Proposed Rules. Advance notice of proposed rulemaking (ANPRM)

Agency: Office of the Secretary (OST), Department of Transportation (DOT)
Action: Advance notice of proposed rulemaking (ANPRM)
Citation: FR Doc. 07-3357 · RIN 2105-AD63 · OST Docket No. OST-01-9325 · 14 CFR 250

Summary

The Department of Transportation (DOT or Department) is seeking comment on whether it should amend its rules relating to oversales and denied boarding compensation to cover flights operated with aircraft seating 30 through 60 passengers, which are currently exempt from the rule, to increase the maximum required compensation, and to make other changes. Such changes in the rule, if undertaken, would be intended to maintain consumer protection commensurate with developments in the aviation industry.

Dates

Comments are requested by September 10, 2007. Late-filed comments will be considered to the extent practicable.

Supplementary Information

Background Part 250 establishes minimum standards for the treatment of airline passengers holding confirmed reservations who are involuntarily denied boarding (“bumped”) from their flight because it has been oversold. In most cases, bumped passengers are entitled to compensation. Part 250 contains limits on the amount of compensation that is required to be provided to passengers who are bumped involuntarily. The rule does not apply to flights operated with aircraft with a design capacity of 60 or fewer passenger seats. In adopting the current rules, the Civil Aeronautics Board (the Department's predecessor in aviation economic regulation) recognized the inherent unfairness in carriers selling “confirmed” ticketed reservations for a flight yet selling more of those reservations for the flight than they have seats. Therefore, the CAB sought to reduce the number of passengers involuntarily denied boarding to the smallest practicable number without prohibiting deliberate overbooking or interfering unnecessarily with the carriers' reservations practices. Air travelers receive some benefit from controlled overbooking because it allows flexibility in making and canceling reservations as well as buying and refunding tickets. Overbooking makes possible a system of confirmed reservations that can almost always be honored. It allows airlines to fill more seats, reducing the pressure for higher fares, and makes it easier for people to obtain reservations on the flights of their choice. On the other hand, overbooking is the major cause of oversales, and the people who are inconvenienced are not those who do not show up for their flights, but passengers who have conformed to all carrier rules. The current rule allocates the risk of being denied boarding among travelers by requiring airlines to solicit volunteers and use a boarding priority procedure that is not unjustly discriminatory. In 1981, the CAB amended the oversales rule to exclude from the rule all operations using aircraft with 60 or fewer passenger seats. (ER-1237, 46 FR 42442, August 21, 1981.) At the time of that proceeding, the impact of the rule on carriers operating small aircraft was found to be significant. If a passenger was denied boarding on a typical small aircraft short-haul flight and subsequently missed a connection to a long-haul flight, the short-haul carrier usually had to compensate the passenger in an amount equal to twice the value of the passenger's remaining ticket coupons to his or her destination, subject to a maximum limitation. For example, if the short-haul fare was $50 and the connecting long-haul fare was $500, the first carrier often had to pay the passenger denied boarding compensation in an amount far greater than $50, depending on whether alternate transportation could be arranged to arrive within a short time, despite the minimal fare that the first carrier received for its flight. The problem was exacerbated by the fact that most commuter airline flights at the time were on small turboprop and piston engine aircraft which were affected by weight limitations in high temperature/humidity conditions to a greater extent than jets and, therefore, might require bumping even when the carrier did not book beyond the seating capacity of the aircraft. Part 250 has tended to reduce passenger inconvenience and financial loss occasioned by overbooking without imposing heavy burdens on the airlines or significant costs on the traveling public. In focusing only on the treatment of passengers whose boarding is involuntarily denied, we have avoided regulating carriers' reservations practices. Overall, it appears that the rule has served a useful purpose; however, in light of recommendations from various sources, including Congress and major airlines themselves, we are seeking comment on whether certain aspects of the rule may be outdated and should be revised. In view of the passage of time since the rule was last revised and changes in commercial air travel over that time, we are in this advanced notice of proposed rulemaking seeking comment on whether we should increase the compensation maximums and extend the rule to cover a larger range of aircraft. The Department is also seeking comment on certain other changes of lesser impact that are under consideration. The Current Denied Boarding Compensation Rule The purpose of the Department's denied boarding compensation rule is to balance the rights of passengers holding reservations with the desirability of allowing air carriers to minimize the adverse economic effects of “no-shows” (passengers with reservations who cancel or change their flights at the last minute). The rule sets up a two-part system. The first encourages passengers to voluntarily relinquish their confirmed reservations in exchange for compensation agreed to between the passenger and the airline. The second requires that, where there is an insufficient number of volunteers, passengers who are bumped involuntarily be given compensation in an amount specified in the rule. In addition, the Department requires carriers to give passengers notice of those procedures through signs, and written notices provided with tickets and at airports, and to report the number of passengers denied boarding to the Department on a quarterly basis. The Civil Aeronautics Board (CAB) first required payments to bumped passengers 45 years ago. In Order No. E-17914, dated January 8, 1962, the CAB conditioned its approval of “no-show penalties” for confirmed passengers on a requirement that bumped passengers be compensated. An oversales rule was adopted in 1967 as 14 CFR Part 250 (ER-503, 32 FR 11939, August 18, 1967) and revised substantially in 1978 and 1982 after comprehensive rulemaking proceedings (ER-1050, 43 FR 24277, June 5, 1978 and ER-1306, 47 FR 52980, November 24, 1982, respectively). The key features of the current requirements are as follows: (1) In the event of an oversold flight, the airline must first seek volunteers who are willing to relinquish their seats in return for compensation offered by the airline. (2) If there are not enough volunteers, the airline must use non-discriminatory procedures (boarding priorities') in deciding who is to be bumped involuntarily. (3) Most passengers who are involuntarily bumped are eligible for denied boarding compensation, with the amount depending on the price of each passenger's ticket and the length of his or her delay. If the airline can arrange alternate transportation that is scheduled to arrive at the passenger's destination within 2 hours of the planned arrival time of the oversold flight (4 hours on international flights), the compensation equals 100% of the passenger's one-way fare to his or her next stopover or final destination, with a $200 maximum. If the airline cannot meet the 2 (or 4) hour deadline, the compensation rate doubles to 200% of the passenger's one-way fare, with a $400 maximum. This compensation is in addition to the value of the passenger's ticket, which the passenger can use for alternate transportation or have refunded if not used. (4) There are several exceptions to the compensation requirement. Compensation is not required if the passenger does not comply fully with the carrier's contract of carriage or tariff provisions regarding ticketing, reconfirmation, check-in, and acceptability for transportation; if an aircraft of lesser capacity has been substituted for operational or safety reasons; if the passenger is offered accommodations in a section of the aircraft other than that specified on the ticket, at no extra charge (a passenger seated in a section for which a lower fare is charged is entitled to an appropriate refund); or if the carrier arranges comparable transportation, at no extra cost to the passenger, that is planned to arrive at the passenger's next stopover or final destination not later than 1 hour after the planned arrival time of the passenger's original flight. (5) A passenger who is denied boarding involuntarily may refuse to accept the denied boarding compensation specified in the rule and seek monetary or other compensation through negotiations with the carrier or by private legal action. (6) Carriers must post counter signs and include notices with tickets to alert travelers of their overbooking practices and the consumer protections of the rule. In addition, they must provide a detailed written notice explaining their oversales practices and boarding priority rules to each passenger involuntarily denied boarding, and to any other person requesting a copy. (7) Every carrier must report, on a quarterly basis, data on the number of denied boardings on flights that are subject to Part 250. Issues The Maximum Amount of Denied Boarding Compensation It has been over 20 years since the rule was last revised, and the existing $200 and $400 limits on the amount of required denied boarding compensation for passengers involuntarily denied boarding have not been raised since 1978. The Department has received recommendations from various sources that it reexamine its oversales rule and, in particular, the maximum amounts of compensation set forth in the rule. In this regard, in a sense-of-the-Senate amendment to the Department of Transportation and Related Agencies Appropriations Act of 2000, Public Law 106-69, the Senate noted its sense that the Department should amend its denied boarding rule to double the applicable compensation amounts. Congress has also proposed legislation to require the Department to review the rule's maximum amounts of compensation. (See S.319, reported in the Senate April 26, 2001.) In addition, in his February 12, 2000, Final Report on Airline Customer Service Commitments, the Department's Inspector General (IG) recommended, among other things, that the airlines petition the Department to increase the amount of denied boarding compensation payable to involuntarily bumped passengers. In response thereto, and citing the length of time since the maximum amounts of denied boarding compensation were last revised, the Air Transport Association (the trade association of the larger U.S. airlines) filed a petition with the Department on April 3, 2001, requesting that a rulemaking be instituted to examine those amounts. 1 (Docket OST-01-9325). Most recently, the IG on November 20, 2006, issued his “Report on the Follow-up Review Performed of U.S. Airlines in Implementing Selected Provisions of the Airline Customer Service Commitment” in which the IG recommended that we determine whether the maximum DBC amount needs to be increased and whether the oversale rule needs to be extended to cover aircraft with 31 through 60 seats. 1 It is important to note that the maximum involuntary denied boarding amounts set forth in Part 250 are amounts below which carriers cannot set their maximum compensation. Airlines have been and continue to be free, as a competitive tool, to set their maximum compensation levels at amounts greater than that provided in the Department's rule. We are not aware of any carrier that has elected to do so. The CAB's decision in 1978 to double the maximum amount of denied boarding compensation to $400 was based on its determination that the previous maximum was inadequate to redress the inconvenience to bumped passengers and that the increase would provide a greater incentive to carriers to reduce the number of persons involuntarily bumped from their flights. Following promulgation of the rule in 1978 requiring the solicitation of volunteers and doubling the compensation maximum, the overall industry rate of involuntary denied boardings per 10,000 enplanements in fact declined for many years. Until the most recently published report, the rate was slightly below the level of involuntary bumping reported 10 years ago. In this regard, 55,828 passengers were involuntarily bumped from their flights in 2006 on the 18 largest U.S. airlines (carriers whose denied boarding rate is tracked in the Department's monthly Air Travel Consumer Report 2 ). Additional passengers were bumped by other airlines, whose denied boarding rate is not tracked in this report but whose bumped passengers are subject to the maximum compensation rates in the DOT rule. The annual rate of involuntary denied boardings per 10,000 enplanements in 2006 for the carriers tracked in the report is the highest since 2000, and that trend continues in the rate for the first quarter of 2007. Involuntary denied boarding rates from the Air Travel Consumer Report for the past ten years appear below: 2 This report tracks the denied boarding rate of air carriers that each account for at least 1% of domestic scheduled-service passenger revenues for the previous year. Consequently, the list of carriers whose performance is tracked in this report can change from year to year. Year Invol. DB's per 10,000 passengers 1997 1.06 1998 0.87 1999 0.88 2000 1.04 2001 0.82 2002 0.72 2003 0.86 2004 0.86 2005 0.89 2006 1.01 1st qtr. 2007 1.45 Likely contributing to this upward trend is the fact that flights are fuller: from 1978 to 2006 the system-wide load factor (percentage of seats filled) for U.S. airlines increased from 61.5% to 79.2%, with most of this increase taking place since 1994. With respect to the denied boarding compensation limits, inflation has eroded the $200 and $400 limits that were established in 1978. Using the Consumer Price Index for All Urban Consumers (CPI-U, the basis for the inflation adjustor in the Department's domestic baggage liability rule, 14 CFR 254.6), $400 in 1978 is worth $128 as of February 2007. (See the Bureau of Labor Statistics Inflation Calculator at *http://www.bls.gov/cpi/home.htm* .) Stated another way, in order to have the same purchasing power today as in 1978, the $400 limit would need to be $1,248 in February 2007. At the same time, however, air fares have not risen to the same extent as the CPI-U. While historical comparisons of air fares are problematic, one frequently-used index for changes in air fares is passenger yield. Yield is passenger revenue divided by revenue passenger miles—the revenue collected by airlines for carrying one passenger for one mile. According to the Air Transport Association, system-wide nominal yield ( *i.e.* , not adjusted for inflation) for all reporting U.S. air carriers was 8.29 cents per revenue passenger mile in 1978 and 12.00 cents per revenue passenger mile in 2005 (latest available data at this writing)—an increase of 44.8%. Applying the CPI-U calculation to the current $200 and $400 DBC limits that were established in 1978 would produce updated limits of $624 and $1,248 respectively. However, applying the 44.8% increase in passenger yield to the current $200 and $400 limits would produce updated limits of $290 and $580 respectively. The $200 and $400 figures in Part 250 are merely limits on the amount of denied boarding compensation; the actual compensation rate is 100% or 200% of the passenger's fare (depending on how long he or she was delayed by the bumping). The Department requests comment on whether the maximums in the rule should be increased so that that a higher percentage of denied boarding compensation payments are not affected. Consequently, we are seeking comment on five options with respect to the limits on the amount of denied boarding compensation, as well as any other suggested changes: (1) Increase the $200/$400 limits to approximately $624 and $1,248 respectively, based on the increase in the CPI as described above; (2) Increase the $200/$400 limits to approximately $290 and $580 respectively, based on the increase in passenger yield as described above; (3) Double the maximum amounts of denied boarding compensation from $200 to $400 and from $400 to $800; (4) Eliminate the limits on compensation altogether, while retaining the 100% and 200% calculations; (5) Take no action, *i.e.* leave the current $200/$400 limits in place. We also seek comment on whether we should amend the rule to include a provision for periodic adjustments to the denied boarding compensation maximums, as is required by our baggage liability rule (14 CFR Part 254). As in the case of the baggage rule, the Department could review the CPI-U every two years, and adjust the maximum amounts accordingly. The new maximum DBC amounts could be rounded to the nearest $50, for simplicity. Any increase would be announced by publishing a notice in the **Federal Register** . (Since this would be merely a mathematical computation, the Department would not need to first publish a proposed rule to effectuate an increase.) The new maximum compensation amounts and revised notice requirements under the rule would be effective a specified amount of time after publication in the **Federal Register** ( *e.g.* , perhaps 90 days). We request comment on this approach. It is important to note that none of these proposals would necessarily require carriers to offer more compensation to the great majority of passengers affected by overbooking because most such situations are handled through voluntary compensation, typically at the departure gate. Nor would they affect the significant proportion of involuntarily bumped passengers—possibly the majority—with fares low enough that the formula for involuntary denied boarding compensation would not reach the proposed new limits. Finally, even with respect to involuntarily bumped passengers whose denied boarding compensation might increase with higher maximums, many such passengers accept a voucher for future travel on that airline (usually in a face amount greater than the legally required denied boarding compensation) in lieu of a check. Carriers make such offers because vouchers do not have the same value as cash compensation given high rates of non-use and inventory-management restrictions. As indicated earlier, in 2006 over 55,000 passengers were denied boarding involuntarily by the 18 carriers that are tracked in the Department's Air Travel Consumer Report ( *i.e.* , the 18 largest U.S. air carriers). We assume that an increase in the regulatory maximums would result in an increase in amounts paid to such passengers but request comment on the likely financial impact, including both the direct impact (increased cash compensation), and the indirect impact resulting from either lower overbooking rates or higher voluntary compensation levels. The Small-Aircraft Exclusion The Oversales rule originally issued by the CAB did not contain an exclusion for small aircraft. In 1981 that agency amended Part 250 to exclude operations with aircraft seating 60 or fewer passengers The CAB determined that without this exclusion the denied boarding rule imposed a proportionately greater financial and operational burden on these small-aircraft operators than on carriers operating larger aircraft. In addition, because of the lower revenues generated by these small aircraft, the financial burden of denied boarding compensation placed certificated carriers operating aircraft with 60 or fewer seats at a competitive disadvantage relative to commuter carriers (non-certificated) operating similar equipment and on similar routes which were not subject to Part 250. The number of flights that was excluded by the amendment was small and most such flights were operated by small carriers that operated small aircraft exclusively. Part 250 currently applies to certificated U.S. carriers and foreign carriers holding a permit, or exemption authority, issued by the Department, only with respect to operations performed with aircraft seating more than 60 passengers. While largely exempt from the denied boarding rule, the regional airline industry has experienced tremendous growth. According to the Regional Airline Association, 3 passenger enplanements on regional carriers have increased more than 100% since 1995, and regional airlines now carry one out of every five domestic air travelers in the United States. RAA states that Revenue Passenger Miles on regional carriers have increased forty fold since 1978 and increased 17 percent from 2004 to 2005 alone. Regional jets have fueled much of the recent growth. According to RAA, from 1989 to 2004 the number of turbofan aircraft (regional jets) in the regional-airline fleet increased from 54 to 1,628 and regional jets now make up 59% of the regional-carrier fleet. Although many regional jets have more than 60 passenger seats and thus are subject to Part 250, the ubiquitous 50-seat regional jet models have driven much of the growth of the regional-carrier sector. Moreover, most regional jets are operated by regional carriers affiliated with a major carrier via a code-share agreement and/or an equity stake in the regional carrier. RAA asserts that 99% of regional airline passengers traveled on code-sharing regional airlines in 2005. 3 See *http://www.raa.org* . DOT statistics demonstrate the growth in traffic on flights operated by aircraft with 31 through 60 seats. From the 4th quarter of 2002 (earliest available consistent data) to the 4th quarter of 2005, the number of U.S.-carrier flights using such aircraft increased by 22% while the number of flights using aircraft seating more than 60 passengers declined by 0.8%. During the same period, the number of passengers carried on flights using aircraft with 31 through 60 seats increased by 40.8% while the number of passengers carried on flights using aircraft seating more than 60 passengers increased by only 8.3%. 4 4 DOT Form 41, schedule T-100. The increased use of jet aircraft in the 30-to-60 seat sector accompanied by the increase in the “branding” of those operations with the codes and livery of major carriers has blurred the distinction between small-aircraft and large-aircraft service in the minds of many passengers. There would seem to be little, if any, difference to a consumer bumped from a small aircraft or a large aircraft—the effect is the same. The Department therefore is seeking comment on whether we should extend the consumer protections of Part 250 to these flights (including flights of non-certificated commuter air carriers) and thus scale back the small-aircraft exception that was added to the rule in 1981. Specifically, the Department seeks comment on whether it should reduce the seating-capacity exception for small aircraft from “60 seats or less” to “less than 30 seats” and add commuter carriers to the list of carriers to which Part 250 applies. Since the Department is aware that many regional carriers already voluntarily provide DBC to passengers bumped from their 30-to-60-seat aircraft, commenters are specifically asked to include in their presentations data regarding oversales and denied boarding compensation in operations with aircraft having 30 through 60 seats by both certificated and non-certificated carriers, to the extent it is available. Application of the Denied Boarding Compensation Rule Boarding priority rules determine the order in which various categories of passengers will be involuntarily bumped when a flight is oversold. Part 250 states that boarding priority rules must not provide any undue or unreasonable preference. The IG in his 2000 report identified possible ambiguities in the Department's requirements regarding boarding priority rules, and he recommended that we provide examples of what we consider to be an undue or unreasonable preference. The IG was also concerned that the amounts of compensation provided passengers who are involuntarily bumped was in some cases less than the face value of vouchers given to passengers who volunteer to give up their seats. He therefore recommended, in addition to raising the maximum compensation amounts for involuntarily bumped passengers, as discussed above, that we require carriers to disclose orally to passengers, at the time the airline makes an offer to volunteers, what the airline is obligated to pay passengers who are involuntarily bumped. Boarding Priorities Our boarding priority requirement was designed to give carriers the maximum flexibility to set their own procedures at the gate, while affording consumers protection against unfair and unreasonable practices. Thus, the rule (1) Requires that airlines establish their own boarding priority rules and criteria for oversale situations consistent with Part 250's requirement to minimize involuntary bumpings and (2) states that those boarding priority rules and criteria “shall not make, give, or cause any undue or unreasonable preference or advantage to any particular person or subject any particular person to any unjust or unreasonable prejudice or disadvantage in any respect whatsoever.” (14 CFR 250.3(a)). Although we are not aware of any problems resulting from this rule as written, we agree that guidance regarding this provision would be useful to the industry and public alike. Accordingly we seek comment on whether the Department should list in the rule, as examples of permissible boarding priority criteria, the following: • A passenger's time of check in (first-come, first-served); • Whether a passenger has a seat assignment before reaching the departure gate for carriers that assign seats; • A passenger's fare; • A passenger's frequent flyer status; and • Special priorities for passengers with disabilities, within the meaning of 14 CFR Part 382, or for unaccompanied minors. We wish to make clear that the five examples proposed here are illustrative only, and not exclusive. We do not intend by these examples, if incorporated into Part 250, to foreclose the use by carriers of other boarding priorities that do not give a passenger undue preference or unjustly prejudice any passenger. Notice to Volunteers Accurately notifying passengers of their rights in an oversale situation is important, so that they can make an informed decision. Part 250 already contains requirements designed to accomplish that objective and to protect passengers from being involuntarily bumped if they have not been accorded adequate notice. Section 250.2b(b) prohibits a carrier from denying boarding involuntarily to any passenger who was earlier asked to volunteer without having been informed about the danger of being denied boarding involuntarily and the amount of compensation that would apply if that occurred. While this provision would appear to provide adequate incentive for airlines to provide complete notice to passengers who are asked to volunteer, and to protect those passengers not provided such notice, we see some merit in making this notice requirement more direct. Accordingly, we seek comment on whether we should amend section 250.2b to affirmatively require that, no later than the time a carrier asks a passenger to volunteer, it inform that person whether he or she is in danger of being involuntarily bumped and, if so, the compensation the carrier is obligated to pay. Reporting Section 250.10 of the current rule requires all carriers that are subject to Part 250 to file a quarterly report (Form 251) on oversale activity. Due to staffing limitations, for many years the only carriers whose oversale data have been routinely reviewed, entered into an automated system, or published by the Department are the airlines that are subject to the on-time performance reporting requirement. Those are the U.S. carriers that each account for at least 1 percent of total domestic scheduled-service passenger revenues—currently 18 airlines (see 14 CFR 234). The Department's monthly Air Travel Consumer Report provides data for these airlines in four areas: on-time performance, baggage mishandling, oversales, and consumer complaints. The oversale data for that report are derived from the Form 251 reports mandated by Part 250. The data in the Form 251 reports filed by the other carriers is not keypunched, summarized, published, or routinely reviewed. The Department seeks comment on whether it should revise section 250.10 to relieve all carriers of this reporting requirement except for the airlines whose data is being used, *i.e.* , U.S. carriers that are required to report on-time performance under Part 234. Those airlines account for the vast majority of domestic traffic and bumpings, so the Department will still receive adequate information and the public will continue to have access to published data for the same category of carriers as before. Such action would be consistent with the Paperwork Reduction Act and the Regulatory Flexibility Act. It would also result in consistent carrier reporting requirements for all four sections of the Air Travel Consumer Report. Regulatory Notices A. Executive Order 12866 (Regulatory Planning and Review) and DOT Regulatory Policies and Procedures This action has been determined to be significant under Executive Order 12866 and the Department of Transportation Regulatory Policies and Procedures. It has been reviewed by the Office of Management and Budget under that Order. A preliminary discussion of possible costs and benefits of the proposed rule is presented above. B. Executive Order 13132 (Federalism) This Advance Notice of Proposed Rulemaking has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”). This notice does not propose any regulation that: (1) Has substantial direct effects on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government; (2) imposes substantial direct compliance costs on State and local governments; or (3) preempts state law. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply. C. Executive Order 13084 This notice has been analyzed in accordance with the principles and criteria contained in Executive Order 13084 (“Consultation and Coordination with Indian Tribal Governments”). Because none of the options on which we are seeking comment would significantly or uniquely affect the communities of the Indian tribal governments and would not impose substantial direct compliance costs, the funding and consultation requirements of Executive Order 13084 do not apply. D. Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ) requires an agency to review regulations to assess their impact on small entities unless the agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities. Certain options on which we are seeking comment may impose new requirements on certain small air carriers, but few of them are small businesses as defined by the Small Business Administration and the Department believes that the economic impact would not be significant. All air carriers have control over the extent to which the rule impacts them since they control their own overbooking rates. Carriers can mitigate the cost of denied boarding compensation by obtaining volunteers who are willing to give up their seat for less compensation than what the rule mandates for passengers who are bumped involuntarily, and by offering travel vouchers in lieu of cash compensation. The vast majority of the traffic that would be covered by the oversales rule for the first time as a result of the options on which we seek comment is carried by airlines that are owned by or affiliated with a major carrier or its parent company. As noted below, one of the options on which we are seeking comment relieves an existing reporting requirement for all but the largest carriers. The monetary costs of most of these options result in a corresponding dollar-for-dollar monetary benefit for members of the public who are bumped from their confirmed flights and for small businesses that employ some of them. The options provide an economic incentive for carriers to use more efficient overbooking rates that result in fewer bumpings while still allowing the carriers to fill seats that would go unsold as the result of “no-show” passengers. Therefore, the options on which we are seeking comment are not expected to have a significant economic impact on a substantial number of small entities. E. Paperwork Reduction Act The options on which we are seeking comment impose no new information reporting or record keeping necessitating clearance by the Office of Management and Budget. They relieve a reporting requirement for many carriers that are currently subject to that requirement. One required handout that airlines distribute to bumped passengers would require minor revisions. F. Unfunded Mandates Reform Act The Department has determined that the requirements of Title II of the Unfunded Mandates Reform Act of 1995 do not apply to this notice. Issued this 3rd day of July, 2007, at Washington, DC. Andrew B. Steinberg, Assistant Secretary for Aviation and International Affairs. [FR Doc. E7-13365 Filed 7-9-07; 8:45 am] BILLING CODE 4910-9X-P SOCIAL SECURITY ADMINISTRATION 20 CFR Parts 404, 405 and 416 [Docket No. SSA 2007-0032] RIN 0960-AG47 Amendments to the Quick Disability Determination Process AGENCY: Social Security Administration. ACTION: Notice of proposed rulemaking. SUMMARY: We propose to amend our regulations to extend the quick disability determination process (QDD), which is operating now in the Boston region, to all of the State disability determination services. We also propose to remove from the QDD process the existing requirements that each State disability determination service maintain a separate QDD unit and that each case referred under QDD be adjudicated within 20 days. These proposed actions stem from our continuing effort to improve our disability adjudication process. DATES: To be sure that we consider your comments, we must receive them no later than August 9, 2007. ADDRESSES: You may give us your comments by: Internet through the Federal eRulemaking Portal at *http://www.regulations.gov* ; e-mail to *regulations@ssa.gov* ; telefax to (410) 966-2830; or letter to the Commissioner of Social Security, P.O. Box 17703, Baltimore, MD 21235-7703. You may also deliver them to the Office of Regulations, Social Security Administration, 107 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, between 8 a.m. and 4:30 p.m. on regular business days. Comments are posted on the Federal eRulemaking Portal, or you may inspect them on regular business days by making arrangements with the contact person shown in this preamble. FOR FURTHER INFORMATION CONTACT: Vince Sabatino, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235-6401, (410) 966-8331 for information about this notice. For information on eligibility or filing for benefits, call our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit our Internet site, Social Security Online, at *http://www.socialsecurity.gov* . SUPPLEMENTARY INFORMATION: Electronic Version The electronic file of this document is available on the date of publication in the **Federal Register** at *http://www.gpoaccess.gov/fr/index.html.* Quick Disability Determinations We are dedicated to providing high-quality service to the American public. When we announced changes in March 2006 to our administrative review process for initial disability claims, we explained that we expected that the changes would improve disability service. Our commitment to continuous improvement in the way we process disability claims did not end with the publication of those rules as we continually explore ways to improve service to some of the most vulnerable in our society. We nevertheless face significant challenges now and in the foreseeable future in our ability to provide the level of service that disability benefit claimants deserve because of the increased complexity of and growth in claims for those benefits. Consequently, we are proposing modifications to our administrative review process that will further help us provide accurate and timely service to claimants for Social Security disability benefits and supplemental security income payments based on disability or blindness. In early spring 2006, we published a final rule in which we laid out changes to the administrative review process for initial disability claims. We expected that the changes would “improve the accuracy, consistency, and timeliness of decision-making throughout the disability determination process.” 71 FR 16424 (March 31, 2006). We planned a gradual roll-out of the changes so that we could test them and their effect on the disability process overall. As we explained then, “Gradual implementation will allow us to monitor the effects that our changes are having on the entire disability determination process * * *. We will carefully monitor the implementation process in the Boston region and quickly address any problems that may arise.” 71 FR at 16440-41. Having thoroughly reviewed the initial determination level of that process, we have concluded that we need to modify some of the changes made last spring. The changes in the March 2006 final rule included establishing, in the Boston region, an initial-determination-level process to identify and accelerate the adjudication of the claims of persons who have a “high degree of probability” of being disabled, where there was an expectation that the claimant's “allegations will be easily and quickly verified * * * .” 20 CFR 405.101-.110 (2006). We refer to this as the Quick Disability Determination (QDD) process. Under QDD, a predictive model analyzes specific elements of data within the electronic claims file to identify claims where there is a high potential that the claimant is disabled and where evidence of the claimant's allegations can be quickly and easily obtained. Those claims are then sent to a separate QDD unit in the State agency, where experienced disability examiners review the claims on an expedited basis. The QDD process in essence is a workload triaging tool that helps identify, in an automated fashion, claims where the disability should be easy to verify. This process has been working quite well. Because our experience with QDD has been very favorable, has proven to be of significant benefit to those claimants who have been affected by it, has been well-received by the State agencies in the Boston region, and has shown that there are no significant administrative costs associated with it, we propose to accelerate our implementation of the QDD process and extend QDD to all States. Nevertheless, in order to improve the efficiencies that we have seen by using the QDD process, we propose to modify those aspects of the QDD process that have served as a barrier to the type of outstanding public service that we strive to provide. These proposed modifications would give State agencies greater flexibility in managing their QDD workloads. Specifically, we propose to eliminate the requirement that QDD claims be adjudicated within 20 days of receipt in the State agency and remove the performance standard and sanction provisions related to that 20-day adjudication requirement. We also propose to eliminate the requirement that separate QDD units be established within the State agencies. The QDD rules published in 2006 required the State agency to adjudicate any claim referred to it under QDD within 20 days of the date the claim was received in the QDD unit; any QDD claim not decided within this time frame had to be returned by the QDD unit for regular processing in the State agency. We propose to eliminate this 20-day requirement for three reasons. First, the early information concerning processing times for QDD claims is quite promising. The average QDD processing time for the Boston region State agencies has been approximately 12 days. For a large majority of the cases, they have processed claims selected for QDD in 9 days or less, and only a small minority of the claims exceeded the 20-day threshold. Given this experience, we are confident that the State agencies will continue to process the vast majority of QDD claims within 20 days. Eliminating the 20-day requirement will give the State agencies more flexibility in managing this workload. Second, even where the processing time goes beyond 20 days, we believe disability claimants would be better served and the State agencies' resources would be better utilized by allowing the QDD examiner to complete the work on the claim, rather than requiring the examiner to return the claim for regular processing in the State agency. Third, we are concerned that the need to obtain evidence within the 20-day period may unduly burden the medical and other providers who submit that evidence to us, and we have reports of some resistance from health care providers stemming from efforts to satisfy the 20-day deadline. In turn, delays in obtaining the evidence might cause an increasing number of otherwise suitable claims to be removed from the QDD process because of the 20-day rule. Though we are proposing to eliminate the 20-day adjudication requirement to give State agencies greater flexibility, we still believe that State agencies should strive to adjudicate any claim referred under QDD within 20 days. We would continue to monitor the performance of State agencies with these claims and would consider broadly or selectively reinstituting a formal time deadline if warranted. Our second proposed change to the QDD rules would remove the requirement that State agencies create separate QDD units to handle the QDD claims we refer. Our intent when we created that requirement was to ensure that QDD claims were processed by individuals with the knowledge, training, and experience to effectively carry out the QDD function and to ensure that they could be held accountable for performing this important task. 71 FR at 16429. At the same time, we recognized the State agencies' need for flexibility in handling their workloads. 71 FR at 16429. Now that we have some experience with the QDD process, we believe the requirement of a separate QDD unit in each DDS is not necessary. Particularly in smaller States, we believe the requirement of a separate QDD unit may unnecessarily restrict the flexibility the State agency needs to best address its workloads. Therefore, we propose to eliminate the requirement that State agencies create a separate QDD unit. We would retain the existing requirement that all QDD claims be handled by designated disability examiners who have the knowledge, training, and experience to effectively carry out the QDD process. We believe this is sufficient to afford QDD cases the proper level of attention and accountability. In light of these considerations, we propose to amend our regulations to require all State agencies that perform disability determinations for us to handle claims we refer to them under QDD and to remove from the QDD rules the 20-day performance standard and the separate unit requirements discussed above. In addition, because we are proposing to accelerate our nationwide roll-out of the QDD process independent of the other changes in the March 2006 final rules, we would move the substantive QDD rules from part 405 of our regulations to part 404, subpart Q, and part 416, subpart J, which contain the provisions covering the State agency determination process. We recognize that State agencies newly affected by this proposed roll-out of the QDD process will need a reasonable time to establish QDD procedures. Therefore, if these rules are adopted as final regulations, we plan to allow the State agencies outside of the Boston region a reasonable period of time within which to implement the QDD process. We would welcome comments from affected State agencies as to the amount of lead time they believe they would need to implement the revised QDD process we now propose. Notices of Initial Determinations In this rule we also propose to revise the provisions in parts 404, 405 and 416 of our regulations that describe the contents of the notices we send to inform claimants of our initial determinations on our claims. The current regulatory provisions, while not substantively inconsistent with one another, are phrased differently. In order to avoid any unintended suggestion that we apply different standards when drafting the notices to which these various sections apply, we propose to revise the language to be consistent in all three sections. We wish to emphasize that we are not in any way proposing to change the substance of what must be in our notices of initial determination, but rather are simply adopting more uniform language based on the statutory requirements in sections 205(b)(1), 205(s) and 1631(c)(1)(A) of the Social Security Act (Act). Clarity of These Rules Executive Order 12866, as amended, requires each agency to write all rules in plain language. In addition to your substantive comments on these proposed rules, we invite your comments on how to make them easier to understand. For example: • Have we organized the material to suit your needs? • Are the requirements in the rules clearly stated? • Do the rules contain technical language or jargon that isn't clear? • Would a different format (grouping and order of sections, use of headings, paragraphing) make the rules easier to understand? • Would more (but shorter) sections be better? • Could we improve clarity by adding tables, lists, or diagrams? • What else could we do to make the rules easier to understand? Regulatory Procedures Executive Order 12866, as Amended We have consulted with the Office of Management and Budget (OMB) and determined that this proposed rule meets the criteria for a significant regulatory action under Executive Order 12866, as amended. Thus, it was reviewed by OMB. Regulatory Flexibility Act We certify that this proposed rule will not have a significant economic impact on a substantial number of small entities as it affects only States and individuals. Therefore, a regulatory flexibility analysis as provided in the Regulatory Flexibility Act, as amended, is not required. Paperwork Reduction Act This proposed rule will impose no additional reporting or recordkeeping requirements requiring OMB clearance. Federalism Impact and Unfunded Mandates Impact We have reviewed this proposed rule under the threshold criteria of Executive Order 13132 and the Unfunded Mandates Reform Act and have determined that it does not have substantial direct effects on the States, on the relationship between the national government and the States, on the distribution of power and responsibilities among the various levels of government, or on imposing any costs on State, local, or tribal governments. This proposed rule does not affect the roles of the State, local, or tribal governments. However, the rule takes administrative notice of existing statutes governing the roles and relationships of the State agencies and SSA with respect to disability determinations under the Act. (Catalog of Federal Domestic Assistance Program Nos. 96.001, Social Security—Disability Insurance; 96.002, Social Security—Retirement Insurance; 96.004, Social Security—Survivors Insurance; 96.006, Supplemental Security Income.) List of Subjects 20 CFR Part 404 Administrative practice and procedure; Blind, Disability benefits; Old-Age, Survivors, and Disability Insurance; Reporting and recordkeeping requirements; Social Security. 20 CFR Part 405 Administrative practice and procedure; Blind, Disability benefits; Old-Age, Survivors, and Disability Insurance; Public assistance programs, Reporting and recordkeeping requirements; Social Security; Supplemental Security Income (SSI). 20 CFR Part 416 Administrative practice and procedure; Aged, Blind, Disability benefits, Public assistance programs, Reporting and recordkeeping requirements; Supplemental Security Income (SSI). Dated: June 25, 2007. Michael J. Astrue, Commissioner of Social Security. For the reasons set out in the preamble, we propose to amend subparts J, P and Q of part 404, subparts A, B and I of part 405, and subparts I, J and N of part 416 as set forth below: PART 404—FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE (1950- ) Subpart J—[Amended] 1. The authority citation for subpart J of part 404 continues to read as follows: Authority: Secs. 201(j), 204(f), 205(a), (b), (d)-(h), and (j), 221, 223(i), 225, and 702(a)(5) of the Social Security Act (42 U.S.C. 401(j), 404(f), 405(a), (b), (d)-(h), and (j), 421, 423(i), 425, and 902(a)(5)); sec. 5, Pub. L. 97-455, 96 Stat. 2500 (42 U.S.C. 405 note); secs. 5, 6(c)-(e), and 15, Pub. L. 98-460, 98 Stat. 1802 (42 U.S.C. 421 note); sec. 202, Pub. L. 108-203, 118 Stat. 509 (42 U.S.C. 902 note). 2. Amend § 404.903 by revising paragraphs (x) and (y) to read as follows: § 404.903 Administrative actions that are not initial determinations. (x) Determining whether to select your claim for the quick disability determination process under § 404.1619; (y) The removal of your claim from the quick disability determination process under § 404.1619; 3. Revise § 404.904 to read as follows: § 404.904 Notice of the initial determination. We will mail a written notice of our initial determination to you at your last known address. The written notice will explain in simple and clear language what we have determined and the reasons for and the effect of our determination. If our determination involves a determination of disability that is in whole or in part unfavorable to you, our written notice also will contain in understandable language a statement of the case setting forth the evidence on which our determination is based. The notice also will inform you of your right to reconsideration. We will not mail a notice if the beneficiary's entitlement to benefits has ended because of his or her death. Subpart P—[Amended] 4. The authority citation for subpart P continues to read as follows: Authority: Secs. 202, 205(a), (b), and (d)-(h), 216(i), 221(a) and (i), 222(c), 223, 225, and 702(a)(5) of the Social Security Act (42 U.S.C. 402, 405(a), (b), and (d)-(h), 416(i), 421(a) and (i), 422(c), 423, 425, and 902(a)(5)); sec. 211(b), Pub. L. 104-193, 110 Stat. 2105, 2189; sec. 202, Pub. L. 108-203, 118 Stat. 509 (42 U.S.C. 902 note). 5. Amend § 404.1503 by removing the last sentence in paragraph (a). Subpart Q—[Amended] 6. The authority citation for subpart Q continues to read as follows: Authority: Secs. 205(a), 221, and 702(a)(5) of the Social Security Act (42 U.S.C. 405(a), 421, and 902(a)(5)). 7. Amend § 404.1602 by adding a definition for “Quick disability determination,” to read as follows: § 404.1602 Definitions. *Quick disability determination* means an initial determination on a claim that we have identified as one that reflects a high degree of probability that you will be found disabled and where we expect that your allegations will be easily and quickly verified. 8. Amend § 404.1603 by revising paragraph (c)(2) to read as follows: § 404.1603 Basic responsibilities for us and the State. (c) * * * (2) Provide an organizational structure, adequate facilities, qualified personnel, medical consultant services, designated quick disability determination examiners (§§ 404.1619 and 404.1620(c)), and a quality assurance function (§§ 404.1620 through 404.1624); 9. Add a new § 404.1619 under the new undesignated center heading QUICK DISABILITY DETERMINATIONS to read as follows: § 404.1619 Quick disability determination process. (a) If we identify a claim as one involving a high degree of probability that the individual is disabled, and we expect that the individual's allegations will be easily and quickly verified, we will refer the claim to the State agency for consideration under the quick disability determination process pursuant to this section and § 404.1620(c). (b) If we refer a claim to the State agency for a quick disability determination, a designated quick disability determination examiner must: (1) Have a medical or psychological consultant verify that the medical evidence in the file is sufficient to determine that, as of the alleged onset date, the individual's physical or mental impairment(s) meets the standards we establish for making quick disability determinations; (2) Make quick disability determinations based only on the medical and nonmedical evidence in the files; and (3) Subject to the provisions in paragraph (c) of this section, make the quick disability determination by applying the rules in subpart P of this part. (c) If the quick disability determination examiner cannot make a determination that is fully favorable to the individual or if there is an unresolved disagreement between the disability examiner and the medical or psychological consultant, the State agency will adjudicate the claim using the regularly applicable procedures in this subpart. 10. Amend § 404.1620 by adding a new paragraph (c) to read as follows: § 404.1620 General administrative requirements. (c) Each State agency will designate experienced disability examiners to handle claims we refer to it under § 404.1619(a). PART 405—ADMINISTRATIVE REVIEW PROCESS FOR ADJUDICATING INITIAL DISABILITY CLAIMS 11. The authority citation for part 405 continues to read as follows: Authority: Secs. 201(j), 205(a)-(b), (d)-(h), and (s), 221, 223(a)-(b), 702(a)(5), 1601, 1602, 1631, and 1633 of the Social Security Act (42 U.S.C. 401(j), 405(a)-(b), (d)-(h), and (s), 421, 423(a)-(b), 902(a)(5), 1381, 1381a, 1383, and 1383b). Subpart A—[Amended] § 405.5 [Amended] 12. Amend § 405.5 by removing the definitions of the terms “Quick disability determination” and “Quick Disability Determination Unit.” 13. Amend the appendix to subpart A by removing paragraph (d). Subpart B—[Amended] 14. Amend § 405.101 by removing from the first sentence the phrase “unless it makes a quick disability determination under §§ 405.105-.110” and the commas that immediately precede and follow that phrase. §§ 405.105 and 405.110 [Removed] 15. Remove and reserve §§ 405.105 and 405.110. 16. Revise § 405.115 to read as follows: § 405.115 Notice of the initial determination. We will mail a written notice of our initial determination to you at your last known address. The written notice will explain in simple and clear language what we have determined and the reasons for and the effect of our determination. If our determination involves a determination of disability that is in whole or in part unfavorable to you, our written notice also will contain in understandable language a statement of the case setting forth the evidence on which our determination is based. The notice also will inform you of your right to review by a Federal reviewing official and explain your right to representation. We will not mail a notice if the beneficiary's entitlement to benefits has ended because of his or her death. Subpart I—[Removed] 17. Remove and reserve subpart I, consisting of §§ 405.801 through 405.850. PART 416—SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND DISABLED Subpart I—[Amended] 18. The authority citation for subpart I is revised to read as follows: Authority: Secs. 702(a)(5), 1611, 1614, 1619, 1631(a), (c), (d)(1), and (p), and 1633 of the Social Security Act (42 U.S.C. 902(a)(5), 1382, 1382c, 1382h, 1383(a), (c), (d)(1), and (p), and 1383b); secs. 4(c) and 5, 6(c)-(e), 14(a), and 15, Pub. L. 98-460, 98 Stat. 1794, 1801, 1802, and 1808 (42 U.S.C. 421 note, 423 note, 1382h note). 19. Amend § 416.903 by removing the last sentence in paragraph (a). Subpart J—[Amended] 20. The authority citation for subpart J continues to read as follows: Authority: Secs. 702(a)(5), 1614, 1631, and 1633 of the Social Security Act (42 U.S.C. 902(a)(5), 1382c, 1383, and 1383b). 21. Amend § 416.1002 by adding a definition for “Quick disability determination,” to read as follows: § 416.1002 Definitions. *Quick disability determination* means an initial determination on a claim that we have identified as one that reflects a high degree of probability that you will be found disabled and where we expect that your allegations will be easily and quickly verified. 22. Amend § 416.1003 by revising paragraph (c)(2) to read as follows: § 416.1003 Basic responsibilities for us and the State. (c) * * * (2) Provide an organizational structure, adequate facilities, qualified personnel, medical consultant services, designated quick disability determination examiners (§§ 416.1019 and 416.1020(c)), and a quality assurance function (§§ 416.1020 through 416.1024); 23. Add a new § 416.1019 under the new undesignated center heading QUICK DISABILITY DETERMINATIONS to read as follows: § 416.1019 Quick disability determination process. (a) If we identify a claim as one involving a high degree of probability that the individual is disabled, and we expect that the individual's allegations will be easily and quickly verified, we will refer the claim to the State agency for consideration under the quick disability determination process pursuant to this section and § 416.1020(c). (b) If we refer a claim to the State agency for a quick disability determination, a designated quick disability determination examiner must: (1) Have a medical or psychological consultant verify that the medical evidence in the file is sufficient to determine that, as of the alleged onset date, the individual's physical or mental impairment(s) meets the standards we establish for making quick disability determinations; (2) Make quick disability determinations based only on the medical and nonmedical evidence in the files; and (3) Subject to the provisions in paragraph (c) of this section, make the quick disability determination by applying the rules in subpart I of this part. (c) If the quick disability determination examiner cannot make a determination that is fully favorable to the individual or if there is an unresolved disagreement between the disability examiner and the medical or psychological consultant, the State agency will adjudicate the claim using the regularly applicable procedures in this subpart. 24. Amend § 416.1020 by adding a new paragraph (c) to read as follows: § 416.1020 General administrative requirements. (c) Each State agency will designate experienced disability examiners to handle claims we refer to it under § 416.1019(a). Subpart N—[Amended] 25. The authority citation for subpart N continues to read as follows: Authority: Secs. 702(a)(5), 1631, and 1633 of the Social Security Act (42 U.S.C. 902(a)(5), 1383, and 1383b); sec. 202, Pub. L. 108-203, 118 Stat. 509 (42 U.S.C. 902 note). 26. Amend § 416.1403 by revising paragraphs (a)(22) and (a)(23) to read as follows: § 416.1403 Administrative actions that are not initial determinations. (a) * * * (22) Determining whether to select your claim for the quick disability determination process under § 416.1019; (23) The removal of your claim from the quick disability determination process under § 416.1019; 27. Amend § 416.1404 by revising paragraph (a), removing existing paragraph (b) and redesignating existing paragraph (c) as paragraph (b), to read as follows: § 416.1404 Notice of the initial determination. (a) We will mail a written notice of our initial determination to you at your last known address. The written notice will explain in simple and clear language what we have determined and the reasons for and the effect of our determination. If our determination involves a determination of disability that is in whole or in part unfavorable to you, our written notice also will contain in understandable language a statement of the case setting forth the evidence on which our determination is based. The notice also will inform you of your right reconsideration. We will not mail a notice if the beneficiary's entitlement to benefits has ended because of his or her death. [FR Doc. E7-13288 Filed 7-9-07; 8:45 am] BILLING CODE 4191-02-P DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Part 203 [Docket No. FR-5087-N-02] RIN 2502-AI52 Standards for Mortgagor's Investment in Mortgaged Property: Extension of Public Comment Period AGENCY: Office of the Assistant Secretary for Housing'Federal Housing Commissioner, HUD. ACTION: Notice: Extension of Public Comment Period. SUMMARY: This notice extends the public comment period for an additional 30-day period for HUD's proposed rule on Standards for Mortgagor's Investment in Mortgaged Property, published on May 11, 2007. DATES: The comment period for the proposed rule published a 72 FR 27048, May 11, 2007, is extended until August 10, 2007. ADDRESSES: Interested persons are invited to submit comments regarding this rule to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 10276, Washington, DC 20410-0500. Communications should refer to the above docket number and title. *Comment by Mail.* Please note that due to security measures at all federal agencies, submission of comments by mail often results in delayed delivery. *Electronic Submission of Comments.* HUD now accepts comments electronically. Interested persons may now submit comments electronically through the Federal eRulemaking Portal at *www.regulations.gov.* HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available for public viewing. Commenters should follow the instructions provided at *www.regulations.gov* to submit comments electronically. *No Facsimile Comments.* Facsimile (Fax) comments are not acceptable. In all cases, communications must refer to the docket number and title. *Public Inspection of Public Comments.* All comments and communications submitted will be available, without revision, for inspection and downloading at *www.regulations.gov.* Comments are also available for public inspection and copying between 8 a.m. and 5 p.m. weekdays at the Office of Regulations. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the comments by calling the Regulations Division at (202) 708-3055 (this is not a toll-free number). FOR FURTHER INFORMATION CONTACT: James Beavers, Acting Director, Office of Single Family Program Development, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410; telephone (202) 708-2121 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Information Relay Service at (800) 877-8339. SUPPLEMENTARY INFORMATION: Background HUD published a proposed rule entitled “Standards for Mortgagor's Investment in Mortgaged Property” on May 11, 2007 (72 FR 27048). Through this rule, HUD proposes to codify in regulation specific standards governing a mortgagor's investment in property for which the mortgage is insured by the Federal Housing Administration (FHA). Specifically, this proposed rule would codify HUD's longstanding practice, authorized by statute, of allowing a mortgagor's investment to be derived from gifts by family members and certain organizations. The standards would address a situation in which the mortgagor's investment is derived from a gift, loan, or other payment that is provided by any donor, including an individual or an organization, and would also specify prohibited sources for a mortgagor's investment. The proposed rule would establish that a prohibited source of downpayment assistance is a payment that consists, in whole or in part, of funds provided by any of the following parties before, during, or after closing of the property sale: (1) The seller, or any other person or entity that financially benefits from the transaction; or (2) any third party or entity that is reimbursed directly or indirectly by any of the parties listed in clause (1). Extension of Public Comment Period HUD's May 11, 2007, proposed rule provides for the public comment period to end on July 10, 2007. Due to significant interest in this rule, HUD is extending the public comment period, for an additional 30-day period, to August 10, 2007. Dated: July 5, 2007. Brian D. Montgomery, Assistant Secretary for Housing—Federal Housing Commissioner. [FR Doc. 07-3357 Filed 7-6-07; 11:24 am]