NEA Arts Indemnity Program: Federal Rules and Regulations


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Federal Rules and Regulations

Arts and Artifacts Indemnity Act PL 94 158 (1975)

Arts and Artifacts Indemnity Act
(P.L. 94-158)

AN ACT To provide indemnities for exhibitions of artistic and humanistic endeavors, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SHORT TITLE

SECTION 1. This Act may be cited as the “Arts and Artifacts Indemnity Act”.

(20 U.S.C. 971) Enacted Dec. 20, 1975, P.L. 94-158, sec. 1, 89 Stat. 844.

FEDERAL COUNCIL

SEC. 2. (a) The Federal Council on the Arts and Humanities (hereinafter in this Act referred to as the “Council”), established under section 9 of the National Foundation on the Arts and the Humanities Act of 1965, is authorized to make the agreements to indemnify against loss or damage such items as may be eligible for such indemnity agreements under section 3—
(1) in accordance with the provisions of this Act; and
(2) on such terms and conditions as the Council shall prescribe, by regulation, in order to achieve the purposes of this Act and, consistent with such purposes, to protect the financial interest of the United States.
(b) (1) For purposes of this Act, the Council shall be an “agency” within the meaning of the appropriate definitions of such term in title 5, United States Code.
(2)For purposes of this Act, the Secretary of the Smithsonian Institution, the Director of the National Gallery of Art, the member designated by the Chairman of the Senate Commission of1 Art and Antiquities and the member designated by the Speaker of the House of Representatives shall not serve as members of the Council.
(20 U.S.C. 971) Enacted Dec. 20, 1975, P.L. 94-158, sec. 2, 89 Stat. 844; amended Dec. 20, 1985, P.L. 99-194, sec. 301, 99 Stat. 1345.
1So in original. Should be “on”.
ELIGIBLE ITEMS
SEC. 3. (a) The Council may make an indemnity agreement under this Act with respect to—
(1) works of art, including tapestries, paintings, sculpture, folk art, graphics and craft arts;
(2) manuscripts, rare documents, books, and other printed or published materials;
(3) other artifacts or objects; and
(4) photographs, motion pictures, or audio and video tape;
which are (A) of educational, cultural, historical, or scientific value, and (B) the exhibition of which is certified by the Secretary of State1 or his designee as being in the national interest.
(b) (1) An indemnity agreement made under this Act shall cover eligible items while on exhibition in the United States or elsewhere preferably when part of an exchange of exhibitions.
(2) For purposes of this subsection, the term “on exhibition” includes that period of time beginning on the date the eligible items leave the premises of the lender or place designated by the lender and ending on the date such items are returned to the premises of the lender or place designated by the lender.

footnote

(20 U.S.C. 972) Enacted Dec. 20, 1975, P.L. 94-158, sec. 3, 89 Stat. 844; amended Dec. 20, 1985, P.L. 99-194, sec. 302, 99 Stat. 1345.
1 So in original. Should be “on”.

ELIGIBLE ITEMS

SEC. 3. (a) The Council may make an indemnity agreement under this Act with respect to—
(1) works of art, including tapestries, paintings, sculpture, folk art, graphics and craft arts;
(2) manuscripts, rare documents, books, and other printed or published materials;
(3) other artifacts or objects; and
(4) photographs, motion pictures, or audio and video tape;
which are (A) of educational, cultural, historical, or scientific value, and (B) the exhibition of which is certified by the Secretary of State1 or his designee as being in the national interest.
(b) (1) An indemnity agreement made under this Act shall cover eligible items while on exhibition in the United States or elsewhere preferably when part of an exchange of exhibitions.
(2) For purposes of this subsection, the term “on exhibition” includes that period of time beginning on the date the eligible items leave the premises of the lender or place designated by the lender and ending on the date such items are returned to the premises of the lender or place designated by the lender.
(20 U.S.C. 972) Enacted Dec. 20, 1975, P.L. 94-158, sec. 3, 89 Stat. 844; amended Dec. 20, 1985, P.L. 99-194, sec. 302, 99 Stat. 1345.
1The certification authority of the Secretary of State and the Secretary’s designee is now vested in the Director of the United States Information Agency and the Director’s designee. See section 7(a)(10) of Reorganization Act No. 2 of 1977 (91 Stat. 1636) and section 303 of the United States Information Agency Authorization Act, Fiscal Years 1982 and 1983 (Public Law 97-241; 96 Stat. 291).

APPLICATION

SEC. 4. (a) Any person, nonprofit agency, institution, or government desiring to make an indemnity agreement for eligible items under this Act shall make application therefore in accordance with such procedures, in such form, and in such manner as the Council shall, by regulation, prescribe.
(b) An application under subsection (a) shall—
(1) describe each item to be covered by the agreement (including an estimated value of such item);
(2) show evidence that the items are eligible under section 3(a); and
(3) set forth policies, procedures, techniques, and methods with respect to preparation for, and conduct of, exhibition of the items, and any transportation related to such items.
(c) Upon receipt of an application under this section, the Council shall, if such application conforms with the requirements of this Act, approve the application and make an indemnity agreement with the applicant. Upon such approval, the agreement shall constitute a contract between the Council and the applicant pledging the full faith and credit of the United States to pay any amount for which the Council becomes liable under such agreement. The Council, for such purpose, is hereby authorized to pledge the full faith and credit of the United States.
(20 U.S.C. 971) Enacted Dec. 20, 1975, P.L. 94-158, 89 Stat. 845.

INDEMNITY AGREEMENT

SEC. 5. (a) Upon receipt of an application meeting the requirements of subsections (a) and (b) of section 4, the Council shall review the estimated value of the items for which coverage by an indemnity agreement is sought. If the Council agrees with such estimated value, for the purposes of this Act, the Council shall, after approval of the application as provided in subsection (c) of section 4, make an indemnity agreement.
(b) The aggregate of loss or damage covered by indemnity agreements made under this Act shall not exceed $10,000,000,000 at any one time.
(c) No indemnity agreement for a single exhibition shall cover loss or damage in excess of $1,200,000,000.
(d) if the estimated value of the items covered by an indemnity agreement for a single exhibition is—
(1) $2,000,000 or less, then the coverage under this Act shall extend only to loss or damage in excess of the first $15,000 of loss or damage to items covered;
(2) more than $2,000,000 but less than $10,000,000, then coverage under this Act shall extend only to loss or damage in excess of the first $25,000 of loss or damage to items covered;
(3) not less than $10,000,000 but less than $125,000,000, then coverage under this Act shall extend to loss or damage in excess of the first $50,000 of loss or damage to items covered;
(4) not less than $125,000,000 but less than $200,000,000, then coverage under this Act shall extend to loss or damage in excess of the first $100,000 of loss or damage to items covered;
(5) not less than $200,000,000 but less than $300,000,000, then coverage under this Act shall extend to loss or damage in excess of the first $200,000 of loss or damage to items covered;
(6) not less than $300,000,000 but less than $400,000,000, then coverage under this Act shall extend to loss or damage in excess of the first $300,000 of loss or damage to items covered;
(7) not less than $400,000,000 but less than $500,000,000, then coverage under this Act shall extend to loss or damage in excess of the first $400,000 of loss or damage to items covered.
(8) $500,000,000 or more, then coverage under this Act shall extend to loss or damage in excess of the first $500,000 of loss or damage of items covered.

(20 U.S.C. 974) Enacted Dec. 20, 1975, P.L. 94-158, sec. 5, 89 Stat. 845; amended Dec. 4, 1980, P.L. 96-496, secs. 301, 302, 94 Stat. 2593; amended Dec. 20, 1985, P.L. 99-194, sec. 303, 99 Stat. 1345; amended Dec 22, 1987, P.L. 100-202, sec. 101, 101 Stat 13329-213,1329-2219; amended Nov. 5, 1990, P.L. 101-512, sec. 301, 104 Stat. 1976; amended Oct. 1998, P.L. 105-277; amended Sept 25, 2003, P.L. 108-81, sec. 102; amended August 2, 2005, P.L. 109-54, sec. 427.

REGULATIONS

SEC. 6. (a) The Council shall prescribe regulations providing for prompt adjustment of valid claims for losses which are covered by an agreement made pursuant to section 5, including provision for arbitration of issues relating to the dollar value of damages involving less than total loss or destruction of such covered objects.
(b) In the case of a claim of loss with respect to an item which is covered by an agreement made pursuant to section 5, the Council shall certify the validity of the claim and the amount of the loss to the Speaker of the House of Representatives and the President pro tempore of the Senate.

(20 U.S.C. 975) Enacted Dec. 20, 1975, P.L. 94-158, sec. 6, 89 Stat. 845.

AUTHORIZATION AND APPROPRIATIONS

Sec. 7. There are hereby authorized to be appropriated such sums as may be necessary (1) to enable the Council to carry out its functions under this Act, and (2) to pay claims certified pursuant to section 6(b).

(20 U.S.C 976) Enacted Dec 20, 1978, P.L. 94-158, sec. 7, 89 Stat. 846.

REPORT

Sec. 8. The Council shall report annually to the Congress (1) all claims actually paid pursuant to this Act during the preceding fiscal year, (2) pending claims against the Council under this Act as of the close of that fiscal year, and (3) the aggregate face value of contracts entered into by the Council which are outstanding at the close of that fiscal year.

(20 U.S.C 977) Enacted Dec 20, 1975, P.L. 94-158, sec. 9, 89 Stat. 846.

================================

Federal Register August 16, 1995

NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES

45 CFR Part 1160
RIN 3154–AAoo

Indemnities Under the Arts and Artifacts Indemnity Act

AGENCY: Federal Council on the Arts and the Humanities.
ACTION: Final rule.

SUMMARY: 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.

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 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

footnotes:

1 Id.
2 Id.
3 H.R. Rep. No. 680, 94th Cong., 1st Sess., at 5.
4 S. Rep. No. 289, 94th Cong., 1st Sess., at 1.
5 H.R. Rep. No. 680, 94th Cong., 1st Sess., at 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 Foundation: Impressionist, Post- Impressionist 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]

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Federal Register, Oct. 2, 1991

ARTS AND THE HUMANITIES
45 CFR Part 1160

Indemnities Under the Arts and Artifacts Indemnity Act

AGENCY: National Endowment for the Arts.

ACTION: Final rule.

SUMMARY: This rule describes the procedures of the Arts and Artifacts Indemnity Program. The previous rules had not been updated since 1976. The revisions reflect changes in the statute and Program guidelines over the last fifteen years.

EFFECTIVE DATE: November 1. 1991

FOR FURTHER INFORMATION CONTACT:
Alice M. Whelihan. Indemnity Administrator. Museum Program. National Endowment for the Arts. 1100 Pennsylvania Avenue. NW.. Washington. DC 20506. 202/682-5442. from whom copies of the program guidelines are available.

SUPPLEMENTARY INFORMATION: This rule adopts as a final rule a proposed rule published in the Federal Register on July 15.1991 (56 FR 32155). The rules govern the Arts and Artifacts Indemnity Act as amended (20 U.S.C. 971-977). The legal counsel of the Federal Council on the Arts and the Humanities reviewed suggestions made by staff and made further adjustments to revise and update the rules. The members of the Indemnity Advisory Panel and Federal Council on the Arts and the Humanities approved the revisions. The revised rules will be included in guideline packages for prospective applicants and in Certificates of Indemnity. The Catalogue of Federal Domestic Assistance number for the Arts and Artifacts Indemnity Program is 45-201.

No comments were received with respect to these proposals. A technical change was made in § 1160.4(e) to clarify the request for information on the significance and value of the exhibition, With that minor change. it has been determined that the proposed rule should be adopted as a final rule. List of Subjects in 45 CFR Part 1160 Indemnity payments. Alice M. Whelihan. Indemnitv Administrator, National Endowment for the Arts. For reasons set out in the preamble Title 45, Chapter XI. part 1160 of the Code of Federal Regulations is amended as set forth below.

List of Subjects in 45 CFR Part 1160

Indemnity payments.
Alice M. Wbelihan.
Indemnity Administrator, National Endowment for the Arts.
For reasons set Ollt in the preamble
Title 45, Chapter XI. par t 1160 of the
Code of Federal Regulations is amended as set forth below.

§ 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.
(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.
(b) Program guidelines and further information are available from the Indemnity Administrator, c/o Museum Program, National Endowment for the Arts, 1100 Pennsylvania Avenue, NW., Washington, DC 20506.

§ 1160.2 Federal Council on the Arts and the Humanities

For the purposes of this part (45 CFR part 1160) the Federal Council on the Arts and the Humanities shall be composed of the Chairman of the National Endowment for the Arts, the Chairman of the National Endowment for the Humanities, the Secretary of Education, the Director of the National Science Foundation, the Librarian of Congress, the Chairman of the Commission of Fine Arts, the Archivist of the United States, the Commissioner, Public Buildings Service, General Services Administration, the Administrator of the General Services Administration, the Director of the United States Information Agency, the Secretary of the Interior, the Secretary of Commerce, the Secretary of Transportation, the Chairman of the National Museum Services Board, the Director of the Institute of Museum and Library Services, the Secretary of Housing and Urban Development, the Secretary of Labor, the Secretary of Veterans Affairs, and the Commissioner of the Administration on Aging.

§ 1160.3 Definitions.

For the purposes of this part:

(a) Council means the Federal Council on the Arts and the Humanities as defined in §1160.2.
(b) Letter of Intent means an agreement by the Council to provide an indemnity covering a future exhibition subject to compliance with all requirements at the date the indemnity is to be effective.
(c) Lender means the owner of an object.
(d) Eligible item means an object which qualifies for coverage under the Arts and Artifacts Indemnity Act.
(e) Exhibition means a public display of an indemnified items(s) at one or more locations, as approved by the Council, presented by any person, nonprofit agency or institution, or Government, in the United States or elsewhere.
(f) On Exhibition means the period of time beginning on the date an indemnified item leaves the place designated by the lender and ending on the termination date.
(g) Indemnity Agreement means the contract between the Council and the indemnitee covering loss or damage to indemnified items under the authority of the Arts and Artifacts Indemnity Act.
(h) Indemnitee means the party or parties to an indemnity agreement issued by the Council, to whom the promise of indemnification is made.
(i) Participating institution(s) means the location(s) where an exhibition indemnified under this part will be displayed.
(j) Termination date means the date thirty (30) calendar days after the date specified in the indemnity Certificate by which an indemnified item is to be returned to the place designated by the lender or the date on which the item is actually so returned, whichever date is earlier. (In museum terms this means wall-to-wall coverage.) After 11:59 p.m. on the termination date, the item is no longer covered by the indemnity agreement unless an extension has theretofore been requested by the indemnitee and granted in writing by the Council.

§ 1160.4 Application for indemnification.

An applicant for an indemnity shall submit an Application for Indemnification, addressed to the Indemnity Administrator, National Endowment for the Arts, Washington, DC 20506, which shall described as fully as possible:

(a) The time, place, nature and Project Director/Curator of the exhibition for which the indemnity is sought;
(b) Evidence that the owner and present possessor are willing to lend the eligible items, and both are prepared to be bound by the terms of the indemnity agreement;
(c) The total value of all items to be indemnified, including a description of each item to be covered by the agreement and each item's value;
(d) The source of valuations of each item, plus an opinion by a disinterested third party of the valuations established by lenders;
(e) The significance, and the educational, cultural, historical, or scientific value of the items to be indemnified, and of the exhibition as a whole;
(f) Statements describing policies, procedures, techniques, and methods to be employed with respect to:
(1) Packing of items at the premises of, or the place designated by the lender;
(2) Shipping arrangements;
(3) Condition reports at lender's location;
(4) Condition reports at borrower's location;
(5) Condition reports upon return of items to lender's location;
(6) Security during the exhibition and security during transportation, including couriers were applicable;
(7) Maximum values to be transported in a single vehicle of transport.
(g) Insurance arrangements, if any, which are proposed to cover the deductible amount provided by law or the excess over the amount indemnified;
(h) Any loss incurred by the indemnitee or participating institutions during the three years prior to the Application for Indemnification which involved a borrowed or loaned item(s) or item(s) in their permanent collections where the amount of loss or damage exceeded $5,000. Details should include the date of loss, nature and cause of damage, and appraised value of the damaged items(s) both before and after loss;
(i) If the application is for an exhibition of loans from the United States, which are being shown outside the United States, the applicant should describe in detail the nature of the exchange of exhibitions of which it is a part if any, including all circumstances surrounding the exhibition being shown in the United States, with particular emphasis on facts concerning insurance or indemnity arrangements.
(j) Upon proper submission of the above required information an application will be selected or rejected for indemnification by the Council. The review criteria include:
(1) Review of educational, cultural, historical, or scientific value as required under the provisions of the Arts and Artifacts Indemnity Act;
(2) Certification by the Director of the United States Information Agency that the exhibition is in the national interest; and
(3) Review of the availability of indemnity obligational authority under section 5(b) of the Arts and Artifacts Indemnity Act (20 U.S.C. 974).

(Approved under OMB control number 3135–0094)

[56 FR 49848, Oct. 2, 1991; 56 FR 51842, Oct. 16, 1991. Redesignated at 60 FR 42465, Aug. 16, 1995]

§ 1160.5 Certificate of national interest.

After preliminary review the application will be submitted to the Director of the United States Information Agency for determination of national interest and issuance of a Certificate of National Interest.

§ 1160.6 Indemnity agreement.

In cases where the requirements of §§1160.4 and 1160.5 have been met to the satisfaction of the Council, an Indemnity Agreement pledging the full faith and credit of the United States for the agreed value of the exhibition in question may be issued to the indemnitee by the Council, subject to the provisions of §1160.7.

§ 1160.7 Letter of intent.

In cases where an exhibition proposed for indemnification is planned to begin on a date more than twelve (12) months after the submission of the application, the Council, upon approval of such a preliminary application, may provide a Letter of Intent stating that it will, subject to the conditions set forth therein, issue an Indemnity Agreement prior to commencement of the exhibition. In such cases, the Council will examine a final application during the twelve (12) month period prior to the date the exhibition is to commence, and shall, upon being satisfied that such conditions have been fulfilled, issue an Indemnity Agreement.

§ 1160.8 Loss adjustment.

(a) In the event of loss or damage covered by an Indemnity Agreement, the indemnitee without delay shall file a Notice of Loss or Damage with the Council and shall exercise reasonable care in order to minimize the amount of loss. Within a reasonable time after a loss has been sustained, the claimant shall file a Proof of Loss or Damage on forms provided by the Council. Failure to report such loss or damage and to file such Proof of Loss within sixty (60) days after the termination date as defined in §1160.3(k) shall invalidate any claim under the Indemnity Agreement.
(b) In the event of total loss or destruction of an indemnified item, indemnification will be made on the basis of the amount specified in the Indemnity Agreement.
(c) In the event of partial loss, or damage, and reduction in the fair market value, as a result thereof, to an indemnified item, indemnification will be made on the basis provided for in the Indemnity Agreement.
(d) No loss or damage claim will be paid in excess of the Indemnification Limits specified in §1160.11.

§ 1160.9 Certification of claim and amount of loss to the Congress.

Upon receipt of a claim of total loss or a claim in which the Council is in agreement with respect to the amount of partial loss, or damage and reduction in fair market value as a result thereof, the Council shall certify the validity of the claim and the amount of such loss or damage and reduction in fair market value as a result thereof, to the Speaker of the House of Representatives and the President pro tempore of the Senate.

§ 1160.10 Appraisal procedures.

(a) In the event the Council and the indemnitee fail to agree on the amount of partial loss, or damage to, or any reduction in the fair market value as a result thereof, to the indemnified item(s), each shall select a competent appraiser(s) with evidence to be provided to show that the indemnitee's selection is satisfactory to the owner. The appraiser(s) selected by the Council and the indemnitee shall then select a competent and disinterested arbitrator.
(b) After selection of an arbitrator, the appraisers shall assess the partial loss, or damage to, or where appropriate, any reduction in the fair market value of, the indemnified item(s). The appraisers' agreement with respect to these issues shall determine the dollar value of such loss or damage or repair costs, and where appropriate, such reduction in the fair market value. Disputes between the appraisers with respect to partial loss, damage repair costs, and fair market value reduction of any item shall be submitted to the arbitrator for determination. The appraisers' agreement or the arbitrator's determination shall be final and binding on the parties, and agreement on amount or such determination on amount shall be certified to the Speaker of the House and the President pro tempore of the Senate by the Council.
(c) Each appraiser shall be paid by the party selecting him or her. The arbitrator and all other expenses of the appraisal shall be paid by the parties in equal shares.

§ 1160.11 Indemnification limits.

The dollar amounts of the limits described below are found in the guidelines referred to in §1160.1 and are based upon the statutory limits in the Arts and Artifacts Indemnity Act (20 U.S.C. 974).
(a) There is a maximum amount of loss or damage covered in a single exhibition or an Indemnity Agreement.
(b) A sliding scale deductible amount is applicable to loss or damage arising out of a single exhibition for which an indemnity is issued.
(c) There is an aggregate amount of loss or damage covered by indemnity agreements at any one time.
(d) The maximum value of eligible items carried in or upon any single instrumentality of transportation at any one time, is established by the Council.

[FR Doc. 91-23531 Filed 10-1-91: 8:45 am]

National Endowment for the Arts · an independent federal agency
1100 Pennsylvania Avenue NW
Washington, DC 20506