Indemnities Under the Arts and Artifacts Indemnity Act August 16, 19952,1991

42464 Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Rules and Regulations
(Catalog of Federal Domestic Assistance No.
83.100, ‘‘Flood Insurance.’’)
Issued: August 10, 1995.
Robert H. Volland,
Acting Deputy Associate Director, Mitigation
Directorate.
[FR Doc. 95–20271 Filed 8–15–95; 8:45 am]
BILLING CODE 6718–21–P

NATIONAL FOUNDATION ON THE
ARTS AND THE HUMANITIES
45 CFR Part 1160
RIN 3154–AAoo

Indemnities Under the Arts and
Artifacts Indemnity Act
Federal Council on the Arts
and the Humanities.
ACTION: Final rule.
AGENCY:

The Federal Council on the
Arts and Humanities is adopting as a
final rule, without change, the
provisions of a proposed rule that
revises the regulations implementing
the Arts and Artifacts Indemnity Act, as
amended (20 U.S.C. 971–977) (the
‘‘Act’’). The final rule permits the
indemnification of eligible items from
the United States while on exhibition in
this country in connection with an
exhibition of eligible items from outside
of the United States. The final rule also
includes illustrations of exhibitions
eligible for indemnification which are
intended to provide further guidance to
persons considering applying for the
indemnification of an international
exhibition. The final rule is not
intended to bring about a major shift in
emphasis of the current policy or
practice of the indemnity program.
EFFECTIVE DATE: September 15, 1995.
FOR FURTHER INFORMATION CONTACT:
Alice Whelihan, Indemnity
Administrator, National Endowment for
the Arts, 1100 Pennsylvania Avenue,
N.W., Washington, D.C. 20506, 202–
682–5442.
SUMMARY:

SUPPLEMENTARY INFORMATION:

I. Background
A. Statutory Background
In 1975, the United States Congress
enacted the Arts and Artifacts
Indemnity Act which established an
indemnity program administered by the
Federal Council on the Arts and the
Humanities (the ‘‘Federal Council’’). 20
U.S.C. Sections 971–977. The Federal
Council is composed of the heads of
nineteen federal agencies and was
established by Congress, among other
things, to coordinate the policies and

operations of the National Endowment
for the Arts, the National Endowment
for the Humanities, and the Institute of
Museum Services, including the joint
support of activities. 20 U.S.C. Section
971.
Under the indemnification program,
the United States Government
guarantees to pay loss or damage claims,
subject to certain limitations, arising out
of exhibitions containing items
determined by the Federal Council to be
of educational, cultural, historical or
scientific value the exhibition of which
must be certified by the Director of the
United States Information Agency as
being in the national interest. In order
to be eligible for indemnification, the
objects must be on exhibition in the
United States, or if outside this country
preferably as part of an exchange of
exhibitions.
B. Legislative History
On May 21, 1975, Senators Claiborne
Pell (D, RI) and Jacob Javits (R, NY)
introduced the Arts and Artifacts
Indemnity Act as an amendment to the
reauthorization of the National
Foundation on the Arts and Humanities
Act of 1965. According to the House
Committee report, the purpose of the
statute was ‘‘to provide indemnities for
exhibitions of artistic and humanistic
endeavors, and for other purposes.’’ 1
The Senate Committee stated that it
believed that this purpose could be
advanced ‘‘through the exchange of
cultural activities and sharing by
nations of the world of their cultural
institutions and national wealth and
treasure.’’ 2
The broad purpose of the Act is
echoed throughout the Act’s language
and legislative history. For example, in
testifying at joint hearings before the
House Subcommittee on Select
Education and the Senate Special
Subcommittee on Arts and Humanities,
Nancy Hanks, Chairman, National
Endowment for the Arts, stated:
Cultural exhibitions and exchanges of high
quality should be encouraged by the laws
and policies of the United States
Government. They are in the national interest
because of the personal, aesthetic,
intellectual, and cultural benefits accruing to
every man, woman and child of this nation
who has the opportunity to experience these
beautiful and enlightening presentations. We
believe that this country should do as much
as any nation in the world to insure that
these vitally important programs are
strengthened.3

There was concern in Congress that
such exchanges were impeded by
1 Id.
2 Id.
3 H.R.

prohibitively high insurance costs. The
Senate noted that ‘‘anywhere from half
to two-thirds of the cost of an
international exhibition is the cost of
insuring the material to be exhibited.’’ 4
Ronald Berman, Chairman of the
Federal Council, testified that without
indemnification provided in special
legislation enacted by the 93rd
Congress, the insurance costs in
connection with several widely
attended exhibitions would have been
prohibitive.5
C. Regulatory Background
The Federal Council is the agency
charged by Congress with the
responsibility to administer the Arts and
Artifacts Indemnity Act. In practice, the
Indemnity Program is administered for
the Federal Council by the Museum
Program of the National Endowment for
the Arts under the ‘‘Indemnities Under
the Arts and Artifacts Indemnity Act’’
regulations (the ‘‘Regulations’’), which
are set forth at 45 CFR Part 1160.
These Regulations have been
promulgated, and amended from time to
time, by the Federal Council pursuant to
the express and implied rulemaking
authorities granted by Congress to make
and amend rules needed for the
effective administration of the
indemnity program. Among other
things, Congress expressly granted the
Federal Council the authorities to
establish the terms and conditions of
indemnity agreements; to set
application procedures; and to establish
claim adjustment procedures. 20 U.S.C.
Sections 971(a)(2), 973(a), 975(a).
For a number of years, the Federal
Council has considered the desirability
of amending the Regulations to permit
the indemnification of U.S.-owned loans
on exhibition in the United States in
connection with certified international
exhibitions. As currently drafted, the
Regulations do not cover domestic
objects on loan to an international
exhibition in the United States. The
Regulations provide, in pertinent part:
An indemnity agreement made under these
regulations shall cover:
(1) Eligible items from outside the United
States while on exhibition in the United
States or
(2) Eligible items from the United States
while on exhibition outside this country,
preferably when they are part of an exchange
of exhibitions. 45 CFR Section 1160.1.

On February 25, 1993, during a
lengthy discussion of the application of
the National Gallery of Art for the
indemnification of the exhibition ‘‘Great
French Paintings from the Barnes
4 S.

Rep. No. 680, 94th Cong., 1st Sess., at 5.

Rep. No. 289, 94th Cong., 1st Sess., at 1.
Rep. No. 680, 94th Cong., 1st Sess., at 5.

5 H.R.

Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Rules and Regulations 42465
Foundation: Impressionist, PostImpressionist and Early Modern,’’ the
Federal Council concluded that the
eligibility criteria set forth in the
Regulations were more narrowly drawn
than required under the Act. While the
Council approved the indemnification
of the Barnes exhibition, which
consisted of one foreign-owned object
and 80 domestically owned objects, a
Certificate of Indemnity ultimately did
not issue because of legal uncertainties
related to the Council’s action under its
current Regulations. To clarify
eligibility issues for future actions, the
Federal Council voted to amend its
regulations.
After extensive discussion of the
issue, the Federal Council resolved that
the proposed amendment to the
Regulations would significantly
enhance its ability to provide the
American public with the benefits to a
high quality program of international
exhibitions while not significantly
increasing the exposure of the Federal
government to pay loss or damage
claims nor significantly adding to the
administrative burdens or costs of the
program.
The Federal Council concluded that
widening the eligibility criteria under
the Indemnity Program to include
coverage of U.S.-owned objects in
exhibitions that also include foreignowned loans would provide an
important benefit to U.S. cultural
institutions and to the American public.
Under the current guidelines, U.S.owned loans may be indemnified only
when exhibited abroad. The Federal
Council concluded that if items from
abroad are of educational, cultural,
historical or scientific value, and their
exhibition has been certified by the
Director of the United States
Information Agency as being in the
national interest, thereby making them
eligible for indemnification coverage,
the U.S.-owned loans to the exhibition
also should be eligible for
indemnification.
The Federal Council stressed that the
amendment is not intended to bring
about a major shift in the emphasis of
the current policy or practice of the
indemnity program. Under the amended
Regulations, indemnity coverage will
continue to be available primarily for
the exhibition of items coming from
outside the United States. In
determining whether to indemnify
international exhibitions that also
include U.S. loans, the Federal Council
will continue to apply the same general
standard of review—whether the
exhibition taken as a whole is of
educational, cultural, historical or
scientific significance. However, to

guard against potential abuses, the
Federal Council will require that the
foreign loans be an integral or essential
component of the exhibition.
Exhibitions consisting solely of
domestic items will continue to be
ineligible for indemnification.
The Federal Council concluded that
because of the overall statutory cap on
the program the proposed modification
would not significantly increase the
exposure of the Federal government to
claims for loss or damage while
providing important additional relief for
U.S. borrowing institutions. Under the
statutory cap, the Federal Council may
not issue indemnity agreements
covering losses of more than an
aggregate of $3,000,000,000 at any one
time. The cap—and thereby the total
government exposure—remains the
same whether the indemnity agreements
cover foreign or domestic content.
Moreover, the fact that coverage during
international transit, the time of greatest
risk, would not be required for loans
from U.S. lending institutions greatly
reduces the risk of additional losses.
The Federal Council further
concluded that the proposed
amendment would not cause a
significant increase in either the number
of applications to the program or the
administrative burdens associated with
applying or reviewing indemnification
applications. This is the case because
under the current practice, applicants
already are required to include
information on domestic loans in their
applications, and indemnity panels
consider the educational, cultural,
historical or scientific value of both the
domestic and foreign items in
determining whether to indemnify an
exhibition.
While the need to determine whether
indemnification of the domestic content
is appropriate will require an additional
judgment made by the Federal Council,
it is similar in character to the
determinations already made by the
Federal Council in determining the
appropriateness of indemnification of
foreign content. Moreover, the same
options for technical assistance and
resubmission will be available for a
rejected applicant as are currently
available.
On June 16, 1993, on the basis of
these conclusions, the Federal Council
reaffirmed its vote of February 25, 1993
to amend the Regulations to permit the
coverage of domestic items in
connection with international
exhibitions in the United States.
Specifically, the Federal Council
approved a motion to promulgate
regulations revising 45 CFR 1160.1

(‘‘Purpose and Scope’’) by adding the
following language:
(3) eligible items from the United States
while on exhibition in the United States if
the exhibition includes other eligible items
from outside the United States.

On April 6, 1994, the Federal Council
published in the Federal Register an
advance notice of proposed rulemaking
(ANPR) regarding the indemnification of
eligible items from the United States
while on exhibition in this country in
connection with an exhibition of items
from outside the United States. 59 FR
16162–64, April 6, 1994. On July 6,
1995, the Federal Council published in
the Federal Register a notice of
proposed rulemaking which included
the Federal Council’s responses to the
comments received in response to the
ANPR. 60 FR 35162–66, July 6, 1995.
II. Discussion of Comments Received
The Federal Council did not receive
any comments in response to its notice
of proposed rulemaking.
III. Regulatory Anlayses
This rule is not a significant
regulatory action for the purposes of
Executive Order 12866 of September 20,
1993.
As required by the Regulatory
Flexibility Act, it is hereby certified that
this rule will not have a significant
impact on small business entities.
The Catalogue of Federal Domestic
Assistance number for the Arts and
Artifacts Indemnity Program is 45–201.
For the Federal Council on the Arts and the
Humanities.
Michael S. Shapiro,
Counsel to the Federal Council on the Arts
and the Humanities.

For the reasons set forth in the
preamble, 45 CFR Part 1160 is amended
as follows:
PART 1160—INDEMNITIES UNDER
THE ARTS AND ARTIFACTS
INDEMNITY ACT
1. The authority citation for part 1160
continues to read as follows:
Authority: 20 U.S.C. 971–977.

2. Section 1160.1 is amended by
revising paragraph (a) as follows:
§ 1160.1

Purpose and scope.

(a) This part sets forth the exhibition
indemnity procedures of the Federal
Council on the Arts and Humanities
under the Arts and Artifacts Indemnity
Act (Pub. L. 94–158) as required by
section 2(a)(2) of the Act.
*
*
*
*
*
3. Sections 1160.4 through 1160.11
are redesignated as §§ 1160.5 through

42466 Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Rules and Regulations
1160.12 and a new Section 1160.4 is
added to read as follows:
§ 1160.4

Eligibility.

An indemnity agreement made under
these regulations shall cover:
(a) Eligible items from outside the
United States while on exhibition in the
United States;
(b) Eligible items from the United
States while on exhibition outside this
country, preferably when they are part
of an exchange of exhibitions; and
(c) Eligible items from the United
States while on exhibition in the United
States, in connection with other eligible
items from outside the United States
which are integral to the exhibition as
a whole.
Example 1
Museum A, an American art museum, is
organizing a retrospective exhibition which
will include more than 150 works of art by
the Impressionist painter Auguste Renoir.
The exhibition will present the full range of
Renoir’s production for the first time ever in
an American museum. Museums B and C,
large national museums in Paris and London,
have agreed to lend 125 major works of art
illustrating every aspect of Renoir’s career.
Museum A is also planning to include related
works from other American public and
private collections which have not been seen
together since the artist’s death in 1919.
Museums D and E, major east coast American
art museums, have agreed to lend 25
masterworks by Renoir. The exhibition will
open in Chicago and travel to San Francisco
and Washington.
Discussion
Example 1 is a straightforward application
of the amended indemnity regulations. Under
the old regulations, only the works of art
from Museums B and C, the foreign
museums, would have been eligible for
indemnification. Under the proposed
Regulations, the works of art from American
museums and other public and private
collections also would be eligible for
indemnification. In determining whether to
indemnify the entire exhibition, the Federal
Council will evaluate the exhibibition as a
whole and whether the foreign loans are
integral to the educational, cultural,
historical or scientific significance of the
exhibition. In this example, the Federal
Council would likely approve
indemnification of the entire exhibit.
Example 2
Museum A in Massachusetts is organizing
an exhibition celebrating 250 Years of
Decorative Arts in America, to be held in
conjunction with the state’s celebration of the
millennium. Included among the objects to
be borrowed from museums and historical
societies in the United States are furniture,
textiles, metalwork, ceramics, glass and
jewelry, illustrating the best examples of
American design from colonial times to the
present. The curator traveled abroad recently
and saw an exhibition of American quilts
which have been acquired by a British

decorative arts museums. He intends to
borrow several of the quilts for the
exhibition.
Discussion
Example 2 raises the question as to
whether the American museum organizing
the exhibition has included the Britishowned American quilts merely to obtain
insurance relief. In determining whether to
indemnify the entire exhibition, the Federal
Council will evaluate the exhibition as a
whole and whether the foreign loans are
integral to achieving its educational, cultural
and historical purposes. Here, it is likely that
the Federal Council will conclude that the
foreign work are not an essential component
of the exhibition. The Federal Council also
may seek additional information from the
applicant to determine whether the
objectives of the exhibition could have been
accomplished as satisfactorily by borrowing
American quilts from U.S. collections. On
these facts, the Federal Council in all
likelihood would deny indemnification for
the entire exhibition.
Example 3
Museum A, an American museum, is
organizing an exhibition of the works of
James Watkins, a nineteenth century
American painter, focusing on his studies of
human anatomy. Museum A has the foremost
collection of preparatory drawings related to
Watkins’ major painting, ‘‘The Surgeon and
His Students.’’ The painting is in the
permanent collection of Museum B, located
in the south of France, which has agreed to
lend the painting for the exhibition. The
exhibition will be shown at Museum B after
the U.S. tour. American Universities, C and
D, have also agreed to lend anatomical
illustrations and drawings which show
Watkins’ development as a draughtsman. The
exhibition and accompanying catalogue are
expected to shed new light on Watkins
contributions to art and scientific history.
Discussion
Example 3 addresses the issue of whether
the Federal Council will indemnify an
exhibition even where the U.S. objects
outnumber the foreign works. In determining
whether to indemnify the entire exhibition,
the Federal Council will evaluate the
exhibition as a whole and the relationship of
the foreign loans to the educational, cultural,
historical and scientific significance of the
exhibition. In this example, the exhibition
promises to make important contributions
not only to the history of art but also to the
history of science. While there is only a
single foreign work of art, it is clearly an
essential component of the exhibition as a
whole. The case for indemnification of the
entire exhibition is further strengthened by
the fact that a foreign masterpiece, which is
closely related to the preparatory drawings
and anatomical illustrations and drawings
owned by American institutions, will be
made available to the American public. Thus,
the mere fact that the U.S. loans outnumber
the foreign works will not in itself disqualify
the entire exhibition for indemnification.
[FR Doc. 95–20189 Filed 8–15–95; 8:45 am]
BILLING CODE 7536–01–M

DEPARTMENT OF TRANSPORTATION
Maritime Administration
46 CFR Part 387
[Docket No. R–157]
RIN No. 2133–AB18

Utilization and Disposal of Surplus
Federal Real Property for Development
or Operation of a Port Facility
Maritime Administration,
Department of Transportation.
ACTION: Final rule.
AGENCY:

This rule provides guidance
for implementation by the Secretary of
Transportation, acting by and through
the Maritime Administrator, Maritime
Administration (Secretary), of
controlling regulations issued by the
Administrator of General Services
(Administrator), as authorized by Public
Law 103–160. This rule prescribes the
terms, reservations, restrictions, and
conditions under which the Secretary
will convey surplus Federal real
property and related personal property
to public entities for use in the
development or operation of a port
facility.
EFFECTIVE DATE: This rule is effective
August 16, 1995.
FOR FURTHER INFORMATION CONTACT:
James R. Carman, Acting Chief, Division
of Ports, Maritime Administration,
MAR–830, Room 7201, 400 Seventh
Street, SW., Washington, DC, 20590,
(202) 366–4357.
SUPPLEMENTARY INFORMATION: Due to the
downsizing of the United States
Government, surplus Federal real
property and related personal property
is becoming available which may be
suitable for the development or
operation of a port facility. Section 2927
of the National Defense Authorization
Act for Fiscal Year 1994, enacted
November 30, 1993, Public Law 103–
160, amended Section 203 of the
Federal Property and Administrative
Services Act of 1949 (40 U.S.C. 484) to
provide that under such regulations as
the Administrator, after consultation
with the Secretary of Defense, may
prescribe, the Administrator or the
Secretary of Defense, in the case of
property located at a military
installation closed or realigned pursuant
to a base closure law, may, in his or her
discretion, assign to the Secretary for
disposal such surplus real property,
including buildings, fixtures, and
equipment situated thereon, as is
recommended by the Secretary as being
needed for the development or
operation of a port facility. The
SUMMARY: