issue-1996-03-08•Federal Register final rules — 1996-03-08
Federal Register final rules — 1996-03-08
issue-1996-03-08Federal Register final rules — 1996-03-08Regulation
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. 96-5741 Security Zone; Coast Waters Adjacent to South Florida
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9348-9350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5741]
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DEPARTMENT OF TRANSPORTATION
Coast Guard
33 CFR Part 165
[CGD07-96-013]
RIN 2115-AA97
Security Zone; Coast Waters Adjacent to South Florida
AGENCY: Coast Guard, DOT.
ACTION: Temporary final rule.
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SUMMARY: Pursuant to Presidential Proclamation No. 6867, declaring a
national emergency, the Coast Guard is establishing a security zone,
restricting the operation of vessels within the internal waters and
territorial seas of the United States, adjacent to or within the
coastal waters around southern Florida. The Coast Guard Captain of the
Port (COTP) may exercise complete control over all vessel operations
and movements within the security zone. Private, noncommercial vessels
of less than 50 meters (165 feet) in length, may not depart the
security zone with the intent to enter Cuban territorial waters, absent
express authorization from the COTP. These vessel control measures are
necessary to provide for the safety of United States citizens and
residents and to prevent threatened disturbance of the international
relations of the United States.
EFFECTIVE DATE: This rule is effective from 5:30 p.m., March 1996 and
will terminate when the National Emergency as declared by the President
in
[[Page 9349]]
Presidential Proclamation No. 6867, terminates. The Coast Guard will
publish a separate document in the Federal Register announcing
termination of this rule.
ADDRESSES: Permission of the COTP to depart the security zone with the
intent of entering Cuban territorial waters may be obtained from the
following U.S. Coast Guard units: Marine Safety Office Miami, 51 S.W.
First Avenue, Miami, FL 33130, ph. (305) 536-5693; Marine Safety Office
Tampa, 155 Columbia Drive, Tampa, FL 33603, ph. (813) 228-2195; Station
Miami Beach, 100 MacArthur Causeway, Miami Beach, FL 33139, ph. (305)
535-4368; Station Fort Lauderdale, 7000 N. Ocean Dr., FL 33004, ph.
(305) 927-1611; Station Marathon, 1800 Overseas Highway, Marathon, FL
33050, ph. (305) 743-1945; Station Islamorada, PO Box 547, 183 Palermo
Dr., Islamorada, FL 33036, ph. (305) 292-8862; Station Key West, Key
West, FL 33040, ph. (305) 292-8862; Station Fort Myers Beach, 719 San
Carlos Drive, Fort Myers Beach, FL 33931, ph. (813) 463-5754.
Additional locations may be established.
FOR FURTHER INFORMATION CONTACT:
Chief, Marine Safety Division, Seventh Coast Guard District, 909 SE
First Avenue, Brickell Plaza Federal Building, Miami, FL 33931, Phone
(305) 536-5651.
SUPPLEMENTARY INFORMATION: On March 1, 1996, the President of the
United States signed a Proclamation declaring a national emergency. To
secure the rights and obligations of the United States and to protect
its citizens and residents from the use of excessive force upon them by
foreign powers, the Coast Guard is establishing a temporary security
zone. In the Proclamation, the President authorized the Secretary of
transportation to regulate the anchorage and movement of domestic and
foreign vessels. This authority has been delegated to the Commander,
Seventh Coast Guard District, Captain of the Port, Miami FL and Captain
of the Port, Tampa FL, by Order of the Secretary of Transportation
dated March 1, 1996. The Coast Guard is establishing a security zone
pursuant to its normal regulatory authority in 50 U.S.C. Sec. 191 and
as supplemented by the authority delegated to the Secretary of
Transportation in the Presidential Proclamation. This authority was re-
delegated to the Commandant of the Coast Guard, as well as to
appropriate District Commanders and Captains of the Port. The security
zone includes the internal waters and territorial seas of the United
States, adjacent to or within the State of Florida south of 26 deg. 19'
N latitude and extending seaward three nautical miles from the baseline
from which the territorial sea is measured.
The Coast Guard has determined that control of the departure of
private noncommercial vessels less than 50 meters in length from the
security zone, with the intent to enter Cuban territorial waters
(hereinafter ``subject vessels''), is necessary to protect the safety
of United States citizens and residents and national security.
Maintaining such control of vessel movement will necessitate some
temporary limitations on traditional freedoms of navigation. Efforts
will be made to keep these limitations to a minimum.
The COTP may control the launching, anchorage, docking, mooring,
operation, and movement of all vessels within the security zone.
Additionally, the COTP may remove all persons not specifically
authorized by the COTP to go or remain on board the subject vessel, may
place guards on the subject vessel and may take full or partial
possession or control of any such vessel or part thereof. Such actions
to be taken are in the discretion of the COTP as deemed necessary to
ensure compliance with the provisions of the security zone or any other
order issued under the authority of the COTP.
Under the special regulations included in this rule, subject
vessels may not depart from the security zone without express
authorization from the COTP. Authorization may be requested in person
or in writing. If the request is approved, the COTP will issue a
written authorization. For the reasons discussed below, commercial
vessels 50 meters or greater in length are exempt from these security
zone departure control regulations.
Past experiences, including the 13 July 1995 Flotilla and the 2
September 1995 attempted Flotilla, did not involve vessels outside the
subject class of vessels.
Any private noncommercial vessel less than 50 meters in length
found to have departed from the security zone, with the intent to enter
Cuban territorial waters, without having express authorization from the
COTP will be in violation of the security zone. Failure to comply with
the regulations or orders issued under the authority of the COTP may
result in seizure and forfeiture of the vessel, suspension or
revocation of Coast Guard licenses, and/or criminal fines and
imprisonment.
This rule is published as a temporary final rule, which is
effective upon the signing of this rule. It is based upon a
Presidential declaration of a national emergency.This rule remains in
effect for the duration of the national emergency. Immediate action is
needed to protect the safety of lives and property at sea and to
prevent threatened disturbance of the international relations of the
United States. For this reason, the Coast Guard finds good cause, under
5 U.S.C. 553 (b) and (d), that notice and public comment on the rule
before the effective date of this rule are, impractical, unnecessary,
contrary to the public interest and this rule should be made effective
in less than 30 days after publication.
Regulatory Process Matters
This final rule, designed under the emergency conditions, is not a
significant regulatory action under section 3(f) of Executive Order
12866 and does not require an assessment of potential cost and benefits
under section 6(a)(3) of that order. Therefore a regulator evaluation
is not included. It is not significant under the regulatory policies
and procedures of the Department of Transportation (DOT) (44 FR 11040;
February 26, 1979). The USCG certifies that this rule will not have a
significant economic impact, positive or negative, on a substantial
number of small entities under the criteria of the Regulatory
Flexibility Act. This rule does not impose unfounded mandates or
contain reporting or record Keeping requirements that require approval
under the Paperwork Reduction Act.
Collection of Information
This rule contains no collection-of-information requirements under
the Paperwork Reduction Act (44 U.S.C. 3501 et. seq.).
Environment
The Coast Guard considered the environmental impact of this rule
and concluded that under section 2.B.2 of Commandant Instruction
M16475.1B. this proposal is categorically excluded from further
environmental documentation.
Federalism Assessment
This action has been analyzed in accordance with the principles and
criteria contained in Executive Order 12612, and it has been determined
that this rule will not have sufficient federalism implication to
warrant preparation of a Federalism Assessment.
List of Subjects in 33 CFR Part 165
Harbors, Marine Safety, Navigation (water), Security measures and
Waterways.
In consideration of the foregoing, Part 165 of Title 33, Code of
Federal Regulations, is amended as follows:
[[Page 9350]]
1. The authority citation for part 165 continues to read as
follows:
Authority: 33 USC 1231; 50 USC 191; 33 CFR 1.05-1(g). 6.04-1
6.04-6, and 160.5; 49 CFR 1.46.
2. Section 165.T07-013 is added to read as follows:
Sec. 165.T07-013 Security Zone: Territorial waters adjacent to Florida
south of 26 deg.19' N latitude.
(a) Location. The following area is established as a security zone:
All U.S. territorial waters adjacent to the State of Florida south of
26 deg.19' N latitude. In general, these are the U.S. territorial seas
adjacent to Collier, Dade, Monroe and Broward Counties of the State of
Florida.
(b) Applicability. For the purpose of this section, this section
applies to private noncommercial vessels less than 50 meters in length
departing the security zone with intent to enter Cuban territorial
waters. Any vessel operating without current documentation of
commercial status issued by the United States, a State or territory of
the United States, or a foreign government is considered to be a
noncommercial vessel for the purposes of this section.
(c) Regulations. (1) The general regulations in Sec. 165.33 of this
part do not apply to this security zone.
(2) Private noncommercial vessels less than 50 meters in length may
not depart from the security zone with the intent to enter Cuban
territorial waters without express authorization from one of the
following designated officials or their designees; Commander, Seventh
Coast Guard District; the Captain of the Port Miami; or the Captain of
the Port Tampa.
(3) Express authorization to depart from the security zone may be
obtained from any designated official or designee.
(4) The owner/operator or person in charge of the vessel shall
maintain the express authorization on board the vessel.
(d) Enforcement. Vessels and or persons violating this section may
be subject to:
(1) Seizure and forfeiture of the vessel;
(2) A monetary penalty of not more than $10,000; and
(3) Imprisonment for not more than 10 years.
(e) This section implements Presidential Proclamation No. 6867.
This section is issued under the authority delegated in Department of
Transportation Order dated March 1, 1996.
Dated: March 1, 1996.
R.T. Rufe, Jr.,
Rear Admiral, U.S. Coast Guard, Commander, Seventh Coast Guard
District.
[FR Doc. 96-5741 Filed 3-6-96; 2:43 pm]
BILLING CODE 4910-14-P
Complete official Federal Register PDF
FR Doc. 96-5560 Groundfish of the Bering Sea and Aleutian Islands Area; Pacific Ocean Perch in the Eastern Aleutian District
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Page 9370]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5560]
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DEPARTMENT OF COMMERCE
50 CFR Part 675
[Docket No. 960129019-6019-01; I.D. 030496E]
Groundfish of the Bering Sea and Aleutian Islands Area; Pacific
Ocean Perch in the Eastern Aleutian District
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Closure.
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SUMMARY: NMFS is closing the directed fishery for Pacific ocean perch
in the Eastern Aleutian District of the Bering Sea and Aleutian Islands
management area (BSAI). This action is necessary to prevent exceeding
the specification of Pacific ocean perch in this area.
EFFECTIVE DATE: 12 noon, Alaska local time (A.l.t.), March 5, 1996,
until 12 midnight, A.l.t., December 31, 1996.
FOR FURTHER INFORMATION CONTACT: Andrew N. Smoker, 907-586-7228.
SUPPLEMENTARY INFORMATION: The groundfish fishery in the BSAI exclusive
economic zone is managed by NMFS according to the Fishery Management
Plan for the Groundfish Fishery of the Bering Sea and Aleutian Islands
Area (FMP) prepared by the North Pacific Fishery Management Council
under authority of the Magnuson Fishery Conservation and Management
Act. Fishing by U.S. vessels is governed by regulations implementing
the FMP at 50 CFR parts 620 and 675.
In accordance with Sec. 675.20(a)(7)(ii), the Final 1996 Harvest
Specifications of Groundfish (61 FR 4311, February 5, 1996) for the
BSAI established 2,571 metric tons (mt) as the initial total allowable
catch for Pacific ocean perch in the Eastern Aleutian District.
The Director, Alaska Region, NMFS (Regional Director), has
determined, in accordance with Sec. 675.20(a)(8), that the Pacific
ocean perch initial total allowable catch in the Eastern Aleutian
District subarea soon will be reached. Therefore, the Regional Director
has established a directed fishing allowance of 2,471 mt after
determining that 100 mt will be taken as incidental catch in directed
fishing for other species in the Eastern Aleutian District. NMFS is
prohibiting directed fishing for Pacific ocean perch in the Eastern
Aleutian District to prevent exceeding the directed fishing allowance.
Maximum retainable bycatch amounts for applicable gear types may be
found in the regulations at Sec. 675.20(h).
Classification
This action is taken under Sec. 675.20 and is exempt from review
under E.O. 12866.
Authority: 16 U.S.C. 1801 et seq.
Dated: March 4, 1996.
Richard W. Surdi,
Acting Director, Office of Fisheries Conservation and Management,
National Marine Fisheries Service.
[FR Doc. 96-5560 Filed 3-5-96; 3:44 pm]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-5556 Grants and AgreementsMilitary Recruiting on Campus
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9344-9346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5556]
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 23
RIN 0790-AF87
Grants and Agreements--Military Recruiting on Campus
AGENCY: Office of the Secretary, DoD.
ACTION: Final rule.
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SUMMARY: The Department of Defense (DoD) adopts this final rule to
implement Section 558 of the National Defense Authorization Act for
Fiscal Year 1995, as it applies to grants. Section 558 states that
funds available to the Department of Defense may not be provided by
grant or contract to any institution of higher education that has a
policy of denying, or which effectively prevents, the Secretary of
Defense from obtaining for military recruiting purposes: entry to
campuses; access to students on campuses; or access to directory
information pertaining to students. The rule implements the law, as it
applies to grants, by requiring inclusion of a clause in DoD grants
with institutions of higher education. It also extends the requirement,
as a matter of policy, to DoD cooperative agreements, because they are
very similar to grants.
DATES: This final rule is effective on April 8, 1996.
FOR FURTHER INFORMATION CONTACT:
Mark Herbst, ODDR&E(R), 3080 Defense Pentagon, Washington, DC 20301-
3080. Telephone (703) 614-0205.
SUPPLEMENTARY INFORMATION:
Responses to Comments
This final rule revises 32 CFR part 23, which was adopted as an
interim-final rule on January 24, 1995 (at 60 FR 4544). In response to
the publication of the interim-final rule, DoD received written
comments from two associations and some telephonic comments. The
responses to the comments are:
Comment 1: The clause is in the interim-final rule referred to
``procedures established by the Secretary of Defense to implement
section 558 of Public Law 103-337.'' It should refer to DoD's
implementation of section 558, at 32 CFR part 216..
Response 1: Agree. At the time the interim-rule on grants and
cooperative agreements was published 32 CFR part 216 had not been
updated to implement section 558. Now that it has been updated
(published elsewhere in the issue of the Federal Register), the clause
in the final 32 CFR part 23 refers to it. The final rule also includes
more background and policy discussion, and more coverage on the grants
officer's responsibilities, than did the interim-final rule--most of
that discussion and coverage is based on 32 CFR part 216.
Comment 2: In implementing an earlier law that is similar to
section 558, DoD recognized that it might, in some cases, find a
subordinate element of an institution of higher education to be
restricting military recruiters' access, but not the institution as a
whole. In those cases, DoD established a policy (in 32 CFR part 216,
before its recent update) that the subordinate element, but not the
parent institution, would be denied DoD funds. If that policy is
continued in 32 CFR part 216 when it is updated to implement section
558, the grants and cooperative agreements clause should be amended by
adding:
(1) The following sentence after the first sentence of the clause:
``A recipient will not be deemed to be such an institution if a
subordinate element of the institution, but not the institution as a
whole, has a policy of preventing or effectively prevents military
recruiting of students;'' and
(2) At the end of the clause the following two sentences: ``If the
Secretary determines that a subordinate element of an institution, but
not the institution as a whole, has a policy of preventing or
effectively prevents military recruiting of students, DoD may cease
payment under, suspend, or terminate grants and agreements that relate
solely to the relevant subordinate element, but may not take such
action with respect to grant and agreements involving other elements of
the institution or the institution as a whole.''
Response 2: Adding the commenter's proposed sentences to the clause
isn't necessary, for two reasons:
The clause in the final rule has been amended to refer to
``institution of higher education (as defined in 32 CFR part 216).''
The definition in 32 CFR part 216 (which also appears in the final
rule] incorporates the concept of the subordinate element of an
institution of higher education that the comment sought to incorporate;
and
The final rule includes an expanded policy section that
refers to the policy in 32 CFR part 216 concerning subordinate elements
of institutions of higher education.
Comment 3: Under the interim-final rule, DoD will cease payments
under existing grants and agreements, if a recipient is determined to
have a policy of restricting military recruiters' access. This is
unreasonable, since the institution already will have committed funds
for personnel and other project
[[Page 9345]]
expenses. DoD instead should cease payments beginning with the next
year.
Response 3: The restriction on providing by grant any funds
available to DoD is a statutory requirement, and not a matter within
DoD's regulatory discretion. To comply, payments on existing awards
must cease promptly, once an institution is identified pursuant to 32
CFR part 216.
Comment 4: The interim-final rule's requirement for grants officers
to include language in program solicitations seems an unnecessary,
added burden.
Response 4: Agree. The requirement has been deleted from the final
rule.
Comment 5: The interim-final rule doesn't state whether recipient
of grants and cooperative agreements must include the clause in their
subawards to institutions of higher education.
Response 5: Agree. That's clarified in the final rule.
Executive Order 12866
This rule is not a ``significant regulatory action,'' as defined by
Executive Order 12866. The Department of Defense believes that it will
not: (1) Have an annual effect on the economy of $100 million or more
or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities; (2) Create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) Materially alter
the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
Raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in Executive Order
12866.
Regulatory Flexibility Act of 1980 [5 U.S.C. 605(b)]
This regulatory action will not have a significant adverse impact
on a substantial number of small entities.
Paperwork Reduction Act of 1995 (44 U.S.C., Chapter 35)
This regulatory action will not impose any additional reporting or
recordkeeping requirements under the Paperwork Reduction Act.
List of Subjects in 32 CFR Part 23
Grants programs.
Accordingly, Title 32 of the Code of Federal Regulations, part 23
is revised to read as follows.
PART 23--GRANTS AND AGREEMENTS--MILITARY RECRUITING ON CAMPUS
Sec.
23.1 Military recruiting on campus.
Authority: 5 U.S.C. 301.
Sec. 23.1 Military recruiting on campus.
(a) Purpose. The purpose of this section is to implement section
558 of the National Defense Authorization Act for Fiscal Year 1995
(Public Law 103-337), as it specifically affects grants and cooperative
agreements (note that section 558 appears as a note to 10 U.S.C. 503).
This section thereby supplements DoD's primary implementation of
section 558, in 32 part 216, ``Military Recruiting at Institutions of
Higher Education.''
(b) Definitions specific to this section. In this section:
(1) Directory information has the following meaning, given in
section 558(c) of Public Law 103-337. It means, with respect to a
student, the student's name, address, telephone listing, date and place
of birth, level of education, degrees received, and the most recent
previous educational institution enrolled in by the student.
(2) Institution of higher education has the following meaning,
given at 32 CFR 216.3(b). The term:
(i) Means a domestic college, university, or subelement of a
university providing postsecondary school courses of study, including
foreign campuses of such institutions. A subelement of a university is
a discrete (although not necessarily autonomous) organizational entity
that establishes policy or practices affecting military recruiting and
related actions covered by 32 CFR part 216. For example, a subelement
may be an undergraduate school, a law school, medical school, or
graduate school of arts and sciences.
(ii) Includes junior colleges, community colleges, and institutions
providing courses leading to undergraduate and post-graduate degrees.
(iii) Does not include entities that operate exclusively outside
the United States, its territories, and possessions.
(c) Statutory requirement. No funds available to the Department of
Defense may be provided by grant to any institution of higher education
that either has a policy of denying or that effectively prevents the
Secretary of Defense from obtaining, for military recruiting purposes,
entry to campuses or access to students on campuses or access to
directory information pertaining to students.
(d) Policy.--(1) Applicability to subordinate elements of
institutions of higher education. 32 CFR part 216, DoD's primary
implementation of section 558, establishes procedures by which the
Department of Defense identifies institutions of higher education that
have a policy or practice described in paragraph (c) of this section.
In cases where those procedures lead to a determination that specific
subordinate elements of an institution of higher education have such a
policy or practice, rather than the institution as a whole, 32 CFR part
216 provides that the prohibition on use of DoD funds applies only to
those subordinate elements.
(2) Applicability to cooperative agreements. As a matter of DoD
policy, the restriction of section 558, as implemented by 32 CFR part
216, apply to cooperative agreements, as well as grants.
(3) Deviations. Grants officers may not deviate from any provision
of this section without obtaining the prior approval of the Director of
Defense Research and Engineering. Requests for deviations shall be
submitted, through appropriate channels, to: Director for Research,
ODDR&E(R), 3080 Defense Pentagon, Washington, D.C. 20301-3080.
(e) Grants officers' responsibilities. A grants officer shall:
(1) Not award any grant or cooperative agreement to an institution
of higher education that has been identified pursuant to the procedures
of 32 CFR part 216. Such institutions are identified on the
Governmentwide ``List of Parties Excluded from Federal Procurement and
Nonprocurement Programs,'' as being ineligible to receive awards of DoD
funds [note that 32 CFR 25.505(d) requires the grants officer to check
the list prior to determining that a recipient is qualified to receive
an award].
(2) Not consent to any subaward of DoD funds to such an
organization, under a grant or cooperative agreement to any recipient,
if such subaward requires the grants officer's consent.
(3) Include the clause in paragraph (f) of this section in each
grant or cooperative agreement with an institution of higher education.
Note that this requirement does not flow down (i.e., recipients are not
required to include the clause in subawards).
(4) If an institution of higher education refuses to accept the
clause in paragraph (f):
(i) Determine that the institution is not qualified with respect to
the award. The grants officer may award to an alternative recipient.
(ii) Transmit the name of the institution, through appropriate
channels, to the Director for Accession
[[Page 9346]]
Policy, Office of the Assistant Secretary of Defense for Force
Management Policy, OASD (FMP), 4000 Defense Pentagon, Washington, D.C.
20301-4000. This will allow OASD (FMP) to decide whether to initiate an
evaluation of the institution under 32 CFR part 216, to determine
whether it is an institution that has a policy or practice described in
paragraph (c) of this section.
(f) Clause for award documents. The following clause is to be
included in grants and cooperative agreements with institutions of
higher education:
As a condition for receipt of funds available to the Department
of Defense (DoD) under this award, the recipient agrees that it is
not an institution of higher education (as defined in 32 CFR part
216) that has a policy of denying, and that it is not an institution
of higher education that effectively prevents, the Secretary of
Defense from obtaining for military recruiting purposes: (A) entry
to campuses or access to students on campuses; or (B) access to
directory information pertaining to students. If the recipient is
determined, using the procedures in 32 CFR part 216, to be such an
institution of higher education during the period of performance of
this agreement, and therefore to be in breach of this clause, the
Government will cease all payments of DoD funds under this agreement
and all other DoD grants and cooperative agreements to the
recipient, and it may suspend or terminate such grants and
agreements unilaterally for material failure to comply with the
terms and conditions of award.
Dated: March 4, 1996.
Linda M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 96-5556 Filed 3-7-96; 8:45 am]
BILLING CODE 5000-04-M
Complete official Federal Register PDF
FR Doc. 96-5555 Military Recruiting at Institutions of Higher Education
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9346-9348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5555]
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DEPARTMENT OF DEFENSE
32 CFR Part 216
[DoD Directive 1322.13]
RIN 0790-AG13
Military Recruiting at Institutions of Higher Education
AGENCY: Office of the Secretary, DoD.
ACTION: Final rule.
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SUMMARY: The Department of Defense adopts this final rule to implement
the National Defense Authorization Act for Fiscal Year 1995. It updates
policy, procedures, and responsibilities for identifying and taking
action against any institution of higher education that has a policy of
denying, or that effectively prevents, the Secretary of Defense from
obtaining for military recruiting purposes entry to campuses, access to
students on campuses, or access to student directory information. No
funds available to the Department of Defense (DoD) may be provided by
grant or contract to any such institution. The new law allows no basis
for waivers.
EFFECTIVE DATE: January 26, 1996.
FOR FURTHER INFORMATION CONTACT:
Ronald G. Liveris, Accession Policy, Room 2B271, Office of the
Assistant Secretary of Defense for Force Management Policy, 4000
Defense Pentagon, Washington, DC 20301-4000. Telephone: (703) 697-9268.
SUPPLEMENTARY INFORMATION:
Responses to Comments
This final rule revises the interim-final rule adopted by DoD on
May 30, 1995 (60 FR 28050). The Department of Defense received four
comments on the interim-final rule. Each comment was reviewed and given
careful consideration.
Two commenters favored the interim-rule. One of these commenters
asked whether the interm-rule prohibits DoD contract and grant awards
at institutions of higher education that have a policy against Reserve
Officer Training Corps (ROTC) programs. 10 U.S.C. 503 note does not
address policy and practices affecting ROTC programs. The final rule
only applies to institutions that have a policy of denying, or that
effectively prevent, entry to campuses, access to students on campuses,
or access to student directory information for military recruiting
purposes.
The other commenter in favor of the interim-rule specifically
supported the provision that restricts the prohibition on the use of
DoD funds to subelements of an institution of higher education that
have a policy of denying, or that effectively prevent military
recruiters access to campuses, access to students, or access to student
directory information. A third commenter took the opposite view,
arguing that the prohibition on the use of DoD funds should apply to an
entire institution when the institution or any of its subelements are
determined to have such a policy or practice. The final rule retains
the provision that restricts the prohibition on DoD funds to
subelements that deny access. Subordinate elements of an institution of
higher education that administer their own placement policies to permit
recruiting will not be subject to a prohibition on receiving DoD funds.
This reflects DoD's interpretation of the law and its legislative
history and DoD's intent to avoid entanglement with the internal
decisionmaking processes of institutions of higher education.
The fourth commenter stated that to protect individual privacy and
``since the Department of Defense discriminates against gays in the
military,'' that the Department should not have any access to students
on campus or to student directory information. DoD policies concerning
gays in the military are the result of implementing 10 U.S.C. chapter
37, section 654 concerning homosexual conduct in the Armed Forces.
This final rule implements 10 U.S.C. 503 note, as added by section
558 of the National Defense Authorization Act for Fiscal Year 1995
(Pub. L. 103-337).
Executive Order 12866
This final rule is not a ``significant regulatory action,'' as
defined by Executive Order 12866. The Department of Defense believes
that it will not: (1) have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
Executive Order 12866.
Regulatory Flexibility Act
This regulatory action will not have a significant adverse impact
on a substantial number of small entities.
Paperwork Reduction Act
This regulatory action will not impose any additional reporting or
record keeping requirements under the Paperwork Reduction Act.
List of Subjects in 32 CFR Part 216
Armed Forces, Colleges and universities, Recruiting personnel.
Accordingly, 32 CFR Part 216 is revised to read as follows:
PART 216--MILITARY RECRUITING AT INSTITUTIONS OF HIGHER EDUCATION
Sec.
216.1 Purpose.
216.2 Applicability.
216.3 Definitions.
216.4 Policy.
216.5 Responsibilities.
Appendix A to Part 216--Sample of Letter of Inquiry.
Authority: 10 U.S.C. 503 note.
[[Page 9347]]
Sec. 216.1 Purpose.
This part:
(a) Implements 10 U.S.C. 503 note.
(b) Updates policy and responsibilities for identifying and taking
action on institutions of higher education that either have a policy of
denying, or that effectively prevents military recruiting personnel
from entry to their campuses, from access to their students, or from
access to student directory information.
Sec. 216.2 Applicability.
This part applies to the Office of the Secretary of Defense, the
Military Departments, the Chairman of the Joint Chiefs of Staff, the
Unified Combatant Commands, the Uniformed Services University of Health
Sciences, the Defense Agencies, and the DoD Field Activities (hereafter
referred to collectively as ``the DoD Components''). The term
``Military Services,'' as used herein, refers to the Army, the Navy,
the Air Force, and the Marine Corps.
Sec. 216.3 Definitions.
(a) Directory information. Referring to a student means the
student's name, address, telephone listing, date and place of birth,
level of education, degrees received, and the most recent previous
educational institution enrolled in by the student.
(b) Institution of higher education. A domestic college,
university, or subelement of a university providing post-secondary
school courses of study, including foreign campuses of such domestic
institutions. That includes junior colleges, community colleges, and
institutions providing courses leading to undergraduate and post-
graduate degrees. That term does not include entities that operate
exclusively outside the United States, its territories, and
possessions. A subelement of a university is a discrete (although not
necessarily autonomous) organizational entity that establishes policy
or practices affecting military recruiting and related actions covered
by 10 U.S.C. 503 note and this part. For example, a subelement may be
an undergraduate school, a law school, medical school, or graduate
school of arts and sciences.
(c) Student. An individual who is 17 years of age or older and
enrolled in an institution of higher education.
Sec. 216.4 Policy.
It is DoD policy that:
(a) Under 10 U.S.C. 503 note, no funds available to the Department
of Defense may be provided by grant or contract to any institution of
higher education that either has a policy of denying, or that
effectively prevents, the Secretary of Defense from obtaining, for
military recruiting purposes, entry to campuses, access to students on
campuses, or access to directory information on students. That
prohibition on use of DoD funds applies only to subelements of an
institution of higher education that are determined to have such a
policy or practice.
(b) An evaluation to determine whether an institution of higher
education has a policy of denying, or is effectively preventing, the
Secretary of Defense from obtaining entry to campuses, access to
students on campuses, or access to student directory information shall
be undertaken when:
(1) Military recruiting personnel cannot obtain permission to
recruit on the premises of the institution or when they are refused
directory information. Military recruiting personnel shall accommodate
an institution's reasonable preferences as to times and places for
scheduling on-campus recruiting, if any such restrictions are not based
on the policies or practices of the Department of Defense and that the
Military Services are provided entry to the campus and access to
students on campus and to directory information; or,
(2) The institution is unwilling to declare in writing as a
prerequisite to an education and training award that the institution
does not have a policy of denying, and that it does not effectively
prevent, the Secretary of Defense from obtaining for military
recruiting purposes entry to campuses, access to students on campuses,
or access to student directory information.
(3) The institution does not accept terms or conditions of a DoD
contract or grant specified under Sec. 216.5(b)(2).
(c) A determination that military recruiting personnel are denied
access shall not be made when the institution does the following:
(1) Excludes all employers from recruiting on the premises of the
institution.
(2) Permits employers to recruit on the premises of the institution
only in response to an expression of student interest, and the
institution:
(i) Provides the Military Services with the same opportunities to
inform the students of military recruiting activities as are available
to other employers.
(ii) Certifies that too few students have expressed an interest to
warrant accommodating military recruiters, applying the same criteria
that are applicable to other employers.
(3) When not providing any directory information, certifies that
such information is not collected by the institution.
(4) When not providing directory information for specific students,
certifies that each student concerned (or his or her parent, if a 17-
year-old) has formally requested the institution to withhold providing
this information from military recruiting personnel for military
recruiting purposes.
Sec. 216.5 Responsibilities.
(a) The Assistant Secretary of Defense for Force Management Policy,
under the Under Secretary of Defense for Personnel and Readiness,
shall:
(1) Not later than 30 days after receipt of the name(s) of
institutions of higher education under paragraphs (d)(2) and (e)(1) of
this section:
(i) Make a final determination about the eligibility of each such
institution to receive funds available to the Department of Defense by
grant or contract under 10 U.S.C. 503 note, and this part.
(ii) Notify each institution determined under paragraph (a)(1)(i)
of this section, that it is ineligible to receive DoD funds under 10
U.S.C. 503 note, and this part. Such notification shall reflect the
basis of that determination.
(iii) Disseminate the names of institutions of higher education
identified under paragraph (a)(1)(i) of this section to all the DoD
Components and to the General Services Administration (GSA) for
inclusion in the Federal list of parties excluded from Federal
procurement or nonprocurement programs.
(iv) Inform each applicable institution identified under paragraph
(d)(2) or (e)(1) of this section, that its eligibility to receive DoD
funds may be restored upon the institution providing sufficient new
information to enable the Assistant Secretary of Defense for Force
Management Policy (ASD(FMP)) to determine that the institution provides
entry to its campus(es), access to students on the campus(es), and
access to directory information on students.
(2) Not later than 45 days after receipt of an institution's
request to restore its eligibility:
(i) Determine whether the institution is qualified to receive DoD
funds under 10 U.S.C. 503 note, and this part.
(ii) Inform the institution of that determination.
(iii) Provide the DoD Components and GSA with the name of that
institution if its eligibility has been restored.
(3) Provide policy and procedures to:
(i) Cease education and training awards of DoD funds (other than
those made by procurement grant or contract under paragraph (b)(1) of
this section) to institutions identified as ineligible under paragraph
(a)(1)(i) of this section.
[[Page 9348]]
(ii) Identify institutions unwilling to declare in writing, as a
prerequisite to such an award of DoD funds for education and training,
that the institution does not have a policy of denying, and that it
does not effectively prevent, the Secretary of Defense from obtaining
for military recruiting purposes entry to campuses, access to students
on campuses, or access to student directory information.
(4) Notify the Defense Finance and Accounting Service of
institutions, under paragraph (a)(1)(i) of this section, that either
lose or regain eligibility to receive DoD funds under 10 U.S.C. 503
note and this part.
(b) The Under Secretary of Defense for Acquisition and Technology
shall establish policy and procedures to:
(1) Deny DoD grant and contract awards to all institutions
identified as ineligible under paragraph (a)(1)(i) of this section.
(2) Include terms or conditions in DoD grants and contracts awarded
to institutions of higher education to make payments of DoD funds under
such awards contingent on the institution's not being one so
identified.
(c) The Under Secretary of Defense (Comptroller)/Chief Financial
Officer shall establish and promulgate financial management policies
and procedures to stop or reactivate payment of DoD funds through
contracts, grants, and other agreements made by the Department of
Defense or other Federal Agencies to institutions identified as
ineligible under paragraph (a)(1)(i) of this section.
(d) The Secretaries of the Military Departments shall:
(1) Identify institutions that, by policy or practice, deny
military recruiting personnel entry to the campus(es) of those
institutions, access to students, or access to student directory
information. When repeated requests to schedule recruiting visits or to
obtain directory information are unsuccessful, the Military Service
concerned shall seek written confirmation of the institution's present
policy from the head of the institution through a letter of inquiry.
The sample letter in Appendix A to the part shall be followed as
closely as possible. If written confirmation cannot be obtained, oral
policy statements or attempts to obtain such statements from an
appropriate official of the institution shall be documented.
(2) Evaluate the responses to the letter of inquiry and of such
other evidence obtained in accordance with this part and submit to the
ASD(FMP) the names and addresses of institutions of higher education
that are recommended to be declared ineligible to receive funds
available to the Department of Defense under 10 U.S.C. 503 note and
this part. Full documentation shall be furnished to the ASD(FMP) for
each such institution, including the institution's formal response to
the letter of inquiry, or oral response or evidence showing attempts to
obtain written confirmation or an oral statement of the institution's
policies.
(e) The Heads of the DoD Components shall:
(1) Provide the ASD(FMP) with the names and addresses of
institutions:
(i) Identified as ineligible as a result of implementing policies
and procedures promulgated under paragraph (a)(3)(ii) of this section.
(ii) That do not accept terms or conditions of a DoD grant or
contract specified under paragraph (b)(2) of this section.
(2) Take immediate action to deny DoD funds to institutions
identified as ineligible under paragraph (a)(1)(i) of this section and
to restore eligibility of institutions identified under paragraph
(a)(2)(i) of this section.
Appendix A to Part 216--Sample Letter of Inquiry
Dr. John Doe
President
XYZ College
Anywhere, USA 12345-0123
Dear Dr. Doe: I understand that military recruiting personnel
are unable to recruit on the campus of XYZ College and have been
refused directory information on XYZ College students for military
recruiting by official policy of the college. Title 10 U.S.C. 503
note, prohibits grant and contract awards of DoD funds to any
institution of higher education that has a policy of denying, or
that effectively prevents, military recruiting personnel entry to
campuses, access to students on campuses, or access to directory
information on students. DoD Directive 1322.13, ``Military
Recruiting at Institutions of Higher Education,'' (January 26, 1996)
codified at 32 CFR part 216, implements 10 U.S.C. 503 note. A copy
of 10 U.S.C. 503 note, and of DoD Directive 1322.13 are enclosed.
Under DoD Directive 1322.13, this letter provides you an
opportunity to clarify your institution's policy on military
recruiting on the campus of XYZ College. In that regard, I request
the official written policy of the institution regarding visits of
civilian employers (public or private) and military recruiting
personnel to the campus for recruiting college students, and access
to directory information on students.
Based on this information, a determination shall be made by the
Assistant Secretary of Defense for Force Management Policy as to
your institution's eligibility to receive DoD funds by grant or
contract. Should it be determined that XYZ College is not qualified
to receive such funds, all current programs requiring payment to XYZ
College shall be stopped, and it shall be ineligible to receive
future payments of DoD funds through grants, contracts, and other
applicable agreements.
I regret that this action may have to be taken. Successful
recruiting requires that DoD recruiters have reasonable access to
students on the campuses of colleges and universities, and at the
same time to have effective relationships with the officials and
student bodies of those institutions. I hope it will be possible for
military recruiters to schedule recruiting visits at XYZ College in
the near future. I am available to answer any questions.
Sincerely,
Enclosures
[Note: DoD Directive 1322.13 is available from the National
Technical Information Service, 5285 Port Royal Road, Springfield, VA
22161. This note is not a part of the sample letter of inquiry.]
Dated: March 4, 1996.
Patricia L. Toppings,
Alternate OSD Federal Register Liaison Officer.
[FR Doc. 96-5555 Filed 3-7-96; 8:45 am]
BILLING CODE 5000-04-M
Complete official Federal Register PDF
FR Doc. 96-5540 Pesticide Tolerance; Avermectin BINF1 and Its Delta-8,9-Isomer
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9350-9352]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5540]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 180
[PP 4F4354/R2196; FRL-4993-5]
RIN 2070-AB78
Pesticide Tolerance; Avermectin B1 and Its Delta-8,9-Isomer
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule establishes a tolerance for combined residues of the
insecticide avermectin B1 and its delta-8,9-isomer in or on the
raw agricultural commodities cucurbit vegetables group (cucumbers,
melons, and squashes). The regulation to establish a maximum
permissible level for residues of the insecticide was requested in a
petition submitted by the Merck Research Laboratories.
EFFECTIVE DATE: This regulation becomes effective March 8, 1996.
ADDRESSES: Written objections and hearing requests, identified by the
document control number, [PP 4F4354/R2196], may be submitted to:
Hearing Clerk (1900), Environmental Protection Agency, Rm. M3708, 401 M
St., SW., Washington, DC 20460. A copy of any objections and hearing
requests filed with the Hearing Clerk should be identified by the
docket control number and submitted to: Public Response and Program
Resources Branch, Field Operations Division (7506C), Office of
Pesticide Programs, Environmental Protection Agency, 401 M St., SW.,
Washington , DC 20460. In person, bring copy of objections and hearing
requests to Rm. 1132, CM #2, 1921 Jefferson Davis Hwy., Arlington, VA.
Fees accompanying objections shall be labeled ``Tolerance Petition
Fees'' and forwarded to: EPA Headquarters Accounting Operations Branch,
OPP (Tolerance Fees), P.O. Box 360277M, Pittsburgh, PA 15251.
An electronic copy of objections and hearing requests filed with
the Hearing Clerk may be submitted to OPP by sending electronic mail
(e-mail) to:
[email protected]
Copies of electronic objections and hearing requests must be
submitted as an ASCII file avoiding the use of special characters and
any form of encryption. Copies of electronic objections and hearing
requests will also be accepted on disks in WordPerfect 5.1 file format
or ASCII file format. All copies of electronic objections and hearing
requests must be identified by the docket number [PP 4F4354/R2196]. No
Confidential Business Information (CBI) should be submitted through e-
mail.
[[Page 9351]]
Copies of electronic objections and hearing requests on this rule may
be filed online at many Federal Depository Libraries. Additional
information on electronic submissions can be found below in this
document.
FOR FURTHER INFORMATION CONTACT: By mail: George LaRocca, Product
Manager (PM) 13, Registration Division (7505C), Office of Pesticide
Programs, Environmental Protection Agency, 401 M St., SW., Washington,
DC 20460. Office location, telephone number, and e-mail address: Rm.
204, CM #2, 1921 Jefferson Davis Hwy., Arlington, VA, (703)-305-6100;
e-mail: [email protected].
SUPPLEMENTARY INFORMATION: EPA issued a notice published in the Federal
Register of November 2, 1994 (59 FR 54911), and September 28, 1994 (59
FR 49392), which announced that Merck Research Laboratories had
submitted pesticide petition (PP) 4F4354 to EPA requesting that the
Administrator, pursuant to section 408(d) of the Federal Food, Drug,
and Cosmetic Act (FFDCA), 21 U.S.C. 346a(d), establish a tolerance for
combined residues of the insecticide avermectin B1 and its delta-
8,9-isomer, in or on the raw agricultural commodities (RACs) cucurbit
vegetables group (cucumbers, melons, and squashes) at 0.005 part per
million (ppm). No comments were received in response to the notice of
filing.
The scientific data submitted in the petition and other relevant
material have been evaluated. The toxicological data considered in
support of this tolerance are discussed in detail in related documents
published in the Federal Register of May 31, 1989 (54 FR 23209,
cottonseed) and August 2, 1989 (54 FR 31836, citrus).
The Agency used a two-generation rat reproduction study with an
uncertainty factor of 300 to establish a Reference Dose (RfD). The 300-
fold uncertainty factor was utilized for (1) inter- and intraspecies
differences, (2) the extremely serious nature (pup death) observed in
the reproduction study, (3) maternal toxicity (lethality) no-
observable-effect level (NOEL) (0.05 mg/kg body weight(bwt) /day), and
(4) cleft palate in the mouse developmental toxicity study with isomer
(NOEL = 0.06 mg/kg bwt/day). Thus, based on a NOEL of 0.12 mg/kg bwt/
day from the two-generation rat reproduction and an uncertainty factor
of 300, the RfD is 0.0004 mg/kg/ bwt/day.
A chronic dietary exposure/risk assessment has been performed for
avermectin B1 using the above RfD. Available information on
anticipated residues and 100% crop treated was incorporated into the
analysis to estimate the Anticipated Residue Contribution (ARC). The
ARC is generally considered a more realistic estimate than an estimate
based on the tolerance level residues. The ARC for established
tolerances and the current action is estimated at 0.000013 mg/kg/bwt/
day and utilizes 3.2% of the RfD for the U.S. population. For
nonnursing infants less than 1-year old (the subgroup population with
the highest exposure level) the ARC for established tolerances and the
current action is estimated at 0.000018 mg/kg bwt/day and utilizes 4.5%
of the RfD. Generally speaking, the Agency has no cause for concern if
anticipated residues contribution for all published and proposed
tolerances is less than the RfD.
Because of the developmental effects seen in animal studies, the
Agency used the mouse teratology study (with a NOEL of 0.06 mg/kg/day
for developmental toxicity for the delta-8,9 isomer) to assess acute
dietary exposure and determine a margin of exposure (MOE) for the
overall U.S. population and certain subgroups. Since the toxicological
end-point pertains to developmental toxicity, the population group of
interest for this analysis is women aged 13 years and above, the
subgroup which most closely approximates women of child-bearing age.
The MOE is calculated as the ratio of the NOEL to the exposure. For
this analysis, the Agency calculated the MOE for the high-end exposures
for women ages 13 years and above. The MOE is 150. Generally speaking,
MOEs greater than 100 for developmental toxicity do not raise concerns.
The metabolism of the chemical in plants and animals for the use is
adequately understood. Secondary residues occurring in livestock and
their by-products are not expected since there are no known animal feed
stock uses for cucurbits. An adequate analytical method (HPLC-
Fluorescence Method) is available for enforcement purposes.The
enforcement methodology has been submitted to the Food and Drug
Administration for publication in the Pesticide Analytical Manual, Vol.
II (PAM II). Because of the long lead time for publication of the
method in PAM II, the analytical methodology is being made available in
the interim to anyone interested in pesticide enforcement when required
from Calvin Furlow, Public Response and Program Resources Branch, Field
Operations Division (7506C), Office of Pesticide Programs, U.S.
Environmental Protection Agency, 401 M St., SW., Washington, DC 20460.
Office location and telephone number: Rm. 1132, CM #2, 1921 Jefferson
Davis Hwy., Arlington, VA 22202, (703)-305-5232.
The tolerances established by amending 40 CFR part 180 will be
adequate to cover residues in or on cucurbits (cucumbers, melons, and
squashes). There are currently no actions pending against the continued
registration of this chemical. The pesticide is considered useful for
the purpose for which it is intended.
Based on the information and data considered, the Agency has
determined that the tolerance established by amending 40 CFR part 180
will protect the public health. Therefore, the tolerance is established
as set forth below.
Any person adversely affected by this regulation may, within 30
days after publication of this document in the Federal Register, file
written objections to the regulation and may also request a hearing on
those objections. Objections and hearing requests must be filed with
the Hearing Clerk, at the address given above (40 CFR 178.20). A copy
of the objections and/or hearing requests filed with the Hearing Clerk
should be submitted to the OPP docket for this rulemaking. The
objections submitted must specify the provisions of the regulation
deemed objectionable and the grounds for the objections (40 CFR
178.25). Each objection must be accompanied by the fee prescribed by 40
CFR 180.33(i). If a hearing is requested, the objections must include a
statement of the factual issue(s) on which a hearing is requested, the
requestor's contentions on such issues, and a summary of any evidence
relied upon by the objector (40 CFR 178.27). A request for a hearing
will be granted if the Administrator determines that the material
submitted shows the following: There is genuine and substantial issue
of fact; there is a reasonable possibility that available evidence
identified by the requestor would, if established, resolve one or more
of such issues in favor of the requestor, taking into account
uncontested claims or facts to the contrary; and resolution of the
factual issue(s) in the manner sought by the requestor would be
adequate to justify the action requested (40 CFR 178.32).
A record has been established for this rulemaking under the docket
number [PP 4F4354/R2196] (including any comments and data submitted
electronically). A public version of this record, including printed,
paper versions of electronic comments, which does not include any
information claimed as CBI, is available for inspection from 8 a.m. to
4:30 p.m., Monday through Friday, excluding legal holidays. The public
record is located in
[[Page 9352]]
Room 1132 of the Public Response and Program Resources Branch, Field
Operations Division (7506C), Office of Pesticide Programs,
Environmental Protection Agency, Crystal Mall #2, 1921 Jefferson Davis
Highway, Arlington, VA 22202.
The official record for this rulemaking, as well as the public
version, as described above will be kept in paper form. Accordingly,
EPA will transfer any copies of objections and hearing requests
received electronically into printed, paper form as they are received
and will place the paper copies in the official rulemaking record which
will also include all comments submitted directly in writing. The
official rulemaking record is the paper record maintained at the
address in ``ADDRESSES'' at the beginning of this document.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to all the requirements of the Executive Order
(i.e., Regulatory Impact Analysis, review by the Office of Management
and Budget (OMB)). Under section 3(f), the order defines
``significant'' as those actions likely to lead to a rule: (1) Having
an annual effect on the economy of $100 million or more, or adversely
and materially affecting a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local or tribal governments or communities (also known as
``economically significant''); (2) creating serious inconsistency or
otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement,
grants, user fees, or loan programs; or (4) raising novel legal or
policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in this Executive Order.
Pursuant to the terms of this Executive Order, EPA has determined
that this rule is not ``significant'' and is therefore not subject to
OMB review.
Pursuant to the requirements of the Regulatory Flexibility Act
(Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C. 601-612), the Administrator
has determined that regulations establishing new tolerances or raising
tolerance levels or establishing exemptions from tolerance requirements
do not have a significant economic impact on a substantial number of
small entities. A certification statement to this effect was published
in the Federal Register of May 4, 1981 (46 FR 24950).
List of Subjects in 40 CFR Part 180
Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.
Dated: February 23, 1996.
Peter Caulkins,
Acting Director, Registration Division, Office of Pesticide Programs.
Therefore, 40 CFR part 180 is amended as follows:
PART 180--[AMENDED]
1. The authority citation for part 180 continues to read as
follows:
Authority: 21 U.S.C. 346a and 371.
2. In Sec. 180.449, by amending the table in paragraph (b) by
adding alphabetically an entry for cucurbits, to read as follows:
Sec. 180.449 Avermectin B1 and its delta-8,9-isomer; tolerances
for residues.
* * * * *
(b) * * *
------------------------------------------------------------------------
Parts per
Commodity million
------------------------------------------------------------------------
* * * * *
Cucurbits (cucumbers, mellons, and squashes)............... 0.005
* * * * *
------------------------------------------------------------------------
[FR Doc. 96-5540 Filed 3-7-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-5539 Food Additive Regulation for Sulfonium, trimethyl-salt with N- (phosphonomethyl)glycine (1:1) (formerly glyphosate-trimesium/ sulfosate)
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9357-9359]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5539]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 185
[FAP 1H5606/R2211; FRL-5353-3]
RIN 2070-AB78
Food Additive Regulation for Sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1) (formerly glyphosate-trimesium/
sulfosate)
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: These regulations establish a food additive regulation for the
residues of the herbicide sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1) (formerly glyphosate-trimesium/
sulfosate) in or on the processed commodity raisins. The regulation to
establish maximum permissible levels for residues of the pesticide in
or on the commodity was requested in a petition submitted by Zeneca AG
Products.
EFFECTIVE DATE: This regulation becomes effective March 8, 1996.
ADDRESSES: Written objections and hearing requests, identified by the
document control number, [FAP 1H5606/R2211], may be submitted to:
Hearing Clerk (1900), Environmental Protection Agency, Rm. M3708, 401 M
St., SW., Washington, DC 20460. A copy of any objections and hearing
requests filed with the Hearing Clerk should be identified by the
document control number and submitted to: Public Response and Program
Resources Branch, Field Operations Division (7506C), Office of
Pesticide Programs, Environmental Protection Agency, 401 M St., SW.,
Washington , DC 20460. In person, bring copy of objections and hearing
requests to Rm. 1132, CM #2, 1921 Jefferson Davis Hwy., Arlington, VA
22202. Fees accompanying objections shall be labeled ``Tolerance
Petition Fees'' and forwarded to: EPA Headquarters Accounting
Operations Branch, OPP (Tolerance Fees), P.O. Box 360277M, Pittsburgh,
PA 15251. An electronic copy of objections and hearing requests filed
with the Hearing Clerk may be submitted to OPP by sending electronic
mail (e-mail) to: [email protected].
Copies of electronic objections and hearing requests must be
submitted as an ASCII file avoiding the use of special characters and
any form of encryption. Copies of electronic objections and hearing
requests will also be accepted on disks in WordPerfect 5.1 file format
or ASCII file format. All copies of electronic objections and hearing
requests must be identified by the docket number [FAP 1H5606/R2211] .
No Confidential Business Information (CBI) should be submitted through
e-mail. Copies of electronic objections and hearing requests on this
rule may be filed online at many Federal Depository Libraries.
Additional information on electronic submissions can be found below in
this document.
FOR FURTHER INFORMATION CONTACT: By mail: Robert J. Taylor, Product
Manager (PM) 25, Registration Division (7505C), Office of Pesticide
Programs, Environmental Protection Agency, 401 M St. SW., Washington,
DC 20460. Office location and telephone number: Rm. 241, CM #2, 1921
Jefferson Davis Highway, Arlington, VA 22202, (703) 305-6027; e-mail:
taylor.robert @epamail.epa.gov.
SUPPLEMENTARY INFORMATION: EPA issued a notice (PF-638; FRL-4986-8),
published in the Federal Register of November 15, 1995 (60 FR 57422),
which announced that Zeneca AG Products, 1800 Concord Pike, P.O. Box
15458, Wilmington, DE 19850-5458, had submitted a food additive
petition (FAP) 1H5606 to EPA requesting that the Administrator,
pursuant to section 409(e) of the FFDCA (21 U.S.C. 348), amend 40 CFR
part 185 by establishing a food additive regulation for the residues of
the herbicide sulfonium, trimethyl-salt with N-(phosphonomethyl)glycine
(1:1) (formerly glyphosate-trimesium/sulfosate), in or on the processed
food commodity raisins at 0.20 ppm (of which no more than 0.05 ppm is
trimethylsulfonium).
[[Page 9358]]
The scientific data submitted in the petition and other relevant
material have been evaluated. The toxicological data considered in
support of the tolerance include:
1. Several acute toxicology studies placing technical grade
sulfonium, trimethyl-salt with N-(phosphonomethyl)glycine (1:1) in
Toxicity Category III and Toxicity Category IV.
2. A subchronic feeding study with dogs fed dosage levels of 0, 2,
10 and 50 milligrams/kilogram/day (mg/kg/day) with a no observable
effect level (NOEL) of 10 mg/kg/day.
3. A chronic feeding/carcinogenicity study in male and female rats
fed dosage levels of 0, 100, 500 and 1,000 parts per million (ppm) (0,
4.2, 21.2 or 41.8 mg/kg/day in males and 0, 5.4, 27.0 or 55.7 mg/kg/day
in females) with no carcinogenic effects observed under the conditions
of the study at dose levels up to and including the 1,000 ppm highest
dose tested (HDT) and a systemic NOEL of 1,000 ppm. There were no
biologically significant effects observed in the study. The study was
considered to be acceptable because the highest dose level tested was
approaching one half of what would be considered an adequate dose level
for carcinogenicity testing and because there was no indication of any
carcinogenic response to warrant repeat of the study. This assessment
was based on toxic effects observed in the subchronic and reproductive
toxicity studies in rats at higher dose levels.
4. A chronic feeding/carcinogenicity study in male and female mice
fed dosage levels of 0, 100, 1,000 and 8,000 ppm (0, 11.7, 118 or 991
mg/kg/day in males and 0, 16, 159 or 1,341 mg/kg/day in females) with
no carcinogenic effects observed under the conditions of the study at
dose levels up to and including the 8,000 ppm HDT (highest dose may
have been excessive) and systemic NOEL of 1,000 ppm based on decreases
in body weight and feed consumption (both sexes), increases in the
incidences of white matter degeneration in the lumbar spinal cord
(males only), and increased incidences of duodenal epithelial
hyperplasia (females only).
5. A developmental toxicity study in rats given doses of 0, 30, 100
and 333 mg/kg/day with a developmental NOEL of 100 mg/kg/day based on
significant decreases in fetal body weight, and a maternal NOEL of 100
mg/kg/day based on undetermined deaths of 2 dams at HDT; decreases in
body weight, body weight gain and feed intake; and increased
salivation, chromorhinorrhea and lethargy (HDT).
6. A developmental toxicity study in rabbits given doses of 0, 10,
40 and 100 mg/kg/day with a developmental NOEL of 40 mg/kg/day based on
4 abortions and a reduction in the number of live fetuses/doe. In
addition, there were only 7 litters available for examination. This was
not a sufficiently high number of animals to absolutely conclude that
no developmental toxicity was occurring at the highest dose level. The
maternal NOEL was 40 mg/kg/day based on 6 deaths/17 pregnant does, 4
abortions in 11 survivors and decreased body weight, body weight gain
and food consumption.
7. A 2-generation reproduction study with rats fed dosage rates of
0, 150, 800 and 2,000 ppm (0, 6.1, 35 or 88.5) mg/kg/day in males and
0, 8, 41 or 98 mg/kg/day in females) with a reproductive/developmental
NOEL of 150 ppm based on decreased litter size in the F0a and F1b
litters at 2,000 ppm and on decreased mean pup weights during lactation
in the second litters at 800 ppm and in all litters at 2,000 ppm; and a
systemic NOEL of 150 ppm based on reduced feed intake, body weights and
body weight gains and reduced absolute and sometimes relative thymus,
heart, liver and kidney weights.
8. Mutagenicity data included two Ames tests with Salmonella
typhimurium; a sex linked recessive lethal test with Drosophila
melanoga; a forward mutation (mouse lymphoma) test; an in vivo bone
marrow cytogenetics test in rats; a micronucleus assay in mice; an in
vitro chromosomal aberration test in Chinese hamster ovary cells (CHO)
(no aberrations were observed either with or without S9 activation and
there were no increases in sister chromatid exchanges); and a
morphological transformation test in mice (all negative).
The reference dose (RfD) based on a chronic dog feeding study (NOEL
of 10 mg/kg body weight (bwt)/day) and using a hundred-fold safety
factor is calculated to be 0.1 mg/kg bwt/day. The theoretical maximum
residue contribution (TMRC) for all proposed tolerances (almond hulls;
imported bananas; citrus fruit group; corn; eggs; grapes; fat/meat by-
products/meat of cattles, goats, hogs, horses and sheep; pome fruit
group; poultry fat, liver, meat by-products and meat; soybeans; stone
fruit group; tree nut group; and wheat; and food additive regulations
(prunes, raisins and soybean hulls) is 0.019760 mg/kg/day or 19.760
percent of the RfD for the overall U.S. population. For U.S. subgroup
populations, nonnursing infants and children 1 to 6 years of age, the
current action, previously proposed tolerances and food additive
regulations utilize a total of 0.044461 mg/kg/day and 44.461 percent of
the RfD, assuming that residue levels are at the established tolerance
levels and that 100 percent of the crop is treated.
The RfD/Peer Review Committee, in a consensus review dated July 26,
1994, classified sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1) as a Group E carcinogen based on no
evidence of carcinogenicity in rat and mouse studies.
An adequate analytical method, gas chromatography for the cation
and liquid chromatography for the anion and its metabolite AMPA, is
available for enforcement purposes, and the methodology will be
published in the Pesticide Analytical Manual (PAM), Vol. II.
There are presently no actions pending against the continued
registration of this chemical.
Based on the information and data considered, the Agency has
determined that the establishment of a food additive regulation by
amending 40 CFR part 185 will be safe. Therefore, the tolerance is
established as set forth below.
Any person adversely affected by this regulation may, within 30
days after publication of this document in the Federal Register, file
written objections to the regulation and may also request a hearing on
those objections. Objections and hearing requests must be filed with
the Hearing Clerk, at the address given above (40 CFR 178.20). A copy
of the objections and/or hearing requests filed with the Hearing Clerk
should be submitted to the OPP docket for this rulemaking. The
objections submitted must specify the provisions of the regulation
deemed objectionable and the grounds for the objections (40 CFR
178.25). Each objection must be accompanied by the fee prescribed by 40
CFR 180.33(i). If a hearing is requested, the objections must include a
statement of the factual issue(s) on which a hearing is requested, the
requestor's contentions on such issues, and a summary of any evidence
relied upon by the objector (40 CFR 178.27). A request for a hearing
will be granted if the Administrator determines that the material
submitted shows the following: There is genuine and substantial issue
of fact; there is a reasonable possibility that available evidence
identified by the requestor would, if established, resolve one or more
of such issues in favor of the requestor, taking into account
uncontested claims or facts to the contrary; and resolution of the
factual issue(s) in the manner sought by the requestor would be
adequate to justify the action requested (40 CFR 178.32).
[[Page 9359]]
A record has been established for this rulemaking under the docket
number [FAP 1H5606/R2211] (including any comments and data submitted
electronically). A public version of this record, including printed,
paper versions of electronic comments, which does not include any
information claimed as CBI, is available for inspection from 8 a.m. to
4:30 p.m., Monday through Friday, excluding legal holidays. The public
record is located in Room 1132 of the Public Response and Program
Resources Branch, Field Operations Division (7506C), Office of
Pesticide Programs, Environmental Protection Agency, Crystal Mall #2,
1921 Jefferson Davis Highway, Arlington, VA.
The official record for this rulemaking, as well as the public
version, as described above will be kept in paper form. Accordingly,
EPA will transfer any copies of objections and hearing requests
received electronically into printed, paper form as they are received
and will place the paper copies in the official rulemaking record which
will also include all comments submitted directly in writing. The
official rulemaking record is the paper record maintained at the
address in ``ADDRESSES'' at the beginning of this document.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to all the requirements of the Executive Order
(i.e., Regulatory Impact Analysis, review by the Office of Management
and Budget (OMB)). Under section 3(f), the order defines
``significant'' as those actions likely to lead to a rule (1) having an
annual effect on the economy of $100 million or more, or adversely and
materially affecting a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local or tribal governments or communities (also known as
``economically significant''); (2) creating serious inconsistency or
otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement,
grants, user fees, or loan programs; or (4) raising novel legal or
policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in this Executive Order.
Pursuant to the terms of this Executive Order, EPA has determined
that this rule is not ``significant'' and is therefore not subject to
OMB review.
Pursuant to the requirements of the Regulatory Flexibility Act
(Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C. 601-612), the Administrator
has determined that regulations establishing new tolerances or raising
tolerance levels or establishing exemptions from tolerance
requirements, or establishing or raising food additive regulations do
not have a significant economic impact on a substantial number of small
entities. A certification statement to this effect was published in the
Federal Register of May 4, 1981 (46 FR 24950).
List of Subjects in 40 CFR Part 185
Environmental protection, Administrative practice and procedure,
Agricultural commodities, Food additive, Pesticides and pests,
Reporting and recordkeeping requirements.
Dated: February 23, 1996.
Peter Caulkins,
Acting Director, Registration Division, Office of Pesticide Programs.
Therefore, chapter I, part 185 of title 40 of the Code of Federal
Regulations is amended as follows:
PART 185--[AMENDED]
1. In part 185:
a. The authority citation for part 185 continues to read as
follows:
Authority: 21 U.S.C. 346a and 348.
b. By adding Sec. 185.5375, Sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1), to read as follows:
Sec. 185.5375 Sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1).
(a) Food additive regulation is established for residues of the
herbicide sulfonium, trimethyl-salt with N-(phosphonomethyl)glycine
(1:1) (formerly glyphosate-trimesium/sulfosate) in or on the following
processed commodities:
------------------------------------------------------------------------
Parts per
Commodities million
------------------------------------------------------------------------
Raisins (of which no more than 0.05 ppm is
trimethylsulfonium........................................ 0.20
------------------------------------------------------------------------
(b) [Reserved]
[FR Doc. 96-5539 Filed 3-7-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-5537 Pesticide Tolerances for Sulfonium, trimethyl-salt with N- (phosphonomethyl)glycine (1:1)
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9352-9355]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5537]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 180
[PP 9F3796, 5E4479, 4F4343, 0F3890, 0F3860 and 1F3950/R2212; FRL-5353-
4]
RIN 2070-AB78
Pesticide Tolerances for Sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1)
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule establishes permanent tolerances for residues of the
herbicide sulfonium, trimethyl-salt with N-(phosphonomethyl)glycine
(1:1) [formerly glyphosate-trimesium/ sulfosate] in or on the raw
agricultural commodities almond hulls, imported bananas, the citrus
fruit group, grapes and the tree nut group. In addition, this
regulation establishes a two year time-limited tolerance for residues
of this herbicide on the raw agricultural commodities corn, and
animals. The regulations to establish a maximum permissible level for
residues of the herbicide was requested in several petitions submitted
by Zeneca AG Products.
EFFECTIVE DATE: This regulation becomes effective March 8, 1996.
ADDRESSES: Written objections and hearing requests, identified by the
document control number, [PP 9F3796, 5E4479, 4F4343, 0F3890, 0F3860 and
1F3950/R2212], may be submitted to: Hearing Clerk (1900), Environmental
Protection Agency, Rm. M3708, 401 M St., SW., Washington, DC 20460. A
copy of any objections and hearing requests filed with the Hearing
Clerk should be identified by the document control number and submitted
to: Public Response and Program Resources Branch, Field Operations
Division (7506C), Office of Pesticide Programs, Environmental
Protection Agency, 401 M St., SW., Washington , DC 20460. In person,
bring copy of objections and hearing requests to Rm. 1132, CM #2, 1921
Jefferson Davis Hwy., Arlington, VA 22202. Fees accompanying objections
shall be labeled ``Tolerance Petition Fees'' and forwarded to: EPA
Headquarters Accounting Operations Branch, OPP (Tolerance Fees), P.O.
Box 360277M, Pittsburgh, PA 15251.
An electronic copy of objections and hearing requests filed with
the Hearing Clerk may be submitted to OPP by sending electronic mail
(e-mail) to: [email protected]
Copies of electronic objections and hearing requests must be
submitted as an ASCII file avoiding the use of special characters and
any form of encryption. Copies of electronic objections and hearing
requests will also be accepted on disks in WordPerfect 5.1 file format
or ASCII file format. All copies of electronic objections and hearing
requests must be identified by the docket number [PP 9F3796, 5E4479,
4F4343, 0F3890, 0F3860 and 1F3950/R2212]. No Confidential Business
Information (CBI) should be submitted through e-mail. Copies of
electronic objections and hearing requests on this rule may be filed
online at many Federal Depository Libraries. Additional information on
electronic submissions can be found below in this document.
FOR FURTHER INFORMATION CONTACT: By mail: Robert J. Taylor, Product
Manager (PM) 25, Registration Division (7505C), Office of Pesticide
Programs, Environmental Protection Agency, 401 M St., SW., Washington,
DC 20460. Office location and telephone number: Rm. 241, CM #2, 1921
Jefferson Davis Highway, Arlington, VA 22202 (703)
[[Page 9353]]
305-6027; e-mail: [email protected].
SUPPLEMENTARY INFORMATION: EPA issued the following notices (PF-643;
FRL-4986-8), published in the Federal Register of November 15, 1995,
(60 FR 57422) which announced that Zeneca AG Products, 1800 Concord
Pike, P.O. Box 15458, Wilmington, DE 19850-5458, had submitted
pesticide petitions to EPA requesting that the Administrator, pursuant
to section 408(d) of the Federal Food, Drug, and Cosmetic Act (FFDCA),
21 U.S.C. 346a(d ), establish a tolerance for the residues of the
herbicide sulfonium, trimethyl-salt with N-(phosphonomethyl)glycine
(1:1) [formerly glyphosate-trimesium/ sulfosate, in or on certain raw
agricultural commodities:
1. PP 0F3890. Originaly published in the Federal Register of
January 16, 1991 (56 FR 1632), the notice proposed establishing a
regulation to permit residues of the herbicide sulfonium, trimethyl-
salt with N-(phosphonomethyl)glycine (1:1) in or on the citrus fruit
group at 0.5 ppm. The November 15, 1995 notice amended this petition by
proposing a regulation to permit residues in or on the raw agricultural
commodities citrus fruits at 0.05 ppm.
2. PP 1F3950. Originally published in the Federal Register of April
3, 1991 (56 FR 13642), the notice proposed establishing a regulation to
permit residues of the herbicide sulfonium, trimethy-salt with N-
(phosphonomethyl)glycine (1:1) in or on grapes at 0.2 ppm. The November
15, 1995 notice amended the petition by proposing to establish a
regulation to permit the residues of the herbicide in or on raw
agricultural commodity grapes at 0.1 ppm.
3. PP 4F4343. Proposed establishing a regulation to permit residues
of the herbicide sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1) in or on the tree nut group at 0.05 ppm
and almond hulls at 2.00 ppm (of which no more than 0.5 ppm is
trimethylsulfonium). However, based on the available residue data, the
appropriate tolerance for almond hulls is 1.0 ppm (of which no more
than 0.3 ppm is trimethylsulfonium). Zeneca AG Products have
resubmitted a revised Section F for this petition.
4. PP 9F3796. Published in the Federal Register of April 12, 1990,
(55 FR 13829), the notice proposed establishing a regulation to permit
residues of the herbicide sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1) in or on corn grain at 0.1 parts per
million (ppm) and corn forage and corn fodder at 0.2 ppm.
5. PP 5E4479. Proposed establishing a regulation to permit residues
of the herbicide sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1) in or on imported bananas at 0.05 parts
per million (ppm).
6. PP 9F3796. Originally published in the Federal Register of April
12, 1990, (55 FR 13829), the notice proposed establishing a regulation
to permit residues of the herbicide sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1) in or on corn grain at 0.1 parts per
million (ppm) and corn forage and corn fodder at 0.2 ppm. This petition
was amended by the November 15, 1995 notice by proposing to establish
tolerances in or on corn grain at 0.2 ppm (of which no more than 0.10
is trimethylsulfonium); corn fodder at 0.3 ppm (of which no more than
0.20 is trimethylsulfonium); and corn forage at 0.1 ppm.
7. PP 0F3860. Published in the Federal Register of November 15,
1995 (60 FR 57423), the notice proposed establishing a regulation to
permit residues of the herbicide sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1) in or on the raw agricultural
commodities for animals as part of the soybean petition for milk and
meat at 0.2 ppm, meat by-products at 1.00 ppm, fat at 0.10 ppm of
cattle, goats, hogs, horses and sheep; eggs at 0.02 ppm, poultry fat,
poultry liver and poultry meat at 0.05 ppm; and poultry meat by-
products (except liver) at 0.10 ppm.
There were no comments or requests for referral to an advisory
committee received in response to these notices of filing.
The scientific data submitted in the petition and other relevant
material have been evaluated. The toxicological data considered in
support of the tolerance include:
1. Several acute toxicology studies placing technical grade
sulfonium, trimethyl-salt with N-(phosphonomethyl)glycine (1:1) in
Toxicity Category III and Toxicity Category IV.
2. A subchronic feeding study with dogs fed dosage levels of 0, 2,
10 and 50 milligrams/kilogram/day (mg/kg/day) with no observable effect
level (NOEL) of 10 mg/kg/day.
3. A chronic feeding/carcinogenicity study in male and female rats
fed dosage levels of 0, 100, 500 and 1000 ppm (0, 4.2, 21.2 or 41.8 mg/
kg/day in males and 0, 5.4, 27.0 or 55.7 mg/kg/day in females) with no
carcinogenic effects observed under the conditions of the study at dose
levels up to and including the 1000 ppm highest dose tested (HDT) and a
systemic NOEL of 1000 ppm. There were no biologically significant
effects observed in the study. The study was considered to be
acceptable because the highest dose level tested was approaching one
half of what would be considered an adequate dose level for
carcinogenicity testing and because there was no indication of any
carcinogenic response to warrant repeat of the study. This assessment
was based on toxic effects observed in the subchronic and reproductive
toxicity studies in rats at higher dose levels.
4. A chronic feeding/carcinogenicity study in male and female mice
fed dosage levels of 0, 100, 1000 and 8,000 ppm (0, 11.7, 118 or 991
mg/kg/day in males and 0, 16, 159 or 1,341 mg/kg/day in females) with
no carcinogenic effects observed under the conditions of the study at
dose levels up to and including the 8000 ppm HDT (highest dose may have
been excessive) and systemic NOEL of 1000 ppm based on decreases in
body weight and feed consumption (both sexes), increases in the
incidences of white matter degeneration in the lumbar spinal cord
(males only), and increased incidences of duodenal epithelial
hyperplasia (females only).
5. A developmental toxicity study in rats given doses of 0, 30, 100
and 333 mg/kg/day with a developmental NOEL of 100 mg/kg/day based on
significant decreases in fetal body weight, and a maternal NOEL of 100
mg/kg/day based on undetermined deaths of 2 dams at HDT; decreases in
body weight, body weight gain and feed intake; and increased
salivation, chromorhinorrhea and lethargy (HDT).
6. A developmental toxicity study in rabbits given doses of 0, 10,
40 and 100 mg/kg/day with a developmental NOEL of 40 mg/kg/day based on
4 abortions and a reduction in the number of live fetuses/doe. In
addition, there were only 7 litters available for examination. This was
not a sufficiently high number of animals to absolutely conclude that
no developmental toxicity was occuring at the highest dose level. The
maternal NOEL was 40 mg/kg/day based on 6 deaths/17 pregnant does, 4
abortions in 11 survivors and decreased body weight, body weight gain,
food consumption.
7. A two generation reproduction study in rats fed dosage rates of
0, 150, 800 and 2,000 ppm (0, 6.1, 35.0 or 88.5 mg/kg/day in males and
0, 8.0, 41.0 or 98.0 mg/kg/day in females) with a reproductive/
developmental NOEL of 150 ppm based on decreased litter size in the F0a
and F1b litters at 2,000 ppm and on decreased mean pup weights during
lactation in the second litters at
[[Page 9354]]
800 ppm and in all litters at 2000 ppm; and a systemic NOEL of 150 ppm
based on reduced feed intake, body weights and body weight gains and
reduced absolute and sometimes relative thymus, heart, liver and kidney
weights.
8. Mutagenicity data included two Ames tests with Salmonella
typhimurium; a sex linked recessive lethal test with Drosophila
melanoga; a forward mutation (mouse lymphoma) test; an in vivo bone
marrow cytogenetics test in rats; a micronucleus assay in mice; an in
vitro chromosomal aberration test in Chinese hamster ovary cells (CHO)
(no aberrations were observed either with or without S9 activation and
there were no increases in sister chromatid exchanges); and a
morphological transformation test in mice (all negative).
The reference dose (RfD) based on a chronic dog feeding study (NOEL
of 10 mg/kg body weight (bwt)/day) and using a hundred-fold safety
factor is calculated to be 0.1 mg/kg bwt/day. The theoretical maximum
residue contribution (TMRC) for all proposed tolerances (almond hulls;
imported bananas; citrus fruit group; corn; eggs; grapes; fat/meat by-
products/meat of cattle, goats, hogs, horses and sheep; pome fruit
group; poultry fat,liver, meat by-products and meat; soybeans; stone
fruit group; tree nut group; and wheat; and food additive regulations
(prunes, raisins and soybean hulls) is 0.019825 mg/kg/day or 19.825
percent of the RfD for the overall U.S. population. For U.S. subgroup
populations, nonnursing infants and children 1 to 6 years of age, the
current action, previously proposed tolerances and food additive
regulations utilize a total of 0.044625 mg/kg/day and 44.625 percent of
the RfD, assuming that residue levels are at the established tolerance
levels and that 100 percent of the crop is treated.
The RfD/Peer Review Committee, in a consensus review dated July 26,
1994, classified sulfonium, trimethyl-salt with N-
(phosphonomethyl)glycine (1:1) as a Group E carcinogen based on no
evidence of carcinogenicity in rat and mouse studies.
An adequate analytical method, gas chromatography for the cation
and liquid chromatography for the anion and its metabolite AMPA, is
available for enforcement purposes and will be published in the
Pesticide Analytical Manual (PAM), Vol. II.
There are presently no actions pending against the continued
registration of this chemical.
Based on the information and data considered, the Agency has
determined that the tolerances established by amending 40 CFR part 180
will protect the public health . Therefore, the tolerances are
established as set forth below.
Any person adversely affected by this regulation may, within 30
days after publication of this document in the Federal Register, file
written objections to the regulation and may also request a hearing on
those objections. Objections and hearing requests must be filed with
the Hearing Clerk, at the address given above (40 CFR 178.20). A copy
of the objections and/or hearing requests filed with the Hearing Clerk
should be submitted to the OPP docket for this rulemaking. The
objections submitted must specify the provisions of the regulation
deemed objectionable and the grounds for the objections (40 CFR
178.25). Each objection must be accompanied by the fee prescribed by 40
CFR 180.33(i). If a hearing is requested, the objections must include a
statement of the factual issue(s) on which a hearing is requested, the
requestor's contentions on such issues, and a summary of any evidence
relied upon by the objector (40 CFR 178.27). A request for a hearing
will be granted if the Administrator determines that the material
submitted shows the following: There is genuine and substantial issue
of fact; there is a reasonable possibility that available evidence
identified by the requestor would, if established, resolve one or more
of such issues in favor of the requestor, taking into account
uncontested claims or facts to the contrary; and resolution of the
factual issue(s) in the manner sought by the requestor would be
adequate to justify the action requested (40 CFR 178.32).
A record has been established for this rulemaking under the docket
number [PP 9F3796, 5E4479, 4F4343, 0F3890, 0F3860 and 1F3950/R2212]
(including any comments and data submitted electronically). A public
version of this record, including printed, paper versions of electronic
comments, which does not include any information claimed as CBI, is
available for inspection from 8 a.m. to 4 p.m., Monday through Friday,
excluding legal holidays. The public record is located in Room 1132 of
the Public Response and Program Resources Branch, Field Operations
Division (7506C), Office of Pesticide Programs, Environmental
Protection Agency, Crystal Mall #2, 1921 Jefferson Davis Highway,
Arlington, VA.
The official record for this rulemaking, as well as the public
version, as described above will be kept in paper form. Accordingly,
EPA will transfer any copies of objections and hearing requests
received electronically into printed, paper form as they are received
and will place the paper copies in the official rule-making record
which will also include all comments submitted directly in writing. The
official rulemaking record is the paper record maintained at the
address in ``ADDRESSES'' at the beginning of this document.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to all the requirements of the Executive Order
(i.e., Regulatory Impact Analysis, review by the Office of Management
and Budget (OMB)). Under section 3(f), the order defines
``significant'' as those actions likely to lead to a rule (1) having an
annual effect on the economy of $100 million or more, or adversely and
materially affecting a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local or tribal governments or communities (also known as
``economically significant''); (2) creating serious inconsistency or
otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement,
grants, user fees, or loan programs; or (4) raising novel legal or
policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in this Executive Order.
Pursuant to the terms of this Executive Order, EPA has determined
that this rule is not ``significant'' and is therefore not subject to
OMB review.
Pursuant to the requirements of the Regulatory Flexibility Act
(Pub. L. 9-354, 94 Stat. 1164, 5 U.S.C. 601-612), the Administrator has
determined that regulations establishing new tolerances or raising
tolerance levels or establishing exemptions from tolerance requirements
do not have a significant economic impact on a substantial number of
small entities. A certification statement to this effect was published
in the Federal Register of May 4, 1981 (46 FR 24950).
[[Page 9355]]
List of Subjects in 40 CFR Part 180
Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.
Dated: February 23, 1996.
Peter Caulkins,
Acting Director, Registration Division, Office of Pesticide Programs.
Therefore, 40 CFR part 180 is amended as follows:
PART 180--[AMENDED]
1. The authority citation for part 180 continues to read as
follows:
Authority: 21 U.S.C. 346a and 371.
2. Section 180.489, is added to subpart C to read as follows:
Sec. 180.489 Sulfonium, trimethyl-salt with N-(phosphonomethyl)glycine
(1:1); tolerances for residues.
(a) Tolerances are established for residues of the
herbicideSulfonium, trimethyl-salt with N-(phosphonomethyl)glycine
(1:1)in or on the following raw agricultural products:
------------------------------------------------------------------------
Parts per
Commodities million
------------------------------------------------------------------------
Almond, hulls, (of which no more than 0.3 ppm is
trimethylsulfonium)....................................... 1.00
Bananas (imported only)a................................... 0.05
Citrus fruit group,........................................ 0.05
Grapes,.................................................... 0.10
Tree nut group,............................................ 0.05
------------------------------------------------------------------------
a There are no U.S. registrations as of the date of publication of the
tolerance in the Federal Register.
(b) Time-limited tolerances to expire March 9, 1998, are
established for the residues of the herbicide sulfonium, trimethyl-salt
with N-(phosphonomethyl)glycine (1:1) in or on the following raw
agricultural commodities:
------------------------------------------------------------------------
Parts per
Commodities million
------------------------------------------------------------------------
Cattle, fat................................................ 0.10
Cattle, mbyp............................................... 1.00
Cattle, meat............................................... 0.20
Corn, fodder (of which no more than 0.20 ppm is
trimethylsulfonium)....................................... 0.30
Corn, forage............................................... 0.10
Corn, grain (of which no more than 0.10 is
trimethylsulfonium)....................................... 0.20
Eggs....................................................... 0.02
Goats, fat................................................. 0.10
Goats, mbyp................................................ 1.00
Goats, meat................................................ 0.20
Hogs, fat.................................................. 0.10
Hogs, mbyp................................................. 1.00
Hogs, meat................................................. 0.20
Horses, fat................................................ 0.10
Horses, mbyp............................................... 1.00
Horses, meat............................................... 0.20
Milk....................................................... 0.20
Poultry, fat............................................... 0.05
Poultry, liver............................................. 0.05
Poultry, mbyp.............................................. 0.10
Poultry, meat.............................................. 0.05
Sheep, fat................................................. 0.10
Sheep, mbyp................................................ 1.00
Sheep, meat................................................ 0.20
------------------------------------------------------------------------
[FR Doc. 96-5537 Filed 3-7-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-5535 1,2-Ethanediamine, Polymer With Oxirane and Methyloxirane; Tolerance Exemption
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9355-9357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5535]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 180
[OPP-300401A; FRL-4993-2]
RIN 2070-AB78
1,2-Ethanediamine, Polymer With Oxirane and Methyloxirane;
Tolerance Exemption
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule establishes an exemption from the requirement of a
tolerance for residues of 1,2-ethanediamine, polymer with oxirane and
methyloxirane (CAS Reg. No. 26316-40-5) when used as an inert
ingredient (surfactant and dispersing agent) in pesticide formulations
applied to growing crops or to raw agricultural commodities after
harvest and to animals, under 40 CFR 180.1001(c) and (e). The BASF
Corp. requested this proposed regulation pursuant to the Federal Food,
Drug and Cosmetic Act (FFDCA).
EFFECTIVE DATE: This regulation becomes effective March 8, 1996.
ADDRESSES: Written objections and hearing requests, identified by the
document control number, [OPP-300401A], may be submitted to: Hearing
Clerk (1900), Environmental Protection Agency, Rm. M3708, 401 M St.,
SW., Washington, DC 20460. A copy of any objections and hearing
requests filed with the Hearing Clerk should be identified by the
document control number and submitted to: Public Response and Program
Resources Branch, Field Operations Division (7506C), Office of
Pesticide Programs, Environmental Protection Agency, 401 M St., SW.,
Washington, DC 20460. In person, bring a copy of objections and hearing
requests to Rm. 1132, CM #2, 1921 Jefferson Davis Hwy., Arlington, VA
22202. Fees accompanying objections shall be labeled ``Tolerance
Petition Fees'' and forwarded to: EPA Headquarters Accounting
Operations Branch, OPP (Tolerance Fees), P.O. Box 360277M, Pittsburgh,
PA 15251. An electronic copy of objections and hearing requests filed
with the Hearing Clerk may be submitted to OPP by sending electronic
mail (e-mail) to: [email protected].
Copies of electronic objections and hearing requests must be
submitted as an ASCII file avoiding the use of special characters and
any form of encryption. Copies of electronic objections and hearing
requests will also be accepted on disks in WordPerfect 5.1 file format
or ASCII file format. All copies of electronic objections and hearing
requests must be identified by the docket number [OPP-300401A] . No
Confidential Business Information (CBI) should be submitted through e-
mail. Copies of electronic objections and hearing requests on this rule
may be filed online at many Federal Depository Libraries. Additional
information on electronic submissions can be found below in this
document.
FOR FURTHER INFORMATION CONTACT: By mail: Bipin Gandhi, Registration
Support Branch, Registration Division (7505W), Office of Pesticide
Programs, Environmental Protection Agency, 401 M St., SW., Washington,
DC 20460. Office location and telephone number: 2800 Crystal Drive,
North Tower, 6th Floor, Arlington, VA 22202, (703)-308-8380; e-mail:
[email protected].
SUPPLEMENTARY INFORMATION: EPA issued a proposed rule, published in the
Federal Register of November 15, 1995 (60 FR 57377), which announced
that the BASF Corp., 3000 Continental Drive-North, Mount Olive, NJ
07828-1234, had submitted a pesticide petition, PP 5E04579, to EPA
requesting that the Administrator, pursuant to section 408(e) of the
Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a(e),
propose to amend 40 CFR 180.1001(c) and (e) by exempting 1,2-
ethanediamine, polmer with oxirane and methyloxirane (CAS Reg. No.
26316-40-5) when used as an inert ingredient (surfactant and dispersing
agent) in pesticide formulations applied to growing crops or to raw
agricultural commodities after harvest and to animals. These inert
ingredients meet the definition of polymers under 40 CFR 723.250(b) and
the criteria listed in 40 CFR 723.250(e) that define chemical
substances that pose no unreasonable
[[Page 9356]]
risks under section 5 of the Toxic Substance Control Act (TSCA).
Inert ingredients are all ingredients that are not active
ingredients as defined in 40 CFR 153.125, and include, but are not
limited to, the following types of ingredients (except when they have a
pesticidal efficacy of their own): solvents such as alcohols and
hydrocarbons; surfactants such as polyoxyethylene polymers and fatty
acids; carriers such as clay and diatomaceous earth; thickeners such as
carrageenan and modified cellulose; wetting, spreading, and dispersing
agents; propellants in aerosol dispensers; microencapsulating agents;
and emulsifiers. The term ``inert'' is not intended to imply
nontoxicity; the ingredient may or may not be chemically active.
There were no comments or requests for referral to an advisory
committee received in response to the proposed rule.
The data submitted with the proposal and other relevant material
have been evaluated and discussed in the proposed rule. Based on the
data and information considered, the Agency concludes that the
tolerance exemptions will protect the public health. Therefore, the
tolerance exemptions are established as set forth below.
Any person adversely affected by this regulation may, within 30
days after publication of this document in the Federal Register, file
written objections to the regulation and may also request a hearing on
those objections. Objections and hearing requests must be filed with
the Hearing Clerk, at the address given above (40 CFR 178.20). A copy
of the objections and/or hearing requests filed with the Hearing Clerk
should be submitted to the OPP docket for this rulemaking. The
objections submitted must specify the provisions of the regulation
deemed objectionable and the grounds for the objections (40 CFR
178.25). Each objection must be accompanied by the fee prescribed by 40
CFR 180.33(i). If a hearing is requested, the objections must include a
statement of the factual issue(s) on which a hearing is requested, the
requestor's contentions on such issues, and a summary of any evidence
relied upon by the objector (40 CFR 178.27). A request for a hearing
will be granted if the Administrator determines that the material
submitted shows the following: There is genuine and substantial issue
of fact; there is a reasonable possibility that available evidence
identified by the requestor would, if established, resolve one or more
of such issues in favor of the requestor, taking into account
uncontested claims or facts to the contrary; and resolution of the
factual issue(s) in the manner sought by the requestor would be
adequate to justify the action requested (40 CFR 178.32).
EPA has established a record for this rulemaking under docket
number [OPP-300401A] (including any comments and data submitted
electronically). A public version of this record, including printed,
paper versions of electronic comments, which does not include any
information claimed as CBI, is available for inspection from 8 a.m. to
4:30 p.m., Monday through Friday, excluding legal holidays. The public
record is located in Room 1132 of the Public Response and Program
Resources Branch, Field Operations Division (7506C), Office of
Pesticide Programs, Environmental Protection Agency, Crystal Mall #2,
1921 Jefferson Davis Highway, Arlington, VA.
Electronic comments may be sent directly to EPA at:
[email protected].
Electronic comments must be submitted as an ASCII file avoiding the
use of special characters and any form of encryption.
The official record for this rulemaking, as well as the public
version, as described above will be kept in paper form. Accordingly,
EPA will transfer any copies of objections and hearing requests
received electronically into printed, paper form as they are received
and will place the paper copies in the official rulemaking record which
will also include all comments submitted directly in writing. The
official rulemaking record is the paper record maintained at the
address in ``ADDRESSES'' at the beginning of this document.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to all the requirements of the Executive Order
(i.e., Regulatory Impact Analysis, review by the Office of Management
and Budget (OMB)). Under section 3(f), the order defines
``significant'' as those actions likely to lead to a rule (1) having an
annual effect on the economy of $100 million or more, or adversely and
materially affecting a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local or tribal governments or communities (also known as
``economically significant''); (2) creating serious inconsistency or
otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement,
grants, user fees, or loan programs; or (4) raising novel legal or
policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in this Executive Order.
Pursuant to the terms of this Executive Order, EPA has determined
that this rule is not ``significant'' and is therefore not subject to
OMB review.
Pursuant to the requirements of the Regulatory Flexibility Act
(Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C. 601-612), the Administrator
has determined that regulations establishing new tolerances or raising
tolerance levels or establishing exemptions from tolerance requirements
do not have a significant economic impact on a substantial number of
small entities. A certification statement to this effect was published
in the Federal Register of May 4, 1981 (46 FR 24950).
List of Subjects in 40 CFR Part 180
Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.
Dated: February 26, 1996.
Peter Caulkins,
Acting Director, Registration Division, Office of Pesticide Programs.
Therefore, 40 CFR part 180 is amended as follows:
PART 180--[AMENDED]
1. The authority citation for part 180 continues to read as
follows:
Authority: 21 U.S.C. 346a and 371.
2. In Sec. 180.1001, paragraphs (c) and (e) are amended in the
tables therein by adding and alphabetically inserting the following
inert ingredient:
Sec. 180.1001 Exemptions from the requirement of a tolerance.
* * * * *
(c) * * *
[[Page 9357]]
------------------------------------------------------------------------
Inert ingredient Limits Uses
------------------------------------------------------------------------
* * * * * * *
1,2 Ethanediamine, polymer .............. Surfactant, dispersing
with oxirane and agent
methyloxirane (CAS Reg. No.
26316-40-5) minimum number
average molecular weight
2,800 and the range of
number average molecular
weight is 2,800 to 10,000
daltons..
* * * * * * *
------------------------------------------------------------------------
* * * * *
(e) * * *
------------------------------------------------------------------------
Inert ingredient Limits Uses
------------------------------------------------------------------------
* * * * * * *
1,2 Ethanediamine, polymer .............. Surfactant, dispersing
with oxirane and agent
methyloxirane (CAS Reg. No.
26316-40-5) minimum number
average molecular weight
2,800 and the range of
number average molecular
weight is 2,800 to 10,000
daltons..
* * * * * * *
------------------------------------------------------------------------
[FR Doc. 96-5535 Filed 3-7-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-5493 Peanut Butter; Amendment of Standard of Identity
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9323-9325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5493]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 164
[Docket No. 93N-0473]
Peanut Butter; Amendment of Standard of Identity
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is amending the
standard of identity for peanut butter to remove the specific reference
to the addition of vitamins, so that modified peanut butter products
with added vitamins can be made in accordance with the agency's general
definition and standard of identity for food named by the use of a
nutrient content claim (such as ``reduced fat'' or ``reduced calorie'')
in conjunction with the standardized term, peanut butter. This action
will assist consumers in maintaining healthy dietary practices by
providing for modified forms of peanut butter. This action will also
promote honesty and fair dealing in the interest of consumers.
DATES: Effective March 8, 1996.
FOR FURTHER INFORMATION CONTACT: Felicia Satchell, Center for Food
Safety and Applied Nutrition (HFS-158), Food and Drug Administration,
200 C St. SW., Washington, DC 20204, 202-205-5099.
SUPPLEMENTARY INFORMATION:
I. Background
In the Federal Register of February 3, 1994 (59 FR 5153), FDA
published a proposal to amend the standard of identity for peanut
butter in Sec. 164.150 (21 CFR 164.150) to remove the specific
prohibition against added vitamins. The proposal was based on comments
the agency received in response to a final rule that was published in
the Federal Register of January 6, 1993 (58 FR 2066). The comments
noted that the requirements of the general definition and standard of
identity in Sec. 130.10 (21 CFR 130.10) create a problem for firms
interested in producing modified (e.g., ``reduced fat'') peanut butter
products. They pointed out that Sec. 130.10(b) requires that the
modified food may not be nutritionally inferior to the traditional
standardized food, and that Sec. 130.10(d)(3) prohibits the addition of
ingredients that are specifically prohibited by the standard for the
traditional food. Because there is a specific prohibition against the
addition of vitamins to peanut butter in Sec. 164.150(c), modified
peanut butter products that are not nutritionally inferior to peanut
butter could not be made under Sec. 130.10.
To eliminate this problem, FDA proposed to remove the specific
prohibition against the addition of vitamins in the peanut butter
standard. The agency stated in that proposal that removal of the term
``added vitamins'' from Sec. 164.150(c) would allow the addition of
vitamins to modified peanut butter products made to comply with
Sec. 130.10, but that the agency still felt that added vitamins are not
suitable ingredients for peanut butter when the food is used in a
balanced diet. Interested persons were given until April 4, 1994, to
submit comments.
II. Comments
The agency received 12 letters, each containing one or more
comments, from a manufacturer, several trade associations, and food
processors. Seven letters supported the proposal, and five opposed it.
One comment that expressed support for the proposed change suggested an
additional change in the standard of identity for peanut butter, and
others requested clarification of the nutrient requirements for
modified peanut butter. Most of the comments that opposed amendment of
the peanut butter standard cited, as grounds for their opposition,
issues that are outside the scope of this rulemaking (e.g., whether a
modified peanut butter product under the general definition and
standard of identity could or should be made with 90 percent of
peanuts, as required by the standard of identity for peanut butter, and
whether FDA is enforcing its regulations with respect to modified
peanut butter products in the marketplace) and they need not be
addressed here. A summary of the relevant comments and the agency's
responses follow.
1. A comment from a trade association that opposed the proposal
stated that its membership believes it would be misleading if the
standard of identity for peanut butter were changed. It expressed the
opinion that peanut butter is nutritionally sound without vitamin
additives.
The agency agrees that peanut butter is nutritionally sound without
added vitamins. The removal of the specific prohibition against added
vitamins in the peanut butter standard is only to permit their
addition, as necessary, to modified peanut butter products made under
the general definition and standard of identity in Sec. 130.10. FDA
clearly stated in the proposed rule that the removal of this
prohibition would not change the agency's position that added vitamins
are not suitable ingredients in peanut butter when it is not being
modified to reduce, for example, its fat content. Thus, in this final
rule, the agency is merely removing the prohibition on the addition of
vitamins to peanut butter in the standard of identity in Sec. 164.150.
It is not making any provision for the addition of these ingredients to
this food under Sec. 164.150. If vitamins are added to peanut butter,
it would have to be labeled in compliance with Sec. 130.10, i.e.,
``peanut butter with added vitamins.'' Any such addition of vitamins to
the food would have to be consistent with the provisions of the
fortification policy in 21 CFR 104.20, or be otherwise rational.
2. One comment stated that it supported the proposal to remove the
phrase ``added vitamins'' in Sec. 164.150(c), but that the proposal did
not go far enough. It stated that the agency should remove the entire
statement contained in paragraph Sec. 164.150(c), i.e., ``except that
artificial flavorings, artificial sweeteners, chemical preservatives,
added vitamins, and color additives are not suitable ingredients of
peanut butter.'' The comment stated that none of these ingredients
would be permitted in peanut butter notwithstanding the above language
because the only optional ingredients permitted in peanut butter under
the standard are ``safe and suitable seasoning and stabilizing
ingredients.'' The comment contended that few would argue that these
``prohibited'' ingredients (artificial flavorings, artificial
sweeteners, chemical preservatives, vitamins, and color additives)
qualify as seasoning or stabilizing ingredients. The comment further
contended that if the agency has a concern in this regard, it could
state for the record that stabilizing and seasoning ingredients, as
used in the
[[Page 9324]]
peanut butter standard, do not include these categories of ingredients.
The comment also noted that many peanut butters include a sweetener
seasoning, and that there might be an opportunity to use an approved
high intensity artificial sweetener to replace sugar or corn syrup in
the formulation of a modified peanut butter. Likewise, the comment
stated, if someone wanted to use a safe and suitable artificial flavor
in a modified peanut butter product (the inclusion of which would be
required to be adequately communicated via the labeling requirements
contained in 21 CFR 101.22), there is no reason to prohibit its use.
Thus, the comment urged the agency to fix the entire problem presented
in the language of the peanut butter standard coupled with the
requirement in Sec. 130.10(d)(3) that specifically prohibits the use in
the modified food of any ingredient whose use is specifically
prohibited by the standard of identity for that food.
FDA is not making the requested change. The suggested removal of
the prohibition against the addition of artificial flavorings,
artificial sweeteners, chemical preservatives, and color additives from
Sec. 164.150(c) was not foreshadowed in the proposed rule. Further,
there is no compelling reason, such as a conflict with the provisions
of the general definition and standard of identity, to make the change
at this time. When FDA developed the general definition and standard of
identity, it specifically included a provision in Sec. 130.10(d)(3) to
prohibit the use of ingredients that were explicitly prohibited by the
standard of identity for the traditional food. The purpose of the
provision was to ensure that the modified food would resemble the
traditional food in as many ways as possible. One way to ensure such
resemblance was to require the use of similar ingredients in the new
food and to exclude those ingredients that were prohibited in the
traditional food.
The agency notes that if the manufacturers of modified peanut
butter products find that these remaining prohibitions in
Sec. 164.150(c) represent significant barriers to the development of
peanut butter products modified to meet a nutrition goal, such as
``reduced calorie'' or ``reduced fat'' products, they may submit a
petition to further amend the peanut butter standard of identity.
3. One comment noted that the agency's proposal only deals with
added vitamins in modified peanut butter products and questioned
whether added minerals were also of concern to the agency.
Depending on the degree of modification of the peanut butter,
manufacturers may need to add minerals to the modified peanut butter
product to ensure that the food will not be nutritionally inferior to
peanut butter. There is, however, no specific prohibition in the
standard of identity for peanut butter that would preclude the addition
of minerals to a modified peanut butter. FDA notes that the general
definition and standard of identity in Sec. 130.10(b) states that
nutrients shall be added to the modified food to restore nutrient
levels, so that the product will not be nutritionally inferior, as
defined in Sec. 101.3(e)(4) (21 CFR 101.3(e)(4)), to the traditional
standardized food. Nutritional equivalence of modified peanut butter
products to peanut butter is defined in the common or usual name
regulation for peanut spreads in Sec. 102.23 (21 CFR 102.23). Section
102.23(b) includes a nutrient profile based on the levels of nutrients
found in peanut butter that may be used as guidance by manufacturers in
determining whether nutrients need to be added to a modified peanut
butter product. This nutrient profile includes requirements for protein
content and quality, as well as minimum levels of niacin, vitamin
B6, folic acid, iron, zinc, magnesium, and copper that must be
present in the food.
4. One comment requested that FDA clarify how the equivalent
micronutrient levels for modified peanut butter products are to be
determined. It noted that the nutrient levels vary from product to
product. The comment suggested the use of U.S. Department of
Agriculture Handbook data or an industry generated data base for
nutrient data on peanut butter and requested that the agency state in
the final rule what source is appropriate. The comment included a copy
of data on the vitamin E content of peanut butter from its submission
that it made to the agency in the rulemaking to establish a common or
usual name regulation for peanut spreads in Sec. 102.23 (see 40 FR
51052, November 3, 1975, and 42 FR 36452, July 15, 1977).
As noted above in the response to comment 3, FDA has established
requirements for nutrient levels in spreadable peanut products in the
common or usual name regulation on peanut spreads in Sec. 102.23. These
levels may be used by manufacturers as guidance in determining
nutritional equivalency to peanut butter. However, manufacturers may
make comparisons to their own traditional peanut butter formulation.
The types and levels of nutrient additions will depend on the types of
modifications that need to be made in formulating the modified peanut
butter product and the effects of such modifications on the composition
of the finished food.
With respect to the comment's resubmission of data on vitamin E,
FDA addressed that data in the final rule establishing Sec. 102.23 (see
42 FR 36452 at 36454). At that time, the agency stated that the values
submitted by the comment were consistent with published literature
values and suggested that 10 international units per 100 grams of
peanut butter would approximate the average content of vitamin E in
peanut butter. However, because the vitamin E content of peanut butter
is subject to variation, additional data would be necessary before the
agency could establish a value for nutritional equivalence in peanut
spreads. Therefore, the agency stated that no peanut spread would be
considered to be an imitation of peanut butter solely because it
contains less vitamin E than peanut butter. The agency has not received
any information to change that position. Thus, modified peanut products
that comply with the minimum requirements for nutrient levels specified
for peanut spreads (Sec. 102.23) will not be considered to be
nutritionally inferior to peanut butter under the provisions in
Sec. 101.3(e)(4).
After considering the comments received and the other relevant
factors that the agency discussed in the proposal, FDA concludes that
it will promote honesty and fair dealing in the interest of consumers
to amend the standard of identity for peanut butter in the manner
proposed. Accordingly, FDA is revising Sec. 164.150(c) by removing the
specific reference to ``added vitamins.'' This change will allow the
replacement of nutrients normally present in peanut butter that may be
lost in formulating and manufacturing modified peanut butter products,
thereby ensuring that the modified version of the food will not be
nutritionally inferior to peanut butter.
III. Economic Impacts
FDA has examined the impact of this final rule under Executive
Order 12866 and the Regulatory Flexibility Act (Pub. L. 96-354).
Executive Order 12866 directs Federal agencies to assess the costs and
benefits of available regulatory alternatives and, when regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects; distributive impacts; and equity). According to Executive
Order 12866, a regulatory action is ``economically significant'' if it
meets any one of a number of specified conditions, including having an
annual
[[Page 9325]]
effect on the economy of $100 million or adversely affecting in a
material way a sector of the economy, competition, or jobs. A
regulation is considered ``significant'' under Executive Order 12866 if
it raises novel legal or policy issues. The Regulatory Flexibility Act
requires Federal agencies to minimize the economic impact of their
regulations on small business.
There are no compliance costs associated with this final rule
because this final rule will not prohibit any current activity. The
benefit of this final rule is that it allows modified peanut butter
products to be labeled with a nutrient content claim and the
standardized term ``peanut butter.'' This labeling may reduce the cost
of identifying these products for some consumers. Therefore, FDA finds
that this final rule is neither an economically significant nor
significant regulatory action as defined by Executive Order 12866. In
compliance with the Regulatory Flexibility Act, FDA certifies that this
final rule, if promulgated, will not have a significant impact on a
substantial number of small businesses.
IV. Environmental Impact
The agency has determined under 21 CFR 25.24(a)(11) 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 in 21 CFR Part 164
Food grades and standards, Nuts, Peanuts.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, 21 CFR part
164 is amended as follows:
PART 164--TREE NUT AND PEANUT PRODUCTS
1. The authority citation for 21 CFR part 164 continues to read as
follows:
Authority: Secs. 201, 401, 403, 409, 701, 721 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 321, 341, 343, 348, 371,
379e).
2. Section 164.150 is amended by revising paragraph (c) to read as
follows:
Sec. 164.150 Peanut butter.
* * * * *
(c) The seasoning and stabilizing ingredients referred to in
paragraph (a) of this section are suitable substances which are not
food additives as defined in section 201(s) of the Federal Food, Drug,
and Cosmetic Act (the act), or if they are food additives as so
defined, they are used in conformity with regulations established
pursuant to section 409 of the act. Seasoning and stabilizing
ingredients that perform a useful function are regarded as suitable,
except that artificial flavorings, artificial sweeteners, chemical
preservatives, and color additives are not suitable ingredients in
peanut butter. Oil products used as optional stabilizing ingredients
shall be hydrogenated vegetable oils. For the purposes of this section,
hydrogenated vegetable oil shall be considered to include partially
hydrogenated vegetable oil.
* * * * *
Dated: February 29, 1996.
William K. Hubbard,
Associate Commissioner for Policy Coordination.
[FR Doc. 96-5493 Filed 3-7-96; 8:45 am]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-5487 Foreign Assets Control Regulations; Humanitarian Donations to North Korea
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9343-9344]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5487]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 500
Foreign Assets Control Regulations; Humanitarian Donations to
North Korea
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Final rule; amendments.
-----------------------------------------------------------------------
SUMMARY: This rule amends the Foreign Assets Control Regulations to
authorize by general license all transactions with respect to the
donation of funds to the United Nations and the American and
International Red Cross for humanitarian assistance in the Democratic
People's Republic of Korea, as well as all transactions incident to the
donation of goods to meet basic human needs to the Democratic People's
Republic of Korea from third countries by persons subject to U.S.
jurisdiction.
EFFECTIVE DATE: March 5, 1996.
FOR FURTHER INFORMATION CONTACT: Steven I. Pinter, Chief of Licensing,
tel.: 202/622-2480, or William B. Hoffman, Chief Counsel, tel.: 202/
622-2410, Office of Foreign Assets Control, Department of the Treasury,
Washington, DC 20220.
SUPPLEMENTARY INFORMATION:
Electronic Availability
This document is available as an electronic file on The Federal
Bulletin Board the day of publication in the Federal Register. By
modem, dial 202/512-1387 and type ``/GO FAC,'' or call 202/512-1530 for
disks or paper copies. This file is available for downloading without
charge in WordPerfect, ASCII, and Adobe AcrobatTM readable (*.PDF)
formats. The document is also accessible for downloading without charge
in ASCII format from Treasury's Electronic Library (``TEL'') in the
``Business, Trade and Labor Mall'' of the FedWorld bulletin board. By
modem dial 703/321-3339, and select the appropriate self-expanding file
in TEL. For Internet access, use one of the following protocols: Telnet
= fedworld.gov (192.239.93.3); World Wide Web (Home Page) = http://
www.fedworld.gov; FTP = ftp.fedworld.gov (192.239.92.205).
Background
As part of the October 21, 1994 United States-Democratic People's
Republic of Korea (``DPRK'') Agreed Framework, the United States
undertook to ease economic sanctions against the DPRK. Since that time,
the DPRK has experienced severe flooding and is in need of emergency
disaster assistance. As a separate measure, to facilitate the provision
of humanitarian aid to the DPRK by private and nongovernmental persons,
the Treasury Department is amending the Foreign Assets Control
Regulations, 31 CFR part 500 (the ``Regulations''), by amending
Sec. 500.573 to authorize, by general license, the donation of funds
for humanitarian assistance to the United Nations, related UN programs
and specialized agencies, the American Red Cross and the International
Committee of the Red Cross. Amended Sec. 500.573 also authorizes by
general license transactions incident to the donation to the DPRK from
third countries of goods to meet basic human needs by persons subject
to U.S. jurisdiction. Goods meeting basic human needs are defined by
reference to Sec. 773.5 and supplement no. 7 to part 773 of the
Commerce Department's Export Administration Regulations, 15 CFR parts
768-799.
Because the Regulations involve a foreign affairs function,
Executive Order 12866 and the provisions of the Administrative
Procedure Act, 5 U.S.C. 553, requiring notice of proposed rulemaking,
opportunity for public participation, and delay in effective date, are
inapplicable. Because no notice of proposed rulemaking is required for
this rule, the Regulatory Flexibility Act, 5 U.S.C. 601-612, does not
apply.
List of Subjects in 31 CFR Part 500
Administrative practice and procedure, Banks, banking, Cambodia,
Exports, Fines and penalties, Finance, Foreign investment in the United
States, Foreign trade, Imports, Information and informational
materials, International organizations, North Korea, Reporting and
recordkeeping requirements,
[[Page 9344]]
Securities, Services, Travel restrictions, Trusts and estates, Vietnam.
For the reasons set forth in the preamble, 31 CFR part 500 is
amended as set forth below:
1. The authority citation for part 500 continues to read as
follows:
T4Authority: 50 U.S.C. App. 1-44; E.O. 9193, 7 FR 5205, 3 CFR,
1938-1943 Comp., p. 1174; E.O. 9989, 13 FR 4891, 3 CFR, 1943-1948
Comp., p. 748.
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
2. Section 500.573 is revised to read as follows:
Sec. 500.573 Certain donations of funds and goods to meet basic human
needs authorized.
(a) The donation of funds for the purpose of contributing to the
provision of humanitarian assistance to victims of natural disasters in
North Korea is authorized, provided that such donations may only be
made through the United Nations, related UN programs and specialized
agencies, the American Red Cross and the International Committee of the
Red Cross.
(b) With respect to transactions not within the scope of the
general license contained in Sec. 500.533 of this part, all
transactions incident to the donation to North Korea of goods to meet
basic human needs are authorized. For purposes of this section, goods
to meet basic human needs shall be defined by reference to the
Humanitarian License Procedure set forth in 15 CFR 773.5 (c) and (d)
and supplement no. 7 to part 773 of the Export Administration
Regulations.
(c) Note: Exports from the United States to North Korea or
reexports to North Korea of U.S.-origin goods, or foreign goods
containing U.S.-origin content or produced from U.S.-origin technical
data, to meet basic human needs in North Korea may require
authorization from the U.S. Department of Commerce.
Dated: February 28, 1996.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
Approved: February 29, 1996.
Dennis M. O'Connell
Acting Deputy Assistant Secretary (Regulatory, Tariff & Law
Enforcement).
[FR Doc. 96-5487 Filed 3-5-96; 9:32 am]
BILLING CODE 4810-25-F
Complete official Federal Register PDF
FR Doc. 96-5482 Whaling Provisions; Elimination of Regulations
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9369-9370]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5482]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
50 CFR Part 351
[Docket No. 960228055-6055-01; I.D. 022396B]
Whaling Provisions; Elimination of Regulations
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: NMFS is eliminating outdated regulations pertaining to
whaling. This action will reduce Federal regulations consistent with
the President's Regulatory Reinvention Initiative.
EFFECTIVE DATE: March 8, 1996.
FOR FURTHER INFORMATION CONTACT: Dr. Kevin Chu (508)548-5123.
SUPPLEMENTARY INFORMATION:
In March 1995, President Clinton issued a directive to Federal
agencies regarding their responsibilities under his Regulatory
Reinvention Initiative. This initiative is part of the National
Performance Review and calls for immediate, comprehensive regulatory
reform. The President directed all agencies to undertake an exhaustive
review of all their regulations, with an
[[Page 9370]]
emphasis on eliminating or modifying those that are obsolete,
duplicative, or otherwise in need of reform. This final rule is
intended to carry out the President's directive with respect to the
regulations implementing the Whaling Convention Act of 1949 (U.S.C. 916
et seq.).
Based on its review, NMFS is removing 50 CFR part 351, which
pertains to the regulation of whaling. Part 351 contains the 1984
regulations of the International Whaling Commission (IWC). No portion
of part 351 is relevant to the management of whaling within the United
States today. Most of part 351 deals with regulations pertaining to
commercial whaling, which is illegal in the United States. The sections
of part 351 dealing with aboriginal whaling, which is permitted under
some circumstances in the United States, regulated only the 1984 and
1985 whale hunt and are, therefore, no longer necessary.
Aboriginal whaling within the United States remains regulated under
50 CFR part 230. Part 230 also contains certain outdated material,
which will be revised and updated through another rulemaking to be
published in the Federal Register.
The elimination of 50 CFR part 351 by this final rule is intended
to reduce the volume and publication costs of the regulations.
Classification
This final rule has been determined to be not significant for the
purposes of E.O. 12866.
Because this rule only eliminates regulations that are no longer
applicable to anyone, no useful purpose would be served by providing
notice and the opportunity for public comment. Accordingly, the
Assistant Administrator for Fisheries, NOAA (AA), under 5 U.S.C.
553(b)(B), for good cause finds that providing notice and opportunity
for public comment is unnecessary. For the same reason, the AA, under 5
U.S.C. 553(d), for good cause finds that a 30-day delay in their
elimination is unnecessary.
List of Subjects in 50 CFR Part 351
Fisheries, Marine mammals, Reporting and recordkeeping
requirements, Treaties.
Dated: March 1, 1996.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.
For the reasons set out in the preamble, under authority of Article
5, 62 Stat. 1718, sec. 2-14, 64 Stat. 421-425; 16 U.S.C. 916 et seq.,
50 CFR part 351 is removed and subchapter B is reserved.
[FR Doc. 96-5482 Filed 3-7-96; 8:45 am]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-5476 Career and Career-Conditional Employment, Noncompetitive Appointment of Certain Former Overseas Employees
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9321-9323]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5476]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
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
week.
========================================================================
Federal Register / Vol. 61, No. 47 / Friday, March 8, 1996 / Rules
and Regulations
[[Page 9321]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 315
RIN 3206-AG81
Career and Career-Conditional Employment, Noncompetitive
Appointment of Certain Former Overseas Employees
AGENCY: Office of Personnel Management.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: The Office of Personnel Management (OPM) is revising its
regulations implementing Executive Order 12721 under which Federal
agencies can noncompetitively appoint certain former overseas employees
who as family members accompanied their sponsors on official assignment
overseas. These regulations add a new condition justifying the waiver
of a portion of the overseas service requirement. The regulations also
remove duplication and add clarifying information.
EFFECTIVE DATE: April 8, 1996.
FOR FURTHER INFORMATION CONTACT:
Ellen Russell on 202-606-0830, FAX 202-606-2329, or TDD 202-606-0023.
SUPPLEMENTARY INFORMATION: On August 23, 1995 (60 FR 47324) OPM
published proposed regulations to make it easier for family members of
U.S. Government personnel stationed abroad to get career Federal jobs
when they are brought back to the United States because of military
downsizing and other management-initiated actions. Rather than penalize
family members who are returned to the States before they had worked
the full 52 weeks required for noncompetitive appointment, the
regulation delegates to agencies the authority to waive up to 26 weeks
of service in nonpersonal situations that necessitate the relocation of
family members out of the overseas area. Under the final regulation, to
waive up to 26 weeks of the 52-week overseas service requirement, the
employing agency overseas must certify that the family member was
forced to return to the United States because of military drawdowns or
other management-initiated decisions not personal to the individual and
must include the number of weeks waived.
Other reasons for waiving up to 26 weeks of the 52-week service
requirement remain the same, i.e., an emergency situation which
necessitated the family member's relocation to the United States. An
emergency situation includes conflict, terrorism, or the threat of
terrorism but does not include a personal situation such as ill health.
We received comments from three Federal agencies and one
individual. The Department of Defense (DOD) made two major suggestions.
First, DOD suggested a change in how an individual's 3-year period of
eligibility could be extended when he or she was stationed in an area
of the United States with no significant opportunities for Federal
employment. DOD suggested the determination be made by the major
Federal employer in the area where the applicant last resided.
We have not adopted this suggestion but instead have modified the
regulation to allow any agency to make the determination in order to
provide the most flexibility. This means that an individual leaving an
area with no significant Federal employment opportunities could get
verification from the major Federal employers in the area and attach
this statement to his or her application for noncompetitive
appointment.
Alternatively, an agency considering an application for
noncompetitive appointment could contact Federal agencies in the area
where the applicant was last stationed to verify an individual's claim
that he or she was stationed in an area with no significant Federal
employment opportunities. This flexibility allows agencies to set up
whatever special procedures they deem necessary as part of the special
assistance provided to family members.
DOD also suggested the regulations add a 2-year ``open period'' so
that individuals who, prior to the issuance of these regulations,
returned to the United States before earning the necessary 52 weeks of
service would be on an equal footing with family members who are
eligible as soon as these final regulations are effective. We agree
that the intent of the Executive order is to help as many family
members as possible and therefore have added such a provision. Under
the final regulation, individuals will be eligible for appointment for
3 years following their return to the United States or until March 31,
1998, whichever is later.
This provision is consistent with an approach OPM took in final
regulations published on April 3, 1991 (56 FR 13575). Those regulations
implemented a revision in Executive Order 12721 that reduced the amount
of necessary overseas service from 18 months to 52 weeks. The 1991
regulation included a 3-year open period to provide equity to family
members whose eligibility had already expired but who would have been
eligible under the terms of the revised Executive order.
The Department of the Army suggested the regulation include certain
provisions that had been in the former Federal Personnel Manual,
specifically that overseas service need not be continuous, that an
eligible need not be a family member at the time of noncompetitive
appointment in the United States, and the eligibles may be appointed in
any occupation and grade level for which they qualify. The final
regulation reflects these comments.
Another Federal agency noted an error in the 5 CFR
315.608(d)(4)(iv) appointing authority. We have corrected the authority
to read ``Public Law 86-36 (50 U.S.C. 402, note)''.
The individual suggested we expand the definition of the ``United
States'' to include American Samoa and the Commonwealth of the Northern
Mariana Islands. This change would allow family members to use their
noncompetitive appointment eligibility in these two locations.
We have not adopted this suggestion because Executive Order 12721
states that eligible individuals may be appointed noncompetitively to a
competitive service position in the executive branch ``within the
United States (including Guam, Puerto Rico, and the Virgin Islands).''
Since the order itself is so specific on where family members can use
their eligibility, we do not believe OPM's regulations could add
additional geographic areas to the definition of the ``United States.''
[[Page 9322]]
Regulatory Flexibility Act
I certify that these regulations will not have a significant
economic impact on a substantial number of small entities because the
regulation pertains only to Federal employees and agencies.
List of Subjects in 5 CFR Part 315
Government employees.
U.S. Office of Personnel Management.
James B. King,
Director.
Accordingly, OPM is amending part 315 of title 5, Code of Federal
Regulations, as follows:
PART 315--CAREER AND CAREER-CONDITIONAL APPOINTMENT
1. The authority citation for part 315 continues to read as
follows:
Authority: 5 U.S.C. 1302, 3301, 3302; E.O. 10577, 3 CFR, 1954-
1958 Comp., page 218, unless otherwise noted.
Secs. 315.601 and 315.609 also issued under 22 U.S.C. 3651 and
3652.
Secs. 315.602 and 315.604 also issued under 5 U.S.C. 1104.
Sec. 315.603 also issued under 5 U.S.C. 8151.
Sec. 315.605 also issued under E.O. 12034, 3 CFR, 1978 Comp., p.
111.
Sec. 315.606 also issued under E.O. 11219, 3 CFR, 1964-1965
Comp., p. 303.
Sec. 315.607 also issued under 22 U.S.C. 2506.
Sec. 315.608 also issued under E.O. 12721, 3 CFR, 1990 Comp., p.
293.
Sec. 315.610 also issued under 5 U.S.C. 3304(d).
Sec. 315.710 also issued under E.O. 12596, 3 CFR, 1987 Comp., p.
229.
Subpart I also issued under 5 U.S.C. 3321, E.O. 12107, 3 CFR,
1978 Comp., p. 264.
2. Section 315.608 is revised to read as follows:
Sec. 315.608 Noncompetitive appointment of certain former overseas
employees.
(a) Authority. An executive branch agency may noncompetitively
appoint, to a competitive service position within the United States
(including Guam, Puerto Rico, and the Virgin Islands), an individual
who has completed 52 weeks of creditable overseas service as defined in
paragraph (b) of this section and is appointed within the time limits
in paragraph (d) of this section. Any law, Executive order, or
regulation that disqualifies an applicant for appointment in the
competitive service, such as the citizenship requirement, also
disqualifies the applicant for appointment under this section. An
individual may be appointed to any occupation and grade level for which
qualified. An agency may waive any requirement for a written test after
determining that the duties and responsibilities of the applicant's
overseas position were similar enough to make the written test
unnecessary.
(1) Tenure. A person appointed under this section becomes a career-
conditional employee unless he or she has already satisfied the
requirements for career tenure or is exempt from the service
requirement in 5 CFR 315.201.
(2) Competitive status. A person appointed under this section
acquires competitive status automatically upon completion of probation.
(b) Creditable overseas service. For purposes of this section only,
creditable service is service in an appropriated fund position(s)
performed by a family member under a local hire appointment(s) overseas
during the time the family member was accompanying a sponsor officially
assigned to an overseas area and for which the family member received a
fully successful or better (or equivalent) performance rating.
Creditable overseas service is computed in accordance with the
procedures in the OPM Guide to Processing Personnel Actions. Creditable
service may have been under more than one appointment and need not be
continuous. Leave without pay taken during the time an individual is in
the overseas area is credited on the same basis as time worked.
(c) Service waiver. Up to 26 weeks of the 52-week service
requirement is waived when the head of an agency (or designee) that
employed the family member overseas certifies that the family member's
expected 52 weeks of employment were cut short because of a nonpersonal
situation that necessitated the relocation of the family member from
the overseas area. The certification must include the number of weeks
waived. For this purpose, a nonpersonal situation includes disaster,
conflict, terrorism or the threat of terrorism, and those situations
when a family member is forced to return to the United States because
of military deployment, drawdowns, or other management-initiated
actions. A nonpersonal situation does not include circumstances that
specifically relate to a particular individual, for example, ill health
or personal interest in relocating.
(d) Time limit on eligibility. An individual is eligible for
appointment(s) under this authority for a period of 3 years following
the date of returning from overseas to the United States to resume
residence or until March 31, 1998, whichever date is later. An agency
may extend an individual's appointment eligibility beyond 3 years for
periods equivalent to--
(1) The time the individual was accompanying a sponsor on official
assignment to an area of the United States with no significant
opportunities for Federal employment; or
(2) The time an individual was incapacitated for employment.
(e) Definitions. In this section terms have the following meaning:
(1) Family member. An unmarried child under age 23 or a spouse. An
individual must have been a family member at the time he or she met the
overseas service requirement and other conditions but does not need to
be a family member at the time of noncompetitive appointment in the
United States.
(2) Sponsor. A Federal civilian employee, a Federal nonappropriated
fund employee, or a member of a uniformed service who is officially
assigned to an overseas area.
(i) Officially assigned. Under active orders issued by the United
States Government.
(ii) Federal civilian employee. An employee of the executive,
judicial, or legislative branch of the United States Government who
serves in an appropriated fund position.
(iii) Nonappropriated fund employee. An employee paid from
nonappropriated funds of the Army and Air Force Exchange Service, Navy
Ship's Stores Ashore, Navy Exchanges, Marine Corps Exchanges, Coast
Guard Exchanges, or other instrumentalities of the United States.
(iv) Member of a uniformed service. Personnel of the U.S. Armed
Forces (including the Coast Guard), the commissioned corps of the
Public Health Service, and the commissioned corps of the National
Oceanic and Atmospheric Administration.
(3) Accompanying. The family member resided in the overseas area
while the sponsor was officially assigned to an overseas post of duty.
The family member need not have physically resided with the sponsor at
all times or have traveled with the sponsor to or from the overseas
area.
(4) Local hire appointment. An appointment that is not actually or
potentially permanent and that is made from among individuals residing
in the overseas area. In this section only, a local hire appointment
includes nonpermanent employment under:
(i) Overseas limited appointment under 5 CFR 301.203(b) or (c);
(ii) Expected appointment under Schedule A 213.3106(b)(1),
213.3106(b)(6), or 213.3106(d)(1)) when the duration of the appointment
is tied to the sponsor's rotation date or when the appointment is made
on a not-to-exceed (NTE) basis;
[[Page 9323]]
(iii) An ``American family member'' or ``part-time intermittent
temporary (PIT)'' appointment in U.S. diplomatic establishments;
(iv) 50 U.S.C. 403j; Public Law 86-36 (50 U.S.C. 402, note); the
Berlin Tariff Agreement; or as a local national employee paid from
appropriated funds; or
(v) Any other nonpermanent appointment in the competitive or
excepted service approved by OPM.
(5) Overseas. A location outside the 50 States of the United
States, the District of Columbia, Guam, Puerto Rico, and the Virgin
Islands.
FR Doc. 96-5476 Filed 3-7-96; 8:45 am]
BILLING CODE 6325-01-M
Complete official Federal Register PDF
FR Doc. 96-5455 Approval and Promulgation of Implementation Plans; Utah; Correction
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Page 9350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5455]
=======================================================================
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[FRL-5435-2]
Approval and Promulgation of Implementation Plans; Utah;
Correction
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule; correction.
-----------------------------------------------------------------------
SUMMARY: This document corrects an error in the Code of Federal
Regulations for Utah. An amendment to 40 CFR 52.2320 at 59 FR 64330, on
December 14, 1994, added a second paragraph to (c)(26). This second
paragraph should be (c)(27).
EFFECTIVE DATE: This action is effective March 8, 1996.
FOR FURTHER INFORMATION CONTACT: Vicki Stamper, 8ART-AP, U.S.
Environmental Protection Agency, Region VIII, 999 18th Street, Suite
500, Denver, Colorado 80202-2466, (303) 312-6445.
List of Subjects in 40 CFR Part 52
Air pollution control, Carbon monoxide, Environmental protection,
Hydrocarbons, Incorporation by reference, Intergovernmental relations,
Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and
recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
Dated: February 15, 1996.
Patricia D. Hull,
Regional Administrator.
Part 52, chapter I, title 40 of the Code of Federal Regulations 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 TT--Utah
Sec. 52.2320 [Corrected]
2. Section 52.2320(c) is revised by redesignating the second
paragraph of (c)(26) as (c)(27).
[FR Doc. 96-5455 Filed 3-7-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-5444 Cold, Cough, Allergy, Bronchodilator, and Antiasthmatic Drug Products for Over-the-Counter Human Use; OTC Nasal Decongestant Drug Products; Partial Stay of Final Rule; Enforcement Policy
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9570-9571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5444]
[[Page 9569]]
_______________________________________________________________________
Part IV
Department of Health and Human Services
_______________________________________________________________________
Food and Drug Administration
_______________________________________________________________________
21 CFR Part 310
Cold, Cough, Allergy, Bronchodilator, and Antiasthmatic Drug Products
for Over-the-Counter Human Use; OTC Nasal Decongestant Drug Products;
Partial Stay of Final Rule; Enforcement Policy
Federal Register / Vol. 61, No. 47 / Friday, March 8, 1996 / Rules
and Regulations
=======================================================================
-----------------------------------------------------------------------
[[Page 9570]]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 310
[Docket No. 76N-052N]
RIN 0910-AA01
Cold, Cough, Allergy, Bronchodilator, and Antiasthmatic Drug
Products for Over-the-Counter Human Use; OTC Nasal Decongestant Drug
Products; Partial Stay of Final Rule; Enforcement Policy
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule; partial stay of regulation; enforcement policy.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is staying part of a
final rule that established that certain over-the-counter (OTC) nasal
decongestant drug products are not generally recognized as safe and
effective and are misbranded. This action is being taken in response to
a citizen petition for a stay of enforcement of regulatory action
against OTC nasal decongestant drug products containing the active
ingredient l-desoxyephedrine. The agency is also providing labeling
requirements for OTC topical nasal decongestant drug products
containing l-desoxyephedrine. This action is part of the ongoing review
of OTC drug products conducted by FDA.
DATES: This partial stay is effective August 31, 1995. On or after
September 9, 1996, no OTC drug product containing l-desoxyephedrine may
be initially introduced or initially delivered for introduction into
interstate commerce unless its labeling conforms to the conditions of
this partial stay.
FOR FURTHER INFORMATION CONTACT: William E. Gilbertson, Center for Drug
Evaluation and Research (HFD-105), Food and Drug Administration, 5600
Fishers Lane, Rockville, MD 20857, 301-827-2304.
SUPPLEMENTARY INFORMATION:
I. Background
In the Federal Register of August 23, 1994 (59 FR 43386), the
agency published a final rule in the form of a final monograph
establishing conditions under which OTC nasal decongestant drug
products are generally recognized as safe and effective. The final
monograph did not include l-desoxyephedrine as a nasal decongestant
active ingredient. The final rule listed l-desoxyephedrine in
Sec. 310.545(a)(6)(ii)(B) (21 CFR 310.545(a)(6)(ii)(B)) as not
generally recognized as safe and effective. L-desoxyephedrine was
declared nonmonograph because it was not currently standardized and
characterized for quality and purity in an official compendium, i.e.,
the United States Pharmacopeia (USP)/National Formulary (NF) (59 FR
43386 at 43408). The agency stated in the final rule that OTC drug
products containing l-desoxyephedrine as a topical nasal decongestant
active ingredient were new drugs under section 201(p) of the Federal
Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 321(p)). The
effective date of the final rule was August 23, 1995. To be marketed,
OTC topical nasal decongestant drug products containing l-
desoxyephedrine would require an application or abbreviated application
approved under section 505 of the act (21 U.S.C. 355) and part 314 (21
CFR part 314). In the absence of an approved application, OTC topical
nasal decongestant drug products containing l-desoxyephedrine would be
misbranded under section 502 of the act (21 U.S.C. 352). The agency
also stated that should interested parties develop appropriate
standards that are included in the USP, the nasal decongestant final
monograph would be amended to include l-desoxyephedrine as a topical
nasal decongestant active ingredient. The agency reserved 21 CFR
341.20(b)(1) of the final monograph for OTC nasal decongestant drug
products for possible future inclusion of l-desoxyephedrine as a
topical nasal decongestant active ingredient.
Subsequently, a citizen petition (Ref. 1) requested that the
agency defer the effective date of Sec. 310.545(a)(6)(ii)(B) as it
applies to l-desoxyephedrine (topical) until December 31, 1996. The
petitioner stated that it had forwarded a draft compendial monograph
(Ref. 2) for 1-desoxyephedrine to the USP in late July 1995. The
petition stated that USP expects to publish a proposed monograph for
public comment in the November/December 1995 issue of Pharmacopeial
Forum, and expects the resulting monograph to become official with
publication of USP23/NF18 Supplement No. 5, on November 15, 1996. The
petition stated that USP, as a practical matter, will have concluded to
adopt the monograph for l-desoxyephedrine well before November 15,
1996, and will have given notice of that conclusion in its
Pharmacopeial Forum Interim Revision Announcement. The petitioner
stated its belief that the agency should have ample time to initiate
its process to amend the nasal decongestant final monograph by the end
of 1996.
The agency was subsequently informed that the ingredient might
become official in the USP in November 1996 or May 1997 (Ref. 3). On
August 31, 1995, the agency stated its intent to stay the effective
date for l-desoxyephedrine in the list of active ingredients in
Sec. 310.545(a)(6)(ii)(B) until December 31, 1996, to permit time for
USP processing to include the ingredient in a compendial monograph
(Ref. 4). At this time, the agency is staying the entry for ``l-
desoxyephedrine (topical)'' in Sec. 310.545(a)(6)(ii)(B) until further
notice. When l-desoxyephedrine becomes official in the USP, the final
monograph for OTC nasal decongestant drug products will be amended to
include the ingredient and Sec. 310.545(a)(6)(ii)(B) will be revised
accordingly.
During the stay period, the following labeling requirements will
be in effect for topical nasal decongestant drug products containing l-
desoxyephedrine:
1. The statement of identity should follow Sec. 341.80(a) (21 CFR
341.80(a)) of the final monograph for OTC nasal decongestant drug
products (59 FR 43386 at 43409).
2. The indications should follow Sec. 341.80(b) of the final
monograph for OTC nasal decongestant drug products (59 FR 43386 at
43409 and 43410).
3. The warnings should follow Sec. 341.80(c)(2)(i) of the final
monograph for OTC nasal decongestant drug products (59 FR 43386 at
43410). In addition, the following warnings are required: ``Do not use
this product for more than 7 days. Use only as directed. Frequent or
prolonged use may cause nasal congestion to recur or worsen. If
symptoms persist, consult a doctor.''
4. The directions are for a product that must deliver 0.04 to 0.150
milligram of l-desoxyephedrine in each 800 milliliters of air. Adults
and children 12 years of age and over: Two inhalations in each nostril
not more often than every 2 hours. Children 6 to under 12 years of age
(with adult supervision): One inhalation in each nostril not more often
than every 2 hours. Children under 6 years of age: Consult a doctor.
5. Other required statements should follow Sec. 341.80(d)(viii)(A)
and (d)(viii)(B).
As part of the conditions of this stay of action, the agency has
determined that manufacturers of OTC topical nasal decongestant drug
products containing l-desoxyephedrine should implement this labeling
within 6 months of the publication of this partial stay. Therefore, on
or after September 9,
[[Page 9571]]
1996, no OTC drug product that is subject to this partial stay of the
final rule for OTC nasal decongestant drug products may be initially
introduced or initially delivered for introduction into interstate
commerce unless its labeling conforms to the conditions of this partial
stay. Further, any OTC drug product subject to this partial stay that
is repackaged or relabeled after the date of publication of this
partial stay must be in compliance with the partial stay regardless of
the date the product was initially introduced or initially delivered
for introduction into interstate commerce. Manufacturers are encouraged
to comply voluntarily with this partial stay at the earliest possible
date.
This partial stay of action applies only to l-desoxyephedrine in
OTC topical nasal decongestant drug products and not to any other nasal
decongestant active ingredient included under
Sec. 310.545(a)(6)(ii)(B).
II. References
The following references are on display in the Dockets Management
Branch (HFA-305), Food and Drug Administration, 12420 Parklawn Dr., rm.
1-23, Rockville, MD 20857, and may be seen by interested persons
between 9 a.m. and 4 p.m., Monday through Friday.
(1) Comment No. CP1, Docket No. 95P-0245, Dockets Management
Branch.
(2) Draft Compendial Monograph, in Comment No. CP1, Docket No.
95P-0245, Dockets Management Branch.
(3) Memorandum of telephone conversation between M. T. Benson,
FDA, ---and T. Cecil, United States Pharmacopeial Convention, Inc.,
coded as MT1, Docket No. 95P-0245, Dockets Management Branch.
(4) Letter from W. E. Gilbertson, FDA, to S. Rexinger, Leiner
Health ---Products, and E. Lambert, Covington & Burling, coded as
LET1, Docket No. --95P-0245, Dockets Management Branch.
III. Paperwork Reduction Act of 1995
FDA concludes that the labeling requirements discussed in this
document are not subject to review by the Office of Management and
Budget because they do not constitute a ``collection of information''
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
Rather, the labeling statements are a ``public disclosure of
information originally supplied by the Federal government to the
recipient for the purpose of disclosure to the public'' (5 CFR
1320.3(c)(2)).----
List of Subjects in 21 CFR Part 310
Administrative practice and procedure, Drugs, Labeling, Medical
devices, Reporting and recordkeeping requirements.
Therefore, under the Federal Food, Drug, and Cosmetic Act and
under authority delegated to the Commissioner of Food and Drugs, 21 CFR
part 310 is amended as follows:
PART 310--NEW DRUGS
1. The authority citation for 21 CFR part 310 continues to read as
follows:
-Authority: Secs. 201, 301, 501, 502, 503, 505, 506, 507, 512-
516, 520, 601(a), 701, 704, 705, 721 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 321, 331, 351, 352, 353, 355, 356, 357,
360b-360f, 360j, 361(a), 371, 374, 375, 379e); secs. 215, 301,
302(a), 351, 354-360F of the Public Health Service Act (42 U.S.C.
216, 241, 242(a), 262, 263b-263n).
Sec. 310.545 [Partial stay]
2. In Sec. 310.545 Drug products containing certain active
ingredients offered over-the-counter (OTC) for certain uses in
paragraph (a)(6)(ii)(B), the entry for ``l-desoxyephedrine (topical)''
is stayed until further notice.
Dated: February 22, 1996.
William K. Hubbard,
Associate Commissioner for Policy Coordination.
[FR Doc. 96-5444 Filed 3-7-96; 8:45 am]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-5442 Bureau of Consular Affairs; Regulations Pertaining to Both Nonimmigrants and Immigrants Under the Immigration and Nationality Act, as Amended; Failure To Comply With INA
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Page 9325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5442]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF STATE
22 CFR Part 40
[Public Notice 2345]
Bureau of Consular Affairs; Regulations Pertaining to Both
Nonimmigrants and Immigrants Under the Immigration and Nationality Act,
as Amended; Failure To Comply With INA
AGENCY: Bureau of Consular Affairs, DOS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department is finalizing the interim rule [59 FR 51367]
published on October 11, 1994. The regulation implements 212(o) of the
Immigration and Nationality Act (INA), which prohibits the issuance of
an immigrant visa to an alien for ninety days following an alien's
departure from the U.S. unless the alien was maintaining a lawful
nonimmigrant status at the time of departure, or unless the alien is
the spouse or unmarried child of certain individuals who obtained
temporary or permanent resident status under INA 210 or 245A or section
202 of the Immigration Reform and Control Act of 1986 (IRCA).
EFFECTIVE DATE: The effective date of this final rule is October 1,
1994.
FOR FURTHER INFORMATION CONTACT: Stephen K. Fischel, Chief, Legislation
and Regulations Division, 202-663-1204.
SUPPLEMENTARY INFORMATION:
Expansion of INA 245 Adjustment of Status and Companion Provision
On August 26, 1994 the President signed into law the appropriations
bill for the Department of State, Pub. L. 103-317. Section 506(b)
thereof amends INA 245 to permit qualified immigrants to acquire
permanent residence through adjustment of status in the United States
even though they entered the United States without inspection or
violated their nonimmigrant status after entry.
This Act further amends the INA at section 212 by adding subsection
``(o)'', which encourages aliens who can benefit from the broadened INA
245 adjustment of status provisions to take advantage of them by
discouraging them from seeking immigrant visa issuance from a U.S.
consular post abroad. To induce such aliens to seek INA 245 adjustment
of status, Congress imposed a requirement that an immigrant visa
applicant be physically absent from the United States for ninety days
since the last departure before an immigrant visa can be issued. Under
this amendment, an alien who departs from the United States would be
eligible to receive an immigrant visa on the 91st day following the
departure. Two classes of aliens are exempted from this provision. The
first class consists of aliens maintaining lawful nonimmigrant status
at the time of departure. The second class consists of the spouses and
children of certain aliens who benefited from the special agricultural
worker program, the legalization program, and the Cuban--Haitian
adjustment provisions of IRCA, and who sought benefits under the family
unity provisions of the Immigration Act of 1990.
Final Rule
Interim rule 2092, published on October 11, 1994 at 59 FR 51367,
invited interested persons to submit comments concerning the
amendments. No comments were received.
PART 40--[AMENDED]
1. The authority citation for Part 40 continues to read as follows:
Authority: 8 U.S.C. 1104; sec. 506(a), Pub. L. 103-317, 108
Stat. 1724.
2. Accordingly, the interim rule's regulations and the October 1,
1994 effective date published at 59 FR 51358 are adopted without
change.
Dated: February 15, 1996.
Mary A. Ryan,
Assistant Secretary for Consular Affairs.
[FR Doc. 96-5442 Filed 3-7-96; 8:45 am]
BILLING CODE 4710-06-P
Complete official Federal Register PDF
FR Doc. 96-5437 Radio Broadcasting Services; Various Locations
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9360-9361]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5437]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
Radio Broadcasting Services; Various Locations
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Commission, on its own motion, editorially amends the
Table of FM Allotments to specify the actual classes of channels
allotted to various communities. The changes in channel classifications
have been authorized in response to applications filed by licensees and
permittees operating on these channels. This action is taken pursuant
to Revision of Section 73.3573(a)(1) of the Commission's Rules
Concerning the Lower Classification of an FM Allotment, 4 FCC Rcd 2413
(1989), and the Amendment of the Commission's Rules to Permit FM
Channel and Class Modifications [Updates] by Applications, 8 FCC Rcd
4735 (1993).
EFFECTIVE DATE: March 8, 1996.
[[Page 9361]]
FOR FURTHER INFORMATION CONTACT: Kathleen Scheuerle, Mass Media Bureau,
(202) 418-2180.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Report and Order, adopted February 20, 1996, and released March 4,
1996. The full text of this Commission decision is available for
inspection and copying during normal business hours in the Commission's
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 contractors, International Transcription Services,
Inc., 2100 M Street, NW., Suite 140, Washington, DC 20037, (202) 857-
3800.
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 Alabama, is
amended by removing Channel 299A and adding Channel 299C2 at Georgiana.
3. Section 73.202(b), the Table of FM Allotments under Arizona, is
amended by removing Channel 229A and adding Channel 231A at Wickenburg.
4. Section 73.202(b), the Table of FM Allotments under Colorado, is
amended by removing Channel 296A and adding Channel 296C3 at Aspen.
5. Section 73.202(b), the Table of FM Allotments under Mississippi,
is amended by removing Channel 230A and adding Channel 230C3 at
Greenwood.
6. Section 73.202(b), the Table of FM Allotments under Texas, is
amended by removing Channel 277A and adding Channel 277C3 at Commerce;
removing Channel 256A and adding Channel 256C3 at Fairfield; removing
Channel 283C3 and adding Channel 284C2 at Ganado; removing Channel 278A
and adding Channel 278C2 at New Boston; removing Channel 252C3 at Odem
and adding Channel 252C2.
Federal Communications Commission.
John A. Karousos,
Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-5437 Filed 3-7-96; 8:45 am]
BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-5435 Radio Broadcasting services; Murdock and Avon Park, FL
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Page 9360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5435]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 89-455; RM-6915, RM-7259]
Radio Broadcasting services; Murdock and Avon Park, FL
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This document allots Channel 255A to Murdock, Florida. In
addition, this document substitutes Channel 256C3 for Channel 292A at
Avon Park, Florida, and modifies the license of Station WWOJ, Avon
Park, to specify operation on Channel 256C3. See 54 FR 43087, October
20, 1989. The reference coordinates for Channel 255A at Murdock,
Florida, are 26-58-00 and 82-16-00. The reference coordinates for
Channel 256C3 at Avon Park, Florida, are 27-29-5 and 81-29-23. With
this action, the proceeding is terminated.
DATES: Effective April 18, 1996. The window period for filing
applications will open on April 18, 1996, and close on May 20, 1996.
FOR FURTHER INFORMATION CONTACT: Robert Hayne, Mass Media Bureau, (202)
418-2177.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Report and Order in MM Docket No. 89-455, adopted February 23, 1996,
and released March 4, 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, International Transcription Service,
Inc., (202) 857-3800, 1919 M Street, NW., Room 246, or 2100 M Street,
NW., Suite 140, Washington, DC 20037.
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, 47 U.S.S. 154, as
amended.
Sec. 73.202 [Amended]
2. Section 73.202(b), the Table of FM Allotments under Florida, is
amended by adding Murdock, Channel 255A.
3. Section 73.202(b), the Table of FM Allotments under Florida, is
amended by removing Channel 292A and adding Channel 256C3 at Avon Park.
Federal Communications Commission.
John A. Karousos,
Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-5435 Filed 3-7-96; 8:45 am]
BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-5434 Radio Broadcasting Services; Laramie, WY
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9359-9360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5434]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 95-159; RM-8711]
Radio Broadcasting Services; Laramie, WY
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Commission, at the request of Rule Communications, allots
Channel 244A at Laramie, Wyoming, as the community's fifth local
commercial FM transmission service. See 60 FR 55822, November 3, 1995.
Channel 244A can be allotted to Laramie in compliance with the
Commission's minimum distance separation requirements at city reference
coordinates. The coordinates for Channel 244A at Laramie are North
Latitude 41-18-42 and West Longitude 105-35-06. With this action, this
proceeding is terminated.
DATES: Effective April 18, 1996. The window period for filing
applications will open on April 18, 1996 and close on May 20, 1996.
FOR FURTHER INFORMATION CONTACT: Sharon P. McDonald, Mass Media Bureau,
(202) 418-2180.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Report and Order, MM Docket No. 95-159, adopted February 22, 1996, and
released March 4, 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 contractors, International Transcription Service,
Inc., (202) 857-3800, 2100 M Street, NW., Suite 140, Washington, DC
20037.
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: Sections 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 Wyoming, is
amended by adding Channel 244A at Laramie.
[[Page 9360]]
Federal Communications Commission.
John A. Karousos,
Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-5434 Filed 3-7-96; 8:45 am]
BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-5430 Radio Broadcasting Services; Kerman, CA
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Page 9360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5430]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 94-101; RM-8510]
Radio Broadcasting Services; Kerman, CA
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This document allots Channel 237A to Kerman, California, in
lieu of previously proposed Channel 252A, as that community's second
local FM transmission service, in response to a petition for rule
making filed by Valley Center Broadcasting. See 59 FR 48846, September
23, 1994. EBE Limited Partnership, licensee of Station KNAX(FM),
Channel 250B, Fresno, California, proposed the allotment of Channel
237A to Kerman to avoid a conflict with its modification application
pursuant to the Commission's policy of attempting to resolve conflicts
between rulemaking petitions and later-filed FM applications. See
Conflicts Between Applications and Petitions for Rulemaking to Amend
the FM Table of Allotments, 8 FCC Rcd 4743, 4745, n.12. Coordinates
used for Channel 237A at Kerman are 36-41-00 and 120-10-48. With this
action, the proceeding is terminated.
DATES: Effective April 18, 1996. The window period for filing
applications will open on April 18, 1996, and close on May 20, 1996.
FOR FURTHER INFORMATION CONTACT: Nancy Joyner, Mass Media Bureau, (202)
418-2180. Questions related to the window application filing process
for Channel 237A at Kerman, California, should be addressed to the
Audio Services Division, FM Branch, (202) 418-2700.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Report and Order, MM Docket No. 94-101, adopted February 12, 1996, and
released March 4, 1996. The full text of this Commission decision is
available for inspection and copying during normal business hours in
the FCC's 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 contractors, International Transcription Service,
Inc., (202) 857-3800, located at 1919 M Street, NW., Room 246, or 2100
M Street, NW., Suite 140, Washington, DC 20037.
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 California,
is amended by adding Channel 237A at Kerman.
Federal Communications Commission.
John A. Karousos,
Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-5430 Filed 3-7-96; 8:45 am]
BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-5427 Cable Television Rate Regulation; Cost of Service Rules
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9361-9367]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5427]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[MM Docket No. 93-215; FCC 95-502]
Cable Television Rate Regulation; Cost of Service Rules
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Commission has adopted the Second Report and Order and
First Order on Reconsideration in MM Docket 93-215 to refine existing
cost of service rules and to create final rules governing standard cost
of service showings filed by cable operators seeking to justify rates
for regulated cable services. By refining these rules, the Commission
brings greater practicality to cost of service filing procedures and
allows operators and regulatory officials increased flexibility in
defining the actual costs of providing regulated cable services.
EFFECTIVE DATE: This final rule contains information collection
requirements and will not become effective until approval by the Office
of Management and Budget, but no sooner than 30 days after publication
in the Federal Register. The Commission will publish a document
specifying the effective date.
FOR FURTHER INFORMATION CONTACT: Tom Power, Cable Services Bureau,
(202) 416-0800.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Second Report and
Order, First Order on Reconsideration and Further Notice of Proposed
Rulemaking in MM Docket No. 93-215, FCC 95-502, adopted December 15,
1995 and released January 26, 1996.
This Second Report and Order and First Order on Reconsideration
contains modified information collections subject to the Paperwork
Reduction Act of 1995 (``PRA''), Pub. L. No. 104-13. It has been
submitted to the Office of Management and Budget (``OMB'') for review
under Section 3507(d) of the PRA. OMB, the general public, and other
Federal agencies are invited to comment on the modified information
collections contained in this proceeding.
The complete text of this Second Report and Order, First Order on
Reconsideration and Further Notice of Proposed Rulemaking is available
for inspection and copying during normal business hours in the FCC
Reference Center (room 239), 1919 M Street, NW., Washington, DC, and
also may be purchased from the Commission's copy contractor,
International Transcription Services, Inc. (``ITS Inc.'') at (202) 587-
3800, 2100 M Street, NW., Suite 140, Washington, DC 20017.
I. Second Report and Order and First Order on Reconsideration
A. Ratebase--Used and Useful Plant and Excess Capacity
1. In general, except as described below, we make permanent our
interim rules regarding ratebase issues. We clarify that used and
useful plant is plant that is actually used to send signals to
customers. Plant which is not currently used and useful, however, is
excess capacity, and operators may include this excess capacity in the
ratebase only if it is fully constructed plant that will be used to
provide regulated service within 12 months. The Commission clarifies
that there are two types of excess capacity. First, where plant is
being used but not to its full capacity, the portion of the plant
allocated to the unused channels is excess capacity. For example, where
a system provides programming over 36 channels but is capable of
transmitting 48 channels of programming, the plant associated with the
12 channels not currently being used is excess capacity. In other
words, in this example, the operator may only include 75% of the cost
of the plant in the ratebase as used and useful plant, and may include
the other 25% as excess capacity only if the 12 channels will be
activated within one year. Second, excess capacity is fully constructed
plant that is not being used at all, such as where the cable operator
has extended its distribution line into an unserved portion of the
franchise area, is ready and able to provide service to that area, but
is not yet providing such service. The operator may include such plant
in its ratebase to the extent it intends to place the plant into
service within 12 months. However, the operator must make a
corresponding adjustment to its subscriber count to include a
reasonable estimate of the number of subscribers it expects to serve
with that plant by the end of the 12 month period.
2. The Commission also clarifies that plant in service must be
allocated between regulated and unregulated services based on a
reasonable measure of the current usage of that plant. Section
76.922(g)(6)(i) of our rules currently uses the phrase ``used and
useful in the provision of cable services,'' but does not specify that
such cable services must be regulated cable services. Since our
authority to determine cable rates extends only to regulated services
as defined by the Communications Act, only plant used and useful in the
provision of regulated services should be included in the ratebase.
Accordingly, for our final rules, we will make this point explicit
[[Page 9362]]
and will amend the interim rule to specify that tangible plant must be
used and useful in the provision of regulated cable services in order
to be included in the ratebase. This will ensure that the ratebase for
regulated cable service only includes plant used for such regulated
cable service, and that subscribers to regulated tiers are not forced
to subsidize plant that is used solely for premium services.
3. In addition, we recognize that what constitutes a reasonable
measure of the current usage of the tangible plant depends on the
circumstances. We believe that in many cases a reasonable measure would
be a straight channel ratio. In other words, if an operator provides
programming over a total of 40 channels, 32 of which are BST and CPST
channels and eight of which are premium and pay-per-view channels, the
operator must allocate 80% of its plant in service to regulated cable
service and 20% to unregulated service. We do not believe, however,
that the channel ratio should be weighted by customer. The cost of
physical plant is directly related to the provision of cable channels
and the amount of channel capacity which exists on a particular cable
system. The cost of that plant does not vary depending on how many
subscribers receive each channel. It would be inappropriate to weight
the channel ratio by subscriber use when such use does not affect the
cost of the plant.
4. With regard to the time period within which excess capacity must
be used and useful in order to be included in ratebase, we adopt the
interim rule of one year as our final rule. For business purposes,
operators commonly project how much capacity will be used within the
given year as part of their annual operating budgets. We believe that
the 12 month period therefore permits plant associated with all
reasonably foreseeable improvements in or additions to service to be
included in ratebase.
B. Ratebase--Intangibles
5. Previously, we had concluded that one reason we should not rely
on acquisition prices for ratemaking was that it appeared that those
prices often include an expectation of supra-competitive profits that
market power of cable systems not operating in a fully competitive
market might expect to generate.
6. We continue to reject the argument that operators are entitled
to include 100% of their intangible costs in the ratebase. Exclusion of
some amount of these costs from the ratebase does not result in an
impermissible taking without just compensation in violation of the
Fifth Amendment. We have no constitutional duty to ensure full recovery
of these acquisition costs, we must only ensure that the end result of
our ratemaking decisions here is reasonable.
7. We continue to believe that the ratebase should not include
costs resulting from any expectation of monopoly profits or expectation
of a return on emerging and unregulated services, which we believe the
presumptive exclusion of such acquisition costs ensures. However, upon
further reflection and based upon our review of cost of service
filings, we believe this presumption can be modified, without
sacrificing this conclusion.
8. Therefore, we have created a new rule, applicable to systems
conveyed prior to the effective date of the interim cost rules, with
respect to the treatment of intangible assets. We find the model in
which 34% of the purchase price of a system is presumed to be
attributable to monopoly expectations, to be the one best suited to
these goals.
9. Our final rule presumes, rebuttably, that 34% of the purchase
price associated with regulated services of systems purchased prior to
regulation represents monopoly expectations and must be removed from
the regulated ratebase. Put differently, the ratebase presumptively
shall not exceed 66% of that portion of the system price allocable to
assets used to provide regulated services. The 34% adjustment must be
applied to the entire purchase price associated with regulated
services, not just the portion of the price allocable to intangibles,
because cable operators derive revenues, including monopoly revenues,
from the employment of both tangible and intangible assets. Applying
the 34% adjustment to all assets associated with regulated services,
rather than only to the associated intangibles, should remove all
expectations of monopoly profits.
10. As noted, we recognize that this approach necessarily involves
the use of industry-wide averages with respect to certain variables
that, while reasonable, will not always reflect with perfect accuracy
the circumstances of particular operators. To the extent the 34%
adjustment is inexact for certain operators, we are particularly
concerned that this adjustment could be used to raise rates
unreasonably, given our statutory mandate to guard against unreasonable
rates. Therefore, we will allow use of the 34% adjustment only for the
purpose of justifying rates in effect as of the effective date of these
rules. We believe that this represents a reasonable compromise between
the overall integrity of the analysis used to arrive at the 34%
adjustment and the concern we have that in some cases this adjustment
could prove overly generous to operators. Accordingly, in cost of
service cases to which the 34% adjustment is applicable, the operator
may include in the ratebase up to 66% of the purchase price allocable
to assets used to provide regulated services, but only to the extent
necessary to justify rates in effect as of the effective date of these
rules. If the current rate can be justified by including in the
ratebase less than the 66% amount, then in no event shall the operator
seek to use a higher percentage for purposes of any cost of service
showing.
11. This adjustment shall be applied only to the purchase price of
systems sold prior to May 15, 1994, the effective date of the Report
and Order and Further Notice of Proposed Rulemaking, MM Docket 93-215,
9 FCC Rcd 4527 (1994) (``Cost Order'' or ``Further Notice''). The
interim rule is made permanent with respect to systems sold after this
date. Operators who acquired systems after May 15, 1994 were aware of
the interim rule strictly limiting the ability to recover the cost of
intangible assets. Thus, to the extent such operators recorded
substantial intangibles, we presume those intangibles are associated
with investment in unregulated services. As such, they cannot be
included in the regulated ratebase.
12. Generally, operators using the cost of service to justify
current rates for the first time, will be able to do so using the 34%
adjustment. In some rare cases, however, this adjustment may not be
adequate. For instance, if an operator acquired a system with tangible
assets equal to 70% of the purchase price, obviously allowing a
ratebase equal to 66% of the purchase price may not allow the operator
to recover reasonably incurred costs. Similarly, if the tangible assets
represent 64% of the purchase price, the remaining 2% may not
adequately compensate the operator for reasonably incurred intangible
assets. Therefore, where the tangible assets approach 66% of the
purchase price, the operator may justify rates using 100% of the
tangible assets and such intangible assets as are permissible using the
interim rules.
13. We further believe it appropriate to adjust our interim rule
concerning deferred income taxes. We will now require operators to
deduct deferred income taxes from the ratebase only to the extent that
such taxes accrued after
[[Page 9363]]
the date the operator became subject to rate regulation.
C. Ratebase-Start-Up Losses
14. We are persuaded that the treatment of prior year losses in the
Cost Order should be amended. We find that we should not prescribe a
specific prematurity phase, rather we find that we should define the
prematurity phase as the actual period during which expenses exceed
revenues. Although we find that the interim rule should be modified, we
continue to reject the claims of commenters who argue that the
wholesale inclusion of start-up losses in the ratebase is warranted. We
also reject the assertion that we should allow deferred earnings into
ratebase. To do so would artificially inflate the ratebase.
15. Thus, we find it appropriate to redefine our current definition
of prematurity so as to account for the specific circumstances
experienced by individual operators rather than continuing to use the
FASB 51 standard. We are persuaded by the arguments that limitations on
start-up losses should be governed by the history of individual
operators. For capitalized start-up losses, build and hold operators
should be permitted to recover reasonably incurred cumulative net
losses, plus any unrecovered interest expenses connected to funding the
regulated ratebase, over the unexpired life of the longest lived asset
in the regulated ratebase, commencing with the end of the loss
accumulation phase. In most cases, acquired systems will have recorded
accumulated start-up losses as goodwill or as some other form of
intangibles. To the extent that purchased systems can demonstrate that
start-up losses have been recorded as goodwill or some other category
of intangibles, these losses shall be allowed just as if they had been
recorded as start-up losses and the system must itemize its assets
instead of using the 66% purchase price allowance methodology described
above. In allowing this however, we must emphasize this should not be
interpreted as authority for the wholesale inclusion of goodwill. The
burden remains on the operator to demonstrate that any portion of a
class of assets is derived from start-up losses.
16. The end of the accumulation phase (i.e., the prematurity phase)
will vary from system to system, depending upon the experience of the
particular system at issue. By allowing the recovery to occur over the
unexpired life of the longest lived asset in the regulated rate base
rather than the remainder of the franchise life, the amortization
period for purchased systems will realistically reflect the expected
period during which the operating losses can be recovered.
D. Ratebase-Tangibles
17. We continue to believe that original cost is a reliable and
fair measure of the value of tangible assets. However, our review of
cost of service filings reveals that in many instances it could be
difficult, if not impossible, to determine the original cost of a
tangible asset. To accomodate this reality, for cable systems
constructed before May 15, 1994, we will allow operators to use the
book value that was recorded as of May 15, 1994, regardless of whether
the system was built or acquired by the current operator. We will
continue to require that original cost be used for cable systems
constructed after May 15, 1994. Also, an operator that acquires
individual cable assets, such as converters or remotes, at arms' length
after May 15, 1994 may use its original cost for those items, rather
than its seller's original cost.
18. An exception may apply to the original cost rule in the case of
assets acquired in an arms-length transaction and without
subscribership. In such instances, assets may be recorded at fair
market value. Thus, where a cable operator sells converters, for
example, to an unaffiliated operator to be used in a different
franchise location, it is acceptable for the acquiring operator to
record such converters at fair market value, that is, at the price the
acquiring operator paid for them.
E. Rate of Return
19. In the Cost Order, we established a single overall rate of
return for cable cost of service proceedings. The presumptive rate was
set at 11.25% after taxes, although operators could seek different
rates if they believed their circumstances justified different rates.
The burden of such justification is high, however, and local
authorities may counter an operator's effort to obtain a higher rate
with evidence to justify a rate below 11.25%. The presumptive 11.25%
rate was selected over individualized rates of return to avoid the
imposition of undue administrative burdens.
20. The Commission will retain this 11.25% presumptive rate. We are
guided to this conclusion by the general absence of challenges to the
presumptive rate and our continued concern that the effort to set an
appropriate rate of return not be overwhelmed by administrative
difficulties that individualized rate estimations could entail. We
recognize, however, that a unitary presumptive rate does not provide
the most accurate estimation of capital costs for the full range of
operators seeking to set cable rates in a cost of service filing. The
Commission is interested in developing a rate of return formula that
better accommodates capital cost differences among cable operators
without imposing unreasonable administrative burdens on operators,
franchise officials and the Commission. We will therefore proceed with
a further notice of proposed rulemaking to solicit input regarding the
development of an alternative rate of return formula. An alternative
formula, if adopted, would serve as an alternative to the current
presumptive rate method. It would not replace it.
F. Depreciation
21. We indicated in the Further Notice that industry practices with
respect to depreciation would shape our ultimate resolution of the
issue. Since release of the Further Notice, we have had the opportunity
to review numerous cost of service filings. These filings demonstrate
that some operators often do not follow any industry standards or other
specific guidelines in establishing the useful lives of their assets
for purposes of depreciation, or with respect to other aspects of their
cost of service filings. As a result, the claimed useful life of a
particular asset category can vary significantly among cable operators,
even though they all use the same type of equipment and hence should be
claiming roughly the same useful life in most instances. Some variation
in the claimed useful lives is to be expected since, for example,
management plans to replace equipment will affect its useful life and
will vary among operators. Thus, when we adopted the interim rules with
respect to depreciation, we expressly provided for case-by-case review
of filings. However, we neither intended nor expected the substantial
variations that the Form 1220s reveal. Our experience since adoption of
the Cost Order now convinces us that the benefits of standardizing the
useful lives of assets underlying depreciation rates outweigh any
resulting burdens.
22. The absence of specific standards or guidelines with respect to
useful lives creates uncertainty for operators and regulators alike
and, at the local level, creates the risk of inconsistent treatment of
similarly situated operators, given the varying practices of the
operators and the discretion given to franchising authorities. These
factors necessitate heightened scrutiny of cost of service cases before
the Commission, as our
[[Page 9364]]
staff endeavors to ensure that the rates charged for regulated services
are the product of reasonable estimations of useful lives. To provide
for consistent treatment of these issues and to ease burdens on
operators and regulators, we believe it prudent to establish some
certainty and uniformity with respect to several issues.
23. Depreciation schedules. A staff survey of cost of service
filings reveals significant disparities in the useful lives claimed by
cable operators with respect to specific assets. Although for each
particular asset category there are a substantial number of filers
claiming useful lives within a relatively small range, there are also a
significant number of outliers whose claimed useful lives appear to be
inappropriate. With respect to headends, for example, 22% of filers
claimed a useful life of between seven and nine years while 18% claimed
between 15 and 16 years. For transmission facilities, 33% of filers set
the useful life at five to six years, while 23% claimed lives of
between 15 and 16 years.
24. The variations in the useful lives of various assets, as
claimed by cable operators, are due in part to the absence of
depreciation schedules in the interim cost rules, which forces
operators to establish the useful lives of their assets on some other
basis. Thus, it appears that operators do not have a great deal of
specific guidance from any source in this regard, resulting in the
variations described above.
25. Local franchising authorities face a similar lack of guidance
when they attempt to determine the reasonableness of the useful lives
that their cable operators claim. And the Commission staff that reviews
the cost of service filings, in an effort to ensure equal treatment of
similarly situated cable operators, must attempt to reconcile the
substantial differences reflected in the individual filings.
26. To eliminate the uncertainty described above, and to facilitate
more uniform depreciation practice for use in computing rates for
regulated cable services, we will adopt a flexible range of useful
lives for use by cable operators seeking to justify depreciation rates
in cost of service filings. In general, we have used the data available
from these filings to develop a range of years defining the useful life
of each of the relevant asset categories identified in Section C, Item
9 of Form 1220, as follows:
------------------------------------------------------------------------
Useful life
Category (years)
------------------------------------------------------------------------
a. Headend................................................ 8-13
b. Transmission Facilities and Equipment.................. 6-14
c. Distribution Facilities................................ 10-15
d. Circuit Equipment...................................... 7-14
e. Maintenance Facilities................................. 17-35
f. Maintenance Vehicles and Equipment..................... 3-7
g. Buildings.............................................. 18-33
h. Office Furniture and Equipment......................... 9-11
------------------------------------------------------------------------
27. These figures are derived from 600 cost of service filings.
Such filings, including the depreciation data, are required to be made
in accordance with generally accepted accounting principles (``GAAP'').
GAAP does not dictate specific useful lives, but rather provides
general guidelines. Thus, the useful lives reported on the cost-of-
service filings reflect, to some extent, the subjective judgments of
the operators making the filings. To the extent certain aspects of
particular filings raise concerns, we have made adjustments
accordingly. For example, we excluded from the observation pool as
facially unreasonable the filings of a number of systems that claimed a
useful life of one year for all of their assets.
28. Having made such adjustments, staff arrived at an average
useful life for each asset category. Staff then established a range, by
taking one standard deviation from the average useful life for each
asset category. Each end of the range was then rounded to the nearest
whole number. We have chosen a range of years, rather than dictating
the use of a unitary figure, to provide operators with flexibility in
determining depreciation rates for their particular systems, although
still within reasonable bounds. By prescribing a range of years, we
will permit operators to take into account factors that reflect
characteristics of their individual systems. For example, the useful
life of a cable distribution system might vary depending upon the
presence and nature of a competing multichannel video programming
distributor (``MVPD''). Depending upon whether the competing MVPD
offers interactivity and other advanced features, the cable operator
reasonably might determine that these factors will alter the
obsolescence, and hence change the depreciation period, of the
operator's assets that do have such features. Thus, while the ranges we
have prescribed will provide for more consistent depreciation practices
between cable operators, we do not believe it is necessary or prudent
to deprive cable operators of all discretion to judge the appropriate
useful life of their own property. However, operators seeking to
establish useful lives that fall outside the prescribed ranges will
have to justify such claims on a case-by-case basis.
29. Given the number of filings, the requirements of GAAP, the
ability of operators to adjust for their individual circumstances, and
the refinements and adjustments made by the staff, we are confident
that the survey captures a representative sampling of data and produces
a fair and reasonable range of years for each asset category.
30. For any asset category, we will presume the reasonableness of
the useful life claimed by an operator if it falls within the range
prescribed above. An operator may seek to depreciate assets over a
period of time other than that which we have prescribed, but in that
case the operator will have the burden of establishing the
reasonableness of the period it has chosen. Thus, while furthering the
goals of certainty and uniformity in the area of depreciation rates,
our approach will be flexible enough to account for those unique
circumstances in which an operator can demonstrate the reasonableness
of a rate that falls outside of the prescribed range.
31. In addition, we will require the operator to depreciate its
assets in accordance with the straight-line methodology. Our review of
the Form 1220s on file with the Commission suggests that some operators
are using accelerated depreciation methodologies to increase the amount
of their depreciation expense and thus to increase rates. While there
are contexts in which accelerated deprecation is a legitimate practice,
we have been presented with insufficient justification to show that it
would be appropriate for purposes of establishing rates under our cable
cost of service rules.
32. Test-year data. Our cost of service rules establish a maximum
permitted rate based on the operator's costs and ratebase as
established during the test year, which is the operator's most recent
fiscal year. In some instances, an operator will be able to time the
filing of its 1220 such that the test year will be one in which
unusually high depreciation write-offs were taken. Higher depreciation
expenses translate into higher permitted rates, since rates must cover
expenses. Thus, to the extent the operator can control the timing of
its filing, it can justify rates that are higher than would be
permitted were the operator to use data from a more representative 12
month period. The staff review of the Form 1220s suggests that some
operators are pursuing precisely this strategy and thus artificially
inflating rates.
[[Page 9365]]
33. Our new rules prescribing depreciation schedules and requiring
straight-line depreciation should help to curb this practice. Where it
nevertheless appears that the test-year data include unreasonably high
depreciation write-offs, the operator should determine the extent to
which the depreciation claimed for the test year exceeds normal
depreciation and exclude the excess from the ratebase.
34. Relevance of Franchise Life in Defining Useful Life of Assets.
The cost of service filings indicate that operators often claim that
the useful life of cable system assets cannot exceed the term of the
cable franchise, based on the proposition that the termination of the
franchise renders the assets useless. However, this presumes that
operators generally are unsuccessful at renewing the franchise, a
premise for which there is no evidence and which conflicts with the
general experience of the industry. Even in the event of a non-renewal,
the operator might sell its asset to the new cable franchisee and
thereby realize the value associated with its actual remaining life.
For these reasons, we will presume that the term of the franchise is
not relevant for purposes of determining the useful life of cable
system assets, again subject to rebuttal by the operator if it can
show, for example, some threat that its franchise will not be renewed
and that in the event of non-renewal the operator will not be able to
recover the value of its assets.
G. Taxes
35. In the Cost Order, we provided for the recovery in income taxes
as an expense incurred by operators as a consequence of providing
regulated cable services. Commenters have argued that capital structure
assumptions used to calculate the tax expense should parallel the
capital structure assumptions used to estimate the rate of return.
36. We agree that use of actual capital structures is the
appropriate method of estimating the equity portion subject to tax
recovery when the actual, or individualized, capital structure of an
operator is used to establish the rate of return. Accordingly, if we
adopt the proposed alternative to use actual capital structures when
calculating the rate of return, we will rely on actual capital
structures derived from the rate of return analysis to determine the
amount of tax recovery for operators using the alternative to the
presumptive 11.25% rate. However, when hypothetical structures are used
to set the rate of return under the initial Cost Order method, we will
employ the same capital structure assumptions used in such analysis to
the tax calculation.
37. With respect to distributions to individual owners of non-
Chapter C entities, we will continue to adjust the income calculation
for estimating allowed taxes. We recognize that entities other than
Chapter C corporations may pass through income directly to the
individual owners and that this income may have been derived from the
provision of regulated cable services. Nevertheless, we will continue
to adhere to the traditional principle of adjusting the income tax
amount to ensure that ratepayers do not pay the taxes of individuals
who are structurally separate from the entity providing the regulated
service.
H. Cost Allocation
38. While our current cost allocation rules require direct
assignment of costs, the rules also allow for operator flexibility in
determining specific allocators and allocation schemes. Accordingly, we
affirm the Commission's current cost allocation requirements, with the
exception of our rule which requires cost allocation of non regulated
costs to specific non regulated service categories, which we remove. We
also clarifiy that, within our current cost allocation methods which
are affirmed by the Order, revenues must be matched with underlying
expenses between related lines on FCC Form 1220, and that allocators
need to be consistent.
39. The general propositions upon which we continue to base our
cost allocation requirements are as follows: (1) costs shall be
directly assigned among the equipment basket and service cost
categories whenever possible; (2) costs that cannot be directly
assigned and which no allocator has been specified by the Commission
are to be allocated based on direct analysis of the origin of the
costs, and where allocation based on direct analysis is not possible,
operators must attempt to make a cost causative linkage to other costs
directly assigned or allocated to the service cost categories and the
equipment basket; and (3) for costs that cannot be directly assigned
and for which no indirect measures of cost allocation can be found,
such costs shall be allocated to each service cost category based on
the ratio of all other costs directly assigned and attributed to a
service cost category over total costs directly or indirectly assigned
and directly or indirectly attributable.
40. We eliminate cost allocation of non-regulated costs to specific
non-regulated service categories. While the requirement may in some
limited instances enable us to more readily ascertain the bases for
cost allocations to regulated categories, we believe that it would be
overly burdensome to continue to include this requirement in our rules.
Therefore, we amend our rules to remove the requirement that non-
regulated costs must be allocated among the non-regulated programming
service categories, other cable activities, and non-cable activities
categories, and replace these categories with a single ``all other''
service cost category. Accordingly, operators electing cost of service
regulation and cable operators seeking an adjustment to external costs
shall allocate costs among the equipment basket and the following
service cost categories: (1) BST, (2) CPST, and (3) all other. The
``all other'' service cost category shall include all costs not
included in the BST or CPST service cost categories.
41. We decline to adopt a ``weighted channel'' approach to cost
allocation. Generally, incremental increases in plant investment are
driven by the number of channels added, irrespective of subscribership
to BST channels. The number of subscribers does not impact costs in
most cable equipment categories. Accordingly, we believe that in most
cases, a straight channel ratio would be a reasonable approach to the
allocation of plant costs amongst service baskets.
42. We also reject the proposition that advertising revenues and
home shopping services be assigned to the ``other cable services''
category. The allocation approach for cost of service showings
reflected in FCC Form 1220 indicates that revenues received for
advertising and home shopping on a regulated tier should be allocated
to that tier, and used as an offset to providing service on that tier.
We adopted this approach because advertising and home shopping shown on
regulated channels employ regulated assets and, consequently, these
revenues should be distributed as offsets to the regulated tier revenue
requirements.
I. Accounting Requirements
43. In the Cost Order, we stated that we would adopt a uniform
system of accounts for those cable operators that elect cost of service
regulation. We concluded that until a uniform system of accounts could
be finalized, operators electing cost of service regulation should use
an interim summary accounting system. Under the interim system that we
adopted, operators using FCC Form 1220 identify costs in 55 summary
level accounts, and small operators using FCC Form 1225 identify costs
in 32 summary level accounts.
[[Page 9366]]
Operators are required to identify all amounts associated with each
revenue and cost category at the franchise, system, regional and/or
company level, depending on the organizational level at which the
operator identified revenues and costs for accounting purposes as of
April 3, 1993. Local franchising authorities and the Commission may
require operators to provide any additional financial data and
explanations necessary to substantiate a cost of service filing and may
order appropriate disallowances if an operator fails to provide a
reasonable response.
44. We now conclude that a uniform system of accounts would be
unnecessarily burdensome for cable operators at this time. Our review
of the cost of service filings has shown that FCC Forms 1220 and 1225
generally provide a sufficiently detailed basis for evaluating
operators' rates. The additional detail provided by a uniform system of
accounts would be of limited value since most of the filing defects we
have discovered thus far are company-specific and would not have been
prevented by a uniform accounting system. Our practice of issuing
deficiency letters when questions arise has proved to be an adequate
means of clarifying data. Therefore, we agree that investing the time
required to develop a uniform system would be counter-productive to
achieving our objective to process cases as expeditiously as possible.
We are also persuaded that imposing a different accounting system on
the relatively few systems filing cost of service justifications may
create administrative inefficiencies for cable operators. Therefore, we
will not adopt a uniform accounting system but will require operators
electing cost of service regulation to follow the accounting standards
required by FCC Forms 1220 and 1225, thus making permanent our interim
accounting standards.
J. Affiliate Transactions
45. In the Cost Order, we promulgated rules for valuing
transactions between cable operators and affiliated companies. These
rules were designed to prevent favorable self-dealing between
affiliated companies in order to manipulate our rate rules. We defined
an affiliated entity as one that shares a 5% or greater ownership
interest with the cable system operator. The interim rules require an
affiliated transaction to be valued at the ``prevailing company
price,'' if the provider has sold the same kind of asset or services to
a substantial number of third parties at a generally available price.
If the provider has not been engaged in similar transactions with a
substantial number of third parties, the rules distinguish between the
sale of an asset and the sale of a service (for the purposes of
evaluating affiliate transactions, programming is considered an asset).
If the transaction involves an asset, the cable operator is required to
value the transaction at the higher of cost or fair market value when
the cable operator is the seller and the lower of cost or fair market
value when the cable operator is the purchaser. If the transaction
involves a service and no prevailing company price can be established,
the cable operator is required to value the service at the service
provider's cost.
46. We reject the argument to permit a window for new services,
i.e., until they can market their services to a substantial number of
third parties. In a competitive market, programmers would not be able
to subsidize new services with higher rates for competitive services.
Similarly, in a regulated industry, programmers cannot expect regulated
ratepayers to subsidize new programming ventures.
47. We also requested comment on an appropriate method of valuing
an asset absent a prevailing company price. Ruling that cable operators
are permitted to value services at the provider's cost is consistent
with the current rules for telephone companies and there appears to be
no reason to distinguish the two industries in this particular context.
This is especially true in light of the more liberal definition of
prevailing company price in the cable services regulatory scheme.
48. We also find that the current definition of ``affiliate'' is
consistent with the definition used elsewhere in the cable services
regulatory scheme.
49. Finally, we requested comment as to whether the interim
affiliate transaction rules should be incorporated into a uniform
system of accounts. Since we have found that no need exists at this
time to adopt a uniform system of accounts, this point is moot.
K. Hardship Rate Relief
50. In the Cost Order, we recognized that, in certain extraordinary
cases, rate regulation under either the benchmark or cost of service
mechanisms would threaten an operator's financial health or ability to
provide service. In such situations, an operator may obtain special
rate relief by demonstrating that rate regulation using either of the
two standard rate-setting options would cause such financial harm that
the operator would be unable to attract capital or maintain credit
necessary to operate, despite prudent and efficient management. The
operator must show that the requested rate relief would not be
unreasonable or exploitative of customers. In other words, rates cannot
be excessive compared to competitive rates of similarly situated
systems. Hardship showings must be made for the MSO level, or the
highest level of the operator's cable system organization. Operators
that submit an adequate initial showing of facts which, if proved,
might warrant special relief, are subsequently given the opportunity to
prove the facts alleged in the showing.
51. We now believe that the process could be shortened by
eliminating the requirement of an initial showing. We will therefore
allow operators to combine the requirements of the initial factual
showing and the subsequent evidentiary showing into one pleading.
52. We continue to believe that we are authorized to consider an
operator's unregulated revenues when determining eligibility for
hardship relief. An evaluation of an operator's financial health that
is based on only a portion of the operator's revenues would be
incomplete and inaccurate. Similarly, it is appropriate to consider a
hardship pleading in light of an operator's revenues measured at the
highest level of the operator's organization. Hardship relief is an
extraordinary relief measure reserved for operators whose overall
financial health would be seriously threatened under the standard rate
regulation mechanisms. It is not designed to bail out struggling cable
systems that are owned and operated by prosperous MSOs. Lastly, the
requirement that rates cannot be excessive compared to competitive
rates of similarly situated systems does not mean that rates cannot
exceed competitive rates. Rather, we expect operators to show that
their rates would not exceed competitive rates to a degree that would
be unreasonable.
II. Regulatory Flexibility Analysis
A. Final Regulatory Flexibility Act Analysis for the Second Report and
Order and First Order on Reconsideration
53. Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C.
Secs. 601-12, the Commission's final analysis with respect to the
Second Report and Order and First Order on Reconsideration is as
follows:
54. Need and purpose of this action: The Commission, in compliance
with Section 3 (b) and (c) of the Cable Television Consumer Protection
and Competition Act of 1992 pertaining to rate regulation, adopts rules
and procedures intended to ensure cable subscribers of reasonable rates
for cable
[[Page 9367]]
services with minimum regulatory and administrative burden on cable
entities.
55. Summary of issues raised by the public in response to the
Initial Regulatory Flexibility Analysis: There were no comments
submitted in response to the Initial Regulatory Flexibility Analysis.
The Chief Counsel for Advocacy of the United States Small Business
Administration filed comments in the original rulemaking order. The
Commission addressed these comments in the Rate Order ( MM Docket No.
92-266, FCC 93-177, 8 FCC Rcd 5631 (1993)). The Chief Counsel for
Advocacy of the United States Small Business Administration also filed
comments in response to the Further Notice of Proposed Rulemaking.
Those comments are addressed herein.
56. Significant alternatives considered and rejected. Petitioners
representing cable interests and franchising authorities submitted
several alternatives aimed at minimizing administrative burdens. In
this proceeding, the Commission has attempted to accommodate the
concerns raised by these parties. For example, the revised rules
regarding action on rate complaints within two years of a cost of
service showing are designed to reduce burdens on both industry and
regulators. In addition, the revised rules also reduce burdens on both
industry and regulators by simplifying certain calculations involved in
producing and reviewing a cost of service showing.
III. Paperwork Reduction Act
57. The Requirements adopted herein have been analyzed with respect
to the Paperwork Reduction Act of 1980 and found to impose a new or
modified information collection requirement on the public.
Implementation of any new or modified requirement will be subject to
approval by the Office of Management and Budget as perscribed in the
Act.
IV. Ordering Clauses
58. Accordingly, it is ordered that the Petitions for
Reconsideration are granted in part, denied in part, and to the extent
that Petitions raise issues unresolved in this order, they will be
disposed of in future orders.
59. It Is further ordered that, pursuant to Sections 4(i), 4(j),
623 (b) and (c) of the Communications Act of 1934, as amended, 47
U.S.C. 154(i), 154(j), 543(b) and (c) the rules, requirements and
policies discussed in this Second Report and Order and First Order on
Reconsideration are adopted and Sections 76.922 and 76.924 of the
Commission's rules, 47 CFR 76.922 and 76.924, are amended as set forth
below.
60. It is further ordered that the requirements and regulations
established in this decision shall become effective upon approval by
the Office of Management and Budget of the new information collection
requirements adopted herein, but no sooner than thirty (30) days after
publication in the Federal Register.
61. It is further ordered that the Secretary shall send a copy of
this Second Report and Order, First Order on Reconsideration, and
Further Notice of Proposed Rulemaking, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration in accordance with paragraph 603(a) of the
Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C.
Secs. 601 et seq. (1981).
List of Subjects in 47 CFR Part 76
Cable television, Reporting and recordkeeping requirements.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Part 76 of Title 47 of the Code of Federal Regulations is amended
as follows:
PART 76--CABLE TELEVISION SERVICE
1. The authority citation for Part 76 continues to read as follows:
Authority: Sections 2, 3, 4, 301, 303, 307, 308, 309, 48 Stat.,
as amended 1064, 1065, 1066, 1081, 1082, 1083, 1084, 1085, 1101; 47
U.S.C. 152, 153, 154, 301, 303, 307, 308, 309; 612, 614-615, 623,
632 as amended, 106 Stat. 1460, 47 U.S.C. 532; 623, as amended, 106
Stat. 1460; 47 U.S.C. 532, 533, 535, 543, 552.
2. Section 76.922 is amended by revising paragraphs (i)(6)(i) and
(i)(7), redesignating paragraphs (i)(6)(ii) through (i)(6)(vii) as
paragraphs (i)(6)(iii) through (i)(6)(viii) respectively, and adding a
new paragraph (i)(6)(ii) to read as follows:
Sec. 76.922 Rates for the basic service tier and cable programming
services tiers.
* * * * *
(i) * * *
(6) * * *
(i) Prudent investment by a cable operator in tangible plant that
is used and useful in the provision of regulated cable services less
accumulated depreciation. Tangible plant in service shall be valued at
the actual money cost (or the money value of any consideration other
than money) at the time it was first used to provide cable service,
except that in the case of systems purchased before May 15, 1994 shall
be presumed to equal 66% of the total purchase price allocable to
assets (including tangible and intangible assets) used to provide
regulated services. The 66% allowance shall not be used to justify any
rate increase taken after the effective date of this rule. The actual
money cost of plant may include an allowance for funds used during
construction at the prime rate or the operator's actual cost of funds
during construction. Cost overruns are presumed to be imprudent
investment in the absence of a showing that the overrun occurred
through no fault of the operator.
(ii) An allowance for start-up losses including depreciation,
amortization and interest expenses related to assets that are included
in the ratebase. Capitalized start-up losses, may include cumulative
net losses, plus any unrecovered interest expenses connected to funding
the regulated ratebase, amortized over the unexpired life of the
franchise, commencing with the end of the loss accumulation phase.
However, losses attributable to accelerated depreciation methodologies
are not permitted.
* * * * *
(7) Deferred income taxes accrued after the date upon which the
operator became subject to regulation shall be deducted from items
included in the ratebase.
* * * * *
3. Section 76.924 is amended by revising the section heading,
removing paragraphs (e)(1)(iv), (e)(1)(v), (e)(2)(iv) and (e)(2)(v),
and revising paragraphs (e)(1)(iii) and (e)(2)(iii) to read as follows:
Sec. 76.924 Allocation to service cost categories.
* * * * *
(e) * * *
(1) * * *
(iii) All other services cost category. The all other services cost
category shall include the costs of providing all other services that
are not included the basic service or a cable programming services cost
categories as defined in paragraphs (e)(1)(i) and (ii) of this section.
(2) * * *
(iii) The all other services cost category as defined by paragraph
(e)(1)(iii) of this section.
* * * * *
[FR Doc. 96-5427 Filed 3-7-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-5373 Commercial Driver's License Program and Controlled Substances and Alcohol Use and Testing
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9546-9567]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5373]
[[Page 9545]]
_______________________________________________________________________
Part III
Department of Transportation
_______________________________________________________________________
Federal Highway Administration
_______________________________________________________________________
49 CFR Part 382, et al.
Commercial Driver's License Program and Controlled Substances and
Alcohol Use and Testing; Final Rule
Federal Register / Vol. 61, No. 47 / Friday, March 8, 1996 / Rules
and Regulations
[[Page 9546]]
DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
49 CFR Parts 382, 383, 390, 391 and 392
[FHWA Docket Nos. MC-92-19 and MC-92-23]
RIN 2125-AD46
Commercial Driver's License Program and Controlled Substances and
Alcohol Use and Testing
AGENCY: Federal Highway Administration (FHWA), DOT.
ACTION: Final rule; technical amendments.
-----------------------------------------------------------------------
SUMMARY: The Federal Highway Administration is making technical
amendments to its alcohol and drug testing rules and its regulations
implementing the commercial driver's license program. The testing rules
require employers to test drivers who are required to obtain commercial
driver's licenses (CDLs) for the illegal use of alcohol and controlled
substances. The amendments are necessary to correct minor errors in the
final rule, codify final dispositions of waivers of the commercial
driver's license program, and make conforming metrification changes.
EFFECTIVE DATE: This rule is effective March 8, 1996.
FOR FURTHER INFORMATION CONTACT: For information regarding program
issues: Office of Motor Carrier Research and Standards, (202) 366-1790,
For information regarding legal issues: Office of the Chief Counsel--
Motor Carrier Law Division, (202) 366-0834, Federal Highway
Administration, Department of Transportation, 400 Seventh Street, SW.,
Washington, DC 20590. Office hours are from 7:45 a.m. to 4:15 p.m.,
e.t., Monday through Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION:
A final rule published in the Federal Register on February 15, 1994
(59 FR 7484), added 49 CFR part 382 and made conforming amendments to
parts 391, 392, and 395.
Applicability
Sections 382.103 and 383.3 are being revised to clarify which
driver groups have been exempted from commercial driver's license
requirements and, by extension, from alcohol and drug testing
requirements. Since the final rule was published on February 15, 1994,
numerous questions have arisen about which groups have been granted
waivers from CDL requirements and how those waivers apply to alcohol
and drug testing. For clarity about the driver groups exempted from
Federal CDL requirements in September 1988 (53 FR 37313, September 26,
1988), the FHWA is amending these sections to note those groups
(farmers, firefighters, military personnel, emergency response
personnel) identified in the waiver notice of final disposition. In the
September 1988 waiver notice, States were given the option to exempt
these groups from all CDL requirements. Drivers in States which have
exercised these options do not have to be tested. Drivers in States
which have not exercised these options, but require those drivers to
obtain CDLs, must be tested for alcohol and drugs under part 382.
The FHWA is also amending Sec. 383.3 to codify part 383 exceptions
to certain CDL requirements for drivers that meet specific conditions
in the State of Alaska, in the farm-related service industries or in
the pyrotechnics industry. The final dispositions of the restricted CDL
requirements for certain Alaskan drivers, farm-related service industry
drivers, and pyrotechnic industry drivers allow States to waive certain
requirements for CDL applicants under certain conditions. These drivers
must still obtain CDLs and will be subject to alcohol and drug testing
by their employers. The restrictions placed on the CDL do not exempt
these drivers from the requirements of the alcohol and drug testing
program. For more information about the State of Alaska, farm-related
service industry, and pyrotechnic industry final dispositions, see 54
FR 33230, August 14, 1989, 57 FR 13650, April 17, 1992, and 60 FR
34188, June 30, 1995.
Definitions
The FHWA is adding definitions in Sec. 382.107 for the terms
``controlled substances,'' ``disabling damage,'' and ``licensed medical
practitioner.'' The definition of controlled substances will include
the substances tested for in part 40 of this title. The FHWA is copying
the definition of ``disabling damage'' in Sec. 390.5 for placement in
Sec. 382.107 to clarify that this definition is to be used in
Sec. 382.303. The FHWA is adding a definition for ``licensed medical
practitioner'' that is patterned after the Sec. 390.5 definition of the
term ``medical examiner'' to state what types of individuals may
prescribe controlled substances to drivers under Sec. 382.213. See the
discussion below about licensed medical practitioners.
Finally, the FHWA is modifying the definitions of ``driver'' and
``safety-sensitive function.'' ``Driver'' is being modified to remove
the last sentence with respect to pre-employment testing. This change,
along with modification to pre-employment testing discussed later in
this document, will allow employers to conduct pre-hire road testing of
applicants that will ensure the applicants know how to properly operate
particular equipment of an employer. ``Safety-sensitive function'' is
being modified to remove the reference to the Sec. 395.2 On-duty time
definition and add the text of part of the on-duty time definition in
its place. The FHWA has received numerous comments that it is difficult
for the public to make a cross reference to part 395, especially for
employers not subject to it. Also, in light of the FHWA's future
recodification of the Federal Motor Carrier Safety Regulations under
its zero base regulatory review project, the FHWA is removing most
cross referencing within subchapter B of Chapter III of Title 49, Code
of Federal Regulations.
Starting Date for Testing Programs
The FHWA has had numerous questions as to which testing regulations
an interstate motor carrier is subject to when the motor carrier begins
operations after March 17, 1994. To clarify the FHWA's intent in
requiring such an interstate motor carrier to start drug testing under
part 391, the FHWA is amending paragraph (c) and adding paragraph (d)
to Sec. 382.115. This will clarify that employers that begin commercial
vehicle operations after March 17, 1994, will have until January 1,
1996, to implement testing programs required by part 382. However, if
an employer begins operating in interstate commerce after March 17,
1994, and prior to January 1, 1996, such an employer is considered an
interstate motor carrier and may be subject to part 391, subpart H. If
such an interstate motor carrier is required to implement the subpart H
testing program, it must do so immediately. On January 1, 1996, the
motor carrier will modify its drug testing program to part 382
requirements and add alcohol testing at that time.
Licensed Medical Practitioner
The FHWA has had inquiries concerning whether drivers, who are
prescribed medications by non-physicians licensed to dispense
controlled substances in their jurisdiction, may take such controlled
substances and not be considered to be in violation of Secs. 382.213
and 392.4. Although the terms ``medical review officer'' and
``substance abuse
[[Page 9547]]
professional'' use the term physician with a parenthetical describing
the type of physician, the FHWA did not intend that such a condition be
applied to the term ``physician'' in Secs. 382.213 and 392.4. The term
``physician'' in the definitions of ``medical review officer'' and
``substance abuse professional'' is followed by a parenthetical stating
``medical doctor or doctor of osteopathy.'' Therefore, the FHWA is
replacing the term ``physician'' in Secs. 382.213 and 392.4 with the
term ``licensed medical practitioner.'' A definition of the term
``licensed medical practitioner'' will be added to Sec. 382.107. A
licensed medical practitioner means a person who is licensed,
certified, and/or registered, in accordance with applicable Federal,
State, local, or foreign laws and regulations, to prescribe controlled
substances and other drugs. In addition, the FHWA is removing the
footnote to Sec. 392.4(a)(1). The Government Printing Office (GPO)
publishes Appendix D to the FMCSRs and the FHWA believes all
individuals have access to the GPO codified versions of Appendix D.
Pre-Employment Testing
The FHWA is amending Sec. 382.301(a) to clarify that an employer
must either administer a pre-employment controlled substances test for
drivers who the employer intends to hire or use or utilize the
exception and obtain specified information from previous employers. An
employer which obtains the information does not have to administer a
test. The information may also be obtained from third party service
providers that act as agents for employers. Regardless of which option
is chosen, an employer must comply with the separate requirements of
Sec. 382.413 to obtain certain prior testing information. Of course,
all testing information may be released only pursuant to the consent of
the driver.
Some questions have arisen regarding whether records prepared by or
obtained from former employers about a driver's pre-employment
controlled substances test results must be retained. These records must
be retained from one to five years in accordance with Sec. 382.401. In
order to be absolutely clear, the FHWA is adding the words ``and
retain'' to Sec. 382.301(d)(1) and is adding the types of records
required to be maintained by Sec. 382.301 to Sec. 382.401, Retention of
records, to address these concerns. Note, however, that such records
would only be subject to an information request under Sec. 382.413 if
the driver was actually employed or used as a driver by the employer.
Paragraph (d)(2) of Sec. 382.301 is also being revised. The rule
text is being rewritten to better explain use of the pre-employment
testing exception for occasional, intermittent, and casual drivers. A
similar paragraph has been in the drug testing rules of part 391 since
the rules were first promulgated. This paragraph relieves employers who
use intermittent, casual, or occasional drivers on a regular basis
(generally for short periods, such as trip-lease drivers or drivers
called from a union hiring hall) from the requirement to make the
verifications in Sec. 382.301(d)(1) each time the driver is used by the
employer to operate commercial motor vehicles (CMVs). These drivers may
be used as little as once each quarter or once each month by an
employer, and are generally in another employer's testing program or
are in a union hall's testing program that conforms to part 40 of this
title.
In response to questions regarding the intent of this section, the
FHWA believes that this revision will make the regulation more
understandable. When employer A uses a driver for the first time,
employer A must verify the information from former employers to ensure
the driver is actively participating in a testing program(s). The
driver may then work for employers B, C, or D, driving CMVs on a short
term basis, or return to driving on a regular basis for a regular
employer. If the driver returns to employer A to operate a CMV within
six months of the previous verification, no verification of the
information or pre-employment test is needed. If the driver returns to
drive a commercial motor vehicle for employer A more than six months
after employer A last verified the information as required under
Sec. 381.301(d)(1), employer A must again verify and record that the
driver is participating in a DOT agency testing program using part 40
procedures.
Post-Accident Testing
The FHWA is clarifying that drivers involved in accidents, as
defined in Sec. 390.5, are subject to post-accident testing. Despite
the general cross reference to Sec. 390.5 in Sec. 382.107, many people
appear to be unclear about what types of accidents require a test.
Therefore, the FHWA will include the definition of ``disabling damage''
to Sec. 382.107, revise the introductory phrase of Sec. 382.303(a), add
a clarifying phrase to Sec. 382.303(a)(2) that comports to the style of
Sec. 382.303(a)(1), and add Sec. 382.303(a)(3), a table to note when a
post-accident test is required.
Random Testing
On December 2, 1994, the FHWA, along with other DOT agencies,
published a final rule in the Federal Register (59 FR 62218) allowing
the agencies' Administrators to adjust the random drug testing rates
based on information obtained by the respective agencies in their drug
testing management information system reports. The agencies, generally,
require certain employers to submit a report covering their drug
testing program for a calendar year. The FHWA has randomly selected a
sample of interstate motor carriers in the past and will make random
selections of employers subject to part 382 in the future.
The FHWA included in the December 2, 1994, rule text of
Sec. 382.305(f) an example of when the FHWA Administrator may lower the
random drug testing rate. The example incorrectly stated that the
Federal Highway Administrator will have the first opportunity, based on
reported data, to reduce the random drug testing rate in 1997. In fact,
as stated in the DOT common preamble, the FHWA testing rate may first
be reduced in 1998. Recodified paragraph (g) of Sec. 382.305 is revised
accordingly.
Second, the rule changed the words ``average number of driver
positions'' in Sec. 382.305(a) to ``number of drivers each selection
period.'' This change was unintentional. Since the change was
unintentional, paragraph (a) is revised accordingly. The revised rule
is corrected using the original words ``average number of driver
positions.''
Third, employers have said that they believed they were not
required to have a random testing program, since the random testing
section does not specifically state that employers are required to have
one. The FHWA, therefore, is adding clarifying language to
Sec. 382.305(a) that states every employer must have a random testing
program and every driver shall submit to random testing.
Finally, employers have asked whether Sec. 382.305(k), recodified
as Sec. 382.305(l), prohibits a driver from driving a commercial motor
vehicle to a testing collection site after notification. The FHWA's
intent in requiring an employer to ensure that the driver ceases to
perform safety-sensitive functions prior to proceeding to the
collection site was to allow the driver to finish a task that may
affect workplace safety, e.g., lowering a load on a forklift prior to
leaving the forklift or finishing the securement of a load prior to
proceeding to the collection site. The FHWA did not intend for the
random
[[Page 9548]]
testing rule proviso in paragraph (k) to include driving a commercial
motor vehicle to a collection site to provide a breath, saliva, or
urine sample. A prohibition from using such a vehicle to travel to a
collection site is not reasonable to the FHWA when there is no
reasonable suspicion to suspect the driver is using alcohol or
controlled substances. Therefore, the FHWA will allow a driver to drive
a commercial motor vehicle to a collection site after being notified of
the driver's random selection. This will include allowing a driver to
be notified en route to proceed to a collection site en route. However,
the FHWA will not allow an employer, who has notified a driver of a
random test selection, to permit or require the driver to complete a
trip or dispatch the driver on another trip prior to the driver
providing the appropriate sample or specimen at the collection site(s)
for the random testing requirement. Of course, if an alcohol test
result of 0.02 or greater alcohol concentration is obtained from this
en route random testing, the driver is prohibited from completing all
trips. Recodified paragraph (l) of Sec. 382.305 is revised accordingly.
Computation of the Average Number of Driver Positions for Random
Testing
The FHWA explained how to compute the average number of driver
positions for the old drug testing program on the February 1, 1990 (55
FR 3546, at 3549). For clarity and to assist those employers that were
not subject to the old drug testing program under 49 CFR part 391, the
FHWA is reprinting this discussion.
The FHWA realizes that there are fluctuations in an employer's CMV
driver work force which will make an accurate computation of a testing
rate difficult. An employer's random testing program plan should take
into account these fluctuations by estimating the number of random
tests needed to be performed over the course of the year. If the
employer's CMV driver work force is expected to be relatively constant
(i.e., the total number of CMV driver positions are approximately the
same or changes at a relatively constant rate), then the number of
tests to be performed in any given year could be determined by
multiplying the average number of CMV driver positions by the testing
rate.
However, if there are large fluctuations in the number of CMV
driver positions throughout the year without any clear indication of
the average number of CMV driver positions, the employer should make a
reasonable estimate of the number of CMV driver positions. After making
the estimate, the employer should then be able to determine the number
of tests necessary. The total random tests taken for the year, however,
must equal or exceed the average number of CMV driver positions (for
calendar years 1996 and 1997, 50% for controlled substances testing and
25% for alcohol testing).
For example, if an employer decided to perform random selections
four times a year, the number of tests to be performed during each of
the testing periods (T) must equal or exceed 50% (25% for alcohol) of
the number of CMV driver positions eligible to be tested (D) divided by
the number of test periods per year (P). As a formula, the controlled
substances formula may be expressed as:
[GRAPHIC] [TIFF OMITTED] TR08MR96.002
The alcohol formula may be expressed as:
[GRAPHIC] [TIFF OMITTED] TR08MR96.003
At the time of selecting the individuals to be tested, the employer
determined that there were an average of 60 CMV drivers eligible for
testing during the period covered by the February test, 80 CMV drivers
in May, 100 CMV drivers in August, and 70 CMV drivers in November.
Using the formulas given above, the employer would have to perform 8
controlled substances tests and 4 alcohol tests in February (50% [25%]
times 60 divided by 4 equals 7.5 controlled substances (3.75 alcohol
tests) and rounding up to the nearest whole number ), 10 controlled
substances (5 alcohol tests) in May, 13 tests (7 alcohol tests) in
August, and 9 tests (5 alcohol tests) in November for a total of 40
controlled substances and 21 alcohol tests.
However, throughout the year the employer needed to perform 39
controlled substances (20 alcohol) tests in order to assure testing at
the 50% (25%) rate. This figure was computed using the same formula
with D equal to the summation of the number of drivers eligible for
testing in each of the selection periods (D=60+80+100+70=310 CMV
drivers), and by completing the formula, T=50% times 310 divided by
4=38.75) and rounding up to the nearest whole number, 39. For alcohol
testing, T=25% times 310 divided by 4=19.375) and rounding up to the
nearest whole number, 20. In these examples, the employer could perform
one less controlled substances test and one less alcohol test in the
last testing period.
Since CMV driver populations may vary during any given period in a
year, an employer who only conducted random testing during low CMV
driver periods would not be able to meet the 50% and 25% random testing
ratios.
The employer's random testing policy/plan must be documented. The
FHWA emphasizes that each selection for random testing must include all
CMV drivers to whom the final rule applies, regardless of whether or
not the CMV drivers have been tested in the past. This would include
individuals who do not regularly drive CMVs (such as clerks, mechanics,
supervisors, officials), but are expected by the employer to be
immediately available to perform the safety-sensitive function of
driving a CMV, as defined in Sec. 382.107, for the employer. It is
quite likely with a large driver turnover rate that an employer, over
the course of the year, will be employing/using more CMV drivers than
there are CMV driver positions. In determining the number of tests, an
employer should use the number of CMV driver positions, not the number
of CMV drivers used/employed during the testing period.
To illustrate using the previous example, in the February selection
(which represents the quarter January 1 through March 31), the employer
determined that there were an average of 60 CMV driver positions.
However, during the same quarter (at least up to the date the employer
performed the random selection of CMV drivers to be tested, say
February 12) the employer used/employed a total of 75 individuals as
CMV drivers or persons expected to be CMV drivers. Of these 75
individuals, 15 were no longer used by the employer at the time the
selection was made (February 12). As noted earlier, eight individuals
will be selected for controlled substances testing and four individuals
will be selected for alcohol testing.
Training Supervisors for Reasonable Suspicion Testing
The FHWA has learned that some employers and drivers believe that
only certain supervisors of a driver are required to be trained in
techniques of determining reasonable suspicion of alcohol and drug use
or that this is subject to collective bargaining. The intent of the
FHWA was, however, to require that all persons designated to supervise
drivers be trained under Sec. 382.603. Section 382.307 is being amended
to clarify this requirement.
The current rule at Sec. 382.401(b)(2) may also be interpreted to
allow employers to discard documents proving that supervisors had
received
[[Page 9549]]
training to determine whether reasonable suspicion exists to conduct
alcohol and controlled substances testing two years after being
trained. The FHWA believes it is necessary to maintain documents
related to such training during the entire period for which a
supervisor is authorized to make such determinations. It was the FHWA's
intent to allow employers to discard such training records two years
after the supervisor leaves the employer or ceases to perform the tasks
requiring the training. The FHWA, therefore, is clarifying the record
retention requirements in Sec. 382.401(b)(4) for all persons who are
required to be trained or educated under the rules, such as collection
site personnel, breath alcohol technicians, screening test technicians
and supervisors.
Record Retention Requirements
The FHWA is revising the record retention section to clarify
certain requirements and to add items that were included in part 391
requirements for drug testing but inadvertently left out of the part
382 regulations.
The FHWA is clarifying that Sec. 382.401(b) is meant to note the
time periods for which records must be kept and Sec. 382.401(c) is
meant to specify most of the records that must be kept. The FHWA
declines to list every record that could be generated in an alcohol and
drug testing program. The FHWA's intent, however, is that all records
that are generated by an employer or its agents in the administration
of the testing program must be maintained to the same extent as
required in part 391. Administrative records are required to be
maintained for a minimum of five years under Sec. 391.87(d). The FHWA
is adding an item to Sec. 382.401(b) noting that administrative records
must be maintained for the same time period.
A new paragraph, Sec. 382.401(e), is also being added to note the
locations in the rule of information collection requirements required
by part 382. The FHWA believes that this provision will allow the
public to easily locate those rule sections which require documents to
be prepared and maintained.
Medical Review Officer Notification to the Employer
The FHWA also has received numerous questions regarding the new
requirement that signed, written notifications of the results be sent
from the MRO to the employer. Many MROs have asked whether their staff
may sign the reports, and if not, whether the MRO signature may be
handwritten, rubber stamped, or electronically produced. These MROs
stated that requiring them to personally sign written reports of
negative test results would be extremely burdensome. The FHWA's intent
with the new requirement was to get reliable information concerning
positive and negative test results into the hands of the employer and
avoid communication problems from occurring over the telephone. Some
employers have stated that they have heard the MRO say ``negative,''
when in fact, the MROs records indicate the driver was verified
positive for illegal controlled substances use.
The FHWA will continue to require that all test results be
forwarded to the employer in writing and be signed by the MRO within
three business days after completion of the verification of test
results. (Note that the Office of the Secretary of Transportation's
Drug Enforcement and Program Compliance office has held, under
Sec. 40.33, that positive test result verifications may not be
completed until part 2 of the Federal Custody and Control Form is
received by the MRO from the laboratory.) Some consortia have reported
that MROs never receive their copy from the collection site, Copy 4, of
the Federal Custody and Control Form. The FHWA would expect in these
circumstances that the MRO would contact the collection site or the
employer to obtain a photocopy of their copy of the form, Copies 6 or 7
in order to complete the verification process for both negatives and
positives.
To facilitate transmittal of information, Sec. 382.407(a) is being
changed to allow MROs to notify employers using a legible photocopy of
the fourth copy of part 40's Appendix A subtitled COPY 4--SEND DIRECTLY
TO MEDICAL REVIEW OFFICER--DO NOT SEND TO LABORATORY of the Federal
Custody and Control Form. This copy may be used in lieu of producing a
new record to make the signed, written notification to the employer,
provided that for verified positive test results the controlled
substance(s) identified and verified as positive shall be legibly noted
in the remarks section for step 8. If a Copy 4 is used, the MRO must
sign his or her name on the form.
The MRO shall forward the test results and other information
required by Sec. 382.407(a) within three business days after the
completion of the MRO's review of the test result and the MRO must sign
his or her name on positive notification records. The FHWA does not
believe a driver should be subject to the consequences of the rule
based on results that are not signed by a MRO. Therefore, the MRO's
signature must be handwritten by the MRO. The MRO's staff will not be
allowed to sign or rubber stamp verified positive test results for the
MRO. The MRO's staff, however, would be allowed to rubber stamp
negative test results for the MRO when the MRO delegates such authority
to the MRO staff. At this time, the FHWA shall not allow electronic
signature technology to be used. If such electronic signature
technology is considered in the future, the public will be provided an
opportunity to comment on such a proposal at that time.
Inquiring for Alcohol and Controlled Substances Information From
Previous Employers
The FHWA has had numerous questions about the new requirement to
obtain prior positive testing information from former employers. Many
questions have arisen about the good faith effort discussed in the
preamble and about other provisions of the section. Also, since
publication of the alcohol and drug testing rule, Congress enacted
legislation requiring interstate motor carriers subject to Sec. 391.23
to obtain safety information from former employers of drivers similar
to that required under Sec. 382.413 (Hazardous Materials Transportation
Authorization Act of 1994 (HazMat Act), Pub. L. 103-311, sec. 114). The
FHWA will provide notice and an opportunity for comment in a future
rulemaking on Sec. 391.23 about possible conforming changes to
Sec. 382.413.
Section 382.413 requires the sharing of information on certain
violations of part 382--positive drug test results, alcohol results of
0.04 alcohol concentration or greater, and refusals to be tested. It
should be noted that the records required to be obtained under
Sec. 382.413 are limited to only those records generated under part 382
after January 1, 1995. See paragraph (h). Employers are expected to
request the information from former employers as soon as the employer
expects to use/hire the driver to drive or perform other safety-
sensitive functions.
The rule continues to require that, if feasible, the employer
obtain the information prior to the first performance of safety-
sensitive functions by a driver. If obtaining the information prior to
the driver's first performance of safety-sensitive functions for the
employer is not feasible, the information should be obtained as soon as
possible, but not more than 14 days later. If a driver leaves a new
employer before the new employer obtains the information, the new
employer must continue to attempt to obtain the information. In
response to inquiry on this point, a clarifying amendment to
Sec. 382.413(b) expressly
[[Page 9550]]
limits this provision to drivers actually hired and used by the
employer to perform safety-sensitive functions. A prospective employer
need not obtain the information from an employer which tested but did
not hire a driver. This is consistent with Sec. 391.21, which requires
drivers to list only previous employers. However, a prospective
employer may request the information if it chooses to obtain the
information.
In another clarifying change, Sec. 382.413(a)(2) is being added to
explain that a new employer may obtain from a former employer
information on all records of that employer relevant to
Sec. 382.413(a)(1) (i)-(iii). This includes not only that information
recorded as the result of the driver's violations of the rules by that
former employer, but also any records of violations within the past two
years which the former employer obtained from other former employers.
For example, Sue Driver is applying for a job with ABC Trucking. Ms.
Driver notes on her application that she previously drove CMVs for
three employers--DEF City Schools, XYZ Airlines, and the Minnesota DOT
(MnDOT). ABC Trucking obtains from Ms. Driver three written
authorization requests to obtain information required by
Sec. 382.413(a)(1) and transmits them to the three employers. In
response to the request, DEF City Schools transmits all the relevant
information it has on file, including not only the information
resulting from tests it administered, but also all the information it
has in its files from XYZ Airlines and the MnDOT, if any, which it had
obtained pursuant to Sec. 382.413 and which referred to tests occurring
during the past two years. No information beyond the two year period is
required to be obtained. ABC Trucking would then have a complete,
perhaps overlapping, picture of Ms. Driver's testing and violation
history. ABC Trucking may, in turn, pass this information along to the
next employer with the information ABC develops from Ms. Driver's ABC
Trucking employment, provided it falls within the two year time period.
New and prospective employers should ensure that the driver's
written consent authorizes former employers to disclose all
prohibitions listed under Sec. 382.413(a)(1), that occurred within the
previous two years, of which the former employer has knowledge.
Otherwise, a former employer may be prohibited by Sec. 382.405(f) from
passing along to the inquiring employer any Sec. 382.413(a)(1)
information that was obtained from another previous employer. Section
382.405(f) states that records under part 382 may only be released to a
subsequent employer upon receipt of written authorization from a
driver. Disclosure of the part 382 records by the subsequent employer
is also permitted only as expressly authorized by the terms of the
driver's signed authorization. If the driver's authorization had
prohibited the subsequent employer from disclosing the information,
sharing that information with the inquiring employer would be in
violation of Sec. 382.405(f).
In another change, Sec. 382.413(f) is being added to explain that a
new employer may obtain directly from the driver the information
required to be shared in Sec. 382.413(a)(1) (i)-(iii). The purpose of
the provision is to facilitate information exchange where it might not
otherwise be possible. Drivers may be the sole source of their testing
records when their previous employers have gone out of business or
refuse to provide the required information. Given the fluidity of
driver-employer relationships in the commercial motor vehicle industry,
employers in some situations might find it difficult to obtain the
necessary testing information on certain drivers. Allowing drivers to
present the information should prevent Sec. 382.413 from being a
hindrance to operations while still ensuring that accurate information
is exchanged. It should also result in more information being
exchanged.
An employer presented with testing information from a driver must
assure itself that the copies of former employer's records provided by
the driver are true and accurate. The rule does not specify how an
employer can assure itself that the copies of former employer's testing
records are true and accurate and it may vary on a case-by-case basis.
One method might be to transmit a confidential fax to the former
employer's (listed on the employment application required by
Sec. 383.35) testing program representative, the driver's written
authorization for release of specific information and the list provided
by the driver. The prospective employer would then telephone the former
employer to verify the information on the testing record copies. A
former employer who has a driver's written authorization in hand and
verifies a prospective employer's inquiry over the telephone is less
sensitive to confidentiality than the former employer providing the
information without any written authorization. Verification might also
have to be made with SAPs directly when the former employer did not
provide for a full rehabilitative program. Prospective employer
verification of this information should help prevent drivers who have
violated the rules by testing positive from continually skipping from
one employer to the next without getting needed treatment. These
drivers will be subject to this previous employer verification check at
every employer where the drivers seek work. Former employers will be
able to share information on these drivers with prospective employers
about the problems with alcohol and/or drugs these drivers have had in
the past.
For example, Sam Trip works as an occasional driver for interstate
motor carriers that use his services in accordance with Sec. 391.63.
Mr. Trip arranges with PWC Contract Carriers to haul a load from
Chicago to Kansas City. PWC Contract Carriers continues to be subject
to Sec. 383.35 and must obtain an employment application from Sam Trip.
Mr. Trip lists three employers where he worked as a CMV operator since
January 1, 1995. Mr. Trip also provides copies of his testing records
for the period January 1, 1995, to the present. PWC Contract Carriers
transmits by confidential telecommunications the information in Sam
Trip's records for the past two years, including testing information
from January 1, 1995, with Mr. Trip's written authorization for release
of such information, verifies the information to be accurate, and
allows Mr. Trip to haul its load to Kansas City.
A subject of many questions since the publication of the February
15, 1994, final rule is the discussion of good faith effort which
appeared in the preamble to the final rule. In response, the good faith
concept is being incorporated into Sec. 382.413(b) of the rule. It is
recognized that, given the high level of fluidity of the motor carrier
population, obtaining responses to information requests may not always
prove to be easy. Former employers may have gone out of business,
changed locations, been less than diligent in reporting, or simply
refused to respond. Drivers and new employers should not be punished
for this situation when they have been diligent in requesting the
information. Therefore, it is provided that an employer may not use a
driver for more than 14 days without having made a good faith effort to
obtain the information.
Good faith in this context means a request of each former employer
listed on the driver's employment application or known to exist. Where
information is not forthcoming, a good faith effort consists of
something more than the original mailed request for information and
will vary depending on the situation. Except where there is a clear
refusal by the former employer to transmit the information, rendering
[[Page 9551]]
further requests futile, there should also be a follow-up attempt,
preferably by telephone, to obtain the information. Refusals to respond
should be reported to the FHWA for investigation as a violation of the
requirement in Sec. 382.405(f) to release information to a subsequent
employer.
In keeping with the intent of this section, there must be a good
faith effort in the first instance to obtain the information before
permitting the driver to drive. If that is not feasible, then the
information should be obtained as soon as possible, but no later than
expiration of the 14-day period. An employer is certainly not acting in
good faith when only beginning to attempt to obtain the information on
the 13th day. Moreover, if, for example, it is possible to obtain the
information in 5 days, it is not good faith and is a violation of the
rule to wait until the 12th day to obtain it. In most circumstances,
good faith dictates that the information should be requested by the new
employer immediately after making a conditional offer of employment.
If, after making a good faith effort, the information is not
available, Sec. 382.413(c) requires a record to be made of the attempt.
The employer may then continue to use the driver. Paragraph (c) also
requires all information obtained in response to a request under
paragraph (a) to be recorded, including failures to obtain the
information. This includes the information in paragraph (a)(1) (i)-
(iii) on violations, as well as the information that the former
employer has no records of any violations. If the information somehow
is made available after the 14-day period, the employer would then be
obligated to take appropriate action on it, including not using a
driver with a violation who has not been subsequently evaluated by an
SAP.
A typical good faith effort would begin with the employer obtaining
the driver's written consent on the employer's letterhead stationary.
The driver should complete the document at the time the driver prepares
other documents in the hiring process (e.g., the document the employer
is required to obtain from the driver in compliance with Sec. 383.35
Notification of Previous Employment or Sec. 391.21 Application for
Employment). Immediately after the employer makes a conditional offer
of employment, a written consent letter is sent via certified mail to
the former employer(s), along with instructions on how the information
should be transmitted back to the requesting employer (e.g., by secure
and confidential facsimile, by certified mail, or by telephone to a
designated person).
After a reasonable period without a response, the employer should
contact the driver's former employers' alcohol and drug testing program
managers to ask about the status of the request to obtain the driver's
testing records. The employer should not wait until a few days before
the first time the employer uses the driver to perform safety-sensitive
functions to make a follow-up contact with the former employers. Former
employers are required to forward, upon receipt of a former driver's
specific written consent, their testing information to the driver, the
employer or any third party the driver designates. Failure to do so is
a violation of Sec. 382.405.
If a driver's former employer has gone out of business or refuses
to comply with part 382, subpart D, requirements to forward its testing
information about the driver to the new employer, or for some other
reason the employer cannot obtain the testing information from a
particular former employer, the employer must document the facts and
any related information and retain this information in the employer's
files.
Finally, the section heading is being changed to clarify the intent
of the section and the current Sec. 382.413(a) is being removed. The
FHWA explained in the February 15, 1994, final rule preamble that
paragraph (a) restated Sec. 382.405(b) in terms of the prospective
employer. The FHWA wrote in the preamble ``An employer may obtain any
of the information retained by other employers under part 382, pursuant
to a driver's consent.'' Because this paragraph merely repeats
Sec. 382.405(f) requirements, it is being removed.
Part 391, Subpart H Record Retention
Questions have also been asked about whether interstate motor
carriers who prepare and maintain records under part 391 may discard
those records when, in accordance with Sec. 391.125, they cease
compliance with part 391 and begin complying with part 382. The intent
of the FHWA was to terminate compliance with the applicability,
consequences, and testing requirements of part 391. It was the FHWA's
intent that the records prepared and maintained under part 391 would
continue to be kept in accordance with part 382. The FHWA is amending
Sec. 391.125 to specify that the recordkeeping requirements of part
391, subpart H, will be transferred to part 382. Also, part 382 is
being amended to note that records generated under part 391, subpart H,
must be maintained under Sec. 382.401(c)(6)(v).
Possession of Alcohol
The FHWA has had numerous inquiries about the alcohol possession
prohibition in parts 382 and 392. The FHWA has reconsidered its
position on whether prohibiting unmanifested possession of alcohol on
commercial motor vehicles is necessary given the new regulations for
alcohol use. The FHWA believes the possession prohibition is not needed
in part 382.
Section 392.5 prohibits the possession of alcoholic beverages and
is generally enforced as a part of roadside inspections by FHWA and
State officials. Formerly, Sec. 392.5 prohibited possession of
intoxicating beverages. On February 15, 1994 (59 FR 7484), Sec. 392.5
was amended to prohibit possession of ``alcoholic beverages.'' The
intent of Sec. 392.5 is to prohibit the carrying of any substance on a
CMV that could be consumed by the driver and result in impairment.
However, it does not prohibit the possession of other forms of alcohol
that would be used for the safe operation of commercial motor vehicles,
such as alcohol formulations to be used in the fuel tank, on the
windshield, as cleaning agents, and for other safety uses.
Section 382.204, in contrast, could be construed as prohibiting the
possession of substances such as windshield washer fluid, denatured
alcohol, fuel line antifreeze, rubbing alcohol, and other products that
contain alcohol and have been allowed in the past for the safe
operation of CMVs. This section could also be construed to prohibit the
possession of shaving lotion, cologne, or room deodorizers. This is the
case because a broader definition of alcohol was used in part 382,
rather than ``alcoholic beverage.'' The FHWA believes, however, that
mere possession of alcohol in forms other than beverage does not render
a person unable to safely operate a CMV. Moreover, the new testing
regulations for alcohol will provide controls in addition to the
amended Sec. 392.5 to ensure that impaired drivers do not operate CMVs.
The FHWA does not believe, therefore, that it is necessary to repeat an
alcohol possession prohibition in part 382 and is removing it.
The FHWA will continue to prohibit the possession of alcoholic
beverages in Sec. 392.5 for interstate motor carriers and drivers. The
term ``alcoholic beverage'' is not defined in the general definitions
of Sec. 390.5, so the FHWA has decided to amend Sec. 392.5 to add the
content of the definition in Sec. 383.5. This definition is consistent
with the Commercial Motor Vehicle Safety Act of 1986 (CMVSA) and is
restricted to beer, wine, and
[[Page 9552]]
distilled spirits as defined under the Internal Revenue Code of 1954.
In addition, consistent with an interpretation published on
November 17, 1993 (58 FR 60734), the FHWA is explaining the exception
for the possession of alcoholic beverages on buses and motorcoachs in
greater detail. The FHWA will not prohibit motor carriers from
transporting alcoholic beverages for distribution to passengers, or
alcoholic beverages that have been brought on board by passengers for
the passengers' personal consumption. However, any driver who is seated
in the passenger seating area or who is resting in sleeper berth
equipment shall be prohibited from possessing alcoholic beverages. It
should be noted, however, that States may have stricter laws regarding
whether bus passengers may possess alcoholic beverages. If a State
would have a stricter law regarding bus passenger possession of
alcoholic beverages, such a law would not be preempted by this rule.
The FHWA has had, and will continue to have, a strong policy of
zero tolerance of consumption and use of alcohol by commercial motor
vehicle drivers. The consumption or presence in the body of any form of
alcohol, including any alcoholic mixture, preparation, or beverage, is
strictly prohibited while driving. This includes any substance
containing alcohol, including, but not limited to, windshield washer
fluid, liquid fuels, fuel line antifreeze, denatured alcohol, shaving
lotion, cologne, beer, wine, and distilled spirits. In terms of
possession, the form of prohibited alcohol is narrower. Drivers subject
to Sec. 392.5 may not possess beer, wine, or distilled spirits. Many
States have laws that are similar to Sec. 392.5 regarding the
possession of alcoholic beverages for commercial motor vehicle drivers
operating in intrastate commerce and the FHWA does not believe that it
must supersede those State laws. The FHWA will allow those States to
use and enforce those laws without expressly preempting them.
Metric System
The Omnibus Trade and Competitiveness Act of 1988 (Pub. L. 100-418,
sec. 5164) amended the Metric Conversion Act of 1975 to require, among
other things, that each Federal agency, by the end of the fiscal year
1992, use the metric system of measurement in its procurements, grants,
and other business-related activities, except to the extent that such
use is impractical or is likely to cause significant inefficiencies or
loss of markets to United States firms, such as when foreign
competitors are producing competing products in non-metric units.
The term ``metric system'' means the International System of Units
(SI) established by the General Conference of Weights and Measures in
1960, as interpreted or modified from time to time for the United
States by the Secretary of Commerce under the authority of the Metric
Conversion Act of 1975 and the Metric Education Act of 1978. The
Commerce Department requires Federal agencies to coordinate and plan
for the use of the metric system in their procurements, grants and
other business-related activities consistent with the requirements of
the Metric Conversion Act, as amended. The FHWA has begun the
transition process to convert to the metric system. In so doing, the
FHWA believes it must convert to metric equivalents those parts of the
definition of the term, ``commercial motor vehicle,'' which use gross
vehicle weight ratings in the U.S. Customary System of measurement. The
FHWA is therefore taking this opportunity to change the definition to
the SI system in line with 15 CFR part 19. The customary equivalent is
provided parenthetically for convenience.
Locations of Regional Offices of Motor Carriers
The FHWA regional Offices of Motor Carriers for regions four and
nine have recently moved. The FHWA, therefore, is updating the title of
the section and the addresses in the table found in Sec. 390.27.
Rulemaking Analyses and Notices
Because this final rule simply makes minor edits to the FHWA's
alcohol and drug testing rules to clarify these regulations, the FHWA
believes that prior notice and opportunity for comment are unnecessary
under 5 U.S.C. 553(b)(3)(B). In addition, due to the technical nature
of this final rule, the FHWA has determined that prior notice and
opportunity for comment are not required under the Department of
Transportation's regulatory policies and procedures, as it is not
anticipated that such action would result in the receipt of useful
information. In this final rule, the FHWA is not exercising discretion
in a way that could be meaningfully affected by public comment.
This action also effectively grants an exemption from an alcohol
and drug testing regulation to employers and MROs. The amendments to
Sec. 382.407 relieve MROs from the requirement to prepare, in writing,
a document if they wish to legibly photocopy Copy 4 of the Federal
Chain of Custody form, fill in verified positive or negative test
information, add a statement about compliance with 49 CFR parts 40 and
382, and sign the photocopy.
Because this final rule relieves employers and MROs from certain
regulations cited above, the FHWA also believes that good cause exists
to publish this rule less than 30 days before it is effective, as is
ordinarily required under 5 U.S.C. 553(d). Accordingly, the FHWA is
proceeding directly to a final rule which is effective on its date of
publication.
Executive Order 12866 (Regulatory Planning and Review) and DOT
Regulatory Policies and Procedures
The FHWA has determined that this action is neither a significant
regulatory action under Executive Order 12866 or significant under the
Department of Transportation's regulatory policies and procedures. It
is anticipated that the economic impact of this action will not be
substantial because this rule simply makes minor, technical changes to
the Federal Motor Carrier Safety Regulations to clarify the FHWA's
alcohol and drug testing rules. Therefore, a full regulatory evaluation
is not warranted.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the FHWA has evaluated the effects of this rule on small
entities. This final rule will technically amend and clarify the
requirements for employers to test drivers for the use of alcohol and
controlled substances. Accordingly, the FHWA certifies that this action
will not have a significant economic impact on a substantial number of
small entities.
Executive Order 12612 (Federalism Assessment)
The amendments made by this rule do not have a substantial direct
effect on the States or on the relationship or distribution of power
between the national government and the States because they do little
to limit the policymaking discretion of the States. To the extent that
these amendments do require States to make minor modifications to their
laws or regulations, the authority to preempt inconsistent State and
local laws, regulations, rules and orders was expressly provided under
49 U.S.C. 31306(g). Therefore, the FHWA is not required to prepare a
separate Federalism Assessment for this rule.
[[Page 9553]]
Executive Order 12372 (Intergovernmental Review)
Catalog of Federal Domestic Assistance Program Number 20.217, Motor
Carrier Safety. The regulations implementing Executive Order 12372
regarding intergovernmental consultation on Federal programs and
activities apply to this program.
Paperwork Reduction Act
The Office of Management and Budget (OMB) has approved 2,900,717
hours for the information collection requirements in the existing drug
and alcohol testing regulations at 49 CFR part 382, under OMB control
no. 2125-0543. One of the changes contained in this rule will decrease
the burden hours required to comply with these regulations by a
significant amount. Other changes are due to technical modifications,
clarification of language, and closing loopholes for drivers with
numerous previous employers. Also, a rule amendment published on March
13, 1995, contains a significant decrease in burden hours. Accordingly,
the overall effect of these amendments is to decrease the burden of
complying with the recordkeeping and reporting requirements of the drug
and alcohol testing regulations.
In addition, the FHWA is clarifying the record retention provisions
in Sec. 382.401 to require that records documenting supervisors'
reasonable suspicion training be retained for two years after the
supervisor ceases to perform the tasks requiring this training,
replacing the current requirement to retain such records for two years
after the training is completed.
Finally, the total number of burden hours will be decreased by this
final rule as a result of the FHWA allowing MROs to send Copy 4 of the
Federal Custody and Control form rather than complete a new written
document that is signed as a notification of test results to the
employer of each driver tested. The net effect of these changes will be
a decrease in burden hours. The FHWA will be sending a revised burden
estimate for this information collection request to the Office of
Management and Budget.
National Environmental Policy Act
The agency has analyzed this action for the purpose of the National
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and has
determined that this action will not have any effect on the quality of
the environment.
Regulation Identification Number
A regulation identification number (RIN) is assigned to each
regulatory action listed in the Unified Agenda of Federal Regulations.
The Regulatory Information Service Center publishes the Unified Agenda
in April and October of each year. The RIN contained in the heading of
this document can be used to cross reference this action with the
Unified Agenda.
List of Subjects in 49 CFR Parts 382, 383, 390, 391, and 392
Alcohol testing, Controlled substances testing, Drivers, Highways
and roads, Highway safety, Motor carriers, Motor vehicle safety,
Reporting and recordkeeping requirements, Safety, Transportation.
Issued on: February 29, 1996.
Rodney E. Slater,
Federal Highway Administrator.
In consideration of the foregoing, the FHWA is amending title 49,
CFR, subtitle B, chapter III, parts 382, 383, 390, 391, and 392 as set
forth below:
1. Part 382 is revised to read as follows:
PART 382--CONTROLLED SUBSTANCES AND ALCOHOL USE AND TESTING
Subpart A--General
Sec.
382.101 Purpose.
382.103 Applicability.
382.105 Testing procedures.
382.107 Definitions.
382.109 Preemption of State and local laws.
382.111 Other requirements imposed by employers.
382.113 Requirement for notice.
382.115 Starting date for testing programs.
Subpart B--Prohibitions
382.201 Alcohol concentration.
382.205 On-duty use.
382.207 Pre-duty use.
382.209 Use following an accident.
382.211 Refusal to submit to a required alcohol or controlled
substances test.
382.213 Controlled substances use.
382.215 Controlled substances testing.
Subpart C--Tests Required
382.301 Pre-employment testing.
382.303 Post-accident testing.
382.305 Random testing.
382.307 Reasonable suspicion testing.
382.309 Return-to-duty testing.
382.311 Follow-up testing.
Subpart D--Handling of Test Results, Record Retention, and
Confidentiality
382.401 Retention of records.
382.403 Reporting of results in a management information system.
382.405 Access to facilities and records.
382.407 Medical review officer notifications to the employer.
382.409 Medical review officer record retention for controlled
substances.
382.411 Employer notifications.
382.413 Inquiries for alcohol and controlled substances information
from previous employers.
Subpart E--Consequences for Drivers Engaging in Substance Use-Related
Conduct
382.501 Removal from safety-sensitive function.
382.503 Required evaluation and testing.
382.505 Other alcohol-related conduct.
382.507 Penalties.
Subpart F--Alcohol Misuse and Controlled Substances Use Information,
Training, and Referral
382.601 Employer obligation to promulgate a policy on the misuse of
alcohol and use of controlled substances.
382.603 Training for supervisors.
382.605 Referral, evaluation, and treatment.
Authority: 49 U.S.C. 31133, 31136, 31301 et seq., 31502; and 49
CFR 1.48.
Subpart A--General
Sec. 382.101 Purpose.
The purpose of this part is to establish programs designed to help
prevent accidents and injuries resulting from the misuse of alcohol or
use of controlled substances by drivers of commercial motor vehicles.
Sec. 382.103 Applicability.
(a) This part applies to every person and to all employers of such
persons who operate a commercial motor vehicle in commerce in any
State, and is subject to:
(1) The commercial driver's license requirements of part 383 of
this subchapter;
(2) The Licencia Federal de Conductor (Mexico) requirements; or
(3) The commercial driver's license requirements of the Canadian
National Safety Code.
(b) An employer who employs himself/herself as a driver must comply
with both the requirements in this part that apply to employers and the
requirements in this part that apply to drivers. An employer who
employs only himself/herself as a driver shall implement a random
alcohol and controlled substances testing program of two or more
covered employees in the random testing selection pool.
(c) The exceptions contained in Sec. 390.3(g) of this subchapter do
not apply to this part. The employers and drivers identified in
Sec. 390.3(g) must comply with the requirements of this part, unless
otherwise specifically provided in paragraph (d) of this section.
(d) Exceptions. This part shall not apply to employers and their
drivers:
(1) Required to comply with the alcohol and/or controlled
substances testing requirements of parts 653 and
[[Page 9554]]
654 of this title (Federal Transit Administration alcohol and
controlled substances testing regulations); or
(2) Who a State must waive from the requirements of part 383 of
this subchapter. These individuals include active duty military
personnel; members of the reserves; and members of the national guard
on active duty, including personnel on full-time national guard duty,
personnel on part-time national guard training and national guard
military technicians (civilians who are required to wear military
uniforms), and active duty U.S. Coast Guard personnel;
(3) Who a State has, at its discretion, exempted from the
requirements of part 383 of this subchapter. These individuals may be:
(i) Operators of a farm vehicle which is:
(A) Controlled and operated by a farmer;
(B) Used to transport either agricultural products, farm machinery,
farm supplies, or both to or from a farm;
(C) Not used in the operations of a common or contract motor
carrier; and
(D) Used within 241 kilometers (150 miles) of the farmer's farm.
(ii) Firefighters or other persons who operate commercial motor
vehicles which are necessary for the preservation of life or property
or the execution of emergency governmental functions, are equipped with
audible and visual signals, and are not subject to normal traffic
regulation.
Sec. 382.105 Testing procedures.
Each employer shall ensure that all alcohol or controlled
substances testing conducted under this part complies with the
procedures set forth in part 40 of this title. The provisions of part
40 of this title that address alcohol or controlled substances testing
are made applicable to employers by this part.
Sec. 382.107 Definitions.
Words or phrases used in this part are defined in Secs. 386.2 and
390.5 of this subchapter, and Sec. 40.3 of this title, except as
provided herein--
Alcohol means the intoxicating agent in beverage alcohol, ethyl
alcohol, or other low molecular weight alcohols including methyl and
isopropyl alcohol.
Alcohol concentration (or content) means the alcohol in a volume of
breath expressed in terms of grams of alcohol per 210 liters of breath
as indicated by an evidential breath test under this part.
Alcohol use means the consumption of any beverage, mixture, or
preparation, including any medication, containing alcohol.
Commerce means:
(1) Any trade, traffic or transportation within the jurisdiction of
the United States between a place in a State and a place outside of
such State, including a place outside of the United States and
(2) Trade, traffic, and transportation in the United States which
affects any trade, traffic, and transportation described in paragraph
(1) of this definition.
Commercial motor vehicle means a motor vehicle or combination of
motor vehicles used in commerce to transport passengers or property if
the motor vehicle--
(1) Has a gross combination weight rating of 11,794 or more
kilograms (26,001 or more pounds) inclusive of a towed unit with a
gross vehicle weight rating of more than 4,536 kilograms (10,000
pounds); or
(2) Has a gross vehicle weight rating of 11,794 or more kilograms
(26,001 or more pounds); or
(3) Is designed to transport 16 or more passengers, including the
driver; or
(4) Is of any size and is used in the transportation of materials
found to be hazardous for the purposes of the Hazardous Materials
Transportation Act and which require the motor vehicle to be placarded
under the Hazardous Materials Regulations (49 CFR part 172, subpart F).
Confirmation test for alcohol testing means a second test,
following a screening test with a result of 0.02 or greater, that
provides quantitative data of alcohol concentration. For controlled
substances testing means a second analytical procedure to identify the
presence of a specific drug or metabolite which is independent of the
screen test and which uses a different technique and chemical principle
from that of the screen test in order to ensure reliability and
accuracy. (Gas chromatography/mass spectrometry (GC/MS) is the only
authorized confirmation method for cocaine, marijuana, opiates,
amphetamines, and phencyclidine.)
Consortium means an entity, including a group or association of
employers or contractors, that provides alcohol or controlled
substances testing as required by this part, or other DOT alcohol or
controlled substances testing rules, and that acts on behalf of the
employers.
Controlled substances mean those substances identified in
Sec. 40.21(a) of this title.
Disabling damage means damage which precludes departure of a motor
vehicle from the scene of the accident in its usual manner in daylight
after simple repairs.
(1) Inclusions. Damage to motor vehicles that could have been
driven, but would have been further damaged if so driven.
(2) Exclusions.
(i) Damage which can be remedied temporarily at the scene of the
accident without special tools or parts.
(ii) Tire disablement without other damage even if no spare tire is
available.
(iii) Headlight or taillight damage.
(iv) Damage to turn signals, horn, or windshield wipers which make
them inoperative.
DOT Agency means an agency (or ``operating administration'') of the
United States Department of Transportation administering regulations
requiring alcohol and/or drug testing (14 CFR parts 61, 63, 65, 121,
and 135; 49 CFR parts 199, 219, 382, 653 and 654), in accordance with
part 40 of this title.
Driver means any person who operates a commercial motor vehicle.
This includes, but is not limited to: Full time, regularly employed
drivers; casual, intermittent or occasional drivers; leased drivers and
independent, owner-operator contractors who are either directly
employed by or under lease to an employer or who operate a commercial
motor vehicle at the direction of or with the consent of an employer.
Employer means any person (including the United States, a State,
District of Columbia, tribal government, or a political subdivision of
a State) who owns or leases a commercial motor vehicle or assigns
persons to operate such a vehicle. The term employer includes an
employer's agents, officers and representatives.
Licensed medical practitioner means a person who is licensed,
certified, and/or registered, in accordance with applicable Federal,
State, local, or foreign laws and regulations, to prescribe controlled
substances and other drugs.
Performing (a safety-sensitive function) means a driver is
considered to be performing a safety-sensitive function during any
period in which he or she is actually performing, ready to perform, or
immediately available to perform any safety-sensitive functions.
Positive rate means the number of positive results for random
controlled substances tests conducted under this part plus the number
of refusals of random controlled substances tests required by this
part, divided by the total of random controlled substances tests
conducted under this part plus the number of refusals of random tests
required by this part.
Refuse to submit (to an alcohol or controlled substances test)
means that a driver:
(1) Fails to provide adequate breath for alcohol testing as
required by part 40
[[Page 9555]]
of this title, without a valid medical explanation, after he or she has
received notice of the requirement for breath testing in accordance
with the provisions of this part,
(2) Fails to provide an adequate urine sample for controlled
substances testing as required by part 40 of this title, without a
genuine inability to provide a specimen (as determined by a medical
evaluation), after he or she has received notice of the requirement for
urine testing in accordance with the provisions of this part, or
(3) Engages in conduct that clearly obstructs the testing process.
Safety-sensitive function means all time from the time a driver
begins to work or is required to be in readiness to work until the time
he/she is relieved from work and all responsibility for performing
work. Safety-sensitive functions shall include:
(1) All time at an employer or shipper plant, terminal, facility,
or other property, or on any public property, waiting to be dispatched,
unless the driver has been relieved from duty by the employer;
(2) All time inspecting equipment as required by Secs. 392.7 and
392.8 of this subchapter or otherwise inspecting, servicing, or
conditioning any commercial motor vehicle at any time;
(3) All time spent at the driving controls of a commercial motor
vehicle in operation;
(4) All time, other than driving time, in or upon any commercial
motor vehicle except time spent resting in a sleeper berth (a berth
conforming to the requirements of Sec. 393.76 of this subchapter);
(5) All time loading or unloading a vehicle, supervising, or
assisting in the loading or unloading, attending a vehicle being loaded
or unloaded, remaining in readiness to operate the vehicle, or in
giving or receiving receipts for shipments loaded or unloaded; and
(6) All time repairing, obtaining assistance, or remaining in
attendance upon a disabled vehicle.
Screening test (also known as initial test) In alcohol testing, it
means an analytical procedure to determine whether a driver may have a
prohibited concentration of alcohol in his or her system. In controlled
substance testing, it means an immunoassay screen to eliminate
``negative'' urine specimens from further consideration.
Substance abuse professional means a licensed physician (Medical
Doctor or Doctor of Osteopathy), or a licensed or certified
psychologist, social worker, employee assistance professional, or
addiction counselor (certified by the National Association of
Alcoholism and Drug Abuse Counselors Certification Commission) with
knowledge of and clinical experience in the diagnosis and treatment of
alcohol and controlled substances-related disorders.
Violation rate means the number of drivers (as reported under
Sec. 382.305 of this part) found during random tests given under this
part to have an alcohol concentration of 0.04 or greater, plus the
number of drivers who refuse a random test required by this part,
divided by the total reported number of drivers in the industry given
random alcohol tests under this part plus the total reported number of
drivers in the industry who refuse a random test required by this part.
Sec. 382.109 Preemption of State and local laws.
(a) Except as provided in paragraph (b) of this section, this part
preempts any State or local law, rule, regulation, or order to the
extent that:
(1) Compliance with both the State or local requirement and this
part is not possible; or
(2) Compliance with the State or local requirement is an obstacle
to the accomplishment and execution of any requirement in this part.
(b) This part shall not be construed to preempt provisions of State
criminal law that impose sanctions for reckless conduct leading to
actual loss of life, injury, or damage to property, whether the
provisions apply specifically to transportation employees, employers,
or the general public.
Sec. 382.111 Other requirements imposed by employers.
Except as expressly provided in this part, nothing in this part
shall be construed to affect the authority of employers, or the rights
of drivers, with respect to the use of alcohol, or the use of
controlled substances, including authority and rights with respect to
testing and rehabilitation.
Sec. 382.113 Requirement for notice.
Before performing an alcohol or controlled substances test under
this part, each employer shall notify a driver that the alcohol or
controlled substances test is required by this part. No employer shall
falsely represent that a test is administered under this part.
Sec. 382.115 Starting date for testing programs.
(a) Large domestic employers. Each employer with fifty or more
drivers on March 17, 1994, will implement the requirements of this part
beginning on January 1, 1995.
(b) Small domestic employers. Each employer with less than fifty
drivers on March 17, 1994, will implement the requirements of this part
beginning on January 1, 1996.
(c) All domestic employers. Each domestic employer that begins
commercial motor vehicle operations after March 17, 1994, but before
January 1, 1996, will implement the requirements of this part beginning
on January 1, 1996. However, such an employer may be subject to the
requirements of part 391, subpart H on the date they begin operations,
if operating commercial motor vehicles in interstate commerce. A
domestic employer that begins commercial motor vehicle operations on or
after January 1, 1996, will implement the requirements of this part on
the date the employer begins such operations.
(d) Large foreign employers. Each foreign-domiciled employer with
fifty or more drivers assigned to operate commercial motor vehicles in
North America on December 17, 1995, must implement the requirements of
this part beginning on July 1, 1996.
(e) Small foreign employers. Each foreign-domiciled employer with
less than fifty drivers assigned to operate commercial motor vehicles
in North America on December 17, 1995, must implement the requirements
of this part beginning on July 1, 1997.
(f) All foreign employers. Each foreign-domiciled employer that
begins commercial motor vehicle operations in the United States after
December 17, 1995, but before July 1, 1997, must implement the
requirements of this part beginning on July 1, 1997. A foreign employer
that begins commercial motor vehicle operations in the United States on
or after July 1, 1997, must implement the requirements of this part on
the date the foreign employer begins such operations.
Subpart B--Prohibitions
Sec. 382.201 Alcohol concentration.
No driver shall report for duty or remain on duty requiring the
performance of safety-sensitive functions while having an alcohol
concentration of 0.04 or greater. No employer having actual knowledge
that a driver has an alcohol concentration of 0.04 or greater shall
permit the driver to perform or continue to perform safety-sensitive
functions.
Sec. 382.205 On-duty use.
No driver shall use alcohol while performing safety-sensitive
functions. No employer having actual knowledge that a driver is using
alcohol while
[[Page 9556]]
performing safety-sensitive functions shall permit the driver to
perform or continue to perform safety- sensitive functions.
Sec. 382.207 Pre-duty use.
No driver shall perform safety-sensitive functions within four
hours after using alcohol. No employer having actual knowledge that a
driver has used alcohol within four hours shall permit a driver to
perform or continue to perform safet
FR Doc. 96-5373 Commercial Driver's License Program and Controlled Substances and Alcohol Use and Testing
y-sensitive functions.
Sec. 382.209 Use following an accident.
No driver required to take a post-accident alcohol test under
Sec. 382.303 of this part shall use alcohol for eight hours following
the accident, or until he/she undergoes a post- accident alcohol test,
whichever occurs first.
Sec. 382.211 Refusal to submit to a required alcohol or controlled
substances test.
No driver shall refuse to submit to a post-accident alcohol or
controlled substances test required under Sec. 382.303, a random
alcohol or controlled substances test required under Sec. 382.305, a
reasonable suspicion alcohol or controlled substances test required
under Sec. 382.307, or a follow-up alcohol or controlled substances
test required under Sec. 382.311. No employer shall permit a driver who
refuses to submit to such tests to perform or continue to perform
safety-sensitive functions.
Sec. 382.213 Controlled substances use.
(a) No driver shall report for duty or remain on duty requiring the
performance of safety-sensitive functions when the driver uses any
controlled substance, except when the use is pursuant to the
instructions of a licensed medical practitioner, as defined in
Sec. 382.107 of this part, who has advised the driver that the
substance will not adversely affect the driver's ability to safely
operate a commercial motor vehicle.
(b) No employer having actual knowledge that a driver has used a
controlled substance shall permit the driver to perform or continue to
perform a safety-sensitive function.
(c) An employer may require a driver to inform the employer of any
therapeutic drug use.
Sec. 382.215 Controlled substances testing.
No driver shall report for duty, remain on duty or perform a
safety-sensitive function, if the driver tests positive for controlled
substances. No employer having actual knowledge that a driver has
tested positive for controlled substances shall permit the driver to
perform or continue to perform safety-sensitive functions.
Subpart C--Tests Required
Sec. 382.301 Pre-employment testing.
(a) Prior to the first time a driver performs safety-sensitive
functions for an employer, the driver shall undergo testing for alcohol
and controlled substances as a condition prior to being used, unless
the employer uses the exception in paragraphs (c) and (d) of this
section. No employer shall allow a driver, who the employer intends to
hire or use, to perform safety-sensitive functions unless the driver
has been administered an alcohol test with a result indicating an
alcohol concentration less than 0.04, and has received a controlled
substances test result from the MRO indicating a verified negative test
result. If a pre-employment alcohol test result under this section
indicates an alcohol content of 0.02 or greater but less than 0.04, the
provision of Sec. 382.505 shall apply.
(b) Exception for pre-employment alcohol testing. An employer is
not required to administer an alcohol test required by paragraph (a) of
this section if:
(1) The driver has undergone an alcohol test required by this
section or the alcohol misuse rule of another DOT agency under part 40
of this title within the previous six months, with a result indicating
an alcohol concentration less than 0.04; and
(2) The employer ensures that no prior employer of the driver of
whom the employer has knowledge has records of a violation of this part
or the alcohol misuse rule of another DOT agency within the previous
six months.
(c) Exception for pre-employment controlled substances testing. An
employer is not required to administer a controlled substances test
required by paragraph (a) of this section if:
(1) The driver has participated in a controlled substances testing
program that meets the requirements of this part within the previous 30
days; and
(2) While participating in that program, either
(i) Was tested for controlled substances within the past 6 months
(from the date of application with the employer) or
(ii) Participated in the random controlled substances testing
program for the previous 12 months (from the date of application with
the employer); and
(3) The employer ensures that no prior employer of the driver of
whom the employer has knowledge has records of a violation of this part
or the controlled substances use rule of another DOT agency within the
previous six months.
(d)(1) An employer who exercises the exception in either paragraph
(b) or (c) of this section shall contact the alcohol and/or controlled
substances testing program(s) in which the driver participates or
participated and shall obtain and retain from the testing program(s)
the following information:
(i) Name(s) and address(es) of the program(s).
(ii) Verification that the driver participates or participated in
the program(s).
(iii) Verification that the program(s) conforms to part 40 of this
title.
(iv) Verification that the driver is qualified under the rules of
this part, including that the driver has not refused to be tested for
controlled substances.
(v) The date the driver was last tested for alcohol or controlled
substances.
(vi) The results of any tests taken within the previous six months
and any other violations of subpart B of this part.
(2) An employer who uses, but does not employ, a driver more than
once a year to operate commercial motor vehicles must obtain the
information in paragraph (d)(1) of this section at least once every six
months. The records prepared under this paragraph shall be maintained
in accordance with Sec. 382.401. If the employer cannot verify that the
driver is participating in a controlled substances testing program in
accordance with this part and part 40, the employer shall conduct a
pre-employment alcohol and/or controlled substances test.
(e) Nothwithstanding any other provisions of this subpart, all
provisions and requirements in this section pertaining to pre-
employment testing for alcohol are vacated as of May 1, 1995.
Sec. 382.303 Post-accident testing.
(a) As soon as practicable following an occurrence involving a
commercial motor vehicle operating on a public road in commerce, each
employer shall test for alcohol and controlled substances each
surviving driver:
(1) Who was performing safety-sensitive functions with respect to
the vehicle, if the accident involved the loss of human life; or
(2) Who receives a citation under State or local law for a moving
traffic violation arising from the accident, if the accident involved:
(i) Bodily injury to any person who, as a result of the injury,
immediately receives medical treatment away from the scene of the
accident; or
(ii) One or more motor vehicles incurring disabling damage as a
result of
[[Page 9557]]
the accident, requiring the motor vehicle to be transported away from
the scene by a tow truck or other motor vehicle.
(3) This table notes when a post-accident test is required to be
conducted by paragraphs (a)(1) and (a)(2) of this section.
Table for Sec. 382.303(a)(3)
------------------------------------------------------------------------
Test must be
Type of accident involved Citation issued to performed by
the CMV driver employer
------------------------------------------------------------------------
Human fatality.................. YES............... YES.
NO................ YES.
Bodily injury with immediate YES............... YES.
medical treatment away from the
scene.
NO................ NO.
Disabling damage to any motor YES............... YES.
vehicle requiring tow away.
NO................ NO.
------------------------------------------------------------------------
(b)(1) Alcohol tests. If a test required by this section is not
administered within two hours following the accident, the employer
shall prepare and maintain on file a record stating the reasons the
test was not promptly administered. If a test required by this section
is not administered within eight hours following the accident, the
employer shall cease attempts to administer an alcohol test and shall
prepare and maintain the same record. Records shall be submitted to the
FHWA upon request of the Associate Administrator.
(2) For the years stated in this paragraph, employers who submit
MIS reports shall submit to the FHWA each record of a test required by
this section that is not completed within eight hours. The employer's
records of tests that are not completed within eight hours shall be
submitted to the FHWA by March 15, 1996; March 15, 1997, and March 15,
1998, for calendar years 1995, 1996, and 1997, respectively. Employers
shall append these records to their MIS submissions. Each record shall
include the following information:
(i) Type of test (reasonable suspicion/post-accident);
(ii) Triggering event (including date, time, and location);
(iii) Reason(s) test could not be completed within eight hours;
(iv) If blood alcohol testing could have been completed within
eight hours, the name, address, and telephone number of the testing
site where blood testing could have occurred; and
(3) Records of alcohol tests that could not be completed in eight
hours shall be submitted to the FHWA at the following address: Attn:
Alcohol Testing Program, Office of Motor Carrier Research and Standards
(HCS-1), Federal Highway Administration, 400 Seventh Street, SW.,
Washington, DC 20590.
(4) Controlled substance tests. If a test required by this section
is not administered within 32 hours following the accident, the
employer shall cease attempts to administer a controlled substances
test, and prepare and maintain on file a record stating the reasons the
test was not promptly administered. Records shall be submitted to the
FHWA upon request of the Associate Administrator.
(c) A driver who is subject to post-accident testing shall remain
readily available for such testing or may be deemed by the employer to
have refused to submit to testing. Nothing in this section shall be
construed to require the delay of necessary medical attention for
injured people following an accident or to prohibit a driver from
leaving the scene of an accident for the period necessary to obtain
assistance in responding to the accident, or to obtain necessary
emergency medical care.
(d) An employer shall provide drivers with necessary post-accident
information, procedures and instructions, prior to the driver operating
a commercial motor vehicle, so that drivers will be able to comply with
the requirements of this section.
(e)(1) The results of a breath or blood test for the use of
alcohol, conducted by Federal, State, or local officials having
independent authority for the test, shall be considered to meet the
requirements of this section, provided such tests conform to the
applicable Federal, State or local alcohol testing requirements, and
that the results of the tests are obtained by the employer.
(2) The results of a urine test for the use of controlled
substances, conducted by Federal, State, or local officials having
independent authority for the test, shall be considered to meet the
requirements of this section, provided such tests conform to the
applicable Federal, State or local controlled substances testing
requirements, and that the results of the tests are obtained by the
employer.
(f) Exception. This section does not apply to:
(1) An occurrence involving only boarding or alighting from a
stationary motor vehicle; or
(2) An occurrence involving only the loading or unloading of cargo;
or
(3) An occurrence in the course of the operation of a passenger car
or a multipurpose passenger vehicle (as defined in Sec. 571.3 of this
title) by an employer unless the motor vehicle is transporting
passengers for hire or hazardous materials of a type and quantity that
require the motor vehicle to be marked or placarded in accordance with
Sec. 177.823 of this title.
Sec. 382.305 Random testing.
(a) Every employer shall comply with the requirements of this
section. Every driver shall submit to random alcohol and controlled
substance testing as required in this section.
(b)(1) Except as provided in paragraphs (c) through (e) of this
section, the minimum annual percentage rate for random alcohol testing
shall be 25 percent of the average number of driver positions.
(2) Except as provided in paragraphs (f) through (h) of this
section, the minimum annual percentage rate for random controlled
substances testing shall be 50 percent of the average number of driver
positions.
(c) The FHWA Administrator's decision to increase or decrease the
minimum annual percentage rate for alcohol testing is based on the
reported violation rate for the entire industry. All information used
for this determination is drawn from the alcohol management information
system reports required by Sec. 382.403 of this part. In order to
ensure reliability of the data, the FHWA Administrator considers the
quality and completeness of the reported data, may obtain additional
information or reports from employers, and may make appropriate
modifications in calculating the industry violation rate. Each year,
the FHWA Administrator will publish in the Federal Register the minimum
annual percentage rate for random alcohol testing of drivers. The new
minimum annual percentage rate for random alcohol testing will be
applicable starting January 1 of the calendar year following
publication.
(d)(1) When the minimum annual percentage rate for random alcohol
testing is 25 percent or more, the FHWA Administrator may lower this
rate to 10 percent of all driver positions if the FHWA Administrator
determines that the data received under the reporting requirements of
Sec. 382.403 for two consecutive calendar years indicate that the
violation rate is less than 0.5 percent.
(2) When the minimum annual percentage rate for random alcohol
testing is 50 percent, the FHWA Administrator may lower this rate to 25
percent of all driver positions if the FHWA Administrator determines
that the data received under the reporting
[[Page 9558]]
requirements of Sec. 382.403 for two consecutive calendar years
indicate that the violation rate is less than 1.0 percent but equal to
or greater than 0.5 percent.
(e)(1) When the minimum annual percentage rate for random alcohol
testing is 10 percent, and the data received under the reporting
requirements of Sec. 382.403 for that calendar year indicate that the
violation rate is equal to or greater than 0.5 percent, but less than
1.0 percent, the FHWA Administrator will increase the minimum annual
percentage rate for random alcohol testing to 25 percent for all driver
positions.
(2) When the minimum annual percentage rate for random alcohol
testing is 25 percent or less, and the data received under the
reporting requirements of Sec. 382.403 for that calendar year indicate
that the violation rate is equal to or greater than 1.0 percent, the
FHWA Administrator will increase the minimum annual percentage rate for
random alcohol testing to 50 percent for all driver positions.
(f) The FHWA Administrator's decision to increase or decrease the
minimum annual percentage rate for controlled substances testing is
based on the reported positive rate for the entire industry. All
information used for this determination is drawn from the controlled
substances management information system reports required by
Sec. 382.403 of this part. In order to ensure reliability of the data,
the FHWA Administrator considers the quality and completeness of the
reported data, may obtain additional information or reports from
employers, and may make appropriate modifications in calculating the
industry positive rate. Each year, the FHWA Administrator will publish
in the Federal Register the minimum annual percentage rate for random
controlled substances testing of drivers. The new minimum annual
percentage rate for random controlled substances testing will be
applicable starting January 1 of the calendar year following
publication.
(g) When the minimum annual percentage rate for random controlled
substances testing is 50 percent, the FHWA Administrator may lower this
rate to 25 percent of all driver positions if the FHWA Administrator
determines that the data received under the reporting requirements of
Sec. 382.403 for two consecutive calendar years indicate that the
positive rate is less than 1.0 percent. However, after the initial two
years of random testing by large employers and the initial first year
of testing by small employers under this section, the FHWA
Administrator may lower the rate the following calendar year, if the
combined positive testing rate is less than 1.0 percent, and if it
would be in the interest of safety.
(h) When the minimum annual percentage rate for random controlled
substances testing is 25 percent, and the data received under the
reporting requirements of Sec. 382.403 for any calendar year indicate
that the reported positive rate is equal to or greater than 1.0
percent, the FHWA Administrator will increase the minimum annual
percentage rate for random controlled substances testing to 50 percent
of all driver positions.
(i) The selection of drivers for random alcohol and controlled
substances testing shall be made by a scientifically valid method, such
as a random number table or a computer-based random number generator
that is matched with drivers' Social Security numbers, payroll
identification numbers, or other comparable identifying numbers. Under
the selection process used, each driver shall have an equal chance of
being tested each time selections are made.
(j) The employer shall randomly select a sufficient number of
drivers for testing during each calendar year to equal an annual rate
not less than the minimum annual percentage rate for random alcohol and
controlled substances testing determined by the FHWA Administrator. If
the employer conducts random testing for alcohol and/or controlled
substances through a consortium, the number of drivers to be tested may
be calculated for each individual employer or may be based on the total
number of drivers covered by the consortium who are subject to random
alcohol and/or controlled substances testing at the same minimum annual
percentage rate under this part or any DOT alcohol or controlled
substances random testing rule.
(k) Each employer shall ensure that random alcohol and controlled
substances tests conducted under this part are unannounced and that the
dates for administering random alcohol and controlled substances tests
are spread reasonably throughout the calendar year.
(l) Each employer shall require that each driver who is notified of
selection for random alcohol and/or controlled substances testing
proceeds to the test site immediately; provided, however, that if the
driver is performing a safety-sensitive function, other than driving a
commercial motor vehicle, at the time of notification, the employer
shall instead ensure that the driver ceases to perform the safety-
sensitive function and proceeds to the testing site as soon as
possible.
(m) A driver shall only be tested for alcohol while the driver is
performing safety-sensitive functions, just before the driver is to
perform safety-sensitive functions, or just after the driver has ceased
performing such functions.
(n) If a given driver is subject to random alcohol or controlled
substances testing under the random alcohol or controlled substances
testing rules of more than one DOT agency for the same employer, the
driver shall be subject to random alcohol and/or controlled substances
testing at the annual percentage rate established for the calendar year
by the DOT agency regulating more than 50 percent of the driver's
function.
(o) If an employer is required to conduct random alcohol or
controlled substances testing under the alcohol or controlled
substances testing rules of more than one DOT agency, the employer
may--
(1) Establish separate pools for random selection, with each pool
containing the DOT-covered employees who are subject to testing at the
same required minimum annual percentage rate; or
(2) Randomly select such employees for testing at the highest
minimum annual percentage rate established for the calendar year by any
DOT agency to which the employer is subject.
Sec. 382.307 Reasonable suspicion testing.
(a) An employer shall require a driver to submit to an alcohol test
when the employer has reasonable suspicion to believe that the driver
has violated the prohibitions of subpart B of this part concerning
alcohol. The employer's determination that reasonable suspicion exists
to require the driver to undergo an alcohol test must be based on
specific, contemporaneous, articulable observations concerning the
appearance, behavior, speech or body odors of the driver.
(b) An employer shall require a driver to submit to a controlled
substances test when the employer has reasonable suspicion to believe
that the driver has violated the prohibitions of subpart B of this part
concerning controlled substances. The employer's determination that
reasonable suspicion exists to require the driver to undergo a
controlled substances test must be based on specific, contemporaneous,
articulable observations concerning the appearance, behavior, speech or
body odors of the driver. The observations may include indications of
the chronic and withdrawal effects of controlled substances.
(c) The required observations for alcohol and/or controlled
substances
[[Page 9559]]
reasonable suspicion testing shall be made by a supervisor or company
official who is trained in accordance with Sec. 382.603 of this part.
The person who makes the determination that reasonable suspicion exists
to conduct an alcohol test shall not conduct the alcohol test of the
driver.
(d) Alcohol testing is authorized by this section only if the
observations required by paragraph (a) of this section are made during,
just preceding, or just after the period of the work day that the
driver is required to be in compliance with this part. A driver may be
directed by the employer to only undergo reasonable suspicion testing
while the driver is performing safety-sensitive functions, just before
the driver is to perform safety-sensitive functions, or just after the
driver has ceased performing such functions.
(e)(1) If an alcohol test required by this section is not
administered within two hours following the determination under
paragraph (a) of this section, the employer shall prepare and maintain
on file a record stating the reasons the alcohol test was not promptly
administered. If an alcohol test required by this section is not
administered within eight hours following the determination under
paragraph (a) of this section, the employer shall cease attempts to
administer an alcohol test and shall state in the record the reasons
for not administering the test.
(2) For the years stated in this paragraph, employers who submit
MIS reports shall submit to the FHWA each record of a test required by
this section that is not completed within 8 hours. The employer's
records of tests that could not be completed within 8 hours shall be
submitted to the FHWA by March 15, 1996; March 15, 1997; and March 15,
1998; for calendar years 1995, 1996, and 1997, respectively. Employers
shall append these records to their MIS submissions. Each record shall
include the following information:
(i) Type of test (reasonable suspicion/post-accident);
(ii) Triggering event (including date, time, and location);
(iii) Reason(s) test could not be completed within 8 hours; and
(iv) If blood alcohol testing could have been completed within
eight hours, the name, address, and telephone number of the testing
site where blood testing could have occurred.
(3) Records of tests that could not be completed in eight hours
shall be submitted to the FHWA at the following address: Attn.: Alcohol
Testing program, Office of Motor Carrier Research and Standards (HCS-
1), Federal Highway Administration, 400 Seventh Street, SW.,
Washington, DC 20590.
(4) Notwithstanding the absence of a reasonable suspicion alcohol
test under this section, no driver shall report for duty or remain on
duty requiring the performance of safety-sensitive functions while the
driver is under the influence of or impaired by alcohol, as shown by
the behavioral, speech, and performance indicators of alcohol misuse,
nor shall an employer permit the driver to perform or continue to
perform safety-sensitive functions, until:
(i) An alcohol test is administered and the driver's alcohol
concentration measures less than 0.02; or
(ii) Twenty four hours have elapsed following the determination
under paragraph (a) of this section that there is reasonable suspicion
to believe that the driver has violated the prohibitions in this part
concerning the use of alcohol.
(5) Except as provided in paragraph (e)(2) of this section, no
employer shall take any action under this part against a driver based
solely on the driver's behavior and appearance, with respect to alcohol
use, in the absence of an alcohol test. This does not prohibit an
employer with independent authority of this part from taking any action
otherwise consistent with law.
(f) A written record shall be made of the observations leading to a
controlled substance reasonable suspicion test, and signed by the
supervisor or company official who made the observations, within 24
hours of the observed behavior or before the results of the controlled
substances test are released, whichever is earlier.
Sec. 382.309 Return-to-duty testing.
(a) Each employer shall ensure that before a driver returns to duty
requiring the performance of a safety-sensitive function after engaging
in conduct prohibited by subpart B of this part concerning alcohol, the
driver shall undergo a return-to-duty alcohol test with a result
indicating an alcohol concentration of less than 0.02.
(b) Each employer shall ensure that before a driver returns to duty
requiring the performance of a safety-sensitive function after engaging
in conduct prohibited by subpart B of this part concerning controlled
substances, the driver shall undergo a return-to-duty controlled
substances test with a result indicating a verified negative result for
controlled substances use.
Sec. 382.311 Follow-up testing.
(a) Following a determination under Sec. 382.605(b) that a driver
is in need of assistance in resolving problems associated with alcohol
misuse and/or use of controlled substances, each employer shall ensure
that the driver is subject to unannounced follow-up alcohol and/or
controlled substances testing as directed by a substance abuse
professional in accordance with the provisions of
Sec. 382.605(c)(2)(ii).
(b) Follow-up alcohol testing shall be conducted only when the
driver is performing safety-sensitive functions, just before the driver
is to perform safety-sensitive functions, or just after the driver has
ceased performing safety-sensitive functions.
Subpart D--Handling Of Test Results, Record Retention and
Confidentiality
Sec. 382.401 Retention of records.
(a) General requirement. Each employer shall maintain records of
its alcohol misuse and controlled substances use prevention programs as
provided in this section. The records shall be maintained in a secure
location with controlled access.
(b) Period of retention. Each employer shall maintain the records
in accordance with the following schedule:
(1) Five years. The following records shall be maintained for a
minimum of five years:
(i) Records of driver alcohol test results indicating an alcohol
concentration of 0.02 or greater,
(ii) Records of driver verified positive controlled substances test
results,
(iii) Documentation of refusals to take required alcohol and/or
controlled substances tests,
(iv) Driver evaluation and referrals,
(v) Calibration documentation,
(vi) Records related to the administration of the alcohol and
controlled substances testing programs, and
(vii) A copy of each annual calendar year summary required by
Sec. 382.403.
(2) Two years. Records related to the alcohol and controlled
substances collection process (except calibration of evidential breath
testing devices).
(3) One year. Records of negative and canceled controlled
substances test results (as defined in part 40 of this title) and
alcohol test results with a concentration of less than 0.02 shall be
maintained for a minimum of one year.
(4) Indefinite period. Records related to the education and
training of breath alcohol technicians, screening test technicians,
supervisors, and drivers shall be maintained by the employer while the
individual performs the functions which require the training and for
two years after ceasing to perform those functions.
(c) Types of records. The following specific types of records shall
be
[[Page 9560]]
maintained. ``Documents generated'' are documents that may have to be
prepared under a requirement of this part. If the record is required to
be prepared, it must be maintained.
(1) Records related to the collection process:
(i) Collection logbooks, if used;
(ii) Documents relating to the random selection process;
(iii) Calibration documentation for evidential breath testing
devices;
(iv) Documentation of breath alcohol technician training;
(v) Documents generated in connection with decisions to administer
reasonable suspicion alcohol or controlled substances tests;
(vi) Documents generated in connection with decisions on post-
accident tests;
(vii) Documents verifying existence of a medical explanation of the
inability of a driver to provide adequate breath or to provide a urine
specimen for testing; and
(viii) Consolidated annual calendar year summaries as required by
Sec. 382.403.
(2) Records related to a driver's test results:
(i) The employer's copy of the alcohol test form, including the
results of the test;
(ii) The employer's copy of the controlled substances test chain of
custody and control form;
(iii) Documents sent by the MRO to the employer, including those
required by Sec. 382.407(a).
(iv) Documents related to the refusal of any driver to submit to an
alcohol or controlled substances test required by this part; and
(v) Documents presented by a driver to dispute the result of an
alcohol or controlled substances test administered under this part.
(vi) Documents generated in connection with verifications of prior
employers' alcohol or controlled substances test results that the
employer:
(A) Must obtain in connection with the exception contained in
Sec. 382.301 of this part, and
(B) Must obtain as required by Sec. 382.413 of this subpart.
(3) Records related to other violations of this part.
(4) Records related to evaluations:
(i) Records pertaining to a determination by a substance abuse
professional concerning a driver's need for assistance; and
(ii) Records concerning a driver's compliance with recommendations
of the substance abuse professional.
(5) Records related to education and training:
(i) Materials on alcohol misuse and controlled substance use
awareness, including a copy of the employer's policy on alcohol misuse
and controlled substance use;
(ii) Documentation of compliance with the requirements of
Sec. 382.601, including the driver's signed receipt of education
materials;
(iii) Documentation of training provided to supervisors for the
purpose of qualifying the supervisors to make a determination
concerning the need for alcohol and/or controlled substances testing
based on reasonable suspicion;
(iv) Documentation of training for breath alcohol technicians as
required by Sec. 40.51(a) of this title, and
(v) Certification that any training conducted under this part
complies with the requirements for such training.
(6) Administrative records related to alcohol and controlled
substances testing:
(i) Agreements with collection site facilities, laboratories,
breath alcohol technicians, screening test technicians, medical review
officers, consortia, and third party service providers;
(ii) Names and positions of officials and their role in the
employer's alcohol and controlled substances testing program(s);
(iii) Quarterly laboratory statistical summaries of urinalysis
required by Sec. 40.29(g)(6) of this title;
(iv) The employer's alcohol and controlled substances testing
policy and procedures; and
(v) Records generated in connection with part 391, subpart H of
this subchapter.
(d) Location of records. All records required by this part shall be
maintained as required by Sec. 390.31 of this subchapter and shall be
made available for inspection at the employer's principal place of
business within two business days after a request has been made by an
authorized representative of the Federal Highway Administration.
(e)(1) OMB control number. The information collection requirements
of this part have been reviewed by the Office of Management and Budget
pursuant to the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et
seq.) and have been assigned OMB control number 2125-0543, approved
through March 31, 1997.
(2) The information collection requirements of this part are found
in the following sections: Section 382.105, 382.113, 382.301, 382.303,
382.305, 382.307, 382.309, 382.311, 382.401, 382.403, 382.405, 382.407,
382.409, 382.411, 382.413, 382.601, 382.603, 382.605.
Sec. 382.403 Reporting of results in a management information system.
(a) An employer shall prepare and maintain a summary of the results
of its alcohol and controlled substances testing programs performed
under this part during the previous calendar year, when requested by
the Secretary of Transportation, any DOT agency, or any State or local
officials with regulatory authority over the employer or any of its
drivers.
(b) If an employer is notified, during the month of January, of a
request by the Federal Highway Administration to report the employer's
annual calendar year summary information, the employer shall prepare
and submit the report to the Federal Highway Administration by March 15
of that year. The employer shall ensure that the annual summary report
is accurate and received by March 15 at the location that the Federal
Highway Administration specifies in its request. The report shall be in
the form and manner prescribed by the Federal Highway Administration in
its request. When the report is submitted to the Federal Highway
Administration by mail or electronic transmission, the information
requested shall be typed, except for the signature of the certifying
official. Each employer shall ensure the accuracy and timeliness of
each report submitted by the employer or a consortium.
(c) Detailed summary. Each annual calendar year summary that
contains information on a verified positive controlled substances test
result, an alcohol screening test result of 0.02 or greater, or any
other violation of the alcohol misuse provisions of subpart B of this
part shall include the following informational elements:
(1) Number of drivers subject to Part 382;
(2) Number of drivers subject to testing under the alcohol misuse
or controlled substances use rules of more than one DOT agency,
identified by each agency;
(3) Number of urine specimens collected by type of test (e.g., pre-
employment, random, reasonable suspicion, post-accident);
(4) Number of positives verified by a MRO by type of test, and type
of controlled substance;
(5) Number of negative controlled substance tests verified by a MRO
by type of test;
(6) Number of persons denied a position as a driver following a
pre-employment verified positive controlled substances test and/or a
pre-employment alcohol test that indicates
[[Page 9561]]
an alcohol concentration of 0.04 or greater;
(7) Number of drivers with tests verified positive by a medical
review officer for multiple controlled substances;
(8) Number of drivers who refused to submit to an alcohol or
controlled substances test required under this subpart;
(9)(i) Number of supervisors who have received required alcohol
training during the reporting period; and
(ii) Number of supervisors who have received required controlled
substances training during the reporting period;
(10)(i) Number of screening alcohol tests by type of test; and
(ii) Number of confirmation alcohol tests, by type of test;
(11) Number of confirmation alcohol tests indicating an alcohol
concentration of 0.02 or greater but less than 0.04, by type of test;
(12) Number of confirmation alcohol tests indicating an alcohol
concentration of 0.04 or greater, by type of test;
(13) Number of drivers who were returned to duty (having complied
with the recommendations of a substance abuse professional as described
in Secs. 382.503 and 382.605), in this reporting period, who
previously:
(i) Had a verified positive controlled substance test result, or
(ii) Engaged in prohibited alcohol misuse under the provisions of
this part;
(14) Number of drivers who were administered alcohol and drug tests
at the same time, with both a verified positive drug test result and an
alcohol test result indicating an alcohol concentration of 0.04 or
greater; and
(15) Number of drivers who were found to have violated any non-
testing prohibitions of subpart B of this part, and any action taken in
response to the violation.
(d) Short summary. Each employer's annual calendar year summary
that contains only negative controlled substance test results, alcohol
screening test results of less than 0.02, and does not contain any
other violations of subpart B of this part, may prepare and submit, as
required by paragraph (b) of this section, either a standard report
form containing all the information elements specified in paragraph (c)
of this section, or an ``EZ'' report form. The ``EZ'' report shall
include the following information elements:
(1) Number of drivers subject to this Part 382;
(2) Number of drivers subject to testing under the alcohol misuse
or controlled substance use rules of more than one DOT agency,
identified by each agency;
(3) Number of urine specimens collected by type of test (e.g., pre-
employment, random, reasonable suspicion, post-accident);
(4) Number of negatives verified by a medical review officer by
type of test;
(5) Number of drivers who refused to submit to an alcohol or
controlled substances test required under this subpart;
(6)(i) Number of supervisors who have received required alcohol
training during the reporting period; and
(ii) Number of supervisors who have received required controlled
substances training during the reporting period;
(7) Number of screen alcohol tests by type of test; and
(8) Number of drivers who were returned to duty (having complied
with the recommendations of a substance abuse professional as described
in Secs. 382.503 and 382.605), in this reporting period, who
previously:
(i) Had a verified positive controlled substance test result, or
(ii) Engaged in prohibited alcohol misuse under the provisions of
this part.
(e) Each employer that is subject to more than one DOT agency
alcohol or controlled substances rule shall identify each driver
covered by the regulations of more than one DOT agency. The
identification will be by the total number of covered functions. Prior
to conducting any alcohol or controlled substances test on a driver
subject to the rules of more than one DOT agency, the employer shall
determine which DOT agency rule or rules authorizes or requires the
test. The test result information shall be directed to the appropriate
DOT agency or agencies.
(f) A consortium may prepare annual calendar year summaries and
reports on behalf of individual employers for purposes of compliance
with this section. However, each employer shall sign and submit such a
report and shall remain responsible for ensuring the accuracy and
timeliness of each report prepared on its behalf by a consortium.
Sec. 382.405 Access to facilities and records.
(a) Except as required by law or expressly authorized or required
in this section, no employer shall release driver information that is
contained in records required to be maintained under Sec. 382.401.
(b) A driver is entitled, upon written request, to obtain copies of
any records pertaining to the driver's use of alcohol or controlled
substances, including any records pertaining to his or her alcohol or
controlled substances tests. The employer shall promptly provide the
records requested by the driver. Access to a driver's records shall not
be contingent upon payment for records other than those specifically
requested.
(c) Each employer shall permit access to all facilities utilized in
complying with the requirements of this part to the Secretary of
Transportation, any DOT agency, or any State or local officials with
regulatory authority over the employer or any of its drivers.
(d) Each employer shall make available copies of all results for
employer alcohol and/or controlled substances testing conducted under
this part and any other information pertaining to the employer's
alcohol misuse and/or controlled substances use prevention program,
when requested by the Secretary of Transportation, any DOT agency, or
any State or local officials with regulatory authority over the
employer or any of its drivers.
(e) When requested by the National Transportation Safety Board as
part of an accident investigation, employers shall disclose information
related to the employer's administration of a post-accident alcohol
and/or controlled substance test administered following the accident
under investigation.
(f) Records shall be made available to a subsequent employer upon
receipt of a written request from a driver. Disclosure by the
subsequent employer is permitted only as expressly authorized by the
terms of the driver's request.
(g) An employer may disclose information required to be maintained
under this part pertaining to a driver, the decisionmaker in a lawsuit,
grievance, or other proceeding initiated by or on behalf of the
individual, and arising from the results of an alcohol and/or
controlled substance test administered under this part, or from the
employer's determination that the driver engaged in conduct prohibited
by subpart B of this part (including, but not limited to, a worker's
compensation, unemployment compensation, or other proceeding relating
to a benefit sought by the driver.)
(h) An employer shall release information regarding a driver's
records as directed by the specific, written consent of the driver
authorizing release of the information to an identified person. Release
of such information by the person receiving the information is
permitted only in accordance with the terms of the employee's consent.
Sec. 382.407 Medical review officer notifications to the employer.
(a) The medical review officer may report to the employer using any
communications device, but in all instances a signed, written
notification must be forwarded within three
[[Page 9562]]
business days of completion of the medical review officer's review,
pursuant to part 40 of this title. A legible photocopy of the fourth
copy of Part 40 Appendix A subtitled COPY 4--SEND DIRECTLY TO MEDICAL
REVIEW OFFICER--DO NOT SEND TO LABORATORY of the Federal Custody and
Control Form OMB Number 9999-0023 may be used to make the signed,
written notification to the employer for all test results (positive,
negative, canceled, etc.), provided that the controlled substance(s)
verified as positive, and the MRO's signature, shall be legibly noted
in the remarks section of step 8 of the form completed by the medical
review officer. The MRO must sign all verified positive test results.
An MRO may sign or rubber stamp negative test results. An MRO's staff
may rubber stamp negative test results under written authorization of
the MRO. In no event shall an MRO, or his/her staff, use electronic
signature technology to comply with this section. All reports, both
oral and in writing, from the medical review officer to an employer
shall clearly include:
(1) A statement that the controlled substances test being reported
was in accordance with part 40 of this title and this part, except for
legible photocopies of Copy 4 of the Federal Custody and Control Form;
(2) The full name of the driver for whom the test results are being
reported;
(3) The type of test indicated on the custody and control form
(i.e. random, post-accident, follow-up);
(4) The date and location of the test collection;
(5) The identities of the persons or entities performing the
collection, analyzing the specimens, and serving as the medical review
officer for the specific test;
(6) The results of the controlled substances test, positive,
negative, test canceled, or test not performed, and if positive, the
identity of the controlled substance(s) for which the test was verified
positive.
(b) A medical review officer shall report to the employer that the
medical review officer has made all reasonable efforts to contact the
driver as provided in Sec. 40.33(c) of this title. The employer shall,
as soon as practicable, request that the driver contact the medical
review officer prior to dispatching the driver or within 24 hours,
whichever is earlier.
Sec. 382.409 Medical review officer record retention for controlled
substances.
(a) A medical review officer shall maintain all dated records and
notifications, identified by individual, for a minimum of five years
for verified positive controlled substances test results.
(b) A medical review officer shall maintain all dated records and
notifications, identified by individual, for a minimum of one year for
negative and canceled controlled substances test results.
(c) No person may obtain the individual controlled substances test
results retained by a medical review officer, and no medical review
officer shall release the individual controlled substances test results
of any driver to any person, without first obtaining a specific,
written authorization from the tested driver. Nothing in this paragraph
shall prohibit a medical review officer from releasing, to the employer
or to officials of the Secretary of Transportation, any DOT agency, or
any State or local officials with regulatory authority over the
controlled substances testing program under this part, the information
delineated in Sec. 382.407(a) of this subpart.
Sec. 382.411 Employer notifications.
(a) An employer shall notify a driver of the results of a pre-
employment controlled substance test conducted under this part, if the
driver requests such results within 60 calendar days of being notified
of the disposition of the employment application. An employer shall
notify a driver of the results of random, reasonable suspicion and
post-accident tests for controlled substances conducted under this part
if the test results are verified positive. The employer shall also
inform the driver which controlled substance or substances were
verified as positive.
(b) The designated management official shall make reasonable
efforts to contact and request each driver who submitted a specimen
under the employer's program, regardless of the driver's employment
status, to contact and discuss the results of the controlled substances
test with a medical review officer who has been unable to contact the
driver.
(c) The designated management official shall immediately notify the
medical review officer that the driver has been notified to contact the
medical review officer within 24 hours.
Sec. 382.413 Inquiries for alcohol and controlled substances
information from previous employers.
(a)(1) An employer shall, pursuant to the driver's written
authorization, inquire about the following information on a driver from
the driver's previous employers, during the preceding two years from
the date of application, which are maintained by the driver's previous
employers under Sec. 382.401(b)(1) (i) through (iii) of this subpart:
(i) Alcohol tests with a result of 0.04 alcohol concentration or
greater;
(ii) Verified positive controlled substances test results; and
(iii) Refusals to be tested.
(2) The information obtained from a previous employer may contain
any alcohol and drug information the previous employer obtained from
other previous employers under paragraph (a)(1) of this section.
(b) If feasible, the information in paragraph (a) of this section
must be obtained and reviewed by the employer prior to the first time a
driver performs safety-sensitive functions for the employer. If not
feasible, the information must be obtained and reviewed as soon as
possible, but no later than 14-calendar days after the first time a
driver performs safety-sensitive functions for the employer. An
employer may not permit a driver to perform safety-sensitive functions
after 14 days without having made a good faith effort to obtain the
information as soon as possible. If a driver hired or used by the
employer ceases performing safety-sensitive functions for the employer
before expiration of the 14-day period or before the employer has
obtained the information in paragraph (a) of this section, the employer
must still make a good faith effort to obtain the information.
(c) An employer must maintain a written, confidential record of the
information obtained under paragraph (a) or (f) of this section. If,
after making a good faith effort, an employer is unable to obtain the
information from a previous employer, a record must be made of the
efforts to obtain the information and retained in the driver's
qualification file.
(d) The prospective employer must provide to each of the driver's
previous employers the driver's specific, written authorization for
release of the information in paragraph (a) of this section.
(e) The release of any information under this section may take the
form of personal interviews, telephone interviews, letters, or any
other method of transmitting information that ensures confidentiality.
(f) The information in paragraph (a) of this section may be
provided directly to the prospective employer by the driver, provided
the employer assures itself that the information is true and accurate.
(g) An employer may not use a driver to perform safety-sensitive
functions if
[[Page 9563]]
the employer obtains information on a violation of the prohibitions in
subpart B of this part by the driver, without obtaining information on
subsequent compliance with the referral and rehabilitation requirements
of Sec. 382.605 of this part.
(h) Employers need not obtain information under paragraph (a) of
this section generated by previous employers prior to the starting
dates in Sec. 382.115 of this part.
Subpart E--Consequences For Drivers Engaging In Substance Use-
Related Conduct
Sec. 382.501 Removal from safety-sensitive function.
(a) Except as provided in subpart F of this part, no driver shall
perform safety-sensitive functions, including driving a commercial
motor vehicle, if the driver has engaged in conduct prohibited by
subpart B of this part or an alcohol or controlled substances rule of
another DOT agency.
(b) No employer shall permit any driver to perform safety-sensitive
functions, including driving a commercial motor vehicle, if the
employer has determined that the driver has violated this section.
(c) For purposes of this subpart, commercial motor vehicle means a
commercial motor vehicle in commerce as defined in Sec. 382.107, and a
commercial motor vehicle in interstate commerce as defined in Part 390
of this subchapter.
Sec. 382.503 Required evaluation and testing.
No driver who has engaged in conduct prohibited by subpart B of
this part shall perform safety-sensitive functions, including driving a
commercial motor vehicle, unless the driver has met the requirements of
Sec. 382.605. No employer shall permit a driver who has engaged in
conduct prohibited by subpart B of this part to perform safety-
sensitive functions, including driving a commercial motor vehicle,
unless the driver has met the requirements of Sec. 382.605.
Sec. 382.505 Other alcohol-related conduct.
(a) No driver tested under the provisions of subpart C of this part
who is found to have an alcohol concentration of 0.02 or greater but
less than 0.04 shall perform or continue to perform safety-sensitive
functions for an employer, including driving a commercial motor
vehicle, nor shall an employer permit the driver to perform or continue
to perform safety-sensitive functions, until the start of the driver's
next regularly scheduled duty period, but not less than 24 hours
following administration of the test.
(b) Except as provided in paragraph (a) of this section, no
employer shall take any action under this part against a driver based
solely on test results showing an alcohol concentration less than 0.04.
This does not prohibit an employer with authority independent of this
part from taking any action otherwise consistent with law.
Sec. 382.507 Penalties.
Any employer or driver who violates the requirements of this part
shall be subject to the penalty provisions of 49 U.S.C. section 521(b).
Subpart F--Alcohol Misuse and Controlled Substances Use
Information, Training, and Referral
Sec. 382.601 Employer obligation to promulgate a policy on the misuse
of alcohol and use of controlled substances.
(a) General requirements. Each employer shall provide educational
materials that explain the requirements of this part and the employer's
policies and procedures with respect to meeting these requirements.
(1) The employer shall ensure that a copy of these materials is
distributed to each driver prior to the start of alcohol and controlled
substances testing under this part and to each driver subsequently
hired or transferred into a position requiring driving a commercial
motor vehicle.
(2) Each employer shall provide written notice to representatives
of employee organizations of the availability of this information.
(b) Required content. The materials to be made available to drivers
shall include detailed discussion of at least the following:
(1) The identity of the person designated by the employer to answer
driver questions about the materials;
(2) The categories of drivers who are subject to the provisions of
this part;
(3) Sufficient information about the safety-sensitive functions
performed by those drivers to make clear what period of the work day
the driver is required to be in compliance with this part;
(4) Specific information concerning driver conduct that is
prohibited by this part;
(5) The circumstances under which a driver will be tested for
alcohol and/or controlled substances under this part, including post-
accident testing under Sec. 382.303(d);
(6) The procedures that will be used to test for the presence of
alcohol and controlled substances, protect the driver and the integrity
of the testing processes, safeguard the validity of the test results,
and ensure that those results are attributed to the correct driver,
including post-accident information, procedures and instructions
required by Sec. 382.303(d) of this part;
(7) The requirement that a driver submit to alcohol and controlled
substances tests administered in accordance with this part;
(8) An explanation of what constitutes a refusal to submit to an
alcohol or controlled substances test and the attendant consequences;
(9) The consequences for drivers found to have violated subpart B
of this part, including the requirement that the driver be removed
immediately from safety-sensitive functions, and the procedures under
Sec. 382.605;
(10) The consequences for drivers found to have an alcohol
concentration of 0.02 or greater but less than 0.04;
(11) Information concerning the effects of alcohol and controlled
substances use on an individual's health, work, and personal life;
signs and symptoms of an alcohol or a controlled substances problem
(the driver's or a coworker's); and available methods of intervening
when an alcohol or a controlled substances problem is suspected,
including confrontation, referral to any employee assistance program
and or referral to management.
(c) Optional provision. The materials supplied to drivers may also
include information on additional employer policies with respect to the
use of alcohol or controlled substances, including any consequences for
a driver found to have a specified alcohol or controlled substances
level, that are based on the employer's authority independent of this
part. Any such additional policies or consequences must be clearly and
obviously described as being based on independent authority.
(d) Certificate of receipt. Each employer shall ensure that each
driver is required to sign a statement certifying that he or she has
received a copy of these materials described in this section. Each
employer shall maintain the original of the signed certificate and may
provide a copy of the certificate to the driver.
Sec. 382.603 Training for supervisors.
Each employer shall ensure that all persons designated to supervise
drivers receive at least 60 minutes of training on alcohol misuse and
receive at least an additional 60 minutes of training on controlled
substances use. The training will be used by the supervisors to
determine whether reasonable suspicion exists to require a driver to
undergo
[[Page 9564]]
testing under Sec. 382.307. The training shall include the physical,
behavioral, speech, and performance indicators of probable alcohol
misuse and use of controlled substances.
Sec. 382.605 Referral, evaluation, and treatment.
(a) Each driver who has engaged in conduct prohibited by subpart B
of this part shall be advised by the employer of the resources
available to the driver in evaluating and resolving problems associated
with the misuse of alcohol and use of controlled substances, including
the names, addresses, and telephone numbers of substance abuse
professionals and counseling and treatment programs.
(b) Each driver who engages in conduct prohibited by subpart B of
this part shall be evaluated by a substance abuse professional who
shall determine what assistance, if any, the employee needs in
resolving problems associated with alcohol misuse and controlled
substances use.
(c)(1) Before a driver returns to duty requiring the performance of
a safety- sensitive function after engaging in conduct prohibited by
subpart B of this part, the driver shall undergo a return-to-duty
alcohol test with a result indicating an alcohol concentration of less
than 0.02 if the conduct involved alcohol, or a controlled substances
test with a verified negative result if the conduct involved a
controlled substance.
(2) In addition, each driver identified as needing assistance in
resolving problems associated with alcohol misuse or controlled
substances use,
(i) Shall be evaluated by a substance abuse professional to
determine that the driver has properly followed any rehabilitation
program prescribed under paragraph (b) of this section, and
(ii) Shall be subject to unannounced follow-up alcohol and
controlled substances tests administered by the employer following the
driver's return to duty. The number and frequency of such follow-up
testing shall be as directed by the substance abuse professional, and
consist of at least six tests in the first 12 months following the
driver's return to duty. The employer may direct the driver to undergo
return-to-duty and follow-up testing for both alcohol and controlled
substances, if the substance abuse professional determines that return-
to-duty and follow-up testing for both alcohol and controlled
substances is necessary for that particular driver. Any such testing
shall be performed in accordance with the requirements of 49 CFR part
40. Follow-up testing shall not exceed 60 months from the date of the
driver's return to duty. The substance abuse professional may terminate
the requirement for follow-up testing at any time after the first six
tests have been administered, if the substance abuse professional
determines that such testing is no longer necessary.
(d) Evaluation and rehabilitation may be provided by the employer,
by a substance abuse professional under contract with the employer, or
by a substance abuse professional not affiliated with the employer. The
choice of substance abuse professional and assignment of costs shall be
made in accordance with employer/driver agreements and employer
policies.
(e) The employer shall ensure that a substance abuse professional
who determines that a driver requires assistance in resolving problems
with alcohol misuse or controlled substances use does not refer the
driver to the substance abuse professional's private practice or to a
person or organization from which the substance abuse professional
receives remuneration or in which the substance abuse professional has
a financial interest. This paragraph does not prohibit a substance
abuse professional from referring a driver for assistance provided
through--
(1) A public agency, such as a State, county, or municipality;
(2) The employer or a person under contract to provide treatment
for alcohol or controlled substance problems on behalf of the employer;
(3) The sole source of therapeutically appropriate treatment under
the driver's health insurance program; or
(4) The sole source of therapeutically appropriate treatment
reasonably accessible to the driver.
(f) The requirements of this section with respect to referral,
evaluation and rehabilitation do not apply to applicants who refuse to
submit to a pre-employment alcohol or controlled substances test or who
have a pre-employment alcohol test with a result indicating an alcohol
concentration of 0.04 or greater or a controlled substances test with a
verified positive test result.
PART 383--[AMENDED]
2. The authority citation for 49 CFR part 383 is revised to read as
follows:
Authority: 49 U.S.C. 31101 et seq., 31136, and 31502; and 49 CFR
1.48.
3. Section 383.3 is revised to read as follows:
Sec. 383.3 Applicability.
(a) The rules in this part apply to every person who operates a
commercial motor vehicle (CMV) in interstate, foreign, or intrastate
commerce, to all employers of such persons, and to all States.
(b) The exceptions contained in Sec. 390.3(g) of this subchapter do
not apply to this part. The employers and drivers identified in
Sec. 390.3(g) must comply with the requirements of this part, unless
otherwise provided in this section.
(c) Exception for certain military drivers. Each State must exempt
from the requirements of this part individuals who operate CMVs for
military purposes. This exception is applicable to active duty military
personnel; members of the military reserves; member of the national
guard on active duty, including personnel on full-time national guard
duty, personnel on part-time national guard training, and national
guard military technicians (civilians who are required to wear military
uniforms); and active duty U.S. Coast Guard personnel. This exception
is not applicable to U.S. Reserve technicians.
(d) Exception for farmers, firefighters and emergency response
vehicle drivers. A State may, at its discretion, exempt individuals
identified in paragraphs (d)(1), (d)(2), and (d)(3) of this section
from the requirements of this part. The use of this waiver is limited
to the driver's home State unless there is a reciprocity agreement with
adjoining States.
(1) Operators of a farm vehicle which is:
(i) Controlled and operated by a farmer, including operation by
employees or family members;
(ii) Used to transport either agricultural products, farm
machinery, farm supplies, or both to or from a farm;
(iii) Not used in the operations of a common or contract motor
carrier; and
(iv) Used within 241 kilometers (150 miles) of the farmer's farm.
(2) Firefighters and other persons who operate CMVs which are
necessary to the preservation of life or property or the execution of
emergency governmental functions, are equipped with audible and visual
signals and are not subject to normal traffic regulation. These
vehicles include fire trucks, hook and ladder trucks, foam or water
transport trucks, police SWAT team vehicles, ambulances, or other
vehicles that are used in response to emergencies.
(e) Restricted commercial drivers license (CDL) for certain drivers
in the State of Alaska. (1) The State of Alaska may, at its discretion,
waive only the following requirements of this part and issue a CDL to
each driver that meets
[[Page 9565]]
the conditions set forth in paragraphs (e) (2) and (3) of this section:
(i) The knowledge tests standards for testing procedures and
methods of subpart H, but must continue to administer knowledge tests
that fulfill the content requirements of subpart G for all applicants;
(ii) All the skills test requirements; and
(iii) The requirement under Sec. 383.153(a)(4) to have a photograph
on the license document.
(2) Drivers of CMVs in the State of Alaska must operate exclusively
over roads that meet both of the following criteria to be eligible for
the exception in paragraph (e)(1) of this section:
(i) Such roads are not connected by land highway or vehicular way
to the land-connected State highway system; and
(ii) Such roads are not connected to any highway or vehicular way
with an average daily traffic volume greater than 499.
(3) Any CDL issued under the terms of this paragraph must carry two
restrictions:
(i) Holders may not operate CMVs over roads other than those
specified in paragraph (e)(2) of this section; and
(ii) The license is not valid for CMV operation outside the State
of Alaska.
(f) Restricted CDL for certain drivers in farm-related service
industries. (1) A State may, at its discretion, waive the required
knowledge and skills tests of subpart H of this part and issue
restricted CDLs to employees of these designated farm-related service
industries:
(i) Agri-chemical businesses;
(ii) Custom harvesters;
(iii) Farm retail outlets and suppliers;
(iv) Livestock feeders.
(2) A restricted CDL issued pursuant to this paragraph shall meet
all the requirements of this part, except subpart H of this part. A
restricted CDL issued pursuant to this paragraph shall be accorded the
same reciprocity as a CDL meeting all of the requirements of this part.
The restrictions imposed upon the issuance of this restricted CDL shall
not limit a person's use of the CDL in a non-CMV during either
validated or non-validated periods, nor shall the CDL affect a State's
power to administer its driver licensing program for operators of
vehicles other than CMVs.
(3) A State issuing a CDL under the terms of this paragraph must
restrict issuance as follows:
(i) Applicants must have a good driving record as defined in this
paragraph. Drivers who have not held any motor vehicle operator's
license for at least one year shall not be eligible for this CDL.
Drivers who have between one and two years of driving experience must
demonstrate a good driving record for their entire driving history.
Drivers with more than two years of driving experience must have a good
driving record for the two most recent years. For the purposes of this
paragraph, the term good driving record means that an applicant:
(A) Has not had more than one license (except in the instances
specified in Sec. 383.21(b));
(B) Has not had any license suspended, revoked, or canceled;
(C) Has not had any conviction for any type of motor vehicle for
the disqualifying offenses contained in Sec. 383.51(b)(2);
(D) Has not had any conviction for any type of motor vehicle for
serious traffic violations; and
(E) Has not had any conviction for a violation of State or local
law relating to motor vehicle traffic control (other than a parking
violation) arising in connection with any traffic accident, and has no
record of an accident in which he/she was at fault.
(ii) Restricted CDLs shall have the same renewal cycle as
unrestricted CDLs, but shall be limited to the seasonal period or
periods as defined by the State of licensure, provided that the total
number of calendar days in any 12-month period for which the restricted
CDL is valid does not exceed 180. If a State elects to provide for more
than one seasonal period, the restricted CDL is valid for commercial
motor vehicle operation only during the currently approved season, and
must be revalidated for each successive season. Only one seasonal
period of validity may appear on the license document at a time. The
good driving record must be confirmed prior to any renewal or
revalidation.
(iii) Restricted CDL holders are limited to operating Group B and C
vehicles, as described in subpart F of this part.
(iv) Restricted CDLs shall not be issued with any endorsements on
the license document. Only the limited tank vehicle and hazardous
materials endorsement privileges that the restricted CDL automatically
confers and are described in paragraph (f)(3)(v) of this section are
permitted.
(v) Restricted CDL holders may not drive vehicles carrying any
placardable quantities of hazardous materials, except for diesel fuel
in quantities of 3,785 liters (1,000 gallons) or less; liquid
fertilizers (i.e., plant nutrients) in vehicles or implements of
husbandry in total quantities of 11,355 liters (3,000 gallons) or less;
and solid fertilizers (i.e., solid plant nutrients) that are not
transported with any organic substance.
(vi) Restricted CDL holders may not hold an unrestricted CDL at the
same time.
(vii) Restricted CDL holders may not operate a commercial motor
vehicle beyond 241 kilometers (150 miles) from the place of business or
the farm currently being served.
(g) Restricted CDL for certain drivers in the pyrotechnic industry.
(1) A State may, at its discretion, waive the required hazardous
materials knowledge tests of subpart H of this part and issue
restricted CDLs to part-time drivers operating commercial motor
vehicles transporting less than 227 kilograms (500 pounds) of fireworks
classified as DOT Class 1.3G explosives.
(2) A State issuing a CDL under the terms of this paragraph must
restrict issuance as follows:
(i) The GVWR of the vehicle to be operated must be less than 4,537
kilograms (10,001 pounds);
(ii) If a State believes, at its discretion, that the training
required by Sec. 172.704 of this title adequately prepares part-time
drivers meeting the other requirements of this paragraph to deal with
fireworks and the other potential dangers posed by fireworks
transportation and use, the State may waive the hazardous materials
knowledge tests of subpart H of this part. The State may impose any
requirements it believes is necessary to ensure itself that a driver is
properly trained pursuant to Sec. 172.704 of this title.
(iii) A restricted CDL document issued pursuant to this paragraph
shall have a statement clearly imprinted on the face of the document
that is substantially similar as follows: ``For use as a CDL only
during the period from June 30 through July 6 for purposes of
transporting less than 227 kilograms (500 pounds) of fireworks
classified as DOT Class 1.3G explosives in a vehicle with a GVWR of
less than 4,537 kilograms (10,001 pounds).
(3) A restricted CDL issued pursuant to this paragraph shall meet
all the requirements of this part, except those specifically
identified. A restricted CDL issued pursuant to this paragraph shall be
accorded the same reciprocity as a CDL meeting all of the requirements
of this part. The restrictions imposed upon the issuance of this
restricted CDL shall not limit a person's use of the CDL in a non-CMV
during either validated or non-validated periods, nor shall the CDL
affect a State's power to administer its driver licensing program for
operators of vehicles other than CMVs.
[[Page 9566]]
(4) Restricted CDLs shall have the same renewal cycle as
unrestricted CDLs, but shall be limited to the seasonal period of June
30 through July 6 of each year or a lesser period as defined by the
State of licensure.
(5) Persons who operate commercial motor vehicles during the period
from July 7 through June 29 for purposes of transporting less than 227
kilograms (500 pounds) of fireworks classified as DOT Class 1.3G
explosives in a vehicle with a GVWR of less than 4,537 kilograms
(10,001 pounds) and who also operate such vehicles for the same
purposes during the period June 30 through July 6 shall not be issued a
restricted CDL pursuant to this paragraph.
4. Section 383.5 is amended by revising the term ``commercial motor
vehicle'' to read as follows:
Sec. 383.5 Definitions.
* * * * *
Commercial motor vehicle (CMV) means a motor vehicle or combination
of motor vehicles used in commerce to transport passengers or property
if
FR Doc. 96-5373 Commercial Driver's License Program and Controlled Substances and Alcohol Use and Testing
the motor vehicle--
(a) Has a gross combination weight rating of 11,794 kilograms or
more (26,001 pounds or more) inclusive of a towed unit with a gross
vehicle weight rating of more than 4,536 kilograms (10,000 pounds); or
(b) Has a gross vehicle weight rating of 11,794 or more kilograms
(26,001 pounds or more); or
(c) Is designed to transport 16 or more passengers, including the
driver; or
(d) Is of any size and is used in the transportation of materials
found to be hazardous for the purposes of the Hazardous Materials
Transportation Act and which require the motor vehicle to be placarded
under the Hazardous Materials Regulations (49 CFR part 172, subpart F).
* * *
* * * * *
5. Section 383.91 is amended by revising paragraph (a) to read as
follows:
Sec. 383.91 Commercial motor vehicle groups.
(a) Vehicle group descriptions. Each driver applicant must possess
and be tested on his/her knowledge and skills, described in subpart G
of this part, for the commercial motor vehicle group(s) for which he/
she desires a CDL. The commercial motor vehicle groups are as follows:
(1) Combination vehicle (Group A)--Any combination of vehicles with
a gross combination weight rating (GCWR) of 11,794 kilograms or more
(26,001 pounds or more) provided the GVWR of the vehicle(s) being towed
is in excess of 4,536 kilograms (10,000 pounds).
(2) Heavy Straight Vehicle (Group B)--Any single vehicle with a
GVWR of 11,794 kilograms or more (26,001 pounds or more), or any such
vehicle towing a vehicle not in excess of 4,536 kilograms (10,000
pounds) GVWR.
(3) Small Vehicle (Group C)--Any single vehicle, or combination of
vehicles, that meets neither the definition of Group A nor that of
Group B as contained in this section, but that either is designed to
transport 16 or more passengers including the driver, or is used in the
transportation of materials found to be hazardous for the purposes of
the Hazardous Materials Transportation Act and which require the motor
vehicle to be placarded under the Hazardous Materials Regulations (49
CFR part 172, subpart F).
* * * * *
PART 390--[AMENDED]
6. The authority citation for part 390 continues to read as
follows:
Authority: 49 U.S.C. 5901-5907, 31132, 31133, 31136, 31502, and
31504; and 49 CFR 1.48.
Sec. 390.5 [Amended]
7. Section 390.5 is amended by revising the definition of
``commercial motor vehicle'' to read as follows:
* * * * *
Commercial motor vehicle means any self-propelled or towed vehicle
used on public highways in interstate commerce to transport passengers
or property when:
(a) The vehicle has a gross vehicle weight rating or gross
combination weight rating of 4,537 or more kilograms (10,001 or more
pounds); or
(b) The vehicle is designed to transport more than 15 passengers,
including the driver; or
(c) The vehicle is used in the transportation of hazardous
materials in a quantity requiring placarding under regulations issued
by the Secretary under the Hazardous Materials Transportation Act (49
U.S.C. 5101 et. seq.).
* * * * *
8. Section 390.27 is revised to read as follows:
Sec. 390.27 Locations of regional offices of motor carriers.
------------------------------------------------------------------------
Location of regional
Region No. Territory included office
------------------------------------------------------------------------
1........................... Connecticut, Maine, Leo W. O'Brien
Massachusetts, New Federal Office
Jersey, New Building, Clinton &
Hampshire, New Pearl Streets, Room
York, Rhode Island, 737, Albany, NY
Vermont, Puerto 12207-2334.
Rico, and the
Virgin Islands.
That part of Canada
east of Highways 19
and 8 from Port
Burwell to
Goderich, thence a
straight line
running north
through Tobermory
and Sudbury, and
thence due north to
the Canadian border.
3........................... Delaware, District City Crescent
of Columbia, Building, #10 South
Maryland, Howard Street,
Pennsylvania, Suite 4000,
Virginia, and West Baltimore, MD 21201-
Virginia. 2819.
4........................... Alabama, Florida, 1720 Peachtree Road,
Georgia, Kentucky, NW., Suite 200,
Mississippi, North Atlanta, GA 30367-
Carolina, South 2349.
Carolina, and
Tennessee.
5........................... Illinois, Indiana, 19900 Governors
Michigan, Drive, Suite 210,
Minnesota, Ohio, Olympia Fields, IL
and Wisconsin. That 60461-1021.
part of Canada west
of Highways 19 and
8 from Port Burwell
to Goderich, thence
a straight line
running north
through Tobermory
and Sudbury, and
thence due north to
the Canadian
border, and east of
the boundary
between the
Provinces of
Ontario and
Manitoba to Hudson
Bay and thence a
straight line north
to the Canadian
border.
6........................... Arkansas, Louisiana, Room 8A00, Federal
New Mexico, Building, 819
Oklahoma, and Taylor Street, P.O.
Texas. All of Box 902003, Fort
Mexico, except the Worth, TX 76102.
States of Baja
California and
Sonora and the
Territory of Baja
California Sur.,
Mexico. All nations
south of Mexico.
[[Page 9567]]
7........................... Iowa, Kansas, 6301 Rockhill Road,
Missouri, and P.O. Box 419715,
Nebraska. Kansas City, MO
64141-6715.
8........................... Colorado, Montana, 555 Zang Street,
North Dakota, South room 190, Lakewood,
Dakota, Utah, CO 80228-1014.
Wyoming. That part
of Canada west of
the boundary
between the
Provinces of
Ontario and
Manitoba to Hudson
Bay and thence a
straight line due
north to the
Canadian border,
and east of Highway
95 from Kingsgate
to Blaeberry and
thence a straight
line due north to
the Canadian border.
9........................... Arizona, California, 201 Mission Street,
Hawaii, Nevada, Suite 2100, San
Guam, American Francisco, CA
Samoa, and Mariana 94105.
Islands. The States
of Baja California
and Sonora, Mexico,
and the Territory
of Baja California
Sur., Mexico.
10.......................... Alaska, Idaho, KOIN Center, suite
Oregon and 600, 222 SW
Washington. That Columbia Street,
part of Canada west Portland, OR 97201-
of Highway 95 from 2491.
Kingsgate to
Blaeberry and
thence a straight
line due north to
the Canadian
border, and all the
Province of British
Columbia.
------------------------------------------------------------------------
PART 391--[AMENDED]
9. The authority citation for part 391 continues to read as
follows:
Authority: 49 U.S.C. 504, 31133, 31136, and 31502; and 49 CFR
1.48.
10. Section 391.85 is amended by removing the term and definition
of ``drivers subject to testing'' and by revising the definition
``commercial motor vehicle'' to read as follows:
Sec. 391.85 Definitions.
* * * * *
Commercial motor vehicle means any self-propelled or towed motor
vehicle used on public highways in interstate commerce to transport
passengers or property when:
(a) The motor vehicle has a gross vehicle weight rating or gross
combination weight rating of 11,794 or more kilograms (26,001 or more
pounds); or
(b) The motor vehicle is designed to transport more than 15
passengers, including the driver; or
(c) The motor vehicle is used in the transportation of hazardous
materials in a quantity requiring placarding under regulations issued
by the Secretary under the Hazardous Materials Transportation Act (49
U.S.C. 5101 et. seq.).
* * * * *
11. Section 391.125 is revised to read as follows:
Sec. 391.125 Termination schedule of this subpart.
(a) All motor carriers shall retain all records generated in
connection with this subpart as required by Sec. 382.401 of this
subchapter.
(b) Large employers. Except as provided in paragraph (a) of this
section, each motor carrier with fifty or more drivers on March 17,
1994, shall terminate compliance with this subpart and shall implement
the requirements of part 382 of this subchapter beginning on January 1,
1995.
(c) Small employers. Except as provided in paragraph (a) of this
section, each motor carrier with fewer than fifty drivers on March 17,
1994, shall terminate compliance with this subpart and shall implement
the requirements of Part 382 of this subchapter beginning on January 1,
1996.
(d) Except as provided in paragraph (a) of this section, all motor
carriers shall terminate compliance with this subpart on January 1,
1996.
PART 392--[AMENDED]
12. The authority citation for part 392 continues to read as
follows:
Authority: 49 U.S.C. 31136 and 31502; and 49 CFR 1.48.
13. Section 392.4 is revised to read as follows:
Sec. 392.4 Drugs and other substances.
(a) No driver shall be on duty and possess, be under the influence
of, or use, any of the following drugs or other substances:
(1) Any Schedule I drug or other substance identified in appendix D
to this subchapter;
(2) An amphetamine or any formulation thereof (including, but not
limited, to ``pep pills,'' and ``bennies'');
(3) A narcotic drug or any derivative thereof; or
(4) Any other substance, to a degree which renders the driver
incapable of safely operating a motor vehicle.
(b) No motor carrier shall require or permit a driver to violate
paragraph (a) of this section.
(c) Paragraphs (a) (2), (3), and (4) do not apply to the possession
or use of a substance administered to a driver by or under the
instructions of a licensed medical practitioner, as defined in
Sec. 382.107 of this subchapter, who has advised the driver that the
substance will not affect the driver's ability to safely operate a
motor vehicle.
(d) As used in this section, ``possession'' does not include
possession of a substance which is manifested and transported as part
of a shipment.
14. Section 392.5 is amended by revising paragraph (a) to read as
follows:
Sec. 392.5 Alcohol prohibition.
(a) No driver shall--
(1) Use alcohol, as defined in Sec. 382.107 of this subchapter, or
be under the influence of alcohol, within 4 hours before going on duty
or operating, or having physical control of, a commercial motor
vehicle; or
(2) Use alcohol, be under the influence of alcohol, or have any
measured alcohol concentration or detected presence of alcohol, while
on duty, or operating, or in physical control of a commercial motor
vehicle; or
(3) Be on duty or operate a commercial motor vehicle while the
driver possesses wine of not less than one-half of one per centum of
alcohol by volume, beer as defined in 26 U.S.C. 5052(a), of the
Internal Revenue Code of 1954, and distilled spirits as defined in
section 5002(a)(8), of such Code. However, this does not apply to
possession of wine, beer, or distilled spirits which are:
(i) Manifested and transported as part of a shipment; or
(ii) Possessed or used by bus passengers.
* * * * *
[FR Doc. 96-5373 Filed 3-7-96; 8:45 am]
BILLING CODE 4910-22-P
Complete official Federal Register PDF
FR Doc. 96-5341 Grain Handling Facilities
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9578-9584]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5341]
[[Page 9577]]
_______________________________________________________________________
Part VI
Department of Labor
_______________________________________________________________________
Occupational Safety and Health Administration
_______________________________________________________________________
29 CFR Part 1910
Grain Handling Facilities; Final Rule
Federal Register / Vol. 61, No. 47 / Friday, March 8, 1996 / Rules
and Regulations
[[Page 9578]]
DEPARTMENT OF LABOR
Occupational Safety and Health Administration
29 CFR Part 1910
[Docket No. H-117-B]
Grain Handling Facilities
AGENCY: Occupational Safety and Health Administration (OSHA), Labor.
ACTION: Final rule; technical amendment.
-----------------------------------------------------------------------
SUMMARY: OSHA is amending its grain handling standard to clarify
requirements intended to provide protection for employees who enter
flat storage structures. This technical amendment assures that
protection against engulfment, mechanical, and other hazards is
provided without regard to the point at which the employee enters the
storage structure. It also adds a definition of ``flat storage
structure'' to clarify OSHA's original intent as to the scope of the
entry provisions of the standard.
DATES: This final rule will become effective April 8, 1996.
ADDRESSES: In compliance with 28 U.S.C. 2112(a), for receipt of
petitions for review of the standard, the Agency designates the
Associate Solicitor for Occupational Safety and Health, Office of the
Solicitor, U.S. Department of Labor, Room S-4004, 200 Constitution
Avenue NW., Washington, DC 20210.
FOR FURTHER INFORMATION CONTACT: Anne C. Cyr, Office of Information and
Consumer Affairs, Occupational Safety and Health Administration, U.S.
Department of Labor, Room N-3647, 200 Constitution Avenue NW.,
Washington, DC 20210. Telephone (202)-219-8148. For electronic copies
of documents, contact the Labor News Bulletin Board ((202)-219-4784),
or OSHA's WebPage on the Internet at http://www.osha.gov/ . For news
releases, fact sheets, and other short documents, contact OSHA FAX at
(900)-555-3400 at $1.50 per minute.
SUPPLEMENTARY INFORMATION: On October 19, 1995 (60 FR 54047), OSHA
published a proposed technical amendment to its standard for grain
handling facilities. This proposed amendment was designed to clarify
the Agency's original intention with regard to protecting employees who
enter grain storage structures from engulfment and other hazards within
those structures. In particular, the proposal focused on entries into
``flat storage'' structures. The proposed amendment added a definition
of ``flat storage facility'' and set forth requirements to be followed
to protect an employee who enters such a facility.
The proposal provided for a 30-day comment period, extending
through November 20, 1995. Sixteen written comments were submitted by
interested parties, and no hearing requests were received by OSHA. The
Agency has reviewed all materials in the docket in developing this
final rule.
The preamble to the proposed amendment discussed at length the
hazards being addressed by, and the rationale for, the proposal. The
comments generally supported the need to provide protection for
employees exposed to engulfment, mechanical, and other hazards in grain
storage structures, as expressed in the preamble. Most of the comments
also supported the need to clarify the existing rule with regard to its
coverage of entries into flat storage structures. Commenters taking
issue with specific aspects of the proposal focused primarily on five
areas: (1) the proposed definition of ``flat storage facility''; (2)
the proposed requirement to deenergize equipment located within the
storage structure; (3) the proposed lifeline requirements for employees
exposed to engulfment hazards; (4) the proposed coverage of entries
into areas of flat storage structures that do not pose engulfment or
other hazards; and (5) the technical feasibility and economic impact of
the proposal. The following discussion addresses these and other
issues.
``Flat storage facility.'' The proposed rule attempted to define
``flat storage facility'' in a way that would describe what is unique
about this type of grain storage and what differentiates it from other
structures such as bins and silos. By contrast, the existing rule
considered only the height-to-width ratio of a structure when
determining whether to classify it as flat storage. The proposed
definition read as follows: `` `Flat storage facility' means a building
or structure that is used to store grain and that has large doorways at
ground level through which motorized vehicles are driven in order to
move grain.'' In discussing the proposed definition, OSHA emphasized
that the factors determining whether the flat storage provisions of the
rule should apply to a structure are the nature of the structure and
the kinds of hazards potentially encountered by the entering employee,
and not just the mathematical relationship of the structure's
dimensions.
The commenters strongly supported OSHA's decision to define the
term ``flat storage facility'' in the final rule. However, the comments
also suggested a variety of changes in the proposed definition. For
example, the National Grain and Feed Association (NGFA) and the Grain
Elevator and Processing Society (GEAPS) [Exs. 4-2, 4-12] contended that
the proposed definition was not flexible enough to encompass many of
the configurations that are considered by the industry to be ``flat
storage.'' They were particularly concerned that OSHA's classification
of flat storage structures as ``warehouse-type storage structures''
would not encompass many types of structures used for flat storage. In
addition, commenters [Ex. 4-2, 4-9] noted that the use of the term
``flat storage facility'' could be misinterpreted to apply to an entire
plant rather than to the storage space, and they recommended that the
defined term be revised to ``flat storage.''
The National Oilseed Processors Association (NOPA) [Ex. 4-10] noted
that some grain-moving machines, such as power scoops, are not
``motorized vehicles'' that are ``driven'' through the ground level
doors, and that the definition of flat storage structure needs to be
revised to recognize the use of this equipment.
OSHA has determined that several of the changes recommended by
commenters will make the definition clearer and more precise, and has
incorporated these changes into the final rule. First, the term ``flat
storage facility'' is being changed to ``flat storage structure,'' to
emphasize that the flat storage exception applies to the storage
structure and not to the entire facility. Second, the definition notes
that flat storage structures must have an unrestricted ground level
opening for entry, and not just ``large doorways,'' and that the
structure must be of a type that will not empty completely by gravity.
The latter element clearly distinguishes flat storage from silos, bins,
and tanks, which do rely on gravity for emptying. Finally, the
definition recognizes that grain is often reclaimed through the ground
level openings using means other than motorized vehicles.
``Unrestricted'' in the context of ground level entry means that
employees can enter by stepping, walking, or driving through these
openings. This clarification was suggested by NGFA [Ex. 4-12].
As discussed below, entries into flat storage structures will be
covered by paragraph (h) only if there are no toxicity, flammability,
oxygen-deficiency, or other atmospheric hazards in those structures. In
addition, the final rule makes clear that paragraph (h) will only cover
entries that are made through unrestricted ground level openings.
Entries made at or above the level of the grain and above ground
[[Page 9579]]
level will be covered by the general provisions for entry into grain
storage structures found in paragraph (g).
Entry into grain storage structures (paragraph (g)). Paragraph (g)
of the grain handling standard covers entries into grain storage
structures. OSHA proposed to add a new paragraph (h) to the rule to
cover entries into flat storage facilities which contained no
atmospheric hazards, and to except such entries from the general
provisions of paragraph (g). This approach received widespread support
among the commenters, who agreed with OSHA's intention to clarify the
exception and limit its scope.
OSHA is promulgating the exception to paragraph (g) as proposed,
with one significant addition. The proposed exception did not
explicitly indicate that it would apply only to flat storage entries
made at ground level. This was OSHA's original intent: the proposed
definition of flat storage facility clearly stated that large, ground
level doorways were an essential element of such a facility. Several
commenters [Exs. 4-2, 4-9, 4-12, 4-13, 4-14] recommended that the
exception be clarified to specify that it applies only to entries made
through unrestricted ground level openings. OSHA agrees that this is a
necessary precondition for an entry to be covered by paragraph (h) and
to be excepted from coverage by paragraph (g), and has amended the
exception accordingly. It is clear that an unrestricted ground level
opening can protect an entrant under paragraph (h) only if the entry is
made through that opening.
Deenergization of equipment (paragraphs (g)(1)(ii) and (h)(2)).
Proposed paragraphs (g)(1)(ii) and (h)(2) would have required
deenergization of energized equipment in a grain storage facility if it
``could'' present a danger to employees. There was widespread agreement
in the record as to the need to deenergize equipment which endangers
employees. However, the use of the phrase ``which could endanger'' was
strongly opposed by most commenters, who felt that it would require
deenergization in situations where other protective measures, such as
machine guarding, would be effective in protecting employees. [cf. Exs.
4-2, 4-5, 4-10, 4-13, 4-15]. It was noted that this was particularly
likely to occur in large flat storage structures, where motorized
vehicles and other mobile equipment that are moving grain within the
structure are not endangering employees. OSHA agrees that adding the
word ``could'' is not necessary to provide the desired degree of
protection, and has not included it in the final rule.
A new paragraph (g)(1)(iv) is being added to prohibit explicitly
the practice of ``walking down grain.'' This and other similar
practices require an employee to walk on the surface of the stored
grain to get the grain to flow out of the structure. ``Walking down
grain'' is an extremely dangerous practice because the employee is on
the surface of the grain with the specific intention of making the
grain flow away from him or her. This exposes the employee to an ever-
increasing risk of engulfment as the surface layer of grain is eroded
from underneath. It was this practice that led to the death of a 19-
year-old employee in a corn storage structure on October 22, 1993.
(This incident is discussed in detail in the preamble to the proposal,
60 FR at 54058, column 1.)
NGFA [Ex. 4-2] stated: `` `Walking down grain' or similar practices
where employees walk on grain to get grain to flow out of a grain
storage structure or where employees are on moving grain (and thus
exposed to an engulfment or a mechanical hazard) are not permitted.''
OSHA agrees with this comment, and is incorporating it into the text of
new paragraph (g)(1)(iv). (As discussed below, language prohibiting
``walking down grain'' and related practices is also being added to the
flat storage structure provisions, as new paragraph (h)(2)(ii).)
In paragraph (g)(2), OSHA proposed to require that whenever an
employee enters a grain storage structure from a level at or above the
level of the stored grain, or whenever an employee walks or stands on
or in stored grain which could cause engulfment, the employer must
equip the employee with a body harness with lifeline or a boatswain's
chair. The lifeline, in turn, would have to be capable of preventing
the employee from sinking further than waist-deep in the grain. This
proposed provision (together with a similar provision in proposed
paragraph (h)(1)), received considerable attention from the public
during the comment period.
The public comments strongly favored a requirement to provide
protection to employees exposed to engulfment hazards. However, several
commenters [cf. Ex. 4-2, 4-10, 4-13] raised specific concerns about the
proposed provision, including the following: (1) In some situations,
lifelines could actually expose the employee to a greater hazard, and
lifelines should not therefore be required in those situations; (2)
lifelines are not necessary if the engulfment hazard either does not
exist or can be controlled; (3) entry onto surfaces which are
relatively free of grain, such as floors, platforms or catwalks, can be
performed safely without lifelines; (4) the configuration of many flat
storage structures does not allow tying off and rigging of lifelines to
assure that the employee does not sink more than waist-deep in grain;
(5) the proposed lifeline provisions were more extensive than those in
the original standard, and their cost impact and feasibility had not
been fully evaluated by OSHA.
The issues relating to lifelines or boatswain's chairs need to be
addressed separately for bins, silos and tanks (paragraph (g)(2)) on
the one hand, and for flat storage structures (paragraph (h)) on the
other. In the context of bins, silos, and tanks, the requirement to
provide a harness/lifeline or boatswain's chair for entry is not new to
this proposal. Indeed, paragraph (g)(2) of OSHA's current standard
reads as follows:
When entering bins, silos, or tanks from the top, employees
shall wear a body harness with lifeline, or use a boatswain's chair
that meets the requirements of subpart D of this part.
It must be emphasized that this general entry requirement
encompasses entry hazards that go well beyond those of engulfment in
grain. In other words, employers whose employees enter bins, silos, or
tanks from above the grain must consider many factors, such as whether
there is an asphyxiation hazard, or whether there are hazardous
atmospheric contaminants in the structure. In such cases, whether the
entering employee is lowered directly onto stored grain is only one
element to consider in providing protection for that employee. Further,
in issuing the proposal, OSHA clearly indicated that the rulemaking was
limited to the changes being proposed, which specifically address
engulfment hazards and flat storage structures. Thus this technical
amendment will not affect the extent to which harnesses and lifelines
or boatswain's chairs are already required by the standard.
The only substantive changes proposed to paragraph (g)(2) were as
follows: first, instead of referring to entry ``from the top,'' the
proposal clarified that the provision refers to entry ``from a level at
or above the level of the stored grain;'' second, the proposal made
clear that the lifeline or boatswain's chair requirement was to apply
``whenever an employee walks or stands on or in stored grain of a depth
which poses an engulfment hazard;'' and third, the proposal added the
requirement that the lifeline must prevent the employee from sinking
further than waist-deep in the grain.
[[Page 9580]]
Several comments contended that there were feasibility problems
with the proposed requirement that lifelines must prevent the employee
from sinking more than waist-deep in the grain. For example, NGFA [Ex.
4-2] stated:
To comply with the requirement that the lifeline and harness
prevent the employee from sinking no more than waist deep in grain,
most grain storage structures and flat storage will need significant
alterations, including new equipment and designs, not envisioned in
the original RIA. For example, compliance with the proposed standard
could require the installation of a winch system, costing between
$3,000 to $4,000, in each grain storage structure, where the line
can remain approximately vertical. Additionally, an engineering
study would be needed to determine what alterations are required to
enable the winch system to comply with the proposed standard and
provide sufficient structural support for a winch system . . . To
our knowledge, no viable system currently exists on the market today
that would achieve the requirements in the proposed standard for
flat storage and, frankly, we do not believe such a system could be
installed at a reasonable cost. Lastly, the RIA did not address the
impact of proposed paragraphs (g)(2) and (h)(1) to require lifelines
and harnesses, regardless of risk.
With regard to employees who enter grain storage structures other
than flat storage, and who are on, in, or under accumulations of grain
which could engulf them, it is clear to OSHA that these employees need
to be protected from engulfment. Paragraph (g)(2) of the final
standard, like the proposal, provides for this protection through the
use of a lifeline that will prevent the employee from sinking further
than waist-deep in the grain. However, the final rule also recognizes
that there are some situations in which this sort of restraint system
may either be infeasible or create a greater hazard. For example, if a
bin has many obstructions above the level of the grain, it may not be
possible for the employer to rig a lifeline properly without having it
become caught on the obstructions. Therefore, paragraph (g)(2) of the
final rule also provides an exception for the employer who can
demonstrate infeasibility or greater hazard, by allowing that employer
to employ an alternative means of protection that will prevent the
employee from being engulfed in the grain. This could be done by
clearing a space on the floor of the tank where an employee could stand
and work without being exposed to either an engulfment hazard or a
mechanical hazard. OSHA emphasizes that, even in situations where the
employer can show that lifelines meeting the standard are not feasible
or will create a greater hazard, the employer continues to have the
responsibility to protect the employee from engulfment.
As was noted in the NGFA [Ex. 4-2] and American Feed Industry
Association [Ex. 4-9] comments, an employee who enters a grain storage
structure under paragraph (g) may not be exposed continuously to
engulfment hazards. For example, when the employee is on a flat floor
of a structure, sweeping or otherwise manually moving residual grain
towards an auger, there is no accumulation of grain beneath the
employee that could cause engulfment. Under these circumstances, it is
permissible for the employee to remove the lifeline during this
operation. In situations where the employer can demonstrate that there
is no exposure to engulfment, the standard does not require the use of
a lifeline for protection against that hazard. OSHA is adding a note to
paragraph (g)(2) to clarify the standard in that regard.
The proposed requirement for lifelines also caused concern in the
context of proposed paragraph (h)(2), which addresses entries into flat
storage structures. As discussed above, some commenters contended that,
because of the size and configuration of flat storage structures,
lifelines which would meet the requirements of the proposal (i.e.,
prevent the employee from sinking deeper than waist-deep into the
grain) would pose feasibility problems. In addition, several commenters
noted that an employee entering a flat storage structure at ground
level is exposed to engulfment hazards only if there is operational
drawoff equipment beneath the grain which could cause the grain beneath
the employee to flow. However, in these cases, an alternative to
lifelines is available: if the stored grain is blocked and will not
flow, the employer can simply lock out the equipment in order to
prevent engulfment from occurring.
Several commenters suggested areas and types of work in flat
storage structures that did not present the hazards addressed by
proposed paragraph (h). They contended that lifelines were not needed
in these situations. For example, Layne and Myers Grain Co. [Ex. 4-3]
noted: ``Grain may be piled against the bin wall 15 feet deep or more
and a worker may never walk on anything more than two inches of grain
while sweeping.'' NGFA [Ex. 4-2], Grain and Feed Association of
Illinois [Ex. 4-15], and The Andersons [Ex. 4-13] agreed that the
following three circumstances did not present engulfment hazards:
1. When the employee is on a flat floor area, such that the
employee is not exposed to flowing grain hazards, or when the employee
is operating mechanical equipment in a safe location;
2. When the employee is inside mobile equipment being used to
reclaim grain; and
3. When the employee is on a catwalk or platform above the grain
surface.
NGFA [Ex. 4-2] added a fourth situation:
When entering on top of sound grain surfaces for inventory
purposes or to apply fumigants [(]using appropriate respiratory
protection), or to determine grain conditions or quality provided
all reclaim systems are properly locked out, preventing the grain
from being subject to movement.
AFIA [Ex. 4-9] suggested that when an employee has shoveled and
cleared a place on the concrete floor of a flat storage structure,
there is no longer a danger of the employee being drawn into the
equipment or engulfed by grain. ``When the employee is able to clear an
area and stand on the floor adjacent to the equipment opening, or must
operate power shovels, bin sweeps or front-end loaders, a danger of
being drawn into operating equipment may not exist.''
OSHA agrees that when the employee is not exposed to the hazards
being addressed by this standard, the lifeline and deenergization
requirements of this standard should not apply. To the extent that the
above situations do not present engulfment, mechanical, or other
hazards addressed by the standard, the standard does not require the
employer to provide protection against those hazards. However, OSHA
chooses not to provide a blanket exclusion from coverage for any
specific work operation. Because of the wide range of work operations,
conditions, and locations within a grain storage structure, OSHA
believes it is more appropriate to address the presence of hazards,
rather than to focus on specific jobs or activities. The Agency
anticipates that where operations such as those noted in the comments
do not expose employees to hazards, the employer will be able to
demonstrate that those hazards are not present.
OSHA agrees with NGFA and others that many entries into flat
storage structures do not present engulfment or mechanical hazards. The
technical amendment does not require lifelines for ground level flat
storage entries if employees are not exposed to these hazards.
Similarly, where an employee in a flat storage structure is standing or
walking on the grain under circumstances which cannot cause engulfment,
the standard does not require the employee to wear a lifeline. A note
is being added to paragraph (h) to clarify that where the employer can
[[Page 9581]]
demonstrate that the employee is standing on a surface which does not
present an engulfment hazard, the standard does not require a lifeline
or other protection against such hazard.
The employer can establish that no engulfment hazard exists for a
wide variety of entry conditions. For example, an employee who is
standing on the floor of the structure, or on a platform or catwalk,
will not be exposed to engulfment if that employee is sufficiently far
away from areas where grain is being drawn from storage. In brief, if
the employer can demonstrate that the employee in the flat storage
structure is not exposed to grain which is subject to flow,
avalanching, collapsing, or sliding, and that the employee is also not
exposed to hazards from equipment used to draw off or reclaim grain,
the standard does not require a lifeline, nor does it require the
equipment to be deenergized.
OSHA acknowledges that, in some cases, it may not be technically
feasible to provide lifelines for employees who enter flat storage
structures. The Agency also agrees with commenters that even where
feasible, lifelines may not be necessary to protect entrants from
engulfment hazards. Where engulfment hazards relate to the practice of
``walking down grain'' to make it flow more readily to the drawoff
equipment, the standard is explicit: it prohibits that practice.
However, in other circumstances where employees are on the grain in
flat storage structures, OSHA has determined that paragraph (h)(2) of
the final standard should be more flexible than the corresponding
paragraph of the proposal. This is because entries at ground level of
flat storage structures do not present the same potential for
engulfment hazards as do entries made from at or above the level of the
grain. As noted by several commenters, many activities inside flat
storage structures do not expose employees to engulfment. Clearly, if
an employee is not walking on the grain at all, but is walking on a
floor, catwalk or platform, that employee is not exposed to engulfment.
Similarly, if the grain cannot flow, avalanche, collapse or slide, and
all reclaim and other equipment which could disturb the grain is
properly locked out, an employee standing on the grain is unlikely to
be exposed to an engulfment hazard. For these reasons, the final
standard does not require the general use of lifelines for ground level
entries. Instead, the standard requires only that the employer provide
protection against engulfment hazards where such hazards exist, without
specifying a particular method of providing this protection. OSHA
believes that for ground level entries into flat storage structures,
the most serious engulfment hazards are addressed by two other
provisions of the final rule: the prohibition on ``walking down grain''
and the requirement to deactivate equipment, including grain transport
machinery, which could endanger employees.
As discussed earlier, OSHA has determined that ``walking the
grain'' and similar practices used to move grain to the drawoff point
are inherently unsafe, regardless of the size, configuration, or type
of grain storage structure. Accordingly, new paragraph (h)(2)(ii) is
being added to prohibit these practices in flat storage structures,
just as new paragraph (g)(2)(iv) is being added to prohibit them for
other types of grain storage structures.
Training. OSHA did not propose any changes in the training
requirements of the grain handling standard. Paragraph (e) of
Sec. 1910.272 requires employers to provide training in both general
safety precautions and specific procedures applicable to the employee's
work. Training in bin entry procedures is specifically required under
paragraph (e)(2).
Two commenters suggested that additional training be spelled out in
the standard. NGFA [Ex. 4-2] recommended that employees who enter grain
storage structures and flat storage structures be trained to recognize
and avoid potential engulfment or equipment hazards. This
recommendation was supported by The Andersons [Ex. 4-13].
The training provisions of paragraph (e) of the grain handling
standard currently require employees to be trained in the specific
procedures and safety practices applicable to their job tasks. In
addition, paragraph (e)(2) specifically addresses the hazards of bin
entry. These provisions already require training in the hazards being
addressed in this notice. However, OSHA agrees that, in light of the
attention being given to these hazards of entry into grain storage
structures, it is appropriate to reemphasize that the standard requires
the employer to train employees in ways of protecting themselves
against these entry hazards. The Agency is, therefore, adding a note to
the training provisions to provide additional emphasis in this area.
Other Issues
Paragraph (h) provides separate coverage for entries into flat
storage structures only if there are no atmospheric hazards. AFIA [Ex.
4-9] recommended that the scope of paragraph (h) be revised to apply to
flat storage facilities ``in which there is no reason to believe that
atmospheric hazards exist, such as toxicity, flammability, or oxygen-
deficiency.'' The intent of this suggested change was to enable the
employer to determine the absence of atmospheric hazards in flat
storage structures based on knowledge and experience, without the need
to perform monitoring in all cases. OSHA recognizes that monitoring may
not be necessary to determine that atmospheric hazards are not present
in flat storage structures. However, the Agency believes that the
provision as proposed provides employers with the flexibility needed.
Unlike the requirements of paragraph (g), which address atmospheric
monitoring directly, the criteria for coverage under paragraph (h) are
silent on the subject of atmospheric monitoring. The employer may use
knowledge and experience to make a determination that no atmospheric
hazards are present if reaching such a conclusion is reasonable under
the circumstances.
Some comments contended that OSHA's use of the word ``grain''
throughout the proposed technical amendment was too narrow, because the
standard covers a wide range of grain and grain products. NOPA [Ex. 4-
10] noted that flat storage structures can contain soybean meal and
hulls, for example, in addition to grain. Ensign Safety and Health
Advisory [Ex. 4-11] requested that the scope of the standard be
clarified as to its coverage of raw and processed agricultural
products.
In response, OSHA notes that Sec. 1910.272 covers a wide range of
grain handling and processing facilities, as noted in paragraph (b) of
the standard. These facilities include those that handle and store both
raw and processed grain and grain products, such as feed, flour, and
soycake. The addition of paragraph (h) to cover flat storage structures
is intended to cover the same range of products as are already covered
by paragraph (b) of the existing rule. OSHA is clarifying this
coverage, in paragraphs (g) and (h) to indicate that the word ``grain''
in these paragraphs refers to both raw and processed grain and grain
products that fall within the scope of paragraph (b).
In proposing to add a new paragraph (h) to Sec. 1910.272, OSHA also
proposed to redesignate paragraphs (h) through (p) as paragraphs (i)
through (q), respectively. In doing so, however, OSHA did not make a
corresponding change in paragraph (b), which indicates which paragraphs
of Sec. 1910.272 cover what types of grain handling facilities. The
final rule makes the necessary change, indicating that paragraphs (a)
through (n) (formerly (a)
[[Page 9582]]
through (m)) cover all grain facilities, while paragraphs (o) through
(q) (formerly paragraphs (n) through (p)) apply only to grain
elevators. In addition, conforming changes are being made throughout
Sec. 1910.272 to assure that internal references within the standard
are consistent with the new paragraph letters.
The American Society of Safety Engineers (ASSE) [Ex. 4-8] suggested
that OSHA use the ANSI national consensus standard for confined spaces,
ANSI Z-117.1-1995, as a resource in completing the grain handling
standard. OSHA agrees with ASSE that the ANSI Z-117.1 standard is a
valuable source document which is appropriate for the Agency to
consider in developing confined space standards. In the context of this
limited rulemaking, OSHA has reviewed the ANSI standard and has
determined that the Agency's technical amendment is consistent with the
consensus standard's requirements. Whereas the ANSI standard is
directed at confined spaces in general, this notice is not directed
primarily at confined space entries. Rather, the new requirements in
paragraph (h) apply only to ground-level entries into flat storage
structures that present no atmospheric hazards. OSHA believes that the
final rule provides appropriate protection for these entries.
Summary of Economic Analysis and Regulatory Flexibility Analysis
The Economic Analysis OSHA has prepared to accompany the final
technical amendment being issued today to the Agency's Grain Handling
standard (29 CFR 1910.272) presents revised cost estimates for the
regulatory provisions addressed in the amendment. Only the costs
associated specifically with the provisions being clarified by the
amendment are described here; all other costs and analytical results
projected by the Regulatory Impact Analysis (RIA) [Ex. 223] originally
prepared in 1987 to support the final Grain Handling standard remain
unchanged. OSHA has determined that the regulatory actions being taken
in this amendment do not constitute a ``significant regulatory action''
for the purposes of Executive Order (EO) 12866. That is, this technical
amendment does not impose costs on the regulated community that
approach the $100 million threshold specified by the EO, because the
changes made in this amendment merely clarify the Agency's original
intent when issuing the final rule in 1987. At that time, OSHA assumed
that the flat storage exception contained in the final rule was clear
and would not expose employees working in such structures to engulfment
hazards. However, several tragedies involving employees working in
these grain handling structures have shown that the flat storage
exception in the 1987 rule was in need of clarification. The amendment
being published today makes these needed changes.
As described elsewhere, these clarifications include: (1)
clarifying in paragraphs (g) and (h) the employer's obligation to
protect employees against grain engulfment hazards regardless of the
dimensions of the structure or point of entry; (2) stating that means
of protection must prevent the employee from sinking further than waist
deep in grain, as explained in paragraphs (g)(2) and (h)(1); (3) in
paragraph (g)(1)(iv), prohibiting ``walking the grain'' for the purpose
of breaking up bridging conditions; and (4) in paragraph (e)(3),
requiring that training must include a section dealing with engulfment
and mechanical hazards.
These clarifications are expected to have substantial benefits for
employers and employees. For example, the Agency estimated in the 1987
RIA [Ex. 223] that the final standard would prevent 80% of all grain
handling engulfments. Based on more recent Agency data from its
Integrated Management Information System (IMIS) database, however, OSHA
now believes that as many as 2 to 4 engulfment fatalities annually will
be prevented by the clarifications contained in this technical
amendment. Based on the same data, the Agency believes that a similar
number of equipment-related accidents (e.g., traumatic injuries caused
by mechanical devices, such as augers) will also be prevented by the
changes being made today.
In the 1987 RIA, the Agency estimated that there were 14,000 grain
elevators with 118,011 full-time and seasonal employees, and 9,922
grain mills with 129,068 full-time and part-time employees [Ex. 223,
Tables II-1, II-3]. OSHA believes that these numbers continue to
represent the industry today. As noted in the 1987 RIA, although all
grain facilities have upright structures, only a portion have flat
storage structures [Exs. 10, 193]. Flat storage structures are
typically add-ons, constructed quickly to handle excess grain.
This final technical amendment incorporates language into paragraph
(g)(2) of the standard that requires employers to ensure that employees
do not sink further than waist deep when walking or standing on or in
grain; employees are required to use a lifeline to provide this
protection when exposed to a grain engulfment hazard. This language,
which has been taken from the Agency's current Grain Handling
Facilities compliance directive, is intended to ensure that employers
have a clear understanding of their obligations to protect employees
from engulfment. The importance of this provision is underscored by
OSHA's review of the Agency's Integrated Management Information System
(IMIS) abstracts on fatal workplace injuries, which identified at least
one fatality that occurred because the employee, although secured by a
lifeline, was engulfed by the grain because the line had too much slack
in it. In this amendment, the Agency is clarifying that merely
requiring an employee to wear a lifeline is not sufficient; in order to
meet the intent of the standard, the lifeline must be used in a way
that prevents the hazard in question.
In comments on the proposed technical amendment, the NFGA [Ex. 4-2]
stated that new paragraph (g)(2) would impose additional costs on the
regulated community. In the view of NGFA, paragraph (g)(2) would
require employers to install a winch system in all grain handling
structures. OSHA believes, however, that many grain handling structures
already have such systems, because winches and lifelines are commonly
used safety devices that have been required by paragraph (g)(4) of the
existing rule since 1988, the year that the Grain Handling Facilities
standard became effective. Paragraph (g)(4) requires that employers
provide rescue equipment that is specifically suited for the structure
being entered. Mechanical assistance, such as that provided by a winch-
and-lifeline system, appears to be the simplest and most common means
of facilitating rescue and maintaining safe entry.
In the earlier rulemaking, industry representatives clearly
recognized that paragraph (g)(4) would require employers to provide
mechanical means to achieve compliance. For example, the American Feed
Manufacturers Association reported at that time that many facilities
already had such systems in place [Ex. 193]. OSHA recognizes that some
grain handling facilities did not have such systems in 1987. However,
OSHA believes that many of these facilities will have installed such
systems in the interval since publication of the standard, although the
Agency does not have a precise count of the number of systems in place
today. Nevertheless, to be conservative, OSHA has evaluated the costs
that some employers might incur to come into compliance with this
technical amendment.
[[Page 9583]]
First, if an establishment believes that the purchase of a winch-
and-lifeline system poses too great an economic burden, the final
technical amendment allows employers to prohibit those work practices
that would allow an employee to sink more than waist deep in grain.
Such prohibitions are common in the industry. For example, the NFGA
[Ex. 4-2] states that its work practice recommendations for this
industry would accomplish this safety goal. For this reason, the Agency
specifically is incorporating NFGA's suggestion [Ex. 4-2, p. 3] to ban
the practice of ``walking the grain'' (i.e., attempting to stamp down a
bridging condition) in the standard (paragraph (g)(1)(iv)). Because
this and other practices prevent engulfment, they accomplish the same
protective purpose as a winch-and-lifeline system (i.e., they keep an
employee's lungs from being compressed by the weight of the grain).
Thus, the provisions of this technical amendment can be complied with
merely by the adoption of work practices that prohibit employees from
walking on grain in situations of potential engulfment.
Alternatively, employers can choose to use a winch-and-lifeline
system to protect their employees from engulfment and mechanical
hazards. To assess the extent of the costs that such systems might
impose on employers in this industry, OSHA turned to an industry study
that was conducted in connection with the 1987 rulemaking. This study,
known as the Stivers study [Ex. 193], assumed that one winch system per
establishment would suffice in most structures, and that this single
system could be moved from bin to bin as needed. In some cases, the
Stivers report assumed that two systems would be required at a given
mill. At the time, the cost of such a system was assumed to be $1400
[Ex. 193, pp. 3-16-17, 6-4]. To evaluate the costs employers might
incur in the worst case as a result of the technical amendment being
published today, OSHA obtained up-to-date cost estimates of
approximately $3000 for these systems [Lab Safety Supply, 1996, pp.
234-236].
Although OSHA does not believe that many employers will in fact be
required by this technical amendment to purchase winch-and-lifeline
systems, the Agency nevertheless performed an economic analysis of
potential worst-case impacts, i.e., analyzed the impacts that would
occur if each facility in this industry was required by the amendment
to purchase such a system. Capital costs, such as those incurred to
purchase a rescue system of this type, are typically annualized over
the life of the equipment. If OSHA conservatively assumes that the life
of such equipment is 10 years, \1\ every affected employer would be
expected to incur an annualized cost of $427 per facility. According to
the economic data reported in the original Regulatory Impact Analysis
[Ex. 223], the annual profits for grain cooperatives in the early 1980s
averaged $223,608 each, on average sales of $12.6 million per
cooperative [Ex. 223, p. VII-5]. Annual costs of $427 amount to less
than 1/100th of a percent of annual per-facility sales, and therefore
would have only a negligible impact on prices. Even if employers were
not able to pass any part of these costs through to their customers, a
highly unlikely scenario, these costs would amount to approximately 2/
10th of one percent of the total profits of a given facility. Grain
mills reported average shipments of more than $36 million per
establishment [Ex. 223, pp. II-4, VII-23], so impacts for these
facilities would be even smaller.
\1\ At a 7 percent discount rate, as indicated in the Office of
Management and Budget's Economic Analysis of Federal Regulations
Under Executive Order 12866.
---------------------------------------------------------------------------
Finally, a recent study that reviewed the methodology and findings
of the original grain handling standard's economic analysis reported
that all of the costs imposed by the standard, taken in their entirety,
had in fact had no discernible economic impact on the grain handling
industry [OTA 1995, p. 60]. For these reasons, the Agency finds that
this amendment does not pose issues of economic feasibility for
employers in the affected industry, and further has determined that
this action will not have a significant impact even on the smallest
grain handling facilities.
At the NFGA's suggestion [Ex. 4-2], the Agency is incorporating
language in the training section of the amendment to ensure that
employers dedicate some of their training to the prevention of
engulfment situations. The Agency does not believe that the addition of
this topic to the training curriculum will require additional training
time or impose additional costs because OSHA believes that the final
standard published in 1987 already requires such training. In this
case, particularly after its review of IMIS fatality abstracts
discussed above, OSHA agrees with the NFGA [Ex. 4-2] that emphasizing
the importance of such training will help to avoid engulfment accidents
in grain handling facilities in the future.
This final rule involves no recordkeeping or reporting requirements
under the Paperwork Reduction Act of 1995. It has no impacts on
Federalism beyond those evaluated at the time of the final rule in
1987.
Lists of Subject in 29 CFR Part 1910
Grain handling, Grain elevators, Occupational safety and health,
Protective equipment, Safety.
State Plan States
The 25 States and Territories with their own OSHA-approved
occupational safety and health plans must revise their existing
standard within six months of the publication date of the final
standard or show OSHA why there is no need for action, e.g. because an
existing State standard covering this area is already ``at least as
effective'' as the revised Federal standard. These States are: Alaska,
Arizona, California, Connecticut (State and local government employees
only), Hawaii, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota,
Nevada, New Mexico, New York (State and local government employees
only), North Carolina, Oregon, Puerto Rico, South Carolina, Tennessee,
Utah, Vermont, Virginia, Virgin Islands, Washington, and Wyoming.
Authority
This document was prepared under the direction of Joseph A. Dear,
Assistant Secretary of Labor for Occupational Safety and Health, U.S.
Department of Labor, 200 Constitution Avenue, N.W., Washington, DC
20210.
Accordingly, pursuant to sections 4, 6, and 8 of the Occupational
Safety and Health Act of 1970 (29 U.S.C. 653, 655, 657), Secretary of
Labor's Order No. 1-90 (55 FR 9033), and 29 CFR Part 1911, 29 CFR part
1910 is hereby amended as set forth below.
Signed at Washington, D.C., this 1st day of March, 1996.
Joseph A. Dear,
Assistant Secretary of Labor.
29 CFR part 1910 is amended as follows:
PART 1910--OCCUPATIONAL SAFETY AND HEALTH STANDARDS
1. The Authority Citation for subpart R of 29 CFR part 1910
continues to read as follows:
Authority: Secs. 4, 6, 8, Occupational Safety and Health Act of
1970 (29 U.S.C. 653, 655, 657); Secretary of Labor's Order No. 12-71
(36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), or 1-90 (55 FR
9033), as applicable.
Sections 1910.261, 1910.262, 1910.265, 1910.266, 1910.267,
1910.268, 1910.269, 1910.272, 1910.274, and
[[Page 9584]]
1910.275 also issued under 29 CFR part 1911.
2. In paragraph (b)(1) of Sec. 1910.272, ``(m)'' is revised to read
``(n).''
3. In paragraph (b)(2) of Sec. 1910.272, ``(n), (o), and (p)'' is
revised to read ``(o), (p), and (q).''
4. The paragraph numbers of the Definitions in paragraph (c) of
Sec. 1910.272 are removed.
5. A new definition of ``Flat storage structure'' is inserted in
paragraph (c) of Sec. 1910.272, between the definitions of ``Choked
leg'' and ``Fugitive grain dust,'' to read as follows:
Sec. 1910.272 Grain handling facilities.
* * * * *
(c) Definitions.
* * * * *
Flat storage structure means a grain storage building or structure
that will not empty completely by gravity, has an unrestricted ground
level opening for entry, and must be entered to reclaim the residual
grain using powered equipment or manual means.
* * * * *
6. A note is added to paragraph (e)(2) of Sec. 1910.272, to read as
follows:
Sec. 1910.272 Grain handling facilities.
* * * * *
(e) Training.
* * * * *
(2) * * *
Note to paragraph (e)(2): Training for an employee who enters
grain storage structures includes training about engulfment and
mechanical hazards and how to avoid them.
7. Paragraphs (h) through (p) of Sec. 1910.272 are redesignated as
new paragraphs (i) through (q), respectively.
8. In new paragraph (m)(3) of Sec. 1910.272, the phrase ``this
paragraph (l)'' is revised to read ``this paragraph (m),'' and the
phrase ``specified in paragraph (l)(1)(i)'' is revised to read
``specified in paragraph (m)(1)(i).''
9. In new paragraph (q)(7) of Sec. 1910.272, the phrase
``Paragraphs (p)(5) and (p)(6) of this section'' is revised to read
``Paragraphs (q)(5) and (q)(6) of this section.''
10. In new paragraph (q)(8) introductory text of Sec. 1910.272, the
phrase ``Paragraphs (p)(4), (p)(5), and (p)(6) of this section'' is
revised to read ``Paragraphs (q)(4), (q)(5), and (q)(6) of this
section.''
11. In the Information collection requirements parenthetical at the
end of new paragraph (q) of Sec. 1910.272, the phrase ``in paragraphs
(d) and (i)'' is revised to read ``in paragraphs (d) and (j).''
12. In Appendix A to Sec. 1910.272:
a. In the second paragraph of the section entitled ``8. Filter
Collectors,'' the phrase ``paragraph (k)(1) of the standard'' is
revised to read ``paragraph (l)(1) of the standard.''
b. In the last paragraph of the section entitled ``8. Filter
Collectors,'' the phrase ``paragraph (k) of the standard'' is revised
to read ``paragraph (l) of the standard.''
13. The introductory language in paragraph (g), and the text of
paragraphs (g)(1)(ii) and (g)(2) of Sec. 1910.272, are revised, and new
paragraphs (g)(1)(iv) and (h) are added, to read as follows:
Sec. 1910.272 Grain handling facilities.
* * * * *
(g) Entry into grain storage structures. This paragraph applies to
employee entry into bins, silos , tanks, and other grain storage
structures. Exception: Entry through unrestricted ground level openings
into flat storage structures in which there are no toxicity,
flammability, oxygen-deficiency, or other atmospheric hazards is
covered by paragraph (h) of this section. For the purposes of this
paragraph (g), the term ``grain'' includes raw and processed grain and
grain products in facilities within the scope of paragraph (b)(1) of
this section.
(1) * * *
(ii) All mechanical, electrical, hydraulic, and pneumatic equipment
which presents a danger to employees inside grain storage structures
shall be deenergized and shall be disconnected, locked-out and tagged,
blocked-off, or otherwise prevented from operating by other equally
effective means or methods.
(iv) ``Walking down grain'' and similar practices where an employee
walks on grain to make it flow within or out from a grain storage
structure, or where an employee is on moving grain, are prohibited.
* * * * *
(2) Whenever an employee enters a grain storage structure from a
level at or above the level of the stored grain or grain products, or
whenever an employee walks or stands on or in stored grain of a depth
which poses an engulfment hazard, the employer shall equip the employee
with a body harness with lifeline, or a boatswain's chair that meets
the requirements of subpart D of this part. The lifeline shall be so
positioned, and of sufficient length, to prevent the employee from
sinking further than waist-deep in the grain. Exception: Where the
employer can demonstrate that the protection required by this paragraph
is not feasible or creates a greater hazard, the employer shall provide
an alternative means of protection which is demonstrated to prevent the
employee from sinking further than waist-deep in the grain.
Note to paragraph (g)(2): When the employee is standing or
walking on a surface which the employer demonstrates is free from
engulfment hazards, the lifeline or alternative means may be
disconnected or removed.
* * * * *
(h) Entry into flat storage structures. For the purposes of this
paragraph (h), the term ``grain'' means raw and processed grain and
grain products in facilities within the scope of paragraph (b)(1) of
this section.
(1) Each employee who walks or stands on or in stored grain, where
the depth of the grain poses an engulfment hazard, shall be equipped
with a lifeline or alternative means which the employer demonstrates
will prevent the employee from sinking further than waist-deep into the
grain.
Note to paragraph (h)(1): When the employee is standing or
walking on a surface which the employer demonstrates is free from
engulfment hazards, the lifeline or alternative means may be
disconnected or removed.
(2) (i) Whenever an employee walks or stands on or in stored grain
or grain products of a depth which poses an engulfment hazard, all
equipment which presents a danger to that employee (such as an auger or
other grain transport equipment) shall be deenergized, and shall be
disconnected, locked-out and tagged, blocked-off, or otherwise
prevented from operating by other equally effective means or methods.
(ii) ``Walking down grain'' and similar practices where an employee
walks on grain to make it flow within or out from a grain storage
structure, or where an employee is on moving grain, are prohibited.
(3) No employee shall be permitted to be either underneath a
bridging condition, or in any other location where an accumulation of
grain on the sides or elsewhere could fall and engulf that employee.
[FR Doc. 96-5341 Filed 3-7-96; 8:45 am]
BILLING CODE 4510-26-P
Complete official Federal Register PDF
FR Doc. 96-5325 Removal and Revision of Inspection Standards and Regulations
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9367-9369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5325]
=======================================================================
-----------------------------------------------------------------------
[[Page 9368]]
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Parts 260-267
[Docket No. 960222044-6044-01; I.D. 022096D]
Removal and Revision of Inspection Standards and Regulations
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In response to the President's Regulatory Reform Initiative,
NMFS amends the Code of Federal Regulations (CFR) by removing the
product-specific voluntary Inspection Program (Program) standards for
grades for fish and fishery products. These standards will be issued as
Program policies and be contained in the NMFS Fishery Products
Inspection Manual. The remaining regulations on these standards in the
CFR are being revised to state the minimum requirements necessary for a
grade standard to be issued as a Program policy.
EFFECTIVE DATE: March 8, 1996.
FOR FURTHER INFORMATION CONTACT: Richard V. Cano, Inspection Services
Division, (301) 713-2355.
SUPPLEMENTARY INFORMATION: In an effort to reduce the volume of
regulations that are maintained in the CFR, the Administration
instructed all Departments to review their regulations to determine
what could be eliminated, reinvented or consolidated. NMFS determined
that it could reduce NOAA's regulatory burden as well as be more
responsive to the industry's technological advances and the demands of
the marketplace by issuing its voluntary United States Standards for
Grades as Program policies instead of publishing them in the CFR.
Compliance with a voluntary standard issued as a Program policy does
not relieve any party from the responsibility to comply with the
provisions of the Federal Food, Drug, and Cosmetic Act or other Federal
laws and regulations.
Any notices of application to the Program for a new grade standard
will continue to be published in the Federal Register for comment.
Background
NMFS operates a voluntary fee-for-service inspection program so
that fishery products may be marketed to the best advantage, trading
may be facilitated, and consumers may be able to obtain the quality
product they desire. The Program's regulations pertaining to grades of
fishery products apply primarily to those who use or advertise the
Program's services to demonstrate compliance with established
processing requirements and nationally recognized quality criteria.
Standards for grades are voluntary standards developed pursuant to
delegated authorities of the Agricultural Marketing Act of 1946 (7
U.S.C. 1621 et seq.). The Program does not require the use of these
standards.
Standards for grades are mechanisms for sorting raw and processed
fish and fishery products into different levels of quality.
Distinctions between levels of quality, or grade categories, are made
within single product groups (e.g., fish portions to fish portions) and
not across product groups (e.g., fish portions to frozen shrimp). Each
level of quality is based on the absence of undesirable attributes or
characteristics. Since each product group has different inherent
attributes and characteristics, a separate standard for grades is
necessary for each product group. For example, breaded fish portions
have inherently different defect characteristics, such as blood spots,
bones, and scales, than frozen shrimp.
A major function of the Program's voluntary standards for grades is
to provide users with a uniform measure of product quality and a
common, national, commercial language for trade. Nationally recognized
standards for grades facilitate efficient and orderly marketing of fish
and fishery products and allow buyers to make informed decisions.
Additionally, international traders of fish and fishery products
frequently use the criteria in the grade standards as buyer/seller
references.
Development or revision of a grade standard is performed at the
request of the industry or at the suggestion of NMFS if it is believed
that considerable technological changes have occurred in an industry
that render the current standard outdated. In either case, there must
be adequate interest by affected parties in developing or revising a
standard, since it must reflect the needs and capabilities of the
industry and users as a whole. The grade standards are developed
cooperatively with Government, industry, and users of the standards
(i.e., Department of Agriculture, Department of Defense, retailers,
restaurateurs, etc.) participating in technical working groups. The
draft standard is field-tested and the results collected by NMFS
inspectors and industry quality assurance personnel are analyzed to
assess the draft standard's performability.
The Program intends to retain the same reasonable and reliable
procedures in the development of grade standards but eliminate the
inherent delays in formal rulemaking. These time constraints have
prevented U.S. processors from obtaining the marketing benefits of the
grade marks and also hindered the consumer's ability to identify and
choose fishery products of consistent high quality. These delays are
particularly aggravating and unnecessary when minimal revisions to
standards are necessary to address changing processing conditions,
product forms, or market demands. Therefore, NMFS concluded it could
better serve Program participants and the public if the standards for
grades were issued as Program policy. This action is consistent with
the President's Regulatory Reform Initiative to reduce the volume of
regulations.
All Program policies are contained within the NMFS Fishery Products
Inspection Manual and will no longer appear in the CFR. A new paragraph
at Sec. 260.84 will reference the manual.
Classification
Because this rule only removes voluntary standards that have been
determined need not be published as regulations, no useful purpose
would be served by providing prior notice and opportunity for public
comment on this rule. Accordingly, under 5 U.S.C. 553(b)(B), the
Assistant Administrator for Fisheries, NOAA (AA) for good cause, finds
that it is unnecessary to provide prior notice and an opportunity for
public comment for this rule. Also, because this rule only removes
regulations that are no longer needed and the revisions impose no new
obligations, the AA, for good cause, finds that no useful purpose would
be served by delaying the rule's effective date for 30 days. Therefore,
this rule is made effective upon publication.
This final rule has been determined to be not significant for
purposes of E.O. 12866.
List of Subjects
50 CFR Part 260
Food grades and standards, Food labeling, Seafood.
50 CFR 261-267
Food grades and standards, Frozen foods, Seafood.
[[Page 9369]]
Dated: February 29, 1996.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.
For the reasons set out in the preamble, 50 CFR Chapter VI is
amended as follows:
PART 260--INSPECTION AND CERTIFICATION
1. The authority citation for part 260 continues to read as
follows:
Authority: Section 6, 70 Stat. 1122, 16 U.S.C. 742e; secs. 203,
205, 60 Stat. 1087, 1090 as amended; 7 U.S.C. 1622, 1624;
Reorganization Plan No. 4 of 1970 (84 Stat. 2090).
2. Section 260.84 is added under the undersignated center heading
``miscellaneous'' to read as follows:
Sec. 260.84 Policies and procedures.
The policies and procedures pertaining to any of the inspection
services are contained within the NMFS Fishery Products Inspection
Manual. The policies and procedures are available from the Secretary to
any interested party by writing to Document Approval and Supply
Services Branch, Inspection Services Division, P.O. Drawer 1207, 3207
Frederic St., Pascagoula, MS 39568-1207.
3. Part 261 is revised to read as follows:
PART 261--UNITED STATES STANDARDS FOR GRADES
Sec. 261.101 Standard description.
Sec. 261.102 Publication and removal of U.S. Grade Standards.
Sec. 261.103 Basis for determination of a U.S. Standard for Grades.
Authority: 7 U.S.C. 1621-1630
Sec. 261.101 Standard description.
A U.S. Standard for Grades authorized under this part is a standard
for a fish or fishery product that has been developed and adopted by
the voluntary seafood inspection program pursuant to the Agricultural
Marketing Act of 1946 (7 U.S.C. 1621 et seq.) and other authorities
delegated to the U.S. Department of Commerce.
Sec. 261.102 Publication and removal of U.S. Grade Standards.
(a) The voluntary U.S. Standards for Grades adopted pursuant to
this part shall be issued as Program policies and contained within the
NMFS Fishery Products Inspection Manual. Compliance with voluntary
standards issued as Program policies within the manual shall satisfy
the requirements of this part. Compliance with a voluntary standard
issued as a Program policy does not relieve any party from the
responsibility to comply with the provisions of the Federal Food, Drug,
and Cosmetic Act; or other Federal laws and regulations.
(b) Notification of an application for a new grade standard shall
be published in the Federal Register. If adopted, the grade standard
shall be issued as a Program policy and contained in the NMFS Fishery
Products Inspection Manual.
(c) Recision and revision of a U.S. Standard for Grades will be
made a Program policy amendment and contained in the NMFS Fishery
Products Inspection Manual.
(d) The NMFS Fishery Products Inspection Manual is available to
interested parties.
Sec. 261.103 Basis for determination of a U.S. Standard for Grades.
(a) To address the inherently distinct and dissimilar attributes
found in the fishery product groups, each standard for grades should
have a different scope and product description, product forms, sample
sizes, definition of defects, etc. The Secretary will make the final
determination regarding the content of a U.S. Standard for Grades.
(b) A proposal for a new or revised U.S. grade standard may include
the following:
(1) Scope and product description, which describes the products
that are eligible for grading using the standard (e.g., fish portion,
fish fillet).
(2) Product forms, which describe the types, styles and market
forms covered by the standard (e.g., skin-off, tail-on, headless).
(3) Grade and inspection marks, which describe the grades and
inspection mark criteria for each grade category (e.g., Grade A
15 points).
(4) Grade determination, which describes the means by which the
grade is determined (i.e., the factors rated by score points and those
that are not). Standards may contain defect grouping limiting rules
that contain additional provisions that must be met.
(5) Sampling, which describes the method of sampling and sample
unit sizes (e.g., 10 portions, 8 ounces, etc.).
(6) Procedures that describe the process used to determine the
product grade (e.g., label declarations, sensory evaluation).
(7) Definitions of defects, which outline the defects associated
with the products covered by the standard, defines them, and describes
the method of counting or measuring the defects. This section may
provide associated defect points or reference a defect table (e.g.,
bruises, blood spots, bones, black spots, coating defects, 1-inch
squares, percent by weight, ratios).
(8) Defect point assessment, which describes how to assess points
and provides any special guidance that may be necessary to the
particular standard (e.g., defect points for certain categories are
added together and divided by the weight of the sample unit; the number
of instances are counted to determine if it is slight, moderate, or
excessive defect).
(9) Tolerances for lot certification, which provide the sections
from Title 50 CFR that regulate lot certification.
(10) Hygiene, which specifies the sections of applicable Federal
regulations regulating the safe, wholesome production of food for human
consumption.
(11) Methods of analysis, which describe the methods of analysis
that will be used in the evaluation of the products covered by the
standard for grades (e.g., net weight, deglazing, debreading).
(12) Defect table, which is the table of defects and associated
points to be assessed for each defect.
PARTS 262 THROUGH 267--[REMOVED]
4. Under the authority of 16 U.S.C. 742e and 7 U.S.C. 1622, 1624,
parts 262 through 267 are removed.
[FR Doc. 96-5325 Filed 3-7-96; 8:45 am]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-5298 Regulatory Reinvention; Consolidated Pet Ownership Requirements for the Elderly and Persons With Disabilities
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9536-9544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5298]
[[Page 9535]]
_______________________________________________________________________
Part II
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Secretary
_______________________________________________________________________
Regulatory Reinvention; Consolidated Pet Ownership Requirements for the
Elderly and Persons With Disabilities; Final Rule
Federal Register / Vol. 61, No. 47 / Friday, March 8, 1996 / Rules
and Regulations
[[Page 9536]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Secretary
24 CFR Parts 5, 243, 842, and 942
[Docket No. FR-3942-F-01]
RIN 2501-AC07
Regulatory Reinvention; Consolidated Pet Ownership Requirements
for the Elderly and Persons With Disabilities
AGENCY: Office of the Secretary, HUD.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule consolidates HUD's pet ownership rules for its
housing and public housing programs. Currently, these similar
requirements are repeated in 24 CFR parts 243, 842, and 942. These
parts implement section 227 of the Housing and Urban-Rural Recovery Act
of 1983. Section 227 provides that no owner or manager of federally
assisted housing for the elderly or persons with disabilities may
prevent tenants of such housing from owning or keeping common household
pets in their units. HUD's consolidation of its pet ownership rules
will eliminate redundancy from title 24 and assist in HUD's effort to
comply with President Clinton's regulatory reinvention initiative.
EFFECTIVE DATE: April 8, 1996.
FOR FURTHER INFORMATION CONTACT: For Housing: Barbara D. Hunter, Room
6182, telephone number (202) 708-3944; For Public and Indian Housing:
Linda Campbell, Room 4206, telephone number (202) 708-0744; Department
of Housing and Urban Development, 451 Seventh Street, SW., Washington,
DC 20410. Hearing or speech-impaired individuals may call 1-800-877-
8339 (Federal Information Relay Service TDD). (Except for the ``800''
number, these telephone numbers are not toll-free.)
SUPPLEMENTARY INFORMATION:
I. Background
A. HUD's Implementation of Section 227 of the Housing and Urban-Rural
Recovery Act of 1983
Section 227 of the Housing and Urban-Rural Recovery Act of 1983 (12
U.S.C. 1701r-1) provides that no owner or manager of federally assisted
rental housing for the elderly or persons with disabilities 1 may,
as a condition of tenancy or otherwise, prohibit or prevent tenants of
such housing from owning or keeping common household pets in their
units, or restrict or discriminate against persons in connection with
admission to, or continued occupancy of, such housing because they own
common household pets.
\1\ Section 227 uses the term ``federally assisted rental
housing for the elderly or handicapped.'' HUD prefers the use of the
term ``persons with disabilities'' to the term ``handicapped.''
Accordingly, this final rule uses the term ``persons with
disabilities.''
---------------------------------------------------------------------------
The statute directs HUD to issue regulations necessary to ensure
compliance with these provisions and to ensure attaining the goal of
providing decent, safe, and sanitary housing for the elderly or persons
with disabilities. The statute also requires that these regulations
establish guidelines under which owners and managers may prescribe
reasonable rules for the keeping of pets by tenants and must consult
with tenants in prescribing the rules.
On December 1, 1986 (51 FR 43270), HUD published a final rule
creating three new parts in title 24 to implement section 227. Part 243
describes the pet ownership requirements for programs administered by
the Assistant Secretary for Housing-Federal Housing Commissioner. Part
942 implements section 227 as it pertains to the public housing
programs administered by the Assistant Secretary for Public and Indian
Housing. Part 842, which concerns the pet ownership rules for programs
assisted under chapter VIII of title 24, merely cross-references the
requirements in 24 CFR part 243.
Parts 243 and 942 are identical in many significant respects, but
there are differences. Part 942 provides Public Housing Agencies (PHAs)
with substantial discretion in the issuance of pet ownership rules. In
contrast, part 243 establishes certain limitations on the flexibility
of project owners in the promulgation of pet rules. As explained in the
preamble to the December 1, 1986 final rule, HUD's decision to
establish a flexible standard for PHAs was based on the broad
discretion contemplated for PHAs under the United States Housing Act of
1937 (42 U.S.C. 1437) (1937 Act) and the policy towards minimization of
Federal control over public bodies created by local government:
(O)ne of the major policies of the United States Housing Act of
1937 * * * is ``* * * to vest in local public housing agencies the
maximum amount of responsibility in the administration of their
housing programs * * *'' (section 2 of the 1937 Act, 42 U.S.C.
1437). Moreover PHAs are public bodies created by State, local, and
tribal governments and traditionally have jurisdiction over a broad
area. Giving these entities greater responsibility for the
management of projects serves the goal of minimizing Federal control
over matters of local concern that are within the competency of
local governments. (51 FR 43270, 43271.)
The preamble to the December 1, 1986 rule also emphasized that
HUD's decision to limit project owner discretion did not indicate a
lack of confidence in the administrative abilities of project owners.
Rather, the decision stemmed from the fact that absent Federal
guidance, project owners were unlikely to receive any governmental
guidance in the implementation of section 227:
(I)n some instances, project owners' expertise will equal or
surpass that of their PHA counterparts. (HUD) also note(s), however,
that project owners, unlike PHAs, are unlikely to receive guidance
in the management of their projects from nonmortgagee agencies of
State or local government. (51 FR 43270, 43271.)
B. President Clinton's Regulatory Reinvention Initiative
On March 4, 1995, President Clinton announced his Regulatory
Reinvention Initiative, which calls for immediate, comprehensive
regulatory reform. The President directed all Federal departments and
agencies to undertake an exhaustive review of their regulations. This
initiative, which is part of the National Performance Review, calls for
the elimination of redundant or obsolete regulatory requirements and
the modification of others to increase flexibility and reduce burden.
On February 9, 1996 (61 FR 5198), HUD published a final rule
creating a new 24 CFR part 5. HUD established part 5 to set forth those
requirements which are applicable to one or more program regulations.
Consolidation of these requirements in part 5 will eliminate redundancy
in title 24 and assist in HUD's overall efforts to streamline the
content of its regulations. Accordingly, this final rule removes parts
243, 842, and 943 from title 24 and consolidates HUD's pet ownership
rules in a new subpart C to 24 CFR part 5.
Although HUD is consolidating its pet ownership requirements, it is
not presently modifying its dual approach towards implementation of
section 227. This final rule eliminates redundancy in the existing pet
ownership requirements wherever possible, but it retains those
provisions which are exclusively applicable to HUD's housing or public
housing programs.
The provisions of part 5, subpart C, are organized under three
headings. The provisions included under the first heading describe
those pet ownership requirements which are applicable to both housing
and public housing programs. The second group of
[[Page 9537]]
regulatory provisions set forth the requirements which are solely
applicable to HUD's housing programs. The third group of requirements
describes the pet rules for public housing programs.
Nothing contained in this regulation limits or impairs the right of
a person with a disability under either the Fair Housing Act, section
504 of the Rehabilitation Act of 1973, or any other appropriate civil
rights authority, to a reasonable accommodation of a pet policy, where
it is established that an animal is necessary to afford a person with a
disability an equal opportunity to use and enjoy a dwelling.
C. Appendices to Final Rule.
Section 5.306 of this final rule sets forth separate definitions of
the term ``Project for the elderly or persons with disabilities'' for
HUD's Housing and Public Housing programs. The definition applicable to
the Housing programs states that projects must be assisted under
certain HUD programs in order to qualify as projects for the elderly or
persons with disabilities. Further, paragraph (d)(2) of Sec. 5.318
limits the pet deposit charges that may be imposed by project owners
assisted under certain HUD programs. In order to eliminate the
necessity of amending these regulatory provisions as HUD programs are
created, terminated, or amended, HUD has not listed the relevant
programs in the regulation. Rather, Secs. 5.306 and 5.318 state that
HUD will identify these programs through notice.
Appendix A to this final rule identifies those Housing programs
which insure or assist projects for the elderly or persons with
disabilities. Appendix B to this final rule lists HUD's Housing
programs which are affected by the maximum pet deposit provisions.
Neither of these appendices will be codified in title 24 of the Code of
Federal Regulations. HUD may update these appendices, as necessary,
through notice.
II. Justification for Final Rulemaking
It is HUD's policy to publish rules for public comment before their
issuance for effect in accordance with its own regulations on
rulemaking found at 24 CFR part 10. However, part 10 provides that
prior public procedure will be omitted if HUD determines that it is
``impracticable, unnecessary, or contrary to the public interest.'' (24
CFR 10.1.) HUD finds that in this case prior comment is unnecessary
since this final rule does not affect or establish policy. This rule
merely consolidates HUD's pet ownership requirements for its housing
and public housing programs in 24 CFR part 5. Where consolidation is
not possible, this rule retains those provisions which are exclusively
applicable to HUD's housing or public housing programs. This final rule
does not add or remove program requirements, but merely relocates them
to a single part of HUD's regulations.
III. Other Matters
A. Environmental Impact
This rulemaking does not have an environmental impact. This
rulemaking simply amends existing regulations by consolidating and
streamlining provisions and does not alter the environmental effect of
the regulations being amended. A Finding of No Significant Impact with
respect to the environment was made in accordance with HUD regulations
in 24 CFR part 50 that implement section 102(2)(C) of the National
Environmental Policy Act of 1969 (42 U.S.C. 4332) at the time of
development of regulations implementing Section 227 of the Housing and
Urban-Rural Recovery Act of 1983 (12 U.S.C. 1701r-1). That Finding
remains applicable to this rule, and is available for public inspection
between 7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules
Docket Clerk at the above address.
B. Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule will not have substantial direct effects on
States or their political subdivisions, or the relationship between the
Federal government and the States, or on the distribution of power and
responsibilities among the various levels of government. Specifically,
this final rule merely consolidates the pet ownership requirements
currently repeated in three separate parts of title 24. This rule
effects no changes in the current relationships between the Federal
government, the States and their political subdivisions in connection
with these programs.
C. Executive Order 12606, the Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this final rule does not
have potential for significant impact on family formation, maintenance,
and general well-being, and, thus, is not subject to review under the
order. This final rule consolidates HUD's frequently repeated pet
ownership requirements in 24 CFR part 5. No significant change in
existing HUD policies or programs will result from promulgation of this
rule as those policies and programs relate to family concerns.
D. Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed and approved this rule and in so doing
certifies that this rule will not have a significant economic impact on
a substantial number of small entities. This rule merely effectuates
HUD's consolidation of its pet ownership rules and will not have any
meaningful economic impact on any entity.
List of Subjects
24 CFR Part 5
Administrative practice and procedure, Aged, Grant programs--
housing and community development, Individuals with disabilities, Loan
programs--housing and community development, Low and moderate income
housing, Mortgage insurance, Pets, Public housing, Rent subsidies,
Reporting and recordkeeping requirements.
24 CFR Part 243
Aged, Grant programs--housing and community development,
Individuals with disabilities, Loan programs--housing and community
development, Low and moderate income housing, Mortgage insurance, Pets,
Reporting and recordkeeping requirements.
24 CFR Part 842
Aged, Grant programs--housing and community development,
Individuals with disabilities, Low and moderate income housing, Pets,
Rent subsidies.
24 CFR Part 942
Aged, Grant programs--housing and community development,
Individuals with disabilities, Pets, Public housing, Reporting and
recordkeeping requirements.
Accordingly, and under the authority of 42 U.S.C. 3535(d), 24 CFR
parts 5, 243, 842, and 942 are amended as follows:
PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS
1. The authority citation for part 5 is revised to read as follows:
Authority: 12 U.S.C. 1701r-1; 42 U.S.C. 3535(d).
2. A new subpart C is added to read as follows:
[[Page 9538]]
Subpart C--Pet Ownership for the Elderly or Persons With Disabilities
Sec.
General Requirements
5.300 Purpose.
5.303 Exclusion for animals that assist persons with disabilities.
5.306 Definitions.
5.309 Prohibition against discrimination.
5.312 Notice to tenants.
5.315 Content of pet rules: general requirements.
5.318 Discretionary pet rules.
5.321 Lease provisions.
5.324 Implementation of lease provisions.
5.327 Nuisance or threat to health or safety.
Pet Ownership Requirements for Housing Programs
5.350 Mandatory pet rules for Housing programs.
5.353 Housing programs: Procedure for development of pet rules.
5.356 Housing programs: Pet rule violation procedures.
5.359 Housing programs: Rejection of units by applicants for
tenancy.
5.360 Housing programs: Additional lease provisions.
5.363 Housing programs: Protection of the pet.
Pet Ownership Requirements for Public Housing Programs
5.380 Public housing programs: Procedure for development of pet
rules.
Subpart C--Pet Ownership for the Elderly or Persons With
Disabilities
General Requirements
Sec. 5.300 Purpose.
(a) This subpart implements section 227 of the Housing and Urban-
Rural Recovery Act of 1983 (12 U.S.C. 1701r-1) as it pertains to
projects for the elderly or persons with disabilities under:
(1) The housing programs administered by the Assistant Secretary
for Housing-Federal Housing Commissioner;
(2) Projects assisted under the programs contained in chapter VIII
of this title 24; and
(3) The public housing programs administered by the Assistant
Secretary for Public and Indian Housing under title I of the United
States Housing Act of 1937 (42 U.S.C. 1437, et seq.). This part does
not apply to Indian housing administered under title II of that Act.
(b) [Reserved].
Sec. 5.303 Exclusion for animals that assist persons with
disabilities.
(a) This subpart C does not apply to animals that are used to
assist persons with disabilities. Project owners and PHAs may not apply
or enforce any pet rules developed under this subpart against
individuals with animals that are used to assist persons with
disabilities. This exclusion applies to animals that reside in projects
for the elderly or persons with disabilities, as well as to animals
that visit these projects.
(1) A project owner may require resident animals to qualify for
this exclusion. Project owners must grant this exclusion if:
(i) The tenant or prospective tenant certifies in writing that the
tenant or a member of his or her family is a person with a disability;
(ii) The animal has been trained to assist persons with that
specific disability; and
(iii) The animal actually assists the person with a disability.
(b) Nothing in this subpart C:
(1) Limits or impairs the rights of persons with disabilities;
(2) Authorizes project owners or PHAs to limit or impair the rights
of persons with disabilities; or
(3) Affects any authority that project owners or PHAs may have to
regulate animals that assist persons with disabilities, under Federal,
State, or local law.
Sec. 5.306 Definitions.
Common household pet means:
(1) For purposes of Housing programs: A domesticated animal, such
as a dog, cat, bird, rodent (including a rabbit), fish, or turtle, that
is traditionally kept in the home for pleasure rather than for
commercial purposes. Common household pet does not include reptiles
(except turtles). If this definition conflicts with any applicable
State or local law or regulation defining the pets that may be owned or
kept in dwelling accommodations, the State or local law or regulation
shall apply. This definition shall not include animals that are used to
assist persons with disabilities.
(2) For purposes of Public Housing programs: PHAs may define the
term ``common household pet'' under Sec. 5.318.
Elderly or disabled family means:
(1) For purposes of Housing programs: An elderly person, a person
with a disability, or an elderly or disabled family for purposes of the
program under which a project for the elderly or persons with
disabilities is assisted or has its mortgage insured.
(2) For purposes of Public Housing programs: (i) An elderly person,
a person with a disability, or an elderly or disabled family as defined
in Sec. 5.403 in subpart A of this part.
Housing programs means:
(1) The housing programs administered by the Assistant Secretary
for Housing-Federal Housing Commissioner; and
(2) The programs contained in chapter VIII of this title 24 that
assist rental projects that meet the definition of project for the
elderly or persons with disabilities in this subpart C.
Project for the elderly or persons with disabilities means:
(1) For purposes of Housing programs: (i) A specific rental or
cooperative multifamily property that, unless currently owned by HUD,
is subject to a first mortgage, and:
(A) That is assisted under statutory authority identified by HUD
through notice;
(B) That was designated for occupancy by elderly or disabled
families when funds for the project were reserved, or when the
commitment to insure the mortgage was issued or, of not then so
designated, that is designated for such occupancy in an effective
amendment to the regulatory agreement covering the project, made
pursuant to the project owner's request, and that is assisted or
insured under one of the programs identified by HUD through notice; or
(C) For which preference in tenant selection is given for all units
in the project to elderly or disabled families and that is owned by HUD
or assisted under one of the programs identified by HUD through notice.
(ii) This term does not include health and care facilities that
have mortgage insurance under the National Housing Act. This term also
does not include any of the project owner's other property that does
not meet the criteria contained in any one of paragraphs (1)(i)(A)
through (C) of this definition, even if the property is adjacent to or
under joint or common management with such specific property.
(2) For purposes of Public Housing programs: Any project assisted
under title I of the United States Housing Act of 1937 (other than
under section 8 or 17 of the Act), including any building within a
mixed-use project, that was designated for occupancy by the elderly or
persons with disabilities at its inception or, although not so
designated, for which the PHA gives preference in tenant selection
(with HUD approval) for all units in the project (or for a building
within a mixed-use project) to elderly or disabled families. For
purposes of this part, this term does not include projects assisted the
Low-Rent Housing Homeownership Opportunity program or under title II of
the United States Housing Act of 1937.
Project owner means an owner (including HUD, where HUD is the
owner) or manager of a project for the
[[Page 9539]]
elderly or persons with disabilities, or an agent authorized to act for
an owner or manager of such housing.
Public Housing Agency (PHA) is defined in Sec. 5.100.
Public Housing programs means the public housing programs
administered by the Assistant Secretary for Public and Indian Housing
under title I of the United States Housing Act of 1937.
Sec. 5.309 Prohibition against discrimination.
Except as otherwise specifically authorized under this subpart no
project owner or PHA that owns or manages a project for the elderly or
persons with disabilities may:
(a) As a condition of tenancy or otherwise, prohibit or prevent any
tenant of such housing from owning common household pets or having such
pets living in the tenant's dwelling unit; or
(b) Restrict or discriminate against any person in connection with
admission to, or continued occupancy of, such housing by reason of the
person's ownership of common household pets or the presence of such
pets in the person's dwelling unit.
Sec. 5.312 Notice to tenants.
(a) During the development of pet rules as described in Secs. 5.353
or 5.380, the project owner or PHA shall serve written notice on all
tenants of projects for the elderly or persons with disabilities in
occupancy at the time of service, stating that:
(1) Tenants are permitted to own and keep common household pets in
their dwelling units, in accordance with the pet rules (if any)
promulgated under this subpart C;
(2) Animals that are used to assist persons with disabilities are
excluded from the requirements of this subpart C, as provided in
Sec. 5.303;
(3) Tenants may, at any time, request a copy of any current pet
rule developed under this subpart C (as well as any current proposed
rule or proposed amendment to an existing rule); and
(4) Tenants may request that their leases be amended under
Sec. 5.321 to permit common household pets.
(b) The project owner or PHA shall provide to each applicant for
tenancy when he or she is offered a dwelling unit in a project for the
elderly or persons with disabilities, the written notice specified in
paragraphs (a) (1), (2), and (3) of this section.
(c) If a PHA chooses not to promulgate pet rules, the notice shall
be served within 60 days of the effective date of this part. PHAs shall
serve notice under this section in accordance with their normal service
of notice procedures.
Sec. 5.315 Content of pet rules: general requirements.
(a) Housing programs. The project owner shall prescribe reasonable
rules to govern the keeping of common household pets. The pet rules
must include the mandatory rules described in Sec. 5.350 and may,
unless otherwise noted in this subpart C, include other discretionary
provisions as provided in Sec. 5.318.
(b) Public Housing programs. (1) PHAs may choose not to promulgate
rules governing the keeping of common household pets or may include
rules as provided in Sec. 5.318. PHAs may elect to include provisions
based on those in Sec. 5.350. If they so choose, the PHAs may modify
the provisions in Sec. 5.350 in any manner consistent with this subpart
C.
(2) If PHAs choose to promulgate pet rules, tenants must be
permitted to own and keep pets in their units in accordance with the
terms and conditions of their leases, the provisions of this subpart C,
and any applicable State or local law or regulation governing the
owning or keeping of pets in dwelling accommodations.
(3) PHAs that choose not to promulgate pet rules, shall not impose,
by lease modification or otherwise, any requirement that is
inconsistent with the provisions of this subpart C.
(c) Use of discretion. (1) This subpart C does not define with
specificity the limits of the project owners' or PHAs' discretion to
promulgate pet rules. Where a project owner or PHA has discretion to
prescribe pet rules under this subpart C, the pet rules should be:
(i) Reasonably related to furthering a legitimate interest of the
project owner or PHA, such as the owner's or PHA's interest in
providing a decent, safe, and sanitary living environment for existing
and prospective tenants and in protecting and preserving the physical
condition of the project and the owner's or PHA's financial interest in
it; and
(ii) Drawn narrowly to achieve the owner's or PHA's legitimate
interests, without imposing unnecessary burdens and restrictions on pet
owners and prospective pet owners.
(2) Where a project owner or PHA has discretion to prescribe pet
rules under this subpart C, the owner or PHA may vary the rules'
content among projects and within individual projects, based on factors
such as the size, type, location, and occupancy of the project or its
units, provided that the applicable rules are reasonable and do not
conflict with any applicable State or local law or regulation governing
the owning or keeping of pets in dwelling accommodations.
(d) Conflict with State or local law. The pet rules adopted by the
project owner or PHA shall not conflict with applicable State or local
law or regulations. If such a conflict may exist, the State and local
law or regulations shall apply.
Sec. 5.318 Discretionary pet rules.
Pet rules promulgated by project owners and PHAs may include, but
are not limited to, consideration of the following factors:
(a) Definitions of ``common household pet.''--(1) For Public
Housing programs. The pet rules established by a PHA may contain a
reasonable definition of a common household pet.
(2) For Housing programs. Project owners wishing to define ``common
household pet'' in their pet rules must use the Housing programs
definition of the term in Sec. 5.306.
(b) Density of tenants and pets. (1)(i) The pet rules established
under this section may take into account tenant and pet density. The
pet rules may place reasonable limitations on the number of common
household pets that may be allowed in each dwelling unit. In the case
of group homes, the pet rules may place reasonable limitations on the
number of common household pets that may be allowed in each home.
(ii) For Housing programs. Under these rules, project owners may
limit the number of four-legged, warm-blooded pets to one pet in each
dwelling unit or group home.
(iii) Other than the limitations described in this paragraph
(b)(1), the pet rules may not limit the total number of pets allowed in
the project.
(2) As used in paragraph (b)(1) of this section, the term ``group
home'' means:
(i) For purposes of Housing programs. A small, communal living
arrangement designed specifically for individuals who are chronically
mentally ill, developmentally disabled, or physically disabled who
require a planned program of continual supportive services or
supervision (other than continual nursing, medical or psychiatric
care).
(ii) For purposes of Public Housing programs. A dwelling or
dwelling unit for the exclusive residential use of elderly persons or
persons with disabilities who are not capable of living completely
independently and who require a planned program of continual supportive
services or supervision (other than continual nursing, medical or
psychiatric care).
(c) Pet size and pet type. The pet rules may place reasonable
limitations on the size, weight, and type of common household pets
allowed in the project.
[[Page 9540]]
(d) Potential financial obligations of tenants (1) Pet deposits.
The pet rules may require tenants who own or keep pets in their units
to pay a refundable pet deposit. In the case of project owners, this
pet deposit shall be limited to those tenants who own or keep cats or
dogs in their units. This deposit is in addition to any other financial
obligation generally imposed on tenants of the project. The project
owner or PHA may use the pet deposit only to pay reasonable expenses
directly attributable to the presence of the pet in the project,
including (but not limited to) the cost of repairs and replacements to,
and fumigation of, the tenant's dwelling unit and, for project owners,
the cost of animal care facilities under Sec. 5.363. The project owner
or PHA shall refund the unused portion of the pet deposit to the tenant
within a reasonable time after the tenant moves from the project or no
longer owns or keeps a pet (or a cat or dog in the case of project
owners) in the dwelling unit.
(2) Housing programs: Maximum pet deposit. (i) Pet deposits for the
following tenants shall not exceed an amount periodically fixed by HUD
through notice.
(A) Tenants whose rents are subsidized (including tenants of a HUD-
owned project, whose rents were subsidized before HUD acquired it)
under one of the programs identified by HUD through notice.
(B) Tenants who live in a project assisted (including tenants who
live in a HUD-owned project that was assisted before HUD acquired it)
under one of the programs identified by HUD through notice.
(C) For all other tenants of projects for the elderly or persons
with disabilities, the pet deposit shall not exceed one month's rent at
the time the pet is brought onto the premises.
(ii) In establishing the maximum amount of pet deposit under
paragraph (d)(2)(i) of this section, HUD will consider factors such as:
(A) Projected, estimated expenses directly attributable to the
presence of pets in the project;
(B) The ability of project owners to offset such expenses by use of
security deposits or HUD-reimbursable expenses; and
(C) The low income status of tenants of projects for the elderly or
persons with disabilities.
(iii) For pet deposits subject to paragraph (d)(2)(i)(A) of this
section, the pet rules shall provide for gradual accumulation of the
deposit by the pet owner through an initial payment not to exceed $50
when the pet is brought onto the premises, and subsequent monthly
payments not to exceed $10 per month until the amount of the deposit is
reached.
(iv) For pet deposits subject to paragraphs (d)(2)(i)(B) and (C) of
this section, the pet rules may provide for gradual accumulation of the
deposit by the pet owner.
(v) The project owner may (subject to the HUD-prescribed limits)
increase the amount of the pet deposit by amending the house pet rules
in accordance with Sec. 5.353.
(A) For pet deposits subject to paragraph (d)(2)(i)(A) of this
section, the house pet rules shall provide for gradual accumulation of
any such increase not to exceed $10 per month for all deposit amounts
that are being accumulated.
(B) [Reserved].
(vi) Any pet deposit that is established within the parameters set
forth by paragraph (d)(2) of this section shall be deemed reasonable
for purposes of this subpart C.
(3) Public Housing programs: Maximum pet deposit. The maximum
amount of pet deposit that may be charged by the PHA, on a per dwelling
unit basis, shall not exceed the higher of the Total Tenant Payment (as
defined in 24 CFR 913.102) or such reasonable fixed amount as the PHA
may require. The pet rules may permit gradual accumulation of the pet
deposit by the pet owner.
(4) Housing programs: Waste removal charge. The pet rules may
permit the project owner to impose a separate waste removal charge of
up to five dollars ($5) per occurrence on pet owners that fail to
remove pet waste in accordance with the prescribed pet rules. Any pet
waste removal charge that is within this five dollar ($5) limitation
shall be deemed to be a reasonable amount for the purposes of this
subpart C.
(5) The pet deposit (for Housing and Public Housing programs) and
waste removal charge (for Housing programs) are not part of the rent
payable by the tenant. Except as provided in paragraph (d) of this
section for Housing programs and, paragraph (d) of this section and 24
CFR 966.4(b) for Public Housing programs, project owners or PHAs may
not prescribe pet rules that impose additional financial obligations on
pet owners that are designed to compensate the project owner or PHA for
costs associated with the presence of pets in the project, including
(but not limited to) requiring pet owners:
(i) To obtain liability or other insurance to cover damage caused
by the pet;
(ii) To agree to be strictly liable for all damages caused by the
pet where this liability is not otherwise imposed by State or local
law, or
(iii) To indemnify the project owner for pet-related litigation and
attorney's fees.
(e) Standards of pet care. The pet rules may prescribe standards of
pet care and handling, but must be limited to those necessary to
protect the condition of the tenant's unit and the general condition of
the project premises, or to protect the health or safety of present
tenants, project employees, and the public. The pet rules may not
require pet owners to have any pet's vocal cords removed. Permitted
rules may:
(1) Bar pets from specified common areas (such as lobbies, laundry
rooms, and social rooms), unless the exclusion will deny a pet
reasonable ingress and egress to the project or building.
(2) Require the pet owner to control noise and odor caused by a
pet.
(3) Housing programs: Project owners may also:
(i) Require pet owners to have their dogs and cats spayed or
neutered; and
(ii) Limit the length of time that a pet may be left unattended in
a dwelling unit.
(f) Pet licensing. The pet rules may require pet owners to license
their pets in accordance with applicable State and local laws and
regulations. (Failure of the pet rules to contain this requirement does
not relieve the pet owner of responsibility for complying with
applicable State and local pet licensing requirements.)
(g) Public Housing programs: Designated pet areas. (1) PHAs may
designate buildings, floors of buildings, or sections of buildings as
no-pet areas where pets generally may not be permitted. Similarly, the
pet rules may designate buildings, floors of buildings, or sections of
buildings for residency generally by pet-owning tenants. The PHA may
direct such initial tenant moves as may be necessary to establish pet
and no-pet areas. The PHA may not refuse to admit (or delay admission
of) an applicant for tenancy on the grounds that the applicant's
admission would violate a pet or no-pet area. The PHA may adjust the
pet and no-pet areas or may direct such additional moves as may be
necessary (or both) to accommodate such applicants for tenancy or to
meet the changing needs of existing tenants.
(2) Project owners may not designate pet areas in buildings in
their pet rules.
(h) Pets temporarily on the premises. The pet rules may exclude
from the project pets not owned by a tenant that are to be kept
temporarily on the project premises. For the purposes of paragraph
[[Page 9541]]
(h) of this section, pets are to be kept ``temporarily'' if they are to
be kept in the tenant's dwelling accommodations for a period of less
than 14 consecutive days and nights. HUD, however, encourages project
owners and PHAs to permit the use of a visiting pet program sponsored
by a humane society, or other nonprofit organization.
Sec. 5.321 Lease provisions.
(a) Lease provisions. (1) PHAs which have established pet rules and
project owners shall ensure that the leases for all tenants of projects
for the elderly or persons with disabilities:
(i) State that tenants are permitted to keep common household pets
in their dwelling units (subject to the provisions of this subpart and
the pet rules);
(ii) Shall incorporate by reference the pet rules promulgated by
the project owner or PHA;
(iii) Shall provide that the tenant agrees to comply with these
rules; and
(iv) Shall state that violation of these rules may be grounds for
removal of the pet or termination of the pet owner's tenancy (or both),
in accordance with the provisions of this subpart and applicable
regulations and State or local law.
(b) Where a PHA has not established pet rules, the leases of all
tenants of such projects shall not contain any provisions prohibiting
the owning or keeping of common household pets, and shall state that
owning and keeping of such pets will be subject to the general
obligations imposed on the PHA and tenants in the lease and any
applicable State or local law or regulation governing the owning or
keeping of pets in dwelling accommodations.
Sec. 5.324 Implementation of lease provisions.
The lease for each tenant of a project for the elderly or persons
with disabilities who is admitted on or after the date on which this
subpart C is implemented shall contain the lease provisions described
in Sec. 5.321 and, if applicable, Sec. 5.360. The lease for each tenant
who occupies a unit in such a project under lease on the date of
implementation of this part shall be amended to include the provisions
described in Sec. 5.321 and, if applicable, Sec. 5.360:
(a) For Housing programs:
(1) Upon renewal of the lease and in accordance with any applicable
regulation; and
(2) When a Housing program tenant registers a common household pet
under Sec. 5.350
(b) For Public Housing programs:
(1) Upon annual reexamination of tenant income in accordance with
any applicable regulation; and
(2) When a Public Housing program tenant wishes to own or keep a
common household pet in his or her unit.
Sec. 5.327 Nuisance or threat to health or safety.
Nothing in this subpart C prohibits a project owner, PHA, or an
appropriate community authority from requiring the removal of any pet
from a project, if the pet's conduct or condition is duly determined to
constitute, under the provisions of State or local law, a nuisance or a
threat to the health or safety of other occupants of the project or of
other persons in the community where the project is located.
Pet Ownership Requirements for Housing Programs
Sec. 5.350 Mandatory pet rules for Housing programs.
Mandatory rules. The project owner must prescribe the following pet
rules:
(a) Inoculations. The pet rules shall require pet owners to have
their pets inoculated in accordance with State and local laws.
(b) Sanitary standards. (1) The pet rules shall prescribe sanitary
standards to govern the disposal of pet waste. These rules may:
(i) Designate areas on the project premises for pet exercise and
the deposit of pet waste;
(ii) Forbid pet owners from exercising their pets or permitting
their pets to deposit waste on the project premises outside the
designated areas;
(iii) Require pet owners to remove and properly dispose of all
removable pet waste; and
(iv) Require pet owners to remove pets from the premises to permit
the pet to exercise or deposit waste, if no area in the project is
designated for such purposes.
(2) In the case of cats and other pets using litter boxes, the pet
rules may require the pet owner to change the litter (but not more than
twice each week), may require pet owners to separate pet waste from
litter (but not more than once each day), and may prescribe methods for
the disposal of pet waste and used litter.
(c) Pet restraint. The pet rules shall require that all cats and
dogs be appropriately and effectively restrained and under the control
of a responsible individual while on the common areas of the project.
(d) Registration. (1) The pet rules shall require pet owners to
register their pets with the project owner. The pet owner must register
the pet before it is brought onto the project premises, and must update
the registration at least annually. The project owner may coordinate
the annual update with the annual reexamination of tenant income, if
applicable. The registration must include:
(i) A certificate signed by a licensed veterinarian or a State or
local authority empowered to inoculate animals (or designated agent of
such an authority) stating that the pet has received all inoculations
required by applicable State and local law;
(ii) Information sufficient to identify the pet and to demonstrate
that it is a common household pet; and
(iii) The name, address, and phone number of one or more
responsible parties who will care for the pet if the pet owner dies, is
incapacitated, or is otherwise unable to care for the pet.
(2) The project owner may require the pet owner to provide
additional information necessary to ensure compliance with any
discretionary rules prescribed under Sec. 5.318, and shall require the
pet owner to sign a statement indicating that he or she has read the
pet rules and agrees to comply with them.
(3) The pet rules shall permit the project owner to refuse to
register a pet if:
(i) The pet is not a common household pet;
(ii) The keeping of the pet would violate any applicable house pet
rule;
(iii) The pet owner fails to provide complete pet registration
information or fails annually to update the pet registration; or
(iv) The project owner reasonably determines, based on the pet
owner's habits and practices, that the pet owner will be unable to keep
the pet in compliance with the pet rules and other lease obligations.
The pet's temperament may be considered as a factor in determining the
prospective pet owner's ability to comply with the pet rules and other
lease obligations.
(4) The project owner may not refuse to register a pet based on a
determination that the pet owner is financially unable to care for the
pet or that the pet is inappropriate, based on the therapeutic value to
the pet owner or the interests of the property or existing tenants.
(5) The pet rules shall require the project owner to notify the pet
owner if the project owner refuses to register a pet. The notice shall
state the basis for the project owner's action and shall be served on
the pet owner in accordance with the requirements of
Sec. 5.353(f)(1)(i) or (ii). The notice of refusal to register
[[Page 9542]]
a pet may be combined with a notice of pet violation as required in
Sec. 5.356.
Sec. 5.353 Housing programs: Procedure for development of pet rules.
(a) General. Project owners shall use the procedures specified in
this section to promulgate the pet rules referred to in Secs. 5.318 and
5.350.
(b) Development and notice of proposed pet rules. Project owners
shall develop proposed rules to govern the owning or keeping of common
household pets in projects for the elderly or persons with
disabilities. Notice of the proposed pet rules shall be served on each
tenant of the project as provided in paragraph (f) of this section. The
notice shall:
(1) Include the text of the proposed rules;
(2) State that tenants or tenant representatives may submit written
comments on the rules; and
(3) State that all comments must be submitted to the project owner
no later than 30 days from the effective date of the notice of the
proposed rules.
(4) The notice may also announce the date, time, and place for a
meeting to discuss the proposed rules (as provided in paragraph (c) of
this section).
(c) Tenant consultation. Tenants or tenant representatives may
submit written comments on the proposed pet rules to the project owner
by the date specified in the notice of proposed rules. In addition, the
owner may schedule one or more meetings with tenants during the comment
period to discuss the proposed rules. Tenants and tenant
representatives may make oral comments on the proposed rules at these
meetings. The project owner must consider comments made at these
meetings only if they are summarized, reduced to writing, and submitted
to the project owner before the end of the comment period.
(d) Development and notice of final pet rules. The project owner
shall develop the final rules after reviewing tenants' written comments
and written summaries of any owner-tenant meetings. The project owner
may meet with tenants and tenant representatives to attempt to resolve
issues raised by the comments. Subject to this subpart C, the content
of the final pet rules, however, is within the sole discretion of the
project owner. The project owner shall serve on each tenant of the
project, a notice of the final pet rules as provided in paragraph (f)
of this section. The notice must include the text of the final pet
rules and must specify the effective date of the final pet rules.
(e) Amendment of pet rules. The project owner may amend the pet
rules at any time by following the procedure for the development of pet
rules specified in paragraphs (b) through (d) of this section.
(f) Service of notice. (1) The project owner must serve the notice
required under this section by:
(i) Sending a letter by first class mail, properly stamped and
addressed to the tenant at the dwelling unit, with a proper return
address; or
(ii) Serving a copy of the notice on any adult answering the door
at the tenant's leased dwelling unit, or if no adult responds, by
placing the notice under or through the door, if possible, or else by
attaching the notice to the door; or
(iii) For service of notice to tenants of a high-rise building,
posting the notice in at least three conspicuous places within the
building and maintaining the posted notices intact and in legible form
for 30 days. For purposes of paragraph (f) of this section, a high-rise
building is a structure that is equipped with an elevator and has a
common lobby.
(2) For purposes of computing time periods following service of the
notice, service is effective on the day that all notices are delivered
or mailed, or in the case of service by posting, on the day that all
notices are initially posted.
Sec. 5.356 Housing programs: Pet rule violation procedures.
(a) Notice of pet rule violation. If a project owner determines on
the basis of objective facts, supported by written statements, that a
pet owner has violated a rule governing the owning or keeping of pets;
the project owner may serve a written notice of pet rule violation on
the pet owner in accordance with Sec. 5.353(f)(1)(i) or (ii). The
notice of pet rule violation must:
(1) Contain a brief statement of the factual basis for the
determination and the pet rule or rules alleged to be violated;
(2) State that the pet owner has 10 days from the effective date of
service of the notice to correct the violation (including, in
appropriate circumstances, removal of the pet) or to make a written
request for a meeting to discuss the violation;
(3) State that the pet owner is entitled to be accompanied by
another person of his or her choice at the meeting; and
(4) State that the pet owner's failure to correct the violation, to
request a meeting, or to appear at a requested meeting may result in
initiation of procedures to terminate the pet owner's tenancy.
(b) (1) Pet rule violation meeting. If the pet owner makes a timely
request for a meeting to discuss an alleged pet rule violation, the
project owner shall establish a mutually agreeable time and place for
the meeting but no later than 15 days from the effective date of
service of the notice of pet rule violation (unless the project owner
agrees to a later date). At the pet rule violation meeting, the pet
owner and project owner shall discuss any alleged pet rule violation
and attempt to correct it. The project owner may, as a result of the
meeting, give the pet owner additional time to correct the violation.
(2) Notice for pet removal. If the pet owner and project owner are
unable to resolve the pet rule violation at the pet rule violation
meeting, or if the project owner determines that the pet owner has
failed to correct the pet rule violation within any additional time
provided for this purpose under paragraph (b)(1) of this section, the
project owner may serve a written notice on the pet owner in accordance
with Sec. 5.353(f)(1)(i) or (ii) (or at the meeting, if appropriate),
requiring the pet owner to remove the pet. The notice must:
(i) Contain a brief statement of the factual basis for the
determination and the pet rule or rules that have been violated;
(ii) State that the pet owner must remove the pet within 10 days of
the effective date of service of the notice of pet removal (or the
meeting, if notice is served at the meeting); and
(iii) State that failure to remove the pet may result in initiation
of procedures to terminate the pet owner's tenancy.
(c) Initiation of procedures to remove a pet or terminate the pet
owner's tenancy. (1) The project owner may not initiate procedures to
terminate a pet owner's tenancy based on a pet rule violation, unless:
(i) The pet owner has failed to remove the pet or correct a pet
rule violation within the applicable time period specified in this
section (including any additional time permitted by the owner); and
(ii) The pet rule violation is sufficient to begin procedures to
terminate the pet owner's tenancy under the terms of the lease and
applicable regulations.
(2) The project owner may initiate procedures to remove a pet under
Sec. 5.327 at any time, in accordance with the provisions of applicable
State or local law.
Sec. 5.359 Housing programs: Rejection of units by applicants for
tenancy.
(a) An applicant for tenancy in a project for the elderly or
persons with disabilities may reject a unit offered by a project owner
if the unit is in close
[[Page 9543]]
proximity to a dwelling unit in which an existing tenant of the project
owns or keeps a common household pet. An applicant's rejection of a
unit under this section shall not adversely affect his or her
application for tenancy in the project, including (but not limited to)
his or her position on the project waiting list or qualification for
any tenant selection preference.
(b) Nothing in this subpart C imposes a duty on project owners to
provide alternate dwelling units to existing or prospective tenants
because of the proximity of common household pets to a particular unit
or the presence of such pets in the project.
Sec. 5.360 Housing programs: Additional lease provisions.
(a) Inspections. In addition to other inspections permitted under
the lease, the leases for all Housing program tenants of projects for
the elderly or persons with disabilities may state that the project
owner may, after reasonable notice to the tenant and during reasonable
hours, enter and inspect the premises. The lease shall permit entry and
inspection only if the project owner has received a signed, written
complaint alleging (or the project owner has reasonable grounds to
believe) that the conduct or condition of a pet in the dwelling unit
constitutes, under applicable State or local law, a nuisance or a
threat to the health or safety of the occupants of the project or other
persons in the community where the project is located.
(b) Emergencies. (1) If there is no State or local authority (or
designated agent of such an authority) authorized under applicable
State or local law to remove a pet that becomes vicious, displays
symptoms of severe illness, or demonstrates other behavior that
constitutes an immediate threat to the health or safety of the tenancy
as a whole, the project owner may place a provision in tenant leases
permitting the project owner to enter the premises (if necessary),
remove the pet, and take such action with respect to the pet as may be
permissible under State and local law, which may include placing it in
a facility that will provide care and shelter for a period not to
exceed 30 days.
(2) The lease shall permit the project owner to enter the premises
and remove the pet or take such other permissible action only if the
project owner requests the pet owner to remove the pet from the project
immediately, and the pet owner refuses to do so, or if the project
owner is unable to contact the pet owner to make a removal request. The
lease may not contain a provision relieving the project owner from
liability for wrongful removal of a pet. The cost of the animal care
facility shall be paid as provided in Sec. 5.363.
(3) The project owner may place a provision in tenant leases
permitting the project owner to enter the premises, remove the pet, and
place the pet in a facility that will provide care and shelter, in
accordance with the provisions of Sec. 5.363. The lease may not contain
a provision relieving the project owner from liability for wrongful
removal of a pet.
Sec. 5.363 Housing programs: protection of the pet.
(a) If the health or safety of a pet is threatened by the death or
incapacity of the pet owner, or by other factors that render the pet
owner unable to care for the pet, the project owner may contact the
responsible party or parties listed in the pet registration required
under Sec. 5.350(d)(1)(iii).
(b) If the responsible party or parties are unwilling or unable to
care for the pet, or the project owner, despite reasonable efforts, has
been unable to contact the responsible party or parties, the project
owner may contact the appropriate State or local authority (or
designated agent of such an authority) and request the removal of the
pet.
(c) If there is no State or local authority (or designated agent of
such an authority) authorized to remove a pet under these circumstances
and the project owner has placed a provision in the lease agreement (as
described in Sec. 5.360(c)(2)), the project owner may enter the pet
owner's unit, remove the pet, and place the pet in a facility that will
provide care and shelter until the pet owner or a representative of the
pet owner is able to assume responsibility for the pet, but not longer
than 30 days.
(d) The cost of the animal care facility provided under this
section shall be borne by the pet owner. If the pet owner (or the pet
owner's estate) is unable or unwilling to pay, the cost of the animal
care facility may be paid from the pet deposit, if imposed under the
pet rules.
Pet Ownership Requirements for Public Housing Programs
Sec. 5.380 Public Housing programs: Procedure for development of pet
rules.
PHAs that choose to promulgate pet rules shall consult with tenants
of projects for the elderly or persons with disabilities administered
by them with respect to their promulgation and subsequent amendment.
PHAs shall develop the specific procedures governing tenant
consultation, but these procedures must be designed to give tenants
(or, if appropriate, tenant councils) adequate opportunity to review
and comment upon the pet rules before they are issued for effect. PHAs
are solely responsible for the content of final pet rules, but must
give consideration to tenant comments. PHAs shall send to the
responsible HUD field office, copies of the final (or amended) pet
rules, as well as summaries or copies of all tenant comments received
in the course of the tenant consultation.
PART 243--[REMOVED]
3. Part 243 is removed.
PART 842--[REMOVED]
4. Part 842 is removed.
PART 942--[REMOVED]
5. Part 942 is removed.
Dated: February 22, 1996.
Henry G. Cisneros,
Secretary.
Note: This Appendix A will not be codified in Title 24 of the
CFR.
Appendix A--Guide to Definition of Projects for the Elderly or Persons
With Disabilities for Purposes of HUD's Housing Programs
Sec.
1. Purpose.
2. Housing Programs Which Insure or Assist Projects for the Elderly
or Persons with Disabilities.
1. Purpose
The regulations at 24 CFR part 5, subpart C, describe HUD's pet
ownership requirements. Section 5.306 provides separate definitions
of the term ``Project for the elderly or persons with disabilities''
for HUD's Housing and Public Housing programs. The definition
applicable to the Housing programs states that projects must be
assisted under certain HUD programs in order to qualify as projects
for the elderly or persons with disabilities. However, in order to
eliminate the necessity of amending this regulatory definition as
HUD programs are created, terminated, or revised, HUD has not listed
the relevant Housing programs in the definition. Rather, the
definition states that HUD will identify these programs through
notice. The purpose of this appendix is to identify HUD's Housing
programs which insure or assist projects for the elderly or persons
with disabilities.
2. Housing Programs Which Insure or Assist Project for the Elderly
or Persons With Disabilities
This appendix repeats the definition for HUD's Housing programs
in 24 CFR 5.306, but lists the applicable programs. HUD may
periodically update this appendix through notice.
Project for the elderly or persons with disabilities means:
(1) For purposes of Housing programs: A specific rental or
cooperative multifamily
[[Page 9544]]
property that, unless currently owned by HUD, is subject to a first
mortgage, and:
(i) That is assisted under section 202 of the Housing Act of
1959 (Housing for the Elderly or Handicapped);
(ii) That was designated for occupancy by elderly or disabled
families when funds for the project were reserved, or when the
commitment to insure the mortgage was issued or, if not then so
designated, that is designated for such occupancy in an effective
amendment to the regulatory agreement covering the project, made
pursuant to the project owner's request, and:
(A) That is assisted (with or without HUD mortgage insurance)
under section 221(d)(3) (BMIR) of the National Housing Act or 24 CFR
part 236; or
(B) Insured under section 221(d)(3) (Market Rate) or section
221(d)(4) of the National Housing Act, or 24 CFR part 231 (Housing
Mortgage Insurance for the Elderly);
(iii) For which preference in tenant selection is given for all
units in the project to elderly or disabled families and that is
owned by HUD or assisted under the following programs:
(A) Housing Development Grant program;
(B) Section 8 New Construction;
(C) Section 8 Substantial Rehabilitation;
(D) Section 8 Moderate Rehabilitation;
(E) Section 8 State Housing Agency programs;
(F) Section 8 Rural Set-Aside;
(G) Section 8 Loan Management and Property Disposition.
(2) This term does not include health and care facilities that
have mortgage insurance under the National Housing Act. This term
also does not include any of the project owner's other property that
does not meet the criteria contained in any one of paragraphs (1)
(i) through (iii) of this definition, even if the property is
adjacent to or under joint or common management with such specific
property.
Note: This Appendix B Will not be Codified in Title 24 of the
CFR.
Appendix B--Guide to Maximum Pet Deposit for Housing Programs
Sec.
1. Purpose.
2. Housing Programs Affected by Maximum Pet Deposit Requirements.
1. Purpose
The regulations at 24 CFR part 5, subpart C, describe the pet
ownership requirements for HUD's Housing and Public housing
programs. Paragraph (d)(2) of Sec. 5.318 limits the pet deposit
charges that may be imposed by project owners assisted under certain
HUD programs. In order to eliminate the necessity of amending this
regulatory provision as HUD programs are created, eliminated, or
amended, HUD has not listed the relevant Housing programs in this
regulation. Rather, paragraphs (d)(2)(i) (A) and (B) of Sec. 5.318
state that HUD will identify through notice the Housing programs
affected by the maximum pet deposit requirements. The purpose of
this appendix is to identify these Housing programs.
2. Housing Programs Affected by Maximum Pet Deposit Requirements
This appendix repeats the maximum pet deposit provision in 24
CFR 5.318(d)(2), but lists the applicable Housing programs. HUD may
periodically update this appendix through notice.
Housing programs: Maximum pet deposit. (i) Pet deposits for the
following tenants shall not exceed an amount periodically fixed by
HUD through notice:
(A) Tenants whose rents are subsidized (including tenants of a
HUD-owned project, whose rents were subsidized before HUD acquired
it) under the following programs:
(1) Rent Supplement Payments;
(2) Rental assistance Payments;
(3) Housing Development Grant program;
(4) Section 8 New Construction;
(5) Section 8 Substantial Rehabilitation;
(6) Section 8 Moderate Rehabilitation;
(7) Section 8 State Housing Agency program;
(8) Section 8 Rural Set-Aside;
(9) Loans for Housing for the Elderly or Persons with
Disabilities; or
(10) Section 8 Loan Management and Property Disposition.
(B) Tenants who live in a project assisted (including tenants
who live in a HUD-owned project that was assisted before HUD
acquired it) under:
(1) The Interest Reduction Payments program;
(2) Section 202 of the Housing Act of 1959; or
(3) Section 221(d)(3) (BMIR) of the National Housing Act.
(C) For all other tenants of projects for the elderly or persons
with disabilities, the pet deposit shall not exceed one month's rent
at the time the pet is brought onto the premises. The house pet
rules may permit gradual accumulation of the pet deposit by the pet
owner.
[FR Doc. 96-5298 Filed 3-7-96; 8:45 am]
BILLING CODE 4210-32-P
Complete official Federal Register PDF
FR Doc. 96-5262 Determination of Interest Expense Deduction of Foreign Corporations
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9325-9336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5262]
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[[Page 9326]]
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 8658]
RIN 1545-AL84
Determination of Interest Expense Deduction of Foreign
Corporations
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains Income Tax Regulations relating to the
determination of the interest expense deduction of foreign corporations
and applies to foreign corporations engaged in a trade or business
within the United States. This action is necessary because of changes
to the applicable tax law made by the Tax Reform Act of 1986, and
because of changes in international financial markets.
EFFECTIVE DATE: June 6, 1996.
FOR FURTHER INFORMATION CONTACT: Ahmad Pirasteh or Richard Hoge, (202)
622-3870 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On April 24, 1992, the IRS published proposed amendments (INTL-309-
88, 1992-1 C.B. 1157) to the Income Tax Regulations (26 CFR parts 1)
under section 882 of the Internal Revenue Code in the Federal Register
(57 FR 15308). A public hearing was held on October 30, 1992. Numerous
written comments were received. After consideration of all of the
comments, the regulations proposed by INTL-309-88 are adopted as
amended by this Treasury decision, and the prior regulations are
withdrawn. The revisions are discussed below.
Discussion of Major Comments and Changes to the Regulations
1. Introduction
Section 882(c) of the Internal Revenue Code provides that a foreign
corporation is allowed a deduction only to the extent that the expense
is connected with income that is effectively connected with the conduct
of a U.S. trade or business within the United States (ECI), and that
the proper allocation is to be determined as provided in regulations.
The proposed Sec. 1.882-5 regulations that were issued in 1992
generally followed the approach adopted in the 1981 final regulations,
with various changes intended to clarify and update the regulations.
The proposed regulations attracted a substantial number of
comments, addressing both general and specific aspects of the
regulations. In response to these comments, the Treasury Department and
the IRS simplified the regulations, coordinated them more closely with
other regulations, and generally responded to the concerns of foreign
corporations doing business in the United States. For example, U.S.
assets are defined in the first step of the three-step formula to
coincide closely with the definition of a U.S. asset used for purposes
of section 884. The computation of the actual ratio in Step 2 has been
simplified considerably, minimizing both the number and the frequency
of required computations. In Step 3, consistent with the emphasis in
the regulations on the use of actual ratios and rates rather than
prescribed ones whenever possible, the final regulations allow
taxpayers to use either their actual interest rate on U.S. dollar
liabilities, or, if they elect, to use their actual rates on
liabilities denominated in each of the currencies in which their U.S.
assets are denominated. The Treasury and the IRS believe that the final
regulations strike a reasonable balance between the concerns of foreign
corporate taxpayers and the interests of the United States Government.
2. Section 1.882-5(a): Rules of General Application
Section 1.882-5(a) provides general rules for determining a foreign
corporation's interest expense allocable to ECI. The final regulations
specify that the provisions of Sec. 1.882-5 constitute the exclusive
rules for allocating interest expense to the income from the U.S. trade
or business of all foreign corporations, including foreign corporations
that are residents of countries with which the United States has an
income tax treaty. In general, this requires all foreign corporations
to use the three-step methodology described in the final regulations.
In response to commenters' questions, however, Sec. 1.882-5(a)(1)(ii)
now provides that a foreign corporation that is engaged in a U.S. trade
or business, either directly or through a partnership, and that
satisfies certain requirements may allocate interest expense directly
to income generated by a particular asset to the same extent that a
U.S. corporation is permitted to directly allocate interest expense
under the rules of Sec. 1.861-10T. When a foreign corporation directly
allocates interest expense under this rule, the final regulations
require adjustments to all three steps of the calculation to avoid
double counting of assets and liabilities.
Numerous commenters questioned whether a taxpayer that is entitled
to the benefits of a U.S. income tax treaty should be required to use
the rules of Sec. 1.882-5 for purposes of determining the amount of
interest expense allocable to the foreign corporation's income
attributable to its U.S. permanent establishment. The IRS and the
Treasury Department believe that the methodology provided in these
regulations is fully consistent with all of the United States's treaty
obligations, including the Business Profits article of our tax
treaties. Generally, the Business Profits article requires that, in
determining the business profits of a permanent establishment, there
shall be allowed as deductions expenses that are incurred for the
purposes of the permanent establishment, including interest expense.
Section 1.882-5(a)(2) of the final regulations is a reasonable method
of implementing that general directive, as our treaties do not compel
the use of any particular method.
Most of the other changes to the general rules of Sec. 1.882-5(a)
are clarifications in response to commenters' questions. For example,
the final regulations clarify certain aspects of the rules that limit a
foreign corporation's allocable interest expense to the amount actually
paid or accrued by the corporation in a taxable year, and the rules
that coordinate the provisions of Sec. 1.882-5 with any other section
that disallows, defers, or capitalizes interest expense, and include
examples that illustrate how Sec. 1.882-5 applies to an asset that
produces income exempt from U.S. taxation.
Many commenters requested that the regulations clarify how and when
to make the various elections allowed under Sec. 1.882-5. The final
regulations provide uniform rules for changing any election prescribed
under Sec. 1.882-5, and give all taxpayers an opportunity to make new
elections, if desired, for the first taxable year beginning after the
effective date of these regulations. The regulations provide that, once
a method is elected, a taxpayer must use the method for five years,
unless the Commissioner or her delegate consents to an earlier change
based on extenuating circumstances. The final regulations reflect the
current practice of the IRS by providing that if the taxpayer fails to
make a timely election, the district director or the Assistant
Commissioner (International) may make any and all elections on the
taxpayer's behalf.
Several commenters asked that the final regulations allow taxpayers
to make correlative adjustments to their Sec. 1.882-5 calculations in
cases where,
[[Page 9327]]
under the authority of Sec. 1.881-3, the district director has
determined that a taxpayer has acted as a conduit entity in a conduit
financing arrangement. The IRS and Treasury do not believe that it is
appropriate in this regulation to alleviate the consequences of
Sec. 1.881-3 if a taxpayer has engaged in a transaction one of the
principal purposes of which is to avoid U.S. withholding tax. Allowing
such correlative adjustments in this regulation would prevent
Sec. 1.881-3 from serving its function as an anti-abuse rule.
3. Section 1.882-5(b): Determination of Total Amount of U.S. Assets for
the Taxable Year (Step 1)
As in the proposed regulations, the final regulations provide that
the classification of an item as a U.S. asset under Sec. 1.884-1(d)
generally governs its classification as a U.S. asset for purposes of
Sec. 1.882-5. Under the rules of Sec. 1.884-1(d), an item generally is
treated as a U.S. asset if all of the income it generates (or would
generate) and all of the gains that it would generate (if sold at a
gain) are ECI. Since the proposed Sec. 1.882-5 regulations were issued
in 1992, the regulations under Sec. 1.884-1 were amended and released
in final form. In light of those new regulations, the inclusions and
exclusions enumerated in the proposed regulations were largely
eliminated, so that the final Sec. 1.882-5 regulations now closely
conform to the Sec. 1.884-1(d) definition of a U.S. asset.
Section 1.882-5(b)(3) of the final regulations continues the
requirement that a foreign corporation must value its U.S. assets at
the most frequent, regular intervals for which data are reasonably
available. However, the rule is applied separately with respect to each
U.S. asset. Paragraph (b)(3) specifies that the value of a U.S. asset
must be computed at least monthly by a large bank and at least semi-
annually by other taxpayers.
Many questions have been raised about how Sec. 1.882-5 applies to
partnership interests held by foreign corporations. With the
elimination of Sec. 1.861-9T(e)(7)(i) by these regulations, Sec. 1.884-
1(d)(3) and Sec. 1.882-5 now provide the exclusive rules for
determining a foreign corporation's interest expense allocable to an
interest in a partnership. The new regulations under Sec. 1.884-1(d)(3)
provide that a foreign corporation determines its U.S. assets by
reference to its basis in the partnership, and expand the methods
available for determining the portion of its partnership basis that is
a U.S. asset.
Numerous commenters were concerned that the provisions of the
proposed regulations relating to real estate would treat international
banks unfairly, since banks frequently acquire real estate through
foreclosure, or own the buildings in which their offices are located.
Commenters stated that it is unclear whether such real estate would
qualify as a U.S. asset. Commenters also objected to the rule in the
proposed regulations that provides that an interest in a U.S. real
property holding company, which is not treated as a U.S. asset under
Sec. 1.884-1(d), would be treated as a U.S. asset only in the year of
disposition. Commenters argued that banks frequently hold property
acquired by foreclosure in special purpose subsidiaries in order to
limit their exposure to environmental or other liabilities. However,
such banks must service the debt they incurred to acquire the real
property throughout the period they hold the stock, not merely upon
disposition.
In response to these comments, an example is added under
Sec. 1.884-1(d)(2) to clarify that U.S. real estate acquired as a
result of foreclosure by a bank acting in the ordinary course of its
business is generally a U.S. asset, because the property would produce
ECI to the bank under section 864(c)(2). Similarly, the building in
which a bank's offices are located generally qualifies as a U.S. asset,
because gain from the sale of the building generally would constitute
effectively connected income under the asset-use test of Sec. 1.864-
4(c)(2). In addition, the final regulations specify that a taxpayer may
achieve the same result under Sec. 1.882-5 whether it holds foreclosure
property or the office building it occupies directly or indirectly
through a corporation. Section 1.882-5(b)(1)(iii)(A) provides a look-
through rule that treats such real property as a U.S. asset for
purposes of Sec. 1.882-5 to the extent that it would have qualified as
a U.S. asset if held directly by the taxpayer.
Commenters noted that the rule in the proposed regulations that
reduces the value of shares of stock claimed as a U.S. asset by a
percentage of the dividends received deduction had the effect of
treating all stock as debt-financed under the principles of section
246A. This stock cut-back rule is eliminated from the final Sec. 1.882-
5 regulations. The elimination of the rule, however, will affect only
those taxpayers whose stock satisfies the business-activities test or
the banking, financing or similar-business test of Sec. 1.864-4(c).
This is because the final regulations under Sec. 1.864-4, which are
being issued contemporaneously with these regulations elsewhere in this
issue of the Federal Register, generally eliminate any inference that
stock can produce effectively connected income under the asset-use test
of Sec. 1.864-4(c)(2).
The final regulations add an anti-abuse rule similar to the rule in
Sec. 1.884-1(d)(5)(ii) to prevent taxpayers from artificially
increasing the amount of their U.S. assets.
4. Section 1.882-5(c): Determination of Total Amount of U.S.
Liabilities for the Taxable Year (Step 2)
Commenters objected to many of the requirements in Step 2 of the
proposed regulations on the grounds that the rules effectively
prevented foreign banks from using their actual ratio of liabilities to
assets by imposing excessive administrative burdens and capping the
actual ratio at 96%. Because the IRS and Treasury believe that a
taxpayer's interest deduction should be based on the taxpayer's actual
ratio of liabilities to assets whenever possible, the final regulations
adopt rules that are intended to encourage taxpayers to use their
actual ratio. Accordingly, the final regulations drop the 96% cap on
the actual ratio that was in the proposed regulations. The final
regulations also substantially ease the administrative burden
associated with computing the actual ratio.
Many commenters objected to the requirement in the proposed
regulations that a taxpayer's worldwide liabilities to assets ratio be
computed strictly in accordance with U.S. tax principles, citing the
substantial burden that such a calculation would entail. In light of
these comments, the final regulations require that only the
classification of assets and liabilities must be strictly in accordance
with U.S. tax principles. The value of worldwide assets and the amount
of worldwide liabilities need only be substantially in accordance with
U.S. tax principles. Examples of how these requirements apply are
provided. With regard to material items, however, the final regulations
specify that a foreign corporation must compute the value of U.S.
assets and the amount of worldwide liabilities in Steps 1 and 2 in a
consistent manner.
The proposed regulations would have required that a foreign bank
compute its actual ratio monthly. Commenters were concerned that the
burden of this rule would be excessive. In response, the final
regulations decrease the required frequency of the computations of the
actual ratio to semi-annually for large banks, and to annually for
other taxpayers.
Commenters also were concerned that the rules in the proposed
regulation
[[Page 9328]]
requiring basis adjustments for 20% owned subsidiaries would be too
burdensome. These rules, which serve a somewhat different purpose in
section 864(e)(4), have been removed from the final regulations.
Commenters pointed out that the election provided by the proposed
regulations to compute the actual ratio of a bank on the basis of a
hypothetical tax year ending six months prior to the beginning of the
actual year does not serve its intended purpose. The six month lagging
ratio election has therefore been eliminated.
Section 1.882-5(c)(3) of the final regulations provides that the
district director or the Assistant Commissioner (International) may
make appropriate adjustments to prevent the artificial increase of a
corporation's actual ratio. This rule, in conjunction with more
specific anti-abuse rules in Steps 1 and 3, replaces the general anti-
abuse rule in Sec. 1.882-5(e) of the proposed regulations.
Commenters criticized the 93% fixed ratio for banks as too low, and
disagreed with the reasons provided in the preamble to the proposed
regulations supporting the 93% ratio. The final regulations, however,
retain the elective fixed ratio at 93%. In conjunction with the more
relaxed rules regarding the computation of a foreign corporation's
actual ratio, Treasury believes that a 93% fixed ratio, which remains
purely elective, represents an appropriate safe harbor for banks.
Section 1.882-5(c)(4) also modifies the definition of a bank for
these purposes to clarify the previous definition and to limit the 93%
fixed ratio to the intended class of businesses.
5. Section 1.882-5(d): Determination of Amount of Interest Expense
Allocable to ECI (Step 3)
Commenters were concerned that Step 3 of the proposed regulations
failed to reflect business realities, increased administrative costs
and created uncertainty. In particular, they objected to the rules that
eliminated certain high interest rate liabilities and certain
liabilities denominated in a non-functional currency from the
definition of booked liabilities, and the rules that prescribed an
interest rate applicable to the extent that a taxpayer's U.S.-connected
liabilities exceed booked liabilities (excess liabilities).
As noted above, the IRS and Treasury believe that the calculation
of a taxpayer's interest deduction should reflect, to the greatest
extent possible, the taxpayer's economic interest expense. Accordingly,
these comments have been largely accepted.
The final regulations eliminate the fixed interest rates assigned
to excess liabilities, and instead require that taxpayers compute their
actual interest rate outside the United States. The IRS anticipates
issuing regulations under section 6038C describing the records needed
to verify the taxpayer's actual interest rate, among other things.
The final regulations also respond to commenters' requests for
simplification and clarification in the Step 3 calculation. Under
Sec. 1.882-5(d)(2), a liability is a U.S. booked liability if the
liability is properly reflected on the books of the U.S. trade or
business. The final regulations set out two standards, one for non-
banks and another for banks, to determine whether a liability is
properly reflected on the foreign corporation's U.S. books. In general,
the final regulations use a facts and circumstances test to determine
whether a liability is properly booked in the United States. In
response to requests from commenters for additional guidance on the
requirement that the booking of a liability be ``reasonably
contemporaneous'' with the time that the liability is incurred, the
regulations specify that a bank is generally required to book a
liability before the end of the day in which the liability is incurred.
Section 1.882-5(d)(2)(iii)(B) provides a relief rule, however, for a
situation where, due to inadvertent error, a bank fails to book a
liability that otherwise would meet the criteria for a booked
liability. The special rules for banks in the proposed regulations have
otherwise been eliminated.
In response to comments, the computation of the scaling ratio that
applies to taxpayers with excess liabilities has also been simplified,
and its application has been reduced in scope. Under the final
regulations, the scaling ratio is computed by simply dividing U.S.-
connected liabilities by U.S. booked liabilities, and multiplying that
fraction by the interest paid or accrued by the foreign corporation.
The final regulations also delete the provision in the proposed
regulations that applied the scaling ratio to section 988 exchange gain
or loss from an unhedged liability. The amount and source of exchange
gain or loss from a section 988 transaction will therefore continue to
be determined under section 988, without any reduction as a result of
the scaling ratio in Sec. 1.882-5.
The rules in the proposed regulations relating to high interest
rate liabilities and nonfunctional currency liabilities have been
replaced in the final regulations by a simpler anti-abuse rule that
provides that U.S. booked liabilities will not include a liability if
one of the principal purposes of incurring or holding the liability is
to increase artificially the interest expense on U.S. booked
liabilities. Factors relevant to that determination are whether the
interest rate on a liability is excessive and whether, from an economic
standpoint, the currency denomination of U.S. booked liabilities
matches the currency denomination of U.S. assets.
6. Section 1.882-5(e): Separate Currency Pools Method
Most commenters argued for retaining the separate currency pools
method, which was deleted from Step 3 in the proposed regulations.
After considering the comments, the IRS and Treasury agree that
taxpayers should be permitted to use a methodology that looks to
worldwide interest rates in all relevant currencies. Because the
separate currency pools rate in the 1981 regulations ignored the
currency denomination of U.S. assets and was based instead on the
currency denomination of U.S. booked liabilities, however, it was
subject to manipulation. The new separate currency pools method in
Sec. 1.882-5(e) of the final regulations allows taxpayers to treat
their U.S. assets in each currency as funded by the worldwide
liabilities of the taxpayer in that same currency. This new separate
currency pools method, which is elective, is an alternative to the Step
3 approach based on U.S. booked liabilities in Sec. 1.882-5(d). To
prevent distortions, taxpayers that have more than 10% of their U.S.
assets denominated in a hyperinflationary currency are precluded from
using the separate currency pools method.
The anti-abuse rule of proposed regulation Sec. 1.882-5(e) has been
replaced by three separate rules that appear under each of the three
steps of this section.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in EO 12866. Therefore, a
regulatory assessment is not required. It also has been determined that
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5)
and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to
these regulations, and, therefore, a Regulatory Flexibility Analysis is
not required. Pursuant to section 7805(f) of the Internal Revenue Code,
the notice of proposed rulemaking preceding these regulations was
submitted to the Small Business Administration for comment on its
impact on small business.
[[Page 9329]]
Drafting Information
Several persons from the Office of Chief Counsel and the Treasury
Department participated in drafting these regulations.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 is amended by adding
an entry in numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.882-5 also issued under 26 U.S.C. 882, 26 U.S.C. 864(e),
26 U.S.C. 988(d), and 26 U.S.C. 7701(l). * * *
Sec. 1.861-9T [Amended]
Par. 2. Section 1.861-9T, paragraph (e)(7) is amended as follows:
1. Paragraph (e)(7)(i) is removed.
2. The heading in paragraph (e)(7)(ii) is removed.
3. Paragraph (e)(7)(ii) is redesignated as the text of paragraph
(e)(7).
Par. 3. Section 1.882-0 is added to read as follows:
Sec. 1.882-0 Table of contents.
This section lists captions contained in Secs. 1.882-1, 1.882-2,
1.882-3, 1.882-4 and 1.882-5.
Sec. 1.882-1 Taxation of foreign corporations engaged in U.S.
business or of foreign corporations treated as having effectively
connected income.
(a) Segregation of income.
(b) Imposition of tax.
(1) Income not effectively connected with the conduct of a trade or
business in the United States.
(2) Income effectively connected with the conduct of a trade or
business in the United States.
(i) In general.
(ii) Determination of taxable income.
(iii) Cross references.
(c) Change in trade or business status.
(d) Credits against tax.
(e) Payment of estimated tax.
(f) Effective date.
Sec. 1.882-2 Income of foreign corporation treated as effectively
connected with U.S. business.
(a) Election as to real property income.
(b) Interest on U.S. obligations received by banks organized in
possessions.
(c) Treatment of income.
(d) Effective date.
Sec. 1.882-3 Gross income of a foreign corporation.
(a) In general.
(1) Inclusions.
(2) Exchange transactions.
(3) Exclusions.
(b) Foreign corporations not engaged in U.S. business.
(c) Foreign corporations engaged in U.S. business.
(d) Effective date.
Sec. 1.882-4 Allowance of deductions and credits to foreign
corporations.
(a) Foreign corporations.
(1) In general.
(2) Return necessary.
(3) Filing deadline for return.
(4) Return by Internal Revenue Service.
(b) Allowed deductions and credits.
(1) In general.
(2) Verification.
Sec. 1.882-5 Determination of interest deduction.
(a) Rules of general application.
(1) Overview.
(i) In general.
(ii) Direct allocations.
(A) In general.
(B) Partnership interest.
(2) Coordination with tax treaties.
(3) Limitation on interest expense.
(4) Translation convention for foreign currency.
(5) Coordination with other sections.
(6) Special rule for foreign governments.
(7) Elections under Sec. 1.882-5.
(i) In general.
(ii) Failure to make the proper election.
(8) Examples.
(b) Step 1: Determination of total value of U.S. assets for the
taxable year.
(1) Classification of an asset as a U.S. asset.
(i) General rule.
(ii) Items excluded from the definition of U.S. asset.
(iii) Items included in the definition of U.S. asset.
(iv) Interbranch transactions.
(v) Assets acquired to increase U.S. assets artificially.
(2) Determination of the value of a U.S. asset.
(i) General rule.
(ii) Fair-market value election.
(A) In general.
(B) Adjustment to partnership basis.
(iii) Reduction of total value of U.S. assets by amount of bad debt
reserves under section 585.
(A) In general.
(B) Example.
(iv) Adjustment to basis of financial instruments.
(3) Computation of total value of U.S. assets.
(c) Step 2: Determination of total amount of U.S.-connected
liabilities for the taxable year.
(1) General rule.
(2) Computation of the actual ratio.
(i) In general.
(ii) Classification of items.
(iii) Determination of amount of worldwide liabilities.
(iv) Determination of value of worldwide assets.
(v) Hedging transactions.
(vi) Treatment of partnership interests and liabilities.
(vii) Computation of actual ratio of insurance companies.
(viii) Interbranch transactions.
(ix) Amounts must be expressed in a single currency.
(3) Adjustments.
(4) Elective fixed ratio method of determining U.S. liabilities.
(5) Examples.
(d) Step 3: Determination of amount of interest expense allocable
to ECI under the adjusted U.S. booked liabilities method.
(1) General rule.
(2) U.S. booked liabilities.
(i) In general.
(ii) Properly reflected on the books of the U.S. trade or business
of a foreign corporation that is not a bank.
(A) In general.
(B) Identified liabilities not properly reflected.
(iii) Properly reflected on the books of the U.S. trade or business
of a foreign corporation that is a bank.
(A) In general.
(B) Inadvertent error.
(iv) Liabilities of insurance companies.
(v) Liabilities used to increase artificially interest expense on
U.S. booked liabilities.
(vi) Hedging transactions.
(vii) Amount of U.S. booked liabilities of a partner.
(viii) Interbranch transactions.
(3) Average total amount of U.S. booked liabilities.
(4) Interest expense where U.S. booked liabilities equal or exceed
U.S. liabilities.
(i) In general.
(ii) Scaling ratio.
(iii) Special rules for insurance companies.
(5) U.S.-connected interest rate where U.S. booked liabilities are
less than U.S.-connected liabilities.
(i) In general.
(ii) Interest rate on excess U.S.-connected liabilities.
(6) Examples.
(e) Separate currency pools method.
(1) General rule.
(i) Determine the value of U.S. assets in each currency pool.
(ii) Determine the U.S.-connected liabilities in each currency
pool.
(iii) Determine the interest expense attributable to each currency
pool.
(2) Prescribed interest rate.
(3) Hedging transactions.
(4) Election not available if excessive hyperinflationary assets.
(5) Examples.
(f) Effective date.
(1) General rule.
(2) Special rules for financial products.
Par. 4. Section 1.882-5 is revised to read as follows:
Sec. 1.882-5 Determination of interest deduction.
(a) Rules of general application--(1) Overview--(i) In general. The
amount of interest expense of a foreign corporation that is allocable
under section 882(c) to income which is (or is treated as)
[[Page 9330]]
effectively connected with the conduct of a trade or business within
the United States (ECI) is the sum of the interest paid or accrued by
the foreign corporation on its liabilities booked in the United States,
as adjusted under the three-step process set forth in paragraphs (b),
(c), and (d) of this section and the specially allocated interest
expense determined under section (a)(1)(ii) of this section. The
provisions of this section provide the exclusive rules for allocating
interest expense to the ECI of a foreign corporation. Under the three-
step process, the total value of the U.S. assets of a foreign
corporation is first determined under paragraph (b) of this section
(Step 1). Next, the amount of U.S.-connected liabilities is determined
under paragraph (c) of this section (Step 2). Finally, the amount of
interest paid or accrued on liabilities booked in the United States, as
determined under paragraph (d)(2) of this section, is adjusted for
interest expense attributable to the difference between U.S.-connected
liabilities and U.S.-booked liabilities (Step 3). Alternatively, a
foreign corporation may elect to determine its interest rate on U.S.-
connected liabilities by reference to its U.S. assets, using the
separate currency pools method described in paragraph (e) of this
section.
(ii) Direct allocations--(A) In general. A foreign corporation that
has a U.S. asset and indebtedness that meet the requirements of
Sec. 1.861-10T (b) and (c), as limited by Sec. 1.861-10T(d)(1), may
directly allocate interest expense from such indebtedness to income
from such asset in the manner and to the extent provided in Sec. 1.861-
10T. For purposes of paragraph (b)(1) or (c)(2) of this section, a
foreign corporation that allocates its interest expense under the
direct allocation rule of this paragraph (a)(1)(ii)(A) shall reduce the
basis of the asset that meets the requirements of Sec. 1.861-10T (b)
and (c) by the principal amount of the indebtedness that meets the
requirements of Sec. 1.861- 10T (b) and (c). The foreign corporation
shall also disregard any indebtedness that meets the requirements of
Sec. 1.861-10T (b) and (c) in determining the amount of the foreign
corporation's liabilities under paragraphs (c)(2) and (d)(2) of this
section, and shall not take into account any interest expense paid or
accrued with respect to such a liability for purposes of paragraph (d)
or (e) of this section.
(B) Partnership interest. A foreign corporation that is a partner
in a partnership that has a U.S. asset and indebtedness that meet the
requirements of Sec. 1.861-10T (b) and (c), as limited by Sec. 1.861-
10T(d)(1), may directly allocate its distributive share of interest
expense from that indebtedness to its distributive share of income from
that asset in the manner and to the extent provided in Sec. 1.861-10T.
A foreign corporation that allocates its distributive share of interest
expense under the direct allocation rule of this paragraph
(a)(1)(ii)(B) shall disregard any partnership indebtedness that meets
the requirements of Sec. 1.861-10T (b) and (c) in determining the
amount of its distributive share of partnership liabilities for
purposes of paragraphs (b)(1), (c)(2)(vi), and (d)(2)(vii) or
(e)(1)(ii) of this section, and shall not take into account any
partnership interest expense paid or accrued with respect to such a
liability for purposes of paragraph (d) or (e) of this section. For
purposes of paragraph (b)(1) of this section, a foreign corporation
that directly allocates its distributive share of interest expense
under this paragraph (a)(1)(ii)(B) shall--
(1) Reduce the partnership's basis in such asset by the amount of
such indebtedness in allocating its basis in the partnership under
Sec. 1.884-1(d)(3)(ii); or
(2) Reduce the partnership's income from such asset by the
partnership's interest expense from such indebtedness under Sec. 1.884-
1(d)(3)(iii).
(2) Coordination with tax treaties. The provisions of this section
provide the exclusive rules for determining the interest expense
attributable to the business profits of a permanent establishment under
a U.S. income tax treaty.
(3) Limitation on interest expense. In no event may the amount of
interest expense computed under this section exceed the amount of
interest on indebtedness paid or accrued by the taxpayer within the
taxable year (translated into U.S. dollars at the weighted average
exchange rate for each currency prescribed by Sec. 1.989(b)-1 for the
taxable year).
(4) Translation convention for foreign currency. For each
computation required by this section, the taxpayer shall translate
values and amounts into the relevant currency at a spot rate or a
weighted average exchange rate consistent with the method such taxpayer
uses for financial reporting purposes, provided such method is applied
consistently from year to year. Interest expense paid or accrued,
however, shall be translated under the rules of Sec. 1.988-2. The
district director or the Assistant Commissioner (International) may
require that any or all computations required by this section be made
in U.S. dollars if the functional currency of the taxpayer's home
office is a hyperinflationary currency, as defined in Sec. 1.985-1, and
the computation in U.S. dollars is necessary to prevent distortions.
(5) Coordination with other sections. Any provision that disallows,
defers, or capitalizes interest expense applies after determining the
amount of interest expense allocated to ECI under this section. For
example, in determining the amount of interest expense that is
disallowed as a deduction under section 265 or 163(j), deferred under
section 163(e)(3) or 267(a)(3), or capitalized under section 263A with
respect to a United States trade or business, a taxpayer takes into
account only the amount of interest expense allocable to ECI under this
section.
(6) Special rule for foreign governments. The amount of interest
expense of a foreign government, as defined in Sec. 1.892-2T(a), that
is allocable to ECI is the total amount of interest paid or accrued
within the taxable year by the United States trade or business on U.S.-
booked liabilities (as defined in paragraph (d)(2) of this section).
Interest expense of a foreign government, however, is not allocable to
ECI to the extent that it is incurred with respect to U.S.-booked
liabilities that exceed 80 percent of the total value of U.S. assets
for the taxable year (determined under paragraph (b) of this section).
This paragraph (a)(6) does not apply to controlled commercial entities
within the meaning of Sec. 1.892-5T.
(7) Elections under Sec. 1.882-5--(i) In general. A corporation
must make each election provided in this section on the corporation's
Federal income tax return for the first taxable year beginning on or
after the effective date of this section. An amended return does not
qualify for this purpose, nor shall the provisions of Sec. 301.9100-1
of this chapter and any guidance promulgated thereunder apply. Each
election under this section, whether an election for the first taxable
year or a subsequent change of election, shall be made by the
corporation calculating its interest expense deduction in accordance
with the methods elected. An elected method must be used for a minimum
period of five years before the taxpayer may elect a different method.
To change an election before the end of the requisite five-year period,
a taxpayer must obtain the consent of the Commissioner or her delegate.
The Commissioner or her delegate will generally consent to a taxpayer's
request to change its election only in rare and unusual circumstances.
(ii) Failure to make the proper election. If a taxpayer, for any
reason, fails to make an election provided in
[[Page 9331]]
this section in a timely fashion, the district director or the
Assistant Commissioner (International) may make any or all of the
elections provided in this section on behalf of the taxpayer, and such
elections shall be binding as if made by the taxpayer.
(8) Examples. The following examples illustrate the application of
paragraph (a) of this section:
Example 1. Direct allocations. (i) Facts: FC is a foreign
corporation that conducts business through a branch, B, in the
United States. Among B's U.S. assets is an interest in a
partnership, P, that is engaged in airplane leasing solely in the
U.S. FC contributes 200 x to P in exchange for its partnership
interest. P incurs qualified nonrecourse indebtedness within the
meaning of Sec. 1.861-10T to purchase an airplane. FC's share of the
liability of P, as determined under section 752, is 800 x .
(ii) Analysis: Pursuant to paragraph (a)(1)(ii)(B) of this
section, FC is permitted to directly allocate its distributive share
of the interest incurred with respect to the qualified nonrecourse
indebtedness to FC's distributive share of the rental income
generated by the airplane. A liability the interest on which is
allocated directly to the income from a particular asset under
paragraph (a)(1)(ii)(B) of this section is disregarded for purposes
of paragraphs (b)(1), (c)(2)(vi), and (d)(2)(vii) or (e)(1)(ii) this
section. Consequently, for purposes of determining the value of FC's
assets under paragraphs (b)(1) and (c)(2)(vi) of this section, FC's
basis in P is reduced by the 800 x liability as determined under
section 752, but is not increased by the 800 x liability that is
directly allocated under paragraph (a)(1)(ii)(B) of this section.
Similarly, pursuant to paragraph (a)(1)(ii)(B) of this section, the
800 x liability is disregarded for purposes of determining FC's
liabilities under paragraphs (c)(2)(vi) and (d)(2)(vii) of this
section.
Example 2. Limitation on interest expense--(i) FC is a foreign
corporation that conducts a real estate business in the United
States. In its 1997 tax year, FC has no outstanding indebtedness,
and therefore incurs no interest expense. FC elects to use the 50%
fixed ratio under paragraph (c)(4) of this section.
(ii) Under paragraph (a)(3) of this section, FC is not allowed
to deduct any interest expense that exceeds the amount of interest
on indebtedness paid or accrued in that taxable year. Since FC
incurred no interest expense in taxable year 1997, FC will not be
entitled to any interest deduction for that year under Sec. 1.882-5,
notwithstanding the fact that FC has elected to use the 50% fixed
ratio.
Example 3. Coordination with other sections--(i) FC is a foreign
corporation that is a bank under section 585(a)(2) and a financial
institution under section 265(b)(5). FC is a calendar year taxpayer,
and operates a U.S. branch, B. Throughout its taxable year 1997, B
holds only two assets that are U.S. assets within the meaning of
paragraph (b)(1) of this section. FC does not make a fair-market
value election under paragraph (b)(2)(ii) of this section, and,
therefore, values its U.S. assets according to their bases under
paragraph (b)(2)(i) of this section. The first asset is a taxable
security with an adjusted basis of $100. The second asset is an
obligation the interest on which is exempt from federal taxation
under section 103, with an adjusted basis of $50. The tax-exempt
obligation is not a qualified tax-exempt obligation as defined by
section 265(b)(3)(B).
(ii) FC calculates its interest expense under Sec. 1.882-5 to be
$12. Under paragraph (a)(5) of this section, however, a portion of
the interest expense that is allocated to FC's effectively connected
income under Sec. 1.882-5 is disallowed in accordance with the
provisions of section 265(b). Using the methodology prescribed under
section 265, the amount of disallowed interest expense is $4,
calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR08MR96.000
(iii) Therefore, FC deducts a total of $8 ($12-$4) of interest
expense attributable to its effectively connected income in 1997.
Example 4. Treaty exempt asset--(i) FC is a foreign corporation,
resident in Country X, that is actively engaged in the banking
business in the United States through a permanent establishment, B.
The income tax treaty in effect between Country X and the United
States provides that FC is not taxable on foreign source income
earned by its U.S. permanent establishment. In its 1997 tax year, B
earns $90 of U.S. source income from U.S. assets with an adjusted
tax basis of $900, and $12 of foreign source interest income from
U.S. assets with an adjusted tax basis of $100. FC's U.S. interest
expense deduction, computed in accordance with Sec. 1.882-5, is
$500.
(ii) Under paragraph (a)(5) of this section, FC is required to
apply any provision that disallows, defers, or capitalizes interest
expense after determining the interest expense allocated to ECI
under Sec. 1.882-5. Section 265(a)(2) disallows interest expense
that is allocable to one or more classes of income that are wholly
exempt from taxation under subtitle A of the Internal Revenue Code.
Section 1.265-1(b) provides that income wholly exempt from taxes
includes both income excluded from tax under any provision of
subtitle A and income wholly exempt from taxes under any other law.
Section 894 specifies that the provisions of subtitle A are applied
with due regard to any relevant treaty obligation of the United
States. Because the treaty between the United States and Country X
exempts foreign source income earned by B from U.S. tax, FC has
assets that produce income wholly exempt from taxes under subtitle
A, and must therefore allocate a portion of its Sec. 1.882-5
interest expense to its exempt income. Using the methodology
prescribed under section 265, the amount of disallowed interest
expense is $50, calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR08MR96.001
(iii) Therefore, FC deducts a total of $450 ($500-$50) of
interest expense attributable to its effectively connected income in
1997.
(b) Step 1: Determination of total value of U.S. assets for the
taxable year--(1) Classification of an asset as a U.S. asset--(i)
General rule. Except as otherwise provided in this paragraph (b)(1), an
asset is a U.S. asset for purposes of this section to the extent that
it is a U.S. asset under Sec. 1.884-1(d). For purposes of this section,
the term determination date, as used in Sec. 1.884-1(d), means each day
for which the total value of U.S. assets is computed under paragraph
(b)(3) of this section.
(ii) Items excluded from the definition of U.S. asset. For purposes
of this section, the term U.S. asset excludes an asset to the extent it
produces income or gain described in sections 883 (a)(3) and (b).
(iii) Items included in the definition of U.S. asset. For purposes
of this section, the term U.S. asset includes--
(A) U.S. real property held in a wholly-owned domestic subsidiary
of a foreign corporation that qualifies as a bank under section
585(a)(2)(B) (without regard to the second sentence thereof), provided
that the real property would qualify as used in the foreign
corporation's trade or business within the meaning of Sec. 1.864-4(c)
(2) or (3) if held directly by the foreign corporation and either was
initially acquired through foreclosure or similar proceedings or is
U.S. real property occupied by the foreign corporation (the value of
which shall be adjusted by the amount of any indebtedness that is
reflected in the value of the property);
(B) An asset that produces income treated as ECI under section
921(d) or 926(b) (relating to certain income of a FSC and certain
dividends paid by a FSC to a foreign corporation);
(C) An asset that produces income treated as ECI under section
953(c)(3)(C) (relating to certain income of a captive insurance company
that a corporation elects to treat as ECI) that is not otherwise ECI;
and
(D) An asset that produces income treated as ECI under section
882(e) (relating to certain interest income of possessions banks).
(iv) Interbranch transactions. A transaction of any type between
separate offices or branches of the same taxpayer does not create a
U.S. asset.
(v) Assets acquired to increase U.S. assets artificially. An asset
shall not be treated as a U.S. asset if one of the principal purposes
for acquiring or using that asset is to increase artificially the U.S.
assets of a foreign corporation on the determination date. Whether an
asset is acquired or used for such
[[Page 9332]]
purpose will depend upon all the facts and circumstances of each case.
Factors to be considered in determining whether one of the principal
purposes in acquiring or using an asset is to increase artificially the
U.S. assets of a foreign corporation include the length of time during
which the asset was used in a U.S. trade or business, whether the asset
was acquired from a related person, and whether the aggregate value of
the U.S. assets of the foreign corporation increased temporarily on or
around the determination date. A purpose may be a principal purpose
even though it is outweighed by other purposes (taken together or
separately).
(2) Determination of the value of a U.S. asset--(i) General rule.
The value of a U.S. asset is the adjusted basis of the asset for
determining gain or loss from the sale or other disposition of that
item, further adjusted as provided in paragraph (b)(2)(iii) of this
section.
(ii) Fair-market value election--(A) In general. A taxpayer may
elect to value all of its U.S. assets on the basis of fair market
value, subject to the requirements of Sec. 1.861-9T(g)(1)(iii), and
provided the taxpayer uses the methodology prescribed in Sec. 1.861-
9T(h). Once elected, the fair market value must be used by the taxpayer
for both Step 1 and Step 2 described in paragraphs (b) and (c) of this
section, and must be used in all subsequent taxable years unless the
Commissioner or her delegate consents to a change.
(B) Adjustment to partnership basis. If a partner makes a fair
market value election under paragraph (b)(2)(ii) of this section, the
value of the partner's interest in a partnership that is treated as an
asset shall be the fair market value of his partnership interest,
increased by the fair market value of the partner's share of the
liabilities determined under paragraph (c)(2)(vi) of this section. See
Sec. 1.884-1(d)(3).
(iii) Reduction of total value of U.S. assets by amount of bad debt
reserves under section 585--(A) In general. The total value of loans
that qualify as U.S. assets shall be reduced by the amount of any
reserve for bad debts additions to which are allowed as deductions
under section 585.
(B) Example. The following example illustrates the provisions of
paragraph (b)(2)(iii)(A) of this section:
Example. Foreign banks; bad debt reserves. FC is a foreign
corporation that qualifies as a bank under section 585(a)(2)(B)
(without regard to the second sentence thereof), but is not a large
bank as defined in section 585(c)(2). FC conducts business through a
branch, B, in the United States. Among B's U.S. assets are a
portfolio of loans with an adjusted basis of $500. FC accounts for
its bad debts for U.S. federal income tax purposes under the reserve
method, and B maintains a deductible reserve for bad debts of $50.
Under paragraph (b)(2)(iii) of this section, the total value of FC's
portfolio of loans is $450 ($500-$50).
(iv) Adjustment to basis of financial instruments. [Reserved]
(3) Computation of total value of U.S. assets. The total value of
U.S. assets for the taxable year is the average of the sums of the
values (determined under paragraph (b)(2) of this section) of U.S.
assets. For each U.S. asset, value shall be computed at the most
frequent, regular intervals for which data are reasonably available. In
no event shall the value of any U.S. asset be computed less frequently
than monthly by a large bank (as defined in section 585(c)(2)) and
semi-annually by any other taxpayer.
(c) Step 2: Determination of total amount of U.S.-connected
liabilities for the taxable year--(1) General rule. The amount of U.S.-
connected liabilities for the taxable year equals the total value of
U.S. assets for the taxable year (as determined under paragraph (b)(3)
of this section) multiplied by the actual ratio for the taxable year
(as determined under paragraph (c)(2) of this section) or, if the
taxpayer has made an election in accordance with paragraph (c)(4) of
this section, by the fixed ratio.
(2) Computation of the actual ratio--(i) In general. A taxpayer's
actual ratio for the taxable year is the total amount of its worldwide
liabilities for the taxable year divided by the total value of its
worldwide assets for the taxable year. The total amount of worldwide
liabilities and the total value of worldwide assets for the taxable
year is the average of the sums of the amounts of the taxpayer's
worldwide liabilities and the values of its worldwide assets
(determined under paragraphs (c)(2) (iii) and (iv) of this section). In
each case, the sums must be computed semi-annually by a large bank (as
defined in section 585(c)(2)) and annually by any other taxpayer.
(ii) Classification of items. The classification of an item as a
liability or an asset must be consistent from year to year and in
accordance with U.S. tax principles.
(iii) Determination of amount of worldwide liabilities. The amount
of a liability must be determined consistently from year to year and
must be substantially in accordance with U.S. tax principles. To be
substantially in accordance with U.S. tax principles, the principles
used to determine the amount of a liability must not differ from U.S.
tax principles to a degree that will materially affect the value of
taxpayer's worldwide liabilities or the taxpayer's actual ratio.
(iv) Determination of value of worldwide assets. The value of an
asset must be determined consistently from year to year and must be
substantially in accordance with U.S. tax principles. To be
substantially in accordance with U.S. tax principles, the principles
used to determine the value of an asset must not differ from U.S. tax
principles to a degree that will materially affect the value of the
taxpayer's worldwide assets or the taxpayer's actual ratio. The value
of an asset is the adjusted basis of that asset for determining the
gain or loss from the sale or other disposition of that asset, adjusted
in the same manner as the basis of U.S. assets are adjusted under
paragraphs (b)(2) (ii) through (iv) of this section.
(v) Hedging transactions. [Reserved]
(vi) Treatment of partnership interests and liabilities. For
purposes of computing the actual ratio, the value of a partner's
interest in a partnership that will be treated as an asset is the
partner's adjusted basis in its partnership interest, reduced by the
partner's share of liabilities of the partnership as determined under
section 752 and increased by the partner's share of liabilities
determined under this paragraph (c)(2)(vi). If the partner has made a
fair market value election under paragraph (b)(2)(ii) of this section,
the value of its interest in the partnership shall be increased by the
fair market value of the partner's share of the liabilities determined
under this paragraph (c)(2)(vi). For purposes of this section a partner
shares in any liability of a partnership in the same proportion that it
shares, for income tax purposes, in the expense attributable to that
liability for the taxable year. A partner's adjusted basis in a
partnership interest cannot be less than zero.
(vii) Computation of actual ratio of insurance companies.
[Reserved]
(viii) Interbranch transactions. A transaction of any type between
separate offices or branches of the same taxpayer does not create an
asset or a liability.
(ix) Amounts must be expressed in a single currency. The actual
ratio must be computed in either U.S. dollars or the functional
currency of the home office of the taxpayer, and that currency must be
used consistently from year to year. For example, a taxpayer that
determines the actual ratio annually using British pounds converted at
the spot rate for financial reporting purposes must translate the U.S.
dollar values of assets and amounts of liabilities of the U.S. trade or
business into pounds using the spot rate on the last day of its taxable
year. The district director or the
[[Page 9333]]
Assistant Commissioner (International) may require that the actual
ratio be computed in dollars if the functional currency of the
taxpayer's home office is a hyperinflationary currency, as defined in
Sec. 1.985-1, that materially distorts the actual ratio.
(3) Adjustments. The district director or the Assistant
Commissioner (International) may make appropriate adjustments to
prevent a foreign corporation from intentionally and artificially
increasing its actual ratio. For example, the district director or the
Assistant Commissioner (International) may offset a loan made from or
to one person with a loan made to or from another person if any of the
parties to the loans are related persons, within the meaning of section
267(b) or 707(b)(1), and one of the principal purposes for entering
into the loans was to increase artificially the actual ratio of a
foreign corporation. A purpose may be a principal purpose even though
it is outweighed by other purposes (taken together or separately).
(4) Elective fixed ratio method of determining U.S. liabilities. A
taxpayer that is a bank as defined in section 585(a)(2)(B)(without
regard to the second sentence thereof) may elect to use a fixed ratio
of 93 percent in lieu of the actual ratio. A taxpayer that is neither a
bank nor an insurance company may elect to use a fixed ratio of 50
percent in lieu of the actual ratio.
(5) Examples. The following examples illustrate the application of
paragraph (c) of this section:
Example 1. Classification of item not in accordance with U.S.
tax principles. Bank Z, a resident of country X, has a branch in the
United States through which it conducts its banking business. In
preparing its financial statements in country X, Z treats an
instrument documented as perpetual subordinated debt as a liability.
Under U.S. tax principles, however, this instrument is treated as
equity. Consequently, the classification of this instrument as a
liability for purposes of paragraph (c)(2)(iii) of this section is
not in accordance with U.S. tax principles.
Example 2. Valuation of item not substantially in accordance
with U.S. tax principles. Bank Z, a resident of country X, has a
branch in the United States through which it conducts its banking
business. Bank Z is a large bank as defined in section 585(c)(2).
The tax rules of country X allow Bank Z to take deductions for
additions to certain reserves. Bank Z decreases the value of the
assets on its financial statements by the amounts of the reserves.
The additions to the reserves under country X tax rules cause the
value of Bank Z's assets to differ from the value of those assets
determined under U.S. tax principles to a degree that materially
affects the value of taxpayer's worldwide assets. Consequently, the
valuation of Bank Z's worldwide assets under country X tax
principles is not substantially in accordance with U.S. tax
principles. Bank Z must increase the value of its worldwide assets
under paragraph (c)(2)(iii) of this section by the amount of its
country X reserves.
Example 3. Valuation of item substantially in accordance with
U.S. tax principles. Bank Z, a resident of country X, has a branch
in the United States through which it conducts its banking business.
In determining the value of its worldwide assets, Bank Z computes
the adjusted basis of certain non-U.S. assets according to the
depreciation methodology provided under country X tax laws, which is
different than the depreciation methodology provided under U.S. tax
law. If the depreciation methodology provided under country X tax
laws does not differ from U.S. tax principles to a degree that
materially affects the value of Bank Z's worldwide assets or Bank
Z's actual ratio as computed under paragraph (c)(2) of this section,
then the valuation of Bank Z's worldwide assets under paragraph
(c)(2)(iv) of this section is substantially in accordance with U.S.
tax principles.
Example 4. [Reserved]
Example 5. Adjustments. FC is a foreign corporation engaged in
the active conduct of a banking business through a branch, B, in the
United States. P, an unrelated foreign corporation, deposits
$100,000 in the home office of FC. Shortly thereafter, in a
transaction arranged by the home office of FC, B lends $80,000
bearing interest at an arm's length rate to S, a wholly owned U.S.
subsidiary of P. The district director or the Assistant Commissioner
(International) determines that one of the principal purposes for
making and incurring such loans is to increase FC's actual ratio.
For purposes of this section, therefore, P is treated as having
directly lent $80,000 to S. Thus, for purposes of paragraph (c) of
this section (Step 2), the district director or the Assistant
Commissioner (International) may offset FC's liability and asset
arising from this transaction, resulting in a net liability of
$20,000 that is not a booked liability of B. Because the loan to S
from B was initiated and arranged by the home office of FC, with no
material participation by B, the loan to S will not be treated as a
U.S. asset.
(d) Step 3: Determination of amount of interest expense allocable
to ECI under the adjusted U.S. booked liabilities method--(1) General
rule. The adjustment to the amount of interest expense paid or accrued
on U.S. booked liabilities is determined by comparing the amount of
U.S.-connected liabilities for the taxable year, as determined under
paragraph (c) of this section, with the average total amount of U.S.
booked liabilities, as determined under paragraphs (d)(2) and (3) of
this section. If the average total amount of U.S. booked liabilities
equals or exceeds the amount of U.S.-connected liabilities, the
adjustment to the interest expense on U.S. booked liabilities is
determined under paragraph (d)(4) of this section. If the amount of
U.S.-connected liabilities exceeds the average total amount of U.S.
booked liabilities, the adjustment to the amount of interest expense
paid or accrued on U.S. booked liabilities is determined under
paragraph (d)(5) of this section.
(2) U.S. booked liabilities--(i) In general. A liability is a U.S.
booked liability if it is properly reflected on the books of the U.S.
trade or business, within the meaning of paragraph (d)(2)(ii) or (iii)
of this section.
(ii) Properly reflected on the books of the U.S. trade or business
of a foreign corporation that is not a bank--(A) In general. A
liability, whether interest bearing or non-interest bearing, is
properly reflected on the books of the U.S. trade or business of a
foreign corporation that is not a bank as described in section
585(a)(2)(B) (without regard to the second sentence thereof) if--
(1) The liability is secured predominantly by a U.S. asset of the
foreign corporation;
(2) The foreign corporation enters the liability on a set of books
relating to an activity that produces ECI at a time reasonably
contemporaneous with the time at which the liability is incurred; or
(3) The foreign corporation maintains a set of books and records
relating to an activity that produces ECI and the District Director or
Assistant Commissioner (International) determines that there is a
direct connection or relationship between the liability and that
activity. Whether there is a direct connection between the liability
and an activity that produces ECI depends on the facts and
circumstances of each case.
(B) Identified liabilities not properly reflected. A liability is
not properly reflected on the books of the U.S. trade or business
merely because a foreign corporation identifies the liability pursuant
to Sec. 1.884-4(b)(1)(ii) and (b)(3).
(iii) Properly reflected on the books of the U.S. trade or business
of a foreign corporation that is a bank--(A) In general. A liability,
whether interest bearing or non-interest bearing, is properly reflected
on the books of the U.S. trade or business of a foreign corporation
that is a bank as described in section 585(a)(2)(B) (without regard to
the second sentence thereof) if--
(1) The bank enters the liability on a set of books relating to an
activity that produces ECI before the close of the day on which the
liability is incurred; and
(2) There is a direct connection or relationship between the
liability and that activity. Whether there is a direct connection
between the liability and an activity that produces ECI depends on
[[Page 9334]]
the facts and circumstances of each case.
(B) Inadvertent error. If a bank fails to enter a liability in the
books of the activity that produces ECI before the close of the day on
which the liability was incurred, the liability may be treated as a
U.S. booked liability only if, under the facts and circumstances, the
taxpayer demonstrates a direct connection or relationship between the
liability and the activity that produces ECI and the failure to enter
the liability in those books was due to inadvertent error.
(iv) Liabilities of insurance companies. [Reserved]
(v) Liabilities used to increase artificially interest expense on
U.S. booked liabilities. U.S. booked liabilities shall not include a
liability if one of the principal purposes for incurring or holding the
liability is to increase artificially the interest expense on the U.S.
booked liabilities of a foreign corporation. Whether a liability is
incurred or held for the purpose of artificially increasing interest
expense will depend upon all the facts and circumstances of each case.
Factors to be considered in determining whether one of the principal
purposes for incurring or holding a liability is to increase
artificially the interest expense on U.S. booked liabilities of a
foreign corporation include whether the interest expense on the
liability is excessive when compared to other liabilities of the
foreign corporation denominated in the same currency and whether the
currency denomination of the liabilities of the U.S. branch
substantially matches the currency denomination of the U.S. branch's
assets. A purpose may be a principal purpose even though it is
outweighed by other purposes (taken together or separately).
(vi) Hedging transactions. [Reserved]
(vii) Amount of U.S. booked liabilities of a partner. A partner's
share of liabilities of a partnership is considered a booked liability
of the partner provided that it is properly reflected on the books
(within the meaning of paragraph (d)(2)(ii) of this section) of the
U.S. trade or business of the partnership.
(viii) Interbranch transactions. A transaction of any type between
separate offices or branches of the same taxpayer does not result in
the creation of a liability.
(3) Average total amount of U.S. booked liabilities. The average
total amount of U.S. booked liabilities for the taxable year is the
average of the sums of the amounts (determined under paragraph (d)(2)
of this section) of U.S. booked liabilities. The amount of U.S. booked
liabilities shall be computed at the most frequent, regular intervals
for which data are reasonably available. In no event shall the amount
of U.S. booked liabilities be computed less frequently than monthly by
a large bank (as defined in section 585(c)(2)) and semi-annually by any
other taxpayer.
(4) Interest expense where U.S. booked liabilities equal or exceed
U.S. liabilities--(i) In general. If the average total amount of U.S.
booked liabilities (as determined in paragraphs (d)(2) and (3) of this
section) exceeds the amount of U.S.-connected liabilities (as
determined under paragraph (c) of this section (Step 2)), the interest
expense allocable to ECI is the product of the total amount of interest
paid or accrued within the taxable year by the U.S. trade or business
on U.S. booked liabilities and the scaling ratio set out in paragraph
(d)(4)(ii) of this section. For purposes of this section, the reduction
resulting from the application of the scaling ratio is applied pro-rata
to all interest expense paid or accrued by the foreign corporation. A
similar reduction in income, expense, gain, or loss from a hedging
transaction (as described in paragraph (d)(2)(vi) of this section) must
also be determined by multiplying such income, expense, gain, or loss
by the scaling ratio. If the average total amount of U.S. booked
liabilities (as determined in paragraph (d)(3) of this section) equals
the amount of U.S.-connected liabilities (as determined under Step 2),
the interest expense allocable to ECI is the total amount of interest
paid or accrued within the taxable year by the U.S. trade or business
on U.S. booked liabilities.
(ii) Scaling ratio. For purposes of this section, the scaling ratio
is a fraction the numerator of which is the amount of U.S.-connected
liabilities and the denominator of which is the average total amount of
U.S. booked liabilities.
(iii) Special rules for insurance companies. [Reserved]
(5) U.S.-connected interest rate where U.S. booked liabilities are
less than U.S.-connected liabilities--(i) In general. If the amount of
U.S.-connected liabilities (as determined under paragraph (c) of this
section (Step 2)) exceeds the average total amount of U.S. booked
liabilities, the interest expense allocable to ECI is the total amount
of interest paid or accrued within the taxable year by the U.S. trade
or business on U.S. booked liabilities, plus the excess of the amount
of U.S.-connected liabilities over the average total amount of U.S.
booked liabilities multiplied by the interest rate determined under
paragraph (d)(5)(ii) of this section.
(ii) Interest rate on excess U.S.-connected liabilities. The
applicable interest rate on excess U.S.-connected liabilities is
determined by dividing the total interest expense paid or accrued for
the taxable year on U.S.-dollar liabilities shown on the books of the
offices or branches of the foreign corporation outside the United
States by the average U.S.-dollar denominated liabilities (whether
interest-bearing or not) shown on the books of the offices or branches
of the foreign corporation outside the United States for the taxable
year.
(6) Examples. The following examples illustrate the rules of this
section:
Example 1. Computation of interest expense; actual ratio--(i)
Facts. (A) FC is a foreign corporation that is not a bank and that
actively conducts a real estate business through a branch, B, in the
United States. For the taxable year, FC's balance sheet and income
statement is as follows (assume amounts are in U.S. dollars and
computed in accordance with paragraphs (b)(2) and (b)(3) of this
section):
------------------------------------------------------------------------
Value
------------------------------------------------------------------------
Asset 1............................................. $2,000
Asset 2............................................. 2,500
Asset 3............................................. 5,500
Amount Interest
Liability 1......................................... $800 56
Liability 2......................................... 3,200 256
Capital............................................. 6,000 0
------------------------------------------------------------------------
(B) Asset 1 is the stock of FC's wholly-owned domestic
subsidiary that is also actively engaged in the real estate
business. Asset 2 is a building in the United States producing
rental income that is entirely ECI to FC. Asset 3 is a building in
the home country of FC that produces rental income. Liabilities 1
and 2 are loans that bear interest at the rates of 7% and 8%,
respectively. Liability 1 is a booked liability of B, and Liability
2 is booked in FC's home country. Assume that FC has not elected to
use the fixed ratio in Step 2.
(ii) Step 1. Under paragraph (b)(1) of this section, Assets 1
and 3 are not U.S. assets, while Asset 2 qualifies as a U.S. asset.
Thus, under paragraph (b)(3) of this section, the total value of
U.S. assets for the taxable year is $2,500, the value of Asset 2.
(iii) Step 2. Under paragraph (c)(1) of this section, the amount
of FC's U.S.-connected liabilities for the taxable year is
determined by multiplying $2,500 (the value of U.S. assets
determined under Step 1) by the actual ratio for the taxable year.
The actual ratio is the average amount of FC's worldwide liabilities
divided by the average value of FC's worldwide assets. The amount of
Liability 1 is $800, and the amount of Liability 2 is $3,200. Thus,
the numerator of the actual ratio is $4,000. The average value of
worldwide assets is $10,000 (Asset 1 + Asset 2 + Asset 3). The
actual ratio, therefore, is 40% ($4,000/$10,000), and the amount of
U.S.-connected liabilities for the taxable year is $1,000 ($2,500
U.S. assets x 40%).
[[Page 9335]]
(iv) Step 3. Because the amount of FC's U.S.-connected
liabilities ($1,000) exceeds the average total amount of U.S. booked
liabilities of B ($800), FC determines its interest expense in
accordance with paragraph (d)(5) of this section by adding the
interest paid or accrued on U.S. booked liabilities, and the
interest expense associated with the excess of its U.S.-connected
liabilities over its average total amount of U.S. booked
liabilities. Under paragraph (d)(5)(ii) of this section, FC
determines the interest rate attributable to its excess U.S.-
connected liabilities by dividing the interest expense paid or
accrued by the average amount of U.S.-dollar denominated
liabilities, which produces an interest rate of 8% ($256/$3200).
Therefore, FC's allocable interest expense is $72 ($56 of interest
expense from U.S. booked liabilities plus $16 ($200 x 8%) of
interest expense attributable to its excess U.S.-connected
liabilities).
Example 2. Computation of interest expense; fixed ratio--(i) The
facts are the same as in Example 1, except that FC makes a fixed
ratio election under paragraph (c)(4) of this section. The
conclusions under Step 1 are the same as in Example 1.
(ii) Step 2. Under paragraph (c)(1) of this section, the amount
of U.S.-connected liabilities for the taxable year is determined by
multiplying $2,500 (the value of U.S. assets determined under Step
1) by the fixed ratio for the taxable year, which, under paragraph
(c)(4) of this section is 50 percent. Thus, the amount of U.S.-
connected liabilities for the taxable year is $1,250 ($2,500 U.S.
assets x 50%).
(iii) Step 3. As in Example 1, the amount of FC's U.S.-connected
liabilities exceed the average total amount of U.S. booked
liabilities of B, requiring FC to determine its interest expense
under paragraph (d)(5) of this section. In this case, however, FC
has excess U.S.-connected liabilities of $450 ($1,250 of U.S.-
connected liabilities--$800 U.S. booked liabilities). FC therefore
has allocable interest expense of $92 ($56 of interest expense from
U.S. booked liabilities plus $36 ($450 x 8%) of interest expense
attributable to its excess U.S.-connected liabilities).
Example 3. Scaling ratio.--(i) Facts. Bank Z, a resident of
country X, has a branch in the United States through which it
conducts its banking business. For the taxable year, Z has U.S.-
connected liabilities, determined under paragraph (c) of this
section, equal to $300. Z, however, has U.S. booked liabilities of
$300 and U500. Therefore, assuming an exchange rate of the U to the
U.S. dollar of 5:1, Z has U.S. booked liabilities of $400 ($300 +
(U500 5)).
(ii) U.S.-connected liabilities. Because Z's U.S. booked
liabilities of $400 exceed its U.S.-connected liabilities by $100,
all of Z's interest expense allocable to its U.S. trade or business
must be scaled back pro-rata. To determine the scaling ratio, Z
divides its U.S.-connected liabilities by its U.S. booked
liabilities, as required by paragraph (d)(4) of this section. Z's
interest expense is scaled back pro rata by the resulting ratio of
\3/4\ ($300 $400). Z's income, expense, gain or loss from
hedging transactions described in paragraph (d)(2)(vi) of this
section must be similarly reduced.
Example 4. [Reserved]
(e) Separate currency pools method--(1) General rule. If a foreign
corporation elects to use the method in this paragraph, its total
interest expense allocable to ECI is the sum of the separate interest
deductions for each of the currencies in which the foreign corporation
has U.S. assets. The separate interest deductions are determined under
the following three-step process.
(i) Determine the value of U.S. assets in each currency pool.
First, the foreign corporation must determine the amount of its U.S.
assets, using the methodology in paragraph (b) of this section, in each
currency pool. The foreign corporation may convert into U.S. dollars
any currency pool in which the foreign corporation holds less than 3%
of its U.S. assets. A transaction (or transactions) that hedges a U.S.
asset shall be taken into account for purposes of determining the
currency denomination and the value of the U.S. asset.
(ii) Determine the U.S.-connected liabilities in each currency
pool. Second, the foreign corporation must determine the amount of its
U.S.-connected liabilities in each currency pool by multiplying the
amount of U.S. assets (as determined under paragraph (b)(3) of this
section) in the currency pool by the foreign corporation's actual ratio
(as determined under paragraph (c)(2) of this section) for the taxable
year or, if the taxpayer has made an election in accordance with
paragraph (c)(4) of this section, by the fixed ratio.
(iii) Determine the interest expense attributable to each currency
pool. Third, the foreign corporation must determine the interest
expense attributable to each currency pool by multiplying the U.S.-
connected liabilities in each currency pool by the prescribed interest
rate as defined in paragraph (e)(2) of this section.
(2) Prescribed interest rate. For each currency pool, the
prescribed interest rate is determined by dividing the total interest
expense that is paid or accrued for the taxable year with respect to
the foreign corporation's worldwide liabilities denominated in that
currency, by the foreign corporation's average worldwide liabilities
(whether interest bearing or not) denominated in that currency. The
interest expense and liabilities are to be stated in that currency.
(3) Hedging transactions. [Reserved]
(4) Election not available if excessive hyperinflationary assets.
The election to use the separate currency pools method of this
paragraph (e) is not available if the value of the foreign
corporation's U.S. assets denominated in a hyperinflationary currency,
as defined in Sec. 1.985-1, exceeds ten percent of the value of the
foreign corporation's total U.S. assets. If a foreign corporation made
a valid election to use the separate currency pools method in a prior
year but no longer qualifies to use such method pursuant to this
paragraph (e)(4), the taxpayer must use the method provided by
paragraphs (b) through (d) of this section.
(5) Examples. The separate currency pools method of this paragraph
(e) is illustrated by the following examples:
Example 1. Separate currency pools method--(i) Facts. (A) Bank
Z, a resident of country X, has a branch in the United States
through which it conducts its banking business. For its 1997 taxable
year, Z has U.S. assets, as defined in paragraph (b) of this
section, that are denominated in U.S. dollars and in U, the country
X currency. Accordingly, Z's U.S. assets are as follows:
------------------------------------------------------------------------
Average
value
------------------------------------------------------------------------
U.S. Dollar Assets........................................... $20,000
U Assets..................................................... U 5,000
------------------------------------------------------------------------
(B) Z's worldwide liabilities are also denominated in U.S.
Dollars and in U. The average interest rates on Z's worldwide
liabilities, including those in the United States, are 6% on its
U.S. dollar liabilities, and 12% on its liabilities denominated in
U. Assume that Z has properly elected to use its actual ratio of 95%
to determine its U.S.-connected liabilities in Step 2, and has also
properly elected to use the separate currency pools method provided
in paragraph (e) of this section.
(ii) Determination of interest expense. Z determines the
interest expense attributable to its U.S.-connected liabilities
according to the steps described below.
(A) First, Z separates its U.S. assets into two currency pools,
one denominated in U.S. dollars ($20,000) and the other denominated
in U (U5,000).
(B) Second, Z multiplies each pool of assets by the applicable
ratio of worldwide liabilities to assets, which in this case is 95%.
Thus, Z has U.S.-connected liabilities of $19,000 ($20,000 x 95%),
and U4750 (U5000 x 95%).
(C) Third, Z calculates its interest expense by multiplying each
pool of its U.S.-connected liabilities by the relevant interest
rates. Accordingly, Z's allocable interest expense for the year is
$1140 ($19,000 x 6%), the sum of the expense associated with its
U.S. dollar liabilities, plus U570 (U4750 x 12%), the interest
expense associated with its liabilities denominated in U. Z must
translate its interest expense denominated in U in accordance with
the rules provided in section 988, and then must determine whether
it is subject to any other provision of the Code that would disallow
or defer any portion of its interest expense so determined.
Example 2. [Reserved]
[[Page 9336]]
(f) Effective date--(1) General rule. This section is effective for
taxable years beginning on or after June 6, 1996.
(2) Special rules for financial products. [Reserved]
Margaret Milner Richardson,
Commissioner of Internal Revenue.
Approved: February 28, 1996.
Leslie Samuels,
Assistant Secretary of the Treasury.
[FR Doc. 96-5262 Filed 3-5-96; 8:45 am]
BILLING CODE 4830-01-U
Complete official Federal Register PDF
FR Doc. 96-5261 Regulations on Effectively Connected Income and the Branch Profits Tax
[Federal Register Volume 61, Number 47 (Friday, March 8, 1996)]
[Rules and Regulations]
[Pages 9336-9343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5261]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
26 CFR Parts 1 and 602
[TD 8657]
RIN 1545-AQ58
Regulations on Effectively Connected Income and the Branch
Profits Tax
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final Income Tax Regulations relating
to the determination of effectively connected income under section 864
and final and temporary Income Tax Regulations relating to the branch
profits tax and branch-level interest tax under section 884 of the
Internal Revenue Code of 1986 (Code). Section 884 was added to the Code
by section 1241 of the Tax Reform Act of 1986. This document also
contains conforming changes to sections 861, 871 and 897.
EFFECTIVE DATE: June 6, 1996.
FOR FURTHER INFORMATION CONTACT: Gwendolyn A. Stanley, (202) 622- 3860
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collections of information contained in these final regulations
have been reviewed and approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under
control number 1545-1070.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number.
The estimated annual burden per respondent is .25 hours.
Comments concerning the accuracy of this burden estimate and
suggestions for reducing this burden should be sent to the Internal
Revenue Service, Attn: IRS Reports Clearance Officer, T:FP, Washington,
DC 20224, and to the Office of Management and Budget, Attn: Desk
Officer for the Department of the Treasury, Office of Information and
Regulatory Affairs, Washington, DC 20503.
Books or records relating to this collection of information must be
retained as long as their contents may be material in the
administration of any internal revenue law. Generally, tax returns and
tax information are confidential, as required by 26 U.S.C. 6103.
Background
On September 2, 1988, proposed and temporary regulations (TD 8223
and INTL-934-86 [1988-2 C.B. 825]) under section 884 were published in
the Federal Register (53 FR 34045). Written comments were received on
the proposed amendments. On September 11, 1992, temporary regulations
under Sec. 1.884-2T were amended and final regulations (1992 final
regulations) (TD 8432 [1992-2 C.B. 157]) under section 884 of the Code
were published in the Federal Register (57 FR 41644). Proposed
amendments (1992 proposed regulations) (INTL-0003-92 [1992-2 C.B. 752])
to the Income Tax Regulations (26 CFR part 1) under sections 864 and
884 of the Internal Revenue Code were published in the Federal Register
(57 FR 41707) on the same day. Written comments were received on the
proposed amendments. After consideration of all the comments,
Sec. 1.884-2(a)(2)(ii) and Sec. 1.884-2(c)(2)(iii) of the 1988 proposed
regulations and the 1992 proposed regulations are adopted as final
regulations as amended by this Treasury decision. The revisions and
conforming changes are discussed below.
Explanation of the Provisions
I. Section 864 Stock Rule
The proposed regulations under section 864 provided that stock of a
corporation shall not be treated as an asset used in, or held for use
in, the conduct of a U.S. trade or business. Accordingly, the
regulations proposed to delete the example of stock acquired and held
to assure a constant source of supply as an asset that satisfies the
asset-use test under Sec. 1.864-4(c)(2). Commenters criticized this
rule and cited to the legislative history to the Foreign Investors Tax
Act of 1966 as contemplating that stock may satisfy the asset-use test.
The IRS and Treasury continue to believe, however, that stock does not
satisfy the asset-use test. Therefore Sec. 1.864-4(c)(2)(iii) adopts
the rule contained in the proposed regulations.
In response to our request for comments on whether insurance
companies require an exception to the stock rule for their portfolio
stock, one commenter suggested that foreign life insurance companies be
permitted to refer to the National Association of Insurance
Commissioners (NAIC) Annual Statement to determine whether their assets
are used in, or held for use in, the conduct of a U.S. trade or
business. The IRS and Treasury will continue to consider whether
modifications to the regulations under section 864 are appropriate for
foreign insurance companies and reserve on the treatment of stock held
by a foreign insurance company.
Conforming changes have been made to regulations under section 864,
as well as regulations under sections 871 and 897 to reflect the
clarification of Sec. 1.864-4(c)(2). The effective date of the changes
to sections 871 and 897 corresponds to the effective date of the
changes to section 864.
II. Branch Profits Tax
A. Interest in a partnership. Currently, a foreign corporation
engaged in a U.S. trade or business through a partnership applies
different rules to determine its U.S. assets depending on whether the
determination is for purposes of section 884 or Sec. 1.882-5. For
purposes of computing its interest expense under Sec. 1.882-5, the
rules of Sec. 1.861-9T(e)(7) apply. Therefore a foreign corporation
takes into account either its pro rata share of partnership assets and
liabilities or applies the rules of Sec. 1.882-5 as if the partnership
were a foreign corporation, depending on the nature of its interest in
the partnership. In contrast, for purposes of section 884, a foreign
corporation generally takes into account its adjusted basis in its
partnership interest as a starting point for determining its U.S.
assets.
Final regulations under section 882 published elsewhere in this
issue of the Federal Register remove the temporary regulations under
Sec. 1.861-9T(e)(7)(i). These final regulations provide a new U.S.
asset rule for partnership interests for purposes of determining the
U.S. assets of a foreign corporate partner under sections 882 and 884.
The final regulations under Sec. 1.882-5 contain a corresponding rule
to determine the value of a partnership interest held by a foreign
corporation for purposes of computing its worldwide assets.
In the event that a partnership derives any income that is not
effectively connected with a U.S. trade or business, or otherwise holds
non-U.S. assets, the rules in Sec. 1.884-1(d)(3) continue to provide a
rule that allocates the basis in
[[Page 9337]]
the partnership interest between U.S. and non-U.S. assets. However, the
allocation rule is more flexible than the rule contained in either the
1992 final regulations or the proposed regulations under section 884.
The rule allows a foreign corporation to use either an income method or
an asset method to determine the proportionate share of its partnership
interest that is a U.S. asset, regardless of its ownership interest in
the partnership. This is a change from the previous 1992 final
regulations, which required all foreign corporate partners to use an
income method, and from the 1992 proposed regulations, which required
more than 10% partners to use the asset method.
Based on commenters' suggestions, other clarifying changes have
been made to the asset method. For example, the final regulations
clarify that the adjusted bases of partnership assets reflect any
adjustment under section 754 with respect to a foreign corporate
partner.
B. Interest in a trust or estate. The rules applicable to interests
in a trust or estate in Sec. 1.884-1(d)(4) are finalized as proposed.
C. Nonrecourse indebtedness and integrated financial transactions.
Because the final regulations under Sec. 1.882-5 incorporate the
special allocation rules of Sec. 1.861-10T, certain changes to the
final regulations under Sec. 1.884-1(e) are needed to maintain the
proper U.S. net equity of a foreign corporation that elects to directly
allocate any portion of its interest expense. These regulations include
a conforming change that provides that liabilities giving rise to such
interest will be considered U.S. liabilities for purposes of section
884, notwithstanding that such liabilities are not taken into account
in Step 2 of Sec. 1.882-5.
In addition, a new provision has been added in Sec. 1.884-4(b) so
that branch interest continues to include interest paid with respect to
liabilities that are subject to the special allocation rules,
notwithstanding that such liabilities are not considered U.S. booked
liabilities for purposes of Step 3 of the Sec. 1.882-5 calculation.
D. Structural changes to conform branch interest rules to final
regulations under Sec. 1.882-5. These regulations adopt the changes
made by the 1992 proposed regulations under Sec. 1.884-4(b), and thus
incorporate the rules in Sec. 1.882-5(d)(2) (relating to U.S. booked
liabilities) in defining the term branch interest of a foreign
corporation. Although certain changes were made to the definition of
U.S. booked liabilities in the final regulations under Sec. 1.882- 5,
the manner in which a foreign corporation computes its branch interest
and excess interest remains substantially unchanged.
E. Excess interest--definition of a foreign bank. A foreign
corporation that is a foreign bank may treat a minimum of 85% of its
excess interest as interest on deposits, regardless of its actual ratio
of deposits to interest bearing liabilities. The IRS and Treasury
believe this rule should be applicable only to a foreign bank engaging
in substantial deposit-taking activities, taking into account its
activities in the United States as well as other countries in which it
operates. The definition used in the 1992 final regulations did not
clearly convey this limitation. Thus, Sec. 1.884-4(a)(2)(iii) now
defines a foreign bank by reference to section 585(a)(2)(B) of the
Code, but also requires that a substantial part of its business
consists of receiving deposits and making loans and discounts.
III. Complete termination rules
The rules in Sec. 1.884-2T(a)(5), applicable to a foreign
corporation whose beneficial interest in a trust terminates, are
finalized as proposed by the 1992 regulations. In addition the waiver
provisions contained in Sec. 1.884-2 of the 1988 proposed regulations
are finalized as amended by this Treasury decision.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in EO 12866. Therefore, a
regulatory assessment is not required. It has also been determined that
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5)
and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to
these regulations, and, therefore, a Regulatory Flexibility Analysis is
not required. Pursuant to section 7805(f) of the Internal Revenue Code,
the notice of proposed rulemaking preceding these regulations was
submitted to the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business.
Drafting Information
The principal author of these regulations is Gwendolyn A. Stanley,
Office of Associate Chief Counsel (International), within the Office of
Chief Counsel, IRS. However, other personnel from the IRS and Treasury
Department participated in their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 602 are amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 is amended by adding
an entry in numerical order to read as follows:
Authority: 26 U.S.C. 7805.
Section 1.884-2 also issued under 26 U.S.C. 884(g).
Par. 2. Section 1.864-4 is amended as follows:
1. The third sentence in paragraph (c)(2)(i) is revised.
2. Paragraph (c)(2)(ii) is revised.
3. Paragraphs (c)(2)(iii) and (c)(2)(iv) are redesignated as
(c)(2)(iv) and (c)(2)(v) respectively.
4. New paragraph (c)(2)(iii) is added.
5. Newly designated paragraph (c)(2)(v) is amended by:
a. Revising the introductory text.
b. Removing Example (2) through Example (4).
c. Redesignating ``Example (5)'' as ``Example (2)''.
d. Amending newly designated Example (2) by:
i. Revising the fifth and sixth sentences.
ii. Removing the date ``1968'' and adding the date ``1997'' where
it appears in the second, third, and eighth sentences.
6. The last sentence of paragraph (c)(6)(i) is removed.
7. Paragraph (c)(7) is added.
The additions and revisions read as follows:
Sec. 1.864-4 U.S. source income effectively connected with U.S.
business.
* * * * *
(c) * * *
(2) * * *
(i) * * * The asset-use test is of primary significance where, for
example, interest income is derived from sources within the United
States by a nonresident alien individual or foreign corporation that is
engaged in the business of manufacturing or selling goods in the United
States. * * *
(ii) Cases where applicable. Ordinarily, an asset shall be treated
as used in, or held for use in, the conduct
[[Page 9338]]
of a trade or business in the United States if the asset is--
(a) Held for the principal purpose of promoting the present conduct
of the trade or business in the United States; or
(b) Acquired and held in the ordinary course of the trade or
business conducted in the United States, as, for example, in the case
of an account or note receivable arising from that trade or business;
or
(c) Otherwise held in a direct relationship to the trade or
business conducted in the United States, as determined under paragraph
(c)(2)(iv) of this section.
(iii) Application of asset-use test to stock--(a) In general.
Except as provided in paragraph (c)(2)(iii)(b) of this section, stock
of a corporation (whether domestic or foreign) shall not be treated as
an asset used in, or held for use in, the conduct of a trade or
business in the United States.
(b) Stock held by foreign insurance companies. [Reserved]
* * * * *
(v) Illustration. The application of paragraph (iv) may be
illustrated by the following examples:
* * * * *
Example (2). * * * During 1997, the branch office derives from
sources within the United States interest on these securities, and
gains and losses resulting from the sale or exchange of such
securities. Since the securities were acquired with amounts
generated by the business conducted in the United States, the
interest is retained in that business, and the portfolio is managed
by personnel actively involved in the conduct of that business, the
securities are presumed under paragraph (c)(2)(iv)(b) of this
section to be held in a direct relationship to that business. * * *
* * * * *
(7) Effective date. Paragraphs (c)(2) and (c)(6)(i) of this section
are effective for taxable years beginning on or after June 6, 1996.
* * * * *
Par. 3. In Sec. 1.871-12, paragraph (d) is amended by:
1. Revising the paragraph heading and introductory text.
2. Removing Example 1.
3. Removing the designation ``(2)'' in Example (2).
The revision reads as follows:
Sec. 1.871-12 Determination of tax on treaty income.
* * * * *
(d) Illustration. The application of this section may be
illustrated by the following example:
* * * * *
Par. 4. Section 1.884-0(b) is amended by revising the entries for
Secs. 1.884-1(d)(4), 1.884-2T(a)(5), 1.884-4(b)(1), and 1.884-4(b)(2)
and adding entries for Secs. 1.884-1(i)(4), 1.884-2T(a)(6), 1.884-
4(e)(1) and 1.884-4(e)(2) to read as follows:
Sec. 1.884-0 Overview of regulation provisions for section 884.
* * * * *
(b) * * *
Sec. 1.884-1 Branch profits tax.
* * * * *
(d) * * *
(4) Interest in a trust or estate.
* * * * *
(i) * * *
(4) Special rule for certain U.S. assets and liabilities.
Sec. 1.884-2T Special Rules for termination or incorporation of a
U.S. trade or business or liquidation or reorganization of a
foreign corporation or its domestic subsidiary (temporary).
(a) * * *
(5) Special rule if a foreign corporation terminates an interest
in a trust. [Reserved]
(6) Coordination with second-level withholding tax.
* * * * *
Sec. 1.884-4 Branch-level interest tax.
* * * * *
(b) * * *
(1) Definition of branch interest.
(2) [Reserved]
(3) * * *
(4) [Reserved]
* * * * *
(e) * * *
(1) General rule.
(2) Special rule.
* * * * *
Par. 5. Section 1.884-1 is amended as follows:
1. Paragraph (c)(2) is amended as follows:
a. The text of paragraph (c)(2) is redesignated as paragraph
(c)(2)(i) and a paragraph heading for (c)(2)(i) is added.
b. New paragraph (c)(2)(ii) is added.
2. In paragraph (d)(2)(xi), Example 2 through Example 4 are
redesignated Example 3 through Example 5, respectively, and new Example
2 is added.
3. Paragraph (d)(3) is revised.
4. The text of paragraph (d)(4) is added.
5. Paragraph (d)(5)(iii) is revised.
6. In Paragraph (d)(6)(iii) the reference to ``(d)(3)(iv)'' is
removed and ``(d)(3)(vi)'' is added in its place.
7. Paragraph (d)(6)(v) is redesignated as paragraph (d)(6)(vi).
8. New paragraph (d)(6)(v) is added and reserved.
9. Paragraph (e)(2) is amended as follows:
a. The paragraph heading and text of paragraph (e)(2) are
redesignated as paragraph (e)(2)(i).
b. In newly designated paragraph (e)(2)(i) the language ``(e)(2)''
is removed and ``(e)(2)(i)'' is added in its place.
c. A new paragraph heading for paragraph (e)(2) is added.
d. Paragraph (e)(2)(ii) is added.
10. Paragraph (e)(3)(ii) is revised.
11. Paragraph (e)(5) is amended as follows:
a. The second sentence in Example 1 is revised.
b. In the list below, for each sentence in Example 1 indicated in
the left column, remove the language in the middle column and add the
language in the right column:
------------------------------------------------------------------------
Sentence Remove Add
------------------------------------------------------------------------
First and third sentence........ 1993.............. 1997.
First sentence.................. Sec. 1.882-5(b).. Sec. 1.882-5(c).
Fourth and fifth sentence....... Sec. 1.882-5(b)(2 Sec. 1.882-5(c)(2
). )
Seventh sentence................ Amount............ Value.
Seventh sentence................ Sec. 1.882-5(b)(1 Sec. 1.882-5(b)(2
). ).
------------------------------------------------------------------------
c. The second sentence in paragraph (i) of Example 2 is revised.
d. In the list below, for each paragraph in Example 2 indicated in
the left column, remove the language in the middle column and add the
language in the right column:
------------------------------------------------------------------------
Paragraph Remove Add
------------------------------------------------------------------------
(i) First sentence.................................. 1993 1997
(i) Third and fifth sentence........................ 1994 1998
(ii) First, second, and third sentence.............. 1995 1999
(ii) Second sentence................................ 1994 1998
(iii) First sentence................................ 1995 1999
(iii) Last sentence................................. 1994 1998
------------------------------------------------------------------------
12. Paragraph (i)(4) is added.
The additions and revisions read as follows:
Sec. 1.884-1 Branch profits tax.
* * * * *
(c) * * *
(2) * * * (i) In general. * * *
(ii) Bad debt reserves. A bank described in section 585(a)(2)(B)
(without regard to the second sentence thereof) that uses the reserve
method of accounting for bad debts for U.S. federal income tax purposes
shall decrease the amount of loans that qualify as U.S. assets by any
reserve that is permitted under section 585.
(d) * * *
[[Page 9339]]
(2) * * *
(xi) * * *
Example 2. U.S. real property interest connected to a U.S.
business. FC is a foreign corporation that is a bank, within the
meaning of section 585(a)(2)(B) (without regard to the second
sentence thereof), and is engaged in the business of taking deposits
and making loans through its branch in the United States. In 1996,
FC makes a loan in the ordinary course of its lending business in
the United States, securing the loan with a mortgage on the U.S.
real property being financed by the borrower. In 1997, after the
borrower has defaulted on the loan, FC takes title to the real
property that secures the loan. On December 31, 1997, FC continues
to hold the property, classifying it on its financial statement as
Other Real Estate Owned. Because all income and gain from the
property would be ECI to FC under the principles of section
864(c)(2), the U.S. real property constitutes a U.S. asset within
the meaning of paragraph (d) of this section.
* * * * *
(3) Interest in a partnership--(i) In general. A foreign
corporation that is a partner in a partnership must take into account
its interest in the partnership (and not the partnership assets) in
determining its U.S. assets. For purposes of determining the proportion
of the partnership interest that is a U.S. asset, a foreign corporation
may elect to use either the asset method described in paragraph
(d)(3)(ii) of this section or the income method described in paragraph
(d)(3)(iii) of this section.
(ii) Asset method--(A) In general. A partner's interest in a
partnership shall be treated as a U.S. asset in the same proportion
that the sum of the partner's proportionate share of the adjusted bases
of all partnership assets as of the determination date, to the extent
that the assets would be treated as U.S. assets if the partnership were
a foreign corporation, bears to the sum of the partner's proportionate
share of the adjusted bases of all partnership assets as of the
determination date. Generally a partner's proportionate share of a
partnership asset is the same as its proportionate share of all items
of income, gain, loss, and deduction that may be generated by the
asset.
(B) Non-uniform proportionate shares. If a partner's proportionate
share of all items of income, gain, loss, and deduction that may be
generated by a single asset of the partnership throughout the period
that includes the taxable year of the partner is not uniform, then, for
purposes of determining the partner's proportionate share of the
adjusted basis of that asset, a partner must take into account the
portion of the adjusted basis of the asset that reflects the partner's
economic interest in that asset. A partner's economic interest in an
asset of the partnership must be determined by applying the following
presumptions. These presumptions may, however, be rebutted if the
partner or the Internal Revenue Service shows that the presumption is
inconsistent with the partner's true economic interest in the asset
during the corporation's taxable year.
(1) If a partnership asset ordinarily generates directly
identifiable income, a partner's economic interest in the asset is
determined by reference to its proportionate share of income that may
be generated by the asset for the partnership's taxable year ending
with or within the partner's taxable year.
(2) If a partnership asset ordinarily generates current deductions
and ordinarily generates no directly identifiable income, for example
because the asset contributes equally to the generation of all the
income of the partnership (such as an asset used in general and
administrative functions), a partner's economic interest in the asset
is determined by reference to its proportionate share of the total
deductions that may be generated by the asset for the partnership's
taxable year ending with or within the partner's taxable year.
(3) For other partnership assets not described in paragraph
(d)(3)(ii)(B) (1) or (2) of this section, a partner's economic interest
in the asset is determined by reference to its proportionate share of
the total gain or loss to which it would be entitled if the asset were
sold at a gain or loss in the partnership's taxable year ending with or
within the partner's taxable year.
(C) Partnership election under section 754. If a partnership files
an election in accordance with section 754, then for purposes of this
paragraph (d)(3)(ii), the basis of partnership property shall reflect
adjustments made pursuant to sections 734 (relating to distributions of
property to a partner) and 743 (relating to the transfer of an interest
in a partnership). However, adjustments made pursuant to section 743
may be made with respect to a transferee partner only.
(iii) Income method. Under the income method, a partner's interest
in a partnership shall be treated as a U.S. asset in the same
proportion that its distributive share of partnership ECI for the
partnership's taxable year that ends with or within the partner's
taxable year bears to its distributive share of all partnership income
for that taxable year.
(iv) Manner of election--(A) In general. In determining the
proportion of a foreign corporation's interest in a partnership that is
a U.S. asset, a foreign corporation must elect one of the methods
described in paragraph (d)(3) of this section on a timely filed return
for the first taxable year beginning on or after the effective date of
this section. An amended return does not qualify for this purpose, nor
shall the provisions of Sec. 301.9100-1 of this chapter and any
guidance promulgated thereunder apply. An election shall be made by the
foreign corporation calculating its U.S. assets in accordance with the
method elected. An elected method must be used for a minimum period of
five years before the foreign corporation may elect a different method.
To change an election before the end of the requisite five-year period,
a foreign corporation must obtain the consent of the Commissioner or
her delegate. The Commissioner or her delegate will generally consent
to a foreign corporation's request to change its election only in rare
and unusual circumstances. A foreign corporation that is a partner in
more than one partnership is not required to elect to use the same
method for each partnership interest.
(B) Elections with tiered partnerships. If a foreign corporation
elects to use the asset method with respect to an interest in a
partnership, and that partnership is a partner in a lower-tier
partnership, the foreign corporation may apply either the asset method
or the income method to determine the proportion of the upper-tier
partnership's interest in the lower-tier partnership that is a U.S.
asset.
(v) Failure to make proper election. If a foreign corporation, for
any reason, fails to make an election to use one of the methods
required by paragraph (d)(3) of this section in a timely fashion, the
district director or the Assistant Commissioner (International) may
make the election on behalf of the foreign corporation and such
election shall be binding as if made by that corporation.
(vi) Special rule for determining a partner's adjusted basis in a
partnership interest. For purposes of paragraphs (d)(3) and (6) of this
section, a partner's adjusted basis in a partnership interest shall be
the partner's basis in such interest (determined under section 705)
reduced by the partner's share of the liabilities of the partnership
determined under section 752 and increased by a proportionate share of
each liability of the partnership equal to the partner's proportionate
share of the expense, for income tax purposes, attributable to such
liability for the taxable year. A partner's adjusted basis in a
partnership interest cannot be less than zero.
(vii) E&P basis of a partnership interest. See paragraph
(d)(6)(iii) of this section for special rules governing the
[[Page 9340]]
calculation of a foreign corporation's E&P basis in a partnership
interest.
(viii) The application of this paragraph (d)(3) is illustrated by
the following examples:
Example 1. General rule--(i) Facts. Foreign corporation, FC, is
a partner in partnership ABC, which is engaged in a trade or
business within the United States. FC and ABC are both calendar year
taxpayers. ABC owns and manages two office buildings located in the
United States, each with an adjusted basis of $50. ABC also owns a
non-U.S. asset with an adjusted basis of $100. ABC has no
liabilities. Under the partnership agreement, FC has a 50 percent
interest in the capital of ABC and a 50 percent interest in all
items of income, gain, loss, and deduction that may be generated by
the partnership's assets. FC's adjusted basis in ABC is $100. In
determining the proportion of its interest in ABC that is a U.S.
asset, FC elects to use the asset method described in paragraph
(d)(3)(ii) of this section.
(ii) Analysis. FC's interest in ABC is treated as a U.S. asset
in the same proportion that the sum of FC's proportionate share of
the adjusted bases of all ABC's U.S. assets (50% of $100), bears to
the sum of FC's proportionate share of the adjusted bases of all of
ABC's assets (50% of $200). Under the asset method, the amount of
FC's interest in ABC that is a U.S. asset is $50 ($100 x $50/
$100).
Example 2. Special allocation of gain with respect to real
property--(i) Facts. The facts are the same as in Example 1, except
that under the partnership agreement, FC is allocated 20 percent of
the income from the partnership property but 80 percent of the gain
on disposition of the partnership property.
(ii) Analysis. Assuming that the buildings ordinarily generate
directly identifiable income, there is a rebuttable presumption
under paragraph (d)(3)(ii)(B)(1) of this section that FC's
proportionate share of the adjusted basis of the buildings is FC's
proportionate share of the income generated by the buildings (20%)
rather than the total gain that it would be entitled to under the
partnership agreement (80%) if the buildings were sold at a gain on
the determination date. Thus, the sum of FC's proportionate share of
the adjusted bases in ABC's U.S. assets (the buildings) is presumed
to be $20 [(20% of $50) + (20% of $50)]. Assuming that the non-U.S.
asset is not income-producing and does not generate current
deductions, there is a rebuttable presumption under paragraph
(d)(3)(ii)(B)(3) of this section that FC's proportionate share of
the adjusted basis of that asset is FC's interest in the gain on the
disposition of the asset (80%) rather than its proportionate share
of the income that may be generated by the asset (20%). Thus, FC's
proportionate share of the adjusted basis of ABC's non-U.S. asset is
presumed to be $80 (80% of $100). FC's proportionate share of the
adjusted bases of all of the assets of ABC is $100 ($20 + $80). The
amount of FC's interest in ABC that is a U.S. asset is $20 ($100 x
$20/$100).
Example 3. Tiered partnerships (asset method)--(i) Facts. The
facts are the same as in Example 1, except that FC's adjusted basis
in ABC is $175 and ABC also has a 50 percent interest in the capital
of partnership DEF. DEF owns and operates a commercial shopping
center in the United States with an adjusted basis of $200 and also
owns non-U.S. assets with an adjusted basis of $100. DEF has no
liabilities. ABC's adjusted basis in its interest in DEF is $150 and
ABC has a 50 percent interest in all the items of income, gain, loss
and deduction that may be generated by the assets of DEF.
(ii) Analysis. Because FC has elected to use the asset method
described in paragraph (d)(3)(ii) of this section, it must determine
what proportion of ABC's partnership interest in DEF is a U.S.
asset. As permitted by paragraph (d)(3)(iv)(B) of this section, FC
also elects to use the asset method with respect to ABC's interest
in DEF. ABC's interest in DEF is treated as a U.S. asset in the same
proportion that the sum of ABC's proportionate share of the adjusted
bases of all DEF's U.S. assets (50% of $200), bears to the sum of
ABC's proportionate share of the adjusted bases of all of DEF's
assets (50% of $300). Thus, the amount of ABC's interest in DEF that
is a U.S. asset is $100 ($150 x $100/$150). FC must then apply the
rules of paragraph (d)(3)(ii) of this section to all the assets of
ABC, including ABC's interest in DEF that is treated in part as a
U.S. asset ($100) and in part as a non-U.S. asset ($50). FC's
interest in ABC is treated as a U.S. asset in the same proportion
that the sum of FC's proportionate share of the adjusted bases of
the U.S. assets of ABC (including ABC's interest in DEF), bears to
the sum of FC's proportionate share of the adjusted bases of all
ABC's assets (including ABC's interest in DEF). Thus, the amount of
FC's interest in ABC that is a U.S. asset is $100 (FC's adjusted
basis in ABC ($175) multiplied by FC's proportionate share of the
sum of the adjusted bases of ABC's U.S. assets ($100)) over FC's
proportionate share of the sum of the adjusted bases of ABC's assets
($175)).
Example 4. Tiered partnerships (income method)--(i) Facts. The
facts are the same as in Example 3, except that FC has elected to
use the income method described in paragraph (d)(3)(iii) of this
section to determine the proportion of its interest in ABC that is a
U.S. asset. The two office buildings located in the United States
generate $60 of income that is ECI for the taxable year. The non-
U.S. asset is not-income producing. In addition ABC's distributive
share of income from DEF consists of $40 of income that is ECI and
$140 of income that is not ECI.
(ii) Analysis. Because FC has elected to use the income method
it does need to determine what proportion of ABC's partnership
interest in DEF is a U.S. asset. FC's interest in ABC is treated as
a U.S. asset in the same proportion that its distributive share of
ABC's income for the taxable year that is ECI ($50) ($30 earned
directly by ABC + $20 distributive share from DEF) bears to its
distributive share of all ABC's income for the taxable year ($55)
($30 earned directly by ABC + $25 distributive share from DEF).
Thus, FC's interest in ABC that is a U.S. asset is $159 ($175 x $50/
$55).
(4) Interest in a trust or estate--(i) Estates and non-grantor
trusts. A foreign corporation that is a beneficiary of a trust or
estate shall not be treated as having a U.S. asset by virtue of its
interest in the trust or estate.
(ii) Grantor trusts. If, under sections 671 through 678, a foreign
corporation is treated as owning a portion of a trust that includes all
the income and gain that may be generated by a trust asset (or pro rata
portion of a trust asset), the foreign corporation will be treated as
owning the trust asset (or pro rata portion thereof) for purposes of
determining its U.S. assets under this section.
(5) * * *
(iii) Interbranch transactions. A transaction of any type between
separate offices or branches of the same taxpayer does not create a
U.S. asset.
(6) * * *
(v) Computation of E&P basis of financial instruments. [Reserved]
* * * * *
(e) * * *
(2) Additional liabilities--(i) * * *
(ii) Liabilities described in Sec. 1.882-5(a)(1)(ii). The amount of
liabilities determined under this paragraph (e)(2)(ii) is the amount
(as of the determination date) of liabilities described in Sec. 1.882-
5(a)(1)(ii) (relating to liabilities giving rise to interest expense
that is directly allocated to income from a U.S. asset).
(3) * * *
(ii) Limitation. For any taxable year, a foreign corporation may
elect to reduce the amount of its liabilities determined under
paragraph (e)(1) of this section by an amount that does not exceed the
excess, if any, of the amount of liabilities in paragraph (e)(1) of
this section over the amount, as of the determination date, of U.S.
booked liabilities (determined under Sec. 1.882-5(d)(2)) and
liabilities described in paragraph (e)(2) of this section.
* * * * *
(5) * * *
Example 1. * * * For purposes of computing its U.S.- connected
liabilities under Sec. 1.882-5(c), A must determine the average
total value of its assets that are U.S. assets. * * *
Example 2. * * * A has $800 of liabilities under paragraph
(e)(1) of this section and $300 of liabilities properly reflected on
the books of its U.S. trade or business under Sec. 1.882-5(d)(2). *
* *
* * * * *
(i) * * *
(4) Special rules for certain U.S. assets and liabilities.
Paragraphs (c)(2) (i) and (ii), (d)(3), (d)(4), (d)(5)(iii),
(d)(6)(iii), (d)(6)(vi), (e)(2), and (e)(3)(ii),
[[Page 9341]]
of this section are effective for taxable years beginning on or after
June 6, 1996.
Par. 6. Sec. 1.884-2 is added to read as follows:
Sec. 1.884-2 Special rules for termination or incorporation of a U.S.
trade or business or liquidation or reorganization of a foreign
corporation or its domestic subsidiary.
(a) through (a)(2)(i) [Reserved] For further information, see
Sec. 1.884-2T(a) through (a)(2)(ii).
(a)(2)(ii) Waiver of period of limitations. The waiver referred to
in Sec. 1.884-2T(a)(2)(i)(D) shall be executed on Form 8848, or
substitute form, and shall extend the period for assessment of the
branch profits tax for the year of complete termination to a date not
earlier than the close of the sixth taxable year following that taxable
year. This form shall include such information as is required by the
form and accompanying instructions. The waiver must be signed by the
person authorized to sign the income tax returns for the foreign
corporation (including an agent authorized to do so under a general or
specific power of attorney). The waiver must be filed on or before the
date (including extensions) prescribed for filing the foreign
corporation's income tax return for the year of complete termination.
With respect to a complete termination occurring in a taxable year
ending prior to June 6, 1996 a foreign corporation may also satisfy the
requirements of this paragraph (a)(2)(ii) by applying Sec. 1.884-
2T(a)(2)(ii) of the temporary regulations (as contained in the CFR
edition revised as of April 1, 1995). A properly executed Form 8848,
substitute form, or other form of waiver authorized by this paragraph
(a)(2)(ii) shall be deemed to be consented to and signed by a Service
Center Director or the Assistant Commissioner (International) for
purposes of Sec. 301.6501(c)-1(d) of this chapter.
(a)(3) through (a)(4) [Reserved] For further information, see
Sec. 1.884-2T(a)(3) through (a)(4).
(a)(5) Special rule if a foreign corporation terminates an interest
in a trust. A foreign corporation whose beneficial interest in a trust
terminates (by disposition or otherwise) in any taxable year shall be
subject to the branch profits tax on ECEP attributable to amounts
(including distributions of accumulated income or gain) treated as ECI
to such beneficiary in such taxable year notwithstanding any other
provision of Sec. 1.884-2T(a).
(b) through (c)(2)(ii) [Reserved] For further information, see
Sec. 1.884-2T (b) through (c)(2)(ii).
(c)(2)(iii) Waiver of period of limitations and transferee
agreement. In the case of a transferee that is a domestic corporation,
the provisions of Sec. 1.884-2T(c)(2)(i) shall not apply unless, as
part of the section 381(a) transaction, the transferee executes a Form
2045 (Transferee Agreement) and a waiver of period of limitations as
described in this paragraph (c)(2)(iii), and files both documents with
its timely filed (including extensions) income tax return for the
taxable year in which the section 381(a) transaction occurs. The waiver
shall be executed on Form 8848, or substitute form, and shall extend
the period for assessment of any additional branch profits tax for the
taxable year in which the section 381(a) transaction occurs to a date
not earlier than the close of the sixth taxable year following the
taxable year in which such transaction occurs. This form shall include
such information as is required by the form and accompanying
instructions. The waiver must be signed by the person authorized to
sign Form 2045. With respect to a complete termination occurring in a
taxable year ending prior to June 6, 1996 a foreign corporation may
also satisfy the requirements of this paragraph (c)(2)(iii) by applying
Sec. 1.884-2T(c)(2)(iii) of the temporary regulations (as contained in
the CFR edition revised as of April 1, 1995). A properly executed Form
8848, substitute form, or other form of waiver authorized by this
paragraph (c)(2)(iii) shall be deemed to be consented to and signed by
a Service Center Director or the Assistant Commissioner (International)
for purposes of Sec. 301.6501(c)-1(d) of this chapter.
(c)(3) through (f) [Reserved] For further information, see
Sec. 1.884-2T (c)(3) through (f).
(g) Effective dates. Paragraphs (a)(2)(ii) and (c)(2)(iii) of this
section are effective for taxable years beginning after December 31,
1986. Paragraph (a)(5) of this section is effective for taxable years
beginning on or after June 6, 1996.
Par. 7. Section 1.884-2T is amended as follows:
1. Paragraph (a)(2)(ii) is revised.
2. Paragraph (a)(5) is redesignated as (a)(6).
3. New paragraph (a)(5) is added.
4. Paragraph (c)(2)(iii) is revised.
The additions and revisions read as follows:
Sec. 1.884-2T Special rules for termination or incorporation of a U.S.
trade or business or liquidation or reorganization of a foreign
corporation or its domestic subsidiary (Temporary).
(a) * * *
(2) * * *
(ii) Waiver of period of limitations. [Reserved] See Sec. 1.884-
2(a)(2)(ii) for rules relating to this paragraph.
* * * * *
(5) Special rule if a foreign corporation terminates an interest in
a trust. [Reserved] See Sec. 1.884-2(a)(5) for rules relating to this
paragraph.
* * * * *
(c) * * *
(2) * * *
(iii) Waiver of period of limitations and transferee agreement.
[Reserved] See Sec. 1.884-2(c)(2)(iii) for rules relating to this
paragraph.
Par. 8. Section 1.884-4 is amended as follows:
1. In paragraph (a)(1), the fifth sentence is revised.
2. Paragraph (a)(2)(iii) is revised.
3. Paragraph (b)(1) is removed and paragraph (b)(2) is revised and
reserved.
4. Paragraph (b)(3) is amended by:
a. Removing the reference ``(b)(1)(v)'' and adding the language
``(b)(1)(ii)'' in the following:
i. Paragraph (b)(3)(i), first sentence.
ii. Paragraph (b)(3)(ii), introductory text.
iii. Paragraph (b)(3)(iii), heading and introductory text.
b. Adding a sentence at the end of paragraph (b)(3)(i).
5. Paragraph (b)(4) is removed and reserved.
6. In the list below, for each paragraph indicated in the left
column, remove the language in the middle column and add the language
in the right column:
------------------------------------------------------------------------
Paragraph Remove Add
------------------------------------------------------------------------
(a)(2)(i)(A)................ Apportioned......... Allocated or
apportioned.
(a)(4) Example 1 first (b)(2).............. (a)(2)(iii).
sentence.
(a)(4) Example 1 first and Apportioned......... Allocated or
seventh sentence. apportioned.
(a)(4) Example 1 first, 1993................ 1997.
second, and eighth sentence.
(a)(4) Example 2 first (b)(2).............. (a)(2)(iii).
sentence.
[[Page 9342]]
(a)(4) Example 2 second and 1993................ 1997.
third sentence.
(b)(5)(i) last sentence..... Apportioned......... Allocated or
apportioned.
(b)(5)(ii) Example first, Apportioned......... Allocated or
fifth, and last sentence. apportioned.
(b)(6) paragraph heading.... Apportioned......... Allocated or
apportioned.
(b)(6)(i) first and last Apportioned......... Allocated or
sentence. apportioned.
(b)(6)(i) second sentence... (b)(1)(v)........... (b)(1)(ii).
(b)(6)(ii) first and second (b)(1)(v)........... (b)(1)(ii).
sentence.
(b)(6)(ii) first and second Paragraphs (b)(1)(i) Paragraph (b)(1)(i).
sentence. through (b)(i)(iv).
(b)(6)(iv) Example 1 1993................ 1997.
introductory text,
paragraphs (i), (iii), and
(iv), flush language first,
fourth, and seventh
sentence.
(b)(6)(iv) Example 1 1992................ 1996.
paragraph (ii).
(b)(6)(iv) Example 1 flush (b)(1)(v)........... (b)(1)(ii).
language second, and sixth
sentence.
(c)(1)(iv) Example 1 first Apportioned......... Allocated or
sentence. apportioned.
(c)(1)(iv) Example 1 first, 1993................ 1997.
second, third, fifth,
sixth, and seventh sentence.
(c)(1)(iv) Example 1 third, 1994................ 1998.
fourth, and seventh
sentence.
(c)(1)(iv) Example 2 second Apportioned......... Allocated or
sentence. apportioned.
(c)(1)(iv) Example 2 first, 1993................ 1997.
second, third, and last
sentence.
(c)(1)(iv) Example 2 second 1994................ 1998.
and last sentence.
(c)(2)(i) first sentence.... Apportioned......... Allocated or
apportioned.
(c)(4) Example third, 1993................ 1997.
fourth, fifth, sixth, and
eighth sentence.
(c)(4) Example fifth Allocated........... Allocated or
sentence. apportioned.
------------------------------------------------------------------------
7. Paragraph (e) is amended as follows:
a. The text of paragraph (e) is redesignated as paragraph (e)(1)
and a paragraph heading for (e)(1) is added.
b. The first sentence of newly designated paragraph (e)(1) is
revised.
8. Paragraph (e)(2) is added.
The revisions and additions read as follows:
Sec. 1.884-4 Branch-level interest tax.
(a) * * * (1) * * * For purposes of this section, a foreign
corporation also shall be treated as engaged in trade or business in
the United States if, at any time during the taxable year, it owns an
asset taken into account under Sec. 1.882-5(a)(1)(ii) or (b)(1) for
purposes of determining the amount of the foreign corporation's
interest expense allocated or apportioned to ECI. * * *
(2) * * *
(iii) Treatment of a portion of the excess interest of banks as
interest on deposits. A portion of the excess interest of a foreign
corporation that is a bank (as defined in section 585(a)(2)(B) without
regard to the second sentence thereof) provided that a substantial part
of its business in the United States, as well as all other countries in
which it operates, consists of receiving deposits and making loans and
discounts, shall be treated as interest on deposits (as described in
section 871(i)(3)), and shall be exempt from the tax imposed by section
881(a) as provided in such section. The portion of the excess interest
of the foreign corporation that is treated as interest on deposits
shall equal the product of the foreign corporation's excess interest
and the greater of--
(A) The ratio of the amount of interest bearing deposits, within
the meaning of section 871(i)(3)(A), of the foreign corporation as of
the close of the taxable year to the amount of all interest bearing
liabilities of the foreign corporation on such date; or
(B) 85 percent.
* * * * *
(b) Branch interest--(1) Definition of branch interest. For
purposes of this section, the term ``branch interest'' means interest
that is--
(i) Paid by a foreign corporation with respect to a liability that
is--
(A) A U.S. booked liability within the meaning of Sec. 1.882-
5(d)(2) (other than a U.S. booked liability of a partner within the
meaning of Sec. 1.882-5(d)(2)(vii)); or
(B) Described in Sec. 1.884-1(e)(2) (relating to insurance
liabilities on U.S. business and liabilities giving rise to interest
expense that is directly allocated to income from a U.S. asset); or
(ii) In the case of a foreign corporation other than a corporation
described in paragraph (a)(2)(iii) of this section, a liability
specifically identified (as provided in paragraph (b)(3)(i) of this
section) as a liability of a U.S. trade or business of the foreign
corporation on or before the earlier of the date on which the first
payment of interest is made with respect to the liability or the due
date (including extensions) of the foreign corporation's income tax
return for the taxable year, provided that--
(A) The amount of such interest does not exceed 85 percent of the
amount of interest of the foreign corporation that would be excess
interest before taking into account interest treated as branch interest
by reason of this paragraph (b)(1)(ii);
(B) The requirements of paragraph (b)(3)(ii) of this section
(relating to notification of recipient of interest) are satisfied; and
(C) The liability is not described in paragraph (b)(3)(iii) of this
section (relating to liabilities incurred in the ordinary course of a
foreign business or secured by foreign assets) or paragraph (b)(1)(i)
of this section.
(2) [Reserved]
(3)(i) * * * A foreign corporation that is subject to this section
may identify a liability under paragraph (b)(1)(ii) of this section
whether or not it is actually
[[Page 9343]]
engaged in the conduct of a trade or business in the United States. * *
*
* * * * *
(4) [Reserved]
* * * * *
(e) Effective dates--(1) General rule. Except as provided in
paragraph (e)(2) of this section, this section is effective for taxable
years beginning October 13, 1992, and for payments of interest
described in section 884(f)(1)(A) made (or treated as made under
paragraph (b)(7) of this section) during taxable years of the payor
beginning after such date. * * *
(2) Special rule. Paragraphs (a)(1), (a)(2)(i)(A), (a)(2)(iii),
(b)(1), (b)(3), (b)(5)(i), (b)(6)(i), (b)(6)(ii), and (c)(2)(i) of this
section are effective for taxable years beginning on or after June 6,
1996.
Par. 9. In Sec. 1.884-5, paragraphs (e)(4)(ii) and (g) are revised
to read as follows:
Sec. 1.884-5 Qualified resident.
* * * * *
(e) * * *
(4) * * *
(ii) Presumption for banks. A U.S. trade or business of a foreign
corporation that is described in Sec. 1.884-4(a)(2)(iii) shall be
presumed to be an integral part of an active banking business conducted
by the foreign country in its country of residence provided that a
substantial part of the business of the foreign corporation in both its
country of residence and the United States consists of receiving
deposits and making loans and discounts. This paragraph shall be
effective for taxable years beginning on or after June 6, 1996.
* * * * *
(g) * * * Except as provided in paragraph (e)(4)(ii) of this
section, this section is effective for taxable years beginning on or
after October 13, 1992. * * *
* * * * *
Par. 10. Section 1.897-1 is amended as follows:
1. In paragraph (f)(1)(iii) the language ``stock,'' is removed.
2. Paragraph (f)(2)(i) is revised to read as follows:
Sec. 1.897-1 Taxation of foreign investments in United States real
property interests, definition of terms.
* * * * *
(f) * * *
(2) * * *
(i) Held for the principal purpose of promoting the present conduct
of the trade or business,
* * * * *
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
Par. 11. The authority for part 602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Sec. 602.101 [Amended]
Par. 12. In Sec. 602.101, the table in paragraph (c) is amended by
adding in numerical order ``Sec. 1.884-2 * * * 1545-1070''.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
Approved: February 28, 1996.
Leslie Samuels,
Assistant Secretary of the Treasury.
[FR Doc. 96-5261 Filed 3-5-96; 8:45 am]
BILLING CODE 4830-01-U
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