30566 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 982

[Docket No. FR 4672–I–01]

RIN 2577—AC29

Exception Payment Standard to Offset

Increase in Utility Costs in the Housing

Choice Voucher Program

AGENCY: Office of the Assistant

Secretary for Public and Indian

Housing, HUD.

ACTION: Interim rule.

SUMMARY: Currently, increased energy

costs in some parts of the country have

had an adverse impact on the ability of

applicants and participants in the

Housing Choice Voucher program to

either lease a unit while paying no more

than 40 percent of their income for rent,

or, once having leased a unit, to

continue to pay both rent and the higher

utility costs. Therefore, HUD is

temporarily approving higher exception

payment standard amounts for certain

PHAs that have adopted a new utility

allowance schedule after October 1,

2000 of between 110% and 120% of the

Fair Market Rents (FMRs) without

requiring the Public Housing Agency

(PHA) to seek HUD approval, in order

to mitigate the adverse impact of

increased energy costs. HUD will

calculate these exception payment

standards using new rental data

(reflected in proposed FMRs for FY

2002 published at 66 FR 23770 (May 9,

2001)) with the result that in areas

where energy costs have increased

substantially the exception payment

standard amount will be between 110%

and 120% of current FMRs. These

exception payment standards are

published in the Federal Register as

appendix A immediately following this

rule. HUD is also permitting these

exception payment standard amounts to

be used at interim reexaminations of

families until September 30, 2001.

The provisions of this interim rule

apply only for the balance of the federal

fiscal year ending September 30, 2001.

The proposed fair market rents for FY

2002 published at 66 FR 23770 (May 9,

2001) reflect the increased cost of

utilities.

DATES: Comment Due Date: August 6,

2001.

Effective Date: This Interim Rule is

effective July 6, 2001.

ADDRESSES: Interested persons are

invited to submit comments regarding

this rule to the Rules Docket Clerk,

Office of General Counsel, Room 10276,

Department of Housing and Urban

Development, 451 Seventh Street, SW,

Washington, DC 20410–0500.

Communications should refer to the

above docket number and title.

Facsimile (FAX) comments are not

acceptable. A copy of each

communication submitted will be

available for public inspection and

copying between 7:30 a.m. and 5:30

p.m. weekdays at the above address.

FOR FURTHER INFORMATION CONTACT:

Gerald J. Benoit, Office of Public and

Indian Housing, Department of Housing

and Urban Development, 451 Seventh

Street, SW, Room 4210, Washington, DC

20410; telephone (202) 708–0477 (this is

not a toll-free number). Persons with

hearing or speech impairments may

access these numbers via TTY by calling

the Federal Information Relay Service at

(800) 877–8339.

SUPPLEMENTARY INFORMATION:

Background

Section 8 of the United Housing Act

of 1937 (the Act)(42 U.S.C.1437f)

authorizes housing assistance to assist

lower income families in obtaining

decent, safe, and sanitary housing. The

amount of the housing assistance

payment in the housing choice voucher

program is limited by the payment

standard amounts adopted by the PHA

based on the HUD published FMR for

designated areas of the country. The

FMR for an area is the amount that

would be needed to pay gross rent

(shelter plus all utilities except

telephone) for privately owned rental

housing.

The payment standard amount is the

maximum subsidy amount available to

pay for rent and family-furnished

utilities. Families searching for housing

may fail to find units that meet the

housing quality standards for the

program because the cost of rent plus

family-furnished utilities for many of

these units, particularly in a tight rental

market, exceeds the current payment

standard amounts that do not reflect the

higher cost of energy since publication

of the FY 2001 FMRs (see 65 FR 57658,

September 25, 2000). Also, an

increasing number of families are

having difficulty finding standard

quality units without paying more than

40 percent of their adjusted income for

rent at initial occupancy, which is

precluded by law. Also, current

participants are affected because they

have to pay more out-of-pocket for rent

and family-furnished utilities. As a

result, some families have rent burdens

that exceed 50 percent of their income.

I. Use of Payment Standard Amounts

HUD has determined that it is

appropriate to take special steps to

permit PHAs to increase payment

standard amounts to reflect the recent

significant increases in utility expenses

for natural gas and petroleum. The rule

allows PHAs to establish exception

payment standard amounts calculated

using updated data on the costs of rents

and utilities (which are reflected in

proposed FMRs for FY 2002 published

at 66 FR 23770 (May 9, 2001).) This

increase in the exception payment

standard amounts is necessary to

prevent any hardship on families who

are currently searching for housing but

who, because of increased utility costs,

are unable to find units for which the

gross rent (including the cost of all

utilities) falls within current established

PHA payment standard amounts that are

limited to 110 percent of the published

fair market rent.

Appendix A, published in the Federal

Register immediately following this

rule, lists the HUD approved maximum

exception payment standard amounts

for each unit size in each fair market

rent area. These are the maximum HUD

approved exception payment standard

amounts, and are capped at 120 percent

of the 40th percentile rent under 24 CFR

888.113. Some housing authorities have

set their payment standards based on

50th percentile rents under 65 FR 58870

(October 2, 2000) in order to

deconcentrate areas of poverty and

promote residential choice. Those PHAs

may use either the appendix A amounts

or 110% of their FMRs as the exception

payment standard amounts. The use of

the exception payment standard

amounts on appendix A is only

approved for those PHAs that have

adopted a new utility allowance

schedule after October 1, 2000.

Permission for PHAs to establish new

maximum payment standard amounts

without HUD approval will continue in

effect only until HUD publishes new fair

market rents for effect on or about

October 1, 2001. If HUD has approved

the PHA adoption of exception payment

standard amounts that are higher than

the maximum exception payment

standard amounts published by HUD in

appendix A of this interim rule, HUD

approval to use those higher maximum

payment standard amounts will

continue in effect. The PHA’s

establishment of the revised payment

standard amounts may not result in

rents higher than 120% of current FMRs

without HUD approval under the

procedures in 24 CFR 982.503(c)(3).

This interim rule gives a PHA the

flexibility to adjust the payment

standard amounts on its payment

standard schedule up to the maximum

HUD-approved exception payment

standard amounts in appendix A to

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Rules and Regulations 30567

increase the amount of a participant’s

subsidy to cover the increased cost of

utilities. A PHA should review its utility

allowance schedule to determine if

there has been a recent increase in

utility costs of 10 percent or more in the

cost of utilities and that increase is

reflected in the utility allowance

schedule adopted by the PHA after

September 30, 2000. For a PHA to

establish these exception payment

standards it is not sufficient that the

cost of any one utility increased by more

than 10 percent. Instead, the PHA must

determine that the total cost of all

utilities for a typical two-bedroom unit

has increased by more than 10 percent

based on the difference between the

new utility allowance schedule and the

previous schedule.

PHAs should review their current

payment standard amounts to determine

if they are adequate to meet the

increased cost of utilities in the

community based on average

consumption rates. If the payment

standard amounts are not adequate to

meet the increased utility costs, the

PHA should increase the payment

standard by an appropriate amount up

to the maximum exception payment

standard amount permitted by this

interim rule and appendix A.

II. Methodology and Source of Data

HUD’s standard methodology for

incorporating changes in utility costs

into FMRs relies on the most current

CPI data on annual changes in

residential utility costs. Annual rather

than point-to-point monthly

comparisons (e.g., July 1999 to July

2000) are used because monthly utility

price indices are volatile and often not

reflective of the annualized cost of

utilities.

In developing the proposed FMRs for

FY 2002, HUD has determined that the

methodology using CPI data does not

adequately capture the unusual

increases in natural gas prices that

occurred at the end of calendar year

2000. This methodology captures a 17

percent increase in natural gas prices

from 1999 to 2000, but December 1999

to December 2000 prices increased by

an average of 37 percent and

Department of Energy projections for

2002 are very similar to the December

2000 prices. For purposes of estimating

FY 2002 FMRs, the Department has

therefore modified the natural gas

inflation component to use Decemberto-December costs when available, and

to use second half to second half of the

year figures for CPI areas where

December 2000 data were not available.

This is a one-time change made to

respond to unusual circumstances; HUD

expects to return to the CPI-based

methodology next year.

III. Rule Change

In addition to publishing the

maximum exception payment standard

amounts in appendix A, this rule revises

the existing program regulations at 24

CFR 982.503(b)(2) and (c)(2), and

982.505(c)(4) to allow the PHA to adopt

these exception payment standard

amounts when calculating a family’s

housing assistance at the next annual

reexamination or any interim

reexamination conducted as a result of

a family request for relief based on a

significant increase in utility costs. This

modification to allow use of these

exception payment standard amounts at

interim reexamination applies only

through September 30, 2001, when it

expires.

IV. Findings and Certifications

Justification for Interim Rulemaking

In general, the Department publishes

a rule for public comment before issuing

a rule for effect, in accordance with its

own regulations on rulemaking, 24 CFR

part 10. However, part 10 does provide

for exceptions from that general rule.

One of these exceptions is where public

comment is ‘‘impracticable,

unnecessary, or contrary to the public

interest.’’ In this case, delaying the

effective date for public comment would

be contrary to the public interest. The

nation is experiencing a significant

increase in the cost of utilities,

especially natural gas and petroleum.

Due to the increased utility costs in

some areas, families in the housing

choice voucher program are having

current difficulty finding affordable

housing or, if already housed, they are

having difficulty paying for utilities. At

this time, HUD has available current

FMR data which, while not yet in effect,

if used as a basis to calculate exception

payments, would allow HUD to approve

exception payment standards above

current FMRs within its existing

regulatory authority. This step should

be taken as quickly as possible to

alleviate hardship in areas where there

has been an unexpected sharp increase

in utility costs. The comments received

within the 60-day comment period will

be considered during development of

final FMRs for publication on October 1,

2001.

Regulatory Flexibility Act

The Secretary, in accordance with the

Regulatory Flexibility Act (5 U.S.C.

605(b)), has reviewed and approved this

interim rule, and in so doing certifies

that this rule will not have a significant

economic impact on a substantial

number of small entities. This rule

permits Housing Authorities to use an

exception payment standard based on

new data, essentially allowing them to

approve payment standards of up to

120% of FMR without HUD approval for

the purpose of accommodating

increased utility costs in certain areas.

Environmental Impact

This rule and appendix A involve

establishment of rate or cost

determinations and related external

administrative requirements and

procedures which do not constitute a

development decision that affects the

physical condition of specific project

areas or building sites. Accordingly,

under 24 CFR 50.19(c)(6), this rule and

appendix A are categorically excluded

from environmental review under the

National Environmental Policy Act of

1969 (42 U.S.C. 4321).

Executive Order 13132, Federalism

Executive Order 13132 (entitled

‘‘Federalism’’) prohibits, to the extent

practicable and permitted by law, an

agency from promulgating a regulation

that has federalism implications and

either imposes substantial direct

compliance costs on State and local

governments and is not required by

statute, or preempts State law, unless

the relevant requirements of section 6 of

the Executive Order are met. This rule

does not have federalism implications

and does not impose substantial direct

compliance costs on State and local

governments or preempt State law

within the meaning of the Executive

Order.

Executive Order 12866

The Office of Management and Budget

(OMB) reviewed this interim rule under

Executive Order 12866, Regulatory

Planning and Review. OMB determined

that this interim rule is a ‘‘significant

regulatory action,’’ as defined in section

3(f) of the Order, (but not economically

significant, as provided in section 3(f)(1)

of the Order). Calculations by HUD

show that the impact of the new

exception payment standards will be

slight, an increase of four dollars per

month for the average voucher holder.

Increases in energy costs generally

translate to low percentage increases in

rent costs; for example, a 50% increase

in natural gas prices would increase

FMRs by only 1%. This is because

natural gas comprises only 27% of

utility costs and utility costs average

only 8–15% of total rent costs in

metropolitan areas. With approximately

1.5 million voucher holders, the cost

through September of 2001 (when new

30568 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Rules and Regulations

FMRs will go into effect) will be

significantly less than the threshold

provided in section 3(f)(1) of the Order.

For these reasons, HUD concludes that

the rule is not economically significant

within the meaning of the Order.

Any changes made to this interim rule

subsequent to its submission to OMB

are identified in the docket file, which

is available for public inspection in the

office of the Department’s Rules Docket

Clerk, Room 10276, 451 Seventh Street,

SW, Washington, DC 20410–0500.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates

Reform Act of 1995 (Pub. L. 104–4;

approved March 22, 1995) (UMRA)

establishes requirements for Federal

agencies to assess the effects of their

regulatory actions on State, local, and

tribal governments, and on the private

sector. This interim rule does not

impose any Federal mandates on any

State, local, or tribal governments, or on

the private sector, within the meaning of

the UMRA.

Catalog of Federal Domestic Assistance.

The Catalog of Federal Domestic

Assistance number applicable to the

program affected by this rule is 14.871.

List of Subjects in 24 CFR Part 982

Grant programs—housing and

community development, Housing,

Low- and moderate-income housing,

Rent subsidies, Reporting and

recordkeeping requirements.

For the reasons stated in the

preamble, HUD amends 24 CFR part 982

as follows:

PART 982—SECTION 8 TENANT

BASED ASSISTANCE: HOUSING

CHOICE VOUCHER PROGRAM

1. The authority citation for 24 CFR

part 982 continues to read as follows:

Authority: 42 U.S.C. 1437f and 3535(d).

2. Amend 24 CFR 982.503 as follows:

a. Revise the first sentence of

paragraph (b)(2);

b. Add a second sentence to

paragraph (c)(2)(i); and

c. Add a new paragraph (c)(2)(iii).

The additions and revisions read as

follows:

§ 982.503 Voucher tenancy: Payment

standard amount and schedule.

* * * * *

(b) * * *

(2) Except as provided in paragraph

(c)(2)(iii) of this section, the PHA must

request HUD approval to establish a

payment standard amount that is higher

or lower than the basic range. * * *

(c) * * *

(2)(i) * * * The PHA may establish

an exception payment standard amount

from above 110 percent of the published

FMR to 120 percent of the published

FMR, in accordance with paragraph

(c)(2)(iii) of this section, without

requesting approval from HUD. * * *

(iii) Until September 30, the PHA may

establish an exception payment

standard amount for all or part of an

FMR area in accordance with maximum

payment standard amounts published in

the Federal Register between September

25, 2000 and September 30, 2001

without requesting HUD approval,

under the following conditions:

(A) The payment standard amounts

referenced in paragraph (c)(2)(iii) are the

maximum payment standard amounts

until October 1, 2001 unless HUD has

approved the PHA’s establishment of a

higher payment standard amount;

(B) The PHA’s establishment of the

maximum payment standard amounts in

pragraph (c)(2)(iii)(A) of this section

does not result in a payment standard

amount that is greater than 120% of the

published FMR;

(C) The PHA has adopted a new

utility allowance schedule after October

1, 2000 which reflects that the total cost

of all utilities for a typical two-bedroom

unit has increased by more than ten

percent based on the difference between

the new utility allowance schedule and

the previous schedule; and

(D) The current payment standard

amounts are not adequate to meet

increased utility costs at 100% of the

FMR.

* * * * *

3. Amend 24 CFR 982.505 by revising

paragraph (c)(4) to read as follows:

§ 982.505 Voucher tenancy: How to

calculate housing assistance payment.

* * * * *

(c) * * *

(4) Increase in the payment standard

amount during the HAP contract term.

If the payment standard amount is

increased during the term of the HAP

contract, the increased payment

standard amount shall be used to

calculate the monthly housing

assistance payment for the family

beginning at the effective date of the

family’s first regular reexamination on

or after the effective date of the increase

in the payment standard amount, except

that, until September 30, 2001, if the

PHA increases the payment standard

amount pursuant to 24 CFR

982.503(b)(2) and (c)(2), the new

payment standard amount shall be used

to calculate the monthly housing

assistance payment for the family

beginning at the family’s first regular or

first interim reexamination on or after

the effective date of the increase in the

payment standard amount.

* * * * *

Dated: May 14, 2001.

Mel Martinez,

Secretary.

Note: The following appendix will not

appear in the Code of Federal Regulations.

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[FR Doc. 01–14275 Filed 6–5–01; 8:45 am]

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