federal register

9063

Wednesday

March 6, 1996

Part VIII

Department of

Housing and Urban

Development

Environmental

Protection Agency

24 CFR Part 35

40 CFR Part 745

Lead; Requirements for Disclosure of

Known Lead-Based Paint and/or LeadBased Paint Hazards in Housing; Final

Rule
9064 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 35

RIN 2501–AB58

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 745

[OPPTS–62130A; FRL–5347–9]

RIN 2070–AC75

Lead; Requirements for Disclosure of

Known Lead-Based Paint and/or LeadBased Paint Hazards in Housing

AGENCIES: Department of Housing and

Urban Development (HUD) and the

Environmental Protection Agency

(EPA).

ACTION: Final rule.

SUMMARY: As a result of past Federal,

State, and local efforts to reduce lead in

the environment, the percentage of

children with elevated levels of lead in

their blood has declined considerably

over the last 20 years. Approximately

1.7 million children, however, still have

blood-lead levels high enough to raise

health concerns. Studies suggest that

lead exposure from deteriorated

residential lead-based paint,

contaminated soil, and lead in dust are

among the major existing sources of lead

exposure among children in the United

States. Section 1018 of the Residential

Lead-Based Paint Hazard Reduction Act

of 1992 directs EPA and HUD to jointly

issue regulations requiring disclosure of

known lead-based paint and/or leadbased paint hazards by persons selling

or leasing housing constructed before

the phaseout of residential lead-based

paint use in 1978. Under that authority,

EPA and HUD are establishing the

following requirements: (1) Sellers and

lessors of most residential housing built

before 1978 must disclose the presence

of known lead-based paint and/or leadbased paint hazards in the housing; (2)

sellers and lessors must provide

purchasers and lessees with any

available records or reports pertaining to

the presence of lead-based paint and/or

lead-based paint hazards; (3) sellers and

lessors must provide purchasers and

lessees with a federally approved lead

hazard information pamphlet; (4) sellers

must provide purchasers with a 10-day

opportunity to conduct a risk

assessment or inspection for the

presence of lead-based paint and/or

lead-based paint hazards before the

purchaser is obligated under any

purchase contract; (5) sales and leasing

contracts must include certain

disclosure and acknowledgment

language; and (6) agents must ensure

compliance with these requirements.

These provisions ensure that families

receive both specific information on the

housing’s lead history and general

information on lead exposure

prevention. With this information,

consumers can make more informed

decisions concerning home purchase,

lease, and maintenance to protect their

families from lead hazard exposure.

DATES: Effective date: March 6, 1996

except for 24 CFR 35.88, 35.90, 35.92,

and 35.94 and 40 CFR 745.107, 745.110,

745.113, and 745.115 which contain

information collection requirements that

have not been approved by OMB. Once

OMB has approved these information

collection requirements, EPA and HUD

will publish a document giving notice of

the effective date and adding the OMB

approval number to 24 CFR part 35 and

40 CFR part 9.

The requirements in this final rule are

applicable in the following manner: (1)

For owners of more than four residential

dwellings, the requirements are

applicable on September 6, 1996 and (2)

For owners of one to four residential

dwellings, the requirements are

applicable on December 6, 1996.

FOR FURTHER INFORMATION CONTACT: For

general information or to obtain copies

of the final rule, pamphlet, or

background materials, contact the

National Lead Information

Clearinghouse (NLIC), toll free, at (800)

424-LEAD or fax requests to the NLIC at

(202) 659-1192. Copies of the final rule,

a brief question-and-answer document,

and the pamphlet Protect Your Family

From Lead In Your Home, are available

on the Internet at the National Safety

Council’s gopher at cais.com and on the

World Wide Web at http://

www.nsc.org/nsc/ehc/ehc.html. 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, E-mail: conrad—c.—

arnolts@hud.gov (use underscore

characters), or John B. Shumway, Office

of General Counsel, Telephone: (202)

708-9988, E-mail: John—B.—

Shumway@hud.gov (use underscore

characters). Persons who are hearing

impaired may access these telephone

numbers by calling the Federal

Information Relay Service at 1-800-877-

TDDY.

At EPA, contact Charles Franklin,

Chemical Management Division, Office

of Pollution Prevention and Toxics,

Environmental Protection Agency, 401

M St., SW., Washington, DC 20460,

Telephone: (202) 260-1781, E-mail:

franklin.charles@epamail.epa.gov.

For general information or to obtain

copies of the final rule, pamphlet, or

background materials, contact the

National Lead Information

Clearinghouse (NLIC), toll free, at (800)

424–LEAD or fax requests to the NLIC

at (202) 659–1192.

Copies of the final rule, a brief

question-and-answer document, and the

pamphlet Protect Your Family From

Lead In Your Home, are available on the

Internet at the National Safety Council’s

gopher at cais.com and on the World

Wide Web at http://www.nsc.org/nsc/

ehc/ehc.html.

SUPPLEMENTARY INFORMATION:

I. Authority

This final rule is issued under the

authority of section 1018 of the

Residential Lead-Based Paint Hazard

Reduction Act of 1992 (42 U.S.C.

4852d). The Residential Lead-Based

Paint Hazard Reduction Act is Title X of

the Housing and Community

Development Act of 1992, Pub. L. 102-

550.

II. Background

A. Legal Background

Congress passed the Residential LeadBased Paint Hazard Reduction Act of

1992 (hereafter referred to as Title X or

the Act) to address the need to control

exposure to lead-based paint hazards. In

addition to amending the Toxic

Substances Control Act (TSCA) and the

Lead-Based Paint Poisoning Prevention

Act (LBPPPA), Title X established the

infrastructure and standards necessary

to reduce lead-based paint hazards in

housing. Within this law, Congress

recognized lead poisoning as a

particular threat to children under age 6

and emphasized the needs of this

vulnerable population (section 1003 of

Title X).

Section 1018 of Title X requires EPA

and HUD to promulgate joint

regulations for disclosure of any known

lead-based paint or any known leadbased paint hazards in target housing

offered for sale or lease. (Target housing

is defined in section 1004(27) of Title X,

section 401(17) of TSCA, and is

discussed in Unit IV.C. of this

preamble.) Specifically, section 1018

requires the following activities before a

purchaser or lessee is obligated under a

contract to purchase or lease target

housing: (1) Sellers and lessors must

provide purchasers and lessees with a

lead hazard information pamphlet, as

developed under section 406(a) of

TSCA; (2) sellers and lessors must
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9065

disclose the presence of known leadbased paint and/or lead-based paint

hazards in such housing and provide

purchasers and lessees with any lead

hazard evaluation report available to the

seller or lessor; (3) sellers must permit

purchasers a 10-day opportunity to

conduct a risk assessment or inspection

for the presence of lead-based paint

hazards; and (4) sales contracts must

include an attached Lead Warning

Statement and acknowledgment, signed

by the purchaser.

Violation of section 1018 may result

in civil and criminal penalties and

potential triple damages in a private

civil suit.

Section 1018 mandated that EPA and

HUD promulgate these requirements no

later than 2 years after the date of

enactment of Title X (October 28, 1994),

to take effect 3 years after enactment of

Title X (October 28, 1995). Due to

promulgation delays, EPA and HUD

have revised the effective date

provisions for this rule.

This rule represents one of a broad

range of interrelated lead exposure

reduction activities mandated under

Title X. Many of these other activities

support and affect the development of

the section 1018 rule. Several of the

activities most closely related to the

disclosure requirements are briefly

discussed below.

The statutory provision most closely

tied to section 1018 is section 406(a) of

TSCA. Section 406(a) directs EPA to

develop and publish, after notice and

comment, a lead hazard information

pamphlet on lead-based paint hazards

in the home. EPA developed the

pamphlet in consultation with HUD, the

Centers for Disease Control and

Prevention (CDC), and the Consumer

Product Safety Commission (CPSC),

which has joined as a co-sponsor of the

pamphlet. EPA issued a notice of

availability in the Federal Register of

August 1, 1995 (60 FR 39167), to

announce the pamphlet’s completion.

As mandated under section 1018 of

Title X, this lead hazard information

pamphlet must be given to purchasers

and lessees of target housing.

Under section 403 of TSCA, EPA is

charged with issuing regulations that

identify lead-based paint hazards, leadcontaminated dust, and leadcontaminated soil, based on the

definitions provided in section 401 of

TSCA. In July 1994, EPA released an

interim guidance document to provide

public and private decisionmakers with

guidance on identifying and prioritizing

lead-based paint hazards for control

before the issuance of the final section

403 standards. EPA subsequently issued

the interim guidance document in the

Federal Register of September 11, 1995

(60 FR 47248). EPA is in the process of

developing the proposed section 403

standards.

Section 402 of TSCA directs EPA (in

consultation with HUD, the Department

of Labor (DOL), and the Department of

Health and Human Services (HHS)) to

promulgate regulations on accreditation

of training programs and training and

certification of individuals and

contractors engaging in lead-based paint

evaluation and reduction activities. This

section also requires that EPA, in

consultation with the above agencies,

develop standards for performance of

such lead-based paint evaluation and

reduction activities. EPA issued the

proposed section 402 rule on September

2, 1994 (59 FR 45872), and expects to

issue the final rule shortly. Under the

section 1018 disclosure requirements

issued today, available reports resulting

from such evaluation and reduction

activities must be provided to the

purchaser or lessee.

Pursuant to sections 1012 and 1013 of

Title X, HUD is drafting regulations

setting out procedures for all federally

owned residential property and housing

receiving Federal assistance. These

procedures concern occupant

notification as well as evaluation (such

as inspection and risk assessment) and

reduction (such as interim controls and

abatement) of lead-based paint and/or

lead-based paint hazards. The

regulations implementing sections 1012

and 1013 will not address the provision

of a lead hazard information pamphlet

to new purchasers and lessees of target

housing, nor any of the other

requirements under section 1018. HUD

will release these regulations in

proposed form as soon as possible for

public comment.

Pursuant to section 1015 of Title X,

HUD and EPA established a Task Force

on Lead-Based Paint Hazard Reduction

and Financing, made up of private and

public organizations representing the

spectrum of interests affected by the

lead-based paint issue. The Task Force

developed recommendations on

evaluating and reducing lead-based

paint hazards in private housing. The

Task Force released its

recommendations on July 11, 1995, in a

report entitled Putting the Pieces

Together: Controlling Lead Hazards in

the Nation’s Housing. A copy of this

report has been entered into the public

record for this rule.

Pursuant to section 1017 of Title X,

HUD and EPA, in cooperation with

other Federal Agencies, have revised

HUD’s guidelines for lead-based paint

hazard evaluation and reduction

activities. These revised guidelines,

entitled Guidelines for the Evaluation

and Control of Lead-Based Paint

Hazards in Housing (hereafter referred

to as the ‘‘HUD Guidelines’’), were

released to the public in June 1995. A

copy of the HUD Guidelines is included

in the public record for this rule.

B. Lead Poisoning in the United States

Lead affects virtually every system of

the body. While it is harmful to

individuals of all ages, lead exposure

can be especially damaging to children,

fetuses, and women of childbearing age.

As recent studies have identified

previously unrecognized effects, there

has been increasing concern about

blood-lead levels once thought to be

safe. Since 1978, CDC has lowered the

blood-lead level of concern from 60 μg/

dL (micrograms per deciliter) to 10 μg/

dL (Ref. 2).

Lead poisoning has been called ‘‘the

silent disease’’ because its effects may

occur gradually and imperceptibly,

often showing no obvious symptoms.

Blood-lead levels as low as 10 μg/dL

have been associated with learning

disabilities, growth impairment,

permanent hearing and visual

impairment, and other damage to the

brain and nervous system. In large

doses, lead exposure can cause brain

damage, convulsions, and even death.

Lead exposure before or during

pregnancy can also alter fetal

development and cause miscarriages.

In 1991, the Secretary of HHS

characterized lead poisoning as the

‘‘number one environmental threat to

the health of children in the United

States’’ (Ref. 1). Although the percentage

of children with elevated blood-lead

levels has declined over the last 20

years, millions of U.S. children still

have blood-lead levels high enough to

threaten their health (Ref. 1). The Third

National Health and Nutrition

Examination Survey (NHANES III)

indicates that over the past two decades,

the average child’s blood-lead level has

decreased from 12.8 μg/dL to 2.8 μg/dL

(Ref. 8). NHANES III also indicates,

however, that in 1991 approximately 1.7

million U.S. children under the age of

6 still had blood-lead levels that

exceeded the CDC 10 μg/dL level of

concern (Ref. 8).

C. Hazards from Past Uses of LeadBased Paint

Efforts to reduce exposure to lead

from sources like gasoline and food cans

have played a large role in the past

reductions of blood-lead levels in the

United States. Despite these successes, a

significant human health hazard

remains from improperly managed leadbased paint. From the turn of the
9066 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

century through the 1940’s, paint

manufacturers used lead as a primary

ingredient in many oil-based interior

and exterior house paints. Usage

gradually decreased through the 1950’s

and 1960’s, as largely lead-free latex

paints became more popular. Although

the CPSC banned lead-based paints from

residential use in 1978 (currently, paints

may not have greater than 0.06 percent

lead by weight (Ref. 3)), EPA and HUD

estimate that 83 percent of the privately

owned housing units built in the United

States before 1980 contain some leadbased paint. By these estimations,

approximately 64 million homes may

contain lead-based paint that may pose

a hazard to the occupants if not

managed properly (Ref. 4).

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 a hard-to-see film over

surfaces in a house. In some cases,

cleaning and renovation activities can

increase the threat of lead-based paint

exposure by dispersing fine lead dust

particles in the air and over accessible

household surfaces. If managed

improperly, both adults and children

can receive hazardous exposures by

inhaling the fine dust or by ingesting

paint dust during hand-to-mouth

activities. Children under age 6 are

especially susceptible to lead poisoning

(Ref. 2).

III. Summary of Proposed Rule and

Public Comments

Under the authority of Title X, EPA

and HUD issued a proposed rule in the

Federal Register of November 2, 1994

(59 FR 54984). The proposed rule

described the basic approach for

implementing the requirements under

section 1018, including draft regulatory

text, definitions, and standardized form

language for use in all transactions. In

many cases, EPA and HUD also

included a range of options for

implementing the rule along with

requests for comment on specific

implementation issues.

In response to the proposed rule,

identified by docket number OPPTS62130A, EPA and HUD received

responses from 198 commenters during

the 60-day comment period. The largest

number of responses (approximately 25

percent) came from the real estate

industry. Other commenter groups

included representatives from the

banking/financial industry (9 percent),

letters from State and local officials

involved with public health or

environmental protection (8 percent),

comments from advocacy groups (8

percent), letters from attorneys

representing various groups (9 percent),

and concerned private citizens (23

percent). Approximately 10 percent of

the responses came from education

officials, housing authorities, and

groups involved with real estate

development and construction. The

paragraphs that follow briefly describe

some of the key areas that were

addressed by the commenters.

A number of comments addressed the

scope and applicability of the rule.

Commenters discussed a range of

transaction types for specific exclusion

or inclusion.

While numerous comments addressed

the various definitions contained in the

rule, most suggestions involved

revisions and modifications to existing

terms as opposed to requests that

additional terms be defined. A prevalent

theme was consistency of terminology

across different rules such as those for

sections 402, 404, and 406 of TSCA.

Comments concerning the disclosure

requirement targeted issues such as the

scope of disclosed information; the

precise stage at which disclosures

should be made; recordkeeping

parameters; and the ways in which

common areas of multi-unit buildings

will be affected by disclosure.

The lead hazard information

pamphlet requirements generated

comments in the following three

categories: strategies for States and

tribes (hereafter, all references to States

include Indian tribes) with their own

notification materials; making the

pamphlet available in other languages;

and requests for more varied and active

distribution strategies.

The proposed disclosure and

acknowledgment form generated

requests for simplification and

availability in non-English languages.

Some suggestions involved revising

portions of the Lead Warning Statement.

The section of the proposed rule that

received the most comments concerned

the proposed 10-day evaluation period.

Of particular concern were the

commencement and length of the

evaluation period; the practical

availability of certified inspectors or risk

assessors to do the testing; and the

practicality and logistics of obligating

purchasers to provide a report to sellers.

Other topics that elicited some

comment included the role of the agent,

the effective date of the rule, and

potential penalties for noncompliance.

A more complete summary of the

comments received, along with EPA’s

and HUD’s responses, is available in the

public record for this rulemaking.

IV. Final Rule Provisions and Key

Comments Addressed

EPA and HUD have revised the

proposed rule to reflect the Agencies’

desire to maximize the rule’s clarity,

flexibility, consistency with other

Federal activities, and consistency with

existing real estate practice. These goals

are important considerations to ensure

quick and widespread implementation

of the rule.

In particular, many of the changes to

the final rule fall into five general

categories. These areas include: (1)

Clarifications of the rule’s applicability,

(2) modification of key definitions, (3)

establishment of a clear and common

sense disclosure process, (4)

development of a concise disclosure

record, and (5) development of a flexible

framework for the 10-day evaluation

period.

Throughout the preamble for this final

rule, there are citations to 24 CFR part

35 and 40 CFR part 745. These

references reflect the location that the

final regulatory text will occupy in the

Code of Federal Regulations (CFR)

following the rule’s promulgation. EPA

and HUD are adding this final joint

EPA/HUD regulation to both titles to

ensure that the public can easily locate

the requirements. Where the preamble

references the actual rule language,

therefore, it will regularly include

references to the requirements as they

appear in each title. While the

requirements are identical, in some

cases the nomenclature for the two titles

may be slightly different.

A. Clarifying the Rule’s Scope and

Applicability

Section 1018 mandated that the rule

apply to sales and leases of target

housing. The proposed rule also

discussed certain unique types of

housing transactions that deserved

special attention in implementing the

regulations. For example, the preamble

of the proposed rule explained the rule’s

exclusion of the following from the

statutory definition of target housing:

housing built after 1977, housing for the

elderly, housing for the disabled, 0-

bedroom dwellings, and commercial

lodging. Many commenters

recommended that the regulatory text of

the final rule clearly designate types of

transactions that are included and

excluded.

EPA and HUD have expanded the

scope and applicability section of the

regulatory text to better define the rule’s

impact on certain types of transactions.

Below is a brief discussion of the unique

transactions addressed under the scope

and applicability section and the
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9067

rationale for including or excluding

them.

1. Transactions to sell properties at

foreclosure. The final rule retains the

exclusion for foreclosure sales presented

in the proposed rule. While some

commenters opposed exempting

foreclosure transactions due to the lack

of protection for the purchaser, EPA and

HUD believe that the circumstances

typically surrounding foreclosure

transactions make pre-sale disclosure

and evaluation unworkable and

impractical. Access to properties during

foreclosure proceedings is often limited,

making evaluations impossible. Such

properties typically are sold on an ‘‘as

is’’ basis with regard to all structural

and environmental factors. Further,

these transactions do not necessarily

involve direct interaction between the

property owner and the purchaser, and

the mortgage holder or trustee is

unlikely to have information on the

presence of lead-based paint and/or

lead-based paint hazards. In light of

these circumstances, EPA and HUD

believe that it would be inappropriate to

extend Federal disclosure and

evaluation requirements to foreclosure

transactions.

This exclusion does not apply,

however, to the sale of housing

originally acquired through a

foreclosure sale and subsequently resold

(an expansion of the exclusion

recommended by some commenters). In

such cases, EPA and HUD believe that

the rule’s provisions can be

incorporated into the sales process since

many of the extenuating circumstances

of foreclosure sales no longer apply.

2. Rental housing found to be free of

lead-based paint. The final rule exempts

from coverage leasing transactions

involving target housing that is free of

lead-based paint, as determined by a

certified inspector. For the purposes of

this rule, EPA and HUD have defined

‘‘lead-based paint free’’ as the absence of

paint with lead levels above those

provided in Title X.

In addition to receiving support by

many public commenters, this exclusion

was recommended by the Task Force on

Lead Hazard Reduction and Financing.

EPA and HUD strongly encourage the

concept of lead-based paint evaluation

in rental housing. Evaluations can help

lessors to detect the presence of leadbased paint and to determine whether

certain management practices and

occupant education efforts are

necessary. Where evaluations discover

lead-based paint, such results will

provide lessors and/or lessees with the

information necessary to take

appropriate hazard reduction steps. EPA

and HUD also believe that the

exemption will provide a valuable

incentive to building owners to conduct

inspections and remove lead-based

paint where present.

Under the provisions of the

regulation, disclosure during rental

transactions is limited to the disclosure

of known lead-based paint and/or leadbased paint hazards, provision of

available records and reports, provision

of a lead hazard information pamphlet,

and creation and retention of lead

warning and acknowledgment language.

These activities provide substantially

fewer benefits in cases where reliable

information indicates that the housing is

lead-based paint free. At the same time,

EPA and HUD expect that the

exemption for lead-based paint free

units will not dissuade many lessors

from providing their inspection reports

to prospective lessees on a voluntary

basis. Given the value that lead-safe

housing would have to an informed

consumer, EPA and HUD expect that

owners will see a great benefit in

informing lessees of the housing’s leadbased paint free status.

Because of the distinct disclosure

obligations the statute imposes on

sellers, obligations that purchasers

assume upon purchase of the housing,

EPA and HUD are not allowing the leadbased paint free exemption for sales

transactions. Unlike lessees, purchasers

take on new obligations to comply with

the disclosure provisions during all

subsequent sales or leasing transactions.

Exempting sales transactions could

disrupt the flow of information from

owner to owner regarding the status of

the target housing and the purchaser’s

potential disclosure obligations.

Further, Title X guarantees purchasers

more than just known information and

available reports. Title X guarantees

each purchaser the opportunity to

conduct an evaluation for lead-based

paint and/or lead-based paint hazards,

regardless of the information disclosed

by the seller. Exempting sales

transactions based on the information in

the possession of the seller would deny

the purchaser that evaluation right.

While many purchasers will accept the

seller’s information and waive their

evaluation opportunity (especially if the

seller provides an evaluation by a

certified inspector), some purchasers

may prefer to have their own evaluation

performed.

Because the Federal training and

certification program will not take effect

until some time after the effective date

of this rule, EPA and HUD recognize the

need for a process to allow property

owners to seek exclusions for lead-based

paint free housing in States without

federally authorized certification

programs. In the interim period before

the Federal certification program (to be

issued under subpart L of 40 CFR part

745) takes effect, inspectors qualified

under any existing State certification

program, and using State-approved

methods, are considered qualified to

conduct inspections for the purpose of

determining whether housing is leadbased paint free. In States without

existing certification programs, lessors

may use the services of inspectors

certified in other States. Once the

Federal or federally authorized State

certification program has taken effect in

a particular State, however, this interim

provision will expire and subsequent

inspections for the purposes of this

exclusion will have to be performed by

inspectors with Federal or federally

authorized State certification.

Some commenters asked whether

lessors hoping to meet the lead-free

exemption could correct for possible

false (or outdated) positive findings

during lead-based paint inspections.

The lessor always retains the option of

having additional tests performed by

certified inspectors. Nothing in either

the law or the regulation is intended to

revoke or restrict that right. An

additional test can sometimes clarify

whether or not lead-based paint is

present. For example, if a lessor

believed that a previous inspection had

rendered a false-positive result (all

measurement techniques involve some

small degree of sampling and analytical

error), the lessor could choose to have

a certified inspector retest the area in

question. If the additional testing by a

certified inspector indicated that the

initial positive results were false (i.e.,

that there was in fact no lead-based

paint present), then the lessor would

qualify for the lead-based paint free

exemption. Similarly, suppose a lessor

first had a test done in 1982 using an Xray fluorescence (XRF) device that

indicated the presence of lead-based

paint. Because testing procedures were

less reliable at that time (standard

practice often failed to consider the

effect of the substrate underneath the

paint on the accuracy of the

measurement and instrument

calibration checks were often deficient),

the lessor might choose to conduct a

new test using the improved

methodology available today. If this

second test indicated that lead-based

paint was not present, then the lessor

would qualify for the lead-based paint

free exemption. As a third example, a

lessor who had all lead-based paint

removed from a rental property

following an earlier inspection could

choose to have a new inspection or
9068 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

clearance examination conducted on the

abated property. If the new information

indicated that lead-based paint was no

longer present, then the lessor would

qualify for the lead-based paint free

exemption. In all three cases, if the

second test confirmed the original

findings, or if the test was not

conducted by a certified inspector, the

exemption would not be available.

3. Short-term leases of 100 days or

less. Many commenters recommended

that the final rule clarify the distinction

between short-term lodgings and longer

term residential housing. The final rule

addresses these comments by excluding

housing transactions involving leasing

agreements of 100 days or less, where

no lease renewal or extension can occur.

This time period is intended to capture

all leasing transactions of 3 months or

less, while providing several additional

days to allow flexibility in the

transaction. Building upon the logic

discussed in the proposed rule, the final

rule’s short-term lease exclusion

captures most seasonal vacation rentals

and hotel and motel transactions, as

well as other forms of short-term

lodging. During such transactions,

which are typified by short stays and

quick occupant turnover, EPA and HUD

believe that the disclosure provisions

are impractical and counter to

Congressional intent. The notification

requirements of this rule would apply to

vacation rentals in cases where the stay

extends beyond a 100-day period. Under

such circumstances, EPA and HUD

believe that the potential for occupant

exposure to lead-based paint and/or

lead-based paint hazards merits the

disclosure of information required by

the rule, regardless of whether the stated

purpose of the lease is temporary or

permanent housing.

In addition, EPA and HUD have

placed a limitation on extensions and

renewals of such short-term leases to

ensure that month-to-month leasing

transactions remain covered by the final

rule. Commenters noted that many

rental transactions incorporate an openended month-to-month leasing

agreement. These transactions will still

be covered by the final rule unless the

parties establish in advance that the

term of rental will be no longer than 100

days. In an open-ended month-to-month

lease arrangement, for example, the rule

still applies since the leasing agreement

fails to limit the lease term to 100 days

or less, i.e., the lease agreement could

possibly be extended beyond 100 days.

If both parties wish to extend a

previously exempted short-term lease

beyond the 100-day limit, all provisions

of this rule must be satisfied in full

before any such ‘‘extension’’ occurs.

4. Lease renewals. The final rule does

not require repeated disclosure during

the renewal of existing leases in which

the lessor has previously disclosed all

information required under 24 CFR

35.88 and 40 CFR 745.107 and where no

new information has come into the

possession of the lessor. As stated in the

proposed rule, EPA and HUD do not

believe that duplicative disclosure

provides significant benefits.

Several commenters noted that in

many residential leasing transactions,

leasing arrangements switch to monthto-month ‘‘at-will’’ arrangements after

an initial period of occupancy. In such

cases, the leasing arrangement may

continue indefinitely without any

‘‘renewal process.’’ Under such

circumstances, EPA and HUD interpret

renewal to occur at the point when the

parties agree to a significant written

change in the terms of the lease, such as

a rental rate adjustment. Following such

alteration of terms, the disclosure

requirements apply to any new

information obtained subsequent to the

original disclosure.

5. The purchase, sale, or servicing of

mortgages. The final rule does not

cover, and was never intended to cover,

the purchase, sale, or servicing of

mortgages. During the comment period,

many commenters expressed concern

that the proposed rule could be

interpreted to hold liable persons

involved in the purchase, sale, or

servicing of mortgages where the title of

the housing does not change hands as

part of the transaction.

6. The sale or lease of 0-bedroom

dwellings. The final rule does not apply

to transactions involving 0-bedroom

dwellings, in keeping with the

definition of ‘‘target housing’’ provided

in section 1004 of Title X. This

definition, at the heart of the section

1018 provisions, specifically excludes 0-

bedroom dwellings of all types.

7. Informal rental agreements. In the

proposed rule, EPA and HUD proposed

excluding ‘‘informal rental agreements

which do not involve a lease’’ (a phrase

meant to capture oral leases) because

‘‘such arrangements, by virtue of their

informality, make the administration

and enforcement of these requirements

extremely difficult.’’ EPA and HUD have

removed any implied exclusion for oral

leases. In deciding not to exclude such

leases, EPA and HUD drew heavily

upon the public comments. Many of

these comments suggested that the

absence of a written lease may not have

bearing on the ‘‘formality’’ of the

housing arrangement. Commenters

noted that oral leases make up a

significant portion of the housing

arrangements in certain areas, especially

those that lack rental housing codes.

Further, although the absence of a

written lease provides challenges for

certain Federal enforcement and

compliance monitoring approaches,

EPA and HUD now believe that

enforcement is possible. Other evidence

may exist, for example, to demonstrate

that a leasing agreement exists between

two parties. Congress also provided

lessees with opportunities for redress

under its civil penalty provisions at

section 1018(b)(3). These safeguards are

not dependent upon Agency actions and

therefore should not be constrained by

EPA and HUD limitations.

EPA and HUD have also considered

policy reasons for not excluding oral

leases. First, EPA and HUD are

sympathetic to commenter concerns that

an explicit exclusion for oral leasing

transactions could create incentives for

lessors to avoid written leases. If the

rule’s exclusion were to indirectly

discourage the use of written leases,

lessees would lose both their right to

information on lead-based paint

poisoning prevention and the many

other protections afforded by written

leases. Commenters also noted that a

disproportionate number of oral

transactions occur in low-income,

disadvantaged communities. These

communities are already at greater risk

of exposure to lead-based paint hazards.

Nevertheless, while the final rule does

not provide an explicit exclusion for

oral leasing arrangements, EPA and

HUD expect that many oral lease

transactions may be excluded for other

reasons (length of arrangements, rental

of 0-bedroom dwelling, etc.).

B. Effective Date

In the proposed rule, EPA and HUD

requested comment on the issue of

extending the effective date for the final

rule beyond October 28, 1995, in light

of the promulgation delays. EPA and

HUD noted Congress’ inclusion of a 1-

year window between the statutory

promulgation deadline and the

statutorily mandated effective deadline.

EPA and HUD received comments in

support of and in opposition to an

extension.

Commenters opposed to delaying the

effective date generally argued that any

delay in implementation would increase

the number of preventable exposures to

lead-based paint hazards. According to

these commenters, given the importance

of educating consumers about their

options for reducing lead hazards, the

positive effects of early implementation

outweigh the practical difficulties.

While agreeing that this rule

addresses an important consumer
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9069

protection and empowerment goal, EPA

and HUD believe that the rule’s effective

implementation requires an informed

and prepared general public and

regulated community. EPA and HUD

believe that a phase-in period is

necessary to provide adequate time for

the real estate industry, private lessors,

and independent housing sellers and

lessors to become familiar with the rule

requirements and to set up procedures

for compliance.

Sellers and lessors who own more

than four residential dwellings will

have 6 months from the final rule’s

promulgation to implement full

disclosure during sales and leasing

transactions. This phase-in schedule

ensures that all such property owners,

sellers, lessors, and agents will have

adequate notice of the new requirements

before they take effect. Believing that

property owners with four or fewer

dwellings are more likely to be nonprofessional sellers and lessors, EPA

and HUD are providing a 9-month

phase-in period for such owners. EPA

and HUD encourage all sellers and

lessors to begin voluntary disclosure in

advance of their relevant effective date.

EPA and HUD also received

comments recommending delaying the

effective date until after EPA issues its

standards for lead hazards in paint,

dust, and soil. These commenters stated

that the regulated community would be

unable to disclose adequately the

presence of lead-based paint and leadbased paint hazards in the absence of

Federal standards.

EPA and HUD do not believe that this

rule requires Federal lead hazard

standards to be effective. In section

1018, Congress mandated that sellers

and lessors disclose not just lead-based

paint hazards but also the presence of

lead-based paint, a far more inclusive

mandate (since not all lead-based paint

is necessarily a hazard).

Further, EPA and HUD expect that

records will likely provide purchasers

and lessees with information on leadbased paint and, where they exist, leadbased paint hazards. Accordingly, if

records pertaining to lead-based paint

are fully disclosed, disclosure of leadbased paint hazards should also be

accomplished.

The statute and now this rule provide

a clear definition for the levels of lead

in paint that constitute lead-based paint.

The statute also provides a qualitative

definition of lead-based paint hazard,

including certain exposures to leadbased paint that is peeling or chipping;

lead-based paint that is on friction,

impact, or chewable surfaces; and leadcontaminated dust and soil.

EPA and HUD have augmented these

definitions by providing guidance on

identifying lead hazards in paint, dust,

and soil (60 FR 47248).

Regarding the need for guidance to

help prospective purchasers and lessees

with the interpretation of disclosed

information, EPA and HUD believe that

the statutory definition of ‘‘lead-based

paint hazard,’’ combined with EPA’s

lead hazard guidance and the HUD

Guidelines, provides sellers, purchasers,

lessors, and lessees with valuable

information for interpreting any

disclosed information.

Some commenters have also

recommended delaying the effective

date of the final rule until after the

activation of the Federal standards for

training and certifying lead workers,

being developed under section 402 of

TSCA. After considering the comments

and reexamining the statute, EPA and

HUD have determined that such a delay

is unnecessary. EPA and HUD believe

that the HUD Guidelines will provide

adequate interim guidance for the

evaluation and management of leadbased paint hazards in target housing,

prior to the release of the section 402

training and certification standards.

C. Definitions

EPA and HUD received comments on

many of the proposed definitions.

Below is a brief discussion of the

significant definitions being

promulgated under this final rule.

1. Agent means any party who enters

into a contract with a seller or lessor,

including any party who enters into a

contract with a representative of the

seller or lessor, for the purpose of

selling or leasing target housing. This

term does not apply to purchasers or

any purchaser’s representative who

receives all compensation from the

purchaser.

EPA and HUD initially defined

‘‘agent’’ to be ‘‘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.’’ Several commenters stated

that the language in this definition was

needlessly vague. Listing agents

typically enter into a contract with the

seller and represent the seller. ‘‘Buyer’’

agents, however, often enter into a

contractual relationship with a seller or

the seller’s agent but may represent both

the seller and the purchaser in the real

estate transaction. EPA and HUD have

revised this definition so that any party

entering into a contractual relationship

directly with the seller or lessor (or

indirectly with a representative of the

seller or lessor) for the purpose of

selling or leasing the target housing, is

an ‘‘agent’’ for the purposes of this rule.

As a consequence, listing agents, selling

agents, and buyer agents (if paid by the

seller or through a cooperative

brokerage agreement with the listing

agent), are ‘‘agents’’ and are responsible

for ensuring compliance under the rule.

Since section 1018 refers only to agents

having entered into a contract with the

seller or lessor, buyer’s agents paid

entirely by the purchaser are not

considered ‘‘agents’’ under this rule.

2. Available means in the seller’s or

lessor’s possession or reasonably

obtainable by the seller or lessor at the

time of the disclosure.

Section 1018(a)(1) requires that sellers

and lessors provide the purchasers and

lessees with ‘‘any lead hazard

evaluation reports available to the seller

or lessor.’’ EPA and HUD interpret

available lead hazard evaluation reports

to mean records and reports that pertain

to lead-based paint and/or lead-based

paint hazards in the target housing and

that are in the possession of the seller

or lessor or that are reasonably

obtainable by the seller or lessor at the

time of the disclosure.

EPA and HUD expect that most sellers

and lessors will retain copies of relevant

information in their possession along

with other important housing files (title,

outstanding leases, etc.). In some cases,

however, the seller or lessor may no

longer have possession of the records

but may have reasonable access to the

information. Examples of ‘‘reasonably

obtainable’’ records include records

retained by a separate or outside entity

on behalf of the seller or lessor and

copies of reports retained by the original

inspector or risk assessor that would be

available to the owner in cases where

the original records were destroyed or

lost. The term ‘‘reasonably obtainable’’

is not intended to impose an obligation

on the seller or lessor to conduct further

evaluation of the housing.

3. 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.

This definition is unchanged from the

proposed rule. The term ‘‘common area’’

will be used in other TSCA Title IV

regulations, some of which may require

a broader interpretation of common

area. The final rule provides one

broadly interpreted term applicable

under all of the TSCA rules, to avoid the

confusion of multiple rule-specific

definitions. Though several commenters

recommended minor changes to adjust

the scope of the definition, EPA and

HUD believe that other regulatory
9070 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

provisions adequately clarify the

relevant scope of the term ‘‘common

area’’ as it relates to target housing.

4. Foreclosure means any of the

various methods, statutory or otherwise,

known in different jurisdictions, of

enforcing payment of a debt, by the

taking and selling of real property.

EPA and HUD added this definition

in response to requests that the final

rule include a regulatory definition of

the term. EPA and HUD believe that this

definition will help property owners

determine the applicability of the

foreclosure exemption to their

transactions. Recognizing that different

jurisdictions may have differing

interpretations of what constitutes

‘‘foreclosure,’’ EPA and HUD have

developed a general definition that

provides flexibility to work within

established local laws and customs.

5. Housing for the elderly means

retirement communities or similar types

of housing specifically designed for

households composed of one or more

persons 62 years of age or more at the

time of initial occupancy.

In response to public comments, EPA

and HUD have added a definition for

this term to the regulatory text. This

definition is consistent with the

definition used by HUD’s Supportive

Housing for the Elderly Program (See 24

CFR 277.1(f)). While some commenters

recommended the use of a ‘‘55 years or

older’’ standard (as used to define

‘‘older person’’ in the Fair Housing Act),

HUD believes that the current definition

is more consistent with HUD’s other

programs for the elderly.

6. Lead-based paint means paint or

other surface coatings that contain lead

equal to or in excess of 1.0 milligram

per square centimeter or 0.5 percent by

weight.

This term has been modified slightly

from the language provided in Title X

and TSCA to retain consistency with the

many HUD programs already using the

levels defined under section 302(c) of

the Lead-Based Paint Poisoning

Prevention Act.

7. Lead-based paint free housing

means target housing that has been

found to be free of paint or other surface

coatings that contain lead equal to or in

excess of 1.0 milligram per square

centimeter or 0.5 percent by weight.

EPA and HUD have added this

definition in support of the provision of

the rule that allows rental transactions

in ‘‘lead-based paint free’’ rental

housing to be excluded from the section

1018 requirements. EPA and HUD

provide further discussion of this

provision in unit IV.A.2. of this

preamble.

8. Lead-based paint hazard means

any condition that causes exposure to

lead from lead-contaminated dust, leadcontaminated soil, or 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 term, defined in section 1004 of

Title X, is unchanged from the proposed

rule. EPA has released guidance on

identifying lead hazards in paint, dust,

and soil (60 FR 47248) and is currently

developing Federal standards. In

addition, HUD has released

comprehensive guidelines for

evaluation and control of lead-based

paint hazards in housing (Ref. 7).

9. Lessee means any entity that enters

into an agreement to lease, rent, or

sublease target housing, including but

not limited to individuals, partnerships,

corporations, trusts, government

agencies, housing agencies, Indian

tribes, and nonprofit organizations.

EPA and HUD received limited

comments on this definition and have

made minor revisions to the language of

the definition to clarify its applicability

to trusts and subleases.

10. Lessor means any entity that offers

target housing for lease, rent, or

sublease, including but not limited to

individuals, partnerships, corporations,

trusts, government agencies, housing

agencies, Indian tribes, and nonprofit

organizations.

EPA and HUD received limited

comments on this definition and have

made minor revisions to the language of

the definition to clarify its applicability

to trusts and subleases.

11. Owner means any entity that has

legal title to target housing, including

but not limited to individuals,

partnerships, corporations, trusts,

government agencies, housing agencies,

Indian tribes, and nonprofit

organizations, except where a mortgagee

holds legal title to property serving as

collateral for a mortgage loan, in which

case the owner is considered the

mortgagor.

EPA and HUD have revised the

definition provided in the proposed rule

to clarify its applicability to trusts and

to clarify one situation in which

mortgage lenders (mortgagees), rather

than borrowers (mortgagors), hold title

and are therefore owners.

12. Purchaser means an entity that

enters into an agreement to purchase an

interest in target housing, including but

not limited to individuals, partnerships,

corporations, trusts, government

agencies, housing agencies, Indian

tribes, and nonprofit organizations.

EPA and HUD received limited

comments on this definition and have

made minor revisions to the language of

the definition to clarify its applicability

to trusts.

13. 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, provided in section

1004 of Title X, is unchanged from the

proposed rule. Under section 402 of

TSCA, EPA will promulgate separate

regulations regarding the conduct of

such activities, as well as a program for

training and certifying workers engaged

in these activities. Under section 404 of

TSCA, these regulations will also

include a process for authorizing States

to implement their own training and

certification programs.

14. Seller means any entity that

transfers legal title to target housing, in

whole or in part, in return for

consideration, including but not limited

to individuals, partnerships,

corporations, trusts, government

agencies, housing agencies, Indian

tribes, and nonprofit organizations. The

term ‘‘seller’’ also includes: (1) An

entity that transfers shares in a

cooperatively owned project, in return

for consideration and (2) an entity that

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,

in return for consideration.

EPA and HUD received limited

comments on this definition and have

made minor revisions to the language of

the definition to clarify its applicability

to trusts.

15. 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.

This definition was provided by

section 1004 of Title X and is

unchanged. Where commenters

provided recommendations for revising

or clarifying the definition, EPA and

HUD have addressed those comments

within the scope and applicability

section of the final rule. Commenters

also noted that the proposed rule
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9071

misstated the statutory definition by

limiting the 0-bedroom dwelling

exception to housing where no children

under 6 reside or are expected to reside.

EPA and HUD have modified the

definition to reflect the statutory

language.

16. 0-bedroom dwelling means any

residential dwelling in which the living

area is not separated from the sleeping

area. Such term includes efficiencies,

studio apartments, dormitory housing,

military barracks, and rentals of

individual rooms in residential

dwellings.

In the preamble of the proposed rule,

EPA and HUD clarified their

interpretation of this term by identifying

efficiencies, studio apartments,

dormitory housing, military barracks,

and other such housing in which the

living area is unseparated from the

sleeping area as types of dwellings that

are not covered under the rule. EPA and

HUD have added rentals of individual

rooms in a residential dwelling to the

types of transactions that would involve

a 0-bedroom dwelling. All of these

clarifications are included in the

regulatory definition in the final rule’s

regulatory text.

D. Changes to the Disclosure

Requirements

Section 1018(a)(1)(B) requires that

‘‘before the purchaser or lessee is

obligated under any contract to

purchase or lease the housing, . . .the

seller or lessor shall. . .disclose to the

purchaser or lessee the presence of any

known lead-based paint or any leadbased paint hazards, in such housing,

and provide any lead hazard evaluation

report available to the seller or lessor.’’

EPA and HUD received more than 150

comments on their proposed

requirements for such information

disclosure, addressing both the

proposed disclosure process and the

issue of what information should be

covered. In particular, recurring themes

among the comments included: (1) The

need for greater specificity regarding the

necessary timing for disclosure

activities; (2) concerns over which

activities should constitute disclosure;

and (3) what kinds of information

should be disclosed under this rule. The

following is a brief discussion of these

key points and a summary of the

regulatory requirements.

1. Timing of disclosure events. In

addressing the need for greater clarity

regarding the timing of disclosure

activities, EPA and HUD have attempted

to maximize the parties’ flexibility in

incorporating these requirements during

negotiations. EPA and HUD believe that

this flexibility is important given the

many types of transactions covered by

these provisions and the existence of

distinct local requirements and customs.

Therefore, the final rule identifies only

the latest point at which full disclosure

must occur. Using the statute as a guide,

EPA and HUD have identified this point

as before the purchaser or lessee

becomes obligated under any contract to

purchase or lease the housing.

Some commenters raised the concern,

however, that without additional

clarification regarding how and when

information must be disclosed, the final

rule could cause unnecessary confusion

regarding how the requirements will

work in actual practice. After reviewing

the framework set out in the proposed

rule, EPA and HUD have revised and

clarified the requirements in a number

of ways. First, the final rule contains

numerous minor changes to the wording

of definitions and requirements to

clarify that the rule does not require

mass disclosure to all prospective

purchasers, regardless of their degree of

interest. Second, the rule requires that

certain disclosure and acknowledgment

language become part of the final sale or

lease contract. In making these changes,

EPA and HUD have considered the

typical negotiation process involved in

leasing and sales transactions.

During sales transactions, for

example, purchasers often take the first

step toward formalizing a sales

agreement by providing a written offer

to purchase the housing. If accepted and

signed by the seller, this offer typically

becomes the sales contract. The statute’s

mandate that disclosure and notification

take place before the purchaser is

obligated imposes a requirement on the

seller to disclose information before

accepting the purchaser’s offer, thereby

allowing the purchaser an opportunity

to review the information and to

possibly amend the offer. If a seller were

to accept a purchaser’s offer and

obligate the purchaser before disclosing

known information, such a seller would

be in violation of Title X and this rule.

Of course, the parties can always agree

to conduct the disclosure activities in

advance of contract discussions,

provided that the final contract includes

the signed and dated disclosure

elements mandated by this rule.

In leasing transactions, the disclosure

process is even simpler. While the

parties are free to negotiate when the

disclosure process occurs, lessors must

provide the information and complete

the disclosure portions of the lease (or

attachment) before the lessee becomes

obligated under a contract to lease the

housing. By requiring that the

disclosure information be included in or

as an attachment to the lease, EPA and

HUD seek to ensure that the disclosure

process automatically occurs during

lease negotiations.

The requirement that the contract or

an attachment include disclosure

language fulfills two additional

functions. First, the process of

completing and signing these sections

ensures that all parties are aware of their

rights and obligations and are able to

confirm that the appropriate actions

have already occurred. Second, this

disclosure language provides a clear

record of compliance.

While sections 1018(a)(2) and (3)

mandate lead warning language for all

sales transactions, the inclusion of such

language as an attachment to leases is

not specifically mandated by Title X.

EPA and HUD, however, believe that it

is necessary to include the warning

language in leases as well. Further, the

completion and retention of disclosure

and acknowledgment language is a

necessary component of any effective,

enforceable disclosure requirement for

leasing transactions.

2. Components of full disclosure. EPA

and HUD consider full disclosure to

have occurred when the seller or lessor

has provided the following items to the

purchaser or lessee.

a. A lead hazard information

pamphlet approved by EPA. As required

by TSCA section 406, EPA has

developed a lead hazard information

pamphlet, entitled Protect Your Family

from Lead in Your Home, and has made

it available through government

channels and private sources. EPA

issued the final notice of the pamphlet’s

availability in the Federal Register of

August 1, 1995 (60 FR 39167). In

addition to providing detailed

information on how to obtain copies

(individually, in bulk, and as cameraready reprints), the notice describes the

process of developing the pamphlet,

including considerable public review

and comment.

The statute also allows States to

develop their own lead hazard

information pamphlets under section

406, provided that they obtain

authorization and approval from EPA.

Several States that already have

disclosure provisions have expressed

their desire to seek approval to use their

own pamphlets in lieu of the Federal

pamphlet. EPA and HUD encourage

States interested in developing their

own materials to seek approval of their

pamphlets for distribution under the

section 1018 regulations.

b. Notice of the presence of known

lead-based paint and/or lead-based

paint hazards. Sellers and lessors must

disclose, based on their actual

knowledge, whether the target housing
9072 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

is known to contain lead-based paint

and/or lead-based paint hazards. EPA

and HUD received many comments on

the types of information under

consideration for disclosure under these

requirements. Many of the commenters

expressed concern that the proposed

rule was too vague about what

constituted ‘‘known information.’’ For

example, did EPA and HUD intend for

the disclosure requirements to

distinguish between information already

in the possession of the seller or lessor

and information that could be obtained

only by some further investigation or

inference? Several commenters

described this distinction in terms of

actual knowledge (knowledge stemming

from existing facts and information)

versus constructive knowledge

(knowledge that could be inferred or

obtained by further inquiry). An

expectation that the property owners

meet a constructive standard for

knowledge could create an implied

testing requirement.

While the Agencies hope to encourage

lead hazard evaluation and reduction

efforts through all of their regulatory

and non-regulatory programs, neither

Agency believes that Congress intended

to mandate additional lead hazard

evaluation activities in private housing.

EPA and HUD believe that Congress

intended to limit the disclosure

obligation to actual knowledge. The

final rule, therefore, embraces an actual

knowledge standard as well. With this

clear standard, property owners and

their agents will be able to take

affirmative steps to comply fully with

the rule and be confident that they have

met the requirements of the law and its

implementing regulations. EPA and

HUD believe that such finality is a

necessary part of this regulation, given

the diverse makeup of the regulated

community.

c. Provision of records and reports on

lead-based paint and/or lead-based

paint hazards available to the seller or

lessor. As mandated by section

1018(a)(1)(B), sellers and lessors must

‘‘provide to the purchaser or lessee any

lead hazard evaluation report available

to the seller or lessor.’’ EPA and HUD

have interpreted ‘‘available evaluation

reports’’ to mean records and reports

that pertain to lead-based paint and/or

lead-based paint hazards in the target

housing and that are in the possession

of the seller or lessor or that are

reasonably obtainable by the seller or

lessor at the time of the disclosure.

During the proposed rule phase, EPA

and HUD requested comment regarding

the disclosure of known lead-based

paint and/or lead-based paint hazards in

other units within target housing. EPA

and HUD received both supporting and

opposing comments on this

requirement. Opponents argued that

distinct dwelling units can have very

different painting histories, making

information on one unit an unreliable

indicator of other units. Proponents

argued that regardless of differences that

may exist, the painting histories of

different units in a building are usually

similar enough to provide valuable

information for individuals considering

whether lead hazard exposure

precautions are prudent.

EPA and HUD believe that

information and reports on other units

in the target housing are directly

relevant to prospective purchasers and

lessees if the information stems from

evaluation or reduction efforts in the

target housing as a whole. In large

multifamily properties, evaluations do

not necessarily examine every dwelling

unit in the housing. Rather, inspectors

or risk assessors examine a

representative sample of the dwelling

units and apply the findings to the

housing as a whole. While such

evaluations might not include data on a

specific unit, the fact that the evaluation

was designed to provide information on

the housing as a whole makes the

report’s findings relevant.

The proposed rule also requested

comment on whether sellers and lessors

should have to disclose information on

past elevated blood-lead levels in other

occupants of target housing. Based on

the comments and further deliberation,

EPA and HUD decided against requiring

disclosure of medical information for

several reasons. As commenters pointed

out, lead exposure, elevated blood-lead

levels, or lead poisoning may come from

sources other than lead-based paint

hazards in the housing. Where elevated

blood-lead levels were determined to

stem from lead-based paint hazards in

the housing, the follow-up

environmental assessment activities in

the affected person’s housing will likely

generate more germane records

regarding lead-based paint exposure

hazards in the housing.

Commenters also questioned whether

disclosure requires the actual transfer of

all documentation from the seller or

lessor, or whether simply making the

information accessible for the

purchaser’s or lessee’s evaluation is

adequate. Based on the mandate in

section 1018(a)(1)(B), EPA and HUD

believe that Congress clearly intended

for purchasers and lessees to receive

their own copies of the records and

reports available to the seller or lessor.

Therefore, the seller or lessor remains

obligated to provide copies of all

relevant materials to the purchaser or

lessee.

d. Completed Lead Warning

Statement and acknowledgment

language, attached to the sales or lease

contract. This information, set out in 24

CFR 35.92 and 40 CFR 745.113,

documents the disclosure and

acknowledgment process, and serves as

the primary confirmation tool for all

parties in ensuring full compliance with

the regulatory requirements. This

information is especially important in

cases where purchasers or lessees

conduct contract negotiations through

their own representatives (requiring

sellers, lessors, or their agents to

provide documents to the representative

instead of the purchaser or lessee). In

such cases, the attachment provides a

record that sellers, lessors, and agents

can use to confirm that purchasers and

lessees have received the necessary

disclosure materials.

The proposed rule required the use of

disclosure forms as attachments to each

contract to purchase or lease target

housing. These forms would have

served as the key mechanisms for

documenting compliance with the

requirements. EPA and HUD carefully

considered the merits of each element,

limiting the rule to information

necessary for demonstrating full

compliance.

The final rule includes some changes

to the information that must be included

in the contract. Where the proposed rule

required that sellers and lessors use

federally developed disclosure forms,

the final rule provides greater flexibility

for negotiating parties to develop their

own language, provided that it contains

the mandated elements. EPA and HUD

eliminated the requirement that parties

use a single form. Instead, the final rule

mandates only the information elements

that must be included without

mandating specific formats or forms.

This flexibility is especially important

to States that have developed, or are

considering developing, their own

disclosure requirements. During the

comment period, several States

requested that the final rule provide

flexibility for States to merge their forms

with the Federal form, eliminating

unnecessary duplication. Under the

final rule, States and jurisdictions will

be able to make changes to the format

as necessary to retain consistency with

State and local laws and customs.

The following is a discussion of the

required elements.

(i) Seller, agent, and purchaser

requirements. The final rule requires

that each contract to sell target housing

include an attachment containing

specific disclosure and acknowledgment
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9073

elements, in the language of the contract

(e.g., English, Spanish). The elements

required are described below:

(A) The first required element is the

Lead Warning Statement, consisting 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 leadbased paint hazards is recommended prior to

purchase.

Congress mandated this language in

section 1018(a)(3) of Title X. While

several commenters recommended

providing simpler language, EPA and

HUD are constrained by the mandate

and have retained the statement as

proposed.

(B) The second required element is a

statement disclosing the presence of any

known lead-based paint and/or leadbased paint hazards in the target

housing or indicating no knowledge of

the presence of lead-based paint and/or

lead-based paint hazards. The seller

must also provide any additional

information available concerning the

known lead-based paint and/or leadbased paint hazards, such as the basis

for the determination that lead-based

paint and/or lead-based paint hazards

exist in the housing, the location of the

lead-based paint and/or lead-based

paint hazards, and the condition of the

painted surfaces. The statement must

also list all records and reports

pertaining to lead-based paint and/or

lead-based paint hazards that are

available to the seller and that have

been provided to the purchaser. If no

such records or reports are available to

the seller, the statement must so

indicate.

(C) The third element is a statement

affirming that the purchaser has

received the information noted in

paragraph (B) above and the lead hazard

information pamphlet required under

section 406 of TSCA (15 U.S.C. 2696).

The pamphlet described above may be

the Federal pamphlet entitled Protect

Your Family from Lead in Your Home

or a State-developed pamphlet that has

been approved by EPA.

(D) The fourth required element is a

statement that the purchaser has

received a 10-day opportunity to

conduct a risk assessment or inspection

for the presence of lead-based paint

and/or lead-based paint hazards (unless

the parties have mutually agreed to a

different period of time), before

becoming obligated under the contract

to purchase the housing. Alternatively,

a purchaser who chooses to waive the

risk assessment or inspection

opportunity must so indicate in writing.

(E) The fifth required element is a

statement by any agent involved in the

transaction that the agent has informed

the seller of the seller’s obligations

under 42 U.S.C. 4852d and that the

agent is aware of his/her duty to ensure

compliance with the requirements of

this rule.

(F) The sixth required element is the

signatures of the seller(s), agent(s), and

purchaser(s), certifying the accuracy of

their statements on the attachment,

along with their dates of signature.

These signatures document the

acceptance by the parties of the

information they have provided on the

attachment as a whole and alert the

various parties to their respective roles

and responsibilities.

(ii) Lessor, agent, and lessee

requirements. Each contract to lease

target housing must include the

following elements, as an attachment or

within the contract, in the language of

the contract (e.g., English, Spanish).

(A) The first required element is a

Lead Warning Statement with the

following language:

Housing built before 1978 may contain

lead-based paint. Lead from paint, paint

chips, and dust can pose health hazards if

not managed properly. Lead exposure is

especially harmful to young children and

pregnant women. Before renting pre-1978

housing, lessors must disclose the presence

of known lead-based paint and/or lead-based

paint hazards in the dwelling. Lessees must

also receive a federally approved pamphlet

on lead poisoning prevention.

EPA and HUD received a considerable

amount of comment regarding the

language of the Lead Warning Statement

used in the leasing disclosure

attachment. EPA and HUD have

developed a modified Lead Warning

Statement for leasing transactions that

uses simpler words and syntax than the

purchase warning statement required by

Title X.

(B) The second required element is a

statement disclosing the presence of any

known lead-based paint and/or leadbased paint hazards in the target

housing or indicating no knowledge of

the presence of lead-based paint and/or

lead-based paint hazards. The lessor

shall also provide any additional

information available concerning the

known lead-based paint and/or leadbased paint hazards, such as the basis

for the determination that lead-based

paint and/or lead-based paint hazards

exist; the location of the lead-based

paint and/or lead-based paint hazards;

and the condition of the painted

surfaces. The statement must also list

any records or reports pertaining to

lead-based paint and/or lead-based

paint hazards that are available to the

lessor and that have been provided to

the lessee. If no such records or reports

are available to the lessor, the statement

must so indicate.

(C) The third required element is a

statement affirming that the lessee

received the information noted in

paragraph (B) above and the lead hazard

information pamphlet required under

section 406 of TSCA (15 U.S.C. 2686).

(D) The fourth required element is a

statement by any agent involved in the

transaction that the agent has informed

the lessor of the lessor’s obligations

under the law and that the agent is

aware of his/her duty to ensure

compliance with the requirements of

this rule.

(E) The fifth required element is the

signatures of the lessor(s), agent(s), and

lessee(s), certifying the accuracy of their

statements, along with their dates of

signature. These signatures document

the acceptance by the parties of the

information they have provided as a

whole and alert the various parties to

the roles and responsibilities of each

party.

3. Sample disclosure attachments.

Recognizing that many parties may

prefer having access to a sample format,

EPA and HUD have developed sample

disclosure formats for sales and leasing

contracts for public reference. These

samples are not included in the

regulatory text itself. Nothing in the rule

requires the use of these specific formats

if a seller or lessor wishes to develop a

separate format that includes all of the

required elements.
9074 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

(Sample Disclosure Format for Target Housing Sales)

Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards

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 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.

Seller’s Disclosure

(a) Presence of lead-based paint and/or lead-based paint hazards (check (i) or (ii) below):

(i)—— Known lead-based paint and/or lead-based paint hazards are present in the housing (explain).

—————————————————————————————————————————————

(ii)——Seller has no knowledge of lead-based paint and/or lead-based paint hazards in the housing.

(b) Records and reports available to the seller (check (i) or (ii) below):

(i)——Seller has provided the purchaser with all available records and reports pertaining to lead-based

paint and/or lead-based paint hazards in the housing (list documents below).

—————————————————————————————————————————————

(ii)—— Seller has no reports or records pertaining to lead-based paint and/or lead-based paint hazards in

the housing.

Purchaser’s Acknowledgment (initial)

(c)——Purchaser has received copies of all information listed above.

(d)——Purchaser has received the pamphlet Protect Your Family from Lead in Your Home.

(e)——Purchaser has (check (i) or (ii) below):

(i)—— received a 10-day opportunity (or mutually agreed upon period) to conduct a risk assessment or inspection for the presence of lead-based paint and/or lead-based paint hazards; or

(ii)—— waived the opportunity to conduct a risk assessment or inspection for the presence of lead-based

paint and/or lead-based paint hazards.

Agent’s Acknowledgment (initial)

(f)——Agent has informed the seller of the seller’s obligations under 42 U.S.C. 4852d and is aware of his/her

responsibility to ensure compliance.

Certification of Accuracy

The following parties have reviewed the information above and certify, to the best of their knowledge, that

the information they have provided is true and accurate.

—————————— —————————— ————————— —————————

Seller Date Seller Date

—————————— —————————— ————————— —————————

Purchaser Date Purchaser Date

—————————— —————————— ————————— —————————

Agent Date Agent Date
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9075

(Sample Disclosure Format for Target Housing Rentals and Leases)

Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards

Lead Warning Statement

Housing built before 1978 may contain lead-based paint. Lead from paint, paint chips, and dust can pose

health hazards if not managed properly. Lead exposure is especially harmful to young children and pregnant women. Before renting pre-1978 housing, lessors must disclose the presence of known lead-based

paint and/or lead-based paint hazards in the dwelling. Lessees must also receive a federally approved

pamphlet on lead poisoning prevention.

Lessor’s Disclosure

(a) Presence of lead-based paint and/or lead-based paint hazards (Check (i) or (ii) below):

(i)—— Known lead-based paint and/or lead-based paint hazards are present in the housing (explain).

————————————————————————————————————

(ii)——Lessor has no knowledge of lead-based paint and/or lead-based paint hazards in the housing.

(b) Records and reports available to the lessor (Check (i) or (ii) below):

(i)—— Lessor has provided the lessee with all available records and reports pertaining to lead-based paint

and/or lead-based paint hazards in the housing (list documents below).

—————————————————————————————————————

(ii)——Lessor has no reports or records pertaining to lead-based paint and/or lead-based paint hazards in

the housing.

Lessee’s Acknowledgment (initial)

(c)——Lessee has received copies of all information listed above.

(d)——Lessee has received the pamphlet Protect Your Family from Lead in Your Home.

Agent’s Acknowledgment (initial)

(e)——— Agent has informed the lessor of the lessor’s obligations under 42 U.S.C. 4852d and is aware of

his/her responsibility to ensure compliance.

Certification of Accuracy

The following parties have reviewed the information above and certify, to the best of their knowledge, that

the information they have provided is true and accurate.

—————————— —————————— —————————— ————————— Lessor Date Lessor Date

—————————— —————————— —————————— ———————— Lessee Date Lessee Date

—————————— —————————— —————————— ————————— Agent Date Agent Date
9076 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

4. Recordkeeping requirements. EPA

and HUD have retained the

recordkeeping requirements under this

rule largely as proposed. The seller and

any agent are required to retain a copy

of the completed disclosure and

acknowledgment contract attachment

(discussed below), required under

§§ 35.92(a) and 745.113(a), for 3 years

from the completion date of the sale.

Similarly, the lessor and any agent are

required to retain a copy of the

completed lease or attachment, required

under § 35.92(b) and § 745.113(b) of this

rule for 3 years from the commencement

of the leasing period. EPA and HUD

have determined that a 3-year period is

an appropriate amount of time to ensure

compliance with the requirements of

Title X and to support Federal

compliance monitoring efforts. This

recordkeeping requirement is not

intended to place any limitations on

civil suits under Title X or to otherwise

affect a lessee’s or purchaser’s rights

under the civil penalty provisions of

section 1018(b)(3) of Title X.

EPA and HUD requested comment on

whether the rule should include an

additional recordkeeping provision

requiring that property owners retain all

records and reports of lead-based paint

and/or lead-based paint hazards in the

housing for the length of their

ownership. Based on the statute’s use of

the term ‘‘available’’ lead hazard

evaluation reports, EPA and HUD have

determined that a specific

recordkeeping requirement for such

reports is beyond the scope of this

regulation. EPA and HUD have,

however, clarified ‘‘available’’ lead

hazard evaluation reports to encompass

records and reports in the possession of

the seller or lessor or reasonably

obtainable by the seller or lessor at the

time of the disclosure. This approach

recognizes that third parties may in

some cases play an independent

recordkeeping role for the seller or

lessor.

While the Agencies do not mandate

the retention of these records, EPA and

HUD encourage sellers and lessors to

retain relevant records in anticipation of

future sale or lease. The information

provided can help purchasers and

occupants take exposure prevention

precautions during later ownership or

occupancy. The requirement to disclose

the presence of known lead-based paint

and/or lead-based paint hazards remains

even if the seller or lessor is unable to

locate the original reports quantifying

the data. Section 1018 requires sellers

and lessors to both (1) disclose the

presence of known lead-based paint

and/or lead-based paint hazards in the

housing and (2) provide available

written records and reports to the

purchaser or lessee. By mandating that

both actions occur, Congress recognized

the distinction between the two actions,

and the fact that the seller or lessor

might have actual knowledge of leadbased paint and/or lead-based paint

hazards above and beyond that present

in available reports.

5. Failure to fully disclose before

ratification of contracts. As mandated

by Title X, the disclosure of

information, the provision of the lead

hazard information pamphlet, and the

purchaser’s opportunity to conduct a

risk assessment or inspection must

occur before the purchaser or lessee

becomes obligated under any contract to

purchase or lease the dwelling. Section

1018(c) prohibits regulatory provisions

that would ‘‘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’’ and states that nothing

in the rule ‘‘shall create a defect in

title.’’ The disclosure requirements

contained in this rule must occur prior

to contract ratification and, as such, do

not affect the validity of the subsequent

contract. Nor does failure to conduct

full disclosure before sale or lease affect

the validity of the sales or leasing

contract itself. Rather, purchasers

seeking remedy for the non-disclosure

may avail themselves of the civil

remedies afforded by section 1018 of

Title X.

6. Opportunity to conduct a risk

assessment or inspection. Section

1018(a) requires that sellers provide

purchasers with a 10-day opportunity to

conduct a risk assessment or inspection

for the presence of lead-based paint

and/or lead-based paint hazards before

becoming obligated under a purchase

contract. The length of time may be

shortened or lengthened by mutual

agreement. In the proposed rule, EPA

and HUD offered several approaches for

implementing this provision of section

1018: (1) Establishing Federal standards

for the implementation of the evaluation

period, providing flexibility for

adjustment by mutual consent; (2)

limiting the regulatory text to the

statutory language, thereby maximizing

the discretion of the two parties in

negotiating the terms; (3) codifying

contract contingency language for use in

complying with the final rule; and (4)

establishing requirements for providing

evaluation opportunities before the

preparation of contracts.

Recognizing that home inspections for

various hazards and housing defects are

common occurrences during housing

transactions around the country, EPA

and HUD believe that the market can

incorporate this requirement into future

transactions without detailed regulatory

language. The final rule, therefore,

steers away from the proposed rule’s

preferred approach of codifying Federal

standards for the performance of the 10-

day evaluation period provision.

However, EPA and HUD also

recognize that some private sellers may

choose to conduct their housing sales

without the aid of a trained agent and

may lack familiarity with the standard

processes for conducting such

evaluations in the sales transaction. For

such persons, EPA and HUD are

providing the following discussion of

several likely approaches for

implementing this provision.

First, some purchasers may choose to

waive the opportunity for a risk

assessment or inspection. Purchasers

may be especially inclined to waive the

opportunity in cases where the seller

provides significant amounts of relevant

information on the property during the

disclosure process, or in cases where no

children are expected to reside in the

housing. If the purchaser chooses to

waive the evaluation opportunity, the

purchaser is still obligated to

acknowledge receipt of the evaluation

opportunity on the attachment,

documenting this voluntary decision to

waive the opportunity.

EPA and HUD expect that in most

cases where the purchaser chooses to

exercise his or her evaluation

opportunity, the parties will develop

and incorporate into the contract

mutually agreeable terms for the

conduct and completion of the

evaluation opportunity. The final rule

provides sellers and purchasers with

broad flexibility to develop terms for

performing the risk assessment or

inspection.

As many commenters noted, home

inspections are already common aspects

of housing transactions. Frequently,

these inspections are incorporated into

the sales contracts as contingency

clauses, providing mutual agreement on

the timing, terms, and conduct of the

inspection. Common terms addressed in

these clauses include: (i) The starting

and ending day of the inspection period;

(ii) any contingencies and conditions

tied to the contract regarding the

inspection period; (iii) the process for

removing any contingency or condition

following the completion of the

inspection; and (iv) the disposition of

any earnest money provided by the

purchaser before the opportunity to

inspect. This general framework is one

possible approach that parties can

consider when developing mutually
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9077

agreeable terms for the evaluation

period required by section 1018(a) of

Title X.

While most commenters stressed the

importance of providing flexibility for

the parties to develop mutually

agreeable evaluation terms, many also

recommended the inclusion of sample

language as a reference. For the purpose

of providing guidance on creating

contract language, EPA and HUD have

included the following sample contract

contingency clause for optional use.

This language is offered as a sample

only, and nothing in this rule imposes

a requirement on either party to accept

or reject this language in the current or

modified form.

Sample Contract Contingency Language

This contract is contingent upon a risk assessment or inspection of the property for the presence of leadbased paint and/or lead-based paint hazards at the Purchaser’s expense until 9 p.m. on the tenth calendar-day after ratification [Insert date 10 days after contract ratification or a date mutually agreed upon].

(Intact lead-based paint that is in good condition is not necessarily a hazard. See the EPA pamphlet Protect Your Family From Lead in Your Home for more information.) This contingency will terminate at the

above predetermined deadline unless the Purchaser (or Purchaser’s agent) delivers to the Seller (or Seller’s agent) a written contract addendum listing the specific existing deficiencies and corrections needed,

together with a copy of the inspection and/or risk assessment report. The Seller may, at the Seller’s option, within ——— days after Delivery of the addendum, elect in writing whether to correct the condition(s)

prior to settlement. If the Seller will correct the condition, the Seller shall furnish the Purchaser with certification from a risk assessor or inspector demonstrating that the condition has been remedied before the

date of the settlement. If the Seller does not elect to make the repairs, or if the Seller makes a counteroffer, the Purchaser shall have ——— days to respond to the counter-offer or remove this contingency and

take the property in ‘‘as is’’ condition or this contract shall become void. The Purchaser may remove this

contingency at any time without cause.

E. Agent Responsibilities

Title X specifically addresses the

responsibilities of agents, requiring

them to ensure compliance with the

provisions of the law. Agents fulfill this

requirement by informing sellers or

lessors of their obligations and by

making sure that these activities are

completed either by the seller or lessor

or by the agent personally. Accordingly,

24 CFR 35.94(b) and 40 CFR 745.107(c)

identify the seller’s affirmative duty to

disclose to the agent any known leadbased paint and/or lead-based paint

hazards on the property. Provided that

the agent has actually informed the

seller or lessor of his/her obligation, the

final rule notes that the agent will not

be responsible for information withheld

from the agent by the seller or lessor.

V. Non-Compliance and Enforcement

EPA and HUD received considerable

comment on the enforcement provisions

discussed in the statute and the

proposed rule. Many commenters

requested more guidance regarding the

Agencies’ plans for enforcement of the

provisions, as well as assurances that

the Agencies recognize the importance

of active education and outreach to the

regulated community. As all

enforcement authority for EPA and HUD

derives directly from the authorizing

statutory language, both the proposed

rule and the final rule contain

enforcement language that is essentially

the same as language provided in Title

X and TSCA. The following is a

discussion of the general enforcement

authority provided by Congress, along

with some discussion of the process that

EPA and HUD will use in developing a

sensible, effective enforcement

approach.

A. HUD Authority

Section 1018(b)(1) of Title X

authorizes HUD to impose civil

monetary penalties on any person who

knowingly violates section 1018. This

authority applies to violations of this

final rule as well. HUD can 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 Title X

authorizes the Secretary to ‘‘take such

lawful action as may be necessary to

enjoin any violation’’ of the law’s

provisions.

B. EPA Authority

1. Civil. Section 1018(b)(5) of Title X

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 can be subject to the

penalty provisions under TSCA section

16 of up to $10,000 for each violation.

2. Criminal. TSCA section 16(b)

provides that any person who

knowingly or willfully violates section

409 (and thus section 1018) could, in

addition to or instead of any civil

penalty, be subject, upon conviction, to

a fine of not more than $25,000 for each

day of violation or to imprisonment for

not more than 1 year, or both. For the

purposes of enforcement under section

1018, Congress has modified the

application of TSCA section 16, limiting

the fine to $10,000 ‘‘for each violation.’’

C. Enforcement Responses

Because the enforcement provisions

of section 1018 are clearly set forth in

the statute, the final rule retains largely

unchanged the discussion of the

enforcement authority.

However, it is EPA’s and HUD’s intent

that outreach and compliance assistance
9078 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

will be a major component of the

section 1018 compliance program so

that individuals are fully informed of

the new requirements and their

obligations. EPA and HUD also intend

to bring clarity and predictability to the

enforcement process for section 1018, in

acknowledgment of the large and

diverse population affected by this rule.

Concurrent with this rule’s release, EPA

will issue a short ‘‘Statement of

Approach’’ as it relates to ensuring

compliance with the requirements of

section 1018, for the information of the

general public. This informational

document will discuss the Agency’s

approach to the section 1018

compliance assurance program. EPA is

also developing a policy for use by EPA

enforcement personnel to achieve a

common sense result between a

particular violation of section 1018 and

a particular enforcement response. This

policy includes, but is not limited to,

issuing notices of warning (without

penalties) as appropriate to let people

know that they are out of compliance

and to give them an opportunity to

come into compliance, while

maintaining provisions that will ensure

that willful and repeat violators are

appropriately penalized. This result is

reached in the context of an

‘‘Enforcement Response Policy’’ (ERP),

which EPA is developing separately for

this rule.

Regarding HUD enforcement actions,

HUD’s civil money penalty procedures

are set out in 24 CFR part 30. These

procedures include notices of intent to

request civil money penalties, civil

money penalty panels, administrative

hearings and appeals, judicial review,

and collection of penalties. A civil

money penalty panel develops

guidelines to determine the appropriate

penalty for a violation of section 1018.

These guidelines include the following

factors: the gravity of the offense,

awareness of procedures, any history of

prior offenses, the ability to pay the

penalty, the injury to the public, any

benefits received by the violator, any

potential benefits to other persons,

deterrence of future violators, the

violator’s culpability, and such other

matters as justice may require.

D. Civil Liability--Direct Compensation

In addition to the EPA and HUD

enforcement authority for the provisions

of this final rule, section 1018(b)(3) of

Title X states that ‘‘[A]ny 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’s or lessor’s

noncompliance. Section 1018(b)(4)

authorizes the court to award court

costs, reasonable attorney fees, and

expert witness fees to a prevailing

plaintiff.

E. Validity of Contracts and Liens

Section 1018(c) provides that nothing

in section 1018 (or its 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 that must be attached to

contracts for the purchase and sale of

target housing and specific procedural

protections that must be given to the

purchaser or lessee.

The provisions of section 1018 cannot

void or nullify the contract after

ratification and cannot void any transfer

of real estate, even if it can be proven

that the seller or lessor violated section

1018 provisions. In such circumstances,

the purchaser or lessee is limited to the

remedies provided in section 1018. Of

course, traditional causes of action

under State law would still exist, and

possibly could be applied to some

section 1018 violations. Also, violations

of section 1018 could be subject to civil

and criminal penalties administered by

EPA and HUD under section 1018(b).

VI. Federal Effect on State and Local

Disclosure Requirements

Several commenters noted that some

States and municipalities already have

requirements for the disclosure of

information on lead-based paint in

housing. In developing the Federal

disclosure requirements, several key

questions have been raised regarding

such programs: (1) Can States obtain

authorization to administer and enforce

their programs in lieu of the Federal

program? and (2) What effect do the

Federal requirements have on the ability

of States to run their own programs?

EPA and HUD have determined that

Title X does not provide authority to

delegate the administration and

enforcement of these section 1018

requirements to State programs. Where

such authority to authorize State

programs was anticipated by Congress

(as in TSCA section 402), Congress

provided specific authority.

Where possible, EPA and HUD have

developed these requirements to make it

possible for State and Federal

requirements to complement each other.

For example, EPA and HUD had State

programs in mind when adding

flexibility in the development of

disclosure and acknowledgment

attachments.

Finally, nothing in this rule is

intended to relieve a seller, lessor, or

agent from any responsibility for

compliance with State or local laws,

ordinances, codes, or regulations

governing notice or disclosure of known

lead-based paint and/or lead-based

paint hazards.

VII. Summary of Regulatory Impact

Analysis

EPA and HUD have prepared a

Regulatory Impact Analysis (RIA) that

examines the potential costs, benefits,

and impacts of regulations for the

disclosure of known lead-based paint

hazards in residential property upon the

transfer of the property for sale or rental.

The analysis is presented in five

sections:

• Background and Framework for

Analysis

• Profile of Sectors Affected

• Estimated Costs to Private Parties

and Government

• Effect of the Lead-Based Paint

Hazard Disclosure Rule for Real Estate

Transfers on Small Businesses—

Regulatory Flexibility Analysis

• Assessment of Benefits

A. Background and Framework for

Analysis

Those parties directly affected by the

rule are the seller, lessor, agent,

property manager, purchaser, and

lessee. The required activities that

impose regulatory burden on the

affected parties fall into four categories

for cost estimation purposes:

1. Start-up costs, which include

learning the rule’s requirements and

establishing compliance procedures;

2. Disclosure costs, which refer to the

costs resulting from the actual transfer

of information and obtaining needed

signatures;

3. Recordkeeping costs, which result

principally from the requirement that

signed acknowledgment forms must be

retained by the provider of the

information; and

4. Materials costs, which are linked

primarily to the disclosure requirement,

as the lead hazard information pamphlet

must be purchased or photocopied

(acknowledgment forms must also be

duplicated). Costs may also be incurred
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9079

for filing where a large number of

acknowledgment statements or

documents for disclosure are generated

(e.g., by 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 and HUD

have estimated to be the case in most

transfers, responsibilities to ensure

compliance fall to such agents or

managers as well.

To estimate the impacts of the rule,

EPA and HUD sought data 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 regulations.

B. Profile of Sectors Affected

The larger of the two affected sectors

expected to bear the principal effects of

the rule falls within Standard Industrial

Classification (SIC) code 651, Real

Estate Operators and Lessors. EPA

estimates there to be 92,000

establishments potentially affected by

the rule. Also affected are business

establishments falling within SIC code

653, Real Estate Agents and Managers.

An additional 92,000 establishments

could be affected by the rule in this

sector.

Employment data were obtained for

the occupations most likely to be

involved in transactions subject to the

rule. EPA and HUD estimate that

324,000 real estate agents and 243,000

property managers will be affected.

With regard to transaction volume, 2.9

million sales transactions and 9.3

million rental transactions were

estimated to occur annually in target

housing.

C. Estimated Costs to Private Parties and

Government

Table 1 below summarizes the

estimated annual costs associated with

the rule. The four costs to private

parties, or compliance costs, are

discussed briefly below. Costs to

government represent rule

administration activities.

The first private party cost category,

start-up costs, represents about onethird of overall annual compliance

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 that must

be undertaken in order to comply; and

the hourly compensation of affected

employees.

As Table 1 shows, disclosure event

costs constitute the greatest portion of

overall compliance costs. Factors

affecting the magnitude of these costs

include the frequencies of regulated

events; the time involved in performing

required activities, such as providing to

the prospective purchaser/lessee the

required information and obtaining the

required signatures; and the hourly

compensation of all involved parties.

EPA and HUD 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 the Disclosure Rule for Residential Property Transfer

Estimated Annual Costs to Private Parties - Sales Transactions

Start-up Costs* $25.8 million

Disclosure Event Costs 20.2 million

Recordkeeping Costs 0.6 million

Materials Costs 2.8 million

Total for Sales Transactions: $49.4 million

Estimated Annual Costs to Private Parties - Rental Transactions

Start-up Costs* $ 1.1 million

Disclosure Event Costs $25.6 million

Recordkeeping Costs $1.9 million

Materials Costs $3.4 million

Total for Rental Transactions: $32.0 million

Total Estimated Annual Costs to Private Parties: $81.4 million

Costs to Government

Low Estimate $2.4 million

High Estimate $4.3 million

Total Estimated Annual Costs:

Based on Low Estimate of Government Costs: $83.8 million

Based on High Estimate of Government Costs: $85.7 million

* First-year costs annualized at 3 percent rate over 6 years.

Recordkeeping and materials costs

account for a relatively modest share of

overall annual costs. Factors affecting

the magnitude of these costs include the

number of affected parties per

transaction; the frequency of
9080 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

transactions, the costs of acquiring/

duplicating documents, which include

the lead hazard information pamphlet

and signed acknowledgment forms; and

costs to maintain documents.

Additional, indirect costs resulting

from actions taken by consumers in

response to the information made

available by the rule were not

quantified, for reasons detailed in Unit

VII.E. of this preamble.

To administer the final regulation,

resources will be required to conduct a

number of activities, including:

inspections; violation case management;

establishment and maintenance of

cooperative agreements; compliance

assistance, development of performance

measurement criteria; and management.

D. Effect of the Lead-Based Paint

Hazard Disclosure Rule for Real Estate

Transfers on Small Businesses--

Regulatory Flexibility Analysis

EPA and HUD investigated the

potential impacts of the rule on small

businesses and have prepared a

Regulatory Flexibility Analysis (RFA).

Although a large number of small

establishments may be affected by the

rule, cost impacts were not found to be

of sufficient magnitude to cause undue

harm to such establishments. The RFA

is summarized separately in Unit X.B. of

this preamble.

E. Assessment of Benefits

The market imperfection that the rule

is intended to correct is the lack of

information available to prospective

home purchasers and lessees concerning

lead-based paint hazards in homes they

may be considering for purchase or rent.

Under the rule, general information

about the risks associated with leadbased paint will be provided through

the provision of a brochure. 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, etc.). The

failure of the marketplace to provide

this information or to provide

prospective home purchasers and

lessees the opportunity to develop such

information means that prospective

purchasers and lessees 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

giving prospective home purchasers and

lessees access to information that might

otherwise have been unavailable (e.g.,

information pertaining to abatement

activities for a specific residence) or that

they might have been able to acquire

only through their own effort and at

some cost. In addition, EPA believes the

information will generate health

benefits by leading many purchasers

and lessees to modify their behavior in

a way that will reduce risks from leadbased 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 rule may also prompt

property owners, due to reluctance on

the part of prospective purchasers/

lessees to select housing containing

lead-based paint, to act to reduce leadrelated hazards associated with their

residential dwellings. Health benefits

resulting from such activities are

distinguishable from the more direct

benefits of the rule, i.e., the value of

improved information. Further, 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 reduce leadbased paint hazards in residential

housing. Thus, the extent to which lead

exposure decreases depends upon how

transaction participants (i.e., sellers/

lessors and prospective purchasers/

lessees) value and respond to the

additional information.

The RIA details three approaches that

are evolving and that 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 analytical

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 rule, either in terms of

efficiency gains from improved

decisionmaking or risk reduction,

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.

VIII. Rulemaking Record

A record for this final rule has been

established for both EPA and HUD

under docket number ‘‘OPPTS-62130.’’

The public version of this record for

both agencies (which does not contain

any information claimed as Confidential

Business Information) is available for

inspection from 12 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. NEB607, 401 M St., SW., Washington, DC

20460.

The docket contains reference works

that EPA and HUD referred to in

developing this regulation. In addition,

other documents, including the

Regulatory Impact Analysis, Information

Collection Request, and copies of all

comments on the proposed rule, are

included in the docket for public

review. The draft of the final rule

submitted by EPA and HUD to OMB for

review prior to the final rule’s

promulgation will also be contained in

the docket.

IX. References

1. Alliance to End Childhood Lead

Poisoning, 1991. Preventing Childhood

Lead Poisoning: The First

Comprehensive National Conference;

Final Report. Washington, DC.

2. CDC, 1991. U.S. Centers for Disease

Control and Prevention, Preventing Lead

Poisoning in Young Children: A

Statement by the Centers for Disease

Control. Atlanta, GA.

3. CPSC, 1977. Notice Reducing

Allowable Levels of Lead in Lead-Based

Paint. Federal Register. September 1,

1977: 42 FR 44199.

4. EPA, 1995. U.S. Environmental

Protection Agency, Report on the

National Survey of Lead-Based Paint in

Housing: Base Report. Washington, DC:

EPA747-R95-003.

5. HUD, 1995. U.S. Department of

Housing and Urban Development, Task

Force on Lead-Based Paint Hazard

Reduction and Financing, Putting the

Pieces Together: Controlling Lead

Hazards in the Nation’s Housing: Final

Report. Washington, DC: HUD-1542-

LBP.

6. HUD, 1990. Lead-Based Paint;

Interim Guidelines for Hazard

Identification and Abatement in Public

and Indian Housing; Notice. Federal

Register. April 18, 1990: 55 FR 14556.

7. HUD, 1995. Department of Housing

and Urban Development, Guidelines for

the Evaluation and Control of LeadBased Paint Hazards in Housing.

Washington, DC.

8. Pirkle, 1994. Pirkle, J.L., D.J. Brody,

E.W. Gunter, R.A. Kramer, D.C. Paschal,
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9081

K.M. Flegal, T.D. Matte, The Decline in

Blood Lead Levels in the United States.

Journal of the American Medical

Association, 272(4): 284-291.

X. Regulatory Assessment

Requirements

A. Executive Order 12866

Pursuant to Executive Order 12866

(58 FR 51735, October 4, 1993), it has

been determined that this is a

‘‘significant regulatory action’’ because

of potential novel legal or policy issues

arising out of the new legal mandates

this action implements. This action was

submitted to OMB for review, and any

comments or changes made during that

review have been documented in the

public record.

In addition, EPA and HUD have

prepared a Regulatory Impact Analysis

(RIA) in conjunction with their lead

information disclosure rule for real

estate transfers. EPA and HUD find that

the rule will not have an effect on the

economy of $100 million or more, will

not result in major increases in costs or

prices, and is not anticipated to have

significant adverse effects on

competition, employment, investment,

or productivity in the relevant sectors.

EPA and HUD estimate the overall

costs to affected entities to be $81.4

million and costs to government to

range from $2.4 to $4.3 million. These

estimates include costs for rule

familiarization, information disclosure

and obtaining required signatures,

recordkeeping, materials costs, and

government administration costs. EPA

and HUD estimate that the provisions of

the rule will add about $2.00 to $6.00

to the cost of each transaction.

A copy of the RIA is available in the

TSCA Public Docket Office for review

and public comment. For information

on the public docket, see Unit VIII. of

this preamble, entitled Rulemaking

Record.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (5

U.S.C. 601 et seq.) requires Federal

agencies to consider whether a

regulatory action will have an adverse

economic impact on small entities.

Section 605(b) requires the agencies to

either certify that the regulatory action

will not have a significant economic

impact on a substantial number of small

entities, or prepare a Regulatory

Flexibility Analysis. Under the EPA

policy that implements the Regulatory

Flexibility Act, EPA performs a

Regulatory Flexibility Analysis

whenever a regulatory action is

anticipated to have any economic

impact on any small entities, and will

also seek to involve these small entities

in the development of the regulatory

action to the extent possible. As such,

in an effort to identify and characterize

the rule’s effects on small business, EPA

and HUD have prepared a Regulatory

Flexibility Analysis. This assessment

has been included as part of the RIA and

is summarized below.

In preparing the RFA, 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 73 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

87 percent, respectively, when

employee size class 1 to 9 was

examined.

To measure the cost impacts of the

rule on these small establishments,

representative or model establishments

were designed. These model

establishments corresponded to typical

establishments in each affected sector,

with respect to number of employees

and annual transaction volume. 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 0.20 to 0.42 percent of labor and

overhead costs. In the case of a rental

establishment, impacts were slightly

higher, ranging from 0.21 to 0.47

percent. An establishment engaged in

both activities was projected to sustain

impacts of 0.28 to 0.63 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.

C. Paperwork Reduction Act

The information collection

requirements in this rule have been

submitted for approval to the Office of

Management and Budget (OMB) under

the Paperwork Reduction Act, 44 U.S.C.

3501 et seq. An Information Collection

Request (ICR) document has been

prepared by EPA (EPA ICR No. 1710.02)

and a copy may be obtained from Sandy

Farmer, OPPE Regulatory Information

Division, Environmental Protection

Agency (2136), 401 M St., SW.,

Washington, DC 20460 or by calling

(202) 260-2740. The information

requirements are not effective until

OMB approves them.

The information collection

requirements of this rule apply to

sellers, lessors, and agents of target

housing. Before selling or leasing target

housing, the following information

collection activities must occur: (1)

Disclosure of known lead-based paint

and/or lead-based paint hazards; (2)

provision of any available records and

reports pertaining to lead-based paint in

the housing; (3) provision of a federally

approved lead hazard information

pamphlet; (4) completion and

subsequent retention of disclosure and

acknowledgment language for 3 years,

and (5) provision of a 10-day evaluation

opportunity to purchasers before

obligation under purchase contracts

(this time period can be adjusted or

waived by mutual consent).

These requirements will help to: (1)

Ensure that purchasers and renters of

older housing make informed housing

and maintenance decisions before they

become obligated under purchase or

lease contracts; (2) ensure that all

participants in target housing sales and

leasing transactions fully understand

their rights and obligations under

section 1018 and the implementing

regulations; (3) document the

completion of all disclosure activities by

the responsible parties; and (4) provide

a record of compliance for use by EPA

and HUD enforcement officials. Under

the authority of section 1018 of Title X,

the information collection requirements

of this rule are mandatory for all

applicable sales and leasing

transactions.

The annual costs to private parties to

comply with the requirements of the

rule are estimated to be $81.4 million,

with an associated burden of 7.1 million

hours. Annual costs may be broken

down into two components:

Initialization or start-up costs, estimated

to be $26.9 million (annualized at 3

percent over 3 years); and costs for

information disclosure and maintenance

of records, estimated to be $54.5

million. Annual burden is estimated to

be distributed among 35.1 million

responses, averaging 12.2 minutes per

response. The number of respondents is

estimated to be 15.5 million. Burden

means the total time, effort, or financial

resources expended by persons to

generate, maintain, retain, or disclose or

provide information to or for a Federal
9082 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

agency. This includes the time needed

to review instructions; develop, acquire,

install, and utilize technology and

systems for the purposes of collecting,

validating, and verifying information,

processing and maintaining

information, and disclosing and

providing information; adjust the

existing ways to comply with any

previously applicable instructions and

requirements; train personnel to

respond to a collection of information;

search data sources; complete and

review the collection of information;

and transmit or otherwise disclose the

information.

An Agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a currently valid OMB

control number. The OMB control

numbers for EPA’s regulations are listed

in 40 CFR part 9 and 48 CFR Chapter

15. Upon OMB approval, EPA will issue

a notice in the Federal Register to

announce OMB’s approval and to make

a technical amendment to include a

reference to this approval in 40 CFR part

9.

Send comments on the burden

estimates and any suggested methods

for minimizing respondent burden,

including through the use of automated

collection techniques, to the Director,

OPPE Regulatory Information Division,

Environmental Protection Agency

(2136), 401 M St., SW., Washington, DC

20460, and to the Office of Information

and Regulatory Affairs, Office of

Management and Budget, 725 17th St.,

NW., Washington, DC 20503, marked

‘‘Attention: Desk Officer for EPA.’’

Include the ICR number in any

correspondence.

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 final rule relate only

to information services and are,

therefore, categorically excluded from

the requirements of the National

Environmental Policy Act.

E. HUD’s Regulatory Agenda

This rule was listed as Item No. 1517

in HUD’s Semiannual Agenda of

Regulations published on April 25, 1994

(59 FR 20424), 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.

F. Unfunded Mandates Reform Act

Pursuant to Title II of the Unfunded

Mandates Reform Act of 1995, which

the President signed into law on March

22, 1995, EPA and HUD have assessed

the effects of this regulatory action on

State, local, and tribal governments, and

the private sector. This action is not an

‘‘unfunded mandate’’ as defined by that

statute and will not result in the

expenditure of $100 million or more by

any State, local, or tribal government, or

by the private sector. Nevertheless, EPA

and HUD consulted with several State,

local, and tribal governments during the

development.

A copy of the RIA is available for

public review. For information on the

public docket, see Unit VIII. of this

preamble, entitled Rulemaking Record.

List of Subjects in 24 CFR Part 35

Environmental protection, Grant

programs-housing and community

development, Hazardous substances,

Lead, Lead poisoning, Mortgage

insurance, Rent subsidies, Reporting

and recordkeeping requirements.

List of Subjects in 40 CFR Part 745

Environmental protection, Hazardous

substances, Lead, Recordkeeping and

notification requirements.

Dated: February 29, 1996.

Henry Cisneros,

Secretary, Department of Housing and Urban

Development.

Dated: February 29, 1996.

Carol M. Browner,

Administrator, Environmental Protection

Agency.

Therefore, 24 CFR subtitle A and 40

CFR Chapter I are amended as follows:

24 CFR Subtitle A

PART 35—LEAD-BASED PAINT

POISONING PREVENTION IN CERTAIN

RESIDENTIAL STRUCTURES

1. The authority citation for part 35 is

revised to read as follows:

Authority: 42 U.S.C. 3535(d), 4821-4846

and 4852d.

2. A new subpart H is added to part

35 to read as follows:

Subpart H—Disclosure of Known LeadBased Paint and/or Lead-Based Paint

Hazards Upon Sale or Lease of Residential

Property

Sec.

35.80 Purpose.

35.82 Scope and applicability.

35.84 Effective dates.

35.86 Definitions.

35.88 Disclosure requirements for sellers

and lessors.

35.90 Opportunity to conduct an

evaluation.

35.92 Certification and acknowledgment

of disclosure.

35.94 Agent responsibilities.

35.96 Enforcement.

35.98 Impact on State and local

requirements.

Subpart H—Disclosure of Known LeadBased Paint and/or Lead-Based Paint

Hazards Upon Sale or Lease of Residential

Property

§ 35.80 Purpose.

This subpart implements the

provisions of 42 U.S.C. 4852d, which

impose 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 the presence of any known

lead-based paint and/or lead-based

paint hazards; provide available records

and reports; provide the purchaser or

lessee with a lead hazard information

pamphlet; give purchasers a 10-day

opportunity to conduct a risk

assessment or inspection; and attach

specific disclosure and warning

language to the sales or leasing contract

before the purchaser or lessee is

obligated under a contract to purchase

or lease target housing.

§ 35.82 Scope and applicability.

This subpart applies to all

transactions to sell or lease target

housing, including subleases, with the

exception of the following:

(a) Sales of target housing at

foreclosure.

(b) Leases of target housing that have

been found to be lead-based paint free

by an inspector certified under the

Federal certification program or under a

federally accredited State or tribal

certification program. Until a Federal

certification program or federally

accredited State certification program is

in place within the State, inspectors

shall be considered qualified to conduct

an inspection for this purpose if they

have received certification under any

existing State or tribal inspector

certification program. The lessor has the

option of using the results of additional

test(s) by a certified inspector to confirm

or refute a prior finding.

(c) Short-term leases of 100 days or

less, where no lease renewal or

extension can occur.

(d) Renewals of existing leases in

target housing in which the lessor has

previously disclosed all information

required under § 35.88 and where no

new information described in § 35.88

has come into the possession of the

lessor. For the purposes of this
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9083

paragraph, renewal shall include both

renegotiation of existing lease terms

and/or ratification of a new lease.

§ 35.84 Effective dates.

The requirements in this subpart take

effect in the following manner:

(a) For owners of more than four

residential dwellings, the requirements

shall take effect on September 6, 1996.

(b) For owners of one to four

residential dwellings, the requirements

shall take effect on December 6, 1996.

§ 35.86 Definitions.

The following definitions apply to

this subpart.

The Act means the Residential LeadBased Paint Hazard Reduction Act of

1992, 42 U.S.C. 4852d.

Agent means any party who enters

into a contract with a seller or lessor,

including any party who enters into a

contract with a representative of the

seller or lessor, for the purpose of

selling or leasing target housing. This

term does not apply to purchasers or

any purchaser’s representative who

receives all compensation from the

purchaser.

Available means in the possession of

or reasonably obtainable by the seller or

lessor at the time of the disclosure.

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.

Foreclosure means any of the various

methods, statutory or otherwise, known

in different jurisdictions, of enforcing

payment of a debt, by the taking and

selling of real property.

Housing for the elderly means

retirement communities or similar types

of housing reserved for households

composed of one or more persons 62

years of age or more at the time of initial

occupancy.

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

equal to or in excess of 1.0 milligram

per square centimeter or 0.5 percent by

weight.

Lead-based paint free housing means

target housing that has been found to be

free of paint or other surface coatings

that contain lead equal to or in excess

of 1.0 milligram per square centimeter

or 0.5 percent by weight.

Lead-based paint hazard means any

condition that causes exposure to lead

from lead-contaminated dust, leadcontaminated soil, or 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, rent, or

sublease target housing, including but

not limited to individuals, partnerships,

corporations, trusts, government

agencies, housing agencies, Indian

tribes, and nonprofit organizations.

Lessor means any entity that offers

target housing for lease, rent, or

sublease, including but not limited to

individuals, partnerships, corporations,

trusts, government agencies, housing

agencies, Indian tribes, and nonprofit

organizations.

Owner means any entity that has legal

title to target housing, including but not

limited to individuals, partnerships,

corporations, trusts, government

agencies, housing agencies, Indian

tribes, and nonprofit organizations,

except where a mortgagee holds legal

title to property serving as collateral for

a mortgage loan, in which case the

owner would be the mortgagor.

Purchaser means an entity that enters

into an agreement to purchase an

interest in target housing, including but

not limited to individuals, partnerships,

corporations, trusts, government

agencies, housing agencies, Indian

tribes, and nonprofit organizations.

Reduction means measures designed

to reduce or eliminate human exposure

to lead-based paint hazards through

methods including interim controls and

abatement.

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; and

(5) Provision of a report explaining

the results of the investigation.

Seller means any entity that transfers

legal title to target housing, in whole or

in part, in return for consideration,

including but not limited to individuals,

partnerships, corporations, trusts,

government agencies, housing agencies,

Indian tribes, and nonprofit

organizations. The term ‘‘seller’’ also

includes:

(1) An entity that transfers shares in

a cooperatively owned project, in return

for consideration; and

(2) An entity that 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, in return

for consideration.

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.

TSCA means the Toxic Substances

Control Act, 15 U.S.C. 2601.

0-bedroom dwelling means any

residential dwelling in which the living

area is not separated from the sleeping

area. The term includes efficiencies,

studio apartments, dormitory housing,

military barracks, and rentals of

individual rooms in residential

dwellings.

§ 35.88 Disclosure requirements for sellers

and lessors.

(a) The following activities shall be

completed before the purchaser or

lessee is obligated under any contract to

purchase or lease target housing that is

not otherwise an exempt transaction

pursuant to § 35.82. Nothing in this

section implies a positive obligation on

the seller or lessor to conduct any

evaluation or reduction activities.

(1) The seller or lessor shall provide

the purchaser or lessee with an EPAapproved lead hazard information
9084 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

pamphlet. Such pamphlets include the

EPA document entitled Protect Your

Family From Lead in Your Home (EPA

#747-K-94-001) or an equivalent

pamphlet that has been approved for

use in that State by EPA.

(2) The seller or lessor shall disclose

to the purchaser or lessee the presence

of any known lead-based paint and/or

lead-based paint hazards in the target

housing being sold or leased. The seller

or lessor shall also disclose any

additional information available

concerning the known lead-based paint

and/or lead-based paint hazards, such as

the basis for the determination that leadbased paint and/or lead-based paint

hazards exist, the location of the leadbased paint and/or lead-based paint

hazards, and the condition of the

painted surfaces.

(3) The seller or lessor shall disclose

to each agent the presence of any known

lead-based paint and/or lead-based

paint hazards in the target housing

being sold or leased and the existence

of any available records or reports

pertaining to lead-based paint and/or

lead-based paint hazards. The seller or

lessor shall also disclose any additional

information available concerning the

known lead-based paint and/or leadbased paint hazards, such as the basis

for the determination that lead-based

paint and/or lead-based paint hazards

exist, the location of the lead-based

paint and/or lead-based paint hazards,

and the condition of the painted

surfaces.

(4) The seller or lessor shall provide

the purchaser or lessee with any records

or reports available to the seller or lessor

pertaining to lead-based paint and/or

lead-based paint hazards in the target

housing being sold or leased. This

requirement includes records and

reports regarding common areas. This

requirement also includes records and

reports regarding other residential

dwellings in multifamily target housing,

provided that such information is part

of an evaluation or reduction of leadbased paint and/or lead-based paint

hazards in the target housing as a whole.

(b) If any of the disclosure activities

identified in paragraph (a) of this

section occurs after the purchaser or

lessee has provided an offer to purchase

or lease the housing, the seller or lessor

shall complete the required disclosure

activities prior to accepting the

purchaser’s or lessee’s offer and allow

the purchaser or lessee an opportunity

to review the information and possibly

amend the offer.

§ 35.90 Opportunity to conduct an

evaluation.

(a) Before a purchaser is obligated

under any contract to purchase target

housing, the seller shall permit the

purchaser a 10-day period (unless the

parties mutually agree, in writing, upon

a different period of time) to conduct a

risk assessment or inspection for the

presence of lead-based paint and/or

lead-based paint hazards.

(b) Notwithstanding paragraph (a) of

this section, a purchaser may waive the

opportunity to conduct the risk

assessment or inspection by so

indicating in writing.

§ 35.92 Certification and acknowledgment

of disclosure.

(a) Seller requirements. Each contract

to sell target housing shall include an

attachment containing the following

elements, in the language of the contract

(e.g., English, Spanish):

(1) A Lead Warning Statement

consisting 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 leadbased paint hazards is recommended prior to

purchase.

(2) A statement by the seller

disclosing the presence of known leadbased paint and/or lead-based paint

hazards in the target housing being sold

or indicating no knowledge of the

presence of lead-based paint and/or

lead-based paint hazards. The seller

shall also provide any additional

information available concerning the

known lead-based paint and/or leadbased paint hazards, such as the basis

for the determination that lead-based

paint and/or lead-based paint hazards

exist, the location of the lead-based

paint and/or lead-based paint hazards,

and the condition of the painted

surfaces.

(3) A list of any records or reports

available to the seller pertaining to leadbased paint and/or lead-based paint

hazards in the housing that have been

provided to the purchaser. If no such

records or reports are available, the

seller shall so indicate.

(4) A statement by the purchaser

affirming receipt of the information set

out in paragraphs (a)(2) and (a)(3) of this

section and the lead hazard information

pamphlet required under section 15

U.S.C. 2696.

(5) A statement by the purchaser that

he/she has either:

(i) Received the opportunity to

conduct the risk assessment or

inspection required by § 35.90(a); or

(ii) Waived the opportunity.

(6) When any agent is involved in the

transaction to sell target housing on

behalf of the seller, a statement that:

(i) The agent has informed the seller

of the seller’s obligations under 42

U.S.C. 4852d; and

(ii) The agent is aware of his/her duty

to ensure compliance with the

requirements of this subpart.

(7) The signatures of the sellers,

agents, and purchasers, certifying to the

accuracy of their statements, to the best

of their knowledge, along with the dates

of signature.

(b) Lessor requirements. Each contract

to lease target housing shall include, as

an attachment or within the contract,

the following elements, in the language

of the contract (e.g., English, Spanish):

(1) A Lead Warning Statement with

the following language:

Housing built before 1978 may contain

lead-based paint. Lead from paint, paint

chips, and dust can pose health hazards if

not managed properly. Lead exposure is

especially harmful to young children and

pregnant women. Before renting pre-1978

housing, lessors must disclose the presence

of lead-based paint and/or lead-based paint

hazards in the dwelling. Lessees must also

receive a federally approved pamphlet on

lead poisoning prevention.

(2) A statement by the lessor

disclosing the presence of known leadbased paint and/or lead-based paint

hazards in the target housing being

leased or indicating no knowledge of the

presence of lead-based paint and/or

lead-based paint hazards. The lessor

shall also disclose any additional

information available concerning the

known lead-based paint and/or leadbased paint hazards, such as the basis

for the determination that lead-based

paint and/or lead-based paint hazards

exist in the housing, the location of the

lead-based paint and/or lead-based

paint hazards, and the condition of the

painted surfaces.

(3) A list of any records or reports

available to the lessor pertaining to leadbased paint and/or lead-based paint

hazards in the housing that have been

provided to the lessee. If no such

records or reports are available, the

lessor shall so indicate.
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9085

(4) A statement by the lessee affirming

receipt of the information set out in

paragraphs (b)(2) and (b)(3) of this

section and the lead hazard information

pamphlet required under 15 U.S.C.

2696.

(5) When any agent is involved in the

transaction to lease target housing on

behalf of the lessor, a statement that:

(i) The agent has informed the lessor

of the lessor’s obligations under 42

U.S.C. 4852d; and

(ii) The agent is aware of his/her duty

to ensure compliance with the

requirements of this subpart.

(6) The signatures of the lessors,

agents, and lessees certifying to the

accuracy of their statements to the best

of their knowledge, along with the dates

of signature.

(c) Retention of certification and

acknowledgment information.

(1) The seller, and any agent, shall

retain a copy of the completed

attachment required under paragraph (a)

of this section for no less than 3 years

from the completion date of the sale.

The lessor, and any agent, shall retain

a copy of the completed attachment or

lease contract containing the

information required under paragraph

(b) of this section for no less than 3

years from the commencement of the

leasing period.

(2) This recordkeeping requirement is

not intended to place any limitations on

civil suits under the Act, or to otherwise

affect a lessee’s or purchaser’s rights

under the civil penalty provisions of 42

U.S.C. 4852d(b)(3).

(d) The seller, lessor, or agent shall

not be responsible for the failure of a

purchaser’s or lessee’s legal

representative (where such

representative receives all compensation

from the purchaser or lessee) to transmit

disclosure materials to the purchaser or

lessee, provided that all required parties

have completed and signed the

necessary certification and

acknowledgment language required

under paragraphs (a) and (b) of this

section.

§ 35.94 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 his/

her obligations under §§ 35.88, 35.90,

and 35.92.

(2) Ensure that the seller or lessor has

performed all activities required under

§§ 35.88, 35.90, and 35.92, or personally

ensure compliance with the

requirements of §§ 35.88, 35.90, and

35.92.

(b) If the agent has complied with

paragraph (a)(1) of this section, the

agent shall not be liable for the failure

to disclose to a purchaser or lessee the

presence of lead-based paint and/or

lead-based paint hazards known by a

seller or lessor but not disclosed to the

agent.

§ 35.96 Enforcement.

(a) 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 42 U.S.C. 3545 and 24

CFR part 30.

(b) 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) 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 42 U.S.C.

4852d(b)(3), 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) Failure or refusal to comply with

§§ 35.88 (disclosure requirements for

sellers and lessors), § 35.90 (opportunity

to conduct an evaluation), § 35.92

(certification and acknowledgment of

disclosure), or § 35.94 (agent

responsibilities) is a violation of 42

U.S.C. 4852d(b)(5) and of TSCA section

409 (15 U.S.C. 2689).

(f) Violators may be subject to civil

and criminal sanctions pursuant to

TSCA section 16 (15 U.S.C. 2615) for

each violation. For purposes of

enforcing this subpart, the penalty for

each violation applicable under 15

U.S.C. 2615 shall be not more than

$10,000.

§ 35.98 Impact on State and local

requirements.

Nothing in this subpart shall relieve a

seller, lessor, or agent from any

responsibility for compliance with State

or local laws, ordinances, codes, or

regulations governing notice or

disclosure of known lead-based paint

and/or lead-based paint hazards.

Neither HUD nor EPA assumes any

responsibility for ensuring compliance

with such State or local requirements.

40 CFR Chapter I

1. Part 745 is added to read as follows:

PART 745–LEAD-BASED PAINT

POISIONING PREVENTION IN

CERTAIN RESIDENTIAL STRUCTURES

Subparts A—E [Reserved]

Subpart F — Disclosure of Known LeadBased Paint and/or Lead-Based Paint

Hazards Upon Sale or Lease of Residential

Property

Sec.

745.100 Purpose.

745.101 Scope and applicability.

745.102 Effective dates.

745.103 Definitions.

745.107 Disclosure requirements for

sellers and lessors.

745.110 Opportunity to conduct an

evaluation.

745.113 Certification and

acknowledgment of disclosure.

745.115 Agent responsibilities.

745.118 Enforcement.

745.119 Impact on State and local

requirements.

Authority: 15 U.S.C. 2615, 15 U.S.C. 2689,

and 42 U.S.C. 4852d.

Subparts A—E [Reserved]

Subpart F—Disclosure of Known LeadBased Paint and/or Lead-Based Paint

Hazards Upon Sale or Lease of

Residential Property

§ 745.100 Purpose.

This subpart implements the

provisions of 42 U.S.C. 4852d, which

impose 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 the presence of any known

lead-based paint and/or lead-based

paint hazards; provide available records

and reports; provide the purchaser or

lessee with a lead hazard information

pamphlet; give purchasers a 10-day

opportunity to conduct a risk

assessment or inspection; and attach

specific disclosure and warning

language to the sales or leasing contract

before the purchaser or lessee is

obligated under a contract to purchase

or lease target housing.

§ 745.101 Scope and applicability.

This subpart applies to all

transactions to sell or lease target

housing, including subleases, with the

exception of the following:

(a) Sales of target housing at

foreclosure.

(b) Leases of target housing that have

been found to be lead-based paint free

by an inspector certified under the

Federal certification program or under a

federally accredited State or tribal

certification program. Until a Federal

certification program or federally

accredited State certification program is
9086 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

in place within the State, inspectors

shall be considered qualified to conduct

an inspection for this purpose if they

have received certification under any

existing State or tribal inspector

certification program. The lessor has the

option of using the results of additional

test(s) by a certified inspector to confirm

or refute a prior finding.

(c) Short-term leases of 100 days or

less, where no lease renewal or

extension can occur.

(d) Renewals of existing leases in

target housing in which the lessor has

previously disclosed all information

required under § 745.107 and where no

new information described in § 745.107

has come into the possession of the

lessor. For the purposes of this

paragraph, renewal shall include both

renegotiation of existing lease terms

and/or ratification of a new lease.

§ 745.102 Effective dates.

The requirements in this subpart take

effect in the following manner:

(a) For owners of more than four

residential dwellings, the requirements

shall take effect on September 6, 1996.

(b) For owners of one to four

residential dwellings, the requirements

shall take effect on December 6, 1996.

§ 745.103 Definitions.

The following definitions apply to

this subpart.

The Act means the Residential LeadBased Paint Hazard Reduction Act of

1992, 42 U.S.C. 4852d.

Agent means any party who enters

into a contract with a seller or lessor,

including any party who enters into a

contract with a representative of the

seller or lessor, for the purpose of

selling or leasing target housing. This

term does not apply to purchasers or

any purchaser’s representative who

receives all compensation from the

purchaser.

Available means in the possession of

or reasonably obtainable by the seller or

lessor at the time of the disclosure.

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.

Foreclosure means any of the various

methods, statutory or otherwise, known

in different jurisdictions, of enforcing

payment of a debt, by the taking and

selling of real property.

Housing for the elderly means

retirement communities or similar types

of housing reserved for households

composed of one or more persons 62

years of age or more at the time of initial

occupancy.

HUD means the U.S. Department of

Housing and Urban Development.

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

equal to or in excess of 1.0 milligram

per square centimeter or 0.5 percent by

weight.

Lead-based paint free housing means

target housing that has been found to be

free of paint or other surface coatings

that contain lead equal to or in excess

of 1.0 milligram per square centimeter

or 0.5 percent by weight.

Lead-based paint hazard means any

condition that causes exposure to lead

from lead-contaminated dust, leadcontaminated soil, or 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, rent, or

sublease target housing, including but

not limited to individuals, partnerships,

corporations, trusts, government

agencies, housing agencies, Indian

tribes, and nonprofit organizations.

Lessor means any entity that offers

target housing for lease, rent, or

sublease, including but not limited to

individuals, partnerships, corporations,

trusts, government agencies, housing

agencies, Indian tribes, and nonprofit

organizations.

Owner means any entity that has legal

title to target housing, including but not

limited to individuals, partnerships,

corporations, trusts, government

agencies, housing agencies, Indian

tribes, and nonprofit organizations,

except where a mortgagee holds legal

title to property serving as collateral for

a mortgage loan, in which case the

owner would be the mortgagor.

Purchaser means an entity that enters

into an agreement to purchase an

interest in target housing, including but

not limited to individuals, partnerships,

corporations, trusts, government

agencies, housing agencies, Indian

tribes, and nonprofit organizations.

Reduction means measures designed

to reduce or eliminate human exposure

to lead-based paint hazards through

methods including interim controls and

abatement.

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; and

(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 transfers

legal title to target housing, in whole or

in part, in return for consideration,

including but not limited to individuals,

partnerships, corporations, trusts,

government agencies, housing agencies,

Indian tribes, and nonprofit

organizations. The term ‘‘seller’’ also

includes:

(1) An entity that transfers shares in

a cooperatively owned project, in return

for consideration; and

(2) An entity that 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, in return

for consideration.

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.

TSCA means the Toxic Substances

Control Act, 15 U.S.C. 2601.
Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations 9087

0-bedroom dwelling means any

residential dwelling in which the living

area is not separated from the sleeping

area. The term includes efficiencies,

studio apartments, dormitory housing,

military barracks, and rentals of

individual rooms in residential

dwellings.

§ 745.107 Disclosure requirements for

sellers and lessors.

(a) The following activities shall be

completed before the purchaser or

lessee is obligated under any contract to

purchase or lease target housing that is

not otherwise an exempt transaction

pursuant to § 745.101. Nothing in this

section implies a positive obligation on

the seller or lessor to conduct any

evaluation or reduction activities.

(1) The seller or lessor shall provide

the purchaser or lessee with an EPAapproved lead hazard information

pamphlet. Such pamphlets include the

EPA document entitled Protect Your

Family From Lead in Your Home (EPA

#747-K-94-001) or an equivalent

pamphlet that has been approved for

use in that State by EPA.

(2) The seller or lessor shall disclose

to the purchaser or lessee the presence

of any known lead-based paint and/or

lead-based paint hazards in the target

housing being sold or leased. The seller

or lessor shall also disclose any

additional information available

concerning the known lead-based paint

and/or lead-based paint hazards, such as

the basis for the determination that leadbased paint and/or lead-based paint

hazards exist, the location of the leadbased paint and/or lead-based paint

hazards, and the condition of the

painted surfaces.

(3) The seller or lessor shall disclose

to each agent the presence of any known

lead-based paint and/or lead-based

paint hazards in the target housing

being sold or leased and the existence

of any available records or reports

pertaining to lead-based paint and/or

lead-based paint hazards. The seller or

lessor shall also disclose any additional

information available concerning the

known lead-based paint and/or leadbased paint hazards, such as the basis

for the determination that lead-based

paint and/or lead-based paint hazards

exist, the location of the lead-based

paint and/or lead-based paint hazards,

and the condition of the painted

surfaces.

(4) The seller or lessor shall provide

the purchaser or lessee with any records

or reports available to the seller or lessor

pertaining to lead-based paint and/or

lead-based paint hazards in the target

housing being sold or leased. This

requirement includes records or reports

regarding common areas. This

requirement also includes records or

reports regarding other residential

dwellings in multifamily target housing,

provided that such information is part

of an evaluation or reduction of leadbased paint and/or lead-based paint

hazards in the target housing as a whole.

(b) If any of the disclosure activities

identified in paragraph (a) of this

section occurs after the purchaser or

lessee has provided an offer to purchase

or lease the housing, the seller or lessor

shall complete the required disclosure

activities prior to accepting the

purchaser’s or lessee’s offer and allow

the purchaser or lessee an opportunity

to review the information and possibly

amend the offer.

§ 745.110 Opportunity to conduct an

evaluation.

(a) Before a purchaser is obligated

under any contract to purchase target

housing, the seller shall permit the

purchaser a 10-day period (unless the

parties mutually agree, in writing, upon

a different period of time) to conduct a

risk assessment or inspection for the

presence of lead-based paint and/or

lead-based paint hazards.

(b) Not withstanding paragraph (a) of

this section, a purchaser may waive the

opportunity to conduct the risk

assessment or inspection by so

indicating in writing.

§ 745.113 Certification and

acknowledgment of disclosure.

(a) Seller requirements. Each contract

to sell target housing shall include an

attachment containing the following

elements, in the language of the contract

(e.g., English, Spanish):

(1) A Lead Warning Statement

consisting 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 leadbased paint hazards is recommended prior to

purchase.

(2) A statement by the seller

disclosing the presence of known leadbased paint and/or lead-based paint

hazards in the target housing being sold

or indicating no knowledge of the

presence of lead-based paint and/or

lead-based paint hazards. The seller

shall also provide any additional

information available concerning the

known lead-based paint and/or leadbased paint hazards, such as the basis

for the determination that lead-based

paint and/or lead-based paint hazards

exist, the location of the lead-based

paint and/or lead-based paint hazards,

and the condition of the painted

surfaces.

(3) A list of any records or reports

available to the seller pertaining to leadbased paint and/or lead-based paint

hazards in the housing that have been

provided to the purchaser. If no such

records or reports are available, the

seller shall so indicate.

(4) A statement by the purchaser

affirming receipt of the information set

out in paragraphs (a)(2) and (a)(3) of this

section and the lead hazard information

pamphlet required under 15 U.S.C.

2696.

(5) A statement by the purchaser that

he/she has either:

(i) Received the opportunity to

conduct the risk assessment or

inspection required by § 745.110(a); or

(ii) Waived the opportunity.

(6) When one or more agents are

involved in the transaction to sell target

housing on behalf of the seller, a

statement that:

(i) The agent has informed the seller

of the seller’s obligations under 42

U.S.C. 4852d; and

(ii) The agent is aware of his/her duty

to ensure compliance with the

requirements of this subpart.

(7) The signatures of the sellers,

agents, and purchasers certifying to the

accuracy of their statements to the best

of their knowledge, along with the dates

of signature.

(b) Lessor requirements. Each contract

to lease target housing shall include, as

an attachment or within the contract,

the following elements, in the language

of the contract (e.g., English, Spanish):

(1) A Lead Warning Statement with

the following language:

Housing built before 1978 may contain

lead-based paint. Lead from paint, paint

chips, and dust can pose health hazards if

not managed properly. Lead exposure is

especially harmful to young children and

pregnant women. Before renting pre-1978

housing, lessors must disclose the presence

of lead-based paint and/or lead-based paint

hazards in the dwelling. Lessees must also

receive a federally approved pamphlet on

lead poisoning prevention.

(2) A statement by the lessor

disclosing the presence of known leadbased paint and/or lead-based paint
9088 Federal Register / Vol. 61, No. 45 / Wednesday, March 6, 1996 / Rules and Regulations

hazards in the target housing being

leased or indicating no knowledge of the

presence of lead-based paint and/or

lead-based paint hazards. The lessor

shall also disclose any additional

information available concerning the

known lead-based paint and/or leadbased paint hazards, such as the basis

for the determination that lead-based

paint and/or lead-based paint hazards

exist, the location of the lead-based

paint and/or lead-based paint hazards,

and the condition of the painted

surfaces.

(3) A list of any records or reports

available to the lessor pertaining to leadbased paint and/or lead-based paint

hazards in the housing that have been

provided to the lessee. If no such

records or reports are available, the

lessor shall so indicate.

(4) A statement by the lessee affirming

receipt of the information set out in

paragraphs (b)(2) and (b)(3) of this

section and the lead hazard information

pamphlet required under 15 U.S.C.

2696.

(5) When one or more agents are

involved in the transaction to lease

target housing on behalf of the lessor, a

statement that:

(i) The agent has informed the lessor

of the lessors obligations under 42

U.S.C. 4852d; and

(ii) The agent is aware of his/her duty

to ensure compliance with the

requirements of this subpart.

(6) The signatures of the lessors,

agents, and lessees, certifying to the

accuracy of their statements, to the best

of their knowledge, along with the dates

of signature.

(c) Retention of Certification and

Acknowledgment Information.

(1) The seller, and any agent, shall

retain a copy of the completed

attachment required under paragraph (a)

of this section for no less than 3 years

from the completion date of the sale.

The lessor, and any agent, shall retain

a copy of the completed attachment or

lease contract containing the

information required under paragraph

(b) of this section for no less than 3

years from the commencement of the

leasing period.

(2) This recordkeeping requirement is

not intended to place any limitations on

civil suits under the Act, or to otherwise

affect a lessee’s or purchaser’s rights

under the civil penalty provisions of 42

U.S.C. 4852d(b)(3).

(d) The seller, lessor, or agent shall

not be responsible for the failure of a

purchaser’s or lessee’s legal

representative (where such

representative receives all compensation

from the purchaser or lessee) to transmit

disclosure materials to the purchaser or

lessee, provided that all required parties

have completed and signed the

necessary certification and

acknowledgment language required

under paragraphs (a) and (b) of this

section.

§ 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 his/

her obligations under §§745.107,

745.110, and 745.113.

(2) Ensure that the seller or lessor has

performed all activities required under

§§ 745.107, 745.110, and 745.113, or

personally ensure compliance with the

requirements of §§ 745.107, 745.110,

and 745.113.

(b) If the agent has complied with

paragraph (a)(1) of this section, the

agent shall not be liable for the failure

to disclose to a purchaser or lessee the

presence of lead-based paint and/or

lead-based paint hazards known by a

seller or lessor but not disclosed to the

agent.

§ 745.118 Enforcement.

(a) 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 42 U.S.C. 3545 and 24

CFR part 30.

(b) 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) 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 42 U.S.C.

4852d(b)(3), 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) Failure or refusal to comply with

§ 745.107 (disclosure requirements for

sellers and lessors), § 745.110

(opportunity to conduct an evaluation),

§ 745.113 (certification and

acknowledgment of disclosure), or

§ 745.115 (agent responsibilities) is a

violation of 42 U.S.C. 4852d(b)(5) and of

TSCA section 409 (15 U.S.C. 2689).

(f) Violators may be subject to civil

and criminal sanctions pursuant to

TSCA section 16 (15 U.S.C. 2615) for

each violation. For purposes of

enforcing this subpart, the penalty for

each violation applicable under 15

U.S.C. 2615 shall be not more than

$10,000.

§ 745.119 Impact on State and local

requirements.

Nothing in this subpart shall relieve a

seller, lessor, or agent from any

responsibility for compliance with State

or local laws, ordinances, codes, or

regulations governing notice or

disclosure of known lead-based paint or

lead-based paint hazards. Neither HUD

nor EPA assumes any responsibility for

ensuring compliance with such State or

local requirements.

[FR Doc. 96–5243 Filed 3–5–96; 8:45 am]

BILLING CODE 6560–50–F