Notice and Request for Comments on HUD's Implementation of the Small Business Regulatory Enforcement Fairness Act of 1996

SUMMARY: This notice solicits comments on HUD's implementation of the

Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).

The notice describes HUD's implementation to date of SBREFA and

additional implementation plans.

DATES: Comment Due Date: July 20, 1998.

ADDRESSES: Interested persons are invited to submit comments regarding

this document to the Regulations Division, Office of the General

Counsel, Room 10276, Department of Housing and Urban Development, 451

Seventh Street, SW, Washington, DC 20410-0500. Communications should

refer to the above docket number and title and to the specific sections

in the regulation. Facsimile (FAX) comments are not acceptable. A copy

of each communication submitted will be available for public inspection

and copying during regular business hours at the above address.

FOR FURTHER INFORMATION CONTACT: Casimir Bonkowski, Director, Office of

Small and Disadvantaged Businesses, Department of Housing and Urban

Development, Room 3130 451 Seventh Street, S.W., Washington, DC 20410,

telephone 202-708-1428. Hearing- or speech-impaired persons may use the

telecommunications system for the hearing-impaired (TTY) by contacting

the Federal Information Relay Service on 1-800-877-TTY (1-800-877-8339)

or (202) 708-9300. (Other than the ``800'' TTY number, telephone

numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. The Small Business Regulatory Enforcement Fairness Act

The Small Business Regulatory Enforcement Fairness Act of 1996

(Pub.L. 104-121, 110 Stat. 847, approved March 29, 1996) (``SBREFA'')

provides, among other things, for agencies to establish specific

policies or programs to assist small entities. Small entities include

small businesses, nonprofit organizations, and small governmental

jurisdictions.

Section 213 of SBREFA requires each covered agency to establish a

program to answer inquiries concerning information and advice about

compliance with statutes and regulations within the agency's

jurisdiction. The agency must use information received during these

inquiries to help small entities interpret and apply the regulations to

specific facts.

Section 223 of SBREFA requires each covered agency to establish a

policy or program to reduce or waive civil penalties when a small

entity violates a statute or regulation. Under appropriate

circumstances, an agency may consider ability to pay when it assesses a

penalty against a small entity. 1

---------------------------------------------------------------------------

\1\ The applicable procurement statutes and regulations do not

provide for special consideration of or rights for small

governmental entities. SBREFA did not make statutory changes that

would result in changes to the Federal Acquisition Regulation to

address small entities.

---------------------------------------------------------------------------

II. Identification of HUD Regulations That May Have a Significant

Economic Impact on a Substantial Number of Small Entities

Although HUD is not generally regarded as a ``regulatory agency'',

HUD has important regulatory responsibilities, including oversight and

enforcement of the Real Estate Settlement Procedures Act (RESPA) and

the Interstate Land Sales Full Disclosure Act; oversight over certain

activities of government-sponsored enterprises (GSEs); oversight and

enforcement of FHA mortgage insurance programs; and the establishment

and enforcement of lead-based paint hazard control standards and

manufactured housing standards.

HUD has long had in place a systematic process for determining

whether newly developed rules are likely to have a significant economic

impact on a substantial number of small entities. The typical HUD rule

implements statutory directions for the administration of grant

programs. Rules of this type are intended to reflect Congressional

mandates that, by their nature, have universal applicability to the

portion of the public affected by the rule. These rules generally do

not lend themselves to the provision of special procedures, or

exemptions from requirements, applicable to small entities. Although

HUD Rules are generally not the type to lend themselves to special

procedures or exemptions for small entities, HUD nevertheless has

developed a process intended to introduce additional scrutiny to

existing procedures for safeguarding the interests of small entities

during development and following implementation of regulations.

To ensure that there is a meaningful assessment of HUD rules to

determine which rules, if any, will have a significant economic impact

on substantial number of small businesses, HUD:

(1) Targets regulations that may impact small businesses at the

earliest opportunity in the development process; and

(2) Assigns oversight responsibility to HUD's Office of Small and

Disadvantaged Business Utilization (OSDBU) to review:

(i) the HUD program office's assessment of any significant economic

impact on a substantial number of small entities;

(ii) the HUD program office's assessment and disposition of all

alternative rule implementation strategies submitted by small entities,

and

(iii) the small entity compliance guides prepared by the program

offices, where applicable.

III. Guidance to Small Entities

To help small entities understand their obligations under the

regulations administered by HUD, HUD provides both general guidance and

individualized advice. OSDBU maintains the requirements of the SBREFA

and Regulatory Flexibility Act on the HUD web site with instructions to

small entities on the OSDBU role as small business Ombudsman, as well

as copies of compliance guides, names of HUD staff with familiarity in

HUD programs that may impact small businesses, to answer questions, and

a users forum where representatives of small entities can ask questions

on a specific rule as a means of providing a fast means of clarifying

issues. Additionally, small entities can download regulations, forms,

and documentation from the HUD web pages. If a small entity does not

have access to a computer, HUD will mail this information on request.

To ensure that we evaluate and update our small entity assistance

program periodically, HUD works with the Small Business Administration

to identify small business concerns in the housing industry.

IV. Rights of Small Entities in Enforcement Actions

Section 223 of SBREFA requires agencies that regulate the

activities of small entities to establish a policy or program to reduce

or, under appropriate circumstances, waive civil penalties when a small

entity violates a statute or

[[Page 28215]]

regulation. (For purposes of brevity, this policy or program is

referred to as the ``small entity compliance policy.'')

Section 223 also requires an agency's small entity compliance

policy to contain conditions or exclusions (subject to any restrictions

or limitations that may be imposed on the agency by other statutes),

which conditions or exclusions may include, but are not limited to the

following:

(1) Requiring small entities to correct the violation within a

reasonable correction period;

(2) Limiting applicability of the small entity compliance policy to

violations discovered when small entities participate in a compliance

assistance or audit program operated by the agency;

(3) Excluding from applicability of the small entity compliance

policy those small entities that have been subject to multiple

enforcement actions by the agency;

(4) Excluding from applicability of the small entity compliance

policy violations involving willful or criminal conduct or that pose

serious health, safety, or environmental threats, safety, or requiring

a good-faith effort to comply with the law.

Federal statutes and regulations authorize HUD to impose civil

penalties in conjunction with regulatory and enforcement issues. Under

these authorities, HUD has authority to issue civil money penalties for

violations of requirements governing its grant, mortgage insurance, and

the regulatory programs, identified earlier in this notice.

In establishing its policy for implementation of SBREFA, following

enactment of SBREFA, HUD reported to President Clinton and the Congress

that, under appropriate circumstances, HUD may consider ability to pay

in determining penalty assessments on small entities. HUD notes that

the ability to pay is a legislative directive for many programs under

the Department of Housing and Urban Development Reform Act of 1989

(Pub. L. 101-235, approved December 15, 1989). HUD's policy to date has

been to assist regulated entities in achieving compliance with

requirements in order to avoid any penalty process.

Where penalties are determined appropriate, HUD's policy is to

consider: (1) the nature of the violation (the violation must not be

one that is repeated or multiple, willful, criminal or poses health or

safety risks), (2) whether the entity has shown a good faith effort to

comply with the regulations; and (3) the resources of the regulated

entity. Depending upon the circumstances surrounding the violation, it

is not HUD's intent to put any individual or entity out of business by

the penalties or settlement amounts paid to the Federal Government.

V. Small Entities' Comments on Agencies Enforcement Activities

Section 222 of SBREFA requires the Small Business and Agriculture

Regulatory Enforcement Ombudsman to ``work with each agency with

regulatory authority over small businesses to ensure that small

business concerns that receive or are subject to an audit, on-site

inspection, compliance assistance effort other enforcement related

communication or contact by agency personnel are provided with a means

to comment on the enforcement activity conducted by this personnel.

To implement this statutory provision, the Small Business

Administration has requested that agencies include the following

language on agency publications and notices which are provided to small

businesses concerns at the time the enforcement action is undertaken.

The language is as follows:

Your Comments Are Important

The Small Business and Agriculture Regulatory Enforcement

Ombudsman and 10 Regional Fairness Boards were established to

receive comments from small businesses about federal agency

enforcement actions. The Ombudsman will annually evaluate the

enforcement activities and rate each agency's responsiveness to

small business. If you wish to comment on the enforcement actions of

[insert agency name], call [provide telephone number].

HUD intends to work with the Small Business Administration to

provide small entities with information on the Fairness Boards and

National Ombudsman program, at the time enforcement actions are taken,

to ensure that small entities have the full means to comment on the

enforcement activity conducted by HUD. HUD intends to include this

language in HUD general circulation issuances and publications

regarding enforcement actions. HUD welcomes comments on the manner in

which it has implemented SBREFA to date, and the additional action

intended to be taken as described in this notice.

Dated: May 14, 1998.

Andrew Cuomo,

Secretary.

[FR Doc. 98-13636 Filed 5-20-98; 8:45 am]

BILLING CODE 4210-32-P