issue-1996-04-08•Federal Register proposed rules — 1996-04-08
Federal Register proposed rules — 1996-04-08
issue-1996-04-08Federal Register proposed rules — 1996-04-08Proposed 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. 98-8628 Oklahoma Abandoned Mine Land Reclamation Plan Amendment
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15435-15437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8628]
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DEPARTMENT OF THE INTERIOR
30 CFR Part 936
[SPATS No. OK-015-FOR]
Oklahoma Abandoned Mine Land Reclamation Plan Amendment
AGENCY: Office of Surface Mining Reclamation and Enforcement (OSM),
Interior.
ACTION: Proposed Rule; Reopening and Extension of Public Comment Period
on Proposed Amendment.
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SUMMARY: OSM is announcing receipt of additional revisions pertaining
to a previously proposed amendment to the Oklahoma abandoned mine land
reclamation plan (hereinafter referred to as the ``Oklahoma plan'')
under the Surface Mining Control and Reclamation Act of 1977 (SMCRA),
as amended by the Abandoned Mine Reclamation Act of 1990. The
additional revisions for Oklahoma's proposed plan amendment pertain to
eligible lands and water. The amendment is intended to revise the
Oklahoma plan to be consistent with the corresponding Federal
regulations and SMCRA, as amended.
DATES: Written comments must be received by 4:00 p.m., c.d.t., April
23, 1996.
ADDRESSES: Written comments should be mailed or hand delivered to Jack
R. Carson, Acting Director, Tulsa Field Office, at the address listed
below.
Copies of the Oklahoma plan, the proposed amendment, and all
written comments received in response to this document will be
available for public review at the addresses listed below during normal
business hours, Monday through Friday, excluding holidays. Each
requester may receive one free
[[Page 15436]]
copy of the proposed amendment by contacting OSM's Tulsa Field Office.
Jack R. Carson, Acting Director, Tulsa Field Office, Office of Surface
Mining Reclamation and Enforcement, 5100 East Skelly Drive, Suite 470,
Tulsa, Oklahoma 74135-6547, Telephone: (918) 581-6430.
Oklahoma Conservation Commission, 2800 N. Lincoln Blvd., Suite 160,
Oklahoma City, Oklahoma 73105-4210, Telephone: (405) 521-2384.
FOR FURTHER INFORMATION CONTACT: Jack R. Carson, Acting Director, Tulsa
Field Office, Telephone: (918) 581-6430.
I. Background on the Oklahoma Plan
On January 21, 1982, the Secretary of the Interior approved the
Oklahoma plan. Background information on the Oklahoma plan, including
the Secretary's findings, the disposition of comments, and the approval
of the plan can be found in the January 21, 1982, Federal Register (47
FR 2989). Subsequent actions concerning Oklahoma's plan and amendments
to the plan can be found at 30 CFR 936.25.
II. Discussion of the Proposed Amendment
By letter dated November 13, 1995 (Administrative Record No. OAML-
63), Oklahoma submitted a proposed amendment to its plan pursuant to
SMCRA, as amended. Oklahoma submitted the proposed amendment in
response to a September 26, 1994, letter (Administrative Record No.
OAML-65) that OSM sent to Oklahoma in accordance with 30 CFR 884.15(d).
Oklahoma proposed revision of the Oklahoma administrative rules at OAC
155:15, Oklahoma Abandoned Mine Land Program, and the Oklahoma plan at
sections 884.13(c)(1), Goals and Objectives; 884.13(c)(2), Project
Ranking and Selection; 884.13(c)(3), Interagency Coordination;
884.13(c)(5), Eligible Lands and Waters; 884.13(c)(7), Public
Participation; and 884.13(d)(1), Administrative and Management
Structure.
OSM announced receipt of the proposed amendment in the December 21,
1995, Federal Register (60 FR 66244) and invited public comment on its
adequacy. The public comment period ended January 22, 1996.
During its review of the amendment, OSM identified concerns
relating to Oklahoma's proposal to revise the administrative
regulations at OAC 155.15-1-5, Eligible Lands and Water, and the
Oklahoma plan at section 884.13(c)(5), Eligible Lands and Water. These
revisions were intended to allow expenditure of funds for reclamation
of certain lands and water affected by mining after August 3, 1977, the
effective date of SMCRA. OSM notified Oklahoma of the concerns by
telephone on March 15, 1996, and by telefax on March 19, 1996
(Administrative Record Nos. OAML-71 and OAML-72). Oklahoma responded in
a letter dated March 21, 1996, by submitting revisions to its amendment
(Administrative Record No. OAML-69).
Oklahoma proposes additional revisions to the Oklahoma plan at
section 884.13(c)(5), Eligible Lands and Water.
A new provision is added at subsection 884.13(c)(5)(C). This
provision performs the following functions:
Prescribes that for post-August 3, 1977, sites, states may
expand funds available under SMCRA 402(g)(1) and (5) (state share and
historic coal distribution);
Requires the State to make certain findings outlined in
OAC 155:15-1-5(b,c,d); and
Requires that the State determine that the reclamation
priority of a site be the same or more urgent than that of pre-August
4, 1977 sites.
A new provision is added at subsection 884.13(c)(5)(D) that
requires the State to use any related financial recoveries from
responsible parties for reclamation at the site, or to reimburse the
Abandoned Mine Land Reclamation Fund.
The portions of the Oklahoma plan previously identified as
subsections 884.13(c)(5)(C) and (D) are redesignated as 884.13(c)(5)(E)
and (F).
III. Public Comment Procedures
OSM is reopening the comment period on the proposed Oklahoma plan
amendment to provide the public an opportunity to reconsider the
adequacy of the proposed amendment in light of the additional materials
submitted. In accordance with the provisions of 30 CFR 884.14 and
884.15(a), OSM is seeking comments on whether the proposed amendment
satisfies the applicable plan approval criteria of 30 CFR 884.14. If
the amendment is deemed adequate, it will become part of the Oklahoma
plan.
Written Comments
Written comments should be specific, pertain only to the issues
proposed in this rulemaking, and include explanations in support of the
commenter's recommendations. Comments received after the time indicated
under DATES or at locations other than the Tules Field Office will not
necessarily be considered in the final rulemaking or included in the
Administrative Record.
IV. Procedural Determinations
Executive Order 12866
This proposed rule is exempted from review by the Office of
Management and Budget (OMB) under Executive Order 12866 (Regulatory
Planning and Review).
Executive Order 12778
The Department of the Interior has conducted the reviews required
by section 2 of Executive Order 12778 (Civil Justice Reform) and has
determined that, to the extent allowed by law, this rule meets the
applicable standards of subsections (a) and (b) of that section.
However, these standards are not applicable to the actual language of
State abandoned mine land reclamation plans and revisions thereof since
each such plan is drafted and promulgated by a specific State, not by
OSM. Decisions on proposed State abandoned mine land reclamation plans
and revisions thereof submitted by a State are based on a determination
of whether the submittal meets the requirements of Title IV of SMCRA
(30 U.S.C. 1231-1243) and 30 CFR Parts 884 and 888.
National Environmental Policy Act
No environmental impact statement is required for this rule since
agency decisions on proposed State abandoned mine land reclamation
plans and revisions thereof are categorically excluded from compliance
with the National Environmental Policy Act (42 U.S.C. 4332) by the
Manual of the Department of the Interior (516 DM 6, appendix 8,
paragraph 8.4B(29)).
Paperwork Reduction Act
This rule does not contain information collection requirements that
require approval by OMB under the Paperwork Reduction Act (44 U.S.C.
3507 et seq.).
Regulatory Flexibility Act
The Department of the Interior has determined that this rule will
not have a significant economic impact on a substantial number of small
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
The State submittal which is the subject of this rule is based upon
Federal regulations for which an economic analysis was prepared and
certification made that such regulations would not have a significant
economic effect upon a substantial number of small entities.
Accordingly, this rule will ensure that existing requirements
established by SMCRA or previously
[[Page 15437]]
promulgated by OSM will be implemented by the State. In making the
determination as to whether this rule would have a significant economic
impact, the Department relied upon the data and assumptions in the
analyses for the corresponding Federal regulations.
List of Subjects in 30 CFR Part 936
Intergovernmental relations, Surface mining, Underground mining.
Dated: April 12, 1996.
Brent Wahlquist,
Regional Director, Mid-Continent Regional Coordinating Center.
[FR Doc. 98-8628 Filed 4-5-96: 8:45 am]
BILLING CODE 4310-05-M
Complete official Federal Register PDF
FR Doc. 96-8767 Western Pacific Crustacean Fisheries; Amendment 9
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15452-15457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8767]
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 681
[Docket No. 960401094-6094-01; I.D. 022296D]
RIN 0648-AI32
Western Pacific Crustacean Fisheries; Amendment 9
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Proposed rule; request for comments.
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SUMMARY: NMFS issues a proposed rule to implement Amendment 9 to the
Fishery Management Plan for the Crustacean Fisheries of the Western
Pacific Region (FMP). The rule would establish a new annual harvest
limitation program for the Northwestern Hawaiian Islands (NWHI) lobster
fishery based on the status of stocks and an explicit level of risk of
overfishing. This would eliminate operational problems with the current
quota system. Current prohibitions on retaining juvenile lobsters and
berried lobsters would be eliminated. The rule would establish
framework procedures to implement regulatory changes if needed in the
future. The rule is intended to maintain the productivity of the stocks
while providing a reasonable opportunity for permit holders to
participate in the fishery and to maintain their markets. The changes
also would improve the
[[Page 15453]]
administration of the management program and improve enforcement
efforts.
DATES: Written comments must be received by May 23, 1996.
ADDRESSES: Copies of Amendment 9 and the associated environmental
assessment and Regulatory Impact Review/Initial Regulatory Flexibility
Analysis (IRFA) may be obtained from Kitty M. Simonds, Executive
Director, Western Pacific Fishery Management Council (Council), 1164
Bishop St., Suite 1405, Honolulu, HI 96813.
Comments on the proposed rule should be sent to Hilda Diaz-
Soltero, Director, Southwest Region, NMFS (Regional Director), 501 West
Ocean Boulevard, Suite 4200, Long Beach, CA 90802. Send comments on the
modifications to approved collection-of-information requirements to the
Regional Director and to the Office of Information and Regulatory
Affairs, Office of Management and Budget, ATTN: Paperwork Reduction
Project 0648-0204 and 0648-0214, Washington, D.C. 20503.
FOR FURTHER INFORMATION CONTACT: Kitty M. Simonds at (808) 522-8220;
Svein Fougner at (310) 980-4034; or Alvin Z. Katekaru at (808) 973-
2985.
SUPPLEMENTARY INFORMATION: The FMP was originally approved in 1983 and
governs fishing for spiny and slipper lobster in the NWHI. The FMP
originally included a variety of measures that have traditionally been
used in crustacean fisheries, including size limits, a ban on retention
of berried female lobsters, area closures, and escape vents for
sublegal lobsters. At that time, the stock was estimated to be able to
support a fishery of one million or more lobsters per year.
The FMP has been amended eight times as more information has become
available and problems in the fishery have been identified. In 1992,
through Amendment 7, an annual quota, closed season, and limited entry
program were established (57 FR 10437, March 26, 1992) in response to a
dramatic decline in lobster landings and catch-per-unit effort (CPUE)
from 1990 through 1991. The annual quota is derived by a formula that
reflects a ``constant escapement'' management goal; that is, the
harvest is limited to the surplus above a given ``optimum'' biomass of
about 1.4 million lobsters. Amendment 8 to the FMP, which NMFS approved
in 1994, eliminated a landing requirement for permit renewal and
modified notification and reporting procedures (Final rule, 59 FR
56004, November 10, 1994).
Amendment 9 is the result of a comprehensive review by NMFS of the
quota-setting procedure established under Amendment 7. The review was
prompted by the difficulties in implementing the current annual quota
process and because information suggests that the overall productivity
of lobster stocks might be significantly lower than estimated in the
late 1970s and early 1980s. There appear to have been major
environmental shifts that have reduced overall marine resource
productivity in the NWHI, as declines similar to that seen in lobster
stocks are seen in sea bird populations as well as in Hawaiian monk
seals. Fishing mortality also is believed to have impacted lobster
productivity.
Scientists from the NMFS Honolulu Laboratory, Southwest Fisheries
Science Center, thoroughly reviewed the lobster stock model and
analyzed three alternative harvest policies for establishing an annual
quota or harvest guideline: Constant escapement, constant catch, and
constant harvest rate. Details of this analysis are contained in
Appendix 4 of Amendment 9.
On August 9, 1995, the Council approved Amendment 9, which was
received by NMFS on February 21, 1996. NMFS will approve, disapprove,
or partially disapprove Amendment 9 by May 24, 1996. See the Notice of
Availability published on February 22, 1996 (61 FR 7771). Amendment 9
includes the following measures:
1. Establish an annual harvest guideline based on a constant
harvest rate and a specific level of risk of overfishing. Under the
constant harvest rate policy, the harvest guideline, which is expressed
in terms of the total number of lobsters (spiny and slipper combined),
would be proportional to the estimated exploitable population size.
Harvest guidelines would be raised or lowered as the stock increased or
decreased, capitalizing on strong years and offering greater protection
during less productive periods. Under the proposed alternative, the
projected average catch would be 288,000 lobsters with a CPUE of 1.2
lobsters (total) and an average Spawning Potential Ratio (SPR) of 0.5
(the overfishing level is 0.20 SPR).
The Council initially voted on a range of acceptable risk levels of
overfishing (7.5-10.0 percent) on which to base the annual harvest
guideline. The Council subsequently clarified its position (via fax on
November 2, 1995) and selected 10 percent as the risk level to be
applied by the Regional Director to determine the annual harvest
guideline. The Council believes that this is consistent with its
Scientific and Statistical Committee's (SSC) view that, with the
conservative nature of the harvest guideline and stock model, a 10
percent level of risk of dropping below the 0.2 SPR threshold for
overfishing in any given year is biologically acceptable. The Council
and its SSC believe this presents an extremely low risk of overfishing
the NWHI lobster stocks. Accordingly, the Council has concluded that
the constant harvest rate strategy is risk averse, which is consistent
with the prevention of overfishing as mandated by the Magnuson Fishery
Conservation and Management Act (Magnuson Act).
The harvest guideline would be determined by the Regional Director.
The harvest guideline would be published in the Federal Register no
later than March 31 each year, and the Regional Director would directly
notify each permit holder of the harvest guideline by mail or by phone.
The harvest guideline would be used as an objective, but the Regional
Director would be expected to close the fishery as close as practicable
to the date on which the harvest guideline is projected to be reached
based on a continuing review of catch and effort data provided by
permit holders.
2. Allow the retention of egg-bearing (``berried'') female lobsters
and eliminate size limits. The FMP and implementing regulations
prohibit fishers from retaining berried lobsters or lobsters with a
tail width of less than 50 mm. While definitive data are not available,
there is good reason to believe that the mortality of small and berried
lobsters that are caught and released is very high. The lobsters share
the NWHI with large and relatively lightly fished stocks of predators
including snappers, jacks, and octopus. The NMFS Honolulu laboratory
has documented on videotape predation on released lobsters from a
research vessel. Common fishing practices result in lobsters being out
of the water for periods of 30 minutes or more. Lobsters may die from
exposure on a vessel, may be injured in handling and not be able to
recover after release, or may suffer mortality from predation upon
release. The members of the SSC agreed that mortality is probably high,
and concluded that a 75 percent mortality rate was appropriate for
modeling the effects of incidental mortality under different management
strategies and risk levels. The SSC noted that the retention of all
lobsters was beneficial when the mortality rate was higher than 25
percent.
The Council discussed the issues and concluded it would like to
minimize the waste associated with handling and release mortality by
eliminating the
[[Page 15454]]
prohibitions on retention of small or berried lobsters. Therefore,
Amendment 9 would allow, but not require, retention of small and
berried lobsters. The existing escape vent requirement would remain in
place to minimize the harvest of immature lobsters in the fishery.
The Council believes that the potential for highgrading (i.e., the
retention of only more valuable lobsters in the total catch) is low
when there are two or more permit holders competing for the harvest
guideline. Since this is a derby fishery, in which the permit holders
fish as quickly as possible without trip or vessel limits, a permit
holder who chooses not to retain all of the catch provides a greater
opportunity for competitors to increase their portion of a fixed
harvest limit. Since NMFS expects that few (if any) vessels will carry
observers, estimates of highgrading will be made using catch and effort
data. If these data indicate that juvenile or berried lobsters are not
being landed (but instead being discarded), NMFS will account for such
discards in calculating the subsequent year's harvest guideline.
Therefore, highgrading would result in a decrease in the following
year's harvest guideline.
NMFS recognizes that the retain-all strategy is a new approach to
the management of lobster. Success of this approach depends on the
actual mortality of discarded lobsters and how well uncertainties about
the actual mortality are taken into account. Likewise, if significant
highgrading occurs, the benefits gained from a retain-all approach
could be substantially reduced. In view of these uncertainties, NMFS
specifically requests comments on the proposed elimination of the size
limits and of the prohibition on retaining berried females. NMFS also
specifically requests comments on the potential for, and possible
problems resulting if, there is significant highgrading.
3. Eliminate the in-season quota adjustment. Under the current
system, NMFS announces an initial quota in February and announces a
final quota as soon as practicable after the first month of fishing.
The in-season quota adjustment has proven to be unworkable, given the
extreme sensitivity of the quota formula to changes in CPUE. For
example, in 1994, the initial quota was 200,000 lobsters, but after
applying the CPUE from the first month of fishing to the formula in the
FMP, NMFS calculated the final quota to be only 20,000 lobsters. The
fishery was closed by emergency action because the actual catch had
already exceeded the final quota by the time the final quota was
determined. The formula used to derive the initial quota reduces
variability through the use of a long time-series of data; however,
using data from the first month of fishing to derive the final quota
reintroduces variability. Under Amendment 9, the harvest guideline
would be set once annually and not be adjusted during the year.
4. Authorize the Regional Director to close the fishery. The
regulations do not now authorize closure of the fishery by direct
notice to the permit holders. Therefore, there can be considerable
delay between determination of the likely date the fishery would be
expected to reach its harvest limit and the actual publication of a
document in the Federal Register. The Council concluded that the
fishery is sufficiently small (there are only 15 persons with limited
entry permits) that direct notice to permit holders by telephone or
radio would be feasible and would provide the most effective means of
ensuring timely closure of the fishery with minimal likelihood of
premature or late closure.
5. Establish broad framework procedures for future regulatory
changes. The FMP currently has framework procedures dealing with
protected species conservation, and the annual harvest guideline is set
under a specific framework (i.e., formula). The Council concluded that
flexibility to consider future changes in management measures under
broad framework procedures would be advantageous, rather than relying
on the lengthy procedures of the FMP amendment process. In the
Council's view, the new framework procedures of Amendment 9 would
provide a mechanism for more rapid response to new information than
would the FMP amendment process.
6. Conduct a 5-year review of the new program. The Council is aware
that the proposed new management approach of Amendment 9 would be a
unique approach for crustacean fishery management and warrants a
complete review of effectiveness. There would be an annual stock
assessment and annual report on the fishery, but the overall management
program should be evaluated to determine how the stocks and the permit
holders have been affected. Therefore, Amendment 9 would commit the
Council to a full review of the program in 5 years.
This proposed rule would eliminate the requirement that fishers
notify NMFS in advance of plans to embark on each fishing trip, so that
NMFS may place observers on the fishing vessel. Although the single
vessel fishing in 1994 under an Experimental Fishing Permit carried a
NMFS observer, NMFS lacks the resources to send observers on lobster
trips on a regular basis. Therefore, NMFS proposes to relieve fishermen
of the burden of reporting each trip in advance. This proposal accords
with President Clinton's directive that agencies reduce public
reporting requirements.
No substantive changes were made in the proposed regulations as
submitted by the Council. The proposed rule includes some technical
changes to the current regulations. These include changes in the
definitions for clarity, eliminating the permit renewal process as
permits would not have a fixed expiration date, authorizing any NMFS
employee designated by the Regional Director to access sales data, and
removing gender specific language.
Classification
Section 304(a)(1)(D) of the Magnuson Act requires NMFS to publish
regulations proposed by a Council within 15 days of receipt of the
amendment and regulations. At this time, NMFS has not determined that
Amendment 9 is consistent with the national standards, other provisions
of the Magnuson Act, and other applicable law. In making that
determination, NMFS will take into account the data, views, and
comments received during the comment period.
This proposed rule has been determined to be not significant for
purposes of E.O. 12866.
The Council prepared an IRFA as part of the regulatory impact
review, which describes the impact this proposed rule would have on
small entities, if adopted. To the extent there are impacts, they are
expected to be beneficial. Under the proposed harvest guideline, there
will likely be fewer years in which the fishery is closed. The proposed
harvest strategy would eliminate the prohibitions on retaining small or
berried lobsters. The increased harvest guideline and reduction in
costs may result in a substantial increase of gross annual revenues.
All vessels in this fishery (15 vessels have permits) are considered
small entities. No new reporting, recordkeeping, or compliance
requirements would be imposed by this rule. No Federal rules are known
to duplicate, overlap, or conflict with this rule. The reasons for,
objectives of, and legal basis for this rule are described elsewhere in
this preamble. Multiple alternatives are analyzed in the IRFA. A copy
of the IRFA is available from, and public comments on the IRFA may be
sent to, the Council (see ADDRESSES).
[[Page 15455]]
Notwithstanding any other provision of law, no person is required
to respond to nor shall a person be subject to a penalty for failure to
comply with a collection-of-information subject to the requirements of
the Paperwork Reduction Act unless that collection of information
displays a currently valid OMB Control Number.
This rule includes a reduction in collection-of-information
requirements subject to the Paperwork Reduction Act. The current rule,
which was approved by the Office of Management and Budget (OMB) under
OMB Control No. 0648-0204, requires that permits be renewed annually.
Under the proposed rule, permits would be effective until modified,
suspended, or revoked. It would be the responsibility of the permit
holder to advise NMFS of any changes in permit information such as
change of ownership or the vessel covered by the permit. The estimated
burden would decrease from one-half hour per year to one-half hour per
3 years. Vessel owners also would no longer be required to notify NMFS
prior to departing on each fishing trip, a requirement approved by OMB
under OMB Control No. 0648-0214. This would reduce the estimated burden
by 5 minutes per vessel per trip, or up to 30 minutes per year. The
total burden is estimated to decrease by about 10 hours per year. A
request for approval of this modification is being submitted to OMB for
approval. Send comments regarding these burden estimates or any other
aspect of these collection-of-information requirements, including
suggestions for reducing the burden, to the Regional Director and to
OMB (see ADDRESSES).
The Southwest Region, NMFS, has initiated formal consultation under
section 7 of the Endangered Species Act to consider the possible
impacts of the fishery, as it would operate under the proposed rule, on
Hawaiian monk seals and other listed species and listed critical
habitat. The results of the consultation will be considered in
determining whether to approve the proposed amendment.
List of Subjects in 50 CFR Part 681
Fisheries, Reporting and recordkeeping requirements.
Dated: April 4, 1996.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.
For the reasons set out in the preamble, 50 CFR part 681 is
proposed to be amended as follows:
PART 681--WESTERN PACIFIC CRUSTACEAN FISHERIES
1. The authority citation for part 681 continues to read as
follows:
Authority: 16 U.S.C. 1801 et seq.
2. In Sec. 681.2, the definitions of ``Carapace length'', ``Final
quota'', ``Initial quota'', ``Processing'', ``Processor'', ``Receiving
Vessel'', ``Tail width of slipper lobster'', ``Tail width of spiny
lobster'', and ``U.S.-harvested lobster'' are removed; the definition
of ``Harvest guideline'' is added in alphabetical order, and the
definition of ``Slipper lobster'' is revised to read as follows:
Sec. 681.2 Definitions.
* * * * *
Harvest guideline means a specified numerical harvest objective.
* * * * *
Slipper lobster means any crustacean of the family Scyllaridae.
* * * * *
3. In Sec. 681.4, paragraphs (b)(2), (d), and (f) are revised,
paragraph (g) is removed, paragraphs (h) through (l) are redesignated
as paragraphs (g) through (k) respectively, to read as follows:
Sec. 681.4 Permits.
* * * * *
(b) * * *
(2) Each application must be submitted on a Southwest Region
Federal Fisheries application form obtained from the Pacific Area
Office containing all the necessary information, attachments,
certification, signature, and fees.
* * * * *
(d) Change in application information. Any change in information on
the permit application form submitted under paragraph (b)(2) of this
section must be reported to the Pacific Area Office at least 10 days
before the effective date of the change. Failure to report such change
is a basis for permit sanctions.
* * * * *
(f) Expiration. Permits issued under this section will remain valid
indefinitely unless transferred, revoked, suspended, or modified under
15 CFR part 904.
* * * * *
4. In Sec. 681.5, paragraphs (b) and (d) are removed, paragraphs
(c) and (e) are redesignated as paragraphs (b) and (c) respectively,
and paragraph (a) and newly redesignated (b) are revised to read as
follows:
Sec. 681.5 Recordkeeping and reporting.
(a) Daily Lobster Catch Report. The operator of any vessel engaged
in commercial fishing for lobster subject to this part must maintain on
board the fishing vessel, while fishing for lobster, an accurate and
complete NMFS Daily Lobster Catch Report on a form provided by the
Regional Director. All information specified on the form, which has
been approved under the Paperwork Reduction Act, must be recorded on
the form within 24 hours after the completion of the fishing day. The
Daily Lobster Catch Reports for a fishing trip must be submitted to the
Regional Director within 72 hours of each landing of lobsters.
(b) Lobster Sales Report. The operator of any vessel engaged in
commercial fishing for lobster subject to this part must submit to the
Regional Director, within 72 hours of off-loading of lobster, an
accurate and complete Lobster Sales Report on a form provided by the
Regional Director, and attach packing or weigh-out slips provided to
the operator by the first-level buyer(s), unless the packing/weigh-out
slips have not been provided in time by the buyer(s). The form, which
has been approved under the Paperwork Reduction Act, must be signed and
dated by the vessel operator.
* * * * *
5. In Sec. 681.7, paragraphs (a)(5), (b)(2) through (b)(4) are
removed, paragraphs (b)(5) through (b)(14) are redesignated as
paragraphs (b)(2) through (b)(11) respectively, and paragraph (b)(1)(i)
through (b)(1)(v), newly redesignated paragraphs (b)(6), (b)(7),
(b)(9), and (b)(11) are revised to read as follows:
Sec. 681.7 Prohibitions.
* * * * *
(b) * * *
(1) * * *
(i) Without a limited access permit issued under Sec. 681.28;
(ii) By methods other than lobster traps or by hand for lobsters,
as specified in Sec. 681.22;
(iii) From closed areas for lobsters, as specified in Sec. 681.21;
(iv) During a closed season, as specified in Sec. 681.27; or
(v) After the date announced by the Regional Director, as specified
in Sec. 681.29(b)(3), and until the fishery opens again in the
following calendar year.
* * * * *
(6) Leave a trap unattended in the Management Area except as
provided in Sec. 681.22(f).
(7) Maintain on board the vessel or in the water, more than 1200
traps per fishing vessel, of which no more than
[[Page 15456]]
1100 can be assembled traps, as specified in Sec. 681.22(e).
* * * * *
(9) Land lobsters taken in Permit Area 1 after the closure date
announced by the Regional Director, as specified in Sec. 681.29 (b)(3),
until the fishery opens again the following year.
* * * * *
(11) Refuse to make available to an authorized officer and employee
of NMFS designated by the Regional Director for inspection and copying
any records that must be made available in accordance with
Sec. 681.11(a).
* * * * *
6. Section 681.10 is revised to read as follows:
Sec. 681.10 Observers.
All fishing vessels subject to this part must carry an observer
when requested to do so by the Regional Director.
7. In Sec. 681.11, paragraph (a) introductory text is revised to
read as follows:
Sec. 681.11 Availability of records for inspection.
(a) Upon request, any first-level buyer must immediately allow an
authorized officer and any employee of NMFS designated by the Regional
Director, to access, inspect, and copy all records relating to the
harvest, sale, or transfer of management unit species taken by vessels
that have permits issued under this part or that are otherwise subject
to this part, including, but not limited to information concerning:
* * * * *
8. Section 681.12 is added to subpart A to read as follows:
Sec. 681.12 Framework procedures.
(a) Introduction. New management measures may be added through
rulemaking if new information demonstrates that there are biological,
social, or economic concerns in Permit Areas 1, 2, or 3. The following
framework process authorizes the implementation of measures that may
affect the operation of the fisheries, gear, harvest guidelines, or
changes in catch and/or effort.
(b) Annual report. By June 30 of each year, the Council-appointed
Crustaceans Plan Team will prepare an annual report on the fisheries in
the management area. The report shall contain, among other things,
recommendations for Council action and an assessment of the urgency and
effects of such action(s).
(c) Procedure for established measures. (1) Established measures
are management measures that, at some time, have been included in
regulations implementing the FMP, and for which the impacts have been
evaluated in Council/NMFS documents in the context of current
conditions.
(2) Following the framework procedures of Amendment 9 to the FMP,
the Council may recommend to the Regional Director that established
measures be modified, removed, or re-instituted. Such recommendation
shall include supporting rationale and analysis, and shall be made
after advance public notice, public discussion, and consideration of
public comment. NMFS may implement the Council's recommendation by
rulemaking if approved by the Regional Director.
(d) Procedure for New Measures. (1) New measures are management
measures that have not been included in regulations implementing the
FMP, or for which the impacts have not been evaluated in Council/NMFS
documents in the context of current conditions.
(2) Following the framework procedures of Amendment 9 to the FMP,
the Council will publicize, including by Federal Register notice, and
solicit public comment on, any proposed new management measure. After a
Council meeting at which the measure is discussed, the Council will
consider recommendations and prepare a Federal Register notice
summarizing the Council's deliberations, rationale, and analysis for
the preferred action, and the time and place for any subsequent Council
meeting(s) to consider the new measure. At subsequent public
meeting(s), the Council will consider public comments and other
information received to make a recommendation to the Regional Director
about any new measure. NMFS may implement the Council's recommendation
by rulemaking if approved by the Regional Director.
9. In Subpart B, Secs. 681.21 and 681.22 are removed and
Secs. 681.23 through 681.32 are redesignated as Secs. 681.21 through
681.30, respectively.
10. In newly redesignated Sec. 681.25, in paragraphs (b) and
(g)(1), the words ``He'' and ``he'' are removed and the words ``The
Regional Director'' and ``the Regional Director'' are added in their
place, respectively.
11. In newly redesignated Sec. 681.26, in paragraphs (a)
introductory text, (b)(1), and (b)(3), the words ``he'', ``He'', and
``He'' are removed and the words ``the Regional Director'', ``The
Regional Director'', and ``The Regional Director'' are added in their
place, respectively.
12. In newly redesignated Sec. 681.28, paragraphs (b) and (c) are
removed, paragraphs (d), (e), and (f) are redesignated as paragraphs
(b), (c) and (d), respectively, and paragraphs (a)(8) and newly
redesignated paragraph (c) are revised to read as follows:
Sec. 681.28 Limited access management program.
(a) * * *
(8) A limited entry permit has no fixed expiration date.
* * * * *
(c) Replacement of a vessel covered by a limited access permit. A
limited access permit issued under this section may, without limitation
as to frequency, be transferred by the permit holder to a replacement
vessel owned by that person.
* * * * *
13. In newly redesignated Sec. 681.29, the section heading is
revised, and paragraph (c) is removed, paragraph (d) is redesignated as
paragraph (c), and paragraphs (a) and (b) are revised to read as
follows:
Sec. 681.29 Harvest limitation program.
(a) General. A harvest guideline for Permit Area 1 will be set
annually for the calendar year and shall:
(1) Apply to the total catch of spiny and slipper lobsters; and
(2) Be expressed in terms of numbers of lobsters.
(b) Harvest guideline. (1) The Regional Director shall use
information from daily lobster catch reports and lobster sales reports
from previous years, and may use information from research sampling and
other sources, to establish the annual harvest guideline in accordance
with the FMP.
(2) NMFS shall publish a document indicating the annual harvest
guideline in the Federal Register by March 31 each year, and shall use
other means to notify permit holders of the harvest guideline for the
year.
(3) The Regional Director shall determine, on the basis of the
information reported to NMFS during the open season by the operator of
each vessel fishing, when the harvest guideline will be reached. Notice
of this determination, with a specification of the date after which
fishing for lobster or further landings of lobster taken in Permit Area
1 is prohibited, will be announced to each permit holder and operator
of each permitted vessel not less than 7 days prior to the effective
date.
* * * * *
14. Newly redesignated Sec. 681.30 is revised to read as follows:
Sec. 681.30 Five-year review.
Five years after the effective date of the rule implementing
Amendment 9, the Council, in cooperation with the NMFS, will conduct a
review of the
[[Page 15457]]
effectiveness and impacts of the NWHI management program, including
biological, economic, and social aspects of the fishery.
[FR Doc. 96-8767 Filed 4-5-96; 8:45 am]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-8766 Endangered and Threatened Wildlife and Plants; Proposed Special Rule for the Conservation of the Northern Spotted Owl on Non-Federal Lands
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Page 15452]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8766]
=======================================================================
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DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Part 17
RIN 1018-AD20
Endangered and Threatened Wildlife and Plants; Proposed Special
Rule for the Conservation of the Northern Spotted Owl on Non-Federal
Lands
AGENCY: Fish and Wildlife Service, Interior.
ACTION: Extension of Public Comment Period.
-----------------------------------------------------------------------
SUMMARY: The Service issued a Draft Environmental Alternatives Analysis
(EAA) for the proposed special rule for the conservation of the
northern spotted owl on non-Federal lands in California and Washington,
which is currently out for public comment. The proposed special rule
was published in the Federal Register on February 17, 1995 (60 FR
9484). The comment period for both documents was scheduled to end on
April 8, 1996. The intent of this document is to extend the comment
period to June 3, 1996.
The Service has received numerous requests to extend the comment
period for these documents from state regulatory agencies, conservation
groups and industry officials in both Washington and California. In
addition, the State of Washington has prepared a proposed rule under
authority of the Washington Timber Practices Board that would address
impacts of forest practices to the northern spotted owl. The state has
asked the Service to consider their proposed state rule as a possible
alternative to the current special rule proposed by the Service. The
Service seeks additional comments from the interested public, agencies,
and interest groups on the Draft EAA, the proposed special rule, and on
the State of Washington's proposed rule as a possible alternative to
the rule currently proposed by the Fish and Wildlife.
DATES: The comment period for written comments is extended until June
3, 1996.
ADDRESSES: Comments and materials concerning this Draft Environmental
Alternatives Analysis and the proposed rule should be sent to Mr.
Michael J. Spear, Regional Director, Region 1, U.S. Fish and Wildlife
Service, 911 N.E. 11th Avenue, Portland, Oregon 97232-4181. The
complete file for this proposed rule will be available for public
inspection, by appointment during normal business hours, at the U.S.
Fish and Wildlife Service, Office of Technical Support for Forest
Resources, 333 S.W. 1st Avenue, 4th Floor, Portland, Oregon 97204,
(503/326-6218).
FOR FURTHER INFORMATION CONTACT: Mr. Curt Smitch, Assistant Regional
Director, Region 1, U.S. Fish and Wildlife Service, 3704 Griffin Lane
S.E., Suite 102, Olympia, Washington 98501, (206/534-9330); or Ron
Crete, Office of Technical Support for Forest Resources, 333 S.W. 1st
Avenue, Portland, Oregon 97232-4181, (503/326-6218).
SUPPLEMENTARY INFORMATION: The Service has prepared a draft document
called an Environmental Alternatives Analysis (EAA) that describes and
analyzes the potential environmental effects of the proposed special
rule and six alternatives for the conservation of the northern spotted
owl on non-Federal lands in Washington and California. Each alternative
would revise to varying degrees the Federal prohibitions and exceptions
regarding the incidental take of spotted owls on non-Federal lands in
California and Washington. The proposed rule, analyzed in the Draft EAA
as Alternative 3, was published in the Federal Register on February 17,
1995 (60 FR, No. 33, Page 9484).
In addition, the State of Washington has prepared a proposed rule
to address the impacts of forest practices on northern spotted owls in
that state. The state's proposed rule is similar in many ways to the
Service's proposed 4(d) rule, although there are some differences. The
state has asked the Service to consider the state rule as an
alternative to the Service's current proposed rule.
The Service is in the process of analyzing the state rule, and
plans to publish in the Federal Register within two weeks a summary of
the state's rule and a comparison of that rule with the Service's
proposed rule. The state's comment period for their proposed rule has
expired, however, the Service is interested in receiving comment from
the interested public regarding the possibility of the Washington state
rule as an alternative to the Service's currently proposed special
rule. To receive a copy of the State of Washington proposed rule and
the state's Draft Environmental Impact Statement, write to Washington
State Department of Natural Resources, Forest Practices Division, P.O.
Box 47012, Olympia, WA 98504-7012, Attn: Judith Holter.
The Service's Draft EAA, including all maps, tables, charts, and
graphs, remains available on the Internet's World Wide Web at http://
www.r1.fws.gov/4deaa/welcome.html.
Dated: April 3, 1996.
Don Weathers,
Acting Regional Director, U.S. Fish and Wildlife Service, Region 1,
Portland, Oregon.
[FR Doc. 96-8766 Filed 4-5-96; 8:45 am]
BILLING CODE 4310-55-P
Complete official Federal Register PDF
FR Doc. 96-8674 Recording and Reporting Occupational Injuries and Illnesses; Notice of Meeting; Extension of Comment Period
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15434-15435]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8674]
=======================================================================
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[[Page 15435]]
DEPARTMENT OF LABOR
Occupational Safety and Health Administration
29 CFR Parts 1904 and 1952
Recording and Reporting Occupational Injuries and Illnesses;
Notice of Meeting; Extension of Comment Period
AGENCY: Occupational Safety and Health Administration (OSHA),
Department of Labor.
ACTION: Proposed rule; notice of meeting.
-----------------------------------------------------------------------
SUMMARY: OSHA published a Notice of Proposed Rulemaking covering the
recording and reporting of workplace deaths, injuries and illnesses,
which appeared in the Federal Register on February 2, 1996 (61 FR
4030). OSHA held a public meeting regarding this proposal from March 26
to March 29, 1996. In response to a request from other interested
stakeholders who were unable to attend this meeting, OSHA will hold an
additional public meeting beginning on April 30, 1996. The purpose of
the meeting is to give the public another opportunity to provide
information to OSHA concerning issues raised by the proposal. As a
result of the scheduling of this second public meeting, OSHA is
extending the end of the public comment period from May 2 to May 31,
1996.
DATES: The public meeting will be held April 30, 1996 beginning at 8:30
a.m. and extend through May 1, if necessary. Persons wishing to make
presentations should contact Tom Hall on or before April 19, 1996. OSHA
invites the public to submit written comments on the NPRM on or before
May 31, 1996.
ADDRESSES: The meeting will be held at the U.S. Department of Labor,
200 Constitution Avenue NW., Washington, DC 20210 in Room S-4215.
Persons wishing to make presentations should contact Tom Hall at U.S.
Department of Labor, OSHA, Room N-3647, 200 Constitution Avenue NW,
Washington D.C. 20210, (202) 219-8148. Written comments are to be
submitted in writing in quadruplicate to: Docket Officer, Docket No. R-
02, Occupational Safety and Health Administration, Room N-2625, U.S.
Department of Labor , 200 Constitution Avenue NW, Washington D.C.
20210, telephone (202) 219-7894.
FOR FURTHER INFORMATION CONTACT: Ms. Anne Cyr, U.S. Department of
Labor, OSHA, Room N-3647, 200 Constitution Avenue NW., Washington, DC
20210, (202) 219-8148.
SUPPLEMENTARY INFORMATION: The meeting will be open to the public.
Seating, however, is limited and will be available on a first-come,
first-serve basis. The amount of time available for each presenter may
be limited by OSHA, if necessary.
Signed in Washington, D.C., this 3rd day of April, 1996.
Joseph A. Dear,
Assistant Secretary of Labor.
[FR Doc. 96-8674 Filed 4-5-96; 8:45 am]
BILLING CODE 4510-26-P
Complete official Federal Register PDF
FR Doc. 96-8670 Drawbridge Operation Regulation; Red River, LA
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15437-15438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8670]
=======================================================================
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DEPARTMENT OF TRANSPORTATION
Coast Guard
33 CFR Part 117
[CGD08-95-028]
RIN 2115-AE47
Drawbridge Operation Regulation; Red River, LA
AGENCY: Coast Guard, DOT.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: At the request of the Kansas City Southern Railway Company and
the Southern Pacific Transportation Company, the Coast Guard is
proposing a change to the regulation governing the operation of two
swing span railroad bridges over the Red River, miles 227.0 and 228.2,
near Shreveport, Louisiana. This proposed change would require that the
bridges be opened on signal for passage of vessels, Monday through
Friday, during daylight hours only, with five days prior written
notice. The draws presently open on signal with 48 hours advance
notice.
DATES: Comments must be received on or before June 7, 1996.
ADDRESSES: Comments may be mailed to Commander (ob), Eighth Coast Guard
District, 510 Magazine Street, New Orleans, Louisiana 70130-3396 or may
be delivered to Room 1313 at the same address between 8 a.m. and 3:30
p.m., Monday through Friday except Federal holidays. The comments and
other materials referenced in this notice will be available for
inspection and copying in Room 1313 at this address. Normal office
hours are between 8 a.m. and 3:30 p.m., Monday through Friday, except
holidays.
FOR FURTHER INFORMATION CONTACT:
Mr. Phil Johnson, Bridge Administration Branch, (504) 589-2965.
SUPPLEMENTARY INFORMATION:
Request for Comments
Interested parties are invited to participate in the rulemaking by
submitting written views, comments, or arguments. Persons submitting
comments should include their names and addresses, identify the bridge
and give the reason for concurrence with or any recommended change in
this proposal. Persons desiring acknowledgment that their comments have
been received should enclose a stamped, self-addressed postcard or
envelope.
The Coast Guard plans no public hearing. Persons may request a
public hearing by writing to Mr. Phil Johnson at the address under
Addresses. The request should include reasons why a hearing would be
beneficial. If it determines that the opportunity for oral
presentations will aid this rulemaking, the Coast Guard will hold a
public hearing at a time and place announced by a later notice in the
Federal Register.
The Commander, Eighth Coast Guard District, will evaluate all
communications received and determine a course of final action on this
proposal. The proposed regulation may be changed in light of comments
received.
Background and Purpose: Upon requests by the bridge owners, the
Coast Guard is proposing permitting the draws of two swing span
railroad bridges over the Red River, LA, miles 227.0 and 228.2 to open
on signal, Monday through Friday and only during daylight hours, if at
least five days prior written notice is given. Currently, the bridges
are required to open on signal if at least 48 hours advance notice is
given. The bridge owners contend that the present regulation is
unreasonable and expensive. Vessel transits through the bridge sites
are infrequent. Since shoaling makes transits hazardous, openings will
be limited to daylight hours for safety reasons.
Discussion of Proposed rules
Vertical clearance of the Southern Railroad bridge at mile 227.0 in
the closed position is 15 feet above mean high water and 50 feet above
low water. Vertical clearance of the Kansas City Southern Railway
Company bridge at mile 228.2 in the closed position is 5 feet above
mean high water and 46 feet above mean low water. There is little
commercial navigation on the waterway in the vicinity of the bridge
crossing. The bridges were opened seven times for the passage of
riverboat gaming vessels in the past two years. The occasional small
recreational boat that uses the waterway can transit the bridges
without requiring an opening. The Southern Pacific Railroad bridge at
mile 227.0 is crossed by approximately 11 trains per day. The Kansas
City Southern Railroad bridge at mile 228.2 is crossed by approximately
12 trains per day. Requiring five days advance notice for an opening of
the draw would result in a significant savings in maintenance and crew
call-out costs with no adverse effect on navigational traffic.
Shoaling is reported to exist throughout the Shreveport area where
the bridges cross the Red River making transits hazardous. The Southern
Pacific Railroad bridge at mile 227.0 was struck two times by gaming
vessels transiting the bridge in 1994. Requiring the bridges to open
only during daylight hours will contribute to safety.
Regulatory Evaluation
This proposal is not a significant regulatory action under section
3(f) of Executive Order 12866 and does not require an assessment of
potential cost and benefits under section 6(a)(3) of that order. It has
not been reviewed by the Office of Management and Budget under that
order. It is not significant under the regulatory policies and
procedures of the Department of Transportation (DOT) (44 FR 11040;
February 26, 1979).
The Coast Guard expects the economic impact of this proposal to be
so minimal that a full Regulatory Evaluation under paragraph 10e of the
regulatory policies and procedures of DOT is unnecessary.
Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the
Coast Guard must consider whether this proposal, if adopted, will have
a significant economic impact on a substantial number of small
entities. ``Small entities'' may include (1) small businesses and not-
for-profit organizations that are independently owned and operated and
are not dominant in their fields and (2) government jurisdictions with
populations of less than 50,000.
Since the proposed rule also considers the needs of local
commercial vessels, the economic impact is expected to be minimal.
Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that this
proposal, if adopted, will not have a significant economic impact on a
substantial number of small entities.
Collection of Information
This proposal contains no collection-of-information requirements
under the
[[Page 15438]]
Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
Federalism
The Coast Guard has analyzed this rule under the principles and
criteria contained in Executive Order 12612 and has determined that
this rule does not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
Environment
The Coast Guard considered the environmental impact of this
proposal and concluded that under paragraph 2.B.2 of Commandant
Instruction M16475.1B, this proposal is categorically excluded from
further environmental documentation. A ``Categorical Exclusion
Determination'' is available in the docket for inspection or copying
where indicated under ADDRESSES.
List of Subjects in 33 CFR Part 117
Bridges.
For the reasons set out in the preamble, the Coast Guard proposes
to amend part 117 of Title 33, Code of Federal Regulations, as follows:
PART 117--DRAWBRIDGE OPERATION REGULATIONS
1. The authority citation for part 117 continues to read as
follows:
Authority: 33 U.S.C. 499; 49 CFR 1.46; 33 CFR 1.05-1(g)(3);
section 117.255 also issued under the authority of Pub. L. 102-587,
102 Stat. 5039.
2. In Sec. 117.491, paragraph (d) is revised to read as follows:
Sec. 117.491 Red River.
* * * * *
(d) The draws of the Southern Pacific Railroad bridge, mile 227.0,
and the Kansas City Southern Railroad bridge, mile 228.2 shall open on
signal during daylight hours only, Monday through Friday, if at least
five days prior written notice is given.
* * * * *
Dated February 27, 1996.
R.C. North,
Rear Admiral, U.S. Coast Guard, Commander, Eighth Coast Guard District.
[FR Doc. 96-8670 Filed 4-5-96; 8:45 am]
BILLING CODE 4910-14-M
Complete official Federal Register PDF
FR Doc. 96-8648 Federal Motor Vehicle Safety Standards; Windshield Wiping and Washing Systems
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15446-15449]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8648]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
49 CFR Part 571
[Docket No. 96-30; Notice 1]
RIN 2127-AF88
Federal Motor Vehicle Safety Standards; Windshield Wiping and
Washing Systems
AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: In this document, NHTSA proposes changes to the Federal Motor
Vehicle Safety Standard on windshield wiping and washing systems. The
proposals range from applying performance requirements to the systems
in light trucks and multipurpose passenger vehicles to rescinding the
Standard. This proposed action is part of NHTSA's efforts to implement
the President's Regulatory Reinvention Initiative.
DATES: Comments must be received on or before May 23, 1996.
ADDRESSES: Comments must refer to the docket and notice numbers cited
at the beginning of this notice and be submitted to: Docket Section,
Room 5109, NHTSA, 400 Seventh Street, SW., Washington, DC 20590. It is
requested that 10 copies of the comments be provided. The Docket
Section is open on weekdays from 9:30 a.m. to 4 p.m.
FOR FURTHER INFORMATION CONTACT: For technical issues: Mr. Richard Van
Iderstine, Office of Vehicle Safety Standards, NPS-21, telephone (202)
366-5280, FAX (202) 366-4329.
For legal issues: Ms. Dorothy Nakama, Office of Chief Counsel, NCC-
20, telephone (202) 366-2992, FAX (202) 366-3820. Both may be reached
at the National Highway Traffic Safety Administration, 400 Seventh
Street, SW., Washington, DC 20590. Comments should not be sent or faxed
to these persons, but should be sent to the Docket Section.
SUPPLEMENTARY INFORMATION:
President's Regulatory Reinvention Initiative
Pursuant to the March 4, 1995 directive ``Regulatory Reinvention
Initiative'' from the President to the heads of departments and
agencies, NHTSA undertook a review of its regulations and directives.
During the course of this review, NHTSA identified regulations that it
could propose to eliminate as unnecessary or to amend to improve their
comprehensibility, application, or appropriateness. Among these
regulations is Federal Motor Vehicle Safety Standard No. 104,
Windshield wiping and washing systems (49 CFR Sec. 571.104). Based on
its review of the standard, NHTSA is proposing three alternative
approaches to amending Standard No. 104.
Background of Standard No. 104
Standard No. 104 was issued in 1967 (32 FR 2408) as one of the
initial Federal Motor Vehicle Safety Standards (FMVSSs). At present,
the standard applies to passenger cars, multipurpose passenger vehicles
(MPVs), trucks, and buses. Standard No. 104 specifies that each vehicle
shall have a power-driven windshield wiping system that meets S4.1.1's
requirement that each system shall have at least two speeds, each of
which wipes at a different number of cycles per minute.
Standard No. 104 specifies additional wiping requirements for
passenger cars, but not for the other vehicle types subject to the
standard. The passenger car windshield areas to be wiped are specified
in paragraphs S4.1.2 and S4.1.2.1 of the standard. S4.1.2 specifies
three areas for passenger car windshields, designated as areas ``A'',
[[Page 15447]]
``B'', and ``C.'' A specified percentage of the glazing in each area is
required to be wiped, as shown in Figures 1 and 2 of SAE Recommended
Practice J903a, May 1966, which the standard incorporates by reference.
The location of those areas is determined using the angles specified in
Tables I, II, III, and IV of Standard No. 104, as applicable. Those
tables apply to passenger cars of varying overall widths, namely, from
less than 60 inches to more than 68 inches. The angles set forth in the
tables vary according to the overall width of the vehicle. Finally,
paragraph S4.1.2 provides that all of the glazing counted toward
meeting the percentage of each area required to be wiped must lie
within the area bounded by a perimeter line on the glazing surface one
inch from the edge of the daylight opening.
Standard No. 104 also specifies requirements for windshield washing
systems on passenger cars, MPVs, trucks, and buses. Each of those
vehicles is required in S4.2.1 or S4.2.2 to have a windshield washing
system that meets the requirements of SAE Recommended Practice J942
(SAE J942), ``Passenger Car Windshield Washing Systems,'' November
1965, with a few modifications.
NHTSA's Review of Standard No. 104 and Proposals for Change
In reviewing Standard No. 104 under the President's Regulatory
Reinvention Initiative, NHTSA identified three proposals for changes to
the Standard and seeks public comment on each proposal. The proposals
are: (1) Rescinding the Standard if a finding can be made that the
motor vehicle industry would continue to provide the same level of
washing and wiping performance in the absence of a standard; (2)
upgrading the light truck and MPV windshield wiping requirements to
make them equivalent to the passenger car requirements; and (3)
eliminating duplicative language by combining Standards Nos. 103 and
104 into a single safety standard and retitling it Windshield clearance
systems, since Standard No. 103 presently references provisions in
Standard No. 104.
Due to the relative simplicity of the proposals, the agency is not
setting forth precise regulatory language for implementing those
proposals.
In addition to seeking comments on each of the three proposals, the
agency also seeks comment on the option of making no changes to the
Standard.
1. Proposal One--Rescind Standard No. 104
NHTSA's first alternative proposal is to rescind Standard No. 104.
To adopt this proposal, NHTSA would conclude that even if Standard No.
104 should be rescinded, manufacturers would continue to provide means
to wipe and wash motor vehicle windshields. It is widely recognized
that a motor vehicle must have some means for keeping the windshield
wiped and washed so that the driver can view the road ahead. More
important, the fact that light trucks and MPVs apparently provide
wiping and washing performance comparable to that in passenger cars,
despite the absence of performance requirements for light trucks and
MPVs, indicates that passenger cars would continue to provide that
level of performance in the absence of performance requirements.
In addition, market forces (in the form of customer demand) would
be highly likely to ensure that vehicle manufacturers continue to
provide windshield wiping and washing systems in motor vehicles.
Customer magazines and consumers themselves would be likely to react
negatively to vehicles that do not have adequate windshield wiping and
washing systems. The agency notes that more than 93 percent of all cars
and light trucks have intermittent (i.e., variable speed) wipers even
though only two wiper speeds are required by Standard No. 104 and that
15 percent of cars have a rear window wiper, even though one is not
required. These installations indicate market forces favoring wiping
and washing devices.
NHTSA notes that if Standard No. 104 were rescinded, some States
might adopt regulations requiring windshield washing and wiping systems
or even regulating their performance. Were the States to adopt such
regulations, there would not be any express preemption under 49 U.S.C.
30103(b), Preemption, of State requirements dissimilar to those
currently in Standard No. 104. It also does not appear likely that a
court would find any implied Federal preemption of State requirements,
regardless of whether they are similar or dissimilar to those in the
Standard. A State regulation addressing the same subject as a rescinded
Federal regulation would be impliedly preempted only if the State
regulation conflicted with or otherwise frustrated achieving the
purposes of the Federal statute. Even if the agency were to conclude
that no regulation, Federal or State, of windshield wiping and washing
is necessary, it is not readily apparent how State regulations, even
ones differing from those of another State, on this subject would
conflict with Federal law or have a deleterious effect on motor vehicle
safety.
Finally, the agency notes that rescinding Standard No. 104 would
also remove what may be unnecessarily restrictive specifications for
windshield wiping and washing systems. For example, at present, S4.1
specifies that a windshield wiping system must have at least two
frequencies, one of which is at least 45 cycles per minute, and the
other cycle must differ by at least 15 cycles per minute. Manufacturers
might develop means to clean windshields that do not operate in cycles,
or other means that do not involve the traditional two wiper blades
rotating in synchronization.
2. Proposal Two--Upgrading the MPV and Light Truck Requirements to Make
Them Equivalent to the Passenger Car Requirement
In the last decade, sales of light trucks and multipurpose
passenger vehicles (MPVs) have increased substantially. In addition,
these vehicles have been increasingly used to transport passengers. As
a result, the number of deaths and injuries associated with those
vehicles have substantially increased.
In response, NHTSA has amended certain FMVSSs to ensure that
passengers are afforded the same level of protection whether they ride
in a passenger car, light truck, or MPV. For example, by model year
1998, the requirements for key FMVSSs such as Standard No. 208,
Occupant crash protection and Standard No. 214, Side impact protection
will be virtually identical for passenger cars, light trucks, and MPVs.
Continuing the trend to make FMVSS requirements uniform for all
three types of vehicles, this proposal would make similar upgrades in
Standard No. 104. As noted above, Standard No. 104 presently specifies
no windshield wiping requirements for light trucks and MPVs other than
that they have a power-driven windshield wiping and washing system,
with at least two speeds, each wiping at a different rate. NHTSA
proposes minimum requirements regarding the portions of light truck and
MPV windshields that must be wiped.
To adopt equivalent requirements for light trucks and MPVs, whose
windshields and driver seating positions may differ from those of
passenger cars, this proposal would incorporate a different set of SAE
[[Page 15448]]
recommended practices than those applicable to passenger cars.
For minimum windshield wiped area requirements for light trucks and
MPVs, this proposal would incorporate relevant provisions of SAE
Recommended Practice J198 (SAE J198) ``Windshield Wiper Systems--
Trucks, Buses, and Multipurpose Vehicles'' January 1971. In Paragraph
3.1.1, SAE J198 describes the portions of the exterior windshield
glazing surface that must be wiped as follows: area A (the largest
area, encompassing both the driver's and front passenger's view), area
B (an area somewhat smaller than area A) and area C (the smallest area,
in front of the driver's view). Each area is established using angles
in Table 1 of SAE J198 applied as shown in Figure 1 of SAE J198.
NHTSA tentatively concludes that if minimum windshield wiped area
requirements were to be adopted for light trucks and MPVs, the costs,
if any, incurred by manufacturers would be slight. It appears that
virtually all light trucks and MPVs already meet SAE J198's minimum
wiped area requirements, thus minimizing the need for design changes.
Nevertheless, NHTSA seeks public comment on cost increases. The
potential for a slight cost increase comes from the possibility that
the manufacturers may not currently be doing as much performance
testing as they would if those requirements were adopted.
As part of this proposal, the agency would adopt minimum
performance requirements for windshield washer systems in trucks, buses
and MPVs. The standard would be amended to reference the two SAE
Recommended Practices addressing the performance of those systems in
those vehicles.
As noted above, Standard No. 104 references SAE J942 ``Passenger
Car Windshield Washer Systems.'' Despite its title, SAE J942 specifies
minimum performance requirements not only for windshield washer systems
in passenger cars, but also for those in trucks, buses, and MPVs. Under
this proposal, NHTSA would apply SAE J942 to trucks, buses and MPVs
with a GVWR 10,000 lbs. and under.
In addition, in May 1991, SAE Recommended Practice J1944 (SAE
J1944) ``Truck & Bus Multipurpose Vehicle Windshield Washer System''
was established. SAE J1944 describes minimum performance requirements
for windshield washing systems on trucks, buses, and MPVs with a gross
vehicle weight rating (GVWR) of 10,000 lbs. or greater. Under this
proposal, NHTSA would incorporate SAE J1944's minimum performance
requirements by reference and apply them to trucks, buses and MPVs with
a GVWR of greater than 10,000 lbs. NHTSA seeks comments on whether this
step would improve the safety of any of these vehicles and on the
potential cost effects for vehicle or windshield washing system
manufacturers.
3. Proposal Three--Combining Standards Nos. 103 and 104
NHTSA's third alternative proposal is to combine Standards Nos. 103
and 104 to make the standards easier to comprehend and apply. The two
standards are already substantially interconnected. Standard No. 103
references tables in Standard No. 104 to establish angles used in
locating the defrosted areas. If the two standards were combined, the
single standard would be titled as a standard on windshield clearance
systems. In addition to seeking comments on this proposal, NHTSA would
entertain comments on combining this proposal with the preceding
proposal.
Rulemaking Analyses and Notices
1. Executive Order 12866 and DOT Regulatory Policies and Procedures
This notice of proposed rulemaking was not reviewed under Executive
Order 12866 (Regulatory Planning and Review). NHTSA has analyzed the
impact of this rulemaking action and determined that it is not
``significant'' within the meaning of the Department of
Transportation's regulatory policies and procedures.
For Proposal One, NHTSA tentatively concludes that if that proposal
were adopted as a final rule, there may be slight cost savings to
industry, since manufacturers would no longer need to test vehicles for
compliance with Standard No. 104. The cost savings would be so minimal
that NHTSA is unable to quantify them. NHTSA tentatively believes
manufacturers likely would continue to provide essentially the same
level of windshield wiping and washing capability as they currently
provide.
With respect to Proposal Two, it is NHTSA's tentative conclusion
that adoption of that proposal might result in only slightly increased
costs to industry, due to testing to new specifications. However, these
potential increased costs are so minimal that NHTSA is unable to
quantify them.
If Proposal Three were adopted as a final rule, NHTSA anticipates
no changes in costs to industry, since no substantive changes to
Standard No. 104 would be made.
Based on the foregoing, the agency concludes that the potential
impacts are so minimal as not to warrant preparation of a full
regulatory evaluation.
2. Regulatory Flexibility Act
NHTSA has also considered the impacts of this rule under the
Regulatory Flexibility Act. I hereby certify that this rule would not
have a significant economic impact on a substantial number of small
entities. As noted above, NHTSA tentatively concludes that only
Proposal Two, if adopted as a final rule, might result in slightly
increased costs to manufacturers, due to testing to new specifications.
Since the cost of new motor vehicles would not be affected, small
entities which purchase motor vehicles would similarly not be affected.
Therefore, an initial regulatory flexibility analysis has not been
prepared.
3. National Environmental Policy Act
NHTSA has also analyzed this proposed rule under the National
Environmental Policy Act and determined that it would not have any
significant impact on the quality of the human environment.
4. Executive Order 12612 (Federalism)
NHTSA has analyzed this proposed rule in accordance with the
principles and criteria contained in E.O. 12612, and has determined
that it would not have significant federalism implications to warrant
the preparation of a Federalism Assessment.
5. Civil Justice Reform
This proposed rule would not have any retroactive effect. Under 49
U.S.C. 30103, whenever a Federal motor vehicle safety standard is in
effect, a State may not adopt or maintain a safety standard applicable
to the same aspect of performance which is not identical to the Federal
standard, except to the extent that the requirement imposes a higher
level of performance and applies only to vehicles procured for the
State's use. 49 U.S.C. 30161 sets forth a procedure for judicial review
of final rules establishing, amending or revoking Federal motor vehicle
safety standards. That section does not require submission of a
petition for reconsideration or other administrative proceedings before
parties may file suit in court.
Procedures for Submitting Comments
Interested persons are invited to submit comments on this advance
notice of proposed rulemaking. It is requested but not required that 10
copies be submitted.
[[Page 15449]]
All comments must not exceed 15 pages in length. (49 CFR 553.21).
Necessary attachments may be appended to these submissions without
regard to the 15-page limit. This limitation is intended to encourage
commenters to detail their primary arguments in a concise fashion.
If a commenter wishes to submit certain information under a claim
of confidentiality, three copies of the complete submission, including
purportedly confidential business information, should be submitted to
the Chief Counsel, NHTSA, at the street address given above, and seven
copies from which the purportedly confidential information has been
deleted should be submitted to the Docket Section. A request for
confidentiality should be accompanied by a cover letter setting forth
the information specified in the agency's confidential business
information regulation. 49 CFR Part 512.
All comments received before the close of business on the comment
closing date indicated above for this notice will be considered, and
will be available for examination in the docket at the above address
both before and after that date. To the extent possible, comments filed
after the closing date will also be considered. Comments received too
late for consideration in regard to the final rule will be considered
as suggestions for future rulemaking. Comments on the proposal will be
available for inspection in the docket. The NHTSA will continue to file
relevant information as it becomes available in the docket after the
closing date, and it is recommended that interested persons continue to
examine the docket for new material.
Those persons desiring to be notified upon receipt of their
comments in the rules docket should enclose a self-addressed, stamped
postcard in the envelope with their comments. Upon receiving the
comments, the docket supervisor will return the postcard by mail.
Authority: 49 U.S.C. 322, 30111, 30115, 30117, and 30166;
delegation of authority at 49 CFR 1.50.
Issued on: April 2, 1996.
Barry Felrice,
Associate Administrator for Safety Performance Standards.
[FR Doc. 96-8648 Filed 4-5-96; 8:45 am]
BILLING CODE 4910-59-P
Complete official Federal Register PDF
FR Doc. 96-8647 Federal Motor Vehicle Safety Standards; Windshield Defrosting and Defogging Systems
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15449-15452]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8647]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
49 CFR Part 571
[Docket No. 96-31; Notice 1]
RIN 2127-AF87
Federal Motor Vehicle Safety Standards; Windshield Defrosting and
Defogging Systems
AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: NHTSA sets forth alternative proposals for changing the
Federal Motor Vehicle Safety Standard on windshield defrosting and
defogging systems. The proposals range from applying performance
requirements to the systems in light trucks and multipurpose passenger
vehicles to rescinding the Standard. This action is part of NHTSA's
efforts to implement the President's Regulatory Reinvention Initiative.
DATES: Comments must be received on or before May 23, 1996.
ADDRESSES: Comments must refer to the docket and notice numbers cited
at the beginning of this notice and be submitted to: Docket Section,
Room 5109, NHTSA, 400 Seventh Street, S.W., Washington, D.C. 20590. It
is requested that 10 copies of the comments be provided. The Docket
Section is open on weekdays from 9:30 a.m. to 4 p.m.
FOR FURTHER INFORMATION CONTACT: For technical issues: Mr. Richard Van
Iderstine, Office of Vehicle Safety Standards, NPS-21, telephone (202)
366-5280, FAX (202) 366-4329.
For legal issues: Ms. Dorothy Nakama, Office of Chief Counsel, NCC-
20, telephone (202) 366-2992, FAX (202) 366-3820.
Both may be reached at the National Highway Traffic Safety
Administration, 400 Seventh Street, S.W., Washington, D.C. 20590.
Comments should not be sent or faxed to these persons, but should be
sent to the Docket Section.
SUPPLEMENTARY INFORMATION:
President's Regulatory Reinvention Initiative
Pursuant to the March 4, 1995, directive ``Regulatory Reinvention
Initiative'' from the President to the heads of departments and
agencies, NHTSA undertook a review of its regulations. During the
course of this review, NHTSA identified regulations that it could
propose to eliminate as unnecessary or to amend to improve their
comprehensibility, application, or appropriateness. Among these
regulations is Federal Motor Vehicle Safety Standard No. 103,
Windshield defrosting and defogging systems 49 CFR 571.103). After
reviewing below the background of the standard, NHTSA explains why it
is proposing changes to Standard No. 103.
Background of Standard No. 103
Standard No. 103 was issued in 1967 (32 FR 2408) as one of the
initial Federal Motor Vehicle Safety Standards (FMVSSs). The standard,
applicable to passenger cars, multipurpose passenger vehicles (MPVs),
trucks, and buses, specifies in S4.1 that each of these vehicles shall
have a windshield defrosting and defogging system.
Standard No. 103 specifies performance requirements for the
windshield defrosting and defogging systems in passenger cars, but not
for the systems in the other types of vehicles covered by the Standard.
S4.2 of Standard No. 103 specifies that each passenger car windshield
defrosting and defogging system shall meet specified provisions of SAE
Recommended Practice J902 (SAE J902), ``Passenger Car Windshield
Defrosting Systems,'' August 1964.
SAE J902 establishes uniform test procedures and minimum
performance requirements for the ``critical area'' of the windshield
and for the ``entire windshield.'' SAE J902 prescribes a laboratory
evaluation of defroster systems during which a known quantity of water
is sprayed on the windshield, forming an ice coating, to provide
uniform and repeatable test results. However, while Standard No. 103
incorporates the test procedures and performance requirements of SAE
J902, it does not incorporate the SAE J902's definition of ``critical
area'' and ``entire windshield.'' Instead, Standard No. 103 substitutes
areas of the windshield determined in accordance with Standard No. 104,
``Windshield Wiping and Washing Systems.'' It substitutes Area C from
Standard No. 104 for the ``critical area'' and Area A for the ``entire
windshield.''
Vehicles manufactured for sale in the ``noncontinental United
States,'' which have tropical climates and where snow and icing
conditions are thus virtually unknown, have the option of either
meeting S4.1 of Standard No. 103 (i.e., installing a windshield
defrosting and defogging system) or installing a windshield defogging
system which operates either by applying heat to the windshield or by
dehumidifying the air inside the passenger compartment of the vehicle.
Since air conditioners dehumidify the air in addition to cooling it,
all vehicles with air conditioners have defogging capability,
[[Page 15450]]
whether or not they have a separate defrosting and defogging system.
Standard No. 103 has had a fairly uneventful history. Very few
changes have been made to it since its promulgation, other than an
amendment in 1994 to accommodate electric- powered vehicles.
NHTSA's Review of Standard No. 103 and Proposals for Change
Based on its review of Standard No. 103 under the President's
Regulatory Reform Initiative, NHTSA offers three proposals for changes
to the Standard and seeks public comment on each proposal. The
proposals are: (1) Rescinding the Standard; (2) upgrading the light
truck and MPV requirements to make them equivalent to the passenger car
requirements; and (3) eliminating duplicative language by combining
Standard Nos. 103 and 104 into a single safety standard and retitling
it Windshield clearance systems, since Standard No. 103 presently
references provisions in Standard No. 104.
Due to the relative simplicity of the proposals, the agency is not
setting forth precise regulatory language for implementing the
proposals.
In addition to seeking comments on each of the three proposals, the
agency also seeks comment on the option of making no changes to the
Standard.
1. Proposal One--Rescind Standard No. 103
NHTSA's first alternative proposal is to rescind Standard No. 103.
To adopt this proposal, NHTSA would conclude that even if Standard No.
103 should be rescinded, manufacturers would continue to provide means
to defrost and defog windshields. It is widely recognized that, in
icing or highly humid conditions, a motor vehicle must have some means
for keeping the windshield clear so that the driver can view the road
ahead. More important, the fact that light trucks and MPVs provide
defrosting and defogging performance comparable to that in passenger
cars, despite the absence of performance requirements for light trucks
and MPVs, could be said to indicate that passenger cars would continue
to provide that level of performance in the absence of performance
requirements.
Market forces (in the form of customer demand) would be highly
likely to ensure that most vehicle manufacturers continue to provide
windshield defrosting and defogging systems in motor vehicles. Customer
magazines and consumers themselves would be likely to react negatively
to vehicles that do not have adequate windshield defrosting and
defogging systems. It should also be noted that nearly 75 percent of
all cars have a rear defroster, although this is not required by
Standard No. 103, indicating the working of market forces in this area.
NHTSA notes that if Standard No. 103 were rescinded, some States
might adopt regulations requiring windshield defrosting and defogging
systems or even regulate their performance. Were the States to adopt
such regulations, there would not be any express preemption under 49
U.S.C. section 30103(b), Preemption, of State requirements dissimilar
to those currently in Standard No. 103. It also does not appear likely
that a court would find any implied Federal preemption of State
requirements, regardless of whether they are similar or dissimilar to
those in the Standard. A State regulation addressing the same subject
as a rescinded Federal regulation would be impliedly preempted only if
the State regulation conflicted with or otherwise frustrated achieving
the purposes of the Federal statute. Even if the agency were to
conclude that no regulation, Federal or State, of windshield defrosting
and defogging is necessary, it is not readily apparent how State
regulations, even ones differing from those of another State, on this
subject would conflict with Federal law or have a deleterious effect on
motor vehicle safety.
2. Proposal Two--Upgrading the MPV and Light Truck Requirements to Make
Them Equivalent to the Passenger Car Requirements
In the last decade, sales of light trucks and multipurpose
passenger vehicles (MPV) have increased substantially. In addition,
these vehicles have been increasingly used to transport passengers. As
a result, the numbers of deaths and injuries associated with those
vehicles have substantially increased.
In response, NHTSA has amended some FMVSSs to ensure that the
public is afforded the same level of protection whether they ride in a
passenger car, light truck, or MPV. For example, by model year 1998,
the requirements for key FMVSSs such as Standard No. 208, Occupant
crash protection, and Standard No. 214, Side impact protection, will be
virtually identical for passenger cars, light trucks, and MPVs.
In keeping with the trend to make FMVSS requirements uniform for
all three of these types of vehicles, under this proposal NHTSA would
specify performance requirements in Standard No. 103 for light trucks
and MPVs. As noted above, Standard No. 103 presently specifies no
requirements for light trucks and MPVs, other than that they have a
windshield defrosting and defogging system. This proposal would
establish minimum performance requirements for windshield defrosting
and defogging systems in light trucks and MPVs, including minimum
requirements regarding the portions of the windshield that must be
defrosted.
As part of this proposal, the agency would extend passenger car
requirements for light trucks and MPVs, by extending S4.3's
Demonstration procedure to light trucks and MPVs. However, the minimum
windshield areas to be defrosted for light trucks and MPVs may differ
somewhat than those for passenger cars, since the windshields of these
various vehicle types differ, and the driver views different windshield
areas of each vehicle type while viewing the road ahead. Because of
potential differences in windshield viewing areas between the passenger
cars and other vehicle types, NHTSA seeks public comment on extending
S.4.3 to light trucks and MPVs.
Any minimum requirements for windshield defrosting in light trucks
and MPVs would likely be based on the defrosted areas specified in SAE
Recommended Practice J382 (SAE J382) ``Windshield Defrosting Systems
Performance Requirements--Trucks, Buses, and Multipurpose Vehicle''
(January 1971). Paragraph 3.1 of SAE J382 describes the portions of the
windshield that must be defrosted as follows: Area A (the largest area,
encompassing both the driver's and front passenger's view), Area B (an
area somewhat smaller than Area A) and Area C (the smallest area, in
front of the driver), described in Table 1 of SAE J382.
NHTSA believes that if requirements concerning minimum windshield
defrosted areas were to be adopted for light trucks and MPVs, the
costs, if any, incurred by manufacturers would be slight. It appears
that virtually all light trucks and MPVs already meet SAE J382's
minimum defrosted area requirements, thus eliminating any possibility
of a need for design changes. Nevertheless, NHTSA seeks public comment
on cost increases. The potential for a slight cost increase comes from
the possibility that the manufacturers may not currently be doing as
much performance testing as they would if those requirements were
adopted.
The agency does not propose to extend Standard No. 103 to heavier
trucks and buses, as it is not aware of an SAE or other standard for
windshield
[[Page 15451]]
defrosting and defogging systems on heavier trucks and buses. NHTSA
therefore requests information whether there are any industry (or
other) standards for windshield defrosting and defogging systems on
trucks and buses with a gross vehicle weight rating (GVWR) over 10,000
lbs. If such a standard exists, should NHTSA consider including it in
Standard No. 103, making Standard No. 103 apply to trucks and buses
with a GVWR over 10,000 lbs.?
Consistent with the agency's intent to make Standard No. 103 as
uniform as possible for all vehicle types, if Proposal Two is adopted,
NHTSA also proposes to remove from Standard No. 103, S4.(b) that
applies to vehicles sold in the ``noncontinental United States.'' As
earlier described, S4.(b) provides that each passenger car,
multipurpose passenger vehicle, truck and bus manufactured for sale in
the noncontinental U.S. may, at the option of the manufacturer, have a
windshield defogging system which operates differently than the
generally applicable requirements. NHTSA requests public comment
whether S4.(b) should be removed.
3. Proposal Three--Combining Standard Nos. 103 and 104
NHTSA's third alternative proposal is to combine Standards Nos. 103
and 104 to make the standards easier to comprehend and apply. The two
standards are already substantially interconnected. Standard No. 103
references tables in Standard No. 104 to establish the angles used in
locating the defrosted areas. If the two standards were combined, the
single standard would be titled as a standard on windshield clearance
systems. In addition to seeking comments on this proposal, NHTSA would
entertain comments on combining this proposal with the preceding
proposal.
Rulemaking Analyses and Notices
1. Executive Order 12866 and DOT Regulatory Policies and Procedures
This notice of proposed rulemaking was not reviewed under Executive
Order 12866 (Regulatory Planning and Review). NHTSA has analyzed the
impact of this rulemaking action and determined that it is not
``significant'' within the meaning of the Department of
Transportation's regulatory policies and procedures.
For Proposal One, NHTSA tentatively concludes that if that proposal
were adopted as a final rule, there may be slight cost savings to
industry, since manufacturers would no longer need to test vehicles for
compliance with Standard No. 103. The cost savings would be so minimal
that NHTSA is unable to quantify them. NHTSA tentatively believes
manufacturers likely would continue to provide essentially the same
level of defrosting and defogging capability as they currently provide.
With respect to Proposal Two, it is NHTSA's tentative conclusion
that adoption of that proposal might result in only slightly increased
costs to industry, due to testing to new specifications. However, these
potential increased costs are so minimal that NHTSA is unable to
quantify them.
If Proposal Three were adopted as a final rule, NHTSA anticipates
no changes in costs to industry, since no substantive changes to
Standard No. 103 would be made.
Based on the foregoing, the agency concludes that the potential
impacts are so minimal as not to warrant preparation of a full
regulatory evaluation.
2. Regulatory Flexibility Act
NHTSA has also considered the impacts of this rule under the
Regulatory Flexibility Act. I hereby certify that this rule would not
have a significant economic impact on a substantial number of small
entities. As noted above, NHTSA tentatively concludes that only
Proposal Two, if adopted as a final rule, might result in slightly
increased costs to manufacturers, due to testing to new specifications.
Since the cost of new motor vehicles would not be affected, small
entities which purchase motor vehicles would similarly not be affected.
Therefore, an initial regulatory flexibility analysis has not been
prepared.
3. National Environmental Policy Act
NHTSA has also analyzed this proposed rule under the National
Environmental Policy Act and determined that it would not have any
significant impact on the quality of the human environment.
4. Executive Order 12612 (Federalism)
NHTSA has analyzed this proposed rule in accordance with the
principles and criteria contained in E.O. 12612, and has determined
that it would not have significant federalism implications to warrant
the preparation of a Federalism Assessment.
5. Civil Justice Reform
This proposed rule would not have any retroactive effect. Under 49
U.S.C. 30103, whenever a Federal motor vehicle safety standard is in
effect, a State may not adopt or maintain a safety standard applicable
to the same aspect of performance which is not identical to the Federal
standard, except to the extent that the State requirement imposes a
higher level of performance and applies only to vehicles procured for
the State's use. 49 U.S.C. 30161 sets forth a procedure for judicial
review of final rules establishing, amending or revoking Federal motor
vehicle safety standards. That section does not require submission of a
petition for reconsideration or other administrative proceedings before
parties may file suit in court.
Procedures for Submitting Comments
Interested persons are invited to submit comments on this notice of
proposed rulemaking. It is requested but not required that 10 copies be
submitted.
All comments must not exceed 15 pages in length. (49 CFR 553.21).
Necessary attachments may be appended to these submissions without
regard to the 15-page limit. This limitation is intended to encourage
commenters to detail their primary arguments in a concise fashion.
If a commenter wishes to submit certain information under a claim
of confidentiality, three copies of the complete submission, including
purportedly confidential business information, should be submitted to
the Chief Counsel, NHTSA, at the street address given above, and seven
copies from which the purportedly confidential information has been
deleted should be submitted to the Docket Section. A request for
confidentiality should be accompanied by a cover letter setting forth
the information specified in the agency's confidential business
information regulation. 49 CFR Part 512.
All comments received before the close of business on the comment
closing date indicated above for this notice will be considered, and
will be available for examination in the docket at the above address
both before and after that date. To the extent possible, comments filed
after the closing date will also be considered. Comments received too
late for consideration in regard to the final rule will be considered
as suggestions for further rulemaking. Comments on the proposal will be
available for inspection in the docket. The NHTSA will continue to file
relevant information as it becomes available in the docket after the
closing date, and it is recommended that interested persons continue to
examine the docket for new material.
[[Page 15452]]
Those persons desiring to be notified upon receipt of their
comments in the rules docket should enclose a self-addressed, stamped
postcard in the envelope with their comments. Upon receiving the
comments, the docket supervisor will return the postcard by mail.
Authority: 49 U.S.C. 322, 30111, 30115, 30117, and 30166;
delegation of authority at 49 CFR 1.50.
Issued on: April 2, 1996.
Barry Felrice,
Associate Administrator for Safety Performance Standards.
[FR Doc. 96-8647 Filed 4-5-96; 8:45 am]
BILLING CODE 4910-59-P
Complete official Federal Register PDF
FR Doc. 96-8644 Amendment of Class E Airspace; Ely, NV
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15432-15433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8644]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 71
[Airspace Docket No. 96-AWP-5]
Amendment of Class E Airspace; Ely, NV
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Supplemental notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This supplemental notice amends a previous proposal to amend
Class E airspace at Ely, NV. The establishment of a Global Positioning
System (GPS) Standard Instrument Approach Procedure (SIAP) to Runway
(RWY) 18 has made this proposal necessary. The intended effect of this
supplemental notice is to provide additional controlled airspace for
Instrument Flight Rules (IFR) operations at Ely Airport (Yelland
Field), Ely, NV.
[[Page 15433]]
DATES: Comments must be received on or before May 13, 1996.
ADDRESSES: Send comments on the proposal in triplicate to: Federal
Aviation Administration, Attn: Manager, System Management Branch, AWP-
530, Docket No. 96-AWP-5, Air Traffic Division, P.O. Box 92007,
Worldway Postal Center, Los Angeles, California, 90009.
The official docket may be examined in the Office of the Assistant
Chief Counsel, Western Pacific Region, Federal Aviation Administration,
Room 6007, 15000 Aviation Boulevard, Lawndale, California, 90261.
An informal docket may also be examined during normal business at
the Office of the Manager, System Management Branch, Air Traffic
Division at the above address.
FOR FURTHER INFORMATION CONTACT:
William Buck, Airspace Specialist, System Management Branch, AWP-530,
Air Traffic Division, Western-Pacific Region, Federal Aviation
Administration, 15000 Aviation Boulevard, Lawndale, California 90261,
telephone (310) 725-6556.
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested parties are invited to participate in this proposed
rulemaking by submitting such written data, views, or arguments as they
may desire. Comments that provide the factual basis supporting the
views and suggestions presented are particularly helpful in developing
reasoned regulatory decisions on the proposal. Comments are
specifically invited on the overall regulatory, aeronautical, economic,
environmental, and energy-related aspects of the proposal.
Communications should identify the airspace docket number and be
submitted in triplicate to the address listed above. Commenters wishing
the FAA to acknowledge receipt of their comments on this notice must
submit with the comments a self-addressed, stamped postcard on which
the following statement is made: ``Comments to Airspace Docket No. 96-
AWP-5.'' The postcard will be date/time stamped and returned to the
commenter. All communications received on or before the specified
closing date for comments will be considered before taking action on
the proposed rule. The proposal contained in this supplemental notice
may be changed in light of comments received. All comments submitted
will be available for examination in the System Management Branch, Air
Traffic Division, at 15000 Aviation Boulevard, Lawndale, California
90261, both before and after the closing date for comments. A report
summarizing each substantive public contact with FAA personnel
concerned with this rulemaking will be filed in the docket.
Availability of NPRM
Any person may obtain a copy of this Supplemental Notice of
Proposed Rulemaking (SNPRM) by submitting a request to the Federal
Aviation Administration, System Management Branch, P.O. Box 92007,
Worldway Postal Center, Los Angeles, California 90009. Communications
must identify the notice number of this SNPRM. Persons interested in
being placed on a mailing list for future NPRM's should also request a
copy of Advisory Circular No. 11-2A, which describes the application
procedures.
The Proposal
The FAA is considering an amendment to part 71 of the Federal
Aviation Regulations (14 CFR part 71) by amending the Class E airspace
area at Ely, NV. The FAA published an earlier notice proposing to amend
the Class E airspace area at Ely, NV, on March 11, 1996 (61 FR 9656).
Comments received in response to the NPRM and this SNPRM will be
addressed in the final, disposition of the rule. This supplemental
notice proposes to amend the Class E airspace area at Ely, NV, as
proposed in the original notice by providing additional controlled
airspace for IFR operations at Ely Airport (Yelland Field), Ely, NV.
Class E airspace designations are published in Paragraph 6005 of FAA
Order 7400.9C dated August 17, 1995, and effective September 16, 1995,
which is incorporated by reference in 14 CFR 71.1. The Class E airspace
designations listed in this document would be published subsequently in
this Order.
The FAA has determined that this proposed regulation only involves
an established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
Therefore, this proposed regulation--(1) is not a ``significant
regulatory action'' under Executive Order 12866; (2) is not a
``significant rule'' under DOT Regulatory Policies and Procedures (44
FR 10034; February 26, 1979); and (3) does to warrant preparation of a
Regulatory Evaluation as the anticipated impact is so minimal. Since
this is a routine matter that will only affect air traffic procedures
and air navigation, it is certified that this proposed rule would not
have a significant economic impact on a substantial number of small
entities under the criteria of the Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference, Navigation (air).
The Proposed Amendment
In consideration of the foregoing, the Federal Aviation
Administration proposes to amend 14 CFR part 71 as follows:
PART 71--[AMENDED]
1. The authority citation for 14 CFR part 71 continues to read as
follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389; 14 CFR 11.69.
Sec. 71.1 [Amended]
2. The incorporation by reference in 14 CFR 71.1 of the Federal
Aviation Administration Order 7400.9C, Airspace Designations and
Reporting Points, dated August 17, 1995, and effective September 16,
1995, is amended as follows:
Paragraph 6005 Class E airspace areas extending upward from 700
feet or more above the surface of the earth.
* * * * *
AWP NV E5 Ely, NV [Revised]
Ely VOR/DME
(Lat. 39 deg.17'53'' N, long. 114 deg.50'54'' W)
That airspace extending upward from 700 feet above the surface
within a 4.3-mile radius of Ely VOR and within 4.3-miles northeast
and 8.3 miles southwest of the Ely VOR 303 deg. radial, extending
from the Ely VOR to 16.1 miles northwest and within 3 miles each
side of the Ely VOR 014 deg. radial, extending from the Ely VOR to
12.6 miles northeast and within 3 miles each side of the Ely VOR
167 deg. radial, extending from the Ely VOR to 7.7 miles south of
the Ely VOR. That airspace extending upward from 1,200 feet above
the surface within a 19.1-mile radius of Ely VOR and within 6.1
miles northeast and 8.7 miles southwest of the Ely VOR 335 deg.
radial, extending from the 19.1-mile radius area to 33 miles
northwest of the Ely VOR and within 4.3 miles east and 6.5 miles
west of the Ely VOR 014 deg. radial, extending from the 19.1-mile
radius to 21.3 miles north of the Ely VOR, and within 14 miles eat
and 12.5 miles west of the Ely VOR 169 deg. radial, extending from
the 19.1-mile radius to 53 miles south of the Ely VOR.
* * * * *
Issued in Los Angeles, California, on March 26, 1996.
James H. Snow,
Acting Manager, Air Traffic Division, Western-Pacific Region.
[FR Doc. 96-8644 Filed 4-5-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-8643 Proposed Establishment of Class E Airspace; Dawson, GA
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15433-15434]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8643]
-----------------------------------------------------------------------
[[Page 15434]]
DEPARTMENT OF TRANSPORTATION
14 CFR Part 71
[Airspace Docket No. 96-ASO-9]
Proposed Establishment of Class E Airspace; Dawson, GA
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document proposes to establish Class E airspace at
Dawson, GA. A VOR/DME RWY 31 Standard Instrument Approach Procedures
(SIAP) has been developed for Dawson Municipal Airport. Controlled
airspace extending upward from 700 feet above the surface (AGL) is
needed to accommodate this SIAP and for instrument flight rules (IFR)
operations at Dawson Municipal Airport. The operating status of the
airport will change from VFR to include IFR operations concurrent with
publication of this SIAP.
DATES: Comments must be received on or before May 20, 1996.
ADDRESSES: Send comments on the proposal in triplicate to: Federal
Aviation Administration, Docket No. 96-ASO-9, Manager, System
Management Branch, ASO-530, P.O. Box 20636, Atlanta, Georgia 30320.
The official docket may be examined in the Office of the Assistant
Chief Counsel for Southern Region, Room 550, 1701 Columbia Avenue,
College Park, Georgia 30337, telephone (404) 305-5586.
FOR FURTHER INFORMATION CONTACT: Benny L. McGlamery, System Management
Branch, Air Traffic Division, Federal Aviation Administration, P.O. Box
20636, Atlanta, Georgia 30320; telephone (404) 305-5570.
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested parties are invited to participate in this proposed
rulemaking by submitting such written data, views or arguments as they
may desire. Comments that provide the factual basis supporting the
views and suggestions presented are particularly helpful in developing
reasoned regulatory decisions on the proposal. Comments are
specifically invited on the overall regulatory, aeronautical, economic,
environmental, and energy-related aspects of the proposal.
Communications should identify the airspace docket and be submitted in
triplicate to the address listed above. Commenters wishing the FAA to
acknowledge receipt of their comments on this notice must submit with
those comments a self-addressed, stamped postcard on which the
following statement is made: ``Comments to Airspace Docket No. 96-ASO-
9,'' The postcard will be date/time stamped and returned to the
commenter. All communications received before the specified closing
date for comments will be considered before taking action on the
proposed rule. The proposal contained in this notice may be changed in
light of the comments received. All comments submitted will be
available for examination in the Office of the Assistant Chief Counsel
for Southern Region, Room 550, 1701 Columbia Avenue, College Park,
Georgia 30337, both before and after the closing date for comments. A
report summarizing each substantive public contact with FAA personnel
concerned with this rulemaking will be filed in the docket.
Availability of NPRMs
Any person may obtain a copy of this Notice of Proposed Rulemaking
(NPRM) by submitting a request to the Federal Aviation Administration,
Manager, System Management Branch, ASO-530, Air Traffic Division, P.O.
Box 20636, Atlanta, Georgia 30320. Communications must identify the
notice number of this NPRM. Persons interested in being placed on a
mailing list for future NPRMs should also request a copy of Advisory
Circular No. 11-2A which describes the application procedure.
The Proposal
The FAA is considering an amendment to part 71 of the Federal
Aviation Regulations (14 CFR part 71) to establish Class E airspace at
Dawson, GA. A VOR/DME RWY 31 SIAP has been developed for Dawson
Municipal Airport. Controlled airspace extending upward from 700 feet
AGL is needed to accommodate this SIAP and for IFR operations at Dawson
Municipal Airport. The operating status of the airport will change from
VFR to include IFR operations concurrent with publication of this SIAP.
Class E airspace designations for airspace areas extending upward from
700 feet or more above the surface are published in Paragraph 6005 of
FAA Order 7400.9C dated August 17, 1995, and effective September 16,
1995, which is incorporated by reference in 14 CFR 71.1 The Class E
airspace designation listed in this document would be published
subsequently in the Order.
The FAA has determined that this proposed regulation only involves
an established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore, (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
will only affect air traffic procedures and air navigation, it is
certified that this rule, when promulgated, will not have a significant
economic impact on a substantial number of small entities under the
criteria of the Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference, Navigation (Air).
The Proposed Amendment
In consideration of the foregoing, the Federal Aviation
Administration proposes to amend 14 CFR part 71 as follows:
PART 71--[AMENDED]
1. The authority citation for 14 CFR part 71 continues to read as
follows:
Authority: 49 U.S.C. 106(g); 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389; 14 CFR 11.69.
Sec. 71.1 [Amended]
2. The incorporation by reference in 14 CFR 71.1 of Federal
Aviation Administration Order 7400.9C, Airspace Designations and
Reporting Points, dated August 17, 1995, and effective September 16,
1995, is amended as follows:
Paragraph 6005 Class E airspace areas extending upward from 700
feet above the surface of the earth.
* * * * *
ASO GA E5 Dawson, GA [New]
Dawson Municipal Airport, GA
(Lat. 31 deg.44'30'' N, long. 84 deg.25'02'' W)
That airspace extending upward from 700 feet above the surface
within a 6.3-mile radius of Dawson Municipal Airport.
* * * * *
Issued in College Park, Georgia, on March 22, 1996.
Benny L. McGlamery,
Acting Manager, Air Traffic Division, Southern Region.
[FR Doc. 96-8643 Filed 4-5-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-8629 Indiana Regulatory Program
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Page 15435]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8629]
=======================================================================
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DEPARTMENT OF THE INTERIOR
Office of Surface Mining Reclamation and Enforcement
30 CFR Part 914
[SPATS No. IN-122-FOR, Amendment No. 95-1]
Indiana Regulatory Program
AGENCY: Office of Surface Mining Reclamation and Enforcement (OSM),
Interior.
ACTION: Proposed rule; withdrawal of proposed amendment.
-----------------------------------------------------------------------
SUMMARY: OSM is announcing the withdrawal of a proposed amendment to
the Indiana regulatory program (hereinafter the ``Indiana program'')
under the Surface Mining Control and Reclamation Act of 1977 (SMCRA).
The proposed amendment pertained to revisions to the Indiana
Administrative Code (IAC) regulations pertaining to procedural rules
for petitions for review and the suspension or revocation of permits.
Indiana is withdrawing this amendment because it needs more time to
complete revisions pursuant to a subsequent recodification of related
procedural rules by the Indiana Natural Resources Commission, Division
of Hearings.
EFFECTIVE DATE: April 8, 1996.
FOR FURTHER INFORMATION CONTACT: Roger W. Calhoun, Director,
Indianapolis Field Office, Telephone: (317) 226-6700.
SUPPLEMENTARY INFORMATION: By letter dated May 3, 1995 (Administrative
Record No. IND-1459), Indiana submitted a proposed amendment to its
program pursuant to SMCRA. The amendment concerned revisions to 310 IAC
0.6-1-5 and 310 IAC 12-6-6.5 concerning procedures for petitions for
review and the suspension or revocation of permits. Indiana submitted
the proposed amendment at its own initiative.
On May 30, 1995, OSM announced receipt of and solicited public
comment on the proposed amendment in the Federal Register (60 FR
28069).
On March 12, 1996 (Administrative Record No. IND-1534), Indiana
requested that the proposed amendment be withdrawn. Indiana intends to
revise the amendment prior to resubmitting it for formal review and
approval by OSM.
Therefore, the proposed amendment announced in the May 30, 1995,
Federal Register is withdrawn.
List of Subjects in 30 CFR Part 914
Intergovernmental relations, Surface mining, Underground mining.
Date: March 29, 1996
Brent Wahlquist,
Regional Director, Mid-Continent Regional Coordinating Center.
[FR Doc. 96-8629 Filed 4-5-96; 8:45 am]
BILLING CODE 4310-05-M
Complete official Federal Register PDF
FR Doc. 96-8599 Financial Assurance Requirements for Decommissioning Nuclear Power Reactors
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15427-15430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8599]
=======================================================================
-----------------------------------------------------------------------
NUCLEAR REGULATORY COMMISSION
10 CFR Part 50
RIN 3150-AF41
Financial Assurance Requirements for Decommissioning Nuclear
Power Reactors
AGENCY: Nuclear Regulatory Commission.
ACTION: Advance notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Nuclear Regulatory Commission is considering amending its
regulations relating to financial assurance requirements for the
decommissioning of nuclear power plants. Potential deregulation of the
power generating industry has created uncertainty with respect to
whether current NRC regulations concerning decommissioning funds and
the financial mechanisms will require a modification to account for
utility reorganizations not contemplated when current financial
assurance requirements were promulgated. Additionally, the NRC is
considering requiring power reactor licensees to periodically report on
the status of their decommissioning funds. Allowing credit for earnings
on decommissioning trust funds during extended storage will also be
considered. This advance notice of proposed rulemaking is issued to
invite public comment on issues pertaining to the form and content of
the NRC's nuclear power reactor decommissioning financial assurance
requirements as they relate to electric utility deregulation.
DATES: Submit comments by June 24, 1996. Comments received after this
date will be considered if it is practical to do so, but the Commission
is able to assure consideration only for comments received on or before
this date.
ADDRESSES: Mail comments to: The Secretary of the Commission, U.S.
Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention:
Docketing and Service Branch.
Deliver comments to: 11555 Rockville Pike, Rockville, Maryland,
between 7:45 a.m. and 4:15 p.m. Federal workdays.
For information on submitting comments electronically, see the
discussion under Electronic Access in the Supplementary Information
Section.
Examine copies of comments received at: The NRC Public Document
Room, 2120 L Street NW. (Lower Level), Washington, DC.
FOR FURTHER INFORMATION CONTACT: Brian J. Richter, Office of Nuclear
Regulatory Research, U.S. Nuclear Regulatory Commission, Washington, DC
20555-0001, telephone (301) 415-6221, e-mail [email protected].
SUPPLEMENTARY INFORMATION:
Background
Requirements pertaining to financial assurance for the
decommissioning of nuclear power reactors are contained in Sec. 50.75.
Under Sec. 50.75(e)(3), the NRC allows power reactor licensees, who are
defined as ``electric utilities'' 1 under Sec. 50.2, to set aside
funds annually over the estimated life of the reactor for
decommissioning. The NRC provided more flexibility to its electric
utility licensees than other licensees because electric utilities have
existed in a highly structured environment regulated by State public
utility commissions (PUCs) or the Federal Energy Regulatory Commission
(FERC). Under Sec. 50.75(e)(2), the NRC requires licensees other than
electric utilities to set aside an external sinking fund coupled with a
surety method or insurance for any unfunded balance. However, with the
advent of deregulation, the distinction between electric utility
licensees and other licensees will likely be reduced or eliminated.
Thus, the NRC needs to clarify the definition of ``electric utility''
and to require additional assurance of those licensees whose power
reactor costs are no longer regulated.
\\ \1\ ``Electric utility means any entity that generates or
distributes electricity and which recovers the cost of this
electricity, either directly or indirectly, through rates
established by the entity itself or by a separate regulatory
authority. Investor-owned utilities, including generation or
distribution subsidiaries, public utility districts, municipalities,
rural electric cooperatives, and State and Federal agencies,
including associations of any of the foregoing, are included within
the meaning of ``electric utility.''
---------------------------------------------------------------------------
Typically, power reactor licensees place decommissioning funds in
external trust or escrow accounts that are reserved for decommissioning
activities.2 Under the definition of external sinking fund, power
reactor licensees must accumulate all the funds estimated to be needed
for decommissioning by the time their facilities are permanently shut
down. Although Sec. 50.75(e) also allows power reactor licensees to use
surety bonds, letters of credit, and prepayment to provide funding
assurance, virtually all power reactor licensees use the external
sinking fund method of assurance.
\\ \2\ Many licensees that have established decommissioning
trust funds for their power reactors are making deposits into their
trust accounts both for decommissioning costs as defined under
Sec. 50.2 and for other decommissioning-associated costs such as
interim spent fuel management and storage and ``green field'' costs.
The NRC allows licensees to deposit funds in the same trust account
as long as the trust has sub-accounts that clearly delineate the
purposes of the sub-account. A trust or sub-account established to
provide assurance of NRC-defined decommissioning costs should be
stipulated to cover NRC-defined decommissioning costs before any
other purpose.
---------------------------------------------------------------------------
In addition, Sec. 50.75(e)(3)(iv) provides that an electric utility
that is a Federal Government licensee need only provide assurance in
the form of a statement of intent indicating that decommissioning funds
will be obtained when necessary.
[[Page 15428]]
The intent of Sec. 50.75 is to provide reasonable assurance that
funds for decommissioning will be available when necessary. The
inability of the licensee to provide funding for decommissioning may
adversely affect protection of public health and safety. Also, a lack
of decommissioning funds is a financial risk to taxpayers (i.e., if the
licensee cannot pay for decommissioning, taxpayers would ultimately pay
the bill).
In a related issue, when the Commission issued the decommissioning
rule, the Commission believed that, for a regulated electric utility,
an external reserve account collected over the estimated remaining
reactor life would provide the necessary reasonable assurance. However,
as a conservatism built into the rule, the NRC decided not to allow
licensees to take credit for earnings on their trust funds while their
reactors were in extended safe storage. Rather, the NRC assumed that
during safe storage the rate of return on external decommissioning
trust funds would equal the decommissioning cost escalation rate. Thus,
the after-tax, after-inflation earnings rate effectively would be zero.
When the NRC promulgated the 1988 decommissioning rule, it did not
require licensees to report periodically on the status of their
decommissioning funds. NRC viewed licensee compliance with the funding
assurance requirements as a matter to be determined through the
inspection process when necessary. Also, the NRC recognized in the 1988
decommissioning rule, the PUCs' and FERC's authority to set annual
contribution rates to decommissioning funds and to establish investment
and other management criteria for the funds. The PUCs and FERC also
actively monitor these decommissioning funds as part of their rate
regulatory responsibility. Moreover, the Financial Accounting Standards
Board (FASB), a national organization that sets accounting standards,
recently initiated a review of reporting of decommissioning obligations
on electric utility financial statements. Although FASB has not
established a final standard, it appears that it will increase the
level of detail on power reactor licensees' financial statements. If
adopted, this standard would likely give the NRC and others additional
information on the status of decommissioning funds. However, the advent
of deregulation, and consequently less oversight by FERC or by PUCs,
makes it imperative that the NRC have a source of information to
monitor the status of decommissioning funds.
Specific Proposal
The Commission is considering amending Secs. 50.2, 50.75, and 50.82
to require that electric utility reactor licensees provide assurance
that the full estimated cost of decommissioning will be available
through an acceptable guarantee mechanism if the licensees are no
longer subject to rate regulation by PUCs or FERC, and do not have a
guaranteed source of income. The amendment would also allow licensees
to assume a positive real rate of return on decommissioning funds
during the safe storage period. Lastly, a periodic reporting
requirement would be established.
Specific Considerations
Advice and recommendations on a proposed rule reflecting the
foregoing and any other points considered pertinent are invited from
all interested persons. Comments and supporting reasons are
particularly requested on the following questions arranged by topic:
A. Timing and Extent of Electric Utility Industry Deregulation
A.1. What is the likely timetable for industry restructuring and
deregulation?
A.2. Will the electric utility industry go through several phases
as it responds to deregulation and other competitive pressures? If so,
what will be the likely major changes in business structure that may
occur in each phase? Will rates remain regulated at the retail
distribution level, with deregulation occurring for generation and
transmission? Will retail wheeling become widespread and lead to
deregulation of all sectors of the electric utility industry? Or will
rates remain regulated at the retail distribution level, with
deregulation occurring within the generation and transmission sectors?
What will likely be the final structure of the electric utility
industry, assuming either partial or full deregulation?
A.3. Some States appear to oppose deregulation. Will they be able
to maintain their opposition if neighboring States deregulate? What
will be the industry structure if some States deregulate more than
others? Can a ``hybrid'' system exist effectively?
B. Stranded Costs.
B.1. How will restructuring affect large baseload plants that
currently receive rate relief to cover construction costs or have a
portion yet to be phased into the rate base? Specifically, what is the
probability that and degree to which these costs will be recoverable
should a nuclear power plant be deemed to be non-competitive because of
high construction costs? What will be the source of operating,
maintenance, and capital improvement funds should such a nuclear
generator decide to continue operations? What will be the source of
funds to prematurely and safely shut down an uneconomic plant? Are
transmission access or other surcharges to cover stranded costs likely?
C. Nuclear Financial Qualifications and Decommissioning Funding
Assurance
C.1. If nuclear plants are shut down prematurely, how will
licensees who can no longer pass costs through to ratepayers provide
for a shortfall of decommissioning funds?
C.2. At what point does an operator of a nuclear power plant cease
to be a ``utility'' as defined in Sec. 50.2 of the NRC's regulations?
C.3. If an electric utility reorganizes itself, including divesting
parts of itself, so that the remaining entity operating a reactor is no
longer regulated by a rate-setting State or Federal body, or will cease
to be regulated by a rate-setting State or Federal body if the reactor
ceases operation, would it be appropriate to require financial
assurance for the decommissioning costs in full prior to NRC approval
of such reorganizations? Such assurance could take the form of self-
guarantee, parent company guarantee, certification by the rate-
regulating entity, or other financial surety mechanism to cover the
unfunded decommissioning costs. Should the NRC require additional
assurance for adequate funds for safe operation and decommissioning in
anticipation of deregulation? Should the NRC require, as a condition of
approval of certain reorganizations involving the transfer of control
of a nuclear power plant, that newly created organizations or holding
companies sign a binding agreement that holds them jointly liable for
decommissioning costs associated with that nuclear power plant? What
would be the impact of such actions?
C.4. Should the NRC require a licensee to provide a reasonable
assurance of the availability of funds for decommissioning by imposing
a minimum level of net worth, cash flow, or other financial measure
(similar to 10 CFR Part 30, Appendices A and B)? If below the minimum
levels, the licensee would no longer be allowed to accumulate
decommissioning costs over remaining facility life, but would need a
guarantee that funds would be available for decommissioning through
various financial measures. What financial measures would be effective
and reasonable?
C.5. Would PUCs and FERC be willing to certify that licensees under
their jurisdictions, both electric utility and
[[Page 15429]]
Part 50 licensees other than electric utilities, would be allowed to
collect sufficient revenues through rates to complete decommissioning
funding?
C.6. What would be the impact if the NRC required licensees to
accelerate collection of decommissioning funds such that
decommissioning funding for all plants would be complete within 10
years (or some other time period)?
C.7. Assume that licensees have accumulated funds that are
determined to be adequate based on current estimates of decommissioning
costs. If these estimates turn out to be low far in the future (for
example, if final dismantlement occurs after a 50-year safe storage
period), how will underfunding be remedied? What measures should the
NRC consider for obtaining assurance of funds for such situations?
Should the NRC require larger contingency factors in estimates to cover
such situations?
C.8. Would it be feasible for the nuclear industry to develop a
captive insurance pool to pay for decommissioning funding shortfalls
that result from premature decommissioning? Could such a pool be
structured similarly to Nuclear Mutual Limited (NML) and Nuclear
Electric Insurance Limited (NEIL), who currently insure on-site
property damage and replacement power of member utilities?
C.9. If PUC or FERC oversight is either substantially limited or
eliminated, are there any other options for financial assurance of
decommissioning that the NRC should consider?
D. Decommissioning Funding Assurance and a Federal Government Licensee
D.1. Section 50.75(e)(3)(iv) provides that an electric utility
which is a Federal Government licensee need only provide assurance in
the form of a statement of intent indicating that decommissioning funds
will be obtained when necessary. Since a Federal utility licensee will
likely be confronted with many of the same new competitive pressures as
non-Federal utilities, the question arises, should the regulations
continue to permit the provision of a statement of intent as the method
by which these licensees provide financial assurance for
decommissioning. There is, for example, no Federal law which clearly
provides that the Federal Government would pay the Tennessee Valley
Authority's financial decommissioning obligations should TVA be unable
to do so. Does this fact or any other factors militate for or against
allowing Federal utility licensees to continue to use statements of
intent as the method by which financial assurance for decommissioning
is provided?
E. Status of Decommissioning Trust Funds During Safe Storage Period
E.1. What real rate(s) of return should the NRC allow licensees to
use as credit for earnings on the decommissioning trust funds during
the extended safe storage period?
E.2. What time period(s) should the NRC allow licensees to use in
estimating the credit for earnings on the decommissioning trust funds
during the extended safe storage period?
F. Reporting on the Status of Decommissioning Funds
F.1. What information should the NRC require to be included in the
periodic reporting requirements?
F.2. How often should the NRC require licensees to report on the
status of decommissioning funding?
The preliminary views expressed in this notice may change in light
of comments received. In any case, there will be another opportunity
for additional public comment in connection with any proposed rule that
may be developed by the Commission.
Electronic Access
Comments may be submitted electronically, in either ASCII text or
WordPerfect format (version 5.1 or later), by calling the NRC
Electronic Bulletin Board (BBS) on FedWorld. The bulletin board may be
accessed using a personal computer, a modem, and one of the commonly
available communications software packages, or directly via Internet.
Background documents on the advance notice of proposed rulemaking are
also available, as practical, for downloading and viewing on the
bulletin board.
If using a personal computer and modem, the NRC rulemaking
subsystem on FedWorld can be accessed directly by dialing the toll free
number 1-(800) 303-9672. Communication software parameters should be
set as follows: parity to none, data bits to 8, and stop bits to 1
(N,8,1). Using ANSI or VT-100 terminal emulation, the NRC rulemaking
subsystem can then be accessed by selecting the ``Rules Menu'' option
from the ``NRC Main Menu.'' Users will find the ``FedWorld Online
User's Guides'' particularly helpful. Many NRC subsystems and data
bases also have a ``Help/Information Center'' option that is tailored
to the particular subsystem.
The NRC subsystem on FedWorld can also be accessed by a direct dial
phone number for the main FedWorld BBS, (703) 321-3339, or by using
Telnet via Internet: fedworld.gov. If using (703) 321-3339 to contact
FedWorld, the NRC subsystem will be accessed from the main FedWorld
menu by selecting the ``Regulatory, Government Administration and State
Systems,'' then selecting ``Regulatory Information Mall.'' At that
point, a menu will be displayed that has an option ``U.S. Nuclear
Regulatory Commission'' that will take you to the NRC Online main menu.
The NRC Online area also can be accessed directly by typing ``/go nrc''
at a FedWorld command line. If you access NRC from FedWorld's main
menu, you may return to FedWorld by selecting the ``Return to
FedWorld'' option from the NRC Online Main Menu. However, if you access
NRC at FedWorld by using NRC's toll-free number, you will have full
access to all NRC systems, but you will not have access to the main
FedWorld system.
If you contact FedWorld using Telnet, you will see the NRC area and
menus, including the Rules Menu. Although you will be able to download
documents and leave messages, you will not be able to write comments or
upload files (comments). If you contact FedWorld using FTP, all files
can be accessed and downloaded but uploads are not allowed; all you
will see is a list of files without descriptions (normal Gopher look).
An index file listing all files within a subdirectory, with
descriptions, is available. There is a 15-minute time limit for FTP
access.
Although FedWorld also can be accessed through the World Wide Web,
like FTP that mode only provides access for downloading files and does
not display the NRC Rules Menu.
For more information on NRC bulletin boards call Mr. Arthur Davis,
Systems Integration and Development Branch, NRC, Washington, DC 20555,
telephone (301) 415-5780; e-mail AXD[email protected].
PART 50--DOMESTIC LICENSING OF PRODUCTION AND UTILIZATION
FACILITIES
The authority citation for Part 50 continues to read as follows:
Authority: Secs. 102, 103, 104, 105, 161, 182, 183, 186, 189, 68
Stat. 936, 937, 938, 948, 953, 954, 955, 956, as amended, sec. 234,
83 Stat. 1244, as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2201,
2232, 2233, 2236, 2239, 2282); secs. 201, as amended, 202, 206, 88
Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846).
Section 50.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat.
2951 as amended by Pub. L. 102-486, sec. 2902, 106 Stat. 3123 (42
U.S.C. 5851). Section 50.10 also issued under secs. 101, 185, 68
Stat. 936, 955, as amended (42 U.S.C. 2131, 2235); sec. 102, Pub. L.
91-190, 83 Stat. 853 (42 U.S.C. 4332). Sections
[[Page 15430]]
50.13, 50.54(dd), and 50.103 also issued under sec. 108, 68 Stat.
939, as amended (42 U.S.C. 2138). Sections 50.23, 50.35, 50.55, and
50.56 also issued under sec. 185, 68 Stat. 955 (42 U.S.C. 2235).
Sections 50.33a, 50.55a and Appendix Q also issued under sec. 102,
Pub. L. 91-190, 83 Stat. 853 (42 U.S.C. 4332). Sections 50.34 and
50.54 also issued under sec. 204, 88 Stat. 1245 (42 U.S.C. 5844).
Sections 50.58, 50.91, and 50.92 also issued under Pub. L. 97-415,
96 Stat. 2073 (42 U.S.C. 2239). Section 50.78 also issued under sec.
122, 68 Stat. 939 (42 U.S.C. 2152). Sections 50.80 and 50.81 also
issued under sec. 184, 68 Stat. 954, as amended (42 U.S.C. 2234).
Appendix F also issued under sec. 187, 68 Stat. 955 (42 U.S.C.
2237).
Dated at Rockville, Maryland, this 1st day of April, 1996.
For the Nuclear Regulatory Commission.
John C. Hoyle,
Secretary of the Commission.
[FR Doc. 96-8599 Filed 4-5-96; 8:45 am]
BILLING CODE 7590-01-P
Complete official Federal Register PDF
FR Doc. 96-8597 Harmonization of U.S. Network Protection Standard With Canadian Network Protection Standard
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15441-15442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8597]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 68
[CC Docket No. 96-28; FCC 96-39]
Harmonization of U.S. Network Protection Standard With Canadian
Network Protection Standard
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: On February 2, 1996, the Commission adopted a Notice of
Proposed Rulemaking (NPRM). The NPRM is intended to address issues
associated with ``harmonizing'' U.S. and Canadian requirements for
connection of terminal equipment to the public switched network. It
seeks comment on whether amending of the Commission's rules regarding
network protection would foster greater efficiencies in manufacturing
terminal equipment without threatening the reliability of the public
network. The Commission's network protection rules govern the terms and
conditions under which customer-provided terminal equipment may be
connected to the network.
DATES: Comments must be filed on or before April 1, 1996, and reply
comments must be filed on or before April 16, 1996.
ADDRESSES: Federal Communications Commission, 1919 M Street, N.W.,
Washington, D.C. 20554.
FOR FURTHER INFORMATION CONTACT: Marian Gordon, Network Services
Division, Special Counsel, Common Carrier Bureau, (202) 418-2337.
SUPPLEMENTARY INFORMATION: This summarizes the Commission's Notice of
Proposed Rulemaking in the Matter of Amendment of Part 68 of the
Commission's Rules. (CC Docket No. 96-28, FCC 96-39, adopted February
2, 1996, and released February 29, 1996). The file is available for
inspection and copying during the weekday hours of 9 a.m. to 4:30 p.m.
in the Commission's Reference Center, Room 239, 1919 M St., N.W.,
Washington D.C., or copies may be purchased from the Commission's
duplicating contractor, ITS, Inc. 2100 M St., N.W., Suite 140,
Washington, D.C. 20037, phone (202) 857-3800.
Analysis of Proceeding
The Commission proposes amendments to Part 68 of its rules to
foster barrier-free trade between Canada and the United States. The
proposed rules are designed to foster greater efficiencies in
manufacturing terminal equipment without threatening the reliability of
the public switched network. Under the proposed rules, the technical
requirements of Part 68 and the Canadian network protection standard
CS-03 would be harmonized so that a manufacturer in one country could
design terminal equipment to a single, consistent set of technical
standards accepted in either the U.S. or Canada. The Commission
tentatively concludes that its proposed rules amending Part 68 will
eliminate unnecessary differences in terminal attachment requirements
between the United States and Canada. It further tentatively concludes
that this is consistent with the spirit and letter of the North
American Free Trade Agreement (NAFTA), which mandates elimination of
trade barriers through reconciliation of differences in standards and
testing procedures. The Commission also tentatively concludes that the
proposed rules will become a guide for harmonization efforts around the
world and will benefit consumers by creating a more competitive
equipment marketplace, thereby lowering
[[Page 15442]]
equipment costs. It tentatively concludes that the proposed rules are
consistent with the Commission's longstanding commitment to ensure that
no public harm results from attachment of private equipment to the
public switched network.
Ordering Clauses
Accordingly, it is ordered, pursuant to Sections 1, 4(i) and (j),
201-205, 218 of the Communications Act as amended, 47 U.S.C. 151,
154(i), 154(j), 201-205, and 218, that notice is hereby given of the
proposed changes to Part 68 to harmonize it with Canada's CS-03
certification requirements and comment is invited on this proposal.
List of Subjects in 47 CFR Part 68
Registered terminal equipment, Telephone.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-8597 Filed 4-5-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-8595 Minor Changes in Broadcast Facilities Without a Construction Permit
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15439-15441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8595]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 1, 73, and 74
[MM Docket No. 96-58, FCC 96-118]
Minor Changes in Broadcast Facilities Without a Construction
Permit
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This Notice of Proposed Rule Making (NPRM) in MM Docket No.
96-58 seeks comment regarding various proposals to streamline the
Commission's rules and processes applicable to broadcast stations
seeking to make minor modifications in their transmission facilities.
The proposals set forth in this NPRM would allow broadcast stations to
effectuate certain types of minor modifications without first obtaining
a construction permit from the Commission authorizing the change. The
types of minor modifications that are proposed for this streamlined
procedure are those which would be expected to have no potential to
cause interference to other stations. The Commission also seeks
comments on other types of minor modifications that would be
appropriate for this streamlined one-step licensing procedure. The NPRM
also proposes some additional changes to relevant rule sections to make
clarifications and to conform the rules to existing policy.
DATES: Initial comments are due May 16, 1996; reply comments are due
June 17, 1996. Written comments by the public on the proposed and/or
modified information collections are due May 16, 1996. Written comments
must be submitted by the Office of Management and Budget (OMB) on the
proposed and/or modified information collections on or before June 7,
1996.
ADDRESSES: Office of the Secretary, Federal Communications Commission,
Washington, D.C. 20554. In addition to filing comments with the
Secretary, a copy of any comments on the information collections
contained herein should be submitted to Dorothy Conway, Federal
Communications Commission, Room 234, 1919 M Street, N.W., Washington,
DC 20554, or via the Internet to [email protected], and to Timothy Fain,
OMB Desk Officer, 10234 NEOB, 725--17th Street, N.W., Washington, DC
20503 or via the Internet to [email protected].
FOR FURTHER INFORMATION CONTACT: Dale Bickel, Mass Media Bureau, Audio
Services Division, (202) 418-2720, or Richard Waysdorf, Mass Media
Bureau, Audio Services Division, (202) 418-2679. For additional
information concerning the information collections contained in the
NPRM, contact Dorothy Conway at (202) 418-0217, or via the Internet at
[email protected].
SUPPLEMENTARY INFORMATION: This is the synopsis of the Commission's
Notice of Proposed Rule Making in MM Docket No. 96-58, adopted March
19, 1996, and released March 22, 1996.
The complete text of this NPRM, which was adopted in MM Docket No,
96-58, is available for inspection and copying during normal business
hours in the FCC Reference Center (Room 239), 1919 M Street, N.W.,
Washington, DC, and may also be purchased from the Commission's copy
contractor, International Transcription Services, Inc., at (202) 857-
3800, 2100 M Street, N.W., Suite 140, Washington, DC 20037.
Synopsis of Order and Notice of Proposed Rule Making
1. In the NPRM, the Commission seeks comment regarding various
proposals to streamline the Commission's rules and procedures relating
to modifications of broadcast station transmission facilities. The NPRM
proposes to modify portions of Section 73 and 74 of the rules to permit
broadcast stations to implement certain types of minor modifications of
their facilities without first obtaining a construction permit
authorizing the modifications. The Commission's Rules generally require
that modifications of broadcast licenses and permits may be
accomplished only through a two-step process: first, the station files
an application for a construction permit, and second, after the
facilities are modified, the station files an application for a license
for the modified facilities. However, because certain types of minor
modifications are unlikely to have any impact on other stations, the
requirement of prior review and authorization of the change by the
Commission staff often involves redundant analysis and unnecessarily
delays the implementation of such changes.
2. Pursuant to a request from the Commission, Congress included in
the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
(1996), a specific provision (Section 403(m)) that authorized the
Commission to allow certain types of minor modifications without the
need for a construction permit. With this new authority, the
Commission, in the NPRM, has proposed that the types of minor license
modifications discussed below be permitted without first obtaining a
construction permit. In addition, in the NPRM, the Commission
explicitly seek suggestions from the public and the broadcast industry
as to additional types of minor modifications that could be effectuated
through a one-step licensing process without prior approval of the
Commission. The NPRM also proposes some additional changes to relevant
rule sections to make clarifications and to conform the rules to
existing policy.
3. The NPRM proposes that the following types of minor license and
permit modifications would be permitted to be implemented without the
prior authorization of the Commission, provided that the licensee or
permittee file a modification of license application, using FCC Form
302, within 10 days of effectuating the change: 1) commercial FM
stations would be permitted to increase effective radiated power up to
the maximum level for the class of station; 2) FM and television
stations would be permitted to replace one directional antenna with
another; 3) FM stations would be permitted to delete contour protection
status under Section 73.215 of the rules where the stations they are
providing contour protection move to fully spaced
[[Page 15440]]
locations; 4) FM stations would be permitted to use formerly licensed
main transmission facilities as auxiliary broadcast facilities; 5) FM
and television stations would be permitted to change vertically
polarized effective radiated power (ERP); and 6) FM and television
stations would be permitted to make slight changes in antenna radiation
center height.
4. In addition, the NPRM proposes that requests for waiver of the
main studio location rule be made by letter with supporting
documentation rather than by filing a construction permit application;
and that commercial stations seeking to change to noncommercial status
file a one-step modification of license application rather than a
construction permit application followed by a license application. In
both of these cases, prior Commission approval would still be required
before the proposed change could be implemented. In addition, the NPRM
proposes that directional FM stations would be allowed to commence
automatic program tests at reduced power upon completion of
construction without the prior approval of the Commission.
5. The proposed rules set forth in the NPRM would allow broadcast
stations to make the types of specified modifications to their
facilities more quickly and at a lower cost. Additionally, the NPRM
seeks additional suggestions from the public as to other types of minor
modifications that could also be streamlined through use of the one-
step licensing process.
Initial Paperwork Reduction Act of 1995 Analysis
The Federal Communications Commission, as part of its continuing
effort to reduce paperwork burdens, invites the general public and
other Federal agencies to take this opportunity to comment on the
following proposed and/or continuing information collections, as
required by the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. The NPRM has been submitted to the Office of Management and Budget
(OMB) for review under Section 3507(d) of the PRA. Comments are
requested concerning (a) whether the proposed collection of information
is necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
This NPRM, MM Docket No. 96-58, ``Amendment of Parts 73 and 74 of
the Commission's Rules to Permit Certain Minor Changes in Broadcast
Facilities Without A Construction Permit'' which does not have an OMB
control number, proposes rules changes that will affect six existing
collections. The revisions are proposed to affect the following:
Title: Section 73.1125 Station Main Studio Location.
Form Numbers: FCC 301, FCC 302-AM, FCC 302-FM, FCC 302-TV, FCC 340.
Type of Review: Revision to Existing Collections.
Respondents: Broadcast Permittees/Licensees.
OMB Control Number: 3060-0027.
Title: Application for Construction Permit for Commercial Broadcast
Station.
Number of Respondents for FCC 301: 1825.
Estimated time per response: The burden ranges from 37 hours to 159
hours. These hours include the hours included in the cost for
contracting out with attorneys and consulting engineers.
Annual Burden: 7,247.
OMB Control Number: 3060-0034.
Title: Application for Construction Permit for Noncommercial
Educational Broadcast Station.
Number of Respondents for FCC 340: 244.
Estimated time per response: The burden ranges from 50 hours to
302.33 hours. These hours include the hours included in the cost for
contracting out with attorneys and consulting engineers.
Annual Burden: 1,243.
OMB Control Number: 3060-0627.
Title: Application for AM Broadcast Station License.
Number of Respondents for FCC 302-AM: 449.
Estimated time per response: The burden ranges from 2 hours to
1039.75 hours. These hours include the hours included in the cost for
contracting out with attorneys and consulting engineers.
Annual Burden: 1,758.
OMB Control Number: 3060-0506.
Title: Application for FM Broadcast Station License.
Number of Respondents for FCC 302-FM: 757.
Estimated time per response: The burden ranges from 3 to 25 hours.
These hours include the hours included in the cost for contracting out
with attorneys and consulting engineers.
Annual Burden: 1,675.
OMB Control Number: 3060-0029.
Title: Application for TV Broadcast Station License.
Number of Respondents for FCC 302-TV: 83.
Estimated time per response: The burden ranges from 18 to 25 hours.
These hours include the hours included in the cost for contracting out
with attorneys and consulting engineers.
Annual Burden: 306.
OMB Control Number: 3060-0171.
Title: Section 73.1125 Station main studio location.
Number of Respondents for Section 73.1125: 155.
Estimated time per response: 0.5 hours (this hour is split between
cost and burden, 15 minutes burden for the licensee and 30 minutes cost
for a communications attorney).
Annual Burden: 39.
Needs and Uses: On February 8, 1996, President Clinton signed into
law the Telecommunications Act of 1996 which revised Section 319(d) of
the Communications Act to remove the prohibition against changing the
permit requirement for minor broadcast station facilities changes. To
implement this change in the law, on March 19, 1996, the Commission
adopted a Notice of Proposed Rule Making in MM Docket No. 96-58 seeking
comment on revising our regulations to eliminate the two-step
application process where appropriate and replace it with a single step
licensing procedure. These proposals would cause revisions to the
following information collections: FCC 301 (3060-0027), FCC 340 (3060-
0034), FCC 302-AM (3060-0627), FCC 302-FM (3060-0506), FCC 302-TV
(3060-0029), Section 73.1125 (3060-0171). Among other things, this NPRM
proposes to eliminate the present requirement for a construction permit
(FCC Forms 301/340) for a broadcast station in certain instances where
the changed facilities will not have an adverse impact on other
broadcast facilities. In these instances, we will permit the broadcast
licensee or permittee to make changes without prior authority from the
Commission and file a license application (FCC Forms 302-AM/302-FM/302-
TV) with specified exhibits to reflect the change afterwards.
Additionally, we propose to eliminate the need to file an application
for construction permit on FCC 301/340 to request a main studio move.
We propose that these requests be made in a letter form with
appropriate justification. These proposed changes would eliminate the
delay and expense of completing the construction permit application and
will enable licensees/permittees to make changes with
[[Page 15441]]
minimal delay. In addition to these specific proposals, the Commission
is also seeking suggestions from the public and the broadcast industry
as to additional types of minor modifications that could be effectuated
through a one-step licensing process without prior approval of the
Commission.
Initial Regulatory Flexibility Analysis
As required by Section 603 of the Regulatory Flexibility Act, the
Commission has prepared an Initial Regulatory Flexibility Analysis
(IRFA) of the expected impact on small entities of the proposals
suggested in the NPRM. Written public comments are requested on the
IFRA. These comments must be filed in accordance with the same filing
deadlines as comments on the rest of the NPRM, but they must have a
separate and distinct heading designating them as responses to the
Initial Regulatory Flexibility Analysis. The Secretary shall send a
copy of the NPRM, including the Initial Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration in accordance with paragraph 603 (a) of the Regulatory
Flexibility Act, Public Law No. 96-354, 94 Stat. 1164, 5 U.S.C. Section
601, et seq. (1980).
I. Reason for Action: This proposed action is necessary to provide
more flexibility for AM, FM and television stations to effectuate minor
modifications of their facilities in instances where there would not
likely be any significant impact on other stations. In addition, this
proposed action would allow such minor modifications to be made more
quickly than under the current procedures.
II. Objectives: The objective of this proceeding is to allow AM,
FM, and television station licensees and permittees to bring improved
service to the public more efficiently and expeditiously while
controlling interference to other stations.
III. Legal Basis: The action taken in this NPRM is authorized by
Sections 4(i), 5(c)(1), 302, and 303 of the Communications Act of 1934,
as amended, 47 U.S.C. Secs. 154(i), 155(c)(1), 302, and 303.
IV. Description, Potential Impact and Number of Small Entities
Affected: The entities affected by this proposal are AM and FM radio
and television station licensees and permittees seeking to effect minor
modifications of facilities that have previously been authorized by the
Commission. The total number of such licensees and permittees is nearly
15,000. Because the Notice proposes provisions which allow for greater
flexibility in operation, the option of whether or not to take
advantage of the new rules rests with each licensee or permittee. There
is no requirement that any licensee or permittee make any change as a
result of these rule amendments. The number of licensees or permittees
who might decide to modify their stations pursuant to these rule
amendments is unknown, but under the present rules, approximately 150
stations each year file applications that propose the types of
facilities modifications that are the subject of these rule amendments.
V. Recording, Record Keeping and Other Compliance Requirements:
None.
VI. Federal Rules which Overlap, Duplicate or Conflict with these
Rules: None.
VII. Any Significant Alternative Minimizing Impact on Small
Entities and Consistent with the Stated Objectives: None.
List of Subjects
47 CFR Part 1
Administrative practice and procedure, Radio, Television.
47 CFR Part 73
Radio broadcasting, Television broadcasting.
47 CFR Part 74
Radio broadcasting, Television broadcasting.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-8595 Filed 4-5-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-8522 Radio Broadcasting Services; Green River, WY
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Page 15442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8522]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 96-63; RM-8777]
Radio Broadcasting Services; Green River, WY
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Commission requests comments on a petition filed by
Wagonwheel Communications Corporation proposing the allotment of
Channel 268C at Green River, Wyoming, as the community's first local
aural transmission service. Channel 268C can be allotted to Green River
in compliance with the Commission's minimum distance separation
requirements at city reference coordinates. The coordinates for Channel
268C at Green River are North Latitude 41-31-36 and West Longitude 109-
28-06.
DATES: Comments must be filed on or before May 23, 1996 and reply
comments on or before June 7, 1996.
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: Erwin
G. Krasnow, Esq., Verner, Liipfert, Bernhard, McPherson and Hand, 901
15th Street, NW., Suite 700, Washington, DC 20005-2301 (Counsel for
Petitioner).
FOR FURTHER INFORMATION CONTACT: Sharon P. McDonald, Mass Media Bureau,
(202) 418-2180.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rule Making, MM Docket No. 96-63, adopted March 15,
1996, and released April 1, 1996. 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, 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,
Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-8522 Filed 4-5-96; 8:45 am]
BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-8521 Radio Broadcasting Services; Starkville, MS, and Ethelsville, AL
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15442-15443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8521]
-----------------------------------------------------------------------
[[Page 15443]]
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 96-67; RM-8774]
Radio Broadcasting Services; Starkville, MS, and Ethelsville, AL
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Commission requests comments on a petition by Charisma
Broadcasting Company, licensee of Station WMSU(FM), Channel 221A,
Starkville, Mississippi, requesting the substitution of Channel 222A
for Channel 221A, the reallotment of Channel 222A from Starkville,
Mississippi, to Ethelsville, Alabama, and the modification of Station
WMSU(FM)'s license to specify Ethelsville as its community of license.
Channel 222A can be allotted to Ethelsville in compliance with the
Commission's minimum distance separation requirements with a site
restriction of 8.2 kilometers (5.1 miles) northwest to accommodate
Charisma's desired site. The coordinates for Channel 222A are 33-28-50
and 88-15-16. In accordance with Section 1.420(i) of the Commission's
Rules, we will not accept competing expressions of interest in the use
of Channel 222A at Ethelsville.
DATES: Comments must be filed on or before May 23, 1996, and reply
comments on or before June 7, 1996.
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: Bill
Milam, Vice President, Charisma Broadcasting Company, Box 980,
Starkville, Mississippi, 89759 (Petitioner).
FOR FURTHER INFORMATION CONTACT: Pam Blumenthal, Mass Media Bureau,
(202) 418-2180.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rule Making, MM Docket No. 96-67, adopted March 19,
1996, and released April 1, 1996. The full text of this Commission
decision is available for inspection and copying during normal business
hours in the FCC'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, ITS, Inc., (202) 857-
3800, 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,
Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-8521 Filed 4-5-96; 8:45 am]
BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-8492 Reengineering and Reinvention of the Direct Section 502 and 504 Single Family Housing (SFH) Programs
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15395-15427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8492]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 61, No. 68 / Monday, April 8, 1996 / Proposed
Rules
[[Page 15395]]
DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Part 3550
RIN 0575-AB17; RIN 0575-AB80; RIN 0575-AB99; RIN 0575-AC00
Reengineering and Reinvention of the Direct Section 502 and 504
Single Family Housing (SFH) Programs
AGENCY: Rural Housing Service, United States Department of Agriculture
(USDA).
ACTION: Proposed rule.
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SUMMARY: The Rural Housing Service (RHS), formerly the Rural Housing
and Community Development Service (RHCDS), a successor agency to the
Farmers Home Administration (FmHA), proposes to streamline and
reengineer its regulations and to utilize private sector processes and
techniques in the administration of its direct Single Family Housing
(SFH) portfolio. This action is taken to reduce regulations, improve
customer service, and improve the agency's ability to achieve greater
efficiency, flexibility, and effectiveness in managing its SFH
portfolio. The agency is centralizing the servicing of its SFH
portfolio loans to provide more timely and consistent supervised
credit. The effect of this action is to provide better service and
reduce the Code of Federal Regulations (CFR) coverage of the SFH
program by an estimated 90 percent.
DATES: Comments must be received on or before June 7, 1996.
ADDRESSES: Submit written comments in duplicate to the Director,
Regulations and Paperwork Management Division, Rural Housing Service,
U.S. Department of Agriculture, Room 6348, South Agriculture Building,
Washington, DC 20250. All written comments made pursuant to this notice
will be made available for public inspection during regular work hours
at the above address.
FOR FURTHER INFORMATION CONTACT: Jean Leavitt, Senior Loan Specialist,
Single Family Housing Servicing and Property Management Division, RHS,
room 5307, South Agriculture Building, Washington, DC, 20250, telephone
(202) 720-1452.
SUPPLEMENTARY INFORMATION:
Classification
This proposed rule has been determined to be significant, but not
economically significant and was reviewed by the Office of Management
and Budget (OMB) under Executive Order 12866.
Executive Order 12778
This proposed rule has been reviewed under Executive Order 12778,
Civil Justice Reform. If this proposed rule is adopted: (1) unless
otherwise specifically provided all state and local laws and
regulations that are in conflict with this rule will be preempted; (2)
no retroactive effect will be given to this rule except as specifically
prescribed in the rule; and (3) administrative proceedings of the
National Appeals (7 CFR Part 11) must be exhausted before bringing
suit.
Unfunded Mandate Reform Act
Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA,
federal agencies generally must prepare a written statement, including
cost-benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures to State, local, or tribal
governments, in the aggregate, or to the private sector, of $100
million or more in any one year. When such a statement is needed for a
rule, section 205 of the UMRA generally requires RHS to identify and
consider a reasonable number of regulatory alternatives and adopt the
least costly, more cost-effective or least burdensome alternative that
achieves the objectives of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, and tribal
governments or the private sector. Therefore, this rule is not subject
to the requirements of sections 202 and 205 of the UMRA.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review (NPR) program to reduce or eliminate unnecessary
regulations and improve those that remain in force. Currently, the
administration of the SFH program is guided by 16 separate regulations
totaling 290 pages in the CFR.
Earlier this year, RHS purchased a commercial-off-the-shelf
Dedicated Loan Origination and Servicing System (DLOS) which includes
escrow capability to improve program performance and efficiency to its
customers. RHS intends to adopt processes and techniques currently
utilized by the private sector including centralized servicing and
automation of many forms and processes. The system is being customized
to provide the additional features and servicing benefits available to
RHS customers to assist them in becoming successful homeowners.
Rather than modify the current 16 regulations to implement DLOS,
RHS committed itself to meet the true spirit and intent of the NPR. RHS
has undertaken a massive effort to completely reinvent and reengineer
its regulatory process. RHS is combining the guidance provided in all
16 regulations into one consolidated rule. Administrative matters have
been eliminated, remaining text has been completely revised to be
consistent, simple, and clear. RHS estimates the final rule, after DLOS
is fully implemented, will cover approximately 30 pages in the CFR, for
a 90% reduction in regulations. This regulatory initiative follows our
final rule of October 27, 1995, in which the cost of the direct section
502 program was reduced by 30%.
Environmental Impact Statement
This document has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' It is the determination of RHS
that the proposed action does not constitute a major Federal action
significantly affecting the quality of the human environment and in
accordance with the National Environmental Policy Act of 1969, Public
Law 91-190, an Environmental Impact Statement is not required.
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Regulatory Flexibility Act
This proposed rule has been reviewed with regard to the
requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). The
undersigned has determined and certified by signature of this document
that this rule will not have a significant economic impact on a
substantial number of small entities since this rulemaking action does
not involve a new or expanded program.
Programs Affected
These programs are listed in the Catalog of Federal Domestic
Assistance under Number 10.410, Very-Low-to Moderate Income Housing
Loans (Section 502 Rural Housing Loans) and 10.417 Very-Low Income
Housing Loans and Grants (Section 504 Rural Housing Loans and Grants).
Intergovernmental Consultation
These programs are not subject to the provision of Executive Order
12372 which requires intergovernmental consultation with state and
local officials. See 7 CFR part 3015, subpart V (48 FR 29112, June 24,
1983) and FmHA Instruction 1940-J, ``Intergovernmental Review of
Farmers Home Administration Programs and Activities.''
Background Information
An Overview
The RHS is taking the next steps in the reengineering and
reinvention of the manner in which direct Section 502 and Section 504
loans and grants are made and serviced. This follows our October 27,
1995, final rule in which the cost of our direct single family housing
low income loan program under section 502 of the Housing Act of 1949
was reduced by 30%. The proposed regulations which follow are a
significant departure from business practices of the former FmHA. As
part of the USDA reorganization, RHS made a commitment to make its
programs more customer friendly, to streamline processes, reduce costs
to the taxpayer, and increase our level of customer service. These
regulations will accomplish these goals within our SFH program and set
the standard for future regulatory actions within RHS.
The RHS has over 725,000 direct Section 502 and 504 loans with
approximately 625,000 customers in its portfolio. With our Fiscal Year
(FY) 1996 direct section 502 and 504 loan appropriation, the Agency
anticipates making 35,000 new direct SFH loans this year. The
accounting system established by FmHA to maintain its vast farm,
housing, community and business loan programs is severely outdated and
not capable of expansion to keep pace with an ever increasingly
automated society. FmHA was not able to provide the same level of
customer service provided by commercial lenders such as the escrow of
real estate taxes and insurance for its customers and toll free
telephone numbers to contact a servicing representative. These features
are critical for RHS to provide prudent supervised credit to its very-
low and low income customers and assist these families in becoming
successful homeowners.
Additionally, RHS is aggressively meeting the Administration's goal
of reducing staff through reorganization and streamlining of processes.
National and field staffs are being reduced and many offices will be
consolidated. This, coupled with our outdated accounting system, made
the accomplishment of our Agency goals more challenging.
In May 1995, the RHS awarded a contract to Fiserv, Inc. and its
subsidiary, Data-Link systems for the purchase of a commercial-off-the-
shelf Dedicated Loan Origination and Servicing System (DLOS) which
includes escrow capability. This system will replace the Agency's
current Program Loan Accounting System (PLAS) and the Management
Records System (MRS) and will provide agency personnel with the tools
to deliver high quality customer services to its customers. RHS intends
to adopt processes and techniques currently utilized by the private
sector including centralized servicing and automation of many forms and
processes. The system is being customized to provide the additional
features and servicing benefits available to RHS customers to assist
them in becoming successful homeowners. The Agency intends to begin
implementing this system on October 1, 1996 with two pilot states.
Other states will be phased into the DLOS system through FY 1996 with
full implementation anticipated by September 30, 1997. Further
information on the implementation of the system follows.
The centralized servicing unit will be located in St. Louis,
Missouri, and will assume primary responsibility for the functions
associated with servicing and managing the loan portfolio such as
collection of loan payments, day to day loan servicing, escrowing, and
accounting in a focused effort to monitor and reduce loan defaults
thereby achieving our goal of having successful homeowners that can
eventually refinance to commercial credit. The centralized unit will be
staffed with many existing RHS employees.
The objectives of DLOS are to:
Establish an escrow system for real estate taxes and
insurance.
Facilitate the centralization of RHS SFH loan servicing.
Reduce the foreclosure rate through early and consistent
intervention with borrowers having trouble making payments.
Reduce costs by reducing delinquency rates, loan losses
and operating costs.
Account for direct SFH loans on a amortized rather than
simple interest rate.
Improve efficiency and service to our customers.
Develop clear, concise and easy to read regulations and
handbooks.
Reduce burden on our customers.
This initiative has been highlighted in the NPR and will streamline
and improve the delivery of program assistance to customers. There are
anticipated savings to the Government of $250 million over a five year
period.
The Regulations
RHS has undertaken a major redevelopment and consolidation of FmHA
regulations affecting the direct Section 502 and 504 programs. At the
current time, direct SFH customers are affected, in part, by the
following regulations:
7 CFR Part 1910, Subpart A--Receiving and Processing
Applications.
7 CFR Part 1944, Subpart A--Section 502 Rural Housing Loan
Policies, Procedures, and Authorizations.
7 CFR Part 1944, Subpart J--Section 504 Rural Housing
Loans and Grants.
7 CFR Part 1951, Subpart B--Collections.
7 CFR Part 1951, Subpart C--Offsets of Federal Payments to
FmHA or its successor agency under Public Law 103-354 Borrowers.
7 CFR Part 1951, Subpart D--Final Payment on Loans.
7 CFR Part 1951, Subpart F--Analyzing Credit Needs and
Graduation of Borrowers.
7 CFR Part 1951, Subpart G--Borrower Supervision,
Servicing and Collection of Single Family Housing Loan Accounts.
7 CFR Part 1951, Subpart I--Recapture of Section 502 Rural
Housing Subsidy.
7 CFR Part 1951, Subpart J--Management and Collection of
Nonprogram (NP) Loans.
7 CFR Part 1951, Subpart M--Servicing Cases Where
Unauthorized Loan or Other Financial Assistance Was Received--Single
Family Housing.
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7 CFR Part 1955, Subpart A--Liquidation of Loans Secured
by Real Estate and Acquisition of Real and Chattel Property.
7 CFR Part 1955, Subpart B--Management of Property.
7 CFR Part 1955, Subpart C--Disposal of Inventory
Property.
7 CFR Part 1956, Subpart B--Debt Settlement--Farmer
Programs and Housing.
7 CFR Part 1965, Subpart C--Security Servicing for Single
Family Rural Housing Loans.
Some of the above mentioned regulations involve only SFH loans,
while others are combined with regulatory provisions of other programs
of the former FmHA such as farm loans, business and industrial loans,
community facilities and multi-family housing. RHS is consolidating all
regulatory actions in the above mentioned regulations which affect
direct SFH loans into one new regulation--7 CFR Part 3550. This
consolidated regulation will make it easier for RHS field staff, and
most importantly, our customers, to understand how to obtain program
benefits.
Additionally, RHS has removed all administrative processes from the
regulations, leaving only regulatory actions which impact the public in
the Federal Register. This streamlining makes the regulation more
concise and much easier to read and understand. The Agency is
developing a separate handbook with administrative matters such as what
forms must be filed and where to submit loan requests and the agency's
internal processing procedures. This handbook will not be published in
the Federal Register but will be available upon request to the public
at no cost.
Implementation Proposal
As previously mentioned, the DLOS system will be implemented over a
one year period. Two pilot states will start the process and other
states will be added to DLOS over the next 12 months. The 12 month
implementation period is critical to ensure for the orderly transfer of
account information on 725,000 loans to the new DLOS system. This
implementation period presents administrative challenges to the Agency
as states will be operating under different computer systems with
significantly different capabilities. When RHS publishes this Proposed
Rule in final, it intends to remove from the CFR the following
regulations:
7 CFR Part 1944, Subpart A--Section 502 Rural Housing Loan
Policies, Procedures, and Authorizations.
7 CFR Part 1944, Subpart J--Section 504 Rural Housing
Loans and Grants.
7 CFR Part 1951, Subpart G--Borrower Supervision,
Servicing and Collection of Single Family Housing Loan Account.
7 CFR Part 1951, Subpart I--Recapture of Section 502 Rural
Housing Subsidy.
7 CFR Part 1951, Subpart M--Servicing Cases Where
Unauthorized Loan or Other Financial Assistance Was Received--Single
Family Housing.
7 CFR Part 1965, Subpart C--Security Servicing for Single
Family Rural Housing Loans.
These regulations deal strictly with the direct SFH programs of the
RHS. The following regulations will remain in the CFR as they contain
provisions relating to other program areas. These regulations will be
amended at the time of our final rulemaking action to clearly indicate
that they no longer apply to the direct SFH programs:
7 CFR Part 1910, Subpart A--Receiving and Processing
Applications.
7 CFR Part 1951, Subpart B--Collections.
7 CFR Part 1951, Subpart C--Offsets of Federal Payments to
FmHA or its successor agency under Public Law 103-354 Borrowers.
7 CFR Part 1951, Subpart D--Final Payment on Loans.
7 CFR Part 1951, Subpart F--Analyzing Credit Needs and
Graduation of Borrowers.
7 CFR Part 1951, Subpart J--Management and Collection of
Nonprogram (NP) Loans.
7 CFR Part 1955, Subpart A--Liquidation of Loans Secured
by Real Estate and Acquisition of Real and Chattel Property.
7 CFR Part 1955, Subpart B--Management of Property.
7 CFR Part 1955, Subpart C--Disposal of Inventory
Property.
7 CFR Part 1956, Subpart B--Debt Settlement--Farmer
Programs and Housing.
After the effective date of the final rule, the direct SFH program
will be guided by 7 CFR Part 3550. The proposed handbook will provide
RHS field personnel and its customers with administrative guidance in
states under the DLOS system. In states not yet under the DLOS system,
RHS field personnel and its customers will be guided by current FmHA
Instructions. These current FmHA Instructions will serve as the
handbook for states not under the DLOS system. Where current FmHA
Instructions may differ from 7 CFR Part 3550, RHS will make changes to
the current FmHA Instructions to reflect such changes concurrently with
publication of the Final Rule.
For example, the proposed regulations provide for a different
manner in which interest credit recapture is calculated. Currently,
guidance for calculating interest credit recapture is published in 7
CFR Part 1951, Subpart I. The formula for determining recapture is very
complex requiring the calculation of the average interest rate and
number of months the borrower has lived in the property. In addition,
the borrower is not given credit for improvements made to the security
property. The proposed rule, in brief, provides credit for improvements
and limits recapture to 50% of value appreciation regardless of average
interest rate and the length of time the borrower has lived in the
property.
When the proposed rule is published in final, RHS intends to remove
7 CFR Part 1951, Subpart I from the CFR. Part 3550 will contain the
guidance on calculation of interest credit recapture, and the proposed
handbook will provide administrative guidance on handling recapture
under the new DLOS computer system. This process will work in states
with access to the DLOS computer system. However, in states without
access to DLOS, they will be unable to use the proposed handbook. These
states will continue to be guided by FmHA Instruction 1951-I which is a
duplicate of 7 CFR Part 1951, Subpart I. Although RHS will remove 7 CFR
Part 1951, Subpart I from the CFR, the FmHA Instruction will continue
to be used in states not under the DLOS computer system until DLOS is
fully implemented. RHS will amend FmHA Instruction 1951-I to include
the new guidance on calculation of interest credit recapture. In this
manner, RHS can ensure that its customers receive equal access to
program benefits. Everyone will be guided by 7 CFR Part 3550, and in
the aforementioned situation, states under DLOS will look to the
proposed handbook for administrative guidance, and states not under
DLOS will look to FmHA Instruction 1951-I for administrative guidance.
After full implementation of DLOS, all states will operate under the
proposed handbook and applicable FmHA Instructions will be removed from
field use.
This proposed method will ensure that all borrowers have access to
the same program benefits. However, some changes proposed in 7 CFR Part
3550, which cannot be implemented under the PLAS computer system, will
be applicable to customers only in states under the DLOS computer
system. For
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example, the proposed regulation imposes a late fee on payments which
are more than 15 days delinquent. The DLOS computer system can handle
such a charge, whereas the current PLAS computer system cannot.
Therefore, borrowers in states under DLOS will be subject to a late
fee. Borrowers in states under the PLAS system will not be subject to a
late fee until they are put under the DLOS system. These differences
are unavoidable due to the shortcomings of the current PLAS computer
system and the massive effort the Agency will be undertaking to convert
all 725,000 loans to the new system. Where 7 CFR 3550 provides a
customer with any additional program benefits, RHS will ensure that all
customers are provided access to these benefits regardless of whether
their state is under DLOS.
Technical enhancements to improve program delivery:
(a) Section 502 Loan Origination
Funding Priorities
RHS has clarified the funding priorities for applications needing
immediate assistance. Previously, there were four categories which all
were eligible for priority funding. These categories for priority
funding were hardship applications, self-help housing applications,
participation loan applications, and applications for servicing type
loans. However, the agency recognizes the need for more explicit
guidance in selection of competing applications for limited resources.
In the interest of better serving our active borrowers, the agency
proposes to provide first priority to active borrowers needing
subsequent loans to correct health and safety hazards. The agency is
compelled to provide decent, safe and sanitary housing to active
borrowers and protect the government's security interest. Second
priority is a consolidated grouping giving preference to an application
for a hardship loan, Real Estate Owned (REO), a loan related to the
transfer of an existing RHS property, a self-help loan and a leveraging
loan made in conjunction with funding from the other sources.
Maximum Loan Amount
In order to minimize the impact of instituting escrow accounts for
borrowers, the maximum loan amount can include the cost of the charge
to establish an escrow account. The amount of the loan can exceed the
appraised value by the cost of an appraisal and the cost to establish
the escrow account. The agency considered this a fair practice for the
very low- and low-income customers we serve.
Deferred Mortgage Payments
A technical clarification was made which states that the amount
deferred will be up to 25 percent of the payment due at one percent
when a borrower qualifies for a deferred mortgage.
(b) Section 504 Originations
Net Family Assets
A technical clarification has been made to define net family assets
the same as in Section 502. This change will provide consistency in the
treatment of assets between the 502 and the 504 program.
Loan and Grant Purposes
Loan and grant funds may be used to refinance a debt incurred for
the installation as well as the assessment of utilities, prior to the
date of application.
Eligibility of Mobile and Manufactured Homes
The requirement that a mobile or manufactured home must need
repairs to remove health and safety hazards as a condition for 504
assistance has been removed. This revision is consistent with meeting
program objectives.
(c) Tax Service and the Escrow of Taxes and Insurance
Section 501(e) of the Housing Act of 1949 (42 U.S.C. Sec. 1471(e))
mandates the Agency to establish procedures under which SFH borrowers
are required to escrow for the payment of real estate taxes,
assessments and insurance.
RHS currently does not maintain escrow accounts for payment of real
estate taxes for any of its SFH borrowers. With few exceptions (such as
the borrower's name and mailing address) the current loan servicing
system (PLAS) has minimal on-line data concerning the borrower and
property. Information essential to the escrow process is not maintained
on-line in the current system. This loan data is instead, currently
maintained in the hard copy files retained in each county office. The
primary responsibility for verifying that borrowers have complied with
the terms of their mortgage and made the appropriate real estate tax
payments resides with the county offices. Methods used to insure that
taxes have been paid vary from office to office. These methods include
(1) sending listings to tax collectors for tax verification (2)
reviewing local newspapers for tax sales and (3) requesting borrowers
to provide proof of tax payment. Previously, once taxes have been found
to be delinquent, the county office staff informed the borrower of the
default and requested the taxes to be paid. In the event of the
borrower's unwillingness or inability to pay the delinquent taxes, RHS
at its option advanced funds for this purpose and charged the advance
to the borrower's account. This decentralized method of monitoring and
processing delinquent taxes has not been successful in assisting
borrowers before they default on the payment of their taxes. With the
escrowing of taxes and insurance the agency does not have to advance
funds to pay delinquent taxes and borrowers are not put in a position
of having a large tax or insurance payment due without adequate funds
to pay it.
The agency intends to utilize a nationwide tax service to obtain
annual tax information on the RHS loan portfolio, and to obtain tax
bills for loans that are escrowed loans. It is common industry practice
to use a tax service and to require all borrowers to pay a one-time
cost of the service. Other major government housing lenders such as
Federal Housing Administration and Department of Veteran Affairs
utilize a tax service.
The process of converting existing loans to a tax service will be
phased-in as states are included in the DLOS system. A small, tax
service fee which is estimated to be approximately $20 will be charged
to each borrower to establish the escrow account. Each existing SFH
borrower agreed, as one of the terms of the security instruments they
executed (mortgage or deed of trust), to pay fees and charges
established by the agency in its regulations. Existing borrowers will
be given the option to either pay the fee or add the fee to the
principal balance of their loan. Borrowers who receive loans after the
effective date of this regulation will be charged a tax service fee
which is estimated to be approximately $60 to be paid at loan closing.
To minimize the impact on our very-low and low income customers, this
fee can be included as part of the loan. These tax service fees are
consistent with industry standards.
The tax service will be responsible for: (1) conducting a search
for delinquent taxes on all existing loans that are converted to the
new loan servicing system; (2) reporting delinquent taxes to the agency
during the life of the loan and (3) assuming responsibility for any
forfeiture that results from properties being sold at a tax sale if the
tax servicer does not inform RHS of delinquent taxes on the properties
so sold. The tax servicer will also be responsible for procuring the
tax bills on all escrowed loans and paying
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the taxes from the borrower's escrow account. The tax service is
responsible for any penalty, loss of discount or incorrect disbursement
should they fail to provide accurate and timely information.
Escrow accounts will be established for all new direct 502 loans
approved after October 27, 1995, except for participation loans where
another lender will be establishing an escrow account. Borrowers whose
loans were approved after October 27, 1995, agreed to the escrow of
taxes and insurance when they received their loan. Section 504 loan
recipients may be required to escrow if their current lender does not
escrow. As existing loans are converted to escrow, the accounting
system used by the agency to credit borrower payments will change from
Daily Simple Interest to a Preamortized Schedule payment. There are two
conditions under which escrow accounts for existing loans will be
established:
(1) The borrower requests that an escrow account be established.
Existing borrowers will be allowed to voluntarily establish an escrow
account once their loan has been converted to the DLOS system.
(2) RHS requires that an escrow account be established. RHS will
require that an escrow account be established for a given loan if
either of the following conditions exists:
(i) A borrower defaults on the responsibility to pay either the
real estate taxes or hazard insurance premiums in a timely manner; or
(ii) A borrower defaults on regular monthly payments and requests
RHS assistance to cure the default.
In both cases (1) and (2) above, the borrower may add the cost of
the tax service fee, and initial escrow to their loan and have the
account reamortized. This will minimize costs to our customers. The tax
service will enhance the agency's ability to provide supervised credit
in rural America and assist more customers in becoming successful
homeowners.
(d) Regular Servicing
(1) Application of payments. If less than the full scheduled
payment is received the payment will be held in suspense and not
applied. For borrowers who remain under daily simple interest, interest
will continue to accrue until the full payment is received. For
borrowers under a predetermined amortized schedule, no additional
interest will accrue against the scheduled payment that is due,
however, the borrower may be charged a late fee. Full scheduled
payments will be applied as follows:
(i) Protective advances due.
(ii) Accrued interest due.
(iii) Principal due.
(iv) Escrow for taxes and insurance.
(v) Fees or charges applied to the account.
(2) Payment Subsidies. RHS currently provides two types of payment
subsidies to borrowers. Interest credit assistance was provided to
borrowers whose loans were approved prior to FY 1996. The interest rate
on these loans could be reduced as low as 1% to allow borrowers to pay
20% of their income for payments, taxes and insurance. Payment
assistance has been provided to borrowers whose loans were approved
after October 1, 1995. Under payment assistance, borrowers must pay 22,
24, or 26% of their income towards payments, taxes and insurance. The
percentage is determined by the borrower's income. Interest credit
assistance and payment assistance are herein referred to as payment
subsidies.
Payment subsidy guidelines are being modified to provide that if a
borrower's income should increase or decrease, a new 12-month agreement
may be prepared, if the amount of assistance changes by at least $10
per month. Currently, there is no dollar threshold which has created an
administrative burden on the agency and its customers.
To assist borrowers who are currently receiving interest credit,
the agency will allow them to continue to stay under the interest
credit program provided they continuously remain eligible. A borrower
who has stopped receiving interest credit and at a later date qualifies
for a payment subsidy will be converted to payment assistance.
Currently, a borrower who is receiving interest credit assistance is
required to convert to payment assistance if they obtain a subsequent
loan or the account is reamortized. This has caused a hardship for
several borrowers whose payments significantly increase because of the
conversion.
(3) Late Fees. A late charge fee will be assessed if the scheduled
payment is not received by the 15th day after the due date. Initially,
the agency intends to set the late charge fee at 4% of the borrower's
scheduled payment. This is an industry standard incentive to encourage
borrowers to pay on time, thereby reducing delinquencies and helping
borrowers to maintain a good credit history.
(4) Returned Check Fee. A returned check charge will be assessed
for any check that is returned for nonsufficient funds. This is
consistent with industry standards. Initially, the agency intends to
set the returned check fee at $15. This fee is less than industry
standards; however, a typical RHS borrower's mortgage payment is
significantly lower than that of a typical industry standard mortgage
payment. RHS feels the lower proposed returned check fee is more
consistent with the borrower's ability to pay.
(5) Final Payment. The RHS will provide a written statement
indicating the amount required to pay the account in full. A fee may be
charged for payoff statements if more than two statements are requested
on the same account in any 30 day period. Initially, the agency intends
to set the fee at $25 per statement which is consistent with industry
standards.
(6) Subsidy recapture. The RHS may now subordinate its lien to
include funds obtained from the other lender to improve or make repairs
to the dwelling if it is in the best interest of the government.
Currently, RHS will only allow a subordination to include the unpaid
principal and interest plus reasonable closing costs. If a borrower
desired to obtain additional funds for improvements or repair, the
lender had to agree to a third lien position which in many cases
prevented the borrower from refinancing.
Further subordination (as in a case where recapture has previously
been subordinated) of a lien securing a recapture receivable will now
be allowed if the borrower is refinancing with no increase in the
amount of the debt to which RHS has subordinated (except reasonable
closing costs).
The recapture formula has been changed to (1) provide a value added
credit for capital improvements (2) cease accrual or additional
principal reduction attributed to subsidy (PRAS) and (3) limit
recapture to 50 percent of value appreciation. This change eliminates
the major complaint concerning recaputure--nonconsideration of
improvements made subsequent to loan closing. It also partially
eliminates another major complaint--PRAS. PRAS is the accelerated
principal write-down that occurred when subsidy was applied to the
account by reducing the effective interest rate under the interest
credit program. RHS intends to ``freeze'' PRAS on the same date for all
borrowers who are subject to PRAS. At this time, we estimate such date
to be October 1, 1996.
By ``freezing'' PRAS, only the amount of accumulated PRAS (as of
the date of the ``freeze'') will be subject to recapture. Freezing PRAS
is to the borrower's financial advantage because PRAS, as it presently
operates,
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continues to accrue even after a borrower no longer qualifies for
subsidy. PRAS continues to accrue until approximately the 20th year in
the life of the loan at which time it gradually decreases until the
loan reaches maturity. To ensure that no borrower is adversely affected
by this change, RHS will reduce the ``frozen'' PRAS starting in the
loan's 15th year by an equal amount each year so the PRAS will be zero
at loan maturity. For example, on an existing 33-year loan, PRAS was
frozen on October 1, 1996 at $5,000. In year 15 of this loan, 18 years
would be remaining. PRAS would be reduced in year 15 by $278 ($5,000
divided by 18), and by an additional $278 each year thereafter. If the
borrower paid off the loan in year 19, there would be $3,610 of PRAS
subject to recapture [$5,000-$1390 ($278 times 5 years).
These proposed changes will allow a borrower to better estimate
their equity position and eliminate this often confusing aspect of the
program. These proposed revisions to subsidy recapture will apply to
all new and existing borrowers.
Borrowers who cease to occupy their dwelling will now have the
amount of recapture due determined and given a choice of either paying
the recapture amount or having it included in the unpaid balance and
reamortized. Existing regulations were unclear when recapture was
calculated and repaid.
Borrowers will also be given a discount on the recapture amount due
if the recapture is repaid within 30 days of refinancing or payment of
the last loan installment and the borrower continues to occupy the
property.
(7) Transfer of security and assumption of indebtedness. The
regulation has been clarified to provide that, unless it is in the
government's best financial interests, RHS will not approve the
assumption of a secured loan if the seller fails to repay any unsecured
loans with USDA.
(e) Special Servicing Actions
(1) Delinquency workout agreements. All past due balances under
workout agreements will be required to be repaid within 2 years or the
remaining term of the loan whichever is shorter. Currently, Agency
regulations encourage but do not require a 2-year payback. With more
timely and consistent servicing, the Agency anticipates the amount of
delinquencies will decrease and the two year timeframe is sufficient.
Borrowers will become current on the account in a shorter period of
time and restore their good credit history.
(2) Moratorium. Moratoriums will be granted for the borrower's full
scheduled payment to include principal, interest, taxes and insurance
or for the borrower's scheduled payment for principal and interest,
based on the borrower's repayment ability. Moratoriums will continue to
be granted for a maximum of 2 years but will be reviewed semiannually.
This will benefit borrowers that no longer meet moratorium conditions
by reinstating scheduled payments at an earlier date thus reducing the
arrearage that must be repaid at the end of the moratorium period.
Borrowers not on escrow will be assisted by establishing an escrow
account and convert to a preamortized schedule prior to reamortization
at the end of the moratorium period.
(3) Unauthorized assistance. Unauthorized payment assistance can
occur through RHS error, or incorrect or false information provided by
the borrower. Borrowers who received unauthorized payment assistance by
providing false information will not be allowed to reamortize their
account to remove the delinquency that occurred when account
adjustments were made and may be recommended for suspension or
debarment. This will eliminate the inequity that currently exists
between borrowers who received unauthorized payment assistance through
no fault of their own and borrowers who provided false information.
(4) Graduation of SFH loans. The term ``graduation'' is being
replaced with ``refinancing'' to other credit.
(5) Debt Settlement. These regulations are revised to encourage the
use of offsets (Administrative, Salary and Internal Revenue) to affect
collection.
(6) Disposition of inventory property. Consistent with industry
standards, the term ``inventory property'' is being replaced with
``REO.''
Program property will now be made available to program applicants
for 60 days instead of 45 days. This sale period is effective from the
date of the notice of sale, and for any reduction in price or any other
change in credit terms or other sale terms. This will allow program
properties to be marketed for a greater period of time to those
individuals most in need of housing.
When a nonprofit organization or public body notifies RHS in
writing of its intent to buy property, RHS will withdraw the property
from the market for up to 30 days to provide the entity with the
opportunity to execute a sale contract. For program properties, the
listed price will now be discounted after the 60 day reservation period
for program applicants has elapsed. Nonprogram properties will continue
to be discounted from the listed price at any time. Initially, the
Agency intends to set the discount at its current rate of 10%.
For properties listed with a real estate broker, offers will now be
held for 3 business days after the date the property is offered for
sale. Offers received during the holding period are considered received
on the 4th business day and evaluated with any other offers received
that day. This action is taken to provide all real estate brokers with
a reasonable timeframe to receive the notice of listing and sell the
property. Problems had occurred in areas with a high housing demand
whereby sale information was obtained by real estate brokers at
different times due to the difference in mailing periods.
(7) Escrow of taxes and insurance. Any remaining funds held in
escrow or unapplied funds will be applied against the debt. Escrow
disbursement will stop immediately upon debt settlement or release of
security or at anytime RHS does not intend to take title.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995, the RHS
announces its intention to seek Office of Management and Budget (OMB)
approval of new reporting and recordkeeping requirements.
The RHS offers a supervised credit program to extend financial
assistance to construct, improve, alter, repair, replace or
rehabilitate dwellings, which will provide modest, decent, safe, and
sanitary housing to eligible individuals living in rural areas. To
assist individuals in obtaining affordable housing, a borrower's house
payment may be subsidized to an interest rate as low as 1% and under
the deferred mortgage program the subsidy can be reduced further. The
amount of subsidy is based on the borrower's household income. The
information requested by RHS is vital to be able to process
applications for RHS assistance and make prudent credit and program
decisions. It includes borrower financial information such as household
income, assets and liabilities and monthly expenses. Without this
information the Agency is unable to determine if a borrower would
qualify for any services or if assistance has been granted that the
borrower may not have been eligible for. In addition, proper
liquidation and debt settlement decisions are made.
Another integral part of Agency lending requires borrowers to
refinance to other credit when they are able to do so. If a borrower is
unable to find other credit available at reasonable rates and terms,
the Agency will continue to review the borrower for possible
[[Page 15401]]
refinancing at periodic intervals. If it is determined that all loan
servicing efforts have failed to produce a successful outcome the
account will be liquidated through voluntary liquidation or
foreclosure. The agency may also accept a deed in lieu of foreclosure
if it is in the best interest of the Government.
As mentioned in the ``Implementation Proposal,'' RHS field staff in
states under the DLOS system will be utilizing the proposed Handbook
for administrative operations of the program. RHS field staff in states
not under the DLOS system will be utilizing existing FmHA Instructions
for administrative operations, until they come under DLOS at which time
they will use the proposed Handbook. The information collection
requirements for existing FmHA Instructions has been previously
approved by OMB. Therefore, public burden for the direct SFH programs
will be contained in Part 3550, the proposed Handbook and existing FmHA
Instructions. RHS intends to establish a new consolidated information
collection docket for Part 3550, which will contain all burden related
to the direct SFH programs.
Public Burden in the Handbook
RHS is currently developing the proposed Handbook while
aggressively analyzing all existing burden imposed upon the public to
obtain and retain SFH program assistance. A Task Force of RHS employees
at the local, state and national level has been established and is
working with the DLOS team to eliminate all unnecessary burden. This
significant effort includes input from the private sector manufacturers
of the DLOS system. The system which RHS has already purchased includes
many industry standard forms. Wherever possible, RHS intends to utilize
these industry standard forms, eliminate duplicative FmHA forms and
make full use of our new expanded automation capabilities. For example,
most forms which a current RHS borrower must complete can be system
generated and contain all relevant system information such as the
borrower's account number, address, property description, real estate
taxes, insurance, income data, etc., thereby reducing unnecessary
burden imposed on our customers. This will reduce the time it takes the
public to complete required information, reduce the need to stock forms
throughout Rural Economic and Community Development (RECD) offices, and
result in cost savings to the public. RHS is confident that existing
information collection dockets can be reduced.
The proposed Handbook will be available for public comment with
regard only to its information collection requirements on or about July
1, 1996. RHS will publish a Notice in the Federal Register, with a 60-
day comment period, when the Handbook is available and its specific
information collection requirements.
Public Burden in Part 3550
At this time, the Agency is requesting OMB clearance of the
following burden:
Form FmHA 1940-43, ``Notice of Right To Cancel'': Federal
law requires that all parties entering into a transaction which results
in a mortgage on their present home be notified of and given the right
to cancel the transaction. Form FmHA 1940-43 provides the means for
such a transaction to be canceled by the potential borrower. This form
has been used by FmHA for many years, but was inadvertently omitted
from previous paperwork burden packages. In order to meet our legal
responsibilities and ensure that all potential borrowers are properly
notified of their rights, this form has been included in this
regulation. This form will now be generated electronically through the
DLOS system.
Form RECD 3550-1, ``Borrower's Certification and
Authorization.'' This is an industry standard form on which an
applicant certifies that all information furnished in connection with
the loan transaction is true and correct, and provides authorization
from the applicant for the release and verification of any information
contained in the loan application. This form will prove to be a time-
saver for the applicant as well as the Agency, and will allow for the
elimination of several existing FmHA forms when DLOS is implemented
nationwide.
Form RECD 3550-2, ``Request for Verification of Gift/Gift
Letter.'' This will be an automated form which will assist the
applicant in providing required information should the applicant plan
to receive monetary gifts to cover costs in connection with the loan,
i.e. loan closing costs. Currently, the applicant must either provide
some type of documentation or use an informal statement prepared by the
RHS field office staff. The burden on the applicant to provide some
type of documentation will be alleviated because this form will be
system generated and require minimal work for the applicant.
Form RECD 3550-4, ``Employment Certification/Payment
Assistance. This form will serve as a supplement to Form RECD 1944-14,
``Payment Assistance/ Deferred Mortgage Assistance Agreement.'' In
conjunction with the execution of Form RECD 1944-14, borrowers will
sign this form verifying that they will notify RHS when they change or
obtain employment.
Form RECD 3550-6, ``Notice to Borrower of Special Flood
Hazard and Federal Disaster Assistance.'' This is an industry standard
form. When applicable, the system will automatically generate this form
which will notify the applicant that the property being financed is
located in a flood hazard area. The form will require the signature of
the applicant.
Form RECD 3550-7, ``Mortgage Loan Commitment.'' This is an
industry standard form, will be system generated and notifies the
applicant of loan approval and stipulates any special conditions of the
loan approval. The applicant signs the form agreeing to the terms set
forth in the commitment.
Form RECD 3550-9, ``Initial Escrow Account Disclosure
Statement.'' This is an industry standard form, is system generated and
provides an applicant/borrower with a breakdown of his or her escrow
payments.
Form RECD 3550-10, ``Condominium Rider,'' and Form RECD
3550-11, ``Planned Unit Development Rider,'' will be used only for the
few loans the Agency provides on condominiums or planned unit
developments (PUDs). These automated forms will be used as a supplement
to the mortgage or deed of trust to specifically define condominium and
PUD covenants. The borrower's signature will be required.
Form RECD 3550-12, ``Subsidy Repayment Agreement,'' is a
new form which replaces Exhibit A, ``Subsidy Repayment Agreement,'' to
7 CFR part 1951 subpart I. Borrowers are required to repay to the
Government any subsidy received in connection with section 502 of the
Housing Act upon disposition or nonoccupancy of the security property.
This form, which is being reduced in excess of 50%, informs the
borrower of this obligation to RHS.
Standard Form (SF) 5510, ``Authorization Agreement for
Preauthorized Payments,'' is added to provide borrowers with the
convenience of having their monthly mortgage payments automatically
deducted from their bank account. This is a Standard Form widely used
throughout the financial community.
Paragraph 3550.9(b). This paragraph requires that
applicants must disclose any known relationship or association with an
RHS employee. This provision ensures impartiality in program decisions
and reduces the potential for employee conflict of interest. This
disclosure is made on Form FmHA 410-
[[Page 15402]]
4 which is part of the information collection package.
Paragraph 3550.53(g). This paragraph requires that
applicants must provide financial data to demonstrate that they have
adequate repayment ability for the requested loan. An applicant must
provide a financial statement listing all recurring monthly debts. This
information is critical to ensure prudent loan underwriting and is an
industry standard. This financial statement is included on Form FmHA
410-4 which is part of the information collection package.
Paragraphs 3550.55 and 3550.106. These paragraphs require
that all persons applying for RHS loans must file a written application
in a format specified by RHS. RHS currently utilizes Form FmHA 410-4,
an industry standard application form for this purpose. The information
in the application is critical to ensure that the applicant qualifies
for the assistance requested. Form FmHA 410-4 is part of the
information collection package.
Paragraphs 3550.55(b)(3) and 3550.106(b)(4). These
paragraphs provide RHS with the ability to periodically request that an
applicant reconfirm their interest in obtaining assistance. The request
is generally made in writing, and the applicant may call or write RHS
to reconfirm their interest. In many RHS offices, a backlog exists of
applications due to loan requests exceeding available loan funds. To
ensure the most timely and efficient processing of active applications,
RHS must periodically update an applicant's continued interest in the
program.
Paragraph 3550.55(b)(4). This paragraph provides RHS with
the opportunity to request additional information to support an
applicants loan request when RHS receives information which may
indicate that the eligibility determination may have been in error.
This information is critical to ensure applicant's are eligible for
assistance which they may be granted.
Paragraphs 3550.61 and 3550.112. These paragraphs require
that borrowers must furnish and continually maintain hazard and flood
insurance on property securing RHS loans. This is an industry standard
and is necessary to protect the borrower's and government's best
financial interests in the property.
Paragraph 3550.68. This paragraph describes the two forms
of payment subsidies available to RHS direct Section 502 borrowers.
Payment subsidies reduce the borrower's payment to a level consistent
with their income.
Payment subsidies are subject to recapture and this paragraph
requires that borrowers execute Form RECD 3550-12, ``Subsidy Repayment
Agreement,'' acknowledging they understand that subsidy must be repaid.
The agreement also provides information on how and when the subsidy
must be repaid. This is necessary to ensure that borrowers are fully
aware of their financial obligations under the program. Form RECD 3550-
12 is part of the information collection package.
Paragraphs 3550.68(e), 3550.69(c) and 3550.157(a)(3).
These paragraphs require that a borrower inform RHS whenever an adult
member of the household changes or obtains employment so that RHS can
determine whether a review of the borrower's circumstances is required.
This provision, which is required throughout the direct SFH programs,
is critical to ensure that a borrower remains eligible for the
assistance they are receiving. If the borrower's income should change,
it may affect their eligibility for decreased or increased assistance.
This requirement is accomplished when an applicant or borrower executes
Form RECD 3550-4, which is part of the information collection package.
Paragraph 3550.73(f). This paragraph requires that a
manufactured home dealer-contractor must sign a construction contract
which will cover both the unit and site development work. This is an
industry standard and protects the government and borrower's best
interests. Form FmHA 1924-6, ``Construction Contract,'' is used for
this purpose and is part of the information collection package.
Paragraph 3550.73(g). This paragraph requires that all
persons furnishing materials and labor in connection with a
construction contract must sign a release of claimants document. Again,
this is an industry standard form and documents to the homebuyer and
lender that all persons have been paid. It precludes mechanics liens
from being filed against the property and protects the best financial
interest of the homeowner and lender. Form FmHA 1924-10, ``Release of
Claimants,'' is used for this purpose and is part of the information
collection package.
Paragraph 3550.73(h). This paragraph requires that a
dealer-contractor must provide a warranty on a manufactured home.
Again, this is an industry standard and ensures the homeowner that
their new home is warranted in case of defects. The paragraph further
requires the dealer-contractor to furnish the homeowner with a copy of
all manufacturer's warranties. This would be for appliances, heating
systems, etc., and it again warrants such items from defect and
provides the homeowner with information regarding the product and who
to contact for further information. Form FmHA 1924-11, ``Builders
Warranty,'' is used for this purpose and is part of the information
collection package.
Paragraph 3550.112(d)(2). This paragraph requires when
borrowers file a claim under hazard and flood insurance, that they
notify RHS of any loss or damage to the security property. Under this
supervised credit program, RHS requires notification of insurable
losses to protect the governments financial interest in the property
and to assist our customers with any advice or counsel on ensuring that
damages are corrected in a workmanlike manner.
Paragraph 3550.113. Under the Section 504 grant program,
if a person obtains a 504 grant, and sells the property within 3 years,
the grant must be repaid. This paragraph requires grant recipients to
sign a grant agreement acknowledging this regulatory requirement. The
intent is to ensure that the recipient understands this provision and
provides the government with documentation to secure any proceeds if
the property is sold.
Paragraph 3550.158(b). This paragraph requires that
borrowers on active military duty, whose interest rates are reduced to
6% pursuant to the Soldiers and Sailors Relief Act, must notify RHS
when they are no longer in active status. The reduced interest rate is
only available to persons in active military duty. The borrower must
notify RHS when they are no longer on active status so that the
interest rate may be changed back to the rate specified in the
Promissory Note. This is to ensure that borrowers do not receive
benefits to which they are not entitled.
Paragraph 3550.159(a). This paragraph requires borrowers
who wish to lease mineral rights on security property to obtain
authorization form RHS. This is an industry standard. Lenders require
such authorization to ensure that the property will remain suitable as
a residence, and their security interests are not adversely affected.
Paragraph 3550.159(b). This paragraph requires borrowers
who wish RHS to subordinate its lien to obtain the Agency's consent.
This is an industry standard. Lenders require such authorization to
ensure that their security interests are not adversely affected.
Paragraph 3550.159(c). This paragraph requires borrowers
who wish to obtain a partial release from RHS for
[[Page 15403]]
the sale or exchange of security property or granting of a right-of-way
across the security property, must obtain approval from RHS. This is an
industry standard. Lenders require such authorization to ensure that
the property will remain suitable, and their security interests are not
adversely affected.
Paragraph 3550.159(d). This paragraph requires borrowers
who wish to lease the security property must obtain RHS consent. RHS
requires prior consent to ensure that the borrower does not receive
payment assistance to which they would no longer be eligible if they
cease to occupy the property, to know the whereabouts of the borrower,
and to ensure that the government's security interests are not
adversely affected.
Paragraph 3550.160. RHS credit is not intended to replace
or supplant private credit. Borrowers agree, a condition of obtaining
assistance, that they must refinance to other credit should it become
available. This paragraph requires that borrowers must periodically
provide RHS with financial data to ascertain their potential to secure
other credit. The borrower must complete a financial statement which
would document their income and debts. This information is used by RHS
to determine if the borrower, as required by statute, must refinance
with another lender.
Paragraph 3550 160(c)(3). This paragraph provides a
borrower, who has been requested to refinance, the opportunity to
provide RHS with additional information to document their inability to
refinance to other credit. This provision exists to give the borrower
every opportunity to dispute RHS's decision prior to their application
for other credit. Most private lenders charge application and related
fees to submit an application. This opportunity may preclude the
borrower from incurring this expense if additional information may
change the RHS decision.
Paragraph 3550.160(d). This paragraph requires that
borrowers who were requested to refinance to other credit, and are
unable to secure other financing, must provide documentation to RHS on
their inability to refinance. This is critical to ensure that the
borrower made a good faith effort to refinance and document that the
borrower cannot move to other credit.
Paragraph 3550.164(d). This paragraph requires that a
recipient of unauthorized assistance be notified in writing and given
the opportunity to provide information to alter the RHS determination
that the assistance they received was unauthorized. This provision
exists to provide the borrower with every opportunity to refute the RHS
action being taken.
Paragraph 3550.207(b). This paragraph requires that
borrowers on a moratorium (temporary stop on mortgage payments) must
provide RHS with financial information to demonstrate that the
moratorium should be continued. This is to ensure that a borrower does
not receive assistance to which they are no longer entitled.
Paragraph 3550.253. This paragraph provides guidance on
settlement of a debt by compromise or adjustment. The provisions allows
such action to be initiated by RHS or the applicant for the settlement
actions. The debtor's offer and a financial statement is required. This
is an industry standard and necessary to settle debts still owed to a
lender. Form FmHA 1956-1, ``Request for Debt Settlement,'' is used for
this purpose and is part of the information collection package.
Public Burden in Existing FmHA Regulations
As mentioned, public burden for the direct SFH programs is
currently approved in several information collection dockets. These
existing information collection dockets will be handled as follows:
7 CFR Part 1910, Subpart A--Receiving and Processing
Applications. RHS will make a technical correction to the existing
approved information collection docket (0575-0134) at the final rule
stage to transfer only the public burden for the direct Section 502 and
504 loan and grant programs to the information collection docket for 7
CFR Part 3550. Every effort will be made streamline and eliminate any
unnecessary public burden for the direct SFH programs before the
technical correction is made.
7 CFR Part 1944, Subpart A--Section 502 Rural Housing Loan
Policies, Procedures, and Authorizations. RHS will transfer the
existing approved information collection docket (0575-0059) at the
final rule stage to the information collection docket for 7 CFR Part
3550. It should be noted that RHS reduced the burden in this regulation
by 250,000 hours in October 1995.
Every effort will be made streamline and eliminate any unnecessary
public burden for the direct SFH programs before the transfer is
accomplished.
7 CFR Part 1944, Subpart J--Section 504 Rural Housing
Loans and Grants. RHS will transfer the existing approved information
collection docket (0575-0062) to the information collection docket for
7 CFR Part 3550. Every effort will be made streamline and eliminate any
unnecessary public burden for the direct SFH programs before the
transfer is accomplished.
7 CFR Part 1951, Subpart C--Offsets of Federal Payments to
FmHA Borrowers. RHS will make a technical correction to the existing
approved information collection docket (0575-0119) at the final rule
stage to transfer only the public burden for the direct Section 502 and
504 loan and grant programs to the information collection docket for 7
CFR Part 3550. Every effort will be made streamline and eliminate any
unnecessary public burden for the direct SFH programs before the
technical correction is made.
7 CFR Part 1951, Subpart F--Analyzing Credit Needs and
Graduation of Borrowers. RHS will make a technical correction to the
existing approved information collection docket (0575-0093) at the
final rule stage to transfer only the public burden for the direct
Section 502 and 504 loan and grant programs to the information
collection docket for 7 CFR Part 3550. Every effort will be made
streamline and eliminate any unnecessary public burden for the direct
SFH programs before the technical correction is made.
7 CFR Part 1951, Subpart G--Borrower Supervision,
Servicing and Collection of Single Family Housing Loan Accounts. RHS
will transfer the existing approved information collection docket
(0575-0060) to the information collection docket for 7 CFR Part 3550.
RHS will also be proposing a reduction in the existing information
collection docket. For example, with the establishment of the
centralized servicing unit borrowers past due on their payment will
receive timely and consistent servicing of their accounts. With prompt
servicing, fewer borrowers will become seriously delinquent on their
accounts thereby reducing the number of workout agreements executed by
borrowers. Every additional effort will be made streamline and
eliminate any unnecessary public burden for the direct SFH programs
before the transfer is made.
7 CFR Part 1951, Subpart M--Servicing Cases Where
Unauthorized Loan or Other Financial Assistance Was Received--Single
Family Housing. RHS will transfer the existing approved information
collection docket (0575-0105) to the information collection docket for
7 CFR Part 3550. RHS will also be proposing a reduction in the existing
information collection docket. For example, when RHS has agreed to
continue with the loan of a borrower who otherwise would not qualify
for a SFH loan either because the loan was made for an unauthorized
purpose or
[[Page 15404]]
the borrower was not eligible for financial assistance the borrower
will no longer be required to repay all of subsidy recapture up to 100%
of the proceeds available. These borrowers will now have recapture
calculated in the same manner as other SFH borrowers. Every additional
effort will be made streamline and eliminate any unnecessary public
burden for the direct SFH programs before the transfer is made.
7 CFR Part 1955, Subpart A--Liquidation of Loans Secured
by Real Estate and Acquisition of Real and Chattel Property. RHS will
make a technical correction to the existing approved information
collection docket (0575-0109) at the final rule stage to transfer only
the public burden for the direct Section 502 and 504 loan and grant
programs to the information collection docket for 7 CFR Part 3550.
Every effort will be made streamline and eliminate any unnecessary
public burden for the direct SFH programs before the technical
correction is made.
7 CFR Part 1955, Subpart B--Management of Property. RHS
will make a technical correction to the existing approved information
collection docket (0575-0110) at the final rule stage to transfer only
the public burden for the direct Section 502 and 504 loan and grant
programs to the information collection docket for 7 CFR Part 3550.
Every effort will be made streamline and eliminate any unnecessary
public burden for the direct SFH programs before the technical
correction is made.
7 CFR Part 1956, Subpart B--Debt Settlement--Farmer
Programs and Housing. RHS will make a technical correction to the
existing approved information collection docket (0575-0118) at the
final rule stage to transfer only the public burden for the direct
Section 502 and 504 loan and grant programs to the information
collection docket for 7 CFR Part 3550. Every effort will be made
streamline and eliminate any unnecessary public burden for the direct
SFH programs before the technical correction is made.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to range from 5 minutes to 3 hours response.
Respondents: Applicants seeking financial assistance through RHS to
purchase adequate housing in rural America and borrowers who have
received such assistance.
Estimated Number of Respondents: 822,570.
Estimated Number of Responses per Respondent: 1.5.
Estimated Total Annual Burden on Respondents: 217,195.
The complete text of the subject regulations is published herein
for public review and comment. Additional copies of the proposed
regulations or copies of the referenced forms may be obtained from the
Director, Regulations and Paperwork Management Division, at (202) 720-
9725. Comments are invited on: (a) whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
proposed collection of information including the validity of the
methodology and assumptions used; (c) ways to enhance the quality,
utility and clarity of the information to be collected; and (d) ways to
minimize the burden of the collection of information on those who are
to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology.
Comments must be received on or before June 7, 1996, to be assured
of consideration. All responses to this notice will be summarized,
included in the request for OMB approval, and will become a matter of
public record. Comments should be submitted to the Desk Officer for
Agriculture, Office of Information and Regulatory Affairs, Office of
Management and Budget, Washington, D.C. 20503 and to the Director,
Regulations and Paperwork Management Division, U.S. Department of
Agriculture, RECD, Ag. Box 0743, Washington, DC 20250. A comment to OMB
is best assured of having its full effect if OMB receives it within 30
days of publication of this rule.
List of Subjects in 7 CFR Part 3550
Accounting, Administrative practice and procedure, Conflicts of
interests, Environmental impact statements, Equal credit opportunity,
Fair housing, Grant programs--Housing and Community Development, Loan
programs--Housing and community development, Low and moderate income
housing, Manufactured homes, Reporting and recordkeeping requirements,
Rural areas, Subsidies.
Therefore, chapter XXXV, title 7, Code of Federal Regulations is
added to read as follows:
CHAPTER XXXV--RURAL HOUSING SERVICE, UNITED STATES DEPARTMENT OF
AGRICULTURE
PART 3550--SINGLE FAMILY HOUSING
Subpart A--General
Sec.
3550.1 Applicability.
3550.2 Purpose.
3550.3 Equal opportunity and fair housing.
3550.4 Reviews and appeals.
3550.5 Environmental requirements.
3550.6 State law or state supplement.
3550.7 Demonstration programs.
3550.8 Exception authority.
3550.9 Conflict of interest.
3550.10 Definitions.
3550.11-3550.50 [Reserved]
Subpart B--Section 502 Origination
3550.51 Program objectives.
3550.52 Loan purposes.
3550.53 Borrower eligibility requirements.
3550.54 Calculation of income and assets.
3550.55 Applications.
3550.56 Site requirements.
3550.57 Dwelling requirements.
3550.58 Ownership requirements.
3550.59 Security requirements.
3550.60 Escrow account.
3550.61 Insurance.
3550.62 Appraisals.
3550.63 Maximum loan amount.
3550.64 Down payment.
3550.65 Loan-to-value ratio.
3550.66 Interest rate.
3550.67 Repayment period.
3550.68 Payment subsidies.
3550.69 Deferred mortgage payments.
3550.70 Conditional commitments.
3550.71 Special requirements for condominiums.
3550.72 Community land trusts.
3550.73 Manufactured homes.
3550.74 Nonprogram loans.
3550.75-3550.100 [Reserved]
Subpart C--Section 504 Origination
3550.101 Program objectives.
3550.102 Grant and loan purposes.
3550.103 Construction standards and requirements.
3550.104 Maximum loan and grant.
3550.105 Eligibility requirements.
3550.106 Applications.
3550.107 Ownership requirements.
3550.108 Loan rates and terms.
3550.109 Security requirements (loans only).
3550.110 Appraisals.
3550.111 Escrow account.
3550.112 Insurance (loans only).
3550.113 Repayment agreement (grants only).
3550.114-3550.150 [Reserved]
Subpart D--Regular Servicing
3550.151 Servicing goals.
3550.152 Loan payments.
3550.153 Fees and charges.
3550.154 Inspections.
3550.155 Escrow account.
3550.156 Borrower obligations.
3550.157 Payment subsidy.
[[Page 15405]]
3550.158 Active military duty.
3550.159 Borrower actions requiring RHS approval.
3550.160 Refinancing with private credit.
3550.161 Final payment.
3550.162 Recapture.
3550.163 Transfer of security and assumption of indebtedness.
3550.164 Unauthorized assistance.
3550.165-3550.200 [Reserved]
Subpart E--Special Servicing
3550.201 Purpose of special servicing actions.
3550.202 Past due accounts.
3550.203 General servicing actions.
3550.204 Payment assistance.
3550.205 Work-out agreements.
3550.206 Protective advances.
3550.207 Payment moratorium.
3550.208 Reamortization using promissory note interest rate.
3550.209 [Reserved]
3550.210 Offsets.
3550.211 Liquidation.
3550.212-3550.250 [Reserved]
Subpart F--Post-Servicing Actions
3550.251 Property management and disposition.
3550.252 Debt settlement policies.
3550.253 Settlement of a debt by compromise or adjustment.
3550.254-3550.300 [Reserved]
Authority: 5 U.S.C. 301 and 42 U.S.C. 1480.
Subpart A--General
Sec. 3550.1 Applicability.
This part sets forth policies for the direct single family housing
loan programs operated by the Rural Housing Service (RHS) of the U.S.
Department of Agriculture. It addresses the requirements of sections
502 and 504 of the Housing Act of 1949, as amended, and includes
policies regarding both origination and servicing. Procedures for
implementing the regulations in this part can be found in program
handbooks, available in any Rural Economic Community Development (RECD)
office. The provision on the expenditure of any funds under this part
is contingent upon the availability of funds to the agency.
Sec. 3550.2 Purpose.
The purpose of the RHS single family direct loan programs is to
provide low- and very low-income people who will live in rural areas
with an opportunity to own adequate but modest, decent, safe and
sanitary dwellings and related facilities. The section 502 program
offers persons that do not currently own adequate housing, and that
cannot obtain other credit, the opportunity to acquire, build,
rehabilitate, improve or relocate dwellings in rural areas. The section
504 program offers loans to homeowners who cannot obtain other credit
to repair or rehabilitate their properties. The section 504 program
also offers grants to homeowners age 62 or older who cannot obtain a
loan to correct health and safety hazards.
Sec. 3550.3 Equal opportunity and fair housing.
RHS will administer its programs fairly, and in accordance with
both the letter and the spirit of all equal opportunity and fair
housing legislation and applicable executive orders. Loan
FR Doc. 96-8492 Reengineering and Reinvention of the Direct Section 502 and 504 Single Family Housing (SFH) Programs
s, grants,
services, and benefits provided under this part shall not be denied to
any person based on race, color, national origin, sex, religion,
marital status, familial status, age, physical or mental disability,
receipt of income from public assistance, or because the applicant has,
in good faith, exercised any right under the Consumer Credit Protection
Act (15 U.S.C. 1601 et seq.). All activities under this part shall be
accomplished in accordance with the Fair Housing Act (42 U.S.C. 3601-
3620), Executive Order 1246, and Executive Order 11063, as amended by
Executive Order 12259 as applicable. The Civil Rights Compliance
Requirements of the U.S. Department of Agriculture are spelled out in 7
CFR part 1901, subpart E.
Sec. 3550.4 Reviews and appeals.
(a) Participant rights. Whenever RHS makes a decision that will
adversely affect a participant, RHS will inform the participant that
the decision can be reviewed by the next level supervisor, and indicate
whether the decision can be appealed to the National Appeals Division
(NAD) according to the regulations set forth in 7 CFR part 11.
Nonprogram (NP) participants are not entitled to appeal rights except
with regard to denial of NP loan assistance.
(b) Non-appealable decisions. The following types of decisions are
not appealable.
(1) Decisions made by parties outside of RHS, even when those
decisions are used as a basis for RHS decisions.
(2) Decisions that do not meet the definition of an ``adverse
decision'' under 7 CFR part 11.
(3) Decisions involving parties who do not meet the definition of
``participant'' under 7 CFR part 11.
(4) Decisions with regard to subject matters not covered by 7 CFR
part 11.
(5) Interest rates as set forth in agency procedures, except
appeals alleging application of the incorrect interest rate.
(6) Refusal to request an administrative waiver permitted by
program regulations.
(7) Denials of assistance due to lack of funds.
(c) Next-level review. Any adverse decision, whether appealable or
non-appealable, may be reviewed by the next-level supervisor.
(d) NAD Review. (1) A participant may request that NAD review the
agency's findings of non-appealability. In cases where the adverse
decision is based on both appealable and non-appealable actions, the
adverse action is not appealable.
(2) A participant may request that NAD review any decision that is
appealable.
(3) NAD will review the participant's request in accordance with 7
CFR part 11.
(e) Actions pending the outcome of an appeal. (1) Assistance will
not be discontinued pending the outcome of an appeal of any adverse
decision.
(2) Real Estate Owned (REO) properties will not be held off the
market pending appeal of a decision to deny credit.
Sec. 3550.5 Environmental requirements.
(a) Policy. RHS will consider environmental quality as equal with
economic, social, and other relevant factors in program development and
decision-making processes. RHS will take into account potential
environmental impacts of proposed projects by working with RHS
applicants, other federal agencies, Indian tribes, state and local
governments, and interested citizens and organizations in order to
formulate actions that advance the program goals in a manner that will
protect, enhance, and restore environmental quality.
(b) Regulatory references. Processing and servicing actions under
this part will be undertaken consistent with the requirements provided
in 7 CFR part 1940, subpart G, which addresses environmental
requirements and 7 CFR part 1924, subpart A, which addresses lead-based
paint.
Sec. 3550.6 State law or state supplement.
State and local laws and regulations may affect RHS implementation
of certain provisions of this part, for example, with respect to the
treatment of liens, construction, or environmental policies.
Supplemental guidance may be issued in the case of any conflict or
significant differences.
Sec. 3550.7 Demonstration programs.
From time to time, RHS may authorize limited demonstration
programs. The purpose of these demonstration programs is to test new
approaches to offering housing under the statutory authority granted to
the Secretary. Therefore, such
[[Page 15406]]
demonstration programs may not be consistent with some of the
provisions contained in this part. However, any program requirements
that are statutory will remain in effect. Demonstration programs will
be clearly identified as such.
Sec. 3550.8 Exception authority.
A State Director may request and the Administrator or designee may
make an exception to any requirement or provision of this part or
address any omission of this part that is consistent with the
applicable statute if the Administrator determines that application of
the requirement or provision, or failure to take action in the case of
an omission, would adversely affect the government's interest.
Sec. 3550.9 Conflict of interest.
(a) Objective. It is the objective of RHS to maintain the highest
standards of honesty, integrity, and impartiality by employees. To
reduce the potential for employee conflict of interest, all processing,
approval, servicing or review activity will be conducted by RHS
employees who:
(1) Are not themselves the applicant.
(2) Are not members of the family or close known relatives of the
applicant.
(3) Do not have an immediate working relationship with the
applicant, the employee related to the applicant, or the employee who
would normally conduct the activity.
(4) Do not have a business or close personal association with the
applicant.
(b) Applicant responsibility. The applicant must disclose any known
relationship or association with a RHS employee when such information
is requested.
(c) RHS employee responsibility. A RHS employee must disclose any
known relationship or association with an applicant, regardless of
whether the relationship or association is known to others. Loans may
not be used by RHS employees and loan closing agents, or members of
their families to purchase REO property, security property from a
borrower, or security property at a foreclosure sale.
Sec. 3550.10 Definitions.
Acceleration. Demand for immediate repayment of the entire balance
of a debt if the security instruments are breached or other conditions
for repayment occur.
Adjusted annual income. Used to determine whether an applicant is
income-eligible. Adjusted income provides for deductions to account for
varying household circumstances and expenses. See Sec. 3550.54 of
subpart B of this part for a complete description of adjusted income.
Adjustment. An agreement by RHS to release a debtor from liability
upon receipt of a reduced amount paid as an initial lump sum and
periodic additional payments over a period of up to 5 years.
Amortized payment. Equal monthly payments under a fully amortized
mortgage loan which provides for the scheduled payment of interest and
principal over the term of the loan. The proportion of the principal is
reduced, and the proportion represented by the principal repayment
increases correspondingly.
Applicant. An adult member of the household who will be responsible
for repayment of the loan.
Assumption. The procedure whereby the transferee becomes liable for
all or part of the debt of the transferor.
Borrower. A recipient who is indebted to RHS under the section 502
or 504 programs.
Cancellation. A decision by RHS to cease collection activities and
release the debtor from personal liability for any remaining amounts
owed.
Co-signer. An individual or an entity that joins in the execution
of a promissory note to compensate for any deficiency in the
applicant's repayment ability. The co-signer becomes jointly liable to
comply with the terms of the promissory note in the event of the
borrower's default, but is not entitled to any interest in the security
or borrower rights.
Compromise. An agreement by RHS to release a debtor from liability
upon receipt of a specified lump sum that is less than the total amount
due.
Conditional commitment. A determination by RHS that a proposed
dwelling will qualify as a program-eligible property. The conditional
commitment does not reserve funds, nor does it ensure that a program-
eligible applicant will be available to buy the dwelling.
Cross-collateralized loan. A situation in which a single property
secures both Rural Housing Service and Farm Service Agency loans.
Custodial property. Borrower-owned real property that serves as
security for a RHS loan that has been taken into possession by RHS to
protect the government's interest.
Daily simple interest. A method of establishing borrower payments
based on daily interest charged on the outstanding principal balance of
the loan. Principal is reduced by the amount of payment in excess of
the accrued interest.
Dealer-contractor. A person, firm, partnership, or corporation in
the business of selling and servicing manufactured homes and developing
sites for manufactured homes. A person, firm, partnership, or
corporation not capable of providing the complete service is not
eligible to be a ``dealer-contractor.''
Debt instrument. A collective term encompassing obligating
documents for a loan, including any applicable promissory note,
assumption agreement, or grant agreement.
Deferred mortgage payments. A subsidy available to eligible, very
low-income borrowers of up to 25% of their principal and interest
payments at 1% for up to 15 years. The deferred amounts are due on
sale.
Deficient housing. A dwelling that lacks complete plumbing; lacks
adequate heating; is dilapidated or structurally unsound; or has an
overcrowding situation that will be corrected with loan funds.
Elderly family. An elderly family consists of one of the following:
(1) A person who is the head, spouse, or sole member of a family
and who is 62 years of age or older, or who is disabled, and is an
applicant or borrower; or
(2) Two or more persons who are living together, at least one of
whom is age 62 or older, or disabled, and who is an applicant or
borrower; or
(3) In the case of a family where the deceased borrower, or spouse,
was at least 62 years old or disabled, the surviving household member
shall continue to be classified as an ``elderly family'' for the
purpose of determining adjusted income even though the surviving
members may not meet the definition of elderly family on their own,
provided:
(i) They occupied the dwelling with the deceased family member at
the time of the death;
(ii) If one of the surviving family members is the spouse of the
deceased family member, the surviving family shall be classified as an
elderly family only until the remarriage of the surviving spouse; and
(iii) At the time of the death of the deceased family member, the
dwelling was financed under Title V of the Housing Act of 1949.
Escrow account. An account maintained by RHS to which the borrower
contributes monthly payments to cover the anticipated costs of real
estate taxes, hazard and flood insurance premiums, and other related
costs.
Existing dwelling or unit. A dwelling or unit which is: more than 1
year old; or less than 1 year old but the dwelling
[[Page 15407]]
is not covered by an approved 10-year warranty plan.
False information. Information that the recipient knew or should
have known was incorrect at the time it was provided.
Full-time student. A person who carries at least the minimum number
of credit hours considered to be full-time by their college or
vocational school.
Hazard. A condition of the property which jeopardizes the health or
safety of the occupants or members of the community, but which does not
make it unfit for habitation. (See also the definition of major hazard
in this section.)
HUD. The U.S. Department of Housing and Urban Development.
Inaccurate information. Incorrect information inadvertently
provided by a recipient without intent to obtain benefits fraudulently.
Indian reservation. All land located within the limits of any
Indian reservation under the jurisdiction of the United States
notwithstanding the issuance of any patent and including rights-of-way
running through the reservation; trust or restricted land located
within the boundaries of a former reservation of a federally recognized
Indian tribe in the State of Oklahoma; or all Indian allotments, the
titles to which have not been extinguished if such allotments are
subject to the jurisdiction of a federally recognized Indian tribe.
Interest credit. A subsidy that reduces the effective interest rate
of a loan. (See Sec. 3550.68(d) of subpart B of this part.) Since
October 27, 1995, new subsidies have been provided through payment
assistance.
Junior lien. A security instrument or a judgment against the
security property to which the RHS debt instrument is superior.
Legal alien. For the purposes of this part, legal alien refers to
any person lawfully admitted to the country who meets the criteria in
section 214 of the Housing and Community Development Act of 1980, 42
U.S.C. 1436a.
Leveraged loan. A loan or grant from a non-RHS source closed
simultaneously with a RHS loan or grant.
Live-in aide. A person who lives with an elderly or disabled person
and is essential to that person's care and well-being, not obligated
for the person's support and would not be living in the unit except to
provide the support services.
Low-income. An adjusted income greater than the very low-income
limit, but that does not exceed the HUD established low-income limit
(generally 80% of median income adjusted for household size) for the
county or Metropolitan Statistical Area where the property is or will
be located.
Major hazard. A condition so severe that it makes the property
unfit for habitation. (See also the definition of hazard in this
section.)
Manufactured home. A structure which is built to Federally
Manufactured Home Construction and Safety Standard (FMHCSS) and RHS
Thermal Performance Standards (TPS) of 7 CFR part 1924, subpart A. It
is transportable in one or more sections, which in the traveling mode
is 10-body feet or more in width, and when erected on site is 400 or
more square feet, and which is built on a permanent chassis and
designed to be used as a dwelling with or without a permanent
foundation when connected to the required utilities. It is designed and
constructed for permanent occupancy by a single family and contains
permanent eating, cooking, sleeping, and sanitary facilities. The
plumbing, heating, and electrical systems are contained in the
structure. Permanent foundations are required.
Market value. The value of the property as determined by a current
appraisal.
Mobile home. A manufactured unit often referred to as a
``trailer,'' designed to be used as a dwelling, but built prior to the
enactment of Public Law 96-399 (October 8, 1980).
Moderate-income. An adjusted income greater than the low-income
limit, but that does not exceed the low-income limit by more than
$5,500.
Modest Housing. A property that is considered modest for the area,
with a cost that does not exceed the applicable limit established under
section 203 (b) of the National Housing Act (unless an exception is
approved by RHS). In addition, the property must not be designed for
income-producing activities nor have an in-ground swimming pool.
Moratorium. A period of up to two years during which scheduled
payments for principal and interest, or principal, interest and
deposits to the escrow accounts are not required, but are subject to
repayment at a later date.
Mortgage. A form of security instrument or lien on real property
including a real estate mortgage or a deed of trust.
Net family assets. Are considered in the calculation of annual
income. See Sec. 3550.54 of subpart B of this part for a complete
description.
Net recovery value. The appraised value of the security property
minus anticipated liquidation expenses as determined by RHS.
New dwelling. A dwelling to be constructed or that is less than 1
year old and is covered by an approved 10-year warranty plan as
described in subpart A of part 1924 of this title.
Nonprogram (NP) property. Property that does not meet the program
eligibility requirements outlined in Sec. 3550.56 and Sec. 3550.57 of
subpart B of this part.
Nonprogram (NP) terms. Credit terms available from RHS when the
applicant or property is not program-eligible.
Offset. Deductions from a borrower's federal retirement benefits,
salary, income tax refund, or payments from other federal agencies to
the borrower to pay a debt owed to RHS. Deductions from retirement
benefits and salary only apply to current and former federal employees.
Participant. For the purpose of appeals, a participant is any
individual or entity who has applied for, or whose right to participate
in or receive a payment, loan, or other benefit is affected by a RHS
decision, in accordance with 7 CFR part 11.
Payment assistance. Subsidy used beginning October 27, 1995, to
reduce mortgage payments. (See Sec. 3550.68(c) of subpart B of this
part.)
Payment subsidy. A general term which refers to either payment
assistance or interest credit.
Person with disability. Any person who has a physical or mental
impairment that substantially limits one or more major life activities,
has a record of such an impairment, or is regarded as having such an
impairment. As used in this definition, the phrase:
(1) Physical or mental impairment includes--
(i) Any physiological disorder or condition, cosmetic
disfigurement, or anatomical loss affecting one or more of the
following body systems: neurological; musculoskeletal; special sense
organs; respiratory, including speech organs; cardiovascular;
reproductive; digestive; genitourinary; hemic and lymphatic; skin; and
endocrine; or
(ii) Any mental or psychological disorder, such as mental
retardation organic brain syndrome, emotional or mental illness, and
specific learning disabilities. The term ``physical or mental
impairment'' includes, but is not limited to, such diseases and
conditions as orthopedic, visual, speech, and hearing impairments,
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis,
cancer, heart disease, diabetes, mental retardation, emotional illness,
HIV disease (whether symptomatic or
[[Page 15408]]
asymptomatic), and drug addiction and alcoholism.
(2) Major life activities include functions such as caring for
one's self, performing manual tasks, walking, seeing, hearing,
speaking, breathing, learning, and working.
(3) Has a record of such an impairment means has a history of, or
has been misclassified as having, a mental or physical impairment that
substantially limits one or more major life activities.
(4) Is regarded as having an impairment means--
(i) Has a physical or mental impairment that does not substantially
limit major life activities but is treated by the agency as
constituting such a limitation;
(ii) Has a physical or mental impairment that substantially limits
major life activities only as a result of the attitudes of others
toward such impairment; or
(iii) Has none of the impairments defined in paragraph (1) of this
definition but is treated by the agency as having such an impairment.
PITI ratio. The amount paid by the borrower for principal,
interest, taxes, and insurance, divided by repayment income.
Primary loan. The oldest RHS loan on the property.
Prior lien. A security instrument or a judgment against the
security property that is superior to the RHS debt instrument.
Program-eligible applicant. Person meeting the eligibility
requirements described in Sec. 3550.53 of subpart B of this part.
Program-eligible property. A property eligible to be financed under
this part, as determined by the criteria listed in Sec. Sec. 3550.56
through 3550.59 of subpart B of this part.
Program terms. Credit terms that are available only to program-
eligible applicants for program-eligible properties.
Property. The land, dwelling, and related facilities for which the
applicant will use RHS assistance.
Protective advances. Costs incurred to protect the security
interest of the government which are charged to the borrower's account.
Real estate taxes. Taxes and the annual portion of assessments
estimated to be due and payable on the property, reduced by any
available tax exemption.
Recapture amount. An amount of subsidy to be repaid by the borrower
upon disposition or nonoccupancy.
RECD. Rural Economic Community Development, a mission area within
the Department of Agriculture which includes the Rural Housing Service.
REO. Property for which RHS holds title.
Repayment income. Used to determine whether an applicant has the
ability to make monthly loan payments. Repayment income includes
amounts excluded for the purpose of adjusted annual income. See
Sec. 3550.54 of subpart B of this part for a complete description.
RHS. The Rural Housing Service of the U.S. Department of
Agriculture, or its successor agency, formerly the Rural Housing and
Community Development Service (RHCDS), a successor agency to the
Farmers Home Administration (FmHA).
RHS interest rate. The current unsubsidized interest rate offered
by RHS, available in any RECD office.
Rural area: A rural area is:
(1) Open country which is not part of or associated with an urban
area.
(2) Any town, village, city or place, including the immediate
adjacent densely settled area, which is not part of or associated with
an urban area and which:
(i) Has a population not in excess of 10,000 if it is rural in
character, or
(ii) Has a population in excess of 10,000 but not in excess of
20,000, and
(A) Is not contained within a Metropolitan Statistical Area, and
(B) Has a serious lack of mortgage credit for low- and moderate-
income households as determined by the Secretary of Agriculture and
Secretary of HUD.
(3) An area classified as a rural area prior to October 1, 1990,
(even if within a Metropolitan Statistical Area), with a population
exceeding 10,000, but not in excess of 25,000, which is rural in
character, and has a serious lack of mortgage credit for low- and
moderate-income families. This is effective through receipt of census
data for the year 2000.
Scheduled payment. The monthly or annual installment on a
promissory note plus escrow (if required), as modified by any payment
subsidy agreement, delinquency workout agreement, or other documented
agreements between RHS and the borrower.
Secured loan. A loan that is collateralized by property so that in
the event of a default on the loan, the property may be sold to satisfy
the debt.
Security property. All the property that serves as collateral for a
RHS loan.
Total debt ratio. The amount paid by the borrower for principal,
interest, taxes, insurance and any continuing obligations, divided by
the repayment income.
Unauthorized assistance. Any loan, payment subsidy, deferred
mortgage payment, or grant for which there was no regulatory
authorization or for which the recipient was not eligible.
Unsecured loan. A loan evidenced only by the borrower's promissory
note.
Value appreciation. The current market value of an RHS financed
property minus: the unpaid balance of the RHS debt; reasonable selling
expenses (if any); and the original equity (if any) of the borrower.
Very low-income. An adjusted income that does not exceed the HUD-
established very low income limit (generally 50% of median income
adjusted for household size) for the county or the Metropolitan
Statistical Area where the property is or will be located.
Veterans preference. A priority extended to any person applying for
a loan or grant under this part who has been honorably discharged,
including clemency discharges, or released from the active forces of
the United States Army, Navy, Air Force, Marine Corps, or Coast Guard,
who served on active duty in such forces:
(1) During the period of April 6, 1917 through March 31, 1921;
(2) During the period of December 7, 1941 through December 31,
1946;
(3) During the period of June 27, 1950 through January 31, 1955; or
(4) For a period of more than 180 days, any part of which occurred
after January 31, 1955, but on or before May 7, 1975.
Secs. 3550.11-3550.50 [Reserved]
Subpart B-Section 502 Origination
Sec. 3550.51 Program objectives.
Section 502 of the Housing Act of 1949 authorizes the Rural Housing
Service (RHS) to provide financing to help low- and very low-income
persons who cannot obtain credit from other sources obtain adequate
housing in rural areas. Resources for the section 502 program are
limited, and therefore, applicants are encouraged to use section 502
funds in conjunction with funding
[[Page 15409]]
or financing from other sources, if possible. Sections 3550.52 through
3550.73 of this subpart set forth the requirements for originating
loans or program terms. Section 3550.74 of this subpart describes the
differences for origination of loans on nonprogram terms.
Sec. 3550.52- Loan purposes.
Section 502 funds may be used to buy, build, rehabilitate, improve,
or relocate an eligible dwelling and provide related facilities for use
by the borrower as a permanent residence. In limited circumstances
section 502 funds may be used to refinance existing debt.
(a) Purchases from existing RHS borrowers. To purchase a property
currently financed by a RHS loan, the new borrower must assume the
existing RHS indebtedness. Section 502 funds may be used to provide
additional financing or make repairs. Loan funds also may be used to
permit a remaining borrower to purchase the equity of a departing co-
borrower.
(b) Refinancing non-RHS loans. Debt from an existing non-RHS loan
may be refinanced if the existing debt is secured by a lien against the
property, RHS will have a first lien position on the security property
after refinancing, and:
(1) In the case of loans for existing dwellings, if:
(i) Due to circumstances beyond the applicant's control, the
applicant is in danger of losing the property, and
(ii) The debt is over $5,000 and was incurred for eligible program
purposes prior to loan application or was a protective advance made by
the mortgagee for items covered by the loan to be refinanced, including
accrued interest, insurance premiums, real estate tax advances, or
preliminary foreclosure costs.
(2) In the case of loans for a building site without a dwelling,
if:
(i) The debt to be refinanced was incurred for the sole purpose of
purchasing the site,
(ii) The applicant is unable to acquire adequate housing without
refinancing, and
(iii) The RHS loan will include funds to construct an appropriate
dwelling on the site for the applicant's use.
(3) Debts incurred after the date of RHS loan application but
before closing may be refinanced if the costs are incurred for eligible
loan purposes and any construction work conforms to the standards
specified in this part.
(c) Refinancing RHS debt. Under limited circumstances, an existing
RHS loan may be refinanced in accordance with Sec. 3550.203 of subpart
E of this part.
(d) Eligible costs. Improvements financed with loan funds must be
on land which, after closing, is part of the security property. In
addition to acquisition, construction, repairs, or the cost of
relocating a dwelling, loan funds may be used to pay for:
(1) Reasonable expenses related to obtaining the loan, including
legal fees, architectural and engineering fees, technical fees, title
clearance fees, and loan closing fees; appraisal, surveying,
environmental, and tax monitoring services; and personal liability
insurance fees for Mutual Self-Help borrowers.
(2) The cost of providing special design features or equipment when
necessary because of a physical disability of the applicant or a member
of the household.
(3) Reasonable connection fees for utilities such as water, sewer,
electricity, and gas for which the borrower is liable and which are not
paid from other funds.
(4) Reasonable lender charges and fees if the RHS loan is being
made in combination with a leveraged loan.
(5) Real estate taxes that are due and payable on the property at
the time of closing and for the establishment of escrow accounts for
real estate taxes and property insurance premiums.
(6) Fees to public and private nonprofit organizations that are tax
exempt under the Internal Revenue Code for the development and
packaging of loan applications, except for loans related to the
purchase of a RHS Real Estate Owned (REO) property.
(e) Loan restrictions. Loan funds may not be used to:
(1) Refinance debts on a manufactured home.
(2) Purchase or improve income-producing land or buildings to be
used principally for income-producing purposes.
(3) Pay fees, commissions, or charges to for-profit entities
related to loan packaging or referral of prospective applicants to RHS.
Sec. 3550.53- Borrower eligibility requirements.
(a) Income eligibility. The adjusted income of an applicant must
not exceed the applicable low-income limit for the area, adjusted for
household size (available in any Rural Economic Community Development
(RECD) office). Section 3550.54 of this subpart provides a detailed
discussion of the calculation of adjusted income.
(b) Citizenship status. The applicant must be a natural person
(individual) who resides as a citizen in any of the 50 States, the
District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin
Islands, Guam, American Samoa, the Commonwealth of the Northern
Marianas, the Federated States of Micronesia, the Republic of Palau, or
the Republic of the Marshall Islands, or a noncitizen who qualifies as
a legal alien as defined in Sec. 3550.10 of subpart A of this part.
(c) Primary residence. Applicants must agree to and have the
ability to occupy the dwelling on a permanent basis.
(1) Because of the probability of transfer, loans will not be
approved for military personnel on active duty unless the applicant
will be discharged within a reasonable period of time.
(2) Because of the probability of moves after graduation, loans
will not be approved for a full-time student unless the applicant
intends to make the home a permanent residence and there are reasonable
prospects that employment will be available in the area after
graduation.
(3) In either case, if the home is being constructed or renovated
an adult member of the household must be available to make inspections
and authorize progress payments as the dwelling is being constructed.
(d) Eligibility of current homeowners. (1) Current homeowners with
a non-RHS loan may receive RHS loan funds to refinance an existing loan
under the conditions outlined in Sec. 3550.52(b) of this subpart, or to
purchase a new dwelling if the current dwelling cannot reasonably be
brought up to local code requirements.
(2) Current homeowners with a RHS loan may receive additional loan
funds to repair the dwelling.
(e) Legal capacity. Applicants must have the legal capacity to
incur the loan obligation, or have a court appointed guardian or
conservator who is empowered to obligate the applicant in real estate
matters.
(f) Suspension or debarment. Applications from applicants who have
been suspended or debarred from participation in federal programs will
be
[[Page 15410]]
handled in accordance with FmHA Instruction 1940-M, available in any
RECD office.
(g) Repayment ability. Applicants must demonstrate adequate
repayment ability.
(1) A very low-income applicant is considered to have repayment
ability when the monthly amount required for payment of principal,
interest, taxes, and insurance (PITI) does not exceed 29 percent of the
applicant's repayment income, and the monthly amount required to pay
PITI plus recurring monthly debts does not exceed 38 percent of the
applicant's repayment income.
(2) A low-income applicant is considered to have repayment ability
when the monthly amount required for payment of PITI does not exceed 33
percent of the applicant's repayment income, and the monthly amount
required to pay PITI plus recurring monthly debts does not exceed 38
percent of repayment income.
(3) Repayment ratios may exceed the percentages specified in
paragraphs (g)(1) and (g)(2) of this section if the applicant has
demonstrated an ability to meet higher debt obligations, or if RHS
determines, based on other compensating factors, that the household has
a higher repayment ability.
(h) Credit qualifications. Applicants must be unable to secure the
necessary credit from other sources upon terms and conditions that the
applicant could reasonably be expected to fulfill. Applicants must have
a credit history that indicates reasonable ability and willingness to
meet debt obligations. An outstanding judgment obtained by the United
States in a federal court, other than the United States Tax Court,
demonstrates an unacceptable credit history.
(1) Indicators of unacceptable credit include:
(i) Incidents of more than two debt payments more than 30 days late
within the last 12 months.
(ii) Loss of security due to a foreclosure if the foreclosure has
been completed within the last 36 months.
(iii) An outstanding Internal Revenue Service (IRS) tax lien or any
other outstanding tax liens with no satisfactory arrangement for
payment.
(iv) A court-created or court-affirmed obligation or judgment
caused by nonpayment that is currently outstanding or has been
outstanding within the last 12 months, except for those excluded in
paragraphs (h)(2)(ii) and (h)(2)(iii) of this section.
(v) Two or more rent payments paid 30 or more days late within the
last two years, or within the last year if the applicant has
experienced no other credit problems in the past two years. This may be
waived if the RHS loan will reduce shelter costs significantly and
contribute to an improved repayment ability.
(vi) Outstanding collection accounts with a record of irregular
payment with no satisfactory arrangements for repayment, or collection
accounts that were paid in full within the last six months.
(vii) Non-agency debts written off within the last 36 months.
(viii) Agency debts that were debt settled, or are being considered
for debt settlement.
(2) The following will not be considered indicators of unacceptable
credit:
(i) Lack of a credit history.
(ii) A bankruptcy in which debts were discharged more than 36
months prior to the date of application or where an applicant
successfully completed a bankruptcy debt restructuring plan and has
demonstrated a willingness to meeting obligations when due for the 12
months prior to the date of application.
(iii) A judgment satisfied more than 12 months before the date of
application, or foreclosure with no monetary loss that was completed
more than 12 months before the date of application.
(3) When an application is rejected because of unacceptable credit,
the applicant will be informed of the reason and source of information.
(4) Co-signers. If an applicant does not meet the repayment ability
requirements, the applicant can have another party join the application
as a co-signer.
(5) Additional applicants. If an applicant does not meet the
repayment ability requirements, the applicant can have other household
members join the application.
Sec. 3550.54- Calculation of income and assets.
(a) Annual income. Annual income is the full amount of income all
adult household members living on the financed property are expected to
receive over the next 12 months from the sources listed in paragraphs
(a)(1) through (a)(8) of this section. Income from the sources listed
in paragraphs (c) and (d) of this section is excluded from the
calculation of annual income. Annual income is the base from which
adjusted income and repayment income are calculated. The following is a
complete list of the sources of income that may contribute to annual
income.
(1) The gross amount, before any payroll deductions, of wages and
salaries, overtime pay, commissions, fees, tips, bonuses, and other
compensations for personal services. If a cost of living allowance or a
proposed increase in income is expected to take place on or before loan
approval, loan closing, or the effective date of the payment assistance
agreement, it will be included as income.
(2) The net income from the operation of a farm, business, or
profession. The following provisions apply:
(i) Expenditures for business or farm expansion, capital
improvements, or payments of principal on capital indebtedness shall
not be used as deductions in determining income. A deduction is allowed
in the manner prescribed by Internal Revenue Service (IRS) regulations
only for interest paid in amortizing capital indebtedness.
(ii) Farm and nonfarm business losses are considered ``0'' in
determining annual income.
(iii) A deduction, based on straight line depreciation, is allowed
in the manner prescribed by IRS regulations for the exhaustion, wear
and tear, and obsolescence of depreciable property used in the
operation of a trade, farm, or business by a member of the household.
The deduction must be based on an itemized schedule showing the amount
of straight line depreciation.
(iv) Any withdrawal of cash or assets from the operation of a farm,
business, or profession will be included in income, except to the
extent the withdrawal is reimbursement of cash or assets invested in
the operation by a member of the household.
(v) A deduction is allowed for verified business expenses, such as
lodging, meals, and fuel, for business trips made by salaried employees
who must meet these expenses without reimbursement.
(vi) Housing related expenses for the property being financed such
as mortgage interest, real estate taxes, and insurance, which may be
claimed as business expense deductions for income tax purposes, will
not be deducted from annual income.
(3) Interest, dividends, and other net income of any kind from real
or personal property, including:
(i) The share received by adult members of the household from
income distributed from a trust fund.
(ii) Any withdrawal of cash or assets from an investment except to
the extent the withdrawal is reimbursement of cash or assets invested
by a member of the household.
(iii) Where the household has net family assets in excess of
$5,000, the greater of the actual income derived from all net family
assets or a percentage of the value of such assets
[[Page 15411]]
based on the current passbook savings rate, as determined by RHS.
(4) The full amount of periodic payments received from Social
Security (including Social Security received by adults on behalf of
minors or by minors intended for their own support), annuities,
insurance policies, retirement funds, pensions, disability or death
benefits, and other similar types of periodic receipts. Amounts
received from the United States Government which are attributable to
underpayment of benefits for one or more prior months shall be excluded
in the calculation of annual income as provided in 42 U.S.C.
1382b(a)(7).
(5) Payments in lieu of earnings, such as unemployment and
disability compensation, worker's compensation, and severance pay.
(6) Public assistance, unless exempted by federal statute.
(7) Periodic allowances, such as:
(i) Alimony and child support awarded in a divorce decree or
separation agreement, unless the applicant certifies the payments are
not received, and the applicant provides documentation to RHS that a
reasonable effort has been made to collect the payments through the
official entity responsible for enforcing such payments; or
(ii) Recurring monetary gifts or contributions from someone who is
not a member of the household.
(8) All regular pay, special pay (except for persons exposed to
hostile fire), and allowances of a member of the armed forces who is
the applicant or spouse, whether or not that family member lives in the
home.
(b) Adjusted income. Adjusted income is the household's annual
income, as defined in paragraph (a) of this section, less any of the
following deductions for which the household is eligible. Adjusted
income is used to determine program eligibility for sections 502 and
504 and the amount of payment subsidy for which the household qualifies
under section 502.
(1) A deduction as determined under section 501(b)(5) of the
Housing Act of 1949, as amended, for each family member, not including
an applicant or spouse, who is under 18 years of age, 18 or older with
a disability, or a full-time student.
(2) A deduction as determined under section 501(b)(5) of the
Housing Act of 1949, as amended, for any elderly family.
(3) For non-elderly households, a deduction of expenses related to
the care of household members with disabilities that:
(i) Enable a family member to work,
(ii) Are not reimbursed from insurance or any other source, and
(iii) Are in excess of three percent of annual income.
(4) For elderly households only, a deduction of the sum of expenses
related to household members with disabilities that are necessary to
enable a family member to work and medical expenses that:
(i) Will not be reimbursed by insurance or any other source, and
(ii) Is in excess of three percent of annual income.
(5) A deduction of expenses for the care of minors 12 or under that
enable a family member to work or to further the applicant's education.
(c) Repayment income. Repayment income is used in calculating the
household's principal, interest, taxes, and insurance (PITI) and Total
Debt ratios, which, in turn, indicate repayment ability. Repayment
income is the household's annual income, as defined in paragraph (a) of
this section, plus income from any of the following additional sources.
(1) Payments received for the care of foster children or foster
adults (usually individuals with disabilities, unrelated to the
applicant, who are unable to live alone).
(2) Amounts granted specifically for, or in reimbursement of, the
cost of medical expenses.
(3) Earnings in excess of an amount determined under section
501(b)(5) of the Housing Act of 1949, as amended, for each full-time
student 18 years old or older, excluding the head of household and
spouse.
(4) Any earned income tax credit.
(5) Adoption assistance payments in excess of an amount determined
under section 501(b)(5) of the Housing Act of 1949, as amended, per
adopted child.
(6) Amounts received by the family in the form of refunds or
rebates under state or local law for property taxes paid on the
dwelling unit.
(7) Amounts paid by a state agency to a family with a
developmentally disabled family member living at home to offset the
cost of services and equipment needed to keep the developmentally
disabled family member at home.
(8) Any other revenue that a federal statute exempts.
(d) Income exclusions. Sources of income excluded from both annual
and repayment income include:
(1) Income of live-in aides.
(2) Income from employment of minors, including foster children.
(3) Student financial aid paid directly to the student or the
educational institution.
(e) Net family assets. (1) The value of equity in real property,
other than the dwelling or site; cash on hand; savings; checking
accounts; demand deposits; and the market value of stocks, bonds, and
other forms of capital investments, including voluntary retirement
plans that are accessible to the applicant such as individual
retirement accounts (IRAs), 401(k) plans, and Keogh accounts, as well
as amounts that can be withdrawn from other retirement and pension
funds without retiring or terminating employment, but exclude:
(i) Interests in American Indian trust land,
(ii) Cash on hand which will be used to reduce the amount of the
loan,
(iii) The value of necessary items of personal property such as
furniture and automotive,
(iv) The assets that are a part of the business, trade, or farming
operation in the case of any member of the household who is actively
engaged in such operation, and
(v) The value of a trust fund that has been established where the
trust is not revocable by, or under the control of, any member of the
household, so long as the fund continues to be held in trust.
(2) The value of any business or household assets disposed of by a
member of the household for less than fair market value (including
disposition in trust, but not in a foreclosure or bankruptcy sale)
during the two years preceding the date of application, in excess of
the consideration received therefore. In the case of a disposition as
part of a separation or divorce settlement, the disposition shall not
be considered to be for less than fair market value if the household
member receives important consideration not measurable in dollar terms.
Sec. 3550.55 Applications.
(a) Application submissions. All persons applying for RHS loans
must file a written application in a format specified by RHS.
Applications will be accepted even when funds are not available.
(b) Agency processing of applications. (1) Incomplete applications
will be returned to the applicant specifying in writing the additional
information that is needed to make the application complete.
(2) An applicant may voluntarily withdraw an application at any
time.
(3) RHS may periodically request in writing that applicants
reconfirm their interest in obtaining a loan. RHS may withdraw the
application of any applicant who does not respond within the specified
time frame.
[[Page 15412]]
(4) Applicants who are eligible will be notified in writing. If
additional information becomes available that indicates that the
original eligibility determination may have been in error, RHS may
reconsider the application and the applicant may be required to submit
additional information.
(5) Applicants who are ineligible will be notified in writing and
provided with the specific reasons for the rejection.
(c) Funding priorities. When funding is insufficient to serve all
program-eligible applicants, applications will be considered and funded
using the funding priorities specified in this paragraph. Within
priority categories, applications will be processed and funded in the
order that the completed applications are received. In the case of
applications with equivalent priority status that are received on the
same day, preference will be extended to applicants qualifying for a
veteran's preference.
(1) First priority will be given to borrowers who request
subsequent loans to correct health and safety hazards.
(2) Second priority will be given to applicants who qualify for any
of the following preferences:
(i) Hardship circumstances including applicants living in deficient
housing for more than six months, current homeowners in danger of
losing a property through foreclosure, and other circumstances
determined by RHS on a case-by-case basis to constitute a hardship.
(ii) Loans related to the sale of an REO property.
(iii) Loans related to the transfer of an existing RHS property.
(iv) Loans for the construction of dwellings in an RHS-approved
Mutual Self-Help project.
(v) Loans that will leverage funding or financing from other
sources.
(3) Applications from applicants who do not qualify for priority
consideration in paragraphs(c)(1) or (c)(2) of this section.
Sec. 3550.56 Site requirements.
(a) Rural areas. Loans may be made only in rural areas designated
by RHS. If an area designation is changed to non-rural:
(1) New conditional commitments will be made and existing
conditional commitments will be honored only in conjunction with an
applicant for a section 502 loan who applied for assistance before the
area designation changed.
(2) REO property sales and transfers with assumption may be
processed.
(3) Subsequent loans may be made either in conjunction with a
transfer with assumption of an RHS loan, or to repair properties that
have RHS loans.
(b) Site standards. Sites must be developed in accordance with
subpart C of part 1924 of this title and any applicable standards
imposed by a state or local government.
(1) The site must not be large enough to subdivide into more than
one site under existing local zoning ordinances.
(2) The site must not include farm service buildings, though small
outbuildings such as a storage shed may be included.
Sec. 3550.57- Dwelling requirements.
(a) Modest dwelling. The property must be one that is considered
modest for the area, with a cost that does not exceed the applicable
limit established under section 203(b) of the National Housing Act
(unless an exception is approved by RHS). In addition, the property
must not be designed for income-producing activities nor have an in-
ground swimming pool.
(d) New dwellings. Construction must meet the requirements in
subpart A of part 1924 of this title.
(c) Existing dwellings. Existing dwellings must be structurally
sound; functionally adequate; in good repair, or to be placed in good
repair with loan funds; have adequate electrical, heating, plumbing,
water, and wastewater disposal systems; be free of termites and other
wood damaging pests and organisms; and meet the thermal performance
requirements of subpart A of part 1924 of this title.
Sec. 3550.58- Ownership requirements.
After the loan is closed, the borrower must have an acceptable
interest in the property as evidenced by one of the following.
(a) Full fee ownership. Acceptable full fee ownership is evidenced
by a fully marketable title with a deed vesting a fee interest in the
property to the borrower.
(b) Secure leasehold interest. To be acceptable a leasehold
interest must have an unexpired term that is at least 150 percent of
the term of the mortgage, unless the loan is guaranteed, in which case
the unexpired term of the lease must be at least two years longer than
the loan term. In no case may the unexpired term be less than 15 years.
(c) Life estate interest. To be acceptable a life estate interest
must provide the borrower with rights of present possession, control,
and beneficial use of the property. Generally, persons with any
remainder interests must be signatories to the mortgage. The remainder
interests need not be included in the mortgage to the extent that one
or more of the persons holding remainder interests are not legally
competent (and there is no representative who can legally consent to
the mortgage), cannot be located, or if the remainder interests are
divided among such a large number of people that it is not practical to
obtain the signatures of all of the remainder interests. In such cases,
the loan may not exceed the value of the property interests owned by
the persons executing the mortgage.
(d) Undivided interest. Generally, all legally competent co-owners
will be required to sign the mortgage. When one or more of the co-
owners are not legally competent (and there is no representative who
can legally consent to the mortgage), cannot be located, or the
ownership interests are divided among so large a number of co-owners
that it is not practical for all of their interests to be mortgaged,
their interests not exceeding 50 percent may be excluded from the
security requirements. In such cases, the loan may not exceed the value
of the property interests owned by the persons executing the mortgage.
(e) Possessory rights. Acceptable forms of ownership include
possessory rights on an American Indian reservation or state-owned land
and the interest of an American Indian in land held in severalty under
trust patents or deeds containing restrictions against alienation,
provided that land in trust or restricted status will remain in trust
or restricted status.
Sec. 3550.59- Security requirements.
Before approving any loan, RHS will impose requirements to secure
its interests.
(a) Adequate security. Generally a loan will be considered
adequately secured only when all of the following requirements are met:
(1) RHS obtains at closing a mortgage on all ownership interests in
the security property.
(2) No liens prior to the RHS mortgage exist at the time of closing
and no junior liens are likely to be taken immediately subsequent to or
at the time of closing, unless the other liens are taken as part of a
leveraging strategy. Liens junior to the RHS lien will be allowed at
loan closing if the junior lien will not interfere with the purpose or
repayment of the RHS loan and the total value of all liens on the
property is less than the property's market value.
(3) The provisions of subpart B of part 1927 of this title
regarding title clearance and the use of legal services have been
followed.
[[Page 15413]]
(4) Existing and proposed property improvements are totally on the
site and do not encroach on adjoining property.
(b) Guaranteed payment. Mortgage insurance guaranteeing payment
from a government agency or Indian tribe is adequate security.
Sec. 3550.60- Escrow account.
RHS may require that borrowers deposit into an escrow account
amounts necessary to ensure that the account will contain sufficient
funds to pay real estate taxes, hazard and flood insurance premiums,
and other related costs when they are due.
(a) At loan settlement, or upon creation of the escrow account, RHS
may require borrowers to deposit funds sufficient to pay taxes and
insurance premiums applicable to the mortgage for the period since the
last payments were made.
(b) RHS will estimate the amount of funds due on the basis of
current data and reasonable estimates of future expenditures.
(c) Escrow accounts will be administered in accordance with the
Real Estate Settlement and Procedures Act of 1974 (RESPA) and section
501(e) of the Housing Act of 1949.
Sec. 3550.61- Insurance.
(a) Borrower responsibility. Until the loan is paid in full the
borrower must furnish and continually maintain hazard and flood
insurance on property securing RHS loans, with companies, in amounts,
and on terms and conditions acceptable to RHS. Borrowers who are
required to have insurance may be required to escrow funds to ensure
payment.
(b) Amount. Essential buildings must be insured in an amount at
least equal to their depreciated replacement value.
(c) Flood insurance. Flood insurance must be obtained and
maintained for the life of the loan for all property located in a
Special Flood Hazard Area (SFHA/0 as determined by the Federal
Emergency Management Agency (FEMA). If flood insurance is not available
in a SFHA, the property is not eligible for federal financial
assistance.
(d) Losses. (1) Loss deductible clauses may not exceed $250 or one
percent of the insurance coverage, whichever is greater. The deductible
for any one building may not exceed $750.
(2) Borrowers must immediately notify RHS of any loss or damage to
insured property and collect the amount of the loss from the insurance
company.
(3) Depending on the amount of the loss, RHS may require that loss
payments be supervised. All repairs and replacements done by or under
the direction of the borrower, or by contract, will be planned,
performed, inspected, and paid for in accordance with subpart A of part
1924 of this title.
(4) When insurance funds remain after all repairs, replacements,
and other authorized disbursements have been made, the funds will be
applied in the following order:
(i) Prior liens, including delinquent property taxes.
(ii) Past-due amounts.
(iii) Protective advances due.
(iv) Applied as an extra payment if the borrower has less than 20
percent equity in the property.
(v) Released to the borrower if the borrower has 20 percent or more
equity in the property.
(5) If a loss occurs when insurance is not in force, the borrower
is responsible for making the needed repairs or replacements and
ensuring that the insurance is reinstated on the property.
(6) If the borrower is not financially able to make the repairs,
RHS may take one of the following actions:
(i) Make a subsequent loan for repairs.
(ii) Subordinate the RHS lien to permit the borrower to obtain
funds for needed repairs from another source.
(iii) Permit the borrower to obtain funds secured by a junior lien
from another source.
(iv) Make a protective advance to protect the government's
interest.
(v) Accelerate the account.
Sec. 3550.62- Appraisals.
(a) Requirement. An appraisal is required when the debt to be
secured exceeds $15,000 or whenever RHS determines that it is necessary
to establish the adequacy of the security. Other real estate that is
mortgaged as additional security will be appraised when it represents a
substantial portion of the security for the loan. Appraisals must be
made in accordance with the Uniform Standards of Professional Appraisal
Practices (USPAP) and subpart C of part 1922 of this title.
(b) Fees. RHS will charge a fee for each loan application that
requires an appraisal. The appraisal fee will be waived on appraisals
done for subsequent loans needed to make minimal, essential repairs.
Fees collected in connection with a dwelling constructed under an
approved conditional commitment will be paid to the contractor at
closing to offset the cost of the real estate appraisal that is
included in the conditional commitment fee.
Sec. 3550.63- Maximum loan amount.
A loan may not exceed the limit established by section 203(b) of
the National Housing Act, except by the amount of the RHS appraisal fee
and the required contribution to an escrow account for taxes and
insurance, unless RHS authorizes an exception.
(a) Area-wide exception. Area-wide exceptions may be granted when
RHS determines that the section 203(b) limit is too low to enable
applicants to purchase adequate housing.
(b) Individual Exceptions. Individual exceptions may be granted to
accommodate the specific needs of an applicant, such as to serve
exceptionally large households or to provide reasonable accommodation
for a household member with a disability. Any additional loan amount
approved must not exceed the amount required to address the specific
need.
Sec. 3550.64 Down payment.
Applicants are required to contribute a portion of net family
assets toward purchase of the property. Elderly families must use any
net family assets in excess of $10,000 for this purpose; non-elderly
families must use net family assets in excess of $7,500. Applicants may
contribute assets in addition to the required down payment to further
reduce the amount to be financed.
Sec. 3550.65 Loan-to-value ratio.
(a) General requirements. Except as noted in paragraph (c) of this
section, total indebtedness, including the RHS loan plus other liens,
may exceed the market value of the security property only as needed to
cover the amount of the RHS appraisal fee and the required contribution
to establish an escrow account for taxes and insurance.
(b) Loans limited to 90% of the market value. Loans for new
dwellings are limited to 90% of the market value plus the amount of the
RHS appraisal fee and the required contribution to establish an escrow
account for taxes and insurance unless:
(1) RHS has issued a conditional commitment for the property,
(2) The loan will be closed prior to the start of construction, so
that RHS can ensure that the construction conforms to subpart A of part
1924 of the title, or
(3) Documentation is provided indicating that the construction was
inspected by either the Federal Housing Administration (FHA) or
Department of Veterans Affairs (VA) and meets the requirements imposed
by either agency.
(c) Loan in excess of market value. Total indebtedness, including
the RHS loan plus other liens, may exceed the market value of the
property when:
(1) RHS makes a subsequent loan for closing costs only,
simultaneously with the sale of a REO property or a transfer.
[[Page 15414]]
The total indebtedness may exceed the lesser of the sales price or
market value of the security property by up to one percent, plus the
required contribution to establish an escrow account for taxes and
insurance.
(2) RHS makes a subsequent loan for repairs necessary to protect
the government's security interest. The excess amount may not exceed
the cost of the essential repairs, reasonable closing costs, and the
required contribution to establish an escrow account for taxes and
insurance.
(3) RHS refinances the loan of an existing RHS borrower. The excess
can be no more than is necessary to refinance the borrower's
outstanding indebtedness plus closing costs associated with the new
loan, and the required contribution to establish an escrow account for
taxes and insurance.
Sec. 3550.66 Interest rate.
Loans will be written using the RHS interest rate in effect at loan
approval or loan closing, whichever is lower. Information about current
interest rates is available in any RECD office.
Sec. 3550.67 Repayment period.
Loans will be scheduled for repayment over a period that does not
exceed the expected useful life of the property as a dwelling. The loan
repayment period will not exceed:
(a) Thirty-three years for initial and subsequent loans.
(b) Thirty-eight years for initial loans if the applicant's
adjusted annual income does not exceed 60 percent of area median and
the longer term is necessary to show repayment ability. The repayment
period of subsequent loans for these borrowers may be up to the lesser
of the remaining term or 33 years.
(c) Ten years for loans not exceeding $2,500 that are not secured
by a mortgage.
Sec. 3550.68 Payment subsidies.
RHS currently administers two types of payment subsidies. Before
October 27, 1995 RHS assistance was provided in the form of interest
credit. Since that time, subsidies have been provided in the form of
payment assistance. Payment subsidies are subject to recapture when the
borrower transfers title or ceases to occupy the property. Borrowers
must sign a subsidy repayment agreement at the time subsidy is
received.
(a) Eligibility for payment subsidies. (1) To be eligible to
receive payment subsidy, an applicant or borrower must agree to
personally occupy the property.
(2) An applicant may receive payment assistance for initial loans
or assumptions at new rates and terms if the applicant's adjusted
annual income does not exceed either the applicable low-income limit at
the time of loan approval, or the applicable moderate-income limit at
the time of loan closing. The loan for which payment assistance is
being requested must have term of at least 25 years.
(3) A borrower receiving a payment subsidy on an initial loan may
receive a payment subsidy on a subsequent loan if the borrower's income
does not exceed the moderate-income limit.
(4) A borrower not receiving a payment subsidy is eligible for
payment assistance if the borrower's adjusted annual income does not
exceed the applicable moderate-income limit.
(5) A payment subsidy may be granted when a loan is assumed on the
terms of the promissory note only if the original loan was approved on
or after August 1, 1968.
(b) Conversion from interest credit to payment assistance. A
borrower currently receiving interest credit will continue to receive
it for the initial loan and for any subsequent loan for as long as the
borrower is eligible and remains on interest credit. A borrower who has
never received interest credit, or who has stopped receiving interest
credit and at a later date again qualifies for a payment subsidy, will
receive payment assistance.
(c) Calculation of payment assistance. The amount of payment
assistance is the difference between the installment due on the
promissory note and the greater of the payment amortized at the
equivalent interest rate or the payment calculated based on the
required floor payment.
(1) The floor payment is a minimum percentage of adjusted annual
income that the borrower must pay for PITI as follows:
(i) Very low-income borrowers must pay a minimum of 22 percent;
(ii) Low-income borrowers with adjusted annual income below 65
percent of median income must pay a minimum of 24 percent; and
(iii) Low-income borrowers with adjusted annual incomes between 65
and 80 percent of median income must pay a minimum of 26 percent.
(2) The equivalent interest rate is determined by a comparison of
the borrower's adjusted annual income to the median income for the area
in which the security property is located. The following chart is used
to determine the equivalent interest rate paid by applicants eligible
for payment assistance.
Percentage of Median Income Equivalent Interest Rate
When the applicant's adjusted income is:
Equal to or more than (percent): BUT less than: THEN the equivalent interest rate is
(percent)*
00 50.01% of median income 1
50.01 55% of median income 2
55 60% of median income 3
60 65% of median income 4
65 70% of median income 5
70 75% of median income 6
75 80.01% of median income 6.5
80.01 50% of median income 7.5
90 100% of median income 8.5
100 110% of median income 9
110 or more than median income 9.5
* Or note rate, whichever is less; in no case will the equivalent interest rate be less than one percent.
(d) Calculation of interest credit. The amount of interest credit
granted is the difference between the sum of the annual installments
due at the promissory note interest rate and the greater of:
(1) 20 percent of the borrower's adjusted annual income less the
cost of real estate taxes and insurance, or
(2) The amount the borrower would pay if the loan were amortized at
an interest rate of one percent.
(e) Annual review. The borrower's income will be reviewed annually
to determine whether the borrower is eligible for continued payment
subsidy. The borrower must notify RHS whenever an adult member of the
[[Page 15415]]
household changes or obtains employment so that RHS can determine
whether a review of the borrower's circumstances is required.
Sec. 3550.69- Deferred mortgage payments.
For qualified borrowers, RHS may defer up to 25 percent of the
monthly principal and interest payment at one percent for up to 15
years. Assistance may be granted only at initial loan closing and is
reviewed annually. Deferred mortgage payments are subject to recapture
when the borrower transfers title or ceases to occupy the property.
(a) Eligibility. In order to qualify for deferred mortgage
payments, all of the following must be true:
(1) The applicant's adjusted income, at the time of initial loan
approval, does not exceed the applicable very low-income limits.
(2) The loan term is 38 years, or 30 years for a manufactured home.
(3) The applicant qualifies for an equivalent interest rate of one
percent.
(4) The applicant's payments for principal and interest, calculated
at a one percent interest rate for the maximum allowable term, plus
estimated costs for taxes and insurance exceeds:
(i) For applicants receiving payment assistance, 29 percent of the
applicant's repayment income by more than $10 per month, or
(ii) For applicants receiving interest credit, 20 percent of
adjusted income by more than $10 per month.
(b) Amount and terms. (1) The amount of the mortgage payment to be
deferred will be the difference between the applicant's payment for
principal and interest, calculated at one percent interest for the
maximum allowable term, plus estimated costs for taxes and insurance
and:
(i) For applicants receiving payment assistance, 29 percent of the
applicant's repayment income.
(ii) For applicants receiving interest credit, 20 percent of
adjusted income.
(2) Deferred mortgage payment agreements will be effective for a 12
month period.
(3) Deferred mortgage assistance may be continued for up to 15
years after loan closing. Once a borrower becomes ineligible for
deferred mortgage assistance, the borrower can never again receive
deferred mortgage assistance, even if income decreases at a later date.
(c) Annual review. The borrower's income, taxes, and insurance will
be reviewed annually to determine eligibility for continued deferred
mortgage assistance. The borrower must notify RHS whenever an adult
member of the household changes or obtains employment so that RHS can
determine whether a review of the borrower's circumstances is required.
Adjustments to deferred mortgage assistance will be effective as of the
date of income change.
Sec. 3550.70 Conditional commitments.
A conditional commitment is a determination by RHS that a dwelling
to be offered for sale will be acceptable for purchase by a qualified
RHS loan applicant if it is built or rehabilitated in accordance with
RHS-approved plans, specifications, and regulations and priced within
the applicable HUD section 203(b) limit. The conditional commitment
does not reserve funds, does not guarantee funding, nor does it ensure
that an eligible loan applicant will be available to buy the dwelling.
(a) Eligibility. To be eligible to request a conditional
commitment, the builder, dealer-contractor, or seller must:
(1) Have an adequate ownership interest in the property, as defined
in Sec. 3550.58 of this subpart, prior to the beginning of any planned
construction;
(2) Have the experience and ability to complete any proposed work
in a competent and professional manner;
(3) Have the legal capacity to enter into the required agreements;
(4) Be financially responsible and have the ability to finance or
obtain financing for any proposed construction or rehabilitation.
Anyone who receives five or more conditional commitments during a 12-
month period must obtain RHS approval of an affirmative marketing plan;
(5) Comply with the requirements of subpart E of part 1901 of this
title and all applicable laws, regulations, and Executive Orders
relating to equal opportunity.
(b) Limitations. Conditional commitments for new or substantially
rehabilitated dwellings will not be issued after construction has
started. RHS may limit the total number of conditional commitments
issued in any locality based on market demand.
(c) Commitment period. A conditional commitment will be valid for
12 months from the date of issuance. The commitment may be extended for
up to an additional six months if there are unexpected delays in
construction caused by such factors as bad weather, materials
shortages, or marketing difficulties. Conditional commitments may be
canceled if construction does not begin within 60 days after the
commitment is issued.
(d) Conditional commitments involving packaging of applications. A
conditional commitment may be made to a seller, builder, or dealer-
contractor who packages an RHS loan application for a prospective
purchaser. In cases where the dwelling is pre-sold and is to be
constructed for sale to a specific eligible applicant, all of the
following conditions must be met:
(1) The conditional commitment will not be approved until the RHS
loan has been approved;
(2) Construction will not begin until loan funds are obligated for
the loan. Exceptions may be made when it appears likely that funding
will be forthcoming and as long as the RHS lien priority is not
jeopardized. The sales agreement must indicate that the loan has been
approved but not funded and must provide that if the loan is not close
FR Doc. 96-8492 Reengineering and Reinvention of the Direct Section 502 and 504 Single Family Housing (SFH) Programs
d
within 90 days of the date of approval, the contractor may terminate
the sales agreement and sell the property to another party. If the
sales agreement is terminated, the conditional commitment will be
honored for another eligible loan applicant for the remaining period of
the commitment.
(3) The RHS loan will be closed only after the dwelling is
constructed or the required rehabilitation completed and final
inspection has been made.
(e) Fees. An application for a conditional commitment must include
payment of the conditional commitment fee. The fee will be refunded if
for any reason preliminary inspection of the property or investigation
of the conditional commitment applicant indicates that a conditional
commitment will not be issued. Application fees will not be refunded
for any property on which the required appraisal has been made.
(f) Failure of conditional commitment applicant or dwelling to
qualify. The conditional commitment applicant will be informed if the
conditional commitment is denied. Conditional commitments will be
cancelled if the property does not meet program requirements,
(g) Changes in plans, specifications, or commitment price. The
holder of the conditional commitment must request approval for changes
in plans, specifications, and commitment price. RHS may approve the
changes if the following requirements are met:
(1) The property price does not exceed the maximum loan limit, and
increases in costs are due to factors beyond the control of the
commitment holder;
(2) The property is still eligible and has not been optioned by a
RHS applicant;
(3) The requested changes are justifiable and appropriate.
[[Page 15416]]
(h) Builder's warranty. The builder or seller, as appropriate, must
execute either a RHS-approved ``Builder's Warranty,'' or provide a 10-
year insured warranty when construction is completed or the loan is
closed.
Sec. 3550.71 Special requirements for condominiums.
RHS loans may be made for condominium units under the following
conditions:
(a) Approval. The unit is in a project approved or accepted by HUD,
the Federal National Mortgage Association (Fannie Mae), or the Federal
Home Loan Mortgage Corporation (Freddie Mac).
(b) Compliance with statutes. The condominium project complies with
the requirements of the condominium enabling statute and all other
applicable laws. Any right of first refusal in the condominium
documents will not impair the rights of RHS to:
(1) Foreclose or take title to a condominium unit pursuant to the
remedies in the mortgage;
(2) Accept a deed or assignment in lieu of foreclosure in the event
of default by a mortgagor; and
(3) Sell or lease a unit acquired by RHS.
(c) If RHS obtains title to a condominium unit pursuant to the
remedies in its mortgage or through foreclosure, RHS will not be liable
for more than 3 months of the unit's unpaid regularly budgeted dues or
charges accrued before acquisition of the title to the unit by RHS. The
homeowners association's lien priority may not include costs of
collecting unpaid dues.
(d) In case of condemnation or substantial loss to the units or
common elements of the condominium project, unless at least two-thirds
of the first mortgagees or unit owners of the individual condominium
units have given their consent, the homeowners association may not:
(1) By act or omission seek to abandon or terminate the condominium
project;
(2) Change the pro rata interest or obligations of any condominium
unit in order to levy assessments or charges, allocate distribution of
hazard insurance proceeds or condemnation awards, or determine the pro
rata share of ownership of each condominium unit in the common
elements;
(3) Partition or subdivide any condominium unit;
(4) Seek to abandon, partition, subdivide, encumber, sell, or
transfer the common elements by act or omission; (the granting of
easements for public utilities or other public purposes consistent with
the intended use of the common elements by the condominium project is
not a transfer within the meaning of this clause); or
(5) Use hazard insurance proceeds for losses to any condominium
property (whether units or common elements) for other than the repair,
replacement, or reconstruction of the condominium property.
(e) All taxes, assessments, and charges that may become liens prior
to the first mortgage under local law relate only to the individual
condominium units and not to the condominium project as a whole.
(f) No provision of the condominium documents gives a condominium
unit owner or any other party priority over any rights of RHS as first
or second mortgagee of the condominium unit pursuant to its mortgage in
the case of a payment to the unit owner of insurance proceeds or
condemnation awards for losses to or taking of condominium units or
common elements.
(g) If the condominium project is on a leasehold the underlying
lease provides adequate security of tenure.
(h) At least 70 percent of the units have been sold. Multiple
purchases of condominium units by one owner are counted as one sale
when determining if the sales requirement has been met.
(i) No more than 15 percent of the unit owners are more than 1
month delinquent in payment of homeowners association's dues or
assessments at the time the RHS loan is closed.
Sec. 3550.72 Community land trusts.
Eligible dwellings located on land owned by a community land trust
may be financed under section 502 if:
(a) The loan meets all the requirements of this subpart, and
(b) Any restrictions, imposed by the community land trust on the
property or applicant are:
(1) Reviewed and accepted by RHS before loan closing, and
(2) Automatically and permanently terminated upon foreclosure or
acceptance by RHS of a deed-in-lieu of foreclosure.
Sec. 3550.73 Manufactured homes.
With the exception of the restrictions and additional requirements
contained in this section, section 502 loans on manufactured homes are
subject to the same conditions as all other section 502 loans.
(a) Loan purposes. RHS may finance the following when a real estate
mortgage covers both the unit and the site:
(1) An eligible new unit for an eligible site owned by the
applicant.
(2) An eligible new unit and an eligible site.
(3) Site development work in accordance with subpart A of part 1924
of this title.
(4) Subsequent loans for equity or repair with a transfer or credit
sale, or a subsequent loan for repair of a unit if the unit is
currently financed with a section 502 loan.
(5) Transportation and set-up costs if an eligible new unit is
financed.
(b) Loan restrictions. RHS may not use loan funds to finance:
(1) An existing unit and site unless it is already financed with a
section 502 loan or is a RHS REO property.
(2) The purchase of a site without also financing the unit.
(3) Existing debts owed by the applicant.
(4) Alteration or remodeling of the unit after the initial loan is
made.
(5) Furniture, including movable articles of personal property such
as drapes, beds, bedding, chairs, sofas, divans, lamps, tables,
televisions, radios, stereo sets, and other similar items of personal
property. Furniture does not include wall-to-wall carpeting,
refrigerators, ovens, ranges, washing machines, clothes dryers, heating
or cooling equipment, or other similar items.
(6) Repairs not associated with transfer or credit sale, or a unit
currently financed with a section 502 RH loan.
(c) Dealer-contractors. No loans will be made on a manufactured
home sold by any entity that is not an approved dealer-contractor.
(d) Loan term. The maximum term of a loan on a manufactured home is
30 years.
(e) Construction and development. Unit construction, site
development and set-up must conform to the FMHCSS and subpart A of part
1924 of this title. Development under the mutual self-help and borrower
construction methods is not permitted for manufactured homes.
(f) Contract requirements. The dealer-contractor must sign a
construction contract, as specified in Sec. 1924.6 of subpart A of part
1924 of this title which will cover both the unit and site development
work. The use of multi-contracts is prohibited. A dealer-contractor may
use subcontractors if the dealer-contractor is solely responsible for
all work under the contract. Payment for all work will be in accordance
with subpart A of part 1924 of this title, except no payment will be
made for materials or property stored on site (e.g., payment for a unit
will be made only after it is permanently attached to the foundation).
(g) Lien release requirements. All persons furnishing materials or
labor in connection with the contract must sign
[[Page 15417]]
a Release by Claimants document, as specified in Sec. 1924.6 of subpart
A of part 1924 of this title, except the manufacturer of the unit. The
manufacturer of the unit must furnish an executed manufacturer's
certificate of origin that the unit is free and clear of all legal
encumbrances. The use of a Release by Claimants document is optional in
a State if the State Director has issued a State Supplement not
requiring its use. However, in all States the certificate of origin is
required.
(h) Warranty requirements. A dealer-contractor must provide a
warranty in accordance with the provisions of Sec. 1924.12 of subpart A
of part 1924 of this title. The warranty must identify the unit by
serial number. The dealer-contractor must certify that the unit
substantially complies with the plans and specifications and the
manufactured home has sustained no hidden damage during transportation
and, if manufactured in separate sections, that the sections were
properly joined and sealed according to the manufacturer's
specifications. The dealer-contractor will also furnish the applicant
with a copy of all manufacturer's warranties.
Sec. 3550.74 Nonprogram loans.
RHS may provide credit on nonprogram (NP) terms to allow applicants
to assume existing RHS debt on new rates and terms. If additional funds
are required to purchase the property, the applicant must obtain them
from another source. NP terms may be extended to applicants who do not
qualify for program credit, or for properties that do not qualify as
program properties, when it is in the best interest of the government.
NP loans are originated and serviced according to the requirements for
program loans except as indicated in this subpart.
(a) NP loan purpose. NP loans may be offered to expedite:
(1) Sale of a REO property.
(2) Assumption of an existing program loan.
(3) Conversion of a program loan that has received unauthorized
assistance.
(4) Continuation of a loan on a portion of a security property when
the remainder is being transferred and the RHS debt is not paid in
full.
(b) Rates and terms. (1) Term:
(i) For an applicant who intends to occupy the property, the term
will not exceed 30 years.
(ii) For other applicants, the term will not exceed 10 years. If
more favorable terms are necessary to facilitate the sale, the loan may
be amortized over a period of up to 20 years with payment in full due
not later than 10 years from the date of closing.
(iii) An applicant with a NP loan under paragraph (b)(1)(i) of this
section who wishes to retain the property and purchase a new property
with RHS credit must purchase the second property according to the
terms of paragraph (b)(1)(ii) of this section, even if the new property
will serve as the applicant's principal residence.
(2) NP loans are written at the RHS interest rate in effect at the
time of loan approval.
(3) NP borrowers are not eligible for program benefits such as
payment assistance, deferred mortgage assistance, or a moratorium.
(c) Additional requirements. (1) NP applicants other than public
bodies and nonprofit organizations must pay a nonrefundable application
fee.
(2) NP applicants must make a down payment based on purchase price
in the case of credit sales, or, in the case of assumptions, on the
lower of market value of the property or debt incurred. The downpayment
will also be based upon whether the applicant intends to personally
occupy the property or use it for other purposes.
(3) NP applicants cannot finance loan closing costs.
(4) Loans will be secured only by the property purchased.
(5) RHS may require a NP applicant to pay a one-time tax service
fee to cover the cost of monitoring the property's tax status.
(d) Reduced restrictions. (1) NP applicants need not be unable to
obtain other credit in order to receive a NP loan and are not required
to refinance with private credit when they are able to do so.
(2) NP applicants are not required to occupy the property.
(3) NP applicants are not subject to leasing restrictions.
(4) Liquidation may be delayed for up to 90 days to permit a NP
borrower to liquidate voluntarily.
(e) Waiver of fees. When the purpose of the loan is the conversion
of a program loan that has received unauthorized assistance or
continuation of a loan on a portion of a security property when the
remainder is being transferred, the application fee, down payment, and
appraisal fee may be waived.
Sec. Sec. 3550.75-3550.100 [Reserved]
Subpart C--Section 504 Origination
Sec. 3550.101- Program objectives.
This subpart sets forth policies for administering loans and grants
under section 504(a) of Title V of the Housing Act of 1949. Section 504
loans and grants are intended to help very low-income owner-occupants
in rural areas repair their properties.
Sec. 3550.102- Grant and loan purposes.
Dwellings repaired with section 504 funds must be modest.
(a) Grant funds. Grant funds may be used only to pay costs for
repairs and improvements which will remove identified health and safety
hazards or to repair or remodel dwellings to make them accessible and
useable for household members with disabilities. Unused grant funds
must be returned to RHS.
(b) Loan funds. Loan funds may be used to make general repairs and
improvements to properties, in addition to the removal of health and
safety standards, as long as the dwelling remains modest in size and
design.
(c) Eligibility of mobile and manufactured homes. Necessary repairs
may be made to mobile or manufactured homes provided:
(1) The applicant owns the home and site and has occupied the home
prior to filing an application with Rural Housing Service (RHS), and
(2) The mobile or manufactured home is on a permanent foundation or
will be put on a permanent foundation with section 504 funds.
(d) Eligible costs. In addition to construction costs to make
necessary repairs and improvements, loan and grant funds may be used
for:
(1) Reasonable connection fees, assessments, or the pro rata
installation costs for required utilities, if not funded by another
source.
(2) Reasonable expenses related to obtaining the loan or grant,
including legal fees, surveys, title clearance, loan closing,
architectural and engineering services, environmental reviews, tax
monitoring, or other technical services.
(3) Real estate taxes that are due and payable on the property at
the time of closing and for the establishment of escrow accounts for
real estate taxes, hazard and flood insurance premiums, and related
costs, if applicable.
(4) Fees to public and private nonprofit organizations that are tax
exempt under the Internal Revenue Code for the development and
packaging of applications.
(e) Limitations on uses of loan or grant funds. Section 504 funds
may not be used to:
(1) Assist in the construction of a new dwelling.
(2) Make repairs to a dwelling of such poor condition that when the
repairs are completed, the dwelling will continue to be a major hazard.
[[Page 15418]]
(3) Move a mobile home or manufactured home from one site to
another.
(4) Pay for off-site improvements except for the necessary
installation costs for utilities.
(5) Refinance any debt or obligation of the applicant incurred
before the date of application, except for the installation and
assessment costs of utilities.
Sec. 3550.103 Construction standards and requirements.
(a) Post-repair condition. Dwellings repaired with section 504
funds need not be brought to the agency development standards or
thermal performance standards of subpart A of part 1924 of this title,
nor must all existing hazards be removed. However, the dwelling may not
continue to have major health or safety hazards.
(b) Construction standards. All work must be completed in
accordance with local construction codes and standards. When
potentially hazardous equipment or materials are being installed, all
materials and installations must be in accordance with the applicable
standards in subpart A of part 1924 of this title.
Sec. 3550.104- aximum loan and grant.
(a) Maximum loan permitted. The sum of all outstanding section 504
loans to one borrower or on one dwelling may not exceed $20,000.
(1) Transferees assuming a section 504 loan are limited to the
difference between the unpaid principal balance of the debt assumed and
$20,000.
(2) For a secured loan, the total of all debts on the secured
property may not exceed the value of the security, except by the amount
of any required contributions to an escrow account for taxes and
insurance.
(b) Maximum loan based upon ability to pay. The maximum loan is
limited to the principal balance that can be supported given the amount
the applicant has available, as determined by RHS, to repay a loan at 1
percent interest with a 20 year term.
(c) Maximum grant. The lifetime total of the grant assistance to
any owner-occupant is $7,500.
Sec. 3550.105 Eligibility requirements.
To be eligible, applicants must meet the following requirements:
(a) Owner-occupant. Applicants must own, as described in
Sec. 3550.107 of this subpart, and occupy the dwelling.
(b) Age (grant applicants only). To be eligible for grant
assistance, an applicant must be 62 years of age or older.
(c) Income eligibility. At the time of loan or grant approval, the
adjusted income of an applicant must not exceed the applicable very
low-income limit adjusted for household size (available in any Rural
Economic Community Development (RECD) office). Section 3550.54 of
subpart B of this part provides a detailed discussion of the
calculation of adjusted income.
(d) Citizenship status. The applicant must be a U.S. citizen or a
non-citizen who qualifies as a legal alien, as defined in Sec. 3550.10
of subpart A of this part.
(e) Need and use of personal resources. Applicants must be unable
to obtain financial assistance at reasonable terms and conditions from
non-RHS credit or grant sources and lack the personal resources to meet
their needs. Applicants must use assets in excess of $7,500 for loan or
grant purposes before assistance will be provided. The definition of
assets for this purpose is net family assets as described in
Sec. 3550.54 of subpart B of this part, less the value of the dwelling
and a minimum adequate site.
(f) Credit qualifications. Applicants must be unable to secure the
necessary credit from other sources upon terms and conditions that the
applicant could reasonably be expected to fulfill. Applicants must have
a credit history that indicates reasonable ability and willingness to
meet debt obligations. An outstanding judgment obtained by the United
States in a federal court, other than the United States Tax Court
demonstrates an unacceptable credit history.
(1) Indicators of unacceptable credit include:
(i) Incidents of more than two debt payments being more than 30
days late within the last 12 months.
(ii) Loss of security due to a foreclosure if the foreclosure has
been completed within the last 36 months.
(iii) An outstanding Internal Revenue Service (IRS) tax lien or any
other outstanding tax liens with no satisfactory arrangement for
payment.
(iv) A court-created or court-affirmed obligation or judgment
caused by nonpayment that is currently outstanding or has been
outstanding within the last 12 months, except for those excluded in
paragraphs (f)(2)(ii) and (f)(2)(iii) of this section.
(v) Two or more rent payments paid 30 or more days late within the
last two years, or within the last year if the applicant has
experienced no other credit problems in the past two years. This
requirement may be waived if the RHS loan will reduce shelter costs
significantly and contribute to an improved repayment ability.
(vi) Outstanding collection accounts with a record of irregular
payment with no satisfactory arrangements for repayment, or collection
accounts that were paid in full within the last six months.
(vii) Non-agency debts written off within the last 36 months.
(viii) Agency debts that were debt settled, or are being considered
for debt settlement.
(2) The following will not be considered indicators of unacceptable
credit:
(i) Lack of a credit history.
(ii) A bankruptcy in which debts were discharged more than 36
months prior to the date of application or where an applicant
successfully completed a bankruptcy debt restructuring plan and has
demonstrated a willingness to meet obligations when due for the 12
months prior to the date of application.
(iii) A judgment satisfied more than 12 months before the date of
application, or foreclosure with no monetary loss that was completed
more than 12 months before the date of application.
(3) When an application is rejected because of unacceptable credit,
the applicant will be informed of the reason and source of information.
(g) Suspension or debarment. Applications from applicants who have
been suspended or debarred from participation in federal programs will
be handled in accordance with FmHA Instruction 1940-M, available in any
RECD office.
Sec. 3550.106 Applications.
(a) Application submissions. All persons applying for section 504
loans or grants must file a complete written application in a format
specified by RHS. Applications will be accepted even when funds are not
available.
(b) Application processing. (1) Applications for assistance to
remove health and safety hazards will receive priority for funding.
(2) Incomplete applications will be returned to the applicant
specifying in writing the additional information that is needed to make
the application complete.
(3) An applicant may voluntarily withdraw an application at any
time.
(4) RHS may periodically request in writing that applicants
reconfirm their interest in obtaining a loan or grant. RHS will
withdraw the application of any applicant who does not respond within
the specified timeframe.
(5) Applicants who are eligible will be notified in writing. If
additional information becomes available which indicates the original
eligibility determination may have been made in error or that
circumstances have
[[Page 15419]]
changed, RHS may reconsider the application.
(6) Applicants who are ineligible will be notified in writing and
provided with the specific reasons for the rejection.
Sec. 3550.107- Ownership requirements.
The applicant must have an acceptable ownership interest in the
property.
(a) Full fee ownership. Acceptable full fee ownership is evidenced
by a fully marketable title with a deed vesting a fee interest in the
property to the applicant.
(b) Secure leasehold interest. A written lease is required. For
loans, the unexpired portion of the lease must not be less than two
years beyond the term of the promissory note. For grants, the remaining
lease period must be at least five years.
(c) Land purchase contract. A land purchase contract is acceptable
if the applicant is current on all payments, and there is a reasonable
likelihood that the applicant will be able to continue meeting the
financial obligations of the contract.
(d) Undivided interest in the property. An undivided interest is
acceptable if there is no reason to believe that the applicant's
position as an owner-occupant will be jeopardized as a result of the
improvements to be made, and:
(1) In the case of unsecured loans or grants, if any co-owners
living or planning to live in the dwelling sign the repayment
agreement.
(2) In the case of a secured loan, when one or more of the co-
owners are not legally competent (and there is no representative who
can legally consent to the mortgage), cannot be located, or the
ownership interests are divided among so large a number of co-owners
that it is not practical for all of their interests to be mortgaged,
their interests not exceeding 50 percent may be excluded from the
security requirements. In such cases, the loan may not exceed the value
of the property interests owned by the persons executing the mortgage.
(e) Life estate interest. To be acceptable, a life estate interest
must provide the applicant with rights of present possession, control
and beneficial use of the property. For secured loans, persons with any
remainder interests generally must be signatories to the mortgage. All
of the remainder interests need not be included in the mortgage if one
or more of the persons holding remainder interests are not legally
competent (and there is no representative who can legally consent to
the mortgage), cannot be located, or if the remainder interests are
divided among such a large number of people that it is not practical to
obtain the signatures of all of the remainder interests. In such cases,
the loan may not exceed the value of the property interests owned by
the persons executing the mortgage.
(f) Alternative evidence of ownership. If evidence, as described in
paragraphs (a) through (e) of this section is not available, RHS may
accept any of the following as evidence of ownership:
(1) Records of the local taxing authority that show the applicant
as owner and that demonstrate that real estate taxes for the property
are paid by the applicant.
(2) Affidavits by others in the community stating that the
applicant has occupied the property as the apparent owner for a period
of not less than 10 years, and is generally believed to be the owner.
(3) Any instrument, whether or not recorded, which is commonly
accepted as evidence of ownership.
Sec. 3550.108- Loan rates and terms.
(a) Interest rate. The interest rate for all section 504 loans will
be one percent.
(b) Loan term. The repayment period for the loan should generally
be as short as possible based on the applicant's repayment ability, and
may never exceed 20 years; however loans made in combination with
grants must have a term of 20 years.
Sec. 3550.109- Security requirements (loans only).
Any loan of $2,500 or more will be secured by a mortgage on the
property (or any leasehold interest or land purchase contract).
(a) RHS does not require a first lien position, but the total of
all debts on the secured property may not exceed the value of the
security, except by the amount of any required contributions to an
escrow account for taxes and insurance.
(b) Subsequent loans will be secured by a mortgage when the total
section 504 debt is $2,500 or more.
(c) Title clearance and the use of legal services in accordance
with subpart B of part 1927 are not required:
(1) For loans of $7,500 or less that are scheduled for repayment in
not more than 15 years or
(2) For subsequent loans made for minimal essential repairs
necessary to protect the government's interest.
Sec. 3550.110- Appraisals.
An appraisal of the real estate or leasehold interest is required
when security is taken and the total section 504 indebtedness will be
more than $15,000. Appraisals must be made in accordance with the
Uniform Standards of Professional Appraisal Practices (USPAP) and
subpart C of part 1922 of this title.
Sec. 3550.111- Escrow account.
RHS may require that deposit into an escrow account amounts
necessary to ensure that the account will contain sufficient funds to
pay real estate taxes, hazard and flood insurance premiums, and other
related costs when they are due.
(a) At loan settlement, or upon creation of the escrow account, RHS
may require borrowers to deposit funds sufficient to pay taxes and
insurance premiums applicable to the mortgage for the period since the
last payments were made.
(b) RHS will estimate the amount of funds due on the basis of
current data and reasonable estimates of future expenditures.
(c) Escrow accounts will be administered in accordance with the
Real Estate Settlement and Procedures Act of 1974 (RESPA) and section
501(e) of the Housing Act of 1949.
Sec. 3550.112- Insurance (loans only).
(a) Borrower responsibility. Until the loan is paid in full the
borrower must furnish and continually maintain insurance on security
property, with companies, in amounts, and on terms and conditions
acceptable to RHS.
(b) Amount. Essential buildings must be insured in an amount at
least equal to their depreciated replacement value.
(c) Flood insurance. RHS may require that flood insurance be
obtained and maintained for the life of the loan for all property
located in Special Flood Hazard Areas (SFHAs) as determined by the
Federal Emergency Management Agency (FEMA). If flood insurance is not
available in a SFHA, the property is not eligible for federal financial
assistance.
(d) Losses. (1) Loss deductible clauses may not exceed $250 or one
percent of the insurance coverage, whichever is greater. The deductible
for any one building may not exceed $750.
(2) Borrowers must immediately notify RHS of any loss or damage to
insured property and collect the amount of the loss from the insurance
company.
(3) Loss payments must be supervised. All repairs and replacements
done by or under the direction of the borrower, or by contract, will be
planned, performed, inspected, and paid for in accordance with subpart
A of part 1924 of this title.
(4) When insurance funds remain after all repairs, replacements,
and other
[[Page 15420]]
authorized disbursements have been made, the funds will be applied in
the following order:
(i) Prior liens, including delinquent property taxes.
(ii) Delinquency on the account.
(iii) Advances due for recoverable cost items.
(iv) Applied as an extra payment if the borrower has less than 20
percent equity in the property.
(v) Released to the borrower if the borrower has 20 percent or more
equity in the property.
(5) If a loss occurs when insurance is not in force, the borrower
is responsible for making the needed repairs or replacements and
ensuring that the insurance is reinstated on the property.
(6) If the borrower is not financially able to make the repairs,
RHS may take one of the following actions:
(i) Make a subsequent loan for repairs.
(ii) Subordinate the RHS lien to permit the borrower to obtain
funds for needed repairs from another source.
(iii) Permit the borrower to obtain funds secured by a junior lien
from another source.
(iv) Make a protective advance to protect the government's
interest.
(v) Accelerate the account and demand payment in full.
Sec. 3550.113- Repayment agreement (grants only).
Grant recipients are required to sign a repayment agreement which
specifies that the full amount of the grant must be repaid to the
government if the property is sold in less than 3 years from the date
of grant closing.
Secs. 3550.114-3550.150 [Reserved]
Subpart D--Regular Servicing
Sec. 3550.151- Servicing goals.
This subpart sets forth the Rural Housing Service (RHS) policies
for managing the repayment of loans made under sections 502 and 504.
Sec. 3550.152- Loan payments.
(a) Payment terms. Unless the loan documents specify other loan
repayment terms, borrowers are required to make monthly payments.
Borrowers with existing loans specifying annual payments may request
conversion to monthly payments, and must convert to a monthly payment
schedule before any subsequent loan, new payment assistance, or
servicing action that benefits the borrower is approved. Suitable forms
of payment are: check, money order, or bank draft. Cash payments will
be accepted only if accompanied by a fee to cover conversion to a money
order.
(b) Application of payments. If a borrower makes less than the full
scheduled payment, the payment is held in suspense and is not applied
to the borrower's account. When subsequent payments are received in an
amount sufficient to equal a full scheduled payment, the full amount
will be applied in the following order:
(1) Protective advances charged to the account.
(2) Accrued interest due.
(3) Principal due.
(4) Escrow for taxes and insurance.
(5) Fees or charges applied to the account.
(c) Multiple loans. When a borrower with multiple loans for the
same property makes less than the full scheduled payment on all loans,
any payment will first be applied to the amount due on the primary
loan, then applied to other loans in the order of declining principal
balance. Future remittances will be applied beginning with the oldest
unpaid installment.
(d) Application of excess payments. Borrowers can elect to make
payments in excess of the scheduled amount and designate on their
billing statements whether the extra funds are to be applied to the
principal or escrow. Extra payments do not relieve borrowers of the
obligation to make the next scheduled payment.
Sec. 3550.153- Fees and charges.
RHS may assess reasonable fees and charges including a tax service
fee, fees for late payments, and charges for checks returned for
insufficient funds.
Sec. 3550.154- Inspections.
RHS or its agent may make reasonable entries upon and inspections
of any property used as security for a RHS loan as necessary to protect
the interest of the government. RHS will give the borrower notice at
the time of or prior to an inspection.
Sec. 3550.155- Escrow account.
Escrow accounts will be administered in accordance with the Real
Estate Settlement and Procedures Act of 1974 (RESPA) and section 501(e)
of the Housing Act of 1949. When the analysis discloses a shortage, RHS
may allow the shortage to exist until the next escrow analysis, or may
adjust the borrower's monthly payment.
Sec. 3550.156- Borrower obligations.
(a) After receiving a loan from RHS, borrowers are expected to meet
a variety of obligations outlined in the loan documents. In addition to
making timely payments, these obligations include:
(1) Maintaining the security property, and
(2) Maintaining an adequately funded escrow account, or paying real
estate taxes, hazard and flood insurance, and other related costs when
due.
(b) If a borrower fails to fulfill these obligations, RHS may
obtain the needed service and charge the cost to the borrower's account
in the form of a protective advance.
Sec. 3550.157- Payment subsidy.
(a) Borrowers currently receiving payment subsidy. (1) RHS will
review annually each borrower's eligibility for continued payment
subsidy and determine the appropriate level of assistance. To be
eligible for payment subsidy renewal, the borrower must meet the
requirements of Sec. 3550.53(a), (b), and (c) of subpart B of this
part.
(2) If the renewal is not completed before the expiration date of
the existing agreement, the effective date of the renewal will be
either the expiration date of the previous agreement if RHS error
caused the delay, or the next due date after the renewal is approved in
all other cases. If RHS determines that a borrower has received less
than the appropriate amount of payment subsidy, the borrower's account
will be credited with the difference between the amount received and
the correct amount.
(3) The borrower must notify RHS whenever an adult member of the
household becomes employed or changes employment. The household may
also report decreases in income. If the change in the household's
income will cause the level of assistance to change by at least $10 per
month, the household's payment subsidy may be adjusted for a new 12-
month period. The new agreement will be effective the due date
following the date the borrower's information is verified by RHS.
(b) Borrowers not currently receiving payment subsidy. Payment
assistance may be granted to borrowers not currently receiving payment
subsidy whose loans were approved on or after August 1, 1968 and who
meet the requirements of Sec. 3550.53(a), (b), and (c) of subpart B of
this part. In general, to receive payment assistance the term of the
loan at closing must have been at least 25 years. If an account has
been reamortized and the initial term of the loan was at least 25
years, payment assistance may be granted even though the term of the
reamortized loan is less than 25 years. Payment assistance may be
granted on a subsequent loan for repairs with a term of less than 25
years.
(c) Unauthorized assistance. When RHS determines that a borrower
has
[[Page 15421]]
received more than the appropriate amount of payment subsidy, the
account will be serviced in accordance with Sec. 3550.164 of this
subpart.
Sec. 3550.158- Active military duty.
The Soldiers and Sailors Relief Act requires that the interest rate
charged a borrower who enters full-time active military duty after a
loan is closed not exceed six percent. Active military duty does not
include participation in a military reserve or the National Guard.
(a) Amount of Assistance. If a borrower qualifies for payment
subsidy after reduction of the interest rate to six percent, the amount
of payment assistance received during the period of active military
duty will be the difference between the amount due at the Equivalent
Interest Rate and the amount due at a six percent interest rate. The
six percent interest rate will be effective with the first payment due
after RHS confirms the active military status of the borrower.
(b) Change of Active Military Status. The borrower must notify RHS
when he or she is no longer on active military duty. RHS will cancel
the six percent interest rate and resume use of the promissory note
interest rate. A new payment subsidy agreement may be processed if the
borrower is eligible.
Sec. 3550.159- Borrower actions requiring RHS approval.
(a) Mineral leases. Borrowers who wish to lease mineral rights to a
security property must request authorization from RHS. RHS may consent
to the lease of mineral rights and subordinate its liens to the
lessee's rights and interests in the mineral activity if the security
property will remain suitable as a residence and the government's
security interest will not be adversely affected. Subordination of RHS
loans to a mineral lease does not entitle the leaseholder to any
proceeds from the sale of the security property.
(1) If the proposed activity is likely to decrease the value of the
security property, RHS may consent to the lease only if the borrower
assigns 100 percent of the income from the lease to RHS to be applied
as extra payments.
(2) If the proposed activity is not likely to decrease the value of
the security property, RHS may consent to the lease if the borrower
agrees to use any damage compensation received from the lessee to
repair damage to the site or dwelling, or assigns it to RHS to be
applied as extra payments.
(b) Subordination. RHS may subordinate its interests to permit a
borrower to defer recapture amounts and refinance the loan, or to
obtain a subsequent loan with private credit.
(1) When it is in the best interest of the government,
subordination will be permitted if:
(i) The other lender will verify that the funds will be used for
purposes for which a RHS loan could be made.
(ii) The prior lien debt will be on terms and conditions that the
borrower can reasonably be expected to meet without jeopardizing
repayment of the RHS indebtedness.
(iii) Any proposed development will be planned and performed in
accordance with subpart A of part 1924 of this title or directed by the
other lender in a manner which is consistent with that subpart.
(iv) An agreement is obtained in writing from the prior lienholder
providing that at least 30 days prior written notice will be given to
RHS before action to foreclose on the prior lien is initiated.
(2) The total amount of debt permitted when RHS subordinates its
interests depends on whether the borrower pays off the RHS loan.
(i) For situations in which the borrower is obtaining a subsequent
loan from another source and will not pay off the RHS debt, the prior
lien debt plus the unpaid balance on the loan, exclusive of the
recapture amount, will not exceed the market value of the security.
(ii) For situations in which RHS is subordinating only a deferred
recapture amount, the prior lien debt plus the deferred recapture
amount will not exceed the market value of the security.
(c) Partial release of security. RHS may consent to transactions
affecting the security, such as sale or exchange of security property
or granting of a right-of-way across the security property, and grant a
partial release provided:
(1) The compensation is:
(i) For sale of the security property, cash in an amount equal to
the value of the security being disposed of or rights granted.
(ii) For exchange of security property, another parcel of property
acquired in exchange with value equal to or greater than that being
disposed of as determined by a current appraisal.
(iii) For granting an easement or right-of-way, benefits derived
that are equal to or greater than the value of the security property
being disposed of.
(2) An appraisal must be conducted if the latest appraisal is more
than one year old or if it does not reflect market value, and the
amount of consideration exceeds $2,000. The appraisal fee will be
charged to the borrower.
(3) The security property, after the transaction is completed, will
be an adequate but modest, decent, safe, and sanitary dwelling and
related facilities.
(4) Repayment of the RHS debt will not be jeopardized.
(5) If applicable, the environmental requirements of subpart G of
part 1940 of this title must be met.
(6) When exchange of all or part of the security is involved, title
clearance must be obtained before release of the existing security.
(7) For the sale of a portion of the security payment, when payment
is received and verified, the release may be delivered.
(8) Proceeds from the sale of a portion of the security property,
granting an easement or right-of-way, damage compensation, and all
similar transactions requiring RHS consent, will be used in the
following order:
(i) To pay customary and reasonable costs related to the
transaction that must be paid by the borrower.
(ii) To be applied on a prior lien debt, if any.
(iii) To be applied to RHS indebtedness or used for improvements to
the security property in keeping with purposes and limitations
applicable for use of RHS loan funds. Proposed development will be
planned and performed in accordance with subpart A of part 1924 of this
title and supervised to ensure that the proceeds are used as planned.
(d) Lease of security property. A borrower must furnish RHS with a
copy of any lease or proposed lease. If the lease is for a term of more
than three years or contains an option to purchase, RHS may liquidate
the loan.
Sec. 3550.160- Refinancing with private credit.
(a) Objective. RHS direct loan programs are not intended to
supplant or compete with private credit sources. Therefore, borrowers
are required to refinance RHS loans with private credit sources when
RHS determines that the borrower meets RHS criteria.
(b) Criteria for refinancing with private credit. Borrowers must
refinance with private credit when RHS determines that the borrower has
the ability to obtain other credit at reasonable rates and terms based
on their income, assets, and credit history. Reasonable rates and terms
are those commercial rates and terms that borrowers are expected to
meet when borrowing for similar purposes. Differences in interest rates
and terms between RHS and other lenders will not be an acceptable
reason for a borrower to fail to refinance with private credit if
[[Page 15422]]
the available rates and terms are within the borrower's ability to pay.
(c) Notice of requirement to refinance with private credit. The
financial status of all borrowers may be reviewed periodically to
determine their ability to refinance with private credit. A borrower's
financial status may be reviewed at any time if information becomes
available to RHS that indicates that the borrower's circumstances have
changed.
(1) A borrower undergoing review is required to supply, within 30
days of a request from RHS, sufficient financial information to enable
RHS to determine the borrower's ability to refinance with private
credit. Foreclosure action may be initiated against any borrower who
fails to respond.
(2) When RHS determines that a borrower has the ability to
refinance with private credit, the borrower will be required to
refinance within 90 days.
(3) Within 30 days after being notified of the requirement to
refinance with private credit, a borrower may contest the RHS decision
and provide additional financial information to document an inability
to refinance with private credit. If RHS agrees that the borrower is
not a candidate for refinancing with private credit, RHS will withdraw
the request.
(d) Failure to refinance with private credit. (1) If the borrower
is unable to secure private credit, the borrower must submit written
statements and documentation to RHS showing:
(i) The lenders contacted.
(ii) The amount of the loan requested by the borrower and the
amount, if any, offered by the lenders.
(iii) The rates and terms offered by the lenders or the specific
reasons why other credit is not available.
The information provided by the borrower to the lenders regarding
the purpose of the loan.
(2) If RHS determines that the borrower's submission does not
demonstrate the borrower's inability to refinance with private credit,
or if the borrower fails to submit the required information,
foreclosure may be initiated.
(e) Subordination of recapture amount. RHS may subordinate its
interest in any deferred recapture amount to permit a borrower to
refinance with private credit.
The amount to which the RHS debt will be subordinated may include:
(1) The amount required to repay the RHS debt, exclusive of
recapture,
(2) Reasonable closing costs,
(3) Up to one percent of the loan amount for loan servicing costs
if required by the lender, and
(4) The cost of any repairs or improvements to the security
property.
(f) Application for additional credit or assistance. A borrower who
has been asked to refinance with private credit will not be considered
for additional credit or assistance until the refinancing issue is
resolved unless such additional assistance is necessary to protect the
government's interest.
Sec. 3550.161- Final payment.
(a) Payment in full. Full payment of a borrower's account includes
repayment of principal and outstanding interest, unauthorized
assistance, recapture amounts, and charges made to the borrower's
account. Any supervised funds or funds remaining in a borrower's escrow
account will be applied to the borrower's account or returned to the
borrower.
(b) Release of security instruments. RHS may release security
instruments when full payment of all amounts owed has been received and
verified. If RHS and the borrower agree to settle the account for less
than the full amount owed, the security instruments may be released
when all agreed-upon amounts are received and verified. Security
instruments will not be released until any deferred recapture amount
has been paid in full.
(c) Written statements. At the borrower's request, RHS will provide
a written statement indicating the amount required to pay the account
in full. RHS may charge a fee for statements for the same account if
more than two statements are requested in any 30 day period.
(d) Suitable forms of payment. Suitable forms of payment are:
check, money order, or bank draft. Cash payments will be accepted only
if accompanied by a fee to cover conversion to a money order.
(e) Recording costs. Recording costs for the release of the
mortgage will be the responsibility of the borrower, except where state
law requires the mortgagee to record or file the satisfaction.
Sec. 3550.162- Recapture.
(a) Recapture policy. Borrowers with loans approved on or after
October 1, 1979 will be required to repay subsidy amounts received
through payment subsidy or deferred mortgage assistance. Amounts to be
recaptured are due and payable when the borrower transfers title or
ceases to occupy the property.
(b) Amount of subsidy to be recaptured. (1) The maximum amount to
be recaptured is the amount of principal reduction atrributed to
subsidy and the lesser of:
(i) The amount of subsidy received or
(ii) 50% of the difference between the value appreciation in the
property and the added value of capital improvements to the property.
(2) The value appreciation of a property with a cross-
collateralized loan is based on the market value of the dwelling and a
minimum adequate site.
(3) Interest reduced from the promissory note rate to six percent
under the Soldiers and Sailors Relief Act is not subject to recapture.
(c) Option to defer payment of recapture amounts. (1) Borrowers may
defer payment of recapture amounts if the loan, exclusive of recapture,
is paid in full, the title does not transfer, and the borrower
continues to occupy the property.
(2) The RHS mortgage securing the deferred recapture amount may be
subordinated to permit refinancing if the RHS mortgage will be
adequately secured.
(3) Borrowers may receive a discount on the recapture amount due if
the recapture amount is repaid within 30 days of refinancing or payment
of the last loan installment, and the borrower continues to occupy the
property.
(d) Borrower ceases to occupy the property. When a borrower ceases
to occupy a property:
(1) The borrower may pay the recapture amount in full or reamortize
the existing loan to include the recapture amount.
(2) If the borrower does not pay the recapture amount or consent to
reamortization within 30 days, RHS may proceed with foreclosure.
(e) Assumed loans. When a loan subject to recapture is assumed
under new rates and terms, the recapture amount may be paid in full by
the seller or included in the principal amount assumed by the buyer.
(2) When a loan is assumed under the terms of the promissory note,
recapture amounts will not be due. When the new borrower transfers
title or ceases to occupy the property, all subsidy subject to
recapture before and after the assumption is due.
(3) When a borrower has deferred payment of recapture amounts and
the RHS loan, exclusive of recapture, is paid in full, the deferred
recapture amount may be assumed by a new RHS borrower and included in
the principal amount of the new loan.
Sec. 3550.163- Transfer of security and assumption of indebtedness.
(a) General policy. RHS mortgages contain due-on-sale clauses that
generally require RHS consent before title of a security property can
be
[[Page 15423]]
transferred with an assumption of the indebtedness. If it is in the
best interest of the government, RHS will approve the transfer of title
and assumption of indebtedness on program or nonprogram (NP) terms,
depending on the transferee's eligibility and the property's
characteristics.
(b) RHS approval of assumptions. A borrower with a loan on program
terms who wishes to transfer a security property restricted by a due-
on-sale clause to a purchaser who wishes to assume the debt must
receive prior authorization from RHS. If RHS authorizes the transfer
and assumption, the account will be serviced in the purchaser's name
and the purchaser will be liable for the loan under the terms of the
security instrument.
(2) If a borrower sells a security property with a due-on-sale
clause without obtaining RHS authorization, RHS will not approve
assumption of the indebtedness, and the loan will be liquidated unless
RHS determines that it is in the government's best interest to continue
the loan. If RHS decides to continue the loan, the account will be
serviced in the original borrower's name and the original borrower will
remain liable for the loan under the terms of the security instrument.
(c) Exceptions to due-on-sale clauses. (1) Due-on-sale clauses are
not triggered by the following types of transfers:
(i) A transfer from the borrower to a spouse or children not
resulting from the death of the borrower.
(ii) A transfer to a relative, joint tenant, or tenant by the
entirety resulting from the death of the borrower.
(iii) A transfer to a spouse or ex-spouse resulting from a divorce
decree, legal separation agreement, or property settlement agreement.
(iv) A transfer to a person other than a deceased borrower's spouse
who wishes to assume the loan for the benefit of persons who were
dependent on the deceased borrower at the time of death, if the
dwelling will be occupied by one or more persons who were dependent on
the borrower at the time of death, and there is a reasonable prospect
of repayment.
(v) A transfer into an inter vivos trust in which the borrower does
not transfer rights of occupancy in the property.
(2) A transferee who obtains property through one of the types of
transfer listed in paragraph (c)(1) of this section:
(i) Is not required to assume the loan, and RHS is not permitted to
liquidate the loan, if the transferee continues to make scheduled
payments and meet all other obligations of the loan. A transferee who
does not assume the loan is not eligible for payment assistance or a
moratorium.
(ii) May assume the loan on the rates and terms contained in the
promissory note, with no down payment. If the account is past due at
the time an assumption is executed, the account may be brought current
by using any of the servicing methods discussed in subpart E of this
part.
(iii) May assume the loan under new rates and terms if the
transferee applies and is program-eligible.
(3) Any subsequent transfer of title, except upon death of the
inheritor or between inheritors to consolidate title, will be treated
as a sale.
(d) Requirements for an assumption. (1) Loans secured by program-
eligible properties to be assumed by program-eligible purchasers may be
assumed on program terms. Loans secured by nonprogram properties and
loans to be assumed by purchasers who are not eligible for program
terms may be assumed on nonprogram terms.
(2) The amount the transferee will assume will be either the
current market value less any prior liens and any required down
payment, or the indebtedness, whichever is less.
(3) The applicant may request that the interest rate charged by RHS
be the rate in effect either at the time of loan approval or at
closing, whichever is lower. If the applicant does not specify, the
rate in effect at the time of loan approval will be used.
(4) If additional financing is required to purchase the property or
to make repairs, RHS may approve a subsequent loan under subparts B or
C of this part.
(5) If an appraisal is required for an assumption on new terms, the
purchaser is responsible for the appraisal fee.
(6) If all or a portion of the borrower's account balance is
assumed, the borrower and co-signer, if any, will be released from
liability on the amount of the indebtedness assumed. If an account
balance remains after the assumption, RHS may pursue debt settlement in
accordance with subpart F of this part.
(7) Unless it is in the government's best interest, RHS will not
approve an assumption of a secured loan if the seller fails to repay
any unsecured RHS loan.
(8) If a loan is secured by a property with a dwelling situated on
more than a minimum adequate site and the excess property cannot be
sold separately as a minimum adequate site for another dwelling, RHS
may approve a transfer of the entire property. If the excess property
can be sold separately as a minimum adequate site, RHS will approve
assumption of only the dwelling and the minimum adequate site. If the
value of the dwelling on the minimum adequate site is less than the
amount of the outstanding RHS debt, the remaining debt will be secured
by the excess property. The outstanding debt will be converted to a NP
loan and reamortized over a period not to exceed 10 years or the final
due date of the original promissory note, whichever is sooner.
Sec. 3550.164- Unauthorized assistance.
(a) Types of unauthorized assistance. Unauthorized assistance
includes:
(1) A loan or grant made to a recipient who did not qualify for the
assistance, or made for an ineligible purpose.
(2) Subsidy in excess of $10 per month or $120 per year for which
the recipient was not eligible.
(b) Recipients who provide false information. (1) False information
is information provided by the recipient that the recipient knew was
incorrect at the time it was provided, and was provided with the intent
to obtain benefits that would not have been obtainable based upon
correct information.
(2) If false information related to recipient eligibility or the
purpose of the loan or grant results in the borrower receiving
unauthorized assistance, RHS will accelerate any loan and require
repayment of any subsidy or grant.
(3) If false information related to the amount of subsidy results
in the recipient receiving unauthorized assistance, the recipient will
be required to repay all excess subsidy received. The account may not
be reamortized to include this excessive subsidy.
(4) RHS may suspend or debar any recipient who provides false
information.
(c) Recipients who provide inaccurate information and unauthorized
assistance received as a result of RHS error. (1) Inaccurate
information is incorrect information inadvertently provided by the
recipient without intent to obtain benefits fraudulently.
(2) Recipients who provide inaccurate information related to
eligibility or the purpose of the loan or grant will be permitted to
retain the loan.
(3) The recipient will be required to repay all excess subsidy
received based on inaccurate information. If a recipient is unable to
repay the excess subsidy in a lump sum, the account may be reamortized.
(d) Repayment terms. If a recipient cannot repay the unauthorized
amount within a reasonable period, RHS may reamortize the loan. Refusal
to repay will result in acceleration of the loan.
[[Page 15424]]
Secs. 3550.165-3550.200 [Reserved]
Subpart E--Special Servicing
Sec. 3550.201 Purpose of special servicing actions.
The Rural Housing Service (RHS) may approve special servicing
actions to reduce the number of borrower failures that result in
liquidation. Borrowers who have difficulty keeping their accounts
current may be eligible for one or more available servicing options
including: payment assistance; work-out agreements that temporarily
modify payment terms; protective advances of funds for taxes, insurance
and other approved costs; payment moratoriums; and reamortization at
promissory note or new interest rates.
Sec. 3550.202 Past due accounts.
An account is past due if the full scheduled payment is not
received by the due date.
(a) Late charges. A late charge will be assessed if the full
scheduled payment is not received by the 15th day after the due date.
(b) Liquidation. The account may be liquidated without further
servicing when at least three full scheduled payments are past due or
an amount equal to at least two full scheduled payments is past due for
at least three consecutive months. In such cases RHS may pursue
voluntary liquidation and foreclosure.
Sec. 3550.203 General servicing actions.
Whenever any of the servicing actions described in this subpart
result in reamortization of the account RHS may:
(a) Require the creation and funding of an escrow account for real
estate taxes and insurance, if one does not already exist.
(b) Convert the method of calculating interest for any account
being charged daily simple interest to a preamortized payment schedule.
Sec. 3550.204 Payment assistance.
Borrowers who are eligible may be offered payment assistance in
accordance with subpart B of this part. Borrowers who are not eligible
for payment assistance because the loan was approved before August 1,
1968 or the loan is an above-moderate or nonprogram loan, may refinance
the loan if:
(a) The borrower is now eligible to receive a loan with payment
assistance;
(b) Due to circumstances beyond the borrower's control, the
borrower is in danger of losing the property; and
(c) The property is program-eligible.
Sec. 3550.205 Work-out agreements.
Borrowers with past due accounts may be offered the opportunity to
avoid liquidation by entering into a written work-out agreement that
specifies a plan for bringing the account current. To receive a work-
out agreement, the following requirements apply:
(a) A borrower who currently makes annual payments but receives
monthly income must convert to monthly payments.
(b) A borrower who is able to do so will be required to pay the
past-due amount in a single payment.
(c) A borrower who is unable to pay the past-due amount in a single
payment must pay monthly all scheduled payments plus an agreed upon
additional amount that brings the account current within two years or
the remaining term of the loan, whichever is shorter.
(d) If a borrower becomes more than 30 days past due under the
terms of a work-out agreement, RHS may cancel the agreement.
Sec. 3550.206 Protective advances.
RHS may pay for fees or services and charge the cost against the
borrower's account to protect the government's interest. A protective
advance will be made only if the borrower cannot obtain a subsequent
loan.
(a) Advances for taxes and insurance. RHS may advance funds to pay
real estate taxes, hazard and flood insurance premiums, and other
related costs.
(1) Monthly payments to the escrow account will be adjusted to
ensure recovery of this advance within 12 months.
(2) A borrower without an established escrow account will be
required to establish such an account. RHS may advance amounts needed
to pay taxes and insurance due as well as to fund the borrower's
contribution to the current escrow cycle. Amounts advanced may be
reamortized or repaid by the borrower in a lump sum due with the next
scheduled installment.
(b) Advances for costs other than taxes and insurance. Advances for
costs other than real estate taxes and hazard insurance will bear
interest at the promissory note rate of the loan against which they are
being charged. Advances for borrowers with multiple loans will be
charged against the primary loan.
Sec. 3550.207 Payment moratorium.
RHS may defer for up to two years payments for either principal,
interest, and contributions to the escrow account for taxes and
insurance, or payments for only principal and interest.
(a) Borrower eligibility. For a borrower to be eligible for a
moratorium, all of the following conditions must be met:
(1) Due to circumstances beyond the borrower's control, the
borrower is temporarily unable to continue making scheduled payments
because:
(i) The borrower's repayment income fell by at least 20 percent
within the last year,
(ii) The borrower must pay unexpected and unreimbursed expenses
resulting from the illness, injury or death of the borrower or a family
member, or
(iii) The borrower must pay unexpected and unreimbursed expenses
resulting from damage to the security property in cases where adequate
hazard insurance was not available or was prohibitively expensive.
(2) The borrower occupies the dwelling, unless RHS determines that
it is uninhabitable.
(3) The borrower's account is not currently accelerated.
(b) Reviews of borrower eligibility. (1) Periodically RHS may
require the borrower to submit financial information to demonstrate
that the moratorium should be continued. The moratorium may be canceled
if:
(i) The borrower does not respond to a request for financial
information,
(ii) RHS receives information indicating that the moratorium is no
longer required, or
(iii) In the case of a moratorium granted to pay unexpected or
unreimbursed expenses, the borrower cannot show that an amount at least
equal to the deferred payments has been applied toward the expenses.
(2) At least 30 days before the moratorium is scheduled to expire,
RHS will require the borrower to provide financial information needed
to determine whether the borrower is able to resume making scheduled
monthly payments.
(c) Resumption of monthly payments. When the borrower is able to
resume scheduled monthly payments, the loan will be reamortized to
include the amount deferred during the moratorium. If the new monthly
payment, after consideration of the maximum amount of payment subsidy
available to the borrower, exceeds the borrower's repayment ability,
all or part of the interest that has accrued during the moratorium may
be forgiven.
(d) Borrowers unable to resume monthly payments. If even after all
appropriate servicing actions have been taken the borrower is unable to
resume making scheduled payments after two consecutive years of being
on a
[[Page 15425]]
moratorium, the account should be liquidated.
Sec. 3550.208 Reamortization using promissory note interest rate.
Reamortization using the promissory note interest rate may be
authorized when RHS determines that reamortization is required to
enable the borrower to meet scheduled obligations, and only if the
government lien priority is not adversely affected.
(a) Permitted uses. Reamortization at the promissory note interest
rate may be used to accomplish a variety of servicing actions,
including to:
(1) Repay unauthorized assistance.
(2) Repay principal and interest accrued and advances made during a
moratorium.
(3) Reinstate an accelerated account.
(4) Bring current an account under a work-out agreement after the
borrower has demonstrated the willingness and ability to meet the terms
of the loan and work-out agreement.
(5) Bring a delinquent account current at the time an assumption is
processed on the terms of the promissory note.
(6) Cover the remaining debt when a portion of the security
property is being transferred but the acquisition price does not cover
the outstanding debt. The remaining balance will be reamortized for a
period not to exceed 10 years or the final due date of the note being
reamortized, whichever is sooner.
(b) Payment term of reamortized loan. Except as noted in paragraph
(a)(6) of this section, the term of the reamortized loan may be
extended to the maximum standard term that was available at the time
the loan was originally made, less the number of years the loan has
been outstanding. In all cases, the term must not exceed the remaining
security life of the property. When reamortizing using the promissory
note interest rate, the loan term cannot be extended to 38 years.
Sec. 3550.209 [Reserved]
Sec. 3550.210- Offsets.
Any money that is or may become payable from the United States to
an RHS borrower may be subject to administrative, salary, or Internal
Revenue Service (IRS) offsets for the collection of a debt owed to RHS.
(a) IRS offset. RHS may take action to effect offset of claims due
RHS against tax refunds due to RHS debtors under 26 U.S.C. 6402, in
accordance with the provisions of 31 U.S.C. 3720A and 26 CFR 301.6402-
6.
(b) Salary offset. Offset of claims due to RHS by a federal
employee may be collected pursuant to the salary offset provisions in 7
CFR part 3, subpart C.
(c) Administrative offset. RHS may take action to effect
administrative offset to recover delinquent claims due to it in
accordance with the procedures in 7 CFR part 3, subpart B.
(d) Offset by other federal agencies. Funds held or payable by RHS
are not subject to offset by other federal agencies.
Sec. 3550.211- Liquidation.
(a) Policy. When RHS determines that a borrower is unable or
unwilling to meet loan obligations, RHS may liquidate the debt and, if
necessary, acquire the security property. The borrower is responsible
for all expenses associated with liquidation and acquisition. After the
security property is liquidated, RHS will credit the borrower's
account. If the account is satisfied in full, the borrower will be
released from liability. If the account is not satisfied in full, RHS
may pursue any deficiency.
(b) Tribal allotted or trust land. Liquidations involving a
security interest in tribal allotted or trust land shall only be
pursued after offering to transfer the account to an eligible tribal
member, the tribe, or the Indian Housing Authority. Forced liquidation
of RHS security interests in Indian trust lands or on tribal allotted
land will be recommended only after the State Director has determined
it is in the best interest of the Government.
(c) Acceleration and Foreclosure. If RHS determines that
foreclosure is in the best interest of the government, RHS will send an
acceleration notice to each borrower and any co-signer. If the borrower
does not pay the full account balance or meet the other terms of the
loan within 30 days of acceleration, RHS may foreclose.
(d) Canceling acceleration. In the case of an account accelerated
because the security property has been sold or transferred without RHS
consent, acceleration cannot be canceled. In all other cases, the
borrower may offer to cure a default after acceleration. RHS will not
accept an offer to cure a default after acceleration unless it is in
the government's best interest. Methods for curing the default include:
(1) Voluntary liquidation. The borrower may refinance or sell the
security property at net recovery value and apply the proceeds to the
account. Foreclosure action will not be delayed pending voluntary
liquidation unless a copy of a firm funding commitment is provided to
RHS indicating that closing will occur within 90 days. An extension of
time may be allowed to complete a transaction provided:
(i) The security property is listed with a real estate broker for
not more than the net recovery value as determined by RHS,
(ii) A sales contract has been entered into and assumption of the
RHS loan, or a loan from another lender, is pending, or
(iii) The borrower has applied to a lender for a long-term loan to
pay RHS in full.
(2) Deed in lieu of foreclosure. RHS may accept a deed in lieu of
foreclosure to convey title to the security property only after the
debt has been accelerated and when it is in the government's best
interest.
(3) Offer by third party. If a junior lienholder or co-signer makes
an offer in the amount of the net recovery value, RHS may assign the
note and mortgage.
(e) Bankruptcy. (1) When a petition in bankruptcy is filed by a
borrower after acceleration, collection actions and foreclosure actions
are suspended in accordance with the provisions of the Bankruptcy Code.
The borrower may be considered for a moratorium or for payment
assistance.
(2) RHS may accept conveyance of security property by the trustee
in bankruptcy if the Bankruptcy Court has approved the transaction, RHS
determines the conveyance is in the best interest of the government,
and RHS will acquire title free of all liens and encumbrances except
RHS liens.
(3) Whenever possible in a Chapter 7 Bankruptcy, a reaffirmation
agreement will be signed by the borrower prior to discharge, if RHS
decides to continue with the borrower.
(f) Junior lienholder foreclosure. When a junior lienholder
foreclosure does not result in payment in full of the RHS debt but the
property is sold subject to the RHS lien, RHS may liquidate the account
unless the new owner is eligible to assume the RHS debt and actually
assumes the RHS debt.
(G) Payment subsidy. If the borrower is receiving payment subsidy,
the payment subsidy agreement will not be canceled when the debt is
accelerated, but will not be renewed unless the account is reinstated.
(h) Eligibility for special servicing actions. A borrower is not
eligible for special servicing actions once the account has been
accelerated.
Secs. 3550.212-3550.250 [Reserved]
Subpart F--Post-Servicing Actions
Sec. 3550.251- Property management and disposition.
(a) Policy. Rural Housing Service (RHS) will manage custodial
property and Real Estate Owned (REO) property
[[Page 15426]]
to protect the government's interest, and may dispose of REO property
through direct sales, sealed bid, or auction. RHS will provide public
notice of all sales of REO property, and follow affirmative fair
housing marketing policies.
(b) Custodial property. RHS may take custodial possession of
security property that has been abandoned, or for other reasons
necessary to protect the government's security. After taking custodial
possession of a security property, RHS may maintain and repair the
security property as needed to protect the government's interest, pay
required real estate taxes and assessments, and secure personal
property left on the premises. Expenses will be charged to the
borrower's account. Custodial property may be leased when it is in the
government's best interest and in such cases the borrower's account
will be credited for income from the security property.
(c)-REO property. (1) When RHS takes title to a security property,
it is classified as either program or nonprogram (NP) property. A REO
property that is eligible for financing under the section 502 program,
or which could reasonably be repaired to be eligible, is classified as
program property. A REO property that cannot reasonably be repaired to
be eligible as section 502 property, and property that has been
improved to a point that it will no longer qualify as modest under
section 502, is classified as NP property.
(2) When RHS determines that a REO property to be sold is not
decent, safe and sanitary, or does not meet cost-effective energy
conservation standards, its known defects will be disclosed. The deed
by which such a REO property is conveyed will contain a covenant
restricting it from residential use until it is decent, safe and
sanitary and meets the RHS cost-effective energy conservation
standards.
(3) Property on Indian tribal allotted or trust land. REO property
which is located on Indian tribal allotted or trust land, will be sold
or otherwise disposed of only to a member of the particular tribe
having jurisdiction over the allotted or tribal land, to the tribe, or
to an Indian housing authority serving the tribe on a first come, first
served basis.
(4) Reservation of program REO properties. (i) Program REO
properties are reserved for program-eligible applicants and nonprofit
organizations or public bodies providing transitional housing during
the first 60 days after the date of the first notice of sale, and
during the first 30 days following any reduction in price or any other
change in credit terms or other sale terms. After the expiration of a
reservation period, program REO properties can be bought by any buyer.
(ii) An offer on a program REO property from a buyer who does not
qualify for a section 502 program loan may be submitted during a
reservation period, but is considered to have been received on the day
after the reservation period ends.
(iii) No offer is considered until three business days after the
date the property is offered for sale. An offer received during the
three-day holding period is not considered until the fourth day, and is
evaluated with any other offers actually received on the fourth day.
(5) Priority of offers received the same day. (i) Offers received
on the same business day are selected in the following order:
(A) Offers from program-eligible applicants, with a request for
credit on program terms. All offers are evaluated as if they were
submitted at the listed price, regardless of the offering price.
(B) Offers from nonprofits or public bodies for conversion to use
as transitional housing or for other special purposes as specified in
paragraph (d)(4) of this section.
(C) Cash offers, from highest to lowest.
(D) NP credit offers, from highest to lowest.
(ii) Acceptable offers of equal priority received on the same
business day are selected by lot.
(iii) REO properties are not held off the market pending the
outcome of an appeal of RHS rejection of a request for financing.
(6) RHS may authorize the sale of a REO property by sealed bid or
public auction when it is in the best interest of the government. RHS
will publicly solicit requests for sealed bids and publicize auctions.
If a successful bidder is unable to settle the transaction under the
terms of the offer, except for the financing contingency, any required
bid deposit may be retained by RHS. If the highest bid is lower than
the minimum acceptable bid established by RHS, or if no acceptable bids
are received, RHS may negotiate a sale without further public notice.
(d) Special purposes. (1) REO property may be purchased for
conversion to multiple family housing.
(2) When a nonprofit organization or public body notifies RHS in
writing of its intent to buy a REO property to provide transitional
housing for the homeless, RHS will stop marketing the property for up
to 30 days to give the entity an opportunity to execute a purchase
contract. The listed price may be discounted for offers on a nonprogram
REO property at any time, and on a program REO property after the 60-
day reservation period. No down payment is required, and the loan term
will be for a maximum of 30 years. Until RHS executes a sales
agreement, an offer from a program-eligible applicant will receive
priority, regardless of a nonprofit's interest in purchasing the REO
property for use as transitional housing.
(3) NP properties may be leased to a nonprofit organization or
public body to provide transitional housing for the homeless at an
annual cost of one dollar. When a REO property is to be leased as
transitional housing, RHS will make repairs needed to put the property
in decent, safe and sanitary condition. The lessee is responsible for
all future repairs and maintenance.
(4) REO property may be sold under special provisions to nonprofit
organizations or public bodies for the purpose of providing affordable
housing to very low- and low-income families. Such sales must be
consistent with section 510(e) of the Housing Act of 1949 and in the
best interests of the government.
Sec. 3550.252- Debt settlement policies.
(a) Applicability. Debt settlement procedures may be initiated to
collect any amounts due to RHS including:
(1) Balances remaining on loan accounts after all liquidation
proceeds or credits have been applied,
(2) Subsidy recapture or grant amounts due, and
(3) Unauthorized assistance due.
(b) Judgment. RHS may seek a judgment whenever a judgment might
enable RHS to collect all or a significant portion of an amount owed.
(c) Multiple loans. RHS generally does not settle debts for one
loan while other RHS loans on the same security property remain active.
(d) Co-signers and claims against estates. RHS may use any and all
remedies available under law to collect from any co-signer and from a
deceased borrower's estate.
(e) Joint debtors. Settlements will not be approved for one joint
debtor unless approved for all debtors.
(f) Reporting. RHS will report to IRS and credit reporting agencies
any debt settled through cancellation, compromise or adjustment.
(g) Settlement during legal or investigative action. Cases that are
under investigation for fiscal irregularity or have been referred to
the Office of Inspector General (OIG), the Office of the General
Counsel (OGC) or the U.S. Attorney will not be considered for debt
settlement until final action by the
[[Page 15427]]
investigating or prosecuting entity has been taken.
(h) Offsets. RHS may request offsets as described in Sec. 3550.210
of subpart E of this part to collect amounts owed.
(i) Escrow funds. At liquidation all funds held in escrow or
unapplied funds will be applied against the debt.
Sec. 3550.253 Settlement of a debt by compromise or adjustment.
Compromise or adjustment offers may be initiated by the debtor or
by RHS. RHS will approve only those compromises and adjustments that
are in the best interest of the government.
(a) Compromise. A compromise is an agreement by RHS to release a
debtor from liability upon receipt of a specified lump sum that is less
than the total amount due.
(b) Adjustments. An adjustment is an agreement by RHS to release a
debtor from liability upon receipt of a reduced amount paid as an
initial lump sum and periodic additional payments over a period of up
to five years.
(c) Timing of offers. (1) For a settlement offer to be considered,
secured debts must be fully matured under the terms of the debt
instrument or must have been accelerated by RHS.
(2) Unsecured debts owed after the sale of the security property
may be proposed for compromise or adjustment at any time. Debts that
were never secured may be proposed for compromise or adjustment when
they are due and payable.
(d) Retention of security property. The debtor may retain the
security property if the compromise payment or the initial payment made
as part of an adjustment offer is at least equal to the net recovery
value, and it is in the best interest of the government to allow the
debtor to retain the security property.
Sec. 3550.254-3550.300 [Reserved]
Dated: March 8, 1996.
Inga Smulkstys,
Acting Under Secretary, Rural Economic and Community Development.
[FR Doc. 96-8492 Filed 4-5-96; 8:45 am]
BILLING CODE 3410-07-U
Complete official Federal Register PDF
FR Doc. 96-8357 Insurer Reporting Requirements; List of Insurers Required to File Reports
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15443-15446]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8357]
=======================================================================
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Part 544
[Docket No. 96-19; Notice 01]
RIN 2127-AF92
Insurer Reporting Requirements; List of Insurers Required to File
Reports
AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).
ACTION: Notice of proposed rulemaking.
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SUMMARY: NHTSA proposes to update its lists in appendices A, B, and C
of part 544 of passenger motor vehicle insurers that are required to
file reports on their motor vehicle theft loss experiences. If these
revised appendices are adopted in a final rule, each insurer included
in any of these appendices must file a report for the 1993 calendar
year not later than October 25, 1996. Further, as long as they remain
listed, they must submit reports by each subsequent October 25.
DATES: Comments on this proposed rule must be received by this agency
not later than June 7, 1996. If this rule is made final, insurers
listed in the appendices would be required to submit reports beginning
with the one due October 25, 1996.
ADDRESSES: Comments on this proposed rule must refer to the docket
number referenced in the heading of this notice, and be submitted to:
Docket Section, NHTSA, Room 5109, 400 Seventh Street, SW, Washington,
DC 20590. Docket hours are 9:30 a.m. to 4:00 p.m., Monday through
Friday.
FOR FURTHER INFORMATION CONTACT: Ms. Rosalind Proctor, Office of
Planning and Consumer Programs, NHTSA, 400 Seventh Street, SW,
Washington, DC 20590. Ms. Proctor's telephone number is (202) 366-0846.
Her fax number is (202) 493-2739.
SUPPLEMENTARY INFORMATION:
Background
Pursuant to 49 U.S.C. 33112, Insurer reports and information, NHTSA
requires certain passenger motor vehicle insurers to file an annual
report. Each insurer's report includes information about thefts and
recoveries of motor vehicles, the rating rules used by the insurer to
establish premiums for comprehensive coverage, the actions taken by the
insurer to reduce such premiums, and the actions taken by the insurer
to reduce or deter theft. Under the agency's implementing regulation,
part 544, the following insurers are subject to the reporting
requirements: (1) Those issuers of motor vehicle insurance policies
whose total premiums account for 1 percent or more of the total
premiums of motor vehicle insurance issued within the United States;
(2) Those issuers of motor vehicle insurance policies whose premiums
account for 10 percent or more of total premiums written within any one
State; and (3) Rental and leasing companies with a fleet of 20 or more
vehicles not covered by theft insurance policies issued by insurers of
motor vehicles, other than any governmental entity.
Pursuant to its statutory exemption authority, the agency has
exempted smaller passenger motor vehicle insurers from the reporting
requirements.
A. Small Insurers of Passenger Motor Vehicles
Section 33112(f) provides that the agency shall exempt small
insurers of passenger motor vehicles if NHTSA finds that such
exemptions will not significantly affect the validity or usefulness of
the information in the reports, either nationally or on a Sate-by-State
basis. The term ``small insurer'' is defined in Section 33112(f) as an
insurer whose premiums account for less than 1 percent of the total
premiums for all forms of motor vehicle insurance issued by insurers
within the United States. However, that section also stipulates that if
an insurance company satisfies this definition of a ``small insurer,''
but accounts for 10 percent or more of the total premiums
[[Page 15444]]
for all motor vehicle insurance issued in a particular State, the
insurer must report about its operations in that State.
As described in the final rule establishing the requirement for
insurer reports (52 FR 59, January 2, 1987), in 49 CFR Part 544. NHTSA
exercises its exemption authority by listing in appendix A each insurer
which must report because it had at least 1 percent of the motor
vehicle insurance premiums nationally. Listing the insurers subject to
reporting instead of each insurer exempted from reporting because it
had less than 1 percent of the premiums nationally is administratively
simpler since the former group is much smaller than the latter. In
appendix B, NHTSA lists those insurers that are required to report for
particular states because each insurer had a 10 percent or greater
market share of motor vehicle premiums in those States. In the January
1987 final rule, the agency stated that appendices A and B will be
updated annually. It has been NHTSA's practice to update the appendices
based on data voluntarily provided by insurance companies to A.M. Best,
and made available for the agency each spring. The agency uses the data
to determine the insurers' market shares nationally and in each state.
B. Self-insured Rental and Leasing Companies
In addition, upon making certain determinations, NHTSA is
authorized to grant exemptions to self-insurers, i.e., any person who
has a fleet of 20 or more motor vehicles (other than any governmental
entity) which are used primarily for rental or lease and which are not
covered by theft insurance policies issued by insurers of passenger
motor vehicles, 49 U.S.C. 33112(b)(1) and (f). NHTSA may exempt a self-
insurer from reporting, if the agency determines:
(1) The cost of preparing and furnishing such reports is excessive
in relation to the size of the business of the insurer; and
(2) The insurer's report will not significantly contribute to
carrying out the purposes of chapter 331.
In a final rule published June 22, 1990 (55 FR 25606), the agency
granted a class exemption to all companies that rent or lease fewer
than 50,000 vehicles because it believed that reports from only the
largest companies would sufficiently represent the theft experience of
rental and leasing companies. NHTSA concluded that reports by the many
smaller rental and leasing companies do not significantly contribute to
carrying out NHTSA's statutory obligations, and that exempting such
companies will relieve an unnecessary burden on most companies that
potentially must report. As a result of the June 1990 final rule, the
agency added a new appendix C, which consists of an annually updated
list of the self-insurers that are subject to part 544. Following the
same approach as in the case of appendix A, NHTSA has included in
appendix C each of the relatively few self-insurers which are subject
to reporting instead of relatively numerous self-insurers which are
exempted. NHTSA updates appendix C based primarily on information from
the publications Automotive Fleet Magazine and Travel Business Travel
News.
C. When a Listed Insurer Must File a Report
Under Part 544, as long as an insurer is listed, it must file
reports on or before each October 25. Thus, any insurer listed in the
appendices as of the date of the most recent final rule must file a
report by the following October 25, and by each succeeding October 25,
absent a further amendment removing the insurer's name from the
appendices.
Notice of Proposed Rulemaking
1. Insurers of Passenger Motor Vehicles
Based on the 1993 calendar year A.M. Best data for market shares,
NHTSA proposes to amend the list in appendix A of insurers which must
report because each had at least one percent of the motor vehicle
insurance premiums on a national basis. The list was last amended in a
notice published on June 27, 1995 (See 60 FR 33145). One company,
General ACC Group, included in the June 1995 listing, is proposed to be
removed from appendix A. Two companies, Allmerica Property and Casualty
Companies, and Metropolitan Group, that were not listed in appendix A,
are proposed to be added.
Each of the 19 insurers listed in appendix A of this notice would
be required to file a report not later than October 25, 1996, setting
forth the information required by part 544 for each State in which it
did business in the 1993 calendar year. As long as those 19 insurers
remain listed, they would be required to submit reports by each
subsequent October 25 for the calendar year ending slightly less than 3
years before.
Appendix B lists those insurers that would be required to report
for particular States for calendar year 1993, because each insurer had
a 10 percent or greater market share of motor vehicle premiums in those
States. Based on the 1993 calendar year A.M. Best data for market
shares, it is proposed that Nodak Mutual Insurance Company, reporting
on its activities in the State of North Dakota be added to appendix B.
The 12 insurers listed in appendix B of this notice would be
required to report on their calendar year 1993 activities in every
State in which they had a 10 percent or greater market share. These
reports must be filed no later than October 25, 1996, and set forth the
information required by part 544. As long as those 12 insurers remain
listed, they would be required to submit reports on or before each
subsequent October 25 for the calendar year ending slightly less than 3
years before.
2. Rental and Leasing Companies
Based on information in Automotive Fleet Magazine and Travel Trade
Business Travel News for 1993, the most recent year for which data are
available, NHTSA is proposing several changes in Appendix C. As
indicated above, that appendix lists rental and leasing companies
required to file reports. Based on the data reported in the above
mentioned publications, it is proposed that the American International
Rent-A-Car Corp./ANSA be removed from appendix C. The agency also
proposes that four additional rental and leasing companies, Citicorp
Bankers Leasing Corporation, Donlen Corporation, Lease Plan
International, and USL Capital Fleet Services, be included in appendix
C. Accordingly, each of the 13 companies (including franchisees and
licensees) listed in this notice in appendix C would be required to
file reports for calendar year 1993 no later than October 25, 1996, and
set forth the information required by part 544. As long as those 13
companies remain listed, they would be required to submit reports on or
before each subsequent October 25 for the calendar year ending slightly
less than 3 years before.
NHTSA notes that on July 5, 1994, the Cost Savings Act, (including
Title VI- Theft Prevention) was revised and codified ``without
substantive change.'' The passenger motor vehicle theft insurers'
reporting provisions, formerly at 15 U.S.C. 2032 are now at 49 U.S.C.
33112. In this NPRM, NHTSA proposes to make minor technical amendments
to make part 544 reflect its changed statutory authority.
Regulatory Impacts
1. Costs and Other Impacts
This notice has not been reviewed under Executive Order 12866.
NHTSA has considered the impact of this proposed rule and has
determined the action not to be ``significant'' within the
[[Page 15445]]
meaning of the Department of Transportation's regulatory policies and
procedures. This proposed rule implements the agency's policy of
ensuring that all insurance companies that are statutorily eligible for
exemption from the insurer reporting requirements are in fact exempted
from those requirements. Only those companies that are not statutorily
eligible for an exemption are required to file reports.
NHTSA does not believe that this proposed rule, reflecting more
current data, affects the impacts described in the final regulatory
evaluation prepared for the final rule establishing part 544. (52 FR
59, January 2, 1987) Accordingly, a separate regulatory evaluation has
not been prepared for this rulemaking action. Using the cost estimates
in the 1987 final regulatory evaluation, the agency estimates that the
cost of compliance will be about $5,770 for any insurer added to
appendix C. If this proposed rule is made final, for appendix A, the
agency would remove one insurer and add two insurers; for appendix B,
the agency would add one insurer; and for appendix C, the agency would
remove one company and include four additional companies. The agency
therefore estimates that the net effect of this proposal, if made
final, would be a cost increase to insurers, as a group of
approximately $87,310.
Interested persons may wish to examine the 1987 final regulatory
evaluation. Copies of that evaluation have been placed in Docket No.
T86-01; Notice 2. Any interested person may obtain a copy of this
evaluation by writing to NHTSA, Docket Section, Room 5109, 400 Seventh
Street, S.W., Washington, DC 20590, or by calling (202) 366-4949.
2. Paperwork Reduction Act
The information collection requirements in this proposed rule have
been submitted to and approved by the Office of Management and Budget
(OMB) pursuant to the requirements of the Paperwork Reduction Act (44
U.S.C. 3501 et seq.) This collection of information has been assigned
OMB Control Number 2127-0547 (``Insurer Reporting Requirements'') and
has been approved for use through October 31, 1996.
3. Regulatory Flexibility Act
The agency has also considered the effects of this rulemaking under
the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) I certify
that this proposed rule would not have a significant economic impact on
a substantial number of small entities. The rationale for the
certification is that none of the companies proposed to be included on
appendices A, B, or C would be construed to be a small entity within
the definition of the RFA. ``Small insurer'' is defined in part under
49 U.S.C. 33112 as any insurer whose premiums for all forms of motor
vehicle insurance account for less than one percent of the total
premiums for all forms of motor vehicle insurance issued by insurers
within the United States, or any insurer whose premiums within any
State, account for less than 10 percent of the total premiums for all
forms of motor vehicle insurance issued by insurers within the State.
This notice would exempt all insurers meeting those criteria. Any
insurers meeting those criteria is not a small entity. In addition, in
this rulemaking, the agency proposes to exempt all ``self insured
rental and leasing companies'' that have fleets of fewer than 50,000
vehicles. Any self insured rental and leasing company too large to meet
that criterion is not a small entity.
4. Federalism
This action has been analyzed in accordance with the principles and
criteria contained in Executive Order 12612, and it has been determined
that the proposed rule does not have sufficient federalism implications
to warrant the preparation of a Federalism Assessment.
5. Environmental Impacts
In accordance with the National Environmental Policy Act, NHTSA has
considered the environmental impacts of this proposed rule and
determined that it would not have a significant impact on the quality
of the human environment.
Interested persons are invited to submit comments on the proposal.
It is requested but not required that 10 copies of the comments be
submitted. All comments must not exceed 15 pages in length. (49 CFR
553.21). Necessary attachments may be appended to these submissions
without regard to the 15 page limit. This limitation is intended to
encourage commenters to detail their primary arguments in a concise
fashion.
If a commenter wishes to submit certain information under a claim
of confidentiality, three copies of the complete submission, including
purportedly confidential business information, should be submitted to
the Chief Counsel, NHTSA, at the street address given above, and seven
copies from which the purportedly confidential information deleted
should be accompanied by cover letter setting forth the information
specified in the agency's confidential business information regulation.
(49 CFR part 512).
All comments received before the close of business on the comment
closing date indicated above for the proposal will be considered, and
will be available for examination in the docket at the above address
both before and after the date. To the extent possible, comments filed
after the closing date will also be considered. Comments received too
late for consideration in regard to the final rule will be considered
as suggestions for further rulemaking action. Comments on the proposal
will be available for inspection in the docket. NHTSA will continue to
file relevant information as it becomes available in the docket after
the closing date, and it is recommended that interested persons
continue to examine the docket for new material.
Those persons desiring to be notified upon receipt of their
comments in the rules docket should enclose a self-addressed, stamped
postcard in the envelope with their comments. Upon receiving the
comments, the docket supervisor will return the postcard by mail.
List of Subjects in 49 CFR Part 544
Crime insurance, insurance, insurance companies, motor vehicles,
reporting and recordkeeping requirements.
In consideration of the foregoing, 49 CFR Part 544 is proposed to
be amended as follows:
PART 544--[AMENDED]
1. The authority citation for part 544 would be revised to read as
follows:
Authority: 49 U.S.C. 33112; delegation of authority at 49 CFR
1.50.
2. Section 544.2 Purpose. would be revised to read as follows:
Sec. 544.2 Purpose.
The purpose of these reporting requirements is to aid in
implementing and evaluating the provisions of 49 U.S.C. chapter 331
Theft Prevention to prevent or discourage the theft of motor vehicles,
to prevent or discourage the sale or distribution in interstate
commerce of used parts removed from stolen motor vehicles, and to help
reduce the cost to consumers of comprehensive insurance coverage for
motor vehicles.
3. Paragraph (a) of Sec. 544.4 Definitions would be revised to read
as follows:
Sec. 544.4 Definitions.
(a) Statutory terms. All terms defined in 49 U.S.C. 32101 and 33112
are used in accordance with their statutory
[[Page 15446]]
meanings unless otherwise defined in paragraph (b) of this section.
* * * * *
4. Paragraph (a) of Sec. 544.5 would be revised to read as follows:
544.5 General requirements for reports.
* * * * *
(a) Each insurer to which this part applies shall submit a report
annually not later than October 25, beginning on October 25, 1986. This
report shall contain the information required by Sec. 544.6 of this
part for the calendar year three years previous to the year in which
the report is filed (e.g., the report due by October 25, 1996 shall
contain the required information for the 1993 calendar year).
* * * * *
5. Appendix A to Part 544 would be revised to read as follows:
Appendix A--Insurers of Motor Vehicle Insurance Policies Subject to the
Reporting Requirements in Each State in Which They Do Business
Aetna Life & Casualty Group
Allmerica Property & Casualty Companies\1\
\1\ Indicates a newly listed company which must file a report
beginning with the report due October 25, 1996
---------------------------------------------------------------------------
Allstate Insurance Group
American Family Group
American International Group
California State Auto Association
CNA Insurance Companies
Farmers Insurance Group
Geico Corporation Group
ITT Hartford Insurance Group
Liberty Mutual Group
Metropolitan Group\1\
Nationwide Group
Progressive Group
Prudential of America Group
Safeco Insurance Companies
State Farm Group
Travelers Insurance Group
USAA Group
6. Appendix B to Part 544 would be revised to read as follows:
Appendix B--Issuers of Motor Vehicle Insurance Policies Subject to the
Reporting Requirements Only in Designated States
Alfa Insurance Group (Alabama)
Amica Mutual Insurance Company (Rhode Island)
Arbella Mutual Insurance (Massachusetts)
Auto Club of Michigan (Michigan)
Commerce Group, Inc. (Massachusetts)
Commercial Union Insurance Companies (Maine)
Concord Group Insurance Companies (Vermont)
Erie Insurance Group (Pennsylvania)
Kentucky Farm Bureau Group (Kentucky)
Nodak Mutual Insurance Company (North Dakota) \1\
\1\ Indicates a newly listed company which must file a report
beginning with the report due October 25, 1996
---------------------------------------------------------------------------
Southern Farm Bureau Casualty Group (Arkansas, Mississippi)
Tennessee Farmers Companies (Tennessee)
7. Appendix C to Part 544 would be revised to read as follows:
Appendix C--Motor Vehicle Rental and Leasing Companies (Including
Licensees and Franchisees) Subject to the Reporting Requirements of
Part 544
Alamo Rent-A-Car, Inc.
Avis, Inc.
Budget Rent-A-Car Corporation
Citicorp Bankers Leasing Corporation \1\
Dollar Rent-A-Car Systems, Inc.
Donlen Corporation \1\
Hertz Rent-A-Car Division (subsidiary of Hertz Corporation)
Lease Plan International \1\
National Car Rental System, Inc.
Penske Truck Leasing Company
Ryder System, Inc. (Both rental and leasing operations)
U-Haul International, Inc. (Subsidiary of AMERCO)
USL Capital Fleet Services \1\
\1\ Indicates a newly listed company which must file a report
beginning with the report due October 25, 1996
Issued on: April 1, 1996.
Barry Felrice,
Associate Administrator for Safety Performance Standards.
[FR Doc. 96-8357 Filed 4-5-96; 8:45 am]
BILLING CODE 4910-59-P
Complete official Federal Register PDF
FR Doc. 96-8352 Implementation of 1995 Amendments to the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978 (STCW)
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15438-15439]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8352]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
46 CFR Parts 10, 12, and 15
[CGD 95-062]
RIN 2115-AF26
Implementation of 1995 Amendments to the International Convention
on Standards of Training, Certification and Watchkeeping for Seafarers,
1978 (STCW)
AGENCY: Coast Guard, DOT.
ACTION: Notice of public meeting.
-----------------------------------------------------------------------
SUMMARY: The Coast Guard plans to hold three public meetings to solicit
input from the maritime industry and from the public at large
concerning the proposed changes to current domestic rules on licensing,
documentation, and manning in compliance with recent amendments to the
STCW. The amendments were adopted by a Conference of Parties to STCW in
July 1995, and will come into force on February 1, 1997. Some changes
to domestic rules must come into force before then to ensure these
rules conform to international requirements, and other changes may come
into force to allow a more gradual shift in practice. The proposed
changes would affect the full range of activities associated with
determining that an individual is competent for serving in certain
shipboard capacities.
DATES: The meetings will be held May 8, 14, and 23, 1996, from 9:30
a.m. to 4:00 p.m. Comments must be submitted by July 24, 1996.
ADDRESSES: The May 8, 1996, meeting will be held at the New Orleans
Airport Hilton, 901 Airline Highway, Kenner, Louisiana 70062. The May
14, 1996, meeting will be held at the Department of Commerce, Bldg. 9,
Auditorium, NOAA Western Regional Center, 7600 Sand Point Way NE,
Seattle, Washington 98115. The May 23, 1996, meeting will be held at
the Department of Transportation, Nassif Building, Room 6200, 400
Seventh Street SW., Washington, DC 20590.
Written comments may be mailed to the Executive Secretary, Marine
Safety Council (G-LRA), U.S. Coast Guard Headquarters, 2100 Second
Street SW., Washington, DC 20593-0001, or may be delivered to room 3406
at the same address between 8 a.m. and 3 p.m., Monday through Friday,
except Federal holidays. Comments will become part of this docket [CGD
95-062] and will be available for inspection or copying at room 3406,
Coast Guard Headquarters, between 8 a.m. and 3 p.m., Monday through
Friday, except Federal holidays.
A copy of the 1995 Amendments to STCW may be obtained by writing
Commandant (G-MOS), U.S. Coast Guard Headquarters, 2100 Second Street
SW., Washington, DC 20593-0001, or by calling (202) 267-0229, between 8
a.m. and 3 p.m. Monday through Friday, except Federal holidays.
Requests may also be submitted by facsimile at (202) 267-4570. For
additional information or to obtain a copy of the STCW notice of
proposed rulemaking (NPRM) [61 FR 13284], published on March 26, 1996,
contact Mr. Christopher Young, Operating and Environmental Standards
Division (G-MOS), 2100 Second Street, SW., Washington, DC 20593-0001,
telephone (202) 267-0216 or fax (202) 267-4570.
FOR FURTHER INFORMATION CONTACT:
Mr. James W. Cratty, Project Facilitator, Standards, Evaluation, and
Development Division (G-MES), U.S. Coast Guard, 2100 Second Street SW.,
Washington, DC 20593-0001, at (202) 267-6742 for public meeting
information.
SUPPLEMENTARY INFORMATION:
Background and Discussion
On July 7, 1995, a Conference of Parties to the International
Convention on Standards of Training, Certification and Watchkeeping for
Seafarers, 1978 (STCW), meeting at the International Maritime
Organization in London, adopted a package of amendments to STCW. The
amendments will enter into force on February 1, 1997, unless a third of
the parties to the Convention, or parties representing over 50 percent
of the world's shipping tons, object to them by August 1, 1996. Because
they were adopted unanimously by the Conference, no objections are
expected. Consequently, the Coast Guard is taking necessary steps to
implement them, and to ensure that U.S. documents and licenses are
issued in compliance with them.
On August 31, 1995, the Coast Guard held a public meeting announced
at [60 FR 39306; August 2, 1995] to discuss the outcome of the
Conference and seek public comment on how the 1995 Amendments to STCW,
adopted by the Conference, should be implemented. The meeting also
provided an opportunity for the public to comment on the steps that the
Coast Guard considers necessary to carry out the requirements of STCW
as amended.
In addition, the Coast Guard published a Notice of Inquiry (NI) on
November 13, in the Federal Register [60 FR 56970]. The purpose of the
NI was to seek information that may be useful in calculating costs and
benefits of implementing the 1995 Amendments to the STCW.
[[Page 15439]]
On March 26, 1996, the Coast Guard published the NPRM in which it
proposed changes to the current domestic rules on licensing,
documentation, and manning in compliance with 1995 Amendments to the
1978 STCW. The NPRM invites comments on or before July 24, 1996.
Persons needing the assistance of sign language interpretation at
the meetings should notify the person listed above under FOR FURTHER
INFORMATION CONTACT as soon as possible so that arrangements may be
made to provide the necessary assistance.
Attendance is open to the public. With advance notice, and as time
permits, members of the public may make oral presentations during the
meetings. Persons wishing to make oral presentations should notify the
person listed above under FOR FURTHER INFORMATION CONTACT no later than
48 hours before the meeting. Written material may be submitted before,
during, or after the meetings. Persons unable to attend the public
meetings are encouraged to submit written comments as outlined in the
NPRM prior to July 24, 1996.
Dated: March 29, 1996.
Joseph J. Angelo,
Director for Standards, Marine Safety and Environmental Protection
Directorate.
[FR Doc. 96-8352 Filed 4-5-96; 8:45 am]
BILLING CODE 4910-14-M
Complete official Federal Register PDF
FR Doc. 96-8283 Airworthiness Directives; Textron Lycoming 235 Series, 290 Series, and Certain 320 and 360 Series Reciprocating Engines
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Pages 15430-15432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8283]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. 94-ANE-44]
Airworthiness Directives; Textron Lycoming 235 Series, 290
Series, and Certain 320 and 360 Series Reciprocating Engines
AGENCY: Federal Aviation Administration, DOT.
ACTION: Proposed rule; extension of comment period.
-----------------------------------------------------------------------
SUMMARY: This document extends the comment period for an earlier
proposed airworthiness directive (AD), applicable to all Textron
Lycoming 235 Series and 290 Series, and certain 320 and 360 series
reciprocating engines, that proposed to require initial and repetitive
inspections of the crankshaft inner diameter (ID) for corrosion and
cracks, and replacement of cracked crankshafts with a serviceable part.
In addition, that AD proposed to permit operation of engines with
crankshafts that are found to have corrosion pits but are free of
cracks provided repetitive inspections are performed until the next
engine overhaul or 5 years after the initial inspection, whichever
occurs first, at which time crankshafts with corrosion pits but no
cracks must be replaced with serviceable crankshafts. Since publication
of that proposal, the Federal Aviation Administration (FAA) has
received numerous comments on the proposed actions, and has determined
there is a need to receive more information from the public. The FAA is
therefore allowing additional time for the public to comment and is
republishing the AD without change. The proposed actions are intended
to prevent crankshaft failure, which can result in engine failure,
propeller separation, forced landing, and possible damage to the
aircraft.
DATES: Comments must be received by June 7, 1996.
ADDRESSES: Submit comments in triplicate to the Federal Aviation
Administration (FAA), New England Region, Office of the Assistant Chief
Counsel, Attention: Rules Docket No. 94-ANE-44, 12 New England
Executive Park, Burlington, MA 01803-5299. Comments may be inspected at
this location between 8:00 a.m. and 4:30 p.m., Monday through Friday,
except Federal holidays. -
The service information referenced in the proposed rule may be
obtained from Textron Lycoming, 652 Oliver St., Williamsport, PA 17701;
telephone (717) 327-7080, fax (717) 327-7100. This information may be
examined at the FAA, New England Region, Office of the Assistant Chief
Counsel, 12 New England Executive Park, Burlington, MA.
FOR FURTHER INFORMATION CONTACT: Raymond Reinhardt, Aerospace Engineer,
New York Aircraft Certification Office, FAA, Engine and Propeller
Directorate, 10 Fifth St., Valley Stream, NY 11581-1200; telephone
(516) 256-7532, fax (516) 568-2716.
SUPPLEMENTARY INFORMATION:
Comments Invited -
Interested persons are invited to participate in the making of the
proposed rule by submitting such written data, views, or arguments as
they may desire. Communications should identify the Rules Docket number
and be submitted in triplicate to the address specified above. All
communications received on or before the closing date for comments,
specified above, will be considered before taking action on the
proposed rule. The proposals contained in this notice may be changed in
light of the comments received. -
Comments are specifically invited on the overall regulatory,
economic, environmental, and energy aspects of the proposed rule. All
comments submitted will be available, both before and after the closing
date for comments, in the Rules Docket for examination by interested
persons. A report that summarizes each FAA-public contact concerned
with the substance of this proposal will be filed in the Rules Docket.
-
Commenters wishing the FAA to acknowledge receipt of their comments
submitted in response to this notice must submit a self-addressed,
stamped postcard on which the following statement is made: ``Comments
to Docket No. 94-ANE-44.'' The postcard will be date stamped and
returned to the commenter.
Availability of NPRMs -
Any person may obtain a copy of this NPRM by submitting a request
to the FAA, New England Region, Office of the Assistant Chief Counsel,
Attention: Rules Docket No. 94-ANE-44, 12 New England Executive Park,
Burlington, MA 01803-5299.
Discussion -
On October 18, 1993, the Civil Aviation Authority (CAA), which is
the airworthiness authority of the United Kingdom, received a report
that a Piper PA-28-161 aircraft, with a Textron Lycoming O-320-D3G
reciprocating engine executed a forced landing due to an engine
crankshaft failure which caused the propeller to separate from the
aircraft. The cause of the crankshaft failure was determined to be due
to a high cycle reverse torsional fatigue mechanism that had initiated
from a number of corrosion pits in the crankshaft bore. After the
cracks had progressed through a substantial proportion of the
crankshaft section, the rate of advance had increased until the
remaining unseparated portion had failed as a result of overload. The
cracking occurred in high cycle fatigue and it had progressed over an
extended period of service. At the time of the accident the engine had
operated for 1,950 hours time in service (TIS) since overhaul and had
accumulated 4,429 hours TIS since new over a period of 16 years. In
addition, the Federal Aviation Administration (FAA) has received
reports of ten additional instances of cracks or failures of the
crankshaft behind the propeller flange on various Textron Lycoming
reciprocating engines due to cracks initiating from corrosion pits in
the crankshaft bore. This condition, if not corrected, could result in
crankshaft failure, which can result in engine failure, propeller
separation, forced landing, and possible damage to the aircraft. -
A proposal to amend part 39 of the Federal Aviation Regulations (14
CFR part 39) to include an AD that would apply to Textron Lycoming 235
Series and 290 Series, and certain 320 and 360 series reciprocating
engines was published in the Federal Register on
[[Page 15431]]
November 28, 1995 (60 FR 58580). The action proposed to require initial
and repetitive inspections of the crankshaft inner diameter (ID) for
corrosion and cracks, and replacement of cracked crankshafts with a
serviceable part. In addition, that AD proposed to permit operation of
engines with crankshafts that are found to have corrosion pits but are
free of cracks provided repetitive inspections are performed until the
next engine overhaul or 5 years after the initial inspection, whichever
occurs first, at which time crankshafts with corrosion pits but no
cracks must be replaced with serviceable crankshafts. The proposed
actions would be performed in accordance with Textron Lycoming
Mandatory Service Bulletin (MSB) No. 505A, dated October 18, 1994.
However, the FAA has determined that additional inspections via
Fluorescent Penetrant Inspection (FPI) are warranted if corrosion pits
are found. The FPI inspection was developed due to reports from
Lycoming and other approved repair stations that most of the
crankshafts that are pitted do not contain cracks. The FPI inspection
was based on crack propagation data developed by the FAA in conjunction
with Textron Lycoming and the technical base in the U.S. for performing
Non-Destructive Inspections. The FPI process has been shown to be
reliable to detect cracks down to 0.050 inches deep and 0.100 inches
long. The FPI inspection interval was based on the crack propagation
data and the detection of a crack before the crankshaft failed. If a
crankshaft is found to be pitted on-wing, it is not recommended that
removal of metal be permitted to remove the corrosion pits due to
possible contamination of the engine oil supply with metal filings and
also to ensure the concentricity of the crankshaft is not compromised.
Interested persons have been afforded an opportunity to participate in
the making of this amendment. The FAA has received numerous comments on
the proposed rule and the FAA's determination of the cost to the
public. The FAA has determined there is a need to receive more
information from the public. The FAA is therefore allowing additional
time for the public to comment. All comments received will be addressed
in the final rule. -
There are approximately 77,100 engines of the affected design in
the worldwide fleet. The FAA estimates that 46,260 engines installed on
aircraft of U.S. registry would be affected by this proposed AD, that
it would take approximately 4 work hours per engine to accomplish the
proposed inspection, and that the average labor rate is $60 per work
hour. The estimated cost impact for the proposed inspections would be
$11,102,400. The FAA estimates 10% of the crankshafts will require
replacement at engine overhaul due to corrosion pits, and that it would
take 32 work hours per engine to replace pitted crankshafts. Required
parts would cost approximately $4,742 per engine. The estimated cost
for replacement of 10% of the crankshafts annually would be $3,081,841.
-
The regulations proposed herein would not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this
proposal would not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this proposed
regulation (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under the DOT
Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
and (3) if promulgated, will not have a significant economic impact,
positive or negative, on a substantial number of small entities under
the criteria of the Regulatory Flexibility Act. A copy of the draft
regulatory evaluation prepared for this action is contained in the
Rules Docket. A copy of it may be obtained by contacting the Rules
Docket at the location provided under the caption ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Safety.
The Proposed Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration proposes to amend
part 39 of the Federal Aviation Regulations (14 CFR part 39) as
follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 USC 106(g), 40113, 44701.
39.13 [Amended]
2. Section 39.13 is amended by adding the following new
airworthiness directive:
Textron Lycoming: Docket No. 94-ANE-44.
Applicability: Textron Lycoming 235 series, 290 series, 320
series except model O-320-B2C installed in helicopters, and 360
series except models O-360-A4G, -A4J, -A4K, -A4M, -C4F, -AEIO-360-
B4A, HO-360 series, HIO-360 series, LHIO-360 series, VO-360 series,
and IVO-360 series, four-cylinder reciprocating engines with fixed
pitch propellers. These engines are installed on but not limited to
reciprocating engine powered aircraft manufactured by Cessna, Piper,
Beech, American Aircraft Corporation, Grumman American Aviation,
Mooney, Augustair Inc., Maule Aerospace Technology Corporation,
Great Lakes Aircraft Co., and Commander Aircraft Co.
Note: This airworthiness directive (AD) applies to each engine
identified in the preceding applicability provision, regardless of
whether it has been modified, altered, or repaired in the area
subject to the requirements of this AD. For engines that have been
modified, altered, or repaired so that the performance of the
requirements of this AD is affected, the owner/operator must use the
authority provided in paragraph (f) to request approval from the
Federal Aviation Administration (FAA). This approval may address
either no action, if the current configuration eliminates the unsafe
condition, or different actions necessary to address the unsafe
condition described in this AD. Such a request should include an
assessment of the effect of the changed configuration on the unsafe
condition addressed by this AD. In no case does the presence of any
modification, alteration, or repair remove any engine from the
applicability of this AD.
-Compliance: Required as indicated, unless accomplished
previously.
To prevent crankshaft failure, which can result in engine
failure, propeller separation, forced landing, and possible damage
to the aircraft, accomplish the following:
(a) For new engines shipped from Textron Lycoming prior to and
including December 31, 1984, that have never been overhauled, or any
remanufactured or overhauled engines that have accumulated 1,000
hours or more time in service (TIS) since remanufacture or overhaul,
initially inspect the inner diameter (ID) of the crankshaft for
corrosion pits within the next 100 hours TIS after the effective
date of this AD, or 6 months after the effective date of this AD,
whichever occurs first, in accordance with Textron Lycoming
Mandatory Service Bulletin (MSB) No. 505A, dated October 18, 1994.
The propeller, if installed, must be removed in accordance with the
aircraft manufacturer's procedures to perform this inspection. If
corrosion pits are found during this inspection, perform a
Fluorescent Penetrant Inspection (FPI) in accordance with paragraph
(e) of this AD.
(b) For new engines shipped from Textron Lycoming after December
31, 1984, that have never been overhauled, or any remanufactured or
overhauled engines that have accumulated less than 1,000 hours TIS
since remanufacture or overhaul, initially inspect the ID of the
crankshaft for corrosion pits, at intervals specified in
subparagraphs (1) through (3) of this paragraph, whichever occurs
first, in accordance with Textron
[[Page 15432]]
Lycoming MSB No. 505A, dated October 18, 1994. The propeller, if
installed, must be removed in accordance with the aircraft
manufacturer's procedures to perform this inspection. If corrosion
pits are found during this inspection, perform an FPI in accordance
with paragraph (e) of this AD.
(1) At the next engine overhaul or disassembly.
(2) Within 10 years of the original ship date or 6 months from
the effective date of this AD, whichever occurs later.
(3) At 1,000 hours TIS since remanufacture or overhaul, or 6
months from the effective date of this AD, whichever occurs later.
(c) Thereafter, if no corrosion pits are found on the ID of the
crankshaft during the initial inspection, perform an inspection at
intervals not to exceed 5 years since last inspection or at the next
engine overhaul or disassembly, whichever occurs first, in
accordance with Textron Lycoming MSB No. 505A, dated October 18,
1994. If corrosion pits but no cracks are found on the ID of the
crankshaft during the initial inspection, repeat the FPI at
intervals not to exceed 100 hours TIS since last FPI inspection, 5
years from the initial inspection that detected the corrosion pits,
or next engine overhaul, whichever occurs first.
(d) Prior to further flight, remove from service and replace
with a serviceable part the following:
(1) Crankshafts found cracked during FPI outlined in paragraph
(e) of this AD.
(2) Crankshafts that have corrosion pits but no cracks, which
are on a repetitive inspection cycle and have attained 5 years from
the initial inspection that detected the corrosion pits, in
accordance with Textron Lycoming MSB No. 505A, dated October 18,
1994.
(3) Crankshafts that have corrosion pits but no cracks, which
are being overhauled.--
(e) An engine as installed in the aircraft having a corroded
crankshaft may be returned to service without disassembly provided
an FPI confirms the bore to be crack free. The process and materials
utilized for the FPI are in accordance with the classification
contained in MIL-I-25135. The FPI must be fluorescent solvent
removable (Method C) utilizing a Type 1 penetrant system with a
penetrant sensitivity Level 3 or higher and a Form D-Nonaqueous
Developer. Spray containers of the materials are acceptable for this
inspection. Personnel performing the FPI that are making accept/
reject decisions shall be qualified to at least Level II in liquid
penetrant inspection in accordance with MIL-STD-410E, dated January
25, 1991 or a similar certification system assuring the competence
of the inspector. This FPI process involves the removal of penetrant
material from the inspection surface. Caution must be used to ensure
that contaminants from the cleaning process and the FPI do not enter
the engine oil supply by blocking off the area of the crankshaft
bore that is aft of the area being inspected by using a clean, dry,
lint-free cloth. The FPI must be performed using the following
steps:
(1) Cleaning--The crankshaft bore surface must be cleaned of
visible corrosion prior to the FPI process using Scotchbrite or an
equivalent material. Metal-removing processes must not be used for
visible corrosion cleaning. In addition, clean all surfaces to be
inspected utilizing a cleaner, such as Magnaflux Spot Check Cleaner/
Remover SKC-NF or equivalent, on the ID of the crankshaft bore. Let
the cleaner/remover dry for 5 minutes minimum. Wipe clean with a
lint-free cloth.
(2) Penetrant Application--Spray penetrant, such as ZYGLO ZL-22A
Magnaflux Corp. or equivalent Type 1 with a penetrant sensitivity
Level 3 or higher, on the ID bore.
(3) Penetrant Dwell--Allow a minimum of 10 minutes dwell. For
dwell times exceeding 60 minutes the penetrant shall be reapplied to
prevent drying.
(4) Penetrant Removal-- Remove all bulk surface penetrant by
wiping with a clean, dry lint-free cloth. Make a single wipe and
then fold the cloth to provide a clean surface for succeeding wipes.
(i) Solvent Wipe--After the bulk of the surface penetrant has
been removed, lightly moisten a fresh lint-free cloth with cleaner/
remover and again wipe the surface. The cloth must not be saturated
and the inspection surface must not be flooded with solvent.
Excessive solvent will wash penetrant from defects.
(ii) During wiping, the inspection surface shall be illuminated
with black light. Repeat the solvent wipe as necessary until no
residual trace of penetrant remains on the inspection surface.
(5) Nonaqueous Developer (solvent suspended)--Following the
cleaner/remover wipe apply nonaqueous developer by spraying a
developer, such as Magnaflux Spot Check Developer SKD-NF or Form D-
Nonaqueous equivalent, on the ID bore. Apply a thin uniform layer to
the bore surface. The optimum coating thickness is indicated by the
visibility of the part surface. If the metallic luster cannot be
seen the developer is too thick.
(6) Dwell--Developer dwell is required to allow the developer
time to draw entrapped penetrant from any small defects. The minimum
development time shall be 10 minutes. The maximum dwell time for
nonaqueous developer shall be 60 minutes.
(7) Inspection shall be performed within the allotted dwell
time. Components that are not inspected within the allotted dwell
time must be reprocessed.
(i) Examine crankshaft bore in a darkened enclosure under
ultraviolet (black) light. Allow 1 minute for eyes to adapt to
darkened environment prior to inspecting crankshaft bore. Use of
photochromic lenses or permanent darkened lenses is prohibited.
(ii) During inspection make sure that the black light intensity
is a minimum of 1200 microwatts/cm\2\ at the bore surface. This can
be accomplished by positioning the black light as close as necessary
to the bore to achieve 1200 microwatts/cm\2\. White light background
shall not exceed 20 1x/m\2\ (2 foot-candles). A photographic light
meter may be used to determine the white light background reading.
(iii) Crankshaft bores having no crack indications are
acceptable.--
(iv) Magnification (10X maximum) and/or white light may be used
to determine discontinuity type. Indications, on parts exhibiting
fluorescent background which interferes with evaluation of
questionable indications, shall be evaluated as follows:
(A) Lightly wipe the area once with a soft brush or cotton swab
applicator dampened with ethyl alcohol. Do not permit alcohol to
flood the surface.
(B) After the alcohol evaporates from the surface, re-inspect.
If an indication reappears, evaluate it immediately. If the
indication does not reappear, reapply developer. The redevelopment
time shall equal the original development time. Thereafter, re-
inspect.
(8) After inspection, clean residual penetrants and developers
from crankshaft bore. Ensure lint-free cloth is removed from
crankshaft bore prior to installing front crankshaft plug. Failure
to do so may result in oil restriction within the engine and in turn
cause engine failure.
(f) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, New York Aircraft Certification
Office. The request should be forwarded through an appropriate FAA
Maintenance Inspector, who may add comments and then send it to the
Manager, New York Aircraft Certification Office.
Note: Information concerning the existence of approved
alternative methods of compliance with this airworthiness directive,
if any, may be obtained from the New York Aircraft Certification
Office.
(g) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the aircraft to a location where
the requirements of this AD can be accomplished.
Issued in Burlington, Massachusetts, on March 25, 1996.
Jay J. Pardee,
Manager, Engine and Propeller Directorate, Aircraft Certification
Service.
[FR Doc. 96-8283 Filed 4-5-96; 8:45 am]
BILLING CODE 4910-13-P
Complete official Federal Register PDF
FR Doc. 96-8123 Radio Broadcasting Services; Sibley, IA, and Brandon, SD
[Federal Register Volume 61, Number 68 (Monday, April 8, 1996)]
[Proposed Rules]
[Page 15442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8123]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 96-66; RM-8729]
Radio Broadcasting Services; Sibley, IA, and Brandon, SD
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Commission requests comments on a petition by 21st Century
Radio Ventures, Inc., permittee of Station KAJQ(FM), Channel 262A,
Sibley, Iowa, seeking the substitution of Channel 261C3 for Channel
262A, the reallotment of Channel 261C3 from Sibley, Iowa, to Brandon,
South Dakota, and the modification of Station KAJQ(FM)'s construction
permit to specify Brandon as the station's community of license.
Channel 261C3 can be allotted to Brandon in compliance with the
Commission's minimum distance requirements with a site restriction of
5.4 kilometers (3.4 miles) east to accommodate's 21st's desired site.
The coordinates for Channel 261C3 at Brandon are 43-36-02 and 96-31-15.
In accordance with Section 1.420(i) of the Commission's Rules, we will
not accept competing expressions of interest in use of Channel 261C3 at
Brandon or require the petitioner to demonstrate the availability of an
additional equivalent class channel for use by such parties.
DATES: Comments must be filed on or before May 21, 1996, and reply
comments on or before June 5, 1996.
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: James
L. Primm, President, 21st Century Radio Ventures, Inc., 530 Wilshire
Boulevard, Suite 301, Santa Monica, California 90401 (Petitioner).
FOR FURTHER INFORMATION CONTACT: Pam Blumenthal, Mass Media Bureau,
(202) 418-2180.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rule Making, MM Docket No. 96-66, adopted March 11,
1996, and released March 29, 1996. The full text of this Commission
decision is available for inspection and copying during normal business
hours in the FCC'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, ITS, Inc., (202) 857-
3800, 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,
Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-8123 Filed 4-5-96; 8:45 am]
BILLING CODE 6712-01-F
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