[Federal Register Volume 61, Number 50 (Wednesday, March 13, 1996)]
[Rules and Regulations]
[Pages 10440-10442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5989]




[[Page 10439]]

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Part IV





Department of Housing and Urban Development





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24 CFR Part 1720 et al.



Streamlining Interstate Land Sales, Manufactured Housing Construction 
and Safety, and Real Estate Settlement Procedures Act Programs--
Investigations; Final Rule

  Federal Register / Vol. 61, No. 50 / Wednesday, March 13, 1996 / 
Rules and Regulations  

[[Page 10440]]


DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner

24 CFR Parts 1720, 3282, 3500, and 3800

[Docket No. FR-4026-F-01]
RIN 2502-AG71


Streamlining Interstate Land Sales, Manufactured Housing 
Construction and Safety Standards, and Real Estate Settlement 
Procedures Act Programs--Investigations

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Final rule.

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

SUMMARY: This final rule amends HUD's regulations for three consumer 
protection regulatory programs by consolidating and streamlining the 
provisions relating to investigations. These programs, over which the 
Secretary has investigative authority, are Interstate Land Sales, the 
Real Estate Settlement Procedures Act, and Manufactured Housing 
Construction and Safety Standards, which are now reorganized under one 
office, the Office of Consumer and Regulatory Affairs (hereafter 
collectively referred to as ``consumer regulatory programs''). In an 
effort to comply with the President's regulatory reform initiatives, 
this rule will streamline the regulations of these consumer regulatory 
programs by eliminating provisions that are redundant or are otherwise 
unnecessary. This final rule will make the consumer regulatory program 
regulations clear and concise.

EFFECTIVE DATE: April 12, 1996.

FOR FURTHER INFORMATION CONTACT: Rebecca Holtz, Attorney, Room 9253, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Washington, DC 20410, telephone number (202) 708-3088 (this is not a 
toll-free number). For hearing- and speech-impaired persons, this 
number may be accessed via TDD by calling the Federal Information Relay 
Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: On March 4, 1995, President Clinton issued a 
memorandum to all Federal departments and agencies regarding regulatory 
reinvention. In response to this memorandum, the Department of Housing 
and Urban Development conducted a page-by-page review of its 
regulations to determine which can be eliminated, consolidated, or 
otherwise improved. HUD has determined that the regulations for three 
consumer protection regulatory programs--Interstate Land Sales, RESPA, 
and Manufactured Housing Construction and Safety Standards--can be 
improved and streamlined by consolidating similar provisions relating 
to investigations and eliminating unnecessary provisions. This rule 
includes these streamlined provisions in a new part 3800 of the 
Department's regulations. The consolidation of these provisions will 
simplify compliance with and understanding of the requirements and 
rights in investigations under these programs.
    Several provisions in the regulations repeat statutory language 
from the Interstate Land Sales Full Disclosure Act, the National 
Manufactured Housing Construction and Safety Standards Act of 1974, and 
the Real Estate Settlement Procedures Act of 1974. It is unnecessary to 
maintain statutory requirements in the Code of Federal Regulations 
(CFR), since those requirements are otherwise fully accessible and 
binding. Furthermore, if regulations contain statutory language, HUD 
must amend the regulations whenever Congress amends the statute. 
Therefore, this final rule will remove repetitious statutory language 
and replace it with a citation to the specific statutory section for 
easy reference.
    Other provisions in the regulations apply to more than one program, 
and HUD repeated these provisions in different subparts. This 
repetition is unnecessary, and updating these scattered provisions is 
cumbersome, often creating confusion. Therefore, this final rule 
consolidates these duplicative provisions, maintaining appropriate 
cross-references for the reader's convenience. The rule also makes 
conforming changes in parts 1720, 3282, and 3500 of title 24, to 
reference the new part 3800.
    Lastly, some provisions in the regulations are not regulatory 
requirements. For example, several sections in the regulations contain 
nonbinding guidance or explanations. While this information is very 
helpful to recipients, HUD will appropriately provide this information 
through handbook guidance or other materials rather than maintain it in 
the CFR.

Justification for Final Rulemaking

    HUD generally publishes a rule for public comment before issuing a 
rule for effect, in accordance with its own regulations on rulemaking 
in 24 CFR part 10. However, part 10 provides for exceptions to the 
general rule if the agency finds good cause to omit advance notice and 
public participation. The good cause requirement is satisfied when 
prior public procedure is ``impracticable, unnecessary, or contrary to 
the public interest'' (24 CFR 10.1). HUD finds that good cause exists 
to publish this rule for effect without first soliciting public 
comment. This rule consolidates similar requirements and removes 
unnecessary regulatory provisions; it does not make substantive changes 
in the program regulations. Therefore, prior public comment is 
unnecessary.

Other Matters

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this final rule, and in so 
doing certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. This rule merely 
streamlines regulations by removing unnecessary provisions. The rule 
will have no adverse or disproportionate economic impact on small 
businesses.

Environmental Impact

    This rulemaking does not have an environmental impact. This 
rulemaking simply amends an existing regulation by consolidating and 
streamlining provisions and does not alter the environmental effect of 
the regulations being amended. A Finding of No Significant Impact with 
respect to the environment was made in accordance with HUD regulations 
in 24 CFR part 50 that implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332) at the time of 
development of regulations implementing the consumer regulatory 
programs. That finding remains applicable to this rule and is available 
for public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the 
Office of the Rules Docket Clerk, Office of General Counsel, Room 
10276, Department of Housing and Urban Development, 451 Seventh Street, 
SW, Washington, DC.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that this rule 
will not have substantial direct effects on States or their political 
subdivisions, or the relationship between the Federal government and 
the States, or on the distribution of power and responsibilities among 
the various

[[Page 10441]]
levels of government. No programmatic or policy changes will result 
from this rule that would affect the relationship between the Federal 
Government and State and local governments.

Executive Order 12606, The Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this rule will not have 
the potential for significant impact on family formation, maintenance, 
or general well-being, and thus is not subject to review under the 
Order. No significant change in existing HUD policies or programs will 
result from promulgation of this rule.
    The Catalog of Federal Domestic Assistance program numbers are 
14.168 and 14.171.

List of Subjects

24 CFR Part 1720

    Administrative practice and procedure.

24 CFR Part 3282

    Administrative practice and procedure, Consumer protection, 
Intergovernmental relations, Investigations, Manufactured homes, 
Reporting and recordkeeping requirements, Warranties.

24 CFR Part 3500

    Consumer protection, Condominiums, Housing, Mortgages, Mortgage 
servicing, Reporting and recordkeeping requirements.

24 CFR Part 3800

    Administrative practice and procedure, Consumer protection, 
Investigations, Manufactured homes, Mortgages, Mortgage servicing, 
Reporting and recordkeeping requirements.

    For the reasons set out in the preamble, under the authority of 42 
U.S.C. 3535(d), title 24 of the Code of Federal Regulations is amended 
by adding a new part 3800, and by amending parts 1720, 3282, and 3500, 
as follows:
    1. A new part 3800 is added to read as follows:

PART 3800--INVESTIGATIONS IN CONSUMER REGULATORY PROGRAMS

Sec.
3800.10  Scope of rules.
3800.20  Subpoenas in investigations.
3800.30  Subpoena enforcement in district court.
3800.40  Investigational proceedings.
3800.50  Rights of witnesses in investigational proceedings.
3800.60  Settlements.

    Authority: 12 U.S.C. 2601 et seq.; 15 U.S.C. 1714; 42 U.S.C. 
3535(d) and 5413.


Sec. 3800.10  Scope of rules.

    This part applies to investigations and investigational proceedings 
undertaken by the Secretary, or the Secretary's designee, pursuant to 
the following:
    (a) The Interstate Land Sales Full Disclosure Act, 15 U.S.C. 1701 
et seq.;
    (b) The National Manufactured Housing Construction and Safety 
Standards Act of 1974, 42 U.S.C. 5401 et seq.; and
    (c) The Real Estate Settlement Procedures Act of 1974, 12 U.S.C. 
2601 et seq.


Sec. 3800.20  Subpoenas in investigations.

    (a) The Secretary may issue subpoenas relating to any matter under 
investigation. A subpoena may:
    (1) Require testimony to be taken by interrogatories;
    (2) Require the attendance and testimony of witnesses at a specific 
time and place;
    (3) Require access to, examination of, and the right to copy 
documents; and
    (4) Require the production of documents at a specific time and 
place.
    (b) A subpoenaed person may petition the Secretary or the 
Secretary's designee to modify or withdraw a subpoena by filing the 
petition within 10 days after service of the subpoena. The petition may 
be in letter form, but must set forth the facts and law upon which the 
petition is based.


Sec. 3800.30  Subpoena enforcement in district court.

    In the case of contumacy of a witness or a witness's refusal to 
obey a subpoena or order of the Secretary, the United States district 
court for the jurisdiction in which an investigation is carried on may 
issue an order requiring compliance with the subpoena. HUD headquarters 
in Washington, D.C., is one of the locations in which the Secretary 
carries on investigations of its consumer regulatory programs.


Sec. 3800.40  Investigational proceedings.

    (a) For the purpose of hearing the testimony of witnesses and 
receiving documents and other data relating to any subject under 
investigation, the Secretary, or the Secretary's designee, may conduct 
an investigational proceeding.
    (b) The Secretary, or the Secretary's designee, (``presiding 
official'') shall preside over the investigational proceeding. The 
proceeding shall be stenographically or mechanically reported. A 
transcript shall be a part of the record of the investigation.
    (c) Unless the presiding official determines otherwise, 
investigational proceedings shall be public.
    (d) The presiding official shall take all necessary action to 
regulate the course of the proceeding to avoid delay and to maintain 
order. If necessary to maintain order, the presiding official may 
exclude a witness or counsel from a proceeding. The Department may also 
take further action as permitted by statute.


Sec. 3800.50  Rights of witnesses in investigational proceedings.

    (a) Any person who testifies at a public investigational proceeding 
shall be entitled, on payment of costs, to purchase a copy of a 
transcript of the testimony the person provided.
    (b) In a nonpublic investigational proceeding, the presiding 
official may for good cause limit a witness to an inspection of the 
official transcript of that witness's testimony.
    (c) Any person subpoenaed to appear at an investigational 
proceeding may be represented by counsel as follows:
    (1) With respect to any question asked of a witness, a witness may 
obtain confidential advice from counsel;
    (2) If a witness refuses to answer a question, counsel for the 
witness may briefly state the legal grounds for the refusal;
    (3) Counsel for the witness may object to a question or a request 
for production of documents that is beyond the scope of the 
investigation or for which a privilege of the witness to refuse to 
answer may be invoked. In so doing, counsel for the witness may state 
briefly the grounds for the objection. Objections will be deemed 
continuing throughout the course of the proceeding. Repetitious or 
cumulative statements of an objection or the grounds for an objection 
are unnecessary and impermissible; and
    (4) After the Department's examination of a witness, counsel for 
the witness may request that the witness be permitted to clarify any 
answers to correct any ambiguity, equivocation, or incompleteness in 
the witness's testimony. The decision to grant or deny this request is 
within the sole discretion of the presiding official.


Sec. 3800.60  Settlements.

    (a) At any time during an investigation, the Department and the 
parties subject to an investigation may conduct settlement 
negotiations.
    (b) When the Secretary or Secretary's designee deems it 
appropriate, the Department may enter into a settlement agreement.

[[Page 10442]]


PART 1720--FORMAL PROCEDURES AND RULES OF PRACTICE

    1a. The authority citation for part 1720 is revised to read as 
follows:

    Authority: 15 U.S.C. 1718; 42 U.S.C. 3535(d).

Subpart A--Rules and Rule Making

    2. Section 1720.10 is revised to read as follows:


Sec. 1720.10  Investigations and Conferences.

    (a) In connection with a rulemaking proceeding, the Secretary may 
conduct such investigations, make such studies, and hold such 
conferences as are necessary. Investigations in connection with a 
rulemaking may be conducted in accordance with the general 
investigatory procedures under part 3800 of this chapter.
    (b) At any such conferences, interested persons may appear to 
express views and suggest amendments relative to proposed rules.

Subpart C--[Removed and Reserved]

    3. Subpart C, consisting of Secs. 1720.45 through 1720.95, is 
removed and reserved.

PART 3282--MANUFACTURED HOME PROCEDURAL AND ENFORCEMENT REGULATIONS

    4. The authority citation for part 3282 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 5424.

Subpart A--General

    5. Section 3282.1(b) is amended by adding at the end a new 
sentence, to read as follows:


Sec. 3282.1  Scope and purpose.

* * * * *
    (b) * * * The procedures for investigations and investigational 
proceedings are set forth in 24 CFR part 3800.

Subpart D--Informal and Formal Presentations of Views, Hearings and 
Investigations

    6. Section 3282.151 is amended by revising paragraph (a); removing 
paragraph (c), and redesignating paragraphs (d) and (e) as paragraphs 
(c) and (d), respectively, to read as follows:


Sec. 3282.151  Applicability and scope.

    (a) This subpart sets out procedures to be followed when an 
opportunity to present views provided for in the Act is requested by an 
appropriate party. Section 3282.152 provides for two types of 
procedures that may be followed, one informal and nonadversary, and one 
more formal and adversary. Section 3282.152 also sets out criteria to 
govern which type of procedure will be followed in particular cases.
* * * * *
    7. Section 3282.155 is revised to read as follows:


Sec. 3282.155  Investigations.

    The procedures for investigations and investigational proceedings 
are set forth in part 3800 of this chapter.

PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT

    8. The authority citation for part 3500 is revised to read as 
follows:

    Authority: 12 U.S.C. 2601 et seq.; 42 U.S.C. 3535(d).

    9. Section 3500.19 is amended by adding a new paragraph (e) to read 
as follows:


Sec. 3500.19  Enforcement.

* * * * *
    (e) Investigations. The procedures for investigations and 
investigational proceedings are set forth in 24 CFR part 3800.


Sec. 3500.20  [Removed and Reserved]

    10. Section 3500.20 is removed and reserved.

    Dated: February 22, 1996.
Stephanie A. Smith,
Acting General Deputy, Assistant Secretary for Housing--Federal Housing 
Commissioner.
[FR Doc. 96-5989 Filed 3-12-96; 8:45 am]
BILLING CODE 4210-27-P