issue-1996-05-15•Federal Register final rules — 1996-05-15
Federal Register final rules — 1996-05-15
issue-1996-05-15Federal Register final rules — 1996-05-15Regulation
Published Federal Register documents, not public-inspection drafts. The GPO XML/text rendition is a research aid; the linked complete official PDF retains the printed layout and all graphics. Graphics are retained in that PDF and are not independently reproduced in this text rendition. Publication does not establish that every provision remains legally in force.
FR Doc. 96-12185 The Application of Irradiation to Phytosanitary Problems
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24433-24439]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12185]
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Rules and Regulations
Federal Register
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This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
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under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
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Federal Register / Vol. 61, No. 95 / Wednesday, May 15, 1996 / Rules
and Regulations
[[Page 24433]]
DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection Service
7 CFR Part 319
[Docket No. 95-088-1]
The Application of Irradiation to Phytosanitary Problems
AGENCY: Animal and Plant Health Inspection Service, USDA.
ACTION: Notice of policy.
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SUMMARY: This document sets forth a policy statement that shares
positions and policies of the Animal and Plant Health Inspection
Service (APHIS) concerning the use of irradiation as a treatment for
plant pests of quarantine significance.
In preparing this document, we have reviewed and evaluated
pertinent and contemporary information concerning irradiation as a
phytosanitary treatment or potential treatment. We have examined this
information against the background of regulatory and operational
parameters associated with APHIS, Plant Protection and Quarantine's
(PPQ's) mission and authority. The objective of this effort has been to
generate a reference document that describes policies, procedures, and
regulations specifically related to irradiation as a phytosanitary
treatment. This document is designed for review and comment.
ADDRESSES: There are several ways to comment on this document. Because
we hope to develop a dialogue among persons interested in contributing
to the improvement of these policies, the preferred method of
commenting is to subscribe to an e-mail mailing list we are
establishing for the discussion of the policy issues. After you
subscribe, on an ongoing basis you will receive e-mail copies of all
comments submitted to the mailing list. Those wishing to subscribe to
this service should send an e-mail message to
``[email protected]''--without the quotation marks--and
leave the subject area empty. In the body of the message, type
``subscribe irrad''--again without the quotes--and then send the
message.
You can also subscribe to this mailing list or file individual e-
mail comments using a form contained in a World Wide Web site devoted
to this document. The site also contains downloadable copies of this
document and may also have additional background documents on
irradiation, and links to other sites concerning radiation and the
irradiation of products. The address (URL) of the World Wide Web site
is: www.aphis.usda.gov/ppd/irrad.
You may also submit comments by postal mail. To do so, please send
an original and three copies of your comments to Docket No. 95-088-1,
Regulatory Analysis and Development, PPD, APHIS, Suite 3C03, 4700 River
Road Unit 118, Riverdale, MD 20737-1238. Please state that your
comments refer to Docket No. 95-046-1. Postal and e-mail comments
received may be inspected at USDA, room 1141, South Building, 14th
Street and Independence Avenue SW., Washington, DC, between 8 a.m. and
4:30 p.m., Monday through Friday, except holidays. Persons wishing to
inspect comments are requested to call ahead on (202) 690-2817 to
facilitate entry into the comment reading room.
FOR FURTHER INFORMATION CONTACT: Mr. Robert Griffin, Senior Plant
Pathologist, USDA, APHIS, PPD, 4700 River Road Unit 117, Riverdale, MD
20737-1228; (301) 734-3576; e-mail [email protected].
SUPPLEMENTARY INFORMATION:
Development of Policy Statement
The first draft of these positions and policies was introduced in
October 1994 during the annual meeting of the North American Plant
Protection Organization (NAPPO). Subsequent review has included NAPPO
participants and a broadening circle of individual experts,
organizations, and agencies interested in, involved in, or impacted by
irradiation as a phytosanitary treatment. Numerous modifications have
been made as additional information has been collected and reviewed.
This document is not final or authoritative, and does not establish any
agency requirements. Any requirements concerning irradiation that APHIS
develops will be promulgated through rulemaking published in the
Federal Register.
Since 1989, the only formally adopted regulatory policy for
irradiation as a phytosanitary treatment in the United States has been
based on Title 7 of the Code of Federal Regulations (7 CFR 318.13-4f,
``Administrative instructions for approving an irradiation treatment as
a condition for certification of papayas for movement from Hawaii'').
This authorization is specific for a commodity, place of origin, and
program, but is designed for a complex of fruit flies rather than a
single pest. While routine commercial shipments were never realized
under this regulation due to the lack of a treatment facility in
Hawaii, the authorization has proven useful from the standpoint of
beginning to establish policies for irradiation as a phytosanitary
treatment in the United States.
Six years later, PPQ remains dedicated to using the most up-to-
date, appropriate and least intrusive technology to provide quarantine
security, and the need for alternative treatments and pest mitigation
systems is greater than ever. Global trade pressures and the possible
loss of methyl bromide as a fumigant for regulatory pest treatments
make it imperative that practical treatment options be explored.
At the same time, irradiation treatment has matured significantly.
Technological advances, greater experience, and an increasingly larger
body of research indicate that irradiation has important potential as a
treatment for quarantine pest problems.
It is in this light that PPQ now seeks to expand the regulatory
framework addressing irradiation treatment and develop comprehensive
policy statements that will facilitate the development and
formalization of new treatments for phytosanitary applications. This
policy statement provides a sketch from which final policies can be
codified after broad review and input.
Position Summary
The regulations at 7 CFR 318.13-4f provide administrative
instructions for an irradiation treatment as a condition for the
certification of fresh papayas
[[Page 24434]]
moving to the mainland States from Hawaii. These were the first
regulations authorizing the use of irradiation as a quarantine
treatment, and the regulations set a number of policy precedents. The
regulations included the following five basic principles or policies
for irradiation:
1. Requirement that irradiation facilities meet certain APHIS
standards;
2. Monitoring based on inspection of treatment records and
unannounced visits;
3. Policy that the Department is not responsible for damage
resulting from intolerance to the prescribed dose;
4. Reliance on the authority and regulations of the United States
Nuclear Regulatory Commission to ensure U.S. facilities are constructed
and operated in a safe manner; and
5. Reliance on the authority and regulations of the United States
Food and Drug Administration (FDA) to ensure irradiated foods are
wholesome for human consumption.
The precedents described above remain valid to the extent that the
same would apply to any new regulations developed by PPQ for the
authorization of other treatments. However, additional clarity and
completeness are necessary to address the range of commodity, pest,
treatment, and operational issues potentially involved with the
approval of irradiation treatments for phytosanitary problems. In
addition, new information needs to be considered in adjusting existing
policies, and program designs must be adapted to address the unique
situations created by authorizing treatments conducted outside the
United States. Therefore, in addition to the five policy precedents
established by the existing regulations, APHIS has identified 28
additional policies, for a total of 33 policies relevant to
irradiation.
The following are summary statements of the 28 additional policies
and positions:
6. PPQ does not endorse the position that irradiation treatment
should be the only replacement for methyl bromide. PPQ believes that
there is adequate scientific evidence to show that irradiation provides
an alternative treatment to be explored and developed, and PPQ
recognizes that irradiation has potentially broad applications in the
treatment of quarantine plant pests.
7. The highest priority for treatment approval is generally given
to treatments deemed by PPQ to have the greatest potential immediate
need, use, and benefit.
8. Treatment schedules approved by PPQ must have been demonstrated
experimentally to achieve the level of efficacy required for a defined
level of quarantine security.
9. To the extent possible, PPQ will ensure consistent requirements
for both import and export authorizations, and align domestic
requirements with foreign requirements as fairly as possible.
10. Specific authorizations for the use of irradiation as a
phytosanitary treatment will initially be provided by PPQ on a case by
case basis following a pest risk analysis, the evaluation of efficacy
data, and the approval of operational protocols.
11. Irradiation may be used as a single treatment achieving
quarantine security, or as part of a multiple treatment, or as a
component in a pest mitigation system (systems approach).
12. Measures aimed at reducing pest presence prior to treatment are
encouraged but will not be required for treatments achieving quarantine
security. However, a very low initial infestation rate is important for
enhancing the acceptance and use of irradiation as a treatment and for
alleviating regulatory concerns arising from the detection of living
pests in the irradiated product.
13. In those instances where pest organisms survive treatment, it
is essential for quarantine purposes that the organism is unable to
reproduce, and it is desirable for the organism to be unable to emerge
from the commodity unless it can be easily distinguished from a non-
irradiated pest of the same species.
14. Live stages of pest organisms, or their signs or symptoms,
found in a commodity following a PPQ prescribed and approved
irradiation treatment will be presumed by PPQ to have been effectively
treated unless evidence exists to indicate that the integrity of the
treatment was inadequate. PPQ may perform or require laboratory or
other analyses on surviving pest organisms, or employ any available
technology to verify efficacy. Authorizations may be suspended or
modified and the requirements for system integrity may be adjusted
based upon the results of such studies.
15. Ionizing energy (radiation) may be provided by radionuclides
(gamma rays from cobalt-60 or cesium-137), electrons generated from
machine sources, or by x-rays. PPQ is not concerned with specifically
describing the requirements for equipment except to the extent that
equipment used for plant quarantine treatments is capable of
irradiating commodities to the specifications required for approved
treatments.
16. Irradiation treatment must be carried out to ensure that the
minimum absorbed dose (Dmin) required to assure quarantine security is
fully attained throughout the commodity. The schedule process for Dmin
must account for uncertainty associated with the dosimetry system
employed.
17. Definition of the lower dose limit is essential to the approval
of irradiation treatments for quarantine purposes. Definition of the
upper dose limit is not critical to determining quarantine security,
but is important from a quality standpoint and to identify potential
problems with the FDA limit for the maximum dose for food (currently 1
kilogray - see 21 CFR 179.26). PPQ will not be concerned with defining
the upper dose limit except to the extent that it is necessary to
determine the feasibility of a particular treatment.
18. Treatments must be proven with adequate dosimetry in accordance
with relevant internationally accepted standards, such as those
published by the American Society for Testing and Materials (ASTM) or
similar organizations. The dosimetry systems must be completely
described, including records related to identifying specific suppliers,
batches, processing dates, locations, and procedures as well as the
means of calibration (reference dosimetry) used.
19. PPQ will confer with the Agricultural Research Service (ARS),
United States Department of Agriculture (USDA) concerning the adequacy
of treatment data, research protocols, and treatment design. ARS will
identify or concur with the minimum dose for efficacy at the level
defined by PPQ as providing quarantine security for a pest or complex
of pests. Other experts may also be asked to provide input.
20. Dosages may be generic relative to a pest group or to a
commodity.
21. PPQ may prescribe treatments with doses higher than what is
indicated as effective by available data. This will be done to expedite
the incorporation of new treatments while providing a measure of safety
when PPQ and ARS judge the data to be inconclusive to the extent
necessary for approving a less rigorous treatment. All treatments will
be subject to amendment as new information is evaluated. PPQ expects
that modifications to an existing treatment will be more easily and
quickly accomplished than approval of a new treatment.
22. An irradiation program protocol, describing the details of a
program surrounding a specific commodity treatment and facility
processes (import or export, domestic or foreign), will be developed
prior to the approval of a new facility or a new commodity for an
existing facility.
[[Page 24435]]
23. Treatment facilities must be licensed by relevant national
authorities. When not conflicting with national authority, compliance
with the criteria of the International Inventory of Authorized Food
Irradiation Facilities, established by the International Consultative
Group on Food Irradiation (ICGFI), is also recommended for facilities
treating food items.
24. Treatment facilities will be subject to the prior approval of
PPQ and will be subject to periodic unannounced monitoring.
Recertification by PPQ will be done on an annual basis or following
repairs, modifications, or adjustments in equipment affecting the
delivery of treatments. Source replenishment (in the case of
radionuclide facilities) will require additional dose mapping.
25. Dose mapping of the product in every geometric packing
configuration, arrangement, and product density that will be used
during routine treatments will be required prior to PPQ approval of a
facility. Dose mapping must be performed in accordance with relevant
internationally accepted standards such as those published by ASTM or
similar organizations.
26. The irradiation treatment can be applied as an integral part of
packing operations, or it may be done at a central location such as the
port of embarkation after packing or packaging. Treatment may also be
performed at the port of arrival or a designated location in the
destination country when safeguards are deemed by PPQ to be adequate
and operationally feasible.
27. The irradiation treatment may be applied to bulk or continuous
unpackaged commodities, or the commodities may be packaged at the time
of treatment. If unpackaged or exposed in packaging,1 commodities
will require safeguarding immediately following treatment to ensure
that they do not become reinfested or contaminated after treatment.
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\1\ Note: Packaging materials may require FDA approval.
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28. Treated and untreated commodities must be adequately segregated
and handled under conditions that will safeguard against cross-
infestation or mistaken identity. Appropriate procedures specific to
each facility and commodity treatment program must be approved by PPQ
in advance.
29. Direct PPQ supervision of treatment programs may not be
necessary for programs deemed by PPQ to provide adequate system
integrity. Minimum criteria include PPQ approval of the treatment
facility, National Plant Protection Organization (NPPO) certification
of treatments, and PPQ approval of a program protocol for system
integrity. PPQ will directly and routinely verify the adequacy of
treatment facilities. PPQ presence may also be necessary for the
monitoring of related program activities and system integrity.
30. Requirements for program protocols and system integrity will be
harmonized with FDA, the USDA Food Safety Inspection Service (FSIS),
and other regulatory authorities to the extent possible.
31. Phytosanitary certificates issued in accordance with the
International Plant Protection Convention (IPPC) may be used as
official documentation verifying the successful completion of a
treatment. Certificates must specifically identify the treated lot and
record the prescribed minimum dose and the verified minimum dose. The
maximum dose may also be required in order to comply with FDA
requirements for some commodities.
32. PPQ is committed to harmonizing with other U.S. agencies,
States, foreign counterparts, and regulatory bodies involved with the
development, approval, and application of irradiation treatments for
phytosanitary problems. PPQ will make every attempt to avoid overlap,
conflict, and ambiguity associated with the relationship of PPQ
regulations to those of other authorities.
33. PPQ is committed to increasing its own depth of understanding
concerning irradiation as a treatment for phytosanitary problems and
expanding its expertise for the approval of treatments and the
certification of facilities.
Research Protocols
General PPQ Requirements for the Acceptance of Irradiation as a
Quarantine Treatment
Irradiation as a single treatment, part of a multiple treatment, or
combined with other pest mitigation measures as a component of a
systems approach, must have a scientifically demonstrated level of
efficacy. The research necessary to demonstrate efficacy for PPQ begins
with laboratory scale tests designed to provide results that can be
analyzed statistically to hypothesize the parameters necessary to
attain a defined level of quarantine security.
Unlike most other PPQ treatment approvals, irradiation treatments
may not always require a second level of confirmatory testing to
demonstrate that the treatment is efficacious under the conditions
associated with the commercial treatment of the commodity. However, the
equipment, processes, and dosimetry for any specific treatment facility
must be approved and monitored by PPQ to ensure that commercial
treatments comply with the parameters for approved treatments.
Judging the feasibility of treatments for commercial applications
is outside the scope of PPQ's authority and responsibility. Likewise,
concerns related to phytotoxicity and issues of quality are not the
responsibility of PPQ. Therefore, primary responsibility falls upon the
research and commercial sectors to ensure that treatments demonstrated
to be efficacious against pests of quarantine concern are also
practical for commercial use.
The efficacy of the treatment as demonstrated against naked pests
in vitro is the primary criterion for approval in most cases,2 but
concurrent phytotoxicity studies are important and appropriate in order
to determine the commercial feasibility of proposed treatments even
though data of this nature will not normally be required by PPQ to
demonstrate efficacy.
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\2\ The FDA establishes the maximum absorbed ionizing radiation
dose for food (currently established at 1 kilogray for the
disinfestation of food for arthropods--21 CFR 179.26). Irradiation
treatments designed for the treatment of other than arthropods in
food must receive FDA approval as well.
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General Research Protocol
If Unknown, Determine the Pest or Pests That Are of Quarantine
Significance and Would be Expected to be Found on or Within the
Commodity at the Time of Export
Submit this information to PPQ for concurrence. PPQ will assess the
risks associated with any quarantine significant pest or pests.
Irradiation may serve as the means of mitigating the risks identified
in the risk analysis process.
Determine the Most Tolerant Life-stage of the Pest(s) of Concern That
Would be Encountered at the Time of Treatment
If not documented in the literature, this must be determined
through research. Research to determine the most tolerant life-stage
may be done with naked organisms outside the commodity. Submit this
information to PPQ for concurrence.
Determine the Minimum Absorbed Dosage (Dmin) and the Type of Radiation
Required to Maintain Quarantine Security
Experimental design must utilize sampling methods and sample sizes
appropriate for statistical tests to be used. In some instances,
efficacy may be
[[Page 24436]]
inferred from the literature for related species and commodities when
complete laboratory investigations are not possible.3 The means of
calibration (reference dosimetry) must be described in detail and
should be developed in accordance with relevant accepted standards,
such as those published by ASTM or similar organizations. Submit the
proposed experimental design to PPQ for concurrence.
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\3\ Quarantine security may be defined in terms of mortality or
in terms of other criteria that would ensure that survivors are not
able to reproduce and are not confused with untreated pests
encountered inside and outside the commodity. In the case of fruit
flies, PPQ has established the criterion as ``the non-emergence of
adults,'' referring to interruption of the developmental sequence
leading to an adult that can emerge from the commodity.
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Confirm That the Proposed Irradiation Dosage Will Provide Quarantine
Security by Testing Large Numbers of Organisms
Submit the proposed experimental design to PPQ for concurrence.
Analyze data statistically.
Analyze data statistically
Submit the proposed statistical methodology to PPQ for concurrence.
Describe Specific Conditions Necessary for Commercial Application of
the Proposed Treatment Methodology. Specify Maximum and Minimum
Absorbed Dose
Submit proposed treatment regime and conditions necessary for
commercial-scale treatment to PPQ for review. This does not mean that
commercial-scale testing is necessary, only that the conditions for
commercial-scale treatments be described to PPQ prior to building a
facility or configuring existing facilities for quarantine treatments.
This provides PPQ the opportunity to address components of design,
monitoring, safeguarding, and commodity handling that will be essential
for the ultimate approval of a specific facility.
Specific Research Protocol: Quarantine Significant Fruit Flies
Quarantine security for a single treatment protocol will be defined
as the prevention of adult emergence at the 99.9968 percent level with
95 percent confidence as demonstrated by a valid statistical method.
Specific Research Protocol: Quarantine Significant External Feeders,
Hitchhikers, and Surface Contaminants
Quarantine security for a single treatment protocol will be defined
as achieving 99.9968 percent sterility or mortality at the 95 percent
confidence level, depending on the pest. Large scale or commercial
confirmatory testing may be waived if satisfactory evidence can be
presented showing that conditions in small scale testing are
representative of commercial practices.
Specific Research Protocol: Quarantine Significant Systemic Organisms
Quarantine security for a single treatment protocol will be defined
as achieving 99.9968 percent sterility or mortality 4 at the 95
percent confidence level, depending on the pest. Efficacy must be
demonstrated with lab scale testing of organisms in host material.
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\4\Note: In general, sterility is more acceptable for organisms
that remain in (or on) the host. Demonstrating the efficacy of
treating organisms for sterility may be difficult to accomplish
without full information on the factors favoring successful
reproduction.
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System Integrity (Quality Assurance/Quality Control)
Post-treatment safeguard methods are critical for irradiation
treatments, as they are for many other commodity treatments, because
the pest may continue to live and develop following treatment. As a
result, confidence in the adequacy of irradiation treatment rests with
the assurance that the treatment:
(a) Is efficacious against the pest under specific conditions, and
(b) Has been properly conducted and the commodity safeguarded.
To ensure condition (a) is met, strict research protocols and
dosimetry requirements prevent lack of efficacy that would lead to
treatment failure. Condition (b) is assured by well designed and
closely monitored systems for treatment delivery and safeguards that
assure system integrity.
This section addresses the policies being considered by PPQ for
ensuring system integrity in the application of irradiation to
phytosanitary problems. The focus of these policies is the achievement
of quarantine security. Product quality is a commercial responsibility
that must also be considered.
A. Pretreatment Conditions
Packers and treatment facility operators must keep complete records
concerning sources (growers) supplying commodities for treatment. These
records must be available for PPQ review in the event a trace-back is
necessary. Trace-back capability is important when pests other than the
target pests have been detected.
Untreated commodities and other agricultural products must be
stored separately from treated commodities and appropriately marked. A
fail-safe means of moving the commodity from receiving areas to
treatment areas in a timely fashion and without mistaken identity or
risk of cross-contamination is essential.
Packaging prior to irradiation is desirable to prevent
reinfestation if irradiation is done at the export source, and to
prevent the accidental escape of target pests at the destination if the
treatment is applied at the destination.
B. Treatment Conditions
An accurate measure of absorbed dose is critical to determining and
monitoring adequacy. The required number and frequency of these
measurements will be prescribed by PPQ based on the specific equipment,
processes, configurations, and commodities.
Approved, standardized dosimetry must demonstrate that the absorbed
dose range, including areas of the minimum and maximum dose is well
mapped, controlled, and recorded for specific pests, commodities, and
equipment.
Dosimetry must consider variations due to density and composition
of the material treated, variations in shape and size, variations in
orientation of the product, stacking, volume, and packaging.
Absorbed dose must be measured using calibrated dosimeters approved
in advance by PPQ. Dosimeters must be calibrated to a recognized
national or international standard.
The number of dosimeters used shall be in accordance with relevant
internationally accepted standards, such as those published by ASTM.
Complete dosimetry records must be kept by the treatment facility
for at least 1 year after treatment. These records must be available to
PPQ for review at any time.
Facilities and control procedures must have approval and licensing
in conformance with local, national, and, where applicable,
international regulatory bodies having authority over the particular
situation or location. For non-U.S. locations, PPQ must judge these to
be adequate and equivalent to U.S. standards.
Facilities must be certified by PPQ for use initially and at least
annually. An increase or decrease in radioisotope or major modification
to equipment that impacts the delivered dose must be reviewed by PPQ
prior to recertification. Approval will be based on a common set of
criteria plus those specific to the site and commodity programs.
Significant variance in dose delivery (based on PPQ monitoring of
dosimetry
[[Page 24437]]
records) may provide the basis for requiring recertification.
Products not treated according to required schedules must be
removed and discarded or otherwise eliminated from shipments for
export. Retreatment is not allowed unless it can be demonstrated that
there is a high degree of confidence that retreatment will not result
in misidentification or cross-contamination, or conflict with other
restrictions.
C. Post-treatment Conditions
Treated commodities must be protected from reinfestation by pest-
proof packaging or other safeguards if treated outside the U.S.
Packages must be marked and labeled with treatment lot numbers and
other identifying features allowing the identification of treatment
lots and trace-back (packing and treatment facility identification and
locations, dates of packing and treatment).
D. Documentation and Monitoring
A phytosanitary certificate will be accepted as certification of
treatment. Minimum information to provide includes identification of
the shipment by treatment lot and certification of the target minimum
dose and the verified minimum absorbed dose.
The treatment operator must have reliable and probative evidence of
correct treatment for each lot certified.
Regulatory Framework
Existing Regulations
Few PPQ treatments are specifically described within the Code of
Federal Regulations (CFR). Most approved treatments are included in the
PPQ Treatment Manual, which is incorporated into the CFR by reference.
An irradiation treatment for papayas from Hawaii is the only
irradiation treatment currently approved by PPQ. This authorization is
specific for a commodity, origin, and program but is designed for a
complex of fruit flies rather than a single pest. The authorization has
proven useful from the standpoint of beginning to establish policies
for irradiation as a phytosanitary treatment in the United States.
Proposed Processes and Structure for New Regulations
The degree of sophisticated work and testing needed to develop and
prove an irradiation treatment program make it essential that the
criteria for approval be clearly understood in advance. A specific and
comprehensive statement of policies combined with a pre-defined
strategy for regulatory incorporation are essential to ensuring that
the development and implementation of new treatments is not unduly
stifled by regulatory requirements nor too liberal as to allow
failures.
PPQ assumes that many additional requests for treatment approvals
will be specific for pest-commodity-origin combinations and will
include unique provisions for particular program parameters. Single
pest treatments as well as broader targets, such as entire groups of
pests, are likely to be explored. A number of individual authorizations
corresponding to items within regulated commodity groups (such as
fruits and vegetables or logs and lumber) will be necessary. There is
also the potential for broad spectrum uses resulting in authorizations
that cross the lines of existing regulated commodity groups. There is a
need to provide general statements of policy and background
requirements that pertain to all irradiation treatments. Any
requirements concerning irradiation that APHIS develops will be
promulgated through rulemaking published in the Federal Register.
The following is offered as a regulatory framework and policy
communication strategy for irradiation treatment:
Use draft position documents to solicit input in the
development of policies and the collection of pertinent information.
Use Federal Register publication and other methods to
widely circulate policy statements.
Use notice and comment rulemaking to propose and
ultimately codify new treatments approved by PPQ.
Commodity specific treatments may be incorporated through
additions to the regulations specific to the commodity group (i.e.,
fruits and vegetables).
Treatments with broader applications (either crossing the
lines of regulated groups, or having broad spectrum pest effectiveness)
may be incorporated into the CFR without being associated with an
existing regulated group.
Needs and Unresolved Issues
There is a need to develop standards for conducting and reporting
the findings of irradiation efficacy research for quarantine decision
making, including:
--Confirmatory testing requirements with sufficient numbers to
demonstrate quarantine security
--Standardized dosimetry and details concerning the methods used
--Information concerning the condition or viability of test organisms
and survivors
--Information concerning the condition of the commodity before and
after treatment
--Appropriate number of replications
--Appropriate methods of statistical analysis
--Criteria for combining data for different organisms or species
--Criteria for the substitution of organisms
There is a need for additional research on product tolerance, in
order to:
--Establish tolerance ranges for more commodities
--Characterize treatment variables that affect phytotoxicity
There is a need for additional research on the efficacy of
irradiation for other pests and diseases, including:
--Data supporting generic doses for commodity and pest groups
--Treatments for other arthropods, diseases, nematodes, noxious weeds
--Coordination with other quarantine and food safety concerns, i.e.,
animal products
Research is needed to develop methods to verify the adequacy of
treatments, particularly a means for verifying that a live pest that
has survived treatment has been adequately irradiated. This also
requires development of dosimeters appropriate to the relatively low
levels of irradiation used for quarantine treatments.
Research is needed to determine the conditions under which in vitro
efficacy data can be considered acceptable in lieu of in vivo or in
situ data.
There is a need to increase the number of facilities available for
treatment research.
A coordinated system is needed for storing and accessing data
associated with irradiation treatments for quarantine purposes.
There is a need for integration and coordination with food safety
and other authorities involved in regulatory aspects of applying
irradiation to agricultural commodities.
There is a need to identify critical control points for purposes of
avoiding hazards (process failures) associated with treatment.
There is a need to determine the load required to have
statistically meaningful results.
Finally, there is a need to develop estimates of the influence of
climate or other environmental effects on the pest's susceptibility to
irradiation treatment.
[[Page 24438]]
Current Initiatives
1. Generic Doses for Fruit Flies
An exhaustive review of the scientific literature concerning the
efficacy of irradiation treatments for fruit flies in fresh fruits and
vegetables has been conducted by ARS with the goal of determining
whether generic dosages could be recommended. An evaluation of the
results by ARS and PPQ provided the basis for the commodity-generic
dosages listed below.
----------------------------------------------------------------------------------------------------------------
Min.
Tephritid species Common name absorbed
dose (Gy)
----------------------------------------------------------------------------------------------------------------
Bactrocera dorsalis 5................. Oriental fruit fly......................................... 250
Ceratitis capitata.................... Mediterranean fruit fly.................................... 225
Bactrocera cucurbitae................. Melon fly.................................................. 210
Anastrepha suspensa................... Caribbean fruit fly........................................ 150
Anastrepha ludens..................... Mexican fruit fly.......................................... 150
Anastrepha obliqua.................... West Indian fruit fly...................................... 150
Anastrepha serpentina................. Sapote fruit fly........................................... 150
Bactrocera tryoni..................... Queensland fruit fly....................................... 150
Bactrocera jarvisi.................... (No common name)........................................... 150
----------------------------------------------------------------------------------------------------------------
5 Unless noted as Bactrocera dorsalis complex, B. dorsalis refers specifically to the species as described by
R.A.I. Drew and D.L. Hancock (1994) ``The Bactrocera dorsalis complex of fruit flies (Diptera: Tephritidae:
Dacinae) in Asia.'' Bulletin of Entomological Research: Supplemental Series Number 2 in Supplement 2. CAB
International, pp 68.
These dosages are generic in the sense that the prescribed dose is
deemed appropriate regardless of the commodity. In cases where more
than one of the listed species is of concern, the prescribed dose would
be the dose for the most tolerant species. All doses are subject to
adjustment based on the scientific evidence supporting a different
dose.
2. Modification of 7 CFR 318.13-4f (Papaya From Hawaii)
The regulations at 7 CFR 318.13-4f have not been used for routine
commercial shipments due to the lack of a treatment facility in Hawaii.
Recently however, PPQ has been approached concerning the potential for
modifying the existing regulations to allow for shipping to northern
areas of the mainland U.S. for treatment, and to include tropical
fruits such as lychee, rambutan, carambola, and cherimoya under a
modification of the existing authorization for papaya.
Pest risk analyses have been done or are underway to determine if
quarantine significant pests other than fruit flies are associated with
other tropical fruits of interest. At the same time, PPQ has authorized
a few experimental shipments from Hawaii to Chicago for treatment at
the dose prescribed in the existing regulations.
Test shipments were authorized under strict safeguards and
supervision. Each shipment was designed to provide PPQ with information
and experience required to determine whether suitable program protocols
could be developed and what conditions would be most appropriate. The
results may provide sufficient basis for proposing modifications to the
existing regulation.
3. Universal Treatment for Logs, Lumber and Unmanufactured Wood
Products
Interest is high in exploring the potential to use irradiation as a
means to address phytosanitary problems in raw wood products. Logs from
Russia are the primary commercial focus at this time.
Russian researchers have conducted research and provided data in
support of adopting a generic dose for treating raw logs. PPQ has
formed a science panel consisting of scientists from APHIS, ARS, and
the Forest Service to establish a research protocol, review data, and
oversee the research effort toward a generic dose providing probit 9
mortality for all organisms of concern in logs from Russia. If
approved, the treatment will be included among the universal treatment
options in 7 CFR 319.40.
Definitions
Absorbed Dose
Quantity of radiation energy imparted per unit of mass of a
specified material (D=de/dm). The mathematical relationship is the
quotient of de by dm, where de is the mean energy imparted by ionizing
radiation to matter of mass dm. The unit of absorbed dose is the gray
(Gy) where 1 gray is equivalent to the absorption of 1 joule per
kilogram (=100 rad).
Absorbed-Dose Mapping
Measurement of the absorbed-dose distribution within a process load
through the use of dosimeters placed at specified locations.
Absorbed-Dose Rate
The absorbed dose in a material per incremental time interval, ie.
the quotient of dD by dt (D=dD/dt). The unit for absorbed-dose rate is
gray per second (Gy/s)
Dmax
The maximum absorbed dose within the process load.
Dmin
The minimum absorbed dose within the process load.
Dose Uniformity Ratio
Ratio of the maximum to the minimum absorbed dose within the
process load. The concept is also referred to as the max/min dose
ratio.
U=Dmax/Dmin
Dosimeter
A device that, when irradiated, exhibits a quantifiable change in
some property of the device which can be related to absorbed dose in a
given material using appropriate analytical instrumentation and
techniques.
Dosimetry System
A system used for determining absorbed dose, consisting of
dosimeters, measurement instruments and their associated reference
standards, and procedures for the system's use.
Efficacy (Treatment)
Capability of a treatment to produce a defined, measurable, and
reproducible effect on pests.
Fruit Flies
Quarantine significant species of Tephritidae.
Gray (Gy)
Unit of absorbed dose where 1 Gy is equivalent to the absorption of
1 joule per kilogram.
1 Gy = 1 J/kg
[[Page 24439]]
Formerly, the special unit for absorbed dose was the rad 1 rad =
.01 J/kg = .01 GyIonizing radiation.
Any type of radiation consisting of charged particles or uncharged
particles, or both, that as a result of physical interaction, creates
ions by either primary or secondary processes. Charged particles could
be positive or negative electrons, protons, or other heavy ions, and
uncharged particles could be X-rays, gamma rays, or neutrons. (Note:
positive electrons, protons, heavy ions, or neutrons are not approved
for food irradiation.)
Irradiation
The purposeful application of ionizing radiation (gamma rays, x-
rays, or electrons) to a product (device or material) to achieve a
desired benefit. Gamma rays in commercial irradiation come from
radioactive cobalt-60 (60Co) or cesium-137 (137Cs). X-rays
(technically referred to as bremsstrahlung) are obtained using high
energy electrons from an electron accelerator striking a target.
Electrons from an accelerator can also be used to penetrate the product
directly.
Kilogray (kGy)
Measure of absorbed dose. 1kGy = 1,000 Gy
Label Dosimeter
A device that can be affixed to an article to be irradiated, and
which exhibits a quantifiable change in property which can be related
to absorbed dose. This change in property can be measured in situ.
(Note: as of 1994, no such devices that have the properties of a
dosimeter are commercially available for the levels appropriate to
quarantine treatments.)
Measurement Traceability
The ability to demonstrate and document on a continuing basis that
the measurement results from a particular measurement system are in
agreement with comparable measurement results obtained with a national
standard (or some identifiable and accepted standard) to a specified
uncertainty.
Pest (Plant)
Any biotic agent capable of causing damage to plants or plant
products.
Phytosanitary Treatment
Subjecting or exposing a plant or plant product to a process,
action, chemical or a physical influence proved to have a measurable
deleterious effect on pest organisms.
Probit 9 (Mortality)
A statistical estimation of 99.99683 percent mortality in a
population of live organisms, corresponding to a survival rate of 32
individuals per million.
Process Load
A volume of material with a specified loading configuration
irradiated as a single entity.
Quarantine Security
A management decision concerning the safety of a defined level of
pest risk. Additional mitigation is not required when quarantine
security is achieved.
Rad (rad or Radiation Absorbed Dose)
Special unit for absorbed dose that is being superseded by the gray
(Gy)
1 rad = 0.01 J/kg = 0.01 Gy
1 kilorad (krad) = 10 J/kg = 10 Gy
1 megarad (Mrad) = 1,000 J/kg = 1,000 Gy = 10 kGy
1Gy = 100 rads
1 kilogray = 100,000 rads
Radiation-Sensitive Indicators
Materials such as coated or impregnated adhesive-backed substrates,
inks, or coatings that may be affixed to, or printed on the irradiation
container and that undergo a visual change when exposed to ionizing
radiation. These indicators, sometimes referred to as go/no-go
indicators, are not dosimeters and are not a substitute for proper
dosimetry.
Systems Approach
A combination of multiple safeguards, treatments or other
mitigation measures. At least two mitigation measures must act
independently to reduce risk.
Validation
Establishing documented evidence that provides a high degree of
assurance that a specific process will consistently produce a product
(quarantine security) meeting its predetermined specifications and
quality characteristics.
Authority: 7 U.S.C. 150dd, 150ee, 150ff, 151-167, 450, 2803, and
2809; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, 371.2(c).
Done in Washington, DC, this 8th day of May 1996.
Terry L. Medley,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 96-12185 Filed 5-14-96; 8:45 am]
BILLING CODE 3410-34-P
Complete official Federal Register PDF
FR Doc. 96-12177 Use of Electronic Media for Delivery Purposes
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24651-24658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12177]
=======================================================================
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[[Page 24652]]
SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 200, 228, 229, 230, 232, 239, 240, 270, and 274
[Release No. 33-7289, 34-37183, IC-21946; File No. S7-31-95]
RIN 3235-AG67
Use of Electronic Media for Delivery Purposes
AGENCY: Securities and Exchange Commission.
ACTION: Final rule.
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SUMMARY: The Securities and Exchange Commission (``Commission'') today
is adopting technical amendments to its rules that are premised on the
distribution of paper documents. These amendments are intended to
clarify certain rules in light of the interpretations set forth in the
Commission's October 6, 1995 release (Release No. 33-7233 [60 FR
53458]) regarding the use of electronic media for the dissemination of
issuer-related information under the federal securities laws (``October
Interpretive Release'') and the availability of electronic filings on
the Commission's World Wide Web site.
EFFECTIVE DATE: The amendments will become effective June 14, 1996.
FOR FURTHER INFORMATION CONTACT: Joseph P. Babits or James R. Budge,
(202) 942-2910, Division of Corporation Finance; and, with regard to
questions concerning investment companies and investment advisers,
Kathleen K. Clarke, (202) 942-0721, Division of Investment Management,
U.S. Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
SUPPLEMENTARY INFORMATION: To clarify certain rules in light of the
interpretations relating to electronic distribution of securities-
related information as set forth in the October Interpretive Release,
the Commission is adopting technical amendments to the following rules
and forms: Rule 200.80, 1 Item 502 of Regulation S-B; 2 Item
502 of Regulation S-K; 3 Rule 120 4 of the Securities Act of
1933 (``Securities Act''); 5 Rule 253 of Regulation A; 6 Rule
420 of Regulation C; 7 Rules 481 and 482 of Regulation C; 8
Rule 605 of Regulation E; 9 Rule 304 of Regulation S-T; 10
Forms F-7, 11 F-8, 12 F-9, 13 F-10 14 and F-80;
15 Rule 12b-12; 16 Rule 13e-3; 17 Rule 13e-4; 18
Schedule 13E-4F; 19 Rule 14a-3; 20 Rule 14a-5; 21 Rule
14a-7; 22 Rule 14c-4; 23 Rule 14c-7; 24 Rule 14d-5;
25 Schedule 14D-1F;26 Schedule 14D-9F; 27 under the
Securities Exchange Act of 1934 (``Exchange Act''); 28 and Rule
8b-12; 29 Rule 30d-1; 30 Rule 30d-2; 31 Form N-1A;
32 Form N-2; 33 Form N-3; 34 and Form N-4 35 under
the Investment Company Act of 1940 (``Investment Company Act'').
36
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\1\ 17 CFR 200.80.
\2\ 17 CFR 228.502.
\3\ 17 CFR 229.502. Two unrelated technical corrections to Item
601(c) of Regulations S-B and S-K [17 CFR 228.601(c) and 229.601(c),
respectively] also are included in this release.
\4\ 17 CFR 230.120.
\5\ 15 U.S.C. 77a et seq.
\6\ 17 CFR 230.253.
\7\ 17 CFR 230.420.
\8\ 17 CFR 230.481 and 230.482.
\9\ 17 CFR 230.605.
\10\ 17 CFR 232.304.
\11\ 17 CFR 239.37.
\12\ 17 CFR 239.38.
\13\ 17 CFR 239.39.
\14\ 17 CFR 239.40.
\15\ 17 CFR 239.41.
\16\ 17 CFR 240.12b-12.
\17\ 17 CFR 240.13e-3.
\18\ 17 CFR 240.13e-4.
\19\ 17 CFR 240.13e-102.
\20\ 17 CFR 240.14a-3.
\21\ 17 CFR 240.14a-5.
\22\ 17 CFR 240.14a-7.
\23\ 17 CFR 240.14c-4.
\24\ 17 CFR 240.14c-7.
\25\ 17 CFR 240.14d-5.
\26\ 17 CFR 240.14d-102.
\27\ 17 CFR 240.14d-103.
\28\ 15 U.S.C. 78a et seq.
\29\ 17 CFR 270.8b-12.
\30\ 17 CFR 270.30d-1.
\31\ 17 CFR 270.30d-2.
\32\ 17 CFR 274.11A.
\33\ 17 CFR 274.11a-1.
\34\ 17 CFR 274.11b.
\35\ 17 CFR 274.11c.
\36\ 15 U.S.C. 80a-1 et seq.
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I. Introduction
In its October Interpretive Release, the Commission recognized the
promise of electronic distribution of information in enhancing
investors' ability to access, research, and analyze information, and in
facilitating the provision of information by issuers and others.37
Acknowledging the wide spectrum of media available to issuers and
others who distribute securities-related information, as well as the
fact that strict compliance with requirements applicable to printed
material may not be possible in all electronic media, in a companion
release, the Commission proposed for comment technical amendments to
rules that were premised on the distribution of paper documents
(``Proposing Release'').38
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\37\ The Commission has issued a second interpretive release
dealing with electronic communication issues relating to broker-
dealers, transfer agents, and investment advisers. Several
additional examples also were included. See Release No. 33-7288 (May
9, 1996).
\38\ Release No. 33-7234 (October 6, 1995) [60 FR 53468].
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The Commission received 12 letters of comment on various issues
raised in its October Interpretive Release and Proposing Release; the
majority of commenters focused on the October Interpretive Release
rather than the Proposing Release.39 Except as noted, the
Commission is adopting the amendments as proposed,40 and certain
other technical rule changes are being made that did not require
proposal.41 The amendments are designed to maintain the intent of
the original requirements while allowing flexibility to issuers and
others in the choice of distribution medium.
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\39\ These letters are available for inspection and copying in
the Commission's public reference room located at 450 Fifth Street,
N.W., Washington, D.C. (File No. S7-31-95).
\40\ Certain clarifying modifications have been made to the
proposed language of Rule 304(c) of Regulation S-T and the note to
Rule 14d-5.
\41\ See technical changes to Rule 200.80 of the Commission's
rules relating to organization, conduct and ethics and information
and requests, Securities Act Rule 120, Item 502 of Regulations S-K
and S-B, and Item 601(c) of Regulations S-K and S-B, and to the
following Investment Company Act registration statement forms: Form
N-1A for open-end investment companies; Form N-2 for closed-end
companies; Form N-3 for separate accounts offering variable annuity
contracts that are registered under the Investment Company Act as
management investment companies; and Form N-4 for separate accounts
offering variable annuity contracts that are registered under the
Investment Company Act as unit investment trusts. The amendments to
Rules 200.80 and 120 relate to agency organization, procedure or
practice; therefore, publication for notice and comment is not
required under the Administrative Procedure Act. 5 U.S.C. 553(b).
With respect to the amendments to Regulations S-K and S-B, and to
the Investment Company Act registration statement forms, the
Commission for good cause finds that publication of these amendments
for notice and comment is unnecessary because they are minor,
technical changes. 5 U.S.C. 553(b).
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A. General Formatting Requirements
As proposed, Commission rules that prescribe the physical
appearance of a paper document, such as type size and font
requirements, are being amended to provide that the issuer, when
delivering an electronic version of a document, may comply with the
requirements by presenting the information in a format readily
communicated to investors. Where legends are required to be printed in
red ink or bold-face type, or in a different font size, the amended
rules will allow issuers to satisfy such requirements by presenting the
legends in any manner reasonably calculated to draw attention to them.
[[Page 24653]]
B. Graphic, Image and Audio Information
1. Documents Delivered to Investors
With respect to documents delivered to investors, the proposed
rules provided that if material graphic, image and audio information is
included in one version of a disclosure document, but not in other
versions, the issuer must include in the other versions a fair and
accurate description or transcript of the omitted information. The
Commission has determined that this language is not necessary to ensure
compliance with the federal securities laws; consequently, the adopted
rules do not include it. Where more than one version of a document is
delivered to investors, each version must contain all information
required by, and otherwise comply with, the requirements of the
applicable form and other provisions of the federal securities
laws.42 The issuer (or other party to whom the law assigns the
responsibility) remains responsible for ensuring that each version
satisfies applicable statutory and regulatory requirements.43
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\42\ See Release No. 33-7288 (May 9, 1996), Part IV, example
(7).
\43\ Differing versions of a document may need to be filed with
the Commission. For example, differing prospectuses should be filed
with the Commission pursuant to Rule 424 [17 CFR 230.424] or Rule
497 [17 CFR 230.497]. Alternatively, the company may file with the
Commission as an appendix to the prospectus a fair and accurate
description of any omitted material. As discussed below, graphic,
image and audio material should be described in EDGAR filings
pursuant to Rule 304 of Regulation S-T.
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2. Documents Filed With the Commission
Documents containing video, audio and graphic presentations
currently cannot be filed on the EDGAR system. Where these
presentations are used in documents delivered to investors, Rule 304 of
Regulation S-T has always required electronic filers to provide fair
and accurate descriptions of omitted materials in their EDGAR filings.
Rule 304 initially was phrased in terms of graphic and image material
included in ``the paper format version'' of an EDGAR filing. To reflect
the possibility of the delivery of an electronic version that differs
from the EDGAR filing, the Commission is amending Rule 304 to provide
that wherever the ``document delivered to investors or others''
includes graphic, image or audio information that cannot be reproduced
in an electronic filing on EDGAR, the EDGAR filing must include a fair
and accurate narrative description, tabular presentation or transcript
of the omitted material.44
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\44\ Of course, immaterial differences would not need to be
described. The rule retains the provisions that all such omitted
material is deemed filed as part of the electronic filing and that
copies of the document as distributed should be retained by the
issuer for a period of five years. One commenter suggested that
rather than require descriptions, the Commission should allow the
filing of documents in formats that currently are not compatible
with EDGAR. This suggestion fundamentally relates to the design of
the EDGAR system, which currently is being reevaluated by the staff;
any necessary rulemaking related to electronic filing will be
undertaken as modifications to the EDGAR system are developed and
implemented in the future.
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C. Rules Where Mailing Is Identified as a Delivery Method
Certain Commission rules provide that information may be
distributed to investors by mail. While some indicate that reasonably
prompt alternative delivery methods may be used,45 others
specifically require ``mailing.'' These rules should be read
consistently to allow the use of alternative methods of distribution
that are reasonably prompt. These rules are being amended where
necessary to reflect this view.46
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\45\ See e.g., Rule 14d-4(a)(2)(ii) [17 CFR 240.14d-
4(a)(2)(ii)].
\46\ Where the costs of distribution are to be calculated under
the rules, the amendments provide that methods analogous to those
applicable to mailing should be used where alternative delivery
methods are chosen. In that regard, the proposed change to Rule 14d-
5 has been modified to provide greater guidance with respect to cost
calculation under that rule.
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D. Identification of Where Filings Are Available for Inspection
Rule 200.80 identifies the public reference rooms located in
Washington, D.C. and other designated Regional Offices as the primary
locations where documents filed with the Commission may be inspected
and copied; in addition, Securities Act Rule 120 states that
registration statements are available for public inspection during
business hours at Commission headquarters. Other rules require a
registrant that is a reporting company to include on the inside front
cover of a prospectus a statement to the effect that reports and other
information filed by the registrant may be inspected and copied at the
Commission's public reference rooms.47 The Commission now also
makes electronic filings publicly available on the Internet within 24
hours of acceptance.48 Consequently, the Commission believes it is
appropriate, as a reflection of this agency's current dissemination
procedures and practices, to amend Rules 200.80(c) and 120 to include a
statement that electronic filings are publicly available on the
Commission's Web site.49 The prospectus requirements also have
been amended to provide for the inclusion of a statement that the
Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the Commission.50
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\47\ Item 502(a) of Regulations S-K and S-B [17 CFR 229.502(a)
and 228.502(a), respectively].
\48\ See Commission News Release No. 95-195 (September 28,
1995).
\49\ A correction to the cross reference to confidential
treatment rules in Rule 120 also is being adopted.
\50\ Item 502(a) of Regulations S-K and S-B. The Commission's
Internet address is http://www.sec.gov.
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The Commission also is amending certain investment company
registration statement forms to provide for inclusion of a statement on
the cover page of prospectuses that the Commission maintains a Web site
that contains the Statement of Additional Information, material
incorporated by reference, and other information regarding registrants
that file electronically with the Commission.51 This new
requirement is limited to prospectuses disseminated electronically by
investment companies that are electronic filers because it should not
impose any significant additional burden on such registrants to include
the disclosure in those prospectuses. The Commission intends to propose
expanding this requirement to apply to all investment company
prospectuses as part of future amendments to investment company
registration forms.
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\51\ See amendments to Item 1(a)(iii)(C) of Form N-1A; Item
1.1.d(C) of Form N-2; Item 1(a)(vi)(C) of Form N-3; and Item
1(a)(v)(C) of Form N-4. This new requirement would apply to any
prospectus that is disseminated electronically by an investment
company that is an electronic filer after the effective date of
these rules, but the new disclosure would not necessitate filing a
prospectus supplement or ``stickering'' the prospectus.
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II. Cost-Benefit Analysis
Quick and broad access to material information was one of the
fundamental premises upon which the federal securities laws were
adopted, and electronic distribution no doubt will benefit issuers and
investors through cheaper and faster communication of information.
While the Commission expects the increased use of electronic media to
benefit securities markets and investors by making disclosure available
faster and more cheaply, it does not anticipate that the amendments
will, in and of themselves, result in substantial economic costs or
benefits. Those benefits will be derived from advances in technology,
and not from the minor technical amendments that are the subject of
this rulemaking.
[[Page 24654]]
III. Regulatory Flexibility Act Certification
Pursuant to section 605(b) of the Regulatory Flexibility Act, 5
U.S.C. 605(b), the Chairman of the Commission has certified that the
amendments will not have a significant economic impact on a substantial
number of small entities. This certification, including the reasons
therefor, was attached to the Proposing Release as Appendix A.
IV. Statutory Bases
The amendments to the Commission's rules under the Securities Act
and amendments to the Commission's rules under the Exchange Act are
being made pursuant to Sections 6, 7, 8, 10 and 19(a) of the Securities
Act and Sections 3, 4, 10, 12, 13, 14, 15, 16 and 23 of the Exchange
Act. The amendments to the Commission's rules under the Investment
Company Act are being made pursuant to Sections 8(b) and 38(a) under
the Investment Company Act, as amended.
List of Subjects
17 CFR Parts 200, 228, 229, 230, 232, 239, 240, 270 and 274
Investment companies, Reporting and recordkeeping requirements,
Securities.
Text of the Amendments
In accordance with the foregoing, Title 17, chapter II of the Code
of Federal Regulations is amended as follows:
PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND
REQUESTS
1. The authority citation for Part 200 continues to read in part as
follows:
Authority: 15 U.S.C. 77s, 78d-1, 78d-2, 78w, 78ll(d), 79t,
77sss, 80a-37, 80b-11, unless otherwise noted.
* * * * *
2. By amending Sec. 200.80 by adding paragraph (c)(3), to read as
follows:
Sec. 200.80 Commission records and information.
* * * * *
(c)(1) * * *
(3) Electronic filings made through the Electronic Data Gathering,
Analysis, and Retrieval system are publicly available through the
Commission's Web site (http://www.sec.gov).
* * * * *
PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS
3. The authority citation for Part 228 continues to read as
follows:
Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s,
77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn, 77sss,
78l, 78m, 78n, 78o, 78w, 78ll, 80a-8, 80a-29, 80a-30, 80a-37, 80b-
11, unless otherwise noted.
4. By amending Sec. 228.502 by revising paragraph (a)(2) to read as
follows:
Sec. 228.502 (Item 502) Inside front and outside back cover pages of
prospectus.
* * * * *
(a)(1) * * *
(2) If the small business issuer is a reporting company, state that
the reports and other information filed by the small business issuer
may be inspected and copied at the public reference facilities of the
Commission in Washington D.C., and at some of its Regional Offices
(include addresses), and that copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington D.C. 20549, at prescribed rates. If the small business
issuer is an electronic filer, state that the Commission maintains a
Web site that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the
Commission and state the address of such site (http://www.sec.gov); and
* * * * *
Sec. 228.601 [Amended]
5. By amending Sec. 228.601(c) by revising the headings ``Note 1 to
paragraph (c)(1)(vi)'' to read ``Note 1 to paragraph (c)(1)'' and
``Note 2 to paragraph (c)(1)(vi)'' to read ``Note 2 to paragraph
(c)(1)''.
PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND
CONSERVATION ACT OF 1975--REGULATION S-K
6. The authority citation for Part 229 continues to read in part as
follows:
Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s,
77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn,
77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79e, 79n,
79t, 80a-8, 80a-29, 80a-30, 80a-37, 80b-11, unless otherwise noted.
* * * * *
7. By amending Sec. 229.502 by revising paragraph (a)(2) to read as
follows:
Sec. 229.502 (Item 502) Inside front and outside back cover pages of
prospectus.
* * * * *
(a) * * *
(2) State that reports (and where the registrant is subject to
sections 14(a) and 14(c) of the Exchange Act, proxy and information
statements) and other information filed by the registrant can be
inspected and copied at the public reference facilities maintained by
the Commission in Washington, D.C., and at certain of its Regional
Offices, and state the current address of each such facility (see
Secs. 200.11(b) and 200.80(c) of this chapter), and that copies of such
material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. If the registrant is an electronic filer, state that
the Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the Commission and state the address of such
site (http://www.sec.gov); and
* * * * *
229.601 [Amended]
8. By amending Sec. 229.601(c) by revising the heading ``Note 1 to
paragraph (c)(1)(vi)'' to read ``Note 1 to paragraph (c)(1)'' and
``Note 2 to paragraph (c)(1)(vi)'' to read ``Note 2 to paragraph
(c)(1)''.
PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933
9. The authority citation for Part 230 continues to read in part as
follows:
Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j, 77s, 77sss, 78c,
78d, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79t, 80a-8, 80a-29, 80a-30,
and 80a-37, unless otherwise noted.
* * * * *
10. By revising Sec. 230.120 to read as follows:
Sec. 230.120 Inspection of registration statements.
Except for material contracts or portions thereof accorded
confidential treatment pursuant to Sec. 230.406, all registration
statements are available for public inspection, during business hours,
at the principal office of the Commission in Washington, D.C.
Electronic registration statements made through the Electronic Data
Gathering, Analysis, and Retrieval system are publicly available
through the Commission's Web site (http://www.sec.gov).
11. By amending Sec. 230.253 by designating the text of paragraph
(b) after the heading as paragraph (b)(1) and by adding paragraph
(b)(2), to read as follows:
Sec. 230.253 Offering circular.
* * * * *
[[Page 24655]]
(b) Presentation of information. (1) * * *
(2) Where an offering circular is distributed through an electronic
medium, issuers may satisfy legibility requirements applicable to
printed documents by presenting all required information in a format
readily communicated to investors.
* * * * *
12. By amending Sec. 230.420 by designating the text as paragraph
(a) and by adding paragraph (b), to read as follows:
Sec. 230.420 Legibility of prospectus.
(a) * * *
(b) Where a prospectus is distributed through an electronic medium,
issuers may satisfy legibility requirements applicable to printed
documents, such as paper size, type size and font, bold-face type,
italics and red ink, by presenting all required information in a format
readily communicated to investors, and where indicated, in a manner
reasonably calculated to draw investor attention to specific
information.
13. By amending Sec. 230.481 to add paragraph (h) to read as
follows:
Sec. 230.481 Information required in prospectus.
* * * * *
(h) Where a prospectus is distributed through an electronic medium,
issuers may satisfy legibility requirements applicable to printed
documents, such as paper size, type size and font, bold-face type,
italics and red ink, by presenting all required information in a format
readily communicated to investors, and where indicated, in a manner
reasonably calculated to draw investor attention to specific
information.
14. By amending Sec. 230.482 by removing the note following
paragraph (a)(7) and adding a note to paragraph (a)(6), to read as
follows:
Sec. 230.482 Advertising by an investment company as satisfying
requirements of section 10.
(a) * * *
(6) * * *
Note to paragraph (a)(6). All advertisements made pursuant to this
rule are subject to Rule 420 [17 CFR 230.420].
* * * * *
15. By amending Sec. 230.605 by designating the text of paragraph
(c) as paragraph (c)(1) and by adding paragraph (c)(2) to read as
follows:
Sec. 230.605 Filing and use of the offering circular.
* * * * *
(c)(1) * * *
(2) Where an offering circular is distributed through an electronic
medium, issuers may satisfy legibility requirements applicable to
printed documents by presenting all required information in a format
readily communicated to investors.
* * * * *
PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR
ELECTRONIC FILINGS
16. The authority citation for Part 232 continues to read as
follows:
Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77sss(a),
78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll(d), 79t(a), 80a-8, 80a-
29, 80a-30 and 80a-37.
17. By amending Sec. 232.304 by revising the section heading,
paragraphs (a), (b)(1), and (c) to read as follows:
Sec. 232.304 Graphic, image and audio material.
(a) If a filer includes graphic, image or audio material in a
document delivered to investors and others that cannot be reproduced in
an electronic filing, the electronically filed version of that document
shall include a fair and accurate narrative description, tabular
representation or transcript of the omitted material. Such
descriptions, representations or transcripts may be included in the
text of the electronic filing at the point where the graphic, image or
audio material is presented in the delivered version, or they may be
listed in an appendix to the electronic filing. Immaterial differences
between the delivered and electronically filed versions, such as
pagination, color, type size or style, or corporate logo need not be
described.
(b)(1) The graphic, image and audio material in the version of a
document delivered to investors and others shall be deemed part of the
electronic filing and subject to the liability and anti-fraud
provisions of the federal securities laws.
(2) * * *
(c) An electronic filer shall retain for a period of five years a
copy of each publicly distributed document, in the format used, that
contains graphic, image or audio material where such material is not
included in the version filed with the Commission. The five-year period
shall commence as of the filing date, or the date that appears on the
document, whichever is later. Upon request, an electronic filer shall
furnish to the Commission or its staff a copy of any or all of the
documents contained in the file.
* * * * *
PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933
18. The authority citation for Part 239 continues to read in part
as follows:
Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77sss, 78c, 78l,
78m, 78n, 78o(d), 78w(a), 78ll(d), 79e, 79f, 79g, 79j, 79l, 79m,
79n, 79q, 79t, 80a-8, 80a-29, 80a-30 and 80a-37, unless otherwise
noted.
* * * * *
19. By amending Form F-7 (referenced in Sec. 239.37) by adding a
note to Part I, Item 2, to read as follows:
Note.--The text of Form F-7 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form F-7
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
PART I
INFORMATION REQUIRED TO BE SENT TO SHAREHOLDERS
* * * * *
Item 2. Information Legends
* * * * *
Note to Item 2. If the home-jurisdiction document(s) are
delivered through an electronic medium, the issuer may satisfy the
legibility requirements for the required legends relating to type
size and font by presenting the legends in any manner reasonably
calculated to draw investor attention to it.
* * * * *
20. By amending Form F-8 (referenced in Sec. 239.38) by adding a
note to Part I, Item 2, to read as follows:
Note.--The text of Form F-8 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form F-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
PART I
INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
* * * * *
Item 2. Informational Legends
* * * * *
Note to Item 2. If the home-jurisdiction document(s) are
delivered through an electronic medium, the issuer may satisfy the
legibility requirements for the required legends relating to type
size and font by presenting the legends in any manner reasonably
calculated to draw investor attention to it.
* * * * *
21. By amending Form F-9 (referenced in Sec. 239.39) by adding a
note to Part I, Item 2, to read as follows:
[[Page 24656]]
Note.--The text of Form F-9 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form F-9
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
PART I
INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
* * * * *
Item 2. Informational Legends
* * * * *
Note to Item 2. If the home-jurisdiction document(s) are
delivered through an electronic medium, the issuer may satisfy the
legibility requirements for the required legends relating to type
size and font by presenting the legends in any manner reasonably
calculated to draw investor attention to it.
* * * * *
22. By amending Form F-10 (referenced in Sec. 239.40) by adding a
note to Part I, Item 3, to read as follows:
Note.--The text of Form F-10 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form F-10
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
PART I
INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
* * * * *
Item 3. Informational Legends
* * * * *
Note to Item 3. If the home-jurisdiction document(s) are
delivered through an electronic medium, the issuer may satisfy the
legibility requirements for the required legends relating to type
size and font by presenting the legends in any manner reasonably
calculated to draw investor attention to it.
* * * * *
23. By amending Form F-80 (referenced in Sec. 239.41) by adding a
note to Part I, Item 2, to read as follows:
Note.The text of Form F-80 does not, and this amendment will
not, appear in the Code of Federal Regulations.
Form F-80
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
* * * * *
PART I
INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS
* * * * *
Item 2. Informational Legends
* * * * *
Note to Item 2. If the home-jurisdiction document(s) are
delivered through an electronic medium, the issuer may satisfy the
legibility requirements for the required legends relating to type
size and font by presenting the legends in any manner reasonably
calculated to draw investor attention to it.
* * * * *
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
24. The authority citation for Part 240 continues to read in part
as follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77eee, 77ggg,
77nnn, 77sss, 77ttt, 78c, 78d, 78i, 78j, 78l, 78m, 78n, 78o, 78p,
78q, 78s, 78w, 78x, 78ll(d), 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-
37, 80b-3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *
25. The authority citation following Sec. 240.14d-5 is removed.
26. By amending Sec. 240.12b-12 by adding paragraph (e) to read as
follows:
Sec. 240.12b-12 Requirements as to paper, printing and language.
* * * * *
(e) Where a statement or report is distributed to investors through
an electronic medium, issuers may satisfy legibility requirements
applicable to printed documents, such as paper size and type size and
font, by presenting all required information in a format readily
communicated to investors.
27. By amending Sec. 240.13e-3 by designating the instructions to
paragraph (e)(3) immediately following paragraph (e)(3)(ii)(B) as
``Instructions to paragraph (e)(3)'' and by adding instruction 3
thereto, to read as follows:
Sec. 240.13e-3 Going private transactions by certain issuers or their
affiliates.
* * * * *
(e) * * *
(3) * * *
Instructions to paragraph (e)(3).
1. * * *
2. * * *
3. If the information delivered to security holders is distributed
through an electronic medium and the legend required by paragraph
(e)(3)(ii) is included, issuers may satisfy the legibility requirement
relating to type size and font by presenting the legend in any manner
reasonably calculated to draw security holder attention to it.
* * * * *
28. By amending Sec. 240.13e-4 by revising paragraph (e)(1)(ii)(A),
to read as follows:
Sec. 240.13e-4 Tender offers by issuers.
* * * * *
(e) * * *
(1) * * *
(ii) * * *
(A) By mailing or otherwise furnishing promptly the statement
required by paragraph (d)(1) of this section to each security holder
whose name appears on the most recent shareholder list of the issuer;
* * * * *
29. By amending Schedule 13E-4F (Sec. 240.13e-102) by adding a note
to Item 2 of Part I, to read as follows:
Sec. 240.13e-102 Schedule 13E-4F. Tender offer statement pursuant to
section 13(e)(1) of the Securities Exchange Act of 1934 and
Sec. 240.13e-4 thereunder.
* * * * *
Part I--Information Required To Be Sent to Shareholders
* * * * *
Item 2. * * *
Note to Item 2. If the home jurisdiction document(s) are
delivered through an electronic medium, the issuer may satisfy the
legibility requirements for the required legends relating to type
size and fonts by presenting the legend in any manner reasonably
calculated to draw security holder attention to it.
* * * * *
30. By amending Sec. 240.14a-3 by designating the text of paragraph
(b)(2) as (b)(2)(i) and by adding paragraph (b)(2)(ii), to read as
follows:
Sec. 240.14a-3 Information to be furnished to security holders.
* * * * *
(b) * * *
(2)(i) * * *
(ii) Where the annual report to security holders is delivered
through an electronic medium, issuers may satisfy legibility
requirements applicable to printed documents, such as type size and
font, by presenting all required information in a format readily
communicated to investors.
* * * * *
31. By amending Sec. 240.14a-5 by designating the text of paragraph
(d) as paragraph (d)(1) and by adding paragraph (d)(2), to read as
follows:
Sec. 240.14a-5 Presentation of information in proxy statement.
* * * * *
(d)(1) * * *
(2) Where a proxy statement is delivered through an electronic
medium, issuers may satisfy legibility requirements applicable to
printed documents, such as type size and font, by presenting all
required information in a format readily communicated to investors.
* * * * *
[[Page 24657]]
32. By amending Sec. 240.14a-7 by adding a note at the end of the
section, to read as follows:
Sec. 240.14a-7 Obligations of registrants to provide a list of, or
mail soliciting material to, security holders.
* * * * *
Note to Sec. 240.14a-7. Reasonably prompt methods of
distribution to security holders may be used instead of mailing. If
an alternative distribution method is chosen, the costs of that
method should be considered where necessary rather than the costs of
mailing.
33. By amending Sec. 240.14c-4 by adding paragraph (d), to read as
follows:
Sec. 240.14c-4 Presentation of information in information statement.
* * * * *
(d) Where an information statement is delivered through an
electronic medium, issuers may satisfy legibility requirements
applicable to printed documents, such as type size and font, by
presenting all required information in a format readily communicated to
investors.
34. By amending Sec. 240.14c-7 by revising paragraph (c), to read
as follows:
Sec. 240.14c-7 Providing copies of material for certain beneficial
owners.
* * * * *
(c) A registrant, at its option, may send by mail or other equally
prompt means, its annual report to security holders to the beneficial
owners whose identifying information is provided by record holders and
respondent banks, pursuant to Sec. 240.14b-1(b)(3) and Sec. 240.14b-
2(b)(4) (ii) and (iii), provided that such registrant notifies the
record holders and respondent banks at the time it makes the inquiry
required by paragraph (a) of this section that the registrant will send
the annual report to security holders to the beneficial owners so
identified.
* * * * *
35. By amending Sec. 240.14d-5 by adding a note at the end of the
section, to read as follows:
Sec. 240.14d-5 Dissemination of certain tender offers by the use of
stockholder lists and security position listings.
* * * * *
Note to Sec. 240.14d-5. Reasonably prompt methods of
distribution to security holders may be used instead of mailing. If
alternative methods are chosen, the approximate direct costs of
distribution shall be computed by adding the estimated direct costs
of preparing the document for distribution through the chosen medium
(including updating of shareholder lists) plus the estimated
reasonable cost of distribution through that medium. Direct costs
incidental to the distribution of tender offer materials and
amendments thereto may include all reasonable charges paid by the
subject company to third parties for supplies or services, including
costs attendant to preparing shareholder lists, handling the
bidder's materials, and contacting participants named on security
position listings, but shall not include indirect costs, such as
employee time which is devoted to either contesting or supporting
the tender offer on behalf of the subject company.
36. By amending Schedule 14D-1F (Sec. 240.14d-102) by adding a note
to Item 2 of Part I, to read as follows:
Sec. 240.14d-102 Schedule 14D-1F. Tender offer statement pursuant to
rule 14d-1(b) under the Securities Exchange Act of 1934.
* * * * *
PART I--INFORMATION REQUIRED TO BE SENT TO SHAREHOLDERS
* * * * *
Item 2. Informational Legends
* * * * *
Note to Item 2. If the home-jurisdiction document(s) are
delivered through an electronic medium, the issuer may satisfy the
legibility requirements for the required legends relating to type
size and font by presenting the legend in any manner reasonably
calculated to draw security holder attention to it.
* * * * *
37. By amending Schedule 14D-9F (Sec. 240.14d-103) by adding a note
to Item 2 of Part I, to read as follows:
Sec. 240.14d-103 Schedule 14D-9F. Solicitation/recommendation
statement pursuant to section 14(d)(4) of the Securities Exchange Act
of 1934 and rules 14d-1(b) and 14e-2(c) thereunder.
* * * * *
Part I--Information Required To Be Sent to Shareholders
* * * * *
Item 2. Informational Legends
* * * * *
Note to Item 2. If the home jurisdiction document(s) are
delivered through an electronic medium, the issuer may satisfy the
legibility requirements for the required legends relating to type
size and font by presenting the legend in any manner reasonably
calculated to draw security holder attention to it.
* * * * *
PART 270--GENERAL RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF
1940
38. The authority citation for Part 270 continues to read, in part,
as follows:
Authority: 15 U.S.C. 80a-1 et seq., 80a-37, 80a-39, unless other
otherwise noted;
* * * * *
39. The authority citations following Sec. 270.8b-12 are removed.
40. By amending Sec. 270.8b-12 by adding paragraph (f) to read as
follows:
Sec. 270.8b-12 Requirements as to paper, printing and language.
* * * * *
(f) Where a registration statement or report is distributed through
an electronic medium, issuers may satisfy legibility requirements
applicable to printed documents, such as paper size, type size and
font, bold-face type, italics and red ink, by presenting all required
information in a format readily communicated to investors, and where
indicated, in a manner reasonably calculated to draw investor attention
to specific information.
Sec. 270.30d-1 [Amended]
41. By amending Sec. 270.30d-1 by revising the word ``mailed'' in
paragraph (c) to read ``transmitted'', revising the word ``mailed'' in
the last sentence of paragraph (d)(2) to read ``transmitted'', and
revising the word ``mailed'' in paragraph (e) to read ``transmitted''.
Sec. 270.30d-2 [Amended]
42. By amending Sec. 270.30d-2 by removing from the first sentence
the phrase ``by mail, postage prepaid,''; and in the second sentence,
by revising the word ``mailed'' to read ``transmitted'' and by revising
the word ``mailing'' to read ``transmitting''.
PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933
PART 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940
43. The authority citation for Part 274 continues to read as
follows:
Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78l, 78m,
78n, 78o(d), 80a-8, 80a-24, and 80a-29, unless otherwise noted.
44. By amending Part A, Information Required in a Prospectus, Item
1(a)(iii) of Form N-1A (referenced in Secs. 239.15A and 274.11A) by
adding a sentence to the end of the parenthetical following paragraph
(C) to read as follows:
[Note: The text of Form N-1A does not and these amendments will
not appear in the Code of Federal Regulations.]
Form N-1A
* * * * *
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page
(a) * * *
[[Page 24658]]
(iii) * * *
(C) * * * (* * * If the Registrant intends to disseminate its
prospectus electronically and is an electronic filer, also include
the information that the Commission maintains a Web site (http://
www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding
registrants that file electronically with the Commission.);
* * * * *
45. By amending Part A, Information Required in a Prospectus, Item
1.1.d of Form N-2 (referenced in Secs. 239.14 and 274.11a-1) by adding
a sentence at the end of the parenthetical following paragraph (C) to
read as follows:
[Note: The text of Form N-2 does not and these amendments will
not appear in the Code of Federal Regulations.]
Form N-2
* * * * *
PART A-INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Outside Front Cover
1. * * *
d. * * *
(C) * * * (* * * If the Registrant intends to disseminate its
prospectus electronically and is an electronic filer, also include
the information that the Commission maintains a Web site (http://
www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding
registrants that file electronically with the Commission.);
* * * * *
46. By amending Part A, Information Required in a Prospectus, Item
1(a)(vi) of Form N-3 (referenced in Secs. 239.17a and 274.11b) by
adding a sentence at the end of the parenthetical following paragraph
(C) to read as follows:
[Note: The text of Form N-3 does not and these amendments will
not appear in the Code of Federal Regulations.]
Form N-3
* * * * *
Part A
INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page
(a) * * *
(vi) * * *
(C) * * * (* * * If the Registrant intends to disseminate its
prospectus electronically and is an electronic filer, also include
the information that the Commission maintains a Web site (http://
www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding
registrants that file electronically with the Commission.);
* * * * *
47. By amending Part A, Information Required in a Prospectus, Item
1(a)(v) of Form N-4 (referenced in Secs. 239.17b and 274.11c) by adding
a sentence at the end of the parenthetical following paragraph (C) to
read as follows:
[Note: The text of Form N-4 does not and these amendments will
not appear in the Code of Federal Regulations.]
Form N-4
* * * * *
Part A
INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page
(a) * * *
(v) * * *
(C) * * * (* * * If the Registrant intends to disseminate its
prospectus electronically and is an electronic filer, also include
the information that the Commission maintains a Web site (http://
www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding
registrants that file electronically with the Commission.);
* * * * *
By the Commission.
Dated: May 9, 1996.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-12177 Filed 5-14-96; 8:45 am]
BILLING CODE 8010-01-P
Complete official Federal Register PDF
FR Doc. 96-12176 Use of Electronic Media by Broker-Dealers, Transfer Agents, and Investment Advisers for Delivery of Information; Additional Examples Under the Securities Act of 1933, Securities Exchange Act of 1934, and Investment Company Act of 1940
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24644-24651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12176]
[[Page 24643]]
_______________________________________________________________________
Part VI
Securities and Exchange Commission
_______________________________________________________________________
17 CFR Part 231, et al.
Use of Electronic Media by Broker-Dealers, Transfer Agents, and
Investment Advisers for Delivery of Information; Final Rules
Federal Register / Vol. 61, No. 95 / Wednesday, May 15, 1996 / Rules
and Regulations
[[Page 24644]]
SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 231, 241, 271, and 276
[Release No. 33-7288; 34-37182; IC-21945; IA-1562; File No. S7-13-96]
Use of Electronic Media by Broker-Dealers, Transfer Agents, and
Investment Advisers for Delivery of Information; Additional Examples
Under the Securities Act of 1933, Securities Exchange Act of 1934, and
Investment Company Act of 1940
AGENCY: Securities and Exchange Commission.
ACTION: Interpretation; solicitation of comments.
-----------------------------------------------------------------------
SUMMARY: The Securities and Exchange Commission (``Commission'') is
publishing its views with respect to the use of electronic media by
broker-dealers, transfer agents, and investment advisers to deliver
information as required under the Securities Exchange Act of 1934 and
the Investment Advisers Act of 1940. This interpretation is intended to
provide guidance in using electronic media to fulfill broker-dealers'
obligations to deliver information to customers, transfer agents'
obligations to deliver information upon written request, and investment
advisers' disclosure delivery obligations. The Commission also is
supplementing its interpretive release published on October 6, 1995,
with seven additional examples illustrating the application of that
earlier release to information delivery under the Securities Act of
1933, the Securities Exchange Act of 1934, and the Investment Company
Act of 1940. Finally, the Commission is seeking comment on the issues
discussed in this release.
DATES: This interpretation is effective on May 15, 1996.
Comments must be received on or before July 1, 1996.
ADDRESSES: Comments should be submitted in triplicate to Jonathan G.
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street
NW., Mail Stop 6-9, Washington, DC 20549. Comments also may be
submitted electronically at the following electronic mail address:
[email protected]. All comment letters should refer to File Number
S7-13-96. This file number should be included on the subject line if
comments are submitted using electronic mail. Comment letters will be
available for public inspection and copying at the Commission's Public
Reference Room, 450 Fifth Street NW., Washington, DC 20549.
Electronically submitted comment letters will be posted on the
Commission's Internet web site (http://www.sec.gov).
FOR FURTHER INFORMATION CONTACT: Catherine McGuire, Chief Counsel, or
Elizabeth King, Special Counsel, or Jack Drogin, Special Counsel
(concerning Rules 10b-10, 10b-16, 15c1-5, 15c1-6, 15c2-12, and 15g-2
through 15g-9 under the Securities Exchange Act of 1934, and the
release generally), 202/942-0073, Office of Chief Counsel, Mail Stop 5-
10; Sheila Slevin, Assistant Director (concerning information about
technology generally), 202/942-0796, Mail Stop 5-1; Michael Walinskas,
Special Counsel (concerning Rule 9b-1 under the Securities Exchange Act
of 1934), 202/942-0188, Mail Stop 5-1; Elizabeth MacGregor, Special
Counsel (concerning Rule 11Ac1-3 under the Securities Exchange Act of
1934), 202/942-0158, Mail Stop 5-1; Alan Reed, Attorney (concerning
Rules 15c2-8 and 15c2-11 under the Securities Exchange Act of 1934),
202/942-0772, Mail Stop 5-1; Michael A. Macchiaroli, Associate Director
(concerning Exchange Act Rules 8c-1, 15c2-5, 15c3-2, 15c3-3, and 17a-
5), 202/942-0132, Mail Stop 5-1; Jerry Carpenter, Assistant Director
(concerning Exchange Act Rule 17Ad-5), 202/942-4187, Mail Stop 5-1,
Division of Market Regulation; Jack W. Murphy, Chief Counsel or Amy
Doberman, Assistant Chief Counsel (concerning the Investment Advisers
Act of 1940 and the examples illustrating application of electronic
delivery to mutual funds), 202/942-0660, Mail Stop 10-6, Division of
Investment Management; Joseph Babits, Special Counsel (concerning the
examples regarding application of electronic delivery to issuers other
than mutual funds), 202/942-2910, Mail Stop 3-7, Division of
Corporation Finance, Securities and Exchange Commission, 450 Fifth
Street NW., Washington, DC 20549.
SUPPLEMENTARY INFORMATION:
I. Introduction
On October 6, 1995, the Commission published an interpretive
release expressing its views on the electronic delivery of documents,
such as prospectuses, annual reports to shareholders, and proxy
solicitation materials under the Securities Act of 1933 (``Securities
Act''), the Securities Exchange Act of 1934 (``Exchange Act''), and the
Investment Company Act of 1940 (``October Interpretive
Release'').1 In the October Interpretive Release, the Commission
directed the Division of Market Regulation (``Division'') to review
Rule 10b-10 and other rules it administers under the Exchange Act to
determine if and under what conditions electronic delivery of
information required by those rules is feasible.2 Accordingly, the
Division conducted a review of the rules it administers under the
Exchange Act. Based on that review, the Commission is issuing this
release, which expresses its views with respect to the delivery of
information through electronic media in satisfaction of broker-dealer
and transfer agent requirements to deliver information under the
Exchange Act and the rules thereunder. In conjunction with the results
of that review, the Commission is publishing its views on the use of
electronic media with respect to the disclosure delivery obligations of
investment advisers and persons acting on their behalf 3 under the
Investment Advisers Act of 1940 (``Advisers Act'').
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\1\ Securities Act Release No. 7233 (Oct. 6, 1995), 60 FR 53458
(Oct. 13, 1995) (hereinafter ``October Interpretive Release''). In a
companion release, the Commission proposed technical amendments to
certain of its rules that currently are premised on the distribution
of paper documents. Securities Act Release No. 7234 (Oct. 6, 1995),
60 FR 53467 (Oct. 13, 1995). Today the Commission is adopting these
technical amendments substantially as proposed. Securities Act
Release No. 7289 (May 9, 1996).
\2\ October Interpretive Release, supra note 1, at 53459, n.12.
\3\ The term investment adviser is used in the rest of this
release to refer to both investment advisers and persons acting on
their behalf (including any solicitor receiving cash compensation
from an adviser in accordance with Advisers Act Rule 206(4)-3, 17
CFR 275.206(4)-3).
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This release addresses only the procedural aspects under the
federal securities laws of the delivery of information by broker-
dealers, transfer agents, and investment advisers. It does not affect
the rights and responsibilities of any party under the federal
securities laws.4 This release also does not address
[[Page 24645]]
or affect the applicability of any self-regulatory organization
(``SRO'') rules,5 or of any state laws. Broker-dealers, transfer
agents, and investment advisers, therefore, are reminded to consider
the applicability of SRO rules and state laws in connection with
delivering information electronically.6 The release further does
not affect any rules promulgated under the Exchange Act by agencies
other than the Commission.\7\
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\4\ The substantive requirements and liability provisions of the
federal securities laws apply equally to electronic and paper-based
media. For example, the antifraud provisions of the Exchange Act and
Rule 10b-5 thereunder, as well as section 206 of the Advisers Act
and the rules thereunder, apply to information delivered and
communications transmitted electronically, to the same extent as
they apply to information delivered in paper form. See October
Interpretive Release, supra note 1, at 53459, n.11. In addition,
broker-dealers, transfer agents, and investment advisers continue to
be subject to their respective recordkeeping requirements under
Exchange Act Rules 17a-3 and 17a-4, 17 CFR 240.17a-3 and 240.17a-4,
Exchange Act Rules 17Ad-6 and 16Ad-7, 17 CFR 240.17Ad-6 and
240.17Ad-7, and Advisers Act Rule 204-2, 17 CFR 275.204-2.
The Commission proposed for comment amendments to the broker-
dealer record preservation rule, which would permit broker-dealers
to employ, under certain conditions, optical storage technology to
maintain required records. See Exchange Act Release No. 32609 (July
9, 1993), 58 FR 38092 (July 15, 1993) (``Proposing Release''). At
the time these amendments were proposed, concerns were expressed
that optical disk images would make it difficult, from an
examination and discovery perspective, to detect alterations made to
handwritten records and to records containing handwritten text. To
address these concerns, the Proposing Release solicited comments on
the adequacy of optical disk technology to preserve handwritten
records or records that contain handwritten text.
Simultaneous with the issuance of the Proposing Release, the
Division of Market Regulation, with the Commission's concurrence,
issued a no-action letter permitting broker-dealers to use optical
disk technology immediately. See Letter from Michael A. Macchiaroli,
Associate Director, Division of Market Regulation, SEC to Mr.
Michael D. Udoff, Chairman, Ad Hoc Record Retention Committee,
Securities Industry Association, Inc., (June 18, 1993). The no-
action letter permits the optical storage of all paper records,
including handwritten records, except those records required to be
made under paragraphs (a)(6) and (a)(7) of Rule 17a-3 (proprietary
and customer order tickets).
The Commission's request for comment in the Proposing Release
regarding handwritten records was in no way intended to limit
reliance on the no-action letter. In addition, the Commission notes
that paperless order tickets (i.e., those generated by computers)
may, under the no-action letter, be stored on optical disks. The
Commission understands that most of the large firms generate
paperless order tickets rather than handwritten order tickets.
Finally, the Commission is aware that questions have been raised
regarding the application of the optical storage no-action letter.
The staff of the Division of Market Regulation is prepared to
discuss with interested persons any issues in connection with this
letter, as well as with the Proposing Release.
\5\ See, e.g., National Association of Securities Dealers, Inc.
(``NASD'') Notice to Members 95-80 (Sept. 26, 1995), NASD Rules of
Fair Practice Sec. 35, and New York Stock Exchange, Inc. (``NYSE'')
Rule 472, which govern member firm responsibilities relating to
communications with the public, including electronic communications.
In order to determine whether new guidelines are needed for the
use of electronic communications, on January 12, 1996, the NYSE sent
a survey to its members and member organizations regarding the use
of electronic systems to communicate with customers. The NYSE asked
its members to return the survey by February 15, 1996. NYSE
Information Memorandum (Jan. 12, 1996). The Commission understands
that the NASD intends to send a similar survey to its members.
The Commission strongly encourages the SROs to continue to work
with broker-dealers to adapt SRO supervisory review requirements
governing communications with customers to accommodate the use of
electronic communications by broker-dealers. Because electronic
delivery systems allow broker-dealers and their associated persons
to freely contact the general public, as well as their clients,
firms should maintain effective supervision and records of
associated persons' communications to avoid potential sales practice
problems. The Commission believes, however, that the SROs' rules
concerning the supervisory requirements for electronic
communications should be based on the content and audience of the
message, and not merely the electronic form of the communication.
For example, the SROs should consider whether electronic mail
communications, that, as a practical matter, replace or substitute
for telephone conversations, in many cases would not require advance
authorization or prior supervisory review.
The Commission also recognizes that broker-dealers are concerned
about the costs of maintaining electronic communications as records
on a long term basis, and it intends to discuss these concerns
further with the securities industry.
\6\ Article 8 of the UCC was revised substantially in 1994, and
the revisions were endorsed by both the American Law Institute and
the National Conference of Commissioners on Uniform State Laws. This
revised version has been adopted by 13 states. Under Revised Article
8 Section 8-102(6), parties to a transaction may ``transmit
information by any mechanism agreed upon by the persons transmitting
and receiving the information.'' Revised Article 8 eliminates the
current Section 8-319 requirement for a signed writing evidencing
the terms of a securities transaction.
In states that have not yet codified the 1994 amendments, a
confirmation bearing the broker-dealer's letterhead or some other
identifying marking, generally, fulfills that requirement. See e.g.,
Kohlmeyer and Co. v. Bowen, 192 S.E.2d 400, 126 Ga. App. 700 (Ga.
Ct. App. 1972); See also Bains v. Piper, Jaffray & Hopwood, 497
N.W.2d 263 (Minn. Ct. App. 1993) (computer generated confirmation
held to satisfy the UCC requirement for a writing).
\7\ See, e.g., Treas. Reg. Secs. 404.4(e) and 403.5(d) (rules
regarding hold in custody repurchase agreements applicable to
government securities brokers and dealers that are financial
institutions).
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Finally, this interpretation does not address the existing paper
filing requirements with the Commission,\8\ other regulatory
authorities,\9\ and other third parties.\10\
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\8\ For example, this interpretation does not apply to any
requirements to file information with the Commission in connection
with registering under sections 15, 15A, 15B, or 15C of the Exchange
Act as a broker-dealer, national securities association, municipal
securities dealer, or government securities broker-dealer. Broker-
dealers currently register with the Commission, the SROs, and the
states through the Central Registration Depository (``CRD'') system
operated by the NASD. A redesign of the CRD system will allow
broker-dealers to file uniform registration forms electronically. In
connection with the CRD redesign the Commission intends to adopt
amendments to Form BD, the uniform application for broker-dealer
registration under the Exchange Act. See Exchange Act Release No.
35224 (Jan. 12, 1995), 60 FR 4040 (Jan. 19, 1995) (proposing
amendments to Form BD).
Because, at the present time, the Commission does not have the
technological capacity to receive electronic transmissions of
information from broker-dealers, transfer agents, or investment
advisers, this interpretation also does not apply to other
requirements to file information with the Commission under the
Exchange and Advisers Acts. See, e.g., Exchange Act Rule 9b-1, 17
CFR 240.9b-1 (options markets' obligation to file with the
Commission any revisions to an options disclosure document);
Advisers Act Form ADV, 17 CFR 279.1 (application for registration of
investment advisers). The Commission, nevertheless, recognizes the
desirability of electronic filing and is examining the feasibility
of establishing systems capable of receiving information
electronically.
\9\ For example, the notice requirements to the National
Association of Securities Dealers, Inc. under Exchange Act Rule 10b-
17, also are not within the scope of this interpretation. 17 CFR
240.10b-17.
\10\ For example, Rule 15a-6 requires U.S. registered broker-
dealers, under certain circumstances, to obtain certain foreign
persons' consent to service of process. 17 CFR 240.15a-
6(a)(3)(iii)(D). The Commission has never taken a position as to the
specific means by which the U.S. broker-dealer may meet this
obligation, but believes that a consent to service of process may be
obtained through the use of a facsimile.
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II. Use of Electronic Media
In the October Interpretive Release, the Commission noted that the
electronic distribution of information provides numerous benefits and
that the use of this type of medium is growing among all participants
in the securities industry. The Commission concluded that issuers,
third parties (such as persons making tender offers or soliciting
proxies), and persons acting on behalf of such third parties may use
electronic media, in accordance with the guidance provided in the
October Interpretive Release, to deliver information. In addition, the
Commission believes that broker-dealers, transfer agents, and
investment advisers may satisfy their delivery obligations under the
Exchange Act and the Advisers Act by using electronic media as an
alternative to paper-based media.11
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\11\ The exact nature of the broker-dealer's, transfer agent's,
and investment adviser's delivery obligations is defined broadly and
includes such terms as ``give,'' ``furnish,'' ``send,'' and
``deliver.'' The Commission believes that, in general, these terms
are sufficiently broad to accommodate the contemplated electronic
transmission of documents by or on behalf of the broker-dealer,
transfer agent, or investment adviser and, when called for, from a
customer to a broker-dealer, transfer agent, or investment adviser.
But see infra notes 12 and 50.
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This interpretation is intended to provide broker-dealers, transfer
agents, and investment advisers with guidance in using electronic media
to satisfy delivery requirements under the federal securities laws.
This release generally covers those requirements that obligate broker-
dealers to deliver information to customers, obligate transfer agents
to deliver information upon written request, and obligate investment
advisers to deliver information to their clients or prospective
clients. Broker-dealers and investment advisers also may rely on this
interpretation in obtaining customers' and clients' consents as
required under certain provisions of the Exchange and Advisers Acts and
the rules
[[Page 24646]]
thereunder.12 A discussion of the information delivery
requirements covered by this interpretation is provided in section III
of this release (``Covered Delivery Requirements''). Unless the
Commission indicates otherwise, this interpretive release also is
intended to apply to all rules promulgated under the Exchange and
Advisers Acts, including rules promulgated subsequent to the issuance
of this release, requiring broker-dealers or investment advisers to
deliver information to customers or clients, and to rules requiring
transfer agents to deliver information in response to written requests.
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\12\ In connection with transactions in penny stocks, however,
the Commission believes that in order to fulfill the purposes of the
Securities Enforcement Remedies and Penny Stock Reform Act of 1990,
broker-dealers should continue to have customers manually sign and
return in paper form any documents that require a customer's
signature or written agreement. See infra note 50.
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A. General
This discussion is intended to complement the discussion in the
October Interpretive Release and to provide general guidance concerning
issues under the Exchange and Advisers Acts. The Commission believes
that broker-dealers, transfer agents, and investment advisers should be
able to satisfy their obligations under the federal securities laws to
deliver information required under the Covered Delivery Requirements by
electronic distribution. The framework set forth in the October
Interpretive Release is applicable to such electronic distribution.
In the October Interpretive Release, the Commission stated that it
would view information distributed through electronic means as
satisfying the delivery or transmission requirements of the federal
securities laws if such distribution results in the delivery to the
intended recipients of substantially equivalent information as such
recipients would have if the required information were delivered to
them in paper form.13 The Commission is not specifying the
electronic medium or source that broker-dealers, transfer agents, and
investment advisers may use.
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\13\ October Interpretive Release, supra note 1, at 53460. See
also supra example 7.
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Like paper documents, electronically delivered documents must be
prepared and delivered in a manner consistent with the federal
securities laws. Regardless of whether information is delivered in
paper form or by electronic means, it should convey all material and
required information. If a paper document is required to present
information in a certain order, for instance, then the information
delivered electronically should be in substantially the same
order.14
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\14\ For a discussion of how requirements to present information
in a certain order may be applied to documents containing
hyperlinks, see example 51 in the October Interpretive Release. Id.
53466.
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Moreover, regardless of whether information is delivered in paper
or electronic form, broker-dealers and investment advisers must
reasonably supervise firm personnel with a view to preventing
violations.15 Thus, broker-dealers and investment advisers should
consider the need for systems and procedures to deter or detect
misconduct by firm personnel in connection with the delivery of
information, whether by electronic or paper means.16
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\15\ See Exchange Act Sec. 15(b)(4)(E); Advisers Act
Sec. 203(e)(5). See also NASD Rules of Fair Practice Sec. 27; NYSE
Rule 342.
\16\ See, e.g., In re: Bryant, Securities Exchange Act Release
No. 32357 (May 24, 1993), (Commission upheld a finding of the
National Association of Securities Dealers, Inc. that, among other
things, the failure to develop procedures to supervise a registered
representative, who sent a false confirmation statement on behalf of
the broker-dealer, and to enforce existing procedures constituted a
failure to supervise on the part of the president of the firm).
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The Commission believes that, as a matter of policy, a person who
has a right to receive a document under the federal securities laws and
chooses to receive it electronically, should be provided with the
information in paper form whenever specifically requesting
paper.17
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\17\ For example if a person revokes consent to receiving
information electronically, even following delivery of the
information, a paper copy should be delivered upon request.
Revocation, however, is not a prerequisite to requesting a paper
copy.
The Commission understands that it can be very costly for
broker-dealers to maintain records for long periods of time. This is
particularly true with respect to information that is specific to a
customer's account or to a transaction, such as the type of
information defined below as Personal Financial Information. See
infra section II.B. For this reason, the Commission has limited the
time period that broker-dealers must preserve records required to be
made under Exchange Act Rules 17a-3. 17 CFR 240.17a-3. Specifically,
Exchange Act Rule 17a-4 requires broker-dealers to preserve records
for a period of six years (3 years in the case of certain types of
information), the first two years in an easily accessible place. 17
CFR 240.17a-4. For these same reasons, the Commission believes it is
reasonable to expect that broker-dealers would provide customers
with information in paper form upon request for a period of two
years. Transfer agents and investment advisers are subject to
similar recordkeeping requirements. 17 CFR 250.17Ad-6 and 240.17Ad-
7; 17 CFR 275.204-2.
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In the October Interpretive Release, the Commission discussed
issues of notice and access that should be considered in determining
whether the legal requirements pertaining to delivery or transmission
of documents have been satisfied,18 and stated that persons using
electronic delivery of information should have reason to believe that
any electronic means so selected will result in the satisfaction of the
delivery requirements.19 The Commission believes that broker-
dealers, transfer agents, and investment advisers should apply the same
considerations in using electronic media to satisfy their delivery
obligations under the Covered Delivery Requirements.
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\18\ October Interpretive Release, supra note 1, at 53460-61.
\19\ Id. at 53461.
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1. Notice
Broker-dealers, transfer agents, and investment advisers providing
information electronically should consider the extent to which
electronic communication provides timely and adequate notice that such
information is available electronically.20 When information is
delivered on paper through the postal mail, recipients most likely will
be made aware that they have received information that they may wish to
review and, therefore, separate notice is not necessary. Information
transmitted through electronic media, however, may not always provide a
similar likelihood of notice that information has been sent that the
recipient may wish to review.21 Broker-dealers, transfer agents,
and investment advisers, therefore, should consider whether it is
necessary to supplement the electronic communication with another
communication that would provide notice similar to that provided by
delivery in paper through the postal mail.
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\20\ See id. at 53460. See also infra section II.B.2. regarding
additional requirements when broker-dealers, transfer agents, and
investment advisers send certain types of information (defined as
Personal Financial Information) to customers.
\21\ For example, if information is provided by physically
delivered material (such as a computer diskette or CD-ROM) or by
electronic mail, that communication itself generally should be
sufficient notice. If information is made available electronically
through a passive delivery system, such as an Internet Web Site,
however, separate notice would be necessary to satisfy the delivery
requirements unless the broker-dealer, transfer agent, or investment
adviser can otherwise evidence that delivery to the customer or
client has been satisfied.
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2. Access
The Commission believes that customers, securities holders, and
clients who are provided information through electronic delivery from
broker-dealers, transfer agents, and investment advisers should have
access to that information comparable to that which would be provided
if the information
[[Page 24647]]
were delivered in paper form. Thus, the use of a particular medium
should not be so burdensome that intended recipients cannot effectively
access the information provided. Also, persons to whom information is
sent electronically should have an opportunity to retain the
information through the selected medium or have ongoing access
equivalent to personal retention.22
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\22\ For example, the intended recipient's ability to download
or print information delivered electronically would enable a
recipient to retain a permanent record. See October Interpretive
Release, supra note 1, at 53460.
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3. Evidence to Show Delivery
Providing information through postal mail provides reasonable
assurance that the delivery requirements of the federal securities laws
have been satisfied. The Commission believes that broker-dealers,
transfer agents, and investment advisers similarly should have reason
to believe that electronically delivered information will result in the
satisfaction of the delivery requirements under the federal securities
laws. Thus, whether using paper or electronic media, broker-dealers,
transfer agents, and investment advisers should consider the need to
establish procedures to ensure that applicable delivery obligations are
met.
Broker-dealers, transfer agents, and investment advisers may be
able to evidence satisfaction of delivery obligations, for example, by:
(1) obtaining the intended recipient's informed consent 23 to
delivery through a specified electronic medium, and ensuring that the
recipient has appropriate notice and access, as discussed above; (2)
obtaining evidence that the intended recipient actually received the
information, such as by an electronic mail return-receipt or by
confirmation that the information was accessed, downloaded, or printed;
24 or (3) disseminating information through certain facsimile
methods. In order to ensure that information is delivered as intended,
broker-dealers, transfer agents, and investment advisers delivering
information using either electronic or paper-media should take
reasonable precautions to ensure the integrity and security of that
information.25
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\23\ See id. at 53460. If a consent is used, the consent should
be an informed consent. An informed consent should specify the
electronic medium or source through which the information will be
delivered and the period during which the consent will be effective,
and should describe the information that will be delivered using
such means. The broker-dealer, transfer agent, or investment adviser
also should inform the customer that there may be potential costs
associated with electronic delivery, such as on-line charges. Except
where a manual signature is required under the penny stock rules,
see infra note 50, broker-dealers may obtain consents either
manually or electronically. In most cases in which a request for
information is made through an electronic medium, consent to receive
the requested information by means of electronic delivery may be
presumed.
In addition, if the broker-dealer, transfer agent, or investment
adviser is relying on the consent to ensure effective delivery and
the intended recipient revokes the consent, future documents should
be delivered in paper.
\24\ For example, depending on the circumstances and the
procedures used, customers' and clients' written consent or
acknowledgement, as required under certain Exchange and Advisers
Acts rules and discussed infra notes 28-29 and accompanying text,
may serve as sufficient evidence to show delivery.
\25\ October Interpretive Release, supra note 1, at 53460, n.22.
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B. Personal Financial Information
Certain information that broker-dealers, transfer agents, and
investment advisers deliver is specific to a particular person's
personal financial matters (``Personal Financial Information''). For
example, the information reported to customers under Exchange Act Rule
10b-10 relates to specific securities transactions and includes the
identity and number of shares bought or sold and the net dollar price
for the shares. Under Exchange Act Rule 10b-16, a broker-dealer that
imposes finance charges on a customer's account during a quarterly
period must deliver a quarterly statement disclosing, among other
things, the account's beginning and closing balances, debits and
credits entered during the period, the interest charged, and the rate
or rates of interest. Similarly, under Advisers Act Rule 206(3)-2,
investment advisers engaging in agency cross transactions involving
clients are required to send the clients disclosure about those
transactions.26
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\26\ 17 CFR 275.206(3)-2(a)(2) (written confirmation of each
transaction ``at or before the completion of each such
transaction''); 17 CFR 275.206(3)-2(a)(3) (annual written disclosure
statement identifying transactions). In addition, investment
advisers having custody of client assets are required to send an
itemized statement to each client at least quarterly showing assets
in custody of the adviser. 17 CFR 275.206(4)-2(a)(4).
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1. Confidentiality and Security
Broker-dealers, transfer agents, and investment advisers sending
Personal Financial Information should take reasonable precautions to
ensure the integrity, confidentiality, and security of that
information, regardless of whether it is delivered through electronic
means or in paper form. The Commission believes that broker-dealers,
transfer agents, and investment advisers transmitting Personal
Financial Information electronically must tailor those precautions to
the medium used in order to ensure that the information is reasonably
secure from tampering or alteration.
2. Consent
Because of the need to maintain the confidentiality and security of
Personal Financial Information, it is important that the intended
recipient is willing to accept the delivery of such information through
electronic media and has actual notice that the Personal Financial
Information will be delivered electronically. Therefore, in order to
ensure that Personal Financial Information can be delivered in a manner
that maintains the information's confidentiality, unless a broker-
dealer, transfer agent, or investment adviser is responding to a
request for information that is made through electronic media or the
person making the request specifies delivery through a particular
electronic medium, the broker-dealer, transfer agent, or investment
adviser should obtain the intended recipient's informed consent prior
to delivering Personal Financial Information electronically.27
This consent will ensure that the intended recipient is willing to
accept the delivery of Personal Financial Information through
electronic media and has actual notice that the Personal Financial
Information will be delivered electronically. The Commission believes
that such consent by the customer or client to the delivery of Personal
Financial Information may be made either by a manual signature or by
electronic means.
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\27\ See discussion supra note 23 regarding informed consent.
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C. Communications From Broker-Dealers' Customers and Investment
Advisers' Clients
In addition to requirements to deliver information, the Exchange
Act and the Advisers Act provide for broker-dealers and investment
advisers to ``receive'' or ``obtain'' responses from their customers or
clients. For example, Exchange Act Rules 8c-1 and 15c2-1 require, under
certain circumstances, broker-dealers to obtain a customer's written
consent in order to hypothecate securities. Similarly, under the
Advisers Act, certain provisions call for clients to consent to a
transaction or acknowledge receipt of certain disclosures.28 The
Commission generally views an electronic communication from a customer
to a broker-dealer or from a client to an investment adviser as
[[Page 24648]]
satisfying the requirements for such written consent or
acknowledgement.29
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\28\ See, e.g. Advisers Act Secs. 205(a)(2) and 206(3); 17 CFR
275.206(3)-2(a)(1); 17 CFR 275.206(4)-3(a)(2)(iii).
\29\ Of course, broker-dealers and investment advisers should be
cognizant of their responsibilities to prevent, and the potential
liability associated with, unauthorized transactions. See, e.g.,
supra note 16. In this regard, the Commission believes that broker-
dealers and investment advisers should have reasonable assurance
that the response received from a customer or client is authentic.
In addition, for policy reason discussed infra note 50, the
Commission will continue to require broker-dealers to obtain the
manual signature of customers on certain disclosure documents
required under Exchange Act Rules 15g-2 and 15g-9.
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D. Electronic Transmission of Non-Required Disclosure
The guidance provided above is intended to permit broker-dealers,
transfer agents, and investment advisers to comply with their delivery
obligations under the federal securities laws when using electronic
media. This interpretation does not apply to the electronic delivery of
non-required information that in some cases is being provided
voluntarily to customers, securities holders, and clients 30 in
that it is not necessary (although it is, of course, permitted) to
conform the electronic delivery of such information to the guidance in
this release. Nevertheless, the Commission urges broker-dealers,
transfer agents, and investment advisers to take into consideration the
need to implement security measures when using electronic media to
provide personal financial information.
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\30\ See, e.g., Kimberly Weisul, Calvert Becomes First Fund to
Offer Info On-Line; Mutual Fund Company Dodges the Security Issue,
Investment Dealers' Digest, Jan. 22, 1996, at 9; Jon Birger,
Prudential Web Site to Let Clients Track Their Accounts Daily, Bond
Buyer, Oct. 18, 1995, at 10.
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The staff also has received inquiries about the permissibility of
using various electronic media to disseminate advertisements for an
investment adviser's services or other information that is not subject
to a delivery requirement. Such communications are permissible, subject
to the same requirements and restrictions that apply to such
communications in paper. For example, electronically disseminated
advertisements are subject to the same prohibitions against misleading
disclosure as advertisements in paper.31 Materials concerning an
adviser that are potentially available to ten or more persons through
an electronic system would be considered subject to the recordkeeping
requirements applicable to such communications.32 Similarly, if an
adviser uses a publicly available electronic medium such as a World
Wide Web site to provide information about its services, the adviser
would not qualify for the exemption from registration in section
203(b)(3) of the Advisers Act. That exemption is available only if,
among other things, an adviser does not hold itself out generally to
the public as an investment adviser.
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\31\ See 17 CFR 275.206(4)-1. Broker-dealers' advertisements and
sales literature are subject to NASD rules, which have recently been
amended specifically to include electronic communications. NASD,
Notice to Members 95-74 (Sept. 1995); NASD, Notice to Members 95-80
(Sept. 26, 1995).
\32\ 17 CFR 275.204-2(a)(11). Broker-dealers also are subject to
recordkeeping requirements that would be applicable to all
electronic communications received and sent by the firm relating to
its business. 17 CFR 17a-4(a)(4).
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III. Covered Delivery Requirements
For clarity, below is a list of current rules under the Exchange
Act and requirements under the Advisers Act to which broker-dealers,
transfer agents, and investment advisers may apply the guidance
provided in this interpretation. The Commission believes that the list
sets forth all of the rules that require or permit communications
between broker-dealers, transfer agents, investment advisers and
customers, securities holders, and clients under the Exchange and
Advisers Acts.33 The interpretation in this release is intended to
cover all optional and required communications under the Exchange and
Advisers Acts between broker-dealers, transfer agents, and investment
advisers, and customers, securities holders, and clients.34
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\33\ The summary provided of the delivery obligations under the
Covered Delivery Requirements is intended for ease of reference
only. It is not intended to be a statement of all the requirements
under the rules and provisions listed, and has no legal force or
effect. Reference should be made to the full text of the rules,
which is published in the Code of Federal Regulations, as well as to
relevant releases, interpretations, and no-action letters, and to
the full text of the Exchange and Advisers Acts, 15 U.S.C. Secs. 77
and 78, et seq.
\34\ But see supra notes 4-10 and accompanying text. See also
infra notes 35 and 50.
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A. Exchange Act
Subject to the guidelines in this release, broker-dealers and
transfer agents may fulfill their requirements to deliver information
to customers and securities holders under the following Exchange Act
rules: 35
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\35\ This release does not address the prospectus delivery
requirements under Exchange Act Rule 15c2-8. 17 CFR 240.15c2-8.
Broker-dealer requirements to deliver a preliminary prospectus in
connection with the issuance of securities by an issuer that has not
previously been required to file reports pursuant to Exchange Act
Section 13(a), 15 U.S.C. 78m(a), or 15(d), 15 U.S.C. 78o(d), were
addressed in the October Interpretive Release. See October
Interpretive Release, supra note 1, at 53462, n. 31.
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Rule 8c-1, which requires broker-dealers to obtain
customers' written consent in order to hypothecate securities under
circumstances that would permit the commingling of customers'
securities and to give written notice to a pledgee that, among other
things, a security pledged is carried for the account of a
customer.36
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\36\ 17 CFR 240.8c-1(a)(1) and (f).
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Rule 9b-1, which, among other things, requires a broker-
dealer to furnish to each customer, and keep current, an options
disclosure document, prior to accepting an order to purchase or sell an
option on behalf of that customer.37
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\37\ 17 CFR 240.9b-1(d).
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Rule 10b-10, which requires a broker-dealer to give or
send confirmation information to customers.38 In addition, broker-
dealers must furnish to customers upon written request information such
as the factors that affect the yield calculation related to asset-based
securities.39
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\38\ 17 CFR 240.10b-10. This release, therefore, resolves the
issues in the October Interpretive Release with respect to Exchange
Act Rule 10b-10, which requires broker-dealers to send confirmations
at or before completion of the transaction by permitting electronic
delivery of the confirmation. 17 CFR 240.10b-10. See October
Interpretive Release, supra note 1, at 53459, n.12.
In a release adopting certain amendments to Rule 10b-10, the
Commission recognized the use of a facsimile machine to send
customer confirmation statements. At that time, however, the
Commission believed that the use of other electronic means to send
confirmations should be viewed on a case-by-case basis. See Exchange
Act Release No. 34962 (Nov. 10, 1994); 59 FR 59612 (Nov. 17, 1994).
This interpretation supersedes the view expressed in the 1994
release.
Broker-dealers are reminded that, when a prospectus is required
to be delivered, it should be delivered prior to, or concurrent
with, delivery of the confirmation. Thus, if a confirmation is sent
by facsimile, the prospectus also should be sent by facsimile or
equally prompt means.
\39\ 17 CFR 240.10b-10(a)(7).
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Rule 10b-16, which requires both initial and periodic
written disclosure of the credit terms of margin loans.40
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\40\ 17 CFR 240.10b-16.
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Rule 11Ac1-3, which requires a broker-dealer to deliver to
each customer, upon opening a new account and on an annual basis
thereafter, an account statement disclosing the broker-dealer's
policies relating to payment for order flow and its order routing
policies.41
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\41\ 17 CFR 240.11Ac1-3.
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Rule 15c1-5, which requires, under specified
circumstances, written disclosure of control if a broker-dealer or
municipal securities dealer is controlled by, controlling, or under
common control with the issuer of a security.42
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\42\ 17 CFR 240.15c1-5.
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Rule 15c1-6, which requires a broker-dealer or municipal
securities dealer receiving advisory fees to
[[Page 24649]]
disclose any participation or financial interest in the distribution of
a security at or before the completion of a transaction in such
security for the account of a customer.43
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\43\ 17 CFR 240.15c1-6.
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Rule 15c2-1, which requires broker-dealers to obtain
customers' written consent in order to hypothecate securities under
circumstances that would permit the commingling of customers'
securities.44
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\44\ 17 CFR 240.15c2-1(a)(1).
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Rule 15c2-5, which requires a written statement making
disclosures prior to effecting transactions in special insurance
premium funding accounts that would involve an extension or arrangement
of credit, as well as retaining for its files, a written statement
setting forth the basis for making a determination that the arrangement
is suitable for the customer.45
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\45\ 17 CFR 240.15c2-5.
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Rule 15c2-11, with regard to the requirement that broker-
dealers make certain information enumerated in the rule reasonably
available upon request.46
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\46\ 17 CFR 240.15c2-11(a)(4) and (a)(5).
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Rule 15c2-12, with regard to the requirements that
municipal securities underwriters provide, upon request, a preliminary
official statement (if one exists) and a final official
statement.47
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\47\ 17 CFR 240.15c2-12.
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Rule 15c3-2, which requires a broker-dealer to give or
send to its customers a written notification of a free credit balance,
that the broker-dealer may use that free credit balance in its business
operations, and that the funds are payable upon demand of the
customer.48
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\48\ 17 CFR 240.15c3-2.
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Rule 15c3-3, which requires that broker-dealers obtain
repurchase agreements in writing and confirm in writing the specific
securities that are the subject of hold in custody repurchase
agreements.49
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\49\ 17 CFR 240.15c3-3(b)(4).
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Rules 15g-3 through 15g-8, which require a broker-dealer,
among other things, to disclose to its customers, both prior to
effecting a transaction in a penny stock and on the written
confirmation, bid and ask quotations and broker-dealer and associated
person compensation.50
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\50\ 17 CFR 240.15g-3 through 15g-8.
The Commission believes that the requirements under Exchange Act
Rules 15g-2 and 15g-9, which require broker-dealers to obtain from a
customer prior to effecting transactions in penny stocks (1) a
manually signed acknowledgement of the receipt of a risk disclosure
document, (2) a written agreement to transactions involving penny
stocks, and (3) a manually signed and dated copy of a written
suitability statement, should not be met by means of electronic
media. In adopting these provisions pursuant to the Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, the
Commission intended to provide customers with an opportunity to make
an informed, deliberate decision without the high pressure sales
practices that sometimes are characteristic of transactions in these
securities. For similar reasons, a facsimile copy of a customer's
signature has not been sufficient to satisfy the requirements under
Rules 15g-2 and 15g-9 that certain documents be manually signed and
dated. See Exchange Act Release No. 32576 (July 2, 1993); NASD
Notice to Members 90-65 (Oct. 1990); NASD Notice to Members 90-18
(Mar. 1990).
While broker-dealers may not meet the signature requirement
under Rule 15g-9 by electronic means, the Commission believes that,
consistent with the guidance set forth in this interpretation, they
may meet their delivery obligations to their customers under this
rule by electronic means. The ``risk disclosure document'' that
broker-dealers are required to furnish to their customers under Rule
15g-2 is subject to strict formatting and typefacing restrictions.
In order to comply with the requirements set forth in the
instructions to Schedule 15G, a risk disclosure document delivered
electronically, when printed, would have to result in a document
that meets the requirements and contains the exact text of Schedule
15G.
When the Commission next reviews the penny stock rules, it may
be willing to consider a ``cooling-off'' period as an alternative to
the requirement of a manual signature under Rules 15g-2 and 15g-9.
The Commission requests comment on this approach.
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Rule 17a-5, which requires a broker-dealer to send to its
customers audited and unaudited financial statements.\51\
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\51\ 17 CFR 240.17a-5(c).
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Rule 17Ad-5, which requires a transfer agent to respond
within certain time frames to written requests for the status of items
presented for transfer, for acknowledgement of transfer instructions,
for confirmation of a transfer agent's possession of a certificate, for
a transcript of a person's account, or for dividend and interest
payments.\52\
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\52\ 17 CFR 17Ad-5. Under certain circumstances, transfer agents
currently are permitted to respond to requests by telephone.
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B. Advisers Act
Section 205(a)(2) of the Advisers Act, which requires an
investment adviser to obtain its client's consent to the assignment of
an advisory contract.\53\
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\53\ 15 U.S.C. 80b-5(a)(2).
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Section 205(a)(3) of the Advisers Act, which requires an
investment adviser to notify its clients, if the adviser is organized
as a partnership and there is a change in members of partnership.\54\
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\54\ 15 U.S.C. 80b-5(a)(3).
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Section 206(3) of the Advisers Act, which prohibits
certain principal and agency transactions with a client without prior
written disclosure about the transaction and consent of the client.\55\
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\55\ 15 U.S.C. 80b-6(3).
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Rule 204-3, which requires investment advisers to deliver
a written disclosure statement, or ``brochure,'' to clients at least 48
hours before entering into an advisory contract, unless the client has
the right to terminate the contract without penalty within five
business days.\56\ In addition, investment advisers are required,
except in certain cases, to make available ``without charge'' updates
to its brochure.\57\
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\56\ 17 CFR 275.204-3(b). To the extent an adviser relies on 48-
hour advance delivery rather than the five-day cancellation period,
the 48-hour period would be measured from the time at which notice
is given to the client that the statement is available through a
specified electronic medium or source. Investment advisers should
have reason to believe that the nature of the system or any
limitations on the client's access to that system will not result in
any material delay in the client's access to the information
following receipt of the notice.
\57\ 17 CFR 275.204-3(c). If a client has elected to receive the
disclosure statement electronically, and neither the adviser nor any
system used by the adviser to disseminate updates electronically
imposes a charge upon the client specifically for the receipt of
this information, the Commission would consider this requirement
satisfied, even though a system selected by a client to gain access
to the adviser's system may impose charges for access, printing or
downloading. Alternatively, the Commission would consider the
requirement satisfied so long as a paper version of the update is
available without charge, notwithstanding any charges that may be
imposed upon a client for access, printing or downloading by the
system used by an adviser to disseminate updates electronically.
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Rule 205-3(d), which requires disclosure regarding
advisory arrangements involving performance fees.\58\
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\58\ 17 CFR 275.205-3(d).
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Rule 206(3)-2, which permits agency cross transactions,
provided that the investment adviser provides general written
disclosure about its role in the transactions, receives from clients
consent to agency cross transactions, and sends both written
confirmation of each transaction and an annual written disclosure
statement.\59\
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\59\ 17 CFR 275.206(3)-2.
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Rule 206(4)-2, which requires certain disclosure relating
to adviser custody of client assets.\60\
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\60\ 17 CFR 275.206(4)-2.
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Rule 206(4)-3, which requires certain disclosures to be
made by solicitors who receive cash solicitation fees from advisers and
a signed and dated acknowledgement from clients of the receipt of the
investment advisers and solicitors written disclosure statements.\61\
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\61\ 17 CFR 275.206(4)-3. Cf. Investment Company Act Release No.
21260 at n. 38 (July 27, 1995), 60 FR 39574 (contemplating that
notification required under proposed Investment Company Act Rule 3a-
4 could be provided electronically by investment advisers and other
sponsors of investment advisory programs).
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[[Page 24650]]
IV. Additional Securities Act, Exchange Act, and Investment Company Act
Examples
The October Interpretive Release included a series of examples
illustrating the general concepts set forth earlier in that release in
order to provide guidance in applying those concepts to specific facts
and circumstances. The Commission is publishing here the following,
additional examples to provide further guidance and illustration. These
examples are based on questions that have been raised with the staff by
industry representatives since the publication of the October
Interpretive Release. Any party (whether or not a registered investment
company) may look to these examples for guidance.
(1) Company XYZ places a prospectus for any securities offering on
its electronic mail system. Company XYZ also uses its electronic mail
system to disseminate documents required under the Exchange Act.
Employees use the company's electronic mail in the ordinary course of
performing their duties as employees and ordinarily are expected to
log-on to electronic mail routinely to receive mail and communications.
Those employees who do not log-on have alternative means of receiving
electronic mail messages, such as having them sent to secretaries or
co-workers who then deliver them to the employee. The electronic mail
either includes the actual document or announces the availability of
the document and provides information as to how to access the document
through the local area network. The electronic mail also prominently
states that a paper version of the document is available upon request.
This would satisfy delivery obligations with respect to employees
who use the company's electronic mail system in the course of
performing their duties or who are expected to have alternative means
made available to receive electronic mail messages.
(2) Company XYZ places a notice announcing its unregistered
Dividend Reinvestment Plan \62\ on its Internet Web site under a menu
heading ``Dividend Reinvestment Plan.'' The announcement also contains
the phone number of the Company's agent (which is independent from the
Company) from whom additional information regarding the operation of
the Dividend Reinvestment Plan can be obtained. Additionally, the
Company's Internet Web site contains a hypertext link to the
independent agent's Internet Web site where a brochure describing the
operation of the Dividend Reinvestment Plan and an enrollment card can
be obtained.
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\62\ A company need not register its dividend reinvestment plan
under the Securities Act where its involvement in the plan is
limited to administrative or ministerial functions. For additional
information, including a listing of permitted functions, see
Securities Act Release No. 4790 (July 13, 1965), 30 FR 9059 (July
20, 1965); Securities Act Release No. 5515 (July 22, 1974), 39 FR
28520 (August 8, 1974); Securities Act Release No. 6188 (February 1,
1980), 45 FR 8960 (February 11, 1980).
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This would be permissible, so long as the information on the
Company's Internet Web site is limited to the announcement of the
unregistered Dividend Reinvestment Plan and the name and address of the
independent agent from whom additional information can be obtained.
(This would be analogous to the communications that an issuer of an
unregistered plan could make in paper format.) As with communications
in paper format, the Company may not use its Internet Web site to
advertise the Dividend Reinvestment Plan or its benefits. Further, the
use of a hypertext link to the home page of the independent agent would
be permitted; however, the Company could not provide a hypertext link
directly to the Dividend Reinvestment Plan materials.
(3) Brokerage firm ABC, a recordholder of Company XYZ's common
stock, received consents from beneficial holders of Company XYZ's
common stock for electronic delivery of Company XYZ's annual report and
proxy materials and for electronic processing of voting instructions.
These customers are provided with the Internet Web site address where
Company XYZ's annual report and proxy materials are located and the
Internet Web site address where they can provide their voting
instructions electronically to the brokerage firm.
The electronic processing of voting instructions from beneficial
holders and the electronic voting of proxies would be consistent with
the proxy rules. Issuers and others are reminded to consider any
applicable state laws or self-regulatory organization rules.
(4) A fund makes supplemental sales literature and its prospectus
available through a commercial on-line service. Under section 5(b) of
the Securities Act, sales literature, whether in paper or electronic
form is required to be preceded or accompanied by a final prospectus
meeting the requirements of section 10(a) of the Securities Act. By
contrast, an advertisement satisfying the requirements of Securities
Act Rule 134 or 482 need not be preceded or accompanied by a
prospectus. Users could click on a box in the supplemental sales
literature to have the prospectus downloaded or to request that a
prospectus be mailed. While the system permits the sales literature to
be viewed on-line, it does not allow users to view the prospectus.
Unlike the system in example 36 in the October Interpretive Release,
this system would not require that a user have downloaded or printed
the prospectus before viewing the supplemental sales literature. Users
accessing the supplemental sales literature would give specific consent
to electronic delivery of the prospectus.
This would not satisfy the prospectus delivery requirement because
there would not be sufficient access to the prospectus. Because the
system does not give users the opportunity to view the prospectus, it
would lack the sort of reasonably comparable access to the prospectus
and the sales literature present in examples 14, 15, and 35 in the
October Interpretive Release. The opportunity to request that a
prospectus be mailed or downloaded would not, under current technology,
be considered to give investors sufficient access to the prospectus.
Instead, it would be analogous to giving investors sales literature in
paper with a toll-free telephone number for requesting the prospectus:
under those circumstances the prospectus would be received later and
would not be considered to have preceded or accompanied the sales
literature.\63\
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\63\ As technology develops, some users may have the capacity to
download and view a prospectus in no more time than it takes to jump
via hyperlink from the sales literature to the prospectus. Under
those circumstances, the capacity to download would be considered to
give those users reasonably comparable access to the prospectus that
would provide sufficient access.
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(5) A fund places its prospectus on its site on the World Wide Web
or some other electronic system. Shareholders provide a written,
revocable consent to receive prospectuses electronically through the
system. The consent informs shareholders that the current version of
each prospectus will be available continuously on the system and that
the fund will use the quarterly account statement or quarterly
newsletter as the means of notification of prospectus amendments. It
also states that another means of notification may be used, but only
after shareholders have been notified of the change by the then current
means of notification.\64\ The fund replaces its prospectus with an
annual amendment updating the
[[Page 24651]]
fund's financial information and making other changes.\65\ The fund has
provided notification that the prospectus will be updated by including
notification in the preceding account statement or shareholder
newsletter; the notification provides the approximate date on which the
amendment will be available. A subsequent amendment to the fund's
prospectus reflects the addition of a redemption fee. Notification of
the prospectus amendment has been included in the preceding statement
or newsletter.\66\
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\64\ A change in means of notification under such circumstances
would also be effective in the case of notification of the
availability of shareholder reports discussed in example 46 in the
October Interpretive Release. October Interpretive Release, supra
note 1.
\65\ Under section 10(a)(3) of the Securities Act, a fund that
continuously offers its shares would have to amend its prospectus no
less frequently than every 16 months in order to include updated
financial statements.
\66\ With unscheduled material prospectus amendments for which
such advance notice would not be feasible, the fund would need to
use other forms of notification such as a postcard or e-mail
message. See October Interpretive Release, supra note 1, example 43.
---------------------------------------------------------------------------
Just as the use of a newsletter or statement in example 46 in the
October Interpretive Release constituted sufficient notice for
effective delivery of the semi-annual reports required under the
Investment Company Act of 1940, the use of a newsletter or statement
here would constitute sufficient notice for effective delivery with
respect to the scheduled prospectus update.
(6) A fund's on-line prospectus has the same text as the paper
version, but the text appears in a different format. For example, text
that appears as a block in the margin of a page in the paper prospectus
appears in a box in the flow of the text in the electronic version. The
fund does not make a separate filing under Securities Act Rule 497 with
respect to the electronic version.
The mere difference in format without any difference in text would
not qualify the electronic version as a different ``form of
prospectus'' for which filing is required.
(7) An investment company produces both an electronic version (such
as a CD-ROM) and a paper version of its prospectus. Each version
contains all information required by, and otherwise complies with, the
applicable form and all other applicable provisions of the federal
securities laws. The electronic version contains a movie that does not
appear in the paper version. Each version of the prospectus indicates
that there may be other versions of the prospectus and, if the issuer
determines to make such other versions available, provides information
on how to obtain such other versions.\67\ The paper version does not
include a summary or transcript of the movie in the electronic version.
Both versions of the prospectus are filed with the Commission as part
of the company's registration statement, or separately pursuant to Rule
497.\68\
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\67\ The facts of this example should not be read as imposing
any obligation on the issuer to make such other versions of its
prospectus available to any person.
\68\ Alternatively, the company may file with the Commission as
an appendix to the prospectus the script of the movie and a fair and
accurate narrative description of the graphic or image material. See
October Interpretive Release, supra note 1, example 13.
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The use of either version of the prospectus to satisfy delivery
requirements would be permissible.\69\ The issuer (or other party to
whom the law assigns the responsibility) remains responsible for
ensuring that each version satisfies applicable statutory
requirements.\70\
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\69\ Of course, the general principles concerning electronic
delivery, as described in the October Interpretive Release, supra
note 1, would apply.
\70\ See id. at 53460.
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V. Solicitation of Comments
Any interested person wishing to submit written comments relating
to the views expressed in this release are invited to do so by
submitting them in triplicate to Jonathan G. Katz, Secretary,
Securities and Exchange Commission, 450 Fifth Street, N.W., Mail Stop
6-9, Washington, D.C. 20549. Comments also may be submitted
electronically at the following electronic mail address: rule-
[email protected]. All comment letters should refer to File Number S7-
13-96. This file number should be included on the subject line if
comments are submitted using electronic mail. Comment is requested not
only on the specific issues discussed in detail in the release, but on
any other issues that should be considered in connection with
facilitating the use of electronic media by broker-dealers, transfer
agents, and investment advisers. Comment is sought from both the point
of view of the sender and the intended recipient. The Commission
further requests comment on any competitive burdens that may result
from this interpretation. Comments must be received on or before July
1, 1996. Comments received will be available for public inspection and
copying in the Commission's public reading room, 450 Fifth Street,
N.W., Washington, D.C. 20549. Electronically submitted comment letters
will be posted on the Commission's Internet web site (http://
www.sec.gov).
List of Subjects
17 CFR Parts 231 and 241
Securities.
17 CFR Parts 271 and 276
Investment companies, Securities.
Amendment to the Code of Federal Regulations
The Commission is amending Title 17, Chapter II of the Code of
Federal Regulations in the manner set forth below:
PART 231--INTERPRETATIVE RELEASES RELATING TO THE SECURITIES ACT OF
1933 AND GENERAL RULES AND REGULATIONS THEREUNDER
Part 231 is amended by adding Release No. 33-7288 and the release
date of May 9, 1996 to the list of interpretive releases.
PART 241--INTERPRETATIVE RELEASES RELATING TO THE SECURITIES
EXCHANGE ACT OF 1934 AND GENERAL RULES AND REGULATIONS THEREUNDER
Part 241 is amended by adding Release No. 34-37182 and the release
date of May 9, 1996 to the list of interpretive releases.
PART 271--INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT
COMPANY ACT OF 1940 AND GENERAL RULES AND REGULATIONS THEREUNDER
Part 271 is amended by adding Release No. IC-21945 and the release
date of May 9, 1996 to the list of interpretive releases.
PART 276--INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT
ADVISERS ACT OF 1940 AND GENERAL RULES AND REGULATIONS THEREUNDER
Part 276 is amended by adding Release No. IA-1562 and the release
date of May 9, 1996 to the list of interpretive releases.
By the Commission.
Dated: May 9, 1996.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-12176 Filed 5-14-96; 8:45 am]
BILLING CODE 8010-01-P
Complete official Federal Register PDF
FR Doc. 96-12163 Radio Broadcasting Services; Denison-Sherman, Paris, Jacksboro, TX, and Madill, OK
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Page 24465]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12163]
=======================================================================
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 95-126; RM-8671]
Radio Broadcasting Services; Denison-Sherman, Paris, Jacksboro,
TX, and Madill, OK
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Commission, at the request of Hunt Broadcasting, Inc.,
substitutes Channel 269C1 for Channel 269C3 at Denison-Sherman, Texas,
and modifies the license of Station KDVE(FM) to specify operation on
the higher powered channel. To accommodate the allotment of Channel
269C1 at Denison-Sherman, the Commission also substitutes Channel 282C2
for Channel 270C2 at Paris, Texas, and modifies Station KBUS(FM)'s
license; substitutes Channel 273A for Channel 272A at Madill, Oklahoma,
and modifies Station KMAD(FM)'s license; and substitutes Channel 252A
for Channel 269A as well as, a change of transmitter site for Station
KAIH(FM) at Jacksboro, Texas, and modifies Station KAIH(FM)'s
construction permit accordingly. See 60 FR 40814, August 10, 1995. See
Supplemental Information, infra. With this action, this proceeding is
terminated.
EFFECTIVE DATE: June 21, 1996.
FOR FURTHER INFORMATION CONTACT: Pam Blumenthal, Mass Media Bureau,
(202) 418-2180.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Report and Order, MM Docket No. 95-126, adopted April 29, 1996, and
released May 7, 1996. The full text of this Commission decision is
available for inspection and copying during normal business hours in
the FCC Reference Center (Room 239), 1919 M Street, NW., Washington,
DC. The complete text of this decision may also be purchased from the
Commission's copy contractor, ITS, Inc., (202) 857-3800, 2100 M Street,
NW., Suite 140, Washington, DC 20037.
Channels 269C1, 282C2, 252A, and 273A can be allotted to Denison-
Sherman, Paris, Jacksboro, Texas, and Madill, Oklahoma, in compliance
with the Commission's minimum distance separation requirements. Channel
269C1 can be allotted to Denison-Sherman without the imposition of a
site restriction. The coordinates for Channel 269C1 at Denison-Sherman
are 33-41-39 and 96-34-38. Channel 252A can be allotted Jacksboro with
a site restriction of 3.4 kilometers (2.1 miles) northwest. The
coordinates for Channel 252A at Jacksboro are 33-14-26 and 98-11-16.
Channel 282C2 and Channel 273A can be allotted Paris, Texas, and
Madill, Oklahoma, respectively, at the transmitter sites specified in
Station KBUS(FM) and Station KMAD(FM)'s authorizations. The coordinates
for Channel 282C2 at Paris are 33-45-04 and 95-24-51. The coordinates
for Channel 273A at Madill are 34-06-24 and 96-46-30.
List of Subjects in 47 CFR Part 73
Radio broadcasting.
Part 73 of title 47 of the Code of Federal Regulations is amended
as follows:
PART 73--[AMENDED]
1. The authority citation for part 73 continues to read as follows:
Authority: Secs. 303, 48 Stat., as amended, 1082; 47 U.S.C. 154,
as amended.
Sec. 73.202 [Amended]
2. Section 73.202(b), the Table of FM Allotments under Texas, is
amended by removing Channel 269C3 and adding Channel 269C1 at Denison-
Sherman, and by removing Channel 270C2 and adding Channel 282C2 at
Paris, and by removing Channel 269A and adding Channel 252A at
Jacksboro.
3. Section 73.202(b), the Table of FM Allotments under Oklahoma, is
amended by removing Channel 272A and adding 273A at Madill.
Federal Communications Commission.
Andrew J. Rhodes,
Acting Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-12163 Filed 5-14-96; 8:45 am]
BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-12156 Animal Drugs, Feeds, and Related Products; Monensin
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24443-24444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12156]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
21 CFR Parts 520 and 558
Animal Drugs, Feeds, and Related Products; Monensin
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
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SUMMARY: The Food and Drug Administration (FDA) is amending the animal
drug regulations to reflect approval of supplemental new animal drug
applications (NADA's) filed by Elanco Animal Health, Division of Eli
Lilly and Co., Moorman Manufacturing Co., and Farmland Industries, Inc.
Elanco's supplemental NADA provides for use of monensin Type C
medicated feeds fed to pasture cattle weighing less than 400 pounds
(lb) for increased rate of weight gain. Moorman's and Farmland's
supplemental NADA's provide for use of monensin blocks for pasture
cattle weighing less than 400 lb for increased rate of weight gain.
EFFECTIVE DATE: May 15, 1996.
FOR FURTHER INFORMATION CONTACT: Jack Caldwell, Center for Veterinary
Medicine (HFV-126), Food and Drug Administration, 7500 Standish Pl.,
Rockville, MD 20855, 301-594-1638.
SUPPLEMENTARY INFORMATION: Elanco Animal Health, Division of Eli Lilly
and Co., Lilly Corporate Center, Indianapolis, IN 46285, filed
supplemental NADA 95-735, which provides for use of monensin Type A
medicated articles to make monensin Type C medicated feeds containing
25 to 400 grams per ton monensin as monensin sodium to be fed at 50 to
200 milligrams per head per day to pasture cattle (slaughter, stocker,
feeder, and dairy and beef replacement heifers) weighing less than 400
lb for increased rate of weight gain. Moorman Manufacturing Co.,
Quincy, IL 62301, filed supplemental NADA 115-581, and Farmland
Industries, Inc., Kansas City, MO 64116, filed supplemental NADA 118-
509, providing for free-choice feeding of monensin blocks, all to
pasture cattle weighing less than 400 lb for increased rate of weight
gain.
The supplemental NADA's provide for removal of the restriction
concerning feeding of the products to animals weighing less than 400 lb
body weight as currently approved. The supplemental NADA's are approved
as of March 15, 1996, and the regulations are amended in 21 CFR
520.1448a(c) and 558.355(f)(3)(iii) and (f)(3)(v) to reflect the
approvals. The basis for approval is discussed in the freedom of
information summary for Elanco's supplemental NADA 95-735.
Under section 512(c)(2)(F)(iii) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360b(c)(2)(F)(iii)), approval of Elanco Animal
Health's supplemental NADA 95-735 qualifies for 3 years of marketing
exclusivity beginning March 15, 1996, because the supplement contains
reports of new clinical or field investigations (other than
bioequivalence or residue studies) essential to the approval and
conducted or sponsored by the applicant. Marketing exclusivity applies
only to the new use of the product.
Under section 512(c)(2)(F)(iii) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360b(c)(2)(F)(iii)), approval of Moorman's
supplemental NADA 115-581 and Farmland's supplemental NADA 118-509 do
not qualify for marketing exclusivity because the supplements do not
contain reports of new clinical or field investigations (other than
bioequivalence or residue studies) or new human food safety studies
(other than bioequivalence or residue studies) essential to the
approval and conducted or sponsored by the applicant.
In accordance with the freedom of information provisions of part 20
(21 CFR part 20) and Sec. 514.11(e)(2)(ii) (21 CFR 514.11(e)(2)(ii)), a
summary of safety and effectiveness data and information submitted to
support approval of this application may be seen in the Dockets
Management Branch (HFA-305), Food and Drug Administration, 12420
Parklawn Dr., rm. 1-23, Rockville, MD 20857, between 9 a.m. and 4 p.m.,
Monday through Friday.
The basis of approval of Moorman's and Farmland's supplemental
NADA's are by authorization to reference data and information in
Elanco's supplemental NADA 95-735. Therefore, a freedom of information
summary of the data and information required for approval of these
NADA's is available under Elanco's supplemental NADA 95-735.
The agency has determined under 21 CFR 25.24(d)(1)(i) that this
action is of a type that does not individually or cumulatively have a
significant effect on the human environment. Therefore, neither an
environmental assessment nor an environmental impact statement is
required.
List of Subjects
21 CFR Part 520
Animal drugs.
21 CFR Part 558 -
Animal drugs, Animal feeds.
Therefore, under the Federal Food, Drug, and Cosmetic Act and
under the authority delegated to the Commissioner of Food and Drugs and
redelegated to the Center for Veterinary Medicine, 21 CFR parts 520 and
558 are amended as follows:
[[Page 24444]]
PART 520--ORAL DOSAGE FORM NEW ANIMAL DRUGS
1. The authority citation for 21 CFR part 520 continues to read as
follows:
Authority: Sec. 512 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 360b).
Sec. 520.1448a [Amended]
2. Section 520.1448a Monensin blocks is amended in paragraph
(c)(4)(iii) by removing the phrase ``weighing more than 400 pounds''.
PART 558--NEW ANIMAL DRUGS FOR USE IN ANIMAL FEEDS
3. The authority citation for 21 CFR part 558 continues to read as
follows:
Authority: Secs. 512, 701 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360b, 371).
Sec. 558.355 [Amended]
4. Section 558.355 Monensin is amended in paragraph (f)(3)(iii)(b)
and (f)(3)(v)(b) by removing the phrase ``weighing more than 400
pounds''.
Dated: April 4, 1996.
Robert C. Livingston,
Director, Office of New Animal Drug Evaluation, Center for Veterinary
Medicine.
[FR Doc. 96-12156 Filed 5-14-96; 8:45 am]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-12154 Animal Drugs, Feeds, and Related Products; Gentamicin Injection
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24440-24441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12154]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Parts 510, 522, and 556
Animal Drugs, Feeds, and Related Products; Gentamicin Injection
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is amending the animal
drug regulations to reflect the following actions on two new animal
drug applications (NADA's) held by Schering-Plough Animal Health: The
combination of two NADA's into one and the withdrawal of the other, the
codification of a supplemental NADA approved by letter, the approval of
a supplemental NADA that provides for the use of two higher product -
concentrations at the same dosage and for the same indications, and the
addition of a tolerance for residues of gentamicin in chickens.
The approved, combined, and supplemented NADA provides for use of
gentamicin sulfate injection for the prevention of early mortality of
day-old chickens and 1- to 3-day-old turkeys due to certain infections
susceptible to gentamicin.
EFFECTIVE DATE: May 15, 1996
FOR FURTHER INFORMATION CONTACT: George K. Haibel, Center for
Veterinary Medicine (HFV-133), Food and Drug
[[Page 24441]]
Administration, 7500 Standish Pl., Rockville, MD 20855, 301-594-1644.
SUPPLEMENTARY INFORMATION: Schering-Plough Animal Health, Schering-
Plough Corp., P.O. Box 529, Kenilworth, NJ 07033, has requested that
NADA 47-486 Garasol Injection (5 milligrams gentamicin per
milliliter (mg/mL) for turkeys) be included in NADA 101-862
Garasol Injection (50 and 100 mg/mL for chickens). The NADA's
are combined as NADA 101-862. NADA 47-486 is withdrawn. Schering-Plough
also filed supplemental NADA 101-862 providing for the use of 50 and
100 mg/mL gentamicin sulfate injection for turkeys at the same dosage
and for the same indications as currently approved. The supplement is
approved as of March 28, 1996. In addition, supplemental NADA 101-862
was approved on July 27, 1983, for the use of a 100 mg/mL injection in
day-old chickens. However, this approval was not codified. At this time
the regulation in Sec. 522.1044 (21 CFR 522.1044) is amended to codify
use of the 100 mg/mL injection in day-old chickens. Although the use
was approved in chickens as well as turkeys, the regulations were not
amended to provide for a tolerance for gentamicin residues in chickens.
The regulations in 21 CFR 556.300 are amended to provide for tolerances
for gentamicin residues in chickens as well as turkeys.
The approved, combined, and supplemented NADA 101-862 provides for
use of Garasol Injection (50 and 100 mg/mL gentamicin sulfate
injection) in day-old chickens for the prevention of early mortality
caused by Escherichia coli, Salmonella typhimurium, and Pseudomonas
aeruginosa susceptible to gentamicin, and for use of Garasol
Injection (5, 50, and 100 mg/mL gentamicin sulfate injection) in 1- to
3-day-old turkeys for the prevention of early mortality due to Arizona
paracolon infections susceptible to gentamicin.
In Sec. 522.1044(d)(2)(i), the regulation is editorially amended to
reflect the language used in Sec. 522.1044(d)(3)(i).
Also, American Scientific Laboratories, A Division of Schering
Corp., has been incorporated into Schering-Plough Animal Health,
Schering-Plough Corp. Therefore, 21 CFR 510.600(c) is amended to remove
the entries for American Scientific Laboratories, drug label code
000138.
In accordance with the freedom of information provisions of part 20
(21 CFR part 20) and Sec. 514.11(e)(2)(ii) (21 CFR 514.11(e)(2)(ii)), a
summary of safety and effectiveness data and information submitted to
support approval of this application may be seen in the Dockets
Management Branch (HFA-305), Food and Drug Administration, 12420
Parklawn Dr., rm. 1-23, Rockville, MD 20857, between 9 a.m. and 4 p.m.,
Monday through Friday.
The agency has determined under 21 CFR 25.24(d)(1)(iii) that this
action is of a type that does not individually or cumulatively have a
significant effect on the human environment. Therefore, neither an
environmental assessment nor an environmental impact statement is
required.
List of Subjects
21 CFR Part 510
Administrative practice and procedure, Animal drugs, Labeling,
Reporting and recordkeeping requirements.
21 CFR Part 522
Animal drugs.
21 CFR Part 556
Animal drugs, Foods.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs and
redelegated to the Center for Veterinary Medicine, 21 CFR parts 510,
522, and 556 are amended as follows:
PART 510--NEW ANIMAL DRUGS
1. The authority citation for 21 CFR part 510 continues to read as
follows:
-Authority: Secs. 201, 301, 501, 502, 503, 512, 701, 721 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321, 331, 351, 352,
353, 360b, 371, 379e).
Sec. 510.600 [Amended]
-2. Section 510.600 Names, addresses, and drug labeler codes of
sponsors of approved applications is amended in the table in paragraph
(c)(1) by removing the entry for ``American Scientific Laboratories''
and in the table in paragraph (c)(2) by removing the entry for
``000138''.
PART 522--IMPLANTATION OR INJECTABLE DOSAGE FORM NEW ANIMAL DRUGS
3. The authority citation for 21 CFR part 522 continues to read as
follows:
Authority: Sec. 512 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 360b).
4. Section 522.1044 is amended by revising paragraphs (b),
(d)(2)(i), and (d)(3)(i) to read as follows:
Sec. 522.1044 Gentamicin sulfate injection.
(b) Sponsors. (1) See No. 000061 in Sec. 510.600(c) of this chapter
for use of: 5-milligrams-per-milliliter solution in swine as in
paragraph (d)(4) of this section, 50-milligrams-per-milliliter solution
in dogs and cats as in paragraph (d)(1) of this section, 50- and 100-
milligrams-per-milliliter solution in chickens and turkeys as in
paragraphs (d)(2) and (d)(3) of this section.
(2) [Reserved]
* * * * *
(d) * * *
(2) Turkeys--(i) Amount. One milligram of gentamicin per 0.2
milliliter dose, using the 50- or 100-milligrams-per-milliliter product
diluted with sterile saline to a concentration of 5 milligrams-per-
milliliter.
* * * * *
(3) Chickens--(i) Amount. 0.2 milligram of gentamicin per 0.2
milliliter dose, using the 50- or 100-milligrams-per-milliliter product
diluted with sterile saline to a concentration of 1.0 milligram-per-
milliliter.
* * * * *
PART 556--TOLERANCES FOR RESIDUES OF NEW ANIMAL DRUGS IN FOOD
-5. The authority citation for 21 CFR part 556 continues to read as
follows:
Authority: Secs. 402, 512, 701 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 342, 360b, 371).
Sec. 556.300 [Amended]
6. Section 556.300 Gentamicin sulfate is amended in paragraph (a)
by adding the phrase ``chickens and'' after ``tissues of''.
Dated: April 26, 1996.
Robert C. Livingston,
Director, Office of New Animal Drug Evaluation, Center for Veterinary
Medicine.
[FR Doc. 96-12154 Filed 5-14-96; 8:45 am]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-12134 International Banking Operations
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24439-24440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12134]
=======================================================================
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 211
[Regulation K; Docket No. R-0911]
International Banking Operations
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the provisions of Regulation K
regarding interstate banking operations of foreign banking
organizations. The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (Interstate Act) removed geographic restrictions
on interstate banking by foreign banks effective September 29, 1995,
and requires certain foreign banks without U.S. deposit-taking offices
to select a home state for the first time. The final rule requires
these foreign banks to select a home state by June 30, 1996, and
removes outdated restrictions on certain mergers by U.S. bank
subsidiaries of foreign banks outside the home state of the foreign
bank. Obsolete and superseded provisions of Regulation K concerning
home state selection also are deleted.
EFFECTIVE DATE: May 9, 1996.
FOR FURTHER INFORMATION CONTACT: Ann E. Misback, Managing Senior
Counsel (202/452-3788), Douglas M. Ely, Senior Attorney (202/452-5289),
Andres L. Navarrete, Attorney (202/452-2300), Legal Division; Michael
G. Martinson, Assistant Director (202/452-3640), Division of Banking
Supervision and Regulation, Board of Governors of the Federal Reserve
System. For users of Telecommunication Device for the Deaf [TDD] only,
please contact Dorothea Thompson (202/452-3544), Board of Governors of
the Federal Reserve System, 20th and C Streets NW., Washington, D.C.
20551.
SUPPLEMENTARY INFORMATION:
The Interstate Act amended section 5 of the International Banking
Act of 1978 (IBA), which governs interstate banking and branching
operations of foreign banks. The Interstate Act also amended the Bank
Holding Company Act of 1956 (BHC Act), the Federal Deposit Insurance
Act and several other statutes regarding interstate banking operations
of bank holding companies, national banks and state banks. In order to
implement certain of these changes, the final rule amends the
provisions of Regulation K regarding interstate banking operations of
foreign banking organizations (12 CFR 211.22).
On December 26, 1995, the Board of Governors of the Federal Reserve
[[Page 24440]]
System (the Board) requested public comment on a proposed rule (the
Proposed Rule) that would require foreign banks with only agencies and
subsidiary commercial lending companies in the United States to select
a home state, or have a home state designated by the Board. 60 FR
67100. The Proposed Rule also would remove a restriction on the ability
of foreign banks to effect major bank mergers through U.S. subsidiary
banks located outside the foreign banks' home states, and would delete
certain outdated rules governing home state selection.
The comment period ended on February 5, 1996. The Board received a
single public comment on the Proposed Rule from a trade association.
The Board has considered the comment and has made changes to address it
in the final rule. Except as discussed below, the Board's final rule
remains unchanged from the Proposed Rule. In addition, the Board
requested and received comments on other aspects of the Interstate Act
as it applies to foreign banks. The Board will consider these comments
in connection with future review of the provisions of Regulation K
concerning the interstate operation of foreign banks.
The commenter generally supported the provisions of the Proposed
Rule, including its provisions requiring certain foreign banks to
select a home state as contemplated by the Interstate Act. The
commenter suggested, however, that the deadline for home state
selection by these banks be 60 days from the publication of the final
rule, rather than March 31, 1996, as proposed in the Proposed Rule. The
commenter requested this extension in order to give these banks
adequate time to assess the consequences of their decision.
Although the Interstate Act removed the geographic restrictions of
the IBA on the interstate acquisition of banks by foreign banks, the
home state of a foreign bank continues to affect its options for
establishing additional branches in the United States under the IBA. In
particular, the location of a foreign bank's home state is a factor
determining the ability of the foreign bank to establish further
interstate branches pursuant to section 5 (a)(1) and 5 (a)(2) of the
IBA, as amended by the Interstate Act. 12 U.S.C. Sec. 3103 (a)(1),
(a)(2).
Accordingly, the final rule allows additional time for home state
selection by establishing June 30, 1996, as the deadline for such
selection. This extension affords foreign banks affected by the rule
ample time in which to make an informed home state selection.
The proposed rule provided that, in the event a foreign bank
required to select a home state fails to do so, the Board would
exercise its authority to determine a foreign bank's home state. In
such cases, the Board generally will designate as a foreign bank's home
state the state in which the total assets of all its offices, net of
claims on affiliates or other offices of the foreign bank, is the
largest, as reflected in the foreign bank's most recent report of
condition, unless other circumstances warrant designation of a
different home state.
Paperwork Reduction Act
In accordance with section 3506 of the Paperwork Reduction Act of
1995 (44 U.S.C. Ch. 35; 5 CFR 1320 Appendix A.1), the Board reviewed
the rule under the authority delegated to the Board by the Office of
Management and Budget. No collections of information pursuant to the
Paperwork Reduction Act are contained in the rule.
Regulatory Flexibility Act Analysis
Pursuant to section 605(b) of the Regulatory Flexibility Act (Pub.
L. 96-354, 5 U.S.C. 601 et seq.), the Board certifies that the final
rule would not have a significant economic impact on a substantial
number of small entities that are subject to its regulation.
List of Subjects in 12 CFR Part 211
Exports, Federal Reserve System, Foreign banking, Holding
companies, Investments, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, the Board amends 12 CFR
Part 211 as set forth below:
PART 211--INTERNATIONAL BANKING OPERATIONS (REGULATION K)
1. The authority citation for Part 211 continues to read as
follows:
Authority: 12 U.S.C. 221 et seq., 1818, 1841 et seq., 3101 et
seq., 3901 et seq.
2. In Sec. 211.22, paragraph (a) is revised; paragraph (c) is
removed; and paragraph (d) is redesignated as paragraph (c) to read as
follows:
Sec. 211.22 Interstate banking operations of foreign banking
organizations.
(a) Determination of home state. (1) A foreign bank (except a
foreign bank to which paragraph (a)(2) of this section applies) that
has any combination of domestic agencies or subsidiary commercial
lending companies that were established before September 29, 1994, in
more than one state and have been continuously operated shall select
its home state from those states in which such offices or subsidiaries
are located. A foreign bank shall do so by filing with the Board a
declaration of home state by June 30, 1996. In the absence of such
selection, the Board shall designate the home state for such foreign
banks.
(2) A foreign bank that, as of September 29, 1994, had declared a
home state or had a home state determined pursuant to the law and
regulations in effect prior to that date shall have that state as its
home state.
(3) A foreign bank that has any branches, agencies, subsidiary
commercial lending companies, or subsidiary banks in one state, and has
no such offices or subsidiaries in any other states, shall have as its
home state the state in which such offices or subsidiaries are located.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, May 9, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96-12134 Filed 5-14-96; 8:45 am]
BILLING CODE 6210-01-P
Complete official Federal Register PDF
FR Doc. 96-12130 Rules of Practice and Procedure
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24447-24457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12130]
=======================================================================
-----------------------------------------------------------------------
POSTAL RATE COMMISSION
39 CFR Part 3001
[Docket No. RM95-4; Order No. 1110]
Rules of Practice and Procedure
AGENCY: Postal Rate Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule sets forth amendments to the Commission's
rules of practice and procedure that provide for expedited
consideration of requests of the United States Postal Service to:
conduct market tests of new postal services in order to develop
information necessary to support a permanent mail classification
change; adopt, on a provisional basis, mail classification and
associated rate changes that supplement, but do not alter, existing
rates and mail classifications; and adopt permanent but narrowly
focused mail classification changes that supplement, but do not alter,
existing rates and mail classifications. In addition to these
amendments, the final rule adopts provisions that allow the Postal
Service to use a multi-year test period for the purpose of
demonstrating the financial viability of potential new services that
are the subject of a concurrent Postal Service request.
EFFECTIVE DATE: These rules are effective May 15, 1996 through May 15,
2001.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, Legal Advisor,
Postal Rate Commission, 1333 H Street NW., Suite 300, Washington DC
20268-0001 (telephone: 202/789-6820).
SUPPLEMENTARY INFORMATION: On October 27, 1995, the Commission
published a notice of proposed amendments to its rules of practice and
procedure designed to facilitate expedited consideration of Postal
Service requests to: (1) Conduct market tests of new postal services in
order to develop information necessary to support a permanent mail
classification change; (2) adopt, on a provisional basis, mail
classification and associated rate changes that supplement, but do not
alter, existing rates and mail classifications; and (3) adopt permanent
but narrowly focused mail classification changes that supplement, but
do not alter, existing rates and mail classifications. The proposed
amendments also include provisions that would permit the Postal Service
to request the Commission's use of a multi-year test period for the
purpose of demonstrating the financial viability of potential new
services that are the subject of a concurrent Postal Service request.
60 FR 54981-89 (October 27, 1995). The Commission's proposed rules
pursue specific recommendations of the Joint Task Force on Postal
Ratemaking,1 and are responsive to a majority of the initiatives
requested by the Postal Service in a petition submitted to the
Commission on April 13, 1995. Id. at 54981.
---------------------------------------------------------------------------
\1\ See Postal Ratemaking in a Time of Change: A Report by the
Joint Task Force on Postal Ratemaking (June 1, 1992).
---------------------------------------------------------------------------
The Commission received 17 sets of comments in response to the
Notice of October 27.2 The commenters present divergent views on
both the substance of the Commission's proposed rules and the propriety
of adopting them in the current proceeding. Additionally, several
commenters suggest that the Commission pursue other initiatives in this
proceeding that were originally recommended by the Joint Task Force
Report and proposed in the Postal Service's petition. In view of these
diverse statements of position, it is appropriate to begin with a
discussion of the considerations bearing on the Commission's
determination to adopt new rules at this time in four areas, on a five-
year trial basis.
---------------------------------------------------------------------------
\2\ The American Bankers Association, American Business Press,
Advertising Mail Marketing Association, Direct Marketing
Association, Inc., Dow Jones & Company, Inc., Federal Express
Corporation, McGraw-Hill Companies, Inc., Major Mailers Association,
Mail Order Association of America, Magazine Publishers of America,
Newspaper Association of America, National Newspaper Association,
the Commission's Office of the Consumer Advocate, Parcel Shippers
Association, Time Warner, Inc., United Parcel Service, and the
United States Postal Service submitted comments in response to the
Notice. Some of these comments were not timely filed, primarily
owing to extraordinarily adverse weather conditions on the date they
were due. In order to avoid prejudice to any party who wished to
comment, the Commission has considered all comments received.
---------------------------------------------------------------------------
I. Considerations Bearing on Adoption of Proposed Rules
In the Notice of Proposed Rulemaking published on October 27, the
Commission announced its determination to promulgate draft rules which
would implement a majority, but not all, of the seven procedural
initiatives contained in the Postal Service's Petition of April 13,
1995. 60 FR 54981. The Commission found that four of the initiatives
offered the greatest promise for procedural improvement in the near
term. Accordingly, the Commission published draft rules of procedure
governing market tests, limited-duration provisional service changes,
minor classifications changes, and multi-year test periods for new
services. With regard to the remaining three Postal Service
initiatives--rules for limited scope rate cases, rate bands for
competitive services, and Negotiated Service Agreements--the Commission
concluded that their consideration should be deferred for various
reasons, but stated that each of the areas merits further study and
deliberation in subsequent proceedings. Id. at 54981, 54985.
The Deferred Postal Service Proposals
Several commenters ask the Commission to take up one or more of the
three remaining initiatives, either in this proceeding or by initiating
another rulemaking in the near future. Time Warner urges the Commission
to reconsider the determination to defer consideration of rules for
establishing rate bands for competitive services and rules providing
for contract rates; Parcel Shippers Association comments that adoption
of procedures allowing rate bands and negotiated service contracts is
crucial to the competitive posture of the Postal Service. Advertising
Mail Marketing Association, Dow Jones & Company, Magazine Publishers of
America, and Mail Order Association of America comment in favor of
initiating a proceeding in the near future to consider one or more of
the three deferred initiatives. The Postal Service states that it would
have preferred that all its proposals be addressed in this proceeding,
but urges the Commission to issue a further rulemaking on the remaining
initiatives now that Docket No. MC95-1 has been concluded.
The Commission continues to believe that limited scope rate cases,
rate bands, and Negotiated Service Agreements present issues that are
qualitatively
[[Page 24448]]
different from, and more difficult than, those in the four areas for
which rules have been proposed. For this reason they will not be
considered in the current proceeding. In addition to the unresolved
legal and other issues cited in the Notice of October 27, see 60 FR
54985, consideration of rules in these three areas would necessarily
involve an exploration of technical and other substantive issues. For
example, development of a rule providing for rate bands would require
consideration of the technical resources available to support adoption
of a range of rates for competitive mail categories and to gauge the
impact of their adoption, and appropriate filing requirements to
support such requests. With regard to Negotiated Service Agreements,
adoption of rules applicable to such special classifications would
involve consideration of the objective criteria that would be required
of a mailer to qualify for reduced contract rates.3 The Commission
is prepared to take up the issues raised by limited scope rate cases,
rate bands, and Negotiated Service Agreements in a forthcoming
rulemaking proceeding.
---------------------------------------------------------------------------
\3\ By way of analogy, the Postal Service's rules applicable to
International Customized Mail (ICM) service impose two objective
qualifications on potential international contract ratepayers:
minimum-volume qualifying criteria, and a single-point-of-origin
criterion. International Mail Manual Sec. 292; see 58 FR 29782.
---------------------------------------------------------------------------
The Commission's Proposed Rules
One commenter--the Newspaper Association of America (NAA)--opposes
adoption of most of the Commission's proposed amendments as unsound
from a regulatory perspective. NAA urges the Commission to abandon the
proposed rules for market tests, provisional services, and multi-year
test periods because their adoption would violate the regulatory
structure of the Postal Reorganization Act, unjustifiably advancing
competitive considerations at the ultimate expense of captive monopoly
ratepayers.
A particular problem raised by the proposed rules, according to
NAA, ``is who bears any potential losses from market tests of new
services, provisional services, or from multi-year test periods.'' NAA
Comments at 4-5. Were the Postal Service a private regulated utility,
NAA observes, the Service's losses would be disallowed from its rate
base, or at least segregated from the costs of monopoly services, and
ultimately absorbed by its shareholders. In contrast, when the Service
loses money, that loss is cumulated in the Prior Years' Losses
component of the revenue requirement, and adds to the institutional
costs of the Postal Service. As a result, NAA argues, any financial
losses stemming from ill-advised or underpriced new services approved
under the proposed rules would ultimately be shifted in large measure
to monopoly mailers, thereby creating a cross-subsidy in contravention
of the intent of Congress. Unless and until Congress makes fundamental
changes in the Reorganization Act that would grant the Commission power
to police the rate effects of Postal Service forays into competitive
service--especially enhanced authority over the revenue requirement--
NAA states that the proposed rules should not be adopted.
NAA's comments raise legitimate concerns regarding the possible
impact of non-compensatory services upon other postal ratepayers,
particularly monopoly mailers. The Commission agrees that new services
adopted to meet competitive or other perceived needs must be offered at
compensatory rates, and cannot be allowed to become a revenue burden on
other categories of mail. However, the possibility that the
Commission's proposed rules could become a vehicle for producing such
results does not compel the conclusion that they should not be adopted.
Rather, it is a reason for fashioning and applying the rules in a
manner that will avoid this potential harm. Each of the proposed rules
for introducing new services includes provisions that will serve to
limit the potential negative financial impact of its application.
Market tests will be limited in duration and typically will occur in
only a few areas. Provisional services also will be limited in
duration. Minor classification changes will be recommended only if
their anticipated impact on overall postal costs and revenues is minor.
Furthermore, in applying the rules the Commission will be bound, as
always, by the requirement in Sec. 3622(b)(3) to recommend rates that
recover estimated costs and contribute to the institutional costs of
the Postal Service.
National Newspaper Association (NNA) and other commenters raise a
different general concern regarding the proposed rules: potential
problems of due process associated with the 90- to 120-day procedural
schedules established in the rules. NNA comments that the speed made
necessary by the foreshortened decisional deadlines equates to
advantage for the Postal Service as proponent, to exclusion of
potential parties, to expense borne by parties who do participate, and
to harm of the Commission's decisional process by limiting the time in
which to develop an evidentiary record. NNA Comments at 3-4. The
Commission's Office of the Consumer Advocate also identifies due
process and evidentiary problems that could result from the abbreviated
procedural schedules as its primary concerns regarding the rules. OCA
asks the Commission to state explicitly that any new rules adopted in
this proceeding will not be used to shift the burden of proof from the
Postal Service or limit discovery. OCA Comments at 7-10. Similar
concerns regarding particular proposed rules were voiced by American
Bankers Association, McGraw-Hill, Newspaper Association of America, and
United Parcel Service.
Procedural schedules of 90 or 120 days admittedly may impose some
extraordinary demands on participants, but they are by no means
impossible to meet, as the prompt litigation and deliberations in
Docket No. MC96-1 demonstrate. The Reorganization Act directs the
Commission to consider rate and classification change requests
``promptly,'' and authorizes it to adopt rules ``[i]n order to conduct
its proceedings with utmost expedition consistent with procedural
fairness to the parties.'' 39 U.S.C. Sec. 3624(a), (b). The Commission
has designed the rules adopted in this proceeding with features--such
as registration and expedited notice provisions--to increase the
feasibility of the prescribed decisional schedules. However, the
Commission wishes to assure all parties that it will not allow these
rules to be used to alter the normally applicable standards of proof,
curtail legitimate discovery and hearing practice, or otherwise deprive
interested parties of their procedural rights. It should also be borne
in mind that in any proceeding conducted under the new rules, an
affected participant may lodge a motion for extension of the procedural
schedule, which the Commission will grant if it finds that an extension
is required to provide due process.
Additionally, in light of the various concerns expressed by
commenters about the operation of the proposed rules and their
consequences, the Commission is including a ``sunset'' provision in
each of the four components of the final rule, which will cause them to
be reviewed or terminated within a five-year period.
II. Market Tests of Potential New Services
Applicability of Rule
Several parties filed comments suggesting changes which would
enlarge applicability of the Commission's proposed market test rule.
Both the Postal Service and Time Warner express support for a rule that
[[Page 24449]]
would go beyond the Joint Task Force's recommendations by encompassing
market tests of rate changes as well as market tests of new services.
Federal Express Corporation comments that the rule should extend to
tests of new international mail services, as well as domestic services;
the National Newspaper Association suggests that non-postal services
contemplated by the Postal Service should also be included. Finally,
American Bankers Association suggests that a Postal Service request for
a permanent change in mail classification should not be a pre-requisite
for procedures that would authorize market tests of potential new
services.
The final rule adopted by the Commission preserves the terms of
applicability recommended by the Joint Task Force Report and
incorporated in the proposed market test rule. As the Commission
observed in the Notice of October 27, tests of pure rate changes in the
usual selective form of market testing would necessarily raise
questions of fairness and equity under 39 U.S.C. Sec. 3622(b)(1) and of
undue discrimination or preference among mail users under Sec. 403(c).
Comments provided in response to the October 27 Notice do not provide
persuasive countervailing considerations that would justify inclusion
of rate tests in the rule.4 Similarly, in the absence of clear
statutory bases for including market tests of international postal
services and non-postal services to--which types of service none of the
Commission's current rules applies--the Commission declines to extend
the final rule into these areas. The Commission also declines to
broaden the rule beyond the context contemplated by the Joint Task
Force recommendation, namely, in connection with the filing of a
request for a permanent change in mail classification. In the
Commission's view, a ``free-standing'' market test rule would require a
different set of procedures, and possibly additional forms of
evidentiary support by the Postal Service.
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\4\ The Postal Service is, of course, free to request expedited
consideration under special rules of practice in connection with any
rate change request it may wish to submit.
---------------------------------------------------------------------------
As the preamble states, the final rule includes a new
Sec. 3001.161(b), which establishes a five-year sunset provision for
the effectiveness of the market test rule.
Evidentiary Requirements
Several parties commented on the appropriateness of the evidentiary
requirements applicable to market test proposals prescribed in proposed
Sec. 3001.162. The Postal Service commented generally that the proposed
section requires the preparation and provision of too much information,
and more particularly that the required estimate of the number of
customers who will participate in the market test could be difficult to
produce. In contrast, other commenters--including American Bankers
Association, Newspaper Association of America, and National Newspaper
Association--suggested that the Postal Service should be required to
produce additional information to support proposed market tests.
The Commission's final rule maintains the evidentiary requirements
of the proposed rule, with minor alterations to accommodate the
concerns of commenters. The Commission continues to believe that the
general standard declared in proposed Sec. 3001.162, namely, the
provision of ``such information and data . . . as are necessary and
appropriate fully to inform the Commission and the parties of the
nature, scope, significance and impact of the proposed market test,''
establishes the appropriate standard of evidentiary support. In
response to the Postal Service's comments, Sec. 3001.162(g) of the
final rule requires the Service to provide an estimate of the number of
customers who will participate in the test ``to the extent that such an
estimate is practicable.'' Also, in order to implement Federal Express
Corporation's proposal of a mechanism that would provide an alternative
to rendering a ``yes or no'' decision on proposed market tests,
Sec. 3001.162(f) of the final rule adds a requirement that the Postal
Service state the goals and objectives of the market test, and
subsection (g) requires the Service to identify ``those features of the
proposed market test that, [in its opinion,] cannot be modified without
significantly impairing the value of the test.''
Rule for Decision
Proposed Sec. 3001.164 provides for the Commission's issuance of a
``yes or no'' decision either in favor of or against the Postal
Service's proposed market test. Several commenters--Federal Express
Corporation, the Commission's Office of the Consumer Advocate, and
United Parcel Service--question the consistency of this decisional
standard with the exercise of the Commission's best judgment in
performing its statutory responsibilities. As noted above, Federal
Express proposes an alternative to a ``yes or no'' decisional standard:
allowing the Postal Service to designate those elements of its proposed
market test which cannot be modified without negating its value, and
adopting a decisional standard which would preclude the Commission only
from modifying those designated elements. The Commission would thereby
retain the option of making necessary modifications in less essential
elements of a proposed market test.
Upon consideration, the Commission believes that the mechanism
proposed by Federal Express is preferable to restricting the
Commission's decision to a blanket approval or rejection of a proposed
market test. As noted in the Notice of October 27, the Commission's
preference and practice has been to cure any identified inconsistencies
with statutory policies or factors by recommending modifications, if
they are feasible. 60 FR 54982. Yet, the Commission also noted, a
recommendation to modify a market test in a manner that would depart
significantly from postal management's plan ``could jeopardize the
timeliness of the test and seriously impair its usefulness.'' Ibid.
Because the mechanism proposed by Federal Express would better
accommodate these competing considerations, Sec. 3001.164 of the final
rule provides for issuance of a decision in accordance with the
policies of the Reorganization Act, but without ``modification of any
feature of the proposed market test which the Postal Service has
identified in accordance with Sec. 3001.162(f)'' as one that cannot be
modified without significantly impairing the value of the test.5
---------------------------------------------------------------------------
\5\ Commenter McGraw-Hill suggests an alternative mechanism
which would provide for preliminary Commission advice to the Postal
Service to modify unacceptable features of the proposed market test
prior to rendition of a decision. While this proposal also has
merit, the Commission anticipates that its implementation could
significantly extend the 90-day schedule proposed by the Commission
and adopted in the final rule.
---------------------------------------------------------------------------
Data Collection and Reporting Requirements
Several parties submitted comments addressing the data collection
and reporting requirements specified in proposed Sec. 3001.165, and the
exemption from providing market test data afforded by proposed
Sec. 3001.166(b). The Postal Service comments that the provision
requiring it to submit all test data to the Commission no later than 60
days following the conclusion of the test could prove to be an
obstacle. McGraw-Hill suggests that the rule should be modified to
require the Postal Service to report all test data collected.
Similarly, United Parcel Service states that the rule
[[Page 24450]]
should require periodic public reporting of the test data without
exception.
The Commission's final market test rule retains the data collection
and reporting provisions of the proposed rule. The 60-day requirement
in Sec. 3001.165 is intended to establish a benchmark for the Service's
production of market test data in the proceeding to consider
recommendation of the proposed service as a permanent mail
classification; if the Postal Service encounters difficulty in meeting
this deadline in a particular case, the Commission will entertain a
motion for a reasonable extension. The Commission also continues to
believe that an inflexible rule requiring the Postal Service to report
all market test data on a periodic basis, without exception, would be
insufficiently flexible to accommodate the Service's legitimate needs,
especially with regard to services tested in a competitive field.
Accordingly, the final rule continues to require production of all test
data only if the Postal Service elects to pursue recommendation of the
tested new service as a permanent mail classification.
Suspension, Continuation or Termination of Proceeding
Section 3001.166 of the Commission's proposed rule provides for
Postal Service motions to suspend the proceeding to consider its
request for a permanent mail classification change, and states that the
Commission shall grant the motion ``if, in the Commission's opinion, it
would be reasonable under the circumstances to defer consideration of
the request'' until data to be produced by the market test becomes
available. In its comments on this provision, the Postal Service states
that the suspension of its request should be automatic.
The Commission is concerned that the Postal Service may have
misunderstood the intent of this provision. It is not designed to
compel the Service to litigate its proposal while the market test is
being conducted. Rather, it is designed to preserve the opportunity to
move forward in the consideration of the requested permanent change in
mail classification if meaningful progress can be made, for the sake of
expedition. Automatic suspension of the proceeding would foreclose this
option. If no progress appears likely until information produced in the
market test is available, the Commission will order a suspension.
III. Requests for Provisional Service Changes of Limited Duration
Applicability of Rule
Commenters raised two issues regarding applicability of a rule for
provisional service changes: (1) whether such a rule would serve any
independent purpose, given adoption of a market test rule; and (2) what
the proper scope of a provisional service change rule should be.
Several commenters--including American Business Press, the
Newspaper Association of America, the Commission's Office of the
Consumer Advocate, and United Parcel Service--take the position that a
rule for considering provisional service changes would perform no
separately identifiable function, or that the concept of a
``provisional service change'' is too nebulous to warrant adoption of a
rule. Notwithstanding these comments, the Commission continues to
believe, as the Joint Task Force concluded, that a separate rule may be
useful for considering certain types of service changes for which
market testing would not be appropriate or adequate. While it would be
impossible to foresee the full spectrum of such changes, the Commission
anticipates that certain types of systemwide, seasonal, or special
service changes would be more appropriately considered as provisional
service changes, rather than as the subjects of market tests.
Therefore, the final rule contains separate provisions for the
expeditious consideration of provisional service changes.
However, the Commission declines to expand the rule to include
provisional changes in rates or in the terms of existing mail
classifications, as the Postal Service and Time Warner suggest in their
comments. The Joint Task Force recommended that an expedited procedure
for introducing provisional service changes ``should be available,
under more restrictive terms, for use in appropriate circumstances.''
Report at 52. [Emphasis added.] The ``restrictive terms'' include a
limitation to ``innovations * * * which supplement existing rates and
classifications without altering any of them, so that customers could
either try the new service or stick with the existing service menu, or
both.'' Ibid. American Business Press, Newspaper Association of
America, and McGraw-Hill express concern in their comments that the
provisional service change rule could be used to restructure existing
services under the guise of introducing a ``new'' service, or otherwise
alter pre-existing service options. In order to address these concerns,
and to implement the concept envisioned by the Joint Task Force, the
Commission's final rule retains the proposed rule's limitation of
applicability to proposed provisional services that ``will supplement,
but will not alter, existing mail classifications and rates for a
limited and fixed duration.'' Sec. 3001.171(a).
As the preamble states, the final rule includes a new
Sec. 3001.171(b), which establishes a five-year sunset provision for
the effectiveness of the provisional service change rule.
Evidentiary Requirements
The Postal Service comments that the filing requirements contained
in proposed Sec. 3001.172 would increase the complexity of seeking a
provisional service change, and would be likely to impair the
expedition with which such changes could be adopted. American Bankers
Association takes the position that the rule should require the Service
to provide the maximum cost and revenue information available, in order
to prevent shifting the cost burden of providing the provisional
service to captive users of First-Class Mail.
The final rule maintains the filing requirements of the proposed
rule. The Commission continues to believe that requiring the Service to
provide a description of the salient features of a proposed provisional
service change, together with an estimate of the effects of
implementing it and all other available information responsive to the
requirements in current Sec. 3001.64, imposes a reasonable standard of
evidence. If the Postal Service experiences difficulty in developing
the required information, it may file a motion for waiver, or an
explanation of unavailability as provided in Sec. 3001.172(b). On the
other hand, if a participant believes that critical information has not
been produced, it may seek to compel its production through discovery
and motions practice.
As with the market test rule, in order to implement Federal Express
Corporation's proposal of a mechanism that would provide an alternative
to rendering a ``yes or no'' decision on proposed provisional service
changes, Sec. 3001.172(a)(2) of the final rule adds a requirement that
the Postal Service state its goals and objectives in introducing the
provisional service, and subsection (a)(3) requires the Service to
identify ``those features of the proposed provisional service that, [in
its opinion,] cannot be modified without significantly reducing the
benefits of introducing the proposed service.''
[[Page 24451]]
Rule for Decision
Proposed Sec. 3001.174 provides for the Commission's issuance of a
``yes or no'' decision either in favor of or against the Postal
Service's proposed provisional service change. Several commenters--
Federal Express Corporation, the Commission's Office of the Consumer
Advocate, and United Parcel Service--challenge this mode of decision,
as they did with respect to market tests. Once again, Federal Express
proposes an alternative that would allow the Postal Service to
designate those elements of its proposed provisional service change
which cannot be modified without negating its value, together with a
decisional standard which would preclude the Commission only from
modifying those designated elements.
Because the same decisional considerations are mutually applicable
to market tests and provisional service changes, the Commission has
decided to modify proposed Sec. 3001.174 to provide for issuance of a
decision in accordance with the policies of the Reorganization Act, but
without ``modification of any feature of the proposed service which the
Postal Service has identified in accordance with Sec.
3001.172(a)(2).''6
---------------------------------------------------------------------------
\6\ McGraw-Hill once again proposes an alternative providing for
preliminary Commission advice to the Postal Service to modify
unacceptable features of the proposal prior to a decision. The
Commission declines to adopt this mechanism on the same bases cited
with respect to the market test rule.
---------------------------------------------------------------------------
Data Collection and Reporting Requirements
Section 3001.175 of the proposed rule directs the Postal Service to
collect and report data pertaining to a recommended provisional service
during the period in which it is in effect. The section would allow the
Service to satisfy these requirements either through its regular data
collection and reporting systems, in combination with the Service's
regularly filed periodic reports under 39 CFR Sec. 3001.102, or by
conducting and reporting the results of special studies on a
corresponding schedule ``to the extent reasonably practicable.''
In its comments, the Postal Service ``strongly objects'' to the
requirements in proposed Sec. 3001.175. Comments at 19. The Service
asserts that it is ``neither necessary nor practical'' to require it to
modify its regular data reporting systems to include a provisional
service, and that it is ``unreasonable'' to expect it to conduct
special studies on a quarterly basis. Ibid. In the Service's view, data
pertaining to a provisional service will not be germane until a record
is developed for the purpose of determining whether to recommend the
service as a permanent mail classification, and ``[d]ata issues will
receive a full airing then.'' Ibid.
The Postal Service's resistance to periodic data collection and
reporting for recommended provisional services is, quite frankly,
difficult to fathom. Under Sec. 3001.171(a) of the final rule, a
provisional service may be recommended for a duration of up to two
years. The Postal Service collects and publicly reports cost and
revenue data for all services it offers on at least an annual basis;
there is no apparent justification for exempting a recommended
provisional service from this practice. Proposed Sec. 3001.175 does not
require the Service to perform quarterly special studies for
provisional services; it only cites Sec. 3001.102 reporting
requirements as a standard, and directs the Service to observe them
``to the extent reasonably practicable.'' The final rule retains this
reasonable standard of data collection and reporting.
IV. Expedited Consideration of Requests for Minor Mail Classification
Changes
Applicability of Rule
Proposed Sec. 3001.69 states that a requested mail classification
change may be considered to be ``minor in character,'' and therefore
eligible for expedited consideration, if it would not involve a change
in any existing rate or fee and: (a) involves only changes in
eligibility standards or requirements applicable to mail classes or
services; or (b) would only affect categories of service with low
aggregate costs and revenues. Several commenters suggested that the
section's standard of applicability should be clarified, or replaced
with an alternative definition of ``minor in character.''
The Postal Service comments that the proposed rule's applicability
criteria require further explanation; Direct Marketing Association
regards the Commission's standards as an improvement over those in the
Service's proposed rule, but observes that application in specific
instances will present difficulties. American Bankers Association,
Newspaper Association of America, National Newspaper Association, and
McGraw-Hill challenge the proposed rule's definition of eligibility
changes as ``minor,'' drawing on experience in recent dockets such as
MC95-1 to illustrate that putative eligibility changes may produce
major impacts on users of the affected mail classification. Other
commenters question the appropriateness of the ``low costs and
revenues'' standard. OCA comments that the standard is ambiguous, and
may be over-inclusive in light of past mail classification
controversies that arguably involved low costs and revenues but
required more extensive scrutiny. United Parcel Service comments that
imposition of the ``low costs and revenues'' standard would tend to
reduce scrutiny of classification changes in almost all the competitive
subclasses. Advertising Mail Marketing Association comments that
neither of the proposed rule's standards will serve to include minor
classification changes and exclude major ones, and proposes an
alternative two-part test that would treat a proposed change as
``minor'' if it:
(a) Does not materially alter the conditions of eligibility for
the entry of mail in a particular subclass, or for a particular rate
element or work sharing discount; and (b) does not materially
increase or decrease the estimated or projected institutional cost
contribution of the affected subclass.
AMMA Comments at 5-6.
Upon consideration of the parties' comments, the Commission agrees
that the definition of ``minor'' classification changes in proposed
Sec. 3001.69 should be amended. Therefore, the Commission has re-
drafted the applicability provisions to include only those proposed
mail classification changes that are likely to be moderate in their
impact both on mailers and on the postal system as a whole. The
substitute retains the introductory clause precluding any change in
existing rates or fees, and models two additional clauses on AMMA's
suggested language, with one alteration: the clause concerning changes
in conditions of eligibility has been modified to preclude only
requests for more restrictive eligibility terms. Thus, proposals to
make existing mail classifications more inclusive could be considered
under the minor classification change provisions.
As the preamble states, the final rule includes a new
Sec. 3001.69(b), which establishes a five-year sunset provision for the
effectiveness of the minor classification change rule.
Expedition of Procedural Schedule--Expedited Notice
Commenter McGraw-Hill suggests that the expedited procedures
specified in proposed Sec. 3001.69b should be supplemented to include
registration and expedited notice provisions similar to those contained
in the proposed market test rule [Sec. 3001.163(b)-(d)] and proposed
rule for provisional service changes [Sec. 3001.173(b)-(d)]. McGraw-
Hill comments that the inclusion of such conforming provisions ``are
[[Page 24452]]
justified by the short timeframes contemplated for the proceedings in
question.'' McGraw-Hill Comments at 5.
The Commission agrees that inclusion of such provisions in the
minor classification change rule is justified, and would be beneficial.
Expedited notice of the Postal Service's filing of a request can be
expected to enable interested parties to intervene, and initiate
discovery if they so desire, earlier in the proceeding. Consequently,
the final rule has been amended to add three new subsections to
proposed Sec. 3001.69b. New subsection (b) provides for registration
with the Secretary of the Commission by persons who are interested in
participating in minor classification change proceedings. These
registrants will automatically become parties to each such proceeding,
but they may withdraw at any time. New subsection (c) requires service
of the Postal Service's complete filing by hand delivery to registrants
with addresses within the Washington metropolitan area, and by Priority
Mail to all other registrants. New subsection (d) requires the Postal
Service to give notice by First-Class Mail of the filing of its request
to all participants in the most recent omnibus rate proceeding. Service
by Priority Mail and First-Class Mail have been substituted for Express
Mail, which is required in the market test and provisional service
change rules, in view of the potentially longer procedural schedule
available in minor classification change proceedings, and to reduce the
resulting burden on the Postal Service. Also, in order to enable the
Service to identify the last day for parties' intervention in the
notice required by new subsection (d), Sec. 3001.69b(e) of the final
rule has been modified to provide that the Commission's notice of
proceeding ``shall afford all interested parties 26 days after filing
of the Postal Service's request within which to intervene[.]''
V. Multi-Year Test Periods for Proposed New Services
Applicability of Rule.
Several commenters question the terms under which proposed
Sec. 3001.181 would allow the Postal Service to use multi-year test
periods for proposed new services. Newspaper Association of America,
United Parcel Service, and McGraw-Hill take the position that the rule
should not extend to permit test periods as long as five years, in
light of the Postal Service's demonstrated limitations in producing
forecasts in prior Commission proceedings. In contrast, the Postal
Service comments that a five-year period may not be sufficient for some
proposed services, and that the appropriate length of a test period
should be determined on a case-by-case basis.
The final rule retains the declaration of a Commission policy in
favor of test periods of up to five fiscal years. The Joint Task Force
Report recommended the adoption of ``rules providing for a multi-year
break-even period of at least four or five years[,]'' Report at 51, and
the Commission accordingly has used five years as a policy benchmark.
The Commission is well aware that Postal Service projections have
usually been limited to two- or three-year horizons in postal rate and
classification proceedings. However, the Commission is prepared to
provide the Service with the opportunity to submit longer-range
forecasts, and to use those projections if they prove to be credible.
Furthermore, the Postal Service is free in any given proceeding to ask
the Commission to expand its policy declaration, if it can furnish even
longer-range projections that it believes to be reliable.
The Postal Service, Advertising Mail Marketing Association, and
Direct Marketing Association oppose another portion of the Commission's
policy declaration in proposed Sec. 3001.181, which refers to
``convincing substantial evidence in support of the test period
proposed.'' These commenters challenge the quoted language on the
ground that it would subject the Postal Service's evidence in support
of a multi-year test period to a higher standard of proof than the
``substantial evidence'' standard of evidentiary support commonly
required of administrative decisions. The Postal Service suggests that
this language ``be eliminated as unjustified and unnecessary.'' Postal
Service Comments at 25.
The proposed rule's use of the phrase ``convincing substantial
evidence'' in the policy declaration was not intended to establish an
extraordinary evidentiary standard for application to the Postal
Service's test year projections; it was only intended to declare a
policy in favor of departure from the normally-applicable test year
rule when the Service's evidence persuades the Commission that such a
departure is justified. In order to remove any ambiguity on this point,
the final rule deletes the word ``convincing.''
As the preamble states, the final rule includes a new
Sec. 3001.181(b), which establishes a five-year sunset provision for
the effectiveness of the multi-year test period rule.
Filing of Evidence in Support of Formal Request.
In its comments, the Postal Service opposes the filing requirements
in proposed Sec. 3001.182 (b)(2) and (b)(3) of the proposed rule, which
direct the Service to produce Return on Investment projections and all
other financial analyses prepared in connection with determining the
cost and revenue impact of the proposed new service, and any other
analyses by the Service that bear on the overall effects of introducing
the new service during the requested test period. The Service claims
these requirements are unnecessary, would introduce needless complexity
and confusion into the proceeding, and call for material that is
``likely to include pre-decisional material and/or material of
commercial sensitivity that would not ordinarily be disclosed in
Commission proceedings.'' Postal Service Comments at 26. Time Warner
also comments on the ``excessive data and documentation requirements''
of the proposed rule, Comments at 4, and urges the Commission to
``accommodate its information and documentation requirements to the
inevitability that new services will be supported by scarcer, more
attenuated data than established ones. . . .'' Time Warner Comments at
5.
The Commission is well aware of the problems of information
deficiency that can be associated with new services, and does not
intend to apply unrealistic standards of proof to such services.
However, the Commission is also aware from experience in prior
proceedings that financial analyses and other information of the types
responsive to proposed Sec. 3001.182(b) (2) and (3) are likely to
underlie the Postal Service's cost and revenue estimates for a proposed
new service, or will at least bear significantly on the credibility and
accuracy of those estimates. The relevance and probative value of these
analyses are likely to be intensified when estimates are projected as
much as five years into the future. Consequently, the final rule
retains these filing requirements, to put the Postal Service on notice
that all relevant supporting analyses will be scrutinized in the
proceeding. If the Postal Service believes that special considerations
of privilege and resulting harm should exempt certain responsive
information in any given case, it may file a motion for waiver
explaining why the requirement should not apply.
[[Page 24453]]
VI. Regulatory Evaluation
It has been determined pursuant to 5 U.S.C. 605(b) that these rules
will apply exclusively to the United States Postal Service in
proceedings conducted by the Postal Rate Commission, and to parties who
choose to participate in those proceedings. Therefore, it is certified
that these rules will not have a significant impact on a substantial
number of small entities under the terms of the Regulatory Flexibility
Act, 5 U.S.C. 501 et seq. Because these rules will only apply to the
Postal Service and other participants in Commission proceedings, it has
also been determined that these rules do not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment
pursuant to Executive Order 12612. Inasmuch as the rules impose
information-gathering and reporting requirements exclusively upon the
United States Postal Service for the purpose of conducting mail
classification change proceedings, they do not contain any information
collection requirements as defined in the Paperwork Reduction Act [44
U.S.C. 3502(4)], and consequently the review provisions of 44 U.S.C.
3507 and the implementing regulations in 5 CFR part 1320 do not apply.
List of Subjects in 39 CFR Part 3001
Administrative practices and procedure, Postal Service.
For the reasons set out in the preamble, 39 CFR part 3001 is
amended as follows:
PART 3001--RULES OF PRACTICE AND PROCEDURE
1. The authority citation for 39 CFR part 3001 continues to read as
follows:
Authority: 39 U.S.C. 404(b), 3603, 3622-24, 3661, 3662.
2. Sections 3001.69 through 3001.69c are added to Subpart C to read
as follows:
Sec. 3001.69 Expedited minor classification cases--applicability.
(a) This section and Secs. 3001.69a through 3001.69c apply in cases
where the Postal Service requests a recommended decision pursuant to
section 3623 and seeks expedited review on the ground that the
requested change in mail classification is minor in character. The
requirements and procedures specified in these sections apply
exclusively to the Commission's consideration of requested mail
classification changes which the Postal Service denominates as, and the
Commission finds to be, minor in character. A requested classification
change may be considered to be minor in character if it:
(1) Would not involve a change in any existing rate or fee;
(2) Would not impose any restriction in addition to pre-existing
conditions of eligibility for the entry of mail in an existing subclass
or category of service, or for an existing rate element or work sharing
discount; and
(3) Would not significantly increase or decrease the estimated
institutional cost contribution of the affected subclass or category of
service.
(b) This section and Secs. 3001.69a through 69c are effective May
15, 1996 through May 15, 2001.
Sec. 3001.69a Expedited minor classification cases--filing of formal
request and prepared direct evidence.
(a) Whenever the Postal Service determines to request that the
Commission submit a decision recommending a mail classification change,
and to seek expedited review on the ground that the requested change is
minor in character, it shall file a request for a change in mail
classification pursuant to section 3623 that comports with the
requirements of this section and of subpart C of this part. Each such
formal request shall include the following particular information:
(1) A description of the proposed classification change or
changes, including proposed changes in the text of the Domestic Mail
Classification Schedule and any pertinent rate schedules;
(2) A thorough explanation of the grounds on which the Postal
Service submits that the requested change in mail classification is
minor in character; and
(3) An estimate, prepared in the greatest level of detail
practicable, of the overall impact of the requested change in mail
classification on postal costs and revenues, mail users, and
competitors of the Postal Service.
(b) If the Postal Service believes that data required to be filed
under Sec. 3001.64 are unavailable, it shall explain their
unavailability, as required by Sec. 3001.64(a)(2) (i), (ii), and (iv).
If the Postal Service believes that any of the data or other
information required to be filed under Sec. 3001.64 should not be
required in light of the minor character of the requested change in
mail classification, it shall move for a waiver of that requirement,
stating with particularity the reasons why the character of the request
and its circumstances justify a waiver of the requirement. A
satisfactory explanation of the unavailability of information required
under Sec. 3001.64, or of why it should not be required to support a
particular request, will be grounds for excluding from the proceeding a
contention that the absence of the information should form a basis for
rejection of the request, unless the party desiring to make such
contention:
(1) Demonstrates that, having regard to all the facts and
circumstances of the case, it was clearly unreasonable for the Postal
Service to propose the change in question without having first secured
the information and submitted it in accordance with Sec. 3001.64; or
(2) Demonstrates other compelling and exceptional circumstances
requiring that the absence of the information in question be treated as
bearing on the merits of the proposal.
Sec. 3001.69b Expedited minor classification cases--expedition of
procedural schedule.
(a) The purpose of this section is to provide a schedule for
expediting proceedings in which the Postal Service requests that the
Commission recommend a change in mail classification and expedite
consideration of that request on the ground that the change is minor in
character.
(b) Persons who are interested in participating in proceedings to
consider Postal Service requests for minor changes in mail
classification may register at any time with the Secretary of the
Postal Rate Commission, who shall maintain a publicly available list of
the names and business addresses of all such registrants. Persons whose
names appear on this list will automatically become parties to each
proceeding in which the Postal Service requests a minor mail
classification change pursuant to Secs. 3001.69 through 3001.69c.
Parties may withdraw from the register or a particular case by filing a
notice with the Secretary of the Commission.
(c) When the Postal Service files a request under the provisions of
Secs. 3001.69 through 3001.69c, it shall on that same day effect
service by hand delivery of the complete filing to each person
registered pursuant to paragraph (b) of this section who maintains an
address for service within the Washington metropolitan area and serve
the complete filing by Priority Mail service on all other registrants.
Each registrant is responsible for insuring that his or her address
remains current.
(d) When the Postal Service files a request under the provisions of
Secs. 3001.69 through 3001.69c, it shall on that same day send by
First-Class Mail to all participants in the most recent omnibus rate
case a notice which briefly
[[Page 24454]]
describes its proposal. This notice shall indicate on its first page
that it is a notice of a request for a minor change in mail
classification to be considered under Secs. 3001.69 through 3001.69c,
and identify the last day for filing a notice of intervention with the
Commission.
(e) Within 5 days after receipt of a Postal Service request
invoking the operation of Secs. 3001.69 through 3001.69c, the
Commission shall issue a notice of proceeding and provide for
intervention by interested parties pursuant to Sec. 3001.20. The notice
of proceeding shall state that the Postal Service has denominated the
mail classification change it requests a minor change, and has
requested expedited consideration pursuant to Secs. 3001.69 through
3001.69c. The notice shall further state the grounds on which the
Postal Service submits that the requested change in mail classification
is minor in character, and shall afford all interested parties 26 days
after filing of the Postal Service's request within which to intervene,
submit responses to the Postal Service's request for consideration of
its proposed mail classification change under the terms of
Secs. 3001.69 through 3001.69c, and request a hearing.
(f) Within 28 days after publication of the notice of proceeding
pursuant to paragraph (e) of this section, the Commission shall decide
whether to consider the request of the Postal Service as a minor
classification change request under Secs. 3001.69 through 3001.69c, and
shall issue an order in the proceeding incorporating that ruling. The
Commission shall order a request to be considered under Secs. 3001.69
through 3001.69c if it finds that:
(1) The requested classification change is minor in character, and
(2) The effects of the requested change are likely to be
appropriately limited in scope and overall impact.
(g) If the Commission determines that the request of the Postal
Service is not appropriate for consideration as a minor classification
change request, no further procedures under Secs. 3001.69 through
3001.69c shall be ordered, and the request will be considered in
accordance with other appropriate provisions of Subpart C of this part.
(h) If the Commission determines that the Postal Service request is
appropriate for consideration under Secs. 3001.69 through 3001.69c,
those respondents who request a hearing shall be directed to state with
specificity within 14 days after publication of the notice the issues
of material fact that require a hearing for resolution. Respondents
shall also identify the fact or facts set forth in the Postal Service's
filing that the party disputes, and when possible, what the party
believes to be the true fact or facts and the evidence it intends to
provide in support of its position.
(i) The Commission will hold hearings on a Postal Service request
which is considered under Secs. 3001.69 through 3001.69c when it
determines that there are genuine issues of material fact to be
resolved, and that a hearing is needed to resolve those issues.
Hearings on the Postal Service request will commence within 21 days
after issuance of the Commission order pursuant to paragraph (f) of
this section. Testimony responsive to the Postal Service request will
be due 14 days after the conclusion of hearings on the Postal Service
request.
Sec. 3001.69c Expedited minor classification cases--time limits.
The Commission will treat cases to which Secs. 3001.69 through
3001.69c apply as subject to the maximum expedition consistent with
procedural fairness. The schedule for adoption of a recommended
decision will therefore be established, in each such case, to allow for
issuance of such decision not more than 90 days after the filing of the
request of the Postal Service if no hearing is held, and not more than
120 days after the filing of the request if a hearing is scheduled.
3. Sections 3001.161 through 3001.166 are added as Subpart I to
read as follows:
Subpart I--Rules Applicable to Requests for Market Tests of Proposed
Mail Classification Changes
Sec.
3001.161 Applicability.
3001.162 Filing of market test proposal and supporting direct
evidence.
3001.163 Procedures--expedition of public notice and procedural
schedule.
3001.164 Rule for decision.
3001.165 Data collection and reporting requirements.
3001.166 Suspension, continuation or termination of proceeding.
Subpart I--Rules Applicable to Requests for Market Tests of
Proposed Classification Changes
Sec. 3001.161 Applicability.
(a) This section and Secs. 3001.162 through 3001.166 apply in cases
in which the Postal Service requests a recommended decision pursuant to
section 3623 preceded by testing in the market in order to develop
information necessary to support a permanent change. The requirements
and procedures specified in these sections apply exclusively to the
Commission's determination to recommend in favor of or against a market
test proposed by the Postal Service, and do not supersede any other
rules applicable to the Postal Service's request for recommendation of
a permanent change in mail classification. In administering this
subpart, it shall be the policy of the Commission to recommend market
tests that are reasonably calculated to produce information needed to
support a permanent change in mail classification, and that are
reasonably limited in scope, scale, duration, and potential adverse
impact. Except in extraordinary circumstances and for good cause shown,
the Commission shall not recommend market tests of more than one year
in duration; however, this limitation is not intended to bar the Postal
Service from conducting more than one market test in support of a
potential permanent change in mail classification in appropriate
circumstances.
(b) This section and Secs. 3001.162 through 3001.166 are effective
May 15, 1996 through May 15, 2001.
Sec. 3001.162 Filing of market test proposal and supporting direct
evidence.
Whenever the Postal Service determines to request that the
Commission submit a recommended decision on a change in mail
classification preceded by testing in the market, the Postal Service
shall file with the Commission, in addition to its request for a
permanent change in mail classification pursuant to section 3623, a
request for a recommended decision in favor of its proposed market test
of the requested change in mail classification. Each formal request
filed under this subpart shall include such information and data and
such statements of reasons and bases as are necessary and appropriate
fully to inform the Commission and the parties of the nature, scope,
significance and impact of the proposed market test, and to show that
it is in the public interest and in accordance with the policies of the
Act and the applicable criteria of the Act. Each formal request shall
also include the following particular information:
(a) A description of the services to be provided in the market
test, and the relationship between the services to be provided and the
permanent change or changes in the mail classification schedule
requested by the Postal Service;
(b) A statement of each rate or fee to be charged for each service
to be provided during the market test, together with all information
relied upon to establish consistency of those rates and fees with the
factors specified in section 3622(b);
[[Page 24455]]
(c) A description of the number and extent of the service areas in
which the market test will be conducted, including the number and type
of postal facilities which will be used;
(d) A statement of the planned duration of the market test;
(e) Proposed Domestic Mail Classification Schedule provisions which
incorporate the information required in paragraphs (a) through (d) of
this section;
(f) A statement of the goals and objectives of the proposed market
test, supported by quantitative projections of anticipated results to
the extent practicable.
(g) A statement of those features of the proposed market test that,
in the opinion of the Postal Service, cannot be modified without
significantly impairing the value of the test;
(h) An estimate of the number of customers who will participate in
the market test to the extent that such an estimate is practicable,
together with a description of the means by which the Postal Service
plans to provide equal access to all potential users in the test market
service areas; and
(i) A plan for testing the proposed change or changes in the
market, including a plan for gathering the data needed to support a
permanent change in mail classification and for reporting the test data
to the Commission. If periodic reporting of the test data would be
harmful to the purposes of the test, such as by revealing information
that might encourage competitors or mailers to take actions that would
affect the test results, the plan may provide for presentation of the
test data as part of the subsequent filing of data supporting a
permanent mail classification change.
Sec. 3001.163 Procedures--expedition of public notice and procedural
schedule.
(a) The purpose of this section is to provide a schedule for
expediting proceedings in which the Postal Service proposes to conduct
a market test of a requested change in mail classification it has
submitted to the Commission pursuant to section 3623.
(b) Persons who are interested in participating in proceedings to
consider Postal Service requests to conduct a market test may register
at any time with the Secretary of the Postal Rate Commission, who shall
maintain a publicly available list of the names and business addresses
of all such registrants. Persons whose names appear on this list will
automatically become parties to each proceeding in which the Postal
Service requests to conduct a market test pursuant to this subpart.
Other interested persons may intervene pursuant to Sec. 3001.20 within
28 days after the filing of a formal request made under the provisions
of this subpart. Parties may withdraw from the register or a particular
case by filing a notice with the Secretary of the Commission.
(c) When the Postal Service files a request under the provisions of
this subpart, it shall on that same day effect service by hand delivery
of the complete filing to each person registered pursuant to paragraph
(b) who maintains an address for service within the Washington
metropolitan area and serve the complete filing by Express Mail service
on all other registrants. Each registrant is responsible for insuring
that his or her address remains current.
(d) When the Postal Service files a request under the provisions of
this subpart, it shall on that same day send by Express Mail to all
participants in the most recent omnibus rate case a notice which
briefly describes its proposal. This notice shall indicate on its first
page that it is a notice of a Market Test Request to be considered
under Secs. 3001.161 through 3001.166, and identify the last day for
filing a notice of intervention with the Commission.
(e) Within 5 days after receipt of a Postal Service request under
the provisions of this subpart, the Commission shall issue a notice of
proceeding and provide for intervention by interested parties pursuant
to Sec. 3001.20. In the event that a party wishes to dispute a genuine
issue of material fact to be resolved in the consideration of the
Postal Service's request, that party shall file with the Commission a
request for a hearing within the time allowed in the notice of
proceeding. The request for a hearing shall state with specificity the
fact or facts set forth in the Postal Service's filing that the party
disputes, and when possible, what the party believes to be the true
fact or facts and the evidence it intends to provide in support of its
position. The Commission will hold hearings on a Postal Service request
made pursuant to this subpart when it determines that there is a
genuine issue of material fact to be resolved, and that a hearing is
needed to resolve that issue.
Sec. 3001.164 Rule for decision.
The Commission will issue a decision on the Postal Service's
proposed market test in accordance with the policies of the Postal
Reorganization Act, but will not recommend modification of any feature
of the proposed market test which the Postal Service has identified in
accordance with Sec. 3001.162(g). The purpose of this subpart is to
allow for consideration of proposed market tests within 90 days,
consistent with the procedural due process rights of interested
persons.
Sec. 3001.165 Data collection and reporting requirements.
In any case in which the Commission has issued a recommended
decision in favor of a market test requested by the Postal Service, and
the Board of Governors has put the market test recommended by the
Commission into effect, the Postal Service shall gather test data and
report them to the Commission in accordance with the plan submitted
pursuant to Sec. 3001.162(h). If the Postal Service's plan for
reporting test data does not provide for periodic reporting during the
conduct of the test, the Postal Service shall submit all test data to
the Commission no later than 60 days following the conclusion of the
test.
Sec. 3001.166 Suspension, continuation or termination of proceeding.
(a) In any case in which the Commission has issued a recommended
decision in favor of a market test requested by the Postal Service, and
the Board of Governors has put the market test recommended by the
Commission into effect, the Postal Service may move for suspension of
the proceeding in which its request for a permanent change in mail
classification is to be considered. The Commission shall grant the
Postal Service's motion for suspension if, in the Commission's opinion,
it would be reasonable under the circumstances to defer consideration
of the request until the information to be produced in connection with
the market test becomes available.
(b) At any time during the pendency of a market test recommended by
the Commission pursuant to this subpart, or following the completion of
such a market test, the Postal Service may move to revise or withdraw
its request for a permanent change in mail classification. If the
Postal Service moves to revise its request, it shall file with the
Commission all data necessary to support its amended request. If the
Postal Service moves to withdraw its request, it shall explain the
circumstances leading to its motion, but need not produce the test data
that would otherwise be submitted pursuant to Sec. 3001.165.
4. Sections 3001.171 through 3001.176 are added as Subpart J, to
read as follows:
[[Page 24456]]
Subpart J--Rules Applicable to Requests for Provisional Service Changes
of Limited Duration
Sec.
3001.171 Applicability.
3001.172 Filing of formal request and prepared direct evidence.
3001.173 Procedures-expedition of public notice and procedural
schedule.
3001.174 Rule for decision.
3001.175 Data collection and reporting requirements.
3001.176 Continuation or termination of provisional service.
Subpart J--Rules Applicable to Requests for Provisional Service
Changes of Limited Duration
Sec. 3001.171 Applicability.
(a) This section and Secs. 3001.172 through 3001.176 apply in cases
in which the Postal Service requests that the Commission recommend the
establishment of a provisional service which will supplement, but will
not alter, existing mail classifications and rates for a limited and
fixed duration. The requirements and procedures specified in these
sections apply exclusively to the Commission's determination to
recommend in favor of or against a provisional service proposed by the
Postal Service, and do not supersede the rules applicable to requests
for permanent changes in rates, fees, mail classifications, and in the
nature of postal services. In administering this subpart, it shall be
the policy of the Commission to recommend the introduction of
provisional services that enhance the range of postal services
available to the public, without producing a material adverse effect
overall on postal revenues or costs, and without causing unnecessary or
unreasonable harm to competitors of the Postal Service. Except in
extraordinary circumstances and for good cause shown, the Commission
shall not recommend provisional services of more than two years in
duration; however, the Commission may grant a request to extend a
provisional service for an additional year if a Postal Service request
to establish the provisional service as a permanent mail classification
is pending before the Commission.
(b) This section and Secs. 3001.172 through 3001.176 are effective
May 15, 1996 through May 15, 2001.
Sec. 3001.172 Filing of formal request and prepared direct evidence.
(a) Whenever the Postal Service determines to request that the
Commission submit a decision recommending the establishment of a
provisional service of limited and fixed duration, it shall file a
request for a change in mail classification pursuant to section 3623
that comports with the requirements of this subpart and of subpart C of
this part. Each formal request shall include the following particular
information:
(1) A description of the proposed classification, including
proposed Domestic Mail Classification Schedule language and rate
schedules;
(2) A statement of the goals and objectives of introducing the
proposed provisional service, supported by quantitative projections of
anticipated results to the extent practicable.
(3) A statement of those features of the proposed provisional
service that, in the opinion of the Postal Service, cannot be modified
without significantly reducing the benefits of introducing the proposed
service;
(4) An explanation and complete documentation of the development of
the rates proposed for the provisional service;
(5) A termination date on which the proposed provisional service
will be discontinued;
(6) An estimate of the effect of implementing the proposed
provisional service on overall Postal Service costs and revenues during
the period in which it is in effect; and
(7) A plan for meeting the data collection and reporting
requirements specified in Sec. 3001.175.
(b) If the Postal Service believes that data required to be filed
under Sec. 3001.64 are unavailable, it shall explain their
unavailability, as required by Sec. 3001.64 (a)(2)(i), (ii), and (iv).
In particular, if the provisional character of the request bears on the
unavailability of the data in question, the Postal Service shall
explain in detail the nexus between these circumstances. A satisfactory
explanation of the unavailability of data will be grounds for excluding
from the proceeding a contention that the absence of the data should
form a basis for rejection of the request, unless the party desiring to
make such contention:
(1) Demonstrates that, having regard to all the facts and
circumstances of the case, it was clearly unreasonable for the Postal
Service to propose the change in question without having first secured
the data which are unavailable, or
(2) Demonstrates other compelling circumstances requiring that the
absence of the data in question be treated as bearing on the merits of
the proposal.
Sec. 3001.173 Procedures--expedition of public notice and procedural
schedule.
(a) The purpose of this section is to provide a schedule for
expediting proceedings in which the Postal Service requests that the
Commission recommend the establishment of a provisional service which
will supplement, but will not alter, existing mail classifications and
rates for a limited and fixed duration.
(b) Persons who are interested in participating in proceedings to
consider Postal Service requests to establish a provisional service may
register at any time with the Secretary of the Postal Rate Commission,
who shall maintain a publicly available list of the names and business
addresses of all such registrants. Persons whose names appear on this
list will automatically become parties to each proceeding in which the
Postal Service requests establishment of a provisional service pursuant
to this subpart. Other interested persons may intervene pursuant to
Sec. 3001.20 within 28 days after the filing of a formal request made
under the provisions of this subpart. Parties may withdraw from the
register or a particular case by filing a notice with the Secretary of
the Commission.
(c) When the Postal Service files a request under the provisions of
this subpart, it shall on that same day effect service by hand delivery
of the complete filing to each person registered pursuant to paragraph
(b) of this section who maintains an address for service within the
Washington metropolitan area and serve the complete filing by Express
Mail service on all other registrants. Each registrant is responsible
for insuring that his or her address remains current.
(d) When the Postal Service files a request under the provisions of
this subpart, it shall on that same day send by Express Mail service to
all participants in the most recent omnibus rate case a notice which
briefly describes its proposal. Such notice shall indicate on its first
page that it is a notice of a Request for Establishment of a
Provisional Service to be considered under Secs. 3001.171 through
3001.176, and identify the last day for filing a notice of intervention
with the Commission.
(e) Within 5 days after receipt of a Postal Service request under
the provisions of this subpart, the Commission shall issue a notice of
proceeding and provide for intervention by interested parties pursuant
to Sec. 3001.20. In the event that a party wishes to dispute a genuine
issue of material fact to be resolved in the consideration of the
Postal Service's
[[Page 24457]]
request, that party shall file with the Commission a request for a
hearing within the time allowed in the notice of proceeding. The
request for a hearing shall state with specificity the fact or facts
set forth in the Postal Service's filing that the party disputes, and
when possible, what the party believes to be the true fact or facts and
the evidence it intends to provide in support of its position. The
Commission will hold hearings on a Postal Service request made pursuant
to this subpart when it determines that there is a genuine issue of
material fact to be resolved, and that a hearing is needed to resolve
that issue.
Sec. 3001.174 Rule for decision.
The Commission will issue a decision on the Postal Service's
proposed provisional service in accordance with the policies of the
Postal Reorganization Act, but will not recommend modification of any
feature of the proposed service which the Postal Service has identified
in accordance with Sec. 3001.172(a)(3). The purpose of this subpart is
to allow for consideration of proposed provisional services within 90
days, consistent with the procedural due process rights of interested
persons.
Sec. 3001.175 Data collection and reporting requirements.
In any case in which the Commission has issued a recommended
decision in favor of a provisional service of limited duration
requested by the Postal Service, and the Board of Governors has put the
provisional service recommended by the Commission into effect, the
Postal Service shall collect and report data pertaining to the
provisional service during the period in which it is in effect in
accordance with the periodic reporting requirements specified in
Sec. 3001.102. If the Postal Service's regular data reporting systems
are not revised to include the provisional service during the period of
its effectiveness, the Postal Service shall perform, and provide to the
Commission on a schedule corresponding to Sec. 3001.102 reports,
special studies to provide equivalent information to the extent
reasonably practicable.
Sec. 3001.176 Continuation or termination of provisional service.
At any time during the period in which a provisional service
recommended by the Commission and implemented by the Board of Governors
is in effect, the Postal Service may submit a formal request that the
provisional service be terminated, or that it be established, either as
originally recommended by the Commission or in modified form, as a
permanent mail classification. Following the conclusion of the period
in which the provisional service was effective, the Postal Service may
submit a request to establish the service as a mail classification
under any applicable subpart of the Commission's rules.
5. Sections 3001.181 and 3001.182 are added as Subpart K, to read
as follows:
Subpart K--Rules for Use of Multi-Year Test Periods
Sec.
3001.181 Use of multi-year test period for proposed new services.
3001.182 Filing of formal request and prepared direct evidence.
Subpart K--Rules for Use of Multi-Year Test Periods
Sec. 3001.181 Use of multi-year test period for proposed new services.
(a) The rules in Secs. 3001.181 and 3001.182 apply to Postal
Service requests pursuant to section 3623 for the establishment of a
new postal service, with attendant rates, which in the estimation of
the Postal Service cannot generate sufficient volumes and revenues to
recover all costs associated with the new service in the first full
fiscal year of its operation. In administering these rules, it shall be
the Commission's policy to adopt test periods of up to 5 fiscal years
for the purpose of determining breakeven for newly introduced postal
services where the Postal Service has presented substantial evidence in
support of the test period proposed.
(b) This section and Sec. 3001.182 are effective May 15, 1996
through May 15, 2001.
Sec. 3001.182 Filing of formal request and prepared direct evidence.
In filing a request for establishment of a new postal service
pursuant to section 3623, the Postal Service may request that its
proposal be considered for a test period of longer duration than the
test period prescribed in Sec. 3001.54(f)(2). Each such request shall
be supported by the following information:
(a) The testimony of a witness on behalf of the Postal Service, who
shall provide:
(1) A complete definition of the multi-year test period requested
for the proposed new service;
(2) A detailed explanation of the Postal Service's preference of a
multi-year test period, including the bases of the Service's
determination that the test period prescribed in Sec. 3001.54(f)(2)
would be inappropriate; and
(3) A complete description of the Postal Service's plan for
achieving an appropriate contribution to institutional costs from the
new service by the end of the requested test period.
(b) Complete documentary support for, and detail underlying, the
test period requested by the Postal Service, including:
(1) Estimated costs, revenues, and volumes of the proposed new
service for the entire requested test period;
(2) Return on Investment projections and all other financial
analyses prepared in connection with determining the cost and revenue
impact of the proposed new service; and
(3) Any other analyses prepared by the Postal Service that bear on
the overall effects of introducing the proposed new service during the
requested test period.
Issued by the Commission on May 7, 1996.
Margaret P. Crenshaw,
Secretary.
[FR Doc. 96-12130 Filed 5-14-96; 8:45 am]
BILLING CODE 7710-FW-P
Complete official Federal Register PDF
FR Doc. 96-12125 Valuation of Plan Benefits in Single-Employer Plans; Valuation of Plan Benefits and Plan Assets Following Mass Withdrawal; Amendments Adopting Additional PBGC Rates
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24444-24446]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12125]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 2619 and 2676
Valuation of Plan Benefits in Single-Employer Plans; Valuation of
Plan Benefits and Plan Assets Following Mass Withdrawal; Amendments
Adopting Additional PBGC Rates
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the Pension Benefit Guaranty
Corporation's regulations on Valuation of Plan Benefits in Single-
Employer Plans and Valuation of Plan Benefits and Plan Assets Following
Mass Withdrawal. The former regulation contains the interest
assumptions that the PBGC uses to value benefits under terminating
single-employer plans. The latter regulation contains the interest
assumptions for valuations of multiemployer plans that have undergone
mass withdrawal. The amendments set out in this final rule adopt the
interest assumptions applicable to single-employer plans with
termination dates in June 1996, and to multiemployer plans with
valuation dates in June 1996. The effect of these amendments is to
advise the public of the adoption of these assumptions.
EFFECTIVE DATE: June 1, 1996.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, Office of the General Counsel, Pension Benefit Guaranty
Corporation, 1200 K Street, NW., Washington, DC 20005, 202-326-4024
(202-326-4179 for TTY and TDD).
SUPPLEMENTARY INFORMATION: This rule adopts the June 1996 interest
assumptions to be used under the Pension Benefit Guaranty Corporation's
regulations on Valuation of Plan Benefits in Single-Employer Plans (29
CFR part 2619, the ``single-employer regulation'') and Valuation of
Plan Benefits and Plan Assets Following Mass Withdrawal (29 CFR part
2676, the ``multiemployer regulation'').
Part 2619 sets forth the methods for valuing plan benefits of
terminating single-employer plans covered under title IV of the
Employee Retirement Income Security Act of 1974, as amended. Under
ERISA section 4041(c), all single-employer plans wishing to terminate
in a distress termination must value guaranteed benefits and ``benefit
liabilities,'' i.e., all benefits provided under the plan as of the
plan termination date, using the formulas set forth in part 2619,
subpart C. (Plans terminating in a standard termination may, for
purposes of the Standard Termination Notice filed with PBGC, use these
formulas to value benefit liabilities, although this is not required.)
In addition, when the PBGC terminates an underfunded plan involuntarily
pursuant to ERISA section 4042(a), it uses the subpart C formulas to
determine the amount of the plan's underfunding. Part 2676 prescribes
rules for valuing benefits and certain assets of multiemployer plans
under sections 4219(c)(1)(D) and 4281(b) of ERISA.
Appendix B to part 2619 sets forth the interest rates and factors
under the single-employer regulation. Appendix B to part 2676 sets
forth the interest rates and factors under the multiemployer
regulation. Because these rates and factors are intended to reflect
current conditions in the financial and annuity markets, it is
necessary to update the rates and factors periodically.
The PBGC issues two sets of interest rates and factors, one set to
be used for the valuation of benefits to be paid as annuities and one
set for the valuation of benefits to be paid as lump sums. The same
assumptions apply to terminating single-employer plans and to
multiemployer plans that have undergone a mass withdrawal. This
amendment adds to appendix B to parts 2619 and 2676 sets of interest
rates and factors for valuing benefits in single-employer plans that
have termination dates during June 1996 and multiemployer plans that
have undergone mass withdrawal and have valuation dates during June
1996.
For annuity benefits, the interest rates will be 6.20% for the
first 20 years following the valuation date and 4.75% thereafter. For
benefits to be paid as lump sums, the interest assumptions to be used
by the PBGC will be 5.00% for the period during which benefits are in
pay status, 4.25% during the seven-year period directly preceding the
benefit's placement in pay status, and 4.0% during any other years
preceding the benefit's placement in pay status. The above annuity
interest assumptions represent an increase (from those in effect for
May 1996) of .20 percent for the first 20 years following the valuation
date and are otherwise unchanged. The lump sum interest assumptions are
unchanged from those in effect for May 1996.
Generally, the interest rates and factors under these regulations
are in effect for at least one month. However, the PBGC publishes its
interest assumptions each month regardless of whether they represent a
change from the previous month's assumptions. The assumptions normally
will be published in the Federal Register by the 15th of the preceding
month or as close to that date as circumstances permit.
The PBGC has determined that notice and public comment on these
amendments are impracticable and contrary to the public interest. This
finding is based on the need to determine and issue new interest rates
and factors promptly so that the rates and factors can reflect, as
accurately as possible, current market conditions.
Because of the need to provide immediate guidance for the valuation
of benefits in single-employer plans whose termination dates fall
during June 1996, and in multiemployer plans that have undergone mass
withdrawal and have valuation dates during June 1996, the PBGC finds
that good cause exists for making the rates and factors set forth in
this amendment effective less than 30 days after publication.
The PBGC has determined that this action is not a ``significant
regulatory action'' under the criteria set forth in Executive Order
12866.
Because no general notice of proposed rulemaking is required for
this amendment, the Regulatory Flexibility
[[Page 24445]]
Act of 1980 does not apply. See 5 U.S.C. 601(2).
List of Subjects
29 CFR Part 2619
Employee benefit plans, Pension insurance, and Pensions.
29 CFR Part 2676
Employee benefit plans and Pensions.
In consideration of the foregoing, parts 2619 and 2676 of chapter
XXVI, title 29, Code of Federal Regulations, are hereby amended as
follows:
PART 2619--[AMENDED]
1. The authority citation for part 2619 continues to read as
follows:
Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
2. In appendix B, Rate Set 32 is added to Table I, and a new entry
is added to Table II, as set forth below. The introductory text of both
tables is republished for the convenience of the reader and remains
unchanged.
Appendix B to Part 2619--Interest Rates Used to Value Lump Sums and
Annuities
Lump Sum Valuations
In determining the value of interest factors of the form vo
: n (as defined in Sec. 2619.49(b)(1)) for purposes of applying the
formulas set forth in Sec. 2619.49 (b) through (i) and in
determining the value of any interest factor used in valuing
benefits under this subpart to be paid as lump sums (including the
return of accumulated employee contributions upon death), the PBGC
shall employ the values of it set out in Table I hereof as
follows:
(1) For benefits for which the participant or beneficiary is
entitled to be in pay status on the valuation date, the immediate
annuity rate shall apply.
(2) For benefits for which the deferral period is y years (y is
an integer and 0n1), interest rate ii shall
apply from the valuation date for a period of y years; thereafter
the immediate annuity rate shall apply.
(3) For benefits for which the deferral period is y years (y is
an integer and n1 n1+n2), interest rate
i2 shall apply from the valuation date for a period of
y-n1 years, interest rate i1 shall apply for the following
n1 year; thereafter the immediate annuity rate shall apply.
(4) For benefits for which the deferral period is y years (y is
an integer and y>n1+n2), interest rate i3 shall apply
from the valuation date for a period of y-n1-n2 years,
interest rate i2 shall apply for the following n2 years,
interest rate i1 shall apply for the following n1 years;
thereafter the immediate annuity rate shall apply.
Table I
[Lump sum valuations]
----------------------------------------------------------------------------------------------------------------
For plans with a Deferred annuities (percent)
valuation date Immediate ----------------------------------------
Rate set ------------------------ annuity rate
On or (percent) i1 i2 i3 n1 n2
after Before
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
32............................... 06-1-96 07-1-96 5.00 4.25 4.00 4.00 7 8
----------------------------------------------------------------------------------------------------------------
Annuity Valuations
In determining the value of interest factors of the form v0
: n (as defined in Sec. 2619.49(b)(1)) for purposes of applying the
formulas set forth in Sec. 2619.49 (b) through (i) and in
determining the value of any interest factor used in valuing
benefits under this subpart, the plan administrator shall use the
values of it, prescribed in Table II hereof.
The following table tabulates, for each calendar month of
valuation ending after the effective date of this part, the interest
rates (denoted by i1, i2, * * *, and referred to generally
as it) assumed to be in effect between specified anniversaries
of a valuation date that occurs within that calendar month; those
anniversaries are specified in the columns adjacent to the rates.
The last listed rate is assumed to be in effect after the last
listed anniversary date.
Table II
[Annuity valuations]
----------------------------------------------------------------------------------------------------------------
The values of it are:
For valuation dates occurring in the month-- -----------------------------------------------------------------
it for t= it for t= it for t=
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
June 1996..................................... .0620 1-20 .0475 >20 N/A N/A
----------------------------------------------------------------------------------------------------------------
PART 2676--[AMENDED]
3. The authority citation for part 2676 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3), 1399(c)(1)(D), 1441(b)(1).
4. In appendix B, Rate Set 32 is added to Table I, and a new entry
is added to Table II, as set forth below. The introductory text of both
tables is republished for the convenience of the reader and remains
unchanged.
Appendix B to Part 2676--Interest Rates Used to Value Lump Sums and
Annuities
Lump Sum Valuations
In determining the value of interest factors of the form v0
: n (as defined in Sec. 2676.13(b)(1)) for purposes of applying the
formulas set forth in Sec. 2676.13 (b) through (i) and in
determining the value of any interest factor used in valuing
benefits under this subpart to be paid as lump sums, the PBGC shall
use the values of it prescribed in Table I hereof. The interest
rates set forth in Table I shall be used by the PBGC to calculate
benefits payable as lump sum benefits as follows:
(1) For benefits for which the participant or beneficiary is
entitled to be in pay status on the valuation date, the immediate
annuity rate shall apply.
(2) For benefits for which the deferral period is y years (y is
an integer and 0n1), interest rate i1 shall
apply from the valuation date for a period of y years; thereafter
the immediate annuity rate shall apply.
(3) For benefits for which the deferral period is y years (y is
an integer and n1n1+n2), interest rate
i2 shall apply from the valuation date for a period of
y-n1 years, interest rate i1 shall apply for the following
[[Page 24446]]
n1 years; thereafter the immediate annuity rate shall apply.
(4) For benefits for which the deferral period is y years (y is
an integer and y > n1 + n2), interest rate i3 shall
apply from the valuation date for a period of y - n1 - n2
years, interest rate i2 shall apply for the following n2
years, interest rate i1 shall apply for the following n1
years; thereafter the immediate annuity rate shall apply.
Table I
[Lump sum valuations]
----------------------------------------------------------------------------------------------------------------
For plans with a Deferred annuities (percent)
valuation date Immediate ----------------------------------------
Rate set ------------------------ annuity rate
On or (percent) i1 2i2 i3 n1 n2
after Before
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
32............................... 06-1-96 07-1-96 5.00 4.25 4.00 4.00 7 8
----------------------------------------------------------------------------------------------------------------
Annuity Valuations
In determining the value of interest factors of the form
v0:n (as defined in Sec. 2676.13(b)(1)) for purposes of
applying the formulas set forth in Sec. 2676.13 (b) through (i) and
in determining the value of any interest factor used in valuing
annuity benefits under this subpart, the plan administrator shall
use the values of it prescribed in the table below.
The following table tabulates, for each calendar month of
valuation ending after the effective date of this part, the interest
rates (denoted by i1, i2, * * *, and referred to generally
as it) assumed to be in effect between specified anniversaries
of a valuation date that occurs within that calendar month; those
anniversaries are specified in the columns adjacent to the rates.
The last listed rate is assumed to be in effect after the last
listed anniversary date.
Table II
[Annuity valuations]
----------------------------------------------------------------------------------------------------------------
The values of it are:
For valuation dates occurring in the month-- -----------------------------------------------------------------
it for t = it for t = it for t =
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
June 1996..................................... .0620 1-20 .0475 >20 N/A N/A
----------------------------------------------------------------------------------------------------------------
Issued in Washington, DC, on this 9th day of May 1996.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 96-12125 Filed 5-14-96; 8:45 am]
BILLING CODE 7708-01-P
Complete official Federal Register PDF
FR Doc. 96-12119 Approval and Promulgation of Implementation Plans; Ohio
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24457-24460]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12119]
=======================================================================
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[OH16-3-7264a; FRL-5439-4]
Approval and Promulgation of Implementation Plans; Ohio
AGENCY: Environmental Protection Agency.
ACTION: Direct final rule.
-----------------------------------------------------------------------
SUMMARY: On August 23, 1994, the United States Environmental Protection
Agency (USEPA) granted conditional approval of revisions to the
emission limitations, compliance methodologies, and compliance time
schedules in Ohio's State Implementation Plan (SIP) for sulfur dioxide
(SO2) as it applies to Hamilton County. The outstanding condition
has been addressed, and USEPA is now fully approving the Hamilton
County, Ohio, SO2 SIP. Submitted by Ohio in response to modeling
analyses which predicted violations of the SO2 National Ambient
Air Quality Standards (NAAQS) due to Hamilton County sources, this SIP
has been demonstrated to provide for attainment and maintenance of the
SO2 NAAQS in Hamilton County.
DATES: This action will be effective on July 15, 1996 unless adverse or
critical comments not previously addressed by the State or USEPA are
received by June 14, 1996. If the effective date is delayed, timely
notice will be published in the Federal Register.
ADDRESSES: Written comments should be addressed to: J. Elmer Bortzer,
Chief,
[[Page 24458]]
Regulation Development Section, Air Programs Branch (AR-18J), United
States Environmental Protection Agency, Region 5, 77 West Jackson
Boulevard, Chicago, Illinois 60604.
Copies of the State's submittal and USEPA's analysis (Technical
Support Document) are available for inspection at the following
location: United States Environmental Protection Agency, Region 5, Air
and Radiation Division, 77 West Jackson Boulevard, Chicago, Illinois
60604. (It is recommended that you telephone Mary Onischak at (312)
353-5954 before visiting the Region 5 Office.)
FOR FURTHER INFORMATION CONTACT: Mary Onischak at (312) 353-5954.
SUPPLEMENTARY INFORMATION:
I. Background
On October 16, 1991, Ohio submitted SO2 SIP revisions to USEPA
for Hamilton County, Ohio. The State submitted a package on March 17,
1993, which further amended these SIP revisions. The SIP revisions were
intended to provide for attainment of the National Ambient Air Quality
Standards (NAAQS) for SO2, in response to a December 22, 1988,
letter in which USEPA notified the Governor of Ohio that the SO2
SIP was substantially inadequate to maintain the SO2 NAAQS in
Hamilton County. USEPA's notification was based on predicted violations
of the SO2 standards due to SO2 sources located in Hamilton
County, Ohio. Ohio's SIP package included revisions to Ohio
Administrative Code (OAC) 3745-18-03 Attainment Dates and Compliance
Time Schedules, OAC 3745-18-04 Measurement Methods and Procedures, and
OAC 3745-18-37 Hamilton County Emission Limits, supplemented by an
administrative order for Cincinnati Gas and Electric's Miami Fort
facility. Ohio's submittal, including the background information,
attainment demonstration, and compliance methodologies, is discussed in
detail in the January 27, 1994, proposed conditional approval (59 FR
3809). Comments on the proposed conditional approval were addressed in
the August 23, 1994, final conditional approval (59 FR 43287).
II. Conditional Approval Issue
The Hamilton County SO2 SIP was conditionally approved by
USEPA because of an issue related to the air dispersion modeling
analysis submitted by Ohio to demonstrate that the revised SO2 SIP
limits would ensure attainment of the SO2 NAAQS in the Hamilton
County area. The State's modeled attainment demonstration is discussed
in detail in USEPA's 1994 proposed and final rulemaking actions. The
techniques used in the attainment demonstration were set forth in a
modeling protocol approved by USEPA. Because Hamilton County borders
Indiana and Kentucky, the attainment demonstration considered the air
quality impacts of SO2 sources in those States, as well as
SO2 sources in Ohio. During the development of the attainment
demonstration, a modeled violation was predicted near the Joseph E.
Seagram and Sons, Inc., (Seagram) facility in adjacent Dearborn County,
Indiana. The Seagram facility was determined to be the main contributor
to the modeled violation, but facilities located in Hamilton County
also contributed to the violation. Since the Ohio sources were
partially implicated in the Indiana violation, USEPA could not accept
Ohio's attainment demonstration until the predicted violation had been
addressed.
A solution to the attainment problem involved a restriction on the
usage of sulfur-bearing fuels at the Seagram facility. Preliminary
modeling showed that when Seagram's Boilers 5 and 6 were not
simultaneously burning such sulfur-bearing fuels as coal or fuel oil,
the SO2 standards would not be violated. Seagram had, in fact,
been operating in this manner for several years. Seagram agreed, in a
September 1, 1992 letter to Ohio and Indiana, that it would not operate
the two boilers simultaneously on sulfur-bearing fuels without written
approval from both State Agencies (the Ohio Environmental Protection
Agency and the Indiana Department of Environmental Management).
However, because Seagram's letter did not create a federally
enforceable limitation, USEPA required that the State of Indiana adopt
the Seagram restriction and submit it to USEPA as a revision to the
Indiana SO2 SIP.
On the basis of Seagram's September 1, 1992 commitment, Ohio
submitted supplementary modeling data to USEPA which demonstrated that
if the Seagram facility did not operate the two boilers simultaneously
on coal or fuel oil, the predicted SO2 NAAQS violation in Dearborn
County would be eliminated. USEPA has reviewed this modeling and
determined that it is acceptable. Because USEPA had determined that the
emission limits and control measures in the SO2 SIP revision for
Hamilton County would be enforceable and would provide for attainment
of the SO2 NAAQS, USEPA proposed to conditionally approve the
Hamilton County SO2 SIP while the State of Indiana proceeded with
the Seagram rulemaking.
USEPA's proposal to conditionally approve the Hamilton County, Ohio
SIP revisions was published on January 27, 1994 (59 FR 3809). USEPA
finalized the conditional approval action on August 23, 1994 (59 FR
43287). USEPA indicated in the final conditional approval that the
Hamilton County, Ohio SIP revisions would be approved in full if
Indiana submitted a federally approvable SIP revision for Seagram by
September 23, 1995. It was anticipated that an approvable Indiana limit
would be formalized in the allotted time and as a result, the Ohio
revised rules would remain a part of the SIP.
The USEPA notified the State of Indiana in a January 5, 1994,
letter that the Seagram limits must be incorporated into the Indiana
SO2 SIP. On August 25, 1995, Indiana submitted to USEPA a site-
specific SO2 SIP revision request which provided that when
Seagram's Boilers 5 and 6 were being operated simultaneously, only one
boiler would use coal or fuel oil. USEPA published a direct final
approval of Indiana's SIP revision for Seagram on February 9, 1996 (61
FR 4897). Therefore, USEPA is now able to fully accept Ohio's modeled
attainment demonstration and finalize the Hamilton County SO2 SIP
approval. (Adverse or critical comments received on the Seagram SIP
revision may affect the effective date of approval of the Hamilton
County, Ohio SO2 SIP.)
III. Final Rulemaking Action
The USEPA is approving Ohio's October 16, 1991, and March 17, 1993,
Hamilton County SO2 SIP revisions because the approval condition
cited in the Federal Register on August 23, 1994 (59 FR 43287) has been
satisfied. The State of Indiana submitted acceptable SO2 SIP
revisions, as required, and USEPA approved them in a direct final
action on February 9, 1996 (61 FR 4897). As indicated in the August 23,
1994, conditional approval, the USEPA has determined that the Ohio
SO2 SIP revisions for Hamilton County satisfy section 110(A)(2) of
the Clean Air Act and are fully approvable at this time. It is
important to note that if USEPA receives adverse or critical comments
on the SO2 SIP revision for Seagram, the receipt of such comments
may affect the effective date of USEPA's approval of the Hamilton
County, Ohio SO2 SIP.
The USEPA is publishing this action without prior proposal because
USEPA views this action as a noncontroversial revision and anticipates
no adverse comments. However, the rulemaking will not be deemed final
if timely unaddressed adverse or critical
[[Page 24459]]
comments are filed. The ``direct final'' approval shall be effective on
July 15, 1996, unless USEPA receives such adverse or critical comments
by June 14, 1996. The USEPA is now soliciting public comments on this
action. Any parties interested in commenting on this action should do
so at this time. In the proposed rules section of this Federal
Register, USEPA is publishing a separate document which constitutes a
``proposed approval'' of the requested SIP revision. If warranted by
comments adverse to or critical of the approval discussed above, which
have not been addressed by the State or USEPA, USEPA will publish a
Federal Register document which withdraws the final action. The USEPA
will then address public comments received in a subsequent rulemaking
document based on the proposed approval.
Nothing in this action should be construed as permitting, allowing
or establishing a precedent for any future request for revision to any
SIP. The USEPA shall consider each request for revision to the SIP in
light of specific technical, economic, and environmental factors and in
relation to relevant statutory and regulatory requirements.
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995, memorandum from Mary Nichols, Assistant Administrator
for Air and Radiation. The Office of Management and Budget (OMB) has
exempted this regulatory action from Executive Order 12866 review.
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., USEPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. (5 U.S.C. 603 and 604.)
Alternatively, USEPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises,
and government entities with jurisdiction over populations of less than
50,000.
SIP approvals under section 110 and subchapter I, Part D of the
Clean Air Act do not create any new requirements, but simply approve
requirements that the State is already imposing. Therefore, because the
Federal SIP approval does not impose any new requirements, I certify
that it does not have a significant impact on any small entities
affected. Moreover, due to the nature of the Federal-State relationship
under the Clean Air Act, preparation of a regulatory flexibility
analysis would constitute Federal inquiry into the economic
reasonableness of the State action. The Clean Air Act forbids USEPA to
base its actions concerning SIPs on such grounds.Union Electric Co. v.
USEPA, 427 U.S. 246, 256-66 (S.Ct. 1976); 42 U.S.C. 7410(a)(2).
Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded
Mandates Act''), signed into law on March 22, 1995, requires that the
USEPA prepare a budgetary impact statement before promulgating a rule
that includes a Federal mandate that may result in expenditure by
State, local, and tribal governments, in aggregate, or by the private
sector, of $100 million or more in any one year. Section 203 requires
the USEPA to establish a plan for obtaining input from and informing,
educating, and advising any small governments that may be significantly
or uniquely affected by the rule.
Under section 205 of the Unfunded Mandates Act, the USEPA must
identify and consider a reasonable number of regulatory alternatives
before promulgating a rule for which a budgetary impact statement must
be prepared. The USEPA must select from those alternatives the least
costly, most cost-effective, or least burdensome alternative that
achieves the objectives of the rule, unless the USEPA explains why this
alternative is not selected or the selection of this alternative is
inconsistent with law.
This rule only approves the incorporation of existing state rules
into the SIP. It imposes no additional requirements. Because this final
rule is estimated to result in the expenditure by State, local, and
tribal governments or the private sector of less then $100 million in
any one year, the USEPA has not prepared a budgetary impact statement
or specifically addressed the selection of the least costly, most cost-
effective, or least burdensome alternative. Because small governments
will not be significantly or uniquely affected by this rule, the USEPA
is not required to develop a plan with regard to small governments.
Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by July 15, 1996. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for the purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed, and shall not postpone the effectiveness of such
rule or action. This action may not be challenged later in proceedings
to enforce its requirements. (See section 307(b)(2).)
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by
reference, Sulfur oxides.
Note: Incorporation by reference of the State Implementation
Plan for the State of Ohio was approved by the Director of the
Federal Register on July 1, 1982.
Dated: February 14, 1996.
David A. Ullrich,
Acting Regional Administrator.
For the reasons set forth in the preamble 40 CFR part 52 is amended
as follows:
PART 52--[AMENDED]
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
Subpart KK--Ohio
2. Section 52.1870 is amended by adding paragraph (c)(92) to read
as follows:
Sec. 52.1870 Identification of plan.
* * * * *
(c) * * *
(92) On October 16, 1991, and March 17, 1993, the Ohio
Environmental Protection Agency (OEPA) submitted revisions to the State
Implementation Plan for sulfur dioxide for sources in Hamilton County,
Ohio.
(i) Incorporation by reference.
(A) Ohio Administrative Code (OAC) Rule 3745-18-03 Attainment dates
and compliance time schedules, Sections (A)(2)(c); (B)(7)(a);
(B)(7)(b); (C)(8)(a); (C)(8)(b); (C)(9)(a); (C)(9)(b); (D)(1); (D)(2);
dated October 11, 1991, and effective on October 31, 1991.
(B) Ohio Administrative Code (OAC) Rule 3745-18-04 Measurement
methods and procedures, Sections (D)(7); (D)(8)(a) to (D)(8)(e);
(E)(5); (E)(6)(a); (E)(6)(b); (F); (G)(1) to (G)(4); (I); dated October
11, 1991, and effective on October 31, 1991.
(C) Ohio Administrative Code (OAC) Rule 3745-18-37, Hamilton county
emission limits, dated February 22, 1993, and effective on March 10,
1993.
(D) Director's Final Findings and Order for Cincinnati Gas and
Electric Company, Miami Fort Station, dated February 22, 1993.
* * * * *
3. Section 52.1919 is revised to read as follows.
[[Page 24460]]
Sec. 52.1919 Identification of plan-conditional approval.
(a) The plan commitments listed below were submitted on the dates
specified.
(1) [Reserved]
(2) On April 20, 1994, Ohio submitted Rule 3745-35-07, entitled
``Federally Enforceable Limitations on Potential to Emit,'' and
requested authority to issue such limitations as conditions in State
operating permits. On June 16, 1994, Ohio submitted a commitment to
revise Rule 3745-35-07 to clarify that the rule provides for USEPA
objection to permits after issuance. The revisions are approved
provided Ohio fulfills this commitment by October 25, 1995.
(i) Incorporation by reference.
(A) Rule 3745-35-07, adopted April 4, 1994, effective April 20,
1994.
(b) (Reserved)
[FR Doc. 96-12119 Filed 5-14-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-12077 Clean Air Act Interim Approval of Operating Permits Program; Delegation of Section 112 Standards; State of Massachusetts
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24460-24461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12077]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70
[AD-FRL-5461-6]
Clean Air Act Interim Approval of Operating Permits Program;
Delegation of Section 112 Standards; State of Massachusetts
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: On February 2, 1996, the Environmental Protection Agency
published a proposed and direct final rule promulgating interim
approval of the Operating Permits Program submitted by the Commonwealth
of Massachusetts for the purpose of complying with the Federal
requirements of an approved program to issue operating permits to all
major stationary sources, and to certain other sources, with the
exception of Indian Lands. This submittal for the operating permits
program was made by the Commonwealth of Massachusetts on April 28,
1995. The 30-day comment period for these documents concluded on March
4, 1996. Also in this document, EPA is correcting the date for the
interim approval of the Operating Permits Program for the Commonwealth
of Massachusetts.
EFFECTIVE DATE: This final rule is effective on May 15, 1996.
FOR FURTHER INFORMATION CONTACT: Ida E. Gagnon, Air Permits Program,
CAP, U.S. Environmental Protection Agency, Region 1, JFK Federal
Building, Boston, MA 02203-2211, (617) 565-3500.
SUPPLEMENTARY INFORMATION: On February 2, 1996, EPA published a direct
final rule (61 FR 3827) which announced that this rule would take
effect in 60 days, or April 2, 1996, unless EPA received adverse
comment on the rule within 30 days of publication in response to a
notice of proposed rulemaking published on the same day (61 FR 3893).
EPA also committed to withdraw the direct final rule in the event it
received adverse comment, and to respond to any adverse comments in a
subsequent final rulemaking action. EPA did receive a timely adverse
comment on this rule. EPA failed, however, to withdraw the final rule
within the 60 days given in the direct final rule, and the rule took
effect on April 2, 1996.
In this document, EPA is responding to the comment it received, but
for the reasons stated below, EPA is not changing the final rule in
response to that comment. For reasons unrelated to the comment, EPA is
correcting a clerical error in the effective date of the rule, as
explained below. Had EPA withdrawn the direct final rule prior to its
going into effect, EPA would have taken final action based on the
proposal to promulgate a rule identical to the direct final rule that
went into effect. Rather than now take the action of withdrawing the
direct final rule only to repromulgate simultaneously an identical
rule, however, EPA in this action is deciding to maintain the rule
unchanged. EPA believes that withdrawal and repromulgation are
unnecessary since the results would be identical to that obtained
simply by leaving the rule unchanged and responding to the comments in
this document. This document provides interested parties an opportunity
to review how EPA addressed the comment, and to petition for review of
EPA's action in this final rulemaking within 60 days of publication of
this document, as provided in section 307(b)(1) of the Act.
I. Summary of Comments and Responses
EPA received two comments from the National Environmental
Development Association's Clean Air Regulatory Project (NEDA/CARP).
First, NEDA/CARP disagrees with EPA's statement that ``prompt reporting
[of deviations] must be more frequent than the semi-annual reporting
requirement, given this is a distinct reporting obligation under
Section 70.6(a)(3)(iii)(A).'' NEDA/CARP believes there is no legal
basis for such a statement. Therefore, NEDA/CARP asserts EPA has no
basis for expecting deviations to be reported more often than every 6
months.
EPA disagrees that there is no legal basis for this statement.
Section 503(b)(2) of the Act requires a permittee ``to promptly report
any deviations from permit requirements to the permitting authority.''
This requirement to report deviations promptly is distinct from section
504(a) of the Act which requires the results of all monitoring to be
submitted no less often than every six months. The Act clearly
distinguishes between the routine semi-annual reporting of all
monitoring, whether or not deviations have occurred, from the
requirements to report deviations that may be violations of the Act and
that at least provide an indication of potential compliance problems.
It makes sense that Congress would expect permittees to report
potential Act violations more quickly than routine monitoring that
confirms compliance. Additionally, the statute has a clear requirement
for prompt reporting of deviations and EPA believes that six months is
not prompt when dealing with information that may document a violation
of the Clean Air Act.
Second, in the February 2, 1996 rulemaking, EPA proposes interim
approval of the program regulation unless the Commonwealth changes its
rule to ensure that all ``significant'' monitoring changes, not just
``relaxations'' are processed as significant changes. NEDA/CARP points
out that this change may not be required when the proposed changes to
Part 70 are finalized and requests EPA take this issue into
consideration before the state revises its procedures.
EPA understands the concerns of NEDA/CARP, but EPA is obligated to
evaluate the Commonwealth's program based on Part 70 rules promulgated
on July 21, 1992. Once the proposed changes to Part 70 are finalized,
EPA and the Commonwealth will revisit this matter and address it
consistent with the program transition provisions of the revised Part
70 regulations.
II. Final Rulemaking Action
Except for the effective date, as explained below, EPA is not
modifying the interim approval to the operating permits program
associated with the February 2, 1996 direct final rulemaking in
response to the comments EPA received. The State must make the changes
specified in the proposed rulemaking, under II.A.2., Regulations and
Program Implementation, in order to be granted full approval.
This interim approval, which may not be renewed, extends for a
period of up to 2 years. During the interim approval period, the
Commonwealth is protected from sanctions for failure to have a
[[Page 24461]]
program, and EPA is not obligated to promulgate a Federal permits
program in the Commonwealth. Permits issued under a program with
interim approval have full standing with respect to Part 70, and the 1-
year time period under the Act for submittal of permit applications by
subject sources begins upon interim approval, as does the 3-year time
period for processing the initial permit applications.
The scope of the Commonwealth of Massachusetts' part 70 program
applies to all part 70 sources (as defined in the approved program)
within the Commonwealth of Massachusetts, except any sources of air
pollution over which an Indian Tribe has jurisdiction. See, e.g., 59 FR
55813, 55815-18 (Nov. 9, 1994). The term ``Indian Tribe'' is defined
under the Act as ``any Indian tribe, band, nation, or other organized
group or community, including any Alaska Native village, which is
Federally recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians.'' See section 302(r) of the CAA; see also 59 FR 43956, 43962
(Aug. 25, 1994); 58 FR 54364 (Oct. 21, 1993).
EPA is also not modifying its approval of DEP's authority to
implement and enforce section 112 standards at Part 70 sources.
Requirements for operating permit program approval, specified in 40 CFR
70.4(b), encompass section 112(l)(5) requirements for approval of a
program for delegation of section 112 standards as promulgated by EPA
as they apply to Part 70 sources. Section 112(l)(5) requires that the
State's program contain adequate authorities, adequate resources for
implementation, and an expeditious compliance schedule, which are also
requirements under Part 70. Therefore, the EPA has also granted
approval under section 112(l)(5) and 40 CFR 63.91 of the State's
program for receiving delegation of section 112 standards that are
unchanged from Federal standards as promulgated. This program for
delegations only applies to sources covered by the Part 70 program.
EPA is hereby correcting a mistaken effective date for our interim
approval. The prior document indicated an effective date of March 4,
1996, 30 days from the date of publication of the document rather than
the correct date of April 2, 1996, 60 days from the date of publication
of the document. In light of the Small Business Regulatory Enforcement
Act (SBREFA) which became effective on March 29, 1996 prior to the
April 2, 1996 corrected date, the rule will take effect on the latter
of the rule's submission to Congress or the date of publication. The
rule has been submitted to Congress, therefore, this final rulemaking
will be effective May 15, 1996.
III. Administrative Requirements
A. Docket
Copies of the Commonwealth's submittal and other information relied
upon for the final interim approval, including public comments received
and reviewed by EPA on the proposal, are maintained in a docket at the
EPA Regional Office. The docket is an organized and complete file of
all the information submitted to, or otherwise considered by, EPA in
the development of this final interim approval. The docket is available
for public inspection at the location under the ADDRESSES section of
this document.
B. Opportunity for Judicial Review
Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by July 15, 1996. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for the purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed, and shall not postpone the effectiveness of such
rule or action. This action may not be challenged later in proceedings
to enforce its requirements. (See section 307(b)(2).)
C. Executive Order 12866
The Office of Management and Budget has exempted this action from
Executive Order 12866 review.
D. Regulatory Flexibility Act
The EPA's actions under section 502 of the Act do not create any
new requirements, but simply address operating permits programs
submitted to satisfy the requirements of 40 CFR Part 70. Because this
action does not impose any new requirements, it does not have a
significant impact on a substantial number of small entities.
E. Unfunded Mandates
Under Section 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA
must prepare a budgetary impact statement to accompany any proposed or
final rule that includes a Federal mandate that may result in estimated
costs to State, local, or tribal governments in the aggregate; or to
the private sector, of $100 million or more. Under Section 205, EPA
must select the most cost-effective and least burdensome alternative
that achieves the objectives of the rule and is consistent with
statutory requirements. Section 203 requires EPA to establish a plan
for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
EPA has determined that the action promulgated today does not
include a Federal mandate that may result in estimated costs of $100
million or more to either State, local, or tribal governments in the
aggregate, or to the private sector. This Federal action approves
preexisting requirements under State or local law, and imposes no new
Federal requirements. Accordingly, no additional costs to State, local,
or tribal governments, or to the private sector, result from this
action.
List of Subjects in 40 CFR Part 70
Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Operating permits,
Reporting and recordkeeping requirements.
Dated: April 2, 1996.
John P. DeVillars,
Regional Administrator, Region I.
Part 70, title 40 of the Code of Federal Regulations is amended as
follows:
PART 70--[AMENDED]
1. The authority citation for part 70 continues to read as follows:
Authority: 42 U.S.C. 7401, et seq.
2. Appendix A to part 70 is amended by revising the entry for
Massachusetts to reflect the dates of the final rulemaking to read as
follows:
Appendix A to Part 70--Approval Status of State and Local Operating
Permits Programs
* * * * *
Massachusetts
(a) Department of Environmental Protection: submitted on April
28, 1995; interim approval effective on April 2, 1996; interim
approval expires April 2, 1998.
(b) (Reserved)
* * * * *
[FR Doc. 96-12077 Filed 5-14-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-12019 National Flood Insurance Program; Allocated Loss Adjustment Expense
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24461-24464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12019]
=======================================================================
-----------------------------------------------------------------------
[[Page 24462]]
FEDERAL EMERGENCY MANAGEMENT AGENCY
44 CFR Part 62
RIN 3067-AC47
National Flood Insurance Program; Allocated Loss Adjustment
Expense
AGENCY: Federal Insurance Administration (FEMA).
ACTION: Interim Final Rule.
-----------------------------------------------------------------------
SUMMARY: This interim final rule modifies the existing allocated loss
adjustment expense fee schedule of the National Flood Insurance Program
(NFIP) 1994 Write Your Own (WYO) Program under the Financial
Assistance/Subsidy Arrangement (the Arrangement). The rule changes the
fee schedule to add new, refined loss ranges and to revise the fees for
adjusting higher ranges of covered losses under the NFIP.
DATES: This interim final rule is effective on May 15, 1996. Please
submit any comments in writing by July 1, 1996.
ADDRESSES: We request comments on this interim final rule. Please
submit any comments to the Rules Docket Clerk, Office of the General
Counsel, Federal Emergency Management Agency, 500 C Street SW., room
840, Washington, DC 20472, (facsimile) (202)646-4536.
FOR FURTHER INFORMATION CONTACT: Charles M. Plaxico, Jr., Federal
Emergency Management Agency, Federal Insurance Administration, 500 C
Street SW., Washington, DC 20472, (202) 646-3422.
SUPPLEMENTARY INFORMATION: The Financial Assistance/Subsidy Arrangement
(``the Arrangement'') between the Federal Insurance Administrator and
licensed property/casualty insurers participating in the WYO program
was last modified effective October 1, 1994. The Arrangement specifies
allowable costs and fees to be reimbursed to member WYO companies for
adjusting losses under this segment of the National Flood Insurance
Program (NFIP). For allocated loss adjustments, participating WYO
companies are reimbursed pursuant to a fee schedule, which is
Attachment A to Appendix A of the Arrangement. The current fee schedule
provides for allowable fees for ranges of losses, the last range being
``$200,000 to limits.''
Since the publication of the Arrangement, however, the limits of
flood insurance coverage available under the National Flood Insurance
Program (NFIP) increased significantly under the National Flood
Insurance Reform Act of 1994 (P.L. 103-325). The higher limits of
coverage and correspondingly higher amounts of recovery for insured
property owners became effective March 1, 1995. Also, a new condominium
policy, effective October 1, 1994, has resulted in much higher limits
of coverage for condominiums.
Recent analysis of loss experience during the last year, especially
in connection with Hurricane Opal (October 1995), shows that there have
been significantly more losses at higher damage thresholds,
particularly for condominiums. The current fee schedule, which has not
been revised for nearly five years, needs to be adjusted to reflect
these factors as well as the increased workload to adjust claims for
condominium losses and the increased costs of labor, overhead,
materials, and transportation since the last fee schedule change.
In light of these factors and in anticipation of this year's
hurricane season, there is an urgent need to revise the current
adjuster fee schedule and make it effective upon publication of this
interim final rule. FEMA finds that there is a compelling need and good
cause to waive the 30-day effective date requirements of the
Administrative Procedure Act, 5 U.S.C. 553(d). This interim final rule
is effective on the date of publication in the Federal Register.
Currently, the fee schedule under the Arrangement is as follows:
Exhibit A.--Fee Schedule
------------------------------------------------------------------------
Range (by covered loss) Fee
------------------------------------------------------------------------
Erroneous Assignment....................................... $40.00
Closed Without Payment..................................... 125.00
Minimum for Upton-Jones Claims............................. 800.00
$0.01 to $600.00........................................... 150.00
$600.01 to $1,000.00....................................... 175.00
$1,000.01 to $2,000.00..................................... 225.00
$2,000.01 to $3,500.00..................................... 275.00
$3,500.01 to $5,000.00..................................... 350.00
$5,000.01 to $7,000.00..................................... 425.00
$7,000.01 to $10,000.00.................................... 500.00
$10,000.01 to $15,000.00................................... 550.00
$15,000.01 to $25,000.00................................... 600.00
$25,000.01 to $35,000.00................................... 675.00
$35,000.01 to $50,000.00................................... 750.00
$50,000.01 to $100,000.00.................................. 1,000.00
$100,000.01 to $150,000.00................................. 1,300.00
$150,000.01 to $200,000.00................................. 1,600.00
$200,000.01 to limits...................................... 2,000.00
------------------------------------------------------------------------
[Note: Allocated fee schedule entry value is covered loss under the
policy asked on the standard deductibles ($500 and $500) and limited
to the amount of insurance purchased.]
This interim final rule revises the adjuster fee schedule as
follows to reflect the higher limits of coverage available for
condominiums and the amount of technical effort required to adjust
losses for condominiums:
[[Page 24463]]
Exhibit A.--Fee Schedule
----------------------------------------------------------------------------------------------------------------
Range (by covered loss) Fee
----------------------------------------------------------------------------------------------------------------
Erroneous Assignment................................... $40.00.
Closed Without Payment................................. 125.00.
Minimum for Upton-Jones Claims......................... 800.00.
$0.01 to $600.00....................................... 150.00.
$600.01 to $1,000.00................................... 175.00.
$1,000.01 to $2,000.00................................. 225.00.
$2,000.01 to $3,500.00................................. 275.00.
$3,500.01 to $5,000.00................................. 350.00.
$5,000.01 to $7,000.00................................. 425.00.
$7,000.01 to $10,000.00................................ 500.00.
$10,000.01 to $15,000.00............................... 550.00.
$15,000.01 to $25,000.00............................... 600.00.
$25,000.01 to $35,000.00............................... 675.00.
$35,000.01 to $50,000.00............................... 750.00.
$50,000.01 to $100,000.00.............................. 3.0%.
$100,000.01 to $250,000.00............................. 2.3% but not less than $3,000.
$250,000.01 and up..................................... 2.1% but not less than $5,750.
----------------------------------------------------------------------------------------------------------------
Note: Based on Gross Loss.
(1) ``Gross loss'' shall mean the agreed cost to repair or replace before application of depreciation,
deductible, or other limiting clauses or condition.
(2) For the purpose of this schedule, should the loss exceed the available coverage, ``gross loss'' shall mean
the total amount of coverage.
(3) If the claim involves a salvage ``buy-back,'' ``gross loss'' shall mean the amount of the claim before the
salvage value is deducted.
(4) If the insured qualifies for replacement cost coverage, ``gross loss'' is determined on the basis of the
entire replacement cost claim (including depreciation holdback).
National Environmental Policy Act
This interim final rule is categorically excluded from the
requirements of 44 CFR Part 10, Environmental Consideration. No
environmental impact assessment has been prepared.
Executive Order 12866, Regulatory Planning and Review
This interim final rule is not a significant regulatory action as
defined under Executive Order 12866 of September 30, 1993, Regulatory
Planning and Review, 58 FR 51735, October 4, 1993. To the extent
possible, this interim final rule adheres to the principles of
regulation set forth in Executive Order 12866. This interim final rule
has not been reviewed by the Office of Management and Budget under the
provisions of Executive Order 12866.
Paperwork Reduction Act
This interim final rule does not contain a collection of
information and is therefore not subject to the provisions of the
Paperwork Reduction Act of 1995.
Executive Order 12612, Federalism
This interim final rule involves no policies that have federalism
implications under Executive Order 12612, Federalism, dated October 26,
1987.
Executive Order 12778, Civil Justice Reform
This interim final rule meets the applicable standards of section
2(b)(2) of Executive Order 12778.
List of Subjects in 44 CFR Part 62
Claims, Flood Insurance.
Accordingly, 44 CFR part 62, Exhibit A, is amended as follows:
PART 62--SALE OF INSURANCE AND ADJUSTMENT OF CLAIMS
1. The authority citation for Part 62 continues to read as follows:
Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of
1978, 43 FR 41943, 3 CFR 1978 Comp., p. 329; E.O. 12127 of Mar. 31,
1979, 44 FR 19367, 3 CFR, 1979 Comp., p. 376.
2. Exhibit A of Appendix A to part 62 is revised to read as
follows:
Appendix A to Part 62--Federal Emergency Management Agency, Federal
Insurance Administration, Financial Assistance/Subsidy Arrangement
* * * * *
Exhibit A.--Fee Schedule
----------------------------------------------------------------------------------------------------------------
Range (by covered loss) Fee
----------------------------------------------------------------------------------------------------------------
Erroneous Assignment................................... $40.00.
Closed Without Payment................................. 125.00.
Minimum for Upton-Jones Claims......................... 800.00.
$0.01 to $600.00....................................... 150.00.
$600.01 to $1,000.00................................... 175.00.
$1,000.01 to $2,000.00................................. 225.00.
$2,000.01 to $3,500.00................................. 275.00.
$3,500.01 to $5,000.00................................. 350.00.
$5,000.01 to $7,000.00................................. 425.00.
$7,000.01 to $10,000.00................................ 500.00.
$10,000.01 to $15,000.00............................... 550.00.
$15,000.01 to $25,000.00............................... 600.00.
$25,000.01 to $35,000.00............................... 675.00.
$35,000.01 to $50,000.00............................... 750.00.
$50,000.01 to $100,000.00.............................. 3.0%.
$100,000.01 to $250,000.00............................. 2.3% but not less than $3,000.
[[Page 24464]]
$250,000.01 and up..................................... 2.1% but not less than $5,750.
----------------------------------------------------------------------------------------------------------------
Note: Based on Gross Loss.
(1) ``Gross loss'' shall mean the agreed cost to repair or replace before application of depreciation,
deductible, or other limiting clauses or condition.
(2) For the purpose of this schedule, should the loss exceed the available coverage, ``gross loss'' shall mean
the total amount of coverage.
(3) If the claim involves a salvage ``buy-back,'' ``gross loss'' shall mean the amount of the claim before the
salvage value is deducted.
(4) If the insured qualifies for replacement cost coverage, ``gross loss'' is determined on the basis of the
entire replacement cost claim (including depreciation holdback).
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood
Insurance'')
Dated: May 8, 1996.
Elaine A. McReynolds,
Administrator.
[FR Doc. 96-12019 Filed 5-14-96; 8:45 am]
BILLING CODE 6718-03-P
Complete official Federal Register PDF
FR Doc. 96-11944 William D. Ford Federal Direct Loan Program
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24446-24447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11944]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF EDUCATION
34 CFR Part 685
RIN 1840-AC19
William D. Ford Federal Direct Loan Program
AGENCY: Department of Education.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: The Secretary amends the William D. Ford Federal Direct Loan
Program regulations to add the Office of Management and Budget (OMB)
control number to a section of the regulations. The section contains
information collection requirements approved by OMB. Under the
Paperwork Reduction Act of 1995, no persons are required to respond to
a collection of information unless it displays a valid OMB control
number. The Secretary takes this action to inform the public that these
requirements have been approved and affected parties must comply with
them.
EFFECTIVE DATE: These regulations are effective on July 1, 1996.
FOR FURTHER INFORMATION CONTACT: Rachel Edelstein, Program Specialist,
Direct Loan Policy Group, Policy Development Division, U.S. Department
of Education, 600 Independence Avenue SW. (Room 3053, ROB-3),
Washington, D.C. 20202. Telephone (202) 708-9406. Individuals who use a
telecommunications device for the deaf (TDD) may call the Federal
Information Relay Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8
p.m. Eastern time, Monday through Friday.
SUPPLEMENTARY INFORMATION: Final regulations for the William D. Ford
Federal Direct Loan Program were published in the Federal Register on
December 1, 1995 (60 FR 61820). Compliance with information collection
requirements in a section of these regulations was delayed until those
requirements were approved by OMB under the Paperwork Reduction Act of
1995. OMB approved the information collection requirements in the
regulations on November 24, 1995. The information collection
requirements in these regulations will therefore become effective with
all of the other provisions of the regulations on July 1, 1996.
Waiver of Proposed Rulemaking
It is the practice of the Secretary to offer interested parties the
opportunity to comment on proposed regulations. However, the
publication of OMB control numbers is purely technical and does not
establish substantive policy. Therefore, the Secretary has determined
under 5 U.S.C. 553(b)(B), that public comment on the regulations is
unnecessary and contrary to the public interest.
List of Subjects in 34 CFR Part 685
Administrative practice and procedure, Colleges and universities,
Education, Loan programs--education, Reporting and recordkeeping
requirements, Student aid, Vocational education.
[[Page 24447]]
Dated: May 8, 1996.
David A. Longanecker,
Assistant Secretary for Postsecondary Education.
The Secretary amends Part 685 of Title 34 of the Code of Federal
Regulations as follows:
PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM
1. The authority citation for Part 685 continues to read as
follows:
Authority: 20 U.S.C. 1087a et. seq, unless otherwise noted.
Sec. 685.209 [Amended]
2. Section 685.209 is amended by revising the OMB control number
following the section to read as follows: ``(Approved by the Office of
Management and Budget under control number 1840-0672).''
[FR Doc. 96-11944 Filed 5-14-96; 8:45 am]
BILLING CODE 4000-01-P
Complete official Federal Register PDF
FR Doc. 96-11927 Animal Drugs, Feeds, and Related Products; Liquid Sul-Q-Nox (Sodium Sulfaquinoxaline Solution)
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24441-24443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11927]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
21 CFR Parts 520 and 556
Animal Drugs, Feeds, and Related Products; Liquid Sul-Q-Nox
(Sodium Sulfaquinoxaline Solution)
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is amending the animal
drug regulations to reflect approval of a supplemental new animal drug
application (NADA) filed by I. D. Russell Co. Laboratories. The
supplemental NADA provides for safe and effective use of a sodium
[[Page 24442]]
sulfaquinoxaline solution in medicating the drinking water of chickens,
turkeys, calves, and cattle for either control or control and treatment
of certain coccidial or bacterial diseases susceptible to
sulfaquinoxaline. The approval reflects compliance with results of the
National Academy of Sciences/ National Research Council (NAS/NRC), Drug
Efficacy Study Group's (DESI) evaluation of the drug's effectiveness
and FDA's conclusions concerning that evaluation. FDA is also amending
the regulations to codify a tolerance for sulfaquinoxaline residues in
edible tissues of chickens, turkeys, calves, and cattle.
EFFECTIVE DATE: May 15, 1996.
FOR FURTHER INFORMATION CONTACT: Dianne T. McRae, Center for Veterinary
Medicine (HFV-102), Food and Drug Administration, 7500 Standish Pl.,
Rockville, MD 20855, 301-594-1623.
SUPPLEMENTARY INFORMATION: I. D. Russell Co. Laboratories, 1301 Iowa
Ave., Longmont, CO 80501, is the sponsor of NADA 6-891 which provides
for the use of 34-percent Liquid Sul-Q-Nox (sodium sulfaquinoxaline
solution). The drug product is used to medicate the drinking water of:
(1) Chickens as an aid in the control of outbreaks of coccidiosis
caused by Eimeria tenella, ---E. necatrix, E. acervulina, E. maxima,
and E. brunetti; (2) turkeys as an aid in the control of outbreaks of
coccidiosis caused by E. meleagrimitis and E. adenoeides; (3) chickens
and turkeys as an aid in the control of acute fowl cholera caused by
Pasteurella multocida susceptible to sulfaquinoxaline and fowl typhoid
caused by Salmonella gallinarum susceptible to sulfaquinoxaline; and
(4) calves and cattle for the control and treatment of outbreaks of
coccidiosis caused by E. bovis or E. zurnii. The NADA was originally
approved as safe on April 28, 1949.
In the Federal Register of July 9, 1970 (35 FR 11069), FDA
published the results of a NAS/NRC DESI evaluation of several
sulfaquinoxaline-containing veterinary drug products. The list of drug
products included solutions which are similar to the subject solution.
In that document, NAS/NRC evaluated the products as ``Probably
effective as an aid in prevention and control of outbreaks of
coccidiosis in chickens, turkeys, pheasants (and other game birds),
cattle, and sheep (provided the specie of coccidia for the respective
hosts are shown) * * *.'' Additionally, although it was inadvertently
omitted from that document, NAS/NRC also evaluated such products as
effective for control of acute fowl cholera in chickens, turkeys,
pheasants, and other game birds and as effective for the control of
fowl typhoid in chickens and turkeys. FDA concurred with the NAS/NRC
findings.
The NAS/NRC evaluation was concerned only with the drugs'
effectiveness and safety to the treated animal. It did not take into
account the safety for human food use of food derived from drug-treated
animals.
Subsequently, in the Federal Register of January 28, 1983 (48 FR
3962 at 3964), FDA established several sections for sulfaquinoxaline-
containing drugs, including Sec. 520.2325a (21 CFR 520.2325a), which
specify those conditions of use found to be effective by NAS/NRC and
FDA.
I. D. Russell Co. Laboratories has submitted information to comply
with the NAS/NRC and FDA findings and has revised its labeling to
conform to the currently approved conditions of use in Sec. 520.2325a.
On that basis, the subject supplemental NADA was approved as of March
6, 1996, and Sec. 520.2325a is now amended to reflect the approval. The
basis for this approval is discussed in the freedom of information
summary.
Also, the section is amended to remove reserved paragraphs (a) and
(b), to add a ``related tolerances'' paragraph, and to add a warning
against use of sulfaquinoxaline-medicated drinking water in veal
calves. The latter is part of a general effort to distinguish between
ruminating and preruminating calves based on information indicating
that withdrawal periods established in ruminating calves may not be
adequate for preruminating calves.
Furthermore, the regulation contains an outdated paragraph citing
the NAS/NRC status of these products. The Generic Animal Drug and
Patent Term Restoration Act of 1988 changed that status. Therefore, the
NAS/NRC paragraph is removed at this time.
Finally, the animal drug regulations are amended because FDA has
noted that a tolerance for sulfaquinoxaline residues in edible tissues
has not been codified. The tolerance for sulfaquinoxaline residues in
all edible tissues from chickens, turkeys, calves, and cattle is 0.1
part per million (ppm). When sulfaquinoxaline was approved, a
negligible tolerance of 0.1 ppm in all edible tissues was applied to
animal drug residues based on subchronic (90-day) toxicological
studies. This ``negligible tolerance'' concept is based on two
precepts: (1) The residues are present at a level of insignificance and
(2) the safety of the residues is supported by limited toxicological
data. The toxicological data available for sulfaquinoxaline (90-day dog
study) permit a tolerance for sulfaquinoxaline residues in edible
tissues of 0.1 ppm. Therefore, this tolerance is being codified in new
Sec. 556.685.
In accordance with the freedom of information provisions of part 20
(21 CFR part 20) and Sec. 514.11(e)(2)(ii) (21 CFR 514.11(e)(2)(ii)), a
summary of safety and effectiveness data and information submitted to
support approval of this application may be seen in the Dockets
Management Branch (HFA-305), Food and Drug Administration, 12420
Parklawn Dr., rm. 1-23, Rockville, MD 20857, between 9 a.m. and 4 p.m.,
Monday through Friday.
Under section 512(c)(2)(F)(iii) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360b(c)(2)(F)(iii)), this approval for food-
producing animals does not qualify for marketing exclusivity because
the supplemental application does not contain reports of new clinical
or field investigations (other than bioequivalence or residue studies)
and new human food safety studies (other than bioequivalence or residue
studies) essential to the approval and conducted or sponsored by the
applicant.-
The agency has carefully considered the potential environmental
effects of this action. FDA has concluded that the action will not have
a significant impact on the human environment, and that an
environmental impact statement is not required. The agency's finding of
no significant impact and the evidence supporting that finding,
contained in an environmental assessment, may be seen in the Dockets
Management Branch (address above) between 9 a.m. and 4 p.m., Monday
through Friday.
List of Subjects
21 CFR Part 520
Animal drugs.
21 CFR Part 556
Animal drugs, Foods.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs and
redelegated to the Center for Veterinary Medicine, 21 CFR parts 520 and
556 are amended as follows:
PART 520--ORAL DOSAGE FORM NEW ANIMAL DRUGS
1. The authority citation for 21 CFR part 520 continues to read as
follows:
Authority: Sec. 512 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 360b).
2. Section 520.2325a is amended by removing paragraph (d); by
redesignating paragraphs (c), (e), and (f)
[[Page 24443]]
as paragraphs (a), (c), and (d), respectively; by revising newly
redesignated paragraph (a); by amending newly redesignated paragraph
(d) by adding two new sentences after the fifth sentence; and by adding
a new paragraph (b) to read as follows:
Sec. 520.2325a Sulfaquinoxaline drinking water.
(a) Sponsor. See Sec. 510.600(c) of this chapter for identification
of the sponsors.
(1) No. 050749 for use of a 25-percent soluble powder and a 20-
percent solution as provided for in paragraph (c) of this section.
(2) No. 060594 for use of 3.44- and 12.85-percent solutions as
provided for in paragraphs (c)(1), (c)(2), (c)(3), (c)(4)(i), and
(c)(4)(ii) of this section.
(3) No. 017144 for use of a 34-percent solution as provided for in
paragraphs (c)(1), (c)(2), (c)(3), (c)(4)(i), and (c)(4)(ii) of this
section.
(b) Related tolerances. See Sec. 556.685 of this chapter.
* * * * *
(d) Limitations. * * * A withdrawal period has not been established
for sulfaquinoxaline in preruminating calves. Do not use in calves to
be processed for veal. * * *
PART 556--TOLERANCES FOR RESIDUES OF NEW ANIMAL DRUGS IN FOOD
3. The authority citation for 21 CFR part 556 continues to read as
follows:
Authority: Secs. 402, 512, 701 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 342, 360b, 371).
-4. New Sec. 556.685 is added to subpart B read as follows:
Sec. 556.685 Sulfaquinoxaline.
A tolerance of 0.1 part per million is established for negligible
residues of sulfaquinoxaline in the uncooked edible tissues of
chickens, turkeys, calves, and cattle.
Dated: April 15, 1996.
Robert C. Livingston,
Director, Office of New Animal Drug Evaluation, Center for Veterinary
Medicine.
[FR Doc. 96-11927 Filed 5-14-96; 8:45 am]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-11898 Small Passenger Vessel Inspection and Certification; Correction
[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24464-24465]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11898]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Coast Guard
46 CFR Parts 170, 171 and 173 and Chapter I, Subchapter K and T
[CGD 85-080]
RIN 2115-AC22
Small Passenger Vessel Inspection and Certification; Correction
AGENCY: Coast Guard, DOT.
ACTION: Correction to interim final rule.
-----------------------------------------------------------------------
SUMMARY: This document contains corrections to the interim final rule
in CGD 85-080, published on Wednesday, January 10, 1996, at 61 FR 864.
The regulations relate to the inspection and certification of small
passenger vessels (less than 100 gross tons).
EFFECTIVE DATE: These amendments are effective on May 15, 1996.
FOR FURTHER INFORMATION CONTACT:
Lieutenant Eric P. Christensen Marine Safety and Environmental
Protection Directorate (G-MOS-2), Room 1210, U.S. Coast Guard
Headquarters, 2100 Second Street SW., Washington, DC 20593-0001, (202)
267-1181 or fax (202) 267-4570.
SUPPLEMENTARY INFORMATION: The interim final rule that is the subject
of these corrections regulates small passenger vessels (less than 100
gross tons).
Need for Correction
As published, the IFR contains typographical errors and omissions
that may prove to be misleading and that therefore need correction.
Correction of Publication
Accordingly, the IFR published on January 10, 1996 [CGD 85-080],
which was the subject of FR Doc. 96-213, is corrected as follows:
Sec. 116.202 [Corrected]
1. Page 901, in the second column, in paragraph (b)(6)(x) of
Sec. 116.202, fourth line, remove ``cognizant OCMI'' and add, in its
place, ``Commanding Officer, Marine Safety Center''.
2. Page 903, in footnote 1 of Table 116.415(b) BULKHEADS, remove
``.025 kPa'' and add, in its place, ``2.5 kg/m2''.
3. On the same page, in footnote 1 of Table 116.415(c) DECKS,
remove ``.025 kPa'' and add, in its place, ``2.5 kg/m2''.
Sec. 117.15 [Corrected]
4. Page 912, at the top of the first column, Sec. 117.15, paragraph
(d) is corrected to read as follows:
* * * * *
(d) New installations of lifesaving equipment on an existing
vessel, which are completed to the satisfaction of the cognizant
Officer in Charge, Marine Inspection, (OCMI) on or after March 11,
1996, must comply with the regulations in this part. Replacement of
existing lifesaving equipment installed before March 11, 1996, must
meet the requirements of paragraph (a) of this section.
* * * * *
Sec. 118.320 [Corrected]
5. Page 918, at the top of the first column, in paragraph (c)(1) of
Sec. 118.320, ``Sec. 160.027'' is corrected to read ``Sec. 162.027''.
Sec. 122.115 [Corrected]
6. Page 936, in the second column, in paragraph (a) of
Sec. 122.115, ``Sec. 122.602(b)'' is corrected to read
``Sec. 122.602(c)''.
Sec. 175.540 [Corrected]
7. Page 951, in the second column, in paragraph (b) of
Sec. 175.540, remove the word ``pending'' before International Maritime
Organization.
Sec. 177.410 [Corrected]
8. Page 963, in the third column, in paragraph (c)(3) of
Sec. 177.410, remove the word ``of'' after Sec. 76.27.
9. Page 964, in the first column, in paragraph (d)(1) of
Sec. 177.410, add the words ``for more than 12 persons'' after the word
``accommodations'' and before the word ``must''.
Sec. 180.15 [Corrected]
10. Page 976, in the second column, in paragraph (e) of
Sec. 180.15, paragraph (e) is corrected to read as follows:
* * * * *
(e) New installations of lifesaving equipment on an existing
vessel, which are completed to the satisfaction of the cognizant
Officer in Charge, Marine Inspection, (OCMI) on or after March 11,
1996, must comply with the regulations in this part. Replacement of
existing lifesaving equipment installed before March 11, 1996, must
meet the requirements of paragraph (a) of this section.
* * * * *
Sec. 180.71 [Corrected]
11. Page 977, in the third column, in paragraph (d) of Sec. 180.71,
remove the words ``of the interim rules'' after the words ``March 11,
1999,'' and before the word ``provided''.
Sec. 180.207 [Corrected]
12. Page 981, in the second column, in paragraph (b) of
Sec. 180.207, remove the words ``buoyant apparatus'' and add, in its
place, ``life floats''.
Sec. 181.320 [Corrected]
13. Page 983, in the first column, in paragraph (d)(1) of
Sec. 181.320. ``Sec. 160.027'' is corrected to read ``Sec. 162.027''.
Sec. 181.500 [Corrected]
14. Page 986, in the first column, in paragraph (d) of
Sec. 181.500, ``paragraph (d) '' is corrected to read ``paragraph
(c)''.
Sec. 182.430 [Corrected]
15. Page 989, in the third column, in paragraph (k) of
Sec. 182.430, remove ``135 kPa (5 psig)'' and add, in its place, ``105
kPa (15 psig)''.
[[Page 24465]]
Sec. 183.530 [Corrected]
16. Page 1002, in the second column, in paragraph (c) of
Sec. 183.530, ``subchapter S of the chapter.'' is corrected to read
``subchapter J of this chapter.''
Sec. 185.115 [Corrected]
17. Page 1005, in the second column, in paragraph (a) of
Sec. 185.115, ``Sec. 185.602(b)'' is corrected to read
``Sec. 185.602(c)''.
Sec. 185.602 [Corrected]
18. Page 1010, in the first column, in paragraph (c) of
Sec. 185.602, add the word ``or'' after the word ``chapter,'' and
before the words ``in accordance with''.
Sec. 185.614 [Corrected]
19. Page 1011, at the bottom of the first column, the section
designated ``Sec. 122.614'' is correctly designated ``Sec. 185.614''.
Dated: May 7, 1996.
Joseph J. Angelo,
Director for Standards, Marine Safety and Environmental Protection.
[FR Doc. 96-11898 Filed 5-14-96; 8:45 am]
BILLING CODE 4910-14-M
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