issue-1996-05-06•Federal Register final rules — 1996-05-06
Federal Register final rules — 1996-05-06
issue-1996-05-06Federal Register final rules — 1996-05-06Regulation
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. 96-11252 Change in Using Agency for Restricted Areas R-4102A and B, Fort Devens; MA
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Page 20127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11252]
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DEPARTMENT OF TRANSPORTATION
14 CFR Part 73
[Airspace Docket No. 95-ANE-71]
Change in Using Agency for Restricted Areas R-4102A and B, Fort
Devens; MA
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
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SUMMARY: This action changes the using agency for Restricted Areas R-
4102A and B, Fort Devens, MA, from ``Director of Plans, Training and
Security, Fort Devens, MA'' to ``Chief, Reserve Component Division,
Devens Reserve Forces Training Area, Ayer, MA.'' This is an
administrative change resulting from a realignment of responsibilities
within the Department of the Army. There are no changes to the
boundaries, designated altitudes, time of designation, or activities
conducted within these restricted areas.
EFFECTIVE DATE: 0901 UTC, June 20, 1996.
FOR FURTHER INFORMATION CONTACT: Ken McElroy, Airspace and Rules
Division (ATA-400), Office of Airspace Management, Federal Aviation
Administration, 800 Independence Avenue, SW., Washington, DC 20591;
telephone: (202) 267-3075.
SUPPLEMENTARY INFORMATION:
The Rule
This amendment to part 73 of the Federal Aviation Regulations
changes the using agency for Restricted Areas R-4102A and B, Fort
Devens, MA, from ``Director of Plans, Training and Security, Fort
Devens, MA'' to ``Chief, Reserve Component Division, Devens Reserve
Forces Training Area, Ayer, MA.'' This is an administrative change to
reflect organizational changes within the Department of the Army. There
are no changes to the dimensions, time of designation, or activities
conducted within the affected restricted areas. Because this action is
a minor technical amendment in which the public is not particularly
interested, I find that notice and public procedure under 5 U.S.C.
553(b) are unnecessary. Section 73.41 of part 73 of the Federal
Aviation Regulations was republished in FAA Order 7400.8C dated June
29, 1995.
The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore--(1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
will only affect air traffic procedures and air navigation, it is
certified that this rule will not have a significant economic impact on
a substantial number of small entities under the criteria of the
Regulatory Flexibility Act.
Environmental Review
This action changes the using agency of the restricted areas. There
are no changes to the boundaries, designated altitudes, times of
designation, or activities conducted within the affected restricted
areas. Accordingly, this action is not subject to environmental
assessments and procedures as set forth in FAA Order 1050.1D,
``Policies and Procedures for Considering Environmental Impacts'' and
the National Environmental Policy Act.
List of Subjects in 14 CFR Part 73
Airspace, Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR part 73 as follows:
PART 73--[AMENDED]
1. The authority citation for part 73 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
Sec. 73.41 [Amended]
2. Section 73.41 is amended as follows:
R-4102A Fort Devens, MA [Amended]
By removing ``Using agency. Director of Plans, Training and
Security, Fort Devens, MA.'' and substituting the following:
``Chief, Reserve Component Division, Devens Reserve Forces Training
Area, Ayer, MA.''
R-4102B Fort Devens, MA [Amended]
By removing ``Using agency. Director of Plans, Training and
Security, Fort Devens, MA.'' and substituting the following:
``Chief, Reserve Component Division, Devens Reserve Forces Training
Area, Ayer, MA.''
Issued in Washington, DC, on April 16, 1996.
Nancy B. Kalinowski,
Acting Program Director for Air Traffic Airspace Management.
[FR Doc. 96-11252 Filed 5-3-96; 8:45 am]
BILLING CODE 4910-13-P
Complete official Federal Register PDF
FR Doc. 96-11236 Special Local Regulations; Annual Kennewick, Washington, Columbia Unlimited Hydroplane Races
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20132-20133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11236]
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DEPARTMENT OF TRANSPORTATION
Coast Guard
33 CFR Part 100
[CGD13-96-012]
RIN 2115-AE46
Special Local Regulations; Annual Kennewick, Washington, Columbia
Unlimited Hydroplane Races
AGENCY: Coast Guard, DOT.
ACTION: Direct final rule.
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SUMMARY: By this direct final rule, the Coast Guard is permanently
amending a special local regulation governing general navigation and
anchorage in the vicinity of the Annual Kennewick, Washington, Columbia
Unlimited Hydroplane Races. Changes made to this regulation will
clarify its annual effective date and will revise the boundaries of the
regulated area. This change is intended to better inform the boating
public and to improve the level of safety at this event.
DATES: This rule is effective on July 22, 1996, unless the Coast Guard
receives written adverse comments or written notice of intent to submit
adverse comments on or before June 20, 1996.
ADDRESSES: Comments may be mailed to U.S. Coast Guard Group Portland,
6767 N. Basin Ave., Portland, OR 97217-3992. The comments and other
materials referenced in this notice will be available for inspection
and copying at the above address in the St. Helens Building, Waterways
Management Section. Normal office hours are between 7 a.m. and 4 p.m.,
Monday through Friday, except Federal holidays. Comments may also be
hand-delivered at this address.
FOR FURTHER INFORMATION CONTACT:
Lieutenant (Junior Grade) C.A. Roskam, Waterways Management Section,
U.S. Coast Guard MSO/Group Portland, OR (Telephone: (503) 240-9327).
SUPPLEMENTARY INFORMATION:
Request for Comments
Any comments must identify the name and address of the person
submitting the comment, specify the rulemaking docket (CGD13-96-012)
and the specific section of this rule to which each comment applies,
and give the reason for each specific comment. Please submit two copies
of all comments and attachments in an unbound format, no larger than
8\1/2\ by 11 inches, suitable for copying and electronic filing.
Persons wanting acknowledgment of receipt of comments should enclose
stamped, self-addressed postcards or envelopes.
Regulatory Information
The Coast Guard is publishing a direct final rule, the procedures
of which are outlined in 33 CFR 1.05-55, because no adverse comments
are anticipated. If no adverse comments or any written notice of intent
to submit adverse comment are received within the specified comment
period, this rule will become effective as stated in the DATES section.
In that case, approximately 30 days prior to the effective date, the
Coast Guard will publish a notice in the Federal Register stating that
no adverse comment was received and confirming that this rule will
become effective as scheduled. However, if the Coast Guard receives
written adverse comment or written notice of intent to submit adverse
comment, the Coast Guard will publish a notice in the final rule
section of the Federal Register to announce withdrawal of all or part
of this direct final rule. If adverse comments apply to only part of
this rule, and it is possible to remove that part without defeating the
purpose of this rule, the Coast Guard may adopt as final those parts of
this rule on which no adverse comments were received. The part of this
rule that was the subject of adverse comment will be withdrawn. If the
Coast Guard decides to proceed with a rulemaking following receipt of
adverse comments, a separate Notice of Proposed Rulemaking (NPRM) will
be published a new opportunity for comment provided.
A comment is considered ``adverse'' if the comment explains why
this rule would be inappropriate, including a challenge to the rule's
underlying premise or approach, or would be ineffective or unacceptable
without a change.
Background and Purpose
Each year, during the last week in July, the Annual Kennewick,
Washington, Columbia Unlimited Hydroplane Races are held on the waters
of the Columbia River between the western end of Hydro Island and the
western end of Clover Island. Under current Coast Guard regulations, 33
CFR 100.1303, a special local regulation is established each year
during the event to provide for public safety by controlling the
movement of spectators and participants in the area of the race course.
The current regulations do not clearly state the days and times
each year when the become effective. In years past, the Coast Guard has
published a notice of implementation in the Federal Register in order
to clearly announce the effective dates and times of the regulations
for a given year. This direct final rule will permanently amend 33 CFR
100.1303, making the regulation effective each year on the last Tuesday
through Sunday in July from 8:30 a.m. local time until the last race is
completed each day at approximately 7:30 p.m. local time.
In recent years, the number of recreational vessels transiting the
area near the race course and the number of spectator craft anchoring
in the vicinity of the race course has greatly increased. The majority
of the recreational vessels drawn to this event congregate in the
vicinity of the upstream end of the race course. Often, spectator craft
anchoring upstream of the race course break free of their anchorage and
drift downstream onto the race course, endangering both themselves and
race participants.
To promote the safety of spectators and participants, the
boundaries of the regulated navigation area created by this special
local regulation are being revised. This revision will move the upriver
boundary an additional 400 yards upriver. This change is intended to
increase the distance between the upriver boundary of the regulated
area and the race course, therefore decreasing the likelihood that
spectator boats will drift downriver into the course. At the same time
the downriver boundary of the regulated area will be moved upriver and
additional 1,000 yards. This change is intended to decrease the
distance between the downriver boundary of the regulated area and the
race course, therefore encouraging spectators to observe the race from
the downriver side where there is little danger of drifting into the
course.
Discussion of Rules
The Coast Guard is permanently amending 33 CFR 100.1303--Annual
Kennewick, Washington, Columbia Unlimited Hydroplane Races.
[[Page 20133]]
The annual effective dates and times of the regulation are amended
so that the regulation becomes effective each year on the last Tuesday
through Sunday in July from 8:30 a.m. local time until the last race is
completed each day at approximately 7:30 p.m. local time.
The boundaries of the regulated navigation area created by these
regulations are also amended. The boundaries of the current regulated
area, as defined in this section, include all waters of the Columbia
River from the western end of Hydro Island to the western end of Clover
Island at Kennewick, Washington. This amendment will change the
boundaries of this regulated area to include all waters of the Columbia
River between a point 400 yards upriver of Hydro Island and a point
1,000 yards upriver of Clover Island. As amended, the regulated area
created by this regulation will include all waters of the Columbia
River bounded by two lines drawn from shore to shore. The first line
will run between position latitude 46 deg.14'07'' N, longitude
119 deg.10'42'' W and position latitude 46 deg.13'42'' N, longitude
119 deg.10'51'' W. The second line will run between position latitude
46 deg.13'35'' N, longitude 119 deg.07'34'' W and position latitude
46 deg.13'10'' N, longitude 119 deg.07'47'' W. Within these boundaries,
general navigation and anchorage will be restricted by this regulation
during the hours it is in effect. This change is intended to encourage
spectator craft to anchor downriver of the race course, which would
greatly reduce the number of vessels congregating upriver of the race
course and reduce the risk of vessels floating downriver onto the race
course. It is also intended to reduce the number of recreational
vessels transiting from one end of the race course to the other before
and after the race, thus reducing congestion in the vicinity of the
event.
Regulatory Evaluation
This rule is not a significant regulatory action under section 3(f)
of Executive Order 12866 and does not require an assessment of
potential costs and benefits under section 6(a)(3) of that order. It
has not been reviewed by the Office of Management and Budget under that
order. It is not significant under the regulatory policies and
procedures of the Department of Transportation (DOT) (44 FR 11040;
February 26, 1979). The Coast Guard expects the economic impact of this
rule to be so minimal that a full Regulatory Evaluation under paragraph
10e of the regulatory policies and procedures of DOT is unnecessary.
This conclusion is based on the fact that only minor changes are being
made to the regulations and that the changes made reduce the area
affected by approximately one half mile.
Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the
Coast Guard must consider the economic impact on small entities of a
rule for which a general notice of proposed rulemaking is required.
``Small entities'' may include (1) small businesses and not-for-profit
organizations that are independently owned and operated and are not
dominant in their fields and (2) governmental jurisdictions with
populations of less than 50,000.
The regulated navigation area created by this section is being
reduced by this direct final rule. Moreover, vessels desiring to
transit this area of the Columbia River may do so by scheduling their
trips in the evening when the restrictions on general navigation
imposed by this section will not be in effect. For these reasons, the
Coast Guard certifies under 5 U.S.C. 605(b) that this change will not
have a significant economic impact on a substantial number of small
entities.
Collection-of-Information
This rule contains no collection-of-information requirements under
the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
Federalism
The Coast Guard has analyzed this rule under the principles and
criteria contained in Executive Order 12612 and has determined that
this rule does not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
Environment
The Coast Guard considered the environmental impact of this rule
and concluded that, under paragraph 2.B.2.e.34(h) of Commandant
Instruction M16475.1B, (as revised by 59 FR 38654, July 29, 1994), this
rule is categorically excluded from further environmental
documentation. A ``Categorical Exclusion Determination'' is available
in the docket for inspection or copying where indicated under
ADDRESSES.
List of Subjects in 33 CFR Part 100
Marine safety, Navigation (water), Reporting and recordkeeping
requirements, Waterways.
Regulation
For the reasons set out in the preamble, the Coast Guard amends 33
CFR part 100 as follows:
PART 100--[AMENDED]
1. The authority citation for part 100 continues to read as
follows:
Authority: 33 U.S.C. 1233; 49 CFR 1.46 and 33 CFR 100.35.
2. Section 100.1303 is amended by revising paragraphs (a) and (b)
as follows:
Sec. 100.1303 Annual Kennewick, Washington, Columbia Unlimited
Hydroplane Races.
(a) This regulation is effective each year on the last Tuesday
through Sunday in July from 8:30 a.m. local time until the last race is
completed each day at approximately 7:30 p.m. local time, unless sooner
terminated by the Patrol Commander.
(b) The Coast Guard will restrict general navigation and anchorage
by this regulation during the hours it is in effect on all waters of
the Columbia River bounded by two lines drawn from shore to shore; the
first line running between position latitude 46 deg.14'07'' N,
longitude 119 deg.10'42'' W and position latitude 46 deg.13'42'' N,
longitude 119 deg.10'51'' W; and the second line running between
position latitude 46 deg.13'35'' N, longitude 119 deg.07'34'' W and
position latitude 46 deg.13'10'' N, longitude 119 deg.07'47'' W.
[Datum: NAD 83]
* * * * *
Dated: April 25, 1996.
J.W. Lockwood,
Rear Admiral, U.S. Coast Guard District Commander.
[FR Doc. 96-11236 Filed 5-3-96; 8:45 am]
BILLING CODE 4910-14-M
Complete official Federal Register PDF
FR Doc. 96-11225 Loan Policies and Operations; Effective Date
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Page 20125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11225]
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FARM CREDIT ADMINISTRATION
12 CFR Part 614
RIN 3052-AB52
Loan Policies and Operations; Effective Date
AGENCY: Farm Credit Administration.
ACTION: Notice of effective date.
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SUMMARY: The Farm Credit Administration (FCA) published a final
regulation under part 614 on March 20, 1996 (61 FR 11303). The final
regulation removes the requirement that Farm Credit institutions give
borrowers 10 days prior notification of a change in the interest rate
on their variable rate loans and replaces it with a 10-day post
notification for interest rate changes for administered rate loans and
a 30-day notice if the loan is tied to an external index. In accordance
with 12 U.S.C. 2252, the effective date of the final rule is 30 days
from the date of publication in the Federal Register during which
either or both Houses of Congress are in session. Based on the records
of the sessions of Congress, the effective date of the regulations is
May 3, 1996.
EFFECTIVE DATE: The regulation amending 12 CFR part 614 published on
March 20, 1996 (61 FR 11303) is effective May 3, 1996.
FOR FURTHER INFORMATION CONTACT:
Robert Child, Policy Analyst, Regulation Development, Office of
Examination, Farm Credit Administration, McLean, Virginia 22102-5090,
(703) 883-4498, TDD (703) 883-4444,
or
Joy E. Strickland, Senior Attorney, Regulatory Operations Division,
Office of General Counsel, Farm Credit Administration, McLean, Virginia
22102-5090, (703) 883-4020, TDD (703) 883-4444.
(12 U.S.C. 2252(a) (9) and (10))
Dated: May 1, 1996.
Floyd Fithian,
Secretary, Farm Credit Administration Board.
[FR Doc. 96-11225 Filed 5-03-96; 8:45 am]
BILLING CODE 6705-01-P
Complete official Federal Register PDF
FR Doc. 96-11210 Approval and Promulgation of Implementation Plans; California State Implementation Plan Revision, Placer County Air Pollution Control District and Ventura County Air Pollution Control District
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20145-20147]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11210]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[CA 140-10-7261a; FRL-5456-9]
Approval and Promulgation of Implementation Plans; California
State Implementation Plan Revision, Placer County Air Pollution Control
District and Ventura County Air Pollution Control District
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
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SUMMARY: EPA is taking direct final action on revisions to the
California State Implementation Plan (SIP). The revisions concern rules
from the following districts: the Placer County Air Pollution Control
District (PCAPCD) and the Ventura County Air Pollution Control District
(VCAPCD). This approval action will incorporate these rules into the
federally approved SIP. The intended effect of approving these rules is
to regulate emissions of volatile organic compounds (VOCs) in
accordance with the requirements of the Clean Air Act, as amended in
1990 (CAA or the Act). The rules control VOC emissions from the storage
and transfer of organic liquids and tank degassing operations. Thus,
EPA is finalizing the approval of these revisions into the California
SIP under provisions of the CAA regarding EPA action on SIP submittals,
SIPs for national primary and secondary ambient air quality standards,
and plan requirements for nonattainment areas.
DATES: This action is effective on July 5, 1996 unless adverse or
critical comments are received by June 5, 1996. If the effective date
is delayed, a timely notice will be published in the Federal Register.
ADDRESSES: Copies of the rules and EPA's evaluation report for each
rule are available for public inspection at EPA's Region IX office
during normal business hours. Copies of the submitted rules are
available for inspection at the following locations:
Rulemaking Section (A-5-3), Air and Toxics Division, U.S.
Environmental Protection Agency, Region IX, 75 Hawthorne Street, San
Francisco, CA 94105.
Environmental Protection Agency, Air Docket (6102), 401 ``M''
Street, S.W., Washington, D.C. 20460.
California Air Resources Board, Stationary Source Division, Rule
Evaluation Section, 2020 ``L'' Street, Sacramento, CA 95814.
Placer County Air Pollution Control District, 11464 B Avenue,
Auburn, CA 95603.
Ventura County Air Pollution Control District, Rule Development
Section, 669 County Square Drive, Ventura, CA 93003.
FOR FURTHER INFORMATION CONTACT: Duane F. James, Rulemaking Section (A-
5-3), Air and Toxics Division, U.S. Environmental Protection Agency,
Region IX, 75 Hawthorne Street, San Francisco, CA 94105, Telephone:
(415) 744-1191, email: [email protected].
SUPPLEMENTARY INFORMATION:
Applicability
The rules being approved into the California SIP include: the
PCAPCD's Rule 212, ``Storage of Organic Liquids,'' and Rule 215,
``Transfer of Gasoline into Tank Trucks, Trailers and Railroad Tank
Cars at Loading Facilities,'' and the VCAPCD's Rule 74.26, ``Crude Oil
Storage Tank Degassing Operations,'' and Rule 74.27, ``Gasoline and ROC
Liquid Storage Tank Degassing Operations.'' These rules were submitted
by the California Air Resources Board (ARB) to EPA on January 24, 1995
(Rules 215, 74.26, and 74.27) and October 13, 1995 (Rule 212).
Background
On March 3, 1978, EPA promulgated a list of ozone nonattainment
areas under the provisions of the Clean Air Act, as amended in 1977
(1977 Act or pre-amended Act), that included portions of Placer County
in the Sacramento Metro Area and the Ventura County Area. 43 FR 8964,
40 CFR 81.305. On May 26, 1988, EPA notified the Governor of
California, pursuant to section 110(a)(2)(H) of the 1977 Act, that
[[Page 20146]]
the above districts' portions of the California SIP were inadequate to
attain and maintain the ozone standard and requested that deficiencies
in the existing SIP be corrected (EPA's SIP-Call). On November 15,
1990, the Clean Air Act Amendments of 1990 were enacted. Public Law
101-549, 104 Stat. 2399, codified at 42 U.S.C. 7401-7671q. In amended
section 182(a)(2)(A) of the CAA, Congress statutorily adopted the
requirement that nonattainment areas fix their deficient reasonably
available control technology (RACT) rules for ozone and established a
deadline of May 15, 1991, for states to submit corrections of those
deficiencies.
Section 182(a)(2)(A) applies to areas designated as nonattainment
prior to enactment of the amendments and classified as marginal or
above as of the date of enactment. It requires such areas to adopt and
correct RACT rules pursuant to pre-amended section 172(b) as
interpreted in pre-amendment guidance.1 EPA's SIP-Call used that
guidance to indicate the necessary corrections for specific
nonattainment areas. The Sacramento Metro Area and the Ventura County
Area are classified as severe; 2 therefore, these areas were
subject to the RACT fix-up requirement and the May 15, 1991 deadline.
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\1\ Among other things, the pre-amendment guidance consists of
those portions of the proposed Post-1987 ozone and carbon monoxide
policy that concern RACT, 52 FR 45044 (November 24, 1987); ``Issues
Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,
Clarification to Appendix D of November 24, 1987 Federal Register
Notice'' (Blue Book) (notice of availability was published in the
Federal Register on May 25, 1988); and the existing control
technique guidelines (CTGs).
\2\ The Sacramento Metro Area was reclassified from serious to
severe on June 1, 1995. See 60 FR 20237 (April 25, 1995). The
Ventura County Area retained its designation of nonattainment and
was classified by operation of law pursuant to sections 107(d) and
181(a) upon the date of enactment of the CAA. See 55 FR 56694
(November 6, 1991).
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The State of California submitted many revised RACT rules for
incorporation into its SIP on January 24, 1995, and October 13, 1995,
including the rules being acted on in this document. The PCAPCD adopted
Rule 212 on June 8, 1995, and Rule 215 on November 3, 1994, and the
VCAPCD adopted Rules 74.26 and 74.27 on November 8, 1994. These
submitted rules were found to be complete on February 24, 1995 (Rules
215, 74.26, and 74.27) and November 28, 1995 (Rule 212), pursuant to
EPA's completeness criteria that are set forth in 40 CFR part 51,
appendix V 3 and are being finalized for approval into the SP.
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\3\ EPA adopted the completeness criteria on February 16, 1990
(55 FR 5830) and, pursuant to section 110(k)(1)(A) of the CAA,
revised the criteria on August 26, 1991 (56 FR 42216).
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The PCAPCD's Rule 212 requires facilities to install and operate
vapor loss control devices for the storage of organic liquids with
vapor pressures of 0.5 psia or higher, and Rule 215 requires vapor
collection and disposal systems for loading gasoline into tank trucks,
trailers, or railroad tank cars. The VCAPCD's Rules 74.26 and 74.27
reduce emissions of VOCs from the degassing of crude oil, produced
water, gasoline, and VOC liquid storage tanks. VOCs contribute to the
production of ground level ozone and smog. These rules were originally
adopted as part of the PCAPCD's and the VCAPCD's efforts to achieve the
National Ambient Air Quality Standard (NAAQS) for ozone and in response
to EPA's SIP-Call and the section 182(a)(2)(A) CAA requirement. The
following is EPA's evaluation and final action for these rules.
EPA Evaluation and Action
In determining the approvability of a VOC rule, EPA must evaluate
the rule for consistency with the requirements of the CAA and EPA
regulations, as found in section 110 and part D of the CAA and 40 CFR
part 51 (Requirements for Preparation, Adoption, and Submittal of
Implementation Plans). The EPA interpretation of these requirements,
which forms the basis for today's action, appears in the various EPA
policy guidance documents listed in footnote 1. Among those provisions
is the requirement that a VOC rule must, at a minimum, provide for the
implementation of RACT for stationary sources of VOC emissions. This
requirement was carried forth from the pre-amended Act.
For the purpose of assisting state and local agencies in developing
RACT rules, EPA prepared a series of Control Technique Guideline (CTG)
documents. The CTGs are based on the underlying requirements of the Act
and specify the presumptive norms for what is RACT for specific source
categories. Under the CAA, Congress ratified EPA's use of these
documents, as well as other Agency policy, for requiring States to
``fix-up'' their RACT rules. See section 182(a)(2)(A). The CTGs
applicable to PCAPCD's Rule 212 are entitled ``Control of Volatile
Organic Emissions from Storage of Petroleum Liquids in Fixed-Roof Tanks
(EPA-450/2-77-036)'' and ``Control of Volatile Organic Emissions from
Petroleum Liquid Storage in External Floating Roof Tanks (EPA-450/2-78-
047).'' The CTGs applicable to PCAPCD's Rule 215 are entitled,
``Control of Hydrocarbons from Tank Truck Gasoline Loading Terminals
(EPA-450/2-77-026),'' ``Control of Volatile Organic Emissions from Bulk
Gasoline Plants (EPA-450/2-77-035),'' and ``Control of Volatile Organic
Compound Leaks from Gasoline Tank Trucks and Vapor Collection Systems
(EPA-450/2-78-051).'' There are no CTGs applicable to VCAPCD's Rules
74.26 and 74.27. Further interpretations of EPA policy are found in the
Blue Book, referred to in footnote 1. In general, these guidance
documents have been set forth to ensure that VOC rules are fully
enforceable and strengthen or maintain the SIP.
The PCAPCD's submitted Rule 212, ``Storage of Organic Liquids,''
includes the following significant changes from the current SIP:
The Table of Content's reference to section 110 has been
deleted because that section was deleted in the previous version of the
rule.
There were two sections 503.1. The second was renumbered
to 503.2.
The PCAPCD's submitted Rule 215, ``Transfer of Gasoline into Tank
Trucks, Trailers and Railroad Tank Cars at Loading Facilities,''
includes the following significant changes from the current SIP:
The rule's applicability was broadened.
The definitions of bulk plant and bulk terminal were added
to the rule. The definition of volatile organic compound (VOC) was
updated for consistency with 40 CFR 51.100(s).
An emission standard of 0.6 pounds of VOC per 1000 gallons
of gasoline transferred was added for bulk plants.
The ARB's Methods 202 and 203 were added to the rule for
equipment certifications.
The VCAPCD's Rule 74.26, ``Crude Oil Storage Tank Degassing
Operations,'' and Rule 74.27, ``Gasoline and ROC Liquid Storage Tank
Degassing Operations,'' are new rules that reduce the emissions of VOCs
from the degassing of crude oil, produced water, gasoline, and VOC
liquid storage tanks. The rules require a vapor destruction and removal
efficiency of at least 95% until the vapor concentration in the tank is
10% of its initial concentration or less than 10,000 parts per million
volume (ppmv). Records of the inlet and outlet concentration are to be
made at the beginning of and throughout the test. Records of
temperature are required when refrigerated condensers are used. All
records must be maintained for two years from the date of entry. ASTM
Methods D 323-82, D 2879-86 and E 260-91 and EPA Methods 2A, 21, and
25A are the test methods used for compliance determinations. A more
detailed discussion of the controls required and the justification for
why
[[Page 20147]]
these controls represent RACT can be found in the Technical Support
Documents (TSDs) for Rules 74.26 and 74.27, dated November 7, 1995.
EPA has evaluated the submitted rules and has determined that they
are consistent with the CAA, EPA regulations, and EPA policy.
Therefore, the PCAPCD's Rule 212, ``Storage of Organic Liquids,'' and
Rule 215, ``Transfer of Gasoline into Tank Trucks, Trailers and
Railroad Tank Cars at Loading Facilities,'' and the VCAPCD's Rule
74.26, ``Crude Oil Storage Tank Degassing Operations,'' and Rule 74.27,
``Gasoline and ROC Liquid Storage Tank Degassing Operations,'' are
being approved under section 110(k)(3) of the CAA as meeting the
requirements of section 110(a) and part D.
Nothing in this action should be construed as permitting or
allowing or establishing a precedent for any future implementation
plan. Each request for revision to the state implementation plan shall
be considered separately in light of specific technical, economic, and
environmental factors and in relation to relevant statutory and
regulatory requirements.
EPA is publishing this document without prior proposal because the
Agency views this as a noncontroversial amendment and anticipates no
adverse comments. However, in a separate document in this Federal
Register publication, the EPA is proposing to approve the SIP revision
should adverse or critical comments be filed. This action will be
effective July 5, 1996, unless, by June 5, 1996, adverse or critical
comments are received.
If the EPA receives such comments, this action will be withdrawn
before the effective date by publishing a subsequent document that will
withdraw the final action. All public comments received will then be
addressed in a subsequent final rule based on this action serving as a
proposed rule. The EPA will not institute a second comment period on
this action. Any parties interested in commenting on this action should
do so at this time. If no such comments are received, the public is
advised that this action will be effective July 5, 1996.
Regulatory Process
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. 5 U.S.C. 603 and 604.
Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises and
government entities with jurisdiction over population of less than
50,000.
SIP approvals under sections 110 and 301(a) and subchapter I, Part
D of the CAA do not create any new requirements, but simply approve
requirements that the State is already imposing. Therefore, because the
Federal SIP-approval does not impose any new requirements, I certify
that it does not have a significant impact on any small entities
affected. Moreover, due to the nature of the Federal-state relationship
under the CAA, preparation of a regulatory flexibility analysis would
constitute Federal inquiry into the economic reasonableness of state
action. The CAA forbids EPA to base its actions concerning SIPs on such
grounds. Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (S.
Ct. 1976); 42 U.S.C. 7410 (a)(2).
Unfunded Mandates
Under Sections 202, 203, and 205 of the Unfunded Mandates Reform
Act of 1995 (``Unfunded Mandates Act''), signed into law on March 22,
1995, EPA must undertake various actions in association with proposed
or final rules that include a Federal mandate that may result in
estimated costs of $100 million or more to the private sector or to
State, local, or tribal governments in the aggregate.
Through submission of this state implementation plan or plan
revision, the State and any affected local or tribal governments have
elected to adopt the program provided for under Part D of the Clean Air
Act. These rules may bind State, local, and tribal governments to
perform certain actions and also require the private sector to perform
certain duties. The rules being approved by this action will impose no
new requirements because affected sources are already subject to these
regulations under State law. Therefore, no additional costs to State,
local, or tribal governments or to the private sector result from this
action. EPA has also determined that this final action does not include
a mandate that may result in estimated costs of $100 million or more to
State, local, or tribal governments in the aggregate or to the private
sector.
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for
Air and Radiation. The Office of Management and Budget (OMB) has
exempted this regulatory action from Executive Order 12866 review.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Ozone,
Reporting and recordkeeping requirements, Volatile organic compounds.
Note: Incorporation by reference of the State Implementation
Plan for the State of California was approved by the Director of the
Federal Register on July 1, 1982.
Dated: March 11, 1996.
Felicia Marcus,
Regional Administrator.
Subpart F of 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 F--California
2. Section 52.220 is amended by adding paragraphs (c)(214)(i)(D)(2)
and (E) and (c)(225)(i)(B)(2) to read as follows:
Sec. 52.220 Identification of plan.
* * * * *
(c) * * *
(214) * * *
(i) * * *
(D) * * *
(2) Rule 74.26 and Rule 74.27, adopted on November 8, 1994.
(E) Placer County Air Pollution Control District.
(1) Rule 215, adopted on November 3, 1994.
* * * * *
(225) * * *
(i) * * *
(B) * * *
(2) Rule 212, adopted on June 8, 1995.
* * * * *
[FR Doc. 96-11210 Filed 5-03-96; 8:45 am]
BILLING CODE 6560-50-W
Complete official Federal Register PDF
FR Doc. 96-11205 Approval and Promulgation of Implementation Plans; California State Implementation Plan Revision, San Joaquin Valley Unified Air Pollution Control District, Santa Barbara County Air Pollution Control District, South Coast Air Quality Management District
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20136-20139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11205]
=======================================================================
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[CA 162-2-0002a FRL-5466-1]
Approval and Promulgation of Implementation Plans; California
State Implementation Plan Revision, San Joaquin Valley Unified Air
Pollution Control District, Santa Barbara County Air Pollution Control
District, South Coast Air Quality Management District
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
-----------------------------------------------------------------------
SUMMARY: EPA is taking direct final action on revisions to the
California State Implementation Plan. The revisions concern rules from
the following districts: San Joaquin Valley Unified Air Pollution
Control District (SJVUAPCD), Santa Barbara County Air Pollution Control
District (SBCAPCD), and South Coast Air Quality Management District
(SCAQMD). This approval action will incorporate these rules into the
federally approved SIP. The intended effect of approving these rules is
to regulate emissions of volatile organic compounds (VOCs) in
accordance with the requirements of the Clean Air Act, as amended in
1990
[[Page 20137]]
(CAA or the Act). The revised rules control VOC emissions from
aerospace assembly and component manufacturing operations, motor
vehicle and mobile equipment coating operations, crude oil production
and separation, and storage of reactive organic compound liquids (ROC).
Thus, EPA is finalizing the approval of these revisions into the
California SIP under provisions of the CAA regarding EPA action on SIP
submittals for national primary and secondary ambient air quality
standards and plan requirements for nonattainment areas.
DATES: This action is effective on July 5, 1996 unless adverse or
critical comments are received by June 5, 1996. If the effective date
is delayed, a timely notice will be published in the Federal Register.
ADDRESSES: Copies of the rule revisions and EPA's evaluation report for
each rule are available for public inspection at EPA's Region IX office
during normal business hours. Copies of the submitted rule revisions
are available for inspection at the following locations:
Rulemaking Section (A-5-3), Air and Toxics Division, U.S. Environmental
Protection Agency, Region IX, 75 Hawthorne Street, San Francisco, CA
94105.
Environmental Protection Agency, Air Docket (6102), 401 ``M'' Street,
S.W., Washington, D.C. 20460.
California Air Resources Board, Stationary Source Division, Rule
Evaluation Section, 2020 ``L'' Street, Sacramento, CA 92123-1095.
San Joaquin Valley Unified Air Pollution Control District, 1999
Tuolumne Street, Suite #200, Fresno, CA 93721.
Santa Barbara County Air Pollution Control District, 26 Castilian
Drive, B-23, Goleta, CA 93117.
South Coast Air Quality Management District, 21865 E. Copley Drive,
Diamond Bar, CA 91765-4182.
FOR FURTHER INFORMATION CONTACT: Helen Liu, Rulemaking Section (A-5-3),
Air and Toxics Division, U.S. Environmental Protection Agency, Region
IX, 75 Hawthorne Street, San Francisco, CA 94105, Telephone: (415) 744-
1199.
SUPPLEMENTARY INFORMATION:
Applicability
The rules being approved into the California SIP include: SJVUAPCD
Rule 4602--Motor Vehicle and Mobile Equipment Coating Operations,
SBCAPCD Rule 325--Crude Oil Production and Separation, SBCAPCD Rule
326--Storage of Reactive Organic Compound Liquids, and SCAQMD Rule
1124--Aerospace Assembly and Component Manufacturing Operations.
Background
On March 3, 1978, EPA promulgated a list of ozone nonattainment
areas under the provisions of the Clean Air Act, as amended in 1977
(1977 Act or pre-amended Act), that included the San Joaquin Valley
Area, the Santa Barbara Area, and the South Coast Air Basin. 43 FR
8964, 40 CFR 81.305. On May 26, 1988, EPA notified the Governor of
California, pursuant to section 110(a)(2)(H) of the 1977 Act, that the
above districts' portions of the California SIP were inadequate to
attain and maintain the ozone standard and requested that deficiencies
in the existing SIP be corrected (EPA's SIP-Call). On November 15,
1990, the Clean Air Act Amendments of 1990 were enacted. Pub. L. 101-
549, 104 Stat. 2399, codified at 42 U.S.C. 7401-7671q. In amended
section 182(a)(2)(A) of the CAA, Congress statutorily adopted the
requirement that nonattainment areas fix their deficient reasonably
available control technology (RACT) rules for ozone and established a
deadline of May 15, 1991 for states to submit corrections of those
deficiencies.
Section 182(a)(2)(A) applies to areas designated as nonattainment
prior to enactment of the amendments and classified as marginal or
above as of the date of enactment. It requires such areas to adopt and
correct RACT rules pursuant to pre-amended section 172(b) as
interpreted in pre-amendment guidance.1 EPA's SIP-Call used that
guidance to indicate the necessary corrections for specific
nonattainment areas. The San Joaquin Area is classified as severe,
Santa Barbara Area as moderate, and the South Coast Air Basin as
extreme; 2 therefore, these areas were subject to the RACT fix-up
requirement and the May 15, 1991 deadline.
---------------------------------------------------------------------------
\1\ Among other things, the pre-amendment guidance consists of
those portions of the proposed post-1987 ozone and carbon monoxide
policy that concern RACT, 52 FR 45044 (November 24, 1987); ``Issues
Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,
Clarification to Appendix D of November 24, 1987 Federal Register
Notice'' (Blue Book) (notice of availability was published in the
Federal Register on May 25, 1988); and the existing control
technique guidelines (CTGs).
\2\ San Joaquin Valley, Santa Barbara, and South Coast retained
their designation of nonattainment and were classified by operation
of law pursuant to sections 107(d) and 181(a) upon the date of
enactment of the CAA. See 55 FR 56694 (November 6, 1991).
---------------------------------------------------------------------------
The State of California submitted many revised RACT rules for
incorporation into its SIP. The following table includes the dates of
when the districts adopted the rules, the dates that California
submitted them to EPA, and the dates that they were found to be
complete pursuant to EPA's completeness criteria that are set forth in
40 CFR part 51 Appendix V: 3
---------------------------------------------------------------------------
\3\ EPA adopted the completeness criteria on February 16, 1990
(55 FR 5830) and, pursuant to section 110(k)(1)(A) of the CAA,
revised the criteria on August 26, 1991 (56 FR 42216).
------------------------------------------------------------------------
Rule Adoption Submittal Completeness
------------------------------------------------------------------------
SJVUAPCD 4602....................... 6/15/95 10/13/95 11/28/95
SBAPCD 325.......................... 1/25/94 3/29/94 6/3/94
SBAPCD 326.......................... 12/14/93 3/29/94 6/3/94
SCAQMD 1124......................... 1/13/95 2/24/95 3/10/95
------------------------------------------------------------------------
This notice addresses EPA's direct-final approval action for the above-
mentioned rules.
All of these rules control VOC emissions from the operations listed
above. VOCs contribute to the production of ground level ozone and
smog. These rules were originally adopted by SJVUAPCD, SBAPCD, and
SCAQMD as part of an effort to achieve the National Ambient Air Quality
Standard (NAAQS) for ozone and in response to EPA's SIP-Call and the
section 182(a)(2)(A) CAA requirement. The following is EPA's evaluation
and final action for these rules.
EPA Evaluation and Action
In determining the approvability of a VOC rule, EPA must evaluate
the rule for consistency with the requirements of the CAA and EPA
regulations, as found in section 110 and part D of the CAA and 40 CFR
part 51 (Requirements for Preparation, Adoption, and Submittal of
Implementation Plans). The EPA interpretation of these requirements,
which forms the basis for today's action, appears in the various EPA
policy guidance documents listed in footnote 1. Among those provisions
is the requirement that a VOC rule must, at a minimum, provide for the
implementation of RACT for stationary sources of VOC emissions. This
requirement was carried forth from the pre-amended Act.
For the purpose of assisting state and local agencies in developing
RACT rules, EPA prepared a series of Control Technique Guideline (CTG)
documents. The CTGs are based on the underlying requirements of the Act
and specify the presumptive norms for what is RACT for specific source
categories. Under the CAA, Congress ratified EPA's use of these
documents, as well as other Agency policy, for requiring States to
[[Page 20138]]
``fix-up'' their RACT rules. See section 182(a)(2)(A). The CTGs
applicable to some of these rules are as follows: EPA-450/2-83-007,
``Control of Volatile Organic Compound Equipment Leaks from Natural
Gas/Gasoline Processing Plants,'' EPA-450/2-78-047, ``Control of
Volatile Organic Emissions From Petroleum Liquid Storage in External
Floating Roof Tanks,'' and EPA-450/2-77-036, ``Control of Volatile
Organic Emissions From Storage of Petroleum Liquid in Fixed-Roof
Tanks.'' Rules 4602 and 1124 control emissions from source categories
for which EPA has not yet finalized CTGs. Accordingly, these rules were
evaluated against the interpretations of EPA policy found in the Blue
Book, referred to in footnote 1, and against other EPA policy. In
general, these guidance documents have been set forth to ensure that
VOC rules are fully enforceable and strengthen or maintain the SIP.
SJVUAPCD's submitted Rule 4602--Motor Vehicle and Mobile Equipment
Coating Operations includes the following major provisions:
Exempts operations involved with touch-up coating, graphic
art, and radiator coating,
Includes the maximum allowable VOC contents for Group I and II
vehicle and equipment coatings,
Specifies the requirements for using add-on control equipment,
Includes a list of acceptable methods to apply coatings,
Limits the VOC content and usage of specialty coatings.
SBCAPCD's submitted Rule 325--Crude Oil Production and Separation
includes the following major provisions:
The conditions under which a tank would be exempt from the
standards portion of this rule,
The control measures required for storage tanks and any
produced gas,
The test methods that are to be used to determine compliance.
This includes an alternative test method that is to be used to measure
vapor pressure of an oil whose API gravity is less than 20 degrees,
Details as to how an inspection will be conducted.
SBCAPCD's submitted Rule 326--Storage of Reactive Organic Compound
Liquids includes the following major provisions:
Exempts storange tanks with a capacity of less than 5,000
gallons and storage tanks containing an ROC liquid having a vapor
pressure less than 0.5 psia from requirements of this rule,
Specifies that certain control measures must be in place on
the tank in order to control emissions or that vapor loss control
devices may be installed,
Lists the allowable vapor loss control devices,
Lists the criteria for the closure device on any external or
internal floating roof tank,
Lists the requirements for inspection and reporting.
SCAQMD's submitted Rule 1124--Aerospace Assembly and Component
Manufacturing Operations includes the following major provisions:
Includes a comprehensive list of coatings, their corresponding
VOC limits, and the phase-in compliance schedule of when facilities
must use coatings that meet certain VOC content limits,
Includes solvent use, clean-up, and stripping requirements,
Includes a list of the different acceptable methods to apply
coatings that ensure a certain level of transfer efficiency,
If control equipment is used, it must have a destruction
efficiency of at least 95% and a capture efficiency of at least 90%,
Prohibits a person from requiring the use of any non-compliant
coating,
Requires a person who performs qualification acceptance
testing on coatings to submit a status report describing the progress
toward the development of coatings that satisfy future compliance
dates,
Lists which facilities and what coatings are exempt from this
rule.
EPA has evaluated the submitted rules and has determined that they
are consistent with the CAA, EPA regulations, and EPA policy.
Therefore, SJVUAPCD 4602--Motor Vehicle and Mobile Equipment Coating
Operations, SBCAPCD 326--Storage of Reactive Organic Compound Liquids,
and SCAQMD 1124--Aerospace Assembly and Component Manufacturing
Operations are being approved under section 110(k)(3) of the CAA as
meeting the requirements of section 110(a) and part D.
Nothing in this action should be construed as permitting or
allowing or establishing a precedent for any future implementation
plan. Each request for revision to the state implementation plan shall
be considered separately in light of specific technical, economic, and
environmental factors and in relation to relevant statutory and
regulatory requirements.
EPA is publishing this notice without prior proposal because the
Agency views this as a noncontroversial amendment and anticipates no
adverse comments. However, in a separate document in this Federal
Register publication, the EPA is proposing to approve the SIP revision
should adverse or critical comments be filed. This action will be
effective July 5, 1996, unless, by June 5, 1996, adverse or critical
comments are received.
If the EPA receives such comments, this action will be withdrawn
before the effective date by publishing a subsequent document that will
withdraw the final action. All public comments received will then be
addressed in a subsequent final rule based on this action serving as a
proposed rule. The EPA will not institute a second comment period on
this action. Any parties interested in commenting on this action should
do so at this time. If no such comments are received, the public is
advised that this action will be effective July 5, 1996.
Regulatory Process
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. 5 U.S.C. Secs. 603 and
604. Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises and
government entities with jurisdiction over population of less than
50,000.
SIP approvals under sections 110 and 301(a) and subchapter I, Part
D of the CAA do not create any new requirements, but simply approve
requirements that the State is already imposing. Therefore, because the
Federal SIP-approval does not impose any new requirements, I certify
that it does not have a significant impact on any small entities
affected. Moreover, due to the nature of the Federal-state relationship
under the CAA, preparation of a regulatory flexibility analysis would
constitute Federal inquiry into the economic reasonableness of state
action. The CAA forbids EPA to base its actions concerning SIPs on such
grounds. Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (S.
Ct. 1976); 42 U.S.C. 7410(a)(2).
Unfunded Mandates
Under Sections 202, 203, and 205 of the Unfunded Mandates Reform
Act of 1995 (``Unfunded Mandates Act''), signed into law on March 22,
1995, EPA must undertake various actions in association with proposed
or final rules that include a Federal mandate that may result in
estimated costs of $100 million or more to the private sector or to
State,
[[Page 20139]]
local, or tribal governments in the aggregate.
Through submission of this state implementation plan or plan
revision, the State and any affected local or tribal governments have
elected to adopt the program provided for under Part D of the Clean Air
Act. These rules may bind State, local, and tribal governments to
perform certain actions and also require the private sector to perform
certain duties. The rules being approved by this action will impose no
new requirements because affected sources are already subject to these
regulations under State law. Therefore, no additional costs to State,
local, or tribal governments or to the private sector result from this
action. EPA has also determined that this direct-final action does not
include a mandate that may result in estimated costs of $100 million or
more to State, local, or tribal governments in the aggregate or to the
private sector.
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for
Air and Radiation. The Office of Management and Budget (OMB) has
exempted this regulatory action from Executive Order 12866 review.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Ozone,
Reporting and recordkeeping requirements, Volatile organic compounds.
Note: Incorporation by reference of the State Implementation
Plan for the State of California was approved by the Director of the
Federal Register on July 1, 1982.
Dated: April 18, 1996.
Felicia Marcus,
Regional Administrator.
Subpart F of 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 F--California
2. Section 52.220 is amended by adding paragraphs
(c)(196)(i)(C)(2), (215)(i)(A)(5), and (225)(i)(D) to read as follows:
Sec. 52.220 Identification of Plan.
* * * * *
(c) * * *
(196) * * *
(i) * * *
(C) * * *
(2) Rules 325 & 326, adopted on January 25, 1994 and December 14,
1993, respectively.
* * * * *
(215) * * *
(i) * * *
(A) * * *
(5) Rule 1124, adopted January 13, 1995.
* * * * *
(225) * * *
(i) * * *
(D) San Joaquin Valley Unified Air Pollution Control District.
(1) Rule 4602, adopted June 15, 1995.
* * * * *
[FR Doc. 96-11205 Filed 5-3-96; 8:45 am]
BILLING CODE 6560-50-W
Complete official Federal Register PDF
FR Doc. 96-11200 Approval and Promulgation of Implementation Plans; Ohio
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20139-20142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11200]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[OH93-1-7290a; FRL-5467-3]
Approval and Promulgation of Implementation Plans; Ohio
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
-----------------------------------------------------------------------
SUMMARY: The EPA is approving the Particulate Matter contingency
measures State implementation plan (SIP) revisions submitted by the
State of Ohio on July 17, 1995. This submittal addresses the Federal
Clean Air Act requirement to submit contingency measures for
particulate matter with an aerodynamic diameter less than or equal to a
nominal 10 micrometers (PM) for the areas designated as nonattainment
for the PM National Ambient Air Quality Standards (NAAQS). In Ohio,
Cuyahoga County and portions of Jefferson County are designated as
nonattainment for PM. Contingency measures are emission reductions
which are to be implemented, with no further action, in the event that
an area fails to meet air quality standards. This submittal would
result in an emissions reduction of 34 pounds of PM per hour in
Cuyahoga County, and 2.9 pounds of PM per hour in Jefferson County if
implementation of the contingency measures becomes necessary.
DATES: This action is effective on July 5, 1996, unless EPA receives
adverse or critical comments by June 5, 1996. If the effective date is
delayed, timely notice will be published in the Federal Register.
ADDRESSES: Copies of the revision request are available for inspection
at the following address: U.S. Environmental Protection Agency, Region
5, Air and Radiation Division 77 West Jackson Boulevard, Chicago,
Illinois 60604. (It is recommended that you telephone David Pohlman at
(312) 886-3299 before visiting the Region 5 Office.)
Written comments should be sent to: J. Elmer Bortzer, Chief,
Regulation Development Section, Air Programs Branch (AR-18J), U.S.
Environmental Protection Agency, 77 West Jackson Boulevard, Chicago,
Illinois 60604.
FOR FURTHER INFORMATION CONTACT: David Pohlman (312) 886-3299.
SUPPLEMENTARY INFORMATION:
I. Background
In Ohio, Cuyahoga County and portions of Jefferson County are
designated as nonattainment for PM and classified as moderate under
sections 107(d)(4)(B) and 188(a) of the Clean Air Act. See 56 FR 56694
(Nov. 6, 1991); 40 CFR 81.336. The air quality planning requirements
for moderate PM nonattainment areas are set out in subparts 1 and 4 of
part D, Title I of the Clean Air Act. The EPA has issued a ``General
Preamble'' describing EPA's preliminary views on how EPA intends to
review SIPs and SIP revisions submitted under Title I of the Clean Air
Act, including those State submittals containing moderate PM
nonattainment area SIP requirements (see generally 57 FR 13498 (April
16, 1992) and 57 FR 18070 (April 28, 1992)). Because EPA is describing
its interpretations here only in broad terms, the reader should refer
to the General Preamble for a more detailed discussion of the
interpretations of Title I advanced in this action and the supporting
rationale.
Those States containing initial moderate PM nonattainment areas
were required to submit contingency measures by November 15, 1993 (see
57 FR 13543). This contingency plan supplements the attainment plan,
and must include measures that become effective, without further action
by the State or EPA, upon a determination by EPA that the area has
failed to achieve reasonable further progress (RFP) or to attain the PM
NAAQS by the applicable statutory deadline. See section 172(c)(9)of the
Clean Air Act and 57 FR 13510-13512 and 13543-13544.
II. Analysis of State Submittal
The Ohio Environmental Protection Agency (OEPA) submitted a
requested SIP revision to the EPA with a letter dated July 17, 1995.
The submittal
[[Page 20140]]
contained Findings and Orders for facilities which identified
reasonably available PM emissions reductions as contingency measures
pursuant to Ohio Administrative Code Rule 3745-17-14. Specifically,
Findings and Orders for the following facilities were included: Ford
Motor Company, Cleveland Casting Plant, T & B Foundry Company,
International Mill Service, Luria Brothers, United Ready Mix.
A. Procedural Requirements
The Act requires States to observe certain procedural requirements
in developing implementation plans and plan revisions for submission to
EPA. Section 110(a)(2) of the Act provides that each implementation
plan submitted by a State must be adopted after reasonable notice and
public hearing. Section 110(l) of the Act similarly provides that each
revision to an implementation plan submitted by a State under the Act
must be adopted by such State after reasonable notice and public
hearing. Also section 172(c)(7) of the Act requires that plan
provisions for nonattainment areas meet the applicable provisions of
section 110(a)(2).
The EPA also must determine whether a submittal is complete and
therefore warrants further EPA review and action (see Section 110(k)(1)
and 57 FR 13565). The EPA's completeness criteria for SIP submittals
are set out at 40 CFR part 51, appendix V. The EPA attempts to make
completeness determinations within 60 days of receiving a submission.
However, a submittal is deemed complete by operation of law if a
completeness determination is not made by EPA six months after receipt
of the submission.
The State of Ohio, after providing adequate notice, held a public
hearing on May 31, 1995, regarding the PM contingency measures.
Following the public hearing, the final Findings and Orders were signed
by the Director of the Ohio Environmental Protection Agency (OEPA) on
July 10, 1995.
The submittal was reviewed by EPA to determine completeness in
accordance with the completeness criteria set out at 40 CFR part 51,
appendix V. The submittal was found to be complete and a letter dated
July 20, 1995, was sent to the State indicating the completeness of the
submittals and the next steps to be taken in the review process.
B. Contingency Measures
The Clean Air Act requires States containing PM nonattainment areas
to adopt contingency measures that will take effect without further
action by the State or EPA upon a determination by EPA that an area
failed to make RFP or to timely attain the applicable NAAQS, as
described in section 172(c)(9). See generally 57 FR 13510-13512 and
13543-13544. Pursuant to section 172(b), the Administrator has
established a schedule providing that states containing initial
moderate PM nonattainment areas shall submit SIP revisions containing
contingency measures no later than November 15, 1993. (See 57 FR 13543,
n. 3.)
The General Preamble further explains that contingency measures for
PM should consist of other available control measures, beyond those
necessary to meet the core moderate area control requirements to
implement reasonably available control measures and to assure
attainment (see Clean Air Act sections 172(c)(1), and 189(a)(1) (A) and
(C). Based on the statutory structure, EPA believes that contingency
measures must, at a minimum, provide for continued progress toward the
attainment goal during an interim period between any prospective
determination that the SIP has failed to achieve RFP or provide for
timely attainment of the NAAQS and the additional formal air quality
planning following the determination (57 FR 13511). PM contingency
measures are also addressed in a memo from the Acting Chief of the
Sulfur Dioxide/Particulate Matter Programs Branch, Air Quality
Management Division to the Air Branch Chiefs of EPA Regions 1-10 dated
August 20, 1991. This memo suggests that PM contingency emissions
reductions for moderate nonattainment areas should represent one year's
RFP. For example, reductions equal to 25 percent of the total reduction
in actual emissions in the SIP control strategy would be appropriate
for a moderate nonattainment area since the control strategy must
generally be implemented within a 3 to 4-year period between SIP
development and the attainment date.
Section 172(c)(9) of the Act specifies that contingency measures
shall ``take effect * * * without further action by the State, or the
[EPA] Administrator.'' EPA has interpreted this requirement (in the
General Preamble at 57 FR 13512) to mean that no further rulemaking
activities by the State or EPA would be needed to implement the
contingency measures. In general, EPA expects all actions needed to
effect full implementation of the measures to occur within 60 days
after EPA notifies the State of its failure to attain the standard or
make RFP.
The EPA recognizes that certain actions, such as notification of
sources, modification of permits, etc., may be needed before some
measures could be implemented. However, States must show that their
contingency measures can be implemented with minimal further
administrative action on their part and with no additional rulemaking
action such as public hearing or legislative review.
Ohio Administrative Code (OAC) Rule 3745-17-14 (approved by the EPA
on May 27, 1994, 59 FR 27464) requires principal facilities in the PM
nonattainment areas to submit control strategies and compliance
schedules to the OEPA which would reduce particulate emissions by 15
and 25 percent. OAC Rule 3745-17-14 also requires that the control
strategies and compliance schedules be approved by the Director of the
OEPA (as Findings and Orders) and submitted to the EPA as a revision to
the Ohio PM SIP. The rule further specifies that the requirements of
the Findings and Orders are to be implemented by each facility upon
receipt of a formal determination and notification by the OEPA or the
EPA that the area is not in compliance with the NAAQS. Whether the 15
percent or the 25 percent control strategy would be implemented will
depend on the severity of any actual violations.
The OEPA received contingency plans from the affected facilities
and worked with them to finalize those plans. The OEPA found various
situations with respect to the availability of additional particulate
emission reductions to meet the levels required in OAC Rule 3745-17-14.
Some of the affected facilities do not have any significant reductions
of PM emissions available, while others have some available reductions,
but not enough to meet the required levels in OAC Rule 3745-17-14.
Others have sufficient reductions available to fully meet the
requirements. As a result, some affected facilities are not being
required to commit to any contingency measure reductions.
The facilities which fully satisfy Rule 3745-17-14, are the Ford
Motor Company's Cleveland Casting Plant, and the T & B Foundry Company.
Ohio has issued Final Findings and Orders which incorporate the
contingency plans for these sources.
The facilities which have some reductions available, but not enough
to fully meet the required levels in OAC Rule 3745-17-14 are
International Mill Service, Luria Brothers, and United Ready Mix
(formerly Harval). Ohio has issued Final Findings and Orders which
incorporate the contingency measures. Ohio also submitted fact sheets
for these sources which explain why further reductions are not
available.
[[Page 20141]]
The facilities which have no significant particulate emission
reductions that are reasonably available are Granger Materials, Boyas
Excavating, Cuyahoga Foundry Company, Drummond Dolomite (formerly
Cleveland Builders Supply), Independence Excavating, Kenmore Asphalt
Products (formerly Lake Erie Asphalt Products), Ohio Aluminum
Industries, Schloss Paving Company, Standard Lafarge Company (formerly
Standard Slag Company), Stein, Wheeling-Pittsburgh Steel Corporation (2
facilities: Mingo Junction and Steubenville).
In addition, two facilities, Boyas Excavating, and Satralloy, have
shut down. LTV Steel Company (East Side and West Side) will have rule
revisions that require no actual emission reductions. EPA guidance
calls for contingency measures only in proportion to the actual
reductions obtained by the nonattainment area. Because LTV has zero
emissions reductions associated with the initial PM attainment plan, it
was not required to commit to any contingency measure reductions.
While Ohio's Rule 3745-17-14 requires contingency emission
reductions of the magnitude called for by the EPA (25% of the actual
reductions in the SIP control plan), it was found that some sources
were not able to reasonably obtain such reductions. Ohio carefully
analyzed the facilities' contingency plans to ensure that all
reasonably available measures are included. The EPA agrees that Ohio
has obtained a sufficient level of reductions to provide for a
reasonable level of continued progress toward the attainment goal
during an interim period between any prospective determination that the
SIP has failed to achieve RFP or provide for timely attainment of the
NAAQS and the additional formal air quality planning following the
determination. Ohio's PM contingency plan is, therefore, approvable by
the EPA.
C. Enforceability
All measures and other elements in the SIP must be enforceable by
the State and EPA (see Sections 172(c)(6), 110(a)(2)(A) and 57 FR
13556). The EPA criteria addressing the enforceability of SIPs and SIP
revisions were stated in a September 23, 1987 memorandum (with
attachments) from J. Craig Potter, Assistant Administrator for Air and
Radiation, et al. (see 57 FR 13541). State implementation plan
provisions also must contain a program to provide for enforcement of
control measures and other elements in the SIP (see section
110(a)(2)(C)).
The Final Findings and Orders issued by OEPA are clearly written,
and are legally enforceable by OEPA. The Final Findings and Orders will
be enforceable by the EPA upon their approval as a SIP revision. The
EPA believes that the State's existing air enforcement program will be
adequate to enforce PM contingency plans.
III. Final Action
The EPA approves Ohio's PM contingency measure rules, submitted by
OEPA on July 17, 1995. This submittal addressed PM contingency measure
plans that were due on November 15, 1993. The State's PM contingency
measures are included in Final Findings and Orders issued by the OEPA.
Previously approved OAC Rule 3745-17-14 requires that facilities
implement the contingency measures upon receipt of a formal
determination and notification by the OEPA or the EPA that the area is
not in compliance with the NAAQS.
The EPA is publishing this action without prior proposal because
EPA views this action as a noncontroversial revision and anticipates no
adverse comments. However, EPA is publishing a separate document in
this Federal Register publication, which constitutes a ``proposed
approval'' of the requested SIP revision and clarifies that the
rulemaking will not be deemed final if timely adverse or critical
comments are filed. The ``direct final'' approval shall be effective on
July 5, 1996, unless EPA receives adverse or critical comments by June
5, 1996. If EPA receives comments adverse to or critical of the
approval discussed above, EPA will withdraw this approval before its
effective date by publishing a subsequent Federal Register document
which withdraws this final action. All public comments received will
then be addressed in subsequent rulemaking. Please be aware that EPA
will institute another comment period on this action only if warranted
by significant revisions to the rulemaking based on any comments
received in response to today's action. Any parties interested in
commenting on this action should do so at this time. If no such
comments are received, EPA hereby advises the public that this action
will be effective on July 5, 1996.
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 9, 1995, memorandum from Mary D. Nichols, Assistant Administrator
for Air and Radiation. The Office of Management and Budget has exempted
this regulatory action from Executive Order 12866 review.
Nothing in this action should be construed as permitting, allowing
or establishing a precedent for any future request for revision to any
SIP. EPA shall consider each request for revision to the SIP in light
of specific technical, economic, and environmental factors and in
relation to relevant statutory and regulatory requirements.
Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded
Mandates Act'') (signed into law on March 22, 1995) requires that the
EPA prepare a budgetary impact statement before promulgating a rule
that includes a Federal mandate that may result in expenditure by
State, local, and tribal governments, in aggregate, or by the private
sector, of $100 million or more in any one year. Section 203 requires
the EPA to establish a plan for obtaining input from and informing,
educating, and advising any small governments that may be significantly
or uniquely affected by the rule.
Under section 205 of the Unfunded Mandates Act, the EPA must
identify and consider a reasonable number of regulatory alternatives
before promulgating a rule for which a budgetary impact statement must
be prepared. The EPA must select from those alternatives the least
costly, most cost-effective, or least burdensome alternative that
achieves the objectives of the rule, unless the EPA explains why this
alternative is not selected or the selection of this alternative is
inconsistent with law.
Because this final rule is estimated to result in the expenditure
by State, local, and tribal governments or the private sector of less
than $100 million in any one year, the EPA has not prepared a budgetary
impact statement or specifically addressed the selection of the least
costly, most cost-effective, or least burdensome alternative. Because
small governments will not be significantly or uniquely affected by
this rule, the EPA is not required to develop a plan with regard to
small governments. This rule only approves the incorporation of
existing state rules into the SIP. It imposes no additional
requirements.
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. (5 U.S.C. 603 and 604.)
Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small
[[Page 20142]]
entities. Small entities include small businesses, small not-for-profit
enterprises, and government entities with jurisdiction over populations
of less than 50,000.
SIP approvals under section 110 and subchapter I, part D of the
Clean Air Act do not create any new requirements, but simply approve
requirements that the State is already imposing. Therefore, because the
Federal SIP-approval does not impose any new requirements, I certify
that it does not have a significant impact on any small entities
affected. Moreover, due to the nature of the Federal-State relationship
under the Act, preparation of a regulatory flexibility analysis would
constitute Federal inquiry into the economic reasonableness of the
State action. The Clean Air Act forbids EPA to base its actions
concerning SIPs on such grounds. Union Electric Co. v. EPA., 427 U.S.
246, 256-66 (S.Ct. 1976); 42 U.S.C. 7410(a)(2).
Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by July 5, 1996. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for the purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed, and shall not postpone the effectiveness of such
rule or action. This action may not be challenged later in proceedings
to enforce its requirements. (See Section 307(b)(2)).
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by
reference, Particulate matter.
Dated: April 19, 1996.
Valdas V. Adamkus,
Regional Administrator.
For the reasons stated in the preamble, 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 KK--Ohio
2. Section 52.1870 is amended by adding paragraph (c)(109) to read
as follows:
Sec. 52.1870 Identification of plan.
* * * * *
(c) * * *
(109) On July 17, 1995, Ohio submitted a Particulate Matter (PM)
contingency measures State Implementation Plan (SIP) revision request.
The submittal includes Final Findings and Orders for 5 companies. The
Findings and Orders provide PM emission reductions which will take
effect if an area fails to attain the National Ambient Air Quality
Standards for PM.
(i) Incorporation by reference.
Director's Final Findings and Orders for Ford Motor Company
(Cleveland Casting Plant), T&B Foundry Company, International Mill
Service, Luria Brothers, and United Ready Mix, issued by the Ohio
Environmental Protection Agency on July 10, 1995.
[FR Doc. 96-11200 Filed 5-3-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-11198 Approval and Promulgation of Air Quality Implementation Plans; Utah; Emission Statement Regulation, Ozone Nonattainment Area Designation, Definitions
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20142-20145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11198]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[UT18-1-6778a; FRL-5468-8]
Approval and Promulgation of Air Quality Implementation Plans;
Utah; Emission Statement Regulation, Ozone Nonattainment Area
Designation, Definitions
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
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SUMMARY: EPA is approving the revision to the Utah State Implementation
Plan (SIP) that was submitted by the Governor of Utah on November 12,
1993, for the purpose of implementing an emission statement program for
stationary sources within the Salt Lake and Davis Counties (SLDC) ozone
nonattainment area. The emission statement inventory regulation, Utah
Air Conservation Regulation (UACR) R307-1-3.5.4., was submitted by the
State to satisfy the Clean Air Act (CAA), as amended in 1990,
requirements for an emission statement program to be part of the SIP
for Utah. EPA's approval will serve to make the emission statement
inventory regulation federally enforceable. In addition, EPA is
approving other minor changes involving definitions in UACR R307-1-1.
and the ozone nonattainment area designation definition in UACR R307-1-
3.3.3.
EFFECTIVE DATE: This final rule will be effective July 5, 1996, unless
adverse comments are received in writing on or before June 5, 1996. If
the effective date is delayed, timely notice will be published in the
Federal Register.
ADDRESSES: Written comments should be addressed to: Richard R. Long,
Director, Air Program (8P2-A), United States Environmental Protection
Agency, Region 8, 999 18th Street, Suite 500, Denver, Colorado 80202-
2466.
Copies of the documents relevant to this action are available for
public inspection between 8:00 a.m. and 4:00 p.m., Monday through
Friday at the following office: United States Environmental Protection
Agency, Region 8, Air Program, 999 18th Street, Suite 500, Denver,
Colorado 80202-2466.
FOR FURTHER INFORMATION CONTACT: Tim Russ, Air Program (8P2-A), United
States Environmental Protection Agency, Region 8, 999 18th Street,
Suite 500, Denver, Colorado 80202-2466, Telephone number: (303) 312-
6479.
SUPPLEMENTARY INFORMATION: Section 110(a)(2)(H)(i) of the CAA provides
the State the opportunity to update its SIP as needed or to address new
statutory requirements. The State is utilizing this authority of the
CAA to include its emission statement inventory regulation as part of
the SIP, to revise the ozone nonattainment area designation definition,
and perform minor definition changes.
I. Background
The air quality planning and SIP requirements for ozone
nonattainment and transport areas are set out in subparts I and II of
Part D of Title I of the CAA. EPA previously published a ``General
Preamble'' describing EPA's preliminary views on how EPA intends to
review SIPs and SIP revisions submitted under Title I of the CAA (refer
to 57 FR 13498, dated April 16, 1992, ``General Preamble for the
Implementation of Title I of the Clean Air Act Amendments of 1990;
Proposed Rule'', 57 FR 18070, dated April 28, 1992, ``General Preamble
for the Implementation of Title I of the Clean Air Act Amendments of
1990; Supplemental; Proposed Rule'', and 57 FR 55620, dated November
25, 1992, ``Nitrogen Oxides Supplement to the General Preamble for the
Implementation of Title I of the Clean Air Act Amendments of 1990'').
EPA also issued guidance describing the requirements for emission
statement programs, as discussed in this action, entitled ``Guidance on
the Implementation of an Emission Statement Program'', dated July,
1992.
Section 182 of the CAA sets out a graduated control program for
ozone nonattainment areas. Section 182(a) describes requirements
applicable to Marginal nonattainment areas. These requirements are also
made applicable to all other ozone nonattainment area
[[Page 20143]]
classifications through subsections (b), (c), (d), and (e) of section
182. Among the requirements in section 182(a) is a program, described
in paragraph (3) of that subsection, for stationary sources to prepare
and submit to the State each year emission statements showing actual
emissions of volatile organic compounds (VOC) and nitrogen oxides
(NOX). Section 182(a)(3) required States to submit to EPA, by
November 15, 1992, a revision to their SIP establishing an emission
statement program.
EPA's document ``Guidance on the Implementation of an Emission
Statement Program'', dated July, 1992, provided that whatever minimum
reporting level is established in a State emission statement program,
if either VOC or NOX is emitted at or above the designated level,
the other pollutant must be included in the emission statement even if
it is emitted at levels below the specified cutoffs.
Section 182(a)(3)(B)(ii) allows States to waive, with EPA approval,
the requirement for an emission statement for classes or categories of
sources with less than 25 tons per year of actual plant-wide NOX
or VOC emissions in nonattainment areas if: (1.) the class or category
is included in the base year and periodic inventories, and (2.)
emissions are calculated using emission factors established by EPA
(such as those found in EPA's publication AP-42) or other methods
acceptable to EPA.
The emission statement data must include: certification of data
accuracy; source identification information; operating schedule;
emissions information (to include annual and typical ozone season day
emissions); control equipment information; and process data. EPA
developed the emission statements data elements so as to be consistent
with other source and State reporting requirements. This consistency is
essential to assist States with quality assurance for emission
estimates and to facilitate consolidation of all EPA reporting
requirements.
In addition to the submission of the emission statement data to
AIRS, States must provide EPA with a status report that outlines the
degree of compliance with the emissions statement program. States must
report quarterly to EPA the total number of sources affected by the
State's emission statement provisions, the number that have complied
with the provisions, and the number that have not. This status report
must also include the total annual and typical ozone season day
emissions from all reporting sources, both corrected and non-corrected
for rule-effectiveness (RE). States must include in their status report
a list of sources that are delinquent in submitting their emission
statement and that emit 500 tpy or more of VOC or 2500 tpy or more of
NOX. This report must be submitted quarterly until all the
regulated sources have complied for the reporting year. The suggested
submittal dates for the quarterly status reports are July 1, October 1,
January 1, and April 1.
II. Analysis of Utah's Emission Statement Regulation
EPA is approving Utah's rule, UACR R307-1-3.5.4, ``Emission
Statement Inventory'', that was submitted by the Governor to EPA on
November 12, 1993. This rule provides the necessary requirements for an
emission statement program for the State of Utah as stipulated in
section 182(a)(3) of the CAA and in EPA's emission statement guidance
document entitled ``Guidance on the Implementation of an Emission
Statement Program'', dated July, 1992.
1. Administrative. The State of Utah held a public hearing on
August 4, 1993, for its Emission Statement Inventory regulation.
Following the public hearing, the Emission Statement Inventory
regulation was adopted by the State with an effective date of November
15, 1993. This new regulation was submitted to EPA on November 12,
1993, as part of the Ozone Redesignation Request and Maintenance Plan
SIP revisions. The State's emission statement inventory regulation was
prepared to fulfill one of the requirements of Section 182(b), for
Moderate ozone nonattainment areas, of the CAA.
The Ozone SIP revisions were reviewed by EPA to determine
completeness, in accordance with the completeness criteria found in 40
CFR Part 51 (as amended by 57 FR 42216 on August 26, 1991). The initial
November 12, 1993, submittal was found to be incomplete, and a letter
dated January 19, 1994, was sent to the Governor indicating the
administrative and technical deficiencies. The State of Utah sued EPA
on March 18, 1994, regarding EPA's incompleteness finding (State of
Utah v. EPA, Case No. 94-9520). As part of the lawsuit settlement, EPA
agreed to allow the State to repackage its submittal and request
parallel processing of the appropriate regulations and SIP revisions
relating to the Ozone Redesignation Request for Salt Lake and Davis
Counties. Therefore, on June 27, 1994, the State submitted: (1) a
request for parallel processing of the Ozone Maintenance Plan and, (2)
a reorganized Ozone Redesignation SIP revision and Maintenance Plan.
Included in the reorganized Ozone Redesignation SIP revision and
Maintenance Plan was the Emission Statement Inventory regulation. On
the basis of the State's June 27, 1994, submittal, EPA withdrew the
January 19, 1994, finding of incompleteness in a letter to the Governor
dated July 7, 1994. The July 7, 1994, letter deemed the State to have
submitted a complete Ozone Redesignation Request, including a complete
Emission Statement Inventory regulation submittal, as of November 12,
1993.
2. Components of an Emission Statement Regulation: There are
several components of an acceptable emission statement regulation.
Specifically, the State must submit an emission statement regulation as
a revision to its SIP. The emission statement regulation must meet the
minimum requirements for reporting by the sources and the State. The
emission statement regulation must include provisions for
applicability, definitions, compliance, and specific source
requirements detailed below.
a. Sources Covered. Section 182(a)(3)(B) requires that States with
areas designated as nonattainment for ozone require emission statement
data from sources of volatile organic compounds (VOC) or oxides of
nitrogen (NOX) in the nonattainment areas. This requirement
applies to all ozone nonattainment areas, regardless of the
classification (Marginal, Moderate, etc.) and is to be addressed
through a SIP revision. This requirement is fulfilled by the State in
UACR R307-1-3.5.4.A.
b. Regulation Elements. A State's emission statement regulation
must include provisions covering applicability of the regulation,
definitions for key terms used in the regulation, a compliance schedule
for sources covered by the regulation, and the specific reporting
requirements for sources. The emission statement submitted by the
source should contain a certification that the information is accurate
to the best knowledge of the individual certifying the statement,
identification information (name, physical location, mailing address of
the facility, latitude and longitude, and 4-digit Standard Industrial
Classification (SIC) code(s)), operating schedule information (annual
throughput, days per week on the normal operating schedule, hours per
day during the normal operating schedule, and hours per year on the
normal operating schedule), process rate data (annual process rate
(annual throughput) and peak ozone season daily process rate), control
equipment information (current primary and secondary control equipment
identification codes and current combined control equipment
[[Page 20144]]
efficiency (%)), emissions information (estimated actual VOC and
NOX emissions at the segment level (in tons per year for an annual
emission rate and pounds per day for a typical ozone season day),
estimated emissions method code, calendar year for the emissions, and
emission factor (if used)). The above requirements are fulfilled by the
State in UACR R307-1-3.5.4.B., UACR R307-1-3.5.4.C., and UACR R307-1-
3.5.4.D.
c. Reporting Requirements for Sources. Sources covered by Utah's
Emission Statement Inventory regulation must submit the data elements
described under Regulation Elements in section 2.b. above. The State
addressed this requirement in UACR R307-1-3.5.4.
d. Reporting Requirements for State. States must: (1) provide to
EPA the information for the sources covered by the emission statement
regulation, (2) provide the value for rule effectiveness utilized by
the State in its calculations, (3) submit quarterly emission statement
status reports. The quarterly reports should show the total number of
facilities that met the State's emission statement regulation
requirements and the number of facilities that failed to meet the
requirements. The above State reporting requirements were not initially
addressed in the State's submittal. In a letter dated April 21, 1995,
from Douglas Skie, Chief, Air Programs Branch, to Russell Roberts,
Director, Utah Division of Air Quality, EPA requested the State to
commit to providing the above information in quarterly status reports.
The necessary format was provided in this letter. In a letter dated May
30, 1995, from Russell Roberts, Director, Utah Division of Air Quality
to Douglas Skie, Chief, Air Programs Branch, the State committed to
provide the requested information.
III. Nonattainment Area Designation and Other Minor Definition
Changes
The State of Utah held a public hearing on September 1, 1993, for,
among other items, the ozone ``nonattainment area designation''
definition change. Following the public hearing, the ozone
``nonattainment area designation'' definition change was adopted by the
State with an effective date of November 13, 1993. UACR R307-1-3.3.3C
was changed from ``Ozone Nonattainment Areas'' to ``Ozone Nonattainment
Areas and Davis and Salt Lake Counties''. The other minor changes
involved several definitions found in UACR R307-1-1., ``Forward and
Definitions''. These other minor changes were administratively
addressed in conjunction with the Emission Statement Inventory
regulation in the August 4, 1993, public hearing and also became
effective on November 15, 1993.
IV. Enforceability Issues
All measures and other elements in the SIP must be enforceable by
the State and EPA. Under section 110(a)(2)(E)(iii) of the Act the State
must provide the necessary assurances that the State has the authority
to implement the SIP. The State has such authority, for the
implementation of the emission statement inventory regulation, UACR
R307-1-3.5.4., revision of the ozone nonattainment area designation
definition, UACR R307-1-3.3.3C, and other minor changes to definitions
in UACR R307-1-1., as found in the Utah Air Conservation Act, Chapter
2, Sections 19-2-101, 19-2-104, and 19-2-109.
Final Action. EPA is approving the following revision to Utah's SIP
as was submitted by the Governor on November 12, 1993: Emission
Statement Inventory regulation, UACR R307-1-3.5.4, ozone nonattainment
area designation definition, UACR R307-1-3.3.3C, and the following
definitions in UACR R307-1-1.; ``Control Apparatus'', ``Emissions
Information'', ``Peak Ozone Season'', ``Process Level'', and ``Process
Rate''.
EPA is publishing this action without prior proposal because the
Agency views this as a noncontroversial amendment and anticipates no
adverse comments. However, in a separate document in this Federal
Register publication, EPA is proposing to approve the SIP revisions
should adverse comments be filed. This action will be effective July 5,
1996, unless, by June 5, 1996, adverse comments are received.
If EPA receives adverse comments, this action will be withdrawn
before the effective date by publishing a subsequent document that will
withdraw the final action. All public comments received will then be
addressed in a subsequent final rule based on this action serving as a
proposed rule. EPA will not institute a second comment period on this
action. Any parties interested in commenting on this action should do
so at this time.
Nothing in this action should be construed as permitting or
allowing or establishing a precedent for any future request for
revision to any State Implementation Plan. Each request for revision to
any State Implementation Plan shall be considered separately in light
of specific technical, economic, and environmental factors and in
relation to relevant statutory and regulatory requirements.
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. 5 U.S.C. 603 and 604.
Alternatively, EPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises,
and government entities with jurisdiction over populations of less than
50,000.
SIP approvals under Section 110 and Subchapter I, Part D of the CAA
do not create any new requirements, but simply approve requirements
that the State is already imposing. Therefore, because the federal SIP-
approval does not impose any new requirements, I certify that it does
not have significant impact on any small entities. Moreover, due to the
nature of the federal-state relationship under the CAA, preparation of
a regulatory flexibility analysis would constitute federal inquiry into
the economic reasonableness of state action. The CAA forbids EPA to
base its actions concerning SIPs on such grounds. Union Electric Co. v.
U.S. E.P.A., 427 U.S. 246, 256-66 (S.Ct. 1976); 42 U.S.C. 7410(a)(2).
Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by July 5, 1996. Filing a petition for
reconsideration by the Administrator for this final rule does not
affect the finality of this rule for the purposes of judicial review
nor does it extend the time within which a petition for judicial review
may be filed, and shall not postpone the effectiveness of such rule or
action. This action may not be challenged later in proceedings to
enforce its requirements (see section 307(b)(2) of the CAA).
Under Sections 202, 203, and 205 of the Unfunded Mandates Reform
Act of 1995 (``Unfunded Mandates Act''), signed into law on March 22,
1995, EPA must undertake various actions in association with proposed
or final rules that include a Federal mandate that may result in
estimated costs of $100 million or more to the private sector, or to
State, local, or tribal governments in the aggregate.
Through submission of this state implementation plan or plan
revision, the State and any affected local or tribal governments have
elected to adopt the program provided for under Section 110 of the
Clean Air Act. These rules may bind State, local and tribal governments
to perform certain actions and also
[[Page 20145]]
require the private sector to perform certain duties. The rules being
approved by this action will impose no new requirements; such sources
are already subject to these regulations under State law. Accordingly,
no additional costs to State, local, or tribal governments, or to the
private sector, result from this action. EPA has also determined that
this final action does not include a mandate that may result in
estimated costs of $100 million or more to State, local, or tribal
governments in the aggregate or to the private sector.
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995, memorandum from Mary Nichols, Assistant Administrator
for Air and Radiation. The Agency has reviewed this request for
revision of the federally-approved SIP for conformance with the
provisions of the 1990 Amendments to the Clean Air Act enacted on
November 15, 1990. The Agency has determined that this action conforms
with those requirements.
Executive Order 12866
The Office of Management and Budget has exempted this rule from the
requirements of Section 6 of Executive Order 12866.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Nitrogen
dioxide, Ozone, Reporting and recordkeeping requirements, Volatile
organic compounds.
Dated: September 29, 1995.
Jack W. McGraw,
Acting Regional Administrator.
40 CFR part 52, Subpart TT, 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
2. Section 52.2320 is amended by adding paragraph (c)(34) to read
as follows:
Sec. 52.2320 Identification of plan.
* * * * *
(c) * * *
(34) Revisions to the Utah State Implementation Plan for the
Emission Statement Inventory regulation, UACR R307-1-3.5.4., revision
of the ozone nonattainment area designation definition, UACR R307-1-
3.3.3C, and other minor changes to definitions in UACR R307-1-1. were
submitted by the Governor in a letter dated November 12, 1993.
(i) Incorporation by reference.
(A) Emission Statement Inventory regulation, UACR R307-1-3.5.4,
ozone nonattainment area designation definition, UACR R307-1-3.3.3C,
and the following definitions in UACR R307-1-1.; ``Control Apparatus'',
``Emissions Information'', ``Peak Ozone Season'', ``Process Level'',
and ``Process Rate''. All were adopted on August 4, 1993, and became
effective on November 15, 1993.
(B) A letter dated May 30, 1995, from Russell Roberts, Director,
Utah Division of Air Quality to Douglas Skie, Chief, Air Programs
Branch for Region 8.
Editorial note: This document was received at the Office of the
Federal Register May 1, 1996.
[FR Doc. 96-11198 Filed 5-3-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-11196 Approval and Promulgation of Implementation Plans; Illinois
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20147-20149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11196]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[IL129-1-7046a; FRL-5464-8]
Approval and Promulgation of Implementation Plans; Illinois
AGENCY: Environmental Protection Agency.
ACTION: Direct final rule.
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SUMMARY: On March 14, 1995, the Illinois Environmental Protection
[[Page 20148]]
Agency (IEPA) formally submitted three federally enforceable State
operating permits (FESOPs) to the United States Environmental
Protection Agency (USEPA). These permits contained enforceable sulfur
dioxide (SO2) emission limitations for three industrial facilities
in the Granite City area of Madison County, Illinois. The limitations
are intended to address modeled violations of the SO2 National
Ambient Air Quality Standards (NAAQS). USEPA has determined that the
three FESOPs are adequate as revisions to Illinois' State
Implementation Plan (SIP) for sulfur dioxide (SO2) as it applies
to Madison County, and as such, address the previously modeled
violations of the SO2 NAAQS.
DATES: This action will be effective on July 5, 1996 unless adverse or
critical comments not previously addressed by the State or USEPA are
received by June 5, 1996. If the effective date is delayed, timely
notice will be published in the Federal Register.
ADDRESSES: Written comments should be addressed to: J. Elmer Bortzer,
Chief, Regulation Development Section, Air Programs Branch (AR-18J),
United States Environmental Protection Agency, Region 5, 77 West
Jackson Boulevard, Chicago, Illinois 60604.
Copies of the State's submittal and USEPA's analysis (Technical
Support Document) are available for inspection at the following
location: United States Environmental Protection Agency, Region 5, Air
and Radiation Division, 77 West Jackson Boulevard, Chicago, Illinois
60604. (It is recommended that you telephone Mary Onischak at (312)
353-5954 before visiting the Region 5 Office.)
FOR FURTHER INFORMATION CONTACT: Mary Onischak at (312) 353-5954.
SUPPLEMENTARY INFORMATION:
I. Background
On September 22, 1992 (57 FR 43846), USEPA proposed to designate
portions of Madison County, Illinois, including the Granite City area
(Granite City and Nameoki Townships) as nonattainment for SO2.
This proposed designation was based on modeled violations of the
SO2 NAAQS. On December 21, 1993 (58 FR 67336), USEPA published its
intent to defer the final SO2 designation of Madison County,
Illinois while the State worked to revise its SO2 SIP. On March
14, 1995, Illinois submitted a SO2 SIP revision request which
consisted of SO2 emission limitations for three facilities in
Madison County: the Nestle Beverage Company (Nestle), Reilly Industries
(Reilly), and the Granite City division of the National Steel
Corporation (Granite City Steel). Illinois' submittal, including
background information, demonstration of attainment, and enforceability
is discussed further in the technical support document.
II. Emission Limitations
A. Nestle Beverage Company
Nestle's FESOP covers three sources: the Nebraska boiler, Boiler
Number 5, and the tea leaf burner. Both boilers normally use natural
gas, but have the capability of burning fuel oil as well. The tea leaf
burner combusts ``spent'' tea leaves, with natural gas or oil as
support fuels. The FESOP conditions require that Nestle's fuels, except
for the tea leaves, must all meet a fuel quality rating of 0.30 pounds
SO2 per million British Thermal Units (lb/MMBTU), on an hourly
basis. The SO2 and particulate emissions from the tea leaf burner
are controlled by a flue gas desulfurization unit, and the tea leaf
burner's SO2 emissions must not exceed 0.30 lb/MMBTU, regardless
of the fuel burned. After April 1, 1996, the SO2 emissions of the
tea leaf burner are to be measured and recorded hourly, using a
continuous emissions monitoring (CEM) system.
B. Reilly Industries
Reilly Industries emits SO2 from seven Stills. The facility
normally uses natural gas at these Stills, but keeps a supply of fuel
oil as a backup fuel. The facility originally was allowed to use
residual fuel oil, which the State of Illinois limits to 1.0 lb/MMBTU
of SO2 [35 IAC 214.161(a)]. Under the new FESOP requirements, the
facility must burn only natural gas or distillate fuel oil, resulting
in SO2 emissions of no more than 0.30 lb/MMBTU. Fuel which would
lead to emissions greater than 0.3 lb/MMBTU may not be burned by the
facility.
C. Granite City Steel
While most combustion units at Granite City Steel are primarily
fueled by natural gas, the plant maintains the ability to use several
different fuels: natural gas, blast furnace gas, fuel oil, and coke
oven gas (COG). Natural gas and blast furnace gas do not cause
significant emissions of SO2. Fuel oil, which contains sulfur, is
primarily used as a backup fuel. COG is produced at the facility and
must either be used as fuel or destroyed in a flare because it cannot
be stored at the site. Granite City Steel requested to be allowed
adequate flexibility to make use of the COG it generates. The COG
contains hydrogen sulfide (H2S), which converts to SO2 during
combustion.
The Granite City Steel FESOP imposes daily and annual SO2
emission caps on certain combustion units and unit groups at the
facility, with additional 3-hour emission caps on some units. Although
certain sources have been restricted to the use of natural gas alone,
or have been prohibited from using fuel oil, the SO2 emission caps
are generally independent of the fuel types used. Granite City Steel
continuously monitors its COG flow and COG sulfur content for the
calculation of SO2 emissions for compliance purposes. The Granite
City Steel FESOP limits were developed based on modeling which tested
both the company's most frequent fuel routing and worst-case fuel
routing.
III. Air Quality Analysis
The SO2 emission limits in the FESOPs for the three Madison
County facilities were all supported by air dispersion modeling.
Illinois used the Industrial Source Complex long- and short-term models
with the regulatory default options. The Granite City area is
considered rural, so rural dispersion coefficients were used. Other
nearby sources were explicitly modeled in addition to the three FESOP
sources. Worst-case building dimensions were used for downwash impacts.
A reduced load screening analysis was performed to determine the source
operating rates that resulted in maximum ambient impact. The receptor
arrays had a resolution of 100 meters in the areas of concern and at
the fencelines, and because the sources are near the border of Illinois
and Missouri, interstate impacts were taken into account. Five years of
meteorological data from St. Louis were used, and background
concentrations were added to the final ambient SO2 concentration
predictions.
The dispersion modeling study was used as a tool for developing the
SO2 emission limits at these sources. Setting and modeling the
emission limits for Nestle and Reilly was fairly straightforward, but
setting Granite City Steel's emission limits presented a challenge.
Because there are many different emission scenarios possible at Granite
City Steel, IEPA considered the relative impacts from each source group
separately. Illinois performed many modeling tests to evaluate the
different operating scenarios. Emission limits were placed on the
source groups so that any operation scenario used at the facility could
be expected to protect the SO2 NAAQS. The final 3-hour, 24-hour,
and annual modeling runs, which included all the Granite City area
SO2 sources and background concentrations, showed that the entire
Granite City area would attain the NAAQS for SO2.
[[Page 20149]]
USEPA has reviewed this modeling and determined that it is acceptable.
For further documentation of the dispersion modeling, see the technical
support document.
IV. Enforceability
Illinois established a set of specific recordkeeping and reporting
requirements as conditions within a federally enforceable operating
permit for the three Granite City facilities. On December 17, 1992 (57
FR 59928) Illinois' operating permit program was approved by USEPA and
incorporated into the Illinois SIP. Permits issued under this federally
enforceable State operating permit program may serve as part of the SIP
and may be used to address certain SIP deficiencies.
The FESOP for Nestle (Application No. 94110119) was issued on March
8, 1995. The FESOP for Reilly (Application No. 94040131) was issued on
February 24, 1995. The Granite City Steel FESOP (Application No.
94120017) was issued on March 7, 1995. The permits were given public
notice and were made available for public comment. The conditions of
the permits effectively limit emissions of sulfur dioxide from the
affected sources.
V. Final Rulemaking Action
The USEPA has determined that Illinois' March 14, 1995, SO2
SIP revision submittal satisfies section 110(A)(2) of the Clean Air Act
and is fully approvable. The FESOPs for Nestle, Reilly, and Granite
City Steel are expected to rectify the modeled ambient air quality
violations identified previously. USEPA's September 22, 1992 (57 FR
43846) proposed redesignation of the Granite City area of Madison
County, Illinois, is rendered moot as a consequence of this approval.
The USEPA is publishing this action without prior proposal because
USEPA views this action as a noncontroversial revision and anticipates
no adverse comments. However, the rulemaking will not be deemed final
if timely unaddressed adverse or critical comments are filed. The
``direct final'' approval shall be effective on July 5, 1996, unless
USEPA receives such adverse or critical comments by June 5, 1996. The
USEPA is now soliciting public comments on this action. Any parties
interested in commenting on this action should do so at this time. In
the proposed rules section of this Federal Register, USEPA is
publishing a separate document which constitutes a ``proposed
approval'' of the requested SIP revision. If warranted by comments
adverse to or critical of the approval discussed above, which have not
been addressed by the State or USEPA, USEPA will publish a Federal
Register document which withdraws the final action. The USEPA will then
address public comments received in a subsequent rulemaking document
based on the proposed approval.
Nothing in this action should be construed as permitting, allowing
or establishing a precedent for any future request for revision to any
SIP. The USEPA shall consider each request for revision to the SIP in
light of specific technical, economic, and environmental factors and in
relation to relevant statutory and regulatory requirements.
This action has been classified as a Table 3 action for signature
by the Regional Administrator under the procedures published in the
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a
July 10, 1995, memorandum from Mary D. Nichols, Assistant Administrator
for Air and Radiation. The Office of Management and Budget (OMB) has
exempted this regulatory action from Executive Order 12866 review.
Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., USEPA
must prepare a regulatory flexibility analysis assessing the impact of
any proposed or final rule on small entities. (5 U.S.C. 603 and 604.)
Alternatively, USEPA may certify that the rule will not have a
significant impact on a substantial number of small entities. Small
entities include small businesses, small not-for-profit enterprises,
and government entities with jurisdiction over populations of less than
50,000.
SIP approvals under section 110 and subchapter I, Part D of the
Clean Air Act do not create any new requirements, but simply approve
requirements that the State is already imposing. Therefore, because the
Federal SIP approval does not impose any new requirements, I certify
that it does not have a significant impact on any small entities
affected. Moreover, due to the nature of the Federal-State relationship
under the Clean Air Act, preparation of a regulatory flexibility
analysis would constitute Federal inquiry into the economic
reasonableness of the State action. The Clean Air Act forbids USEPA to
base its actions concerning SIPs on such grounds. Union Electric Co. v.
USEPA, 427 U.S. 246, 256-66 (S.Ct. 1976); 42 U.S.C. 7410(a)(2).
Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded
Mandates Act''), signed into law on March 22, 1995, requires that the
USEPA prepare a budgetary impact statement before promulgating a rule
that includes a Federal mandate that may result in expenditure by
State, local, and tribal governments, in aggregate, or by the private
sector, of $100 million or more in any one year. Section 203 requires
the USEPA to establish a plan for obtaining input from and informing,
educating, and advising any small governments that may be significantly
or uniquely affected by the rule.
Under section 205 of the Unfunded Mandates Act, the USEPA must
identify and consider a reasonable number of regulatory alternatives
before promulgating a rule for which a budgetary impact statement must
be prepared. The USEPA must select from those alternatives the least
costly, most cost-effective, or least burdensome alternative that
achieves the objectives of the rule, unless the USEPA explains why this
alternative is not selected or the selection of this alternative is
inconsistent with law.
This rule only approves the incorporation of existing state rules
into the SIP. It imposes no additional requirements. Because this final
rule is estimated to result in the expenditure by State, local, and
tribal governments or the private sector of less then $100 million in
any one year, the USEPA has not prepared a budgetary impact statement
or specifically addressed the selection of the least costly, most cost-
effective, or least burdensome alternative. Because small governments
will not be significantly or uniquely affected by this rule, the USEPA
is not required to develop a plan with regard to small governments.
Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by July 5, 1996. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for the purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed, and shall not postpone the effectiveness of such
rule or action. This action may not be challenged later in proceedings
to enforce its requirements. (See section 307(b)(2).)
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Sulfur oxides.
Authority: 42 U.S.C. 7401-7671q.
Dated: April 18, 1996.
David Kee,
Acting Regional Administrator.
[FR Doc. 96-11196 Filed 5-3-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-11173 Airworthiness Directives; AlliedSignal Inc. ALF502L Series Turbofan Engine
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Page 20127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11173]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. Docket No. 94-ANE-56; Amendment 39-9513; AD 96-04-02]
Airworthiness Directives; AlliedSignal Inc. ALF502L Series
Turbofan Engine
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule; correction.
-----------------------------------------------------------------------
SUMMARY: This document makes a correction to Airworthiness Directive
(AD) 96-04-02 applicable to AlliedSignal Inc. (formerly Textron
Lycoming) ALF502L series turbofan engines that was published in the
Federal Register on February 29, 1996 (61 FR 7692). The AD number in
the compliance section is incorrect. This document corrects the AD
number. In all other respects, the original document remains the same.
DATES: Effective May 6, 1996.
SUPPLEMENTARY INFORMATION: A final rule airworthiness directive
applicable to AlliedSignal Inc. (formerly Textron Lycoming) ALF502L
engines, was published in the Federal Register on February 29, 1996 (61
FR 7692). The following correction is needed:
On page 7693, in the middle column, in the Compliance Section 2.,
in the fourth line, ``94-04-02'' should read ``96-04-02.''
Issued in Burlington, MA, on April 22, 1996.
Jay J. Pardee,
Manager, Engine and Propeller Directorate, Aircraft Certification
Service.
[FR Doc. 96-11173 Filed 5-3-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-11172 Airworthiness Directives; Pratt and Whitney JT8D Series Turbofan Engines
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Page 20125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11172]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. 95-ANE-58; Amendment 39-9461; AD 95-26-03]
Airworthiness Directives; Pratt and Whitney JT8D Series Turbofan
Engines
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule; correction.
-----------------------------------------------------------------------
SUMMARY: This document makes a correction to Airworthiness Directive
(AD) 95-26-03 applicable to Pratt & Whitney (PW) JT8D series turbofan
engines that was published in the Federal Register on December 27, 1995
(60 FR 66872). An engine model was omitted from the Applicability
paragraph. This document adds the omitted engine model. In all other
respects, the original document remains the same.
DATES: Effective May 6, 1996.
SUPPLEMENTARY INFORMATION: A final rule airworthiness directive
applicable to Pratt & Whitney (PW) JT8D series turbofan engines, was
published in the Federal Register on December 27, 1995 (60 FR 66872).
The following correction is needed:
On page 66874, in the first column, in the Compliance Section, in
the Applicability paragraph, in the second line, ``Models JT8D-1, -1A,
-1B, -7, -7A, -9, -9A `` should read ``Models JT8D-1, -1A, -1B, -7, -
7A, -7B. -9, -9A.''
Issued in Burlington, MA, on April 17, 1996.
Jay J. Pardee,
Manager, Engine and Propeller Directorate, Aircraft Certification
Service.
[FR Doc. 96-11172 Filed 5-3-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-11167 Airworthiness Directives; Maule Aerospace Technologies, Inc. Models M-4-210 and M-4-210C Airplanes
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20125-20127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11167]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 95-CE-22-AD; Amendment 39-9610; AD 96-10-05]
RIN 2120-AA64
Airworthiness Directives; Maule Aerospace Technologies, Inc.
Models M-4-210 and M-4-210C Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment adopts a new airworthiness directive (AD) that
applies to certain Maule Aerospace Technologies, Inc. (Maule) Models M-
4-210 and M-4-210C airplanes that have Dual Exhaust System 5230F
installed. This action requires relocating the gascolator and electric
fuel pump away from the dual exhaust system. The Federal Aviation
Administration (FAA) recently became aware that, with these dual
exhaust systems installed on the affected airplanes, the left-hand
exhaust stack is routed almost directly below the fuel gascolator. The
close proximity of the flammable fuel to the exhaust system presents an
unsafe condition and violates current regulations. The actions
specified by this AD are intended to prevent an airplane engine fire
caused by the close proximity of the fuel gascolator and electric fuel
pump to the exhaust system.
DATES: Effective June 21, 1996.
The incorporation by reference of certain publications listed in
the regulations is approved by the Director of the Federal Register as
of June 21, 1996.
[[Page 20126]]
ADDRESSES: Service information that applies to this AD may be obtained
from Maule Aerospace Technology, Inc., Lake Maule, Route 5, Box 318,
Moultrie, Georgia 31768; telephone (912) 985-2045; facsimile (912) 890-
2402. This information may also be examined at the FAA, Central Region,
Office of the Assistant Chief Counsel, Attention: Rules Docket 95-CE-
22-AD, Room 1558, 601 E. 12th Street, Kansas City, Missouri 64106; or
at the Office of the Federal Register, 800 North Capitol Street, NW.,
suite 700, Washington, DC.
FOR FURTHER INFORMATION CONTACT: Ms. Juanita Craft-Lloyd, Aerospace
Engineer, FAA, Atlanta Aircraft Certification Office, Campus Building,
1701 Columbia Avenue, suite 2-160, College Park, Georgia 30337-2748;
telephone (404) 305-7373; facsimile (404) 305-7348.
SUPPLEMENTARY INFORMATION: A proposal to amend part 39 of the Federal
Aviation Regulations (14 CFR part 39) to include an AD that would apply
to Maule Models M-4-210 and M-4-210C airplanes that have Dual Exhaust
System 5230F installed was published in the Federal Register on June
12, 1995 (60 FR 35877). The action proposed to require relocating the
gascolator and electric fuel pump. Accomplishment of the proposed
action would be in accordance with Maule Service Bulletin No. 10, dated
September 16, 1994.
Interested persons have been afforded an opportunity to participate
in the making of this amendment. No comments were received on the
proposed rule or the FAA's determination of the cost to the public.
After careful review of all available information related to the
subject presented above, the FAA has determined that air safety and the
public interest require the adoption of the rule as proposed except for
minor editorial corrections. The FAA has determined that these minor
corrections will not change the meaning of the AD and will not add any
additional burden upon the public than was already proposed.
The FAA estimates that 125 airplanes in the U.S. registry will be
affected by this AD, that it will take approximately 8 workhours per
airplane to accomplish the required action, and that the average labor
rate is approximately $60 an hour. Parts cost approximately $158 per
airplane. Based on these figures, the total cost impact of this AD on
U.S. operators is estimated to be $79,750. This figure is based on the
assumption that no owner/operator of the affected airplanes has
relocated the gascolator and electric fuel pump.
Maule has informed the FAA that enough parts have been distributed
to accomplish the relocation on two of the affected airplanes. Assuming
that each owner/operator that received parts has accomplished the
relocation, the cost impact upon the public is reduced by $1,276 from
$79,750 to $78,474.
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this final
rule does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this action (1) is
not a ``significant regulatory action'' under Executive Order 12866;
(2) is not a ``significant rule'' under DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979); and (3) 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. A copy of the final evaluation prepared for this
action is contained in the Rules Docket. A copy of it may be obtained
by contacting the Rules Docket at the location provided under the
caption ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration amends part 39 of
the Federal Aviation Regulations (14 CFR part 39) as follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 USC 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by adding a new airworthiness directive
(AD) to read as follows:
96-10-05 Maule Aerospace Technologies, Inc.: Amendment 39-9610;
Docket No. 95-CE-22-AD.
Applicability: The following airplane models and serial numbers,
certificated in any category, that have Dual Exhaust System 5230F
installed:
------------------------------------------------------------------------
Model Serial numbers
------------------------------------------------------------------------
M-4-210 1001 through 1045.
M-4-210C 1001C through 1080C.
------------------------------------------------------------------------
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must request approval for an
alternative method of compliance in accordance with paragraph (c) of
this AD. The request should include an assessment of the effect of
the modification, alteration, or repair on the unsafe condition
addressed by this AD; and, if the unsafe condition has not been
eliminated, the request should include specific proposed actions to
address it. Compliance: Required within the next 50 hours time-in-
service after the effective date of this AD, unless already
accomplished.
To prevent an airplane engine fire caused by the close proximity
of the fuel gascolator and electric fuel pump to the exhaust system,
accomplish the following:
(a) Relocate the gascolator and fuel pump from above the air
egress to the left-side of the airplane in accordance with Maule
Service Bulletin No. 10, dated September 16, 1994.
(b) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
(c) An alternative method of compliance or adjustment of the
compliance time that provides an equivalent level of safety may be
approved by the Manager, Atlanta Aircraft Certification Office
(ACO), Campus Building, 1701 Columbia Avenue, suite 2-160, College
Park, Georgia 30337-2748. The request shall be forwarded through an
appropriate FAA Maintenance Inspector, who may add comments and then
send it to the Manager, Atlanta ACO.
Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Atlanta ACO.
(d) The relocation required by this AD shall be done in
accordance with Maule Service Bulletin No. 10, dated September 16,
1994. This incorporation by reference was approved by the Director
of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR
part 51. Copies may be obtained from Maule Aerospace Technology,
Inc., Lake Maule, Route 5, Box 318, Moultrie, Georgia 31768. Copies
may be inspected at the FAA, Central Region, Office of the Assistant
Chief Counsel, Room 1558, 601 E. 12th Street, Kansas City, Missouri,
or at the Office of the Federal Register, 800 North Capitol Street,
NW., suite 700, Washington, DC.
(e) This amendment (39-9610) becomes effective on June 21, 1996.
[[Page 20127]]
Issued in Kansas City, Missouri, on April 30, 1996.
Bobby W. Sexton,
Acting Manager, Small Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-11167 Filed 5-3-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-11163 General Provisions for Domestic Fisheries; Extension of Emergency Fishing Closure in Block Island Sound
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Page 20175]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11163]
=======================================================================
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 620
[Docket No. 960126016-6121-04; I.D. 042996F]
General Provisions for Domestic Fisheries; Extension of Emergency
Fishing Closure in Block Island Sound
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Emergency interim rule; extension.
-----------------------------------------------------------------------
SUMMARY: In response to a request from the State of Rhode Island, NMFS
is extending the emergency interim rule that closed a portion of
Federal waters off the coast of the State of Rhode Island, in Block
Island Sound subsequent to an oil spill. Fishing for and possession of
lobsters in a small area east and north of Block Island will remain
prohibited.
EFFECTIVE DATE: May 1, 1996, through July 23, 1996.
FOR FURTHER INFORMATION CONTACT: Daniel Morris, (508) 281-9388.
SUPPLEMENTARY INFORMATION: On January 19, 1996, an oil barge grounded
and spilled more than 800,000 gallons (3.0 million liters) of heating
oil into the waters of Block Island Sound, RI. On January 26, 1996,
NMFS, at the request of and in conjunction with the State of Rhode
Island, prohibited the harvest of seafood from an area of approximately
250 square miles (647 square km) in Block Island Sound. The original
area of closure was announced and defined in an emergency interim rule
published in the Federal Register on February 1, 1996 (61 FR 3602).
The Federal closure has been twice amended, effective on March 13,
1996 (61 FR 11164, March 19, 1996), and April 9, 1996 (61 FR 16401,
April 15, 1996). The latter citation describes the current closure.
Following the oil spill, State officials, in consultation with
Federal agencies and the responsible party, developed a protocol for
reopening fisheries in the affected area. The protocol sets sampling,
inspection, and analysis standards, which, if met, would ensure that
seafood is wholesome and would provide a basis for reopening fisheries.
In the most recent round of inspection, evidence of oil adulteration
was found in lobster samples taken from the closed Federal waters.
Therefore, the closure to fishing for and possessing lobsters in a
small area east and north of Block Island is extended by 90 days or
until the testing protocol is satisfied.
The New England Fishery Management Council (Council) has concurred
in the extension of this emergency closure, so long as the extension
complements the State's regulations and is implemented at the State's
request.
Classification
Extension of the emergency interim rule is intended to prevent oil-
adulterated lobsters from reaching consumers. Also, the extension does
not change existing regulations. On these grounds, NMFS finds good
cause to extend the emergency interim rule in accordance with section
305(c)(3)(B) of the Magnuson Fishery Conservation and Management Act
(Magnuson Act). It would be contrary to public interest to provide
notice and opportunity for comment or to delay for 30 days the
effective date of this action under authority at 5 U.S.C. 553(b)(B) and
(d)(3).
The Assistant Administrator for Fisheries, NOAA (AA), has
determined that this rule is necessary to respond to an emergency
situation and is consistent with the Magnuson Act and other applicable
law.
This emergency rule extension has been determined to be not
significant for the purposes of E.O. 12866.
This emergency rule extension is exempt from the procedures of the
Regulatory Flexibility Act because this rule is not required to be
issued with prior notice and opportunity for public comment.
Authority: 16 U.S.C. 1801 et seq.
Dated: April 30, 1996.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.
[FR Doc. 96-11163 Filed 5-1-96; 10:02 am]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-11157 Servicemen's and Veterans' Group Life Insurance
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20134-20136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11157]
-----------------------------------------------------------------------
DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 9
RIN 2900-AH50
Servicemen's and Veterans' Group Life Insurance
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This document amends the Department of Veterans Affairs (VA)
regulations relating to Servicemen's and Veterans' Group Life Insurance
by eliminating provisions that merely restate statutory provisions or
that no longer apply to the insurance programs and by rewriting other
provisions for purposes of clarification.
EFFECTIVE DATE: May 6, 1996.
FOR FURTHER INFORMATION CONTACT: George Poole, Chief, Insurance Program
Administration, Department of Veterans Affairs Regional Office and
Insurance Center, PO Box 8079, Philadelphia, Pennsylvania 19101, (215)
951-5718.
SUPPLEMENTARY INFORMATION: The Insurance Service of the Veterans
Benefits Administration has determined that it is no longer practicable
to publish in the Federal Register provisions that merely restate
statutory provisions. This is especially evident when one considers the
burden involved in keeping such regulatory provisions current with
statutory changes. As an illustrative example, consider the previous 38
CFR 9.4, which merely restated the provisions of 38 U.S.C. 1967(a) as
they pertain to the amount of life insurance coverage allowable under
the Servicemen's Group Life Insurance (SGLI) program. When Congress
established the SGLI program in 1965, it set the maximum coverage
available at $10,000. VA promulgated Sec. 9.4 to reflect this maximum
coverage. Section 9.4 was merely informational, but added no real value
to the operation of the SGLI program. Since then, Congress has
increased the maximum coverage six times, and each time VA has had to
amend Sec. 9.4 to reflect the statutory change. If VA had not initially
promulgated Sec. 9.4, VA would have avoided a total of seven regulatory
submissions and their resultant costs.
Accordingly, all or portions of Secs. 9.1, 9.4, 9.5, 9.6, 9.7, 9.8,
9.10, 9.12, 9.14, 9.16, 9.17, 9.18, 9.24, 9.32, 9.34 and 9.36 are
eliminated because they merely restate provisions in 38 U.S.C. Chapter
19.
Also, provisions set forth in Secs. 9.2(a), 9.2(d)(3), 9.3(a),
9.3(e), 9.5(d), 9.24(a)(1), 9.24(a)(2), and 9.30(a) concern ``sunset''
requirements that no longer apply to Servicemen's or Veterans' Group
Life Insurance. Consequently, these provisions are eliminated.
In addition, Secs. 9.2 and 9.3 are combined and rewritten to
eliminate redundant text, and amendments are made to other sections for
purposes of clarification.
This final rule consists of nonsubstantive changes and, therefore,
is not subject to the notice-and-comment and effective-date provisions
of 5 U.S.C. 553. Also, this final rule is not a significant revision as
defined in FAR 1.501-1.
The Secretary of Veterans Affairs hereby certifies that this final
rule will not have a significant economic impact on a substantial
number of small entities as they are defined in the Regulatory
Flexibility Act, 5 U.S.C. 601-612, since it does not contain any
substantive provisions. This final rule will not significantly affect
any entity. Therefore, pursuant to 5 U.S.C. 605(b), this amendment is
exempt from the initial and final regulatory flexibility analysis
requirements of sections 603 and 604.
The Catalog of Federal Domestic Assistance Program number for
these regulations is 64.103.
List of Subjects in 38 CFR Part 9
Life insurance, Military personnel, Veterans.
Approved: April 29, 1996.
Jesse Brown,
Secretary of Veterans Affairs.
For the reasons set out in the preamble, 38 CFR part 9 is amended
as set forth below:
[[Page 20135]]
PART 9--SERVICEMEN'S GROUP LIFE INSURANCE AND VETERANS' GROUP LIFE
INSURANCE
1. The authority citation for part 9 is revised to read as follows:
Authority: 38 U.S.C. 501, 1965-1979, unless otherwise noted.
2. In Sec. 9.1, paragraphs (c), (f), (g), (h), (j), (k), (l), (o),
and (s) are removed; paragraphs (i), (m), (n), (p), (q), and (r) are
redesignated as paragraphs (c), (f), (g), (h), (i), and (j),
respectively; and introductory text is added, and paragraphs (a), (b),
(d), and (e) are revised to read as follows:
Sec. 9.1 Definitions.
The following definitions are in addition to those definitions in
38 U.S.C. 101 and 1965:
(a) The term policy means Group Policy No. G-32000, which was
effective September 29, 1965, purchased from the insurer pursuant to 38
U.S.C. 1966, executed and attested on December 30, 1965, and amended
thereafter.
(b) The term administrative office means the Office of
Servicemembers' Group Life Insurance located at 213 Washington Street,
Newark, NJ 07102.
* * * * *
(d) The term reinsurer means any life insurance company meeting all
the criteria set forth in Sec. 9.10 which reinsures a portion of the
total amount of insurance covered by the policy and issues individual
life insurance policies to members under the provisions of 38 U.S.C.
1968(b) and 1977(e).
(e) The term converter means any life insurance company meeting all
the criteria set forth in Sec. 9.10 which issues individual life
insurance policies to members under the provisions of 38 U.S.C. 1968(b)
and 1977(e).
* * * * *
3. Section 9.2 is revised to read as follows:
Sec. 9.2 Effective date; Applications.
(a) The effective date of Servicemen's Group Life Insurance will be
as follows:
(1) For members who qualify for continuation of coverage under 38
U.S.C. 1967(a)(3), the effective date shall be the 121st day after
termination of duty. An application and the initial premium must be
received by the administrative office within 120 days following
termination of duty.
(2) For members who qualify for coverage under 38 U.S.C. 1967(a)(3)
and whose coverage is extended because of total disability, the
effective date shall be the day following the end of the 1-year period
of extended coverage or the day following the end of the total
disability, whichever is the earlier date, but in no event before the
121st day following termination of duty. An application and the initial
premium must be received by the administrative office within 1 year
following termination of duty.
(b) The effective date of Veterans' Group Life Insurance will be as
follows:
(1) For members whose Servicemen's Group Life Insurance coverage
ceases under 38 U.S.C. 1968(a)(1)(A), the effective date shall be the
121st day after termination of duty. An application and the initial
premium must be received by the administrative office within 120 days
following termination of duty.
(2) For members whose Servicemen's Group Life Insurance coverage
was extended because of total disability, the effective date shall be
the day following the end of the 1-year period of extended coverage or
the day following the end of the total disability, whichever is the
earlier date, but in no event before the 121st day following
termination of duty. An application and the initial premium must be
received by the administrative office within 1 year following
termination of duty.
(3) For members who qualify for coverage under 38 U.S.C. 1967(b),
the effective date shall be the 121st day after termination of duty. An
application, the initial premium, and proof of disability must be
received by the administrative office within 120 days following
termination of duty.
(4) For members of the Individual Ready Reserve or the Inactive
National Guard, the effective date shall be the date an application and
the initial premium are received by the administrative office. The
application and initial premium must be received by the administrative
office within 120 days of becoming a member of either organization.
(Authority: 38 U.S.C. 1977(e))
(c) If either an application or the initial premium has not been
received by the administrative office within the time limits set forth
above, Servicemen's Group Life Insurance or Veterans' Group Life
Insurance coverage may still be granted if an application, the initial
premium, and evidence of insurability are received by the
administrative office within 1 year and 120 days following termination
of duty.
(d) The effective date for Servicemen's Group Life Insurance or
Veterans' Group Life Insurance in any case not otherwise covered under
this section or under 38 U.S.C. 1967(a) shall be the date an
application and the initial premium are received by the administrative
office.
(e) For purposes of this section, an application, an initial
premium, and any evidence necessary to effect Servicemen's Group Life
Insurance or Veterans' Group Life Insurance coverage will be considered
to have been received by the administrative office if:
(1) They are properly addressed to the administrative office, and
(2) The proper postage is affixed, and
(3) They are legibly postmarked within the time limit required for
receipt by the administrative office.
Sec. 9.3 [Removed]
4. Section 9.3 is removed.
Sec. 9.6 [Redesignated as Sec. 9.3]
5. Section 9.6 is redesignated as Sec. 9.3. In newly redesignated
Sec. 9.3, paragraph (b) is removed, and paragraph (c) is redesignated
as paragraph (b). Newly redesignated paragraph (b) is amended by
removing ``, Sec. 9.5(b)(1) or (2),'' wherever it appears; and
paragraph (b)(3), is amended by removing ``paragraph (c)(2)'' and
adding, in its place, ``paragraph (b)(2)'', and by removing ``under
Sec. 9.5(a)''; and paragraph (a) is revised to read as follows:
Sec. 9.3 Waiver or reduction of coverage.
(a) Full-time coverage which is in effect will terminate or be
reduced at midnight of the last day of the month a member's written
notice requesting such termination or reduction is received by his or
her uniformed service. In the case of a member paying premiums directly
to the administrative office, full-time coverage will terminate or be
reduced as of the last day of the month for which the last full premium
was paid. Termination or reduction of coverage is effective for the
entire remaining period of active duty unless the member reinstates his
or her coverage under the provisions of 38 U.S.C. 1967(c). If,
following termination of duty, a member reenters duty (in the same or
another uniformed service), a waiver or reduction for the previous
period of duty will not apply to the subsequent period of duty.
Secs. 9.4, 9.5, 9.7, 9.8, 9.10, 9.12, 9.14, 9.17, 9.34, and
9.36 [Removed];
Secs. 9.16, 9.18, 9.20, 9.22, 9.24, 9.26, 9.27, 9.28, 9.30 and
9.32 [Redesignated as Secs. 9.4 through 9.13]
6. Sections 9.4, 9.5, 9.7, 9.8, 9.10, 9.12, 9.14, 9.17, 9.34, and
9.36 are removed, and Secs. 9.16, 9.18, 9.20, 9.22, 9.24, 9.26, 9.27,
9.28, 9.30, and 9.32 are redesignated as Secs. 9.4, 9.5, 9.6, 9.7, 9.8,
9.9, 9.10, 9.11, 9.12, and 9.13, respectively.
[[Page 20136]]
7. In newly redesignated Sec. 9.4, paragraphs (a), (c), (d), (f),
(h), (i), and (j) are removed; paragraphs (b), (e), and (g) are
redesignated as paragraphs (a), (b), and (c), respectively; newly
redesignated paragraph (c) is amended by removing ``election of
optional settlement'' and adding, in its place, ``settlement option
election''; introductory text is added; and newly redesignated
paragraph (a) is revised to read as follows:
Sec. 9.4 Beneficiaries and options.
Any designation of beneficiary or election of settlement options is
subject to the provisions of 38 U.S.C. 1970 and 1977 and the following
provisions:
(a) Any designation of beneficiary or settlement option election
made by any member insured under Servicemen's Group Life Insurance for
full-time coverage or part-time coverage will remain in effect until
properly changed by the member or canceled automatically for any of the
following reasons:
(1) The insurance terminates following separation or release from
all duty in a uniformed service.
(2) The member enters on duty in another uniformed service.
(3) The member reenters on duty in the same uniformed service more
than 1 calendar day after separation or release from all duty in that
uniformed service.
* * * * *
8. In newly redesignated Sec. 9.5, paragraphs (a), (b), (c), and
(e) are removed; paragraphs (f), (g), and (h) are redesignated as
paragraphs (a), (b), and (c), respectively; introductory text is added,
and paragraph (d) is added to read as follows:
Sec. 9.5 Payment of proceeds.
Proceeds shall be paid in accordance with provisions set forth in
38 U.S.C. 1970 and the following provisions:
* * * * *
(d) If a member whose coverage is extended due to total disability
converts the group insurance to an individual policy which is effective
before he or she ceases to be totally disabled or before the end of 1
year following termination of duty, whichever is earlier, and dies
while group insurance would be in effect, except for such conversion,
the group insurance will be payable, provided the individual policy is
surrendered for a return of premiums and without further claim. When
there is no such surrender, any amount of group insurance in excess of
the amount of the individual policy will be payable.
(Authority: 38 U.S.C. 501)
Sec. 9.7 [Amended]
9. In newly redesignated Sec. 9.7, paragraph (a)(1) is amended by
removing ``under Sec. 9.5(b)(3)'' and adding, in its place, ``under 38
U.S.C. 1967(b)'', and by removing ``under Sec. 9.7(b)''. Paragraph
(a)(4) is amended by removing ``and Sec. 9.34''. Paragraph (a)(5) is
amended by removing ``under Sec. 9.7 (a) and (b)'' and adding, in its
place, ``under 38 U.S.C. 1968''. Paragraph (b) is amended by removing
``in Sec. 9.34 of this part'' and adding, in its place, ``under 38
U.S.C. 1973'', and by removing ``as required by Sec. 9.8(c) of this
part'' and adding, in its place, ``as required under 38 U.S.C.
1967(c)''. Paragraph (d) is amended by removing ``Chief Benefits
Director and/or'' and adding, in its place, ``Under Secretary for
Benefits and''.
10. In newly redesignated Sec. 9.8, paragraphs (a), (b), (c), (d),
and (e) are removed; paragraphs (f) and (g) are redesignated as
paragraphs (a) and (b), respectively; newly redesignated paragraph (a)
is amended by removing ``Sec. 9.34,''; and newly redesignated paragraph
(b) is amended by removing ``under Sec. 9.1(a)(3)'' and adding, in its
place, ``under 38 U.S.C. 1968(a)(4)(B)''; and introductory text is
added to read as follows:
Sec. 9.8 Termination of coverage.
Termination of coverage will be in accordance with the provisions
of 38 U.S.C. 1968 and Sec. 9.3 of this part and the following
provisions:
* * * * *
11. In newly redesignated Sec. 9.9, paragraphs (a), (a)(1), (a)(3),
(b)(1), (b)(2), (b)(3), and (d) are removed; paragraph (a)(2) is
redesignated as paragraph (a). Newly redesignated paragraph (a) is
amended by removing ``Sec. 9.7(b)'' and adding, in its place, ``38
U.S.C. 1967(b) or 1968(a)''; and by removing ``, in which event the
insurance may be converted effective the day after the end of such 120-
day period'' and adding ``.'' after ``duty''; and paragraph (b) is
revised to read as follows:
Sec. 9.9 Conversion privilege.
* * * * *
(b) The individual policy of life insurance to which an insured may
convert under 38 U.S.C. 1968(b) or 1977(e) shall not have disability or
other supplementary benefits and shall not be term insurance or any
policy which does not provide for cash values. Term riders providing
level or decreasing insurance for which an additional premium is
charged may be attached to an eligible basic conversion policy, but the
rider will be excluded from the conversion pool agreement under the
policy.
* * * * *
12. In newly redesignated Sec. 9.12, paragraph (a) is removed, and
paragraphs (b), (c), and (d) are redesignated as paragraphs (a), (b),
and (c), respectively. Newly redesignated paragraph (a), is amended by
removing ``of the remaining balance'', and by removing ``on December
31, 1964,''; newly redesignated paragraph (b) is amended by removing
``paragraph (b)''and adding, in its place, ``paragraph (a)''; newly
redesignated paragraph (c) is amended by removing ``Sec. 9.28'' and
adding, in its place, ``Sec. 9.11''; and the introductory text is
revised to read as follows:
Sec. 9.12 Reinsurance formula.
The allocation of insurance to the insurer and each reinsurer will
be based upon the following:
* * * * *
Sec. 9.13 [Amended]
12. In newly redesignated Sec. 9.13, the first sentence is removed.
[FR Doc. 96-11157 Filed 5-3-96; 8:45 am]
BILLING CODE 8320-01-P
Complete official Federal Register PDF
FR Doc. 96-11156 Delegation of Authority To Order Paid Advertising for Use in Recruitment
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20133-20134]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11156]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 2
RIN 2900-AH74
Delegation of Authority To Order Paid Advertising for Use in
Recruitment
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This document amends regulations concerning delegations of
authority to order paid advertising for use in recruitment. Under the
previous regulations, the authority was delegated to heads of each
department; to the Director, Office of Personnel and Labor Relations;
to the deputies to such officials; and to field facility heads. To
reflect current organizational structure and titles, and to ensure that
delegations are made to all of those who need
[[Page 20134]]
authority to order paid advertising for use in recruitment, the
regulations are amended to delegate such authority to Administration
Heads, Assistant Secretaries, Other Key Officials (the General Counsel;
the Inspector General; the Chairman, Board of Veterans' Appeals; the
Chairman, Board of Contract Appeals; and the Director, Office of Small
and Disadvantaged Business Utilization), Deputy Assistant Secretaries,
to the deputies of such officials, to the Deputy Assistant Secretary
and Associate Deputy Assistant Secretary for Human Resources
Management, and to field facility Directors. Also, nonsubstantive
changes are made for purposes of clarity.
EFFECTIVE DATE: May 6, 1996.
FOR FURTHER INFORMATION CONTACT: Gloria C. Oliver, Chief, Recruitment
and Examining Division (054E), Employment and Training Service, Office
of Human Resources Management, Department of Veterans Affairs, 810
Vermont Avenue, N.W., Washington, D.C. 20420, (202) 565-8231.
SUPPLEMENTARY INFORMATION: This final rule consists of delegations of
authority and nonsubstantive changes and, therefore, is not subject to
the notice and comment and effective date provisions of 5 U.S.C. 553.
The Secretary hereby certifies that this rule will not have a
significant economic impact on a substantial number of small entities
as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-
612. This rule merely sets forth delegations of authority and
nonsubstantive changes.
There is no Catalog of Federal Domestic Assistance program number
for this regulation.
List of Subjects in 38 CFR Part 2
Authority delegations (government agencies).
Approved: April 1, 1996.
Jesse Brown,
Secretary of Veterans Affairs.
For the reasons set out in the preamble, 38 CFR part 2 is amended
as set forth below:
PART 2--DELEGATIONS OF AUTHORITY
1. The authority citation for part 2 continues to read as follows:
Authority: 72 Stat. 1114; 38 U.S.C. 501, unless otherwise noted.
2. Section 2.4 is revised to read as follows:
Sec. 2.4 Delegation of authority to order paid advertising for use in
recruitment.
Paid advertisements may be used in recruitment for VA competitive
and excepted service positions. Authority to order such advertisements
is hereby delegated to Administration Heads, Assistant Secretaries,
Other Key Officials (the General Counsel; the Inspector General; the
Chairman, Board of Veterans' Appeals; the Chairman, Board of Contract
Appeals; and the Director, Office of Small and Disadvantaged Business
Utilization), Deputy Assistant Secretaries, to the deputies of such
officials, to the Deputy Assistant Secretary and Associate Deputy
Assistant Secretary for Human Resources Management, and to field
facility Directors.
(Authority: 5 U.S.C. 302(b)(2); 44 U.S.C. 3702)
[FR Doc. 96-11156 Filed 5-3-96; 8:45 am]
BILLING CODE 8320-01-P
Complete official Federal Register PDF
FR Doc. 96-11152 Spearmint Oil Produced in the Far West; Assessment Rate
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20122-20124]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11152]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
7 CFR Part 985
[Docket No. FV96-985-2-IFR]
Spearmint Oil Produced in the Far West; Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This interim final rule establishes an assessment rate for the
Spearmint Oil Administrative Committee (Committee) under Marketing
Order No. 985 for the 1996-97 and subsequent fiscal periods. The
Committee is responsible for local administration of the marketing
order which regulates the handling of spearmint oil produced in the Far
West. Authorization to assess spearmint oil handlers enables the
Committee to incur expenses that are reasonable and necessary to
administer the program.
DATES: Effective on June 1, 1996. Comments received by June 5, 1996,
will be considered prior to issuance of a final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent in triplicate to the Docket
Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, room
2523-S, Washington, DC 20090-6456, FAX (202) 720-5698. Comments should
reference the docket number and the date and page number of this issue
of the Federal Register and will be available for public inspection in
the Office of the Docket Clerk during regular business hours.
FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369,
Portland, Oregon 97204-2807; telephone (503) 326-2724; or Tershirra T.
Yeager, Marketing Order Administration Branch, Fruit and Vegetable
Division, AMS, USDA, room 2525, South Building, P.O. Box 96456,
Washington, D.C. 20090-6456; telephone: (202) 720-5127.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order
No. 985 (7 CFR part 985), regulating the handling of spearmint oil
produced in the Far West (Washington, Idaho,
[[Page 20123]]
Oregon, and designated parts of California, Nevada, Montana, and Utah),
hereinafter referred to as the ``order.'' The marketing order is
effective under the Agricultural Marketing Agreement Act of 1937, as
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''
The Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12778, Civil
Justice Reform. Under the marketing order now in effect, Far West
spearmint oil handlers are subject to assessments. Funds to administer
the order are derived from such assessments. It is intended that the
assessment rate as issued herein will be applicable to all assessable
spearmint oil beginning June 1, 1996, and continuing until amended,
suspended, or terminated. This rule will not preempt any State or local
laws, regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. Such handler is afforded the opportunity for a hearing on
the petition. After the hearing the Secretary would rule on the
petition. The Act provides that the district court of the United States
in any district in which the handler is an inhabitant, or has his or
her principal place of business, has jurisdiction to review the
Secretary's ruling on the petition, provided an action is filed not
later than 20 days after the date of the entry of the ruling.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Administrator of the Agricultural Marketing Service
(AMS) has considered the economic impact of this rule on small
entities.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 260 producers of spearmint oil in the
production area and 8 handlers subject to regulation under the
marketing order. Small agricultural producers have been defined by the
Small Business Administration (13 CFR 121.601) as those having annual
receipts less than $500,000, and small agricultural service firms are
defined as those whose annual receipts are less than $5,000,000. A
minority of spearmint oil producers and handlers may be classified as
small entities.
The spearmint oil marketing order provides authority for the
Committee, with the approval of the Department, to formulate an annual
budget of expenses and collect assessments from handlers to administer
the program. The members of the Committee are producers of Far West
spearmint oil. They are familiar with the Committee's needs and with
the costs for goods and services in their local area and are thus in a
position to formulate an appropriate budget and assessment rate. The
assessment rate is formulated and discussed in a public meeting. Thus,
all directly affected persons have an opportunity to participate and
provide input.
The Committee met on February 27, 1996, and unanimously recommended
1996-97 expenditures of $230,752 and an assessment rate of $0.10 per
pound of spearmint oil. In comparison, last year's budgeted
expenditures were $233,272. The assessment rate of $.10 is the same as
last year's established rate. Major expenditures recommended by the
Committee for 1996-97 include $96,200 for administrative expenses,
$113,552 for salaries, and $21,000 for committee travel. Budgeted
expenses for these items in 1995-96 were $102,900, $107,372, and
$23,009, respectively.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of Far West
spearmint oil. Spearmint oil shipments for the year are estimated at
2,081,610 pounds which should provide $208,161 in assessment income.
Income derived from handler assessments, along with interest income and
funds from the committee's authorized reserve, will be adequate to
cover budgeted expenses. Funds in the reserve at the beginning of the
1996-97 fiscal year are estimated at $162,923. Funds in the reserve
will be kept within the maximum permitted by the order.
While this rule will impose some additional costs on handlers, the
costs are in the form of uniform assessments on all handlers. Some of
the additional costs may be passed on to producers. However, these
costs will be offset by the benefits derived by the operation of the
marketing order. Therefore, the Administrator of the AMS has determined
that this rule will not have a significant economic impact on a
substantial number of small entities.
The assessment rate established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by the
Secretary upon recommendation and information submitted by the
Committee or other available information.
Although this assessment rate is effective for an indefinite
period, the Committee will continue to meet prior to or during each
fiscal period to recommend a budget of expenses and consider
recommendations for modification of the assessment rate. The dates and
times of Committee meetings are available from the Committee or the
Department. Committee meetings are open to the public and interested
persons may express their views at these meetings. The Department will
evaluate Committee recommendations and other available information to
determine whether modification of the assessment is needed. Further
rulemaking will be undertaken as necessary. The Committee's 1996-97
budget and those for subsequent fiscal years will be reviewed and as
appropriate, approved by the Department.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Committee and other
available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined upon good
cause that it is impracticable, unnecessary, and contrary to the public
interest to give preliminary notice prior to putting this rule into
effect, and that good cause exists for not postponing the effective
date of this rule until 30 days after publication in the Federal
Register because: (1) The Committee needs to have sufficient funds to
pay its expenses which are incurred on a continuous basis; (2) the
1996-97 fiscal period begins on June 1, 1996, and the marketing order
requires that the rate of assessment for each fiscal period apply to
all assessable spearmint oil handled during such fiscal period; (3)
handlers are aware of this action which was unanimously recommended by
the Committee at a public meeting and is similar to other assessment
rate actions issued in past years; and (4) this interim final rule
provides a 30-day comment period, and all comments timely
[[Page 20124]]
received will be considered prior to finalization of this rule.
List of Subjects in 7 CFR Part 985
Marketing agreements, Oils and fats, Reporting and recordkeeping
requirements, Spearmint oil.
For the reasons set forth in the preamble, 7 CFR Part 985 is
amended as follows:
PART 985--SPEARMINT OIL PRODUCED IN THE FAR WEST
1. The authority citation for 7 CFR Part 985 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. Section 985.141 is added to read as follows:
Sec. 985.141 Assessment rate.
On and after June 1, 1996, an assessment rate of $0.10 per pound is
established for Far West spearmint oil. Unexpended funds may be carried
over as a reserve.
Dated: April 30, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-11152 Filed 5-3-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-11151 Irish Potatoes Grown in Washington; Assessment Rate
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20119-20121]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11151]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 946
[Docket No. FV96-946-2IFR]
Irish Potatoes Grown in Washington; Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This interim final rule establishes an assessment rate for the
State of Washington Potato Committee (Committee) under Marketing Order
No. 946 for the 1996-97 and subsequent fiscal periods. The Committee is
responsible for local administration of the marketing order which
regulates the handling of Irish potatoes grown in Washington.
Authorization to assess potato handlers enables the Committee to incur
expenses that are reasonable and necessary to administer the program.
DATES: Effective on July 1, 1996. Comments received by June 5, 1996,
will be considered prior to issuance of a final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent in triplicate to the Docket
Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, room
2523-S, Washington, DC 20090-6456, FAX 202-720-5698. Comments should
reference the docket number and the date and page number of this issue
of the Federal Register and will be available for public inspection in
the Office of the Docket Clerk during regular business hours.
FOR FURTHER INFORMATION CONTACT: Martha Sue Clark, Marketing Order
Administration Branch, Fruit and Vegetable Division, AMS, USDA, P.O.
Box 96456, room 2523-S, Washington, DC 20090-6456, telephone 202-720-
9918, FAX 202-720-5698, or Dennis L. West, Northwest Marketing Field
Office, Fruit and Vegetable Division, AMS,
[[Page 20120]]
USDA, Green-Wyatt Federal Building, room 369, 1220 Southwest Third
Avenue, Portland, OR 97204, telephone 503-326-2724, FAX 503-326-7440.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement No. 113 and Order No. 946, both as amended (7 CFR part 946)
regulating the handling of Irish potatoes grown in Washington,
hereinafter referred to as the ``order.'' The order is effective under
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C.
601-674), hereinafter referred to as the ``Act.''
The Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12778, Civil
Justice Reform. Under the marketing order now in effect, Washington
potato handlers are subject to assessments. Funds to administer the
order are derived from such assessments. It is intended that the
assessment rate as issued herein will be applicable to all assessable
potatoes beginning July 1, 1996, and continuing until amended,
suspended, or terminated. This rule will not preempt any State or local
laws, regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. Such handler is afforded the opportunity for a hearing on
the petition. After the hearing the Secretary would rule on the
petition. The Act provides that the district court of the United States
in any district in which the handler is an inhabitant, or has his or
her principal place of business, has jurisdiction to review the
Secretary's ruling on the petition, provided an action is filed not
later than 20 days after the date of the entry of the ruling.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule on small entities.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 450 producers of Washington potatoes in the
production area and approximately 40 handlers subject to regulation
under the marketing order. Small agricultural producers have been
defined by the Small Business Administration (13 CFR 121.601) as those
having annual receipts of less than $500,000, and small agricultural
service firms are defined as those whose annual receipts are less than
$5,000,000. The majority of Washington potato producers and handlers
may be classified as small entities.
The Washington potato marketing order provides authority for the
Committee, with the approval of the Department, to formulate an annual
budget of expenses and collect assessments from handlers to administer
the program. The members of the Committee are producers and handlers of
Washington potatoes. They are familiar with the Committee's needs and
with the costs for goods and services in their local area and are thus
in a position to formulate an appropriate budget and assessment rate.
The assessment rate is formulated and discussed in a public meeting.
Thus, all directly affected persons have an opportunity to participate
and provide input.
The Committee met on February 15, 1996, and unanimously recommended
1996-97 expenditures of $42,500 and an assessment rate of $0.003 per
hundredweight of potatoes. In comparison, last year's budgeted
expenditures were $42,300. The assessment rate of $0.003 is the same as
last year's established rate. Major expenditures recommended by the
Committee for the 1996-97 year include $17,400 for an agreement with
the Washington State Potato Commission to provide miscellaneous
services to the Committee and $6,000 for compliance audits, the same as
the budgeted amounts for these items in 1995-96.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of Washington
potatoes. Potato shipments for the year are estimated at 9,000,000
hundredweight which should provide $27,000 in assessment income. Income
derived from handler assessments, along with funds from the Committee's
authorized reserve, will be adequate to cover budgeted expenses. Funds
remaining in the reserve at the end of the 1996-97 fiscal period should
be about $74,500. Funds in the reserve will be kept within the maximum
permitted by the order.
While this rule will impose some additional costs on handlers, the
costs are in the form of uniform assessments on all handlers. Some of
the additional costs may be passed on to producers. However, these
costs will be offset by the benefits derived by the operation of the
marketing order. Therefore, the Agricultural Marketing Service has
determined that this rule will not have a significant economic impact
on a substantial number of small entities.
The assessment rate established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by the
Secretary upon recommendation and information submitted by the
Committee or other available information.
Although this assessment rate is effective for an indefinite
period, the Committee will continue to meet prior to or during each
fiscal period to recommend a budget of expenses and consider
recommendations for modification of the assessment rate. The dates and
times of Committee meetings are available from the Committee or the
Department. Committee meetings are open to the public and interested
persons may express their views at these meetings. The Department will
evaluate Committee recommendations and other available information to
determine whether modification of the assessment rate is needed.
Further rulemaking will be undertaken as necessary. The Committee's
1996-97 budget and those for subsequent fiscal periods will be reviewed
and, as appropriate, approved by the Department.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Committee and other
available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined upon good
cause that it is impracticable, unnecessary, and contrary to the public
interest to give preliminary notice prior to putting this rule into
effect, because: (1) The Committee needs to have sufficient funds to
pay its expenses which are incurred on a continuous basis; (2) the
1996-97 fiscal period begins on July 1, 1996, and the marketing order
requires that the rate of assessment for each fiscal period apply to
all assessable potatoes handled during such fiscal period; (3) handlers
are aware of this
[[Page 20121]]
action which was unanimously recommended by the Committee at a public
meeting and is similar to other assessment rate actions issued in past
years; and (4) this interim final rule provides a 30-day comment
period, and all comments timely received will be considered prior to
finalization of this rule.
List of Subjects in 7 CFR Part 946
Marketing agreements, Potatoes, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR part 946 is
amended as follows:
PART 946--IRISH POTATOES GROWN IN WASHINGTON
1. The authority citation for 7 CFR part 946 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. A new Sec. 946.248 is added to read as follows:
Note: This section will not appear in the annual Code of Federal
Regulations.
Sec. 946.248 Assessment rate.
On and after July 1, 1996, an assessment rate of $0.003 per
hundredweight is established for Washington potatoes.
Dated: April 30, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-11151 Filed 5-3-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-11150 Sweet Onions Grown in the Walla Walla Valley of Southeast Washington and Northeast Oregon; Assessment Rate
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20121-20122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11150]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
7 CFR Part 956
[Docket No. FV96-956-2IFR]
Sweet Onions Grown in the Walla Walla Valley of Southeast
Washington and Northeast Oregon; Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This interim final rule establishes an assessment rate for the
Walla Walla Sweet Onion Committee (Committee) under Marketing Order No.
956 for the 1996-97 and subsequent fiscal periods. The Committee is
responsible for local administration of the marketing order which
regulates the handling of Sweet Onions grown in the Walla Walla Valley
of Southeast Washington and Northeast Oregon. Authorization to assess
onion handlers enables the Committee to incur expenses that are
reasonable and necessary to administer the program.
DATES: Effective on June 1, 1996. Comments received by June 5, 1996,
will be considered prior to issuance of a final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent in triplicate to the Docket
Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, room
2523-S, Washington, DC 20090-6456, FAX 202-720-5698. Comments should
reference the docket number and the date and page number of this issue
of the Federal Register and will be available for public inspection in
the Office of the Docket Clerk during regular business hours.
FOR FURTHER INFORMATION CONTACT: Martha Sue Clark, Marketing Order
Administration Branch, Fruit and Vegetable Division, AMS, USDA, P.O.
Box 96456, room 2523-S, Washington, DC 20090-6456, telephone 202-720-
9918, FAX 202-720-5698, or Robert J. Curry, Northwest Marketing Field
Office, Fruit and Vegetable Division, AMS, USDA, Green-Wyatt Federal
Building, room 369, 1220 Southwest Third Avenue, Portland, OR 97204,
telephone 503-326-2724, FAX 503-326-7440.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 956 (7 CFR part 956) regulating the handling of
Sweet Onions grown in the Walla Walla Valley of Southeast Washington
and Northeast Oregon, hereinafter referred to as the ``order.'' The
order is effective under the Agricultural Marketing Agreement Act of
1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the
``Act.''
The Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12778, Civil
Justice Reform. Under the marketing order now in effect, Walla Walla
Sweet Onion handlers are subject to assessments. Funds to administer
the order are derived from such assessments. It is intended that the
assessment rate as issued herein will be applicable to all assessable
onions beginning June 1, 1996, and continuing until amended, suspended,
or terminated. This rule will not preempt any State or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. Such handler is afforded the opportunity for a hearing on
the petition. After the hearing the Secretary would rule on the
petition. The Act provides that the district court of the United States
in any district in which the handler is an inhabitant, or has his or
her principal place of business, has jurisdiction to review the
Secretary's ruling on the petition, provided an action is filed not
later than 20 days after the date of the entry of the ruling.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule on small entities.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 50 producers of Walla Walla Sweet Onions in
the production area and approximately 30 handlers subject to regulation
under the marketing order. Small agricultural producers have been
defined by the Small Business Administration (13 CFR 121.601) as those
having annual receipts of less than $500,000, and small agricultural
service firms are defined as those whose annual receipts are less than
$5,000,000. The majority of Walla Walla Sweet Onion producers and
handlers may be classified as small entities.
The Walla Walla Sweet Onion marketing order provides authority for
the Committee, with the approval of the Department, to formulate an
annual budget of expenses and collect assessments from handlers to
administer the program. The members of the Committee are producers and
handlers of Walla Walla Sweet Onions. They are familiar with the
Committee's needs and with the costs for goods and services in their
local area and are thus in a position to formulate an appropriate
budget and assessment rate. The assessment rate is formulated and
discussed in a public meeting. Thus, all directly affected persons have
an opportunity to participate and provide input.
[[Page 20122]]
The Committee met on March 12, 1996, and unanimously recommended
1996-97 expenditures of $114,000 and an assessment rate of $0.19 per
50-pound bag or equivalent of onions. In comparison, last year's
budgeted expenditures were $72,000. The assessment rate of $0.19 is
$0.07 higher than last year's established rate. Major expenditures
recommended by the Committee for the 1996-97 year include $34,000 for
administrative expenses, $62,000 for research and promotion, and $9,000
for compliance. Budgeted expenses for these items in 1995-96 were
$28,000, $22,000, and $9,000, respectively.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of Walla Walla
Sweet Onions. Onion shipments for the year are estimated at 600,000 50-
pound bags which should provide $114,000 in assessment income, which
will be adequate to cover budgeted expenses. Funds in the reserve at
the beginning of the 1996-97 fiscal period are estimated at $27,000.
Funds in the reserve will be kept within the maximum permitted by the
order.
While this rule will impose some additional costs on handlers, the
costs are in the form of uniform assessments on all handlers. Some of
the additional costs may be passed on to producers. However, these
costs will be offset by the benefits derived by the operation of the
marketing order. Therefore, the Agricultural Marketing Service has
determined that this rule will not have a significant economic impact
on a substantial number of small entities.
The assessment rate established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by the
Secretary upon recommendation and information submitted by the
Committee or other available information.
Although this assessment rate is effective for an indefinite
period, the Committee will continue to meet prior to or during each
fiscal period to recommend a budget of expenses and consider
recommendations for modification of the assessment rate. The dates and
times of Committee meetings are available from the Committee or the
Department. Committee meetings are open to the public and interested
persons may express their views at these meetings. The Department will
evaluate Committee recommendations and other available information to
determine whether modification of the assessment rate is needed.
Further rulemaking will be undertaken as necessary. The Committee's
1996-97 budget and those for subsequent fiscal periods will be reviewed
and, as appropriate, approved by the Department.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Committee and other
available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined upon good
cause that it is impracticable, unnecessary, and contrary to the public
interest to give preliminary notice prior to putting this rule into
effect, and that good cause exists for not postponing the effective
date of this rule until 30 days after publication in the Federal
Register because: (1) The Committee needs to have sufficient funds to
pay its expenses which are incurred on a continuous basis; (2) the
1996-97 fiscal period begins on June 1, 1996, and the marketing order
requires that the rate of assessment for each fiscal period apply to
all assessable onions handled during such fiscal period; (3) handlers
are aware of this action which was unanimously recommended by the
Committee at a public meeting and is similar to the assessment rate
action issued last year; and (4) this interim final rule provides a 30-
day comment period, and all comments timely received will be considered
prior to finalization of this rule.
List of Subjects in 7 CFR Part 956
Marketing agreements, Onions, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR part 956 is
amended as follows:
PART 956--SWEET ONIONS GROWN IN THE WALLA WALLA VALLEY OF SOUTHEAST
WASHINGTON AND NORTHEAST OREGON
1. The authority citation for 7 CFR part 956 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. A new Sec. 956.202 is added to read as follows:
Note: This section will not appear in the Annual Code of Federal
Regulations.
Sec. 956.202 Assessment rate.
On and after June 1, 1996, an assessment rate of $0.19 per 50 pound
bag or equivalent is established for Walla Walla Sweet Onions.
Dated: April 30, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-11150 Filed 5-03-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-11136 Ocean Salmon Fisheries Off the Coasts of Washington, Oregon, and California; 1996 Management Measures and Technical Amendment
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20175-20187]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11136]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
50 CFR Part 661
[Docket No. 960429120-6120-01; I.D. 042496C]
RIN 0648-AI35
Ocean Salmon Fisheries Off the Coasts of Washington, Oregon, and
California; 1996 Management Measures and Technical Amendment
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Annual management measures for the ocean salmon fishery and
technical amendment; request for comments.
-----------------------------------------------------------------------
SUMMARY: NMFS establishes fishery management measures for the ocean
salmon fisheries off Washington, Oregon, and California for 1996 and
for those salmon seasons opening earlier than May 1, 1997. Specific
fishery management measures vary by fishery and area. The measures
establish fishing areas, seasons, quotas, legal gear, recreational
fishing days and catch limits, possession and landing restrictions, and
minimum lengths for salmon taken in the exclusive economic
[[Page 20176]]
zone (3-200 nautical miles) off Washington, Oregon, and California.
These management measures are intended to prevent overfishing and to
apportion the ocean harvest equitably among treaty Indian and non-
treaty commercial and recreational fisheries. The measures are intended
to allow a portion of the salmon runs to escape the ocean fisheries to
provide for spawning escapement and inside fisheries. This action also
announces a technical amendment to modify the spawning escapement goal
for Klamath River fall chinook salmon.
DATES: Effective from 0001 hours Pacific Daylight Time (P.d.t.), May 1,
1996, until the effective date of the 1997 management measures, as
published in the Federal Register, except the amendment to the appendix
to part 661 remains in effect indefinitely. Comments must be received
by June 5, 1996.
ADDRESSES: Comments on the management measures may be sent to William
Stelle, Jr., Director, Northwest Region, National Marine Fisheries
Service, 7600 Sand Point Way N.E., BIN C15700, Seattle, WA 98115-0070;
or Hilda Diaz-Soltero, Director, Southwest Region, National Marine
Fisheries Service, 501 West Ocean Boulevard, Suite 4200, Long Beach, CA
90802-4213. Documents cited in this document are available on request.
FOR FURTHER INFORMATION CONTACT: William L. Robinson at 206-526-6140,
or Rodney R. McInnis at 310-980-4030.
SUPPLEMENTARY INFORMATION:
Background
The ocean salmon fisheries off Washington, Oregon, and California
are managed under a ``framework'' fishery management plan (FMP). The
framework FMP was approved in 1984 and has been amended five times (52
FR 4146, February 10, 1987; 53 FR 30285, August 11, 1988; 54 FR 19185,
May 4, 1989; 56 FR 26774, June 11, 1991; 59 FR 23013, May 4, 1994).
Regulations at 50 CFR part 661 provide the mechanism for making
preseason and inseason adjustments to the management measures, within
limits set by the FMP, by notification in the Federal Register.
These management measures for the 1996 and pre-May 1997 ocean
salmon fisheries were recommended by the Pacific Fishery Management
Council (Council) at its April 9-12, 1996 meeting.
Schedule Used to Establish 1996 Management Measures
In accordance with the FMP, the Council's Salmon Technical Team
(STT) and staff economist prepared several reports for the Council, its
advisors, and the public. The first report, ``Review of 1995 Ocean
Salmon Fisheries,'' summarizes the 1995 ocean salmon fisheries and
assesses how well the Council's management objectives were met in 1995.
The second report, ``Preseason Report I Stock Abundance Analysis for
1996 Ocean Salmon Fisheries,'' provides the 1996 salmon stock abundance
projections and analyzes the impacts on the stocks and Council
management goals if the 1995 regulations or regulatory procedures were
applied to the 1996 stock abundances.
The Council met on March 12-15, 1996, in Portland, OR, to develop
proposed management options for 1996. Four commercial and four
recreational fishery management options were proposed for analysis and
public comment. These options presented various combinations of
management measures designed to protect numerous weak stocks of coho
and chinook salmon and provide for ocean harvests of more abundant
stocks. All options provided for no directed harvest of chinook salmon
in non-treaty fisheries north of Cape Falcon, OR, and no directed
harvest of coho salmon south of Cape Falcon. After the March Council
meeting, the STT and staff economist prepared a third report,
``Preseason Report II Analysis of Proposed Regulatory Options for 1996
Ocean Salmon Fisheries,'' which analyzes the effects of the proposed
1996 management options. This report also was made available to the
Council, its advisors, and the public.
Public hearings on the proposed options were held April 1-2, 1996,
in Westport, WA; Astoria and North Bend, OR; and Eureka, CA.
The Council met on April 9-12, 1996, in South San Francisco, CA, to
adopt its final 1996 recommendations. Following the April Council
meeting, the STT and staff economist prepared a fourth report,
``Preseason Report III Analysis of Council-Adopted Management Measures
for 1996 Ocean Salmon Fisheries,'' which analyzes the environmental and
socio-economic effects of the Council's final recommendations. This
report also was made available to the Council, its advisors, and the
public.
Resource Status
Some salmon runs returning to Washington, Oregon, and California
streams in 1996 are expected to be larger than in 1995. Abundance of
Klamath River fall chinook is estimated to be significantly higher than
was projected in recent years, but lower than the actual abundance in
1995.
Aside from salmon species listed and proposed for listing under the
Endangered Species Act (ESA) discussed below, the primary resource
concerns are for lower Columbia River fall chinook stocks; Oregon
Production Index area coho stocks destined for the Columbia River and
the California and Oregon coasts, particularly Oregon coastal natural
coho; and Washington coastal and Puget Sound natural coho. (The Oregon
Production Index (OPI) is an annual index of coho abundance from
Leadbetter Point, WA, south through California.) Management of all of
these stocks is affected by interjurisdictional agreements among
tribal, state, Federal, and/or Canadian managers.
Chinook Salmon Stocks
California Central Valley stocks are relatively abundant compared
to other chinook stocks of the Pacific coast. The Central Valley Index
of abundance of combined Central Valley chinook stocks is estimated to
be 533,000 fish for 1996, 58 percent below the postseason estimate of
the index for 1995 and 27 percent below the average of the index from
1986-1995. The spawning escapement of Sacramento River adult fall
chinook was 267,800 adults in 1995, nearly twice the 1994 escapement
and well above the spawning escapement goal range of 122,000 to 180,000
adult spawners.
Winter chinook from the Sacramento River are listed under the ESA
as an endangered species (59 FR 440, January 4, 1994). The 1995
spawning run size was estimated to be approximately 1,300 adults.
Neither preseason nor postseason estimates of ocean abundance are
available for winter chinook, but the run is expected to remain
extremely depressed in 1996 with a return comparable to the primary
parent year of 1993 of about 300 adults.
Klamath River fall chinook ocean abundance is projected to be
454,700 age-3 and age-4 fish at the beginning of the fishing season.
Although the abundance forecast is 25 percent below the 1995 postseason
abundance estimate, it is 52 percent above the average postseason
estimates for 1985-95. The spawning escapement goal for the stock is
33-34 percent of the potential natural adults but no fewer than 35,000
natural spawners (fish that spawn outside of hatcheries). The natural
spawning escapement in 1995 was 150,600 adults, well above the 1994
escapement of 32,300 and the highest on record since 1978 when
basinwide escapement estimates began.
[[Page 20177]]
Oregon coastal chinook stocks include south-migrating and localized
stocks primarily from southern Oregon streams, and north-migrating
chinook stocks which generally originate in central and northern Oregon
streams. Abundance of south-migrating and localized stocks is expected
to be low and similar to the levels observed in 1995. These stocks are
important contributors to ocean fisheries off Oregon and northern
California. The generalized expectation for north-migrating stocks is
for a continuation of average to above-average abundance as observed in
recent years. These stocks contribute primarily to ocean fisheries off
British Columbia and Alaska. It is expected that the aggregate Oregon
coastal chinook spawning escapement goal of 150,000 to 200,000
naturally spawning adults will be met in 1996.
Estimates of Columbia River chinook abundance vary by stock as
follows.
1. Upper Columbia River spring and summer chinook. Numbers of
upriver spring chinook predicted to return to the river in 1996 are
37,200 fish, 265 percent above the 1995 record low return of 10,200
adult fish, and 34 percent below the 1979-84 average of 56,600 fish.
The 1996 stock status indicates some improvement from returns in 1994
and 1995 but suggests continuation of the depressed status of this
stock. Recent improvements in 1985-90 and 1992-93 from the poor returns
in the early 1980s are primarily the result of increases of hatchery
stocks. The natural stock component remains severely depressed. Ocean
escapement is expected to be significantly below the goal of 115,000
adults counted at Bonneville Dam. Upriver spring chinook are affected
only slightly by ocean harvests in Council area fisheries, with the
contribution of these stocks being generally 1 percent or less of the
total chinook catch north of Cape Falcon, OR. Expected ocean escapement
of adult upriver summer chinook is 16,800 fish, the third lowest on
record. The 1996 stock status remains extremely depressed, with ocean
escapement being only 21 percent of the lower end of the spawning
escapement goal range of 80,000 to 90,000 adults counted at Bonneville
Dam. Upriver summer chinook migrate to the far north and are not a
major contributor to ocean fisheries off Washington and Oregon. Snake
River spring and summer chinook are listed as threatened under the ESA
(57 FR 14653, April 22, 1992).
2. Willamette River spring chinook. Willamette River spring chinook
returns are projected to be 38,700 fish, 5 percent below the observed
1995 run of 40,900 fish, and 40 percent below the 1980-84 average
return of 65,000 fish. Lower Columbia River spring chinook stocks are
important contributors to Council area fishery catches north of Cape
Falcon; Willamette River spring chinook stocks generally contribute to
Canadian and Alaskan ocean fisheries.
3. Columbia River fall chinook. Abundance estimates are made for
five distinct fall chinook stock units, as follows.
a. Upriver bright fall chinook ocean escapement is expected to be
88,900 adults, 21 percent below the 1995 actual return of 112,600
adults. The escapement goal for upriver bright fall chinook is 40,000
adults above McNary Dam, although in recent years the management goal
has been set higher. This stock has a northern ocean migratory pattern
and constitutes less than 10 percent of Council area fisheries north of
Cape Falcon.
b. Lower river natural fall chinook ocean escapement is forecast at
8,800 adults, 44 percent below the 1995 run size of 15,800 adults.
c. Lower river hatchery fall chinook ocean escapement is forecast
at a new record low of 37,700 adults, slightly above the 1995 preseason
estimate of 35,800 adults but 18 percent below the 1995 observed return
of 46,100 adults. This stock has declined sharply since the record high
return in 1987 to a record low return in 1995. Lower Columbia River
fall chinook stocks normally account for more than half the total catch
in Council area fisheries north of Cape Falcon, with lower river
hatchery fall chinook being the single largest contributing stock.
d. Spring Creek hatchery fall chinook ocean escapement is projected
to be 26,700 adults, 19 percent below the 1995 return of 33,000 adults;
the 1986-90 average ocean escapement was 16,700 adults. The Spring
Creek hatchery fall chinook stock has been rebuilding slowly since the
record low return in 1987.
e. Mid-Columbia bright fall chinook ocean escapement is projected
to be 40,800 adults, 35 percent above the 1995 return of 30,300 adults.
These fall chinook are returns primarily from hatchery releases of
bright fall chinook stock in the area below McNary Dam, although some
natural spawning in tributaries between Bonneville and McNary dams is
also occurring.
4. Snake River wild fall chinook. Also of concern are Snake River
wild fall chinook, which are listed as threatened under the ESA (57 FR
14653, April 22, 1992). Information on the stock's ocean distribution
and fishery impacts is not available. Attempts to evaluate fishery
impacts on Snake River fall chinook have used the Lyons Ferry Hatchery
stock to represent Snake River wild fall chinook. The Lyons Ferry stock
is widely distributed and harvested by ocean fisheries from southern
California to Alaska.
Washington coastal and Puget Sound chinook generally migrate to the
far north and are affected insignificantly by ocean harvests from Cape
Falcon to the U.S.-Canada border.
Coho Salmon Stocks
Coho populations in California have not been monitored closely nor
have they been a controlling factor in establishing ocean salmon
management measures in the past. Although no forecasts of the ocean
abundance of coho originating from California are available, these runs
have been generally at low abundance levels for several years.
California and Oregon coastal coho are proposed for listing as
threatened under the ESA (60 FR 38011, July 25, 1995).
Oregon coastal and Columbia River coho stocks are the primary
components of the OPI. Beginning in 1988, the Council adopted revised
estimation procedures which were expected to more accurately predict
abundance of the following individual OPI area stock components: Public
hatchery, private hatchery, Oregon coastal natural (OCN) for rivers and
lakes, and Salmon Trout Enhancement Program. Prediction methodologies
are described in the Council's ``Preseason Report I Stock Abundance
Analysis for 1988 Ocean Salmon Fisheries.'' In response to the
extremely low abundances in 1994, some changes to the abundance
predictors were implemented as described in the Council's ``Preseason
Report I Stock Abundance Analysis for 1994 Ocean Salmon Fisheries.''
The 1996 OPI is forecast to be 372,800 coho, nearly the same as the
1995 preseason forecast of 369,800 coho, and 76 percent above the 1995
observed level of 212,300 coho. The 1996 estimate for OCN is 63,200
coho, 5 percent above the 1995 preseason forecast of 60,000 coho, and 4
percent below the 1995 observed level of 65,800 coho. The 1995 spawning
escapement of the OCN stock was 131,300 fish.
Most Washington coastal natural coho stocks and Puget Sound
combined natural coho stocks are expected to be less abundant in 1996
than forecast in 1995. Abundances for Washington coastal stocks of Hoh,
Queets, and Grays Harbor natural coho are projected to be 38 percent
below, 31 percent below, and 17 percent above the 1995 preseason
predictions, respectively. Abundances
[[Page 20178]]
for Puget Sound stocks of Skagit, Stillaguamish, Hood Canal, and Strait
of Juan de Fuca natural coho are projected to be below the 1995
preseason predictions by 31 percent, 27 percent, 31 percent, and 6
percent, respectively. Many natural coho run sizes are forecast to be
well below maximum sustainable yield (MSY) spawning escapement goals.
Abundance forecasts for coho hatchery production are well above 1995
expectations for most Washington coastal stocks and 18 percent above
the 1995 forecast for Puget Sound combined stocks.
Pink Salmon Stocks
Major pink salmon runs return to the Fraser River and Puget Sound
only in odd-numbered years. Consequently, pink salmon runs are not of
management concern in 1996.
Management Measures for 1996
The Council adopted allowable ocean harvest levels and management
measures for 1996 that are designed to apportion the burden of
protecting the weak stocks discussed above equitably among ocean
fisheries and to allow maximum harvest of natural and hatchery runs
surplus to inside fishery and spawning needs. The management measures
below reflect the Council's recommendations. NMFS concurs with these
recommendations and finds them responsive to the goals of the FMP, the
requirements of the resource, and the socio-economic factors affecting
resource users. The management measures are consistent with
requirements of the Magnuson Fishery Conservation and Management Act
(Magnuson Act) and other applicable law, including U.S. obligations to
Indian tribes with Federally recognized fishing rights and the ESA.
A. South of Cape Falcon
In the area south of Cape Falcon, the management measures in this
rule are based primarily on concerns for Sacramento River winter
chinook, and California and OCN coho stocks.
In a March 8, 1996, biological opinion, NMFS evaluated the
potential effects of the FMP on all salmonids that are listed under the
ESA and that occur within the management area of the FMP. NMFS
determined that the fisheries conducted under the FMP are likely to
jeopardize the continued existence of listed salmon, particularly
Sacramento River winter chinook (discussed in this section) and Snake
River fall chinook (discussed in section B, North of Cape Falcon). The
conclusion of jeopardy resulted, in part, because the FMP does not
contain specific management objectives designed to protect and recover
listed stocks.
The biological opinion identified a Reasonable and Prudent
Alternative (RPA) to the proposed action to avoid jeopardy to the
stocks. The RPA has three parts. First, the Council must adopt an
amendment to the FMP by October of 1996, and NMFS must implement the
amendment by May of 1997, to include management objectives for species
that are currently listed under the ESA, consistent with immediate
conservation needs and the long-term recovery of listed species.
Second, pending completion of the FMP amendment, NMFS must reduce all
harvest-related impacts to the Sacramento River winter chinook salmon
population by a level that would achieve a 35 percent increase in
spawner escapement from current levels. A reduction in incidental
harvest impacts of approximately 50 percent is estimated to be
necessary to achieve the needed increase in escapement. The third
action pertains to Snake River fall chinook, which is discussed in
section B, North of Cape Falcon.
In considering how best to reduce the ocean harvest of winter
chinook, the STT recommended the use of increased minimum size limits
in conjunction with restricted seasons. Because winter chinook are
significantly smaller than Central Valley fall chinook, an increase in
the minimum size is expected to result in relatively larger reductions
in harvest impacts on winter chinook compared to fall chinook. The
increases in minimum size limits (total length) off California range
from 4 to 6 inches (10.2-15.2 cm) in the recreational fishery and 1
inch (2.5 cm) in the commercial fishery.
In addition to increased minimum size limits, new gear restrictions
for recreational fisheries off California are being implemented that
are intended to reduce hook-and-release mortality for fish less than
the minimum size limit. Recreational anglers may use no more than one
rod while fishing north of Point Conception, which is the same as the
regulations off Oregon and Washington. Between Horse Mountain and Point
Conception, special restrictions on the size, number, and placement of
hooks are imposed when anglers are using the mooching instead of the
trolling technique.
The reductions in fishery impacts to Sacramento River winter
chinook, including non-landed mortality, necessary to achieve the 35
percent increase in spawning escapement required by the biological
opinion are estimated using a Winter Chinook Ocean Harvest Model. The
model was developed by the California Department of Fish and Game in
consultation with NMFS and the U.S. Fish and Wildlife Service.
The 1996 preseason abundance estimate for OCN coho is 63,200 fish,
a level that allows up to a 20 percent incidental exploitation rate
under the FMP for combined ocean and inside fisheries. A 20 percent
exploitation rate would be expected to result in a spawner escapement
of 29 adults per mile on standard index surveys. The 1996 management
measures result in a total OCN coho exploitation rate of 11-13 percent.
The projected spawner escapement for 1996 is 32 adults per mile on
standard index surveys. The Council's recommendations include time and
area closures, and gear restrictions intended to minimize incidental
fishing contact with OCN coho and subsequent hook-and-release mortality
while allowing access to harvestable stocks of chinook salmon.
Klamath River fall chinook are significantly more abundant,
allowing for more liberal seasons in the area between Humbug Mountain,
OR, and Horse Mountain, CA, termed the Klamath management zone (KMZ),
than in recent years. The Council's recommended measures provide for
equal sharing of the harvest of Klamath River fall chinook between the
Klamath River Indian Tribes and non-Indian fishermen.
The California Fish and Game Commission (Commission) regulates
sport fishing in California waters. In a March 11, 1996 letter, the
Commission notified the Council that it is considering a higher catch
level for the 1996 in-river sport fishery than has existed in recent
years and requested the Council consider an increase in the allocation
for the in-river sport fishery from the current 12 percent to 18
percent of the non-tribal allocation. The Commission will set harvest
levels for in-river sport fisheries at its June 1996 meeting. The
Klamath River Fishery Management Council considered in-river sport
allocations of 12, 15, and 18 percent and recommended to the Council
and the Commission an in-river sport allocation of 15 percent. When the
Council adopted management measures, it was not clear whether in-river
sport fishery impacts were being modeled at 15 or 18 percent of the
non-tribal allocation. Modeling by the STT subsequent to the issuance
of the Council's recommendations indicates that the Council's
recommended ocean seasons, in conjunction with an in-river sport
harvest share of 18 percent and equal sharing between tribal and non-
tribal fisheries, would not achieve the
[[Page 20179]]
spawning escapement goal for Klamath River fall chinook. An in-river
sport harvest allocation of 15 percent is predicted to achieve the
spawning escapement goal and provide equal sharing of the harvest
between tribal and non-tribal fisheries. NMFS approval of the Council's
recommendations is based on the assumption that the Commission will set
an in-river sport harvest at 15 percent of the non-tribal allocation.
Should the Commission approve an allocation higher than 15 percent,
NMFS will implement adjustments to ocean fisheries designed to achieve
the Klamath River fall chinook spawning escapement goal and provide for
equal sharing between tribal and non-tribal fisheries.
Depending on the management structure for ocean salmon fisheries
north of Cape Falcon, the Council recommended that inseason adjustments
be considered for fisheries south of Cape Falcon consistent with
management intent for stocks of concern.
Commercial Troll Fisheries
Retention of coho salmon is prohibited in all areas south of Cape
Falcon. All seasons listed below are restricted to all salmon species
except coho salmon. Minimum size limits (total length) for chinook
salmon are as follows: Off Oregon, 26 inches (66.0 cm); and off
California, 26 inches (66.0 cm) through June 30 and 27 inches (68.6 cm)
thereafter.
From Point Reyes, CA, to the U.S.-Mexican border, the commercial
fishery will open May 1 and continue through June 30, then reopen July
3 and continue through September 15. Gear is restricted to no more than
six lines per vessel. From Bodega Head to Point San Pedro, CA, the
commercial fishery will be open September 16 through September 30. Gear
is restricted to no more than six lines per vessel.
From Point Arena to Point Reyes, CA, the commercial fishery will
open June 1 and continue through June 30, then reopen August 1 and
continue through September 15. Gear is restricted to no more than six
lines per vessel.
From Horse Mountain to Point Arena, CA, the commercial fishery will
open August 1 and continue through September 30. Gear is restricted to
no more than six lines per vessel.
From the Oregon-California border to Humboldt South Jetty, CA, the
commercial fishery will open August 15 and continue through the earlier
of August 31 or attainment of the 2,500 chinook quota, then reopen
September 1 and continue through the earlier of September 15 or
attainment of the 6,000 chinook quota. Gear is restricted to no more
than six lines per vessel. Other restrictions include a landing limit
of 30 fish per day and closure of the Klamath Control Zone.
From Cape Arago, OR, to the Oregon-California border, the
commercial fishery will open May 1 and continue through the earlier of
June 30 or attainment of the 5,300 chinook quota. The fishery will
follow a cycle of 4 days open and 3 days closed. The days open may be
adjusted and landing limits may be instituted inseason if necessary to
manage the fishery. Gear is restricted to no more than four spreads per
line.
From Sisters Rocks to Mack Arch, OR, the commercial fishery will
open August 3 and continue through the earlier of August 31 or
attainment of the 3,000 chinook quota. The fishery will follow a cycle
of 2 days open and 2 days closed. The days open may be adjusted and
landing limits may be instituted inseason if necessary to manage the
fishery. Gear is restricted to no more than four spreads per line, with
the open area restricted to only 0-4 nautical miles (7.4 km) of shore.
Participants must register by August 1 with the Oregon Department of
Fish and Wildlife.
From Cape Arago to Humbug Mountain, OR, the commercial fishery will
open August 7 and continue through the earlier of August 31 or
attainment of the 8,800 chinook quota, then reopen September 1 and
continue through the earlier of October 31 or attainment of the 10,000
chinook quota. Gear is restricted to no more than four spreads per
line.
From Cape Falcon to Cape Arago, OR, the commercial fishery will
open May 1 and continue through June 30, then reopen August 7 and
continue through October 31. Gear is restricted to no more than four
spreads per line.
Recreational Fisheries
Retention of coho salmon is prohibited in all areas south of Cape
Falcon. Minimum size limits (total length) for chinook salmon are as
follows: Between Cape Falcon, OR, and Horse Mountain, CA, 20 inches
(50.8 cm); between Horse Mountain and Point Arena, CA, 24 inches (61.0
cm); between Point Arena and the U.S.-Mexican border, 24 inches (61.0
cm) through July 1 and 26 inches (66.0 cm) thereafter. Off California
north of Point Conception, persons fishing for salmon and persons
fishing from a boat with salmon on board are restricted to no more than
one rod per angler. From Horse Mountain to Point Conception, CA,
beginning July 1 the following restrictions apply when fishing with
bait and any combination of weights measuring 1 pound or less: No more
than 2 hooks may be used; when using 2 hooks, the terminal (lower) hook
must be no less than 5/0 and the upper hook no less than 4/0, the
distance between the 2 hooks must not exceed 5 inches (12.7 cm) and
both hooks must be permanently tied in place (hard tied); if using a
single hook, the hook size cannot be less than 5/0. Hook size
restrictions do not apply when artificial lures are used or when bait
is attached to an artificial lure. (An artificial lure is a man-made
lure designed to attract fish, not including scented or flavored
artificial baits.)
From Point Arena, CA, to the U.S.-Mexican border, the recreational
fishery opened on March 2 (the nearest Saturday to March 1) for all
salmon except coho (61 FR 8497, March 5, 1996). Continuation of this
fishery is provided as follows: From Point San Pedro, CA, to the U.S.-
Mexican border, the recreational fishery will continue through August
25 with a two-fish daily bag limit. From Point Arena to Point San
Pedro, CA, the recreational fishery will continue through October 14
with a two-fish daily bag limit.
From Horse Mountain to Point Arena, CA, the recreational fishery
for all salmon except coho which opened on February 17 (the nearest
Saturday to February 15) will continue through July 7 then reopen
August 1 and continue through November 17 (the nearest Sunday to
November 15) with a two-fish daily bag limit for both seasons.
From Humbug Mountain, OR, to Horse Mountain, CA, the recreational
fishery will open May 12 and continue through July 7, then reopen
August 18 and continue through September 21. Both seasons include a
one-fish daily bag limit, but no more than four fish in 7 consecutive
days, and closure of the Klamath Control Zone.
From Cape Falcon to Humbug Mountain, OR, the recreational fishery
will open May 1 through July 7, then reopen August 16 through September
30. Both seasons include a two-fish daily bag limit, but no more than
six fish in 7 consecutive days. Legal gear is limited to artificial
lures, plugs, or bait no less than 6 inches (15.2 cm) long (excluding
hooks and swivels) with no more than two single point, single shank
barbless hooks; flashers and divers are prohibited.
B. North of Cape Falcon
From the U.S.-Canadian border to Cape Falcon, ocean fisheries are
managed to protect depressed lower Columbia River fall chinook salmon,
Snake River fall chinook salmon, and Washington coastal and Puget Sound
[[Page 20180]]
natural coho salmon stocks. Ocean treaty and non-treaty harvests and
management measures were based in part on negotiations between
Washington State fishery managers, commercial and recreational fishing
groups, and the Washington coastal, Puget Sound, and Columbia River
treaty Indian tribes as authorized by the U.S. District Court in U.S.
v. Washington, U.S. v. Oregon, and Hoh Indian Tribe v. Baldrige.
The Council recommended that all non-treaty commercial and
recreational fisheries be closed north of Cape Falcon, absent an
agreement between the United States and Canada on coho salmon harvest
levels. For the purposes of modeling impacts and escapements for this
regime, the west coast of Vancouver Island (WCVI) coho harvest was
assumed to be 1.46 million coho, a harvest level which represents
recent year average harvest rates with this year's abundance estimates.
Total allowable harvest levels for treaty Indian troll fisheries would
be 11,000 chinook and 12,500 coho. The treaty Indian coho quota could
be modified under inseason management provisions, not to exceed 20,000
coho, upon agreement of relevant state and tribal fishery managers.
Because there currently is no assurance that the WCVI harvest will be
below 1.46 million coho, this regime is the one implemented in these
annual management measures.
The Council also recommended two alternate management regimes for
non-treaty and treaty Indian fisheries north of Cape Falcon based on
lower catch expectations in the Canadian troll fishery off the WCVI. If
either of these regimes is to be implemented inseason, NMFS will follow
the inseason notice procedures described below. Due to low abundance of
lower Columbia River fall chinook stocks, all three regimes prohibit
the retention of chinook in non-treaty commercial and recreational
fisheries.
1. The first contingency regime is if the Canadian harvest is
anticipated to be in the range of 1.1 million to 1.3 million coho off
WCVI, the total allowable harvest for non-treaty fisheries would be
zero chinook and 75,000 coho (18,800 coho to the commercial fishery and
56,200 coho to the recreational fishery). For the purposes of modeling
impacts and escapements for this contingency, the WCVI coho harvest was
assumed to be 1.2 million coho, the midpoint of the range. The Regional
Director would use the inseason management authority and process to
implement the season structure recommended by the Council. Total
allowable harvest levels for treaty Indian troll fisheries would be
11,000 chinook and 25,000 coho.
2. The second contingency regime is if the Canadian harvest is
anticipated to be less than 1.1 million coho off WCVI, the Director,
Northwest Region, NMFS is authorized to make inseason adjustments to
modify the ocean quotas in the first contingency upon the
recommendation of the States of Washington and Oregon and the treaty
Indian tribes.
The Council recommended additional provisions to protect stocks of
management concern should the second contingency regime cause coho
quotas to be increased above the levels in the first contingency
regime. Estimated impacts on OCN coho cannot be higher than those
modeled for the season structure to be implemented for the first
contingency, and at least 50 percent of any savings from reductions in
harvest below 1.2 million coho are to be allocated to spawning
escapement of critical coho stocks.
Since it is not known when understandings with Canada will be
reached on the level of Canadian harvest, it is possible that little
time could be available to implement either contingency. Therefore,
these two contingencies are included in this action in order to
simplify the implementation process for any inseason action and inform
the public of the range of possible seasons.
The Council analyzed the impacts of the proposed seasons and
contingencies on Snake River spring/summer and fall chinook stocks,
which are listed as threatened species under ESA. For Snake River wild
spring and summer chinook, the available information indicates that it
is highly unlikely these fish are impacted by Council area fisheries.
Pending implementation of an amendment to the FMP, NMFS and the Council
must manage the ocean salmon fisheries within the Council's
jurisdiction to ensure the impacts of the annual management measures on
Snake River fall chinook meet the requirements of the March 8, 1996
biological opinion and RPA. Impacts of Council area fisheries are
limited to no more than 50 percent of the 1988-93 average exploitation
rate, or 70 percent for all United States and Canadian ocean fisheries
combined. The STT estimated that under the Council's recommended
management measures, impacts on Snake River fall chinook would be 63
percent of the base period average for all ocean fisheries, thus
meeting the standard of no more than 70 percent.
Commercial Troll Fisheries
Non-treaty commercial troll fisheries north of Cape Falcon are
closed in 1996. Should a contingency management regime be implemented
inseason, the commercial fishery for all salmon except chinook between
the U.S.-Canadian border and Leadbetter Point, WA, will open July 26
and continue through the earlier of September 30 or attainment of the
18,800 coho quota. The fishery will follow a cycle of 3 days open and 4
days closed, with a possession and landing limit of 75 coho per
opening. The days open and the landing limit may be adjusted inseason
if necessary to manage the fishery. The minimum size limit (total
length) for coho salmon is 16.0 inches (40.6 cm). The commercial troll
ocean quota for coho may be adjusted by inseason action if the Canadian
harvest is anticipated to be less than 1.1 million coho off WCVI.
Recreational Fisheries
Recreational fisheries north of Cape Falcon are closed in 1996.
Should a contingency management regime be implemented inseason, the
recreational fisheries for all salmon except chinook will be divided
into four subareas. Opening dates, subarea quotas, bag limits, and area
restrictions are described below. The fisheries in all subareas will
close the earlier of September 26 or on attainment of the subarea coho
salmon quota. The minimum size limit (total length) for coho salmon is
16.0 inches (40.6 cm). The recreational ocean quotas (overall and
subarea) for coho may be adjusted by inseason action if the Canadian
harvest is anticipated to be less than 1.1 million coho off WCVI.
From the Queets River to Leadbetter Point, WA, and from Leadbetter
Point, WA, to Cape Falcon, OR, the fishery will open July 22 with coho
subarea quotas of 20,800 and 28,100, respectively. Both subareas will
be open Sunday through Thursday only, with a two-fish daily bag limit,
but no more than four fish in 7 consecutive days, and closed 0-3 miles
(4.8 km) of shore north of the Columbia Control Zone and in the
Columbia Control Zone.
From Cape Alava to the Queets River, WA, the fishery will open
August 5 with a 1,500 coho subarea quota. The fishery will be open 7
days per week with a two-fish daily bag limit, and closed 0-3 miles
(4.8 km) of shore.
From the U.S.-Canadian border to Cape Alava, WA, the fishery will
open August 5 with a 5,800 coho subarea quota. The fishery will be open
7 days per week with a two-fish daily bag limit,
[[Page 20181]]
and closed 0-3 miles (4.8 km) of shore south of Skagway Rock.
Treaty Indian Fisheries
Ocean salmon management measures proposed by the treaty Indian
tribes are part of a comprehensive package of treaty Indian and non-
treaty salmon fisheries in the ocean and inside waters that was agreed
to by the various parties. Treaty troll seasons, minimum length
restrictions, and gear restrictions were developed by the tribes and
agreed to by the Council. Treaty Indian troll fisheries north of Cape
Falcon are governed by a chinook quota of 11,000 fish and a coho quota
which is dependent on the level of Canadian coho harvest off WCVI. If
the Canadian harvest is more than 1.3 million coho off WCVI, then the
coho quota is set at 12,500 fish; upon agreement of state and tribal
managers, the Regional Director will implement an inseason adjustment
to the coho quota not to exceed 20,000 fish. At a Canadian harvest
level between 1.1 and 1.3 million coho off WCVI, the Regional Director
will adjust the coho quota to 25,000. The all-salmon-except-coho
seasons will open May 1 and extend through June 30, if the overall
harvest guideline of 7,000 chinook is not reached. The all-salmon
seasons will open August 1 and extend through the earliest of September
15 or attainment of the chinook or coho quotas. The minimum length
restrictions for all treaty ocean fisheries, excluding ceremonial and
subsistence harvest, is 24 inches (61.0 cm) for chinook and 16 inches
(40.6 cm) for coho.
The 1997 Fisheries
The timing of the March and April Council meetings makes it
impracticable for the Council to recommend fishing seasons that begin
before May 1 of the same year. Therefore, 1997 fishing season openings
earlier than May 1 also are established in this notification. The
Council recommended, and NMFS concurs, that the following seasons will
open off California in 1997. From Point Lopez to Point Mugu, a
commercial fishery for all salmon except coho will open April 15 and
continue through the earlier of April 28 or attainment of the 10,000
chinook quota. This fishery is intended to evaluate the relative
contribution rates of Central Valley, Klamath, and southern Oregon
chinook stocks to catches off southern California. The following
recreational seasons have two-fish daily bag limits and a minimum size
limit of 24 inches (61.0 cm) for chinook salmon: From Pigeon Point to
the U.S.-Mexican border, a recreational fishery for all salmon will
open on March 15. From Point Arena to Pigeon Point, a recreational
fishery for all salmon will open on March 29. From Horse Mountain to
Point Arena, a recreational fishery for all salmon except coho will
open on February 15 (the nearest Saturday to February 15). If an
evaluation indicates low coho abundance is anticipated in 1997,
inseason action may be taken to prohibit retention of coho in the
recreational fisheries south of Point Arena.
At its March 1997 meeting, the Council will consider an inseason
recommendation to open commercial and recreational seasons for all
salmon except coho on April 15, 1997, in areas off Oregon.
The following tables and text are the management measures
recommended by the Council for 1996 and, as specified, for 1997.
Table 1. Commercial Management Measures for 1996 Ocean Salmon
Fisheries
Note: This table contains important restrictions in parts A, B,
and C which must be followed for lawful participation in the
fishery.
A. Season Descriptions
North of Cape Falcon
Attention: All non-treaty troll and recreational ocean fisheries
north of Cape Falcon are closed in 1996, and will remain closed all
season unless the conditions allowing the contingency season to be
implemented are met. If Canadian harvest of coho off the west coast of
Vancouver Island (WCVI) is determined to be at 1.3 million coho or
less, a contingency season described below will be implemented through
an inseason adjustment to the regulations. At a harvest level of 1.1
million to 1.3 million coho off the WCVI, the non-treaty ocean total
allowable catch (TAC) will be set at 75,000 coho; the troll fishery
will be limited by overall catch quotas of zero chinook and 18,800
coho. At a harvest level of less than 1.1 million coho off the WCVI,
the non-treaty coho TAC may be increased contingent on: Allocating at
least 50 percent of the savings from harvest reductions below 1.2
million coho to spawner escapement of the critical coho stocks; no
increase in estimated Oregon coastal natural coho impacts above those
modeled under the assumptions of the season structure presented in the
contingency season for an assumed WCVI harvest of 1.2 million coho; and
agreement among all relevant state and tribal fishery managers. The
contingency season, if it is implemented, and any adjustments to the
non-treaty coho TAC will be implemented by inseason management.
Season Effective May 1, 1996
U.S.-Canadian Border to Cape Falcon
Closed.
Contingency Season
U.S.-Canadian Border to Leadbetter Point
July 26 through earlier of September 30 or 18,800 coho quota. All
salmon except chinook. Season to follow a cycle of 3 days open/4 days
closed. The open/closure cycle may be modified inseason as necessary to
manage the fishery. Each vessel may possess, land and deliver no more
than 75 coho per open period. The landing limit may be modified
inseason as necessary to utilize the available quota. Following any
closure, vessels must land and deliver fish in the area or adjacent
closed area within 24 hours.
South of Cape Falcon
Cape Falcon to Cape Arago
May 1 through June 30, and August 7 through October 31. All salmon
except coho. No more than 4 spreads per line.
Cape Arago to Oregon-California Border
May 1 through earlier of June 30 or 5,300 chinook quota. All salmon
except coho. Season to follow a cycle of 4 days open/3 days closed. The
open/closure cycle may be modified inseason as necessary to manage the
fishery. No more than 4 spreads per line. Landing limits may be
instituted inseason as necessary to keep the fishery within the quota.
Cape Arago to Humbug Mountain
August 7 through earlier of August 31 or 8,800 chinook quota, and
September 1 through earlier of October 31 or 10,000 chinook quota. All
salmon except coho. No more than 4 spreads per line.
Sisters Rocks to Mack Arch
August 3 through earlier of August 31 or 3,000 chinook quota. All
salmon except coho. Season to follow a cycle of 2 days open/2 days
closed. The open/closure cycle may be modified inseason as necessary to
manage the fishery. No more than 4 spreads per line. Open only 0 to 4
nautical miles (7.4 km) of shore. All salmon caught in the area must be
landed and delivered in Port Orford, Gold Beach, or Brookings within 24
hours of each closure. Landings limits may be instituted inseason as
necessary to keep the fishery within the quota. Vessel registration
with the Oregon Department of Fish and Wildlife is required by the
State prior to August 1 for participants in this fishery in order
[[Page 20182]]
to accurately sample the catch to determine the river of origin of
salmon landed in this fishery.
Oregon-California Border to Humboldt South Jetty
August 15 thru earlier of August 31 or 2,500 chinook quota, and
September 1 thru earlier of September 15 or 6,000 chinook quota. All
salmon except coho. Landing limit of 30 fish per day. Chinook minimum
size limit (total length) of 27 inches. Klamath Control Zone closed
(see C.7.). See line restriction (C.3.).
Horse Mountain to Point Arena
August 1 through September 30. All salmon except coho. Chinook
minimum size limit (total length) of 27 inches. See line restriction
(C.3.).
Point Arena to Point Reyes
June 1 through June 30, and August 1 through September 15. All
salmon except coho. Chinook minimum size limits (total length) of 26
inches through June 30 and 27 inches thereafter. See line restriction
(C.3.).
Bodega Head to Point San Pedro
September 16 through September 30. All salmon except coho. Chinook
minimum size limit (total length) of 27 inches. See line restriction
(C.3.).
Point Reyes to U.S.-Mexican Border
May 1 through June 30, and July 3 through September 15. All salmon
except coho. Chinook minimum size limit (total length) of 26 inches
through June 30 and 27 inches thereafter. See line restriction (C.3.).
Point Lopez to Point Mugu in 1997
April 15 through earlier of April 28 or 10,000 chinook quota. All
salmon except coho. Chinook minimum size limit (total length) of 26
inches. All fish must be landed within the area. See line restriction
(C.3.).
B. Minimum Size Limits
[Inches*]
----------------------------------------------------------------------------------------------------------------
Chinook Coho
-----------------------------------------------------
Area (when open) Total Total Pink
length Head-off length Head-off
----------------------------------------------------------------------------------------------------------------
North of Cape Falcon.................. ........... ............ 16.0 12.0 None.
Cape Falcon to Oregon-California 26.0 19.5 ........... ........... None.
Border.
South of Oregon-California Border (see 26.0 19.5 ........... ........... None.
part A for applicable chinook size or 27.0 20.25
limit).
----------------------------------------------------------------------------------------------------------------
* Metric equivalents for chinook: 27.0 inches=68.6 cm, 26.0 inches=66.0 cm, 20.25 inches=51.4 cm, 19.5
inches=49.5 cm.
Metric equivalents for coho: 16.0 inches=40.6 cm, 12.0 inches=30.5 cm.
C. Special Requirements, Restrictions, and Exceptions
C.1. Hooks--Single point, single shank barbless hooks are required.
C.2. Spread--A single leader connected to an individual lure or
bait.
C.3. Line Restriction--No more than 6 lines per vessel off
California.
C.4. Compliance with Minimum Size or Other Special Restrictions--
All salmon on board a vessel must meet the minimum size or other
special requirements for the area being fished and the area in which
they are landed if that area is open. Salmon may be landed in an area
that is closed only if they meet the minimum size or other special
requirements for the area in which they were caught.
C.5. Transit Through Closed Areas with Salmon on Board--It is
unlawful for a vessel to have troll gear in the water while transiting
any area closed to salmon fishing while possessing salmon.
C.6. Notification When Unsafe Conditions Prevent Compliance with
Regulations--A vessel is exempt from meeting the landing requirements
for the contingency season north of Leadbetter Point if it is prevented
by unsafe weather conditions or mechanical problems from meeting
landing restrictions, and it complies with the State of Washington
requirement to notify the U.S. Coast Guard and receives acknowledgement
of such notification prior to leaving the area where landing is
required. This notification shall include the name of the vessel, port
where delivery will be made, approximate amount of salmon (by species)
on board and the estimated time of arrival.
C.7. Klamath Control Zone--The ocean area at the Klamath River
mouth bounded on the north by 41 deg.38'48'' N. lat. (approximately 6
nautical miles north of the Klamath River mouth), on the west by
124 deg.23'00'' W. long. (approximately 12 nautical miles of shore),
and on the south by 41 deg.26'48'' N. lat. (approximately 6 nautical
miles south of the Klamath River mouth).
C.8. Inseason Management--In addition to standard inseason actions
or inseason modifications already noted under the season description,
the following inseason guidance is provided to NMFS:
Transfers of 5,000 fish or less between subarea quotas north of
Cape Falcon shall be done on a fish-for-fish basis;
NMFS may make inseason adjustments to fisheries north and south of
Cape Falcon, consistent with and complementary to Council spawner
escapement objectives, if management agreements or understandings with
Canada warrant such action;
At the March 1997 meeting, the Council will consider an inseason
recommendation to open commercial seasons for all salmon except coho on
April 15 in areas off Oregon.
C.9. Incidental Halibut Harvest--To land Pacific halibut caught
incidentally in Area 2A (all waters off the States of Washington,
Oregon, and California) while trolling for salmon during troll seasons,
a vessel must be issued an incidental halibut harvest license by the
International Pacific Halibut Commission (phone 206-634-1838). License
applications must be postmarked no later than April 1, 1996. A salmon
troller may participate in this fishery or in the directed commercial
fishery targeting halibut, but not in both. In troll fisheries (except
in July), incidentally caught halibut may be landed under the following
restrictions: No more than 1 halibut for each 15 chinook landed, except
1 halibut may be landed without meeting the ratio requirement, and no
more than 20 halibut may be landed per trip. Halibut retained must be
in compliance with the minimum size limit of 32 inches (81.3 cm). The
Oregon Department of Fish and Wildlife will monitor landings. If
landings are projected to exceed the 16,068-lb (7.3-mt) preseason
allocation or the entire Area 2A total allowable catch of halibut, NMFS
will take
[[Page 20183]]
inseason action to close the incidental halibut fishery through a
document published in the Federal Register.
C.10. Consistent with Council management objectives, the State of
Oregon may establish additional late-season, all-salmon-except-coho
fisheries in state waters.
C.11. For the purposes of California Department of Fish and Game
Code, section 8232.5, the definition of the Klamath management zone for
the ocean salmon season shall be that area from Humbug Mountain, OR, to
Horse Mountain, CA.
Table 2. Recreational Management Measures for 1996 Ocean Salmon
Fisheries
Note: This table contains important restrictions in parts A, B,
and C which must be followed for lawful participation in the
fishery.
A. Season Descriptions
North of Cape Falcon
Attention: All non-treaty troll and recreational ocean fisheries
north of Cape Falcon are closed in 1996, and will remain closed all
season unless the conditions allowing the contingency season to be
implemented are met. If Canadian harvest of coho off the west coast of
Vancouver Island (WCVI) is determined to be at 1.3 million coho or
less, a contingency season described below will be implemented through
an inseason adjustment to the regulations. At a harvest level of 1.1
million to 1.3 million coho off the WCVI, the non-treaty ocean total
allowable catch (TAC) will be set at 75,000 coho; the recreational
fishery will be limited by overall catch quotas of zero chinook and
56,200 coho. At a harvest level of less than 1.1 million coho off the
WCVI, the non-treaty coho TAC may be increased contingent on:
allocating at least 50 percent of the savings from harvest reductions
below 1.2 million coho to spawner escapement of the critical coho
stocks; no increase in estimated Oregon coastal natural coho impacts
above those modeled under the assumptions of the season structure
presented in the contingency season for an assumed WCVI harvest of 1.2
million coho; and agreement among all relevant state and tribal fishery
managers. The contingency season, if it is implemented, and any
adjustments to the non-treaty coho TAC will be implemented by inseason
management.
Season Effective May 1, 1996
U.S.-Canadian Border to Cape Falcon
Closed.
Contingency Season
U.S.-Canadian Border to Cape Alava
August 5 through earlier of September 26 or 5,800 coho subarea
quota. Open 7 days per week. All salmon except chinook. Two fish per
day. Closed 0 to 3 miles (4.8 km) of shore south of Skagway Rock
(48 deg.21'58'' N. lat.). Inseason management may be used to maintain
season length.
Cape Alava to Queets River
August 5 through earlier of September 26 or 1,500 coho subarea
quota. Open 7 days per week. All salmon except chinook. Two fish per
day. Closed 0 to 3 miles (4.8 km) of shore. Inseason management may be
used to maintain season length.
Queets River to Leadbetter Point
July 22 through earlier of September 26 or 20,800 coho subarea
quota. Open Sunday through Thursday only. All salmon except chinook.
Two fish per day. No more than 4 fish in 7 consecutive days. Closed 0
to 3 miles (4.8 km) of shore. Inseason management may be used to
maintain season length.
Leadbetter Point to Cape Falcon
July 22 through earlier of September 26 or 28,100 coho subarea
quota. Open Sunday through Thursday only. All salmon except chinook.
Two fish per day. No more than 4 fish in 7 consecutive days. Closed 0
to 3 miles (4.8 km) of shore north of the Columbia Control Zone and in
the Columbia Control Zone (see C.5. for revised definition). Inseason
management may be used to maintain season length.
South of Cape Falcon
Cape Falcon to Humbug Mountain
May 1 through July 7, and August 16 through September 30. All
salmon except coho. Two fish per day. No more than 6 fish in 7
consecutive days. Legal gear limited to: Artificial lures, plugs or
bait no less than 6 inches (15.2 cm) long (excluding hooks and swivels)
with no more than 2 single point, single shank barbless hooks; flashers
and divers prohibited.
Humbug Mountain to Horse Mountain
May 12 through July 7, and August 18 through September 21. All
salmon except coho. 1 fish per day. No more than 4 fish in 7
consecutive days. Klamath Control Zone closed (see C.6.). See rod
restriction (C.2.).
Horse Mountain to Point Arena
February 17 (nearest Saturday to February 15) through July 7, and
August 1 through November 17 (nearest Sunday to November 15). All
salmon except coho. Two fish per day. Chinook minimum size limit of 24
inches. See rod and gear restrictions (C.2. and C.3.).
In 1997, the season will open February 15 (nearest Saturday to
February 15) through April 30 for all salmon except coho; two fish per
day; chinook minimum size limit of 24 inches.
Point Arena to Point San Pedro
March 2 through October 14. All salmon except coho. Two fish per
day. Chinook minimum size limit of 24 inches through July 1 and 26
inches thereafter. See rod and gear restrictions (C.2. and C.3.).
In 1997, the season will open March 29 through April 30 for all
salmon; two fish per day; chinook minimum size limit of 24 inches. If
evaluation indicates low coho abundance in 1997, inseason action may
prohibit retention of coho. At the April 1997 meeting, the Council will
consider measures for the remainder of the season.
Point San Pedro to Pigeon Point
March 2 through August 25. All salmon except coho. Two fish per
day. Chinook minimum size limit of 24 inches through July 1 and 26
inches thereafter. See rod and gear restrictions (C.2. and C.3.).
In 1997, the season will open March 29 through April 30 for all
salmon; two fish per day; chinook minimum size limit of 24 inches. If
evaluation indicates low coho abundance in 1997, inseason action may
prohibit retention of coho. At the April 1997 meeting, the Council will
consider measures for the remainder of the season.
Pigeon Point to U.S.-Mexican Border
March 2 through August 25. All salmon except coho. Two fish per
day. Chinook minimum size limit of 24 inches through July 1 and 26
inches thereafter. See rod and gear restrictions (C.2. and C.3.).
In 1997, the season will open March 15 through April 30 for all
salmon; two fish per day; chinook minimum size limit of 24 inches. If
evaluation indicates low coho abundance in 1997, inseason action may
prohibit retention of coho. At the April 1997 meeting, the Council will
consider measures for the remainder of the season.
[[Page 20184]]
B. Minimum Size Limits
[Total length in inches*]
----------------------------------------------------------------------------------------------------------------
Area (when open) Chinook Coho Pink
----------------------------------------------------------------------------------------------------------------
North of Cape Falcon................. ............ 16.0 None.
Cape Falcon to Horse Mountain........ 20.0 ........ None, except 20.0 off California.
South of Horse Mountain (see part A 24.0 or 26.0 ........ 20.0.
for applicable chinook size limit).
----------------------------------------------------------------------------------------------------------------
*Metric equivalents for chinook: 26.0 inches=66.0 cm, 24.0 inches=61.0 cm, 20.0 inches=50.8 cm.
Metric equivalents for coho: 16.0 inches=40.6 cm.
Metric equivalents for pink: 20.0 inches=50.8 cm.
C. Special Requirements, Restrictions, and Exceptions
C.1. Hooks--Single point, single shank barbless hooks are required
for all fishing gear north of Point Conception, CA (34 deg.27'00'' N.
lat.).
C.2. Restriction on Number of Fishing Rods Off California North of
Point Conception--No person fishing for salmon, and no person fishing
from a boat with salmon on board, may use more than one rod and line.
C.3. Gear Restrictions Between Horse Mountain and Point Conception,
California, Beginning July 1, 1996--When fishing with bait and any
combination of weights measuring 1 lb or less, the following
restrictions apply: no more than 2 hooks may be used; when using 2
hooks, the terminal (lower) hook must be no less than 5/0 and the upper
hook no less than 4/0, the distance between the 2 hooks must not exceed
5 inches (12.7 cm) and both hooks must be permanently tied in place
(hard tied); if using a single hook, the hook size cannot be less than
5/0. Hook size restrictions do not apply when artificial lures are used
or when bait is attached to an artificial lure. (An artificial lure is
a man-made lure designed to attract fish, not including scented or
flavored artificial baits.)
C.4. Compliance with Minimum Size or Other Special Restrictions--
All salmon on board a vessel must meet the minimum size or other
special requirements for the area being fished and the area in which
they are landed if that area is open. Salmon may be landed in an area
that is closed only if they meet the minimum size or other special
requirements for the area in which they were caught.
C.5. Columbia Control Zone--The ocean area at the Columbia River
mouth bounded by a line extending for 6 nautical miles (11.1 km) due
west from North Head along 46 deg.18'00'' N. lat. to 124 deg.13'18'' W.
long., then southerly to 46 deg.13'24'' N. lat. and 124 deg.11'00'' W.
long. (green, Columbia River Entrance Lighted Bell Buoy #1), then
southerly to 46 deg.11'06'' N. lat. and 124 deg.11'00'' W. long. (red,
Columbia River Approach Lighted Whistle Buoy), then northeast along red
buoy line to the tip of the south jetty.
C.6. Klamath Control Zone--The ocean area at the Klamath River
mouth bounded on the north by 41 deg.38'48'' N. lat. (approximately 6
nautical miles [11.1 km] north of the Klamath River mouth), on the west
by 124 deg.23'00'' W. long. (approximately 12 nautical miles [22.2 km]
of shore), and on the south by 41 deg.26'48'' N. lat. (approximately 6
nautical miles [11.1 km] south of the Klamath River mouth).
C.7. Inseason Management--To meet preseason management objectives
such as quotas, harvest guidelines and season duration, certain
regulatory modifications may become necessary inseason. Actions could
include modifications to bag limits or days open to fishing, and
extensions or reductions in areas open to fishing.
For 1996, the Council has requested NMFS to make inseason
adjustments to fisheries north and south of Cape Falcon, consistent
with and complementary to Council spawner escapement objectives, in the
event that management agreements or understandings with Canada warrant
such action.
The procedure for inseason transfer of coho among recreational
subareas north of Cape Falcon will be as follows:
After conferring with representatives of the affected ports and the
Salmon Advisory Subpanel recreational representatives north of Cape
Falcon, NMFS may transfer coho inseason among recreational subareas to
help meet the recreational season duration objectives (for each
subarea). Any transfers between subarea quotas of 5,000 fish or less
shall be done on a fish-for-fish basis.
At the March 1997 meeting, the Council will consider an inseason
recommendation to open seasons for all salmon except coho on April 15
in areas off Oregon.
C.8. Consistent with Council management objectives, the States of
Washington and Oregon may establish limited seasons in State waters;
fisheries in Oregon State waters are limited to all salmon except coho.
Table 3. Treaty Indian Management Measures for 1996 Ocean Salmon
Fisheries.
Note: This table contains important restrictions in parts A, B,
and C which must be followed for lawful participation in the
fishery.
A. Season Descriptions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minimum size
limit (inches*)
Tribe and area boundaries Open seasons Salmon species ----------------- Special restrictions by area
Chinook Coho
--------------------------------------------------------------------------------------------------------------------------------------------------------
Makah--That portion of the Fishery May 1 through earlier of All except coho.......... 24 ..... Barbless hooks. No more than 8 fixed lines
Management Area (FMA) north of 48 June 30 or overall 7,000 per boat or no more than 4 hand-held
deg.02'15'' N. lat. (Norwegian chinook guideline. No lines per person.
Memorial) and east of 125 more than 3,500 chinook
deg.44'00'' W. long. may be taken prior to
June 1.
[[Page 20185]]
August 1 through earliest All...................... 24 16
of September 15 or
chinook or coho quota.
Quileute--That portion of the FMA May 1 through earlier of All except coho.......... 24 ..... Barbless hooks. No more than 8 fixed lines
between 48 deg.07'36'' N. lat. (Sand June 30 or overall 7,000 per boat.
Point) and 47 deg.31'42'' N. lat. chinook guideline. No
(Queets River) east of 125 more than 3,500 chinook
deg.44'00'' W. long. may be taken prior to
June 1.
August 1 through earliest All...................... 24 16
of September 15 or
chinook or coho quota.
Hoh--That portion of the FMA between May 1 through earlier of All except coho.......... 24 ..... Barbless hooks. No more than 8 fixed lines
47 deg.54'18'' N. lat. (Quillayute June 30 or overall 7,000 per boat.
River) and 47 deg.21'00'' N. lat. chinook guideline. No
(Quinault River) east of 125 more than 3,500 chinook
deg.44'00'' W. long. may be taken prior to
June 1.
August 1 through earliest All...................... 24 16
of September 15 or
chinook or coho quota.
Quinault--That portion of the FMA May 1 through earlier of All except coho.......... 24 ..... Barbless hooks. No more than 8 fixed lines
between 47 deg.40'06'' N. lat. June 30 or overall 7,000 per boat.
(Destruction Island) and 46 chinook guideline. No
deg.53'18'' N. lat. (Point Chehalis) more than 3,500 chinook
east of 125 deg.44'00'' W. long. may be taken prior to
June 1.
August 1 through earliest All...................... 24 16
of September 15 or
chinook or coho quota.
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Metric equivalents: 24 inches=61.0 cm, 16 inches=40.6 cm.
B. Special Requirements, Restrictions, and Exceptions
B.1. All boundaries may be changed to include such other areas as
may hereafter be authorized by a Federal court for that tribe's treaty
fishery.
B.2. Applicable lengths, in inches, for dressed, head-off salmon,
are 18 inches (45.7 cm) for chinook and 12 inches (30.5 cm) for coho.
Minimum size and retention limits for ceremonial and subsistence
harvest are as follows:
Makah Tribe--None.
Quileute, Hoh, and Quinault tribes--Not more than 2 chinook longer
than 24 inches in total length may be retained per day. Chinook less
than 24 inches total length may be retained.
B.3. The areas within a 6-mile (9.7-km) radius of the mouths of the
Queets River (47 deg.31'42'' N. lat.) and the Hoh River (47 deg.45'12''
N. lat.) will be closed to commercial fishing. A closure within 2 miles
(3.2 km) of the mouth of the Quinault River (47 deg.21'00'' N. lat.)
may be enacted by the Quinault Nation and/or the State of Washington
and will not adversely affect the Secretary of Commerce's management
regime.
C. Quotas
C.1. The overall treaty troll ocean quotas would be as follows
under assumed coho harvest levels in the Canadian fishery off the west
coast of Vancouver Island (WCVI): At 1.46 million coho, 11,000 chinook
and from 12,500 to 20,000 coho, depending on the actual WCVI coho
harvest target; and at 1.2 million coho, 11,000 chinook and 25,000
coho. These quotas include troll catches by the Klallam and Makah
tribes in Washington State Statistical Area 4B from May 1 through
September 30. The all-salmon-except-coho fishery will be limited by an
overall harvest guideline of 7,000 chinook (3,500 chinook in May and
3,500 chinook in June). The remainder of the quota will be available
for the all-salmon fishery beginning in August. The chinook guidelines
for May and June are based on a quota of 20,000 to 25,000 coho and may
be modified if the final coho quota is less than 20,000. The coho quota
is set in these management measures at 12,500. Upon agreement of state
and tribal managers, the Regional Director will implement an inseason
adjustment to the coho quota not to exceed 20,000. At a Canadian
harvest level between 1.1 and 1.3 million, the Regional Director will
adjust the coho quota to 25,000.
Halibut Retention
In accordance with the Northern Pacific Halibut Act, regulations
governing the Pacific halibut fishery were published in the Federal
Register on March 20, 1996 (61 FR 11337). The regulations, which appear
under 50 CFR part 301, state that operators of vessels participating in
the salmon troll fishery in Area 2A (all waters off the States of
Washington, Oregon, and California), who have obtained the appropriate
International
FR Doc. 96-11136 Ocean Salmon Fisheries Off the Coasts of Washington, Oregon, and California; 1996 Management Measures and Technical Amendment
Pacific Halibut Commission (IPHC) license, may retain
halibut caught incidentally during authorized periods, in conformance
with provisions announced with the annual salmon management measures.
As provided by 50 CFR 301.7(c) and 301.24(e), the following
measures have been approved. The operator of a vessel that has been
issued an incidental halibut harvest license by the IPHC (trollers must
have sent license applications to IPHC postmarked no later than April
1) may retain Pacific halibut caught incidentally while trolling for
salmon during troll seasons, except in July, in Area 2A. A salmon
troller may participate in this fishery or in the directed commercial
fishery targeting halibut, but not both. In troll fisheries,
incidentally caught halibut may be landed only under the following
restrictions: No more than 1 halibut for each 15 chinook landed, except
1 halibut may be landed without meeting the ratio requirement, and no
more than
[[Page 20186]]
20 halibut may be landed per trip. Any halibut retained must be in
compliance with the minimum size limit of 32 inches (81.3 cm). The
Oregon Department of Fish and Wildlife will monitor landings. If
landings are projected to exceed the 16,068-lb (7.3-mt) preseason
commercial troll fishery allocation or the entire Area 2A total
allowable catch of halibut, NMFS will take inseason action to close the
incidental halibut fishery through a document published in the Federal
Register.
Gear Definitions and Restrictions
In addition to gear restrictions shown in Tables 1, 2, and 3 of
this preamble, the following gear definitions and restrictions will be
in effect:
Troll Fishing Gear
Troll fishing gear for the fishery management area (FMA) is defined
as one or more lines that drag hooks behind a moving fishing vessel.
In that portion of the FMA off Oregon and Washington, the line or
lines must be affixed to the vessel and must not be intentionally
disengaged from the vessel at any time during the fishing operation.
Recreational Fishing Gear
Recreational fishing gear for the FMA is defined as angling tackle
consisting of a line with not more than one artificial lure or natural
bait attached.
In that portion of the FMA off Oregon and Washington, the line must
be attached to a rod and reel held by hand or closely attended; the rod
and reel must be held by hand while playing a hooked fish. No person
may use more than one rod and line while fishing off Oregon or
Washington.
In that portion of the FMA off California, the line must be
attached to a rod and reel held by hand or closely attended. Weights
directly attached to a line may not exceed 4 lb (1.8 kg). While fishing
off California north of Point Conception, no person fishing for salmon,
and no person fishing from a boat with salmon on board, may use more
than one rod and line.
Fishing includes any activity that can reasonably be expected to
result in the catching, taking, or harvesting of fish.
Geographical Landmarks
Wherever the words ``nautical miles of shore'' are used in this
rule, the distance is measured from the baseline from which the
territorial sea is measured.
Geographical landmarks referenced in this document are at the
following locations:
Skagway Rock......................... 48 deg.21'58'' N. lat.
Cape Alava........................... 48 deg.10'00'' N. lat.
Queets River......................... 47 deg.31'42'' N. lat.
Leadbetter Point..................... 46 deg.38'10'' N. lat.
Cape Falcon.......................... 45 deg.46'00'' N. lat.
Cape Arago........................... 43 deg.18'20'' N. lat.
Humbug Mountain...................... 42 deg.40'30'' N. lat.
Sisters Rocks........................ 42 deg.35'45'' N. lat.
Mack Arch............................ 42 deg.13'40'' N. lat.
Oregon-California Border............. 42 deg.00'00'' N. lat.
Humboldt South Jetty................. 40 deg.45'53'' N. lat.
Horse Mountain....................... 40 deg.05'00'' N. lat.
Point Arena.......................... 38 deg.57'30'' N. lat.
Bodega Head.......................... 38 deg.17'58'' N. lat.
Point Reyes.......................... 37 deg.59'44'' N. lat.
Point San Pedro...................... 37 deg.35'40'' N. lat.
Pigeon Point......................... 37 deg.11'00'' N. lat.
Point Lopez.......................... 36 deg.01'15'' N. lat.
Point Conception..................... 34 deg.27'00'' N. lat.
Point Mugu........................... 34 deg.05'12'' N. lat.
Inseason Notice Procedures
Actual notice of inseason management actions will be provided by a
telephone hotline administered by the Northwest Region, NMFS, 206-526-
6667 or 800-662-9825, and by U.S. Coast Guard Notice to Mariners
broadcasts. These broadcasts are announced on Channel 16 VHF-FM and
2182 kHz at frequent intervals. The announcements designate the channel
or frequency over which the Notice to Mariners will be immediately
broadcast. Inseason actions will also be filed for publication with the
Office of the Federal Register as soon as practicable. Since provisions
of these management measures may be altered by inseason actions,
fishermen should monitor either the telephone hotline or Coast Guard
broadcasts for current information for the area in which they are
fishing.
Technical Amendment
Amendment 9 to the FMP replaced the long-term spawning escapement
goal and interim rebuilding schedule for Klamath River fall chinook
contained in the framework FMP with fixed annual spawning escapement
and harvest rates. Under this approach, known as harvest rate
management, the spawning escapement rate is held constant at 33-34
percent of the potential adults from each brood over a long period of
time while the magnitude of harvest and the number of spawners is
allowed to vary in proportion to the stock abundance. Variation in
spawning escapement is subject to a minimum spawning escapement floor
of 35,000 naturally spawning adults. The purpose of shifting to a
harvest rate management approach was to allow for natural variation in
the spawning escapement and to obtain information on the productivity
of the Klamath River Basin to ultimately determine the optimum
escapement in order to achieve maximum sustainable yield over the long
term.
On October 4, 1993, Solicitor of the Department of the Interior
issued an opinion on the fishing rights of the Hoopa Valley and Yurok
Indian Tribes on the Klamath and Trinity Rivers. In that opinion, the
Solicitor concluded that the tribes have a federally protected right to
the fishery resource sufficient to support a moderate standard of
living or 50 percent of the total available annual harvest of Klamath-
Trinity basin salmon, whichever is less. NMFS issued a final rule
recognizing the federally reserved fishing rights of the Yurok and
Hoopa Valley Tribes, as acknowledged and quantified by the Solicitor,
as applicable law for the purposes of the Magnuson Act.
The STT was concerned that fixed rate escapement for each brood of
fish might not be possible under variable recruitment levels and annual
50/50 sharing of the harvest between tribal and non-tribal sectors.
Analysis by the Klamath River Technical Advisory Team indicated that
under annual 50/50 sharing, the brood rate escapement rate could vary
from the targeted 33-34 percent rate by approximately 2 percent for any
given brood, but over the long term the brood escapement rate would
average 33-34 percent.
Under the procedures contained in 50 CFR 661.22, NMFS is authorized
to modify an escapement goal by publishing a notice in the Federal
Register under Sec. 661.23 if: ``A comprehensive technical review of
the best scientific information available provides conclusive evidence
which, in the view of the Salmon Technical Team and the Council,
justifies modification of an escapement goal.'' In addition, Amendment
9 states that the escapement rate may be modified upon approval of the
STT and the Council to meet optimum yield (OY).
At the April 1996 Council meeting, the STT advised the Council that
revising the escapement goal from a 33-34 percent escapement rate
calculated on a brood year basis to a 33-34 percent rate calculated
over the long term would not constitute a significant change. The
Council then recommended to NMFS that the spawning escapement goal be
revised to allow the escapement rate to vary from the 33-34 percent in
order to achieve the required tribal/non-tribal annual allocation, as
long as it averages 33-34 percent over the long term. NMFS has approved
this change because it meets the objectives of Amendment 9's long-term
escapement rate goal, and it allows achievement of OY by allowing
[[Page 20187]]
achievement of both the escapement goal and the 50/50 sharing
requirement.
Classification
This notification of annual management measures and technical
amendment are exempt from review under E.O. 12866.
Section 661.23 requires NMFS to publish a notice establishing
management measures for ocean salmon fisheries each year and, if time
allows, invite public comments prior to the effective date. Section
661.23 further states that if, for good cause, a notice must be filed
without affording a prior opportunity for public comment, public
comments on the notice must be invited and received for a minimum of 15
days after filing the notice with the Office of the Federal Register.
Under Sec. 661.23, measures are effective upon filing, unless otherwise
specified in the notice.
Because many ocean salmon seasons are scheduled to start May 1, the
management measures must be in effect by then. Each year the schedule
for establishing the annual management measures begins in February with
the compilation and analysis of biological and socio-economic data for
the previous year's fishery and salmon stock abundance estimates for
the current year. These documents are made available and distributed to
the public for review and comment. Two meetings of the Council follow
in March and April. These meetings are open to the public and public
comment on the salmon management measures is encouraged. In 1996, the
Council recommended management measures near the conclusion of its
meeting on April 12, which resulted in a short time frame for
implementation.
In some areas, the season started on May 1 in 1995, but is not
scheduled to start until later in 1996 (or it is scheduled to start
with different management restrictions in place). The different
restrictions are put in place to respond to the needs of the various
stocks in 1996. A delay in implementation of the management measures
would allow inappropriate openings in some areas, which would cause
adverse impacts not contemplated in the design of the 1996 management
measures. Therefore, in light of the limited available time and the
adverse effect of delay, NMFS has determined that good cause exists to
waive the requirements of 50 CFR 661.23 and 5 U.S.C. 553(b) for prior
notice and opportunity for prior public comments on that notice to be
published in the Federal Register. For the same reasons, NMFS has
determined that good cause exists to waive the 30-day delay in
effectiveness under 5 U.S.C. 553(d). The measures are effective May 1,
1996. For this document, NMFS is receiving public comments for 30 days
from publication of the document.
The public had opportunity to comment on these management measures
during their development. The public participated in the March and
April Council, STT, and Salmon Advisory Subpanel meetings, and in
public hearings held in Washington, Oregon, and California in early
April that generated the management actions recommended by the Council
and approved by NMFS. Written public comments were invited by the
Council between the March and April Council meetings.
On March 8, 1996, NMFS issued a biological opinion that considered
the effects of the FMP on all listed salmon species. The biological
opinion concluded that fisheries conducted under the FMP are likely to
jeopardize the continued existence of Sacramento River winter chinook
and Snake River fall chinook, but provided a RPA to avoid jeopardy.
These management measures comply with the RPA as well as the incidental
take conditions contained in the biological opinion.
The biological opinion also concluded that fisheries conducted
under the FMP are not likely to jeopardize the continued existence of
other listed salmon species, specifically Snake River wild sockeye
salmon and Snake River wild spring and summer chinook.
List of Subjects in 50 CFR Part 661
Fisheries, Fishing, Indians, Reporting and recordkeeping
requirements.
Dated: April 30, 1996.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.
For the reasons set forth in the preamble, 50 CFR part 661 is
amended as follows:
PART 661--OCEAN SALMON FISHERIES OFF THE COASTS OF WASHINGTON,
OREGON, AND CALIFORNIA
1. The authority citation for part 661 continues to read as
follows:
Authority: 16 U.S.C. 1801 et seq.
Appendix to Part 661 [Amended]
2. The appendix to part 661 is amended in the table in IV.A.,
``Summary of Specific Management Goals for Stocks in the Salmon
Management Unit,'' by revising the entry for Klamath Fall Chinook to
read as follows:
Appendix
* * * * *
IV. Escapement Goals
A. * * *
Summary of Specific Management Goals for Stocks in the Salmon Management
Unit
------------------------------------------------------------------------
System Spawning \1\ escapement goal
------------------------------------------------------------------------
* * * * *
Klamath Fall Chinook... Between 33 and 34 percent of the potential
adult natural spawners, but no fewer than
35,000 naturally spawning adults in any one
year.\3\ The brood escapement rate will
average 33 to 34 percent over the long term.
The escapement rate for each brood may vary
from the 33 to 34 percent in order to achieve
the required tribal/non-tribal annual
allocation.
* * * * *
------------------------------------------------------------------------
\1\ Represents adult natural spawning escapement goal for viable natural
stocks or adult hatchery return goal for stocks managed for artificial
production.
* * * * *
\3\ The minimum escapement floor of 35,000 naturally spawning adults may
be modified only by amendment to the FMP.
* * * * *
* * * * *
[FR Doc. 96-11136 Filed 4-30-96; 4:40 pm]
BILLING CODE 3510-22-W
Complete official Federal Register PDF
FR Doc. 96-11114 Federal Motor Vehicle Safety Standards; Wheel Nuts, Wheel Discs, and Hub Caps
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20172-20175]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11114]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
49 CFR Part 571
[Docket No. 95-48; Notice 2]
RIN 2127-AF71
Federal Motor Vehicle Safety Standards; Wheel Nuts, Wheel Discs,
and Hub Caps
AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this final rule document, NHTSA rescinds the Federal motor
vehicle safety standard on wheel nuts, wheel discs, and hub caps. This
action is part of the agency's efforts to implement the President's
Regulatory Reinvention Initiative to either eliminate regulations, if
determined to be unnecessary, or to make them easier to understand and
to apply. The agency takes this action based on several conclusions. It
concludes that there is no safety problem. Further, the standard is
unavoidably overly design-restrictive. Moreover, to the extent that
there are any safety concerns regarding the practices of motorists in
installing wheel nuts, wheel discs, and hub caps that have winged
projections, the agency believes those concerns are more appropriately
addressed by State laws which regulate vehicle use than by a Federal
motor vehicle safety standard, which regulates the performance of new
motor vehicles and motor vehicle equipment as manufactured.
DATES: Effective Date: This final rule is effective June 5, 1996.
Petitions for Reconsideration: Any petitions for reconsideration of
this final rule must be received by NHTSA no later than June 20, 1996.
ADDRESSES: Any petition for reconsideration of this final rule should
refer to the docket and notice number set forth in the heading of this
notice and be submitted to: Administrator, NHTSA, 400 Seventh Street,
S.W., Washington, D.C. 20590.
FOR FURTHER INFORMATION CONTACT: For technical issues: Mr. Clarke
Harper, Office of Crashworthiness, NHTSA, telephone (202) 366-4916, FAX
number (202) 366-4329. Mr. Harper's e-mail address is
[email protected].
For legal issues: Ms. Dorothy Nakama, Office of Chief Counsel, NCC-
20, telephone (202) 366-2992, FAX (202) 366-3820.
Both may be reached at the National Highway Traffic Safety
Administration, 400 Seventh Street, S.W., Washington, D.C. 20590.
Comments should not be sent or faxed to these persons, but should be
sent to the Docket Section.
SUPPLEMENTARY INFORMATION:
President's Regulatory Reinvention Initiative
Pursuant to the March 4, 1995 directive ``Regulatory Reinvention
Initiative'' from the President to the heads of departments and
agencies, NHTSA undertook a review of its regulations and directives.
During the course of this review, NHTSA identified certain regulations
that could be rescinded as unnecessary. Among these regulations is
Federal Motor Vehicle Safety Standard No. 211, Wheel Nuts, Wheel Discs,
and Hub Caps (49 CFR Sec. 571.211). In the following section, NHTSA
describes how it reviewed the background of the standard, and explains
why it came to the conclusion that the safety problem is a minor one,
that Standard No. 211 is unavoidably overly design-restrictive, and
that wheel nuts, wheel discs, and hub caps having winged projections
are more appropriately addressed by State laws which regulate vehicle
use than by a Federal motor vehicle safety standard, which regulates
new motor vehicles and motor vehicle equipment. For these reasons,
NHTSA rescinds Standard No. 211.
Background
Standard No. 211 was issued in 1967 (32 FR 2408) as one of the
initial Federal Motor Vehicle Safety Standards. Since Standard No. 211
applies to motor vehicles and motor vehicle equipment, both vehicle
manufacturers and manufacturers of motor vehicle equipment must meet
the requirements of Standard No. 211. For many years, Standard No. 211
prohibited all wheel nuts, wheel discs, and hub caps (referred to
generically hereafter as ``hub caps'') that incorporate ``winged
projections,'' based on a concern that such projections can pose a
hazard to pedestrians and cyclists.
On January 15, 1993, NHTSA published in the Federal Register (58 FR
4582) a final rule amending Standard No. 211 to permit ``winged
projections'' on hub caps if, when the hub caps are installed on a
wheel rim, the projections do not extend beyond the plane of the wheel
rim. NHTSA amended Standard No. 211 after concluding that ``winged
projections'' that do not extend beyond the plane of the wheel do not
compromise pedestrian or cyclist safety. Persons who are interested in
a more detailed explanation for that conclusion are referred to the
January 1993 final rule and the preceding notice of proposed rulemaking
(57 FR 24207, June 8, 1992).
The January 1993 amendment was the culmination of a rulemaking
proceeding initiated in response to a petition for rulemaking submitted
by several hub cap manufacturers. After the amendment was published,
however, NHTSA received information from John Russell Deane III, an
attorney representing the petitioners, indicating that the amendment
did not provide the regulatory relief that had been requested by the
petitioners and anticipated by the agency in issuing the amendment.
Mr. Deane stated that certain preambular language in the January
1993 final rule suggested that manufacturers may manufacture and
distribute hub caps incorporating winged projections only if the
manufacturer is sure the product does not fit ``any other
combinations'' of axles and wheel rims which would result in the
projections extending beyond the plane of the wheel. He stated,
however, that a typical decorative hub cap incorporating winged
projections has a standardized attachment design which is identical to
wingless hexagonal cap attachment designs. In other words, the method
of attaching adapters to wheels is essentially standardized. Thus, the
winged hub caps could be installed on any wheels, not only on deep
wheels on which they would not extend beyond the plane of the wheel,
but also shallower wheels on which the projections would protrude
beyond such plane. Mr. Deane therefore concluded that ensuring
compliance of decorative hub caps incorporating winged projections on
all wheels would be virtually impossible, and that the practical effect
of the amendment is to continue to prevent the manufacture and
distribution of hub caps incorporating winged projections.
After reexamining the regulatory language, NHTSA concluded Mr.
Deane was correct. The regulatory language requires that each hub cap
with winged projections, as used in any physically compatible
combination of axle and wheel rim, may not extend beyond the plane of
the wheel. NHTSA determined the dilemma could be addressed only by
amending the regulatory language, not,
[[Page 20173]]
as Mr. Deane suggested, by issuing a letter of clarification. (A more
detailed explanation of the issue is provided in NHTSA's June 19, 1995
notice of proposed rulemaking (60 FR 31947).)
Notice of Proposed Rulemaking To Rescind Standard No. 211
In reviewing Standard No. 211 under the President's directive,
NHTSA was faced with a regulation that had the practical effect of
preventing the manufacture of all hubcaps with winged projections,
notwithstanding the fact that the agency concluded that such hubcaps
only pose a potential safety concern when used in circumstances in
which the winged projections extend beyond the plane of the wheel.
NHTSA strongly believes that its safety standards should not be overly
design-restrictive and therefore considered whether the current
standard, or any safety standard, is both an effective and appropriate
means of addressing the safety of winged projections that extend beyond
the plane of the wheel.
The agency tentatively concluded that the language of Standard No.
211 is not an appropriate means to ensure safe use of hub caps
incorporating winged projections. Therefore, on June 19, 1995 (60 FR
31947), NHTSA published a notice of proposed rulemaking (NPRM) to
rescind Standard No. 211. In the NPRM, NHTSA tentatively concluded that
the potential safety concern primarily relates to how hub caps with
winged projections are installed, rather than how they are
manufactured, and that the issue is therefore more appropriately
addressed by the States than by a Federal motor vehicle safety
standard. The agency therefore proposed to rescind Standard No. 211.
First, NHTSA stated its belief that, because of product liability
considerations, it is in the interest of vehicle manufacturers not to
install unsafe hub caps, such as those with winged projections
extending beyond the plane of the wheel, on their new vehicles. Vehicle
manufacturers can ensure that winged hub caps are not installed in
unsafe hub cap/wheel combinations since they can control which
combinations are authorized. The only potential safety concern
therefore relates to the availability and installation of aftermarket
winged hub caps.
Second, as discussed above, the regulatory dilemma facing NHTSA is
that hub caps with winged projections that are safe for relatively deep
wheels, since the projections do not extend beyond the plane of those
wheels, might be unsafe on other, shallower wheels. While the agency
recognizes that a total ban on hub caps with winged projections would
ensure safety, it would also be overly restrictive on vehicle and hub
cap design.
The agency proposed to solve this dilemma by ceasing to regulate
the manufacture of hub caps incorporating winged projections and
leaving it to the States to regulate the installation of hub caps
incorporating winged projections. The potential safety problem is not
how such hub caps are manufactured but instead how they are installed;
i.e., whether they are installed on wheels shallow enough to cause the
winged projections to extend beyond the plane of the wheel. While NHTSA
does not have the authority to regulate the use of vehicles, the States
do. Moreover, all States already regulate the use of vehicles and, to
the extent that the States determine that regulations are needed in
this area, they can issue ones which are not unnecessarily design-
restrictive. The States can do this by simply prohibiting the
installation or use of hub caps incorporating winged projections on
wheels so shallow that the projections extend beyond the plane of the
wheel.
Third, NHTSA stated its belief that rescission of Standard No. 211
would not compromise safety since the potential safety problem
addressed by the standard has always been virtually nonexistent.
Moreover, the agency stated its belief that, should there be any
significant increase in the installation of hubcaps with winged
projections in a manner that causes injuries to pedestrians, the States
could address that problem through their motor vehicle use regulations.
Public Comments on the NPRM and NHTSA's Response
NHTSA received comments from the Insurance Institute for Highway
Safety (IIHS), the Association of International Automobile
Manufacturers (AIAM), Chrysler Corporation, the State of Connecticut
and John Russell Deane III, on behalf of Consolidated International
Automotive, Inc., Dayton Wheel Products and Gorilla Automotive
Products. Mr. Deane enclosed copies of letters from 22 automotive parts
manufacturers, wholesalers and retailers, all of which expressed
support for rescinding Standard No. 211.
AIAM, Chrysler, Mr. Deane and the wheel industry representatives
either favored rescission or did not oppose rescission of Standard No.
211. AIAM stated that since pedestrian safety is also a concern in
Japan and Europe, ``[I]f the Standard were to be removed AIAM member
companies would not provide wheel nuts, wheel discs, or hub caps that
present a hazard.'' Mr. Deane agreed with NHTSA that product liability
concerns will induce vehicle manufacturers not to install unsafe hub
caps and will compel aftermarket manufacturers and installers to inform
consumers of the ``intended use combinations'' and to install the
equipment in accordance with that information. Mr. Deane did not
specify what he meant by ``intended use combinations.'' NHTSA presumes
that Mr. Deane meant limits recommended by hub cap manufacturers on
combinations of wheel rims, axle lengths, and wheel depths, that are to
be used in conjunction with a given hub cap incorporating winged
projections. The automotive parts manufacturers and distributors did
not provide any supporting data or raise any issues.
IIHS and Connecticut opposed rescinding Standard No. 211 and
provided numerous reasons for their opposition. NHTSA addresses each of
IIHS' and Connecticut's comments below.
Should NHTSA Retain Standard No. 211 and Impose More Design
Restrictions
IIHS asserts that the way to protect the public from ``hazards
created by a design that is safe in some configurations but not in
others, is to limit the design choices to the safe ones.'' IIHS was
concerned that NHTSA balanced the manufacturers' interests in having
more design choices for hub caps versus public safety and decided in
favor of the manufacturers. IIHS argues that no ``scintilla'' of
evidence supports NHTSA's proposal. Similarly, Connecticut stated it
would be ``[m]ore appropriate to relax the current standard in a way
that would be less design restrictive.''
Neither IIHS nor Connecticut provided any data to show a safety
problem associated with winged projections on wheels. Additionally,
neither of them suggested how the agency might amend Standard No. 211
to make it less design restrictive and ``limit the design choices to
the safe ones.'' As explained in the background section, NHTSA has
attempted to find out how to limit design choices to the ``safe ones''
for the past three years. Since the agency has not been able to find a
means other than outright prohibition of the hub caps incorporating
winged projections and has found no evidence of a safety problem, the
appropriate course of action is to rescind Standard No. 211.
[[Page 20174]]
State Law Issues
Two state law issues were raised in the public comments. First, the
IIHS stated: ``The availability of potential state regulatory action
and possible product liability suits to replace an existing [FMVSS] is
not a sufficient basis to justify rescinding the standard.''
The factors mentioned by IIHS are not the primary basis for the
rescission, but are additional considerations that weigh in favor of
rescission. The primary issue is safety. IIHS believes that there is a
risk to safety and that it is posed by the vehicle or equipment design.
NHTSA believes that the design of the vehicle or equipment itself would
not inherently create a risk to pedestrian or cyclist safety. It is the
particular combination of components as assembled by consumers that
determines whether a risk to safety is created.
NHTSA believes that Standard No. 211 as originally written (i.e.,
completely banning hub caps incorporating winged projections of any
design) was unduly restrictive and that State regulation offers a less
burdensome, more targeted alternative for achieving the same end. As
stated in the NPRM, the same end could be achieved by States placing
restrictions on the installation of winged hub caps on shallow wheels.
The second state law issue was raised by Connecticut. Connecticut
stated that in the absence of Standard No. 211, the States would have
to regulate. As a result, a vehicle manufacturer may have to meet as
many as 50 different State requirements.
As stated in the NPRM (see 60 FR at 31948), NHTSA believes that
States can issue regulations that do not directly regulate hub cap
design but rather prohibit inappropriate installation of any wheel
devices with winged projections, e.g., installation so that the
projections extend beyond the plane of the wheel. If each State enacted
a similar law prohibiting such installation, there would not be ``50
different state requirements.''
Product Liability
Connecticut appears to state that small aftermarket parts
manufacturers are often unaware of or not concerned with product
liability issues. According to the commenter, such small manufacturers
are often not concerned about product liability because they are not
aware of the possibility of liability until after the fact, i.e., until
after they have been sued.
As NHTSA already noted in its response to IIHS, product liability
factors are not the primary basis for this action. Further, the agency
does not believe that small manufacturers or other small businesses are
unresponsive to the potential product liability implications of hub
caps incorporating winged projections being used in an unsafe manner,
and causing injury. The prospect of product liability lawsuits is faced
by any company doing business in the United States. As earlier noted,
Mr. Deane, who represents many hub cap manufacturers, dealers, and
suppliers, agreed with NHTSA that product liability concerns will
induce vehicle manufacturers not to make any unsafe installations of
hub caps incorporating winged projections and will induce aftermarket
manufacturers and installers to inform consumers of suggested safe
combinations and to install the equipment in accordance with safe use.
Possibility of Reintroducing a Winged Hub Cap Problem
IIHS commented that: ``NHTSA's proposal could reintroduce a problem
that was eliminated by the original standard almost 30 years ago.''
NHTSA does not agree with IIHS' concern. IIHS offers no evidence to
support its position. Data available to NHTSA indicate that a
``reintroduction'' of a problem is unlikely, because it has never been
established that a problem existed in the first instance. In the 1992
NPRM to amend Standard No. 211, NHTSA examined various data sources to
determine the extent of injuries from contact by pedestrians,
motorcyclists, and bicyclists with wheels and hub caps, and to assess
the potential for injuries if winged projections were incorporated on
hub caps. NHTSA concluded: ``The data * * * do not indicate that since
1979, significant injury has been caused to pedestrians or cyclists as
a result of accidental contact with wheels or hub caps.'' (57 FR at
24208). NHTSA has received no data or other information refuting the
conclusions in the 1992 NPRM. No data relevant to the potential injury
issue were offered in response to the June 1995 NPRM.
Effective Date
In the NPRM, NHTSA proposed that if a final rule rescinding
Standard No. 211 is published, the effective date for the final rule be
45 days after publication in the Federal Register. The only commenter
addressing this issue, Mr. Deane, favored the final rule taking effect
30 days after its publication in the Federal Register. NHTSA received
no comments opposing an effective date 30 days after Federal Register
publication. Thus, the agency determines that there is good cause shown
that an effective date earlier than 180 days after issuance is in the
public interest.
Rulemaking Analyses and Notices
1. Executive Order 12866 and DOT Regulatory Policies and Procedures
This final rule was not reviewed under Executive Order 12866
(Regulatory Planning and Review). NHTSA has analyzed the impact of this
rulemaking action and determined that it is not ``significant'' within
the meaning of the Department of Transportation's regulatory policies
and procedures. The final rule does not impose any costs or yield any
significant savings. It instead relieves a restriction and thereby
provides vehicle and equipment manufacturers with greater flexibility
in the design and installation of wheel nuts, wheel discs, and hub
caps. Moreover, consumers will likely have a greater choice of hub cap
styles. The impacts will be so minimal that preparation of a full
regulatory evaluation is not warranted.
2. Regulatory Flexibility Act
NHTSA has also considered the impacts of this final rule under the
Regulatory Flexibility Act. I hereby certify that this final rule will
not have a significant economic impact on a substantial number of small
entities. As explained above, the rule will not impose any new
requirements but will relieve a restriction for hub caps with winged
projections. The final rule will likely have a small beneficial effect
on small manufacturers and dealers of motor vehicle equipment, since
they will have greater flexibility in the types of hub caps they may
manufacture and sell. Similarly, persons who purchase aftermarket hub
caps will likely have a greater choice. For these reasons, small
businesses, small organizations and small governmental units which
purchase motor vehicles will not be significantly affected by the final
rule. Accordingly, a final regulatory flexibility analysis has not been
prepared.
3. Executive Order 12612 (Federalism)
This final rule has been analyzed in accordance with the principles
and criteria contained in Executive Order 12612. The agency has
determined that the final rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment.
4. National Environmental Policy Act
The agency also has analyzed this final rule for the purpose of the
National Environmental Policy Act, and determined that it will not have
any
[[Page 20175]]
significant impact on the quality of the human environment.
5. Executive Order 12778 (Civil Justice Reform)
This final rule does not have any retroactive effect. Under 49
U.S.C. 30103, whenever a Federal motor vehicle safety standard is in
effect, a State may not adopt or maintain a safety standard applicable
to the same aspect of performance which is not identical to the Federal
standard, except to the extent that the State requirement imposes a
higher level of performance and applies only to vehicles procured for
the State's use. 49 U.S.C. 30161 sets forth a procedure for judicial
review of final rules establishing, amending or revoking Federal motor
vehicle safety standards. That section does not require submission of a
petition for reconsideration or other administrative proceedings before
parties may file suit in court.
List of Subjects in 49 CFR Part 571
Imports, Motor vehicle safety, Motor vehicles, Rubber and rubber
products, tires.
In consideration of the foregoing, 49 CFR part 571 is amended as
set forth below:
PART 571--[AMENDED]
1. The authority citation for part 571 continues to read as
follows:
Authority: 49 U.S.C. 322, 30111, 30115, 30117, and 30166;
delegation of authority at 49 CFR 1.50.
Sec. 571.211 [Removed]
2. Section 571.211 is removed and reserved.
Issued on: April 30, 1996.
Ricardo Martinez,
Administrator.
[FR Doc. 96-11114 Filed 5-03-96; 8:45 am]
BILLING CODE 4910-59-P
Complete official Federal Register PDF
FR Doc. 96-11081 Clean Air Act Interim Approval of Operating Permits Program; State of Rhode Island
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20150-20155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11081]
[[Page 20150]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 70
[AD-FRL-5465-9]
Clean Air Act Interim Approval of Operating Permits Program;
State of Rhode Island
AGENCY: Environmental Protection Agency (EPA).
ACTION: Direct final rule.
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SUMMARY: The EPA is promulgating source category-limited interim
approval of the Operating Permits Program submitted by the State of
Rhode Island for the purpose of complying with Federal requirements for
an approvable State program to issue operating permits to all major
stationary sources, and to certain other sources.
DATES: This action will become effective July 5, 1996 unless notice is
received by June 5, 1996 that adverse or critical comments will be
submitted. If the effective date is delayed, timely notice will be
published in the Federal Register.
ADDRESSES: Comments should be addressed to Ida E. Gagnon, Air Permits,
CAP, U.S. Environmental Protection Agency, Region I, JFK Federal
Building, Boston, MA 02203-2211.
Copies of the State's submittal and other supporting information
relevant to this action are available for inspection during normal
business hours at the following location: U.S. Environmental Protection
Agency, Region 1, One Congress Street, 11th floor, Boston, MA 02203.
FOR FURTHER INFORMATION CONTACT: Ida E. Gagnon, Air Permits, APO, U.S.
Environmental Protection Agency, Region 1, JFK Federal Building,
Boston, MA 02203-2211, (617) 565-3500.
SUPPLEMENTARY INFORMATION:
I. Background and Purpose
A. Introduction
As required under title V of the 1990 Clean Air Act Amendments
(sections 501-507 of the Clean Air Act (``the Act'')), EPA has
promulgated rules which define the minimum elements of an approvable
State operating permits program and the corresponding standards and
procedures by which the EPA will approve, oversee, and withdraw
approval of State operating permits programs (see 57 FR 32250 (July 21,
1992)). These rules are codified at 40 Code of Federal Regulations
(CFR) Part 70. Title V requires States to develop, and submit to EPA,
programs for issuing these operating permits to all major stationary
sources and to certain other sources.
The Act requires that States develop and submit these programs to
EPA by November 15, 1993, and that EPA act to approve or disapprove
each program within 1 year after receiving the submittal. The EPA's
program review occurs pursuant to section 502 of the Act and the part
70 regulations, which together outline criteria for approval or
disapproval. Where a program substantially, but not fully, meets the
requirements of Part 70, and where a state requests source category-
limited interim approval, EPA may grant the program interim approval
for a period of up to 2 years. EPA is publishing this action without
prior proposal because the Agency views this as a noncontroversial
program and anticipates no adverse comments. However, in a separate
document in this Federal Register publication, EPA is proposing source
category-limited interim approval of the Operating Permit Program
submitted by the State of Rhode Island should adverse or critical
comments be filed. This action will be effective July 5, 1996 unless
adverse or critical comments are received by June 5, 1996.
If EPA receives such comments, this action will be withdrawn before
the effective date by simultaneously publishing a subsequent notice
that will withdraw the final action. All public comments received will
then be addressed in a subsequent final rule based on this action
serving as a proposed rule. The EPA will not institute a second comment
period on this action.
Any parties interested in commenting on this action should do so at
this time. If no such comments are received, the public is advised that
this action will be effective on July 5, 1996.
B. Federal Oversight
When EPA promulgates this source category-limited interim approval,
it will extend for two years following the effective date, and cannot
be renewed. During the interim approval period, the State of Rhode
Island is protected from sanctions, and EPA is not obligated to
promulgate, administer and enforce a Federal permits program for the
State of Rhode Island. Permits issued under a program with interim
approval have full standing with respect to part 70, and the state will
permit sources based on the transition schedule submitted with the
source category-limited interim approval request. This schedule may
extend for no more than five years beyond the interim approval date.
II. Proposed Action and Implications
A. Analysis of State Submission
1. Support Materials
The Governor of the State of Rhode Island submitted an
administratively complete title V Operating Permits Program (PROGRAM)
on June 20, 1995. EPA deemed the PROGRAM administratively complete in a
letter to the Governor dated on July 28, 1995. The PROGRAM submittal
includes a legal opinion from the Attorney General of Rhode Island
stating that the laws of the State provide adequate authority to carry
out the PROGRAM, and a description of how the State intends to
implement the PROGRAM. The submittal additionally contains evidence of
proper adoption of the PROGRAM regulations, permit application forms, a
data management system and a fee adequacy demonstration.
2. Regulations and Program Implementation
The State of Rhode Island has submitted Air Pollution Control
Regulation No. 29 entitled ``Operating Permits'' for implementing the
State part 70 program as required by 40 CFR 70.4(b)(2). Sufficient
evidence of procedurally correct adoption is included in Section IV of
the submittal.
The Rhode Island operating permits regulations follow part 70 very
closely. The following requirements, set out in EPA's part 70 operating
permits program review are addressed in Section IV of the State's
submittal.
The Rhode Island PROGRAM, including the operating permit
regulations, meet the requirements of 40 CFR part 70.2 and 70.3 with
respect to applicability; parts 70.4, 70.5 and 70.6 with respect to
permit content and operational flexibility; part 70.5 with respect to
complete application forms and criteria which define insignificant
activities; part 70.7 and 70.8 with respect to public participation,
minor permit modifications and permit review by affected states and
EPA; and 70.11 with respect to requirements for enforcement authority.
Part 70 of the operating permits regulation requires prompt
reporting of deviations from the permit requirements. Section
70.6(a)(3)(iii)(B) requires the permitting authority to define prompt
in relation to the degree and type of deviation likely to occur and the
applicable requirements. The State of Rhode Island has not defined
``prompt'' in its program with respect to reporting of deviations.
Although the permit program regulations should
[[Page 20151]]
define prompt for purposes of administrative efficiency and clarity, an
acceptable alternative is to define prompt in each individual permit.
The EPA believes that prompt should generally be defined as requiring
reporting within two to ten days of the deviation. Two to ten days is
sufficient time in most cases to protect public health and safety as
well as to provide a forewarning of potential problems. For sources
with a low level of excess emissions, a longer time period may be
acceptable. However, prompt reporting must be more frequent than the
semiannual reporting requirement, given this is a distinct reporting
obligation under Sec. 70.6(a)(3)(iii)(A). Rhode Island committed in
their rule to define ``prompt'' in the individual permit. See Section
29.6.4(b)(2). Where ``prompt'' is defined in the individual permit but
not in the program regulations, EPA may veto permits that do not
contain sufficiently prompt reporting of deviations.
In connection with the direct final rulemaking notice promulgating
interim approval of the Operating Permits Program submitted by the
Commonwealth of Massachusetts, EPA listed the definition of ``prompt''
as an issue. On March 4, 1996, EPA received a comment from the National
Environmental Development Association's Clean Air Regulatory Project
(NEDA/CARP) regarding this definition. NEDA/CARP has asked that we
address this comment on record for the Rhode Island program so that
they need not resubmit the comment to preserve their right to petition
for review on this issue.
NEDA/CARP disagrees with EPA's statement that ``prompt reporting
[of deviations] must be more frequent than the semi-annual reporting
requirement, given this is a distinct reporting obligation under
Sec. 70.6(a)(3)(iii)(A).'' NEDA/CARP believes there is no legal basis
for such a statement. Therefore, NEDA/CARP asserts EPA has no basis for
expecting deviations to be reported more often than every 6 months.
EPA disagrees that there is no legal basis for this statement.
Section 503(b)(2) of the Act requires a permittee ``to promptly report
any deviations from permit requirements to the permitting authority.''
This requirement to report deviations promptly is distinct from section
504(a) of the Act which requires the results of all monitoring to be
submitted no less often than every six months. The Act clearly
distinguishes between the routine semi-annual reporting of all
monitoring, whether or not deviations have occurred, from the
requirement to report deviations that may be violations of the Act and
that at least provide an indication of potential compliance problems.
It makes sense that Congress would expect permittees to report
potential Act violations more quickly than routine monitoring that
confirms compliance. Additionally, the statute has a clear requirement
for prompt reporting of deviations, and EPA believes that six months is
not prompt when dealing with information that may document a violation
of the Clean Air Act.
Rhode Island's definition of ``title I modification'' does not
include changes reviewed under a minor source preconstruction review
program (``minor NSR changes''). In an August 29, 1994 rulemaking
proposal, EPA explained its view that the better reading of ``title I
modifications'' includes minor NSR. However, the Agency solicited
public comment on whether the phrase should be interpreted to mean
literally any change at a source that would trigger permitting
authority review under regulations approved or promulgated under Title
I of the Act. (59 FR 44572, 44573). This would include State
preconstruction review programs approved by EPA as part of the State
Implementation Plan under section 110(a)(2)(C) of the Clean Air Act.
The EPA has not yet taken final action on the August 29, 1994
proposal. However, in response to public comment on that proposal, the
Agency has decided that the definition of ``title I modifications'' is
best interpreted as not including changes reviewed under minor NSR
programs. EPA included this interpretation in a supplemental rulemaking
proposal published on August 31, 1995. 60 FR 45530, 545-546. Thus, EPA
expects to confirm that Rhode Island's definition of ``title I
modification'' is fully consistent with part 70.
In the event EPA ultimately changes the position proposed on August
31, 1995, EPA expects to grant Rhode Island interim approval as to this
issue. In the August 29, 1994 proposal (59 FR 44572) the Agency stated
that if, after considering the public comments, it determined that the
phrase ``title I modifications'' should be interpreted as including
minor NSR changes, it would revise the interim approval criteria as
needed to allow states with a narrower definition to be eligible for
interim approval. If EPA should conclude, during this rulemaking, that
Title I modifications should be read to include minor NSR, it will
identify the narrow definition of Title I modification as an interim
approval condition on Rhode Island's program.
RI DEM defines research and development (R&D) in a manner which
allows DEM to exclude research and development operations from a source
when determining if the source is major. See Sec. 29.2.4. EPA has
recently announced an interpretation of its Part 70 regulation which
would allow most R&D facilities to be considered separately from the
source, and has proposed rule changes to Part 70 to clarify the
Agency's intent. See 60 FR 45556-45558 (Aug. 31, 1995).
This interpretation of EPA's rule is generally consistent with
Rhode Island's separation of R&D activities from the source in Section
29.2.4. In section 29.1.32, Rhode Island includes pilot plants in its
definition of R&D operations in a manner that might appear inconsistent
with the discussion of pilot plants in EPA's recent proposal. See 60 FR
45557. However, section 29.1.32 specifically states that ``Development
shall not include production for sale of established products through
established processes; nor shall it include production for distribution
through market testing channels.'' This is consistent with the
discussion of pilot plants in the August 31, 1995 proposal since
production for commerce is not permitted by the Rhode Island
regulation.
RI DEM is requesting a source-category limited interim approval of
its operating permits program. The EPA can grant source category-
limited interim approval to states whose programs do not provide for
permitting all required sources if the state makes a showing that two
criteria are met: (1) That there are ``compelling reasons'' for the
exclusions and (2) that all required sources will be permitted on a
schedule that ``substantially meets'' the requirements of part 70.
Rhode Island intends to permit all subject sources within five years of
initial program approval. Over 70% of the sources which account for 80%
of the emissions will be issued permits during the first three years.
This may extend beyond 1999, which is the final date announced for
phase-ins in the interim approval guidance dated August 2, 1993,
entitled ``Interim Title V Program Approvals.'' This cutoff date was
selected because it is five years after the date required for EPA final
action on a timely-submitted, approvable program. Although Rhode Island
will not have permitted all sources by this date, it will have done so
by 2001, five years from EPA program approval. Additionally, Rhode
Island will have permitted over 70% of its sources by November, 1999.
EPA believes this schedule substantially
[[Page 20152]]
meets the implementation schedule in section 503(c) of the Act.
Rhode Island identified 211 sources whose emissions based on 1993
inventory total 13,171 tons. This is an average of 62 tons per source.
This is an extremely small inventory to provide the funding needed to
develop, administer and enforce an operating permit program. The DEM
initially estimates that the dollar per ton charge necessary to provide
funding for a fully staffed operating permit program would be $117.00,
substantially higher that the presumptive national average permitting
fee provided for in title V and Part 70. The regulated community in
Rhode Island has argued that these disproportionately higher fees put
them at an economic disadvantage with their competitors in other
states. A source category-limited interim approval would allow Rhode
Island a longer period of time to build up to full staffing levels.
This in turn translates to a more gradual increase in fees and allows
the source population additional time to budget for these higher fees.
EPA considers the above reasons to be compelling for granting this type
of interim approval.
Additionally, Rhode Island demonstrates that all sources required
to be permitted under Part 70 will be permitted on a 5 year schedule
that substantially meets the requirements of part 70.
Because of this 5 year schedule, EPA is granting interim approval
to the Rhode Island program rather than full approval. Pursuant to
section 502(g) of the Act, Rhode Island would be authorized to
implement the program for a period of two years following EPA's interim
approval of the program. Normally, with interim approval, a state must
submit a corrective program in order to receive full approval. Rhode
Island's program is fully approvable, however, with the exception that
they will be issuing permits within a five-year schedule, rather than
the 3 year schedule in 503(c) of the Act. Moreover, DEM has submitted
its complete 5 year transition plan with the program, so there is no
corrective action for DEM to take to make the program fully approvable.
Consequently, Rhode Island's program will automatically convert to full
approval without any further rulemaking from EPA as long as Rhode
Island issues permits in a timely fashion consistent with its 5 year
transition plan. Section 502(g) of the Act giving interim approvals
does not speak directly to this situation, and appears to assume that a
state would always have to cure a program granted interim approval. On
the other hand, the combination of sections 502(f) and 502(g) allow for
interim approval of partial programs that issue permits on a 5 year
schedule. Where a state submits a reasonable 5 year schedule with an
otherwise fully approvable program, EPA believes it would be a futile
exercise to require some further submission from the state or action
from EPA to fully approve the program. EPA is interpreting this gap in
the statutory structure of title V to allow for automatic conversion to
full approval, and asks for comments from any party that objects to
this rationale.
The complete program submittal and the TSD dated January 11, 1996
entitled ``Technical Support Document--Rhode Island Operating Permits
Program'' are available in the docket for review. The TSD includes a
detailed analysis, including a program checklist, of how the State's
program and regulations compare with EPA's requirements and
regulations, and also includes an important analysis of how operational
flexibility and permit shield provisions in Section 29.11.1(c) of Rhode
Island's rule operate as a matter of federal law.
3. Permit Fee Demonstration
Section 502(b)(3) of the Act requires that each permitting
authority collect fees sufficient to cover all reasonable direct and
indirect costs required to develop and administer its title V operating
permit program. Each title V program submittal must contain either a
detailed demonstration of fee adequacy or a demonstration that the fees
collected exceed $25 per ton of actual emissions per year, adjusted
from the August, 1989 consumer price index. The $25 per ton was
presumed by Congress to cover all reasonable direct and indirect costs
to an operating permit program. This minimum amount is referred to as
the ``presumptive minimum.''
Rhode Island has opted to make a presumptive minimum fee
demonstration. In the fee regulation, the State proposes an emission
based fee for calculating the operating permit program fees for the
first four years of the program. The fee structure consists of payment
of a fixed fee for the first eighteen months of the program. The fixed
fee shall be based on the sources actual emissions for the 1993
calendar year. Beginning in July 1996, annual emissions fees will be a
fixed fee for sources with actual emissions below 10 tons per year and
above that threshold fees will be assessed on a dollar per ton basis.
All regulated pollutants will be assessed at the same rate. This fee is
equivalent to at least the part 70 presumptive minimum fee of $25 per
ton of regulated air pollutants, adjusted per the consumer price index
(CPI). Using Rhode Island's emission based fee approach, the State will
collect $35.00 per ton for the period of January 1995 through December
1995 and for the State fiscal year 1996, the equivalent dollar per ton
charge is $48.09. The projected dollar per ton charge for the fiscal
years 1997 through 2001 are $101.00, $117.00, $121.00, $125.00, and
$132.00 respectively, consistent with the schedule for phasing in the
full program, as described above. Rhode Island's projected rate is
above the presumptive minimum adjusted by the CPI. The fee rate will be
reviewed every year and adjusted as necessary to reflect staffing and
resource needs, permit program efficiency and cost requirements.
Therefore, Rhode Island has demonstrated that the state is
collecting sufficient permit fees to meet EPA's presumptive minimum
criteria. For more information, see Section VIII of Rhode Island's
title V program.
4. Provisions Implementing the Requirements of Other Titles of the Act
a. Authority and/or Commitments for Section 112 Implementation
Rhode Island has demonstrated in its title V program submittal
adequate legal authority to implement and enforce all section 112
requirements through the title V permit. This legal authority is
contained in Rhode Island's enabling legislation and in regulatory
provisions defining ``applicable requirements'' and stating that the
permit must incorporate all applicable requirements. EPA has determined
that this legal authority is sufficient to allow Rhode Island to issue
permits that assure compliance with all section 112 requirements and
carry out all section 112 activities at permitted facilities.
Therefore, EPA is interpreting the State of Rhode Island's legal
authority and commitments to be sufficient to allow the State to issue
permits that assure compliance with all section 112 requirements, and
to carry out all section 112 activities at permitted facilities. For
further rationale on this interpretation, please refer to the Technical
Support Document referenced above and the April 13, 1993 guidance
memorandum titled ``Title V Program Approval Criteria for Section 112
Activities,'' signed by John Seitz, Director of the Office of Air
Quality Planning and Standards.
[[Page 20153]]
b. Implementation of 112(g) Upon Program Approval
On February 14, 1995 EPA published an interpretive notice (see 60
FR 8333) that postpones the effective date of section 112(g) until
after EPA has promulgated a rule addressing that provision. The section
112(g) interpretive notice explains that EPA is still considering
whether the effective date of section 112(g) should be delayed beyond
the date of promulgation of the Federal rule so as to allow states time
to adopt rules implementing the Federal rule, and that EPA will provide
for any such additional delay in the final section 112(g) rulemaking.
Unless and until EPA provides for such an additional postponement of
section 112(g) Rhode Island must be able to implement section 112(g)
during the period between promulgation of the Federal section 112(g)
rule and adoption of implementing State regulations. EPA believes that
Rhode Island can utilize its preconstruction permitting program to
serve as a procedural vehicle for implementing the section 112(g) rule
and making these requirements Federally enforceable between
promulgation of the Federal section 112(g) rule and adoption of
implementing State regulations. For this reason, EPA is approving Rhode
Island's preconstruction permitting program found in Regulation No.9
under the authority of title V and part 70 solely for the purpose of
implementing section 112(g) during the transition period between title
V approval and adoption of a State rule implementing EPA's section
112(g) regulations.
Since the approval would be for the single purpose of providing a
mechanism to implement section 112(g) during the transition period, the
approval would be without effect if EPA decides in the final section
112(g) rule that sources are not subject to the requirements of the
rule until State regulations are adopted. Also, since the approval
would be for the limited purpose of allowing the State sufficient time
to adopt regulations, EPA proposes to limit the duration of the
approval to 18 months following promulgation by EPA of its section
112(g) rule.
c. Program for Straight Delegation of Sections 111 and 112 Standards
Requirements for operating permit program approval, specified in 40
CFR 70.4(b), encompass section 112(l)(5) requirements for approval of a
program for delegation of section 112 General Provision Subpart A and
standards as promulgated by EPA as they apply to part 70 sources.
Section 112(l)(5) requires that the State's program contain adequate
authorities, adequate resources for implementation, and an expeditious
compliance schedule, which are also requirements under part 70.
Therefore, the EPA is also granting approval of the State's program
under section 112(l)(5) and 40 CFR Parts 63.91 for receiving delegation
of section 112 standards that are unchanged from the Federal standards
as promulgated, and to delegate existing standards under 40 CFR parts
61 and 63 as indicated in Table 1 as they apply to title V
sources.1 In addition, in a letter dated April 4, 1996, EPA is
approving a Memorandum of Agreement (MOA) granting to the DEM
delegation of authority to administer and enforce those NSPS listed in
Table 2 as they apply to title V sources.2
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\1\ The radionuclide National Emission Standards for Hazardous
Air Pollutant (NESHAP) is a section 112 regulation and therefore,
also an applicable requirement under the State operating permits
program for part 70 sources. There is not yet a Federal definition
of ``major'' for radionuclide sources. Therefore, until a major
source definition for radionuclide is promulgated, no source would
be a major section 112 source solely due to its radionuclide
emissions. However, a radionuclide source may, in the interim, be a
major source under part 70 for another reason, thus requiring a part
70 permit. The EPA will work with the State in the development of
its radionuclide program to ensure that permits are issued in a
timely manner.
\2\ Please note that federal rule making is not required for
delegation of section 111 standards. EPA is publishing this table
for informational purposes.
---------------------------------------------------------------------------
Rhode Island in Section X of its Title V submittal informed EPA
that it commits to adopt, as deemed necessary by EPA, and implement
through existing state law and regulations, future requirements of
section 112. Therefore, as required by EPA, Rhode Island Department of
Environmental Protection will implement Section 112 through their
existing rules and adopt new rules as necessary.
Rhode Island has informed the EPA that it intends to accept future
delegations of section 111 and 112 standards by checking the
appropriate boxes on a standardized checklist. The checklist will list
applicable regulations and will be sent by the EPA Regional Office to
Rhode Island. Rhode Island will accept delegation by checking the
appropriate box and returning the checklist to EPA Region I. The
details of this delegation mechanism have been set forth in an
agreement between Rhode Island and EPA in a letter dated April 4, 1996.
This program will apply to both existing and future standards but is
limited to sources covered by the part 70 program.
d. Commitment To Implement Title IV of the Act
Rhode Island has committed to take action, following promulgation
by EPA of regulations implementing section 407 and 410 of the Act, or
revisions to either part 72, 74, or 76 or the regulations implementing
section 407 or 410, to either incorporate by reference or submit, for
EPA approval, Rhode Island Department of Environmental Management (DEM)
regulations implementing these provisions.
B. Direct Final Actions
The EPA is promulgating source category-limited interim approval of
the operating permits program submitted to EPA by the State of Rhode
Island on June 20, 1995. This interim approval, which may not be
renewed, extends for a period of up to 2 years. During the interim
approval period, the State is protected from sanctions for failure to
have a program, and EPA is not obligated to promulgate a Federal
permits program in the State. Permits issued under a program with
interim approval have full standing with respect to Part 70, and the
state will permit sources based on the transition schedule submitted
with the source category-limited interim approval. As discussed above,
this interim approval will convert to a full approval without further
action by EPA, provided Rhode Island issues permits consistent with
their transition schedule.
The scope of the State of Rhode Island's part 70 program that EPA
is approving in this notice would apply to all part 70 sources (as
defined in the approved program) within the State of Rhode Island,
except any sources of air pollution over which an Indian Tribe has
jurisdiction. See, e.g., 59 FR 55813, 55815-18 (Nov. 9, 1994). The term
``Indian Tribe'' is defined under the Act as ``any Indian tribe, band,
nation, or other organized group or community, including any Alaska
Native village, which is Federally recognized as eligible for the
special programs and services provided by the United States to Indians
because of their status as Indians.'' See section 302(r) of the CAA;
see also 59 FR 43956, 43962 (Aug. 25, 1994); 58 FR 54364 (Oct. 21,
1993).
Requirements for approval, specified in 40 CFR 70.4(b), encompass
section 112(l)(5) requirements for approval of a program for delegation
of section 112 standards as promulgated by EPA as they apply to Part 70
sources. Section 112(l)(5) requires that the State's program contain
adequate authorities, adequate resources for implementation, and an
expeditious compliance
[[Page 20154]]
schedule, which are also requirements under Part 70. Therefore, the EPA
is also granting approval under section 112(l)(5) and 40 CFR 63.91 of
the State's program for receiving delegation of section 112 standards
that are unchanged from Federal standards as promulgated. This program
for delegations only applies to sources covered by the Part 70 program.
III. Administrative Requirements
A. Request for Public Comments
The EPA is requesting comments on all aspects of this final rule.
Copies of the State's submittal and other information relied upon for
the interim approval are contained in a docket maintained at the EPA
Regional Office. The docket is an organized and complete file of all
the information submitted to, or otherwise considered by, EPA in the
development of this interim approval. The principal purposes of the
docket are:
(1) To allow interested parties a means to identify and locate
documents so that they can effectively participate in the approval
process, and
(2) To serve as the record in case of judicial review. The EPA will
consider any comments received by June 5, 1996.
B. Executive Order 12866
The Office of Management and Budget has exempted this action from
Executive Order 12866 review.
C. Regulatory Flexibility Act
The EPA's actions under section 502 of the Act do not create any
new requirements, but simply address operating permits programs
submitted to satisfy the requirements of 40 CFR Part 70. Because this
action does not impose any new requirements, it does not have a
significant impact on a substantial number of small entities.
D. Unfunded Mandates
Under Section 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA
must prepare a budgetary impact statement to accompany any proposed or
final rule that includes a Federal mandate that may result in estimated
costs to State, local, or tribal governments in the aggregate; or to
the private sector, of $100 million or more. Under Section 205, EPA
must select the most cost-effective and least burdensome alternative
that achieves the objectives of the rule and is consistent with
statutory requirements. Section 203 requires EPA to establish a plan
for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
EPA has determined that the action promulgated today does not
include a Federal mandate that may result in estimated costs of $100
million or more to either State, local, or tribal governments in the
aggregate, or to the private sector. This Federal action approves pre-
existing requirements under State or local law, and imposes no new
Federal requirements. Accordingly, no additional costs to State, local,
or tribal governments, or to the private sector, result from this
action.
Table I to the Preamble--Delegation of Parts 61 and 63 Standards As
They Apply to Rhode Island's Title V Operating Permits Program
Part 61 Subpart Categories
C BERYLLIUM
D BERYLLIUM-ROCKET MOTOR
E MERCURY
F VINYL CHLORIDE
J EQUIP LEAKS OF BENZENE
L BENZENE-COLE BY-PRODUCT RECOVERY PLANT
N ARSENIC-GLASS MANUFACTURING
O ARSENIC-PRIMARY COPPER-SMELTERS
P ARSENIC-TRIOXIDE AND METALLIC
V EQUIP LEAKS (FUGITIVE EMISSION SOURCES)
Y BENZENE STORAGE VESSELS
BB BENZENE TRANSFER OPERATIONS
FF BENZENE WASTE OPERATION
40 CFR Part 63
A GENERAL PROVISIONS
H ORGANIC HAZARDOUS AIR POLLUTANTS FOR EQUIPMENT LEAKS
I ORGANIC HAZARDOUS AIR POLLUTANTS FOR CERTAIN PROCESS SUBJECT TO THE
NEGOTIATED REGULATION FOR HAZARDOUS LEAKS
N CHROMIUM EMISSIONS FROM HARD AND DECORATIVE CHROMIUM ELECTROPLATING
O ETHYLENE OXIDE EMISSION STANDARDS FOR STERILIZATION FACILITIES
R GASOLINE DISTRIBUTION (STAGE 1)
GG AEROSPACE MANUFACTURING AND REWORK
II SHIPBUILDING AND SHIP REPAIR (SURFACE COATING)
Table II to the Preamble
Part 60 Subpart Categories
D FOSSIL-FUEL FIRED STEAM GENERATORS
Da ELECTRIC UTILITY STEAM GENERATORS
Db INDUSTRIAL-COMMERCIAL-INSTITUTIONAL STEAM GENERATING UNITS
Dc SMALL INDUSTRIAL COMMERCIAL INSTITUTIONAL STEAM GENERATING UNITS
E INCINERATORS
Ea MUNICIPAL WASTE COMBUSTORS
F PORTLAND CEMENT PLANTS
G NITRIC ACID PLANTS
H SULFURIC ACID PLANTS
I ASPHALT CONCRETE PLANTS
J PETROLEUM REFINERIES
K PETROLEUM LIQUID STORAGE VESSELS
Ka PETROLEUM LIQUID STORAGE VESSELS
L SECONDARY LEAD SMELTERS
M SECONDARY BRASS AND BRONZE PRODUCTION PLANTS
N BASIC OXYGEN PROCESS FURNACES PRIMARY EMISSIONS
Na BASIC OXYGEN PROCESS STEELMAKING-SECONDARY EMISSIONS
O SEWAGE TREATMENT PLANTS
P PRIMARY COPPER SMELTERS
Q PRIMARY ZINC SMELTERS
R PRIMARY LEAD SMELTERS
S PRIMARY ALUMINUM REDUCTION
T PHOSPHATE FERTILIZER WET PROCESS
U PHOSPHATE FERTILIZER-SUPERPHOSPHORIC ACID
V PHOSPHATE FERTILIZER-DIAMMONIUM PHOSPHATE
X PHOSPHATE FERTILIZER-GRANULAR TRIPLE SUPERPHOSPHATE STORAGE
Y COAL PREPARATION PLANTS
Z FERROALLOY PRODUCTION FACILITIES
AA STEEL PLANTS-ELECTRIC ARC FURNACES
CC GLASS MANUFACTURING PLANTS
DD GRAIN ELEVATORS
EE SURFACE COATING OF METAL FURNITURE
GG STATIONARY GAS TURBINES
HH LIME MANUFACTURING PLANTS
KK LEAD-ACID BATTERY MANUFACTURING
LL METALLIC MINERAL PROCESSING PLANTS
MM AUTOMOBILE AND LIGHT DUTY TRUCK SURFACE COATING OPERATIONS
NN PHOSPHATE ROCK PLANTS
PP AMMONIUM SULFATE MANUFACTURING
QQ GRAPHIC ARTS-ROTOGRAVURE PRINTING
RR TAPE AND LABEL SURFACE COATINGS
[[Page 20155]]
SS SURFACE COATING: LARGE APPLIANCES
TT METAL COIL SURFACE COATING
UU ASPHALT PROCESSING ROOFING
VV EQUIPMENT LEAKS OF VOC IN SOCMI
WW BEVERAGE CAN SURFACE COATING
XX BULK GASOLINE TERMINALS
BBB RUBBER TIRE MANUFACTURING
DDD VOC EMISSIONS FROM POLYMER MANUFACTURING INDUSTRY
FFF FLEXIBLE VINYL AND URETHAN COATING AND PRINTING
GGG EQUIPMENT LEAKS OF VOC IN PETROLEUM REFINERIES
HHH SYNTHETIC FIBER PRODUCTION
III VOC FROM SOCMI AIR OXIDATION UNIT
JJJ PETROLEUM DRY CLEANERS
NNN VOC FROM SOCMI DISTILLATION
OOO NONMETALLIC MINERAL PLANTS
PPP WOOL FIBERGLASS INSULATION
QQQ VOC FROM PETROLEUM REFINERY WASTEWATER SYSTEMS
SSS MAGNETIC TAPE COATING
TTT SURFACE COATING OF PLASTIC PARTS FOR BUSINESS MACHINES
UUU CALCINERS & DRYERS IN THE MINERAL INDUSTRY
VVV POLYMERIC COATING OF SUPPORTING SUBSTRATES
List of Subjects in 40 CFR Part 70
Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Operating permits,
Reporting and recordkeeping requirements.
Dated: April 19, 1996.
John P. DeVillars,
Regional Administrator, Region I.
Part 70, title 40 of the Code of Federal Regulations is amended as
follows:
PART 70--[AMENDED]
1. The authority citation for part 70 continues to read as follows:
Authority: 42 U.S.C. 7401, et seq.
2. Appendix A to part 70 is amended by adding the entry for Rhode
Island in alphabetical order to read as follows:
Appendix A to Part 70--Approval Status of State and Local Operating
Permits Programs
* * * * *
Rhode Island
(a) Department of Environmental Management: submitted on June 20,
1995; interim approval effective on July 5, 1996; interim approval
expires July 6, 1998.
(b) (Reserved)
* * * * *
[FR Doc. 96-11081 Filed 5-03-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-11026 Federal Motor Vehicle Safety Standards; Seat Belt Assemblies; Child Restraint Systems
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20170-20172]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11026]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Part 571
[Docket No. 95-42; Notice 2]
RIN 2127-AF67
Federal Motor Vehicle Safety Standards; Seat Belt Assemblies;
Child Restraint Systems
AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This document rescinds the colorfastness requirements for seat
belt assemblies. The purpose of those requirements is to ensure that
motorists are not discouraged from using safety belts out of a concern
that the belts will transfer their coloring to the motorists' clothing.
NHTSA concludes that manufacturer concerns about public acceptance are
sufficient by themselves to ensure that manufacturers will continue to
make their belts colorfast. Therefore, retention of the requirements is
not necessary.
DATES: Effective Date: The amendments made in this rule are effective
June 20, 1996.
Applicability Date: Seat belt assemblies manufactured after June
20, 1996 are not required to meet the colorfastness requirements.
Petition Date: Any petitions for reconsideration must be received
by NHTSA no later than June 20, 1996.
ADDRESSES: Any petitions for reconsideration should refer to the docket
and notice number of this notice and be submitted to: Administrator,
National Highway Traffic Safety Administration, 400 Seventh Street,
SW., Washington, DC 20590.
FOR FURTHER INFORMATION CONTACT: The following persons at the National
Highway Traffic Safety Administration, 400 Seventh Street, SW,
Washington, DC 20590:
For non-legal issues: Clarke Harper, Office of Vehicle Safety
Standards, NPS-12, telephone (202) 366-4916, facsimile (202) 366-4329,
electronic mail ``[email protected]''.
For legal issues: Mary Versailles, Office of the Chief Counsel,
NCC-20, telephone (202) 366-2992, facsimile (202) 366-3820, electronic
mail ``[email protected]''.
SUPPLEMENTARY INFORMATION: Pursuant to the March 4, 1995 directive,
``Regulatory Reinvention Initiative,'' from the President to the heads
of departments and agencies, NHTSA undertook a review of all its
regulations and directives. During the course of that review, the
agency identified several requirements and regulations as being
potential candidates for rescission. On June 19, 1995, the agency
published an NPRM proposing the rescission of several of those
candidate requirements, including the colorfastness requirements in
Standard No. 209, ``Seat Belt Assemblies'' (60 FR 31946).
In the NPRM, NHTSA noted that it had included the colorfastness
requirements in Standard No. 209 out of concern that occupants would be
less likely to wear their seat belt if a lack of colorfastness of the
webbing damaged their clothing. Paragraphs S4.2 (g) and (h) of the
Standard require seat belt webbing to resist transferring color to a
wet or dry crock cloth and to resist
[[Page 20171]]
staining (the colorfastness requirements). Test procedures for
determining compliance with the colorfastness requirements are found in
S5.1 (g) and (h) of the Standard.
NHTSA tentatively concluded in the NPRM that market forces would be
sufficient, in the absence of the current requirements, to induce seat
belt manufacturers to use webbing that will not stain clothing. The
agency noted that it was not aware of any basis for believing that
rescission of the colorfastness requirements would lessen colorfastness
or safety.
Therefore, NHTSA proposed to delete the colorfastness requirements
from Standard No. 209. NHTSA also proposed to delete references to
these requirements in Standard No. 213, ``Child Restraint Systems.''
The agency received 5 comments in response to the NPRM. The
commenters were: the Industrial Fabrics Association International
(IFAI), Chrysler, Volkswagen, the Automotive Occupant Restraints
Council (AORC), and Ford.
Three commenters (IFAI, Chrysler, and Ford) supported the proposal,
indicating that the colorfastness would be maintained voluntarily. Two
commenters (Volkswagen and AORC) opposed rescission of the
requirements. Volkswagen believed that rescission would not reduce the
cost burden on manufacturers as they would have to ensure colorfastness
regardless. AORC opposed rescission more adamantly because they
believed that, while major manufacturers would continue to comply,
smaller, less experienced manufacturers might use non-colorfast
webbing. They believed that this would result in increased consumer
dissatisfaction, increased non-use of safety belts, and increased
injuries.
Because the comments were split, the agency contacted four
additional sources not represented by the commenters: a safety belt
manufacturer (Indiana Mills and Manufacturing), a child seat
manufacturer (Gerry Baby Products Company), a test laboratory (Dayton
T. Brown Testing), and a webbing manufacturer (Narricot Industries).
The first three agreed that colorfastness would be voluntarily
maintained. The webbing manufacturer expressed concern that market
pressures could require it to reduce colorfastness to remain cost
competitive.
After reviewing this information, the agency has decided to rescind
the colorfastness requirements. The majority of the manufacturers who
commented or were contacted indicated that they would voluntarily
maintain colorfastness, even if they had concerns that some others
might not. While NHTSA understands the concern that market pressures
for reducing costs might lead to a lessening of colorfastness, the
agency believes that there is a countervailing market force that will
minimize the possibility and extent of any such lessening of
colorfastness. If a problem with colorfastness were to occur, the
affected consumers would complain to the responsible manufacturer and
likely insist on having the belt replaced, rather than forgoing use of
the belt. Further, this countervailing force is much greater than it
was when the colorfastness requirements were originally adopted. The
proportion of the driving population likely to notice and complain
about lack of colorfastness has grown substantially since the 1970's.
Belt use has increased from 18 percent in those years to 67 percent
today. In part, this increase is a reflection of consumers' increased
interest in safety and understanding of the contribution that seat belt
use makes to safety. The increase also reflects the existence now of
safety belt use laws in 49 states and of child safety seat use laws in
all 50 states. Thus, further increases in belt use are anticipated.
Rulemaking Analyses and Notices
Executive Order 12866 and DOT Regulatory Policies and Procedures
NHTSA has considered the impact of this rulemaking action under
E.O. 12866 and the Department of Transportation's regulatory policies
and procedures. This rulemaking document was not reviewed under E.O.
12866, ``Regulatory Planning and Review.'' This action has been
determined to be not ``significant'' under the Department of
Transportation's regulatory policies and procedures. NHTSA believes
that there would be no gain or loss of safety benefits from Standards
Nos. 209 and 213 as a result of rescission of the colorfastness
requirements. NHTSA also believes there will be no cost increases or
savings for manufacturers.
Regulatory Flexibility Act
NHTSA has also considered the impacts of this final rule under the
Regulatory Flexibility Act. I hereby certify that this rule will not
have a significant economic impact on a substantial number of small
entities. As explained above, NHTSA does not anticipate that this
proposal will significantly economically impact small manufacturers, or
small entities that purchase safety belts or vehicles.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1980 (P.L. 96-
511), there are no requirements for information collection associated
with this final rule.
National Environmental Policy Act
NHTSA has also analyzed this final rule under the National
Environmental Policy Act and determined that it will not have a
significant impact on the human environment.
Executive Order 12612 (Federalism)
NHTSA has analyzed this rule in accordance with the principles and
criteria contained in E.O. 12612, and has determined that this rule
will not have significant federalism implications to warrant the
preparation of a Federalism Assessment.
Civil Justice Reform
This final rule does not have any retroactive effect. Under 49
U.S.C. 30103, whenever a Federal motor vehicle safety standard is in
effect, a State may not adopt or maintain a safety standard applicable
to the same aspect of performance which is not identical to the Federal
standard, except to the extent that the State requirement imposes a
higher level of performance and applies only to vehicles procured for
the State's use. 49 U.S.C. 30161 sets forth a procedure for judicial
review of final rules establishing, amending or revoking Federal motor
vehicle safety standards. That section does not require submission of a
petition for reconsideration or other administrative proceedings before
parties may file suit in court.
List of Subjects in 49 CFR Part 571
Imports, Motor vehicle safety, Motor vehicles.
In consideration of the foregoing, 49 CFR Part 571 is amended as
follows:
PART 571--FEDERAL MOTOR VEHICLE SAFETY STANDARDS
1. The authority citation for Part 571 of Title 49 continues to
read as follows:
Authority: 49 U.S.C. 322, 30111, 30115, 30117, and 30166;
delegation of authority at 49 CFR 1.50.
Sec. 571.209 [Amended]
2. Section 571.209 is amended by removing S4.2(g), S4.2(h), S5.1(g)
and S5.1(h).
3. Section 571.213 is amended by revising S5.4.1(b) to read as
follows:
Sec. 571.213 Standard No. 213; Child restraint systems.
* * * * *
[[Page 20172]]
S5.4.1 * * *
(b) Meet the requirements of S4.2 (e) and (f) of FMVSS No. 209
(Sec. 571.209); and
* * * * *
Issued on April 29, 1996.
Ricardo Martinez,
Administrator.
[FR Doc. 96-11026 Filed 5-3-96; 8:45 am]
BILLING CODE 4910-59-P
Complete official Federal Register PDF
FR Doc. 96-10992 Milk in the Southeast Marketing Area; Order Amending the Order
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20124-20125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10992]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
7 CFR Part 1007
[Docket No. AO-366-A37; DA-95-22]
Milk in the Southeast Marketing Area; Order Amending the Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends certain location adjustments under the
Southeast Federal milk marketing order. The amendments are based upon
industry proposals considered at a public hearing held on September 19,
1995. The amended order was approved by more than two-thirds of the
producers voting in the specified marketing area.
EFFECTIVE DATE: July 1, 1996.
FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist,
Order Formulation Branch, USDA/AMS/Dairy Division, Room 2971, South
Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 690-1932.
SUPPLEMENTARY INFORMATION: This administrative rule is governed by the
provisions of sections 556 and 557 of Title 5 of the United States Code
and, therefore, is excluded from the requirements of Executive Order
12866.
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires the
Agency to examine the impact of a proposed rule on small entities.
Pursuant to 5 U.S.C. 605(b), the Administrator of the Agricultural
Marketing Service has certified that this action will not have a
significant economic impact on a substantial number of small entities.
The amended order will promote orderly marketing of milk by producers
and regulated handlers.
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This rule is not intended to have a retroactive
effect. This rule will not preempt any state or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Agricultural Marketing Agreement Act of 1937, as amended (7
U.S.C. 601-674), provides that administrative proceedings must be
exhausted before parties may file suit in court. Under section
608c(15)(A) of the Act, any handler subject to an order may file with
the Secretary a petition stating that the order, any provision of the
order, or any obligation imposed in connection with the order is not in
accordance with the law and requesting a modification of an order or to
be exempted from the order. A handler is afforded the opportunity for a
hearing on the petition. After a hearing, the Secretary would rule on
the petition. The Act provides that the district court of the United
States in any district in which the handler is an inhabitant, or has
its principal place of business, has jurisdiction in equity to review
the Secretary's ruling on the petition, provided a bill in equity is
filed not later than 20 days after the date of the entry of the ruling.
Prior Documents in This Proceeding
Notice of Hearing: Issued August 11, 1995; published August 17,
1995 (60 FR 42815).
Supplemental Notice of Hearing: Issued September 8, 1995; published
September 13, 1995 (60 FR 47495).
Recommended Decision: Issued December 18, 1995; published December
27, 1995 (60 FR 66929).
Final Decision: Issued March 18, 1996; published March 22, 1996 (61
FR 11756).
Findings and Determinations
The findings and determinations hereinafter set forth supplement
those that were made when the order was first issued and when it was
amended. The previous findings and determinations are hereby ratified
and confirmed, except where they may conflict with those set forth
herein.
(a) Findings. A public hearing was held upon certain proposed
amendments to the tentative marketing agreement and to the order
regulating the handling of milk in the Southeast marketing area. The
hearing was held pursuant to the provisions of the Agricultural
Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), and the
applicable rules of practice and procedure (7 CFR Part 900).
Upon the basis of the evidence introduced at such hearing and the
record thereof, it is found that:
(1) The Southeast order, as hereby amended, and all the terms and
conditions thereof, will tend to effectuate the declared policy of the
Act;
(2) The parity prices of milk, as determined pursuant to section 2
of the Act, are not reasonable in view of the price of feeds, available
supplies of feeds, and other economic conditions which affect market
supply and demand for milk in the marketing area. The minimum prices
specified in the order, as hereby amended, are such prices as will
reflect the aforesaid factors, insure a sufficient quantity of pure and
wholesome milk, and be in the public interest; and
(3) The Southeast order, as hereby amended, will regulate the
handling of milk in the same manner as, and will be applicable only to
persons in the respective classes of industrial and commercial activity
specified in, a marketing agreement upon which a hearing has been held.
(b) Determinations. It is hereby determined that:
(1) The refusal or failure of handlers (excluding cooperative
associations specified in Sec. 8c(9) of the Act) of more than 50
percent of the milk which is marketed within the Southeast marketing
area to sign a proposed marketing agreement tends to prevent the
effectuation of the declared policy of the Act;
(2) The issuance of this order amending the order is the only
practical means pursuant to the declared policy of the Act of advancing
the interests of producers as defined in the order as hereby amended;
and
(3) The issuance of the order amending the order is favored by at
least two-thirds of the producers who during December 1995 were engaged
in the production of milk for sale in the Southeast marketing area.
List of Subjects in 7 CFR Part 1007
Milk marketing orders.
Order Relative to Handling
It is therefore ordered, that on and after the effective date
hereof, the
[[Page 20125]]
handling of milk in the Southeast marketing area shall be in conformity
to and in compliance with the terms and conditions of the order, as
amended, and as hereby further amended, as follows:
PART 1007--MILK IN THE SOUTHEAST MARKETING AREA
1. The authority citation for 7 CFR part 1007 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
Sec. 1007.2 [Amended]
2. In Sec. 1007.2, Zone 11, under ``Alabama Counties'' the words
``(more than 20 miles from the Mobile city hall)'' are removed
following the word ``Mobile'' and under ``Louisiana Parishes'' the
words ``(north of State Highway 16)'' are added following the word
``Tangipahoa''.
3. In Sec. 1007.2, Zone 12, the heading ``Alabama Counties'' and
the entry under it are removed and under ``Louisiana Parishes'' the
words ``Tangipahoa (south of State Highway 16)'' are added following
the word ``St. Mary,''.
Sec. 1007.50 [Amended]
4. In Sec. 1007.50(d), the words ``value per hundredweight of 3.5
percent milk and rounded to the nearest cent, and subject to the
adjustments set forth in paragraph (c) of this section for the
applicable month'' are removed and the words ``times 35 and rounded to
the nearest cent'' are added in their place.
Sec. 1007.92 [Amended]
5. In the introductory text of Sec. 1007.92(c), the word ``four'',
where it appears for the third and final time, is changed to read
``three''.
Dated: April 29, 1996.
Michael V. Dunn,
Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 96-10992 Filed 5-3-96; 8:45 am]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 96-10974 Administration of U.S. Certified Accounting Authorities in Maritime Mobile and Maritime Mobile-Satellite Radio Services
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20155-20170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10974]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 3
[MD Docket No. 93-297; FCC 96-110]
Administration of U.S. Certified Accounting Authorities in
Maritime Mobile and Maritime Mobile-Satellite Radio Services
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This Report and Order establishes final rules related to the
administration of U.S. certified accounting authorities in the maritime
mobile and maritime mobile-satellite radio services except for distress
and safety communications. The rules are required in order to ensure
adherence to international settlement procedures. This Report and Order
contains modified information collections requirements subject to the
Paperwork Reductions Act of 1995.
EFFECTIVE DATE: This regulation is effective July 5, 1996 subject to
the review of information collection requirements by the Office of
Management and Budget. Upon approval of the information collections
requirement from the Office of Management and Budget (OMB). The
Commission will publish a public notice to notify the public of the
effective date.
ADDRESSES: Comments on the information collections contained in this
Report and Order should be directed to Office of The Secretary, Federal
Communications Commission, 1919 M Street, N.W., Washington, DC 20554.
In addition to filing comments with the Secretary, a copy of any
comments on the information collections contained herein should be
submitted to Dorothy Conway, Federal Communications Commission, Room
234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to
[email protected] and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725
17th Street, N.W., Washington, DC 20503 or via the Internet to
[email protected].
FOR FURTHER INFORMATION CONTACT: Shirley F. Wood, Office of the
Managing Director, Financial Analysis Branch, Telephone: (202) 418-1990
or via the Internet at [email protected].
SUPPLEMENTARY INFORMATION:
Synopsis of Commission's Report and Order Adopted March 13, 1996 and
Released April 23, 1996
1. The Federal Communications Commission's International
Telecommunications Settlements Section, located in Gettysburg,
Pennsylvania, acts as a national clearinghouse for the settlement of
international maritime mobile service and maritime mobile-satellite
service accounts. In this capacity, the FCC is known as an accounting
authority and settles accounts for messages transmitted or received by
U.S. licensed vessels via foreign coast station facilities.
2. The FCC has also allowed private entities to settle accounts
with foreign administrations. By approving these additional
``accounting authorities'', the FCC has, in effect, delegated a portion
of its traditional responsibilities regarding settlement of maritime
accounts to private enterprise, at least in those instances where the
accounting authority is settling accounts of U.S. licensed ship
stations.
3. The FCC is issuing final rules regarding the approval and/or
operations of accounting authorities. This Report and Order delineates
rules for (a) determining the eligibility for granting/revoking
certification as a U.S. accounting authority, (b) settlement
operational procedures, (c) reporting requirements, and (d) enforcement
procedures.
4. Further, the Report and Order establishes rules to ensure
compliance by ship station licensees to make proper and timely payments
and declares the ship station licensee to be ultimately responsible for
settlement of their accounts.
5. The complete text of this rulemaking may be purchased from the
Commission's copy contractor, International Transcription Service, Inc.
(202) 857-3800, 2100 M Street, N.W., Suite 140, Washington, DC 20037.
Paperwork Reduction Act
The Commission, as part of its continuing effort to reduce
paperwork burdens, invites the general public and OMB to comment on the
information collections contained in this Report and
[[Page 20156]]
Order, as required by the Paperwork Reduction Act of 1995, Pub. L. No.
104-13. OMB notification of action is due July 5, 1996; public and
agency comments are due at the same time. Comments should address: (a)
whether the proposed collection of information is necessary for the
proper performance of the functions of the Commission, including
whether the information shall have practical utility; (b) the accuracy
of the Commission's burden estimates; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on the
respondents, including the use of automated collection techniques or
other forms of information technology.
OMB Approval Number: 3060-0584.
Title: Administration of U.S. certified accounting authorities in
maritime mobile and maritime mobile-satellite radio services.
Form No.: FCC Form 44 and FCC Form 45.
Type of Review: Revision to an existing collection to consolidate
three information collection requirements.
Respondents: Individuals and households; businesses and other for-
profit.
Number of Respondents: 25.
Estimated Time Per Response: Three hours per response for
Application for Certification of Accounting Authority form; one hour
per response for the Annual Statistical Report of Settlement Operations
form; and one hour per response for the Report of Additions/
Modifications/Deletions to Inventory.
Needs and Uses: The Commission will use the information in this
information collection to determine eligibility of applicant; to create
internal studies and to ensure compliance. The Commission will also use
the information to identify the accounting authorities of U.S. licensed
vessels and to update the reporting of changes in accounting authority
functions to the International Telecommunication Union for inclusion in
their List of Ship Stations Report. The Report and Order is modified to
reduce a monthly reporting of changes to the inventory of ships for
which the accounting authority performs settlements to a semi-annual
requirement. A requirement for this information was included in the
Notice of Proposed Rulemaking, 58 FR 246, December 27, 1993, however,
the burden of the requirement was not adequately addressed at that
time.
Adopted: March 13, 1996.
Released: April 23, 1996.
By the Commission.
Table of Contents
Paragraph
Topic No.
I. Introduction.............................................. 1-2
II. Background............................................... 3-12
III. Issues Analysis......................................... 13
A. Eligibility............................................. 14-22
B. Application Procedures.................................. 23-33
C. Settlement Operations................................... 34-44
D. Reporting Requirements.................................. 45-50
E. Enforcement............................................. 51-53
F. Conclusion.............................................. 54
IV. Procedural Matters.......................................
A. Ex Parte................................................ 55
B. Final Regulatory Flexibility Analysis................... 56
V. Ordering Clauses........................................ 57-58
I. Introduction
1. By this Report and Order, the Commission adopts rules governing
the administration of accounting authorities in the maritime mobile and
the maritime mobile-satellite radio services, except for distress and
safety communications. The Report and Order establishes a certification
process and settlement procedures within a regulatory framework that is
flexible enough to invite participation by many diverse entities. The
rules clarify accounting authority responsibilities and strengthen the
settlement process while promoting the improvement of standards and
settlement operations in industry.
2. The rules we adopt below establish an application and approval
process for becoming an accounting authority to ensure that only
qualified applicants perform this function. The application process and
procedural rules also apply to entities currently settling accounts
under interim Commission certification. The interim certification will
be cancelled 60 days after the effective date of these rules if these
entities do not follow the application process. The Report and Order
also establishes standardized operational procedures and reporting
requirements that will assist the FCC in monitoring the overall
settlement function. The rules establish the accounting authority's
receipt date of accounts for purposes of determining the appropriate
conversion rate for the Special Drawing Rights (SDRs) and sets forth
enforcement procedures for both accounting authorities who are not
operating in accordance with FCC and established international
procedures and for ship station licensees where the licensee fails to
remit proper and timely payment for public correspondence
communications to the Commission or to another accounting authority.
Finally, the rules declare that the ship station licensee is ultimately
liable for proper and timely payment of accounts.
II. Background
3. International telecommunications settlements involve the
collection and payment by various accounting entities of charges due
foreign administrations for messages transmitted at sea by or between
maritime mobile stations located on board ships subject to U.S.
registry and utilizing foreign coast and coast earth station
facilities. The United States Government has performed accounting
settlements for maritime mobile service message charges since 1913 and,
more recently, for maritime mobile-satellite service messages.
4. On June 10, 1934, the Federal Radio Commission was absorbed by
the Federal Communications Commission (FCC), which had been created by
the Communications Act of 1934. At that time the international radio
accounts were transferred to the jurisdiction of the FCC, where they
are now maintained.
5. The subjects of international telecommunications accounting and
settlements are addressed in the International Telecommunication
Convention (Nairobi, 1982), in the International Telecommunication
Regulations (Melbourne, 1988) (ITR), in the ITU Radio Regulations and
in the ITU-T (formerly CCITT) Recommendations.1 The ITU-T develops
technical, operational and service recommendations applicable to
essentially all international telecommunications services via wire and
radio. Provisions of Conventions and Regulations have treaty status and
are therefore binding on the parties thereto. The ITU-T Recommendations
do not have treaty status and are not legally binding. However, as a
practical matter, the ITU-T Recommendations are
[[Page 20157]]
effectively the standards that govern international telecommunications.
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\1\ ``CCITT'' is the French acronym for the International
Telegraph and Telephone Consultative Committee within the
International Telecommunication Union (ITU). ``CCITT'' was,
nevertheless, the recognized acronym used in most languages--
including English. At the ITU Additional Plenipotentiary Conference
(APP) in Geneva (December 1992), the structure, working methods, and
construct of the basic ITU treaty instrument was modified. The
result is that the names of the sub-entities of the ITU have changed
(e.g., the CCITT has become the Telecommunication Standardization
Sector--ITU-T and the primary treaty instruments have become the ITU
Constitution and the ITU Convention with consequential renumbering
of all provisions). We note the changes coming from the APP were
placed into provisional effect on March 1, 1993, with the formal
entry into force of these changes being July 1, 1994 (as between
those ITU Member countries who have ratified or acceded to the new
instruments). We will, subsequently, refer to the new nomenclatures
within this proceeding wherever practicable.
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6. The World Administrative Radio Conference (Geneva, 1979) changed
the procedures governing accounting practices in the maritime mobile
and maritime mobile-satellite services, partly in response to the
perceived need to improve the efficiency of the international
telecommunication settlements system. The Final Acts of the Conference,
ratified by the U.S. Senate on October 27, 1983, revised Chapter IX of
the international Radio Regulations by establishing a new Article 66
which set forth the following general principles to govern the
international accounting for public correspondence in the maritime
mobile and maritime mobile-satellite services:
5086 Sec. 2. Charges for radiocommunications from ship to shore shall
in principle, and subject to national law and practice, be collected
from the maritime mobile station licensee:
5087 (a) by the administration that has issued the license; or
5088 (b) by a recognized private operating agency; or
5089 (c) by any other entity or entities designated for this purpose by
the administration referred to in No. 5087.
7. The Mobile World Administrative Radio Conference in 1987 passed
a resolution (contained in the Regulations as Resolution No. 334)
providing that the provisions of Article 66 should merely refer to the
International Telecommunication Regulations (ITR), assuming that the
World Administrative Telegraph and Telephone Conference (WATTC-88)
placed the substance of the Article 66 provisions into the ITR. The
WATTC-88 did incorporate these provisions into the ITR, effective July
1, 1990 (ITR, Appendix 2). We assume a future competent
Radiocommunication Conference will eventually implement the provisions
of Resolution No. 334.2 In any event, both the current Radio
Regulations and the ITR provide that the ITU-T Recommendations are to
be taken into account when applying the international regulatory
provisions. As it now stands, the implementing recommendations
developed by the ITU-T include: (1) Rec. D.90 on charging, accounting
and refunds; (2) Rec. D.195 on settlement of international
telecommunication balances of accounts; (3) Rec. E.200 on operational
provisions for maritime mobile services; (4) Rec. F.100 on mobile
operational provisions; and (5) the newest recommendation adopted, Rec.
F.111 on principles of service for mobile systems.
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\2\ The ITU Voluntary Group of Experts (VGE), charged with
simplifying the Radio Regulations has, indeed, made such a
recommendation. Once adopted by a competent World Radiocommunication
Conference, the VGE recommendation would result in Article 66 simply
stating that: ``The provisions of the ITR, taking into account ITU-T
Recommendations, shall apply [to charging and accounting for
Maritime Radiocommunications].''
---------------------------------------------------------------------------
8. The organization within the FCC responsible for the settlement
of maritime mobile and maritime mobile-satellite accounts with foreign
administrations is the International Telecommunications Settlements
(ITS) Section of the Financial Operations Division, Office of the
Managing Director. The settlement operation basically consists of
examining and processing invoices received from foreign administrations
to ensure the validity of the charges and, in turn, billing U.S. ship
station licensees for the charges due the foreign country. The accounts
generally contain the ship call sign and name, the date the message was
transmitted, the number of words or minutes, the cost per word or
minute in gold francs or Special Drawing Rights (SDRs) and the amount
due shown in either gold francs or SDRs. Collections are then processed
and appropriate payments made to the foreign countries or their agents
through the U.S. Treasury.
The settlement clearinghouse service was performed by the FCC at no
cost to licensees until December 19, 1989 when Public Law 101-239
established a $2.00 per line item administrative fee applicable to all
ITS billings.
9. The FCC, in accordance with international procedures described
within this document, has also permitted private entities, called
``accounting authorities'', to settle accounts between U.S. registered
ships and foreign administrations just as ITS does. (See In The Matter
of Accounting and Operating Procedures in the Maritime Mobile Service,
FCC 80-741, Mimeo No. 28600 (released December 12, 1980).) The
accounting authority may settle accounts of foreign licensed vessels in
addition to settling U.S. accounts. Vessel operators/licensees choosing
to have these private entities settle their accounts are generally also
charged a fee under a contractual arrangement. In certain cases, the
vessels are owned and/or operated by the same company that is acting as
an accounting authority.
10. Accounting authorities have been established or certified by
the FCC in accordance with the procedures delineated in the ITU-T
Recommendations. Those procedures allow administrations to establish up
to 25 accounting authorities per country. Specifically, accounting
authorities are designated by the assignment of an individual
Accounting Authority Identification Code (AAIC). This code is used by
ships and foreign coast stations to identify where charges for messages
transmitted through foreign facilities are to be sent for collection.
All accounting authorities approved by the FCC to settle maritime
accounts for U.S. licensed vessels are assigned a discrete four-
character alpha-numeric code. Accounting authorities operating in the
U.S. are assigned codes with a ``US'' prefix. Currently, only eight
codes beginning with the prefix ``US'' are authorized, including US01
which is used by the Commission's ITS Section in its settlement
activities.3 Foreign-based accounting authorities may also be
certified to settle accounts of U.S. licensed vessels. If approved,
they use the AAIC originally assigned to them by their country of
origin. The Commission has currently certified seven foreign-based
accounting authorities 4 to settle accounts for U.S. flag vessels.
Although all certifications have technically been interim
certifications, fifteen years have elapsed since the original interim
assignments.
---------------------------------------------------------------------------
\3\ Besides the FCC, the accounting authorities assigned a
``US'' code are: Mackay Communications, Inc.; Radio-Holland
Communications, Inc.; SAIT Communications, Inc.; Mobile Marine
Radio, Inc.; Exxon Communications Company; Raytheon Service Company
and Global Communications, Inc.
\4\ The following foreign companies have been approved as
accounting authorities: Kelvin Hughes, Ltd. (England); Peninsular
Electronics, Ltd. (England); STC International Marine, Ltd.
(England); Marconi International Marine Co., Ltd. (England); E.B.
Communications, Ltd. (England); International Radio Traffic Services
(Ireland) and ANDgate, Ltd. (Gibraltar).
---------------------------------------------------------------------------
11. There are currently no rules, formal guidance or procedures
issued by the Commission for determining who should be certified as an
accounting authority. There are no FCC standards of conduct for
accounting authorities nor any requirement to keep the Commission
informed of their activities. There are no rules to ensure that the
overall United States settlement activity is conducted uniformly. We
believe that at least minimal regulations should be in place to assist
current and future accounting authorities in adhering to those
international procedures as a matter of public interest and in
fulfillment of U.S. treaty interests.
12. On November 9, 1993, the Commission adopted a Notice of
Proposed Rulemaking (NPRM) that invited comment on our proposed rules
governing the administration of
[[Page 20158]]
accounting authorities (2FCC Record, Volume 8, No. 26, December 13-23,
1993). The NPRM proposed rules providing for: (1) a certification
process, (2) settlement procedures, (3) compliance procedures, and (4)
determining responsibility for proper and timely settlement of
accounts.
III. Issues Analysis
13. The NPRM proposed rules and raised many issues regarding the
administration of accounting authorities. Comments and Reply Comments
were received from eleven (11) entities and are discussed in the
paragraphs below where we review each of the categories and consider
the comments. The commenters are listed in Appendix 2 of the Report and
Order.
A. Eligibility
14. The NPRM proposed no U.S. citizenship requirements, but did
propose certain restrictions regarding the physical location of
settlement facilities for those accounting authorities wishing to be
assigned an AAIC with a ``US'' prefix. The NPRM proposed that prior
experience in accounting or settlement activities will be considered
but is not a prerequisite to becoming an accounting authority; and,
that applicants must (1) be willing and able to accept clients at a
reasonable charge; (2) agree to accept accounts in both gold francs and
Special Drawing Rights (SDRs) and to use the conversion rate as
directed by the International Monetary Fund; and (3) agree to conduct
operations in accordance with applicable FCC policies and rules, the
International Telecommunication Regulations and other international
rules, regulations, agreements, and, where appropriate, ITU-T
Recommendations. Finally, the NPRM proposed that all entities intending
to settle accounts of U.S. licensed vessels obtain prior Commission
authorization to do so.
15. Comments. Mackay Communications (Mackay) urged that we prohibit
the Commission from ``operating as a Recognized Private Operating
Agency'' so that it can be neutral and enforce compliance of
regulations without creating potential conflicts of interest. In reply
comments, COMSAT Corporation (COMSAT) stated that the Commission can
still be an impartial administrator and questioned Mackay's suggestion
that the Commission remove itself from the accounting authority
function.
Response. The Commission cannot operate as a Recognized Private
Operating Agency because (1) we are a Federal government agency and (2)
we do not operate telecommunications installations nor do we provide
telecommunications services. However, we believe that Mackay meant
``accounting authority'' and address this response in that context. The
Commission has a dual role in the administration of settlement of
accounts for international telecommunications. First, as the
administration responsible for settlement of accounts of U.S.-flag
vessels, we are establishing rules for non-U.S. governmental accounting
authorities. Second, the Commission provides a valuable function in
that ship station licensees who do not select an accounting authority,
simply ``default'' to US01, the AAIC of the Commission's International
Telecommunications Settlements Section (ITS) which performs the FCC's
accounting authority function. We believe that the functions are
separate and can be administered without any conflict of interest.
16. Comments. Mackay urged the Commission to consider a requirement
that the applicant must offer services to all U.S.-flagged vessels--not
just vessels owned directly or indirectly by the applicant. EXXON
Communications Company (EXXON) stated their objection to any proposal
that accounting authorities ``be required to serve as common carriers
offering service indiscriminately to the public.'' They pointed out
that they serve as an accounting authority for their vessels only, they
are not a revenue generating endeavor and, ``were the Commission to
require EXXON to hold itself out to the general public
indiscriminately, it would no longer be in a position to serve as an
accounting authority.'' In reply comments, the American Institute of
Merchant Shipping (AIMS) agreed with EXXON's proposal that accounting
authorities should not be required to act as a common carrier and
COMSAT opposed a ban on accounting authorities who process settlements
exclusively for their own vessels. COMSAT further stated that ``the
Commission may consider imposing conditions on the certifications
awarded to these entities, e.g., the Commission may wish to reserve the
right to require such accounting authorities to serve all customers or
relinquish their AAIC when there are no * * *. codes available and
there is a demonstrable need for broader-based services.''
Response. We believe the function of accounting authorities should
be such that the public's best interests are served by the
organizations. Such is not the case when an accounting authority
settles accounts for themselves only. Thus, the rules we have adopted
require that accounting authorities settle accounts for any qualified
ship station licensees who request it. Accounting authorities may
require credit checks, and clients must accept the terms of settlement
charges, deposits, etc. However, it is not the Commission's intent in
establishing these rules to place additional requirements on the
interim accounting authorities nor to establish a requirement in the
application process that could not be overcome. We acknowledge COMSAT's
workable suggestions and we are waiving this requirement for accounting
authorities who are ``grandfathered'' with the provision that, should
all 25 AAICs be assigned and the need for additional codes become
necessary, these same organizations will be required to extend their
services to the public or to relinquish their certification. Should
these grandfathered accounting authorities cease their settlement
activities, the new accounting authorities assigned the AAICs will be
required to serve the general public. 47 CFR, Part 3, section 3.10 is
amended to add this waiver information.
17. Comments. Mobile Marine Radio, Inc. (MMR) requested that the
Commission impose requirements that accounting authorities verify the
creditability of its clients and ``another means of guarantee for the
provider could be a requirement that the accounting authority * * *
share in a loss should it occur.'' COMSAT supported the recommendation
that accounting authorities be required to verify the credit worthiness
of their customers and that accounting authorities should be able to
reject customers they determine are credit risks and further suggest a
rule to require a deposit from customers before contracting to settle
accounts.
Response. The rules we are adopting below declare that the ship
station licensee is ultimately responsible for the proper and timely
payment of their accounts (47 CFR Part 3, section 3.76). However, this
in no way relieves the accounting authority from performing their
settlement activities timely and accurately. We have purposely left out
regulations which would prevent accounting authorities from verifying
the credit standings of potential clients or requiring deposits. The
contractual agreement between accounting authorities and clients should
be entered into mutually without further regulation. Ship station
licensees who do not enter into such an arrangement will default to
US01, the International Telecommunications Settlement Section at
Gettysburg, Pennsylvania.
[[Page 20159]]
18. Comments. Mackay raised the issue of foreign accounting
authorities settling traffic for U.S.-flagged vessels. Mackay does not
object, provided U.S.-flagged vessels of foreign accounting authorities
are required to pay the same ``federal excise taxes'' that vessels
represented by U.S. accounting authorities are required to pay.
Response. This subject is beyond the scope of this proceeding and
is not addressed in the Report and Order.
19. Comments. Mackay urged considering that owners of coast
stations or coast earth stations not be allowed as accounting
authorities. In reply comments, EXXON stated that Mackay has no
rationale for their suggestion and COMSAT opposes any limitation on
land earth station operators stating the ``operators * * * are more at
risk to justify their involvement * * * than many other entities * *
*''
Response. Our experience has been that we have encountered no
problems in the past with accounting authorities who are also owners
and/or operators of coast stations that lead us to believe there is a
potential problem. Thus, the final rule will not ban coast stations,
coast earth stations or any other entity from becoming accounting
authorities as long as they meet the eligibility requirements.
20. Comments. Radio Holland USA B.V. (Radio Holland) recommended
that prior relevant experience be a mandatory requirement. In reply
comments, COMSAT stated that prior experience as an accounting
authority should not be the sole determining factor for qualification.
Response. The Commission, in this final rule, has purposely
declined to adopt regulations requiring specific prior relevant
experience. We believe the rule at Part 3, section 3.10(c) is clear
that related prior experience will be reviewed favorably, however, this
experience or lack of experience will not be the sole determinant in
granting certification. COMSAT appears to be referring to the
``grandfathering'' process directed toward the interim accounting
authorities. In that case, experience will not be the sole determining
factor, either, but will be evaluated along with other requirements.
21. Comments. Mackay urges the Commission to consider prohibiting
``foreign-based RPOAs'' from settling for U.S.-flagged vessels unless
their administration has a reciprocal agreement allowing U.S.
accounting authorities to operate in their administration. In reply
comments, COMSAT agreed with Mackay that the Commission should consider
whether foreign administrations permit U.S. entities to apply for
accounting authority identification codes in their country.
Response. Based on our past experience where no problems of this
nature have occurred, we do not think it is necessary to adopt a policy
of reciprocity. At most, only ten of the AAICs will be available to
foreign-based organizations. We have not addressed this issue in the
rules adopted below, however, should the situation change, the
Commission could revisit the issue.
22. Comments. MMR commented that, in the case of assignment of a
U.S. accounting authority identification code, all settlements should
be processed and made from the physical location of the accounting
authority from its U.S. address. COMSAT stated there is no ``rule
section providing the standard of evidence for establishing that an
accounting authority will conduct operations in the United States'' and
recommended the submission of partnership or corporate documents
demonstrating where the entity intends to do business. COMSAT further
suggested imposing a jurisdictional requirement on foreign-based
accounting authorities settling for U.S. vessels requiring the
accounting authorities to be subject to the jurisdiction of the U.S.
courts.
Response. We will assign a ``US'' AAIC to those accounting
authorities who demonstrate they are operating from a physical U.S.
location. As the administration responsible, the FCC will be in a
better position to monitor operations and perform audits, as
applicable. Title 47 CFR, Part 3, section 3.11(a) is revised to state
this explicitly. Further, we believe the reporting requirements will
assist the Commission in assuring the accounting authority is
continuing to settle from a U.S. location. We do not think it is
necessary to subject foreign-based accounting authorities to the
jurisdiction of the U.S. courts. We have concluded that such a
requirement would be complex, unwieldy, and time consuming, far beyond
the regulatory structure we are establishing. At this time, it appears
that disputes can be satisfactorily resolved without judicial
intervention.
B. Application Procedures
23. The NPRM proposed rules requiring the filing of an original FCC
application form in order to be considered as an accounting authority.
The NPRM requested only basic information identifying the applicant and
describing the applicant's objectives and capabilities with respect to
the accounting authority function. The NPRM stated our intention to
request that any relevant experience of an applicant be detailed, that
the applicant's proposed settlement plans be provided and documents
demonstrating financial responsibility should provide an adequate basis
for determining whether to issue a certification. We intend to process
applications on a first-come, first-served basis, however, we proposed
to ``grandfather'' current accounting authorities as long as they are
otherwise qualified and follow the procedures established by the final
rule (Report and Order) to obtain permanent accounting authority
authorizations. Existing accounting authorities are not exempt from the
new application procedures and would be required to apply for permanent
accounting authority certifications within 60 days of the effective
date of these rules or risk losing their status as accounting
authorities. The NPRM established an FCC policy that a minimum of 15 of
the available 25 Accounting Authority Identification Codes (AAICs) be
reserved for use by accounting authorities conducting settlement
operations in the United States. Accounting authorities conducting
settlement operations within the United States will be assigned a
``US'' AAIC prefix if approved. Certified accounting authorities, who
maintain their settlement operations outside the U.S., would retain the
AAIC originally assigned by the country of origin.
24. The NPRM included language in the application and rules which
would make clear to applicants the requirement to adhere to applicable
FCC policies and rules, the International Telecommunication Regulations
(ITR), and other international rules, regulations, agreements, and,
where appropriate, ITU-T Recommendations. We invited comment as to the
types of documents acceptable for proving financial responsibility as
well as the specific criteria for evaluation. The NPRM proposed that,
although the United States is not a guarantor of payments by its
citizens, our proposed rules sought to minimize potential financial
risks that might be present if settlement operations are performed by
other accounting authorities. Further, the NPRM documented the FCC
policy that the ship station licensee has final responsibility for
settlement should their selected accounting authority be unable or
unwilling to make valid payments to foreign entities.
25. The NPRM also detailed the procedures the Commission will
utilize to obtain public comment on applications received by the
Commission. Comments received during
[[Page 20160]]
the informal public comment period will be taken into consideration in
making a determination as to whether to approve the applicant as an
accounting authority. The NPRM further states that, if the applicant is
found to be qualified, the Commission will inform the applicant, in
writing, that the application has been approved.
26. Comments. Mackay stated that they encourage the proposed
``grandfathering'' of interim accounting authorities. EXXON commented
that the proposed formal application process is unnecessary for the
grandfathering process. COMSAT stated they do not understand how the
grandfathered applications will participate in the licensing process,
that the grandfathered applications will limit the number of new
entrants to ten and the public interests will not be served by limiting
the number of new applicants. IDB Mobile Communications, Inc. (IDB)
agreed with COMSAT that ``all applicants should be considered equally
in the applicant process and should be subject to the same criteria for
approval.'' In reply comments, EXXON stated that all applicants do have
an equal opportunity to apply and ``there is no shortage of available
accounting authority identification codes.'' EXXON further commented it
is only fair to allow grandfathered accounting authorities to retain
their status and ``action to the contrary would prove extremely
disruptive to existing accounting procedures.'' In reply comments, AIMS
stated their agreement with EXXON's position, but COMSAT disagreed with
commenters who would restrict the certification process by exempting
interim accounting authorities from the application filing
requirements.
Response. The Commission does not intend to hinder the current
operations of interim accounting authorities and the final rule has
provided for the ``grandfathering'' of such applicants, provided they
meet the eligibility requirements. Applicants will be subject to the
same criteria and considered equally. It should be noted that, although
only ten accounting authority identification codes will be available
provided all interim accounting authorities are approved, this is not a
new limitation. Additionally, the interim rules for granting
certification did not provide the Commission with the same information
requested in this rule, and, since there have been no reporting
requirements, the Commission has little information about the
settlement activities of the interim accounting authorities.
Information provided in response to the Report and Order should assist
the Commission in its role as administrator of accounting authorities.
27. Comments. Mackay urged the Commission to give ``existing U.S.-
based RPOAs'' preference in order of consideration regardless of when
the application was received in relation to other applications. In
reply comments, COMSAT opposed any ban on foreign-based settlement
entities, but proposed that the Commission reserve the right to process
U.S.-based accounting authority applications before foreign-based
applicants, should the Commission receive more applications than the
available number of accounting authority identification codes.
Response. The rules we are adopting will not place a ban on
foreign-based settlement entities, however, it should be noted that,
although the rule states (47 CFR, Part 3, section 3.21(b)) that a
minimum of 15 identification codes will be retained for ``US'' codes,
that does not mean we will withhold certification of U.S. entities and
await applications from foreign-based entities until a quota of ten is
certified. In cases where U.S. applicants apply and no foreign-based
applications are on-hand, the U.S. applications could be approved.
28. Comments. Mackay commented they want to ensure there is
sufficient notification to enable existing accounting authorities to
complete the application process. COMSAT stated there is no mention of
the triggering date for filing.
Response. This final rule establishes the effective date of the
rules, which is 30 days following the publication of the Report and
Order in the Federal Register. Interim accounting authorities will be
required to apply for permanent accounting authority certifications
within 60 days of the effective date. Others seeking certification may
submit their applications at any time following the release date. They
cannot usurp those requesting ``grandfathering'' but they will be
considered on a first-come, first-served basis for the remaining codes.
29. Comments. Radio Holland recommended the retention of their
existing accounting authority identification code for interim
accounting authorities approved for a permanent ``license.'' Further,
Radio Holland seeks clarification of the term ``entity''.
Response. The Commission believes the implementation of these rules
should make little disruption to the manner in which interim accounting
authorities are currently conducting business. Title 47 CFR, Part 3,
section 3.22 is amended to state that those interim accounting
authorities approved for permanent certification will retain their
existing accounting authority identification code.
In addressing the request to define ``entity'', the following
definition is provided: An entity is an individual or a business that
is self-contained, separate and independent of other organizations. An
entity may exist within or be a part of an overall, widely diversified
organization.
30. Comments. Radio Holland pointed out their perceived
consequences if an application for an accounting authority with interim
certification was not approved. They pointed out that communications
from/to vessels would cease and a change in code might involve huge
costs. Radio Holland stated that certain countries mention the
accounting authority identification code on their registrations and
that, changes can cost up to $500 per vessel. Radio Holland proposed,
in case of non-approval, the Commission extend the period to include
time for resolution of problems including a 6-month period to satisfy
requirements. SAIT Communications (SAIT) recommended a procedure for
resolution of problems before a final decision. In reply comments,
EXXON agreed with SAIT that the rules should provide procedures for
appeal. IDB disagreed, in reply comments, with Radio Holland's proposal
of additional time to meet the requirements and proposed ``the
Commission only consider * * * applicants which meet the requirements
at the time of application and that the Commission subject every
applicant to the same level of scrutiny.'' In reply comments, COMSAT
Corporation agreed with commenters requesting a clarification of the
process for evaluating applications and the appeal rights of applicants
denied certification. Further, COMSAT proposed a ``thirty-day petition
to deny process for reviewing * * *.''
Response. The Commission recognizes the consequences of not
approving a permanent certification to an interim accounting authority.
However, we anticipate that interim accounting authorities will have no
problem completing the application process. Inasmuch as possible, we
propose to work through these situations during the comment period to
prevent unusual delays. 47 CFR, Part 3, section 3.29 is amended in the
Report and Order to provide procedures for seeking review when the
application for certification is denied. We do emphasize, however, that
all comments resulting from the public notice will be
[[Page 20161]]
considered in granting/denying certifications.
31. Comments. Mackay raised the issue of continued use of an
accounting authority identification code if a business is acquired,
merged or sold. Radio Holland proposed that codes not be canceled
automatically in case of transfer or change of control of an accounting
authority. Radio Holland is concerned that the new application of the
new controlling entity might not be considered due to the ``first come-
first served'' clause and the limitation of total codes. In reply
comments, COMSAT supported commenters who propose a modification of the
rule to permit the transfer of accounting authority identification
codes pursuant to the sale or transfer of control. EXXON recommended
that the Commission develop procedures for the pro-forma transfer of
control of accounting authorities.
Response. The final rules adopted below will allow the continued
use of accounting authority codes in these cases provided the new
entity can meet the eligibility qualifications. 47 CFR Part 3, section
3.51 is amended to require the transferee to comply with the same
application process including public comment and Commission scrutiny
that all applicants do. The rules also require the transferee to
certify to the Commission that all accounts are accepted and to provide
a list of the accounts. In the case of a merger of accounting
authorities, the merged entity will be allowed to decide which AAIC to
keep.
32. Comments. Mackay stated the Commission should define what
constitutes sound financial status and how the status will be monitored
in the future. Mackay suggested requiring the applicant to be a
business with established accounting procedures and formal audited
statements. Radio Holland recommended that a sound financial track
record be made a mandatory requirement. Marconi Marine asks if a copy
of their statutory accounts would be acceptable as evidence of
financial status. COMSAT recommended fairly strict financial
requirements and offered several options: (1) requiring a bond, (2)
requiring accounting authorities to demonstrate and maintain an asset
value of a certain percentage in relation to outstanding debts, (3)
requiring accounting authorities to put deposits in escrow, (4) dollar
requirements for cash-on-hand amounts, (5) limits on the number of
outstanding loans and the amount of risk undertaken, and/or (6)
requiring accounting authorities to take deposits from customers under
certain circumstances. COMSAT further recommended the rules be revised
to require the initial (and annual) submission of independently
``audited financial statements'' and cite requirements in the rural
cellular radio services (47 CFR 22.917(c)(6)). EXXON commented that a
formal financial showing should not be required of accounting
authorities with interim authority during the ``grandfathering''
process and, in reply comments, EXXON disagreed with COMSAT's proposal
for stricter financial requirements for accounting authorities. Global
Communications (Global) recommended accounting authorities require a
deposit from vessels to be placed in an escrow account to assure some
company reserve in case of default.
Response. The Commission is interested in ensuring that accounting
authorities have a sound financial background with a reputation for
good business practices. Any comments received following the public
notice announcing the application will be carefully considered.
However, we believe our objective can be met by requiring formal
financial statements from applicants who are business entities and
other documents, e.g., tax statements, statements proving assets and
liabilities from individuals. These, coupled with any forthcoming
comments, will provide adequate information for making a sound
decision. Marconi Marine's statutory accounts will probably be adequate
to prove financial responsibility. However, 47 CFR, section 3.24 is
amended in the final rule to include a requirement to provide
additional information to the Commission, as required. As to whether
accounting authorities who will be grandfathered should provide
financial responsibility evidence, as stated elsewhere, the interim
accounting authorities, although not subject to any formal FCC rules in
the past, must now prove their eligibility by complying with the
application process.
33. Comments. Mackay asked what method will be used to obtain
public comment and who will evaluate the comments. Mackay is concerned
that significant time and money could be spent while responding to
unsubstantiated comments or accusations. COMSAT requested that
applicants ``be subject to petitions to deny filed within 30 days of
the public notice identifying the applicant. Radio Holland recommended
consideration of consultation with selected U.S. coast stations and
foreign administrations involved in international telecommunication
settlements in assessing the qualifications and actual performance of
applicants. In reply comments, COMSAT supported Radio Holland's comment
``that the Commission consider foreign-based applicant's record in
dealing with U.S. service providers.''
Response. The public notice/comment process is discussed in Part 3,
section 3.29 of the final rule. The comments and application will be
evaluated by Commission employees designated by the Managing Director
and including the Accounting Authority Certification Officer. As to
whether consultations with U.S. service providers will be necessary,
these organizations will have an opportunity to comment as discussed in
the same rule cite.
C. Settlement Operations
34. The NPRM proposed several operational requirements for
accounting authorities. Basically, the operational requirements
parallel applicable ITR and other international rules, regulations,
agreements, and applicable ITU-T Recommendations and require adherence
to established international procedures. The NPRM proposed that
accounting authorities be allowed a full six months following
certification as an accounting authority to commence settlement
operations. The NPRM also proposed a settlement period within which
individual settlements must be accomplished, consistent with ITU
procedures. This provision requires accounting authorities to make
timely payment to foreign administrations and to accept accounts both
in gold francs and in Special Drawing Rights (SDRs). The proposed rules
are in accord with existing international procedure and FCC policy, as
is the requirement to settle accounts taking into consideration ITU-T
Recommendation D.90.* In addition, the NPRM proposed rules to
establish the requirement that accounting authorities cooperate fully
with the Commission concerning maritime settlements issues. Since the
United States government is required, upon request, to take all
possible steps, within the limits of applicable national law, to ensure
settlement of the accounts of the licensee, (Radio Regulations, Geneva
1979, Article 66, Section III Accounting, paragraph 10, number 5097;
and, International
[[Page 20162]]
Telecommunication Regulations, Melbourne 1988, Appendix 2--Additional
Provisions Relating to Maritime Telecommunications, paragraph 4.2) this
requirement is intended to ensure that the Commission is kept aware of
potential problems or issues which could affect the national interest
or which could have a significant impact on overall settlement
operations. The proposed rules also made accounting authorities subject
to audit by the Commission or its representative.
---------------------------------------------------------------------------
\*\ We note that the latest (ITU-T Study Group 3, December 1994)
accepted version of ITU-T Recommendation D.90 provides that bills be
paid by the accounting authority without delay and within 3 months
of receipt or within 4 months after dispatch, whichever is the
shortest period. However, the Revised Rec. D.90 also recognizes that
the ITR period of 6 months after dispatch is controlling.
---------------------------------------------------------------------------
35. Comments. One commenter, Global, responded both as an
accounting authority and a radiotelephone station. Global recommended
providing detailed requirements for the day-to-day operation of
accounting authorities. They commented that detailed rules would
eliminate confusion in identifying accounts, promote the dissemination
of mutual information and the timeliness of settlements and produce
better records and internal accounting. Global recommended requiring
accounting authorities with more than 100 vessels to maintain an
``800'' number 24 hours a day that coast stations can call for
information. They further stated that accounting authorities should
acknowledge receipt of invoices, should notify coast stations of
rejections within 30 days and clearly identify invoices being paid.
When invoices are paid by bank draft, a separate notice should be sent
to coast stations detailing the paid invoices.
Response. Global's recommendations are good, sound business
practices which we hope accounting authorities will consider. However,
the final rules do not provide detailed requirements for day-to-day
operation because the Commission believes that organizations should not
be limited in methodology as long as they achieve timely and accurate
settlements.
36. Comments. Marconi Marine referred to rules in the NPRM stating
that payments should be made in U.S. dollars. They stated that most of
their payments are made in Sterling.
Response. The final rules, Part 3, sections 3.46 and 3.47, provide
for payment in other currencies. However, it should be noted that,
although payments can be made in currency other than U.S. dollars, the
rules require a written agreement between the foreign administration(s)
and the accounting authority to be approved by the Commission. This
agreement can be a part of the original certification process or it can
be presented to the Commission at anytime.
37. Comments. COMSAT suggested the consideration of permitting
maritime customers to select direct billing payment methods from their
service providers. COMSAT further states that, although Article 66
provides for collection of charges for radiocommunications by RPOAs,
that, ``in order for RPOAs to settle accounts with foreign
administrations on behalf of their customers, the Commission requires
that the service provider be certified as an accounting authority.''
Response. There is no legal bar preventing service providers from
engaging in direct billing. (Radio Regulations, Geneva 1979, Article
66, Section II, Accounting Authority, para. 2, numbers 5086-5089; see
also ITR, Appendix 2) Neither do we believe the adopted rules contain
language that prevent a service provider from entering into contractual
agreements with their clients to include direct billing. The issue of
requiring RPOAs to become accounting authorities arises when the RPOA
settles debtor accounts for their clients.
38. Comments. Peninsular Electronics (Peninsular) commented that
most ship licensing administrations for which they are an accounting
authority require them to confirm acceptance of total accounting
responsibilities before they issue the Ship Radio Station license.
Their services cover settlement of all communications originated by
clients. They stated that the proposed rules only refer to settlement
with foreign administrations. Peninsular asks if U.S. settlements are
also covered by FCC regulations.
Response. These rules apply to settlements of accounts for U.S.
flag vessels for messages transmitted via foreign coast and coast earth
station facilities only. The final rules are amended, at 3.1 to explain
``[Accounting authorities] settle accounts due foreign administrations
for messages transmitted at sea by or between maritime mobile stations
located on board ships subject to U.S. registry and utilizing foreign
coast and coast earth station facilities.''
39. Comments. MMR commented that they were instrumental in
establishing the current 4-month settlement time frame, they are a
strong advocate for reducing the settlement time frame and they suggest
that settlements not handled within the allotted time frame should have
interest penalties applied and enforced. COMSAT Corporation urged the
Commission to ``consider expediting the settlement procedures down to
four months, or shorter * * *'' In reply comments, IDB recommended a
three-month settlement period and referred to the NPRM which requires a
6-month settlement period. In reply comments, COMSAT agreed with MMR
that accounting authorities who do not make timely settlements should
be assessed an interest penalty by the Commission.
Response. The Commission recognizes that many organizations have
up-to-date technology and can effect settlements well ahead of the 6-
month settlement period. This can be an advantage in soliciting
clients; however, it is not our intention to place additional burdens
on existing accounting authorities but to provide a structure within
which they can continue to function. The final rules do not adopt a
requirement that is more stringent than Radio Regulations, Article 66,
and ITR, Appendix 2 which require a 6-month settlement period (See note
to paragraph 34, above.). As to the issue of interest penalties, we
will not impose such a rule; however, the rules in 47 CFR, Part 3
establish a number of sanctions including cancellation of their
certification for those accounting authorities who repeatedly fail to
settle accounts timely.
40. Comments. Mackay commented that the Commission should be more
specific regarding the extent, time and scope of proposed audits.
Marconi Marine commented that they do not see the necessity for audit
since they are regularly audited internally and externally. COMSAT
requested clarification of audit authority to describe events that
could ``trigger the audit process.''
Response. Routine audits are not a part of this rulemaking, rather,
an audit would normally be precipitated only in the event of a
disagreement as to amounts of accounts, late payments, etc. The audits
will be strictly related to accounting authority activities.
41. Comments. Peninsular pointed out that the NPRM states that ITU-
T recommendations are not legally binding, but it is indicated they
must be taken into account together with FCC rules and regulations.
Peninsular further commented that it is not clear whether compliance
with D.90 is an FCC requirement or if parallel FCC rules exist. Marconi
Marine expressed concern about references regarding ``abiding by FCC
rules'' and commented that ``this seems somewhat open ended to us, as
we do not know what rules we would be agreeing to abide by.'' Marconi
recommended altering the wording of the text to reflect agreement to
abide by rules relating to accounting authorities only.
Response. The Commission believes that accounting authorities
should follow the ITU-T recommendations which are generally considered
to
[[Page 20163]]
govern international telecommunications, and they should always be
considered in technical, operational and service decisions. Any
references to FCC rules within this Report and Order refer to 47 CFR,
Part 3, the new rules being established by this proceeding and related
to the oversight and administration of accounting authorities. 47 CFR,
Part 3, section 3.43(f) is amended to add the CFR reference.
42. Comments. MMR commented there are presently no guidelines
whereby accounting authorities can enlist assistance from its
administration ``when conflicts arise between the provider and the
accounting authority.'' In reply comments, COMSAT endorses MMR's
suggestion for enlisting the Commission's assistance in attempting to
resolve bad debt * * *''
Response. The Commission believes that each administration has a
responsibility to assist in resolving outstanding issues between
accounting authorities and clients or foreign administrations. The
Commission proposes to respond through all available methods to resolve
issues and are prepared to follow through by enforcing applicable rules
(Part 3, 3.52(b), 3.70-3.76).
43. Comments. COMSAT commented that the rules should make it clear
that the accounting authority is a guarantor of payment.
Response. In the rules adopted below, the non-governmental
accounting authorities, by virtue of their contractual agreement with
their clients and their signed application wherein they agree to
perform settlements in accordance with 47 CFR, Part 3, must perform
their settlement activities properly or be subjected to a number of
sanctions and/or cancellation of their certification.
However, the Report and Order does not state that any accounting
authority is a guarantor of payment. Rather, at Part 3, section 3.76,
the ship station licensee is declared responsible for final payment of
its accounts. Because the ship station licensee has the most to lose
for non-payment of accounts, the Commission believes care will be given
to the selection of an accounting authority.
44. Comments. Marconi Marine recommends the rules define more
clearly the complaint/inquiry resolution procedures and there should be
a clearly defined arbitration procedure.
Response. These rules, section 3.52, are purposely presented in
general terms because we believe complaints and arguments must be
addressed on a case-by-case basis. By leaving these rules ``general''
in tone, the Commission will be able to respond to issues without
restrictions. We think this approach will be an advantage to applicants
and/or accounting authorities. Section 3.52(a) is amended in the final
rule to require that a copy of complaint/inquiry resolution procedures
be sent, upon request, to the Commission.
D. Reporting Requirements
45. The NPRM proposed several new reporting requirements for
accounting authorities. These reports should enable the Commission to
monitor accounting authority operations to ensure adherence to the
adopted rules and to appropriate international settlement procedures.
Currently, the Commission submits monthly reports to the ITU in Geneva
detailing the inventory of U.S. licensed ship stations operating in
international waters. The NPRM proposed that accounting authorities
provide the Commission with a detailed report of additions, deletions,
or modifications to their inventory of serviced vessels each month. The
Commission would use this information to maintain the ITU database and
to assure efficient settlement operations. The proposed rules also
required an end of year inventory of vessels for which the accounting
authority is the settlement entity and an annual statistical report
which would provide information to the Commission regarding settlement
operations.
Comments will be addressed separately for each of the reports, as
follows:
Annual Statistical Report of Operations
46. Comments. Peninsular stated that their settlement operation
does not require identifying the actual number of settlements and this
information would not be readily available. They asked if the necessity
for this information could be reexamined. Marconi Marine commented they
would have difficulty providing both the number of line items and
payments to individual administrations. MMR asked what purpose the
collection of monetary statistics serves.
Response. The Commission is delegating a portion of its settlement
responsibility to the certified non-governmental accounting
authorities. Our oversight responsibilities require that we ensure that
settlements for U.S. licensees are being performed properly and timely.
The information will assist us in monitoring the volume and aging of
accounts. We have reviewed statements from foreign administrations and
observe the billings have sufficient detail (a line-by-line listing of
individual calls to a specific ship for a specific service) to comply
with this requirement. Therefore, the final rule will require
accounting authorities to comply with this reporting requirement.
47. Comments. COMSAT recommended modifying the rules to require
additional evidence of financial responsibility and recommended
quarterly statistical reports filed within one month of the end of each
quarter, showing an aging of liabilities. In reply comments, EXXON
opposed the proposals to require the annual reports on a quarterly
basis. EXXON further commented that if the report is required, it
should apply to accounting authorities settling for unaffiliated
entities and on an annual basis only. In reply comments, AIMS supported
EXXON's proposal that the reporting requirement apply only to
accounting authorities settling accounts for unaffiliated entities. In
reply comments, COMSAT supported ``the adoption of streamlined
reporting requirements which provide the Commission and the public with
an accurate * * * mechanism for monitoring the aging of accounts and
assessing the financial performance of accounting authorities.'' COMSAT
opposed any limitation of the annual statistical report and commented
that the report can be used to assess the accounting authority's
settlement performance, determine whether the accounting authority is
meeting its obligations to customers and service providers * * *''
Response. The Commission will retain the reporting requirement and
believes the usefulness of the information outweighs our desire to
minimize the burden of reporting. The NPRM, Part 3, 3.60(d) states that
the information will provide statistical data for Commission use.
Subsequently, we have determined that the data can be useful in
determining whether accounting authorities are performing settlements,
the volume of settlements and the timeliness of settlements. The
report, FCC Form 45 states ``provide statistical information to the
Commission for overall program monitoring purposes.'' Lines 2, 3, and 4
referenced by Peninsular address the average number of unprocessed
settlements on hand, the number processed to completion more than 180
days after dispatch from foreign administration and the percent of
settlements processed to completion more than 180 days after dispatch.
This information will be helpful in determining whether settlements are
being accomplished timely. Rule section 3.60 (d) is amended to include
the additional uses of the report.
[[Page 20164]]
Inventory of Vessels
48. Comments. MMR questioned the proposed requirement to report an
inventory of vessels. MMR believes this information is available
through the Private Radio Bureau's Licensing Division. Global, who is
both an accounting authority and a high-seas radiotelephone station,
cited the difficulty in using ITU's List of Ship Stations, saying it is
published once a year and is often out of date because of delays in
reporting changes to ITU.
Response. As background, the Commission/ITS has a responsibility to
provide a report of accounting authority information to ITU. ITS has
experienced the same problems that Global has in identifying the
accounting authorities of vessels. This reporting is accomplished in
the following manner: The Wireless Telecommunications Bureau maintains
a database of ships in the maritime service. That database is used to
prepare a report of changes in accounting authority functions to ITU,
however, the database can only be updated by ITS when current
information becomes available. By requiring accounting authorities to
provide the initial inventory of vessels and the end-of-year inventory,
the List of Ship Stations Report will provide more accurate, up-to-date
information. Additionally, the title of Part 3, section 3.60(a) is
changed to ``Initial Inventory of Vessels.''
Report of Additions/Modifications/Deletions
49. Comments. EXXON stated that they settle only for their own
vessels and their inventory remains relatively constant and a monthly
report would serve no useful purpose and be unduly burdensome. In reply
comments, AIMS agreed with commenters who feel it is unnecessary to
require monthly inventories when there is no change. COMSAT agreed with
EXXON regarding the modification of inventory reporting so that only
commercial accounting authorities are required to submit monthly
inventory reports. Global recommended that accounting authorities
should publish lists of ships accepted quarterly or monthly.
Response. We have considered the requests for a less burdensome
requirement. Part 3, section 3.60(b) is revised to require a semi-
annual report. However, we believe there is merit in requiring a ``no-
change'' report, as applicable. The report will assure a ``status-quo''
in inventory.
50. Comments. Marconi Marine stated that some information reported
would be commercially sensitive and should be kept confidential.
Response. The rules adopted below do not automatically offer
confidentiality because we do not believe that the information
requested is commercially sensitive. The application form states that
``Information requested by this form will be available to the public.''
Nonetheless, any entity submitting information to the Commission may
submit a request that such information not be made routinely available
for public inspection. We will consider requests as discussed in 47
CFR, section 0.459. A new rule section, Part 3, section 3.62, addresses
this issue.
E. Enforcement
51.The NPRM set forth the procedures the Commission will use to
investigate and to resolve complaints or infractions of the
Commission's rules or established international settlement procedures.
The proposed rules specified grounds for enforcement sanctions,
including forfeiture, and/or cancellation of an accounting authority's
certification and also specified that the Commission will afford an
accounting authority notice and an opportunity to present its side of
any issue involving cancellation of its accounting authority privilege.
The proposed rules also provide that any ship station licensee affected
by the cancellation of an accounting authority's privilege must find
another accounting authority to settle its accounts. The Commission
will notify the ship stations, via a Public Notice, of any
cancellations, and, inasmuch as possible, list individual shipowners
serviced by the cancelled accounting authority as identified from the
required reports of vessel inventories. Finally, the proposed rules
provided for forfeiture or other sanction action, should a ship
operator or licensee not remit full and timely payment to the
Commission or to an approved accounting authority when properly billed
or in the event that the accounting authority fails in their
responsibility to forward payment to the foreign entity. The Commission
reserves the right to cooperate with foreign administrations in
restricting public correspondence communications to and from vessels
for which valid payments have not been received or made as required
(Distress and safety communications must be carried without charge.)
and to utilize available debt collection procedures to collect amounts
owed.
52. Comments. Mackay stated that there is no mention of a procedure
to be followed or the opportunity for appeal if the Commission denies
privilege, Part 3, section 3.28, [and] further, Mackay commented that a
procedure and appeal process should be available under a rule section.
Response. Part 3, section 3.29 is amended in the final rule to
provide time frames for problems encountered during the application
process. Every effort will be made to remedy any problems during the
timeframes. As to any format for appeal, we are purposely presenting
this rule section in general terms only because we believe these
situations would need to be addressed on a case-by-case basis. Part 3,
section 3.72(b) is also amended in the final rule to include timeframes
for appeal of sanctions and to include the address for filing an
appeal.
53. Comments. COMSAT urged the Commission to clarify that U.S.
approved accounting authorities may be sanctioned by the Commission for
failing to perform settlement operations here, or abroad, involving
either U.S.-registered or foreign vessels.
Response. The rules adopted below address settlement of accounts of
U.S. ship station licensees and do not address the settlement of
foreign vessels.
F. Conclusion
54. In this Report and Order, we are adopting rules that establish
basic qualifications and requirements for individuals or entities who
may wish to serve as accounting authorities for the settlement of
international radio maritime accounts involving U.S. registered vessels
operating in foreign or international waters. These rules also
establish requirements to ensure that accounting authorities operate in
accordance with established international procedures. There are few
changes in this final rule from the related Notice of Proposed
Rulemaking. All comments and changes are discussed in III, Issues
Analysis, paragraphs 13-53.
IV. Procedural Matters
A. Ex Parte
55. This is a non-restricted Report and Order rulemaking
proceeding. Ex parte presentations are permitted, except during the
Sunshine Agenda period, provided they are disclosed as provided in
Commission rules. See generally 47 CFR Sections 1.1202, 1.1203, and
1.1206(a).
B. Final Regulatory Analysis
56. Pursuant to the Regulatory Flexibility Act of 1980, the
Commission's final analysis is as follows:
(a) Purpose of this action: This Report and Order sets forth the
final rules
[[Page 20165]]
concerning the administration of accounting authorities in the maritime
mobile and the maritime mobile-satellite services except for distress
and safety communications.
(b) Summary of the issues raised by the public comments in response
to the Initial Regulatory Flexibility analysis: There were no comments
submitted in response to the Initial Regulatory Flexibility Analysis.
(c) Significant alternatives considered: The Notice of Proposed
Rulemaking (November 9, 1993) in this proceeding presented standards
for the approval/cancellation of accounting authority certifications
and set forth guidelines for settlement operations, reporting
requirements and enforcement. The commenters supported the Commission's
intent to provide an effective regulatory framework which permits
markets for communications services to function effectively while
eliminating unnecessary regulations. There were several requests for
more stringent guidelines. Upon review, we determined the public
interest would be better served by allowing accounting authorities to
perform settlements in an environment that allows them to operate as
closely as possible to the manner in which interim accounting
authorities have performed in previous years. Because the system has
worked relatively trouble-free with no established FCC rules in the
past, we intend to minimize any regulations/additional burden on
accounting authorities in this Order.
FR Doc. 96-10974 Administration of U.S. Certified Accounting Authorities in Maritime Mobile and Maritime Mobile-Satellite Radio Services
V. Ordering Clauses
57. Accordingly, it is ordered that the rules specified below are
adopted.
58. It is further ordered that the rules herein will be effective
immediately upon approval of the information collection requirements by
the Office of Management and Budget. The Commission will publish a
public notice to notify the public of the effective date.
List of Subjects in 47 CFR Part 3
Accounting, Administrative practice and procedure, maritime
carriers, Penalties, Reporting and recordkeeping requirements,
Telecommunications.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Title 47 of the Code of Federal Regulations is amended by adding a
new Part 3 as follows:
PART 3--AUTHORIZATION AND ADMINISTRATION OF ACCOUNTING AUTHORITIES
IN MARITIME AND MARITIME MOBILE-SATELLITE RADIO SERVICES
General
Sec.
3.1 Scope, basis, purpose.
3.2 Terms and definitions.
Eligibility
3.10 Basic qualifications.
3.11 Location of settlement operation.
Application Procedures
3.20 Application form.
3.21 Order of consideration.
3.22 Number of accounting authority identification codes per
applicant.
3.23 Legal applicant.
3.24 Evidence of financial responsibility.
3.25 Number of copies.
3.26 Where application is to be mailed.
3.27 Amended application.
3.28 Denial of privilege.
3.29 Notifications.
Settlement Operations
3.40 Operational requirements.
3.41 Amount of time allowed before initial settlements.
3.42 Location of processing facility.
3.43 Applicable rules and regulations.
3.44 Time to achieve settlements.
3.45 Amount of charges.
3.46 Use of gold francs.
3.47 Use of SDRs.
3.48 Cooperation with the Commission.
3.49 Agreement to be audited.
3.50 Retention of settlement records.
3.51 Cessation of operations.
3.52 Complaint/inquiry resolution procedures.
3.53 FCC notification of refusal to provide telecommunications
service to U.S. registered vessel(s).
3.54 Notification of change in address.
Reporting Requirements
3.60 Reports.
3.61 Reporting address.
3.62 Request for confidentiality.
Enforcement
3.70 Investigations.
3.71 Warnings.
3.72 Grounds for further enforcement action.
3.73 Waiting period after cancellation.
3.74 Ship stations affected by suspension, cancellation or
relinquishment.
3.75 Licensee's failure to make timely payment.
3.76 Licensee's liability for payment.
Authority: 47 U.S.C. 154(i), 154(j) and 303(r).
General
Sec. 3.1 Scope, basis, purpose.
By these rules the Federal Communications Commission (FCC) is
delineating its responsibilities in certifying and monitoring
accounting authorities in the maritime mobile and maritime mobile-
satellite radio services. These entities settle accounts for public
correspondence due to foreign administrations for messages transmitted
at sea by or between maritime mobile stations located on board ships
subject to U.S. registry and utilizing foreign coast and coast earth
station facilities. These rules are intended to ensure that settlements
of accounts for U.S. licensed ship radio stations are conducted in
accordance with the International Telecommunication Regulations (ITR),
taking into account the applicable ITU-T Recommendations.
Sec. 3.2 Terms and definitions.
(a) Accounting Authority. The Administration of the country that
has issued the license for a mobile station or the recognized operating
agency or other entity/entities designated by the Administration in
accordance with ITR, Appendix 2 and ITU-T Recommendation D.90 to whom
maritime accounts in respect of mobile stations licensed by that
country may be sent.
(b) Accounting Authority Certification Officer. The official
designated by the Managing Director, Federal Communications Commission,
who is responsible, based on the coordination and review of information
related to applicants, for granting certification as an accounting
authority in the maritime mobile and maritime mobile-satellite radio
services. The Accounting Authority Certification Officer may initiate
action to suspend or cancel an accounting authority certification if it
is determined to be in the public's best interest.
(c) Accounting Authority Identification Codes (AAICs). The discrete
identification code of an accounting authority responsible for the
settlement of maritime accounts (Annex A to ITU-T Recommendation D.90).
(d) Administration. Any governmental department or service
responsible for discharging the obligations undertaken in the
Convention of the International Telecommunication Union and the Radio
Regulations. For purposes of these rules, ``Administration'' refers to
a foreign government or the U.S. Government, and more specifically, to
the Federal Communications Commission.
(e) Authorization. Approval by the Federal Communications
Commission to operate as an accounting authority. Synonymous with
``certification''.
(f) CCITT. The internationally recognized French acronym for the
International Telegraph and Telephone Consultative Committee, one of
the
[[Page 20166]]
former sub-entities of the International Telecommunication Union (ITU).
The CCITT (ITU-T)\1\ is responsible for developing international
telecommunications recommendations relating to standardization of
international telecommunications services and facilities, including
matters related to international charging and accounting principles and
the settlement of international telecommunications accounts.
---------------------------------------------------------------------------
\1\ At the ITU Additional Plenipotentiary Conference in Geneva
(December, 1992), the structure, working methods and construct of
the basic ITU treaty instrument were modified. The result is that
the names of the sub-entities of the ITU have changed (e.g., the
CCITT has become the Telecommunication Standardization Sector--ITU-T
and Recognized Private Operating Agency has become Recognized
Operating Agency-ROA). The changes were placed into provisional
effect on March 1, 1993 with the formal entry into force of these
changes being July 1, 1994. We will refer to the new nomenclatures
within these rules, wherever practicable.
---------------------------------------------------------------------------
Such recommendations are, effectively, the detailed implementation
provisions for topics addressed in the International Telecommunication
Regulations (ITR).
(g) Certification. Approval by the FCC to operate as an accounting
authority. Synonymous with ``authorization''.
(h) Coast Earth Station. An earth station in the fixed-satellite
service or, in some cases, in the maritime mobile-satellite service,
located at a specified fixed point on land to provide a feeder link for
the maritime mobile-satellite service.
(i) Coast Station. A land station in the maritime mobile service.
(j) Commission. The Federal Communications Commission. The FCC.
(k) Gold Franc. A monetary unit representing the value of a
particular nation's currency to a gold par value. One of the monetary
units used to effect accounting settlements in the maritime mobile and
the maritime mobile-satellite services.
(l) International Telecommunication Union (ITU). One of the United
Nations family organizations headquartered in Geneva, Switzerland along
with several other United Nations (UN) family organizations. The ITU is
the UN agency responsible for all matters related to international
telecommunications. The ITU has over 180 Member Countries, including
the United States, and provides an international forum for dealing with
all aspects of international telecommunications, including radio,
telecom services and telecom facilities.
(m) Linking Coefficient. The ITU mandated conversion factor used to
convert gold francs to Special Drawing Rights (SDRs). Among other
things, it is used to perform accounting settlements in the maritime
mobile and the maritime mobile-satellite services.
(n) Maritime Mobile Service. A mobile service between coast
stations and ship stations, or between ship stations, or between
associated on-board communication stations. Survival craft stations and
emergency position- indicating radiobeacon stations may also
participate in this service.
(o) Maritime Mobile-Satellite Service. A mobile-satellite service
in which mobile earth stations are located on board ships. Survival
craft stations and emergency position-indicating radiobeacon stations
may also participate in this radio service.
(p) Public Correspondence. Any telecommunication which the offices
and stations must, by reason of their being at the disposal of the
public, accept for transmission. This usually applies to maritime
mobile and maritime mobile-satellite stations.
(q) Recognized Operating Agencies (ROAs).\2\ Individuals, companies
or corporations, other than governments or agencies, recognized by
administrations, which operate telecommunications installations or
provide telecommunications services intended for international use or
which are capable of causing interference to international
telecommunications. ROAs which settle debtor accounts for public
correspondence in the maritime mobile and maritime mobile-satellite
radio services must be certified as accounting authorities.
---------------------------------------------------------------------------
\2\ Id.
---------------------------------------------------------------------------
(r) Ship Station. A mobile station in the maritime mobile service
located on board a vessel which is not permanently moored, other than a
survival craft station.
(s) Special Drawing Right (SDR). A monetary unit of the
International Monetary Fund (IMF) currently based on a market basket of
exchange rates for the United States, West Germany, Great Britain,
France and Japan but is subject to IMF's definition. One of the
monetary units used to effect accounting settlements in the maritime
mobile and maritime mobile-satellite services.
(t) United States. The continental U.S., Alaska, Hawaii, the
Commonwealth of Puerto Rico, the Virgin Islands or any territory or
possession of the United States.
Eligibility
Sec. 3.10 Basic qualifications.
(a) Applicants must meet the requirements and conditions contained
in these rules in order to be certified as an accounting authority. No
individual or other entity, including accounting authorities approved
by other administrations, may act as a United States accounting
authority and settle accounts of U.S. licensed vessels in the maritime
mobile or maritime mobile-satellite services without a certification
from the Federal Communications Commission. Accounting authorities with
interim certification as of the effective date of this rule must submit
to the application process discussed in Section 3.20. They will be
``grandfathered'', i.e, granted permanent certification provided they
demonstrate their eligibility and present a proper application.
(b) U.S. citizenship is not required of individuals in order to
receive certification from the Commission to be an accounting
authority. Likewise, joint ventures need not be organized under the
laws of the United States in order to be eligible to perform
settlements for U.S. licensed vessels. See, however, Section 3.11.
(c) Prior experience in maritime accounting, general commercial
accounting, international shipping or any other related endeavor will
be taken into consideration by the Commission in certifying accounting
authorities. The lack of such expertise, however, will not
automatically disqualify an individual, partnership, corporation or
other entity from becoming an accounting authority.
(d) Applicants must provide formal financial statements or
documentation proving all assets, liabilities, income and expenses.
(e) Applicants must be willing to offer their services to the
public at a reasonable charge. This requirement will be waived for
applicants who settle their own accounts only and are eligible to be
``grandfathered'' during the initial application period. However,
should the need for additional accounting authorities be proven, these
accounting authorities will be required to offer their services to the
public or relinquish their certification.
Sec. 3.11 Location of settlement operation.
(a) Within the United States. A certified accounting authority
maintaining all settlement operations, as well as associated
documentation, within the United States will be assigned an AAIC with a
``US'' prefix.
(b) Outside the United States. A certified accounting authority
maintaining settlement operations outside the United States will be
assigned the same AAIC as that originally assigned to such entity by
the administration of the country of origin. However, in no case will
an entity be
[[Page 20167]]
certified as an accounting authority for settlement of U.S. licensed
vessel accounts unless the entity is requesting to conduct a settlement
operation in the United States or has already been issued an AAIC by
another administration.
Application Procedures
Sec. 3.20 Application form.
Written application must be made to the Federal Communications
Commission on FCC Form 44, ``Application For Certification As An
Accounting Authority'' in order to be considered for certification as
an accounting authority. No other application form may be used. No
consideration will be given to applicants not submitting applications
in accordance with these rules or in accordance with any other
instructions the Commission may issue. FCC Form 44 may be obtained from
the Commission by writing to the address shown in Section 3.61.
Sec. 3.21 Order of consideration.
(a) Accounting Authority applications will be processed on a first-
come, first-served basis. When applications are received on the same
day, the application with the earliest mailing date, as evidenced by
the postmark, will be processed first. Interim accounting authorities
seeking permanent certifications through the ``grandfathering'' process
will not compete with other applicants during the first 60 days
following the effective date of these rules which is allowed for
submission of their applications. After the ``grandfathering'' process
is completed, all other applicants will be processed as in paragraph
(a) of this section.
(b) At any given time, there will be no more than 25 certified
accounting authorities with a minimum of 15 ``US'' AAICs reserved for
use by accounting authorities conducting settlement operations within
the United States. The Commission will retain all valid applications
received after the maximum number of accounting authorities have been
approved and will inform such applicants that should an AAIC become
available for reassignment in the future, the Commission will
conditionally certify as an accounting authority the oldest of the
qualified pending applicants, as determined by the order of receipt.
Final certification would be conditional upon filing of an amended
application (if necessary). The Commission will inform the applicant of
his/her conditional selection in writing to confirm the applicant's
continued interest in becoming an accounting authority.
Sec. 3.22 Number of accounting authority identification codes per
applicant.
(a) No entity will be entitled to or assigned more than one AAIC.
(b) AAICs may not be reassigned, sold, bartered or transferred and
do not convey upon sale or absorption of a company or firm without the
express written approval of the Commission. Only the FCC may certify
accounting authorities and assign U.S. AAICs for entities settling
accounts of U.S. licensed vessels in the maritime mobile and maritime
mobile-satellite services.
(c) Accounting authorities who are ``grandfathered'' during the
initial application period may retain their interim AAIC.
Sec. 3.23 Legal applicant.
The application shall be signed by the individual, partner or
primary officer of a corporation who is legally able to obligate the
entity for which he or she is a representative.
Sec. 3.24 Evidence of financial responsibility.
All applicants must provide evidence of sound financial status. To
the extent that the applicant is a business, formal financial
statements will be required. Other applicants may submit documentation
proving all assets, liabilities, income and expenses which supports
their ability to meet their personal obligations. Applicants must
provide any additional information deemed necessary by the Commission.
Sec. 3.25 Number of copies.
One original and one copy of FCC Form 44, ``Application For
Certification As An Accounting Authority'' will be required. Only
applications mailed to the Commission on official, Commission approved
application forms will be considered. Applications should be mailed at
least 90 days prior to planned commencement of settlement activities to
allow time for the Commission to review the application and to allow
for the informal public comment period.
Sec. 3.26 Where application is to be mailed.
All applications shall be mailed to the Accounting Authority
Certification Officer in Washington, D.C. The designated address will
be provided on the FCC Form 44, ``Application for Certification As An
Accounting Authority''.
Sec. 3.27 Amended application.
Changes in circumstances that cause information previously supplied
to the FCC to be incorrect or incomplete and that could affect the
approval process, require the submission of an amended application. The
amended application should be mailed to the Commission immediately
following such change. See also Sections 3.24 and 3.51.
Sec. 3.28 Denial of privilege.
(a) The Commission, in its sole discretion, may refuse to grant an
application to become an accounting authority for any of the following
reasons:
(1) Failure to provide evidence of acceptable financial
responsibility;
(2) If the applicant, in the opinion of the FCC reviewing official,
does not possess the qualifications necessary to the proper functioning
of an accounting authority;
(3) Application is not personally signed by the proper official(s);
(4) Applicant does not provide evidence that accounting operations
will take place in the United States or its territories and the
applicant does not already possess an AAIC issued by another
administration;
(5) Application is incomplete, the applicant fails to provide
additional information requested by the Commission or the applicant
indicates that it cannot meet a particular provision; or
(6) When the Commission determines that the grant of an
authorization is contrary to the public interest.
(b) These rules provide sufficient latitude to address defects in
applications. Entities seeking review should follow procedures set
forth in Sections 1.106 or 1.115 of this chapter.
Sec. 3.29 Notifications.
(a) The Commission will publish the name of an applicant in a
Public Notice before granting certification and will invite informal
public comment on the qualifications of the applicant from any
interested parties. Comments received will be taken into consideration
by the Commission in making its determination as to whether to approve
an applicant as an accounting authority. Thirty days will be allowed
for submission of comments.
(b) The Commission will notify each applicant in writing as to
whether the applicant has been approved as an accounting authority. If
the application is not approved, the Commission will provide a brief
statement of the grounds for denial.
(c) The names and addresses of all newly certified accounting
authorities will be published in a Public Notice issued by the
Commission. Additionally, the Commission will notify the ITU within 30
days of any changes to its approved list of accounting authorities.
[[Page 20168]]
Settlement Operations
Sec. 3.40 Operational requirements.
All accounting authorities must conduct their operations in
conformance with the provisions contained in this section and with
relevant rules and guidance issued from time to time by the Commission.
Sec. 3.41 Amount of time allowed before initial settlements.
An accounting authority must begin settling accounts no later than
six months from the date of certification. Failure to commence
settlement operations is cause for suspension or cancellation of an
accounting authority certification.
Sec. 3.42 Location of processing facility.
Settlement of maritime mobile and maritime mobile-satellite service
accounts must be performed within the United States by all accounting
authorities possessing the ``US'' prefix. Other accounting authorities
approved by the Commission may settle accounts either in the U.S. or
elsewhere. See also Sections 3.11 and 3.21(b).
Sec. 3.43 Applicable rules and regulations.
Accounting authority operations must be conducted in accordance
with applicable FCC rules and regulations, the International
Telecommunication Regulations (ITR), and other international rules,
regulations, agreements, and, where appropriate, ITU-T Recommendations.
In particular, the following must be adhered to or taken into account
in the case of ITU-T.
(a) The latest basic treaty instrument(s) of the International
Telecommunication Union (ITU);
(b) Binding agreements contained in the Final Acts of World
Administrative Radio Conferences and/or World International
Telecommunication Conferences;
(c) ITU Radio Regulations;
(d) ITU International Telecommunication Regulations (ITR);
(e) ITU-T Recommendations (particularly D.90 and D.195); and
(f) FCC Rules and Regulations (47 CFR Part 3).
Sec. 3.44 Time to achieve settlements.
All maritime telecommunications accounts should be timely paid in
accordance with applicable ITU Regulations, Article 66 and
International Telecommunication Regulations (Melbourne, 1988).
Accounting authorities are deemed to be responsible for remitting, in a
timely manner, all valid amounts due to foreign administrations or
their agents.
Sec. 3.45 Amount of charges.
Accounting Authorities may charge any reasonable fee for their
settlement services. Settlements themselves, however, must adhere to
the standards set forth in these rules and must be in accordance with
the International Telecommunication Regulations (ITR) taking into
account the applicable ITU-T Recommendations and other guidance issued
by the Commission.
Sec. 3.46 Use of gold francs.
An accounting authority must accept accounts presented to it from
foreign administrations in gold francs. These gold francs must be
converted on the date of receipt of the bill to the applicable Special
Drawing Right (SDR) rate (as published by the International Monetary
Fund) on that date utilizing the linking coefficient of 3.061 gold
francs = 1 SDR. An equivalent amount in U.S. dollars must be paid to
the foreign administration. Upon written concurrence by the FCC, an
accounting authority may make separate agreements, in writing, with
foreign administrations or their agents for alternative settlement
methods, in accordance with ITU-T Recommendation D.195.
Sec. 3.47 Use of SDRs.
An accounting authority must accept accounts presented to it from
foreign administrations in Special Drawing Rights (SDRs). These SDRs
must be converted to dollars on the date of receipt by the accounting
authority and an equivalent amount in US dollars must be paid to the
foreign administration. The conversion rate will be the applicable rate
published by the International Monetary Fund (IMF) for the date of
receipt of the account from the foreign administration. Upon written
concurrence by the FCC, any accounting authority may make separate
agreements, in writing, with foreign administrations or their agents
for alternative settlement methods, provided account is taken of ITU-T
Recommendation D.195.
Sec. 3.48 Cooperation with the Commission.
Accounting authorities must cooperate fully with the FCC in all
respects concerning international maritime settlements issues,
including the resolution of questions of fact or other issues arising
as a result of settlement operations.
Sec. 3.49 Agreement to be audited.
Accounting authorities accept their certifications on condition
that they are subject to audit of their settlement activities by the
Commission or its representative. Additionally, the Commission reserves
the right to verify any statement(s) made or any materials submitted to
the Commission under these rules. Verification may involve discussions
with ship owners or others as well as the requirement to submit
additional information to the Commission. Failure to respond
satisfactorily to any audit findings is grounds for forfeiture or
suspension or cancellation of authority to act as an accounting
authority for U.S. vessels.
Sec. 3.50 Retention of settlement records.
Accounting authorities must maintain, for the purpose of compliance
with these rules, all settlement records for a period of at least seven
years following settlement of an account with a foreign administration
or agent.
Sec. 3.51 Cessation of operations.
The FCC must be notified immediately should an accounting authority
plan to relinquish its certification or cease to perform settlements as
authorized. Additionally, the Commission must be advised in advance of
any proposed transfer of control of an accounting authority's firm or
organization, by any means, to another entity.
(a) When an accounting authority is transferred, merged or sold,
the new entity must apply for certification in its own right if it is
interested in becoming an accounting authority. Provided the new
applicant is eligible and completes the application process
satisfactorily, the AAIC will be transferred to the new applicant. In
the case of a merger of two accounting authorities, the merged entity
must decide which AAIC to retain.
(b) Section 3.21(a) will be waived for these applicants.
(c) The applicant must comply with application process including
public comment.
(d) The applicant must certify acceptance of all accounts and must
furnish a list of the accounts to the Commission at the time of
application.
Sec. 3.52 Complaint/inquiry resolution procedures.
(a) Accounting authorities must maintain procedures for resolving
complaints and/or inquiries from its contractual customers (vessels for
which it performs settlements), the FCC, the ITU, and foreign
administrations or their agents. These procedures must be available to
the Commission upon request.
(b) If a foreign administration requests assistance in collection
of accounts from ships licensed by the FCC, the
[[Page 20169]]
appropriate accounting authority will provide all information requested
by the Commission in a timely manner to enable the Commission to
determine the cause of the complaint and to resolve the issue. If
accounts are in dispute, the Commission will determine the amount due
the foreign administration, accounting authority or ROA, and may direct
the accounting authority to pay the accounts to the foreign
administration. If the accounting authority does not pay the disputed
accounts within a reasonable timeframe, the Commission may take action
to levy a forfeiture, cancel the AAIC privilege and/or to revoke any
operating authority or licenses held by that accounting authority. (See
also Section 3.72).
Sec. 3.53 FCC notification of refusal to provide telecommunications
service to U.S. registered vessel(s).
An accounting authority must inform the FCC immediately should it
receive notice from any source that a foreign administration or
facility is refusing or plans to refuse legitimate public
correspondence to or from any U.S. registered vessel.
Sec. 3.54 Notification of change in address.
The Commission must be notified in writing within 15 days of any
change in address of an accounting authority. Such written notification
should be sent to the address shown in Section 3.61.
Reporting Requirements
Sec. 3.60 Reports.
(a) Initial Inventory of Vessels. Within 60 days after receiving
final approval from the FCC to be an accounting authority, each
certified accounting authority must provide to the FCC an initial list
of vessels for which it is performing settlements. This list should
contain only U.S. registered vessels. Such list shall be typewritten or
computer generated, be annotated to indicate it is the initial
inventory and be in the general format of the following and provide the
information shown:
Vessel Name Call Sign
(b) Semi-Annual Additions/Modifications/Deletions to Vessel
Inventory. Beginning with the period ending on the last day of March or
September following submission of an accounting authority's Initial
Inventory of Vessels (See paragraph (a) of this section.) and each
semi-annual period thereafter, each accounting authority is required to
submit to the FCC a report on additions, modifications or deletions to
its list of vessels for which it is performing or intending to perform
settlements, whether or not settlements actually have taken place. The
list should contain only U.S. registered vessels. The report shall be
typewritten or computer generated and be in the following general
format:
ADDITIONS TO CURRENT VESSEL INVENTORY
Vessel Name Call Sign Effective Date
MODIFICATIONS TO CURRENT VESSEL INVENTORY
Previous Vessel Name Previous Call Sign New Vessel Name New Call Sign Effective Date
DELETIONS TO CURRENT VESSEL INVENTORY
Vessel Name Call Sign Effective Date
The preceding report must be received by the Commission no later than
15 days following the end of the period (March or September) for which
the report pertains. Modifications refer to changes to call sign or
ship name of vessels for which the accounting authority settles
accounts and for which basic information has previously been provided
to the Commission. Reports are to be submitted even if there have been
no additions, modifications or deletions to vessel inventories since
the previous report. If there are no changes to an inventory, this
should be indicated on the report.
(c) End of Year Inventory. By February 1st of each year, each
accounting authority must submit an end-of-year inventory report
listing vessels for which the accounting authority performed
settlements as of the previous December 31st. The list should contain
only U.S. registered vessels. The report must be typewritten or
computer generated and prepared in the same general format as that
shown in paragraph (a) of this section except it should be annotated to
indicate it is the End of Year inventory.
(d) Annual Statistical Report of Settlement Operations. By February
1st of each year, each accounting authority settling accounts for U.S.
registered vessels must submit to the FCC an Annual Statistical Report,
FCC Form 45, which details the number and dollar amount of settlements,
by foreign administration, during the preceding twelve months.
Information contained in this report provides statistical data that
will enable the Commission to monitor operations to ensure adherence to
these rules and to appropriate international settlement procedures. FCC
Form 45 can be obtained by writing to the address in 3.61 of these
rules.
Sec. 3.61 Reporting address.
All reports must be received at the following address no later than
the required reporting date:
Accounting Authority Certification Officer, Financial Operations
Division, Stop 1110A, Federal Communications Commission, 1919 M
Street NW., Washington, D.C. 20554
Sec. 3.62 Request for confidentiality.
Applicants should comply with Section 0.459 of this chapter when
requesting confidentiality and cannot assume that it will be offered
automatically.
Enforcement
Sec. 3.70 Investigations.
The Commission may investigate any complaints made against
accounting authorities to ensure compliance with the Commission's rules
and with applicable ITU Regulations and other international maritime
accounting procedures.
Sec. 3.71 Warnings.
The Commission may issue written warnings or forfeitures to
accounting authorities which are found not to be operating in
accordance with established rules and regulations. Warnings will
generally be issued for violations which do not seriously or
immediately affect settlement functions or international relations.
Continued or unresolved violations may lead to further enforcement
action by the Commission, including any or all legally available
sanctions, including but not limited to, forfeitures (Communications
Act of 1934, Sec. 503), suspension or cancellation of the accounting
authority certification.
Sec. 3.72 Grounds for further enforcement action.
(a) The Commission may take further enforcement action, including
forfeiture, suspension or cancellation of an accounting authority
certification, if it is determined that the public interest so
requires. Reasons for which such action may be taken include, inter
alia:
(1) Failure to initiate settlements within six months of
certification or failure to perform settlements during any subsequent
six month period;
[[Page 20170]]
(2) Illegal activity or fraud;
(3) Non-payment or late payment to a foreign administration or
agent;
(4) Failure to follow ITR requirements and procedures;
(5) Failure to take into account ITU-T Recommendations;
(6) Failure to follow FCC rules and regulations;
(7) Bankruptcy; or
(8) Providing false or incomplete information to the Commission or
failure to comply with or respond to requests for information.
(b) Prior to taking any of the enforcement actions in paragraph (a)
of this section, the Commission will give notice of its intent to take
the specified action and the grounds therefor, and afford a 30-day
period for a response in writing; provided that, where the public
interest so requires, the Commission may temporarily suspend a
certification pending completion of these procedures. Responses must be
forwarded to the Accounting Authority Certification Officer. See
Section 3.61.
Sec. 3.73 Waiting period after cancellation.
An accounting authority whose certification has been cancelled must
wait a minimum of three years before reapplying to be an accounting
authority.
Sec. 3.74 Ship stations affected by suspension, cancellation or
relinquishment.
(a) Whenever the accounting authority privilege has been suspended,
cancelled or relinquished, the accounting authority is responsible for
immediately notifying all U.S. ship licensees for which it was
performing settlements of the circumstances and informing them of the
requirement contained in paragraph (b) of this section.
(b) Those ship stations utilizing an accounting authority's AAIC
for which the subject accounting authority certification has been
suspended, cancelled or relinquished, should make contractual
arrangements with another properly authorized accounting authority to
settle its accounts.
(c) The Commission will notify the ITU of all accounting authority
suspensions, cancellations and relinquishments, and
(d) The Commission will publish a Public Notice detailing all
accounting authority suspensions, cancellations and relinquishments.
Sec. 3.75 Licensee's failure to make timely payment.
Failure to remit proper and timely payment to the Commission or to
an accounting authority may result in one or more of the following
actions against the licensee:
(a) Forfeiture or other authorized sanction.
(b) The refusal by foreign countries to accept or refer public
correspondence communications to or from the vessel or vessels owned,
operated or licensed by the person or entity failing to make payment.
This action may be taken at the request of the Commission or
independently by the foreign country or coast station involved.
(c) Further action to recover amounts owed utilizing any or all
legally available debt collection procedures.
Sec. 3.76 Licensee's liability for payment.
The U.S. ship station licensee bears ultimate responsibility for
final payment of its accounts. This responsibility cannot be superseded
by the contractual agreement between the ship station licensee and the
accounting authority. In the event that an accounting authority does
not remit proper and timely payments on behalf of the ship station
licensee:
(a) The ship station licensee will make arrangements for another
accounting authority to perform future settlements, and
(b) The ship station licensee will settle any outstanding accounts
due to foreign entities.
(c) The Commission will, upon request, take all possible steps,
within the limits of applicable national law, to ensure settlement of
the accounts of the ship station licensee. As circumstances warrant,
this may include issuing warnings to ship station licensees when it
becomes apparent that an accounting authority is failing to settle
accounts. See also Sections 3.70 through 3.74.
[FR Doc. 96-10974 Filed 5-03-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-10940 Supplemental Standards of Ethical Conduct for Employees of the Tennessee Valley Authority
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20117-20119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10940]
========================================================================
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.
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Prices of new books are listed in the first FEDERAL REGISTER issue of each
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Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and
Regulations
[[Page 20117]]
TENNESSEE VALLEY AUTHORITY
5 CFR Chapter LXIX
18 CFR Part 1300
Supplemental Standards of Ethical Conduct for Employees of the
Tennessee Valley Authority
AGENCY: Tennessee Valley Authority (TVA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Tennessee Valley Authority, with the concurrence of the
Office of Government Ethics (OGE), is issuing regulations for employees
of TVA that supplement the Standards of Ethical Conduct for Employees
of the Executive Branch (Standards) issued by OGE by adding a
requirement to obtain prior approval for outside employment. By this
final rule, TVA also is repealing those sections of its existing
conduct standards that are superseded by the new Standards as
supplemented by this final rule and by the executive branch financial
disclosure regulations inserting in their place a cross-reference to
the new 5 CFR provisions, and reissuing those provisions in the TVA
conduct standards which have not been superseded.
EFFECTIVE DATE: May 6, 1996.
FOR FURTHER INFORMATION CONTACT:
William L. Osteen, Designated Agency Ethics Official, 423-632-4142, FAX
423-632-2422.
SUPPLEMENTARY INFORMATION:
I. Background
On August 7, 1992, OGE published new Standards of Ethical Conduct
for Employees of the Executive Branch (Standards). See 57 FR 35006-
35067, as corrected at 57 FR 48557 and 57 FR 52583, with additional
grace period extensions at 59 FR 4779-4780 and 60 FR 6390-6391.
Codified at 5 CFR part 2635, the new standards became effective on
February 3, 1993.
With the concurrence of OGE, 5 CFR 2635.105 authorizes executive
branch agencies to publish agency-specific supplemental regulations
that are necessary to implement their respective ethics programs. TVA,
with OGE's concurrence, has determined that the following supplemental
rules, being codified in new chapter LXIX of 5 CFR, are necessary to
the success of its ethics program. Simultaneously, TVA is repealing
superseded provisions of 18 CFR part 1300, replacing those provisions
with a section that provides cross-references to 5 CFR parts 2634 and
2635 and to TVA's new supplemental regulations, and reissuing existing
provisions of 18 CFR part 1300 which have not been superseded.
II. Analysis of the Regulations
Section 7901.101 General
Section 7901.101 explains that these regulations supplement the
executive branch-wide Standards and reminds TVA employees that they are
subject to the Standards and to the executive branch-wide financial
disclosure regulations, in addition to these regulations.
Section 7901.102 Prior Approval for Outside Employment
Where it is determined to be necessary or desirable for the purpose
of administering its ethics program, 5 CFR 2635.803 authorizes an
individual agency to issue supplemental regulations requiring agency
employees to obtain prior approval before engaging in outside
employment. TVA has for many years had a prior approval requirement,
expressed partly in TVA conduct standards at 18 CFR 1300.735-13(b) and
partly in uncodified instructions. Based on its findings that this
requirement has helped ensure that employees' outside employment
conforms to applicable statutes and regulations, TVA has determined
that continuing this requirement is necessary for the purpose of its
ethics program. Paragraph (a) clarifies that the outside employment,
except for Special Government Employees, must be approved by the
employee's supervising TVA vice president or designee. The employee is
required to request approval in writing, describing the organizations,
duties, hours of work, and remuneration pertaining to the outside
employment. Paragraph (b) clarifies the standard for review and
approval. To ensure that Sec. 7901.102 is not in itself construed as
authority to totally prohibit outside employment, Sec. 7901.102(b)
states that approval will be granted only upon a determination that the
prospective outside employment is not expected to involve conduct
prohibited by statute or Federal regulations, including 5 CFR part
2635. Paragraph (c) is intended to foster efficient administration by
allowing exclusion from the approval requirement for classes of
employees as to which outside employment is unlikely to raise issues of
compliance with 5 CFR part 2635. Paragraph (d) adds a definition of
employment for purposes of applying the requirement for prior approval
set forth in paragraph (a) of the section.
III. Repeal of Superseded TVA Standards of Conduct Regulations
The Tennessee Valley Authority is repealing those sections of its
standards of conduct regulations at 18 CFR part 1300 which have been
superseded by the OGE regulations at 5 CFR parts 2634 or 2635 or by the
TVA's supplemental regulations at new 5 CFR 7901 made effective by this
final rule. To ensure that employees are on notice of the ethical
standards to which they are subject, TVA is replacing the superseded
standards at 18 CFR part 1300 with a provision that cross-references 5
CFR parts 2634, 2635, and 7901. To accommodate the removal of
superseded provisions. TVA is renumbering and reissuing existing
sections of 18 CFR part 1300 dealing with gambling, harassment, and
conduct prejudicial to the Government which have not been superseded.
The Office of Government Ethics (OGE) concurs in the reissuance of
these regulations only insofar as it has determined that the substance
of new 18 CFR 1300.102-1300.107 need not be issued as part of TVA's
supplemental regulations at 5 CFR part 7901. Pursuant to 5 CFR
2635.402(d), TVA is also renumbering and reissuing, with a revised
heading, its regulatory waivers at 18 CFR 1300.734-14(c) which were
issued under the authority of 18 U.S.C. 208(b)(2); it is anticipated
that these waivers will be superseded in the future by new OGE
regulations. See 60 FR
[[Page 20118]]
44706-44709 (August 28, 1995) and 60 FR 47208-47233 (September 11,
1995).
IV. Matters of Regulatory Procedure
Administrative Procedure Act
TVA has found that good cause exists under 5 U.S.C. 553 (b) and
(d)(3) for waiving, as unnecessary and contrary to the public interest,
the general notice of proposed rulemaking and the 30-day delay in
effectiveness as to these rules and repeals. The supplemental
regulations are essentially a restatement of rules previously contained
in the standards of conduct, and TVA believes that it is important to a
smooth transition from TVA standards of conduct to the Executive branch
standards that these rules become effective as soon as possible.
Furthermore, this rulemaking is related to TVA organization, procedure,
and practice.
Regulatory Flexibility Act
TVA has determined under the Regulatory Flexibility Act (5 U.S.C.
chapter 6) that these regulations will not have a significant impact on
small business entities because they affect only TVA employees.
Paperwork Reduction Act
TVA has determined that the Paperwork Reduction Act (44 U.S.C.
chapter 35) does not apply because these regulations do not contain any
information collection requirements that require the approval of the
Office of Management and Budget.
Environmental Impact
This decision will not have a significant impact upon the quality
of the human environment or the conservation of energy resources
List of Subjects
5 CFR Part 7901
Conflict of interests, Government employees.
18 CFR Part 1300
Government employees.
Dated: April 5, 1996.
William L. Osteen,
Associate General Counsel and Designated Agency Ethics Official,
Tennessee Valley Authority.
Approved: April 12, 1996.
Stephen D. Potts,
Director, Office of Government Ethics.
For the reasons set forth in the preamble, the Tennessee Valley
Authority, with the concurrence of the Office of Government Ethics, is
amending title 5 of the Code of Federal Regulations and title 18,
chapter XIII of the Code of Federal Regulations as follows:
TITLE 5--[AMENDED]
1. A new chapter LXIX, consisting of part 7901, is added to title 5
of the Code of Federal Regulations to read as follows:
CHAPTER LXIX--TENNESSEE VALLEY AUTHORITY
PART 7901--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE TENNESSEE VALLEY AUTHORITY
Sec.
7901.101 General.
7901.102 Prior approval for outside employment.
Authority: 5 U.S.C. App. (Ethics in Government Act of 1978); 16
U.S.C. 831-831dd; E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p.
215, as modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p.
306; 5 CFR 2635.105, 2635.803.
Sec. 7901.101 General.
In accordance with 5 CFR 2635.105, the regulations in this part
apply to employees of the Tennessee Valley Authority (TVA) and
supplement the Standards of Ethical Conduct for Employees of the
Executive Branch contained in 5 CFR part 2635. In addition, some TVA
employees are subject to the executive branch financial disclosure
regulations at 5 CFR part 2634.
Sec. 7901.102 Prior approval for outside employment.
(a) Before engaging in outside employment, with or without
compensation, an employee, other than a special Government employee,
must obtain written approval from the supervising TVA vice president or
designee. The written request shall be submitted through the employee's
supervisor or human resource office and shall, at a minimum, identify
the employer or other person for whom the services are to be provided,
as well as the duties, hours of work, and compensation involved in the
proposed outside employment.
(b) Approval under paragraph (a) of this section shall be granted
only upon a determination that the outside employment is not expected
to involve conduct prohibited by statute or Federal regulation,
including 5 CFR part 2635.
(c) Vice presidents or other officers of TVA may, after
consultation with the Designated Agency Ethics Official, exempt
specified classes of employees from this section based upon a
determination that the official duties of employees in the class are
such that their outside employment activities are not likely to raise
issues of compliance with 5 CFR part 2635.
(d) For purposes of this section, employment means any form of non-
Federal employment or business relationship involving the provision of
services by the employee. It includes, but is not limited to, personal
services as an officer, director, employee, agent, attorney,
consultant, contractor, general partner, trustee, teacher, or speaker.
It includes writing when done under an arrangement with another person
for production or publication of the written product. It does not,
however, include participation in the activities of a nonprofit
charitable, religious, professional, social, fraternal, educational,
recreational, public service, or civic organization, unless such
activities involve the provision of professional services or advice or
are for compensation other than reimbursement for actual expenses.
18 CFR CHAPTER XIII--TENNESSEE VALLEY AUTHORITY
2. Part 1300 is revised to read as follows:
PART 1300--STANDARDS OF CONDUCT FOR EMPLOYEES OF TENNESSEE VALLEY
AUTHORITY
Sec.
1300.101 Cross reference to employee ethical conduct standards and
other applicable regulations.
1300.102 Gambling, betting, and lotteries.
1300.103 General conduct prejudicial to TVA.
1300.104 Sexual harassment.
1300.105 National origin harassment.
1300.106 Harassment on the basis of race, color, religion, age, or
disability.
1300.107 Financial interest exemptions.
Authority: 16 U.S.C. 831-831dd; 18 U.S.C. 208(b)(2).
Sec. 1300.101 Cross references to employee ethical conduct standards
and other applicable regulations.
Employees of the Tennessee Valley Authority (TVA) are subject to
the executive branch-wide standards of ethical conduct at 5 CFR part
2635 and to the TVA regulations at 5 CFR part 7901 which supplement the
executive branch-wide standards. In addition, certain TVA employees are
subject to executive branch-wide financial disclosure regulations at 5
CFR part 2634.
Sec. 1300.102 Gambling, betting, and lotteries.
An employee shall not participate, while on Government- or TVA-
owned or leased property or while on TVA duty, in any gambling activity
including the operation of a gambling device, in
[[Page 20119]]
conducting a lottery or pool, in a game for money or property, or in
selling or purchasing a numbers slip or ticket. However, this section
does not preclude activities:
(a) Necessitated by an employee's law enforcement duties; or
(b) Under section 7 of Executive Order 12353 (47 FR 12785, 3 CFR,
1982 Comp., p. 139) and similar TVA-approved activities.
Sec. 1300.103 General conduct prejudicial to TVA.
An employee shall not engage in criminal, infamous, dishonest,
immoral, or notoriously disgraceful conduct, or other conduct
prejudicial to TVA.
Sec. 1300.104 Sexual harassment.
It is TVA policy that all TVA employees are responsible for
assuring that the workplace is free from sexual harassment.
Accordingly, all employees must avoid any action or conduct which could
be viewed as sexual harassment including:
(a) Unwelcome sexual advances;
(b) Requests for sexual favors; and
(c) Other verbal or physical conduct of a sexual nature when:
(1) Submission to such conduct is made either explicitly or
implicitly a term or condition of an individual's employment;
(2) Submission to or rejection of such conduct by an individual is
used as the basis for employment decisions affecting such individual;
or
(3) Such conduct has the purpose or effect of unreasonably
interfering with an individual's work performance or creating an
intimidating, hostile, or offensive working environment.
Sec. 1300.105 National origin harassment.
It is TVA policy that all TVA employees are responsible for
assuring that the workplace is free from national origin harassment.
Accordingly, all employees must avoid any action or conduct which could
be viewed as national origin harassment, including ethnic slurs and
other verbal or physical conduct relating to an individual's national
origin when such conduct:
(a) Has the purpose or effect of creating an intimidating, hostile,
or offensive working environment;
(b) Has the purpose or effect of unreasonably interfering with an
individual's work performance; or
(c) Otherwise adversely affects an individual's employment
opportunities.
Sec. 1300.106 Harassment on the basis of race, color, religion, age,
or disability.
It is TVA policy that all TVA employees are responsible for
assuring that the workplace is free from harassment on the basis of
race, color, religion, age, or disability. Accordingly, all employees
must avoid any action or conduct which could be viewed as harassment on
these bases, including any verbal or physical conduct relating to an
individual's race, color, religion, age, or disability when such
conduct:
(a) Has the purpose or effect of creating an intimidating, hostile,
or offensive working environment;
(b) Has the purpose or effect of unreasonably interfering with an
individual's work performance; or
(c) Otherwise adversely affects an individual's employment
opportunities.
Sec. 1300.107 Financial interest exemptions.
In accordance with the provisions of 18 U.S.C. 208(b)(2), TVA has
exempted the following financial interests of its employees from the
requirements of 18 U.S.C. 208(a) upon the ground that such interests
are too remote or too inconsequential to affect the integrity of such
employees' services. When any of the following exemptions applies only
to a limited range of official actions, rather than all official acts,
the range of actions will be specified within the language of the
exemption.
(a) An investment in a business enterprise in the form of ownership
of bonds, notes, and other evidences of indebtness which are not
convertible into shares of preferred or common stock and have no
warrants attached entitling the holder to purchase stock provided that
the estimated market value of the interest does not exceed $5,000;
(b) An investment in the form of shares in the ownership of
enterprises, including preferred and common stocks whether voting or
nonvoting, or warrants to purchase such shares, or evidences of
indebtedness convertible into such shares provided that the estimated
market value of the interest does not exceed $5,000 and does not exceed
1 percent of the estimated market value of all the outstanding shares
of the enterprise;
(c) Shares or investments in a well-diversified money market or
mutual fund;
(d) Vested interests in a pension fund arising out of former
employment and to which no further contributions are being made in the
employee's behalf, provided that, if the pension plan is a defined
benefit plan, the assets of the plan are diversified. For the purpose
of this provision, payments are not considered to be made ``in the
employee's behalf'' if they are made solely to maintain adequate plan
funding rather than to provide specific benefits for the employee; or
(e) The interest an employee has by virtue of his or her personal
or family use of electric power or through his or her interests in an
organization using electric power generated or distributed by TVA, for
purposes of his or her official actions at TVA in the process of
developing or approving TVA power rate schedules.
[FR Doc. 96-10940 Filed 5-3-96; 8:45 am]
BILLING CODE 8120-01-M
Complete official Federal Register PDF
FR Doc. 96-10890 Uniform Rules of Practice and Procedure
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20338-20344]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10890]
=======================================================================
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FEDERAL RESERVE SYSTEM
12 CFR Part 263
[Docket No. R-0878]
Uniform Rules of Practice and Procedure
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Board of Governors of the Federal Reserve System (Board),
as a result of an interagency review conducted by the Board, the Office
of the Comptroller of the Currency (OCC), the Office of Thrift
Supervision (OTS), the Federal Deposit Insurance Corporation (FDIC),
and the National Credit Union Administration (NCUA), is amending its
implementation of the Uniform Rules of Practice and Procedure for
Administrative Hearings (Uniform Rules). The Board's review of the
Uniform Rules was conducted in accordance with section 303 of the
Riegle Community Development and Regulatory Improvement Act of 1994.
The final rule is intended to clarify certain provisions and to
increase the efficiency and fairness of administrative hearings.
EFFECTIVE DATE: June 5, 1996.
FOR FURTHER INFORMATION CONTACT: Katherine H. Wheatley, Assistant
General Counsel, Legal Division (202 452-3779), Douglas B. Jordan,
Senior Attorney, Legal Division, (202 452-3787), or Ann Marie
Kohlligian, Senior Counsel, Division of Banking Supervision and
Regulation, (202/452-3528).
SUPPLEMENTARY INFORMATION:
A. Background
Section 916 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA), Pub. L. 101-73, 103 Stat. 183 (1989),
required the Board, OCC, FDIC, OTS, and NCUA (agencies) to develop
uniform rules and procedures for administrative hearings. The agencies
each adopted final Uniform Rules in August, 1991.1 Based
[[Page 20339]]
on their experience in using the rules since then, the agencies have
identified sections of the Uniform Rules that should be modified.
Accordingly, the agencies proposed amendments to the Uniform Rules on
June 23, 1995 (60 FR 32882).
---------------------------------------------------------------------------
\1\ The agencies issued a joint notice of proposed rulemaking on
Monday, June 17, 1991 (56 FR 27790). The agencies promulgated their
final rules on the following dates: OCC on August 9, 1991 (56 FR
38024); Board on August 9, 1991 (56 FR 38052); FDIC on August 9,
1991 (56 FR 37975); OTS on August 12, 1991 (56 FR 38317); and NCUA
on August 8, 1991 (56 FR 37767).
---------------------------------------------------------------------------
The Board received two comments on the proposal. Both commenters
expressed general approval of the proposal, and one suggested specific
improvements. The Board has also reviewed the comments received by the
other agencies.
The final rule implements the proposal with minor changes. The
following section-by-section analysis summarizes the final rule and
highlights the changes from the proposal that the Board has made after
considering the commenters' suggestions.
The OTS, FDIC, OCC, and NCUA are publishing separate final rules
that are substantively identical to the Board's final rule. The OTS,
FDIC, and OCC rules appear elsewhere in this Federal Register. The
process of amendment of the Uniform Rules and their adoption in
identical form by the agencies also meets the requirements of section
303 of the Riegle Community Development and Regulatory Improvement Act
of 1994.
B. Section-by-Section Summary and Discussion of Amendments to the
Uniform Rules
Section 263.1 Scope
The proposal added two statutory provisions to the list of civil
money penalty provisions to which the Uniform Rules apply. The two
provisions were enacted by the Riegle Community Development and
Regulatory Improvement Act of 1994 (CDRI), Pub. L. 103-325, 108 Stat.
2160.
The first provision, CDRI section 406, amended the Bank Secrecy Act
(BSA) (31 U.S.C. 5321) to require the Secretary of the Treasury to
delegate authority to the Federal banking agencies (as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) to
impose civil money penalties for BSA violations.
The second, CDRI section 525, amended section 102 the Flood
Disaster Protection Act of 1973 (FDPA) (42 U.S.C. 4012a) to give each
``Federal entity for lending regulation'' authority to assess civil
money penalties against a regulated lending institution if the
institution has a pattern of committing violations of the FDPA or the
notice requirements of the National Flood Insurance Act of 1968 (NFIA).
Under the FDPA, the term ``Federal entity for lending regulation''
includes the agencies and the Farm Credit Administration.
CDRI section 525 also gave the agencies authority to require a
regulated lending institution to take remedial actions that are
necessary to ensure that the institution complies with the requirements
of the national flood insurance program if: (1) The institution has
engaged in a pattern and practice of noncompliance with regulations
issued pursuant to the FDPA and NFIA; and (2) has not demonstrated
measurable improvement in compliance despite the assessment of civil
money penalties. The final rule adds a new paragraph to the scope
section that reflects this additional authority.
The Board received no comments on this section, which is adopted as
proposed.
Section 263.6 Appearance and Practice in Adjudicatory Proceedings
The proposal permitted the Administrative Law Judge (ALJ) to
require counsel who withdraws after filing a notice of appearance on
behalf of a party to accept service of papers for that party until
either: (1) A new counsel has filed a notice of appearance; or (2) the
party indicates that he or she will proceed on a pro se basis.
The Board received one comment on this section. The commenter
suggested that the proposal does not adequately address certain
situations: for example, when counsel withdraws because of a lack of
payment of legal fees that is caused by an agency asset freeze, or
withdraws because the client discharged him or her. The commenter's
implication is that it is unfair to require counsel to continue to
accept service in these situations. The commenter expressed concern
that the administrative proceeding may become involved in a dispute
between the client and counsel when the ALJ requires counsel to
continue to accept service after a client discharges counsel. The
commenter suggested that the rule should require that service be given
to both the unreplaced counsel and the party.
The proposal was intended to ensure that a lawyer is always
available to receive service in order to prevent a party from halting
the administrative proceedings simply by evading service. The
regulatory text is clear, however, that the ALJ has the discretion
whether to require former counsel to continue to accept service.
Fairness to counsel is among the factors that ALJ would consider in
exercising this discretion, and the Board therefore believes that the
provision as proposed is sufficiently flexible to accommodate the
concerns raised by the commenter.
The final rule changes the proposal's reference from ``service of
process'' to ``service'' to clarify that this section applies to all
papers that the party is entitled to receive. This section is otherwise
adopted as proposed.
Section 263.8 Conflicts of Interest
The proposal sought to improve, in two ways, the provisions
governing conflicts of interest that arise when counsel represents
multiple persons connected with a proceeding.
First, the proposal sought to protect the interests of individuals
and financial institutions by expanding the circumstances under which
counsel must certify that he or she has obtained a waiver from non-
parties of any potential conflict of interest. The former rule required
counsel to obtain waivers only from non-party institutions ``to which
notice of the proceedings must be given.'' The proposal required
counsel to obtain waivers from all parties and non-parties that counsel
represents on a matter relevant to an issue in the proceeding. It thus
ensured that all appropriate party and non-party individuals and
institutions are informed of potential conflicts.
Second, the proposal simplified this provision by eliminating the
requirement that counsel certify that each client has asserted that
there are no conflicts of interest. The Board believes that the former
provision was superfluous because the responsibility for identifying
potential conflicts resides with counsel.
The Board received one comment on this section. The commenter noted
that the proposal may inhibit multiple representation that otherwise
complies with applicable ethics rules. The commenter suggested that the
proposal could inappropriately tilt the proceeding in favor of the
agencies.
The provision does not limit the right of any party to
representation by counsel of the party's choice. Rather, it ensures
that all interested persons are informed of potential conflicts so that
they may avoid the conflict if they choose. State rules of professional
responsibility that impose more stringent ethical standards are
unaffected by this requirement.
In addition, the Board is unpersuaded by the argument that the
provision grants the agencies any significant advantage in a
proceeding. Persons and institutions may be well and vigorously
[[Page 20340]]
represented even if they are not all represented by the same counsel.
Therefore, the Board adopts this section as proposed.
Section 263.11 Service of Papers
The proposal changed this section by permitting parties, the Board,
and ALJs to serve a subpoena on a party by delivering it to a person of
suitable age and discretion at a party's place of work.
The Board received one comment on this section. The commenter
supported the intent of the proposal, but asserted that permitting
service at a person's place of work was too broad to be effective,
particularly where a bank has numerous branches.
The Board interpreted the phrase ``person's place of work'' as used
in the proposal to mean the physical location at which an individual
works and not as any office of the corporation or association at which
a person works. To avoid confusion, the Board has added specific
reference to physical location in the regulatory text. In addition, the
final rule states expressly that only an individual, not a corporation
or association, may be served at a residence or place of work.
The comment points out, however, that the former Uniform Rules did
not permit certain methods of service that are useful for serving a
corporation or other association and that are permitted under the
Federal Rules of Civil Procedure. The final rule, therefore, permits
service on a party corporation or other association by delivery of a
copy of a notice to an officer, managing or general agent, or to any
other agent authorized by appointment or by law to receive service of
process. The final rule also provides that, if the agent is one
authorized by statute to receive service and the statute so requires,
the serving party must also mail a copy to the party. The final rule
also restructures this provision for clarity.
Section 263.12 Construction of Time Limits
The proposal clarified that the additional time allotted for
responding to papers served by mail, delivery service, or electronic
media transmission under Sec. 263.12(c) is not included in determining
whether an act is required to be performed within ten days. The
proposal also clarified that additional time allotted for responding to
papers served by mail, delivery, or electronic media transmission is
counted by calendar days and, therefore, a party must count Saturdays,
Sundays, and holidays when calculating a time deadline.
The Board received no comments on this section, which is adopted as
proposed.
Section 263.20 Amended Pleadings
The proposal changed this section to permit a party to amend its
pleadings without leave of the ALJ and to permit the ALJ to admit
evidence over the objection that the evidence does not fall directly
within the scope of the issues raised by a notice or answer.
The Board received one comment on this section. The commenter
asserted that the change could unduly prejudice a party if a notice
were amended to add or delete allegations immediately prior to the
hearing. The commenter expressed concern that the amendment would give
a party insufficient time to seek additional discovery or file for
summary judgment.
The regulatory text gives the ALJ discretion to revise the hearing
schedule to ensure that no prejudice results from last minute
amendments to a notice. The Board believes this approach is adequate to
avoid prejudice to a party and, therefore, adopts this section as
proposed.
Section 263.24 Scope of Document Discovery
The former Uniform Rules were silent on the use of interrogatories.
The proposal expressly prohibited parties from using interrogatories on
grounds that other discovery tools are more efficient and less
burdensome, and therefore more appropriate to administrative
adjudications.
The proposal also sought to focus document discovery requests so
that they are not unreasonable, oppressive, excessive in scope, or
unduly burdensome to any of the parties.
Accordingly, the proposal preserved the former rule's limitation by
permitting discovery only of documents that have material relevance.
However, the proposal specifically provided that a request should be
considered unreasonable, oppressive, excessive in scope, or unduly
burdensome if, among other things: (1) it fails to include justifiable
limitations on the time period covered and the geographic locations to
be searched; (2) the time provided to respond in the request is
inadequate; or (3) the request calls for copies of documents to be
delivered to the requesting party and fails to include the requestor's
written agreement to pay in advance for the copying, in accordance with
Sec. 263.25.
Under the proposal, the scope of permissible document discovery is
not as broad as that allowed under Federal Rule of Civil Procedure
26(b) (28 U.S.C. app.). Historically, given the specialized nature of
enforcement proceedings in regulated industries, discovery in
administrative proceedings has not been as expansive as it is in civil
litigation.
The Board received no significant comments on this section and,
therefore, adopts this section as proposed.
Section 263.25 Request for Document Discovery From Parties
The Board proposed several changes to Sec. 263.25. First, the
proposal sought to reduce unnecessary burden by permitting a party to:
(1) respond to document discovery either by producing documents as they
are kept in the ordinary course of business or by organizing them to
correspond to the categories in a document request; and (2) identify
similar documents by category when they are voluminous and are
protected by the deliberative process, attorney-client, or attorney-
work-product privilege.
The proposal also amended section 263.25 to permit a party to
require payment in advance for the costs of copying and shipping
requested documents, and clarified that, if a party has stated its
intention to file a timely motion for interlocutory review, the ALJ may
not release, or order a party to produce, documents withheld on grounds
of privilege until the motion for interlocutory review has been
decided.
The Board received two comments on this section. One commenter
sought guidance on when, how, and to whom a party must express an
``intention'' to file a timely motion for interlocutory review. Because
it is the ALJ who may not release or order a party to produce
documents, it was implicit in the proposed regulatory text that a party
must make the intention to seek interlocutory review known to the ALJ.
For clarity's sake, the final rule adds language to this effect.
Another commenter suggested that a request for interlocutory review
should automatically stay the proceeding. Under Sec. 263.28(d) of the
Uniform Rules, a party may request that a proceeding be stayed during
the pendency of an interlocutory review, and the ALJ has the discretion
to decide whether a stay is appropriate. The Board believes that this
procedure adequately protects the parties. For this reason and to avoid
unnecessary delays in the administrative proceedings, the Board
declines to provide for an automatic stay whenever a party requests
interlocutory review.
One commenter asserted that permitting the Board to require payment
in advance for document copying and shipping costs would give the Board
an
[[Page 20341]]
advantage over other creditors if the party is bankrupt following the
administrative hearing. The Board finds that this situation is rare and
therefore does not outweigh the Board's need to ensure that it receives
payment. Moreover, the provision does not preclude other creditors from
requiring prepayment for products or services.
The Board adopts this section as proposed.
Section 263.27 Deposition of Witness Unavailable for Hearing
The proposal clarified that a party may serve a deposition subpoena
on a witness who is unavailable by serving the subpoena on the
witness's authorized representative. The Board does not include this
proposed change because, in Sec. 263.11(d), the final rule expressly
permits a party to serve a subpoena by delivering the subpoena to an
agent, which includes delivery to an authorized representative.
Therefore, the proposed change to Sec. 263.27 would be redundant.
The Board received no comments on this section, and makes no change
to it.
Section 263.33 Public Hearings
The proposal changed this section to specify that a party must file
a motion for a private hearing with the Board and not the ALJ, but must
serve the ALJ with a copy of the motion.
The Board received no comments on this section, which is adopted as
proposed.
Section 263.34 Hearing Subpoenas
The former Uniform Rules did not specifically require that a party
inform all other parties when a subpoena to a non-party is issued. The
proposal required that, after a hearing subpoena is issued by the ALJ,
the party that applied for the subpoena must serve a copy of it on each
party. Under the proposal, any party may move to quash any hearing
subpoena and must serve the motion on each other party.
The Board received no comments on this section, which is adopted as
proposed.
Section 263.35 Conduct of Hearings
The proposal limited the number of counsel permitted to examine a
witness and clarified that hearing transcripts may be obtained only
from the court reporter. The former Uniform Rules were silent on these
issues.
The Board received no comments on this section, which is adopted as
proposed.
Section 263.37 Post-Hearing Filings
The proposal changed the title of this section from ``Proposed
findings and conclusions'' to ``Post-hearing filings'' to describe more
accurately the content of the section.
The proposal also moved, from Sec. 263.35(b) to Sec. 263.37(a), the
provision that requires the ALJ to serve each party with notice of the
filing of the certified transcript of the hearing (including hearing
exhibits). The proposal added a requirement that the ALJ must use the
same method of service for this notice.
Finally, the proposal clarified that the ALJ may, when appropriate,
permit parties more than the allotted 30 days to file proposed findings
of fact, proposed conclusions of law, and a proposed order.
The Board received no comments on this section, which is adopted
with a minor technical change.
Section 263.38 Recommended Decision and Filing of Record
Under the former Uniform Rules, the ALJ was not required to file an
index of the record when he filed the record with the Board. The
proposal added this requirement and reorganized this section to improve
its clarity.
The Board received no comments on this section, which is adopted as
proposed.
C. Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act, the
Board hereby certifies that this final rule will not have a significant
economic impact on a substantial number of small entities. Accordingly,
a regulatory flexibility analysis is not required.
This final rule only imposes procedural requirements in
administrative adjudications. It contains no substantive requirements.
It improves the Uniform Rules of Practice and Procedure and facilitates
the orderly determination of administrative proceedings. The changes in
this final rule are primarily clarifications and impose no significant
additional burdens on regulated institutions, parties to administrative
actions, or counsel.
List of Subjects in 12 CFR Part 263
Administrative practice and procedure, Claims, Crime, Equal access
to justice, Federal Reserve System, Lawyers, Penalties.
For the reasons set out in the preamble, 12 CFR Part 263 is amended
as set forth below:
PART 263--RULES OF PRACTICE FOR HEARINGS
1. The authority citation for part 263 is revised to read as
follows:
Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 248, 324, 504, 505,
1817(j), 1818, 1828(c), 1847(b), 1847(d), 1884(b), 1972(2)(F), 3105,
3107, 3108, 3907, 3909, and 4717; 15 U.S.C. 21, 78o-4, 78o-5, and
78u-2; 31 U.S.C. 5321; and 42 U.S.C. 4012a.
2. In Sec. 263.1, paragraph (e)(9) is amended by removing ``and''
after the semicolon, new paragraphs (e)(11) and (e)(12) are added,
paragraph (f) is redesignated as paragraph (g) and revised, and new
paragraph (f) is added to read as follows:
Sec. 263.1 Scope.
* * * * *
(e) * * *
(11) Any provision of law referenced in section 102(f) of the Flood
Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)) or any order or
regulation issued thereunder; and
(12) Any provision of law referenced in 31 U.S.C. 5321 or any order
or regulation issued thereunder;
(f) Remedial action under section 102(g) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4012a(g)); and
(g) This subpart also applies to all other adjudications required
by statute to be determined on the record after opportunity for an
agency hearing, unless otherwise specifically provided for in the Local
Rules.
3. In Sec. 263.6, paragraph (a)(3) is revised to read as follows:
Sec. 263.6 Appearance and practice in adjudicatory proceedings.
(a) * * *
(3) Notice of appearance. Any individual acting as counsel on
behalf of a party, including the Board, shall file a notice of
appearance with OFIA at or before the time that individual submits
papers or otherwise appears on behalf of a party in the adjudicatory
proceeding. The notice of appearance must include a written declaration
that the individual is currently qualified as provided in paragraph
(a)(1) or (a)(2) of this section and is authorized to represent the
particular party. By filing a notice of appearance on behalf of a party
in an adjudicatory proceeding, the counsel agrees and represents that
he or she is authorized to accept service on behalf of the represented
party and that, in the event of withdrawal from representation, he or
she will, if required by the administrative law judge, continue to
accept service until new counsel has filed a notice of appearance or
until the represented party indicates that he or she will proceed on a
pro se basis.
* * * * *
4. In Sec. 263.8, paragraph (b) is revised to read as follows:
[[Page 20342]]
Sec. 263.8 Conflicts of interest.
* * * * *
(b) Certification and waiver. If any person appearing as counsel
represents two or more parties to an adjudicatory proceeding or also
represents a non-party on a matter relevant to an issue in the
proceeding, counsel must certify in writing at the time of filing the
notice of appearance required by Sec. 263.6(a):
(1) That the counsel has personally and fully discussed the
possibility of conflicts of interest with each such party and non-
party; and
(2) That each such party and non-party waives any right it might
otherwise have had to assert any known conflicts of interest or to
assert any non-material conflicts of interest during the course of the
proceeding.
5. In Sec. 263.11, paragraphs (c)(2) and (d) are revised to read as
follows:
Sec. 263.11 Service of papers.
* * * * *
(c) * * *
(2) If a party has not appeared in the proceeding in accordance
with Sec. 263.6, the Board or the administrative law judge shall make
service by any of the following methods:
(i) By personal service;
(ii) If the person to be served is an individual, by delivery to a
person of suitable age and discretion at the physical location where
the individual resides or works;
(iii) If the person to be served is a corporation or other
association, by delivery to an officer, managing or general agent, or
to any other agent authorized by appointment or by law to receive
service and, if the agent is one authorized by statute to receive
service and the statute so requires, by also mailing a copy to the
party;
(iv) By registered or certified mail addressed to the person's last
known address; or
(v) By any other method reasonably calculated to give actual
notice.
(d) Subpoenas. Service of a subpoena may be made:
(1) By personal service;
(2) If the person to be served is an individual, by delivery to a
person of suitable age and discretion at the physical location where
the individual resides or works;
(3) By delivery to an agent, which, in the case of a corporation or
other association, is delivery to an officer, managing or general
agent, or to any other agent authorized by appointment or by law to
receive service and, if the agent is one authorized by statute to
receive service and the statute so requires, by also mailing a copy to
the party;
(4) By registered or certified mail addressed to the person's last
known address; or
(5) By any other method as is reasonably calculated to give actual
notice.
* * * * *
6. In Sec. 263.12, paragraphs (a), (c)(1), (c)(2), and (c)(3) are
revised to read as follows:
Sec. 263.12 Construction of time limits.
(a) General rule. In computing any period of time prescribed by
this subpart, the date of the act or event that commences the
designated period of time is not included. The last day so computed is
included unless it is a Saturday, Sunday, or Federal holiday. When the
last day is a Saturday, Sunday, or Federal holiday, the period runs
until the end of the next day that is not a Saturday, Sunday, or
Federal holiday. Intermediate Saturdays, Sundays, and Federal holidays
are included in the computation of time. However, when the time period
within which an act is to be performed is ten days or less, not
including any additional time allowed for in paragraph (c) of this
section, intermediate Saturdays, Sundays, and Federal holidays are not
included.
* * * * *
(c) * * *
(1) If service is made by first class, registered, or certified
mail, add three calendar days to the prescribed period;
(2) If service is made by express mail or overnight delivery
service, add one calendar day to the prescribed period; or
(3) If service is made by electronic media transmission, add one
calendar day to the prescribed period, unless otherwise determined by
the Board or the administrative law judge in the case of filing, or by
agreement among the parties in the case of service.
7. Section 263.20 is revised to read as follows:
Sec. 263.20 Amended pleadings.
(a) Amendments. The notice or answer may be amended or supplemented
at any stage of the proceeding. The respondent must answer an amended
notice within the time remaining for the respondent's answer to the
original notice, or within ten days after service of the amended
notice, whichever period is longer, unless the Board or administrative
law judge orders otherwise for good cause.
(b) Amendments to conform to the evidence. When issues not raised
in the notice or answer are tried at the hearing by express or implied
consent of the parties, they will be treated in all respects as if they
had been raised in the notice or answer, and no formal amendments are
required. If evidence is objected to at the hearing on the ground that
it is not within the issues raised by the notice or answer, the
administrative law judge may admit the evidence when admission is
likely to assist in adjudicating the merits of the action and the
objecting party fails to satisfy the administrative law judge that the
admission of such evidence would unfairly prejudice that party's action
or defense upon the merits. The administrative law judge may grant a
continuance to enable the objecting party to meet such evidence.
8. In Sec. 263.24, paragraphs (a) and (b) are revised to read as
follows:
Sec. 263.24 Scope of document discovery.
(a) Limits on discovery. (1) Subject to the limitations set out in
paragraphs (b), (c), and (d) of this section, a party to a proceeding
under this subpart may obtain document discovery by serving a written
request to produce documents. For purposes of a request to produce
documents, the term ``documents'' may be defined to include drawings,
graphs, charts, photographs, recordings, data stored in electronic
form, and other data compilations from which information can be
obtained, or translated, if necessary, by the parties through detection
devices into reasonably usable form, as well as written material of all
kinds.
(2) Discovery by use of deposition is governed by Sec. 263.53 of
subpart B of this part.
(3) Discovery by use of interrogatories is not permitted.
(b) Relevance. A party may obtain document discovery regarding any
matter, not privileged, that has material relevance to the merits of
the pending action. Any request to produce documents that calls for
irrelevant material, that is unreasonable, oppressive, excessive in
scope, unduly burdensome, or repetitive of previous requests, or that
seeks to obtain privileged documents will be denied or modified. A
request is unreasonable, oppressive, excessive in scope or unduly
burdensome if, among other things, it fails to include justifiable
limitations on the time period covered and the geographic locations to
be searched, the time provided to respond in the request is inadequate,
or the request calls for copies of documents to be delivered to the
requesting party and fails to include the requestor's written agreement
to pay in advance for the copying, in accordance with Sec. 263.25.
* * * * *
9. In Sec. 263.25, paragraphs (a), (b), (e), and (g) are revised to
read as follows:
[[Page 20343]]
Sec. 263.25 Request for document discovery from parties.
(a) General rule. Any party may serve on any other party a request
to produce for inspection any discoverable documents that are in the
possession, custody, or control of the party upon whom the request is
served. The request must identify the documents to be produced either
by individual item or by category, and must describe each item and
category with reasonable particularity. Documents must be produced as
they are kept in the usual course of business or must be organized to
correspond with the categories in the request.
(b) Production or copying. The request must specify a reasonable
time, place, and manner for production and performing any related acts.
In lieu of inspecting the documents, the requesting party may specify
that all or some of the responsive documents be copied and the copies
delivered to the requesting party. If copying of fewer than 250 pages
is requested, the party to whom the request is addressed shall bear the
cost of copying and shipping charges. If a party requests 250 pages or
more of copying, the requesting party shall pay for the copying and
shipping charges. Copying charges are the current per-page copying rate
imposed by 12 CFR Part 261 implementing the Freedom of Information Act
(5 U.S.C. 552). The party to whom the request is addressed may require
payment in advance before producing the documents.
* * * * *
(e) Privilege. At the time other documents are produced, the
producing party must reasonably identify all documents withheld on the
grounds of privilege and must produce a statement of the basis for the
assertion of privilege. When similar documents that are protected by
deliberative process, attorney-work-product, or attorney-client
privilege are voluminous, these documents may be identified by category
instead of by individual document. The administrative law judge retains
discretion to determine when the identification by category is
insufficient.
* * * * *
(g) Ruling on motions. After the time for filing responses pursuant
to this section has expired, the administrative law judge shall rule
promptly on all motions filed pursuant to this section. If the
administrative law judge determines that a discovery request, or any of
its terms, calls for irrelevant material, is unreasonable, oppressive,
excessive in scope, unduly burdensome, or repetitive of previous
requests, or seeks to obtain privileged documents, he or she may deny
or modify the request, and may issue appropriate protective orders,
upon such conditions as justice may require. The pendency of a motion
to strike or limit discovery or to compel production is not a basis for
staying or continuing the proceeding, unless otherwise ordered by the
administrative law judge. Notwithstanding any other provision in this
part, the administrative law judge may not release, or order a party to
produce, documents withheld on grounds of privilege if the party has
stated to the administrative law judge its intention to file a timely
motion for interlocutory review of the administrative law judge's order
to produce the documents, and until the motion for interlocutory review
has been decided.
* * * * *
10. In Sec. 263.33, paragraph (a) is revised to read as follows:
Sec. 263.33 Public hearings.
(a) General rule. All hearings shall be open to the public, unless
the Board, in the Board's discretion, determines that holding an open
hearing would be contrary to the public interest. Within 20 days of
service of the notice or, in the case of change-in-control proceedings
under section 7(j)(4) of the FDIA (12 U.S.C. 1817(j)(4)), within 20
days from service of the hearing order, any respondent may file with
the Board a request for a private hearing, and any party may file a
reply to such a request. A party must serve on the administrative law
judge a copy of any request or reply the party files with the Board.
The form of, and procedure for, these requests and replies are governed
by Sec. 263.23. A party's failure to file a request or a reply
constitutes a waiver of any objections regarding whether the hearing
will be public or private.
* * * * *
11. In Sec. 263.34, paragraphs (a) and (b)(1) are revised to read
as follows:
Sec. 263.34 Hearing subpoenas.
(a) Issuance. (1) Upon application of a party showing general
relevance and reasonableness of scope of the testimony or other
evidence sought, the administrative law judge may issue a subpoena or a
subpoena duces tecum requiring the attendance of a witness at the
hearing or the production of documentary or physical evidence at the
hearing. The application for a hearing subpoena must also contain a
proposed subpoena specifying the attendance of a witness or the
production of evidence from any state, territory, or possession of the
United States, the District of Columbia, or as otherwise provided by
law at any designated place where the hearing is being conducted. The
party making the application shall serve a copy of the application and
the proposed subpoena on every other party.
(2) A party may apply for a hearing subpoena at any time before the
commencement of a hearing. During a hearing, a party may make an
application for a subpoena orally on the record before the
administrative law judge.
(3) The administrative law judge shall promptly issue any hearing
subpoena requested pursuant to this section. If the administrative law
judge determines that the application does not set forth a valid basis
for the issuance of the subpoena, or that any of its terms are
unreasonable, oppressive, excessive in scope, or unduly burdensome, he
or she may refuse to issue the subpoena or may issue it in a modified
form upon any conditions consistent with this subpart. Upon issuance by
the administrative law judge, the party making the application shall
serve the subpoena on the person named in the subpoena and on each
party.
(b) Motion to quash or modify. (1) Any person to whom a hearing
subpoena is directed or any party may file a motion to quash or modify
the subpoena, accompanied by a statement of the basis for quashing or
modifying the subpoena. The movant must serve the motion on each party
and on the person named in the subpoena. Any party may respond to the
motion within ten days of service of the motion.
* * * * *
12. In Sec. 263.35, paragraph (a)(3) is redesignated as paragraph
(a)(4), a new paragraph (a)(3) is added, and paragraph (b) is revised
to read as follows:
Sec. 263.35 Conduct of hearings.
(a) * * *
(3) Examination of witnesses. Only one counsel for each party may
conduct an examination of a witness, except that in the case of
extensive direct examination, the administrative law judge may permit
more than one counsel for the party presenting the witness to conduct
the examination. A party may have one counsel conduct the direct
examination and another counsel conduct re-direct examination of a
witness, or may have one counsel conduct the cross examination of a
witness and another counsel conduct the re-cross examination of a
witness.
* * * * *
(b) Transcript. The hearing must be recorded and transcribed. The
reporter will make the transcript available to any
[[Page 20344]]
party upon payment by that party to the reporter of the cost of the
transcript. The administrative law judge may order the record
corrected, either upon motion to correct, upon stipulation of the
parties, or following notice to the parties upon the administrative law
judge's own motion.
13. In Sec. 263.37, the section heading and paragraph (a)(1) are
revised to read as follows:
Sec. 263.37 Post-hearing filings.
(a) Proposed findings and conclusions and supporting briefs. (1)
Using the same method of service for each party, the administrative law
judge shall serve notice upon each party, that the certified
transcript, together with all hearing exhibits and exhibits introduced
but not admitted into evidence at the hearing, has been filed. Any
party may file with the administrative law judge proposed findings of
fact, proposed conclusions of law, and a proposed order within 30 days
following service of this notice by the administrative law judge or
within such longer period as may be ordered by the administrative law
judge.
* * * * *
14. Section 263.38 is revised to read as follows:
Sec. 263.38 Recommended decision and filing of record.
(a) Filing of recommended decision and record. Within 45 days after
expiration of the time allowed for filing reply briefs under
Sec. 263.37(b), the administrative law judge shall file with and
certify to the Board, for decision, the record of the proceeding. The
record must include the administrative law judge's recommended
decision, recommended findings of fact, recommended conclusions of law,
and proposed order; all prehearing and hearing transcripts, exhibits,
and rulings; and the motions, briefs, memoranda, and other supporting
papers filed in connection with the hearing. The administrative law
judge shall serve upon each party the recommended decision, findings,
conclusions, and proposed order.
(b) Filing of index. At the same time the administrative law judge
files with and certifies to the Board for final determination the
record of the proceeding, the administrative law judge shall furnish to
the Board a certified index of the entire record of the proceeding. The
certified index shall include, at a minimum, an entry for each paper,
document or motion filed with the administrative law judge in the
proceeding, the date of the filing, and the identity of the filer. The
certified index shall also include an exhibit index containing, at a
minimum, an entry consisting of exhibit number and title or description
for: Each exhibit introduced and admitted into evidence at the hearing;
each exhibit introduced but not admitted into evidence at the hearing;
each exhibit introduced and admitted into evidence after the completion
of the hearing; and each exhibit introduced but not admitted into
evidence after the completion of the hearing.
By order of the Board of Governors of the Federal Reserve
System, April 26, 1996.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 96-10890 Filed 5-3-96; 8:45 a.m.]
BILLING CODE 6210-01-P
Complete official Federal Register PDF
FR Doc. 96-10730 Ethics Training for Registrants
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20127-20132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10730]
=======================================================================
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 3
Ethics Training for Registrants
AGENCY: Commodity Futures Trading Commission.
ACTION: Final rules.
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SUMMARY: On December 14, 1995, the Commodity Futures Trading Commission
(Commission or CFTC) published for comment proposed amendments to
Sec. 3.34, which governs
[[Page 20128]]
ethics training for Commission registrants. These amendments require
ethics training providers, who have not already been authorized by the
Commission to provide ethics training, to pass the Series 3
Examination, the standard industry proficiency test, and possess three
years of relevant experience. The rule is now also applicable to state-
accredited entities, which in the past were exempt from certain
requirements.
EFFECTIVE DATE: These rule amendments will become effective June 5,
1996. However, with respect to state-accredited persons or entities
providing ethics training pursuant to Sec. 3.34 as of March 29, 1996,
the applicable date shall be August 6, 1996.
FOR FURTHER INFORMATION CONTACT: Lawrence B. Patent, Associate Chief
Counsel or Myra R. Silberstein, Attorney-Advisor, Division of Trading
and Markets, 1155 21st Street, NW., Washington, DC 20581. Telephone
(202) 418-5450.
SUPPLEMENTARY INFORMATION:
I. Background
Section 210 of the Futures Trading Practices Act of 1992 added a
new paragraph (b) to Section 4p of the Commodity Exchange Act (Act) to
mandate ethics training for persons required to be registered under the
Act.1 On April 6, 1993, the Commission adopted Rule 3.34 to
implement this Congressional mandate.2 Rule 3.34 requires natural
persons registered under the Act to attend ethics training to ensure
that they understand their responsibilities to the public under the
Act. The required training must address the requirements of the Act and
relevant rules concerning the treatment and handling of customer orders
and business. Issues to be addressed may include: Honesty, fairness and
the interests of customers and the integrity of the markets; effective
supervisory systems and controls; assessment of financial circumstances
and investment experience of customers; disclosure of material
information; and avoidance of conflicts of interest.
---------------------------------------------------------------------------
\1\ This provision of the Act is codified at 7 U.S.C. 6p(b)
(1994) and states that:
The Commission shall issue regulations to require new
registrants, within 6 months after receiving such registration, to
attend a training session, and all other registrants to attend
periodic training sessions, to ensure that registrants understand
their responsibilities to the public under this Act, including
responsibilities to observe just and equitable principles of trade,
any rule or regulation of the Commission, any rule of any
appropriate contract market, registered futures association, or
other self-regulatory organization, or any other applicable Federal
or state law, rule or regulation.
\2\ 58 FR 19575, 19584-19587, 19593-19594 (Apr. 15, 1993). In
September, 1993, the Commission issued a Federal Register release to
clarify the procedures to be followed by persons seeking to provide
ethics training pursuant to Rule 3.34. 58 FR 47890 (Sept. 13, 1993).
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New registrants must attend ethics training within six months of
being granted registration and every three years thereafter. The
initial training is required to be at least four hours in duration;
subsequent training must be at least one hour in duration. Persons
registered when Rule 3.34 became effective on April 26, 1993 were
granted until April 26, 1996 to attend an initial training session of
at least two hours in duration and thereafter to attend a one-hour
session every three years. Ethics trainers must maintain records of
materials used in such training and of attendees at such training.
In December 1995, the Commission adopted amendments to Rule 3.34 to
enhance the operation of the ethics training program and furnish
additional guidance with respect to the activities of ethics training
providers.3 These amendments, which became effective on January
12, 1996, require, among other things, that a person seeking to provide
ethics training certify that he is not subject to a statutory
disqualification from registration under the Act,4 barred from
service on self-regulatory organization (SRO) governing boards or
committees,5 or subject to a pending proceeding concerning
possible violations of the Act or rules or orders promulgated
thereunder.6 Also in December 1995, the Commission published
proposals for further amendments to Rule 3.34 which would require that
persons who seek to provide ethics training: (1) present satisfactory
evidence of successful completion of proficiency testing requirements
established by a registered futures association; and (2) possess a
minimum of three years of relevant experience. The Commission also
proposed to amend Rule 3.34 to eliminate the provision permitting
state-accredited entities to provide ethics training without compliance
with the requirements applicable to other providers under the
rule.7
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\3\ 60 FR 63907 (Dec. 13, 1995).
\4\ 7 U.S.C. 12a(2) and (3)(1994). The Act specifies several
grounds for disqualification from registration including, among
others, a prior revocation of registration, felony conviction, and
an injunction relating to futures or securities activities.
\5\ No person may serve on SRO governing boards or committees
who, among other things, has been found within the prior three years
to have committed a ``disciplinary offense'' or entered into a
settlement agreement with respect to a charge involving a
``disciplinary offense,'' is currently suspended from trading on any
contract market, is suspended or expelled from membership in any
SRO, or is currently subject to an agreement with the Commission or
an SRO not to apply for registration or membership. A ``disciplinary
offense'' for these purposes means any violation of the Act or the
rules promulgated thereunder or SRO rules other than those relating
to: (1) Decorum or attire; (2) financial requirements; or (3)
reporting or recordkeeping, unless resulting in fines aggregating
more than $5,000 in a calendar year, provided such SRO rule
violations did not involve fraud, deceit or conversion, or result in
a suspension or expulsion. 17 CFR 1.63 (1995).
\6\ See Commission Rule 3.34(b)(3), 60 FR 63907, 63912.
\7\ 60 FR 64132 (Dec. 14, 1995).
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The Commission received five comment letters on the proposed rule
amendments. The commenters included a registered futures association,
an SRO and three ethics training providers. The commenters generally
supported the objectives of the proposed rule amendments, but some
commenters recommended modifications of the proposals. Comments
addressed to specific provisions of the proposed rule amendments and
the Commission's resolution of the issues raised therein are discussed
below in the context of the relevant rule provision.
Based upon its review of the comments received and in light of its
experience in administering this program, the Commission has adopted,
substantially in the form proposed, the amendments to Rule 3.34
regarding ethics training providers published in December 1995. The
amendments adopted herein will require any person other than an SRO
seeking to provide ethics training to meet a proficiency testing
requirement and possess a minimum of three years of relevant
experience. These amendments have been adopted generally as proposed,
with certain clarifications based upon the Commission's review of the
comments received. The provisions of the rule relating to the topics to
be covered in ethics training and the minimum requirements for
attendance by registrants at such training remain unchanged.
II. Amendments to Commission Rule 3.34
A. Proficiency Testing and Minimum Experience Requirements
Currently, Rule 3.34 requires that any person seeking to provide
ethics training to registrants under Rule 3.34, other than an SRO or a
state-accredited entity, certify to a registered futures association
that such person, any principals thereof (as defined in Commission Rule
3.1(a)) 8 and any individuals who, on behalf of such person,
present ethics training or prepare ethics training videotapes or
electronic presentations are not subject
[[Page 20129]]
to: (1) Statutory disqualification from registration under Sections 8a
(2) or (3) of the Act; (2) a bar from service on SRO governing boards
or committees based upon disciplinary histories pursuant to Commission
Rule 1.63 or any SRO rule adopted thereunder; and (3) a pending
adjudicatory proceeding under Sections 6(c), 6(d), or 9 of the Act, or
similar proceeding under Section 8a of the Act, or Commission Rules
3.55, 3.56 or 3.60. If the person intends to conduct training via
videotape or electronic presentation, he must also certify that he will
maintain documentation reasonably designed to verify attendance of
registrants at such presentations for the minimum time required. These
certifications are continuous; thus, if circumstances change which
result in the certification becoming inaccurate, the ethics training
provider must promptly so inform the registered futures association
which, upon being so notified, shall refuse to include in, or shall
remove such person from, the list of ethics training providers.9
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\8\ 17 CFR 3.1(a) (1995).
\9\ Commission Rule 3.34(b)(3), 60 FR 63907, 63912.
---------------------------------------------------------------------------
The amendments to Rule 3.34 proposed in December 1995 would require
any person seeking to provide ethics training (other than an SRO) to
furnish satisfactory evidence to a registered futures association that
he has met the proficiency testing requirement established by a
registered futures association pursuant to Section 17(p)(1) of the Act
for the registration of commodity professionals 10 and possesses
three years of relevant experience. Currently, the National Commodity
Futures Examination (Series 3 Exam) is the proficiency test required to
be completed by most commodity professionals.11
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\10\ Section 17(p)(1) of the Act, 7 U.S.C. 21(p)(1)(1994),
provides, in part, that a registered futures association must
establish training standards and proficiency testing for persons
involved in the solicitation of transactions subject to the Act,
supervisors of such persons, and all persons for whom it has
registration responsibilities.
\11\ See NFA Registration Rule 401.
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The proficiency requirement, coupled with a three-year experience
requirement, provides an even-handed, objective basis for assuring a
minimum level of expertise. Further, such standards are compatible with
the method used by the Commission to date in reviewing applications
from potential offerors of ethics training. As the Commission noted in
proposing the original Rule 3.34, ``pedagogical expertise and knowledge
of futures are factors that should be taken into consideration in
evaluating potential offerors of ethics training.'' 12
Consequently, in reviewing applications filed under Rule 3.34 by
persons seeking to provide ethics training, the Commission has
endeavored to assure that such providers demonstrate pedagogical
experience and knowledge of the futures markets.
---------------------------------------------------------------------------
\12\ 58 FR 19575, 19586.
---------------------------------------------------------------------------
In commenting on these proposed amendments, the National Futures
Association (NFA) stated that it fully supports the concept of
requiring ethics training providers to meet objective and readily
measurable standards of proficiency. NFA reiterated its view, expressed
initially in commenting upon the amendments to Rule 3.34 in December
1995, that it is imperative that these standards assure that ethics
training providers possess a working knowledge of the futures industry
and relevant regulations. NFA expressed its belief that satisfactory
completion of the Series 3 Exam, in conjunction with three years of
relevant experience, generally will achieve this end.
Two commenters suggested that persons having certain types of
experience, e.g., former CFTC Commissioners or non-compensated
instructors, should be automatically exempted from the proficiency
testing requirement. One commenter expressed concern that the proposed
amendments would exclude attorneys who have practiced extensively in
this field but who would be unwilling to incur the time and expense
associated with taking the Series 3 Exam. This commenter recommended an
alternative proficiency requirement to the Series 3 Exam based upon
representations that the proposed provider is not subject to a
statutory disqualification, is a member in good standing of a state bar
association and: (1) Was a CFTC Commissioner or staff attorney or SRO
staff attorney for at least two years; (2) has taught a futures course
at an accredited university or law school for at least two years; or
(3) has had a law practice consisting of at least thirty percent
futures work over the previous three years. A second commenter proposed
that the Commission exempt from the proficiency testing requirement
experienced new instructors who participate in ethics training programs
previously authorized by the Commission. This commenter suggested that
such an exemption could be limited, so as not to detract from
achievement of the objective of assuring effective, high quality ethics
training, to instructors who: (1) Co-instruct with at least one other
instructor who has passed the Series 3 Exam; (2) possess qualifications
similar to those instructors previously participating as ethics
training providers; (3) are not compensated; and (4) meet minimum
experience requirements. The commenter supported such an exemption as a
means of assuring a healthy influx of additional qualified instructors.
This commenter noted that its pro bono instructors are highly
experienced in-house counsel and compliance officers of future
commission merchants, commodity pool operators and commodity trading
advisors and attorneys specializing in financial services law and
regulation who have been very effective instructors of ethics training.
The Commission believes that requiring persons who seek to provide
ethics training to provide proof of satisfactory completion of a
proficiency testing requirement and of three years of relevant industry
or pedagogical experience provide objective, readily administered
standards for determining knowledge of relevant matters, compliance
with which should not be unduly burdensome.13 Compliance with the
proficiency test requirements applicable to registrants is an
appropriate benchmark for a minimum level of knowledge of relevant
statutory and rule requirements.14 However, the Commission
appreciates that the proficiency requirement may be unduly restrictive
in some cases and believes that this requirement can be implemented
with sufficient flexibility to permit highly qualified instructors, at
least those providing services on a pro bono basis, to participate in
ethics training programs with providers who
[[Page 20130]]
have passed the Series 3 Exam. Such service is itself in furtherance of
the public interest and established ethical precepts, and the
Commission believes that alternative indicia of experience can be
relied upon in such cases.
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\13\ One commenter suggested that the minimum experience
requirement be two years rather than three, because two years
corresponds to the minimum experience required by NFA before APs of
member futures commission merchants and introducing brokers are
permitted to exercise discretion over accounts. See NFA Rule 2-8(d).
However, the Commission believes that the special responsibilities
of ethics training instructors warrant a three-year minimum
experience requirement.
\14\ The Commission believes that the Series 3 Exam is the only
relevant proficiency test currently available for ethics training
providers, since it is the proficiency test that is generally
applicable to Commission registrants and is designed to assure a
broad working knowledge of the futures industry. Although the
Commission recently approved an alternative proficiency testing
requirement under which general securities representatives whose
commodity interest activity will be limited to managed accounts or
commodity pool interests may take the Futures Managed Funds
Examination (Series 31 Exam) in lieu of the Series 3 Exam, the
Commission believes that even if an ethics training provider wishes
to instruct only commodity pool operators, commodity trading
advisors and their associated persons (APs), the more comprehensive
based Series 3 Exam is the appropriate proficiency test.
---------------------------------------------------------------------------
The Commission therefore believes that it would be appropriate for
NFA, in establishing proficiency standards, to create either on a case-
by-case or generic basis, a waiver of the proficiency test requirement
in appropriate cases, where the proposed instructors would serve
without compensation and have qualifications that evidence expertise at
least comparable to that provided by successful completion of the
Series 3 Exam. Such an exception might appropriately be granted in
circumstances in which the person: (1) Co-instructs with at least one
other instructor who has passed the Series 3 Exam; (2) meets the
minimum experience requirements and has experience in financial
services law and regulation; and (3) is acting on a pro bono basis,
i.e., without compensation other than reimbursement for travel
expenses. The Commission contemplates that NFA may grant other
exemptions from the proficiency test requirement in special
circumstances, such as where a scheduled instructor becomes
unavailable.15
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\15\ NFA Rule 402 permits NFA's Vice-President of Compliance to
waive the general proficiency requirements under circumstances
approved by NFA's Board of Directors. See also NFA Interpretive
Notices under Rule 402 at para.9018 and para.9022.
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The Commission intends that the requirement of three years of
relevant experience may be satisfied not only by pedagogical experience
but, also, by relevant industry experience. For example, such industry
experience might be acquired through legal practice in the fields of
futures or securities or employment as a compliance officer or risk
manager at a brokerage or end-user firm. NFA suggests in its comment
letter that guidelines, rather than an itemized list of acceptable
positions, be provided to address the types of experience that would be
acceptable for this purpose. Such guidelines could include examples of
acceptable relevant experience, such as those suggested by the
Commission, but would not preclude satisfaction of the relevant
experience requirement by other means. NFA (or the Commission if it
chose to retain that responsibility) would have the discretion to
determine whether a potential provider had demonstrated the relevant
experience.16
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\16\ NFA noted that it employs a similar approach under NFA
Compliance Rule 2-8. Rule 2-8 requires NFA associates who exercise
discretion over customer accounts to have been registered for two
years. NFA may, at its discretion, waive this requirement if the
associate shows that he has equivalent experience. Although
``equivalent experience'' is not defined in the rule, NFA has
encountered no difficulties in administering this rule.
---------------------------------------------------------------------------
NFA expressed its willingness to establish experience re-quirements
but requested confirmation that the Commission intends that it do so.
The Commission believes that it is appropriate for NFA to promulgate
rules establishing experience and proficiency standards for ethics
training providers, subject to the general standards set forth in Rule
3.34.17 The Commission hereby delegates authority to NFA to
promulgate rules establishing experience and proficiency standards for
ethics training providers. Such standards may consist of guidelines
consistent with the views set forth herein.18
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\17\ 60 FR 64132, 64133.
\18\ Of course, NFA's rules must be submitted to the Commission
for review pursuant to Section 17(j) of the Act, which governs
Commission review and approval of registered futures association
rules. 7 U.S.C. 21(j) (1994).
---------------------------------------------------------------------------
B. Applicability of Certification, Proficiency Testing and Experience
Requirements
Rule 3.34 requires that any provider of ethics training, other than
an SRO offering ethics training to its members or employees or an
entity accredited to conduct continuing education programs by a state
professional licensing authority in the fields of law, finance,
accounting or economics, file the certification referred to above in
order to be included on a list of ethics training providers maintained
by a registered futures association. In December 1995, the Commission
proposed to amend Rule 3.34 to eliminate the provision permitting
state-accredited entities to provide ethics training without compliance
with the requirements applicable to other providers under the rule.
The Commission received one comment letter addressing this aspect
of the proposals. The commenter, an SRO, supported the proposal to
impose proficiency testing and experience requirements upon ethics
training providers other than SROs, even if they are state-accredited
entities. The SRO stated that until now almost all exchange members
received their ethics training from the exchange itself. While the SRO
believes that most members will continue to attend ethics training
provided by the exchange, a greater number of exchange members may
choose to enroll in ethics training programs offered by providers other
than the SRO as a result of the December 1995 amendments to Rule 3.34
which may increase the availability of videotape and electronic ethics
training programs. Therefore, the SRO expressed a strong interest in
assuring that non-SRO providers have the necessary knowledge and
experience to provide such training.19
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\19\ The SRO commenter also recommended an additional amendment
of Rule 3.34(b)(4) to require that ethics training providers submit
records of ethics training attendance by floor traders and floor
brokers to the contract markets that have granted them trading
privileges as well as to NFA. The Commission adopted an amendment to
Rule 3.34(b)(4) in December 1995 to require ethics training
providers to furnish records of attendees at such training to a
registered futures association but did not propose further
amendments to this provision. 60 FR 63907, 63911-63912. While the
Commission is generally supportive of contract markets receiving
ethics training records on floor traders and floor brokers to whom
they have granted trading privileges, the Commission does not
believe that an additional amendment to Rule 3.34(b)(4) is necessary
to achieve that end. Contract markets may encourage or require their
own floor trader and floor broker members to provide satisfactory
proof of satisfactory completion of the ethics training
requirements. Further, the Commission encourages ethics training
providers instructing floor traders and floor brokers to provide
this information to the relevant contract markets.
---------------------------------------------------------------------------
The Commission is adopting as proposed an amendment to Rule 3.34 to
require that state-accredited entities file with the NFA the
certification required under Rule 3.34(b)(3)(iii) and comply with the
other relevant provisions of Rule 3.34, including proficiency testing
and experience requirements. In the absence of such compliance and in
light of the potential for significant variations among state-
accreditation regimes, the Commission would have no ready means of
assuring that such providers have a minimum level of relevant knowledge
or experience.20
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\20\ As to whether SROs themselves should be subject to the
requirements applicable to other providers under 3.34, the
Commission believes that the business purposes and functions of
SROs, the statutory and regulatory requirements applicable to SROs,
and the Commission's oversight program for assuring compliance by
SROs with their responsibilities under the Act and Commission rules
provide sufficient assurance of the expertise and fitness of SROs as
ethics training providers without the necessity for imposing
additional requirements. Consequently, the Commission's proposals
with respect to proficiency training and pedagogical or industry
experience did not apply to SROs seeking to provide ethics training
to their members or employees. 60 FR 64132, 64134.
---------------------------------------------------------------------------
The Commission proposed that the proficiency testing and minimum
experience requirements apply to the provider or sponsor of the ethics
training program, to any instructors or presenters employed by the
provider of such ethics training, and to those persons who prepare
ethics training videotapes or electronic presentations. NFA expressed
concern that the rule as proposed appeared to require that the ethics
training provider itself, which in many instances would be a corporate
[[Page 20131]]
entity, meet the proficiency and experience requirements. NFA
recommended that the Commission clarify this aspect of the rule to make
clear that the persons who will be required to meet these standards
include the principals of the ethics training provider, any instructors
or presenters employed by the provider and persons who prepare ethics
training materials, including videotaped and electronic presentations.
NFA also recommended that only those principals of registered firms
that offer in-house ethics training who are directly involved with the
ethics training process be required to meet the proficiency and
experience requirements, noting that it would serve no purpose to
require all principals of a registered firm to comply with these
requirements.
The Commission agrees that clarification of the applicability of
the testing and experience requirements is desirable and that these
requirements should not apply to all principals of registered firms.
The Commission believes that the proficiency testing and experience
requirements should apply to persons who are direct participants in
ethics training, whether as presenters of such programs, preparers of
course materials, or supervisors of such activities. Consequently, the
Commission believes that unlike the required representations concerning
fitness, which apply to all principals of the ethics training provider,
the testing and experience requirements should not apply solely by
virtue of status as a principal, but, rather, should be applicable
based upon involvement in such programs as instructors, developers,
supervisors or managers of such programs.
A person who is currently acting as an instructor or course
preparer for an ethics training provider whose application to provide
ethics training has previously been granted by the Commission will not
be subject to the proficiency testing and minimum relevant experience
standards of Rule 3.34. However, should such an ethics training
provider seek to add a new instructor or course preparer, such person
would be subject to the proficiency testing and minimum relevant
experience standards. Persons acting as instructors or presenters of
in-person ethics training or preparing videotapes or electronic
presentations on behalf of a state-accredited entity must meet the
proficiency and experience requirements, even if such persons have
previously been operating under Rule 3.34. However, for existing ethics
training providers operating as of March 29, 1996 pursuant to the
former Rule 3.34 provision permitting certain state-accredited entities
to provide ethics training without further authorization, the effective
date for these rule amendments will be deferred for 60 days to allow
adequate time for filing the requisite certification and to take and
pass the Series 3 Exam.
III. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-611 (1994),
requires that agencies, in proposing rules, consider the impact of
those rules on small businesses. The rule amendments discussed herein
will not affect SROs who wish to provide ethics training but would
affect all others who seek to be included on a list of authorized
ethics training providers, including entities accredited to conduct
continuing education programs by state professional licensing
authorities in the fields of law, finance, accounting or economics. The
impact of this proposal on persons seeking to become providers of
ethics training should be minimal. At this time, a one-time processing
fee for the Series 3 Exam offered by the NFA is $75.00. This should not
constitute an unduly burdensome entry cost for ethics training
providers; the same cost is incurred by all the attendees at ethics
training as a cost of registration. Requiring a minimum level of
experience also should not adversely impact small businesses as this
requirement should not impose additional financial cost upon such
entities. Further, the ethics training requirement, reflects a
Congressional mandate to assure that registrants understand their
responsibilities to the public under the Act. Therefore, these rule
amendments will not have a significant economic impact on a substantial
number of small entities.
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1980 (PRA), 44 U.S.C. 3501 et seq.,
imposes certain requirements on federal agencies (including the
Commission) in connection with their conducting or sponsoring any
collection of information as defined by the PRA. In compliance with the
PRA, the Commission has previously submitted the proposed rule and its
associated information collection requirements to the Office of
Management and Budget. While the amendments proposed herein have no
burden, Rule 3.34 is a part of a group of rules which has the following
burden:
Rules 3.16, 3.32 and 3.34 (3038-0023, approved June 2, 1993):
Average Burden Hours Per Response: 1.13.
Number of Respondents: 60,980.
Frequency of Response: On Occasion and Triennially.
Persons wishing to comment on the information which will be
required by these rules as amended should contact Jeff Hill, Office of
Management and Budget, Room 3228, NEOB, Washington, D.C. 20503, (202)
395-7340. Copies of the information collection submission to OMB are
available from Joe F. Mink, CFTC Clearance Officer, 1155 21st St. NW,
Washington, DC 20581, (202) 418-5170.
List of Subjects in 17 CFR Part 3
Registration, Ethics Training.
Accordingly, the Commission, pursuant to the authority contained in
the Commodity Exchange Act and, in particular, sections 1a, 4d, 4e, 4g,
4m, 4p, 8a and 17 thereof (7 U.S.C. 1a, 6d, 6e, 6g, 6m, 6p, 12a and 21
(1994), hereby amends Part 3 of Chapter I of Title 17 of the Code of
Federal Regulations as follows:
PART 3--REGISTRATION
1. The authority citation for part 3 continues to read as follows:
Authority: 7 U.S.C. la, 2, 4, 4a, 6, 6b, 6d, 6e, 6f, 6g, 6h, 6i,
6k, 6m, 6o, 6p, 8, 9, 9a, 12, 12a, 13b, 13c, 16a, 18, 19, 21 and 23;
5 U.S.C. 552, 552b.
2. Section 3.34 is amended by removing and reserving paragraph
(b)(3)(ii) and revising the introductory text of paragraph (b)(3)(iii)
and paragraph (b)(3)(iii)(A)(3) to read as follows:
Sec. 3.34 Mandatory ethics training for registrants.
* * * * *
(b) * * *
(3) * * *
(ii) [Reserved]
(iii) A person included on a list maintained by a registered
futures association who has presented satisfactory evidence to the
registered futures association that any individuals, on behalf of such
person, who present ethics training, prepare an ethics training
videotape or electronic presentation, or who supervise the foregoing,
have taken and passed the proficiency testing requirements for an
ethics training provider, as established by rules of a registered
futures association that have been approved by the Commission, and
possess a minimum of three years of relevant experience for an ethics
training
[[Page 20132]]
provider, as established by rules of a registered futures association
that have been approved by the Commission, and who certifies that:
(A) * * *
(3) A pending adjudicatory proceeding under sections 6(c), 6(d),
6c, 6d, or 9 of the Act, or similar proceeding under Section 8a of the
Act, or Secs. 3.55, 3.56, or 3.60; and
* * * * *
Issued in Washington, DC on April 25, 1996, by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 96-10730 Filed 5-3-96; 8:45 am]
BILLING CODE 6351-01-P
Complete official Federal Register PDF
FR Doc. 96-10607 Securities Credit Transactions; Review of Regulation T, ``Credit by Brokers and Dealers''
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20386-20398]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10607]
[[Page 20385]]
_______________________________________________________________________
Part IV
Federal Reserve System
_______________________________________________________________________
12 CFR Parts 207, 220, and 221
Securities Credit Transactions; Rule and Proposed Rule
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and
Regulations
[[Page 20386]]
FEDERAL RESERVE SYSTEM
12 CFR Part 220
[Regulation T; Docket No. R-0772]
RIN 7100-AB28
Securities Credit Transactions; Review of Regulation T, ``Credit
by Brokers and Dealers''
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board is adopting amendments to Regulation T, the
regulation that covers extensions of credit by and to broker and
dealers. These amendments reflect consideration of the comments
submitted in response to the proposed rule issued by the Board for
public comment on June 29, 1995.
Major amendments include eliminating restrictions on the ability of
broker-dealers to arrange for credit; increasing the type and number of
domestic and foreign securities that may be bought on margin and
increasing the loan value of some securities that are already
marginable; deleting Board rules regarding options transactions in
favor of the rules of the options exchanges; and reducing restrictions
on transactions involving foreign persons, foreign securities, and
foreign currency. In addition, technical changes are being adopted to
provide clarification, update references, or restore language
inadvertently deleted. The Board is also soliciting comments on the
possibility of additional Regulation T amendments in a separate
document published elsewhere in today's Federal Register.
EFFECTIVE DATE: July 1, 1996.
FOR FURTHER INFORMATION CONTACT: Scott Holz, Senior Attorney, or Angela
Desmond, Senior Counsel, Division of Banking Supervision and Regulation
(202) 452-2781; for the hearing impaired only, Telecommunications
Device for the Deaf (TDD), Dorothea Thompson (202) 452-3544.
SUPPLEMENTARY INFORMATION: In 1992, the Board issued an Advance Notice
of Proposed Rulemaking and Request for Comment to aid in its periodic
review of Regulation T.\1\ In 1994, the Board proposed and adopted
amendments exempting transactions involving government securities and
shortening the time period within which customers must deposit margin
requirements or make payment for securities in light of the industry's
move to a three-day settlement period.\2\ In June 1995, the Board
published proposed amendments covering additional areas of Regulation
T.\3\ Forty-six comment letters were received in response to the 1995
proposal. The review of Regulation T predates but is now encompassed
within the Board's regulatory review under section 303 of the Riegle
Community Redevelopment and Regulatory Improvement Act of 1994.
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\1\ 57 FR 37109 (August 18, 1992).
\2\ The proposed amendments were published at 59 FR 33923 (July
1, 1994) and the final rule was published at 59 FR 53565 (October
25, 1994).
\3\ 60 FR 33763 (June 29, 1995). The comment period was
subsequently extended at the request of commenters (60 FR 43726,
August 23, 1995).
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The Board is now adopting a final rule which covers four major
areas: arranging for credit, loan value of securities, options
transactions, and international transactions.
In the arranging area, the Board is eliminating all restrictions on
the ability of broker-dealers to arrange for credit that does not
otherwise violate the lending provisions of the Board's margin
regulations.
Amendments regarding the loan value of securities include changing
the loan value of money market and exempted securities mutual funds
from 50 percent to ``good faith'' loan value. The Board is adopting
additional, alternate criteria for unlisted debt securities so that any
debt security with an investment grade rating will be entitled to
``good faith'' loan value. The Board is also adopting an additional
method for foreign stocks to qualify for margin treatment that will
result in an increase in the number of foreign margin stocks from
approximately 700 to approximately 1800 stocks. The Board is extending
loan value to convertible bonds that do not meet the existing margin
criteria if the underlying security is already marginable. Finally, the
Board is extending loan value to exchange-traded options, which will be
entitled to the loan value deemed appropriate by the exchange that
trades the option, subject to the approval of the Securities and
Exchange Commission (SEC).
In addition to giving loan value to exchange-traded options, other
amendments in the options area will increase Regulation T's reliance on
the margin rules of the exchange where the option is traded for
customer and specialist transactions. This will allow increased
flexibility in recognizing the offsetting nature of certain
transactions and assets, such as financial futures. The Board is
retaining the current provisions until June 1, 1997 in response to
requests from options exchanges for extra time to develop exchange
rules and have them approved by the SEC.
The Board is reducing Regulation T restrictions on international
transactions involving the borrowing and lending of foreign securities
that are not publicly traded in the United States and giving broker-
dealers greater flexibility to accept foreign currencies, compute
margin requirements using foreign currencies, and deal with foreign
broker-dealers on the same basis as domestic broker-dealers. These
changes are discussed more fully below. The amendments are discussed in
the order they appear in the regulation.
Section 220.2 Definitions
The following new definitions or amended definitions are being
adopted as proposed: cash equivalent, exempted securities mutual fund,
foreign person, in the money, margin security, money market mutual
fund, non-U.S. traded foreign security, and OTC margin stock. As
proposed, the Board will delete the definition of in or at the money,
but this will be delayed until June 1, 1997, when the other option-
specific rules of Regulation T are deleted.\4\ The effect of the
definitions is described below under the section in which the defined
term is used. Definitional changes that have the effect of increasing
the types and number of securities that are marginable are discussed
below under section 220.18, Supplement: Margin requirements.
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\4\ See also the definition of permitted offset position in
section 220.2, section 220.4(b)(8), section 220.12(b)(6), and
section 220.18(f). Several options exchanges requested a delay in
effectiveness of Regulation T provisions which replace Board-
specified options rules with reference to exchange rules. In order
to allow the exchanges to develop rules in these areas and have them
approved by the SEC, the Board is delaying the effectiveness of the
new options provisions in Regulation T until June 1, 1997.
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The following definitions are being amended based on comments:
covered option transaction, escrow agreement, OTC margin bond,
permitted offset position, short call or short put, and underlying
security. The modifications are technical in nature, with the exception
of those discussed in the following two paragraphs.
The Board proposed to add the word ``sold'' to the definition of
short call or short put and the list of permissible transactions in the
cash account to mimic rules of the self-regulatory organizations
(SROs). The word is not being added in light of comments pointing out
that the Board's proposal would cover transactions that are not covered
by SRO rules, which was not the Board's intent.
[[Page 20387]]
The definition of underlying security is being changed to
underlying asset to account for the fact that not every asset
underlying a securities option is a security. A conforming change has
also been made to the definition of in the money. The definition is
also being changed from the proposal so that customers and specialists
may hold less than all of the securities in an index as cover for a
short option position if SEC-approved rules of the SRO where the option
is traded allow partial baskets. The language that was proposed
required that all securities that comprise an index be held in the same
proportion as the index.
Section 220.3 General Provisions
The Board is amending section 220.3(e)(4), which permits what the
industry refers to as ``cashless exercise'' of employee stock options,
to cover additional types of securities received by customers pursuant
to an employee benefit plan and to conform with SEC rules that
determine who is covered under these plans and therefore who may take
advantage of the ``cashless exercise'' procedure. The Board is
modifying the language that was proposed to accommodate employee stock
award plans.
The Board is also adding a new paragraph to the general provisions
in section 220.3 to make clear that freely convertible currency can be
accepted by creditors and treated at its U.S. dollar equivalent on a
marked-to-market basis for all purposes under Regulation T. Marking to
market should minimize currency risk.
Section 220.4 Margin Account
Consistent with the amendment to the general provisions in section
220.3 of Regulation T allowing freely convertible foreign currency to
be accepted for all purposes under Regulation T, the Board is amending
Regulation T to enhance the ability of broker-dealers to extend credit
denominated in a foreign currency by eliminating the restriction in
section 220.4(c) that prevents an increase in one foreign currency
subaccount from offsetting a decrease in another foreign currency
subaccount. The Board is also simplifying the language that was
proposed for section 220.4(b)(8) to allow broker-dealers to extend
credit in any freely convertible currency, whether or not a security
denominated in that currency is (or was) held in the account.
As proposed, the Board is completing the process of deferring to
SRO rules for options transactions by deleting specific provisions
governing cover or positions in lieu of margin found in section
220.5(c) in favor of SRO rules. This change will become effective on
June 1, 1997. The margin requirement for a customer who writes an over-
the-counter (OTC) option that is purchased by its broker-dealer will be
determined by the rules of the broker-dealer's examining authority.
As proposed, the margin account exceptions and special provisions
in section 220.5 have been incorporated into section 220.4 so that each
Regulation T account is described in a single section. The special
memorandum account and the government securities account are being
renumbered as section 220.5 and 220.6 respectively. No substantive
change is intended by this renumbering.
Section 220.8 Cash Account
The Board is amending the cash account, as proposed, to recognize
industry practice by specifically allowing the purchase of
nonsecurities on a cash basis in the cash account. Because this change
includes foreign currencies, foreign exchange transactions can be
effected on a cash basis in the account.
The Board is adding money market mutual funds to the definition of
cash equivalent as proposed to allow these mutual fund shares to be
used to cover puts in the cash account. In response to commenters, the
Board has added language to section 220.8(a)(4) to make clear that cash
equivalents covering options transactions may be held in the account
via an escrow agreement.
The specific option transactions formerly permitted in the cash
account pursuant to section 220.8(a)(3) have been incorporated into a
definition for covered option transactions along with new authority,
effective June 1, 1997, for the SROs to permit additional transactions
with finite risk in this account. The proposed language has been
modified to permit greater flexibility for the SROs. This flexibility
includes covering (1) transactions in which a customer's risk is not a
fixed dollar amount but is effectively limited to the value of the
assets securing it, (2) transactions in which early exercise of any
aspect of the transaction results in contemporaneous exercise of all
aspects, and (3) OTC options transactions. SROs may designate covered
transactions by category if they choose to do so.
The Board is amending section 220.8(b)(1)(ii), the cash account
provision covering the purchase of foreign securities with extended
settlement periods, as proposed, so that a broker-dealer will not be
required to sell a customer's securities for failure to make payment
until one day beyond the foreign settlement date. Currently, a broker-
dealer must receive its customer's payment by settlement date. The
extra day will allow the broker-dealer to verify that its failure to
receive the customer's payment is not due to time zone differences,
error, or other exceptional circumstances.
Section 220.11 Broker-Dealer Credit Account
Two substantive changes proposed by the Board are being made to
section 220.11(a), Permissible transactions. First, the Board is
amending section 220.11(a) to permit foreign broker-dealers to use this
account for delivery-versus-payment transactions with U.S. broker-
dealers. Under this amendment foreign broker-dealers are referred to as
``persons regulated by a foreign securities authority.'' Regulation T
incorporates the definitions from section 3(a) of the Act, which
defines a ``foreign securities authority'' to include entities
``empowered by a foreign government to administer or enforce laws as
they relate to securities matters.'' Several commenters stated that the
Board's proposal may not encompass entities such as universal banks
that are generally recognized as broker-dealers but are regulated by a
banking regulator that is also responsible for securities regulation in
that country. The Board believes that the phrase ``person regulated by
a foreign securities authority,'' is broad enough for purposes of
Regulation T to cover universal banks.
The Board is also amending section 220.11(a) to include ``prime
broker'' arrangements set up under SEC guidelines 5 in the list of
permissible transactions. This will permit use of the broker-dealer
credit account by executing broker-dealers so that a customer's
transactions may be consolidated at the customer's prime broker.
---------------------------------------------------------------------------
\5\ See, Fed. Sec. L. Rep. (CCH) para. 76,819.
---------------------------------------------------------------------------
In 1995, the Board proposed an amendment to clarify that the joint
back office (JBO) arrangements established pursuant to section
220.11(a)(2), which allow participant broker-dealers to be treated as
if they were self-clearing broker-dealers, require a reasonable
relationship between the owners' equity interests and the amount of
business transacted through the JBO. The Board's intention in 1983 in
first permitting the formation of JBOs was to allow for economies of
scale among registered broker-dealers, and the Board believed it was
unnecessary to explicitly require a specific capital structure to
ensure equitable treatment among participants.
[[Page 20388]]
Several commenters noted that the Board's 1995 proposal was
ambiguous; others suggested that the current language could be
interpreted to prevent unreasonable arrangements without the need for
amendment; and several commenters, including some opposed to the
Board's proposal, were in favor of involving SROs in this process.
After considering the comments, the Board has decided not to
incorporate its understanding into the regulation and believes it is
appropriate to rely on the authority of the JBO's examining authority
(SRO) to ensure the reasonableness of JBO arrangements under its
supervision.
Section 220.12 Market Functions Account
The Board proposed two substantive amendments to this section and
is adopting both of them. First, the Board is amending section
220.12(b), Specialists, to delete the specific ``permitted offset
positions'' established by the Board in favor of SEC-approved rules of
the SROs. Permitted offset positions are entitled to good faith margin,
and allowing exchange rules to govern these transactions is consistent
with the Board's intention to allow margin requirements for options
transactions and margin requirements for specialists to be determined
by the appropriate market, subject to SEC approval. This change will be
effective June 1, 1997.
Second, the Board is revising the description of OTC marketmakers
and third marketmakers to respond to questions raised about the
coverage of this provision. The revision concerning third marketmakers
mirrors the language in Regulation U, while the revision concerning OTC
marketmakers ensures that the exempt credit available to OTC
marketmakers, like the exempt credit for specialists, is in return for
market-making obligations enforced by the regulatory authority for that
market.
Section 220.13 Arranging for Loans by Others
The Board is amending section 220.13 to permit creditors to arrange
for any credit transaction so long as they do not willfully arrange
credit that otherwise violates the Board's margin regulations.
Currently, broker-dealers cannot arrange for transactions they could
not engage in themselves unless covered by one of the exceptions found
in this section.
Section 7 of the Act requires broker-dealers to comply with Federal
Reserve margin regulations when they ``extend or maintain credit or
arrange for the extension or maintenance of credit.'' Since 1938,
Regulation T has contained a provision addressing the ``arranging'' of
credit by broker-dealers. This provision remained unaltered until 1975,
when the Board began to adopt exceptions to the general prohibition.
Although the arranging prohibition was intended to prevent a broker-
dealer from circumventing Regulation T by arranging for another lender
to extend credit that the broker-dealer was prevented from extending
itself, the Board's regulations now cover most U.S. margin lenders
directly.6
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\6\ The Board adopted Regulation U in 1936 to cover securities
credit extended by banks. In 1968 the Board adopted Regulation G to
cover most other margin lenders in the United States, and in 1971
the Board adopted Regulation X to cover U.S. borrowers obtaining
margin credit against U.S. securities abroad.
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One of the most basic and frequently raised trends noted in the
comments received since the Board announced its review of Regulation T
is the erosion of barriers between broker-dealers and other lenders,
including globalization of the securities markets and the increasing
overlap in the businesses of these various lenders. Several trade
associations and broker-dealers responded favorably to the Board's
request for comment on applying the arranging restriction only to
credit that otherwise violates the Board's margin regulations.
The Board has concluded that broker-dealers should be permitted to
arrange for any credit that is not directly prohibited by a Federal
Reserve margin regulation. Because a broker-dealer may not know all of
the credit terms agreed to between its customer and the actual lender,
the amended language prohibits a broker-dealer from willfully arranging
credit that violates one of the Board's margin regulations. The ability
of broker-dealers to arrange for credit in connection with new issues
of securities will still be constrained by section 11(d) of the Act and
the rules of the SEC issued thereunder.7
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\7\ Section 11(d) of the Act prohibits a broker-dealer from
extending or maintaining or arranging for the extension or
maintenance of credit on any newly issued security if the broker-
dealer has been involved in the distribution of that security within
the past thirty days. The section is aimed at preventing a broker-
dealer from inducing its customer to buy on credit securities which
it has undertaken to distribute to the public.
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Section 220.16 Borrowing and Lending Securities
The Board proposed two changes for this section, and is adopting
both of them. First, the Board is expanding the types of permissible
collateral for securities lending transactions to include marginable
foreign sovereign debt securities and any other collateral that is
acceptable to the SEC when a broker-dealer borrows securities from its
customer.8
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\8\ The SEC requirements are found in Rule 15c3-3 (17 CFR
240.15c3-3).
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Second, the Board is adding a new subsection 220.16(b) to allow
U.S. broker-dealers to lend foreign securities that are not publicly
traded in the United States to a foreign person for any purpose, and
against any collateral, legally permitted in the foreign country.
Although several commenters stated their preference for also extending
this liberalized treatment to foreign stocks that are publicly traded
in the United States, other commenters, including U.S. securities
exchanges, stressed the importance of equal treatment in this area for
all securities that are publicly traded in the United States. The Board
is confirming several clarifications in this area requested by the
commenters: (1) a foreign security not listed on NASDAQ or a U.S.
national securities exchange is not ``U.S. traded'' solely because
American Depository Receipts (ADRs) on the foreign security are traded
in the United States; (2) new section 220.16(b) is not mandatory and
creditors may continue to borrow and lend foreign securities under the
existing rule in section 220.16(a); and (3) coverage of the term
``foreign lender'' is determined by the status of the beneficial owner
of an account and includes a non-U.S. person with a U.S. investment
adviser or other fiduciary. The Board is also amending the language
that was proposed to make clear that a creditor may borrow foreign
securities pursuant to section 220.16(b) for the purpose of relending
them to a foreign person (or relending them to a U.S. person as long as
the ultimate borrower is a foreign person).
The Board is also amending section 220.16 to address questions
regarding ``pre-borrowing,'' that is the borrowing of securities in
anticipation of a short sale. Currently, securities may be borrowed for
a permitted purpose when the transaction has been effected ``or is in
immediate prospect''.\9\ The section will now provide that a creditor
who reasonably anticipates a short sale may borrow securities up to one
standard settlement cycle in advance of the trade date. The standard
settlement cycle is contained in SEC Rule 15c6-1 \10\ and is currently
three business days.
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\9\ See 12 CFR 220.103, a Board Interpretation reprinted in the
Federal Reserve Regulatory Service at 5-472.
\10\ 17 CFR 240.15c6-1.
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[[Page 20389]]
Section 220.17 Requirements for the List of Marginable OTC Stocks and
the List of Foreign Margin Stocks
The Board is adopting additional, alternative criteria for
determining which foreign stocks qualify as margin equity securities.
The Board has published a List of Foreign Margin Stock (Foreign List)
since 1990, using criteria modeled on those for OTC margin stocks. In
the 1995 proposal, the Board asked for comment on whether foreign
stocks should also be marginable if they meet two criteria: (1) the SEC
or CFTC has approved trading in the United States of options, warrants,
or futures on a foreign securities index that contains the foreign
stock and (2) the stock is deemed to have a ``ready market'' for
purposes of the SEC's net capital rule.\11\ The SEC has issued a no-
action letter that effectively treats all stocks on the Financial
Times/Standard & Poor's World Actuaries Indices as having a ``ready
market'' for capital purposes, and requested comment on adopting
regulatory language to this effect.\12\
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\11\ See SEC Rule 15c3-1 (17 CFR 240.15c3-1).
\12\ 58 FR 44310, August 20, 1993.
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None of the commenters opposed the Board's proposal to enlarge the
number of foreign margin stocks, but many suggested modification of the
proposed criteria. Some commenters asked the Board to use the SEC's
capital rule's ``ready market'' test as a criterion for determining the
margin status of foreign securities. The Board has concluded that a
determination that a foreign stock has a ``ready market'' for purposes
of the SEC's net capital rule is a more particularized determination
about the collateral value of the stock than SEC or CFTC approval for
trading in the United States of an index product containing the stock.
The Board is therefore adopting this test as an alternate method by
which stocks will be included on the Foreign List. To implement this
change, stocks on the Financial Times/Standard & Poor's Actuaries World
Indices will be added to the Board's Foreign List as soon as practical.
Comments were few and contradictory concerning how a new test for
foreign margin stocks should be integrated with the Board's Foreign
List. The Board is requesting additional comment regarding the Foreign
List in the proposed rule published elsewhere today in the Federal
Register.
Section 220.18 Supplement: Margin Requirements
The Board is increasing the coverage of the definitions of margin
security and OTC margin bond and is allowing loan value for exchange-
traded options that are currently denied loan value.\13\ The Board is
also changing the loan value of mutual funds whose portfolios consist
of exempted securities and money market mutual funds. These mutual
funds were previously subject to the margin for margin equity
securities (currently 50 percent) and today's amendments will instead
allow good faith loan value.
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\13\ Although most customers cannot purchase exchange-traded
options on credit, specialists in these options and the underlying
securities have been able to obtain good faith credit on options for
some time.
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The Board is amending the definition of margin security to cover a
debt security convertible into a margin security. This mirrors the
treatment of convertible bonds in Regulations G and U, as well as
Regulation T's treatment of foreign convertible bonds.
The Board is also amending the definition of OTC margin bond to
include any nonconvertible debt security with an investment grade
rating. Although commenters suggested a variety of ways to expand the
categories of unlisted debt securities entitled to good faith margin as
``OTC margin bonds,'' at a minimum there was agreement that an
investment grade rating (i.e. a rating in one of the top four rating
categories by a nationally recognized statistical rating organization)
should be sufficient to make a debt security marginable. The Board has
successfully used rating criteria for unregistered mortgage-related
securities \14\ and foreign debt securities and believes it is now
appropriate to enlarge the number of qualifying ratings and extend this
treatment to other debt securities.
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\14\ The Board first used a rating requirement when it fulfilled
Congress' mandate under the Secondary Mortgage Market Enhancement
Act of 1984 by making a ``mortgage-related security'' marginable.
The Congressional definition of ``mortgage-related security''
included a requirement that the security be rated in one of the top
two rating categories by a nationally recognized statistical rating
organization.
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The Board is permitting loan value for exchange-traded options, but
has modified its 1995 proposal that options be given the same fifty
percent loan value if listed on a national securities exchange as other
exchange-traded equity securities. Commenters, including some of the
options exchanges, indicated that the time value of options may make it
appropriate to have higher margin requirements for options approaching
expiration and expressed support for use of SRO rules in this area
generally. Rather than adopting a flat 50 percent margin requirement,
the Board is incorporating into Regulation T the margin requirements
established by the exchange that trades the option. This change will
also respond to commenters seeking confirmation that the Board intends
to allow loan value for options on non-equity securities. To ensure
comparability with exchange-traded warrants on securities indexes and
warrants on foreign currency, these products will also be subjected to
exchange maintenance margin rules in lieu of specific Regulation T
requirements. Margin requirements for short OTC options will continue
to be subject to the rules of the examining authority of the broker-
dealer involved.
Board Interpretations
The Board has begun to review its interpretations of Regulation T,
and is deleting eleven interpretations as a first step. These
interpretations have either been incorporated directly into the
regulation or have become moot due to subsequent amendments. The Board
will continue its review to cover the remaining interpretations.
Regulatory Flexibility Act
The amendments being adopted are intended to simplify regulatory
requirements and eliminate restrictions currently imposed on broker-
dealers and their customers. The Board is also increasing reliance on
the rules of the SEC and SROs so that Regulation T will reflect market
developments that are subsequently approved by regulators with primary
responsibility for the securities markets. The Board believes that
these benefits will be shared by all broker-dealers and the amendments
will not have a substantial adverse effect on a significant number of
small broker-dealers.
Paperwork Reduction Act
No collections of information pursuant to section 3504(h) of the
Paperwork Reduction Act (44 U.S.C. 3501 et seq.) are contained in this
rule.
List of Subjects in 12 CFR Part 220
Banks, banking, Brokers, Credit, Federal Reserve System, Margin,
Margin requirements, Reporting and recordkeeping requirements,
Securities.
For the reasons set out in the preamble, 12 CFR Part 220 is amended
as follows:
PART 220--CREDIT BY BROKERS AND DEALERS (REGULATION T)
1. The authority citation for Part 220 continues to read as
follows:
Authority: 15 U.S.C. 78c, 78g, 78h, 78q, and 78w.
[[Page 20390]]
2. Sections 220.1 through 220.18 are revised to read as follows:
Sec. 220.1 Authority, purpose, and scope.
(a) Authority and purpose. Regulation T (this part) is issued by
the Board of Governors of the Federal Reserve System (the Board)
pursuant to the Securities Exchange Act of 1934 (the Act) (15 U.S.C.
78a et seq.). Its principal purpose is to regulate extensions of credit
by and to brokers and dealers; it also covers related transactions
within the Board's authority under the Act. It imposes, among other
obligations, initial margin requirements and payment rules on
securities transactions.
(b) Scope. (1) This part provides a margin account and eight
special purpose accounts in which to record all financial relations
between a customer and a creditor. Any transaction not specifically
permitted in a special account shall be recorded in a margin account.
(2) This part does not preclude any exchange, national securities
association, or creditor from imposing additional requirements or
taking action for its own protection.
(3) This part does not apply to transactions between a customer and
a broker or dealer registered only under section 15C of the Act.
Sec. 220.2 Definitions.
The terms used in this part have the meanings given them in section
3(a) of the Act or as defined in this section.
Cash equivalent means securities issued or guaranteed by the United
States or its agencies, negotiable bank certificates of deposit,
bankers acceptances issued by banking institutions in the United States
and payable in the United States, or money market mutual funds.
Covered option transaction means:
(1) In the case of a short call, the underlying asset (or a
security immediately convertible into the underlying asset, without the
payment of money) is held in or purchased for the account on the same
day, and the option premium is held in the account until cash payment
for the underlying asset or convertible security is received; or
(2) In the case of a short put, the creditor obtains cash in an
amount equal to the exercise price or holds in the account cash
equivalents with a current market value at least equal to the exercise
price and, except in the case of money market mutual funds, with one
year or less to maturity; or
(3) In the case of a short put or short call, the creditor verifies
that the appropriate escrow agreement will be delivered to the creditor
promptly and the option premium is held in the account until such
delivery is made; or
(4) Beginning June 1, 1997, any other transaction involving options
or warrants in which the customer's risk is limited and all elements of
the transaction are subject to contemporaneous exercise if:
(i) the amount at risk is held in the account in cash, cash
equivalents, or via an escrow receipt; and
(ii) the transaction is eligible for the cash account by the rules
of the registered national securities exchange authorized to trade the
option or warrant or by the rules of the creditor's examining authority
in the case of an unregistered option, provided that all such rules
have been approved or amended by the SEC.
Credit balance means the cash amount due the customer in a margin
account after debiting amounts transferred to the special memorandum
account.
Creditor means any broker or dealer (as defined in sections 3(a)(4)
and 3(a)(5) of the Act), any member of a national securities exchange,
or any person associated with a broker or dealer (as defined in section
3(a)(18) of the Act), except for business entities controlling or under
common control with the creditor.
Customer includes:
(1) Any person or persons acting jointly:
(i) To or for whom a creditor extends, arranges, or maintains any
credit; or
(ii) who would be considered a customer of the creditor according
to the ordinary usage of the trade;
(2) Any partner in a firm who would be considered a customer of the
firm absent the partnership relationship; and
(3) Any joint venture in which a creditor participates and which
would be considered a customer of the creditor if the creditor were not
a participant.
Debit balance means the cash amount owed to the creditor in a
margin account after debiting amounts transferred to the special
memorandum account.
Delivery against payment, Payment against delivery, or a C.O.D.
transaction refers to an arrangement under which a creditor and a
customer agree that the creditor will deliver to, or accept from, the
customer, or the customer's agent, a security against full payment of
the purchase price.
Equity means the total current market value of security positions
held in the margin account plus any credit balance less the debit
balance in the margin account.
Escrow agreement means any agreement issued in connection with a
call or put option under which a bank or any person designated as a
control location under paragraph (c) of SEC Rule 15c3-3 (17 CFR
240.15c3-3(c)), holding the underlying asset or required cash or cash
equivalents, is obligated to deliver to the creditor (in the case of a
call option) or accept from the creditor (in the case of a put option)
the underlying asset or required cash or cash equivalent against
payment of the exercise price upon exercise of the call or put.
Examining authority means:
(1) The national securities exchange or national securities
association of which a creditor is a member; or
(2) If a member of more than one self-regulatory organization, the
organization designated by the SEC as the examining authority for the
creditor.
Exempted securities mutual fund means any security issued by an
investment company registered under section 8 of the Investment Company
Act of 1940 (15 U.S.C. 80a-8), provided the company has at least 95
percent of its assets continuously invested in exempted securities (as
defined in section 3(a)(12) of the Act).
Foreign margin stock means a foreign security that is an equity
security and that appears on the Board's periodically published List of
Foreign Margin Stocks.
Foreign person means a person other than a United States person as
defined in section 7(f) of the Act.
Foreign security means a security issued in a jurisdiction other
than the United States.
Good faith margin means the amount of margin which a
creditor,exercising sound credit judgment, would customarily require
for a specified security position and which is established without
regard to the customer's other assets or securities positions held in
connection with unrelated transactions.
In or at the money means, until June 1, 1997, the current market
price of the underlying security is not more than one standard exercise
interval below (with respect to a call option) or above (with respect
to a put option) the exercise price of the option.
In the money means the current market price of the underlying asset
or index is not below (with respect to a call option) or above (with
respect to a put option) the exercise price of the option.
Margin call means a demand by a creditor to a customer for a
deposit of additional cash or securities to eliminate or reduce a
margin deficiency as required under this part.
[[Page 20391]]
Margin deficiency means the amount by which the required margin
exceeds the equity in the margin account.
Margin excess means the amount by which the equity in the margin
account exceeds the required margin. When the margin excess is
represented by securities, the current value of the securities is
subject to the percentages set forth in Sec. 220.18 (the Supplement).
Margin security means:
(1) Any registered security;
(2) Any OTC margin stock;
(3) Any OTC margin bond;
(4) Any OTC security designated as qualified for trading in the
National Market System under a designation plan approved by the
Securities and Exchange Commission (NMS security);
(5) Any security issued by either an open-end investment company or
unit investment trust which is registered under section 8 of the
Investment Company Act of 1940 (15 U.S.C. 80a-8);
(6) Any foreign margin stock; or
(7) Any debt security convertible into a margin security.
Money market mutual fund means any security issued by an investment
company registered under section 8 of the Investment Company Act of
1940 (15 U.S.C. 80a-8) that is considered a money market fund under SEC
Rule 2a--7 (17 CFR 270.2a-7).
Nonexempted security means any security other than an exempted
security (as defined in section 3(a)(12) of the Act).
Nonmember bank means a bank that is not a member of the Federal
Reserve System.
Non-U.S. traded foreign security means a foreign security that is
neither a registered security nor one listed on NASDAQ.
OTC margin bond means:
(1) A debt security not traded on a national securities exchange
which meets all of the following requirements:
(i) At the time of the original issue, a principal amount of not
less than $25,000,000 of the issue was outstanding;
(ii) The issue was registered under section 5 of the Securities Act
of 1933 (15 U.S.C. 77e) and the issuer either files periodic reports
pursuant to section 13(a) or 15(d) of the Act or is an insurance
company which meets all of the conditions specified in section
12(g)(2)(G) of the Act; and
(iii) At the time of the extension of credit, the creditor has a
reasonable basis for believing that the issuer is not in default on
interest or principal payments; or
(2) A private pass-through security (not guaranteed by an agency of
the U.S. government) meeting all of the following requirements:
(i) An aggregate principal amount of not less than $25,000,000
(which may be issued in series) was issued pursuant to a registration
statement filed with the SEC under section 5 of the Securities Act of
1933 (15 U.S.C. 77e);
(ii) Current reports relating to the issue have been filed with the
SEC; and
(iii) At the time of the credit extension, the creditor has a
reasonable basis for believing that mortgage interest, principal
payments and other distributions are being passed through as required
and that the servicing agent is meeting its material obligations under
the terms of the offering; or
(3) A mortgage related security as defined in section 3(a)(41) of
the Act; or
(4) A debt security issued or guaranteed as a general obligation by
the government of a foreign country, its provinces, states, or cities,
or a supranational entity, if at the time of the extension of credit
one of the following is rated in one of the two highest rating
categories by a nationally recognized statistical rating organization:
(i) The issue;
(ii) The issuer or guarantor (implicitly); or
(iii) Other outstanding unsecured long-term debt securities issued
or guaranteed by the government or entity; or
(5) A foreign security that is a nonconvertible debt security that
meets all of the following requirements:
(i) At the time of original issue, a principal amount of at least
$100,000,000 was outstanding;
(ii) At the time of the extension of credit, the creditor has a
reasonable basis for believing that the issuer is not in default on
interest or principal payments; and
(iii) At the time of the extension of credit, the issue is rated in
one of the two highest rating categories by a nationally recognized
statistical rating organization; or
(6) Any nonconvertible debt security that meets all of the
following requirements:
(i) At the time of the extension of credit, the creditor has a
reasonable basis for believing that the issuer is not in default on
interest or principal payments; and
(ii) At the time of the extension of credit, the issue is rated in
one of the four highest rating categories by a nationally recognized
statistical rating organization.
OTC margin stock means any equity security traded over-the-counter
that the Board has determined has the degree of national investor
interest, the depth and breadth of market, the availability of
information respecting the security and its issuer, and the character
and permanence of the issuer to warrant being treated like an equity
security traded on a national securities exchange. An OTC stock is not
considered to be an OTC margin stock unless it appears on the Board's
periodically published list of OTC margin stocks.
Overlying option means:
(1) A put option purchased or a call option written against a long
position in an underlying asset in the specialist record in
Sec. 220.12(b); or
(2) A call option purchased or a put option written against a short
position in an underlying asset in the specialist record in
Sec. 220.12(b).
Payment period means the number of business days in the standard
securities settlement cycle in the United States, as defined in
paragraph (a) of SEC Rule 15c6-1 (17 CFR 240.15c6-1(a)), plus two
business days.
Permitted offset position means, in the case of an option in which
a specialist makes a market, a position in the underlying asset or
other related assets, and in the case of other securities in which a
specialist makes a market, a position in options overlying the
securities in which a specialist makes a market, provided the positions
qualify as permitted offsets under the rules of the national securities
exchange with which the specialist is registered, and further provided
all such rules have been approved or amended by the SEC. Until June 1,
1997, permitted offsets are determined by reference to section
220.12(b)(6).
Purpose credit means credit for the purpose of:
(1) Buying, carrying, or trading in securities; or
(2) Buying or carrying any part of an investment contract security
which shall be deemed credit for the purpose of buying or carrying the
entire security.
Registered security means any security that:
(1) Is registered on a national securities exchange; or
(2) Has unlisted trading privileges on a national securities
exchange.
Short call or short put means a call option or a put option that is
issued, endorsed, or guaranteed in or for an account.
(1) A short call that is not cash-settled obligates the customer to
sell the underlying asset at the exercise price upon receipt of a valid
exercise notice or as otherwise required by the option contract.
(2) A short put that is not cash-settled obligates the customer to
purchase the underlying asset at the exercise price upon receipt of a
valid exercise notice
[[Page 20392]]
or as otherwise required by the option contract.
(3) A short call or a short put that is cash-settled obligates the
customer to pay the holder of an in the money long put or long call who
has, or has been deemed to have, exercised the option the cash
difference between the exercise price and the current assigned value of
the option as established by the option contract.
Specialist joint account means an account which, by written
agreement, provides for the commingling of the security positions of
the participants and a sharing of profits and losses from the account
on some predetermined ratio.
Underlying asset means:
(1) the security or other asset that will be delivered upon
exercise of an option; or
(2) In the case of a cash-settled option, the securities or other
assets which comprise the index or other measure from which the
option's value is derived.
Sec. 220.3 General provisions.
(a) Records. The creditor shall maintain a record for each account
showing the full details of all transactions.
(b) Separation of accounts. Except as provided for in the margin
account and the special memorandum account, the requirements of an
account may not be met by considering items in any other account. If
withdrawals of cash or securities are permitted under the regulation,
written entries shall be made when cash or securities are used for
purposes of meeting requirements in another account.
(c) Maintenance of credit. Except as prohibited by this part, any
credit initially extended in compliance with this part may be
maintained regardless of:
(1) Reductions in the customer's equity resulting from changes in
market prices;
(2) Any security in an account ceasing to be margin or exempted; or
(3) Any change in the margin requirements prescribed under this
part.
(d) Guarantee of accounts. No guarantee of a customer's account
shall be given any effect for purposes of this part.
(e) Receipt of funds or securities. (1) A creditor, acting in good
faith, may accept as immediate payment:
(i) Cash or any check, draft, or order payable on presentation; or
(ii) Any security with sight draft attached.
(2) A creditor may treat a security, check or draft as received
upon written notification from another creditor that the specified
security, check, or draft has been sent.
(3) Upon notification that a check, draft, or order has been
dishonored or when securities have not been received within a
reasonable time, the creditor shall take the action required by this
part when payment or securities are not received on time.
(4) To temporarily finance a customer's receipt of securities
pursuant to an employee benefit plan registered on SEC Form S-8 or the
withholding taxes for an employee stock award plan, a creditor may
accept, in lieu of the securities, a properly executed exercise notice,
where applicable, and instructions to the issuer to deliver the stock
to the creditor. Prior to acceptance, the creditor must verify that the
issuer will deliver the securities promptly and the customer must
designate the account into which the securities are to be deposited.
(f) Exchange of securities. (1) To enable a customer to participate
in an offer to exchange securities which is made to all holders of an
issue of securities, a creditor may submit for exchange any securities
held in a margin account, without regard to the other provisions of
this part, provided the consideration received is deposited into the
account.
(2) If a nonmargin, nonexempted security is acquired in exchange
for a margin security, its retention, withdrawal, or sale within 60
days following its acquisition shall be treated as if the security is a
margin security.
(g) Valuing securities. The current market value of a security
shall be determined as follows:
(1) Throughout the day of the purchase or sale of a security, the
creditor shall use the security's total cost of purchase or the net
proceeds of its sale including any commissions charged.
(2) At any other time, the creditor shall use the closing sale
price of the security on the preceding business day, as shown by any
regularly published reporting or quotation service. If there is no
closing price, the creditor may use any reasonable estimate of the
market value of the security as of the close of business on the
preceding business day.
(h) Innocent mistakes. If any failure to comply with this part
results from a mistake made in good faith in executing a transaction or
calculating the amount of margin, the creditor shall not be deemed in
violation of this part if, promptly after the discovery of the mistake,
the creditor takes appropriate corrective action.
(i) Foreign currency. Freely convertible foreign currency may be
treated at its U.S. dollar equivalent, provided the currency is marked-
to-market daily.
Sec. 220.4 Margin account.
(a) Margin transactions. (1) All transactions not specifically
authorized for inclusion in another account shall be recorded in the
margin account.
(2) A creditor may establish separate margin accounts for the same
person to:
(i) Clear transactions for other creditors where the transactions
are introduced to the clearing creditor by separate creditors; or
(ii) Clear transactions through other creditors if the transactions
are cleared by separate creditors; or
(iii) Provide one or more accounts over which the creditor or a
third party investment adviser has investment discretion.
(b) Required margin--(1) Applicability. The required margin for
each long or short position in securities is set forth in Sec. 220.18
(the Supplement) and is subject to the following exceptions and special
provisions.
(2) Short sale against the box. A short sale ``against the box''
shall be treated as a long sale for the purpose of computing the equity
and the required margin.
(3) When-issued securities. The required margin on a net long or
net short commitment in a when-issued security is the margin that would
be required if the security were an issued margin security, plus any
unrealized loss on the commitment or less any unrealized gain.
(4) Stock used as cover. (i) When a short position held in the
account serves in lieu of the required margin for a short put, the
amount prescribed by paragraph (b)(1) of this section as the amount to
be added to the required margin in respect of short sales shall be
increased by any unrealized loss on the position.
(ii) When a security held in the account serves in lieu of the
required margin for a short call, the security shall be valued at no
greater than the exercise price of the short call.
(5) Accounts of partners. If a partner of the creditor has a margin
account with the creditor, the creditor shall disregard the partner's
financial relations with the firm (as shown in the partner's capital
and ordinary drawing accounts) in calculating the margin or equity of
the partner's margin account.
(6) Contribution to joint venture. If a margin account is the
account of a joint venture in which the creditor participates, any
interest of the creditor in the joint account in excess of the
[[Page 20393]]
interest which the creditor would have on the basis of its right to
share in the profits shall be treated as an extension of credit to the
joint account and shall be margined as such.
(7) Transfer of accounts. (i) A margin account that is transferred
from one creditor to another may be treated as if it had been
maintained by the transferee from the date of its origin, if the
transferee accepts, in good faith, a signed statement of the transferor
(or, if that is not practicable, of the customer), that any margin call
issued under this part has been satisfied.
(ii) A margin account that is transferred from one customer to
another as part of a transaction, not undertaken to avoid the
requirements of this part, may be treated as if it had been maintained
for the transferee from the date of its origin, if the creditor accepts
in good faith and keeps with the transferee account a signed statement
of the transferor describing the circumstances for the transfer.
(8) Credit denominated in foreign currency. A creditor may extend
credit denominated in any freely convertible foreign currency.
(9) Options. The following provisions are in force until June 1,
1997:
(i) Margin or cover for options on exempted debt securities,
certificates of deposit, stock indices, or securities exchange traded
options on foreign currencies. The required margin for each transaction
involving any short put or short call on an exempted debt security,
certificate of deposit, stock index, or foreign currency (if the option
is traded on a securities exchange), shall be the amount or position in
lieu of margin set forth in Sec. 220.18 (the Supplement).
(ii) Margin for options on equity securities. The required margin
for each transaction involving any short put or short call on an equity
security shall be the amount set forth in Sec. 220.18 (the Supplement).
(iii) Cover or positions in lieu of margin. No margin is required
for an option written on an equity security position when the account
holds any of the following:
(A) The underlying asset in the case of a short call, or a short
position in the underlying asset in the case of a short put;
(B) Securities immediately convertible into or exchangeable for the
underlying asset without the payment of money in the case of a short
call, if the right to convert or exchange does not expire on or before
the expiration date of the short call;
(C) An escrow agreement for the underlying security or foreign
exchange (in the case of a short call) or cash (in the case of a short
put);
(D) A long call on the same number of shares of the same underlying
asset if the long call does not expire before the expiration date of
the short call, and if the amount (if any), by which the exercise price
of the long call exceeds the exercise price of the short call is
deposited in the account;
(E) A long put on the same number of shares of the same underlying
asset if the long put does not expire before the expiration date of the
short put, and if the amount (if any), by which the exercise price of
the short put exceeds the exercise price of the long put is deposited
in the account;
(F) A warrant to purchase the underlying asset, in the case of a
short call, if the warrant does not expire on or before the expiration
date of the short call, and if the amount (if any), by which the
exercise price of the short call is deposited in the account. A warrant
used in lieu of the required margin under this provision shall
contribute no equity to the account.
(iv) Straddles. When both a short put and a short call are in a
margin account on the same number of shares of the same underlying
security, the required margin shall be the margin on either the short
put of the short call, whichever is greater, plus any unrealized loss
on the other option.
(v) Exclusive designation. The customer may designate at the time
the option order is entered which security position held in the account
is to serve in lieu of the required margin, if such service is offered
by the creditor; or the customer may have a standing agreement with the
creditor as to the method to be used for determining on any given day
which security position will be used in lieu of the margin to support
an option transaction. Any security held in the account which serves in
lieu of the required margin for a short put or a short call shall be
unavailable to support any other option transaction in the account.
(c) When additional margin is required--(1) Computing deficiency.
All transactions on the same day shall be combined to determine whether
additional margin is required by the creditor. For the purpose of
computing equity in an account, security positions are established or
eliminated and a credit or debit created on the trade date of a
security transaction. Additional margin is required on any day when the
day's transactions create or increase a margin deficiency in the
account and shall be for the amount of the margin deficiency so created
or increased.
(2) Satisfaction of deficiency. The additional required margin may
be satisfied by a transfer from the special memorandum account or by a
deposit of cash, margin securities, exempted securities, or any
combination thereof.
(3) Time limits. (i) A margin call shall be satisfied within one
payment period after the margin deficiency was created or increased.
(ii) The payment period may be extended for one or more limited
periods upon application by the creditor to its examining authority
unless the examining authority believes that the creditor is not acting
in good faith or that the creditor has not sufficiently determined that
exceptional circumstances warrant such action. Applications shall be
filed and acted upon prior to the end of the payment period or the
expiration of any subsequent extension.
(4) Satisfaction restriction. Any transaction, position, or deposit
that is used to satisfy one requirement under this part shall be
unavailable to satisfy any other requirement.
(d) Liquidation in lieu of deposit. If any margin call is not met
in full within the required time, the creditor shall liquidate
securities sufficient to meet the margin call or to eliminate any
margin deficiency existing on the day such liquidation is required,
whichever is less. If the margin deficiency created or increased is
$1000 or less, no action need be taken by the creditor.
(e) Withdrawals of cash or securities. (1) Cash or securities may
be withdrawn from an account, except if:
(i) Additional cash or securities are required to be deposited into
the account for a transaction on the same or a previous day; or
(ii) The withdrawal, together with other transactions, deposits,
and withdrawals on the same day, would create or increase a margin
deficiency.
(2) Margin excess may be withdrawn or may be transferred to the
special memorandum account (Sec. 220.5) by making a single entry to
that account which will represent a debit to the margin account and a
credit to the special memorandum account.
(3) If a creditor does not receive a distribution of cash or
securities which is payable with respect to any security in a margin
account on the day it is payable and withdrawal would not be permitted
under paragraph (e) of this section, a withdrawal transaction shall be
deemed to have occurred on the day the distribution is payable.
(f) Interest, service charges, etc. (1) Without regard to the other
provisions of this section, the creditor, in its usual practice, may
debit the following items
[[Page 20394]]
to a margin account if they are considered in calculating the balance
of such account:
(i) Interest charged on credit maintained in the margin account;
(ii) Premiums on securities borrowed in connection with short sales
or to effect delivery;
(iii) Dividends, interest, or other distributions due on borrowed
securities;
(iv) Communication or shipping charges with respect to transactions
in the margin account; and
(v) Any other service charges which the creditor may impose.
(2) A creditor may permit interest, dividends, or other
distributions credited to a margin account to be withdrawn from the
account if:
(i) The withdrawal does not create or increase a margin deficiency
in the account; or
(ii) The current market value of any securities withdrawn does not
exceed 10 percent of the current market value of the security with
respect to which they were distributed.
Sec. 220.5 Special memorandum account.
(a) A special memorandum account (SMA) may be maintained in
conjunction with a margin account. A single entry amount may be used to
represent both a credit to the SMA and a debit to the margin account. A
transfer between the two accounts may be effected by an increase or
reduction in the entry. When computing the equity in a margin account,
the single entry amount shall be considered as a debit in the margin
account. A payment to the customer or on the customer's behalf or a
transfer to any of the customer's other accounts from the SMA reduces
the single entry amount.
(b) The SMA may contain the following entries:
(1) Dividend and interest payments;
(2) Cash not required by this part, including cash deposited to
meet a maintenance margin call or to meet any requirement of a self-
regulatory organization that is not imposed by this part;
(3) Proceeds of a sale of securities or cash no longer required on
any expired or liquidated security position that may be withdrawn under
Sec. 220.4(e); and
(4) Margin excess transferred from the margin account under
Sec. 220.4(e)(2).
Sec. 220.6 Government securities account.
In a government securities account, a creditor may effect and
finance transactions involving government securities, provided the
transaction is not prohibited by section 15C of the Act or any rule
thereunder.
Sec. 220.7 Arbitrage account.
In an arbitrage account a creditor may effect and finance for any
customer bona fide arbitrage transactions. For the purpose of this
section, the term ``bona fide arbitrage'' means:
(a) A purchase or sale of a security in one market together with an
offsetting sale or purchase of the same security in a different market
at as nearly the same time as practicable for the purpose of taking
advantage of a difference in prices in the two markets; or
(b) A purchase of a security which is, without restriction other
then the payment of money, exchangeable or convertible within 90
calendar days of the purchase into a second security together with an
offsetting sale of the second security at or about the same time, for
the purpose of taking advantage of a concurrent disparity in the prices
of the two securities.
Sec. 220.8 Cash account.
(a) Permissible transactions. In a cash account, a creditor, may:
(1) Buy for or sell to any customer any security or other asset if:
(i) There are sufficient funds in the account; or
(ii) The creditor accepts in good faith the customer's agreement
that the customer will promptly make full cash payment for the security
or asset before selling it and does not contemplate selling it prior to
making such payment;
(2) Buy from or sell for any customer any security or other asset
if:
(i) The security is held in the account; or
(ii) The creditor accepts in good faith the customer's statement
that the security is owned by the customer or the customer's principal,
and that it will be promptly deposited in the account;
(3) Issue, endorse, or guarantee, or sell an option for any
customer as part of a covered option transaction; and
(4) Use an escrow agreement in lieu of the cash, cash equivalents
or underlying asset position if:
(i) In the case of a short call or a short put, the creditor is
advised by the customer that the required securities, assets or cash
are held by a person authorized to issue an escrow agreement and the
creditor independently verifies that the appropriate escrow agreement
will be delivered by the person promptly; or
(ii) In the case of a call issued, endorsed, guaranteed, or sold on
the same day the underlying asset is purchased in the account and the
underlying asset is to be delivered to a person authorized to issue an
escrow agreement, the creditor verifies that the appropriate escrow
agreement will be delivered by the person promptly.
(b) Time periods for payment; cancellation or liquidation--(1) Full
cash payment. A creditor shall obtain full cash payment for customer
purchases--
(i) Within one payment period of the date:
(A) Any nonexempted security was purchased;
(B) Any when-issued security was made available by the issuer for
delivery to purchasers;
(C) Any ``when distributed'' security was distributed under a
published plan;
(D) A security owned by the customer has matured or has been
redeemed and a new refunding security of the same issuer has been
purchased by the customer, provided:
(1) The customer purchased the new security no more than 35
calendar days prior to the date of maturity or redemption of the old
security;
(2) The customer is entitled to the proceeds of the redemption; and
(3) The delayed payment does not exceed 103 percent of the proceeds
of the old security.
(ii) In the case of the purchase of a foreign security, within one
payment period of the trade date or within one day after the date on
which settlement is required to occur by the rules of the foreign
securities market, provided this period does not exceed the maximum
time permitted by this part for delivery against payment transactions.
(2) Delivery against payment. If a creditor purchases for or sells
to a customer a security in a delivery against payment transaction, the
creditor shall have up to 35 calendar days to obtain payment if
delivery of the security is delayed due to the mechanics of the
transaction and is not related to the customer's willingness or ability
to pay.
(3) Shipment of securities, extension. If any shipment of
securities is incidental to consummation of a transaction, a creditor
may extend the payment period by the number of days required for
shipment, but not by more than one additional payment period.
(4) Cancellation; liquidation; minimum amount. A creditor shall
promptly cancel or otherwise liquidate a transaction or any part of a
transaction for which the customer has not made full cash payment
within the required time. A creditor may, at its option, disregard any
sum due from the customer not exceeding $1000.
(c) 90 day freeze. (1) If a nonexempted security in the account is
sold or delivered to another broker or dealer without having been
previously paid for in full by the customer, the privilege of
[[Page 20395]]
delaying payment beyond the trade date shall be withdrawn for 90
calendar days following the date of sale of the security. Cancellation
of the transaction other than to correct an error shall constitute a
sale.
(2) The 90 day freeze shall not apply if:
(i) Within the period specified in paragraph (b)(1) of this
section, full payment is received or any check or draft in payment has
cleared and the proceeds from the sale are not withdrawn prior to such
payment or check clearance; or
(ii) The purchased security was delivered to another broker or
dealer for deposit in a cash account which holds sufficient funds to
pay for the security. The creditor may rely on a written statement
accepted in good faith from the other broker or dealer that sufficient
funds are held in the other cash account.
(d) Extension of time periods; transfers. (1) Unless the creditor's
examining authority believes that the creditor is not acting in good
faith or that the creditor has not sufficiently determined that
exceptional circumstances warrant such action, it may upon application
by the creditor:
(i) Extend any period specified in paragraph (b) of this section;
(ii) Authorize transfer to another account of any transaction
involving the purchase of a margin or exempted security; or
(iii) Grant a waiver from the 90 day freeze.
(2) Applications shall be filed and acted upon prior to the end of
the payment period, or in the case of the purchase of a foreign
security within the period specified in paragraph (b)(1)(ii) of this
section, or the expiration of any subsequent extension.
Sec. 220.9 Nonsecurities credit and employee stock ownership account.
(a) In a nonsecurities credit account a creditor may:
(1) Effect and carry transactions in commodities;
(2) Effect and carry transactions in foreign exchange;
(3) Extend and maintain secured or unsecured nonpurpose credit,
subject to the requirements of paragraph (b) of this section; and
(4) Extend and maintain credit to employee stock ownership plans
without regard to the other sections of this part.
(b) Every extension of credit, except as provided in paragraphs
(a)(1) and (a)(2) of this section, shall be deemed to be purpose credit
unless, prior to extending the credit, the creditor accepts in good
faith from the customer a written statement that it is not purpose
credit. The statement shall conform to the requirements established by
the Board. To accept the customer's statement in good faith, the
creditor shall be aware of the circumstances surrounding the extension
of credit and shall be satisfied that the statement is truthful.
Sec. 220.10 Omnibus account.
(a) In an omnibus account, a creditor may effect and finance
transactions for a broker or dealer who is registered with the SEC
under section 15 of the Act and who gives the creditor written notice
that:
(1) All securities will be for the account of customers of the
broker or dealer; and
(2) Any short sales effected will be short sales made on behalf of
the customers of the broker or dealer other than partners.
(b) The written notice required by paragraph (a) of this section
shall conform to any SEC rule on the hypothecation of customers'
securities by brokers or dealers.
Sec. 220.11 Broker-dealer credit account.
(a) Permissible transactions. In a broker-dealer credit account, a
creditor may:
(1) Purchase any security from or sell any security to another
creditor or person regulated by a foreign securities authority under a
good faith agreement to promptly deliver the security against full
payment of the purchase price.
(2) Effect or finance transactions of any of its owners if the
creditor is a clearing and servicing broker or dealer owned jointly or
individually by other creditors.
(3) Extend and maintain credit to any partner or stockholder of the
creditor for the purpose of making a capital contribution to, or
purchasing stock of, the creditor, affiliated corporation or another
creditor.
(4) Extend and maintain, with the approval of the appropriate
examining authority:
(i) Credit to meet the emergency needs of any creditor; or
(ii) Subordinated credit to another creditor for capital purposes,
if the other creditor:
(A) Is an affiliated corporation or would not be considered a
customer of the lender apart from the subordinated loan; or
(B) Will not use the proceeds of the loan to increase the amount of
dealing in securities for the account of the creditor, its firm or
corporation or an affiliated corporation.
(5) Effect transactions for a customer as part of a ``prime
broker'' arrangement in conformity with SEC guidelines.
(b) Affiliated corporations. For purposes of paragraphs (a)(3) and
(a)(4) of this section ``affiliated corporation'' means a corporation
all the common stock of which is owned directly or indirectly by the
firm or general partners and employees of the firm, or by the
corporation or holders of the controlling stock and employees of the
corporation and the affiliation has been approved by the creditor's
examining authority.
Sec. 220.12 Market functions account.
(a) Requirements. In a market functions account, a creditor may
effect or finance the transactions of market participants in accordance
with the following provisions. A separate record shall be kept for the
transactions specified for each category described in paragraphs (b)
through (e) of this section. Any position in a separate record shall
not be used to meet the requirements of any other category.
(b) Specialists.--(1) Applicability. A creditor may clear or
finance specialist transactions a
FR Doc. 96-10607 Securities Credit Transactions; Review of Regulation T, ``Credit by Brokers and Dealers''
nd permitted offset positions for any
specialist, or any specialist joint account, in which all participants,
or all participants other than the creditor, are registered as
specialists on a national securities exchange that requires regular
reports on the use of specialist credit from the registered
specialists.
(2) Required margin. The required margin for a specialist's
transactions shall be:
(i) Good faith margin for:
(A) Any long or short position in a security in which the
specialist makes a market;
(B) Any wholly-owned margin security or exempted security; or
(C) Any permitted offset position.
(ii) The margin prescribed by Sec. 220.18 (the Supplement) when a
security purchased or sold short in the account does not qualify as a
specialist or permitted offset position.
(3) Additional margin; restriction on ``free-riding.'' (i) Except
as required by paragraph (b)(4) of this section, the creditor shall
issue a margin call on any day when additional margin is required as a
result of specialist transactions. The creditor may allow the
specialist a maximum of one payment period to satisfy a margin call.
(ii) If a specialist fails to satisfy a margin call within the
period specified in paragraph (b)(3) of this section (and the creditor
is required to liquidate securities to satisfy the call), the creditor
shall be prohibited for a 15 calendar day
[[Page 20396]]
period from extending any further credit to the specialist to finance
transactions in nonspecialty securities.
(iii) The restriction on ``free-riding'' shall not apply to:
(A) Any specialist on a national securities exchange that has an
SEC-approved rule on ``free-riding'' by specialists; or
(B) the acquisition or liquidation of a permitted offset position.
(4) Deficit status. On any day when a specialist's separate record
would liquidate to a deficit, the creditor shall not extend any further
specialist credit in the account and shall issue a margin call at least
as large as the deficit. If the call is not met by noon of the
following business day, the creditor shall liquidate positions in the
specialist's account.
(5) Withdrawals. Withdrawals may be permitted to the extent that
the equity exceeds the margin requirements specified in paragraph
(b)(2) of this section.
(6) Permitted offset positions. Until June 1, 1997, a specialist in
options may establish, on a share-for-share basis, a long or short
position in the securities underlying the options in which the
specialist makes a market, and a specialist in securities other than
options may purchase or write options overlying the securities in which
the specialist makes a market, if the account holds the following
permitted offset positions:
(i) A short option position which is ``in or at the money'' and is
not offset by a long or short option position for an equal or greater
number of shares of the same underlying security which is ``in the
money'';
(ii) A long option position which is ``in or at the money'' and is
not offset by a long or short option position for an equal or greater
number of shares of the same underlying security which is ``in the
money'';
(iii) A short option position against which an exercise notice was
tendered;
(iv) A long option position which was exercised;
(v) A net long position in a security (other than an option) in
which the specialist makes a market; or
(vi) A net short position in a security (other than an option) in
which the specialist makes a market.
(c) Underwriters and distributors. A creditor may effect or finance
for any dealer or group of dealers transactions for the purpose of
facilitating the underwriting or distribution of all or a part of an
issue of securities with a good faith margin.
(d) OTC marketmakers and third marketmakers. (1) A creditor may
clear or finance with a good faith margin, marketmaking transactions
for a creditor who is a registered NASDAQ marketmaker or a qualified
third marketmaker as defined in SEC Rule 3b-8 (17 CFR 240.3b-8).
(2) If the credit extended to a marketmaker ceases to be for the
purpose of marketmaking, or the dealer ceases to be a marketmaker for
an issue of securities for which credit was extended, the credit shall
be subject to the margin specified in Sec. 220.18 (the Supplement).
(e) Odd-lot dealers. A creditor may clear and finance odd-lot
transactions for any creditor who is registered as an odd-lot dealer on
a national securities exchange with a good faith margin.
Sec. 220.13 Arranging for loans by others.
A creditor may arrange for the extension or maintenance of credit
to or for any customer by any person, provided the creditor does not
willfully arrange credit that violates parts 207, 221, or 224 of this
chapter.
Sec. 220.14 Clearance of securities, options, and futures.
(a) Credit for clearance of securities. The provisions of this part
shall not apply to the extension or maintenance of any credit that is
not for more than one day if it is incidental to the clearance of
transactions in securities directly between members of a national
securities exchange or association or through any clearing agency
registered with the SEC.
(b) Deposit of securities with a clearing agency. The provisions of
this part shall not apply to the deposit of securities with an options
or futures clearing agency for the purpose of meeting the deposit
requirements of the agency if:
(1) The clearing agency:
(i) Issues, guarantees performance on, or clears transactions in,
any security (including options on any security, certificate of
deposit, securities index or foreign currency); or
(ii) Guarantees performance of contracts for the purchase or sale
of a commodity for future delivery or options on such contracts;
(2) The clearing agency is registered with the Securities and
Exchange Commission or is the clearing agency for a contract market
regulated by the Commodity Futures Trading Commission; and
(3) The deposit consists of any margin security and complies with
the rules of the clearing agency that have been approved by the
Securities and Exchange Commission or the Commodity Futures Trading
Commission.
Sec. 220.15 Borrowing by creditors.
(a) Restrictions on borrowing. A creditor may not borrow in the
ordinary course of business as a broker or dealer using as collateral
any registered nonexempted security, except:
(1) From or through a member bank of the Federal Reserve System; or
(2) From any nonmember bank that has filed with the Board an
agreement as prescribed in paragraph (b) of this section, which
agreement is still in effect; or
(3) From another creditor if the loan is permissible under this
part.
(b) Agreements of nonmember banks. (1) A nonmember bank shall file
an agreement that conforms to the requirements of section 8(a) of the
Act (See Form FR T-1, T-2).
(2) Any nonmember bank may terminate its agreement if it obtains
the written consent of the Board.
Sec. 220.16 Borrowing and lending securities.
(a) Without regard to the other provisions of this part, a creditor
may borrow or lend securities for the purpose of making delivery of the
securities in the case of short sales, failure to receive securities
required to be delivered, or other similar situations. Each borrowing
shall be secured by a deposit of one or more of the following: cash,
cash equivalents, foreign sovereign nonconvertible debt securities that
are margin securities, collateral acceptable for borrowings of
securities pursuant to SEC Rule 15c3-3 (17 CFR 240.15c3-3), or
irrevocable letters of credit issued by a bank insured by the Federal
Deposit Insurance Corporation or a foreign bank that has filed an
agreement with the Board on Form FR T-1, T-2. Such deposit made with
the lender of the securities shall have at all times a value at least
equal to 100 percent of the market value of the securities borrowed,
computed as of the close of the preceding business day. If a creditor
reasonably anticipates a short sale, such borrowing may be made up to
one standard settlement cycle in advance of trade date.
(b) A creditor may lend non-U.S. traded foreign securities to a
foreign person (or borrow such securities for the purpose of relending
them to a foreign person) for any purpose lawful in the country in
which they are to be used. Each borrowing shall be secured with
collateral having at all times a value at least equal to 100 percent of
the market value of the securities borrowed, computed as of the close
of the preceding business day.
[[Page 20397]]
Sec. 220.17 Requirements for the list of marginable OTC stocks and the
list of foreign margin stocks.
(a) Requirements for inclusion on the list of marginable OTC
stocks. Except as provided in paragraph (f) of this section, OTC margin
stock shall meet the following requirements:
(1) Four or more dealers stand willing to, and do in fact, make a
market in such stock and regularly submit bona fide bids and offers to
an automated quotations system for their own accounts;
(2) The minimum average bid price of such stock, as determined by
the Board, is at least $5 per share;
(3) The stock is registered under section 12 of the Act, is issued
by an insurance company subject to section 12(g)(2)(G) of the Act, is
issued by a closed-end investment management company subject to
registration pursuant to section 8 of the Investment Company Act of
1940 (15 U.S.C. 80a-8), is an American Depository Receipt (ADR) of a
foreign issuer whose securities are registered under section 12 of the
Act, or is a stock of an issuer required to file reports under section
15(d) of the Act;
(4) Daily quotations for both bid and asked prices for the stock
are continuously available to the general public;
(5) The stock has been publicly traded for at least six months;
(6) The issuer has at least $4 million of capital, surplus, and
undivided profits;
(7) There are 400,000 or more shares of such stock outstanding in
addition to shares held beneficially by officers, directors or
beneficial owners of more than 10 percent of the stock;
(8) There are 1,200 or more holders of record, as defined in SEC
Rule 12g5-1 (17 CFR 240.12g5-1), of the stock who are not officers,
directors or beneficial owners of 10 percent or more of the stock, or
the average daily trading volume of such stock as determined by the
Board, is at least 500 shares; and
(9) The issuer or a predecessor in interest has been in existence
for at least three years.
(b) Requirements for continued inclusion on the list of marginable
OTC stocks. Except as provided in paragraph (f) of this section, OTC
margin stock shall meet the following requirements:
(1) Three or more dealers stand willing to, and do in fact, make a
market in such stock and regularly submit bona fide bids and offers to
an automated quotations system for their own accounts;
(2) The minimum average bid price of such stocks, as determined by
the Board, is at least $2 per share;
(3) The stock is registered as specified in paragraph (a)(3) of
this section;
(4) Daily quotations for both bid and asked prices for the stock
are continuously available to the general public;
(5) The issuer has at least $1 million of capital, surplus, and
undivided profits;
(6) There are 300,000 or more shares of such stock outstanding in
addition to shares held beneficially by officers, directors, or
beneficial owners of more than 10 percent of the stock; and
(7) There continue to be 800 or more holders of record, as defined
in SEC Rule 12g5-1 (17 CFR 240.12g5-1), of the stock who are not
officers, directors, or beneficial owners of 10 percent or more of the
stock, or the average daily trading volume of such stock, as determined
by the Board, is at least 300 shares.
(c) Requirements for inclusion on the list of foreign margin
stocks. Except as provided in paragraph (f) of this section, a foreign
margin stock shall be a foreign security deemed to have a ``ready
market'' for purposes of SEC Rule 15c3-1 (17 CFR 240.15c3-1) or meet
the following requirements:
(1) The security is listed for trading on or through the facilities
of a foreign securities exchange or a recognized foreign securities
market and has been trading on such exchange or market for at least six
months;
(2) Daily quotations for both bid and asked or last sale prices for
the security provided by the foreign securities exchange or foreign
securities market on which the security is traded are continuously
available to creditors in the United States pursuant to an electronic
quotation system;
(3) The aggregate market value of shares, the ownership of which is
unrestricted, is not less than $1 billion;
(4) The average weekly trading volume of such security during the
preceding six months is either at least 200,000 shares or $1 million;
and
(5) The issuer or a predecessor in interest has been in existence
for at least five years.
(d) Requirements for continued inclusion on the list of foreign
margin stocks. Except as provided in paragraph (f) of this section, a
foreign margin stock shall be a foreign security deemed to have a
``ready market'' for purposes of SEC Rule 15c3-1 (17 CFR 240.15c3-1) or
meet the following requirements:
(1) The security continues to meet the requirements specified in
paragraphs (c) (1) and (2) of this section;
(2) The aggregate market value of shares, the ownership of which is
unrestricted, is not less than $500 million; and
(3) The average weekly trading volume of such security during the
preceding six months is either at least 100,000 shares or $500,000.
(e) Removal from the lists. The Board shall periodically remove
from the lists any stock that:
(1) Ceases to exist or of which the issuer ceases to exist; or
(2) No longer substantially meets the provisions of paragraph (b)
or (d) of this section or the definition of OTC margin stock.
(f) Discretionary authority of Board. Without regard to other
paragraphs of this section, the Board may add to, or omit or remove
from the list of marginable OTC stocks and the list of foreign margin
stocks and equity security, if in the judgment of the Board, such
action is necessary or appropriate in the public interest.
(g) Unlawful representations. It shall be unlawful for any creditor
to make,or cause to be made, any representation to the effect that the
inclusion of a security on the list of marginable OTC stocks or the
list of foreign margin stocks is evidence that the Board or the SEC has
in any way passed upon the merits of, or given approval to, such
security or any transactions therein. Any statement in an advertisement
or other similar communication containing a reference to the Board in
connection with the lists or stocks on those lists shall be an unlawful
representation.
Sec. 220.18 Supplement: Margin requirements.
The required margin for each security position held in a margin
account shall be as follows:
(a) Margin equity security, except for an exempted security, money
market mutual fund or exempted securities mutual fund, warrant on a
securities index or foreign currency or a long position in an option:
50 percent of the current market value of the security or the
percentage set by the regulatory authority where the trade occurs,
whichever is greater.
(b) Exempted security, registered nonconvertible debt security, OTC
margin bond, money market mutual fund or exempted securities mutual
fund: The margin required by the creditor in good faith or the
percentage set by the regulatory authority where the trade occurs,
whichever is greater.
(c) Short sale of a nonexempted security, except for a registered
nonconvertible debt security or OTC margin bond: 150 percent of the
current
[[Page 20398]]
market value of the security, or 100 percent of the current market
value if a security exchangeable or convertible within 90 calendar days
without restriction other than the payment of money into the security
sold short is held in the account.
(d) Short sale of an exempted security, registered nonconvertible
debt security or OTC margin bond: 100 percent of the current market
value of the security plus the margin required by the creditor in good
faith.
(e) Nonmargin, nonexempted security: 100 percent of the current
market value.
(f) Put or call on a security, certificate of deposit, securities
index or foreign currency or a warrant on a securities index or foreign
currency:
(1) In the case of puts and calls issued by a registered clearing
corporation and listed or traded on a registered national securities
exchange or a registered securities association and registered warrants
on a securities index or foreign currency, the amount, or other
position (except in the case of an option on an equity security until
June 1, 1997), specified by the rules of the registered national
securities exchange or the registered securities association authorized
to trade the option or warrant, provided that all such rules have been
approved or amended by the SEC; or
(2) In the case of all other puts and calls, the amount, or other
position, specified by the maintenance rules of the creditor's
examining authority.
Sec. 220.19 [Removed]
3. Section 220.19 is removed.
Secs. 220.106, 220.107, 220.109, 220.112, 220.114-220.116, 220.120,
220.125, 220.129, 220.130 [Removed]
Interpretations
4. The following sections are removed and reserved: 220.106,
220.107, 220.109, 220.112, 220.114, 220.115, 220.116, 220.120, 220.125,
220.129, and 220.130.
By order of the Board of Governors of the Federal Reserve
System, April 24, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96-10607 Filed 5-3-96; 8:45 am]
BILLING CODE 6210-01-P
Complete official Federal Register PDF
FR Doc. 96-10471 Uniform Rules of Practice and Procedure
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20344-20350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10471]
=======================================================================
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 308
RIN 3064-AB49
Uniform Rules of Practice and Procedure
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is amending
its regulatory provisions implementing the Uniform Rules of Practice
and Procedure (Uniform Rules). The final rule is intended to clarify
certain provisions and to increase the efficiency and fairness of
administrative hearings.
EFFECTIVE DATE: June 5, 1996.
FOR FURTHER INFORMATION CONTACT: Andrea Winkler, Counsel, Federal
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC
20429; (202) 736-0762.
SUPPLEMENTARY INFORMATION:
A. Background
Section 916 of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA), Pub. L. 101-73, 103 Stat. 183 (1989),
required the FDIC, Office of the Comptroller of the Currency (OCC),
Board of Governors of the Federal Reserve System (Board), Office of
Thrift Supervision (OTS), and National Credit Union Administration
(NCUA)(collectively agencies) to develop uniform rules and procedures
for administrative hearings. The agencies each adopted final Uniform
Rules in August 1991.1 Based on their experience, the agencies
have identified sections of the Uniform Rules that should be modified.
Accordingly, the agencies proposed amendments to the Uniform Rules on
June 23, 1995 (60 FR 32882).
---------------------------------------------------------------------------
\1\ The agencies issued a joint notice of proposed rulemaking on
Monday, June 17, 1991 (56 FR 27790). The agencies promulgated their
final rules on the following dates: OCC on August 9, 1991 (56 FR
38024); Board on August 9, 1991 (56 FR 38052); FDIC on August 9,
1991 (56 FR 37975); OTS on August 12, 1991 (56 FR 38317); and NCUA
on August 8, 1991 (56 FR 37767).
---------------------------------------------------------------------------
The FDIC received one comment on the proposal. The commenter
generally supported the proposal, but suggested improvements. The FDIC
also considered comments received by the other agencies.
The final rule implements the proposal with minor changes. The
following section-by-section analysis summarizes the final rule and
highlights the changes from the proposal that the FDIC has made after
considering the commenters' suggestions.
The OTS, OCC, Board and NCUA are publishing separate final rules
that are substantively identical to the FDIC's final rule. The OTS,
OCC, and Board rules appear elsewhere in this Federal Register.
B. Section-by-Section Summary and Discussion of Amendments to the
Uniform Rules
Section 308.1 Scope
The proposal added two statutory provisions to the list of civil
money penalty provisions to which the Uniform Rules apply. The two
provisions were enacted by the Riegle Community Development and
Regulatory Improvement Act of 1994 (CDRI), Pub. L. 103-325, 108 Stat.
2160.
The first provision, CDRI section 406, amended the Bank Secrecy Act
(BSA) (31 U.S.C. 5321), to require the Secretary of the Treasury to
delegate authority to the Federal banking agencies (as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) to
impose civil money penalties for BSA violations.
The second, CDRI section 525, amended section 102 of the Flood
Disaster Protection Act of 1973 (FDPA) (42 U.S.C. 4012a) to give each
``Federal entity for lending regulation'' authority to assess civil
money penalties against a regulated lending institution if the
institution has a pattern or practice of committing violations of the
FDPA or the notice requirements of the National Flood Insurance Act of
1968 (NFIA) (42 U.S.C. 4104a). Under the FDPA, the term ``Federal
entity for lending
[[Page 20345]]
regulation'' includes the agencies and the Farm Credit Administration.
Section 525 of CDRI also gave the agencies authority to require a
regulated lending institution to take remedial actions that are
necessary to ensure that the institution complies with the requirements
of the national flood insurance program if: (1) The institution has
engaged in a pattern or practice of noncompliance with regulations
issued pursuant to the FDPA and NFIA; and (2) has not demonstrated
measurable improvement in compliance despite the assessment of civil
money penalties. The final rule adds a new paragraph to the scope
section that reflects this additional authority.
The FDIC received no comments on this section, which is adopted as
proposed with the addition of the aforementioned paragraph pertaining
to remedial action.
Section 308.6 Appearance and Practice in Adjudicatory Proceedings
The proposal permitted the administrative law judge (ALJ) to
require counsel who withdraws from representing a party to accept
service of papers for that party until either: (1) A new counsel has
filed a notice of appearance; or (2) the party indicates that he or she
will proceed on a pro se basis.
The FDIC received one comment on this section. The commenter
suggested that the proposal does not adequately address certain
situations: for example, when counsel withdraws because of lack of
payment of legal fees that is caused by an agency asset freeze, or
withdraws because the client discharged him or her. The commenter's
implication is that it is unfair to require counsel to continue to
accept service in these situations. Moreover, the commenter expressed
concern that the administrative proceeding may become involved in a
dispute between the client and counsel when the ALJ requires counsel to
continue to accept service after a client discharges counsel. The
commenter suggested that the rule should require that service be given
to both the unreplaced counsel and the party.
The proposal was intended to ensure that a lawyer is always
available to receive service in order to prevent a party from halting
the administrative proceedings simply by evading service. The
regulatory text is clear, however, that the ALJ has discretion whether
to require former counsel to continue to accept service. Fairness to
counsel is among the factors the ALJ would consider in exercising this
discretion, and the FDIC therefore believes that the provision as
proposed is sufficiently flexible to accommodate the concerns raised by
the commenter.
The final rule changes the proposal's reference from ``service of
process'' to ``service'' to clarify that this section applies to all
papers that the party is entitled to receive. This section is otherwise
adopted as proposed.
Section 308.8 Conflicts of Interest
The proposal sought to improve in two ways the provisions governing
conflicts of interest that arise when counsel represents multiple
persons connected with a proceeding.
First, the proposal sought to protect the interests of individuals
and financial institutions by expanding the circumstances under which
counsel must certify that he or she has obtained a waiver from non-
parties of any potential conflict of interest. The former rule required
counsel to obtain waivers only from non-party institutions ``to which
notice of the proceedings must be given''. The proposal required
counsel to obtain waivers from all parties and non-parties that counsel
represents on a matter relevant to an issue in the proceeding. It thus
ensured that all appropriate party and non-party individuals and
institutions are informed of potential conflicts.
Second, the proposal simplified this provision by eliminating the
requirement for counsel to certify that each client has asserted that
there are no conflicts of interest. The FDIC believes that the former
provision was superfluous because the responsibility for identifying
potential conflicts resides with counsel.
The FDIC received one comment on this section. The commenter noted
that the proposal may inhibit multiple representation that otherwise
complies with applicable ethics rules. The commenter suggested that the
proposal could inappropriately tilt the proceeding in favor of the
agencies.
The provision does not limit the right of any party to
representation by the counsel of the party's choice. Rather, it ensures
that all interested persons are informed of potential conflicts so that
they may avoid the conflict if they choose. In the FDIC's view, it is
reasonable to establish a baseline standard requiring the affirmative
waiver of conflicts by all affected persons or entities in order to
ensure the integrity of the administrative adjudication process. State
rules of professional responsibility that impose more stringent ethical
standards are unaffected by this requirement.
In addition, the FDIC is unpersuaded by the argument that the
conflicts provision grants the agencies significant advantage in a
proceeding. Persons and entities may be well and vigorously represented
even if they are not all represented by the same counsel.
Therefore, the FDIC adopts this section as proposed.
Section 308.11 Service of Papers
The proposal changed this section by permitting parties, the Board
of Directors, and ALJs to serve a subpoena on a party by delivering it
to a person of suitable age and discretion at a party's place of work.
One comment was received by the agencies on this section. The commenter
supported the intent of the proposal, but asserted that permitting
service at a person's place of work was too broad to be effective,
particularly where a bank has numerous branches.
The FDIC interpreted the phrase ``person's place of work'' as used
in the proposal to mean the physical location at which an individual
works and not as any office of the corporation or association that
employs the person. To avoid confusion, the FDIC has added specific
reference to physical location to the regulatory text. In addition, the
final rule states expressly that only an individual, not a corporation
or association, may be served at a residence or place of work.
The same comment points out, however, that the former Uniform Rules
did not permit certain methods of service that are useful for serving a
corporation or other association. The final rule, therefore, permits
service on a party, corporation or other association by delivery of a
copy of a notice to an officer, managing or general agent, or to any
other agent authorized by appointment or by law to receive service of
process. The final rule also provides that, if the agent is one
authorized by statute to receive service and the statute so requires,
the serving party must also mail a copy to the party. The final rule
also restructures this provision for clarity.
Section 308.12 Construction of Time Limits
The proposal clarified that the additional time allotted for
responding to papers served by mail, delivery service, or electronic
media transmission under Sec. 308.12(c) is not included in determining
whether an act is required to be performed within ten days. The
proposal also clarified that additional time allotted for responding to
papers served by mail, delivery, or electronic media transmission is
counted by calendar days and, therefore, a party must count Saturdays,
Sundays,
[[Page 20346]]
and holidays when calculating a time deadline.
The FDIC received no comments on this section, which is adopted as
proposed.
Section 308.20 Amended Pleadings
The proposal changed this section to permit a party to amend its
pleadings without leave of the ALJ and to permit the ALJ to admit
evidence over the objection that the evidence does not fall directly
within the scope of the issues raised by a notice or answer.
The FDIC received one comment on this section. The commenter
asserted that the change could unduly prejudice a party if a notice
were amended to add or delete allegations immediately prior to the
hearing. The commenter expressed concern that the amendment would give
a party insufficient time to seek additional discovery or file for
summary judgment.
The regulatory text gives the ALJ discretion to revise the hearing
schedule to ensure that no prejudice results from last minute
amendments to a notice. The FDIC believes this approach is adequate to
avoid prejudice to a party and, therefore, adopts this section as
proposed.
Section 308.24 Scope of Document Discovery
The former Uniform Rules were silent on the use of interrogatories.
The proposal expressly prohibited parties from using interrogatories on
the grounds that other discovery tools are more efficient and less
burdensome and therefore more appropriate to administrative
adjudications.
The proposal also sought to focus document discovery requests so
that they are not unreasonable, oppressive, excessive in scope, or
unduly burdensome to any of the parties.
Accordingly, the proposal preserved the former rule's limitation on
document discovery by permitting discovery only of documents that have
material relevance. However, the proposal specifically provided that a
request should be considered unreasonable, oppressive, excessive in
scope, or unduly burdensome if, among other things: (1) it fails to
include justifiable limitations on the time period covered and the
geographic locations to be searched; (2) the time provided to respond
in the request is inadequate; or (3) the request calls for copies of
documents to be delivered to the requesting party and fails to include
the requestor's written agreement to pay in advance for the copying, in
accordance with Sec. 308.25.
Under the proposal, the scope of permissible document discovery is
not as broad as that allowed under Federal Rule of Civil Procedure
26(b) (28 U.S.C. app.). Historically, given the specialized nature of
enforcement proceedings in regulated industries, discovery in
administrative proceedings has not been as expansive as it is in civil
litigation.
The agencies received no significant comments on this section and,
therefore, the FDIC adopts it as proposed.
Section 308.25 Request for Document Discovery From Parties
The FDIC proposed several changes to Sec. 308.25. First, the
proposal sought to reduce unnecessary burden by permitting a party to:
(1) respond to document discovery either by producing documents as they
are kept in the ordinary course of business or by organizing them to
correspond to the categories in a document request; and (2) identify
similar documents by category when they are voluminous and are
protected by the deliberative process, attorney-client, or attorney-
work-product privilege.
The proposal also amended section 308.25 to permit a party to
require payment in advance for the costs of copying and shipping
requested documents and clarified that, if a party has stated its
intention to file a timely motion for interlocutory review, the ALJ may
not release, or order a party to produce, documents withheld on grounds
of privilege until the motion for interlocutory review has been
decided.
The FDIC received one comment on this section, and one other
comment was received by the agencies. One commenter sought guidance on
when, how, and to whom a party must express an ``intention'' to file a
timely motion for interlocutory review.
Because it is the ALJ who may not release or order a party to
produce documents, it was implicit in the proposed regulatory text that
a party must make the intention to seek interlocutory review known to
the ALJ. For clarity's sake, the final rule adds language to this
effect.
Another commenter suggested that a request for interlocutory review
should stay the proceeding.
Under Sec. 308.28(d) of the Uniform Rules, a party may request that
a proceeding be stayed during the pendency of an interlocutory review
and the ALJ has the discretion to decide whether a stay is appropriate.
The FDIC believes that this procedure adequately protects the parties.
For this reason and to avoid adding unnecessary delays in the
administrative proceedings, the FDIC declines to provide for an
automatic stay whenever a party requests interlocutory review.
One commenter asserted that permitting the FDIC to require payment
in advance for document copying and shipping costs would give the FDIC
an advantage over other creditors if the party is bankrupt following
the administrative hearing. The FDIC finds that this situation is rare
and therefore does not outweigh the FDIC's need to ensure that it
receives payment. Moreover, the provision does not preclude other
creditors from requiring prepayment for products or services.
Accordingly, the FDIC adopts this section as proposed.
Section 308.27 Deposition of Witness Unavailable for Hearing
The proposal clarified that a party may serve a deposition subpoena
on a witness who is unavailable by serving the subpoena on the
witness's authorized representative. The FDIC does not include this
proposed change because in Sec. 308.11(d), the final rule expressly
permits a party to serve a subpoena by delivering the subpoena to an
agent, which includes delivery to an authorized representative.
Therefore, the proposed change to Sec. 308.27 would be redundant.
The FDIC received no comments on this section, and makes no change
to it.
Section 308.33 Public Hearings
The proposal changed this section to specify that a party must file
a motion for a private hearing with the Executive Secretary and not the
ALJ but must serve the ALJ with a copy of the motion.
The FDIC received no comments on this section, which is adopted as
proposed.
Section 308.34 Hearing Subpoenas
The former Uniform Rules did not specifically require that a party
inform all other parties when a subpoena to a non-party is issued. The
proposal required that, after a hearing subpoena is issued by the ALJ,
the party that applied for the subpoena must serve a copy of it on each
party. Under the proposal, any party may move to quash any hearing
subpoena and must serve the motion on each other party.
The FDIC received no comments on this section, which is adopted as
proposed.
Section 308.35 Conduct of Hearings
The proposal limited the number of counsel permitted to examine a
witness and clarified that hearing transcripts may be obtained only
from the court reporter. The former Uniform Rules were silent on these
issues.
[[Page 20347]]
The FDIC received no comments on this section, which is adopted as
proposed.
Section 308.37 Post-Hearing Filings
The proposal changed the title of this section from ``Proposed
findings and conclusions'' to ``Post-hearing filings'' to describe more
accurately the content of the section.
The proposal also moved, from Sec. 308.35(b) to Sec. 308.37(a), the
provision that requires the ALJ to serve each party with notice of the
filing of the certified transcript of the hearing (including hearing
exhibits). The proposal added a requirement that the ALJ must use the
same method of service for this notice.
Finally, the proposal clarified that the ALJ may, when appropriate,
permit parties more than the allotted 30 days to file proposed findings
of fact, proposed conclusions of law, and a proposed order.
The FDIC received no comments on this section, which is adopted as
proposed.
Section 308.38 Recommended Decision and Filing of Record
Under the former Uniform Rules, the ALJ was not required to file an
index of the record when he filed the record with the Board of
Directors. The proposal added this requirement and reorganized this
section to improve its clarity.
The FDIC received no comments on this section, which is adopted as
proposed.
C. Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act, the
FDIC hereby certifies that this final rule will not have a significant
economic impact on a substantial number of small entities. Accordingly,
a regulatory flexibility analysis is not required.
This final rule only imposes procedural requirements in
administrative adjudications. It contains no substantive requirements.
It improves the Uniform Rules of Practice and Procedure and facilitates
the orderly determination of administrative proceedings. The changes in
this final rule are primarily clarifications and impose no significant
additional burdens on regulated institutions, parties to administrative
actions, or counsel.
D. Effective Date
Section 302(b) of the Riegle Community Development and Regulatory
Improvement Act of 1994 (Pub. L. 103-325, September 29, 1994) provides
that new regulations and amendments to regulations prescribed by the
federal banking agencies shall take effect on the first day of a
calendar quarter which begins on or after the date on which the
regulation is published in final form, unless the agency determines for
good cause that the regulation should become effective at an earlier
date or the regulation is required to become effective at some other
date determined by law. The Administrative Procedure Act (5 U.S.C. 551
et seq.) provides that regulations shall become effective thirty days
after their publication in the Federal Register. 5 U.S.C. 553. Thus,
this amendment to Part 308 of the FDIC's regulations shall become
effective on June 5, 1996.
List of Subjects in 12 CFR Part 308
Administrative practice and procedure, Bank deposit insurance,
Claims, Crime, Equal access to justice, Investigations, Lawyers,
Penalties.
Authority and Issuance
For the reasons set out in the preamble, part 308 of chapter III of
title 12 of the Code of Federal Regulations is amended as set forth
below:
PART 308--RULES OF PRACTICE AND PROCEDURE
1. The authority citation for part 308 is revised to read as
follows:
Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505,
1817, 1818, 1820, 1831o, 1972, 3102, 3108(a), 3909, 4717; 15 U.S.C.
78 (h) and (i), 78o-4(c), 78o-5, 78q-1, 78u, 78u-2, 78u-3, and 78w;
31 U.S.C. 330, 5321; 42 U.S.C. 4012a.
Subpart A--[Amended]
2. In Sec. 308.1, paragraph (e)(8) is amended by removing ``and''
after the semicolon, paragraphs (e)(10) and (e)(11) are added,
paragraph (f) is redesignated as paragraph (g) and revised, and new
paragraph (f) is added to read as follows:
Sec. 308.1 Scope.
* * * * *
(e) * * *
(10) Any provision of law referenced in section 102(f) of the Flood
Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)) or any order or
regulation issued thereunder; and
(11) Any provision of law referenced in 31 U.S.C. 5321 or any order
or regulation issued thereunder;
(f) Remedial action under section 102(g) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4012a(g)); and
(g) This subpart also applies to all other adjudications required
by statute to be determined on the record after opportunity for an
agency hearing, unless otherwise specifically provided for in the Local
Rules.
3. In Sec. 308.6, paragraph (a)(3) is revised to read as follows:
Sec. 308.6 Appearance and practice in adjudicatory proceedings.
(a) * * *
(3) Notice of appearance. Any individual acting as counsel on
behalf of a party, including the FDIC, shall file a notice of
appearance with OFIA at or before the time that individual submits
papers or otherwise appears on behalf of a party in the adjudicatory
proceeding. The notice of appearance must include a written declaration
that the individual is currently qualified as provided in paragraph
(a)(1) or (a)(2) of this section and is authorized to represent the
particular party. By filing a notice of appearance on behalf of a party
in an adjudicatory proceeding, the counsel agrees and represents that
he or she is authorized to accept service on behalf of the represented
party and that, in the event of withdrawal from representation, he or
she will, if required by the administrative law judge, continue to
accept service until new counsel has filed a notice of appearance or
until the represented party indicates that he or she will proceed on a
pro se basis.
* * * * *
4. In Sec. 308.8, paragraph (b) is revised to read as follows:
Sec. 308.8 Conflicts of interest.
* * * * *
(b) Certification and waiver. If any person appearing as counsel
represents two or more parties to an adjudicatory proceeding or also
represents a non-party on a matter relevant to an issue in the
proceeding, counsel must certify in writing at the time of filing the
notice of appearance required by Sec. 308.6(a):
(1) That the counsel has personally and fully discussed the
possibility of conflicts of interest with each such party and non-
party; and
(2) That each such party and non-party waives any right it might
otherwise have had to assert any known conflicts of interest or to
assert any non-material conflicts of interest during the course of the
proceeding.
5. In Sec. 308.11, paragraphs (c) (2) and (d) are revised to read
as follows:
Sec. 308.11 Service of papers.
* * * * *
(c) * * *
(2) If a party has not appeared in the proceeding in accordance
with Sec. 308.6, the Board of Directors or the administrative law judge
shall make service by any of the following methods:
[[Page 20348]]
(i) By personal service;
(ii) If the person to be served is an individual, by delivery to a
person of suitable age and discretion at the physical location where
the individual resides or works;
(iii) If the person to be served is a corporation or other
association, by delivery to an officer, managing or general agent, or
to any other agent authorized by appointment or by law to receive
service and, if the agent is one authorized by statute to receive
service and the statute so requires, by also mailing a copy to the
party;
(iv) By registered or certified mail addressed to the party's last
known address; or
(v) By any other method reasonably calculated to give actual
notice.
(d) Subpoenas. Service of a subpoena may be made:
(1) By personal service;
(2) If the person to be served is an individual, by delivery to a
person of suitable age and discretion at the physical location where
the individual resides or works;
(3) By delivery to an agent which, in the case of a corporation or
other association, is delivery to an officer, managing or general
agent, or to any other agent authorized by appointment or by law to
receive service and, if the agent is one authorized by statute to
receive service and the statute so requires, by also mailing a copy to
the party;
(4) By registered or certified mail addressed to the person's last
known address; or
(5) In such other manner as is reasonably calculated to give actual
notice.
* * * * *
6. In Sec. 308.12, paragraphs (a), (c)(1), (c)(2), and (c)(3) are
revised to read as follows:
Sec. 308.12 Construction of time limits.
(a) General rule. In computing any period of time prescribed by
this subpart, the date of the act or event that commences the
designated period of time is not included. The last day so computed is
included unless it is a Saturday, Sunday, or Federal holiday. When the
last day is a Saturday, Sunday, or Federal holiday, the period runs
until the end of the next day that is not a Saturday, Sunday, or
Federal holiday. Intermediate Saturdays, Sundays, and Federal holidays
are included in the computation of time. However, when the time period
within which an act is to be performed is ten days or less, not
including any additional time allowed for in paragraph (c) of this
section, intermediate Saturdays, Sundays, and Federal holidays are not
included.
* * * * *
(c) * * *
(1) If service is made by first class, registered, or certified
mail, add three calendar days to the prescribed period;
(2) If service is made by express mail or overnight delivery
service, add one calendar day to the prescribed period; or
(3) If service is made by electronic media transmission, add one
calendar day to the prescribed period, unless otherwise determined by
the Board of Directors or the administrative law judge in the case of
filing, or by agreement among the parties in the case of service.
7. Section 308.20 is revised to read as follows:
Sec. 308.20 Amended pleadings.
(a) Amendments. The notice or answer may be amended or supplemented
at any stage of the proceeding. The respondent must answer an amended
notice within the time remaining for the respondent's answer to the
original notice, or within ten days after service of the amended
notice, whichever period is longer, unless the Board of Directors or
administrative law judge orders otherwise for good cause.
(b) Amendments to conform to the evidence. When issues not raised
in the notice or answer are tried at the hearing by express or implied
consent of the parties, they will be treated in all respects as if they
had been raised in the notice or answer, and no formal amendments are
required. If evidence is objected to at the hearing on the ground that
it is not within the issues raised by the notice or answer, the
administrative law judge may admit the evidence when admission is
likely to assist in adjudicating the merits of the action and the
objecting party fails to satisfy the administrative law judge that the
admission of such evidence would unfairly prejudice that party's action
or defense upon the merits. The administrative law judge may grant a
continuance to enable the objecting party to meet such evidence.
8. In Sec. 308.24, paragraphs (a) and (b) are revised to read as
follows:
Sec. 308.24 Scope of document discovery.
(a) Limits on discovery. (1) Subject to the limitations set out in
paragraphs (b), (c), and (d) of this section, a party to a proceeding
under this subpart may obtain document discovery by serving a written
request to produce documents. For purposes of a request to produce
documents, the term ``documents'' may be defined to include drawings,
graphs, charts, photographs, recordings, data stored in electronic
form, and other data compilations from which information can be
obtained, or translated, if necessary, by the parties through detection
devices into reasonably usable form, as well as written material of all
kinds.
(2) Discovery by use of deposition is governed by subpart I of this
part.
(3) Discovery by use of interrogatories is not permitted.
(b) Relevance. A party may obtain document discovery regarding any
matter, not privileged, that has material relevance to the merits of
the pending action. Any request to produce documents that calls for
irrelevant material, that is unreasonable, oppressive, excessive in
scope, unduly burdensome, or repetitive of previous requests, or that
seeks to obtain privileged documents will be denied or modified. A
request is unreasonable, oppressive, excessive in scope or unduly
burdensome if, among other things, it fails to include justifiable
limitations on the time period covered and the geographic locations to
be searched, the time provided to respond in the request is inadequate,
or the request calls for copies of documents to be delivered to the
requesting party and fails to include the requestor's written agreement
to pay in advance for the copying, in accordance with Sec. 308.25.
* * * * *
9. In Sec. 308.25, paragraphs (a), (b), (e), and (g) are revised to
read as follows:
Sec. 308.25 Request for document discovery from parties.
(a) General rule. Any party may serve on any other party a request
to produce for inspection any discoverable documents that are in the
possession, custody, or control of the party upon whom the request is
served. The request must identify the documents to be produced either
by individual item or by category, and must describe each item and
category with reasonable particularity. Documents must be produced as
they are kept in the usual course of business or must be organized to
correspond with the categories in the request.
(b) Production or copying. The request must specify a reasonable
time, place, and manner for production and performing any related acts.
In lieu of inspecting the documents, the requesting party may specify
that all or some of the responsive documents be copied and the copies
delivered to the requesting party. If copying of fewer than 250 pages
is requested, the party to whom the request is addressed shall bear the
cost of copying and shipping
[[Page 20349]]
charges. If a party requests 250 pages or more of copying, the
requesting party shall pay for the copying and shipping charges.
Copying charges are the current per-page copying rate imposed by 12 CFR
part 310 implementing the Freedom of Information Act (5 U.S.C. 552).
The party to whom the request is addressed may require payment in
advance before producing the documents.
* * * * *
(e) Privilege. At the time other documents are produced, the
producing party must reasonably identify all documents withheld on the
grounds of privilege and must produce a statement of the basis for the
assertion of privilege. When similar documents that are protected by
deliberative process, attorney-work-product, or attorney-client
privilege are voluminous, these documents may be identified by category
instead of by individual document. The administrative law judge retains
discretion to determine when the identification by category is
insufficient.
* * * * *
(g) Ruling on motions. After the time for filing responses pursuant
to this section has expired, the administrative law judge shall rule
promptly on all motions filed pursuant to this section. If the
administrative law judge determines that a discovery request, or any of
its terms, calls for irrelevant material, is unreasonable, oppressive,
excessive in scope, unduly burdensome, or repetitive of previous
requests, or seeks to obtain privileged documents, he or she may deny
or modify the request, and may issue appropriate protective orders,
upon such conditions as justice may require. The pendency of a motion
to strike or limit discovery or to compel production is not a basis for
staying or continuing the proceeding, unless otherwise ordered by the
administrative law judge. Notwithstanding any other provision in this
part, the administrative law judge may not release, or order a party to
produce, documents withheld on grounds of privilege if the party has
stated to the administrative law judge its intention to file a timely
motion for interlocutory review of the administrative law judge's order
to produce the documents, and until the motion for interlocutory review
has been decided.
* * * * *
10. In Sec. 308.33, paragraph (a) is revised to read as follows:
Sec. 308.33 Public hearings.
(a) General rule. All hearings shall be open to the public, unless
the FDIC, in its discretion, determines that holding an open hearing
would be contrary to the public interest. Within 20 days of service of
the notice or, in the case of change-in-control proceedings under
section 7(j)(4) of the FDIA (12 U.S.C. 1817(j)(4)), within 20 days from
service of the hearing order, any respondent may file with the
Executive Secretary a request for a private hearing, and any party may
file a reply to such a request. A party must serve on the
administrative law judge a copy of any request or reply the party files
with the Executive Secretary. The form of, and procedure for, these
requests and replies are governed by Sec. 308.23. A party's failure to
file a request or a reply constitutes a waiver of any objections
regarding whether the hearing will be public or private.
* * * * *
11. In Sec. 308.34, paragraphs (a) and (b)(1) are revised to read
as follows:
Sec. 308.34 Hearing subpoenas.
(a) Issuance. (1) Upon application of a party showing general
relevance and reasonableness of scope of the testimony or other
evidence sought, the administrative law judge may issue a subpoena or a
subpoena duces tecum requiring the attendance of a witness at the
hearing or the production of documentary or physical evidence at the
hearing. The application for a hearing subpoena must also contain a
proposed subpoena specifying the attendance of a witness or the
production of evidence from any state, territory, or possession of the
United States, the District of Columbia, or as otherwise provided by
law at any designated place where the hearing is being conducted. The
party making the application shall serve a copy of the application and
the proposed subpoena on every other party.
(2) A party may apply for a hearing subpoena at any time before the
commencement of a hearing. During a hearing, a party may make an
application for a subpoena orally on the record before the
administrative law judge.
(3) The administrative law judge shall promptly issue any hearing
subpoena requested pursuant to this section. If the administrative law
judge determines that the application does not set forth a valid basis
for the issuance of the subpoena, or that any of its terms are
unreasonable, oppressive, excessive in scope, or unduly burdensome, he
or she may refuse to issue the subpoena or may issue it in a modified
form upon any conditions consistent with this subpart. Upon issuance by
the administrative law judge, the party making the application shall
serve the subpoena on the person named in the subpoena and on each
party.
(b) Motion to quash or modify. (1) Any person to whom a hearing
subpoena is directed or any party may file a motion to quash or modify
the subpoena, accompanied by a statement of the basis for quashing or
modifying the subpoena. The movant must serve the motion on each party
and on the person named in the subpoena. Any party may respond to the
motion within ten days of service of the motion.
* * * * *
12. In Sec. 308.35, paragraph (a)(3) is redesignated as paragraph
(a)(4), a new paragraph (a)(3) is added, and paragraph (b) is revised
to read as follows:
Sec. 308.35 Conduct of hearings.
(a) * * *
(3) Examination of witnesses. Only one counsel for each party may
conduct an examination of a witness, except that in the case of
extensive direct examination, the administrative law judge may permit
more than one counsel for the party presenting the witness to conduct
the examination. A party may have one counsel conduct the direct
examination and another counsel conduct re-direct examination of a
witness, or may have one counsel conduct the cross examination of a
witness and another counsel conduct the re-cross examination of a
witness.
* * * * *
(b) Transcript. The hearing must be recorded and transcribed. The
reporter will make the transcript available to any party upon payment
by that party to the reporter of the cost of the transcript. The
administrative law judge may order the record corrected, either upon
motion to correct, upon stipulation of the parties, or following notice
to the parties upon the administrative law judge's own motion.
13. In Sec. 308.37, the section heading and paragraph (a)(1) are
revised to read as follows:
Sec. 308.37 Post-hearing filings.
(a) Proposed findings and conclusions and supporting briefs. (1)
Using the same method of service for each party, the administrative law
judge shall serve notice upon each party, that the certified
transcript, together with all hearing exhibits and exhibits introduced
but not admitted into evidence at the hearing, has been filed. Any
party may file with the administrative law judge proposed findings of
fact, proposed conclusions of law, and a proposed order within 30 days
following service of this notice by the administrative law judge or
within such longer period as
[[Page 20350]]
may be ordered by the administrative law judge.
* * * * *
14. Section 308.38 is revised to read as follows:
Sec. 308.38 Recommended decision and filing of record.
(a) Filing of recommended decision and record. Within 45 days after
expiration of the time allowed for filing reply briefs under
Sec. 308.37(b), the administrative law judge shall file with and
certify to the Executive Secretary, for decision, the record of the
proceeding. The record must include the administrative law judge's
recommended decision, recommended findings of fact, recommended
conclusions of law, and proposed order; all prehearing and hearing
transcripts, exhibits, and rulings; and the motions, briefs, memoranda,
and other supporting papers filed in connection with the hearing. The
administrative law judge shall serve upon each party the recommended
decision, findings, conclusions, and proposed order.
(b) Filing of index. At the same time the administrative law judge
files with and certifies to the Executive Secretary for final
determination the record of the proceeding, the administrative law
judge shall furnish to the Executive Secretary a certified index of the
entire record of the proceeding. The certified index shall include, at
a minimum, an entry for each paper, document or motion filed with the
administrative law judge in the proceeding, the date of the filing, and
the identity of the filer. The certified index shall also include an
exhibit index containing, at a minimum, an entry consisting of exhibit
number and title or description for: Each exhibit introduced and
admitted into evidence at the hearing; each exhibit introduced but not
admitted into evidence at the hearing; each exhibit introduced and
admitted into evidence after the completion of the hearing; and each
exhibit introduced but not admitted into evidence after the completion
of the hearing.
By order of the Board of Directors.
Dated at Washington, D.C. this 3rd day of April 1996.
Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 96-10471 Filed 5-3-96; 8:45 am]
BILLING CODE 6714-01-P
Complete official Federal Register PDF
FR Doc. 96-10342 Uniform Rules of Practice and Procedure
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20350-20356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10342]
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DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 509
[No. 96-30]
RIN 1550-AA79
Uniform Rules of Practice and Procedure
AGENCY: Office of Thrift Supervision, Treasury.
ACTION: Final rule.
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SUMMARY: The Office of Thrift Supervision (OTS) is amending its Rules
of Practice and Procedure in Adjudicatory Proceedings. The final rule
is intended to clarify certain provisions and to increase the
efficiency and fairness of administrative hearings.
EFFECTIVE DATE: June 5, 1996.
FOR FURTHER INFORMATION CONTACT: Karen A. Osterloh, Counsel (Banking
and Finance), Regulations and Legislation Division, Chief Counsel's
Office, (202) 906-6639, or Eliot Goldstein, Counsel, Division of
Enforcement, Chief Counsel's Office, (202) 906-7162, Office of Thrift
Supervision, 1700 G Street, NW., Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
A. Background
Section 916 of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA), Pub. L. 101-73, 103 Stat. 183 (1989),
required the OTS, the Office of the Comptroller of the Currency (OCC),
the Board of Governors of the Federal Reserve System (Board), the
Federal Deposit Insurance Corporation (FDIC) and the National Credit
Union Administration (NCUA) (agencies) to develop uniform rules and
procedures for administrative hearings. The agencies each adopted final
Uniform Rules in August, 1991.1 Based on their experience in using
the rules since then, the agencies have identified sections of the
Uniform Rules that should be modified. Accordingly, the agencies
proposed amendments to the Uniform Rules on June 23, 1995 (60 FR
32882). These changes affect OTS Uniform Rules at 12 CFR Part 509
(Subpart A). The OTS also proposed amendments to its agency-specific
procedural rules at 12 CFR Part 509 (Subpart B) (Local Rules).
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\1\ The agencies issued a joint notice of proposed rulemaking on
Monday, June 17, 1991 (56 FR 27790). The agencies promulgated their
final rules on the following dates: OCC on August 9, 1991 (56 FR
38024); Board on August 9, 1991 (56 FR 38052); FDIC on August 9,
1991 (56 FR 37975); OTS on August 12, 1991 (56 FR 38317); and NCUA
on August 8, 1991 (56 FR 37767).
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The OTS received one comment which expressed general approval of
the proposal and suggested specific improvements. The OTS has also
considered comments submitted to the other agencies on the proposed
rule.
The final rule implements the proposal with minor changes. The
following section-by-section analysis summarizes the final rule and
highlights the changes that the OTS has made after considering the
commenters' suggestions.
The OCC, FDIC, Board and NCUA are publishing separate final rules
that are substantively identical to the OTS's final rule. The OCC,
FDIC, and Board rules appear elsewhere in this Federal Register.
B. Section-by-Section Summary and Discussion of Amendments to the
Uniform Rules
Section 509.1 Scope
The proposal added two statutory provisions to the list of civil
money penalty provisions to which the Uniform Rules apply. The two
provisions were enacted by the Riegle Community Development and
Regulatory Improvement Act of 1994 (CDRI), Pub. L. 103-325, 108 Stat.
2160.
The first provision, CDRI section 406, amended the Bank Secrecy Act
(BSA) (31 U.S.C. 5321) to require the Secretary of the Treasury to
delegate authority to the Federal banking agencies (as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) to
impose civil money penalties for BSA violations.
The second provision, CDRI section 525, amended section 102 of the
Flood Disaster Protection Act of 1973 (FDPA) (42 U.S.C. 4012a) to give
each ``Federal entity for lending regulation'' authority to assess
civil money penalties against a regulated lending institution if the
institution has a pattern or practice of committing violations of the
FDPA or the notice requirements of the National Flood Insurance Act of
1968 (NFIA) (42 U.S.C. 4104a). Under the FDPA, the term ``Federal
entity for lending regulation'' includes the agencies and the Farm
Credit Administration.
CDRI Sec. 525 also gave the agencies authority to require a
regulated lending institution to take remedial actions that are
necessary to ensure that the institution complies with the requirements
of the national flood insurance program if: (1) the institution has
engaged in a pattern and practice of noncompliance with regulations
issued pursuant to the FDPA; and (2) has not
[[Page 20351]]
demonstrated measurable improvement in compliance despite the
assessment of civil money penalties. The final rule adds a new
paragraph to the scope section that reflects this additional authority.
The OTS received no comments on this section, which is adopted as
proposed.
Section 509.6 Appearance and Practice in Adjudicatory Proceedings
The proposal permitted the administrative law judge (ALJ) to
require counsel who withdraws from representing a party to accept
service of papers for that party until either: (1) a new counsel has
filed a notice of appearance; or (2) the party indicates that he or she
will proceed on a pro se basis.
One commenter suggested that the proposal does not adequately
address certain situations: for example, when counsel withdraws because
of lack of payment of legal fees or withdraws because the client
discharged him or her. The commenter's implication is that it is unfair
to require counsel to continue to accept service in these situations.
Moreover, the commenter expressed concern that the administrative
proceeding may become involved in a dispute between the client and
counsel when the ALJ requires counsel to continue to accept service
after a client discharges counsel. The commenter suggested that the
rule should require service be given to both the unreplaced counsel and
the party.
The proposal was intended to ensure that a lawyer is always
available to receive service in order to prevent a party from halting
the administrative process simply by evading service. The regulatory
text is clear, however, that the ALJ has the discretion whether to
require former counsel to continue to accept service. Fairness to
counsel is among the factors the ALJ would consider in exercising this
discretion. The OTS, therefore, believes that the provision as proposed
is sufficiently flexible to accommodate the concerns raised by the
commenter.
The final rule changes the proposal's reference from ``service of
process'' to ``service'' to clarify that this section applies to all
papers that the party is entitled to receive. The section is otherwise
adopted as proposed.
Section 509.8 Conflicts of Interest
The proposal sought to improve in two ways the provisions governing
conflicts of interest that arise when counsel represents multiple
persons connected with a proceeding.
First, the proposal sought to protect the interests of individuals
and financial institutions by expanding the circumstances under which
counsel must certify that he or she has obtained a waiver from non-
parties of any potential conflict of interest. The former rule required
counsel to obtain waivers only from non-party institutions ``to which
notice of the proceedings must be given.'' The proposal required
counsel to obtain waivers from all parties and non-parties that counsel
represents on a matter relevant to an issue in the proceeding. It thus
ensured that all appropriate party and non-party individuals and
institutions are informed of potential conflicts.
Second, the proposal simplified this provision by eliminating the
requirement for counsel to certify that each client has asserted that
there are no conflicts of interest. The OTS believes that the former
provision was superfluous because the responsibility for identifying
potential conflicts resides with counsel.
One commenter noted that the proposal may inhibit multiple
representation that otherwise complies with applicable ethics rules.
The commenter suggested that the proposal could inappropriately tilt
the proceeding in favor of the agencies.
The provision does not limit the right of any party to
representation by counsel of the party's choice. Rather, it ensures
that all interested persons are informed of potential conflicts so that
they may avoid the conflict if they choose. In the OTS's view, it is
reasonable to establish a baseline standard requiring the affirmative
waiver of conflicts by all affected persons or entities in order to
ensure the integrity of the administrative adjudication process. State
rules of professional responsibility that impose more stringent ethical
standards are unaffected by this requirement.
In addition, the OTS is unpersuaded by the argument that the
conflicts provision grants the agencies significant advantage in a
proceeding. Persons and parties may be well and vigorously represented
even if they are not all represented by the same counsel.
Therefore, the OTS adopts this section as proposed.
Section 509.11 Service of Papers
The proposal changed this section by permitting parties, the
Director, and ALJs to serve a subpoena on a party by delivering it to a
person of suitable age and discretion at a party's place of work.
One commenter supported the intent of the proposal, but asserted
that permitting service on a person at a person's place of work was too
broad to be effective, particularly where an institution has numerous
branches.
The OTS interpreted the phrase ``person's place of work'' as used
in the proposal to mean the physical location at which an individual
works and not as any office of the corporation or association that
employs the person. To avoid confusion, the OTS has added specific
reference to physical location to the regulatory text. In addition, the
final rule states expressly that only an individual, not a corporation
or association, may be served at a residence or place of work.
The same commenter points out, however, that the former Uniform
Rules do not permit certain methods of service that are useful for
serving a corporation or other association. The final rule, therefore,
permits service on a party corporation or other association by delivery
of a copy of a notice to an officer, managing or general agent, or to
any other agent authorized by appointment or by law to receive service
of process. The final rule also provides that, if the agent is one
authorized by statute to receive service and the statute so requires,
the serving party must also mail a copy to the party. The final rule
also restructures this provision for clarity.
Section 509.12 Construction of Time Limits
The proposal clarified that the additional time allotted for
responding to papers served by mail, delivery service, or electronic
media transmission under Sec. 509.12(c) is not included in determining
whether an act is required to be performed within ten days. The
proposal also clarified that additional time allotted for responding to
papers served by mail, delivery, or electronic media transmission is
counted by calendar days and, therefore, a party must count Saturdays,
Sundays, and holidays when calculating a time deadline.
The OTS received no comments on this section, which is adopted as
proposed.
Section 509.20 Amended Pleadings
The proposal changed this section to permit a party to amend its
pleadings without leave of the ALJ and to permit the ALJ to admit
evidence over the objection that the evidence does not fall directly
within the scope of the issues raised by a notice or answer.
One commenter asserted that the change could unduly prejudice a
party if a notice were amended to add or delete allegations immediately
prior to the hearing. The commenter expressed
[[Page 20352]]
concern that the amendment would give a party insufficient time to seek
additional discovery or file for summary judgment.
The regulatory text gives the ALJ discretion to revise the hearing
schedule to ensure that no prejudice results from last minute
amendments to a notice. The OTS believes this approach is adequate to
avoid prejudice to a party and, therefore, adopts this section as
proposed.
Section 509.24 Scope of Document Discovery
The former Uniform Rules were silent on the use of interrogatories.
The proposal expressly prohibited parties from using interrogatories on
grounds that other discovery tools are more efficient and less
burdensome and, therefore, more appropriate to administrative
adjudications.
The proposal also sought to focus document discovery requests so
that they are not unreasonable, oppressive, excessive in scope, or
unduly burdensome to any of the parties.
Accordingly, the proposal preserved the former rule's limitation on
document discovery by permitting discovery only of documents that have
material relevance. However, the proposal specifically provided that a
request should be considered unreasonable, oppressive, excessive in
scope, or unduly burdensome if, among other things: (1) it fails to
include justifiable limitations on the time period covered and the
geographic locations to be searched; (2) the time provided to respond
in the request is inadequate; or (3) the request calls for copies of
documents to be delivered to the requesting party and fails to include
the requestor's written agreement to pay in advance for the copying, in
accordance with Sec. 509.25.
Under the proposal, the scope of permissible document discovery is
not as broad as that allowed under Federal Rule of Civil Procedure
26(b) (28 U.S.C. app.). Historically, given the specialized nature of
enforcement proceedings in regulated industries, discovery in
administrative proceedings has not been as expansive as it is in civil
litigation.
The OTS received no significant comments on this section and,
therefore, adopts it as proposed.
Section 509.25 Request for document discovery from parties
The OTS proposed several changes to Sec. 509.25. First, the
proposal sought to reduce unnecessary burden by permitting a party to:
(1) respond to document discovery either by producing documents as they
are kept in the ordinary course of business or by organizing them to
correspond to the categories in a document request; and (2) identify
similar documents by category when they are voluminous and are
protected by the deliberative process, attorney-client, or attorney
work-product privilege.
The proposal also amended Sec. 509.25 to permit a party to require
payment in advance for the costs of copying and shipping requested
documents; and clarified that, if a party has stated its intention to
file a timely motion for interlocutory review, the ALJ may not release,
or order a party to produce, documents withheld on grounds of privilege
until the motion for interlocutory review has been decided.
The agencies received two comments on this section. One commenter
sought guidance on when, how, and to whom a party must express an
``intention'' to file a timely motion for interlocutory review.
Because the ALJ may not release or order a party to produce
documents, it was implicit in the proposed regulatory text that a party
must make the intention to seek interlocutory review known to the ALJ.
For clarity's sake, the final rule adds language to this effect.
Another commenter suggested that a request for interlocutory review
should automatically stay the proceeding.
Under Sec. 509.28(d) of the Uniform Rules, a party may request that
a proceeding be stayed during the pendency of an interlocutory review.
The ALJ has the discretion to decide whether a stay is appropriate. The
OTS believes that this procedure adequately protects the parties. For
this reason and to avoid adding unnecessary delays in the
administrative proceedings, the OTS declines to provide for an
automatic stay whenever a party requests interlocutory review.
One commenter asserted that permitting the OTS to require payment
in advance for document copying and shipping costs would give the OTS
an advantage over other creditors if the party is bankrupt following
the administrative hearing. The OTS finds that this situation is rare
and therefore does not outweigh the OTS's need to ensure that it
receives payment. Moreover, the provision does not preclude other
creditors from requiring prepayment for products or services.
Accordingly, the OTS adopts this section as proposed.
Section 509.27 Deposition of witness unavailable for hearing
The proposal clarified that a party may serve a deposition subpoena
on a witness who is unavailable by serving the subpoena on the witness
or the witness's authorized representative. The OTS received no
comments on this section.
As amended, section 509.11(d) expressly permits a party to serve a
subpoena by delivering the subpoena to an agent, which would include
delivery to an authorized representative. The proposed change to
section 509.27 is, therefore, redundant and has not been included in
the final rule.
Section 509.33 Public Hearings
The proposal changed this section to specify that a party must file
a motion for a private hearing with the Director and not the ALJ, but
must serve the ALJ with a copy of the motion.
The OTS received no comments on this section, which is adopted as
proposed.
Section 509.34 Hearing Subpoenas
The former Uniform Rules did not specifically require that a party
inform all other parties when a subpoena to a non-party is issued. The
proposal required that, after a hearing subpoena is issued by the ALJ,
the party that applied for the subpoena must serve a copy of it on each
party. Under the proposal, any party may move to quash any hearing
subpoena and must serve the motion on each other party.
The OTS received no comments on this section, which is adopted as
proposed.
Section 509.35 Conduct of Hearings
The proposal limited the number of counsel permitted to examine a
witness and clarified that hearing transcripts may be obtained only
from the court reporter. The former Uniform Rules were silent on these
issues. The OTS received no comments on this section, which is adopted
as proposed.
Section 509.37 Post-Hearing Filings
The proposal changed the title of this section from ``Proposed
findings and conclusions'' to ``Post-hearing filings'' to describe more
accurately the content of the section.
The proposal also moved, from Sec. 509.35(b) to Sec. 509.37(a), the
provision that requires the ALJ to serve each party with notice of the
filing of the certified transcript of the hearing (including hearing
exhibits). The proposal added a requirement that the ALJ must use the
same method of service for this notice.
Finally, the proposal clarified that the ALJ may, when appropriate,
permit parties more than the allotted 30 days to file proposed findings
of fact, proposed conclusions of law, and a proposed order.
[[Page 20353]]
The OTS received no comments on this section, which is adopted with
a minor technical change.
Section 509.38 Recommended decision and filing of record
Under OTS Local Rule Sec. 509.104(h), the ALJ was required to file
an index of the record when he filed the record with the Director. The
proposal added this requirement to the Uniform Rules at Sec. 509.38,
and reorganized this section to improve its clarity.
The OTS received no comments on this section, which is adopted as
proposed.
C. Section-by-Section Summary and Discussion of Proposed Amendments to
the OTS Local Rules
Section 509.102 Discovery
The OTS proposed to revise its local rule at Sec. 509.102(g)(2)
which governs the service of discovery deposition subpoenas. The
current rule permits service of deposition subpoenas only by personal
service, certified mail, or overnight delivery service. The proposed
rule, however, would have permitted parties to serve deposition
subpoenas by any of the methods listed in Uniform Rule Sec. 509.11(d).
The OTS received no comments on this proposal. It is adopted without
change.
Current Sec. 509.102(g)(2) requires a party to serve a deposition
subpoena on ``the person named therein and a copy on that person's
counsel, or on that person's counsel.'' The OTS proposed to revise this
provision to require a party to serve a deposition subpoena on the
person named therein or on that person's counsel. The proposed change
would conform the OTS Local Rule to the OCC Local Rule at 12 CFR
19.171.
One commenter suggested that the OTS should require a party to
serve both the deponent and the deponent's counsel. The OTS rejects
this suggestion. Initially, a party may not be able to comply with the
commenter's proposed requirement. For example, where the witness to be
deposed is a non-party, the party issuing the subpoena may not know
whether the witness is represented by counsel and the identity of
counsel. Where a party is to be deposed, however, counsel of record
will always receive notice of the deposition under Sec. 509.102(a).
This commenter suggests that it may be a violation of an attorney's
ethics for counsel to serve a deponent, but not the deponent's
attorney. The OTS Local Rule does not limit the ability of any party to
make service upon a deponent's attorney where required by local ethics
rules. State rules of professional responsibility that impose more
stringent ethical standards are unaffected by this Local Rule.
The proposed changes to Sec. 509.102(g)(2) are adopted with certain
clarifying changes.
Section 509.104 Additional Procedures
As amended today, Sec. 509.38 incorporates OTS Local Rule at
Sec. 509.104(h). Accordingly, the local rule is deleted.
D. Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act, the
OTS hereby certifies that this final rule will not have a significant
economic impact on a substantial number of small entities. Accordingly,
a regulatory flexibility analysis is not required.
This final rule only imposes procedural requirements in
administrative adjudications. It contains no substantive requirements.
It improves the Uniform Rules of Practice and Procedure and facilitates
the orderly determination of administrative proceedings. The changes in
this final rule are primarily clarifications and impose no significant
additional burdens on regulated institutions, parties to administrative
actions, or counsel.
E. Executive Order 12866
The OTS has determined that this final rule is not a significant
regulatory action as defined in Executive Order 12866.
F. Unfunded Mandates Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L.
104-4 (Unfunded Mandates Act) requires that an agency prepare a
budgetary impact statement before promulgating a rule that includes a
Federal mandate that may result in expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year. If a budgetary impact statement is
required, Section 205 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule. As discussed in the preamble,
this final rule is limited in application to procedural amendments to
the rules of administrative practice before the OTS. The OTS has
therefore determined that the final rule will not result in
expenditures by State, local, or tribal governments or by the private
sector of more than $100 million. Accordingly, the OTS has not prepared
a budgetary impact statement or specifically addressed the regulatory
alternatives considered.
G. Effective Date
Section 302 of the Riegle Community Development and Regulatory
Improvement Act of 1994 delays the effective date of regulations
promulgated by the Federal banking agencies that impose additional
reporting, disclosure, or other new requirements to the first day of
the first calendar quarter following publication of the final rule. The
OTS believes that section 302 is not applicable to this final rule,
because the regulation does not impose any additional reporting or
other requirements not already contained in the current version of the
Uniform Rules or the Local Rules.
List of Subjects in 12 CFR Part 509
Administrative practice and procedure, Penalties.
For the reasons set out in the preamble, part 509 of chapter V of
title 12 of the Code of Federal Regulations is amended as set forth
below.
PART 509--RULES OF PRACTICE AND PROCEDURE IN ADJUDICATORY
PROCEEDINGS
1. The authority citation for part 509 is revised to read as
follows:
Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 1464, 1467, 1467a,
1468, 1817(j), 1818, 3349, 4717; 15 U.S.C. 78(l), 78o-5, 78u-2; 31
U.S.C. 5321; 42 U.S.C. 4012a.
Subpart A--Uniform Rules of Practice and Procedure
2. Section 509.1 is amended in paragraph (e)(7) by removing the
word ``and'' after the semicolon, adding paragraphs (e)(9) and (e)(10),
redesignating paragraph (f) as paragraph (g) and revising it, and
adding new paragraph (f) read as follows:
Sec. 509.1 Scope.
* * * * *
(e) * * *
(9) Any provision of law referenced in section 102 of the Flood
Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)) or any order or
regulation issued thereunder; and
(10) Any provision of law referenced in 31 U.S.C. 5321 or any order
or regulation issued thereunder;
(f) Remedial action under section 102 of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4012a(g)); and
(g) This subpart also applies to all other adjudications required
by statute to be determined on the record after opportunity for an
agency hearing,
[[Page 20354]]
unless otherwise specifically provided for in the Local Rules.
3. Section 509.6 is amended by revising paragraph (a)(3) to read as
follows:
Sec. 509.6 Appearance and practice in adjudicatory proceedings.
(a) * * *
(3) Notice of appearance. Any individual acting as counsel on
behalf of a party, including the Director, shall file a notice of
appearance with OFIA at or before the time that individual submits
papers or otherwise appears on behalf of a party in the adjudicatory
proceeding. The notice of appearance must include a written declaration
that the individual is currently qualified as provided in paragraph
(a)(1) or (a)(2) of this section and is authorized to represent the
particular party. By filing a notice of appearance on behalf of a party
in an adjudicatory proceeding, the counsel agrees and represents that
he or she is authorized to accept service on behalf of the represented
party and that, in the event of withdrawal from representation, he or
she will, if required by the administrative law judge, continue to
accept service until new counsel has filed a notice of appearance or
until the represented party indicates that he or she will proceed on a
pro se basis.
* * * * *
4. Section 509.8 is amended by revising paragraph (b) to read as
follows:
Sec. 509.8 Conflicts of interest.
* * * * *
(b) Certification and waiver. If any person appearing as counsel
represents two or more parties to an adjudicatory proceeding or also
represents a non-party on a matter relevant to an issue in the
proceeding, counsel must certify in writing at the time of filing the
notice of appearance required by Sec. 509.6(a):
(1) That the counsel has personally and fully discussed the
possibility of conflicts of interest with each such party and non-
party; and
(2) That each such party and non-party waives any right it might
otherwise have had to assert any known conflicts of interest or to
assert any non-material conflicts of interest during the course of the
proceeding.
5. Section 509.11 is amended by revising paragraphs (c)(2) and (d)
to read as follows:
Sec. 509.11 Service of papers.
* * * * *
(c) * * *
(2) If a party has not appeared in the proceeding in accordance
with Sec. 509.6 of this subpart, the Director or the administrative law
judge shall make service by any of the following methods:
(i) By personal service;
(ii) If the person to be served is an individual, by delivery to a
person of suitable age and discretion at the physical location where
the individual resides or works;
(iii) If the person to be served is a corporation or other
association, by delivery to an officer, managing or general agent, or
to any other agent authorized by appointment or by law to receive
service and, if the agent is one authorized by statute to receive
service and the statute so requires, by also mailing a copy to the
party;
(iv) By registered or certified mail addressed to the person's last
known address; or
(v) By any other method reasonably calculated to give actual
notice.
(d) Subpoenas. Service of a subpoena may be made:
(1) By personal service;
(2) If the person to be served is an individual, by delivery to a
person of suitable age and discretion at the physical location where
the individual resides or works;
(3) By delivery to an agent, which in the case of a corporation or
other association, is delivery to an officer, managing or general
agent, or to any other agent authorized by appointment or by law to
receive service and, if the agent is one authorized by statute to
receive service and the statute so requires, by also mailing a copy to
the party;
(4) By registered or certified mail addressed to the person's last
known address; or
(5) By any other method reasonably calculated to give actual
notice.
* * * * *
6. Section 509.12 is amended by revising paragraphs (a), (c)(1),
(c)(2), and (c)(3) to read as follows:
Sec. 509.12 Construction of time limits.
(a) General rule. In computing any period of time prescribed by
this subpart, the date of the act or event that commences the
designated period of time is not included. The last day so computed is
included unless it is a Saturday, Sunday, or Federal holiday. When the
last day is a Saturday, Sunday, or Federal holiday, the period runs
until the end of the next day that is not a Saturday, Sunday, or
Federal holiday. Intermediate Saturdays, Sundays, and Federal holidays
are included in the computation of time. However, when the time period
within which an act is to be performed is ten days or less, not
including any additional time allowed for in paragraph (c) of this
section, intermediate Saturdays, Sundays, and Federal holidays are not
included.
* * * * *
(c) * * *
(1) If service is made by first class, registered, or certified
mail, add three calendar days to the prescribed period;
(2) If service is made by express mail or overnight delivery
service, add one calendar day to the prescribed period; or
(3) If service is made by electronic media transmission, add one
calendar day to the prescribed period, unless otherwise determined by
the Director or the administrative law judge in the case of filing, or
by agreement among the parties in the case of service.
7. Section 509.20 is revised to read as follows:
Sec. 509.20 Amended pleadings.
(a) Amendments. The notice or answer may be amended or supplemented
at any stage of the proceeding. The respondent must answer an amended
notice within the time remaining for the respondent's answer to the
original notice, or within ten days after service of the amended
notice, whichever period is longer, unless the Director or
administrative law judge orders otherwise for good cause.
(b) Amendments to conform to the evidence. When issues not raised
in the notice or answer are tried at the hearing by express or implied
consent of the parties, they will be treated in all respects as if they
had been raised in the notice or answer, and no formal amendments are
required. If evidence is objected to at the hearing on the ground that
it is not within the issues raised by the notice or answer, the
administrative law judge may admit the evidence when admission is
likely to assist in adjudicating the merits of the action and the
objecting party fails to satisfy the administrative law judge that the
admission of such evidence would unfairly prejudice that party's action
or defense upon the merits. The administrative law judge may grant a
continuance to enable the objecting party to meet such evidence.
8. Section 509.24 is amended by revising paragraphs (a) and (b) to
read as follows:
Sec. 509.24 Scope of document discovery.
(a) Limits on discovery. (1) Subject to the limitations set out in
paragraphs (b), (c), and (d) of this section, a party to a proceeding
under this subpart may obtain document discovery by serving a written
request to produce documents. For purposes of a request to produce
documents, the term ``documents'' may
[[Page 20355]]
be defined to include drawings, graphs, charts, photographs,
recordings, data stored in electronic form, and other data compilations
from which information can be obtained, or translated, if necessary, by
the parties through detection devices into reasonably usable form, as
well as written material of all kinds.
(2) Discovery by use of deposition is governed by Sec. 509.102 of
this part.
(3) Discovery by use of interrogatories is not permitted.
(b) Relevance. A party may obtain document discovery regarding any
matter, not privileged, that has material relevance to the merits of
the pending action. Any request to produce documents that calls for
irrelevant material, that is unreasonable, oppressive, excessive in
scope, unduly burdensome, or repetitive of previous requests, or that
seeks to obtain privileged documents will be denied or modified. A
request is unreasonable, oppressive, excessive in scope or unduly
burdensome if, among other things, it fails to include justifiable
limitations on the time period covered and the geographic locations to
be searched, the time provided to respond in the request is inadequate,
or the request calls for copies of documents to be delivered to the
requesting party and fails to include the requestor's written agreement
to pay in advance for the copying, in accordance with Sec. 509.25 of
this subpart.
* * * * *
9. Section 509.25 is amended by revising paragraphs (a), (b), (e),
and (g) to read as follows:
Sec. 509.25 Request for document discovery from parties.
(a) General rule. Any party may serve on any other party a request
to produce for inspection any discoverable documents that are in the
possession, custody, or control of the party upon whom the request is
served. The request must identify the documents to be produced either
by individual item or by category, and must describe each item and
category with reasonable particularity. Documents must be produced as
they are kept in the usual course of business or must be organized to
correspond with the categories in the request.
(b) Production or copying. The request must specify a reasonable
time, place, and manner for production and performing any related acts.
In lieu of inspecting the documents, the requesting party may specify
that all or some of the responsive documents be copied and the copies
delivered to the requesting party. If copying of fewer than 250 pages
is requested, the party to whom the request is addressed shall bear the
cost of copying and shipping charges. If a party requests 250 pages or
more of copying, the requesting party shall pay for the copying and
shipping charges. Copying charges are the current per-page copying rate
imposed under 12 CFR 502.7 for requests under the Freedom of
Information Act (5 U.S.C. 552). The party to whom the request is
addressed may require payment in advance before producing the
documents.
* * * * *
(e) Privilege. At the time other documents are produced, the
producing party must reasonably identify all documents withheld on the
grounds of privilege and must produce a statement of the basis for the
assertion of privilege. When similar documents that are protected by
deliberative process, attorney-work-product, or attorney-client
privilege are voluminous, these documents may be identified by category
instead of by individual document. The administrative law judge retains
discretion to determine when the identification by category is
insufficient.
* * * * *
(g) Ruling on motions. After the time for filing responses pursuant
to this section has expired, the administrative law judge shall rule
promptly on all motions filed pursuant to this section. If the
administrative law judge determines that a discovery request, or any of
its terms, calls for irrelevant material, is unreasonable, oppressive,
excessive in scope, unduly burdensome, or repetitive of previous
requests, or seeks to obtain privileged documents, he or she may deny
or modify the request, and may issue appropriate protective orders,
upon such conditions as justice may require. The pendency of a motion
to strike or limit discovery or to compel production is not a basis for
staying or continuing the proceeding, unless otherwise ordered by the
administrative law judge. Notwithstanding any other provision in this
part, the administrative law judge may not release, or order a party to
produce, documents withheld on grounds of privilege if the party has
stated to the administrative law judge its intention to file a timely
motion for interlocutory review of the administrative law judge's order
to produce the documents, and until the motion for interlocutory review
has been decided.
* * * * *
10. Section 509.33 is amended by revising paragraph (a) to read as
follows:
Sec. 509.33 Public hearings.
(a) General rule. All hearings shall be open to the public, unless
the Director, in the Director's discretion, determines that holding an
open hearing would be contrary to the public interest. Within 20 days
of service of the notice or, in the case of change-in-control
proceedings under section 7(j)(4) of the FDIA (12 U.S.C. 1817(j)(4)),
within 20 days from service of the hearing order, any respondent may
file with the Director a request for a private hearing, and any party
may file a reply to such a request. A party must serve on the
administrative law judge a copy of any request or reply the party files
with the Director. The form of, and procedure for, these requests and
replies are governed by Sec. 509.23 of this subpart. A party's failure
to file a request or a reply constitutes a waiver of any objections
regarding whether the hearing will be public or private.
* * * * *
11. Section 509.34 is amended by revising paragraphs (a) and (b)(1)
to read as follows:
Sec. 509.34 Hearing subpoenas.
(a) Issuance. (1) Upon application of a party showing general
relevance and reasonableness of scope of the testimony or other
evidence sought, the administrative law judge may issue a subpoena or a
subpoena duces tecum requiring the attendance of a witness at the
hearing or the production of documentary or physical evidence at the
hearing. The application for a hearing subpoena must also contain a
proposed subpoena specifying the attendance of a witness or the
production of evidence from any state, territory, or possession of the
United States, the District of Columbia, or as otherwise provided by
law at any designated place where the hearing is being conducted. The
party making the application shall serve a copy of the application and
the proposed subpoena on every other party.
(2) A party may apply for a hearing subpoena at any time before the
commencement of a hearing. During a hearing, a party may make an
application for a subpoena orally on the record before the
administrative law judge.
(3) The administrative law judge shall promptly issue any hearing
subpoena requested pursuant to this section. If the administrative law
judge determines that the application does not set forth a valid basis
for the issuance of the subpoena, or that any of its terms are
unreasonable, oppressive, excessive in scope, or unduly burdensome, he
or she may refuse to issue the subpoena or may
[[Page 20356]]
issue it in a modified form upon any conditions consistent with this
subpart. Upon issuance by the administrative law judge, the party
making the application shall serve the subpoena on the person named in
the subpoena and on each party.
(b) Motion to quash or modify. (1) Any person to whom a hearing
subpoena is directed or any party may file a motion to quash or modify
the subpoena, accompanied by a statement of the basis for quashing or
modifying the subpoena. The movant must serve the motion on each party
and on the person named in the subpoena. Any party may respond to the
motion within ten days of service of the motion.
* * * * *
12. Section 509.35 is amended by redesignating paragraph (a)(3) as
paragraph (a)(4), by adding a new paragraph (a)(3), and by revising
paragraph (b) to read as follows:
Sec. 509.35 Conduct of hearings.
(a) * * *
(3) Examination of witnesses. Only one counsel for each party may
conduct an examination of a witness, except that in the case of
extensive direct examination, the administrative law judge may permit
more than one counsel for the party presenting the witness to conduct
the examination. A party may have one counsel conduct the direct
examination and another counsel conduct re-direct examination of a
witness, or may have one counsel conduct the cross examination of a
witness and another counsel conduct the re-cross examination of a
witness.
* * * * *
(b) Transcript. The hearing must be recorded and transcribed. The
reporter will make the transcript available to any party upon payment
by that party to the reporter of the cost of the transcript. The
administrative law judge may order the record corrected, either upon
motion to correct, upon stipulation of the parties, or following notice
to the parties upon the administrative law judge's own motion.
13. Section 509.37 is amended by revising the section heading and
paragraph (a)(1) to read as follows:
Sec. 509.37 Post-hearing filings.
(a) Proposed findings and conclusions and supporting briefs. (1)
Using the same method of service for each party, the administrative law
judge shall serve notice upon each party, that the certified
transcript, together with all hearing exhibits and exhibits introduced
but not admitted into evidence at the hearing, has been filed. Any
party may file with the administrative law judge proposed findings of
fact, proposed conclusions of law, and a proposed order within 30 days
following service of this notice by the administrative law judge or
within such longer period as may be ordered by the administrative law
judge.
* * * * *
14. Section 509.38 is revised to read as follows:
Sec. 509.38 Recommended decision and filing of record.
(a) Filing of recommended decision and record. Within 45 days after
expiration of the time allowed for filing reply briefs under
Sec. 509.37(b) of this subpart, the administrative law judge shall file
with and certify to the Director, for decision, the record of the
proceeding. The record must include the administrative law judge's
recommended decision, recommended findings of fact, recommended
conclusions of law, and proposed order; all prehearing and hearing
transcripts, exhibits, and rulings; and the motions, briefs, memoranda,
and other supporting papers filed in connection with the hearing. The
administrative law judge shall serve upon each party the recommended
decision, findings, conclusions, and proposed order.
(b) Filing of index. At the same time the administrative law judge
files with and certifies to the Director for final determination the
record of the proceeding, the administrative law judge shall furnish to
the Director a certified index of the entire record of the proceeding.
The certified index shall include, at a minimum, an entry for each
paper, document or motion filed with the administrative law judge in
the proceeding, the date of the filing, and the identity of the filer.
The certified index shall also include an exhibit index containing, at
a minimum, an entry consisting of exhibit number and title or
description for: Each exhibit introduced and admitted into evidence at
the hearing; each exhibit introduced but not admitted into evidence at
the hearing; each exhibit introduced and admitted into evidence after
the completion of the hearing; and each exhibit introduced but not
admitted into evidence after the completion of the hearing.
Subpart B--Local Rules
15. Section 509.102 is amended by revising paragraph (g)(2) to read
as follows:
Sec. 509.102 Discovery.
* * * * *
(g) * * *
(2) Service. The party requesting the subpoena must serve it on the
person named therein or upon that person's counsel, by any of the
methods identified in Sec. 509.11(d) of this part. The party serving
the subpoena must file proof of service with the administrative law
judge.
* * * * *
Sec. 509.104 [Amended]
16. Section 509.104 is amended by removing paragraph (h) and by
redesignating paragraph (i) as paragraph (h).
By the Office of Thrift Supervision.
Dated: April 4, 1996.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 96-10342 Filed 5-3-96; 8:45 am]
BILLING CODE 6720-01-P
Complete official Federal Register PDF
FR Doc. 96-10331 Uniform Rules of Practice and Procedure
[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20330-20338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10331]
[[Page 20329]]
_______________________________________________________________________
Part II
Department of the Treasury
Office of the Comptroller of the Currency
12 CFR Part 19
Federal Reserve System
12 CFR Part 263
Federal Deposit Insurance Corporation
12 CFR Part 308
Department of the Treasury
Office of Thrift Supervision
12 CFR Part 509
_______________________________________________________________________
Uniform Rules of Practice and Procedure; Final Rules
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and
Regulations
[[Page 20330]]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 19
[Docket No. 96-10]
RIN 1557-AB43
Uniform Rules of Practice and Procedure
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Office of the Comptroller of the Currency (OCC) is
amending its regulatory provisions implementing the Uniform Rules of
Practice and Procedure (Uniform Rules) and the OCC's agency-specific
rules of administrative practice and procedure (Local Rules).
The final rule is intended to clarify certain provisions and to
increase the efficiency and fairness of administrative hearings. The
final rule is another component of the OCC's Regulation Review Program.
EFFECTIVE DATE: June 5, 1996.
FOR FURTHER INFORMATION CONTACT: Daniel Stipano, Director, Enforcement
and Compliance Division, 202-874-4800, or Daniel Cooke, Attorney,
Legislative and Regulatory Activities, Division, 202-874-5090, Office
of the Comptroller of the Currency, 250 E Street, SW, Washington, DC
20219.
SUPPLEMENTARY INFORMATION:
Background
Section 916 of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA), Pub. L. 101-73, 103 Stat. 183 (1989),
required the OCC, The Office of Thrift Supervision (OTS), the Federal
Deposit Insurance Corporation (FDIC), the Board of Governors of the
Federal Reserve System (Board), and the National Credit Union
Administration (NCUA) (agencies) to develop uniform rules and
procedures for administrative hearings. The agencies each adopted final
Uniform Rules in August, 1991.1 Based on their experience in using
the rules since then, the agencies have identified sections of the
Uniform Rules that should be modified. Accordingly, the agencies
proposed amendments to the Uniform Rules on June 23, 1995 (60 FR
32882). The OCC also proposed amendments to its Local Rules.
---------------------------------------------------------------------------
\1\ The agencies issued a joint notice of proposed rulemaking
on, June 17, 1991 (56 FR 27790). The agencies issued their final
rules on the following dates: OCC on August 9, 1991 (56 FR 38024);
Board on August 9, 1991 (56 FR 38052); FDIC on August 9, 1991 (56 FR
37975); OTS on August 12, 1991 (56 FR 38317); and NCUA on August 8,
1991 (56 FR 37767).
---------------------------------------------------------------------------
The OCC received two comments on the proposal. Both commenters
generally supported the proposal, but each suggested improvements.
The final rule implements the proposal with certain changes,
including revisions responsive to some of the concerns expressed by the
commenters. The following section-by-section analysis summarizes the
final rule and highlights the changes from the proposal that the OCC
made in response to the commenters' suggestions.
The OTS, FDIC, Board, and NCUA are publishing separate final rules
that are substantively identical to the OCC's final rule.
Section-by-Section Summary and Discussion of Amendments to the Uniform
Rules
Section 19.1 Scope
The proposal added two statutory provisions to the list of civil
money penalty provisions to which the Uniform Rules apply. The two
provisions were enacted by the Riegle Community Development and
Regulatory Improvement Act of 1994 (CDRI), Pub. L. 103-325, 108 Stat.
2160.
The first provision, CDRI section 406, amended the Bank Secrecy Act
(BSA) (31 U.S.C. 5321) to require the Secretary of the Treasury to
delegate authority to the Federal banking agencies (as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) to
impose civil money penalties for BSA violations.
The second, CDRI section 525, amended section 102 the Flood
Disaster Protection Act of 1973 (FDPA) (42 U.S.C. 4012a). Section 102
now gives each ``Federal entity for lending regulation'' authority to
assess civil money penalties against a regulated lending institution if
the institution has a pattern or practice of committing violations
under the FDPA or the notice requirements of the National Flood
Insurance Act of 1968 (NFIA) (42 U.S.C. 4104a). Under the FDPA, the
term ``Federal entity for lending regulation'' includes the agencies
and the Farm Credit Administration.
CDRI section 525 also gave the agencies authority to require a
regulated lending institution to take remedial actions that are
necessary to ensure that the institution complies with the requirements
of the national flood insurance program if: (1) the institution has
engaged in a pattern and practice of noncompliance with regulations
issued pursuant to the FDPA and NFIA; and (2) has not demonstrated
measurable improvement in compliance despite the assessment of civil
money penalties. The final rule adds a new paragraph to the scope
section that reflects this additional authority.
The OCC received no comments on this section, which is adopted as
proposed.
Section 19.6 Appearance and Practice in Adjudicatory Proceedings
The proposal permitted the administrative law judge (ALJ) to
require counsel who withdraws from representing a party to accept
service of papers for that party until either: (1) a new counsel has
filed a notice of appearance; or (2) the party indicates that he or she
will proceed on a pro se basis.
The OCC received one comment on this section. The commenter
suggested that the proposal did not adequately address certain
situations: for example, when counsel withdraws because of a lack of
payment of legal fees that is caused by an agency asset freeze, or
withdraws because the client discharged him or her. The commenter's
implication is that it is unfair to require counsel to continue to
accept service in these situations. Moreover, the commenter expressed
concern that the administrative proceeding may become involved in a
dispute between the client and counsel when the ALJ requires counsel to
continue to accept service after a client discharges counsel. The
commenter suggested that the rule should require that service be given
to both the unreplaced counsel and the party.
The proposal was intended to ensure that a lawyer is always
available to receive service in order to prevent a party from halting
the administrative proceedings simply by evading service. The
regulatory text is clear, however, that the ALJ has the discretion
whether to require former counsel to continue to accept service.
Fairness to counsel is among the factors the ALJ would consider in
exercising this discretion, and the OCC therefore believes that the
provision as proposed is sufficiently flexible to accommodate the
concerns raised by the commenter.
The final rule changes the proposal's reference from ``service of
process'' to ``service'' to clarify that this section applies to all
papers that the party is entitled to receive. This section is otherwise
adopted as proposed.
Section 19.8 Conflicts of Interest
The proposal sought to improve in two ways the provisions governing
the
[[Page 20331]]
conflicts of interest that may arise when counsel represents multiple
persons connected with a proceeding.
First, the proposal sought to protect the interests of individuals
and financial institutions by expanding the circumstances under which
counsel must certify that he or she has obtained a waiver from each
non-party of any potential conflict of interest. The former rule
required counsel to obtain waivers only from non-party institutions
``to which notice of the proceedings must be given.'' The proposal
required counsel to obtain waivers from all parties and non-parties
that counsel represents on a matter relevant to an issue in the
proceeding. It thus ensured that all appropriate party and non-party
individuals and institutions are informed of potential conflicts.
Second, the proposal simplified this provision by eliminating the
requirement for counsel to certify that each client has asserted that
there are no conflicts of interest. The OCC believes that the former
provision was superfluous because the responsibility for identifying
potential conflicts resides with counsel.
The OCC received one comment on this section. The commenter noted
that the proposal may inhibit multiple representation that otherwise
complies with applicable ethics rules. The commenter suggested that the
proposal could inappropriately tilt the proceeding in favor of the
agencies.
The provision does not limit the right of any party to
representation by counsel of the party's choice. Rather, it ensures
that all interested persons are informed of potential conflicts so that
they may avoid the conflict if they choose. In the OCC's view, it is
reasonable to establish a baseline standard requiring the affirmative
waiver of conflicts by all affected persons or entities in order to
ensure the integrity of the administrative adjudication process. State
rules of professional responsibility that impose more stringent ethical
standards are unaffected by this requirement.
In addition, the OCC is unpersuaded by the argument that the
conflicts provision grants the agencies significant advantage in a
proceeding. Persons and entities may be well and vigorously represented
even if they are not all represented by the same counsel.
Therefore, the OCC adopts this section as proposed.
Section 19.11 Service of Papers
The proposal changed this section by permitting parties, the
Comptroller, and ALJs to serve a subpoena on a party by delivering it
to a person of suitable age and discretion at a party's place of work.
The OCC received one comment on this section. The commenter
supported the intent of the proposal, but asserted that the provision
permitting service at a person's place of work was too broad to be
effective, particularly where a bank has numerous branches.
The OCC interpreted the phrase ``person's place of work'' as used
in the proposal to mean the physical location at which an individual
works and not as any office of the corporation or association that
employs the person. To avoid confusion, the OCC has added specific
reference to physical location to the regulatory text. In addition, the
final rule states expressly that only an individual, not a corporation
or association, may be served at a residence or place of work.
The same comment points out, however, that the former Uniform Rules
did not expressly permit certain methods of service that are useful for
serving a corporation or other association. The final rule, therefore,
permits service on a party corporation or other association by delivery
of a copy of a notice to an officer, managing or general agent, or to
any other agent authorized by appointment or by law to receive service
of process. The final rule also provides that, if the agent is one
authorized by a statute to receive service and the statute so requires,
the serving party must also mail a copy to the party. The final rule
also restructures this provision for clarity.
Section 19.12 Construction of Time Limits
The proposal clarified that the additional time allotted for
responding to papers served by mail, delivery service, or electronic
media transmission under Sec. 19.12(c) is not included in determining
whether an act is required to be performed within ten days. The
proposal also clarified that additional time allotted for responding to
papers served by mail, delivery, or electronic media transmission is
counted by calendar days and, therefore, a party must count Saturdays,
Sundays, and holidays when calculating a time deadline.
The OCC received no comments on this section, which is adopted as
proposed.
Section 19.20 Amended Pleadings
The proposal changed this section to permit a party to amend its
pleadings without leave of the ALJ and to permit the ALJ to admit
evidence over the objection that the evidence does not fall directly
within the scope of the issues raised by a notice or answer.
The OCC received one comment on this section. The commenter
asserted that the change could unduly prejudice a party if a notice
were amended to add or delete allegations immediately prior to the
hearing. The commenter expressed concern that the amendment would give
a party insufficient time to seek additional discovery or file for
summary judgment.
The regulatory text gives the ALJ discretion to revise the hearing
schedule to ensure that no prejudice results from last minute
amendments to a notice. The OCC believes this approach is adequate to
avoid prejudice to a party and, therefore, the OCC adopts this section
as proposed.
Section 19.24 Scope of Document Discovery
The former Uniform Rules were silent on the use of interrogatories.
The proposal expressly prohibited parties from using interrogatories on
grounds that other discovery tools are more efficient and less
burdensome and therefore more appropriate to administrative
adjudications.
The proposal also sought to focus document discovery requests so
that they are not unreasonable, oppressive, excessive in scope, or
unduly burdensome to any of the parties.
Accordingly, the proposal preserved the former rule's limitation on
document discovery by permitting discovery only of documents that have
material relevance. However, the proposal specifically provided that a
request should be considered unreasonable, oppressive, excessive in
scope, or unduly burdensome if, among other things: (1) it fails to
include justifiable limitations on the time period covered and the
geographic locations to be searched; (2) the time provided to respond
in the request is inadequate; or (3) the request calls for copies of
documents to be delivered to the requesting party and fails to include
the requestor's written agreement to pay in advance for the copying, in
accordance with Sec. 19.25.
Under the proposal, the scope of permissible document discovery is
not as broad as that allowed under Federal Rule of Civil Procedure
26(b) (28 U.S.C. app.). Historically, given the specialized nature of
enforcement proceedings in regulated industries, discovery in
administrative proceedings has not been as expansive as it is in civil
litigation.
The OCC received no significant comments on this section and,
therefore, adopts it as proposed.
[[Page 20332]]
Section 19.25 Request for Document Discovery From Parties
The OCC proposed several changes to Sec. 19.25. First, the proposal
sought to reduce unnecessary burden by permitting a party to: (1)
respond to document discovery either by producing documents as they are
kept in the ordinary course of business or by organizing them to
correspond to the categories in a document request; and (2) identify
similar documents by category when they are voluminous and are
protected by the deliberative process, attorney-client, or attorney
work-product privilege.
The proposal also amended Sec. 19.25 to permit a party to require
payment in advance for the costs of copying and shipping requested
documents; and clarified that, if a party has stated its intention to
file a timely motion for interlocutory review, the ALJ may not release,
or order a party to produce, documents withheld on grounds of privilege
until the motion for interlocutory review has been decided.
The OCC received two comments on this section. One commenter sought
guidance on when, how, and to whom a party must express an
``intention'' to file a timely motion for interlocutory review.
Because it is the ALJ who may not release or order a party to
produce documents, it was implicit in the proposed regulatory text that
a party must make the intention to seek interlocutory review known to
the ALJ. For clarity, the final rule adds language to this effect.
Another commenter suggested that a request for interlocutory review
should automatically stay the proceeding.
Under Sec. 19.28(d) of the Uniform Rules, a party may request that
a proceeding be stayed during the pendency of an interlocutory review,
and the ALJ has the discretion to decide whether a stay is appropriate.
The OCC believes that this procedure adequately protects the parties.
For this reason and to avoid adding unnecessary delays in the
administrative proceedings, the OCC declines to provide for an
automatic stay whenever a party requests interlocutory review.
One commenter asserted that permitting the OCC to require payment
in advance for document copying and shipping costs would give the OCC
an advantage over other creditors if the party is bankrupt following
the administrative hearing. The commenter does not assert that it is a
violation of the bankruptcy laws for the OCC or any other creditor to
require prepayment for products or services. Moreover, the OCC believes
that the situations causing the commenter's concern would be very rare.
Accordingly, the OCC adopts this section as proposed.
Section 19.27 Deposition of Witness Unavailable for Hearing
The proposal clarified that a party may serve a deposition subpoena
on a witness who is unavailable by serving the subpoena on the
witness's authorized representative. The final rule does not include
this proposed change because, in Sec. 19.11(d), the final rule
expressly permits a party to serve a subpoena by delivering the
subpoena to an agent, which includes delivery to an authorized
representative. The proposed change to Sec. 19.27 would be redundant.
The OCC received no comments on this section. The final rule does not,
therefore, change this provision.
Section 19.33 Public Hearings
The proposal changed this section to specify that a party must file
a motion for a private hearing with the Comptroller, and not the ALJ,
but must serve the ALJ with a copy of the motion.
The OCC received no comments on this section, which is adopted as
proposed.
Section 19.34 Hearing Subpoenas
The former Uniform Rules did not specifically require that a party
inform all other parties when a subpoena is issued to a non-party. The
proposal required that, after a hearing subpoena is issued by the ALJ,
the party that applied for the subpoena must serve a copy of it on each
party. Under the proposal, any party may move to quash any hearing
subpoena and must serve the motion on each other party.
The OCC received no comments on this section, which is adopted as
proposed.
Section 19.35 Conduct of Hearings
The proposal limited the number of counsel permitted to examine a
witness and clarified that hearing transcripts may be obtained only
from the court reporter. The former Uniform Rules were silent on these
issues.
The OCC received no comments on this section, which is adopted as
proposed.
Section 19.37 Post-Hearing Filings
The proposal changed the title of this section from ``Proposed
findings and conclusions'' to ``Post-hearing filings'' to describe more
accurately the content of the section.
The proposal also moved, from Sec. 19.35(b) to Sec. 19.37(a), the
provision that requires the ALJ to serve each party with notice of the
filing of the certified transcript of the hearing (including hearing
exhibits). The proposal added a requirement that the ALJ must use the
same method of service for this notice for each recipient.
Finally, the proposal clarified that the ALJ may, when appropriate,
permit parties more than the allotted 30 days to file proposed findings
of fact, proposed conclusions of law, and a proposed order.
The OCC received no comments on this section, which is adopted with
a minor technical change.
Section 19.38 Recommended Decision and Filing of Record
Under the former Uniform Rules, the ALJ was not required to file an
index of the record when he filed the record with the Comptroller. The
proposal added this requirement and reorganized this section to improve
its clarity.
The OCC received no comments on this section, which is adopted as
proposed.
Section-by-Section Summary and Discussion of Proposed Amendments to the
OCC's Local Rules
Section 19.112 Informal Hearing
Section 19.112 governs the conduct of informal hearings requested
by a party who is the subject of a removal, suspension, or prohibition
when a crime is charged or a conviction obtained.
The proposal amended Sec. 19.112(b) so that the District Deputy
Comptroller or Administrator, the Deputy Comptroller for Multinational
Banking, or the Deputy Comptroller or Director for Special Supervision,
whoever is appropriate, fixes the date, time, and place for an informal
hearing and chooses the presiding officer.
The proposal amended Sec. 19.112(c): (1) to clarify that, if a
petitioner waives the opportunity to present an oral argument at a
hearing, the OCC may file written submissions with the presiding
officer no later than the date on which the hearing was to be held; and
(2) to require a petitioner who chooses to waive the opportunity to
present oral argument to submit that waiver at the same time that the
petitioner requests a hearing.
Former Sec. 19.112(d)(3) required that copies of all affidavits,
memoranda, and other written material to be presented at the hearing be
provided to the presiding officer and other parties ten days prior to
the hearing. The final rule conforms Sec. 19.112(d)(3) to the change
made to Sec. 19.112(c), which permits the OCC to file papers on the day
of the hearing. Therefore, as amended, Sec. 19.112(d)
[[Page 20333]]
allows the OCC an additional ten days to file its submissions when a
petitioner chooses to waive its right to an oral hearing. The OCC will
need the additional ten days to prepare its submissions as a response
to the petitioner's submissions because the OCC will not have an
opportunity to present an oral argument.
The OCC received one comment on this section. The commenter sought
clarification of whether waiver of oral argument results in a waiver of
the hearing.
The former rule and the proposal used the term ``hearing'' to refer
to both an oral hearing and a hearing based solely on documents. A
waiver of an oral argument does not result in a waiver of the hearing
itself. Therefore, the OCC believes no further clarification is
necessary and adopts this section with a minor technical change.
Section 19.113 Recommended and Final Decisions
The former Local Rules stated that the Comptroller must issue a
final decision in a removal, suspension, or prohibition case within 60
days of the hearing or within 60 days of receiving the petitioner's
written submission. Section 8(g)(3) of the Federal Deposit Insurance
Act (12 U.S.C. 1818(g)(3)) requires the Comptroller to notify a
petitioner of the Comptroller's final decision within 60 days of the
hearing. Section 8(g)(3) does not state that the Comptroller may use
the date of receipt of the petitioner's written submission as the start
date of the 60-day time limitation.
The proposal clarified that the Local Rules conform to section
8(g)(3) by requiring the Comptroller to issue a final decision on a
removal, suspension, or prohibition case within 60 days of the hearing,
regardless of when the Comptroller received the petitioner's written
submission.
To ensure that the Comptroller can meet this 60-day deadline, the
proposal imposed a clear time deadline on the presiding officer to
issue a recommended decision. The proposal required the presiding
officer to issue a recommended decision within 20 days from the
hearing.
The OCC received no comments on this section, which is adopted as
proposed.
Section 19.160 Scope
The proposal clarified the provision regarding the time permitted
the OCC to communicate to the proposed acquiring party (filer) the
OCC's disapproval of a change-in-control notice.
Former Sec. 19.160 suggests that the OCC must give written notice
to a filer of the OCC's disapproval within three days of the decision.
Because first class mail can take three days, the proposal stated that
the OCC must mail the written notice within three days of making a
disapproval decision.
The OCC received no comments on this section, which is adopted as
proposed.
Section 19.161 Notice of Disapproval and Hearing Initiation
The proposal changed the title of this section from ``Hearing
request and answer'' to ``Notice of disapproval and hearing
initiation'' in order to describe more accurately the content of the
section.
The proposal changed the initiation procedures for change-in-
control proceedings. Under the former OCC Local Rule, the OCC's notice
of disapproval was both a licensing communication and the initial
pleading in the action.
As proposed, the notice of disapproval would not serve as the OCC's
initial pleading. Under the proposal, the Comptroller issues a hearing
order after receiving a request for a hearing in response to a notice
of disapproval. The hearing order serves as the OCC's pleading document
and states the legal authority for the proceeding, the OCC's
jurisdiction over the proceeding, and the matters of fact or law upon
which the disapproval is based. The hearing order also states that a
filer who seeks a hearing must file an answer to the hearing order with
the Office of Financial Institution Adjudication (OFIA) within 20 days
after service of the order on the filer.
The proposal also made a technical correction by removing the
phrase ``in civil money penalty proceedings'' from the heading of
former paragraph (c)(2).
The OCC received no comments on this section, which is adopted as
proposed with minor technical changes.
Section 19.170 Discovery Depositions
The proposal clarified that a party may have the court reporter
record deposition testimony with a stenotype machine or an electronic
sound recording device. The proposal modified the former rule to state
expressly that, for good cause and with leave of the ALJ or upon
agreement of the parties, a party may have the court reporter use any
other method to record the deposition testimony.
The proposal specified that a written record of the witness's
testimony must be made unless the parties agree otherwise, that all
parties are entitled to receive a transcript of the witness's
testimony, and that the party taking the deposition bears the cost of
the recording and the transcription of that recording.
The OCC received no comments on this section, which is adopted with
one clarifying change. The final rule specifies that each party is
responsible for the cost of the copy of the transcript that the party
receives and that the cost of these additional transcript copies does
not fall on the party that requests the deposition.
Section 19.171 Deposition Subpoenas
The proposal added to the permissible methods of serving a
deposition subpoena under Sec. 19.171 the methods allowed in the
Uniform Rules, Sec. 19.11(d). As amended by this final rule, the
Uniform Rules permit the following methods of service: by delivery to
an agent, by delivery to a person of suitable age and discretion at the
subpoenaed person's residence or place of work, by registered or
certified mail to the person's last known address, or in such other
manner as is reasonably calculated to give actual notice.
The OCC received no comments on this section. The final rule
conforms Sec. 19.184 with Sec. 19.11(d), as adopted in the final rule,
by cross-referencing Sec. 19.11(d).
Section 19.184 Service of Subpoena and Payment of Witness Fees
As in Sec. 19.171, the proposal adopted the methods of service used
in Sec. 19.11(d). The OCC also received no comments on this section.
The final rule conforms this section, as it does Sec. 19.171, to
Sec. 19.11(d) by cross-referencing Sec. 19.11(d).
Technical Changes
The final rule makes several technical changes to the proposal that
make the final rule specific to the OCC. These changes appear
throughout the rule text. For example, bracketed references to the
``agency head'' have been replaced with ``the Comptroller'' and the
blank part designation before each section number has been filled in
with ``19.''
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act, the
OCC hereby certifies that this final rule will not have a significant
economic impact on a substantial number of small entities. Accordingly,
a regulatory flexibility analysis is not required.
This final rule imposes only procedural requirements in
administrative adjudications. It contains no substantive requirements.
It improves the Uniform Rules of Practice and Procedure and facilitates
the
[[Page 20334]]
orderly determination of administrative proceedings. The changes in
this final rule are primarily clarifications and impose no significant
additional burdens on regulated institutions, parties to administrative
actions, or counsel.
Executive Order 12866 Statement
The OCC has determined that this final rule is not a significant
regulatory action as defined in Executive Order 12866.
Unfunded Mandates Act
Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L.
104-4 (Unfunded Mandates Act) requires that an agency prepare a
budgetary impact statement before promulgating a rule that includes a
Federal mandate that may result in expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year. If a budgetary impact statement is
required, section 205 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule. As discussed in the preamble,
this final rule is limited in application to procedural amendments to
the rules of administrative practice before the OCC. The OCC has
therefore determined that the final rule will not result in
expenditures by State, local, or tribal governments or by the private
sector of more than $100 million. Accordingly, the OCC has not prepared
a budgetary impact statement or specifically addressed the regulatory
alternatives considered.
Effective Date
Section 302 of the Riegle Community Development and Regulatory
Improvement Act 1994 delays the effective date of regulations
promulgated by the Federal banking agencies that impose additional
reporting, disclosure, or other new requirements to the first date of
the first calendar quarter following publication of the final rule. The
OCC believes that section 302 is not applicable to this final rule,
because the regulation does not impose any additional reporting or
other requirements not already contained in the current version of the
Uniform Rules or the Local Rules.
List of Subjects in 12 CFR Part 19
Administrative practice and procedure, Crime, Investigations,
National banks, Penalties, Securities.
Authority and Issuance
For the reasons set out in the preamble, part 19 of chapter I of
title 12 of the Code of Federal Regulations is amended as set forth
below:
PART 19--RULES OF PRACTICE AND PROCEDURE
1. The authority citation for part 19 is revised to read as
follows:
Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505,
1817, 1818, 1820, 1831o, 1972, 3102, 3108(a), 3909, and 4717; 15
U.S.C. 78 (h) and (i), 78o-4(c), 78o-5, 78q-1, 78u, 78u-2, 78u-3,
and 78w; 31 U.S.C. 330 and 5321; and 42 U.S.C. 4012a.
Subpart A--[Amended]
2. In Sec. 19.1, paragraph (e)(9) is amended by removing ``and''
after the semicolon, new paragraphs (e)(11) and (e)(12) are added,
paragraph (f) is redesignated as paragraph (g), and new paragraph (f)
is added to read as follows:
Sec. 19.1 Scope.
* * * * *
(e) * * *
(11) Any provision of law referenced in section 102(f) of the Flood
Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)) or any order or
regulation issued thereunder; and
(12) Any provision of law referenced in 31 U.S.C. 5321 or any order
or regulation issued thereunder;
(f) Remedial action under section 102(g) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4012a(g)); and
* * * * *
3. In Sec. 19.6, paragraph (a)(3) is revised to read as follows:
Sec. 19.6 Appearance and practice in adjudicatory proceedings.
(a) * * *
(3) Notice of appearance. Any individual acting as counsel on
behalf of a party, including the Comptroller, shall file a notice of
appearance with OFIA at or before the time that the individual submits
papers or otherwise appears on behalf of a party in the adjudicatory
proceeding. The notice of appearance must include a written declaration
that the individual is currently qualified as provided in paragraph
(a)(1) or (a)(2) of this section and is authorized to represent the
particular party. By filing a notice of appearance on behalf of a party
in an adjudicatory proceeding, the counsel agrees and represents that
he or she is authorized to accept service on behalf of the represented
party and that, in the event of withdrawal from representation, he or
she will, if required by the administrative law judge, continue to
accept service until new counsel has filed a notice of appearance or
until the represented party indicates that he or she will proceed on a
pro se basis.
* * * * *
4. In Sec. 19.8, paragraph (b) is revised to read as follows:
Sec. 19.8 Conflicts of interest.
* * * * *
(b) Certification and waiver. If any person appearing as counsel
represents two or more parties to an adjudicatory proceeding or also
represents a non-party on a matter relevant to an issue in the
proceeding, counsel must certify in writing at the time of filing the
notice of appearance required by Sec. 19.6(a):
(1) That the counsel has personally and fully discussed the
possibility of conflicts of interest with each such party and non-
party; and
(2) That each such party and non-party waives any right it might
otherwise have had to assert any known conflicts of interest or to
assert any non-material conflicts of interest during the course of the
proceeding.
5. In Sec. 19.11, paragraphs (c)(2) and (d) are revised to read as
follows:
Sec. 19.11 Service of papers.
* * * * *
(c) * * *
(2) If a party has not appeared in the proceeding in accordance
with Sec. 19.6, the Comptroller or the administrative law judge shall
make service by any of the following methods:
(i) By personal service;
(ii) If the person to be served is an individual, by delivery to a
person of suitable age and discretion at the physical location where
the individual resides or works;
(iii) If the person to be served is a corporation or other
association, by delivery to an officer, managing or general agent, or
to any other agent authorized by appointment or by law to receive
service and, if the agent is one authorized by statute to receive
service and the statute so requires, by also mailing a copy to the
party;
(iv) By registered or certified mail addressed to the person's last
known address; or
(v) By any other method reasonably calculated to give actual
notice.
(d) Subpoenas. Service of a subpoena may be made:
(1) By personal service;
(2) If the person to be served is an individual, by delivery to a
person of suitable age and discretion at the physical location where
the individual resides or works;
(3) By delivery to an agent, which, in the case of a corporation or
other
[[Page 20335]]
association, is delivery to an officer, managing or general agent, or
to any other agent authorized by appointment or by law to receive
service and, if the agent is one authorized by statute to receive
service and the statute so requires, by also mailing a copy to the
party;
(4) By registered or certified mail addressed to the person's last
known address; or
(5) By any other method reasonably calculated to give actual
notice.
* * * * *
6. In Sec. 19.12, paragraphs (a), (c)(1), (c)(2), and (c)(3) are
revised to read as follows:
Sec. 19.12 Construction of time limits.
(a) General rule. In computing any period of time prescribed by
this subpart, the date of the act or event that commences the
designated period of time is not included. The last day so computed is
included unless it is a Saturday, Sunday, or Federal holiday. When the
last day is a Saturday, Sunday, or Federal holiday, the period runs
until the end of the next day that is not a Saturday, Sunday, or
Federal holiday. Intermediate Saturdays, Sundays, and Federal holidays
are included in the computation of time. However, when the time period
within which an act is to be performed is ten days or less, not
including any additional time allowed for in paragraph (c) of this
section, intermediate Saturdays, Sundays, and Federal holidays are not
included.
* * * * *
(c) * * *
(1) If service is made by first class, registered, or certified
mail, add three calendar days to the prescribed period;
(2) If service is made by express mail or overnight delivery
service, add one calendar day to the prescribed period; or
(3) If service is made by electronic media transmission, add one
calendar day to the prescribed period, unless otherwise determined by
the Comptroller or the administrative law judge in the case of filing,
or by agreement among the parties in the case of service.
7. Section 19.20 is revised to read as follows:
Sec. 19.20 Amended pleadings.
(a) Amendments. The notice or answer may be amended or supplemented
at any stage of the proceeding. The respondent must answer an amended
notice within the time remaining for the respondent's answer to the
original notice, or within ten days after service of the amended
notice, whichever period is longer, unless the Comptroller or
administrative law judge orders otherwise for good cause.
(b) Amendments to conform to the evidence. When issues not raised
in the notice or answer are tried at the hearing by express or implied
consent of the parties, they will be treated in all respects as if they
had been raised in the notice or answer, and no formal amendments are
required. If evidence is objected to at the hearing on the ground that
it is not within the issues raised by the notice or answer, the
administrative law judge may admit the evidence when admission is
likely to assist in adjudicating the merits of the action and the
objecting party fails to satisfy the administrative law judge that the
admission of such evidence would unfairly prejudice that party's action
or defense upon the merits. The administrative law judge may grant a
continuance to enable the objecting party to meet such evidence.
8. In Sec. 19.24, paragraphs (a) and (b) are revised to read as
follows:
Sec. 19.24 Scope of document discovery.
(a) Limits on discovery. (1) Subject to the limitations set out in
paragraphs (b), (c), and (d) of this section, a party to a proceeding
under this subpart may obtain document discovery by serving a written
request to produce documents. For purposes of a request to produce
documents, the term ``documents'' may be defined to include drawings,
graphs, charts, photographs, recordings, data stored in electronic
form, and other data compilations from which information can be
obtained, or translated, if necessary, by the parties through detection
devices into reasonably usable form, as well as written material of all
kinds.
(2) Discovery by use of deposition is governed by subpart I of this
part.
(3) Discovery by use of interrogatories is not permitted.
(b) Relevance. A party may obtain document discovery regarding any
matter, not privileged, that has material relevance to the merits of
the pending action. Any request to produce documents that calls for
irrelevant material, that is unreasonable, oppressive, excessive in
scope, unduly burdensome, or repetitive of previous requests, or that
seeks to obtain privileged documents will be denied or modified. A
request is unreasonable, oppressive, excessive in scope, or unduly
burdensome if, among other things, it fails to include justifiable
limitations on the time period covered and the geographic locations to
be searched, the time provided to respond in the request is inadequate,
or the request calls for copies of documents to be delivered to the
requesting party and fails to include the requestor's written agreement
to pay in advance for the copying, in accordance with Sec. 19.25.
* * * * *
9. In Sec. 19.25, paragraphs (a), (b), (e), and (g) are revised to
read as follows:
Sec. 19.25 Request for document discovery from parties.
(a) General rule. Any party may serve on any other party a request
to produce for inspection any discoverable documents that are in the
possession, custody, or control of the party upon whom the request is
served. The request must identify the documents to be produced either
by individual item or by category, and must describe each item and
category with reasonable particularity. Documents must be produced as
they are kept in the usual course of business or must be organized to
correspond with the categories in the request.
(b) Production or copying. The request must specify a reasonable
time, place, and manner for production and performing any related acts.
In lieu of inspecting the documents, the requesting party may specify
that all or some of the responsive documents be copied and the copies
delivered to the requesting party. If copying of fewer than 250 pages
is requested, the party to whom the request is addressed shall bear the
cost of copying and shipping charges. If a party requests 250 pages or
more of copying, the requesting party shall pay for the copying and
shipping charges. Copying charges are the current per-page copying rate
imposed by 12 CFR part 4 implementing the Freedom of Information Act (5
U.S.C. 552). The party to whom the request is addressed may require
payment in advance before producing the documents.
* * * * *
(e) Privilege. At the time other documents are produced, the
producing party must reasonably identify all documents withheld on the
grounds of privilege and must produce a statement of the basis for the
assertion of privilege. When similar documents that are protected by
deliberative process, attorney work-product, or attorney-client
privilege are voluminous, these documents may be identified by category
instead of by individual document. The administrative law judge retains
discretion to determine when the identification by category is
insufficient.
* * * * *
(g) Ruling on motions. After the time for filing responses pursuant
to this section has expired, the administrative
[[Page 20336]]
law judge shall rule promptly on all motions filed pursuant to this
section. If the administrative law judge determines that a discovery
request, or any of its terms, calls for irrelevant material, is
unreasonable, oppressive, excessive in scope, unduly burdensome, or
repetitive of previous requests, or seeks to obtain privileged
documents, he or she may deny or modify the request, and may issue
appropriate protective orders, upon such conditions as justice may
require. The pendency of a motion to strike or limit discovery or to
compel production is not a basis for staying or continuing the
proceeding, unless otherwise ordered by the administrative law judge.
Notwithstanding any other provision in this part, the administrative
law judge may not release, or order a party to produce, documents
withheld on grounds of privilege if the party has stated to the
administrative law judge its intention to file a timely motion for
interlocutory review of the administrative law judge's order to produce
the documents, and until the motion for interlocutory review has been
decided.
* * * * *
10. In Sec. 19.33, paragraph (a) is revised to read as follows:
Sec. 19.33 Public hearings.
(a) General rule. All hearings shall be open to the public, unless
the Comptroller, in the Comptroller's discretion, determines that
holding an open hearing would be contrary to the public interest.
Within 20 days of service of the notice or, in the case of change-in-
control proceedings under section 7(j)(4) of the FDIA (12 U.S.C.
1817(j)(4)), within 20 days from service of the hearing order, any
respondent may file with the Comptroller a request for a private
hearing, and any party may file a reply to such a request. A party must
serve on the administrative law judge a copy of any request or reply
the party files with the Comptroller. The form of, and procedure for,
these requests and replies are governed by Sec. 19.23. A party's
failure to file a request or a reply constitutes a waiver of any
objections regarding whether the hearing will be public or private.
* * * * *
11. In Sec. 19.34, paragraphs (a) and (b)(1) are revised to read as
follows:
Sec. 19.34 Hearing subpoenas.
(a) Issuance. (1) Upon application of a party showing general
relevance and reasonableness of scope of the testimony or other
evidence sought, the administrative law judge may issue a subpoena or a
subpoena duces tecum requiring the attendance of a witness at the
hearing or the production of documentary or physical evidence at the
hearing. The application for a hearing subpoena must also contain a
proposed subpoena specifying the attendance of a witness or the
production of evidence from any state, territory, or possession of the
United States, the District of Columbia, or as otherwise provided by
law at any designated place where the hearing is being conducted. The
party making the application shall serve a copy of the application and
the proposed subpoena on every other party.
(2) A party may apply for a hearing subpoena at any time before the
commencement of a hearing. During a hearing, a party may make an
application for a subpoena orally on the record before the
administrative law judge.
(3) The administrative law judge shall promptly issue any hearing
subpoena requested pursuant to this section. If the administrative law
judge determines that the application does not set forth a valid basis
for the issuance of the subpoena, or that any of its terms are
unreasonable, oppressive, excessive in scope, or unduly burdensome, he
or she may refuse to issue the subpoena or may issue it in a modified
form upon any conditions consistent with this subpart. Upon issuance by
the administrative law judge, the party making the application shall
serve the subpoena on the person named in the subpoena and on each
party.
(b) Motion to quash or modify. (1) Any person to whom a hearing
subpoena is directed or any party may file a motion to quash or modify
the subpoena, accompanied by a statement of the basis for quashing or
modifying the subpoena. The movant must serve the motion on each party
and on the person named in the subpoena. Any party may respond to the
motion within ten days of service of the motion.
* * * * *
12. In Sec. 19.35, paragraph (a)(3) is redesignated as paragraph
(a)(4), a new paragraph (a)(3) is added, and paragraph (b) is revised
to read as follows:
Sec. 19.35 Conduct of hearings.
(a) * * *
(3) Examination of witnesses. Only one counsel for each party may
conduct an examination of a witness, except that in the case of
extensive direct examination, the administrative law judge may permit
more than one counsel for the party presenting the witness to conduct
the examination. A party may have one counsel conduct the direct
examination and another counsel conduct re-direct examination of a
witness, or may have one counsel conduct the cross examination of a
witness and another counsel conduct the re-cross examination of a
witness.
* * * * *
(b) Transcript. The hearing must be recorded and transcribed. The
reporter will make the transcript available to any party upon payment
by that party to the reporter of the cost of the transcript. The
administrative law judge may order the record corrected, either upon
motion to correct, upon stipulation of the parties, or following notice
to the parties upon the administrative law judge's own motion.
13. In Sec. 19.37, the section heading and paragraph (a)(1) are
revised to read as follows:
Sec. 19.37 Post-hearing filings.
(a) Proposed findings and conclusions and supporting briefs. (1)
Using the same method of service for each party, the administrative law
judge shall serve notice upon each party that the certified transcript,
together with all hearing exhibits and exhibits introduced but not
admitted into evidence at the hearing, has been filed. Any party may
file with the administrative law judge proposed findings of fact,
proposed conclusions of law, and a proposed order within 30 days
following service of this notice by the administrative law judge or
within such longer period as may be ordered by the administrative law
judge.
* * * * *
14. Section 19.38 is revised to read as follows:
Sec. 19.38 Recommended decision and filing of record.
(a) Filing of recommended decision and record. Within 45 days after
expiration of the time allowed for filing reply briefs under
Sec. 19.37(b), the administrative law judge shall file with and certify
to the Comptroller, for decision, the record of the proceeding. The
record must include the administrative law judge's recommended
decision, recommended findings of fact, recommended conclusions of law,
and proposed order; all prehearing and hearing transcripts, exhibits,
and rulings; and the motions, briefs, memoranda, and other supporting
papers filed in connection with the hearing. The administrative law
judge shall serve upon each party the recommended decision, findings,
conclusions, and proposed order.
(b) Filing of index. At the same time the administrative law judge
files with and certifies to the Comptroller for final determination the
record of the proceeding, the administrative law judge shall furnish to
the Comptroller a
[[Page 20337]]
certified index of the entire record of the proceeding. The certified
index shall include, at a minimum, an entry for each paper, document or
motion filed with the administrative law judge in the proceeding, the
date of the filing, and the identity of the filer. The certified index
shall also include an exhibit index containing, at a minimum, an entry
consisting of exhibit number and title or description for: Each exhibit
introduced and admitted into evidence at the hearing; each exhibit
introduced but not admitted into evidence at the hearing; each exhibit
introduced and admitted into evidence after the completion of the
hearing; and each exhibit introduced but not admitted into evidence
after the completion of the hearing.
Subpart B--[Amended]
15. Section 19.100 is revised to read as follows:
Sec. 19.100 Filing documents.
All materials required to be filed with or referred to the
Comptroller or the administrative law judge in any proceeding under
this part must be filed with the Hearing Clerk, Office of the
Comptroller of the Currency, 250 E Street, SW, Washington, DC 20219.
Filings to be made with the Hearing Clerk include the notice and
answer; motions and responses to motions; briefs; the record filed by
the administrative law judge after the issuance of a recommended
decision; the recommended decision filed by the administrative law
judge following a motion for summary disposition (except that in
removal and prohibition cases the administrative law judge will file
the record and the recommended decision with the Board of Governors of
the Federal Reserve System); referrals by the administrative law judge
of motions for interlocutory review; exceptions and requests for oral
argument; and any other papers required to be filed with the
Comptroller or the administrative law judge under this part.
Subpart C--[Amended]
16. In Sec. 19.112, paragraphs (a), (b), (c) and (d)(3)(i) are
revised to read as follows:
Sec. 19.112 Informal hearing.
(a) Issuance of hearing order. After receipt of a request for
hearing, the District Deputy Comptroller or Administrator, the Deputy
Comptroller for Multinational Banking, or the Deputy Comptroller or
Director for Special Supervision, as appropriate, must notify the
petitioner requesting the hearing, the OCC's Enforcement and Compliance
Division, and the appropriate OCC District Counsel of the date, time,
and place fixed for the hearing. The hearing must be scheduled to be
held not later than 30 days from the date when a request for hearing is
received unless the time is extended in response to a written request
of the petitioner. The District Deputy Comptroller or Administrator,
the Deputy Comptroller for Multinational Banking, or the Deputy
Comptroller or Director for Special Supervision, as appropriate, may
extend the hearing date only for a specific period of time and must
take appropriate action to ensure that the hearing is not unduly
delayed.
(b) Appointment of presiding officer. The District Deputy
Comptroller or Administrator, the Deputy Comptroller for Multinational
Banking, or the Deputy Comptroller or Director for Special Supervision,
as appropriate, must appoint one or more OCC employees as the presiding
officer to conduct the hearing. The presiding officer(s) may not have
been involved in the proceeding, a factually related proceeding, or the
underlying enforcement action in a prosecutorial or investigative role.
(c) Waiver of oral hearing--(1) Petitioner. When the petitioner
requests a hearing, the petitioner may elect to have the matter
determined by the presiding officer solely on the basis of written
submissions by serving on the District Deputy Comptroller or
Administrator, the Deputy Comptroller for Multinational Banking, or the
Deputy Comptroller or Director for Special Supervision, as appropriate,
and all parties, a signed document waiving the statutory right to
appear and make oral argument. The petitioner must present the written
submissions to the presiding officer, and serve the other parties, not
later than ten days prior to the date fixed for the hearing, or within
such shorter time period as the presiding officer may permit.
(2) OCC. The OCC may respond to the petitioner's submissions by
presenting the presiding officer with a written response, and by
serving the other parties, not later than the date fixed for the
hearing, or within such other time period as the presiding officer may
require.
(d) * * *
(3) Presentation. (i) The OCC may appear and the petitioner may
appear personally or through counsel at the hearing to present relevant
written materials and oral argument. Except as permitted in paragraph
(c) of this section, each party, including the OCC, must file a copy of
any affidavit, memorandum, or other written material to be presented at
the hearing with the presiding officer and must serve the other parties
not later than ten days prior to the hearing or within such shorter
time period as permitted by the presiding officer.
* * * * *
17. In Sec. 19.113, paragraphs (a) and (b) are revised, paragraph
(c), (d), and (e) are redesignated as paragraphs (d), (e), and (f),
respectively, and new paragraph (c) is added, to read as follows:
Sec. 19.113 Recommended and final decisions.
(a) The presiding officer must issue a recommended decision to the
Comptroller within 20 days of the conclusion of the hearing or, when
the petitioner has waived an oral hearing, within 20 days of the date
fixed for the hearing. The presiding officer must serve promptly a copy
of the recommended decision on the parties to the proceeding. The
decision must include a summary of the facts and arguments of the
parties.
(b) Each party may, within ten days of being served with the
presiding officer's recommended decision, submit to the Comptroller
comments on the recommended decision.
(c) Within 60 days of the conclusion of the hearing or, when the
petitioner has waived an oral hearing, within 60 days from the date
fixed for the hearing, the Comptroller must notify the petitioner by
registered mail whether the suspension or removal from office, and
prohibition from participation in any manner in the affairs of the
bank, will be affirmed, terminated, or modified. The Comptroller's
decision must include a statement of reasons supporting the decision.
The Comptroller's decision is a final and unappealable order.
* * * * *
Subpart H--[Amended]
Sec. 19.160 [Amended]
18. In Sec. 19.160, paragraph (a) is amended in the second sentence
by revising the phrase ``notify the acquiring party in writing'' to
read ``mail a written notification to the proposed acquiring person''.
19. Section 19.161 is revised to read as follows:
Sec. 19.161 Notice of disapproval and hearing initiation.
(a) Notice of disapproval. The OCC's written disapproval of a
proposed acquisition of control of a national bank must:
[[Page 20338]]
(1) Contain a statement of the basis for the disapproval; and
(2) Indicate that the filer may request a hearing.
(b) Hearing request. Following receipt of a notice of disapproval,
a filer may request a hearing on the proposed acquisition. A hearing
request must:
(1) Be in writing; and
(2) Be filed with the Hearing Clerk of the OCC within ten days
after service on the filer of the notice of disapproval. If a filer
fails to request a hearing with a timely written request, the notice of
disapproval constitutes a final and unappealable order.
(c) Hearing order. Following receipt of a hearing request, the
Comptroller shall issue, within 20 days, an order that sets forth:
(1) The legal authority for the proceeding and for the OCC's
jurisdiction over the proceeding;
(2) The matters of fact or law upon which the disapproval is based;
and
(3) The requirement for filing an answer to the hearing order with
OFIA within 20 days after service of the hearing order.
(d) Answer. An answer to a hearing order must specifically deny
those portions of the order that are disputed. Those portions of the
order that the filer does not specifically deny are deemed admitted by
the filer. Any hearing under this subpart is limited to those portions
of the order that are specifically denied.
(e) Effect of failure to answer. Failure of a filer to file an
answer within 20 days after service of the hearing order constitutes a
waiver of the filer's right to appear and contest the allegations in
the hearing order. If a filer does not file a timely answer,
enforcement counsel may file a motion for entry of an order of default.
Upon a finding that no good cause has been shown for the failure to
file a timely answer, the administrative law judge shall file with the
Comptroller a recommended decision containing the findings and the
relief sought in the hearing order. Any final order issued by the
Comptroller based upon a filer's failure to answer is deemed to be an
order issued upon consent and is a final and unappealable order.
Sec. 19.162 [Removed]
20. Section 19.162 is removed.
Subpart I--[Amended]
21. In Sec. 19.170, paragraph (d) is revised, paragraphs (e) and
(f) are redesignated as paragraphs (f) and (g), respectively, and a new
paragraph (e) is added to read as follows:
Sec. 19.170 Discovery depositions.
* * * * *
(d) Conduct of the deposition. The witness must be duly sworn, and
each party will have the right to examine the witness with respect to
all non-privileged, relevant, and material matters of which the witness
has factual, direct, and personal knowledge. Objections to questions or
exhibits must be in short form and must state the grounds for the
objection. Failure to object to questions or exhibits is not a waiver
except where the grounds for the objection might have been avoided if
the objection had been timely presented.
(e) Recording the testimony--(1) Generally. The party taking the
deposition must have a certified court reporter record the witness's
testimony:
(i) By stenotype machine or electronic sound recording device;
(ii) Upon agreement of the parties, by any other method; or
(iii) For good cause and with leave of the administrative law
judge, by any other method.
(2) Cost. The party taking the deposition must bear the cost of the
recording and transcribing the witness's testimony.
(3) Transcript. Unless the parties agree that a transcription is
not necessary, the court reporter must provide a transcript of the
witness's testimony to the party taking the deposition and must make a
copy of the transcript available to each party upon payment by that
party of the cost of the copy.
* * * * *
22. In Sec. 19.171, paragraph (b) is revised to read as follows:
Sec. 19.171 Deposition subpoenas.
* * * * *
(b) Service--(1) Methods of service. The party requesting the
subpoena must serve it on the person named therein, or on that person's
counsel, by any of the methods identified in Sec. 19.11(d).
(2) Proof of service. The party serving the subpoena must file
proof of service with the administrative law judge.
* * * * *
Subpart J--[Amended]
23. Section 19.184 is revised to read as follows:
Sec. 19.184 Service of subpoena and payment of witness expenses.
(a) Methods of service. Service of a subpoena may be made by any of
the methods identified in Sec. 19.11(d).
(b) Expenses. A witness who is subpoenaed will be paid the same
expenses in the same manner as witnesses in the district courts of the
United States. The expenses need not be tendered at the time a subpoena
is served.
Dated: April 2, 1996.
Eugene A. Ludwig,
Comptroller of the Currency.
[FR Doc. 96-10331 Filed 5-3-96; 8:45 am]
BILLING CODE 4810-33-P
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