this rule.
Regarding HUD enforcement actions, HUD's civil money penalty
procedures are set out in 24 CFR part 30. These procedures include
notices of intent to request civil money penalties, civil money penalty
panels, administrative hearings and appeals, judicial review, and
collection of penalties. A civil money penalty panel develops
guidelines to determine the appropriate penalty for a violation of
section 1018. These guidelines include the following factors: the
gravity of the offense, awareness of procedures, any history of prior
offenses, the ability to pay the penalty, the injury to the public, any
benefits received by the violator, any potential benefits to other
persons, deterrence of future violators, the violator's culpability,
and such other matters as justice may require.
D. Civil Liability--Direct Compensation
In addition to the EPA and HUD enforcement authority for the
provisions of this final rule, section 1018(b)(3) of Title X states
that ``[A]ny person who knowingly violates the provisions of this
section shall be jointly and severally liable to the purchaser or
lessee in an amount equal to 3 times the amount of damages incurred by
such individual.'' This provision allows the purchaser or lessee to
seek direct compensation for any damages incurred based on the seller's
or lessor's noncompliance. Section 1018(b)(4) authorizes the court to
award court costs, reasonable attorney fees, and expert witness fees to
a prevailing plaintiff.
E. Validity of Contracts and Liens
Section 1018(c) provides that nothing in section 1018 (or its
implementing rules) ``shall affect the validity or enforceability of
any sale or contract for the purchase and sale or lease of any interest
in residential real property or any loan, loan agreement, mortgage, or
lien made or arising in connection with a mortgage loan. . . .'' It
also provides that nothing in section 1018 (or its implementing rules)
shall ``create a defect in title.''
EPA and HUD have looked at section 1018(c) in the context of other
section 1018 provisions, which outline specific clauses that must be
attached to contracts for the purchase and sale of target housing and
specific procedural protections that must be given to the purchaser or
lessee.
The provisions of section 1018 cannot void or nullify the contract
after ratification and cannot void any transfer of real estate, even if
it can be proven that the seller or lessor violated section 1018
provisions. In such circumstances, the purchaser or lessee is limited
to the remedies provided in section 1018. Of course, traditional causes
of action under State law would still exist, and possibly could be
applied to some section 1018 violations. Also, violations of section
1018 could be subject to civil and criminal penalties administered by
EPA and HUD under section 1018(b).
VI. Federal Effect on State and Local Disclosure Requirements
Several commenters noted that some States and municipalities
already have requirements for the disclosure of information on lead-
based paint in housing. In developing the Federal disclosure
requirements, several key questions have been raised regarding such
programs: (1) Can States obtain authorization to administer and enforce
their programs in lieu of the Federal program? and (2) What effect do
the Federal requirements have on the ability of States to run their own
programs?
EPA and HUD have determined that Title X does not provide authority
to delegate the administration and enforcement of these section 1018
requirements to State programs. Where such authority to authorize State
programs was anticipated by Congress (as in TSCA section 402), Congress
provided specific authority.
Where possible, EPA and HUD have developed these requirements to
make it possible for State and Federal requirements to complement each
other. For example, EPA and HUD had State programs in mind when adding
flexibility in the development of disclosure and acknowledgment
attachments.
Finally, nothing in this rule is intended to relieve a seller,
lessor, or agent from any responsibility for compliance with State or
local laws, ordinances, codes, or regulations governing notice or
disclosure of known lead-based paint and/or lead-based paint hazards.
VII. Summary of Regulatory Impact Analysis
EPA and HUD have prepared a Regulatory Impact Analysis (RIA) that
examines the potential costs, benefits, and impacts of regulations for
the disclosure of known lead-based paint hazards in residential
property upon the transfer of the property for sale or rental. The
analysis is presented in five sections:
Background and Framework for Analysis
Profile of Sectors Affected
Estimated Costs to Private Parties and Government
Effect of the Lead-Based Paint Hazard Disclosure Rule for
Real Estate Transfers on Small Businesses--Regulatory Flexibility
Analysis
Assessment of Benefits
A. Background and Framework for Analysis
Those parties directly affected by the rule are the seller, lessor,
agent, property manager, purchaser, and lessee. The required activities
that impose regulatory burden on the affected parties fall into four
categories for cost estimation purposes:
1. Start-up costs, which include learning the rule's requirements
and establishing compliance procedures;
2. Disclosure costs, which refer to the costs resulting from the
actual transfer of information and obtaining needed signatures;
3. Recordkeeping costs, which result principally from the
requirement that signed acknowledgment forms must be retained by the
provider of the information; and
4. Materials costs, which are linked primarily to the disclosure
requirement, as the lead hazard information pamphlet must be purchased
or photocopied (acknowledgment forms must also be duplicated). Costs
may also be incurred
[[Page 9079]]
for filing where a large number of acknowledgment statements or
documents for disclosure are generated (e.g., by agents), though such
burden was estimated to be quite modest.
The requirements of section 1018 of the Act fall primarily on the
seller or lessor of ``target housing,'' which is defined to be any
housing constructed prior to 1978, except housing for the elderly or
persons with disabilities (unless any child who is less than 6 years of
age resides or is expected to reside in such housing) or any 0-bedroom
dwelling. However, if an agent or property manager acts on behalf of
the seller or lessor, which EPA and HUD have estimated to be the case
in most transfers, responsibilities to ensure compliance fall to such
agents or managers as well.
To estimate the impacts of the rule, EPA and HUD sought data
pertaining to the number of affected parties in each classification
listed above, the frequency with which affected purchase and lease
transactions are completed, and the incremental costs, in labor and
materials, added to each transaction by the regulations.
B. Profile of Sectors Affected
The larger of the two affected sectors expected to bear the
principal effects of the rule falls within Standard Industrial
Classification (SIC) code 651, Real Estate Operators and Lessors. EPA
estimates there to be 92,000 establishments potentially affected by the
rule. Also affected are business establishments falling within SIC code
653, Real Estate Agents and Managers. An additional 92,000
establishments could be affected by the rule in this sector.
Employment data were obtained for the occupations most likely to be
involved in transactions subject to the rule. EPA and HUD estimate that
324,000 real estate agents and 243,000 property managers will be
affected.
With regard to transaction volume, 2.9 million sales transactions
and 9.3 million rental transactions were estimated to occur annually in
target housing.
C. Estimated Costs to Private Parties and Government
Table 1 below summarizes the estimated annual costs associated with
the rule. The four costs to private parties, or compliance costs, are
discussed briefly below. Costs to government represent rule
administration activities.
The first private party cost category, start-up costs, represents
about one-third of overall annual compliance costs. Factors affecting
the magnitude of these costs include the number of employees having to
familiarize themselves with the regulations, both initially (employees
in the existing workforce) and over time (new entrants to the affected
sectors); the time required to learn the activities that must be
undertaken in order to comply; and the hourly compensation of affected
employees.
As Table 1 shows, disclosure event costs constitute the greatest
portion of overall compliance costs. Factors affecting the magnitude of
these costs include the frequencies of regulated events; the time
involved in performing required activities, such as providing to the
prospective purchaser/lessee the required information and obtaining the
required signatures; and the hourly compensation of all involved
parties. EPA and HUD also took into account the fact that a number of
States have similar requirements pertaining to information transfer
regarding potential lead hazards in the sale of residential property.
Thus, an allowance was made in the burden estimates for transactions
occurring in such States to reflect a certain level of current
compliance.
Table 1--Summary of Annual Costs of the Disclosure Rule for Residential
Property Transfer
------------------------------------------------------------------------
------------------------------------------------------------------------
Estimated Annual Costs to Private Parties -
Sales Transactions
Start-up Costs* $25.8 million
Disclosure Event Costs 20.2 million
Recordkeeping Costs 0.6 million
Materials Costs 2.8 million
---------------------------
Total for Sales Transactions: $49.4 million
Estimated Annual Costs to Private Parties -
Rental Transactions
Start-up Costs* $ 1.1 million
Disclosure Event Costs $25.6 million
Recordkeeping Costs $1.9 million
Materials Costs $3.4 million
---------------------------
Total for Rental Transactions: $32.0 million
===========================
Total Estimated Annual Costs to Private $81.4 million
Parties:
Costs to Government
Low Estimate $2.4 million
High Estimate $4.3 million
Total Estimated Annual Costs:
Based on Low Estimate of Government Costs: $83.8 million
Based on High Estimate of Government Costs: $85.7 million
* First-year costs annualized at 3 percent
rate over 6 years.
------------------------------------------------------------------------
Recordkeeping and materials costs account for a relatively modest
share of overall annual costs. Factors affecting the magnitude of these
costs include the number of affected parties per transaction; the
frequency of
[[Page 9080]]
transactions, the costs of acquiring/duplicating documents, which
include the lead hazard information pamphlet and signed acknowledgment
forms; and costs to maintain documents.
Additional, indirect costs resulting from actions taken by
consumers in response to the information made available by the rule
were not quantified, for reasons detailed in Unit VII.E. of this
preamble.
To administer the final regulation, resources will be required to
conduct a number of activities, including: inspections; violation case
management; establishment and maintenance of cooperative agreements;
compliance assistance, development of performance measurement criteria;
and management.
D. Effect of the Lead-Based Paint Hazard Disclosure Rule for Real
Estate Transfers on Small Businesses--Regulatory Flexibility Analysis
EPA and HUD investigated the potential impacts of the rule on small
businesses and have prepared a Regulatory Flexibility Analysis (RFA).
Although a large number of small establishments may be affected by the
rule, cost impacts were not found to be of sufficient magnitude to
cause undue harm to such establishments. The RFA is summarized
separately in Unit X.B. of this preamble.
E. Assessment of Benefits
The market imperfection that the rule is intended to correct is the
lack of information available to prospective home purchasers and
lessees concerning lead-based paint hazards in homes they may be
considering for purchase or rent. Under the rule, general information
about the risks associated with lead-based paint will be provided
through the provision of a brochure. When available, information about
the presence of or abatement of lead in the specific unit being
considered for purchase or rent must also be disclosed (e.g.,
information concerning previous testing for the presence of lead-based
paint, abatement history, etc.). The failure of the marketplace to
provide this information or to provide prospective home purchasers and
lessees the opportunity to develop such information means that
prospective purchasers and lessees might purchase or lease a property,
or make pricing or rental payment decisions regarding properties,
without understanding possible lead-related health risks or risk
management costs accompanying the transaction.
EPA and HUD expect that this rulemaking will generate benefits by
giving prospective home purchasers and lessees access to information
that might otherwise have been unavailable (e.g., information
pertaining to abatement activities for a specific residence) or that
they might have been able to acquire only through their own effort and
at some cost. In addition, EPA believes the information will generate
health benefits by leading many purchasers and lessees to modify their
behavior in a way that will reduce risks from lead-based paint. For
example, purchasers could undertake abatement activities subsequent to
taking ownership of a dwelling, change household cleaning practices, or
request professional assistance when undertaking renovation activities.
The rule may also prompt property owners, due to reluctance on the part
of prospective purchasers/lessees to select housing containing lead-
based paint, to act to reduce lead-related hazards associated with
their residential dwellings. Health benefits resulting from such
activities are distinguishable from the more direct benefits of the
rule, i.e., the value of improved information. Further, in cases where
action is taken to remediate a lead-based paint hazard, additional
costs would be incurred, and would have to be subtracted from the
expected benefits associated with the remediation.
EPA and HUD note that the regulation does not require actions to
reduce lead-based paint hazards in residential housing. Thus, the
extent to which lead exposure decreases depends upon how transaction
participants (i.e., sellers/lessors and prospective purchasers/lessees)
value and respond to the additional information.
The RIA details three approaches that are evolving and that can be
seen as a starting point in an effort to expand the level of
understanding of how benefits from information products can be valued.
However, an information base and the associated accepted analytical
methods necessary to predict consumer reaction to information products
on lead-based paint hazards are not readily available; thus,
quantifying the expected benefits of this rule, either in terms of
efficiency gains from improved decisionmaking or risk reduction, would
be extremely difficult. Given the high level of uncertainty associated
with the results from such a quantitative analysis, and given the
prescriptive nature of section 1018 of the Act, EPA and HUD believe
that the information provided in the qualitative analysis presented in
the RIA served to inform decisionmaking.
VIII. Rulemaking Record
A record for this final rule has been established for both EPA and
HUD under docket number ``OPPTS-62130.'' The public version of this
record for both agencies (which does not contain any information
claimed as Confidential Business Information) is available for
inspection from 12 noon to 4 p.m., Monday through Friday, excluding
legal holidays. The public record is located in EPA's TSCA
Nonconfidential Information Center (NCIC), Rm. NE-B607, 401 M St., SW.,
Washington, DC 20460.
The docket contains reference works that EPA and HUD referred to in
developing this regulation. In addition, other documents, including the
Regulatory Impact Analysis, Information Collection Request, and copies
of all comments on the proposed rule, are included in the docket for
public review. The draft of the final rule submitted by EPA and HUD to
OMB for review prior to the final rule's promulgation will also be
contained in the docket.
IX. References
1. Alliance to End Childhood Lead Poisoning, 1991. Preventing
Childhood Lead Poisoning: The First Comprehensive National Conference;
Final Report. Washington, DC.
2. CDC, 1991. U.S. Centers for Disease Control and Prevention,
Preventing Lead Poisoning in Young Children: A Statement by the Centers
for Disease Control. Atlanta, GA.
3. CPSC, 1977. Notice Reducing Allowable Levels of Lead in Lead-
Based Paint. Federal Register. September 1, 1977: 42 FR 44199.
4. EPA, 1995. U.S. Environmental Protection Agency, Report on the
National Survey of Lead-Based Paint in Housing: Base Report.
Washington, DC: EPA747-R95-003.
5. HUD, 1995. U.S. Department of Housing and Urban Development,
Task Force on Lead-Based Paint Hazard Reduction and Financing, Putting
the Pieces Together: Controlling Lead Hazards in the Nation's Housing:
Final Report. Washington, DC: HUD-1542-LBP.
6. HUD, 1990. Lead-Based Paint; Interim Guidelines for Hazard
Identification and Abatement in Public and Indian Housing; Notice.
Federal Register. April 18, 1990: 55 FR 14556.
7. HUD, 1995. Department of Housing and Urban Development,
Guidelines for the Evaluation and Control of Lead-Based Paint Hazards
in Housing. Washington, DC.
8. Pirkle, 1994. Pirkle, J.L., D.J. Brody, E.W. Gunter, R.A.
Kramer, D.C. Paschal,
[[Page 9081]]
K.M. Flegal, T.D. Matte, The Decline in Blood Lead Levels in the United
States. Journal of the American Medical Association, 272(4): 284-291.
X. Regulatory Assessment Requirements
A. Executive Order 12866
Pursuant to Executive Order 12866 (58 FR 51735, October 4, 1993),
it has been determined that this is a ``significant regulatory action''
because of potential novel legal or policy issues arising out of the
new legal mandates this action implements. This action was submitted to
OMB for review, and any comments or changes made during that review
have been documented in the public record.
In addition, EPA and HUD have prepared a Regulatory Impact Analysis
(RIA) in conjunction with their lead information disclosure rule for
real estate transfers. EPA and HUD find that the rule will not have an
effect on the economy of $100 million or more, will not result in major
increases in costs or prices, and is not anticipated to have
significant adverse effects on competition, employment, investment, or
productivity in the relevant sectors.
EPA and HUD estimate the overall costs to affected entities to be
$81.4 million and costs to government to range from $2.4 to $4.3
million. These estimates include costs for rule familiarization,
information disclosure and obtaining required signatures,
recordkeeping, materials costs, and government administration costs.
EPA and HUD estimate that the provisions of the rule will add about
$2.00 to $6.00 to the cost of each transaction.
A copy of the RIA is available in the TSCA Public Docket Office for
review and public comment. For information on the public docket, see
Unit VIII. of this preamble, entitled Rulemaking Record.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
Federal agencies to consider whether a regulatory action will have an
adverse economic impact on small entities. Section 605(b) requires the
agencies to either certify that the regulatory action will not have a
significant economic impact on a substantial number of small entities,
or prepare a Regulatory Flexibility Analysis. Under the EPA policy that
implements the Regulatory Flexibility Act, EPA performs a Regulatory
Flexibility Analysis whenever a regulatory action is anticipated to
have any economic impact on any small entities, and will also seek to
involve these small entities in the development of the regulatory
action to the extent possible. As such, in an effort to identify and
characterize the rule's effects on small business, EPA and HUD have
prepared a Regulatory Flexibility Analysis. This assessment has been
included as part of the RIA and is summarized below.
In preparing the RFA, EPA and HUD first developed an establishment
profile for each major sector (SIC 651 and SIC 653). This profile
indicated that approximately 75 percent of all establishments in SIC
651 (Real Estate Operators and Lessors) and approximately 73 percent of
all establishments in SIC 653 (Real Estate Agents and Managers) fell
within the 1 to 4 employee size class. These proportions increased to
90 percent and 87 percent, respectively, when employee size class 1 to
9 was examined.
To measure the cost impacts of the rule on these small
establishments, representative or model establishments were designed.
These model establishments corresponded to typical establishments in
each affected sector, with respect to number of employees and annual
transaction volume. Since transaction activity was reported to vary
widely, a range of transaction volume was estimated for each
establishment type.
For each model establishment, annual regulatory costs were then
calculated and compared to annual labor and overhead costs. Ratios were
computed for both high and low estimates of the range of transaction
activity. In the case of a real estate sales organization, regulatory
costs were found to represent from 0.20 to 0.42 percent of labor and
overhead costs. In the case of a rental establishment, impacts were
slightly higher, ranging from 0.21 to 0.47 percent. An establishment
engaged in both activities was projected to sustain impacts of 0.28 to
0.63 percent.
Thus, while a large number of small establishments will be
potentially affected by the rule, cost impacts were not found to be of
sufficient magnitude to cause undue harm to such establishments.
Consequently, no regulatory alternatives are being proposed in
connection with small business impacts.
C. Paperwork Reduction Act
The information collection requirements in this rule have been
submitted for approval to the Office of Management and Budget (OMB)
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An
Information Collection Request (ICR) document has been prepared by EPA
(EPA ICR No. 1710.02) and a copy may be obtained from Sandy Farmer,
OPPE Regulatory Information Division, Environmental Protection Agency
(2136), 401 M St., SW., Washington, DC 20460 or by calling (202) 260-
2740. The information requirements are not effective until OMB approves
them.
The information collection requirements of this rule apply to
sellers, lessors, and agents of target housing. Before selling or
leasing target housing, the following information collection activities
must occur: (1) Disclosure of known lead-based paint and/or lead-based
paint hazards; (2) provision of any available records and reports
pertaining to lead-based paint in the housing; (3) provision of a
federally approved lead hazard information pamphlet; (4) completion and
subsequent retention of disclosure and acknowledgment language for 3
years, and (5) provision of a 10-day evaluation opportunity to
purchasers before obligation under purchase contracts (this time period
can be adjusted or waived by mutual consent).
These requirements will help to: (1) Ensure that purchasers and
renters of older housing make informed housing and maintenance
decisions before they become obligated under purchase or lease
contracts; (2) ensure that all participants in target housing sales and
leasing transactions fully understand their rights and obligations
under section 1018 and the implementing regulations; (3) document the
completion of all disclosure activities by the responsible parties; and
(4) provide a record of compliance for use by EPA and HUD enforcement
officials. Under the authority of section 1018 of Title X, the
information collection requirements of this rule are mandatory for all
applicable sales and leasing transactions.
The annual costs to private parties to comply with the requirements
of the rule are estimated to be $81.4 million, with an associated
burden of 7.1 million hours. Annual costs may be broken down into two
components: Initialization or start-up costs, estimated to be $26.9
million (annualized at 3 percent over 3 years); and costs for
information disclosure and maintenance of records, estimated to be
$54.5 million. Annual burden is estimated to be distributed among 35.1
million responses, averaging 12.2 minutes per response. The number of
respondents is estimated to be 15.5 million. Burden means the total
time, effort, or financial resources expended by persons to generate,
maintain, retain, or disclose or provide information to or for a
Federal
[[Page 9082]]
agency. This includes the time needed to review instructions; develop,
acquire, install, and utilize technology and systems for the purposes
of collecting, validating, and verifying information, processing and
maintaining information, and disclosing and providing information;
adjust the existing ways to comply with any previously applicable
instructions and requirements; train personnel to respond to a
collection of information; search data sources; complete and review the
collection of information; and transmit or otherwise disclose the
information.
An Agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15. Upon OMB
approval, EPA will issue a notice in the Federal Register to announce
OMB's approval and to make a technical amendment to include a reference
to this approval in 40 CFR part 9.
Send comments on the burden estimates and any suggested methods for
minimizing respondent burden, including through the use of automated
collection techniques, to the Director, OPPE Regulatory Information
Division, Environmental Protection Agency (2136), 401 M St., SW.,
Washington, DC 20460, and to the Office of Information and Regulatory
Affairs, Office of Management and Budget, 725 17th St., NW.,
Washington, DC 20503, marked ``Attention: Desk Officer for EPA.''
Include the ICR number in any correspondence.
D. Environmental Impact
In accordance with 40 CFR 1508.4 of the regulations of the Council
on Environmental Quality and 24 CFR 50.19 and 50.20(o)(2) of the HUD
regulations, the policies and procedures contained in this final rule
relate only to information services and are, therefore, categorically
excluded from the requirements of the National Environmental Policy
Act.
E. HUD's Regulatory Agenda
This rule was listed as Item No. 1517 in HUD's Semiannual Agenda of
Regulations published on April 25, 1994 (59 FR 20424), in accordance
with Executive Order 12866 and the Regulatory Flexibility Act, and was
requested by and submitted to the Committee on Banking, Finance and
Urban Affairs of the House of Representatives under section 7(o) of the
Department of Housing and Urban Development Act.
F. Unfunded Mandates Reform Act
Pursuant to Title II of the Unfunded Mandates Reform Act of 1995,
which the President signed into law on March 22, 1995, EPA and HUD have
assessed the effects of this regulatory action on State, local, and
tribal governments, and the private sector. This action is not an
``unfunded mandate'' as defined by that statute and will not result in
the expenditure of $100 million or more by any State, local, or tribal
government, or by the private sector. Nevertheless, EPA and HUD
consulted with several State, local, and tribal governments during the
development.
A copy of the RIA is available for public review. For information
on the public docket, see Unit VIII. of this preamble, entitled
Rulemaking Record.
List of Subjects in 24 CFR Part 35
Environmental protection, Grant programs-housing and community
development, Hazardous substances, Lead, Lead poisoning, Mortgage
insurance, Rent subsidies, Reporting and recordkeeping requirements.
List of Subjects in 40 CFR Part 745
Environmental protection, Hazardous substances, Lead, Recordkeeping
and notification requirements.
Dated: February 29, 1996.
Henry Cisneros,
Secretary, Department of Housing and Urban Development.
Dated: February 29, 1996.
Carol M. Browner,
Administrator, Environmental Protection Agency.
Therefore, 24 CFR subtitle A and 40 CFR Chapter I are amended as
follows:
24 CFR Subtitle A
PART 35--LEAD-BASED PAINT POISONING PREVENTION IN CERTAIN
RESIDENTIAL STRUCTURES
1. The authority citation for part 35 is revised to read as
follows:
Authority: 42 U.S.C. 3535(d), 4821-4846 and 4852d.
2. A new subpart H is added to part 35 to read as follows:
Subpart H--Disclosure of Known Lead-Based Paint and/or Lead-Based Paint
Hazards Upon Sale or Lease of Residential Property
Sec.
35.80 Purpose.
35.82 Scope and applicability.
35.84 Effective dates.
35.86 Definitions.
35.88 Disclosure requirements for sellers and lessors.
35.90 Opportunity to conduct an evaluation.
35.92 Certification and acknowledgment of disclosure.
35.94 Agent responsibilities.
35.96 Enforcement.
35.98 Impact on State and local requirements.
Subpart H--Disclosure of Known Lead-Based Paint and/or Lead-Based Paint
Hazards Upon Sale or Lease of Residential Property
Sec. 35.80 Purpose.
This subpart implements the provisions of 42 U.S.C. 4852d, which
impose certain requirements on the sale or lease of target housing.
Under this subpart, a seller or lessor of target housing shall disclose
to the purchaser or lessee the presence of any known lead-based paint
and/or lead-based paint hazards; provide available records and reports;
provide the purchaser or lessee with a lead hazard information
pamphlet; give purchasers a 10-day opportunity to conduct a risk
assessment or inspection; and attach specific disclosure and warning
language to the sales or leasing contract before the purchaser or
lessee is obligated under a contract to purchase or lease target
housing.
Sec. 35.82 Scope and applicability.
This subpart applies to all transactions to sell or lease target
housing, including subleases, with the exception of the following:
(a) Sales of target housing at foreclosure.
(b) Leases of target housing that have been found to be lead-based
paint free by an inspector certified under the Federal certification
program or under a federally accredited State or tribal certification
program. Until a Federal certification program or federally accredited
State certification program is in place within the State, inspectors
shall be considered qualified to conduct an inspection for this purpose
if they have received certification under any existing State or tribal
inspector certification program. The lessor has the option of using the
results of additional test(s) by a certified inspector to confirm or
refute a prior finding.
(c) Short-term leases of 100 days or less, where no lease renewal
or extension can occur.
(d) Renewals of existing leases in target housing in which the
lessor has previously disclosed all information required under
Sec. 35.88 and where no new information described in Sec. 35.88 has
come into the possession of the lessor. For the purposes of this
[[Page 9083]]
paragraph, renewal shall include both renegotiation of existing lease
terms and/or ratification of a new lease.
Sec. 35.84 Effective dates.
The requirements in this subpart take effect in the following
manner:
(a) For owners of more than four residential dwellings, the
requirements shall take effect on September 6, 1996.
(b) For owners of one to four residential dwellings, the
requirements shall take effect on December 6, 1996.
Sec. 35.86 Definitions.
The following definitions apply to this subpart.
The Act means the Residential Lead-Based Paint Hazard Reduction Act
of 1992, 42 U.S.C. 4852d.
Agent means any party who enters into a contract with a seller or
lessor, including any party who enters into a contract with a
representative of the seller or lessor, for the purpose of selling or
leasing target housing. This term does not apply to purchasers or any
purchaser's representative who receives all compensation from the
purchaser.
Available means in the possession of or reasonably obtainable by
the seller or lessor at the time of the disclosure.
Common area means a portion of a building generally accessible to
all residents/users including, but not limited to, hallways, stairways,
laundry and recreational rooms, playgrounds, community centers, and
boundary fences.
Contract for the purchase and sale of residential real property
means any contract or agreement in which one party agrees to purchase
an interest in real property on which there is situated one or more
residential dwellings used or occupied, or intended to be used or
occupied, in whole or in part, as the home or residence of one or more
persons.
EPA means the Environmental Protection Agency.
Evaluation means a risk assessment and/or inspection.
Foreclosure means any of the various methods, statutory or
otherwise, known in different jurisdictions, of enforcing payment of a
debt, by the taking and selling of real property.
Housing for the elderly means retirement communities or similar
types of housing reserved for households composed of one or more
persons 62 years of age or more at the time of initial occupancy.
Inspection means:
(1) A surface-by-surface investigation to determine the presence of
lead-based paint as provided in section 302(c) of the Lead-Based Paint
Poisoning and Prevention Act [42 U.S.C. 4822], and
(2) The provision of a report explaining the results of the
investigation.
Lead-based paint means paint or other surface coatings that contain
lead equal to or in excess of 1.0 milligram per square centimeter or
0.5 percent by weight.
Lead-based paint free housing means target housing that has been
found to be free of paint or other surface coatings that contain lead
equal to or in excess of 1.0 milligram per square centimeter or 0.5
percent by weight.
Lead-based paint hazard means any condition that causes exposure to
lead from lead-contaminated dust, lead-contaminated soil, or lead-
contaminated paint that is deteriorated or present in accessible
surfaces, friction surfaces, or impact surfaces that would result in
adverse human health effects as established by the appropriate Federal
agency.
Lessee means any entity that enters into an agreement to lease,
rent, or sublease target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
Lessor means any entity that offers target housing for lease, rent,
or sublease, including but not limited to individuals, partnerships,
corporations, trusts, government agencies, housing agencies, Indian
tribes, and nonprofit organizations.
Owner means any entity that has legal title to target housing,
including but not limited to individuals, partnerships, corporations,
trusts, government agencies, housing agencies, Indian tribes, and
nonprofit organizations, except where a mortgagee holds legal title to
property serving as collateral for a mortgage loan, in which case the
owner would be the mortgagor.
Purchaser means an entity that enters into an agreement to purchase
an interest in target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
Reduction means measures designed to reduce or eliminate human
exposure to lead-based paint hazards through methods including interim
controls and abatement.
Residential dwelling means:
(1) A single-family dwelling, including attached structures such as
porches and stoops; or
(2) A single-family dwelling unit in a structure that contains more
than one separate residential dwelling unit, and in which each such
unit is used or occupied, or intended to be used or occupied, in whole
or in part, as the residence of one or more persons.
Risk assessment means an on-site investigation to determine and
report the existence, nature, severity, and location of lead-based
paint hazards in residential dwellings, including:
(1) Information gathering regarding the age and history of the
housing and occupancy by children under age 6;
(2) Visual inspection;
(3) Limited wipe sampling or other environmental sampling
techniques;
(4) Other activity as may be appropriate; and
(5) Provision of a report explaining the results of the
investigation.
Seller means any entity that transfers legal title to target
housing, in whole or in part, in return for consideration, including
but not limited to individuals, partnerships, corporations, trusts,
government agencies, housing agencies, Indian tribes, and nonprofit
organizations. The term ``seller'' also includes:
(1) An entity that transfers shares in a cooperatively owned
project, in return for consideration; and
(2) An entity that transfers its interest in a leasehold, in
jurisdictions or circumstances where it is legally permissible to
separate the fee title from the title to the improvement, in return for
consideration.
Target housing means any housing constructed prior to 1978, except
housing for the elderly or persons with disabilities (unless any child
who is less than 6 years of age resides or is expected to reside in
such housing) or any 0-bedroom dwelling.
TSCA means the Toxic Substances Control Act, 15 U.S.C. 2601.
0-bedroom dwelling means any residential dwelling in which the
living area is not separated from the sleeping area. The term includes
efficiencies, studio apartments, dormitory housing, military barracks,
and rentals of individual rooms in residential dwellings.
Sec. 35.88 Disclosure requirements for sellers and lessors.
(a) The following activities shall be completed before the
purchaser or lessee is obligated under any contract to purchase or
lease target housing that is not otherwise an exempt transaction
pursuant to Sec. 35.82. Nothing in this section implies a positive
obligation on the seller or lessor to conduct any evaluation or
reduction activities.
(1) The seller or lessor shall provide the purchaser or lessee with
an EPA-approved lead hazard information
[[Page 9084]]
pamphlet. Such pamphlets include the EPA document entitled Protect Your
Family From Lead in Your Home (EPA #747-K-94-001) or an equivalent
pamphlet that has been approved for use in that State by EPA.
(2) The seller or lessor shall disclose to the purchaser or lessee
the presence of any known lead-based paint and/or lead-based paint
hazards in the target housing being sold or leased. The seller or
lessor shall also disclose any additional information available
concerning the known lead-based paint and/or lead-based paint hazards,
such as the basis for the determination that lead-based paint and/or
lead-based paint hazards exist, the location of the lead-based paint
and/or lead-based paint hazards, and the condition of the painted
surfaces.
(3) The seller or lessor shall disclose to each agent the presence
of any known lead-based paint and/or lead-based paint hazards in the
target housing being sold or leased and the existence of any available
records or reports pertaining to lead-based paint and/or lead-based
paint hazards. The seller or lessor shall also disclose any additional
information available concerning the known lead-based paint and/or
lead-based paint hazards, such as the basis for the determination that
lead-based paint and/or lead-based paint hazards exist, the location of
the lead-based paint and/or lead-based paint hazards, and the condition
of the painted surfaces.
(4) The seller or lessor shall provide the purchaser or lessee with
any records or reports available to the seller or lessor pertaining to
lead-based paint and/or lead-based paint hazards in the target housing
being sold or leased. This requirement includes records and reports
regarding common areas. This requirement also includes records and
reports regarding other residential dwellings in multifamily target
housing, provided that such information is part of an evaluation or
reduction of lead-based paint and/or lead-based paint hazards in the
target housing as a whole.
(b) If any of the disclosure activities identified in paragraph (a)
of this section occurs after the purchaser or lessee has provided an
offer to purchase or lease the housing, the seller or lessor shall
complete the required disclosure activities prior to accepting the
purchaser's or lessee's offer and allow the purchaser or lessee an
opportunity to review the information and possibly amend the offer.
Sec. 35.90 Opportunity to conduct an evaluation.
(a) Before a purchaser is obligated under any contract to purchase
target housing, the seller shall permit the purchaser a 10-day period
(unless the parties mutually agree, in writing, upon a different period
of time) to conduct a risk assessment or inspection for the presence of
lead-based paint and/or lead-based paint hazards.
(b) Notwithstanding paragraph (a) of this section, a purchaser may
waive the opportunity to conduct the risk assessment or inspection by
so indicating in writing.
Sec. 35.92 Certification and acknowledgment of disclosure.
(a) Seller requirements. Each contract to sell target housing shall
include an attachment containing the following elements, in the
language of the contract (e.g., English, Spanish):
(1) A Lead Warning Statement consisting of the following language:
Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified
that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities, reduced
intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to
provide the buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's possession and
notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is
recommended prior to purchase.
(2) A statement by the seller disclosing the presence of known
lead-based paint and/or lead-based paint hazards in the target housing
being sold or indicating no knowledge of the presence of lead-based
paint and/or lead-based paint hazards. The seller shall also provide
any additional information available concerning the known lead-based
paint and/or lead-based paint hazards, such as the basis for the
determination that lead-based paint and/or lead-based paint hazards
exist, the location of the lead-based paint and/or lead-based paint
hazards, and the condition of the painted surfaces.
(3) A list of any records or reports available to
FR Doc. 96-5243 Lead; Requirements for Disclosure of Known Lead-Based Paint and/ or Lead-Based Paint Hazards in Housing
the seller
pertaining to lead-based paint and/or lead-based paint hazards in the
housing that have been provided to the purchaser. If no such records or
reports are available, the seller shall so indicate.
(4) A statement by the purchaser affirming receipt of the
information set out in paragraphs (a)(2) and (a)(3) of this section and
the lead hazard information pamphlet required under section 15 U.S.C.
2696.
(5) A statement by the purchaser that he/she has either:
(i) Received the opportunity to conduct the risk assessment or
inspection required by Sec. 35.90(a); or
(ii) Waived the opportunity.
(6) When any agent is involved in the transaction to sell target
housing on behalf of the seller, a statement that:
(i) The agent has informed the seller of the seller's obligations
under 42 U.S.C. 4852d; and
(ii) The agent is aware of his/her duty to ensure compliance with
the requirements of this subpart.
(7) The signatures of the sellers, agents, and purchasers,
certifying to the accuracy of their statements, to the best of their
knowledge, along with the dates of signature.
(b) Lessor requirements. Each contract to lease target housing
shall include, as an attachment or within the contract, the following
elements, in the language of the contract (e.g., English, Spanish):
(1) A Lead Warning Statement with the following language:
Housing built before 1978 may contain lead-based paint. Lead
from paint, paint chips, and dust can pose health hazards if not
managed properly. Lead exposure is especially harmful to young
children and pregnant women. Before renting pre-1978 housing,
lessors must disclose the presence of lead-based paint and/or lead-
based paint hazards in the dwelling. Lessees must also receive a
federally approved pamphlet on lead poisoning prevention.
(2) A statement by the lessor disclosing the presence of known
lead-based paint and/or lead-based paint hazards in the target housing
being leased or indicating no knowledge of the presence of lead-based
paint and/or lead-based paint hazards. The lessor shall also disclose
any additional information available concerning the known lead-based
paint and/or lead-based paint hazards, such as the basis for the
determination that lead-based paint and/or lead-based paint hazards
exist in the housing, the location of the lead-based paint and/or lead-
based paint hazards, and the condition of the painted surfaces.
(3) A list of any records or reports available to the lessor
pertaining to lead-based paint and/or lead-based paint hazards in the
housing that have been provided to the lessee. If no such records or
reports are available, the lessor shall so indicate.
[[Page 9085]]
(4) A statement by the lessee affirming receipt of the information
set out in paragraphs (b)(2) and (b)(3) of this section and the lead
hazard information pamphlet required under 15 U.S.C. 2696.
(5) When any agent is involved in the transaction to lease target
housing on behalf of the lessor, a statement that:
(i) The agent has informed the lessor of the lessor's obligations
under 42 U.S.C. 4852d; and
(ii) The agent is aware of his/her duty to ensure compliance with
the requirements of this subpart.
(6) The signatures of the lessors, agents, and lessees certifying
to the accuracy of their statements to the best of their knowledge,
along with the dates of signature.
(c) Retention of certification and acknowledgment information.
(1) The seller, and any agent, shall retain a copy of the completed
attachment required under paragraph (a) of this section for no less
than 3 years from the completion date of the sale. The lessor, and any
agent, shall retain a copy of the completed attachment or lease
contract containing the information required under paragraph (b) of
this section for no less than 3 years from the commencement of the
leasing period.
(2) This recordkeeping requirement is not intended to place any
limitations on civil suits under the Act, or to otherwise affect a
lessee's or purchaser's rights under the civil penalty provisions of 42
U.S.C. 4852d(b)(3).
(d) The seller, lessor, or agent shall not be responsible for the
failure of a purchaser's or lessee's legal representative (where such
representative receives all compensation from the purchaser or lessee)
to transmit disclosure materials to the purchaser or lessee, provided
that all required parties have completed and signed the necessary
certification and acknowledgment language required under paragraphs (a)
and (b) of this section.
Sec. 35.94 Agent responsibilities.
(a) Each agent shall ensure compliance with all requirements of
this subpart. To ensure compliance, the agent shall:
(1) Inform the seller or lessor of his/her obligations under
Secs. 35.88, 35.90, and 35.92.
(2) Ensure that the seller or lessor has performed all activities
required under Secs. 35.88, 35.90, and 35.92, or personally ensure
compliance with the requirements of Secs. 35.88, 35.90, and 35.92.
(b) If the agent has complied with paragraph (a)(1) of this
section, the agent shall not be liable for the failure to disclose to a
purchaser or lessee the presence of lead-based paint and/or lead-based
paint hazards known by a seller or lessor but not disclosed to the
agent.
Sec. 35.96 Enforcement.
(a) Any person who knowingly fails to comply with any provision of
this subpart shall be subject to civil monetary penalties in accordance
with the provisions of 42 U.S.C. 3545 and 24 CFR part 30.
(b) The Secretary is authorized to take such action as may be
necessary to enjoin any violation of this subpart in the appropriate
Federal district court.
(c) Any person who knowingly violates the provisions of this
subpart shall be jointly and severally liable to the purchaser or
lessee in an amount equal to 3 times the amount of damages incurred by
such individual.
(d) In any civil action brought for damages pursuant to 42 U.S.C.
4852d(b)(3), the appropriate court may award court costs to the party
commencing such action, together with reasonable attorney fees and any
expert witness fees, if that party prevails.
(e) Failure or refusal to comply with Secs. 35.88 (disclosure
requirements for sellers and lessors), Sec. 35.90 (opportunity to
conduct an evaluation), Sec. 35.92 (certification and acknowledgment of
disclosure), or Sec. 35.94 (agent responsibilities) is a violation of
42 U.S.C. 4852d(b)(5) and of TSCA section 409 (15 U.S.C. 2689).
(f) Violators may be subject to civil and criminal sanctions
pursuant to TSCA section 16 (15 U.S.C. 2615) for each violation. For
purposes of enforcing this subpart, the penalty for each violation
applicable under 15 U.S.C. 2615 shall be not more than $10,000.
Sec. 35.98 Impact on State and local requirements.
Nothing in this subpart shall relieve a seller, lessor, or agent
from any responsibility for compliance with State or local laws,
ordinances, codes, or regulations governing notice or disclosure of
known lead-based paint and/or lead-based paint hazards. Neither HUD nor
EPA assumes any responsibility for ensuring compliance with such State
or local requirements.
40 CFR Chapter I
1. Part 745 is added to read as follows:
PART 745-LEAD-BASED PAINT POISIONING PREVENTION IN CERTAIN
RESIDENTIAL STRUCTURES
Subparts A--E [Reserved]
Subpart F -- Disclosure of Known Lead-Based Paint and/or Lead-Based
Paint Hazards Upon Sale or Lease of Residential Property
Sec.
745.100 Purpose.
745.101 Scope and applicability.
745.102 Effective dates.
745.103 Definitions.
745.107 Disclosure requirements for sellers and lessors.
745.110 Opportunity to conduct an evaluation.
745.113 Certification and acknowledgment of disclosure.
745.115 Agent responsibilities.
745.118 Enforcement.
745.119 Impact on State and local requirements.
Authority: 15 U.S.C. 2615, 15 U.S.C. 2689, and 42 U.S.C. 4852d.
Subparts A--E [Reserved]
Subpart F--Disclosure of Known Lead-Based Paint and/or Lead-Based
Paint Hazards Upon Sale or Lease of Residential Property
Sec. 745.100 Purpose.
This subpart implements the provisions of 42 U.S.C. 4852d, which
impose certain requirements on the sale or lease of target housing.
Under this subpart, a seller or lessor of target housing shall disclose
to the purchaser or lessee the presence of any known lead-based paint
and/or lead-based paint hazards; provide available records and reports;
provide the purchaser or lessee with a lead hazard information
pamphlet; give purchasers a 10-day opportunity to conduct a risk
assessment or inspection; and attach specific disclosure and warning
language to the sales or leasing contract before the purchaser or
lessee is obligated under a contract to purchase or lease target
housing.
Sec. 745.101 Scope and applicability.
This subpart applies to all transactions to sell or lease target
housing, including subleases, with the exception of the following:
(a) Sales of target housing at foreclosure.
(b) Leases of target housing that have been found to be lead-based
paint free by an inspector certified under the Federal certification
program or under a federally accredited State or tribal certification
program. Until a Federal certification program or federally accredited
State certification program is
[[Page 9086]]
in place within the State, inspectors shall be considered qualified to
conduct an inspection for this purpose if they have received
certification under any existing State or tribal inspector
certification program. The lessor has the option of using the results
of additional test(s) by a certified inspector to confirm or refute a
prior finding.
(c) Short-term leases of 100 days or less, where no lease renewal
or extension can occur.
(d) Renewals of existing leases in target housing in which the
lessor has previously disclosed all information required under
Sec. 745.107 and where no new information described in Sec. 745.107 has
come into the possession of the lessor. For the purposes of this
paragraph, renewal shall include both renegotiation of existing lease
terms and/or ratification of a new lease.
Sec. 745.102 Effective dates.
The requirements in this subpart take effect in the following
manner:
(a) For owners of more than four residential dwellings, the
requirements shall take effect on September 6, 1996.
(b) For owners of one to four residential dwellings, the
requirements shall take effect on December 6, 1996.
Sec. 745.103 Definitions.
The following definitions apply to this subpart.
The Act means the Residential Lead-Based Paint Hazard Reduction Act
of 1992, 42 U.S.C. 4852d.
Agent means any party who enters into a contract with a seller or
lessor, including any party who enters into a contract with a
representative of the seller or lessor, for the purpose of selling or
leasing target housing. This term does not apply to purchasers or any
purchaser's representative who receives all compensation from the
purchaser.
Available means in the possession of or reasonably obtainable by
the seller or lessor at the time of the disclosure.
Common area means a portion of a building generally accessible to
all residents/users including, but not limited to, hallways, stairways,
laundry and recreational rooms, playgrounds, community centers, and
boundary fences.
Contract for the purchase and sale of residential real property
means any contract or agreement in which one party agrees to purchase
an interest in real property on which there is situated one or more
residential dwellings used or occupied, or intended to be used or
occupied, in whole or in part, as the home or residence of one or more
persons.
EPA means the Environmental Protection Agency.
Evaluation means a risk assessment and/or inspection.
Foreclosure means any of the various methods, statutory or
otherwise, known in different jurisdictions, of enforcing payment of a
debt, by the taking and selling of real property.
Housing for the elderly means retirement communities or similar
types of housing reserved for households composed of one or more
persons 62 years of age or more at the time of initial occupancy.
HUD means the U.S. Department of Housing and Urban Development.
Inspection means:
(1) A surface-by-surface investigation to determine the presence of
lead-based paint as provided in section 302(c) of the Lead-Based Paint
Poisoning and Prevention Act [42 U.S.C. 4822], and
(2) The provision of a report explaining the results of the
investigation.
Lead-based paint means paint or other surface coatings that contain
lead equal to or in excess of 1.0 milligram per square centimeter or
0.5 percent by weight.
Lead-based paint free housing means target housing that has been
found to be free of paint or other surface coatings that contain lead
equal to or in excess of 1.0 milligram per square centimeter or 0.5
percent by weight.
Lead-based paint hazard means any condition that causes exposure to
lead from lead-contaminated dust, lead-contaminated soil, or lead-
contaminated paint that is deteriorated or present in accessible
surfaces, friction surfaces, or impact surfaces that would result in
adverse human health effects as established by the appropriate Federal
agency.
Lessee means any entity that enters into an agreement to lease,
rent, or sublease target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
Lessor means any entity that offers target housing for lease, rent,
or sublease, including but not limited to individuals, partnerships,
corporations, trusts, government agencies, housing agencies, Indian
tribes, and nonprofit organizations.
Owner means any entity that has legal title to target housing,
including but not limited to individuals, partnerships, corporations,
trusts, government agencies, housing agencies, Indian tribes, and
nonprofit organizations, except where a mortgagee holds legal title to
property serving as collateral for a mortgage loan, in which case the
owner would be the mortgagor.
Purchaser means an entity that enters into an agreement to purchase
an interest in target housing, including but not limited to
individuals, partnerships, corporations, trusts, government agencies,
housing agencies, Indian tribes, and nonprofit organizations.
Reduction means measures designed to reduce or eliminate human
exposure to lead-based paint hazards through methods including interim
controls and abatement.
Residential dwelling means:
(1) A single-family dwelling, including attached structures such as
porches and stoops; or
(2) A single-family dwelling unit in a structure that contains more
than one separate residential dwelling unit, and in which each such
unit is used or occupied, or intended to be used or occupied, in whole
or in part, as the residence of one or more persons.
Risk assessment means an on-site investigation to determine and
report the existence, nature, severity, and location of lead-based
paint hazards in residential dwellings, including:
(1) Information gathering regarding the age and history of the
housing and occupancy by children under age 6;
(2) Visual inspection;
(3) Limited wipe sampling or other environmental sampling
techniques;
(4) Other activity as may be appropriate; and
(5) Provision of a report explaining the results of the
investigation.
Secretary means the Secretary of Housing and Urban Development.
Seller means any entity that transfers legal title to target
housing, in whole or in part, in return for consideration, including
but not limited to individuals, partnerships, corporations, trusts,
government agencies, housing agencies, Indian tribes, and nonprofit
organizations. The term ``seller'' also includes:
(1) An entity that transfers shares in a cooperatively owned
project, in return for consideration; and
(2) An entity that transfers its interest in a leasehold, in
jurisdictions or circumstances where it is legally permissible to
separate the fee title from the title to the improvement, in return for
consideration.
Target housing means any housing constructed prior to 1978, except
housing for the elderly or persons with disabilities (unless any child
who is less than 6 years of age resides or is expected to reside in
such housing) or any 0-bedroom dwelling.
TSCA means the Toxic Substances Control Act, 15 U.S.C. 2601.
[[Page 9087]]
0-bedroom dwelling means any residential dwelling in which the
living area is not separated from the sleeping area. The term includes
efficiencies, studio apartments, dormitory housing, military barracks,
and rentals of individual rooms in residential dwellings.
Sec. 745.107 Disclosure requirements for sellers and lessors.
(a) The following activities shall be completed before the
purchaser or lessee is obligated under any contract to purchase or
lease target housing that is not otherwise an exempt transaction
pursuant to Sec. 745.101. Nothing in this section implies a positive
obligation on the seller or lessor to conduct any evaluation or
reduction activities.
(1) The seller or lessor shall provide the purchaser or lessee with
an EPA-approved lead hazard information pamphlet. Such pamphlets
include the EPA document entitled Protect Your Family From Lead in Your
Home (EPA #747-K-94-001) or an equivalent pamphlet that has been
approved for use in that State by EPA.
(2) The seller or lessor shall disclose to the purchaser or lessee
the presence of any known lead-based paint and/or lead-based paint
hazards in the target housing being sold or leased. The seller or
lessor shall also disclose any additional information available
concerning the known lead-based paint and/or lead-based paint hazards,
such as the basis for the determination that lead-based paint and/or
lead-based paint hazards exist, the location of the lead-based paint
and/or lead-based paint hazards, and the condition of the painted
surfaces.
(3) The seller or lessor shall disclose to each agent the presence
of any known lead-based paint and/or lead-based paint hazards in the
target housing being sold or leased and the existence of any available
records or reports pertaining to lead-based paint and/or lead-based
paint hazards. The seller or lessor shall also disclose any additional
information available concerning the known lead-based paint and/or
lead-based paint hazards, such as the basis for the determination that
lead-based paint and/or lead-based paint hazards exist, the location of
the lead-based paint and/or lead-based paint hazards, and the condition
of the painted surfaces.
(4) The seller or lessor shall provide the purchaser or lessee with
any records or reports available to the seller or lessor pertaining to
lead-based paint and/or lead-based paint hazards in the target housing
being sold or leased. This requirement includes records or reports
regarding common areas. This requirement also includes records or
reports regarding other residential dwellings in multifamily target
housing, provided that such information is part of an evaluation or
reduction of lead-based paint and/or lead-based paint hazards in the
target housing as a whole.
(b) If any of the disclosure activities identified in paragraph (a)
of this section occurs after the purchaser or lessee has provided an
offer to purchase or lease the housing, the seller or lessor shall
complete the required disclosure activities prior to accepting the
purchaser's or lessee's offer and allow the purchaser or lessee an
opportunity to review the information and possibly amend the offer.
Sec. 745.110 Opportunity to conduct an evaluation.
(a) Before a purchaser is obligated under any contract to purchase
target housing, the seller shall permit the purchaser a 10-day period
(unless the parties mutually agree, in writing, upon a different period
of time) to conduct a risk assessment or inspection for the presence of
lead-based paint and/or lead-based paint hazards.
(b) Not withstanding paragraph (a) of this section, a purchaser may
waive the opportunity to conduct the risk assessment or inspection by
so indicating in writing.
Sec. 745.113 Certification and acknowledgment of disclosure.
(a) Seller requirements. Each contract to sell target housing shall
include an attachment containing the following elements, in the
language of the contract (e.g., English, Spanish):
(1) A Lead Warning Statement consisting of the following language:
Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified
that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities, reduced
intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to
provide the buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's possession and
notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is
recommended prior to purchase.
(2) A statement by the seller disclosing the presence of known
lead-based paint and/or lead-based paint hazards in the target housing
being sold or indicating no knowledge of the presence of lead-based
paint and/or lead-based paint hazards. The seller shall also provide
any additional information available concerning the known lead-based
paint and/or lead-based paint hazards, such as the basis for the
determination that lead-based paint and/or lead-based paint hazards
exist, the location of the lead-based paint and/or lead-based paint
hazards, and the condition of the painted surfaces.
(3) A list of any records or reports available to the seller
pertaining to lead-based paint and/or lead-based paint hazards in the
housing that have been provided to the purchaser. If no such records or
reports are available, the seller shall so indicate.
(4) A statement by the purchaser affirming receipt of the
information set out in paragraphs (a)(2) and (a)(3) of this section and
the lead hazard information pamphlet required under 15 U.S.C. 2696.
(5) A statement by the purchaser that he/she has either:
(i) Received the opportunity to conduct the risk assessment or
inspection required by Sec. 745.110(a); or
(ii) Waived the opportunity.
(6) When one or more agents are involved in the transaction to sell
target housing on behalf of the seller, a statement that:
(i) The agent has informed the seller of the seller's obligations
under 42 U.S.C. 4852d; and
(ii) The agent is aware of his/her duty to ensure compliance with
the requirements of this subpart.
(7) The signatures of the sellers, agents, and purchasers
certifying to the accuracy of their statements to the best of their
knowledge, along with the dates of signature.
(b) Lessor requirements. Each contract to lease target housing
shall include, as an attachment or within the contract, the following
elements, in the language of the contract (e.g., English, Spanish):
(1) A Lead Warning Statement with the following language:
Housing built before 1978 may contain lead-based paint. Lead
from paint, paint chips, and dust can pose health hazards if not
managed properly. Lead exposure is especially harmful to young
children and pregnant women. Before renting pre-1978 housing,
lessors must disclose the presence of lead-based paint and/or lead-
based paint hazards in the dwelling. Lessees must also receive a
federally approved pamphlet on lead poisoning prevention.
(2) A statement by the lessor disclosing the presence of known
lead-based paint and/or lead-based paint
[[Page 9088]]
hazards in the target housing being leased or indicating no knowledge
of the presence of lead-based paint and/or lead-based paint hazards.
The lessor shall also disclose any additional information available
concerning the known lead-based paint and/or lead-based paint hazards,
such as the basis for the determination that lead-based paint and/or
lead-based paint hazards exist, the location of the lead-based paint
and/or lead-based paint hazards, and the condition of the painted
surfaces.
(3) A list of any records or reports available to the lessor
pertaining to lead-based paint and/or lead-based paint hazards in the
housing that have been provided to the lessee. If no such records or
reports are available, the lessor shall so indicate.
(4) A statement by the lessee affirming receipt of the information
set out in paragraphs (b)(2) and (b)(3) of this section and the lead
hazard information pamphlet required under 15 U.S.C. 2696.
(5) When one or more agents are involved in the transaction to
lease target housing on behalf of the lessor, a statement that:
(i) The agent has informed the lessor of the lessors obligations
under 42 U.S.C. 4852d; and
(ii) The agent is aware of his/her duty to ensure compliance with
the requirements of this subpart.
(6) The signatures of the lessors, agents, and lessees, certifying
to the accuracy of their statements, to the best of their knowledge,
along with the dates of signature.
(c) Retention of Certification and Acknowledgment Information.
(1) The seller, and any agent, shall retain a copy of the completed
attachment required under paragraph (a) of this section for no less
than 3 years from the completion date of the sale. The lessor, and any
agent, shall retain a copy of the completed attachment or lease
contract containing the information required under paragraph (b) of
this section for no less than 3 years from the commencement of the
leasing period.
(2) This recordkeeping requirement is not intended to place any
limitations on civil suits under the Act, or to otherwise affect a
lessee's or purchaser's rights under the civil penalty provisions of 42
U.S.C. 4852d(b)(3).
(d) The seller, lessor, or agent shall not be responsible for the
failure of a purchaser's or lessee's legal representative (where such
representative receives all compensation from the purchaser or lessee)
to transmit disclosure materials to the purchaser or lessee, provided
that all required parties have completed and signed the necessary
certification and acknowledgment language required under paragraphs (a)
and (b) of this section.
Sec. 745.115 Agent responsibilities.
(a) Each agent shall ensure compliance with all requirements of
this subpart. To ensure compliance, the agent shall:
(1) Inform the seller or lessor of his/her obligations under
Secs. 745.107, 745.110, and 745.113.
(2) Ensure that the seller or lessor has performed all activities
required under Secs. 745.107, 745.110, and 745.113, or personally
ensure compliance with the requirements of Secs. 745.107, 745.110, and
745.113.
(b) If the agent has complied with paragraph (a)(1) of this
section, the agent shall not be liable for the failure to disclose to a
purchaser or lessee the presence of lead-based paint and/or lead-based
paint hazards known by a seller or lessor but not disclosed to the
agent.
Sec. 745.118 Enforcement.
(a) Any person who knowingly fails to comply with any provision of
this subpart shall be subject to civil monetary penalties in accordance
with the provisions of 42 U.S.C. 3545 and 24 CFR part 30.
(b) The Secretary is authorized to take such action as may be
necessary to enjoin any violation of this subpart in the appropriate
Federal district court.
(c) Any person who knowingly violates the provisions of this
subpart shall be jointly and severally liable to the purchaser or
lessee in an amount equal to 3 times the amount of damages incurred by
such individual.
(d) In any civil action brought for damages pursuant to 42 U.S.C.
4852d(b)(3), the appropriate court may award court costs to the party
commencing such action, together with reasonable attorney fees and any
expert witness fees, if that party prevails.
(e) Failure or refusal to comply with Sec. 745.107 (disclosure
requirements for sellers and lessors), Sec. 745.110 (opportunity to
conduct an evaluation), Sec. 745.113 (certification and acknowledgment
of disclosure), or Sec. 745.115 (agent responsibilities) is a violation
of 42 U.S.C. 4852d(b)(5) and of TSCA section 409 (15 U.S.C. 2689).
(f) Violators may be subject to civil and criminal sanctions
pursuant to TSCA section 16 (15 U.S.C. 2615) for each violation. For
purposes of enforcing this subpart, the penalty for each violation
applicable under 15 U.S.C. 2615 shall be not more than $10,000.
Sec. 745.119 Impact on State and local requirements.
Nothing in this subpart shall relieve a seller, lessor, or agent
from any responsibility for compliance with State or local laws,
ordinances, codes, or regulations governing notice or disclosure of
known lead-based paint or lead-based paint hazards. Neither HUD nor EPA
assumes any responsibility for ensuring compliance with such State or
local requirements.
[FR Doc. 96-5243 Filed 3-5-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-5240 Exemption of Certain Pesticide Substances From Federal Insecticide, Fungicide, and Rodenticide Act Requirements
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8876-8879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5240]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 152
[OPP-300350A; FRL 4984-8]
RIN 2070-AC67
Exemption of Certain Pesticide Substances From Federal
Insecticide, Fungicide, and Rodenticide Act Requirements
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final Rule.
-----------------------------------------------------------------------
SUMMARY: This rule establishes an exemption from regulation under the
Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) for certain
pesticides. EPA has determined that these pesticides, under certain
conditions, are of a character not necessary to be regulated under
FIFRA in order to carry out the purposes of the Act. EPA has concluded
that exemption of products covered by this final rule will not pose
unreasonable risks to public health or the environment and will, at the
same time, relieve producers of the burden associated with regulation.
Pesticidal products that do not meet the conditions of this final rule
will continue to be regulated under FIFRA.
DATES: This rule becomes effective May 6, 1996.
FOR FURTHER INFORMATION CONTACT: Robert S. Brennis, Registration
Division (7505C), Office of Pesticide Programs, Environmental
Protection Agency, 401 M St., SW., Washington DC 20460. Office
location: Room 713, CM #2, 1921 Jefferson Davis Highway, Arlington, VA.
Telephone: 703-305-7501, e-mail: [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
Authority: This rule is issued under the authority of FIFRA
section 25(b).
EPA issued a proposed rule in the Federal Register on September 15,
1994 to exempt from FIFRA regulation certain pesticidal substances (59
FR 47289). In its proposal, EPA identified a total of 31 pesticidal
active ingredients that it believed were not of a character necessary
to be regulated under FIFRA.
In developing its list of exempted substances, EPA applied certain
factors. Consideration was given to such factors as, (1) whether the
pesticidal substance is widely available to the general public for
other uses; (2) if it is a common food or constituent of a common food;
(3) if it has a nontoxic mode of action; (4) if it is recognized by the
Food and Drug Administration (FDA) as safe; (5) if there is no
information showing significant adverse effects; (6) if its use pattern
will result in significant exposure, and (7) if it is likely to be
persistent in the environment.
EPA also proposed, as a condition of exempted status, several
restrictions. First, the proposal identified active ingredients and
listed certain inert ingredients that would be permitted in exempted
formulations. Pesticide formulations would qualify only if all of the
ingredients contained in the product were exempt. All inert ingredients
contained in the formulation would have to be from the list of inerts
identified as minimum risk inerts as published in the Federal Register
as List 4A inerts. This list was last published in the Federal
Register, September 28, 1994 (59 FR 49400).
Second, in order to qualify for the exemption, the pesticide
product label must identify all the ingredients of the product. Third,
labels must comply with established regulations regarding false and
misleading statements (40 CFR 156.10(a)(5)(i) through (viii)). And
fourth, the substance or product could not bear claims either to
control or mitigate microorganisms that pose a threat to human health
or carriers of such microorganisms.
In its proposal, EPA solicited comments on the list of substances
themselves, the evaluation factors and the conditions of exemption.
EPA has determined, with the conditions imposed by this rule, that
use of these pesticides poses insignificant risks to human health or
the environment in order to carry out the purposes of the Act, and the
burden imposed by regulation is, therefore, not justified. The Agency,
in promulgating this rule, is responding to society's increasing demand
for more natural and benign methods of pest control, and to the desire
to reduce governmental regulations and ease the burden on the public.
The regulatory steps required to register any pesticide substance are
formidable, not only for the Agency but for the applicants, who often
are small businesses. The novice registrant often requires extra
attention and instruction. EPA believes that both the applicant and the
Agency are consuming valuable time, energy, and money to register
chemicals that pose such low risk.
II. Implementation
Products registered with EPA which now qualify for exemption from
pesticide regulation under this rule, will remain registered until
further action is taken by the registrant. The Agency encourages
voluntary cancellation of these registrations. Cancellation requests
should be mailed to James A. Hollins, Office of Pesticide Programs
(7502C) EPA, 401 M St., SW., Washington, DC 20460. The letter should
request cancellation under FIFRA section 25(b) and specify the product
to be canceled by both name and EPA registration number. Existing
stocks may be distributed for 1 year after the date of cancellation.
After that date, it will be a violation of FIFRA for the former
registrant to sell or distribute stock with an EPA registration number
displayed on the label. Products in channels of trade may be sold and
used until supplies are exhausted.
Producers of products that are exempted from regulation by this
final rule, will not be obligated to comply with the established
registration and reporting requirements of FIFRA, section 7 with
respect to exempted products. Producers who wish to market exempted
products do not need to notify the Agency or obtain confirmation that
the product is exempt. Provided the producer complies with all
conditions of this rule, product may be distributed. To comply,
producers must refer to this rule, the most recently published 4A
inerts list, and a copy of the false and misleading labeling
requirements contained in 40 CFR 156.10(a)(5)(i) through (viii).
It is important to note that this rule only affects Federal
regulation of pesticide products. Pesticide producers of exempt
products should contact the pesticide agency in each State in which
[[Page 8877]]
they wish to market their products, to determine if there are State
requirements which need to be met.
III. Public Comment and Agency Response
Fifty-six commenters responded to the proposed rule. Of these, 29
(52%) generally opposed the proposal, and 23 (41%) generally supported
it. Fourteen of the 29 commenters who opposed the rule as proposed,
expressed support for some form of reduced regulation of low-risk
pesticides.
Supporters of the proposal include the ``organic'' industry,
Greenpeace and companies likely to benefit from deregulation of these
substances. Those opposed to the proposal include the States' FIFRA
Issues Research Evaluation Group (SFIREG); State lead agencies with
pesticide enforcement responsibilities in Arizona, California, New
Jersey and Vermont; the Armed Forces Pest Management Board; the U.S.
Department of Health and Human Services' Center for Disease Control;
the National Coalition Against the Misuse of Pesticides (NCAMP);
mosquito and vector control agencies; and several members of the
regulated pesticide industry.
The supporters of the proposal generally agreed with EPA that
regulation of the listed substances is not necessary to prevent
unreasonable adverse effects on human health or the environment. Many
commented that deregulation would encourage the development and use of
``safer'' pesticides and that the exemptions would benefit business,
especially small business and the organic industry. Many supporters
felt that EPA should more fully implement the proposal by greatly
expanding the lists of exempted active ingredients and permitted
inerts. Approximately 80 additional active ingredients and 50 inerts
were proposed for future consideration. The Agency will evaluate each
active ingredient and will include those it feels qualify for exemption
in its next proposal. The inerts are presently being reviewed for
possible inclusion in the next published list of inerts of minimum
concern (inerts 4A list).
Among objections to the proposal, the most often repeated concern
was that deregulation would result in a proliferation of ineffective
products making false or misleading claims about product performance
and/or safety and that the public would pay the price for inadequate
oversight by EPA and the Federal Trade Commission (FTC). SFIREG, the
State Lead Agencies, and others expressed concern that deregulation
would create a number of serious enforcement problems for States. Other
significant concerns included the fear that deregulation of arthropod
repellents would adversely affect public health; that certain
substances proposed for exemption or included on the list of permitted
inerts were not ``safe'' or could cause adverse effects when used in
combination or in ways not anticipated by EPA; that EPA's factors and
process for determining which substances to exempt or its process for
revoking exemptions in the face of reported adverse effects were
inadequate; and that deregulation of these substances would give an
unfair competitive advantage to manufacturers of exempt pesticide
products. Although more than 50 percent of the commenters opposed the
proposed exemptions, nearly half (14 of 29) of the opponents expressed
support for some form of reduced regulation of low-risk pesticides.
In response to concerns regarding labeling and enforcement, the
Agency has changed the rule to provide specific label requirements as
indicated in the following section of this rule. If these conditions
are not met by products being distributed, then the conditions for
exemption from regulation have not been met, and the Agency retains
authority to bring enforcement action under FIFRA.
It is significant to point out, that since one condition for
exemption is that the product label cannot make false or misleading
claims, it is important for formulators and distributors of unregulated
products to ensure that they are not making any unsupported efficacy
claims for any pest, particularly for those which may be of a possible
public health concern.
The final rule clearly and concisely states which conditions
manufacturers must meet to obtain exempted status for certain low-risk
pesticides. States need only review whether a product meets those
conditions to determine exempt status. The Agency is convinced that the
deregulation of low risk products is wise. Exempted products should not
require significant monitoring and it will not be difficult for States
to identify properly exempted products. Those States which do not allow
exemptions from State registration are free to continue to enforce
their State provisions.
Many commenters expressed concern that deregulation of some
pesticides would give a competitive advantage to manufacturers of
deregulated products. EPA's regulatory authority under FIFRA is
primarily a licensing authority and every decision has some potential
effect on competitors. The Agency does not consider potential impact on
competitors to be a valid and sufficient reason to preclude an
exemption under FIFRA.
While no one submitted compelling evidence that the listed
substances should not be exempted from regulation, several people took
issue with the way EPA approached exempting pesticides in general and
expressed concerns about the specific factors the Agency used to arrive
at its selections. The Agency agrees that any one factor, taken alone,
is insufficient to make a minimum risk determination. Admittedly, many
chemicals that are available to the public on a daily basis, pose some
level of risk, and several higher-risk pesticides were once listed on
FDA's Generally Recognized As Safe (GRAS) list. It is important to
stress that these factors were not applied exclusive of one another,
but rather in conjunction with all of the others. Moreover, the factors
themselves are not meant to be absolute criteria and certainly some
factors are unsupported for some of the substances. But, taken as a
whole, EPA believes that the factors applied to each of the substances
indicate that the substances will not pose a risk that warrants
regulation under FIFRA. EPA researched each substance prior to
proposing it for exemption. A general literature search was performed
in addition to an in-house search of the Agency's own data base.
In its proposal, the Agency invited the public to add to the list
of factors or submit information that might be appropriate to consider
in determining whether a substance should be exempted from FIFRA
regulation. No information was submitted by commenters about the
proposed pesticides to support their comments. Any person may submit
evidence that refutes the Agency's conclusions that any exempted
pesticide should no longer be exempted because of newly uncovered risk.
EPA will consider such information in determining whether the exemption
should be continued.
Commenters indicated that EPA should adopt a position similar to
FDA's that allows cosmetics manufacturers to use the generic term
``fragrance'' on their labels. The requirement to list all ingredients
on the exempted product label presents problems, since fragrances are
often purchased from independent vendors, and their formulations are
proprietary. Fragrances can be skin sensitizers or have other adverse
effects, particularly at higher concentrations. The Agency's evaluation
of fragrances is concentration dependent; that is, it is based upon the
amount of fragrance that will be used in
[[Page 8878]]
a given formulation. What is acceptable at 0.1% concentration, may not
be acceptable at 2%. In deregulating, the Agency would not be able to
regulate the concentration of these fragrances in a formulation. The
Agency understands the proprietary nature of many fragrance
formulations, and we have evaluated ways of including fragrances on
inerts list 4A. The Agency has found no workable solutions for this
issue. The rule has not been changed.
All public comments and more detailed responses to specific issues,
are available in the public docket.
IV. Revisions Made to the Rule in Response to Comments
The Agency has made the following changes from the proposed rule in
response to the comments it received.
1. The ingredients cinnamon, citronella, garlic, and sesame have
been revised to include their oils.
2. The requirement that the product label must indicate the
percentage (by weight) of active ingredient(s) contained in the product
has been added.
3. The requirement, ``The substance or product must not bear claims
either to control or mitigate microorganisms that pose a threat to
human health or carriers of such microorganisms'', has been amended to
read, ``The substance or product must not bear claims either to control
or mitigate microorganisms that pose a threat to human health,
including, but not limited to disease transmitting bacteria or viruses,
or claims to control insects or rodents carrying specific diseases,
including, but not limited to ticks that carry Lyme disease.''
4. The requirement that products must not include any false and
misleading labeling statements, including those listed in 40 CFR
156.10(a)(5)(i) - (viii) has been added.
V. Public Docket
EPA has established a public docket for this rulemaking (OPP-300350
and 300350A). All comments received in response to the proposed and
final rule are available in the public docket. A public version of this
record, including printed, paper versions of electronic comments, which
does not include any information claimed as CBI, is available for
inspection from 8 a.m. to 4 p.m, Monday through Friday, excluding legal
holidays. The public record is located in Room 1132 of the Public
Response and Program Resources Branch, Field Operations Division
(7506C), Office of Pesticide Programs, Environmental Protection Agency,
Crystal Mall #2, 1921 Jefferson Davis Highway, Arlington, VA. Please
address all written inquiries to the Public Response Section, Field
Operations Division (7506C), Office of Pesticide Programs,
Environmental Protection Agency, 401 M St., SW., Washington, DC 20460.
VI. Regulatory Assessment Requirements
A. Executive Order 12866
Under Executive Order 12866 (58 FR 51735, Oct. 4, 1993), it has
been determined that this rule is not ``significant'' and is therefore
not subject to review by the Office of Management and Budget.
B. Regulatory Flexibility Act
This rule has been reviewed under the Regulatory Flexibility Act of
1980 (Pub.L. 96-354; 94 Stat. 1164, 5 U.S.C. 601 et seq.). EPA has
determined that this rule will have a positive economic impact on a
substantial number of small businesses which will no longer be subject
to FIFRA regulation, thereby reducing their costs and regulatory
burdens.
Accordingly, I certify that this rule does not require a separate
regulatory flexibility analysis under the Regulatory Flexibility Act.
C. Paperwork Reduction Act
This rule contains no information collection requirements.
Therefore, the Paperwork Reduction Act is not applicable.
D. SAP, USDA and Congressional Review
In accordance with FIFRA section 25, the FIFRA Scientific Advisory
Panel (SAP) has waived review of this rule. A copy of the rule has been
forwarded to the U.S. Department of Agriculture before publication.
Copies of the final rule also were forwarded to the Committee of
Agriculture of the House of Representatives and the Committee on
Agriculture, Nutrition and Forestry of the Senate.
List of Subjects in 40 CFR Part 152
Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and record
keeping requirements.
Dated: February 28, 1996.
Carol M. Browner,
Administrator.
Therefore, 40 CFR chapter I, part 152 is amended as follows:
PART 152--[AMENDED]
1. The authority citation for part 152 continues to read as
follows:
Authority: 7 U.S.C. 136-136y.
2. In Sec. 152.25 by adding a new paragraph (g) to read as follows:
Sec. 152.25 Exemptions for pesticides of a character not requiring
FIFRA regulation.
* * * * *
(g) Minimum risk pesticides-- (1) Exempted products. Products
containing the following active ingredients are exempt from the
requirements of FIFRA, alone or in combination with other substances
listed in this paragraph, provided that all of the criteria of this
section are met.
Castor oil (U.S.P. or equivalent)
Cedar oil
Cinnamon and cinnamon oil
Citric acid
Citronella and Citronella oil
Cloves and clove oil
Corn gluten meal
Corn oil
Cottonseed oil
Dried Blood
Eugenol
Garlic and garlic oil
Geraniol
Geranium oil
Lauryl sulfate
Lemongrass oil
Linseed oil
Malic acid
Mint and mint oil
Peppermint and peppermint oil
2-Phenethyl propionate (2-phenylethyl propionate)
Potassium sorbate
Putrescent whole egg solids
Rosemary and rosemary oil
Sesame (includes ground sesame plant) and sesame oil
Sodium chloride (common salt)
Sodium lauryl sulfate
Soybean oil
Thyme and thyme oil
White pepper
Zinc metal strips (consisting solely of zinc metal and
impurities)
(2) Permitted inerts. A pesticide product exempt under paragraph
(g)(1) of this section may only include inert ingredients listed in the
most current List 4A. This list is updated periodically and is
published in the Federal Register. The most current list may be
obtained by writing to Registration Support Branch (4A Inerts List)
Registration Division (7505C), Office of Pesticide Programs,
Environmental Protection Agency, 401 M St., SW., Washington DC 20460.
(3) Other conditions of exemption. All of the following conditions
must be met for products to be exempted under this section:
(i) Each product containing the substance must bear a label
identifying the name and percentage (by weight) of each active
ingredient and the name of each inert ingredient.
[[Page 8879]]
(ii) The product must not bear claims either to control or mitigate
microorganisms that pose a threat to human health, including but not
limited to disease transmitting bacteria or viruses, or claims to
control insects or rodents carrying specific diseases, including, but
not limited to ticks that carry Lyme disease.
(iii) The product must not include any false and misleading
labeling statements, including those listed in 40 CFR 156.10(a)(5)(i)
through (viii).
[FR Doc. 96-5240 Filed 3-5-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-5228 Groundfish of the Gulf of Alaska; Pacific Cod for Processing by the Inshore Component
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Page 8888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5228]
=======================================================================
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 672
[Docket No. 960129018-6018-01; I.D. 030196B]
Groundfish of the Gulf of Alaska; Pacific Cod for Processing by
the Inshore Component
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Closure.
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SUMMARY: NMFS is closing the directed fishery for Pacific cod for
processing by the inshore component in the Western Regulatory Area of
the Gulf of Alaska (GOA). This action is necessary to prevent exceeding
the allocation of Pacific cod for processing by the inshore component
in the Western Regulatory Area.
EFFECTIVE DATE: 12 noon, Alaska local time (A.l.t.), March 2, 1996,
until 12 midnight, A.l.t., December 31, 1996.
FOR FURTHER INFORMATION CONTACT: Andrew N. Smoker, 907-586-7228.
SUPPLEMENTARY INFORMATION: The groundfish fishery in the GOA exclusive
economic zone is managed by NMFS according to the Fishery Management
Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North
Pacific Fishery Management Council under authority of the Magnuson
Fishery Conservation and Management Act. Fishing by U.S. vessels is
governed by regulations implementing the FMP at 50 CFR parts 620 and
672.
In accordance with Sec. 672.20(c)(1)(ii)(B), the allocation of
Pacific cod for processing by the inshore component in the Western
Regulatory Area was established by the Final 1996 Harvest
Specifications of Groundfish (61 FR 4304, February 5, 1996) as 16,965
metric tons (mt).
The Director, Alaska Region, NMFS (Regional Director), has
determined, in accordance with Sec. 672.20(c)(2)(ii), that the
allocation of Pacific cod total allowable catch for processing by the
inshore component in the Western Regulatory Area soon will be reached.
The Regional Director established a directed fishing allowance of
15,965 mt, with consideration that 1,000 mt will be taken as incidental
catch in directed fishing for other species in the Western Regulatory
Area. The Regional Director has determined that the directed fishing
allowance has been reached. Consequently, NMFS is prohibiting directed
fishing for Pacific cod by vessels catching Pacific cod for processing
by the inshore component in the Western Regulatory Area.
Maximum retainable bycatch amounts for applicable gear types may be
found in the regulations at Sec. 672.20(g).
Classification
This action is taken under 50 CFR 672.20 and is exempt from review
under E.O. 12866.
Authority: 16 U.S.C. 1801 et seq.
Dated: March 1, 1996.
Richard W. Surdi,
Acting Director, Office of Fisheries Conservation and Management,
National Marine Fisheries Service.
[FR Doc. 96-5228 Filed 3-1-96; 2:35 pm]
BILLING CODE 3510-22-P
Complete official Federal Register PDF
FR Doc. 96-5227 Groundfish of the Bering Sea and Aleutian Islands Area, Trawl Closure to Protect Red King Crab
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8889-8890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5227]
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DEPARTMENT OF COMMERCE
50 CFR Part 675
[Docket No. 960129019-6019-01; I.D. 022996A]
Groundfish of the Bering Sea and Aleutian Islands Area, Trawl
Closure to Protect Red King Crab
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Inseason adjustment; request for comments.
-----------------------------------------------------------------------
SUMMARY: NMFS has determined that an interim closure to all trawling is
necessary in a part of the Bristol Bay area of the Bering Sea and
Aleutians Islands (BSAI) management area. Results of the 1995 bottom
trawl survey conducted by NMFS in Bristol Bay indicate that the red
king crab stock in Bristol Bay continues to be severely depressed. NMFS
anticipates that the condition of this stock could worsen if vessels
fishing for groundfish with trawl gear were allowed to conduct
operations in a particular part of Bristol Bay that is important to red
king crab during a period after they have molted and are in a softshell
condition. NMFS is closing part of Bristol Bay to trawling for
groundfish for purposes of protecting red king crab from anticipated
adverse impacts due to trawl operations. This measure is necessary to
respond to the continued decline of red king crab stocks in the BSAI
management area. It is intended to accomplish the objectives of the
North Pacific Fishery Management Council (Council) with respect to
management of red king crab stocks.
DATES: Effective April 1, 1996, through June 15, 1996. Comments must be
submitted by April 5, 1996.
ADDRESSES: Comments may be sent to Ronald J. Berg, Chief, Fisheries
Management Division, Alaska Region, National Marine Fisheries Service,
P.O. Box 21668, Juneau, AK 99802, Attention: Lori Gravel.
FOR FURTHER INFORMATION CONTACT: Ronald J. Berg, 907-586-7228.
SUPPLEMENTARY INFORMATION:
Background
Fishing for groundfish by U.S. vessels in the exclusive economic
zone of the BSAI is managed by NMFS according to the Fishery Management
Plan for the Groundfish Fishery of the Bering Sea and Aleutian Islands
Area (FMP). The FMP was prepared by the Council under the Magnuson
Fishery Conservation and Management Act (16 U.S.C. 1801, et seq.)
(Magnuson Act), and is implemented by regulations governing the U.S.
groundfish fisheries at 50 CFR parts 675 and 676. General regulations
that also pertain to U.S. fisheries are codified at 50 CFR part 620.
High rates of prohibited species bycatch may warrant inseason
adjustment to close an area to fishing for groundfish. Authority for
interim closures of a specific area is contained in regulations at
Sec. 675.20(e). This inseason adjustment prohibits fishing for
groundfish by operators of vessels using trawl gear from April 1, 1996,
through June 15, 1996, in that portion of the Bering Sea that is
bounded by straight lines connecting the following coordinates in the
order listed below.
Latitude Longitude
56 deg.00' N.; 163 deg.00' W.;
56 deg.00' N.; 164 deg.00' W.;
57 deg.00' N.; 164 deg.00' W.;
57 deg.00' N.; 163 deg.00' W.; and
56 deg.00' N.; 163 deg.00' W.
This action is necessary to protect depressed stocks of red king
crab from being taken by the groundfish trawl fisheries during a period
when the crab are in a softshell condition and are particularly
vulnerable to injury. Further reasons for the inseason adjustment under
Sec. 675.20(e)(1)(iv) follow.
Results of the 1995 NMFS-conducted bottom-trawl survey in Bristol
Bay indicate that the total population of red king crab continues to be
at low levels. Although the number of legal male red king crab was 6.3
million, which represents a 15 percent increase from 1994, the number
of pre-recruits was 5.4 million, which represents an 11 percent
decrease from 1994. The number of large female crab was 8.0 million,
which is 400,000 fewer than the number considered to be the
``threshold'' in the FMP for the Commercial King and Tanner Crab
Fisheries of the Bering Sea and Aleutian Islands (crab FMP). Under the
crab FMP, the Acceptable Biological Catch in the directed red king crab
fishery is defined as zero when the female red king crab stock is at or
below threshold. Accordingly, the Alaska Department of Fish and Game
(ADF&G) closed the directed red king crab fishery in 1995.
Likewise, because NMFS survey results in 1994 also indicated that
the number of female red king crab was below threshold, ADF&G closed
the red king crab fishery in 1994. Due to the 1994 and 1995 closures of
the red king crab fishery in Bristol Bay, ADF&G closed the area east of
163 deg. W. longitude to Chionoecetes bairdi Tanner crab fishing for
both years to reduce incidental mortality of red king crab in this
area.
The Council responded to the 1994 results by recommending that NMFS
close by emergency rule an area between 56 deg. and 57 deg. N. lat. and
162 deg. and 164 deg. W. long. to trawling during the rock sole roe
fishery. NMFS implemented that emergency rule (60 FR 4866, January 25,
1995), and it remained in effect from January 20 through April 25,
1995. At that time, the Council directed its staff to analyze
alternative closure areas that could be implemented permanently under
an FMP amendment to provide long-term protection to Bristol Bay red
king crab.
At its September 1995 meeting, the Council recommended
implementation of proposed Amendment 37 to the FMP, an action similar
to the emergency rule. This includes a closure of the Red King Crab
Savings Area to vessels using non-pelagic trawl gear as well as an
increase in observer coverage. NMFS has not yet received that amendment
from the Council for review under Section 304 of the Magnuson Act.
On January 20, 1996, NMFS implemented an inseason adjustment (60 FR
63451, December 11, 1995) under its authority at 50 CFR 675.20(e) to
close the above-described area through March 31, 1996. The purpose of
this action was to protect female red king crab during a time when the
trawl fishery for rock sole was ongoing.
On January 30, 1996, the Council met jointly with the Alaska Board
of Fisheries (BOF) and reviewed the best available scientific
information about the status of red king crab and the potential
effectiveness of measures that have been taken to protect red king
crab.
[[Page 8890]]
The Council and BOF were especially concerned about potential adverse
impacts of trawl operations on red king crab during a period when crab
are in a softshell condition. This condition occurs during the months
of January through mid-June when crab molt and then mate. When in this
softshell condition, red king crab could be damaged by physical impacts
of the bottom trawl itself or by additional handling when they are
caught in a trawl, brought aboard a vessel, sorted, and eventually
returned to the sea. The Council also received agency reports
summarizing the result of the 1995 NMFS trawl survey, which provided
the aforementioned status of red king crab.
The Council and BOF heard testimony about existing management
measures, including the aforementioned inseason adjustment that will be
in effect through March 31, which are intended to protect red king crab
in the management area. These measures include a year round closure of
Federal Statistical Srea 512 to trawling, and a closure of Federal
Statistical Area 516 from March 15 through June 15 to protect red king
crab during their molting and mating period. An analysis of data from
the NMFS-conducted trawl surveys in 1993, 1994, and 1995 indicates that
a substantial proportion (19 percent) of mature male crab are located
in part of Federal Statistical Area 516. This analysis also indicates
that another substantial proportion (21 percent) of male red king crab
is located between the same latitudes immediately to the west between
163 deg. W. and 164 deg. W. long. Without further regulatory action,
the area west of Statistical Area 516 would open to trawling once the
aforementioned inseason adjustment expires on March 31, 1996, which
could aggravate the depressed condition of red king crab during the
period when they are in a softshell condition.
On February 2, 1996, after reviewing new information obtained
during its January 30 meeting with the BOF and additional information
from the public as well as NMFS and ADF&G testimony, the Council
recommended that an emergency rule be implemented to close an area in
part of Bristol Bay to fishing by vessels using trawl gear through June
15, 1996. The particular area is located between 163 deg. and 164 deg.
W. long. and 56 deg. N. and 57 deg. N. lat. This area is to the west
of, and immediately adjacent to, Statistical Area 516, which is closed
under existing regulations from March 15 through June 15. A closure of
the additional area to the west through June 15 would provide necessary
protection for red king crab during the period they are in a softshell
condition and are particularly susceptible to fishing mortality.
The Council intends to review current management regimes that
govern groundfish fishing to determine whether the protection measures
afforded red king crab and other crab species managed under the crab
FMP are adequate or should be changed to respond to new information
concerning both the groundfish and crab fisheries. NMFS anticipates
that the Council will recommend potential regulatory changes in the
near future.
The Council's emergency rule recommendation is intended to avoid
significant direct economic loss to fishermen who might otherwise
benefit in the future as red king crab stocks rebuild to harvestable
levels. Public testimony at the Council's January 1996 meeting,
indicated that the groundfish trawl fishing industry was concerned
about not being able to trawl for yellowfin sole in the closed area,
should yellowfin sole be present during the month of April in schooling
concentrations as they migrate to more northerly locations in Bristol
Bay. Industry members indicated that the amount of time required to
complete a tow with trawl gear may be about a \1/2\ hour compared to
more than 2 hours when yellowfin school stocks are not concentrated. If
these vessel operators are not allowed to operate in the closed area,
their operating costs (including fuel and crew time) could increase as
they fish at lower catch rates where yellowfin sole stocks are not
concentrated.
NMFS does not have information to quantify what these increased
costs might be, because vessels' operating costs differ. NMFS notes
that the locations of the migrating yellowfin sole might even be
outside the closed area where they could still be targeted by
participating vessels. The actual costs would depend on the ability of
these vessel operators to achieve their harvest goals, which will
depend on market conditions, catch rates, and possibly premature
closures resulting from other regulations.
NMFS anticipates that large numbers of red king crab could be
adversely impacted in this area by trawl operations during their
softshell period. Therefore, NMFS has determined that a closure to
trawling in the area described above is necessary to protect red king
crab through June 15 while they are in a softshell condition.
Notwithstanding the Council's recommendation that NMFS implement this
closure by emergency rule, NMFS is implementing it under the inseason
adjustment authority at Sec. 675.20(e). Inseason adjustments are
authorized for a period of 60 days, which would be less than the
Council's intended closure period. Regulations at Sec. 675.20(e)(6)
authorize closures beyond 60 days if warranted by available data. The
available scientific information indicates that the relative
distribution and abundance of red king crab in the closure area is
high. The Director, Alaska Region, NMFS has determined that this
interim closure is based on the best available scientific information
concerning the seasonal distribution and abundance of red king crab and
the bycatch rates of red king crab associated with groundfish trawl
fisheries.
Classification
This action is taken under Sec. 672.20(e) and is exempt from review
under E.O. 12866.
Authority: 16 U.S.C. 1801 et seq.
Dated: March 1, 1996.
Richard W. Surdi,
Acting Director, Office of Fisheries Conservation and Management,
National Marine Fisheries Service.
[FR Doc. 96-5227 Filed 3-1-96; 2:35 pm]
BILLING CODE 3510-22-P
Complete official Federal Register PDF
FR Doc. 96-5213 Animal Drugs, Feeds, and Related Products; Change of Sponsor
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8872-8873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5213]
=======================================================================
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Parts 510, 520, 522, and 524
Animal Drugs, Feeds, and Related Products; Change of Sponsor
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is amending the animal
drug regulations to reflect the change of sponsor for 28 approved new
animal drug applications (NADA's) from Coopers Animal Health, Inc., to
Mallinckrodt Veterinary, Inc.
EFFECTIVE DATE: March 6, 1996.
FOR FURTHER INFORMATION CONTACT: Thomas J. McKay, Center for Veterinary
Medicine (HFV-102), Food and Drug Administration, 7500 Standish Pl.,
Rockville, MD 20855, 301-827-0213.
SUPPLEMENTARY INFORMATION: Coopers Animal Health, Inc., 1201 Douglas
Ave., Kansas City, KS 66103-1438, has informed FDA that it has
transferred the ownership of, and all rights and interests in, the
following approved NADA's to Mallinckrodt Veterinary, Inc., Mundelein,
IL 60060.
------------------------------------------------------------------------
NADA No. Trade name Active ingredient
------------------------------------------------------------------------
6-602...... A-H Tablets 25 milligrams Doxylamine Succinate
(mg)/100 mg.
6-983...... A-H Injection................ Doxylamine Succinate,
Chlorobutanol
10-987..... Butazolidin Tablets/Bolus.... Phenylbutazone
11-222..... Diquel Tablets............... Ethylisobutrazine
Hydrochloride
11-575..... Butazolidin Injection 20%.... Phenylbutazone
11-877..... Jenotone Tablets............. Aminopromazine Fumarate
11-893..... Dermathycin Injection........ Thyroid Stimulating Hormone
15-182..... Canopar Tablets.............. Thenium Closylate
13-181..... Jenomycin Tablets............ Aminopromazine Fumarate,
Neomycin Sulfate
34-477..... Jenotone Solution............ Aminopromazine Fumarate
35-016..... Scolaban 400................. Bunamidine Hydrochloride
35-265..... Diquel Solution.............. Ethylisobutrazine
Hydrochloride
38-800..... Butazolidin Granules......... Phenylbutazone
44-757..... Prolate I-E.................. Phosmet
48-913..... Halox Wormer Drench.......... Haloxon
65-476..... Cortisporin Veterinary Bactricin ZN, Neomycin
Ophthalmic Ointment. Sulfate, Polymyxin B
Sulfate, Hydrocortisone
Acetate
65-485..... Neosporin Ophthalmic Ointment Bactricin ZN, Neomycin
Sulfate, Polymyxin B
Sulfate
92-483..... Halox Bolus.................. Haloxon
95-614..... Tribrissen 30/120/480/960 Sulfadiazine, Trimethoprim
Tablets.
97-288..... Imizol Equine Injection...... Imidocarb Dipropionate
101-161.... Thenatol PW Tablets.......... Thenium Closylate,
Piperazine Phosphate
105-093.... Tribrissen 24% Injection..... Trimethoprim, Sulfadiazine
Sodium
106-965.... Tribrissen 48% Injection..... Trimethoprim, Sulfadiazine
116-087.... Burazolidin Paste/Butazolidin/ Phenylbutazone
Phenylzone/Bute.
120-326.... Filban Chewable Wafers....... Diethylcarbamazine Citrate
124-842.... Filban Tablets............... Diethylcarbamazine Citrate
131-918.... Tribrissen 400 Oral Paste.... Trimethoprim, Sulfadiazine
136-741.... Tribrissen 60 Oral Suspension Trimethoprim, Sulfadiazine
------------------------------------------------------------------------
The agency is amending 21 CFR 510.600(c)(1) and (c)(2), and parts
520, 522, and 524 to reflect the change of sponsor.
List of Subjects
21 CFR Part 510
Administrative practice and procedure, Animal drugs, Labeling,
Reporting and recordkeeping requirements.
21 CFR Parts 520, 522, and 524
Animal drugs.
-Therefore, under the Federal Food, Drug, and Cosmetic Act and
under authority delegated to the Commissioner of Food and Drugs and
redelegated to the Center for Veterinary Medicine, 21 CFR parts 510,
520, 522, and 524 are amended as follows:
PART 510--NEW ANIMAL DRUGS
1. The authority citation for 21 CFR part 510 continues to read as
follows:
Authority: Secs. 201, 301, 501, 502, 503, 512, 701, 721 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321, 331, 351, 352,
353, 360b, 371, 379e).
Sec. 510.600 [Amended]
-2. Section 510.600 is amended in the table in paragraph (c)(1) by
removing the entry for ``Coopers Animal Health, Inc.''; and in the
table in paragraph (c)(2) by removing the entry for ``017220''.
PART 520--ORAL DOSAGE FORM NEW ANIMAL DRUGS
-3. The authority citation for 21 CFR part 520 continues to read as
follows:
Authority: Sec. 512 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 360b) .
[[Page 8873]]
Sec. 520.82a [Amended]
4. Section 520.82a Aminopropazine fumarate tablets is amended in
paragraph (b) by removing ``017220'' and adding in its place
``011716''.
Sec. 520.82b [Amended]
5. Section 520.82b Aminopropazine fumarate, neomycin sulfate
tablets is amended in paragraph (b) by removing ``017220'' and adding
in its place ``011716''.
Sec. 520.222 [Amended]
6. Section 520.222 Bunamidine hydrochloride is amended in
paragraph (c) by removing ``017220'' and adding in its place
``011716''.
Sec. 520.622c [Amended]
7. Section 520.622c Diethylcarbamazine citrate chewable tablets is
amended in paragraph (b)(5) by removing ``017220'' and adding in its
place ``011716''.
Sec. 520.784 [Amended]
8. Section 520.784 Doxylamine succinate tablets is amended in
paragraph (b) by removing ``017220'' and adding in its place
``011716''.
Sec. 520.863 [Amended]
9. Section 520.863 Ethylisobutrazine hydrochloride tablets is
amended in paragraph (b) by removing ``017220'' and adding in its place
``011716''.
Sec. 520.1120a [Amended]
10. Section 520.1120a Haloxon drench is amended in paragraph (c)
by removing ``017220'' and adding in its place ``011716''.
Sec. 520.1120b [Amended]
11. Section 520.1120b Haloxon boluses is amended in paragraph (c)
by removing ``017220'' and adding in its place ``011716''.
Sec. 520.1720a [Amended]
12. Section 520.1720a Phenylbutazone tablets and boluses is
amended in paragraph (b)(1) by removing ``017220'' and adding in its
place ``011716''.
Sec. 520.1720b [Amended]
13. Section 520.1720b Phenylbutazone granules is amended in
paragraph (b) by removing ``017220'' and adding in its place
``011716''.
Sec. 520.1720c [Amended]
14. Section 520.1720c Phenylbutazone paste is amended in paragraph
(b) by removing ``017220'' and adding in its place ``011716''.
Sec. 520.1805 [Amended]
15. Section 520.1805 Piperazine phosphate with thenium closylate
tablets is amended in paragraph (b) by removing ``017220'' and adding
in its place ``011716''.
Sec. 520.2362 [Amended]
16. Section 520.2362 Thenium closylate tablets is amended in
paragraph (c) by removing ``017220'' and adding in its place
``011716''.
Sec. 520.2610 [Amended]
17. Section 520.2610 Trimethoprim and sulfadiazine tablets is
amended in paragraph (b) by removing ``017220'' and adding in its place
``011716''.
Sec. 520.2611 [Amended]
18. Section 520.2611 Trimethoprim and sulfadiazine oral paste is
amended in paragraph (b) by removing ``017220'' and adding in its place
``011716''.
Sec. 520.2612 [Amended]
19. Section 520.2612 Trimethoprim and sulfadiazine oral suspension
is amended in paragraph (b) by removing ``017220'' and adding in its
place ``011716''.
PART 522--IMPLANTATION OR INJECTABLE DOSAGE FORM NEW ANIMAL DRUGS
20. The authority citation for 21 CFR Part 522 continues to read
as follows:
Authority: Sec. 512 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 360b).
Sec. 522.82 [Amended]
-21. Section 522.82 Aminopropazine fumarate sterile solution
injection is amended in paragraph (b) by removing ``017220'' and adding
in its place ``011716''.
Sec. 522.784 [Amended]
-22. Section 522.784 Doxylamine succinate injection is amended in
paragraph (b) by removing ``017220'' and adding in its place
``011716''.
Sec. 522.863 [Amended]
-23. Section 522.863 Ethylisobutrazine hydrochloride injection is
amended in paragraph (b) by removing ``017220'' and adding in its place
``011716''.
Sec. 522.1155 [Amended]
-24. Section 522.1155 Imidocarb dipropionate sterile powder is
amended in paragraph (b) by removing ``017220'' and adding in its place
``011716''.
Sec. 522.1720 [Amended]
-25. Section 522.1720 Phenylbutazone injection is amended in
paragraph (b)(1) by removing ``017220'' and adding in its place
``011716''.
Sec. 522.2610 [Amended]
-26. Section 522.2610 Trimethoprim and sulfadiazine sterile
suspension is amended in paragraphs (a)(2) and (b)(2) by removing
``017220'' and adding in its place ``011716''.
PART 524--OPHTHALMIC AND TOPICAL DOSAGE FORM NEW ANIMAL DRUGS
-27. The authority citation for 21 CFR part 524 continues to read
as follows:
Authority: Sec. 512 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 360b).
Sec. 524.154 [Amended]
-28. Section 524.154 Bacitracin or bacitracin zinc-neomycin
sulfate-polymyxin B sulfate ophthalmic ointment is amended in paragraph
(a)(2) by removing ``017220'' and adding in its place ``011716''.
Sec. 524.155 [Amended]
-29. Section 524.155 Bacitracin zinc-polymyxin B sulfate neomycin
sulfate-hydrocortisone or hydrocortisone acetate ophthalmic ointment is
amended in paragraph (a)(1) by removing ``017220'' and adding in its
place ``011716''.
Sec. 524.1742 [Amended]
-30. Section 524.1742 N-(Mercaptomethyl) phthalimide S-(O,O-
dimethyl phosphorodithioate) emulsifiable liquid is amended in
paragraph (b) by removing ``017220'' and adding in its place
``011716''.
Dated: February 28, 1996.
Robert C. Livingston,
Director, Office of New Animal Drug Evaluation, Center for Veterinary
Medicine.
[FR Doc. 96-5213 Filed 3-5-96; 8:45 am]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-5191 Radio Broadcasting Services; Punxsutawney, PA
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)] [Rules and Regulations] [Pages 8880-8881] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-5191] ----------------------------------------------------------------------- FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [MM Docket No. 87-433; RM-5994 and RM-6181] Radio Broadcasting Services; Punxsutawney, PA AGENCY: Federal Communications Commission. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Chief, Policy and Rules Division denied the petition for reconsideration, filed by Renda Radio, Inc., licensee of Station WPXZ- FM, Punxsutawney, Pennsylvania, of the letter decision by the Chief, Allocations Branch, to return as procedurally defective Renda's petition for rule making. With this action, the proceeding is terminated. EFFECTIVE DATE: March 6, 1996. FOR FURTHER INFORMATION CONTACT: J. Bertron Withers, Jr., Mass Media Bureau, (202) 418-2180. SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Memorandum Opinion and Order, MM Docket No. 87-433, adopted February 16, 1996 and released February 29, 1996. The full text of this Commission decision is available for inspection and copying during normal business hours in the Commission's Reference Center (Room 239), 1919 M Street, NW., Washington, DC 20554. The complete text of this decision may also be purchased from the Commission's copy contractor, International Transcription Services, 2100 M Street, NW., Suite 140, Washington, DC 20037, (202) 857-3800. [[Page 8881]] Federal Communications Commission. Douglas W. Webbink, Chief, Policy and Rules Division, Mass Media Bureau. [FR Doc. 96-5191 Filed 3-5-96; 8:45 am] BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-5190 Radio Broadcasting Services; Harrisburg and Albemarle, NC
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)] [Rules and Regulations] [Page 8881] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-5190] ----------------------------------------------------------------------- FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [MM Docket No. 89-594, RM-7142, RM-7318] Radio Broadcasting Services; Harrisburg and Albemarle, NC AGENCY: Federal Communications Commission. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Chief, Policy and Rules Division denied the petition for reconsideration, filed by Piedmont Crescent Communications, Inc., of the Report and Order in this proceeding, 56 FR 1650, published January 15, 1992. The Report and Order granted RM-7142 to allot Channel 224A to Harrisburg and partially denied another proposal, treated as a counterproposal and filed by Piedmont, to substitute Channel 264A for Channel 265A at Albemarle, North Carolina, to reallot Channel 264A to Harrisburg, North Carolina, and to modify the license of Albemarle Station WABZ-FM accordingly, and also to allot Channel 224A to Harrisburg. With this action, the proceeding is terminated. EFFECTIVE DATE: March 6, 1996. FOR FURTHER INFORMATION CONTACT: J. Bertron Withers, Jr., Mass Media Bureau, (202) 418-2180. SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Memorandum Opinion and Order, MM Docket No. 89-594, adopted February 16, 1996 and released February 29, 1996. The full text of this Commission decision is available for inspection and copying during normal business hours in Commission's Reference Center (Room 239), 1919 M Street, NW., Washington, DC 20554. The complete text of this decision may also be purchased from the Commission's copy contractor, International Transcription Services, 2100 M Street, NW., Suite 140, Washington, DC 20037, (202) 857-3800. Federal Communications Commission. Douglas W. Webbink, Chief, Policy and Rules Division, Mass Media Bureau. [FR Doc. 96-5190 Filed 3-5-96; 8:45 am] BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-5189 Tariffing Requirements for Billing Name and Address
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8879-8880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5189]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[CC Docket No. 91-115; FCC 96-38]
Tariffing Requirements for Billing Name and Address
AGENCY: Federal Communications Commission.
ACTION: Final Rule; petition for reconsideration.
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SUMMARY: On February 1, 1996, the Commission adopted a Third Order on
Reconsideration in this proceeding denying two petitions for
reconsideration filed by US West Communications, Inc. (US West). In its
first petition, US West sought reconsideration of the Commission's
denial of its petition for stay of the Order requiring LECs to file
tariffs governing the provision of billing name and address (BNA)
information. The Commission denied this petition as repetitious,
because the Commission had addressed all of US West's arguments in a
previous Order. In the other petition, US West sought reconsideration
of the prohibition against using BNA information for marketing
purposes, which the Commission adopted in 1993 to protect end user
privacy when local exchange carriers provide BNA information under
tariff. US West also claimed that the previous Orders in this
proceeding did not explain whether the BNA rules applied to all BNA
information, or only to BNA information associated with calling card,
third party, and collect calls. The Commission denied this petition to
the extent it sought to eliminate the prohibition against using BNA
information for marketing purposes, and granted it to the extent it
[[Page 8880]]
sought clarification of the application of the BNA requirements.
EFFECTIVE DATE: April 5, 1996.
FOR FURTHER INFORMATION CONTACT: Steven Spaeth, Tariff Division, Common
Carrier Bureau, (202) 418-1530.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Third
Order on Reconsideration adopted February 1, 1996, and released
February 9, 1996. The full text of this Commission decision is
available for inspection and copying during normal business hours in
the FCC Public Reference Room (Room 230), 1919 M Street NW.,
Washington, DC. The complete text of this decision may also be
purchased from the Commission's copy contractor, International
Transcription Service, Suite 140, 2100 M Street NW., Washington, DC
20037.
Regulatory Flexibility Analysis
The Commission has determined that Section 605(b) of the Regulatory
Flexibility Act of 1980, 5 U.S.C. 605(b), does not apply to these rules
because they do not have a significant economic impact on a substantial
number of small entities. The definition of a ``small entity'' in
Section 3 of the Small Business Act excludes any business that is
dominant in its field of operation. Although some of the local exchange
carriers that will be affected are very small, local exchange carriers
do not qualify as small entities because each of them has a monopoly on
ubiquitous access to the subscribers in their service area. The
Commission has also found all exchange carriers to be dominant in its
competitive carrier proceeding. See 85 FCC 2d 1, 23-24 (1980). To the
extent that small telephone companies will be affected by these rules,
the Commission hereby certifies that these rules will not have a
significant effect on a substantial number of ``small entities.''
Summary of Report and Order
In the Second Report and Order in this Docket, 58 FR 36143, July 6,
1993, the Commission required local exchange carriers (LECs) to provide
their customers' BNA information to interexchange carriers and other
telecommunications service providers on a common carrier basis. Because
widespread disclosure of BNA information could conflict with customers'
reasonable expectations of privacy, the Commission also limited BNA
disclosure, thus safeguarding these expectations. In particular, the
Commission prohibited parties obtaining BNA information from using it
for marketing purposes. In the Second Order on Reconsideration in this
docket, 58 FR 65669, December 16, 1993, the Commission revised some of
its privacy protections, but again expressly forbade parties from using
BNA information for marketing purposes.
In its petitions for reconsideration, US West argued that the
record did not adequately demonstrate the need for any privacy
protections, that adopting these rules violated US West's due process
rights, that these rules were inconsistent with rules we adopted in a
different proceeding, and that the restriction against marketing was an
unconstitutional restriction on BNA purchasers' freedom of speech. The
Commission found that none of these arguments warranted revision of the
BNA privacy protections.
US West also claimed that the previous Orders in this proceeding
did not explain whether the rules applied to all BNA information, or
only to BNA information associated with calling card, third party, and
collect calls. The Commission explained which of its rules apply to all
BNA information, and which apply only to BNA information associated
with calling card, third party, and collect calls. The Commission also
revised Section 64.1201(e)(3) of its rules, to make its application
more clear.
Ordering Clauses
Accordingly, It is ordered, Pursuant to Section 1.429(i) of the
Commission's Rules, 47 CFR Sec. 1.429(i), that the petition for
reconsideration of the First BNA Reconsideration Order filed by US West
Communications, Inc. is dismissed as repetitious.
It is further ordered, Pursuant to Section 1.429(i) of the
Commission's Rules, 47 CFR Sec. 1.429(i), that the petition for
reconsideration of the Second BNA Reconsideration Order filed by US
West Communications, Inc. is granted to the extent indicated above, and
otherwise is denied.
It is further ordered, That the policies, rules and requirements
set forth herein are adopted.
List of Subjects in 47 CFR Part 64
Communications common carriers.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Title 47 of the CFR, Part 64, is amended as follows:
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
Rule Changes
1. The authority citation for Part 64 continues to read as follows:
Authority: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154,
unless otherwise noted.
2. Section 64.1201(e)(3) is revised to read as follows:
Sec. 64.1201 Restrictions on billing name and address disclosure.
* * * * *
(e) * * *
(3) No local exchange carrier shall disclose the billing name and
address information associated with any calling card call made by any
subscriber who has affirmatively withheld consent for disclosure of BNA
information, or for any third party or collect call charged to any
subscriber who has affirmatively withheld consent for disclosure of BNA
information.
[FR Doc. 96-5189 Filed 3-5-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-5187 Inmate Calling ServicesPrison Payphones
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Page 8879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5187]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 61 and 64
[FCC 96-34]
Inmate Calling Services--Prison Payphones
AGENCY: Federal Communications Commission.
ACTION: Declaratory ruling.
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SUMMARY: On January 30, 1996, the Commission adopted a Declaratory
Ruling that inmate-only payphone instruments are customer premises
equipment (CPE) that must be provided on an unregulated basis. The
Commission additionally denied petitioner's request that certain
inmate-only services be considered enhanced services. The intended
effect is to ensure that the inmate-only payphone market remains
competitive.
EFFECTIVE DATE: March 6, 1996.
FOR FURTHER INFORMATION CONTACT: Alan A. Thomas, Attorney, Network
Services Division, Common Carrier Bureau, (202) 418-2338.
SUPPLEMENTARY INFORMATION: This report summarizes the Commission's
Declaratory Ruling in the matter of Petition for Declaratory Ruling by
the Inmate Calling Services Providers Task Force--Prison Payphones,
(RM-8181, FCC 96-34, adopted January 30, 1996 and released February 20,
1996). The file is available for inspection and copying during the
weekday hours of 9 a.m. to 4:30 p.m. in the Commission's Reference
Center, room 239, 1919 M St., N.W., Washington D.C., or copies may be
purchased from the Commission's duplicating contractor, ITS, Inc. 2100
M St., N.W., Suite 140, Washington, D.C. 20037, phone (202) 857-3800.
Analysis of Proceeding
1. Petitioner requested the Commission to rule that LECs must
provide inmate-only payphone instruments as detariffed CPE and must
offer certain prison inmate payphone services as unregulated enhanced
services. Petitioner argued that inmate-only payphone service is
distinguishable from pay telephone service offered to the ``transient
mobile public,'' as defined in Tonka Tools, Inc. 58 RR 2d 903, 50 FR
24694 (June 12, 1985) and therefore not entitled to special treatment
pursuant to Amendment of Section 64.702 of the Commission's Rules and
Regulations (Computer II), 77 FCC 2d 384 (1980), 45 FR 24694 (May 13,
1980).
2. In this Declaratory Ruling, the Commission concluded that the
decision in Tonka resulted from a concern that payphones should be
available to the ``transient mobile'' or general public. Those
concerns, the Commission concluded, are not applicable in the context
of prison payphones. Thus the Commission agreed with Petitioner that
inmate-only payphones are to be considered CPE for regulatory purposes.
3. Additionally, the Commission rejected Petitioner's argument that
inmate phone services such as call monitoring and blocking, and
restrictions on call timing and duration are enhanced services under
the Commission's Computer II decisions. The Commission concluded that
these services may be characterized as adjuncts to basic service under
existing precedent. The Commission also concluded that the record
provided insufficient detail to support a ruling that inmate Personal
Identification Numbers (PINs) are an enhanced service.
4. Ordering Clauses. It is ordered, pursuant to Section 4 of the
Communications Act as amended, 47 U.S.C. Secs. 154, that the petition
for declaratory ruling filed by the Inmate Calling Services Providers
Task Force of the American Public Communication Council is Granted to
the extent discussed and otherwise IS Denied.
5. It is further ordered that carriers shall notify their customers
in writing for prison payphone service of the change in status of
inmate-only customer premises equipment from a regulated activity to a
nonregulated activity by July 1, 1996. Accordingly, by September 2,
1996, the LECs must reclassify any inmate-only pay telephone investment
recorded in Account 32.2351, Public telephone terminal equipment, along
with the associated depreciation and tax reserves and any related
expenses, from a regulated activity to nonregulated activity pursuant
to our Part 64 rules. The LECs shall also establish whatever Part 64
cost pools are needed to accomplish this reclassification and shall
file revisions to their Cost Allocation Manuals reflecting this
reclassification within sixty (60) days prior to the effective date of
the change. In addition, carriers must make appropriate tariff changes
pursuant to Part 61 of the Commission's Rules.
6. List of Subjects in 47 CFR Parts 61 and 64
Inmate-only payphone equipment, Communications common carriers,
Telephone.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-5187 Filed 3-5-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-5182 Western Pacific Bottomfish Fisheries; Enforcement of Permit and Other Requirements
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8890-8891]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5182]
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DEPARTMENT OF COMMERCE
50 CFR Part 683
[Docket No. 950803202-6040-02; I.D. 070395C]
RIN 0648-AH48
Western Pacific Bottomfish Fisheries; Enforcement of Permit and
Other Requirements
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Final rule.
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SUMMARY: NMFS issues a final rule to make minor changes to regulations
governing the Bottomfish Fisheries of the Western Pacific Region. In
addition to making some technical changes, the rule requires operators
of bottomfish vessels to display their official number to enhance
enforcement, and fish dealers to make available to authorized officers
records of fish landings and sales they are required by state law to
maintain to facilitate monitoring of the fishery. These changes are
intended to make existing regulations clearer and more effective.
EFFECTIVE DATE: April 4, 1996.
ADDRESSES: Send comments on the collection-of-information requirement
to Ms. Hilda Diaz-Soltero, Director, Southwest Region, NMFS, 501 West
Ocean Boulevard, Suite 4200, Long
[[Page 8891]]
Beach, CA 90802-4213 and to the Office of Information and Regulatory
Affairs, Office of Management and Budget, ATTN: Paperwork Reduction
Project 0648-0306, Washington, DC 20503.
FOR FURTHER INFORMATION CONTACT: Mr. James Morgan, 310-980-4036; or
Alvin Z. Katekaru, 808-973-2985.
SUPPLEMENTARY INFORMATION: The Western Pacific Fishery Management
Council recommended that NMFS amend the existing regulations governing
the bottomfish fishery to make the regulations clearer and more
effective. The changes made by this final rule were proposed in the
Federal Register on August 18, 1995 (60 FR 43106). The public comment
period on the proposed changes ended on October 16, 1995. No comments
were received.
The final rule makes the following changes in addition to a number
of editorial changes:
1. Adding a prohibition to the prohibitions section of the
regulations to clarify that fishing for bottomfish in the Mau Zone of
the Northwestern Hawaiian Islands without a permit is unlawful;
2. Adding a requirement that the official number of a bottomfish
vessel be prominently displayed; and
3. Adding a requirement that any person, such as fish dealers, make
available to authorized officers records of fish landings and sales
that are required to be maintained by state law.
Classification
This action has been determined to be not significant for the
purposes of E.O. 12866.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with a collection of information subject to the
requirements of the Paperwork Reduction Act, unless the collection of
information displays a currently valid OMB Control Number.
This rule contains a collection of information requirement subject
to the PRA, namely the requirement that vessels display their official
number in a specified manner. This collection of information has been
approved by OMB under OMB Control Number 0648-0306, which expires
September 29, 1998. The burden estimate for compliance is 45 minutes.
Send comments regarding this burden estimate, or any other aspect of
this collection of information, including suggestions for reducing this
burden to Hilda Diaz-Soltero, NMFS, or the Office of Information and
Regulatory Affairs, OMB (see ADDRESSES).
List of Subjects in 50 CFR Part 683
Administrative practice and procedure, Fisheries, Reporting and
recordkeeping requirements.
Dated: February 29, 1996.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.
For the reasons set out in the preamble, 50 CFR part 683 is amended
as follows:
PART 683--WESTERN PACIFIC BOTTOMFISH AND SEAMOUNT GROUNDFISH
FISHERIES
1. The authority citation for part 683 continues to read as
follows:
Authority: 16 U.S.C. 1801 et seq.
2. In Sec. 683.2, the definition of ``Council'' is revised to read
as follows:
Sec. 683.2 Definitions.
* * * * *
Council means the Western Pacific Fishery Management Council, 1164
Bishop Street, Suite 1405, Honolulu, HI 96813, 808-522-8220.
* * * * *
3. In Sec. 683.4, paragraph (d) is added to read as follows:
Sec. 683.4 Recordkeeping and reporting.
* * * * *
(d) Any person who is required by state laws and regulations to
maintain records of landings and sales for vessels regulated by this
part, shall make those records immediately available for Federal
inspection and copying upon request by an authorized officer.
4. In Sec. 683.6, paragraphs (i) and (j) are amended by removing
the word ``fishing'' and replacing it with the word ``fish''; and
paragraphs (f) through (k) are redesignated as paragraphs (g) through
(l), respectively, and paragraphs (f), (m), and (n) are added to read
as follows:
Sec. 683.6 Prohibitions.
* * * * *
(f) Fish for bottomfish in the Mau Zone without a permit issued
under Sec. 683.21.
* * * * *
(m) Fail to affix and maintain vessel markings, as required by
Sec. 683.9.
(n) Refuse to make available to an authorized officer for
inspection any records that must be made available in accordance with
Sec. 681.4.
5. Sections 683.9 and 683.10 are redesignated as Secs. 683.10 and
683.11, respectively, and a new Sec. 683.9 is added as follows:
Sec. 683.9 Vessel identification.
(a) Official number. Each fishing vessel subject to this part must
display its official number on the port and starboard sides of the
deckhouse or hull, and on an appropriate weather deck so as to be
visible from enforcement vessels and aircraft.
(b) Numerals. In each of the three locations specified in paragraph
(a), the official number must appear in block Arabic numerals at least
18 inches (45.7 cm) in height for fishing vessels of 65 ft (19.8 m) in
length or longer, and at least 10 inches (25.4 cm) in height for other
vessels. Markings must be legible and of a color that contrasts with
the background.
(c) Duties of operator. The operator of each fishing vessel subject
to this part must:
(1) Keep the displayed official number clearly legible and in good
repair; and
(2) Ensure that no part of the vessel, its rigging, or its fishing
gear obstructs the view of the official number from an enforcement
vessel or aircraft.
Sec. 683.29 [Amended]
6. In Sec. 683.29, paragraph (a) is amended by removing the
telephone number ``808-955-8831'' and adding, in its place ``808-973-
2939''.
[FR Doc. 96-5182 Filed 3-5-96; 8:45 am]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-5181 Groundfish of the Bering Sea and Aleutian Islands Area; Inshore Component Pollock in the Bering Sea subarea
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8888-8889]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5181]
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DEPARTMENT OF COMMERCE
50 CFR Part 675
[Docket No. 960129019-6019-01; I.D. 022996B]
Groundfish of the Bering Sea and Aleutian Islands Area; Inshore
Component Pollock in the Bering Sea subarea
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Closure.
-----------------------------------------------------------------------
SUMMARY: NMFS is prohibiting directed fishing for pollock by vessels
catching pollock for processing by the inshore component in the Bering
Sea subarea (BS) of the Bering Sea and Aleutian Islands management area
(BSAI). This action is necessary to prevent exceeding the first
allowance of the pollock total allowable catch (TAC) for vessels
catching pollock for processing by the inshore component in the BS.
EFFECTIVE DATE: 12 noon, Alaska local time (A.l.t.), March 2, 1996,
until 12 noon, A.l.t., April 15, 1996.
FOR FURTHER INFORMATION CONTACT: Mary Furuness, 907-586-7228.
SUPPLEMENTARY INFORMATION: The groundfish fishery in the BSAI exclusive
economic zone is managed by the NMFS according to the Fishery
Management Plan for the Groundfish Fishery of the Bering Sea and
Aleutian Islands Area (FMP) prepared by the North Pacific Fishery
Management Council under authority of the Magnuson Fishery Conservation
and Management Act. Fishing by U.S. vessels is governed by regulations
implementing the FMP at 50 CFR parts 620 and 675.
In accordance with Sec. 675.20(a)(7)(ii), the first seasonal
allowance of pollock for the inshore component in the BS was
established by the Final 1996 Harvest Specifications of Groundfish (61
FR 4311, February 5, 1996) as 159,311 metric tons (mt).
The Director, Alaska Region, NMFS (Regional Director), has
determined in accordance with Sec. 675.20(a)(8), that the first
seasonal allowance of pollock TAC for vessels catching pollock for
processing by the inshore component in the BS soon will be reached.
Therefore, the Regional Director has established a directed fishing
allowance of 147,311 mt with consideration that 12,000 mt will be taken
as incidental catch in directed fishing for other species in the BS.
Consequently, NMFS is prohibiting directed fishing for pollock by
vessels catching pollock for processing by the inshore component in the
BS. This closure is effective March 2, 1996, until
[[Page 8889]]
12 noon, A.l.t., April 15, 1996. Under Sec. 675.20(a)(2)(ii), the
second seasonal allowance will be available from 12 noon, A.l.t.,
August 15 through the end of the fishing year.
Maximum retainable bycatch amounts for applicable gear types may be
found in the regulations at Sec. 675.20(h).
Classification
This action is taken under Sec. 675.20 and is exempt from review
under E.O. 12866.
Authority: 16 U.S.C. 1801 et seq.
Dated: February 29, 1996.
Richard W. Surdi,
Acting Director, Office of Fisheries Conservation and Management,
National Mmarine Fisheries Service.
[FR Doc. 96-5181 Filed 3-1-96; 10:23 am]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-5176 Order to Show Cause and Notice of Hearing; Apprehension, Custody and Detention
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8858-8859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5176]
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DEPARTMENT OF JUSTICE
Immigration and Naturalization Service
8 CFR Part 242
[INS No. 1716-95]
RIN 1115-AE13
Order to Show Cause and Notice of Hearing; Apprehension, Custody
and Detention
AGENCY: Immigration and Naturalization Service, Justice.
ACTION: Final rule.
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SUMMARY: This rule amends existing Immigration and Naturalization
Service (Service) regulations, by adding the position of institutional
hearing program director to the list of Immigration and Naturalization
Service officials authorized to issue orders to show cause and warrants
of arrest. This is an internal change only and is necessitated by the
placement of Service special agents at correctional institution sites
to process criminal aliens for deportation proceedings. The
modification is intended to facilitate the processing of incarcerated
criminal aliens. The position of patrol agent in charge is also being
added to the list of officials authorized to issue orders to show cause
and warrants of arrest. This change will allow the Service to obtain
more efficient use of its personnel and resources and is in keeping
with current organizational command structure and program
responsibility with a Border Patrol sector. This rule also deletes
positions from the list of officials authorized to issue orders to show
cause and warrants of arrest which are no longer necessary.
EFFECTIVE DATE: March 6, 1996.
FOR FURTHER INFORMATION CONTACT:
Ira L. Frank, Senior Special Agent, Investigations Division,
Immigration and Naturalization Service, 425 I Street NW., Room 1000,
Washington, DC 20536, telephone: (202) 514-0747.
SUPPLEMENTARY INFORMATION: This rule adds the position of institutional
hearing program director and patrol agent in charge to the list of
Immigration and Naturalization Service officials authorized to issue
orders to show cause, thereby initiating deportation proceedings
pursuant to 8 CFR 242.1(a). It also amends 8 CFR 242.2(c)(1) to permit
the same officials to sign warrants of arrest.
The Institutional Hearing Program (IHP) represents one of the
Service's major undertakings to process criminal aliens while they are
incarcerated in correctional institutions and to obtain orders of
deportation prior to their release from imprisonment. The correctional
institutions designated as IHP sites are often geographically situated
a great distance from an existing Service office that has an official
designated to sign orders to show cause and warrants of arrest. Sending
orders to show cause or warrants of arrest to another Service office
location frequently causes as unnecessary delay in the processing of
the criminal alien. This rule will permit the institutional hearing
program director, in charge of a staff at a correctional institution
designated as an IHP site, to sign orders to show cause and warrants of
arrest.
Frequently, patrol agents in charge are also geographically remote
from the sector officials currently authorized to issue orders to show
cause and warrants of arrest. The addition of patrol agents in charge
to the list of immigration officials authorized to issue orders to show
cause and warrants of arrest will allow the Service to obtain more
efficient use of its personnel and resources, and is in keeping with
current organizational command structure and program responsibility
within a Border Patrol sector.
The Service is withdrawing authorization for the Director,
Organized Crime Drug Enforcement Task Force (OCDETF), and the Assistant
Director, OCDETF (New York, NY; Houston, TX; Los Angeles, CA; and
Miami, FL), to issue orders to show cause and warrants of arrest. These
organizational positions cease to exist. The Service is also
withdrawing authorization for the Assistant Commissioner, Refugees,
Asylum and Parole, to issue orders to show cause, because this
organizational position no longer exists.
The Service's implementation of this rule as a final rule is based
upon the ``good cause'' exception found at 5 U.S.C. 553(b)(B). The
reason and the necessity for immediate implementation of this final
rule is as follows: This is a rule of agency organization, practice, or
procedure and does not include action which goes beyond formality and
substantially affects the rights of those over whom the agency
exercises authority.
The rule will not have a significant economic impact. It does not
affect parties that are small entities.
Regulatory Flexibility Act
The Commissioner of the Immigration and Naturalization Service, in
accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has
reviewed this regulation and, by approving it, certifies that the rule
will not have a significant economic impact on a substantial number of
small entities as discussed in the Supplemental section of this
document.
Executive Order 12866
This rule is not considered by the Department of Justice,
Immigration and Naturalization Service, to be a ``significant
regulatory action'' under Executive Order 12866, Sec. 3(f), Regulatory
Planning and Review, and the Office of Management and Budget has waived
its review process under section 6(a)(3)(A).
Executive Order 12612
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the National
Government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this rule
does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
List of Subjects in 8 CFR Part 242
Administrative practice and procedure, Aliens, Deportation.
Accordingly, part 242 of chapter I of title 8 of the Code of
Federal Regulations is amended as follows:
[[Page 8859]]
PART 242--PROCEEDINGS TO DETERMINE DEPORTABILITY OF ALIENS IN THE
UNITED STATES: APPREHENSION, CUSTODY, HEARING, AND APPEAL
1. The authority citation for part 242 continues to read as
follows:
Authority: 8 U.S.C. 1103, 1182, 1186a, 1251, 1252, 1252 note,
1252a, 1252b, 1254, 1362; 8 CFR part 2.
2. Section 242.1, paragraph (a) is revised to read as follows:
Sec. 242.1 Order to show cause and notice of hearing.
(a) Commencement. Every proceeding to determine the deportability
of an alien in the United States is commenced by the filing of an order
to show cause with the Office of the Immigration Judge, except for an
alien who has been admitted to the United States under the provisions
of section 217 of the Act and Part 217 of this chapter other than such
an alien who has applied for asylum in the United States. In the
proceeding, the alien shall be known as the respondent. Orders to show
cause may be issued by:
(1) District directors (except foreign);
(2) Deputy district directors (except foreign);
(3) Assistant district directors for investigations;
(4) Deputy assistant district directors for investigations;
(5) Assistant district directors for deportation;
(6) Deputy assistant district directors for deportation;
(7) Assistant district directors for examinations;
(8) Deputy assistant district directors for examinations;
(9) Officers in charge (except foreign);
(10) Assistant officers in charge (except foreign);
(11) Chief patrol agents;
(12) Deputy chief patrol agents;
(13) Associate chief patrol agents;
(14) Assistant chief patrol agents;
(15) Patrol agents in charge;
(16) The Assistant Commissioner, Investigations;
(17) Service center directors;
(18) Supervisory asylum officers; or
(19) Institutional Hearing Program Directors.
* * * * *
3. In Sec. 242.2, paragraph (c)(1) (i) through (xvii) is revised to
read as follows:
Sec. 242.2 Apprehension, custody, and detention.
* * * * *
(c) * * *
(1) * * *
(i) District directors (except foreign);
(ii) Deputy district directors (except foreign);
(iii) Assistant district directors for investigations;
(iv) Deputy assistant district directors for investigations;
(v) Assistant district directors for deportation;
(vi) Deputy assistant district directors for deportation;
(vii) Assistant district directors for examinations;
(viii) Deputy assistant district directors for examinations;
(ix) Officers in charge (except foreign);
(x) Assistant officers in charge (except foreign);
(xi) Chief patrol agents;
(xii) Deputy chief patrol agents;
(xiii) Associate chief patrol agents;
(xiv) Assistant chief patrol agents;
(xv) Patrol agents in charge;
(xvi) The Assistant Commissioner, Investigations; or
(xvii) Institutional Hearing Program Directors.
* * * * *
Dated: February 22, 1996.
Doris Meissner,
Commissioner, Immigration and Naturalization Service.
[FR Doc. 96-5176 Filed 3-5-96; 8:45 am]
BILLING CODE 4410-10-M
Complete official Federal Register PDF
FR Doc. 96-5166 Revisions to Uniform System of Accounts, Forms, Statements, and Reporting Requirements for Natural Gas Companies
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8870-8872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5166]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
18 CFR Part 284
[Docket No. RM95-4-000]
Revisions to Uniform System of Accounts, Forms, Statements, and
Reporting Requirements for Natural Gas Companies
February 29, 1996.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Final rule; Notice Adopting Electronic Filing Specifications
for the Index of Customers and Discount Transportation Rate Report.
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SUMMARY: On September 28, 1995, the Commission issued a final rule in
this proceeding requiring pipelines to file electronically, a quarterly
Index of Customers through a downloadable file, and the discount
transportation rate reports previously filed only on paper. The
Commission is adopting specifications and instructions for the
electronic filing of these reports. These filing specifications are
entitled ``Instruction Manual for Electronic Filing of the Index of
Customers,'' and ``Instruction Manual for Electronic Filing of the
Discount Transportation Rate Report,'' respectively.
DATES: Pipelines must implement the data sets for the Index of
Customers starting on April 1, 1996, and for the discount
transportation rate reports, starting with the first filing after April
1, 1996.
ADDRESSES: Federal Energy Regulatory Commission, 888 First Street NE.,
Washington, D.C. 20426.
[[Page 8871]]
FOR FURTHER INFORMATION CONTACT:
Richard A. White, Office of the General Counsel, Federal Energy
Regulatory Commission, 888 First Street NE., Washington, D.C. 20426,
(202) 208-0491
Elizabeth A. Taylor, Office of Pipeline Regulation, 888 First Street
NE., Washington, D.C. 20426, (202) 208-0826.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission also provides all
interested persons an opportunity to inspect or copy the contents of
the document during normal business hours in Room 2-A, 888 First
Street, N.E., Washington, D.C. 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing (202) 208-1397 if dialing locally or 1-800-856-3720 if dialing
long distance. To access CIPS, set your communications software to
19200, 14400, 12000, 9600, 7200, 4800, 2400 or 1200 bps, full duplex,
no parity, 8 data bits, and 1 stop bit. The full text of this notice
will be available on CIPS indefinitely in ASCII and WordPerfect 5.1
format. The complete text on diskette in WordPerfect format may also be
purchased from the Commission's copy contractor, La Dorn Systems
Corporation, also located in the Public Reference Room, 888 First
Street, N.E., Washington, D.C. 20426.
The Commission's bulletin board system can also be accessed through
the FedWorld system directly by modem or through the Internet. To
access the FedWorld system by modem:
Dial (703) 321-3339 and logon to the FedWorld system.
After logging on, type: /go FERC
To access the FedWorld system, through the Internet:
Telnet to: fedworld.gov
Select the option: [1] FedWorld
Logon to the FedWorld system
Type: /go FERC
Or:
Point your Web Browser to: http://www.fedworld.gov
Scroll down the page to select FedWorld Telnet Site
Select the option: [1] FedWorld
Logon to the FedWorld system
Type: /go FERC
On September 28, 1995, the Federal Energy Regulatory Commission
(Commission) issued Order No. 581, amending its Uniform System of
Accounts, its forms, and its reports and statements for natural gas
companies.1 These changes include modifications to the
Commission's electronic filing requirements.
\1\ Revisions to Uniform System of Accounts, Forms, Statements,
and Reporting Requirements for Natural Gas Companies, 60 FR 53019
(October 11, 1995).
---------------------------------------------------------------------------
Order No. 581 contains several new and revised electronic filing
requirements. Interstate pipelines transporting or storing gas under
subparts B and G must now provide an electronic Index of Customers
through a downloadable file that is updated quarterly.2 The
discount rate report, previously filed only on paper, will now be filed
both on paper and electronically.3 In addition, the electronic
filing requirements for Form Nos. 2, 2-A, and 11 must be modified to
recognize changes made to these forms.
\2\ See 18 CFR 284.106(c) and 284.223(b). II FERC Stats. & Regs.
Paras. 24,866 and 24,943. No paper copies of the Index of Customers
are required to be filed.
\3\ See 18 CFR 284.7(c)(6). II FERC Stats. & Regs. para. 24,847.
In its ``Order on Clarification and Granting Rehearing Solely for
the Purpose of Further Consideration,'' 73 FERC para. 61,215 (1995),
the Commission clarified that the discount rate reports should be
filed solely on paper until the electronic filing specifications are
issued.
---------------------------------------------------------------------------
Although Order No. 581 imposed new electronic filing requirements,
it did not include the final electronic filing specifications. The
Commission wanted to provide the industry the opportunity to
participate in the formulation of the specifications and formats for
the electronic filing requirements. To ensure the widest possible
input, the Commission directed its staff to convene an informal
technical conference. The first conference was convened on December 1,
1995. As a result of the discussions at that meeting, the Commission's
staff has formulated the final electronic filing requirements for the
Index of Customers and the discount rate reports, attached as
Appendices A and B, respectively.4 Work on Form Nos. 2, 2-A, and
11 will be completed by the working group established for that
purpose.5
\4\ The Appendices are not being published in the Federal
Register, but are available from the Commission's Public Reference
Room.
\5\ The Working Group--Forms met on December 12, 1995, and again
on February 7, 1996.
---------------------------------------------------------------------------
The Index of Customers consists of five data elements: the customer
name, the rate schedule under which service is rendered, the contract
effective date, the contract termination date, and the maximum daily
contract quantity, for either transportation or storage service, as
appropriate. Since the expiration date of the contract may depend on
the terms of an evergreen or roll-over provision,6 a separate
field is provided to enter the number of days in the roll-over or
evergreen period. For example, if a contract has passed its primary
expiration date, and is continuing on a month-to-month basis, the
pipeline would report the number 31. This number was chosen since the
next possible expiration date would be in one month's time. For three
of the four reporting dates, that is 31 days away. To minimize the
number of changes each quarter to the Index, the working group
participants agreed to use the number 31 to designate an evergreen
period of one month and 365 to designate one year. If the primary term
has not yet expired and, therefore, the contract is not operating under
an evergreen or roll-over clause, this field would be empty. That is,
two tabs would appear side-by-side.
\6\ These terms are defined in the electronic filing
specifications as they are defined in Order No. 636. III FERC
Statutes and Regulations para. 30,939 at 30,445.
---------------------------------------------------------------------------
The primary term must be reported for every record. When the
contract is operating under an evergreen clause, the next possible
termination date can only be determined by using the primary term date
and the number of days reported in the ``Days Until Next Possible
Contract Expiration'' field.
In a departure from past practice, a three-character code to
identify the filing pipeline will be used for the Index of Customers
and the discount rate reports. Previously, the electronic filing
requirements specified a six-digit company code available from the
Energy Information Agency. In the future, the three-digit code assigned
by the Commission as part of the docket number in all dockets with the
prefix ``TM,'' will be used to identify the filing pipeline. The new
code's short length allows it to be used not only in the data, but as
part of the filename. A complete list of the pipelines' three-digit
codes is included in these filing specifications.
In addition to the file specifications and definitions, the filing
instructions contain aids to filing. One such aid is a presentation of
a sample tab-delimited file, and a sample of what it would look like
when displayed in a text editor. These samples are intended to help the
pipeline accurately create the file. Also included is a section
entitled ``File Creation Hints/ Do's and Don'ts, which contains helpful
hints on creating a tab-delimited file in several popular software
applications.
These electronic filing specifications for the Index of Customers
and discount
[[Page 8872]]
rate reports, entitled ``Instruction Manual for Electronic Filing of
the Index of Customers,'' and ``Instruction Manual for Electronic
Filing of the Discount Transportation Rate Report,'' respectively, and
attached to this notice as Appendices A and B, are hereby adopted. The
first electronic filing of the Index of Customers under sections
284.106(c) and 284.223(b) will be April 1, 1996. April 1 is one of the
four scheduled filing dates provided for in the referenced regulations.
The first discount rate reports to be filed electronically will be the
reports due for the month of March 1996. Those reports are due within
15 days of the close of the March billing period.
By direction of the Commission.
Lois D. Cashell,
Secretary.
[FR Doc. 96-5166 Filed 3-5-96; 8:45 am]
BILLING CODE 6717-01-P
Complete official Federal Register PDF
FR Doc. 96-5164 Revisions to Uniform System of Accounts, Forms, Statements, and Reporting Requirements for Natural Gas Companies; Order on Rehearing
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8859-8870]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5164]
=======================================================================
-----------------------------------------------------------------------
[[Page 8860]]
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 201 and 284
[Docket No. RM95-4-001; Order No. 581-A]
Revisions to Uniform System of Accounts, Forms, Statements, and
Reporting Requirements for Natural Gas Companies; Order on Rehearing
Issued February 29, 1996.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Final Rule; Order on rehearing.
-----------------------------------------------------------------------
SUMMARY: The Federal Energy Regulatory Commission is issuing an order
on the requests for rehearing of Order No. 581, the final rule amending
the Commission's Uniform System of Accounts, its forms, and its reports
and statements for natural gas companies. In the final rule, the
Commission sought to simplify and streamline its requirements to reduce
the burden of respondents. The revisions here address issues raised and
clarifications requested by parties in this proceeding.
DATES: The revised regulations will become effective April 5, 1996.
FOR FURTHER INFORMATION CONTACT: Erica J. Yanoff, Office of the General
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 208-0708.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document, excluding Appendices A (Revised Pages of FERC Form No.
2) and B (Revised Pages of FERC Form No. 2-A) in the Federal Register,
the Commission also provides all interested persons an opportunity to
inspect or copy the contents of this document during normal business
hours at 888 First Street, NE., Washington, DC 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing (202) 208-1397 if dialing locally or 1-800-856-3720 if dialing
long distance. To access CIPS, set your communications software to
19200, 14400, 12000, 9600, 7200, 4800, 2400, or 1200 bps, full duplex,
no parity, 8 data bits, and 1 stop bit. The full text of this document
will be available on CIPS indefinitely in ASCII and WordPerfect 5.1
format. The complete text on diskette in Wordperfect format may also be
purchased from the Commission's copy contractor, La Dorn Systems
Corporation, also located in the Public Reference Room at 888 First
Street, NE., Washington, DC 20426.
Before Commissioners: Elizabeth Anne Moler, Chair; Vicky A. Bailey,
James J. Hoecker, William L. Massey, and Donald F. Santa, Jr.
I. Introduction
On September 28, 1995, the Federal Energy Regulatory Commission
(Commission) issued Order No. 581, amending its Uniform System of
Accounts, its forms, and its reports and statements for natural gas
companies. 1 In Order No. 581, the Commission, with respect to the
Uniform System of Accounts, addressed the treatment of gas in
underground storage reservoirs and in pipelines, and of revenues and
gas supply expenses, eliminated all accounts for Nonmajor respondents,
and redesignated accounts used only by Major respondents for use by all
respondents. The Commission also modified various forms, reports, and
statements in an effort to create documents that reflect the current
regulatory environment of unbundled pipeline sales for resale at
market-based prices and open-access transportation of natural gas. This
included changes to, and deletions from, the FERC Form No. 11 (Form No.
11), ``Natural gas pipeline company monthly statement,'' the FERC Form
No. 2 (Form No. 2), ``Annual report of Major natural gas companies,''
and the FERC Form No. 2-A (Form No. 2-A), ``Annual report of Nonmajor
natural gas companies.''
\1\ Revisions to Uniform System of Accounts, Forms, Statements,
and Reporting Requirements for Natural Gas Companies, 60 FR 53019
(October 11, 1995), II FERC Stats. & Regs. para. 20,000 et seq.
(1995) (regulatory text), III FERC Stats. & Regs. para. 31,026
(1995) (preamble). This order on rehearing is a companion to the
order on rehearing, issued concurrently in Docket No. RM95-3-001,
which concerned amendments to the form and composition of interstate
natural gas pipeline tariffs and the filing of rates and charges for
the transportation of natural gas. See Filing Requirements for
Interstate Natural Gas Company Rate Schedules and Tariffs, Order No.
582, 60 FR 52960 (October 11, 1995).
---------------------------------------------------------------------------
The Commission also sought to simplify and streamline its
requirements to reduce the burden on respondents. Hence, the Commission
eliminated certain reporting requirements (as well as a few non-
reporting requirements) that were outdated or nonessential in light of
current regulation, or were duplicative of other reporting
requirements. This included the deletion of the Form No. 8,
``Underground Gas Storage Report.'' At the same time, the Commission
imposed new reporting requirements, too, most notably, the electronic
Index of Customers.
All of the revisions, especially of Form No. 2, were designed to
provide financial, rate, and statistical information on transactions
that is more useful than what is currently available to regulatory
agencies and other users of the financial statements and reports of
natural gas companies.
ANR Pipeline Company and Colorado Interstate Gas Company (ANR/CIG),
jointly, and the National Registry of Capacity Rights, Inc. (Registry)
request rehearing of Order No. 581. 2 Columbia Gas Transmission
Corporation and Columbia Gulf Transmission Company (collectively,
Columbia) also request rehearing, but do so alternatively, if the
Commission does not clarify Order No. 581 as they request. The
Interstate Natural Gas Association of America (INGAA), the Natural Gas
Supply Association (NGSA), and the PEC Pipeline Group 3 each filed
a request for clarification of Order No. 581.
\2\ ANR/CIG's request is titled ``Request for Rehearing and
Clarification.''
\3\ The ``PEC Pipeline Group'' refers, collectively, to
Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Texas
Eastern Transmission Corporation, and Algonquin Gas Transmission
Company.
---------------------------------------------------------------------------
Generally, the issues raised and clarifications requested by these
parties concern Order No. 581's holdings with respect to storage
accounting in the Uniform System of Accounts, the lack of receipt and
delivery point information in the Index of Customers, and the
disclosure of commercially sensitive information in the Index of
Customers and the discount rate report. In addition, Louis Dreyfus
Energy Corp. (Louis Dreyfus) filed a petition for reconsideration of
Order No. 581's elimination of the Form No. 8.
This order grants in part, and denies in part, the rehearing
requests, denies Louis Dreyfus' petition for reconsideration, and
clarifies Order No. 581.
II. Uniform System of Accounts
A. Storage Accounting
1. Accounting for Use of System Gas Under Fixed Asset Model
ANR/CIG request rehearing with respect to the Commission's
treatment of new Account 117.4, ``Gas Owed to System Gas.'' In the
final rule, the Commission permitted pipelines to account for system
gas using either the inventory method or the fixed asset method. For
pipelines using the fixed asset method, the Commission adopted
accounting provisions which require
[[Page 8861]]
that future encroachments on system gas, resulting from transportation
imbalances, no-notice transportation, and other operational needs, be
credited to Account 117.4 at the then-current market price of gas, with
a corresponding charge to Account 808.1, ``Gas Withdrawn From Storage-
Debit.'' The Commission stated that if the volumes withdrawn are used
to meet transportation imbalances, Account 806, ``Exchange Gas,'' will
be credited and Account 174, ``Miscellaneous Current and Accrued
Assets,'' will be debited simultaneously with the entries to the system
gas account. 4
\4\ III FERC Stats. & Regs. at 31,454-55.
---------------------------------------------------------------------------
ANR/CIG argue that this accounting treatment will result in a
fluctuating balance for Account 117 (the sum of Accounts 117.1, 117.2,
117.3, and 117.4), which is designated as a fixed asset. In order to
treat the balance in Account 117 as a fixed asset, and prevent
potential monthly fluctuations, which ANR/CIG assert is inconsistent
with the nature of a fixed asset, ANR/CIG urge the Commission to
establish an additional contra account within the Account 117 series,
instead of using the current asset Account 174.
The Commission will not adopt ANR/CIG's suggestion for the
following reason. Although the receivable may have originally been
generated by the encroachment of system gas, the settlement of the
receivable is not dependent on the replacement of the system gas
volumes. For example, a customer may ``cash-out'' his receivable with
the pipeline in one month, while the pipeline replaces the volumes into
storage in another month. The amount of the receivable may also differ
from the amount of the encroachment if, e.g., the pipeline revalues its
encroachments. Because of the lack of one-to-one correspondence between
the receivable and the replacement of the encroachment volumes, the
Account 117 series would become misstated if we were to allow recording
of the receivable within them. It would also not be appropriate to mix
one type of asset (i.e., a receivable) with a completely different type
of asset (i.e., system gas volumes).
2. Losses on Settlement of Imbalances
In explaining how the simplified recordkeeping requirements under
the fixed asset method should mitigate CNG Transmission Corporation's
concerns over the recordkeeping required to calculate imbalance gains
or losses, the Commission stated:
For imbalances in which the pipeline has delivered more than the
shipper injected at the receipt point, gains (or losses) will be the
difference between the cash-out price and the pipeline's purchase
cost of replacement gas volumes. For cashed-out imbalances in which
the pipeline has delivered less than the shipper has tendered into
the pipeline, the gain (or loss) will be the difference between the
cash-out price paid by the pipeline and the current price of volumes
recorded in Account 117.4. 5
\5\ III FERC Stats. & Regs. at 31,459.
---------------------------------------------------------------------------
INGAA asserts that this accounting treatment assumes that all pipelines
that elect the fixed asset model use a monthly cash-out, and purchase
replacement volumes concurrently. However, INGAA states that some
pipelines roll imbalances over month-to-month after assigning a dollar
value to the imbalance, and that pipelines do not necessarily purchase
or track replacement volumes on a transaction-by-transaction basis.
INGAA argues that it appears that the intended accounting
treatment, based on other statements in the final rule under ``Use of
System Gas, Fixed Asset Method,'' 6 and on the Account 174 and 242
definitions, is for the gain or loss to equal the difference between
the cash out (or the current value of gas physically received or
delivered) and the imbalance receivable or payable balance. Therefore,
INGAA requests that the Commission modify the wording under ``Losses on
Settlement of Imbalances'' to be consistent with the intended
accounting.
\6\ Id. at 31,455.
---------------------------------------------------------------------------
The Commission will not clarify Order No. 581 as requested by
INGAA. The final rule correctly stated that the difference between the
cash-out price and the pipeline's purchase costs of replacement gas
volumes is the amount of the gain or loss on imbalances involving cash-
out settlements. Such gain or loss consists of two components: (1) Gain
or loss on the settlement of receivables/payables (i.e., the difference
between the recorded amount of the receivable/payable and the actual
cash-out amount); and (2) gain or loss on the difference between the
injection price and the actual cost of replacement gas.
Contrary to INGAA's assertion, the accounting requirements for
storage imbalances do not assume that all pipelines settle cash-outs
concurrently with the replacement of system gas; the prescribed
accounting is designed to accommodate different cash-out settlement
dates and replacement dates. For example, if a pipeline recorded a $100
imbalance receivable in month one, and rolled it over to month two, in
which it had an additional $200 imbalance receivable, it could settle
the $300 receivable (or any part of it) by debiting cash and crediting
the receivable, and would recognize a gain or loss on the difference
between the recorded amount of receivable and the settlement amount. If
the pipeline replaced the gas in month six, it would recognize a gain
or loss on the difference between its cost of replacement gas and the
accounting value of the storage injection. The gain or loss on the
settlement of the receivable and the replacement activity would be
reflected in the gain or loss accounts in the period in which they
occur. There would be no tracking of gains or losses on transactions
for individual customers.
3. Pricing of Losses of System Gas
The Commission stated in Order No. 581 that, under the fixed asset
model, ``losses of system gas should be priced at the same rate used to
price withdrawals in the month in which the gas loss is recognized
(i.e., the current market price of gas available to the utility).''
7 According to Columbia, this is appropriate for accounting for
losses of working gas, but not for accounting for losses of cushion
gas.
\7\ III FERC Stats. & Regs. at 31,459-60.
---------------------------------------------------------------------------
In support, Columbia argues that losses of system gas often occur
over long periods of time, and are recognized only after extensive
periods of analyses of storage fields. A pipeline may choose not to
replace cushion gas losses. Additionally, Columbia maintains that in
instances where a pipeline accrues a reserve for cushion gas losses, it
would be inappropriate to use a value which differs from the actual
cost of the gas. Thus, Columbia requests that the Commission clarify
that losses of cushion gas must be recorded at book value, not at the
present market value, or in the alternative, grant rehearing on this
issue.
Columbia also reiterates its recommendation in its initial comments
that the Commission add another subaccount or provision to Account
117.1 to allow for recognition of extraordinary gas storage losses as a
reduction of the asset which has incurred the loss. Columbia states
that the Commission did not address this issue in the final rule, and
therefore, requests rehearing.
The Commission will not clarify Order No. 581 to permit losses of
cushion gas to be recorded at book value. Under the fixed asset model,
losses of both working gas and cushion gas are accounted for in the
same manner--Account 117.4 is credited (and Account 823 is charged)
with the current market value of the lost gas. The
[[Page 8862]]
underlying presumption is that all encroachments of system gas
(including gas losses) will be replaced in order to maintain authorized
system gas levels.
However, the Commission will grant rehearing, in part, and allow
pipelines to credit the system gas accounts (i.e., Account 117.1 or
117.2) directly with the historical cost of the decrease in authorized
system gas volumes in the unusual situation where a pipeline
determines, and the Commission authorizes, a decrease in system gas
volumes (due to, for example, extraordinary storage losses, changes in
system operational needs, etc.). The Commission does not believe that
it is necessary, though, to create a separate subaccount under Account
117, or include another provision in the regulations to accommodate
these unusual occurrences. Because Commission approval is required to
change authorized system gas levels, a pipeline should not record
permanent reductions in authorized system gas volumes prior to
receiving Commission approval. Instead, prior to receiving Commission
approval, a pipeline should credit Account 117.4 with the market value
of the losses.
4. Use of Customer-Owned Storage Quantities for Balancing
In Columbia's comments to the NOPR, Columbia sought confirmation
that entries to Account 117.4 to record encroachments by customers
resulting from imbalances, no-notice transportation, and other
operational needs should be made only after Columbia has exhausted
other options for resolving the encroachments, such as using customer-
owned storage quantities. Columbia stated that Account 117.4 should be
used only after the balance of all customer gas has been withdrawn, and
the only remaining gas belongs to the pipeline. In Order No. 581, the
Commission responded:
Columbia is permitted to borrow the gas from storage because of
an arrangement between Columbia and its customers that, consistent
with Columbia's tariff, allows Columbia to use its customer's gas
for balancing purposes. Thus, Columbia and any other similarly
situated pipeline would record amounts in Account 117.4 only after
customer gas available to the utility for system balancing purposes
has been exhausted. This accounting is appropriate because the
pipeline is using its customers' gas to meet imbalances on its
transportation system.8
\8\ III FERC Stats. & Regs. at 31,460.
---------------------------------------------------------------------------
Columbia now requests clarification that the Commission's holding
in Order No. 581 with respect to the use of customer gas for storage
withdrawals, above, will not require Columbia to make revisions to its
present tariff. It states that the Commission's language could be
interpreted to require that Columbia's present accounting methodology
for gas imbalances be conditioned upon specific tariff provisions.
Columbia further states that the storage accounting it employs is based
upon its system operations as reviewed and accepted by the Commission
in its restructuring proceeding. Thus, Columbia seeks confirmation that
Order No. 581 approved its storage accounting, and was not intended to
require Columbia to revise its current tariff.
Order No. 581 allows Columbia, and similarly situated pipelines, to
recognize that gas borrowed from storage (to the extent that there is
customer gas in storage) to meet imbalances belongs to the storage
customers. This recognition is permissible where there are arrangements
between the pipeline and its customer(s), consistent with the
pipeline's tariff, that permit the pipeline to use its customer's gas
for balancing purposes. In Columbia's case, Rate Schedule FSS
specifically provides for customers' storage to be used for
extinguishing imbalances arising under the customers' various service
agreements:
Buyer's FSS Inventory under this Rate Schedule shall be
increased or decreased by any actual imbalances (actual receipts
compared to actual deliveries) created under any other Service
Agreement(s) Buyer has with Seller and the imbalance shall be
removed from such other Service Agreement(s). Such increase or
decrease shall be deemed to be a storage injection or withdrawal
under Buyer's FSS Service Agreement.9
\9\ Substitute Original Sheet No. 165, Second Revised Volume No.
1 of Columbia's FERC Gas Tariff.
---------------------------------------------------------------------------
It was this and similar provisions in Columbia's tariff which prompted
the Commission's response in Order No. 581.
However, we clarify that where the pipeline's retained system gas
is used for balancing, no-notice service, or other uses associated with
maintaining efficient transmission operations, entries to Account No.
117.4 are necessary. Columbia's tariff contains two rate schedules,
Rate Schedules NTS and SIT, which rely on Columbia's retained
storage.10
\10\ See orders addressing Columbia's compliance filings,
Columbia Gas Transmission Corporation, 65 FERC para. 61,344 at
62,726 (1993) and 64 FERC para. 61,060 at 61,528 (1993).
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Further, in the restructuring proceeding, Columbia asserted that
retained storage would be used for balancing purposes. As described by
the Commission:
Columbia avers the allocation of retained storage costs to FTS
service is appropriate to recognize the use of storage for
operational balancing agreements (OBAs) with upstream pipelines.
Columbia also argues its retained storage handles the hourly swings
of customers and imbalances within tolerance levels. Allocation of
retained storage costs thus recognizes system balancing for all
services.11
\11\ 64 FERC para. 61,060 at 61,528 (1993).
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Therefore, Columbia (and any similarly situated pipeline) must
comply with the applicable Uniform System of Accounts instructions for
recording system gas injections and withdrawals whenever it uses its
own system gas for balancing, no-notice, or other uses associated with
maintaining efficient transmission operations.
Columbia additionally asks the Commission, assuming arguendo, that
the Commission finds that storage encroachments by customers must be
recorded in Account No. 117.4 before all customer gas has been
physically withdrawn, to expand the instructions in Account 117.4 to
address the accounting treatment of gas resulting from a net overtender
position (i.e., when shippers put more gas into the system than they
take out). Columbia seeks clarification of the accounting entries
required when customers are in an overtendered position, which
physically requires an injection of gas into storage.
The Commission believes that overtendered gas should be treated the
same as customer contract gas physically held by the pipeline. That is,
records of stored volumes should be maintained, but no formal
accounting recognition of dollar amounts should be given to the
overtendered volumes.
5. Conforming Corrections to Regulation Text
Several parties have identified instances in which the findings and
rulings of the Commission, as described in Order No. 581, are not
reflected in the text of the new regulations. In those instances,
discussed below, the parties maintain that the Part 201 regulations
need to be amended accordingly. Also identified below are minor
typographical errors.
INGAA and the PEC Pipeline Group state that the use of Account
117.2 to credit withdrawals of storage gas under the inventory method,
as permitted by Order No. 581, is not specified in the instructions for
Account 808. The Commission will conform the instructions for Account
808.1, Gas
[[Page 8863]]
Withdrawn from storage-Debit, and Account 808.2, Gas Injected into
storage-Credit, to reflect withdrawals and injections of gas under the
inventory method of accounting.
INGAA states that the changes in the final rule that explicitly
require that storage losses be charged to Account 823 are not reflected
in the Part 201 instructions. The Commission will modify the
instructions to the text of Account 823, Gas Losses, and the Special
Instructions to Accounts 117.1, 117.2 and 117.3, to require losses of
gas stored in underground reservoirs to be charged to Account 823.
INGAA and the PEC Pipeline Group state that in the Special
Instructions to Accounts 117.1, 117.2, and 117.3, (b) Fixed Asset
Method, the first sentence of the fourth paragraph is incomplete, and
should be revised to: ``When replacement of the gas is made, the amount
carried in Account 117.4 for such volumes must be cleared with an
offsetting entry to Account 808.2.'' The Commission agrees, and will
revise the instruction accordingly.
INGAA and the PEC Pipeline Group state that the last sentence of
the instructions to Account 117.4, Gas Owed to System Gas, must be
corrected by changing the word ``revolve'' to ``revalue''. The
Commission agrees and will revise the instruction accordingly.
B. Shipper-Supplied Gas
1. Recordkeeping
In Order No. 581, the Commission revised the recordkeeping
requirements for shipper-supplied fuel to require records to be
maintained and readily available for shipper-supplied gas on a rate
schedule and zone basis.12 INGAA requests that the Commission
clarify that for companies that calculate shipper-supplied fuel based
on delivered volumes, the accounts of retained fuel and unaccounted-for
volumes be maintained on the basis of gas delivered, rather than gas
received.
\12\ III FERC Stats. & Regs. at 31,463.
---------------------------------------------------------------------------
The Commission clarifies that it is permissible to maintain records
of shipper-supplied gas on the basis of gas delivered or gas received,
as appropriate in the circumstances.
2. Conforming Changes to Regulation Text
According to NGSA, Order No. 581 states that ``the value of gas
received from shippers under tariff allowances that is not consumed in
operations nor returnable to customers through rate tracking mechanisms
shall be credited to Account 495, Other Gas Revenues and charged to
Account 805.'' 13 However, NGSA states that this language does not
appear in the revised regulations. NGSA requests that the Commission
clarify this matter by including a statement in the regulations which
explicitly requires such accounting treatment.
\13\ Id. at 31,461.
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The Commission will add a new paragraph to the text of Account 805,
Other gas purchases, to address the treatment of retained shipper-
supplied gas.
C. Revenues
In Order No. 581, the Commission modified the accounting treatment
it had proposed for gains and losses on imbalance transactions, in
instances where a pipeline's tariff requires such gains and losses to
be passed along to customers. Rather than requiring a gain or loss to
be initially recorded in Accounts 495 or 813, respectively, the
Commission stated that it would require pipelines to record the gain or
loss on imbalances directly in Account 254, Other Regulatory
Liabilities, or Account 182.3, Other Regulatory Assets, as
appropriate.14
\14\ Id. at 31,464-65.
---------------------------------------------------------------------------
INGAA and the PEC Pipeline Group argue that the corresponding
instructions do not appear in Account 174 of the Balance Sheet
Accounts; they state that Account 174 only includes instructions to
record all gains and losses from balancing transactions in Accounts 495
and 813, respectively. INGAA and the PEC Pipeline Group request that
the Commission clarify the regulations to reflect its decision to
record certain gains and losses from imbalance transactions in the
deferred accounts, Account 254 and Account 182.3, respectively.
The Commission will not clarify the regulations as requested by the
parties. Because the Uniform System of Accounts already provides
instructions for accounting for regulatory assets and liabilities,\15\
the Commission believes that it is unnecessary to modify the text of
Accounts 174, Miscellaneous Current and Accrued Assets, and Account
242, Miscellaneous Current and Accrued Liabilities, to specifically
address regulatory assets and liabilities related to imbalances. As
with any revenue, expense, gain, or loss that would have been included
in net income determinations in one period under the general
requirements of the Uniform System of Accounts were it not for the
probability that such items would be included in a different period for
ratemaking purposes (or, in the case of regulatory liabilities, would
be required to be refunded),\16\ imbalance gains and losses to be
collected from or returned to customers in future rates must be
accounted for as regulatory assets and liabilities in accordance with
Definition No. 31, and the instructions to Accounts 182.3 and 254 of
the Uniform System of Accounts.
\15\ See Definition No. 31 of the Uniform System of Accounts, 18
C.F.R. Part 201 (1995).
\16\ This defines ``regulatory assets and liabilities.'' Id.
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D. Gas Supply Expenses
In Order No. 581, the Commission found that the amounts recorded in
Account 806, Exchange Gas, should be based on the measurement attribute
of the gas received or delivered in the exchange.17 INGAA and the
PEC Pipeline Group maintain that the instructions in the final rule for
recording the amounts in Account 806 do not appear in the Account 806
regulations. They assert that in the final rule, the Commission
properly stated that if a company is using the inventory method, and
the gas delivered in an exchange has been priced on a historical cost
basis, the costs to be recorded in Account 806 would be based on the
historical cost of the gas. The parties state that the text of the
Account 806 regulation states that ``costs are to be determined from
the current market price of gas at the time gas is tendered for
transportation,'' reflecting a pipeline's use of only the fixed asset
method. Therefore, INGAA and the PEC Pipeline Group ask that the
regulations for Account 806 be clarified to reflect the appropriate
accounting for both the fixed asset and the inventory method.
\17\ III FERC Stats. & Regs. at 31,466.
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The Commission will modify the text of Account 806 to reflect the
use of the inventory method, as well as the use of the fixed asset
method.
The PEC Pipeline Group states in Order No. 581, the Commission
adopted Panhandle Eastern Pipeline Company's suggestion to move the
detailed recordkeeping requirements for cash-out transactions to other
accounts.18 The PEC Pipeline Group argues that paragraph B of the
Part 201 instructions for Account 806, establishing the recordkeeping
requirement, should be deleted, and the detailed recordkeeping
requirements for all balancing transactions should be moved to other
accounts (i.e., Account 174, Miscellaneous Current and Accrued Assets,
and Account 242, Miscellaneous Current and Accrued Liabilities).
\18\ Id.
[[Page 8864]]
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In response to Panhandle's comments on the NOPR, the Commission
reduced the level of recordkeeping requirements, and moved the
instructions for accounting for settlement of imbalance receivables and
payables from Account 806 to Accounts 174 and 242, respectively.
Included in the new Paragraph B of the instructions to Accounts 174 and
242 is a requirement that pipelines maintain for each party entering
gas exchange, load balancing, or no-notice transportation transactions,
the quantity and cost of gas delivered and received. This is the same
requirement as now appears in paragraph B of Account 806. Therefore, to
avoid unnecessary duplication, the Commission will delete paragraph B
of Account 806, as requested by the PEC Pipeline Group.
III. Form Nos. 2 and 2-A
Only one corrective change to the Form No. 2 was requested by the
parties. INGAA and the PEC Pipeline Group note that on page 220, in
Column (e) for Account 117.4, lines 2 and 3 should not be blacked out.
Similarly, INGAA states that lines 2 and 3 in Column (b) for Account
117.1 also should not be blacked out. INGAA states that if a pipeline
is using the fixed asset method, it will show entries in both Account
117.1 and Account 117.4 for contra accounts Gas Delivered to Storage
(line 2) and Gas Withdrawn From Storage (line 3). The Commission agrees
that those lines should not be blacked out, and will delete the shading
from those lines.
The Commission has identified several other editorial,
typographical, and conforming changes that must be made to the Form No.
2, and where applicable, to the Form No. 2-A, also. These changes are
listed below, and appear in the revised pages of the forms in
Appendices A and B 19 to this order:
\19\ These Appendices are not being published in the Federal
Register, but are available from the Commission's Public Reference
Room.
---------------------------------------------------------------------------
General Information--Page i
In section III, paragraph (b), the second sentence of the
parenthetical is revised to read: ``Indicate by checking the
appropriate box on page 3, * * * .''
In section III, paragraph (c)(i), the word ``aspects'' is revised
to ``respects.''
General Information--Page ii
In section III, paragraph (c)(ii), the pages referring to schedule
``Statement of Income'' are revised to ``114-116,'' and the page
referring to schedule ``Notes to Financial Statements'' are revised to
``122.''
In section III, paragraph (d), the word ``Branch'' is added to the
end of the phrase ``Public Reference and Files Maintenance.''
General Instructions--Page iii
In section IV, paragraph (b), the Commission is omitting the
reference to page 4.
List of Schedules (Natural Gas Company)--Page 3
In Column (a), under Income Account Supporting Schedules, the word
``Other'' in the second and third lines is revised to ``Others.'' In
addition in Column (a), under Common Section, the page reference for
Distribution of Salaries and Wages is revised to ``354-355.''
Comparative Balance Sheet (Assets and Other Debits)--Page 110
The page number reference of 200-201 on line 1 is moved to line 3.
The page number reference of 221 on lines 17 and 18 is eliminated. In
addition, line 21 is revised to read: ``(For Cost of Account 123.1 See
Footnote Page 224, line 40).''
Statement of Income for the Year--Page 116
The account titles on lines 29 through 34 are indented.
Statement of Retained Earnings for the Year--Pages 118-119
On page 118, Columns (b), (c), and (d) for the account title
``UNAPPROPRIATED RETAINED EARNINGS,'' and on lines 2 and 3, are shaded.
On page 119, Column (b), ``Contra Primary Account Affected,'' is
eliminated for all lines.
Notes to Financial Statements--Page 122
The Commission is modifying instruction 9 to require explanation
for only those significant changes in accounting methods made during
the year which had an effect on net income.
Gas Plant in Service (Accounts 101,102, 103, and 106)--Pages 204-209
On page 204, the Commission is adding instructions to each line
showing a total (i.e., lines 5 and 26), instructions to total the
applicable lines. The Commission is also shading Columns (b) and (c) on
line 27.
On page 205, the Commission is adding shading to all columns of
line 27.
On page 206, the Commission is adding to each line showing a total
(i.e., lines 36, 37, 39, 54, 65, 75, and 76), instructions to total the
applicable lines.
On page 208, the Commission is adding to each line showing a total
(i.e., lines 86, 102, 114, 116, and 121), instructions to total the
applicable lines.
On page 209, the Commission is removing the shading on line 119,
and adding shading to Column (d) on line 118.
General Description of Construction Overhead Procedure--Page 218
The Commission is adding the word ``the'' at the beginning of
instruction 1(a). The title of Column (c), ``Capital Ratio,'' is
revised to read ``Capitalization Ratio.'' In addition, the Commission
is repositioning the parentheses and brackets in the formulas listed in
items 2 and 3 to correctly present the formulas.
Gas Stored (Accounts 117.1, 117.2, 117.3, 117.4, 164.1, 164.2, and
164.3)--Page 220
In addition to deleting the shading on lines 2 and 3 of Columns (b)
and (e), the Commission is deleting the parenthetical ``(contra
account)'' from lines 2 and 3 of Column (a), and is revising the
parenthetical on the last line in instruction 3, to read, ``(i.e.,
fixed asset method or inventory method).''
Investments in Subsidiary Companies (Account 123.1)--Page 224
After the word ``Total'' on line 40, the Commission is adding the
phrase ``Cost of Account 123.1 $________'' to Column (a), and the word
``Total'' to Column (c).
Other Regulatory Assets (Account 182.3)--Page 232
The title of Column (d) is revised to ``Account Charged.''
Miscellaneous Deferred Debits (Account 186)--Page 233
On line 39, the Commission is adding shading to Columns (c), (d),
and (e).
IV. Form No. 8
All natural gas companies operating an underground natural gas
storage field have been required to file with the Commission, under
section 260.11, a monthly report of its storage activities--the Form
No. 8, ``Underground Gas Storage Report.'' In the NOPR, the Commission
stated the following, with respect to both section 260.11 and section
260.4 (prescribing the Form No. 14, ``Annual Report for Importers and
Exporters of Natural Gas''):
``The Commission is not proposing any substantive changes to
these sections in this NOPR. However, the Commission is seeking
comments on whether the collection of the information contained in
these forms by other governmental or private sources is
[[Page 8865]]
currently adequate, making the collection of the same information in
these Commission forms unnecessary20
\20\ IV FERC Stats. & Regs. para. 32,512 at 33,017.
---------------------------------------------------------------------------
The Commission received comments indicating that essentially the
same storage information is collected by the Department of Energy (DOE)
in the more comprehensive Form EIA-191, ``Underground Gas Storage
Report.'' In the final rule, the Commission determined that the data
from Form EIA-191 could be used to meet the Commission's requirements
for storage data in lieu of the Form No. 8 information, and therefore
eliminated the requirement to file Form No. 8. The Commission held that
elimination of this form was consistent with the overall objective of
the rulemaking proceeding to eliminate duplicative reporting
requirements.
Louis Dreyfus has filed a petition for reconsideration of the
Commission's elimination of the Form No. 8. Louis Dreyfus maintains
that the ready availability of the storage-related information reported
on Form No. 8 is essential to the continual maturation of the primary
and secondary gas transmission and storage markets and to improved
natural gas commodity price discovery. Louis Dreyfus argues that the
Commission erred in eliminating the Form No. 8 both on substantive
grounds, asserting that there is no adequate alternative source from
which to obtain the storage capacity and inventory data in the Form No.
8, and on procedural grounds, asserting that the Commission failed to
provide notice that it might eliminate the form.
A. Necessity of Form No. 8
Louis Dreyfus argues that the Form EIA-191 is not an exact
duplicate of, or adequate substitute for, the FERC Form No. 8, and that
the two forms differ radically in their usefulness to the public and as
sources of information. Louis Dreyfus states that the information filed
in Form EIA-191 is confidential and is never made available to the
public on a company-by-company basis, while the company-by-company
information contained in Form No. 8 is made public within a few weeks
of its submission. It claims that only after a delay is aggregated Form
EIA-191 data made available to the public, and that such aggregated
data is insufficient to meet its needs as a natural gas
marketer.21
\21\ The Form No. 8 collects monthly pipeline storage data such
as injections, withdrawals, and balances. This data in the Form No.
8 is reported on a company-by-company basis, aggregating all storage
fields operated by a company. Reservoir capacity and ownership is
reported separately by storage field. The Form EIA-191 collects
monthly data on the location and operations of all active
underground natural gas storage fields, such as injections,
withdrawals, base gas, working gas, and peak day withdrawals. It
also collects annual data on the capacity, type of facility, maximum
deliverability, and pipelines to which the field is connected. Thus,
the Form EIA-191 is more comprehensive, and collects the data by
reservoir. However, the Form EIA-191 is subject to certain
confidentiality requirements, and therefore is not public
information. DOE does, though, aggregate the Form EIA-191 data by
geographical jurisdiction, and makes that aggregated data available
publicly.
---------------------------------------------------------------------------
Louis Dreyfus maintains that without timely access to the
information reported in Form No. 8, market participants will be
hampered in their efforts to compete fairly in natural gas markets. It
argues that marketers, particularly those not affiliated with storage-
owning pipelines, must be able to evaluate the state of storage
capacity and storage balances in pricing their products. It claims that
marketers lacking the data formerly collected and made publicly
available through Form 8 will be at a disadvantage to marketers that
can gain access to storage-related information.Louis Dreyfus also
argues that any efforts by DOE to have the confidentiality requirements
of Form EIA-191 removed, which the Commission endorsed in Order No.
581, are unlikely to succeed. In its comments to the NOPR, DOE stated
that the opposition to having the confidentiality requirements lifted
that was voiced when DOE attempted to do so in 1993, may have decreased
with the implementation of Order No. 636. However, Louis Dreyfus argues
that that opposition was based on the position that Order No. 636 and
increased competition were the precise reasons why data on storage
field performance by reservoir must not be made public.
Most of the reporting requirements under review in this rule exist
in large part to enable the Commission to carry out its regulatory
mission. They are intended to provide the Commission with the
information it needs to conduct its regulatory review activities.
Accordingly, one of the Commission's main goals in this rulemaking
proceeding has been to eliminate filing requirements that may be
unnecessary to meet the Commission's regulatory responsibilities,
either because they are duplicative, or outdated, or because of other
reasons. In keeping with this goal, the Commission determined in Order
No. 581 that Form No. 8 and Form EIA-191 are similar enough that it is
unnecessary for both DOE and the Commission to require the reporting of
the information contained in those forms. The Commission further found
that it could eliminate Form No. 8 and use the data collected in Form
EIA-191 to meet its regulatory needs.
Moreover, the Energy Information Administration (EIA), within DOE,
is subject to a statutory obligation to collect and publish energy
information and statistics.22 The information that is collected by
the EIA must be ``promptly provide[d]'' to other offices within DOE
when requested.23 Thus, the Commission is confident that it will
be able to readily obtain the storage data in Form EIA-191 when needed,
and therefore, that replacing the Form No. 8 data collection with
access to storage data through the Form EIA-191 will be adequate to
meet the Commission's needs.
\22\ Section 205(a)(2) of the Department of Energy Organization
Act provides that the Administrator of EIA shall be responsible for
carrying out a central comprehensive, and unified energy data and
information program which will collect, evaluate, assemble, analyze,
and disseminate data and information which is relevant to energy
resource reserves, energy production, demand, and technology, and
related economic and statistical information, or which is relevant
to the adequacy of energy resources to meet demands in the near and
longer term future for the Nation's economic and social needs.
42 U.S.C.A. Sec. 7135(a)(2) (1995).
\23\ Section 205(f) states: The Administrator shall, upon
request, promptly provide any information or analysis in his
possession pursuant to this section to any other administration,
commission, or office within the Department which such
administration, commission or office determines relates to the
functions of such administration, commission, or office.
42 U.S.C.A. Sec. 7135(f) (1995).
---------------------------------------------------------------------------
With respect to Louis Dreyfus' needs, Louis Dreyfus complains that
the Form EIA-191 data is insufficient for its purposes because the EIA
only makes publicly available aggregated storage data from the Form
EIA-191 due to the confidentiality restrictions, and because such data
is not company-specific. However, the EIA is under an obligation, upon
request to ``promptly [make] available to the public in a form and
manner easily adaptable for public use'' the information that it
collects.24 Louis Dreyfus is free to pursue any changes to the
EIA's publication of the EIA-191 data with the EIA.
\24\ Section 205(g) of the Department of Energy Organization Act
provides, in pertinent part:
``Information collected by the Energy Information Administration
shall be cataloged and, upon request, any such information shall be
promptly made available to the public in a form and manner easily
adaptable for public use, except that this subsection shall not
require disclosure of matters exempted from mandatory disclosure by
section 552(b) of Title 5, United States Code.
42 U.S.C.A. Sec. 7135(g) (1995).
---------------------------------------------------------------------------
B. Adequacy of Notice Provided
Louis Dreyfus asks that the Commission exercise its discretion to
reconsider the elimination of Form No. 8 in light of the alleged lack
of notice
[[Page 8866]]
afforded to it. Louis Dreyfus states that the Commission never
suggested in the NOPR that it might eliminate the Form No. 8 filing
requirement, but rather ``reassured potentially interested parties that
the Form No. 8 reporting requirements were `not on the table' for
elimination.'' 25 Louis Dreyfus argues that the Commission's
failure to provide any notice of the possibility that it could wholly
eliminate the Form No. 8 reporting requirement, or to provide an
adequate comment period for all interested parties to express their
concerns about such proposal, violates the provisions of Section 553 of
the Administrative Procedure Act (APA),26 and applicable case law.
As a remedy for Order No. 581's alleged legal error in eliminating the
Form No. 8 without adequate notice, Louis Dreyfus argues that the
Commission must reinstate the Form No. 8 reporting requirements, or in
the alternative, reopen the matter by issuing a supplemental notice of
proposed rulemaking that proposes the elimination of Form No. 8 and
invites comments thereon.
\25\ Petition for Reconsideration at 5.
\26\ Section 553(b) of the APA requires that an agency's notice
of proposed rulemaking provide ``either the terms or substance of
the proposed rule or a description of the subjects and issues
involved.'' 5 U.S.C. Sec. 553(b)(3) (1994).
---------------------------------------------------------------------------
The Commission denies Louis Dreyfus' request for reconsideration.
The primary purpose of the notice requirement under Section 553(b) of
the APA is to provide an opportunity for the public to participate in
the rulemaking process through a commenting procedure. The purpose of
section 553 of the APA has been met by the notice given in the NOPR
with respect to the Form No. 8. While the Commission did not explicitly
propose to eliminate the Form No. 8, the notice provided was adequate
under the APA to justify elimination because the Commission expressly
invited parties to comment on whether the collection of the Form No. 8
information is unnecessary. In so doing, the notice raised the issue of
the necessity and continuing existence of the Form No. 8, and gave
interested parties an opportunity to comment on that issue. Given the
goal of the rulemaking proceeding to simplify and streamline its
regulations to reduce the reporting burden, the reasonable implication
from the Commission's invitation for comments was that if commenters
advised the Commission that the collection of storage information in
the Form No. 8 was unnecessary because the collection of the same
information by other entities was adequate, the Commission would
eliminate the Form No. 8. Thus, the notice did indeed raise the
prospect of a potential elimination of the Form No. 8.
The notice with respect to the Form 8 was also adequate under
applicable case law. Louis Dreyfus argues that courts have found notice
of an adopted change to be inadequate in cases such as this one, where
``there were major substantive differences between the proposed rule
and the rule adopted.'' 27 However, substantive differences
between a proposed and final rule do not always invalidate the final
rule for lack of notice. The standard generally invoked by the courts
with respect to the sufficiency of notice, where the final rule differs
from the proposed rule, is that if the rule finally adopted is a
``logical outgrowth'' of, or is ``in character with,'' the proposed
rule, the rulemaking proceeding, or the comments received, a second
notice and comment period is unnecessary, and the final rule will not
be invalidated. 28 However, ``if the final rule deviates too
sharply from the proposal, affected parties will be deprived of notice
and an opportunity to respond to the proposal.'' 29
\27\ Chrysler Corporation v. Dept. of Transportation, 515 F.2d
1053, 1061 (6th Cir. 1975). Louis Dreyfus cites other cases, as
well, stressing the importance of specificity in agency notice. See
Petition for Reconsideration at 4-5.
\28\ Shell Oil Company v. EPA, 950 F.2d 741, 750-51 (D.C. Cir.
1991) (citations omitted) (``An agency, of course, may promulgate
final rules that differ from the proposed regulations. To avoid `the
absurdity that * * * the agency can learn from the comments on its
proposals only at the peril of starting a new procedural round of
commentary,'' we have held that final rules need only be a ``logical
outgrowth'' of the proposed regulations.''); Rybachek v. U.S. EPA,
904 F.2d 1276, 1287-88 (9th Cir. 1990) (``[T]he fact that a final
rule varies from a proposal, even substantially, does not
automatically void the regulations. Rather, we must determine
whether the * * * final rule was in character with the original
proposal and a logical outgrowth of the notice and comments
received.''); City of Stoughton, Wisconsin v. U.S. EPA, 858 F.2d
747, 753 (D.C. Cir. 1988) (``[A]n agency may promulgate a final rule
that differs from its proposed rule without allowing further comment
if the relevant changes are a `logical outgrowth'' of the proposed
rule and the notice and comments upon it.''); Natural Resources
Defense Council, Inc. v. U.S. EPA, 824 F.2d 1258, 1283 (1st Cir.
1987) (citations omitted) (``An agency can make even substantial
changes from the proposed version, as long as the final changes are
`in character with the original scheme' and a `logical outgrowth' of
the notice and comment.'').
\29\ Small Refiner Lead Phase-Down Task Force v. U.S. EPA, 705
F.2d 506, 547 (D.C. Cir. 1983).
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In this case, the elimination of Form No. 8 as an unnecessary
reporting requirement is a ``logical outgrowth'' of, and ``in character
with'' the nature of the proposed rule, which was designed to simplify
and streamline the Commission's reporting requirements in an effort to
reduce the reporting burden, as well as with the comments received. In
the NOPR, the Commission proposed to eliminate numerous unnecessary
reporting requirements because they were ``outdated or nonessential in
light of current regulation, or [were] duplicative of other reporting
requirements.'' 30 Thus, the Commission's action taken in
eliminating the Form No. 8 fell within the general rubric, or
``original scheme'' of the NOPR, and Louis Dreyfus should have
anticipated that elimination of the Form No. 8 was possible.
\30\ IV Stats. & Regs. para. 32,512 at 32,996.
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Moreover, in determining whether a final rule is a ``logical
outgrowth'' of a proposed rule, ``the key focus is on whether the
purposes of notice and comment have been adequately served.'' 31
In this case, parties were given an adequate opportunity to comment on
the Form No. 8, specifically on its relationship to other sources of
storage information, and its necessity. Five parties did, in fact,
comment in favor of the elimination of the Form No. 8 reporting
requirement, indicating that they understood what was being proposed.
Louis Dreyfus had the same opportunity to comment on the retention of
the Form No. 8, but chose to ignore the Commission's request.
\31\ Fertilizer Institute v. U.S. EPA, 935 F.2d 1303, 1311 (D.C.
Cir. 1991) (citations omitted) (``This means that a final rule will
be deemed to be the logical outgrowth of a proposed rule if a new
round of notice and comment would not provide commenters with `their
first occasion to offer new and difference criticisms which the
agency might find convincing.' ''); see Small Refiner Lead Phase-
Down Task Force v. U.S. EPA, 705 F.2d at 547.
---------------------------------------------------------------------------
Louis Dreyfus claims that it relied on the Commission's statement
that it was ``not proposing any substantive changes to [the Form No. 8]
in this NOPR.'' It claims that such reliance is the reason it failed to
comment prior to the final rule, and the reason that it was unaware of
the Commission's ``surprise repeal'' of the Form No. 8 in time to file
a timely rehearing request. 32
\32\ Petition for Reconsideration at 8. Louis Dreyfus states
that it learned of the elimination of the Form No. 8 from reading
the trade press.
---------------------------------------------------------------------------
That statement in the NOPR, taken alone, would have indicated to
the public that no substantive changes would appear in the final rule.
However, read together with the NOPR's invitation for comments on
whether the Form No. 8 might be unnecessary, the statement put the
public on notice that the Commission was contemplating eliminating the
form; the solicitation for comments following the statement conveyed to
the public that the Commission did not yet have enough information upon
which to propose the elimination of the form, but that it
[[Page 8867]]
simply needed comments to fully and carefully consider the issue.
The Commission finds that reinstatement of the Form No. 8 on
procedural grounds is unwarranted. Similarly, Louis Dreyfus' request in
the alternative for reconsideration of the Form No. 8 issue through
additional notice and comment procedures is denied. The Commission has
already reconsidered the issue on the merits, supra, based on Louis
Dreyfus' petition for reconsideration, and has determined that the Form
No. 8 will not be reinstated.
V. Discount Rate Report
A. Disclosure of Commercially Sensitive Information
In their comments to the NOPR, ANR/CIG objected to the public
disclosure of the customer-specific data that was included in the
proposed discount report. The discount report that was proposed in
section 284.7(c)(6) represented a combination of the requirements
contained in the existing discount reporting and maintenance provisions
in section 284.7(d)(5)(iv) and 250.16(d), and thus, required expanded
public reporting of discount information. The proposed discount report
included: (1) The shipper's contract number (for all discounts on firm
transportation); (2) any affiliate role in the transaction; (3) the
quantity of gas delivered during the billing period at the discounted
rate; and (4) the zone of delivery (for interruptible). ANR/CIG argued
that the disclosure of much of the information in the discount report
would cause competitive harm to both pipelines and their customers.
Therefore, ANR/CIG sought the elimination of the discount report, or at
a minimum, the deletion of the contract number, affiliate's role,
quantities delivered, and delivery zone.
The Commission heard the concerns of ANR/CIG and other commenters
regarding the release of sensitive commercial information, and
consequently, abandoned its proposal for an expanded discount reporting
requirement under section 284.7. Thus, the Commission eliminated many
of the proposed data elements from the discount report, and limited the
information required to be filed to the discount data that was
currently required to be filed under existing section 284.7(d)(5)(iv).
33 However, on rehearing, ANR/CIG request that the Commission
reconsider its decision to require disclosure of the information that
was retained; essentially, ANR/CIG continue to seek elimination of the
requirement that pipelines file discount rate reports.
\33\ The discount rate report adopted in new section 284.7(c)(6)
contains the name of the shipper, the corporate affiliation between
the shipper and the transporting pipeline, the maximum rate or fee,
and the rate or fee actually charge during the billing period.
---------------------------------------------------------------------------
By retaining the existing discount rate report requirement, the
Commission has already met ANR/CIG's original, alternative request that
the contract number, affiliate's role, quantities delivered, and
delivery zone be eliminated from the discount report. The Commission,
however, will not go one step further and eliminate entirely the
discount rate report.
The purpose of the discount rate report is to ensure that discounts
are offered on a nondiscriminatory basis. The public disclosure of the
discount rate information is a critical element of the requirement to
produce the data; it enables the discount report to achieve the
purposes for which it was designed. Public reporting permits the
Commission, as well as other interested parties, to maintain a vigil
against discriminatory pricing. Making it more difficult to access this
information will diminish the ability of the Commission and the public
to discover problem deals. This concept was supported by the United
States Court of Appeals for the D.C. Circuit when it condoned rate
discounting:
The reporting system will enable the Commission to monitor
behavior and to act promptly when it or another party detects
behavior arguably falling under the bans of [sections] 4 and 5.
34
\34\ Associated Gas Distributors v. FERC, 824 F.2d 981, 1009.
(D.C. Cir. 1987).
---------------------------------------------------------------------------
B. Customer Codes
At a minimum, if the Commission continues to require the filing of
a discount rate report, ANR/CIG request that in all instances where
customer-specific information is sought, the Commission permit
pipelines, at their option, to use a customer code to identify
customers. ANR/CIG state that each customer would be apprised of its
customer code, and the code would be used consistently in all filings
where customer information is required. ANR/CIG argue that if the need
arises to identify any customer in any proceeding, that information
could be sought in discovery, and such need evaluated on a case-by-case
basis. Thus, ANR/CIG support the use of customer codes, rather than
shipper names. For example, ANR/CIG assert that the provision of
customer-specific information in the discount report, identified by
customer code, with an identification of which codes represent
affiliates of the pipeline, would be equally useful as a discount
report containing the full name of the shipper.
The Commission will not permit the use of customer codes in place
of the full legal name of the shipper in the discount rate report. As
noted above, the key purpose of the discount rate report is to enable
shippers to determine whether a pipeline has offered a discount to a
similarly situated shipper. Since under ANG/CIG's proposal, only the
shipper receiving the discount would know its code, other shippers
would be unable to determine whether the discount given was to a
``similarly situated'' shipper. In other words, shippers need to know
the name of the shipper being given a discount to evaluate if they are
similarly situated. Therefore, the substitution of a secret code for
the name of the shipper will thwart the purpose of the discount rate
report, and the collection of the discount rate data will become
useless.
VI. Index of Customers
A. Receipt Point Data
In Order No. 581, the Commission required interstate pipelines
transporting gas under subparts B and G to establish an Index of
Customers through a downloadable electronic file. Under new section
284.106(c), on the first day of each calendar quarter, the electronic
Index of Customers must be posted on the pipeline's electronic bulletin
board (EBB), and filed with the Commission in electronic form. A paper
copy of the Index is not required to be filed.
The Index of Customers, as finally adopted by Order No. 581,
contains for all firm customers under contract as of the first day of
the calendar quarter, the full legal name of the shipper, the rate
schedule number for which service is contracted, the contract effective
and expiration dates, and the maximum daily contract quantities. This
is a more limited Index of Customers than the Index of Customers that
was proposed in the NOPR. The proposed Index had included a number of
additional data elements, including the receipt and delivery points
associated with the shippers' maximum daily quantities (MDQs).35
\35\ IV Stats. & Regs. para. 32,512 at 33,039.
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However, in light of the primary goal of the rulemaking proceeding
to eliminate unnecessary regulations, and in response to comments that
much of the proposed information was commercially sensitive, and that
its disclosure would be harmful and
[[Page 8868]]
burdensome, the Commission reconsidered the regulatory need for the
information in the proposed Index. The Commission found that many
items, such as the receipt and delivery points, extended beyond that
which the Commission needs to receive from all pipelines on a regular
basis to regulate the natural gas industry today. Thus, in the final
rule, the Commission eliminated such items, reducing the information
contained in the proposed Index of Customers to only that information
absolutely necessary for the Commission's regulatory purposes.
On rehearing, the Registry argues that capacity information at
receipt and delivery points must be included in the Index of Customers
because it is crucial to the development and functioning of the
capacity market. The Registry states that point rights define the
location, nature, and extent of capacity rights, and are the only way
to determine segment rights. It argues that knowing the quantity of
rights in a contract alone is useful neither to shippers, nor to
regulators. The Registry argues that the Commission's deletion of point
rights information from the Index of Customers will ensure that the
capacity release market will function improperly, and that in taking
such action, the Commission has abdicated its responsibility to protect
the public interest.
The Registry analogizes the operation of the capacity release
market without disclosure of point rights to the operation of the
securities market without disclosure of the quantity of stocks or bonds
available in each class, or disclosure of their maturity, rate, and
redemption/conversion terms. The Registry uses this analogy to argue
that absent access to point information, the capacity release market
will fail, since the securities market failed due to a lack of
confidence, prior to securities registration.
In a nutshell, the Registry explains that if users cannot identify
the quantity of rights that they own to move gas into and out of a
point relative to the quantity of rights others own to move gas into
and out of the pipeline at the same and other locations, shippers will
not know the value of their capacity and will discount the value they
ascribe to owning the pipeline's capacity. In other words, without the
availability of point quantity information, there is no method for
market participants to monitor the quantity of rights sold or available
for sale, or to measure the relative amount of rights held in relation
to the total of rights. The Registry asserts that this lack of
knowledge of the true value of capacity in the capacity release market
will lead to a lack of confidence in the market and in the real value
of capacity rights.
According to the Registry, a lack of confidence in the capacity
market will lead to an avoidance of long-term commitments, which in
turn, will result in an unhealthy gas market and market failure. The
Registry argues that a healthy gas business is in the public interest,
and that it is the Commission's fundamental role and responsibility to
provide confidence in, and contribute to, a healthy, functioning
natural gas market, and to thereby protect consumers.
Finally, the Registry argues that receipt and delivery point
information is not overly burdensome or needless; it argues point data
is essential, otherwise the market will fail, and heavy-handed
regulation will return. The Registry believes that this information is
most likely currently contained in one or more computerized databases
and/or control systems operating at the pipelines, since pipelines need
this information to determine releases and valid nominations for the
flow of gas. According to the Registry, the only tool necessary to
``publish'' this information would be an electronic application to
extract the information from the computerized system it is contained
in, and to place it into the defined format for download. Since this
application has to be developed anyway to supply the rest of the
information contained in the Index of Customers, argues the Registry,
the marginal cost to extract and include point level information in the
application is far less than the benefits to the natural gas market of
having the information available.
In the final rule, the Commission found that it was unpersuaded
that it should require pipelines to maintain a comprehensive list of
capacity rights by receipt and delivery points to aid the secondary
capacity market, or to assist third-party-run exchanges and market
center developers. The Commission stated that it was not clear what
practical effect providing the proposed receipt and delivery point
information would have on the secondary market. The Commission remains
unpersuaded that inclusion of capacity information by receipt and
delivery points in the Index of Customers is essential to the continued
viability of the capacity market.
One of the goals of this rulemaking proceeding is to simplify and
streamline the Commission's reporting requirements, and to reduce the
reporting burden on pipelines. For the Commission to add to the
reporting burden by including receipt and delivery point data in the
Index of Customers, a conclusive showing would need to be made that a
problem in the secondary market exists, and that the inclusion of the
point information would solve the problem. The Registry has not made
such a showing in its request for rehearing. Instead, the Registry has
presented a general claim that the market will fail to function
properly, or will collapse completely, without the availability of the
information.
Receipt and delivery point information has never before been
available in an electronic index. At best, the information was embedded
in the initial and subsequent reports that pipelines were required to
file, and thus, not easily accessible. Without the ready availability
of receipt and delivery point information, the secondary capacity
market was created, and has grown to a healthy market. Since the market
has expanded to what it is today, without market participants' access
to capacity information at receipt and delivery points throughout its
infancy and development, it is logical to assume that a continued lack
of access to this information will not cause it to fail or collapse.
The Registry rests its belief that the market is destined to fail
on the lack of confidence in the market and of knowledge of the true
value of capacity that will be caused by a lack of access to receipt
and delivery point information. It states that without capacity
information by point, there is no method for market participants to
monitor the quantity of rights sold or available for sale.
However, market participants may determine the quantity of rights
sold, at particular receipt and delivery points, through the capacity
release data sets that pipelines are required to make publicly
available through EDI transmission and information posted on each
pipeline's EBB. Second, even if the contract quantity by receipt and
delivery point were posted in the Index of Customers, there is no way
of knowing what proportion of the posted capacity is available for
release. In any given time frame, some capacity is available for
release, some is used by the owner, and some is idle.
Finally, the Commission is not abdicating its responsibility to the
natural gas market and to the public by failing to require that this
information be included in the Index of Customers for the purpose of
aiding the secondary market. The Commission has all indications that
the market can function adequately without the electronic posting of
this information in an Index
[[Page 8869]]
of Customers. Moreover, we have determined that requiring this
information to be included in a quarterly Index of Customers is
unnecessary for the Commission to fulfill its regulatory oversight
responsibilities. We find that there is enough information included in
the capacity release data sets for the Commission to monitor the
secondary market. Accordingly, the Commission will not require that
receipt and delivery point information be included in the Index of
Customers. Rehearing is denied.
B. Customer Codes
As with the discount reports, ANR/CIG are concerned that the
dissemination of the information in the Index of Customers could cause
competitive harm. Therefore, ANR/CIG also seek the use of customer
codes instead of customer names for the customer-specific information
required in the Index of Customers.
The Commission will not permit the use of customer codes in the
Index of Customers. ANR/CIG has proposed the use of customer codes to
ensure that the information required by the Index of Customers is kept
confidential. However, this information, including the shipper's name,
is information that appears in the contract between the pipeline and
the shipper, and is the type of information that section 4(c) of the
Natural Gas Act (NGA) requires the pipeline to make publicly available.
36
\36\ 15 U.S.C. Sec. 717c(c) (1994).
---------------------------------------------------------------------------
Furthermore, it has not been demonstrated that the release of a
shipper's name, and the other information included in the Index of
Customers, would cause competitive harm. First, the data is basic
contract information of an identifying nature, and does not include
commercially sensitive rate information. Second, the Commission does
not presume the existence of competition in the natural gas
transportation market, since there is a presumption that a pipeline
still retains a substantial degree of market power in the
transportation of natural gas, unless proven otherwise. When the claim
of confidentiality has been asserted in Commission proceedings, the
Commission has required the claim to be supported with specificity,
rather than with vague and speculative allegations of competitive harm,
37 since the Commission must ``balance the need for public
disclosure against the harm caused by release of the information.''
38 ANR/CIG's request for rehearing on this issue is denied.
\37\ See Trunkline Gas Company, 49 FERC para. 61,227 (1989).
\38\ ANR Pipeline Company, 65 FERC para. 61,280 at 62,305
(1993).
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3. Clarification of Quarterly Posting Requirement
Section 284.106(c) provides that each calendar quarter, a pipeline
must post on the pipeline's electronic bulletin board (EBB), and file
with the Commission in electronic form, an electronic index of firm
customers under contract as of the first day of the calendar quarter.
The Commission clarifies this provision to require pipelines to post
and file its index of customers that are under contract as of the first
day of the calendar quarter, on the first business day of the calendar
quarter. This will conserve the pipelines' personnel resources in the
event the first day of the calendar quarter falls on a weekend or a
holiday.
VII. Effective Date
The amendments to the Commission's regulations adopted in this
order on rehearing will become effective April 5, 1996, except for the
changes to the Form Nos. 2 and 2-A, which will be effective January 1,
1996. In the final rule, the Commission adopted an effective date of
January 1, 1996 for the changes to Form Nos. 2, 2-A, and 11 to afford
the pipelines adequate opportunity to adapt to the requirements of the
final rule, and to make the necessary modifications to their
recordkeeping systems. Adopting the January 1, 1996 effective date
means that data for the report year 1995 will be submitted in the
format for Form Nos. 2 and 2-A in effect prior to January 1, 1996.
Similarly, for report months November 1995 and December 1995, pipelines
will report Form No. 11 data in the format in effect prior to January
1, 1996. This is true even though the filing dates for the forms fall
subsequent to January 1, 1996.
List of Subjects
18 CFR Part 201
Natural gas, Reporting and recordkeeping requirements, Uniform
System of Accounts.
18 CFR Part 284
Continental shelf, Natural gas, Reporting and recordkeeping
requirements.
By the Commission.
Lois D. Cashell,
Secretary.
In consideration of the foregoing, the Commission denies rehearing
in part, grants rehearing in part, clarifies Order No. 581 as described
above, and amends Parts 201 and 284, Chapter I, Title 18, Code of
Federal Regulations, as set forth below.
PART 201-UNIFORM SYSTEM OF ACCOUNTS PRESCRIBED FOR NATURAL GAS
COMPANIES SUBJECT TO THE PROVISIONS OF THE NATURAL GAS ACT
1. The authority citation for Part 201 continues to read as
follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352,
7651-7651o.
2. In Part 201, Balance Sheet Accounts, Special Instructions to
Accounts 117.1, 117.2, and 117.3, a new subparagraph is added after the
last subparagraph in paragraph (a), and paragraph (b) is revised to
read as follows:
Balance Sheet Accounts
* * * * *
Special Instructions to Accounts 117.1, 117.2 and 117.3
* * * * *
(a) Inventory Method-- * * *
Adjustments for inventory losses related to gas held in underground
reservoirs due to cumulative inaccuracies of gas measurements, or from
other causes, must be charged to Account 823, Gas Losses. Losses of
system gas not associated with underground reservoirs must be charged
to Account 813, Other Gas Supply Expenses.
(b) Fixed Asset Method-- * * *
When replacement of the gas is made, the amount carried in Account
117.4 for such volumes must be cleared with a contra entry to Account
808.2, Gas Delivered to Storage--Credit. Any difference between the
utility's cost of replacement gas volumes and the amount cleared from
Account 117.4 must be recognized as a gain in Account 495, Other gas
revenues, or as a loss in Account 813, Other gas supply expenses, with
contra entries to Account 808.2.
Adjustments for inventory losses related to gas held in underground
reservoirs due to cumulative inaccuracies of gas measurements, or from
other causes, must be charged to Account 823, Gas Losses. Losses of
system gas not associated with underground reservoirs must be charged
to Account 813, Other Gas Supply Expenses. Gas losses must be priced at
the market price of gas available to the utility in the month the loss
is recognized.
[[Page 8870]]
Gas owned by the utility and injected into its system will be
deemed to satisfy any encroachment on system gas first before any other
use.
3. In part 201, Balance Sheet Accounts, Account 117.4, the word
``revolve'' is removed, and the word ``revalue'' is added in its place.
4. In Part 201, Operation and Maintenance Expense Accounts, Account
805, a new paragraph D is added to read as follows:
Operation and Maintenance Expense Accounts
* * * * *
805 Other gas purchases.
* * * * *
D. The value of gas received from shippers under tariff allowances
that is not consumed in operations nor returnable to customers through
rate tracking mechanisms must be credited to Account 495, Other Gas
Revenues and charged to this account. Utilities must simultaneously
charge Accounts 117.3 or 117.4 as appropriate, with contra credits to
Account 808.2, Gas Delivered to Storage--Credit. Records are to be
maintained and readily available that include the name of shipper,
quantity of gas, and the publication and price used to value shipper-
supplied gas.
* * * * *
5. In Part 201, Operation and Maintenance Expense Accounts, Account
806 is revised to read as follows:
Operation and Maintenance Expense Accounts
* * * * *
806 Exchange gas.
This account includes debits or credits for the cost of gas in
unbalanced transactions where gas is received from or delivered to
another party in exchange, load balancing, or no-notice transportation
transactions. The costs are to be determined consistent with the
accounting method adopted by the utility for its system gas. If the
utility has adopted the inventory method of accounting, the amounts to
be recorded in Account 806 must be based on the historical cost of the
gas. If the utility has adopted the fixed asset method of accounting,
the amounts to be recorded in Account 806 must be based on the current
market price of gas at the time gas is tendered for transportation.
(See the Special Instructions to Accounts 117.1, 117.2, and 117.3 for a
description of the inventory and fixed asset methods and the definition
of the current market price of gas.) Contra entries to those in this
account are to be made to account 174, Miscellaneous Current and
Accrued Assets, for gas receivable and to account 242, Miscellaneous
Current and Accrued Liabilities, for gas deliverable under such
transactions. Such entries must be reversed and appropriate contra
entries made to this account when gas is received or delivered in
satisfaction of the amounts receivable or deliverable.
* * * * *
6. In part 201, Operation and Maintenance Expense Accounts,
paragraph A of Accounts 808.1 and 808.2 are revised to read as follows:
Operation and Maintenance Expense Accounts
* * * * *
808.1 Gas withdrawn from storage-Debit.
A. This account shall include debits for the cost of gas withdrawn
from storage during the year. Contra credits for entries to this
account shall be made to accounts 117.1 through 117.4, or account
164.2, Liquefied Natural Gas Stored, as appropriate. (See the Special
Instructions to accounts 117.1, 117.2, and 117.3).
* * * * *
808.2 Gas delivered to storage-Credit.
A. This account shall include credits for the cost of gas delivered
to storage during the year. Contra debits for entries to this account
shall be made to accounts 117.1 through 117.4, or account 164.2,
Liquefied Natural Gas Stored, as appropriate. (See the Special
Instructions to accounts 117.1, 117.2, and 117.3).
* * * * *
7. In Part 201, Operation and Maintenance Expense Accounts, Account
823 is revised to read as follows:
823 Gas losses.
This account shall include the amounts of inventory adjustments
representing the cost of gas lost or unaccounted for in underground
storage operations due to cumulative inaccuracies of gas measurements
or other causes. (See the Special Instructions to Accounts 117.1, 117.2
and 117.3). If however, any adjustment is substantial, the utility may,
with approval of the Commission, amortize the amount of the adjustment
to this account over future operating periods.
PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES
8. The authority citation for part 284 continues to read as
follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7201-7352;
43 U.S.C. 1331-1356.
* * * * *
Subpart B--Certain Transportation by Interstate Pipelines
9. In Sec. 284.106, the first sentence of paragraph (c)(1) is
revised to read as follows:
Sec. 284.106 Reporting requirements.
* * * * *
(c) Index of customers. (1) On the first business day of each
calendar quarter, subsequent to the initial implementation of this
provision, an interstate pipeline must provide for electronic
dissemination of an index of all its firm transportation and storage
customers under contract as of the first day of the calendar quarter.*
* *
* * * * *
[FR Doc. 96-5164 Filed 3-5-96; 8:45 am]
BILLING CODE 6717-01-P
Complete official Federal Register PDF
FR Doc. 96-5125 Removal of Class D and E2 Airspace; Lawrenceville, GA
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Page 8859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5125]
=======================================================================
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Airspace Docket No. 96-ASO-1]
Removal of Class D and E2 Airspace; Lawrenceville, GA
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule, withdrawal.
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SUMMARY: This action withdraws the final rule published in the Federal
Register on January 23, 1996, with an effective date of April 25, 1996.
The rule revoked the Class D and E2 airspace at Lawrenceville, GA. The
planned opening of a non-federal control tower at the Lawrenceville/
Gwinnett County-Briscoe Field Airport was delayed indefinitely due to
construction problems. Therefore, the Class D and E2 airspace was not
necessary, and action was undertaken to remove this airspace. However,
the Gwinnett County Airport Authority has been able to secure a
temporary tower until the permanent tower can be completed. Therefore,
the Class D and E2 airspace will be necessary, and action to revoke
this airspace is being withdrawn.
DATES: The withdrawal is effective March 6, 1996.
FOR FURTHER INFORMATION CONTACT:
Benny L. McGlamery, System Management Branch, Air Traffic Division,
Federal Aviation Administration, P.O. Box 20636, Atlanta, Georgia
30320; telephone (404) 305-5570.
SUPPLEMENTARY INFORMATION:
History
Class D and E2 airspace at Lawrenceville, GA, was established to
support the planned opening of a non-federal control tower at the
Lawrenceville/Gwinnett County-Briscoe Field Airport. Due to
construction problems, the opening was delayed indefinitely. Therefore,
on January 23, 1996, the FAA published a final rule stating that, since
the Class D and E2 airspace was not necessary, the Class D and E2
airspace in the vicinity of the Lawrenceville/Gwinnett County-Briscoe
Field Airport was being revoked (61 FR 1705). However, the Gwinnett
County Airport Authority has been able to secure a temporary control
tower until the permanent control tower can be completed. As a result,
the Class D and E2 airspace will be necessary. Therefore, the action to
revoke the Class D and E2 airspace at Lawrenceville, GA, is being
withdrawn.
Conclusion
In consideration of the action taken to provide the Lawrenceville/
Gwinnett County-Briscoe Field Airport with a temporary control tower
until the permanent tower is completed, action to revoke the airspace
is unnecessary.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference, Navigation (Air).
Withdrawal of Final Rule
Accordingly, pursuant to the authority delegated to me, Airspace
Docket No. 96-ASO-1, as published in the Federal Register on January
23, 1996 (61 FR 1705), is hereby withdrawn.
Authority: 49 U.S.C. 106(g); 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389; 14 CFR 11.69.
Issued in College Park, Georgia, on February 21, 1996.
Benny L. McGlamery,
Acting Manager, Air Traffic Division, Southern Region.
[FR Doc. 96-5125 Filed 3-5-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-5082 Approval and Promulgation of Implementation PlansKentucky: Approval of Revision To The State Implementation Plan
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8873-8875]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5082]
=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[KY-71-2-6062a; FRL-5427-4]
Approval and Promulgation of Implementation Plans--Kentucky:
Approval of Revision To The State Implementation Plan
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
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SUMMARY: This action approves a revision to the Kentucky State
Implementation Plan (SIP) adopted by the Kentucky Natural Resources and
Environmental Protection Cabinet (KNREP) on March 4, 1993, for the
[[Page 8874]]
purpose of implementing a Stage II vapor recovery program in Jefferson
County, Kentucky.
DATES: This final rule is effective May 6, 1996 unless adverse or
critical comments are received by April 5, 1996. If the effective date
is delayed, timely notice will be published in the Federal Register.
ADDRESSES: Written comments on this action should be addressed to Alan
Powell at the EPA Regional Office listed below.
Copies of the documents relative to this action are available for
public inspection during normal business hours at the following
locations. The interested persons wanting to examine these documents
should make an appointment with the appropriate office at least 24
hours before the visiting day.
Air and Radiation Docket and Information Center (Air Docket 6102), U.S.
Environmental Protection Agency, 401 M Street, SW, Washington, DC
20460.
Environmental Protection Agency, Region 4 Air Programs Branch, 345
Courtland Street, NE, Atlanta, Georgia 30365.
Kentucky Resources and Environmental Protection Cabinet, Department for
Environmental Protection, Division for Air Quality, 316 St. Clair Mall,
Frankfort, Kentucky 40601.
FOR FURTHER INFORMATION CONTACT: Alan Powell, Regulatory Planning and
Development Section, Air Programs Branch, Air, Pesticides & Toxics
Management Division, Region 4 Environmental Protection Agency, 345
Courtland Street, NE, Atlanta, Georgia 30365. The telephone number is
404/347-3555, extension 4209. Reference file KY-71-2.
SUPPLEMENTARY INFORMATION: On November 15, 1990, the President signed
into law the Clean Air Act Amendments of 1990. The Clean Air Act as
amended in 1990 (CAA) includes new requirements for the improvement of
air quality in ozone nonattainment areas. Under section 181(a) of the
CAA, nonattainment areas were categorized by the severity of the area's
ozone problem, and progressively more stringent control measures were
required for each category of higher ozone concentrations. The basis
for classifying an area in a specific category was the ambient air
quality data obtained in the three year period 1987-1989. The CAA
delineates in section 182 the SIP requirements for ozone nonattainment
areas based on their classifications. Specifically, section 182(b)(3)
requires areas classified as moderate to implement Stage II controls
unless and until EPA promulgates On Board Vapor Recovery (OBVR)
regulations pursuant to section 202(a)(6) of the CAA. Based on
consultation with the National Highway Transportation Safety Board, EPA
determined that OBVR were unsafe and therefore moderate areas must
implement a Stage II program. On January 22, 1993, the United States
Court of Appeals for the District of Columbia ruled that EPA's previous
decision not to require OBVR controls be set aside and that OBVR
regulations be promulgated pursuant to section 202(a)(6) of the CAA.
Subsequently, EPA reached a settlement with the plaintiffs which
required EPA to promulgate final regulations by January 22, 1994. After
such promulgation, moderate areas will not be required to implement
Stage II regulations, but Kentucky has indicated that the Commonwealth
intends to continue Stage II as part of its ozone attainment plan for
the Jefferson County, Kentucky area. The EPA Administrator signed the
OBVR final rule on January 24, 1994.
Under section 182(b)(3), EPA was required to issue guidance as to
the effectiveness of Stage II systems. In November 1991, EPA issued
technical and enforcement guidance to meet this requirement. These two
documents are entitled ``Technical Guidance-Stage II Vapor Recovery
Systems for Control of Vehicle Refueling Emissions at Gasoline
Dispensing Facilities'' (EPA-450/3-91-022) and ``Enforcement Guidance
for Stage II Vehicle Refueling Control Programs.'' In addition, on
April 16, 1992, EPA published the ``General Preamble for the
Implementation of Title I of the Clean Air Act Amendments of 1990'' (57
FR 13498). The guidance documents and the General Preamble discuss
Stage II statutory requirements and indicate what EPA believes a State
submittal needs to include to meet those requirements.
The Pollution Control District of Jefferson County approved these
regulations and on February 24, 1993, the Commonwealth of Kentucky
granted prior concurrence according to the provision in KRS 224.20-130.
The Jefferson County regulation is summarized as follows.
Regulation 6.40--Standards of Performance for Gasoline Transfer to
Motor Vehicles (Stage II Vapor Recovery)
The CAA specifies that the state regulation must apply to any
facility that dispenses more than 10,000 gallons of gasoline per month
or, in the case of an independent small business marketer (ISBM), any
facility that dispenses more than 50,000 gallons of gasoline per month.
Section 324 of the CAA defines an ISBM. The Jefferson County regulation
does not allow the ISBM exemption and all gasoline dispensing stations
with a throughput of more than 10,000 gallons per month must comply.
Consistent with EPA's guidance, the regulation requires that Stage
II systems be tested and certified to meet a 95 percent emission
reduction efficiently by using a system approved by the California Air
Resources Board (CARB). The regulation requires sources to verify
proper installation and function of Stage II equipment through use of a
liquid blockage test and a leak test prior to system operation and
every five years or upon major modification of a facility (i.e., 75
percent or more equipment change). The County has also established an
inspection program consistent with that described in EPA's guidance and
has established procedures for enforcing violations of the Stage II
requirements.
EPA has evaluated the Kentucky submittal for consistency with the
CAA, EPA regulations, and EPA policy. EPA has determined that the rule
addressed in this notice meets all of the CAA requirements and is
approving under section 110(k)(3), Regulation 6.40 of the Air Pollution
Control District of Jefferson County as part of the Kentucky SIP.
Final Action
EPA is approving this revision because it meets the requirements of
EPA and the CAA. This action is being taken without prior proposal
because the Agency views this as a noncontroversial amendment and
anticipates no adverse comments. However, in a separate document in
this Federal Register publication, the EPA is proposing to approve the
SIP revision should adverse or critical comments be filed. This action
will be effective May 6, 1996 unless, by April 5, 1996 adverse or
critical comments are received.
If the EPA receives such comments, this action will be withdrawn
before the effective date by publishing a subsequent document that will
withdraw the final action. All public comments received will then be
addressed in a subsequent final rule based on the separate proposed
rule. The EPA will not institute a second comment period on this
action. Any parties interested in commenting on this action should do
so at this time. If no such comments are received, the public is
advised that this action will be effective May 6, 1996.
The Agency has reviewed this request for revision of the Federally-
approved
[[Page 8875]]
State implementation plan for conformance with the provisions of the
CAA. The Agency has determined that this action conforms with those
requirements.
Under section 307(b)(1) of the Act, 42 U.S.C. 7607 (b)(1),
petitions for judicial review of this action must be filed in the
United States Court of Appeals for the appropriate circuit by May 6,
1996. Filing a petition for reconsideration by the Administrator of
this final rule does not affect the finality of this rule for purposes
of judicial review nor does it extend the time within which a petition
for judicial review may be filed, and shall not postpone the
effectiveness of such rule or action. This action may not be challenged
later in proceedings to enforce its requirements. (See section
307(b)(2) of the Act, 42 U.S.C. 7607 (b)(2).)
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for
Air and Radiation. The Office of Management and Budget (OMB) has
exempted this regulatory action from E.O. 12866 review.
Nothing in this action shall be construed as permitting or allowing
or establishing a precedent for any future request for a revision to
any state implementation plan. Each request for revision to the state
implementation plan shall be considered separately in light of specific
technical, economic, and environmental factors and in relation to
relevant statutory and regulatory requirements.
Under the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. 5 U.S.C. 603 and 604.
Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises,
and government entities with jurisdiction over populations of less than
50,000.
SIP approvals under section 110 and subchapter I, part D of the CAA
do not create any new requirements, but simply approve requirements
that the Commonwealth is already imposing. Therefore, because the
Federal SIP-approval does not impose any new requirements, I certify
that it does not have a significant impact on any small entities
affected. Moreover, due to the nature of the Federal-state relationship
under the CAA, preparation of a regulatory flexibility analysis would
constitute Federal inquiry into the economic reasonableness of state
action. The CAA forbids EPA to base its actions concerning SIPs on such
grounds. Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (S.Ct.
1976); 42 U.S.C. section 7410(a)(2) and 7410(k)(3).
Under Sections 202, 203, and 205 of the Unfunded Mandates Reform
Act of 1995 (``Unfunded Madates Act''), signed into law on March 22,
1995, EPA must undertake various actions in association with proposed
or final rules that include a Federal mandate that may result in
estimated costs of $100 million or more to the private sector, or to
State, local, or tribal governments in the aggregate.
Through submission of this state implementation plan or plan
revision, the State and any affected local or tribal governments have
elected to adopt the program provided for under Section (insert) of the
CAA. These rules may bind State, local and tribal governments to
perform certain actions and also require the private sector to perform
certain duties. EPA has examined whether the rules being approved by
this action will impose no new requirements, since such sources are
already subject to these regulations under State law. Accordingly, no
additional costs to State, local, or tribal governments, or to the
private sector, result from this action, and therefore there will be no
significant impact on a substantial number of small entities.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Ozone,
Reporting and recordkeeping requirements.
Dated: January 10, 1996.
Phyllis P. Harris,
Acting Regional Administrator.
52 of chapter I, title 40, Code of Federal Regulations, is amended
as follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42.U.S.C. 7401-7671q.
Subpart S--Kentucky
2. Section 52.920, is amended by adding paragraph (c) (82) to read
as follows:
Sec. 52.920 Identification of plan.
* * * * *
(c) * * *
(82) Revision to the Kentucky State Implementation Plan; Regulation
6.40 of the Air Pollution Control District of Jefferson County which
was submitted to EPA on March 4, 1993.
(i) Incorporation by reference.
Regulation 6.40 Standards of Performance for Gasoline Transfer to
Motor Vehicles (Stage II Vapor Recovery and Control) which were adopted
on December 16, 1992.
(ii) Other material. None.
[FR Doc. 96-5082 Filed 3-5-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-5053 Clean Air Act Final Interim Approval of the Operating Permits Program; Indiana; Correction
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8875-8876]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5053]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70
[IN002; FRL-5434-2]
Clean Air Act Final Interim Approval of the Operating Permits
Program; Indiana; Correction
AGENCY: Environmental Protection Agency (USEPA).
ACTION: Final interim approval; Correction.
-----------------------------------------------------------------------
SUMMARY: On November 14, 1995 (60 FR 57191), EPA promulgated interim
approval of the 40 CFR Part 70 Operating Permits Program for the State
of Indiana. The document correctly identified the effective date as
December 14, 1995. However, the language to amend 40 CFR part 70 listed
an incorrect effective date and an incorrect expiration date for the
interim approval of this program.
EFFECTIVE DATE: December 14, 1995.
FOR FURTHER INFORMATION CONTACT: Sam Portanova, AR-18J, 77 West Jackson
Boulevard, Chicago, Illinois, 60604, (312) 886-3189.
SUPPLEMENTARY INFORMATION: In the document published on November 14,
1995, at 60 FR 57191, column 3, the effective date and expiration date
were incorrect. This final rule corrects the language to amend 40 CFR
part 70 in a manner which is consistent with the November 14, 1995
rule. The correct effective date of this interim approval is December
14, 1995, and the correct expiration date of this interim approval is
December 14, 1997.
The USEPA regrets any inconvenience the earlier information has
caused.
List of Subjects in 40 CFR Part 70
Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Operating permits,
Reporting and recordkeeping requirements.
[[Page 8876]]
Dated: January 25, 1996.
Valdas V. Adamkus,
Regional Administrator.
40 CFR part 70 is amended as follows:
PART 70--[AMENDED]
1. The authority citation for part 70 continues to read as follows:
Authority: 42 U.S.C. 7401 et seq.
2. Appendix A to part 70 is amended by revising the entry for
Indiana to read as follows:
Appendix A to Part 70--Approval Status of State and Local Operating
Permits Programs
* * * * *
Indiana
(a) The Indiana Department of Environmental Management: submitted
on August 10, 1994; interim approval effective on December 14, 1995;
interim approval expires December 14, 1997.
(b) Reserved
* * * * *
[FR Doc. 96-5053 Filed 3-5-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-5050 Office of the Assistant Secretary for Public and Indian Housing; Loan Guarantees for Indian Housing
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 9052-9058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5050]
[[Page 9051]]
_______________________________________________________________________
Part VI
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 955
Loan Guarantees for Indian Housing; Final Rule
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules
and Regulations
-----------------------------------------------------------------------
[[Page 9052]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 955
[Docket No. FR-3614-F-04]
RIN 2577-AB40
Office of the Assistant Secretary for Public and Indian Housing;
Loan Guarantees for Indian Housing
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule sets forth regulations to implement the Indian
Loan Guarantee Program authorized by section 184 of the Housing and
Community Development Act of 1992. The purpose of the program is to
provide loan guarantees that will make private financing available to
Native Americans on restricted lands where no source of financing is
currently available.
EFFECTIVE DATE: April 5, 1996.
FOR FURTHER INFORMATION CONTACT: Dominic Nessi, Deputy Assistant
Secretary for Native American Programs, Room B-133, Department of
Housing and Urban Development, Washington, DC 20410; telephone (202)
755-0032 (voice) or (202) 708-0850 (TDD for speech or hearing impaired
individuals). These are not toll-free numbers.
SUPPLEMENTARY INFORMATION:
I. Paperwork Reduction Act Statement
The information collection requirements contained in Sec. 955.101
of this rule have been approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520), and assigned OMB control number 2577-0200. An agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless the collection displays a valid
control number.
II. Background
Section 184 of the Housing and Community Development Act of 1992
(HCDA 1992) (Pub. L. 102-550, approved October 28, 1992) authorized the
establishment of the Indian Housing Loan Guarantee Fund (the Fund) to
provide access to sources of private financing to Indian families and
Indian housing authorities who otherwise could not acquire housing
financing because of the unique legal status of Indian trust land. In
general, these lands, held in trust by the United States for the
benefit of an Indian or Indian tribe, are inalienable. Trust lands
under this program also include lands to which the title is held by an
Indian tribe subject to a restriction against alienation imposed by the
United States. Because titles to individual plots do not convey, and
liens do not attach, conventional mortgage lending practices do not
operate in this forum.
The Fund addresses these obstacles to mortgage financing by
guaranteeing loans made to Indian families or Indian housing
authorities to construct, acquire, or rehabilitate 1- to 4-family
dwellings that are standard housing and are located on trust land or
land located in an Indian or Alaska Native area. Loans may be made by
any lender approved by the Secretary of Housing and Urban Development,
the Secretary of Agriculture, or the Secretary of Veterans' Affairs;
or, any lender which is supervised, approved, regulated or insured by
any agency of the Federal Government.
The Department implemented the section 184 Loan Guarantees for
Indian Housing program at 24 CFR part 955 by an interim rule published
on August 18, 1994 (59 FR 42732). Six public comments, which are
discussed in section IV. of this preamble, below, were received in
response to the interim rule.
III. Changes Made in the Final Rule
In keeping with the President's mandate to reinvent and reform
regulations, part 955 is substantially streamlined in this rule. One of
the methods by which the Department is streamlining and reducing its
regulations is to remove rule text that only repeats statutory
language. Rules will only contain legally binding requirements that are
in addition to those contained in a statute. Besides reducing the sheer
bulk of rules, this practice will remove the problems that result when
a rule that echoes the language of a statute becomes inconsistent with
new statutory amendments. The period before such a rule is amended to
conform to new statutory language is often one of confusion and
uncertainty as to which law applies: the old provisions in the
regulations or the new provisions in the statute. The new part 955
promulgated here does not, therefore, repeat any statutory language,
but only implements requirements that are in addition to those in
Section 184.
The combined statutory and regulatory requirements that apply with
respect to Section 184 loan guarantees have been placed in an appendix
to this final rule. The final rule will be codified in the Code of
Federal Regulations; the appendix will not be codified. However, the
appendix is available to the public as a single document which provides
a unified overview of the general requirements under Section 184.
This final rule also adds a definition of Section 184, referring to
the loan guarantee program, that makes citing the program in the rule
more convenient.
IV. Comments on the Interim Rule
HUD solicited public comments on the interim rule. During the
comment period HUD received 6 comments from IHAs, Tribal leaders, and
financial institutions. This final rule summarizes below the comments
according to their relevant subparts and provides HUD's responses to
those comments.
Section 955.101 Applicability
Three commentors objected to the interim rule's definition of
eligible areas as ``restricted Indian lands.'' These commentors stated
that eligible areas should be defined as all lands in Indian country,
regardless of title status (including fee lands).
HUD response: Section 184 can be used only with respect to
properties which are located on trust/restricted lands or which are
located within an Indian area. Some tribes are currently expanding
their service area by purchasing fee simple land and placing that land
into trust status. These areas are eligible for section 184 assistance
because they are restricted lands within an Indian area.
Section 955.103 Definitions
One commentor noted that the Interim Rule refers to ``Native
Americans'' while the statute refers to ``Indian families'' and
``Indian Housing Authorities.'' The commentor recommended that
references to ``Native Americans'' be removed from the rule.
HUD response: The definition of Indian used in the rule means any
person recognized as being Indian or Alaska Native by an Indian tribe,
the Federal Government, or any State, and includes the term ``Native
American'', which has been added to the regulatory language at the
discretion of the Department.
One commentor requested clarification regarding whether Native
Hawaiians are eligible borrowers under the section 184 program.
HUD response: The statutory purpose of the section 184 program is
given at HCDA 1992 section 184(a) as: ``To provide access to sources of
private financing to Indian families and Indian housing authorities who
otherwise could not acquire housing financing
[[Page 9053]]
because of the unique legal status of Indian trust land * * *''. Native
Hawaiians, who are not included within the definition of the term
``Indian,'' do not qualify under this statutory purpose.
Section 955.105 Eligible Loans
Two commentors noted that the restriction on eligible loans should
be expanded to include adjustable rate mortgages and balloon payment
mortgages.
HUD response: The Department has determined that the section 184
program will be operating in a totally new lending environment and the
uncertainty of a balloon payment mortgage or an adjustable rate
mortgage of any type would create an unnecessary risk to the borrower,
the lender and the Department. This rule clarifies, at Sec. 955.105,
that only fixed rate, fixed term loans with even monthly payments are
eligible.
Two commentors noted that acquisition and rehabilitation is an
eligible activity and requested clarification whether a single
guaranteed loan can be made to cover both of these activities for one
structure.
HUD response: Yes, a single guaranteed loan can be made to cover
both acquisition and rehabilitation for one structure. A section 184
guaranteed loan may be used to ``pay off'' a Mutual Help home so that
the property may be conveyed to the homeowner. A guaranteed loan could
be used to pay off and rehabilitate a Mutual Help home.
Section 955.107 Eligible Housing
One commenter stated that fee lands within Indian country should be
eligible sites. HUD will allow fee simple lands in limited
circumstances. Fee simple lands within a designated Indian area are
eligible sites under section 184.
One commentor recommended that the term ``modest in size and
design'' be defined in specific terms.
HUD response: In order to determine ``modest'' the section 184
program loan may not exceed 150% of the FHA mortgage limits, as
adjusted for the area. These mortgage limits are published by the
Federal Housing Administration (FHA) by area of the country on a
periodic basis. Thus, the mortgage limit in Anchorage may differ
greatly from the mortgage limit in Oklahoma City.
One commentor criticized the lack of specificity in the
construction standards at Sec. 955.107(2). The commentor recommended
that structures be required to conform to the Uniform Building Code
(UBC) and other locally adopted Tribal building ordinances.
HUD response: The section 184 statute provides requirements
relating to size; heating, plumbing, and electrical requirements; and
energy efficiency. However, the Department emphasizes that the
standards represent a minimum level of requirements. The tribe,
individual owner, or IHA may design and construct a property that meets
a higher standard.
Section 955.109 Eligible Lenders
In addressing this section, one commentor stated that the rule
should cross reference prohibitions against housing discrimination. The
same commentor then stated that lenders should not be able to withhold
loans where the fund is fully obligated.
HUD response: The commentor appears to be asking HUD to prohibit
lenders from refusing to make loans to eligible borrowers as long as
there is section 184 guarantee authority available. Notwithstanding any
housing discrimination laws, HUD does not have the authority to compel
lenders to participate in this program.
Section 955.111 Eligible Collateral
One commentor suggested that the term ``leasehold'' be deleted from
section Sec. 955.111(b)(3).
HUD response: HUD agrees, and has removed the term ``leasehold''
from section Sec. 955.111(b)(3) of the final rule.
One commentor stated that there is no time period specified for
when the Notice of Default (NOD) is filed or for when it ends, or when
the 60 day period starts for the eviction action. Another commentor
stated that tribal eviction procedures under Sec. 955.111(4) should be
standardized and/or reviewed by OGC and ONAP for approval as a
precondition for participation in the section 184 program.
HUD response: Tribes are required to adopt foreclosure, eviction,
and priority of lien procedures to be eligible for participation in the
section 184 program. HUD does not approve or review the text of each
procedure. This function is left to Tribal discretion. The Department
will simply ensure that such procedures do exist. In order to provide
maximum flexibility and Tribal discretion in the matter of establishing
foreclosure and eviction policies HUD has determined to only recognize
the existence of such procedures and not a line by line technical
review of each tribe's policies.
One commentor stated that the 60-day time period for appealing
decisions under Sec. 955.111(b)(4)(ii) should be reduced to 30 days.
HUD response: HUD agrees with the commentor and will change the 60-
day time period for appealing decisions under Sec. 955.111(b)(4)(ii) to
30 days.
One commentor stated that Indian nation public policy allows for a
wide range of collateral arrangements.
HUD response: The rule takes this into account by specifying that
collateral may include, but is not limited to, the categories
specified.
One commentor objected to the priority of loan obligation
provision, asserting that it gives HUD oversight regarding the
substantive content of Indian nation law.
HUD response: This is a critical step to ensure the financial
stability of this new loan program and will provide the tribes and the
Department with the assurance of prompt action and protection of the
guaranteed loan.
One commentor objected to the requirement that tribes must certify
that they have in place and will enforce procedures for eviction. The
commentor stated that it is not required by the Statute.
HUD response: The Department has attempted to provide the broadest
interpretation possible in all instances; however, in a totally new
lending environment it is necessary to have in place at least minimal
safeguards to the financial integrity of the loan guarantee fund.
One commentor objected to the enforcement requirement under
Sec. 955.111(b)(4)(i), stating that it infringes on Indian nation
sovereignty.
HUD response: Once again the Department has determined that, in
this entirely new lending environment, it is critical to have in place
minimal standards that will ensure the financial integrity of the loan
guarantee fund.
One commentor requested further clarification on the review of HUD
decisions to cease issuing guarantees to specific tribes, saying that
it is important to ensure due process rights.
HUD response: The Department has determined that due process rights
of appeal have been developed to ensure maximum protection to both the
Department and the tribes with several levels of appeal available and a
final option to resubmit the appeal based upon new evidence following
the exhaustion of all appeal levels.
Section 955.113 Certificate of Guarantee
No comments received concerning this section.
Section 955.115 Guarantee Fee
One commentor requested clarification on what happens to the one
percent guarantee fee.
HUD response: Funds received as a result of the one percent
guarantee fee are returned to the loan guarantee fund
[[Page 9054]]
to provide additional resources for additional loans.
Section 955.117 Liability Under Guarantee
No comments received concerning this section.
Section 955.119 Transfer and Assumptions
One commentor questioned whether HUD will require that all of the
loans under the section 184 program be assumable, stating that many
lenders are reluctant to underwrite assumable loans.
HUD response: There is no requirement that all of the loans under
the section 184 program be assumable.
One commentor requested clarification regarding whether sales and
assignments to financial institutions will be subject to the law of the
Indian nations where the loans are made, in addition to being subject
to agency supervision under state regulators.
HUD response: Transactions may be subject to tribal laws in
addition to agency supervision under state regulations.
Section 955.121 Disqualification of Lenders and Civil Money Penalties
No comments received concerning this section.
Section 955.123 Payment Under Guarantee
Three commentors recommended that consideration be given to the
issue of whether the loan guarantee program will allow nonjudicial
remedies such as deeds of trust and escrow agents to be utilized as an
alternative to judicial foreclosure, as referred to under
Sec. 955.123(a)(1)(i) of the interim rule.
HUD response: Any method that promotes collection is encouraged,
because the statute requires the holder of the guarantee to exhaust all
reasonable possibilities of collection before any payment under a
guarantee is made.
Section 955.125 Expiration of Interim Rule
No comments received concerning this section.
V. Other Matters
Impact on Small Entities
The Department, in accordance with the Regulatory Flexibility Act
(5 U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule does not have a significant
economic impact on a substantial number of small entities.
Specifically, the requirements of this interim rule are directed to
individual borrowers, Indian Housing Authorities, Tribal governments
and financial institutions.
Environmental Review
A Finding of No Significant Impact with respect to the environment
has been made in accordance with HUD regulations at 24 CFR Part 50,
which implement section 102(2)(C) of the National Environmental Policy
Act of 1969. The Finding of No Significant Impact is available for
public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the
Office of the Rules Docket Clerk.
Federalism Impact
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule will not have substantial direct effects on
states or their political subdivisions, or the relationship between the
federal government and the states, or on the distribution of power and
responsibilities among the various levels of government. As a result,
the rule is not subject to review under this order. Specifically, the
requirements of this rule are directed to individual borrowers and
financial institutions.
Impact on the Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule has potential
for significant impact on family formation, maintenance, and general
well-being. The Indian Loan Guarantee Program will make it possible for
Native American families to build or acquire homes on their Native
lands where homeownership opportunities have been very limited in the
past. Accordingly, since the impact on the family is beneficial, no
further review is considered necessary.
List of Subjects in 24 CFR Part 955
Indians, Loan programs--Indians, Reporting and recordkeeping
requirements.
Accordingly, 24 CFR part 955 is revised to read as follows:
PART 955--LOAN GUARANTEES FOR INDIAN HOUSING
Sec.
955.101 Applicability and scope.
955.103 Definitions.
955.105 Eligible loans.
955.107 Eligible collateral.
955.109 Guarantee fee.
955.111 Safety and quality standards.
Authority: 42 U.S.C. 1715z-13a and 3535(d).
Sec. 955.101 Applicability and scope.
Under the provisions of section 184 of the Housing and Community
Development Act of 1992 (12 U.S.C. 1515z-13a), the Department of
Housing and Urban Development (the Department) has the authority to
guarantee loans for the construction, acquisition, or rehabilitation of
1- to 4-family homes to be owned by Native Americans on restricted
Indian lands. This part provides requirements that are in addition to
those in section 184.
(Approved by the Office of Management and Budget under control
number 2577-0200.)
Sec. 955.103 Definitions.
In addition to the definitions that appear in Section 184 of the
Housing and Community Development Act of 1992, the following
definitions are applicable to loan guarantees under Section 184--
Default means the failure by a borrower to make any payment or to
perform any other obligation under the terms of a loan, and such
failure continues for a period of more than 30 days.
Indian means any person recognized as being Indian or Alaska Native
by an Indian tribe, the Federal Government, or any State, and includes
the term ``Native American''.
Mortgage as used in this part, means a first lien as is commonly
given to secure advances on, or the unpaid purchase price of, real
estate under the laws of the jurisdiction where the property is located
and may refer both to a security instrument creating a lien, whether
called a mortgage, deed of trust, security deed, or another term used
in a particular jurisdiction, as well as the credit instrument, or
note, secured thereby.
Principal residence means the dwelling where the mortgagor
maintains (or will maintain) his or her permanent place of abode, and
typically spends (or will spend) the majority of the calendar year. A
person may have only one principal residence at any one time.
Section 184 means section 184 (entitled, ``Loan Guarantees for
Indian Housing'') of the Housing and Community Development Act of 1992
(12 U.S.C. 1515z-13a).
Sec. 955.105 Eligible loans.
(a) In general. Only fixed rate, fixed term loans with even monthly
payments are eligible under the Section 184 program.
(b) Eligible borrowers. A loan guaranteed under Section 184 may be
made to a borrower that is:
(1) An Indian who will occupy it as a principal residence and who
is
[[Page 9055]]
otherwise qualified under Section 184; or
(2) An Indian Housing Authority.
(c) Appraisal of labor value. The value of any improvements to the
property made through the skilled or unskilled labor of the borrower,
which may be used to make a payment on account of the balance of the
purchase price, must be appraised in accordance with generally
acceptable practices and procedures.
(d) Construction advances. The Department may guarantee loans from
which advances will be made during construction. The Department will
provide guarantees for advances made by the mortgagee during
construction if all of the following conditions are satisfied:
(1) The mortgagor and the mortgagee execute a building loan
agreement, approved by HUD, setting forth the terms and conditions
under which advances will be made;
(2) The advances are made only as provided in the commitment;
(3) The principal amount of the mortgage is held by the mortgagee
in an interest bearing account, trust, or escrow for the benefit of the
mortgagor, pending advancement to the mortgagor or to his or her
creditors as provided in the loan agreement; and
(4) The mortgage shall bear interest on the amount advanced to the
mortgagor or to his or her creditors and on the amount held in an
account or trust for the benefit of the mortgagor.
(e) Environmental compliance. Prior to the guarantee of any loan,
there must be compliance with the environmental rules as stated in 24
CFR part 50.
Sec. 955.107 Eligible collateral.
(a) In general. A loan guaranteed under Section 184 may be secured
by any collateral authorized under Federal, State, or tribal law and
determined by the lender and approved by the Department to be
sufficient to cover the amount of the loan, and may include, but is not
limited to, the following:
(1) The property and/or improvements to be acquired, constructed,
or rehabilitated, to the extent that an interest in such property is
not subject to the restrictions of trust lands against alienation;
(2) A first or second mortgage on property other than trust land;
(3) Personal property; or
(4) Cash, notes, an interest in securities, royalties, annuities,
or any other property that is transferable and whose present value may
be determined.
(b) Trust land as collateral. If trust land is used as collateral
for the loan, the following additional provisions apply:
(1) Approved Lease. Any land lease for a unit financed under
Section 184 must be on a form approved by both HUD and the Bureau of
Indian Affairs, U.S. Department of Interior.
(2) Assumption or sale of leasehold. If a leasehold is used as
security for the loan, the loan form must contain a provision requiring
tribal consent before any assumption of an existing lease, except where
title to the leasehold interest is obtained by the Department through
foreclosure of the guaranteed mortgage. A mortgagee other than the
Department must obtain tribal consent before obtaining title through a
foreclosure sale. Tribal consent must be obtained on any subsequent
transfer from the purchaser, including the Department, at foreclosure
sale. The lease may not be terminated by the lessor without HUD's
approval while the mortgage is guaranteed or held by the Department.
(3) Priority of loan obligation. Any tribal government whose courts
have jurisdiction to hear foreclosures must enact a law providing for
the satisfaction of a loan guaranteed or held by the Department before
other obligations (other than tribal leasehold taxes against the
property assessed after the property is mortgaged) are satisfied.
(4) Eviction procedures. Before HUD will guarantee a loan secured
by trust land, the tribe having jurisdiction over such property must
notify the Department that it has adopted and will enforce procedures
for eviction of defaulted mortgagors where the guaranteed loan has been
foreclosed.
(i) Enforcement. If the Department determines that the tribe has
failed to enforce adequately its eviction procedures, HUD will cease
issuing guarantees for loans for tribal members except pursuant to
existing commitments. Adequate enforcement is demonstrated where prior
evictions have been completed within 60 days after the date of the
notice by HUD that foreclosure was completed.
(ii) Review. If the Department ceases issuing guarantees in
accordance with the first sentence of paragraph (c)(1) of this section,
HUD shall notify the tribe of the reasons for such action and that the
tribe may, within 30 days after notification of HUD's action, file a
written appeal with the Field Office of Native American Programs
(FONAP) Administrator. Within 30 days after notification of an adverse
decision of the appeal by the FONAP Administrator, the tribe may file a
written request for review with the Deputy Assistant Secretary, Office
of Native American Programs (ONAP). Upon notification of an adverse
decision by the Deputy Assistant Secretary, the tribe has 30 additional
days to file an appeal with the Assistant Secretary for Public and
Indian Housing. The determination of the Assistant Secretary shall be
final, but the tribe may resubmit the issue to the Assistant Secretary
for review at any subsequent time if new evidence or changed
circumstances warrant reconsideration. (Any other administrative
actions determined to be necessary to debar a tribe from participating
in this program will be subject to the formal debarment procedures
contained in 24 CFR part 24.)
Sec. 955.109 Guarantee fee.
The lender shall pay to the Department, at the time of issuance of
the guarantee, a fee for the guarantee of loans under Section 184, in
an amount equal to 1 percent of the principal obligation of the loan.
This amount is payable by the borrower at closing.
Sec. 955.111 Safety and quality standards.
Loans guaranteed under Section 184 shall be made only on dwelling
units which meet safety and quality standards set forth herein. Each
unit must:
(a) Be decent, safe, sanitary, and modest in size and design;
(b) Conform with applicable general construction standards for the
region;
(c) Contain a heating system that:
(1) Has the capacity to maintain a minimum temperature in the
dwelling of 65 degrees Fahrenheit during the coldest weather in the
area;
(2) Is safe to operate and maintain;
(3) Delivers a uniform distribution of heat; and
(4) Conforms to any applicable tribal heating code or, if there is
no applicable tribal code, an appropriate county, State, or National
code;
(d) Contain a plumbing system that:
(1) Uses a properly installed system of piping;
(2) Includes a kitchen sink and a partitional bathroom with
lavatory, toilet, and bath or shower; and
(3) Uses water supply, plumbing and sewage disposal systems that
conform to any applicable tribal code or, if there is no applicable
tribal code, the minimum standards established by the applicable county
or State;
(e) Contain an electrical system using wiring and equipment
properly installed to safely supply electrical energy for adequate
lighting and for operation of appliances that conforms to any
applicable tribal code or, if there is no applicable tribal code, an
appropriate county, State, or National code;
[[Page 9056]]
(f) Be not less than:
(1) 570 square feet in size, if designed for a family of not more
than 4 persons;
(2) 850 square feet in size, if designed for a family of not less
than 5 and more than 7 persons; and
(3) 1020 square feet in size, if designed for a family of not less
than 8 persons; or
(4) The size provided under the applicable locally adopted
standards for size of dwelling units; except that the Department, upon
the request of a tribe or Indian housing authority, may waive the size
requirements under this paragraph; and
(g) Conform with the energy performance requirements for new
construction established by the Department under section 526(a) of the
National Housing Act (12 U.S.C. 1735f-4).
Dated: February 26, 1996.
Michael B. Janis,
General Deputy Assistant Secretary for Public and Indian Housing.
[Note: The following appendix will not be codified in the Code of
Federal Regulations.]
Appendix--Guide to Loan Guarantees for Indian Housing
Section 1. Purpose, applicability and scope.
Section 2. Definitions.
Section 3. Eligible loans.
Section 4. Eligible housing.
Section 5. Eligible lenders.
Section 6. Eligible collateral.
Section 7. Certificate of Guarantee.
Section 8. Guarantee fee.
Section 9. Liability under guarantee.
Section 10. Transfer and assumptions.
Section 11. Disqualification of lenders and civil money penalties.
Section 12. Payment under guarantee.
Section 1. Purpose, Applicability and Scope
The purpose of this guide is to present, in a single document,
the statutory and regulatory requirements that apply to the Loan
Guarantees for Indian Housing Program under section 184 of the
Housing and Community Development Act of 1992 (P.L. 102-550,
approved October 28, 1992). Although it presents the regulatory and
statutory requirements in a combined format, this guide is a
secondary source for these requirements. The Code of Federal
Regulations (CFR), at 24 CFR, is the primary, governing source for
regulatory requirements, and section 184 of the Housing and
Community Development Act of 1992 is the primary, governing source
for statutory requirements.
Under the provisions of Section 184, the Department of Housing
and Urban Development (the Department) has the authority to
guarantee loans for the construction, acquisition, or rehabilitation
of 1- to 4-family homes to be owned by Native Americans on
restricted Indian lands. This guide describes the eligibility of
borrowers, lenders and property, as well as the benefits of the
Indian Loan Guarantee Program.
Section 2. Definitions
Default means the failure by a borrower to make any payment or
to perform any other obligation under the terms of a loan, and such
failure continues for a period of more than 30 days.
Department means the U. S. Department of Housing and Urban
Development (HUD).
Guarantee Fund means the Indian Housing Loan Guarantee Fund
established under section 184(i) of the Housing and Community
Development Act of 1992.
Indian means any person recognized as being Indian or Alaska
Native by an Indian tribe, the Federal Government, or any State, and
includes the term ``Native American''.
Indian area means the area within which an Indian housing
authority is authorized to provide housing.
Indian Housing Authority (IHA) means any entity that is
authorized to engage in or assist in the development or operation of
low-income housing for Indians and that is established either (1) by
exercise of the power of self-government of an Indian tribe
independent of State law; or (2) by operation of State law providing
specifically for housing authorities for Indians, including regional
housing authorities in the State of Alaska.
Mortgage as used in this part, means a first lien as is commonly
given to secure advances on, or the unpaid purchase price of, real
estate under the laws of the jurisdiction where the property is
located and may refer both to a security instrument creating a lien,
whether called a mortgage, deed of trust, security deed, or another
term used in a particular jurisdiction, as well as the credit
instrument, or note, secured thereby.
Principal residence means the dwelling where the mortgagor
maintains (or will maintain) his or her permanent place of abode,
and typically spends (or will spend) the majority of the calendar
year. A person may have only one principal residence at any one
time.
Secretary means the Secretary of Housing and Urban Development.
Section 184 means section 184 (entitled, ``Loan Guarantees for
Indian Housing'') of the Housing and Community Development Act of
1992 (Pub. L. 102-550, approved October 28, 1992).
Standard housing means a dwelling unit or housing that complies
with the requirements established in this part.
Tribe means any tribe, band, pueblo, group, community, or nation
of Indians or Alaska Natives.
Trust land means land, title to which is held by the United
States for the benefit of an Indian or Indian tribe; or, land, title
to which is held by an Indian tribe, subject to a restriction
against alienation imposed by the United States.
Section 3. Eligible Loans
(a) In general. Only fixed rate, fixed term loans with even
monthly payments are eligible under the Section 184 program.
(b) Eligible borrowers. A loan guaranteed under Section 184 may
be made to a borrower that is:
(1) An Indian who will occupy it as a principal residence and
who is otherwise qualified under this part; or
(2) An Indian Housing Authority
(c) Terms of loan. The loan shall:
(1) Be made for a term not exceeding 30 years;
(2) Bear interest (exclusive of the guarantee fee and service
charges, if any) at a fixed rate agreed upon by the borrower and the
lender and determined by the Department to be reasonable, which may
not exceed the rate generally charged in the area (as determined by
the Department) for home mortgage loans not guaranteed or insured by
any agency or instrumentality of the Federal Government.
(d) Maximum mortgage amounts.
(1) A principal obligation may not exceed:
(i) An amount equal to the sum of:
(A) 97 percent of the first $25,000 of the appraised value of
the property, as of the date the loan is accepted for guarantee, and
(B) 95 percent of such value in excess of $25,000; and
(ii) Amounts approved otherwise by the Department.
(2) The balance of the purchase price must involve a payment on
account of the property that may be:
(i) In cash or other property of equivalent value acceptable to
the lender and the Department, or
(ii) The value of any improvements to the property made through
the skilled or unskilled labor of the borrower, appraised in
accordance with generally acceptable practices and procedures.
(e) Construction advances. The Department may guarantee loans
from which advances will be made during construction. The Department
will provide guarantees for advances made by the mortgagee during
construction if all of the following conditions are satisfied:
(1) The mortgagor and the mortgagee execute a building loan
agreement, approved by HUD, setting forth the terms and conditions
under which advances will be made;
(2) The advances are made only as provided in the commitment;
(3) The principal amount of the mortgage is held by the
mortgagee in an interest bearing account, trust, or escrow for the
benefit of the mortgagor, pending advancement to the mortgagor or to
his or her creditors as provided in the loan agreement; and
(4) The mortgage shall bear interest on the amount advanced to
the mortgagor or to his or her creditors and on the amount held in
an account or trust for the benefit of the mortgagor.
(f) Environmental compliance. Prior to the guarantee of any
loan, there must be compliance with the environmental rules as
stated in 24 CFR part 50.
Section 4. Eligible Housing
(a) In general. A loan guaranteed under Section 184 may be used
for the construction, acquisition, or rehabilitation of a 1- to 4-
family dwelling unit located on trust land or land located in an
Indian area.
(b) Safety and quality standards. Loans guaranteed under Section
184 shall be made only on dwelling units which meet safety and
quality standards set forth herein. Each unit must:
[[Page 9057]]
(1) Be decent, safe, sanitary, and modest in size and design;
(2) Conform with applicable general construction standards for
the region;
(3) Contain a heating system that:
(i) Has the capacity to maintain a minimum temperature in the
dwelling of 65 degrees Fahrenheit during the coldest weather in the
area;
(ii) Is safe to operate and maintain;
(iii) Delivers a uniform distribution of heat; and
(iv) Conforms to any applicable tribal heating code or, if there
is no applicable tribal code, an appropriate county, State, or
National code;
(4) Contain a plumbing system that:
(i) Uses a properly installed system of piping;
(ii) Includes a kitchen sink and a partitional bathroom with
lavatory, toilet, and bath or shower; and
(iii) Uses water supply, plumbing and sewage disposal systems
that conform to any applicable tribal code or, if there is no
applicable tribal code, the minimum standards established by the
applicable county or State;
(5) Contain an electrical system using wiring and equipment
properly installed to safely supply electrical energy for adequate
lighting and for operation of appliances that conforms to any
applicable tribal code or, if there is no applicable tribal code, an
appropriate county, State, or National code;
(6) Be not less than:
(i) 570 square feet in size, if designed for a family of not
more than 4 persons;
(ii) 850 square feet in size, if designed for a family of not
less than 5 and more than 7 persons; and
(iii) 1020 square feet in size, if designed for a family of not
less than 8 persons, or
(iv) The size provided under the applicable locally adopted
standards for size of dwelling units; except that the Department,
upon the request of a tribe or Indian housing authority, may waive
the size requirements under this paragraph; and
(7) Conform with the energy performance requirements for new
construction established by the Department under section 526(a) of
the National Housing Act.
Section 5. Eligible Lenders
The loan shall be made only by a lender approved by and meeting
qualifications established in this part, except that loans otherwise
insured or guaranteed by any agency of the Federal Government, or
made by an organization of Indians from amounts borrowed from the
United States shall not be eligible for guarantee under this part.
The following lenders are deemed to be approved under this part:
(a) Any mortgagee approved by the Department of Housing and
Urban Development for participation in the single family mortgage
insurance program under title II of the National Housing Act.
(b) Any lender whose housing loans under chapter 37 of title 38,
United States Code are automatically guaranteed pursuant to section
1802(d) of such title.
(c) Any lender approved by the Department of Agriculture to make
guaranteed loans for single family housing under the Housing Act of
1949.
(d) Any other lender that is supervised, approved, regulated, or
insured by any agency of the Federal Government.
Section 6. Eligible Collateral
(a) In general. A loan guaranteed under Section 184 may be
secured by any collateral authorized under Federal, State, or tribal
law and determined by the lender and approved by the Department to
be sufficient to cover the amount of the loan, and may include, but
is not limited to, the following:
(1) The property and/or improvements to be acquired,
constructed, or rehabilitated, to the extent that an interest in
such property is not subject to the restrictions of trust lands
against alienation;
(2) A first or second mortgage on property other than trust
land;
(3) Personal property; or
(4) Cash, notes, an interest in securities, royalties,
annuities, or any other property that is transferable and whose
present value may be determined.
(b) Trust land as collateral. If trust land is used as
collateral for the loan, the following additional provisions apply:
(1) Approved Lease. Any land lease for a unit financed under
Section 184 must be on a form approved by both HUD and the Bureau of
Indian Affairs, U.S. Department of Interior.
(2) Assumption or sale of leasehold. If a leasehold is used as
security for the loan, the loan form must contain a provision
requiring tribal consent before any assumption of an existing lease,
except where title to the leasehold interest is obtained by the
Department through foreclosure of the guaranteed mortgage. A
mortgagee other than the Department must obtain tribal consent
before obtaining title through a foreclosure sale. Tribal consent
must be obtained on any subsequent transfer from the purchaser,
including the Department, at foreclosure sale. The lease may not be
terminated by the lessor without HUD's approval while the mortgage
is guaranteed or held by the Department.
(3) Eviction procedures. Before HUD will guarantee a loan
secured by trust land, the tribe having jurisdiction over such
property must notify the Department that it has adopted and will
enforce procedures for eviction of defaulted mortgagors where the
guaranteed loan has been foreclosed.
(i) Enforcement. If the Department determines that the tribe has
failed to enforce adequately its eviction procedures, HUD will cease
issuing guarantees for loans for tribal members except pursuant to
existing commitments. Adequate enforcement is demonstrated where
prior evictions have been completed within 60 days after the date of
the notice by HUD that foreclosure was completed.
(ii) Review. If the Department ceases issuing guarantees in
accordance with the first sentence of paragraph (c)(1) of this
section, HUD shall notify the tribe of the reasons for such action
and that the tribe may, within 30 days after notification of HUD's
action, file a written appeal with the Field Office of Native
American Programs (FONAP) Administrator. Within 30 days after
notification of an adverse decision of the appeal by the FONAP
Administrator, the tribe may file a written request for review with
the Deputy Assistant Secretary, Office of Native American Programs
(ONAP). Upon notification of an adverse decision by the Deputy
Assistant Secretary, the tribe has 30 additional days to file an
appeal with the Assistant Secretary for Public and Indian Housing.
The determination of the Assistant Secretary shall be final, but the
tribe may resubmit the issue to the Assistant Secretary for review
at any subsequent time if new evidence or changed circumstances
warrant reconsideration. (Any other administrative actions
determined to be necessary to debar a tribe from participating in
this program will be subject to the formal debarment procedures
contained in 24 CFR part 24).
Section 7. Certificate of Guarantee
(a) Extent of guarantee. A certificate issued in accordance with
Section 184 guarantees 100 percent of the unpaid principal and
interest of the underlying loan.
(b) Approval process. Before the Department approves any loan
for guarantee under this part, the lender shall submit the
application or the loan to the Department for examination. If the
Department approves the loan for guarantee, the Department will
issue a certificate under Section 184 as evidence of the guarantee.
(c) Standard for approval. The Department may approve a loan for
guarantee under Section 184 and issue a certificate only if the
Department determines there is a reasonable prospect of repayment of
the loan.
(d) Effect. A certificate of guarantee issued under Section 184
by the Department shall be conclusive evidence of the eligibility of
the loan for guarantee under the provisions of Section 184 and the
amount of such guarantee. Such evidence shall be incontestable in
the hands of the bearer and the full faith and credit of the United
States is pledged to the payment of all amounts agreed to be paid by
the Department as security for such obligations.
(e) Fraud and misrepresentation. Nothing in Section 184 may
preclude the Department from establishing:
(1) Defenses against the original lender based on fraud or
material misrepresentation; and
(2) Establishing partial defenses, based upon regulations in
effect on the date of issuance or disbursement (whichever is
earlier), to the amount payable on the guarantee.
Section 8. Guarantee Fee
The lender shall pay to the Department, at the time of issuance
of the guarantee, a fee for the guarantee of loans under Section
184, in an amount equal to 1 percent of the principal obligation of
the loan. This amount is payable by the borrower at closing.
Section 9. Liability Under Guarantee
The liability under a guarantee provided in accordance with
Section 184 shall decrease or increase on a pro rata basis according
to any decrease or increase in the amount of the unpaid obligation
under the provisions of the loan agreement.
[[Page 9058]]
Section 10. Transfer and Assumptions
Notwithstanding any other provision of law, any loan guaranteed
under this part, including the security given for the loan, may be
sold or assigned by the lender to any financial institution subject
to examination and supervision by an agency of the Federal
Government or of any State or the District of Columbia.
Section 11. Disqualification of Lenders and Civil Money Penalties
(a) General. If the Department determines that a lender or
holder of a guarantee certificate under Section 184 has failed to
maintain adequate accounting records, to adequately service loans
guaranteed under Section 184, to exercise proper credit or
underwriting judgement, or has engaged in practices otherwise
detrimental to the interest of a borrower or the United States, the
Department may:
(1) Refuse, either temporarily or permanently, to guarantee any
further loans made by such lender or holder;
(2) Bar such lender or holder from acquiring additional loans
guaranteed under Section 184; and
(3) Require that such lender or holder assume not less than 10
percent of any loss on further loans made or held by the lender or
holder that are guaranteed under Section 184.
(b) Civil money penalties for intentional violations. If the
Department determines that any lender or holder of a guarantee
certificate under Section 184 has intentionally failed to maintain
adequate accounting records, to adequately service loans guaranteed
under Section 184, or to exercise proper credit or underwriting
judgement, the Department may impose a civil money penalty on such
lender or holder in the manner and amount provided under section 536
of the National Housing Act with respect to mortgagees and lenders
under such Act.
(c) Payment of loans made in good faith. Notwithstanding
paragraphs (a) and (b), the Department may not refuse to pay
pursuant to a valid guarantee on loans of a lender or holder barred
under Section 184, if the loans were previously made in good faith.
Section 12. Payment Under Guarantee
(a) Lender options.
(1) General. In the event of default by the borrower on a loan
guaranteed under this part, the holder of the guarantee certificate
shall provide written notice of the default to the Department. Upon
providing this notice, the holder of the guarantee certificate will
be entitled to payment under the guarantee (subject to the
provisions of this part) and may proceed to obtain payment in one of
the following manners:
(i) Foreclosure. The holder of the certificate may initiate
foreclosure proceedings in a court of competent jurisdiction (after
providing written notice of such action to the Department) and upon
a final order by the court authorizing foreclosure and submission to
the Department of a claim for payment under the guarantee, the
Department will pay to the holder of the certificate the pro rata
portion of the amount guaranteed (as determined in accordance with
Section 9 of this guide) plus reasonable fees and expenses as
approved by the Department. The Department will be subrogated to the
rights of the holder of the guarantee and the holder shall assign
the obligation and security to the Department.
(ii) No foreclosure. Without seeking a judicial foreclosure (or
in any case in which a foreclosure proceeding initiated under
paragraph (i) of this section continues for a period in excess of 1
year), the holder of the guarantee may submit to the Department a
claim for payment under the guarantee and the Department will only
pay to such holder for a loss on any single loan an amount equal to
90 percent of the pro rata portion of the amount guaranteed (as
determined in accordance with Section 9 of this guide). The
Department will be subrogated to the rights of the holder of the
guarantee and the holder shall assign the obligation and security to
the Department.
(2) Requirements. Before any payment under a guarantee is made
under paragraph (1) of this section, the holder of the guarantee
shall exhaust all reasonable possibilities of collection. Upon
payment, in whole or in part, to the holder, the note of judgement
evidencing the debt shall be assigned to the United States and the
holder shall have no further claim against the borrower or the
United States.
(b) Assignment by the Department. Notwithstanding paragraph (a)
of this section, upon receiving notice of default on a loan
guaranteed under Section 184 from the holder of the guarantee, the
Department may accept assignment of the loan if the Department
determines that the assignment is in the best interests of the
United States. Upon assignment the Department will pay to the holder
of the guarantee the pro rata portion of the amount guaranteed (as
determined in accordance with Section 9 of this guide). The
Department will be subrogated to the rights of the holder of the
guarantee and the holder shall assign the obligation and security to
the Department.
(c) Limitations on liquidation. In the event of default by the
borrower on a loan guaranteed under Section 184 involving a security
interest in tribal allotted or trust land, the Department will only
pursue liquidation after offering to transfer the account to an
eligible tribal member, the tribe, or the Indian housing authority
serving the tribe or tribes. If the Department subsequently proceeds
to liquidate the account, the Department will not sell, transfer,
otherwise dispose of or alienate the property except to one of the
entities described in the preceding sentence.
[FR Doc. 96-5050 Filed 3-5-96; 8:45 am]
BILLING CODE 4210-33-P
Complete official Federal Register PDF
FR Doc. 96-5049 Office of the Secretary; HOME Investment Partnerships Program: Streamlining Interim Rule
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 9036-9037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5049]
[[Page 9035]]
_______________________________________________________________________
Part III
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 92
HOME Investment Partnerships Program: Streamlining; Interim Rule
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules
and Regulations
=======================================================================
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[[Page 9036]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 92
[Docket No. FR-3962-I-01]
RIN 2501-AC06
Office of the Secretary; HOME Investment Partnerships Program:
Streamlining Interim Rule
AGENCY: Office of the Assistant Secretary for Community Planning and
Development, HUD.
ACTION: Interim rule.
-----------------------------------------------------------------------
SUMMARY: This interim rule streamlines HUD's regulations for the HOME
Program by eliminating provisions that are redundant of statutes or are
otherwise unnecessary. This rule will make the HOME Program regulations
more concise.
EFFECTIVE DATE: April 5, 1996.
FOR FURTHER INFORMATION CONTACT: Mary Kolesar, Director, Program Policy
Division, Office of Affordable Housing Programs, Room 7162, Department
of Housing and Urban Development, 451 Seventh Street, SW, Washington,
DC 20410, telephone number (202) 708-2470. (This is not a toll-free
number). A telecommunications device for hearing- and speech-impaired
persons (TDD) is available at 1-800-877-8339 (Federal Information Relay
Service).
SUPPLEMENTARY INFORMATION: On March 4, 1995, President Clinton issued a
memorandum to all Federal departments and agencies regarding regulatory
reinvention. In response to this memorandum, the Department of Housing
and Urban Development conducted a page-by-page review of its
regulations to determine which can be eliminated, consolidated, or
otherwise improved. HUD has determined that the regulations for the
HOME Investment Partnerships Program can be improved and streamlined by
eliminating unnecessary provisions.
Several provisions in the regulations repeat statutory language
from the Cranston-Gonzalez National Affordable Housing Act (NAHA). It
is unnecessary to maintain statutory requirements in the Code of
Federal Regulations (CFR), since those requirements are otherwise fully
accessible and binding. Furthermore, if regulations contain statutory
language, HUD must amend the regulations whenever Congress amends the
statute. Therefore, this rule will remove repetitious statutory
language and replace it with a citation to the specific statutory
section for easy reference.
Several other provisions in the regulations apply to more than one
program, and therefore HUD repeated these provisions in different
subparts. This repetition is unnecessary, and updating these scattered
provisions is cumbersome and often creates confusion. Therefore, this
rule will consolidate these duplicative provisions, maintaining
appropriate cross-references for the reader's convenience.
Some provisions in the regulations are now obsolete. For instance,
this rule removes reference to obsolete regulations regarding Cost
Effective Energy Standards in subpart F. These guidelines were found in
24 CFR part 39, which has been deleted but will be made available as
standards for participating jurisdictions.
Justification for Interim Rulemaking
HUD generally publishes a rule for public comment before issuing a
rule for effect, in accordance with its own regulations on rulemaking
in 24 CFR part 10. However, part 10 provides for exceptions to the
general rule if the agency finds good cause to omit advance notice and
public participation. The good cause requirement is satisfied when
prior public procedure is ``impracticable, unnecessary, or contrary to
the public interest'' (24 CFR 10.1). HUD finds that good cause exists
to publish this rule for effect without first soliciting public
comment. This rule merely removes unnecessary regulatory provisions and
does not establish or affect substantive policy. Therefore, prior
public comment is unnecessary. This rule is being published as an
interim rule and not as a final rule because the HOME program
regulation at 24 CFR part 92 has not yet been issued as a final rule.
Other Matters
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed and approved this rule, and in so doing
certifies that this rule will not have a significant economic impact on
a substantial number of small entities. This rule merely streamlines
regulations by removing unnecessary provisions. The rule will have no
adverse or disproportionate economic impact on small businesses.
Environmental Impact
This rulemaking does not have an environmental impact. This
rulemaking simply amends an existing regulation by consolidating and
streamlining provisions. It does not change the environmental review
procedures or the physical impact of the program or the projects
assisted under the regulations being amended. Findings of No
Significant Impact with respect to the environment were made in
accordance with HUD regulations in 24 CFR part 50 that implement
section 102(2)(C) of the National Environmental Policy Act of 1969 (42
U.S.C. 4332) at the time of development of regulations implementing the
HOME Investment Partnerships Program, and regulations removing 24 CFR
part 39. Those findings remain applicable to this rule, and are
available for public inspection between 7:30 a.m. and 5:30 p.m.
weekdays in the Office of the Rules Docket Clerk, Office of General
Counsel, Room 10276, Department of Housing and Urban Development, 451
Seventh Street, SW, Washington, DC.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that this rule
will not have substantial direct effects on States or their political
subdivisions, or the relationship between the Federal government and
the States, or on the distribution of power and responsibilities among
the various levels of government. No programmatic or policy changes
that would affect the relationship between the Federal Government and
State and local governments will result from this rule.
Executive Order 12606, The Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule will not have
the potential for significant impact on family formation, maintenance,
or general well-being, and thus is not subject to review under the
Order. No significant change in existing HUD policies or programs will
result from promulgation of this rule.
The Catalog of Federal Domestic Assistance Number for the HOME
Program is 14.239.
List of Subjects in 24 CFR Part 92
Administrative practice and procedure, Grant programs--housing and
community development, Grant programs--Indians, Low and moderate income
housing, Manufactured homes, Rent subsidies, Reporting and
recordkeeping requirements.
Accordingly, part 92 of title 24 of the Code of Federal Regulations
is amended as follows:
[[Page 9037]]
PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM
1. The authority citation for part 92 is revised to read as
follows:
Authority: 42 U.S.C. 3535(d) and 12701-12839.
2. Section 92.1 is revised to read as follows:
Sec. 92.1 Overview.
This part implements the HOME Investment Partnerships Act (the HOME
Investment Partnerships Program). In general, under the HOME Investment
Partnerships Program, HUD allocates funds by formula among eligible
State and local governments to strengthen public-private partnerships
to expand the supply of decent, safe, sanitary, and affordable housing,
with primary attention to rental housing for very low-income and low-
income families. Generally, HOME funds must be matched by nonfederal
resources. State and local governments that become participating
jurisdictions may use HOME funds to carry out multi-year housing
strategies through acquisition, rehabilitation, and new construction of
housing, and tenant-based rental assistance. Participating
jurisdictions are able to provide assistance in a number of eligible
forms, including loans, advances, equity investments, interest
subsidies and other forms of investment that HUD approves.
3. In Sec. 92.2, the definition ``Act'' is added in alphabetical
order, to read as follows:
Sec. 92.2 Definitions.
Act means the HOME Investment Partnerships Act at title II of the
Cranston-Gonzalez National Affordable Housing Act, as amended, 42
U.S.C. 12701 et seq.
* * * * *
4. Section 92.4 is revised to read as follows:
Sec. 92.4 Suspension of requirements for disaster areas.
HUD may suspend HOME statutory requirements in connection with
disaster areas in accordance with section 290 of the Act.
Sec. 92.52 [Removed]
5. Section 92.52 is removed.
Sec. 92.100 [Removed and reserved]
6. Section 92.100 is removed and reserved.
Sec. 92.212 [Removed and reserved]
7. Section 92.212 is removed and reserved.
8. Section 92.213 is revised to read as follows:
Sec. 92.213 Development of model programs.
HUD will develop and make available model programs in accordance
with section 213 of the Act.
9. In Sec. 92.214, paragraph (a)(2) is revised to read as follows:
Sec. 92.214 Prohibited activities.
(a) * * *
(2) Provide tenant-based rental assistance for the special purposes
of the existing section 8 program in accordance with section 212(d) of
the Act.
* * * * *
10. Section 92.215 is revised to read as follows:
Sec. 92.215 Limitation on jurisdictions under court order.
Limitations on the use of HOME funds in connection with litigation
involving discrimination or fair housing are set forth in section 224
of the Act.
Sec. 92.251 [Amended]
11. Section 92.251 is amended by removing the last sentence in
paragraph (a).
12. Section 92.302 is revised to read as follows:
Sec. 92.302 Housing education and organizational support.
(a) General. HUD is authorized to provide education and
organizational support assistance in conjunction with HOME funds made
available to community housing development organizations in accordance
with section 233 of the Act.
(b) Limitations. Contracts under this section with any one
contractor for a fiscal year may not--
(1) Exceed 20 percent of the amount appropriated for this section
for such fiscal year; or
(2) Provide more than 20 percent of the operating budget (which may
not include funds that are passed through to community housing
development organizations) of the contracting organization for any one
year.
(c) Single-state contractors. Not less than 40 percent of the funds
made available for this section in an appropriations Act in any fiscal
year must be made available for eligible contractors that have worked
primarily in one state. HUD shall provide assistance under this
section, to the extent applications are submitted and approved, to
contractors in each of the HUD geographic regions.
(d) Notice of funding. HUD will publish a notice in the Federal
Register announcing the availability of funding under this section, as
appropriate. The notice need not include funding for each of the
eligible activities, but may target funding from among the eligible
activities.
Sec. 92.358 [Removed and reserved]
13. Section 92.358 is removed and reserved.
14. Section 92.400 is revised to read as follows:
Sec. 92.400 Coordinated Federal support for housing strategies.
(a) General. HUD will provide assistance to increase the capacity
to identify and meet the needs to increase the supply of affordable
housing in accordance with subtitle C of the Act.
(b) Notice of funding. HUD will publish a notice in the Federal
Register announcing the availability of funding under this section as
appropriate.
Dated: February 22, 1996.
Henry G. Cisneros,
Secretary.
[FR Doc. 96-5049 Filed 3-5-96; 8:45 am]
BILLING CODE 4210-32-P
Complete official Federal Register PDF
FR Doc. 96-5024 Regulatory ReinventionConsolidation of Admission Preferences for Assisted Housing
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 9040-9048]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5024]
[[Page 9039]]
_______________________________________________________________________
Part IV
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 5, et al.
Regulatory Reinvention: Consolidation of Admission Preferences for
Assisted Housing; Final Rule
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules
and Regulations
[[Page 9040]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Secretary
24 CFR Parts 5, 880, 881, 882, 883, 884, 885, 886, 889, 904, 960,
982, and 983
[Docket No. FR-3980-F-01]
RIN 2501-AC10
Regulatory Reinvention--Consolidation of Admission Preferences
for Assisted Housing
AGENCY: Office of the Secretary, HUD.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the various program regulations
governing assisted housing programs to remove the nearly identical
provisions concerning admission preferences found in numerous parts of
title 24 of the Code of Federal Regulations and adds several sections
on this subject in 24 CFR part 5. The amendments made by this rule do
not change the substance of the provisions but eliminate redundant
provisions by placing in a general part the provisions that derive from
parallel statutory provisions in the United States Housing Act of 1937.
EFFECTIVE DATE: April 5, 1996.
FOR FURTHER INFORMATION CONTACT: For the Section 8 project-based
programs other than the Moderate Rehabilitation and Project-Based
Certificate programs: Barbara Hunter, Director, Program Management
Division, Office of Housing, telephone (202) 708-3944 (voice).
For the Section 8 Certificate, Voucher and Moderate Rehabilitation
programs and for the public housing program: Linda Campbell, Director
of Marketing, Leasing and Management Division, Office of Public and
Indian Housing, telephone (202) 708-0744 (voice).
Both of these officials are located at the Department of Housing
and Urban Development, 451 Seventh Street, SW, Washington, D.C. 20410.
For hearing- or speech-impaired persons, the above-stated telephone
numbers may be accessed via TDD by calling the Federal Information
Relay Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act Statement
There are no changes to the information collection requirements
contained in these provisions. An agency may not conduct or sponsor,
and a person is not required to respond to, a collection of information
unless the collection displays a valid control number.
I. Background
The impetus for this rule is the Secretary's desire to simplify the
Department's regulations. In response to the President's initiative to
reinvent regulations, the Secretary has determined that the regulations
currently found in parts 880, 881, 882, 883, 884, 885, 886, 889, 904,
960, 982, and 983 concerning preferences in admission to assisted
housing for persons that are involuntarily displaced, living in
substandard housing, or paying more than 50 percent of income for rent,
can be consolidated into one set of provisions to apply to these
programs without changing the policies implemented by those provisions.
This consolidation will eliminate 56 pages from the Department's
regulations codified at title 24 of the Code of Federal Regulations.
The continuing resolution enacted on January 26, 1996, approving
partial funding for the Department, provides that the statutory
provisions on admissions preferences implemented by the regulations
being consolidated in this rulemaking are suspended for Fiscal Year
1996. Therefore, this consolidated rule and the regulations that it
amends have no effect until October 1, 1996.
II. Action
The nearly identical provisions in parts 880, 881, 882, 883, 884,
885, 889, 960, 982, and 983 shown in the following chart are being
removed and consolidated in the corresponding sections of part 5. Cross
references to those sections are revised to refer to the Federal
preference provisions of 24 CFR part 5:
Corresponding Preference Provisions
[New provision at head of column]
------------------------------------------------------------------------
5.410 5.415 5.420 5.425 5.430
------------------------------------------------------------------------
880.613...... 880.614 880.615 880.616 880.617
881.613...... 881.614 881.615 881.616 881.617
882.517...... 882.518 882.519 882.520 882.521
883.714...... 883.715 883.716 883.717 883.718
884.226...... 884.227 884.228 884.229 884.230
886.132...... 886.133 886.134 886.135 886.136
886.337......
889.611...... 889.612 889.613 889.614 889.615
904.122......
960.211...... 960.212 960.213 960.214 960.215
982.209...... 982.210 982.211 982.212 982.213
983.203......
------------------------------------------------------------------------
Findings and Certifications
Justification for Final Rule
It is HUD's policy to publish rules for public comment before their
issuance for effect, in accordance with its own regulations on
rulemaking found at 24 CFR part 10. However, part 10 provides that
prior public procedure will be omitted if HUD determines that it is
``impracticable, unnecessary, or contrary to the public interest'' (24
CFR 10.1). HUD finds that in this case, prior public comment is
unnecessary because the removal of nearly identical program
requirements and consolidation of these provisions into a single part
does not affect or establish policy. The primary purpose of this rule
is to relocate provisions concerning admission preferences, not to
revise them.
Impact on the Environment
A Finding of No Significant Impact with respect to the environment
was made in accordance with HUD regulations at 24 CFR part 50 that
implement section 102(2)(C) of the National Environmental Policy Act of
1969, 42 U.S.C. 4332 when the admission preference rules (FR-3122 and
FR-3727) were promulgated as final rules. Those Findings of No
Significant Impact are available for public inspection and copying
during regular business hours (7:30 a.m. to 5:30 p.m.) in the Office of
the Rules Docket Clerk, room 10276, 451 Seventh Street, SW, Washington,
DC 20410-0500.
[[Page 9041]]
Federalism Impact
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that actions taken
in this rule do not have significant impact on States or their
political subdivisions, since the rule merely relocates provisions
regarding admission preferences for assisted housing.
Impact on the Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule does not have
potential for significant impact on family formation, maintenance, and
general well-being. Therefore, the proposed rule is not subject to
review under the Order. No significant change in existing HUD policies
or programs will result from promulgation of this rule, as those
policies and programs relate to family concerns.
Impact on Small Entities
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule will not have a significant
impact on a substantial number of small entities. The rule is limited
to consolidating identical provisions found in various program
regulations.
Regulatory Review
This rule was reviewed by the Office of Management and Budget under
Executive Order 12866, Regulatory Planning and Review. Any changes made
to the rule as a result of that review are clearly identified in the
docket file, which is available for public inspection at the address
stated above for review of the environmental finding.
Catalog
The Catalog of Federal Domestic Assistance numbers for the
program affected by this rule are 14.157, 14.182, 14.850, and
14.856.
List of Subjects
24 CFR Part 5
Administrative practive and procedure, Grant programs--housing and
community development, Low and moderate income housing, Public housing,
Reporting and recordkeeping requirements.
24 CFR Part 880
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
24 CFR Part 881
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
24 CFR Part 882
Grant programs--housing and community development, Homeless, Lead
poisoning, Manufactured homes, Rent subsidies, Reporting and
recordkeeping requirements.
24 CFR Part 883
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
24 CFR Part 884
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements, Rural areas.
24 CFR Part 885
Aged, Individuals with disabilities, Loan programs--housing and
community development, Low and moderate income housing, Reporting and
recordkeeping requirements.
24 CFR Part 886
Grant programs--housing and community development, Lead poisoning,
Rent subsidies, Reporting and recordkeeping requirements.
24 CFR Part 889
Aged, Capital advance programs, Grant programs--housing and
community development, Loan programs--housing and community
development, Low and moderate income housing, Rent subsidies, Reporting
and recordkeeping requirements.
24 CFR Part 904
Grant programs--housing and community development, Loan programs--
housing and community development, Public housing.
24 CFR Part 960
Aged, Grant programs--housing and community development,
Individuals with disabilities, Public housing.
24 CFR Part 982
Grant programs--housing and community development, Housing, Rent
subsidies, Reporting and recordkeeping requirements.
24 CFR Part 983
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
Accordingly, for the reasons stated in the preamble, parts 5, 880,
881, 882, 883, 884, 885, 886, 889, 904, 960, 982, and 983 of title 24
of the Code of Federal Regulations are amended as follows:
PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS
1. The authority citation is revised to read as follows:
Authority: 42 U.S.C. 1437a and 3535(d).
2. New Secs. 5.410, 5.415, 5.420, 5.425, and 5.430, are added to
subpart D of part 5, to read as follows:
Subpart D--Definitions and Other General Requirements for Assistance
Under the United States Housing Act of 1937
* * * * *
5.410 Selection preferences.
5.415 Federal preferences: general.
5.420 Federal preference: involuntary displacement.
5.425 Federal preference: substandard housing.
5.430 Federal preference: rent burden.
Subpart D--Definitions and Other General Requirements for
Assistance Under the United States Housing Act of 1937
* * * * *
Sec. 5.410 Selection preferences.
(a) Applicability. The selection preferences that are described in
this part are applicable to public housing and housing assisted under
the Section 8 Housing Assistance Payments program. (Corresponding
provisions applicable to the Indian housing program are found in 24 CFR
part 950.) These preferences are administered by the entity responsible
for admission functions in the programs covered (``responsible
entity''), i.e., the public housing agency (``HA'') in the public
housing and Section 8 Certificate/Voucher and Moderate Rehabilitation
programs and the owner in all other Section 8 programs.
(b) Types of preference. There are three types of admission
preferences:
(1) ``Federal preferences'' are admission preferences for three
categories of families, as prescribed in 42 U.S.C. 1437d(c)(4)(A),
1437f(d)(1)(A), 1437f(o)(3), and 1437f note. Federal preference is
given for selection of families that are:
(i) Involuntarily displaced;
(ii) Living in substandard housing (including families that are
homeless or living in a shelter for the homeless); or
(iii) Paying more than 50 percent of family income for rent.
[[Page 9042]]
(2) ``Ranking preferences'' are preferences that may be established
by the responsible entity to use in selecting among applicants that
qualify for federal preferences.
(3) ``Local preferences'' are preferences for use in selecting
among applicants without regard to their federal preference status.
(See 42 U.S.C. 1437d(c)(4)(A), 1437f(d)(1)(A), 1437f(o)(3), and 1437f
note.)
(c) System. In the Section 8 programs other than the Certificate/
Voucher and Moderate Rehabilitation programs, the owner must establish
a system for selection of applicants from the waiting list that
includes the following:
(1) How the federal preferences will be used;
(2) How any ranking preferences will be used;
(3) How any local preferences will be used; and
(4) How any residency preference will be used.
(d) Use of preference in selection process. (1) Factors other than
federal and local preferences. (i) Characteristics of the unit. For
developments administered under the Section 8 New Construction and
Substantial Rehabilitation programs and the public housing program, the
responsible entity may match other characteristics of the applicant
family with the type of unit available, e.g., number of bedrooms. In
selection of a family for a unit that has special accessibility
features, the responsible entity must give preference to families that
include persons with disabilities who can benefit from those features
of the unit (see 24 CFR 8.27 and 24 CFR 100.202(c)(3)). Also, in
selection of a family for a unit in a mixed population project, the
responsible entity will give preference to elderly families and
disabled families (see subpart D of part 960 or Sec. 880.612a or
Sec. 881.612a of this title).
(ii) Singles preference. See Sec. 5.405.
(2) Local preference admissions. (i) Local preferences may be
adopted or amended by an HA to respond to local housing needs and
priorities after the HA has conducted a public hearing.
(ii) For Section 8 programs other than the Section 8 Certificate/
Voucher, Project-Based Certificate, and Moderate Rehabilitation
programs operated under 24 CFR part 982, 983, and 882, respectively, if
the owner wants to use preferences to select among applicants without
regard to their federal preference status, it must use the local
preference system adopted for use in the Section 8 Certificate/Voucher
programs by the housing agency for the jurisdiction. If there is more
than one HA for the jurisdiction, the owner shall use the local
preference system of the HA for the lowest level of government that has
jurisdiction where the project is located. For the public housing
program, the HA may use a local preference system it adopts for that
program.
(iii) In the Section 8 programs other than the Certificate/Voucher,
Project-Based Certificate, and Moderate Rehabilitation programs
operated under 24 CFR parts 982, 983 and 882, respectively, before an
owner implements the HA's local preferences, the owner must receive
approval from the HUD Field Office. HUD shall review these preferences
to ensure that they are applicable to any tenant eligibility
limitations for the subject housing and that they are consistent with
HUD requirements pertaining to nondiscrimination and the Affirmative
Fair Housing Marketing objectives. If HUD determines that the local
preferences are in violation of those requirements, the owner will not
be permitted to admit applicants on the basis of any local preferences.
(iv) In any year, the number of families given preference in
admission pursuant to a local preference over families with a federal
preference may not exceed the local preference limit. ``Local
preference limit'' means the following:
(A) For an HA's Section 8 Certificate/Voucher program operated
under 24 CFR part 982, ten percent of annual waiting list admissions;
(B) For an HA's public housing program, fifty percent of annual
admissions;
(C) For an HA's Section 8 Moderate Rehabilitation program, thirty
percent of annual admissions;
(D) For Section 8 New Construction, Substantial Rehabilitation, and
Loan Management/Property Disposition projects, thirty percent of annual
admissions to each project; and
(E) For the Section 8 Project-Based Certificate program, thirty
percent of total annual waiting list admissions to the HA's Project-
Based Certificate program (including admissions pursuant to 24 CFR
983.203(c)(3)).
(3) Prohibition of preference if applicant was evicted for drug-
related criminal activity. With respect to the Section 8 Certificate,
Voucher, Loan Management, and Property Disposition programs and the
public housing program, the HA may not give a preference (federal
preference, local preference, or ranking preference) to an applicant if
any member of the family is a person who was evicted during the past
three years from housing assisted under a 1937 Housing Act program
because of drug-related criminal activity. However, the HA may give an
admission preference in any of the following cases:
(i) If the HA determines that the evicted person has successfully
completed a rehabilitation program approved by the HA;
(ii) If the HA determines that the evicted person clearly did not
participate in or know about the drug-related criminal activity; or
(iii) If the HA determines that the evicted person no longer
participates in any drug-related criminal activity.
(4) Retention of federal preference status. With respect to
determining the preference status of an applicant for the Section 8
Certificate/Voucher programs, an applicant who is receiving tenant-
based assistance under the HOME program (24 CFR part 92) and an
applicant who resides in public or Indian housing of the same HA (and
was on the tenant-based program waiting list when admitted to the HA's
public or Indian housing on or after April 26, 1993), the HA determines
whether the applicant qualifies for federal preference based on the
situation of the applicant at the time the applicant began to receive
tenant-based assistance under the HOME program or was admitted to the
HA's public or Indian housing program (beginning of initial public or
Indian housing lease).
(e) Income-based admission. (1) In public housing, the HA may only
give preference to select a relatively higher income family for
admission if the preference is pursuant to a ``local preference''
admission. (For other income-related restrictions on selection, see 24
CFR 913.105.)
(2) In Section 8 programs, the responsible entity may not select a
family for admission in an order different from the order on the
waiting list for the purpose of selecting a relatively higher income
family for admission.
(f) Informing applicants about admission preferences. (1) The
responsible entity must inform all applicants about available
preferences and must give applicants an opportunity to show that they
qualify for available preferences (federal preference, ranking
preference, or local preference).
(2) If the responsible entity determines that the notification to
all applicants on a waiting list required by paragraph (f)(1) of this
section is impracticable because of the length of the list, the
responsible entity may provide this notification to fewer than all
applicants on the list at any given time. The responsible entity must,
however, have notified a sufficient
[[Page 9043]]
number of applicants at any given time that, on the basis of the
entity's determination of the number of applicants on the waiting list
who already claim a federal preference and the anticipated number of
project admissions:
(i) There is an adequate pool of applicants who are likely to
qualify for a federal preference; and
(ii) It is unlikely that, on the basis of the responsible entity's
framework for applying the preferences under paragraph (c) of this
section and the federal preferences claimed by those already on the
waiting list, any applicant who has not been so notified would receive
assistance before those who have received notification.
(g) Notice and opportunity for a meeting where preference is
denied. (1) If the responsible entity determines that an applicant does
not qualify for a federal preference, ranking preference, or local
preference claimed by the applicant, the responsible entity must
promptly give the applicant written notice of the determination. The
notice must contain a brief statement of the reasons for the
determination, and state that the applicant has the right to meet with
a representative of the responsible entity to review the determination.
The meeting may be conducted by any person or persons designated by the
responsible entity, who may be an officer or employee of the
responsible entity, including the person who made or reviewed the
determination or a subordinate employee.
(2) The applicant may exercise other rights if the applicant
believes that the applicant has been discriminated against on the basis
of race, color, religion, sex, national origin, age, disability or
familial status.
(h) Residency preferences. A ``residency preference'' is a
preference for admission of families that reside anywhere in a
specified ``residency preference area.'' A residency preference may be
used as a ranking or local preference.
(1) Section 8 programs other than Certificate/Voucher and Project-
Based Certificate. In these developments, local residency requirements
are prohibited.
(2) Section 8 Certificate/Voucher and Project-Based Certificate
programs. Any residency preference must be approved by HUD.
(i) A county or municipality may be used as a residency preference
area.
(ii) An area smaller than a county or municipality may not be used
as a residency preference area.
(3) All projects. With respect to any residency preference,
applicants who are working or who have been notified that they are
hired to work in the residency preference area shall be treated as
residents of the residency preference area. A residency preference may
not be based on how long the applicant has resided in or worked in the
residency preference area.
(i) Nondiscrimination. (1) Any selection preferences must be
established and administered in accordance with the following
authorities:
(i) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) and
the implementing regulations at 24 CFR part 1;
(ii) The Fair Housing Act (42 U.S.C. 3601-3619) and the
implementing regulations at 24 CFR parts 100, 108, 109, and 110;
(iii) Executive Order 11063 on Equal Opportunity in Housing and the
implementing regulations at 24 CFR part 107;
(iv) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794)
and the implementing regulations at 24 CFR part 8;
(v) The Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and
the implementing regulations at 24 CFR part 146; and
(vi) The Americans with Disabilities Act (42 U.S.C. 12101-12213) to
the extent applicable.
(2) Such preferences also must be consistent with HUD's affirmative
fair housing objectives and (where applicable) the owner's HUD-approved
affirmative fair housing marketing plan.
(Approved by the Office of Management and Budget under OMB control
numbers 2577-0105 and 2502-0372.)
Sec. 5.415 Federal preferences: general.
(a) Definitions. The definitions of these preference categories
stated in Secs. 5.420, 5.425, and 5.430 must be used by the responsible
entity, except that an HA may use its own alternative definitions if
they have been approved by HUD.
(b) Ranking preferences: selection among federal preference
holders. The responsible entity's system of administering the federal
preferences (its admission policy, in the case of the Section 8
Certificate/Voucher programs) may provide for use of ranking preference
for selecting among applicants who qualify for federal preference.
(1) The responsible entity may give preference to working
families--so long as the prohibition of Sec. 5.410 against selection
based on income and the nondiscrimination provisions that protect
against discrimination on the basis of age or disability are not
violated. (If a responsible entity adopts such a preference, it may not
give greater weight to an applicant based on the amount of employment
income, and an applicant household shall be given the benefit of the
preference if the head and spouse, or sole member, are age 62 or older
or are receiving social security disability, supplemental security
income disability benefits, or any other payments based on an
individual's inability to work.) A responsible entity may give
preference to graduates of, as well as active participants in,
educational and training programs that are designed to prepare
individuals for the job market. The responsible entity also may use the
housing agency's ``local preferences'' for the Section 8 Certificate
and Voucher programs to rank federal preference holders.
(2) The ranking preferences may give different weight to the
federal preferences, through such means as:
(i) Aggregating the federal preferences (e.g., provide that two
federal preferences outweigh one);
(ii) Giving greater weight to holders of a particular category of
federal preference; or
(iii) Giving greater weight to a federal preference holder who fits
a particular category of federal preference.
(c) Qualifying for a federal preference. (1) Certification of
preference. An applicant may claim qualification for a federal
preference by certifying to the responsible entity that the family
qualifies for federal preference. The responsible entity must accept
this certification, unless the responsible entity verifies that the
applicant is not qualified for federal preference.
(2) Verification of preference. (i) Before admitting an applicant
on the basis of a federal preference, the responsible entity must
require the applicant to provide information needed by the responsible
entity to verify that the applicant qualifies for a federal preference
because of the applicant's current status. The applicant's current
status must be determined without regard to whether there has been a
change in the applicant's qualification for a federal preference
between the time of application and selection for admission, including
a change from one federal preference category to another.
(ii) In the case of Section 8 programs other than the Section 8
Certificate/Voucher, Project-Based Certificate, and Moderate
Rehabilitation programs, the owner must use the verification procedures
specified in Sec. 5.420(c) (involuntary displacement); Sec. 5.425(c)
(substandard housing); and Sec. 5.430(b) (rent burden). In the case of
the Section 8 Certificate/Voucher, Project-Based
[[Page 9044]]
Certificate, and Moderate Rehabilitation programs and the public
housing program, the HA may adopt its own verification procedure.
(iii) Once the responsible entity has verified an applicant's
qualification for a federal preference, the responsible entity need not
require the applicant to provide information needed by the responsible
entity to verify such qualification again unless:
(A) The responsible entity determines reverification is desirable
because a long time has passed since verification; or
(B) The responsible entity has reasonable grounds to believe that
the applicant no longer qualifies for a federal preference.
(3) Effect of current residence in assisted housing. No applicant
is to be denied a federal preference for which the family otherwise
qualifies on the basis that the applicant already resides in assisted
housing; for example, the actual condition of the housing unit must be
considered, or the possibility of involuntary displacement resulting
from domestic violence must be evaluated.
(d) Approval of special conditions satisfying preference
definitions. With respect to Section 8 programs other than the Section
8 Certificate/Voucher, Project-Based Certificate and Moderate
Rehabilitation programs, HUD may specify additional conditions under
which the federal preferences, as described in Secs. 5.420, 5.425, and
5.430, can be satisfied. In such cases, appropriate certification of
qualification must be provided. (See HUD Handbook 4350.3, which is
available at HUD field offices.) (Approved by the Office of Management
and Budget under OMB control number 2502-0372 and 2577-0105.)
Sec. 5.420 Federal preference: involuntary displacement.
(a) How applicant qualifies for displacement preference. (See
Sec. 5.415(a)(2) and (c)(2)(ii) for applicability of this section to
the Section 8 Certificate/Voucher, Project-Based Certificate, and
Moderate Rehabilitation programs and the public housing program.)
(1) An applicant qualifies for a federal preference on the basis of
involuntary displacement if either of the following apply:
(i) The applicant has been involuntarily displaced and is not
living in standard, permanent replacement housing; or
(ii) The applicant will be involuntarily displaced within no more
than six months from the date of preference status certification by the
family or verification by the responsible entity.
(2)(i) ``Standard, permanent replacement housing'' is housing:
(A) That is decent, safe, and sanitary;
(B) That is adequate for the family size; and
(C) That the family is occupying pursuant to a lease or occupancy
agreement.
(ii) ``Standard, permanent replacement housing'' does not include:
(A) Transient facilities, such as motels, hotels, or temporary
shelters for victims of domestic violence or homeless families; or
(B) In the case of domestic violence, the housing unit in which the
applicant and the applicant's spouse or other member of the household
who engages in such violence live.
(b) Meaning of involuntary displacement. An applicant is or will be
involuntarily displaced if the applicant has vacated or will have to
vacate the unit where the applicant lives because of one or more of the
following:
(1) Displacement by disaster. An applicant's unit is uninhabitable
because of a disaster, such as a fire or flood.
(2) Displacement by government action. Activity carried on by an
agency of the United States or by any State or local governmental body
or agency in connection with code enforcement or a public improvement
or development program.
(3) Displacement by action of housing owner. (i) Action by a
housing owner forces the applicant to vacate its unit.
(ii) An applicant does not qualify as involuntarily displaced
because action by a housing owner forces the applicant to vacate its
unit unless:
(A) The applicant cannot control or prevent the owner's action;
(B) The owner action occurs although the applicant met all
previously imposed conditions of occupancy; and
(C) The action taken by the owner is other than a rent increase.
(iii) To qualify as involuntarily displaced because action by a
housing owner forces the applicant to vacate its unit, reasons for an
applicant's having to vacate a housing unit include, but are not
limited to, conversion of an applicant's housing unit to non-rental or
non-residential use; closing of an applicant's housing unit for
rehabilitation or for any other reason; notice to an applicant that the
applicant must vacate a unit because the owner wants the unit for the
owner's personal or family use or occupancy; sale of a housing unit in
which an applicant resides under an agreement that the unit must be
vacant when possession is transferred; or any other legally authorized
act that results or will result in the withdrawal by the owner of the
unit or structure from the rental market.
(iv) Such reasons do not include the vacating of a unit by a tenant
as a result of actions taken by the owner because the tenant refuses:
(A) To comply with HUD program policies and procedures for the
occupancy of under-occupied or overcrowded units; or
(B) To accept a transfer to another housing unit in accordance with
a court decree or in accordance with policies and procedures under a
HUD-approved desegregation plan.
(4) Displacement by domestic violence. (i) An applicant is
involuntarily displaced if:
(A) The applicant has vacated a housing unit because of domestic
violence; or
(B) The applicant lives in a housing unit with a person who engages
in domestic violence.
(ii) ``Domestic violence'' means actual or threatened physical
violence directed against one or more members of the applicant family
by a spouse or other member of the applicant's household.
(iii) To qualify as involuntarily displaced because of domestic
violence:
(A) The responsible entity must determine, in accordance with HUD's
administrative instructions, that the domestic violence occurred
recently or is of a continuing nature; and
(B) The applicant must certify that the person who engaged in such
violence will not reside with the applicant family unless the
responsible entity has given advance written approval. If the family is
admitted, the responsible entity may deny or terminate assistance to
the family for breach of this certification.
(5) Displacement to avoid reprisals. (i) An applicant family is
involuntarily displaced if:
(A) Family members provided information on criminal activities to a
law enforcement agency; and
(B) Based on a threat assessment, a law enforcement agency
recommends rehousing the family to avoid or minimize a risk of violence
against family members as a reprisal for providing such information.
(ii) The responsible entity may establish appropriate safeguards to
conceal the identity of families requiring protection against such
reprisals.
(6) Displacement by hate crimes. (i) An applicant is involuntarily
displaced if:
(A) One or more members of the applicant's family have been the
victim of one or more hate crimes; and
[[Page 9045]]
(B) The applicant has vacated a housing unit because of such crime,
or the fear associated with such crime has destroyed the applicant's
peaceful enjoyment of the unit.
(ii) ``Hate crime'' means actual or threatened physical violence or
intimidation that is directed against a person or his or her property
and that is based on the person's race, color, religion, sex, national
origin, handicap, or familial status.
(iii) The responsible entity must determine, in accordance with
HUD's administrative instructions, that the hate crime involved
occurred recently or is of a continuing nature.
(7) Displacement by inaccessibility of unit. An applicant is
involuntarily displaced if:
(i) A member of the family has a mobility or other impairment that
makes the person unable to use critical elements of the unit; and
(ii) The owner is not legally obligated to make the changes to the
unit that would make critical elements accessible to the disabled
person as a reasonable accommodation.
(8) Displacement because of HUD disposition of multifamily project.
Involuntary displacement includes displacement because of disposition
of a multifamily rental housing project by HUD under section 203 of the
Housing and Community Development Amendments of 1978.
(c) Involuntary displacement preference: Verification. A private
owner's verification of an applicant's involuntary displacement is
established by the following documentation:
(1) Displacement by disaster. Certification, in a form prescribed
by the Secretary, from a unit or agency of government that an applicant
has been or will be displaced as a result of a disaster that results in
the uninhabitability of an applicant's unit.
(2) Displacement by government action. Certification, in a form
prescribed by the Secretary, from a unit or agency of government that
an applicant has been or will be displaced by activity carried on by an
agency of the United States or by any State or local governmental body
or agency in connection with code enforcement or a public improvement
or development program.
(3) Displacement by owner action. Certification, in a form
prescribed by the Secretary, from an owner or owner's agent that an
applicant had to or will have to vacate a unit by a date certain
because of owner action.
(4) Displacement because of domestic violence. Certification, in a
form prescribed by the Secretary, of displacement because of domestic
violence from the local police department, social services agency, or
court of competent jurisdiction, or a clergyman, physician, or public
or private facility that provides shelter or counseling to the victims
of domestic violence.
(5) Displacement to avoid reprisals. A threat assessment by a law
enforcement agency.
(6) Displacement by hate crime. Certification by a law enforcement
agency or other reliable information.
(7) Displacement by inaccessibility of unit. Certification by a
health care professional that a family member has a mobility or other
impairment that makes critical elements of the current unit
inaccessible, and statement by the owner that it is unable to make
necessary changes to the unit to make it accessible.
(8) Displacement by HUD disposition of multifamily project.
Certification by HUD with respect to the disposition.
Sec. 5.425 Federal preference: substandard housing.
(a) When unit is substandard. (See Sec. 5.415(a)(2) and (c)(2)(ii)
for applicability of this section to the Section 8 Certificate/Voucher,
Project-Based Certificate, Moderate Rehabilitation programs and the
public housing program.) A unit is substandard if it:
(1) Is dilapidated;
(2) Does not have operable indoor plumbing;
(3) Does not have a usable flush toilet inside the unit for the
exclusive use of a family;
(4) Does not have a usable bathtub or shower inside the unit for
the exclusive use of a family;
(5) Does not have electricity, or has inadequate or unsafe
electrical service;
(6) Does not have a safe or adequate source of heat;
(7) Should, but does not, have a kitchen; or
(8) Has been declared unfit for habitation by an agency or unit of
government.
(b) Other definitions. (1) Dilapidated unit. A housing unit is
dilapidated if:
(i) The unit does not provide safe and adequate shelter, and in its
present condition endangers the health, safety, or well-being of a
family; or
(ii) The unit has one or more critical defects, or a combination of
intermediate defects in sufficient number or extent to require
considerable repair or rebuilding. The defects may involve original
construction, or they may result from continued neglect or lack of
repair or from serious damage to the structure.
(2) Homeless family. (i) An applicant that is a ``homeless family''
is considered to be living in substandard housing.
(ii) A ``homeless family'' includes:
(A) Any person or family that lacks a fixed, regular, and adequate
nighttime residence; and
(B) Any person or family that has a primary nighttime residence
that is:
(1) A supervised publicly or privately operated shelter designed to
provide temporary living accommodations (including welfare hotels,
congregate shelters, and transitional housing);
(2) An institution that provides a temporary residence for
individuals intended to be institutionalized; or
(3) A public or private place not designed for, or ordinarily used
as, a regular sleeping accommodation for human beings.
(iii) A ``homeless family'' does not include any person imprisoned
or otherwise detained pursuant to an Act of Congress or a State law.
(3) Status of SRO housing. In determining whether an individual
living in single room occupancy (SRO) housing qualifies for federal
preference, SRO housing is not considered substandard solely because it
does not contain sanitary or food preparation facilities.
(c) Substandard housing preference: verification. The following
provisions are applicable to private owners:
(1) Verification that an applicant is living in substandard housing
consists of certification, in a form prescribed by the Secretary, from
a unit or agency of government or from an applicant's present landlord
that the applicant's unit is ``substandard housing'' (as described in
this section).
(2) In the case of a ``homeless family'' (as described in this
section), verification consists of certification, in a form prescribed
by the Secretary, of this status from a public or private facility that
provides shelter for such individuals, or from the local police
department or social services agency.
Sec. 5.430 Federal preference: rent burden.
(a) Rent burden preference: how determined. (See Sec. 5.415(a)(2)
and (c)(2)(ii) for applicability of this section to the Section 8
Certificate/Voucher, Project-Based Certificate, and Moderate
Rehabilitation programs and the public housing program.)
(1) ``Rent burden preference'' means the federal preference for
admission of applicants that pay more than 50 percent of family income
for rent.
(2) For purposes of determining whether an applicant qualifies for
the rent burden preference:
[[Page 9046]]
(i) ``Family income'' means Monthly Income, as defined in 24 CFR
813.102.
(ii) ``Rent'' means:
(A) The actual monthly amount due under a lease or occupancy
agreement between a family and the family's current landlord; and
(B) For utilities purchased directly by tenants from utility
providers:
(1) The utility allowance for family-purchased utilities and
services that is used in the HA tenant-based program; or
(2) If the family chooses, the average monthly payments that the
family actually made for these utilities and services for the most
recent 12-month period or, if information is not obtainable for the
entire period, for an appropriate recent period.
(iii) Amounts paid to or on behalf of a family under any energy
assistance program must be subtracted from the otherwise applicable
rental amount, to the extent that they are not included in the family's
income.
(iv) For purposes of the Section 8 Certificate/Voucher programs,
rent for an applicant who owns a manufactured home, but rents the space
upon which it is located, includes the monthly payment to amortize the
purchase price of the home, calculated in accordance with HUD's
requirements. In addition, for this program, rent for members of a
cooperative means the charges under the occupancy agreement between the
members and the cooperative.
(3) An applicant does not qualify for a rent burden preference if
either of the following is applicable:
(i) The applicant has been paying more than 50 percent of income
for rent for less than 90 days.
(ii) The applicant is paying more than 50 percent of family income
to rent a unit because the applicant's housing assistance for occupancy
of the unit under any of the following programs has been terminated
because of the applicant's refusal to comply with applicable program
policies and procedures on the occupancy of underoccupied and
overcrowded units:
(A) The Section 8 programs or public and Indian housing programs
under the United States Housing Act of 1937;
(B) The rent supplement program under section 101 of the Housing
and Urban Development Act of 1965; or
(C) Rental assistance payments under section 236(f)(2) of the
National Housing Act.
(b) Rent burden preference: verification of income and rent. The
owner must verify that an applicant is paying more than 50 percent of
family income for rent, as follows:
(1) How to verify income. The owner must verify a family's income
by using the standards and procedures that it uses to verify family
income under 24 CFR part 813.
(2) How to verify rent. The owner must verify the amount due to the
family's landlord (or cooperative) under the lease or occupancy
agreement:
(i) By requiring the family to furnish copies of its most recent
rental (or cooperative charges) receipts (which may include canceled
checks or money order receipts) or a copy of the family's current lease
or occupancy agreement; or
(ii) By contacting the landlord (or cooperative) or its agent
directly.
(3) Utilities. To verify the actual amount that a family paid for
utilities and other housing services, the owner must require the family
to provide copies of the appropriate bills or receipts, or must obtain
the information directly from the utility or service supplier.
PART 880-SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW
CONSTRUCTION
3. The authority citation for part 880 continues to read as
follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and
13611-13619.
Subpart F--Management
Sec. 880.603 [Amended]
4. Section 880.603 is amended by:
a. Amending the introductory text of paragraph (b) by removing the
phrase ``Secs. 880.613 through 880.617.'' from the end of the
paragraph, and adding in its place the phrase ``24 CFR part 5.'';
b. Amending paragraph (b)(1) introductory text by removing the term
``Sec. 880.613(c)(2)'' from the third sentence, and adding in its place
the phrase ``24 CFR part 5''; and
c. Amending paragraph (b)(2) by removing the term
``Sec. 880.613(k)'' from the fifth sentence, and adding in its place
``24 CFR 5.410''.
Sec. 880.612a [Amended]
5. In Sec. 880.612a, paragraph (g) is amended by removing the term
``Sec. 880.613'' in the two places where it appears, and by adding the
term ``24 CFR part 5'' in those two places.
Secs. 880.613, 880.614, 880.615, 880.616, and 880.617 [Removed]
6. Sections 880.613, 880.614, 880.615, 880.616, and 880.617 are
removed.
PART 881--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR
SUBSTANTIAL REHABILITATION
7. The authority citation for part 881 continues to read as
follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and
13611-13619.
Subpart F--Management
Sec. 881.603 [Amended]
8. Section 881.603 is amended by:
a. Amending the introductory text of paragraph (b) by removing the
phrase ``Secs. 881.613 through 881.617'' from the end of the paragraph,
and adding in its place the phrase ``24 CFR part 5'';
b. Amending paragraph (b)(2) introductory text by removing the term
``Sec. 881.613(c)(2)'' from the third sentence, and adding in its place
the phrase ``24 CFR part 5''; and
c. Amending paragraph (b)(3) by removing the term
``Sec. 881.613(k)'' from the fifth sentence, and adding in its place
the term ``Sec. 24 CFR 5.410''.
Sec. 881.612a [Amended]
9. In Sec. 881.612a, paragraph (g) is amended by removing the term
``Sec. 881.613'' in the two places where it appears, and by adding the
term ``24 CFR part 5'' in those two places.
Secs. 881.613, 881.614, 881.615, 881.616, and 881.617 [Removed]
10. Sections 881.613, 881.614, 881.615, 881.616, and 881.617 are
removed.
PART 882--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--EXISTING
HOUSING
11. The authority citation for part 882 is revised to read as
follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f, and 3535(d).
Subpart E--Special Procedures for Moderate Rehabilitation--Program
Development and Operation
Sec. 882.514 [Amended]
12. Section 882.514 is amended by:
a. Amending paragraph (a)(1) by adding, before the term ``750'' in
the parenthetical phrase, the term ``5, ``, and by removing the last
sentence, and
b. Amending the introductory text of paragraph (b) by removing the
term ``Sec. 882.517(c)(2)'' from the fourth sentence, and adding in its
place the phrase ``24 CFR part 5''.
Secs. 882.517, 882.518, 882.519, 882.520, and 882.521 [Removed]
13. Sections 882.517, 882.518, 882.519, 882.520, and 882.521 are
removed.
[[Page 9047]]
PART 883--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--STATE
HOUSING AGENCIES
14. The authority citation for part 883 continues to read as
follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.
Subpart G--Management of New Construction and Substantial
Rehabilitation Projects
Sec. 883.704 [Amended]
15. Section 883.704 is amended by:
a. Amending the introductory text of paragraph (b) by removing the
phrase ``parts 750 and 760 of chapter VII'', and adding in its place
the phrase ``24 CFR parts 5, 750, and 760'', and by removing the phrase
``, including giving a Federal preference in accordance with
Sec. 883.714'' from the end of the paragraph;
b. Amending paragraph (b)(2) by removing the term
``Sec. 883.714(c)(2)'' from the third sentence, and adding in its place
the phrase ``24 CFR part 5''; and
c. Amending paragraph (b)(3) by removing the term ``883.714(k)''
from the third sentence, and adding in its place ``24 CFR 5.410''.
Sec. 883.704a [Amended]
15a. In Sec. 883.704a, paragraph (g) is amended by removing the
term ``Sec. 883.714'' in the two places it appears, and adding in its
places the term ``24 CFR part 5''.
Secs. 883.714, 883.715, 883.716, 883.717, and 883.718 [Removed]
16. Sections 883.714, 883.715, 883.716, 883.717, and 883.718 are
removed.
PART 884--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM, NEW
CONSTRUCTION SET-ASIDE FOR SECTION 515 RURAL RENTAL HOUSING
PROJECTS
17. The authority citation for part 884 continues to read as
follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.
17a. The table of contents for part 884 is amended to add the
reference to ``Sec. 884.223a Preference for occupancy by elderly
families.''
Subpart B--Project Development and Operation
Sec. 884.214 [Amended]
18. Section 884.214 is amended as follows:
a. Paragraph (b)(1) is amended by removing the term
``Sec. 884.226'' from the parenthetical phrase, and adding in its place
the phrase ``24 CFR part 5'';
b. Paragraph (b)(2) is amended by removing the term
``Sec. 884.226(c)(2)'' from the second sentence, and adding in its
place the phrase ``24 CFR part 5''; and
c. Paragraph (b)(7) is revised, to read as follows:
Sec. 884.214 Marketing.
* * * * *
(b) * * *
(7) See 24 CFR part 5 for the informal review provisions for the
denial of a Federal selection preference.
* * * * *
Sec. 884.223a [Amended]
19. In Sec. 884.223a, paragraph (g) is amended by removing the term
``Sec. 884.226'' in the two places where it appears, and by adding in
those places the phrase ``24 CFR part 5''.
Secs. 884.226, 884.227, 884.228, 884.229, and 884.230 [Removed]
20. Sections 884.226, 884.227, 884.228, 884.229, and 884.230 are
removed.
PART 885--LOANS FOR HOUSING FOR THE ELDERLY OR HANDICAPPED
21. The authority citation for part 885 continues to read as
follows:
Authority: 12 U.S.C. 1701q; 42 U.S.C. 1437f and 3535(d).
Subpart B--Section 202 Projects for the Elderly or Handicapped--
Section 8 Assistance
Sec. 885.427 [Amended]
22. Section 885.427 is amended by removing the term
``Secs. 880.613-880.617 of this chapter'' and adding in its place the
phrase ``24 CFR part 5, subpart D''.
PART 886--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--SPECIAL
ALLOCATIONS
23. The authority citation for part 886 continues to read as
follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.
Subpart A--Additional Assistance Program for Projects With HUD-
Insured and HUD-Held Mortgages
Sec. 886.119 [Amended]
24. In Sec. 886.119, paragraph (a)(3) is amended by removing the
term ``Sec. 886.132'' and adding in its place the phrase ``24 CFR part
5''.
25. Section 886.132 is revised to read as follows:
Sec. 886.132 Selection preferences.
Sections 5.410 through 5.430 of this title govern the use of
preferences in the selection of tenants under this subpart A.
Secs. 886.133, 886.134, 886.135, and 886.136 [Removed]
26. Sections 886.133, 886.134, 886.135, and 886.136 are removed.
Subpart C--Section 8 Housing Assistance Program for the Disposition
of HUD-Owned Projects
Sec. 886.337 [Amended]
27. Section 886.337 is amended by removing the phrase ``Sections
886.132 through 886.136'' and by adding the phrase ``Sections 5.410
through 5.430''.
PART 889--SUPPORTIVE HOUSING FOR THE ELDERLY
28. The authority citation for part 889 is revised to read as
follows:
Authority: 12 U.S.C. 1701q; 42 U.S.C. 3535(d).
Subpart F--Project Management
29. In Sec. 889.610, paragraph (a) is revised to read as follows:
Sec. 889.610 Selection and admission of tenants.
(a) Written procedures. The owner shall adopt written tenant
selection procedures that ensure nondiscrimination in the selection of
tenants and that are consistent with the purpose of improving housing
opportunities for very low-income elderly persons; that are reasonably
related to program eligibility and an applicant's ability to perform
the obligations of the lease; and that conform to the requirements on
preferences contained in 24 CFR part 5. Owners shall promptly inform in
writing any rejected applicant of the grounds for any rejection.
Additionally, owners shall maintain a written, chronological waiting
list showing the name, race, gender, ethnicity and date of each person
applying for the program.
* * * * *
Secs. 889.611, 889.612, 889.613, 889.614, and 889.615 [Removed]
30. Sections 889.611, 889.612, 889.613, 889.614, and 889.615 are
removed.
PART 904--LOW RENT HOUSING HOMEOWNERSHIP OPPORTUNITIES
31. The authority citation for part 904 continues to read as
follows:
Authority: 42 U.S.C. 1437-1437ee and 3535(d).
[[Page 9048]]
Subpart B--Turnkey III Program Description
Sec. 904.122 [Amended]
32. Section 904.122 is amended by removing the phrase
``Secs. 960.211 through 960.215'' and adding in its place the phrase
``24 CFR 5.410 through 5.430''.
PART 960--ADMISSION TO, AND OCCUPANCY OF, PUBLIC HOUSING
33. The authority citation for part 960 continues to read as
follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437d, 1437n, and 3535(d).
Subpart B--Admission, Rent and Reexamination
Sec. 960.203 [Removed and reserved]
34. Section 960.203 is removed and reserved.
Sec. 960.204 [Amended]
35. In Sec. 960.204, paragraph (a) is amended by adding after the
word ``chapter'', the phrase ``and 24 CFR part 5''; and by removing
paragraph (d).
Sec. 960.205 [Amended]
36. In Sec. 960.205, paragraph (c) is amended by removing the two
parenthetical phrases that read ``(see Sec. 960.211)'' and ``(But see
Sec. 960.211(d)''.
Sec. 960.206 [Amended]
37. In Sec. 960.206, paragraph (a) is amended by removing the
reference to ``Sec. 960.211'' and by adding in its place the phrase
``24 CFR part 5''.
Sec. 960.207 [Amended]
38. In Sec. 960.207, paragraph (a) is amended by removing the
phrase ``(see Sec. 960.211)''.
Secs. 960.211, 960.212, 960.213, 960,214, and 960.215 [Removed]
39. Sections 960.211, 960.212, 960.213, 960,214, and 960.215 are
removed.
PART 982--SECTION 8 TENANT-BASED ASSISTANCE: UNIFIED RULE FOR
TENANT-BASED ASSISTANCE UNDER THE SECTION 8 RENTAL CERTIFICATE
PROGRAM AND THE SECTION 8 RENTAL VOUCHER PROGRAM
40. The authority citation for part 982 continues to read as
follows:
Authority: 42 U.S.C. 1437f and 3535(d).
Subpart A--General Information
Sec. 982.3 [Amended]
41. Section 982.3 is amended by removing the definitions of
``Federal preference,'' Federal preference holder,'' ``Local
preference,'' ``Local preference limit,'' ``Ranking preference,''
``Residency preference,'' and ``Residency preference area.''
Subpart E--Admission to Tenant-Based Program
Sec. 982.202 [Amended]
42. Section 982.202 is amended by:
a. Redesignating paragraph (b)(4)(i) as paragraph (b)(4);
b. Redesignating paragraphs (b)(4)(i)(A), (b)(4)(i)(B),
(b)(4)(i)(C), (b)(4)(i)(D), and (b)(4)(i)(E), as paragraphs (b)(4)(i),
(b)(4)(ii), (b)(4)(iii), (b)(4)(iv), and (b)(4)(v), respectively; and
c. Removing paragraph (b)(4)(ii).
43. Section 982.207 is revised to read as follows:
Sec. 982.207 Waiting list: Use of preferences.
(a) The HA must use the following to select among applicants on the
waiting list with the same preference status:
(1) Date and time of application; or
(2) A drawing or other random choice technique.
(b)(1) The method for selecting applicants from preference
categories must be consistent with requirements governing federal
preference and the singles preference, as described in 24 CFR part 5.
(2) In its system for applying the preferences described in 24 CFR
part 5, the following provisions apply:
(i) The HA may limit the number of applicants that may qualify for
any ranking preference or local preference.
(ii) The local preference limit only applies to admission of an
applicant from the HA waiting list. A special admission is not counted
against the local preference limit.
(iii) The local preference limit does not apply when an applicant
is received in an HA program under portability procedures. The
admission of a portability family by a receiving HA does not count
against the receiving HA local preference limit. The admission of such
a family (not qualified for federal preference) counts against the
local preference limit of the initial HA.
(c) The method for selecting applicants from preference categories
must leave a clear audit trail that can be used to verify that each
applicant has been selected in accordance with the method specified in
the administrative plan.
Secs. 982.208, 982.209, 982.210, 982.211, 982.212, and
982.213 [Removed]
44. Sections 982.208, 982.209, 982.210, 982.211, 982.212, and
982.213 are removed.
PART 983--SECTION 8 PROJECT-BASED CERTIFICATE PROGRAM
45. The authority citation for part 983 continues to read as
follows:
Authority: 42 U.S.C. 1437f and 3535(d).
Subpart E--Management
Sec. 983.203 [Amended]
46. Section 983.203 is amended as follows:
a. Paragraph (a)(1) is amended by removing the phrase, ``except
(b)(1), and 982.208 through 982.213 of this chapter'', and adding in
its place the phrase, ``and 24 CFR 5.410 through 5.430''; and
b. Paragraph (a)(5) is removed, and paragraphs (a)(6) and (a)(7)
are redesignated as paragraphs (a)(5) and (a)(6), respectively.
Dated: February 22, 1996.
Henry G. Cisneros,
Secretary.
[FR Doc. 96-5024 Filed 3-5-96; 8:45 am]
BILLING CODE 4210-32-P
Complete official Federal Register PDF
FR Doc. 96-4838 Locomotive Visibility; Minimum Standards for Auxiliary Lights
[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Rules and Regulations]
[Pages 8881-8888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4838]
=======================================================================
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DEPARTMENT OF TRANSPORTATION
Federal Railroad Administration
49 CFR Part 229
[FRA Docket No. RSGC-2, Notice No. 10]
RIN 2130-AA80
Locomotive Visibility; Minimum Standards for Auxiliary Lights
AGENCY: Federal Railroad Administration (FRA), Department of
Transportation (DOT).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: FRA amends the locomotive safety standards to increase train
visibility. This action requires that certain locomotives be equipped
with auxiliary lights to enable motorists, railroad employees and
pedestrians to recognize approaching trains at a greater distance. The
rule requires that locomotives operated over public highway-rail
crossings at greater speeds than 20 miles per hour be equipped with
auxiliary lights.
EFFECTIVE DATE: May 6, 1996.
ADDRESSES: Petitions for reconsideration should be submitted in
triplicate to the Docket Clerk, Office of Chief Counsel, Federal
Railroad Administration, 400 Seventh Street, S.W., Room 8201,
Washington, D.C. 20590.
FOR FURTHER INFORMATION CONTACT: Gordon Davids, Bridge Engineer, Office
of Safety, FRA, 400 Seventh Street, S.W., Washington, D.C. 20590
(telephone: 202-366-0507); Grady Cothen, Jr., Deputy Associate
Administrator for Safety Standards, FRA, 400 Seventh Street, S.W.,
Washington, D.C. 20590 (telephone: 202-366-0897); or Kyle M. Mulhall,
Trial Attorney, Office of Chief Counsel, FRA, 400 Seventh Street, S.W.,
Washington, D.C. 20590 (telephone: 202-366-0635).
SUPPLEMENTARY INFORMATION: On August 28, 1995, FRA published a notice
of proposed rulemaking (NPRM) that would change headlight regulations
for locomotives by requiring two auxiliary lights that would be placed
on the front of the locomotive to form a triangle with the headlight.
60 FR 44457. Publication of this final rule was required by section 14
of the Amtrak Authorization and Development Act (Pub. L. 102-533). This
legislation added a new subsection (u) to Sec. 202 of the Federal
Railroad Safety Act of 1970 (FRSA) [45 U.S.C. 431(u)], to address
locomotive visibility. On July 5, 1994, Sec. 202(u) of the FRSA,
together with all the other general and permanent Federal railroad
safety laws, was simultaneously repealed, revised and reenacted without
substantive change, and recodified as positive law at 49 U.S.C. 20143.
As recodified, the section now reads as follows:
Locomotive Visibility
(a) Definition.--In this section, ``locomotive visibility'' means
the enhancement of day and night visibility of the front end locomotive
of a train, considering in particular the visibility and perspective of
a driver of a motor vehicle at a grade crossing.
(b) Interim Regulations.--Not later than December 31, 1992, the
Secretary of Transportation shall prescribe temporary regulations
identifying ditch, crossing, strobe, and oscillating lights as
temporary locomotive visibility measures and authorizing and
encouraging the installation and use of those lights. Subchapter II of
chapter 5 of title 5 does not apply to a temporary regulation or to an
amendment to a temporary regulation.
(c) Review of Regulations.--The Secretary shall review the
Secretary's regulations on locomotive visibility. Not later than
December 31, 1993, the Secretary shall complete the current research of
the Department of Transportation on locomotive visibility. In
conducting the review, the Secretary shall collect relevant information
from operational experience by rail carriers using enhanced visibility
measures.
(d) Regulatory Proceeding.--Not later than June 30, 1994, the
Secretary shall begin a regulatory proceeding to prescribe final
regulations requiring substantially enhanced locomotive visibility
measures. In the proceeding, the Secretary shall consider at least--
(1) Revisions to the existing locomotive headlight standards,
including standards for placement and intensity;
(2) Requiring the use of reflective material to enhance locomotive
visibility;
(3) Requiring the use of additional alerting lights, including
ditch, crossing, strobe, and oscillating lights;
(4) Requiring the use of auxiliary lights to enhance locomotive
visibility when viewed from the side;
(5) The effect of an enhanced visibility measure on the vision,
health, and safety of train crew members; and
(6) Separate standards for self-propelled, push-pull, and multiple
unit passenger operations without a dedicated head end locomotive.
(e) Final Regulations.--(1) Not later than June 30, 1995, the
Secretary shall prescribe final regulations requiring enhanced
locomotive visibility measures. The Secretary shall require that not
later than December 31, 1997,
[[Page 8882]]
a locomotive not excluded from the regulations be equipped with
temporary visibility measures under subsection (b) of this section or
the visibility measures the final regulations require.
(2) In prescribing regulations under paragraph (1) of this
subsection, the Secretary may exclude a category of trains or rail
operations from a specific visibility requirement if the Secretary
decides the exclusion is in the public interest and is consistent with
rail safety, including grade-crossing safety.
(3) A locomotive equipped with temporary visibility measures
prescribed under subsection (b) of this section when final regulations
are prescribed under paragraph (1) of this subsection is deemed to be
complying with the final regulations for 4 years after the final
regulations are prescribed.
After publication of the NPRM, FRA held a public hearing at the
request of the Association of American Railroads (AAR) and The American
Short Line Railroad Association (ASLRA). This hearing was held in
Washington, on November 28, 1995. FRA also extended the comment period
on the NPRM. FRA now responds to the comments concerning this
rulemaking.
FRA Study of Auxiliary Lights
FRA's Office of Research and Development, through the Volpe
National Transportation Systems Center (VNTSC), has studied the impact
of auxiliary lights as alerting devices to improve locomotive
visibility. A copy of the final report was placed in the docket of this
rulemaking.
As part of this study, FRA initially evaluated various lighting
systems, paint schemes, and reflective materials. Four of the alerting
light systems were selected for further study: standard locomotive
headlights and crossing, ditch, and strobe lights. FRA evaluated the
lights for compliance with FRA's interim advisory standards and for
cost and reliability and conducted field tests on their ability to
increase an approaching train's visibility.
The results were that the addition of auxiliary lights
significantly increased train visibility compared to the use of
standard headlights alone. Results indicated a 10 to 20 percent
increase in the distance an approaching train can be recognized. Tests
also indicated that motorists are better able to predict the time it
takes for an approaching train to enter a crossing. Limited data
collected from three railroads participating in the study suggested
that accident rates drop significantly when auxiliary lights are used.
The AAR dismisses FRA's findings on two grounds; one, that the
field tests did not adequately reproduce real conditions at highway-
rail grade crossings; and, two, that FRA failed to separate locomotives
that were and were not equipped with auxiliary lights when it
determined there was a drop in the accident rate after auxiliary lights
were installed on some locomotives.
FRA replies that the field tests were not intended to simulate real
conditions at highway-rail grade crossings. They were intended to
compare the responses of a selected group of subjects to the approach
of trains with several configurations of auxiliary lights, and a
control sample with no auxiliary lights. Real conditions at highway-
rail grade crossings involve so many variables that testing for all
possible conditions would not have been possible within the time and
resources available for this project. The tests were successful in
measuring the subjects'' response to the carefully selected parameters.
The in-service accident data was requested from the participating
railroads by VNTSC after the periods for which the data had been
accumulated. FRA used data that was available at the time, and the data
had not been collected with this rulemaking in mind. Therefore, the
data was not available for an ideal detailed statistical analysis.
However, the trend favoring the accident-reduction potential of
auxiliary lights was obvious throughout the analysis that was performed
and reported by VNTSC.
Section Analysis
1. Three-Light Triangle: Sec. 229.125(d)
It continues to be FRA's belief that a uniform light configuration
on locomotives will help the public become familiar with and quickly
recognize the appearance of an approaching locomotive. A configuration
of three front-mounted lights is the most common system adopted by the
railroad industry since the issuance of the first interim rule in 1993.
Those three lights form a triangle with one major dimension (base or
vertical axis) of at least 60 inches.
In its post-hearing comments, AAR objects to the standard measures
used for placing auxiliary lights. AAR argues that 236 Canadian
National locomotives, which operate over the United States border with
Canada, would have to be refitted to come into compliance since their
auxiliary lights are not arranged as required by this rule. As an AAR
spokesman at the public hearing states, however, ``[w]e could
understand FRA is looking toward standardization of some type over
time, and we support that.''
FRA is indeed concerned with giving a consistent warning so
motorists are not confused. In addition, the Canadian National filed
comments with FRA addressing the NPRM and did not raise this objection.
FRA did, however, consider AAR's latest comment.
The normal human eye can discern two objects as separate when the
objects are spaced to form a visual angle of approximately one-half of
one degree. When the lights are seen as separate, the observer can
better estimate the speed of an approaching train because as the
locomotive moves closer the lights will appear to move further apart.
It is the goal of this rule to give a uniform warning. If the lights
are arranged in a standard position, then motorists at grade crossings
will become accustomed to judging the train's rate of approach. If the
distance between the lights vary, from locomotive to locomotive, then
the motorists will not be receiving a consistent warning. The Canadian
National locomotives have a maximum axis of as little as 44.5 inches.
The smaller axis reduces the distance at which the lights can be
discerned as separate, and would give a false visual indication of a
greater than actual distance from the train.
It is also unclear under what circumstances these Canadian National
locomotives will operate in this country, or if all of these
locomotives are intended to be used in the United States. Given the
fact that all carriers have been aware of the proposed dimensions for
several years, it is difficult to understand why locomotives in use in
this country would have been fitted with auxiliary lights which were
not in compliance with the interim standards or the NPRM.
Given the prevalence and practicality of the three-light triangle
system, the desire for a uniform appearance of an approaching
locomotive, and the physical advantages of this system, FRA believes it
to be the best lighting system to accomplish the purpose of this rule.
The dimensions for the three-light triangle are the same as those
specified in the interim rule as revised on May 13, 1994. Those
dimensions were prescribed as the result of comments made on the first
interim rule of February 3, 1993. They are functionally the same, but
the second interim rule permitted more flexibility in light placement
on locomotives to accommodate various locomotive configurations and
placement of other vital appliances. FRA will, however, permit the
light arrangement on the Canadian National locomotives to be
grandfathered. Any locomotive equipped before May 30, 1994, with a
[[Page 8883]]
three-auxiliary-light arrangement with one axis at least 44 inches,
will be considered in compliance with this rule until such time as the
locomotive is rebuilt or retired. This liberalization of the
grandfathering provision will validate early investment in visibility
measures that increase safety.
The 36-inch minimum vertical axis requirement aids the observer's
sight distance. The maximum vertical curve recommended by the American
Railway Engineering Association for main track has a rate of change of
grade of 0.2 percent per 100 feet. On this vertical curve, a light
three feet above the track will be visible to an observer at a distance
of 1,095 feet, provided the observer's eyes are three feet above the
track. A reduction in height of one foot, of either the observer or the
light, reduces the sight distance by approximately 100 feet.
One comment to the first interim rule requested a lower height
above the rail for lights on cab control cars in suburban passenger
service. FRA believes that an inflexible requirement to place lights on
cab control cars or other multiple unit locomotives as defined in this
regulation at a height of 36 inches might lead to a reduction in the
integrity of the car body structure at this critical location. Such
reduced structural integrity could increase the risk of injury to the
occupants of the equipment in the event of an accident. The final rule
would therefore permit auxiliary lights to be mounted at heights down
to 24 inches above the rail on equipment that would not readily
accommodate a higher placement.
However, the lower, 24-inch minimum height for multiple unit
locomotives and cab control cars is not suitable for general railroad
service, owing to the reduced visibility on vertical curves, and
susceptibility to damage from snow and foreign material away from
commuter lines. FRA therefore retains the minimum height of 36 inches
for auxiliary lights for all other applications.
Horizontal orientation of the auxiliary lights should also be
reasonably uniform in order to ensure recognition. FRA has selected the
``crossing light'' configuration (focused within plus or minus 15
degrees of a line parallel to the centerline of the locomotive) in lieu
of the extreme ``ditch light'' configuration as described in the
grandfathering rule (turned outward up to 45 degrees). In the extreme
ditch light configuration, there appears to be a risk that the
auxiliary lights might affect the night vision of motorists on parallel
roadways. Several parties commented that this was a legitimate fear,
although no direct evidence was presented.
FRA had also requested comment as to whether a dimmer feature
should be required for auxiliary lights similar to the dimmer used on
headlights. The comments received on this point indicated that the
dimmer feature would be unnecessary. FRA can identify no compelling
safety need for a dimmer on auxiliary lights. The one argument made for
dimmers was that the device might prevent blinding motorists. As noted
above, FRA believes that aligning the lights as required in the final
rule should reduce this possibility. Several parties also argued that
requiring dimmers would significantly increase installation cost per
locomotive.
The interim rule and the proposed rule provided a minimum intensity
requirement of 200,000 candela for each auxiliary light. The criterion
assumes steady-state operation. Field observations suggest that current
alerting light pulsing systems provide more than adequate effective
candela; however, research conducted to date evaluated only strobe
lights for effective intensity in a pulsing or flashing mode. No
comments were received suggesting a separate effective intensity
requirement be stated in the final rule for systems that operate
pulsing. At this time, FRA can identify no compelling safety reason to
set a different candela intensity for pulsing auxiliary lights.
FRA's final rule permits the use of either the steady-state or
pulsing auxiliary lights, drawing permissible features from both the
``ditch lights'' and ``crossing lights'' as described in the interim
requirements.
It should be noted that nomenclature for auxiliary lights is not
standard. For example, most non-pulsing installations referred to by
railroads as ``ditch lights'' have, in practice, been aligned within 15
degrees of centerline and would therefore meet FRA's requirements for
permanent auxiliary lights. This rule does not elect a single option
from among the configurations that railroads continue to evaluate.
Rather, it proposes a minimum standardization of placement and
alignment of the two auxiliary lights that, with the locomotive
headlight, form the distinct triangle.
Speed Limits
Much comment has been received concerning FRA's low speed exclusion
from the auxiliary lights requirement. FRA proposed this exception for
two reasons; one, accidents at lower speeds are significantly less
likely to cause injuries or fatalities (for example, on an annual
average, 92 percent of accident fatalities occur at speeds greater than
20 miles per hour); and two, FRA believed the cost of equipping these
locomotives, which are, on average, nearer the end of their useful
life, would not produce the justifying benefits, given the shorter time
for recovering the costs of upgrading.
FRA originally considered requiring the use of auxiliary lights
only during the 20 seconds before a locomotive entered a public
highway-rail grade crossing. It was quickly concluded, however, that it
would be too difficult for a train operator to tell whether or not he
was 20 seconds approach time from the crossing. FRA concluded,
therefore, that the interest of safety would be best served if all
locomotives required by this rule to be equipped with auxiliary lights
were required to use those lights whenever the locomotive is moving.
Only locomotives which never exceeded 20 miles per hour would be
allowed to operate without ever using auxiliary lights.
AAR, ASLRA, and parties representing tourist railroads requested an
increase in this speed limit. These parties asked that FRA raise the
speed exclusion to 30 miles per hour. FRA has considered this option
and also the option of raising the limit to 25 miles per hour. After
much consideration, FRA has concluded that the projected reduction in
accidents that would occur at speeds greater than 20 miles per hour if
locomotives at those speeds were equipped with auxiliary lights
significantly outweighs any cost savings from not having to equip the
affected class of locomotives.
FRA also believes that having large numbers of unequipped
locomotives would confuse the public. Many unequipped locomotives would
be able to operate on freight main lines if the speed were
significantly raised. Motorists crossing such lines will likely expect
to see the light triangle. This might be particularly true in rural
areas where many crossings are only passively signed. FRA's analysis of
costs and benefits, discussed further below, confirmed the positive
contribution that auxiliary lights can make to grade crossing safety,
even at speeds only slightly above 20 miles per hour. FRA therefore
will retain the 20 miles per hour speed exclusion.
FRA is required to issue a rule that would require that by December
31, 1997, locomotives be equipped with a form of auxiliary lights. In
order to develop additional information that may later provide a basis
for distinguishing between steady-burning and alternately-pulsing
arrangements, AAR has indicated that they would conduct a
[[Page 8884]]
further study under which two or more major railroads would equip
portions of their fleets used in the same service with steady and
pulsing lights. In order to eliminate transient effects, the study
would follow the two matched fleets for a period of approximately three
years. The progress of this study will be tracked on an annual basis,
and at the conclusion of the study, FRA will review the data to
determine if a statistically significant difference can be discerned
between the effectiveness of steady and flashing lights. The results of
the study should provide a factual basis for determining whether
further refinement of the rule is appropriate and, if so, the degree of
urgency associated with any such change.
2. Flash Rates: Sec. 229.125(e)
Subsection (e) provides that auxiliary lights may be illumined
continuously or may be arranged to flash on approach to a highway-rail
grade crossing. If flashing lights are used, the rate must be not fewer
than 40 and not more than 180 per minute, as provided in the second
interim rule. FRA has received no negative comments regarding the range
of flash rates permitted for locomotive visibility lights in the second
interim rule or the NPRM. The rates are constrained by the need for
visibility but also the need to avoid a ``flicker vertigo'' effect on
train crew members.
FRA leaves control of flashing lights to the discretion of the
railroad. Depending on their operations, some railroads might consider
it advisable to interconnect the horn and lighting controls to provide
joint activation when approaching a crossing, but that question need
not be addressed in a regulation.
3. Operation of Auxiliary Lights: Sec. 229.125(f)
In subsection (f), FRA proposed to require operation of auxiliary
lights for a period of at least 20 seconds prior to arrival of the
locomotive at the crossing. FRA received comments, however, that
estimating the approach time to a crossing is too difficult an
assignment to be reliably carried out by the locomotive engineer. FRA
agrees that this is an unfair responsibility to place on the train
crew. The Final Rule, therefore, requires continuous use of auxiliary
lights. Railroads using locomotives with flashing lights shall include
in the railroad's operating rules standard procedures for use of this
model of auxiliary light.
FRA received several comments from railroads asking allowance for
not using auxiliary lights under certain circumstances for the safety
of motorists, or railroad employees working in the area, or for certain
weather conditions. FRA believes that any exception should be made only
in the best interest of safety to avoid grade crossing accidents where
there has been a railroad decision not to use the auxiliary lights.
Railroads may wish to extinguish auxiliary lights when the
headlight is dimmed under existing operating rules. Rule 5.9 of the
General Code of Operating Rules, for instance, requires that the
headlight be dimmed at stations and yards where switching is done, when
the engine is stopped close behind another engine, when passing another
train, and under other specified circumstances.
FRA will allow railroads subject to this rule to except, for a
public safety purpose, auxiliary light use at any highway-rail grade
crossing so designated in the railroads'' operating rules, timetable,
or special order. These exceptions will be subject to disapproval by
FRA's Associate Administrator for Safety, or one of FRA's Regional
Administrators, after investigation and opportunity for response by the
railroad, for good cause stated.
FRA believes there will be little burden on the industry from this
requirement since it is currently standard practice for railroads to so
print such directions for use by train crews. Under existing railroad
rules, there are few exceptions, limited primarily to situations where
two trains are approaching each other and it is necessary to avoid
blinding their respective locomotive engineers.
4. Other Uses of Auxiliary Lights: Proposed Sec. 229.125(g)
FRA's proposed subsection (g) is deleted from the Final Rule.
Continuous use of auxiliary lights is now required for any lead
locomotive that is equipped with such lights.
5. Defective En Route: Sec. 229.125(g)
FRA's proposed subsection (h) is relettered, and its provisions are
now contained at subsection (g).
FRA received comments from several carrier representatives that
more flexibility was needed for making auxiliary light repairs. FRA's
proposed subsection regarding movement of defective locomotives
permitted a lead locomotive with one defective auxiliary light to
proceed to a point where repairs could be made. If both auxiliary
lights were out, Sec. 229.9 (movement of non-complying locomotives)
would apply, which would ordinarily require that the locomotive be
switched to a trailing position or be operated at less than 20 miles
per hour. It should be noted that the requirement for auxiliary lights
applies only to a lead locomotive.
FRA recognizes that light failures should be infrequent, and
accidents occurring during a period of failure even more rare. Although
each is important, the large number of safety items on a locomotive
presents a challenge with respect to appropriate use of an asset that
may be valued as high as two million dollars.
FRA's final rule requires that if either of the two auxiliary
lights on a lead locomotive is inoperative at an initial terminal, then
each inoperative auxiliary light must be fully repaired prior to the
train's departure. At any other time, a lead locomotive may continue
with one auxiliary light out to the place where the next calendar day
inspection is conducted. An en route failure of both lights would
require repair at the next location in the direction of movement where
repairs of the kind can be made. This movement must be consistent with
Sec. 229.9.
6. Exception for Historic Equipment: Sec. 229.125(h)
FRA also received comments on its proposed rule from parties
concerned with historic locomotive models that are not steam driven.
FRA agrees that requiring these rare locomotives to be equipped with
auxiliary lights is unnecessary and would compromise their historic
appearance. These locomotives, including inter-urban electric cars,
operate at low speeds on limited operations, and generally during
daylight hours. Fitting these historic locomotives with auxiliary
lights can entail the upgrading of the entire electrical system. This
expense seems unnecessary. FRA has been informed that these locomotives
were no longer built after the end of 1948. FRA will therefore allow an
exception for historic locomotives built before December 31, 1948. This
exception does not apply to any locomotive used in regular commuter or
inter-city passenger service. This exception does apply to locomotives
operated by historic or tourist railroads.
In 1992, FRA reviewed its policy regarding tourist, scenic and
excursion railroads that transport passengers on lines separate from
the general railroad system of transportation. While in the past FRA
has usually limited its exercise of jurisdiction over passenger
operations to those on the general system, FRA determined that public
safety required a uniform floor of regulation for this growing segment
of the railroad marketplace. Only those
[[Page 8885]]
railroads deemed ``insular'' were excluded from this exercise of
jurisdiction; however, several existing sets of regulations, including
Part 229, do not apply to passenger railroads that are not part of the
general rail system. Since a major criterion of non-insular status is
the presence of a public highway-rail grade crossing, the issue is
presented in this proceeding whether these non-general system railroads
should be required to equip their locomotives with auxiliary alerting
lights.
FRA has determined that any passenger railroad that is not part of
the general railroad system of transportation should not be required to
comply with this rule. The small number of locomotives, if any, that
would fit in this category present little safety risk at grade
crossings. These trains tend to operate at lower speeds, carry fewer
passengers over grade crossings, and are used predominately during
daytime when visibility is better. This locomotive visibility rule
already excludes locomotives operated at 20 miles per hour or less.
This exclusion renders the rule inapplicable to many non-steam
locomotives owned and operated by passenger railroads off the general
system.
7. Grandfathering: Sec. 229.133
The interim provisions on auxiliary lights are contained in 49 CFR
229.133. Subsection (c), which makes use of auxiliary lights elective
during the period prior to December 31, 1997, would be repealed on that
date.
The interim provisions identify four alerting light arrangements
that FRA believed would increase locomotive visibility. First, ditch
lights, which are composed of two white lights focused within 45
degrees of the longitudinal centerline of the locomotive. Second,
strobe lights, which are two white stroboscopic lights that flash at a
rate between one pulse every 1.0 to 1.3 seconds. Third, crossing
lights, which are two white standard lights that flash at the same rate
as the strobes and are focused within 15 degrees of the longitudinal
centerline of the locomotive. And the final alerting lights system, an
oscillating light, which is composed of one or more white lights that
cast a moving beam in circular or elliptical shapes in front of the
locomotive. These alerting light systems will be ``grandfathered'' and
considered in temporary compliance with any final rule.
By law, ``grandfathered'' auxiliary lights installed before the
final rule is issued may continue in use for four years from the date
the final rule is issued.
During the comment period on the NPRM, FRA was asked to extend the
grandfathering period beyond the minimum set by the statute. This
request was referred to as ``supergrandfathering.'' These comments
concerned oscillating and strobe lights.
FRA did consider the use of oscillating lights and strobe lights
for inclusion in the NPRM and final rule in Sec. 229.125(d). Both light
systems offer significant advantages but have unique drawbacks. An
oscillating light can provide a startling effect when the light rapidly
reflects off nearby objects, fog, or snow. However, in general,
oscillating lights are costly and difficult to maintain. Oscillating
lights have often been used individually, a configuration inconsistent
with the triangular signature common in European railroad operators.
Desirable effects can also be achieved with pulsating strobe
lights, particularly those lights operated in pairs. However, extensive
use of strobe and oscillating-type lights on emergency vehicles has
reduced their usefulness as a distinct warning of an approaching train.
Further, strobe lights can tend to wash out against a light background
and may not compete well for attention in a nighttime environment with
a variety of light sources.
Research in support of this proceeding indicates that crossing
lights and ditch lights--the auxiliary lights most widely used by U.S.
railroads--also appear to perform well under both experimental
conditions and in revenue service. Experimental field tests compared
the performance of a lone headlight with combinations of a headlight
and each of the following:
(i) pulsing ``crossing lights'' that were aligned straight down the
railroad,
(ii) steady burning ``ditch lights'' that were outwardly aligned at
15 degrees, and
(iii) dual strobe lights mounted on the top of the locomotive.
All three types of auxiliary lights outperformed the lone headlight
by significantly increasing the distance a train can be detected and
improving an observer's ability to estimate a train's arrival time at
the crossing. For detection distance, the crossing light performed
best, followed by the ditch and strobe lights. With respect to
estimation of time of arrival, the crossing lights were judged to
result in the smallest estimation errors for actual arrival time
intervals between 7 and 22 seconds. However, the ditch lights clearly
aided estimation of arrival, as well.1
\1\ In the field tests, observers wore headphones to mask noise
from the oncoming locomotive. FRA has conducted separate analyses
that indicate locomotive horns provide a very powerful (though not
always sufficient) warning to motorists that the train is present
and its arrival at the crossing is imminent. FRA recognizes that
some overlap may exist between the two warning systems; however, to
the extent this overlap may be beneficial in modifying risky
behavior, its potential should be exploited. The actual service
experience tends to confirm the possibility that such an effect may
exist.
---------------------------------------------------------------------------
The Volpe Center gathered limited data from Norfolk Southern,
Conrail, and CalTrans (California) comparing accident experience of
locomotives equipped with crossing lights to locomotives equipped with
a headlight alone. These data suggest that the use of crossing lights
may result in a greater than 50- percent reduction in accident rates.
Although these trials lasted from only nine to twenty-four months, and
some of the accident reduction may have resulted from a ``novelty
effect'' (an initial impact that wanes as risk-taking motorists become
accustomed to the new lights), there is no reason to believe that there
will not be substantial and continuing benefits from use of auxiliary
lights.
All of the service applications examined by the Volpe Center
involved pulsing auxiliary lights, and the experimental field tests
potentially relevant to this issue involved a confounding variable
(angle of alignment). Accordingly, no empirically-based comparisons can
be made at this time between lights that pulse (alternately flash) on
approach to a crossing and those that burn steadily.
FRA agrees with those parties who argued that evidence that
crossing lights are superior is not, however, extensive. FRA also
recognizes that it has been the agency's policy to encourage early
installation of auxiliary lights. Many carriers made just such good
faith investments in safety. FRA therefore will permit
``supergrandfathering'' for certain light arrangements. The final rule
will consider oscillating lights, installed in newly-acquired equipment
ordered prior to January 1, 1996, as permanently grandfathered. Use of
these lights is concentrated in low speed and commuter operations over
territories where an oscillating pattern should provide significant
benefits. Strobe lights will be permitted on a locomotive until the
locomotive is retired or rebuilt. Strobe lights will be permanently
grandfathered on any locomotive that is limited to operating at speeds
no greater than 40 miles per hour. FRA believes this approach best
validates early
[[Page 8886]]
investment in safety, while encouraging uniform light configurations.
FRA notes that application of strobe or oscillating lights, as
attention-getting supplements to the triangular pattern of auxiliary
lights made standard by this rule, can have further beneficial effects
on safety. Nothing in this final rule should be construed to discourage
use of such systems as supplements to the triangle pattern, either
through retention of existing lights or new installations.
Related Issues
Reflective Materials
The enabling legislation requires that the Secretary consider the
use of reflective materials to enhance locomotive visibility. Research
has shown that the frontal visibility of a locomotive displaying a
headlight is not affected by reflective material or distinctive colors.
The headlight is visible at a far greater distance than any light
reflected from the front of the locomotive.
Analysis of the 4,240 highway-rail grade crossing accidents
reported to FRA in 1993 shows that the lead locomotive of a train
struck the motor vehicle in 3,171 of the accidents. The motor vehicle
struck the lead locomotive in 664 accidents. In the remaining 405
accidents, the motor vehicle struck the train at a point behind the
lead locomotive.
This information suggests that enhancing the visibility of the
front of the train could affect up to 90 percent of crossing accidents.
The effect of increasing the visibility of the side of the train does
not have as clearly defined a potential to reduce accidents.
Nevertheless, FRA continues to conduct research, including analysis of
recently designed retro-reflective materials and evaluation of the
accident experience of car fleets equipped with retro-reflective
material. FRA is required by other legislation to consider the use of
retro- reflective materials on railroad cars as well as locomotives,
and will address the issue in a separate proceeding. See 49 U.S.C.
20148, Pub. L. 103-440, Sec. 212 (Nov. 2, 1994). As soon as sufficient
information becomes available to support a decision on whether to place
reflective material on cars and locomotives, FRA will act accordingly.
Applicability: Steam Locomotives
This rule amends Part 229 of title 49, Code of Federal Regulations,
which applies, in general, to railroads in the general system and only
to non-steam locomotives. FRA believes that, as a general rule, steam
locomotives are used with relatively less frequency or at lower speeds
than non-steam locomotives. Equipping steam locomotives with alerting
lights would cost more per locomotive because of the need to update
generators, and some steam operators have commented that the
modification would detract from the historic authenticity of this
antique equipment. FRA presently has insufficient specific information
indicating that safety would benefit from application of auxiliary
lights to steam locomotives.
Regulatory Impact
Executive Order 12866 and DOT Regulatory Policies and Procedures
This final rule has been evaluated in accordance with existing
policies and procedures and is considered ``nonsignificant'' under
Executive Order 12866. It is also considered to be not significant
under DOT policies and procedures. See 44 FR 11034.
Although the rule is ``nonsignificant,'' FRA nonetheless has
prepared a regulatory evaluation addressing the economic impact of the
rule. This regulatory evaluation has been placed in the docket and is
available for public inspection and copying during normal business
hours in Room 8201, Office of Chief Counsel, FRA, 400 Seventh Street,
S.W., Washington, D.C. 20590. Copies may also be obtained by submitting
a written request to the FRA Docket Clerk at the above address.
The evaluation found costs and benefits associated with this rule
calculated for a twenty-year period using the seven percent discount
rate required by federal regulatory evaluation guidelines.
This rule allows two distinct light system specifications--a
pulsing light system and a steady beam light system. Auxiliary light
requirements can be met by equipping locomotives with the lower cost
steady beam lights. However, realistically, some locomotives will have
steady beam lights installed and others will have pulsing lights
installed. Information available to FRA suggests that at least 8,327
locomotives are currently equipped with auxiliary lights complying with
the rule. About 52.84 percent of these locomotives have pulsing lights.
The remainder (47.16 percent) have steady beam lights. Small operators
involved mainly in shortline service may choose to equip their affected
locomotive fleet with the less expensive steady beam lights. Assuming
locomotives which operate at speeds below 30 m.p.h. are equipped with
steady beam lights and all others continue to be equipped in the
current proportions, we expect twenty-year costs to total about $83
million. This includes installation and maintenance costs which the
railroad industry would not incur in the absence of this rule.
Although specifications for pulsing and steady beam lights differ,
data is not available to establish that one light system is more
effective than the other. This analysis assumes both are equally
effective than the other. For total benefits of the auxiliary lights to
justify incurring $83 million in costs, use of the lights must prevent
an average of about nine accidents annually. FRA estimates that the use
of auxiliary lights will prevent at least 3,300 grade crossing
accidents (involving about 750 fatalities and 1,800 injuries) valued at
$1.3 billion over twenty years, or an average of about 165 accidents
annually. Analysis indicates this accident reduction will almost
certainly be achieved and probably will be substantially exceeded as a
result of using auxiliary lights. The benefit/cost ratio is 15.7:1.
Analysis of costs and benefits of locomotives operating at maximum
speeds between 21 and 25 m.p.h. indicates that for that particular
sector this rule has a benefit/cost ratio of no less than 1.3:1. The
return on investment represented by the ratio is relatively lower for
this sector. However, the increased safety still justifies incurring
the costs associated with applying the rule to this sector.
Costs and benefits associated with the in-service tests are not
quantified in this analysis. FRA recognizes that participating
railroads will incur data collection costs. However, given the
permissive nature of the industry in-service tests, we cannot determine
the level of participation or the magnitude of costs which the industry
will incur. Nevertheless, safety benefits resulting from application of
the knowledge gained should far outweigh costs incurred by the
participants. Including test costs would not change the final outcome
of this analysis.
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.)
requires a review of rules to assess their impact on small entities,
unless the Secretary certifies that a final rule will not have a
significant economic impact on a substantial number of small entities.
It is certified that this rule will not have a significant economic
impact on a substantial number of small entities under the provisions
of the Regulatory Flexibility Act.
Paperwork Reduction Act
This rule will require that railroads note any grade crossings
excluded from
[[Page 8887]]
auxiliary light use in the railroads'' operating rules, time tables, or
special orders. It is therefore necessary to estimate the public
reporting burden for purposes of the Paperwork Reduction Act of 1980,
44 U.S.C. 3501 et seq.
FRA is currently preparing this analysis. Once it is completed,
before the rule takes effect in December, 1997, the paperwork reduction
review will be placed in the docket.
FRA is anticipating a minimal paperwork impact from this rule given
the fact that railroad operating rules standardly contain the type of
operating instructions now required by FRA.
Environmental Impact
FRA has evaluated these regulations in accordance with its
procedures for ensuring full consideration of the environmental impact
of FRA actions, as required by the National Environmental Policy Act
(42 U.S.C. 4321 et seq.), other environmental statutes, Executive
Orders, and DOT Order 5610.1c. It has been determined that this rule
will not have any effect on the quality of the environment.
Federalism Implications
This rule will not have a substantial effect on the states, on the
relationship between the national government and the states, or on the
distribution of power and responsibilities among the various levels of
government. Therefore, in accordance with Executive Order 12612, a
Federalism Assessment is not necessary.
Under 49 U.S.C. 20106 (superseding at 45 U.S.C. 434), issuance of
this regulation preempts any State law, rule, regulation, order, or
standard covering the same subject matter, except for a provision
directed at a local safety hazard if that provision is consistent with
this rule and does not impose an undue burden on interstate commerce.
List of Subjects in 49 CFR Part 229
Railroad safety.
The Final Rule
In consideration of the foregoing, FRA amends Part 229, Title 49,
Code of Federal Regulations as follows:
1. The authority citation for Part 229 is revised to read as
follows:
Authority: 49 U.S.C. 20102-20103, 20110-20112, 20114, 20133,
20137, 20138, 20143, 20301-20303, 20306, 20701-20703, 21301- 21302,
21304, 21306, and 21311; 49 CFR 1.49 (c), (g) and (m).
2. Section 229.9 is amended by revising paragraph (a) introductory
text to read as follows:
Sec. 229.9 Movement of non-complying locomotives.
(a) Except as provided in paragraphs (b), (c) and Sec. 229.125(h),
a locomotive with one or more conditions not in compliance with this
part may be moved only as a lite locomotive or a dead locomotive after
the carrier has complied with the following:
* * * * *
3. Section 229.125 is amended by revising the section heading and
by adding (d), (e), (f), (g), and (h) to read as follows:
Sec. 229.125 Headlights and auxiliary lights.
* * * * *
(d) Effective December 31, 1997, each lead locomotive operated at a
speed greater than 20 miles per hour over one or more public highway-
rail crossings shall be equipped with operative auxiliary lights, in
addition to the headlight required by paragraph (a) or (b) of this
section. A locomotive equipped on March 6, 1996 with auxiliary lights
in conformance with Sec. 229.133 shall be deemed to conform to this
section until March 6, 2000. All locomotives in compliance with
Sec. 229.133(c) shall be deemed to conform to this section. Auxiliary
lights shall be composed as follows:
(1) Two white auxiliary lights shall be placed at the front of the
locomotive to form a triangle with the headlight.
(i) The auxiliary lights shall be at least 36 inches above the top
of the rail, except on MU locomotives and control cab locomotives where
such placement would compromise the integrity of the car body or be
otherwise impractical. Auxiliary lights on such MU locomotives and
control cab locomotives shall be at least 24 inches above the top of
the rail.
(ii) The auxiliary lights shall be spaced at least 36 inches apart
if the vertical distance from the headlight to the horizontal axis of
the auxiliary lights is 60 inches or more.
(iii) The auxiliary lights shall be spaced at least 60 inches apart
if the vertical distance from the headlight to the horizontal axis of
the auxiliary lights is less than 60 inches.
(2) Each auxiliary light shall produce at least 200,000 candela.
(3) The auxiliary lights shall be focused horizontally within 15
degrees of the longitudinal centerline of the locomotive.
(e) Auxiliary lights required by paragraph (d) of this section may
be arranged
(1) to burn steadily or
(2) flash on approach to a crossing.
If the auxiliary lights are arranged to flash;
(i) they shall flash alternately at a rate of at least 40 flashes
per minute and at most 180 flashes per minute,
(ii) the railroad's operating rules shall set a standard procedure
for use of flashing lights at public highway-rail grade crossings, and
(iii) the flashing feature may be activated automatically, but
shall be capable of manual activation and deactivation by the
locomotive engineer.
(f) Auxiliary lights required by paragraph (d) of this section
shall be continuously illuminated immediately prior to and during
movement of the locomotive, except as provided by railroad operating
rules, timetable or special instructions, unless such exception is
disapproved by FRA. A railroad may except use of auxiliary lights at a
specific public highway-rail grade crossing by designating that
exception in the railroad's operating rules, timetable, or a special
order. Any exception from use of auxiliary lights at a specific public
grade crossing can be disapproved for a stated cause by FRA's Associate
Administrator for Safety or any one of FRA's Regional Administrators,
after investigation by FRA and opportunity for response from the
railroad.
(g) Movement of locomotives with defective auxiliary lights.
(1) A lead locomotive with only one failed auxiliary light must be
repaired or switched to a trailing position before departure from the
place where an initial terminal inspection is required for that train.
(2) A locomotive with only one auxiliary light that has failed
after departure from an initial terminal, must be repaired not later
than the next calendar inspection required by Sec. 229.21.
(3) A lead locomotive with two failed auxiliary lights may only
proceed to the next place where repairs can be made. This movement must
be consistent with Sec. 229.9.
(h) Any locomotive subject to Part 229, that was built before
December 31, 1948, and that is not used regularly in commuter or
intercity passenger service, shall be considered historic equipment and
excepted from the requirements of paragraphs (d) through (h) of this
section.
4. Amend Sec. 229.133 by revising paragraph (c) to read as follows:
Sec. 229.133 Interim locomotive conspicuity measures--auxiliary
external lights.
* * * * *
(c)(1) Any lead locomotive equipped with oscillating lights as
described in paragraph (b)(4) that were ordered for installation on
that locomotive prior to
[[Page 8888]]
January 1, 1996, is considered in compliance with Sec. 229.125(d) (1)
through (3).
(2) Any lead locomotive equipped with strobe lights as described in
paragraph (b)(2) and operated at speeds no greater than 40 miles per
hour, is considered in compliance with Sec. 229.125(d) (1) through (3)
until the locomotive is retired or rebuilt, whichever comes first.
(3) Any lead locomotive equipped with two white auxiliary lights
spaced at least 44 inches apart on at least one axis which was equipped
with these auxiliary lights before May 30, 1994, will be considered in
compliance with Sec. 229.125(d) (1) through (3) until the locomotive is
retired or rebuilt, whichever comes first.
Appendix B [Amended]
5. Amend Appendix B to Part 229--Schedule of Civil Penalties--by
adding in numerical sequence by section number the following:
2,500
5,000
------------------------------------------------------------------------
Willful
Section Violation violation
------------------------------------------------------------------------
* * * * *
229.125:
(a) Headlights.................................. 2,500 5,000
(d) Auxiliary lights............................ 2,500 5,000
* * * * *
------------------------------------------------------------------------
Issued in Washington, DC, on February 28, 1996.
Jolene M. Molitoris,
Federal Railroad Administrator.
[FR Doc. 96-4838 Filed 3-5-96; 8:45 am]
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