[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8238]


[[Page Unknown]]

[Federal Register: April 6, 1994]


=======================================================================
-----------------------------------------------------------------------

NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES

45 CFR Part 1160

RIN 3154 - AAoo

 

Indemnities Under the Arts and Artifacts Indemnity Act

AGENCY: Federal Council on the Arts and the Humanities, National 
Foundation on the Arts and the Humanities.

ACTION: Advance notice of proposed rulemaking.

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

SUMMARY: This Advance Notice of Proposed Rulemaking advises the public 
that the Federal Council on the Arts and the Humanities is considering 
an amendment to the regulations implementing the Arts and Artifacts 
Indemnity Act, as amended (the ``Act''). The proposed amendment would 
permit the indemnification of eligible items from the United States 
while on exhibition in this country in connection with an exhibition of 
eligible items from outside of the United States. The proposed 
amendment is not intended to bring about a major shift in emphasis of 
the current policy or practice of the indemnity program. Specifically, 
exhibitions consisting solely of domestic items would continue to be 
ineligible for indemnification.
    This notice invites comments that will assist the Federal Council 
in more fully understanding the issues involved in such a change. The 
Federal Council particularly invites comments from groups, individuals, 
and other governmental agencies involved in the international 
exhibition process, including museums, private insurers, and 
professional and scholarly organizations. The revised rules will be 
published in the Federal Register and will be included in guideline 
packages for prospective applicants and in Certificates of Indemnity. 
The Catalogue of Federal Domestic Assistance number for the Arts and 
Artifacts Indemnity Program is 45-201.

DATES: Comments should be received by May 16, 1994.

ADDRESSES: Interested persons should submit ten copies of their written 
comments to the Federal Council on the Arts and the Humanities, c/o 
Alice M. Whelihan, Indemnity Administrator, National Endowment for the 
Arts, 1100 Pennsylvania Avenue, NW., Washington, DC 20506.

FOR FURTHER INFORMATION CONTACT: Alice M. Whelihan, (202) 682-5442.

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory Background

    In 1975, the United States Congress enacted the Arts and Artifacts 
Indemnity Act which established an indemnity program administered by 
the Federal Council on the Arts and the Humanities (the ``Federal 
Council''). 20 U.S.C. section 273(c). The Federal Council is composed 
of the heads of nineteen federal agencies and was established by 
Congress, among other things, to coordinate the policies and operations 
of the National Endowment for the Arts, the National Endowment for the 
Humanities, and the Institute of Museum Services, including the joint 
support of activities. 20 U.S.C. 972(a).
    Under the indemnification program, the United States Government 
guarantees to pay loss or damage claims, subject to certain 
limitations, arising out of exhibitions containing items determined by 
the Federal Council to be of educational, cultural, historical or 
scientific value the exhibition of which must be certified by the 
Director of the United States Information Agency as being in the 
national interest. In order to be eligible for indemnification, the 
objects must be on exhibition in the United States, or if outside this 
country preferably as part of an exchange of exhibitions.

B. Regulatory Background

    The Federal Council is the agency charged by Congress with the 
responsibility to administer the Arts and Artifacts Indemnity Act. In 
practice, the Indemnity Program is administered for the Federal Council 
by the Museum Program of the National Endowment for the Arts under the 
``Indemnities Under the Arts and Artifacts Indemnity Act'' regulations 
(the ``Regulations''), which are set forth at 45 CFR part 1160.
    These Regulations have been promulgated, and amended from time to 
time, by the Federal Council pursuant to the express and implied 
rulemaking authorities granted by Congress to make and amend rules 
needed for the effective administration of the indemnity program. Among 
other things, Congress expressly granted the Federal Council the 
authorities to establish the terms and conditions of indemnity 
agreements; to set application procedures; and to establish claim 
adjustment procedures. 20 U.S.C. sections 971(a)(2), 973(a), 975(a).
    For a number of years, the Federal Council has considered the 
desirability of amending the Regulations to permit the indemnification 
of U.S.-owned loans on exhibition in the United States in connection 
with certified international exhibitions. As currently drafted, the 
Regulations do not cover domestic objects on loan to an international 
exhibition in the United States. The Regulations provide, in pertinent 
part:
    An indemnity agreement made under these regulations shall cover:

     (1) Eligible items from outside the United States while on 
exhibition in the United States or
    (2) Eligible items from the United States while on exhibition 
outside this country, preferably when they are part of an exchange 
of exhibitions. 45 CFR section 1160.1

    On February 25, 1993, during a lengthy discussion of the 
application of the National Gallery of Art for the indemnification of 
the exhibition ``Great French Paintings from the Barnes Foundation: 
Impressionist, Post-Impressionist and Early Modern,'' the Federal 
Council extensively considered the question of whether the eligibility 
criteria set forth in the Regulations were more narrowly drawn than 
required under the Act. On a preliminary basis, the Federal Council 
concluded that they were. While the Council approved the 
indemnification of the Barnes exhibition, a Certificate of Indemnity 
ultimately did not issue because of legal uncertainities related to the 
Council's action under its current Regulations. To clarify eligibility 
issues for future actions, the Federal Council also voted to ``move 
with dispatch to amend its regulations.''
    On June 16, 1993, the Federal Council reaffirmed its vote of 
February 25, 1993 to amend the Regulations to permit the coverage of 
domestic items in connection with international exhibitions in the 
United States. Specifically, the Federal Council approved a motion to 
promulgate regulations revising 45 CFR part 1160.1 (``Purpose and 
Scope'') by adding the following language immediately following section 
1160.1(a)(2):

    (3) eligible items from the United States while on exhibition in 
the United States if the exhibition includes other eligible items 
from outside the United States.

II. Statement of Views of the Federal Council

    Since 1975, the Federal Council has approved indemnification for 
more than 500 exhibitions which have been viewed by millions of 
Americans in towns, cities and college campuses across the nation. 
Indemnification has facilitated both major international exhibitions 
and shows of more limited scale. More than 175 American museums have 
participated in the program, saving the organizers of the exhibitions 
nearly $70 million in commercial premiums. To date, the costs to the 
Federal government have been limited to the administrative costs of the 
program and the payment of two loss or damage claims totalling 
$104,700.
    The Federal Council believes that the proposed amendment to the 
Regulations will significantly enhance its ability to provide the 
American public with the benefits of a high quality program of 
international exhibitions while not significantly increasing the 
exposure of the Federal government to pay loss or damage claims nor 
significantly adding to the administrative burdens or costs of the 
program.
    The Federal Council believes that widening the eligibility criteria 
under the Indemnity Program to include coverage of U.S.-owned objects 
in exhibitions that also include foreign-owned loans would provide an 
important benefit to U.S. cultural institutions and to the American 
public. Under the current guidelines, U.S.-owned loans may be 
indemnified only when exhibited abroad. The Federal Council believes 
that if an exhibition of eligible items from abroad meets the criteria 
of having educational, cultural, historical or scientific value, and is 
certified by the Director of the United States Information Agency as 
being in the national interest, the U.S.-owned loans to the exhibition 
also should be eligible for indemnification.
    The Federal Council wishes to stress that the proposed amendment is 
not intended to bring about a major shift in the emphasis of the 
current policy or practice of the indemnity program. Under the proposed 
amended regulations, indemnity coverage would continue to be available 
primarily for the exhibition of items coming from outside the United 
States. It is anticipated that any U.S. loans to such international 
exhibitions would be a small but important component of the exhibition. 
Exhibitions consisting solely of domestic items would continue to be 
ineligible for indemnification. The Director of the United States 
Information Agency would continue to certify that the exhibition of 
items otherwise determined by the Council to be eligible for 
indemnification is in the national interest.
    The Federal Council believes that the proposed modification would 
not significantly increase the exposure of the Federal government to 
claims for loss or damage while providing important additional relief 
for U.S. borrowing institutions. This is because coverage during 
international transit, the time of greatest risk, would not be required 
for loans from U.S. lending institutions. Nor does the Federal Council 
anticipate a significant increase in either the number of applications 
to the program or the administrative burdens associated with applying 
or reviewing indemnification applications. Under current practice, 
applicants already are required to include information on domestic 
loans in their applications, and indemnity panels consider the 
educational, cultural, historical or scientific value of both the 
domestic and foreign items in determining whether to indemnify an 
exhibition.

List of Subjects in 45 CFR Part 1160

    Indemnity payments.

    For the Federal Council on the Arts and the Humanities.
Michael S. Shapiro,
Counsel to the Federal Council on the Arts and the Humanities.

    Accordingly, for the reasons set out in the preamble, the Federal 
Council proposes to amend 45 CFR part 1160 as follows:
    1. The authority citation for part 1160 continues to read as 
follows:

    Authority: 20 U.S.C. 971-977.

PART 1160--INDEMNITIES UNDER THE ARTS AND ARTIFACTS INDEMNITY ACT


Sec. 1160.1  [Amended]

    2. Section 1160.1, is amended by revising paragraph (a) to read as 
follows:


Sec. 1160.1  Purpose and scope.

    (a) This part sets forth the exhibition indemnity procedures of the 
Federal Council on the Arts and Humanities under the Arts and Artifacts 
Indemnity Act (Pub. L. 94-158) as required by section 2(a)(2) of the 
Act. An indemnity agreement made under the regulations in this part 
shall cover:
    (1) Eligible items from outside the United States while on 
exhibition in the United States;
    (2) Eligible items from the United States while on exhibition 
outside this country, preferably when they are part of an exchange of 
exhibitions; or
    (3) Eligible items from the United States while on exhibition in 
the United States if the exhibition includes other eligible items from 
outside the United States.
* * * * *
[FR Doc. 94-8238 Filed 4-5-94; 8:45 am]
BILLING CODE 7536-01-P