[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Proposed Rules]
[Pages 42722-42725]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20697]
[[Page 42721]]
_______________________________________________________________________
Part IV
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Secretary
_______________________________________________________________________
24 CFR Part 10
Rulemaking Policies and Procedures; Proposed Removal of Part 10;
Proposed Rule
Federal Register / Vol. 61, No. 160 / Friday, August 16, 1996 /
Proposed Rules
[[Page 42722]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Secretary
24 CFR Part 10
[Docket No. FR-3292-P-04]
RIN 2501-AB43
Rulemaking Policies and Procedures; Proposed Removal of Part 10
AGENCY: Office of the Secretary, HUD.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: Part 10 of HUD's regulations, commonly known as HUD's ``Rule
on Rules,'' contains HUD's policies and procedures for the promulgation
and issuance of rules, including the use of public participation in the
rulemaking process. This rule proposes to remove part 10 and replace
this part with an uncodified policy statement, published in the Federal
Register, that would advise the public of HUD's policies and procedures
regarding rulemaking. This rule also proposes to revise HUD's
rulemaking policies by removing the commitment to undertake notice and
comment rulemaking for those matters that are exempt from notice and
comment rulemaking under the Administrative Procedure Act. HUD's
proposed statement of regulatory policies and procedures is part of
this notice of proposed rulemaking.
DATES: Comments Due Date: October 15, 1996.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the Office of the General Counsel, Rules Docket
Clerk, Room 10276, Department of Housing and Urban Development, 451
Seventh Street, SW, Washington, DC 20410-0500. Communications should
refer to the above docket number and title and to the specific sections
in the regulation. Facsimile (FAX) comments are not acceptable. A copy
of each communication submitted will be available for public inspection
and copying during regular business hours at the above address.
FOR FURTHER INFORMATION CONTACT: Camille E. Acevedo, Assistant General
Counsel for Regulations, Office of General Counsel; Room 10276; U.S.
Department of Housing and Urban Development; 451 Seventh Street, SW;
Washington, DC 20410-0500; telephone (202) 708-3055. Hearing or speech-
impaired individuals may call HUD's TTY number 1-800-877-8399 (Federal
Information Relay Service). (The ``800'' number is a toll-free number,
the ``708'' number is not toll-free.)
SUPPLEMENTARY INFORMATION:
I. Background
Part 10 establishes HUD's policy of affording public participation
in the Department's rulemakings, gives notice of the location of HUD's
Rules Docket, and sets forth procedures for HUD rulemakings, including
the public's right to petition for rulemaking. In promulgating part 10,
HUD, along with several other Federal agencies during this same time
period, responded to public sentiment to the effect that agencies
administering loan and grant programs, which are exempt from notice and
comment rulemaking under 5 U.S.C. 553 (the Administrative Procedure
Act, (APA)), should not exclude themselves from comparable limitations
on their authority to promulgate regulations.1
---------------------------------------------------------------------------
\1\ Part 10 was initially issued on December 22, 1971 (36 FR
24423), and underwent several revisions. Part 10, as currently
codified, was promulgated on January 5, 1979 (44 FR 1606). With
respect to similar rules and policies of other agencies, see the
notice of the Department of Agriculture, published on July 24, 1971
(36 FR 13804); the notice of the Department of Health and Human
Services, published on February 5, 1971 (36 FR 2532); the notice of
the Department of the Interior, published on May 5, 1971 (36 FR
8336); the notice of the Small Business Administration, published on
August 25, 1971 (36 FR 16716); the rule of the Department of
Defense, published on February 3, 1975 (40 FR 4911, redesignated at
41 FR 27074 on July 1, 1976, and redesignated and amended at 56 FR
64482 on December 10, 1991, see 32 CFR part 336); the notice of the
Department of Transportation, published on February 26, 1979 (44 FR
11034); and the rule of the Department of Labor, published on
January 2, 1981 (46 FR 35) concerning 29 CFR part 2.
---------------------------------------------------------------------------
There were two recent efforts by HUD to amend the policies and
procedures in part 10.
November 14, 1991 Proposed Rule. On November 14, 1991 (56 FR
57869), HUD published a proposed rule entitled ``Rulemaking Policies
and Procedures--Public Comment Periods.'' Through this rule, HUD
proposed to reduce the 60-day public comment period it required for all
rules under part 10. The November 14, 1991 proposed rule would have
permitted HUD discretion in establishing the period for public comment
on rules in a manner similar to that permitted by the APA. The rule
would continue to provide for 60-day public comment period as the norm
for HUD rulemaking, but would allow for a minimum of 30 days upon a
finding of good cause. HUD received 21 public comments on this rule.
The majority of the commenters opposed the rule.
October 14, 1992 Proposed Rule. On October 14, 1992 (57 FR 47166),
HUD published a proposed rule entitled, ``Rulemaking Policies and
Procedures--Expediting Rulemaking and Policy Implementation''. Relying
on the exemption from notice and comment rulemaking in the APA for
matters involving public property, loans, grants, benefits or contracts
(the ``proprietary'' exemption), the October 14, 1992 proposed rule
would have amended part 10 to dispense with notice and comment
rulemaking, except where required by statute.
The October 14, 1992 proposed rule provided two discretionary
grounds for employing advance notice and comment to the public: (1)
where HUD determined it to be ``essential for the formulation of the
rule,'' or (2) necessary to ``enhance'' the rulemaking where ``time is
not of the essence.'' HUD received 77 comments on the proposed rule.
The majority of the commenters opposed the rule's attempt to curtail
the use of advance notice and opportunity for comment. The reasons for
objecting to curtailing notice and comment rulemaking varied, but the
overwhelming reason was that the commenters believe that public input
makes for a better rule.
The 1991 and 1992 proposed rules are withdrawn by this proposed
rule.
II. This Proposed Rule
This rule proposes to remove part 10 from HUD's regulations, and
replace part 10 with an uncodified policy statement, published in the
Federal Register, that would advise the public of HUD's policies and
procedures regarding regulations. This rule also proposes to remove
from HUD's rulemaking policies its commitment to undertake notice and
comment rulemaking for matters that are exempt from notice and comment
rulemaking under the APA.
A. Proposed Removal of Part 10
On March 4, 1995, President Clinton issued a directive to all
Federal agencies to eliminate obsolete and unnecessary regulations and
to streamline the remaining regulations to ensure that they are
``smart'' rules, rules that are sensible, understandable, cost-
effective, customer friendly, and minimally burdensome. In response to
the President's directive, HUD conducted a line-by-line review of its
regulations, and submitted two reports to the President outlining the
Department's strategy for achieving the President's regulatory
objectives. One of the principles of this review was that only matters
that were required to be promulgated by regulation would be codified.
To the maximum extent possible, HUD would find alternative, legally
permissible means of informing
[[Page 42723]]
the public of its policies and procedures.
In furtherance of the President's directive, HUD proposes to remove
part 10 from its codified regulations, and to include HUD's rulemaking
policies and procedures in a statement of policy to be published in the
Federal Register. Several agencies have set forth their rulemaking
policies and procedures in uncodified Federal Register documents, and
through this document HUD proposes to do the same. (See footnote 1 in
this preamble, and also see the more recently issued notice of the Farm
Credit Administration on its rulemaking policies, published on May 16,
1995, 60 FR 26034.) HUD's ``Statement of Regulatory Policies and
Procedures'' will be published in the Federal Register after taking
into consideration the public comments received on this proposed rule,
and the proposed Statement of Regulatory Policies and Procedures,
contained in Section III of this preamble.
B. Proposed Removal of Commitment to Undertake Notice and Comment
Rulemaking in All Matters
With the exception of the removal of the commitment to undertake
notice and comment rulemaking in all matters, HUD is not proposing to
make significant changes in its rulemaking policies and procedures. On
the matter of notice and comment rulemaking, HUD would continue to be
governed by the two general statutory authorities that currently govern
HUD rulemakings: (1) section 552 of the APA (5 U.S.C. 552); and (2)
section 553 of the APA (5 U.S.C. 553). Additionally, HUD, along with
the other Federal agencies, must adhere to any regulatory principles
and procedures adopted by the President through executive order or
other Presidential document (such as Presidential memorandum).
1. Authorities Governing Rulemaking
Section 552. Section 552(a)(1) of the APA, the public information
section of the APA, requires each Federal agency to publish in the
Federal Register several types of documents, including ``substantive
rules of general applicability'' and ``statements of policy.'' Failure
to publish a rule may result in its being unenforceable against the
public. Section 552 requires HUD to have a regulatory structure based
on regular publication of rules and policies in the Federal Register.
The publication requirements of section 552 apply to all rules, even
those subject to the ``proprietary'' exemption from advance public
participation set forth in section 553.
Section 553. Section 553, the APA's informal rulemaking provision,
specifies the situations in which the public must be given advance
notice and an opportunity to comment on proposed regulations. Section
553(a)(1) contains an exception to this requirement for matters
relating to ``public property, loans, grants, benefits, or
contracts''--the so-called ``proprietary'' exemption. Rules that do not
qualify for the ``proprietary'' exemption or other section 553
exemptions must provide for advance notice and opportunity to comment,
unless notice and comment are ``impracticable, unnecessary, or contrary
to the public interest.''
Many HUD programs are grant, loan and benefit programs (such as
HUD's Federal Housing Administration programs, Government National
Mortgage Association programs, Community Development Block Grant
programs, and public and Indian housing programs) and fit within the
proprietary exemption. However, other HUD programs or other HUD
responsibilities do not qualify for the ``proprietary'' exemption.
These include such ``regulatory'' authorities as the Real Estate
Settlement Procedures Act (RESPA), Manufactured Home Standards,
Interstate Land Sales, Lead-Based Paint Abatement, and possibly certain
authorities under the Fair Housing Act.
Executive Order 12866. In addition to the APA, HUD would continue
to be governed by President Clinton's Executive Order 12866 on
Regulatory Planning and Review (issued September 30, 1993, and
published on October 4, 1993, 58 FR 51735). Section 6(a)(1) of the
Executive Order contains the following guidance on public participation
in rulemaking:
Each agency shall (consistent with its own rules, regulations,
or procedures) provide the public with meaningful participation in
the regulatory process. In particular, before issuing a notice of
proposed rulemaking, each agency should, where appropriate, seek the
involvement of those who are intended to benefit from and those
expected to be burdened by any regulation .... In addition, each
agency should afford the public a meaningful opportunity to comment
on any proposed regulation, which in most cases should include a
comment period of not less than 60 days.
The Executive Order imposes a clear and affirmative obligation on
Federal agencies to ensure the public's meaningful participation in the
development of agency rules. Specifically, the Executive Order
encourages public participation before agencies' issuance of a notice
of proposed rulemaking, where appropriate.
In response to this provision in the Executive Order, HUD has
conducted a number of meetings with members of the public, formal and
informal, to solicit public guidance early in the rulemaking process.
HUD's Fiscal Year 1995 Regulatory Plan, published on November 14, 1994
(59 FR 57087), contains several examples of rules in which HUD sought
the input of affected members, through informal meetings or public
meetings, before a proposed rule was published. These examples included
HUD's Consolidated Plan rule, the Section 3 (Economic Opportunities for
Low- and Very Low-Income Persons) rule, the Indian Housing
Consolidation Regulation rule, the Noncitizens rule, and the Public
Housing Management Assessment rule. Additional examples of rules in
which HUD solicited public comment before issuance of the rule, that
have occurred since publication of the November 1994 Regulatory Plan,
include HUD's Significant Facilities and Services rule (four public
meetings were held), the Occupancy Standards rule (three informal
meetings were held), and the Mortgagee Review Board regulation.
In addition, under President Clinton's Executive Order, HUD has
published one rule developed through the negotiated rulemaking process
and is currently involved in its second negotiated rulemaking. HUD's
first negotiated rulemaking entitled ``Low-Income Public and Indian
Housing--Vacancy Rule'' was published as a proposed rule on July 19,
1995 (60 FR 37294), and the final rule was published on February 28,
1996 (61 FR 7586). HUD's second negotiated rulemaking addresses the
subject of the treatment of certain fees received by mortgage brokers
and other retail lenders under the Real Estate Settlement Procedures
Act (RESPA), and the Negotiated Rulemaking Advisory Committee has been
formed and is meeting regularly to address the issues involved in this
rulemaking.
Negotiated rulemaking is a process that brings together all the
interests affected by a rule and seeks to reach a consensus policy, and
is strongly encouraged by this Administration. HUD anticipates
increased use of this effective mechanism for ensuring early and
meaningful public participation.
2. Limitations on Notice and Comment Rulemaking
In adopting the proprietary exemption in section 553 of the APA,
the Congress recognized from the outset the additional time that notice
and
[[Page 42724]]
comment rulemaking in the areas of public property, loans, grants,
benefits and contracts would involve, and that given the subject areas
involved, agencies have a legitimate and recognizable need to make
loans, grants or other benefits available to the affected public more
quickly than notice and comment rulemaking allows (even under the most
efficient rulemaking procedures). In adopting the proprietary exemption
in section 553, the Congress found that agencies were justified in
proceeding without notice and comment rulemaking in proprietary matters
and that no further justification on the part of the agency is required
for dispensing with notice and comment rulemaking on proprietary
matters.
HUD believes that the removal of its commitment to undertake
advance notice and comment rulemaking in all matters would not result
in a significant diminution of public participation in HUD rulemakings.
HUD's use of notice and comment rulemaking has become more targeted
over the years, more focused on situations in which public
participation is most valuable. Concomitantly, HUD also has focused on
situations in which advance notice should be waived for good cause.
Working within the existing part 10 over the years, HUD has identified
several ``good cause'' exceptions to part 10's advance participation
requirements, and these are as follows:
a. Rules involving little or no discretion. Notice and comment
rulemaking is not required where implementation of the applicable
statutory provision allows for minimal, if any, agency discretion. This
includes so-called ``self-executing'' laws. The rationale is that
public comment is only of value where there is a significant amount of
discretion involved in the rulemaking. Typically, matters falling into
this category are implemented by informal means (such as handbooks and
HUD notices), followed by a conforming final rule, if a rule is
required to be published by section 552 of the APA or part 10.
b. ``Temporary programs.'' Notice and comment rulemaking is not
required for demonstrations, pilot programs, and similar temporary
programs. The rationale is that demonstrations and other temporary
programs are presumed not to contemplate the delay inherent in notice
and comment rulemaking, and because they are temporary programs, they
are not intended to be permanently codified. These types of programs
are typically implemented by non-regulatory means, such as a notice of
funding availability (NOFA) or, if sufficiently directed, a contract
with the recipient.
c. Provisions in appropriations acts. Notice and comment rulemaking
is not required for new programs or amendments that are included in
appropriations acts and that apply for one year only (the statutory
directives are only applicable for one year) or are tied to specific
appropriation funds. The rationale is that by tying these authorities
to specific time periods and appropriation funds, the Congress can be
presumed to have intended their immediate implementation, without the
delay attendant to notice and comment rulemaking. These provisions are
typically implemented by informal means, such as notices of funding
availability (NOFAs) and other notices.
d. Authorizing legislation with funding. Notice and comment
rulemaking is not required for recently enacted authorizing legislation
that requires a rulemaking to implement the legislative authority, and
that has funding for the first time. The assumption is that by funding
such a program, the Congress intends the program to be up and running
as soon as possible, and does not envision a two-stage rulemaking
process that could unduly delay funding distribution, even under the
most efficient rulemaking processes. These programs can be implemented
in a variety of ways, including by interim rule or by NOFA accompanied
by a proposed rule.
e. Statutory deadlines. With increasing frequency, HUD authorizing
statutes contain specific deadlines for the issuance of implementing
regulations. Where compliance with a deadline does not permit use of
two-stage rulemaking, implementation is permitted by interim rulemaking
to ensure that the rule takes effect within the prescribed deadline.
f. Statutory rulemaking directives. Over the years, the Congress
has become increasingly directional about the use of public
participation in HUD rulemakings. In some cases, Congress has mandated
notice and comment rulemaking for specific provisions or entire titles
or subtitles of authorizing statutes.2 In other cases, the
Congress has provided for implementation by interim rule, with public
participation after rule effectiveness.3 In still other cases, the
Congress has provided for implementation by non-regulatory means.4
Finally, the Congress has increasingly called for the effectiveness of
statutory provisions without regard to HUD rulemaking.5
---------------------------------------------------------------------------
\2\ See, for example, the following provisions of: (1) the
Housing and Community Development Act of 1992 (Pub.L. 102-550,
approved October 28, 1992): sec. 191 (title I), sec. 222 (title II),
sec. 332 (title III), and sec. 685 (title VI); and (2) sec. 103(h)
of the Multifamily Housing Property Disposition Reform Act of 1994
(Pub.L. 103-233, approved April 11, 1994) (notice/proposed rule for
alternative uses for prevention of mortgage defaults).
\3\ See, for example, sec. 101(f) of the Multifamily Housing
Property Disposition Reform Act of 1994 (Pub. L. 103-233) (interim
rule to implement property disposition reforms) and sec. 332 of the
Housing and Community Development Act of 1992 (Pub. L. 102-550)
(interim rule for title III).
\4\ See, for example, the following provisions of the HUD
Demonstration Act of 1993 (Pub. L. 103-120): sec. 2(c)(6)
(noncompetitive selection in innovative homeless program) and secs.
4(d) and 6(e) (notices to implement the NCDI and pension fund
initiatives).
\5\ See, for example, sec. 2 of the Housing and Community
Development Act of 1992 (Pub. L. 102-550) and sec. 113 of H.R. 2046
(104th Cong., 1st Sess.), the United States Housing Act of 1995.
---------------------------------------------------------------------------
Because of HUD's interpretation of part 10 and the increasing
incidence of Congressional direction of regulatory policy, the areas
subject to HUD's use of notice and comment rulemaking under part 10
have considerably narrowed over the years. The Department recognizes
the importance of public participation in the remaining situations, and
is committed to ensuring the public is given meaningful participation
in those matters as required by the APA.
The Department believes that the commitment to undertake notice and
comment rulemaking in all matters, even those exempt by the APA from
advance notice and comment, is not necessary and, as shown by the
preceding discussion, is not always practicable. Additionally, the
Department believes that its policies regarding rulemaking need not be
codified in the Code of Federal Regulations. These policies may be set
forth by notice that is published in the Federal Register, as several
other agencies have done.
III. HUD's Proposed Statement of Regulatory Policies and Procedures
The following sets forth HUD's proposed Statement of Regulatory
Policies and Procedures.
Statement of Regulatory Policies and Procedures
A. Policy
The Department of Housing and Urban Development will develop
regulations consistent with the Administrative Procedure Act (APA), the
Department of Housing and Urban Development Act, and any other statute,
executive order, or Administration directive that contains specific
rulemaking directions applicable to
[[Page 42725]]
HUD. HUD will promulgate regulations where required by statute, or
necessary to interpret the law, or to promote the objectives of the
agency. To achieve its objective, HUD will:
1. Strive to ensure that each regulation has a well-defined
objective.
2. Promulgate regulations that, to the extent feasible, specify
performance criteria and objectives rather than command and control
requirements.
3. Issue regulations that are clear and easy to understand to all
who may be affected by the regulation, and that are as brief and
uncomplicated as possible.
4. Issue regulations that have been developed giving adequate
consideration to regulatory alternatives, and that have been developed
based on a reasoned determination of the costs and benefits involved in
the regulation.
5. Coordinate its rulemaking with other agencies to eliminate or
minimize unnecessary duplication of regulations or inconsistency.
6. Provide for public participation in the rulemaking consistent
with the APA and all other applicable statutes and executive orders,
and provide meaningful public participation in the development of the
rule at the earliest stage possible.
HUD will consider these principles as it develops new regulations
and as it reviews existing regulations to determine whether the
regulations continue to be necessary and effective.
B. Rules Docket
1. All Federal Register documents and records of published
documents are maintained in the Office of the Rules Docket Clerk, Room
10276, Department of Housing and Urban Development, 451 Seventh Street,
SW, Washington, DC 20410.
2. All public comments on Federal Register documents should refer
to the docket number appearing in the heading of the rule, and should
be addressed to the Rules Docket Clerk.
3. Federal Register documents are public records. After a docket is
established, any person may examine docketed materials, including
public comments, at any time during regular business hours, and may
obtain a copy of any docketed material.
C. Petitions for Rulemaking
1. Any interested person may petition the Secretary for the
issuance, amendment, or repeal of a rule. Each petition shall:
a. Be submitted to the Rules Docket Clerk, Room 10276, Department
of Housing and Urban Development, Washington, DC 20410.
b. Set forth the text or substance of the rule or amendment
proposed or specify the rule sought to be repealed;
c. Explain the interest of the petitioner in the action sought; and
d. Set forth all data and arguments available to the petitioner in
support of the action sought.
2. No public procedures will be held directly on the petition
before its disposition. If the Secretary finds that the petition
contains adequate justification, a rulemaking proceeding will be
initiated or a final rule will be issued, as appropriate. If the
Secretary finds that the petition does not contain adequate
justification, the petition will be denied by letter or other notice,
with a brief statement of the ground for denial. The Secretary may
consider new evidence at any time; however, repetitious petitions for
rulemaking will not be considered.
D. Additional Rulemaking Proceedings
The Secretary may invite interested persons to present oral
arguments, appear at informal hearings, or participate in any other
procedure affording opportunity for oral presentation of views. The
transcripts or minutes of such meetings, as appropriate, will be kept
and filed in the Rules Docket.
E. Hearings
1. The provisions of 5 U.S.C. 556 and 557, which govern formal
hearings in adjudicatory proceedings, do not apply to informal
rulemaking proceedings described in this part. When opportunity is
afforded for oral presentation, such informal hearing is a
nonadversary, fact-finding proceeding. Any rule issued in a proceeding
under this part in which a hearing is held is not based exclusively on
the record of such hearing.
2. When a hearing is provided, the Secretary will designate a
representative to conduct the hearing, and if the presence of a legal
officer is desirable, the General Counsel will designate a staff
attorney to serve as the officer.
F. Adoption of a Final Rule
All timely comments are considered in taking final action on a
proposed rule. Each preamble to a final rule will contain a short
analysis and evaluation of the relevant significant issues set forth in
the comments submitted, and a clear concise statement of the basis and
purpose of the rule.
G. Petitions for Reconsideration
Petitions for reconsideration of a final rule will not be
considered. Such petitions, if filed, will be treated as petitions for
rulemaking in accordance with section C of this notice.
IV. Other Matters
Environmental impact. A Finding of No Significant Impact with
respect to the environment has been made in accordance with HUD
regulations at 24 CFR part 50, which implements section 102(2)(C) of
the National Environmental Policy Act of 1969 (NEPA). This Finding of
No Significant Impact is available for public inspection between 7:30
a.m. and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk,
Office of the General Counsel, Department of Housing and Urban
Development Room 10276, 451 Seventh Street, SW, Washington, DC 20410.
Impact on small entities. The Secretary, in accordance with the
Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this
proposed rule before publication and, by approving it, certifies that
the proposed rule will not have a significant impact on a substantial
number of small entities. The proposed rule is procedural only, and
would not have a substantive effect on small entities.
Executive Order 12606, the Family. The General Counsel, as the
Designated Official under Executive Order 12606, The Family, has
determined that this proposed rule is procedural only, and would not
have potential for significant impact on family-formation, maintenance,
and general well-being, and thus is not subject to review under the
Order.
Executive Order 12612, Federalism. The General Counsel, as the
Designated Official under section 6(a) of Executive Order 12612,
Federalism, has determined that this proposed rule is procedural only,
and would not have substantial, direct effects on States, on their
political subdivisions, or on their relationship with the Federal
government, or on the distribution of power and responsibilities among
the various levels of government.
List of Subjects in 24 CFR Part 10
Administrative practice and procedure.
Accordingly, under the authority of 42 U.S.C. 3535(d), part 10 is
proposed to be removed from title 24 of the Code of Federal
Regulations.
Dated: July 18, 1996.
Henry G. Cisneros,
Secretary.
[FR Doc. 96-20697 Filed 8-15-96; 8:45 am]
BILLING CODE 4210-32-P
