issue-1994-01-10•Federal Register proposed rules — 1994-01-10
Federal Register proposed rules — 1994-01-10
issue-1994-01-10Federal Register proposed rules — 1994-01-10Proposed Regulation
Published Federal Register documents, not public-inspection drafts. The GPO XML/text rendition is a research aid; the linked complete official PDF retains the printed layout and all graphics. Graphics are retained in that PDF and are not independently reproduced in this text rendition. Publication does not establish that every provision remains legally in force.
FR Doc. 94-544 Regulatory Review
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Page 1362]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-544]
[[Page Unknown]]
[Federal Register: January 10, 1994]
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Chapter I
[Docket No. 27581, Notice No. 94-1]
Regulatory Review
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Request for comments.
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SUMMARY: This notice requests that the public identify regulations that
it believes should be amended or eliminated to reduce undue regulatory
burdens, if any, consistent with the FAA's statutory safety, security,
and other public interest responsibilities. This notice asks each
commenter to identify, in order of priority, those regulations that are
believed to be unwarranted or inappropriate. In order to focus agency
consideration, each commenter is asked to concentrate on no more than
three regulations he or she believes to be of primary concern. The
agency asks further that each commenter provide a brief explanation of:
(1) The bases for the three highest priority recommendations to amend
or eliminate the regulations; (2) the ways in which each regulation's
objective is otherwise fulfilled (e.g., by duplicative regulations or
by technological advances that render the regulations obsolete); and
(3) where appropriate, a suggested substitute or amended version of the
regulations identified. This information will help the FAA to respond
to the Administration's direction to design regulations in the most
effective manner to achieve their regulatory objective.
DATES: Comments should be submitted on or before March 11, 1994.
ADDRESSES: Comments should be mailed, in triplicate, to: Federal
Aviation Administration, Office of Chief Counsel, Attention: Rules
Docket (AGC-200), Docket No. 27581, 800 Independence Avenue, SW.,
Washington, DC 20591.
Comments delivered must be marked Docket No. 27581. Comments may be
examined in room 915G weekdays between 8:30 a.m. and 5 p.m., except on
Federal holidays.
FOR FURTHER INFORMATION CONTACT:
Chris Christie, Director, Office of Rulemaking, Federal Aviation
Administration, 800 Independence Avenue, SW., Washington, DC 20591;
telephone (202) 267-9677.
SUPPLEMENTARY INFORMATION: With this Notice, the FAA is undertaking an
evaluation aimed at eliminating or amending existing rules and
regulations that may not be necessary to achieve the agency's safety,
security, and other public interest responsibilities. This effort
initiates a response to the recommendations of the 15-member National
Commission to Ensure a Strong Competitive Airline Industry, the
recommendations of the Vice President's National Performance Review,
and DOT and FAA regulatory initiatives.
In April 1993, the National Commission to Ensure a Strong
Competitive Airline Industry (Commission) was established by Public Law
No. 103-13. The Commission was asked to investigate, study and make
policy recommendations regarding the financial vitality and future
competitiveness of the U.S. airline and aerospace industries.
In August 1993, the Commission issued a report to the President and
Congress that addressed, among other things, the legal and
administrative policies that govern the regulatory responsibilities
imposed on United States airlines. The Commission found that Federal
regulations impose a cumulative burden on airlines. While the FAA has
not quantified that burden, the Commission estimated that existing
rules have added to airline costs and concluded that the costs of these
rules have a direct impact on the airlines' financial condition.
To enhance the FAA's ability to perform its statutory role without
undue economic impact on the aviation industry, the Commission
recommends that the ``FAA/DOT undertake a short-range regulatory
review--in close consultation with industry and other interested
parties--to eliminate or amend existing regulations to reduce
regulatory burdens consistent with safety and security
considerations.''
In addition, Executive Order 12866 requires that agencies
``identify regulations that are cumulative, obsolete, or inconsistent,
and where appropriate, eliminate or modify them.'' In light of these
concerns, and consistent with the Administration's Civil Aviation
Initiative, this notice solicits public comment that will assist the
FAA in focusing attention on areas where the public believes the
regulatory burden is excessive and unjustified. In particular, the
agency requests that each commenter identify the most significant
regulations that the commenter believes may no longer be necessary, are
unduly burdensome, or impose excessive costs or red tape. In some
cases, for example, important innovations, technologies, or new market
opportunities may have taken place or may have been created since a
rule was promulgated, potentially rendering a rule obsolete.
The FAA requests commenters to focus their recommendations on up to
three regulations they believe to be of primary concern--rather than
catalogue all rules that they may view to be objectionable in some
respect. This will facilitate development of a manageable overall
proposal. Further, each commenter should rank in priority order the
regulations that the commenter believes the agency should address
first. In addition, each submission should include an explanation of:
(1) How the identified regulatory requirement is burdensome; (2) how
the requirement should be changed or deleted, including, where
possible, suggested draft substitutes; (3) how a regulatory change
would benefit the public; and (4) how a proposed regulatory change
would provide an adequate level of safety, security, or environmental
protection. Specific economic information to support a reliable cost/
benefit analysis of the proposed change will also be of assistance.
Comments in response to this notice are also expected to facilitate
the FAA's regulatory review envisioned by Executive Order No. 12866,
``Regulatory Planning and Review,'' issued September 30, 1993. This
executive order requires each agency to create a program under which it
will periodically review its existing significant regulations to
determine whether any should be modified or eliminated to make the
agency's regulatory program more effective and less burdensome.
The comments provided in response to this notice will assist the
agency in establishing its priorities for future regulatory changes,
including repeal or modification of rules where appropriate, to
maintain safety and security while reducing regulatory burdens.
Issued in Washington, DC, on January 5, 1994.
David R. Hinson,
Administrator.
[FR Doc. 94-544 Filed 1-6-94; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 94-481 Organization and Procedures; Procedures of the Office of Hearings and Appeals; Authority of Appeals Officers to Deny a Request for Appeals Council Review
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1363-1365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-481]
[[Page Unknown]]
[Federal Register: January 10, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Social Security Administration
20 CFR Part 422
RIN 0960-AD45
Organization and Procedures; Procedures of the Office of Hearings
and Appeals; Authority of Appeals Officers to Deny a Request for
Appeals Council Review
AGENCY: Social Security Administration, HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would amend 20 CFR 422.205, which describes
the organization and procedures of the Appeals Council, to authorize
Appeals Officers, as well as members of the Appeals Council, to deny a
request for review of a decision by an Administrative Law Judge (ALJ).
DATES: To be sure that your comments are considered, we must receive
them no later than March 11, 1994.
ADDRESSEES: Comments should be submitted in writing to the Commissioner
of Social Security, Department of Health and Human Services, P.O. Box
1585, Baltimore, Maryland 21235, or delivered to the Office of
Regulations, Social Security Administration, 3-B-1 Operations Building,
6401 Security Boulevard, Baltimore, Maryland 21235, between 8 a.m. and
4:30 p.m. on regular business days. Comments received may be inspected
during these same hours by making arrangements with the contact person
shown below.
FOR FURTHER INFORMATION CONTACT: Philip Berge, Legal Assistant, 3-B-4
Operations Building, 6401 Security Boulevard, Baltimore, Maryland 21235
(410) 965-1769.
SUPPLEMENTARY INFORMATION:
Background
Part 422 of 20 CFR provides information regarding the organization
and procedures of the Social Security Administration (SSA). Subpart C
of part 422 describes the procedures of the Office of Hearings and
Appeals (OHA). Section 422.205 describes the organization and functions
of the Appeals Council, a part of OHA.
By direct delegation of authority from the Secretary of Health and
Human Services (Secretary), the Appeals Council is authorized to review
hearing decisions and orders of dismissal issued by SSA's ALJs. Through
the exercise of this authority, the Appeals Council is responsible for
ensuring that the final decisions of the Secretary involving benefits
under titles II, XI, XVI and XVIII of the Social Security Act (the Act)
and part B of title IV of the Federal Mine Safety and Health Act of
1977, as amended, are proper and in accordance with the law,
regulations, and binding agency policy established in Social Security
Rulings and Acquiescence Rulings.
Currently, 20 Appeals Council members, hereinafter referred to as
either ``Administrative Appeals Judges (AAJs)'' or ``members,''
comprise the membership of the Appeals Council. The Associate
Commissioner for OHA is the Chair of the Appeals Council and is the
administrative officer directly responsible to the Commissioner of
Social Security for carrying out OHA's mission of holding ALJ hearings
and deciding appeals. Each AAJ, other than the Chair, is assisted by an
Appeals Officer who serves as a legal clerk. Organizationally, Appeals
Officers are a part of the Appeals Council.
The Appeals Council considers appeals under titles II, XI, XVI, and
XVIII of the Act, and under part B of title IV of the Federal Mine
Safety and Health Act of 1977, as amended. The regulations setting
forth the responsibilities of the Appeals Council appear in 20 CFR part
404 (subpart J, Secs. 404.967 et seq.), part 410 (subpart F,
Secs. 410.657 et seq.), part 416 (subpart N, Secs. 416.1467 et seq.),
and 42 CFR part 405 (subpart G, Secs. 405.701(c) and 405.724), part 417
(subpart Q, Sec. 417.634 and part 473 (subpart B, Secs. 473.46 and
473.48(b)). These regulations provide that after an ALJ has issued a
decision or dismissed a request for a hearing, the Appeals Council may
review a case on its own motion or at the request of a party to the
hearing decision or dismissal. The Council may deny or dismiss a
party's request for review, or it may grant the request and either
issue a decision or remand the case to an ALJ. If the Appeals Council
denies a request for review of a decision by an ALJ, the ALJ's decision
becomes the final decision of the Secretary subject to judicial review
under the provisions of section 205(g) of the Act. If the Appeals
Council grants a request for review and issues a decision, that
decision becomes the final decision of the Secretary subject to
judicial review pursuant to section 205(g) of the Act.
Sections 404.970 and 416.1470 describe cases involving Social
Security and supplemental security income benefits payable under title
II and title XVI of the Act that the Appeals Council will review. Those
sections provide that the Appeals Council will review a case if the
action, findings or conclusions of the ALJ are not supported by
substantial evidence; there is an error of law; or there appears to be
an abuse of discretion by the ALJ. Those sections also provide that the
Appeals Council will review a case that presents a broad policy or
procedural issue that may affect the general public interest. The same
standards apply to determine if the Appeals Council will review a case
under title XVIII of the Act or under part B of title IV of the Federal
Mine Safety and Health Act of 1977.
Over the years, there have been questions about the functions and
operations of the Appeals Council. Some commenters have questioned the
usefulness of review by the Appeals Council. Several studies have
addressed the role of the Appeals Council, resulting in many
recommendations for improving the Council's structure and operations.
In its Recommendation 87-7: A New Role for the Social Security
Appeals Council (adopted December 18, 1987), the Administrative
Conference of the United States (ACUS) concluded that the high volume
of work of the Council (up to 500 cases per member per month) precluded
it from detecting emerging problems, identifying new issues to be
resolved, and identifying and developing needed policies. ACUS
recommended that the Secretary and SSA restructure the Appeals Council
in ``a fashion that redirects the institution's goals and operations
from an exclusive focus on processing the stream of individual cases
and toward an emphasis on improved organizational effectiveness'' (1
CFR 305.87-7). To this end, ACUS recommended that ``the Appeals Council
should be provided the authority to reduce significantly its caseload
and also be given, as its principal mandate, the responsibility to
recommend and, where appropriate, develop and implement adjudicatory
principles and decisional standards for the disability determination
process.'' ACUS also recommended that the agency enhance the status of
the Appeals Council and provide law clerks to its members.
To address the workload problems ACUS discussed in its
recommendation, SSA decided, in 1988, to add Appeals Officers to the
Council to enable the members to focus their attention on the more
complex and significant cases, including those cases presenting
important policy or procedural issues.
Appeals Officers presently assist AAJs in considering
recommendations made by the Council's support staff in OHA's Office of
Appellate Operations. Appeals Officers, who are attorneys, also act as
the AAJs' staff attorneys, researching and providing legal memoranda on
issues arising from cases that come to the attention of the Appeals
Council. However, because the Appeals Officers do not have authority
under our existing regulations to carry out any of the decision making
responsibilities of the AAJs, one or more AAJs must make these
decisions.
Research we have supported since we established the Appeals Officer
position has persuaded us that if the Appeals Officers are authorized
to assume some of the responsibilities of the AAJs, the AAJs will be
able to focus more of their attention on cases that present broad
policy or procedural issues. In a report commissioned by ACUS in 1989
(Report and Recommendations on the Social Security Administration's
Administrative Appeals Process), Professor Frank S. Block discussed the
Appeals Council's workload and stated that the Council could not be
expected to assume a meaningful review function for all claims that
might be presented to it. One of the recommendations in the report was
that the Appeals Council be authorized ``to use staff or lower level
Council members to deny a request for review, and limit the review of
cases by the Appeals Council to those raising significant policy
issues.'' See Recommendation No. 12.
To complete the changes we contemplated when we established the
Appeals Officer position, we propose to amend Sec. 422.205 to authorize
Appeals Officers to deny a request for review of an ALJ hearing
decision. Because an ALJ's dismissal of a request for a hearing is not
subject to judicial review, AAJs will continue to decide whether to
grant or deny a request for review of a hearing dismissal. Appeals
Officers will continue to receive guidance, direction and supervision
from AAJs, including instructions as to specific issues or kinds of
cases requiring the attention of the AAJ.
We believe this proposed change, which provides Appeals Officers a
specific and limited authority, will improve both the quality and
efficiency of the service the Appeals Council is able to provide. The
proposed change should allow the Council to give the public a more
timely response to their requests for review and increase the ability
of the AAJs to carry out their important function of providing review
of many ALJ decisions.
Although the Appeals Officer under the proposed rule would have
authority to deny a request for review of an ALJ decision, he or she
may also refer a particular case to an AAJ with a recommendation if it
involves complex factual issues or complicated interpretative issues of
law and/or regulations. In addition, all cases in which an analyst in
OHA's Office of Appellate Operations prepares a recommendation to grant
a request for review will be submitted directly to an AAJ for
disposition. We believe this process will serve two purposes: (1) It
will expedite bringing the ``close cases,'' which are normally more
complex, to the AAJ's attention; and (2) it will allow the AAJs to
focus on those cases raising significant issues.
We propose to make this change in the regulation concerning the
operating procedures of the Appeals Council under the provisions of
sections 205, 1102, and 1631 of the Act. These statutory sections give
the Secretary broad regulatory authority to establish procedures that
are necessary and appropriate to carry out the Act's provisions.
Regulatory Provisions
The proposed rule will enable the Appeals Officers to decide
whether a request for review of an ALJ decision should be denied,
thereby making the decision of the ALJ the final decision of the
Secretary for the purpose of any request for judicial review which a
party to the decision may decide to file under section 205(g) of the
Act. The Appeals Officers will not have authority to grant a request
for review, to decide to review a case on the Appeals Council's own
motion, to remand a case to an ALJ, to grant or to deny a request to
review a hearing dismissal, or to issue a final decision. The authority
to exercise those powers of the Council will remain exclusively with
the AAJs.
Appeals Officers will be required to apply the same criteria as the
AAJs in determining whether to deny a request for review. The Appeals
Officers will apply the provisions of Secs. 404.970 and 416.1470, which
specify when the Appeals Council will review a case, in determining the
appropriate action.
Judges,'' or by the proposed change to expand the authority of the
Appeals Officers, who organizationally are part of the Council.
Regulatory Procedures
Regulatory Flexibility Act
We generally prepare a regulatory flexibility analysis that is
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612) unless the Secretary certifies that a rule will not have a
significant economic impact on a substantial number of small entities.
Individuals are not included in the definition of a small entity.
However, for purposes of the RFA, we consider the majority of Medicare
providers, physicians and suppliers to be small entities.
Inasmuch as the proposed rule does not alter the standards for
Appeals Council review, we believe that it will have little, if any,
effect on providers, physicians and suppliers which substantial number
of small entities. Individuals are not included in the definition of a
small entity. However, for purposes of the RFA, we consider the
majority of Medicare providers, physicians and suppliers to be small
entities.
Inasmuch as the proposed rule does not alter the standards for
Appeals Council review, we believe that it will have little, if any,
effect on providers, physicians and suppliers which request Appeals
Council review of Medicare claims. Accordingly, we have determined, and
the Secretary certifies, that this proposed rule will not result in a
significant economic impact on a substantial number of small entities.
Therefore, we have not prepared an RFA analysis.
Paperwork Reduction Act
This regulation imposes no new reporting or recordkeeping
requirements requiring Office of Management and Budget clearance.
(Catalog of Federal Domestic Assistance Program Nos. 93.773 and
93.774, Medicare; Reporting and recordkeeping requirements; 93.802-
93.805 Social Security; and 93.807 Supplemental Security.)
List of Subjects in 20 CFR Part 422
Administrative practice and procedure, Freedom of information,
Organization and functions (government agencies), Social security.
Dated: September 1, 1993.
Lawrence H. Thompson,
Principal Deputy Commissioner of Social Security.
Approved: December 22, 1993.
Donna E. Shalala,
Secretary of Health and Human Services.
For the reasons set out in the preamble, we propose to amend part
422 of chapter III of title 20 of the Code of Federal Regulations as
follows:
PART 422--ORGANIZATION AND PROCEDURES
1. The authority citation for Subpart C continues to read as
follows:
Authority: Secs. 205, 221, 1102, 1869, and 1871 of the Social
Security Act; 42 U.S.C. 405, 421, 1302, 1395ff, and 1395hh; sec.
413(b) of the Federal Mine Safety and Health Act of 1977; 30 U.S.C.
923(b).
2. Section 422.205 is amended by revising paragraph (c) to read as
follows:
Sec. 422.205 Review by Appeals Council.
* * * * *
(c) The denial of a request for review of a hearing decision
concerning a determination under Sec. 422.203(a)(1) shall be by such
appeals officer or appeals officers or by such member or members of the
Appeals Council as may be designated in the manner prescribed by the
Chair or Deputy Chair. The denial of a request for review of a hearing
dismissal, the dismissal of a request for review, or the refusal of a
request to reopen a hearing or Appeals Council decision concerning a
determination under Sec. 422.203(a)(1) shall be by such member or
members of the Appeals Council as may be designated in the manner
prescribed by the Chair or Deputy Chair.
* * * * *
[FR Doc. 94-481 Filed 1-7-94; 8:45 am]
BILLING CODE 4190-29-P
Complete official Federal Register PDF
FR Doc. 94-479 Municipal Interest Rates for First Quarter of 1994
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1370-1371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-479]
[[Page Unknown]]
[Federal Register: January 10, 1994]
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DEPARTMENT OF AGRICULTURE
Rural Electrification Administration
Municipal Interest Rates for First Quarter of 1994
AGENCY: Rural Electrification Administration, USDA.
ACTION: Notice of interest rates for the first quarter of 1994.
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SUMMARY: REA hereby announces the interest rates for municipal rate
loans with interest rate terms beginning during the first calendar
quarter of 1994.
DATES: These interest rates are effective for interest rate terms that
commence during the period beginning January 1, 1994, and ending March
31, 1994.
FOR FURTHER INFORMATION CONTACT: Sue Arnold, Management Analyst, U.S.
Department of Agriculture, Rural Electrification Administration, room
2230-s, 14th Street & Independence Avenue, SW., Washington, DC 20250-
1500. Telephone: 202-720-0736. FAX: 202-720-4120.
SUPPLEMENTARY INFORMATION: On December 20, 1993, at 58 FR 66260, REA
published a rule establishing a program for electric loans at municipal
interest rates. Pursuant to 7 CFR 1714.5 of this rule, the interest
rates on these municipal rate loans are based on indexes published in
the ``Bond Buyer'' for the four weeks prior to the first Friday of the
last month before the beginning of the quarter. In accordance with 7
CFR 1714.5, the interest rates are established as shown in the
following table for all interest rate terms that begin at any time
during the first calendar quarter of 1994.
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Interest
Interest rate term ends in (year) rate (0.000
percent)
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2015 or later.............................................. 5.375
2014....................................................... 5.375
2013....................................................... 5.375
2012....................................................... 5.375
2011....................................................... 5.375
2010....................................................... 5.250
2009....................................................... 5.250
2008....................................................... 5.250
2007....................................................... 5.125
2006....................................................... 5.000
2005....................................................... 4.875
2004....................................................... 4.750
2003....................................................... 4.750
2002....................................................... 4.625
2001....................................................... 4.500
2000....................................................... 4.375
1999....................................................... 4.250
1998....................................................... 4.125
1997....................................................... 3.875
1996....................................................... 3.625
1995....................................................... 3.375
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Dated: January 4, 1994.
Wally Beyer,
Administrator.
[FR Doc. 94-479 Filed 1-7-94; 8:45 am]
BILLING CODE 3410-15-M
Complete official Federal Register PDF
FR Doc. 94-474 Small Business Size Standards; Waiver of the Nonmanufacturer Rule
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1360-1362]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-474]
[[Page Unknown]]
[Federal Register: January 10, 1994]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
Small Business Size Standards; Waiver of the Nonmanufacturer Rule
AGENCY: Small Business Administration.
ACTION: Notice of intent to terminate waivers of the Nonmanufacturer
Rule for several classes of metal products.
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SUMMARY: The Small Business Administration (SBA) intends to terminate
existing waivers of the Nonmanufacturer Rule for: (1) Bars and rods,
high nickel alloy; (2) plate sheet, strip and foil, stainless steel and
high nickel alloy; (3) wire, nonelectrical, high nickel alloy; (4) bars
and rods, high nickel alloy, aluminum, nickel-copper, nickel-copper-
aluminum, copper, copper-nickel, aluminum-bronze, and naval brass; (5)
plate, sheet and strip, nickel-copper, nickel-copper-aluminum, copper-
nickel, and copper; (6) sheet and plate aluminum products; and (7)
structural shapes, angles, channels, tees and zees, aluminum and high
nickel alloy. SBA's intent to terminate these waivers of the
Nonmanufacturer Rule is based on our recent discovery of small business
manufacturers for these classes of products. Terminating these waivers
will require recipients of contracts set aside for small or 8(a)
businesses to provide the products of small business manufacturers or
processors on such contracts.
DATES: Comments must be received on or before February 9, 1994.
ADDRESSES: Written comments should be addressed to Mr. Robert J.
Moffitt, Associate Administrator for Procurement Assistance, U.S. Small
Business Administration, Mail Code 6250, 409 3rd Street SW.,
Washington, DC 20416.
FOR FURTHER INFORMATION CONTACT:
James Parker, Procurement Analyst, phone (703) 695-2435.
SUPPLEMENTARY INFORMATION: Public Law 100-656, enacted on November 15,
1988, incorporated into the Small Business Act the previously existing
regulation that recipients of Federal contracts set aside for small
businesses or SBA 8(a) Program procurements must provide the products
of small business manufacturers or processors. The SBA regulations
imposing this requirement are found at 13 CFR 121.906(b) and
121.1106(b). Section 210 of Public Law 101-574 further amended the law
to allow for waivers for classes of products for which there are no
small business manufacturers or processors ``available to participate
in the Federal procurement market.'' The actions which the SBA is
proposing to take with respect to existing waivers and the reasons for
those actions follow:
1. SBA announced its decision to grant the waiver of the
Nonmanufacturer Rule for bars and rods, high nickel alloy, in the
Federal Register on May 15, 1991, p. 22306. Recently, while researching
SBA's Procurement Automated Source System (PASS) on a related issue,
SBA became aware of the existence of small business manufacturers for
items within this class of product. For this reason, SBA intends to
terminate the waiver previously granted for bars and rods, high nickel
alloy, identified under Product and Service Code (PSC) 9510 and
Standard Industrial Classification (SIC) Code 3312.
2. The SBA announced its decision to grant the waiver for plate,
sheet, strip and foil, stainless steel and high nickel alloy in the
Federal Register on May 15, 1991, p. 22306. While researching the PASS
on a related issue, SBA became aware of the existence of a small
business manufacturer for items within this class of products. For this
reason, SBA intends to terminate the waiver previously granted for
plate, sheet, strip and foil, stainless steel and high nickel alloy
identified under Product and Service Code (PSC) 9515 and Standard
Industrial Classification (SIC) Code 3312.
3. SBA announced its decision to grant a class waiver for wire,
nonelectrical, high nickel alloy, in the Federal Register on May 15,
1991, p. 22306. While researching the PASS on a related issue, SBA
became aware of the existence of a small business manufacturer for
items within this class of products. For this reason, SBA intends to
terminate the waiver previously granted for wire, nonelectrical, high
nickel alloy, identified under Product and Service Code (PSC) 9525 and
Standard Industrial Classification (SIC) Code 3356.
4. SBA announced its decision to grant a class waiver for bars and
rods, high nickel alloy, aluminum, nickel-copper, nickel-copper-
aluminum, copper, copper-nickel, aluminum-bronze, and naval brass in
the Federal Register on May 15, 1991, p. 22306. The Defense Industrial
Supply Center recently brought to SBA's attention the existence of a
small business manufacturer for items within this class of products.
For this reason, SBA intends to terminate the waiver previously granted
for bars and rods, high nickel alloy, aluminum, nickel-copper, nickel-
copper-aluminum, copper, copper-nickel, aluminum-bronze, and naval
brass identified under Product and Service Code (PSC) 9530 and Standard
Industrial Classification (SIC) Code 3356.
5. SBA announced its decision to grant the waiver for plate, sheet
and strip, titanium, nickel-copper, nickel-copper-aluminum, copper-
nickel, and copper in the Federal Register on August 23, 1991, p.
41787. SBA announced its decision to exclude titanium bars, rods,
plates, sheets and strips from this class waiver in the Federal
Register on April 30, 1992, p. 18396. The remaining class waiver
included plate, sheet and strip, nickel-copper, nickel-copper-aluminum,
copper-nickel, and copper. While researching the PASS on a related
issue, SBA became aware of the existence of a small business
manufacturer for items within the class of products of plate, sheet and
strip, nickel-copper, nickel-copper-aluminum, copper-nickel, and
copper. For this reason, SBA intends to terminate the waiver previously
granted for plate, sheet and strip, nickel-copper, nickel-copper-
aluminum, copper-nickel, and copper identified under Product and
Service Code (PSC) 9535 and Standard Industrial Classification (SIC)
Code 3353.
6. SBA announced its intent to grant the waiver for sheet and plate
aluminum products in the Federal Register on July 13, 1991, p. 28772.
It was recently brought to SBA's attention by the Defense Industrial
Supply Center that a small business manufacturer exists for items
within this class of products. For this reason, SBA intends to
terminate the waiver for sheet and plate aluminum products identified
under Product and Service Code (PSC) 9535 and Standard Industrial
Classification (SIC) Code 3353.
7. SBA announced its decision to grant the waiver for structural
shapes, angles, channels, tees and zees, aluminum and high nickel alloy
in the Federal Register on May 15, 1991, p. 22306. It was recently
brought to SBA's attention by the Defense Industrial Supply Center that
a small business manufacturer exists for items within this class of
products. For this reason, SBA intends to terminate the waiver for
structural shapes, angles, channels, tees and zees, aluminum and high
nickel alloy identified under Product and Service Code (PSC) 9540 and
Standard Industrial Classification (SIC) Code 3354.
In summary, based on the above information, the SBA proposes to
terminate the class waivers of the Nonmanufacturer Rule for:
1. Bars and rods, high nickel alloy, PSC 9510, SIC 3312;
2. Plate, sheet, strip and foil, stainless steel and high nickel alloy,
PSC 9515, SIC 3312;
3. Wire, nonelectrical, high nickel alloy, PSC 9525, SIC 3356;
4. Bars and rods, high nickel alloy, aluminum, nickel-copper, nickel-
copper-aluminum, copper, copper-nickel, aluminum-bronze, and naval
brass, PSC 9530, SIC 3356;
5. Plate, sheet and strip, nickel-copper, nickel-copper-aluminum,
copper-nickel, and copper, PSC 9535, SIC 3353;
6. Sheet and plate aluminum products, PSC 9535, SIC 3353; and
7. Structural shapes, angles, channels, tees and zees, aluminum and
high nickel alloy, PSC 9540, SIC 3354.
The public is invited to comment to SBA on its proposed termination
of the waivers for the classes of products specified. All comments by
the public will be duly considered by SBA in determining whether to
finalize its intent to terminate these waivers.
Dated: December 27, 1993.
Robert J. Moffitt,
Associate Administrator for Procurement Assistance.
[FR Doc. 94-474 Filed 1-7-94; 8:45 am]
BILLING CODE 8025-01-M
Complete official Federal Register PDF
FR Doc. 94-473 Radio Broadcasting Services; Huntsville, MO
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Page 1366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-473]
[[Page Unknown]]
[Federal Register: January 10, 1994]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 93-315, RM-8320]
Radio Broadcasting Services; Huntsville, MO
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: This document requests comments on a petition filed by
Contemporary Broadcasting, Inc., proposing the substitution of Channel
278C1 for Channel 278C2 at Huntsville, Missouri, and modification of
the construction permit for Station KTDI to specify operation on the
higher class channel. The coordinates for Channel 278C1 are 39-39-30
North Latitude and 92-13-10 West Longitude. We shall propose to modify
the construction permit for Station KTDI in accordance with
Sec. 1.420(g) of the Commission's Rules and will not accept competing
expressions of interest for the use of the channel or require
petitioner to demonstrate the availability of an additional equivalent
class channel for use by such parties.
DATES: Comments must be filed on or before February 25, 1994, and reply
comments on or before March 14, 1994.
ADDRESSES: Federal Communications Commission, Washington, DC 20554. In
addition to filing comments with the FCC, interested parties should
serve the petitioner, as follows: Janet P. Cox, Vice President,
Contemporary Broadcasting, Inc., 222 Indacom Drive, St. Peters,
Missouri 63376.
FOR FURTHER INFORMATION CONTACT:
Kathleen Scheuerle, Mass Media Bureau, (202) 634-6530.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rule Making, MM Docket No. 93-315, adopted December 13,
1993, and released January 4, 1994. 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. The complete text of this decision may also be
purchased from the Commission's copy contractor, International
Transcription Services, Inc., 2100 M Street, NW., suite 140,
Washington, DC 20037, (202) 857-3800.
Provisions of the Regulatory Flexibility Act of 1980 do not apply
to this proceeding.
Members of the public should note that from the time a Notice of
Proposed Rule Making is issued until the matter is no longer subject to
Commission consideration or court review, all ex parte contacts are
prohibited in Commission proceedings, such as this one, which involve
channel allotments. See 47 CFR 1.1204(b) for rules governing
permissible ex parte contact.
For information regarding proper filing procedures for comments,
see 47 CFR 1.415 and 1.420.
List of Subjects in 47 CFR Part 73
Radio broadcasting.
Federal Communications Commission.
John A. Karousos,
Acting Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 94-473 Filed 1-7-94; 8:45 am]
BILLING CODE 6712-01-M
Complete official Federal Register PDF
FR Doc. 94-472 Radio Broadcasting Services; Douglas and Unionville, GA
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1365-1366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-472]
[[Page Unknown]]
[Federal Register: January 10, 1994]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 93-316, RM-8403]
Radio Broadcasting Services; Douglas and Unionville, GA
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This document requests comments on a petition by Orchon Media,
Inc., permittee of Station WKZZ(FM), Channel 223A, Douglas, Georgia,
requesting the substitution of Channel 223C3 for Channel 223A at
Douglas, Georgia, and the reallotment of Channel 223C3 from Douglas to
Unionville, Georgia, and the modification of the construction permit
for Station WKZZ(FM) to specify Unionville as its community of license,
in accordance with Section 1.420(i) of the Commission's rules. The
coordinates for Channel 223C3 at Unionville are North Latitude 31-31-05
and West Longitude 83-20-43.
DATES: Comments must be filed on or before February 25, 1994, and reply
comments on or before March 14, 1994.
ADDRESSES: Federal Communications Commission, Washington, DC 20554. In
addition to filing comments with the FCC, interested parties should
serve the petitioner, or its counsel or consultant, as follows: Robert
S. Stone, McCampbell & Young, 2021 Plaza Tower, P.O. Box 550,
Knoxville, TN 37901-0550 (Attorney for petitioner).
FOR FURTHER INFORMATION CONTACT:
Nancy J. Walls, Mass Media Bureau, (202) 634-6530.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rule Making, MM Docket No. 93-316, adopted December
13, 1993, and released January 4, 1994. The full text of this
Commission decision is available for inspection and copying during
normal business hours in the FCC Reference Center (room 239), 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, Inc., (202) 857-3800, 1919 M Street, NW., room
246, or 2100 M Street, NW., suite 140, Washington, DC 20037.
Provisions of the Regulatory Flexibility Act of 1980 do not apply
to this proceeding.
Members of the public should note that from the time a Notice of
Proposed Rule Making is issued until the matter is no longer subject to
Commission consideration or court review, all ex parte contacts are
prohibited in Commission proceedings, such as this one, which involve
channel allotments. See 47 CFR 1.1204(b) for rules governing
permissible ex parte contacts.
For information regarding proper filing procedures for comments,
see 47 CFR 1.415 and 1.420.
List of Subjects in 47 CFR Part 73
Radio broadcasting.
Federal Communications Commission.
John A. Karousos,
Acting Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 94-472 Filed 1-7-94; 8:45 am]
BILLING CODE 6712-01-M
Complete official Federal Register PDF
FR Doc. 94-471 Radio Broadcasting Services; Jensen Beach and Melbourne, FL
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Page 1365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-471]
[[Page Unknown]]
[Federal Register: January 10, 1994]
=======================================================================
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 93-307, RM-8386]
Radio Broadcasting Services; Jensen Beach and Melbourne, FL
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This document requests comments on a joint petition by HLG,
Inc., licensee of Station WHLG(FM), Jensen Beach, Florida, and City
Broadcasting Co., Inc., license of Station WGGD(FM), Melbourne,
Florida, proposing the substitution of Channel 272C3 for Channel 272A
at Jensen Beach, Florida, and modification of the license for Station
WHLG(FM) to specify the higher powered channel, and the substitution of
Channel 236A for Channel 272A at Melbourne, Florida, and the
modification of Station WGGD(FM)'s license to specify the alternate
Class A channel. Channel 272C3 can be allotted to Jensen Beach in
compliance with the minimum distance separation requirements of the
Commission's Rules at the licensed transmitter site. The coordinates
for Channel 272C3 at Jensen Beach are 27-12-53 North Latitude and 80-
15-24 West Longitude. Channel 236A can be allotted to Melbourne in
compliance with the minimum distance separation requirements of the
Commission's Rules with a site restriction of 6.4 kilometers (4.0
miles) north of the community, in order to avoid a short-spacing to
Station WWRM(FM), Channel 235C, Tampa, Florida. The coordinates for
Channel 236A at Melbourne are 28-08-08 North Latitude and 80-35-35 West
Longitude.
DATES: Comments must be filed on or before February 25, 1994, and reply
comments on or before March 14, 1994.
ADDRESSES: Federal Communications Commission, Washington, DC 20554. In
addition to filing comments with the FCC, interested parties should
serve the petitioner, or its counsel or consultant, as follows: Bruce
A. Eisen, Kaye, Scholer, Fierman, Hays & Handler, 901 15th Street, NW.,
suite 1100, Washington, DC 20005-2327 (Counsel for HLG, Inc. and City
Broadcasting Company, Inc.).
FOR FURTHER INFORMATION CONTACT:
Nancy J. Walls, Mass Media Bureau, (202) 634-6530.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rule Making, MM Docket No. 93-307, adopted December
8, 1993, and released January 4, 1994. The full text of this Commission
decision is available for inspection and copying during normal business
hours in the FCC Reference Center (Room 239), 1919 M Street, NW.,
Washington, DC. The complete text of this decision may also be
purchased from the Commission's copy contractors, International
Transcription Service, Inc., (202) 857-3800, 1919 M Street, NW., room
246, or 2100 M Street, NW., suite 140, Washington, DC 20037.
Provisions of the Regulatory Flexibility Act of 1980 do not apply
to this proceeding.
Members of the public should note that from the time a Notice of
Proposed Rule Making is issued until the matter is no longer subject to
Commission consideration or court review, all ex parte contacts are
prohibited in Commission proceedings, such as this one, which involve
channel allotments. See 47 CFR 1.1204(b) for rules governing
permissible ex parte contacts.
For information regarding proper filing procedures for comments,
see 47 CFR 1.415 and 1.420.
List of Subjects in 47 CFR Part 73
Radio broadcasting.
Federal Communications Commission.
John A. Karousos,
Acting Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 94-471 Filed 1-7-94; 8:45 am]
BILLING CODE 6712-01-M
Complete official Federal Register PDF
FR Doc. 94-444 Removal of Obsolete and Redundant Regulations and Appendices
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1366-1369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-444]
[[Page Unknown]]
[Federal Register: January 10, 1994]
=======================================================================
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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
49 CFR Parts 391, 392, and 396
[FHWA Docket No. MC-93-32]
RIN 2125-AD28
Removal of Obsolete and Redundant Regulations and Appendices
AGENCY: Federal Highway Administration (FHWA), DOT.
ACTION: Notice of proposed rulemaking (NPRM).
-----------------------------------------------------------------------
SUMMARY: The FHWA is proposing to remove obsolete and redundant
regulations and appendices from the Federal Motor Carrier Safety
Regulations (FMCSRs). In addition, the FHWA is proposing minor
technical changes in an effort to keep the FMCSRs current. The removal
of obsolete and redundant regulations and appendices is one of the
first actions taken by the FHWA following the Agency's Zero Base
Regulatory Review public outreach sessions. The deletion of these
regulations should result in the reduction of the paperwork burden on
the industry without any reduction in safety benefits.
DATES: Comments must be received on or before March 11, 1994.
ADDRESSES: Submit written, signed comments to FHWA Docket No. MC-93-32,
room 4232, HCC-10, Office of the Chief Counsel, Federal Highway
Administration, 400 Seventh Street SW., Washington, DC 20590. All
comments received will be available for examination at the above
address from 8:30 a.m. to 3:30 p.m., e.t., Monday through Friday,
except legal Federal holidays. Those desiring notification of receipt
of comments must include a self-addressed, stamped postcard.
FOR FURTHER INFORMATION CONTACT:
Mr. William Blount, Office of Motor Carrier Standards, (202) 366-4009,
or Mr. Charles E. Medalen, Office of Chief Counsel, (202) 366-1354,
Federal Highway Administration, Department of Transportation, 400
Seventh Street SW., Washington, DC 20590. Office hours are from 7:45
a.m. to 4:15 p.m., e.t., Monday through Friday, except legal Federal
holidays.
SUPPLEMENTARY INFORMATION:
Background
The primary focus of the FHWA's Motor Carrier Safety Program is to
reduce commercial motor vehicle (CMV) accidents and the attendant
fatalities, injuries, and property losses. To remain effective,
regulations must reflect trends in State regulatory practices as well
as technical and operational changes in the motor carrier industry. The
motor carrier safety regulations were initially promulgated and
enforced by the Interstate Commerce Commission (ICC) in 1937. In 1967
the Department of Transportation (DOT) was created by the Department of
Transportation Act of 1966, (Pub. L. 89-670, 80 Stat. 931) and the
regulatory and enforcement authority for motor carrier safety was
transferred to the DOT. Today this authority is vested in the FHWA.
Over the years, the FMCSRs have been modified incrementally,
usually by addition of new provisions and often because of
congressional mandates. Some sections, however, no longer correspond to
current practices in the motor carrier industry, and others have been
superseded by State or local initiatives. In September 1992, the
Federal Highway Administration began a comprehensive multi-year effort
to re-create a body of safety rules and regulations that are (1)
understandable, (2) enforceable, (3) capable of being implemented by
industry, and above all, (4) consistent with highway safety. The effort
has been termed ``Zero Base Regulatory Review.'' The review will not
edit the current regulations, but will start with the basic questions
of who, what, and how do we regulate and what is essential to improve
motor carrier safety.
Concurrent with the Zero Base effort, the FHWA participated in a
governmentwide review of regulations designed to identify regulations
that were no longer required or unnecessarily hindered economic growth.
The FHWA's proposed deletions were incorporated into an NPRM published
by the Office of the Secretary of Transportation (OST) on May 20, 1992
(57 FR 21362). On December 22, 1992, the OST published a final rule but
declined to take final action on the FHWA proposals. 57 FR 60725.
Docket comments submitted in response to the May 20 NPRM, and other
comments received in conjunction with the FHWA's Zero Base review
effort, were evaluated by the FHWA in preparing the current NPRM. The
FHWA has identified several requirements that are obsolete or
redundant, i.e., which are repeated by State law or covered in another
part of the FMCSRs or which could be reissued as non-regulatory
guidance.
Discussion
Criteria Used for Regulation Review
The objectives of the FHWA's regulatory review were to (1)
eliminate requirements not needed to carry out the regulatory program;
(2) ensure that rules are clear and succinct; (3) reduce lengthy and
excessively detailed regulations whenever possible; (4) eliminate
redundancy; (5) eliminate excessive reporting requirements; and (6)
reduce or eliminate paperwork burdens wherever possible, without
compromising safety.
Section-by-Section Analysis
Part 391--Qualifications of Drivers
The primary function of part 391 is to ensure that operators of
CMVs meet minimum physical standards and possess the knowledge, skills,
and abilities to operate CMVs safely. The FHWA has reviewed the
regulations in part 391 and has determined that all requirements
pertaining to the written examination and record of violations are
unnecessary, for the reasons set forth below.
Written examination. The written examination tests prospective
drivers on the rules and requirements established by the FMCSRs.
However, the examination is an instructional tool only and a person's
qualification is not affected by his or her performance on the
examination. Carriers are not obligated to take applicants' scores into
consideration when making hiring decisions, so the Federal requirement
is of only marginal usefulness. Carriers may continue to give the test,
but the FHWA will no longer require them to do so. Moreover, drivers
who are subject to the Commercial Driver's License (CDL) requirements
must pass a knowledge test to obtain a CDL, so for CDL holders the
written exam is both redundant and ineffectual. Therefore, the written
examination (contained in appendix C) and all related qualification and
recordkeeping requirements would be removed. The sections to be removed
or amended by this proposal include Secs. 391.11(b)(11); 391.35;
391.37; 391.51(c)(5); 391.51(d)(3); 391.61; 391.67(a); 391.67(c);
391.69(b); 391.71(a) and appendix C to subchapter B.
List of violations. The objective of the record of violations is to
notify the employing motor carrier of all of a driver's moving
violations of motor vehicle traffic laws. This information is to be
used by the carrier to ensure that its drivers have not been
disqualified to drive a CMV.
The CDL regulations require CMV drivers to notify their current
employers within 30 days of any conviction for a non-parking violation
in any kind of vehicle (not only a CMV). If the conviction occurred in
a jurisdiction other than the one that issued the CDL, the driver must
also report it to the issuing jurisdiction within 30 days (49 CFR
383.31). Therefore, the provisions in Sec. 391.27 for motor carriers to
require their drivers to prepare and furnish a list of all traffic
violations during the preceding 12 months at least once every year, and
to maintain the record of violations in driver qualification files for
three years, are unnecessary and redundant. Furthermore, it is a common
practice for motor carriers or their insurance providers to obtain from
the State licensing agency the motor vehicle records on each of their
drivers once or more per year, although this is not required. The FHWA
is therefore proposing to delete Sec. 391.27 and all related
qualification and recordkeeping requirements. The sections to be
removed or amended by this proposal include Secs. 391.11(b)(8); 391.27;
391.51(b)(4); 391.51(h)(3); 391.63(a)(4); 391.67(a).
Miscellaneous. The FHWA is also proposing minor technical
corrections to Sec. 391.51(b)(2) and Sec. 391.51(g). These corrections
will bring the regulation into conformance with organizational changes
of the regional offices of the Federal Highway Administration, and will
correctly identify the new title of the Regional Director of Motor
Carriers.
Drivers operating in Hawaii. The limited exemption in
Sec. 391.69(a) for drivers operating in the State of Hawaii is
obsolete. Section 391.69(a) states that ``drivers who will reach the
age of 21 no later than April 1, 1976, may continue to drive within the
State of Hawaii.'' Since this date has passed, the provision should be
removed.
Part 392--Driving of Motor Vehicles
The FHWA has identified regulations within part 392, Driving of
Motor Vehicles, that are redundant of State and local laws. The
regulations in part 392 are designed to reduce Commercial Motor Vehicle
accidents by requiring that every motor vehicle be operated in
accordance with State and local laws and ordinances, or FHWA
regulations, whichever imposes the higher standard of care. The driving
regulations and rules of the road in part 392 resemble traffic laws and
ordinances. Basic rules of the road for trucks and buses are more
appropriately monitored and enforced by State and local authorities
under their own laws than by Federal regulators. In order to reduce
duplication of enforcement requirements, many of the rules contained in
part 392 should be removed. The FHWA is proposing to remove the
sections discussed below:
Section 392.9a Corrective lenses to be worn.
The FHWA is proposing to remove this section because it is
duplicated by State driver licensing laws. State laws routinely require
drivers who need glasses or contact lenses to wear them while driving.
In addition, the requirement that wearers of contact lenses carry an
extra set of them while driving does nothing to improve safety since a
spare lens could not be inserted before bringing the vehicle to a stop.
Section 392.12 Drawbridges; stopping of buses.
Section 392.18 slow moving vehicles; hazard warning signal flashers.
Section 392.21 Stopped vehicles not to interfere with other traffic.
The FHWA is proposing to remove these sections because they are
unenforceable by FHWA field staff and are more appropriately addressed
by State and local ordinances. In most, if not all, cases, State and
local laws provide that drivers are required to observe traffic signs.
State and local enforcement officers are responsible for maintaining
proper traffic flow and handling slow moving and stepped vehicles.
Section 392.30 Lighted lamps; moving vehicles.
Section 392.31 Lighted lamps; stopped or parked vehicles.
Section 392.32 Upper and lower head-lamp beams.
The FHWA is proposing to remove these sections because they are
duplicated by State laws and can only be enforced by State or local
agencies. In addition, the requirements for lighting devices are
addressed in part 393 of the FMCSRs.
Section 392.40 All accidents.
Section 392.41 Striking unattended vehicle.
The FHWA is proposing to remove these two sections because they
duplicate State ordinances.
Section 392.61 Driving by unauthorized person.
Section 392.62 Bus driver; distraction.
Section 392.65 Sleeper berth; transfer to or from.
Section 392.69 Sleeper berth, occupation.
The FHWA is proposing to remove Secs. 392.61 and 392.69 because the
FHWA believes that these situations should be governed by company
policy or a labor management agreement. Section 392.62 duplicates State
and local regulations and should be removed. Section 392.65 is proposed
to be removed because it is obsolete. There are very few truck tractors
still in use that require entry into the sleeper berth from outside the
vehicle.
Part 396--Inspection, Repair, and Maintenance
Part 396 places the responsibility upon the motor carrier to insure
that its vehicles are properly maintained. The FHWA is proposing to
remove Sec. 396.3(b)(4) because it is redundant. Section 396.3(b)(3)
already requires motor carriers to maintain for vehicles controlled for
30 consecutive days or more a record of inspection, repairs and
maintenance indicating their date and nature. Since the lubrication
record required by Sec. 396.3(b)(4) is a maintenance record, the
requirement is duplicative and should be removed.
Appendix A to Subchapter B
Appendix A to subchapter B includes all interpretations that were
issued by the FHWA up to the publication of a collection of
interpretations on November 23, 1977 (42 FR 60078). A new compilation
of interpretations was recently published in the Federal Register on
November 17, 1993 (58 FR 60734). Therefore, appendix A is redundant and
obsolete, and the FHWA is proposing it be removed.
Rulemaking Analyses and Notices
All comments received before the close of business on the comment
closing date indicated above will be considered and will be available
for examination in the docket at the above address. Comments received
after the comment closing date will be filed in the docket and will be
considered to the extent practicable, but the FHWA may issue a final
rule at any time after the close of the comment period. In addition to
late comments, the FHWA will also continue to file relevant information
in the docket as it becomes available after the comment closing date,
and interested persons should continue to examine the docket for new
material.
Executive Order 12866 (Regulatory Planning and Review) and DOT
Regulatory Policies and Procedures
This proposed rule would remove obsolete and redundant regulations
from the FMCSRs. The FHWA has determined that this document is not a
significant regulatory action under Executive Order 12866 or a
significant regulation under the regulatory policies and procedures of
the DOT. It is anticipated that the economic impact of this rulemaking
will be minimal. Therefore, a full regulatory evaluation is not
required.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the FHWA has evaluated the effects of this proposal on small
entities. This action would lessen the regulatory burden on small and
large entities subject to the FMCSRs by removing recordkeeping
requirements associated with the written examination and record of
violations. Based on the evaluation of this proposal, the FHWA
certifies that this action will not have a significant economic impact
on a substantial number of small entities.
Executive Order 12612 (Federalism Assessment)
This action has been analyzed in accordance with the principles and
criteria contained in Executive Order 12612, and it has been determined
that this proposed rule does not have sufficient federalism
implications to warrant the preparation of a full Federalism
Assessment.
Executive Order 12372 (Intergovernmental Review)
Catalog of Federal Domestic Assistance Program Number 20.217, Motor
Carrier Safety. The regulations implementing Executive Order 12372
regarding intergovernmental consultation on Federal programs and
activities apply to this program.
Paperwork Reduction Act
This rulemaking action does not contain a collection of information
requirement for purposes of the Paperwork Reduction Act of 1980, 44
U.S.C. 3501 et seq.
National Environmental Policy Act
The agency has analyzed this action for the purpose of the National
Environmental Policy Act of 1969 and has determined that this action
would not have any effect on the quality of the environment.
Regulation Identification Number
A regulation identification number (RIN) is assigned to each
regulatory action listed in the Unified Agenda of Federal Regulations.
The Regulatory Information Service Center publishes the Unified Agenda
in April and October of each year. The RIN contained in the heading of
this document can be used to cross reference this action with the
Unified Agenda.
List of Subjects in 49 CFR Parts 391, 392, and 396
Highway safety, Highways and roads, Motor carriers, and Motor
vehicle safety.
Issued on: January 3, 1994.
Rodney E. Slater,
Federal Highway Administrator.
In consideration of the foregoing, the FHWA proposes to amend title
49, Code of Federal Regulations, chapter III, subchapter B, parts 391,
392, 396, and appendices A and C to subchapter B as set forth below:
PART 391--QUALIFICATIONS OF DRIVERS [AMENDED]
1. The authority citation for part 391 continues to read as
follows:
Authority: 49 U.S.C. app. 2505; 49 U.S.C. 504 and 3102; 49 CFR
1.48.
Sec. 391.11 [Amended]
2. Section 391.11 is amended by removing paragraphs (b)(8) and
(b)(11), and redesignating paragraphs (b)(9), (10) and (12) as
paragraphs (b)(8), (9) and (10).
Secs. 391.27, 391.35, and 391.37 [Removed and Reserved]
3. Sections 391.27, 391.35, and 391.37 are removed and reserved.
Sec. 391.51 [Amended]
4. Section 391.51 is amended as follows:
a. In paragraph (b)(2), by removing ``The Regional Federal Highway
Administrator's letter'' and inserting in lieu thereof the words ``The
letter from the Regional Director of Motor Carriers'';
b. By removing paragraph (b)(4) and redesignating paragraph (b)(5)
as paragraph (b)(4), and by adding the word ``and'' at the end of
paragraph (b)(3);
c. In paragraph (c)(4), by removing ``; and'' and inserting in lieu
thereof a period, and by removing paragraph (c)(5);
d. By removing paragraph (d)(3) and redesignating paragraph (d)(4)
as paragraph (d)(3), and by adding the word ``and'' at the end of
paragraph (d)(2);
e. In paragraph (g), by removing the words ``Director, Regional
Motor Carrier Safety Office'' and ``Directors of Regional Motor Carrier
Safety Offices'' and inserting in lieu thereof ``Regional Director of
Motor Carriers'' and ``Regional Directors of Motor Carriers'',
respectively; and
f. By removing paragraph (h)(3) and redesignating paragraph (h)(4)
as paragraph (h)(3).
5. Section 391.61 is revised to read as follows:
Sec. 391.61 Drivers who were regularly employed before January 1,
1971.
The provisions of Sec. 391.21 (relating to applications for
employment), Sec. 391.23 (relating to investigations and inquiries),
and Sec. 391.31 (relating to road tests) do not apply to a driver who
has been a regularly employed driver (as defined in Sec. 390.5 of this
subchapter) of a motor carrier for a continuous period which began
before January 1, 1971, as long as he/she continues to be a regularly
employed driver of that motor carrier. Such a driver is qualified to
drive a motor vehicle if he/she fulfills the requirements of paragraphs
(b)(1) through (b)(8) of Sec. 391.11 (relating to qualifications of
drivers).
Sec. 391.63 [Amended]
6. Section 391.63 is amended by removing paragraph (a)(4), and
paragraph (a)(3) is amended by removing ``; or'' and inserting in lieu
thereof a period.
7. Section 391.67 is revised to read as follows:
Sec. 391.67 Drivers of articulated (combination) farm vehicles.
The following rules in this part do not apply to a farm vehicle
driver (as defined in Sec. 390.5) who is 18 years of age or older and
who drives an articulated motor vehicle:
(a) Paragraphs (b)(1), (b)(9), and (b)(10) of Sec. 391.11 (relating
to driver qualifications in general).
(b) Subpart C (relating to disclosure of, investigation into, and
inquiries about the background, character, and driving record of,
drivers).
(c) Subpart D (relating to road tests).
(d) So much of Secs. 391.41 and 391.45 as require a driver to be
medically examined and to have a medical examiner's certificate on his
person before January 1, 1973.
(e) Subpart F (relating to maintenance of files and records).
8. Section 391.69 is revised to read as follows:
Sec. 391.69 Drivers operating in Hawaii.
The provisions of Sec. 391.21 (relating to applications for
employment), Sec. 391.23 (relating to investigations and inquiries),
and Sec. 391.31 (relating to road tests) do not apply to a driver who
has been a regularly employed driver (as defined in Sec. 390.5 of this
subchapter) of a motor carrier for a continuous period which began
before January 1, 1971, as long as he/she continues to be a regularly
employed driver of that motor carrier. Such a driver is qualified to
drive a motor vehicle if he/she fulfills the requirements of paragraphs
(b)(1) through (b)(8) of Sec. 391.11 (relating to qualifications of
drivers).
Sec. 391.71 [Amended]
9. In Sec. 391.71 paragraph (a) introductory text is amended by
removing the words ``and Sec. 391.35 (relating to written
examination)'' and inserting the word ``and'' before the reference to
``Sec. 391.31.''
PART 392--DRIVING OF MOTOR VEHICLES
10. The authority citation for part 392 is revised to read as
follows:
Authority: 49 U.S.C. app. 2505; 49 U.S.C. 3102; 49 CFR 1.48.
Secs. 392.9a, 392.12, 392.18, 392.21, 392.30, 392.31, 392.32, 392.40,
392.41, 392.61, 392.62, 392.65, and 392.69 [Removed and Reserved]
11. Sections 392.9a, 392.12, 392.18, 392.21, 392.30, 392.31,
392.32, 392.40, 392.41, 392.61, 392.62, 392.65, and 392.69 are removed
and reserved.
PART 396--INSPECTION, REPAIR, AND MAINTENANCE
12. The authority citation for part 396 continues to read as
follows:
Authority: 49 U.S.C. app. 2509; 49 U.S.C. 3102; 49 CFR 1.48.
Sec. 396.3 [Amended]
13. Section 396.3 is amended by removing paragraph (b)(4) and
redesignating paragraph (b)(5) as paragraph (b)(4), and by adding the
word ``and'' at the end of paragraph (b)(3).
Appendices A and C [Removed and Reserved]
14. In chapter III, suchapter B, appendices A and C are removed and
reserved.
[FR Doc. 94-444 Filed 1-7-94; 8:45 am]
BILLING CODE 4910-22-M
Complete official Federal Register PDF
FR Doc. 94-427 Milk in the New Orleans-Mississippi Marketing Area; Proposed Suspension of a Provision of the Order
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1307-1308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-427]
[[Page Unknown]]
[Federal Register: January 10, 1994]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
7 CFR Part 1094
[DA-94-06]
Milk in the New Orleans-Mississippi Marketing Area; Proposed
Suspension of a Provision of the Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed suspension of rule.
-----------------------------------------------------------------------
SUMMARY: This document invites written comments on a proposal to
suspend, for 23 months, the 45 percent delivery requirement for a plant
operated by a cooperative association that is located within the New
Orleans-Mississippi marketing area. The suspension was requested by
Gulf Dairy Association, Inc., which operates a manufacturing plant at
Kentwood, Louisiana. The association states that without the
suspension, it will be forced to make inefficient qualifying shipments
of milk merely to keep the milk of its producers qualified for pooling
under the order.
DATES: Comments are due no later than January 20, 1994.
ADDRESSES: Comments (two copies) should be sent to USDA/AMS/Dairy
Division, Order Formulation Branch, room 2968, South Building, P.O. Box
96456, Washington, DC 20090-6456.
FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist,
USDA/AMS/Dairy Division, Order Formulation Branch, room 2968, South
Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 690-1932.
SUPPLEMENTARY INFORMATION: The Regulatory Flexibility Act (5 U.S.C.
601-612) requires the Agency to examine the impact of a proposed rule
on small entities. Pursuant to 5 U.S.C. 605(b), the Administrator of
the Agricultural Marketing Service has certified that this action would
not have a significant economic impact on a substantial number of small
entities. Such action would lessen the regulatory impact of the order
on certain milk handlers and would tend to ensure that dairy farmers
would continue to have their milk priced under the order and thereby
receive the benefits that accrue from such pricing.
The Department is issuing this proposed action in conformance with
Executive Order 12866.
This proposed action has been reviewed under Executive Order 12778,
Civil Justice Reform. This action is not intended to have a retroactive
effect. If adopted, this proposed action will not preempt any state or
local laws, regulations, or policies, unless they present an
irreconcilable conflict with the rule.
The Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601-674), provides that administrative proceedings must be
exhausted before parties may file suit in court. Under section
8c(15)(A) of the Act, any handler subject to an order may file with the
Secretary a petition stating that the order, any provisions of the
order, or any obligation imposed in connection with the order is not in
accordance with law and request a modification of an order or to be
exempted from the order. A handler is afforded the opportunity for a
hearing on the petition. After a hearing the Secretary would rule on
the petition. The Act provides that the district court of the United
States in any district in which the handler is an inhabitant, or has
its principal place of business, has jurisdiction in equity to review
the Secretary's ruling on the petition, provided a bill in equity is
filed not later than 20 days after the date of the entry of the ruling.
Notice is hereby given that, pursuant to the provisions of the
Agricultural Marketing Agreement Act, suspension of the following
provision of the order regulating the handling of milk in the New
Orleans-Mississippi marketing area is being considered for the period
from February 1, 1994 through December 31, 1995:
In Sec. 1094.7(c), the words ``45 percent or more of the''.
All persons wishing to submit written data, views or arguments
about the proposed suspension should send two copies of their views to
USDA/AMS/Dairy Division, Order Formulation Branch, room 2968, South
Building, P.O. Box 96456, Washington, DC 20090-6456 by the 10th day
after publication of this notice in the Federal Register. The filing
period is limited to ten days because a longer period would not provide
the time needed to complete the required procedures before the
requested suspension is to be effective.
All written submissions made pursuant to this notice will be made
available for public inspection in the Dairy Division during regular
business hours (7 CFR 1.27 (b)).
Statement of Consideration
The proposed action would suspend for the months of February 1994
through December 1995 the 45 percent delivery requirement for a
cooperative association plant that is located in the New Orleans-
Mississippi marketing area.
Gulf Dairy Association, Inc., which operates a manufacturing plant
at Kentwood, Louisiana, that is regulated under Order 94 submitted the
suspension request. The cooperative stated that because of the present
45 percent delivery requirement applicable to a cooperative association
that wishes to qualify a manufacturing plant for pooling, it has had to
shift some of its producers to neighboring Greater Louisiana (Order 96)
pool plants to keep its Kentwood plant qualified as a pool plant under
Order 94. It indicated that Order 96 requires that six days' production
of a producer must be received at pool plants each month in order to
qualify the milk for pooling by diversion to a nonpool plant.
Accordingly, it has had to move the milk of selected producers to Order
96 pool plants six days per month. Since this milk is not actually
needed by these pool plants, the cooperative has then had to back-haul
the milk to its Kentwood manufacturing plant for processing. The
problem is now particularly acute, according to the cooperative,
because two Order 94 pool plants have notified Gulf Dairy Association
that they will no longer purchase milk from them after February 1,
1994.
Gulf Dairy Association noted that the problem it is experiencing
will be resolved through the proposed merger of milk orders that is now
under consideration by the Department. It urged that the proposed
suspension be effective pending the completion of that proceeding.
List of Subjects in 7 CFR Part 1094
Milk marketing orders.
Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-
674.
Dated: January 3, 1994.
Lon Hatamiya,
Administrator.
[FR Doc. 94-427 Filed 1-7-94; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 94-424 Milk in the Carolina, Georgia, Tennessee Valley, and Louisville- Lexington-Evansville Marketing Areas; Revised Proposed Suspension of Certain Provisions of the Orders
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1305-1307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-424]
[[Page Unknown]]
[Federal Register: January 10, 1994]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 1005, 1007, 1011, and 1046
[DA-93-29]
Milk in the Carolina, Georgia, Tennessee Valley, and Louisville-
Lexington-Evansville Marketing Areas; Revised Proposed Suspension of
Certain Provisions of the Orders
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed suspension of rules.
-----------------------------------------------------------------------
SUMMARY: This document invites written comments on a proposal that
would suspend for nearly two years certain provisions of the Carolina,
Georgia, Tennessee Valley, and Louisville-Lexington-Evansville Federal
milk orders. If adopted, the proposal would regulate a plant at
Kingsport, Tennessee, under the Tennessee Valley order, instead of the
Carolina order, and it would keep regulated under the Tennessee Valley
order a plant at Somerset, Kentucky, that otherwise might become
regulated under the Louisville-Lexington-Evansville order. The
proposals were submitted by Land-O-Sun Dairies, which operates the
Kingsport, Tennessee, plant, and Southern Bell Dairy, Inc., which
operates the Somerset, Kentucky, plant. These handlers contend that
without the suspension they would be subject to pricing disparities
that could jeopardize their business.
DATES: Comments are due no later than January 20, 1994.
ADDRESSES: Comments (two copies) should be sent to USDA/AMS/Dairy
Division, Order Formulation Branch, room 2968, South Building, P.O. Box
96456, Washington, DC 20090-6456.
FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist,
USDA/AMS/Dairy Division, Order Formulation Branch, room 2968, South
Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 690-1932.
SUPPLEMENTARY INFORMATION: Prior document in this proceeding:
Notice of Proposed Suspension (DA-93-29): Issued October 22, 1993;
published October 28, 1993 (58 FR 57970).
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires the
Agency to examine the impact of a proposed rule on small entities.
Pursuant to 5 U.S.C. 605(b), the Administrator of the Agricultural
Marketing Service has certified that this action would not have a
significant economic impact on a substantial number of small entities.
This action would lessen the regulatory burden on small entities by
removing pricing disparities that are causing or could cause financial
hardship for certain distributing plants.
The Department is issuing this proposed action in conformance with
Executive Order 12866.
This proposed suspension has been reviewed under Executive Order
12778, Civil Justice Reform. This action is not intended to have a
retroactive effect. This action will not preempt any state or local
laws, regulations, or policies, unless they present an irreconcilable
conflict with the rule.
The Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601-674), provides that administrative proceedings must be
exhausted before parties may file suit in court. Under section
608c(15)(A) of the Act, any handler subject to an order may file with
the Secretary a petition stating that the order, any provisions of the
order, or any obligation imposed in connection with the order is not in
accordance with law and requesting a modification of the order or to be
exempted from the order. A handler is afforded the opportunity for a
hearing on the petition. After a hearing, the Secretary would rule on
the petition. The Act provides that the district court of the United
States in any district in which the handler is an inhabitant, or has
its principal place of business, has jurisdiction in equity to review
the Secretary's ruling on the petition, provided a bill in equity is
filed not later than 20 days after the date of the entry of the ruling.
Notice of proposed rulemaking was published in the Federal Register
(58 FR 57970) on October 28, 1993, concerning the proposed suspension
of certain provisions of the Georgia, Carolina, and Tennessee Valley
Federal milk orders (DA-93-29). The public was afforded the opportunity
to comment on the notice by submitting written data, views, and
arguments by November 4, 1993. Six comment letters were received
concerning the three-market proposed suspension.
Subsequent to the issuance of the above proposed suspension, a
suspension request was received from a handler regulated under the
Tennessee Valley order that in effect expands the initial suspension
issue to the Louisville-Lexington-Evansville order. It also affects a
proposed suspension that was issued earlier for the Louisville order.
Because of the interrelationship of these several requests, it has been
determined that a revised proposed suspension involving all four orders
should be issued for comment. Therefore, notice is hereby given that,
pursuant to the provisions of the Agricultural Marketing Agreement Act
of 1937, as amended (7 U.S.C. 601-674), the suspension of the following
provisions of the orders regulating the handling of milk in the
Carolina, Georgia, Tennessee Valley, and Louisville-Lexington-
Evansville marketing areas is being considered for a 23-month period
beginning February 1, 1994:
1. In Sec. 1005.7(d)(3) of the Carolina order, the words ``from'',
``there'', ``a greater quantity of route disposition, except filled
milk, during the month'', and ``than in this marketing area'';
2. In Sec. 1007.7(e)(3) of the Georgia order, the words ``, except
as provided in paragraph (e)(4) of this section,'';
3. In Sec. 1007.7 of the Georgia order, paragraph (e)(4);
4. In Sec. 1011.7(d)(3) of the Tennessee Valley order, the words
``from'', ``there'', ``a greater quantity of route disposition, except
filled milk, during the month'', and ``than in this marketing area'';
and
5. In Sec. 1046.2 of the Louisville-Lexington-Evansville order, the
word ``Pulaski''.
All persons who desire to send written data, views or arguments
about the proposed suspension should send two copies of them to the
USDA/AMS/Dairy Division, Order Formulation Branch, Room 2968, South
Building, P.O. Box 96456, Washington, DC 20090-6456, by the 10th day
after publication of this notice in the Federal Register.
The comment period is limited to 10 days so that the suspension, if
found appropriate, can be implemented quickly and thereby minimize
financial hardship and disruptive marketing conditions.
The comments that are sent will be made available for public
inspection in the Dairy Division during normal business hours (7 CFR
1.27(b)).
Statement of Consideration
This proposed suspension would allow a distributing plant at
Kingsport, Tennessee, that is located within the Tennessee Valley
marketing area and that meets all of the pooling standards of the
Tennessee Valley order to be regulated under that order rather than the
Carolina order, as now, despite the plant having greater sales in the
Carolina marketing area. It would also allow a distributing plant
located at Somerset, Kentucky, that has been regulated under the
Tennessee Valley order to remain regulated there even if it should
develop greater sales in the Louisville-Lexington-Evansville (Order 46)
marketing area. In addition, the proposed suspension would allow a
supply plant at Springfield, Kentucky, that has been supplying the
Somerset plant to remain pooled under the Tennessee Valley order
without having to make uneconomic shipments of milk that it contends
would be necessary if the Southern Belle plant shifted to Order 46.
1. The problem of Land-O-Sun Dairies, Inc. In recent months, the
blend price to producers at Kingsport, Tennessee, under the Tennessee
Valley order has been significantly higher than the blend price at that
location under the Carolina order. For example, during the months of
July through October 1993, the Tennessee Valley blend price at
Kingsport was 32 cents, 29 cents, 20 cents, and 20 cents, respectively,
higher than the Carolina blend price at Kingsport. Although the Class I
price at Kingsport is identical under both of these orders, the
Tennessee Valley order's higher Class I utilization has resulted in a
higher blend price at Kingsport during nearly every month for the past
two years.
The difference in blend prices at Kingsport requires Land-O-Sun
Dairies, as a Carolina order handler, to pay significant over-order
prices to retain its milk supply in competition with nearby handlers
regulated under the Tennessee Valley order. Land-O-Sun has indicated
that it cannot continue to pay these over-order prices without
jeopardizing the existence of its business. It therefore proposed a
suspension of certain provisions of Orders 5 and 11 that would allow it
to become regulated under Order 11.
As noted in the earlier proposed suspension, the paragraph that is
proposed to be suspended from the Georgia order is merely a conforming
change to preserve the status quo between the Carolina and Georgia
orders. This change is necessary to continue the regulation of a
Greenville, South Carolina, plant under the Georgia order. Without the
suspension, the plant would become regulated under the Carolina order.
2. The problem of Southern Belle Dairy Company. Southern Belle
Dairy at Somerset, Kentucky, has been regulated under Order 11 for the
past four years. However, recently it has acquired accounts that could
cause it to shift to Order 46.
In recent months, the blend price at Somerset under Order 11 has
been significantly higher than the blend price at that location under
Order 46. For example, during the months of July through October 1993,
the blend price under Order 11 at Somerset was 67 cents, 62 cents, 49
cents, and 25 cents, respectively, higher than the Order 46 price at
that location. Of these amounts, 19 cents is attributable to a 19-cent
higher Class I price at that location under Order 11. Southern Belle
contends that if it should shift to Order 46 it would have to pay
substantial over-order prices to its producers to retain its milk
supply. Moreover, slight changes in sales could cause it to shift back
and forth between the two orders, causing market instability and
uncertainty under the base-excess programs applicable to both orders.
3. The problem of Armour Food Ingredients Company. Armour Food
operates a supply plant and a nonpool manufacturing plant at
Springfield, Kentucky. The supply plant has been regulated under Order
11 since August 1992. If the Southern Belle plant shifts to Order 46,
Armour's supply plant would also become subject to the regulations of
Order 46 because the plant is supplying milk to the Southern Belle
plant. Armour contends that the plant would not qualify as a pool plant
based on its present milk handling practices because, under the net
shipment provision of Order 46, all of the shipments sent to its
manufacturing facility from pool distributing plants for surplus
disposal would be subtracted from its shipments to pool distributing
plants. Armour states that to keep the milk of its producers pooled
under Order 46 it would have to incur substantial increases in
transportation and assembly costs. To avoid these costs, Armour
proposed suspending language in the net shipment provision of Order 46.
4. Industry responses to the earlier proposed suspensions (DA-93-29
and DA-93-26). On the basis of the Land-O-Sun request, a notice of
proposed suspension of provisions in Orders 5, 7, and 11 was issued on
October 22, 1993 (DA-93-29)(58 FR 57970). Four comments were submitted
in support of the action, and two comments were filed in opposition to
it.
Milkco, Inc., a handler regulated under the Carolina order with a
plant in Asheville, North Carolina, stated that it supported the
proposed suspension. Southern Belle Dairy also submitted a letter in
support of the suspension.
A letter supporting the suspension also was received from Mid-
America Dairymen, Inc., on behalf of Southern Milk Sales, Inc., a dairy
cooperative with producer milk pooled on the Tennessee Valley, Georgia,
and Carolina orders. The cooperative notes in its letter that ``paying
higher over-order values to maintain its supply of milk would
jeopardize the existence of the affected distributing plant.''
Additionally, an individual dairy farmer who supplies producer milk
to Land-O-Sun filed a comment in support of the suspension. He stated
that if Land-O-Sun paid him a lesser price for his milk he would have
to sell to another handler.
Coburg Dairy, a Carolina order handler located in Charleston, South
Carolina, filed a comment opposing the suspension. Coburg competes with
the Kingsport plant for Class I sales in the Carolina market. The
handler argued that the regulation of the Kingsport plant under the
Tennessee Valley order would give the plant a competitive advantage in
the Carolina market since it has a lower Class I price and because it
presumably would not have to pay over-order prices to its producers.
The North Carolina Farm Bureau Federation, a general farm
organization, also objected to the proposed suspension on the grounds
that regulation of the Kingsport plant under Order 11 would jeopardize
the over-order prices in the Carolina market. The Federation indicated
that eroding Class I premiums and lower Class I utilization were
threatening the health of the dairy industry in North Carolina.
In response to the Armour Food request, a notice of proposed
suspension of the net shipment provision of Order 46 was issued on
September 22, 1993 (DA-93-26) (58 FR 50526). Three comments were
submitted.
Southern Belle supported the suspension, indicating that Armour was
supplying it with milk and could encounter problems of assembly and
transportation if the plant became subject to the provisions of Order
46 because of a shift in regulation of the Southern Belle plant from
Order 11 to Order 46.
Milk Marketing, Inc., a cooperative association with 688 dairy
farmers under Order 46, and The Kroger Company, a handler operating
Winchester Farms Dairy at Winchester, Kentucky, filed comments opposing
the proposed suspension of the net shipment provision. MMI argued that
if the net shipment provision is suspended, the intent of the order
would not be carried out appropriately and that the needs of the order
would not be met in an efficient manner. Kroger stated that there was
not an abundant amount of milk available for fluid use under Order 46
and that the net shipment provision was needed to help assure that
distributing plants have sufficient supplies of milk to meet their
fluid requirements. It contends that there is no justification to relax
the performance provisions of the order during the season when milk
availability is reduced and Class I sales increase simply because there
is a ``possibility'' that a distributing plant may switch regulation
from Order 11 to Order 46.
No final action has been taken on Armour's request to suspend the
net shipment provision. However, since that issue would become moot
under the proposed suspension being considered herein, final action on
the Armour proposal is being held in abeyance pending the outcome of
the current proposal.
List of Subjects in 7 CFR Parts 1005, 1007, 1011, and 1046
Milk marketing orders.
Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-
674.
Dated: January 3, 1994.
Lon Hatamiya,
Administrator.
[FR Doc. 94-424 Filed 1-7-94; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 94-415 Conservation and Environmental Programs
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1293-1305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-415]
[[Page Unknown]]
[Federal Register: January 10, 1994]
VOL. 59, NO. 6
Monday, January 10, 1994
=======================================================================
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DEPARTMENT OF AGRICULTURE
Agricultural Stabilization and Conservation Service
7 CFR Part 701
RIN 0560-AD08
Conservation and Environmental Programs
AGENCY: Agricultural Stabilization and Conservation Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule revises the Agricultural Stabilization and
Conservation Service (ASCS) regulations governing the Agricultural
Conservation Program (ACP), Emergency Conservation Program (ECP), and
the Forestry Incentives Program (FIP). This proposed rule incorporates
amendments made to the ACP, ECP, and FIP; revises procedures to reflect
current policies; and incorporates the Water Quality Incentive Projects
(WQIP) into the ACP.
DATES: Comments must be received on or before February 9, 1994 in order
to be assured of consideration.
ADDRESSES: Send comments on this proposed rule to Director,
Conservation and Environmental Protection Division, United States
Department of Agriculture (USDA), P.O. Box 2415, Washington, DC 20013-
2415. All written submissions made pursuant to this rule will be
available for further inspection in room 4714, South Building, USDA,
between the hours of 8:15 a.m. and 4:45 p.m., Monday through Friday,
except holidays.
FOR FURTHER INFORMATION CONTACT: Chief, Conservation and Environmental
Activities Branch, Conservation and Environmental Protection Division,
ASCS, USDA, P.O. Box 2415, Washington, DC 20013-2415, telephone 202-
720-7333.
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
Information collection requirements contained in the current
regulation at 7 CFR part 701 have been approved by the Office of
Management and Budget under the provisions of 44 U.S.C. chapter 35 and
have been assigned OMB Number 0560-0082. ASCS will resubmit these
requirements to OMB for review in light of the amendments set forth in
this proposed rule.
Executive Order 12866
This proposed rule is issued in conformance with Executive Order
12866. Based on information compiled by the Department, it has been
determined that this proposed rule:
(1) Would have an annual effect on the economy of less than $100
million;
(2) Would not adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities;
(3) Would not create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency;
(4) Would not alter the budgetary impact of entitlements, grants,
user fees, or loan programs or rights and obligations of recipients
thereof; and
(5) Would not raise novel legal or policy issues arising out of
legal mandates, the Presidents's priorities, or principles set forth in
Executive Order 12866.
Federal Assistance Program
The titles and numbers of the Federal Assistance Programs, as found
in the Catalog of Federal Domestic Assistance, to which this rule
applies are: Agricultural Conservation Program (ACP)--10.063; Emergency
Conservation Program (ECP)--10.054; and Forestry Incentives Program
(FIP)--10.064.
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this rule since ASCS is not required by 5 U.S.C. 553 or
any other provision of law to publish a notice of proposed rulemaking
with respect to the subject matter of this rule.
Environmental Evaluation
It has been determined by an environmental evaluation that this
action will have no significant impact on the quality of the human
environment, health, and safety. Therefore, neither an Environmental
Assessment nor an Environmental Impact Statement is needed.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372 which requires 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
This proposed rule has been reviewed in accordance with Executive
Order 12778. The provisions of this proposed rule are not retroactive
and preempt State laws to the extent they are not consistent with the
provisions of this proposed rule. Before any judicial action may be
brought regarding the provisions of this proposed rule, the
administrative appeal provisions of 7 CFR part 780 must be exhausted.
Background
The ACP is authorized generally by Sections 7-17 of the Soil
Conservation and Domestic Allotment Act as amended (the Act) (16 U.S.C.
22590g et seq.). The program provides financial and technical
assistance to encourage agricultural producers to voluntarily perform
enduring soil and water conservation, water quality, and pollution
abatement measures, including practices or programs which are deemed
essential to maintain soil productivity, prevent soil depletion,
maintain water quality, or prevent increased cost of production.
A WQIP is authorized by the Food, Agriculture, Conservation, and
Trade Act of 1990 (16 U.S.C. 3831 et seq.). However, Congress funded
WQIP as a part of the ACP. Accordingly, the WQIP is a voluntary
incentive program conducted pursuant to the Act to develop and
implement agricultural water quality protection plans on up to 10
million acres.
The ECP is authorized by the Agricultural Credit Act of 1978 (16
U.S.C. 2201 et seq.). This program is designed to provide cost-share
assistance for emergency restoration work to meet only the critical
needs of agricultural producers due to drought or other natural
disaster.
The FIP is authorized by section 4 of the Cooperative Forestry
Assistance Act of 1978 (16 U.S.C. 2103) and is designed to increase the
nation's supply of timber products from private nonindustrial forest
lands. The purpose of FIP is to encourage private landowners to apply
forestry practices that will provide for afforestation of suitable open
lands and reforestation of cut-over or other nonstocked forest lands
and to encourage intensive multi-purpose forest resource management and
protection so as to provide for cost-effective timber production and
other related forest resources needs.
The regulation governing these programs is being restructured and
simplified to provide an easier and more effective structure for the
use of this regulation. The ACP is being revised to:
(1) Incorporate several amendments that have been published in the
Federal Register;
(2) Incorporate the WQIP;
(3) Clarify that producers wanting to participate with practice
WP4, Agricultural Waste Control Facilities, must have been in operation
for at least 5 years;
(4) Adjust the LTA payment limitation to reflect that the payment
limitation shall be based on the number of years remaining on the LTA;
and
(5) reflect that payments shall be based on attribution. The ECP is
being revised to:
(1) Reflect that the Disaster Assistance Act of 1989 (16 U.S.C.
2202) authorized assistance for confined livestock operations; and
(2) Define land subject to frequent damage which is ineligible for
cost-share assistance.
The FIP is being restructured for clarity.
Currently, ACP practices are prioritized locally by county
Agricultural Stabilization and Conservation committees to ensure that
the most severe conservation and environmental problems are addressed.
However, this county committee prioritization process has been
criticized as not addressing the most severe conservation and
environmental problems. Therefore, comments are requested regarding the
manner in which ACP practices and allocation of funds could be
prioritized to achieve greater conservation and environmental benefits
at the least Federal cost. Although not exclusive, such considerations
for prioritization may be based on temporary versus longer-term
practices or type of conservation or environmental benefit. Further,
consideration should be given to whether priorities should be
established by the National, State, or county Agricultural
Stabilization and Conservation Service offices. Moreover, for ACP, ECP
and FIP, comments are requested on ways in which the programs can best
be targeted in order to ensure that public benefits, rather than
private benefits are maximized with Federal expenditures. For example,
the use of ACP for temporary practices may not provide large public
benefits.
Comments are requested as to whether funds should be targeted
toward designated areas with impaired water quality. Similarly, cost-
share practices could be selected for a region where they will
contribute to an identified problem. Thus, nutrient management
practices would be designated as a cost-share option in areas where
nutrients have been identified as a water quality problem.
List of Subjects in 7 CFR Part 701
Disaster assistance, Forest and forest products, Grant programs--
agriculture, Grant programs--natural resources, Reporting and
recordkeeping requirements, Rural areas, Soil conservation, Water
resources, Wildlife.
For the reasons set forth in the preamble, 7 CFR Part 701 is
proposed to be revised to read as follows:
PART 701--CONSERVATION AND ENVIRONMENTAL PROGRAMS
Subpart A--General Provisions
Sec.
701.1 Background.
701.2 Administration.
701.3 Definitions.
701.4 Restriction on program eligibility.
701.5 Practice specifications.
701.6 Responsibility for referred technical phases of practices.
701.7 Items of costs on which rates of cost-share assistance may be
based.
701.8 Repair, upkeep, and maintenance of practices.
701.9 Public benefits when installing practices.
701.10 Payments for uncompleted practices.
701.11 Practices involving the establishment or improvement of
vegetative cover.
701.12 Failure to meet minimum requirements or failure to comply
fully with program provisions.
701.13 Practices carried out with aid from ineligible persons.
701.14 Division of cost-share assistance.
701.15 Applying cost-share assistance limitations.
701.16 Persons eligible to file application for payment of cost-
share assistance.
701.17 Time and manner of filing application and required
information.
701.18 Death, incompetency, or disappearance.
701.19 Appeals.
701.20 Performance based on advice or action of COC or STC.
701.21 Compliance with regulatory measures.
701.22 Maintenance and use of practice.
701.23 Actions defeating purpose of program.
701.24 Depriving others of cost-share assistance.
701.25 Filing false claims.
701.26 Cost-share assistance not subject to claims.
701.27 Assignments.
701.28 Environmental considerations.
701.29 Information collection requirements.
701.30-701.99 [Reserved]
Subpart B--Agricultural Conservation Program
701.100 Program objective.
701.101 State funds.
701.102 County funds.
701.103 Availability of funds.
701.104 Eligible person.
701.105 Eligible land.
701.106 Conservation practices.
701.107 County programs.
701.108 State programs.
701.109 Selection of practices.
701.110 Levels and rates of cost-share assistance.
701.111 Starting practices.
701.112 Method of approval.
701.113 Long-term agreements.
701.114 Replacement, enlargement, or restoration.
701.115 Pooling agreements.
701.116 Special provisions for low-income farmers and ranchers.
701.117 Maximum cost-share assistance limitation.
701.118 Completion of practices.
701.119 Time of filing payment application.
701.120 Water Quality Incentive Projects.
701.121-701.199 [Reserved]
Subpart C--Emergency Conservation Program
701.200 Program objective.
701.201 Program availability.
701.202 Eligibility of person and land.
701.203 Emergency Conservation Program practices.
701.204 Practice approval.
701.205 Extent of cost-share assistance.
701.206 Eligible costs.
701.207 Filing requests.
701.208 Approving requests.
701.209 Pooling agreements.
701.210 Payment approval.
701.211-701.299 [Reserved]
Subpart D--Forestry Incentives Program
701.300 Program objective.
701.301 Designated counties.
701.302 Eligible person, land, and ownerships.
701.303 Program funds.
701.304 Eligible practices and cost-share assistance requirements.
701.305 The national FIP.
701.306 Development of State FIP.
701.307 Development of county FIP.
701.308 Adaptation of practices.
701.309 Levels and rates of cost-share assistance.
701.310 Prior approval for cost-share assistance.
701.311 Methods of approval.
701.312 Long-term agreements.
701.313 Restoration of practices.
701.314 FIP maximum cost-share assistance limitations.
701.315 Completion of practice.
701.316 Time of filing payment application.
701.317-701.399 [Reserved]
Authority: 16 U.S.C. 590d, 590g-590o, 590p(a), 590q, 1501-1510,
1606, 2101-2111, 2201-2205, 3831; 48 U.S.C. 1469d(c).
Subpart A--General Provisions
Sec. 701.1 Background.
(a) Through the conservation and environmental programs
administered by the Department of Agriculture, the Federal Government
will share with farmers, ranchers, and other eligible private
landowners in the United States and the applicable territories and
possessions of the United States, the cost of performing:
(1) Approved soil and water conservation, water quality, and
pollution abatement practices including related wildlife conservation
practices.
(2) Emergency conservation measures.
(3) Approved forestry practices.
(b) The Federal Government will provide incentive payments to
farmers, ranchers, and other private landowners in applicable areas of
the United States to establish Water Quality Incentive Projects (WQIP)
practices.
(c) Cost-share assistance or incentive payments may be made
available to eligible program participants by the Agricultural
Stabilization and Conservation Service (ASCS) for:
(1) Soil and water conservation, water quality, and pollution
abatement practices under the Agricultural Conservation Program (ACP)
which includes WQIP.
(2) Practices to correct damage to land or conservation practices
caused by natural disaster under the Emergency Conservation Program
(ECP).
(3) Installation of water conservation measures under the ECP
during periods of severe drought.
(4) Forestry practices under the ACP and the Forestry Incentives
Program (FIP).
(d) Information on the practices for which costs will be shared,
the exact specifications and rates of cost-share assistance for such
practices, and the eligibility requirements for participating in the
programs, may be obtained from the County Agricultural Stabilization
and Conservation (ASC) Committee (county committee) for the county in
which the farm, ranch, or other eligible land is administered or from
the State ASC committee (State committee) for the State in which such
county is located.
(e) The provisions at subpart A apply to the programs specified in
subparts B through D.
Sec. 701.2 Administration.
(a) The regulations in this part will be administered under the
general supervision of the Administrator, ASCS and shall be carried out
in the field by State and county Agricultural Stabilization and
Conservation committees (State and county ASC committees).
(b) State and county ASC committees, and representatives and
employees thereof do not have the authority to modify or waive any of
the provisions of the regulations of this part.
(c) The State ASC committee shall take any action required by these
regulations which has not been taken by the county ASC committee. The
State ASC committee shall also:
(1) Correct, or require a county ASC committee to correct any
action taken by such county ASC committee which is not in accordance
with the regulations of this part, or
(2) Require a county ASC committee to withhold taking any action
which is not in accordance with the regulations of this part.
(d) No provision or delegation herein to a State or county ASC
committee shall preclude the Administrator, ASCS, or a designee, from
determining any question arising under the regulations of this part or
from reversing or modifying any determination made by a State or county
ASC committee.
Sec. 701.3 Definitions.
(a) The terms defined in part 719 of this chapter shall be
applicable to this part and all documents issued in accordance with
this part, except as otherwise provided in this section.
(b) The following definitions shall apply to this part:
ACP means the Agricultural Conservation Program.
Applicant means a person who submits to ASCS an intention to
participate in a cost-share program.
ASCS means the Agricultural Stabilization and Conservation Service
of the United States Department of Agriculture.
Conservation District (CD) means a subdivision of a State organized
pursuant to an applicable State Conservation District law or in
instances where a CD does not exist, the State Conservationist of the
Soil Conservation Service.
Cost-share payment means the payment made by ASCS to producers who
complete an approved program practice.
County committee (COC) means the Agricultural Stabilization and
Conservation county committee of the ASCS.
County Conservation Review Group (CCRG) consists of the county ASC
committee; the county extension agent; a Soil Conservation Service
(SCS) representative; a Forest Service (FS) representative; a Farmers
Home Administration representative; a representative of the State
forestry agency or its equivalent, when the representative accepts an
invitation to be a member of the group; and a representative of the CD
in the county, where the governing board of the district accepts an
invitation to designate a representative (if there is more than one
district in the county, the governing boards of the districts may
jointly designate one person to represent all the districts). The CCRG
shall have the responsibilities as provided for in Secs. 701.107 and
701.307.
CPO means the conservation plan of operations developed for the
participant by the SCS.
Deputy Administrator means the Deputy Administrator, State and
County Operations, or designee, of the ASCS.
ECP means the Emergency Conservation Program.
Eligible person means a person who meets all program eligibility
requirements and is eligible to participate and receive assistance.
Farm or ranch means that area of land considered as a farm under
the regulations governing reconstitution of farms, allotments, and
bases, at part 719 of this chapter, as amended, for ACP, ECP, and WQIP,
and, for the FIP, farm or ranch means eligible land (or ownership
tracts) as provided in Sec. 701.302.
FIP means the Forestry Incentives Program.
FS means the Forest Service of the United States Department of
Agriculture.
Incentive payment means, unless the context indicates otherwise,
the incentive payment specified in the WQIP agreement which, subject to
the availability of funds, is made to a participant to compensate such
participant who implemented conservation practices or management
changes that reduce agricultural pollutants.
National Conservation Review Group (NCRG) consists of
representatives of the ASCS; SCS; U.S. Forest Service; Extension
Service; Economic Research Service; Farmers Home Administration;
Agricultural Research Service; Office of General Counsel, U.S.
Department of Agriculture; Office of Budget, Planning and Analysis,
U.S. Department of Agriculture; Environmental Protection Agency; Office
of Management and Budget; and Fish and Wildlife Service, U.S.
Department of the Interior (DOI). The NCRG is responsible for
recommending changes to the Administrator, ASCS, in program
administrative procedures and policy guidelines, and evaluations of
program effectiveness and operating arrangements.
Participant means an owner, operator, landlord, tenant, or
sharecropper of a farm or ranch who shares in the cost of the practice
and who will receive cost-share or incentive assistance.
Program year means the Federal fiscal year for accounting purposes.
SCS means the Soil Conservation Service of the United States
Department of Agriculture.
State means any one State of the United States, Puerto Rico, the
Virgin Islands, and:
(1) In the case of the ACP and ECP, Guam, the American Samoa, and
the Commonwealth of the Northern Mariana Islands; and
(2) In the case of the FIP, Guam, the American Samoa, the
Commonwealth of the Northern Mariana Islands, the Trust Territory of
the Pacific Islands and the territories and possessions of the United
States.
State committee (STC) means the ASCS State Agricultural
Stabilization and Conservation Committee.
State Conservation Review Group (SCRG) consists of the STC, the
State Director of Extension; the State Conservationist of the SCS; a
representative of the U.S. Forest Service; a representative of the
Farmers Home Administration; a representative of the State forestry
agency, or its equivalent, when the representative accepts an
invitation to be a member of the group; a representative of the State
Soil Conservation Committee, or its equivalent, when the representative
accepts an invitation to be a member of the group; and a representative
of the State water quality agency, or its equivalent when it accepts an
invitation to be a member of the group. The SCRG has the responsibility
provided for in Sec. 701.108.
State Forestry Committee, or its equivalent, consists of the State
forester or equivalent State official, who serves as chairperson; and a
representative at the State level of the following USDA agencies: ASCS;
FS; Extension Service; Farmers Home Administration; and SCS. At the
discretion of the State Forestry Committee, State and local interests
may also be involved. The function of the State Forestry Committee is
to coordinate forestry budget proposals, agency roles in education,
technical assistance, technology transfers, and forestry incentives.
WQIP means the Water Quality Incentive Projects authorized under
the ACP.
WQIP Agreement means the program agreement including the applicable
water quality resource management plan entered into between ASCS and
the participant. Such agreement shall set forth the terms and
conditions for participation in the WQIP pursuant to this part.
Sec. 701.4 Restriction on program eligibility.
The regulations in part 796 of this chapter prohibiting the making
of payments to program participants who harvest or knowingly permit to
be harvested for illegal use, marijuana or other such prohibited drug-
producing plants on any part of the land owned or controlled by such
program participants are applicable to these programs.
Sec. 701.5 Practice specifications.
(a) Minimum specifications that practices must satisfy to be
eligible for cost-share assistance shall be set forth in the county
program within the authority established by the STC and Deputy
Administrator, State and County Operations (DASCO) or incorporated by
specific reference to a standard publication or other written document
containing such specifications.
(b) Practice specifications shall represent the minimum levels of
performance needed in order for the practice to be effective in meeting
the program objective. Cost-share assistance shall be limited to these
minimum levels.
Sec. 701.6 Responsibility for referred technical phases of practices.
The SCS and the FS are responsible for technical phases of
practices as assigned and such assignment will be specified in State
and county programs.
(a) The SCS State Conservationist may use the expertise from
private consultants, State, or Federal agencies in performing the
assigned responsibilities if SCS certifies that assigned practices are
completed properly. No responsibilities will be assigned for counties
when DASCO and the Chief, SCS, determine that it would not be
administratively practicable for the SCS to discharge such
responsibilities. In such counties, these responsibilities shall be
assumed by COC's. The SCS may utilize resources of the State forestry
agencies in performing assigned responsibilities for practices
involving the establishment of windbreaks or shelterbelts on farmland
to prevent wind erosion.
(b) The FS is responsible for the technical phases of practices or
components of practices involving the planting of trees for forestry
purposes and those involving the improving or protecting of a stand of
forest trees as specified in State and county programs. The FS may use
the assistance of private consultants, State, or Federal agencies in
performing these assigned responsibilities if FS certifies that
assigned practices are completed properly; however, services of State
forestry agencies will be used to the extent that such services are
available.
Sec. 701.7 Items of cost on which rates of cost-share assistance may
be based.
Except as otherwise provided by ASCS, the cost of any direct and
significant factor in the performance of a practice may be considered
in establishing the rate of cost-share assistance for the practice.
Sec. 701.8 Repair, upkeep, and maintenance of practices.
Cost-share assistance shall not be authorized for repairs or for
normal upkeep or maintenance of any practice.
Sec. 701.9 Public benefits when installing practices.
Persons responsible for any aspect of performing practices shall
install the practices to promote public benefits by:
(a) Improving or preserving environmental quality and ecological
balance by preventing or abating pollution and other environmental
degradation;
(b) Benefiting the community by such means as preserving open space
or enhancing the appearance of the area;
(c) Benefiting wildlife and other desirable life forms;
(d) Preserving historic, archeological, or scenic sites, wetlands,
ecologically critical areas, and prime farmlands;
(e) Avoiding the creation of hazards to persons or animals; and
(f) Avoiding actions that may adversely affect an endangered or
threatened species or flood plains.
Sec. 701.10 Payments for uncompleted practices.
Cost-share assistance approved under these programs shall not be
considered earned until all components of the approved practice are
completed according to applicable specifications and program
provisions. Cost-share assistance for completed components of an
approved practice may be paid only on the condition that the eligible
participant will complete the remaining components of the practice
within the time prescribed by the COC regardless of whether cost-share
assistance is offered for them unless the COC subsequently determines
they are prevented from doing so because of reasons beyond their
control.
Sec. 701.11 Practices involving the establishment or improvement of
vegetative cover.
(a) Costs may be shared even though an adequate stand is not
established, for practices involving the establishment or improvement
of vegetative cover, including trees, if the COC determines, according
to standards approved by the STC, that the practice was carried out in
a manner which could normally result in the establishment of an
adequate stand and that failure to establish an adequate stand was due
to weather or other conditions beyond the control of the participant.
The COC may require, as a condition of cost-share assistance in such
cases, that the area be reseeded or replanted or that other needed
protective measures be performed. Cost-share assistance in such cases
may also be approved for repeat applications of measures previously
performed or for additional eligible measures. Cost-share assistance
for such measures may be approved to the extent such measures are
needed to ensure an adequate stand even though the measures may be less
than that required by the applicable practice wording for initial
approvals.
(b) In the case of FIP, replanting of trees is required where the
landowner received cost-share assistance for site preparation.
Sec. 701.12 Failure to meet minimum requirements or failure to comply
fully with program provisions.
(a) Notwithstanding other provisions of these programs, costs may
be shared for performance actually rendered even though the minimum
requirements for a practice are not satisfied, if the participant
establishes to the satisfaction of the COC and the county
representative of any other agency having responsibility for technical
phases of the practice that a reasonable effort was made to satisfy the
minimum requirements and that the practice as performed adequately
solves the need for the practice.
(b) Notwithstanding the provisions in paragraph (a) of this
section, the Deputy Administrator may in accordance with part 791 of
this chapter authorize relief when a participant acting in good faith
failed to fully comply with the program provisions.
Sec. 701.13 Practices carried out with aid from ineligible persons.
Financial assistance which is made available, or will be made
available, to a program participant from a person ineligible for cost-
share assistance under this part for the practice, including aid from a
State or Federal agency other than aid made available under this part,
shall be deducted from the program participant's total costs incurred
for the practice for purposes of determining the applicant's eligible
reimbursable costs under this part.
Sec. 701.14 Division of cost-share assistance.
(a) The cost-share assistance shall be credited to the participant
who performed the practice. If more than one person contributed to the
performance of the practice, the cost-share assistance for the practice
shall be divided among those persons in the proportion that the COC
determines they contributed to the performance of the practice. In
making this determination, the COC shall consider the value of the
labor, equipment, or material contributed by each person toward
performance.
(b) The allowance by an eligible person of a credit to another
eligible person in the form of an adjustment in rental, an exchange of
cash or other consideration shall not be considered as a contribution
to the performance of any practice, unless ASCS is satisfied that such
credit is directly related to the cost of the practice. A person fully
reimbursed through an adjustment in rental, an exchange of cash, or
other consideration shall not be considered as having contributed to
the practice performance.
Sec. 701.15 Applying cost-share assistance limitations.
(a) All or any part of cost-share assistance which otherwise would
be due any participant for a program year may be withheld, or required
to be refunded, if, with respect to that program year, the participant
has adopted, or participated in adopting, any scheme or device designed
to evade a maximum cost-share limitation.
(b) The provisions of 7 CFR 1497.109(a), which provide that
payments shall be attributed to each member of an entity, shall apply
in determining whether certain individuals or other entities are to be
considered as separate persons for the purpose of applying any maximum
payment limitations provided for in this part.
Sec. 701.16 Persons eligible to file application for payment of cost-
share assistance.
Any eligible person as defined in Secs. 701.104, 701.202, and
701.302, who bore a part of the cost of an approved practice, is
eligible to file an application for cost-share assistance. For ACP
practice WP4, Agricultural Waste Control Facilities, an eligible person
is one who has been in an operation from which the agricultural waste
is produced for at least 5 years.
Sec. 701.17 Time and manner of filing application and required
information.
(a) Participants shall submit to the county office the information
needed to establish the extent of the performance of approved practices
and compliance with applicable program provisions. The time limits for
submission of such information shall be established where necessary for
efficient administration of the programs. Such time limits shall afford
a full and fair opportunity to those eligible to submit the information
within the period prescribed. At least 2 weeks notice of any general
time limit prescribed shall be provided to the public.
(b) Other means of notification of program availability including
radio announcements and individual notices to the person affected,
shall be used to the extent practicable. Notice of such time limits
which are applicable to individual persons, such as time limits for
reporting performance of approved practices, shall be issued in writing
to the person affected. Exceptions to the time limits may be made in
cases where failure to submit required forms and information within the
applicable time limits is due to reasons beyond the control of the
farmer or rancher.
Sec. 701.18 Death, incompetency, or disappearance.
In case of death, incompetency, or disappearance of any
participant, any cost shares due shall be paid to the successor,
determined in accordance with provisions of the regulations in part 707
of this chapter.
Sec. 701.19 Appeals.
Any person may obtain reconsideration and review of determinations
affecting participation in these programs, in accordance with part 780
of this chapter.
Sec. 701.20 Performance based on advice or action of COC or STC.
Cases involving performance rendered in good faith in reliance upon
action or advice of an authorized representative of a STC or COC shall
be considered according to part 790 of this chapter.
Sec. 701.21 Compliance with regulatory measures.
Participants who perform practices shall be responsible for
obtaining the authorities, rights, easements, or other approvals
necessary to the performance and maintenance of the practices according
to applicable laws and regulations. The participant with whom the cost
of the practice is shared shall be responsible to the Federal
Government for any losses it may sustain because such participant
infringes on the rights of others or fails to comply with applicable
laws or regulations.
Sec. 701.22 Maintenance and use of practice.
Each participant receiving cost-share assistance is responsible for
the required maintenance and proper use of the practice. Each practice
shall have an established lifespan or minimum period of time that it is
expected to function as a conservation practice with proper
maintenance. If ASCS determines that a practice has not been properly
maintained for the established lifespan, the participant receiving the
cost-share assistance shall refund all or any part of such cost-share
assistance as determined appropriate by the ASC COC. Further, any
agreement providing for cost-share assistance will be terminated, with
respect to the land on which the practice is located, if there is
voluntary loss of control of the land by the participant receiving the
cost-share assistance and the person acquiring control of such land
elects not to become a successor in interest to the agreement. If the
agreement providing for cost-share assistance is terminated as a result
of the voluntary loss of control of the land, each participant
receiving cost-share assistance under that agreement shall be liable
for refunding to ASCS any cost-share assistance which has been received
with respect to the practice. In addition, such person shall forfeit
any right to receive any further cost-share assistance with respect to
the land on which the practice is located.
Sec. 701.23 Actions defeating purpose of program.
If the STC or COC determines that a participant has taken any
action which tends to defeat the purposes of these programs, the
participant may be required to refund all or part of any of these
program payments otherwise due or paid that participant during the
program year. These actions include, but are not limited to, failure to
properly maintain or deliberately destroying a practice carried out
under a prior program year.
Sec. 701.24 Depriving others of cost-share assistance.
If the STC or COC determines that any participant has employed any
scheme or device to deprive any other person of cost-share assistance,
the participant may be required to refund all or part of any of these
program payments otherwise due or paid that person during the program
year. A scheme or device includes, but is not limited to, coercion,
fraud, or misrepresentation.
Sec. 701.25 Filing false claims.
If the STC or COC determines that any person has knowingly supplied
false information or filed a false claim, that person is ineligible for
cost-share assistance under the program year with respect to which
information or claim was filed. False information or a false claim
includes, but is not limited to, a request for payment for a practice
not carried out or for practices which do not meet the required
specifications. Any amounts paid under these circumstances shall be
refunded and any amounts otherwise due the participant shall be
withheld. The withholding or refunding of cost shares will be in
addition to any other penalty or liability otherwise imposed by law.
Sec. 701.26 Cost-share assistance not subject to claims.
Any cost-share assistance or portion thereof due any participant
shall be allowed without regard to questions of title under State law,
and without regard to any claim or lien against the crop, or proceeds
thereof, in favor of the owner or any other creditor except agencies of
the U.S. Government. The regulations issued by the Secretary governing
offsets and withholdings at part 1403 of this title shall be applicable
to these programs.
Sec. 701.27 Assignments.
Any participant who may be entitled to any cost-share assistance
under these programs may assign the right thereto, in whole or in part,
according to the regulations governing the assignment of payments at 7
CFR part 1404.
Sec. 701.28 Environmental considerations.
All actions implemented under the programs in this part shall be in
compliance with regulations issued at part 799 of this chapter, which
includes the procedures for complying with the National Environmental
Policy Act, Floodplain Management and Wetland Protection and other
environmental concerns.
Sec. 701.29 Information collection requirements.
Information collection requirements contained in this part have
been approved by the Office of Management and Budget under the
provisions at 44 U.S.C. Chapter 35 and have been assigned OMB Number
0560-0082.
Secs. 701.30-701.99 [Reserved]
Subpart B--Agricultural Conservation Program
Sec. 701.100 Program objective.
(a) The objective of the ACP is to restore and protect the Nation's
land and water resources. This objective will be accomplished through a
program that considers:
(1) The need to control erosion and sedimentation from agricultural
land and conserve the water resources on such land.
(2) The need to control pollution from animal wastes.
(3) The need to facilitate sound resource management systems
through soil and water conservation.
(4) The need to encourage voluntary compliance by agricultural
producers with Federal and State requirements to solve point and
nonpoint sources of pollution.
(5) National priorities reflected in the National Environmental
Policy Act of 1969, the Resource Conservation Act of 1977, and other
congressional and administrative actions.
(6) The degrees to which the measures contribute to the national
objective of ensuring a continuous supply of food and fiber necessary
for the maintenance of a strong and healthy people and economy.
(7) The type of conservation measures needed to improve water
quality.
(8) The need to improve water quality.
(b) These objectives will ensure the continued supply of food and
fiber necessary for the maintenance of a strong and healthy people and
economy and provide for environmental conservation or enhancement.
Sec. 701.101 State funds.
Funds available for practices to be performed under the ACP will be
distributed among the States as determined by the Deputy Administrator.
Sec. 701.102 County funds.
The STC will allocate the funds available for practices among the
counties within the State consistent with the ACP's objective, and will
give particular consideration to the furtherance of special projects,
watershed conservation projects, resource conservation development
projects, approved State water quality plans, and other conservation
and pollution abatement projects sponsored locally.
Sec. 701.103 Availability of funds.
(a) The paying of the cost-share assistance provided herein is
contingent upon such appropriation as the Congress may provide for such
purpose; and the amounts of such cost shares shall be within the limits
authorized by such appropriation.
(b) Funds available for the ACP may be made available as needed for
practices to be performed under the Naval Stores Conservation Program,
according to instructions issued by the Deputy Administrator.
Sec. 701.104 Eligible person.
An eligible person is a farmer or rancher who as an individual,
partnership, association, corporation, estate, trust, other business
enterprise, or other legal entity (excluding districts which have
taxing authority, Federal agencies, States and State agencies,
including political subdivisions of a State) and, as an owner,
landlord, tenant, or sharecropper, participates or has an interest in
the operation of a farm or ranch for which cost share assistance has
been requested.
Sec. 701.105 Eligible land.
(a) The program is applicable to:
(1) Privately-owned lands;
(2) Land owned by a State or political subdivision of a State;
(3) Lands owned by corporations which are partly owned by the
United States;
(4) Lands temporarily owned by the United States or a corporation
wholly owned by it, which were not acquired or reserved for
conservation purposes, including lands administered by the Farmers Home
Administration, the U.S. Department of Defense, or by any other
Government agency designated by the Deputy Administrator.
(5) Any cropland operated by private persons which is owned by the
United States or a corporation wholly owned by it;
(6) Native American lands, except that where grazing operations are
carried out on Native American lands administered by the DOI, such
lands are within the scope of the program only if covered by a written
agreement approved by the DOI giving the operator an interest in the
grazing and forage growing on the land and a right to occupy the land
in order to carry out the grazing operations; and
(7) Noncropland owned by the United States on which practices are
performed by private persons where such practices directly conserve or
benefit nearby or adjoining privately owned lands of the persons
performing the practices and such persons maintain and use such
federally owned noncropland under agreement with the Federal agency
having jurisdiction thereof.
(b) The program is not applicable to:
(1) Noncropland owned by the United States which was acquired or
reserved for conservation purposes, or which is to be retained
permanently under Government ownership, including, but not limited to,
grazing lands administered by the FS, or by the Bureau of Land
Management, DOI (including lands administered under the Taylor Grazing
Act), or the Fish and Wildlife Service, DOI, except as indicated in
paragraph (a)(7) of this section.
(2) Nonprivate persons for performance of practices on any land
owned by the United States or a corporation wholly owned by it. A
nonprivate person is anyone except an individual, partnership,
association, corporation, estate, trust, or other business enterprise,
or other legal entity (excluding districts which have taxing authority,
Federal agencies, States and State agencies, including political
subdivisions of a State).
Sec. 701.106 Conservation practices.
Conservation practices as specified by the Deputy Administrator are
made available nationally under the ACP and may be included in the
State and county programs. Practices shall not be primarily production-
oriented and shall have primarily conservation, environmental, or
pollution abatement benefits. The practices are designed to be
consistent with the agricultural conservation policy stated in section
7 of the Soil Conservation and Domestic Allotment Act, as amended, and
national program policy, and are developed primarily to meet a definite
need to accomplish one or more of the following:
(a) Establish long-lasting protective cover.
(b) Improve or sustain existing protective cover.
(c) Conserve or safely dispose of water.
(d) Benefit wildlife.
(e) Establish or improve stands of forest trees.
(f) Give protection against soil erosion.
(g) Prevent or abate agricultural-related pollution of water, land,
and air.
(h) Meet special State or county conservation needs.
(i) Encourage energy conservation practices.
(j) Improve water quality.
Sec. 701.107 County programs.
(a) ACP shall be developed in each county by the COC, in
consultation with the CCRG in accordance with the National and State
development guidelines and policies provided. Subject to the
availability of funds, at least one public meeting per year shall be
held for this purpose.
(b) The county ACP shall be effective after approval by the STC.
Sec. 701.108 State programs.
(a) The SCRG shall develop recommendations for the State ACP. The
chairperson of the SCRG may also invite others with conservation or
water quality interests to participate in such deliberations. Subject
to the availability of funds, at least one public meeting per year
shall be held for this purpose.
(b) The State ACP shall consist of the guidelines and practices
authorized by the STC and approved by the Deputy Administrator after
considering the recommendations submitted by COC's.
Sec. 701.109 Selection of practices.
The practices to be included in the State or county ACP shall be
only those practices authorized by Deputy Administrator for which cost-
share assistance is essential to permit accomplishment of the ACP
objective.
Sec. 701.110 Levels and rates of cost-share assistance.
(a) The maximum level of cost-share assistance for each practice
shall be the percentage of the average cost of performing the practice
considered necessary to obtain the needed performance of the practice
and established at a level such that the participant will make a
significant contribution to the cost of performing the practice.
(b) Levels of cost-share assistance under annual agreements for
each practice shall not be in excess of seventy-five (75) percent of
the average cost of performing the practice as determined by the COC.
Where the Deputy Administrator determines a higher level of cost-share
assistance is necessary to provide adequate incentive for a participant
to perform a conservation practice, the Deputy Administrator may
specifically authorize a higher level. See Sec. 701.116 for special
provision for low-income farmers.
(c) Levels of cost-share assistance under long-term agreements
shall not be in excess of seventy-five (75) percent nor less than 50
percent of the average cost for each practice as determined by the COC.
(d) For the purpose of establishing rates of cost-share assistance,
the average cost of performing a practice may be the average cost for
either a county or a part of a county as determined by the COC.
Sec. 701.111 Starting practices.
Costs will not be shared for practices or components of practices
that are started before COC approval.
Sec. 701.112 Method of approval.
(a) The COC shall determine the extent to which Federal funds may
be made available to share the cost of each approved practice, taking
into consideration the county allocation, the conservation and
environmental problems in the county, the land involved, and the
practices for which requested cost-share assistance is considered by
the COC as most needed. The method approved shall provide for the
issuance of notices of approval showing for each approved practice the
number of units of the practice for which the Federal Government will
share in the cost and the amount of the cost-share assistance for the
performance of that number of units of the practice. To the extent
practicable, notices of approved practices shall be issued before
performance of the practice is started. No practice may be approved for
cost-share assistance except as authorized by the county program, or
according to procedures incorporated therein. Available funds for cost-
share assistance shall not be allocated on a proportionate share basis;
however, cost-share funds shall be directed to the accomplishment of
the most enduring benefits attainable.
(b) Cost-share assistance may be approved under annual agreements
or long-term agreements.
(c) Annual agreements may be approved in all counties. Long-term
agreements are limited to farms or ranches which are within Soil
Conservation Districts (or comparable districts) through which the SCS
provides planning and technical services, except:
(1) Farms and ranches located within a county designated for the
Great Plains Conservation Program (GPCP) are only eligible if not
covered by GPCP contract.
(2) Farms and ranches not located within a Soil Conservation
District or comparable district may be eligible for a long-term
agreement provided CPO's are developed by the farmer or rancher in
cooperation with the SCS and approved by an appropriate State official
or, in cases where an appropriate State official is not available,
approved by the SCS.
Sec. 701.113 Long-term agreements.
(a) The period of a long-term agreement shall be for not less than
three (3) program years nor more than ten (10) program years. The COC
and the signors to the long-term agreement in consultation with the SCS
representative shall mutually determine the period of the agreement.
(b) The long-term agreement will be based on a CPO for the farm or
ranch or portion thereof which has been approved by the Soil
Conservation District or comparable district or for farms or ranches
not located in a Soil Conservation District or comparable district, by
an appropriate State Official or the SCS, as applicable.
(c) The long-term agreement will provide that the farmer or rancher
will perform those measures in the CPO's which are determined to be
essential to meeting the basic conservation needs of the farm or ranch,
or portion thereof, regardless of whether cost-share assistance is
approved for such measures.
(d) The owner of the farm or ranch will be required to sign a long-
term agreement regardless of whether that person contributes to the
cost of approved practices thereon except in cases where the long-term
agreement consists wholly of integrated crop management practices.
(e) Any party to a long-term agreement who is not an owner of the
farm or ranch shall provide assurance of control of the land for the
duration of the period of the agreement.
(f) The level of cost-share assistance as provided in Sec. 701.110,
in effect for practices in all years of a long-term agreement shall be
the level in effect at the beginning year of the agreement. The rate of
cost-share assistance for payment purposes for such practice shall be
based on the average cost of performing the practice at the time the
practice is performed.
(g) A long-term agreement may be canceled for failure to fully
comply with the terms of the agreement if, after consulting with the
Soil Conservation District or comparable district board or if none
exists with a representative of the SCS, the State or COC determines
that the seriousness of the irregularities warrant such action. If the
agreement is canceled, the parties to the agreement are jointly and
severally responsible for refunding all cost shares paid and will
forfeit all rights to further payments under the agreement. In such a
case, no other refund or forfeiture provisions of these regulations
apply.
(h) A long-term agreement may be revised according to instructions
issued by the Deputy Administrator by mutual agreement between the
parties to the agreement and the COC based on approved changes in the
CPO's for the farm or ranch.
(i) An otherwise eligible person who acquires control of land under
an approved agreement may elect to become a successor in interest under
such agreement.
(j) An agreement will be terminated with respect to land for which
loss of control has occurred and where the person acquiring control of
such land elects not to become a successor in interest under the
agreement. If the loss of control is for reasons beyond the control of
the parties to the agreement, the COC will determine whether any cost-
share assistance previously paid shall be refunded; however, in no
event shall the refund be greater than would be required in cases where
loss of control is voluntary. If the loss of control is voluntary on
the part of the signatories to the agreement, the signatories will be
jointly and severally responsible for refunding all cost shares paid
and will forfeit all rights to further payments, with respect to the
land for which control is lost. However, a refund will not be required
for cost shares where the COC or the STC determine, after consulting
with a representative of the SCS, that failure to perform the remaining
practices in the agreement will not impair the effectiveness of the
practices which have been performed and that the completed practices
have provided conservation benefits consistent with the cost shares
which have been paid.
(k) An agreement may be terminated by the COC, after considering
the recommendation of the Soil Conservation District or comparable
district board or if none exists with a representative of the SCS if
such action is in the public interest. The COC will determine the
amount of cost shares previously paid that shall be refunded.
(l) An agreement may be terminated by the COC upon the written
request of the participant to a long-term agreement where no cost-share
assistance has been paid for any of the scheduled practices and where
the participant does not intend to perform any of the scheduled
practices.
Sec. 701.114 Replacement, enlargement, or restoration.
The establishment or installation of a practice, for the purposes
of the program shall be deemed to include the replacement, enlargement,
or restoration of a practice for which cost-share assistance has been
allowed if the practice has served its normal lifespan or if all of the
following conditions exist:
(a) Replacement, enlargement, or restoration of the practice is
needed to solve the related conservation or environmental problem.
(b) The failure of the original practice was not due to the lack of
proper maintenance by the current operator.
(c) The COC believes that the replacement, enlargement, or
restoration of the practice merits consideration to an equal extent
with other practices.
(d) The replacement, enlargement, or restoration of the practice is
not being performed because the producer has increased his operation to
where these measures are needed to solve the increased conservation or
environmental problem.
Sec. 701.115 Pooling agreements.
Eligible persons in any local area may agree in writing with the
approval of the COC to perform designated practices which will solve a
mutual conservation, pollution, or other environmental problem on the
land of the participants. For purposes of eligibility for cost-share
assistance, practices carried out under such an approved written
agreement shall be regarded as having been carried out on the land of
the persons who performed the practices.
Sec. 701.116 Special provisions for low-income farmers and ranchers.
(a) Except as otherwise provided in Sec. 701.110(c), the COC may
approve in the case of low-income farmers and ranchers as defined in
this section a level of cost-share assistance of up to eighty (80)
percent of the average cost of performing practices.
(b) A low-income farmer or rancher is one who as determined by the
COC is a small producer whose livelihood is largely dependent on the
farm or ranch and whose prospective income and financial resources for
the current year are such that the low-income farmer or rancher could
not reasonably be expected to perform needed conservation practices at
levels of cost-share assistance applicable to other persons in the
county.
Sec. 701.117 Maximum cost-share assistance limitation.
For each program year, the total amount which may be received by
any person under this subpart for approved practices shall not exceed
$3,500 except that:
(a) The total amount received for approved practices, including
those carried out under pooling agreements, shall not exceed $10,000;
and
(b) The total amount received under an ACP long-term agreement
(LTA) shall not exceed the annual payment limitation ($3,500)
multiplied by the number of years remaining in the LTA. The payment
limitation in effect after the first year of LTA or after an LTA
payment has been made shall be equal to the lessor of the following:
(1) The number of years remaining in the LTA times the annual
payment limitation; or
(2) The difference between the LTA's maximum payment limitation and
the ACP cost-share assistance previously earned during the contract
period.
Sec. 701.118 Completion of practices.
Cost-share assistance for the practices contained in this part is
conditioned upon the performance of the practice according to all
applicable specifications and program provisions.
Sec. 701.119 Time of filing payment application.
Payment of cost-share assistance will be made only upon application
submitted on the prescribed form to the county office by a date
established by the COC. Any application for payment may be denied if
any form or information required of the applicant is not submitted to
the county office within the applicable time limit.
Sec. 701.120 Water Quality Incentive Projects.
(a) The WQIP administered through the ACP provides both financial
and technical assistance to achieve the source reduction of pollutants
in an environmentally and economically sound manner in order to assist
in compliance with State and Federal environmental laws to enhance the
environment.
(b) Other provisions as contained in subpart A and this subpart
apply to WQIP.
(c) Any representative of USDA, or designee thereof, shall have the
right of access to land which is the subject of a WQIP application, or
land which is under a WQIP agreement; and shall have the right to
examine records, with respect to crop management systems, use of
agricultural inputs, recordkeeping, land use decisions, resource
inventory, and impacts on water quality for the purpose of determining
whether there is compliance with the terms and conditions of the WQIP
agreement.
(d) A participant may, in addition to any payment earned under
WQIP, receive other financial assistance, rental payments, or tax
benefits from a State or subdivision of such State for enrolling lands
in WQIP.
(e) Eligible land areas must be:
(1) Wellhead areas included by the Secretary or designee in
consultation with Environmental Protection Agency (EPA) and the State
agency responsible for the State's operations under the Safe Drinking
Water Act (42 U.S.C. 300 h-7);
(2) Critical nonpoint agricultural areas identified in Clean Water
Act 319 plans;
(3) Karst topography areas with sinkholes;
(4) Agricultural nonpoint source areas that may adversely impact
threatened or endangered species habitat;
(5) Areas recommended by State environmental agencies and approved
by the Secretary;
(6) Areas recommended by EPA and DOI in consultation with the
Secretary;
(7) Lands not located within approved or designated areas but that
are in proximity and if allowed to continue to operate under the
existing management practices would defeat the purpose of the program;
and
(8) Areas contributing to identified water quality problems in
Secretarial designated areas.
(f) WQIP agreements shall be administered through long-term
agreements. These agreements shall be a minimum of three (3) years to a
maximum of five (5) years in duration as determined by the Deputy
Administrator.
(g) The applicant, in consultation with the SCS or other designated
technical agency, shall develop a Water Quality Resource Management
Plan which will:
(1) Include an assessment of the resources and management measures
needed to achieve the source reduction of agricultural pollutants;
(2) Cover the entire tract or tracts owned or operated by the
applicant within the WQIP area;
(3) Be reviewed and approved by SCS;
(4) Be reviewed and approved by the local Conservation District;
and
(5) Be consistent with conservation compliance goals.
(h) Technical assistance will be provided by the SCS as the lead
agency with assistance from the Cooperative Extension Service,
Agricultural Research Service, and other Federal agencies and private
consultants as deemed necessary by the Secretary.
Secs. 701.121-701.199 [Reserved]
Subpart C--Emergency Conservation Program
Sec. 701.200 Program objective.
The objective of the ECP is to cost share with eligible persons to
rehabilitate farmlands damaged by wind and water erosion, floods,
hurricanes, or other natural disasters and to provide water
conservation or water enhancement measures during periods of severe
drought.
Sec. 701.201 Program availability.
(a) The COC may implement the program subject to the availability
of funds where new conservation problems have been created on farmland
by a natural disaster or wind erosion which if not treated will:
(1) Impair or endanger the land;
(2) Materially affect the productive capacity of the land;
(3) Represent damage which is unusual in character and except for
wind erosion shall not be the type that would recur frequently in the
same area; and
(4) Be so costly to rehabilitate that Federal assistance is or will
be required to return the land to productive agricultural use.
(b) Subject to the availability of funds, the COC with the
concurrence of the STC and approval of the Deputy Administrator may
implement the program to carry out emergency water conservation and
water enhancement measures during periods of severe drought.
(c) Land normally used for farming or ranching which is protected
by levees or dikes is eligible for enrollment in the ECP, except as
follows:
(1) Land adjacent to water impoundment reservoirs subject to
inundation when the reservoir is filled to capacity;
(2) Land that is subject to frequent damage which is any of the
following:
(i) Land has been severely damaged 3 or more times in the last 25
years, including the current disaster. Also land protected by levees or
dikes that have physically failed and severely damaged adjoining land 3
or more times in the last 25 years, including the current disaster.
(ii) Land that is susceptible to severe damage because of its
location, regardless of whether it has been severely damaged in the
last 25 years.
(iii) Flowage or flood easements acquired by the U.S. Army Corps of
Engineers or other authorities that are subject to inundation when
water is released under the course of normal operations.
(3) Land located in old or new channels of a stream, creek, river,
or other similar body of water or on any of the inside banks unless
approved by DASCO. Facilities in irrigation canals or on their inside
banks may be approved if the canal is not a channel subject to
flooding;
(4) Land in greenhouses or other confined areas; and (5) Land on
which poor farming practices, such as failure to farm on the contour,
have materially contributed to damaging the land.
Sec. 701.202 Eligibility of person and land.
Person and land eligibility requirements are the same as for the
ACP as provided in Secs. 701.104 and 701.105 except in cases of severe
drought conditions then cost-share assistance is limited to supplying:
(a) Emergency livestock water, including measures to assist
confined livestock operations, and
(b) Water for existing irrigation systems serving orchards and
vineyards.
Sec. 701.203 Emergency Conservation Program practices.
(a) Except for severe drought and wind erosion, cost-share
assistance may be offered for emergency conservation practices only to
replace or restore farmland to a condition similar to that existing
before the natural disaster. Cost-share assistance may not be offered
for the solution of conservation problems existing before the disaster.
(b) ECP practices for which cost-share assistance may be authorized
are:
(1) Removing debris from farmland.
(2) Grading, shaping, releveling, or similar measures.
(3) Restoring permanent fences.
(4) Restoring structures and other installations.
(5) Emergency wind control measures.
(6) Drought emergency measures.
(7) Other emergency conservation measures.
Sec. 701.204 Practice approval.
Practices listed in Sec. 701.203 (b)(1) through (b)(5) may be
approved by COC's. Authorization to offer practices at Sec. 701.203
(b)(6) and (b)(7) shall be approved by the Deputy Administrator.
Sec. 701.205 Extent of cost-share assistance.
(a) The maximum payment under this subpart per person, per
disaster, is limited to $200,000 including the amount of any payment
received by such person as the result of the disaster under a pooling
agreement.
(b) The cost-share payments which may be made by ASCS for a
practice under the program shall, subject to the maximum payment amount
specified in paragraph (a) of this section and any other limitation as
may apply, be further limited to the level of cost-share assistance
established by the COC not to exceed:
(1) Sixty four (64) percent of the first $62,500 of the eligible
cost of restoring the loss;
(2) Forty (40) percent of the second $62,500 of the eligible cost
of restoring the loss; and
(3) Twenty (20) percent of the eligible cost above $125,000 to
restore the loss.
Sec. 701.206 Eligible costs.
Upon determination that a person is eligible for ECP assistance,
cost-share assistance may be authorized for all reasonable costs
incurred in the completion of the practice. Such costs may include
personal labor, equipment, and other such costs which are determined by
the COC to be related to the costs of performing the practice. COC's
shall limit costs for the use of personal equipment to an amount that
reflects out-of-pocket expenses. Expenses for personal labor and
personal equipment shall be less than rates charged by contractors who
expect to make a profit for their efforts.
Sec. 701.207 Filing requests.
(a) The COC shall establish an enrollment period for filing cost-
sharing requests immediately after the COC's authorization or the
Deputy Administrator's authorization in cases of drought to implement
the ECP in the county. Such periods shall be at least 30 days in
length. Late-filed requests may be accepted by the COC in justifiable
cases.
(b) Costs will not be shared for practices or components of
practices that are started before a request is filed with the county
office.
Sec. 701.208 Approving requests.
COC's shall issue practice approvals only when:
(a) Funds are available;
(b) The requested practice has been determined eligible for cost-
share assistance; and
(c) The eligible person has indicated a readiness to start the
practice.
Sec. 701.209 Pooling agreements.
Pooling agreements may be used on the same basis as provided for at
Sec. 701.115.
Sec. 701.210 Payment approval.
The COC is authorized to approve payments not to exceed $10,000 per
person per disaster. The STC is authorized to approve payments not to
exceed $20,000 per person per disaster. Cost-share assistance in excess
of $20,000 must be approved by the Deputy Administrator.
Secs. 701.211-701.299 [Reserved]
Subpart D--Forestry Incentives Program
Sec. 701.300 Program objective.
The objective of the FIP is to help ensure a future supply of
timber will be accomplished by encouraging landowners to apply forestry
practices for:
(a) Production of softwood and hardwood timber and other associated
forest resources to increase afforestation of suitable open lands.
(b) Reforestation of cutover and understocked forest lands.
(c) Timber stand improvement.
(d) Intensive multipurpose management.
(e) Protection of forest resources.
Sec. 701.301 Designated counties.
The STC in consultation with the State Forester will designate the
counties or parts of counties in which FIP will be operated. The
following will be considered in making the designations:
(a) The total acreage in the county devoted to desirable types of
softwood and hardwood timber.
(b) The estimated area in the county that is under eligible
ownership.
(c) The estimated acreage suitable for the production of forest
products.
(d) The availability of funds.
(e) The enhancement of other forest resources.
Sec. 701.302 Eligible person, land, and ownerships.
(a) An eligible person is a private individual, group, Native
American Tribe or other native group, association, corporation
excluding corporations whose stocks are publicly traded, or other legal
entity which owns eligible land. Firms principally engaged in the
manufacture of wood products are not eligible. However, forest
landowners who manufacture forest products on a part-time or irregular
basis are eligible.
(b) Eligible land is nonindustrial private forest land capable of
producing at least fifty (50) cubic feet of wood per acre per year.
(c) Eligible farms are those not exceeding a total of 1,000 acres
of eligible private nonindustrial forest land in the United States or
any commonwealth, territory, or possession of the United States. The
STC with the concurrence of the State Forester may approve cost-share
assistance with landowners owning more than 1,000 acres but not more
than 5,000 acres of eligible forest land where it is deemed to be to
the public's significant benefit.
(d) Significant public benefits are primarily those resulting from
cost-effective timber production with related benefits to aesthetics,
recreation, wildlife habitat, watershed protection, erosion reduction,
and other resource values.
Sec. 701.303 Program funds.
(a) Each designated State and county will receive a share of the
funds provided for the program. Funds will be distributed on the basis
of the forest production opportunities in each State, considering the
acreage of private nonindustrial forest lands, the number of eligible
owners, the potential productivity of such lands and the need for
reforestation, timber stand improvement, other forestry management
needs, and the enhancement of other forest resources. The Deputy
Administrator will allocate funds after consultation with
representatives of the FS and a committee of not less than five State
foresters or equivalent State officials selected by a majority of the
State foresters or equivalent State officials. The STC will consult
with the State forester when determining the allocation of such funds
to the designated counties.
(b) A limitation on the amount of funds which may be obligated
under long-term agreements shall be established by the STC according to
guidelines provided by the Deputy Administrator.
Sec. 701.304 Eligible practices and cost-share assistance
requirements.
(a)(1) Cost-share assistance may be available for the following
National practices and authority:
(i) Planting Trees.
(ii) Improving a Stand of Forest Trees.
(iii) Special Forestry Practices.
(2) The Deputy Administrator after consultation with the FS, may
approve special forestry practices needed to solve a significant and
unique local condition for which the National practices are not
adequate. Such practices may be approved for inclusion in a county
program after consultation with the program development group and the
recommendation of the COC, the service forester, the STC, and the State
forester.
(b) A forest management plan is required as a condition for cost-
share assistance. The Forest Management plan will be developed in
consultation with the landowner, approved by the service forester, and
will contain information for accurate evaluation of practice
effectiveness. The participant will be required to perform those
measures in the Forest Management plan which are essential to the
effectiveness of the practice for which costs are shared. In the
development of the Forest Management plan, consideration will be given
to wildlife, watershed protection, recreation, erosion control,
aesthetics, and other associated forest resources values as well as
cost-effective timber production.
Sec. 701.305 The National FIP.
The National FIP is jointly developed by ASCS, the FS and the
committee of State foresters provided for in Sec. 701.303.
Sec. 701.306 Development of State FIP.
(a) A State FIP shall be developed in each applicable State or
territory according to the provisions contained in this part and in the
National FIP. The State FIP shall be developed by the State forestry
committee as provided in Sec. 701.303.
(b) The State FIP shall be:
(1) Recommended by the STC and State forester; and
(2) Approved by the Deputy Administrator after consulting with the
FS.
Sec. 701.307 Development of county FIP.
(a) A county FIP shall be developed in each designated county
according to the provisions of the State FIP. The county FIP shall be
developed by the CCRG. The CCRG, working with the governing body of the
conservation district, the State forestry agency representatives, the
county supervisor of the Farmers Home Administration, and others with
conservation and environmental interest shall develop recommendations
for the county program.
(b) The county FIP shall be recommended by the COC and service
forester and approved by the STC and State forester.
Sec. 701.308 Adaptation of practices.
(a) The practices included in the State FIP shall satisfy the
conditions and requirements of the National FIP. The STC and State
Forester may modify or delete National FIP provisions to make practices
more restrictive where such changes satisfy the objectives of the
program.
(b) The practices included in the county FIP must meet the
conditions and requirements of the State FIP. The COC in consultation
with State Forestry representative or Service Forester may modify or
delete State FIP provisions to make practices more restrictive where
such changes satisfy the objectives of the program.
Sec. 701.309 Levels and rates of cost-share assistance.
(a) The maximum cost-share assistance for each practice shall be
the percentage of the actual cost of performing the practice considered
necessary by ASCS to ensure completion of the practice by the
participants.
(b) Levels of cost-share assistance shall be approved by the STC
and shall not be in excess of sixty-five (65) percent of actual costs
incurred by the landowners.
(c) For the purpose of establishing rates of cost-share assistance,
the average cost of performing a practice may be the average cost for a
State, a county or a part of a county, as determined by the STC.
(d) The rates of cost-share assistance for practices included in
the county FIP may be lower than the rates approved for general use in
the State, as determined by the COC.
Sec. 701.310 Prior approval for cost-share assistance.
Costs will be shared only for those practices, or components of
practices, for which cost-share assistance is requested and approval
issued before performance is started.
Sec. 701.311 Methods of approval.
The COC shall determine the extent to which Federal funds may be
made available to share the cost of each approved practice. Approvals
shall be made based on consideration of the county allocation, cost-
effective opportunities for increasing timber production, potential for
enhancing other forest resources, the forestry needs in the county, and
the practices for which requested cost-share assistance is considered
by the COC as most needed. The method approved shall provide for the
issuance of notices of approval showing for each approved practice the
number of units of the practice for which the Federal Government will
share in the cost and the amount of the cost share for the performance
of that number of units of the practice. Notices of approved requests
shall be issued before the practice may be started. No practice may be
approved for cost-share assistance except as authorized by the county
FIP. Available funds for cost-share assistance shall not be allocated
on a pro-rata basis, but shall be directed to the accomplishment of the
most production attainable.
(a) Cost-share assistance may be approved under annual agreements
or long-term agreements.
(b) Land covered by a GPCP contract is not excluded from an annual
or long-term agreement if the land is otherwise eligible.
(c) The same practices, cost-share levels, and general program
provisions apply to both annual agreements and long-term agreements.
Sec. 701.312 Long-term agreements.
(a) The period of a long-term agreement shall be for not less than
three (3) years nor more than ten (10) years. The COC and the parties
to the agreement in consultation with the State forestry representative
will mutually determine the scheduling of essential practices and
practice cost-sharing over the period of the agreement.
(b) The long-term agreement shall be based on a forest management
plan for the land which shall be developed by the service forester.
(c) The long-term agreement shall provide that the owner shall
perform those measures in the forest management plan which are
determined to be essential regardless of whether cost-share assistance
is approved for such measures.
(d) The level of cost-share assistance in effect for practices in
all years of a long-term agreement shall be the level in effect for the
beginning year of the agreement. The rate of cost-sharing for payment
purposes for such practices will be based on the average cost of
performing the practice at the time the practice is performed.
(e) A long-term agreement may be canceled for failure to fully
comply with the terms of the agreement if, after consulting with the
service forester, the STC or COC determines that the seriousness of the
irregularities warrant such action. If the agreement is canceled, the
signors to the agreement are jointly and severally responsible for
refunding all cost shares paid and will forfeit all rights to further
payments under the agreement. In such a case, no other refund or
forfeiture provisions of these regulations apply.
(f) A long-term agreement may be revised in accordance with
instructions issued by the Deputy Administrator where there is a change
in status of the participants or the land under agreement.
(g) An eligible person who acquires control of land under an
approved agreement may elect to become a successor in interest under
such agreement.
(h) An agreement will be terminated with respect to land for which
loss of control has occurred and where the person acquiring control of
such land elects not to become a successor in interest under the
agreement. If the loss of control is for reasons beyond the control of
the signatories to the agreement, the COC will determine whether or not
any cost-share assistance previously paid shall be refunded; however,
in no event shall the refund be greater than would be required in cases
where loss of control is voluntary. If the loss of control is voluntary
on the part of the signatories, they will be jointly and severally
responsible for refunding all cost shares paid and will forfeit all
rights to further payments, with respect to the land for which control
is lost. A refund will not be required for cost-share assistance where
the COC or the STC determines, after consulting with the service
forester, that failure to perform the remaining practices in the
agreement will not impair the effectiveness of the practices which have
been performed and that the completed practices will provide forestry
benefits consistent with the cost-share assistance which have been
paid.
(i) An agreement may be terminated if, after considering the
recommendation of the service forester, the STC or COC recommends that
such action is in the public interest.
Sec. 701.313 Restoration of practices.
(a) Cost-share assistance may be authorized under FIP for the
establishment or installation of the practices contained in this part.
Cost-share assistance may not be authorized for repeating any of the
practices in this part with the same owner on the same acreage, except
as provided in paragraph (b) or (c) of this section.
(b) Cost-share assistance may be authorized for the replacement,
enlargement, or restoration of practices for which such assistance has
been allowed under the program only if all of the following conditions
exist:
(1) Replacement or restoration of the practice is needed to solve a
conservation or environmental problem.
(2) The failure of the original practice was not due to the lack of
proper maintenance by the current operator.
(3) The COC believes that the replacement or restoration of the
practice merits consideration under the program to an equal extent with
other practices cost-shared.
(c) Cost-share assistance may be authorized for timber stand
improvement measures carried out in repetitive steps where the stand
treatment warrants such silvicultural practice in the judgment of the
service forester.
Sec. 701.314 FIP maximum cost-share assistance limitations.
For each program year, the total amount which may be received by
any person under this subpart shall not exceed $10,000 with respect to
eligible owners (Sec. 701.302) in the United States or any
commonwealth, territory, or possessions of the United States for
approved practices performed under annual or long-term agreements.
Sec. 701.315 Completion of practice.
Cost-share assistance for the practices contained in this subpart
is conditioned upon the performance of the practices according to all
applicable specifications and program provisions.
Sec. 701.316 Time of filing payment application.
Cost-share assistance will be made only upon an application
submitted to the county office by the prescribed time limit or any
authorized extension. Any application for payment may be rejected if
any information required of the applicant is not submitted to the
county office within the applicable time limit.
Secs. 701.317-701.399 [Reserved]
Signed at Washington, DC, on December 30, 1993.
Bruce R. Weber,
Acting Administrator, Agricultural Stabilization and Conservation
Service.
[FR Doc. 94-415 Filed 1-7-94; 8:45 am]
BILLING CODE 3410-05-P
Complete official Federal Register PDF
FR Doc. 94-412 Affordable Housing Program
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1323-1360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-412]
[[Page Unknown]]
[Federal Register: January 10, 1994]
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FEDERAL HOUSING FINANCE BOARD
12 CFR Part 960
[No. 93-94]
Affordable Housing Program
AGENCY: Federal Housing Finance Board.
ACTION: Proposed rule.
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SUMMARY: The Federal Housing Finance Board (Board) is proposing to
amend in its entirety its regulation governing the operation of the
Affordable Housing Program (AHP or Program). The proposed rule modifies
or carries forward requirements of the Board's existing AHP regulation,
adds new provisions, and incorporates, with modifications, the
provisions of the Board's existing policy guidelines governing the
award of funds to loan funds and loan consortia.
DATES: Comments on this proposed rule must be received in writing on or
before March 11, 1994.
ADDRESSES: Comments should be mailed to: Federal Housing Finance Board,
Executive Secretary, 1777 F Street, NW., Washington, DC 20006. Comments
will be available for public inspection at this address.
FOR FURTHER INFORMATION CONTACT: Diane E. Dorius, Deputy Director, or
Sylvia C. Martinez, Director, Housing Finance Directorate, (202) 408-
2576, or Sharon B. Like, Attorney-Advisor, (202) 408-2930, or Brandon
B. Straus, Attorney-Advisor, (202) 408-2589, Office of Legal & External
Affairs-Legal Division, Federal Housing Finance Board, 1777 F Street,
NW., Washington, DC 20006.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
A. General
Section 10(j)(1) of the Federal Home Loan Bank Act (Act) requires
each Federal Home Loan Bank (Bank) to establish a Program to subsidize
the interest rate on advances to members of the Federal Home Loan Bank
System (Bank System) engaged in lending for long-term, low- and
moderate-income, owner-occupied and affordable rental housing at
subsidized interest rates. The Board is required to promulgate
regulations governing the Program. 12 U.S.C. 1430(j)(1). The Board's
existing regulation governing the operation of the AHP appears at part
960 of the Board's regulations. 12 CFR part 960.
This proposed rule amends the Board's existing AHP regulation to
address operational issues that have arisen during the three and one-
half years that the AHP has been in existence. The proposed amendments
are intended to make the AHP more responsive to low-income housing
needs in each of the twelve Federal Home Loan Bank Districts
(Districts), to increase efficiency in the administration of the
Program, and to enhance coordination of the AHP with other housing
programs whose funds are used in conjunction with AHP funds. These
issues are discussed in greater detail below in the Analysis of
Proposed Rule section.
II. Analysis of Proposed Rule
A. AHP Application Approval Process
The proposed rule makes a fundamental change to the AHP by vesting
the Banks, instead of the Board, with the authority to approve AHP
applications. The current application approval process implemented by
the Board's existing AHP regulation may be briefly described as
follows. The Banks receive AHP applications and first evaluate them for
satisfaction of certain threshold requirements contained in the
existing regulation. See 12 CFR 960.5(a)(1), (2). Those applications
meeting the threshold requirements are evaluated by the Banks to
determine if they meet at least three of the priorities contained in
the existing regulation. If they do, they are scored by the Banks on
the priorities and on other scoring objectives contained in the
existing regulation before applications that meet fewer than three
priorities. See id. Sec. 960.5(a)(3), (b) through (e). Under the
existing regulation, the Bank then forwards to the Board the highest
scoring applications, and submits a summary of such applications. See
id. Sec. 960.5(f)(1), (2). The Board reviews the applications to ensure
consistency with the threshold, priorities and scoring requirements,
and makes final funding decisions on the applications. See id.
Sec. 960.5(f)(3).
While section 10(j) of the Act requires each Bank to establish an
AHP, and vests in the Board broad authority to regulate the Banks' AHP
activities through regulations implementing the Act, section 10(j) does
not specifically assign the responsibility of operating the AHP to the
Board. See 12 U.S.C. 1430(j). The Board does have other statutorily
designated duties, including issuing regulations that specify
activities eligible to receive subsidized advances under the AHP,
ensuring advances are used to assist projects for which adequate long-
term monitoring is available, ensuring that a preponderance of
assistance provided under the AHP is ultimately received by low- and
moderate-income households, and ensuring that AHP subsidies provided by
Banks to members are passed on to the ultimate borrower. See id.
Section 1430(j)(9) (A), (C), (D), (E). However, section 10(j) does not
specify what entity is responsible for administering the AHP, and what
entity is responsible for determining which AHP applications are
approved for funding.
For the following reasons, the Board is proposing that the Banks
assume the responsibility for determining which AHP applications are
approved for funding. First, the Banks have had three and one-half
years of experience with the AHP, which experience has included
processing AHP applications, scoring the applications, and recommending
applications for approval to the Board as described above.
Consequently, the Banks are already processing and reviewing
applications under the existing system.
Second, decentralization of the AHP is consistent with the Bank
System's Strategic Plan, which calls for decentralization of a number
of functions currently conducted by the Board, with the exception of
those Board activities involving oversight and supervision of the
Banks. See ``System 2000: A Long-Term Strategic Plan For The Federal
Home Loan Bank System.''
The details of the proposed new application approval process are
discussed further below.
The Board specifically requests comments as to whether the Banks
should be given the authority to approve and disapprove AHP
applications.
The proposed rule also revises the Board's existing AHP regulation
by allowing each Bank to define more specifically its own priorities
and scoring criteria, subject to certain overall priority and scoring
parameters established in the proposed rule. The Bank would be required
to include such proposed priorities and scoring criteria in its AHP
implementation plan which must be approved by the Board. Under the
Board's existing AHP regulation, the Banks have much less flexibility
in defining priorities and scoring criteria. See 12 CFR 960.5 (a)
through (e). In addition, under the proposed rule, certain point values
for scoring categories would be revised.
The details of the proposed revisions for adopting priorities and
scoring criteria are discussed further below under the scoring of AHP
applications section.
B. Bank Establishment of AHP and Adoption of AHP Implementation Plan
Section 960.2(a) of the proposed rule generally reiterates the
statement in Sec. 960.2(a) of the Board's existing AHP regulation that
it is the policy of the Board and the Banks to promote decent and safe
affordable housing and to address critical affordable housing needs
through providing subsidized advances and direct subsidies to members
pursuant to the AHP. See 12 CFR 960.2(a).
Section 960.2(b) of the proposed rule provides that each Bank's
board of directors shall establish an AHP, which shall be funded
pursuant to the requirements of Sec. 960.18 of the proposed rule. (See
discussion below under the required annual AHP contributions section.)
The Bank is required to make subsidized advances to applicants pursuant
to its AHP and to operate its AHP in conformity with an annual AHP
implementation plan and the requirements of this part. Direct subsidies
provided by a Bank to applicants pursuant to its AHP also shall be
provided in conformity with the Bank's AHP implementation plan and the
requirements of this part. Each Bank's AHP implementation plan shall be
approved by the Board before it is effective.
Section 960.2(b) of the proposed rule further provides that the AHP
implementation plan must meet the requirements of this part, and shall
include:
(1) The Bank's AHP funding cycle schedule, including application
due dates, as required by proposed Sec. 960.6(a)(1);
(2) The Bank's priorities, and scoring criteria for applications,
as required by proposed Secs. 960.8(a) and 960.10;
(3) The Bank's procedures to ensure satisfaction of the long-term
requirement, as required by proposed Sec. 960.5 (a)(1) and (b);
(4) The Bank's requirements for and verification procedures
concerning (i) the use of subsidized advances or direct subsidies
within a reasonable period of time after approval of an AHP
application, as required by proposed Sec. 960.12(a), or (ii) the use of
loans or grants within a reasonable period of time after repayment of
such funds to a loan fund or loan consortium, as required by proposed
Sec. 960.17(c)(5);
(5) The Bank's verification procedures upon initial disbursement of
subsidized advances or direct subsidies, as required by proposed
Sec. 960.13;
(6) The Bank's monitoring plan, as required by proposed
Sec. 960.14(b);
(7) The Bank's reporting requirements for applicants during the
construction or rehabilitation phase, as required by proposed
Sec. 960.15(b)(2);
(8) An explanation of circumstances justifying undue hardship
waivers by the Bank of imposition of remedial actions, as required by
proposed Sec. 960.16 (c)(1) and (d)(1); and
(9) The Bank's determination regarding the number of persons that
may serve on the Bank's Advisory Council and their terms, as required
by proposed Sec. 960.21(a)(1) and (4).
Section 960.2(c) of the proposed rule provides that the Bank's
proposed AHP implementation plan shall be submitted to its Advisory
Council at least 45 calendar days before it is considered by the Bank's
board of directors. The Advisory Council shall review the proposed plan
and submit its recommendations to the Bank's board of directors at
least seven calendar days before the Bank's board of directors is
scheduled to vote on the proposed plan. The Bank's board of directors
shall vote on the proposed AHP implementation plan, and shall submit
its approved plan to the Board for action. The Board shall approve or
disapprove the proposed plan within 60 calendar days of receipt. The
Bank's plan is not effective until it is approved by the Board, and it
must become effective at least 45 calendar days before the due date for
AHP applications established by the Bank. Each Bank must submit its AHP
implementation plan to the Board for approval no later than 180
calendar days after the publication of this rule as a final rule in the
Federal Register.
Section 960.2(d) of the proposed rule provides that the Bank's
approved AHP implementation plan shall be made available by the Bank to
the public upon request.
Section 960.2(e) of the proposed rule provides that the Board will
approve or disapprove proposed amendments to a Bank's approved AHP
implementation plan submitted by the Bank within 60 calendar days of
receipt.
C. Authorized and Required Uses of AHP Subsidized Advances or Direct
Subsidies
Section 960.3 of the proposed rule states the general authorized
uses of AHP subsidized advances and direct subsidies by applicants,
Sec. 960.4 provides specific examples of such authorized and
unauthorized uses and other use requirements, and Sec. 960.5 sets forth
the long-term income-eligibility, affordability and income-targeting
requirements for such uses. These proposed sections are discussed
further below.
1. Authorized Uses of Subsidized Advances or Direct Subsidies
Section 960.3 of the proposed rule, consistent with Sec. 960.3(b)
(1) and (2) of the Board's existing AHP regulation, provides that
applicants may use subsidized advances or direct subsidies received
from a Bank under the AHP to either:
(a) Finance the purchase, construction or rehabilitation of owner-
occupied housing units by or for low- or moderate-income households; or
(b) Finance the purchase, construction or rehabilitation of rental
housing units, at least 20 percent of the units of which will be
occupied by and affordable for very low-income households. See 12 CFR
960.3(b) (1) and (2).
2. Specific Use Requirements for Subsidized Advances or Direct
Subsidies
Section 960.3(c) of the Board's existing AHP regulation provides
that ``Program funds may only be used for direct costs required to
produce and/or finance affordable housing units.'' 12 CFR 960.3(c). A
number of questions have arisen as to whether specific types of costs
associated with the financing or production of housing may be
considered ``direct costs'' for purposes of the Board's regulation.
Because of the confusion in this area, the Board believes that it would
be helpful to set forth in the rule examples of specific types of costs
it considers to be authorized and unauthorized for AHP purposes.
Accordingly, Sec. 960.4(a) (1) and (2) of the proposed rule sets forth
examples of specific costs related to the purchase, construction or
rehabilitation of housing that are authorized and unauthorized uses of
AHP subsidized advances or direct subsidies. However, because it is
impossible to anticipate all types of costs that may arise in the
course of financing or producing housing, the list of authorized and
unauthorized costs in proposed Sec. 960.4(a) is not exclusive. Other
costs not included arguably may or may not qualify as costs of
financing the purchase, construction or rehabilitation of housing. If
an applicant seeks to use funds under the AHP to pay for costs not
specifically included in this rule, it should consult with the Bank
before submitting its application for approval. The Board specifically
asks for comments as to whether these authorized and unauthorized costs
are appropriate.
Specifically, Sec. 960.4(a)(1) of the proposed rule provides that
authorized uses of subsidized advances or direct subsidies include, but
are not limited to, the following costs related to the purchase,
construction or rehabilitation of housing:
(i) Real property purchase and improvement costs;
(ii) Construction or rehabilitation costs, including labor and
materials, and contractor profit and overhead allowances;
(iii) Costs integral to the purchase or development of housing
including, but not limited to, project-related: Architectural,
inspection and engineering fees; local building permit and planning
fees; accounting costs; survey costs; appraisal fees; title insurance
and other insurance costs; performance bond and other bond fees;
recording fees; credit report fees; property taxes; residential
relocation costs where such costs are part of a relocation plan; legal
fees; syndication fees; costs of translating resident documents to
another language; loan commitment, loan origination and other loan
financing fees for administrative costs other than costs of
administering the AHP award; developer's fees; and marketing costs;
(iv) Prepayment fees imposed by the Bank on an applicant for a
subsidized advance that is prepaid in connection with the purchase,
construction or rehabilitation of housing, if the applicant requires
the borrower to pay such fee;
(v) Capitalization of reserve fund(s) necessary for the successful
operation of rental housing projects, including replacement reserves,
rent-up reserves, operating deficit reserves, and sinking fund reserves
used for the transfer of the project to nonprofit ownership when
associated with a low income housing tax credit transaction (26 U.S.C.
42);
(vi) Cancellation fees imposed by the Bank on an applicant for a
subsidized advance commitment that is canceled and converted to and
disbursed as a direct subsidy in connection with the purchase,
construction or rehabilitation of housing, if the applicant requires
the borrower to pay such fee;
(vii) Refinancing of an existing loan in conjunction with the
purchase, construction or rehabilitation of housing, provided the
subsidized advance or direct subsidy and the proceeds of the
refinancing are used only to retire existing debt and to benefit low-
or moderate-income households and, in the case of refinancing in order
to rehabilitate a project, there is a minimum of $2,500 per unit spent
on such rehabilitation; and
(viii) Tenant services, tenant counseling and homeowner counseling
costs that are a condition imposed by a lender to obtain financing from
such lender and which are necessary for the successful operation of the
project.
Cancellation fees identified in paragraph (vi) above, where there
is purchase, construction or rehabilitation of housing and the borrower
is required to pay the fee, are a cost of financing such purchase,
construction or rehabilitation and therefore are authorized uses of
funds under the AHP. Because the advance would be converted to a direct
subsidy, such cancellation fees would be payable only if the
application also meets the requirements for modification of
applications contained in Sec. 960.11 of the proposed rule. (These
requirements are discussed in greater detail in the modification
section below.) However, AHP subsidized advances or direct subsidies
may not be used to pay for cancellation fees in situations where the
cancellation of the advance is not part of a restructuring that results
in the purchase, construction or rehabilitation of housing.
The conditions identified in paragraph (vii) above on the use of
funds under the AHP for refinancing are intended to ensure that the
funds are not used by the borrower to take out its equity in the
project and to ensure that the funds are used for authorized purposes
under the AHP. The Board specifically requests comments on whether the
$2,500 minimum per unit is a reasonable minimum amount to be required
to be spent on rehabilitation in conjunction with a refinancing.
Questions have arisen as to whether funds under the AHP should be
used to pay for pre-development costs that may or may not result in the
purchase, construction or rehabilitation of AHP housing. Pre-
development costs are costs incurred prior to the closing of a
purchase, construction or rehabilitation loan for the purpose of
determining the feasibility of a proposed project. Examples of pre-
development costs include architectural and engineering fees, legal
fees, the costs of surveys and appraisals, local building permit and
planning fees, and earnest money deposits. Since AHP applications are
required to meet the threshold feasibility requirement provided in
proposed Sec. 960.9(d) in order to be scored, authorizing the use of
funds for pre-development costs raises the question how applications
for such costs can or should be scored since the funds would be
disbursed to applicants before the feasibility of a proposed project
could be established.
In addition, there is a greater likelihood that costs incurred
during the pre-feasibility period, rather than during the post-
feasibility period, will not result in the purchase, construction or
rehabilitation of housing. Thus, if applications for AHP funds to
finance pre-development costs are approved, AHP funds in perhaps
significant amounts could go towards pre-development costs that do not
result in the financing or production of housing. If such costs are
authorized, one option for dealing with this concern could be to cap
the total amount of AHP funds that may be used for pre-development
costs at a specific dollar amount or percentage, such as the lesser of
$200,000 or 5 percent of the Bank's total AHP contributions for the
year. These funds could be set aside and disbursed in a separate
competitive process.
The Board specifically requests comments on whether funds under the
AHP should be used for pre-development costs, how applications for such
costs can or should be scored, and what limits, if any, should be
placed on the amount of funds used for such purposes under the AHP.
3. Use of Funds Requirements
Section 960.4(b)(1)(i) of the proposed rule provides that the total
amount of a direct subsidy provided by the Bank to an applicant under
the AHP must be passed on by the applicant to the recipient. Consistent
with Sec. 960.9(c) of the Board's existing AHP regulation,
Sec. 960.4(b)(1)(ii) of the proposed rule provides that an applicant
receiving a subsidized advance shall extend credit to the borrower at a
rate of interest equal to the rate of interest charged on the
subsidized advance plus an interest rate spread approved by the Bank.
See 12 CFR 960.9(c). These provisions implement section 10(j)(9)(E) of
the Act, which provides that the Board's AHP regulation shall ensure
that AHP subsidies provided by Banks to applicants are passed on to the
ultimate borrower. See 12 U.S.C. 1430(j)(9)(E).
Section 960.4(b)(2) of the proposed rule provides that if an
applicant receives a subsidized advance or direct subsidy from a Bank
or prepayment of a loan originally made under the AHP, any interest or
other income earned by the applicant on such funds, not including any
approved fee or interest rate spread charged to the borrower, must be
forwarded to the Bank to be used for additional AHP projects, except
for interest or other income earned by the applicant within 30 calendar
days of receiving the subsidized advance or direct subsidy or of
receiving prepayment of a loan originally made under the AHP.
Section 960.4(b)(3) of the proposed rule provides that a direct
subsidy received by an applicant from a Bank that is provided by such
applicant to a sponsor may be lent by the sponsor in connection with an
AHP rental housing project involving low-income housing tax credits
(LIHTC), provided the subsidy is lent by the sponsor for a term of not
less than 30 years, with all principal and interest payments deferred
until the end of such term. If such a loan is repaid before the end of
the 30-year term, the entire amount of the direct subsidy must be
repaid to the Bank.
For various tax reasons, sponsors prefer to structure LIHTC
projects so that the AHP direct subsidy is lent to the project for a
specific long-term period, with principal and interest payments
deferred until the end of such term. The lending of a direct subsidy by
a sponsor raises the question whether the subsidy is being passed on to
the ultimate recipient, as required under section 10(j)(9)(E) of the
Act and proposed Sec. 960.4(b)(1)(i), since the subsidy ultimately is
being repaid to the Bank. See 12 U.S.C. 1430(j)(9)(E). The Board
believes that the lending of a direct subsidy for the long-term period
of income eligibility and affordability required by Sec. 960.5 of the
proposed rule, with all principal and interest payments deferred until
the end of such term, satisfies section 10(j)(9)(E) and proposed
Sec. 960.4(b)(1)(i), because the project will have had the use of such
funds for the period the project must remain occupied by and affordable
for low- or moderate-income households, even though the funds may be
repaid at the end of such term. As discussed below, Sec. 960.5(a)(1) of
the proposed rule defines this long-term period generally as not less
than 30 years for rental housing projects. Accordingly, the direct
subsidy must be lent for a term of 30 years or more, with all principal
and interest payments deferred until the end of such term.
Section 960.4(b)(4) of the proposed rule provides that if an
applicant receives a subsidized advance or a direct subsidy from a
Bank, and in turn provides both a loan and a grant to a borrower and
charges an origination fee for providing the loan, then any fee charged
by the applicant for providing the grant may not be paid with the AHP
subsidized advance or direct subsidy. The fee may not be paid with the
AHP subsidized advance because the applicant has already covered the
underwriting costs for the loan and the grant in its origination fee
for the loan. The fee may not be paid with the direct subsidy because
otherwise the entire amount of the AHP subsidy would not be passed
through to the borrower, as required by section 10(j)(9)(E) of the Act
and proposed Sec. 960.4(b)(1)(i). See 12 U.S.C. 1430(j)(9)(E).
4. Long-term Requirements
a. Owner-occupied housing units. (1) Long-term requirement. Section
10(j)(1) of the Act states that pursuant to regulations promulgated by
the Board, each Bank shall establish a Program to subsidize the
interest rate on advances to members engaged in lending for long-term,
low- and moderate-income, owner-occupied housing at subsidized interest
rates. Id. Sec. 1430(j)(1). In addition, section 10(j)(2)(A) of the Act
states that the Board's regulations shall permit Bank members to use
subsidized advances received from the Banks to finance homeownership by
families with incomes at or below 80 percent of the median income for
the area. Id. Sec. 1430(j)(2)(A).
The Act permits more than one possible interpretation of the
requirement that owner-occupied housing must be ``long-term.'' One way
to interpret this requirement is that owner-occupied housing units
assisted under the AHP must be added to and retained as part of the
stock of affordable housing for a long-term period. Alternatively, the
Act may be interpreted to require that under the AHP, assistance must
be provided to low- or moderate-income households to make owner-
occupied housing units affordable to such households for as long as
they own the unit. These two possible interpretations are incorporated
in options A and B described below. The Board specifically requests
comments on these two options.
Option A. Under option A, the long-term requirement would be met by
providing that owner-occupied housing units be required to be retained
as affordable units for 30 years or, at the election of the sponsor,
the remaining useful life of the units, regardless of changes in
occupancy. In order to enforce this retention requirement, owner-
occupied units assisted with a loan or a grant under the AHP would have
to be subject to a deed restriction or other legally enforceable
mechanism restricting transfer of the unit to a low- or moderate-income
household if the unit were sold within 30 years of the purchase,
construction, or rehabilitation or prior to the end of the remaining
useful life of the unit, as the case may be.
A household purchasing such a unit would have to qualify as a low-
or moderate-income household only at the time of purchase or at the
time of closing on the financing for the unit. A household
rehabilitating a unit would have to qualify as a low- or moderate-
income household only at the time the household received a commitment
for funding through the AHP.
If an owner-occupied unit assisted by a loan under the AHP were
sold prior to the end of the 30-year period or the remaining useful
life of the unit, as the case may be, to a household that was not a
low- or moderate-income household, then the applicant would have to
either: (1) Repay to the Bank that portion of the advance used to make
the loan to the seller, or (2) convert that portion of the advance used
to make the loan to the seller to a market rate advance with an
interest rate equal to the market rate of interest at the time the
advance was made, and any unused AHP subsidy which had been set aside
by the Bank to subsidize that portion of the advance used to make the
loan to the seller would be made available by the Bank for additional
AHP projects.
If an owner-occupied unit assisted by a grant under the AHP were
sold prior to the end of the 30-year period or the remaining useful
life of the unit, as the case may be, to a household that was not a
low- or moderate-income household, then the seller would have to repay
to the applicant a pro rata portion of the grant from any profit
realized upon the sale of the unit, and any amount repaid to the
applicant would have to be forwarded to the Bank and made available for
additional AHP projects. The Bank would have the discretion to waive
this recapture requirement if imposition of the requirement would cause
undue hardship on the seller, as defined in the Bank's AHP
implementation plan. In addition, for owner-occupied units assisted by
a grant, the Bank would have to monitor the unit during the required
long-term period by reviewing land title records or reports or
certifications from the sponsor or a regulatory agency, as determined
by each Bank in its AHP implementation plan, to determine whether the
unit had been sold to a household whose income exceeded a low-or
moderate-income.
As an alternative to requiring that each owner-occupied unit
assisted by a grant be subject to a restriction on transfer, the Bank
could have a legally binding agreement with the sponsor providing that
if such unit were sold prior to the end of the required long-term
period to a household that was not a low- or moderate-income household,
the sponsor would make another unit available to a low- or moderate-
income household.
Option B. Under option B, the long-term requirement would be met by
providing that an owner-occupied unit assisted by a grant or a loan
under the AHP must be affordable for the initial household for the
duration of that household's occupancy of the unit. However, to
minimize opportunities for speculation, the unit would have to be
subject to a deed restriction or other legally enforceable mechanism
restricting transfer of the unit to a low- or moderate-income household
if the unit were sold within five years of the purchase, construction,
or rehabilitation of the unit.
As under option A, a household purchasing such a unit under option
B would have to qualify as a low- or moderate-income household only at
the time of purchase or at the time of closing on the financing for the
unit, and a household rehabilitating a unit would have to qualify as a
low- or moderate-income household only at the time the household
received a commitment for funding through the AHP.
If an owner-occupied unit assisted by a loan under the AHP were
sold prior to the end of the five-year period to a household that was
not a low- or moderate-income household, then the applicant would have
to either: (1) Repay to the Bank that portion of the advance used to
make the loan to the seller, or (2) convert that portion of the advance
used to make the loan to the seller to a market rate advance with an
interest rate equal to the market rate of interest at the time the
advance was made, and any unused AHP subsidy which had been set aside
by the Bank to subsidize that portion of the advance used to make the
loan to the seller would be made available by the Bank for additional
AHP projects.
If an owner-occupied unit assisted by a grant under the AHP were
sold prior to the end of the five-year period to a household that was
not a low- or moderate-income household, then the seller would have to
repay to the applicant a pro rata portion of the grant from any profit
realized upon the sale of the unit, and any amount repaid to the
applicant would have to be forwarded to the Bank and made available for
additional AHP projects. The Bank would have the discretion to waive
this recapture requirement if imposition of the requirement would cause
undue hardship on the seller, as defined in the Bank's AHP
implementation plan. In addition, for owner-occupied units assisted by
a grant, the Bank would have to monitor the unit during the required
long-term period by reviewing land title records or reports or
certifications from the sponsor or a regulatory agency, as determined
by each Bank in its AHP implementation plan, to determine whether the
unit had been sold to a household whose income exceeded a low or
moderate income.
As under option A, as an alternative to requiring that each owner-
occupied unit assisted by a grant be subject to a restriction on
transfer, the Bank under option B could have a legally binding
agreement with the sponsor providing that if such unit were sold prior
to the end of the required long-term period to a household that was not
a low- or moderate-income household, the sponsor would make another
unit available to a low- or moderate-income household.
(2) Definitions of ``low- or moderate-income household'' and ``very
low-income household''. Section 10(j)(13)(A) of the Act defines the
term ``low- or moderate-income household'' as a household which has an
income of 80 percent or less of the area median. 12 U.S.C.
1430(j)(13)(A). Section 10(j)(13)(B) of the Act defines the term ``very
low-income household'' as a household that has an income of 50 percent
or less of the area median. Id. section 1430(j)(13)(B). Thus, the term
low- or moderate-income household incorporates households that meet the
definition of very low-income household.
The Board's existing AHP regulation defines ``low- and moderate-
income households'' as households for which the aggregate income is 80
percent or less of the area median income, and ``very low-income
households'' as households for which the aggregate income is 50 percent
or less of the area median income. See 12 CFR 960.1(g), (o). ``Median
income'' is defined as ``the median family income for an area as
determined and published by the U.S. Department of Housing and Urban
Development.'' Id. Sec. 960.1(h). ``Area'' is defined as ``a
metropolitan statistical area, a county, or a nonmetropolitan area, as
established by the U.S. Office of Management and Budget.'' Id.
Sec. 960.1(c).
(i) Adjustments of income limit. On November 5, 1993, the Board
published a proposed rule to amend the definitions of these terms. See
58 FR 58988 (November 5, 1993). As discussed in the preamble to the
proposed amendment, under section 3 of the United States Housing Act of
1937, the Secretary of the U.S. Department of Housing and Urban
Development (Secretary) establishes income limits to be used in
determining whether a family qualifies as a ``low-income family'' or as
a ``very low-income family'' that is eligible to receive assistance
under the Department of Housing and Urban Development's (HUD) housing
programs. See 42 U.S.C. 1437a(b)(2). These income limits are calculated
as a percentage of the median income of a four-person family living in
a particular area. In general, the income limit for qualifying as a
``low-income family'' is set at 80 percent of the area median income,
and the income limit for qualifying as a ``very low-income family'' is
set at 50 percent of the area median income.
The Secretary may adjust the income limits for very low-income
families and low-income families upward or downward to take into
account unusually high or low family incomes in an area. See id. In
addition, the income limit for low-income families may be adjusted to
take into account prevailing levels of construction costs. See id. Then
an adjustment in this figure is made to establish the comparable income
limits for larger and smaller families living in the area. See id.
In 31 higher-income metropolitan statistical areas (MSAs) and 18
counties, the Secretary adjusts the area-based income limit for a four-
person, low-income family downward if it would otherwise exceed the
U.S. median income for a four-person family. In these areas, the
Secretary caps the income limit for a four-person, low-income family at
the U.S. median income for a four-person family.
In four MSAs and 107 counties, the Secretary adjusts the area-based
income limit for four-person, very low- and low-income families
downward because housing costs are low compared to incomes.
Adjusting the income limit downward decreases the number of
households in an area that are eligible to receive assistance under
HUD's housing programs.
As discussed in the proposed amendment, the Board believes that
affordable housing financed through the AHP should be available to the
greatest number of households possible, within the limits established
by the Act. Further, households should not be excluded from affordable
housing in a particular local market on the basis that housing costs
are lower or household incomes are higher in that market than in other
regions of the United States.
Applying the income limits that have been adjusted downward for
prevailing construction costs, low housing costs, or unusually high
household incomes for purposes of administering the AHP reduces the
number of households eligible to live in affordable housing financed
through the AHP. This limits a member's ability to use funds under the
AHP to fulfill its obligation under the Community Reinvestment Act. See
12 U.S.C. 2901 et seq. It also limits a member's ability to use funds
under the AHP to meet the ``community investment or service''
requirement of section 10(g) of the Act, 12 U.S.C. 1430(g), and the
Board's Community Support Regulation, 12 CFR part 936.
Accordingly, the Board is proposing that in administering the AHP
and in defining the standards governing the ``community investment or
service'' requirement of the Act, the income limits used to determine
whether a household in a particular area qualifies as a ``very low-
income household'' or as a ``low- or moderate-income household'' should
not be adjusted downward based on prevailing construction costs, low
housing costs, or unusually high household incomes.
Therefore, as set forth in the Board's proposed amendment,
Sec. 960.1 of this proposed rule defines ``low- or moderate-income
household'' as a household which has an income of 80 percent or less of
the median income for the area, as adjusted and published by HUD,
except in areas where the Secretary adjusts this figure downward
because of prevailing construction costs, low housing costs, or
unusually high household incomes. For areas where the Secretary makes
this downward adjustment, ``low- or moderate-income household'' would
be defined to mean a household which has an income of 80 percent or
less of the median income for the area, as published by HUD, with
adjustment for household size, but without the adjustments made by the
Secretary for prevailing construction costs, low housing costs, or
unusually high household incomes.
In addition, as set forth in the Board's proposed amendment,
Sec. 960.1 of this proposed rule defines ``very low-income household''
as a household which has an income of 50 percent or less of the median
income for the area, as adjusted and published by HUD, except in areas
where the Secretary adjusts this figure downward because of prevailing
construction costs, low housing costs, or unusually high household
incomes. For areas where the Secretary makes this downward adjustment,
``very low-income household'' would be defined to mean a household
which has an income of 50 percent or less of the median income for the
area, as published by HUD, with adjustment for household size, but
without the adjustments made by the Secretary for prevailing
construction costs, low housing costs, or unusually high household
incomes.
While HUD publishes tables with adjusted income information that
incorporates the adjustments for family size, prevailing construction
costs, low housing costs, and unusually high family incomes, it does
not publish tables with income information that adjusts only for family
size and not these other factors. Therefore, as set forth in the
Board's proposed amendment, Sec. 960.1 of this proposed rule adds a
definition of ``adjustment for household size'' in order to provide
additional guidance in calculating this adjustment.
An adjustment for household size is made by taking a specified
percentage of the income limit of a four-person household for a
particular area, according to the following scale:
------------------------------------------------------------------------
No. persons Percent adjustment
------------------------------------------------------------------------
1.................................. 70.
2.................................. 80.
3.................................. 90.
4.................................. Base.
5.................................. 108.
6.................................. 116.
7.................................. 124.
8.................................. 132.
------------------------------------------------------------------------
For each person in excess of eight, eight percent of the four-
person household base income limit should be added to the income limit
for an eight-person household for the area. These adjustment factors
are the same as those used by HUD in administering its housing
programs.
Section 960.1 of the proposed rule retains the definition of
``area'' from the Board's existing AHP regulation. See 12 CFR 960.1(c).
``Area'' means, for purposes of defining ``median income for the
area,'' a metropolitan statistical area, a county, or a nonmetropolitan
area, as established by the U.S. Office of Management and Budget.
Consistent with the proposed amendment, Sec. 960.1 of this proposed
rule does not include a definition of ``median income'' because it is
included in the proposed definitions of ``very low-income household''
and ``low- or moderate-income household.''
(ii) Definition of ``income''. The Act is silent on how to define
the term ``income,'' i.e., what are eligible sources of household
income that should be considered in determining whether the household
satisfies the definition of ``low- or moderate-income household'' or
``very low-income household.'' The Board has determined not to define
the term ``income'' in the proposed rule. Homeownership projects
typically involve the participation of a lender which provides
permanent financing for the homeowner over an extended period of time.
The lender generally verifies a household's income prior to issuing a
financing commitment during the underwriting of the loan. Eligible
sources of income are identified by the lender during the mortgage
underwriting process. Identifying eligible sources of income in the
rule could cause inconsistency with lenders' customary and usual
underwriting practices, or with the standards applied by the entity
providing the major source of financing for the project.
b. Rental housing units. Section 960.5(a)(1) of the proposed rule
provides generally that at least 20 percent of the rental housing units
in a project financed under the AHP with subsidized advances or direct
subsidies shall remain affordable for and occupied by very low-income
households for a minimum period of 30 years or, at the election of the
sponsor, the remaining useful life of such units.
Proposed Sec. 960.5(a)(1) implements section 10(j)(2)(B) of the
Act, which provides that Bank members may use subsidized advances
received from the Banks to finance the purchase, construction, or
rehabilitation of rental housing, at least 20 percent of the units of
which will be occupied by and affordable for very low-income households
for the remaining useful life of such housing or the mortgage term. 12
U.S.C. 1430(j)(2)(B).
Proposed Sec. 960.5(a)(1) provides that the applicant and project
sponsor shall state in the AHP application their commitment regarding
satisfaction of the long-term income-eligibility, affordability and
income-targeting requirements. In addition, an applicant may commit to
maintain additional units as affordable for and occupied by low- or
moderate-income households, which commitment shall be a minimum period
of 30 years or, at the election of the sponsor, the remaining useful
life of such units.
(1) Long-term requirement. Section 10(j) of the Act does not define
``remaining useful life'' as used in section 10(j)(2)(B) of the Act.
See 12 U.S.C. 1430(j). However, the legislative history of section
21A(c) of the Act regarding residential properties sold by the
Resolution Trust Corporation (RTC), which was enacted as part of the
same legislation that enacted section 10(j), states that the remaining
useful life of such RTC property is intended to cover the property as
long as it is habitable and assumes good faith efforts by the purchaser
to maintain the property and to rehabilitate it as necessary. See Joint
Explanatory Statement of the Committee of the Conference, H.R. Conf.
Rep. No. 101-222, 101st Cong., 1st Sess., 419 (1989) (FIRREA Conference
Report); 12 U.S.C. 1441a(c). The RTC has in fact adopted a specific
uniform period of useful life for all buildings instead of a period of
useful life based on physical habitability. See 12 CFR 1609.2(kk). The
legislative history of a recently enacted affordable housing statute,
the Low Income Housing Preservation and Residential Homeownership Act
(LIHPRHA), provides further support for a definition of ``remaining
useful life'' based on the period of physical habitability of a
property by explicitly rejecting the RTC's regulatory definition.
Accordingly, Sec. 960.1 of the proposed rule defines ``remaining
useful life'' as the period during which the housing remains in a
condition suitable for occupancy, assuming normal maintenance and
repairs are made and major systems and capital components are replaced
or repaired as becomes necessary.
Section 10(j) of the Act does not define ``mortgage term'' as used
in section 10(j)(2)(B) of the Act. See 12 U.S.C. 1430(j). The
legislative history of section 10(j) states that the conferees expect
that the Board will encourage the use of the longest practicable
mortgage term in order to aid in making the housing affordable for very
low-income households. See FIRREA Conference Report at 431.
Accordingly, the Board believes that ``mortgage term'' should be
defined as the mortgage term only of long-term mortgage loans and
believes that 30 years is consistent with Congress' intent in section
10(j)(2)(B) of the Act to ensure that AHP-assisted rental housing
projects remain occupied by and affordable for income-eligible
households for a long-term period.
(2) Definitions of ``low- or moderate-income household'' and ``very
low-income household''. The definitions of ``low- or moderate-income
household'' and ``very low-income household'' discussed above for AHP-
assisted owner-occupied housing projects apply for AHP-assisted rental
housing projects as well.
With respect to the definition of ``income,'' rental housing
projects typically have multiple providers of financing, each of which
may specify the eligible sources of income, which sometimes conflict
with each other. However, as with AHP-assisted owner-occupied housing
projects, the Board has determined that the proposed rule should not
specify the eligible sources of income for rental housing projects, but
rather that applicants should be permitted to follow their usual
underwriting guidelines, or may follow those of the predominant source
of financing in the project.
(3) Increase in household income or sale of project before end of
required long-term period. (i) Increase in household income. Section
960.5(a)(2) of the proposed rule provides that all households occupying
a rental housing unit subject to the income-targeting requirement of
paragraph (a)(1) of this section must satisfy the income-eligibility
requirement applicable to such income-targeted unit, as committed to in
the AHP application, upon initial occupancy. The household may continue
to occupy the income-targeted unit even if its income increases above
the income-eligibility requirement for such unit. The unit may continue
to count toward meeting the income-targeting requirement committed to
in the AHP application, provided the rent charged remains affordable to
the household as defined in proposed Sec. 960.1 (as further discussed
below). However, if the household's income rises above 140 percent of
the income-targeting level committed to in the AHP application, the
sponsor must make the next available rental housing unit in the project
affordable to and available for occupancy by a household whose income
is at or below the income-targeting level committed to in the AHP
application for the original unit. Once the next available rental
housing unit is so occupied, the rent charged on the unit occupied by
the household whose income has risen shall no longer be subject to the
requirement that it be affordable for households at the income-
targeting level committed to in the AHP application.
This approach is consistent with the approach followed in the LIHTC
program. Under the LIHTC program, a unit is in compliance with the
occupancy requirements until the tenant's income has risen to 140
percent of the qualifying income. See 26 U.S.C. Sec. 42(g)(2)(D)(i).
The next available unit must then be rented to an income-eligible
tenant at an affordable rent. See id. Section 42(g)(2)(D)(ii). This
approach allows the household to achieve stability by allowing
increases in income without fear of displacement or increased rents. In
addition, it does not cause destabilization of the project's cash flow
by having the project sponsor provide additional income-eligible units
with reduced rents that may reduce the income of the project. It also
would be consistent with the treatment of rents under the AHP's 20
percent requirement (also known as the maximum subsidy rule), which is
currently an interim rule of the Board, and which is incorporated in
Sec. 960.9(c) of this proposed rule. (See discussion of 20 percent
requirement below.)
Section 960.1 of the proposed rule defines ``affordable for very
low-income households'' to mean:
(1) For purposes of rental housing units, that rents, including
reasonable utility costs, charged to households for such units do not
exceed 30 percent of the income of a household (assuming a household
size of 1.5 persons per bedroom or 1.0 person per unit without a
separate bedroom) which has an income of 50 percent of the median
income for the area, as adjusted and published by HUD, except that in
areas where the Secretary adjusts this income figure downward because
of prevailing construction costs, low housing costs, or unusually high
household incomes, then ``affordable for very low-income households''
means that rents, including reasonable utility costs, charged to
households for such units do not exceed 30 percent of the income of a
household which has an income of 50 percent of the median income for
the area, as published by HUD, with adjustment for household size, but
without the adjustments made by the Secretary for prevailing
construction costs, low housing costs, or unusually high household
incomes;
(2) If a rental unit is targeted to a household whose income is
less than 50 percent of the median income for the area, then
``affordable for very low-income households'' means that the rent,
including reasonable utility costs, charged to a household for such
unit does not exceed 30 percent of the maximum qualifying income of the
targeted households of the size expected to occupy the unit.
This proposed definition implements section 10(j)(13)(D) of the
Act, which defines ``affordable for very low-income households'' to
mean that rents charged to tenants for units made available for
occupancy by low-income families shall not exceed 30 percent of the
adjusted income of a family whose income equals 50 percent of the
income for the area (as determined by the Secretary of HUD) with
adjustment for family size. 12 U.S.C. 1430(j)(13)(D). Section 960.1(b)
of the Board's existing AHP regulation contains a definition of the
term that is similar to the statutory definition. See 12 CFR 960.1(b).
The Board has determined that an estimate for reasonable utility
costs should be included in the determination of rents charged to
households under this section, if they are not already included in the
projected rents. Including utility costs would reduce the housing cost
burden for very low-income households under the AHP, and would allow
all rental projects to be treated equally, since some projects include
the cost of utilities in the rent, while others do not include such
costs in the rent. Including utility costs would be consistent with the
treatment of rents in other federal housing programs, such as HUD's
Section 8 program and the LIHTC program. It also would be consistent
with the treatment of rents under the AHP's 20 percent requirement,
which is currently an interim rule of the Board, and which is
incorporated in Sec. 960.9(c) of this proposed rule. (See discussion of
20 percent requirement below.)
The definition of ``affordable for low- or moderate-income
households'' in Sec. 960.1 of the proposed rule is similar to the above
definition, except that the household must have an income of 80
percent, instead of 50 percent, of the median income for the area,
since the Act defines a ``low- or moderate-income household'' as any
household which has an income of 80 percent or less of the area median.
12 U.S.C. 1430(j)(13)(A).
(ii) Sale of AHP-assisted rental housing project. Section
960.5(a)(3) of the proposed rule provides that an owner of an AHP-
assisted rental housing project may sell the project prior to the end
of the long-term period during which the project's rental units, or
applicable portion thereof, must remain affordable for and occupied by
households with incomes at or below the levels committed to in the AHP
application; however, either:
a. The purchaser must agree to continue the project's rental units,
or applicable portion thereof, as affordable for and occupied by
households with incomes at or below the levels committed to in the AHP
application for the remainder of the long-term period committed to in
the AHP application, and must agree to be subject to the same
restrictions on resale that applied to the seller; or
b. If the purchaser does not satisfy the requirements in paragraph
a. above, and if the Bank provided a direct subsidy to the applicant
which was passed on as a grant to the seller, the seller must repay a
pro rata portion of the grant as provided in Sec. 960.16(d)(1); or
c. If the purchaser does not satisfy the requirements in paragraph
a. above, and if the Bank provided a subsidized advance to the
applicant which in turn provided a below market rate loan to the
seller, then the provisions of Sec. 960.16(d)(2) shall apply.
Proposed Sec. 960.5(b) further provides that the Bank's AHP
implementation plan shall permit the owner of an AHP-assisted rental
housing project to sell such project as provided for in paragraph
(a)(3).
D. Establishment of AHP Funding Cycles and Available AHP Subsidies
Section 960.6(a)(1) of the proposed rule requires each Bank to
establish at least two but no more than four AHP funding cycles per
year during which applications for AHP subsidized advances or direct
subsidies will be accepted. This is a change from the Board's existing
AHP regulation, which provides that the Banks may accept AHP
applications during two of four quarterly periods each year. See 12 CFR
960.4(a).
Section 960.6(a)(1) of the proposed rule also provides that the AHP
funding cycle schedule, including application due dates, is to be
determined by the Bank in its discretion, but shall allow for
sufficient time intervals to ensure an adequate pool of applicants to
compete in each funding cycle. The funding cycles schedule, including
application due dates, shall be described in detail in the Bank's AHP
implementation plan. This is also a change from the Board's existing
AHP regulation, which sets forth specific application due dates. See 12
CFR 960.4(a).
Section 960.6(a)(2) of the proposed rule provides that each Bank
shall inform the general public and its members of the number and dates
of its AHP funding cycles for the year and the approximate amount of
available AHP subsidies for each funding cycle at least 45 calendar
days before the due date for AHP applications for the first funding
cycle for the year. This is a change from the Board's existing AHP
regulation, which requires each Bank to announce its funding cycles by
December 1 of the preceding year, and to notify only its members of the
approximate amount of AHP subsidies to be offered in each funding
cycle. See 12 CFR 960.4(a), (b).
Consistent with Sec. 960.4(b) of the Board's existing AHP
regulation, Sec. 960.6(b) of the proposed rule provides that each Bank
shall allocate comparable amounts of AHP subsidies for each AHP funding
cycle during the year. See 12 CFR 960.4(b).
E. Specific Application and Scoring Requirements
1. Application Requirements
The proposed rule does not mandate use of a uniform AHP application
form by all of the Banks. Rather, the Board believes that, consistent
with current practice under the AHP, each Bank should continue to
devise its own AHP application form, because each Bank will have its
own special information requirements as a result of the specific
priorities and scoring criteria adopted by the Bank.
However, as discussed further below, all AHP applications must
satisfy certain threshold requirements in order to be considered for
scoring under the proposed rule. Thus, certain information from
applicants must be received by all Banks in order for the Banks to be
able to determine whether the applications satisfy the threshold
requirements in the proposed rule and to score the applications under
the scoring criteria. Accordingly, Sec. 960.7(a) of the proposed rule
provides that each Bank shall require applicants for subsidized
advances or direct subsidies under the AHP to submit to the Bank an
application which, at a minimum, contains all of the information
described below and any other information which the Bank determines is
necessary in order to take action on such application, including the
following:
(1) A concise description of the purpose of the request and
proposed uses of the funds, and its relationship to the priorities
identified in proposed Sec. 960.10(d), the targeting criterion
identified in proposed Sec. 960.10(e), and the other objectives
identified in proposed Sec. 960.10(f);
(2) A statement of how the project will satisfy the authorized uses
and long-term requirements, including a description of legal mechanisms
to be used to ensure compliance by the project with such requirements,
contained in proposed Secs. 960.3 and 960.5;
(3) A statement of how the project will comply with the fair
housing law requirement contained in proposed Sec. 960.9(b);
(4) A statement of how the project will satisfy the feasibility
requirement contained in proposed Sec. 960.9(d);
(5) A statement of how the project's sponsor satisfies the
qualification requirement contained in proposed Sec. 960.9(e);
(6) A statement of whether a subsidized advance or direct subsidy
has been requested and the amount of such funds requested;
(7) A disclosure of whether or not the applicant has a direct or
indirect interest in the property or project. If the applicant has an
interest in the property and the application is approved, then prior to
the transfer of AHP funds to the project, an independent current
appraisal of the fair market value of such property must be provided,
unless the applicant demonstrates that the property is being sold or
otherwise transferred to the sponsor at a price substantially below the
fair market value;
(8) A statement of the project's costs; and
(9) A certification from the applicant's, the sponsor's and the
loan fund's or loan consortium's board of directors, or president or
senior officer if so delegated by the board of directors, that the
applicant, the sponsor and the loan fund or loan consortium will comply
with all requirements of this part and all obligations committed to in
the AHP application.
Section 960.4(c) of the Board's existing AHP regulation also
generally requires an applicant to include in its AHP application the
information identified in paragraphs (3) through (6) above, as well as
any other information the Bank may require. See 12 CFR 960.4(c).
Section 960.4(c)(6) of the Board's existing AHP regulation also
requires an applicant to disclose in its AHP application any direct or
indirect interest of the applicant in the property or project. See 12
CFR 960.4(c)(6). Under Sec. 960.7(a)(7) of the proposed rule, if such
an interest exists and the application is approved, then prior to the
transfer of AHP funds to the project, the applicant generally is
required to provide an appraisal of the property or project. This is to
ensure that the sales price of such property or project owned by the
applicant has not been inflated and that the applicant is not receiving
the benefit of the AHP subsidy.
Section 960.4(c)(7) of the Board's existing AHP regulation requires
the applicant to include in its AHP application an explanation of how
the applicant intends to monitor the use of any funds received under
the AHP, including an explanation of how the structure of the project
ensures that a preponderance of the subsidy is ultimately received by
the targeted beneficiaries. See 12 U.S.C. 1430(j)(9)(D); 12 CFR
960.4(c)(7). As discussed in greater detail in the monitoring section
below, as long as adequate monitoring is otherwise provided for, the
proposed rule does not require the applicant in all instances to
monitor the AHP-assisted project for compliance with the long-term
requirement of the proposed rule. Accordingly, this provision of the
existing regulation is deleted in the proposed rule.
Section 960.4(c)(8) of the Board's existing AHP regulation requires
the applicant to certify that the maximum subsidy limitation
requirements of the AHP rule will not be violated. See 12 CFR
960.4(c)(8). However, since the maximum subsidy limitation requirements
are threshold requirements that all AHP applications must satisfy (see
discussion below of the 20 percent requirement), this requirement is
incorporated into proposed Sec. 960.7(a)(9), which provides generally
that the applicant and sponsor must certify that all requirements of
the AHP regulation will be satisfied.
Section 960.4(c)(8) of the Board's existing AHP regulation also
requires the applicant to explain in its AHP application how any AHP
subsidy that exceeds the maximum subsidy requirements will be
recaptured. See 12 CFR 960.4(c)(8). Since AHP applications must satisfy
the threshold maximum subsidy limitation requirements at the outset in
order to be scored and approved for AHP funding, this issue does not
arise and therefore has been deleted in the proposed rule.
As discussed above, the requirement in Sec. 960.4(c)(9) of the
Board's existing AHP regulation that the applicant's managing officer
must certify that the AHP subsidy shall be only for authorized uses is
expanded in proposed Sec. 960.7(a)(9) to require a certification by the
applicant, the sponsor and the loan fund or loan consortium not only
that funds received under the AHP will be used for authorized uses, but
also a certification of compliance with all requirements of the AHP
regulation and all obligations committed to in the AHP application. See
12 CFR 960.4(c)(9). In addition, the proposed rule requires the
applicant, the sponsor and the loan fund or loan consortium, not just
the applicant, as in the Board's existing AHP regulation, to make the
certification in the AHP application. This change is proposed because
the applicant, the sponsor and the loan fund or loan consortium are all
subject to specific requirements under the AHP and therefore should be
required to certify that they will comply with such requirements.
2. Action on Applications
As discussed above, the proposed rule makes a major change in the
Board's existing AHP regulation by taking the Board out of the approval
process for AHP applications. Section 960.7(b)(1) of the proposed rule
provides that each Bank shall review, score and take action on an AHP
application pursuant to the requirements contained in proposed
Secs. 960.8, 960.9 and 960.10, and shall notify the applicant of such
action no later than 60 calendar days after the application due date
for the AHP funding cycle. Section 960.5(f)(1) of the existing
regulation requires the Banks to forward to the Board their recommended
applications no later than 30 days after each offering deadline. See 12
CFR 960.5(f)(1). Since the Banks would have greater responsibilities in
the approval process under the proposed rule, the 30-day period is
proposed to be extended to 60 calendar days.
Section 960.7(b)(2) of the proposed rule provides specifically that
the board of directors of each Bank shall have the authority to approve
or disapprove AHP applications received, and may delegate such
authority to the president or other senior officers of the Bank.
Section 960.7(b)(3) of the proposed rule provides that within 30
calendar days of each Bank's approval of the AHP applications for a
given AHP funding cycle, the Bank shall forward to the Board a summary
of each approved AHP application. The summary shall:
(i) Briefly describe the project, including the applicant, the loan
fund or loan consortium, if applicable, and the sponsor--whether
nonprofit, for-profit or public agency, the type of housing, the
location, the long-term period committed to, the number of housing
units including the number of units affordable for very low-, low- or
moderate-income households or for households at any other income levels
committed to in the AHP application, the development cost, other
financing sources, and special needs populations served;
(ii) State the reason for the points awarded under each of the
Bank's scoring criteria for the project;
(iii) Indicate whether a subsidized advance or direct subsidy was
approved by the Bank for the project, the use of such funds, and the
amount of such funds approved; if a subsidized advance was approved,
the summary shall indicate the amount of the advance, the advance rate,
the amortization schedule for the advance, the term to maturity, the
applicable cost of funds, and the date as of which the cost of funds
was determined;
(iv) Indicate whether the project received approval in a prior AHP
funding cycle, or whether the project is an extension, expansion,
continuation or reconfiguration of a previously approved AHP project;
(v) Describe how the project will be monitored and by what entity;
(vi) Describe the legal mechanisms to be used to ensure compliance
by the project with the long-term requirement contained in Sec. 960.5
of the proposed rule;
(vii) Include a summary in chart form showing all AHP applications
received by the Bank in the particular AHP funding cycle, with the
score each application received for each scoring criterion, and the
total score received by each project; and
(viii) Include any other information required by the Board.
The Board has general oversight responsibility over the AHP under
section 10(j) of the Act. See 12 U.S.C. 1430(j). In addition, section
10(j)(12)(A) of the Act requires the Board to monitor and report
annually to the Congress and the Advisory Council for each Bank the
support of low-income housing and community development by the Banks
and the utilization of advances for these purposes. Id.
Sec. 1430(j)(12)(A). Since the Board would no longer be receiving and
approving AHP applications under the proposed rule, the Board would no
longer have these applications as a source of data to assist the Board
in exercising its oversight and monitoring responsibilities and
preparing the annual report to the Congress and the Advisory Councils.
Accordingly, the Board will need the Banks to provide this additional
information to the Board in the summary, as required in proposed
Sec. 960.7(b)(3).
F. Requirements For Approval of AHP Applications
1. General
Section 960.8(a) of the proposed rule provides that each Bank shall
evaluate the AHP applications received to determine if they satisfy the
threshold criteria in proposed Sec. 960.9. All applications that meet
the threshold criteria shall be scored pursuant to the criteria
contained in proposed Sec. 960.10 as set forth in the Bank's approved
AHP implementation plan.
Section 960.8(b) of the proposed rule provides that the Bank shall
approve the applications in descending order starting with the highest
scoring application until the total AHP funding amount for the
particular funding cycle, except for any amount insufficient to fund
the next highest scoring project, has been allocated. The Bank also may
approve the next four highest scoring applications as alternates and,
within one year of approval by the Bank, may fund such alternates if
any previously committed AHP funds become available.
2. Threshold Criteria for Approval of AHP Applications
Section 960.9 of the proposed rule provides that an AHP application
must meet all of the threshold criteria set forth in a. through f.
below in order to be considered for scoring under proposed Sec. 960.10
and for AHP funding approval. These criteria are discussed in detail
below.
a. Authorized and required uses requirements. The AHP application
must indicate that the use of the subsidized advance or direct subsidy
set forth in the AHP application for the proposed project will comply
with the requirements for authorized and required uses of such funds
contained in proposed Secs. 960.3, 960.4 and 960.5. See proposed
Sec. 960.9(a).
This proposed provision is consistent with the intent of
Sec. 960.5(a)(1) of the Board's existing AHP regulation. See 12 CFR
960.5(a)(1).
b. Fair housing law requirements. The AHP application must indicate
that the project sponsor will comply with any applicable fair housing
law requirements and must indicate how the sponsor proposes to
affirmatively further compliance with such requirements. See proposed
Sec. 960.9(b).
This proposed provision is consistent with the requirement of
compliance with fair housing laws contained in Sec. 960.5(a)(2)(i) of
the Board's existing AHP regulation, and the requirement under existing
practice that applications indicate how the sponsor proposes to
affirmatively further such compliance. See 12 CFR 960.5(a)(2)(i).
c. The twenty percent requirement and alternatives. Section
960.9(c) of the proposed rule incorporates the existing maximum subsidy
limitation requirement and alternatives contained in Sec. 960.9 of the
Board's interim rule, with minor changes in language and one
substantive modification discussed below. See 12 CFR 960.9 (58 FR 17968
(April 7, 1993)). The 20 percent requirement and the alternatives
discussed below implement the maximum subsidy limitation requirement
contained in section 10(j)(9)(F) of the Act. See 12 U.S.C.
1430(j)(9)(F). Since the 20 percent requirement or an alternative must
be satisfied by all AHP applications to avoid over-subsidization of a
project, it is set forth as a threshold requirement in the proposed
rule.
(i) The twenty percent requirement. Section 960.9(c)(1)(i) of the
proposed rule provides generally that a Bank shall not offer subsidized
advances or direct subsidies to applicants in excess of that amount
needed to reduce the monthly housing costs for income-eligible
households, as committed to in the AHP application, to 20 percent of
the household's gross monthly income (the 20 percent requirement). In
projects where other forms of federal, state, local or private
subsidized assistance are being used in conjunction with AHP subsidized
advances or direct subsidies, the total amount of subsidized
assistance, including funds provided under the AHP, shall not be in
excess of the amount needed to reduce the monthly housing costs for the
income-eligible households, as committed to in the AHP application, to
20 percent of the household's gross monthly income.
Monthly housing costs are defined in proposed Sec. 960.9(c)(1)(ii)
as:
(1) For households in AHP-assisted owner-occupied housing units,
mortgage principal and interest payments, real property taxes,
homeowners' insurance, a reasonable estimate of utility costs excluding
telephone service, and for households in AHP-assisted condominium,
cooperative, mutual housing or other housing projects involving common
ownership, those portions of any regular operating assessment or fee
allocated for principal and interest payments, taxes, insurance and a
reasonable estimate of utilities attributable to the household's share
of the common area and/or the individual unit; and
(2) For households in AHP-assisted rental housing units, rent
payments, and where they are not already included in rent payments, a
reasonable estimate of utility costs excluding telephone service.
Section 960.9(c)(1)(iii) of the proposed rule provides that a
household subject to the 20 percent requirement is required to meet
such requirement only at the time it initially purchases or occupies a
unit.
(ii) Alternative requirements. Section 960.9(c)(2)(i) of the
proposed rule provides that the 20 percent requirement shall not apply
where a Bank provides subsidized advances or direct subsidies to an
applicant for a rental housing project, which project also receives
funds from a federal or state rental housing progra
FR Doc. 94-412 Affordable Housing Program
m that requires
qualifying households to pay as rent a certain percentage of their
monthly income or a designated amount, provided that the household
meets the housing payment requirements of the other program.
Section 960.9(c)(2)(ii)(A) of the proposed rule provides that the
20 percent requirement shall not apply where the total amount of AHP
funds provided through a Bank subsidized advance or direct subsidy used
to finance rehabilitation of a housing unit by a very low-income
household that already owns and occupies the housing unit is $10,000 or
less per such household. In addition, proposed Sec. 960.9(c)(2)(ii)(B)
provides that the 20 percent requirement shall not apply where the
total amount of AHP funds provided through a Bank subsidized advance or
direct subsidy used to finance the purchase of a housing unit by a very
low-income household is $5,000 or less per such household. This is a
change from the interim rule which permits this alternative to the 20
percent requirement only for households that are above the threshold
income level for very low-income households and at or below the income
level to qualify as low- or moderate-income households. The Board did
not intend to exclude very low-income households from taking advantage
of this alternative when it adopted the interim rule. Accordingly,
proposed Sec. 960.9(c)(2)(ii)(B) corrects this error.
Section 960.9(c)(2)(iii) of the proposed rule provides that the 20
percent requirement shall not apply where the total amount of AHP funds
provided through a Bank subsidized advance or direct subsidy used to
finance rehabilitation or purchase of a housing unit by a low- or
moderate-income household is $5,000 or less per such household.
Section 960.9(c)(2)(iv) of the proposed rule provides that the 20
percent requirement shall not apply where a Bank provides subsidized
advances or direct subsidies ultimately benefiting a household with an
income at or below the level committed to in the AHP application, which
is participating in a self-help, sweat equity or similar housing
program. Under the proposed rule, the household is required to
contribute its skilled or unskilled labor valued at a minimum of $2,000
per household. The household must work cooperatively with others to
construct or rehabilitate housing which the household or other program
participants are purchasing or already own and occupy, and the program
must involve supervision of the work performed by skilled builders or
rehabilitators.
d. Project feasibility. The AHP application must indicate that the
proposed project is feasible. This determination must be based on an
analysis of project sources and uses of funds, project multi-year
operating pro formas for rental housing projects, projections of sales
and prices for owner-occupied housing units, and local market
conditions. The analysis must show that the project is financially
viable and likely to be completed within a reasonable period of time,
and is likely to operate or sell and remain affordable to the
designated income-eligible households over the long-term period
committed to in the AHP application. See proposed Sec. 960.9(d).
A feasibility requirement also is contained in Sec. 960.5(a)(2)(ii)
of the Board's existing AHP regulation. See 12 CFR 960.5(a)(2)(ii).
e. Qualifications of sponsor. The AHP application must indicate
that the sponsor has the qualifications and ability to perform its
responsibilities as committed to in the AHP application. See proposed
Sec. 960.9(e).
This proposed provision is not included as a threshold requirement
in the Board's existing AHP regulation, although it is required under
the regulation to be included by an applicant in its AHP application.
See 12 CFR 960.4(c)(4). The Board believes that this provision should
be included as a threshold requirement, since a project should not be
funded if the sponsor lacks the qualifications and ability to undertake
the project.
f. Creditworthiness of applicant. Consistent with the Board's
existing AHP regulation, Sec. 960.9(f) of the proposed rule provides
that the applicant must have the ability to qualify for an advance from
the Bank to fund the project described in the AHP application. See 12
CFR 960.5(a)(2)(iii).
The Board's existing AHP regulation also includes as a threshold
requirement the ability of the project to begin using Bank assistance
within 12 months. See 12 CFR 960.5(a)(2)(iv). Since this involves the
use of funds after a project has been approved for funding, it does not
belong as a threshold requirement and has been omitted in this section
of the proposed rule. The requirements under the proposed rule for use
of funds under the AHP within a reasonable period of time after
approval of the application are discussed below in the use and
verification section.
Finally, it has been suggested that a threshold criterion should be
added requiring that the project costs set forth in the AHP application
are reasonable and appropriate for the type and location of the
housing.
Section 10(j)(9)(F) of the Act requires the Board to establish
maximum subsidy limitations under the AHP. 12 U.S.C. 1430(j)(9)(F).
Section 10(j)(9)(D) of the Act also requires the Board to ensure that a
preponderance of assistance provided under the AHP is ultimately
received by low- and moderate-income households. Id. Section
1430(j)(9)(D). Requiring that project costs be reasonable is one way of
controlling the amount of AHP subsidies that fund a project in order to
keep the project from being over-subsidized, and to ensure that a
preponderance of the funds are being received by the ultimate
households by lowering their housing costs and not providing undue
benefit to the intermediaries in the development process.
A project costs requirement is not explicitly prescribed in the
threshold requirements under the Board's existing AHP regulation,
although some Banks do currently review project costs to determine if
they are reasonable under the feasibility requirement in the existing
regulation. See 12 CFR 960.5(a)(2)(ii). The feasibility requirement as
defined in the proposed rule would not incorporate a project costs
limit requirement.
The Board specifically requests comments on how the Banks currently
deal with applications with excessive project costs, whether the
project costs option discussed above should be required as a threshold
criterion in approving AHP applications, and how such a requirement
could be implemented by the Banks.
3. Scoring of AHP Applications
Section 960.10(a) of the proposed rule provides that the Bank shall
score AHP applications that satisfy all of the threshold criteria in
proposed Sec. 960.9 according to the scoring methodology set forth in
proposed Sec. 960.10, which shall be included in the Bank's approved
AHP implementation plan. Section 960.10 of the proposed rule modifies
the existing scoring methodology, and the Board specifically requests
comments on this proposed new scoring methodology.
a. Priority treatment and scoring. Section 960.10(b) of the
proposed rule provides that each application is first evaluated to
determine if it will receive priority treatment. The Board's existing
AHP regulation contains seven priorities: Homeownership projects;
rental projects; projects using government properties; projects with a
non-profit or public agency sponsor; projects promoting empowerment;
homeless housing projects; and projects meeting a Bank priority. Under
the existing AHP regulation, an application must meet at least three of
the seven priorities to receive priority treatment. The proposed rule
would contain only five priorities. The proposed rule would eliminate
the priorities for homeownership and rental properties because a
project must be either a rental or homeownership project in order to
qualify for AHP funding. The proposed rule would replace the
empowerment and homeless housing priorities with a priority for
``special needs'' housing. In addition, the proposed rule would add a
new priority for projects promoting economic mobility.
Under Sec. 960.10(b) of the proposed rule, for purposes of
determining priority, an application can receive a maximum of eight
points for each of the five priority categories described below. A Bank
in its AHP implementation plan shall define more specifically each of
the five priority categories and explain specifically how points will
be awarded for satisfying each category. An application will be deemed
to meet a particular priority category if it is awarded at least four
points for that priority category. Applications meeting at least two
priority categories shall receive priority treatment.
Section 960.10(c) of the proposed rule provides that applications
that qualify for such priority treatment shall be scored before
applications that do not qualify for priority treatment. The
applications that do not qualify for priority treatment will not be
scored unless there are insufficient priority treatment applications to
utilize the total AHP funding amount for the funding cycle. Under the
proposed rule, the total points available for the priorities would be
increased from 25 to 40. Section 960.10(d) of the proposed rule
provides that the Bank shall total the points received by each
applicant for purposes of determining priority for all of the five
priority categories and shall award 40 points to the application(s)
that receive the highest number of total points, and the remaining
application scores shall be adjusted and awarded points on a declining
scale basis.
The five priority categories are set forth below.
(1) Government-owned properties. Applications for projects that
finance the purchase or rehabilitation of housing owned or held by the
United States Government or any agency or instrumentality of the United
States, including but not limited to HUD, the RTC, Farmers Home
Administration, Veterans Administration, Federal National Mortgage
Association, or Federal Home Loan Mortgage Corporation. (See proposed
Sec. 960.10(d)(1).)
(2) Nonprofit or state or local government sponsored projects.
Applications for projects that finance the purchase, construction or
rehabilitation of housing sponsored by a nonprofit organization, a
state or political subdivision of a state, a local housing authority or
a state housing finance agency. (See proposed Sec. 960.10(d)(2).)
(3) Special needs projects. Applications for projects that address
special needs, which shall be defined by the Bank in its AHP
implementation plan, which special needs may include but are not
limited to:
(i) Empowering the households or residents through programs such as
resident management of the property, self-help housing, homesteading,
and sweat equity;
(ii) Providing housing for special needs populations such as
homeless persons, abused or battered persons, persons with AIDS,
mentally or physically disabled persons, or persons with substance
abuse problems;
(iii) Providing housing in rural areas or areas targeted by local,
state or federal governments for community development or
revitalization through the development of affordable housing or
economic investment; or
(iv) Providing housing with special services to meet the needs of
low- or moderate-income households including, but not limited to, child
care, job training, medical care, substance abuse programs, independent
living skill training, and rental household and homeowner household
counseling. (See proposed Sec. 960.10(d)(3).)
In defining the special needs priority in its AHP implementation
plan, a Bank is not required to include all of the special needs listed
as examples above. Rather, a Bank may be selective in giving priority
to some special needs and not others in devising its scoring system. In
addition, the Bank may select other special needs not listed as
examples above if the special needs chosen are similar in nature to
such examples.
(4) District Bank priority. Applications for projects that meet one
or more priorities recommended by the Bank's Advisory Council and
adopted by the Bank's board of directors that each address a housing
need in the Bank's district and are consistent with the purposes of
this part. The Bank shall describe in its AHP implementation plan how
the points for the priority or priorities will be distributed. (See
proposed Sec. 960.10(d)(4).)
(5) Economic mobility priority. Applications for projects that
provide housing for low- or moderate-income households that move from
low- or moderate-income neighborhoods or housing projects to
neighborhoods, mixed-income buildings or owner-occupied housing
developments in which at least 50 percent of the households have
incomes above the median income for the area, as published by the U.S.
Department of Housing and Urban Development. (See proposed
Sec. 960.10(d)(5).)
b. Scoring for objectives. The Board's existing AHP regulation
contains the following ``objectives'' scoring criteria: Targeting;
long-term retention; effectiveness; community involvement; community
stability; and innovation. The proposed rule makes long-term retention
a threshold criteria and adds a new objective called ``applicant
participation.'' A description of this new objective and the other
criteria are set forth below.
c. Scoring for targeting objective. Section 960.10(e) of the
proposed rule provides that an application can receive a maximum of 20
points for the targeting objective category. This is an increase from
15 points under the existing regulation. The proposed rule provides
that the Bank shall award points to applications based on the extent to
which the project(s) serve(s) the greatest percentage of very low-,
low- and moderate-income households, in that priority order. In the
alternative, if a weighted-average scoring methodology is provided in
the Bank's AHP implementation plan, the Bank shall award points to an
application based on the extent to which the project has the lowest
weighted-average income determined by multiplying the percentage of
units reserved for households at certain income levels by those incomes
expressed as a percentage of median income, and adding the totals.
Applications shall be scored relative to each other with the maximum
number of points allowable awarded to the application(s) that best
achieve(s) the targeting objective, and the remaining application
scores shall be adjusted and awarded points on a declining scale basis.
However, owner-occupied housing projects shall be scored as one group
and rental housing projects shall be scored as a separate group.
d. Scoring for other objectives. Section 960.10(f) of the proposed
rule sets forth five other objectives categories for scoring AHP
applications. The proposed rule requires the Bank in its AHP
implementation plan to define more specifically each of the five other
objectives categories and explain specifically how points will be
awarded for satisfying each category. For each category, the Bank shall
award the maximum number of points allowable for such category to the
application(s) that best achieve(s) the objective, and the remaining
application scores shall be adjusted and awarded points on a declining
scale basis. The five other objectives categories are set forth below.
(1) AHP subsidy per unit. An application can receive a maximum of
10 points for this category. The Bank shall award points to
applications based on the extent to which the project proposes to use
the least amount of AHP subsidy per AHP-subsidized unit. Projects
should be scored relative to each other; however, owner-occupied
housing projects shall be scored as one group and rental housing
projects shall be scored as a separate group. This scoring criterion
may not include a leveraging criterion whereby the application is
scored based on the percentage of the project's total development cost
that is to be financed with the AHP subsidy. This replaces the
effectiveness criterion that can receive a maximum of 15 points in the
existing scoring methodology.
(2) Applicant participation. An application can receive a maximum
of five points for this category. The Bank shall award points to
applications based on the extent to which the project involves
participation by applicants other than the receipt of a subsidized
advance or direct subsidy under the AHP. Such participation can be
financial or non-financial, including but not limited to debt or equity
financing of the project, grants to the project, applicant involvement
on the boards of nonprofit sponsors, and applicant provision of
technical assistance to the nonprofit sponsors for the project. This is
a new scoring criterion.
(3) Community involvement. An application can receive a maximum of
10 points for this category. The Bank shall award points to
applications based on the extent to which there is demonstrated support
for the project by local community organizations and individuals other
than as project sponsors, such as through the commitment by such
organizations and individuals of funds, goods and services, and
volunteer labor. The Banks should not award points for this category
based solely on the number of letters of support received for the
project.
(4) Community stability. An application can receive a maximum of 10
points for this category. The Bank shall award points to applications
based on the extent to which the project(s) maximize(s) community
stability, such as by: committing to maintain a greater long-term
period pursuant to Sec. 960.5; revitalizing vacant or abandoned
properties or being integrally part of a neighborhood stabilization
plan, if such revitalization or stabilization is not identified as a
special needs category by the Bank pursuant to Sec. 960.10(d)(3)(iii);
and not displacing low- or moderate-income households, or if such
displacement will occur, indicating how such households will be
assisted to minimize the impact of such displacement.
(5) Innovation. An application can receive a maximum of five points
for this category. This is a reduction from 10 points under the
existing regulation. The Bank shall award points to applications based
on the extent to which the project(s) involve(s) a particularly new or
unusual approach, either financial or non-financial, for meeting the
requirements of this part.
G. Modifications of Approved AHP Applications
Section 960.11(a) of the proposed rule provides that an applicant
that seeks a modification of an approved AHP application before
completion and occupancy of the project must submit a request for such
modification in writing to the Bank for review and approval. A
modification is any change that affects or could potentially affect the
material facts under which the application was originally evaluated and
scored. Modifications are changes in the specifics of an application
such as requests for additional AHP subsidy or changes in approved
income targeting.
Section 960.11(b) of the proposed rule provides that a request for
a modification of an approved AHP application must include, at a
minimum:
1. A description of how the proposed modification differs from the
original application;
2. The reason for the proposed modification; and
3. Any other information that the Bank determines is necessary to
review the proposed modification.
Section 960.11(c)(1) of the proposed rule provides that the Bank
shall review the request for modification, shall re-score the
application as proposed to be modified according to the scoring
criteria used in the AHP funding cycle in which the application was
originally approved, and may approve such request if the following
factors are satisfied:
1. The project as proposed to be modified continues to meet all of
the requirements of this part; and
2. The project as proposed to be modified continues to score high
enough that it would have been approved in its AHP funding cycle.
Section 960.11(c)(2) of the proposed rule provides that if the
application does not satisfy the requirements in paragraph (c)(1), the
Bank in its discretion may approve the request for modification if the
reason for the modification is due to circumstances outside the control
of the applicant or sponsor.
Section 960.11(d) of the proposed rule provides that the Bank shall
forward to the Board a detailed summary of any modification of an AHP
application approved by the Bank, including how the Bank re-scored the
project, within 30 calendar days of the approval of such modification.
H. Use, Calculation and Verification at Initial Disbursement of AHP
Subsidized Advances or Direct Subsidies
1. Use of Subsidized Advances or Direct Subsidies Within Reasonable
Period of Time and Verification of Reasonable Progress
As discussed above, the threshold requirement in the Board's
existing AHP regulation that the project have the ability to begin
using Bank assistance within 12 months is omitted as a threshold
requirement in the proposed rule. See 12 CFR 960.5(a)(2)(iv). In
addition, setting a fixed period of 12 months may not be appropriate in
all cases, because what is a reasonable period of time will vary from
project to project depending on the type of project and the
circumstances of the project. However, the Board does believe that
funds received under the AHP should be used within a reasonable period
of time after approval of an AHP application. Because what is a
reasonable period of time is so project specific, the Board believes
that the determination of such periods should be left to the discretion
of the Banks.
Accordingly, Sec. 960.12(a) of the proposed rule provides that the
Bank shall in its AHP implementation plan identify what constitutes
reasonable progress by the sponsor towards using subsidized advances or
direct subsidies within a reasonable period of time after the approval
of an AHP application for different types of projects, and explain how
it intends to verify such reasonable progress.
Section 960.12(b) of the proposed rule provides that the sponsor
must demonstrate that reasonable progress is being made towards using
the requested funds within a reasonable period of time after approval
of the AHP application, as determined by the Bank.
Section 960.12(c) of the proposed rule provides that the Bank shall
verify the efforts of the sponsor to determine whether it has satisfied
the requirement in paragraph (b).
Section 960.12(d) of the proposed rule provides that if the sponsor
fails to satisfy the requirement in paragraph (b), the Bank shall
cancel the AHP award, and shall not disburse any subsidized advances or
direct subsidies through the applicant to the sponsor, and the full
amount of any previously disbursed subsidized advances or direct
subsidies shall be returned to the Bank.
2. Calculation of AHP Subsidy
The Board is considering adopting rules on the calculation of AHP
subsidies for subsidized advances and specifically requests comments on
the following proposals. Under consideration is whether AHP application
approvals should commit to provide a dollar amount of subsidy, or
should commit to make a subsidized advance at a specific interest rate.
Another possibility is that the Bank can select on a case-by-case basis
to do one or the other or both but the choice must be specified in its
approval. The rule could require the Bank's AHP implementation plan to
describe the Bank's procedures in this area.
The Board specifically requests comments as to whether an AHP
approval should commit to provide a specific dollar amount of subsidy
for a subsidized advance. If interest rates rise after the approval,
should the interest rate on the subsidized advance be increased so that
the present value of the amount needed to subsidize the reduction in
interest rate is equal to the subsidy amount originally approved?
Should the applicant be given the option of either reducing the
principal amount of the loan and keeping the originally requested
interest rate unchanged, or increasing the interest rate on the loan
and keeping the principal amount of the loan unchanged? If interest
rates fall after the approval, should the specific dollar amount of
approved subsidy stay the same, or be adjusted?
Alternatively, if the AHP approval commits to make a subsidized
loan at a specified interest rate, then a number of issues are raised.
First, should the amount of the subsidy to be charged against the AHP
fund be calculated at the time the application is approved, or at the
time of disbursement. If the calculation is not done at the time the
application is approved but is done at the time of funding and interest
rates have fallen since the approval, the amount of the subsidy
provided to subsidize the advance would decrease and the amount of
subsidy charged against the AHP fund would decrease. If the calculation
is done at the time of funding and interest rates have risen since the
approval, the amount of the subsidy provided to subsidize the advance
would increase and the amount of subsidy charged against the AHP fund
would increase. If the increase in subsidy is permitted to be charged
against the AHP fund, should there be any limits on the amount of
increase in subsidy? If the amount that could be charged against the
AHP fund could be increased without limit, these charges could reduce
the amount of funds available for future cycles of AHP funding. One
option would be to put an upper limit, for example a specified number
of basis points, as the maximum amount by which additional AHP funds
would be provided to cover the interest rate increase. Another option
would be to approve the amount of the subsidy as well as the interest
rate on the advance at the time the advance is approved and permit the
subsidy to be increased up to a specified amount. Another issue is
whether funds from future AHP funding cycles should be used to pay for
increased subsidies due to interest rate increases. The Board
specifically requests comments on these options.
The Board is concerned about the calculation of subsidies where
non-amortizing subsidized advances are used by members to fund
amortizing AHP loans from members to sponsors. Since principal is
repaid on a different schedule for amortizing loans than non-amortizing
loans, the Banks must adjust their subsidy calculation methodologies to
ensure that they have properly adjusted for these differences. As AHP
principal is repaid to a member but not repaid to the Bank, the benefit
of these subsidized funds may not be passed on to the ultimate
borrower, as required in section 10(j)(9)(E) of the Act. See 12 U.S.C.
1430(j)(9)(E). Without proper adjustment for differences in the cash
flows for an amortizing loan and an interest-only advance, the amount
of subsidy actually received by a project will be less than the amount
incurred by the Bank as an AHP expense. The Board specifically requests
comments as to whether an amortizing advance structure is required to
assure that the subsidy amount incurred by the Bank as an AHP expense
matches the amount of the subsidy actually received by a sponsor. In
addition, the Board requests comments as to whether there are
alternative appropriate methods to deal with the discrepancy in the
subsidy amounts where such advances are used to fund amortizing loans.
3. Verification at Initial Disbursement of Subsidized Advances or
Direct Subsidies
Section 960.13 of the proposed rule provides that at the time of
initial disbursement of a subsidized advance or a direct subsidy by a
Bank for an approved AHP application, the Bank shall verify in writing
that the project complies with all applicable requirements contained in
proposed Sec. 960.9 and all obligations committed to in the approved
AHP application. The Bank shall verify the amount of subsidy being
provided in connection with the application and being charged against
the AHP fund. The Bank shall include in its AHP implementation plan its
verification procedures for such purposes.
I. Monitoring Requirements
Section 960.14 of the proposed rule sets forth the requirements for
monitoring AHP-assisted housing projects. Section 960.14 is intended to
implement the statutory requirement of section 10(j)(9)(C) of the Act,
which provides that the Board's regulations shall ensure that advances
made under the AHP be used only to assist projects for which adequate
long-term monitoring is available. See 12 U.S.C. 1430(j)(9)(C).
The Board's existing AHP regulation provides that each Bank must
monitor housing projects funded through its AHP. See 12 CFR 960.7(b).
Section 960.14(a) of the proposed rule carries forward this
requirement, and Sec. 960.14(e) through (h) of the proposed rule sets
forth the specific monitoring requirements for the Banks, which are
discussed further below. Section 960.14(b) of the proposed rule
provides that each Bank shall include in its AHP implementation plan an
explanation of how it intends to meet the monitoring requirements of
Sec. 960.14 of the proposed rule.
Under Sec. 960.14(c) of the proposed rule, a Bank may contract with
an applicant, a state housing finance agency, or another entity to
perform the tasks required to carry out the Bank's monitoring
responsibilities; however, the Bank remains ultimately responsible for
meeting the monitoring requirements set forth in Sec. 960.14 (e)
through (h) of the proposed rule. Thus, a Bank may decide in its
monitoring plan that applicants will have no long-term monitoring
responsibilities. Alternatively, the Bank may decide to require
applicants to perform long-term monitoring as a condition of approval
of an AHP award, or the Bank may determine what entity has the
responsibility for monitoring on a project-by-project basis.
1. Applicant Monitoring of Construction or Rehabilitation
Section 960.14(d) of the proposed rule adds a new requirement that
if a subsidized advance or direct subsidy is used to finance
construction or rehabilitation of a project, the Bank shall require the
applicant to monitor the construction or rehabilitation until
completion, and to make progress reports to the Bank. Where an
applicant finances construction or rehabilitation, the applicant
usually monitors the progress of the project in connection with
approving disbursements of funds to the borrower. Therefore, the Board
believes that where an applicant uses a subsidized advance or direct
subsidy to make loans for construction or rehabilitation of an AHP-
assisted project, the applicant is in the best position to monitor the
progress of such construction or rehabilitation and to make progress
reports to the Bank.
2. Bank Monitoring Requirements
Section 960.14 (e) through (h) of the proposed rule sets forth the
specific aspects of an AHP project that a Bank is required to monitor.
Section 960.14(e) of the proposed rule sets for the monitoring
responsibilities that are long-term in nature, as required by section
10(j)(9)(C) of the Act. See 12 U.S.C. 1430(j)(9)(C). Section 960.14(f)
and (h) of the proposed rule sets forth the short-term monitoring
responsibilities for compliance with the special needs and economic
mobility priorities. Section 960.14(g) sets forth the monitoring
responsibilities for the District Bank priority or priorities, which
may or may not be long-term, depending on the nature of the priority
selected by the Bank.
a. Monitoring of long-term requirements. Section 960.14(e) of the
proposed rule sets forth the requirements for monitoring the long-term
requirements for owner-occupied and rental housing projects assisted
under the AHP.
(i) Owner-occupied housing units. Section 960.14(e)(1)(i) of the
proposed rule provides that at the time a household enters into a
purchase contract for an AHP-assisted housing unit or by the closing on
the financing for such unit, or at the time a household that already
owns the housing unit receives a commitment of a loan or a grant
pursuant to the AHP, the Bank or its designee shall obtain a
certification from the sponsor that the household has an income at or
below the level committed to in the AHP application.
Section 960.14(e)(1)(ii)(A) of the proposed rule provides that
during the required long-term period applicable to an owner-occupied
housing unit assisted by a grant provided under the AHP, the Bank or
its designee shall monitor the unit to determine whether it has been
sold to a household with an income that exceeds the level committed to
in the AHP application.
The Board requests comments on two proposed options for
implementing this requirement. These options incorporate the use of
sampling to monitor AHP-assisted projects. The Board recognizes that as
the number of AHP-assisted projects in existence grows, the costs of
monitoring these projects may place an undue financial burden on the
Banks and the AHP. Monitoring AHP-assisted projects on a sample basis
may be one way to minimize the costs of monitoring while continuing to
meet the monitoring requirements of the Act.
Section 960.14(e)(1)(ii)(B) of the proposed rule proposes that
monitoring shall include, but is not limited to, periodic review of
relevant reports or certifications obtained from the sponsor, including
any reports or certifications received pursuant to
Sec. 960.15(c)(1)(ii) of the proposed rule and, at least on a sample
basis, periodic review of land title records at intervals determined by
the Bank, based on the amount of funds received by the project pursuant
to the AHP, the type and complexity of the project, or other factors
deemed relevant by the Bank.
An alternative option would be to require that the Bank only would
have to review land title records on a sample basis, as determined by
the Bank.
(ii) Rental housing projects. Section 960.14(e)(2)(i) of the
proposed rule provides that the Bank shall require an AHP-assisted
rental housing project to be subject to a deed restriction or other
legally enforceable mechanism which requires that upon sale of the
project prior to the end of the long-term period during which the
project's rental units, or portion thereof, must remain affordable for
and occupied by households with incomes at or below the level committed
to in the AHP application, the Bank or its designee must receive notice
of the sale, and:
(1) The project's rental units, or portion thereof, must continue
to be affordable for and occupied by households with incomes at or
below the levels committed to in the AHP application for the remainder
of the long-term period committed to in the AHP application, and the
purchaser agrees to be subject to the same restrictions on resale that
applied to the seller; or
(2) If the purchaser does not satisfy the requirements in (1)
above, and if the Bank provided a direct subsidy to the applicant which
was passed on as a grant to the seller, the seller must repay a pro
rata portion of the grant to the applicant, as provided in
Sec. 960.16(d)(1) of the proposed rule; or
(3) If the purchaser does not satisfy the requirements in (1)
above, and if the Bank provided a subsidized advance to the applicant
which in turn provided a below market rate loan to the seller, then the
provisions of Sec. 960.16(d)(2) shall apply.
Section 960.14(e)(2)(ii) of the proposed rule provides that upon
initial full occupancy of the units in an AHP-assisted rental housing
project or one year after initial disbursement of the subsidized
advance or direct subsidy, whichever occurs first, the Bank or its
designee shall obtain a certification from the sponsor or the owner
that the project's units, or portion thereof, are affordable for and
occupied by households with incomes at initial occupancy at or below
the levels committed to in the AHP application.
Section 960.14(e)(2)(iii)(A) of the proposed rule provides that
during the long-term period for which the units, or portion thereof, of
a rental housing project must remain affordable for and occupied by
households with incomes at or below the levels committed to in the AHP
application, the Bank or its designee shall monitor the project to
determine whether the project's units, or portion thereof, remain
affordable for and occupied by households with incomes at or below the
levels committed to in the AHP application. The Board requests comments
on several options for implementing this requirement.
Section 960.14(e)(2)(iii)(B) of the proposed rule proposes that
monitoring shall include, but is not limited to, periodic review of
relevant household income and rent reports or certifications obtained
from the sponsor or the owner and, at least on a sample basis, periodic
inspections of the project at intervals to be determined by the Bank,
based on the amount of AHP assistance received by the project, the type
and complexity of the project, and other factors deemed relevant by the
Bank.
Another option would be that where funds other than funds provided
under the AHP are the predominant source of financing for an AHP-
assisted rental housing project and the monitoring activities of such
other funding source are sufficient to determine the project's
compliance with the requirements of the AHP, as committed to in the AHP
application, the monitoring requirement would be deemed to be
fulfilled. However, if the monitoring activities of such other funding
source are not sufficient to determine the project's compliance with
the requirements of the AHP, as committed to in the AHP application,
the Bank would be required to monitor the project by conducting
inspections, at least on a sample basis, as determined by the Bank,
based on the amount of the funds received by the project under the AHP,
the type and complexity of the project, or other factors deemed
relevant by the Bank. In the alternative, if the monitoring activities
of such other funding source are not sufficient to determine the
project's compliance with the requirements of the AHP, as committed to
in the AHP application, could the Bank rely on monitoring activities of
the predominant funding source as long as it is monitoring for
compliance with requirements that are substantially similar to the AHP
requirements?
The Board specifically requests comments on how random sampling
could be used to monitor AHP-assisted rental housing projects to
determine whether, during the long-term period committed to in the AHP
application, the project's units continue to be affordable for and
occupied by households with incomes at or below the levels committed to
in the AHP application. For example, sampling could involve monitoring
a portion of AHP-assisted rental projects at fixed intervals. The
sampling method could be devised so that each project is monitored at
least once during the long-term period committed to in the AHP
application. Alternatively, the sampling method might be structured so
that some, but not all, AHP-assisted rental projects are monitored
during the long-term period committed to in the AHP application.
The Act requires that the AHP regulation must ensure that the AHP
will be used only to assist projects for which adequate long-term
monitoring is available to guarantee that affordability standards and
other requirements of the Act are satisfied. See 12 U.S.C.
1430(j)(9)(C). The Board requests comments as to whether it is
appropriate to interpret this requirement in a manner that permits
monitoring to be done by sampling that could result in some AHP-
assisted rental projects not being monitored during the long-term
period committed to in the AHP application. In addition, the Board
specifically requests comments on whether there are sampling techniques
that would ensure that each project is monitored in satisfaction of the
monitoring requirement in the Act.
b. Monitoring of special needs projects. Section 960.14(f) of the
proposed rule sets forth the requirements for monitoring a project that
commits to meet a special need pursuant to proposed Sec. 960.10(d)(3),
either through providing units for persons with a special need or
through providing a special service to occupants, as defined in the
Bank's AHP implementation plan. If an applicant commits to fund a
project that provides owner-occupied or rental housing units for
persons with a special need, as defined in the Bank's AHP
implementation plan, Sec. 960.14(f)(1) of the proposed rule requires
the Bank or its designee to obtain a certification from the sponsor or
the owner upon completion and occupancy of the project that the
project's units, or portion thereof, are occupied by persons with such
special need.
If an applicant in its AHP application commits to fund a project
that will provide a continuing special service to its occupants, as
defined in the Bank's AHP implementation plan, such as child care, job
training, medical care, or other services designed to meet the special
needs of occupants, then Sec. 960.14(f)(1) of the proposed rule
provides that the Bank or its designee shall obtain a certification
from the sponsor or owner upon completion and occupancy of the project
that the special service is being provided to the occupants, as
committed to in the AHP application.
Section 960.14(f)(2) of the proposed rule provides that, where an
applicant in its AHP application commits to fund a housing project that
will provide a continuing special service, the Bank or its designee
shall monitor the project, as determined by the Bank in its AHP
implementation plan, for at least one year from the date of initial
full occupancy of the project to verify that the special service
continues to be provided to the occupants, as committed to in the AHP
application.
c. Monitoring of District Bank priority or priorities. Section
960.14(g) of the proposed rule sets forth the requirement for
monitoring compliance with the District Bank priority or priorities
established pursuant to proposed Sec. 960.10(d)(4). Section
960.14(g)(1) of the proposed rule provides that if an applicant in its
AHP application commits to fund a project that meets a District Bank
priority or priorities, the Bank or its designee shall monitor the
project to verify that it continues to meet the priority or priorities.
Section 960.14(g)(2) of the proposed rule provides that the Bank shall
set forth in its AHP implementation plan the nature, frequency and
duration for monitoring compliance with the District Bank priority or
priorities.
d. Monitoring of economic mobility priority. Section 960.14(h) of
the proposed rule sets forth the requirement for monitoring compliance
with the economic mobility priority set forth under Sec. 960.5(d)(5) of
the proposed rule. Section 960.14(h) provides that if an applicant in
its AHP application commits to fund a project that meets the
requirements of Sec. 960.5(d)(5), the Bank or its designee shall obtain
a certification from the sponsor or the owner upon completion and full
occupancy of the project, as required under Sec. 960.15(c)(4), that the
sponsor or the owner has met such requirements, as committed to in the
AHP application.
J. Reporting Requirements
Section 960.15 of the proposed rule sets forth the reporting
requirements for the Banks, the applicants, and the sponsors or owners
of AHP-assisted projects. Section 960.15(a) of the proposed rule
provides that each Bank shall provide accurate and timely reports and
documentation to, and in the format requested by, the Board concerning
the Bank's AHP, as the Board may from time to time require. See 12 CFR
960.6(a).
1. Applicant Reporting Requirements
Section 960.15(b)(1) of the proposed rule carries forward the
requirement in the Board's existing AHP regulation that each Bank shall
require an applicant receiving a subsidized advance or direct subsidy
to report at least annually to the Bank on the manner in which it has
used the funds, with such reports continuing until the funds have been
fully disbursed by the applicant. See 12 CFR 960.6(b).
The proposed rule eliminates the requirement in the Board's
existing AHP regulation that the applicant certify that the AHP subsidy
has been passed through to the borrower and continues to be used for
approved purposes because, as discussed previously in the section on
monitoring requirements, under the proposed rule applicants are not
required to monitor the use of a subsidy in AHP-assisted projects,
except during the period when a subsidized advance or direct subsidy is
used to finance construction or rehabilitation of a project or where
the applicant has agreed to undertake monitoring. See 12 CFR 960.6(c).
Section 960.15(b)(2) of the proposed rule adds a new requirement
that if subsidized advances or direct subsidies are used to finance
construction or rehabilitation of an AHP-assisted project, the Bank
shall require the applicant to report to the Bank at reasonable
intervals determined by the Bank, and described in the Bank's AHP
implementation plan, on the progress of the construction or
rehabilitation, until completion. This reporting requirement coincides
with the requirement in Sec. 960.14(d) of the proposed rule that the
Bank shall require the applicant to monitor the construction or
rehabilitation of an AHP-assisted project and make progress reports to
the Bank where AHP subsidized advances or direct subsidies are used to
finance such construction or rehabilitation.
2. Sponsor and Owner Reporting Requirements
Section 960.15(c) of the proposed rule sets forth the reporting
requirements for sponsors and owners. These requirements coincide with
the monitoring requirements set forth in Sec. 960.14(e) through (h) of
the proposed rule. Section 960.15(c)(1)(i) of the proposed rule
provides that where a subsidized advance or direct subsidy is used to
finance the purchase of an owner-occupied housing unit, the Bank shall
require the sponsor to certify at the time a household enters into a
purchase contract for such unit or at the closing on the financing for
such unit that the unit has been sold to a household with an income at
or below the level committed to in the AHP application. Where a
subsidized advance or direct subsidy is used to finance the
rehabilitation of an owner-occupied housing unit, the Bank shall
require the sponsor to certify at the time a loan or grant is committed
to fund such rehabilitation that the household that owns and occupies
the unit has an income at or below the level committed to in the AHP
application.
Section 960.15(c)(1)(ii) of the proposed rule provides that if an
owner-occupied housing unit assisted by a grant provided under the AHP
is not subject to a deed restriction or other legally enforceable
mechanism restricting transfer of ownership to a household with an
income at or below the level committed to in the AHP application, the
Bank shall require the sponsor to report to the Bank or its designee,
at least annually for the required long-term period, the number of any
such units that are sold to households whose incomes exceed the level
committed to in the AHP application, and to certify to the Bank that it
is continuing to satisfy its commitment pursuant to its legally binding
agreement with the Bank.
Section 960.15(c)(2) of the proposed rule provides that the Bank
shall require the sponsor or the owner to certify upon initial full
occupancy of the units in an AHP-assisted rental housing project, but
no later than one year after initial disbursement of the subsidized
advance or direct subsidy, and annually thereafter, that the project's
units, or portion thereof, are affordable for and occupied by
households with incomes at or below the levels committed to in the AHP
application.
Section 960.15(c)(3) of the proposed rule provides that if an
applicant in its AHP application commits to fund a project that will
provide housing units for persons with a special need, or will provide
a continuing special service to occupants pursuant to Sec. 960.10(d)(3)
of the proposed rule, the Bank shall require the sponsor or the owner
to certify upon completion and full occupancy of the project that the
project's units, or portion thereof, are occupied by persons with such
special needs or that a special service is being provided to occupants,
as committed to in the AHP application.
Section 960.15(c)(4) of the proposed rule provides that if an
applicant in its AHP application commits to fund a housing project that
meets the requirements of the economic mobility priority under
Sec. 960.10(d)(5) of the proposed rule, the Bank shall require the
sponsor or the owner to certify upon completion and full occupancy of
the project that the sponsor or owner has met such requirements, as
committed to in the AHP application.
Section 960.15(d) of the proposed rule provides that each Bank
shall require applicants or sponsors to provide such other reports to
the Bank, in addition to the reports and documentation required by
Sec. 960.15 of the proposed rule, as the Bank deems necessary in order
to fulfill its monitoring obligations under Sec. 960.14 of the proposed
rule.
K. Corrective and Remedial Actions for Fraud or Non-Compliance With AHP
Requirements
Section 10(j) of the Act is silent on what specific corrective and
remedial actions should be imposed when there is fraud or non-
compliance with the requirements of the AHP. See 12 U.S.C. 1430(j).
Accordingly, the Board has the discretion to determine, as a matter of
policy, what those requirements should be.
The Board's existing AHP regulation provides that, where funds
provided under the AHP will not be or are no longer being used for
their approved purposes, the amount of committed but unused subsidy or
improperly used subsidy shall be recovered and made available by the
Bank for future AHP projects. See 12 CFR 960.8(a). The existing
regulation requires the Bank, in recapturing such funds, to take any or
all of the following actions, without limitation on other remedies, in
its discretion:
a. Reprice the advance at the interest rate charged to members on
non-subsidized advances of comparable type and maturity at the time of
the original advance;
b. Call the advance;
c. Assess a prepayment fee; or
d. Require the member to reimburse the Bank for the amount of the
unused or improperly used subsidy on the advance or other assistance.
Id. Sec. 960.8(b). In addition, some Banks have adopted procedures
that require a direct subsidy to be converted to an advance if the
project is found to be in non-compliance with the requirements of the
AHP regulation.
A number of concerns have been raised about this recapture
requirement. First, it may not be equitable to require the applicant to
reimburse the Bank when it is the sponsor that is in non-compliance
with the AHP requirements. Second, requiring recapture of the AHP
subsidy could in some situations result in the applicant having to
foreclose against a property in order to recover the funds to repay an
advance to the Bank, thereby eliminating affordable housing units even
when only a few of the units in the project may be out of compliance
with AHP requirements.
In short, it has become clear through the operation of the AHP that
the recapture remedy may not be the appropriate remedial action in all
circumstances. Other less severe remedial actions may be more
appropriate depending on the nature of the non-compliance that has
occurred. In addition, the remedial actions should be directed only at
the parties that are in non-compliance. Accordingly, the proposed rule
contains provisions that tailor the remedial actions required to the
nature of the non-compliance and the party committing the non-
compliance, which are discussed further below.
1. Fraud or Willful Non-Compliance
Fraud and willful non-compliance are the most extreme examples of
non-compliance with the AHP requirements. Accordingly, the proposed
rule applies the most severe remedial actions--exclusion or suspension
from future participation in the AHP and recovery of the full amount of
the AHP subsidy--to parties that have committed fraud or are in willful
non-compliance with respect to the AHP requirements.
Specifically, Sec. 960.16(a)(1) of the proposed rule provides that
in the event of an applicant's, sponsor's or owner's fraud with respect
to the AHP requirements, the Bank shall exclude the applicant, sponsor
or owner, respectively, on a permanent basis, from future participation
in the AHP. In the event of an applicant's, sponsor's or owner's
willful non-compliance with the AHP requirements, the Bank shall
suspend the applicant, sponsor or owner, respectively, at least on a
temporary basis, from future participation in the AHP during the period
such willful non-compliance continues, and may exclude such party
permanently from future participation in the AHP. The Board
specifically requests comments as to whether the Banks should be able
to determine whether fraud or willful non-compliance has occurred, or
whether such determination should be made by the Board, or by either
the Bank or the Board.
In addition, Sec. 960.16(a)(2) of the proposed rule provides that
in the event of an applicant's fraud or willful non-compliance with
respect to the AHP requirements, the Bank shall recover from the
applicant the full amount of the AHP subsidy provided to the project.
Section 960.16(a)(3)(i) of the proposed rule provides that in the
event of a sponsor's or owner's fraud or willful non-compliance with
respect to the AHP requirements, the full amount of the AHP subsidy
shall be recovered from the sponsor or owner by the applicant and
returned to the Bank or, if previously agreed to by the Bank, shall be
recovered by the Bank from the sponsor or owner. If efforts to recover
the AHP subsidy from the sponsor or owner are unsuccessful, the
applicant shall not be liable for such funds.
In order to be able to implement this recapture requirement, the
applicant is required, under proposed Sec. 960.16(a)(3)(ii), to have in
place either:
(1) A legally binding agreement or other legally enforceable
mechanism that permits it to recover these funds from the sponsor or
owner; or
(2) If the Bank agrees and such an agreement is legally
enforceable, a three-party agreement that includes the Bank, the
sponsor or owner and the applicant that permits the Bank to recover
these funds from the sponsor or owner.
Section 960.16(a)(4) of the proposed rule provides that the Board
in its discretion may grant a waiver of any required remedial actions
under this paragraph (a) upon written request by the Bank, applicant,
sponsor or owner.
2. Other Types of Non-Compliance
Non-compliance by a party with the AHP requirements, such as due to
inadvertent errors by such party or changes in circumstances that are
outside such party's control, does not warrant imposition of the most
severe remedial actions since the party lacked the intent to violate
such requirements. In addition, in many such cases, the non-compliance
can be rectified within a reasonable period of time.
Accordingly, Sec. 960.16(b) of the proposed rule provides that in
the event of inadvertent non-compliance by an applicant, sponsor or
owner, the Bank shall provide such party with a reasonable period of
time in which to take reasonable efforts, pursuant to a compliance plan
approved by the Bank, to remedy the non-compliance. The Bank in its
discretion may exclude such party from participation in the AHP while
it is under a compliance plan, or in its discretion may require the
applicant to increase the long-term period committed to in its AHP
application for the project by the amount of time the project has been
in non-compliance.
Section 960.16(b) of the proposed rule further provides that if the
applicant, sponsor or owner takes no reasonable efforts to comply with
the compliance plan, then such party is in willful non-compliance with
the requirements of this part and is subject to the remedial actions
contained in paragraph (a) of this section. If the applicant, sponsor
or owner takes reasonable efforts pursuant to the compliance plan to
remedy the non-compliance under paragraph (b) and such efforts are
unsuccessful, the applicant, sponsor or owner would be subject to the
remedial actions for fraud or willful non-compliance, but may apply to
the Bank for a waiver of any such required remedial actions. The Bank
shall report to the Board in writing on any waivers approved pursuant
to paragraph (b) within 30 calendar days of such approval.
3. Sale of AHP-assisted Owner-Occupied Housing Unit to Income-
Ineligible Household
a. Recapture requirement. Section 960.16(c) of the proposed rule
provides generally that in the event that a household sells its AHP-
assisted owner-occupied housing unit to a household whose income
exceeds the level committed to in the AHP application prior to the end
of the required long-term period, then:
(i) If the Bank provided a direct subsidy to the applicant which
was passed on as a grant to the seller, the Bank shall require the
seller to repay a pro rata share, except for de minimis amounts, of the
grant received by such seller. The amount to be repaid shall be reduced
for every year the seller owned the unit, to be repaid from any net
gain from the sale of the unit after deduction for sales expenses, and
to be returned to the Bank. The proposed rule provides, however, that
the Bank in its discretion may waive such requirement if the imposition
of such requirement will cause undue hardship on the seller, as defined
by the Bank in its AHP implementation plan; or
(ii) If the Bank provided a subsidized advance to the applicant and
the applicant provided a below market rate loan to the seller, then the
applicant shall either repay to the Bank that portion of the advance
used to make the loan to the seller or the Bank shall convert that
portion of the advance used to make the loan to the seller to a market
rate advance with an interest rate equal to the market rate of interest
at the time the advance was made, and any unused AHP subsidy which had
been set aside by the Bank to subsidize that portion of the advance
used to make the loan to the seller shall be made available by the Bank
for additional AHP projects.
b. Exception to recapture requirement. Section 960.16(c)(3) of the
proposed rule provides that the recapture requirements described above
shall not apply provided the sponsor, pursuant to a legally binding
agreement with the Bank, assists another household with an income at or
below the level committed to in the AHP application in the manner
originally committed to in the AHP application.
This alternative approach is discussed in greater detail above
under the monitoring section.
4. Sale of AHP-Assisted Rental Housing Project
Section 960.16(d) of the proposed rule provides that in the event
that the owner of an AHP-assisted rental housing project sells the
project prior to the end of the long-term period during which the
project's rental units, or portion thereof, must remain affordable for
and occupied by households with incomes at or below the levels
committed to in the AHP application, and the purchaser does not agree
to maintain the project according to such commitments and to be subject
to the same restrictions on resale that applied to the seller, then:
(i) If the Bank provided a direct subsidy to the applicant which
was passed on as a grant to the seller, the Bank shall require the
seller to repay a pro rata share, except for de minimis amounts, of the
grant received by such seller, reduced for every year the seller owned
the unit, to be repaid from any net gain from the sale of the project
after deduction for sales expenses, and to be returned to the Bank,
except that the Bank in its discretion may waive such requirement if
the imposition of such requirement will cause undue hardship on the
seller, as defined by the Bank in its AHP implementation plan; or
(ii) If the Bank provided a subsidized advance to the applicant and
the applicant provided a below market rate loan to the seller, then the
applicant shall either repay the advance to the Bank or the Bank shall
convert the advance to a market rate advance with an interest rate
equal to the market rate of interest at the time the advance was made,
and any unused AHP subsidy which had been set aside by the Bank to
subsidize the advance shall be made available by the Bank for
additional AHP projects.
L. AHP Applications Involving Loan Funds and Loan Consortia
Section 960.17 of the proposed rule sets forth specific
requirements governing the use of loans and grants received by loan
funds and loan consortia pursuant to the AHP. The Board's existing AHP
regulation does not address specifically the use of loans or grants by
loan funds or loan consortia pursuant to the AHP. See 12 CFR part 960.
However, the Board has adopted policy guidelines for the Banks
governing the award of subsidized advances and direct subsidies to
applicants that then make loans or grants to loan funds and loan
consortia (policy guidelines). See Board Resolution No. 93-54, June 23,
1993. The provisions in Sec. 960.17 of the proposed rule, if adopted in
final form by the Board, would incorporate the policy guidelines, with
some modifications.
Section 960.17(a)(1) of the proposed rule provides generally that
an applicant may use a subsidized advance or a direct subsidy to make a
loan or a grant to a loan fund or loan consortium. Section 960.17(a)(2)
of the proposed rule provides that AHP applications involving the use
of loans or grants by loan funds or loan consortia are governed by the
provisions of part 960, except as provided in Sec. 960.17 of the
proposed rule.
Section 960.17(b) of the proposed rule provides that the
requirements for approval of an AHP application that proposes to use
subsidized advances or direct subsidies to make a loan or a grant to a
loan fund or loan consortium are the same as the requirements for
approval applicable to all other AHP applications under Sec. 960.8 of
the proposed rule, except that an AHP application that involves a loan
fund or loan consortium will be scored on the criteria that the loan
fund or loan consortium proposes to use to select projects that will
ultimately receive a loan or grant from the loan fund or loan
consortium that is subsidized by the AHP.
This provision is intended to address the fact that loan funds and
loan consortia do not have specific proposed projects in place at the
time they apply for funds under the AHP. Section 960.17(b)(1) of the
proposed rule therefore requires the Banks to score AHP applications
involving loan funds or loan consortia based on the criteria that the
loan fund or loan consortium commits to use when selecting the projects
it will fund. This provision carries forward a requirement of the
Board's existing policy guidelines.
In addition, Sec. 960.17(b)(2) of the proposed rule provides that
the Bank shall review and shall require the applicant to review each
new rental housing project funded by a loan fund or loan consortium
prior to disbursing a loan or grant to ensure that the project meets
the threshold requirements of Sec. 960.9 of the proposed rule and the
project selection criteria committed to in the approved AHP
application.
This is a change from the provision in the Board's existing policy
guidelines that requires the Bank and the applicant to review both
rental and owner-occupied housing projects prior to funding by a loan
fund or loan consortium under the AHP. This change is intended to
eliminate duplicative review of loan fund or loan consortium activities
where funds are used to finance owner-occupied housing units under the
AHP. However, since rental housing projects are more complex than
owner-occupied housing projects, the Board believes that the applicant
and the Bank should continue to review each rental housing project
funded by a loan fund or loan consortium prior to disbursement of any
funds to ensure that the project meets the feasibility, maximum
subsidy, and other threshold requirements of Sec. 960.9 of the proposed
rule.
Section 960.17(c)(1) of the proposed rule carries forward the
requirement in the Board's existing policy guidelines that if an
applicant receives a subsidized advance and uses the proceeds of the
advance to make a loan to a loan fund or loan consortium, the total
value of the interest rate subsidy must be passed on to the borrower of
the funds. Thus, Sec. 960.17(c)(1) provides that a loan fund or loan
consortium shall extend credit to the borrower at a rate of interest
equal to the rate of interest charged on the subsidized advance plus a
reasonable interest rate spread approved by the Bank. The applicant and
the loan fund or loan consortium may determine between themselves what
proportion of the interest rate spread the applicant and the loan fund
or loan consortium will share.
Section 960.17(c)(2)(i) of the proposed rule provides that a loan
fund or loan consortium that receives a grant from an applicant
pursuant to the AHP must either:
(A) Pass the entire grant on to the recipient;
(B) Use the entire grant to lower the interest rate on a loan to
the borrower; or
(C) Lend the entire grant to the borrower to finance a rental
housing project for a term of not less than 30 years, with all
principal and interest payments deferred until the end of such term. If
such loan is repaid before the end of the 30-year term, the entire
amount of the grant must be repaid to the applicant, which in turn must
forward the funds to the Bank to be used for additional AHP projects.
This is a change from the provision in the Board's existing policy
guidelines that prohibits a loan fund or loan consortium from using a
grant from an applicant to make a loan to the borrower. The Board
believes that if a loan fund or loan consortium lends a grant to a
sponsor to finance rental housing units that will remain affordable for
and occupied by income-eligible households for not less than 30 years,
with all principal and interest payments deferred until the end of the
loan term, then the loan fund or loan consortium has passed on the full
amount of the AHP subsidy to the recipient or borrower of the funds, as
required by section 10(j)(9)(E) of the Act. See 12 U.S.C.
1430(j)(9)(E). However, if the borrower repays the loan before
maturity, the entire amount of the subsidy must be repaid to the
applicant and forwarded by the applicant to the Bank to be returned to
the AHP fund. Therefore, a loan fund or loan consortium may use a grant
under the AHP to make a loan to the borrower under the conditions
specified in Sec. 960.17(c)(2)(i)(C) of the proposed rule.
Section 960.17(c)(2)(ii) of the proposed rule provides that if a
loan fund or loan consortium provides both a loan and a grant to the
borrower and the loan fund or loan consortium charges an origination
fee for providing the loan, then any fee charged by the loan fund or
loan consortium for providing the grant may not be paid with AHP
subsidized advances or direct subsidies. The Board does not believe
that such funds should be used to pay a fee for providing a grant to a
project if the loan fund or loan consortium charges a fee for
underwriting a loan to the same project.
Section 960.17(c)(2)(iii) of the proposed rule provides that when a
loan fund or loan consortium receives a grant from an applicant
pursuant to the AHP and uses the grant to lower the interest rate on a
loan to the borrower, the interest rate calculation must be consistent
with the procedure used by the Bank for calculating the amount of AHP
subsidy needed for a subsidized advance, taking into account the source
of funds used by the loan fund or loan consortium for its loans and the
rate that normally would be charged for a loan of the type and term
that is provided to the borrower.
Section 960.17(c)(3) of the proposed rule provides that any
interest or other income earned by a loan fund or loan consortium on a
loan or a grant received from an applicant, other than any approved fee
or interest rate spread charged to the borrower, either (i) must be
used by the loan fund or loan consortium to provide funds for
additional projects meeting the threshold requirements in Sec. 960.9 of
the proposed rule and the criteria committed to in the approved AHP
application, or (ii) must be forwarded to the applicant, which in turn
must forward the funds to the Bank to be used for additional AHP
projects. This is a change from the provision in the Board's existing
policy guidelines that allows loan funds and loan consortia to earn and
retain de minimis amounts of income on loans or grants received from
applicants. The Board believes that accounting for de minimis amounts
of interest or other income earned on loans or grants received from an
applicant is no less of an administrative burden than accounting for
all such interest or other income earned. Therefore, the proposed rule
requires all interest or other income earned on loans or grants
received from an applicant to be used by the loan fund or loan
consortium for additional AHP projects or returned to the applicant.
Section 960.17(c)(4) of the proposed rule provides that if loans or
grants received by a loan fund or loan consortium pursuant to one AHP
funding cycle are combined with loans or grants received by such entity
pursuant to another AHP funding cycle in a single rental housing
project, the loan fund or loan consortium shall require the recipient
of the funds to follow the requirements for the use of such funds from
the AHP funding cycle that is more restrictive as to the approved AHP
criteria. This requirement does not apply when loans or grants received
by a loan fund or loan consortium pursuant to separate AHP funding
cycles are combined to finance a single owner-occupied housing project.
The reason for this provision is that funds are more easily traceable
to separate units in an owner-occupied housing project than to separate
units in a rental housing project. Therefore, for purposes of owner-
occupied housing projects, it is possible to use loans or grants from
different AHP funding cycles according to the different criteria
approved by the Bank in each of the respective funding cycles. However,
the loan fund or loan consortium in its discretion may require the
recipient of the funds to follow the requirements for the use of such
funds from the AHP funding cycle that is more restrictive as to the
approved AHP criteria.
Section 960.17(c)(5) of the proposed rule provides that any loans
provided by a loan fund or loan consortium pursuant to the AHP that are
repaid to such entity must be re-lent or provided as grants by such
entity within a reasonable period of time after such repayments, or
must be repaid to the applicant, which in turn must repay such funds to
the Bank, and must be made available by the Bank for additional AHP
projects. The Bank shall in its AHP implementation plan identify what
constitutes a reasonable period of time for such purposes.
Section 960.17(d) of the proposed rule sets forth the monitoring
and reporting requirements where an applicant makes loans or grants
pursuant to the AHP to a loan fund or loan consortium which uses the
funds to finance owner-occupied or rental housing units. Section
960.17(d)(1)(i) of the proposed rule requires the Bank to monitor such
units, according to the monitoring requirements of Sec. 960.14(e)
through (h) of the proposed rule, to determine compliance with the
long-term requirements, as well as compliance with the special needs
priority, the District Bank priority or priorities, and the economic
mobility priority, where applicable. In addition, Sec. 960.17(d)(1)(ii)
of the proposed rule provides that the Bank shall require the sponsor
or owner of a project receiving a loan or grant from the loan fund or
loan consortium to submit to the Bank such reports and certifications
as are required under Sec. 960.15(c) of the proposed rule. Section
960.17(d)(1)(iii) of the proposed rule provides that the Bank shall
require the loan fund or loan consortium to report to the Bank any new
loan or grant made using repayments of loans by the borrower. If a loan
fund or loan consortium receives loans or grants from an applicant
pursuant to separate AHP funding cycles, the use of such funds must be
reported separately.
Section 960.17(d)(2) of the proposed rule provides that the Bank
may contract with either the applicant or the loan fund or loan
consortium to meet the monitoring requirements of Sec. 960.14(e)
through (h). Under Sec. 960.17(d)(2)(i) of the proposed rule, if the
Bank contracts with the applicant to meet such monitoring requirements,
the Bank shall require the applicant to monitor the AHP-assisted
housing units according to the monitoring requirements of
Sec. 960.14(e) through (h) of the proposed rule. The Bank also shall
require the applicant to require the sponsor or owner of the project to
submit to the applicant such reports and certifications as are required
under Sec. 960.15(c) of the proposed rule. In addition, the applicant
shall require the loan fund or loan consortium to report to the
applicant any new loan or grant made using repayments of loans by the
borrower. If a loan fund or loan consortium receives loans or grants
from an applicant pursuant to separate AHP funding cycles, the use of
such funds must be reported separately.
Under Sec. 960.17(d)(2)(ii) of the proposed rule, if the Bank
contracts with the loan fund or loan consortium to meet the monitoring
requirements in Sec. 960.14(e) through (h) of the proposed rule, the
Bank shall require the loan fund or loan consortium to monitor the AHP-
assisted housing units according to the monitoring requirements of
Sec. 960.14(e) through (h) of the proposed rule. The Bank also shall
FR Doc. 94-412 Affordable Housing Program
require the loan fund or loan consortium to require the sponsor or
owner of the project to submit to the loan fund or loan consortium such
reports and certifications as are required under Sec. 960.15(c) of the
proposed rule. In addition, the loan fund or loan consortium shall
report to the Bank any new loan or grant made using repayments of loans
by the borrower. If a loan fund or loan consortium receives loans or
grants from an applicant pursuant to separate AHP funding cycles, the
use of such funds must be reported separately.
The monitoring and reporting requirements in Sec. 960.17(d) of the
proposed rule are a change from the provisions on monitoring and
reporting in the Board's existing policy guidelines, which require the
applicant to monitor the loan fund or loan consortium and require the
Bank to monitor the applicant. This change is intended to conform the
monitoring and reporting requirements for projects involving loan funds
or loan consortia with the proposed monitoring and reporting
requirements applicable to AHP-assisted housing projects generally
under Secs. 960.14 and 960.15 of this proposed rule.
Section 960.17(e)(1) of the proposed rule provides that a loan fund
or loan consortium receiving loans or grants from applicants pursuant
to the AHP and the project sponsors and owners receiving loans or
grants from loan funds or loan consortia are subject to the corrective
and remedial actions contained in Sec. 960.16 of the proposed rule for
fraud and non-compliance with respect to the AHP requirements.
Section 960.17(e)(2)(i) of the proposed rule provides that in the
event of a loan fund's or loan consortium's fraud or willful non-
compliance with respect to the requirements of this part, the full
amount of the AHP subsidy shall be recovered from the loan fund or loan
consortium by the applicant and returned to the Bank, or if previously
agreed to by the Bank, shall be recovered by the Bank from the loan
fund or loan consortium.
Section 960.17(e)(2)(ii) of the proposed rule requires an applicant
that provides a loan or a grant to a loan fund or loan consortium
pursuant to the AHP to have in place either:
(1) A legally binding agreement or other legally enforceable
mechanism that permits the applicant to recover from the loan fund or
loan consortium, in the event of fraud or willful non-compliance by the
loan fund or loan consortium with respect to the AHP requirements, the
full amount of the AHP subsidy; or
(2) If the Bank agrees and such an agreement is legally
enforceable, a three-party agreement that includes the Bank, the
applicant, and the loan fund or loan consortium, that permits the Bank
to recover from the loan fund or loan consortium, in the event of fraud
or willful non-compliance by the loan fund or loan consortium with
respect to the AHP requirements, the full amount of the AHP subsidy.
Section 960.17(e)(3)(i) of the proposed rule provides that in the
event of a sponsor's or owner's fraud or willful non-compliance with
respect to the AHP requirements, the full amount of the AHP subsidy
shall be recovered by the loan fund or loan consortium from the sponsor
or owner to be used for additional AHP projects.
Section 960.17(e)(3)(ii)(A) of the proposed rule provides that the
loan fund or loan consortium shall have in place a legally binding
agreement or other legally enforceable mechanism that permits it to
recover from the sponsor or owner the full amount of the AHP subsidy
provided to the project in the event of the sponsor's or owner's fraud
or willful non-compliance with respect to the AHP requirements, and the
applicant shall have in place a legally binding agreement or other
legally enforceable mechanism that permits it to recover from the loan
fund or loan consortium such amount recovered by the loan fund or loan
consortium from the sponsor or owner.
Section 960.17(e)(3)(ii)(B) of the proposed rule also provides that
the applicant shall have in place, if the Bank agrees and such
agreement is legally enforceable, a four-party agreement that includes
the Bank, the applicant, the loan fund or loan consortium, and the
sponsor or owner, that permits the Bank to recover from the sponsor or
owner the full amount of the AHP subsidy provided to the project in the
event of the sponsor's or owner's fraud or willful non-compliance with
respect to the AHP requirements.
Section 960.17(e)(4) of the proposed rule provides that the Board
in its discretion may grant a waiver of any required remedial actions
for fraud or willful non-compliance with respect to the AHP
requirements, upon written request by the Bank, applicant, loan fund or
loan consortium, sponsor or owner.
M. Required Annual AHP Contributions
Section 960.18 of the proposed rule requires each Bank to fund its
AHP annually in accordance with the formula set forth in section
10(j)(5) of the Act. See 12 U.S.C. 1430(j)(5). Proposed Sec. 960.18 is
consistent with Sec. 960.10 of the Board's existing AHP regulation,
except for minor wording changes and deletion of language regarding
required funding in 1990 through 1993 which is no longer necessary. See
12 CFR 960.10.
Specifically, proposed Sec. 960.18 provides that each Bank shall
fund its AHP in accordance with the following formula:
(a) In 1994, the greater of:
(1) 6 percent of the Bank's net earnings for the previous year; or
(2) That Bank's pro rata share of an aggregate of $75 million to be
contributed in total by the Banks, such proration being made on the
basis of the net earnings of the Banks for the previous year.
(b) In 1995 and each year thereafter, the greater of:
(1) 10 percent of the Bank's net earnings for the previous year; or
(2) That Bank's pro rata share of an aggregate of $100 million to
be contributed in total by the Banks, such proration being made on the
basis of the net earnings of the Banks for the previous year.
The term ``net earnings of a Bank'' is defined in proposed
Sec. 960.1. The definition has been revised from the definition in the
Board's existing AHP regulation in order to more accurately track its
definition in section 10(j)(8) of the Act. See 12 CFR 960.1(j); 12
U.S.C. 1430(j)(8).
N. Temporary Suspension of AHP Contributions
Section 960.19 of the proposed rule sets forth the provisions
governing temporary suspensions by Banks of their required annual AHP
contributions. A number of revisions have been made to this section in
the Board's existing AHP regulation in order to more accurately track
the language in section 10(j)(6) of the Act concerning this section and
to provide greater clarity. See 12 CFR 960.11; 12 U.S.C. 1430(j)(6).
1. Application for Temporary Suspension
Section 960.19(a)(1) of the proposed rule provides that if a Bank
finds that the contributions required pursuant to proposed Sec. 960.18
are contributing to the financial instability of the Bank, the Bank
shall notify the Board promptly, and may apply in writing to the Board
for a temporary suspension of such contributions.
Section 960.19(a)(2) of the proposed rule provides that a Bank's
application for a temporary suspension of contributions shall:
(i) State the period of time for which the Bank seeks a suspension;
(ii) State the grounds for a suspension;
(iii) Include a plan for returning the Bank to a financially stable
position; and
(iv) Be accompanied by the Bank's preceding year's annual financial
report, if available, and the Bank's most recent quarterly and monthly
financial statements and any other financial data the Bank wishes the
Board to consider.
The requirement in paragraph (ii) above is not explicitly required
in the Board's existing AHP regulation. See 12 CFR 960.11(a).
Paragraph (iv) above adds to the Board's existing regulation that
the Bank may include any other financial data it wishes the Board to
consider.
2. Board Review of Application for Temporary Suspension
a. Grounds for approval of application. Section 960.19(b)(1) of the
proposed rule provides that, in reviewing a Bank's application for a
temporary suspension of contributions to determine the Bank's financial
instability, the Board shall consider the following factors:
(i) Whether the Bank's earnings are severely depressed. This
language was added to track the statutory standard in section 10(j)(6)
of the Act. See 12 U.S.C. 1430(j)(6). In addition, the Board shall
consider the extent to which the Bank's quarterly or annual net
earnings have decreased from the preceding quarter or year, and whether
such decline is projected to continue;
(ii) Whether there has been a substantial decline in the Bank's
membership capital. The Board shall consider the extent to which the
Bank's paid-in membership capital has declined in any given quarter or
year, and whether such decline is projected to continue;
(iii) Whether there has been a substantial reduction in the Bank's
advances outstanding. The Board shall consider the extent to which the
Bank's level of advances has declined in any given quarter or year, and
whether such decline is projected to continue; and
(iv) Whether any other financial condition exists with respect to
the Bank which has resulted in, or is likely to result in, the
financial instability of the Bank.
b. Limitations on grounds for approval of application. Section
960.19(b)(2) of the proposed rule provides that the Board shall
disapprove an application for a temporary suspension if it determines
that the Bank's reduction in earnings is a result of:
(i) A change in the terms of advances (other than subsidized
advances) to members which is not justified by market conditions;
(ii) Inordinate operating and administrative expenses; or
(iii) Mismanagement.
The ``reduction in earnings'' language replaces the term
``financial instability'' used in the Board's existing regulation,
because the former is the term used in the Act. See 12 CFR 960.11(c);
12 U.S.C. 1430(j)(6).
In addition, the requirement in Sec. 960.11(c)(5) of the Board's
existing regulation that the Bank shall disapprove an application if
for any other reason the temporary suspension is not warranted, is
deleted in the proposed rule because it is not required by the Act, and
limits the Board's discretion to balance reasons warranting approval of
an application for a temporary suspension. See 12 CFR 960.11(c)(5); 12
U.S.C. 1430(j)(6).
3. Board Decision
Section 960.19(c) of the proposed rule provides that the Board
shall approve or disapprove a Bank's application for a temporary
suspension within 30 calendar days of receipt of such application, and
the Board's decision shall be in writing and shall be accompanied by
specific findings and reasons for its action. A copy of the Board's
decision shall be forwarded to each of the Banks.
4. Board Approval of Application for Temporary Suspension
Section 960.19(d)(1) of the proposed rule provides that if the
Board approves a Bank's application for a temporary suspension, the
Board's written decision shall specify the period of time such
suspension shall remain in effect.
Section 960.19(d)(2) of the proposed rule provides that during the
term of a temporary suspension approved by the Board, the affected Bank
shall provide to the Board such financial reports as the Board shall
require to monitor the financial condition of the Bank, and the Board
shall continue to monitor the Bank's financial condition. The
requirement that the Board shall monitor the Bank's financial condition
is added because it is required by the Act. See 12 U.S.C.
1430(j)(6)(D).
Section 960.19(d)(3) of the proposed rule provides that if, prior
to the conclusion of the temporary suspension period, the Board
determines that the Bank has returned to a position of financial
stability, the Board may, upon written notice to the Bank, terminate
the temporary suspension.
5. Application for Extension of Temporary Suspension Period
Section 960.19(e)(1) of the proposed rule provides that if a Bank's
board of directors determines that the Bank has not returned to, or is
not likely to return to, a position of financial stability at the
conclusion of the temporary suspension period, the Bank may apply in
writing for an extension of the temporary suspension period, stating
the grounds for such extension.
Proposed Sec. 960.19(e)(2) provides that the Board shall approve or
disapprove a Bank's application for an extension of a temporary
suspension period within 30 calendar days of receipt of such
application.
Proposed Sec. 960.19(e)(3) provides that the Board's decision on an
application for an extension of a temporary suspension period shall be
in writing, shall be accompanied by specific findings and reasons for
such action, and shall state the effective date and time period if an
extension is approved.
6. Notice to Congress
Section 960.19(f)(1) of the proposed rule provides that the Board
shall notify the Committee on Banking, Finance and Urban Affairs of the
House of Representatives and the Committee on Banking, Housing and
Urban Affairs of the Senate not less than 60 calendar days before any
temporary suspension (or extension of such suspension) approved
pursuant to this section takes effect.
Deleted from this provision is the requirement in the Board's
existing regulation that a copy of the Board's suspension decision
shall be forwarded to the Congress since, as discussed above, the Act
only requires that the Board provide notice to Congress of the
suspension decision. See 12 CFR 960.11(f); 12 U.S.C. 1430(j)(6)(F).
Proposed Sec. 960.19(f)(2) provides that a temporary suspension (or
extension of such suspension) shall become effective as determined by
the Board, unless a joint resolution of Congress is enacted
disapproving such suspension (or extension thereof). The proposed rule
deletes the provision in the Board's existing regulation that a
temporary suspension extension may not take effect until at least 30
days after the Board gives the required notice to Congress, because
this is inconsistent with the requirement in the existing regulation
that the Board must notify the Congress at least 60 days before such
extension takes effect. See 12 CFR 960.11(g).
Proposed Sec. 960.19(f)(2) also deletes from the Board's existing
regulation the requirement that a joint resolution of Congress
disapproving a suspension or extension of a suspension must be enacted
prior to the Board's determined effective date, in order to track more
closely the actual language in the Act. See 12 U.S.C. 1430(j)(6)(F).
O. Affordable Housing Reserve Fund
Consistent with the Board's existing AHP regulation, Sec. 960.20(a)
of the proposed rule provides that if a Bank fails to use or commit the
full amount of its required annual contribution to the AHP, 90 percent
of the amount that has not been used or committed in that year shall be
deposited by the Bank in an Affordable Housing Reserve Fund established
and administered by the Board. See 12 CFR 960.12. The 10 percent of the
unused and uncommitted amount retained by the Bank should be fully used
or committed by the Bank during the following year, and any remaining
portion must be deposited in the Affordable Housing Reserve Fund. A
Bank is deemed to have used or committed its required contribution
where amounts are remaining at the end of the year because funding the
next highest ranking project would exceed the Bank's required AHP
contribution for the year. Such amounts remaining shall be combined
with returned AHP funds to fund the next highest scoring AHP project or
projects, or carried over by the Bank to the next year's AHP funding
cycles.
The language allowing these amounts to remain at the end of the
year is added in the proposed rule to take into account situations
where amounts remain uncommitted at the end of the year because the
balance of required AHP contributions remaining is too small to fund
the Bank's next highest scoring AHP application.
The last sentence in proposed paragraph (a) also is new, making
explicit that such amounts remaining and funds returned to the Bank
shall fund other AHP projects and need not be transferred to the
Affordable Housing Reserve Fund.
Section 960.20(b) of the proposed rule provides that by January 15
of each year, each Bank shall provide to the Board a statement
indicating the amount of unused and uncommitted funds from the prior
year, if any, which will be deposited in the Affordable Housing Reserve
Fund.
Proposed Sec. 960.20(c) provides that by January 31 of each year,
the Board will notify the Banks of the total amount of funds, if any,
available in the Affordable Housing Reserve Fund.
Section 960.12(d) of the Board's existing regulation governing how
any Reserve Funds would be made available to the Banks, is deleted in
the proposed rule. See 12 CFR 960.12(d). The Act states that such
provisions would be determined pursuant to regulations issued by the
Board. See 12 U.S.C. 1430(j)(7). Since there currently are no Reserve
Funds and it is not anticipated that there will be any Reserve Funds in
the near future, it is not necessary at this time to include provisions
in the proposed rule dealing with this issue. The Board can issue
regulations on this issue at a future date if such eventuality should
arise.
P. Advisory Councils
Section 960.21 of the proposed rule sets forth provisions governing
the appointment, operation, and responsibilities of the Advisory
Councils to the Banks.
Section 960.21(a)(1) of the proposed rule carries forward the
requirement in the Board's existing AHP regulation that each Bank shall
appoint an Advisory Council of seven to 15 persons who shall reside in
the Bank's District and shall be drawn from community and nonprofit
organizations actively involved in providing or promoting low- or
moderate-income housing in the Bank's District. See 12 CFR 960.14(a).
In addition, Sec. 960.21(a)(1) of the proposed rule provides that the
size of the Advisory Council shall be stated in the Bank's AHP
implementation plan.
Section 960.21(a)(2) of the proposed rule carries forward the
requirement in the Board's existing AHP regulation that the Bank must
actively solicit nominations from Bank members and community and
nonprofit organizations and shall allow sufficient time for response,
so that the nomination and appointment process is as broad and as
participatory as possible. See 12 CFR 960.14(b), (d). The Bank also
should solicit nominations from any other interested parties. In
addition, Sec. 960.21(a)(3) of the proposed rule provides that Advisory
Council members shall be appointed by the Banks giving consideration to
the size of the District and the diversity of low-income housing needs
within the District.
The Board's existing AHP regulation provides that officials of
state and local housing finance agencies may serve as members of an
Advisory Council, provided that such officials do not constitute an
undue proportion of the membership of the Advisory Council. See 12 CFR
960.14(c). It has been suggested that such officials should only be
able to serve as non-voting members of an Advisory Council, unless the
officials also are employed or associated with a private community or
nonprofit organization actively involved in providing or promoting low-
or moderate-income housing in the Bank's District. This suggestion is
based on the view that the Advisory Councils are intended to serve as
vehicles for private sector community and nonprofit organizations, not
public agencies, to advise the Banks on low- and moderate-income
housing programs and needs in the District and on the utilization of
Bank advances for such purposes. See 12 U.S.C. 1430(j)(11). While
acknowledging that officials of state and local housing finance
agencies make valuable contributions to the Advisory Councils, the
supporters of this viewpoint argue that these agencies have
opportunities to influence the allocation of housing finance credit
through means other than by voting representation on the Advisory
Councils.
The Board specifically requests comments on whether or not
officials of state and local housing finance agencies should be able to
vote on the Advisory Councils and whether their representation should
be limited so that it does not constitute an undue proportion of the
Advisory Council membership.
Section 960.21(a)(4) of the proposed rule provides that Advisory
Council members shall serve for terms of two or three years, as
determined by the Bank and set forth in its AHP implementation plan.
The Board is proposing to give the Banks the option of appointing
Advisory Council members for three-year terms in order to allow the
Banks to benefit from the experience and familiarity with the AHP that
Advisory Council members develop the longer they serve on an Advisory
Council. In addition, Sec. 960.21(a)(4) of the proposed rule carries
forward the requirement in the Board's existing AHP regulation that
terms of Advisory Council members shall be staggered to provide
continuity and experience in service. See 12 CFR 960.14(f). The
proposed rule requires the Banks to explain in their AHP implementation
plans how Advisory Council member terms will be staggered.
Section 960.21(a)(4) of the proposed rule contains a new provision
limiting an Advisory Council member to six years of consecutive
service. The Bank may set its own limits on consecutive terms within
the six-year limit. This provision is intended to ensure that the
membership of the Advisory Councils reflects the diverse and changing
viewpoints of private sector community and nonprofit organizations on
the low-income housing programs and needs of the Bank Districts.
Section 960.21(a)(5) of the proposed rule provides that an Advisory
Council member who, subsequent to appointment, is no longer employed by
or associated with a community or nonprofit organization actively
involved in providing or promoting low- or moderate-income housing in
the Bank's District may continue to serve on the Advisory Council until
the end of his or her term. Allowing the Advisory Council member to
serve out the remainder of his or her term promotes continuity in the
collective experience of the Advisory Council. Further, the member may
still have relevant experience related to low-income housing needs in
the District, which may continue to benefit the Advisory Council.
However, the Board recognizes that the Advisory Council member may no
longer represent the interests of the community and nonprofit sector.
Therefore, the Board specifically requests comments on this provision
of the proposed rule. The Board also specifically requests comments on
whether a member who is no longer employed by or associated with a
community or nonprofit organization should be entitled to vote on the
Advisory Council if he or she becomes a state or local housing finance
agency official.
Section 960.21(b) of the proposed rule provides that each Advisory
Council shall elect from among its voting members a chairperson and a
vice chairperson.
Section 960.21(c) of the proposed rule carries forward the
requirement of the Board's existing AHP regulation that each Advisory
Council shall designate a member, or request that a member of the
Bank's staff be designated, to act as secretary to the Advisory
Council. See 12 CFR 960.14(g). The secretary shall record and maintain
the minutes of the meetings of the Advisory Council, which shall
contain, among other things, a record of the persons present, a
description of the matters discussed, and recommendations made. The
person acting as secretary at a meeting shall certify to the accuracy
of the minutes of that meeting.
Section 960.21(d)(1) of the proposed rule adds a new requirement
that, prior to the approval of the Bank's proposed AHP implementation
plan by the Bank's board of directors, the Bank's Advisory Council
shall review the proposed AHP implementation plan and provide its
recommendations to the Bank's board of directors pursuant to the
requirements of Sec. 960.2(c) discussed above under the section on the
adoption of the AHP implementation plan. This provision is intended to
give the Advisory Councils a greater role in advising the Banks on how
AHP funds should be allocated to meet the low-income housing needs in
their Districts.
Section 960.21(d)(2) of the proposed rule adds a new requirement
that upon request of the Advisory Council, the Bank shall provide the
Advisory Council with copies of any AHP applications from prior AHP
funding cycles. The Board is aware that some Banks have already adopted
this practice. This requirement is intended to aid the Advisory Council
members in evaluating how the AHP application priorities and scoring
criteria adopted by the Bank in its AHP implementation plan affect the
allocation of AHP funds among different types of housing projects.
Further, this requirement is subject to any limitations of other laws
that may require the Bank to keep information in an AHP application
confidential. The Bank may require Advisory Council members to agree to
keep all or parts of AHP applications confidential. The Board
specifically requests comments on the advantages and disadvantages of
allowing Advisory Council members to examine AHP applications received
by the Bank in prior AHP funding cycles.
Section 960.21(e) of the proposed rule carries forward the
requirement in the Board's existing AHP regulation that the Advisory
Council shall meet with representatives of the board of directors of
the Bank at least quarterly to advise the Bank on low- and moderate-
income housing programs and needs in the Bank's District and on the
utilization of AHP subsidized advances and direct subsidies for these
purposes. See 12 CFR 960.14(a).
Section 960.21(f) of the proposed rule requires each Advisory
Council to submit to the Board annually by March 1 its analysis of the
low-income housing activity of its Bank. This is a change from the
January 31 date in the Board's existing AHP regulation, and is intended
to give the Advisory Councils sufficient time after the end of the year
to compile and evaluate year-end data in order to prepare their reports
to the Board. See 12 CFR 960.14(j).
Section 960.21(g)(1) of the proposed rule carries forward the
requirement in the Board's existing AHP regulation that each Bank shall
reimburse members of its Advisory Council for transportation and
subsistence expenses they incur for each day devoted to attending
quarterly meetings with representatives of the board of directors of
the Bank. See 12 CFR 960.14(e). Section 960.21(g)(2) of the proposed
rule adds a new requirement that each Bank shall pay members of its
Advisory Council a fee for each day devoted to attending quarterly
meetings with representatives of the board of directors of the Bank.
The Board is proposing this change in light of the additional
responsibility given to Advisory Council members under the proposed
rule to advise the Banks on preparation of the AHP implementation
plans. The Board specifically requests comments as to whether the Banks
should be required to pay fees, and whether the amount to be paid
should be set forth in the final AHP rule so that a uniform fee is paid
to all Advisory Council members, or whether the fees should be set by
the board of directors of each Bank.
Q. Effective Dates
Section 960.22 of the proposed rule provides that, if published as
a final rule, this part shall become effective 30 days from such
publication in the Federal Register. In addition, the provisions of
this part, or portion thereof, may be applied to projects approved for
AHP funding prior to the effective date of the final rule to the extent
all relevant parties agree thereto in writing. The Finance Board would
not need to approve any such retroactive application of the final rule.
This proposed provision is intended to allow the retroactive
application to existing AHP projects of provisions of the revised AHP
rule that are less restrictive than existing AHP requirements, to the
extent all relevant parties (the Bank, the applicant, the sponsor, the
owner, and if applicable, the loan fund or loan consortium) agree to
such application of the new provisions. The Board specifically requests
comments on this proposed provision.
III. Regulatory Flexibility Act
The proposed rule applies only to the Banks, which do not come
within the meaning of ``small entities,'' as defined in the Regulatory
Flexibility Act (RFA). See 5 U.S.C. 601(6). Therefore, in accordance
with section 605(b) of the RFA, see id. section 605(b), the Finance
Board hereby certifies that this proposed rule, if promulgated as a
final rule, will not have a significant economic impact on a
substantial number of small entities.
IV. Paperwork Reduction Act
The information collection requirements contained in this proposed
rule have been submitted to the Office of Management and Budget (OMB)
for review under section 3504(h) of the Paperwork Reduction Act of
1980, 44 U.S.C. chapter 35. The title, description of need and use, and
the respondent description for the information collection requirements
are discussed in the SUPPLEMENTARY INFORMATION.
Any comments on the proposed information collections should be sent
to Gary Waxman, Paperwork Reduction Project, OMB, room 3208, New
Executive Office Building, Washington, DC 20503.
In accordance with 5 CFR 1320.12 and 1320.15, the following table
discloses the estimated annual reporting burden for each collection of
information in the proposed rule:
Estimated Annual Reporting Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average No. of
Description of information collected Average No. of x responses per = Total average x Average hours = Total average
respondents respondent responses per response hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. AHP application.................................... 1800 ... 1 .. 1800 ... 16.00 .. 28,800.0
2. Summary of approved AHP applications............... 12 ... 3 .. 36 ... 20.00 .. 720.0
3. Request for modification of approved AHP 100 ... 1 .. 100 ... 2.00 .. 200.0
application.
4. Summary of approved modifications to approved AHP 12 ... 4 .. 48 ... 4.00 .. 192.0
applications.
5. Request for waiver of AHP remedial actions......... 75 ... 1 .. 75 ... 10.00 .. 750.0
6. Advisory council report............................ 12 ... 1 .. 12 ... 200.00 .. 2,400.0
-------------------------------------------------------------------------------------------------
Totals............................................ 2,011 ... 2 .. 3,872 ... 8.54* .. 33,066.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Weighted average hours per response.
List of Subjects in 12 CFR Part 960
Credit, Federal home loan banks, Housing, Reporting and
recordkeeping requirements.
Accordingly, the Federal Housing Finance Board hereby proposes to
amend chapter IX, title 12, subchapter E, Code of Federal Regulations,
by revising part 960 to read as follows:
SUBCHAPTER E--AFFORDABLE HOUSING
PART 960--AFFORDABLE HOUSING PROGRAM
Subpart A--Definitions
Sec.
960.1 Definitions.
Subpart B--Establishment of AHP
960.2 Bank establishment of AHP and adoption of AHP implementation
plan.
Subpart C--Authorized and Required Uses of AHP Subsidized Advances or
Direct Subsidies
960.3 Authorized uses of AHP subsidized advances or direct
subsidies.
960.4 Specific use requirements for AHP subsidized advances or
direct subsidies.
960.5 Long-term requirements.
Subpart D--Applications for AHP Subsidized Advances or Direct Subsidies
960.6 Establishment of AHP funding cycles and available AHP
subsidies.
960.7 AHP application approval process.
Subpart E--Requirements for Approval of AHP Applications
960.8 General requirements for approval of AHP applications.
960.9 Threshold criteria for approval of AHP applications.
960.10 Scoring of AHP applications.
960.11 Modifications of approved AHP applications.
Subpart F--Use and Verification at Initial Disbursement of AHP
Subsidized Advances or Direct Subsidies
960.12 Use of AHP subsidized advances or direct subsidies within
reasonable period of time and verification of reasonable progress.
960.13 Verification at initial disbursement of AHP subsidized
advances or direct subsidies.
Subpart G--Monitoring and Reporting Requirements
960.14 Monitoring requirements.
960.15 Reporting requirements.
Subpart H--Corrective and Remedial Actions for Fraud or Non-Compliance
With AHP Requirements
960.16 Corrective and remedial actions for fraud or non-compliance.
Subpart I--AHP Applications Involving Loan Funds and Loan Consortia
960.17 AHP applications involving loan funds and loan consortia.
Subpart J--Required AHP Contributions
960.18 Required annual AHP contributions.
960.19 Temporary suspension of AHP contributions.
Subpart K--Affordable Housing Reserve Fund
960.20 Affordable Housing Reserve Fund.
Subpart L--Advisory Councils
960.21 Advisory Councils.
Subpart M--Effective Dates
960.22 Effective dates.
Authority: 12 U.S.C. 1430(j).
Subpart A--Definitions
Sec. 960.1 Definitions.
As used in this part:
Act means the Federal Home Loan Bank Act, as amended (12 U.S.C.
1421 through 1449).
Adjustment for household size means:
(1) Adjusting the household income limit according to the following
adjustment factors for households of more than or fewer than four
persons:
------------------------------------------------------------------------
No persons Percent adjustment
------------------------------------------------------------------------
1.................................. 70.
2.................................. 80.
3.................................. 90.
4.................................. Base.
5.................................. 108.
6.................................. 116.
7.................................. 124.
8.................................. 132.
------------------------------------------------------------------------
(2) For each person in excess of eight, eight percent of the four-
person household base income limit shall be added to the income limit
for an eight-person household for the area.
Advance means a loan from a Bank that is:
(1) Provided pursuant to a written agreement;
(2) Supported by a note or other written evidence of the borrower's
obligation; and
(3) Fully secured by collateral in accordance with the Act and part
935 of this chapter.
Affordable for low- or moderate-income households means:
(1) For purposes of rental housing units, that rents, including
reasonable utility costs, charged to households for such units do not
exceed 30 percent of the income of a household (assuming a household
size of 1.5 persons per bedroom or 1.0 person per unit without a
separate bedroom) which has an income of 80 percent of the median
income for the area, as adjusted and published by the U.S. Department
of Housing and Urban Development, except that in areas where the
Secretary of Housing and Urban Development adjusts this income figure
downward because of prevailing construction costs, low housing costs,
or unusually high household incomes, then ``affordable for low- or
moderate-income households'' means that rents, including reasonable
utility costs, charged to households for such units do not exceed 30
percent of the income of a household which has an income of 80 percent
of the median income for the area, as published by the U.S. Department
of Housing and Urban Development, with adjustment for household size,
but without the adjustments made by the Secretary of Housing and Urban
Development for prevailing construction costs, low housing costs, or
unusually high household incomes; or
(2) If a rental housing unit is targeted to households whose income
is less than 80 percent of the median income for the area, then
``affordable for low- or moderate-income households'' means that the
rent, including reasonable utility costs, charged to a household for
such unit does not exceed 30 percent of the maximum qualifying income
of the targeted households of the size expected to occupy the unit.
Affordable for very low-income households means:
(1) For purposes of rental housing units, that rents, including
reasonable utility costs, charged to households for such units do not
exceed 30 percent of the income of a household (assuming a household
size of 1.5 persons per bedroom or 1.0 person per unit without a
separate bedroom) which has an income of 50 percent of the median
income for the area, as adjusted and published by the U.S. Department
of Housing and Urban Development, except that in areas where the
Secretary of Housing and Urban Development adjusts this income figure
downward because of prevailing construction costs, low housing costs,
or unusually high household incomes, then ``affordable for very low-
income households'' means that rents, including reasonable utility
costs, charged to households for such units do not exceed 30 percent of
the income of a household which has an income of 50 percent of the
median income for the area, as published by the U.S. Department of
Housing and Urban Development, with adjustment for household size, but
without the adjustments made by the Secretary of Housing and Urban
Development for prevailing construction costs, low housing costs, or
unusually high household incomes.
(2) If a rental housing unit is targeted to a household whose
income is less than 50 percent of the median income for the area, then
``affordable for very low-income households'' means that the rent,
including reasonable utility costs, charged to a household for such
unit does not exceed 30 percent of the maximum qualifying income of the
targeted households of the size expected to occupy the unit.
AHP means the Affordable Housing Program established pursuant to
this part.
Applicant means a member that applies to the Bank of which it is a
member for AHP funds to be used pursuant to the requirements of this
part.
Area means, for purposes of defining ``median income for the
area,'' a metropolitan statistical area, a county, or a nonmetropolitan
area, as established by the U.S. Office of Management and Budget.
Bank means a Federal Home Loan Bank established under the authority
of the Act.
Board means the Federal Housing Finance Board.
Cost of funds means the estimated cost of issuing Bank System
consolidated obligations with maturities comparable to the maturity of
the AHP subsidized advance, as published from time to time by the Bank
System's Office of Finance.
Direct subsidy means the direct cash payments of AHP funds made to
the applicant by the Bank.
Loan consortium means:
(1) A nonprofit or for-profit corporation whose members are
regulated financial institutions including at least one Bank member and
that provides housing loans that benefit low- or moderate-income
households; or
(2) A group of regulated financial institutions including at least
one Bank member that have entered into a legal agreement with each
other to jointly make loans to finance housing for low- or moderate-
income households.
Loan fund means a nonprofit or for-profit organization that is not
owned or controlled by a regulated financial institution and which
aggregates capital from public and private sources to provide financing
for housing for low- or moderate-income households.
Low- or moderate-income household means a household which has an
income of 80 percent or less of the median income for the area, as
adjusted and published by the U.S. Department of Housing and Urban
Development, except that in areas where the Secretary of Housing and
Urban Development adjusts this figure downward because of prevailing
construction costs, low housing costs, or unusually high household
incomes, then ``low- or moderate-income household'' means a household
which has an income of 80 percent or less of the median income for the
area, as published by the U.S. Department of Housing and Urban
Development, with adjustment for household size, but without the
adjustments made by the Secretary of Housing and Urban Development for
prevailing construction costs, low housing costs, or unusually high
household incomes.
Low- or moderate-income neighborhood means any neighborhood in
which 51 percent or more of the households are low- or moderate-income
households.
Member means an institution that has been approved for membership
in a Bank and has purchased capital stock in the Bank in accordance
with Secs. 933.7 and 933.11 of this chapter.
Neighborhood means a census tract; a combination of census tracts;
or a geographic location designated in comprehensive plans, ordinances
or other local documents as a neighborhood, village or similar
geographical designation that is within the boundary but does not
encompass the entire area of a unit of general local government and for
which income information is available to determine the percentage of
households with incomes satisfying the requirements of
Sec. 960.10(d)(5). If the unit of general local government has a
population under 25,000, the neighborhood may, but need not, encompass
the entire area of a unit of general local government.
Net earnings of a Bank means the net earnings of a Bank for a
calendar year after deducting the Bank's pro rata share of the annual
contribution to the Resolution Funding Corporation required under
section 21A or 21B of the Act (12 U.S.C. 1441a, 1441b), and before
declaring any dividend under section 16 of the Act (12 U.S.C. 1436).
Nonprofit organization means a private organization that is a tax-
exempt entity under section 501(c) of the Internal Revenue Code of 1986
(26 U.S.C. 501(c)), or a private nonprofit organization that is
organized or chartered under state or local laws and has no part of its
net earnings inuring to the benefit of any member, founder, contributor
or individual.
Remaining useful life means the period during which the housing
remains in a condition suitable for occupancy, assuming normal
maintenance and repairs are made and major systems and capital
components are replaced or repaired as becomes necessary.
Sponsor means a nonprofit or for-profit organization or public
entity that is integrally involved in a rental housing project by
owning or being the general partner of a partnership that owns the
project, or that is integrally involved in exercising control over an
owner-occupied housing project by developing the project or by
qualifying borrowers and providing or arranging financing for the
owners of the housing units.
State means a state of the United States, the District of Columbia,
Guam, Puerto Rico, or the U.S. Virgin Islands.
Subsidized advance means an advance whose interest rate is reduced
below the cost of funds, with the interest rate differential subsidized
using AHP funds in the amount of the net present value of the
difference between the cost of funds and the rate charged on the
subsidized advance over the term of the advance.
Subsidy means:
(1) The direct cash payments of AHP funds provided by the Bank to
the applicant; or
(2) The amount of AHP funds necessary to compensate the Bank for
the net present value of the difference between the cost of funds and
the rate charged on the subsidized advance to the applicant over the
term of the advance.
Very low-income household means a household which has an income of
50 percent or less of the median income for the area, as adjusted and
published by the U.S. Department of Housing and Urban Development,
except that in areas where the Secretary of Housing and Urban
Development adjusts this figure downward because of prevailing
construction costs, low housing costs, or unusually high household
incomes, then ``very low-income household'' means a household which has
an income of 50 percent or less of the median income for the area, as
published by the U.S. Department of Housing and Urban Development, with
adjustment for household size, but without the adjustments made by the
Secretary of Housing and Urban Development for prevailing construction
costs, low housing costs, or unusually high household incomes.
Subpart B--Establishment of AHP
Sec. 960.2 Bank establishment of AHP and adoption of AHP
implementation plan.
(a) It is the policy of the Board and the Banks to promote decent
and safe affordable housing and to address critical affordable housing
needs through providing subsidized advances and direct subsidies to
members pursuant to this part.
(b) Each Bank's board of directors shall establish an AHP, which
shall be funded pursuant to the requirements of Sec. 960.18. The Bank
shall make subsidized advances to applicants pursuant to its AHP and
shall operate its AHP in conformity with an annual AHP implementation
plan and the requirements of this part. Direct subsidies provided by a
Bank to applicants pursuant to its AHP shall be provided in conformity
with the Bank's AHP implementation plan and the requirements of this
part. Each Bank's AHP implementation plan shall be approved by the
Board before it is effective. The Bank's AHP implementation plan shall
meet the requirements of this part, and shall include:
(1) The Bank's AHP funding cycle schedule, including application
due dates, as required by Sec. 960.6(a)(1);
(2) The Bank's priorities, and scoring criteria for applications,
as required by Secs. 960.8(a) and 960.10;
(3) The Bank's procedures to ensure satisfaction of the long-term
requirement, as required by Sec. 960.5 (a)(1) and (b);
(4) The Bank's requirements for and verification procedures
concerning:
(i) The use of subsidized advances or direct subsidies within a
reasonable period of time after approval of an AHP application, as
required by Sec. 960.12(a); or
(ii) The use of loans or grants within a reasonable period of time
after repayment of such funds to a loan fund or loan consortium, as
required by Sec. 960.17(c)(5);
(5) The Bank's verification procedures upon initial disbursement of
subsidized advances or direct subsidies, as required by Sec. 960.13;
(6) The Bank's monitoring plan, as required by Sec. 960.14(b);
(7) The Bank's reporting requirements for applicants during the
construction or rehabilitation phase, as required by Sec. 960.15(b)(2);
(8) An explanation of circumstances justifying undue hardship
waivers by the Bank of imposition of remedial actions, as required by
Sec. 960.16 (c)(1) and (d)(1); and
(9) The Bank's determination regarding the number of persons that
may serve on the Bank's Advisory Council and their terms, as required
by Sec. 960.21(a) (1) and (4).
(c) The Bank's proposed AHP implementation plan shall be submitted
to its Advisory Council at least 45 calendar days before it is
considered by the Bank's board of directors. The Advisory Council shall
review the proposed AHP implementation plan and submit its
recommendations to the Bank's board of directors at least seven
calendar days before the Bank's board of directors is scheduled to vote
on the AHP implementation plan. The Bank's board of directors shall
vote on the proposed AHP implementation plan, and shall submit its
approved plan to the Board for action. The Board shall approve or
disapprove any proposed AHP implementation plan it receives within 60
calendar days of receipt. A Bank's AHP implementation plan must be
effective at least 45 calendar days before the due date for AHP
applications. Each Bank shall submit its AHP implementation plan to the
Board for approval no later than 180 calendar days after [the
publication of the final rule in the Federal Register].
(d) The Bank's AHP implementation plan adopted pursuant to this
section shall be made available by the Bank to the public upon request.
(e) The Board will approve or disapprove proposed amendments to a
Bank's approved AHP implementation plan submitted by the Bank within 60
calendar days of receipt.
Subpart C--Authorized and Required Uses of AHP Subsidized Advances
or Direct Subsidies
Sec. 960.3 Authorized uses of AHP subsidized advances or direct
subsidies.
(a) General. Applicants may use subsidized advances or direct
subsidies received from a Bank pursuant to this part only for the uses
set forth in paragraphs (b) and (c) of this section and subject to the
long-term requirements set forth in Sec. 960.5.
(b) Owner-occupied housing units. Applicants may use subsidized
advances or direct subsidies received from a Bank pursuant to this part
to finance the purchase, construction or rehabilitation of owner-
occupied housing units by or for low- or moderate-income households.
(c) Rental housing units. Applicants may use subsidized advances or
direct subsidies received from a Bank pursuant to this part to finance
the purchase, construction or rehabilitation of rental housing units,
at least 20 percent of the units of which will be occupied by and
affordable for very low-income households.
Sec. 960.4 Specific use requirements for AHP subsidized advances or
direct subsidies.
(a) Examples of specific authorized and unauthorized uses. (1)
Authorized uses of subsidized advances or direct subsidies include, but
are not limited to, the following costs related to the purchase,
construction or rehabilitation of housing:
(i) Real property purchase and improvement costs;
(ii) Construction or rehabilitation costs, including labor and
materials, and contractor profit and overhead allowances;
(iii) Costs integral to the purchase or development of housing
including, but not limited to, project-related: Architectural,
inspection and engineering fees; local building permit and planning
fees; accounting costs; survey costs; appraisal fees; title insurance
and other insurance costs; performance bond and other bond fees;
recording fees; credit report fees; property taxes; residential
relocation costs where such costs are part of a relocation plan; legal
fees; syndication fees; costs of translating resident documents to
another language; loan commitment, loan origination and other loan
financing fees for administrative costs other than costs of
administering the AHP award; developer's fees; and marketing costs;
(iv) Prepayment fees imposed by the Bank on an applicant for a
subsidized advance that is prepaid in connection with the purchase,
construction or rehabilitation of housing, if the applicant requires
the borrower to pay such fee;
(v) Capitalization of reserve fund(s) necessary for the successful
operation of rental housing projects, including replacement reserves,
rent-up reserves, operating deficit reserves, and sinking fund reserves
used for the transfer of the project to nonprofit ownership when
associated with a low income housing tax credit transaction (26 U.S.C.
42);
(vi) Cancellation fees imposed by the Bank on an applicant for a
subsidized advance commitment that is canceled and converted to and
disbursed as a direct subsidy in connection with the purchase,
construction or rehabilitation of housing, if the applicant requires
the borrower to pay such fee;
(vii) Refinancing of an existing loan in conjunction with the
purchase, construction or rehabilitation of housing, provided the
subsidized advance or direct subsidy and the proceeds of the
refinancing are used only to retire existing debt and to benefit low-
or moderate-income households and, in the case of refinancing in order
to rehabilitate a project, there is a minimum of $2,500 per unit spent
on such rehabilitation; and
(viii) Tenant services, tenant counseling and homeowner counseling
costs that are a condition imposed by a lender to obtain financing from
such lender and which are necessary for the successful operation of the
project.
(2) Uses of subsidized advances or direct subsidies that are not
authorized include, but are not limited to, AHP administrative costs of
the applicant or the Bank.
(b) Use of funds requirements. (1)(i) The total amount of a direct
subsidy provided by the Bank to an applicant under this section must be
passed on by the applicant to the recipient.
(ii) An applicant receiving a subsidized advance from a Bank shall
extend credit to the borrower at a rate of interest equal to the rate
of interest charged on the subsidized advance plus an interest rate
spread approved by the Bank.
(2) If an applicant receives a subsidized advance or direct subsidy
from a Bank or prepayment of a loan originally made under the AHP, any
interest or other income earned by the applicant on such funds, not
including any approved fee or interest rate spread charged to the
borrower, must be forwarded to the Bank to be used for additional AHP
projects, except for interest or other income earned by the applicant
within 30 calendar days of receiving the subsidized advance or direct
subsidy or of receiving prepayment of a loan originally made under the
AHP.
(3) A direct subsidy received by an applicant from a Bank that is
provided by such applicant to a sponsor may be lent by the sponsor in
connection with an AHP rental housing project involving low-income
housing tax credits, provided the subsidy is lent by the sponsor for a
term of not less than 30 years, with all principal and interest
payments deferred until the end of such term. If such a loan is repaid
before the end of the 30-year term, the entire amount of the direct
subsidy must be repaid to the Bank.
(4) If an applicant receives a subsidized advance or direct subsidy
from a Bank, and in turn provides both a loan and a grant to a borrower
and charges an origination fee for providing the loan, then any fee
charged by the applicant for providing the grant may not be paid with
the AHP subsidized advance or direct subsidy.
Sec. 960.5 Long-term requirements.
(a) Rental housing units. (1) At least 20 percent of the rental
housing units in a project financed under the AHP with subsidized
advances or direct subsidies shall remain affordable for and occupied
by very low-income households for a minimum period of 30 years or, at
the election of the sponsor, the remaining useful life of such units,
except as provided in paragraph (a)(3) of this section. An applicant
and the project sponsor shall state in the AHP application their
commitment regarding satisfaction of the long-term income-eligibility,
affordability and income-targeting requirements contained in this
paragraph (a)(1). An applicant may commit to maintain additional units
as affordable for and occupied by low- or moderate-income households,
which commitment shall be for a minimum period of 30 years or, at the
election of the sponsor, the remaining useful life of such units,
except as provided in paragraph (a)(3) of this section. The Bank's AHP
implementation plan shall set forth the procedures that the Bank will
follow to effectively implement the requirements of this paragraph
(a)(1).
(2) A household occupying a rental housing unit subject to the
income-targeting requirement of paragraph (a)(1) of this section is
required to satisfy the income-eligibility requirement of such
paragraph applicable to such income-targeted unit, as committed to in
the AHP application, upon initial occupancy. The household may continue
to occupy the income-targeted unit even if its income increases above
the income-eligibility requirement for such unit. The unit may continue
to count toward meeting the income-targeting requirement committed to
in the AHP application, provided the rent charged remains affordable to
the household as defined in Sec. 960.1; however, if the household's
income rises above 140 percent of the income-targeting level committed
to in the AHP application, the sponsor must make the next available
rental housing unit in the project affordable to and available for
occupancy by a household whose income is at or below the income-
targeting level committed to in the AHP application for the original
unit, and once the next available rental housing unit is so occupied,
the rent charged on the unit occupied by the household whose income has
risen shall no longer be subject to the requirement that it be
affordable for households at the income-targeting level committed to in
the AHP application.
(3) An owner of an AHP-assisted rental housing project may sell the
project prior to the end of the long-term period during which the
project's rental units, or applicable portion thereof, must remain
affordable for and occupied by households with incomes at or below the
levels committed to in the AHP application; however, either:
(i) The purchaser must agree to continue the project's rental
units, or applicable portion thereof, as affordable for and occupied by
households with incomes at or below the levels committed to in the AHP
application for the remainder of the long-term period committed to in
the AHP application, and must agree to be subject to the same
restrictions on resale that applied to the seller; or
(ii) If the purchaser does not satisfy the requirements of
paragraph (a)(3)(i) of this section, and if the Bank provided a direct
subsidy to the applicant which was passed on as a grant to the seller,
the seller must repay a pro rata portion of the grant as provided in
Sec. 960.16(d)(1); or
(iii) If the purchaser does not satisfy the requirements of
paragraph (a)(3)(i) of this section, and if the Bank provided a
subsidized advance to the applicant which in turn provided a below
market rate loan to the seller, then the provisions of
Sec. 960.16(d)(2) shall apply.
(b) The Bank's AHP implementation plan shall permit the owner of an
AHP-assisted rental housing project to sell such project as provided
for in paragraph (a)(3) of this section.
Subpart D--Applications for AHP Subsidized Advances or Direct
Subsidies
Sec. 960.6 Establishment of AHP funding cycles and available AHP
subsidies.
(a) Establishment of AHP funding cycles. (1) Each Bank shall
establish at least two but no more than four AHP funding cycles per
year during which applications for subsidized advances or direct
subsidies will be accepted. The schedule for such funding cycles,
including application due dates, is to be determined by the Bank in its
discretion, but shall allow for sufficient time intervals to ensure an
adequate pool of applicants to compete in each funding cycle. The
funding cycle schedule, including application due dates, shall be
described in detail in the Bank's AHP implementation plan.
(2) Each Bank shall inform the general public and its members of
the number and dates of its AHP funding cycles for the year and the
approximate amount of available AHP subsidies for each funding cycle at
least 45 calendar days before the due date for AHP applications for the
first funding cycle for the year.
(b) Available AHP subsidies. Each Bank shall allocate comparable
amounts of AHP subsidies for each AHP funding cycle during the year.
Sec. 960.7 AHP application approval process.
(a) Application. Each Bank shall require applicants for subsidized
advances or direct subsidies to submit to the Bank an application
which, at a minimum, contains all of the information described in this
paragraph and any other information which the Bank determines is
necessary in order to take action on such application pursuant to this
part, including the following:
(1) A concise description of the purpose of the request and
proposed uses of the funds, and its relationship to the priorities
identified in Sec. 960.10(d), the targeting criterion identified in
Sec. 960.10(e), and the other objectives identified in Sec. 960.10(f);
(2) A statement of how the project will satisfy the authorized uses
and long-term requirements, including a description of legal mechanisms
to be used to ensure compliance by the project with such requirements,
contained in Secs. 960.3 and 960.5;
(3) A statement of how the project will comply with the fair
housing law requirement contained in Sec. 960.9(b);
(4) A statement of how the project will satisfy the feasibility
requirement contained in Sec. 960.9(d);
(5) A statement of how the project's sponsor satisfies the
qualification requirement contained in Sec. 960.9(e);
(6) A statement of whether a subsidized advance or direct subsidy
has been requested and the amount of such funds requested;
(7) A disclosure of whether or not the applicant has a direct or
indirect interest in the property or project. If the applicant has an
interest in the property and the application is approved, then prior to
the transfer of AHP funds to the project, an independent current
appraisal of the fair market value of such property must be provided,
unless the applicant demonstrates that the property is being sold or
otherwise transferred to the sponsor at a price substantially below the
fair market value;
(8) A statement of the project's costs; and
(9) A certification from the applicant's, the sponsor's and the
loan fund's or loan consortium's board of directors, or president or
senior officer if so delegated by the board of directors, that the
applicant, the sponsor and the loan fund or loan consortium will comply
with all requirements of this part and all obligations committed to in
the AHP application.
(b) Action on applications. (1) The Bank shall review, score and
take action on an AHP application pursuant to the requirements
contained in Secs. 960.8, 960.9 and 960.10, and shall notify the
applicant of such action no later than 60 calendar days after the
application due date for the AHP funding cycle.
(2) The board of directors of each Bank shall have the authority to
approve or disapprove AHP applications received, and may delegate such
authority to the president or other senior officers of the Bank.
(3) Within 30 calendar days of each Bank's approval of the AHP
applications for a given AHP funding cycle, the Bank shall forward to
the Board a summary of each approved AHP application. The summary
shall:
(i) Briefly describe the project, including the applicant, the loan
fund or loan consortium, if applicable, and the sponsor--whether
nonprofit, for-profit or public agency, the type of housing, the
location, the long-term period committed to, the number of housing
units including the number of units affordable for very low-, low- or
moderate-income households or for households at any other income levels
committed to in the AHP application, the development cost, other
financing sources, and special needs populations served;
(ii) State the reason for the points awarded under each of the
Bank's scoring criteria for the project;
(iii) Indicate whether a subsidized advance or direct subsidy was
approved by the Bank for the project, the use of such funds, and the
amount of such funds approved; if a subsidized advance was approved,
the summary shall indicate the amount of the advance, the advance rate,
the amortization schedule for the advance, the term to maturity, the
applicable cost of funds, and the date as of which the cost of funds
was determined;
(iv) Indicate whether the project received approval in a prior AHP
funding cycle, or if the project is an extension, expansion,
continuation or reconfiguration of a previously approved AHP project;
(v) Describe how the project will be monitored and by what entity;
(vi) Describe the legal mechanisms to be used to ensure compliance
by the project with the long-term requirement contained in Sec. 960.5;
(vii) Include a summary in chart form showing all AHP applications
received by the Bank in the particular AHP funding cycle, with the
score each application received for each scoring criterion, and the
total score received by each project; and
(viii) Include any other information required by the Board.
Subpart E--Requirements for Approval of AHP Applications
Sec. 960.8 General requirements for approval of AHP applications.
(a) Each Bank shall evaluate the AHP applications received to
determine if they satisfy the threshold criteria in Sec. 960.9. All
applications that meet the threshold criteria shall be scored pursuant
to the criteria contained in Sec. 960.10, as set forth in the Bank's
approved AHP implementation plan.
(b) The Bank shall approve the applications in descending order
starting with the highest scoring application until the total AHP
funding amount for the particular funding cycle, except for any amount
insufficient to fund the next highest scoring project, has been
allocated. The Bank also may approve the next four highest scoring
applications as alternates and, within one year of approval by the
Bank, may fund such alternates if any previously committed AHP funds
become available.
Sec. 960.9 Threshold criteria for approval of AHP applications.
Threshold criteria. An AHP application must meet all of the
threshold criteria set forth in this section in order to be considered
for scoring under Sec. 960.10 and for AHP funding approval.
(a) Authorized and required uses requirements. The AHP application
must indicate that the use of the subsidized advance or direct subsidy
set forth in the AHP application for the proposed project will comply
with the requirements for authorized and required uses of such funds
contained in Secs. 960.3, 960.4 and 960.5.
(b) Fair housing law requirements. The AHP application must
indicate that the project sponsor will comply with any applicable fair
housing law requirements and must indicate how the sponsor proposes to
affirmatively further compliance with such requirements.
(c) Twenty percent requirement and alternatives.--(1) General. (i)
Except as provided in paragraph (c)(2) of this section, a Bank shall
not offer subsidized advances or direct subsidies to applicants in
excess of that amount needed to reduce the monthly housing costs (as
defined in paragraph (c)(1)(ii) of this section) for income-eligible
households, as committed to in the AHP application, to 20 percent of
the household's gross monthly income. In projects where other forms of
federal, state, local or private subsidized assistance are being used
in conjunction with AHP subsidized advances or direct subsidies, the
total amount of subsidized assistance, including funds provided under
the AHP, shall not be in excess of the amount needed to reduce the
monthly housing costs (as defined in paragraph (c)(1)(ii) of this
section) for the income-eligible households, as committed to in the AHP
application, to 20 percent of the household's gross monthly income.
(ii) For purposes of paragraph (c)(1) of this section, monthly
housing costs are defined as:
(A) For households in AHP-assisted owner-occupied housing units,
mortgage principal and interest payments, real property taxes,
homeowners' insurance, a reasonable estimate of utility costs excluding
telephone service, and for households in AHP-assisted condominium,
cooperative, mutual housing or other housing projects involving common
ownership, those portions of any regular operating assessment or fee
allocated for principal and interest payments, taxes, insurance and a
reasonable estimate of utilities attributable to the household's share
of the common area and/or the individual unit; and
(B) For households in AHP-assisted rental housing units, rent
payments, and where they are not already included in rent payments, a
reasonable estimate of utility costs excluding telephone service.
(iii) A household subject to the 20 percent requirement set forth
in paragraph (c)(1) of this section is required to meet such
requirement only at the time it initially purchases or occupies a unit.
(2) Alternative requirements. (i) The requirement in paragraph
(c)(1) of this section shall not apply where a Bank provides subsidized
advances or direct subsidies to an applicant for a rental housing
project, which project also receives funds from a federal or state
rental housing program that requires qualifying households to pay as
rent a certain percentage of their monthly income or a designated
amount, provided that the household meets the housing payment
requirements of the other program.
(ii) The requirement in paragraph (c)(1) of this section shall not
apply where:
(A) The total amount of the AHP funds provided through a subsidized
advance or direct subsidy used to finance rehabilitation of a housing
unit by a very low-income household that already owns and occupies the
housing unit is $10,000 or less per such household; or
(B) The total amount of the AHP funds provided through a subsidized
advance or direct subsidy used to finance the purchase of a housing
unit by a very low-income household is $5,000 or less per such
household.
(iii) The requirement in paragraph (c)(1) of this section shall not
apply where the total amount of the AHP funds provided through a
subsidized advance or direct subsidy used to finance rehabilitation or
purchase of a housing unit by a low- or moderate-income household is
$5,000 or less per such household.
(iv) The requirement in paragraph (c)(1) of this section shall not
apply where a Bank provides subsidized advances or direct subsidies
ultimately benefiting a household with an income at or below the level
committed to in the AHP application, which is participating in a self-
help, sweat equity or similar housing program that requires the
household to contribute its skilled or unskilled labor valued at a
minimum of $2,000 per household, working cooperatively with others, to
construct or rehabilitate housing which the household or other program
participants are purchasing or already own and occupy, and that
involves supervision of the work performed by skilled builders or
rehabilitators.
(d) Project feasibility. The AHP application must indicate that the
proposed project is feasible in that, based on an analysis of project
sources and uses of funds, project multi-year operating pro formas for
rental housing projects, projections of sales and prices for owner-
occupied housing units, and local market conditions, the project is
financially viable and likely to be completed within a reasonable
period of time, and is likely to operate or sell and remain affordable
to the designated income-eligible households over the long-term period
committed to in the AHP application.
(e) Qualifications of sponsor. The AHP application must indicate
that the sponsor has the qualifications and ability to perform its
responsibilities as committed to in the AHP application.
(f) Creditworthiness of applicant. The applicant must have the
ability to qualify for an advance from the Bank to fund the project
described in the AHP application.
Sec. 960.10 Scoring of AHP applications.
(a) General. The Bank shall score AHP applications that satisfy all
of the threshold criteria in Sec. 960.9 according to the scoring
methodology set forth in this section which shall be included in the
Bank's approved AHP implementation plan.
(b) Priority treatment. Each application is first evaluated to
determine if it will receive priority treatment. For purposes of
determining priority, an application can receive a maximum of eight
points for each of the five priority categories set forth in paragraph
(d) of this section. A Bank in its AHP implementation plan shall define
more specifically each of the five priority categories and explain
specifically how points will be awarded for satisfying each category.
An application will be deemed to meet a particular priority category if
it is awarded at least four points for that priority category.
Applications meeting at least two priority categories shall receive
priority treatment.
(c) Order of scoring. Applications that qualify for priority
treatment pursuant to paragraph (b) of this section shall be scored
before applications that do not qualify for priority treatment. The
applications that do not qualify for priority treatment will not be
scored unless there are insufficient priority treatment applications
FR Doc. 94-412 Affordable Housing Program
to
utilize the total AHP funding amount for the funding cycle.
(d) Priorities--40 point category. The Bank shall total the points
received by each applicant for purposes of determining priority for all
of the five priority categories set forth in this paragraph (d); it
shall award 40 points to the application(s) that receive the highest
number of total points, and the remaining application scores shall be
adjusted and awarded points on a declining scale basis. The five
priority categories are as set forth in the following paragraphs (d)(1)
through (5) of this section.
(1) Government-owned properties. Applications for projects that
finance the purchase or rehabilitation of housing owned or held by the
United States Government or any agency or instrumentality of the United
States, including but not limited to the Department of Housing and
Urban Development, Resolution Trust Corporation, Farmers Home
Administration, Veterans Administration, Federal National Mortgage
Association, or Federal Home Loan Mortgage Corporation.
(2) Nonprofit or state or local government sponsored projects.
Applications for projects that finance the purchase, construction or
rehabilitation of housing the sponsor of which is a nonprofit
organization, a state or political subdivision of a state, a local
housing authority or a state housing finance agency.
(3) Special needs projects. Applications for projects that address
special needs, which shall be defined by the Bank in its AHP
implementation plan, which special needs may include but are not
limited to:
(i) Empowering the households or residents through programs such as
resident management of the property, self-help housing, homesteading,
and sweat equity;
(ii) Providing housing for special needs populations such as
homeless persons, abused or battered persons, persons with AIDS,
mentally or physically disabled persons, or persons with substance
abuse problems;
(iii) Providing housing in rural areas or areas targeted by local,
state or federal governments for community development or
revitalization through the development of affordable housing or
economic investment; or
(iv) Providing housing with special services to meet the needs of
low- or moderate-income households including, but not limited to, child
care, job training, medical care, substance abuse programs, independent
living skill training, and rental household and homeowner household
counseling.
(4) District Bank priority. Applications for projects that meet one
or more priorities recommended by the Bank's Advisory Council and
adopted by the Bank's board of directors that each address a housing
need in the Bank's district and are consistent with the purposes of
this part. The Bank shall describe in its AHP implementation plan how
the points for the priority or priorities will be distributed.
(5) Economic mobility priority. Applications for projects that
provide housing for low- or moderate-income households that move from
low- or moderate-income neighborhoods or housing projects to
neighborhoods, mixed-income buildings or owner-occupied housing
developments in which at least 50 percent of the households have
incomes above the median income for the area, as published by the U.S.
Department of Housing and Urban Development.
(e) Targeting--20-point category. An application can receive a
maximum of 20 points for this category. The Bank shall award points to
applications based on the extent to which the project(s) serve(s) the
greatest percentage of very low-, low- and moderate-income households,
in that priority order. In the alternative, if a weighted-average
scoring methodology is provided in the Bank's AHP implementation plan,
the Bank shall award points to an application based on the extent to
which the project has the lowest weighted-average income determined by
multiplying the percentage of units reserved for households at certain
income levels by those incomes expressed as a percentage of median
income, and adding the totals. Applications shall be scored relative to
each other with the maximum number of points allowable awarded to the
application(s) that best achieve(s) the targeting objective, and the
remaining application scores shall be adjusted and awarded points on a
declining scale basis. However, owner-occupied housing projects shall
be scored as one group and rental housing projects shall be scored as a
separate group.
(f) Other objectives. The five other objectives categories are as
set forth in the following paragraphs (f)(1) through (5) of this
section. The Bank in its AHP implementation plan shall define more
specifically each of the five other objectives categories and explain
specifically how points will be awarded for satisfying each category.
For each category, the Bank shall award the maximum number of points
allowable for such category to the application(s) that best achieve(s)
the objective, and the remaining application scores shall be adjusted
and awarded points on a declining scale basis.
(1) AHP subsidy per unit--10-point category. An application can
receive a maximum of 10 points for this category. The Bank shall award
points to applications based on the extent to which the project
proposes to use the least amount of AHP subsidy per AHP-subsidized
unit. Projects should be scored relative to each other; however, owner-
occupied housing projects shall be scored as one group and rental
housing projects shall be scored as a separate group. This scoring
criterion may not include a leveraging criterion whereby the
application is scored based on the percentage of the project's total
development cost that is to be financed with the AHP subsidy.
(2) Applicant participation--5-point category. An application can
receive a maximum of 5 points for this category. The Bank shall award
points to applications based on the extent to which the project
involves participation by applicants other than the receipt of a
subsidized advance or direct subsidy under the AHP. Such participation
can be financial or non-financial, including but not limited to debt or
equity financing of the project, grants to the project, applicant
involvement on the boards of nonprofit sponsors, and applicant
provision of technical assistance to the nonprofit sponsors for the
project.
(3) Community involvement--10-point category. An application can
receive a maximum of 10 points for this category. The Bank shall award
points to applications based on the extent to which there is
demonstrated support for the project by local community organizations
and individuals other than as project sponsors, such as through the
commitment by such organizations and individuals of funds, goods and
services, and volunteer labor.
(4) Community stability--10-point category. An application can
receive a maximum of 10 points for this category. The Bank shall award
points to applications based on the extent to which the project(s)
maximize(s) community stability, such as by: committing to a greater
long-term period pursuant to Sec. 960.5; revitalizing vacant or
abandoned properties or being integrally part of a neighborhood
stabilization plan, if such revitalization or stabilization is not
identified as a special needs category by the Bank pursuant to
Sec. 960.10(d)(3)(iii); and not displacing low- or moderate-income
households, or if such displacement will occur, indicating how such
households will be assisted to minimize the impact of such
displacement.
(5) Innovation--5-point category. An application can receive a
maximum of 5 points for this category. The Bank shall award points to
applications based on the extent to which the project(s) involve(s) a
particularly new or unusual approach, either financial or non-
financial, for meeting the requirements of this part.
Sec. 960.11 Modifications of approved AHP applications.
(a) An applicant that seeks a modification of an approved AHP
application before completion and occupancy of the project must submit
a request for such modification in writing to the Bank for review and
approval. A modification is any change that affects or could
potentially affect the material facts under which the application was
originally evaluated and scored.
(b) A request for a modification of an approved AHP application
must include, at a minimum:
(1) A description of how the proposed modification differs from the
original application;
(2) The reason for the proposed modification; and
(3) Any other information that the Bank determines is necessary to
review the proposed modification.
(c)(1) The Bank shall review the request for modification, shall
re-score the application as proposed to be modified according to the
scoring criteria used in the AHP funding cycle in which the application
was originally approved, and may approve such request if the following
factors are satisfied:
(i) The project as proposed to be modified continues to meet all of
the requirements of this part; and
(ii) The project as proposed to be modified continues to score high
enough that it would have been approved in its AHP funding cycle.
(2) If the application does not satisfy the requirements in
paragraph (c)(1) of this section, the Bank in its discretion may
approve the request for modification if the reason for the modification
is due to circumstances outside the control of the applicant or
sponsor.
(d) The Bank shall forward to the Board a detailed summary of any
modification of an AHP application approved by the Bank, including how
the Bank re-scored the project, within 30 calendar days of the approval
of such modification.
Subpart F--Use and Verification at Initial Disbursement of AHP
Subsidized Advances or Direct Subsidies
Sec. 960.12 Use of AHP subsidized advances or direct subsidies within
reasonable period of time and verification of reasonable progress.
(a) The Bank shall in its AHP implementation plan identify what
constitutes reasonable progress by the sponsor towards using subsidized
advances or direct subsidies within a reasonable period of time after
the approval of an AHP application for different types of projects, and
explain how it intends to verify such reasonable progress.
(b) The sponsor must demonstrate that reasonable progress is being
made towards using the requested funds within a reasonable period of
time after approval of the AHP application, as determined by the Bank
under paragraph (a) of this section.
(c) The Bank shall verify the efforts of the sponsor to determine
whether it has satisfied the requirement in paragraph (b) of this
section.
(d) If the sponsor fails to satisfy the requirement in paragraph
(b) of this section, the Bank shall cancel the AHP award, and shall not
disburse any subsidized advances or direct subsidies through the
applicant to the sponsor, and the full amount of any previously
disbursed subsidized advances or direct subsidies shall be returned to
the Bank.
Sec. 960.13 Verification at initial disbursement of AHP subsidized
advances or direct subsidies.
At the time of initial disbursement of a subsidized advance or a
direct subsidy by a Bank for an approved AHP application, the Bank
shall verify in writing that the project complies with all applicable
requirements contained in Sec. 960.9 and all obligations committed to
in the approved AHP application. The Bank shall verify the amount of
subsidy being provided in connection with the application and being
charged against the AHP fund. The Bank shall include in its AHP
implementation plan its verification procedures for such purposes.
Subpart G--Monitoring and Reporting Requirements
Sec. 960.14 Monitoring requirements.
(a) Monitoring by the Banks. Each Bank has the responsibility to
monitor the projects funded through its AHP according to the monitoring
requirements described in this section.
(b) Monitoring plan. Each Bank shall include in its AHP
implementation plan an explanation of how it intends to meet the
monitoring requirements of this section.
(c) Monitoring by Bank's designee. A Bank may contract with an
applicant, a state housing finance agency, or other entity to perform
the tasks required to meet the monitoring requirements described in
paragraphs (e) through (h) of this section; however, the Bank remains
ultimately responsible for compliance with the monitoring requirements
of this section.
(d) Monitoring during construction or rehabilitation. If subsidized
advances or direct subsidies are used to finance construction or
rehabilitation of a project, the Bank shall require the applicant to
monitor the construction or rehabilitation until completion, and to
make progress reports to the Bank, as required under Sec. 960.15(b)(2).
(e) Monitoring long-term requirements.--(1) Owner-occupied
housing.--(i) Initial certification. At the time a household enters
into a purchase contract for an AHP-assisted housing unit or at the
closing on the financing for such unit, or at the time a household that
already owns a housing unit receives a commitment of a loan or a grant
pursuant to the AHP, the Bank or its designee shall obtain a
certification from the sponsor, as required under Sec. 960.15(c)(1)(i),
that the household has an income at or below the level committed to in
the AHP application.
(ii) Monitoring after initial sale. (A) During the required long-
term period applicable to an owner-occupied housing unit assisted by a
grant provided under the AHP, the Bank or its designee shall monitor
the unit to determine whether it has been sold to a household with an
income that exceeds the level committed to in the AHP application.
(B) Monitoring shall include, but is not limited to, periodic
review of relevant reports or certifications obtained from the sponsor,
including reports and certifications received pursuant to
Sec. 960.15(c)(1)(ii) and, at least on a sample basis, periodic review
of land title records at intervals to be determined by the Bank, based
on the amount of funds received by the project pursuant to the AHP, the
type and complexity of the project, or other factors deemed relevant by
the Bank.
(2) Rental housing.--(i) Restriction on transfer. The Bank shall
require an AHP-assisted rental housing project to be subject to a deed
restriction or other legally enforceable mechanism which requires that
upon sale of the project prior to the end of the long-term period
during which the project's rental units, or portion thereof, must
remain affordable for and occupied by households with incomes at or
below the levels committed to in the AHP application, the Bank or its
designee receives notice of the sale, and:
(A) The project's rental units, or portion thereof, must continue
to be affordable for and occupied by households with incomes at or
below the levels committed to in the AHP application for the remainder
of the long-term period committed to in the AHP application, and the
purchaser agrees to be subject to the same restrictions on resale that
applied to the seller; or
(B) If the purchaser does not satisfy the requirements in paragraph
(e)(2)(i)(A) of this section, and if the Bank provided a direct subsidy
to the applicant which was passed on as a grant to the seller, the
seller must repay the grant as provided in Sec. 960.16(d)(1); or
(C) If the purchaser does not satisfy the requirements in paragraph
(e)(2)(i)(A) of this section, and if the Bank provided a subsidized
advance to the applicant which in turn provided a below market rate
loan to the seller, then the provisions of Sec. 960.16(d)(2) shall
apply.
(ii) Initial certification. Upon initial full occupancy of the
units in an AHP-assisted rental housing project, or one year after
initial disbursement of the subsidized advance or direct subsidy,
whichever occurs first, the Bank or its designee shall obtain a
certification from the sponsor or the owner, as required under
Sec. 960.15(c)(2), that the project's units, or portion thereof, are
affordable for and occupied by households with incomes at initial
occupancy at or below the levels committed to in the AHP application.
(iii) Monitoring after initial occupancy. (A) During the long-term
period for which the units, or portion thereof, of an AHP-assisted
rental housing project must remain affordable for and occupied by
households with incomes at or below the levels committed to in the AHP
application, the Bank or its designee shall monitor the project to
determine whether the project's units, or portion thereof, remain
affordable for and occupied by households with incomes at or below the
levels committed to in the AHP application.
(B) Monitoring shall include, but is not limited to, periodic
review of relevant household income and rent reports or certifications
obtained from the sponsor or the owner, including certifications
received pursuant to Sec. 960.15(c)(2) and, at least on a sample basis,
periodic inspections of the project at intervals to be determined by
the Bank, based on the amount of funds received by the project pursuant
to the AHP, the type and complexity of the project, or other factors
deemed relevant by the Bank.
(f) Monitoring compliance with the special needs priority. If an
applicant in its AHP application commits to fund a housing project that
will address a special need pursuant to Sec. 960.10(d)(3), either
through providing units for persons with a special need, or through
providing a special service for occupants, as defined in the Banks AHP
implementation plan:
(1) The Bank or its designee shall obtain a certification from the
sponsor or owner upon completion and occupancy of the project, as
required under Sec. 960.15(c)(3), that the project's units, or portion
thereof, are occupied by persons with such special need, as committed
to in the AHP application, or that a special service is being provided,
as committed to in the AHP application; and
(2) In the case of a special service being provided pursuant to
Sec. 960.10(d)(3), the Bank or its designee shall monitor the project,
as determined by the Bank in its AHP implementation plan, for at least
one year from the date of initial full occupancy of the project, to
verify that such special service continues to be provided to the
households, as committed to in the AHP application.
(g) Monitoring compliance with the District Bank priority or
priorities. (1) If an applicant in its AHP application commits to fund
a project that meets a District Bank priority or priorities established
by the Bank pursuant to Sec. 960.10(d)(4), the Bank or its designee
shall monitor the project to verify that it continues to meet the Bank
priority or priorities.
(2) The Bank shall set forth in its AHP implementation plan the
nature, frequency and duration for monitoring compliance with the
District Bank priority or priorities.
(h) Monitoring compliance with the economic mobility priority. If
an applicant in its AHP application commits to fund a project that
meets the requirements of Sec. 960.10(d)(5), the Bank or its designee
shall obtain a certification from the sponsor or the owner upon
completion and full occupancy of the project, as required under
Sec. 960.15(c)(4), that the sponsor or the owner has met such
requirements as committed to in the AHP application.
Sec. 960.15 Reporting requirements.
(a) Reporting by the Banks. Each Bank shall provide accurate and
timely reports and documentation to, and in the format requested by,
the Board concerning the Bank's AHP, as the Board may from time to time
require.
(b) Reporting by applicants. (1) Each Bank shall require an
applicant receiving a subsidized advance or direct subsidy pursuant to
this part to report at least annually to the Bank on the manner in
which it has used the funds, with such reports continuing until the
funds have been fully disbursed by the applicant.
(2) If subsidized advances or direct subsidies are used to finance
construction or rehabilitation of a project, the Bank shall require the
applicant to report to the Bank at reasonable intervals determined by
the Bank, and described in the Bank's AHP implementation plan, on the
progress of the construction or rehabilitation until completion.
(c) Reporting by the sponsor or owner.--(1) Owner-occupied housing
units--(i) Initial certification. Where a subsidized advance or direct
subsidy is used to finance the purchase of an owner-occupied housing
unit, the Bank shall require the sponsor to certify, at the time a
household enters into a purchase contract for such unit or at the
closing on the financing for such unit, that the unit has been sold to
a household with an income at or below the level committed to in the
AHP application. Where a subsidized advance or direct subsidy is used
to finance the rehabilitation of an owner-occupied housing unit, the
Bank shall require the sponsor to certify at the time a loan or grant
is committed to fund such rehabilitation that the household that owns
and occupies the unit has an income at or below the level committed to
in the AHP application.
(ii) Reports of subsequent sale. If an owner-occupied housing unit
assisted by a grant provided under the AHP is not subject to a deed
restriction or other legally enforceable mechanism restricting transfer
of ownership to a household with an income at or below the level
committed to in the AHP application, the Bank shall require the sponsor
to report to the Bank or its designee, at least annually for the
required long-term period, the number of any such units that are sold
to households whose incomes exceed the level committed to in the AHP
application, and to certify to the Bank that it is continuing to
satisfy its commitment, pursuant to its legally binding agreement with
the Bank.
(2) Rental housing units--certification. The Bank shall require the
sponsor or owner to certify, upon initial full occupancy of the units
in an AHP-assisted rental housing project but no later than one year
after initial disbursement of the subsidized advance or direct subsidy,
and annually thereafter, that the project's units, or portion thereof,
are affordable for and occupied by households with incomes at or below
the levels committed to in the AHP application.
(3) Special needs--initial certification. If an applicant in its
AHP application commits to fund a housing project that will provide
housing units for persons with a special need, or will provide a
continuing special service to occupants pursuant to Sec. 960.10(d)(3),
the Bank shall require the sponsor or the owner to certify upon
completion and full occupancy of the project that the project's units,
or portion thereof, are occupied by persons with such special needs or
that a special service is being provided to occupants, as committed to
in the AHP application.
(4) Economic mobility--certification. If an applicant in its AHP
application commits to fund a housing project that meets the
requirements for economic mobility under Sec. 960.10(d)(5), the Bank
shall require the sponsor or the owner to certify upon completion and
full occupancy of the project that the sponsor or owner has met such
requirements, as committed to in the AHP application.
(d) Other reports. The Bank shall require applicants or sponsors to
provide such other reports as the Bank deems necessary in order to
fulfill its monitoring obligations under Sec. 960.14.
Subpart H--Corrective and Remedial Actions for Fraud or Non-
Compliance With AHP Requirements
Sec. 960.16 Corrective and remedial actions for fraud or non-
compliance.
(a) Fraud or willful non-compliance. (1) In the event of an
applicant's, sponsor's or owner's fraud with respect to the
requirements of this part, the Bank shall exclude the applicant,
sponsor or owner, respectively, on a permanent basis, from future
participation in the AHP. In the event of an applicant's, sponsor's or
owner's willful non-compliance with the requirements of this part, the
Bank shall suspend the applicant, sponsor or owner, respectively, at
least on a temporary basis, from future participation in the AHP during
the period such willful non-compliance continues, and may exclude such
party permanently from future participation in the AHP.
(2) In the event of an applicant's fraud or willful non-compliance
with respect to the requirements of this part, the Bank shall recover
from the applicant the full amount of the AHP subsidy provided to the
project.
(3)(i) In the event of a sponsor's or owner's fraud or willful non-
compliance with respect to the requirements of this part, the full
amount of the AHP subsidy shall be recovered from the sponsor or owner
by the applicant and returned to the Bank or, if previously agreed to
by the Bank, shall be recovered by the Bank from the sponsor or owner.
If efforts to recover the AHP subsidy from the sponsor or owner are
unsuccessful, the applicant shall not be liable for such funds.
(ii) The applicant shall have in place either:
(A) A legally binding agreement or other legally enforceable
mechanism that permits it to recover from the sponsor or owner the full
amount of the AHP subsidy provided to the project in the event of a
sponsor's or owner's fraud or willful non-compliance with respect to
the requirements of this part; or
(B) If the Bank agrees and such an agreement is legally
enforceable, a three-party agreement that includes the Bank, the
sponsor or owner and the applicant that permits the Bank to recover
from the sponsor or owner the full amount of the AHP subsidy provided
to the project in the event of a sponsor's or owner's fraud or willful
non-compliance with respect to the requirements of this part.
(4) The Board in its discretion may grant a waiver of any required
remedial actions under this paragraph (a) upon written request by the
Bank, applicant, sponsor or owner.
(b) Other types of non-compliance. In the event of an applicant's,
sponsor's or owner's non-compliance with the requirements of this part
that is not willful, such as due to inadvertent errors by such party or
changes in circumstances that are outside such party's control, the
Bank shall provide the party a reasonable period of time in which to
take reasonable efforts, pursuant to a compliance plan approved by the
Bank, to remedy the non-compliance. The Bank in its discretion may
exclude the applicant, sponsor or owner from participation in the AHP
while such party is under a compliance plan, or in its discretion may
require the applicant to increase the long-term period committed to in
its AHP application for the project by the amount of time the project
has been in non-compliance. If the applicant, sponsor or owner takes no
reasonable efforts to comply with the compliance plan, then such party
is in willful non-compliance with the requirements of this part and is
subject to the remedial actions contained in paragraph (a) of this
section. If the applicant, sponsor or owner takes reasonable efforts
pursuant to the compliance plan to remedy the non-compliance under this
paragraph (b) and such efforts are unsuccessful, the applicant, sponsor
or owner would be subject to the remedial actions contained in
paragraph (a) of this section, but may apply to the Bank for a waiver
of any such required remedial actions. The Bank shall report to the
Board in writing on any waivers approved pursuant to this paragraph (b)
within 30 calendar days of such approval.
(c) Sale of AHP-assisted owner-occupied housing unit to income-
ineligible household. Except as provided in paragraph (c)(3) of this
section, in the event that a household sells its AHP-assisted owner-
occupied housing unit to a household whose income exceeds the level
committed to in the AHP application prior to the end of the required
long-term period, then the provisions of either paragraph (c)(1) or (2)
of this section shall apply.
(1) If the Bank provided a direct subsidy to the applicant which
was passed on as a grant to the seller, the Bank shall require the
seller to repay a pro rata share, except for de minimis amounts, of the
grant received by such seller, reduced for every year the seller owned
the unit, to be repaid from any net gain from the sale of the unit
after deduction for sales expenses, and to be returned to the Bank,
except that the Bank in its discretion may waive such requirement if
the imposition of such requirement will cause undue hardship on the
seller, as defined by the Bank in its AHP implementation plan.
(2) If the Bank provided a subsidized advance to the applicant and
the applicant provided a below market rate loan to the seller, the
applicant shall either repay to the Bank that portion of the advance
used to make the loan to the seller or the Bank shall convert that
portion of the advance used to make the loan to the seller to a market
rate advance with an interest rate equal to the market rate of interest
at the time the advance was made, and any unused AHP subsidy which had
been set aside by the Bank to subsidize that portion of the advance
used to make the loan to the seller shall be made available by the Bank
for additional AHP projects.
(3) The requirements of paragraphs (c)(1) and (2) of this section
shall not apply provided the sponsor, pursuant to a legally binding
agreement with the Bank, assists another household with an income at or
below the level committed to in the AHP application in the manner
originally committed to in the AHP application.
(d) Sale of AHP-assisted rental housing project. In the event that
the owner of an AHP-assisted rental housing project sells the project
prior to the end of the long-term period during which the project's
rental units, or portion thereof, must remain affordable for and
occupied by households with incomes at or below the levels committed to
in the AHP application, and the purchaser does not agree to maintain
the project according to such commitments and to be subject to the same
restrictions on resale that applied to the seller, then the provisions
of either paragraph (d)(1) or (2) of this section shall apply.
(1) If the Bank provided a direct subsidy to the applicant which
was passed on as a grant to the seller, the Bank shall require the
seller to repay a pro rata share, except for de minimis amounts, of the
grant received by such seller, reduced for every year the seller owned
the unit, to be repaid from any net gain from the sale of the project
after deduction for sales expenses, and to be returned to the Bank,
except that the Bank in its discretion may waive such requirement if
the imposition of such requirement will cause undue hardship on the
seller, as defined by the Bank in its AHP implementation plan; or
(2) If the Bank provided a subsidized advance to the applicant and
the applicant provided a below market rate loan to the seller, the
applicant shall either repay the advance to the Bank or the Bank shall
convert the advance to a market rate advance with an interest rate
equal to the market rate of interest at the time the advance was made,
and any unused AHP subsidy which had been set aside by the Bank to
subsidize the advance shall be made available by the Bank for
additional AHP projects.
Subpart I--AHP Applications Involving Loan Funds and Loan Consortia
Sec. 960.17 AHP applications involving loan funds and loan consortia.
(a) General. (1) An applicant may use a subsidized advance or a
direct subsidy to make a loan or a grant to a loan fund or loan
consortium as provided in paragraph (c) of this section.
(2) AHP applications involving the use of loans or grants by loan
funds or loan consortia pursuant to the AHP are governed by the
provisions of this part, except as otherwise provided in this section.
(b) AHP application approval requirements. The requirements for
approval of an AHP application that proposes to use subsidized advances
or direct subsidies to make a loan or a grant to a loan fund or a loan
consortium are governed by the provisions of Sec. 960.8, except that:
(1) The application will be scored on the criteria that the loan
fund or loan consortium proposes to use to select projects that will
ultimately receive a loan or grant from the loan fund or loan
consortium that is subsidized by the AHP; and
(2) The Bank shall review and shall require the applicant to review
each new rental housing project funded by a loan fund or loan
consortium prior to disbursing the loan or grant to ensure that:
(i) The project meets the threshold requirements of Sec. 960.9; and
(ii) The project meets the criteria committed to in the approved
AHP application.
(c) Use of funds.--(1) Subsidized advances. If an applicant
receives a subsidized advance and uses the proceeds of the advance to
make a loan to a loan fund or loan consortium, the loan fund or loan
consortium shall extend credit to the borrower at a rate of interest
equal to the rate of interest charged on the subsidized advance plus a
reasonable interest rate spread approved by the Bank. The applicant and
the loan fund or loan consortium may determine between themselves what
proportion of the interest rate spread the applicant and the loan fund
or loan consortium will share.
(2) Direct subsidies. (i) If an applicant receives a direct subsidy
from a Bank and in turn provides a grant to a loan fund or loan
consortium, the loan fund or loan consortium must either:
(A) Pass the entire grant on to the recipient;
(B) Use the entire grant to lower the interest rate on a loan to
the borrower; or
(C) Lend the entire grant to the borrower to finance a rental
housing project for a term of not less than 30 years, with all
principal and interest payments deferred until the end of such term. If
such loan is repaid before the end of the 30-year term, the entire
amount of the grant must be repaid to the applicant, which in turn must
forward the funds to the Bank to be used for additional AHP projects.
(ii) If a loan fund or loan consortium provides both a loan and a
grant to a borrower and the loan fund or loan consortium charges an
origination fee for providing the loan, then any fee charged by the
loan fund or loan consortium for providing the grant may not be paid
with AHP subsidized advances or direct subsidies.
(iii) Calculation of interest rate. When a loan fund or loan
consortium receives a grant from an applicant pursuant to the AHP and
uses the grant to lower the interest rate on a loan to the borrower,
the interest rate calculation must be consistent with the procedure
used by the Bank for calculating the amount of AHP subsidy needed for a
subsidized advance, taking into account the source of funds used by the
loan fund or loan consortium for its loans and the rate that normally
would be charged for a loan of the type and term that is provided to
the borrower.
(3) Interest or other income earned on loans or grants. If an
applicant receives a subsidized advance or direct subsidy from a Bank
and in turn provides a loan or grant to a loan fund or loan consortium,
any interest or other income earned by the loan fund or loan consortium
on such funds, not including any approved fee or interest rate spread
charged to the borrower, either:
(i) Must be used by the loan fund or loan consortium to provide
funds for additional projects meeting the threshold requirements in
Sec. 960.9 and the criteria committed to in the approved AHP
application; or
(ii) Must be forwarded to the applicant, which in turn must forward
the funds to the Bank to be used for additional AHP projects.
(4) Loans or grants from multiple AHP funding cycles. If loans or
grants received by a loan fund or loan consortium pursuant to one AHP
funding cycle are combined with loans or grants received by such entity
pursuant to another AHP funding cycle in a single rental housing
project, the loan fund or loan consortium shall require the recipient
of the funds to follow the requirements for the use of such funds from
the AHP funding cycle that is more restrictive as to the approved AHP
criteria. The requirement does not apply when loans or grants received
by a loan fund or loan consortium pursuant to separate AHP funding
cycles are combined to finance a single owner-occupied housing project;
however, the loan fund or loan consortium in its discretion may require
the recipient of the funds to follow the requirements for the use of
such funds from the AHP funding cycle that is more restrictive as to
the approved AHP criteria.
(5) Using repayments of loans within reasonable period of time. Any
loans provided by a loan fund or loan consortium pursuant to the AHP
that are repaid to such entity must be re-lent or provided as grants by
such entity within a reasonable period of time after such repayments,
or must be repaid to the applicant, which in turn must repay such funds
to the Bank, and must be made available by the Bank for additional AHP
projects. The Bank shall in its AHP implementation plan identify what
constitutes a reasonable period of time for such purposes.
(d) Monitoring and reporting--(1) General. Where loans or grants
are provided by an applicant pursuant to the AHP to a loan fund or loan
consortium which uses the funds to finance owner-occupied or rental
housing units, the Bank shall:
(i) Monitor such units according to the monitoring requirements of
Sec. 960.14(e) through (h);
(ii) Require the sponsor or owner of a project receiving loans or
grants from the loan fund or loan consortium to submit such reports and
certifications to the Bank as are required under Sec. 960.15(c); and
(iii) Require the loan fund or loan consortium to report to the
Bank any new loan or grant made using the repayments of loans by the
borrower. If a loan fund or loan consortium receives loans or grants
from an applicant pursuant to separate AHP funding cycles, the use of
such funds must be reported separately.
(2) Exceptions. (i) The Bank may contract with the applicant to
meet the monitoring requirements of Sec. 960.14 (e) through (h), in
which case the applicant shall:
(A) Monitor the AHP-assisted housing units according to the
monitoring requirements of Sec. 960.14 (e) through (h);
(B) Require the sponsor or owner of the project to submit to the
applicant such reports and certifications as are required under
Sec. 960.15(c); and
(C) Require the loan fund or loan consortium to report to the
applicant any new loan or grant made using the repayments of loans by
the borrower. If a loan fund or loan consortium receives loans or
grants from an applicant pursuant to separate AHP funding cycles, the
use of such funds must be reported separately.
(ii) The Bank may contract with the loan fund or loan consortium to
meet the monitoring requirements of Sec. 960.14 (e) through (h), in
which case the loan fund or loan consortium shall:
(A) Monitor the AHP-assisted housing units according to the
monitoring requirements of Sec. 960.14 (e) through (h);
(B) Require the sponsor or owner of the project to submit to the
loan fund or loan consortium such reports and certifications as are
required under Sec. 960.15(c); and
(C) Report to the Bank any new loan or grant made using the
repayments of loans by the borrower. If a loan fund or loan consortium
receives loans or grants from an applicant pursuant to separate AHP
funding cycles, the use of such funds must be reported separately.
(e) Corrective and remedial actions for fraud or non-compliance
with AHP requirements. (1) A loan fund or loan consortium receiving
loans or grants from an applicant pursuant to the AHP and the project
sponsors or owners receiving loans or grants from a loan fund or loan
consortium are subject to the corrective and remedial actions contained
in Sec. 960.16 for fraud and non-compliance with respect to the
requirements of this part.
(2)(i) In the event of a loan fund's or loan consortium's fraud or
willful non-compliance with respect to the requirements of this part,
the full amount of the AHP subsidy shall be recovered from the loan
fund or loan consortium by the applicant and returned to the Bank or,
if previously agreed to by the Bank, shall be recovered by the Bank
from the loan fund or loan consortium.
(ii) An applicant that provides loans or grants to a loan fund or
loan consortium pursuant to the AHP shall have in place either:
(A) A legally binding agreement or other legally enforceable
mechanism that permits it to recover from the loan fund or loan
consortium, in the event of fraud or willful non-compliance by the loan
fund or loan consortium with respect to the requirements of this part,
the full amount of the AHP subsidy; or
(B) If the Bank agrees and such an agreement is legally
enforceable, a three-party agreement that includes the Bank, the
applicant and the loan fund or loan consortium that permits the Bank to
recover from the loan fund or loan consortium, in the event of fraud or
willful non-compliance by the loan fund or loan consortium with respect
to the requirements of this part, the full amount of the AHP subsidy.
(3)(i) In the event of a sponsor's or owner's fraud or willful non-
compliance with respect to the requirements of this part, the full
amount the AHP subsidy shall be recovered by the loan fund or loan
consortium from the sponsor or owner, to be used for additional AHP
projects.
(ii)(A) The loan fund or loan consortium shall have in place a
legally binding agreement or other legally enforceable mechanism that
permits it to recover from the sponsor or owner the full amount of the
AHP subsidy provided to the project in the event of the sponsor's or
owner's fraud or willful non-compliance with respect to the
requirements of this part, and the applicant shall have in place a
legally binding agreement or other legally enforceable mechanism that
permits it to recover from the loan fund or loan consortium such amount
recovered by the loan fund or loan consortium from the sponsor or
owner; or
(B) The applicant shall have in place, if the Bank agrees and such
agreement is legally enforceable, a four-party agreement that includes
the Bank, the applicant, the loan fund or loan consortium and the
sponsor or owner, that permits the Bank to recover from the sponsor or
owner the full amount of the AHP subsidy provided to the project in the
event of the sponsor's or owner's fraud or willful non-compliance with
respect to the requirements of this part.
(4) The Board in its discretion may grant a waiver of any required
remedial actions under this paragraph (e) for fraud or willful non-
compliance with respect to the requirements of this part, upon written
request by the Bank, applicant, loan fund or loan consortium, sponsor
or owner.
Subpart J--Required AHP Contributions
Sec. 960.18 Required annual AHP contributions.
Each Bank shall fund its AHP in accordance with the following
formula:
(a) In 1994, the greater of:
(1) 6 percent of the Bank's net earnings for the previous year; or
(2) That Bank's pro rata share of an aggregate of $75 million to be
contributed in total by the Banks, such proration being made on the
basis of the net earnings of the Banks for the previous year.
(b) In 1995 and each year thereafter, the greater of:
(1) 10 percent of the Bank's net earnings for the previous year; or
(2) That Bank's pro rata share of an aggregate of $100 million to
be contributed in total by the Banks, such proration being made on the
basis of the net earnings of the Banks for the previous year.
Sec. 960.19 Temporary suspension of AHP contributions.
(a) Application for temporary suspension. (1) If a Bank finds that
the contributions required pursuant to Sec. 960.18 are contributing to
the financial instability of the Bank, the Bank shall notify the Board
promptly, and may apply in writing to the Board for a temporary
suspension of such contributions.
(2) A Bank's application for a temporary suspension of
contributions shall:
(i) State the period of time for which the Bank seeks a suspension;
(ii) State the grounds for a suspension;
(iii) Include a plan for returning the Bank to a financially stable
position; and
(iv) Be accompanied by the Bank's preceding year's annual financial
report, if available, and the Bank's most recent quarterly and monthly
financial statements and any other financial data the Bank wishes the
Board to consider.
(b) Board review of application for temporary suspension.--(1)
Grounds for approval of application. In reviewing a Bank's application
for a temporary suspension of contributions to determine the Bank's
financial instability, the Board shall consider the following factors:
(i) Whether the Bank's earnings are severely depressed. The Board
shall consider the extent to which the Bank's quarterly or annual net
earnings have decreased from the preceding quarter or year, and whether
such decline is projected to continue;
(ii) Whether there has been a substantial decline in the Bank's
membership capital. The Board shall consider the extent to which the
Bank's paid-in membership capital has declined in any given quarter or
year, and whether such decline is projected to continue;
(iii) Whether there has been a substantial reduction in the Bank's
advances outstanding. The Board shall consider the extent to which the
Bank's level of advances has declined in any given quarter or year, and
whether such decline is projected to continue; and
(iv) Whether any other financial condition exists with respect to
the Bank which has resulted in, or is likely to result in, the
financial instability of the Bank.
(2) Limitations on grounds for approval of application. The Board
shall disapprove an application for a temporary suspension if it
determines that the Bank's reduction in earnings is a result of:
(i) A change in the terms of advances (other than subsidized
advances) to members which is not justified by market conditions;
(ii) Inordinate operating and administrative expenses; or
(iii) Mismanagement.
(c) Board decision. The Board shall approve or disapprove a Bank's
application for a temporary suspension within 30 calendar days of
receipt of such application, and the Board's decision shall be in
writing and shall be accompanied by specific findings and reasons for
its action. A copy of the Board's decision shall be forwarded to each
of the Banks.
(d) Board approval of application for temporary suspension. (1) If
the Board approves a Bank's application for a temporary suspension, the
Board's written decision shall specify the period of time such
suspension shall remain in effect.
(2) During the term of a temporary suspension approved by the
Board, the affected Bank shall provide to the Board such financial
reports as the Board shall require to monitor the financial condition
of the Bank, and the Board shall continue to monitor the Bank's
financial condition.
(3) If, prior to the conclusion of the temporary suspension period,
the Board determines that the Bank has returned to a position of
financial stability, the Board may, upon written notice to the Bank,
terminate the temporary suspension.
(e) Application for extension of temporary suspension period. (1)
If a Bank's board of directors determines that the Bank has not
returned to, or is not likely to return to, a position of financial
stability at the conclusion of the temporary suspension period, the
Bank may apply in writing for an extension of the temporary suspension
period, stating the grounds for such extension.
(2) The Board shall approve or disapprove a Bank's application for
an extension of a temporary suspension period within 30 calendar days
of receipt of such application.
(3) The Board's decision on an application for an extension of a
temporary suspension period shall be in writing, shall be accompanied
by specific findings and reasons for such action, and shall state the
effective date and time period if an extension is approved.
(f) Notice to Congress. (1) The Board shall notify the Committee on
Banking, Finance and Urban Affairs of the House of Representatives and
the Committee on Banking, Housing and Urban Affairs of the Senate not
less than 60 calendar days before any temporary suspension (or
extension of such suspension) approved pursuant to this section takes
effect.
(2) A temporary suspension (or extension of such suspension) shall
become effective as determined by the Board, unless a joint resolution
of Congress is enacted disapproving such suspension (or extension
thereof).
Subpart K--Affordable Housing Reserve Fund
Sec. 960.20 Affordable Housing Reserve Fund.
(a) If a Bank fails to use or commit the full amount it is required
to contribute to the AHP in any year pursuant to Sec. 960.18, 90
percent of the amount that has not been used or committed in that year
shall be deposited by the Bank in an Affordable Housing Reserve Fund
established and administered by the Board. The 10 percent of the unused
and uncommitted amount retained by the Bank should be fully used or
committed by the Bank during the following year, and any remaining
portion must be deposited in the Affordable Housing Reserve Fund. A
Bank is deemed to have used or committed its required contribution
where amounts are remaining at the end of the year because funding the
next highest ranking project would exceed the Bank's required AHP
contribution for the year. Such amounts remaining shall be combined
with returned AHP funds to fund the next highest scoring AHP project or
projects, or carried over by the Bank to the next year's AHP funding
cycles.
(b) By January 15 of each year, each Bank shall provide to the
Board a statement indicating the amount of unused and uncommitted funds
from the prior year, if any, which will be deposited in the Affordable
Housing Reserve Fund.
(c) By January 31 of each year, the Board will notify the Banks of
the total amount of funds, if any, available in the Affordable Housing
Reserve Fund.
Subpart L--Advisory Councils
Sec. 960.21 Advisory Councils.
(a) Appointment. (1) Each Bank shall appoint an Advisory Council of
seven to 15 persons, as provided in the Bank's AHP implementation plan.
Advisory Council members shall reside in the Bank's district and shall
be drawn from community and nonprofit organizations actively involved
in providing or promoting low- or moderate-income housing in the Bank's
District.
(2) The Bank shall actively solicit nominations from Bank members
and community and nonprofit organizations actively involved in
providing or promoting low- or moderate-income housing in the Bank's
District, and shall allow sufficient time for such organizations to
respond, so that the nomination and appointment process is as broad and
as participatory as possible.
(3) Advisory Council members shall be appointed by the Banks giving
consideration to the size of the District and the diversity of low-
income housing needs within the District.
(4) Advisory Council members shall serve for terms of two or three
years, and such terms shall be staggered to provide continuity and
experience in service, as provided in the Bank's AHP implementation
plan. An Advisory Council member may not serve for more than six years
consecutively.
(5) An Advisory Council member who, subsequent to appointment, is
no longer employed by or associated with a community or nonprofit
organization actively involved in providing or promoting low- or
moderate-income housing in the Bank's District, may continue to serve
on the Advisory Council until the end of his or her term.
(b) Election of chairperson and vice chairperson. Each Advisory
Council shall elect from among its voting members a chairperson and a
vice chairperson.
(c) Designation of secretary. Each Advisory Council shall designate
a member, or request that a member of the Bank's staff be designated,
to act as secretary of the Advisory Council. The secretary shall record
and maintain minutes of the meetings of the Advisory Council. Minutes
of each meeting shall contain, among other things, a record of the
persons present, a description of the matters discussed, and
recommendations made. The person acting as secretary at a meeting shall
certify to the accuracy of the minutes of that meeting.
(d) Review of Bank's proposed AHP implementation plan and prior AHP
applications. (1) Prior to approval of the Bank's proposed AHP
implementation plan by the Bank's board of directors, the Bank's
Advisory Council shall review the proposed AHP implementation plan and
provide its recommendations to the Bank's board of directors pursuant
to the requirements in Sec. 960.2(c).
(2) Upon request of the Advisory Council, the Bank shall provide
the Advisory Council with copies of any AHP applications from prior AHP
funding cycles.
(e) Meetings with the Banks. The Advisory Council shall meet with
representatives of the board of directors of the Bank at least
quarterly to advise the Bank on low- and moderate-income housing
programs and needs in the Bank's District and on the utilization of AHP
subsidized advances or direct subsidies for these purposes.
(f) Report to the Board. Each Advisory Council shall submit to the
Board annually by March 1 its analysis of the low-income housing
activity of its Bank.
(g) Payment of expenses and compensation.--(1) Expenses. Each Bank
shall reimburse members of its Advisory Council for transportation and
subsistence expenses they incur for each day devoted to attending
quarterly meetings with representatives of the board of directors of
the Bank.
(2) Fees. Each Bank shall pay members of its Advisory Council a fee
for each day devoted to attending quarterly meetings with
representatives of the board of directors of the Bank.
Subpart M--Effective Dates
Sec. 960.22 Effective dates.
This part shall become effective [30 days after publication of the
final rule in the Federal Register]. The provisions of this part, or
portion thereof, may be applied to projects approved for AHP funding
prior to [30 days after publication of the final rule in the Federal
Register] to the extent all relevant parties (the Bank, the applicant,
the sponsor or the owner, and if applicable, the loan fund or loan
consortium) agree thereto in writing.
Dated: December 15, 1993.
By the Federal Housing Finance Board.
Philip L. Conover,
Managing Director.
[FR Doc. 94-412 Filed 1-7-94; 8:45 am]
BILLING CODE 6725-01-U
Complete official Federal Register PDF
FR Doc. 94-391 Conditional Permanent Resident Regulations for Alien Entrepreneurs, Spouses, and Children
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1317-1323]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-391]
[[Page Unknown]]
[Federal Register: January 10, 1994]
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DEPARTMENT OF JUSTICE
8 CFR Parts 103, 211, 216, 235, and 242
[INS No. 1429-92]
RIN 1115-AC53
Conditional Permanent Resident Regulations for Alien
Entrepreneurs, Spouses, and Children
AGENCY: Immigration and Naturalization Service, Justice.
ACTION: Proposed rule.
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SUMMARY: This rule implements provisions of section 121 of the
Immigration Act of 1990, by providing for conditional resident status
to certain alien entrepreneurs, their spouses, and their unmarried
minor children. It also provides for the removal of the conditional
basis of such status through the filing of a petition by the alien
entrepreneur. This rule will allow alien entrepreneurs to continue
their commercial enterprises while providing jobs in the United States.
DATES: Written comments must be submitted on or before February 9,
1994.
ADDRESSES: Please submit written comments, in triplicate, to the
Records Systems Division, Director, Policy Directives and Instructions
Branch, Immigration and Naturalization Service, 425 I Street, NW., room
5307, Washington, DC 20536. To ensure proper handling, please reference
the INS number 1429-92 on your correspondence.
FOR FURTHER INFORMATION CONTACT:
Michael W. Straus, Senior Immigration Examiner, Adjudications Division,
Immigration and Naturalization Service, 425 I Street, NW., room 7122,
Washington, DC 20536, telephone (202) 514-5014.
SUPPLEMENTARY INFORMATION: The Immigration and Naturalization Service
(the Service) notes that the legislative history on conditional
permanent residence status for alien entrepreneurs is limited in its
guidance; therefore, this rule relies heavily on the language of the
statute itself. Congress, however, did indicate that the two-year
conditional status for alien entrepreneurs exists for the primary
purpose of ensuring that ``all aliens receiving visas in this section *
* * continue their new commercial enterprises so that the creation of
U.S. jobs and the infusion of capital into the U.S. economy is
sustained.'' S. Rep. No. 101-55, 101st Cong., 1st Sess. 22 (1989).
Accordingly the Service proposes to amend 8 CFR parts 211, 216,
235, and 242 by providing conditional permanent resident status for
certain alien entrepreneurs, their spouses, and their children.
Petition for Removal of Conditions
The Immigration and Nationality Act (the Act), as amended by the
Immigration Act of 1990, Public Law 101-649, November 29, 1990,
requires that an alien entrepreneur file a petition for removal of
conditions during the 90-day period before the second anniversary of
the alien's obtaining conditional permanent resident status (section
216A(d)(2)(A) of the Act). The petition should include any spouse or
children accorded conditional permanent resident status. Children who
have reached the age of twenty-one or who have married during the
period of conditional permanent residence will remain eligible for
removal of conditions. The statute also calls for a personal interview
of the alien within 90 days after the date the alien files the petition
for removal of conditions. The Service may waive the requirement of an
interview in appropriate cases (section 216A(d)(3) of the Act).
This rule provides that the required petition shall be filed with
the Service Center having jurisdiction over the location of the alien's
commercial enterprise. The petition will be reviewed by the Service
Center, and a determination will be made on the necessity of an
interview. If the Service Center director determines in his or her
discretion that a decision may be made on the basis of the petition and
accompanying evidence without the necessity of an interview, the
decision on the petition will be rendered at the Service Center. If the
director determines that an interview is needed, the Service Center
director will schedule the alien for an interview to be held at the
local Service district office or sub-office having jurisdiction over
the alien entrepreneur's commercial enterprise in the United States.
The local district office will then take responsibility for the case to
its conclusion.
Decision on Petition
If the alien's petition is approved, the conditional basis of the
beneficiaries' permanent resident status will be removed as of the
second anniversary of the alien's entry as a conditional permanent
resident. Denial of a petition will result in termination of the
alien's lawful permanent resident status and issuance by the Service of
an order to show cause why the alien should not be deported from the
United States. There is no appeal from this denial, but the alien may
seek review of the decision by the immigration judge in deportation
proceedings. In such deportation proceedings, the burden shall rest
with the Service to establish by a preponderance of the evidence that
the facts and information in the alien's petition for removal of
conditions are not true.
The Service explored the possibility of establishing by regulation
some form of hardship waiver similar to that set forth at 8 CFR 216.5
for removal of conditions for certain alien spouses and sons and
daughters. The Service has concluded that such a waiver cannot,
consistent with the statute, be created by regulation for alien
entrepreneurs. Section 216A(c)(3)(C) of the Act sets out a mandatory
instruction: The Attorney General shall terminate the permanent
resident status of an alien entrepreneur who has failed to comply with
the requirements for removal of conditions. Unlike section 216, section
216A of the Act does not provide for the waiver of these requirements
in cases of hardship.
Although the statute does not provide for a waiver of requirements
for removal of conditions for alien entrepreneurs, the requirement that
an alien entrepreneur has sustained his or her investment of the
requisite capital during the two years of conditional residence will be
interpreted flexibly. The alien entrepreneur will be considered to have
``sustained'' the actions required for removal of conditions if he or
she has, in good faith, substantially met the capital investment
requirement of the statute and continuously maintained his or her
capital investment over the two years of conditional residence. This
liberal interpretation of the term ``sustained'' in section
216A(a)(1)(C) of the Act permits the Service maximum flexibility in
determining whether the prerequisites for removal of the conditions
have been met in light of the congressional intent underlying this
provision. The Service recognizes that a bona-fide and good faith
investment may not meet all of the expectations envisioned when the
alien entrepreneur obtained conditional residence status. For example,
the fact that an alien entrepreneur has less than the requisite capital
invested in the enterprise at the end of the two-year conditional
period would not necessarily require the denial of the petition to
remove conditions. The petition could be granted if the alien
entrepreneur had invested a substantial portion of the requisite
capital, thereby demonstrating that he or she was actively sustaining
his or her investment in the enterprise as required by the statute. The
determination of whether an alien entrepreneur had invested a
substantial portion of the requisite capital in good faith will be made
on a case-by-case basis. The proposed rule reflects this standard at 8
CFR 216.6(a)(4)(iii) and 8 CFR 216.6(c)(1)(iii).
The following example illustrates how the alien entrepreneur can
``substantially meet'' the capital investment requirement. An alien
entrepreneur is granted conditional residence based on a business plan
which envisioned an investment of $1.2 million. At the end of the
conditional residence period, he or she has invested only $800,000 in a
non-targeted employment area, because through circumstances beyond the
alien's control, construction of a facility took longer than
anticipated. The Service may remove the conditions, if the entrepreneur
can show that he or she can and will invest the additional capital
within a reasonable time to complete the investment. On the other hand,
if the entrepreneur cannot show that he or she will be able to generate
additional capital within a reasonable time, regardless of his or her
good-faith efforts, the Service will not remove the conditions.
In determining whether an alien entrepreneur has demonstrated that
he or she invested in good faith, the Service will examine his or her
intent based on both objective and subjective standards. The following
example illustrates the ``good faith'' analysis. An entrepreneur
invests $600,000 in a non-targeted employment area prior to obtaining
conditional residence, but is unable to provide the additional capital
as envisioned in the Form I-526 application. At the time he or she
obtained conditional residence, he or she had no realistic prospect of
obtaining funds to meet the capital investment requirement and in fact
is unable to acquire the additional $400,000 required to complete the
investment. Even though the entrepreneur sincerely wished to make the
investment succeed, under the objective part of the good faith
analysis, the entrepreneur will be unable to establish that he or she
substantially met the capital investment requirement in good faith.
This rule also permits the director for good cause to remove
conditions for the spouse and/or unmarried minor children of a deceased
principal alien entrepreneur. If the spouse and/or children can show
that, despite the entrepreneur's death, the requirements for removal of
conditions have been met, the director may approve the petition and
remove the conditions. This procedure makes humanitarian as well as
economic sense and fufills the goals of the statute in that the economy
of the United States will have benefited in the manner sought by
Congress notwithstanding the death of the principal entrepreneur.
Other Reasons for Termination
The statute calls for termination of the alien's conditional
permanent residence status during the two-year period if the Service
determines: That establishment of the new commercial enterprise was for
the sole purpose of evading United States immigration laws; that the
new commercial enterprise in fact was not established; that the alien
did not invest or was not in the process of investing the prescribed
capital; that the alien was not sustaining the new commercial
enterprise or the investment of capital; or that the alien was not
otherwise conforming to the requirements of the status (section
216A(b)(1) of the Act). If the Service determines any of the foregoing,
the alien's status will be terminated and an order to show cause will
be issued. The alien may request review of this decision in deportation
proceedings. In such proceedings, the burden of proof will rest with
the Service to establish by a preponderance of the evidence that one of
the foregoing reasons for termination is true.
Termination will also result, and an order to show cause will be
issued, if the alien enterpreneur fails to file the required petition
for removal of conditions or, without good cause, fails to appear for a
personal interview when requested by the Service (section 216A(c)(2) of
the Act). The decision may be reviewed in deportation proceedings, but,
in either instance, the burden will rest with the alien to show
compliance with the filing and interview requirments. The Service may
accept and consider a late petition if the alien demonstrates good
cause and extenuating circumstances for having failed to file a timely
petition. Furthermore, the Service may stay deportation proceedings and
consider a petition for an alien who is the subject of deportation
proceedings for failure to file a timely petition if the alien
demonstrates good cause and extenuating circumstances.
Finally, the legislative history of this provision at S. Rep. No.
101-55, 101st Cong., 1st Sess. 21 (1989) indicates Congress's wish that
``* * * processing of an individual visa not continue if it becomes
known to the Government that the money invested was obtained by the
alien through other than legal means (such as money received through
the sale of illegal drugs).'' This position is clearly part of
Congress's general policy to penalize one who prospers as a result of
an illegal enterprise. That policy is evidenced elsewhere in the
federal law, such as the statute which defines money laundering crimes
as aggravated felonies, 8 U.S.C. 1101(a)(43), and the provisions of the
United States Code which provide for the forfeiture of proceeds of
unlawful activities to the United States, 21 U.S.C. 881(a)(6)
(forfeiture of proceeds of controlled substance exchange) and 18 U.S.C.
1963(a)(3) (forfeiture of proceeds of racketeering activity or unlawful
debt collection). In light of Congress's specific statement of intent
with regard to this provision, and its overall policy concerning
proceeds from illegal activities, termination of status will result at
any time during the two-year conditional residence period or at the
time a petition for removal of conditions is filed, if the Service
determines that the alien's investment funds have been obtained through
other than legal means.
Application Fee
In accordance with Office of Management and Budget Circular A-25,
User Charges, ``user charges will be sufficient to recover the full
cost to the Federal Government * * * of providing the service * * *.
Full cost shall be determined or estimated from the best available
records of the agency * * *.'' The Service proposes to institute an
application fee of $90.00 for filing form I-829. This fee is based on
the estimated costs of processing the petition.
The I-829 fee will be one of many examinations fees assessed for
providing adjudication and naturalization services. Each examinations
fee has three components: Direct costs, indirect costs, and a surcharge
to cover the costs of the International Affairs and Outreach Program
(formerly the Refugees and Overseas Program).
Direct costs are those costs directly related to the processing of
a particular application form for a particular benefit. Generally,
direct costs include: The pay of the adjudications officers and
clerical staff working on each type of application and the costs of
their associated personnel benefits; the costs of Federal Bureau of
Investigation name and fingerprint checks; where applicable, the costs
by application of naturalization ceremonies conducted by the United
States Courts; and the costs of INS immigration document and card
production. The pay costs are calculated by multiplying average
adjudications processing time by the hourly pay for the average grade
level of adjudicators and clerks. For the I-829, the direct costs
include the pay costs of the adjudications officers and clerical staff
and the costs of producing the Alien Registration Card.
Indirect costs are defined as the costs of supervisory, management,
and administrative activities, related staff training, records, data
processing, files services, legal services, and space and support costs
of providing immigration benefits under the Immigration and Nationality
Act and related statutes. Indirect costs also include costs in the
management and administration portion of the INS budget, such as the
costs of personnel administration work needed to recruit and pay the
officers and clerks who process customers' applications for benefits.
The activities associated with these costs are no less essential to
providing INS services to its customers than are the direct costs.
These indirect costs are distinguished only by the somewhat greater
complexity of determining the portion of such costs that are
attributable to work done for fee-paying customers.
The costs to carry out the International Affairs and Outreach
Program are borne by the Examinations Fee Account, at the direction of
Congress. See section 286(m) of the Act. These costs are treated as a
surcharge that is added to the examinations fees.
The total cost of processing the I-829 is estimated at $90.45. The
proposed fee was determined by rounding the total cost to the nearest
$5.00. As the Service gains experience in processing this new
application, the fee will be adjusted as necessary based on improved
data.
Technical Changes
The proposed regulation also contains some minor technical changes
resulting from the merger of Form I-751 and Form I-752 into the new
Form I-751 (see 56 FR 55931 on October 30, 1991; 57 FR 6181 on February
21, 1992). This regulation eliminates reference to the Form I-752,
which has been cancelled.
In accordance with 5 U.S.C. 605(b), the Commissioner of the
Immigration and Naturalization Service certifies that this rule will
not, if promulgated, have a significant adverse economic impact on a
substantial number of small entities. Insofar as this proposed rule
merely sets forth the procedures for terminating the conditional
resident status of alien entrepreneurs already present in the country
and for removing the conditional basis of permanent resident status for
such persons, any impact the proposed rule will have on small business
entities will be, at most, indirect or attenuated. This rule is not
significant within the meaning of section 3(f) of E.O. 12866, nor does
this rule have Federalism implications warranting the preparation of a
Federalism Assessment in accordance with E.O. 12612.
This rule contains information collection requirements which have
been approved by the Office of Management and Budget (OMB) under the
provisions of the Paperwork Reduction Act. The OMB control numbers for
these collections are contained in 8 CFR 299.5. This rule also contains
a new collection requirement which has been forwarded to OMB under the
provisions of the Paperwork Reduction Act for review and clearance.
List of Subjects
8 CFR Part 103
Administrative practice and procedures Archives and records,
Authority delegations (Government agencies), Bonding, Fees, Forms,
Freedom of Information, Organization and functions (Government
agencies), Privacy, Reporting and recordkeeping requirements, Surety
bonds.
8 CFR Part 211
Immigration, Passports and visas, Reporting and recordkeeping
requirements.
8 CFR Part 216
Administrative practice and procedure, Aliens, Immigration,
Reporting and recordkeeping requirements.
8 CFR Part 235
Administrative practice and procedure, Aliens, Immigration,
Reporting and recordkeeping requirements.
8 CFR Part 242
Administrative practice and procedure, Aliens.
Accordingly, chapter I of title 8 of the Code of Federal
Regulations is proposed to be amended as follows:
PART 103--POWERS AND DUTIES OF SERVICE OFFICERS; AVAILABILITY OF
SERVICE RECORDS
1. The authority citation for part 103 continues to read as
follows:
Authority: 5 U.S.C. 552, 552a; 8 U.S.C. 1101, 1103, 1201, 1252,
note, 1252b, 1304, 1356; 31 U.S.C. 9701; E.O. 12356, 47 FR 14874,
15557; 3 CFR, 1982 Comp., p. 166; 8 CFR part 2.
2. In Sec. 103.7, paragraph (b)(1) is amended by:
a. Removing the ``Form I-752'' from the listing of forms;
b. Revising the description for ``Form I-751''; and by
c. Adding the ``Form I-829'', to the listing of forms, in proper
numerical sequence, to read as follows:
Sec. 103.7 Fees.
* * * * *
(b) * * *
(1) * * *
* * * * *
Form I-751. For filing petition to remove the conditions on
residence which is based on marriage--$75.00.
* * *
Form I-829. For filing petition by entrepreneur to remove
conditions--$90.00.
* * * * *
PART 211--DOCUMENTARY REQUIREMENTS: IMMIGRANTS; WAIVERS
3. The authority citation for part 211 continues to read as
follows:
Authority: 8 U.S.C. 1101, 1103, 1181, 1182, 1203, 1225, 1257.
4. In Sec. 211.1, paragraph (b)(1)(i) introductory text is revised
to read as follows:
Sec. 211.1 Visas.
* * * * *
(b)(1) * * *
(i) Alien not travelling pursuant to government orders. An Alien
Registration Receipt Card may be presented in lieu of an immigrant visa
by an immigrant alien who is returning to an unrelenquished lawful
permanent residence in the United States, is returning prior to the
second anniversary of the date on which he or she obtained such
residence if subject to the provisons of section 216 or 216A of the
Act, whichever is applicable, or within six months of the date of
filing a Petition to Remove the Conditions on Residence (Form I-751) or
a Petition By Entrepreneur to Remove Conditions (Form I-829) pursuant
to 8 CFR part 216, if the alien is in possession of a Service-issued
receipt for such filing, and:
* * * * *
PART 216--CONDITIONAL BASIS OF LAWFUL PERMANENT RESIDENCE STATUS
5. The heading for part 216 is revised as set forth above.
6. The authority citation for part 216 is revised to read as
follows:
Authority: 8 U.S.C. 1101, 1103, 1154, 1184, 1186a, 1186b, and 8
CFR part 2.
Sec. 216.1 [Amended]
7. Section 216.1 is amended in the first sentence by revising the
phrase ``section 216 of the Act'' to read: ``section 216 or 216A of the
Act, whichever is applicable,''.
Sec. 216.2 [Amended]
8. Section 216.2(b) is amended in the first sentence by adding the
phrase ``or he alien entrepreneur'' between the words ``spouse'' and
``must''.
9. Section 216.2(c) is amended by adding the phrase ``, or the
alien entrepreneur'' between the words ``spouse'' and ``of''; and by
removing the word ``joint''.
10. In Sec. 216.3 is revised to read as follows:
Sec. 216.3 Termination of conditional resident status.
(a) During the two-year conditional period. The director shall send
a formal written notice to the conditional permanent resident of the
termination of the alien's conditional permanent resident status if the
director determines that any of the conditions set forth in section
216(b)(1) or 216A(b)(1) of the Act, whichever is applicable, are true,
or it becomes known to the government that an alien entrepreneur who
was admitted pursuant to section 203(b)(5) of the Act obtained his or
her investment capital through other than legal means (such as through
the sale of illegal drugs). If the Service issues a notice of Intent to
Terminate an alien's conditional resident status, the director shall
not adjudicate Form I-751 or Form I-829 until it has been determined
that the alien's status shall not be terminated. During this time, the
alien shall continue to be a lawful conditional permanent resident with
all the rights, privileges, and responsibilities provided to persons
possessing such status. Prior to issuing the Notice of Termination, the
director shall provide the alien with an opportunity to review and
rebut the evidence upon which the decision is to be based, in
accordance with Sec. 103.2(b)(2) of this chapter. The termination of
status, and all of the rights and privileges concomitant thereto
(including authorization to accept or continue in employment in this
country), shall take effect as of the date of such determination by the
director, although the alien may request a review of such determination
in deportation proceedings. In addition to the notice of termination,
the director shall issue an order to show cause why the alien should
not be deported from the United States, in accordance with part 242 of
this chapter. During the ensuing deportation proceedings, the alien may
submit evidence to rebut the determination of the director. The burden
of proof shall be on the Service to establish, by a preponderance of
the evidence, that one or more of the conditions in section 216(b)(1)
or 216A(b)(1) of the Act, whichever is applicable, are true, or that an
alien entrepreneur who was admitted pursuant to section 203(b)(5) of
the Act obtained his or her investment capital through other than legal
means (such as through the sale of illegal drugs).
(b) Determination of fraud after two years. If, subsequent to the
removal of the conditional basis of an alien's permanent resident
status, the director determines that an alien spouse obtained permanent
resident status through a marriage which was entered into for the
purpose of evading the immigration laws or an alien entrepreneur
obtained permanent resident status through a commercial enterprise
which was improper under section 216A(b)(1) of the Act, the director
may institute rescission proceedings pursuant to section 246 of the Act
(if otherwise appropriate) or deportation proceedings under section 242
of the Act.
Sec. 216.4 [Amended]
11-12. In Sec. 216.4, paragraph (a)(1) is amended by revising the
phrase ``a Joint Petition to Remove the Conditional Basis of Alien's
Permanent Resident Status'' in the first sentence, to read: ``a
Petition to Remove the Conditions on Residence''.
13. In Sec. 216.4, the heading is revised and paragraph (a)(1) is
amended by adding a new sentence at the end of the paragraph to read as
follows:
Sec. 216.4 Joint petition to remove conditional basis of lawful
permanent resident status for alien spouse.
(a) * * *
(1) General procedures. * * *Upon receipt of a properly filed Form
I-751, the alien's conditional permanent resident status shall be
extended automatically, if necessary, until such time as the director
has adjudicated the petition.
* * * * *
Sec. 216.4 [Amended]
14. In Sec. 216.4, paragraph (a)(2) is amended in the last
sentence, by revising the phrase ``an Application for Waiver of
Requirement to File Joint Petition for Removal of Conditions (Form I-
752)'' to read: ``a separate Petition to Remove the Conditions on
Residence (Form I-751)''.
15. In Sec. 216.4, paragraph (a)(6) is amended in the first
sentence by removing the phrase ``or Form I-752''.
16. In Sec. 216.5, the section heading and paragraph (a),
introductory text, are revised to read as follows:
Sec. 216.5 Waiver of requirement to file joint petition to remove
conditions by alien spouse.
(a) General. A conditional resident alien who is unable to meet the
requirements under section 216 of the Act for a joint petition for
removal of the conditional basis of his or her permanent resident
status may file a Petition to Remove the Conditions on Residence (Form
I-751), if the alien requests a waiver, was not at fault in failing to
meet the filing requirement, and the conditional resident alien is able
to establish that:
* * * * *
Sec. 216.5 [Amended]
17. In Sec. 216.5, paragraphs (b) and (c) are amended by revising
the phrase ``Form I-752'' to read: ``Form I-751''.
18. A new Sec. 216.6 is added to read as follows:
Sec. 216.6 Petition by entrepreneur to remove conditional basis of
lawful permanent resident status.
(a) Filing the petition--(1) General procedures. A petition to
remove the conditional basis of the permanent resident status of an
alien accorded conditional permanent residence pursuant to section
203(b)(5) of the Act must be filed by the alien entrepreneur on Form I-
829, Petition by Entrepreneur to Remove Conditions. The alien
entrepreneur must file Form I-829 within the 90-day period preceding
the second anniversary of his or her admission to the United States as
a conditional permanent resident. Before Form I-829 may be considered
as properly filed, it must be accompanied by the fee required under
Sec. 103.7(b)(1) of this chapter, and by documentation as described in
paragraph (a)(4) of this section, and it must be properly signed by the
alien. Upon receipt of a properly filed Form I-829, the alien's
conditional permanent resident status shall be extended automatically,
if necessary, until such time as the director has adjudicated the
petition. The entrepreneur's spouse and children should be included in
the petition to remove conditions. Children who have reached the age of
twenty-one or who have married during the period of conditional
permanent residence may be included in the petition.
(2) Jurisdiction. Form I-829 must be filed with the regional
service center having jurisdiction over the location of the alien
entrepreneur's commercial enterprise in the United States.
(3) Physical presence at time of filing. A petition may be filed
regardless of whether the alien is physically present in the United
States. However, if the alien is outside the United States at the time
of filing, he or she must return to the United States, with his or her
spouse and children, if necessary, to comply with the interview
requirements contained in the Act. Once the petition has been properly
filed, the alien may travel outside the United States and return if in
possession of documentation as set forth in Sec. 211.1(b)(1) of this
chapter, provided the alien complies with the interview requirements
described in paragraph (b) of this section. An alien who is not
physically present in the United States during the filing period but
subsequently applies for admission to the United States shall be
processed in accordance with Sec. 235.11 of this chapter.
(4) Documentation. The petition for removal of conditions must be
accompanied by the following evidence:
(i) Evidence that a commercial enterprise was established by the
alien. Such evidence may include, but is not limited to, Federal income
tax returns;
(ii) Evidence that the alien invested or was actively in the
process of investing the requisite capital. Such evidence may include,
but is not limited to, an audited financial statement; and
(iii) Evidence that the alien sustained the actions described in
paragraphs (a)(4)(i) and (a)(4)(ii) of this section throughout the
period of the alien's residence in the United States. The alien will be
considered to have sustained the actions required for removal of
conditions if he or she has, in good faith, substantially met the
capital investment requirement of the statute and continuously
maintained his or her capital investment over the two years of
conditional residence. Such evidence may include, but is not limited
to, bank statements, invoices, receipts, contracts, business licenses,
Federal or State income tax returns, and Federal or State quarterly tax
statements.
(iv) Evidence that the alien created or can be expected to create
within a reasonable time ten full-time jobs for qualifying employees.
In the case of a ``troubled business'' as defined in 8 CFR
204.6(j)(4)(ii), the alien entrepreneur must submit evidence that the
commercial enterprise maintained the number of existing employees at no
less than the pre-investment level for the period following his or her
admission as a conditional permanent resident. Such evidence may
include payroll records, relevant tax documents and Forms I-9.
(5) Termination of status for failure to file petition. Failure to
properly file Form I-829 within the 90-day period immediately preceding
the second anniversary of the date on which the alien obtained lawful
permanent residence on a conditional basis shall result in the
automatic termination of the alien's permanent residence status and the
initiation of deportation proceedings. The director shall send a
written notice of termination and an order to show cause to an alien
entrepreneur who fails to timely file a petition for removal of
conditions. No appeal shall lie from this decision; however, the alien
may request a review of the determination during deportation
proceedings. In deportation proceedings, the burden of proof shall rest
with the alien to show by a preponderance of the evidence that he or
she complied with the requirement to file the petition within the
designated period. The director may deem the petition to have been
filed prior to the second anniversary of the alien's obtaining
conditional permanent residence status and accept and consider a late
petition if the alien demonstrates to the director's satisfaction that
failure to file a timely petition was for good cause and due to
extenuating circumstances. If the late petition is filed prior to
jurisdiction vesting with the immigration judge in deportation
proceedings and the director excuses the late filing and approves the
petition, he or she shall restore the alien's permanent resident
status, remove the conditional basis of such status, and cancel any
outstanding order to show cause in accordance with Sec. 242.7 of this
chapter. If the petition is not filed until after jurisdiction vests
with the immigration judge, the immigration judge may terminate the
matter upon joint motion by the alien and the Service.
(6) Death of entrepreneur and effect on spouse and children. If an
entrepreneur dies during the prescribed two-year period of conditional
permanent residence, the spouse and children of the entrepreneur will
be eligible for removal of conditions if it can be demonstrated that
the conditions set forth in paragraph (a)(4) of this section have been
met.
(b) Petition review--(1) Authority to waive interview. The director
of the service center shall review the Form I-829 and the supporting
documents to determine whether to waive the interview required by the
Act. If satisfied that the requirements set forth in paragraph (c)(1)
of this section have been met, the service center director may waive
the interview and approve the petition. If not so satisfied, then the
service center director shall forward the petition to the district
director having jurisdiction over the location of the alien
entrepreneur's commercial enterprise in the United States so that an
interview of the alien entrepreneur may be conducted. The director must
either waive the requirement for an interview and adjudicate the
petition or arrange for an interview within 90 days of the date on
which the petition was properly filed.
(2) Location of interview. Unless waived, an interview relating to
the Form I-829 shall be conducted by an immigration examiner or other
officer so designated by the district director at the district office
that has jurisdiction over the location of the alien entrepreneur's
commercial enterprise in the United States.
(3) Termination of status for failure to appear for interview. If
the alien fails to appear for an interview in connection with the
petition when requested by the Service, the alien's permanent resident
status will be automatically terminated as of the second anniversary of
the date on which the alien obtained permanent residence. The alien
will be provided with written notification of the termination and the
reasons therefore, and an order to show cause shall be issued placing
the alien under deportation proceedings. The alien may seek review of
the decision to terminate his or her status in such proceedings, but
the burden shall be on the alien to establish by a preponderance of the
evidence that he or she complied with the interview requirements. If
the alien has failed to appear for a scheduled interview, he or she may
submit a written request to the district director asking that the
interview be rescheduled or that the interview be waived. That request
should explain his or her failure to appear for the scheduled
interview, and if a request for waiver of the interview, the reasons
such waiver should be granted. If the district director determines that
there is good cause for granting the request, the interview may be
rescheduled or waived, as appropriate. If the district director waives
the interview, he or she shall restore the alien's conditional
permanent resident status, cancel any outstanding order to show cause
in accordance with Sec. 242.7 of this chapter, and proceed to
adjudicate the alien's petition. If the district director reschedules
that alien's interview, he or she shall restore the alien's conditional
residence status, and cancel any outstanding order to show cause in
accordance with Sec. 242.7 of this chapter. If the interview is
rescheduled at the request of the alien, the Service shall not be
required to conduct the interview within the 90-day period following
the filing of the petition.
(c) Adjudication of petition. (1) The decision on the petition
shall be made within 90 days of the date of filing or within 90 days of
the date of interview, whichever is later. In adjudicating the
petition, the director shall determine whether:
(i) A commercial enterprise was established by the alien;
(ii) The alien invested or was actively in the process of investing
the requisite capital; and
(iii) The alien sustained the actions described in paragraphs
(c)(1)(i) and (c)(1)(ii) of this section throughout the period of the
alien's residence in the United States. The alien will be considered to
have sustained the actions required for removal of conditions if he or
she has, in good faith, substantially met the capital investment
requirement of the statute and continuously maintained his or her
capital investment over the two years of conditional residence.
(iv) The alien created or can be expected to create within a
reasonable period of time ten full-time jobs to qualifying employees.
In the case of a ``troubled business'' as defined in 8 CFR
204.6(j)(4)(ii), the alien maintained the number of existing employees
at no less than the pre-investment level for the previous two years.
(2) If derogatory information is determined regarding any of these
issues or it becomes known to the government that the entrepreneur
obtained his or her investment funds through other than legal means
(such as through the sale of illegal drugs), the director shall offer
the alien entrepreneur the opportunity to rebut such information. If
the alien entrepreneur fails to overcome such derogatory information or
evidence the investment funds were obtained through other than legal
means, the director may deny the petition, terminate the alien's
permanent residence, and issue an order to show cause. If derogatory
information not relating to any of these issues is determined during
the course of the interview, such information shall be forwarded to the
investigations unit for appropriate action. If no unresolved derogatory
information is determined relating to these issues, the petition shall
be approved and the conditional basis of the alien's permanent
residence status removed, regardless of any action taken or
contemplated regarding other possible grounds for deportation.
(d) Decision--(1) Approval. If, after initial review or after the
interview, the director approves the petition, he or she will remove
the conditional basis of the alien's permanent resident status as of
the second anniversary of the alien's entry as a conditional permanent
resident. He or she shall provide written notice of the decision to the
alien and shall require the alien to report to the appropriate district
office for processing for a new Alien Registration Receipt Card, Form
I-551, at which time the alien shall surrender any Alien Registration
Receipt Card previously issued.
(2) Denial. If, after initial review or after the interview, the
director denies the petition, he or she shall provide written notice to
the alien of the decision and the reasons(s) therefor, and shall issue
an order to show cause why the alien should not be deported from the
United States. The alien's lawful permanent resident status and that of
his or her spouse and any children shall be terminated as of the date
of the director's written decision. The alien shall also be instructed
to surrender any Alien Registration Receipt Card previously issued by
the Service. No appeal shall lie from this decision; however, the alien
may seek review of the decision in deportation proceedings. In
deportation proceedings, the burden shall rest with the Service to
establish by a preponderance of the evidence that the facts and
information in the alien's petition for removal of conditions are not
true and that the petition was properly denied.
PART 235--INSPECTION OF PERSONS APPLYING FOR ADMISSION
19. The authority citation for part 235 continues to read as
follows:
Authority: 8 U.S.C. 1101, 1103, 1182, 1183, 1201, 1224, 1225,
1226, 1227, 1228, 1252.
20. In Sec. 235.11, paragraphs (a) and (c) are revised to read as
follows:
Sec. 235.11 Admission of conditional permanent residents.
(a) General--(1) Conditional residence based on family
relationship. An alien seeking admission to the United States with an
immigrant visa as the spouse or son or daughter of a United States
citizen or lawful permanent resident shall be examined to determine
whether the conditions of section 216 of the Act apply. If so, the
alien shall be admitted conditionally for a period of two years. At the
time of admission, the alien shall be notified that the alien and his
or her petitioning spouse must file a Petition to Remove the Conditions
on Residence (Form I-751) within the 90-day period immediately
preceding the second anniversary of the alien's admission for permanent
residence.
(2) Conditional residence based on entrepreneurship. An alien
seeking admission to the United States with an immigrant visa as an
alien entrepreneur (as defined in section 216A(f)(1) of the Act) or the
spouse or unmarried minor child of an alien entrepreneur shall be
admitted conditionally for a period of two years. At the time of
admission, the alien shall be notified that the principal alien
(entrepreneur) must file a Petition by Entrepreneur to Remove
Conditions (Form I-829) within the 90-day period immediately preceding
the second anniversary of the alien's admission for permanent
residence.
* * * * *
(c) Expired conditional permanent resident alien status. The lawful
permanent resident alien status of a conditional resident automatically
terminates if the conditional basis of such status is not removed by
the Service through approval of a Petition to Remove the Conditions on
Residence (Form I-751) or, in the case of an alien entrepreneur (as
defined in section 216A(f)(1) of the Act), a Petition by Entrepreneur
to Remove Conditions (Form I-829). Therefore, an alien who is seeking
admission as a returning resident subsequent to the second anniversary
of the date on which conditional residence was obtained (except as
provided in Sec. 211.1(b)(1) of this chapter) and whose conditional
basis of such residence has not been removed pursuant to section 216(c)
or 216A(c) of the Act, whichever is applicable, shall be placed under
exclusion proceedings. However, in a case where conditional residence
was based on a marriage, exclusion proceedings may be terminated and
the alien may be admitted as a returning resident if the required
petition (Form I-751) is filed jointly, or by the alien alone (if
appropriate), and approved by the Service. In the case of an alien
entrepreneur, exclusion proceedings may be terminated and the alien
admitted as a returning resident if the required petition (Form I-829)
is filed by the alien entrepreneur and approved by the Service.
PART 242--PROCEEDINGS TO DETERMINE DEPORTABILITY OF ALIENS IN THE
UNITED STATES, APPREHENSION, CUSTODY, HEARING, AND APPEAL
21. The authority citation for part 242 continues to read as
follows:
Authority: 8 U.S.C. 1103, 1182, 1186a, 1251, 1252, 1252 note,
1252b, 1254, 1362; 8 CFR part 2.
22. In Sec. 242.17, paragraph (a) is revised to read as follows:
Sec. 242.17 Ancillary matters, applications.
(a) Creation of the status of an alien lawfully admitted for
permanent residence. The respondent may apply to the immigration judge
for suspension of deportation under section 244(a) of the Act; for
adjustment of status under section 245 of the Act, or under section 1
of the Act of November 2, 1966, or under section 101 or 104 of the Act
of October 28, 1977; or for the creation of a record of lawful
admission for permanent residence under section 249 of the Act. The
application shall be subject to the requirements of parts 244, 245, and
249 of this chapter. The approval of any application made to the
immigration judge under section 245 of the Act by an alien spouse (as
defined in section 216(g)(1) of the Act) or by an alien entrepreneur
(as defined in section 216A(f)(1) of the Act), shall result in the
alien's obtaining the status of lawful permanent resident on a
conditional basis in accordance with the provisions of section 216 or
216A of the Act, whichever is applicable. However, the Petition to
Remove the Conditions on Residence required by section 216(c) of the
Act or the Petition by Entrepreneur to Remove Conditions required by
section 216A(c) of the Act shall be made to the director in accordance
with part 216 of the chapter. In conjunction with any application for
creation of status of an alien lawfully admitted for permanent
residence made to an immigration judge, if the respondent is
inadmissible under any provision of section 212(a) of the Act and
believes that he or she meets the eligibility requirements for a waiver
of the ground of inadmissibility, he or she may apply to the
immigration judge for such waiver. The immigration judge shall inform
the respondent of his or her apparent eligibility to apply for any of
the benefits enumerated in this paragraph and shall afford the
respondent an opportunity to make application therefor during the
hearing. In exercising discretionary power when considering an
application under this paragraph, the immigration judge may consider
and base the decision on information not contained in the record and
not made available for inspection by the respondent, provided the
Commissioner has determined that such information is relevant and is
classified under Executive Order No. 12356 (47 14874, April 6, 1982) as
requiring protection from unauthorized disclosure in the interest of
national security. Whenever the immigration judge believes that he or
she can do so while safeguarding both the information and its source,
the immigration judge should inform the respondent of the general
nature of the information in order that the respondent may have an
opportunity to offer opposing evidence. A decision based in whole or in
part on such classified information shall state that the information is
material to the decision.
* * * * *
Dated: November 5, 1993.
Doris Meissner,
Commissioner, Immigration and Naturalization Service.
[FR Doc. 94-391 Filed 1-7-94; 8:45 am]
BILLING CODE 4410-10-Ms
Complete official Federal Register PDF
FR Doc. 94-298 Adjustment to the Examinations Fee Schedule
[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Proposed Rules]
[Pages 1308-1317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-298]
[[Page Unknown]]
[Federal Register: January 10, 1994]
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DEPARTMENT OF JUSTICE
Immigration and Naturalization Service
8 CFR Part 103
[INS No. 1384-92; AG Order No. 1821-93]
RIN 1115-AD18
Adjustment to the Examinations Fee Schedule
AGENCY: Immigration and Naturalization Service, Justice.
ACTION: Proposed rule.
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SUMMARY: This rule proposes to adjust the current Examinations Fee
schedule for the Immigration and Naturalization Service (INS) in order
to generate sufficient revenue to recover the costs of providing
immigration and naturalization services, and to change procedures and
charges for the Petition for a Nonimmigrant Worker, Form I-129, in
response to INS and user experiences. The fee adjustment is needed to
comply with specific Federal immigration laws and the Federal user fee
statute and regulations, which require the recipients of special
benefits from Government services that are not directed to the public
at large to bear the costs to the Government of providing those
services. The fees proposed in this rule result from an analysis of
adjudication and naturalization services and associated costs for
fiscal years 1993 and 1994, and are calculated to recover the costs of
providing these special services and benefits. This proposed rule
ensures that funds will be available to continue to improve the quality
of service to users. Its financial impact on users of the services is
small. In most cases the proposed fee increase is five dollars. In the
aggregate this proposed fee increase is slightly less than the
projected change in the consumer price index since the last general fee
increase in April 1991.
DATES: Written comments must be submitted on or before February 9,
1994.
ADDRESSES: Comments must be submitted in writing for consideration.
Please submit written comments, in triplicate, to the Director, Policy
Directives and Instructions Branch; Immigration and Naturalization
Service; 425 I Street, NW.; room 5307; Washington, DC 20536-0002. To
ensure proper handling, please reference INS No. 1384-92 on your
correspondence.
FOR FURTHER INFORMATION CONTACT:
Barbara J. Atherton, Chief, Fee Analysis and Operations Branch, Office
of Finance; Immigration and Naturalization Service; 425 I Street, NW.;
room 6240; Washington, DC 20536-0002; telephone 202-616-2754.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Immigration and Naturalization Service (INS) of the Department
of Justice (DOJ) is required by law to charge fees to the users of its
services. Such fees presently comprise about 36 percent of the INS
budget. There are four fee accounts, and the fees which are collected
in each account are used to fund specific services. The four fee
accounts are the Immigration Examinations Fee Account, the Immigration
User Fee Account, the Land Border Inspection Fee Account, and the
Legalization Fee Account. Because the fees in each of these accounts
are designed to recover the costs which are incurred to provide
specific services, they must be reviewed regularly and adjusted as
costs change or more precise cost determination processes become
available. This rule proposes to modify the examinations fee schedule.
The Immigration Examinations Fee Account (Examinations Fee Account)
provides funds for immigration adjudication and naturalization
services. It is funded by a total of 32 separate fees for processing
the various applications used by INS. Examples include applications for
permanent resident status, petitions for relatives, employment
authorization applications, reentry permits, and extensions of
temporary stay. The separate fees currently range from $30 to $140.
To cover the costs of providing adjudication and naturalization
services, it has been determined that a fee increase of 7.5 percent is
needed. This increase reflects inflation since the last general fee
increase in April 1991, the assignment of certain additional costs to
the Examinations Fee Account for services that support adjudications
and naturalization functions, and the costs of investments to improve
services to users. This proposed rule would adjust the current fee
schedule by 7.5 percent.
A. Refining the Fee Development Process
INS has initiated a process of continuous improvement in the
management of the finances of the fee accounts and the development of
fee schedules. Areas that are being addressed over a projected multi-
year time horizon include: Identifying the INS resources consumed in
providing services to our customers which by law must be recovered
through fee revenues; refining definitions of direct and indirect
costs; and refining cost measurement systems, in concert with wider
Department of Justice initiatives to improve financial management
information systems.
Of necessity, to ensure the availability of necessary funds for
maintaining operations, the first phase of this effort has been
identification of INS resource use that must be recovered through fees.
Prior to 1992, INS had not analyzed rigorously the full extent of its
costs related to fee-supported services. In 1992, INS undertook a
comprehensive review of the work that should properly be charged to fee
accounts in order to meet statutory requirements. Extensive information
gathering and analysis were performed as part of this effort. The
aggregate cost of the work in support of the Examinations Fee Account
was computed based on the budget for fiscal year 1993 and the estimated
budget for fiscal year 1994.
This information was used to compute the percentage revenue
increase required to cover the costs, and that percentage, with limited
exceptions, was applied to the existing fee schedule that has been in
place since 1991 to arrive at the proposed fees, through the steps
explained in this proposed rule.
Instead of using the existing fee schedule as a base for the
percentage increases, INS also considered whether it would have been
feasible to base the proposed fees on 1992 cost measurements. INS
rejected this approach because of problems with 1992 data caused by the
transition to a more automated system of productivity measurement.
Future fee adjustments will reflect efforts to refine direct and
indirect cost definitions and measurements, and will address
alternative approaches to the allocation of indirect costs among
applicants for services. At this time, however, the current fee
schedule, with the adjustments specifically identified below, reflects
the best available comprehensive data on service costs, and was
therefore judged to be the soundest foundation for computing the
proposed fee schedules for fiscal year 1994.
II. Directives and Guidelines
INS's examinations fees have been designed in accordance with
legislation, guidance from the Office of Management and Budget (OMB)
and the Department, and accepted principles of ratemaking in regulated
public and commercial enterprises. The overall principle employed is
one of cost causation, which means the fees are designed to cover the
costs associated with providing the services funded through the
Examinations Fee Account.
A. Legislation
The enabling legislation for the Examinations Fee Account is the
Departments of Commerce, Justice, and State, the Judiciary, and Related
Agencies Appropriations Act, 1989 (Pub. L. 100-459), a U.S.C. 1356(n),
which provides that the receipts collected shall ``* * * remain
available * * * to reimburse any appropriation the amount paid out of
such appropriation for expenses in providing immigration adjudication
and naturalization services and the collection, safeguarding and
accounting for fees * * *''. The Departments of Commerce, Justice, and
State, the Judiciary, and Related Agencies Appropriations Act, 1991
(Pub. L. 101-515), 8 U.S.C. 1356(m), provides further ``* * * that fees
for providing adjudication and naturalization services may be set at a
level that will ensure recovery of the full costs of providing all such
services, including the costs of similar services provided without
charge to asylum applicants or other immigrants. Such fees may also be
set at a level that will recover any additional costs associated with
the administration of the fees collected.'' The general authority to
assess fees for services is found in the Independent Offices
Appropriation Act, 1952 (Pub. L. 82-137) (IOAA), 31 U.S.C. 9701,
frequently referred to as the ``user fee statute,'' which provides for
Federal agencies to define special services provided to unique segments
of the population and to charge fees for those services instead of
supporting them through general tax revenues. The IOAA provides that
``* * * each service or thing of value provided by an agency * * * to a
person * * * is to be self-sustaining to the extent possible.'' These
charges, among other things, are to be based on ``* * * [t]he costs to
the Government * * *.''
In 1986, proposed fee increases for adjudication services were
challenged in the Federal District Court for the District of Columbia
on the grounds that the Attorney General lacked authority to impose
fees for the services in question and that, even if the fees were
legally permissible, the specific fees under challenge were arbitrarily
excessive. In Ayuda, Inc. v. Attorney General, 661 F. Supp. 33 (D.D.C.,
1987), the District Court rejected these arguments:
Accordingly, it appearing that the service fees were established
through appropriate administrative procedures after adequate cost
analysis and with opportunity for public participation, and that
they are in all respects consistent with the statutes being
implemented, summary judgment must be granted to the Attorney
General and denied to plaintiffs.
661 F.Supp. at 36.
In upholding the District Court decision, the Court of Appeals held
that:
In light of settled law, we are constrained to conclude that the
INS fees at issue are for a ``service or thing of value'' which
provides the recipients with a special benefit * * *. Since these
procedures are triggered only at the instance of the individual who
seeks, obviously, to benefit from them, this fee regime cannot in
fairness be characterized as an INS effort to charge for activities
that are carried on principally to benefit the public generally. The
benefit is simply too direct and immediate to a specific,
identifiable beneficiary to consider such services as constituting
primarily a broad part of INS' overall mission to serve the public.
Ayuda, Inc. v. Attorney General, 848 F.2d 1297, at 1301 (D.C. Cir.
1988).
B. Office of Management and Budget (OMB) Guidelines
OMB circular A-25, User Charges, states that as a general policy
``a user charge * * * will be assessed against each identifiable
recipient for special benefits derived from Federal activities beyond
those received by the general public.'' The following discussion is
provided:
When a service (or privilege) provides special benefits to an
identifiable recipient beyond those that accrue to the general
public, a charge will be imposed (to recover the full cost to the
Federal Government for providing the special benefit, or the market
price). For example, a special benefit will be considered to accrue
and a user charge will be imposed when a Government service:
(a) Enables the beneficiary to obtain more immediate or
substantial gains or values (which may or may not be measurable in
monetary terms) than those that accrue to the general public (e.g.,
receiving a patent, insurance, or guarantee provision, or a license
to carry on a specific activity or business or various kinds of
public land use); or
(b) Provides business stability or contributes to public
confidence in the business activity of the beneficiary (e.g.,
insuring deposits in commercial banks); or
(c) Is performed at the request of or for the convenience of the
recipient, and is beyond the services regularly received by other
members of the same industry or group or by the general public
(e.g., receiving a passport, visa, airman's certificate, or a
Custom's inspection after regular duty hours).
Circular No. A-25, User Charges, Executive Office of the President,
Office of Management and Budget, July 8, 1993, pp. 2-3.
C. Department of Justice Guidelines
The Department of Justice issued guidance on User Fee Programs in
April 1993. The guidance states that as a general policy ``a charge
shall be imposed to recover the full cost to the Federal Government of
rendering a service that provides specific benefits to an identifiable
recipient above and beyond those that accrue to the public at large.''
The following discussion is provided:
Cost is a financial measurement of resources used in
accomplishing a specified purpose, carrying out an activity, or
completing a unit of work or a specific project * * *. Direct costs
are those which are proximate and directly traceable to the unit of
output for which the fee is charged. Indirect costs are those which
are more distant, general in nature, and not directly traceable to
the product or service produced.
* * * [E]xisting legislation may require the inclusion of costs
for selected activities not directly related to the unit of
performance or product for which a fee is charged. Where this
occurs, both the direct and indirect costs of such activities should
be included in the cost computation.
User Fee Programs, Department of Justice, Justice Management Division,
April 1993, pp. 3 and 12. The policies and procedures followed in the
development of the proposed fee schedules are consistent with this
guidance.
D. Ratemaking Principles
The above-stated policies, as set forth by statute and more fully
developed by OMB and the Department, comport with reasonable standards
for user charges and are strongly supported by the prescriptions of
economic experts with widely recognized credentials in the field of
ratemaking policy. Any other approach would burden taxpayers with costs
that can be traced directly to the needs of specific individuals, not
to society at large.
One of many similar statements on cost of service as a basic
standard of reasonableness is stated as follows in the authoritative
text by Bonbright, Danielsen, and Kamerschen:
No writer whose views on public utility rates command respect
purports to find a single yardstick by sole reference to which rates
may be judged reasonable or socially desirable as distinguished from
rates that are unreasonable or adverse to the public interest. A
complex of tests of acceptability is required just as would be the
case with the tests of a good automobile, a good income-tax law, or
a good poem. Nevertheless, one standard of reasonable rates can
fairly be said to outrank all others in the importance attached to
it by experts and public opinion alike--the standard of costs of
service, often qualified by the stipulation that the relevant cost
is necessary, true (i.e., private and social) cost or cost
reasonably or prudently incurred.* * *
A cost standard of ratemaking has been most generally accepted
in the regulation of the levels of rates charged by private utility
companies. But even more significant is the widespread adherence to
cost, or to some approximation of cost, as a basis of ratemaking
under public ownership* * * *
Bonbright, Danielsen, and Kamerschen, Principles of Public Utility
Rates, Public Utilities Reports, Inc., Arlington, Va., 2nd ed. 1988,
pp. 109-110.
While the foregoing reference is extracted from a discussion of
public utility rates, the rate standard cited also is applicable to
other pricing situations that require cost recovery in a fair and
reasonable manner.
III. Examinations Fee Account
This section describes the major programs funded by the
Examinations Fee Account.
A. Adjudications and Naturalization Program
The function of this program is to process, adjudicate, and
ultimately grant or deny applications and petitions for benefits
provided under the immigration laws of the United States. Adjudications
activities include processing applications for permanent resident
status, petitions for relatives, temporary and permanent worker
petitions, reentry permits, refugee travel documents, extensions of
temporary stay, employment authorizations, and temporary protected
status. Naturalization activities include the examination of aliens to
determine their qualifications for naturalization, administration of
the oath for citizenship, and issuance of citizenship documents.
B. Refugees and Overseas Program
The function of this program is to adjudicate refugee and asylum
applications, conduct investigations for preference and relative visa
petitions, and conduct other records checks and background
investigations as are required at overseas INS offices. Officers
assigned to this program also provide assistance to citizens and lawful
permanent residents abroad regarding adoptions, immigration, or parole
of alien spouses and children, and other benefits under the Immigration
and Nationality Act. They also review requests for the Attorney General
to grant humanitarian parole into the United States for deserving
persons.
C. Information and Records Management
The Information and Records Management program provides a variety
of services critical to the adjudications and naturalization processes.
These services include: Creating, updating, storing, retrieving, and
tracking alien files; responding to inquiries on application status;
providing information to the public, both in-person and by telephone,
on immigration-related matters; printing and distributing application
forms and instructions and providing them to the public.
D. Data and Communications
The Data and Communications program develops and operates INS
automated information systems which support the adjudications and
naturalization program, and operates the identification card production
facility. Adjudications and naturalization support systems are
currently being integrated and consolidated into the Computer Linked
Application Information Management System (CLAIMS), which provides
adjudication support to service centers, district offices, and ports of
entry. The system, which is operating in the service centers and is
being installed in other field offices, reduces application processing
time and response time to inquiries.
IV. Fee Setting Procedures
This section provides a description of INS fee-setting procedures,
including an explanation of the cost bases for setting fees.
Descriptions of the examinations fees and their cost components and an
explanation of the procedures employed by INS to calculate the costs
are included.
A. History of Current Examinations Fees
Policies pertaining to the assessment of INS user fees and their
underlying costs have evolved over 25 years, beginning in 1968. The
Examinations Fee Account itself has a more recent history, starting in
1989. Prior to 1989, all examinations fee revenues were treated as
general revenues of the Federal Government. They are now credited to
the Examinations Fee Account and used to fund related services.
Procedures to compute examinations fees involve the development and
summation of three cost components: direct costs, indirect costs, and a
surcharge to recover the costs of the Refugees and Overseas program.
These three cost components are described more fully below.
Salient developments preceding the analyses that led to this
proposed rule include the issuance in December 1992 of an audit report
prepared by the Office of the Inspector General (OIG) of the Department
of Justice. That report, entitled ``Controls Over Established User Fee
Accounts in the Immigration and Naturalization Service'' (DOJ OIG Audit
Report No. 93-3), stated that INS's accounting system did not identify
properly all costs that ought to be recovered from user fee accounts.
This view is summarized below:
The review of actual program costs disclosed that all identified
costs were charged to the proper user fee accounts. However, the INS
accounting system does not provide usable cost data applicable to
the user fee program and INS program managers had not identified all
the direct program costs that should have been reimbursed from the
user fee accounts. In addition, various INS units providing indirect
support of personnel and services were not receiving user fee
reimbursement commensurate with the level of resources expended * *
* Since valid direct and indirect program costs went unidentified,
appropriated funds essentially subsidized user fee related program
costs that should have been reimbursed from user fee revenue.
DOJ OIG Audit Report No. 93-3, at p. i.
The finding that all program costs were not being recovered from
user fee accounts triggered several actions by INS that culminated in
the current proposed rule. At the same time that the OIG was conducting
its audit, a senior Justice Department official reviewed the fee-
setting process and proposed changes. As a result, the OIG deferred
additional work in this area. According to the audit report:
A plan was developed and approved and the same Justice official
was detailed to compile user fee costs, revise fee schedules as
necessary to collect revenues sufficient to make each account self-
sustaining, and obtain Congressional approval to reprogram INS
appropriations accordingly. This project was initiated in March 1992
and is scheduled to be completed by the end of FY 1992. Since the
project covered most of the problem areas disclosed by our audit, we
deferred additional audit work in this area.
DOJ OIG Audit Report No. 93-3, at p. ii.
The review of the process conducted during 1992 consisted of a
detailed survey and extensive consultations with all INS program
offices to review the extent to which they provide services to fee
account activities, whether they were commensurately reimbursed for
those services, and whether specific service improvement investments
would be appropriate if additional fee account revenues were available.
An initial reallocation (reprogramming) of program costs proposed
earlier by the Attorney General was approved by Congress, with the
effect of properly assigning some costs of user fee activities to the
fee accounts. The budget enacted by Congress for fiscal year 1993
reflected these reallocations.
The 1992 review found that the Attorney General's reprogramming had
substantially corrected the assignment of costs identifiable at that
point as related to fee account activities, with two exceptions: The
costs of legal proceedings and the costs of management and
administration. In the case of these two programs, some costs are being
charged to fee accounts, but not enough to cover the substantial work
associated with the fee account activities.
The review also concluded that although a number of investments
were recommended by review participants, the recommendations generally
anticipated actions that were planned in future budget cycles.
Therefore the investments would generally be addressed as part of INS's
normal budget review process, rather than as a part of the current fee
adjustment process.
This proposed fee increase incorporates the results of this
extensive review of INS programs, inflationary cost increases since the
last general fee increase in April 1991, and the projected costs of
presently budgeted program investments to improve services to INS's
customers.
B. Costs
1. Cost Components
OMB Circular A-25, in its discussion of cost determination for
purposes of setting fees, provides that ``user charges will be
sufficient to recover the full cost to the Federal Government * * * of
providing the service * * *.'' It also provides that those costs shall
include an ``appropriate share of the management and supervisory
costs.'' Circular No. A-25, User Charges, Executive Office of the
President, Office of Management and Budget, July 8, 1993, pp. 3-5.
Direct costs are only the most readily identifiable costs of providing
user services. Each service also has indirect components which,
although not as easily identifiable, are nevertheless causally related
to the costs of providing services. Each examinations fee has three
components: direct costs, indirect costs, and a surcharge to cover the
costs of the Refugees and Overseas Program.
a. Direct costs. Direct costs are those costs directly related to
the processing of a particular application form for a particular
benefit. Direct costs include: the pay of the Adjudications officers
and clerical staff working on each type of application and the costs of
their associated personnel benefits; the costs of Federal Bureau of
Investigation (FBI) name and fingerprint checks; where applicable, the
costs by application of naturalization ceremonies conducted by United
States Courts; and the costs of INS immigration document and card
production. The pay costs are calculated by multiplying average
adjudications processing time by the hourly pay for the average grade
levels of adjudicators and clerks.
b. Indirect costs. Indirect costs reflected in the current fee
structure are defined as the costs of supervisory, management, and
administrative activities, related staff training, records, data
processing, and files services, legal services, and space and support
costs of providing immigration benefits under the Immigration and
Nationality Act and related statutes.
Indirect costs also include costs in the management and
administration portion of the INS budget, such as the costs of the
personnel administration work needed to recruit and pay the officers
and clerks who process customers' applications for benefits. The
activities associated with these costs are no less essential to
providing INS services to its customers than are the direct costs.
These indirect costs are distinguished only by the somewhat greater
complexity of determining the portion of such costs that are
attributable to work done for fee-paying customers. In addition,
indirect costs include the cost of auditing the Examinations Fee
Account by the Department of Justice Inspector General.
c. Surcharge. The costs to carry out the Refugees and Overseas
Program are borne by the Examinations Fee Account, at the direction of
Congress. See section 286(m) of the INA, 8 U.S.C. 1356(m). These costs
are treated as a surcharge that is added to the examinations fees.
2. Cost Transfers
A transfer is the shift of costs from one account to another.
Transfers arise when costs from one account are identified as
appropriately charged to another account. Transfers have been prompted
by cost reviews such as that conducted in 1992 to refine the
identification of costs attributable to user fee activities. Transfers
found in the 1992 review to be necessary to meet statutory requirements
are as follows:
a. Legal proceedings. A review of INS workload statistics
identified the equivalent of 78 additional positions and work years of
legal activities that properly should be charged to Examinations Fee
Account activities. These legal activities include appearances before
the Immigration Court for hearings related to asylum, adjustment of
status, registry, waivers of inadmissibility, and rescission; the
preparation of arguments and briefs for such hearings; appearances
before Federal and state courts for contested naturalization hearings;
appearances in U.S. District Courts in mandamus and declaratory
judgment cases; preparation of arguments, briefs, and litigation
reports in such cases; and associated legal consultations and
preparation of legal memoranda. Also included are resources for support
staff, and Special Assistant U.S. Attorney, Regional Counsel, and
District Counsel positions chargeable for Examinations work. INS will
propose to transfer these 78 positions, work years, and associated
costs from the Salaries and Expenses appropriation to the Examinations
Fee Account. Copies of this review are available upon request.
b. Management and administration. Management and Administration
(M&A) resources have been assigned to the Examinations Fee Account
using a ``distribution-key'' concept. Distribution-key is a term
borrowed from the U.S. Postal Service's cost allocation practice. With
this practice, costs which cannot be directly related to a certain
class or account are distributed on the basis of costs which can be
directly assigned. For example, in the case of mail processing, the
costs associated with supervision of mail clerks (where no direct
statistical assignment mechanisms are in place) are distributed on the
same basis as are the costs for the mail clerks themselves (where
statistical workload measurement systems are in place). See, for
example, Postal Rate Commission, Docket No. R90-1, United States Postal
Service Library Reference F-1, Summary Description of USPS Cost
Development by Segments and Components, fiscal year 1988, pp. 2-2
through 2-5.
For this process, a full-time equivalent work year (referred to as
``work year'' or ``FTE'') was chosen as the distribution-key. Costs
were allocated based upon the percentage distribution of work years
between the Examinations Fee Account and all other accounts in INS. See
Exhibit 1, Derivation of Management and Administration Distribution
Key.
At INS, examinations officer work years relate directly to workload
volume, and the management and administration work that supports the
examinations officers are dependent upon the number of officer work
years. Work years are a useful gauge of the resources needed in each
program because they include the contributions of both full and part-
time staff. Other possible distribution-keys (positions and dollars)
are believed to be inferior to work years. Positions alone are inferior
as a distribution-key because they include only full-time permanent
staff and vacancies. The use of positions would understate proper
assignment levels to the extent that part-time workers are ignored, but
would overstate proper assignment levels to the extent that vacancies
are included. Dollars are also an inferior distribution-key because
they may be skewed by the inclusion of one-time expenditures or other
unique costs.
The distribution-key concept is consistent with the guidance
provided by the Department. The following discussion is provided:
For each overhead activity * * *, estimate, on a rational basis,
approximately what percentage of the amount is indirectly relatable
or incidental to the functions and costs * * * . The percentage
assigned ordinarily should be based on the relative amount of time
or outputs traceable to the particular unit of performance. In the
case of very general, non-traceable activities (e.g., executive
direction or congressional and public affairs), where there are
labor-intensive performance units, general or non-traceable cost
allocations may be predicated on relative employment (costs or full
time personnel equivalents) devoted directly to the fee account
revenue-generating programs vis-a-vis all other programs.
User Fee Programs, Department of Justice, Justice Management Division,
April 1993, pp. 10-11.
To distribute costs properly, based on the distribution-key
concept, INS will propose to transfer 143 positions, 133 work years,
and associated costs from the Salaries and Expenses appropriation to
the Examinations Fee Account. However, INS will not propose to use all
of the resources potentially available as a result of the transfer to
correct documented deficiencies in M&A program support activities in
fiscal year 1994. Rather, INS will propose to use part of these
resources to support additional work years for the Adjudications and
Naturalization Program to ensure good service during the period of
transition when more work will be shifted from district offices to
service centers (the ``Direct Mail III'' program). INS will defer full
use of the resources for program support activities until fiscal year
1995 or 1996, as conditions warrant.
3. Investments to Improve Service Quality
Service quality improvements are made possible by investments in
staff additions and capital assets. One investment which will be
financed by the examinations fee increase will be the continued
expansion of INS service center operations. These expanded automation-
intensive facilities will improve productivity and reduce delays in
application processing operations. The transfer of work now conducted
at the district offices to the service centers will improve processing
at district offices and allow district office staff to devote more time
to those applications which require personal contact with people
applying for benefits.
C. Proposed Fee Increase
The need for increased revenues which underlies the proposed fee
increase was calculated by adjusting the projected total costs of
providing adjudications and naturalization services to include the
transfers and service improvements described above, and comparing the
costs to the revenue projected under the current fee schedule. Because
they are reflected in INS budget projections, the calculation
incorporates the effects of inflation-based cost increases that have
occurred since the last general fee increase in April 1991 and all
other mandatory adjustments to the cost base. This calculation yields a
required percentage revenue increase which, with limited exceptions,
was then uniformly applied to the existing schedule of fees. The
exceptions to this procedure, required because of (i) the consolidation
of forms and (ii) certain technical adjustments, are described below.
Exhibit 2, Projected Examinations Fee Account, shows the projected
fiscal year 1994 resource allocations to the Examinations Fee Account.
The projected transfers from the Salaries and Expenses appropriation,
which are incorporated in Exhibit 2, are shown in Exhibit 3, Projected
Transfers From Salaries and Expenses Appropriation to Examinations Fee
Account.
Exhibit 4, Proposed Examinations Fee Revenue Adjustment, shows how
the proposed fee increase was computed. The calculations are based on
the projected fiscal year 1994 budget, and begin with an estimate of
the funds that will remain in the Examinations Fee Account at the close
of fiscal year 1993.
INS projects that $18.7 million will be carried forward in the
Examinations Fee Account from fiscal year 1993 to fiscal year 1994
(Line 1). Revenue of $314.7 million is anticipated in fiscal year 1994
at the fee levels currently in place (Line 2). The sum of these two
amounts is $333.4 million, which is the total amount projected to be
available for the Examinations Fee Account for fiscal year 1994 in the
absence of a fee increase (Line 3).
INS projects that the costs of Examinations Fee Account programs
for fiscal year 1994 will be $331.5 million (Line 4). Because of the
impossibility of predicting precisely the number of applications and
associated revenue and workload in any given time period, and in order
to ensure that there are sufficient resources to adjudicate
applications, including those currently in process, INS has determined
the need to retain a balance equivalent to one month of costs, or $27.6
million (Line 5). The remainder of that amount, if any, would be
carried forward to the next fiscal year to continue processing
applications. The existence of a carryforward balance is consistent
with INS' past practice. As explained below, technical adjustments were
applied to the fee base for some forms to ensure fair distribution of
costs among users. The net effect of those adjustments is subtracted so
that they will have no net impact on the aggregate INS fee revenue
requirement (Line 6). The algebraic sum of these three amounts is the
total revenue requirement of $356.9 million (Line 7).
Subtracting the revenue requirement from the funds available shows
a revenue shortfall of $23.5 million (Line 8). Dividing this shortfall
by the revenues projected under the current fee schedule produces the
percentage by which the fees must be increased, 7.5 percent (Line 9).
D. Computation of the Fees
The proposed fees for most Immigration and Naturalization forms
were calculated by applying the increase of 7.5 percent to the current
fee, and rounding the result upward or downward to the nearest $5.00.
Fees adjusted in this manner are shown on Exhibit 5.
There were two exceptions to this computational procedure. One
exception is a consequence of forms consolidation actions affecting the
Petition for a Nonimmigrant Worker, I-129, where procedures and charges
have been altered in response to experience with the consolidated forms
and suggestions from users. The new charges associated with the I-129
are described below, and presented in Exhibit 6. The other exception is
associated with technical adjustments to the computational base for
certain forms, as described below and shown in Exhibit 7.
1. Petition For a Nonimmigrant Worker, I-129
On October 4, 1991, INS published a proposed revision of Form I-
129, Petition for a Nonimmigrant Worker (56 FR 50350). This revision
consolidated a number of separate application and petition processes
that had previously been handled on separate application forms, each
with separate fees. To the extent possible, the new form retained the
original fee structure, which was based upon the costs associated with
each separate adjudication.
After the consolidation of Form I-129, INS received a number of
comments and questions regarding the I-129 process. As a result, INS
proposes to revise Form I-129 to incorporate several additional
processes created by the Immigration Act of 1990 (Pub. L. 101-649) and
the Miscellaneous and Technical Immigration and Naturalization
Amendments of 1991 (Pub. L. 102-232), and to simplify the application
procedures in response to public comments. For example, INS proposes to
revise procedures in instances where an employer is filing for one
worker to allow the worker's dependents to be included in the petition
instead of requiring separate applications. In addition, INS would no
longer require separate petitions for groups where the members will be
applying for visas at more than one consulate or for visa-exempt
workers applying for admission at different ports of entry.
Current Form I-129 Fee Structure:
The fee for a Petition for a Nonimmigrant Worker consists of a base
fee of $70 plus either:
--$10 per worker if requesting consulate or port-of-entry notification
for visa issuance or admission;
--$80 per worker if requesting a change of status; or
--$50 per worker if requesting an extension of stay.
Proposed Form I-129 Fee Structure:
The proposed fee for a Petition for a Nonimmigrant Worker is $120
per petition plus $10 for each dependent if filing for one worker, and
$100 per petition plus $20 for each worker if filing for more than one
worker. The changes simplify the application process and more fairly
distribute the costs of processing.
Because INS has consolidated actions which were previously
separate, data are not yet available for establishing a fee based upon
actual cost experience. Therefore, the proposed fee is based upon
estimates of these costs.
2. Technical Adjustments to Computation Base for Certain Applications
Before undertaking the percentage computations to arrive at the fee
schedules proposed in this rule, INS reviewed the cost information
supporting the current fee schedule. The information on processing
times and related costs, the costs of FBI name and fingerprint checks,
the costs of naturalization ceremonies conducted by United States
Courts, the costs of INS immigration document and card production, the
indirect costs and the surcharge were examined. (Copies of this
analysis are available upon request.) Some differences were found
between the current fees and the statistical information on the
associated costs. The differences are small, and probably result from
data corrections after the fees were computed.
In order to ensure fair distribution of costs among users, INS
adjusted, upward or downward as necessary, the current fees for forms
where differences were identified, before computing the proposed fee
increase for those forms. INS ensured that this process had no net
effect on the total revenue increase proposal by deducting the revenue
increase that would be caused by the technical adjustments from the
total revenue requirement before calculating the percentage fee revenue
adjustment that would be applied to all forms. As previously noted,
this deduction appears on Line 6 of Exhibit 4, where the fee revision
requirement is calculated.
V. Proposed Fee Adjustments
Proposed fee adjustments are shown in Exhibits 5-7.
In accordance with 5 U.S.C. 605(b), the Attorney General certifies
that this rule does not have a significant adverse economic impact on a
substantial number of small entities. This rule is not considered to be
a major rule within the meaning of section 1(b) of E.O. 12291, nor does
this rule have Federalism implications warranting the preparation of a
Federalism Assessment in accordance with E.O. 12612.
The information collection requirements contained in this rule have
been cleared by the Office of Management and Budget under the
provisions of the Paperwork Reduction Act. Clearance numbers for these
collections are contained in 8 CFR 299.5, Display of Control Numbers.
List of Subjects in 8 CFR Part 103
Administrative practice and procedure, Authority delegations
(Government agencies), Fees, Forms, Freedom of information, Privacy,
Reporting and recordkeeping requirements, Surety bonds.
Accordingly, part 103 of chapter I of title 8 of the Code of
Federal Regulations is proposed to be amended as follows:
PART 103--POWERS AND DUTIES OF SERVICE OFFICERS; AVAILABILITY OF
SERVICE RECORDS
1. The authority citation for part 103 continues to read as
follows:
Authority: 5 U.S.C. 552, 552a; 8 U.S.C. 1101, 1103, 1201, 1252
note, 1252b, 1304, 1356; 31 U.S.C. 9701; E.O. 12356, 47 FR 14874,
15557; 3 CFR, 1982 Comp., p. 166; 8 CFR part 2.
2. Section 103.7, paragraph (b)(1) is amended by revising the
entries listed to read as follows:
Sec. 103.7 Fees.
* * * * *
(b) * * *
(1) * * *
Form I-17. For filing application for school approval, except in
the case of a school or school system owned or operated as a public
educational institution or system by the United States or a state or
political subdivision thereof--$140.
Form I-90. For filing application for Alien Registration Receipt
Card (Form I-551) in lieu of an obsolete card or in lieu of one lost,
mutilated or destroyed, or in a changed name--$75.
Form I-102. For filing application (Form I-102) for Arrival-
Departure Record (Form I-94) or Crewman's Landing Permit (Form I-95),
in lieu of one lost, mutilated, or destroyed--$65.
* * * * *
Form I-129. For filing a petition for a nonimmigrant worker--$120
per petition plus $10 for each dependent if filing for one worker; $100
per petition plus $20 for each worker if filing for more than one
worker.
Form I-192F. For filing petition to classify nonimmigrant as
fiancee or fiance under section 214(d) of the Act--$75.
* * * * *
Form I-130. For filing petition to classify status of alien
relative for issuance of immigrant visa under section 204(a) of the
Act--$80.
Form I-131. For filing application for issuance of reentry permit--
$70.
Form I-140. For filing petition to classify preference status of an
alien on basis of profession or occupation under section 204(a) of the
Act--$75.
Form I-191. For filing application for discretionary relief under
section 212(c) of the Act--$90.
Form I-192. For filing application for discretionary relief under
section 212(d)(3) of the Act, except, in an emergency case, or where
the approval of the application is in the interest of the United States
Government--$90.
Form I-193. For filing application for waiver of passport and/or
visa--$95.
Form I-212. For filing application for permission to reapply for an
excluded or deported alien, an alien who has fallen into distress and
has been removed as an alien enemy, or an alien who has been removed at
Government expense in lieu of deportation--$95.
* * * * *
Form I-360. For filing petition for an Amerasian, Widow(er), or
Special Immigrant--$80, except there is no fee for a petition seeking
classification as an Amerasian.
Form I-485. For filing application for permanent residence status
or creation of a record of lawful permanent residence--$130 for an
applicant 14 years of age or older; $100 for an applicant under the age
of 14 years.
* * * * *
Form I-526. For filing a petition for an alien entrepreneur--$155.
* * * * *
Form I-539. For filing an application to extend or change
nonimmigrant status--$75 plus $10 per co-applicant.
* * * * *
Form I-600. For filing petition to classify orphan as an immediate
relative for issuance of immigrant visa under section 204(a) of the
Act. (When more than one petition is submitted by the same petitioner
on behalf of orphans who are brothers or sisters, only one fee will be
required.)--$155.
Form I-600A. For filing application for advance processing of
orphan petition. (When more than one petition is submitted by the same
petitioner on behalf of orphans who are brothers or sisters, only one
fee will be required.)--$155.
Form I-601. For filing application for waiver of ground of
excludability under section 212 (h) or (i) of the Act. (Only a single
application and fee shall be required when the alien is applying
simultaneously for a waiver under both those subsections)--$95.
Form I-612. For filing application for waiver of the foreign-
residence requirement under section 212(e) of the Act--$95.
* * * * *
Form I-751. For filing an application to remove the conditions on
residence which is based on marriage--$80.
* * * * *
Form I-765. For filing an application for employment authorization
pursuant to 8 CFR 274a.13--$70.
* * * * *
Form I-817. For filing application for voluntary departure under
the Family Unity Program--$80. The maximum amount payable by the
members of a family filing their applications concurrently shall be
$225.
* * * * *
Form N-300. For filing application for declaration of intention--
$75.
* * * * *
Form N-400. For filing an application for naturalization--$95. For
filing an application for naturalization under section 405 of the
Immigration Act of 1990, if the applicant will be interviewed in the
Philippines--$120.
* * * * *
Form N-470. For filing application for section 316(b) or 317 of the
Act benefits--$115.
Form N-565. For filing application for a certificate of
naturalization or declaration of intention in lieu of a certificate or
declaration alleged to have been lost, mutilated, or destroyed; for a
certificate of citizenship in a changed name under section 343 (b) or
(d) of the Act; or for a special certificate of naturalization to
obtain recognition as a citizen of the United States by a foreign state
under section 343(c) of the Act--$65.
Form N-600. For filing application for certificate of citizenship
under section 309(c) or section 341 of the Act--$100.
Form N-643. For filing an application for a certificate of
citizenship on behalf of an adopted child--$80.
Form N-644. For filing an application for posthumous citizenship--
$80.
* * * * *
Dated: December 23, 1993.
Janet Reno,
Attorney General.
Exhibit 1
Note: The following exhibit will not appear in the Code of
Federal Regulations.
Derivation of Management and Administration (M&A) Distribution Key
[Fiscal Year 1994]
----------------------------------------------------------------------------------------------------------------
Full-Time Equivalent Work Years (FTE)
--------------------------------------------------------------------------
Description Examinations Fee
Account All Other INS Accounts Total
----------------------------------------------------------------------------------------------------------------
Non-M&A Work Years................... 3,951 13,291 17,242
Percent.............................. 22.9 77.1 100
----------------------------------------------------------------------------------------------------------------
Exhibit 2
Note: The following exhibit will not appear in the Code of
Federal Regulations.
Examinations Fee Account--Projected Positions, Work Years and Dollars
[Fiscal Year 1994]
----------------------------------------------------------------------------------------------------------------
Program Positions Work years Dollars ($000)
----------------------------------------------------------------------------------------------------------------
Inspections............................................ 241 240 15,847
Border Patrol.......................................... ................. ................. .................
Investigations......................................... 100 100 7,533
Detention & Deportation................................ ................. ................. .................
Adjudications & Naturalization......................... 2,258 2,129 145,859
Refugees & Overseas.................................... 412 472 40,761
Training............................................... 22 20 3,153
Data & Communications.................................. 72 68 34,863
Information & Records Management....................... 736 801 51,359
Intelligence........................................... 8 8 549
Legal Proceedings...................................... 116 112 9,432
Construction & Engineering............................. 1 1 178
Management & Administration............................ 213 204 21,939
--------------------------------------------------------
Total.............................................. 4,179 4,155 331,473
----------------------------------------------------------------------------------------------------------------
Exhibit 3
Note: The following exhibit will not appear in the Code of
Federal Regulations.
Projected Transfers; Salaries and Expenses Appropriation to Examinations Fee Account--Positions, Work Years and
Dollars
[Fiscal Year 1994]
----------------------------------------------------------------------------------------------------------------
Program Positions Work years Dollars ($000)
----------------------------------------------------------------------------------------------------------------
Inspections............................................ ................. ................. .................
Border Patrol.......................................... ................. ................. .................
Investigations......................................... ................. ................. .................
Detention & Deportation................................ ................. ................. .................
Adjudications & Naturalization......................... ................. ................. .................
Refugees & Overseas.................................... ................. ................. .................
Training............................................... ................. ................. .................
Data & Communications.................................. ................. ................. .................
Information & Records Management....................... ................. ................. .................
Intelligence........................................... ................. ................. .................
Legal Proceedings...................................... 78 78 6,304
Construction & Engineering............................. ................. ................. .................
Management & Administration\1\......................... 126 117 12,311
--------------------------------------------------------
Total.............................................. 204 195 $18,615
----------------------------------------------------------------------------------------------------------------
\1\To distribute costs properly, INS would transfer 143 positions, 133 work years and associated costs. However,
in FY 1994 INS will propose to transfer only 126 positions, 117 work years and associated costs, so that the
difference can be used to support additional work years in the adjudications and naturalization program during
the period of transition when work is shifted to service centers.
Exhibit 4
Note: The following exhibit will not appear in the Code of
Federal Regulations.
Proposed Examinations Fee Revenue Adjustment
[Fiscal Year 1994]
------------------------------------------------------------------------
Line Description Dollars (000)
------------------------------------------------------------------------
Funds Availability
1....... Carry-forward from FY 1993.................... $18,677
2....... Anticipated FY 1994 Revenue at Current Fee 314,741
Levels.
---------------
3....... Projected FY 1994 Funds Availability (Line 1 + 333,418
Line 2).
Costs
4....... Funding Requirements (1994 Costs)............. 331,473
5....... Planned Carry-forward to FY 1995 (1 months' 27,623
cost).
6....... Less: Effect of Technical Adjustments......... 2,180
---------------
7....... Total Revenue Requirement (Line 4 + Line 5 - 356,916
Line 6).
Impact on Fee Schedule
8....... Additional Revenue Required (Line 3 - Line 7). 23,498
9....... Fee Revenue Adjustment Required (Line 8 7.5%
Line 2).
------------------------------------------------------------------------
Exhibit 5
Note: The following exhibit will not appear in the Code of
Federal Regulations.
Examinations Fee Account
[Current Fees and Proposed Fees]
------------------------------------------------------------------------
Proposed
Form No. Form name/description Current fee fee
------------------------------------------------------------------------
I-17...... Petition for Approval of School $130 140
for Attendance by Nonimmigrant
Students.
I-90...... Application to Replace Alien 70 75
Registration Card.
I-130..... Petition for Alien Relative....... 75 80
I-131..... Application for Travel Document... 65 70
I-140..... Immigrant Petition for Alien 70 75
Worker.
I-192..... Application for Advance Permission 85 90
to Enter as Nonimmigrant.
I-193..... Application for Waiver of Passpart 90 95
and/or Visa.
I-212..... Application for Permission to 90 95
Reapply for Admission into the
U.S. After Deportation or Removal.
I-360..... Petition for Amerasian, Widow(er), 75 80
or Special Immigrant (except for
a petition seeking classification
as an Amerasian in which case the
fee is waived).
I-485..... Application to Register Permanent
Residence or Adjust Status.
If 14 years of age or older....... 120 130
If under 14 years of age.......... 95 100
I-539..... Application to extend/Change 70 75
Nonimmigrant Status.
I-601..... Application for Waiver of Grounds 90 95
of Excludability.
I-612..... Application for Waiver of the 90 95
Foreign Residence Requirement.
I-751..... Petition to Remove the Condition 75 80
on Residence.
I-817..... Application for Voluntary 75 80
Departure Under Family Unity
Program.
N-300..... Application to File Declaration of 70 75
Intention.
N-400..... Application for Naturalization.... 90 95
------------------------------------------------------------------------
Exhibit 6
Note: The following exhibit will not appear in the Code of
Federal Regulations.
EXAMINATIONS FEE ACCOUNT
Current Fee and Proposed Fee
Petition for a Nonimmigrant Worker (I-129)
Current Fee Structure:
The fee for a petition is a base fee of $70 plus either:
--$10 per worker if requesting consulate or port-of-entry
notification for visa issuance or admission;
--$80 per worker if requesting a change of status; or
--$50 per worker if requesting an extension of stay.
Proposed Fee Structure:
If filing for one worker, $120 per petition plus $10 for each
dependent.
If filing for more than one worker, $100 per petition plus $20 for
each worker.
Exhibit 7
Note: The following exhibit will not appear in the Code of
Federal Regulations.
Examinations Fee Account
[Current Fee and Proposed Fee, with Technical Adjustments]
----------------------------------------------------------------------------------------------------------------
Form No.
Form name/description Current fee Adjusted fee Proposed fee
----------------------------------------------------------------------------------------------------------------
I-102 Application for Replacement/Initial Nonimmigrant $50 $60 $65
Arrival Departure Document.
I-129F Petition for Alien Fiance(e).......................... 75 70 75
I-191 Application for Advance Permission to Return to 90 85 90
Unrelinquished Domicile.
I-526 Immigrant Petition by Alien Entrepreneur.............. 140 145 155
I-600 Petition to Classify Orphan as an Immediate Relative.. 140 145 155
I-600A Application for Advance Processing of Orphan Petition. 140 145 155
I-765 Application for Employment Authorization.............. 60 65 70
N-470 Application to Preserve Residence for Naturalization 90 105 115
Purposes.
N-565 Application for Replacement Naturalization/Citizenship 50 60 65
Document.
N-600 Application for Certification of Citizenship.......... 90 95 100
N-643 Application for Certificate of Citizenship in Behalf 85 75 80
of an Adopted Child.
N-644 Application for Posthumous Citizenship................ 60 75 80
----------------------------------------------------------------------------------------------------------------
[FR Doc. 94-298 Filed 1-7-94; 8:45 am]
BILLING CODE 4410-01-M
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