Federal Register Vol. 80, No.173,

On June 23, 2015 (80 FR 35829), the NRC published a direct final rule amending its regulations in § 72.214 of Title 10 of the Code of Federal Regulations (10 CFR) by revising the Holtec HI-STORM UMAX Canister Storage System listing within the “List of approved spent fuel storage casks” to add Amendment No. 1 to CoC No. 1040. Amendment No. 1 provides a seismically enhanced version of the HI-STORM UMAX Canister Storage System, identified as the “Most Severe Earthquake (MSE)” version that could be used in areas with higher seismic demands than those analyzed previously. Amendment No. 1 also includes minor physical design changes to help ensure structural integrity of the amended system. These are the addition of a hold-down system to the closure lid; replacing the fill material in the interstitial spaces between the CECs surrounding the casks with 3000 psi concrete; strengthening the MPC guides, and engineering the guides' nominal gap with the MPC to be tighter than the original HI-STORM UMAX Canister Storage System design.

In the direct final rule, the NRC stated that if no significant adverse comments were received, the direct final rule would become effective on September 8, 2015. The NRC received 10 comment submittals on the companion proposed rule (80 FR 35872). Electronic copies of these comments can be obtained from the Federal Rulemaking Web site, http://www.regulations.gov, by searching for Docket ID NRC-2015-0067. The comments are also available in ADAMS under Accession Nos. ML15210A145, ML15210A150, ML15210A151, ML15210A155, ML15210A169, ML15210A164, ML15210A166, ML15210A177, ML15210A181, and ML15210A184. For the reasons discussed in more detail in Section III, “Public Comment Analysis,” of this document, none of the comments received are considered significant adverse comments as defined in NUREG/BR-0053, Revision 6, “United States Nuclear Regulatory Commission Regulations Handbook” (ADAMS Accession No. ML052720461).

The NRC received 10 comment submittals on the proposed rule, many raising multiple and overlapping issues. As explained in the June 23, 2015, direct final rule (80 FR 35829), the NRC would withdraw the direct final rule only if it received a “significant adverse comment.” This is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if:

(1) The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, a substantive response is required when:

(a) The comment causes the NRC staff to reevaluate (or reconsider) its position or conduct additional analysis;

(b) The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or

(c) The comment raises a relevant issue that was not previously addressed or considered by the NRC staff.

(2) The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition.

(3) The comment causes the NRC staff to make a change (other than editorial) to the rule, CoC, or Technical Specifications (TSs).

The NRC determined that none of the comments submitted on this direct final rule met any of these criteria. The comments either were already addressed by the NRC staff's safety evaluation report (SER) (ADAMS Accession No. ML15070A149), or were beyond the scope of this rulemaking. The NRC has not made any changes to the direct final rule as a result of the public comments. However, the NRC is taking this opportunity to respond to some of the comments in an effort to clarify information about the 10 CFR part 72 CoC rulemaking process.

For rulemakings amending or revising a CoC, the scope of the rulemaking is limited to the specific changes requested by the applicant in the request for the amendment or amendment revision. Therefore, comments about the system or spent fuel storage in general that are not applicable to the changes requested by the applicant are outside the scope of this rulemaking. Comments about details of the particular system that is the subject of the rulemaking, but that are not being addressed by the specific changes requested, have already been resolved in prior rulemakings. Persons who have questions or concerns about prior rulemakings and the resulting final rules may consider the NRC's process for petitions for rulemaking under 10 CFR 2.802. Additionally, safety concerns about any NRC-regulated activity may be reported to the NRC in accordance with the guidance posted on the NRC's Web site at http://www.nrc.gov/about-nrc/regulatory/allegations/safety-concern.html. This Web page provides information on how to notify the NRC of emergency or non-emergency issues.

The NRC identified the following issues raised in the comments, and the NRC's responses to these issues follow.

Several commenters raised concerns regarding the ability of this CoC system to withstand seismic events, particularly if the system were to be used at specific sites with known seismic activity, such as San Onofre Nuclear Generating Station (SONGS). These commenters stated that Holtec casks have not been tested for newly discovered potential Supersonic Shear Earthquakes, which might result in a rupture after Supersonic Shear Earthquake Events. According to the comments, cask venting can be blocked after a tsunami leading to cask failure.

These comments are outside the scope of this rulemaking because they are not specific to the amendment at issue in the rule, but instead raise concerns with the general 10 CFR part 72 requirements and process for certification of the CoC systems. This rule adds Amendment No. 1 to the HI-STORM UMAX Canister Storage System, CoC No. 1040. Applicants submitting CoC's for approval are required to document a design bases for their CoC or amendment CoC, which includes seismic parameters. Under 10 CFR 72.212(b)(6), general licensees (power reactors seeking to use those CoC systems at their specific sites) are required to conduct a review of the CoC's Final Safety Analysis Report (FSAR) and the related NRC SER prior to use of the general license to ensure that the reactor site parameters, including analyses of earthquake intensity, are enveloped by the cask design bases considered in these reports. This rulemaking makes no determination regarding the acceptability of this amended system for use at any specific site. Nor does this rule seek to change the existing generic nature of CoC approvals or the technical qualifications outlined for CoC approval, as currently envisioned in 10 CFR part 72. Commenters with concerns regarding the existing 10 CFR part 72 regulations for technical review and approval of CoC systems could consider filing a petition for rulemaking under 10 CFR 2.802.

Commenters stated that according to NUREG-2174 “Impact of Variation in Environmental Conditions on the Thermal Performance of Dry Storage Casks” (ADAMS Accession No. ML15054A207), low-speed wind conditions increased the peak cladding temperature on underground systems, and asked whether this was considered in the development of the heat load limits of the HI-STORM UMAX Canister Storage System.

The comment is outside the scope of this rulemaking because it is not specific to the amendment at issue in the rule. The NRC evaluated and approved the HI-STORM UMAX Canister Storage System heat loads in the initial CoC certification, and this is provided in its SER (ADAMS Accession No. ML15093A510). The Amendment No. 1 application requested no thermal changes that required NRC evaluation.

A commenter stated that the thin stainless steel MPC canisters are subject to pitting and corrosion (particularly from marine environments like chloride-induced stress corrosion cracking). According to the comment, since cracks may initiate during the initial licensing period in these canisters, cracking canisters should be included in the seismic analysis for MPC's stored while in the HI-STORM UMAX Canister Storage System since it would be of more concern in high risk seismic areas as proposed for this UMAX Amendment.

The comment is outside the scope of this rulemaking because it is not specific to the amendment at issue in the rule. The NRC has evaluated the design of the HI-STORM UMAX Canister Storage System and has determined that the design is robust, and contains a number of layers of acceptable confinement systems in compliance with 10 CFR part 72 requirements. Furthermore, the NRC has evaluated the susceptibility to and effects of stress corrosion cracking and other corrosion mechanisms on safety significant systems for spent nuclear fuel (SNF) dry cask storage (DCS) systems during an initial certification period. The NRC staff has determined that the HI-STORM UMAX Canister Storage System, when used within the requirements of the proposed CoC, will safely store SNF and prevent radiation releases and exposure consistent with regulatory requirements, including seismic requirements. This evaluation is documented in the NRC staff's SERs (ADAMS Accession Nos. ML15070A149 and ML14202A031).

Commenters ask if the transfer casks were approved for storage of an MPC in case of a failed MPC.

To the extent that this comment raises a concern with the availability of a transfer cask, it raises an issue that was addressed in the NRC's evaluation of this amendment and fails to cite any specific information that would alter the NRC's conclusions. In this case, the transfer cask utilized in the HI-STORM UMAX Canister Storage System is described in the HI-STORM Flood/Wind (F/W) Multipurpose Canister (MPC) Storage System FSAR (ADAMS Accession No. ML15177A336). The HI-STORM UMAX transfer cask is authorized to transfer intact MPC's in accordance with the CoC No. 1040 TSs.

A commenter asked if there is a plan to remediate a failed canister.

The comment is outside the scope of this rulemaking because it is not specific to the amendment at issue in the rule, but instead raises a concern with the general 10 CFR part 72 requirement and process for certification of the CoC systems. Implementing corrective actions in the event of a failed MPC is the responsibility of the general licensee and those corrective actions are not incorporated into CoC No. 1040.

Commenters questioned the maximum MPC thickness allowed in this amendment, noting that although the FSAR indicated 0.5″ as the maximum thickness, Holtec has proposed using a thickness of 0.625 at San Onofre (SONGS). The commenters raised concerns regarding the implications of such a change outside of a license amendment where it could be properly evaluated to determine if the change in limiting parameters will affect seismic, thermal, weight, dimensions and other critical analyses.

The comment is outside the scope of this rulemaking because it is not specific to the amendment at issue in the rule, but instead raises concerns with the general 10 CFR part 72 requirements and process for certification of the CoC systems. The nominal MPC thickness for the canisters certified under CoC No. 1040, Amendment No. 1 is 0.5″. The NRC has no knowledge of a Holtec proposal to increase the thickness of an MPC to 0.625″. If presented with an amendment request to do so, the NRC will evaluate it in accordance with 10 CFR part 72 requirements.

Commenters requested the NRC require a definition of “long-term” in the FSAR.

The comment is outside the scope of this rulemaking because it is not specific to the amendment at issue in the rule, but instead raises general concerns regarding terminology. The definitions required by the NRC to support the evaluation and approval of CoC No. 1040, Amendment No. 1, are provided in Appendix A of the CoC, Technical Specifications for the HI-STORM UMAX Canister Storage System. “Long-term” is a general descriptive term that is not required to support any regulatory or technical evaluation, and thus is not required to be more formally defined.

Commenters requested the NRC define the term “underground” as used in this system. The comments raised concerns that a structure that is only partially underground, but covered on the side with an “earthen berm,” could still be considered “underground” for compliance with this CoC.

The comments regarding the need to define the term “underground” as used in the HI-STORM UMAX Canister Storage System are outside the scope of this rulemaking because they are not specific to the amendment at issue in the rule, but instead raise concerns with the general 10 CFR part 72 requirements and process for certification of CoC systems. In this instance, Holtec has provided and analyzed specific structure placement parameters, and the NRC has evaluated these parameters that bound the placement of such a system in the ground. Pursuant to the regulatory requirements in 10 CFR 72.212(b), any general licensee that seeks to use this system must determine that the design and construction of the system, structures, and components are bounded by the conditions of the CoC by analyzing the generic parameters provided and analyzed in the FSAR and SER to ensure that its site specific parameters are enveloped by the cask design bases established in these reports. The NRC is aware of the SONGS proposed configuration submitted to the California Coastal Commission and is closely monitoring this issue. The NRC will continue to ensure that the facility constructed at SONGS meets the requirements of the CoC and TS of the specific DCS system selected by Southern California Edison.

One commenter stated that the FSAR indicates that changes to storage cell kW heat loads were made and requested that the NRC determine if this was evaluated in the amendment request. The comment also requested clarification on the placement configuration of SNF assemblies in the MPC, as well as the rationale for the heat load configuration.

This comment is outside the scope of this rulemaking because it is not specific to the amendment at issue in the rule, but instead raises concerns with the general 10 CFR part 72 requirements and process for certification of CoC systems. The comment is addressing revision bars that are incorporated into the HI-STORM UMAX Canister Storage System FSAR, Revision 2 (ADAMS Accession No. ML14202A031). The tables referenced in the comment were revised due to changes made during the original HI-STORM UMAX Canister Storage System evaluation; 10 CFR 72.248(a)(1) requires that an updated FSAR reflecting any changes made during the NRC review process be submitted within 90 days after an approval of the cask design. The loading patterns were evaluated and approved by the NRC staff in its initial SER (ADAMS Accession No. ML15093A510). The Amendment No. 1 application required no further changes to these tables requiring NRC evaluation.

A commenter requested that the NRC clarify that the MPC leak test inspection, that is used to verify the integrity of the confinement boundary, is performed before the MPC is loaded with fuel.

This comment is outside the scope of this rulemaking because it is not specific to the amendment at issue in the rule, but instead raises concerns with the general 10 CFR part 72 requirements and process for certification of CoC systems. The HI-STORM F/W MPC Canister System FSAR clearly identifies the purpose of the MPC leak detection requirement as a post fabrication certification test that is only required to be performed one time.

Some commenters raised an issue with Holtec's claim that there is no credible mechanism for gross fuel cladding degradation of fuel classified as undamaged during storage in the HI-STORM UMAX Canister Storage System.

These comments are outside the scope of this rulemaking because they are not specific to the amendment at issue in the rule. Instead, these comments raise issues that would be addressed during any renewal application review. The NRC has determined that fuel cladding degradation is not an issue during the initial 20-year certification period, but instead, is an issue that would have to be addressed if a CoC holder requested renewal of the CoC for a period beyond the initial 20 years. If a renewal application is filed, NRC regulations require that the application include programs to manage the effects of aging, including necessary monitoring and inspection programs. Those programs would have to be reviewed and determined acceptable by the NRC before any CoC renewal is approved.

Commenters questioned Holtec's claims of a design life of 60 years, a service life of 100 years and a licensed life of 40 years. Since no substantiation was provided for these claims, the commenters requested the claims be removed from the FSAR.

This issue is outside of the scope of this rulemaking because the term of a certificate is determined in the original certification, not in amendments to that certification. This rulemaking seeks to add Amendment No. 1 to CoC No. 1040. In this case, the UMAX CoC was approved on March 6, 2015 (80 FR 12073), for an initial 20-year term. This 20-year term will also apply to Amendment No. 1. Use of this system beyond the expiration date of 20 years would require an evaluation of a renewal application for this CoC which would be addressed in a subsequent rulemaking process.

Some commenters questioned whether the HI-STORM UMAX Canister Storage System design provided a safe and accessible method to perform inspections within the license period given that high seismic risk areas are more likely to cause cracking or other structural changes, and indicated that such an evaluation should be part of the NRC's review process.

This comment is outside the scope of this rulemaking because it is not specific to the amendment at issue in the rule, but instead raises concerns with the general 10 CFR part 72 requirements and process for certification of CoC systems. The NRC has determined that concrete degradation is not an issue requiring inspection during the initial 20-year certification period, but instead, is an issue that would have to be addressed if a CoC holder requested renewal of the CoC for a period beyond the initial 20 years. If a renewal application is filed, NRC regulations require that the application include programs to manage the effects of aging, including necessary monitoring and inspection programs. Those programs would have to be reviewed and determined acceptable by the NRC before any CoC renewal is approved.

Commenters also raised questions regarding the long-term acceptability of the extended storage of high burnup fuel (HBF).

To the extent these comments raise issues about the storage of HBF in the CoC for the first 20 years, these comments are outside the scope of this rulemaking. The NRC has evaluated the acceptability of storage of HBF for the initial 20-year certification term for the HI-STORM UMAX Canister Storage System during its review of the initial certificate. As documented in the NRC staff's SER under Docket ID NRC-2014-0120, the NRC staff has determined that the use of the HI-STORM UMAX Canister Storage System, including storage of HBF, will be conducted in compliance with the applicable regulations of 10 CFR part 72, and the CoC should be approved for the initial 20-year term. This amendment does not impact the analysis conducted by the NRC staff during the initial certification of this system.

Additionally, to the extent these comments raise concerns regarding the storage of HBF beyond the initial term of 20 years, the comments are also outside the scope of this rulemaking. A request to store HBF beyond the initial 20 years provided in the certification of this system will require the applicant to submit a license renewal application with the inclusion of Aging Management Programs addressing HBF. In that regard, a demonstration project is being planned by the U.S. Department of Energy to provide confirmatory data on the performance of HBF in DCS. The NRC plans to evaluate the data obtained from the project to confirm the accuracy of current models that are relied upon for authorizing the storage of HBF for extended storage periods beyond the initial 20-year certification term.

The NRC staff has concluded that the comments received on the companion proposed rule for the Holtec HI-STORM UMAX Canister Storage System, CoC No. 1040, Amendment No. 1, are not significant adverse comments as defined in NUREG/BR-0053, Revision 6, “United States Nuclear Regulatory Commission Regulations Handbook.” Therefore, this rule will become effective as scheduled.

This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or removes SIAPS, Takeoff Minimums and/or ODPS. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part § 97.20. The applicable FAA forms are FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A.

The large number of SIAPs, Takeoff Minimums and ODPs, their complex nature, and the need for a special format make publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA form documents is unnecessary. This amendment provides the affected CFR and specifies the types of SIAPs, Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure, and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPS, Takeoff Minimums and/or ODPS as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as Amended in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided.

Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making some SIAPs effective in less than 30 days.

The FAA has determined that this 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. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows:

This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained on FAA form documents is unnecessary.

This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPs, Takeoff Minimums and ODPs as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and Takeoff Minimums and ODP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP and Takeoff Minimums and ODP as modified by FDC permanent NOTAMs.

The SIAPs and Takeoff Minimums and ODPs, as modified by FDC permanent NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for these SIAP and Takeoff Minimums and ODP amendments require making them effective in less than 30 days.

Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this 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. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or removes SIAPS, Takeoff Minimums and/or ODPS. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part § 97.20. The applicable FAA forms are FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A.

The large number of SIAPs, Takeoff Minimums and ODPs, their complex nature, and the need for a special format make publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA form documents is unnecessary. This amendment provides the affected CFR and specifies the types of SIAPs, Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure, and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPS, Takeoff Minimums and/or ODPS as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as Amended in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided.

Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C 553(d), good cause exists for making some SIAPs effective in less than 30 days.

The FAA has determined that this 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. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows:

This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained on FAA form documents is unnecessary.

This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPs, Takeoff Minimums and ODPs as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and Takeoff Minimums and ODP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP and Takeoff Minimums and ODP as modified by FDC permanent NOTAMs.

The SIAPs and Takeoff Minimums and ODPs, as modified by FDC permanent NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for these SIAP and Takeoff Minimums and ODP amendments require making them effective in less than 30 days.

Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this 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. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal regulations, Part 97, (14 CFR part 97), is amended by amending Standard Instrument Approach Procedures and Takeoff Minimums and ODPs, effective at 0901 UTC on the dates specified, as follows:

Background

The rule makes changes to the Schedule of Fees for Consular Services of the Department of State's Bureau of Consular Affairs. The Department sets and collects its fees based on the concept of full cost recovery. The Department completed its most recent review of current consular fees and will implement several changes to the Schedule of Fees based on the costs of services calculated by the Fiscal Year 2013 update to the Cost of Service Model.

The Department of State derives the general authority to set fees based on the cost of the consular services it provides, and to charge those fees, from the general user charges statute, 31 U.S.C. 9701. See, e.g., 31 U.S.C. 9701(b)(2)(A) (“The head of each agency . . . may prescribe regulations establishing the charge for a service or thing of value provided by the agency . . . based on . . . the costs to the government.”). As implemented through Executive Order 10718 of June 27, 1957, 22 U.S.C. 4219 further authorizes the Department to establish fees to be charged for official services provided by U.S. embassies and consulates. Other authorities allow the Department to charge fees for consular services, but not to determine the amount of such fees because the amount is statutorily determined.

Several statutes address specific fees relating to passports. For instance, 22 U.S.C. 214 authorizes the Secretary of State to set the passport application fee by regulation. In addition, another statute authorizes the Department to collect and retain a surcharge on passports to help pay for efforts to enhance border security. See 8 U.S.C. 1714. Although this passport surcharge was originally frozen statutorily at $12, subsequent legislation authorized the Department to amend this surcharge administratively, provided, among other things, that the resulting surcharge is “reasonably related to the costs of providing services in connection with the activity or item for which the surcharges are charged.” Public Law 109-472, 6, 120 Stat. 3554, reproduced at 8 U.S.C. 1714 (note).

Certain people are exempted by law or regulation from paying specific fees. These are noted in the Schedule of Fees. They include, for instance, exemptions from the passport execution and application fees for officers or employees of the United States government proceeding abroad in the discharge of official duties. See 22 U.S.C. 214; 22 CFR 51.52(b).

Although the funds collected for many consular fees must be deposited into the general fund of the Treasury pursuant to 31 U.S.C. 3302(b), various statutes permit the Department to retain some or all of the fee revenue it collects. For example, the Department retains the immigrant visa and passport security surcharges, see 8 U.S.C. 1714, but the portion of the passport application fee not related to the Western Hemisphere Travel Initiative is deposited into the general fund of the Treasury.

The Department last changed fees for passport services in an interim final rule dated June 28, 2010. See Department of State Schedule of Fees for Consular Services, Department of State and Overseas Embassies and Consulates, 22 CFR part 22 (75 FR 36522). Those changes to the Schedule went into effect July 13, 2010. A final rule regarding those fees was published on February 2, 2012 (77 FR 5177). The Department last changed fees for visa and citizenship services in an interim final rule dated August 28, 2014. See Schedule of Fees for Consular Services, Department of State and Overseas Embassies and Consulates—Visa and Citizenship Services Fee Changes, 22 CFR part 22 (79 FR 51247). That change to the Schedule went into effect on September 12, 2014. A final rule regarding those fees was published on August 25, 2015 (80 FR 51464).

Some fees in the Schedule, including Items 20(a) and (b), 31(a) and (b) and 35(c), are set by the Department of Homeland Security (DHS). These DHS fees were most recently updated by that agency on November 23, 2010, and are subject to change in the future. See 75 FR 58962. The Department lists these DHS fees in the Department Schedule of Fees for cashiering purposes only. The Department has no authority to set DHS fees, which are listed at 8 CFR 103.7(b)(1).

Consistent with OMB Circular A-25 guidelines, the Department recently completed a fee review using its Cost of Service Model. This review was conducted from September 2013 through May 2014 and provides the basis for updating the Schedule. The results of that review are outlined in this rule.1 While fees are set in accordance with full cost recovery, there are limited circumstances, such as the passport book and card application fees for minors, in which costs are allocated to related fees or the Department charges a fee that is lower than the cost of providing the service. This may be done in order to account for statutory requirements or the potential impact on the public of setting those fees at a higher level. See 31 U.S.C. 9701(b)(2) (user charges based on costs to the government, the value of the service to the recipient, the public policy or interest served, and other relevant facts).

Similar to the 2012 fee review, upon which the current Schedule is based, costs are generated by an activity-based costing model that takes into account all costs to the U.S. government. Unlike a typical accounting system, which accounts for only traditional general-ledger-type costs such as salaries, supplies, travel and other business expenses, activity-based costing (ABC) models measure the costs of activities, or processes, and then provide an additional view of costs by the products and services produced by an organization through the identification of the key cost drivers of the activities. Below is a description of activity-based costing excerpted from the Supplemental Notice of Proposed Rulemaking published on March 24, 2010 (75 FR 14111).

OMB Circular A-25 states that it is the objective of the United States Government to “(a) ensure that each service, sale, or use of Government goods or resources provided by an agency to specific recipients be self-sustaining; [and] (b) promote efficient allocation of the Nation's resources by establishing charges for special benefits provided to the recipient that are at least as great as costs to the Government of providing the special benefits . . .” OMB Circular A-25, 5(a)-(b); see also 31 U.S.C. 9701(b)(2)(A) (agency “may prescribe regulations establishing the charge for a service or thing of value provided by the agency . . . based on . . . the costs to the Government . . .”). To set prices that are “self-sustaining,” the Department must determine the full cost of providing consular services. Following guidance provided in Statement 4 of OMB's Statement of Federal Financial Accounting Standards (SFFAS), available at http://www.fasab.gov/pdffiles/sffas-4.pdf, the Department chose to develop and use an activity-based costing (ABC) model to determine the full cost of the services listed in its Schedule of Fees, both those whose fee the Department proposes to change, and those whose fee will remain unchanged from prior years. The Department refers to the specific ABC model that underpins the proposed fees as the “Cost of Service Model” or “CoSM.”

The Government Accountability Office (GAO) defines activity-based costing as a “set of accounting methods used to identify and describe costs and required resources for activities within processes.” Because an organization can use the same staff and resources (computer equipment, production facilities, etc.) to produce multiple products or services, ABC models seek to precisely identify and assign costs to processes and activities and then to individual products and services through the identification of key cost drivers referred to as “resource drivers” and “activity drivers.”

Example: Imagine a government agency that has a single facility it uses to prepare and issue a single product—a driver's license. In this simple scenario, every cost associated with that facility (the salaries of employees, the electricity to power the computer terminals, the cost of a blank driver's license, etc.) can be attributed directly to the cost of producing that single item. If that agency wants to ensure that it is charging a “self-sustaining” price for driver's licenses, it only has to divide its total costs for a given time period by an estimate of the number of driver's licenses to be produced during that same time period.

However, if that agency issues multiple products (driver's licenses, non-driver ID cards, etc.), has employees that work on other activities besides licenses (for example, accepting payment for traffic tickets), and operates out of multiple facilities it shares with other agencies, it becomes much more complex for the agency to determine exactly how much it costs to produce any single product. In those instances, the agency would need to know what percent of time its employees spend on each service and how much of its overhead (rent, utilities, facilities maintenance, etc.) can be allocated to the delivery of each service to determine the cost of producing each of its various products—the driver's license, the non-driver ID card, etc. Using an ABC model allows the agency to identify separate costs for those different services.

As noted in SFFAS Statement 4, “activity-based costing has gained broad acceptance by manufacturing and service industries as an effective managerial tool” (SFFAS Statement 4, 147). There are no “off-the-shelf” ABC models that allow the Department (or any other entity) to simply populate a few data points and generate an answer. ABC models require financial and accounting analysis and modeling skills combined with a detailed understanding of all the organization's business processes, which, in an entity the size of the Department's Bureau of Consular Affairs, are exceedingly complex. More specifically, ABC models require an organization to:

• Identify all of the activities that are required to produce a particular product or service (“activities”);

• Identify all of the resources allocated to the production of (costs) that product or service (“resources”);

• Measure the quantity of resources consumed (“resource driver”); and

• Measure the frequency and intensity of demand placed on activities to produce services (“activity driver”).

For additional details on an activity-based costing model, see the Supplemental Notice of Proposed Rulemaking published on March 24, 2010 (75 FR 14111).

Although much of the modeling methodology has remained the same between fee reviews, the methodology for capturing the Department's historical support costs and projected costs has been revised to reflect the change in the Department's workload. In order to accurately account for the costs associated with growing demand for consular services, the current fee review also incorporates two years of projected costs in addition to two years of historical costs and one year of current costs. The new fees represent a weighted average of the annual costs by service for fiscal years 2011 through 2015. Costs for individual fiscal years were weighted by the projected workload volume for that year. These weighted costs by fiscal year were then added together to generate a single cost per service upon which the fees are determined.

The Department is decreasing the application fee for an adult (age 16 and older) passport book from $70 to $50, and the application fee for a minor (under age 16) passport book from $40 to $20. These changes apply to all applicants except those persons who are statutorily exempted from paying fees. The reduction in the passport application fee (and corresponding increase in the passport security surcharge noted below) will result in a reduction of funds deposited in the general fund at the Treasury and an increase in the revenue retained by the Department of State. The passport fee changes will not alter the total fee paid by passport customers.

Since the passport book application services fee was last changed in 2010, the Department has enhanced its Cost of Service Model to more accurately identify which costs should be attributed to the application fee and which should be attributed to the passport security surcharge. The application fee includes all costs of passport issuance and use that are not included in the passport security surcharge, such as the cost of providing emergency services for American citizens overseas and the cost of collecting passport fees and initial data entry through a lockbox service. The 2013 Cost of Service Model reflected that these costs were lower than the previous fee of $70 (including the “WHTI surcharge” described below) and thus the Department is lowering the fee to more precisely reflect these costs.

Because a minor passport book has a validity of just five years, in contrast with the ten-year validity period of an adult passport book, the Department charges a lower, below-cost fee for minor passport books and allocates the remainder of the cost of processing minor passport book applications to the adult passport application fee. The Department is also decreasing the minor passport book application fee by $20.

As described in 22 CFR 51.51(d), the passport application services fee incorporates a surcharge (the “Western Hemisphere Travel Initiative surcharge” or “WHTI surcharge”) to recover the costs of meeting the increased demand for passports as a result of actions taken to comply with section 7209(b) of Pub. L. 108-458 (reproduced at 8 U.S.C. 1185 note) (“WHTI”). The 2013 Cost of Service Model revealed that there has been no change in the costs attributable to WHTI and thus the surcharge remains $22 for adults. This surcharge is embedded within the passport book application services fee and not charged separately or separately itemized in the Schedule of Fees, see 22 CFR 51.51(d) (noting absence of separate itemization). This portion of the application fee has decreased from $22 to $20 for minors to allow the Department to keep the overall passport application fee for minors (including the security surcharge, below) at $80, a reduced fee. The Department may charge reduced fees in order to account for statutory requirements or the potential impact on the public of setting those fees at a higher level. See 31 U.S.C. 9701(b)(2) (user charges based on costs to the government, the value of the service to the recipient, the public policy or interest served, and other relevant facts).

The Department is increasing the passport security surcharge, which is applicable to all applicants except those persons who are statutorily exempted from paying fees, from $40 to $60. The passport security surcharge includes costs associated with the passport application processing fee that support enhanced border security, such as the secure book and card materials, passport printers, and compensation associated with passport adjudication, including fraud prevention. The 2013 Cost of Service Model results indicated that these costs amount to approximately $60 per passport. This change will result in a reduction of revenue deposited in the general fund of the Treasury and increase the revenue retained by the Department of State. This fee increase is due in part to new technology and more secure passport materials since 2010. See 8 U.S.C. 1714 and Public Law 109-472, 120 Stat. 3554, reproduced at 8 U.S.C. 1714 note.

The Department is expanding the application of and renaming item 8 in the Schedule of Fees to “Administrative Processing of Request for Certificate of Loss of Nationality.” The fee will be applied to cover not only services to U.S. nationals (i.e., U.S. citizens and non-citizen nationals) who relinquish nationality by taking the oath of renunciation under 8 U.S.C. 1481(a)(5), but also to cover services to U.S. nationals who relinquish nationality under 8 U.S.C. 1481(a)(1) to 1481(a)(4) or any earlier-in-time relinquishment statutes administered by the Department of State and request a Certificate of Loss of Nationality. Currently, the fee is paid by those taking the oath of renunciation under 8 U.S.C. 1481(a)(5) at the time the oath is sworn. The fee would be collected from an individual claiming to have relinquished nationality at the time that person requests the Certificate of Loss of Nationality (that is, after completing Form DS-4079 and signing before a consular officer Part II of Form DS-4079 entitled “Statement of Voluntary Relinquishment of U.S. Citizenship”). The Fiscal Year 2012 Cost of Service Model update demonstrated that documenting a U.S. national's relinquishment of nationality is extremely costly whether the service is for a relinquishment under 8 U.S.C. 1481(a)(1) to 1481(a)(4) or a relinquishment by renunciation under 8 U.S.C. 1481(a)(5). Both require American consular officers overseas to spend substantial amounts of time to accept, process, and adjudicate cases. The cost of the service is not limited to the time consular officers spend with individuals prior to and at appointments. The application is reviewed both overseas and domestically to ensure full compliance with the law. The consular officer must determine that the individual is indeed a U.S. national, advise the individual on the consequences of loss of nationality, and ensure that the individual fully understands the consequences of loss, including the inability to reside in the United States unless properly documented as an alien. Through documentary review, consideration of the individual's circumstances, and careful interviewing, the consular officer also must determine whether the individual is seeking loss of nationality voluntarily and with the requisite intent, as required by U.S. Supreme Court case law and by statute (8 U.S.C. 1481). This determination can be especially demanding in the case of minors or individuals with a developmental disability or mental illness.

The consular officer must also ensure that the commission of an expatriating act was as prescribed by statute, which is often an issue in non-renunciation relinquishment cases. The loss of nationality service must be documented on several forms and in consular systems as well as in a memorandum from the consular officer to the Department's Directorate of Overseas Citizens Services in Washington, DC (“OCS”), in the Bureau of Consular Affairs. All forms and memoranda are closely reviewed in OCS by a country officer and a senior approving officer, and may include consultation with legal advisers. This review entails close examination of whether the requirements of voluntariness and intent are satisfied in the individual case. Some applications require multiple rounds of correspondence between post and the Department. The final approval of the loss of nationality must be done by law within the Department (8 U.S.C. 1501), by OCS, after which the case is returned to the consular officer overseas for final delivery of the Certificate of Loss of Nationality to the individual. In addition, every individual issued a Certificate of Loss of Nationality is advised of the possibility of seeking a future Administrative Review of the loss of nationality, a time-consuming process that is conducted by OCS's Office of Legal Affairs.

Currently, nationals who renounce nationality pay a fee of $2,350, while nationals who apply for documentation of relinquishment of nationality by the voluntary commission of an expatriating act with the intention to lose nationality, do not pay a fee. However the services performed in both situations are similar, requiring close and detailed case-by-case review of the factors involved in a request for a Certificate of Loss of Nationality, and both result in similar costs to the Department.

In the past, individuals seldom requested Certificates of Loss of Nationality from the Department to document relinquishment. Although the Department was aware that an individual relinquishment service was among the most time consuming of consular services, it was rarely performed so the overall cost to the Department was low and the Department did not establish a fee. Requests for a Certificate of Loss of Nationality on the basis of a non-renunciatory relinquishment have increased significantly in recent years, and the Department expects the number to grow in the future, causing the total cost of this service to increase. At the same time, the Department funds consular services completely from user fees. The Cost of Service Model continues to demonstrate that such costs are incurred by the Department when accepting, processing, and adjudicating relinquishment of nationality cases; therefore, the Department will collect a fee from all individuals seeking a Certificate of Loss of Nationality. Taking into account the costs of both renunciation and non-renunciation relinquishment processes, the fee will be $2,350.

The Department is publishing this rule as an interim final rule with request for comment, with a 60-day provision for post-promulgation comments and with an effective date for § 22.1, Items 2.(a), 2.(b), and 2.(g) of less than 30 days from the date of publication, based on the “good cause” exception set forth at 5 U.S.C. 553(b)(3)(B) and 553(d)(3). Delaying implementation of this rule would be contrary to the public interest because consular services are directly funded by user fees, not by appropriated funds. Each day that the Department is not collecting adequate user fees, services provided by the Department to citizens, nationals, and other customers worldwide suffer an immediate degradation. For example, the passport security surcharge change will provide approximately $1,000,000 per day to continue timely and secure passport services in a sustainable manner. There is no backup source of funds for consular services. Therefore, the Department finds that the delay involved in publishing this rule for notice and comment would cause immediate harm to the ability of the Department to provide these services.

The Department has reviewed this rule and, by approving it, certifies that it will not have a significant economic impact on a substantial number of small entities as defined in 5 U.S.C. 601(6).

This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501-1504.

This rule is not a major rule as defined by 5 U.S.C. 804(2).

The Department has reviewed this rule to ensure its consistency with the regulatory philosophy and principles set forth in the Executive Orders. This rule has been submitted to OMB for review.

This rule is necessary in light of the Department of State's Fiscal Year 2013 update to the Cost of Service Model finding that the cost of processing passports has changed since those fees were last amended in 2010. The Department is setting the new fees in accordance with 31 U.S.C. 9701 and other applicable legal authorities, as described in detail above. See, e.g., 31 U.S.C. 9701(b)(2)(A) (“The head of each agency . . . may prescribe regulations establishing the charge for a service or thing of value provided by the agency . . . based on . . . the costs to the government.”). This regulation sets the fees for consular services at the amount required to recover the costs associated with providing that service.

Details of the fee changes are as follows:

This regulation will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on federal programs and activities do not apply to this regulation.

The Department has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Accordingly, the requirements of Executive Order 13175 do not apply to this rulemaking.

This rule does not impose any new reporting or record-keeping requirements subject to the Paperwork Reduction Act.

Accordingly, for the reasons stated in the preamble, 22 CFR part 22 is amended as follows:

Section 3(a)(2)(B) of the 1937 Act (42 U.S.C. 1437a(a)(2)(B)) requires PHAs to set a flat rental amount for each public housing unit. In the 2014 Appropriations Act,1 this amount was statutorily set at no less than 80 percent of the applicable fair market rent (FMR), as determined by HUD under section 8(c) of the 1937 Act (42 U.S.C. 1437f(c)). In the event that implementation of this requirement would increase a family's rental payment by more than 35 percent a year, the PHA must phase in the flat rent as necessary to avoid such result. The 2014 Appropriations Act required HUD to implement this change by notice, and to begin the rulemaking process necessary to amend the corresponding regulations. HUD implemented the 2014 statutory change by notice issued on May 19, 2014 2 and commenced rulemaking on January 6, 2015, at 80 FR 423.3

In the 2015 Appropriations Act,4 section 3 of the 1937 Act was amended again to allow for additional flexibility to the requirement that the flat rental amount be set at no less than 80 percent of the applicable FMR, as established under 8(c) of the 1937 Act. HUD may allow a PHA to establish a flat rent based on an FMR that is based on an area geographically smaller than would otherwise be used, if HUD determines that the resulting FMR more accurately reflects local market conditions. In addition, a PHA may apply to HUD for an exception allowing a flat rental amount that is lower than the amount otherwise determined under the two allowable FMRs, if HUD determines that the two FMRs do not reflect the market value of the property and the lower flat rental amount is based on a market analysis of the applicable market. In either case, the alternative flat rent must not create a disincentive for families seeking to become economically self-sufficient to continue to reside in public housing.

In addition to providing additional flexibility to the 80 percent of an applicable FMR and allowing PHAs to apply for an exception, the 2015 Appropriations Act struck the statutory language requiring flat rents to be based on the rental value of the unit and the language requiring PHAs to comply with the statutory provisions by June 1, 2014.

HUD's January 6, 2015 rule proposed regulatory changes to conform to several statutory changes made to the 1937 Act that were designed to streamline and ease the burden of administrative requirements, imposed primarily on PHAs but also on multifamily housing owners administering programs and certain HUD Multifamily Housing and HUD Community Planning and Development programs. The January 6, 2015, proposed rule addresses a variety of administrative requirements, including verification of Social Security numbers, annual reexamination for families on fixed incomes, utility reimbursements, and the Earned Income Disregard used in several HUD programs. That proposed rule also included changes to 24 CFR 960.253(b), the regulations addressing public housing flat rents,5 and proposed to codify the changes already implemented for flat rents by PIH Notice 2014-12.

This interim rule replaces only the proposed changes with respect to flat rents in § 960.253(b); the changes proposed in January for other portions of § 960.253 remain in place, and are not effective until HUD issues a final rule that addresses all the regulatory changes proposed by HUD on January 6, 2015. HUD intends to issue a single final rule that takes into consideration all public comments received on both the January 6, 2015, proposed rule and this interim rule.

This interim rule, consistent with statutory authority and the notice implementing the changes in the 2014 Appropriations Act, establishes a standard flat rent amount at not less than 80 percent of the applicable FMR for a given unit.

However, the 2015 Appropriations Act allowed PHAs flexibility when establishing flat rents if 80 percent of the applicable FMR did not reflect the market value of a unit.6 This interim rule amends 24 CFR 960.253(b)(2) to provide PHAs additional flexibility when setting flat rents using a HUD-determined FMR. First, this interim rule provides that HUD may permit a flat rental amount based on either 80 percent of the applicable FMR, or an FMR that more accurately reflects local market conditions and is based on an area geographically smaller than the one that would otherwise be used. This second FMR would be either the Small Area FMR (SAFMR), issued for metropolitan counties, or the unadjusted rents, for counties not covered by an SAFMR, or any successor fair market rental determination. If neither a SAFMR nor an unadjusted rent has been determined for an area, PHAs must set flat rents based on the applicable FMR for the larger area. Second, this interim rule provides that the PHA may submit to HUD a request for an exception to use a flat rental amount that is lower than the amount allowed under the two FMRs. This request, if made, must include a market analysis and a demonstration that the proposed lower flat rental amount is based on a market analysis of the applicable market and is reasonable in comparison to other comparable unassisted units.

While the new statutory authority grants PHAs additional flexibility in establishing flat rents, PHAs are not required to exercise such flexibility. PHAs may opt to continue to implement flat rents equal to not less than 80 percent of the applicable FMR, as determined under 8(c) of the 1937 Act. Some PHAs may want to wait for the conclusion of public comment and the final rule before taking advantage of the new authority, and HUD understands and supports this position.

However, consistent with the 2014 Appropriations Act and the implementing PIH Notice 2014-12, PHAs are required to adjust flat rents downward to account for tenant-paid utilities and to revise flat rents within 90 days of HUD's issuance of new FMRs. In addition, the family's rent must not increase by more than 35 percent in a single year as a result of the new flat rent rules.

Finally, this interim rule removes language requiring documentation on the part of the PHA regarding the PHA's methods of determining a unit's flat rent, as the process setting flat rents is now less reliant upon discretionary actions by the PHA, except in the case of exception requests, which require documentation provided by PHAs.

In general, HUD publishes rules for advance public comment in accordance with its rule on rulemaking at 24 CFR part 10. However, under 24 CFR 10.1, HUD may omit prior public notice and comment if it is “impracticable, unnecessary, or contrary to the public interest.” Under such circumstances, HUD may publish an interim rule without soliciting public comment. In this instance, HUD has determined that it is unnecessary to delay the effectiveness of this rule for advance public comment.

First, section 238 of the 2015 Appropriations Act is effective immediately and introduces statutory changes intended to provide relief to PHAs and tenants burdened by the current statute. This interim rule implements those statutory changes.

Second, while the interim rule does exercise some discretion on the part of HUD, the exercise is minimal and generally relies on the PHA requesting action by HUD to initiate the action. HUD is not mandating that PHAs use the flexibility authorized by the new statutory language, but is rather allowing PHAs the option to utilize the new authority if they so choose. PHAs may elect to continue to establish flat rents in accordance with the changes allowed under the 2014 Appropriations Act. Given that many PHAs want to use the new authority, this interim rule strikes the right balance of allowing them to implement this new authority but not requiring them to do so.

Finally, although HUD has determined that good cause exists to publish this rule for effect without prior solicitation of public comment, HUD recognizes the value and importance of public input in the rulemaking process. Accordingly, HUD is issuing these regulatory amendments on an interim basis and providing a 60-day public comment period.

The Office of Management and Budget (OMB) reviewed this rule under Executive Order 12866, “Regulatory Planning and Review.” This rule was determined to be a “significant regulatory action,” as defined in section 3(f) of the order (although not an economically significant regulatory action under the order). The docket file is available for public inspection in the Regulations Division, Office of the General Counsel, 451 7th Street SW., Room 10276, Washington, DC 20410- 0500. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the docket file by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the Federal Information Relay Service at 800-877-8339 (this is a toll-free number).

The information collection requirements contained in this interim rule have been submitted to the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control numbers 2577-0220 and -0169. In accordance with the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information, unless the collection displays a currently valid OMB control number.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This interim rule will not impose any Federal mandates on any State, local, or tribal governments or the private sector within the meaning of UMRA.

A Finding of No Significant Impact (FONSI) with respect to the environment was made in accordance with HUD regulations in 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)), in connection with HUD's publication of the Streamlining Administrative Regulations proposed rule, published on January 6, 2015, at 80 FR 423. That FONSI remains applicable to this interim rule, and is available for public inspection during regular business hours in the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 Seventh Street SW., Room 10276, Washington, DC 20410-0500. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the FONSI by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the Federal Relay Service at 800-877-8339 (this is a toll-free number).

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This interim rule reduces administrative burdens on PHAs in many aspects of administering public housing. All PHAs, regardless of size, will benefit from the burden reduction made by this interim rule. These revisions impose no significant economic impact on a substantial number of small entities. Therefore, the undersigned certifies that this interim rule will not have a significant impact on a substantial number of small entities.

Notwithstanding HUD's belief that this interim rule will not have a significant effect on a substantial number of small entities, HUD specifically invites comments regarding any less burdensome alternatives to this interim rule that will meet HUD's objectives as described in this preamble.

Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial direct compliance costs on State and local governments and is not required by statute or the rule preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. This interim rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments nor preempt State law within the meaning of the Executive order.

The Catalog of Federal Domestic Assistance number for the Public Housing program is 14.872.

Accordingly, for the reasons stated in the preamble, HUD amends 24 CFR part 960 as follows:

The National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5401 et seq.) (the Act), as amended, authorizes HUD to establish and amend the Manufactured Home Construction and Safety Standards (the Construction and Safety Standards, or Standards). The Construction and Safety Standards established by HUD are codified in 24 CFR part 3280. The Act also authorizes HUD to conduct inspections and investigations necessary to enforce the Standards, to determine whether a manufactured home fails to comply with an applicable standard or contains a defect or an imminent safety hazard, and to direct the manufacturer to furnish notification of such failure, defect, or hazard, and, in some cases, to remedy the defect or imminent safety hazard through established procedures necessary to ensure compliance with the Construction and Safety Standards and the related enforcement and monitoring provisions of the Act. These procedures are codified in 24 CFR part 3282. As provided in § 3282.1(b), HUD's policy is to work in partnership, especially with State agencies, in the enforcement of the Construction and Safety Standards, consistent with the public interest.

This final rule establishes procedures to permit completion of new manufactured housing at the installation site, rather than in the factory, under certain circumstances. Prior to this rule, manufacturers were required to request and obtain advanced HUD approval to permit alternative construction (AC) under § 3282.14(b), for each model of home that it wanted to complete on-site rather than in the production facility. Among other things, manufacturers were required to include in their requests information regarding how the construction work completed on-site would bring the home into conformance with the Construction and Safety Standards. This final rule establishes simplified procedures that eliminate the requirement for the manufacturer to obtain advance HUD approval and permits certain construction to be completed on-site rather than in the factory when the completed site work will bring the home into conformance with the Manufactured Home Construction and Safety Standards.

This final rule follows a proposed rule published on June 23, 2010 (75 FR 35902), and takes into account public comments received on the proposed rule. In preparing this final rule, HUD also reconsidered and incorporated some of the earlier comments provided by the Manufactured Housing Consensus Committee (MHCC) during the development of the proposed rule. The MHCC is a Federal Advisory Committee authorized by the Manufactured Housing Improvement Act of 2000 (Pub. L. 106-569) (42 U.S.C. 5403). The MHCC was established to provide HUD with periodic recommendations regarding Federal Manufactured Housing Construction and Safety Standards and related procedural and enforcement regulations.

This final rule follows publication of the June 23, 2010, proposed rule and takes into consideration the public comments received on the proposed rule. In response to public comment, a discussion of which is presented in the following section of this preamble, and in further consideration of issues addressed at the proposed rule stage, the Department is making the following changes at this final rule:

• Section 3280.5 has been revised to conform to this final rule to require that the manufacturer's data plate contain information, if applicable, stating that, except for the components completed on-site, the home has been substantially completed in accordance with an approved design and has been inspected in accordance with the Construction and Safety Standards.

• Section 3280.305 has been revised to provide that the attic floor of homes with high-pitched roofs (with slopes of 7:12 or greater), completed on-site, be designed to support live loads of 40 pounds per square inch. The attic floor of homes with roofs with slopes less than 7:12 that contain an attic space that can be used for storage must be designed for a storage live load of 20 pounds per square foot.

• Section 3282.603(d) has been revised to provide that the contents of the Design Approval Primary Inspection Agency (DAPIA) approval, in addition to items listed in this section in the proposed rule, must include a unique site completion numeric identification for each approval for each manufacturer (i.e., manufacturer name or abbreviation, SC-XX) and a quality control checklist to be used by the manufacturer and Production Inspection Primary Inspection Agency (IPIA) and approved by the DAPIA to verify that all required components, materials, labels, and instructions needed for site completion are provided in each home prior to shipment.

• Section 3282.604(c) of the proposed rule which would have required the DAPIA to determine if complex work requires special criteria or qualification for the IPIA inspector has been removed in this final rule.

• Section 3282.605(a) has been revised to permit the “SC” designation to be used as either a prefix or suffix in the serial number for homes or sections of homes completed on-site.

• Section 3282.605(b) has been revised to remove the requirement that the manufacturer include a green, on-site certification label of the same size, location, material, and fastening as provided by § 3280.11. Rather, this final rule provides that the manufacturer have a label affixed to the home, in accordance with § 3282.362(c)(2).

• Section 3282.605(d)(4) has been revised to provide that the manufacturer must, within 5 business days after receiving notification from the IPIA regarding acceptance of its final site inspection report, provide the purchaser or lessor, as applicable, the manufacturer's final site inspection report.

• Section 3282.607 has been revised to provide that the IPIA is responsible for reporting to HUD, the DAPIA, and manufacturer if one or more homes has not been site inspected prior to occupancy or when arrangements for one or more manufactured homes to be site inspected have not been made.

• Section 3282.608 has been revised in several ways. First, HUD removed the requirement that the manufacturer certify the home by affixing the on-site completion certification label as proposed at paragraph (f), and that the manufacturer notify a State or local jurisdiction of any add-on to the home as proposed by paragraph (n). HUD also revised paragraph (e) by adding the requirement that the manufacturer maintain a copy of any applicable DAPIA-approved quality assurance manual for on-site completion, the approved instructions for completing the construction work on-site, and the approved inspection checklist at the job site until all on-site work is completed and accepted by the IPIA. HUD also added paragraph (f) which makes the manufacturer responsible for the satisfactory completion of all on-site construction and required repairs and for authorizing a licensed contractor or a similarly qualified person to complete site construction and needed repairs. HUD also added paragraph (g) to require that the manufacturer provide a written certification to the lessor or purchaser when all site construction work is completed that each home, to the best of the manufacturer's knowledge and belief, is constructed in conformance with the Federal Manufactured Home Construction and Safety Standards. Finally, HUD revised paragraph (m) of the final rule to require the manufacturer to provide a copy of the site report to a State Administrative Agency (SAA), upon request.

• Section 3285.801(f)(2) has been revised to provide that homes with roof slopes of less than 7:12, including any designs incorporating peak cap construction or peak flip construction, are exempt from IPIA inspection and are to be inspected in accordance with 24 CFR part 3286.

The public comment period for the June 23, 2010 (75 FR 35902), proposed rule closed August 23, 2010. In addition to soliciting comments on the proposal as a whole, HUD invited comments on 26 specific questions. HUD received 20 public comments. Comments were submitted by individuals; a housing alliance; a housing and community development organization; a vertically integrated manufactured housing company; a marketer of factory-built homes; a fire, building, and life-safety organization; manufactured housing associations; an industry trade journal; a State licensed installer/manager; a producer of manufactured housing; and a trade association representing all segments of the factory-built housing industry. The following section of this preamble summarizes the significant issues raised by the commenters on the June 23, 2010, proposed rule and HUD's responses to these comments.

Comment: Several commenters stated that properly implemented, the rule supports the goals of the Manufactured Housing Improvement Act of 2000 to “facilitate the availability of affordable manufactured homes” and “encourage innovative and cost-effective construction techniques for manufactured homes.” These commenters stated that allowing selected completion of construction after the home is transported to the site will also encourage the use of designs and techniques that will demonstrate the adaptability and versatility of manufactured housing. The commenters stated that the current process of HUD approval of AC requests on a case-by-case basis is time consuming, unduly costly, and ultimately unnecessary given the third-party design approval and quality control inspection infrastructure that the program already has in place.

HUD Response: HUD agrees with the commenters that allowing selected completion of homes to conform to the Manufactured Home Construction and Safety Standards after the homes have been transported to the site will encourage and facilitate use of innovative designs and construction methods and that its current method of approving AC requests has been time consuming.

Comment: Another commenter stated, however, that the manufactured home program appears to be expanding beyond the scope of the Act. Specifically, the commenter stated that the manufactured home industry of today appears to be competing with site-built and modular homes constructed to site-built codes. Rather than providing affordable, safe, durable, low-cost housing, the manufactured housing industry is trying to outdo site-built homes while trying to avoid the site-built codes and regulations adopted by most States with preemptive and weakened Federal regulations that are not strictly enforced to ensure safe, durable housing for consumers.

HUD Response: The scope of HUD's authority to regulate the manufacture of manufactured homes is established by the Manufactured Housing Construction and Safety Act, as amended. Under the Act, HUD is responsible for establishing construction and safety standards that, among other things, protects residents of manufactured homes, while encouraging innovation and cost-effective construction techniques. This rule recognizes that manufactured housing is evolving in ways that may not have been contemplated when the Act was enacted. Nevertheless, this rule remains consistent with the Act and its goals and reflects HUD's efforts to encourage innovative designs, while ensuring that high construction standards continue to be met.

Comment: One commenter stated that under the proposed rule, there are many situations that would require extensive approval, reporting, and notification procedures and that there is not a clear “trigger” for when this new process would be required. The commenter stated, for example, that there are a number of existing DAPIA approvals that currently allow site installation of certain components, such as the field installation of double exterior doors (to prevent damage during transportation) and the field installation of fireplace hearths that cross the mating lines. These on-site installations are minor in nature and are already a natural part of the current process. The commenter asked, therefore, whether they would fall under the new proposal.

HUD Response: Yes, the field completion and installation of these components would be allowed under § 3282.602(a)(4) and (a)(5) of the final rule.

Comment: One commenter stated that the proposed rule would significantly change the procedure for the on-site assembly of manufactured homes and will create confusion with consumers and retailers and may add unnecessary cost. The commenter stated that the completion of manufactured homes on-site should be left to the State or local authority having jurisdiction, working from manufacturer and DAPIA-approved methods of site assembly.

HUD Response: HUD believes that this rule will not create confusion with consumers and retailers or add to costs currently incurred by manufactures under the AC procedure for similar site-completion work. The final rule continues to require the IPIA rather than a State or local authority having jurisdiction to conduct the inspection. HUD does not agree with the commenter's suggestion that entities other than IPIAs conduct the final site inspection, as State or local jurisdictions are often unfamiliar with the requirements of the Standards and are not authorized to conduct these inspections on HUD's behalf.

Comment: Several commenters recommended that HUD withdraw the proposed rule given its lack of accountability, oversight, and enforcement, coupled with its failure to recognize the concerns of the retailers, installers, and home buying public. Another commenter stated that the views and concerns of retailers and certified installers in States that have approved programs have not been considered. One commenter described the on-site rule as the manufactured housing industry trying to shift the burden to retailers and installers. Other commenters claimed that the rule adds unnecessary administrative paperwork that will restrict the manufacturer and retailer's ability to use the new process effectively.

HUD Response: Rather than adding layers of administrative paperwork, HUD believes that this final rule streamlines the approval process for on-site construction. This final rule adds only minimal burdens for retailers and installers. The final rule requires retailers to provide a copy of the consumer notice to prospective purchasers before sale; however, under current AC practices, they are already required to provide such a notice to purchasers. The only burden shifted to installers is the inclusion of the completion of peak flip and peak cap construction as installation, rather than construction, when the roof pitch is less than 7:12 and the home is designed to be located in Wind Zone I. Manufacturers continue to remain responsible for successful completion of all site work to conform to HUD's standards and regulations.

Comment: Several commenters, citing language in the preamble of the proposed rule, agreed with the exclusion of close-up work from the proposed rule but recommended that the rule specify the types of close-up work that would be excluded from the rule. These commenters recommended that close-up work excluded from the rule include: (1) Duct connection from half to half and additional crossovers; (2) dryer vent, range cook-top exhaust termination vents; (3) ridge vents; (4) plumbing connections in the attic; (5) gas line connections between the halves; (6) the main power supply connection; (7) electrical crossover connections; (8) front and rear siding; and (9) floor and roof connections (e.g., lags, straps, etc.). According to the commenters, specifying the types of close-up work excluded from the rule will avoid future disputes regarding the scope of on-site completion and reduce unnecessary costs for manufacturers and consumers.

HUD Response: HUD agrees that specifying the types of close-up work excluded from the rule will avoid future disputes; however, the specific types of close-up work cited by the commenters are already covered under various provisions of HUD's Model Manufactured Home Installation Standards, or would be considered as components for construction qualifying for on-site completion under § 3282.602(a) of this final rule.

Comment: A commenter recommended that HUD remove terms such as “reasonably” and “practically” from the final rule since these terms are not quantifiable and meaningless in the regulation.

HUD Response: HUD agrees with the commenter and has removed the terms “reasonably” and “practicably” from the final rule.

Comment: Several commenters described HUD's method of designating homes constructed on-site with an “SC” designation as a prudent and necessary requirement. These commenters recommended, however, that manufacturers should have the flexibility of including the “SC” designation as either a prefix or a suffix, or in the middle of the serial number. According to these commenters, many manufacturers use the serial number for various types of recordkeeping and invoicing. Requiring manufacturers to use the “SC” designation as a prefix is unnecessarily restrictive and will necessitate cumbersome and extensive changes to current database programs and recordkeeping practices.

HUD Response: HUD agrees with the commenters and has revised § 3282.605(a) of the final rule to permit the “SC” designation to be used as either a prefix or suffix in the serial number for homes or sections of homes completed under this rule.

Comment: Several commenters strongly opposed the use of a green on-site completion certification label. These commenters stated that use of a different color permanent label for a home completed on-site will lead to significant disorder in the market, which already suffers from confusion between manufactured homes, modular homes, and park models. According to these commenters, the label is utilized by consumers, code inspectors, zoning officials, lenders, and appraisers as the primary distinguishing feature to differentiate between these different types of factory-built housing. The commenters recommended that the proposal to require a data plate with an “SC” designation, combined with a notice to the consumer, would be sufficient to meet the objectives of this proposal. These commenters also stated that consumer notice should be provided at the time the buyer enters into a contract to purchase the home rather than requiring it to be posted in the home. This will ensure that the buyer has complete knowledge of the status of the home and knows that it will not be complete until a certificate of occupancy is provided. Another commenter stated that there is no way to get the text required by § 3282.605(b)(2) on a 2in x 4in label and make it legible.

HUD Response: HUD agrees with the commenters and is revising § 3282.605(b) of the final rule to remove the requirement that the manufacturer include a green, on-site certification label. Rather, the current label required by § 3282.362(c)(2) will be required for homes completed on-site. The final rule continues to require, however, that the consumer notice be provided to prospective purchasers before sale of the home is completed.

Comment: A commenter stated that HUD's existing label method should be viewed to signify compliance of the home prior to delivery from the factory. According to the commenter, a label placed on the unit at the factory cannot signify more because future on-site construction and inspections have not yet occurred.

HUD Response: The placement of the label on the home at the factory is consistent with the current AC process, which requires the IPIA to inspect the unit at the site to verify that all work that could not be completed at the factory is satisfactorily completed on-site. This final rule requires the IPIA to inspect all work that could not be completed at the factory and to verify that the home complies with the Department's Standards when completed on-site. Further, under this final rule, a home cannot be occupied until a successful inspection has been completed by the IPIA.

Comment: Several commenters questioned the requirement that the manufacturer notify the appropriate State or local jurisdiction of any add-on to the home that has not been inspected by the State or local jurisdiction as unnecessary and inappropriately placing responsibility on the manufacturer to certify that the home meets the Federal Manufactured Home Construction Safety Standards. The commenters suggested that this requirement may raise liability issues by extending responsibility for construction issues not covered by the Construction and Safety Standards to the manufacturer.

HUD Response: The requirement in § 3282.608(n) of the proposed rule for the manufacturer to notify the State or local jurisdiction of any add-on to the home has been removed from this final rule.

Comment: Several commenters expressed concern regarding the provision requiring an on-site inspection to be completed by the IPIA for every home prior to occupancy. According to the commenters, the reporting requirements in the proposed rule are redundant and have the potential to cause unnecessary, costly delays in loan closings and settlements; increase costs for the homebuyer; and reduce consumer satisfaction. The commenters questioned, for example, whether it was necessary to require both the IPIA and the manufacturer to prepare a site inspection report. According to the commenters, the required DAPIA approved “on-site” inspection checklist can be used by all parties to provide the necessary information and assurances that the on-site work was completed in accordance with the DAPIA approved design. The checklist can be expanded to include the necessary manufacturer's certification, and the identifying items specified in § 3282.605(d)(2) of the proposed rule, e.g., serial numbers, names and addresses, etc. This expanded inspection checklist can be used for the necessary reporting requirements and can be used to obtain the certificate of occupancy and can serve as the necessary documentation for lenders, settlement agents, State Administrative Agencies (SAA's) and HUD.

HUD Response: HUD does not agree with the commenters and a successful on-site inspection must be independently completed by the IPIA prior to occupancy for all site completed homes, as required by this final rule.

Comment: Several commenters recommended that site work be treated as yet another “stage of production” whereby each unit is inspected in at least one stage of its production. The commenters recommended that the rule be changed to reflect current inspection practices and extend flexibility to the IPIA for determining frequency of on-site inspections as they deem necessary based on complexity of the design and history of past inspections. As an option, the commenters recommended that HUD modify the rule to allow a manufacturer to elect either 100 percent on-site inspection offset by reduced in-plant inspections, or audit type inspections subject to frequency adjustments based on demonstrated compliance levels.

HUD Response: HUD believes that the construction completed on-site is part of the final production necessary to complete the home. HUD believes that IPIA inspection of each home completed on-site is required to ensure compliance with its Safety and Construction Standards since on-site construction necessarily involves the completion of a variety of unique design specification and quality control procedures that may be performed by staff or representatives assigned by retailers or manufacturers for which there is no way for HUD to ensure their knowledge and qualifications.

Comment: One commenter stated that the proposed rule allows 10 days after IPIA approval for the manufacturer to provide the report to the consumer. According to the commenter, this time frame is unrealistic and contrary to a number of State laws defining completion of sale.

HUD Response: HUD agrees with the commenter and has revised § 3282.605(d)(4) of the final rule to require that the report be provided 5 days after IPIA approval to facilitate the completion of sale.

Comment: Several commenters supported provisions in the proposed rule prohibiting non-IPIA inspections of on-site work. According to these commenters, allowing non-IPIA inspections of the on-site work would erode HUD's authority and is contrary to the existing and effective inspection process in the current regulations. In addition, it would be a disincentive for States to become HUD-approved State IPIAs under the current regulations, and would complicate the current inspection process. These commenters stated that if SAAs wish to become IPIAs as provided under the current procedural and enforcement regulations, they have every opportunity to do so through the appropriate approval process.

HUD Response: HUD agrees with the commenters. As previously indicated, only IPIAs or representatives of IPIAs are authorized to perform on-site completion inspections under this final rule.

Comment: Another commenter stated that completion of manufactured homes on-site should be left to the State or local authority having jurisdiction over the work site, working from manufacturer/DAPIA approved methods of site assembly. According to the commenter, if State or local authorities having jurisdiction are not allowed to inspect on-site construction, a large segment of the consumer protection will have been lost from the manufactured housing program and it may increase the cost to consumers as local authorities having jurisdiction will still invoice, issue permits, and inspect other on-site work.

HUD Response: HUD disagrees with the commenter. Using State or local jurisdictions to perform the on-site inspections would be both outside of HUD's regulatory system, as established under 24 CFR part 3282, and would create inconsistencies in interpretation, tracking, and reporting between those entities and the Department and may result in unnecessary costs for consumers. In addition, some State or local jurisdictions may not have the ability or resources to perform the inspection.

Comment: Several comments stated that the rule will cause many local municipalities and State building code enforcers to reexamine their current programs. According to these commenters, current building codes were enacted under the assumption that every section of manufactured housing would be constructed in accordance with approved designs and inspected under an approved quality assurance program. On-site completion would change this and shift compliance responsibilities to local and State officials who will have to reexamine their current programs to include these responsibilities.

HUD Response: HUD does not believe that the rule will impact current programs of State or local building code enforcers or create additional confusion for consumers. The final rule makes no changes from current AC procedures for inspection or acceptance of the work being completed on-site and therefore should not impact current programs of State or local building code enforcers.

To assist in HUD's development of this final rule, HUD solicited feedback on specific questions and issues associated with its on-site completion procedures. Each question will be followed by the comments received and HUD's responses to those commenters in developing this final rule.

Comment: Several commenters recommended that the rule retain a broad definition of “substantial completion” to not limit future technological advances. One commenter, for example, suggested that an external heating/cooling technology may become available that would differ based upon the geography or other physical feature of the job site, which might go beyond the “box” of the home. As a result, the commenter stated that HUD's final rule should maintain flexibility in defining the type of work that may be completed on-site. Other commenters agreed stating that there should not be a defined limit due to the infinite combinations of on-site construction. The commenters suggest that limits be left to the DAPIAs and manufacturers, who are well-suited to determine and clarify on-site construction. Other commenters stated that § 3283.602 provides adequate examples that qualify for on-site completion and provide adequate direction to enable manufacturers and DAPIAs to determine when on-site construction protocol is warranted. Another commenter stated that extending on-site completion to certain installation work, such as a hinged roof, is appropriate since this work is performed under the guidance of the manufacturer.

HUD Response: HUD shares an interest in promoting technological advances in the design and manufacture of manufactured housing and agrees that manufacturers and manufacturer's DAPIAs and IPIAs should have flexibility in determining the scope of construction that may be approved to be completed on-site. HUD also agrees that § 3282.602(a) of this final rule contains adequate examples to determine whether a particular type of construction may qualify for on-site completion. This flexibility should encourage and not inhibit future technological advancements. Further, the final rule does not change current practice with regard to which site work is considered construction and which is considered installation, except for the inclusion of peak flip or peak cap construction with roof slopes less than 7:12, when homes are designed to be located in Wind Zone I.

Comment: Several commenters stated that repairs should not be included in the rule. These commenters submitted that repairs do not fit the scope of this rule and including them will inevitably lead to consumer dissatisfaction. The commenters stated that subjecting repairs to the on-site process would also result in increased cost to consumers where there has been no indication of changes required from present practice.

HUD Response: HUD agrees. This final rule does not include any additional requirements for repairs of manufactured homes in the possession of retailers or distributors beyond those requirements currently in effect under 24 CFR part 3282, subpart F.

Comment: Several commenters stated that the distinction between on-site construction work and installation work should be clarified. According to these commenters, more clearly defining the work subject to on-site construction process would provide greater flexibility in the on-site inspection process and ensure uniform, preemptive Federal regulation and oversight of on-site work.

HUD Response: HUD believes that the distinction between on-site construction work and installation work is adequately provided by § 3282.602 of this final rule and related provisions in HUD's Model Manufactured Home Installation Standards, 24 CFR part 3285. In addition, HUD clarified the distinction for certain types of roof construction by allowing peak flip and peak cap construction with a roof pitch of less than 7:12, when located in Wind Zone I, to be considered as installation.

Comment: Another commenter stated that the rule cites examples of work to which the new rule would apply (e.g., completion of dormer windows, additions of sidings/stone/stucco, certain types of hinged roofs, and assembly of multistory designs) which would be part of the construction standards if factory installed. The commenter continued, however, that this work also becomes part of the home installation if it is to performed on-site. According to the commenter, the rule does not clearly distinguish “on-site construction” from “installation.” As a result, it may be difficult to determine whether HUD's Construction and Safety or Installation Standards apply.

HUD Response: HUD does not agree with the commenter, and believes that this final rule distinguishes between on-site construction work that could or should have been completed in the factory and work that is considered part of the installation of the home.

Comment: Several commenters stated that including the on-site installation of certain components such as the field installation of double exterior doors and of fireplace hearths that cross the mating line are too broad and should be questioned. According to the commenters, allowing unregulated entities to provide alternate or additional building components without the benefit of proper oversight should not be permitted. The commenters stated that some appliances are likely to be installed in new manufactured homes that will not only take the home out of compliance, but also defeat some of the safeguards provided in the present Construction and Safety Standards.

HUD Response: As stated in response to a previous comment, the field completion and installation of these components are permitted under § 3282.602(a)(4) and (a)(5) of this final rule. Site installation of these types of building components, including appliances and fireplaces, are subject to final inspection and oversight by the IPIA under this final rule.

Comment: Several commenters expressed disagreement with HUD's decision to codify the Model Manufactured Home Installation Standards in part 3285 rather than incorporating them in the Construction and Safety Standards in part 3280 of the Code of Federal Regulations. However, despite this disagreement, the commenters agreed with HUD that on-site work covered by the proposed rule clearly entails final “construction” of the home and is subject to the Federal preemption.

HUD Response: The National Manufactured Home Construction and Safety Standards Act does not permit “installation” to be considered as “construction” and does not authorize codification of the Model Installation Standards under the preemptive provisions of 24 CFR part 3280.

Comment: Several commenters stated that on-site inspection is a natural extension of the manufacturing process and, as a result, the inspection process should do the same. According to these commenters, each unit in the factory is inspected by an IPIA in at least one stage of its production. Further, manufacturer's personnel are responsible for inspection of all stages of production. The commenters submitted that this process should be applied to on-site construction and that the manufacturer's personnel certify completion, subject to sampling by the IPIA and that the frequency of inspections would be determined by the IPIA, based on the manufacturer's performance.

HUD Response: As the personnel and work crew at each home site typically varies, HUD considers the on-site construction work at each site to be similar to conducting a plant certification during which both the manufacturer and IPIA are responsible for inspecting each phase of the production to ensure the quality assurance system is properly functioning and the work performed conforms to the Standards. As such, the final rule makes the manufacturer responsible for satisfactory completion of all on-site work for each home and requires the IPIA to inspect all of the on-site construction work for each home.

Comment: Several commenters stated that the inspection process needs to be uniform nationally, and recommend that only HUD-approved IPIAs be permitted to conduct on-site inspections. These commenters supported the provisions in the rule prohibiting parties other than the plant's IPIA from being responsible for inspections of on-site work performed by individuals that may be unqualified since to do otherwise may result in insufficient oversight. Several commenters opposed requiring or permitting on-site inspections by any State entity other than an approved State stating that such an approach would discourage States from becoming SAAs and, thereby, weakening and undermining the Federal-State partnership envisioned by the Act. According to the commenters, a State option or mandate could also allow States to exercise IPIA-type enforcement powers without meeting all the requirements for HUD approval as an IPIA, thereby undermining HUD superintendence and control of the regulation of manufactured housing as provided by Federal law.

HUD Response: HUD agrees with these commenters. Inspections need to be uniform nationally and performed by entities that are knowledgeable with the requirements of the Standards. As a result and as stated in response to a previous comment, only IPIAs are authorized to conduct site completion inspections under this final rule.

Comment: Several commenters also stated that allowing non-IPIA agencies to regulate inspections of the on-site work would erode HUD's authority and is contrary to the existing and effective inspection process established by the current regulations. These commenters stated that inspections by non-IPIA agencies may expose consumers to inconsistent, ineffective, and more costly and/or improper regulation.

HUD Response: HUD agrees with these commenters and reiterates that only IPIAs are authorized to conduct site completion inspections under this final rule.

Comment: Other commenters, however, suggested that the final rule allow manufacturers to elect between on-site inspections by IPIAs or by other HUD-approved, non-IPIA licensed and insured individuals or entities, such as Registered Professional Engineers or Certified Architect-Engineers. According to the commenters, permitting on-site inspections by HUD-approved, independent, licensed professionals would result in more effective competition and more affordable inspection prices and ensure proper accountability for errors or omissions.

HUD Response: HUD's interest in ensuring that inspections are conducted by entities knowledgeable with the Construction and Safety Standards requires that it authorize only IPIAs to conduct site completion inspections under this final rule. However, an IPIA may authorize or designate a professional engineer or architect or other inspection professionals to conduct inspections on their behalf.

Comment: Several commenters stated that not every home needs to be inspected and recommended that the IPIA should inspect a percentage of homes that convinces them that the process is being completed as directed. They suggested that the IPIA determine how many inspections should be performed, based on the complexity and multiple uses of an approval across different models and in accordance with the regulations. The commenters based their recommendation on the fact that IPIA personnel do not inspect each home at every stage of production and are not required to inspect homes at any specific stage of production, or specifically upon completion in a production facility.

HUD Response: As noted in response to a previous comment, HUD believes that construction completed on-site is part of the final production necessary to complete the home. Notwithstanding, on-site construction necessarily involves the completion of a variety of unique design specification and quality control procedures which may be performed by staff or representatives assigned by the retailer or manufacture. HUD does not have a means to ensure that such staff has the proper qualifications and knowledge to perform the work. As a result, HUD believes that IPIA inspection of each home completed on-site is required to ensure compliance with the Safety and Construction Standards.

Comment: Commenters also suggested that manufacturers be allowed to exercise an election regarding the inspection of homes completed on-site, in place of the one-size-fits-all, 100 percent inspection mandated by the proposed rule. According to the commenters, such an approach would reduce costs and create flexibility for the IPIA and HUD to increase the frequency of inspection as warranted by a particular manufacturer's compliance with its DAPIA approved on-site design and the Standards. One commenter recommended that HUD modify the rule to permit manufacturers to elect 100 percent on-site inspection, offset by reduced in-plant inspections, or audit type inspections subject to frequency adjustments based on demonstrated compliance levels.

HUD Response: HUD does not agree with the commenters. Initially, given the scope and complexity of construction that may be completed on-site, inspection of each home at the construction site is not a “one-size-fits-all” procedure. Further, providing manufacturers the option of reducing in plant inspections for each on-site inspection misses the fact that inspections on-site differ in scope and purpose from in plant inspections. Consequently, IPIA inspection of each home completed on-site is required by this final rule to ensure conformance to the Standards and the manufacturer's designs and specifications.

Comment: Some commenters expressed concern that requiring an on-site inspection to be completed by the IPIA for every home prior to occupancy will result in lengthy delays in the construction and sales process, add unnecessary costs for the homebuyer, and reduce consumer satisfaction. Other commenters suggested that the rule be changed to reflect current inspection practices and extend flexibility to the IPIA for determining the frequency of on-site inspections as they deem necessary based on complexity of the design and history of past inspection.

HUD Response: HUD does not anticipate that the inspection of each home completed on-site will result in any additional time or delay than is currently required for IPIAs to conduct inspections under AC procedures.

Comment: Several commenters stated that the IPIA should designate who may act on its behalf. They also stated that the qualifications of individuals selected to act on behalf of the IPIA should be no different than those required of individuals conducting in-plant inspections.

HUD Response: Each IPIA may designate and authorize independent inspection professionals to conduct inspections on their behalf, as permitted by § 3282.607(d) of this final rule. Any IPIA that permits others to act on its behalf assumes full regulatory responsibility for those individuals.

Comment: Some commenters stated that designating those aspects subject to local inspection would be helpful as long as some consistency is maintained. However, other commenters stated that there should be no need for HUD's involvement in on-site work items that are not covered by or subject to the Standards. In addition, commenters also stated that when permits are required, those items are covered and inspected by the jurisdiction issuing the permit and these construction elements are the responsibility of others and outside the control of the manufacturer. Other commenters stated that this is not part of the regulatory responsibility of manufacturers under Manufactured Home Construction and Safety Standards and should not be required.

HUD Response: The final rule requires the IPIA, rather than a State or local authority having jurisdiction, to conduct the inspection. HUD does not agree with the commenters' suggestion to permit entities other than IPIAs to perform the final site inspection. HUD believes that entities such as State or local jurisdictions are often unfamiliar with the requirements of the Construction and Safety Standards and are not are authorized to conduct these inspections on HUD's behalf.

Comment: One commenter stated that the manufacturer, not the DAPIA, is responsible for the proper completion of all on-site work and, in conjunction with its IPIA, should be responsible for the proper inspection of such work. According to the commenter, 24 CFR part 3282, subpart I, makes the manufacturer responsible for noncompliances and defects in the home. As a result, the commenter recommended that the manufacturer and IPIA determine the appropriate qualifications for the on-site inspector in a given situation.

HUD Response: HUD agrees with the commenter. As a result, HUD has removed from this final rule the requirement proposed by § 3282.604(c) that would have made the DAPIA responsible for determining whether the on-site inspection required special testing or that the IPIA inspector have special qualifications to perform the on-site inspection.

Comment: Other commenters stated that the qualifications of individuals conducting on-site inspections should not be different than those of an IPIA inspector, and that the manufacturer and the IPIA should have responsibility for determining the appropriate qualifications of the on-site inspector in a given situation. Other commenters stated that the functions of the DAPIA and IPIA should complement each other rather than have barriers that prevent direct and open communication. As a result, these commenters stated that DAPIA oversight functions should not include responsibility for determining the specific skills necessary for an individual to conduct the on-site inspections.

HUD Response: As stated in the preceding response, HUD agrees with those comments and has removed from this final rule the provision that would have made the DAPIA responsible for determining whether the IPIA inspector requires special skills to conduct on-site inspections.

Comment: Several commenters stated that the rule should address completion timelines and not permit nonuniform deadlines. However, other commenters disagreed and stated that completion time deadlines have no place in a construction standard. These commenters stated that unforeseen circumstances may arise which, if addressed in the rule, would subject the manufacturer and the IPIA to legal liability or regulatory consequences. Another commenter stated that time frame deadlines are almost always a part of the contractual negotiation with the consumer. Another commenter stated that for display models, deadlines for completion would not be possible to predict.

HUD Response: HUD believes that the deadlines for completion should be negotiated by the parties to the transaction. As a result, HUD has not added completion timelines or deadlines to this final rule.

Comment: Several commenters suggested that arranging for the final inspection be left to private arrangements. Another commenter stated that HUD should specify that the retailer is responsible for notifying the manufacturer that a home is ready for final inspection.

HUD Response: HUD agrees with the commenter that recommended that arranging for the final inspection be left to private arrangements.

Comment: Several commenters stated that the retailer is responsible for such items and the manufacturer should not be held responsible. Other commenters state that repairs should be left to the private arrangements between the manufacturer and the retailer.

HUD Response: If a home is damaged on a retailer's lot, it cannot be sold by the retailer to a consumer until the home is brought into compliance with the Standards. If the manufactured home is damaged on-site by some other entity, the manufacturer of the home remains responsible for its required repairs. Under the final rule, the manufacturer is to complete the work and any repairs and may authorize a licensed contractor or similarly qualified person to complete the work or repairs.

Comment: One commenter stated that it should be left to the IPIA and the manufacturer to determine what happens if a home does not pass inspection and if they cannot reach consensus in a timely manner then the homeowner has legal rights to remedy the situation. Another commenters stated that, this should be left to private arrangements and noted that the rule is clear that the home may not be occupied absent a satisfactory inspection.

HUD Response: This final rule requires that each home must successfully pass a final on-site completion inspection. The rule leaves it to the IPIA and manufacturer to determine how to resolve any areas that do not pass inspection so that a successful final inspection can be completed.

HUD responded to comments submitted in response to this question in Section A, General Comments, of this preamble.

Comment: Several commenters stated that the retailer or manufacturer will advise the customer of any requirements applicable under the on-site construction approval during contract negotiations. Commenters recommended that the Consumer Information Notice be provided to the consumer when the contract is signed and that the homebuyer be required to sign the notice. Commenters stated that there is no need for notice to be posted in the home because this does not ensure that the consumer has read or will read the notice.

HUD Response: HUD believes the value in displaying the notice in the home is that it alerts perspective purchasers at the earliest opportunity that additional construction needs to be completed at the site before the home can be occupied. The final rule requires that the notice be both prominently displayed in the home and that a copy of the notice be given to prospective purchasers before the purchasers enter into a sales agreement to purchase the home. Removal or failure to provide the notice by any entity constitutes a violation of the regulations.

Comment: One commenter stated that times have changed and that unlike in the past, when retailers would purchase inventory to be sold off the lot, today's process is much different. According to the commenter, with few exceptions a potential customer will visit a model center and make decisions about floor plans, colors, exteriors, etc., and then have their home built. This is the point, according to the commenter, when the consumer needs to be informed about any SC approvals and the possible delay of their expected move‐in. The commenter also stated that the display of the notice in the unit is unnecessary and of little value since it is unlikely that a retailer would display a unit that required SC approval.

HUD Response: Under the final rule it is the responsibility of the retailer to provide the notice to all prospective purchasers before the prospective purchaser enters into an agreement to purchase the home, as required by § 3282.606(c).

Comment: One commenter stated that the rule should provide guidance on the issue to ensure uniformity and an even playing field for all regulated parties. Other commenters stated that regardless of what method HUD decides to use, the date of manufacture should be the date the label is affixed at the factory, prior to shipment, to allow completion of all paperwork that goes with the home. This will eliminate the need for additional paperwork, avoid miscommunications between the factory and the site, and ensure uniformity.

HUD Response: HUD agrees with the commenters that the date of manufacture is the date the label is affixed to a manufactured home at the factory, as specified in § 3282.7(h).

Comment: One commenter stated that the current AC reporting process (quarterly) be applied to this rule. Another commenter stated that any new paperwork and related costs under the rule should be minimized to the greatest degree possible, consistent with safety. The commenter agreed, however, that the existing form be used.

HUD Response: The final rule has been revised to require an SC numeric identification with the monthly 302 production form, in lieu of the brief description of the work performed that was indicated in the proposed rule. This will provide HUD with the most up-to-date information with regard to homes produced for site completion. Under the final rule, each IPIA is required to maintain complete inspection records of all on-site inspections for at least 5 years.

Comment: Some commenters indicated that IPIAs will be challenged to perform on-site inspections, especially those conducted out of State. These commenters also stated that any such concerns should be addressed outside of this rule, either in the regulations relating to State plans or as part of the regulations governing the qualification and approval of State IPIAs. Other commenters suggested that this issue be left to private arrangements between the State IPIA and the manufacturer. These commenters stated the IPIA, whether a State or private agency, must have the flexibility to select other qualified third-party inspectors for any on-site inspections.

HUD Response: HUD agrees that these arrangements are best addressed outside of the rule through private arrangements as suggested by some of the commenters. As a result, the final rule provides that the IPIA, whether State or private, is responsible for conducting the required on-site inspections by using its own inspectors or by independent qualified inspectors acceptable to the IPIA as its representative. The manufacturer is responsible for coordinating for these required inspections by the IPIA.

Comment: Some commenters suggested that inspection requirements should be left to the manufacturer designing and the DAPIA approving the design, who are the most qualified to determine the appropriate inspection levels on-site. Other commenters suggested that changing inspection requirements might reduce compliance costs but that it would also create confusion, disputes, and need for a more intricate inspection system.

HUD Response: HUD agrees with those commenters that stated that multiple inspection requirements would add unnecessary complexity to the rule and create confusion for the public. As a result, under the final rule, the inspection requirements are the same regardless of the type of site construction work that is being completed.

Comment: Commenters stated that special inspection requirements have no place in a construction standard and reiterate that inspection requirements should be left to the manufacturer and the DAPIA. Other commenters stated that there is no evidence that this issue would require special processing or inspection requirements.

HUD Response: There are no provisions in the final rule for the DAPIA to require special processing or inspection requirements. At the option of the DAPIA, it may determine whether any special processing or inspection requirements are needed for site completion of the home. In addition, this final rule is not applicable to completion of multistory homes and does not apply to attached garages as this subject is under current review by the MHCC and is expected to be addressed in future rulemaking by HUD.

Comment: A commenter stated that the manufacturer's IPIA must be allowed to use alternate, qualified inspectors outside their organization.

HUD Response: Section 3282.607(d) of the final rule allows independent, qualified inspectors acceptable to the IPIA to act as its representative or designee in making the required inspections.

Comment: Several commenters stated that the manufacturer's IPIA must be allowed to use alternate, qualified inspectors outside their organization. These commenters stated that if the IPIA is unable or unwilling to help select a qualified party for the inspection, the manufacturer should be given the authority to select the inspection agent.

HUD Response: Please see HUD's prior responses regarding the use of other professionals to conduct inspections on behalf of the IPIA.

Comment: Several commenters stated that submitting related paperwork prior to a consumer complaint should not be necessary and that additional paperwork is a barrier to streamlining the process and is contrary to HUD's intention in issuing this rule. A commenter also stated that SAAs can request service records from the manufacturer when they receive a consumer complaint. Other commenters stated that additional paperwork would unnecessarily increase costs without providing corresponding benefits for consumers.

HUD Response: In response to these comments, HUD has revised § 3282.608(m) of the final rule to require the manufacturer to provide a copy of the site report to an SAA, upon request.

Comment: Commenters stated that SAAs do not need to be involved in the SC process, unless, and until, they receive a consumer complaint. These commenters stated that the appropriate role of the SAA is to address consumer complaints and conduct monitoring as per the current procedural enforcement regulations.

HUD Response: HUD agrees. SAAs are not authorized to revoke or amend site construction approvals. Section 3282.609 of the final rule provides regulatory remedies if manufacturers fail to comply with the provisions of this final rule.

Comment: Several commenters suggested that the rule only require SC for fuel-burning, built-in appliances and be limited to those appliances furnished by the manufacturer. The commenters also stated that a customer who decides to furnish his own appliances should assume responsibility for installing them properly.

HUD Response: HUD considered these comments and concluded that the final rule should continue to allow for the installation of all appliances, subject to a final site inspection by the IPIA.

Comment: Several commenters stated that the manufacturer's responsibilities are clearly outlined in § 3282.605(c)

HUD Response: HUD agrees that the manufacturer's responsibilities are clearly delineated in the final rule.

Comment on § 3282.252(b): One commenter stated that the proposed amendment attempts to redefine when the “completion of the entire sales transaction” occurs and refers to the term “set-up,” which is not defined in either the Manufactured Home Procedural and Enforcement Regulations or this proposed rule.

HUD Response: HUD appreciates this comment and has changed the term “set-up” to “installation” in the final rule to be consistent with the terminology used in other parts of the rule.

Comment on § 3282.603(d): One commenter stated that this section would provide that all nine items delineated in paragraphs (d)(1) to (d)(9) must be included with each request for approval. According to the commenter, this is overly cumbersome. More specifically, the commenter recommended that paragraphs (d)(3), (d)(4), and (d)(6), be generalized and applicable to the process of SC as a whole and not be specific to and for any individual approval.

HUD Response: HUD does not agree with commenter. All items are needed and must be provided to the DAPIA for each site construction approval request to ensure that all site work can be completed in accordance with the manufacturers' designs, quality control procedures, standards, and regulations.

Comment on § 3282.605(d)(1): A commenter stated that there is no time limit for the IPIA to notify the manufacturers of the IPIA's final site inspection report.

HUD Response: HUD has revised § 3282.605(f) of the final rule to require the IPIA to notify the manufacturer within 5 business days of its acceptance of the manufacturer's final site inspection report.

Comment on § 605(d)(3)(i) to (iii): One commenter questioned if the IPIA must inspect the on-site completed work concurrently with the manufacturer, why would the IPIA have to “formally” accept or reject the inspection report. According to the commenter, waiting for the IPIA to issue a written acceptance delays the ability of the owner to move in and will inevitably lead to customer dissatisfaction.

HUD Response: As discussed in response to other comments in this preamble, HUD does not believe that issuance of a written acceptance by the IPIA will result any additional delays as that currently required by the AC procedures. Under the current AC procedures and the on-site procedures provided by this final rule, the IPIA must verify that all site completion work has been successfully completed by the manufacturer.

Comment on § 3285.801(f): Several commenters expressed concerns about moving single-hinged-roof designs from “installation” to “construction.” According to the commenters, the proposed rule would require that any hinged roof with a ridge box (peak cap) or peak flip (second hinge) be included under the on-site completion regime established by this final rule and, thereby, subject to inspection by the IPIA. They also suggested that this will subject nearly every home with a hinged roof to fall under this rulemaking and add significant cost to consumers. The commenters urged HUD to leave this section unchanged, enabling hinged roofs to be regulated by the installation standards.

HUD Response: The revisions HUD is making to § 3285.801(f) do not change current practice used to determine which types of hinged roofs are covered by HUD's Model Installation Standards and will only extend these requirements to peak cap or peak flip construction for roof slopes less than 7:12, as suggested by the commenters, when the home is designed to be located in Wind Zone I. Otherwise, the final rule does not change the type of hinged roofs considered as construction and subject to AC under current procedures.

Prior to this rule, HUD reviewed and approved requests for on-site completion of construction of manufactured homes under § 3282.14. This procedure can be lengthy and, when originally implemented, was not intended to address the evolution and sophistication of the current modern manufactured housing construction techniques. Manufactured homes now include home design features, such as stucco or brick, that cannot reasonably be completed in the factory and which are currently being completed on-site under the AC process. HUD also recognizes that many parts of modern manufactured homes, such as components of smoke alarm, heating, ventilation, air conditioning, and plumbing systems, are typically shipped loose with the home. It is only when these systems are completed that the homes comply with the Construction and Safety Standards.

This final rule establishes simplified, uniform procedures at 24 CFR part 3282, subpart M, that permit manufacturers to complete the construction of manufactured housing on-site, rather than in the factory, under certain circumstances, without obtaining advance approval from HUD. Under this final rule, HUD's approved DAPIAs and IPIAs (collectively known as Primary Inspection Agencies (PIAs) are authorized to approve and inspect certain construction for manufactured homes designed to be completed on-site. Delegating this responsibility to HUD's PIAs is consistent with HUD's policy to expand regulatory flexibility, encourage innovation in the construction of manufactured homes, and facilitate the timely completion of manufactured homes on-site.

As a result of this final rule, manufacturers may now complete the home in the factory, in accordance with the Construction and Safety Standards and an approved quality assurance manual, or may complete work on certain aspects of the home on-site in accordance with procedures established by this rule, which bring the home in conformance with the Construction and Safety Standards. The designs for construction work to be done on-site in accordance with the procedures in this final rule are subject to Construction and Safety Standards; accordingly, State and local jurisdictions are preempted from establishing their own design requirements for these aspects of the home, unless the requirements are identical to the Construction and Safety Standards. Manufacturers also may continue to seek approval through the AC process under the procedures established by § 3282.14 for construction that does not comply with the Construction and Safety Standards.

The Federal Manufactured Housing program is based upon national Construction and Safety Standards that are enforced through the manufacturer's quality control systems, in-plant compliance inspections by HUD-approved third-party agencies, and performance monitoring of those agencies in the plant. Given these conditions, this final rule does not permit major portions of a home to be completed beyond the plant, as that would avoid the normal inspection and certification process, and may frustrate legitimate local and State code enforcement efforts. Notwithstanding, § 3282.602 of this final rule lists aspects of construction of a manufactured home that may be approved to be completed on-site. Examples of the types of work that are not considered to involve substantial completion and which cannot be reasonably expected to be completed in the factory and to which the final rule applies include:

(a) Completion of roof dormers;

(b) Addition of stucco, stone, brick, or other siding that is subject to damage in transit;

(c) Retailer changes to the home on-site (such as add-ons subject to requirements established by the local authority having jurisdiction), when the home is taken out of compliance with the Construction and Safety Standards and then is brought back into compliance with the Standards. However, this provision does not apply to attached garages as this subject is under current review by the MHCC and is expected to be addressed in future rulemaking by HUD;

(d) Any hinged roof that is not considered part of the installation of the home (see § 3285.801(f)). Based on the recent recommendations of the MHCC and the comments received, the final rule now allows peak flip and peak cap construction in which the roof pitch of the hinged roof is less than 7:12, when located in Wind Zone I, to be deemed part of installation and exempt from IPIA inspection under the Regulations;

(e) Site installed appliances that are listed or certified for use in manufactured homes, such as a cooking range, furnace, or water heater; and

(f) Completion of any high-pitch (i.e., roof pitch equals or exceeds 7:12) hinged roof construction that conforms to the construction and safety standards when finished. Completion of lower-pitched hinged roofs that are not penetrated above the hinge and are designed for Wind Zone I would be considered installation and are not covered by this final rule.

The procedures established by this final rule eliminate much of the reporting for site inspections of completed homes previously required under the AC process. Under this final rule, the manufacturer is only required to report, to HUD or its agent, the State of first location of the home, its serial number, and a brief description of the work done on-site. This information is to be included on an updated HUD Manufactured Home Monthly Production Report (Form 302), which manufacturers have in the past used to report to their IPIA and to HUD (or their monitoring contractor) certain completion and shipping information on labeled units.

As stated in this preamble, manufacturers may continue to seek approval through the AC process, under the procedures established by § 3282.14, for construction that does not comply with the Construction and Safety Standards. HUD will utilize § 3282.14, as originally intended, to encourage innovation and the use of new technology that are not in conformance with the Construction and Safety Standards. The AC process is limited to specific circumstances and requires the manufacturer to submit a formal request to HUD and show that the construction it proposes provides performance that is equivalent or superior to that required by the Construction and Safety Standards. Examples of designs in which the completed home does not comply with the Construction and Safety Standards when finished and would therefore continue to require an AC approval include:

(a) Multistory homes that do not comply with the standards because of distance requirements to reach an exterior door for egress from a bedroom or other requirements;

(b) A home installed without floor insulation over a basement; that is, the existence of a basement will not substitute for insulation under the construction and safety standards (however, if the floor is properly insulated at the factory, it may be installed over a basement without having to use either the on-site or AC approval processes); and

(c) Attached garages, as this subject is under current review by the MHCC and is expected to be addressed in future rulemaking by HUD.

The procedures established by this final rule for on-site completion differ from the AC. Initially, this final rule applies to homes that can be certified as substantially meeting the requirements of the Construction and Safety Standards when labeled in the factory and that comply fully with those Standards when completed on-site. In addition, the on-site completion procedures established by this rule eliminate the direct HUD review and approval currently required under the AC process. Rather, this rule requires that manufacturers work directly with their DAPIAs and IPIAs to obtain approval to complete aspects of construction at the final home site.

This final rule will encourage the use of innovative designs and techniques that will further demonstrate the adaptability and versatility of manufactured housing. As manufacturers continue to make significant improvements to both the quality and the aesthetics of such homes, providing for simplified, uniform procedures that permit manufacturers to complete the construction of manufactured housing on-site, rather than in the factory, will support the increased recognition of manufactured homes as a viable source of unsubsidized, affordable housing and encourage zoning policies that do not discriminate against manufactured housing.

1. Purpose and applicability (§ 3282.601). Section 3282.601 establishes a procedure that allows manufacturers to deviate from existing completion requirements when an aspect of construction cannot reasonably be completed in the manufacturer's production facility. Manufacturers may utilize this procedure when all requirements of Subpart M are met. Generally, to be applicable a manufactured home must be: (1) Substantially completed in the factory; (2) meet the requirements of the Construction and Safety Standards upon completion of the site work; and (3) inspected by the manufacturer's IPIA, as provided in this subpart, unless specifically exempted as installation under HUD's Model Installation Standards, 24 CFR part 3285. These special procedures would be available only when the manufacturer, its DAPIA, and its IPIA agree to follow them, and can only be used if all affected homes are substantially completed in the factory, as defined.

2. Qualifying construction (§ 3282.602). Section 3282.602 describes those aspects of the construction of a manufactured home that may be completed on-site, under the Construction and Safety Standards, in accordance with the requirements of this subpart. Generally, the on-site approval process is available for work to complete a partial structural assembly or system that cannot reasonably be done in the factory. The reasons for this difficulty may result, for example, from transportation limitations, design requirements, or delivery of an appliance ordered by a homeowner. This final rule clarifies when work on certain hinged roofs can be completed under the installation standards, rather than through the on-site process under the Construction and Safety Standards.

3. Request for approval; DAPIA approval (§ 3282.603). Under this final rule, the manufacturer must request and obtain DAPIA approval to complete, on-site, the final, limited aspects of construction of a manufactured home that would be substantially completed in the factory (i.e., the home leaving the factory must include: (1) A complete chassis; and (2) structural assemblies and plumbing, heating, and air conditioning systems that are complete except for limited construction that cannot reasonably be completed in the manufacturer's production facility and that the DAPIA has approved for completion on-site). Among other things, in the approval, the DAPIA will identify what work will be completed on-site through use of a unique site completion numeric identification for each manufacturer and will authorize a notice that includes a description of this work, identify instructions authorized for completing the work on-site (including any special conditions and requirements), and list all models for which the DAPIA approval is applicable.1 As part of its approval, the DAPIA will stamp or sign each page of any set of designs accepted for completion on-site, and will include an “SC” designation on each page that includes an element of construction that is to be completed on-site.

In addition, the DAPIA must approve the part of the manufacturer's written quality assurance manual that is applicable to completing the manufactured homes on-site under the Construction and Safety Standards. When the part of the quality assurance manual applicable to the on-site completion also has received the concurrence of the IPIA, the system may be approved as part of the manufacturer's quality assurance manual. If this approval is not done as part of the initial approval of the entire quality assurance manual, the pertinent part of the manufacturer's manual will be deemed a change to be incorporated into the manual in accordance with established procedures (see §§ 3282.203(e) and 3282.361(c)(4)). The approval will also include other requirements, such as a quality control checklist to verify that all required components, materials, labels, and instructions needed for site completion are provided by the manufacturer and an inspection checklist, developed by the manufacturer and approved by the DAPIA, to be used in the manufacturer's and IPIA's final inspections. As with the procedures followed under an approval for AC, the manufacturer's IPIA is responsible for ensuring that the homes the IPIA inspects under the new procedures comply with the changes in the quality assurance manual, as provided in § 3282.362(a) of the existing regulations, and with the approved design or, where the design is not specific, to the Construction and Safety Standards.

4. DAPIA responsibilities (§ 3282.604). In addition to the DAPIA's regular duties under § 3282.361, this section provides that the DAPIA is also responsible for:

(a) Verifying that the manufacturer submits all required information, when a manufacturer seeks a DAPIA's approval to complete any aspect of construction on-site under § 3282.603;

(b) Reviewing and approving the manufacturer's designs, site completion instructions, and quality assurance manuals for the site work that is to be performed;

(c) Determining whether there are any other requirements or limitations deemed necessary or appropriate; and

(d) Revoking or amending its approval for on-site construction, as provided in § 3282.609, after determining that the manufacturer is: (1) Not complying with the terms of the approval or the requirements of § 3282.610; (2) the approval was not issued in conformance with the requirements of § 3282.603; (3) a home produced under the approval fails to comply with the Federal construction and safety standards or contains an imminent safety hazard; or (4) the manufacturer failed to make arrangements for one or more manufactured homes to be inspected by the IPIA prior to occupancy. Upon revocation or amendment of a DAPIA approval, the DAPIA must immediately notify the manufacturer, the IPIA, and HUD.

5. Requirements applicable to completion of construction (§ 3282.605). After an acceptable final inspection of work completed on-site, the manufacturer must report to HUD or its agent the serial number and a brief description of the work done on-site for each home produced under these procedures. This report must be consistent with the DAPIA approval and is to be submitted, in part, on the updated production Form 302. A copy of this report also must be submitted to the SAAs of the States where the home is substantially completed in the factory and where the home is sited, upon request. The serial numbers as provided by the manufacturer must contain the prefix or suffix “SC,” for site construction.

Based on the comments received, the final rule does not require a unique on-site completion label as indicated in the proposed rule, but instead requires that homes or sections of such homes have a label affixed in accordance with § 3282.362(c)(2) and be shipped with a Consumer Information Notice that meets the requirements of § 3282.606. Approved designs for completion of aspects of construction outside of the manufacturer's plant must be marked with the identification code for the appropriate approved set of designs, and must be included as a separate part of the manufacturer's approved design package. All aspects of construction that are completed on the final home site remain the responsibility of the manufacturer, which must ensure that the home is properly labeled and, as part of its final on-site inspection report provided to the IPIA, certify that the work is consistent with DAPIA-approved instructions and conforms with approved designs or, as appropriate under § 3282.362(a)(1)(iii), conforms to the Construction and Safety Standards. The IPIA is required to review all of the manufacturer's final on-site inspection reports and to inspect all on-site work completed pursuant to an approval under this new process. If the IPIA determines that the manufacturer is not performing adequately in conformance with the approval, the IPIA may require reinspections, until it is satisfied that the manufacturer is conforming to the conditions included in the approval. Based on public comments HUD has revised § 3282.605(d)(4) to require that the manufacturer provide the purchaser or lessor a copy of the final site inspection report within 5 business days of the IPIA's notification of its acceptance of the report.

6. Consumer information (§ 3282.606). In addition to the on-site completion certification label, this section requires that the home must be shipped with a “NOTICE” that explains that the home will comply with the requirements of the Construction and Safety Standards only after all of the limited on-site work has been completed in accordance with detailed instructions provided by the manufacturer, and the home has been inspected. The “NOTICE” is to be displayed in a prominent and highly visible location within the home (e.g., a kitchen countertop or front door), and include information instructions for those aspects of construction to be completed on-site and provided with the home. The notice may only be removed after the final inspection report is completed and the purchaser or lessor is provided with a copy of the report.

The sale or lease of the manufactured home to the purchaser will not be considered complete (see § 3282.252(b)) until the purchaser has been provided with a copy of the manufacturer's final site inspection report, including the certification of completion that has been reviewed and accepted by the IPIA. However, HUD does not intend that failure to provide this report within 5 days of the date of the IPIA's notification will constitute a breach of contract. The manufacturer must maintain in its labeling records an indication that the final on-site inspection report and certification of completion has been provided to the purchaser and the retailer.

7. Responsibilities of the IPIA (§ 3282.607). The responsibilities of the IPIA include, in addition to the IPIA's regular duties under § 3282.362:

(a) Working with the manufacturer and the manufacturer's DAPIA to ensure that the manufacturer's quality control system has the proper procedures and controls to assure that the on-site construction work will conform to DAPIA-approved designs and HUD's construction and safety standards;

(b) Providing the certification labels that the manufacturer may use to label a home that has been substantially completed in the factory;

(c) Monitoring the manufacturer's system for tracking the status of homes built under the approval until the on-site work and necessary inspections have been completed, to assure that the work is being performed properly on all applicable homes;

(d) Performing the required inspections of the manufacturer's reports and site work, to verify compliance with the manufacturer's quality control system, the approved designs, and, as appropriate, the Construction and Safety Standards. Only the IPIA, or other qualified independent inspector acceptable to and acting on behalf of the IPIA, may perform these inspections. The inspector must be free of any conflict of interest (see § 3282.359) and not be involved in the sale or site completion of the home; and

(e) Maintaining a copy of each final site inspection report submitted by a manufacturer and each inspection report prepared or accepted by the IPIA, and reporting to HUD, the DAPIA, and manufacturer if one or more manufactured homes has not been site inspected prior to occupancy or if arrangements have not been made to site inspect one or more manufactured homes.

8. Manufacturer's responsibilities (§ 3282.608). The manufacturer's responsibilities include:

(a) Certifying the completed home is constructed in conformance with the Federal Manufactured Home Construction and Safety Standards, as indicated on the label, in § 3282.362(c)(2) of the Manufactured Home Procedural and Enforcement Regulations;

(b) Completing all work performed on a home that is necessary to assure compliance with the Construction and Safety Standards, regardless of who does the work or where it is completed. Such responsibility would not extend to any limited close-up work for multiple-section homes, as defined as installation work in the model installation standards;

(c) Working with the DAPIA and IPIA to obtain approval and concurrence on the quality control system the manufacturer will use to assure that the on-site work is performed according to DAPIA-approved designs, and to incorporate this system into the manufacturer's quality assurance manual;

(d) Working with the DAPIA to develop an approved checklist, providing the IPIA with the checklist to be used when the IPIA inspects the home after completion on-site, and notifying the IPIA that the home is ready to be inspected;

(e) Maintaining a system for tracking the status of homes built under the approval, to ensure that each home installed on a building lot has the on-site work and necessary inspections completed;

(f) Paying IPIA costs for performing on-site inspections;

(g) Providing inside the home and to the IPIA, a copy of the instructions for completing the work on-site, for monitoring/inspection purposes (the copy provided in the home may be provided with the installation instructions in the home). Either before, or at the time on-site work commences, the manufacturer must provide the IPIA with a copy of any applicable, DAPIA-approved quality assurance manual for on-site completion changes; the approved instructions for completing the construction work on-site; and the approved inspection checklist;

(h) Satisfactory completion of all on-site work construction and required repairs or authorizing a licensed contractor or similarly qualified person to complete all site inspection and repairs.

(i) Providing a copy of the final site inspection report and certificate of completion to the IPIA; first purchaser or lessor of the home, prior to occupancy; to the appropriate retailer, and to the SAA upon request;

(j) Maintaining a copy of the site inspection report and the notification of the IPIA's approval or acceptance of this report;

(k) Notifying the appropriate State or local jurisdiction of any add-on to the home, as referenced in § 3282.8(j), that is not covered by the manufacturer's inspection and certification of completion, but about which the manufacturer knows or reasonably should have known. The manufacturer is not required to provide this notification if the manufacturer knows that the State or local jurisdiction has already inspected the add-on; and

(l) Providing cumulative quarterly production inspection reports to HUD or its agent.

9. Enforcement (§§ 3282.609, 3282.610, and 3282.611). A manufacturer or IPIA found to be in violation of the requirements for this procedure may lose the discretion to utilize the on-site completion procedure in the future. HUD or the DAPIA also may withdraw or amend an approval for on-site construction if the manufacturer does not comply with the requirements for the approval or produces a home that does not comply with the Federal Construction and Safety Standards. Other remedies provided separately under the Act and HUD's regulations will also continue to be available, as applicable, but HUD would consider a manufacturer or IPIA that complies with the requirements for on-site completion to be in compliance with the certification requirements of the Act and regulations for aspects of construction that are covered by the on-site completion approval.

This final rule includes conforming changes to 24 CFR part 3280. Initially, HUD is revising § 3280.5 to require that the manufacturer's data plate contain information, if applicable, stating that, except for the components completed on-site, the home has been substantially completed in accordance with an approved design and has been inspected in accordance with the Construction and Safety Standards.

In addition, and as discussed in the preamble of the proposed rule, HUD is revising the structural design requirements in § 3280.305 for attic areas with high- or low-pitched roofs. As discussed in the preamble of the June 23, 2010, proposed rule, HUD stated that this rule as proposed would apply to the completion of any high-pitched (i.e., the roof pitch equals or exceeds 7:12), hinged roof construction that conforms to the Construction and Safety Standards when finished. HUD sought public comment on whether different treatment for high-pitched roofs was needed since a portion of the attic would meet the ceiling-height/living-spaces requirements of the Construction and Safety Standards and, as such, would require the attic floor to be designed for floor live loads of 40 pounds per square inch. In response to this request, most commenters stated that extending on-site completion to certain installation work, such as a hinged roof, would be appropriate since this work is done under the guidance of the manufacturer. Another commenter stated that HUD should not allow the inspection of certain roof pitches to be under the installation standards, while requiring inspection of others under the provisions of the on-site construction rule. No commenter addressed whether HUD should conform the Construction and Safety Standards for high-pitched roofs that create attic space to be designed to resist a minimum design live load of 40 pounds per square foot, in accordance with 3280.305(g) of the standards, the design standard for floors, or that roofs with slopes of less than 7:12 that contain an attic area for storage be required to be designed for a storage live load of 20 pounds per square foot. As a result, as provided in the June 23, 2010, proposed rule, HUD is conforming the Construction and Safety Standards to address these elements of the home that results when the roof is raised via construction on-site in this final rule.

The final rule includes conforming changes to three other sections of 24 CFR part 3282. A conforming amendment is made to § 3282.252 (b) to change the term “dealer” to “retailer.” HUD is also conforming this section to this final rule by providing that the sale is complete upon delivery to the site, except that sales under this final rule will not be considered complete until the purchaser or lessor has been provided with a final site inspection report. A conforming amendment is also made to § 3282.552 to specify the information that is included on the reports currently submitted under 24 CFR part 3282. Finally, HUD is also using this rulemaking to make a technical correction to the heading of § 3282.8(a), which would be updated from “mobile homes” to “manufactured homes”.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if the regulation is necessary, to select the regulatory approach that maximizes net benefits. Because this final rule allows manufactured housing manufacturers to complete construction of certain homes at the installation site without seeking advance approval from HUD, and thereby eliminating costly processing and construction delays, the rule was determined to not be a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and therefore was not reviewed by the Office of Management and Budget (OMB).

This final rule establishes simplified, uniform procedures at 24 CFR part 3282, subpart M, that permit manufacturers to complete the construction of manufactured housing on-site, rather than in the factory, under certain circumstances, without obtaining advanced approval from HUD. Given the objective of the Federal Manufactured Housing program, this final rule does not permit major portions of a home to be completed beyond the plant, as that would avoid the normal inspection and certification process, and may frustrate legitimate local and State code enforcement efforts. Notwithstanding, this final rule lists numerous aspects of construction of a manufactured home that may be approved to be completed on-site.

This final rule will encourage the use of innovative designs and techniques that will further demonstrate the adaptability and versatility of manufactured housing and eliminate the need for manufactures to apply for advance approval to complete construction of a manufactured home on-site. Easing the process for on-site construction of manufactured homes supports achievement of the goal of widely available safe, durable, and affordable manufactured housing.

This final rule contains provisions that are subject to review by the OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As required by the Paperwork Reduction Act, HUD published a description of these provisions, with estimates of annual reporting, recordkeeping, and notice requirements, on June 15, 2015, at 80 FR 34165. Interested persons are encouraged to review and provide comment on HUD's proposed information collection. The 180-day delayed effective date for this rule will provide HUD the opportunity to complete the approval process for this final rule prior to its effective date. In accordance with the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information, unless the collection displays a currently valid OMB control number.

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This final rule does not impose any Federal mandates on any State, local, or tribal governments or the private sector within the meaning of UMRA.

A Finding of No Significant Impact (FONSI) with respect to the environment was approved at the proposed rule stage in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is available for public inspection between the hours of 8 a.m. and 5 p.m., weekdays, in the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500. Due to security measures at the HUD headquarters building, please schedule an appointment to review the FONSI by calling the Regulations Division at 202-402-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number through TTY by calling the Federal Information Relay Service at 800-877-8339 (this is a toll-free number).

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. It is HUD's position that this final rule does not have a significant economic impact on a substantial number of small entities. HUD and MHCC have recognized the benefit of maximizing opportunities for housing manufacturers to complete construction of some homes at the installation site without seeking advance approval from HUD. This final rule promotes this shared goal. The manufactured housing industry is rapidly expanding its offerings, and the inclusion of new design elements is viewed as key to the growth of this industry. On-site installation of innovative design elements will improve the aesthetic quality and overall attractiveness of the manufactured housing product, increasing the appeal of these homes to the public and improving cost effectiveness for the manufacturers, by allowing them to complete these structures at the construction site by installing these features there.

This rule also alleviates burden for all manufacturers, large and small, because it makes tangible streamlined improvements to the system regulating on-site construction of manufactured homes. This rule establishes procedures whereby manufacturers could complete construction of new manufactured housing on-site without being required to apply for HUD approval for on-site construction. This rule would apply only to work done to complete the manufacturing process required by the Manufactured Home Construction and Safety Standards. It would not affect the installation of homes subject to the model Manufactured Home Installation Standards, or apply in instances where a major portion of the home is to be constructed on site. In addition, this rule applies only to a subset of the total number of manufactured housing manufacturers—those that decide to incorporate the new design elements into their products. It is not a requirement that all manufacturers do so.

Finally, this final rule will have a beneficial effect by reducing the paperwork burden and costs of construction delays for all housing manufacturers, large or small. These manufacturers will no longer be required to apply repeatedly for variances regarding on-site construction utilizing design elements and innovations that are expected to become commonplace over time. Easing the process for on-site construction of manufactured homes supports achievement of the goal of widely available safe, durable, and affordable manufactured housing.

Accordingly, the undersigned certifies that this rule would not have a significant economic impact on a substantial number of small entities.

Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial direct compliance costs on State and local governments and is not required by statute or the rule preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. This final rule does not have federalism implications and would not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive order.

Background

On September 5, 2012, the Treasury Department and the IRS issued temporary regulations (TD 9598) (the “Temporary Regulations”) that revised the legging out rules of § 1.988-5(a)(6)(ii) applicable to hedging transactions under section 988(d). No public hearing was requested or held. One comment was received, which is available at www.regulations.gov or upon request. After consideration of the comment, the Temporary Regulations are adopted as final regulations without substantive change. The Temporary Regulations are removed.

The only comment received on the Temporary Regulations suggested that the promulgation of the Temporary Regulations was unnecessary because the prior regulations did not support the taxpayer reporting position that the Temporary Regulations were designed to prevent. The comment considered the taxpayer position addressed in the Temporary Regulations to be inconsistent with both the purposes of section 988(d) and the economic substance of the transaction. Although the comment finds the Temporary Regulations ultimately unnecessary, it acknowledges that the section 988 hedging rules are a complicated area of law and that the prior regulations could be improved to provide greater certainty to taxpayers. The Treasury Department and the IRS have determined that the Temporary Regulations are useful in clarifying the section 988(d) integration rules—as well as in preventing unintended approaches to legging out under those rules—and thus should be adopted as final.

The comment recommended that the Treasury Department and the IRS consider aligning the hedge integration regime under section 988 with the approach taken in regulations under section 1275 on the basis that the section 1275 approach is more consistent with economic reality. The § 1.1275-6 regulations generally allow the integration of a qualifying debt instrument with a hedge or combination of hedges if the combined cash flows of the components are substantially equivalent to the cash flows on a fixed or variable rate debt instrument. However, a financial instrument that hedges currency risk cannot be integrated as a § 1.1275-6 hedge. See § 1.1275-6(b)(2). Under the legging out rules of § 1.1275-6, a taxpayer that legs out of an integrated transaction is treated as terminating the synthetic debt instrument for its fair market value and recognizing any gain or loss. If the taxpayer remains liable on the qualifying debt instrument after the leg-out, adjustments are made to reflect any difference between the fair market value of the qualifying debt instrument and its adjusted issue price. If the taxpayer remains a party to the § 1.1275-6 hedge, the hedge is treated as entered into at its fair market value. By contrast, subject to § 1.988-5T(a)(6)(ii)(F), the legging out rules under § 1.988-5 treat a taxpayer that legs out of a synthetic debt instrument under section 988 as having disposed of any remaining hedges, and those hedges cannot be part of a qualified hedging transaction for any period after the leg-out date.

The Treasury Department and the IRS have determined that achieving greater alignment between the hedge integration regimes under sections 988 and 1275 is beyond the scope of this project and unnecessary to achieve the purpose of the Temporary Regulations. The limited purpose of the Temporary Regulations was to clarify the application of the legging out rules under § 1.988-5 to a particular fact pattern rather than to undertake a more general revision of those rules. When some of the hedge components of a qualified hedging transaction are disposed of on a leg-out date, deeming a disposition of all remaining components is sufficient to achieve a clear reflection of income. Continuing to treat the remaining components as integrated, as under the rule of § 1.1275-6, would represent a departure from the approach taken in the original § 1.988-5 regulations. Nonetheless, the Treasury Department and the IRS will continue to consider whether the hedge integration regimes under sections 988 and 1275 should be modified and brought into closer conformity.

As further support for the recommendation to achieve better alignment between §§ 1.988-5 and 1.1275-6, the comment also suggested that the provision in § 1.988-5T(a)(6)(ii)(F) of the Temporary Regulations, which was also included in the prior final regulations, would be unnecessary if the regulations were modified to conform to § 1.1275-6. Under § 1.988-5T(a)(6)(ii)(F), if a taxpayer legs out of a qualified hedging transaction and realizes a gain with respect to the debt instrument or hedge that is disposed of or otherwise terminated, then the taxpayer is not treated as legging out if during the period beginning 30 days before the leg-out date and ending 30 days after that date the taxpayer enters into another transaction that, taken together with any remaining components of the hedge, hedges at least 50 percent of the remaining currency flow with respect to the qualifying debt instrument that was part of the qualified hedging transaction. Section 1.988-5T(a)(6)(ii)(F) also provides a similar rule where a taxpayer has a qualified hedging transaction comprised of multiple components. In such a case, the taxpayer will not be treated as legging out of the qualified hedging transaction if the taxpayer terminates all or a part of one or more of the components and realizes a net gain with respect to the terminated component, components, or portions thereof, provided that the remaining components of the hedge by themselves hedge at least 50 percent of the remaining currency flow with respect to the qualifying debt instrument that was part of the qualified hedging transaction.

The comment suggests that this provision of the section 988 hedging rules is unnecessarily complex, as well as incomplete because it does not cover situations in which, upon legging out, a taxpayer recognizes a loss on the debt instrument or hedge that is disposed of or otherwise terminated. However, as stated in this preamble, in issuing the Temporary Regulations, the Treasury Department and the IRS only sought to clarify the application of the section 988 hedging rules to a particular fact pattern and did not seek to undertake a more general revision of those rules. Accordingly, the Treasury Department and the IRS have determined that modifications to § 1.988-5T(a)(6)(ii)(F) are beyond the scope of this guidance project. However, the Treasury Department and the IRS will continue to consider whether any modifications to the rule are necessary or appropriate.

Finally, the comment also recommended that, even if the final regulations do not adopt the recommendation to align with the approach taken in § 1.1275-6, the Temporary Regulations should be modified to provide that, when an issuer of a qualifying debt instrument legs out but continues to be the obligor on the qualifying debt instrument, the issuer should be deemed to repurchase and reissue the debt instrument for its then fair market value. The Temporary Regulations instead provide that, in such a case, the debt instrument is “treated as sold for its fair market value.” The comment notes that the sale of a debt instrument has no tax consequences for the issuer of the instrument. The Treasury Department and the IRS agree that this aspect of the Temporary Regulations should be modified and, for the sake of consistency, these final regulations adopt the phrasing “treated as sold or otherwise terminated by the taxpayer for its fair market value,” which is used in § 1.988-5(a)(6)(i)(C) (regarding legging in).

The final regulations also update the dates in two existing examples, to be consistent with the applicability date of the revised legging out rules. Additionally, the final regulations reflect minor wording changes to the Temporary Regulations for purposes of improving clarity. The Treasury Department and the IRS do not intend these changes to be interpreted as substantive changes to the Temporary Regulations.

Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that these regulations will not have a significant impact on a substantial number of small entities. This certification is based upon the fact that these regulations merely clarify an existing standard and do not impose a collection of information on small entities. Accordingly, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

The principal author of these regulations is Sheila Ramaswamy, Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development.

Accordingly, 26 CFR part 1 is amended as follows:

Throughout this document wherever “we”, “us” or “our” is used, it is intended to refer to the EPA. Information is organized as follows:

On September 27, 1995, the EPA approved the general conformity rules in Article 7 of the Alaska Administrative Code (AAC) Title 18, Chapter 50 into the Alaska SIP (60 FR 49765). General conformity is a requirement of section 176(c) of the CAA to ensure that no federally supported actions outside of highway and transit projects interfere with the purpose of the approved SIP, i.e. the SIP's protection of the national ambient air quality standards (NAAQS). General conformity requirements currently apply to the following criteria pollutants: Ozone, particulate matter, carbon monoxide, and nitrogen dioxide. The general conformity regulation is found in 40 CFR part 93, subpart B and in 40 CFR 51.851.

On December 29, 1999, the EPA approved the transportation conformity rules in Article 7 of the Alaska Administrative Code (AAC) Title 18, Chapter 50 into the Alaska SIP (64 FR 72940). Transportation conformity is required under section 176(c) of the Act to ensure that federally supported highway, transit projects, and other activities are consistent with (“conform to”) the purpose of the SIP. Transportation conformity currently applies to areas that are designated nonattainment, and to areas that have been redesignated to attainment after 1990 (maintenance areas) with plans developed under section 175A of the Act, for the following transportation related criteria pollutants: Ozone, particulate matter (PM2.5 and PM10), carbon monoxide, and nitrogen dioxide. The transportation conformity regulation is found in 40 CFR part 93, subpart A, and in 40 CFR 51.390.

On August 10, 2005, the “Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users” (SAFETEA-LU) transportation act was signed into law, and among other things, it amended the CAA to eliminate the requirement for states to adopt and submit general conformity SIPs. On April 5, 2010 (75 FR 17254), the EPA updated the general conformity SIP regulations to be consistent with the transportation act by eliminating the Federal regulatory requirement for states to adopt and submit general conformity SIPs. See 40 CFR 51.851. On May 7, 2015, with a supplementary letter received July 29, 2015, the Alaska Department of Environmental Conservation (ADEC) submitted a request to update the transportation conformity regulations and to remove the general conformity regulations from the Alaska SIP.

We reviewed the State of Alaska's (the State) transportation conformity and general conformity SIP submittal to ensure consistency with the current CAA, as amended by the transportation act, and EPA regulations governing state procedures for both transportation and general conformity.

Alaska's submittal revises transportation conformity criteria and procedures related to interagency consultation, and enforceability of certain transportation related control and mitigation measures. Alaska's SIP revision updates the State's transportation conformity provisions, Article 7 of the Alaska Administrative Code (AAC) Title 18, Chapter 50 (18 AAC 50), to be consistent with the Act as amended by SAFETEA-LU and EPA regulations (40 CFR part 93 and 40 CFR 51.390). The EPA has reviewed the submittal to assure consistency with the Act as amended by SAFETEA-LU and EPA regulations (40 CFR part 93 and 40 CFR 51.390) governing state procedures for transportation conformity and interagency consultation and has concluded that the submittal is approvable. Details of our review are set forth in a technical support document (TSD), which has been included in the docket for this action. Specifically, in the TSD, the EPA identifies how the submitted procedures, as clarified by the State's July 29, 2015, supplement, satisfy the requirements under 40 CFR 93.105 for interagency consultation with respect to the development of transportation plans and programs, SIPs, and conformity determinations, the resolution of conflicts, and the provision of adequate public consultation, and our requirements under 40 CFR 93.122(a)(4)(ii) and 93.125(c) for enforceability of control measures and mitigation measures.

Alaska's SIP revision also addresses general conformity requirements. The revision removes the general conformity regulations from the Alaska SIP. These regulations are no longer necessary since the establishment of the SAFETEA-LU removed the requirement for states to maintain general conformity regulations. Specifically, 40 CFR 51.851(a) was changed to indicate that states “may,” not “must” submit to the EPA a general conformity SIP because, as 40 CFR 51.851(b) indicates, Federal agencies shall use the provisions of 40 CFR part 93, subpart B in addition to any existing applicable state or tribal requirements to review the conformity of Federal actions in nonattainment or maintenance areas. Alaska's removal of general conformity rules from its SIP meets the requirements set forth in section 110(l) of the CAA with respect to adoption and submission of SIP revisions. 40 CFR part 93, subpart B continues to subject certain Federal actions to general conformity requirements without the need for identical state rules and SIPs. Therefore, repealing the state rule will not impact continuity of the general conformity program in Alaska, and consequently meets the requirements of section 110(l). Alaska's request to remove the general conformity regulations from the Alaska SIP is approvable.

The EPA is approving and incorporating by reference into the Alaska SIP the revisions to 18 AAC 50 Article 7, Transportation Conformity, and supporting definitions in 18 AAC 50 Article 9, General Provisions, submitted by the State of Alaska on May 7, 2015, and supplemented on July 29, 2015. The revisions are State effective April 17, 2015. We note that we are not approving the revision to 18 AAC 50.735 because the State determined it was submitted in error, and requested in the July 29, 2015 supplement that the EPA not approve the revision. The State intends to rescind the rule section in the near future. We also note that the May 7, 2015 submittal included a number of rule revisions to 18 AAC 50 Articles 1 and 2, which are not related to transportation and general conformity. We intend to address those rule revisions in a separate action.

The EPA is approving but not incorporating by reference supplementary letter submitted by Alaska on July 29, 2015. The July 29, 2015 supplement clarifies that Alaska Statute (AS) 40.25.110 and AS 40.25.115, and implementing regulations at 2 AAC 96, Public Information, adequately address availability of materials and reasonable costs associated with access to public records with respect to Transportation Conformity.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is incorporating by reference the provisions set forth below. The EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or in hard copy at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Public Law 104-4);

• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and

• does not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

The SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 9, 2015. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's Federal Register, rather than file an immediate petition for judicial review of this direct final rule, so that the EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons stated in the preamble, 40 CFR part 52 is amended as follows:

The EPA published a document in the Federal Register on July 8, 2015, (80 FR 38959) approving revisions to various sections of the California State Implementation Plan (SIP) in § 52.220, Subpart F. This correction adds the appropriate amendatory language.

In FR Doc. 2015-16627 appearing on page 38964 in the Federal Register on July 8, 2015 (80 FR 38959) make the following correction:

Section 464z-3 (42 U.S.C. 285t) of the Public Health Service (PHS) Act authorizes the Director of the NIMHD to carry out a program to facilitate minority health disparities research and other health disparities research by providing research endowments to eligible centers of excellence under sections 736 and 464z-4 of the PHS Act. The program is called the NIMHD Research Endowment Program (Endowment Program). The objective of the Endowment Program is to build research and training capacity and infrastructure at eligible section 736 health professions schools (42 U.S.C. 293) and section 464z-4 biomedical and behavioral research institutions (42 U.S.C. 285t-1) to facilitate minority health and other health disparities research to close the disparity gap in the burden of illness and death experienced by racial and ethnic minority Americans and other health disparity populations. Endowment Program activities may include strengthening the research infrastructure through the renovation of facilities, purchasing of state-of-the-art instruments and equipment, and enhancing information technology; enhancing the academic environment by recruiting a diverse faculty and creating relevant courses in such topics as research methodology and health disparities as additions to the existing curriculum; enhancing recruitment of individuals currently underrepresented in the biomedical, clinical, behavioral, and social sciences; or other relevant activities.

Section 464z-4 of the PHS Act authorizes the NIMHD Director to make awards to designated biomedical and behavioral research institutions, alone or as a participant in a consortium, that meet certain criteria for the purpose of assisting the institutions in supporting programs of excellence in training for individuals who are members of minority health disparity populations or other health disparity populations. This program is called the NIMHD Centers of Excellence Program. Section 464z-4(f) of the PHS Act permits the NIMHD Director to expend a portion of such an award for research endowment.

To be eligible to apply for the Endowment Program, Centers of Excellence (funded under section 736 or section 464z-4 of the PHS Act) must have an institutional endowment that is equal to or less than 50 percent of the national median of endowment funds at institutions that conduct similar biomedical research and training of health professionals. Endowment Program applications filed by institutions meeting eligibility requirements undergo peer review by outside experts to evaluate the scientific and technical merit of the proposed activities and the adequacy of the endowment fund management plan. Reviewers use the criteria of significance, investigators, innovation, approach, and environment to determine the overall impact of the application. After receiving an Endowment Program award, a grantee must provide documentation to the NIMHD over a 20-year period regarding endowment fund activity, including investments, income, and expenditures for activities consistent with its strategic plan.

This final rule specifies the endowment research grants or endowment portion of an award to which the regulations apply (section 52i.1), the definitions (section 52i.2), who is eligible (section 52i.3) and how to apply for a grant under the program (section 52i.5), and under what conditions an eligible institution that is a recipient may transfer to a foundation a research endowment grant (section 52i.4). Additionally, the final rule specifies how endowment grant applications will be evaluated (section 52i.6), the nature of the grant awards (52i.7), how much endowment fund income a grantee may withdraw and spend and for what purpose (sections 52i.9 and 52i.10), what a grantee must record and report (section 52i.11), and when and for what purposes a grantee may spend the endowment fund corpus (section 52i.8). This final rule also specifies what happens if a grantee fails to administer the research endowment grant in accordance with applicable regulations (section 52i.12), what other HHS policies and regulations apply (section 52i.13), and what additional conditions the NIMHD Director may impose when, in the Director's judgment, the conditions are necessary (section 52i.14).

NIH announced its intentions to take this rulemaking action, through HHS, in the notice of proposed rulemaking (NPRM) titled “National Institute on Minority Health and Health Disparities Research Endowments” published in the Federal Register on June 14, 2013 (78 FR 35837-35844). In the NPRM, we provided a sixty day public comment period. The comment period expired August 13, 2013. We received a total of five comments, two of which were identical.

Three respondents, two of whom submitted identical comments, expressed general support for the regulations. One of these respondents cited the importance of clarity regarding eligibility, the application process, and other required terms and conditions. The other two respondents discussed health disparities in the United States and research as a means to support health equity for all people in the United States. These supportive comments did not result in any necessary changes to this final rule.

One respondent stated that the Department of Health and Human Services (HHS) should require all municipalities and States that receive Federal funds from HHS for the provision of health care to notify HHS of the reasons for not considering or exploring solicited or non-solicited health disparities proposals they have received within 90 days. Since this comment is not related to any of the provisions of the Endowment Program, we did not consider the comment relevant to this rulemaking.

A fifth respondent provided comments addressing a number of issues relevant to the rulemaking, which are discussed below. This respondent requested clarification of the definition of a “Center of Excellence,” specifically, whether the act of receiving funds under section 736 or section 464z-4 is necessary for an institution to meet the definition of a Center of Excellence for purposes of the Endowment Program. The designation as a Center of Excellence for the purposes of the Endowment Program requires both receiving funding under section 736 or section 464z-4 of the Public Health Service Act and meeting certain specific nonfinancial institutional operational requirements as specified in section 736(c)(2)-(5) or section 464z-4(c)(1), respectively. The funding component of the definition in section 52i.2 is intended to clarify that an institution must be an active Center of Excellence under section 736 or section 464z-4 to be eligible for an endowment grant under this program. An institution is not eligible merely because it may be able to satisfy the nonfinancial requirements to qualify for funding under section 736 or section 464z-4.

This respondent also requested that institutions be allowed to apply for another Endowment Program grant prior to their last year of funding. We disagree with the comment. The intent of the language in the regulation is to prevent an eligible entity with an active award from having more than a single endowment grant at any given time.

This respondent additionally inquired whether awardee institutions may now directly conduct health disparities research projects instead of capacity building for the conduct of research projects because Endowment Program applications undergo scientific peer review. This is not the case. At the NIH, the peer review of applications determines the technical and scientific merit of the proposed project. The process of peer review does not in itself convey any meaning regarding the particular activities allowed under a grant program. The Endowment Program supports the development of research infrastructure and capacity which is the underpinning of the conduct of research projects.

This respondent raised concerns regarding the scientific peer review of applications and the expertise of the members of the review groups, suggesting that applicants be able to suggest potential candidates for each review group. We disagree with the comment. One of the hallmarks of the NIH is objective, peer review of applications for financial support. The organizational units within NIH that are responsible for the review of applications take deliberate steps to ensure that the reviewers have the appropriate expertise for the applications to be reviewed. Allowing applicants to suggest potential reviewers would interfere with NIH procedures designed to prevent possible financial and scientific conflicts of interest in the review of applications.

This respondent also expressed the belief that requiring the endowment fund corpus to be maintained for 20 years after the end of the award period is too restrictive, suggesting that awardees be given greater flexibility and allowed to expend a proportion of the endowment fund corpus earlier than 20 years. We disagree with the comment. Institutional endowments, in general, are designed to create a long-term asset capable of generating income for an extended period of time. Since the focus of the Endowment Program is to build institutional capacity and infrastructure to conduct health disparities research, any diminution of the endowment corpus in the short-term would be at odds with the goals and objectives of the Endowment Program.

This respondent requested clarity on what actions would satisfy the requirement that awardees take “appropriate actions” in cases where the investments have eroded into the value of the endowment corpus. We have not specified a strict definition for “appropriate actions” in order to allow each institution the flexibility to manage their endowment funds effectively. Certainly, a review and change of investment strategy to a more conservative approach would be an option. A temporary suspension of investment due to adverse market conditions could also be an appropriate action. We did not want to be prescriptive, but would expect actions to be reasonable and consistent with prevailing practices in the management of institutional endowments.

This respondent also inquired as to whether management costs for the endowment fund can be paid from the endowment fund itself. Section 52i.11(a)(4) of the proposed rule provided that expenses and charges associated with the management of the endowment funds may be paid from “the grant funds.” Since the endowment fund corpus cannot be used for this purpose, section 52i.11(a)(4) has been amended to replace “the grant funds” with “endowment fund income” to clarify the issue. Awardees are expected to ensure that those costs are appropriately recorded.

This respondent suggested adding a reference to an “institution's policies and procedures” to section 52i.9(b) regarding the expenditure of endowment fund income. We disagree with the comment. Section 52i.7(b) already specifies the need for the awardee to adhere to the institution's spending rules and policies, provided that such spending rules are not inconsistent with applicable federal regulations and policies.

This respondent requested clarification on the timing for the filing of the final Financial Status Report under section 52.11(d). Upon approval of an application for the Endowment Program, NIMHD agrees to provide financial support for a specified project period, usually five years. Due to the unique nature of the program, it is reasonable for the long-term reporting requirement to begin at the end of the project period. To clarify the filing requirement, section 52i.11(d) has been amended to replace “date of the original award” with “end of the project period.” In addition, sections 52i.7(e) and 52i.8(a) have been amended in a consistent manner to replace “date of award” with “end of the project period.”

Finally, with regard to actions that may be taken if a grantee fails to administer the endowment in accordance to the regulations, this respondent believes that the awardee should be given an opportunity to rectify an error, unless such an error or failure was intentional. We agree with the comment with the following qualification. The specific language in section 52i.12 is consistent with the financial stewardship responsibilities of the Federal government. The opportunity for a full and fair hearing is provided and the Director of NIMHD has discretion regarding any action to be taken depending on the circumstances of the breach in responsibilities. Limiting the range of actions available to the NIH in situations of an awardee's poor endowment fund management, even if non-intentional, would not be appropriate.

The published NPRM contained two typographical errors that have been corrected in this final rule. First, under the definition of “endowment fund” in section 52i.2, the reference to “section 464z-4” should have been “section 464z-3” of the PHS Act. Second, in the discussion of the sections of the proposed regulations that contain requirements subject to the Paperwork Reduction Act of 1995, the reference to section “52i.9” should have been specified as section “52i.9(b)”. That error has been corrected in the final rule, consistent with the correct identification of section 52i.9(b) in the Reporting part of the Estimated Annual Reporting and Recordkeeping Burden table included in the NPRM and this final rule. The published NPRM contained a table on the cost burdens for reporting and recordkeeping for the NIMHD Research Endowment Program. In the final rule it has been labeled “ESTIMATED ANNUALIZED COST BURDEN TO THE RESPONDENTS FOR REPORTING AND RECORDKEEPING UNDER THE NIMHD RESEARCH ENDOWMENT PROGRAM.” An additional column (designated as the 4th) was added to the table as “Average Burden per Respondents (in hours)” and columns 1, 2 3, 5, and 6 were re-titled as “Final Rule Citations,” “Number of Respondents,” Number of Responses per Respondent,” “Hourly Wage Rate,” and “Total Cost Burden,” respectively. The dollar amounts in the Hourly Wage Rate column were edited to reflect the actual cost per hour for responses. In addition, the footnotes for the table were edited to be consistent with the table.

The Regulatory Flexibility Act section of the final rule has been revised to clarify that while all eligible institutions are considered small entities, the impact of the final rule will not exceed five percent of revenues of the entities.

We have examined the impacts of this rule as required by Executive Order 12866, Regulatory Planning and Review (September 30, 1993); Executive Order 13563, Improving Regulation and Regulatory Review (January 18, 2011); the Regulatory Flexibility Act (5 U.S.C. 601-612); the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4); and Executive Order 13132, Federalism (August 4, 1999).

Executive Order 12866, Regulatory Planning and Review, directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in one year). Based on our analysis, we believe that the final rule does not constitute an economically significant regulatory action. Additionally, if a regulatory action is deemed to fall within the scope of the definition of the term “significant regulatory action” contained in section 3(f) of Executive Order 12866, pre-publication review by the Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget (OMB) is required. This final rule was reviewed under the criteria of Executive Order 12866 and was not deemed a “significant regulatory action.”

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects; distributive impacts; and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

The final rule will add transparency for potential applicants regarding who is eligible and how to apply for a grant under the program, how grant applications will be evaluated, and under what conditions an eligible institution that is a recipient may transfer to a foundation a research endowment grant. Additionally, the final rule specifies the nature of the grants, how much endowment fund income a grantee may withdraw and for what purpose, what a grantee must record and report, and when and for what purposes a grantee may spend the endowment fund corpus.

This final rule also enhances compliance and effective fiduciary responsibilities for the federal government. It specifies what happens if a grantee fails to administer the research endowment grant in accordance with applicable regulations, what other HHS policies and regulations apply, and additional conditions the NIMHD Director may impose when, in the Director's judgment, the conditions are necessary. The Director may, with respect to any grant award, impose additional conditions prior to, or at the time of, any award when in the Director's judgment the conditions are necessary to ensure the carrying out of the purposes of the award, the interests of the public health, or the conservation of grant funds.

Based on the provisions of the PHS Act, approximately twelve Institutions of Higher Education (IHEs) are eligible for the NIMHD Research Endowment Program. Costs for participation can be subdivided into those associated with the application process and those required for the necessary recordkeeping. The application process includes a competitive submission, as well as noncompetitive progress report for those institutions awarded funds under the NIMHD Research Endowment Program for subsequent years within the project period. Based on estimates provided in the PHS 424 instructions, an average application should require approximately 22 hours to complete and 15 hours for a subsequent progress report, according to the PHS 2590 instructions. The contribution of various professional disciplines such as biomedical researchers, contract/grants specialists, and technical staff to the reporting and recordkeeping requirements varies. Cost estimates are based on a blended analysis of institutional salary structure and prevailing market conditions for certain categories of personnel. In addition, fiscal year 2012 NIH salary limitations were included in the derivation of cost estimates, where applicable.

This is a summary of the Commission's Order; FCC 15-81, adopted and released on July 16, 2015. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 12th Street SW., Washington, DC 20554 or at the following Internet address: https://www.fcc.gov/document/fcc-adopts-plan-modernize-field-operations-0. Alternative formats are available to persons with disabilities (braille, large print, electronic files, audio format); to obtain, please send an email to [email protected] or call the Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

1. Through this Order, we act to improve the Commission's efficiency, effectively manage Commission resources, and align the Commission's field enforcement activities with contemporary needs for a field enforcement presence. With its 24 field offices (“Field”) and Equipment Development Group, the Enforcement Bureau resolves interference issues, assists with disaster recovery, and enforces technical compliance with Commission rules and the Communications Act. The current model of the Field was adopted approximately 20 years ago.1 Since then, technological changes and increasingly limited resources have created the need to take a fresh look at the Bureau's Field operations. The Commission has completed a full review of the mission, processes, and organization of the Field. Our review concludes that our Field resources should be concentrated in urban areas where the need for them is greatest. This Order refocuses the Field on enforcement of our radio frequency spectrum rules and other key regulations in a high impact and cost effective manner that is better aligned with the priorities of the Commission and the Bureau as a whole.

2. The Commission has determined to make changes to the Field in order to create a more effective organization within the limits of our budgetary constraints. By this action we restructure the Enforcement Bureau's field operations to implement the changes. The Field reorganization will better align the Field's mission with the priorities of the Commission, increase efficiency in terms of both employee performance and management oversight, and enable updating the employee skillset and equipment deployed in the Field. We take this action after extensive outreach to internal and external stakeholders, including a survey of field personnel and interviews with field staff, current and former management, outside experts, regulatees, and other government agencies. We also reviewed field operations by other federal agencies and examined the Bureau's enforcement activity database to assess the Field's caseload, efficiency, and effectiveness.

3. Based on that comprehensive review, the Commission, the Office of Managing Director and the Enforcement Bureau will take several actions to realign the mission and resources of the Field. The Bureau's field offices will primarily support the enforcement of the Commission's radiofrequency interference requirements and other key rules. These enforcement efforts will be guided by the priorities of the Commission and the Enforcement Bureau and occur in the manner likely to have the greatest impact, in the most cost effective way possible.

4. The Field will embark on a program to update its equipment and employee skillset to address the likely issues that will accompany new and expanded uses of spectrum. This program will include the expanded use of remotely operated monitoring equipment to supplement field staff, as well as the identification and use of portable devices capable of assessing interference issues in bands expected to experience heavy spectrum use. Upon completion of all required implementation steps, the Commission will first apply the net savings resulting from this reorganization effort to this program, before applying those monies to the agency's general fund. The net savings will not be used to increase the number of full-time non-field-related employees in the headquarters office of the Enforcement Bureau.

5. The Bureau will close its field offices in or near Anchorage, Alaska; Buffalo, New York; Detroit, Michigan; Houston, Texas; Kansas City, Missouri; Norfolk, Virginia; Philadelphia, Pennsylvania; San Diego, California; San Juan, Puerto Rico; Seattle, Washington; and Tampa, Florida. Relatedly, the Enforcement Bureau field offices in or near Atlanta, Georgia; Columbia, Maryland; and San Francisco, California will relocate to FCC-owned properties nearby or in the same metropolitan areas. In addition, recognizing that current work volume does not require full-time employees, the Bureau will contract with local personnel to maintain a field presence in Alaska and Puerto Rico and will also periodically dispatch field agents to Kansas City, Missouri.

6. All Bureau field agents shall have electrical engineering backgrounds.

7. The relocated offices identified in paragraph 5 and the remaining offices in or near New York City, New York; Miami, Florida; Dallas, Texas; Chicago, Illinois; Boston, Massachusetts; Denver, Colorado; Honolulu, Hawaii; New Orleans, Louisiana; Portland, Oregon; and Los Angeles, California will be staffed and equipped to maintain the Commission's Field program.

8. Within 6 weeks of release of this Order, the Bureau will establish procedures for industry and public safety complainants to escalate their complaints within the Field organization.

9. The Commission will continue to work with outside stakeholders to develop a comprehensive policy and enforcement approach to the issue of unlicensed radio broadcasting.

10. The Commission will implement a nationwide outplacement effort to assist all displaced employees to find positions in the public or private sectors, including other vacancies within the Commission for which they are qualified and selected.

11. The amendments adopted herein pertain to agency organization, procedure, and practice. Some of the amendments are administrative updates to rules that were inadvertently not revised during prior agency organization efforts.2 Other amendments add references to the FCC Web site where parties and the Commission may obtain information more efficiently than they could by the current practice of addressing requests to the Field. The remainder of the amendments conform the rules to the current practice. Consequently, the requirement of notice and comment and the effective date provisions of the Administrative Procedures Act, 5 U.S.C. 553(b) and (d), do not apply. Authority for the amendments adopted herein is contained in Sections 4(f)(1), 4(g), 4(i), 5(b), 5(c)(1) and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(f)(1), (g), (i), 155(b), 155(c)(1), and 303(r).

This document does not contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13.

The Commission will not send a copy of this Order pursuant to the Congressional Review Act, 5 U.S.C. 801(a)(1)(A), because the adopted rules pertain to agency organization, procedure, and practice.

12. Accordingly, It is ordered that, pursuant to Sections 4(f)(1), 4(g), 4(i), 5(b), 5(c)(1) and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(f)(1), (g), (i), 155(b), 155(c)(1), and 303(r) the Enforcement Bureau's Field operations be restructured.

13. It is further ordered that the field offices in or near Anchorage, Alaska; Buffalo, New York; Detroit, Michigan; Houston, Texas; Kansas City, Missouri; Norfolk, Virginia; Philadelphia, Pennsylvania; San Diego, California; San Juan, Puerto Rico; Seattle, Washington; and Tampa, Florida be closed. The Bureau will contract with local personnel to maintain a field presence in Alaska and Puerto Rico and will also periodically dispatch field agents to Kansas City, Missouri.

14. It is further ordered that the Enforcement Bureau relocate field offices in or near Atlanta, Georgia; Columbia, Maryland; and San Francisco, California to nearby FCC-owned properties.

15. It is further ordered that all Enforcement Bureau field agents shall have electrical engineering backgrounds.

16. It is further ordered that the Commission devote resources to provide its field staff with the training and equipment to address new interference threats in bands that are currently in use, as well as bands that are not yet widely utilized. The equipment should focus on portable, cost-effective devices as well as remotely-operated spectrum monitoring equipment deployable on a permanent or temporary basis. Upon completion of all required implementation steps, the Commission will first apply the net savings resulting from this reorganization effort to this program, before applying those monies to the agency's general fund. The net savings will not be used to increase the number of full time non-field-related employees in the headquarters office of the Enforcement Bureau.

17. It is further ordered that, within 6 weeks of release of this Order, the Enforcement Bureau will establish procedures for industry and public safety complainants to escalate their complaints within the Field organization.

18. It is further ordered that the Commission will continue to work with outside stakeholders to develop a comprehensive policy and enforcement approach to the issue of unlicensed radio broadcasting.

19. It is further ordered that the Commission implement a nationwide outplacement effort to assist all displaced employees to find positions in the public or private sectors, including other vacancies within the Commission for which they are qualified and selected.

20. It is further ordered that effective upon publication of this Order in the Federal Register that Sections 0.111, 0.314, 0.317, 0.401, 0.421, 0.555, 2.106, 2.405, 11.35, 15.239, 18.115, 18.117, 73.688, 73.1030, 73.1690, 74.24, 74.25, 76.613, 78.11, 78.19, 80.59, 80.1067, 90.425, 95.129, 95.208, 95.209, 95.408, 95.409, 97.13, 97.109, 97.203, 97.309, 97.311, and 97.313 of the Commission's rules are amended as indicated in the Appendix.

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 0, 2, 11, 15, 18, 73, 74, 76, 78, 80, 90, 95, and 97 as follows:

In rule FR Doc. 2015-16206 published in the Federal Register at 80 FR 38293, July 2, 2015, make the following corrections: