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PA Bulletin, Doc. No. 12-158


Notice of Comments Issued

[42 Pa.B. 628]
[Saturday, January 28, 2012]

 Section 5(g) of the Regulatory Review Act (71 P. S. § 745.5(g)) provides that the Independent Regulatory Review Commission (Commission) may issue comments within 30 days of the close of the public comment period. The Commission comments are based upon the criteria contained in section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b).

 The Commission has issued comments on the following proposed regulations. The agencies must consider these comments in preparing the final-form regulation. The final-form regulations must be submitted within 2 years of the close of the public comment period or it will be deemed withdrawn.

Close of the Public Comments
Reg. No. Agency/Title Comment Period Issued
18-420 Department of Transportation Public Transportation—Sustainable
41 Pa.B. 6089 (November 12, 2011)
12/12/11 01/11/12
15-453Department of Revenue
Reality Transfer Tax Amendments
41 Pa.B. 6220 (November 19, 2011)
12/19/11 01/18/12

Department of Transportation
Regulation #18-420 (IRRC #2922)

Public Transportation—Sustainable Mobility

January 11, 2012

 We submit for your consideration the following comments on the proposed rulemaking published in the November 12, 2011 Pennsylvania Bulletin. Our comments are based on criteria in Section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b). Section 5.1(a) of the Regulatory Review Act (71 P. S. § 745.5a(a)) directs the Department of Transportation (Department) to respond to all comments received from us or any other source.

1. Expiration of the temporary regulation—Consistency with statute; Compliance with the regulations of the Independent Regulatory Review Commission.

 The Department states in the Preamble that:

The purpose of Chapter 427 is to implement 74 Pa.C.S. Chapter 15 (relating to sustainable mobility options), as required under 74 Pa.C.S. § 1505. Section 1505 of 74 Pa.C.S. directed the Department to promulgate temporary regulations within 2 years of the effective date of 74 Pa.C.S. Chapter 15, by July 18, 2009, and thereafter to promulgate permanent regulations. The Department has used the period during which the temporary regulations have been effective to test and refine the regulations to assure compliance in carrying out the purposes for which 74 Pa.C.S. Chapter 15 provides financial assistance for public transportation services and infrastructure in this Commonwealth. This proposed rulemaking is the result of that experience under the temporary regulations. (Emphasis added.)

 On November 1, 2011, the Department submitted the proposed regulation showing the full text of temporary Chapter 427 with amendments. On November 12, 2011, the proposed regulation appeared in the Pennsylvania Bulletin in an abbreviated form, just showing the amendments.

 The Department's authority to promulgate a temporary regulation states, in part:

Unless otherwise provided in this chapter, in order to facilitate the prompt implementation of this chapter, during the two-year period following the effective date of this section, the Department shall promulgate temporary regulations which shall expire four years from the effective date of this section. (Emphasis added.)

 See 74 Pa.C.S. § 1505(b)(1).

 By statute, the temporary regulations expired on July 18, 2011, prior to the submittal of the proposed regulation. In effect, there is no existing Chapter 427 to amend.

 We recognize the Department's intent was to implement temporary Chapter 427 with the amendments. However, neither the Department's submittal of the proposed regulation, nor the subsequent Pennsylvania Bulletin publication show the addition of the full text of Chapter 427 in compliance with 1 Pa. Code § 305.1a. We recommend that the final-form regulation properly designate the addition of the full text of Chapter 427 in compliance with our regulations at 1 Pa. Code § 307.3a.

2. Section 427.4. Local matching funds.—Clarity.


 Paragraph (a)(6) uses the term ''swaptions.'' We recommend defining this term or deleting it.

''Schedules as required by the Department''

 Paragraphs (b)(4) and (c)(3) use the phrase ''schedules as required by the Department.'' This phrase is vague because the regulation is not clear regarding what is required. We recommend clarifying these provisions.

3. Section 427.5. Procurement.—Clarity; Reasonableness.

 Subsection (b) begins with the phrase ''failure to comply with any applicable requirement.'' This phrase is subjective. We recommend specifying the requirements that apply.

4. Section 427.6. Restriction on use of funds.—Clarity.

 Paragraph (a)(3) uses the phrase ''State capital assistance including current or carryover PTAF, Act 3, Section 1514 Bond or Section 1517 Capital Improvement assistance.'' It is not clear what the phrases ''PTAF,'' ''Act 3,'' ''Section 1514 Bond'' or ''Section 1517 Capital Improvement assistance'' refer to. For example, ''Act 3'' of what year? The regulation should either be amended to specify these phrases or define them.

5. Section 427.7. Audits.—Clarity.

Auditing standards

 Subparagraph (a)(4)(i) requires an audit to be conducted in accordance with ''auditing standards generally accepted in the United States.'' How can the regulated community determine what standards apply? The Department should replace this phrase with specific standards.

''Schedules as required by the Department''

 Subparagraph (a)(4)(v) requires an audit to include all supplemental schedules ''as required by the Department.'' This phrase is vague. Again, the regulation itself should state the specific requirements.

6. Section 427.11. Data submission and verification.—Clarity.

 Subsections (a), (b) and (d) use the phrase ''section 1513 operating assistance'' funds or grants. The Department should either define this phrase or provide the specific citation. The same concern applies to Subsection 427.12(a)

7. Section 427.12. Performance reviews.—Clarity.

 Paragraph (b)(2) states the Department will provide its performance review policy on its website. We request a specific website reference to this policy and an explanation of how the policy will affect the regulation. Why didn't the Department include the process for conducting a performance review in regulation?

Department of Revenue
Regulation #15-453 (IRRC #2924)

Realty Transfer Tax Amendments

January 18, 2012

 We submit for your consideration the following comments on the proposed rulemaking published in the November 19, 2011 Pennsylvania Bulletin. Our comments are based on criteria in Section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b). Section 5.1(a) of the Regulatory Review Act (71 P. S. § 745.5a(a)) directs the Department of Revenue (Department) to respond to all comments received from us or any other source.

1. Determining whether the regulation is in the public interest.

 Section 5.2 of the RRA (71 P. S. § 745.5b) directs this Commission to determine whether a regulation is in the public interest. When making this determination, the Commission considers criteria such as economic or fiscal impact and reasonableness. To make that determination, the Commission must analyze the text of the proposed rulemaking and the reasons for the new or amended language. The Commission also considers the information a promulgating agency is required to provide under § 745.5(a) in the Regulatory Analysis Form (RAF).

 The information contained in the RAF submitted with this rulemaking is not sufficient to allow this Commission to determine if the regulation is in the public interest. By way of example, there is no detailed fiscal impact and cost benefit analysis in the RAF. How did the Department arrive at the conclusion that there will be no costs or savings to the regulated community, local government and state government? Regarding the approximate number of people that will be required to comply with the regulation, the Department responded that the number is indeterminable. Why is that number indeterminable? The Department has also failed to describe how the regulation compares to those of other states. Without this information, we cannot determine if this proposed regulation is in the public interest. In the Preamble and RAF submitted with the final-form rulemaking, the Board should provide more detailed information required under § 745.5(a) of the RRA.

2. Section 91.101. Definitions.—Whether the regulation is consistent with the intent of the General Assembly; Clarity.

Business trust

 A commentator believes that, under this definition, all trusts would be considered business trusts. Therefore, every transfer of real estate to a trust would be subject to realty transfer tax. This would be contrary to the Realty Transfer Tax Law (72 P. S. §§ 8101-C—8103-C.1) (Law) and the statutory exclusions it provides for living trusts and ordinary trusts. Given the concerns raised by the commentator, we ask the Department to explain if transfers to living trusts and ordinary trusts would be taxable, and if so, what statutory provision would allow the Department to tax those transfers. If the transfers are not taxable, we recommend that the definition of ''business trust'' be clarified to reflect that fact.

3. Section 91.138. Valuation.—Clarity.

 Paragraph (3) pertains to other valuation methods when there is not a bona fide sale or computed value. A commentator has pointed out two concerns with this paragraph. First, under Subparagraph (3)(ii)(A), the reference to the term ''licensed real estate appraiser'' is incorrect and should be replaced with ''certified real estate appraiser'' because appraisers in Pennsylvania are certified, not licensed. Second, Subparagraph (3)(ii)(b) includes the phrase ''realistic estimate of the value of the real estate.'' The commentator notes that the term ''realistic'' is difficult to quantify and suggests that it either be deleted or a reference to Section 608(c) of the Real Estate Licensing and Registration Act be added to the regulation. We agree with the commentator and ask the Department to amend the regulation accordingly.

4. Section 91.153. Agent and straw party transactions.—Reasonableness; Need; Clarity.

 According to the Preamble, new Subsection (e) expands on the subject matter of this section because it has generated questions from taxpayers. We have two concerns. First, we ask the Department to explain the nature of the questions and how the new language addresses the concerns. We also ask the Department to explain the need for invalidating an indemnification or subrogation agreement between a purported principal or real party in interest and a purported agent or straw party, and whether this invalidation is consistent with the law.

 Second, as noted by a commentator, what does the phrase ''does not circumvent this condition'' found in Subsection (e)(4) mean? We suggest that this phrase be clarified.

5. Section 91.193. Exemptions and exclusions.—Statutory authority; Whether the regulation is consistent with the intent of the General Assembly; Clarity.

 Amendments to this section of the regulation replace the characterization of certain transactions as being ''excluded'' from tax as now being ''exempt'' from tax. The Preamble provides little information on why this change is needed. Commentators are concerned that this change conflicts with the Law. We agree that this change appears to conflict with excluded transactions specifically cited as such in Section 1102-C.3 of the Law (72 P. S. § 8102-C.3). We ask the Department to provide a more detailed explanation of why this change is needed and how it is consistent with the Law and the intent of the General Assembly when it enacted the Law.

 In addition, it is our understanding that the Court of Common Pleas issues divorce decrees. Therefore, Example 2 under § 91.193(b)(6)(i)(F) should be amended accordingly.


[Pa.B. Doc. No. 12-158. Filed for public inspection January 27, 2012, 9:00 a.m.]

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