Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Rules and Regulations 64269 

1Codified at 24 CFR 203.18 and 200–209. 

2The public comments on the proposed rule are 

available for download from the Regulations.gov 

website at the following link: http://

www.regulations.gov/#!docketBrowser;rpp

=25;po=0;dct=PS;D=HUD-2013-0011. 

than 600 lb (272 kg) of butterfish per 

trip at any time. 

(2) Incidental fishery. A vessel issued 

a squid/butterfish incidental catch 

permit, regardless of mesh size used, 

may not fish for, possess, or land more 

than 600 lb (272 kg) of butterfish per 

trip at any. 

[FR Doc. 2018–27067 Filed 12–13–18; 8:45 am] 

BILLING CODE 3510–22–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 203 

[Docket No. FR–6029–F–01] 

RIN 2502–AJ40 

Streamlining Warranty Requirements 

for Federal Housing Administration 

(FHA) Single-Family Mortgage 

Insurance: Removal of the Ten-Year 

Protection Plan Requirements 

AGENCY: Office of the Assistant 

Secretary of Housing—Federal Housing 

Commissioner, HUD. 

ACTION: Final rule. 

SUMMARY: This final rule streamlines the 

home warranty requirements for FHA 

single-family mortgage insurance by 

removing the regulations that require 

borrowers to purchase 10-year 

protection plans in order to qualify for 

certain mortgages on newly constructed 

single-family homes. This action 

conforms with the changes made by the 

Housing and Economic Recovery Act of 

2008 (HERA). HUD, however, is 

retaining the requirement that the 

Warranty of Completion of Construction 

(form HUD–92544) be executed by the 

builder and the buyer of a new 

construction home, as a condition for 

FHA mortgage insurance. This final rule 

follows publication of a February 6, 

2013, proposed rule, and takes into 

consideration the public comments 

received on the proposed rule. 

DATES: Effective: March 14, 2019. 

FOR FURTHER INFORMATION CONTACT: 

Elissa Saunders, Director, Office of 

Single Family Program Development, 

Office of Housing, Department of 

Housing and Urban Development, 451 

7th Street SW, Room 9184, Washington, 

DC 20410–8000; telephone number 202– 

708–2121 (this is not a toll-free 

number). Persons with hearing or 

speech impairments may access this 

number via TTY by calling the Federal 

Relay Service at 1–800–877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background—HUD’s February 6, 

2013, Proposed Rule 

On February 6, 2013, at 78 FR 8448, 

HUD published a proposed rule to 

streamline the inspection and home 

warranty requirements for FHA singlefamily home insurance. As part of the 

February 6, 2013 rule, HUD proposed to 

eliminate its requirement that borrowers 

purchase a 10-year protection plan in 

order to qualify for FHA mortgage 

insurance for high loan-to-value 

mortgages where the dwelling was not 

approved for guaranty, insurance, or a 

direct loan before the beginning of 

construction and where the dwelling is 

less than one year old.1 In 2008, HERA 

(Pub. L. 110–289, 122 Stat. 2654, 

approved July 30, 2008) eliminated the 

requirement of purchasing a consumer 

protection plan or warranty plan for 

such mortgages. While HUD maintained 

discretion to keep the requirements in 

place, HUD is no longer statutorily 

mandated to do so. Upon evaluation, 

HUD believes that the significant 

improvements in building technology 

and the quality of housing, as well as 

the adoption of uniform building codes 

and local jurisdictions’ more stringent 

enforcement of building codes, mitigate 

HUD’s previous concerns about needing 

to protect property owners from defects 

in workmanship and materials. HUD 

proposed, however, to retain the 

requirement that the Warranty of 

Completion of Construction (form HUD– 

92544) be executed by the builder and 

the buyer of a newly constructed home, 

as a condition for FHA mortgage 

insurance. This warranty provides 

assurance to FHA that the home was 

built according to plan, and protects the 

buyer against defects in equipment, 

material, or workmanship supplied or 

performed by the builder, subcontractor, 

or supplier. The warrantor agrees to fix 

and pay for the defect and restore any 

component of the home damaged in 

fulfilling the terms and conditions of the 

warranty. The one-year warranty 

commences on the date that title is 

conveyed to the buyer, the date that 

construction is complete, or upon 

occupancy, whichever date occurs first. 

In addition to eliminating the 10-year 

protection plan requirements and 

related regulations in 24 CFR 203.18 

and 203.200–209, HUD proposed to 

amend 24 CFR 203.50 to reflect the 

statutory change made by HERA and the 

removal of §§ 203.18(a)(3) and 200–209 

of the regulations. Section 203.50(f) 

(‘‘Eligibility of rehabilitation loans’’) 

cross-references § 203.18(a)(3), and 

because § 203.18(a)(3) was proposed for 

removal, HUD proposed to also amend 

§ 203.50(f) accordingly. 

As part of the same publication, HUD 

also proposed to eliminate the FHA 

Inspector Roster (Roster), which is a list 

of inspectors approved by FHA as 

eligible to determine if the construction 

quality of a property is acceptable 

security for an FHA-insured loan in 

limited circumstances. HUD had 

combined the two proposals as they 

both involved streamlining 

requirements for FHA single-family 

mortgage insurance. However, the two 

proposals are distinct and the 

regulations unrelated. In addition to 

covering separate subjects, the 

regulations applied to different parties. 

The procedures and requirements 

related to the Roster applied to 

inspectors and lenders, while the 

regulations regarding 10-year protection 

plans applied to homebuilders, lenders, 

and borrowers. The public comments 

reflect this distinction, in that they 

treated these proposals separately, with 

the exception of expressions of general 

support for both proposals. In order to 

properly address the separate comments 

received on each proposal and to be 

more transparent about how the 

regulatory changes will affect different 

parties, this final rule only deals with 

elimination of the 10-year protection 

plan requirement. HUD published its 

final rule removing the FHA Inspector 

Roster on July 3, 2018 (83 FR 31038). 

Interested readers are referred to the 

preamble of the February 6, 2013, 

proposed rule for additional historical 

background and explanation of the 

proposed regulatory changes. 

II. Discussion of the Public Comments 

Related to the Elimination of the 10- 

Year Warranty Requirement Received 

on the February 6, 2013, Proposed Rule 

This final rule follows publication of 

the February 6, 2013, proposed rule, and 

takes into consideration the public 

comments received on the proposed 

rule. The public comment period closed 

on April 8, 2013. HUD received 7 public 

comments in response to the proposed 

rule, 5 of which provided comments on 

elimination of the 10-year protection 

plan requirement. These comments 

were submitted by a fair housing 

consulting group, a home warranty 

provider, a housing trade association, a 

homebuilder, and an individual.2

Three of these comments expressed 

support for eliminating the 10-year 

protection plan requirement. 


amozie on DSK3GDR082PROD with RULES
64270 Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Rules and Regulations 

3See http://portal.hud.gov/hudportal/HUD?src=/ 

press/press_releases_media_advisories/2010/ 

HUDNo.10-068. 

Commenters said the requirement for a 

ten-year warranty is expensive and 

unnecessarily increases the cost of 

homeownership to the consumer. One 

commenter said it agreed with HUD that 

a 10-year protection plan is no longer 

necessary to safeguard FHA’s insurance 

fund since the quality of housing, 

building technology, and building codes 

and enforcement have improved 

significantly. This commenter said that 

the rule would benefit homeowners who 

choose to purchase a protection plan 

because there will be additional market 

competition, as current FHA approved 

warranty issuers would have to compete 

with other warranty issuers. Further, the 

commenter said that eliminating the 10- 

year protection plan requirement would 

relieve warranty providers and HUD of 

the administrative burdens of 

application, review, and approval of 

each warranty plan. 

Following is a summary of the 

significant issues pertaining to the 10- 

year protection plan requirement raised 

by the other comments, and HUD’s 

responses. As discussed below, after 

consideration of all of the comments, 

HUD has not changed its proposal to 

eliminate the 10-year protection plan 

requirement as it was set forth in the 

February 6, 2013, proposed rule. 

Comment: Elimination of the 10-Year 

Warranty Would Adversely Affect 

Minority Homeowners. One commenter 

opposed eliminating the 10-year 

warranty requirement, writing that 

African Americans and Hispanic 

Americans make up a high percentage of 

FHA mortgage holders, and persons 

who are eligible for FHA mortgage 

insurance are those most likely to be 

targeted with defective products and 

services and the least likely to have the 

means to protect their investment if a 

defect should occur. The commenter 

wrote that based on the numbers 

included in the proposed rule used to 

calculate savings, the average 

homeowner would pay an annual 

premium of $510, which is a significant 

cost, but a cost that directly benefits the 

homeowner, unlike other fees designed 

to protect the investor that have no 

value to the homeowner. 

HUD Response. HUD has not revised 

the rule in response to this comment. 

HUD takes its mission to expand 

affordable homeownership 

opportunities in a non-discriminatory 

manner seriously, and believes that the 

regulatory amendments made by this 

final rule are consistent with those 

principles. Although the home warranty 

has been required, HUD records do not 

document that a claim has ever been 

made against the warranty discussed in 

this rule that resulted in a subsequent 

claim to FHA for unresolved repairs, 

damages, or foreclosure. Despite this, as 

acknowledged by the commenter, the 

warranty requirements impose a 

significant cost on FHA borrowers. 

Congress recognized these 

developments and eliminated the 

statutory requirement for such plans in 

the FHA programs. This rule follows 

suit and eliminates the mandate that 

borrowers purchase such plans. The 

rule, however, does not prohibit 

borrowers who desire, and are able to 

afford, the extra protection from 

purchasing warranty protection plans. 

Further, the rule retains the requirement 

that the Warranty of Completion of 

Construction (form HUD–92544) be 

executed by the builder and the buyer 

of a newly constructed home, as a 

condition of FHA mortgage insurance. 

Comment: Quality of State and Local 

Codes is Not Sufficiently High to 

Warrant Removal of 10-Year Warranty 

Requirement. Two commenters 

challenged the assertion that the quality 

of construction standards is sufficiently 

high enough to warrant the removal of 

the warranty requirement. The 

commenters wrote that warranty 

companies continue to pay out large 

sums to repair homes due to improper 

construction, and cited incidents from 

2005 to 2008, when thousands of 

households were exposed to problem 

drywall, which caused odd odors, 

corrosion of metal components, failure 

of electronics and appliances, and 

physical ailments. A commenter also 

wrote that because new homes are 

comprised of thousands of components, 

and fallible human beings develop the 

science behind building products, better 

building and stricter building codes will 

not prevent construction defects. The 

commenters wrote that without the 10- 

year warranty, homeowners face the 

possibility that the builder may have 

gone out of business or entered 

bankruptcy and they are unable to 

identify the source of the defective 

materials. The commenters 

recommended withdrawing this 

proposed rule and conducting 

additional research into the number of 

complaints filed with state regulators 

and local building code officials. 

HUD Response. HUD agrees that the 

complete elimination of construction 

defects, while a worthwhile goal is most 

likely not a feasible outcome given 

human fallibility and the limitations of 

modern technology. HUD does not 

agree, however, that this justifies the 

imposition of a costly warranty 

mandate. The rule does not prohibit 

homeowners who wish to purchase 

warranty protection plans from doing 

so, it only eliminates the mandate that 

they must purchase such plans. Further, 

HUD reiterates that the final rule 

continues to condition FHA mortgage 

insurance on the Warranty of 

Completion of Construction (form HUD– 

92544) which provides assurance that 

the home was built according to plan 

and protects the buyer against 

construction defects. With respect to 

unforeseen events, such as the concerns 

noted by the commenter regarding 

problem drywall, HUD will continue to 

be at the forefront of efforts to take or 

support enforcement action, as 

appropriate, and to provide economic 

relief for impacted homebuyers. For 

example, HUD encouraged its mortgage 

lenders nationwide to consider 

extending temporary relief to allow 

families experiencing problems paying 

their mortgages because of problem 

drywall, to allow the homeowner time 

to repair their homes.3 FHA pursued a 

policy of loan forbearance for one year 

to borrowers impacted by the drywall 

problem. Further, the United States 

Consumer Product Safety Commission 

(CPSC) and HUD staff representing the 

Interagency Task Force on Problem 

Drywall no longer recommended the 

removal of all electrical wiring in homes 

with problem drywall after a study 

conducted on behalf of CPSC was 

completed. The change in the 

government’s protocol may have 

reduced the cost of remediation for 

many homes (CPSC and HUD Issue 

Updated Remediation Protocol for 

Homes with Problem Drywall, Release 

Number 11–176, Release Date: 18, 

2011). 

III. Findings and Certifications 

Regulatory Review—Executive Orders 

12866 and 13563 

Under Executive Order 12866 

(Regulatory Planning and Review), a 

determination must be made whether a 

regulatory action is significant and, 

therefore, subject to review by the Office 

of Management and Budget (OMB) in 

accordance with the requirements of the 

order. Executive Order 13563 

(Improving Regulation and Regulatory 

Review) directs executive agencies to 

analyze regulations that are ‘‘outmoded, 

ineffective, insufficient, or excessively 

burdensome, and to modify, streamline, 

expand, or repeal them in accordance 

with what has been learned.’’ Executive 

Order 13563 also directs that where 

relevant, feasible, and consistent with 

regulatory objectives, and to the extent 

permitted by law, agencies are to 

identify and consider regulatory 


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Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Rules and Regulations 64271 

4https://www.bls.gov/ooh/business-andfinancial/loan-officers.htm. 

5 Includes benefits, management overhead, rent, 

employer taxes, and equipment. 

approaches that reduce burdens and 

maintain flexibility and freedom of 

choice for the public. 

This rule was determined to be a 

‘‘significant regulatory action’’ as 

defined in section 3(f) of Executive 

Order 12866 (although not an 

economically significant regulatory 

action, as provided under section 3(f)(1) 

of the Executive Order). The removal of 

this requirement is consistent with goals 

of Executive Order 13563. 

The rule does not rise to the level of 

an economically ‘‘significant regulatory 

action’’ under section 3(f)(1) of 

Executive Order 12866. HUD expects 

the elimination of the 10-year warranty 

plan to have economic benefits and 

costs. However, neither the economic 

costs nor the benefits of the elimination 

are greater than the $100 million 

threshold that determines economic 

significance under Executive Orders 

12866 and 13563. The preamble to the 

February 6, 2013, proposed rule at 78 

FR 8453–8454, provided a discussion of 

the anticipated costs and benefits of the 

regulatory amendments. Please see the 

below section on the Summary of 

Benefits and Costs, which summarizes 

and updates the costs and benefits of the 

regulatory changes. 

Executive Order 13771 

Executive Order 13771, entitled 

‘‘Reducing Regulation and Controlling 

Regulatory Costs,’’ was issued on 

January 30, 2017. This final rule is 

considered an E.O. 13771 deregulatory 

action. Details on the estimated cost 

savings of this proposed rule can be 

found below in the Summary of Benefits 

and Costs, and in the rule’s Regulatory 

Impact Analysis. 

Summary of Benefits and Costs of Final 

Rule 

Concurrently with this final rule, 

HUD is publishing its final Regulatory 

Impact Analysis (RIA) that examines the 

costs and benefits of this final rule. The 

RIA is available on-line at: http://

www.regulations.gov. The major 

findings in the RIA are presented in this 

summary. 

Reducing risk to borrowers and FHA 

of substandard construction was the 

primary purpose of requiring the 

purchase of a home warranty. Positive 

trends in the housing sector have 

weakened the need for such a 

requirement. Increased quality of 

construction materials, and the 

standardization of building codes and 

building code enforcement, protect 

consumers better now than when the 

warranty requirement regulation was 

first promulgated. Although the home 

warranty is required, HUD records do 

not document that a claim has ever been 

made against the warranty discussed in 

this rule that resulted in a subsequent 

claim to FHA for unresolved repairs, 

damages, or foreclosure. Thus, HUD 

believes that the benefit in cost savings 

to consumers would exceed the 

potential cost of any risk introduced. 

To understand the magnitude of the 

potential gain to consumers, HUD first 

approximated the resources devoted to 

the purchase of home warranties. On an 

annual basis, from 50,000 to 60,000 

warranties are issued to FHA borrowers 

(data provided by FHA). The analysis 

uses 55,000 to represent a typical year. 

The average coverage of the mandated 

warranty plans is $200,000. The average 

premium charged under the plans is 

$2.70 per $1,000 of coverage (data 

provided by warranty companies). The 

average annual cost per homeowner is 

approximately $540 ($2.70/$1,000 × 

$200,000). Over ten years, the present 

value of the $540 annual payment 

would range from $4,060 (at 7 percent) 

to $4,740 (at 3 percent). 

If the home warranty were a 

regulatory burden of no utility, then the 

annual savings to consumers would 

equal the full amount of the fee of $540. 

The aggregate savings would be 

approximately $30 million ($540 times 

55,000 warranties). However, the gain is 

likely less than the estimate of $30 

million. There are homebuyers who 

would demand and sellers who would 

supply a long-term warranty even when 

not required. If a buyer is extremely 

risk-averse or if a seller prefers to use 

home warranties to facilitate sales, their 

purchase of the home warranty would 

be unaffected by a rule not requiring it. 

Estimates of the general prevalence of 

home warranties vary, with studies 

finding that between 10 and 30 percent 

of homes have warranties. If 10 percent 

of homebuyers would have purchased a 

long-term warranty without the 

requirement, then consumer savings 

would be $27 million, and if 30 percent 

of homebuyers would have purchased a 

long-term warranty without the 

requirement, then the consumer savings 

would average $21 million. 

The elimination of the warranty 

requirement also eliminates paperwork 

burden. Lenders face paperwork burden 

from reviewing the home warranty 

before closing. HUD estimates that a 

lender requires 0.1 hours to process one 

warranty. Loan officers earn a median 

hourly wage of $31; 4 the opportunity 

cost of their time would be twice 5 that, 

or $62 per hour. The burden per 

warranty is $6.20 (0.1 hours × $62). At 

a volume of 55,000 warranties, the total 

paperwork burden relieved is $341,000. 

Savings will extend to the U.S. 

government. The elimination of the 

warranty requirement eliminates the 

cost to HUD associated with review of 

the warranty plans submitted for 

approval and renewal. Administrative 

burdens to HUD include review of 

warranty plans for acceptance, review of 

plan renewals, and maintenance of 

HUD’s home warranty web page. 

There is a potential risk to FHA from 

eliminating the requirement of 

construction warranties for high-LTV 

loans. A major structural defect would 

adversely affect the value of a property 

and potentially lead to a foreclosure. 

FHA would bear the cost of the claim 

directly, and if systemic these costs 

could be passed on to program 

participants through higher premiums. 

Advances in detecting the causes of 

structural failure reduce both the 

probability and cost of any structural 

failure. To ensure that there are no 

observable construction defects in 

newly built homes bought by FHAinsured borrowers, HUD is retaining the 

requirement that the Warranty of 

Completion of Construction (form HUD– 

92544) be executed by the builder and 

the buyer of the home, as a condition for 

FHA mortgage insurance. In addition, 

the rule requires that inspections be 

performed by qualified individuals, to 

further mitigate risk. If all these 

safeguards fail, then HUD estimates that 

the average aggregate loss to FHA (a 

transfer of risk) is $1.3 million, which 

is far below the consumer benefits 

generated by the rule. 

Paperwork Reduction Act 

The information collection 

requirements contained in this rule have 

been approved by the Office of 

Management and Budget (OMB) under 

the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520) and assigned 

OMB Control Numbers 2502–0059 

(Warranty of Completion of 

Construction (form HUD–92544)). In 

accordance with the Paperwork 

Reduction Act, an agency may not 

conduct or sponsor, and a person is not 

required to respond to, a collection of 

information, unless the collection 

displays a currently valid OMB control 

number. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601 et seq.) generally requires 

an agency to conduct a regulatory 

flexibility analysis of any rule subject to 

notice and comment rulemaking 


amozie on DSK3GDR082PROD with RULES
64272 Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Rules and Regulations 

requirements, unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. As noted 

above in this preamble, this rule is a 

deregulatory action taken by HUD that 

will alleviate the economic costs borne 

by participants in the FHA single family 

mortgage insurance programs. As 

discussed in this preamble, removal of 

the requirement for a 10-year protection 

plan would ease burdens on lenders and 

homebuilders and does not preclude 

borrowers from purchasing such plans. 

HUD is removing this requirement 

because it has deemed they are no 

longer necessary. Therefore, the 

undersigned certifies that this rule will 

not have a significant impact on a 

substantial number of small entities. 

Environmental Impact 

This rule does not direct, provide for 

assistance or loan and mortgage 

insurance for, or otherwise govern or 

regulate, real property acquisition, 

disposition, leasing, rehabilitation, 

alteration, demolition, or new 

construction, or establish, revise, or 

provide for standards for construction or 

construction materials, manufactured 

housing, or occupancy. In addition, part 

of this rule changes a statutorily 

required and/or discretionary 

establishment and review of loan limits. 

Accordingly, under 24 CFR 50.19(c)(1) 

and (c)(6), this rule is categorically 

excluded from environmental review 

under the National Environmental 

Policy Act of 1969 (42 U.S.C. 4321). 

Executive Order 13132, Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits an agency from 

publishing any rule that has federalism 

implications if the rule either imposes 

substantial direct compliance costs on 

State and local governments or is not 

required by statute, or the rule preempts 

State law, unless the agency meets the 

consultation and funding requirements 

of section 6 of the Executive Order. This 

rule will not have federalism 

implications and would not impose 

substantial direct compliance costs on 

State and local governments or preempt 

State law within the meaning of the 

Executive Order. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531– 

1538) (UMRA) establishes requirements 

for federal agencies to assess the effects 

of their regulatory actions on State, 

local, and tribal governments, and on 

the private sector. This rule does not 

impose any federal mandates on any 

State, local, or tribal governments, or on 

the private sector, within the meaning of 

UMRA. 

Catalogue of Federal Domestic 

Assistance 

The Catalogue of Federal Domestic 

Assistance Number for the principal 

FHA single-family mortgage insurance 

program is 14.117. 

List of Subjects in 24 CFR Part 203 

Hawaiian Natives, Home 

improvement, Indians–lands, Loan 

programs—housing and community 

development, Mortgage insurance, 

Reporting and recordkeeping 

requirements, Solar energy. 

Accordingly, for the reasons 

discussed in the preamble, HUD amends 

24 CFR part 203 to read as follows: 

PART 203—SINGLE FAMILY 

MORTGAGE INSURANCE 

■ 1. The authority citation for part 203 

continues to read as follows: 

Authority: 12 U.S.C. 1709, 1710, 1715b, 

1715z–16, and 1715u; 42 U.S.C. 3535(d). 

§ 203.18 [Amended] 

■ 2. In § 203.18, remove paragraph (a)(3) 

and redesignate paragraph (a)(4) as 

paragraph (a)(3). 

■ 3. In § 203.50, revise paragraph (f)(1) 

to read as follows: 

§ 203.50 Eligibility of rehabilitation loans. 

* * * * * 

(f) * * * 

(1)(i) The limits prescribed in 

§ 203.18(a)(1) (in the case of a dwelling 

to be occupied as a principal residence, 

as defined in § 203.18(f)(1)); 

(ii) The limits prescribed in 

§ 203.18(a)(1) and (3) (in the case of a 

dwelling to be occupied as a secondary 

residence, as defined in § 203.18(f)(2)); 

(iii) 85 percent of the limits 

prescribed in § 203.18(c), or such higher 

limit, not to exceed the limits set forth 

in § 203.18(a)(1), as Commissioner may 

prescribe (in the case of an eligible nonoccupant mortgagor as defined in 

§ 203.18(f)(3)); 

(iv) The limits prescribed in 

§ 203.18a, based upon the sum of the 

estimated cost of rehabilitation and the 

Commissioner’s estimate of the value of 

the property before rehabilitation; or 

* * * * * 

§§ 203.200 through 203.209 [Removed] 

■ 4. Remove the undesignated center 

heading ‘‘Insured Ten-Year Protection 

Plans (Plan)’’ and §§ 203.200 through 

203.209. 

Dated: December 3, 2018. 

Brian D. Montgomery, 

Assistant Secretary for Housing—Federal 

Housing Commissioner. 

[FR Doc. 2018–27116 Filed 12–13–18; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF THE TREASURY 

Alcohol and Tobacco Tax and Trade 

Bureau 

27 CFR Part 9 

[Docket No. TTB–2018–0004; T.D. TTB–154; 

Ref: Notice No. 173] 

RIN 1513–AC37 

Expansion of the Monticello 

Viticultural Area 

AGENCY: Alcohol and Tobacco Tax and 

Trade Bureau, Treasury. 

ACTION: Final rule; Treasury decision. 

SUMMARY: The Alcohol and Tobacco Tax 

and Trade Bureau (TTB) is expanding 

the approximately 1,320-square mile 

‘‘Monticello’’ viticultural area in 

Albemarle, Greene, Nelson, and Orange 

Counties, in Virginia, by approximately 

166 square miles, into Fluvanna County, 

Virginia. The established viticultural 

area and the expansion area are not 

located within any other established 

viticultural area. TTB designates 

viticultural areas to allow vintners to 

better describe the origin of their wines 

and to allow consumers to better 

identify wines they may purchase. 

DATES: This final rule is effective 

January 14, 2019. 

FOR FURTHER INFORMATION CONTACT: 

Trevar D. Kolodny, Regulations and 

Rulings Division, Alcohol and Tobacco 

Tax and Trade Bureau, 1310 G Street 

NW, Box 12, Washington, DC 20005; 

phone 202–559–6222. 

SUPPLEMENTARY INFORMATION: 

Background on Viticultural Areas 

TTB Authority 

Section 105(e) of the Federal Alcohol 

Administration Act (FAA Act), 27 

U.S.C. 205(e), authorizes the Secretary 

of the Treasury to prescribe regulations 

for the labeling of wine, distilled spirits, 

and malt beverages. The FAA Act 

provides that these regulations should, 

among other things, prohibit consumer 

deception and the use of misleading 

statements on labels and ensure that 

labels provide the consumer with 

adequate information as to the identity 

and quality of the product. The Alcohol 

and Tobacco Tax and Trade Bureau 

(TTB) administers the FAA Act 


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