[Federal Register Volume 59, Number 211 (Wednesday, November 2, 1994)]
[Proposed Rules]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27097]
[[Page Unknown]]
[Federal Register: November 2, 1994]
_______________________________________________________________________
Part III
Department of Housing and Urban Development
Environmental Protection Agency
_______________________________________________________________________
24 CFR Part 38
40 CFR Part 745
Lead; Proposed Requirements for Disclosure of Information Concerning
Lead-Based Paint in Housing; Proposed Rule
Federal Register / Vol. 59, No. 211 / Wednesday, November 2, 1994 /
Proposed Rules
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 38
[Docket No. R-94-1756; FR-3483-P-01]
RIN 2501-AB58
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 745
[OPPTS-62130; FRL-4637-4]
RIN 2070-AC75
Lead; Proposed Requirements for Disclosure of Information
Concerning Lead-Based Paint in Housing
AGENCIES: Department of Housing and Urban Development (HUD) and the
Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: Section 1018 of the Residential Lead-Based Paint Hazard
Reduction Act of 1992 directs EPA and HUD to jointly issue regulations
requiring disclosure of certain information by persons selling or
leasing (leasing includes renting) housing that may contain lead-based
paint or lead-based paint hazards. Under that authority, EPA and HUD
propose the following requirements. Sellers and lessors, or any agent
acting on their behalf, of most residential housing built before 1978
would be required to provide purchasers and lessees with all
information known to the seller, lessor, or agent on the presence of
lead-based paint and lead-based paint hazards, as well as an EPA
pamphlet on lead-based paint hazards. In addition, sellers would be
required to grant purchasers 10 calendar days to conduct an inspection
or risk assessment for lead-based paint hazards before being obligated
under any contract to purchase that housing. Finally, the regulation
would require that a standard warning, disclosure, and acknowledgement
form be attached to all leases and sales contracts involving target
housing. The rule would require the completion of these disclosure
activities before the purchaser or lessee had become obligated under
any contract to purchase or lease the target housing.
DATES: Written comments in response to this proposed rule must be
received on or before January 3, 1995. If persons request time for oral
comment, EPA and HUD will consider holding an informal hearing in
Washington, DC. Requests for oral comment must be received by December
2, 1994. EPA and HUD will decide whether to hold such a hearing by
December 19, 1994. The exact date, time, and location of any such
hearing will be made available by telephoning EPA's Environmental
Assistance Division at the telephone number listed under FOR FURTHER
INFORMATION CONTACT. For further information regarding the submission
of information claimed as confidential business information (CBI), see
Unit XI of this preamble.
ADDRESSES: Please submit three copies of all written comments on this
joint HUD/EPA proposed rule, including any comments directed
specifically to HUD, to: TSCA Document Receipts (7407), Rm. E-G99,
Office of Pollution Prevention and Toxics, Environmental Protection
Agency, 401 M St., SW., Washington, DC 20460. All comments on this
proposed rule should be identified by the docket number OPPTS-62130A.
In order to reduce the burden on the commenters, receipt of all
comments will be centralized at EPA.
FOR FURTHER INFORMATION CONTACT: For general information or to obtain
copies of the proposed rule, contact Susan B. Hazen, Director,
Environmental Assistance Division (7408), Office of Pollution
Prevention and Toxics, Environmental Protection Agency, 401 M St., SW.,
Washington, DC 20460, Telephone: 202-554-1404, TDD: 202-554-0551. For
technical information: At HUD, contact Conrad C. Arnolts, Office of
Lead-Based Paint Abatement and Poisoning Prevention, Department of
Housing and Urban Development, 451 7th St., SW., Washington, DC 20410,
Telephone: (202) 755-1810. At EPA, contact Charles Franklin, Program
Development Branch, Chemical Management Division, Office of Pollution
Prevention and Toxics, Environmental Protection Agency, 401 M St., SW.,
Washington, DC 20460, Telephone: 202-260-1781.
SUPPLEMENTARY INFORMATION:
I. Authority
This proposed rule is issued under the authority of section 1018 of
the Residential Lead-Based Paint Hazard Reduction Act of 1992, [42
U.S.C. 4852(d)]. The Residential Lead-Based Paint Hazard Reduction Act
is Title X of the Housing and Community and Development Act of 1992,
Public Law 102-550.
II. Background
A. Legal Background
In 1992, Congress, recognizing the need to control exposure to
lead-based paint hazards, passed the Residential Lead-Based Paint
Hazard Reduction Act of 1992 (the Act). The main purpose of the Act was
to develop the infrastructure and standards necessary to reduce lead-
based paint hazards in housing (section 1003 of the Act). Congress
recognized that lead poisoning is a particular threat to children under
age 6, and particularly emphasized the needs of this vulnerable
population within various sections of the Act. Section 1021 of the Act
amends the Toxic Substances Control Act (``TSCA''), 15 U.S.C. 2601 et
seq., by adding a new Title IV entitled ``Lead Exposure Reduction.''
Actions under some sections of the Act are to be implemented and
administered by HUD, some by EPA, and some jointly by both agencies,
often in consultation with other federal agencies.
This proposed rule is issued under the authority of section 1018 of
the Act. Section 1018 requires EPA and HUD to jointly promulgate
regulations for disclosure of lead-based paint or lead-based paint
hazards in target housing which is offered for sale or lease. Target
housing is defined in section 1004(27) of the Act and in Unit V. of
this preamble. Specifically, section 1018 requires: (1) Sellers or
lessors to provide the purchaser or lessee of target housing with a
lead information pamphlet to be developed under section 406(a) of TSCA;
(2) sellers and lessors of target housing to disclose any known lead-
based paint or lead-based paint hazard in such housing; (3) sellers of
target housing to permit purchasers a 10-day opportunity to conduct a
risk assessment or inspection for the presence of lead-based paint
hazards; and (4) attachment of a lead warning statement to each
contract for purchase and sale of target housing. Violation of section
1018 may result in civil and criminal penalties and potential triple
damages in a private civil suit. Section 1018 provides that regulations
under this section must be promulgated no later than 2 years after the
date of enactment of the Act and must take effect 3 years after
enactment of the Act. Thus, Congress intended that the section 1018
regulations must be published as final by October 28, 1994, and must
take effect on October 28, 1995. Although 1018 specified that final
regulations should be promulgated no later than October 28, 1994, EPA/
HUD will not be able to meet this deadline. It appears that Congress'
intent in section 1018 was to provide a year between the promulgation
of the final rule, and the effective date of the rule. Congress
reasonably could have believed that this year was necessary in order
that the real estate industry, landlords, sellers, etc. could become
familiar with the rule requirements and set up procedures for
compliance. For this reason, EPA and HUD believe that the effective
date of the rule should be no earlier than 1 year after promulgation of
the final rule, even if this occurs later than October 28, 1995. EPA
and HUD believe that this interpretation is the one most consistent
with Congressional intent.
Several related provisions of the Act and of the new Title IV of
TSCA, added by section 1021 of the Act, are briefly discussed below to
further clarify this proposed rule.
The section most closely related to section 1018 is section 406 of
TSCA. Section 406(a) directs EPA to develop and publish, after notice
and comment, a lead hazard information pamphlet on lead and lead-based
paint hazards in the home. EPA has developed the draft pamphlet in
consultation with HUD and the Centers for Disease Control and
Prevention (CDC), and published a notice in the Federal Register of
March 9, 1994 (59 FR 11119), announcing the pamphlet's availability for
public review and comment. As required under section 1018 of the Act,
the section 406 pamphlet will be given to purchasers and lessees under
the EPA/HUD disclosure regulations proposed today.
Sections 1004(15), 1004(16), and 1004(17) of the Act generally
define lead-based paint hazards, lead-contaminated dust, and lead-
contaminated soil. Congress charged EPA under section 403 of TSCA to
issue regulations identifying more specifically the meaning of these
three terms, for the purposes of other provisions of TSCA and the Act.
Thus, EPA is in the process of defining more precisely what constitutes
a lead-based paint hazard, including lead-contaminated dust and lead-
contaminated soil. However, EPA and HUD believe that the provisions of
this proposed section 1018 rule can be carefully considered on their
own merit and independent of decisions made under the section 403
rulemaking.
Therefore, EPA and HUD are soliciting public comment on this
proposed rule prior to the availability of proposed or final
regulations under section 403. EPA and HUD believe the public has
adequate information and opportunity to comment on the contents of this
proposed rule and on the relationship between regulations promulgated
under sections 1018 and 403 for the following reasons:
(1) While known lead-based paint hazards must be disclosed, this
requirement is only one of a number of requirements for which sellers
and lessors of target housing are responsible. Therefore, EPA's
definition of ``lead-based paint hazards'' does not change the affected
population, although that definition has clear implications for the
extent of disclosure.
(2) The requirements under section 1018 will apply to all target
housing regardless of the presence of lead-based paint hazards in that
housing. That is, all owners, sellers, and lessors of target housing
will be on notice that EPA and HUD are issuing disclosure requirements,
and that they will be required to retain and disclose certain types of
information and to allow for the 10-day inspection period, regardless
of whether their housing contains lead-based paint or a lead-based
paint hazard.
(3) The Act clearly specifies the requirements of this proposed
rule. Therefore, regardless of the standards proposed and issued in the
section 403 regulations, EPA and HUD do not have flexibility to change
the basic provisions specified by Congress.
(4) Section 403, on the other hand, does give EPA flexibility to
consider a number of factors in developing health-based standards.
Comments specifically concerning the implications of EPA's section 403
standards, given the concrete legislative requirements of section 1018,
will be most appropriately addressed by EPA during the development of
the section 403 rule.
Section 402 of TSCA requires that EPA (in consultation with HUD,
the Department of Labor, and the Department of Health and Human
Services) promulgate regulations to ensure that individuals engaged in
certain lead-based paint activities are trained, that such training
programs are accredited, and that contractors engaging in such
activities are certified. This section also requires that EPA, in
consultation with the above agencies, shall develop standards for
performance of lead-based paint activities. Pursuant to section 402,
EPA is in the process of developing regulations which would require
that detailed reports be written at the completion of any lead
inspection or risk assessment, whether voluntary or required. Such
reports would have to be disclosed as information known to the seller
or lessor under the proposed section 1018 disclosure requirements being
proposed today.
B. Lead Background
1. Lead and lead-based paint. Lead is a soft, bluish metallic
element mined from rock and found in its natural state all over the
world. Lead is virtually indestructible, is nonbiodegradable, and has
been known since antiquity for its adaptability in making various
useful items. In modern times it has been used to manufacture many
different products, including paint, batteries, pipes, solder, pottery,
and gasoline. From the turn of the century through the 1940's, paint
manufacturers frequently used lead as a primary ingredient in many oil-
based interior and exterior house paints. Usage gradually decreased
through the 1950's and 60's as latex paints (which are generally lead-
free) became more widespread. Although the Consumer Product Safety
Commission (CPSC) banned lead-based paints from residential use in 1978
(paint currently may not have greater than .06 percent lead by weight)
(Ref. 1), HUD estimates that 75 percent of the houses built in the
United States before 1978 contain some lead-based paint (Ref. 2). By
current estimations, approximately 57 million homes may contain lead-
based paint (Ref. 2). Thus lead-based paint may pose a potential hazard
to the occupants under some conditions.
2. Lead hazards. Lead affects virtually every system of the body.
While it is harmful to individuals of all ages, lead exposure is
especially harmful to children, fetuses, and women of childbearing age.
Results of recent studies suggest that lead's adverse effects occur at
blood-lead levels previously thought to be safe; in fact, there does
not yet appear to be a discernable threshold for the adverse effects of
lead on the young (Ref. 3).
Lead poisoning has been referred to as ``the silent disease''
because its effects often occur gradually and imperceptibly, showing no
obvious symptoms. Over time, low levels of lead in the bloodstream can
cause learning disabilities, interfere with growth, cause permanent
hearing and visual impairment, and cause other damage to the brain and
nervous system. In large doses, lead can cause blindness, brain damage,
convulsions, and even death. Lead exposure before or during pregnancy
can also affect fetal development and cause miscarriages (Ref. 3).
In 1991, the Secretary of the Department of Health and Human
Services characterized lead poisoning as the ``number one environmental
threat to the health of children in the United States'' (Ref. 4).
Although the percentage of children with elevated blood-lead levels
has declined over the last 20 years with the reduction of lead in
gasoline, millions of U.S. children still have levels of lead in their
blood high enough to seriously threaten their health (Ref. 5).
Lead-based paint poses a health threat through various routes of
exposure. Children under age 6 may ingest lead-based paint chips from
flaking walls, windows, and doors. Lead from exterior house paint can
flake off or leach into the soil around the outside of a home,
contaminating children's playing areas. Dust caused during normal lead-
based paint wear (especially around windows and doors) can create an
invisible film over surfaces in a house. In some cases, cleaning and
renovation activities can actually increase the threat of lead-based
paint exposure by dispersing fine lead dust particles in the air and
over accessible household surfaces. Both adults and children can
receive hazardous exposures by inhaling the fine dust or by ingesting
paint-dust during hand-to-mouth activities.
III. Purpose
The purpose of this proposed rule is to ensure that families are
aware of: (1) The existence of lead-based paint or lead-based paint
hazards in target housing, (2) the hazards of exposure to lead-based
paint, and (3) ways to avoid such exposure before they become obligated
to purchase or lease housing that may contain lead-based paint. EPA and
HUD are proposing identical rules to appear in both Title 40 of the
Code of Federal Regulations (CFR) where other EPA lead rules will
appear and in Title 24 of the CFR where other HUD lead rules appear.
IV. Scope and Applicability
Section 1018 of the Act applies to contracts for sale or lease of
target housing as defined in section 1004(27) of the Act. Therefore,
this rulemaking would apply to virtually all transactions involving a
written contract to sell or lease target housing. EPA and HUD have
identified the following several specific areas that would be excluded
or where coverage would be limited in the proposed rule.
A. Foreclosure Sales
EPA and HUD have identified both legal and policy reasons to
exclude the sale of properties at foreclosure from the section 1018
requirements. First, when a property is sold at foreclosure, the sale
is conducted at public auction by or on behalf of a secured lender, and
the property is sold to the highest bidder without any form of arms-
length negotiation and without a sales contract. In most of these
cases, the lender is not in possession of the property being sold and
never has been; the property is controlled by the owner, who is often
hostile to the lender and to any potential purchaser.
For this reason, the lender (or the party conducting the sale for
the lender) is often not in a position to provide a potential purchaser
with access to the property for a risk assessment or inspection, nor
are they usually in possession of information concerning the existence
of lead-based paint, as required by section 1018(a)(1)(B). In fact,
lenders typically know very little about the history of single-family
properties in their portfolios, and these make up the vast majority of
the properties being foreclosed.
HUD's experience in foreclosure sales suggests that most properties
sold at foreclosure are not sold to private investors or people
attempting to purchase a residence for themselves. Rather, the secured
lender, acting to protect its security for the defaulted loan, is the
successful bidder in nearly all foreclosure sales, purchasing the
property at auction. When the lender is the purchaser, the lender will
typically attempt to recover its investment by selling the property to
a third party and, at that point, the protections of section 1018 would
clearly apply.
B. Informal Rental Agreements
Because this proposed rulemaking only applies to transactions to
lease housing which involve a written contract, EPA and HUD have
concluded that it should not apply to informal rental agreements which
do not involve a lease. Such arrangements, by virtue of their
informality, make the administration and enforcement of these
requirements extremely difficult. To the extent practicable, however,
EPA and HUD encourage individuals engaging in such informal
arrangements to obtain available information on lead-based paint before
occupying target housing.
C. Renewals of Existing Leases
EPA and HUD do not believe that individuals would significantly
benefit from multiple receipt of previously disclosed information
during renewals of existing leases and see no justification for placing
repetitive disclosure requirements on lessors. For that reason,
renewals of existing leases would only be covered by this proposed
regulation if the tenant has not previously received the lead-based
paint hazard information required under section 1018. If, however, the
lessor becomes aware of additional information about the property
concerning lead-based paint or lead-based paint hazards during the term
of the lease, he or she would be required to disclose this information
prior to renewal of the lease.
V. Definitions
In order to implement section 1018 of the Act, certain terms need
to be defined. This section will provide the regulatory definition
followed by an explanation of the definition's source. Where possible,
EPA and HUD have drawn definitions directly from section 1004 of the
Act. In cases where the statute either failed to define terms for the
rulemaking or where the definition lacked sufficient detail, EPA and
HUD are proposing appropriate definitions, along with an explanation of
the reasons for their choices. EPA and HUD are accepting comment on all
definitions not taken directly from the statute.
Abatement means any set of measures designed to permanently
eliminate lead-based paint hazards in accordance with standards
established by appropriate Federal agencies. Such term includes: (1)
The removal of lead-based paint and lead-contaminated dust, the
permanent containment or encapsulation of lead-based paint, the
replacement of lead painted surfaces or fixtures, and the removal or
covering of lead-contaminated soil; and (2) all preparation, clean up,
disposal, and post abatement clearance testing activities associated
with such measures.
This definition appears in section 1004(1) of the Act. In
accordance with the development of standards for the performance of
abatements by EPA under section 402 of TSCA, EPA may propose
modifications to this definition in a separate proposed rule. If such a
revision is proposed, EPA and HUD would consider including the revised
definition in the final rule for these requirements.
The Act means the Residential Lead-Based Paint Hazard Reduction Act
of 1992, Title X of the Housing and Community Development Act of 1992,
Pub. L. 102-550.
Agent means any party who enters into a contract with a seller or
lessor to represent the seller or lessor for the purpose of selling or
leasing target housing.
This definition is based on the statutory wording of section
1018(a)(4) of the Act, which states that ``Whenever a seller or lessor
has entered into a contract with an agent for the purpose of selling or
leasing a residential dwelling of target housing, the regulations
promulgated under this section shall require the agent, on behalf of
the seller or lessor, to ensure compliance with the requirements of
this section'' [emphasis added]. This provision clearly identifies an
agent as a party who has entered into a contract for the purpose of
selling or leasing target housing.
State statutory provisions and common law may vary on the topic of
real estate contracts and the concept of agency. In response to this
diversity in state law, EPA and HUD propose a definition of ``agent''
which does not seek to differentiate various real estate agent
activities. The agencies believe that this proposed definition provides
necessary flexibility regarding which parties could be defined as
``agents'' who have entered into a contract to sell or lease target
housing and, as a consequence, would be covered by the requirements of
this regulation.
For example, it is EPA's and HUD's understanding that in many
states, it is typical for a seller or lessor to enter into a contract
to sell or lease target housing with a licensed ``real estate broker,''
who may or may not perform the actual duties of an ``agent'' associated
with selling or leasing housing. In these states, individuals working
for the licensed broker, typically called ``real estate agents,'' may
perform some or all of the duties of an ``agent'' but may be treated as
an employee of the broker or independent contractor. If the ``real
estate agent'' were to fail to ensure compliance with the requirements
of the rulemaking, the broker would assume liability for that failure,
just as if the broker had performed all agent duties themselves. In
other states, the real estate agent is considered an independent
contractor rather than an employee of the broker, and the agent, rather
than the broker, is held liable for negligence under common law.
Because of these variations in state law, EPA/HUD propose a flexible
definition of agent, one that could include broker and/or agent,
depending on the particular circumstance. If state law does not
recognize the difference between a real estate agent and a real estate
broker, the party identified in the contract, and in any subcontract to
perform those duties, would be liable for any failure to comply,
regardless of whether they were called brokers or agents.
Specifically excluded from the requirements of this regulation,
however, would be agents or brokers who operate solely on behalf of the
buyer(s) or lessee(s) and who receive all remuneration from the buyer/
lessee (so called ``buyers' agents''). This exclusion is based on the
language of section 1018(a)(4) which focuses on agents entering into a
contract with a seller or lessor.
Common Area means a portion of a building generally accessible to
all residents/users including, but not limited to, hallways, stairways,
laundry and recreational rooms, playgrounds, community centers, and
boundary fences.
EPA and HUD are proposing this definition to maintain consistency
with the definition of ``common area'' proposed in a separate notice in
the Federal Register of March 9, 1994 (59 FR 11108), pursuant to the
requirements of section 406 of TSCA. This definition is purposefully
broad to allow for its use in other EPA and HUD regulations that might
also cover commercial and public buildings.
Contract for the purchase and sale of residential real property
means any contract or agreement in which one party agrees to purchase
an interest in real property on which there is situated one or more
residential dwellings used or occupied, or intended to be used or
occupied, in whole or in part, as the home or residence of one or more
persons.
This definition appears in section 1004(4) of the Act.
Evaluation means a risk assessment and/or inspection.
This definition appears in section 1004(6) of the Act.
Inspection means (1) a surface-by-surface investigation to
determine the presence of lead-based paint as provided in section
302(c) of the Lead-Based Paint Poisoning and Prevention Act [42 U.S.C.
4822], and (2) the provision of a report explaining the results of the
investigation.
This definition appears in section 1004(12) of the Act.
Lead-based paint means paint or other surface coatings that contain
lead in excess of 1.0 milligrams per centimeter squared or 0.5 percent
by weight or (1) in the case of paint or other surface coatings on
target housing, such lower level as may be established by the Secretary
of Housing and Urban Development as defined under section 302(c) of the
Lead-Based Paint Poisoning Prevention Act [42 U.S.C. 4822], or (2) in
the case of any other paint or surface coatings, such other level as
may be established by the Administrator.
This definition appears in section 401 of TSCA. Title IV of TSCA
was added by the Act, and, given the close relationship between the
section 1018 requirements and the provisions of TSCA Title IV, EPA and
HUD believe it is consistent to use the Title IV definition for section
1018 purposes.
Lead-based paint hazard means any condition that causes exposure to
lead from lead-contaminated dust, lead-contaminated soil, lead-
contaminated paint that is deteriorated or present in accessible
surfaces, friction surfaces, or impact surfaces that would result in
adverse human health effects as established by the appropriate Federal
Agency.
This definition appears in section 1004(15) of the Act. The exact
levels of lead in dust, paint, and soil that would be defined as a
hazard will be addressed in a separate rulemaking, mandated by section
403 of TSCA. For the purposes of this rulemaking, however, the
statutory definition is sufficient to provide the public with notice to
comment on the rulemaking's requirements and structure. Parties who
wish to provide comments specifically on what levels of lead in dust
and soil (or what conditions or locations of lead-based paint) should
be considered a hazard, should do so separately in the section 403
rulemaking process.
Lessee means any entity that enters into an agreement to lease or
rent target housing, including but not limited to individuals,
partnerships, corporations, trusteeships, government agencies, Indian
tribes, or nonprofit organizations.
This proposed definition is based on the agencies' interpretation
of the intent of the Act in identifying individuals entering into a
contract to lease target housing.
Lessor means any entity that offers target housing for lease,
including but not limited to individuals, partnerships, corporations,
trusteeships, government agencies, Indian tribes, or nonprofit
organizations.
This definition is based on the agencies' interpretation of the
Act's intent in identifying entities entering into an agreement to
lease target housing.
Owner means any entity that has legal title to target housing,
including but not limited to individuals, partnerships, corporations,
trusteeships, government agencies, Indian tribes, or nonprofit
organizations.
This definition is based on the agencies' interpretation of the
intent of the Act relating to owners of target housing.
Purchaser means any entity that submits a written offer to
purchaser an interest in target housing, including but not limited to
individuals, partnerships, corporations, trusteeships, government
agencies, Indian tribes, or nonprofit organizations.
EPA and HUD are proposing to limit the scope of this regulation to
parties that demonstrate a real interest in purchasing target housing,
so that sellers or agents representing sellers need not provide all
parties who view a property with a 10 calendar-day opportunity to
inspect for lead-based paint hazards. This definition is based on the
agencies' interpretation of the Act's intent in identifying purchasers
of target housing.
Residential dwelling means (1) a single-family dwelling, including
attached structures such as porches and stoops; or (2) a single-family
dwelling unit in a structure that contains more than one separate
residential dwelling unit, and in which each such unit is used or
occupied, or intended to be used or occupied, in whole or in part, as
the residence of one or more persons.
This definition is provided in section 1004(23) of the Act.
Risk assessment means an on-site investigation to determine and
report the existence, nature, severity, and location of lead-based
paint hazards in residential dwellings, including: (1) Information
gathering regarding the age and history of the housing and occupancy by
children under age 6; (2) visual inspection; (3) limited wipe sampling
or other environmental sampling techniques; (4) other activity as may
be appropriate, and; (5) provision of a report explaining the results
of the investigation.
This definition is provided in section 1004(25) of the Act.
Secretary means the Secretary of the Department of Housing and
Urban Development.
Seller means any entity that sells an interest in target housing,
including but not limited to individuals, partnerships, corporations,
trusteeships, government agencies, Indian tribes, or nonprofit
organizations. The term seller also includes: (1) An entity which
transfers shares in a cooperatively-owned project and (2) an entity
which transfers its interest in a leasehold in jurisdictions or
circumstances where it is legally permissible to separate the fee title
from the title to the improvement.
EPA and HUD have proposed this definition to cover the range of
entities and arrangements that may be involved in the ``sale'' of
target housing and that the agencies interpret to be covered by the
Act. The second part of the proposed definition describes sellers who
have legal title to the improvements (residential dwellings) on
property that is leased from another person.
Target housing means any housing constructed prior to 1978, except
0-bedroom dwellings, or housing for the elderly or persons with
disabilities (unless any child who is less than 6 years of age resides
or is expected to reside in the dwelling). In the case of jurisdictions
which banned the sale or use of lead-based paint prior to 1978, the
Secretary, at the Secretary's discretion, may designate an earlier
date.
This definition appears in section 1004(27) of the Act. The Act
excludes housing constructed after 1978 since the allowable lead in
paint was reduced to .06 percent by CPSC after that date (Ref. 1).
EPA and HUD interpret the term ``0-bedroom dwelling'' to mean any
dwelling in which the living area is unseparated from the sleeping
area. Under this definition, efficiency, studio apartments, loft space,
and single-room dormitory units would be exempt from the requirements
of the rule unless children under 6 years of age reside or may reside
in the unit.
EPA and HUD interpret the term ``housing for the elderly,'' to mean
retirement communities or similar types of housing reserved for persons
62 years of age or older. EPA and HUD request comment on what
additional specificity might be necessary for identifying housing for
the elderly.
EPA and HUD also considered whether Congress meant to include
hotels, motels, inns, and other commercial lodging facilities in the
term ``housing.'' Most hotels, motels, inns, and other commercial
lodging are 0-bedroom dwellings, and would typically be exempt from the
requirements of this proposed rule. In addition, EPA and HUD believe it
is reasonable to interpret that Congress' intent was to distinguish
residential housing from commercial lodging facilities.
Specifically, the definition of target housing intended to capture
housing designed for long-term or continuous residence, as opposed to
lodging facilities offering temporary accommodations. Given the high
frequency and short duration of transactions, EPA and HUD believe it is
impractical to apply the requirements of this proposed rule to rental
transactions in motels, hotels, and other commercial lodging
facilities.
As directed in the statute, the exclusions for 0-bedroom dwelling,
elderly housing, and handicapped housing do not apply to any housing in
which children under 6 years old reside or are expected to reside.
Similarly, in cases where families with children under 6 might enter
into a contract to purchase or lease commercial housing as long-term
residences, however, EPA and HUD believe it is consistent with the
statute that such establishments be considered target housing under
this proposed rule's requirements.
0-Bedroom dwelling means any residential dwelling in which the
living area is unseparated from the sleeping area.
EPA and HUD are proposing this definition to clarify the term used
in the Act's definition of target housing. Under this definition,
efficiency, studio apartments, loft space, and single-room dormitory
units would be considered 0-bedroom dwellings.
VI. Proposed Regulatory Requirements
Section 1018 requires EPA and HUD to promulgate joint regulations
for disclosure of lead-based paint hazards in target housing which is
offered for sale or lease. Specifically, section 1018 requires that
before purchasers or lessees become obligated under any purchase or
lease contract, sellers or lessors must provide the purchaser or lessee
with a lead information pamphlet (being developed by EPA under TSCA
section 406) and disclose any lead-based paint or lead-based paint
hazards known to the seller or lessor in such housing. In addition,
before obligating purchasers under a contract to purchase the housing,
sellers must permit purchasers a 10-day period to conduct a risk
assessment or inspection for the presence of lead-based paint hazards,
and must attach a specific lead warning statement and acknowledgement,
signed by the purchaser, to each contract. Violation of Section 1018
may result in civil and criminal penalties, and potential triple
damages in a private civil suit. In this unit, EPA and HUD present a
more detailed discussion of these requirements as proposed in the EPA
and HUD regulations. As noted above, EPA and HUD are proposing joint
and equivalent regulations that would appear in Title 40 of the CFR
with other EPA lead regulations and in Title 24 of the CFR with other
HUD lead regulations. Including the joint regulations in both CFR
locations will help ensure that sellers, lessors, agents, buyers, and
lessees are informed of their existence.
A. Disclosure Requirement
Section 1018(a)(1)(B) of the Act requires the seller or lessor of
target housing to provide all information known to the seller or lessor
on lead-based paint and lead-based paint hazards in the housing to the
purchaser or lessee before the purchaser or lessee is obligated under
any contract to purchase or lease target housing. EPA and HUD are
proposing such a disclosure requirement in 24 CFR 38.20 and 40 CFR
745.107. Under the proposed regulations, the seller or lessor, or the
agent acting on behalf of the seller or lessor, is required to provide
the purchaser or lessee with written documentation of all information
known to the seller or lessor, or the agent regarding the presence of
lead-based paint or lead-based paint hazards associated with the
housing being sold or leased. Consistent with the statute, records of
this information must be provided to the purchaser or lessee before
they become obligated under any contract to purchase or lease the
target housing.
For the purposes of this proposed rule, EPA and HUD propose that
``information known to the seller or lessor'' comprise, at minimum, the
information described in 24 CFR 38.20 and 40 CFR 745.107 of these
regulations. The proposed information would include, but not be limited
to, the following items:
1. Reports from all lead-based paint inspections, risk assessments,
and abatement activities known to the seller or lessor and conducted on
or in the target housing, including any known reports completed before
the effective date of the final rule if such reports are available to
the seller or lessor on or after the effective date. Section
1018(a)(1)(B) requires sellers or lessors of target housing to
``provide to the purchaser or lessee any lead hazard evaluation report
available to the seller or lessor.'' EPA and HUD recognize that reports
from some lead-based paint activities conducted before the effective
date of the final rule may no longer be available to the seller or
lessor given that the seller or lessor had not been put on notice that
disclosure of such records would be required. However, those reports in
the possession of the seller or lessor on or after November 2, 1994
would become part of the permanent record for that unit of target
housing.
2. Records of lead-based paint inspections, assessments, and
abatement activities conducted for current or past sellers or lessors
in common areas of target housing containing more than one residential
dwelling. EPA and HUD are concerned that lead-based paint in common
areas may pose an additional exposure risk to occupants, especially in
buildings where lead-based paint chips and dust are allowed to
accumulate. Also, the presence of lead-based paint in common areas of
buildings containing target housing may signal the presence of lead-
based paint within the residential dwellings. For these reasons, EPA
and HUD are proposing to require the disclosure of records and reports
of lead-based paint in common areas.
3. Information known to the seller or lessor regarding whether
other residential dwellings in the target housing contain or have
contained lead-based paint or lead-based paint hazards. This would only
apply to target housing containing more than one residential dwelling,
and would be of primary value in cases where information on lead-based
paint and lead-based paint hazards only exists for some, but not all
residential dwellings. The presence of lead-based paint in some of the
residential dwellings may suggest a greater likelihood of lead-based
paint existing in the residential dwellings that have yet to be tested.
To balance the indirect value of the information with the
disclosure burden of providing such information during transactions,
EPA and HUD propose to require that sellers/lessors disclose only
whether or not lead-based paint is or has been present in other
residential dwellings within the target housing, rather than requiring
that sellers and lessors provide specific reports on those residential
dwellings. The seller or lessor would, of course, retain the option of
providing more detailed information, but would not be required to
provide specific data on each residential dwelling.
EPA and HUD believe that such information will help potential
occupants make more informed decisions when considering leasing or
purchasing target housing. For example, such information could persuade
purchasers to exercise their option to conduct an inspection or risk
assessment before purchasing the property. Similarly, knowledge of
lead-based paint on the premises could prompt lessees to take greater
precautions to guard against exposure. EPA and HUD request comment on
whether requiring disclosure of information regarding other residential
units is warranted and, if so, whether a more stringent disclosure
standard is needed.
4. Other available information that may indicate lead-based paint
or a lead-based paint hazard in the unit. This proposed requirement is
directed at other relevant information on lead-based paint hazards that
may be known by the seller or lessor.
EPA and HUD request information and comment on other appropriate
information that may be commonly available to owners of target housing
and which should be itemized in the final rule. For example, should
information on past cases of lead-poisoning of occupants be disclosed
to purchasers or lessees? If such information is to be considered, what
level of detail would be appropriate given the privacy implications of
medical records?
In addition, EPA and HUD request comment on whether the final rule
should impose specific recordkeeping requirements on owners of target
housing to retain information known to the owner on lead-based paint
and lead-based paint hazards, as identified in proposed 24 CFR 35.20
and 40 CFR 745.107. If promulgated, the time period for such a
recordkeeping requirement for owners of target housing could range in
length from the length of ownership to a discrete number of years (3
years, 5 years, 10 years, etc), based on its feasibility and utility in
ensuring compliance with the regulations. In evaluating the value of an
owner record retention requirement, EPA and HUD will consider its
potential value both in aiding and supporting Agency enforcement
efforts as well as its potential value in supporting civil actions for
damages taken under section 1018(b)(3).
B. Lead-Hazard Information Pamphlet
Section 1018(a)(1)(A) requires that sellers and lessors of target
housing provide the purchaser or lessee with a copy of the EPA pamphlet
Lead Paint: Protect Your Family before the purchaser or lessee is
obligated under any contract to purchase or lease the housing. A
primary function of the pamphlet is to educate families on the
potential health risks associated with lead exposure and ways to avoid
such exposure. By requiring that families receive the pamphlet at the
beginning of the real estate transaction, Congress ensured that
families would be informed about lead-based paint issues during the
transaction process. Therefore, the joint provisions of these
regulations (located in Secs. 38.20(a) and 745.107(a) of the proposed
regulatory text) would require that purchasers and lessees receive the
pamphlet before becoming obligated under any contract.
The draft pamphlet was developed by EPA in consultation with HUD
and CDC and was released to the public for a 60-day comment period and
announced in the Federal Register of March 9, 1994, (59 FR 11119). In
addition, EPA has conducted a series of focus tests and interviews in
different regions of the country to ensure that the pamphlet meets both
high technical and editorial standards.
The final pamphlet will be made available to the public through the
Government Printing Office (GPO) for a nominal fee. In addition, EPA
will make a limited number of camera-ready copies of the final pamphlet
available to organizations that wish to print copies for private
distribution, and the pamphlet will be available in electronic form
through the GPO Bulletin Board. EPA and HUD are continuing to explore
methods for printing and distributing the pamphlet in a quick and
inexpensive way to the regulated community and the general public at
large. EPA and HUD welcome comment on other potential distribution
methods for the pamphlet.
C. Disclosure and Acknowledgment Form
In addition to requiring written documentation of the information
known by the seller or lessor, defined in proposed 24 CFR 38.20(b) and
40 CFR 745.107(b) of the regulatory text, EPA and HUD have developed
disclosure and acknowledgement forms to be attached to all sales and
leasing contracts for target housing. Form A for sellers and Form B for
lessors are included as Appendix A to the proposed HUD regulatory text.
EPA and HUD believe that the forms will help ensure that (1) All
information known to the seller or lessor on lead-based paint and lead-
based paint hazards is disclosed and documented, (2) all purchasers and
lessees are aware of their rights under the provisions of section 1018,
and (3) sellers, lessors, and agents are aware of their obligations
under their rule. In addition, these forms would be an important
enforcement tool by providing a record of compliance with the rule. By
maintaining completed forms after a transaction to purchase or lease
target housing, the seller, lessor, and agents would have documentation
of their compliance with the disclosure activities and of the
purchaser's/lessee's receipt and acknowledgement. Because sellers and
lessors have different obligations under the requirements mandated by
section 1018, EPA and HUD believe that it is appropriate to provide two
separate and distinct forms for the two types of transactions.
EPA and HUD initially considered including the elements in the
forms as separate provisions for inclusion in the leasing or purchase
contracts themselves. Ultimately, that concept was rejected because it
would be more burdensome and confusing. By creating one form covering
all regulated parties for each type of transaction, EPA and HUD hope to
minimize confusion over the new requirements, decrease the
recordkeeping burden, and ensure a greater level of compliance.
1. Form for Transactions to Sell Target Housing
For the reasons discussed above, EPA and HUD are proposing in
Secs. 745.107(a)(4) and 38.20(a)(4), respectively, that each contract
to sell property defined as target housing contain a signed and dated
copy of the joint HUD/EPA form entitled Disclosure and Acknowledgement
of Lead-Based Paint Before Sale.
The form is divided into four distinct parts: a general notice
statement, a certification of compliance statement by the seller, a
certification of compliance statement by the agent (where applicable),
and an acknowledgement statement by the purchaser. Each part is
discussed below.
a. Notice to purchasers of target housing. Section 1018(a)(3) of
the Act provides a specific ``lead warning statement'' to be included
in all contracts involving the purchase and sale of any interest in
target housing. The statute states that the lead warning statement
shall contain the required language printed in large type on a separate
sheet of paper attached to the contract. Because the disclosure and
acknowledgement form would serve as an attachment to the contract, EPA
and HUD propose to include this lead warning statement as the first
part of the form, and to print it in a larger type than the rest of the
form to ensure its prominence. The required text would read:
Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified
that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities, reduced
intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to
provide the buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's possession and
notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is
recommended prior to purchase.
In addition, EPA and HUD propose that, in cases where the sales
contract is written in a language other than English, the lead warning
statement must be included in the language of the contract as well,
based on a translation of the English-version lead warning statement.
While this is not expressly required by the statute, such a requirement
would be consistent with Congress' intent of ensuring that families be
fully aware of the potential hazards of lead-based paint before
purchasing target housing. EPA and HUD request comment on this proposed
requirement.
b. Certification of compliance statement by the seller. The second
part of the form would require the seller to list all information known
to the seller on lead-based paint and lead-based paint hazards in the
target housing. EPA and HUD believe that it is necessary to create a
single record of the information provided by the lessor/owner.
Completion of this part would ensure that at the time of the contract
agreement, both the seller and the purchaser would be aware of the
disclosure requirements under these regulations and the lead-based
paint hazard information being disclosed.
If information described in Part II of the form is in the
possession of the seller, the seller would be required to provide the
information in written form to the purchaser, check the appropriate
box, and note the dates and type of known information in the space
provided. This information would be a necessary record during the
disclosure process, both to inform the purchaser of the information the
purchaser should have received, and as a later measure of compliance by
the seller and the seller's agent.
c. Certification of compliance statement by the agent. The third
part of the form would require an agent, if one is used, to certify
that the requirements of section 1018 have been satisfied, either by
the seller or by the agent.
d. Acknowledgement of lead-based paint requirements in target
housing by the purchaser. Section 1018(a)(2) requires that contracts to
purchase target property include an acknowledgement signed by
purchasers. EPA and HUD propose that the purchaser indicate the
following in the acknowledgement: That they have read and understood
the lead warning statement, received any information on lead-based
paint and lead-based paint hazards noted in the seller certification,
received a lead hazard information pamphlet, and that they are aware
that they must receive an opportunity for a 10-day inspection period
before becoming obligated under a contract to purchase the property. In
the fourth part of the form, EPA and HUD propose such an
acknowledgement. The acknowledgement would state:
I acknowledge that I have read and understood the attached lead
warning statement in Part I of this form, received the information
noted in Part II of this form, received the lead hazard information
pamphlet Lead-Based Paint: Protect Your Family. In addition, I
acknowledge that, pursuant to 42 U.S.C. 4852(d) and its implementing
regulations, the attached contract entitles me to up to 10 calendar
days to conduct a risk assessment or inspection for the presence of
lead-based paint hazards before becoming obligated under a contract
to purchase, unless I agree otherwise in writing.
2. Form for Transactions to Lease Target Housing
EPA and HUD are proposing in Secs. 745.107(a)(5) and 38.20(a)(5),
respectively, that each contract to lease target housing contain a
signed and dated copy of the joint HUD/EPA form entitled Disclosure and
Acknowledgement of Lead-Based Paint Before Lease.
The form is divided into four distinct parts: a general notice
statement, a certification of compliance statement by the lessor, a
certification of compliance statement by the agent (where applicable),
and an acknowledgement statement by the lessee. Each part is discussed
below; however, where statutory justifications and background are the
same as that presented in the part on the form for sales of target
housing, the repetitive elements have been omitted.
a. Notice to residents of target housing. EPA and HUD propose to
include a tailored lead warning statement as the first part of the
form, and to print it in a larger type than the rest of the form to
ensure its prominence. Although not specifically required by section
1018, EPA and HUD believe that this statement provides a useful context
for information disclosed to lessees, just as for purchasers,
concerning the hazards of lead-based paint. The required text would
read:
A residential structure built prior to 1978 may present exposure
to lead from lead-based paint. This exposure may place young
children at risk of developing lead poisoning. Lead poisoning in
young children can produce permanent neurological damage, including
learning disabilities, reduced intelligence quotient, behavioral
problems, and impaired memory. Lead poisoning also poses a
particular risk to pregnant women. The lessor of any residential
dwelling is required to provide the lessee with any information on
lead-based paint hazards from risk assessments or inspections in the
lessor's possession and notify the lessee of any known lead-based
paint hazards.
In addition, EPA and HUD propose that, in cases where the lease is
written in a language other than English, a translation of this lead
warning statement would be required to be attached in the language of
the contract. EPA and HUD believe that this translation requirement may
be even more critical in the case of leasing transactions than in
purchases as many non-English speakers may be more likely to lease
housing for themselves and their families. EPA and HUD request comment
on this proposed requirement.
b. Certification of compliance statement by the lessor. The second
part of the form would require the lessor to list all information known
to the lessor on lead-based paint and lead-based paint hazards in the
target housing.
If information listed in Part II of the form is in the possession
of the lessor, the lessor would be required to provide it in written
form to the lessee, check the appropriate box, and note the dates and
type of known information in the space provided.
c. Certification of compliance statement by the agent. The third
part of the form would require an agent, if one is used, to certify
that the requirements of section 1018 have been satisfied, either by
the lessor or by the agent.
d. Acknowledgement of lead-based paint requirements in target
housing by the lessee. The fourth part of the form consists of an
acknowledgement by the lessee that the necessary disclosure steps, as
required by section 1018(a)(1), had been performed. The acknowledgement
language reads:
I acknowledge that I have read and understood the attached lead
warning statement in Part I of this form, received the information
noted in Part II of this form and received the lead hazard
information pamphlet Lead Paint: Protect Your Family
3. Request for Comment on the Forms
EPA and HUD request comments on all aspects of the disclosure and
acknowledgement forms. Specific questions include: Are the forms
effective in communicating the importance of lead-based paint hazard
awareness and the rights of purchasers and lessees? Is there other
information that should be included on the forms? Is some of the
included information that is not required by the statute unnecessary?
4. Retention of Disclosure and Acknowledgment Form
The disclosure and acknowledgement form documents the fulfillment
of the mandated disclosure requirements during the sale or lease of
target housing. This record, if maintained by the seller or lessor
after the completion of the transaction, would provide a valuable
record of the fulfillment of these requirements to both the agencies
and courts. If this record were not regularly maintained, EPA and HUD
are concerned that they would have little ability to determine whether
the necessary disclosure steps had occurred.
For that reason, proposed Secs. 38.20 and 745.107 of the regulatory
text would require that the signed notice and disclosure form be
maintained by sellers, lessors, and agents for a full 3 years from: (a)
The commencement of the lease period in the case of a transaction to
lease target housing, or (b) the completion of the sale in the case of
a sale of target housing. EPA and HUD chose 3 years as the retention
period for the disclosure form in order to allow adequate time for
enforcement action by HUD or EPA. If the regulation were to mandate a
shorter period of time, Federal enforcement actions could be hampered,
undermining the efficacy of the regulations mandated by statute. EPA
and HUD are concerned that requiring a longer retention period would
place an undue burden on the regulated community.
EPA and HUD have not identified any less burdensome alternative to
support compliance monitoring and enforcement actions but are sensitive
to the need to impose minimum recordkeeping burdens on the regulated
community, especially given the large number of transactions affected.
The agencies are willing to consider alternatives to the proposed
requirements, including the reduction or omission of recordkeeping
requirements, if the alternatives would still ensure the successful
administration and enforcement of the provisions of section 1018 of the
Act.
Such alternatives could include the imposition of a longer or
shorter retention period for the disclosure form, or the addition or
substitution of other records as part of a post-transaction
recordkeeping requirement. EPA is also considering the potential
efficacy of instituting recordkeeping requirements with a sunset
provision, which would phase them out over time as the market
increasingly embraced and institutionalized the disclosure process.
Regardless of what recordkeeping time limits the agencies impose,
these limits would not effect time limits on lawsuits under section
1018(b)(3) by injured parties against former sellers, lessors, or
agents who fail to comply with these regulations. For this reason EPA
and HUD would encourage sellers, lessors, and agents to maintain
signed, dated forms beyond the required recordkeeping period as proof
of compliance.
D. 10-Day Inspection Period
Section 1018(a)(1)(C) of the Act requires that, before a party is
obligated under any contract to purchase target housing, the seller
shall grant the purchaser a 10-day period to conduct a risk assessment
or inspection for the presence of lead-based paint hazards in target
housing.
EPA and HUD interpret the term ``10-day period'' to mean 10
calendar days. While the seller and purchaser may mutually agree to a
shorter or longer period, without written proof of an agreed upon
change to the time, the legally enforceable period would remain 10
calendar days. Given the diversity of definitions for ``business'' or
``working'' days, EPA and HUD believe that an alternative
interpretation of the 10-day period would lead to confusion among the
public. In cases where a 10 calendar-day inspection or assessment
period would be insufficient, the purchaser would retain the option of
negotiating in writing for a longer period.
Since known lead-based paint information may affect a purchaser's
decision to utilize the 10-day inspection period option, EPA and HUD
propose to require that sellers perform and document all disclosure
activities required under this proposed rule before providing the
purchaser with the opportunity for the 10-day period. EPA and HUD
believe that the purchaser will be most able to determine whether a
risk assessment or inspection is necessary or appropriate after
receiving the disclosed information.
EPA and HUD also believe that reports from inspections conducted
during the 10-day inspection/assessment period should become part of
the permanent record retained by the owner of the housing. Therefore,
EPA and HUD are also requesting comment on whether purchasers who
conduct inspections or risk assessments during the 10-day period but
who do not ultimately purchase the housing should be required, under
this rulemaking, to provide a copy of any report to the owner for their
records.
Some purchasers and sellers may prefer to conduct the 10-day
inspection/assessment period before the parties have signed a contract
for the purchase and sale of the target housing. Others may prefer to
conduct the inspection period after the contract is signed. In
implementing these requirements, EPA and HUD have considered several
approaches to fulfilling the statutory provision that the purchaser
receive the opportunity for a 10-day inspection period before becoming
obligated under a contract to purchase the housing. These regulations
propose several approaches to Federal implementation of the 10-day
inspection period.
Option 1. Require Contract Language Addressing Outcome of
Inspection (Preferred Option)
To insure that the purchaser receives the statutorily required 10-
day opportunity to conduct a risk assessment or inspection before
becoming obligated under the contract, the proposed regulation (24 CFR
38.21 and 40 CFR 745.110) requires that, if the parties elect to ratify
the contract prior to completion of the 10-day opportunity, the seller
or agent must include appropriate language in the contract to reflect
that the contract shall be contingent on the condition that no lead-
based paint hazard is found in the inspection or risk assessment. If a
lead-based paint hazard is found during the inspection or risk
assessment, the seller and purchaser would mutually determine the terms
under which the sale will or will not proceed.
Option 2. Base Regulatory Text on Statutory Language
The least prescriptive option for implementing section
1018(a)(1)(C) requirement for a 10-day inspection opportunity is to
state in the regulation simply that ``the seller shall provide the
purchaser with an opportunity for a 10-day inspection period (unless
the parties agree to a mutually agreed upon different period of time)
before becoming obligated under the contract to purchase the housing to
conduct a risk assessment or inspection for the presence of lead-based
paint hazards.'' While this option would provide the regulated
community with flexibility in determining how to comply, EPA and HUD
are concerned that the lack of detail would provide inadequate guidance
to the regulated community, regarding the measures needed for proper
compliance.
Option 3. Mandate Specific Contingency Language for All Contracts
Completed Before Inspection or Assessment Period
EPA and HUD are considering the merit of requiring that all
contracts to purchase target housing include specific language mandated
by HUD and EPA addressing the purchaser's opportunity for a 10-day
inspection period. In addition to further informing the purchaser of
his/her rights to the inspection/assessment period, EPA and HUD could
provide specific language addressing the rights of the purchaser in
cases where the inspection/assessment period was provided after the
purchaser had signed a contract to purchase the target housing. These
requirements have the advantage of providing a clear message regarding
what the seller and agent must do to comply and regarding what rights
the purchaser has in cases where the purchaser does not receive the
inspection or assessment period until after having signed a contract.
Option 4. Require the Inspection/Assessment Period Before the
Contract is Signed
EPA and HUD also requests comment on requiring that the 10-day
opportunity for inspection or assessment be provided before the
purchaser signs a contract for the purchase of target housing. This
would ensure that all purchasers were aware of the presence of any
lead-based paint and lead-based paint hazards before they entered into
the contract to purchase the housing. EPA and HUD do not currently
prefer to impose such a prescriptive requirement on the real estate
community; however, recognizing that both purchasers and sellers may
prefer, at times, to implement the inspection period after all parties
have acknowledged serious interest in completing the transaction.
In addition, EPA and HUD request comment on whether more
prescriptive regulations would be of value regarding exactly what level
or conditions of lead-based paint or lead-based paint hazards would
allow for purchasers to escape their obligation under a contract signed
before the inspection. Alternatively, the agencies would also like
comment on whether the regulatory language and safeguards being
proposed may be overly prescriptive regarding implementation of the 10-
day opportunity.
E. Role of Agent
As set forth in section 1018(a)(4) of the Act, agents entering into
a contract with a seller or lessor to sell or lease target housing must
ensure compliance with all requirements imposed upon the seller or
lessor under section 1018. If the sale or lease of target housing was
aided or accomplished by an agent who has entered into a contract with
a seller or lessor, the agent can be held liable for their failure to
comply with the requirements of section 1018 and the regulations and
can be liable for all penalties, both criminal and civil.
EPA and HUD propose to impose an affirmative obligation on agents
to advise the seller of the provisions of the rule, including the
seller's obligation to inform the agent of lead-based paint or lead-
based paint hazards in the target housing. The language of the
disclosure form reflects this notification requirement.
As a method for demonstrating compliance, EPA and HUD have proposed
a requirement that agents sign and maintain copies of the signed notice
and disclosure forms from each sale or lease of target housing. As
proposed for sellers and lessors, the agent would have to maintain
these records for 3 years from the commencement of the leasing period
or for 3 years from the completion of the sale.
In determining an appropriate recordkeeping requirement, EPA and
HUD considered both the burden on the regulated community and the
information and duration necessary to ensure adequate compliance
monitoring and enforcement of the rule's provisions. EPA and HUD
rejected the ``no-recordkeeping requirement'' for agents because it
would hinder Federal compliance assurance activities and make it
difficult to determine whether a disclosure had taken place. Similarly,
a recordkeeping requirement of less than 3 years would provide
inadequate time for inspection of records and initiation of appropriate
enforcement actions.
If no agents were employed during the leasing or purchasing
process, then all liability for failure to adhere to the proposed
requirements would rest solely with the seller or lessor.
EPA and HUD request comment on the rule's proposed definition of
agent (see Unit IV of the preamble and Secs. 38.15 and 745.103 of the
regulatory text) and on the interpretation of their compliance
assurance provision in section 1018(a)(4).
F. Effective Date
Section 1018(a)(1) of the Act directs EPA and HUD to jointly issue
these requirements as final regulations by October 28, 1994, and
pursuant to section 1018(d), the regulations will take effect on
October 28, 1995.
Although section 1018 specified that final regulations should be
promulgated no later than October 28, 1994, EPA/HUD will not be able to
meet this deadline. It appears that Congress' intent in section 1018
was to provide a year between the promulgation of the final rule, and
the effective date of the rule. Congress reasonably could have felt
that this year was necessary in order that the real estate industry,
landlords, sellers, etc. could become familiar with the rule
requirements and set up procedures for compliance. For this reason,
EPA/HUD believe that the effective date of the rule should be no early
than 1 year after promulgation of the final rule, even if this means
occurring later than October 28, 1995, as mandated by section 1018. EPA
and HUD believe that this interpretation is the one most consistent
with Congressional intent.
VII. Non-Compliance and Penalties
In addition to civil liability under section 1018(b)(3), section
1018 provides both EPA and HUD with other enforcement authority for
these requirements. The enforcement authority is discussed below.
A. HUD Authority
Section 1018(b)(1) of the Act authorizes HUD to impose civil
monetary penalties on any person who knowingly violates section 1018.
HUD interprets this authority to apply to violators of the regulations
under section 1018 as well. HUD shall impose penalties under section
102 of the Department of Housing and Urban Development Reform Act of
1989 [42 U.S.C. 3545]. These penalties may be up to $10,000 for each
violation. In addition, section 1018(b)(2) of the Act authorizes the
Secretary of HUD to ``take such lawful action as may be necessary to
enjoin any violation'' of the rule's provisions. Section 1018(b)(5)
provides that any violation of section 1018 will be a violation of
section 409. Section 412(a) of TSCA provides that the U.S. district
courts have jurisdiction to restrain any violation of section 409 of
TSCA. Thus, the district courts will have jurisdiction over violations
of section 1018.
B. EPA Authority
1. Civil
Section 1018(b)(5) of the Act provides that failure or refusal to
comply with section 1018 or its implementing regulations is a violation
of TSCA section 409. Violations of TSCA section 409 are subject to TSCA
section 16 penalties. Thus, a violator of section 1018 will be subject
to penalties under TSCA section 16 of up to $10,000 for each violation.
2. Criminal
Since TSCA section 16 includes violations under section 409, TSCA
section 16(b) provides that any person who knowingly or willfully
violates section 409 (and thus section 1018) would, in addition to or
instead of any civil penalty, be subject, upon conviction, to a fine of
not more than $10,000 for each day of violation or to imprisonment for
not more than 1 year, or both. As violations of each provision can only
occur one time during each transaction (as opposed to on a daily
basis), the $10,000 penalty may be interpreted as ``for each
violation.''
C. Civil Liability
In addition to the EPA and HUD enforcement authority for the
provisions of this proposed rule, under section 1018(b)(3) of the Act,
``Any person who knowingly violates the provisions of this section
shall be jointly and severally liable to the purchaser or lessee in an
amount equal to 3 times the amount of damages incurred by such
individual.'' This provision allows the purchaser or lessee to seek
direct compensation for any damages incurred based on the seller or
lessor's noncompliance. Section 1018(b)(4) authorizes the court to
award court costs, reasonable attorney fees, and expert witness fees to
the plaintiff if the plaintiff prevails.
D. Validity of Contracts and Liens
Section 1018(c) provides that nothing in section 1018 (or
implementing rules) shall affect the validity or enforceability of any
sale or contract for the purchase and sale or lease of any interest in
residential real property or any loan, loan agreement, mortgage, or
lien, made or arising in connection with a mortgage loan.'' It also
provides that nothing in section 1018 (or its implementing rules) shall
``create a defect in title.'' EPA and HUD have looked at section
1018(c) in the context of other section 1018 provisions, which outline
specific clauses which must be attached to contracts for the purchase
and sale of target housing, and specific procedural protections which
must be given to the purchaser/lessee. EPA and HUD interpret section
1018 as a whole to provide that, once the contract is ratified, if
certain attachments are not included in the ratified contract and if
certain protections afforded in section 1018 were not given to the
lessee/purchaser, the remedy available to the purchaser or lessee under
section 1018 against the seller or lessor would be monetary damages.
It appears clear from the language of section 1018(c), that such an
injured purchaser/lessee could not void or nullify the contract after
ratification and could not void any transfer of real estate, through
the use of section 1018 authority, even if it could be proven that the
seller/lessor violated section 1018 provisions. Congress appears to
have wanted to avoid upsetting real estate transactions once they were
completed, and to have intended to limit the purchaser/lessee's
remedies to civil damage suits. Also, Congress appears to have wanted
not to create an independent cause of action for breach of contract or
for any breach associated with real estate transfers through the use of
section 1018. Of course, traditional causes of action under state law
for misrepresentation/fraud would still exist, and possibly could be
applied to some section 1018 violations. Also, violations of section
1018 would be subject to civil and criminal penalties administered by
EPA and HUD under section 1018(b).
VIII. Procedures for Requesting a Public Hearing
The Act mandates Federal involvement in housing transactions at an
unprecedented level. Recognizing the broad scope of these provisions,
EPA and HUD will consider holding an informal hearing for public
comment on this proposed rule in Washington, DC. To ensure adequate
preparation for the hearing by all parties involved, persons or
organizations desiring to participate in an informal hearing must file
a written request for a hearing or to participate in any such hearing.
The written request must be sent to the Environmental Assistance
Division at the address listed under FOR FURTHER INFORMATION CONTACT.
The written request to participate must include: (1) A brief statement
of the interest of the person or organization in the proceeding; (2) a
brief outline of the points to be addressed; (3) an estimate of the
time required; and (4) if the request comes from an organization, a
non-binding list of the persons to take part in the presentation. The
request must be received by December 2, 1994. Should a hearing be held,
organizations are requested to bring with them, to the extent possible,
employees with individual expertise in and responsibility for each one
of the areas to be addressed. Organizations which do not file written
comments in response to the proposed rule will not be allowed to
participate at the hearing.
IX. Summary of Regulatory Impact Analysis
EPA has prepared a Regulatory Impact Analysis (RIA) examining the
potential costs, benefits, and impacts of regulations for the
disclosure of lead-based paint hazards in residential property upon the
transfer of the property for sale or rental. The analysis is presented
in five sections:
Framework for Analyzing the Costs of the Lead-Based Paint
Hazard Disclosure Rule for Real Estate Transfers
Profile of Sectors Affected by the Lead-Based Paint Hazard
Disclosure Rule for Real Estate Transfers
Estimated Costs to Private Parties from the Lead-Based
Paint Hazard Disclosure Rule for Real Estate Transfers
Effect of the Lead-Based Paint Hazard Disclosure Rule for
Real Estate Transfers on Small Businesses-Initial Regulatory
Flexibility Analysis
Assessment of the Benefits of the Lead-Based Paint Hazard
Disclosure Rule for Real Estate Transfers.
1. Framework for Analyzing the Costs of the Lead-Based Paint Hazard
Disclosure Rule for Real Estate Transfers
Those parties directly affected by the proposed rule are the
seller, lessor, agent, property manager, buyer, and tenant. EPA found
the required activities which give rise to regulatory burden imposed on
the affected parties to fall into four categories for cost estimation
purposes:
Start-up costs, which include learning the rule's
requirements and establishing compliance procedures.
Disclosure activities, which refers to the costs resulting
from the actual transfer of information and obtaining of needed
signatures.
Recordkeeping, which results from the requirement that
signed acknowledgement forms must be retained by the provider of the
information.
Materials, which are linked primarily to the disclosure
requirement, as the lead hazard information pamphlet must be purchased
or photocopied (acknowedgement forms must also be duplicated). Costs
may also be incurred for filing where a high number of acknowledgement
forms are generated (e.g., agents), though such burden was estimated to
be quite modest.
The requirements of section 1018 of the Act fall primarily on the
seller or lessor of ``target housing,'' which is defined to be any
housing constructed prior to 1978, except housing for the elderly or
persons with disabilities (unless any child who is less than 6 years of
age resides or is expected to reside in such housing) or any 0 bedroom
dwelling. However, if an agent or property manager acts on behalf of
the seller or lessor, which EPA has estimated to be the case in the
great majority of transfers, the responsibilities fall to such agents
or managers.
To estimate the cost impacts of the proposed rule, data were sought
pertaining to the number of affected parties in each classification
listed above, the frequency with which affected purchase and lease
transactions are completed, and the incremental costs, in labor and
materials, added to each transaction by the proposed regulations.
2. Profile of Sectors Affected by the Lead-Based Paint Hazard
Disclosure Rule for Real Estate Transfers
The larger of the two affected sectors expected to bear the
principal effects of the proposed rule falls within Standard Industrial
Classification (SIC) code 651, Real Estate Operators and Lessors. EPA
estimates there to be 96,000 establishments potentially affected by the
proposed rule. Also affected are business establishments falling within
SIC code 653, Real Estate Agents and Managers; an estimated 72,000
establishments could be affected by the proposed rule.
Employment data for these industries were obtained for occupations
most likely to be involved in transactions subject to the rule. EPA
estimates that 339,000 real estate agents and 225,000 property managers
will be affected.
With regard to transaction volume, EPA found that 2.9 million sales
transactions and 9.3 million rental transactions occur annually in
target housing.
3. Estimated Costs to Private Parties from the Lead-Based Paint
Hazard Disclosure Rule for Real Estate Transfers
Table 1 below presents a summary of the estimated annual compliance
costs associated with the proposed rule. Each of the four cost
categories appearing in the table are discussed briefly below.
The first category, start-up costs, represents about one-third of
overall annual costs. Factors affecting the magnitude of these costs
include the number of employees having to familiarize themselves with
the regulations, both initially (employees in the existing workforce)
and over time (new entrants to the affected sectors); the time required
to learn the activities which must be undertaken in order to comply;
and the hourly compensation of affected employees.
As is evident from Table 1 below, disclosure event costs constitute
the greatest portion of overall costs. Factors affecting the magnitude
of these costs include the frequencies of regulated events; the time
involved in performing required activities, such as providing the
prospective purchaser/tenant with the required information and
obtaining the required signatures; and the hourly compensation of all
involved parties. EPA also took into account the fact that a number of
States have similar requirements pertaining to information transfer
regarding potential lead hazards in the sale of residential property.
Thus, an allowance was made in the burden estimates for transactions
occurring in such States to reflect a certain level of current
compliance.
Table 1.--Summary of Annual Costs of Compliance
Sales Transactions
Start-up Costs* $24.5 million
Disclosure Event Costs 18.8 million
Recordkeeping Costs 0.6 million
Materials Costs 1.1 million
---------------
Total for Sales Transactions: $45.0 million
Rental Transactions
Start-up Costs* $ 0.9 million
Disclosure Event Costs 23.9 million
Recordkeeping Costs 1.8 million
Materials Costs 2.6 million
---------------
Total for Sales Transactions: $29.2 million
Total Estimated Annual Costs: $74.2 million
------------------------------------------------------------------------
*First-year costs annualized at 3 percent rate.
Recordkeeping and materials costs comprise a relatively modest
share of overall annual costs. Factors affecting the magnitude of these
cost items include the number of affected parties per transaction; the
frequency of transactions, the costs of acquiring/duplicating
documents, which include the lead hazard information pamphlet and
signed acknowledgement forms; and costs to maintain documents.
4. Effect of the Lead-Based Paint Hazard Disclosure Rule for Real
Estate Transfers on Small Businesses - Initial Regulatory Flexibility
Analysis
EPA investigated the potential impacts of the proposed rule on
small businesses, and has prepared an Initial Regulatory Flexibility
Analysis (IRFA). While a large number of small establishments will be
potentially affected by the rule, cost impacts were not found to be of
sufficient magnitude to cause undue harm to such establishments.
Consequently, no regulatory alternatives are being proposed in
connection with small business impacts. The IRFA is summarized
separately below in Unit XI.C of this preamble.
5. Assessment of the Benefits of the Lead-Based Paint Hazard
Disclosure Rule for Real Estate Transfers
The market imperfection that the proposed rule is intended to
correct is the lack of information available to prospective home buyers
and renters on lead-based paint hazards in homes they may be
considering for purchase or rent. Under the proposed rule, general
information about risks associated with lead-based paint will be
provided (through the provision of a brochure) and, when available,
information about the presence of or abatement of lead in the specific
unit being considered for purchase or rent must also be disclosed
(e.g., information concerning previous testing for the presence of
lead-based paint, abatement history, evidence of previous poisoning,
etc.). The failure of the marketplace to provide this information or to
provide prospective home buyers and renters the opportunity to develop
such information means that prospective buyers and renters might
purchase or lease a property, or make pricing or rental payment
decisions regarding properties, without understanding possible lead-
related health risks or risk management costs accompanying the
transaction.
EPA and HUD expect that this rulemaking will generate benefits by
providing prospective home buyers and renters access to information
which they otherwise may not have been able to acquire, such as
information pertaining to abatement activities for a specific
residence, or, in the case of more general information, which they may
have been able to acquire only through their own effort at some cost.
In addition, EPA believes the information will generate health benefits
by leading many buyers and renters to modify their behavior in a way
that will reduce risks from lead-based paint. For example, purchasers
could undertake abatement activities subsequent to taking ownership of
a dwelling, change household cleaning practices, or request
professional assistance when undertaking renovation activities. The
proposed rule may also prompt property owners, due to reluctance on the
part of prospective buyers/renters to select housing containing lead-
based paint, to act to reduce lead-related hazards associated with
their residential dwellings. In cases where action is taken to
remediate a lead-based paint hazard, additional costs would be
incurred, and would have to be subtracted from the expected benefits
associated with the remediation.
EPA and HUD note that the regulation does not require actions to be
taken to reduce lead-based paint hazards in residential housing; thus,
the extent to which health benefits accrue depends upon how transaction
participants, that is, sellers/lessors and prospective buyers/renters,
value and respond to the additional information.
In the RIA, three approaches are detailed that are evolving and can
be seen as a starting point in an effort to expand the level of
understanding of how benefits from information products can be valued.
However, an information base and the associated accepted analytic
methods necessary to predict consumer reaction to information products
on lead-based paint hazards are not readily available; thus,
quantifying the expected benefits of this proposed rule would be
extremely difficult. Given the high level of uncertainty associated
with the results from such a quantitative analysis, and given the
prescriptive nature of section 1018 of the Act, EPA and HUD believe
that the information provided in the qualitative analysis presented in
the RIA served to inform decisionmaking. EPA invites comment, however,
on its benefits analysis and on alternative approaches to assessing the
benefits of the proposed rule.
X. Confidential Business Information
While EPA and HUD do not anticipate the receipt of much (if any)
confidential business information (CBI) in connection with this
rulemaking, a person may assert a claim of confidentiality for any
information, including all or portions of written comments, submitted
in connection with the proposed rule. Any person who submits a comment
subject to a claim of confidentiality must also submit a
nonconfidential version. Any claim of confidentiality must accompany
the information when it is submitted. Persons must label information
claimed as confidential by circling, bracketing, or underlining it, and
marking it with ``CONFIDENTIAL'' or some other appropriate designation.
A determination of whether information will be disclosed will be made
pursuant to the Freedom of Information Act. If a person does not assert
a claim of confidentiality for information in comments at the time they
are submitted to EPA, EPA will place the information in the public
record for this rulemaking without further notice to that person.
XI. Rulemaking Record
A record for this proposed rule has been established under docket
number ``OPPTS-62130.'' The public version of this record (which does
not contain any information claimed as CBI) is available for inspection
from noon to 4 p.m., Monday through Friday, excluding legal holidays.
The public record is located in EPA's TSCA Nonconfidential Information
Center (NCIC), Rm. NE-B607, 401 M St., SW., Washington, DC 20460.
The following is a list of documents which EPA and HUD referred to
in developing this regulation and which can be found in the docket. In
addition, other documents, including those submitted with written
comments from interested parties, will be included in the docket
following the publication of this proposed rule in the Federal
Register.
The draft of the proposed rule submitted by EPA and HUD to the
Office of Management and Budget (OMB) for review prior to proposal will
also be contained in the docket. The drafts of the final rule submitted
for review before promulgation will be placed into the docket as well.
1. CPSC, Notice Reducing Allowable Levels of Lead in Lead-Based
Paint. Federal Register, [42 FR 44199, September 1, 1977].
2. U.S. Congress. The Residential Lead-Based Paint Hazard Reduction
Act of 1992 (Pub. L. 102-550).
3. HUD, Comprehensive and Workable Plan for the Abatement of Lead-
Based Paint in Privately-Owned Housing. Report to Congress, December 7,
1990.
4. HUD, Office of Lead-Based Paint Abatement and Poisoning
Prevention. Lead-Based Paint; Interim Guidelines for Hazard
Identification and Abatement in Public and Indian Housing; Notice. [55
FR 14556, April 18, 1990].
5. DOL, OSHA, Lead Exposure in Construction; Interim Final Rule.
Federal Register [58 FR 26590, May 4, 1993).
6. EPA, Draft: Reducing Exposure to Lead in The Home; An Action
Guide For Families. (January 1992).
7. HUD, Lead-Based Paint: A Threat to Your Children. U.S. GPO:
1993-351-568. January 1993.
8. EPA, Lead Poisoning and Your Children. EPA/800-B-920002,
September 1992.
9. HHS, PHS, CDC, Preventing Lead Poisoning in Young Children; A
Statement By the Centers for Disease Control. October 1991.
10. Alliance to End Childhood Lead Poisoning, Preventing Childhood
Lead Poisoning: The First Comprehensive National Conference; Final
Report. October 6, 7, and 8, 1991.
11. HHS, PHS, ATSDR, The Nature and Extent of Lead Poisoning in
Children in the United States: A Report to Congress. July 1988.
XII. References
1. CPSC, ``Notice Reducing Allowable Levels of Lead in Lead-Based
Paint. Federal Register. [42 FR 44199, September 1, 1977].
2. HUD, Comprehensive and Workable Plan for the Abatement of Lead-
Based Paint in Privately-Owned Housing. Report to Congress, December 7,
1990.
3. HHS, PHS, CDC, Preventing Lead Poisoning in Young Children; A
Statement By the Centers For Disease Control. October 1991, pp. 7-10.
4. Alliance to End Childhood Lead Poisoning, Preventing Childhood
Lead Poisoning: The First Comprehensive National Conference; Final
Report. October 6, 7, 8, 1991, p. A-3.
XIII. Regulatory Assessment Requirements
A. Executive Order 12866
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
agency must determine whether the regulatory action is ``significant''
and therefore subject to review by the Office of Management and Budget
(OMB) and the requirements of the Executive Order. Under section 3(f),
the order defines a ``significant regulatory action'' as an action that
is likely to result in a rule (1) Having an annual effect on the
economy of $100 million or more, or adversely and materially affecting
a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or
significant''); (2) creating serious inconsistency or otherwise
interfering with an action taken or planned by another agency; (3)
materially altering the budgetary impacts of entitlement, grant, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raising novel legal or policy issues arising out of
legal mandates, the Presidents priorities, or the principles set forth
in this Executive Order.
Pursuant to the terms of this Executive Order, it has been
determined that this proposed rule is a ``significant regulatory
action'' because it is raising novel policy issues arising out of its
legal mandate. As such, this action was submitted to OMB for review,
and any comments or changes made in response to OMB suggestions or
recommendations have been documented in the public record.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 requires each Federal agency
to perform a Regulatory Flexibility Analysis for all rules that are
likely to have a ``significant impact on a substantial number of small
entities.'' In an effort to identify and characterize the proposed
rule's effects on small business, EPA and HUD have prepared an Initial
Regulatory Flexibility Analysis (IRFA). This assessment has been
included as part of the RIA, and is summarized below.
In preparing the IRFA, EPA and HUD first developed an establishment
profile for each major sector (SIC 651 and SIC 653). This profile
indicated that approximately 75 percent of all establishments in SIC
651 (Real Estate Operators and Lessors) and approximately 71 percent of
all establishments in SIC 653 (Real Estate Agents and Managers) fell
within the 1 to 4 employee size class. These proportions increased to
90 percent and 86 percent, respectively, when employee size class 1 to
9 was examined.
To measure the cost impacts of the proposed rule on these small
establishments, representative, or model establishments were designed.
These model establishments corresponded to typical establishments, with
respect to number of employees and annual transaction volume, in each
affected sector. Since transaction activity was reported to vary
widely, a range of transaction volume was estimated for each
establishment type.
For each model establishment, annual regulatory costs were then
calculated and compared to annual labor and overhead costs. Ratios were
computed for both high and low estimates of the range of transaction
activity. In the case of a real estate sales organization, regulatory
costs were found to represent from 0.18 to 0.38 percent of labor and
overhead costs. In the case of a rental establishment, impacts were
slightly higher, ranging from 0.20 to 0.46 percent. An establishment
engaged in both activities was projected to sustain impacts of 0.26 to
0.59 percent.
Thus, while a large number of small establishments will be
potentially affected by the rule, cost impacts were not found to be of
sufficient magnitude to cause undue harm to such establishments.
Consequently, no regulatory alternatives are being proposed in
connection with small business impacts.
Pursuant to section 605(b) of the Regulatory Flexibility Act, 5
U.S.C. 605(b), EPA certifies that this proposed rule will not have a
significant economic impact on a substantial number of small entities.
C. Paperwork Reduction Act
The information collection requirements in this proposed rule have
been submitted for approval to OMB under the Paperwork Reduction Act,
44 U.S.C. 3501 et seq. An Information Collection Request (ICR) document
has been prepared by EPA and HUD (ICR No. 1710.01) and a copy may be
obtained from Sandy Farmer, Information Policy Branch (MC-2136),
Environmental Protection Agency, 401 M St., SW., Washington, DC or by
calling (202) 260-2740.
The collection of information that would be associated with this
proposed rule is estimated to have a public burden averaging 19.5
minutes per response (at 6.5 minutes per an average of 3 respondents),
and to require 15.4 minutes per respondent, annually. This includes
time for gathering and maintaining the data needed, and completing and
reviewing the collection of information.
Send comments regarding the burden estimate or any other aspect of
this collection of information, including suggestions for reducing this
burden to Chief, Information Policy Branch (MC-2136); Environmental
Protection Agency; 401 M St., SW; Washington, DC 20503, marked
``Attention: Desk Officer for EPA.'' The final rule will respond to any
OMB or public comments on the information collection requirements
contained in this proposed rule.
D. Environmental Impact
In accordance with 40 CFR 1508.4 of the regulations of the Council
on Environmental Quality and 24 CFR 50.19 and 50.20(o)(2) of the HUD
regulations, the policies and procedures contained in this proposed
rule relate only to information services and, therfore, are
categorically excluded from the requirements of the National
Environmental Policy Act.
E. HUD's Regulatory Agenda
This proposed rule was listed as Item No. 1517 in HUD's Semiannual
Agenda of Regulations published on April 25, 1994 (59 FR 20424, 20431),
in accordance with Executive Order 12866 and the Regulatory Flexibility
Act, and was requested by and submitted to the Committee on Banking,
Finance and Urban Affairs of the House of Representatives under section
7(o) of the Department of Housing and Urban Development Act.
List of Subjects in 24 CFR Part 38
Environmental protection, Lead poisoning, Mortgage insurance,
Recordkeeping and reporting requirements, and Rent subsidies.
List of Subjects in 40 CFR Part 745
Environmental protection, Hazardous substances, Lead, Recordkeeping
and notification requirements.
Dated: October 17, 1994.
Henry Cisneros,
Secretary, Housing and Urban Development.
Dated: October 21, 1994.
Carol M. Browner,
Administrator, Environmental Protection Agency.
Therefore, it is proposed that 24 CFR subtitle A and 40 CFR Chapter
I be amended as follows.
24 CFR Subtitle A
A new part 38 is added to 24 CFR subtitle A to read as follows:
PART 38--LEAD-BASED PAINT POISONING PREVENTION IN CERTAIN
RESIDENTIAL STRUCTURES
Subpart A--Disclosure of Information Concerning Lead-Based Paint Upon
Transfer of Residential Property
Sec.
38.5 Purpose.
38.7 Scope and applicability.
38.10 Effective date.
38.15 Definitions.
38.20 Disclosure requirements.
38.21 Ten calendar-day opportunity to inspect.
38.22 Disclosure and acknowledgement forms.
38.25 Agent responsibilities.
38.30 Penalties.
Appendix A to Subpart A
Subparts B-G--[Reserved]
Authority: 42 U.S.C. 4852(d).
Subpart A--Disclosure of Information Concerning Lead-Based Paint
Upon Transfer of Residential Property
Sec. 38.5 Purpose.
This subpart implements the provisions of section 1018 of the
Residential Lead-Based Paint Hazard Reduction Act of 1992, which
imposes certain requirements on the sale or lease of target housing.
Under this subpart, a seller or lessor of target housing shall disclose
to the purchaser or lessee all information known by the seller or
lessor about lead-based paint and lead-based paint hazards, provide the
purchaser with a lead hazard information pamphlet, and attach specific
disclosure and warning language to the sales contract or lease. Sellers
must also give the purchaser a 10-day opportunity to conduct an
inspection or risk assessment, before the purchaser is obligated under
a contract to purchase such housing.
Sec. 38.7 Scope and applicability.
This subpart does not apply to the sale of properties at
foreclosure and informal rental agreements not involving a lease.
Renewals of existing leases would be covered by the requirements of
this subpart only if the lessor:
(a) Did not previously provide the lessee with the lead-based paint
hazard information required under Sec. 38.20; or
(b) If the lessor becomes aware of additional information
concerning lead-based paint hazards during the term of the lease, in
which case he or she is required to disclose this information prior to
renewal of the lease.
Sec. 38.10 Effective date.
The requirements in this subpart shall apply to any transaction to
sell or lease target housing on or after October 28, 1995.
Sec. 38.15 Definitions.
All definitions as set forth in section 1004 of the Residential
Lead-Based Paint Hazard Reduction Act apply in this part. In addition,
the following definitions are provided for the purposes of this part.
Abatement means any set of measures designed to permanently
eliminate lead-based paint hazards in accordance with standards
established by appropriate Federal agencies. Such term includes:
(1) The removal of lead-based paint and lead-contaminated dust, the
permanent containment or encapsulation of lead-based paint, the
replacement of lead-painted surfaces or fixtures, and the removal or
covering of lead-contaminated soil.
(2) All preparation, clean up, disposal, and post-abatement
clearance testing activities associated with such measures.
The Act means the Residential Lead-Based Paint Hazard Reduction Act
of 1992, (Title X of the Housing and Community Development Act of 1992,
Pub. L. 102-550).
Administrator means the Administrator of the Environmental
Protection Agency.
Agent means any party who enters into a contract with a seller or
lessor to represent the seller or lessor for the purpose of selling or
leasing target housing.
Common area means a portion of a building generally accessible to
all residents/users including, but not limited to, hallways, stairways,
laundry and recreational rooms, playgrounds, community centers, and
boundary fences.
Contract for the purchase and sale of residential real property
means any contract or agreement in which one party agrees to purchase
an interest in real property on which there is situated one or more
residential dwellings used or occupied, or intended to be used or
occupied, in whole or in part, as the home or residence of one or more
persons.
EPA means the Environmental Protection Agency.
Evaluation means a risk assessment and/or inspection.
Inspection means:
(1) A surface-by-surface investigation to determine the presence of
lead-based paint as provided in section 302(c) of the Lead-Based Paint
Poisoning and Prevention Act [42 U.S.C. 4822], and
(2) The provision of a report explaining the results of the
investigation.
Lead-based paint means paint or other surface coatings that contain
lead in excess of 1.0 milligrams per centimeter squared or 0.5 percent
by weight or
(1) In the case of paint or other surface coatings on target
housing, such lower level as may be established by the Secretary of
Housing and Urban Development as defined under section 302(c) of the
Lead-Based Paint Poisoning Prevention Act [42 U.S.C. 4822], or
(2) In the case of any other paint or surface coatings, such other
level as may be established by the Administrator.
Lead-based paint hazard means any condition that causes exposure to
lead from lead-contaminated dust, lead-contaminated soil, lead-
contaminated paint that is deteriorated or present in accessible
surfaces, friction surfaces, or impact surfaces that would result in
adverse human health effects as established by the appropriate Federal
Agency.
Lessee means any entity that enters into an agreement to lease or
rent target housing, including but not limited to individuals,
partnerships, corporations, trusteeships, government agencies, Indian
tribes, or nonprofit organizations.
Lessor means any entity that offers target housing for lease,
including but not limited to individuals, partnerships, corporations,
trusteeships, government agencies, Indian tribes, or nonprofit
organizations.
Owner means any entity that has legal title to target housing,
including but not limited to individuals, partnerships, corporations,
trusteeships, government agencies, Indian tribes, or nonprofit
organizations.
Purchaser means any entity that submits a written offer to purchase
an interest in target housing, including but not limited to
individuals, partnerships, corporations, trusteeships, government
agencies, Indian tribes, or nonprofit organizations.
Residential dwelling means:
(1) A single-family dwelling, including attached structures such as
porches and stoops; or
(2) A single-family dwelling unit in a structure that contains more
than one separate residential dwelling unit, and in which each such
unit is used or occupied, or intended to be used or occupied, in whole
or in part, as the residence of one or more persons.
Risk assessment means an on-site investigation to determine and
report the existence, nature, severity, and location of lead-based
paint hazards in residential dwellings, including:
(1) Information gathering regarding the age and history of the
housing and occupancy by children under age 6.
(2) Visual inspection.
(3) Limited wipe sampling or other environmental sampling
techniques.
(4) Other activity as may be appropriate.
(5) Provision of a report explaining the results of the
investigation.
Secretary means the Secretary of Housing and Urban Development.
Seller means any entity that sells an interest in target housing,
including but not limited to individuals, partnerships, corporations,
trusteeships, government agencies, Indian tribes, or nonprofit
organizations. The term seller also includes:
(1) An entity which transfers shares in a cooperatively owned
project.
(2) An entity which transfers its interest in a leasehold in
jurisdictions or circumstances where it is legally permissible to
separate the fee title from the title to the improvement.
Target housing means any housing constructed prior to 1978, except
housing for the elderly or persons with disabilities (unless any child
who is less than 6 years of age resides or is expected to reside in
such housing) or any 0-bedroom dwelling.
0-Bedroom dwelling means any residential dwelling in which the
living area is unseparated from the sleeping area.
Sec. 38.20 Disclosure requirements.
(a) The following activities shall be completed before the
purchaser or lessee is obligated under any contract to purchase or
lease target housing.
(1) The seller or lessor, or the agent acting on behalf of the
seller or lessor, shall provide the purchaser or lessee with a copy of
EPA's lead-hazard information pamphlet, entitled Lead-Based Paint:
Protect Your Family, issued under section 406 of the Toxic Substances
Control Act.
(2) The seller or lessor, or the agent acting on behalf of the
seller or lessor, shall provide the purchaser or lessee with written
descriptions, or actual copies where available, of all information
known by the seller or lessor or the agent on the presence of lead-
based paint or lead-based paint hazards associated with the target
housing being sold or leased. Such information includes, but is not
limited to, the following items:
(i) Reports from all lead-based paint inspections, risk
assessments, and abatement activities known by the seller or lessor, or
agent.
(ii) If the target housing contains more than one residential
dwelling:
(A) Records of lead-based paint inspections, assessments, and
abatement activities conducted in common areas of the property.
(B) Records indicating whether other residential dwellings in the
target housing contain or have contained lead-based paint or lead-based
paint hazards.
(iii) Other information known by the seller or lessor, or agent
that may indicate the presence of lead-based paint or lead-based paint
hazards in the residential dwelling.
(3) The seller shall make copies of the information required under
paragragh (a)(2) of this section, accessible for inspection or copying
by purchasers and lessees.
(4) Each contract or agreement to sell property defined as target
housing shall contain a completed, signed, and dated copy of the joint
HUD/EPA form entitled Form A-Disclosure and Acknowledgement of Lead-
Based Paint Before Sale (Form A).
(5) Each contract or agreement to lease property defined as target
housing shall contain a completed, signed, and dated copy of the joint
HUD/EPA form entitled Form B-Disclosure and Acknowledgement of Lead-
Based Paint Before Lease (Form B).
(b) The seller or lessor shall disclose to the agent, any
information known to the seller or lessor regarding lead-based paint or
lead-based paint hazards within the target housing, as defined in
paragragh (a)(2) of this section.
(c) The seller, and any agent acting on behalf of the seller, shall
retain a copy of the completed Form A required under paragraph (a)(4)
of this section for 3 years from the completion date of the sale. The
lessor, and any agent acting on behalf of the lessor, shall retain a
copy of the completed Form B required under paragraph (a)(5) of this
section for 3 years from the commencement of the leasing period.
Sec. 38.21 Ten calendar-day opportunity to inspect.
This section applies only to transactions to sell target housing.
As described in this section, each purchaser of target housing shall be
given a 10 calendar-day opportunity to conduct an inspection or risk
assessment of the target housing for lead-based paint and lead-based
paint hazards prior to being bound to purchase the target housing.
Unless otherwise agreed in writing by the parties, the inspection
period shall be provided in the following manner.
(a) The seller, or the agent acting on behalf of the seller, shall
permit the purchaser 10 calendar days to conduct a risk assessment or
inspection of the target housing for the presence of lead-based paint
or lead-based paint hazards.
(b) This opportunity shall be provided to the purchaser after the
seller or the seller's agent has disclosed, in accordance with
Sec. 38.20(a)(2), all information known to the seller and agent
regarding lead-based paint and lead-based paint hazards in the target
housing and after the purchaser has received the lead hazard
information pamphlet required under Sec. 38.20(a)(1).
(c) The 10 calendar-day opportunity to inspect or assess shall
commence at the time the purchaser signs a contract to purchase the
target housing.
(d) The contract shall be contingent on finding no lead-based paint
hazard in the inspection or risk assessment conducted by a certified
firm. If a lead-based paint hazard is found during the inspection or
risk assessment, the seller and purchaser shall mutually determine the
terms under which the sale will or will not proceed.
(e) The purchaser is not required to conduct a risk assessment or
inspection of the target housing for the presence of lead-based paint
or lead-based paint hazards. The purchaser and seller may mutually
agree in writing to lengthen, shorten, or eliminate the 10-day
inspection period.
(f) The identity of the company performing the risk assessment or
inspection and the results shall be provided to the seller.
Sec. 38.22 Disclosure and acknowledgement forms.
(a) Availability of forms. Form A-Disclosure and Acknowledgement of
Lead-Based Paint Before Sale (GPO #XXX) and Form B-Disclosure and
Acknowledgement of Lead-Based Paint Before Lease (GPO #XXX) are
included for reference in Appendix A of this part. Copies are available
from the Government Printing Office (GPO) by writing to: Government
Printing Office, Superintendent of Documents, Mail Stop XXX,
Washington, DC 20402-9328. In addition, persons may contact EPA's TSCA
Hotline at 202-554-1404 for further information on obtaining copies.
(b) Seller and purchaser requirements. (1) Part I of Form A is a
``Lead Warning Statement'' required under section 1018(a)(3) of the
Act. If the contract is written in a language other than English, the
contract shall include a translation of the Lead Warning Statement in
the language of the contract as an attachment to the contract. The
statement shall consist of the following language:
Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified
that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities, reduced
intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to
provide the buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's possession and
notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is
recommended prior to purchase.
(2) In Part II of Form A, the seller shall certify, by signing and
dating the form, that he or she has:
(i) Disclosed to the purchaser any information known to the seller
on lead-based paint and lead-based paint hazards in the target housing.
(ii) Given the purchaser the EPA lead pamphlet.
(iii) Provided the purchaser with a 10 calendar-day opportunity to
conduct a risk assessment or inspection.
(3) In Part III of Form A, the agent, if any, shall certify, by
signing and dating the form, that the agent has:
(i) Informed the seller of the seller's obligation under this
subpart.
(ii) Ensured that any information known to the agent on lead-based
paint and lead-based paint hazards in the target housing has been
disclosed to the purchaser.
(iii) Ensured that the EPA lead pamphlet has been provided to the
purchaser.
(iv) Ensured that the purchaser has been or will be given a 10
calendar-day opportunity to conduct a risk assessment or inspection.
(4) In Part IV of Form A, the purchaser shall acknowledge, by
signing and dating the form, that he or she has:
(i) Read and understood the attached lead warning statement.
(ii) Received the disclosures in Part II of Form A.
(iii) Received the lead hazard information pamphlet.
(iv) Understands that he or she is entitled, by law, to a 10
calendar-day opportunity to conduct a risk assessment or inspection.
(c) Lessor and lessee requirements. (1) Part I of Form B is a
statement warning of the hazards of lead-based paint poisoning. The
statement shall consist of the following language:
A residential structure built prior to 1978 may present exposure
to lead from lead-based paint. This exposure may place young
children at risk of developing lead poisoning. Lead poisoning in
young children can produce permanent neurological damage, including
learning disabilities, reduced intelligence quotient, behavioral
problems, and impaired memory. Lead poisoning also poses a
particular risk to pregnant women. The lessor of any residential
dwelling is required to provide the lessee with any information on
lead-based paint hazards from risk assessments or inspections in the
lessor's possession and notify the lessee of any known lead-based
paint hazards.
(2) In Part II of Form B, the lessor shall certify that he or she
has disclosed any information known to the lessor on lead-based paint
and lead-based paint hazards in the target housing and provided the
lessee with the EPA lead pamphlet. The lessor shall sign and date the
form.
(3) In Part III of Form B, the agent, if any, shall certify that he
or she has notified the lessor of the lessor's obligation under this
subpart, ensured that any information known to the lessor and the agent
on lead-based paint and lead-based paint hazards in the target housing
has been disclosed, and ensured that the lessee has been given the EPA
lead pamphlet. The agent shall sign and date the form.
(4) In Part IV of Form B, the lessee shall acknowledge that he or
she received the disclosures in Part II of Form B and the EPA lead
pamphlet. The lessee shall sign and date the form.
Sec. 38.25 Agent responsibilities.
(a) Each agent shall ensure compliance with all requirements of
this subpart. To ensure compliance, the agent shall:
(1) Inform the seller or lessor of their obligations under
Secs. 38.20, 38.21, and 38.22, and to disclose to the agent information
known to the seller or lessor regarding lead-based paint and lead-based
paint hazards.
(2) Either:
(i) Make certain that the seller or lessor has performed all
activities required under Secs. 38.20, 38.21, and 38.22.
(ii) Personally comply with the requirements of Secs. 38.20, 38.21,
and 38.22.
(b) If the agent has complied with Sec. 38.25(a), the agent shall
not be liable for the failure to disclose to a purchaser or lessee
information regarding lead-based paint or lead-based paint hazards
known by a seller or lessor but not disclosed to the agent.
Sec. 38.30 Penalties.
(a) Under section 1018(b)(1) of the Act, any person who knowingly
fails to comply with any provision of this subpart shall be subject to
civil monetary penalties in accordance with the provisions of section
102 of the Department of Housing and Urban Development Reform Act of
1989 [42 U.S.C. 3545] and 24 CFR part 30.
(b) Under section 1018(b)(2) of the Act, the Secretary is
authorized to take such action as may be necessary to enjoin any
violation of this subpart in the appropriate Federal district court.
(c) Under section 1018(b)(3) of the Act, any person who knowingly
violates the provisions of this subpart shall be jointly and severally
liable to the purchaser or lessee in an amount equal to 3 times the
amount of damages incurred by such individual.
(d) In any civil action brought for damages pursuant to section
1018(b)(3) of the Act, the appropriate court may award court costs to
the party commencing such action, together with reasonable attorney
fees and any expert witness fees, if that party prevails.
(e) It is a prohibited act under section 409 of the Toxic
Substances Control Act [15 U.S.C. 2689] for any person to fail or
refuse to comply with a provision of this subpart. For purposes of
enforcing this subpart under the Toxic Substances Control Act, the
penalty for each violation applicable under section 16 of that Act is
not more than $10,000.
Appendix A to Supart A of Part 38
Form A--Disclosure and Acknowledgment of Lead-Based Paint Before
Sale
OMB #____________
Part I: Lead Warning Statement
Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified
that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities, reduced
intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The
seller or any interest in residential real property is required to
provide the buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's possession and
notify the buyer of any known lead-based paint hazards. A risk
assessments or inspection for possible lead-based paint hazards is
recommended prior to purchase.
Part II: Seller's Certification
Seller certifies to have disclosed to the purchaser and agent
all information known to the seller regarding the presence of lead-
based paint and lead-based paint hazards within this target housing
(Seller initials box and insert date).
(a)
On---------------------------------------------------------------------
(insert date)
seller provided the purchaser with lead-hazard reports based on
lead-based paint inspections, assessments, or abatements conducted
on the following dates:
(b)
On---------------------------------------------------------------------
(insert date)
the seller provided the purchaser with the following information on
lead-based paint hazards in common areas:
(c)
On---------------------------------------------------------------------
(insert date)
the seller provided the purchaser with following additional
information that may indicate lead-based paint and lead-based paint
hazards in the target housing.
(d)
On---------------------------------------------------------------------
(insert date)
Seller certifies that no additional information is known about this
target housing. (Note: By selecting (d), seller does not avoid
liability for lead-based paint and lead-based paint hazards known to
the seller that are not noted under (a), (b), or (c).
(e)
On---------------------------------------------------------------------
(insert date)
the seller provided the purchaser with the lead hazard information
pamphlet Lead-Based Paint: Protect Your Family.
The seller is aware that Federal laws requires the seller to
permit the purchaser a 10 calendar day period to conduct a risk
assessment or inspection for the presence of lead-based paint
hazards before becoming obligated under a contract to purchase
target housing (unless mutually agreed otherwise in writing). That
opportunity was or will be provided between the following dates:
__________________.
----------------------------------------------------------------------
Date
----------------------------------------------------------------------
Seller
----------------------------------------------------------------------
Seller
Part III: Agent's Certification (When Applicable)
Agent certifies to have informed the seller of his/her
obligation to disclose to the purchasers and agent all information
known to the seller regarding the presence of lead-based paint and
lead-based paint hazards within this target housing and that all
information known to the agent regarding the presence of lead-based
paint and lead-based paint hazards within this target housing has
been disclosed to the purchaser. Agent further certifies that the
purchaser received the lead hazard information pamphlet Lead-Based
Paint: Protect Your Family and that the purchaser has or will be
given a 10 calendar-day period (unless otherwise agreed in writing)
to conduct a risk assessment or inspection for the presence of lead-
based paint before becoming obligated under the contract to purchase
the target housing.
----------------------------------------------------------------------
Date
----------------------------------------------------------------------
Agent
----------------------------------------------------------------------
Date
----------------------------------------------------------------------
Agent
Part IV: Purchaser's Acknowledgment
I acknowledge that I have read and understood the attached lead
warning statement in part I of this form and received all
information noted in Part II of this form, including the lead hazard
information pamphlet Lead-Based Paint: Protect Your Family. I
further acknowledge that, pursuant to 42 U.S.C. 4852(d) and its
implementing regulations, the attached contract entitles me to 10
calendar days to conduct a risk assessment or inspection for the
presence of lead-based paint hazards before becoming obligated under
a contract to purchase this target housing, unless mutually agreed
otherwise, in writing.
----------------------------------------------------------------------
Date
----------------------------------------------------------------------
Purchaser
----------------------------------------------------------------------
Purchaser
Appendix A to Subpart A of Part 38
Form B--Disclosure and Acknowledgment of Lead-Based Paint Before
Lease
OMB #____________
Part I: Lead Warning Statement
A residential structure built prior to 1978 may present exposure
to lead from lead-based paint. This exposure may place young
children at risk of developing lead poisoning. Lead poisoning in
young children can produce permanent neurological damage, including
learning disabilities, reduced intelligence quotient, behavioral
problems, and impaired memory. Lead poisoning also poses a
particular risk to pregnant women. The lessor of any residential
dwelling is required to provide the lessee with any information on
lead-based paint hazards from risk assessments or inspections in the
lessor's possession and notify the lessee of any known lead-base
paint hazards.
Part II: Lessor's Certification
Lessor certifies to have disclosed to the lessee and agent all
information known to the lessor regarding the presence of lead-based
paint and lead-based paint hazards within this target housing. The
information provided includes:
(a)
On---------------------------------------------------------------------
(insert date)
the lessor provided the lessee with lead-hazard reports based on
lead-based paint inspections, assessments, or abatements conducted
on the following dates:
(b)
On---------------------------------------------------------------------
(insert date)
the lessor provided the lessee with the following information on
lead-based paint hazards in common areas:
(c)
On---------------------------------------------------------------------
(insert date)
the lessor provided the lessee with following additional information
that may indicate lead-based paint and lead-based paint hazards in
the target housing.
(d)
On---------------------------------------------------------------------
(insert date)
Lessor certifies that no additional information is known about this
target housing.
Note: By selecting (d), lessor does not avoid liability for lead-
based paint and lead-based paint hazards known to the lessor that
are not noted under (a), (b), or (c).
(e)
On---------------------------------------------------------------------
(insert date)
the lessor provided the lessee with the lead hazard information
pamphlet Lead-Based Paint: Protect Your Family.
----------------------------------------------------------------------
Date
----------------------------------------------------------------------
Lessor
----------------------------------------------------------------------
Lessor
Part III: Agent's Certification (When Applicable)
Agent certifies to have informed the lessor of his/her
obligation to disclose to the lessee and agent all information known
to the lessor regarding the presence of lead-based paint and lead-
based paint hazards within this target housing and that all
information known to the agent regarding the presence of lead-based
paint and lead-based paint hazards within this target housing has
been disclosed to the lessee. Agent further certifies that the
lessee received the lead hazard information pamphlet Lead-Based
Paint: Protect Your Family.
----------------------------------------------------------------------
Date
----------------------------------------------------------------------
Agent
----------------------------------------------------------------------
Date
----------------------------------------------------------------------
Agent
Part IV: Lessee's Acknowledgment
I acknowledge that I have read and understood the attached lead
warning statement in Part I of this form, received the information
noted in Part II of this form, and received the materials noted
above, including the pamphlet Lead-Based Paint: Protect Your Family.
----------------------------------------------------------------------
Date
----------------------------------------------------------------------
Lessee
----------------------------------------------------------------------
Date
----------------------------------------------------------------------
Lessee
BILLING CODE 6560-50-M
Subparts B-G--[Reserved]
40 CFR Chapter I
Part 745 of 40 CFR Chapter I which was proposed to be added on
March 9, 1994, at 59 FR 11116 would be further amended as follows:
PART 745--LEAD EXPOSURE REDUCTION
1. The authority citation for part 745 would be revised to read as
follows:
Authority: 15 U.S.C. 2605, 2607, 2681-2692 and 42 U.S.C.
4852(d).
2. Subpart F would be added to read as follows:
Subpart F -- Disclosure of Information Concerning Lead-Based Paint Upon
Transfer of Residential Property
Sec.
745.100 Purpose.
745.101 Scope and applicability.
745.102 Effective date.
745.103 Definitions.
745.107 Disclosure requirements.
745.110 Ten calendar-day opportunity to
inspect.
745.113 Disclosure and acknowledgment
forms.
745.115 Agent responsibilities.
745.118 Penalties.
Subpart F -- Disclosure of Information Concerning Lead-Based Paint
Upon Transfer of Residential Property
Sec. 745.100 Purpose.
This subpart implements the provisions of section 1018 of the
Residential Lead-Based Paint Hazard Reduction Act of 1992, which
imposes certain requirements on the sale or lease of target housing.
Under this subpart, a seller or lessor of target housing shall disclose
to the purchaser or lessee all information known by the seller or
lessor about lead-based paint and lead-based paint hazards, provide the
purchaser with a lead hazard information pamphlet, and attach specific
disclosure and warning language to the sales contract or lease. Sellers
must also give the purchaser a 10-day opportunity to conduct an
inspection or risk assessment, before the purchaser is obligated under
a contract to purchase such housing.
Sec. 745.101 Scope and applicability.
This subpart does not apply to the sale of properties at
foreclosure and informal rental agreements not involving a lease.
Renewals of existing leases would be covered by the requirements of
this subpart only if the lessor:
(a) Did not previously provide the lessee with the lead-based paint
hazard information required under Sec. 745.107; or
(b) If the lessor becomes aware of additional information
concerning lead-based paint hazards during the term of the lease, in
which case he or she is required to disclose this information prior to
renewal of the lease.
Sec. 745.102 Effective date.
The requirements in this subpart shall apply to any transaction to
sell or lease target housing if the transaction is completed on or
after October 28, 1995.
Sec. 745.103 Definitions.
All definitions as set forth in section 1004 of the Residential
Lead-Based Paint Hazard Reduction Act apply in this subpart. In
addition, the following definitions are provided for the purposes of
this subpart.
Abatement means any set of measures designed to permanently
eliminate lead-based paint hazards in accordance with standards
established by appropriate Federal agencies. Such term includes:
(1) The removal of lead-based paint and lead-contaminated dust, the
permanent containment or encapsulation of lead-based paint, the
replacement of lead painted surfaces or fixtures, and the removal or
covering of lead-contaminated soil.
(2) All preparation, clean up, disposal, and post-abatement
clearance testing activities associated with such measures.
The Act means the Residential Lead-Based Paint Hazard Reduction Act
of 1992, (Title X of the Housing and Community Development Act of 1992,
Pub. L. 102-550).
Administrator means the Administrator of the Environmental
Protection Agency.
Agent means any party who enters into a contract with a seller or
lessor to represent the seller or lessor for the purpose of selling or
leasing target housing.
Common area means a portion of a building generally accessible to
all residents/users including, but not limited to, hallways, stairways,
laundry and recreational rooms, playgrounds, community centers, and
boundary fences.
Contract for the purchase and sale of residential real property
means any contract or agreement in which one party agrees to purchase
an interest in real property on which there is situated one or more
residential dwellings used or occupied, or intended to be used or
occupied, in whole or in part, as the home or residence of one or more
persons.
Evaluation means a risk assessment and/or inspection.
Inspection means:
(1) A surface-by-surface investigation to determine the presence of
lead-based paint as provided in section 302(c) of the Lead-Based Paint
Poisoning and Prevention Act [42 U.S.C. 4822], and
(2) The provision of a report explaining the results of the
investigation.
Lead-based paint means paint or other surface coatings that contain
lead in excess of 1.0 milligrams per centimeter squared or 0.5 percent
by weight or
(1) In the case of paint or other surface coatings on target
housing, such lower level as may be established by the Secretary of
Housing and Urban Development as defined under section 302(c) of the
Lead-Based Paint Poisoning Prevention Act [42 U.S.C. 4822], or
(2) In the case of any other paint or surface coatings, such other
level as may be established by the Administrator.
Lead-based paint hazard means any condition that causes exposure to
lead from lead-contaminated dust, lead-contaminated soil, lead-
contaminated paint that is deteriorated or present in accessible
surfaces, friction surfaces or impact surfaces that would result in
adverse human health effects as established by the appropriate Federal
Agency.
Lessee means any entity that enters into an agreement to lease or
rent target housing, including but not limited to individuals,
partnerships, corporations, trusteeships, government agencies, Indian
tribes, or nonprofit organizations.
Lessor means any entity that offers target housing for lease,
including but not limited to individuals, partnerships, corporations,
trusteeships, government agencies, Indian tribes, or nonprofit
organizations.
Owner means any entity that has legal title to target housing,
including but not limited to individuals, partnerships, corporations,
trusteeships, government agencies, Indian tribes, or nonprofit
organizations.
Purchaser means any entity that submits a written offer to purchase
an interest in target housing, including but not limited to
individuals, partnerships, corporations, trusteeships, government
agencies, Indian tribes, or nonprofit organizations.
Residential dwelling means:
(1) A single-family dwelling, including attached structures such as
porches and stoops; or
(2) A single-family dwelling unit in a structure that contains more
than one separate residential dwelling unit, and in which each such
unit is used or occupied, or intended to be used or occupied, in whole
or in part, as the residence of one or more persons.
Risk assessment means an on-site investigation to determine and
report the existence, nature, severity, and location of lead-based
paint hazards in residential dwellings, including:
(1) Information gathering regarding the age and history of the
housing and occupancy by children under age 6.
(2) Visual inspection.
(3) Limited wipe sampling or other environmental sampling
techniques.
(4) Other activity as may be appropriate.
(5) Provision of a report explaining the results of the
investigation.
Secretary means the Secretary of Housing and Urban Development.
Seller means any entity that sells an interest in target housing,
including but not limited to individuals, partnerships, corporations,
trusteeships, government agencies, Indian tribes, or nonprofit
organizations. The term seller also includes:
(1) An entity which transfers shares in a cooperatively owned
project.
(2) An entity which transfers its interest in a leasehold in
jurisdictions or circumstances where it is legally permissible to
separate the fee title from the title to the improvement.
Target housing means any housing constructed prior to 1978, except
housing for the elderly or persons with disabilities (unless any child
who is less than 6 years of age resides or is expected to reside in
such housing) or any 0-bedroom dwelling.
0-Bedroom dwelling means any residential dwelling in which the
living area is unseparated from the sleeping area.
Sec. 745.107 Disclosure requirements.
(a) The following activities shall be completed before the
purchaser or lessee is obligated under any contract to purchase or
lease target housing.
(1) The seller or lessor, or the agent acting on behalf of the
seller or lessor, shall provide the purchaser or lessee with a copy of
EPA's lead-hazard information pamphlet, entitled Lead-Based Paint:
Protect Your Family, issued under section 406 of the Toxic Substances
Control Act.
(2) The seller or lessor, or the agent acting on behalf of the
seller or lessor, shall provide the purchaser or lessee with written
descriptions, or actual copies where available, of all information
known by the seller or lessor or the agent on the presence of lead-
based paint or lead-based paint hazards associated with the target
housing being sold or leased. Such information includes, but is not
limited to, the following items:
(i) Reports from all lead-based paint inspections, risk
assessments, and abatement activities known by the seller or lessor, or
agent.
(ii) If the target housing contains more than one residential
dwelling:
(A) Records of lead-based paint inspections, assessments, and
abatement activities conducted in common areas of the property.
(B) Records indicating whether other residential dwellings in the
target housing contain or have contained lead-based paint or lead-based
paint hazards.
(iii) Other information known by the seller or lessor, or agent
that may indicate the presence of lead-based paint or lead-based paint
hazards in the residential dwelling.
(3) The seller shall make copies of the information required under
paragraph (a)(2) of this section accessible for inspection or copying
by purchasers and lessees.
(4) Each contract or agreement to sell property defined as target
housing shall contain a completed, signed, and dated copy of the joint
HUD/EPA form entitled Form A-Disclosure and Acknowledgement of Lead-
Based Paint Before Sale (Form A).
(5) Each contract or agreement to lease property defined as target
housing shall contain a completed, signed, and dated copy of the joint
HUD/EPA form entitled Form B-Disclosure and Acknowledgement of Lead-
Based Paint Before Lease (Form B).
(b) The seller or lessor shall disclose to the agent, any
information known to the seller or lessor regarding lead-based paint or
lead-based paint hazards within the target housing, as defined in
paragraph (a)(2) of this section.
(c) The seller, and any agent acting on behalf of the seller, shall
retain a copy of the completed Form A required under paragraph (a)(4)
of this section for 3 years from the completion date of the sale. The
lessor, and any agent acting on behalf of the lessor, shall retain a
copy of the completed Form B, required under paragraph (a)(5) of this
section, for 3 years from the commencement of the leasing period.
Sec. 745.110 Ten Calendar-Day Opportunity to Inspect.
This section applies only to transactions to sell target housing.
As described in this section, each purchaser of target housing shall be
given a 10 calendar-day opportunity to conduct an inspection or risk
assessment of the target housing for lead-based paint and lead-based
paint hazards prior to being bound to purchase the housing. Unless
otherwise agreed in writing by the parties, the inspection period shall
be provided in the following manner.
(a) The seller, or the agent acting on behalf of the seller, shall
permit the purchaser 10 calendar days to conduct a risk assessment or
inspection of the target housing for the presence of lead-based paint
or lead-based paint hazards.
(b) This opportunity shall be provided to the purchaser after the
seller or the seller's agent has disclosed, in accordance with
Sec. 745.107(a)(2), all information known to the seller and agent
regarding lead-based paint and lead-based paint hazards in the target
housing and after the purchaser has received the lead hazard
information pamphlet required under Sec. 745.107(a)(1).
(c) The 10 calendar-day opportunity to inspect or assess shall
commence at the time the purchaser signs a contract to purchase the
target housing.
(d) The contract shall be contingent on finding no lead-based paint
hazard in the inspection or risk assessment conducted by a certified
firm. If a lead-based paint hazard is found during the inspection or
risk assessment, the seller and purchaser shall mutually determine the
terms under which the sale will or will not proceed.
(e) The purchaser is not required to conduct a risk assessment or
inspection of the target housing for the presence of lead-based paint
or lead-based paint hazards. The purchaser and seller may mutually
agree in writing to lengthen, shorten, or eliminate the 10-day
inspection period.
(f) The identity of the company performing the risk assessment or
inspection and the results shall be provided to the seller.
Sec. 745.113 Disclosure and acknowledgement forms.
(a) Availability of forms. Form A-Disclosure and Acknowledgement of
Lead-Based Paint Before Sale (GPO #XXX) and Form B-Disclosure and
Acknowledgement of Lead-Based Paint Before Lease (GPO #XXX) are
included for reference in Appendix A of this part. Copies are available
from the Government Printing Office (GPO) by writing to: Government
Printing Office, Superintendent of Documents, Mail Stop XXX,
Washington, DC 20402-9328. In addition, persons may contact EPA's TSCA
Hotline at 202-554-1404 for further information on obtaining copies.
(b) Seller and purchaser requirements. (1) Part I of Form A is a
``Lead Warning Statement'' required under section 1018(a)(3) of the
Act. If the contract is written in a language other than English, the
contract shall include a translation of the Lead Warning Statement in
the language of the contract as an attachment to the contract. The
statement shall consist of the following language:
Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified
that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent
neurological damage, including learning disabilities, reduced
intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to
provide the buyer with any information on lead-based paint hazards
from risk assessments or inspections in the seller's possession and
notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is
recommended prior to purchase.
(2) In Part II of Form A, the seller shall certify, by signing and
dating the form, that he or she has:
(i) Disclosed to the purchaser any information known to the seller
on lead-based paint and lead-based paint hazards in the target housing.
(ii) Given the purchaser the EPA lead pamphlet.
(iii) Provided the purchaser with a 10 calendar-day opportunity to
conduct a risk assessment or inspection.
(3) In Part III of Form A, the agent, if any, shall certify, by
signing and dating the form, that the agent has:
(i) Informed the seller of the seller's obligation under this
subpart.
(ii) Ensured that any information known to the agent on lead-based
paint and lead-based paint hazards in the target housing has been
disclosed to the purchaser.
(iii) Ensured that the EPA lead pamphlet has been provided to the
purchaser.
(iv) Ensured that the purchaser has been or will be given a 10
calendar-day opportunity to conduct a risk assessment or inspection.
(4) In Part IV of Form A, the purchaser shall acknowledge, by
signing and dating the form, that he or she has:
(i) Read and understood the attached lead warning statement.
(ii) Received the disclosures in Part II of Form A.
(iii) Received the lead hazard information pamphlet.
(iv) Understands that he or she is entitled, by law, to a 10
calendar-day opportunity to conduct a risk assessment or inspection.
(c) Lessor and lessee requirements. (1) Part I of Form B is a
statement warning of the hazards of lead-based paint poisoning. The
statement shall consist of the following language:
A residential structure built prior to 1978 may present exposure
to lead from lead-based paint. This exposure may place young
children at risk of developing lead poisoning. Lead poisoning in
young children can produce permanent neurological damage, including
learning disabilities, reduced intelligence quotient, behavioral
problems, and impaired memory. Lead poisoning also poses a
particular risk to pregnant women. The lessor of any residential
dwelling is required to provide the lessee with any information on
lead-based paint hazards from risk assessments or inspections in the
lessor's possession and notify the lessee of any known lead-based
paint hazards.
(2) In Part II of Form B, the lessor shall certify that he or she
has disclosed any information known to the lessor on lead-based paint
and lead-based paint hazards in the target housing and provided the
lessee with the EPA lead pamphlet. The lessor shall sign and date the
form.
(3) In Part III of Form A, the agent, if any, shall certify that
the agent has informed the lessor of the lessor's obligation under this
subpart, ensured that any information known to the agent on lead-based
paint and lead-based paint hazards in the target housing has been
disclosed to the lessee, and ensured that the EPA lead hazard
information pamphlet has been provided to the lessee. The agent shall
sign and date the form.
(4) In Part IV of Form B, the lessee shall acknowledge that he or
she received the disclosures in Part II of Form B and the EPA lead
pamphlet. The lessee shall sign and date the form.
Sec. 745.115 Agent responsibilities.
(a) Each agent shall ensure compliance with all requirements of
this subpart. To ensure compliance, the agent shall:
(1) Inform the seller or lessor of their obligations under
Secs. 745.107, 745.110, and 745.113 (including the seller or lessor's
obligation to disclose to the agent any information known to the seller
or lessor regarding lead-based paint and lead-based paint hazards;
and,.
(2) Either:
(i) Make certain that the seller or lessor has performed all
activities required under Secs. 745.107, 745.110, and 745.113.
(ii) Personally comply with the requirements of Secs. 745.107,
745.110, and 745.113.
(b) If the agent has complied with paragraph (a) of this section,
the agent shall not be liable for the failure to disclose to a
purchaser or lessee information regarding lead-based paint or lead-
based paint hazards known by a seller or lessor but not disclosed to
the agent.
Sec. 745.118 Penalties.
(a) Under section 1018(b)(1) of the Act, any person who knowingly
fails to comply with any provision of this subpart shall be subject to
civil monetary penalties in accordance with the provisions of section
102 of the Department of Housing and Urban Development Reform Act of
1989 [42 U.S.C. 3545] and 24 CFR part 30.
(b) Under section 1018(b)(2) of the Act, the Secretary is
authorized to take such action as may be necessary to enjoin any
violation of this subpart in the appropriate Federal district court.
(c) Under section 1018(b)(3) of the Act, any person who knowingly
violates the provisions of this subpart shall be jointly and severally
liable to the purchaser or lessee in an amount equal to 3 times the
amount of damages incurred by such individual.
(d) In any civil action brought for damages pursuant to section
1018(b)(3) of the Act, the appropriate court may award court costs to
the party commencing such action, together with reasonable attorney
fees and any expert witness fees, if that party prevails.
(e) It is a prohibited act under section 409 of the Toxic
Substances Control Act (15 U.S.C. 2689) for any person to fail or
refuse to comply with a provision of this subpart. For purposes of
enforcing this subpart under the Toxic Substances Control Act, the
penalty for each violation applicable under section 16 of that Act is
not more than $10,000.
[FR Doc. 94-27097 Filed 10-28-94; 10:12am]
BILLING CODE 6560-50-F