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[Federal Register Volume 72, Number 237 (Tuesday, December 11, 2007)]
[Rules and Regulations]
[Pages 70220-70222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-6009]

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DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business--Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Parts 1924 and 1944

Rural Housing Service

7 CFR Part 3550

RIN 0575-AC65

Thermal Standards

AGENCY: Rural Housing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Housing Service (Agency) is amending its regulations 
to be consistent with other Federal agencies. The current thermal 
standards for existing single family housing can impose an unnecessary 
financial burden on the borrower and are not always cost-effective. 
Removing the thermal standards for existing single family housing will 
provide consistency with HUD. This change will not affect the thermal 
standards for new construction; such requirements are generally 
prescribed by adopted building and model energy codes. Construction 
materials and building techniques have improved tremendously during the 
last thirty years, creating many alternatives to achieve thermally 
efficient homes. Removing the Agency's imposed thermal standards for 
existing single family housing will give a borrower the opportunity to 
allocate money towards other improvements which may result in higher 
cost savings. The rule will not result in any increase in costs or 
prices to consumers; non-profit organizations; businesses; Federal, 
State, or local government agencies; or geographic regions.

DATES: Effective Date: January 10, 2008.

FOR FURTHER INFORMATION CONTACT: Michel Mitias, Technical Support 
Branch, Program Support Staff, Rural Housing Service, U.S. Department 
of Agriculture, STOP 0761, 1400 Independence Avenue, SW., Washington, 
DC 20250-0761; Telephone: 202-720-9653; FAX: 202-690-4335; E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION:

Classification

    This rule has been determined to be not significant for purposes of 
Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget (OMB).

Civil Justice Reform

    In accordance with this rule: (1) All State and local laws and 
regulations that are in conflict with this rule will be preempted, (2) 
no retroactive effect will be given to this rule, and (3) 
administrative proceedings in accordance with 7 CFR part 11 must be 
exhausted before bringing suit in court challenging action taken under 
this rule, unless those regulations specifically allow bringing suit at 
an earlier time.

Regulatory Flexibility Act

    The Administrator of the Agency has determined that this rule will 
not have a significant economic impact on a substantial number of small 
entities as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.). New provisions included in this rule will not impact a 
substantial number of small entities to a greater extent than large 
entities. Therefore, a regulatory flexibility analysis was not 
performed.

Unfunded Mandates Reform Act

    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995) for 
State, local, and tribal governments or the private sector. Thus, this 
rule is not subject to the requirements of sections 202 and 205 of the 
Unfunded Mandates Reform Act of 1995.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' The Agency has determined that 
this action does not constitute a major Federal action significantly 
affecting the quality of the human environment, and, in accordance with 
the National Environmental Policy Act of 1969, Public Law 91-190, an 
Environmental Impact Statement is not required.

Programs Affected

    The programs affected are listed in the Catalog of Federal Domestic 
Assistance under Number 10.410, Very Low to Moderate Income Housing 
Loans (Direct and Guaranteed/Insured).

Federalism

    The policies contained in this rule do not have any substantial 
direct effect on States, on the relationship between the National 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on State and local 
governments. Therefore, consultation with the States is not required.

Intergovernmental Review

    The Agency conducts intergovernmental consultation in the manner 
delineated in RD Instruction 1940-J, ``Intergovernmental Review of 
Rural Development Programs and Activities,'' and in 7 CFR part 3015, 
subpart V. The Very Low to Moderate Income Housing Loans Program, 
Number 10.410, is not subject to the provisions of Executive Order 
12372, which requires intergovernmental consultation with State and 
local officials. An intergovernmental review for this revision is not 
required or applicable.

Paperwork Reduction Act

    There are no new reporting and recordkeeping requirements 
associated with this rule.

E-Government Act Compliance

    The Agency is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes. For information 
pertinent to E-GOV compliance related to this final rule, please 
contact Michel Mitias, 202-720-9653.

Background

    The quality of construction, age, and condition of an existing 
dwelling financed through the Agency's single family housing programs 
may have a significant impact on the unit's thermal efficiency. The 
Agency should consider the thermal performance of a home as part of its 
overall condition, rather than a separate factor.
    Newer residences, or older residences currently in average or good 
condition, generally can be accepted as being representative of their 
community, and

[[Page 70221]]

are likely to have average thermal efficiency for the market in which 
they are located. These homes represent a typical residence in terms of 
overall design, construction, and appeal in the marketplace, and can be 
presumed to have reasonable, overall thermal performance.
    Aging residences, particularly those with significant deficiencies, 
or those designated as being in only fair condition or less could 
represent a higher risk to the borrower and the Agency. Homes with 
older effective ages or in fair condition may be financed in some 
circumstances with certain upgrades, but should be thoroughly and 
carefully inspected to insure the overall soundness of the collateral, 
including thermal components. These homes may require thermal and 
insulation upgrades in order to ensure reasonable (average) heating and 
cooling costs for borrowers.
    The Agency's thermal standards for existing construction, or 
similar standard, may serve as a guide for an energy efficient home; 
however we recognize that incremental improvements to existing homes to 
reach this standard may not always be cost effective. The Agency should 
look at homes to be financed based on their overall condition. When a 
home needs improvement in order to be acceptable for our financing, the 
focus should be on reducing the effective age by improving the existing 
overall condition as well as increasing energy efficiency.
    A combination of Uniform Residential Appraisal Report (URAR) 
designations for ``quality of construction'' and ``condition'', as well 
as ``age'' and ``effective age'' may be used to judge the overall 
condition of a home, and whether additional analysis needs to be 
undertaken to ensure the dwelling will be reasonably thermally 
efficient for the market in which it is located. In addition, an on-
site inspection by an Agency representative or designee may provide 
further information on the thermal performance of a home. Hence, the 
Agency has determined that it is no longer necessary to impose thermal 
standards for existing single family housing.
    This change will not be subject to Section 509(a) of the Housing 
Act of 1949 because it pertains only to existing single family housing. 
All new single family housing construction must comply with the Minimum 
Property Standards (MPS) adopted by the Department of Housing and Urban 
Development (HUD), as well as national model codes adopted by the 
applicable jurisdiction, locality, or state.

Comments on the Proposed Rule and Responses

    The Proposed Rule was published on May 16, 2007 [72 FR 27470-
27471]. The Agency received a total of 51 comments. Only one comment 
was negative. A majority of the comments addressed the additional 
burden of thermal requirements for existing construction as a hindrance 
in the loan making process. Commenters also noted that these 
requirements did not increase the efficiency of the home significantly 
with the standards that have been in place over the last 20 years. A 
majority of the comments addressed the fact that more loans will be 
able to be provided to rural America by not imposing thermal standards 
on homes with materials and systems that have improved since this 
requirement was imposed. The general consensus is that the importance 
of energy efficient housing should be of utmost importance, but should 
not be a contingency upon which a home loan approval is determined. 
This goal can be met without imposing the existing thermal standards 
and can be accomplished by homebuyer education, as well as other 
government sponsored programs supporting energy efficient methods and 
systems. The end result will allow the Agency to provide more loans to 
eligible borrowers, while streamlining this process to conform to other 
government agencies. In general, the comments were very supportive of 
the proposed rule.
    The negative comment (Comment Reference RHS-07-SFH-0012-0004) 
mainly focused on the need for energy conservation and that this rule 
would not support this goal. There are other methods of energy 
conservation for existing construction that can be more beneficial to 
the borrowers than what the Agency has required. The Agency has added 
guidance to its Handbook that provides alternative methods and 
practices to achieve an energy efficient home. This was put into effect 
as an alternative to imposed thermal requirements on potential 
borrowers seeking Agency financing for existing housing.

List of Subjects

7 CFR Part 1924

    Agriculture, Construction management, Construction and repair, 
Energy conservation, Housing, Loan programs--Agriculture, Low and 
moderate income housing.

7 CFR Part 1944

    Grant programs--Housing and community development, Home 
improvement, Rural housing, Nonprofit organizations, Loan programs--
Housing and community development.

7 CFR Part 3550

    Accounting, Grant programs--Housing and community development, 
Housing, Loan programs--Housing and community development, Low and 
moderate income housing, Manufactured homes, Reporting and 
recordkeeping requirements, Rural areas, Subsidies.

0
Accordingly, chapters XVIII and XXXV, title 7, of the Code of Federal 
Regulations are amended to read as follows:

PART 1924--CONSTRUCTION AND REPAIR

0
1. The authority citation for part 1924 continues to read as follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

Subpart A--Planning and Performing Construction and Other 
Development

0
2. Exhibit D of subpart A is amended by:
0
A. Removing the last sentence in paragraph II;
0
B. Removing and reserving paragraph IV B;
0
C. Revising the words ``paragraphs IV A and IV B'' in paragraph IV C 1 
to read ``paragraph IV A'';
0
D. Revising the words ``paragraphs IV A and B'' in paragraph IV C 2 to 
read ``paragraph IV A'';
0
E. Revising the words ``paragraphs IV A or B'' in the first and last 
sentences of paragraph IV C 2b, and in paragraphs IV C 3 introductory 
text, IV C 3a and IV C 3b to read ``paragraph IV A''; and
0
F. Removing the words ``or B'' in paragraphs IV C introductory text and 
IV C 3c.

PART 1944--HOUSING

0
3. The authority citation for part 1944 continues to read as follows:

    Authority: 5 U.S.C. 301; 42 U.S.C. 1480.

Subpart N--Housing Preservation Grants

Sec.  1944.656  [Amended]

0
4. Section 1944.656 is amended by:
0
A. Revising the second sentence in the definition for ``Housing 
preservation'' to read ``As a result of these activities, the overall 
condition of the unit or dwelling must be raised to meet Thermal 
Standards for existing structures adopted by the locality/jurisdiction 
and applicable development standards for existing housing recognized by 
RHS in subpart A of part 1924 or standards

[[Page 70222]]

contained in any of the voluntary national model codes acceptable upon 
review by RHS.''
0
B. Revising the third sentence in the definition for ``Replacement 
housing'' to read ``The overall condition of the unit or dwelling must 
meet Thermal Standards adopted by the locality/jurisdiction for new or 
existing structures and applicable development standards for new or 
existing housing recognized by RHS in subpart A of part 1924 or 
standards contained in any of the voluntary national model codes 
acceptable upon review by RHS.''

PART 3550--DIRECT SINGLE FAMLY HOUSING LOANS AND GRANTS

0
5. The authority citation for part 3550 continues to read as follows:

    Authority: 5 U.S.C. 301; 42 U.S.C. 1480.

Subpart B--Section 502 Origination

Sec.  3550.57  [Amended]

0
6. Section 3550.57(c) is amended by adding the word ``and'' after the 
word ``systems;'' and by removing ``and meet the thermal performance 
requirements for existing dwellings of 7 CFR part 1924, subpart A''.

Subpart C--Section 504 Origination and Section 306C Water and Waste 
Disposal Grants

Sec.  3550.106  [Amended]

0
7. Section 3550.106(b) is amended by removing the words ``or thermal 
performance standards''.

    Dated: November 28, 2007.
Russell T. Davis,
Administrator, Rural Housing Service.
[FR Doc. 07-6009 Filed 12-10-07; 8:45 am]
BILLING CODE 3410-XV-P
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