issue-1996-07-01•Federal Register final rules — 1996-07-01
Federal Register final rules — 1996-07-01
issue-1996-07-01Federal Register final rules — 1996-07-01Regulation
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. 96-16818 Technical Amendments to OMB Approval Numbers
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33851-33852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16818]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 9
[OPPTS-00191; FRL-5379-8]
Technical Amendments to OMB Approval Numbers
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: EPA is amending the list of OMB control numbers which are
issued under the Paperwork Reduction Act for regulations with
information collection requirements. This is a technical amendment
which only updates the table to include any approvals that have
published in the Federal Register since July 1, 1995, or to delete any
approval that have been terminated since that date.
DATES: The effective date of this rule is July 1, 1996.
FOR FURTHER INFORMATION CONTACT: Susan H. Hazen, Director,
Environmental Assistance Division, Environmental Protection Agency, 401
M St., SW., Washington, DC 20460, Telephone: (202) 554-1404, TDD: (202)
554-0551, e-mail address: TSCA-H[email protected].
SUPPLEMENTARY INFORMATION: This document will consolidate the OMB
control numbers for various regulations issued under the Toxic
Substances Control Act and section 313 of the Emergency Planning and
Community Right-to-Know Act that have published since July 1, 1995.
The information collection requests and the OMB control numbers
included in this technical amendment were previously subject to public
notice and comment prior to OMB approval. As such, EPA finds that there
is ``good cause'' under section 553(b)(B) of the Administrative
Procedure Act (5 U.S.C. 533) to issue this technical amendment without
prior notice and comment.
List of Subjects in 40 CFR Part 9
Environmental protection, Information collection request, Reporting
and recordkeeping requirements.
Dated: June 27, 1996.
Susan H. Wayland,
Acting Assistant Administrator for Prevention, Pesticides and Toxic
Substances.
Therefore, 40 CFR chapter I, part 9 is amended as follows:
PART 9--[AMENDED]
1. The authority citation for part 9 continues to read as follows:
Authority: 7 U.S.C. 135 et seq., 136-136y; 15 U.S.C. 2001, 2003,
2005, 2006, 2601-2671; 21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33
U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318, 1321, 1326, 1330,
1342, 1344, 1345 (d) and (e), 1361; E.O. 11735, 38 FR 21243, 3 CFR,
1971-1975 Comp. p. 973; 42 U.S.C. 241, 242b, 243, 246, 300f, 300g,
300g-1, 300g-2, 300g-3, 300g-4, 300g-5, 300g-6, 300j-1, 300j-2,
300j-3, 300j-4, 300j-9, 1857 et seq., 6901-6992k, 7401-7671q, 7542,
9601-9657, 11023, 11048.
Sec. 9.1 [Amended]
2. In Sec. 9.1 the table is amended as follows:
a. By adding the following entries in ascending section number
order, under the headings ``Toxic Chemical Release Reporting: Community
Right-to-Know,'' and ``Significant New Uses of Chemical Substances,''
and adding an entry for part 745 under a new heading ``Lead-Based Paint
Poisioning Prevention in Certain Residential Structures'' to read as
follows:
------------------------------------------------------------------------
OMB control
40 CFR citation No.
------------------------------------------------------------------------
Toxic Chemical Release Reporting: Community Right-to-Know
* * * * *
part 372, subpart A..................................... 2070-0093 and
2070-0143
372.22.................................................. 2070-0093 and
2070-0143
372.25.................................................. 2070-0093
372.27.................................................. 2070-0143
372.30.................................................. 2070-0093 and
2070-0143
372.38.................................................. 2070-0093 and
2070-0143
part 372, subpart C..................................... 2070-0093 and
2070-0143
part 372, subpart D..................................... 2070-0093 and
2070-0143
372.85.................................................. 2070-0093
372.95.................................................. 2070-0143
------------------------------------------------------------------------
* * * * *
Significant New Uses of Chemical Substances
* * * * *
721.562................................................. 2070-0012
* * * * *
721.639................................................. 2070-0012
* * * * *
721.1193................................................ 2070-0012
* * * * *
721.1643................................................ 2070-0012
* * * * *
721.2089................................................ 2070-0012
* * * * *
721.2815................................................ 2070-0012
* * * * *
721.3152................................................ 2070-0012
* * * * *
721.3486................................................ 2070-0012
* * * * *
721.3760................................................ 2070-0012
* * * * *
721.4463................................................ 2070-0012
721.4466................................................ 2070-0012
* * * * *
721.4473................................................ 2070-0012
* * * * *
721.5192................................................ 2070-0012
* * * * *
721.5278................................................ 2070-0012
721.5282................................................ 2070-0012
* * * * *
721.5763................................................ 2070-0012
721.5769................................................ 2070-0012
* * * * *
721.5867................................................ 2070-0012
* * * * *
721.6110................................................ 2070-0012
[[Page 33852]]
* * * * *
721.7046................................................ 2070-0012
* * * * *
721.8090................................................ 2070-0012
* * * * *
721.9526................................................ 2070-0012
* * * * *
721.9656................................................ 2070-0012
721.9658................................................ 2070-0012
* * * * *
721.9892................................................ 2070-0012
------------------------------------------------------------------------
* * * * *
Lead-Based Paint Poisioning Prevention in Certain Residential Structures
part 745, subpart F..................................... 2070-0151
------------------------------------------------------------------------
* * * * *
b. Under the heading ``Reporting and Recordkeeping Requirements''
by removing the entire entry for ``704.30.''
[FR Doc. 96-16818 Filed 6-28-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-16743 Rules for Determining the Country of Origin of a Good for Purposes of Annex 311 of the North American Free Trade Agreement; Corrections
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33845-33846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16743]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Parts 10, 12, 102 and 134
[T.D. 96-48]
RIN 1515-AB34
Rules for Determining the Country of Origin of a Good for
Purposes of Annex 311 of the North American Free Trade Agreement;
Corrections
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Final rule; corrections.
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SUMMARY: This document makes corrections to the document published in
the Federal Register which set forth final amendments to the Customs
Regulations regarding the rules for determining when the country of
origin of a good is one of the parties to the North American Free Trade
Agreement (NAFTA) as required by Annex 311 of the NAFTA.
EFFECTIVE DATE: These corrections are effective August 5, 1996.
FOR FURTHER INFORMATION CONTACT: Sandra L. Gethers, Office of
Regulations and Rulings (202-482-6980).
SUPPLEMENTARY INFORMATION:
Background
On June 6, 1996, Customs published in the Federal Register (61 FR
28932) as T.D. 96-48 a document which adopted as a final rule, with
some modifications, interim amendments to the Customs Regulations that
established the rules for determining when the country of origin of a
good is one of the parties to the North American Free Trade Agreement
(NAFTA) as required by Annex 311 of the NAFTA. Those final NAFTA
Marking Rules apply only to all goods imported from Canada or Mexico
other than textile and apparel products, and do not apply to trade with
other countries. The June 6, 1996, notice provided for an August 5,
1996, effective date for the final regulations.
[[Page 33846]]
This document corrects some errors published in T.D. 96-48.
Several errors involved the Background discussion under the
SUPPLEMENTARY INFORMATION portion of the document. In the discussion of
the effective date of the final regulations in relation to previously-
published final regulations regarding country of origin rules for
textile products, reference was inadvertently made to July 1, 1996,
thus creating some confusion since the EFFECTIVE DATE portion of T.D.
96-48 specified August 5, 1996. In addition, four Harmonized Tariff
Schedule of the United States (HTSUS) heading or subheading references
were inadvertently omitted from the list of conforming changes made to
the regulatory texts to reflect the 1996 version of the HTSUS.
Two errors also appeared in the final regulatory texts in the table
under Sec. 102.20 which sets forth the specific rules by tariff
classification. First, in the second tariff shift rule for subheading
2836.99, the words ``other than to bismuth carbonate'' were omitted,
with the result that the rule as published overlaps with the first
tariff shift rule for that subheading and thus does not properly
reflect the changes made in the 1996 HTSUS. Second, the final
regulatory texts inadvertently failed to implement a proposal, set
forth in a document published in the Federal Register on May 5, 1995
(60 FR 22312), to remove the Note to Section XVI which, as stated in
that May 5, 1995, document, would no longer be necessary in view of a
proposed change to Sec. 102.17(e) that was adopted in the final
regulatory texts.
Corrections of Publication
Accordingly, the document published in the Federal Register as T.D.
96-48 on June 6, 1996 (61 FR 28932) is corrected as set forth below.
Corrections to the Background Section
1. On page 28934, in the first column in the second full paragraph,
in the second sentence, the words ``will take effect on July 1, 1996,
when'' are corrected to read ``will not take effect before''.
2. On page 28934, in the third column under the heading ``Changes
to Conform to 1996 HTSUS'', after the colon in the third sentence, the
reference ``1517.90,'' is added after ``0901.90,''.
3. On page 28935, in the first column, the references ``8545.11,
8547.90, 8548,'' are added at the end of the first line after
``8543.40-8543.89,''.
Corrections to the Final Regulations
4. On page 28961, in the ``Tariff shift and/or other requirements''
column opposite the ``HTSUS'' column listing for 2836.99, in the second
tariff shift rule, the words ``other than to bismuth carbonate'' are
added after the words ``A change to subheading 2836.99''.
5. On page 28971, the Note to Section XVI is removed.
Dated: June 26, 1996.
Stuart P. Seidel,
Assistant Commissioner, Office of Regulations and Rulings.
[FR Doc. 96-16743 Filed 6-28-96; 8:45 am]
BILLING CODE 4820-02-P
Complete official Federal Register PDF
FR Doc. 96-16734 Amendment of Class E Airspace; Jackson, WY
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33843-33844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16734]
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Airspace Docket No. 96-ANM-004]
Amendment of Class E Airspace; Jackson, WY
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
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SUMMARY: This action amends Jackson, Wyoming, Class E airspace by
providing additional controlled airspace to accommodate a Global
Positioning System (GPS) Standard Instrument Approach Procedure (SIAP)
to the Jackson Hole Airport. A correction is made herein clarifying
that the intent of this rulemaking action is to amend existing Class E
airspace rather than establish Class E airspace as was stated in the
notice of proposed rulemaking action. A minor correction is also being
made to the geographic position coordinates of the Jackson Hole
Airport.
EFFECTIVE DATE: 0901 UTC, October 10, 1996.
FOR FURTHER INFORMATION CONTACT: James C. Frala, Operations Branch,
ANM-532.4, Federal Aviation Administration, Docket No. 96-ANM-004, 1601
Lind Avenue, SW., Renton, Washington 98055-4056; telephone number:
(206) 227-2535.
SUPPLEMENTARY INFORMATION:
History
On April 22, 1996, the FAA proposed to amend part 71 of the Federal
Aviation Regulations (14 CFR part 71) to amend Class E airspace at
Jackson, Wyoming, by providing additional controlled airspace to
accommodate a new GPS SIAP to the Jackson Hole Airport (61 FR 17606). A
correction is made herein clarifying that the intent of this action is
to amend existing Class E airspace rather than establish Class E
airspace as was stated in the notice of proposed rulemaking action. A
minor correction is also being made to the geographical position
coordinates of the Jackson Hole Airport.
Interested parties were invited to participate in the rulemaking
proceeding by submitting written comments on the proposal. No comments
were received.
The coordinates for this airspace docket are based on North
American Datum 83. Class E airspace areas extending upward from 700
feet or more above the surface of the earth are published in paragraph
6005 of FAA Order 7400.9C dated August 17, 1995, and effective
September 16, 1995, which is incorporated by reference in 14 CFR 71.1.
The Class E airspace listed in this document will be published
subsequently in the Order.
The Rule
This amendment to part 71 of Federal Aviation Regulations amends
Class E airspace at Jackson, Wyoming. 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.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference, Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the FAA amends 14 CFR part 71 as
follows:
PART 71--[AMENDED]
1. The authority citation for 14 CFR part 71 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; 14 CFR 11.69.
Sec. 71.1 [Amended]
2. The incorporation by reference in 14 CFR 71.1 of the Federal
Aviation Administration Order 7400.9C, Airspace Designations and
Reporting Points, dated August 17, 1995, and effective September 16,
1995, is amended as follows:
Paragraph 6005 Class E airspace areas extending upward from 700
feet or more above the surface of the earth.
* * * * *
[[Page 33844]]
ANM WY E5 Jackson, WY [Revised]
Jackson Hole Airport, WY
(lat. 43 deg.36'24''N, long. 110 deg.44'17''W)
Jackson VOR/DME
(lat. 43 deg.36'30''N, long 110 deg.44'05''W)
Dunoir VOR/DME
(lat. 43 deg.49'42''N, long. 110 deg.20'08''W)
That airspace extending upward from 700 feet above the surface
within a 4.3-mile radius of the Jackson Hole Airport, and within 4.4
miles west and 8.3 miles east of the Jackson VOR/DME 200 deg. radial
extending from the VOR/DME to 21.4 miles south of the VOR/DME, and
within 2.2 mile each side of the Jackson VOR/DME 020 deg. radial
extending from the VOR/DME to 10.5 miles north of the VOR/DME; that
airspace extending upward from 1,200 feet above the surface within 7
miles west and 10.5 miles east of the Jackson VOR/DME 020 deg.
radial extending from the VOR/DME to 33.5 miles north of the VOR/
DME, and within 4.3 miles each side of the Jackson VOR/DME 107 deg.
33.5 radial extending from the VOR/DME to 13.1 miles east of the
VOR/DME, and within 5.3 miles north and 7.9 miles south of the
Dunoir VOR/DME 102 deg. and 282 deg. radials extending from 7 miles
east to 18.2 miles west of the Dunior VOR/DME, and that airspace
south of the Jackson VOR/DME bounded on the east by the southwest
edge of V-328, on the south by lat. 42 deg.30'00''N, and on the west
by the southeast edge of V-465; excluding the Big Piney, WY, Class E
airspace area.
* * * * *
Issued in Seattle, Washington, on June 12, 1996.
Richard E. Prang,
Acting Assistant Manager, Air Traffic Division, Northwest Mountain
Region.
[FR Doc. 96-16734 Filed 6-28-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-16733 Amendment of Class E Airspace; La Grande, Oregon
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Page 33844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16733]
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DEPARTMENT OF TRANSPORTATION
14 CFR Part 71
[Airspace Docket No. 96-ANM-008]
Amendment of Class E Airspace; La Grande, Oregon
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
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SUMMARY: This action amends the La Grande, Oregon, Class E airspace to
accommodate a new Global Positioning System (GPS) Standard Instrument
Approach Procedure (SIAP) to the La Grande/Union County Airport.
Additionally, this action corrects a typographical error of an airway
referenced in the legal description and corrects the spelling of the
name of the Class E airspace area that is excluded from this action.
EFFECTIVE DATE: 0901 UTC, October 10, 1996.
FOR FURTHER INFORMATION CONTACT:
James C. Frala, Operations Branch, ANM-532.4, Federal Aviation
Administration, Docket No. 96-ANM-008, 1601 Lind Avenue S.W., Renton,
Washington 98055-4056; telephone number: (206) 227-2535.
SUPPLEMENTARY INFORMATION:
History
On May 2, 1996, the FAA proposed to amend part 71 of the Federal
Aviation Regulations (14 CFR part 71) to amend Class E airspace at La
Grande, Oregon, to accommodate a new GPS SIAP to the La Grande/Union
County Airport (61 FR 19593). In the proposed legal description of the
Class E airspace, there was a typographical error to an airway and the
name of the Class E airspace area that is excluded from this action was
misspelled. Those errors are corrected herein.
Interested parties were invited to participate in the rulemaking
proceeding by submitting written comments on the proposal. No comments
were received.
The coordinates for this airspace docket are based on North
American Datum 83. Class E airspace areas extending upward from 700
feet or more above the surface of the earth are published in paragraph
6005 of FAA Order 7400.9C dated August 17, 1995, and effective
September 16, 1995, which is incorporated by reference in 14 CFR 71.1.
The Class E airspace listed in this document will be published
subsequently in the Order.
The Rule
This amendment to part 71 of Federal Aviation Regulations amends
Class E airspace at La Grande, Oregon. 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.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference, Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the FAA amends 14 CFR part 71 as
follows:
PART 71--[AMENDED]
1. The authority citation for 14 CFR part 71 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; 14 CFR 11.69.
Sec. 71.1 [Amended]
2. The incorporation by reference in 14 CFR 71.1 of the Federal
Aviation Administration Order 7400.9C, Airspace Designations and
Reporting Points, dated August 17, 1995, and effective September 16,
1995, is amended as follows:
Paragraph 6005 Class E airspace areas extending upward from 700
feet or more above the surface of the earth.
* * * * *
ANM OR E5 La Grande, OR
La Grande/Union County Airport, OR
(Lat. 45 deg.17'25''N, long. 118 deg.00'26''W)
Walla Walla VOR/DME
(Lat. 46 deg.05'13''N, long. 118 deg.17'33''W)
That airspace extending upward from 700 feet above the surface
bounded on the north by a line beginning at lat. 45 deg.38'59''N,
long. 118 deg.02'04''W, extending eastwardly to lat.
45 deg.37'00''N, long. 117 deg.44'34''W, on the east by a line
extending to lat. 45 deg.15'29''N, long. 117 deg.49'04''W, on the
south by a line extending to lat. 45 deg.17'29''N, long.
118 deg.07'04''W, on the west by a line extending to the point of
beginning, and within a 4.3-mile radius of the La Grande/Union
County Airport; that airspace extending upward from 1,200 feet above
the surface bounded by a line beginning at lat. 45 deg.38'59''N,
long. 118 deg.02'04''W, extending northwest along V-357 to the Walla
Walla VOR/DME 16.6-mile radius, thence north along the Walla Walla
VOR/DME 16.6-mile radius until intercepting lat. 46 deg.00'00''N,
thence eastward along lat. 46 deg.00'00''N, to long.
117 deg.02'00''W, thence south along long. 117 deg.02'00''W until
intercepting V-298, thence westward along V-298 to lat.
45 deg.23'30''N, long. 117 deg.47'10''W, to lat. 45 deg.37'00''N,
long. 117 deg.44'34''W, thence to the point of beginning, and that
airspace bounded on the north by the southwest edge of V-298, on the
east by the Boise, ID, Enroute Domestic Airspace Area, on the south
by the north edge of V-121, on the west by the east edge of V-182-
357, excluding that airspace within Federal airways and the Baker
City, OR, Class E airspace area.
* * * * *
Issued in Seattle, Washington, on June 19, 1996.
Richard E. Prang,
Acting Assistant Manager, Air Traffic Division, Northwest Mountain
Region.
[FR Doc. 96-16733 Filed 6-28-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-16732 Amendment to Class E Airspace; Abilene, KS, and Independence, KS
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Page 33845]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16732]
[[Page 33845]]
14 CFR Part 71
[Airspace Docket No. 96-ACE-4]
Amendment to Class E Airspace; Abilene, KS, and Independence, KS
AGENCY: Federal Aviation Administration [FAA], DOT.
ACTION: Final rule.
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SUMMARY: This amendment modifies the Class E airspace area at Abilene
Municipal Airport, Abilene, KS, and Independence Municipal Airport,
Independence, KS, to accommodate a new Standard Instrument Approach
Procedure (SIAP) at the two airports. This action will provide for
additional controlled airspace necessary for aircraft executing the
SIAP utilizing the Global Positioning System (GPS) at Abilene Municipal
Airport, and for aircraft executing the Instrument Landing System (ILS)
procedure at Independence Municipal Airport. This will also correct a
minor error in geographical coordinates of the above listed airports.
EFFECTIVE DATE: 0901 UTC August 15, 1996.
FOR FURTHER INFORMATION CONTACT:
Kathy Randolph, Air Traffic Operations Branch, ACE-530C, Federal
Aviation Administration, 601 E. 12th St., Kansas City, MO, 64106;
telephone (816) 426-3408.
SUPPLEMENTARY INFORMATION:
History
On April 9, 1996, the FAA proposed to amend Part 71 of the Federal
Aviation Regulations (14 CFR Part 71) by modifying the Class E airspace
area at Abilene, KS and Independence, KS. (61 FR 15742). The proposed
action would provide additional controlled airspace to accommodate the
new SIAP to Abilene KS, and Independence, KS.
Interested parties were invited to participate in this rulemaking
proceeding by submitting written comments on the proposal to the FAA.
No comments objecting to the proposal were received. Class E airspace
areas extending from 700 feet or more above the surface of the earth
are published in paragraphs 6005 of FAA Order 7400.9C, dated August 17,
1995, and effective September 16, 1995, which is incorporated by
reference in 14 CFR 71.1. The Class E airspace designation listed in
this document will be published subsequently in the Order.
The Rule
This amendment to Part 71 of the Federal Aviation Regulations (14
CFR Part 71) amends the Class E airspace area at Abilene, KS and
Independence, KS, by providing additional controlled airspace for
aircraft executing the SIAP's to the airports.
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.
Therefore, this regulation (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.
List of Subjects in 14 CFR Part 71
Aviation, Incorporation by reference, Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR Part 71 as follows:
PART 71--[AMENDED]
1. The authority citation for Part 71 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; 14 CFR 11.69.
Sec. 71.1 [Amended]
2. The incorporation by reference in 14 CFR 71.1 of Federal
Aviation Administration Order 7400.9C, Airspace Designations and
Reporting Points, dated August 17, 1995, and effective September 16,
1995, is amended as follows:
Paragraph 6005 Class E airspace areas extending from 700 feet or
more above the surface of the earth.
* * * * *
ACE KS E5 Abilene, KS
Abilene Municipal Airport, KS.
(Lat. 38 deg.54'15'' N., long 97 deg.14'09'' W.)
That airspace extending upward from 700 feet above the surface
within a 6.3-mile radius of Abilene Municipal Airport and within 2.6
miles each side of the 180 deg. bearing from the Abilene Municipal
Airport extending from the 6.3-mile radius to 7 miles south of the
airport.
* * * * *
* * * * *
ACE KS E5 Independence, KS
Independence Municipal Airport, KS
(Lat. 37 deg.09'32'' N., long. 95 deg.46'44'' W.)
That airspace extending upward from 700 feet above the surface
within a 6.6-mile radius of Independence Municipal Airport.
* * * * *
Issued in Kansas City, MO on June 11, 1996.
Christopher R. Blum,
Acting Manager, Air Traffic Division, Central Region.
[FR Doc. 96-16732 Filed 6-28-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-16724 Agricultural Loan Loss Amortization
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33842-33843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16724]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 324
RIN 3067-AB77
Agricultural Loan Loss Amortization
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Final rule.
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SUMMARY: As part of the FDIC's systematic review of its regulations and
written policies under section 303(a) of the Riegle Community
Development and Regulatory Improvement Act of 1994 (CDRI), the FDIC is
removing its regulation governing agricultural loan loss amortization.
This action is needed to eliminate the regulation when it becomes
obsolete on January 1, 1999.
EFFECTIVE DATE: January 1, 1999.
FOR FURTHER INFORMATION CONTACT: Robert W. Walsh, Manager, Planning and
Program Development, (202) 898-6896, Division of Supervision; Susan van
den Toorn, Counsel, (202) 898-8707, Legal Division, FDIC, 550 17th
Street, N.W., Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION: The FDIC is conducting a systematic review
of its regulations and written policies. Section 303(a) of the CDRI (12
U.S.C. 4803(a)) requires each federal banking agency to streamline and
modify its regulations and written policies in order to improve
efficiency, reduce unnecessary costs, and eliminate unwarranted
constraints on credit availability. Section 303(a) also requires each
federal banking agency to remove inconsistencies and outmoded and
duplicative requirements from its regulations and written policies.
As part of this review, the FDIC is removing 12 CFR part 324. This
action is appropriate because the regulation implemented legislation
which permitted agricultural banks to amortize qualified agricultural
loan losses incurred only between 1984 and 1991 with a resulting
amortization period not to exceed seven years. Consequently, this
regulation will become obsolete at the end of the permissible
amortization period. Therefore, the FDIC is eliminating the rule
effective January 1, 1999. The Office of the Comptroller of the
Currency (OCC), as part of its Regulation Review Program, has
previously reviewed its regulation on Agricultural Loan Loss
Amortization, 12 CFR part 35, and determined that the regulation
becomes obsolete on January 1, 1999. The OCC issued a proposed rule on
February 8, 1995 (60 FR 7467) and a final rule on May 24, 1995 (60 FR
27401) to remove its regulation on January 1, 1999. The Federal Reserve
Board (FRB) has under consideration a similar proposal with regard to
12 CFR 208.15.
Title VIII of the Competitive Equality Banking Act of 1987 (Act),
Pub. L. 100-86, 101 Stat. 635 (1987), added 12 U.S.C. 1823(j) in an
attempt to alleviate some of the financial pressures then facing
agricultural banks. In particular, 12 U.S.C. 1823(j) permits an
agricultural bank to amortize over a period not to exceed seven years:
(1) Any loss on a qualified agricultural loan that the bank would
otherwise be required to show on its annual financial statement for any
year between December 31, 1983, and January 1, 1992; and (2) any loss
resulting from the reappraisal of property that the bank owned or
acquired between January 1, 1983, and January 1, 1992, in connection
with a qualified agricultural loan. The FDIC implemented this statutory
provision by promulgating 12 CFR part 324 with a final rule published
on November 2, 1987 (52 FR 41968). Pursuant to section 1823(j)(3) of
the Act, the OCC and the FRB issued substantively similar regulations.
See, 12 CFR part 35 and 12 CFR 208.15 respectively.
Because the statute requires that a loss occur on or before
December 31, 1991, to qualify, and that the amortization period may not
exceed seven years, the program becomes obsolete on January 1,
[[Page 33843]]
1999. Reflecting this fact, the FDIC's rule requires that loans under
the program must be fully amortized by December 31, 1998. 12 CFR
324.3(b).
In light of the statutory termination of the agricultural loan loss
amortization program, the FDIC is removing 12 CFR part 324, effective
January 1, 1999, to obviate the need for any regulatory action in the
future. Prior to that date, an annotation to part 324 in title 12 of
the Code of Federal Regulations would indicate the effective date for
removal of the part.
Exemption from Public Notice and Comment
The FDIC believes that it is unnecessary to seek public comment on
this rule because the agricultural loan loss amortization program
becomes obsolete by operation of law on January 1, 1999. Accordingly,
the rule is being adopted in final, rather than proposed, form with a
protracted effective date that will coincide with cessation of the
statutory program.
Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (5
U.S.C. 605(b)), the FDIC hereby certifies that this regulation will not
have a significant economic impact on a substantial number of small
entities because only three institutions are affected. Accordingly, a
regulatory flexibility analysis is not required. This regulation has no
material impact on insured depository institutions and state nonmember
banks, regardless of size.
Paperwork Reduction Act
The collection of information contained in 12 CFR 324.7 has been
approved by the Office of Management and Budget (OMB) under OMB Control
Number 3064-0091. This final rule will remove as unnecessary, for the
reasons set forth in the preamble, that collection of information
effective January 1, 1999.
List of Subjects in 12 CFR Part 324
Accounting, Agriculture, Banks, Banking, State nonmember banks,
Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons set out in the preamble, and under the authority of
12 U.S.C. 1823(j), chapter III of title 12 of the Code of Federal
Regulations is amended as follows:
PART 324--[REMOVED]
1. Part 324 is removed effective January 1, 1999.
By Order of the Board of Directors.
Dated at Washington, D.C., this 17th day of June, 1996.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Deputy Executive Secretary.
[FR Doc. 96-16724 Filed 6-28-96; 8:45 am]
BILLING CODE 6714-01-P
Complete official Federal Register PDF
FR Doc. 96-16710 Viruses, Serums, Toxins, and Analogous Products; Marek's Disease Vaccines
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33839-33842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16710]
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[[Page 33840]]
DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection Service
9 CFR Parts 112 and 113
[Docket No. 94-046-2]
Viruses, Serums, Toxins, and Analogous Products; Marek's Disease
Vaccines
AGENCY: Animal and Plant Health Inspection Service, USDA.
ACTION: Final rule.
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SUMMARY: We are amending the standard requirements for Marek's disease
vaccines by including vaccines prepared from any of the three Marek's
disease virus serotypes, and by defining the identity, safety, and
efficacy requirements for vaccines prepared from each serotype or
combinations of serotypes. We are also amending the requirements for
labeling Marek's disease vaccines. These amendments are necessary based
on the evolution of virus serotypes in the field, advances in the
development of vaccines that are currently prepared to prevent the
disease, and advances in the methods for evaluating such vaccines. The
effect of this rule will be to save license applicants time by
clarifying and codifying the guidelines developed for licensing these
products over the past several years.
EFFECTIVE DATE: July 31, 1996.
FOR FURTHER INFORMATION CONTACT: Dr. David Espeseth, Deputy Director,
Veterinary Biologics, BBEP, APHIS, 4700 River Road Unit 148, Riverdale,
MD, 20737-1237, (301) 734-8245.
SUPPLEMENTARY INFORMATION:
Background
Veterinary biologics are regulated under the Virus-Serum-Toxin Act
of 1913, as amended by the Food Security Act of 1985 (21 U.S.C. 151-
159, hereinafter referred to as the Act). In accordance with the Act,
the Animal and Plant Health Inspection Service (APHIS) promulgates
standard requirements that establish the purity, safety, potency, and
efficacy requirements for these products.
The current standard requirements in Sec. 113.330 (hereinafter
referred to as the regulations) for licensing Marek's disease vaccines
were promulgated at a time when only Serotype 3 Marek's disease
vaccines were prepared. Also, the standard requirements did not include
the evaluation of vaccine efficacy. Since that time, vaccines for
Serotypes 1 and 2 have been developed, very virulent forms of the field
virus have emerged, and other advances in our understanding of this
virus have occurred. In response to these changes, APHIS has developed
guidelines over the past several years for licensing these products.
On May 9, 1995, we published in the Federal Register (60 FR 24584-
24587, Docket No. 94-046-1) a proposal to amend the standard
requirement for Marek's disease vaccines to include Serotypes 1 and 2,
and to codify appropriate efficacy standards and guidelines which
license applicants have utilized.
We solicited comments concerning our proposal for 60 days ending
July 10, 1995. We received two comments by that date. They were from an
association of poultry producers and a poultry producer. Both
commenters agreed with the need for the establishment of standard
requirements for vaccines prepared from any of the three Marek's
disease virus serotypes. Both commenters were in favor of the rule as
proposed.
In preparing the final rule, APHIS observed that it is necessary to
clarify the appropriate use of the group 4 controls in Sec. 113.330,
paragraphs (c)(1)(4) and (c)(4), to assess the severity of serotype 1
virus challenge in an immunogenicity test. The proposed rule specified
that ``at least'' (i.e., ``greater than or equal to'') 20 percent of
the birds in group 4 must have lesions for a valid test after serotype
1 virus challenge in birds vaccinated with a serotype 3 vaccine (see
Sec. 113.330, paragraph (c)(4)). For a satisfactory serotype 3 vaccine
immunogenicity test, the proposed rule specified that 80 percent of
vaccinated birds must be free of lesions (see Sec. 113.330, paragraph
(c)(5)). Stated another way, 20 percent of the vaccinated birds may
have lesions for a satisfactory serotype 3 vaccine immunogenicity test.
When the severity of virulence of the challenge virus for a
serotype 1 or 2 vaccine in group 4 controls is equal to that for
serotype 3 vaccine, the result would be inconsistent with a claim to
aid in the prevention of disease against a very virulent serotype 1
virus (see Sec. 113.330(c)(5)). If the birds in group 4 show 20 percent
or fewer lesions, the challenge virus is deemed not sufficiently
virulent and the test is declared invalid.
Therefore, proposed Sec. 113.330(c)(4) is amended to read ``greater
than'' (in place of ``at least'') 20 percent of vaccinated birds in
group 4 controls must have lesions for a valid immunogenicity test
after challenge with more virulent serotype 1 virus. The amendment to
proposed Sec. 113.330(c)(4) should not hold the vaccine producer to a
higher standard than was originally proposed. This is because the
proposed rule specified that the group 4 control would not apply to the
case of a serotype 3 vaccine challenge virus that requires that 20 per
cent of the vaccinated birds have lesions (see Sec. 113.330(c)(1)(iv)).
Thus, the amendment to Sec. 113.330(c)(4) is consistent with APHIS'
original intent that immunogenicity tests for serotype 1 and 2 vaccines
be based on challenge viruses more virulent than that for serotype 3
vaccines.
Therefore, based on the rationale set forth in the proposed rule
and this document, we are adopting the provisions of the proposal as a
final rule with the change discussed in this document.
Executive Order 12866 and Regulatory Flexibility Act
This rule has been reviewed under Executive Order 12866. The rule
has been determined to be not significant for purposes of Executive
Order 12866 and, therefore, has not been reviewed by the Office of
Management and Budget.
The amendments to the standard requirements for Marek's disease
vaccines codify guidelines developed for licensing these products over
the past several years. These amendments affect all (currently a total
of eight) manufacturers of Marek's disease vaccines, some of which may
be small businesses. By clarifying licensing requirements for Marek's
disease vaccines, the rule will save time during the application
process and will not cause an adverse economic impact on industry.
Under these circumstances, the Administrator of the Animal and
Plant Health Inspection Service has determined that this action will
not have a significant economic impact on a substantial number of small
entities.
Executive Order 12372
This program/activity is listed in the Catalog of Federal Domestic
Assistance under No. 10.025 and is subject to Executive Order 12372,
which requires intergovernmental consultation with State and local
officials. (See 7 CFR part 3015, subpart V.)
Executive Order 12778
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. It is not intended to have retroactive effect.
This rule would not preempt any State or local laws, regulations, or
policies, unless they present an irreconcilable conflict with this
rule. There are no administrative procedures that must be exhausted
prior
[[Page 33841]]
to a judicial challenge to the provisions of this rule.
Paperwork Reduction Act
This rule contains no new information collection or recordkeeping
requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
et seq.).
List of Subjects
9 CFR Part 112
Animal biologics, Exports, Imports, Labeling, Packaging and
containers, Reporting and recordkeeping requirements.
9 CFR Part 113
Animal biologics, Exports, Imports, Reporting and recordkeeping
requirements.
Accordingly, 9 CFR parts 112 and 113 are amended as follows:
PART 112--PACKAGING AND LABELING
1. The authority citation for part 112 continues to read as
follows:
Authority: 21 U.S.C. 151-159; 7 CFR 2.22, 2.80, and 371.2(d).
2. Section 112.7 is amended by adding paragraph (m) to read as
follows:
Sec. 112.7 Special additional requirements.
* * * * *
(m) In the case of biological products containing Marek's disease
virus, all labels shall specify the Marek's disease virus serotype(s)
used in the product.
PART 113--STANDARD REQUIREMENTS
3. The authority citation for part 113 continues to read as
follows:
Authority: 21 U.S.C. 151-159; 7 CFR 2.22, 2.80, and 371.2(d).
4. Section 113.330 is revised to read as follows:
Sec. 113.330 Marek's Disease Vaccines.
Marek's disease vaccine shall be prepared from virus-bearing tissue
culture cells. Only Master Seed Virus which has been established as
pure, safe, and immunogenic shall be used for preparing the production
seed virus for vaccine production.
(a) The Master Seed Virus shall meet the applicable requirements
prescribed in Sec. 113.300, and the requirements prescribed in this
section. The identity test required in Sec. 113.300(c) shall be
conducted in a serotype-specific manner by a method acceptable to
APHIS. Each lot of Master Seed Virus shall also be tested for pathogens
by the chicken embryo inoculation test prescribed in Sec. 113.37,
except that, if the test is inconclusive because of a vaccine virus
override, the chicken inoculation test prescribed in Sec. 113.36 may be
conducted and the virus judged accordingly.
(b) Safety test. The Master Seed Virus shall be nonpathogenic for
chickens as determined by the following procedure:
(1) Specific pathogen free chickens or embryos, negative for
Marek's disease virus antibodies, and from the same source, shall be
isolated into the following groups:
(i) Group 1. At least 50 test subjects shall be inoculated with 10
times as much viable virus as will be contained in one dose of vaccine,
by the route recommended for vaccination.
(ii) Group 2. At least 50 test subjects shall be injected with a
very virulent Marek's disease virus provided or approved by APHIS, at a
dosage level that will cause gross lesions of Marek's disease in at
least 80 per cent of the chickens within 50 days.
(iii) Group 3. Fifty uninoculated controls. For in ovo studies,
this group should receive a sham inoculation of diluent.
(iv) Group 4. For studies evaluating Serotype 1 Master Seed
Viruses, a group of 50 uninoculated control chickens shall be housed in
contact with the group 1 vaccinated chickens.
(2) At least 40 chickens in each group shall survive to 5 days of
age. All chickens that die shall be necropsied and examined for lesions
of Marek's disease and cause of death. The test shall be judged
according to the following criteria:
(i) At 50 days of age, the remaining chickens in group 2 shall be
killed and examined for gross lesions of Marek's disease. If at least
80 percent of this group do not develop Marek's disease, the test is
inconclusive and may be repeated.
(ii) At 120 days of age, the remaining chickens in groups 1, 3, and
4 shall be weighed, killed, and necropsied. If less than 30 of the
chickens in group 3 survive the 120 day period, or if any of the
chickens in group 3 have gross lesions of Marek's disease at necropsy,
the test is declared inconclusive. If less than 30 chickens in groups 1
and 4 survive the 120 day period; or if any of the chickens in groups 1
and 4 have gross lesions of Marek's disease at necropsy; or if the
average body weight of the chickens in groups 1 or 4 is significantly
(statistically) different from the average in group 3 at the end of the
120 days, the lot of Master Seed Virus is unsatisfactory.
(3) For tests involving in ovo inoculation, hatchability results
shall also be reported for each group.
(c) Immunogenicity. Each lot of Master Seed Virus used for vaccine
production shall be tested for immunogenicity at the highest passage
level allowed for the product, and the virus dose to be used shall be
established as follows:
(1) Specific pathogen free chickens or embryos, negative for
Marek's disease antibodies, and from the same source, shall be isolated
into the following groups:
(i) Group 1. A minimum of 35 test subjects shall be inoculated with
the vaccine, using the recommended route, at 1 day of age for chicks or
18 days of embryonation for embryos. The dose used shall be established
by 5 replicate virus titrations conducted by a cell culture system or
other titration method acceptable to APHIS.
(ii) Group 2. A minimum of 35 nonvaccinated test subjects shall be
held as challenge controls.
(iii) Group 3. A minimum of 25 nonvaccinated test subjects shall be
held as nonchallenge controls.
(iv) Group 4. Except for studies evaluating vaccines which contain
only a Serotype 3 virus as the Marek's disease fraction, a minimum of
35 chicks shall be vaccinated at 1 day of age with a licensed Serotype
3 vaccine, in order to document the severity of the very virulent
challenge.
(2) At least 30 chickens in groups 1, 2, and 4, and at least 20
chickens in group 3, shall survive to 5 days of age. All chickens in
groups 1, 2, and 4 shall be challenged at 5 days of age in the
following manner:
(i) For studies evaluating vaccines which contain only a Serotype 3
virus as the Marek's disease fraction, groups 1 and 2 shall be
inoculated with a standard virulent challenge virus provided or
approved by APHIS.
(ii) For all other Marek's disease vaccines, groups 1, 2, and 4
shall be inoculated with a very virulent challenge virus provided or
approved by APHIS.
(3) All chickens shall be observed until 7 weeks of age,
necropsied, and examined for grossly observable lesions consistent with
Marek's disease. All chickens dying before the end of the 7 week
observation period shall be necropsied and evaluated for gross lesions
of Marek's disease. Any chickens not so examined shall be scored as
positive for Marek's disease.
(4) For a valid test, at least 80 percent of the chickens in group
2 must develop grossly observable lesions, none of the chickens in
group 3 shall develop
[[Page 33842]]
grossly observable lesions, and (when included) greater than 20 percent
of the chickens in group 4 must develop grossly observable lesions.
(5) For a valid test to be considered satisfactory, at least 80
percent of the chickens in group 1 must remain free of grossly
observable lesions. The appropriate product claim resulting from a
satisfactory test would be to aid in the prevention of Marek's disease,
for vaccines containing only a Serotype 3 virus as the Marek's disease
fraction, or to aid in the prevention of very virulent Marek's disease,
for all other vaccines.
(d) Test requirements for release. Each serial and subserial shall
meet the applicable requirements prescribed in Sec. 113.300. The
identity test required in Sec. 113.300(c) shall be conducted in a
serotype-specific manner by a method acceptable to APHIS. Final
container samples of completed product shall also meet the requirements
in paragraphs (d) (1), (2), and (3) of this section. Any serial or
subserial found unsatisfactory by a prescribed test shall not be
released.
(1) Purity test. The chicken embryo inoculation test prescribed in
Sec. 113.37 shall be conducted, except that, if the test is
inconclusive because of a vaccine virus override, the chicken
inoculation test prescribed in Sec. 113.36 may be conducted and the
virus judged accordingly.
(2) Safety test. At least 25 one-day-old, specific pathogen free
chickens shall be injected, by the subcutaneous route, with the
equivalent of 10 chicken doses of virus (vaccine concentrated 10X). The
chickens shall be observed each day for 21 days. Chickens dying during
the period shall be examined, cause of death determined, and the
results recorded.
(i) If at least 20 chickens do not survive the observation period,
the test is inconclusive.
(ii) If lesions of any disease or cause of death are directly
attributable to the vaccine, the serial is unsatisfactory.
(iii) If less than 20 chicks survive the observation period and
there are no deaths or lesions attributable to the vaccine, the test
may be repeated one time, Provided, that if the test is not repeated,
the serial shall be declared unsatisfactory.
(3) Potency test. The samples shall be titrated using a cell
culture system or other titration method acceptable to APHIS. For
vaccines composed of more than one Marek's disease virus serotype, each
fraction shall be titrated in a serotype-specific manner.
(i) Samples of desiccated vaccine shall be incubated at 37 deg.C
for 3 days before preparation for use in the potency test. Samples of
desiccated or frozen vaccine shall be reconstituted in diluent
according to the label recommendations, and held in an ice bath at
0 deg.C to 4 deg.C for 2 hours prior to use in the potency test.
(ii) For a serial or subserial to be eligible for release, each
serotype contained in the vaccine shall have a virus titer per dose
which is at least 3 times greater than the number of plaque forming
units (pfu) used in the immunogenicity test prescribed in paragraph (c)
of this section, but not less than 1000 pfu per dose.
(iii) When tested (without the pretest incubation of desiccated
products) at any time within the expiration period, each serotype
contained in the vaccine shall have a virus titer per dose which is at
least 2 times the number of pfu used in the immunogenicity test, but
not less than 750 pfu per dose.
Done in Washington, DC, this 25th day of June 1996.
Donald W. Luchsinger,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 96-16710 Filed 6-28-96; 8:45 am]
BILLING CODE 3410-34-P
Complete official Federal Register PDF
FR Doc. 96-16701 Changes in Flood Elevation Determinations
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33852-33854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16701]
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FEDERAL EMERGENCY MANAGEMENT AGENCY
44 CFR Part 65
Changes in Flood Elevation Determinations
AGENCY: Federal Emergency Management Agency (FEMA).
ACTION: Final rule.
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SUMMARY: Modified base (1% annual chance) flood elevations are
finalized for the communities listed below. These modified elevations
will be used to calculate flood insurance premium rates for new
buildings and their contents.
EFFECTIVE DATES: The effective dates for these modified base flood
elevations are indicated on the following table and revise the Flood
Insurance Rate Map(s) in effect for each listed community prior to this
date.
ADDRESSES: The modified base flood elevations for each community are
available for inspection at the office of the Chief Executive Officer
of each community. The respective addresses are listed in the following
table.
FOR FURTHER INFORMATION CONTACT: Michael K. Buckley, P.E., Chief,
Hazard Identification Branch, Mitigation Directorate, 500 C Street SW.,
Washington, DC 20472, (202) 646-2756.
SUPPLEMENTARY INFORMATION: The Federal Emergency Management Agency
makes the final determinations listed below of the final determinations
of modified base flood elevations for each community listed. These
modified elevations have been published in newspapers of local
circulation and ninety (90) days have elapsed since that publication.
The Acting Associate Director has resolved any appeals resulting from
this notification.
The modified base flood elevations are not listed for each
community in this notice. However, this rule includes the address of
the Chief Executive Officer of the community where the modified base
flood elevation determinations are available for inspection.
The modifications are made pursuant to Section 206 of the Flood
Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance
with the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq.,
and with 44 CFR Part 65.
For rating purposes, the currently effective community number is
shown and must be used for all new policies and renewals.
The modified base flood elevations are the basis for the floodplain
management measures that the community is required to either adopt or
to show evidence of being already in effect in order to qualify or to
remain qualified for participation in the National Flood Insurance
Program (NFIP).
These modified elevations, together with the floodplain management
criteria required by 44 CFR 60.3, are the minimum that are required.
They should not be construed to mean that the community must change any
existing ordinances that are more stringent in their floodplain
management requirements. The community may at any time enact stricter
requirements of its own, or pursuant to policies established by other
Federal, State, or regional entities.
These modified elevations are used to meet the floodplain
management requirements of the NFIP and are also used to calculate the
appropriate flood insurance premium rates for new buildings built after
these elevations are made final, and for the contents in these
buildings.
The changes in base flood elevations are in accordance with 44 CFR
65.4.
National Environmental Policy Act
This rule is categorically excluded from the requirements of 44 CFR
Part 10, Environmental Consideration. No environmental impact
assessment has been prepared.
Regulatory Flexibility Act
The Acting Associate Director, Mitigation Directorate, certifies
that this rule is exempt from the requirements of the Regulatory
Flexibility Act because modified base flood elevations are required by
the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are
required to maintain community eligibility in the NFIP. No regulatory
flexibility analysis has been prepared.
Regulatory Classification
This final rule is not a significant regulatory action under the
criteria of Section 3(f) of Executive Order 12866 of September 30,
1993, Regulatory Planning and Review, 58 FR 51735.
Executive Order 12612, Federalism
This rule involves no policies that have federalism implications
under Executive Order 12612, Federalism, dated October 26, 1987.
Executive Order 12778, Civil Justice Reform
This rule meets the applicable standards of Section 2(b)(2) of
Executive Order 12778.
List of Subjects in 44 CFR Part 65
Flood insurance, Floodplains, Reporting and recordkeeping
requirements.
Accordingly, 44 CFR Part 65 is amended to read as follows:
PART 65--[AMENDED]
1. The authority citation for Part 65 continues to read as follows:
Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of
1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR 19367, 3 CFR,
1979 Comp., p. 376.
2. The tables published under the authority of Sec. 65.4 are
amended as follows:
Sec. 65.4 [Amended]
[[Page 33853]]
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Chief executive
State and county Location Dates and name of newspaper officer of Effective date of Community
where notice was published community modification No.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arizona: Maricopa (FEMA City of Scottsdale.......... June 1, 1995, June 8, 1995, The Honorable May 5, 1995................. 045012
Docket No. 7147). Scottsdale Progress. Herbert
Drinkwater,
Mayor, City of
Scottsdale,
P.O. Box 1000,
Scottsdale,
Arizona 85252-
1000.
Arkansas:
Benton (FEMA Docket No. Unincorporated areas........ Dec. 1, 1995, Dec. 8, 1995, The Honorable Nov. 3, 1995................ 050419
7171). Benton County Daily Record. Bruce
Rutherford,
Benton County
Judge, P.O.
Box 278,
Bentonville,
Arkansas 72712.
Benton (FEMA Docket No. City of Rogers.............. Dec. 1, 1995, Dec. 8, 1995, The Honorable Nov. 3, 1995................ 050013
7171). Benton County Daily Record. John W.
Sampier, Jr.,
Mayor, City of
Rogers, 300
West Poplar,
Rogers,
Arkansas 72756.
Colorado:
Boulder (FEMA Docket No. Unincorporated areas........ Nov. 23, 1995, Nov. 30, 1995, The Honorable Nov. 1, 1995................ 080023
7167). Daily Camera. Ronald K.
Stewart,
Chairperson,
Boulder County
Board of
Supervisors,
P.O. Box 471,
Boulder,
Colorado 80306.
Boulder (FEMA Docket No. City of Boulder............. Nov. 23, 1995, Nov. 30, 1995, The Honorable Nov. 1, 1995................ 080024
7167). Daily Camera. Leslie Durgin,
Mayor, City of
Boulder, P.O.
Box 791,
Boulder,
Colorado 80306.
Hawaii: Honolulu (FEMA City and county of Honolulu. Dec. 7, 1995, Dec. 14, 1995, The Honorable Nov. 13, 1995............... 150001
Docket No. 7171). Honolulu Advertiser. Jeremy Harris,
Mayor, City
and County of
Honolulu, 530
South King
Street, Room
300, Honolulu,
Hawaii 96813.
Idaho: Bannock (FEMA Docket City of Pocatello........... Nov. 23, 1995, Nov. 30, 1995, The Honorable Oct. 12, 1995............... 160012
No. 7167). Idaho State Journal. Peter
Angstadt,
Mayor, City of
Pocatello,
P.O. Box
4169,Pocatello
, Idaho 83205.
Oklahoma: Oklahoma (FEMA City of Oklahoma City....... Nov. 23, 1995, Nov. 30, 1995, The Honorable Oct. 19, 1995............... 405378
Docket No. 7167). Journal Record. Ronald J.
Norick, Mayor,
City of
Oklahoma City,
200 North
Walker Avenue,
Oklahoma City,
Oklahoma 73102.
Texas:
Tarrant (FEMA Docket No. City of Arlington........... Dec. 1, 1995, Dec. 8, 1995, Fort The Honorable Nov. 10, 1995............... 485454
7171). Worth Telegram. Richard
Greene, Mayor,
City of
Arlington,
P.O. Box 231,
Arlington,
Texas 76004-
0231.
Dallas (FEMA Docket No. City of Coppell............. Dec. 1, 1995, Dec. 8, 1995, The Honorable Nov. 10, 1995............... 480170
7171). Citizen's Advocate. Tom Morton,
Mayor, City of
Coppell, P.O.
Box 478,
Coppell, Texas
75019.
Harris (FEMA Docket No. Unincorporated areas........ Dec. 6, 1995, Dec. 13, 1995, The Honorable Nov. 8, 1995................ 480287
7171). Houston Chronicle. Jon Lindsay,
Harris County
Judge, 1001
Preston
Street,
Houston, Texas
77002.
Dallas (FEMA Docket No. City of Irving.............. Dec. 1, 1995, Dec. 8, 1995, The Honorable Nov. 10, 1995............... 480180
7171). Citizen's Advocate. Bobby Joe
Raper, Mayor,
City of
Irving, P.O.
Box 152288,
Irving, Texas
75015-2288.
[[Page 33854]]
Collin (FEMA Docket No. City of Murphy.............. Dec. 20, 1995, Dec. 27, 1995, The Honorable Nov. 30, 1995............... 480137
7171). Wylie News. Greg
Singleton,
Mayor, City of
Murphy, 205
North Murphy
Road,Murphy,
Texas 75094.
Collin (FEMA Docket No. City of Plano............... Nov. 23, 1995, Nov. 30, 1995, The Honorable Oct. 27, 1995............... 480140
7162). Plano Star Courier. James N. Muns,
Mayor, City of
Plano, P.O.
Box 860358,
Plano, Texas
75086-0358.
Collin (FEMA Docket No. City of Plano............... Dec. 20, 1995, Dec. 27, 1995, The Honorable Nov. 30, 1995............... 480140
7171). Plano Star Courier. James N. Muns,
Mayor, City of
Plano, P.O.
Box 860358,
Plano, Texas
75086-0358.
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood
Insurance'')
Dated: June 25, 1996.
Richard W. Krimm,
Acting Associate Director for Mitigation.
[FR Doc. 96-16701 Filed 6-28-96; 8:45 am]
BILLING CODE 6718-04-P
Complete official Federal Register PDF
FR Doc. 96-16700 Changes in Flood Elevation Determinations
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33854-33856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16700]
-----------------------------------------------------------------------
FEDERAL EMERGENCY MANAGEMENT AGENCY
44 CFR Part 65
[Docket No. FEMA-7185]
Changes in Flood Elevation Determinations
AGENCY: Federal Emergency Management Agency (FEMA).
ACTION: Interim final rule.
-----------------------------------------------------------------------
SUMMARY: This interim final rule lists communities where modification
of the base (1% annual chance) flood elevations is appropriate because
of new scientific or technical data. New flood insurance premium rates
will be calculated from the modified base flood elevations for new
buildings and their contents.
DATES: These modified base flood elevations are currently in effect on
the dates listed in the table and revise the Flood Insurance Rate
Map(s) in effect prior to this determination for each listed community.
From the date of the second publication of these changes in a
newspaper of local circulation, any person has ninety (90) days in
which to request through the community that the Acting Associate
Director, Mitigation Directorate, reconsider the changes. The modified
elevations may be changed during the 90-day period.
ADDRESSES: The modified base flood elevations for each community are
available for inspection at the office of the Chief Executive Officer
of each community. The respective addresses are listed in the following
table.
FOR FURTHER INFORMATION CONTACT: Michael K. Buckley, P.E., Chief,
Hazard Identification Branch, Mitigation Directorate 500 C Street SW,
Washington, DC 20472, (202) 646-2756.
SUPPLEMENTARY INFORMATION: The modified base flood elevations are not
listed for each community in this interim rule. However, the address of
the Chief Executive Officer of the community where the modified base
flood elevation determinations are available for inspection is
provided.
Any request for reconsideration must be based upon knowledge of
changed conditions, or upon new scientific or technical data.
The modifications are made pursuant to Section 201 of the Flood
Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance
with the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq.,
and with 44 CFR Part 65.
For rating purposes, the currently effective community number is
shown and must be used for all new policies and renewals.
The modified base flood elevations are the basis for the floodplain
management measures that the community is required to either adopt or
to show evidence of being already in effect in order to qualify or to
remain qualified for participation in the National Flood Insurance
Program (NFIP).
These modified elevations, together with the floodplain management
criteria required by 44 CFR 60.3, are the minimum that are required.
They should not be construed to mean that the community must change any
existing ordinances that are more stringent in their floodplain
management requirements. The community may at any time enact stricter
requirements of its own, or pursuant to policies established by other
Federal, State, or regional entities.
The changes in base flood elevations are in accordance with 44 CFR
65.4.
National Environmental Policy Act
This rule is categorically excluded from the requirements of 44 CFR
Part 10, Environmental Consideration. No environmental impact
assessment has been prepared.
Regulatory Flexibility Act
The Acting Associate Director, Mitigation Directorate, certifies
that this rule is exempt from the requirements of the Regulatory
Flexibility Act because modified base flood elevations are required by
the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are
required to maintain community eligibility in the NFIP. No regulatory
flexibility analysis has been prepared.
Regulatory Classification
This interim rule is not a significant regulatory action under the
criteria of Section 3(f) of Executive Order 12866 of September 30,
1993, Regulatory Planning and Review, 58 FR 51735.
Executive Order 12612, Federalism
This rule involves no policies that have federalism implications
under Executive Order 12612, Federalism, dated October 26, 1987.
Executive Order 12778, Civil Justice Reform
This rule meets the applicable standards of Section 2(b)(2) of
Executive Order 12778.
List of Subjects in 44 CFR Part 65
Flood insurance, Floodplains, Reporting and recordkeeping
requirements.
[[Page 33855]]
Accordingly, 44 CFR Part 65 is amended to read as follows:
PART 65--[AMENDED]
1. The authority citation for Part 65 continues to read as follows:
Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of
1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR 19367, 3 CFR,
1979 Comp., p. 376.
Sec. 65.4 [Amended]
2. The tables published under the authority of Sec. 65.4 are
amended as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chief executive
State and county Location Dates and name of newspaper officer of Effective date of Community
where notice was published community modification No.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arizona:
Maricopa................ City of Glendale............ Apr. 4, 1996, Apr. 11, 1996, The Honorable Feb. 26, 1996............... 040045
Arizona Republic. Elaine
Scruggs,
Mayor, City of
Glendale, 5850
West Glendale
Avenue,
Glendale,
Arizona 85301.
Maricopa................ City of Phoenix............. Apr. 4, 1996, Apr. 11, 1996, The Honorable Feb. 26, 1996............... 040051
Arizona Republic. Skip Rimsza,
Mayor, City of
Phoenix, 200
West
Washington
Street,
Phoenix,
Arizona 85003-
1611.
California: Orange.......... City of Orange.............. Apr. 4, 1996, Apr. 11, 1996, The Honorable Mar. 7, 1996................ 060228
Orange County Register. Joanne Coontz,
Mayor, City of
Orange, P.O.
Box 449,
Orange,
California
92666-1591.
Colorado:
Denver.................. City and county of Denver... Apr. 4, 1996, Apr. 11, 1996, The Honorable Mar. 7, 1996................ 080046
Daily Journal. Wellington E.
Webb, Mayor,
City and
County of
Denver, 2000
West Third
Avenue,
Denver,
Colorado 80223.
Jefferson............... Unincorporated areas........ Apr. 19, 1996, April 26, 1996, The Honorable Mar. 19, 1996............... 080087
Golden Transcript. Gary D. Laura.
Chairperson,
Jefferson
County Board
of
Commissioners,
100 Jefferson
County
Parkway,
Golden,
Colorado 80419.
Arapahoe and Douglas.... City of Littleton........... Apr. 11, 1996, Apr. 18, 1996, The Honorable Mar. 11, 1996............... 080017
Littleton Independent. Dennis
Reynolds,
Mayor, City of
Littleton,
2255 West
Berry Avenue,
Littleton,
Colorado 80165.
Boulder................. City of Louisville.......... Apr. 10, 1996, Apr. 17, 1996, The Honorable Mar. 19, 1996............... 085076
Louisville TImes. Tom Davidson,
Mayor, City of
Louisville,
749 Main
Street,
Louisville,
Colorado 80027.
Iowa: Polk.................. City of Des Monies.......... Apr. 11, 1996, Apr. 18, 1996, The Honorable Mar. 19, 1996............... 190227
Des Moines Register. Arthur Davis,
Mayor, City of
Des Moines,
400 East First
Street, Des
Moines, Iowa
50309-1891.
Oklahoma: Cleveland......... City of Norman.............. Apr. 12, 1996, Apr.19, 1996, The Honorable Mar. 27, 1996............... 400046
Norman Transcript. William
Nations,
Mayor, City of
Norman, 201
West Gray,
Norman,
Oklahoma 73070.
Texas:
Collin.................. City of Frisco.............. Apr. 19, 1996, Apr. 26, 1996, The Honorable Mar. 27, 1996............... 480134
Frisco Enterprise. Robert Warren,
Mayor, City of
Frisco, P.O.
Drawer 1100,
Frisco, Texas
75034.
[[Page 33856]]
Lubbock................. City of Lubbock............. Apr. 18, 1996, Apr. 25, 1996, The Honorable Apr. 1, 1996................ 480452
Lubbock Avalanche Journal. David R.
Langston,
Mayor, City of
Lubbock, P.O.
Box 2000,
Lubbock, Texas
79457.
Montgomery.............. Unincorporated areas........ Apr. 12, 1996, Apr. 19, 1996. The Honorable Mar. 27, 1996............... 480483
Conroe Courier. Alan B.
Sadler,
Montgomery
County Judge,
301 North
Thompson,
Suite 210,
Conroe, Texas
77301.
Collin.................. City of Plano............... Apr. 17, 1996, Apr. 24, 1996, The Honorable Mar. 27, 1996............... 480140
Plano Star Courier. James N. Muns,
Mayor, City of
Plano, P.O.
Box 860358,
Plano, Texas
75086-0358.
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood
Insurance'')
Dated: June 25, 1996.
Richard W. Krimm,
Acting Associate Director for Mitigation.
[FR Doc. 96-16700 Filed 6-28-96; 8:45 am]
BILLING CODE 6718-04-P
Complete official Federal Register PDF
FR Doc. 96-16699 Final Flood Elevation Determinations
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33856-33859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16699]
-----------------------------------------------------------------------
FEDERAL EMERGENCY MANAGEMENT AGENCY
44 CFR Part 67
Final Flood Elevation Determinations
AGENCY: Federal Emergency Management Agency (FEMA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: Base (1% annual chance) flood elevations and modified base
flood elevations are made final for the communities listed below. The
base flood elevations and modified base flood elevations are the basis
for the floodplain management measures that each community is required
either to adopt or to show evidence of being already in effect in order
to qualify or remain qualified for participation in the National Flood
Insurance Program (NFIP).
EFFECTIVE DATE: The date of issuance of the Flood Insurance Rate Map
(FIRM) showing base flood elevations and modified base flood elevations
for each community. This date may be obtained by contacting the office
where the FIRM is available for inspection as indicated in the table
below.
ADDRESSES: The final base flood elevations for each community are
available for inspection at the office of the Chief Executive Officer
of each community. The respective addresses are listed in the table
below.
FOR FURTHER INFORMATION CONTACT: Michael K. Buckley, P.E., Chief,
Hazard Identification Branch, Mitigation Directorate, 500 C Street SW.,
Washington, DC 20472, (202) 646-2756.
SUPPLEMENTARY INFORMATION: The Federal Emergency Management Agency
makes final determinations listed below of base flood elevations and
modified base flood elevations for each community listed. The proposed
base flood elevations and proposed modified base flood elevations were
published in newspapers of local circulation and an opportunity for the
community or individuals to appeal the proposed determinations to or
through the community was provided for a period of ninety (90) days.
The proposed base flood elevations and proposed modified base flood
elevations were also published in the Federal Register.
This final rule is issued in accordance with Section 110 of the
Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR Part
67.
FEMA has developed criteria for floodplain management in floodprone
areas in accordance with 44 CFR Part 60.
Interested lessees and owners of real property are encouraged to
review the proof Flood Insurance Study and FIRM available at the
address cited below for each community.
The base flood elevations and modified base flood elevations are
made final in the communities listed below. Elevations at selected
locations in each community are shown.
National Environmental Policy Act
This rule is categorically excluded from the requirements of 44 CFR
Part 10, Environmental Consideration. No environmental impact
assessment has been prepared.
Regulatory Flexibility Act
The Acting Associate Director for Mitigation certifies that this
rule is exempt from the requirements of the Regulatory Flexibility Act
because final or modified base flood elevations are required by the
Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and are required
to establish and maintain community eligibility in the NFIP. No
regulatory flexibility analysis has been prepared.
Regulatory Classification
This final rule is not a significant regulatory action under the
criteria of Section 3(f) of Executive Order 12866 of September 30,
1993, Regulatory Planning and Review, 58 FR 51735.
Executive Order 12612, Federalism
This rule involves no policies that have federalism implications
under Executive Order 12612, Federalism, dated October 26, 1987.
Executive Order 12778, Civil Justice Reform
This rule meets the applicable standards of Section 2(b)(2) of
Executive Order 12778.
List of Subjects in 44 CFR Part 67
Administrative practice and procedure, Flood insurance, Reporting
and recordkeeping requirements.
Accordingly, 44 CFR Part 67 is amended to read as follows:
PART 67--[AMENDED]
1. The authority citation for Part 67 continues to read as follows:
Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of
1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR 19367, 3 CFR,
1979 Comp., p. 376.
Sec. 67.11 [Amended]
2. The tables published under the authority of Sec. 67.11 are
amended as follows:
[[Page 33857]]
------------------------------------------------------------------------
#Depth in
feet above
ground.
Source of flooding and location *Elevation
in feet
(NGVD)
------------------------------------------------------------------------
ARIZONA
-------------------------------------------------------------
Camp Verde (town), Yavapai County (FEMA Docket No. 7166)
Verde River:
Just downstream of State Route 260........................ *3,074
Just upstream of State Route 260.......................... *3,075
Just upstream of Montezuma Castle Highway................. *3,094
Approximately 1,000 feet upstream of Interstate Highway 17 *3,107
Approximately 2.62 miles upstream of Interstate Highway 17 *3,132
Cherry Creek:
At confluence with Verde River............................ *3,164
At State Route 279........................................ *3,252
At corporate limits (approximately 3,400 feet upstream of
State Route 279)......................................... *3,314
Lucky Canyon Wash:
At confluence with Verde River............................ *3,060
At Salt Mine Road......................................... *3,100
Approximately 930 feet upstream of Salt Mine Road......... *3,126
Copper Canyon Wash:
At confluence with Verde River............................ *3,063
At Salt Mine Road......................................... *3,142
Approximately 980 feet upstream of Salt Mine Road......... *3,164
Maps are available for inspection at Town Hall, 473 South
Main Street, Camp Verde, Arizona.
------
Yavapai County (unincorporated areas) (FEMA Docket No. 7166)
Verde River:
Just upstream of State Route 260.......................... *3,074
Just upstream of Montezuma Castle Highway................. *3,094
Just upstream of Interstate Highway 17.................... *3,107
Just downstream of Middle Verde Indian Reservation........ *3,132
Chino Valley Stream--East:
At confluence with Chino Valley Stream.................... *4,732
At Center Street.......................................... *4,760
Approximately 1.55 miles upstream of confluence with Chino
Valley Stream............................................ *4,796
Approximately 1.79 miles upstream of confluence with Chino
Valley Stream............................................ *4,808
Approximately 3.69 miles upstream of confluence with Chino
Valley Stream............................................ *4,906
Miller Creek:
Approximately 3,400 feet downstream of U.S. Route 89...... *4,458
Approximately 2,350 feet downstream of U.S. Route 89...... *4,463
Approximately 1,300 feet downstream of U.S. Route 89...... *4,468
Approximately 300 feet downstream of U.S. Route 89........ *4,473
Approximately 600 feet upstream of U.S. Route 89.......... *4,478
Approximately 1,250 feet upstream of U.S. Route 89........ *4,483
Approximately 2,250 feet upstream of U.S. Route 89........ *4,488
Approximately 3,100 feet upstream of U.S. Route 89........ *4,493
Approximately 3,800 feet upstream of U.S. Route 89........ *4,498
Approximately 4,350 feet upstream of U.S. Route 89........ *4,503
Approximately 4,900 feet upstream of U.S. Route 89........ *4,508
Approximately 5,600 feet upstream of U.S. Route 89........ *4,513
Approximately 6,400 feet upstream of U.S. Route 89........ *4,519
At corporate limits (upstream of City of Prescott)........ *5,478
At Idylwild Drive......................................... *5,517
At Pine Drive............................................. *5,612
Approximately 2,500 feet upstream of Pine Drive (at limit
of detailed study)....................................... *5,672
Cherry Creek:
At corporate limits....................................... *3,314
Approximately 200 feet upstream of corporate limits (at
limit of detailed study)................................. *3,318
Texas Gulch Main Stem:
At confluence with Aqua Fria River........................ *4,490
At Quarter Horse Lane..................................... *4,536
At confluence of Texas Gulch West Branch.................. *4,568
Texas Gulch West Branch:
At confluence with Texas Gulch Main Stem.................. *4,568
Approximately 0.5 mile upstream of confluence with Texas
Gulch Main Stem.......................................... *4,600
Approximately 1.20 miles upstream of confluence with Texas
Gulch Main Stem.......................................... *4,660
Approximately 1.58 miles upstream of confluence with Texas
Gulch Main Stem.......................................... *4,700
Zalesky Wash Main Stem:
Approximately 0.04 mile upstream of confluence with Verde
River.................................................... *3,259
Approximately 0.86 mile upstream of confluence with Verde
River.................................................... *3,293
Robert Wash:
At U.S. Route 89.......................................... *4,394
Approximate 0.25 mile upstream of U.S. Route 89........... *4,398
Telephone Tank Wash:
At confluence with Green Wash............................. *4,394
At U.S. Highway 89........................................ *4,404
Approximately 0.88 mile upstream of confluence with Green
Wash..................................................... *4,434
Telephone Tank Wash Breakout:
At confluence with Green Wash............................. *4,388
At confluence of Robert Wash.............................. *4,394
At divergence from Telephone Tank Wash.................... *4,430
J.W. Draw:
At confluence with Green Wash............................. *4,394
At Bayberry Drive......................................... *4,412
At Naples Street.......................................... *4,462
Approximately 0.41 mile upstream of Naples Street......... *4,488
Green Wash:
At confluence with Big Chino Wash......................... *4,364
At Big Chino Road......................................... *4,388
Just upstream of Grand Canyon Road........................ *4,398
At Apsen Drive............................................ *4,460
Approximately 0.36 mile upstream of Enid Drive............ *4,504
Dry Well Wash:
At confluence with Clayton Canyon Wash.................... *4,420
At Patricia Road.......................................... *4,502
At Barbara Road........................................... *4,598
Approximately 500 feet upstream of Barbara Road........... *4,608
Clayton Canyon Wash:
Approximately 0.08 mile upstream of confluence with Big
Chino Wash............................................... *4,376
Just downstream of Clayton Canyon Dam..................... *4,480
Just upstream of Clayton Canyon Dam....................... *4,500
At Barbara Road........................................... *4,520
Approximately 320 feet upstream of Barbara Road........... *4,525
Timon Wash:
Approximately 0.50 mile upstream of confluence with Big
Chino Wash............................................... *4,395
At Ahonen Road............................................ *4,438
At Barbara Road........................................... *4,524
Approximately 320 feet upstream of Barbara Road........... *4,528
Model Creek:
Just upstream of U.S. Route 89............................ *4,460
Approximately 1,000 feet upstream of U.S. Route 89........ *4,461
Approximately 2,000 feet upstream of U.S. Route 89........ *4,464
Approximately 3,000 feet upstream of U.S. Route 89........ *4,467
Approximately 4,000 feet upstream of U.S. Route 89........ *4,473
Approximately 4,400 feet upstream of U.S. Route 89........ *4,476
West Fork Miller Creek:
[[Page 33858]]
Approximately 500 feet upstream of confluence with Model
Creek.................................................... *4,460
Approximately 1,500 feet upstream of confluence with Model
Creek.................................................... *4,463
Approximately 2,500 feet upstream of confluence with Model
Creek.................................................... *4,465
Approximately 3,500 feet upstream of confluence with Model
Creek.................................................... *4,470
Approximately 4,500 feet upstream of confluence with Model
Creek.................................................... *4,474
Approximately 4,800 feet upstream of confluence with Model
Creek.................................................... *4,475
Maps are available for inspection at the Yavapai County
Flood Control District, 500 South Marina Street, Prescott,
Arizona.
-------------------------------------------------------------
CALIFORNIA
-------------------------------------------------------------
Red Bluff (city), Tehama County (FEMA Docket No. 7170)
Reeds Creek:
Approximately 430 feet upstream of Southern Pacific
Railroad................................................. *268
Just downstream of South Jackson Street................... *271
Approximately 180 feet downstream of western corporate
limits................................................... *279
East Sand Slough:
Just upstream of Gilmore Ranch Road extended, at corporate
limits................................................... *267
Approximately 150 feet downstream of Antelope Boulevard... *269
Approximately 550 feet upstream of Antelope Boulevard..... *271
Brewery Creek Tributary:
Approximately 750 feet downstream of Monroe Avenue........ *274
Approximately 130 feet downstream of Monroe Avenue........ *280
Just upstream of Monroe Avenue............................ *291
Maps are available for inspection at the Community
Development Department, City of Red Bluff, City Hall, 555
Washington Street, Red Bluff, California.
-------------------------------------------------------------
NEW MEXICO
-------------------------------------------------------------
Bernalillo County and Incorporated Areas (FEMA Docket No.
7166)
Rio Grande:
Approximately 1,000 feet downstream of Interstate 25...... *4,902
Approximately 3,000 feet upstream of Interstate 25........ *4,906
At confluence with South Diversion Channel................ *4,924
Rio Grande East Overbank:
Approximately 1,300 feet downstream of Interstate 25...... *4,900
Just downstream of Interstate 25.......................... *4,903
Approximately 3,500 feet upstream of Interstate 25........ *4,905
Approximately 20,400 feet upstream of Interstate 25....... *4,922
Arroyo A-B:
Approximately 150 feet north of Amalia Road............... *4,970
Approximately 550 feet north of Amalia Road............... *4,980
Just upstream of Sage Road................................ *4,995
Ponding area west of Arenal Canal......................... *4,951
Ponding area northwest of intersection of Sage Road and
Coors Boulevard.......................................... *5.001
Ponding area north of Tower Road and west of Coors
Boulevard................................................ *5,029
Arroyo A-C:
Approximately 1,140 feet downstream of Gonzales Road...... *5,006
Just upstream of Gonzales Road............................ *5,008
Approximately 630 feet upstream of intersection of
Forsythe Road and Corregidor Place....................... *5,012
Ponding area just upstream of Old Coors Road.............. *5,012
Arroyo B-A:
Approximately 100 feet upstream of Unser Boulevard........ *5,087
Just upstream of 86th Street.............................. *5,115
Approximately 1,000 feet upstream of 86th Street (limit of
detailed study).......................................... *5,133
Ponding area west of 94th Street and south of Central
Avenue................................................... *5,169
Arroyo B-B:
Approximately 650 feet downstream of Unser Boulevard...... *5,081
Just upstream of 86th Street.............................. *5,105
Approximately 400 feet upstream of 90th Street............ *5,135
Approximately 1,900 feet upstream of 90th Street (limit of
detailed study).......................................... *5,171
Shallow flooding between Stinson Street and 300 feet
upstream of 75th Street.................................. *5,080
Arroyo B-C:
Just upstream of Unser Boulevard.......................... *5,079
Approximately 80 feet downstream of 86th Street........... *5,093
Approximately 240 feet downstream of 94th Street.......... *5,120
Approximately 1,050 feet upstream of 94th Street (limit of
detailed study).......................................... *5,140
Shallow flooding between Unser Boulevard and Abeyta Road.. #1
Ponding Area 18: *5,009
Ponding Area:
Along Trujillo Road approximately 500 feet east of Bataan
Drive.................................................... *5,009
Ponding Area:
Along Dennison Road approximately 500 feet east of Bataan
Drive.................................................... *5,009
Ponding Area:
North of Eucariz Avenue approximately 500 feet east of
Bataan Drive............................................. *5,008
Ponding Area:
Along Yerba Road south of Eucariz Avenue.................. *5,002
Ponding Area:
Between Coors Boulevard and Corona Drive and between
Redlands Road and Pheasant Avenue........................ *5,100
Maps are available for inspection at the Bernalillo County
Planning Office, One Civic Plaza Northwest, Fifth Floor,
Room 5025, Albuquerque, New Mexico.
Maps are available for inspection at the City of Albuquerque
Planning Department, One Civic Plaza Northwest, Albuquerque,
New Mexico.
-------------------------------------------------------------
WYOMING
Laramie (city), Albany County (FEMA Docket No. 7170)
Laramie River:
Approximately 2,260 feet downstream of Curtis Street...... *7,129
Just upstream of Curtis Street............................ *7,132
Just downstream of new Wyoming Highway.................... *7,137
Just upstream of Interstate Highway 80.................... *7,141
Approximately 1,000 feet upstream of Interstate Highway 80 *7,143
Maps are available for inspection at the City of Laramie,
City Engineer's Office, City Hall, 406 Ivinson Street,
Laramie, Wyoming.
------------------------------------------------------------------------
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood
Insurance.'')
[[Page 33859]]
Dated: June 25, 1996.
Richard W. Krimm,
Acting Associate Director for Mitigation.
[FR Doc. 96-16699 Filed 6-28-96; 8:45 am]
BILLING CODE 6718-04-P
Complete official Federal Register PDF
FR Doc. 96-16674 Commodity Credit Corporation Supplier Credit Guarantee Program
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33825-33839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16674]
========================================================================
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
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Federal Register / Vol. 61, No. 127 / Monday, July 1, 1996 / Rules
and Regulations
[[Page 33825]]
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1493
RIN 0551-AA30
Commodity Credit Corporation Supplier Credit Guarantee Program
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: The Commodity Credit Corporation (CCC) is issuing this interim
rule which amends the regulations for the Commodity Credit
Corporation's (CCC) Export Credit Guarantee Program (GSM-102) and the
Intermediate Export Credit Guarantee Program (GSM-103) by adding a new
subpart D, Supplier Credit Guarantee Program (SCGP). The SCGP is
designed to assist exporters of U.S. agricultural commodities who wish
to provide relatively short term (up to 180 days) credits to their
foreign buyers. Under SCGP, CCC will guarantee payment of such credits
by the foreign buyer, and the exporter may assign such guarantees to an
eligible U.S. financial institution.
This program will be administered by the Office of the General
Sales Manager (GSM), U.S. Department of Agriculture, on behalf of CCC.
DATES: The provisions of this interim rule are effective August 30,
1996; comments must be submitted on or before December 30, 1996.
FOR FURTHER INFORMATION CONTACT: L.T. McElvain, Director, CCC
Operations Division, Foreign Agricultural Service, U.S. Department of
Agriculture (USDA), Ag. Box 1035, Washington, DC 20250-1035; telephone
(202) 720-6211; FAX (202) 720-2949. The USDA prohibits discrimination
in its programs on the basis of race, color, national origin, sex,
religion, age, disability, political beliefs and marital or familial
status. Persons with disabilities who require alternative means for
communication of program information (braille, large print, audiotape,
etc.) should contact the USDA Office of Communications at (202) 820-
5881 (voice) or (202) 720-7808 (TDD).
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be economically significant and
was reviewed by the Office of Management and Budget (OMB) under
Executive Order 12866.
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this interim rule because CCC is not required by 5 U.S.C.
553 or any other provision of law to publish a notice of rulemaking
with respect to the subject matter of this rule.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which requires intergovernmental consultation with state and
local officials. See the notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115 (June 24, 1983).
Paperwork Reduction Act
The paperwork requirements that would be imposed by this interim
rule were described in the proposed rule and approved by the Office of
Management and Budget (OMB) under the Paperwork Reduction Act of 1980.
The OMB-assigned number for those requirements is OMB No. 0551-0037.
The public reporting burden for these collections is estimated to
average 0.18 hours per response, including time for reviewing
instructions, searching existing sources, gathering and maintaining the
data needed, and completing and reviewing the collection of
information. Send comments regarding this burden estimate or any other
aspects of this collection, including suggestions for reducing this
burden, to Department of Agriculture, Clearance Officer, OIRA, Room
404-W, Washington DC 20250; and to the OMB, Paperwork Reduction Project
# 0551-0037, Washington, DC 20503.
Executive Order 12778
This interim rule has been reviewed under the Executive Order
12778, Civil Justice Reform. The interim rule would have preemptive
effect with respect to any state or local laws, regulations, or
policies which conflict with such provisions or which otherwise impede
their full implementation. The rule would not have retroactive effect.
The interim rule requires that certain administrative remedies be
exhausted before suit may be filed.
The USDA is committed to carrying out its statutory and regulatory
mandates in a manner that best serves the public interest. Therefore,
where legal discretion permits, the Department actively seeks to
promulgate regulations that promote economic growth, create jobs, are
minimally burdensome and are easy for the public to understand, use or
comply with. In short, the Department is committed to issuing
regulations that maximize net benefits to society and minimize costs
imposed by those regulations.
Background
In the Federal Register of July 19, 1995 (60 FR 37025), CCC issued
a proposed rule to amend the regulations for the CCC Export Credit
Guarantee Programs (GSM-102/103), codified at 7 CFR part 1493, by
adding a new subpart D. Subpart D establishes the terms and conditions
for the Supplier Credit Guarantee Program (SCGP). The deadline for
comments on the proposed rule was September 18, 1995. Comments were
received from six U.S. exporters, one importer, three producer
associations, seven agribusiness associations, one U.S. financial
institution, and one U.S. Government agency (USDA Office of Inspector
General). These nineteen parties made approximately 88 separate and
significant comments regarding either the proposed rule, the
Preliminary Economic Impact Analysis, or the policy issues involved in
administering the SCGP.
Reason for Issuing an Interim Rather Than Final Rule
CCC is issuing this rule on an interim rather than a final basis
because, based on comments received on the proposed rule, it has made
several significant changes and is providing the public with an
additional opportunity for
[[Page 33826]]
comment. Specifically, CCC is establishing a condition on its payment
of a claim that results from a default under a guaranteed promissory
note. CCC will pay claims unless it determines that the guaranteed
portion of port value exceeds the prevailing U.S. market value of the
agricultural commodity or product exported. The reasons for this change
are discussed below under the General Comments section, Other general
comments, and under the Section-by-Section Analysis of Subpart D,
Sec. 1493.450, Payment guarantee. Also, CCC has modified Sec. 1493.510,
Payment for loss, to remove the immunity of assignees from the effects
of determinations by CCC not to pay claims based on the new exception.
CCC is publishing this interim rule, but will establish a comment
period of 120 days from the rule's effective date to permit program
participants an opportunity to provide views based, if possible, on
actual program experience.
Interim Economic Impact Analysis
Two of the commenters addressed, in part, the Preliminary Economic
Impact Analysis (PEIA). One commenter felt that each program option,
considered by CCC and briefly discussed in the PEIA, ``should be
implemented as each addresses a different need.'' The same commenter
also questioned why the SCGP was selected as the preferred option, in
that the PEIA did not discuss why the other options were ruled out. CCC
concurs that the other program options considered have merit, although
the reasons for selecting the SCGP option were given. CCC may, in the
future, incorporate features of the other options into, the SCGP
(subpart D), the GSM-102/103 programs (subpart B), or additional
programs that could be developed.
Another commenter stated that CCC may want to ``reassess the
estimated $3.1 million subsidy level'' determined for the SCGP. The
commenter felt that this estimate may be too low and enclosed a news
article discussing difficulties by some U.S. exporters in collecting
payments from importers. CCC by itself does not determine the
methodology used in estimating the subsidy level for its export credit
guarantee programs. The model for estimating the subsidy amount was
developed by the Office of Management and Budget (OMB). Country risk
ratings which are an important component in determining the subsidy
estimate are developed by a U. S. Government interagency group which is
chaired by OMB. After assessing the results of the initial phase of
operating the SCGP, CCC may propose changes in the subsidy model, or in
the model inputs, to more accurately determine appropriate subsidy
levels for the program.
The interim Economic Impact Analysis of the SCGP is available upon
request from Mary T. Chambliss, Deputy Administrator, Export Credits,
FAS/USDA, Ag. Box 1030, Washington DC 20250-1030; telephone (202) 720-
6301; FAX (202) 690-0727.
General Comments
Eighteen commenters commended CCC on its efforts to design a new
program to promote the sale of U.S. agricultural products. They
generally agreed that the program had potential for reducing export
financing costs, allowing importers to enjoy the benefits of CCC credit
guarantees more directly than is possible under the GSM-102/103
programs, and increasing the competitiveness of U.S. agricultural
products overseas. One commenter neither supported nor opposed the
program.
Guarantee Coverage
Eighteen respondents commented on CCC's proposal to inaugurate the
program with maximum coverage of 50 percent of principal (defined as
port value), with no coverage of interest. One commenter agreed that
the structure of the SCGP entails certain financial risks for CCC that
justify lower levels of coverage. Another commenter thought the
proposed coverage may be a starting point, but adjustments would have
to be made if the program is to gain wide acceptance, particularly from
the banking sector. Sixteen of the commenters contended that the
proposed coverage was too low to provide an incentive to exporters to
use the program. One commenter asserted that the proposed coverage
would be unattractive to exporters and the assignee bank, and that the
added risk would increase the cost of the transaction to the importer.
Two commenters suggested that CCC vary its level of coverage based on
the past performance of the importer. They also suggested that the
exporter be required to furnish information on the importer which,
under criteria to be established, could permit a higher level of
coverage. Suggestions for the level of coverage of principal ranged
from 70 percent to 98 percent, depending on whether or not interest
and/or freight would be included in the coverage.
After considering these comments, CCC has determined that during
the initial phase of the program, CCC's coverage will normally be
limited to 50 percent of principal. This level of coverage will provide
an incentive to U.S. exporters and their assignees to evaluate
carefully the credit risks posed by importers while still permitting an
expansion of export sales of targeted commodities and products. The
suggestion that CCC vary its level of coverage based on the past
performance of the importer or other information furnished by the
exporter on the importer may have merit. However, CCC will be in a
better position to assess this approach after gaining experience
operating the program. The amount of guaranteed coverage is not
specified in the regulation because CCC wishes to retain the ability to
adjust coverage, as necessary, to make the program workable, efficient,
and responsive to market conditions.
Freight Coverage
Six comments were received regarding the inclusion of freight costs
in the value on which guarantee coverage is based. Five commenters
argued that, with freight excluded, coverage would be too low. Two
commenters felt that, with freight coverage, exporters would be more
likely to use the SCGP. One commenter suggested that when freight costs
are more than 20 percent of export value, the level of coverage should
be increased.
CCC recognizes the validity of the concerns expressed. In cost and
freight (CFR) and cost, insurance and freight (CIF) transactions where
freight costs are a high percentage of total export value, CCC coverage
of 50% of commodity value would result in overall coverage of
substantially less than 50 percent of transaction value. CCC therefore
will retain the flexibility through Program Announcements to determine
whether, and to what extent, to provide coverage on a free on board
(FOB), free alongside ship (FAS), CFR, or CIF basis.
Guarantee Fees
Thirteen respondents commented on CCC's intention to set the
guarantee fee ``in the midpoint of the range of insurance premiums for
good risk countries charged by Eximbank'' (recently about 95 cents per
$100.00 of guaranteed coverage). One commenter agreed that the benefits
offered by the SCGP entail corresponding financial risks for CCC and,
therefore, justify higher fees. Another thought that the proposed fee
may be a starting point, but that adjustments would have to be made if
the program is to gain wide acceptance. Ten commenters felt the
proposed fee was too high given the proposed level of guaranteed
coverage. In general, their additional comments
[[Page 33827]]
can be summarized as follows: (1) Fees should be at or close to the
GSM-102 (subpart B) fee levels; (2) fees should be reasonable because
fees add to the overall financial exposure of the exporter; and (3)
high fees could be a disincentive for program participation. Two
commenters suggested that CCC vary its fees based on the past
performance record of the importer. They also suggested that the
exporter be required to furnish information on the importer which,
under criteria to be established, could permit lower fees.
One commenter stated that the Foreign Credit Insurance Association
varies its fees according to where exports are shipped, how shipments
occur, the payment history of customer, and the payment collection
history experienced by the exporter with the importer.
CCC appreciates these comments. To avoid a possible misconception
concerning the proposed fee structure for the SCGP, CCC provides the
following clarification: the fee would be assessed only on the value of
actual CCC coverage, (e.g., 50 percent of the port value), not on the
total port value registered. CCC recognizes that the 95 cents per
$100.00 fee on covered value is high in comparison to the fees charged
for credits of up to 180 days duration under the GSM-102 (subpart B)
program. However, under subpart B, CCC is insuring risks of eligible
foreign banks; under SCGP (subpart D), foreign buyer risk is likely to
be higher. Exporters will have a greater incentive to investigate the
creditworthiness of an importer if they have a larger degree of
financial risk in the export sales transaction. Also, a higher fee may
dissuade exporters from entering into speculative transactions because
the fee will not normally be refundable if the transaction is not
completed. Thus, CCC intends to initiate the SCGP with the fee policy
it described in the proposed rule. Adjustments in fee schedules can be
made in light of experience in operating the program.
Regarding the comment that CCC reduce its fee on transactions with
importers who have a proven performance record, CCC has determined
initially to have a single fee for all countries and commodities.
However, a sliding fee scale based on the importer's past performance
and other factors may have merit and remains an option as CCC gains
experience operating the program. The level of the registration fee is
not specified in the regulation, giving CCC flexibility in this matter.
Clarification
One respondent questioned what CCC meant by the statement in the
background of the proposed rule that CCC does not intend to routinely
conduct independent evaluations of the creditworthiness of individual
importers.
Although CCC does not at this time intend to make such evaluations
routinely, the proposed rule provides that CCC may request that the
exporter submit information/documentation on the importer as a
condition to CCC's approval of the exporter's application of a payment
guarantee. Such instances will, at the outset, be determined on a case-
by-case basis and will be related to the degree of experience CCC has
with the parties to the transaction, or to other pertinent credit risk-
related factors.
Country and Commodity Selection
Four respondents commented on the selection of countries and
commodities under the SCGP. One commenter felt that it would be a
mistake to direct SCGP primarily towards high value products and that
the program should be available for all U.S. agricultural commodities.
One commenter felt that the best way to determine where, and for what
commodities, the program should be used would be to begin operation of
the SCGP. The response of the financial and commodity markets would act
as the ``best barometer'' for the size and scope of the program.
Another respondent, an importer, urged CCC to include poultry to the
Commonwealth of Independent States under the SCGP. The importer stated
that the cost of obtaining a letter of credit in Russia was high and
further required payment in full to the bank in 30 days. By using SCGP,
the importer could have the certainty of financing and could proceed
with plans for building a facility in Russia to process U.S. poultry.
One commenter urged that country allocations for GSM-102/103 (subpart
B) and the SCGP be made separately.
CCC has given careful consideration to the issues of programming
countries and commodities under the SCGP. CCC intends initially to
program countries and commodities and/or products which it considers
may benefit from the SCGP and may not have benefitted from GSM-102.
Commodity and country selections will be made separately from the GSM-
102/103 (subpart B) program, but will follow the same criteria
specified in 7 CFR 1493.5. CCC will retain the flexibility, through
Program Announcements, to revise the SCGP country and commodity
allocations, as necessary, to ensure the most effective use of the
program.
Other General Comments
One commenter, a government agency, recommended that the provisions
of the Office of Management and Budget (OMB) Circular A-129, ``Policies
for Federal Credit Programs and Non-Tax Receivables,'' be applied to
the SCGP. The commenter recommended that: (1) Fees should be high
enough to cover the cost of making the loan guarantee, including
administrative costs, default and other subsidy costs; (2) in view of
budget constraints, the maximum fee permitted by law (7 U.S.C.
5641(b)(1)(B)), $1.00 per $100, should be charged; (3) lower fees may
be justified in instances where borrowers (importers) prepay part of
the shipment because the risk of default would be reduced; (4) riskier
buyers should be charged more in fees than those who pose less risk;
and (5) fees should be set on a sliding scale reflecting country and
commercial risk factors. According to this commenter, such factors
should include the strength of the country's central bank and whether
or not the country subscribes to uniform commercial code agreements
that govern international commerce. The commenter further suggested
that CCC require exporters to certify and document that they cannot
obtain credit from private sources, and that CCC determine whether the
applicant is delinquent on any Federal debt, including tax debt, before
approving the guarantee. This commenter also suggested that CCC should
require exporters to follow due diligence in collecting past due
accounts and in using litigation to enforce payment on guaranteed
credits. The commenter recommended that CCC require that the export
sales contract state that CCC will, in the event of nonpayment, assess
interest, penalties, and administrative charges against the importer.
The commenter further recommended that all accounts due CCC that are
six months or more past due be turned over to a collection contractor
unless CCC is involved in litigation.
Although applicable statutes do not require the CCC to apply the
provisions of OMB Circular No. A-12, CCC agrees that program rules
should operate not only to lower CCC's risk, but also to assure that
CCC and exporters are sharing the risk of loan defaults. The proposed
rule includes certain provisions, i.e. lower level of coverage and
higher fees, that are intended to encourage exporters to evaluate
carefully importer creditworthiness. However, the provisions of the
proposed
[[Page 33828]]
rule may not adequately ensure that (1) the risk sharing objectives
outlined in the Background section of the proposed rule (part C, How
certain SCGP provision differ from GSM-102) will be achieved, or (2)
CCC would be protected from paying excessive claims stemming from
export transactions with prices inflated far above prevailing market
levels. Therefore, CCC is establishing a condition on its payment of a
claim to address these two concerns. This new provision and required
related modifications are discussed below under Section-by-Section
Analysis of Subpart D, Section 1493.450, Payment guarantee.
The other suggestions of the commenter have also been considered
carefully and evaluated in terms of cost-effectiveness and relevance to
protecting the financial interests of CCC. Many of the suggestions of
the commenter could be implemented as a matter of policy under the rule
as proposed. CCC has therefore determined not to incorporate the
suggestions into this interim rule, but will continue to review them in
light of experience gained in operating the SCGP.
Other commenters addressed issues other than the proposed
regulations. CCC has determined not to discuss these unrelated
comments. CCC will, however, take these additional views into
consideration as they relate to CCC's other commercial export programs.
Section-by-Section Analysis of Subpart D
The numbering system of the interim rule differs somewhat from that
of the proposed rule. One section was deleted. For the purposes of this
discussion, the numbering system of the interim rule will be used,
except where otherwise indicated.
Section 1493.400 General Statement
Two respondents commented on Sec. 1493.400(a), Overview. One
commenter felt that the proposed 180 day maximum terms are adequate for
single transactions. However, this commenter suggested that to better
coincide with existing trade practices, CCC should guarantee lines of
credit, rather than single transactions. This commenter also thought
that annual (or shorter) revolving credit guarantees would reduce
administrative costs for the exporter, importer, and CCC without
reducing the ability of CCC to manage its risk. The commenter stated
that established buyers would have better procurement planning and
control under a line of credit. The second commenter felt that because
of small profit margins on cotton, exporters would not find open
accounts for up to 180 days a viable business practice. The commenter
added that some countries under GSM-102/103 operate with strict central
bank guidelines regarding foreign exchange that require letters of
credit to make the import purchases. The commenter wondered how the
SCGP could be successful in such countries.
CCC recognizes that the SCGP may not work effectively for all
commodities in all countries. Exporters who have successfully used the
GSM-102 program may continue to rely on that program.
Regarding revolving lines of credit, CCC finds this an interesting
concept and will continue to assess its merits. However, at this time
the budget allocation and subsidy funding for SCGP are not based on
revolving lines of credit. A revolving line of credit would require
fundamental changes in CCC accounting and computer database systems.
CCC will not be in a position to consider implementing revolving lines
of credit guarantees until these and other issues are resolved.
Section 1493.410 Definition of Terms
Although no public comment was received specifically regarding the
definition of Importer obligation, found at Sec. 1493.410(n), comments
were received on Sec. 1493.470, Importer obligation of the proposed
rule (see Section-by-Section Analysis of Subpart D, Sec. 1493.470
Importer Obligation). Based on those comments, CCC revised the
definition to read: ``A promissory note or notes that conform(s) with
the requirements for such note(s) specified in the applicable country
or regional Program Announcement(s).'' By specifying the provisions of
the promissory note(s) in the Program Announcement, CCC will retain
flexibility to specify provisions for a particular country or region
and, if necessary, to make changes in such provisions in light of
changing circumstances. In addition to specifying the form of the
promissory note in Program Announcement, CCC will refer to the
particular form of promissory note in the special terms and conditions
described on the face of the guarantee and attach the required form of
the promissory note to the guarantee. This change requires deletion of
Sec. 1493.470 Importer Obligation, from the interim rule.
Three respondents made comments regarding Sec. 1493.410(x), the
definition of a U.S. agricultural commodity. Two commenters stated that
for the SCGP to be effective and increase sales of high value or value
added products, changes would be needed regarding permissible levels of
foreign-origin agricultural components in such products. One commenter
stated that Congress should better define the term ``U.S. origin'' or
provide a tolerance for foreign components.
The Department of Agriculture agrees with these comments and
supports legislation to change the definition of ``product of an
agricultural commodity'' now contained in section 102(7)(B) of the
Agricultural Trade Act of 1978, as amended, (7 U.S.C. 5602)(7)(B)).
Until such legislative action, the definition contained in the proposed
rule must be retained.
Section 1493.420 Information Required for Program Participation
No public comments were received on this section. No changes have
been made in this section of the interim rule.
Section 1493.430 Application for Payment Guarantee
Two respondents made comments regarding Sec. 1493.430(a), which
requires that a firm export sale exist before an exporter may submit an
application for a payment guarantee. Both commenters suggested that
this requirement be changed to allow the export sale to be contingent
upon approval of the payment guarantee. The commenters advocated that
an exporter and importer should agree on the terms of the sale but, if
the payment guarantee is not obtained, cancellation of the sale should
be allowed. One commenter recommended that CCC require a copy of the
sales contract be submitted at the time the payment guarantee is
requested. The commenter believed that the list of the 17 requested
items could be reduced if the sales contract was provided.
The ``firm'' sale requirement of Sec. 1493.430(a) does not preclude
a sales contract from being contingent on approval by CCC of a payment
guarantee. At a minimum, this rule requires that the exporter and
importer be in agreement regarding the terms and conditions required to
be reported in an application for a payment guarantee.
Regarding the comment that CCC require exporters to submit sales
contracts, CCC disagrees that the suggestion would save time. Sales
contracts often contain terms and conditions that CCC does not need to
review. CCC does not want the burden of reviewing and safeguarding a
large quantity of business confidential and sensitive private documents
where that is unnecessary. CCC reserves the right to request an
exporter's sales contract in reviewing applications from newly
[[Page 33829]]
eligible applicants, where questions of program compliance or control
arise.
Three comments were received regarding Sec. 1493.430(16). These
concerned the statement that CCC would reserve the right to require
exporters to submit additional information about the importer. One
respondent was concerned about the nature of the information. If CCC
requested proprietary information, would CCC protect the information
from public disclosure? The respondent felt that exporters may be
reluctant to provide importer information unless there are clear
protections against its release. Another commenter felt that providing
information regarding the importer could be a potential paperwork
burden. The third respondent suggested that information be requested
for all first-time applicants of the program. This commenter suggested
that the information requested should, at a minimum, include credit
rating, trade references, and bank references and should be submitted
before CCC approves the payment guarantee.
As stated in the background section of the proposed rule (part
C(5), Application), CCC will not routinely conduct independent
evaluations of the creditworthiness of individual importers, but will
reserve the right to require exporters, in the application process, to
provide additional information concerning the importer. Such
information may include the importer's credit and payment history with
the applicant, and any credit analysis the exporter has done regarding
the importer. CCC will protect any proprietary information submitted by
exporters to the extent permitted by law.
Three comments were received regarding CCC's price review process
established under Sec. 1493.430(b). Two commenters asked whether the
SCGP would be subject to price review. One commenter stated that
elimination of price review would save time and reduce paperwork. The
commenter also felt that if price review were included in the SCGP, it
would make the program unattractive. Another commenter wondered how
prices would be reviewed because for short term credit transactions it
is a common commercial practice to build interest into the sales price.
One commenter noted that the rule does not contain a detailed
discussion of price review and urged CCC to be as flexible as possible
in the administration of this function. The respondent noted that for
fresh produce, price review must be sensitive to prices which can vary
from hour to hour.
To the extent that SCGP transactions may be subject to price
review, CCC may choose to price review different commodities
differently or exempt some commodities from price review. Although CCC
does not intend to provide guarantee coverage for interest risk
separately, CCC realizes that, under SCGP, exporters may build interest
into their sales prices. If CCC were to subject the SCGP to price
review, CCC could take this into account.
Four respondents commented on Sec. 1493.430(c), Ineligible
Exporter. One commenter felt strongly that no financial or ownership
connection should exist between exporter and importer. The commenter
indicated that if such a connection existed, defaults would be
encouraged and make the program unworkable. Another commenter felt that
restrictions on relationships between importers and exporters would
dissuade many potential participants. In particular it would restrict
many smaller import/export companies because the U.S.-based exporter
may be related to the importer. One commenter felt that CCC may be
increasing its export risk, in some cases, with its prohibition against
within-company and joint venture transactions. This commenter agreed
that taxpayers should not finance intra-company sales. However, in some
instances, particularly common-owner or joint-venture sales, such
restrictions would force export sales to competing foreign suppliers.
The commenter requested greater flexibility to allow CCC to choose
export transactions benefiting U.S. agriculture.
The ``ineligible exporter'' provision is intended to avoid the
situation in which CCC would receive a claim for loss from an exporter
that directly or indirectly owns or controls, or is owned or controlled
by, the importer responsible for the default. CCC has determined not to
change this provision.
One commenter felt that any exporter who has three defaults under
the program in five years should be considered ineligible for further
participation. With respect to this comment, CCC does not wish to
qualify exporters based upon the performance of importers. However, CCC
will continue to evaluate whether program modifications may be needed
to provide incentives/disincentives to exporters based on program
participation experience.
Section 1493.440 Certification Requirements for a Payment Guarantee
No public comments were received on this section. No changes have
been made in this section of the interim rule.
Section 1493.450 Payment Guarantee
To address the risk issues raised by comments from a government
agency (see General Comments, Other general comments), CCC has revised
the first sentence of Sec. 1493.450(a) to read: ``The payment guarantee
will provide that CCC agrees to pay the exporter or the exporter's
assignee an amount not to exceed the guaranteed value, plus eligible
interest, in the event that the importer fails to pay under the
importer obligation unless CCC determines, with respect to the
particular transaction and claim, that the guaranteed portion of the
port value exceeded the prevailing U. S. market value for the same, or
same type of, agricultural commodity or product. In making this
determination, CCC will adjust the prevailing U.S. market value for
estimated freight and/or insurance costs if the export sale was made on
a CFR or CIF basis.''
CCC recognizes that determining a prevailing U.S. market value may
be difficult for some products, particularly for some high value and
value added products. CCC will, therefore, utilize information from all
available sources including, when appropriate, information furnished by
participants to the transaction to support the validity of the claim.
Exporters using normal pricing practices, i.e., pricing at or near the
market without excessive markups intended to shift to CCC all risk of
loss, need not be concerned that the new claim review provision will
result in a denial of a claim should a default occur.
In instances where CCC has reviewed the unit price of the commodity
in the process of approving an exporter's application for a payment
guarantee pursuant to Sec. 1493.430(b), and the price of the commodity
reported by the exporter in the evidence of export report has not
changed (Sec. 1493.470(a)(7)), CCC will not conduct another review of
the price of the transaction as a condition for paying a claim.
Although CCC may conduct some price reviews pursuant to
Sec. 1493.430(b) as it deems desirable, it does not intend to do so
with respect to all exporter applications. Such price reviews will be
done entirely at CCC's discretion, and nothing in the SCGP regulations
provides exporters the right to demand or expect that such price
reviews take place prior to issuing a payment guarantee.
This new provision is intended to ensure that there will be
substantial risk sharing on the part of the exporter, and that CCC will
not pay claims inflated by transaction prices far above prevailing
market levels. CCC has no intention of avoiding payment of normal
claims, nor does it intend to regulate or control
[[Page 33830]]
exporters' profit margins. CCC's sole intention is to enhance the
integrity of the SCGP. CCC encourages and welcomes any comments
regarding this provision.
Section 1493.460 Guarantee Rates and Fees
No public comments were received on this section. No changes have
been made in this section of the interim rule.
Section 1493.470 Importer Obligation (as in the Proposed Rule)
As stated in Sec. 1493.410, Definition of Terms, of the Section-by-
Section Analysis of Subpart D, CCC has determined to delete
Sec. 1493.470. Three comments were received regarding this section. One
commenter thought that the terms of the promissory note were too
onerous. Another commenter felt that use of a promissory note as
evidence of indebtedness was a step in the right direction. However,
the commenter was concerned that not enough is known about the legal
enforceability of the promissory note in countries whose commercial
code is different from ours. Having a foreign bank aval or guarantee
would mitigate the risk of possibly having a legally unenforceable
document. The commenter also recommended that the optional provision
regarding late interest under Sec. 1493.470(d)(1), be made a
requirement since it is customary business practice to charge late
interest when payments are not made on the due date. The commenter felt
that this would also provide CCC with a mechanism to be paid interest
on outstanding claims. Another commenter felt the promissory note may
need to include a ``sound product provision.'' This commenter suggested
that if there were quality problems upon arrival, it may be appropriate
to be flexible in adjusting the value of the promissory note.
CCC's decision to retain flexibility in adapting the provisions of
the promissory note should partially address the concerns expressed
that the note contained in the proposed rule would be too onerous and
may not be legally enforceable in some countries. Although CCC
continues to believe that the previously proposed promissory note, or
one substantially similar to it, will be the basic instrument required
by most Program Announcements in the initial implementation of the
SCGP, CCC will make adaptations, including adaptations specific to a
particular country or region, if they appear necessary to enhance the
likelihood of enforceability. Similarly, if experience demonstrates
that the terms of the proposed note are too onerous, modifications will
be considered that are consistent with overall program goals and
criteria.
CCC's intention to make adaptations, as necessary, in the form of
the required promissory note would be compatible with the objectives
stated by other commenters. For example, CCC could adopt a note
permitting a foreign bank aval or a guarantee. For now, however, CCC
has determined not to make this a program requirement because one of
the primary intentions of the SCGP is to remove the foreign bank's
mandatory involvement in the transaction. Additionally, CCC could
choose to incorporate a provision regarding late interest into the
importer's promissory note. Regarding a ``sound product provision,''
value adjustments could be agreed to by exporters and importers. In the
event the promissory note had already been executed prior to
establishing the actual export value, a substitute promissory note
might need to be executed. If the exporter had submitted an Evidence of
Export (EOE) before the value adjustment is made, the exporter would
have to file an amended EOE with CCC. In any event, CCC's principal
coverage would be limited to the lower of the value of the export
transaction established by the EOE or the principal amount of the
promissory note.
Section 1493.470 Evidence of Export
One comment was received regarding Sec. 1493.470(b), Time limit for
submission of the EOE (of the interim rule). The respondent suggested
that CCC allow a standard 60 days to submit the EOE. The respondent
thought exporters would be seeking extensions of the proposed 30-day
period in order to obtain a fully executed promissory note from the
importer.
Under the proposed rule, EOEs must be filed in 30 days if export is
by vessel, and 60 days if export is by truck or rail. Experience under
the GSM-102/103 programs has not shown a need to increase the 30 day
filing requirement for EOEs on vessels. However, under the proposed
rule, an exporter needing additional time to file an EOE may request
that the General Sales Manager extend the time limit for filing. CCC
has determined not to change the time limit for filing the EOE, but to
assess the need for such a change after the SCGP has been in operation.
Timely submission of the EOEs will be important to permit CCC to keep
accurate program data for release to the public as well as for internal
program monitoring and controls.
Section 1493.480 Certification Requirements for Evidence of Export
No public comments were received on this section. No changes have
been made in this section of the interim rule.
Section 1493.490 Proof of Entry
One comment was received regarding Sec. 1493.490(b), Records of
proof of entry (of the interim rule). From the viewpoint of the
commenter, the requirement that exporters obtain written proof that the
exported goods entered the country would be particularly problematic
for fresh produce exporters. Traditionally, once the product leaves the
dock the exporter ceases to have any control or liability for the
goods. It is not currently a practice in the produce industry to
provide proof the goods actually left the U.S. The commenter requested
that CCC seek an alternate approach which will satisfy the requirements
of the program, but be practical for fresh produce exporters.
CCC has determined to make no changes in this section. The
requirement that exporters maintain records of an official or customary
commercial nature, or other documents to verify the arrival in the
foreign country of the agricultural commodity exported, is mandated by
section 401(a)(1) of the Agricultural Trade Act of 1978, as amended (7
U.S.C. 5661(a)(1)). Furthermore, if a default occurred under a
guaranteed transaction in which the commodity was exported by truck or
rail, the entry certificate or similar document would be included when
filing a claim for loss (see Sec. 1494.500(b)). If traditional forms of
entry documentation are unobtainable, Sec. 1494.490(b) permits CCC to
consider other types of documents which can be deemed acceptable by the
General Sales Manager. CCC believes that these provisions are flexible
enough to meet the concerns raised by the commenter.
Section 1493.500 Notice of Default and Claims for Loss
One comment was received regarding Sec. 1493.500, Notice of default
and claims for loss (of the interim rule). This commenter suggested
that CCC pre-approve documents that are normally submitted in the claim
procedure. The respondent stated that there is a need for greater
certainty in the approval of documentation in case of a default, and
that exporters would be willing to pay a fee to cover the cost of pre-
approval.
Partly because of the added administrative burden that pre-approval
of documents would place on CCC, this suggestion will not be adopted at
this time. However, CCC will continue to consider this issue which is
also
[[Page 33831]]
relevant to the GSM-102/103 (subpart B) programs.
This same commenter suggested that CCC provide an example of
subrogation language in an addendum to its regulations. Since exporters
are not banks, they require specific language to fulfill their
responsibility in the event of a default. CCC agrees with the comment
and will make available an example of language for an Instrument of
Subrogation and Assignment.
Section 1493.510 Payment for Loss
Although no comments were received regarding Secs. 1493.510 (b) and
(e), CCC has revised these provisions to be consistent with the changes
made in Sec. 1493.450(a), CCC's obligation.
Section 1493.510(b), Amount of CCC's liability, is revised to read
in part: ``Subject to a determination by CCC with respect to prevailing
U.S. market value pursuant to Sec. 1493.450(a), of this part, CCC's
maximum liability for any claims for loss * * * .''
Section 1493.510(e), Action against the assignee, is revised to
read: ``Notwithstanding * * *. CCC will not, except pursuant to a
determination under Sec. 1493.450(a) of this part, hold the assignee
responsible or take any action or raise any defense against the
assignee for any action, omission, or statement by the exporter of
which the assignee has no knowledge provided that:''
Section 1493.520 Recovery of Losses
No public comments were received on this section. No changes have
been made in this section of the interim rule.
Section 1493.530 Miscellaneous Provisions
One comment was received regarding Sec. 1493.530(a), Assignment (of
the interim rule). The commenter suggested that greater flexibility is
needed in the assignment of proceeds, including the sub-assignment to
more than one party. The commenter felt this would bring the
transaction in line with standard practice for similar financial
instruments.
CCC has traditionally not allowed assignment of a payment guarantee
to more than one party. However the proposed rule permits further
assignment if `` * * * approved in advance by CCC.'' Therefore, CCC has
determined it is not necessary at this time to change Sec. 1494.530(a).
List of Subjects in 7 CFR Part 1493
Administrative practice and procedures, Agriculture, Agricultural
commodities, Credits, Exports, Guarantees, Reporting and recordkeeping
requirements.
PART 1493--[AMENDED]
Accordingly, part 1493 of title 7 is amended by adding and
reserving subpart C and adding subpart D reading as follows:
Subpart C--[Reserved]
Subpart D--CCC Supplier Credit Guarantee Program Operations
Sec.
1493.400 General statement.
1493.410 Definition of terms.
1493.420 Information required for program participation.
1493.430 Application for a payment guarantee.
1493.440 Certification requirements for a payment guarantee.
1493.450 Payment guarantee.
1493.460 Guarantee rates and fees.
1493.470 Evidence of export.
1493.480 Certification requirements for the evidence of export.
1493.490 Proof of entry.
1493.500 Notice of default and claims for loss.
1493.510 Payment for loss.
1493.520 Recovery of losses.
1493.530 Miscellaneous provisions.
Authority: 7 U.S.C. 5602, 5622, 5661, 5662, 5663, 5664, 5676; 15
U.S.C. 714b(d), 714c(f).
Subpart C--[Reserved]
Subpart D--CCC Supplier Credit Guarantee Program Operations
Sec. 1493.400 General statement.
(a) Overview. (1) This subpart contains the regulations governing
the operations of the Supplier Credit Guarantee Program (SCGP). The
restrictions and criteria set forth at subpart A for the Commodity
Credit Corporation (CCC) Export Credit Guarantee Program (GSM-102) and
the Intermediate Credit Guarantee Program (GSM-103) will apply to this
subpart. The SCGP was developed to expand U.S. agricultural exports by
making available payment guarantees to encourage U.S. exporters to
extend financing on credit terms of not more than 180 days to importers
of U.S. agricultural commodities.
(2) The SCGP operates in cases where credit is necessary to
increase or maintain U.S. exports to a foreign market and where private
U.S. exporters would be unwilling to provide financing without CCC's
guarantee. The program is operated in a manner intended not to
interfere with markets for cash sales. The program is targeted toward
those countries where the guarantees are necessary to secure financing
of the exports but which have sufficient financial strength so that
foreign exchange will be available for scheduled payments. In providing
this credit guarantee facility, CCC seeks to expand market
opportunities for U.S. agricultural exporters and assist long-term
market development for U.S. agricultural commodities.
(3) The credit facility created by this program is the SCGP payment
guarantee (payment guarantee). The payment guarantee is an agreement by
CCC to pay the exporter, or the U.S. financial institution that may
take assignment of the exporter's right to proceeds, specified amounts
of principal and, where applicable, interest due from, but not paid by,
the importer incurring the obligation in connection with the export
sale to which CCC's guarantee coverage pertains. By approving an
exporter's application for a payment guarantee, CCC encourages private
sector, rather than government, financing and incurs a substantial
portion of the risk of default by the importer. CCC assumes this risk,
in order to be able to operate the program for the purposes specified
in Sec. 1493.2.
(b) Credit facility mechanism. (1) For the purpose of the SCGP, CCC
will consider applications for payment guarantees only in connection
with export sales of U.S. agricultural commodities where the payment
for the agricultural commodities will be made under an unconditional
and irrevocable importer obligation to a U.S. exporter payable in U.S.
dollars, as defined in Sec. 1493.410(n).
(2) The exporter may assign the right to proceeds under the
importer obligation to a U.S. bank or other financial institution so
that the exporter may realize the proceeds of the sale prior to the
deferred payment date(s) as set forth in the importer obligation.
(3) The SCGP payment guarantee is designed to protect the exporter
or the exporter's assignee against those losses specified in the
payment guarantee resulting from defaults, whether for commercial or
noncommercial reasons, by the importer under the importer's obligation.
(c) Program administration. The SCGP will be administered pursuant
to subpart A and this subpart and any Program Announcements and Notices
to Participants issued by CCC pursuant to, and not inconsistent with,
this subpart. This program is under the general administrative
responsibility of the General Sales Manager (GSM), Foreign Agricultural
Service (FAS/USDA). The review and payment of claims for loss will be
administered by the Office of the Controller, CCC. Information
regarding specific points of contact for the public, including names,
addresses, and
[[Page 33832]]
telephone and facsimile numbers of particular USDA or CCC offices, will
be announced by a public press release (see Sec. 1493.410(c),
``Contacts P/R'').
(d) Country allocations and program announcements. From time to
time, CCC will issue a Program Announcement to announce a SCGP
allocation for a specific country. The Program Announcement for a
country allocation will designate specific allocations for U.S.
agricultural commodities or products thereof, will indicate the form of
promissory note required by CCC, and will provide other pertinent
information. Exporters may negotiate export sales to importers in that
country for one of the commodities specified in the Program
Announcement and seek payment guarantee coverage within the dollar
amounts of specified coverage for that commodity. The Program
Announcement will contain a requirement that the exporter's sales
contract contain a shipping deadline within the applicable program
year. The final date for a contractual shipping deadline will be stated
in the Program Announcement. Program Announcements may also contain a
specified ``undesignated'' or ``unallocated'' dollar amount for the
purpose that if dollar amounts specified for a specific commodity for a
country become fully used, an additional allocation from the
``unallocated'' or ``undesignated'' portion of the total country
allocation may then be designated for a specific commodity. Program
Announcements that include an ``unallocated'' or ``undesignated''
dollar amount will contain further information on the ``unallocated''
or ``undesignated'' portion of the country allocation.
Sec. 1493.410 Definition of terms.
Terms set forth in this subpart and in CCC Program Announcements,
Notices to Participants, and any other CCC-originated documents
pertaining to the SCGP will have the following meanings:
(a) Assignee. A financial institution in the United States which,
for adequate consideration given, has obtained the legal rights to
receive the payment of proceeds under the payment guarantee.
(b) CCC. The Commodity Credit Corporation, an agency and
instrumentality of the United States within the Department of
Agriculture, authorized pursuant to the Commodity Credit Corporation
Charter Act of 1948 (15 U.S.C. 714 et seq.), and subject to the general
supervision and direction of the Secretary of Agriculture.
(c) Contacts P/R. A notice issued by FAS/USDA by public press
release which contains specific names, addresses, and telephone and
facsimile numbers of contacts within FAS/USDA and CCC for use by
persons interested in obtaining information concerning the operations
of the SCGP. The Contacts P/R also contains details about where to
submit information required to qualify for program participation, to
apply for payment guarantees, to request amendments of payment
guarantees, to submit evidence of export reports, and to give notices
of default and file claims for loss.
(d) Date of export. One of the following dates, depending upon the
method of shipment: the on-board date of an ocean bill of lading or the
on-board ocean carrier date of an intermodal bill of lading; the on-
board date of an airway bill; or, if exported by rail or truck, the
date of entry shown on an entry certificate or similar document issued
and signed by an official of the Government of the importing country.
(e) Date of sale. The earliest date on which a contractual
obligation exists between the exporter, or an intervening purchaser, if
applicable, and the importer under which a firm dollar-and-cent price
for the sale of agricultural commodities to the importer has been
established or a mechanism to establish such price has been agreed
upon.
(f) Discounts and allowances. Any consideration provided directly
or indirectly, by or on behalf of the exporter, or an intervening
purchaser, to the importer in connection with a sale of an agricultural
commodity, above and beyond the commodity's value, stated on the
appropriate FOB, FAS, CFR or CIF basis. Discounts and allowances
include, but are not limited to, the provision of additional goods,
services or benefits; the promise to provide additional goods, services
or benefits in the future; financial rebates; the assumption of any
financial or contractual obligations; the whole or partial release of
the importer from any financial or contractual obligations; or
settlements made in favor of the importer for quality or weight.
(g) Eligible interest. The maximum amount of interest, based on the
interest rate indicated in CCC's payment guarantee or any amendments to
such payment guarantee, which CCC agrees to pay the exporter or the
exporter's assignee in the event that CCC pays a claim for loss. The
maximum interest rate stated in the payment guarantee, when determined
or adjusted by CCC, will not exceed the average investment rate of the
most recent Treasury 52-week bill auction in effect at that time.
(h) Exported value. (1) Where CCC announces coverage on a FAS or
FOB basis and:
(i) Where the commodity is sold on a FAS or FOB basis, the value,
FAS or FOB basis, U.S. point of export, of the export sale, reduced by
the value of any discounts or allowances granted to the importer in
connection with such sale; or
(ii) Where the commodity was sold on a CFR or CIF basis, point of
entry, the value of the export sale, FAS or FOB, point of export, is
measured by the CFR or CIF value of the agricultural commodity less the
cost of ocean freight, as determined at the time of application and, in
the case of CIF sales, less the cost of marine and war risk insurance,
as determined at the time of application, reduced by the value of any
discounts or allowances granted to the importer in connection with the
sale of the commodity; or
(2) Where CCC announces coverage on a CFR or CIF basis, and where
the commodity is sold on a CFR or CIF basis, point of entry, the total
value of the export sale, CFR or CIF basis, point of entry, reduced by
the value of any discounts or allowances granted to the importer in
connection with the sale of the commodity.
(3) When a CFR or CIF commodity export sale involves the
performance of non-freight services to be performed outside the United
States (e.g., services such as bagging bulk cargo) which are not
normally included in ocean freight contracts, the value of such
services and any related materials not exported from the U.S. with the
commodity must also be deducted from the CFR or CIF sales price in
determining the exported value.
(i) Exporter. A seller of U.S. agricultural commodities or products
thereof that has qualified in accordance with the provisions of
Sec. 1493.420.
(j) FAS/USDA. The Foreign Agricultural Service, U.S. Department of
Agriculture.
(k) GSM. The General Sales Manager, FAS/USDA, acting in his
capacity as Vice President, CCC, or his designee.
(l) Guaranteed value. The maximum amount, exclusive of interest,
that CCC agrees to pay the exporter or assignee under CCC's payment
guarantee, as indicated on the face of the payment guarantee.
(m) Importer. A foreign buyer that enters into a contract with an
exporter, or with an intervening purchaser, for an export sale of
agricultural commodities to be shipped from the U.S. to the foreign
buyer.
(n) Importer obligation. A promissory note or notes that conform(s)
with the requirements for such note(s) specified in the applicable
country or regional Program Announcement(s).
[[Page 33833]]
(o) Incoterms. The following customary terms, as defined by the
International Chamber of Commerce, Incoterms current
revision):
(1) Free Alongside Ship (FAS);
(2) Free on Board (FOB);
(3) Cost and Freight (CFR, or alternatively, C&F, C and F, or CNF);
and
(4) Cost Insurance and Freight (CIF).
(p) Intervening purchaser. A party that agrees to purchase U.S.
agricultural commodities from an exporter and sell the same
agricultural commodities to an importer.
(q) Late interest. Interest, in addition to the interest due under
the payment guarantee, which CCC agrees to pay in connection with a
claim for loss, accruing during the period beginning on the first day
after receipt of a claim which CCC has determined to be in good order
and ending on the day on which payment is made on such claim for loss.
(r) Notice to participants. A notice issued by CCC by public press
release which serves one or more of the following functions: to remind
participants of the requirements of the program; to clarify the program
requirements contained in these regulations in a manner which is not
inconsistent with the regulations; to instruct exporters to provide
additional information in applications for payment guarantees under
specific country and/or commodity allocations; and to supplement the
provisions of a payment guarantee, in a manner not inconsistent with
these regulations, before the exporter's application for such payment
guarantee is approved.
(s) Payment guarantee. An agreement under which CCC, in
consideration of a fee paid, and in reliance upon the statements and
declarations of the exporter, subject to the terms set forth in the
written guarantee (including the required form of promissory note),
this subpart, and any applicable Program Announcements or Notices to
Participants, agrees to pay the exporter or the exporter's assignee in
the event of a default by an importer under the importer obligation.
(t) Port value. (1) Where CCC announces coverage on a FAS or FOB
basis and:
(i) Where the commodity is sold on a FAS or FOB basis, U.S. point
of export, the value, FAS or FOB basis, U.S. point of export, of the
export sale, including the upward tolerance, if any, as provided by the
export sales contract, reduced by the value of any discounts or
allowances granted to the importer in connection with such sale; or
(ii) Where the commodity was sold on a CFR or CIF basis, point of
entry, the value of the export sale, FAS or FOB, point of export,
including the upward tolerance, if any, as provided by the export sales
contract, is measured by the CFR or CIF value of the agricultural
commodity less the value of ocean freight and, in the case of CIF
sales, less the value of marine and war risk insurance, reduced by the
value of any discounts or allowances granted to the importer in
connection with the sale of the commodity; or
(2) Where CCC announces coverage on a CFR or CIF basis and where
the commodity was sold on CFR or CIF basis, point of entry, the total
value of the export sale, CFR or CIF basis, point of entry, including
the upward tolerance, if any, as provided by the export sales contract,
reduced by the value of any discounts or allowances granted to the
importer in connection with the sale of the commodity.
(3) When a CFR or CIF commodity export sale involves the
performance of non-freight services to be performed outside the United
States (e.g., services such as bagging bulk cargo), which are not
normally included in ocean freight contracts, the value of such
services and any related materials not exported from the U.S. with the
commodity must also be deducted from the CFR or CIF sales price in
determining the port value.
(u) Program announcement. An announcement issued by CCC which
provides information on specific country and commodity allocations and
may identify eligible agricultural commodities and countries, length of
credit periods which may be covered, specify dollar limitations for CCC
exposure in particular countries, the form of promissory note required
for a particular country or region, and include other information and
requirements.
(v) SCGP. The Supplier Credit Guarantee Program described by this
subpart.
(w) United States or U.S. All of the 50 states, the District of
Columbia, and the territories and possessions of the United States.
(x) U.S. agricultural commodity. (1) With respect to any
agricultural commodity other than a product of an agricultural
commodity, an agricultural commodity entirely produced in the United
States; and
(2) With respect to a product of an agricultural commodity:
(i) A product all of the agricultural components of which are
entirely produced in the United states; or
(ii) Any other product the Secretary may designate that contains
any agricultural component that is not entirely produced in the United
States if:
(A) Such component is an added, de minimis component;
(B) Such component is not commercially produced in the United
States; and
(C) There is not acceptable substitute for such component that is
commercially produced in the United States (For purposes of this
paragraph, fish entirely produced in the United States include fish
harvested by a documented fishing vessel as defined in title 46, United
States Code, in waters that are not waters [including the territorial
sea] of a foreign country).
(y) USDA. United States Department of Agriculture.
Sec. 1493.420 Information required for program participation.
Before CCC will accept an application for a payment guarantee under
the SCGP, the applicant must qualify for participation in this program.
Based upon the information submitted by the applicant and other
publicly available sources, CCC will determine whether the applicant is
eligible for participation in the program.
(a) Submission of documentation. In order to qualify for
participation in the SCGP, an applicant must submit to CCC, at the
address specified in the Contacts P/R, the following information:
(1) The address of the applicant's headquarters office and the name
and address of an agent in the U.S. for the service of process;
(2) The legal form of doing business of the applicant, e.g., sole
proprietorship, partnership, corporation, etc.;
(3) The place of incorporation of the applicant, if the applicant
is a corporation;
(4) The name and U.S. address of the office(s) of the applicant,
and statement indicating whether the applicant is a U.S. domestic
corporation, a foreign corporation or another foreign entity. If the
applicant has multiple offices, the address included in the information
should be that which is pertinent to the particular export sale
contemplated by the applicant under this subpart;
(5) A certified statement describing the applicant's participation,
if any, during the past three years in U.S. Government programs,
contracts or agreements; and
(6) A certification that: ``I certify, to the best of my knowledge
and belief, that neither [name of applicant] nor any of its principals
has been debarred, suspended, or proposed for debarment from
contracting with or participating in
[[Page 33834]]
programs administered by any U.S. Government agency. [''Principals,''
for the purpose of this certification, means officers; directors;
owners of five percent or more of stock; partners; and persons having
primary management or supervisory responsibility within a business
entity (e.g., general manager, plant manager, head of a subsidiary
division, or business segment, and similar positions).] I further agree
that, should any such debarment, suspension, or notice of proposed
debarment occur in the future, [name of applicant] will immediately
notify CCC.''
(b) Previous qualification. Any exporter that is qualified under
subpart B, Sec. 1493.30 is qualified under this section to submit
applications for a SCGP payment guarantee, and the information provided
by the exporter pursuant to Sec. 1493.30 will be deemed to also have
been provided under this section. Each application must include the
statement required by Sec. 1493.430(a)(17) incorporating the
certifications of Sec. 1493.440, including the certification in
Sec. 1493.440(e) that the information previously provided pursuant to
Sec. 1493.420 has not changed. If the exporter is unable to provide
such certification, such exporter must update the information required
by paragraph (a) of this section which has changed and certify that the
remainder of the information previously provided has not changed.
(c) Additional submissions. CCC will promptly notify applicants
that have submitted information required by this section whether they
have qualified to participate in the program. Any applicant failing to
qualify will be given an opportunity to provide additional information
for consideration by CCC.
(d) Ineligibility for program participation. An applicant may be
ineligible to participate in the SCGP if:
(1) Such applicant is currently debarred, suspended, or proposed
for debarment from contracting with or participating in any program
administered by a U.S. Government agency; or
(2) Such applicant is controlled or can be controlled, in whole or
in part, by any individuals or entities currently debarred, suspended
or proposed for debarment from contracting with or participating in
programs administered by any U.S. Government agency.
Sec. 1493.430 Application for a payment guarantee.
(a) A firm export sale must exist before an exporter may submit an
application for a payment guarantee. An application for a payment
guarantee may be submitted in writing or may be made by telephone, but,
if made by telephone, it must be confirmed in writing to the office
specified in the Contacts P/R. An application must identify the name
and address of the exporter and include the following information:
(1) Name of the destination country;
(2) Name and address of the importer;
(3) Name and address of the intervening purchaser, if any, and a
statement that the commodity will be shipped directly to the importer
in the destination country;
(4) Date of sale;
(5) Exporter's sale number;
(6) Delivery period as agreed between the exporter and the
importer;
(7) A full description of the commodity (including packaging, if
any);
(8) Mean quantity, contract loading tolerance and, if the exporter
chooses, a request for CCC to reserve coverage up to the maximum
quantity permitted by the contract loading tolerance;
(9) Unit sales price of the commodity, or a mechanism to establish
the price, as agreed between the exporter and the importer. If the
commodity was sold on the basis of CFR or CIF, the actual (if known at
the time of application) or estimated value of freight and, in the case
of sales made on a CIF basis, the actual (if known at the time of
application) or estimated value of marine and war risk insurance, must
be specified;
(10) Description and value of discounts and allowances, if any;
(11) Port value (includes upward loading tolerance, if any);
(12) Guaranteed value;
(13) Guarantee fee;
(14) The term length for the credit being extended and the
intervals between principal payments for each shipment to be made under
the export sale;
(15) A statement indicating whether any portion of the export sale
for which the exporter is applying for a payment guarantee is also
being used as the basis for an application for participation in any of
the following CCC or USDA export programs: Export Enhancement Program,
Dairy Export Incentive Program, Sunflowerseed Oil Assistance Program,
or Cottonseed Oil Assistance Program. The number of the Agreement
assigned by USDA under one of these programs should be included, as
applicable;
(16) Other information as requested by CCC or specified in Program
Announcements and Notices to Participants, as applicable; and
(17) The exporter's statement, ``ALL SECTION 1493.440
CERTIFICATIONS ARE BEING MADE IN THIS APPLICATION'' which, when
included in the application by the exporter, will constitute a
certification that it is in compliance with all the requirements set
forth in Sec. 1493.440.
(b) An application for a payment guarantee may be approved as
submitted, approved with modifications agreed to by the exporter, or
rejected by the GSM. In the event that the application is approved, the
GSM will cause a payment guarantee to be issued in favor of the
exporter. Such payment guarantee will become effective at the time
specified in Sec. 1493.450(b). If, based upon a price review, the unit
sales price of the commodity does not fall within the prevailing
commercial market level ranges, as determined by CCC, the application
will not be approved.
(c) Ineligible exporter. An exporter will be ineligible to obtain a
payment guarantee if such exporter:
(1) Directly or indirectly owns or controls the importer;
(2) Is directly or indirectly owned or controlled by the importer;
or
(3) Is directly or indirectly owned or controlled by a person(s) or
entity(ies) which also owns or controls the importer.
Sec. 1493.440 Certification requirements for payment guarantee.
By providing the statement in Sec. 1493.430(a)(17), the exporter is
certifying that the information provided in the application is true and
correct and, further, that all requirements set forth in this section
have been or will be met. The exporter will be required to provide
further explanation or documentation with regard to applications that
do not include this statement. The exporter, in submitting an
application for a payment guarantee and providing the statement set
forth in Sec. 1493.430(a)(17), certifies that:
(a) The agricultural commodity or product to be exported under the
payment guarantee is a United States agricultural commodity or a
product thereof, as defined in Sec. 1493.410(x);
(b) There have not been and will not be any corrupt payments or
extra sales services or other items extraneous to the transaction
provided, financed, or guaranteed in connection with the transaction,
and that the transaction complies with applicable United States law;
(c) If the agricultural commodity is vegetable oil or a vegetable
oil product, that none of the agricultural commodity or product has
been or will be used as a basis for a claim of a refund, as drawback,
pursuant to section 313 of the Tariff Act of 1930, 19 U.S.C. 1313, of
[[Page 33835]]
any duty, tax or fee imposed under Federal law on an imported commodity
or product;
(d) No person or selling agency has been employed or retained to
solicit or secure the payment guarantee, and that there is no agreement
or understanding for a commission, percentage, brokerage, or contingent
fee, except in the case of bona fide employees or bona fide established
commercial or selling agencies maintained by the exporter for the
purpose of securing business; and
(e) The information provided pursuant to Sec. 1493.420 has not
changed, the exporter still meets all of the qualification requirements
of Sec. 1493.420, and the exporter will immediately notify CCC if there
is a change of circumstances which would cause it to fail to meet such
requirements. If the exporter breaches or violates these certifications
with respect to a SCGP payment guarantee, CCC will have the right,
notwithstanding any other rights provided under this subpart, to annul
guarantee coverage for any commodities not yet exported and/or to
proceed against the exporter.
Sec. 1493.450 Payment guarantee.
(a) CCC's obligation. The payment guarantee will provide that CCC
agrees to pay the exporter or the exporter's assignee an amount not to
exceed the guaranteed value, plus eligible interest, in the event that
the importer fails to pay under the importer obligation. unless CCC
determines with respect to the particular transaction and claim that
the guaranteed portion of the port value exceeded the prevailing U.S.
market value for the same, or same type of agricultural commodity or
product. In making this determination, CCC will adjust the prevailing
U.S. market value for estimated freight and/or insurance costs if the
export sal
FR Doc. 96-16674 Commodity Credit Corporation Supplier Credit Guarantee Program
e was made on a CFR or CIF basis. Payment by CCC will be in
U.S. dollars.
(b) Period of guarantee coverage. The payment guarantee will apply
to a credit period not exceeding 180 days beginning either on the
date(s) of export(s) or from the date when interest begins to accrue
whichever is earlier, and will continue during the credit term
specified in the payment guarantee or amendments thereto. However, the
payment guarantee becomes effective on the date(s) of export(s) of the
agricultural commodities or products thereof specified in the
exporter's application for a payment guarantee.
(c) Terms of the CCC payment guarantee. The terms of CCC's coverage
will be set forth in the payment guarantee, as approved by CCC, and
will include the provisions of this subpart, which may be supplemented
by any Program Announcements and/or Notices to Participants in effect
at the time the payment guarantee is approved by CCC.
(d) Final date to export. The final date to export shown on the
payment guarantee will be one month, as determined by CCC, after the
contractual deadline for shipping.
(e) Reserve coverage for loading tolerances. The exporter may apply
for a payment guarantee and, if coverage is available, pay the
guarantee fee, based at least on, the amount of the lower loading
tolerance of the export sales contract; however, the exporter may also
request that CCC reserve additional guarantee coverage to accommodate
up to the amount of the upward loading tolerance specified in the
export sales contract. If such additional guarantee coverage is
available at the time of application and CCC determines to make such
reservation, it will so indicate to the exporter. In the event that the
exporter ships a quantity greater than the amount on which the
guarantee fee was paid (i.e., lower loading tolerance), it may obtain
the additional coverage from CCC, up to the amount of the upward
loading tolerance, by filing for an amendment to the payment guarantee,
and by paying the additional amount of fee applicable. If such
amendment to the payment guarantee is not filed with CCC by the
exporter within 30 days after the date of the last export against the
sales contract, CCC may determine not to reserve the coverage
originally set aside for the exporter.
(f) Ineligible exports. Commodities with a date of export prior to
the date of receipt by CCC of the exporter's telephonic or written
application for a payment guarantee, or with a date of export made
after the final date for export shown on the payment guarantee or any
amendments thereof, are ineligible for guarantee coverage under this
subpart, except where it is determined by the GSM to be in the best
interests of CCC to provide guarantee coverage on such commodities.
(g) Foreign agricultural component. CCC may approve payment
guarantees under this subpart only in connection with sales of United
States agricultural commodities as defined in Sec. 1493.410(x). CCC may
not provide guarantee coverage under this subpart on credit extended
for the value of any foreign agricultural component.
(h) Additional requirements. The payment guarantee may contain such
additional terms, conditions, and limitations as deemed necessary or
desirable by the GSM. Such additional terms, conditions or
qualifications, as stated in the payment guarantee are binding on the
exporter or the exporter's assignee.
(i) Amendments. A request for an amendment of a payment guarantee
may be submitted only by the exporter (with the concurrence of the
assignee, if any). CCC will consider such a request only if the
amendment sought is consistent with this subpart and any applicable
Program Announcements and Notices to Participants. Amendments may
include, but will not be limited to, a change in the credit period and
an extension of time to export. Any amendment to the payment guarantee,
particularly those that result in an increase in CCC's liability under
the payment guarantee, may result in an increase in the guarantee fee.
(Technical corrections or corrections of a clerical error which may be
submitted by the exporter or the exporter's assignee are not viewed as
amendments.)
Sec. 1493.460 Guarantee rates and fees.
(a) Guarantee fee rates. The current payment guarantee fee rate(s)
will be available by Program Announcement.
(b) Calculation of fee. The guarantee fee will be computed by
multiplying the guaranteed value by the guarantee fee rate.
(c) Payment of fee. The exporter shall remit, with his written
application, the full amount of the guarantee fee. Applications will
not be approved until the guarantee fee has been received by CCC. The
exporter's check for the guarantee fee shall be made payable to CCC and
mailed or delivered by courier to the office specified in the Contacts
P/R.
(d) Refunds of fee. Guarantee fees paid in connection with approved
applications will ordinarily not be refundable. CCC's approval of the
application will be final and refund of the guarantee fee will not be
made after approval unless the GSM determines that such refund will be
in the best interest of CCC. If the application for a payment guarantee
is not approved or is approved only for a part of the guarantee
coverage requested, a full or pro rata refund of the fee remittance
will be made.
Sec. 1493.470 Evidence of export.
(a) Report of export. The exporter is required to provide CCC an
evidence of export report for each shipment made under the payment
guarantee. This report must include the following:
(1) Payment guarantee number;
(2) Date of export;
(3) Exporter's sale number;
(4) Exported value;
[[Page 33836]]
(5) Quantity;
(6) A full description of the commodity exported;
(7) Unit sales price received for the commodity exported and the
basis (e.g., FOB, CFR, CIF). Where the unit sales price at export
differs from the unit sales price indicated in the exporter's
application for a payment guarantee, the exporter is also required to
submit a statement explaining the reason for the difference;
(8) Description and value of discounts and allowances, if any;
(9) Number of the Agreement assigned by USDA under any other
program if any portion of the export sale was also approved for
participation in any of the following CCC or USDA export program:
Export Enhancement Program, Dairy Export Incentive Program,
Sunflowerseed Oil Assistance Program, or Cottonseed Oil Assistance
Program; and
(10) The exporter's statement, ``ALL SECTION 1493.480
CERTIFICATIONS ARE BEING MADE IN THIS EVIDENCE OF EXPORT'' which, when
included in the evidence of export by the exporter, will constitute a
certification that it is in compliance with all the requirements set
forth in Sec. 1493.480.
(b) Time limit for submission of evidence of export. The exporter
must provide a written report to the office specified in the Contacts
P/R within 60 calendar days if the export was by rail or truck; or 30
calendar days if the export was by any other carrier. The time period
for filing a report of export will commence upon each date of export of
the commodity covered under a payment guarantee. If the evidence of
export report is not received by CCC within the time period for filing,
the payment guarantee will become null and void only if and only to the
extent that failure to make timely filing resulted, or would be likely
to result, in:
(1) Significant financial harm to CCC;
(2) The undermining of an essential regulatory purpose of the
program;
(3) Obstruction of the fair administration of the program; or
(4) A threat to the integrity of the program. The time limit for
submission of an evidence of export report may be extended if such
extension is determined by the GSM to be in the best interests of CCC.
(c) Export sales reporting. Exporters may have a mandatory
reporting responsibility under section 602 of the Agricultural Trade
Act of 1978, as amended (7 U.S.C. 5712) for exports of wheat and wheat
flour, feed grains, oilseeds, cotton, and other agricultural
commodities and products thereof.
Sec. 1493.480 Certification requirements for the evidence of export.
By providing the statement contained in Sec. 1493.470(a)(10), the
exporter is certifying that the information provided in the evidence of
export report is true and correct and, further, that all requirements
set forth in this section have been or will be met. The exporter will
be required to provide further explanation or documentation with regard
to reports that do not include this statement. If the exporter breaches
or violates these certifications with respect to a SCGP payment
guarantee, CCC will have the right, notwithstanding any other rights
provided under this subpart, to annul guarantee coverage for any
commodities not yet exported and/or to proceed against the exporter.
The exporter, in submitting the evidence of export and providing the
statement set forth in Sec. 1493.470(a)(10), certifies that:
(a) The agricultural commodity or product exported under a payment
guarantee is a United States agricultural commodity or product thereof,
as defined in Sec. 1493.410(x);
(b) Agricultural commodities of the grade, quality and quantity
called for in the exporter's sales contract with the importer have been
exported to the country specified in the payment guarantee;
(c) There is an importer obligation as defined in Sec. 1493.410(n)
to cover the exported value of the commodity exported;
(d) There have not been and will not be any corrupt payments or
extra sales services or other items extraneous to the transaction
provided, financed, or guaranteed in connection with the transaction,
and that the transaction complies with applicable United States law;
and
(e) The information provided pursuant to Sec. 1493.420 has not
changed, the exporter still meets all of the qualification requirements
of Sec. 1493.420 and the exporter will immediately notify CCC if there
is a change of circumstances which would cause it to fail to meet such
requirements.
Sec. 1493.490 Proof of entry.
(a) Diversion. The diversion of commodities covered by a SCGP
payment guarantee to a country other than that shown on the payment
guarantee is prohibited, unless expressly authorized by the GSM.
(b) Records of proof of entry. Exporters must obtain and maintain
records of an official or customary commercial nature and grant
authorized USDA officials access to such documents or records as may be
necessary to demonstrate the arrival of the agricultural commodities
exported in connection with the SCGP in the country that was the
intended country of destination of such commodities. Records
demonstrating proof of entry must be in English or be accompanied by a
certified or other translation acceptable to CCC. Records acceptable to
meet this requirement include an original certification of entry signed
by a duly authorized customs or port official of the importing country,
by the importer, by an agent or representative of the vessel or
shipline which delivered the agricultural commodity to the importing
country, or by a private surveyor in the importing country, or other
documentation deemed acceptable by the GSM showing:
(1) That the agricultural commodity entered the importing country;
(2) The identification of the export carrier;
(3) The quantity of the agricultural commodity;
(4) The kind, type, grade and/or class of the agricultural
commodity; and
(5) The date(s) and place(s) of unloading of the agricultural
commodity in the importing country. (Records of proof of entry need not
be submitted with a claim for loss, except as may be provided in
Sec. 1493.500(b)(4)(ii).)
Sec. 1493.500 Notice of default and claims for loss.
(a) Notice of default. If the importer fails to make payment
pursuant to the terms of the importer obligation, the exporter or the
exporter's assignee must submit a notice of default to CCC as soon as
possible, but not later than 10 calendar days after the date that
payment was due from the importer (the due date). A notice of default
must be submitted in writing to the Treasurer, CCC, at the address
specified in the Contacts P/R. If the exporter or the exporter's
assignee fails to promptly notify CCC of defaults in accordance with
this paragraph, CCC may make the payment guarantee null and void with
respect to any payment(s) applicable to such default. This time limit
may be extended only under extraordinary circumstances and if such
extension is determined by the Controller, CCC, to be in the best
interests of CCC. The notice of default must include:
(1) Payment guarantee number;
(2) Name of the country;
(3) Name of the defaulting importer;
(4) Due date;
(5) Total amount of the defaulted payment due, indicating
separately the amounts for principal and interest;
(6) Date of importer's refusal to pay, if applicable; and
(7) Reason for importer's refusal to pay, if known.
[[Page 33837]]
(b) Filing a claim for loss. A claim for a loss by the exporter or
the exporter's assignee will not be paid if it is made later than six
months from the due date of the defaulted payment. A claim for loss
must be submitted in writing to the Treasurer, CCC, at the address
specified in the Contacts P/R. The claim for loss must include the
following information and documents:
(1) Payment guarantee number;
(2) A certification that the scheduled payment has not been
received;
(3) A certification of the amount of accrued interest in default,
the date interest began to accrue, and the interest rate on the
importer obligation applicable to the claim;
(4) A copy of each of the following documents, with a cover
document containing a signed certification by the exporter or the
exporter's assignee that each page of each document is a true and
correct copy:
(i) The importer obligation;
(ii) Depending upon the method of shipment, the negotiable ocean
carrier or intermodal bill(s) of lading signed by the shipping company
with the onboard ocean carrier date for each shipment, the airway bill,
or, if shipped by rail or truck, the entry certificate or similar
document signed by an official of the importing country;
(iii)(A) The exporter's invoice showing, as applicable, the FAS,
FOB, CFR or CIF values; or
(B) If there was an intervening purchaser, both the exporter's
invoice to the intervening purchaser and the intervening purchaser's
invoice to the importer;
(iv) An instrument, in form and substance satisfactory to CCC,
subrogating to CCC the respective rights of the exporter and the
exporter's assignee, if applicable, to the amount of payment in default
under the applicable export sale. The instrument must reference the
applicable importer obligation; and
(v) A copy of the report(s) of export previously submitted by the
exporter to CCC pursuant to Sec. 1493.470(a).
(c) Subsequent claims for defaults on installments. If the initial
claim is found in good order, the exporter or an exporter's assignee
need only provide all of the required claims documents with the initial
claim relating to a covered transaction. For subsequent claims relating
to failure of the importer to make scheduled installments on the same
export shipment, the exporter or the exporter's assignee need only
submit to CCC a notice of such failure containing the information
stated in paragraph (b) (1), (2), and (3) of this section; an
instrument of subrogation as per paragraph (b)(4)(iv) of this section,
and including the date the original claim was filed with CCC.
Sec. 1493.510 Payment for loss.
(a) Determination of CCC's liability. Upon receipt in good order of
the information and documents required under Sec. 1493.500, CCC will
determine whether or not a loss has occurred for which CCC is liable
under the applicable payment guarantee, this subpart and any applicable
supplemental Program Announcements and Notices to Participants. If CCC
determines that it is liable to the exporter and/or the exporter's
assignee, CCC will pay the exporter or the exporter's assignee in
accordance with paragraphs (b) and (c) of this section.
(b) Amount of CCC's liability. Subject to a determination by CCC
with respect to prevailing U.S. market value pursuant to
Sec. 1493.450(a) of this part, CCC's maximum liability for any claims
for loss submitted with respect to any payment guarantee, not including
any late interest payments due in accordance with paragraph (c) of this
section, will be limited to the lesser of:
(1) The guaranteed value as stated in the payment guarantee, plus
eligible interest; or
(2) The guaranteed percentage (as indicated in the payment
guarantee) of the exported value indicated in the evidence of export,
plus eligible interest.
(c) Late interest payment. If a claim is not paid within one day of
receipt of a claim which CCC has determined to be in good order, late
interest will accrue in favor of the exporter or the exporter's
assignee beginning with the first day after the day of receipt of a
claim found by CCC to be in good order and continuing until and
including the date that payment is made by CCC. Late interest will be
paid on the guaranteed amount, as determined by paragraphs (b)(1) and
(2) of this section, and will be calculated based on the average
investment rate of the most recent Treasury 91-day bill auction as
announced by the Department of Treasury as of the due date.
(d) Accelerated payments. CCC will pay claims only for losses on
amounts not paid as scheduled. CCC will not pay claims for amounts due
under an accelerated payment clause in the export sales contract or the
importer obligation unless it is determined to be in the best interests
of CCC by the Controller, CCC. Notwithstanding the foregoing, CCC at
its option may declare the entire amount of the unpaid balance, plus
accrued interest, in default and make payment to the exporter or the
exporter's assignee in addition to such other claimed amount as may be
due from CCC.
(e) Action against the assignee. Notwithstanding any other
provision in this subpart to the contrary, with regard to commodities
covered by a payment guarantee, CCC will not, except pursuant to a
determination under Sec. 1493.450(a) of this part, hold the assignee
responsible or take any action or raise any defense against the
assignee for any action, omission, or statement by the exporter of
which the assignee has no knowledge, provided that:
(1) The exporter complies with the reporting requirements under
Secs. 1493.470 and 1493.480, excluding post-export adjustments (i.e.,
corrections to evidence of export reports); and
(2) The exporter or the exporter's assignee furnishes the
statements and documents specified in Sec. 1493.500.
Sec. 1493.520 Recovery of losses.
(a) Notification. Upon payment of loss to the exporter or the
exporter's assignee, CCC will notify the importer of CCC's rights under
the subrogation agreement to recover all moneys in default.
(b) Receipt of monies. (1) In the event that monies for a defaulted
payment are recovered by the exporter or the exporter's assignee from
the importer or any other source whatsoever, such monies shall be
immediately paid to the Treasurer, CCC. If such monies are not received
by CCC within 15 business days from the date of recovery by the
exporter or the exporter's assignee, the exporter or the exporter's
assignee will owe to CCC interest from the date of recovery to the date
of receipt by CCC. This interest will be calculated based on the latest
average investment rate of the most recent Treasury 91-day bill
auction, as announced by the Department of Treasury, in effect on the
date of recovery and will accrue from such date to the date of payment
by the exporter or the exporter's assignee to CCC. Such interest will
be charged only on CCC's share of the recovery.
(2) If CCC recovers monies that should be applied to a payment
guarantee for which a claim has been paid by CCC, CCC will pay the
holder of the payment guarantee its pro rata share immediately,
provided that the required information necessary for determining pro
rata distribution has been furnished. If payment is not made by CCC
within 15 business days from the date of recovery or 15 business days
from receiving the required information for determining pro rata
distribution, whichever is later, CCC will pay interest
[[Page 33838]]
calculated on the latest average investment rate of the most recent
Treasury 91-day bill auction, as announced by the Department of
Treasury, in effect on the date of recovery and such interest will
accrue from such date to the date of payment by CCC. The interest will
apply only to the portion of the recovery payable to the holder of the
payment guarantee.
(c) Allocation of recoveries. Recoveries made by CCC from the
importer, and recoveries received by CCC from the exporter, the
exporter's assignee, or any other source whatsoever, will be allocated
by CCC to the exporter or the exporter's assignee and to CCC on a pro
rata basis determined by their respective interests in such recoveries.
The respective interest of each party will be determined on a pro rata
basis, based on the combined amount of principal and interest in
default. Once CCC has paid out a particular claim under a payment
guarantee, CCC pro rates any collections it receives and shares these
collections proportionately with the holder of the guarantee until both
CCC and the holder of the guarantee have been reimbursed in full.
Appendix A to Sec. 1493.520--Illustration of Pro Rata Allocation of
Recoveries--provides an example of the methodology used by CCC in
applying this paragraph (c).
(d) Liabilities to CCC. Notwithstanding any other terms of the
payment guarantee, the exporter may be liable to CCC for any amounts
paid by CCC under the payment guarantee when and if it is determined by
CCC that the exporter has engaged in fraud, or has been or is in
material breach of any contractual obligation, certification or
warranty made by the exporter for the purpose of obtaining the payment
guarantee or for fulfilling obligations under SCGP. Further, the
exporter's assignee may be liable to CCC for any amounts paid by CCC
under the payment guarantee when and if it is determined by CCC that
the exporter's assignee has engaged in fraud or otherwise violated
program requirements.
(e) Good faith. The violation by an exporter of the certifications
in Secs. 1493.440(b) and 1493.480(d) or the failure of an exporter to
comply with the provisions of Secs. 1493.490 or 1493.530(e) will not
affect the validity of any payment guarantee with respect to an
assignee which had no knowledge of such violation or failure to comply
at the time such exporter applied for the payment guarantee or at the
time of assignment of the payment guarantee.
(f) Cooperation in recoveries. Upon payment by CCC of a claim to
the exporter or the exporter's assignee, the exporter or the exporter's
assignee will cooperate with CCC to effect recoveries from the
importer.
Appendix A to Sec. 1493.520--Illustration of Pro Rata Allocation of
Recoveries
The following example illustrates CCC's policy, as set forth in
Sec. 1493.520(c), regarding pro rata sharing of recoveries made for
claims filed under the SCGP. A typical case might be as follows:
1. The U.S. exporter enters into a $200,000, 180 day credit
arrangement with the importer calling for two equal payments of
principal and two equal payments of interest at a rate of 10 percent
per annum and a penalty interest rate of 12 percent per annum (basis
360 days) on overdue amounts until the overdue amount is paid.
(Basis for interest calculation may be 360 or 365 days.)
2. The importer fails to make the final principal payment of
$100,000 and an interest payment of $2,500.00 (10% per annum for 90
days on $100,000), both due on January 31.
3. On February 10, the U.S. exporter files a claim in good order
with CCC.
4. CCC's guarantee states that CCC's maximum liability is
limited to 60 percent of the principal amount due ($60,000) and
interest at a rate of 8 percent per annum (basis 365 days) on 60
percent of the principal outstanding ($1,183.56) (8% per annum for
90 days on $60,000). (CCC's basis for interest calculation is 365
days.)
5. CCC pays the claim on February 22.
6. The average investment rate of the most recent 91-day
Treasury Bill auction average which has been published by the
Department of Treasury in effect on the date of nonpayment by CCC
(January 31) is 7 percent. (CCC's late interest rate.)
Computation of Obligations
Using the above case, CCC's payment to the holder of the payment
guarantee would be computed as follows:
1. CCC's Obligation under the Payment Guarantee:
(a) Principal coverage--(60% $100,000).............. $60,000.00
(b) Interest coverage--(8% per annum for 90 days on
$60,000, basis 365 days)........................... 1,183.56
---------------
$61,183.56
(c) Late interest due from CCC (7% per annum for 11
days on $61,183.56, basis 365 days)................ 129.07
---------------
(d) Amount paid by CCC on February 22............... $61,312.63
2. Importer's obligation under the importer obligation:
(a) Principal due January 31........................ $100,000.00
Interest due January 31.........................
(10% per annum for 90 days on $100,000, basis
360 days)...................................... 2,500.00
---------------
Amount owed by importer as of January 31........ $102,500.00
(b) Penalty interest due (12% per annum for 22 days
on $102,500.00, basis 360 days).................... 751.67
(c) Amount owed by importer as of February 22....... $103,251.67
3. Amount of importer's obligation not covered by CCC's
payment guarantee: $41,939.04 ($103,251.67-$61,312.63).
Computation of Pro Rata Sharing in Recovery of Losses
In establishing each party's respective interest in any recovery
of losses, the total amount due under the importer obligation would
be determined as of the date the claim is paid by CCC (February 22).
Using the above example in which the amount owed by the importer is
$103,251.67, CCC would be entitled to 59.38 percent ($61,312.63
divided by $103,251.67) and the holder of the payment guarantee
would be entitled to 40.62 percent ($41,939.04 divided by
$103,251.67) of any recoveries of losses after settlement of the
claim. Since in this example, the losses were recovered after the
claim has been paid by CCC, Sec. 1493.520(b) would apply.
Sec. 1493.530 Miscellaneous provisions.
(a) Assignment. (1) The exporter may assign the proceeds which are,
or may become, payable by CCC under a payment guarantee or the right to
such proceeds only to a financial institution in the U.S. The
assignment must cover all amounts payable under the payment guarantee
not already paid, may not be made to more than one party, and may not,
unless approved in advance by CCC, be:
(i) Made to one party acting for two or more parties; or
(ii) Subject to further assignment.
(2) An original and two copies of the written notice of assignment
signed by the parties thereto must be filed by the
[[Page 33839]]
assignee with the Treasurer, CCC, at the address specified in the
Contacts P/R.
(3) Receipt of the notice of assignment will ordinarily be
acknowledged to the exporter and its assignee in writing by an officer
of CCC. In cases where a financial institution is determined to be
ineligible to receive an assignment, in accordance with paragraph (b)
of this section, CCC will provide notice thereof, to the financial
institution and to the exporter issued the payment guarantee, in lieu
of an acknowledgment of assignment.
(4) The name and address of the assignee must be included on the
written notice of assignment.
(b) Ineligibility of financial institutions to receive an
assignment. A financial institution will be ineligible to receive an
assignment of proceeds which may become payable under a payment
guarantee if, at the time of assignment, such financial institution:
(1) Is not in sound financial condition, as determined by the
Treasurer of CCC;
(2) Owns or controls the entity issuing the importer obligation; or
(3) Is owned or controlled by an entity that owns or controls the
entity issuing the importer obligation.
(c) Ineligibility of financial institutions to receive proceeds. A
financial institution will be ineligible to receive proceeds payable
under a payment guarantee approved by CCC if such financial
institution:
(1) At the time of assignment of a payment guarantee, is not in
sound financial condition, as determined by the Treasurer of CCC;
(2) Owns or controls the entity issuing the importer obligation; or
(3) Is owned or controlled by an entity that owns or controls the
entity issuing the importer obligation.
(d) Alternative satisfaction of payment guarantees. CCC may, with
the agreement of the exporter (or if the right to proceeds payable
under the payment guarantee has been assigned, with the agreement of
the exporter's assignee), establish procedures, terms and/or conditions
for the satisfaction of CCC's obligations under a payment guarantee
other than those provided for in this subpart if CCC determines that
those alternative procedures, terms, and/or conditions are appropriate
in rescheduling the debts arising out of any transaction covered by the
payment guarantee and would not result in CCC paying more than the
amount of CCC's obligation.
(e) Maintenance of records and access to premises. (1) For a period
of five years after the date of expiration of the coverage of a payment
guarantee, the exporter or the exporter's assignee, as applicable, must
maintain and make available all records pertaining to sales and
deliveries of and extension of credit for agricultural commodities
exported in connection with a payment guarantee, including those
records generated and maintained by agents, intervening purchasers, and
related companies involved in special arrangements with the exporter.
The Secretary of Agriculture and the Comptroller General of the United
States, through their authorized representatives, must be given full
and complete access to the premises of the exporter or the exporter's
assignee, as applicable, during regular business hours from the
effective date of the payment guarantee until the expiration of such
five-year period to inspect, examine, audit, and make copies of the
exporter's, exporter's assignee's, agent's, intervening purchaser's, or
related company's books, records and accounts concerning transactions
relating to the payment guarantee, including, but not limited to,
financial records and accounts pertaining to sales, inventory,
processing, and administrative and incidental costs, both normal and
unforeseen. During such period, the exporter or the exporter's assignee
may be required to make available to the Secretary of Agriculture or
the Comptroller General of the United States, through their authorized
representatives, records that pertain to transactions conducted outside
the program, if, in the opinion of the GSM, such records would pertain
directly to the review of transactions undertaken by the exporter in
connection with the payment guarantee.
(2) The exporter must maintain the proof of entry required by
Sec. 1493.490(b), and must provide access to such documentation if
requested by the Secretary of Agriculture or his authorized
representative for the five-year period specified in paragraph (e)(1)
of this section.
(f) Responsibility of program participants. It is the
responsibility of all program participants to review, and fully
acquaint themselves with, all regulations, Program Announcements, and
Notices to Participants issued pursuant to this subpart. Applicants for
payment guarantees are hereby on notice that they will be bound by any
terms contained in applicable Program Announcements or Notices to
Participants issued prior to the date of approval of a payment
guarantee.
(g) Submission of documents by principal officers. All required
submissions, including certifications, applications, reports, or
requests (i.e., requests for amendments), by exporters or exporters'
assignees under this subpart must be signed by a principal or officer
of the exporter or exporter's assignee or their authorized designee(s).
In cases where the designee is acting on behalf of the principal or the
officer, the signature must be accompanied by: Wording indicating the
delegation of authority or, in the alternative, by a certified copy of
the delegation of authority; and the name and title of the authorized
person or officer. Further, the exporter or exporter's assignee must
ensure that all information/reports required under these regulations
are submitted within the required time limits. If requested in writing,
CCC will acknowledge receipt of a submission by the exporter or the
exporter's assignee. If acknowledgment of receipt is requested, the
exporter or exporter's assignee must submit an extra copy of each
document and a stamped self-addressed envelope for return by U.S. mail.
If courier services are desired for the return receipt, the exporter or
exporter's assignee must also submit a self-addressed courier service
order which includes the recipient's billing code for such service.
(h) Officials not to benefit. No member of or delegate to Congress,
or Resident Commissioner, shall be admitted to any share or part of the
payment guarantee or to any benefit that may arise therefrom, but this
provision shall not be construed to extend to the payment guarantee if
made with a corporation for its general benefit.
(i) OMB control number assigned pursuant to the Paperwork Reduction
Act. The information requirements contained in this part (7 CFR part
1493, subpart D) have been approved by the Office of Management and
Budget (OMB) in accordance with the provisions of 44 U.S.C. Chapter 35
and have been assigned OMB Control Number 0551-0037.
Signed this 25th day of June 1996 at Washington, DC.
Mary T. Chambliss,
Acting General Sales Manager, Foreign Agricultural Service and Acting
Vice President, Commodity Credit Corporation.
[FR Doc. 96-16674 Filed 6-28-96; 8:45 am]
BILLING CODE 3410-10-P
Complete official Federal Register PDF
FR Doc. 96-16665 Broadband Personal Communications Services
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33859-33870]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16665]
=======================================================================
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 20 and 24
[WT Docket No. 96-59; GN Docket No. 90-314; FCC 96-278]
Broadband Personal Communications Services
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: This Report and Order amends the Commission's broadband
Personal Communications Services (``PCS'') rules. The Commission
concludes that the present record is insufficient to support the race-
based F block rules under the strict scrutiny standard of judicial
review required by the Supreme Court's decision in Adarand
Constructors, Inc. v. Pena, or to support the gender-based rules under
the intermediate scrutiny standard that currently applies to those
rules. Taking account of the need to award the remaining broadband PCS
licenses expeditiously and to promote the rapid deployment of new
services to the public, as well as the statutory objective of
disseminating licenses among a wide variety of applicants, the
Commission makes the F block rules race- and gender-neutral to avoid
the delay that would likely result from legal challenges to the special
provisions for minority- and women-owned businesses. The Commission
also amends its D, E, and F block rules and broadband PCS rules
generally to streamline procedures, reduce administrative burdens, and
minimize the possibility of insincere bidding and bidder default.
Finally, the Commission, in response to Cincinnati Bell Telephone Co.
v. FCC, eliminates the cellular/PCS cross-ownership rule and the PCS
spectrum cap in favor of the 45 MHz cap on Commercial Mobile Radio
Services spectrum.
EFFECTIVE DATE: July 31, 1996.
FOR FURTHER INFORMATION CONTACT: Mark Bollinger, Wireless
Telecommunications Bureau, (202) 418-0660.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Report and Order in WT Docket No. 96-59; GN Docket No. 90-314; FCC 96-
278, adopted June 21, 1996, and released June 24, 1996. The complete
text is available for inspection and copying during normal business
hours in the FCC Reference Center (Room 239), 1919 M Street, N.W.,
Washington, DC. The complete text may also be purchased from the
Commission's copy contractor, International Transcription Service,
Inc., (202) 857-3800, 2100 M Street, N.W., Washington, DC 20037.
Synopsis of the Report and Order
I. Introduction
1. In this Report and Order, the Commission modifies the
competitive bidding and ownership rules for broadband Personal
Communications Services (``PCS''). Many of the rule modifications
concern the treatment of ``designated entities,'' i.e., small
businesses, rural telephone companies, and businesses owned by members
of minority groups and women, under the broadband PCS F block rules.
The Commission also amends the D, E, and F block rules and other
broadband PCS rules in order to encourage sincere bidding, streamline
the auction process, and lessen administrative burdens. In addition, in
response to the remand from the U.S. Court of Appeals for the Sixth
Circuit in Cincinnati Bell Telephone Co. v. FCC, 69 F.3d 752 (6th Cir.
1995), the Commission modifies the rules governing cellular licensees'
ownership of broadband PCS licenses in all frequency blocks.
II. Rules Affecting Designated Entities
A. Meeting the Adarand Standard
2. In Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097 (1995),
the Supreme Court held that all racial classifications, whether imposed
at the federal, state or local government level, must be analyzed by a
reviewing court under strict scrutiny, which requires such
classifications to be narrowly tailored to further a compelling
governmental interest. An intermediate scrutiny standard of review
(under which a provision is constitutional if it serves an important
governmental objective and is substantially related to achievement of
that objective) applies to gender-based measures. Having evaluated the
record before it, the Commission concludes that this record is
insufficient to support the race- and gender-based F block provisions
and revises the F block rules in this Report and Order to make them
race- and gender-neutral. Overall, the commenters agree that this
approach will best serve the goal of rapidly conducting the F block
auction with the least risk of judicial delay. Moreover, this type of
approach was upheld by the D.C. Circuit Court of Appeals, which held in
Omnipoint v. FCC, 78 F.3d 620 (D.C. Cir. 1996), that the Commission
acted reasonably in concluding that, in light of the additional time it
would take to develop a record to support the race- and gender-based
provisions of the C block rules, it should revise these rules by
providing the most favorable terms to all small businesses. The
Commission concludes that making the F block rules race- and gender-
neutral will serve the public interest by enabling it to auction the
remaining broadband PCS licenses as expeditiously as possible. Because
many minority- and women-owned entities are small businesses and will
therefore qualify for the same special provisions that would have
applied to them under the previous rules, the Commission also believes
that the amended rules will continue to fulfill the mandate under
Section 309(j) of the Communications Act, as amended, 47 U.S.C.
309(j)(3), to provide opportunities for minority- and women-owned
businesses to become providers of spectrum-based services.
1. Control Group Equity Structures
3. The F block auction is limited to applicants that, together with
their affiliates and persons or entities that hold interests in them,
have gross revenues of less than $125 million in each of the last two
years and total assets of less than $500 million. As part of its
decision to make the F block rules race- and gender-neutral, the
Commission concludes that the 50.1/49.9 percent equity option,
previously available to minority- and women-owned applicants only,
should be available to all small businesses and entrepreneurs.
Applicants may use this control group equity structure to establish
eligibility to participate in the F block auction. It requires the
control group to own at least 50.1 percent of the applicant's total
equity; of that 50.1 percent equity, at least 30 percent must be held
by qualifying investors. If these and certain other requirements are
met, the remaining 49.9 percent of the applicant's equity may be held
by non-controlling investors, and the gross revenues and total assets
of any such investor will not be attributed.
4. The Commission adopts this rule modification because it reduces
the likelihood of legal challenges to the F block rules and enhances
the opportunities for a wide variety of applicants to obtain licenses
and rapidly deploy broadband PCS; and because it believes that making
the same equity structures available to both C and F block applicants
is necessary so that C
[[Page 33860]]
block participants will not be required to structure themselves
differently in order to participate in the F block auction. Moreover,
this rule amendment will benefit other entities that did not
participate in the C block auction because it continues equity
structures that are familiar to the industry and the financial
community.
5. The Commission declines to make adjustments to the financial
eligibility thresholds in the F block rules. The Commission believes
that retaining the same thresholds as those used for the C block
auction will allow for participation by entities that used the C block
rules as guidelines for determining their structure in preparation for
the F block auction. Moreover, these thresholds were used by C block
bidders, many of whom will be interested in participating in the F
block auction. The Commission declines to further restrict
participation in the F block (or any of the other 10 MHz blocks) to
small businesses and rural telephone companies. It believes that
setting aside the F block for both entrepreneurs and small businesses
will be sufficient to achieve the objectives of providing opportunities
for small businesses to obtain 10 MHz licenses and ensuring broad
dissemination of 10 MHz licenses.
6. In addition, the Commission declines to treat C block licenses
as assets that could potentially preclude C block winners from F block
eligibility. It believes it would be unfair to disqualify C block
winners on the basis of their success in acquiring capital to
participate in that auction, primarily because the Commission has
indicated previously that the C and F blocks are linked. The Commission
believes that treating C block winners' licenses as an asset for
purposes of eligibility for the F block auction could frustrate
business plans and auction strategies made in reliance on its previous
statements. Applicants should be aware that other licenses (such as
Specialized Mobile Radio (``SMR''), cellular, narrowband PCS, and
broadband PCS A and B block licenses) should be included in their total
asset calculations for F block eligibility.
2. Affiliation Rules
7. The affiliation rules applicable to the F block identify all
individuals and entities whose gross revenues and assets must be
aggregated with those of the applicant to determine whether the
applicant exceeds the financial caps for the entrepreneurs' blocks or
for small business size status. There are two exceptions to these
rules. Under the first exception, Indian tribes and Alaska Regional or
Village Corporations organized pursuant to the Alaska Native Claims
Settlement Act, 43 U.S.C. 1601 et seq., are not considered affiliates
of an applicant owned and controlled by such tribes and corporations.
Under the second exception, the gross revenues and assets of affiliates
controlled by minority investors who are members of the applicant's
control group are not attributed to the applicant.
8. The Commission will eliminate the exception to the affiliation
rules pertaining to minority investors for purposes of the F block
auction. To retain this exception in its present state poses legal
risks that, as discussed above, could delay the award of F block
licenses. Furthermore, the Commission declines to adopt the
modification of this rule that it utilized for the C block, which
allowed all small business applicants to exclude any affiliates who
would otherwise qualify as entrepreneurs by having gross revenues of
$125 million or less and total assets of $500 million or less and whose
total assets and gross revenues, when considered on a cumulative basis
and aggregated with each other, do not exceed these amounts. The
Commission adopted the modified exception for the C block at a time
when a number of minority-owned applicants had relied on the rule and
had structured their business arrangements accordingly. However, the
Commission is not convinced that the C block exception is needed under
current circumstances, and it acknowledges the argument made by certain
commenters that the exception may qualify too many larger entities as
small businesses. For applicants that participated in the C block
auction and relied on the affiliation exception in structuring
themselves, the Commission will consider requests to waive the rules to
allow them to be eligible to participate in the F block auction.
Finally, the Commission will retain the exception to the affiliation
rules for Indian tribes and Alaska Regional or Village Corporations.
The Commission notes that certain comments support its tentative
conclusion in the Notice of Proposed Rule Making that the Indian
Commerce Clause of the U.S. Constitution provides a basis for this
exception which is not implicated by Adarand.
3. Installment Payments
9. The Commission amends its F block rules concerning installment
payments to provide for three rather than five installment payment
plans and to make all small businesses, rather than only those owned by
minorities and women, eligible for the most favorable installment plan.
The Commission concludes that extending the most favorable payment plan
to all small businesses will give minority- and women-owned businesses
an opportunity to participate in the provision of spectrum-based
services. The Commission also concludes, however, that it should
shorten the period during which F block auction winners eligible for
this plan may make interest-only payments. Thus, the most favorable
plan will have a two-year interest-only payment period, rather than a
six-year interest-only period. The plan will provide for installments
at a rate equal to ten-year U.S. Treasury obligations applicable on the
date the license is granted, with payments of principal and interest
amortized over the remaining eight years of the license term. Principal
will be repaid as part of equal quarterly payments of interest and
principal (as with a standard mortgage amortization schedule).
10. The Commission believes that these terms will provide small
businesses with the appropriate level of U.S. government assisted
financing to overcome the difficulties they face in accessing capital
to compete in the PCS marketplace. It further believes that reducing
the interest-only period to two years will deter speculation; encourage
bidding, business, and financial strategies based upon market forces
rather than the financial terms of installment payment plans; and still
provide small businesses with the ability to obtain the necessary funds
for construction and initial operation of their systems. Finally,
shortening the interest-only period to two years will not foreclose
opportunities for small businesses to compete in PCS. The terms that
the Commission is offering are extremely attractive compared to other
terms small businesses may be able to obtain.
11. Entrepreneurs that are not small businesses will be eligible
for installment payments as provided in Sections 24.716(b)(1) and
24.716(b)(2) of the rules. These rules provide for installments at a
rate equal to ten-year U.S. Treasury obligations applicable on the date
the license is granted plus 3.5 percent, with payments of principal and
interest amortized over the license term for eligible licensees with
gross revenues exceeding $75 million in each of the two preceding
years. Eligible licensees with gross revenues not exceeding $75 million
in each of the two preceding years may make installment payments at a
rate equal to ten-year U.S. Treasury obligations applicable on the date
the license is granted plus 2.5 percent, with interest-
[[Page 33861]]
only payments for the first year and payments of interest and principal
amortized over the remaining nine years of the license term.
12. The Commission also concludes that it should amend the terms of
the installment payment plans to provide for late payment fees.
Therefore, when licensees are more than fifteen days late in their
scheduled installment payments, the Commission will charge a late
payment fee equal to 5 percent of the amount of the past due payment.
Without this late payment fee, licensees may not have adequate
financial incentives to make installment payments on time. The 5
percent payment adopted here is an approximation of late payment fees
applied in typical commercial lending transactions. Payments will be
applied in the following order: late charges, interest charges,
principal payments.
4. Bidding Credits
13. Consistent with its concerns about avoiding litigation based on
Adarand, the Commission will eliminate the race- and gender-based
aspects of the F block bidding credits. In place of these provisions,
the Commission adopts a two-tiered bidding credit for small businesses.
It believes that this approach will promote dissemination of licenses
to a broader variety of applicants than a 25 percent bidding credit for
all small businesses and will encourage smaller businesses, possibly
businesses that are very well suited to provide 10 MHz niche services,
to participate in the F block auction.
14. The Commission modifies its rules to provide that entities with
average gross revenues greater than $15 million but not more than $40
million for the past three years are eligible for a 15 percent bidding
credit; entities with average gross revenues of not more than $15
million for the past three years are eligible for a 25 percent bidding
credit. The Commission believes that the timing of the modification
here allows it to take a different approach than it took for the C
block. Entities interested in bidding on F block licenses have not had
expectations similar to those of entities that were interested in
bidding on the C block licenses and that formulated business strategies
in reliance on the tiered bidding credits originally adopted.
5. Information Collection
15. The Commission will request information regarding minority- and
women-owned status in the F block short-form applications. The
Commission believes that continuing to collect such information will
assist it in analyzing applicant pools and auction results to determine
whether it has promoted substantial participation in auctions by
minorities and women, as directed by Congress, through the special
provisions it makes available to small businesses.
B. Definitions
1. Small Business
16. Under the current F block rules, a ``small business'' is
defined as an entity that, together with its affiliates and persons or
entities that hold interests in such entity and their affiliates, has
average gross revenues of not more than $40 million for the preceding
three years. The Commission will continue to define small businesses in
this way. Maintaining the $40 million definition of small businesses
avoids disruption to the business plans of potential bidders,
particularly participants in the C block auction. Additionally,
however, the Commission defines a second tier of small businesses,
which it will refer to as ``very small businesses,'' as entities that,
together with their affiliates and persons or entities that hold
interests in such entities and their affiliates, have average gross
revenues of not more than $15 million for the preceding three years.
Creation of this subcategory of small businesses enables the Commission
to tailor its benefits to better meet the needs of bidders likely to
participate in the F block auction. Smaller license size may mean that
smaller businesses are likely to participate in the F block auction.
Thus, as discussed above, the Commission's goals can best be served by
offering varying bidding credits depending on the applicant's size.
17. The Commission declines to make special provisions for small
business winners of C block licenses as requested by some commenters.
As a practical matter, C block small business winners will likely not
have accrued substantial gross revenues by the time the Commission
auctions the D, E, and F blocks. Therefore, most of these winners
should continue to qualify as small businesses. On the other hand, if
they have grown in size beyond the established financial cap, or if
they can no longer avail themselves of the exception to the affiliation
rules, they may no longer qualify as a small business.
2. Rural Telephone Company
18. The Telecommunications Act of 1996 (``1996 Act'') defines
'rural telephone company' to include a larger number of local exchange
carriers than the Commission's F block rules, which define a rural
telephone company as ``a local exchange carrier having 100,000 or fewer
access lines, including all affiliates.'' The Commission adopts the
definition of rural telephone company contained in the 1996 Act. It
finds compelling the argument that this definition will increase the
number of entities eligible for partitioning and expedite the delivery
of advanced services to rural areas. Although this decision may result
in larger rural telephone companies being eligible to partition
licenses, the Commission recognizes that the number of accesslines--
including those provided by rural telephone companies--continues to
grow rapidly as the uses of telecommunications services expand. Thus,
most rural telephone companies will benefit from a definition that
accounts for their growth. Adopting the 1996 Act definition for
purposes of Section 309(j) will also promote uniformity of regulations
and is therefore consistent with the mandate of this legislation of
easing regulatory burdens and eliminating unnecessary regulation.
19. The Commission agrees with commenters who assert that the
definition is one of general applicability and it therefore elects not
to adopt the definition of rural telephone company contained in Section
251(f)(2) of the 1996 Act, as proposed by one commenter. This
definition applies to rural telephone companies only in the context of
suspensions or modifications of the application of certain statutory
requirements to rural carriers. Absent a specific definition of rural
telephone company for purposes of Section 309(j), and reading the
statute as a whole, the Commission is constrained to adopt the more
generalized definition.
C. Extending Small Business Provisions to the D and E Blocks
20. The Commission declines to extend installment payment plans or
any other special provisions to small businesses bidding on the D and E
blocks, believing that the special provisions for small businesses in
the F block rules sufficiently further the objective of encouraging
wide dissemination of broadband PCS licenses. Since the F block is an
entrepreneurs' block, it guarantees that one third of the 10 MHz
broadband PCS licenses will be assigned to entrepreneurs and small
businesses. The Commission believes that it would undermine the
justification for the F block as an entrepreneurs' block if it were to
open the D and E blocks to special provisions for small businesses, and
that departing from the original
[[Page 33862]]
plan to establish two contiguous blocks of broadband PCS spectrum for
the exclusive use of entrepreneurs and small businesses is not
warranted.
D. Adjusting Payment Provisions for 10 MHz Licenses
21. The Commission modifies the upfront payment requirement for the
F block to raise it to the same level as the D and E block requirement
and eliminate the discount previously provided to entrepreneurs. The
Commission originally discounted upfront payments for entrepreneurs
because their down payment requirement was low (5 percent) and it was
concerned that if it required them to pay upfront payments larger than
the required down payment it might discourage their participation. The
Commission's experience to date, however, indicates that it has
underestimated the value of spectrum and that upfront payments have not
created a barrier to entrepreneur participation in auctions. The
Commission is also concerned, based on defaults in the C block auction,
that there is a need to obtain a higher payment up front to guard
against default. The Commission also agrees that requiring a uniform
upfront payment (per bidding unit) of all bidders for D, E, and F block
licenses will greatly simplify the auction process for bidders
interested in bidding on two or more of the blocks. The Commission also
believes that if it conducts a single simultaneous multiple round
auction of the D, E, and F block licenses, it is necessary for
operational reasons to have the same upfront payment and activity
requirements across all three blocks.
22. Further, because the Commission wants the payment terms to more
accurately reflect the value of the licenses, it will raise the upfront
payment requirement for all three blocks. It believes that this action
is consistent with the policy reason for requiring upfront payments--to
deter insincere and speculative bidding and to ensure that bidders have
the financial capability to build out their systems. The formula for
calculating upfront payments was intended to approximate 5 percent of
the estimated license value. Based on the license values established in
the completed PCS auctions, however, the formula of $0.02 per MHz-pop
underestimates actual value. The Commission adopts an upfront payment
of $.06 per MHz-pop for the D, E, and F blocks. Based on its analysis
of the prices paid in the C block auction, the Commission believes that
such an upfront payment is sufficient to ensure sincere bidding and
guard against defaults. The Commission also delegates authority to the
Wireless Telecommunications Bureau to modify the upfront payment
requirement for any C block licenses that are reauctioned in the
future. The Commission notes that it also favors the suggested approach
that would require applicants to supplement their upfront payments
during the auction to ensure that their payment is a certain percentage
of their bids. Operationally the Commission cannot implement this
proposal at this time, but it will look for ways to implement it in
future auctions.
23. For similar reasons, the Commission also modifies the rule
governing down payments for the F block. It finds that a 20 percent
down payment, the same down payment that is required of D and E block
auction winners, should be required of F block winners. Under this
approach, F block entrepreneurs and small businesses will be required
to supplement their upfront payments to bring their total payment to 10
percent of their winning bid within 5 business days of the close of the
auction. Prior to licensing, they will be required to pay an additional
10 percent. The government will then finance the remaining 80 percent
of the purchase price. The Commission believes an increased down
payment will provide it with strong assurance against default and
sufficient funds to cover default payments in the unlikely event of
default. Increasing the amount of the bidder's funds at risk in the
event of default discourages insincere bidding and therefore increases
the likelihood that licenses are awarded to parties who are best able
to serve the public.
E. Rules Regarding the Holding of Licenses
24. The Commission amends the holding requirement for F block
licensees and extends this change to the C block rules. The Commission
amends 47 CFR Sec. 24.839 to permit the transfer of entrepreneurs'
block licenses in the first five years to any entity that either holds
other entrepreneurs' block licenses (and thus at the time of auction
satisfied the entrepreneurs' block criteria) or that satisfies the
criteria at the time of transfer. There will be no restrictions on
transfers after the fifth year. The Commission notes, however, that the
unjust enrichment provisions will continue to apply as before. The
Commission further amends the holding rule to exempt pro forma
transfers and assignments because trafficking concerns do not exist
under such circumstances. The Commission concludes that allowing
transfers and assignments in the first five years--but only to
entrepreneurs--provides a sufficient safeguard. It also has the
experience of the C block auction behind it, and understands that
strict holding requirements may actually be hampering the ability of
entrepreneurs to attract the capital necessary to construct and operate
their systems. In particular, lenders and investors have expressed
concern about the need for more flexibility in the event of financial
distress and default. Because the Commission does not want investors to
shy away from financing C and F block winners due to such concerns, it
modifies the holding rule in a manner that continues to promote small
and entrepreneurial ownership in broadband PCS licenses. The Commission
believes that by not eliminating the transfer restriction entirely, it
continues to have a useful safeguard to ensure that small businesses
and entrepreneurs retain the opportunity to build out and operate
broadband PCS licenses. At the same time, by allowing entrepreneurs to
transfer their licenses to other entrepreneurs, the Commission believes
that it allows market transactions to occur that balance the objectives
of ensuring that entrepreneurs have an opportunity to participate in
PCS and putting spectrum in the hands of those who value it most in the
event the auction fails to accomplish this objective. In addition, the
Commission believes that its amendment to the holding requirement
serves the public interest by helping to ensure rapid and uninterrupted
service to the public. Market-oriented solutions in the event of
financial distress will help avoid PCS license defaults to the
Commission and the accompanying investor and/or service disruption that
such defaults engender.
III. The Cincinnati Bell Remand
A. The Cellular/PCS Cross-ownership Rule
25. In light of the Sixth Circuit's ruling in Cincinnati Bell
Telephone Co. v. FCC, remanding the Commission's rule limiting cellular
operators' eligibility for PCS licenses, the Commission will maintain
the 45 MHz Commercial Mobile Radio Services (``CMRS'') spectrum cap set
forth in 47 CFR 20.6 and eliminate the PCS and cellular/PCS spectrum
cap contained in Sections 24.229 and 24.204, respectively. The
Commission finds that a spectrum cap is necessary to avoid excessive
concentration of licenses and promote and preserve competition in the
CMRS marketplace and therefore declines to eliminate all limitations on
[[Page 33863]]
the amount of CMRS spectrum a single entity (or affiliated entities)
may acquire.
26. The Commission adopted the 45 MHz CMRS spectrum cap to
discourage anticompetitive behavior while at the same time maintaining
incentives for innovation and efficiency. The Commission was concerned
that excessive aggregation of spectrum by any one of several CMRS
licensees could reduce competition by precluding entry by other service
providers and might thus confer excessive market power on incumbents.
The continuation of the 45 MHz spectrum cap will promote competition
and prevent anticompetitive horizontal concentration in the CMRS
business.
27. For determining when concentration reduces competition to an
undesirable level, one accepted tool is the Herfindahl-Hirschman Index
(``HHI''), which is used in the Department of Justice and Federal Trade
Commission Horizontal Merger Guidelines (``DOJ/ FTC Guidelines'') to
measure market concentration. In addition to considering the arguments
presented by commenters in this proceeding and in response to the Sixth
Circuit's concern about the lack of economic support for the cellular/
PCS spectrum cap, the Commission's competitive analysis staff performed
an HHI analysis for various possible structures of a hypothetical
market for mobile two-way voice communications service in the same
geographic area. The Commission staff's HHI analysis indicates that the
45 MHz CMRS spectrum cap is needed to prevent undue market
concentration and the noncompetitive conditions in local markets that
result from such concentration.
28. The 45 MHz spectrum cap is also needed specifically to prevent
cellular licensees from gaining too great a competitive advantage over
new entrants to the wireless telephony market. Cellular companies
already hold licenses for 25 MHz of clear spectrum, and they already
have technical expertise, customer bases, marketing operations, and
antenna and transmitter sites. In short, cellular operators have a
competitive position that is superior to that of any new market
entrant. By limiting current cellular licensees to an additional 20 MHz
of spectrum (i.e., two of the three 10 MHz broadband PCS licenses), the
45 MHz cap will help to level the playing field for all new entrants,
while ensuring that incumbent providers are not placed at any
disadvantage.
29. The 45 MHz spectrum cap also furthers the goal of diversity of
ownership that the Commission is mandated to promote under Section
309(j). Section 309(j) directs the Commission, in specifying
eligibility for licenses and permits, to avoid excessive concentration
of licenses and disseminate licenses among a wide variety of
applicants. The statute further states that in prescribing regulations,
the Commission must, inter alia, prescribe area designations and
bandwidth assignments that promote economic opportunity for a wide
variety of applicants. A spectrum cap is one of the most effective
mechanisms the Commission could employ to achieve these goals.
30. The court in the Cincinnati Bell decision was concerned that
the cellular/PCS spectrum cap would ``have a profound impact on
businesses in an industry enmeshed in this country's telecommunications
culture.'' It stated that ``[t]he continued existence of some wireless
communications businesses rests on their ability to bid on Personal
Communications Service licenses'' and that ``Cellular providers
foreclosed from obtaining Personal Communications Service licenses may
ultimately be left holding the remnants of an obsolete technology.''
Cincinnati Bell, 69 F.3d at 764. The Commission's amendment of its
rules provides cellular licensees additional flexibility to expand into
or migrate to PCS technology. Under the old rule, they were limited to
one 10 MHz channel until the year 2000. The shift to a single 45 MHz
spectrum cap will allow incumbent cellular operators to acquire up to
two of the 10 MHz broadband PCS licenses (20 MHz) in the upcoming
auction for the D, E, and F blocks. As many commenters point out, an
additional 20 MHz of spectrum will be sufficient to develop and provide
new digital services. The Commission also notes that cellular carriers
have been rapidly implementing digital and other new technologies with
their current 25 MHz of spectrum.
31. While the Commission's analysis of the CMRS market under the
DOJ/FTC Guidelines indicates that the 45 MHz spectrum cap is needed to
ensure competition, it also shows that this cap adequately addresses
the Commission's concerns about anticompetitive behavior. Indeed, the
Commission's HHI analysis indicates that the concentration levels under
the single 45 MHz spectrum cap would not be higher than the level that
would be possible under all three of the existing caps. Thus, the
Commission concludes that the PCS and cellular/PCS spectrum caps are
unnecessary.
32. The Commission also believes that elimination of the cellular/
PCS cross-ownership rule and the PCS spectrum cap in favor of the
single 45 MHz CMRS spectrum cap has important advantages. Applying the
single 45 MHz CMRS cap will give both cellular and PCS providers more
flexibility to participate in a more competitive marketplace. The
elimination of the cellular/PCS and PCS limits will give PCS providers
greater flexibility to own interests in other providers and provide
additional services and, hence, enhanced opportunities to compete. In
addition, PCS providers will no longer be restricted to less than a 5
percent ownership interest in cellular and other PCS licensees in order
to avoid attribution. Instead, they will be subject to the more liberal
20 percent attribution level for all CMRS.
33. The Commission also notes that the 1996 Act requires it to
determine in every even-numbered year (beginning with 1998) ``whether
any regulation is no longer necessary in the public interest as the
result of meaningful economic competition between providers of such
service'' and to modify or repeal such regulation. 47 CFR 161(a)(2). In
an effort to streamline regulations consistent with the spirit of the
1996 Act, and in light of the findings set forth above, the Commission
believes that simplifying the rules to include a single 45 MHz CMRS cap
in place of the three separate spectrum caps is warranted. In addition,
at the next biennial review of the Commission's regulations under the
1996 Act and in annual reports on the state of competition in the CMRS
market, the Commission will continue to evaluate the need for the 45
MHz spectrum cap in its present form.
34. The Commission declines to alter the 10 percent overlap
restriction for the CMRS cap as some commenters suggest. It continues
to believe that an overlap of less than 10 percent of the population is
sufficiently small that the potential for exercise of undue market
power by the cellular operator is slight. Given its decision to
eliminate the cellular/PCS and PCS ownership limitations, the
Commission is concerned that greater overlap might lead to
anticompetitive practices. It will, however, expand the post-auction
divestiture provisions of 47 CFR Sec. 20.6 to conform with the
divestiture provisions that previously applied in the cellular/PCS
cross-ownership rule, including the relaxed rule applicable to
situations where the overlap exceeds 10 percent, but is less than 20
percent. Thus, any party holding an attributable ownership interest in
a CMRS licensee may be a party to a broadband PCS application if it
certifies that, if necessary, it will come
[[Page 33864]]
into compliance with the CMRS spectrum cap through post-auction
divestiture procedures.
B. The 20 Percent Attribution Standard
35. The Commission's decision to eliminate the 35 MHz cellular/PCS
spectrum cap renders the issue of whether to modify the attribution
standard of 47 CFR 24.204(d) moot. The Commission reaffirms, however,
the 20 percent attribution standard for the purpose of determining
whether an entity is subject to the 45 MHz CMRS spectrum aggregation
limit. The Commission also concludes that the attribution standard for
the 45 MHz spectrum cap should be made race- and gender-neutral such
that a 40 percent attribution standard applies to all small businesses
and rural telephone companies. The Commission believes that extending
the 40 percent threshold to noncontrolling investors in small
businesses as it did for the C block licenses will promote additional
investment in small business applicants and ensure broad participation
in PCS by designated entities.
36. The Commission believes that a 20 percent interest held by a
single entity would create a possibility of de facto control. Such an
interest (whether 20 percent or less) that conveys to its holder actual
working control (including investor control) is already attributable
under the rules. The Commission believes generally, however, that even
an entity that does not have de facto or de jure control but owns a 20
percent or more interest in a licensee would have sufficient influence
to reduce competition and should be subject to the CMRS spectrum
aggregation limit. The Commission notes that attribution rules for
other services typically apply much lower ownership benchmarks of 5 to
10 percent. Both cable and broadcast use a 5 to 10 percent attribution
level. The Commission further notes, as do some commenters, that the
1996 Act defines ``affiliate'' as a ``person that * * * owns or
controls, is owned or controlled by, or is under common ownership or
control with, another person * * *. [The] term `own' means to own an
equity interest (or the equivalent thereof) of more than 10 percent.''
47 U.S.C. 153 (1).
37. The Commission continues to believe that a higher benchmark of
20 percent should apply for purposes of the CMRS spectrum cap to
encourage capital investment and business opportunities in CMRS. Given
the changing technology and the variety of competing services that will
be subject to this limitation, it believes that increased flexibility
in the rules will enable CMRS providers to adapt their services to meet
customer demand. Furthermore, the Commission originally adopted a 20
percent attribution level in the cellular/PCS cross-ownership rules to
allow partial owners of cellular licensees to participate in PCS, in
light of several partial and often passive ownership interests that may
have resulted from early settlements during the initial phase of
cellular licensing. The Commission believes that maintaining a 20
percent attribution level for the CMRS cap will allow a wide variety of
players (i.e., PCS, cellular and SMR providers) to enter the
marketplace while still preventing anticompetitive practices that would
have harmful effects on consumers.
38. The Commission disagrees with suggestions that only controlling
interests should be attributable. Establishing a control test would
require the Commission to conduct frequent case-by-case determinations
of control, which are time-consuming, fact specific, and subjective.
The bright line 20 percent attribution rule avoids these problems.
Also, for the reasons discussed below, a single majority shareholder
exception to the rule is not appropriate for all situations involving
CMRS licensees and their owners, and so adoption of such an exception
is not a suitable bright line substitute for 20 percent attribution.
However, the Commission adopts a less restrictive alternative and
allows licensees with non-controlling minority investors with
potentially conflicting CMRS ownership interests to seek waivers of the
spectrum cap rule where the licensee is controlled by a single majority
shareholder or controlling general partner.
39. The Commission rejects a control-based attribution test because
significant, but non-controlling, investments have sufficient potential
to affect the level of competition in the CMRS market. The CMRS
spectrum cap ownership attribution rule, just as all other ownership
attribution rules and similar statutory provisions, must take such
interests into account. Economic theory predicts that where a CMRS
licensee owns a substantial portion of one of its competitors, neither
company has as strong an incentive to compete vigorously against its
partner as it does with respect to an unrelated competitor. Theoretical
analysis has demonstrated that partial ownership interests can create
the very non-competitive markets that the Commission wants to avoid.
Indeed, as noted above, Congress was also apparently concerned about
competitive incentives when it defined ownership in the 1996 Act to
mean an interest of ten percent. The Communications Act also limits
foreign ownership interests in CMRS licenses to 20 percent. Although
these statutory ownership attribution criteria do not directly apply to
the CMRS ownership attribution rules, they indicate that Congress
believed that even non-controlling, minority ownership interests can
convey significant influence to their holders.
40. The Commission recognizes that small businesses and rural
telephone companies, as well as non-controlling investors in small
businesses, may have non-attributable ownership of up to 40 percent
under the rules. But these relaxed attribution rules present a
situation entirely different from the 20 percent attribution rule. The
Commission has been charged expressly by Congress to ensure that small
businesses, including businesses owned by women and minorities, and
rural telephone companies are given meaningful opportunities to
participate in the provision of wireless services. The rules must also
promote the development and rapid deployment of new technologies,
products, and services for the benefit of the public, including those
residing in rural areas. One of the most formidable barriers to such
participation is the difficulty such businesses face in raising
sufficient capital to compete in the highly capital-intensive wireless
communications businesses. By increasing the attribution threshold for
such designated entities and their investors, the Commission's goal was
to make capital more readily available by reducing the number of
investors such businesses must seek out. The Commission also concluded
that smaller entities that have some interests in cellular operations
may be especially effective PCS competitors because of their cellular
experience. This will help ensure that service is brought quickly to
underserved areas and that designated entities become viable
competitors. In particular, rural telephone companies and some small
cellular companies, due to their existing infrastructure, are uniquely
positioned rapidly to introduce PCS services into their service areas
or adjacent areas.
41. However, the Commission did not exempt small businesses and
rural telephone companies entirely from the cellular eligibility rules
because such an exemption could foreclose competition from a new PCS
entrant. In maintaining the 45 MHz spectrum cap, the Commission remains
concerned that there is potential for some of these parties to compete
less vigorously in the nascent PCS industry. While it recognizes that
its relaxation of the rules
[[Page 33865]]
for the CMRS spectrum cap presents a risk of lower than optimal
competition, the Commission must balance competing public policies and
believes that this is the proper balance to fulfill the various
statutory mandates under Section 309(j) of the Communications Act.
42. Further, the Commission declines to adopt a single majority
shareholder exception for the CMRS spectrum cap rule. As discussed
above, economic theory indicates that an entity holding less than a
majority interest may influence the CMRS market in an anticompetitive
manner. In those circumstances, it makes no difference whether there is
another shareholder that exercises control since significant minority
ownership that does not convey control still poses a serious danger of
hindering competition in a concentrated market such as CMRS. In
addition, the Commission notes that, although the single majority
shareholder exception currently applies in the broadcast context, it
believes that the broadcast and CMRS markets are sufficiently different
to warrant different treatment (and even in the broadcast arena the
Commission has recently sought comment on whether to restrict the
single majority shareholder rule). Mass media entities subject to the
broadcast ownership rules with the single majority shareholder
exception--including AM and FM radio licensees, UHF and VHF television
licensees, cable television operators and newspaper publishers--offer
the audience with numerous competing ``voices'' from which to choose.
There are as many as 30 or more broadcast stations in some areas. In
contrast, as the Commission envisions CMRS (particularly in the short
term), consumers will be able to choose from only about 5 or 6
competing service providers at most--as noted above, a fairly
concentrated market. The concerns the Commission has expressed above
about the potential of common ownership to influence the entire market
may be far less serious in a less concentrated market such as that for
mass media services. That is because the participants in a non-
oligopoly market are less likely to act jointly in order to preserve
high prices. In addition, the type of ``product'' on which competition
in broadcasting is based is different from the product offered by CMRS
providers. Broadcasters compete for advertising dollars (by attracting
audience share) on the basis of non-quantifiable programming choices,
while CMRS providers are expected to offer commodity-type services that
compete in terms of prices charged directly to consumers. The
Commission believes that it is more important to preserve vigorous
competition in a commodity-based market than in a market like
broadcasting. CMRS prices will be lowered only where competitors must
vie to survive, whereas it is not so clear that programming will
improve or become more diverse as the result of competition in free
over-the-air television and radio. Indeed, some economists suggest that
less competitive markets may actually offer more diverse programming.
Thus, even if the single majority shareholder rule is appropriate for
the mass media industry, that sector is sufficiently different from the
CMRS market to justify somewhat different regulation.
43. Hence, the Commission believes that, as a general matter,
minority stock interests and limited partnership interests should be
deemed attributable CMRS ownership interests even if a single holder
(or group of affiliated holders) that owns more than 50 percent of the
outstanding stock or partnership equity or has voting control of the
CMRS licensee. Nevertheless, the Commission believes that there may be
limited circumstances where the existence of a single majority
shareholder (or a single, controlling general partner) may mitigate the
competitive impact of common ownership and the ability of the non-
controlling interest holder to influence the licensee. Accordingly, the
Commission will implement two less restrictive measures as an
alternative to attributing ownership in such cases.
44. First, as was previously done with the cellular/PCS cross-
ownership rule, the Commission will allow parties with non-controlling,
attributable interests in CMRS licensees to have an attributable (or
controlling) interest in another CMRS application that would exceed the
45 MHz cap so long as certain post-licensing divestiture procedures are
followed. A ``non-controlling attributable interest'' is one where the
holder has less than a 50 percent voting interest and there is an
unaffiliated single holder of a 50 percent or greater voting interest.
This will allow interest holders in licensees with a single majority
shareholder to obtain another CMRS license (or attributable interest
therein) through an auction or other means, subject to the interest
holder coming into compliance with the divestiture provisions within 90
days of grant of the conflicting license.
45. Second, the Commission will consider requests for waivers of
the CMRS spectrum cap that make an affirmative showing that an
otherwise attributable ownership interest should not be attributed to
its holder because: the interest holder has less than a 50 percent
voting interest and there is an unaffiliated single holder of a 50
percent or greater voting interest; the interest holder is not likely
to affect the local market in an anticompetitive manner because the
market is highly competitive; the interest holder is not involved in
operations of the licensee and does not have the ability to influence
the licensee on a regular basis; and grant of a waiver is in the public
interest because the benefits of such common ownership to the public
outweigh any potential for anticompetitive harm to the market.
46. Finally, the Commission believes that retroactive application
of any cross-ownership or spectrum cap rule changes would be contrary
to the public interest. PCS licensees that participated in the A, B,
and C block auctions have already incurred enormous expenses to, inter
alia, design their systems, relocate incumbent users of the spectrum,
acquire cell sites, and establish marketing plans. Retroactive
application of the rules would disrupt this burgeoning industry and
delay service to the public. Furthermore, entities that may have been
precluded from participating in past auctions for CMRS spectrum based
on the prior rules may now acquire additional spectrum through future
auctions, assignments of licenses, transfers of control or investments.
Thus, the Commission concludes that any changes to the spectrum cap and
cross-ownership rules will apply prospectively.
IV. Ownership Disclosure Provisions
47. The Commission amends Section 24.813(a)(1) and Section
24.813(a)(2) of the rules, 47 CFR Secs. 24.813 (a)(1) and (a)(2), to
limit the information disclosure requirement with respect to outside
ownership interests of applicants' attributable stockholders, and will
require only the disclosure of attributable stockholders' direct,
attributable ownership in other businesses holding or applying for CMRS
or PMRS licenses. The Commission believes that the more extensive
ownership disclosure requirements are burdensome and difficult to
administer, and that the more limited requirements will continue to
ensure participation of only eligible bidders. The Commission also
amends 47 CFR 24.813(a)(4) to delete the requirement that partnerships
file a signed and dated copy of their partnership agreement with their
short-form and long-form applications. The Commission has found this
requirement
[[Page 33866]]
to be overly burdensome and is concerned that confidential or strategic
bidding information could be unnecessarily disclosed through
submissions of such agreements.
48. The Commission also amends Sections 24.720(f) and 24.720(g) of
the rules, to allow each applicant that does not otherwise use audited
financial statements to provide a certification from its chief
financial officer that the gross revenue and total asset figures
indicated in its short-form and long-form applications are true, full,
and accurate and, that it does not have the audited financial
statements that are otherwise required under the rules. The Commission
believes the requirement of using audited financial statements to be
unnecessarily burdensome, especially for small businesses that do not
normally rely on such statements.
49. Finally, the Commission amends its rules to require that an
applicant's determination of average gross revenues be based on the
three most recently completed fiscal or calendar years. With regard to
concerns about inadvertent release of confidential data, the Commission
will require that confidential data be filed separately on paper.
Similarly, any requests that information be treated as confidential
will not be accepted electronically and must otherwise comply with the
rules governing confidential treatment of documents.
V. Auction Schedule
50. The Commission concludes that it should auction the D, E, and F
blocks at the same time. It also intends to auction the D, E, and F
blocks in a single auction. The Commission believes that auctioning the
three blocks in one simultaneous multiple round auction will benefit
bidders by reducing administrative inefficiencies and by providing
maximum flexibility for bidders to choose between similar licenses. The
Commission believes that if it uses uniform upfront payments, which it
adopts for the three blocks in this Report and Order, it will reduce
the complexity of a single auction. The Commission also believes that
this method will expedite service to the public. Although the
Commission believes that a single auction is the best option, it
delegates authority to the Wireless Telecommunications Bureau to
conduct one auction for the D and E blocks and one for the F block
concurrently if such an approach is operationally necessary or
otherwise furthers the public interest.
VI. Other Issues
A. Limit on Licenses Acquired at Auction
51. Several commenters suggested modifying the limitation on the
number of licenses that a single entity may acquire at auction to
ensure wide distribution of entrepreneurs' block licenses. Commission
rules provide that a single entity may win no more than 10 percent of
the licenses available in the entrepreneurs' blocks; these licenses may
be all C block licenses or F block licenses or some combination of the
two. Several commenters proposed that the Commission change this
limitation to one based on population rather than on the number of
licenses. The Commission declines to modify the rule as requested.
First, C block licenses were disseminated to a large number of auction
winners. Second, bidding strategies in the C block auction and the
business plans of many firms may have been formulated in reliance on
this rule. The Commission finds no basis for modifying it here.
B. Partitioning and Disaggregation
52. Numerous commenters argue that the Commission's geographic
partitioning provisions, which currently apply only to rural telephone
companies, should be expanded to include broadband PCS licensees and
spectrum disaggregation should be permitted in the near term. Under the
current rules, broadband PCS licensees may disaggregate licensed
broadband PCS spectrum after January 1, 2000, if they have met the
five-year construction requirement. Because the issues of partitioning
and disaggregation exceed the scope of this proceeding, the Commission
will consider these issues in a separate proceeding.
C. Bid Withdrawal
53. One commenter suggested that the bid submission software should
be enhanced to warn bidders whenever a bid is entered that exceeds the
minimum bid by more than 10 bid increments. For the D, E, and F block
auction, the Wireless Telecommunications Bureau will employ a procedure
in addition to those in place that will warn bidders of the possibility
of a mistaken bid.
54. The same commenter also states that since the Commission cannot
distinguish honest mistakes from strategic mistakes, it should impose a
penalty for mistaken bids. The rules provide for a bid withdrawal
payment that is equal to the difference between the withdrawn bid
amount and the subsequent winning bid, if the subsequent winning bid is
lower. No withdrawal payment is assessed if the subsequent winning bid
exceeds the withdrawn bid.
55. For the D, E, and F block auction, the Commission adopts the
approach of Atlanta Trunking, where it held that in cases of erroneous
bids, some relief from the bid withdrawal payment requirement appears
necessary. (Atlanta Trunking Associates, Inc. and MAP Wireless L.L.C.
Requests to Waive Bid Withdrawal Payment Provisions, Order, FCC 96-203,
61 FR 25807 (May 23, 1996)). In Atlanta Trunking, the Commission
fashioned the following guidelines to be followed when addressing
individual requests for waiver of withdrawal payments: If a mistaken
bid is withdrawn in the round immediately following the round in which
it was submitted, and the auction is in Stage I or Stage II, the
withdrawal payment should be the greater of (a) two times the minimum
bid increment during the round in which the mistaken bid was submitted
or (b) the standard withdrawal payment calculated as if the bidder had
made a bid at one bid increment above the minimum accepted bid. If the
mistaken bid is withdrawn two or more rounds following the round in
which it was submitted, the bidder should not be eligible for any
reduction in the bid withdrawal payment. Similarly, during Stage III of
an auction, if a mistaken bid is not withdrawn during the round in
which it was submitted, the bidder should not be eligible for any
reduction in the bid withdrawal payment. The Commission believes that
under this approach, the required bid withdrawal payment would be
substantial enough to discourage strategic placement of erroneous bids
without being so severe as to impose an untenable burden on bidders.
VII. Conclusion
In this Order, the Commission concludes that making the F block
rules race- and gender-neutral will avoid the uncertainty and delay
that could result from legal challenges to the special provisions for
minority- and women-owned businesses in the broadband PCS F block
rules. The Commission also takes steps to streamline procedures and
minimize the possibility of insincere bidding and bidder default. The
Commission also responds to the Cincinnati Bell remand issues. Finally,
to expedite the delivery of broadband PCS services to the public, the
Commission plans to offer the D, E, and F block licenses together in
one simultaneous multiple round auction and delegates authority to the
Wireless
[[Page 33867]]
Telecommunications Bureau to conduct two concurrent auctions if
circumstances warrant.
VIII. Procedural Matters and Ordering Clauses
57. The Final Regulatory Flexibility Analysis, as required by
Section 604 of the Regulatory Flexibility Act, is set forth in Appendix
C of the Report and Order. Public Law No. 96-354, 94 Stat. 1164, 5
U.S.C. 601 et seq. (1981).
58. It is ordered, That the rule changes specified below are
adopted and are effective July 31, 1996.
59. This action is taken pursuant to Sections 4(i), 303(r), and
309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i),
303(r) and 309(j).
List of Subjects in 47 CFR Parts 20 and 24
Commercial Mobile Radio Service, Personal Communications Services.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Parts 20 and 24 of Chapter I of Title 47 of the Code of Federal
Regulations are amended as follows:
PART 20--COMMERCIAL MOBILE RADIO SERVICES
1. The authority citation for Part 20 continues to read as follows:
Authority: Secs. 4, 303, and 332, 48 Stat. 1066, 1082, as
amended; 47 U.S.C. 154, 303, and 332, unless otherwise noted.
2. Section 20.6 is amended by revising paragraphs (d)(2), (e), and
Note 1 to Sec. 20.6 to read as follows:
Sec. 20.6 CMRS spectrum aggregation limit.
* * * * *
(d) * * *
(2) Partnership and other ownership interests and any stock
interest amounting to 20 percent or more of the equity, or outstanding
stock, or outstanding voting stock of a broadband PCS, cellular or SMR
licensee shall be attributed, except that ownership will not be
attributed unless the partnership and other ownership interests and any
stock interest amount to at least 40 percent of the equity, or
outstanding stock, or outstanding voting stock of a broadband PCS,
cellular or SMR licensee if the ownership interest is held by a small
business or a rural telephone company, as these terms are defined in
Sec. 1.2110 of this chapter or other related provisions of the
Commission's rules, or if the ownership interest is held by an entity
with a non-controlling equity interest in a broadband PCS licensee or
applicant that is a small business.
* * * * *
(e) Divestiture. (1) Any party holding controlling or attributable
ownership interests in broadband PCS, cellular, and/or SMR licensees
regulated as CMRS providers that would exceed the spectrum aggregation
limitation defined in paragraph (a) of this section, if granted
additional licenses, may be a party to a broadband PCS, cellular, or
SMR application (i.e., have a controlling or attributable interest in
the applicant), and such applicant will be eligible for licenses
amounting to more than 45 MHz of broadband PCS, cellular, and/or SMR
spectrum regulated as CMRS in a geographical area, pursuant to the
divestiture procedures set forth in paragraphs (e)(2) through (e)(4) of
this section; provided, however, that in the case of parties holding
controlling or attributable ownership interests in broadband PCS,
cellular, and/or SMR licensees, these divestiture procedures shall be
available only to:
(i) Parties with controlling or attributable ownership interests in
broadband PCS, cellular, and/or SMR licenses where the geographic
license areas cover 20 percent or less of the applicant's service area
population;
(ii) Parties with attributable interests in broadband PCS,
cellular, and/or SMR licenses solely due to management agreements or
joint marketing agreements; and
(iii) Parties with non-controlling attributable interests in
broadband PCS, cellular, and/or SMR licenses, regardless of the degree
to which the geographic license areas cover the applicant's service
area population. For purposes of this paragraph, a ``non-controlling
attributable interest'' is one in which the holder has less than a
fifty (50) percent voting interest and there is an unaffiliated single
holder of a fifty (50) percent or greater voting interest.
(2) The applicant for a license that, if granted, would exceed the
45 MHz limitation shall certify on its application that it and all
parties to the application will come into compliance with this
limitation.
(3) If such an applicant is a successful bidder in an auction, it
must submit with its long-form application a signed statement
describing its efforts to date and future plans to come into compliance
with the 45 MHz spectrum limitation. A similar statement must also be
included with any application for assignment of licenses or transfer of
control that, if granted, would exceed the spectrum aggregation limit.
(4) If such an applicant is otherwise qualified, its application
will be granted subject to a condition that the licensee shall come
into compliance with the 45 MHz spectrum limitation within ninety (90)
days of final grant.
(i) Parties holding controlling interests in broadband PCS,
cellular, and/or SMR licensees that conflict with the attribution
threshold or geographic overlap limitations set forth in this section
will be considered to have come into compliance if they have submitted
to the Commission an application for assignment of license or transfer
of control of the conflicting licensee (see Secs. 24.839 of this
chapter (PCS), 22.39 of this chapter (cellular), 90.158 of this chapter
(SMR)) by which, if granted, such parties no longer would have an
attributable interest in the conflicting license. If no such assignment
or transfer application is tendered to the Commission within ninety
(90) days of final grant of the initial license, the Commission may
consider the certification and the divestiture statement to be
material, bad faith misrepresentations and shall invoke the condition
on the initial license or the assignment or transfer, cancelling or
rescinding it automatically, shall retain all monies paid to the
Commission, and, based on the facts presented, shall take any other
action it may deem appropriate. Divestiture may be to an interim
trustee if a buyer has not been secured in the required period of time,
as long as the applicant has no interest in or control of the trustee,
and the trustee may dispose of the license as it sees fit.
(ii) Where parties to broadband PCS, cellular, or SMR applications
hold less than controlling (but still attributable) interests in
broadband PCS, cellular, or SMR licensee(s), they shall submit, within
ninety (90) days of final grant, a certification that the applicant and
all parties to the application have come into compliance with the
limitations on spectrum aggregation set forth in this section.
Note 1 to Sec. 20.6: Waivers of Sec. 20.6(d) may be granted upon
an affirmative showing:
(1) That the interest holder has less than a 50 percent voting
interest in the licensee and there is an unaffiliated single holder
of a 50 percent or greater voting interest;
(2) That the interest holder is not likely to affect the local
market in an anticompetitive manner;
(3) That the interest holder is not involved in the operations
of the licensee and does not have the ability to influence the
licensee on a regular basis; and
(4) That grant of a waiver is in the public interest because the
benefits to the public of common ownership outweigh any potential
anticompetitive harm to the market.
* * * * *
[[Page 33868]]
PART 24--PERSONAL COMMUNICATIONS SERVICES
3. The authority citation for Part 24 continues to read as follows:
Authority: Secs. 4, 301, 302, 303, 309 and 332, 48 Stat. 1066,
1082, as amended; 47 U.S.C. Secs. 154, 301, 302, 303, 309 and 332,
unless otherwise noted.
Sec. 24.204 [Removed]
4. Section 24.204 is removed.
5. Section 24.229 is amended by removing paragraph (c) and
redesignating paragraph (d) as paragraph (c) and revising it to read as
follows.
Sec. 24.229 Frequencies.
* * * * *
(c) After January 1, 2000, licensees that have met the 5-year
construction requirement may assign portions of licensed PCS spectrum.
6. Section 24.704 is amended by adding paragraph (a)(3) to read as
follows:
Sec. 24.704 Withdrawal, default and disqualification penalties.
(a) * * *
(3) Erroneous Bids. If at any point during an auction an erroneous
bid is withdrawn in the same round in which it was submitted, the bid
withdrawal payment will be the greater of
(i) The minimum bid increment for that license and round; and
(ii) The standard bid withdrawal payment, as defined in paragraph
(a)(1) of this section, calculated as if the bidder had made the
minimum accepted bid. If an erroneous bid is withdrawn in the round
immediately following the round in which it was submitted, and the
auction is in Stage I or Stage II, the withdrawal payment will be the
greater of
(A) Two times the minimum bid increment during the round in which
the erroneous bid was submitted, and
(B) The standard withdrawal payment, as defined in paragraph (a)(1)
of this section, calculated as if the bidder had made a bid one bid
increment above the minimum accepted bid. If an erroneous bid is
withdrawn two or more rounds following the round in which it was
submitted, the bidder will not be eligible for any reduction in the bid
withdrawal payment as defined in paragraph (a)(1) of this section.
During Stage III of an auction, if an erroneous bid is not withdrawn
during the round in which it was submitted, the bidder will not be
eligible for any reduction in the bid withdrawal payment as defined in
paragraph (a)(1) of this section.
* * * * *
7. Section 24.706 is revised to read as follows:
Sec. 24.706 Submission of upfront payments and down payments.
(a) Where the Commission uses simultaneous multiple round auctions
or oral sequential auctions, bidders will be required to submit an
upfront payment in accordance with Sec. 1.2106 of this chapter,
paragraph (c) of this section, and Secs. 24.711(a)(1) and 24.716(a)(1).
(b) Winning bidders in an auction must submit a down payment to the
Commission in accordance with Sec. 1.2107(b) of this chapter and
Secs. 24.711(a)(2) and 24.716(a)(2).
(c) Each eligible bidder for licenses on frequency Blocks D and E
subject to auction shall pay an upfront payment of $0.06 per MHz per
pop for the maximum number of licenses (in terms of MHz-pops) on which
it intends to bid pursuant to Sec. 1.2106 of this chapter and
procedures specified by Public Notice.
8. Section 24.709 is amended by revising the section heading,
paragraphs (a)(1), (a)(2), (c)(1) introductory text, (c)(2)
introductory text, and (c)(2)(ii) to read as follows:
Sec. 24.709 Eligibility for licenses for frequency Blocks C and F.
(a) * * *
(1) No application is acceptable for filing and no license shall be
granted for frequency block C or frequency block F, unless the
applicant, together with its affiliates and persons or entities that
hold interests in the applicant and their affiliates, have gross
revenues of less than $125 million in each of the last two years and
total assets of less than $500 million at the time the applicant's
short-form application (Form 175) is filed.
(2) The gross revenues and total assets of the applicant (or
licensee), and its affiliates, and (except as provided in paragraph (b)
of this section) of persons or entities that hold interests in the
applicant (or licensee), and their affiliates, shall be attributed to
the applicant and considered on a cumulative basis and aggregated for
purposes of determining whether the applicant (or licensee) is eligible
for a license for frequency block C or frequency block F under this
section.
* * * * *
(c) * * *
(1) Short-form Application. In addition to certifications and
disclosures required by Part 1, subpart Q of this chapter and
Sec. 24.813, each applicant for a license for frequency block C or
frequency block F shall certify on its short-form application (Form
175) that it is eligible to bid on and obtain such license(s), and (if
applicable) that it is eligible for designated entity status pursuant
to this section and Sec. 24.720, and shall append the following
information as an exhibit to its Form 175:
* * * * *
(2) Long-form Application. In addition to the requirements in
subpart I of this part and other applicable rules (e.g., Secs. 20.6(e)
and 20.9(b) of this chapter), each applicant submitting a long-form
application for a license(s) for frequency block C or frequency block F
shall, in an exhibit to its long-form application:
* * * * *
(ii) List and summarize all agreements or other instruments (with
appropriate references to specific provisions in the text of such
agreements and instruments) that support the applicant's eligibility
for a license(s) for frequency block C or frequency block F and its
eligibility under Secs. 24.711, 24.712, 24.714 and 24.720, including
the establishment of de facto and de jure control; such agreements and
instruments include articles of incorporation and bylaws, shareholder
agreements, voting or other trust agreements, partnership agreements,
management agreements, joint marketing agreements, franchise
agreements, and any other relevant agreements (including letters of
intent), oral or written; and
* * * * *
Sec. 24.715 [Removed]
9. Section 24.715 is removed.
10. Section 24.716 is amended by revising paragraphs (a)(1),
(a)(2), (b), redesignating paragraph (c) as paragraph (d); revising
newly-redesignated paragraph (d)(2); and adding a new paragraph (c) to
read as follows:
Sec. 24.716 Upfront payments, down payments, and installment payments
for licenses for frequency Block F.
(a) * * *
(1) Each eligible bidder for licenses on frequency Block F subject
to auction shall pay an upfront payment of $0.06 per MHz per pop for
the maximum number of licenses (in terms of MHz-pops) on which it
intends to bid pursuant to Sec. 1.2106 of this chapter and procedures
specified by Public Notice;
(2) Each winning bidder shall make a down payment equal to 20
percent of its winning bid (less applicable bidding credits); a winning
bidder shall bring its total amount on deposit with the Commission
(including upfront payment) to 10 percent of its net winning bid within
five business days after the auction closes, and the remainder of the
down payment (10
[[Page 33869]]
percent) shall be paid within five business days after the application
required by Sec. 24.809(b) is granted; and
(b) Installment Payments. Each eligible licensee of frequency Block
F may pay the remaining 80 percent of the net auction price for the
license in installment payments pursuant to Sec. 1.2110(e) of this
chapter and under the following terms:
(1) For an eligible licensee with gross revenues exceeding $75
million (calculated in accordance with Sec. 24.709 (a)(2) and (b)) in
each of the two preceding years (calculated in accordance with
Sec. 24.720(f)), interest shall be imposed based on the rate for ten-
year U.S. Treasury obligations applicable on the date the license is
granted, plus 3.5 percent; payments shall include both principal and
interest amortized over the term of the license;
(2) For an eligible licensee with gross revenues not exceeding $75
million (calculated in accordance with Sec. 24.709 (a)(2) and (b)) in
each of the two preceding years (calculated in accordance with
Sec. 24.720(f)), interest shall be imposed based on the rate for ten-
year U.S. Treasury obligations applicable on the date the license is
granted, plus 2.5 percent; payments shall include interest only for the
first year and payments of interest and principal amortized over the
remaining nine years of the license term; or
(3) For an eligible licensee that qualifies as a small business or
as a consortium of small businesses, interest shall be imposed based on
the rate for ten-year U.S. Treasury obligations applicable on the date
the license is granted; payments shall include interest only for the
first two years and payments of interest and principal amortized over
the remaining eight years of the license term.
(c) Late Installment Payments. Any licensee that submits a
scheduled installment payment more than 15 days late will be charged a
late payment fee equal to 5 percent of the amount of the past due
payment. Payments will be applied in the following order: late charges,
interest charges, principal payments.
(d) * * *
(2) If a licensee that utilizes installment financing under this
section seeks to make any change in ownership structure that would
result in the licensee losing eligibility for installment payments, the
licensee shall first seek Commission approval and must make full
payment of the remaining unpaid principal and any unpaid interest
accrued through the date of such change as a condition of approval. A
licensee's (or other attributable entity's) increased gross revenues or
increased total assets due to nonattributable equity investments (i.e.,
from sources whose gross revenues and total assets are not considered
under Sec. 24.709(b)), debt financing, revenue from operations or other
investments, business development or expanded service shall not be
considered to result in the licensee losing eligibility for installment
payments.
* * * * *
11. Section 24.717 is amended by revising paragraphs (a) and (b),
removing paragraph (c), and redesignating paragraph (d) as paragraph
(c) to read as follows:
Sec. 24.717 Bidding credits for licenses for frequency Block F.
(a) A winning bidder that qualifies as a small business or a
consortium of small businesses may use a bidding credit of 15 percent
to lower the cost of its winning bid.
(b) A winning bidder that qualifies as a very small business or a
consortium of very small businesses may use a bidding credit of 25
percent to lower the cost of its winning bid.
* * * * *
12. Section 24.720 is amended by revising the heading of paragraph
(b) redesignating paragraphs (b)(2) and (b)(3) as paragraphs (b)(3) and
(b)(4) and revising them; adding new paragraphs (b)(2) and (b)(5); and
revising paragraphs (c)(2), (e), (f), (g), (j)(2), (l)(11)(i), (n)(1),
(n)(3) and (n)(4) to read as follows:
Sec. 24.720 Definitions.
* * * * *
(b) Small business; very small business; consortia. * * *
(2) A very small business is an entity that, together with its
affiliates and persons or entities that hold interests in such entity
and their affiliates, has average annual gross revenues that are not
more than $15 million for the preceding three years.
(3) For purposes of determining whether an entity meets the $40
million average annual gross revenues size standard set forth in
paragraph (b)(1) of this section or the $15 million average annual
gross revenues size standard set forth in paragraph (b)(2) of this
section, the gross revenues of the entity, its affiliates, persons or
entities holding interests in the entity and their affiliates shall be
considered on a cumulative basis and aggregated subject to the
exceptions set forth in Sec. 24.709(b).
(4) A small business consortium is a conglomerate organization
formed as a joint venture between or among mutually independent
business firms, each of which individually satisfies the definition of
a small business in paragraphs (b)(1) and (b)(3) of this section.
(5) A very small business consortium is a conglomerate organization
formed as a joint venture between or among mutually independent
business firms, each of which individually satisfies the definition of
a very small business in paragraphs (b)(2) and (b)(3) of this section.
(c) * * *
(2) That complies with the requirements of Sec. 24.709(b)(3) and
(b)(5) or Sec. 24.709(b)(4) and (b)(6).
* * * * *
(e) Rural Telephone Company. A rural telephone company is a local
exchange carrier operating entity to the extent that such entity:
(1) Provides common carrier service to any local exchange carrier
study area that does not include either;
(i) Any incorporated place of 10,000 inhabitants or more, or any
part thereof, based on the most recently available population
statistics of the Bureau of the Census; or
(ii) Any territory, incorporated or unincorporated, included in an
urbanized area, as defined by the Bureau of the Census as of August 10,
1993;
(2) Provides telephone exchange service, including exchange access,
to fewer than 50,000 access lines;
(3) Provides telephone exchange service to any local exchange
carrier study area with fewer than 100,000 access lines; or
(4) Has less than 15 percent of its access lines in communities of
more than 50,000 on the date of enactment of the Telecommunications Act
of 1996.
(f) Gross Revenues. Gross revenues shall mean all income received
by an entity, whether earned or passive, before any deductions are made
for costs of doing business (e.g., cost of goods sold), as evidenced by
audited financial statements for the relevant number of most recently
completed calendar years, or, if audited financial statements were not
prepared on a calendar-year basis, for the most recently completed
fiscal years preceding the filing of the applicant's short-form
application (Form 175). If an entity was not in existence for all or
part of the relevant period, gross revenues shall be evidenced by the
audited financial statements of the entity's predecessor-in-interest
or, if there is no identifiable predecessor-in-interest, unaudited
financial statements certified by the applicant as accurate. When an
applicant does not otherwise use
[[Page 33870]]
audited financial statements, its gross revenues may be certified by
its chief financial officer or its equivalent.
(g) Total Assets. Total assets shall mean the book value (except
where generally accepted accounting principles (GAAP) require market
valuation) of all property owned by an entity, whether real or
personal, tangible or intangible, as evidenced by the most recent
audited financial statements or certified by the applicant's chief
financial officer or its equivalent if the applicant does not otherwise
use audited financial statements.
* * * * *
(j) * * *
(2) For purposes of assessing compliance with the equity limits in
Sec. 24.709 (b)(3)(i) and (b)(4)(i), where such interests are not held
directly in the applicant, the total equity held by a person or entity
shall be determined by successive multiplication of the ownership
percentages for each link in the vertical ownership chain.
* * * * *
(l) * * *
(11) * * *
(i) For purposes of Secs. 24.709(a)(2) and paragraphs (b)(2) and
(d) of this section, Indian tribes or Alaska Regional or Village
Corporations organized pursuant to the Alaska Native Claims Settlement
Act (43 U.S.C. 1601 et seq.), or entities owned and controlled by such
tribes or corporations, are not considered affiliates of an applicant
(or licensee) that is owned and controlled by such tribes, corporations
or entities, and that otherwise complies with the requirements of
Sec. 24.709 (b)(3) and (b)(5) or Sec. 24.709 (b)(4) and (b)(6), except
that gross revenues derived from gaming activities conducted by
affiliated entities pursuant to the Indian Gaming Regulatory Act (25
U.S.C. 2701 et seq.) will be counted in determining such applicant's
(or licensee's) compliance with the financial requirements of
Sec. 24.709(a) and paragraphs (b) and (d) of this section, unless such
applicant establishes that it will not receive a substantial unfair
competitive advantage because significant legal constraints restrict
the applicant's ability to access such gross revenues.
* * * * *
(n) * * *
(1) A qualifying investor is a person who is (or holds an interest
in) a member of the applicant's (or licensee's) control group and whose
gross revenues and total assets, when aggregated with those of all
other attributable investors and affiliates, do not exceed the gross
revenues and total assets limits specified in Sec. 24.709(a), or, in
the case of an applicant (or licensee) that is a small business, do not
exceed the gross revenues limit specified in paragraph (b) of this
section.
* * * * *
(3) For purposes of assessing compliance with the minimum equity
requirements of Sec. 24.709(b) (5) and (6), where such equity interests
are not held directly in the applicant, interests held by qualifying
investors or qualifying minority and/or woman investors shall be
determined by successive multiplication of the ownership percentages
for each link in the vertical ownership chain.
(4) For purposes of Sec. 24.709 (b)(5)(i)(C) and (b)(6)(i)(C), a
qualifying investor is a person who is (or holds an interest in) a
member of the applicant's (or licensee's) control group and whose gross
revenues and total assets do not exceed the gross revenues and total
assets limits specified in Sec. 24.709(a).
* * * * *
13. Section 24.813 is amended by revising paragraphs (a)(1), (a)(2)
and (a)(4) to read as follows:
Sec. 24.813 General application requirements.
(a) * * *
(1) A list of any business, holding or applying for CMRS or PMRS
licenses, five percent or more of whose stock, warrants, options or
debt securities are owned by the applicant or an officer, director,
attributable stockholder or key management personnel of the applicant.
This list must include a description of each such business' principal
business and a description of each such business' relationship to the
applicant.
(2) A list of any party which holds a five percent or more interest
(or a ten percent or more interest for institutional investors as
defined in Sec. 24.720(h)) in the applicant, or any entity holding or
applying for CMRS or PMRS licenses in which a five percent or more
interest (or a ten percent or more interest for institutional investors
as defined in Sec. 24.720(h)) is held by another party which holds a
five percent or more interest (or a ten percent or more interest for
institutional investors as defined in Sec. 24.720(h)) in the applicant
(e.g. If Company A owns 5% of Company B (the applicant) and 5% of
Company C, a company holding or applying for CMRS or PMRS licenses,
then Companies A and C must be listed on Company B's applications.)
* * * * *
(4) In the case of partnerships, the name and address of each
partner, each partner's citizenship and the share or interest
participation in the partnership. This information must be provided for
all partners, regardless of their respective ownership interest in the
partnership.
* * * * *
14. Section 24.839 is amended by revising paragraphs (a), (d)(1),
and (d)(2) and adding paragraphs (d)(3), (d)(4), and (d)(5) to read as
follows:
Sec. 24.839 Transfer of control or assignment of license.
(a) Approval required. Authorization shall be transferred or
assigned to another party, voluntarily (for example, by contract) or
involuntarily (for example, by death, bankruptcy or legal disability),
directly or indirectly or by transfer of control of any corporation
holding such authorization, only upon application and approval by the
Commission. A transfer of control or assignment of station
authorization in the broadband Personal Communications Service is also
subject to Secs. 24.711(e), 24.712(d), 24.713(b), 24.717(c) (unjust
enrichment) and 1.2111(a) (reporting requirement).
* * * * *
(d) * * *
(1) The application for assignment or transfer of control is filed
after five years from the date of the initial license grant; or
(2) The proposed assignee or transferee meets the eligibility
criteria set forth in Sec. 24.709 at the time the application for
assignment or transfer of control is filed, or the proposed assignee or
transferee holds other license(s) for frequency blocks C and F and, at
the time of receipt of such license(s), met the eligibility criteria
set forth in Sec. 24.709;
(3) The application is for partial assignment of a partitioned
service area to a rural telephone company pursuant to Sec. 24.714 and
the proposed assignee meets the eligibility criteria set forth in
Sec. 24.709;
(4) The application is for an involuntary assignment or transfer of
control to a bankruptcy trustee appointed under involuntary bankruptcy,
an independent receiver appointed by a court of competent jurisdiction
in a foreclosure action, or, in the event of death or disability, to a
person or entity legally qualified to succeed the deceased or disabled
person under the laws of the place having jurisdiction over the estate
involved; provided that, the applicant requests a waiver pursuant to
this paragraph; or
(5) The assignment or transfer of control is pro forma.
* * * * *
[FR Doc. 96-16665 Filed 6-28-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-16662 Indirect Food Additives: Adjuvants, Production Aids, and Sanitizers
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33846-33847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16662]
=======================================================================
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 178
[Docket No. 96F-0052]
Indirect Food Additives: Adjuvants, Production Aids, and
Sanitizers
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is amending the food
additive regulations to provide for the additional safe use of
dimethyldibenzylidene sorbitol as a clarifying agent for propylene
homopolymers and high-propylene copolymer articles intended for contact
with food. This action is in response to a petition filed by Milliken &
Co.
DATES: Effective July 1, 1996; written objections and requests for a
hearing by July 31, 1996.
ADDRESSES: Submit written objections to the Dockets Management Branch
(HFA-305), Food and Drug Administration, 12420 Parklawn Dr., rm. 1-23,
Rockville, MD 20857.
FOR FURTHER INFORMATION CONTACT: Vir D. Anand, Center for Food Safety
and Applied Nutrition (HFS-216), Food and Drug Administration, 200 C
St. SW., Washington, DC 20204, 202-418-3081.
SUPPLEMENTARY INFORMATION: In a notice published in the Federal
Register of February 26, 1996 (61 FR 7111), FDA announced that a food
additive petition (FAP 6B4495) had been filed by Milliken & Co., c/o
Keller and Heckman, 1001 G St. NW., suite 500 West, Washington, DC
20001. The petition proposed to amend the food additive regulations in
Sec. 178.3295 Clarifying agents for polymers (21 CFR 178.3295) to
provide for the additional safe use of dimethyldibenzylidene sorbitol
as a clarifying agent for olefin polymers complying with Sec. 177.1520
(21 CFR 177.1520), items 1.1, 3.1, and 3.2, for contact with food under
condition of use A, described in Table 2 of Sec. 176.170(c) of this
chapter.
FDA has evaluated data in the petition and other relevant material.
The agency concludes that the proposed use of the additive is safe,
that the additive will have the intended technical effect, and that the
regulations in Sec. 178.3295 should be amended as set forth below.
In accordance with Sec. 171.1(h) (21 CFR 171.1(h)), the petition
and the documents that FDA considered and relied upon in reaching its
decision to approve the petition are available for inspection at the
Center for Food Safety and Applied Nutrition by appointment with the
information contact person listed above. As provided in Sec. 171.1(h),
the agency will delete from the documents any materials that are not
available for public disclosure before making the documents available
for inspection.
The agency has carefully considered the potential environmental
effects of this action. FDA has concluded that the action will not have
a significant impact on the human environment, and that an
environmental impact statement is not required. The agency's finding of
no significant impact and the evidence supporting that finding,
contained in an environmental assessment, may be seen in the Dockets
Management Branch (address above) between 9 a.m. and 4 p.m., Monday
through Friday.
Any person who will be adversely affected by this regulation may at
any time on or before July 31, 1996, file with the Dockets Management
Branch (address above) written objections thereto. Each objection shall
be separately numbered, and each numbered objection shall specify with
particularity the provisions of the regulation to which objection is
made and the grounds for the objection. Each numbered objection on
which a hearing is requested shall specifically so state. Failure to
request a hearing for any particular objection shall constitute a
waiver of the right to a hearing on that objection. Each numbered
objection for which a hearing is requested shall include a detailed
description and analysis of the specific factual information intended
to be presented in support of the objection in the event that a hearing
is held. Failure to include such a description and analysis for any
particular objection shall constitute a waiver of the right to a
hearing on the objection. Three copies of all documents
[[Page 33847]]
shall be submitted and shall be identified with the docket number found
in brackets in the heading of this document. Any objections received in
response to the regulation may be seen in the Dockets Management Branch
between 9 a.m. and 4 p.m., Monday through Friday.
List of Subjects in 21 CFR Part 178
Food additives, Food packaging.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs and
redelegated to the Director, Center for Food Safety and Applied
Nutrition, 21 CFR part 178 is amended as follows:
PART 178--INDIRECT FOOD ADDITIVES: ADJUVANTS, PRODUCTION AIDS, AND
SANITIZERS
1. The authority citation for 21 CFR part 178 continues to read as
follows:
Authority: Secs. 201, 402, 409, 721 of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 321, 342, 348, 379e).
2. Section 178.3295 is amended in the table by revising the entry
for ``Dimethyldibenzylidene sorbitol'' to read as follows:
Sec. 178.3295 Clarifying agents for polymers.
* * * * *
------------------------------------------------------------------------
Substances Limitations
------------------------------------------------------------------------
* * * * *
Dimethyldibenzylidene sorbitol (CAS Reg. For use only as a clarifying
No 135861-56-2). agent at a level not to
exceed 0.4 percent by
weight of olefin polymers
complying with Sec.
177.1520(c) of this
chapter, items 1.1, 3.1,
and 3.2, where the
copolymers complying with
items 3.1 and 3.2 contain
not less than 85 weight
percent of polymer units
derived from polypropylene.
The finished polymers shall
be used in contact with
food under conditions of
use A through H described
in Table 2 of Sec.
176.170(c) of this chapter.
* * * * *
------------------------------------------------------------------------
Dated: June 12, 1996.
Fred R. Shank,
Director, Center for Food Safety and Applied Nutrition.
[FR Doc. 96-16662 Filed 6-28-96; 8:45 am]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-16642 Reestablishing Rulemaking Procedures; Public Participation in Regulatory Development
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33850-33851]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16642]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 1
RIN 2900-AI32
Reestablishing Rulemaking Procedures; Public Participation in
Regulatory Development
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In a document published in the Federal Register on March 20,
1996 (61 FR 11309), the Department of Veterans Affairs (VA) amended 38
CFR Part 1 by promulgating a final rule that included the elimination
of Sec. 1.12. The provisions of Sec. 1.12 set forth a policy statement
concerning prior notice-and-comment for rulemaking. Judicial review of
VA's action eliminating Sec. 1.12 has been sought on the basis that
such action did not comply with notice-and-comment provisions. While we
believe such a position is not legally correct, we are by this document
reestablishing Sec. 1.12, and, in a companion document published in the
Proposed Rules section of this issue of the Federal Register, proposing
to eliminate Sec. 1.12. This will provide interested parties an
opportunity to provide comments concerning this matter, thus mooting
the pending litigation.
EFFECTIVE DATE: July 1, 1996.
FOR FURTHER INFORMATION CONTACT: Thomas O. Gessel, Director, Office of
Regulations Management (02D), Office of General Counsel, Department of
Veterans Affairs, 810 Vermont Avenue, NW, Washington, DC 20420, (202)
273-8605.
SUPPLEMENTARY INFORMATION: This final rule merely concerns VA policy.
Accordingly, in accordance with the provisions of 5 U.S.C. 553, it is
promulgated without notice-and-comment and without a delayed effective
date.
No notice of proposed rulemaking was required in connection with
this rulemaking action. Accordingly, no regulatory flexibility analysis
is required under the Regulatory Flexibility Act (5 U.S.C. 601-612).
Nevertheless, the Secretary of Veterans Affairs certifies that this
rule would not have a significant economic impact on a substantial
number of small entities as they are defined in the Regulatory
Flexibility Act. This rule will not have a direct effect on small
entities.
There is no Catalog of Federal Domestic Assistance program number.
List of Subjects in 38 CFR Part 1
Administrative practice and procedure, Archives and records,
Cemeteries, Claims, Courts, Flags, Freedom of information, Government
contracts, Government employees, Government property, Infants and
children, Inventions and patents, Investigations, Parking, Penalties,
Postal Service, Privacy, Reporting and recordkeeping requirements,
Seals and insignia, Security measures, Wages.
Approved: June 21, 1996.
Jesse Brown,
Secretary of Veterans Affairs.
For the reasons set out in the preamble, 38 CFR part 1 is amended
as set forth below:
PART 1--GENERAL PROVISIONS
1. The authority citation for part 1 continues to read as follows:
Authority: 38 U.S.C. 501(a), unless otherwise noted.
2. An undesignated center heading and section 1.12 are added to
read as follows:
Public Participation
Sec. 1.12 Public participation in regulatory development.
It is the policy of the Department of Veterans Affairs to afford
the public general notice, published in the Federal Register, of
proposed regulatory development, and an opportunity to participate in
the regulatory development in accordance with the provisions of the
Administrative
[[Page 33851]]
Procedure Act (APA). All written comments received will be available
for public inspection. Exceptions to the policy of permitting public
participation in the regulatory development may be authorized by the
Secretary or one of the Secretary's deputies if adequately justified
and concurred in by the General Counsel. Such exceptions, unless public
comment is required by statute, may be recommended when:
(a) The proposed regulations consist of interpretative rules,
general statements of policy, or rules of Department of Veterans
Affairs organization, procedure, or practice, or
(b) When the Department of Veterans Affairs for good cause finds
(and incorporates the finding and a brief statement of reasons therefor
in the rules issued) that notice and public procedure thereon are
impracticable, unnecessary, or contrary to the public interest.
(Authority: 38 U.S.C. 501)
[FR Doc. 96-16642 Filed 6-28-96; 8:45 am]
BILLING CODE 8320-01-P
Complete official Federal Register PDF
FR Doc. 96-16594 Removal of Interpretive Bulletins and Regulations Relating to ERISA
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33847-33850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16594]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Parts 2509, 2520 and 2550
RIN 1210-AA51
Removal of Interpretive Bulletins and Regulations Relating to
ERISA
AGENCY: Pension and Welfare Benefits Administration, DOL.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule removes from the Code of Federal Regulations certain
interpretive bulletins and regulations (or portions thereof) under the
Employee Retirement Income Security Act of 1974 (ERISA), that the
Department of Labor (the Department) believes are obsolete
(collectively, the obsolete regulations). The obsolete regulations
generally provided transitional relief for plan sponsors, plan
administrators, and others subject to the requirements of title I of
ERISA, in coming into compliance with ERISA's requirements in the first
several years following ERISA's enactment in 1974. Because the election
periods or dates of applicability under these rules have expired, the
Department believes that the regulations are no longer needed. In other
instances, the obsolete regulations are unnecessary because they merely
provide notice of a rescission or withdrawal of prior guidance or
regulations, or were rendered ineffective by a subsequent Supreme Court
decision.
EFFECTIVE DATE: July 1, 1996.
FOR FURTHER INFORMATION CONTACT: Katherine D. Lewis, Office of
Regulations and Interpretations, Pension and Welfare Benefits
Administration, U.S. Department of Labor, Rm. N-5669, 200 Constitution
Avenue, N.W., Washington, D.C. 20210 (telephone (202) 219-7461), or
Vicki Shteir-Dunn, Plan Benefits Security Division, Office of the
Solicitor, U.S. Department of Labor, Rm. N-4611, 200 Constitution Ave.,
N.W., Washington, D.C. 20210 telephone (202) 219-8610).
SUPPLEMENTARY INFORMATION: In accordance with the President's Executive
Order No. 12866 of September 1993, ``Regulatory Planning and Review,''
and the President's directive of March 4, 1995, ``Regulatory
Reinvention Initiative,'' the Department has undertaken to identify and
eliminate regulations which are no longer needed. Pursuant to a review
of regulations under the Employee Retirement Income Security Act of
1974 (ERISA), the Department identified 28 interpretive bulletins and
regulations (or portions thereof) which it believes to be obsolete.
Nearly all of these interpretive bulletins and regulations were issued
over fifteen years ago. This rule removes these interpretive bulletins,
regulations and paragraphs of regulations from the Code of Federal
Regulations, and makes conforming amendments where necessary to
accommodate the removal of identified provisions. In order to ensure
that members of the public had the opportunity to comment, the
Department initially published this rule in the Federal Register (61 FR
14690, April 3, 1996) as a notice of proposed rulemaking. The
Department received one public comment, which was fully supportive of
the proposal.
The rule removes the obsolete regulations prospectively, as of the
date of publication of this final rule, and has no effect on their
legal effectiveness prior to that date. Following is a brief
description of each of the obsolete interpretive bulletins and
regulations (or portions thereof) removed by the Department. All of
these items were in title 29 of the Code of Federal Regulations.
I. Part 2509--Interpretive Bulletins Relating to the Employee
Retirement Income Security Act of 1974
This rule removes interpretive bulletins 75-1, 75-7, 76-2 and 76-3
from subchapter A, part 2509 of the Code of Federal Regulations (29 CFR
Secs. 2509.75-1, 2509.75-7, 2509.76-2 and 2509.76-3). In addition, the
rule removes paragraph (b) of interpretive bulletin 75-2 (29 CFR
2509.75-2).
Interpretive bulletin 75-1 outlined and clarified section 414(c)(4)
of ERISA, which provided that sections 406 and 407(a) of ERISA
(relating to prohibited transactions) are not applicable to the
provision of certain services between a plan and a party in interest
before June 30, 1977, if certain conditions described in that section
are met. Interpretive bulletin 75-7 supplemented interpretive bulletin
75-1 and provided examples of its application. Interpretive bulletins
76-2 and 76-3 merely gave notice of the rescission or withdrawal of
earlier guidance relating to the definition of ``seasonal industries,''
a matter now under the jurisdiction of the Internal Revenue Service
pursuant to Reorganization Plan No. 4 of 1978. Paragraph (b) of
interpretive bulletin 75-2 took the position that consideration paid
for a contract or policy of insurance issued to a plan would not be
considered plan assets if placed in the general account of the issuing
insurance company, and therefore could not give rise to
[[Page 33848]]
prohibited transactions. This interpretation may no longer be relied on
as a result of the December 13, 1993 Supreme Court decision in John
Hancock Mutual Life Insurance Co. v. Harris Trust & Savings Bank, 114
S. Ct. 517 (1993), and therefore, has no force or effect.
II. Part 2520--Rules and Regulations for Reporting and Disclosure
The rule removes ten regulations and provisions of two other
regulations from subchapter C, part 2520 of the Code of Federal
Regulations (29 CFR Part 2520), pertaining to reporting and disclosure
under ERISA.
From subpart C of Part 2520, the rule removes Sec. 103-6(b)(1)(ii),
which defined the current value of plan assets for purposes of
schedules of reportable transactions for plan years beginning in 1975.
The remainder of Sec. 103-6(b)(1) is revised to eliminate the reference
to Sec. 103-6(b)(1)(ii), and to otherwise conform to this change. The
rule also removes Sec. 103-7. This regulation, which provided special
accounting rules for plans filing the annual report for plan years
beginning in 1975, applied only with respect to plan years beginning in
1975 and not to any subsequent plan years.
The rule removes the following seven regulations from subpart D of
part 2520. The Department's regulation at Sec. 104-2 postponed the
effective date of annual reporting requirements for non-calendar year
plans and extended the reporting requirements under prior legislation
for such plans until the end of the first plan year beginning after
January 1, 1975. The Department's regulation at Sec. 104-3 deferred
certain reporting and disclosure requirements for welfare plans, and
provided an alternative method of compliance for pension plans, until
May 30, 1976. The Department's regulation at Sec. 104-5 deferred, until
no later than November 16, 1977, the application of certain reporting
and disclosure requirements relating to the summary plan description
for welfare plans. The Department's regulation at Sec. 104-6 provided
an alternative method of compliance for pension plans which elected to
defer the summary plan description reporting and disclosure
requirements. The availability of the deferral expired on November 16,
1977. The Department's regulation at Sec. 104-28 provided an extension
of time for filing and disclosure of the initial summary plan
description for certain employee benefit plans that became subject to
part 1 of title I of ERISA on or before July 17, 1977. The Department's
regulation at Sec. 104-45 provided a temporary exemption and
alternative method of compliance with respect to the requirement to
report insurance fees and commissions for insured plans with fewer than
100 participants. The regulation applied only to annual reports
required to be filed for the plan years beginning in 1975 and 1976.
From subpart F of part 2520, the rule removes and reserves certain
paragraphs of Sec. 104b-2 and Sec. 104b-4, and removes Secs. 104b-5 and
104b-12.
With respect to Sec. 104b-2, the rule revises paragraphs (b)(1) and
(b)(2), and removes and reserves paragraphs (c), (d), (e), (f) and (h).
Paragraphs (b)(1) and (b)(2) establish the periods within which updated
summary plan descriptions must be furnished to participants and
beneficiaries receiving benefits under the plan (which differ depending
on whether there have been amendments to the plan). In both cases, the
periods for providing an updated summary plan description are no later
than 210 days after the end of the plan year within which occurs the
later of a date certain (November 16, 1983 or November 16, 1987) or a
period of years after the last date a change in the information
required to be disclosed by section 102 of ERISA or Sec. 102-3 would
have been reflected in the most recently distributed summary plan
description. The rule revises paragraphs (b)(1) and (b)(2) to eliminate
the references to the dates certain.
Paragraph (c) of Sec. 104b-2 pertained to plans making elections
under Secs. 2520.104-5 and 2520.104-6, for which the election periods
expired in 1977. Paragraph (d) of the regulation provided an
alternative method of compliance for plans using a Form EBS-1 with a
print date of April 1975 as the summary plan description. The Form EBS-
1 was eliminated in 1976. Paragraph (e) of the regulation provided an
alternative method of compliance with ERISA's summary plan description
requirements for plans which filed and disclosed an initial summary
plan description on or before May 30, 1976, in reliance upon earlier
guidance of the Department. The availability of the alternative method
of compliance was conditioned on the disclosure by such plans, prior to
November 16, 1977, of a statement of ERISA rights which complied with
Sec. 2520.102-3(t). Paragraph (f) of the regulation provided an
alternative method of compliance for plans which were not described in
paragraphs (d) or (e) and which met certain requirements. The
alternative method of compliance under paragraph (f) expired on
November 16, 1977. Paragraph (h) of the regulation merely referred to
Secs. 2520.104-5 and 2520.104-6, both of which authorized alternative
methods of compliance which expired on November 16, 1977.
With respect to Sec. 104b-4, the rule removes paragraph (d). This
paragraph required certain plans to furnish information to certain
classes of participants or beneficiaries by November 16, 1977.
The rule also removes Sec. 104b-5 and Sec. 104b-12. The
Department's regulation at Sec. 104b-5 created a new disclosure
document, the ``ERISA Notice'', for use as an interim disclosure
document by welfare and pension benefit plans electing to use the
deferral until November 16, 1977 provided under Secs. 2520.104-5 and
2520.104-6. The Department's regulation at Sec. 104b-12 provided
multiemployer plans lacking records of covered participants with
optional methods of distributing the first summary annual report to
participants covered under the plan. The regulation generally applied
to reports distributed before February 15, 1977.
III. Part 2550--Rules and Regulations for Fiduciary Responsibility
The rule removes eight regulations from subchapter F, part 2550 of
title 29 of the Code of Federal Regulations, pertaining to fiduciary
responsibility under ERISA. These include Secs. 407a-3, 407a-4, 407c-3,
414b-1, 414c-1, 414c-2, 414c-3 and 414c-4, all of which provided
transitional relief for the first several years following ERISA's
enactment.
The Department's regulation at Sec. 407a-3 provided plan
administrators with prospective guidance clarifying the meaning of
section 407(a)(3)(B) of ERISA. This guidance assisted plan
administrators in determining whether their plans held qualifying
employer securities and/or qualifying employer real property the fair
market value of which, on any date between January 1, 1975 and December
31, 1984, did not exceed ten percent of the fair market value of the
plan's assets, and thus would not be subject to the ten percent holding
limitation contained in section 407(a)(3)(A) of ERISA. The period for
which plan administrators needed such prospective guidance was from
January 1, 1975 until December 31, 1984. Accordingly, the need for such
guidance no longer exists.
The Department's regulation at Sec. 407a-4 clarified the
requirements of section 407(a)(4) of ERISA, which required that plans
divest, by December 31, 1979, 50 percent of the qualifying employer
securities and qualifying real property which they would be required to
divest before January 1, 1985, under
[[Page 33849]]
section 407(a)(3) or 407(c) of ERISA. Accordingly, the transactions
addressed by the regulation were transactions that were required to
occur on or before December 31, 1979.
The Department's regulation at Sec. 407c-3 described an election
plans could make, prior to January 1, 1976, to utilize an alternate
method of calculating the value of employer securities for purposes of
satisfying the limitations of section 407(a)(3) of ERISA on the holding
of such securities or real property. The regulation also provided that
after making such an election, and before January 1, 1985, the plan
could not acquire any real property.
The Department's regulation at Sec. 414b-1 provided guidance to
plans applying to the Department of Labor, in accordance with section
414(b)(1) of ERISA, for postponement, until no later than January 1,
1976, of the effective date of certain provisions of ERISA.
Applications for such postponement generally had to be submitted to the
Department on or before December 31, 1974.
The Department's regulations at Secs. 414c-1, 414c-2, and 414c-3
provided guidance concerning transitional rules relating to certain
types of transactions prior to June 30, 1984, after which the rules
became inapplicable. Specifically, Sec. 414c-1 related to certain loans
or other extensions of credit prior to June 30, 1984; Sec. 414c-2
related to certain leases or joint uses of property prior to June 30,
1984; and Sec. 414c-3 related to certain sales, exchanges, or other
dispositions of property prior to June 30, 1984. The Department's
regulation at Sec. 414c-4 provided guidance regarding a transitional
rule relating to the provision of certain services until June 30, 1977,
after which the rule became inapplicable.
Executive Order 12866
The Department has determined that this regulatory action is not a
``significant rule'' within the meaning of Executive Order 12866
concerning Federal regulations, because it is not likely to result in:
(1) An annual effect on the economy of $100 million or more, or an
adverse and material effect on a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local or tribal governments or communities; (2) the creation of a
serious inconsistency or interference with an action taken or planned
by another agency; (3) a material alteration in the budgetary impacts
of entitlement, grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) the raising of novel legal or
policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in Executive Order 12866.
Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601 et. seq., requires
each Federal agency to perform a Regulatory Flexibility Analysis for
all rules that are likely to have a significant economic impact on a
substantial number of small entities. Small entities include small
businesses, organizations, and governmental jurisdictions; under ERISA,
a ``small plan'' is one with less than 100 participants. ERISA section
104(a)(2), 29 U.S.C. 1024(a)(2).
The Assistant Secretary of the Pension and Welfare Benefits
Administration certifies that the modifications set forth in this rule
will not have a significant economic impact on a substantial number of
small entities. The reasons for this certification are as follows:
(1) The rule merely removes obsolete or unnecessary interpretive
bulletins and regulations (or portions thereof) from the Code of
Federal Regulations, and, where appropriate, makes conforming
amendments to accommodate such removal; and
(2) The rule does not impose any new requirements on any entity.
Paperwork Reduction Act
This rule is not subject to the requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.) because it contains no
``collection of information'' as defined in 44 U.S.C. 3502(3).
List of Subjects
29 CFR Part 2509
Employee benefit plans, Pensions.
29 CFR Part 2520
Employee benefit plans, Pensions, Reporting and recordkeeping
requirements.
29 CFR Part 2550
Employee benefit plans, Pensions, Prohibited transactions.
Authority
For the reasons described in the preamble, parts 2509, 2520, and
2550 of chapter XXV of title 29 of the Code of Federal Regulations, are
amended as set forth below:
PART 2509--INTERPRETIVE BULLETINS RELATING TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974
1. The authority citation for part 2509 is revised to read as
follows:
Authority: 29 U.S.C. 1135. Sections 2509.75-10 and 2509.75-2
issued under 29 U.S.C. 1052, 1053, 1054. Secretary of Labor's Order
No. 1-87 (52 FR 13139).
Sec. 2509.75-1 [Removed]
2. Section 2509.75-1 is removed.
Sec. 2509.75-2 [Amended]
3. Section 2509.75-2 is amended by removing and reserving paragraph
(b).
Secs. 2509.75-7, 2509.76-2, 2509.76-3 [Removed]
4. Sections 2509.75-7, 2509.76-2 and 2509.76-3 are removed.
PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE
5. The authority citation for part 2520 continues to read as
follows:
Authority: Secs. 101, 102, 103, 104, 105, 109, 110, 111(b)(2),
111(c), and 505, Pub. L. 93-406, 88 Stat. 840-52 and 894 (29 U.S.C.
1021-25, 1029-31, and 1135); Secretary of Labor's Order No. 27-74,
13-76, 1-87, and Labor Management Services Administration Order No.
2-6.
Subpart C--[Amended]
6. Section 2520.103-6 is amended by revising paragraph (b)(1) to
read as follows:
Sec. 2520.103-6 Definition of reportable transaction for Annual
Return/Report.
* * * * *
(b) Definitions. (1) Except as provided in paragraphs (c)(2) and
(d)(1)(vi) of this section (relating to assets acquired or disposed of
during the plan year), ``current value'' shall mean the current value,
as defined in section 3(26) of the Act, of plan assets as of the
beginning of the plan year, or the end of the previous plan year.
* * * * *
Sec. 2520.103-7 [Removed]
7. Section 2520.103-7 is removed.
Subpart D--[Amended]
Secs. 2520.104-2, 2520.104-3, 2520.104-5, 2520.104-6, 2520.104-28,
2520.104-45 [Removed and Reserved]
8. Sections 2520.104-2, 2520.104-3, 2520.104-5, 2520.104-6,
2520.104-28, and 2520.104-45 are removed and reserved.
Subpart F--[Amended]
9. Section 2520.104b-2 is amended by revising paragraph (b) to read
as follows:
Sec. 2520.104b-2 Summary plan description.
* * * * *
(b) Periods for furnishing updated summary plan description. (1)
For
[[Page 33850]]
purposes of the requirement to furnish the updated summary plan
description to each participant and each beneficiary receiving benefits
under the plan (other than beneficiaries receiving benefits under a
welfare plan) required by section 104(b)(1) of the Act, the
administrator of an employee benefit plan shall furnish such updated
summary plan description no later than 210 days following the end of
the plan year which occurs five years after the last date a change in
the information required to be disclosed by section 102 or 29 CFR
2520.102-3 would have been reflected in the most recently distributed
summary plan description (or updated summary plan description) as
described in section 102 of the Act.
(2) In the case of a plan to which no amendments have been made
between the end of the time period covered by the last distributed
summary plan description (or updated summary plan description),
described in section 102 of the Act, and the next occurring applicable
date described in paragraph (b)(1) of this section, for purposes of the
requirement to furnish the updated summary plan description to each
participant, and to each beneficiary receiving benefits under the plan
(other than beneficiaries receiving benefits under a welfare plan),
required by section 104(b)(1) of the Act, the administrator of an
employee benefit plan shall furnish such updated summary plan
description no later than 210 days following the end of the plan year
which occurs ten years after the last date a change in the information
required to be disclosed by section 102 or 29 CFR 2520.102-3 would have
been reflected in the most recently distributed summary plan
description (or updated summary plan description), as described in
section 102 of the Act.
* * * * *
Sec. 2520.104b-2 [Amended]
10. Paragraphs (c), (d), (e), (f) and (h) of Sec. 2520.104b-2 are
removed and reserved.
Sec. 2520.104b-4 [Amended]
11. Paragraph (d) of Sec. 2520.104b-4 is removed.
Secs. 2520.104b-5--2520.104b-12 [Removed]
12. Sections 2520.104b-5 and 2520.104b-12 are removed.
PART 2550--RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY
13. The authority citation for part 2550 is revised to read as
follows:
Authority: 29 U.S.C. 1135. Section 2550.401b-1 also issued under
sec. 102, Reorganization Plan No. 4 of 1978 (43 FR 47713, Oct. 17,
1978), effective December 31, 1978 (44 FR 1065, Jan. 3, 1979), 3
CFR, 1978 Comp., p. 332. Section 2550.404c-1 also issued under 29
U.S.C. 1104. Section 2550.407c-3 also issued under 29 U.S.C. 1107.
Section 2550.408b-1 also issued under sec. 102, Reorganization Plan
No. 4 of 1978 (43 FR 47713, Oct. 17, 1978), effective December 31,
1978 (44 FR 1065, Jan. 3, 1979), 3 CFR, 1978 Comp., p. 332, and 29
U.S.C. 1108(b)(1). Section 2550.412-1 also issued under 29 U.S.C.
1112. Secretary of Labor's Order No. 1-87 (52 FR 13139).
Secs. 2550.407a-3, 2550.407a-4, 2550.407c-3, 2550.414b-1, 2550.414c-1,
2550.414c-2, 2550.414c-3, 2550.414c-4 [Removed]
14. Sections 2550.407a-3, 2550.407a-4, 2550.407c-3, 2550.414b-1,
2550.414c-1, 2550.414c-2, 2550.414c-3, 2550.414c-4 are removed.
Signed at Washington, D.C., this 25th day of June, 1996.
Olena Berg,
Assistant Secretary for Pension and Welfare Benefits, U.S. Department
of Labor.
[FR Doc. 96-16594 Filed 6-28-96; 8:45 am]
BILLING CODE 4510-29-P
Complete official Federal Register PDF
FR Doc. 96-16585 Criteria for Classification of Solid Waste Disposal Facilities and Practices; Identification and Listing of Hazardous Waste; Requirements for Authorization of State Hazardous Waste Programs
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 34252-34278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16585]
[[Page 34251]]
_______________________________________________________________________
Part V
Environmental Protection Agency
_______________________________________________________________________
40 CFR Part 257, et al.
Criteria for Classification of Solid Waste Disposal Facilities and
Practices; Identification and Listing of Hazardous Waste; Requirements
for Authorization of State Hazardous Waste Programs; Final Rule
Federal Register / Vol. 61, No. 127 / Monday, July 1, 1996 / Rules
and Regulations
[[Page 34252]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 257, 261, and 271
[FRL-5528-4]
RIN 2050-AE11
Criteria for Classification of Solid Waste Disposal Facilities
and Practices; Identification and Listing of Hazardous Waste;
Requirements for Authorization of State Hazardous Waste Programs
AGENCY: Environmental Protection Agency.
ACTION: Final rule.
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SUMMARY: The Environmental Protection Agency today is promulgating
revisions to the existing criteria for solid waste disposal facilities
and practices. These revisions were developed in response to the 1984
Hazardous and Solid Waste Amendments to the Resource Conservation and
Recovery Act (RCRA). Today's final revisions establish that only those
non-municipal non-hazardous waste disposal units that meet specific
standards may receive conditionally exempt small quantity generator
(CESQG) hazardous wastes. Today's final revisions establish standards
pertaining to location restrictions, ground-water monitoring and
corrective action.
The EPA is also finalizing revisions to regulations for hazardous
wastes generated by CESQGs. Today's final language will clarify
acceptable disposal options under Subtitle D of RCRA by specifying that
CESQG hazardous waste may be managed at municipal solid waste landfills
subject to Part 258 and at nonmunicipal non-hazardous waste disposal
units subject to today's revised Criteria.
EFFECTIVE DATES: January 1, 1998, except Secs. 257.21 through 257.28
which are effective July 1, 1998, and Secs. 261.5(f), 261.5(g) and
271.1 which are effective January 1, 1997, but which have a compliance
date of January 1, 1998. The information collection requirements
contained in Secs. 257.24, 257.25, and 257.27 have not been approved by
the Office of Management and Budget (OMB) and are not effective until
OMB has approved them.
ADDRESSES: The public docket for this rulemaking (docket number F-96-
NCEF-FFFFF) is located at the U.S. Environmental Protection Agency,
Crystal Gateway Building, 1235 Jefferson Davis Highway, First Floor,
Arlington, Virginia. The public docket is available for viewing from 9
a.m. to 4 p.m., Monday through Friday, excluding federal holidays.
Appointments may be made by calling (703) 603-9230. Copies cost $0.15/
page.
FOR FURTHER INFORMATION CONTACT: For specific information on aspects of
the final rule, please contact Paul Cassidy of the Industrial Solid
Waste Branch of the Office of Solid Waste at 1-703-308-7281. For a
paper copy of the Federal Register notice or for general information,
please contact the RCRA Hotline at 1-800-424-9346 or at 1-703-412-9810.
SUPPLEMENTARY INFORMATION:
Regulated Entities
Entities potentially regulated by this action are owners/operators
of non-municipal non-hazardous waste disposal units that may receive
conditionally exempt small quantity generator (CESQG) hazardous waste.
Regulated categories and entities include:
------------------------------------------------------------------------
Examples of regulated
Category entities
------------------------------------------------------------------------
Construction and demolition waste disposal Owners/operators of
firms. construction and demolition
waste disposal units that
may receive CESQG hazardous
waste.
Industrial manufacturing plants........... Owners/operators of non-
municipal non-hazardous
waste disposal units that
may receive CESQG hazardous
waste.
------------------------------------------------------------------------
This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the type of entities that EPA is now aware
could potentially be regulated by this action. Other types of entities
not listed in the table could also be regulated. To determine whether
your non-municipal non-hazardous waste disposal unit is regulated by
this action, you should carefully examine the applicability section of
this final rule (i.e., section 257.5). If you have any questions
regarding the applicability of this action to a particular entity,
consult the person listed in the preceding FOR FURTHER INFORMATION
CONTACT section.
This Federal Register notice will be available in electronic format
on the Internet system through the EPA Public Access Server @
gopher.epa.gov.
How to Access the Net
1. Through Gopher: Go to: gopher.epa.gov. From the main menu,
choose ``EPA Offices and Regions''. Next, choose ``Office of Solid
Waste and Emergency Response (OSWER)''. Next, choose ``Office of Solid
Waste''. Then, choose ``Non-Hazardous Waste--RCRA Subtitle D''.
Finally, choose ``Industrial''.
2. Through FTP: Go to: ftp.epa.gov.
Login: anonymous
Password: Your Internet Address
Files are located in directories/pub/gopher. All OSW files are in
directories beginning with ``OSW''.
3. Through MOSAIC: Go to: http://www.epa.gov. Choose the EPA Public
Access Gopher. From the main (Gopher) menu, choose ``EPA Offices and
Regions''. Next, choose ``Office of Solid Waste and Emergency Response
(OSWER)''. Next, choose ``Office of Solid Waste''. Then, choose ``Non-
Hazardous Waste--RCRA Subtitle D''. Finally, choose ``Industrial''.
4. Through dial-up access: Dial 919-558-0335. Choose EPA Public
Access Gopher. From the main (Gopher) menu, choose ``EPA Offices and
Regions''. Next, choose ``Office of Solid Waste and Emergency Response
(OSWER)''. Next, choose ``Office of Solid Waste''. Then, choose ``Non-
Hazardous Waste--RCRA Subtitle D''. Finally, choose ``Industrial''.
Preamble Outline
I. Authority
II. Background
A. Current Solid Waste Controls under the Resource Conservation
and Recovery Act (RCRA)--Non-Hazardous Waste Management: Municipal
Wastes
B. Sierra Club Lawsuit
C. Summary of Proposal Rule
III. Summary of Regulatory Approach of Today's Final Rule
IV. Major Issues
A. Non-Municipal Non-Hazardous Waste Disposal Units that May
Receive CESQG Hazardous Wastes
B. Decision to Impose or Go Beyond the Statutory Minimum
Components
C. Decision to Use the Part 258 Criteria Language or General
Performance Language
V. Summary of Today's Final Rule
VI. Specifics of Today's Final Rule
A. Section 257.5--Applicability
B. Sections 257.7-257.13--Location Restrictions
C. Sections 257.21-257.28--Ground-Water Monitoring and
Corrective Action
D. Section 257.30--Recordkeeping Requirements
E. Special Requirements for Hazardous Waste Generated by
Conditionally Exempt Small Quantity Generators
1. Changes to Section 261.5
2. CESQG Wastes
3. Screening Procedures
VII. Implementation of Today's Final Rule
VIII. Executive Order No. 12866
IX. Regulatory Flexibility Act
X. Submission to Congress and the General Accounting Office
[[Page 34253]]
XI. Paperwork Reduction Act
XII. Environmental Justice
XIII. Unfunded Mandates Reform Act
I. Authority
Today's rule is being promulgated under the authority of sections
1008, 2002 (general rulemaking authority), 3001(d)(4), 4004 and 4010 of
RCRA, as amended. Section 3001(d)(4) authorizes EPA to promulgate
standards for generators who do not generate more than 100 kilograms
per month of hazardous waste. Section 4010(c) directs EPA to revise
Criteria promulgated under sections 1008 and 4004 for facilities that
may receive hazardous household wastes (HHW) or small quantity
generator (SQG) hazardous waste.
II. Background
A. Current Solid Waste Controls Under the Resource Conservation and
Recovery Act (RCRA)--Non-Hazardous Waste Management: Municipal Wastes
As added by the Hazardous and Solid Waste Amendments (HSWA) of
1984, section 4010(c) requires that the Administrator revise the
existing Part 257 Subtitle D Criteria used to classify facilities as
sanitary landfills or open dumps by March 31, 1988, for facilities that
may receive household hazardous waste or hazardous waste from small
quantity generators. The required revisions are those necessary to
protect human health and the environment and which take into account
the practicable capability of such facilities. At a minimum, the
revised Criteria must include ground-water monitoring as necessary to
detect contamination, location restrictions, and provide for corrective
action, as appropriate.
On October 9, 1991, EPA promulgated revised Criteria for Solid
Waste Disposal Facilities accepting household hazardous wastes. Those
revisions fulfilled the part of the statutory mandate found in RCRA
section 4010 for all facilities that receive household hazardous
wastes. (Any facility receiving any household waste is subject to the
revised Criteria, which were relocated at 40 CFR part 258 for purposes
of clarity). Revisions to the Part 257 Criteria for other Subtitle D
disposal facilities that may receive conditionally exempt small
quantity generator (CESQG) hazardous wastes were delayed as the Agency
had little information concerning the potential or actual impacts that
these types of facilities may have on human health and the environment.
B. Sierra Club Lawsuit
The Sierra Club, on October 21, 1993, filed suit against the EPA in
the United States District Court for the District of Columbia, seeking
to compel the EPA to promulgate revised Criteria for non-municipal
facilities that may receive small quantity generator hazardous waste.
As a result of the October 21, 1993 lawsuit, the EPA and the Sierra
Club reached agreement on a schedule concerning revised Criteria for
non-municipal facilities that may receive CESQG wastes. This schedule
requires that the EPA Administrator sign a proposal by May 15, 1995 and
a final rule by July 1, 1996. On May 15, 1995, the Administrator signed
proposed standards for non-municipal non-hazardous waste disposal units
that may receive CESQG hazardous wastes. These proposed standards were
published in the Federal Register on June 12, 1995 (see 60 FR 30964).
C. Summary of Proposed Regulatory Approach
The June 12, 1995 proposal stated that any non-municipal non-
hazardous waste disposal unit 1 that meets the proposed
requirements may receive CESQG hazardous waste; if such units do not
meet the proposed requirements, they may not receive CESQG waste.
Sections 257.5 through 257.30 were proposed to address appropriate
facility standards for owners/operators of non-municipal non-hazardous
waste disposal units that receive CESQG hazardous wastes. The
requirements proposed in Secs. 257.5 through 257.30 were substantially
the same as 40 CFR part 258. The location restrictions were proposed to
be effective 18 months after publication of the final rule, while the
ground-water monitoring and corrective action requirements were
proposed to be effective 24 months after publication of the final rule.
---------------------------------------------------------------------------
\1\ Proposed phrase ``Non-municipal solid waste disposal
facility'' has been replaced in the final rule with the phrase
``non-municipal non-hazardous waste disposal unit''. See Section VI,
A2 of today's preamble for an explanation.
---------------------------------------------------------------------------
The June 12, 1995 proposal also proposed to amend the existing
language of Sec. 261.5 clarifying acceptable Subtitle D management
options for CESQGs. The existing language in Sec. 261.5, paragraphs
(f)(3) and (g)(3) allows for a CESQG hazardous waste to be managed at a
hazardous waste facility (either in interim status or permitted), a
reuse or recycling facility, or a non-hazardous solid waste facility
that is permitted, licensed, or registered by a State to manage
municipal or industrial waste. The June 12 proposal proposed to
continue to allow CESQG waste to be managed at a hazardous waste
facility or at a reuse or recycling facility; however, if CESQG waste
is managed in a Subtitle D disposal facility, it must be managed in a
MSWLF that is subject to part 258 or a non-municipal non-hazardous
waste disposal unit that would be subject to the facility standards in
Secs. 257.5 through 257.30.
III. Summary of Regulatory Approach of Today's Final Rule
Based on comments received on the proposed regulatory approach, the
EPA is today finalizing a rule that is almost identical to the proposed
requirements for non-municipal non-hazardous waste disposal units that
receive CESQG hazardous wastes. Commentors clearly did not favor
imposing additional requirements, beyond those proposed, based on the
lack of risks presented by non-municipal non-hazardous waste disposal
units that receive CESQG hazardous wastes. Furthermore, commentors were
somewhat divided on whether to use the part 258 requirements or general
performance standards in writing the requirements. The EPA has elected
to use the part 258 requirements.
Elsewhere in today's final rule, and again based on comments that
agreed with the EPA's proposed regulatory approach for CESQGs, EPA is
finalizing the proposed changes to the special requirements for CESQGs
(i.e., Sec. 261.5) to clarify the obligation that the generators of
CESQG wastes have to ensure proper management of such wastes. CESQGs
are those that generate no more than 100 kilograms of hazardous waste
or no more than one kilogram of acutely hazardous waste in a month and
who accumulate no more than 1000 kilograms of hazardous waste or no
more than one kilogram of acutely hazardous waste at one time.
As previously discussed, today's final rule responds to the
statutory language in RCRA section 4010(c). In responding initially to
the statutory language of section 4010(c), EPA elected to regulate
municipal solid waste landfills first, due to the comparatively higher
risks presented by these types of facilities. As discussed in the
proposed rule, the subject of today's final rule--non-municipal non-
hazardous waste disposal units that receive CESQG waste--present a
small risk relative to risks presented by other environmental
conditions or situations. Given this lower risk, the Agency would have
elected not to issue this final rule at this time. In a time of limited
resources,
[[Page 34254]]
common sense dictates that we deal with higher priorities first, a
principle on which EPA, members of the regulated community, and the
public can agree. However, given the D.C Circuit's reading of RCRA
section 4010(c), Sierra Club v. EPA, 992 F.2d 337, 347 (D.C. Cir.
1993), and a schedule established as a result of litigation, the Agency
must issue this final rule now. Faced with having to issue this final
rule for a class of facilities that do not generally pose risks as high
as municipal solid waste landfills, the Agency is finalizing
requirements that address only the statutory minimum requirements in an
attempt to reduce the economic burden on the regulated community.
A complete discussion of the main issues associated with today's
final rule is presented in the next section of today's preamble while a
discussion of today's requirements is presented later in today's
preamble.
IV. Major Issues
A. Non-Municipal Non-Hazardous Waste Disposal Units That May Receive
CESQG Hazardous Waste
The proposed rule was written to provide that only those non-
municipal non-hazardous waste disposal units which meet the
requirements in Secs. 257.5 through 257.30 ``may receive'' CESQG waste,
as required by RCRA section 4010(c). Any non-municipal non-hazardous
waste disposal unit that did not meet the proposed requirements may not
receive CESQG hazardous wastes. The proposal was written to apply to
non-municipal non-hazardous waste disposal units that receive CESQG
waste for storage, treatment, or disposal, including such units as
surface impoundments, landfills, land application units and waste
piles. The regulatory definition of the term ``disposal'' cover all
placement of wastes on the land. See 40 CFR 257.2.
Several commentors addressed the Agency's interpretation of the
statutory language ``may receive''. One commentor supported the
Agency's decision to limit the proposed regulatory requirements to only
those non-municipal non-hazardous waste disposal units that receive
CESQG wastes. Another commentor, however, stated that a closer reading
of Section 4010(c) reveals that Congress was not only concerned about
modifying the criteria for ``facilities that may receive hazardous
household wastes or hazardous wastes from small quantity generators * *
*'' but also for ``facilities potentially receiving such wastes.''
According to the commentor, the ``may receive'' clause of the first
sentence in Section 4010(c) merely refers to whether a facility may
legally receive CESQG waste for disposal. The ``potentially receiving
such wastes'' clause of the third sentence of Section 4010(c) refers to
the actual potential for such facilities to receive CESQG wastes. The
potential for CESQG waste to be disposed of at many types of industrial
D landfills is high even with the proposed prohibition under
Sec. 261.5. It is the ``potentially receiving'' clause that
specifically commands the Agency to promulgate provisions for all
industrial facilities that could potentially receive CESQG wastes.
EPA disagrees with the commentor's interpretation of the statutory
language in RCRA section 4010(c). More specifically, for a number of
reasons, the Agency does not believe that the statutory language cited
by the commentor evidences congressional intent that the revised
criteria being promulgated today should address disposal of solid waste
in all industrial disposal facilities. First, EPA believes that the
commentor errs by focusing only on the ``facilities potentially
receiving'' language in the last sentence of section 4010(c). If one
reviews this language together with the statutory language in RCRA
section 4010(a), it is clear that Congress did not intend for the
revised criteria being promulgated today to apply to all industrial
landfills.
RCRA section 4010(a) required EPA to conduct a study of the then
existing guidelines and criteria issued under RCRA sections 1008 and
4004 which were applicable to ``solid waste management and disposal
facilities, including, but not limited to landfills and surface
impoundments.'' 42 U.S.C. Sec. 6949a(a). This statutory language does
indeed suggest that EPA was to study a wide range of solid waste
disposal facilities, including industrial landfills. (As the commentor
stated, because the information on industrial disposal facilities was
quite limited, EPA's report to Congress did focus on municipal
landfills.)
However, the statutory language in section 4010(c) directing EPA to
promulgate a rule revising the criteria in 40 CFR Part 257 limits the
rule's applicability only to those facilities which may receive
hazardous household waste or small quantity generator waste. 42 U.S.C.
6949a(c). If Congress had intended the revised criteria under section
4010(c) to apply to all solid waste disposal facilities, including
industrial landfills and surface impoundments, it clearly could have
done so by enacting language similar to that already used in section
4010(a).
Secondly, the legislative history of RCRA section 4010 suggests
that Congress expressly rejected a provision that would have required
rules to be promulgated under section 4010(c) to apply to the entire
universe of RCRA Subtitle D solid waste disposal facilities. Indeed,
the House version of section 4010 would have required EPA to promulgate
revised guidelines and criteria such that they would be applicable to
all ``solid waste management and disposal facilities, including, but
not limited to landfills and surface impoundments * * *.'' H.R. 2867,
section 30, 98th Cong., 1st Sess. (as introduced in the Senate on
November 9, 1983). However, the Conference Committee instead adopted a
Senate amendment which limited the scope of the revised criteria to
those facilities that may receive hazardous household waste or small
quantity generator waste. H. Rept. No. 98-1133, 98th Cong., 2d Sess.,
at 116-117.
Another indication that RCRA section 4010(c) was not intended to
cover the entire universe of solid waste disposal facilities is the
fact that subsequent to the enactment of section 4010(c) (as part of
the Hazardous and Solid Waste Amendments in 1984), a number of bills
were introduced in Congress which would have either authorized or
required EPA to issue additional regulations that would address all
disposal facilities receiving industrial waste as opposed to addressing
those which may receive CESQG waste as stated in Section 4010(c). See,
e.g., H.R. 3735, ``Waste Materials Management Act of 1989,'' section
324 (would have required EPA to promulgate standards for the management
of industrial solid waste) (Luken Bill); S. 1113, ``Waste Minimization
and Control Act of 1989,'' section 204 (would have required EPA to
promulgate requirements for facilities that manage different types of
industrial waste) (Baucus Bill). Neither of these provisions (although
neither was enacted) would have been necessary if RCRA section 4010(c)
required EPA to promulgate revised criteria for all types of industrial
disposal facilities.
This same commentor cites to language in both the Report to
Congress (as provided for in RCRA section 4010(b)) and the MSWLF
rulemaking to suggest that EPA acknowledged that all industrial
landfills, even those not receiving CESQG waste, should fall within the
scope of today's rule. EPA acknowledges that it expressed a concern
about the potential risks that industrial solid waste disposal
facilities might pose; however, EPA indicated
[[Page 34255]]
that it did not have the level of information necessary to conduct a
rulemaking for such disposal facilities. At the time of issuing the
final MSWLF rule, EPA indicated that it would attempt to study these
facilities to gain a better understanding of the risks that they may
pose. See 56 FR 51000 (Oct. 9, 1991).
After investigating available information in more detail, it became
clear that of all industrial solid waste disposal facilities, only
construction and demolition and off-site commercial facilities
typically receive CESQG waste. As discussed in the proposed rule,
recent information and discussions with the relevant industries
indicate that on-site industrial disposal facilities (which make up the
vast majority of industrial disposal facilities) generally do not
receive CESQG waste. However, the commentor should be aware that EPA
has drafted the rule such that it will apply to such industrial on-site
facilities if they receive CESQG waste. See sections 257.5(a) (1) and
(3).
B. Decision To Impose or Go Beyond the Statutory Minimum Components
RCRA section 4010(c) requires that the revised criteria must at a
minimum include location restrictions, ground-water monitoring as
necessary to detect contamination, and corrective action, as
appropriate. The June 12, 1995, proposal discussed how the Part 258
Municipal Solid Waste Landfill Criteria went beyond these requirements.
(See 60 FR 30968.) The proposal for non-municipal non-hazardous waste
disposal units did not, however, go beyond these statutory minimum
requirements. The Agency presented data, in the June 12 proposal, which
showed that the establishment of additional facility management
requirements, beyond these types of requirements, for non-municipal
non-hazardous waste disposal units that may receive CESQG waste was not
warranted.
The Agency received comments on both sides of this issue. Some
commentors felt that the statutory minimum components were adequate to
address the potential risks from non-municipal non-hazardous waste
disposal units that may receive CESQG wastes. However, other commentors
believed that additional regulatory controls should have been required.
Commentors stated that the level of documented releases and
environmental problems do not merit extensive regulations. Commentors
also stated that the final regulations should be limited to the
proposed requirements as they felt that those requirements were indeed
adequate given the low risks associated with the disposal of CESQG
waste in non-municipal non-hazardous waste disposal units. Some
commentors argued that less stringent requirements, less than the
proposed requirements, would have been more appropriate.
On the other hand, some commentors raised the concern that the
cumulative effect of allowing small quantities of hazardous waste to be
disposed of in non-municipal non-hazardous waste disposal units would
result in a major source of ground-water pollution. Commentors further
felt that because MSWLF owners/operators have upgraded their units to
meet the requirements in Part 258 in order to minimize the risk
associated with the disposal of household hazardous wastes and CESQG
wastes, non-municipal non-hazardous waste disposal units disposing of
CESQG wastes should be required to meet the same standards as in Part
258 (e.g., closure and post-closure care, financial assurance and
operating requirements). In addition, one commentor believed that the
Agency's conclusions, concerning the potential risks associated with
non-municipal non-hazardous waste disposal units receiving CESQG
wastes, were based on outdated and limited data. The commentor felt
that the data cited by EPA failed to justify the Agency's conclusion
that non-municipal non-hazardous waste disposal units pose low risk but
rather simply indicate a lack of information on the subject.
The Agency agrees with those commentors who believe that the
proposed requirements are adequate to address the potential risks from
non-municipal non-hazardous waste disposal units that receive CESQG
hazardous wastes. In the June 1995 proposal, the Agency took the
position that only the proposed requirements were necessary because
``construction and demolition (C&D) waste units, in general, do not
currently pose significant risks and that individual damage cases are
limited in occurrence'' and that off-site commercial landfills are
subject to more ``stringent environmental controls''. The Agency
requested additional data concerning C&D units to further assess the
potential risks these types of units may pose as well as additional
data on commercial industrial solid waste units or other types of units
that may be subject to the proposal.
The Agency did not receive any new data concerning the potential
risks associated with C&D units or any other types of units potentially
subject to the proposal. Thus, EPA has no information suggesting that
the facilities subject to this rule pose any risks beyond those limited
ones discussed in the proposed rule. (One commentor submitted leachate
data on bulky waste landfills but that data was previously considered
by the Agency during the development of the proposal.) In response to
the commentor that suggested that the cumulative effects of allowing
small amounts of hazardous waste would result in a major source of
ground-water pollution the Agency disagrees. The Agency believes that
the limited number of documented damage cases and cases of ground-water
contamination, discussed in the proposal to this rule, do not support
the commentor's concern about the creation of major sources of ground-
water pollution. As such, the Agency believes that it should not go
beyond the requirements that were proposed.
For those commentors who expressed the need to impose Federal
controls on C&D units beyond the proposed requirements, in the form of
closure/post-closure standards and/or financial assurance requirements,
the Agency wishes to point out that these types of standards are
prevalent among State programs for C&D units. Most States (44) specify
some thickness for a final cover, 34 States require post-closure care
for some period of time while 33 and 32 States require financial
assurance for closure and post-closure care, respectively, for C&D
units. Given the lack of data suggesting that C&D facilities pose the
same risks as MSWLFs and the fact that most States already require
additional regulatory controls, EPA does not believe it is appropriate
to establish requirements that go beyond the statutory minimum
requirements of Section 4010(c).
C. Decision To Use the Part 258 Criteria Language or General
Performance Language
The June 12, 1995 proposal identified two options for writing the
proposed requirements. One was to use the Part 258 criteria as the
baseline for these requirements. Part 258 is a combination of
performance standards and additional detail to help the owner/operator
achieve compliance with the performance standards. Part 258 also
establishes minimum national criteria for municipal solid waste
landfills, and as such, a minimum national level of protection. The
second option was to use general performance standards that could be
met by facility owners/operators as they implement the standards as
well as to guide States in designing new regulatory programs (or
revising existing regulatory programs).
[[Page 34256]]
Reasons cited in the proposal for using the Part 258 Criteria
included: (1) Part 258 Criteria provide sufficient detail so that an
individual owner/operator can self-implement them without State
interaction in those instances where States do not seek approval of
their permitting program as required in RCRA Section 4005(c); (2) EPA
believes that the national minimum requirements are necessary for
collection of reliable and consistent ground-water monitoring data and
to allow the owner/operator and States to respond to contamination from
the unit; (3) They contain a substantial amount of flexibility that
allows approved States to tailor standards to individual and classes of
facilities; (4) Some States expressed strong support for using 258
standards as the baseline for solid waste disposal facilities that
receive CESQG hazardous waste; and (5) While some States have standards
for non-municipal facilities that are not identical to the 258
standards, the Agency believed there was a strong likelihood that many
State programs would be approvable.
Reasons cited in the preamble in support of using the general
performance standard approach included: (1) Although the Part 258
standards contain substantial flexibility for States to tailor the
programs to their conditions, the Part 258 standards put certain limits
on State flexibility to design a program tailored to local conditions;
(2) The Part 258 standards also include certain national minimum
requirements (which States can not modify) that EPA promulgated because
of the risks posed by MSWLFs; (3) In the absence of a significant
Federal program, over half of the States have adopted location
standards, ground-water monitoring requirements, and corrective action
requirements that are significantly less extensive than the Part 258
standards; and (4) a general performance standard would provide the
maximum flexibility for States and owners to adopt new methodologies
and technologies (e.g., detecting ground-water contamination using
technologies other than monitoring wells) to meet the standard at the
lowest possible cost.
Comments were received in support of both approaches. Commentors
supported the use of the Part 258 Criteria because they thought general
performance standards would be difficult to implement and enforce.
Another commentor stated that Section 4010(c) requires EPA to spell-out
the requirements that facilities must implement; he argues that by not
specifying how to attain the statutory minimum requirements, a
performance-based approach would fall short of the statute. The
performance-based approach would spawn endless uncertainty, requiring
the wheel to be re-invented for each facility. This uncertainty would
fall most heavily on citizens who are concerned about individual
facilities. Other commentors argued against promulgating general
performance standards and stated that the Part 258 rules provide a
clear, flexible, common sense approach. Using Part 258 provides both
the regulated community and the State Agencies a familiar, well-thought
out scheme that is easy to administer and implement and offers
sufficient flexibility to address site-specific conditions in approved
States. The Agency received extensive comment in the Part 258
rulemaking indicating why general performance standards were
inappropriate for landfills; those comments are as relevant today for
landfills receiving CESQG waste. Finally, developing a significantly
different set of rules from either Part 257 or Part 258 would also be
confusing to the regulated community because it would create one set of
rules for household wastes (Part 258), one for sites that accept CESQG
wastes (this rule) and one for all other non-hazardous wastes (Part
257).
Other commentors supported the use of general performance standards
by reiterating the reasons provided in the proposal in support of such
an approach. Other commentors stated that due to the nature of the
demolition waste stream being landfilled, they supported the use of
general performance standards vs. all of the Part 258 standards.
Commentors supported maximum State flexibility to address local
conditions and requirements tailored to the perceived risk, not
automatically adopting the more restrictive MSWLF regime. Another
commentor stated that the Part 258 ground-water monitoring standards
were developed for MSWLFs and if the ground-water monitoring program
for non-municipal non-hazardous waste disposal units is not based on a
performance standard that allows for site-specific design, certain
facilities will be overregulated. Another commentor stated that the
general performance standard is preferable as long as it provides an
adequate description of the performance objective. Guidance manuals
could be used to implement the general performance standards.
The Agency agrees with the majority of commentors who supported the
use of the Part 258 Criteria. The Agency believes, for all of the
reasons discussed by the commentors, that the use of the Part 258
criteria is the preferable option to utilize in the final rule. The
Part 258 Criteria are a clear, flexible set of regulations that can be
tailored by approved States to address site-specific conditions while
protecting human health and the environment. The ground-water and
corrective action requirements of today's final rule offer owners/
operators in approved States great flexibility in establishing a
ground-water monitoring program and in selecting a corrective measure
should corrective action become necessary.
In a sense, the Part 258 Criteria for ground-water monitoring and
corrective action are general performance standards. However, the big
difference between the use of the Part 258 Criteria and the use of a
general performance standard approach is the detail that is contained
in the Part 258 Criteria, the same detail would not be a part of a
general performance standard approach. Both the Part 258 Criteria and
the general performance standard approach use performance standards;
the general performance standard approach would provide only general
standards to be followed by the owner/operator, while the Part 258
Criteria would provide additional detail and guidance to an owner/
operator in trying to comply with the performance standards contained
in Part 258. This additional detail in the Part 258 Criteria is what
the Agency believes commentors were referring to when they stated that
``using Part 258 provides both the regulated community and the State
Agencies a familiar, well-thought out scheme that is easy to administer
and implement and offers sufficient flexibility to address site-
specific conditions''. It is this additional detail in Part 258 that if
not contained in the general performance standard approach would create
confusion among the regulated community and ``spawn endless
uncertainty''.
The Agency believes that the use of the detail in the Part 258
Criteria for ground-water monitoring and corrective action, in the form
of factors to consider vs. design standards, clearly guides an owner/
operator in achieving compliance with the performance standards in Part
258 while maximizing the owners/operators ability to take into account
and use site-specific data. Part 258 guides an owner/operator and State
Agencies by specifying (1) what factors should be considered in
determining the number, depth, and spacing of the wells in the
monitoring system, (2) how wells should be cased, (3) that any
statistical test comply with basic performance standards, (4) what
factors should be considered in establishing an initial list of
monitoring parameters and frequency, (5) what factors should be
[[Page 34257]]
considered in selecting any potential remedy under corrective action,
and (6) what factors should be considered in developing interim
measures under a corrective action program. The Agency does not believe
that the use of the detail in the Part 258 Criteria will result in
``facilities being overregulated''. EPA also believes that this detail
is necessary to protect human health and the environment.
V. Summary of Today's Final Rule
Today's final rule specifies that non-municipal non-hazardous waste
disposal units that do not meet the requirements (i.e., location
restrictions, ground-water monitoring and corrective action) in
sections 257.5 through 257.30 may not receive CESQG hazardous waste.
The ground-water monitoring and corrective action requirements being
finalized today are substantially the same as those that were proposed.
The location restrictions have been changed from the proposal with the
major change being that in the proposal 6 location restrictions were
proposed but in today's final rule only 2 location restrictions are
being finalized (floodplains and wetlands). Differences between the
final requirements and those that were proposed are discussed in the
appropriate sections of today's preamble.
The location restrictions will be effective 18 months after
publication of the final rule. The location restrictions being
finalized today are the floodplains and wetlands restrictions. The
floodplains restriction is applicable to new units, existing units, and
lateral expansions of existing units that receive CESQG waste. Only new
units and lateral expansions of existing units that receive CESQG
hazardous waste must comply with the wetlands location restriction.
The ground-water monitoring and corrective action requirements will
be effective 24 months after publication of the final rule. Any
existing unit, new unit, or lateral expansion of an existing unit that
receives CESQG hazardous waste after the effective date will be
required to comply with the final ground-water monitoring and
corrective action requirements. The ground-water monitoring provisions
are being finalized to ensure that units that receive CESQG hazardous
waste will have monitoring systems in place that will enable the
detection of any contamination of ground-waters along with appropriate
sampling and analysis procedures to allow for the statistical analysis
of monitoring results. The corrective action requirements will allow
for the evaluation, selection, and implementation of an appropriate
remedial technology to clean-up any contamination of ground-waters.
Today's final rule also amends the existing language of Sec. 261.5
clarifying acceptable Subtitle D management options for CESQGs. The
language in Sec. 261.5, paragraphs (f)(3) and (g)(3) currently allows a
CESQG hazardous waste to be managed at a hazardous waste facility
(either in interim status or permitted), a reuse or recycling facility,
or a non-hazardous waste disposal unit that is permitted, licensed, or
registered by a State to manage municipal or industrial waste. Today's
final rule would continue to allow CESQG waste to be managed at a
hazardous waste facility or at a reuse or recycling facility. Today's
final rule will require that if CESQG waste is managed in a Subtitle D
disposal facility, it may be managed in a MSWLF that is subject to Part
258 or managed in a non-municipal non-hazardous waste disposal unit
that is subject to the standards being finalized in Secs. 257.5 through
257.30.
VI. Specifics of Today's Final Rule
A. Section 257.5--Applicability
1. Applicability
EPA proposed that any owner/operator of a non-municipal non-
hazardous waste disposal unit that wanted to receive CESQG hazardous
waste would have to comply with the proposed requirements in
Secs. 257.5-257.30 prior to the actual receipt of the CESQG waste. The
proposal stated that owners/operators of non-municipal non-hazardous
waste disposal units that do not meet the proposed criteria may not
receive CESQG hazardous waste.
The proposal further stated that owners/operators of non-municipal
non-hazardous waste disposal units that receive CESQG hazardous waste
after the effective date would have to comply with the location
restrictions (Secs. 257.7-257.12) within 18 months after the date of
publication of the final rule and with the ground-water monitoring and
corrective action requirements (Secs. 257.21-257.28) within 24 months
after the date of publication of the final rule.
The Agency is finalizing the applicability of the final rule as
proposed and retaining the effective dates as proposed. The Agency
received no specific comments in regard to the effective dates with the
exception of one comment that stated that the commentor had no problem
with the two-year effective date for the ground-water monitoring and
corrective action requirements.
2. Definitions
EPA proposed a number of definitions for terms in the proposal and
received limited comments. One commentor thought that the term ``non-
municipal solid waste disposal facility'' should be more appropriately
called ``non-municipal non-hazardous waste disposal facility''. The
commentor stated that by discussing only ``solid waste'' facilities,
hazardous waste facilities are not excluded because they are a subset
of ``solid waste''. Furthermore, this commentor thought the term ``non-
municipal solid waste landfill'' should also more appropriately be
called a ``non-municipal non-hazardous waste disposal facility''. This
same commentor also expressed a concern that the terms ``facility'' and
``unit'' as used in Secs. 257.7 through 257.9 were used interchangeably
and that some clarification and/or consistency was necessary.
The EPA agrees that the term ``non-municipal solid waste disposal
facility'' could be confusing and that the term ``non-municipal non-
hazardous waste disposal facility'' more clearly defines the types of
facilities potentially subject to today's final rule. The EPA also
agrees that the terms ``facility'' and ``unit'' were used
interchangeably and that the term ``unit'' is more appropriate to use
in defining what is potentially subject to today's final rule.
Therefore, in today's preamble and in the final rule language the term
non-municipal non-hazardous waste disposal unit is used.
Correspondingly, the terms ``existing facility'' and ``new facility''
have been changed in the final rule to refer to ``exiting unit'' and
``new unit''. Existing unit refers to any non-municipal non-hazardous
waste disposal unit that is receiving CESQG hazardous waste as of the
effective date (i.e., 18 months after the final rule is published in
the Federal Register). A new unit is any non-municipal non-hazardous
waste disposal unit that has not received CESQG hazardous waste prior
to the effective date (i.e., 18 months after the final rule is
published in the Federal Register).
Today's applicability section (Sec. 257.5) has also been changed to
clarify the situation where a non-municipal non-hazardous waste
disposal unit decides to receive CESQG hazardous waste after the
effective date of today's rule. The applicability section (section
257.5(a)(5)) has been changed to clarify that any non-municipal non-
hazardous waste disposal unit that first receives CESQG hazardous waste
after the date 18 months after the date of publication of this final
rule in the Federal Register
[[Page 34258]]
must be in compliance with all the requirements prior to the receipt of
the CESQG hazardous waste.
One additional change from the proposed rule language concerns the
definition of the term State/Tribal Director. In the proposal the term
State/Tribal Director was defined to mean the chief administrative of
the State/Tribal agency responsible for implementing the State/Tribal
permit program for Subtitle D regulated facilities. The remainder of
the proposed rule language, however, consistently used the term State
Director. This was done as a means of efficiency and the Agency did not
imply any other substantive effect on the character, authority, and/or
rights of Tribes. The final rule will include Indian Tribes in the
definition of the term ``State'' (as was proposed) and Tribal Director
in the definition of ``State Director''. This change is being made to
be consistent with the proposed changes to Part 258 language in the
proposed State/Tribal Permit Program Determination of Adequacy (See 61
FR 2584, January 26, 1996). The State/Tribal Permit Program
Determination of Adequacy contains a complete discussion of the
opportunities that are available to Indian Tribes to apply for program
approval.
B. Sections 257.7-257.13--Location Restrictions
EPA proposed a set of location restrictions for new and existing
units that receive CESQG waste which mirrored restrictions already
established for MSWLFs. 40 CFR 258.10 to 258.16. However, in response
to comment received on the proposal, EPA has modified the proposed
location restrictions in a number of ways. Because units receiving
CESQG waste pose a smaller risk to human health and the environment
than do MSWLF facilities and for the reasons discussed below, EPA
believes that the restrictions being promulgated today satisfy the
statutory standard contained in RCRA Section 4010(c). 42 U.S.C.
Sec. 6949a(c).
1. Airport Safety
EPA proposed that new, existing, and lateral expansions of existing
non-municipal non-hazardous waste disposal units, that receive CESQG
hazardous waste, demonstrate that the unit does not pose a bird hazard
to aircraft. The proposed airport safety provision was the same as the
current Part 257 requirement; only the demonstration requirement to the
affected airport and to the FAA for new and lateral expansions of
existing units was new.
Several commentors objected to the airport safety provision in
Section 257.7 and requested that the provision be removed. Commentors
stated that units that accept CESQG wastes will be non-putrescible
operations that do not provide a source of food or nesting for birds.
One commentor stated that actual observations of over 30 sites across
the country support the conclusion that birds are virtually nonexistent
at C&D units. Lastly, one commentor referenced the recent FAA report
titled ``Draft Report to Congress on Potential Hazards to Aircraft by
Locating Waste Disposal Sites in Vicinity of Airports'', wherein, the
FAA stated that recent FAA sponsored research has shown that non-
putrescible waste landfills (i.e., construction and demolition waste
landfills, . . .) do not attract wildlife that could create a wildlife/
aircraft strike hazard.
In response to commentors concerns, the Agency has eliminated the
airport safety provision from today's final rulemaking. The Agency's
original requirement under Part 257 was designed to regulate units that
dispose of putrescible wastes; based on the fact that units potentially
subject to today's final rule do not receive putrescible wastes (e.g.,
C&D units), the Agency sees no reason to have this requirement as part
of today's final rule.
2. Floodplains
EPA proposed that new, existing, and lateral expansions of existing
non-municipal non-hazardous waste disposal units, that receive CESQG
hazardous wastes, located in the 100-year floodplain demonstrate that
the unit will not restrict the flow of the 100-year flood, reduce the
temporary water storage capacity of the floodplain or result in washout
of solid waste so as to pose a hazard to human health and the
environment.
No comments were received on the substance of the floodplain
provision; therefore, the Agency is finalizing the floodplain provision
as it was proposed.
3. Wetlands
The Agency proposed that new facilities and lateral expansions of
existing non-municipal non-hazardous waste disposal units, that receive
CESQG hazardous wastes, not be located in a wetland unless specified
demonstrations can be met by the owner/operator. The demonstrations
were to ensure that if a non-municipal non-hazardous waste disposal
unit needed to be located in a wetland, protection of state water
quality standards and protection of the wetland will be achieved.
Furthermore, the proposal was consistent with the Agency's goal of
achieving no net loss of the nation's wetlands.
No comments were received on the substance of the wetlands
provision, therefore, the Agency is finalizing the wetlands provision
as it was proposed.
4. Fault Areas
EPA proposed that new and lateral expansions of existing non-
municipal non-hazardous waste disposal units, that receive CESQG
hazardous waste, not be located within 200 feet of a fault that has had
displacement in Holocene time unless the owner/operator demonstrates
that an alternative setback distance of less than 200 feet will not
affect the structural integrity of the unit during displacement and
will be protective of human health and the environment.
One commentor questioned the need for a fault area restriction
because this location provision is premised on the fact that if
movement along a fault occurs, the structural integrity of the
engineering features will be disrupted. Given the low risks imposed by
many of the facilities potentially subject to the rule and the fact the
Agency is not regulating the design features (i.e., liners, leachate
collection systems) of these facilities, imposing siting restrictions
is not warranted.
The Agency agrees that the fault area restriction is designed to
guard against disruptions to the engineering features that provide
structural integrity to the unit. Because of the low-risks posed by
non-municipal non-hazardous waste units that receive CESQG waste, EPA
did not propose any liner requirements or other provisions bearing on
the structural integrity of the units. Thus, the Agency agrees that
imposing this restriction is not warranted, and as such, the fault area
restriction is not a part of today's final rule.
5. Seismic Impact Zones
EPA proposed that new and lateral expansions of existing non-
municipal non-hazardous waste disposal units, that receive CESQG
hazardous waste, not be located in seismic impact zones unless the
owner/operator demonstrates that all containment structures are
designed to resist the maximum horizontal acceleration in lithified
earth material for the site.
No specific comments were received on this provision. However, this
provision like the fault area provision, was designed to guard against
disruptions to liners, leachate collection systems, and surface water
control systems, therefore, EPA considers that the logic of the
comments on fault area
[[Page 34259]]
restrictions applies to this restriction as well, and as such, the
Agency sees no reason to include this location restriction as part of
today's final rulemaking.
6. Unstable Areas
EPA proposed that new, existing and lateral expansions of existing
non-municipal non-hazardous waste disposal units, that receive CESQG
hazardous waste, located in an unstable area demonstrate that
engineering measures have been incorporated into the facility design to
ensure that the integrity of the structural components of the facility
will not be disrupted.
As with the seismic impact zone restriction, no specific comments
were received on this part of the proposal. However, for the same
reasons as discussed above under the fault area and seismic impact zone
restrictions, this location restriction is also not part of today's
final rule.
7. Deadline for Making Demonstrations
EPA proposed that existing non-municipal non-hazardous waste
disposal units, that receive CESQG hazardous wastes, that could not
make the demonstrations pertaining to airports, floodplains, or
unstable areas, would not be allowed to accept CESQG hazardous waste
for disposal 18 months after the date of publication of the final rule.
No specific comments were received on this provision of the
proposal. As the final rule only applies to existing units located in
floodplains, this provision has been changed to require that only
existing units in floodplains will not be allowed to accept CESQG
hazardous waste for disposal 18 months after the date of publication of
the final rule.
C. Sections 257.21-257.28--Ground-Water Monitoring and Corrective
Action
1. Applicability
The Agency proposed a number of requirements under the heading
``applicability.'' The Agency proposed that the ground-water monitoring
requirements could be suspended by the Director of an approved State if
the owner/operator could demonstrate that there was no potential for
migration of hazardous constituents from the facility to the uppermost
aquifer during the active life plus 30 years.
The Agency also proposed the existing units had to be in compliance
with the groundwater monitoring requirements within 2 years after the
date of publication of the final rule in the Federal Register. EPA
proposed that new facilities meet the ground-water monitoring
requirements when waste is first placed in the unit. The Director of an
approved State could specify an alternative schedule for compliance for
existing units. The proposed alternative schedule called for 50% of
existing units to be in compliance within 2 years and for all existing
units to be in compliance within 3 years.
The Agency also proposed that ground-water monitoring be conducted
throughout the active life plus 30 years. The director of an approved
State could decrease the 30 year period.
Lastly, the Agency proposed to grant the Director of an approved
State the flexibility to establish and use an alternative list of
indicator parameters for some or all of the constituents listed in
Appendix I (appendix I to Part 258) and to allow small, dry, remote
non-municipal non-hazardous waste disposal units to use an alternative
form of detecting ground-water contamination.
The Agency received no adverse comment on most of these provisions.
The flexibility for small, dry, remote non-municipal units was
considered an example of increased flexibility by a commentor. The
Agency has slightly altered the regulatory language for the proposed
flexibility for small, dry, remote non-municipal non-hazardous waste
disposal units that may be allowed to use alternative forms of
detecting ground-water contamination. The proposed language required,
in two places, that an owner or operator had to submit results or seek
approval of corrective measures within 60 days. These deadlines have
been removed to allow for increased flexibility. The deadlines have
been replaced with language that allows the Director of an approved
State to establish a schedule for the owner or operator for the above
mentioned activities. This change is also being done to be consistent
with the rule language that was proposed for MSWLFs, allowing small,
dry, remote MSWLFs to use alternative forms of detecting ground-water
contamination. See 60 FR 40799, August 10, 1995. The proposed language
allowing for alternatives to be used for small, dry, remote MSWLFs was
the basis for the proposed language to allow small, dry, remote non-
municipal, nonhazardous waste disposal units to also use alternative
forms of detecting ground-water monitoring. See 60 FR 30976, June 12,
1995.
The length of the ground-water monitoring period (i.e., active life
plus 30 years) generated some disagreement. In regard to the length of
the ground-water monitoring period, two commentors concurred with the
Agency's decision to impose the ground-water monitoring period through
the active life plus 30 years. The commentors believed that the time
frame was consistent with other similar rules, and based upon the
flexibility in the rule, was not overly burdensome to units in
comparison to the environmental protection it affords.
Several commentors requested that the Agency reduce the ground-
water monitoring period to a shorter time period or to a time period
based on an individual unit's performance standard. In regard to a
performance standard, one commentor argued a performance standard could
be used by an owner/operator to demonstrate that an alternative time
period is appropriate. One example suggested was that the performance
standard be based on a specified number of years without significant
changes in ground-water quality. No specific number of years was
provided.
In regard to a shorter period of time, commentors generally agreed
that the 30 years was not reflective of the low risks posed by units
that may potentially receive CESQG wastes. One commentor requested 10
years for existing and 15 years for new units. Another commentor stated
that a shorter period was necessary because most States have a post-
closure period that ranges from 5-10 years. A third commentor stated
that applying an extremely burdensome 30 years period places an
economic burden on operators that is not remotely balanced by any real
environmental benefit. This commentor suggested a 5-year period and
that the rules could be extended if problems are discovered during the
5 years. Lastly, one commentor questioned what incentive existed to
monitor groundwater for 30 years beyond the final receipt of waste.
This commentor considered it unreasonable to expect that the monitoring
program will be met after a disposal unit has no further economic
value.
After a consideration of the comments, the Agency has elected to
retain the requirement that ground-water monitoring be conducted for 30
years after the active life of the unit for the same reasons that were
discussed in the proposal. The Agency believes that there is sufficient
flexibility within Sec. 257.21(e) for an approved State to decrease the
30-year period. The final regulation allows the Director of an approved
State to reduce the length of the monitoring period if the owner/
operator demonstrates that a shorter period is adequate to protect
human health and the environment. The Agency expects that States will
reduce
[[Page 34260]]
the length of the monitoring period if an owner/operator can
demonstrate, for example, that no adverse changes in ground-water
quality have been detected for some period of time less than 30 years.
Furthermore, although some commentors expressed concern over the length
of the 30-year period, the Agency did not receive any data supporting
any such reduction in the length of the monitoring period.
Today's final rule continues to provide flexibility for an approved
State to suspend the ground-water monitoring requirements in
hydrogeologic settings that may preclude the migration of hazardous
constituents from the unit to the ground water.
2. Ground-Water Monitoring Systems
The Agency proposed a number of requirements under the proposed
section ``ground-water monitoring systems''. The Agency proposed that
ground-water monitoring systems consist of a sufficient number of
wells, installed at appropriate locations and depths to yield ground-
water samples from the uppermost aquifer that represent the quality of
background ground water and the quality of ground water passing the
relevant point of compliance. The downgradient monitoring system was to
be installed at the relevant point of compliance, as allowed by the
Director of an approved State, or at the waste management unit boundary
in unapproved States. The relevant point of compliance specified by the
Director of an approved State was proposed to be no more than 150
meters from the waste management unit boundary and located on land
owned by the owner/operator. Furthermore, the proposal allowed for
multi-unit monitoring under specific conditions.
The only area to receive comments was the point of compliance. A
number of commentors expressed concern regarding the 150 meter limit
for the point of compliance. One commentor requested EPA to either
allow a site-specific decision regarding the point of compliance or
allow the use of a point of compliance within the facility boundary. A
second commentor requested that EPA not specify a specific distance but
rather authorize a site-specific identification of a compliance point
based on the location for the potential for exposure. For example, if a
unit is located a considerable distance from a drinking water well,
having the point of compliance 150 meters from the unit boundary may be
needlessly stringent. A third commentor stated that a flexible approach
to establishing the point of compliance is well suited to low-risk
facilities.
After a consideration of the comments, the Agency has decided to
retain the proposed language regarding the point of compliance. The
final rule will require that the downgradient monitoring wells be
installed at the waste management unit boundary in unapproved States or
at the relevant point of compliance, as allowed by the Director of an
approved State. The relevant point of compliance can be up to 150
meters from the waste management unit boundary. The Agency retained the
150 meter limit because the Agency believes it is essential to set a
maximum distance limit for the point of compliance that would limit
ground-water contamination, yet still provide flexibility to owners/
operators of non-municipal non-hazardous waste disposal units that
receive CESQG wastes. A point of compliance set some distance much
farther from the unit boundary would result in a situation where
ground-water contamination, when first detected, would be more wide-
spread and result in higher corrective action costs to remedy the
situation.
The Agency realizes that the point of compliance can have
significant implications associated with the scope, magnitude and cost
of ground-water remedial actions. Because of these implications, the
point of compliance continues to be an area of discussion and debate.
At this point in time, the Agency is finalizing the point of compliance
language for Subtitle D units as described in the proposal for this
rule. However, the Agency is addressing the point of compliance issue
in an Advance Notice of Proposed Rulemaking (ANPR) (See 61 FR 19432,
May 1, 1996) as part of developing regulations concerning ``Corrective
Action for Releases from Solid Waste Management Units at Hazardous
Waste Management Facilities'' (subpart S of 40 CFR part 264). The
Agency intends to use the ANPR to invite comments on a number of
issues, including the point of compliance pertaining to corrective
action under Subtitle C of RCRA. It is possible that future
regulations, which address new point of compliance approaches for
Subtitle C facilities, could also address Subtitle D units subject to
today's final rule.
3. Ground-Water Sampling and Analysis Requirements
The proposal required the use of consistent sampling and analysis
procedures that would be designed to ensure monitoring results that
provide an accurate representation of ground-water quality at the
background and downgradient monitoring wells. The Agency received no
substantial comments on this section of the proposal; therefore, the
sampling and analysis requirements are being finalized as proposed.
Comments concerning sampling and analysis requirements are addressed in
the comment response document associated with this final rule.
4. Detection Monitoring Program
The proposal addressed numerous requirements associated with
detection monitoring, the first phase of ground-water monitoring. The
majority of the proposed requirements pertained to which constituents
had to be monitored for and the required frequency of monitoring. The
proposal required that those constituents identified in Appendix I of
part 258 were to be monitored for during the detection monitoring phase
of ground-water monitoring and that the frequency of monitoring was to
be at least semi-annual. The proposal also specified the areas of
flexibility that existed for an owner/operator during detection
monitoring.
The Agency received no comments on the frequency of monitoring
during the detection monitoring period, and as such, the final rule
requires at least semi-annual monitoring during detection monitoring.
The final rule also continues to allow the Director of an approved
State to specify an alternative frequency of monitoring during the
active life plus 30 years (no less than annual during the active life).
The Agency did receive some comments regarding the constituents to
be monitored for during detection monitoring. A commentor raised the
issue of developing a new list of ground-water parameters for
facilities that accept CESQG wastes. Another commentor stated that
MSWLFs contain a much larger portion of waste that is biodegradable and
therefore creates its own chemical degradation byproducts. Unless EPA
has data that shows that leachates from non-municipal non-hazardous
waste facilities are similar to municipal solid waste landfills, the
Agency should not be imposing similar requirements. According to the
commentor, the ground-water monitoring program should require testing
only for constituents that are related to the waste accepted at the
facility, not a list of constituents that could be found at any
facility that may accept CESQG wastes. Lastly, the commentor stated
that the monitoring parameters should be representative of
[[Page 34261]]
those constituents that are most mobile in the ground-water environment
so that early detection is accomplished without undue cost of over
regulation.
After a consideration of the comments, the Agency has decided to
retain the requirements as proposed in the detection monitoring section
of the proposal. The Agency believes that developing a new list of
ground-water constituents for facilities that accept CESQG wastes would
cause undue confusion for the regulated community. However, EPA has
provided some flexibility for approved States in regard to testing for
constituents that are related to the wastes accepted at the unit.
Today's final rule provides flexibility to the Director of an approved
State to remove from the detection monitoring list of constituents, any
constituent that is not reasonably expected to be in or derived from
the waste contained in the unit. Furthermore, the Director of an
approved State may establish an alternative list of indicator
parameters in lieu of some or all of the constituents in appendix I of
part 258, if the alternative indicator parameter(s) provides a reliable
indication of releases from the unit to the ground water.
The June 1995 proposal allowed the Director of an approved State to
develop only an alternative list of inorganic indicator parameters; the
organic parameters in appendix I of part 258 were to be monitored for
and no substitutions were allowed. However, in today's final rule, the
Agency has provided additional flexibility in that the Director of an
approved State can establish an alternative list of indicator
parameters for some or all of the constituents in appendix I of part
258 including the organic constituents. The Agency has provided this
area of increased flexibility because an alternative list of indicator
parameters, approved by the Director of an approved State, could be
appropriate in specific circumstances, and the Agency continues to
believe that the risks posed by non-municipal non-hazardous waste
disposal units that may elect to receive CESQG wastes is relatively
small when compared to MSWLFs. Non-municipal non-hazardous waste units
that elect to receive CESQG wastes will be mostly C&D units. The Agency
stated in the proposal for this rulemaking, that these types of units,
in general, do not pose a significant risk. As such, the Agency
believes that Directors of approved State programs can exercise
additional flexibility in establishing the appropriate list of
detection monitoring constituents or indicator parameters.
This area of increased flexibility can serve to alleviate
commentor's concerns regarding the appropriate parameters to monitor
for during detection monitoring. This area of flexibility will allow
the Director of an approved State to tailor the detection monitoring
list to those wastes accepted at the facility and/or those that are
expected to be a concern due to mobility. One commentor expressed
concern that the detection monitoring list (Appendix I to Part 258) for
today's final rule should not be identical to the detection monitoring
list developed for municipal solid waste landfills. The Agency,
however, believes that leachates from non-municipal units are somewhat
similar, in that some of same types of organics and inorganics can
appear in non-municipal leachates but at lesser concentrations, and as
such, saw no reason to create a separate and new detection monitoring
list.
5. Assessment Monitoring Program
The proposal would have required that once a statistically
significant increase over background was detected during detection
monitoring, a full assessment of any impacts on ground-water quality
had to be undertaken. The purpose of assessment monitoring was to
sample for a larger list of constituents to determine which were
present. The assessment monitoring program also required the
establishment of ground-water protection standards.
The Agency received no comments on the proposed assessment
monitoring requirements; therefore, the assessment monitoring program
requirements are being finalized as proposed.
6. Assessment of Corrective Measures, Selection of Remedy, and
Implementation of the Corrective Action Program
The proposal required that once a statistically significant
increase was detected over the ground-water protection standard for any
constituent detected during assessment monitoring, the owner/operator
was required to assess available corrective measures. Available
corrective measures were those that could meet the performance
standards established under the proposed selection of remedy
requirements. Lastly, the proposal would have required that once a
corrective measure was selected, the owner/operator would be required
to implement the selected remedy.
The Agency received no comments on the proposed corrective action
requirements; therefore, the corrective action requirements are being
finalized as proposed.
D. Section 257.30--Recordkeeping Requirements
EPA proposed that owners/operators of non-municipal non-hazardous
waste disposal units record and retain various pieces of information in
an operating record. The operating record was proposed to be at the
facility or at an alternative location as approved by the Director of
an approved State. The following type of information was proposed to be
retained: any location restriction demonstration and any demonstration,
certification, finding, monitoring, testing, or analytical data
required as part of complying with the ground-water monitoring and
corrective action requirements.
No comments were received on the substance of the recordkeeping
requirements; therefore, the Agency is finalizing the recordkeeping
requirements provision as it was proposed.
E. Special Requirements for Hazardous Waste Generated by Conditionally
Exempt Small Quantity Generators
1. Changes to Section 261.5
The proposal would have amended the existing language of Sec. 261.5
by establishing acceptable Subtitle D management options for CESQG
waste. The existing language in Sec. 261.5, paragraphs (f)(3) and
(g)(3), allows for a CESQG hazardous waste to be managed at a hazardous
waste facility (either in interim status or permitted), a reuse or
recycling facility, or a non-hazardous solid waste facility that is
permitted, licensed, or registered by a State to manage municipal or
industrial wastes. The proposed rule would have continued to allow
CESQG waste to be managed at a hazardous waste facility, or at a reuse
or recycling facility; however, the proposal would have required that
if CESQG waste was to be managed at a Subtitle D disposal facility, it
must be managed in a MSWLF that is subject to Part 258 or a non-
municipal non-hazardous waste disposal unit that is subject to the
standards that were proposed for units receiving CESQG wa
FR Doc. 96-16585 Criteria for Classification of Solid Waste Disposal Facilities and Practices; Identification and Listing of Hazardous Waste; Requirements for Authorization of State Hazardous Waste Programs
ste.
Commentors supported the proposed rule changes to paragraphs (f)(3)
and (g)(3) in Sec. 261.5 regarding waste generated by CESQGs.
Commentors stated that the continuation of the CESQG rules was very
important as these rules were developed to ease the burden of small
generators. Other commentors also supported the proposed generator
changes for various reasons: proposed changes will help CESQGs ensure
that their wastes are properly managed, CESQGs may
[[Page 34262]]
investigate the recycling or reuse of their waste streams, or use of
alternative, less-hazardous materials in their operations, and the
proposed changes are a wise-policy decision.
Given the agreement that commentors had with the proposed changes
to Sec. 261.5, the Agency has decided to largely finalize the
requirements as proposed.
One small change has been made in today's final rule language,
however, in paragraphs (f)(3) and (g)(3). This small conforming change
deals with final regulatory language that was developed in the
universal waste rule (see 60 FR 25541, May 11, 1995). Universal wastes
are the following hazardous wastes that are subject to the universal
waste rule: batteries as described in 40 CFR 273.2, pesticides as
described in 40 CFR 273.3, and thermostats as described in 40 CFR
273.4. The conforming changes are found in today's final rule language
in paragraphs (f)(3)(vii) and (g)(3)(vii). The conforming changes in
today's final rule allow a CESQG to manage universal wastes in a
facility that is a universal waste hauler or destination, provided that
facility is subject to the universal waste requirements in 40 CFR Part
273. See 60 FR 25492, May 11, 1995. The possibility that some CESQG
waste could be considered a universal waste was discussed in the
proposal to this final rule. See 60 FR 30968, June 12, 1996.
RCRA Section 3010(b) states that regulations respecting
requirements applicable to the generation, transportation, treatment,
or disposal of hazardous waste that are promulgated under Subtitle C
shall take effect six months after the date of promulgation. The
Administrator is authorized to establish a shorter effective date. 42
U.S.C. 6930(b).
The revisions to 40 CFR Section 261.5 and 271.1 are being
promulgated, in part, under RCRA section 3001(d)(4), and thus, are
subject to the six month effective date provision in section 3010(b).
In the proposed rule, EPA stated that it intended to make these
revisions to the Subtitle C regulations effective 18 months after their
publication so as to coincide with the effective dates of the Subtitle
D provisions. See 60 FR 30979. In the final rule, EPA is making the
Subtitle C provisions effective in six months in accordance with RCRA
section 3010(b). However, to ensure that there will be consistency in
implementation of both the Subtitle C and D provisions, as suggested in
the proposal, EPA has chosen to delay the compliance date for the
Subtitle C provisions until 18 months after today's date. Thus,
although the Subtitle C revisions go into effect in six months, those
who generate CESQG waste will have to comply with the revised disposal
standards in section 261.5 (f)) and (g) only when the Subtitle D
revised location restrictions for CESQG waste go into effect in 18
months. The final rule language for section 261.5 and 271.1 reflect
this delayed compliance date.
2. CESQG Wastes
Comments were received concerning various aspects related to the
requirements for CESQGs. Comments were also received requesting that
the Agency provide a clearer picture of what constitutes a CESQG waste.
Lastly, other commentors stated that the final rule needed to have a
screening requirement in place for facilities that elect not to receive
CESQG wastes.
In regard to the comments concerning the need to better identify
what is a CESQG waste, the proposal identified examples of CESQG
wastes, particularly for the construction and demolition waste
industry. See 60 FR 30967, June 12, 1995. CESQG hazardous wastes
generated in the construction, renovation, and demolition waste
industry are more likely to be specific chemicals or products used in
these activities. Building demolition debris can be a CESQG waste if
based on generator knowledge or a representative sample of the entire
building debris, the building debris is determined to be a hazardous
waste (i.e., it exhibits one of the four characteristics of a hazardous
waste), and if hazardous, is under the waste quantity cutoff limit for
a CESQG waste (See 60 FR 30967, June 12, 1995).
Commentors requested a comprehensive listing of C&D wastes which
may be typically hazardous. The Agency's supporting document
``Construction and Demolition Waste Landfills'' identified a number of
wastes that were considered potentially ``hazardous'' by various
sources. The Agency continues to believe, as stated in the proposal,
that not all of the wastes identified in the report are hazardous as
determined under Subtitle C; however, the listing provided in the
supporting document provides an indication of the types of wastes that
may be present in the construction and demolition waste industry that
could be a concern. Given that the Subtitle C and D regulations are
generally implemented by the States, the Agency believes that owners/
operators should work with their State Agencies to determine what
specific rules or guidance applies with regard to the types of wastes
that their State Agency considers to be hazardous.
3. Screening Procedures
Comments were also received requesting that the Agency acknowledge
the use of existing screening procedures. With regard to the comments
concerning the need to acknowledge the use of existing screening
procedures and the need to have a screening procedure in place for
facilities that elect not to receive CESQG wastes, the proposal did not
require non-municipal non-hazardous waste disposal units to screen
incoming wastes in order to assure that they were not receiving CESQG
wastes. Rather, it left it up to the owner/operator to assure, through
what ever means he/she determined, that the facility was not receiving
CESQG waste. This could include certifications by waste haulers that
their wastes destined for the facility will not contain CESQG wastes,
written prohibitions in contracts between waste haulers and the owner/
operator stating that the facility does not receive CESQG waste for
disposal, and/or random screening procedures at the facility.
Commentors were concerned that CESQG wastes would find their way into
C&D landfills that elect not to upgrade and comply with today's final
requirements, particularly given that the proposal did not require the
use of a formal screening procedure to prove that the facility was not
receiving CESQG wastes. Specifically, one commentor stated that without
a stringent method of restricting wastes and documenting these efforts,
C&D landfills that do not meet the proposed requirements may become
low-cost alternatives for the unscrupulous. Two other commentors stated
that the proposed rule, as written, lacked an affirmative demonstration
on the part of a facility that elected not to comply with the proposed
requirements, that the facility was in reality not receiving CESQG
waste for disposal. The commentor argued that ``without a screening
method at facilities that elect not to comply, the proposed rule is
insufficient to satisfy the mandate of RCRA Section 4010(c)''. Several
of these commentors suggested the use of the screening procedure
specified in the Part 258 Criteria for municipal solid waste landfills.
Other commentors acknowledged that screening exists today for C&D
facilities and that it is successful. Screening is done at most C&D
facilities and, thus, regulatory criteria made applicable to such
facilities should take into account screening practices that
significantly reduce the risks that C&D facilities present to human
health and the environment. These commentors wanted EPA to expressly
acknowledge
[[Page 34263]]
that screening programs reduce risks at C&D facilities or to develop a
regulatory approach that allows C&D facilities with established
screening programs to be exempted from a majority of the proposed
criteria or EPA should develop relaxed regulatory criteria that take
into account such risk-reduction operational practices.
The proposal explained that owners/operators implementing a
screening procedure should contact their State Agency to determine that
the screening procedure ensures that the facility does not receive
CESQG wastes. Responding to this statement, one commentor said that the
Agency should not delegate this obligation to the states because doing
so will lead to unwarranted lawsuits against owners/operators that do
not want to accept CESQG wastes and confusion at the state level caused
by widely divergent screening requirements that may or may not be
acceptable.
In response to the comments about the need for screening
requirements as part of today's final rule, the Agency is concerned
that the establishment of specific and/or detailed screening standards
would limit flexibility that owners/operators and State Agencies have
in developing an appropriate screening method, if one is considered
necessary. Under the rule as proposed and promulgated, if an owner/
operator of a non-municipal non-hazardous waste disposal unit elects
not to receive CESQG wastes, and therefore, does not upgrade to meet
the requirements in today's final rule, he/she is not legally allowed
to accept CESQG wastes. See 40 CFR 257.5(a)(3). If the owner/operator
does accept CESQG wastes, then he/she would be in violation of today's
final rule and would be subject to enforcement actions. See 40 CFR
257.5(a)(1). CESQGs that send their CESQG waste to landfills that are
not subject to today's requirements for non-municipal units would,
likewise, be subject to enforcement actions.
Owners/operators that elect not to upgrade and therefore not
receive CESQG hazardous wastes, may on their own elect to develop a
screening procedure that is effective in screening out CESQG materials.
Owners/operators who elect to develop a screening procedure are
encouraged to work with their State Agency to determine what screening
procedures, may at a State level be required, recommended or in
guidance. The Agency believes that the adoption of a Federal screening
program as a condition of not receiving CESQG hazardous waste, will
limit the flexibility that both States and owners/operators can
exercise in developing a successful screening program. The Agency does
not want to interfere in the development of acceptable screening
programs that, based on comments received on this rule, can be
developed and are being used in the field .
VII. Implementation of Today's Final Rule
A. State Activities Under Subtitle C (Regulation of CESQGs of Hazardous
Waste)
1. Hazardous and Solid Waste Amendments to RCRA
Today's final rule changes the existing requirements in Sec. 261.5,
paragraphs (f)(3) and (g)(3) pertaining to the special requirements for
CESQGs. Under Section 3006 of RCRA, EPA may authorize qualified States
to administer and enforce the RCRA program within the State. (See 40
CFR Part 271 for the standards and requirements for authorization.)
Following authorization, EPA retains enforcement authority under
Sections 3008, 7003 and 3013 of RCRA, although authorized States have
primary enforcement responsibilities.
Prior to the Hazardous and Solid Waste Amendments of 1984 (HSWA), a
State with final authorization administered its hazardous waste program
entirely in lieu of EPA administering the Federal program in that
State. The Federal requirements no longer applied in the authorized
State, and EPA could not issue permits for any facility which the State
was authorized to permit. When new, more stringent, Federal
requirements were promulgated or enacted, the State was obliged to
enact equivalent authority within specified time frames. New Federal
requirements did not take effect in an authorized State until the State
adopted the requirements as State law.
In contrast, under Section 3006(g) of RCRA, 42 U.S.C. 6926(g), new
requirements and prohibitions imposed by HSWA take effect in authorized
States at the same time they take effect in unauthorized States. EPA is
directed to carry out these requirements and prohibitions in previously
authorized States, including the issuance of permits and primary
enforcement, until the State is granted HSWA authorization to do so.
While States must still adopt HSWA-related provisions as State law to
retain final authorization, the HSWA provisions apply in authorized
States in the interim.
The amendments to Sec. 261.5, paragraphs (f)(3) and (g)(3), are
finalized pursuant to section 3001(d)(4) of RCRA, which is a provision
added by HSWA. Therefore, the Agency has added the requirements to
Table 1 in Sec. 271.1(j) which identifies the Federal program
requirements that are promulgated pursuant to HSWA and that take effect
in all States, regardless of their authorization status. States may
apply for either interim or final authorization for the HSWA provisions
identified in Table 1.
2. Effect on State Authorizations
As noted above, EPA will implement today's rule (i.e., the revision
to Sec. 261.5) in authorized States until they modify their programs to
adopt the Section 261.5 rule change and the modification is approved by
EPA. Because the rule has been finalized pursuant to HSWA, a State
submitting a program modification may apply to receive either interim
or final authorization under Section 3006(g)(2) or 3006(b),
respectively, on the basis of requirements that are substantially
equivalent or equivalent to EPA's. The procedures and schedule for
State program modifications for either interim or final authorization
are described in 40 CFR 271.21. It should be noted that all HSWA
interim authorizations will expire January 1, 2003. (See Sec. 271.24(c)
and 57 FR 60129 (December 18, 1992)).
40 CFR 271.21(e)(2) provides that States that have final
authorization must modify their programs to reflect Federal program
changes, and must subsequently submit the modifications to EPA for
approval. The deadline by which the State must modify its program to
adopt these regulations and submit its application for approval is
specified in 40 CFR 271.21(e). These deadlines can be extended in
certain cases (40 CFR 271.21(e)(3)). Once EPA approves the
modification, the State requirements act in lieu of Subtitle C RCRA
requirements.
States with authorized RCRA programs may already have adopted
requirements under State law similar to those in today's rule. These
State regulations have not been assessed against the Federal
regulations being finalized today to determine whether they meet the
tests for authorization. Thus, a State is not authorized to implement
these requirements in lieu of EPA until the State program modification
is approved. Although revisions to 40 CFR Parts 257 and 261 are being
finalized, for the purpose of authorization under Subtitle C, only the
final changes to Sec. 261.5 would be assessed against the Federal
program. Of course, States with existing standards may continue to
administer and enforce their standards as a matter of State law. In
implementing the Federal program, EPA will work with States under
cooperative agreements to minimize
[[Page 34264]]
duplication of efforts. In many cases EPA will be able to defer to the
States in their efforts to implement their programs, rather than take
separate actions under Federal authority.
States that submit their official applications for final
authorization less than 12 months after the effective date of these
standards are not required to include standards equivalent to these
standards in their application. However, the State must modify its
program by the deadlines set forth in Sec. 271.21(e). States that
submit official applications for final authorization 12 months after
the effective date of these standards must include standards equivalent
to these standards in their applications. 40 CFR 271.3 sets forth the
requirements a State must meet when submitting its final authorization
application.
3. States With More Stringent Programs
EPA is aware that a number of States have more stringent
requirements for the disposal of waste generated by CESQGs. In
particular, some States do not allow the disposal of this waste into
any Subtitle D landfill (i.e., some States do not allow permitted
MSWLFs to accept CESQG hazardous waste). For these States, today's
final rule would clearly be considered less stringent than the
applicable provisions in these States' authorized programs. Section
3009 of RCRA allows States to adopt or retain provisions that are more
stringent than the Federal provisions. Therefore, regarding today's
final rule, EPA believes that States which do not allow the disposal of
wastes generated by CESQGs into Subtitle D landfills under their
existing authorized Subtitle C program would not be required to revise
their programs and obtain authorization for today's proposed rule. Of
course this situation would only apply in those cases where a State is
not changing its authorized regulatory language. Further, the
authorized State requirements in such States, since they would be more
stringent than today's final rule, would continue to apply in that
State, even though today's rule is proposed pursuant to HSWA authority.
For a State to not be required to submit an authorization revision
application for today's final rule, the State must have provisions that
are authorized by EPA and that are more stringent than the analogous
Subtitle C provisions in today's rule. For those States that would not
be required to revise their authorization, EPA encourages States to
inform their EPA Regional Office by letter that for this final rule,
they are not required to submit a revision application pursuant to 40
CFR 271.21(e), because in accordance with RCRA Section 3009 the
authorized State provision currently in effect is more stringent than
the requirements contained in today's final rule. Otherwise, EPA might
conclude that a revised authorization application is required.
B. State Activities Under Subtitle D (Regulation of Receiving Non-
Municipal Non-Hazardous Units)
States are the lead entities in implementing and enforcing Subtitle
D rules. The Agency intends to maintain the State's lead in
implementing the Subtitle D program. RCRA Section 4005 requires States
to adopt and implement, within 18 months of the publication of a final
rule, a permit program or other system of prior approval and conditions
to ensure that non-municipal non-hazardous waste disposal units
receiving CESQG waste comply with today's standards. The statute
requires EPA to determine whether States have developed adequate permit
programs. States will need to review their existing programs to
determine where their programs need to be revised and to complete
program changes, if changes are necessary. The process for evaluating
the adequacy of State programs has been set forth in a separate
proposal, the State/Tribal Permit Program Determination of Adequacy.
See 61 FR 2584, January 26, 1996.
For the purpose of determining adequacy and granting approval under
Subtitle D for today's rule, only the proposed technical changes in
Secs. 257.5 through 257.30 will be evaluated by the Agency. The State
may need to meet other procedural and administrative provisions
identified in the State/Tribal Permit Program Determination of
Adequacy. EPA policy on approval of permit programs for non-municipal
non-hazardous waste disposal units receiving CESQG waste is the same
process that the Agency used for determining the adequacy of State
programs for the Municipal Solid Waste Landfill Criteria. In States
already approved for the Part 258 MSWLF Criteria, changes required by
this rulemaking will constitute a program revision.
The Agency believes that for many approved States, changes required
by this rulemaking will affect the technical Criteria only and should
warrant limited changes to the approved State program. For example, if
non-municipal non-hazardous waste disposal units subject to this rule
are already subject to an approved State MSWLF program (i.e., the non-
municipal non-hazardous waste disposal units receiving CESQG waste are
currently subject to the Part 258 location restrictions, ground-water
monitoring, and corrective action criteria), the State may only be
required to submit documentation that the non-municipal non-hazardous
waste disposal units receiving CESQG waste are subject to their
approved program. In most cases, the Agency anticipates that a
streamlined approval process would be appropriate. States are
encouraged to contact their appropriate EPA Regional office to
determine the specifics of the approval process.
In the proposed State/Tribal permit program determination of
adequacy, the Agency originally proposed that a streamlined approval
process would not be used for permit programs that related to
additional classifications other than MSWLFs. See 61 FR 2599, January
26, 1996. As suggested above, the Agency is re-evaluating its proposed
position and a final determination will be made in the final State/
Tribal permit program determination of adequacy.
In States that have not been approved for the MSWLF Criteria, these
revisions can be incorporated into an application for overall program
approval of Part 258 and Secs. 257.5 through 257.30. For purposes of
today's rule, States that currently restrict CESQG disposal to Subtitle
C facilities (and States that may choose to adopt that restriction) or
approved States which currently restrict CESQG disposal to Part 258
municipal solid waste landfills will not need to seek further EPA
approval of their Subtitle D program. RCRA Section 4005(c)(1)(B)
requires States to adopt and implement permit programs to ensure that
facilities which receive CESQG waste will comply with the revised
Criteria promulgated under Section 4010(c). However, the Agency sees no
need for approved States that already require CESQG waste to be
disposed of in either Subtitle C facilities or facilities subject to
the Part 258 MSWLF Criteria to adopt and implement a permit program
based upon the standards being finalized today.
RCRA Section 7004(b)(1) requires the Administrator and the States
to encourage and provide for public participation in the development,
revision, implementation, and enforcement of this regulation and, once
it is promulgated, in the State permit programs which implement it. EPA
provides for public participation in its decisions on whether State
permit programs are adequate under RCRA Section 4005(c)(1)(c). In
developing and implementing permit programs, States must provide for
public participation in accordance with the provisions of 40 CFR Part
239 (specifically Sec. 239.6).
[[Page 34265]]
Permit programs have been defined in the proposed State/Tribal Permit
Program Determination of Adequacy to include other systems of prior
approval and conditions, including licenses or registrations.
C. Summary of Comments and EPA Response
Several commenters supported EPA's approach in the proposal toward
States with approved Subtitle D programs that have CESQG disposal
restrictions in their Subtitle D programs. In particular, the
commenters supported EPA's statement that States which require CESQG
waste to be disposed of in either Subtitle C facilities or facilities
subject to the part 258 MSWLF Criteria do not need EPA approval for a
permit program based on today's final (Subtitle D) standards. However,
the commenters believed that for these States, the absence of a
required EPA approval should be extended to the Subtitle C program.
EPA believes that its approach toward States with programs that are
more stringent than this final rule is the same for both the Subtitle C
and Subtitle D programs. Those States with approved Subtitle D or
authorized Subtitle C program that do not allow CESQG waste to be
disposed of in a landfill addressed by today's technical standards do
not need approval by EPA for that program. EPA's position is detailed
in sections VII.A. and VII.B. above. EPA believes that since the
existing approved State requirements are more stringent than the
provisions in today's rule, in such States, program revisions are not
necessary for the State programs to remain at least equivalent to the
Federal rules.
Other commenters raised the possibility of State self-certification
for State authorization for both the RCRA Subtitle C and D programs,
particularly where the State already has rules that are equivalent to
today's rule in its waste management programs. The commenters argued
that this self-certification will result in significant resource
savings.
Regarding the commenters suggestion on allowing State self-
certification, EPA is currently examining this issue for Subtitle C
authorization as part of the HWIR-Media rulemaking (see 61 FR 18780,
April 29, 1996). In the proposed Phase IV LDR rule, EPA proposed an
abbreviated authorization process for new minor rule changes (see 60 FR
43686, August 22, 1995). Although this authorization proposal did not
address the rule changes in the June 12, 1995 proposal, EPA is
committed to streamlining the Subtitle C authorization process.
EPA believes that the authorization process for the Subtitle C
portion of today's final rule will be very straightforward because
today's rule only added two new provisions to the hazardous waste
regulations. EPA will work with States and EPA regions to ensure that
the Subtitle C authorization process for this rule will be completed
swiftly. EPA believes that it can take such certifications into account
to a large degree, thereby, greatly reducing review time. Further, EPA
believes that many States will not require revisions to their
authorized programs because their authorized programs are currently
more stringent than today's rule.
D. Owner/Operator Responsibilities
1. Owner/Operator Responsibility and Flexibility in Approved States
The regulatory structure of the Part 258 MSWLF Criteria is based on
an owner/operator achieving compliance through self-implementation with
the various requirements while allowing approved States the flexibility
to consider local conditions in setting appropriate alternative
standards that still achieve compliance with the basic goal of the Part
258 Criteria. This flexibility that exists for approved States under
Part 258 has been retained in today's final rule and can be used by
approved States in determining facility specific requirements. Owners/
operators of non-municipal non-hazardous waste disposal units that are
receiving CESQG wastes as of the effective dates of today's final rule,
due to the self-implementing nature of this final rule, would be
required to comply with the promulgated standards regardless of the
status of the States approval determination under Subtitle D. If an
owner/operator of a non-municipal non-hazardous waste disposal unit is
receiving CESQG waste and is located in a State that has not been
approved under Subtitle D for these revised criteria, then the owner/
operator would have to comply with the promulgated standards, without
the benefit of the flexibility allowed to be granted by the Director of
an approved State.
Owners/operators of non-municipal non-hazardous waste disposal
units that receive CESQG waste and are located in approved States may
be subject to alternate requirements based on the approved State
standards.
2. CESQG's Responsibilities Relating to the Revisions in Sec. 261.5,
Paragraphs (f) and (g)
Today's final rule allows that CESQG waste go to either a hazardous
waste facility, a reuse or recycling facility, a municipal solid waste
landfill subject to Part 258, a non-municipal solid waste disposal
facility that is subject to the requirements being proposed in
Secs. 257.5 through 257.30 or a solid waste management facility (i.e.,
incinerator) that is permitted, licensed, or registered by a State to
manage municipal or non-municipal waste. Today's final rule does not
mandate that CESQG waste go to a MSWLF or to a non-municipal non-
hazardous waste disposal unit subject to today's final requirements.
These are just two of the options as to where CESQG hazardous waste can
be send for management.
The Agency does not believe that today's final rule amendment to
Sec. 261.5 will result in a larger obligation for any CESQG. The Agency
knows that the majority of CESQG waste is managed off-site. For the
CESQG waste managed off-site, recycling is the predominant form of
management. The Agency assumes that for the small amount of CESQG waste
that is currently being sent off-site to a MSWLF, this practice can
continue to occur, as long as allowed under State regulations, as all
MSWLFs where CESQG waste could be sent are subject to Part 258.
Hazardous waste regulations applicable to CESQGs require that CESQG
hazardous waste be managed in a unit permitted, licensed, or registered
by the State to manage municipal or industrial waste. Those CESQGs,
including construction and demolition waste generators, who wish to
send their CESQG waste to a non-municipal non-hazardous waste disposal
unit and are uncertain whether the unit has the appropriate permit,
license, or registration should contact his/her State Agency to
ascertain if the non-municipal non-hazardous waste disposal unit in
question can legally accept CESQG waste.
A CESQG may elect to screen-out or segregate out the CESQG
hazardous wastes from his non-hazardous waste and then manage the CESQG
hazardous portion in compliance with today's final amendments to
Sec. 261.5(f)(3) and (g)(3). The remaining non-hazardous waste would
not be subject to the final requirements in Sec. 261.5; however, it
must be managed in a facility that complies with either the Part 258
Criteria or the existing Criteria in Secs. 257.1-257.4. On the other
hand, a CESQG may elect not to screen-out or segregate the CESQG
hazardous waste
[[Page 34266]]
preferring instead to leave it mixed with the mass of non-hazardous
waste. If the CESQG elects this option, the entire mass of material
must be managed in a Subtitle C or Subtitle D facility as per today's
final language in Sec. 261.5.
E. Enforcement
1. Hazardous Waste Enforcement
Today's final rule amends Sec. 261.5, paragraphs (f)(3) and (g)(3),
and as such any CESQG who mismanages their CESQG hazardous waste on-
site or delivers the CESQG hazardous waste to an inappropriate Subtitle
D facility becomes subject to enforcement actions which could include
loss of CESQG status for any CESQG waste that is improperly disposed
of.
2. Subtitle D Enforcement
States that adopt programs meeting the standards in Secs. 257.5
through 257.30 may enforce them in accordance with State authorities.
Under RCRA Section 7002, citizens may seek enforcement of the standards
in Secs. 257.5 through 257.30 independent of any State enforcement
program. Section 7002 provides that any person may commence a civil
action on his/her own behalf against any person who is alleged to be in
violation of any permit, standard, regulation, condition, requirement,
prohibition, or order that has become effective pursuant to RCRA. Once
the self-implementing provisions in Secs. 257.5 through 257.30 become
effective, they constitute the basis for citizen enforcement. Federal
enforcement by EPA can be done only in States that EPA has determined
have inadequate programs. EPA has no enforcement authorities under
Section 4005 in approved States. EPA does, however, retain enforcement
authority under Section 7003 to protect against imminent and
substantial endangerment to health and the environment in all States.
VIII. Executive Order 12866
Under Executive Order No. 12866, EPA must determine whether a new
regulation is significant. A significant regulatory action is defined
as an action likely to result in a rule that may:
1. Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or state, local, or tribal governments or
communities;
2. Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
3. Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
4. Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
Executive Order 12866.
Pursuant to the terms of the Executive Order 12866, it has been
determined that this rule is a ``significant regulatory action''
because it raises novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order. Changes made in response to OMB suggestions or
recommendations will be documented in the public record.
A. Cost Impacts
In the Cost and Economic Impact Analysis (May, 1995) accompanying
the proposed rule, the Agency estimated the total annual costs to the
economy resulting from the proposed rule ranged from $10.0 million to
$47.0 million.
The national low-end cost assumes that all CESQG hazardous waste is
separated at the point of generation for the construction industry. It
assumes there will be no CESQG waste generated by the demolition
industry. The CESQG portion is disposed of at hazardous waste
facilities while the remaining non-hazardous waste portion is disposed
of in non-upgraded construction and demolition waste facilities. The
costs include the separation costs at the point of generation, costs of
transporting/disposing the hazardous portion at a Subtitle C facility,
and the costs of screening incoming wastes at all of the construction
and demolition waste facilities.
The national annual high-end cost assumes that generators will not
separate out CESQG waste from 30% of construction and demolition wastes
and that this fraction will be sent to upgraded construction and
demolition waste facilities that elect to comply with today's proposed
requirements. Under this scenario, the Agency assumed that most medium
to large size construction and demolition waste facilities (162) will
upgrade. The costs include separation costs at the point of generation
for waste not going to an upgraded landfill, costs of screening
incoming wastes at 80% of the affected construction and demolition
waste facilities which do not upgrade and costs for 20% of the affected
construction and demolition wastes facilities to upgrade. Upgrade costs
include ground-water monitoring and corrective action.
Upon receipt and incorporation of public comments, the Agency
prepared a revised Cost and Economic Impact Analysis (June, 1996). In
the revised analysis, the Agency estimates the total annual costs to
the economy for today's final rule will range from $12.65 to $51.0
million dollars. These costs fall upon approximately three types of
facilities: 600 manufacturing-sector CESQGs, at an average annual cost
of $280 per facility; 10,000 construction-sector CESQGs, at an average
cost of $930 per facility; and 700 construction/demolition waste
landfills, at an average cost of $4500 per facility.
One commentor suggested that EPA had understated the costs of
compliance with the new regulation. The commentor supported this
conclusion based on several contentions:
(1) The commentor maintained that EPA's estimates of total
construction and demolition wastes were flawed because some data
sources were inappropriate, including European data. Although EPA
agrees that U.S. data would be preferable, the European information
provided an important and relevant insight for our analysis. EPA
believes that many aspects of construction technology are similar from
one developed western country to another. EPA also notes that the
costing methodology used in the analysis rests mostly on costs per
facility, rather than costs per ton.
(2) The commentor suggested that EPA underestimated the labor
required for screening hazardous waste at construction/demolition waste
landfills. Data that EPA has collected from construction/demolition
landfill owner/operators, however, indicates that screening programs
are already in affect at most of these facilities. EPA has collected
information on the number of hours required for screening wastes per
year per landfill, and believes that the nationwide estimate of one
additional hour of labor per day per landfill is reasonable.
(3) The commentor also suggested that EPA had underestimated the
amount of labor which would be required to separate wastes at
construction sites. The Cost and Economic Impact Analysis estimated one
labor hour per week per company for separating hazardous wastes. Since
a company can have multiple job-sites operating simultaneously, the
commentor indicated that it would be more reasonable to estimate one
hour per job-site, rather than per company. EPA agrees, and notes that
the wording in the original analysis was incorrect; the estimate was
actually labor hours per establishment, where each establishment
represents a group of job sites. Therefore, EPA has used the
[[Page 34267]]
costing methodology that the commentor recommends.
(4) Finally, the commentor disputes EPA's estimate of the hourly
labor cost for screening wastes at the landfill and separating wastes
at the generator site. EPA re-examined the labor costs, consulting with
the Bureau of Labor Statistics and a standard construction industry
costing guide. As a result, EPA agrees with this comment and has
adjusted the labor figure by 27% (from $13.60 per hour to $17.32 per
hour).
Further discussion of the cost analysis can be found in Cost and
Economic Impact Analysis of the CESQG Rule, June 1996, available in the
docket.
B. Benefits
The Agency believes that the requirements being proposed for non-
municipal solid waste disposal facilities will result in more Subtitle
D facilities providing protection against ground-water contamination
from the disposal of small amounts of hazardous waste. Today's action
will force some non-municipal solid waste disposal facilities to either
upgrade and install ground-water monitoring and perform corrective
action if contamination is detected, or stop accepting hazardous waste.
Today's action will also cause some generators of CESQG wastes to
separate out these small quantities of hazardous waste and send them to
more heavily regulated facilities (i.e., Subtitle C facilities or
MSWLFs). These are the direct benefits of today's proposal, however,
additional benefits will be realized due to this proposal.
Today's final rule will require that any ground-water contamination
that is occurring at units that continue to receive CESQG hazardous
waste will be quickly detected, and therefore, corrective action can be
initiated sooner avoiding a more costly corrective action.
To the extent that existing non-municipal non-hazardous waste
disposal units that receive CESQG hazardous waste upgrade their units
to include ground-water monitoring, and to the extent that new
facilities will be located outside of floodplains and wetlands, public
confidence in these types of units will be increased. Having a higher
level of confidence should result in these types of units being easier
to site in the future.
Finally, to the extent that CESQGs separate out the small volumes
of hazardous waste, the resulting mass of clean non-hazardous waste
would have a better potential to be recycled.
IX. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.,
Pub. L. 96-354), as amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (``SBREFA''), EPA must consider
whether a regulatory action will have a significant adverse impact on
small entities. For a rule promulgated after June 27, 1996, EPA must
either certify that the regulation will not have a significant impact
on a substantial number of small entities or prepare a final regulatory
flexibility analysis that contains an evaluation of five factors. 5
U.S.C. 604(a). Because EPA promulgated this rule prior to June 28,
1996, the revised requirements of SBREFA for an expanded regulatory
flexibility analysis if a certification is not made do not apply. At
the same time, however, EPA has conducted an analysis to determine
whether the rule will have a significant impact on small entities. On
the basis of that analysis, EPA certifies that this rule will not have
a significant impact on a substantial number of small entities. The
factual basis for this certification is as follows.
EPA anticipates that this rule will increase costs for two classes
of facilities. CESQG generators that still handle their CESQG waste on
site are expected to send their CESQG waste to Subtitle C facilities,
at a maximum per-facility cost of $570 per year. Construction waste
generators will incur maximum additional per-firm costs of $1,469 per
year, for separation, transportation, and disposal of hazardous wastes.
In each case, EPA's analysis shows that the impacts are less than one
percent of annual revenues, for all sizes and types of companies.
This determination is based on EPA's projection of the response of
CESQG waste generators and disposal facilities to today's rule. EPA
performed a high end analysis, predicated on an assumption that C&D
landfills upgrade to meet these standards. In this scenario, cost
impacts would be higher. EPA does not expect C&D landfills to upgrade,
however, since they would be unlikely to recover the high costs of
upgrading. The analysis of effects on small entities is predicated on
an assumption that the owners of C&D landfills act rationally, i.e.,
they choose not to upgrade but rather choose to stop accepting CESQG
wastes.
Moreover, EPA has modified the proposed rule in a number of ways so
that cost to small entities may be decreased. For example, EPA has
included a provision which authorizes Directors of approved state
programs to establish an alternative list of indicator parameters not
only for the inorganic constituents but also for the organic
constituents to be monitored for in the detection monitoring phase of
ground water monitoring. Thus, owner/operators of non-municipal, non-
hazardous waste disposal units in approved states may have lower ground
water monitoring costs.
In addition, EPA has removed four location restrictions (airports,
fault areas, seismic impact zone, and unstable areas) from the final
rule for the reasons set forth in Section VI.B of today's preamble.
Costs for small entities that own non-municipal, non-hazardous waste
disposal units that must comply with this rule would thus be reduced
because no demonstrations to establish that these location restrictions
have been met would need to be made.
X. Submission to Congress and the General Accounting Office
Under section 801(a)(1)(A) of the Administrative Procedure Act
(APA) as amended by the Small Business Regulatory Enforcement Fairness
Act of 1996, EPA submitted a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives and the Comptroller General of the General Accounting
Office prior to publication of the rule in today's Federal Register.
This rule is not a ``major rule'' as defined by section 804(2) of the
APA as amended.
XI. Paperwork Reduction Act
The information collection requirements in this rule have been
submitted for approval to the Office of Management and Budget (OMB)
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An
Information Collection Request (ICR) document has been prepared by EPA
(ICR No. 1745.01) and a copy may be obtained from Sandy Farmer, OPPE
Regulatory Information Division, U.S. Environmental Protection Agency
(2136), 401 M St., S.W. Washington, DC 20460 or by calling (202) 260-
2740. The information requirements are not effective until OMB approves
them.
The information to be collected under this rulemaking would be used
primarily by the States to regulate and ensure that non-municipal non-
hazardous waste disposal units that may receive CESQG wastes are
complying with the final requirements. The information collected would
be used by the State Director to confirm compliance on the part of the
owner/operator with the final requirements. All information will be
reported to the States or kept in an operating record at the facility.
EPA will not collect information from any of the facilities subject to
today's requirements, except in any potential enforcement case.
[[Page 34268]]
The total annual public recordkeeping and reporting burden is
estimated to be 12,100 hours with an average of 67 hours per
respondent. Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review collection of information; and
transmit or otherwise disclose the information.
An Agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15.
Send comments on the Agency's need for this information, the
accuracy of the provided burden estimates, and any suggested methods
for minimizing respondent burden, including through the use of
automated collection techniques to the Director, OPPE Regulatory
Information Division, U.S. Environmental Protection Agency (2136), 401
M St., S.W., Washington, DC 20460 or to the Office of Information and
Regulatory Affairs, Office of Management and Budget, 725 17th St.,
N.W., Washington, DC 20503, marked ``Attention: Desk Officer for EPA.''
Include the ICR number in any correspondence.
XII. Environmental Justice
Executive Order 12898 requires Federal Agencies, to the greatest
extent practicable, to identify and address disproportionately high
adverse human health or environmental effects of its activities on
minority and low-income populations.
The Agency does not currently have data on the demographics of
populations surrounding the facilities affected by today's final rule
(i.e., construction and demolition landfills). The Agency does not
believe, however, that today's final rule will adversely impact
minority or low-income populations. The facilities affected by the
final rule pose limited risk to surrounding populations. In addition,
today's final rule would further reduce this risk by requiring the
affected facilities to either stop accepting CESQG hazardous waste or
to begin ground-water monitoring and, if applicable, corrective action.
Thus, today's final rule will further reduce the already low risk
for populations surrounding construction and demolition landfills,
regardless of the population's ethnicity or income level. Minority and
low-income populations will not be adversely affected.
XIII. Unfunded Mandates Reform Act
Under section 202 of the Unfunded Mandates Reform Act of 1995 (the
Act), Public Law 104-4, which was signed into law on March 22, 1995,
EPA generally must prepare a written statement for rules with Federal
mandates that may result in estimated costs to State, local, and tribal
governments in the aggregate, or to the private sector, of $100 million
or more in any one year. When such a statement is required for EPA
rules, under section 205 of the Act EPA must identify and consider
alternatives, including the least costly, most cost-effective or least
burdensome alternative that achieves the objectives of the rule. EPA
must select that alternative, unless the Administrator explains in the
final rule why it was not selected or it is inconsistent with law.
Before EPA establishes regulatory requirements that may significantly
or uniquely affect small governments, including tribal governments, it
must develop under section 203 of the Act a small government agency
plan. The plan must provide for notifying potentially affected small
governments, giving them meaningful and timely input in the development
of EPA regulatory proposals with significant Federal intergovernmental
mandates, and informing, educating, and advising them on compliance
with the regulatory requirements.
EPA has determined that today's final rule does not include a
Federal 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, in any one year. EPA has estimated that the annual
costs of today's final rule on generators of CESQG wastes and those
entities which own or operate CESQG disposal facilities, including the
private sector, States, local or tribal governments, range from $12.65-
48.9M.
In addition to compliance costs for those who own or operate CESQG
facilities, States will have a cost of developing permit programs or
other systems of prior approval to ensure that CESQG units comply with
the final rule. Adoption and implementation of such State permit
programs is required under RCRA section 4005(c)(1)(B). 42 USC
6945(c)(1)(B). The Agency has estimated that the costs for a state to
develop an application for approval of an MSWLF permit program to be
approximately $15,000. Because these state permit programs already
contain ground water monitoring, corrective action, and location
standards for MSWLFs that are quite similar to those in this final
rule, EPA believes that the additional costs for states to revise their
permit programs to reflect the CESQG requirements are not expected to
be significant. Also, because of the reduced level of regulatory
requirements contained in this CESQG final rule as compared to the
MSWLF Part 258 criteria, state costs for preparing applications for
approval of a CESQG permit program should be considerably less than
that $15,000 figure.
Indian tribes are not required to develop permit programs for
approval by EPA, but the Agency believes tribal governments are
authorized to development such permit programs and have them approved
by EPA. This issue is discussed in the proposal STIR. See 61 FR 2584,
January 26, 1996. EPA has estimated that it will cost a tribal
government approximately $7,000 to prepare an application for approval
of a MSWLF program. Because of the reduced regulatory provisions of the
CESQG final rule, EPA expects that the costs which a tribal government
might face in developing a permit program for CESQG units should be
less than $7,000.
EPA has also finalized amendments to the requirements for
generators of CESQG hazardous waste. These amendments to 40 CFR 261.5
(f)(3) and (g)(3) are finalized pursuant to RCRA Section 3001 (d)(4),
which is a provision added by HSWA. The Sec. 261.5 amendments are also
more stringent than current Federal hazardous waste regulations.
Subtitle C regulatory changes carried out under HSWA authority become
effective in all states at the same time and are implemented by EPA
until states revise their programs. States are obligated to revise
their hazardous waste programs and seek EPA authorization of these
program revisions, unless their programs already incorporate more
stringent provisions. The Agency believes approximately 24 states
already have more stringent CESQG hazardous waste provisions and would
not have to take action because of these regulatory changes. About 26
states would have to revise their
[[Page 34269]]
hazardous waste programs and seek authorization. States generally
incorporate a number of hazardous waste program revisions and seek
authorization for them at one time. The Agency estimates the State
costs associated with Subtitle C program revision/authorization
activity are approximately $7,320 per state. Since this estimate covers
several separate program components at one time, the cost for revisions
only to Section 261.5 in the remaining 26 States would be substantially
less.
As to section 203 of the Act, EPA has determined that the
requirements being finalized today will not significantly or uniquely
affect small governments, including tribal governments. EPA recognizes
that small governments may own or operate waste disposal units that
receive CESQG waste. However, EPA continues to estimate that the
majority of construction and demolition landfills, which are the
primary facilities to be subject to this final rule, are owned by the
private sector. Moreover, EPA is aware that a number of states already
require owners/operators of C&D landfills to meet regulatory standards
that are similar to those being finalized today. Thus, EPA believes
that today's final rule contains no regulatory requirements that
significantly or uniquely affect small governments.
EPA has, however, sought meaningful and timely input from the
private sector, states, and small governments on the development of
this final rule by seeking comments on the proposed CESQG rule and by
attempting to adequately address issues and concerns expressed by these
entities in their comments. Furthermore, the Agency highlighted, in the
June 12, 1995 proposal, those actions that it took to get meaningful
and timely input from these entities prior to proposal.
List of Subjects
40 CFR Part 257
Environmental protection, Reporting and recordkeeping requirements,
Waste disposal.
40 CFR Part 261
Hazardous materials, Recycling, Waste treatment and disposal.
40 CFR Part 271
Administrative practice and procedure, Hazardous materials
transportation, Hazardous waste, Indian-lands, Intergovernmental
relations, Penalties, Reporting and recordkeeping requirements, Water
pollution control, Water supply.
Dated: June 21, 1996.
Carol M. Browner,
Administrator.
For reasons set out in the preamble, title 40, Chapter I of the
Code of Federal Regulations is amended as set forth below:
PART 257--CRITERIA FOR CLASSIFICATION OF SOLID WASTE DISPOSAL
FACILITIES AND PRACTICES
1. The authority citation for part 257 is revised to read as
follows:
Authority: 42 U.S.C. 6907(a)(3), 6912(a)(1), 6944(a) and
6949(c), 33 U.S.C. 1345 (d) and (e).
Secs. 257.1 through 257.4 [Redesignated as Subpart A]
2. Sections 257.1 through 257.4 are designated as Subpart A--
Classification of Solid Waste Disposal Facilities and Practices.
3. Section 257.1(a) is revised to read as follows:
Sec. 257.1 Scope and purpose.
(a) Unless otherwise provided, the criteria in Secs. 257.1 through
257.4 are adopted for determining which solid waste disposal facilities
and practices pose a reasonable probability of adverse effects on
health or the environment under sections 1008(a)(3) and 4004(a) of the
Resource Conservation and Recovery Act (The Act). Unless otherwise
provided, the criteria in Secs. 257.5 through 257.30 are adopted for
purposes of ensuring that non-municipal non-hazardous waste disposal
units that receive conditionally exempt small quantity generator
(CESQG) waste do not present risks to human health and the environment
taking into account the practicable capability of such units in
accordance with Section 4010(c) of the Act.
(1) Facilities failing to satisfy either the criteria in
Secs. 257.1 through 257.4 or Secs. 257.5 though 257.30 are considered
open dumps, which are prohibited under section 4005 of the Act.
(2) Practices failing to satisfy either the criteria in Secs. 257.1
through 257.4 or Secs. 257.5 through 257.30 constitute open dumping,
which is prohibited under section 4005 of the Act.
* * * * *
4. Part 257 is amended by adding a new Subpart B to read as
follows:
Subpart B--Disposal Standards for the Receipt of Conditionally Exempt
Small Quantity Generator (CESQG) Wastes at Non-Municipal Non-Hazardous
Waste Disposal Units
Sec.
257.5 Disposal standards for owners/operators of non-municipal non-
hazardous waste disposal units that receive Conditionally Exempt
Small Quantity Generator (CESQG) waste
Location Restrictions
257.7 Reserved
257.8 Floodplains.
257.9 Wetlands
257.10 Reserved
257.11 Reserved
257.12 Reserved
257.13 Deadline for making demonstrations.
Ground-Water Monitoring and Corrective Action
257.21 Applicability.
257.22 Ground-water monitoring systems.
257.23 Ground-water sampling and analysis requirements.
257.24 Detection monitoring program.
257.25 Assessment monitoring program.
257.26 Assessment of corrective measures.
257.27 Selection of remedy.
257.28 Implementation of the corrective action program.
Recordkeeping Requirement
257.30 Recordkeeping requirements.
Subpart B--Disposal Standards for the Receipt of Conditionally
Exempt Small Quantity Generator (CESQG) Wastes at Non-Municipal
Non-Hazardous Waste Disposal Units
Sec. 257.5 Disposal standards for owners/operators of non-municipal
non-hazardous waste disposal units that receive Conditionally Exempt
Small Quantity Generator (CESQG) waste.
(a) Applicability. (1) The requirements in this section apply to
owners/operators of any non-municipal non-hazardous waste disposal unit
that receives CESQG hazardous waste, as defined in 40 CFR 261.5. Non-
municipal non-hazardous waste disposal units that meet the requirements
of this section may receive CESQG wastes. Any owner/operator of a non-
municipal non-hazardous waste disposal unit that receives CESQG
hazardous waste continues to be subject to the requirements in
Secs. 257.3-2, 257.3-3, 257.3-5, 257.3-6, 257.3-7, and 257.3-8 (a),
(b), and (d).
(2) Any non-municipal non-hazardous waste disposal unit that is
receiving CESQG hazardous waste as of January 1, 1998, must be in
compliance with the requirements in Secs. 257.7 through 257.13 and
Sec. 257.30 by January 1, 1998, and the requirements in Secs. 257.21
through 257.28 by July 1, 1998.
(3) Any non-municipal non-hazardous waste disposal unit that does
not meet the requirements in this section may not receive CESQG wastes.
[[Page 34270]]
(4) Any non-municipal non-hazardous waste disposal unit that is not
receiving CESQG Hazardous waste as of January 1, 1998, continues to be
subject to the requirements in Secs. 257.1 through 257.4.
(5) Any non-municipal non-hazardous waste disposal unit that first
receives CESQG hazardous waste after January 1, 1998, must be in
compliance with Secs. 257.7 through 257.30 prior to the receipt of
CESQG hazardous waste.
(b) Definitions.
Active life means the period of operation beginning with the
initial receipt of solid waste and ending at the final receipt of solid
waste.
Existing unit means any non-municipal non-hazardous waste disposal
unit that is receiving CESQG hazardous waste as of January 1, 1998.
Facility means all contiguous land and structures, other
appurtenances, and improvements on the land used for the disposal of
non-municipal non-hazardous waste.
Lateral expansion means a horizontal expansion of the waste
boundaries of an existing non-municipal non-hazardous waste disposal
unit.
New unit means any non-municipal non-hazardous waste disposal unit
that has not received CESQG hazardous waste prior to January 1, 1998.
State means any of the several States, the District of Columbia,
the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American
Samoa, and the Commonwealth of the Northern Mariana Islands, and Indian
Tribes.
State Director means the chief administrative officer of the lead
State/Tribal agency responsible for implementing the State/Tribal
permit program for Subtitle D regulated facilities.
Uppermost aquifer means the geologic formation nearest the natural
ground surface that is an aquifer, as well as, lower aquifers that are
hydraulically interconnected with this aquifer within the facility's
property boundary.
Waste management unit boundary means a vertical surface located at
the hydraulically downgradient limit of the unit. This vertical surface
extends down into the uppermost aquifer.
Location Restrictions
Sec. 257.7 [Reserved]
Sec. 257.8 Floodplains.
(a) Owners or operators of new units, existing units, and lateral
expansions located in 100-year floodplains must demonstrate that the
unit will not restrict the flow of the 100-year flood, reduce the
temporary water storage capacity of the floodplain, or result in
washout of solid waste so as to pose a hazard to human health and the
environment. The owner or operator must place the demonstration in the
operating record and notify the State Director that it has been placed
in the operating record.
(b) For purposes of this section:
(1) ``Floodplain'' means the lowland and relatively flat areas
adjoining inland and coastal waters, including flood-prone areas of
offshore islands, that are inundated by the 100-year flood.
(2) ``100-year flood'' means a flood that has a 1-percent or
greater chance of recurring in any given year or a flood of a magnitude
equalled or exceeded once in 100 years on the average over a
significantly long period.
(3) ``Washout'' means the carrying away of solid waste by waters of
the base flood.
Sec. 257.9 Wetlands.
(a) Owners or operators of new units and lateral expansions shall
not locate such units in wetlands, unless the owner or operator can
make the following demonstrations to the Director of an approved State:
(1) Where applicable under section 404 of the Clean Water Act or
applicable State wetlands laws, the presumption that a practicable
alternative to the proposed landfill is available which does not
involved wetlands is clearly rebutted:
(2) The construction and operation of the unit will not:
(i) Cause or contribute to violations of any applicable State water
quality standard;
(ii) Violate any applicable toxic effluent standard or prohibition
under Section 307 of the Clean Water Act;
(iii) Jeopardize the continued existence of endangered or
threatened species or result in the destruction or adverse modification
of a critical habitat, protected under the Endangered Species Act of
1973; and
(iv) Violate any requirement under the Marine Protection, Research,
and Sanctuaries Act of 1972 for the protection of a marine sanctuary;
(3) The unit will not cause or contribute to significant
degradation of wetlands. The owner/operator must demonstrate the
integrity of the unit and its ability to protect ecological resources
by addressing the following factors:
(i) Erosion, stability, and migration potential of native wetland
soils, muds and deposits used to support the unit;
(ii) Erosion, stability, and migration potential of dredged and
fill materials used to support the unit;
(iii) The volume and chemical nature of the waste managed in the
unit;
(iv) Impacts on fish, wildlife, and other aquatic resources and
their habitat from release of the waste;
(v) The potential effects of catastrophic release of waste to the
wetland and the resulting impacts on the environment; and
(vi) Any additional factors, as necessary, to demonstrate that
ecological resources in the wetland are sufficiently protected.
(4) To the extent required under section 404 of the Clean Water Act
or applicable State wetlands laws, steps have been taken to attempt to
achieve no net loss of wetlands (as defined by acreage and function) by
first avoiding impacts to wetlands to the maximum extent practicable as
required by paragraph (a)(1) of this section, then minimizing
unavoidable impacts to the maximum extent practicable, and finally
offsetting remaining unavoidable wetland impacts through all
appropriate and practicable compensatory mitigation actions (e.g.,
restoration of existing degraded wetlands or creation of man-made
wetlands); and
(5) Sufficient information is available to make a reasonable
determination with respect to these demonstrations.
(b) For purposes of this section, wetlands means those areas that
are defined in 40 CFR 232.2(r).
Sec. 257.10 [Reserved]
Sec. 257.11 [Reserved]
Sec. 257.12 [Reserved]
Sec. 257.13 Deadline for making demonstrations.
Existing units that cannot make the demonstration specified in
Sec. 257.8(a) pertaining to floodplains by January 1, 1998, must not
accept CESQG hazardous waste for disposal.
Ground-water monitoring and corrective action.
Sec. 257.21 Applicability.
(a) The requirements in this section apply to units identified in
Sec. 257.5(a), except as provided in paragraph (b) of this section.
(b) Ground-water monitoring requirements under Secs. 257.22 through
257.25 may be suspended by the Director of an approved State for a unit
identified in Sec. 257.5(a) if the owner or operator can demonstrate
that there is no potential for migration of hazardous constituents from
that unit to the uppermost aquifer during the active life of the unit
plus 30 years. This demonstration must be certified by a qualified
ground-water scientist and approved by the Director of an approved
State, and must be based upon:
[[Page 34271]]
(1) Site-specific field collected measurements, sampling, and
analysis of physical, chemical, and biological processes affecting
contaminant fate and transport; and
(2) Contaminant fate and transport predictions that maximize
contaminant migration and consider impacts on human health and
environment.
(c) Owners and operators of facilities identified in Sec. 257.5(a)
must comply with the ground-water monitoring requirements of this
section according to the following schedule unless an alternative
schedule is specified under paragraph (d) of this section:
(1) Existing units and lateral expansions must be in compliance
with the ground-water monitoring requirements specified in Secs. 257.22
through 257.25 by July 1, 1998.
(2) New units identified in Sec. 257.5(a) must be in compliance
with the ground-water monitoring requirements specified in Secs. 257.22
through 257.25 before waste can be placed in the unit.
(d) The Director of an approved State may specify an alternative
schedule for the owners or operators of existing units and lateral
expansions to comply with the ground-water monitoring requirements
specified in Secs. 257.22 through 257.25. This schedule must ensure
that 50 percent of all existing units are in compliance by July 1,
1998, and all existing units are in compliance by July 1, 1999. In
setting the compliance schedule, the Director of an approved State must
consider potential risks posed by the unit to human health and the
environment. The following factors should be considered in determining
potential risk:
(1) Proximity of human and environmental receptors;
(2) Design of the unit;
(3) Age of the unit;
(4) The size of the unit; and
(5) Resource value of the underlying aquifer, including:
(i) Current and future uses;
(ii) Proximity and withdrawal rate of users; and
(iii) Ground-water quality and quantity.
(e) Once established at a unit, ground-water monitoring shall be
conducted throughout the active life plus 30 years. The Director of an
approved State may decrease the 30 year period if the owner/operator
demonstrates that a shorter period of time is adequate to protect human
health and the environment and the Director approves the demonstration.
(f) For the purposes of this section, a qualified ground-water
scientist is a scientist or engineer who has received a baccalaureate
or post-graduate degree in the natural sciences or engineering and has
sufficient training and experience in ground-water hydrology and
related fields as may be demonstrated by State registration,
professional Certifications, or completion of accredited university
programs that enable that individual to make sound professional
judgments regarding ground-water monitoring, contaminant fate and
transport, and corrective-action.
(g) The Director of an approved State may establish alternative
schedules for demonstrating compliance with Sec. 257.22(d)(2),
pertaining to notification of placement of certification in operating
record; Sec. 257.24(c)(1), pertaining to notification that
statistically significant increase (SSI) notice is in operating record;
Sec. 257.24(c) (2) and (3), pertaining to an assessment monitoring
program; Sec. 257.25(b), pertaining to sampling and analyzing appendix
II of Part 258 constituents; Sec. 257.25(d)(1), pertaining to placement
of notice (appendix II of 40 CFR part 258 constituents detected) in
record and notification of notice in record; Sec. 257.25(d)(2),
pertaining to sampling for appendix I and II of 40 CFR Part 258;
Sec. 257.25(g), pertaining to notification (and placement of notice in
record) of SSI above ground-water protection standard;
Secs. 257.25(g)(1)(iv) and 257.26(a), pertaining to assessment of
corrective measures; Sec. 257.27(a), pertaining to selection of remedy
and notification of placement in record; Sec. 257.28(c)(4), pertaining
to notification of placement in record (alternative corrective action
measures); and Sec. 257.28(f), pertaining to notification of placement
in record (certification of remedy completed).
(h) Directors of approved States can use the flexibility in
paragraph (i) of this section for any non-municipal non-hazardous waste
disposal unit that receives CESQG waste, if the non-municipal non-
hazardous waste disposal unit:
(1) Disposes of less than 20 tons of non-municipal waste daily,
based on an annual average; and
(2) Has no evidence of ground-water contamination; and either
(3) Serves a community that experiences an annual interruption of
at least three consecutive months of surface transportation that
prevents access to a regional waste management facility; or
(4) Serves a community that has no practicable waste management
alternative and the non-municipal solid waste disposal facility is
located in an area that annually receives less than or equal to 25
inches of precipitation.
(5) Owners/operators of any non-municipal non-hazardous waste
disposal unit that meets the criteria in paragraph (h) of this section
must place in the operating record information demonstrating this.
(i) Directors of approved States may allow any non-municipal non-
hazardous waste disposal unit meeting the criteria in paragraph (h) of
this section to:
(1) Use alternatives to the ground-water monitoring system
prescribed in Secs. 257.22 through 257.25 so long as the alternatives
will detect and, if necessary, assess the nature or extent of
contamination from the non-municipal non-hazardous waste disposal unit
on a site-specific basis; or establish and use, on a site-specific
basis, an alternative list of indicator parameters for some or all of
the constituents listed in Appendix I (Appendix I of 40 CFR Part 258.
Alternative indicator parameters approved by the Director of an
approved State under this section must ensure detection of
contamination from the non-municipal non-hazardous waste disposal unit.
(2) If contamination is detected through the use of any alternative
to the ground-water monitoring system prescribed in Secs. 257.22
through 257.25, the non-municipal non-hazardous waste disposal unit
owner or operator must perform expanded monitoring to determine whether
the detected contamination is an actual release from the non-municipal
solid waste disposal unit and, if so, to determine the nature and
extent of the contamination. The Director of the approved State shall
establish a schedule for the non-municipal non-hazardous waste disposal
unit owner or operator to submit results from expanded monitoring in a
manner that ensures protection of human health and the environment.
(i) If expanded monitoring indicates that contamination from the
non-municipal non-hazardous waste disposal unit has reached the
saturated zone, the owner or operator must install ground-water
monitoring wells and sample these wells in accordance with Secs. 257.22
through 257.25.
(ii) If expanded monitoring indicates that contamination from the
non-municipal non-hazardous waste disposal unit is present in the
unsaturated zone or on the surface, the Director of an approved State
shall establish a schedule for the owner or operator to submit a
description of any necessary corrective measures. The schedule shall
ensure corrective measures, where necessary, are undertaken in a timely
manner that
[[Page 34272]]
protects human health and the environment. The proposed corrective
measures are subject to revision and approval by the Director of the
approved State. The owner or operator must implement the corrective
measures according to a schedule established by the Director of the
approved State.
(3) When considering whether to allow alternatives to a ground-
water monitoring system prescribed in Secs. 257.22 through 257.25,
including alternative indicator parameters, the Director of an approved
State shall consider at least the following factors:
(i) The geological and hydrogeological characteristics of the site;
(ii) The impact of manmade and natural features on the
effectiveness of an alternative technology;
(iii) Climatic factors that may influence the selection, use, and
reliability of alternative ground-water monitoring procedures; and
(iv) The effectiveness of indicator
FR Doc. 96-16585 Criteria for Classification of Solid Waste Disposal Facilities and Practices; Identification and Listing of Hazardous Waste; Requirements for Authorization of State Hazardous Waste Programs
parameters in detecting a
release.
(4) The Director of an approved State can require an owner or
operator to comply with the requirements of Secs. 257.22 through
257.25, where it is determined by the Director that using alternatives
to ground-water monitoring approved under this paragraph are inadequate
to detect contamination and, if necessary, to assess the nature and
extent of contamination.
Sec. 257.22 Ground-water monitoring systems.
(a) A ground-water monitoring system must be installed that
consists of a sufficient number of wells, installed at appropriate
locations and depths, to yield ground-water samples from the uppermost
aquifer (as defined in Sec. 257.5(b)) that:
(1) Represent the quality of background ground water that has not
been affected by leakage from a unit. A determination of background
quality may include sampling of wells that are not hydraulically
upgradient of the waste management area where:
(i) Hydrogeologic conditions do not allow the owner or operator to
determine what wells are hydraulically upgradient; or
(ii) Sampling at other wells will provide an indication of
background ground-water quality that is as representative or more
representative than that provided by the upgradient wells; and
(2) Represent the quality of ground water passing the relevant
point of compliance specified by the Director of an approved State or
at the waste management unit boundary in an unapproved State. The
downgradient monitoring system must be installed at the relevant point
of compliance specified by the Director of an approved State or at the
waste management unit boundary in an unapproved State that ensures
detection of ground-water contamination in the uppermost aquifer. The
relevant point of compliance specified by the Director of an approved
State shall be no more than 150 meters from the waste management unit
boundary and shall be located on land owned by the owner of the
facility. In determining the relevant point of compliance the State
Director shall consider at least the following factors: the
hydrogeologic characteristics of the unit and surrounding land, the
volume and physical and chemical characteristics of the leachate, the
quantity, quality and direction of flow of ground water, the proximity
and withdrawal rate of the ground-water users, the availability of
alternative drinking water supplies, the existing quality of the ground
water, including other sources of contamination and their cumulative
impacts on the ground water, and whether the ground water is currently
used or reasonably expected to be used for drinking water, public
health, safety, and welfare effects, and practicable capability of the
owner or operator. When physical obstacles preclude installation of
ground-water monitoring wells at the relevant point of compliance at
existing units, the down-gradient monitoring system may be installed at
the closest practicable distance hydraulically down-gradient from the
relevant point of compliance specified by the Director of an approved
State that ensures detection of groundwater contamination in the
uppermost aquifer.
(b) The Director of an approved State may approve a multi-unit
ground-water monitoring system instead of separate ground-water
monitoring systems for each unit when the facility has several units,
provided the multi-unit ground-water monitoring system meets the
requirement of Sec. 257.22(a) and will be as protective of human health
and the environment as individual monitoring systems for each unit,
based on the following factors:
(1) Number, spacing, and orientation of the units;
(2) Hydrogeologic setting;
(3) Site history;
(4) Engineering design of the units; and
(5) Type of waste accepted at the units.
(c) Monitoring wells must be cased in a manner that maintains the
integrity of the monitoring well bore hole. This casing must be
screened or perforated and packed with gravel or sand, where necessary,
to enable collection of ground-water samples. The annular space (i.e.,
the space between the bore hole and well casing) above the sampling
depth must be sealed to prevent contamination of samples and the ground
water.
(1) The owner or operator must notify the State Director that the
design, installation, development, and decommission of any monitoring
wells, piezometers and other measurement, sampling, and analytical
devices documentation has been placed in the operating record; and
(2) The monitoring wells, piezometers, and other measurement,
sampling, and analytical devices must be operated and maintained so
that they perform to design specifications throughout the life of the
monitoring program.
(d) The number, spacing, and depths of monitoring systems shall be:
(1) Determined based upon site-specific technical information that
must include thorough characterization of:
(i) Aquifer thickness, ground-water flow rate, ground-water flow
direction including seasonal and temporal fluctuations in ground-water
flow; and
(ii) Saturated and unsaturated geologic units and fill materials
overlying the uppermost aquifer, materials comprising the uppermost
aquifer, and materials comprising the confining unit defining the lower
boundary of the uppermost aquifer; including, but not limited to:
thicknesses, stratigraphy, lithology, hydraulic conductivities,
porosities and effective porosities.
(2) Certified by a qualified ground-water scientist or approved by
the Director of an approved State. Within 14 days of this
certification, the owner or operator must notify the State Director
that the certification has been placed in the operating record.
Sec. 257.23 Ground-water sampling and analysis requirements.
(a) The ground-water monitoring program must include consistent
sampling and analysis procedures that are designed to ensure monitoring
results that provide an accurate representation of ground-water quality
at the background and downgradient wells installed in compliance with
Sec. 257.22(a). The owner or operator must notify the State Director
that the sampling and analysis program documentation has been placed in
the operating record and the program must include procedures and
techniques for:
(1) Sample collection;
[[Page 34273]]
(2) Sample preservation and shipment;
(3) Analytical procedures;
(4) Chain of custody control; and
(5) Quality assurance and quality control.
(b) The ground-water monitoring program must include sampling and
analytical methods that are appropriate for ground-water sampling and
that accurately measure hazardous constituents and other monitoring
parameters in ground-water samples. Ground-water samples shall not be
field-filtered prior to laboratory analysis.
(c) The sampling procedures and frequency must be protective of
human health and the environment.
(d) Ground-water elevations must be measured in each well
immediately prior to purging, each time ground water is sampled. The
owner or operator must determine the rate and direction of ground-water
flow each time ground water is sampled. Ground-water elevations in
wells which monitor the same waste management area must be measured
within a period of time short enough to avoid temporal variations in
ground-water flow which could preclude accurate determination of
ground-water flow rate and direction.
(e) The owner or operator must establish background ground-water
quality in a hydraulically upgradient or background well(s) for each of
the monitoring parameters or constituents required in the particular
ground-water monitoring program that applies to the unit, as determined
under Sec. 257.24(a), or Sec. 257.25(a). Background ground-water
quality may be established at wells that are not located hydraulically
upgradient from the unit if it meets the requirements of
Sec. 257.22(a)(1).
(f) The number of samples collected to establish ground-water
quality data must be consistent with the appropriate statistical
procedures determined pursuant to paragraph (g) of this section. The
sampling procedures shall be those specified under Sec. 257.24(b) for
detection monitoring, Sec. 257.25 (b) and (d) for assessment
monitoring, and Sec. 257.26(b) for corrective action.
(g) The owner or operator must specify in the operating record one
of the following statistical methods to be used in evaluating ground-
water monitoring data for each hazardous constituent. The statistical
test chosen shall be conducted separately for each hazardous
constituent in each well.
(1) A parametric analysis of variance (ANOVA) followed by multiple
comparisons procedures to identify statistically significant evidence
of contamination. The method must include estimation and testing of the
contrasts between each compliance well's mean and the background mean
levels for each constituent.
(2) An analysis of variance (ANOVA) based on ranks followed by
multiple comparisons procedures to identify statistically significant
evidence of contamination. The method must include estimation and
testing of the contrasts between each compliance well's median and the
background median levels for each constituent.
(3) A tolerance or prediction interval procedure in which an
interval for each constituent is established from the distribution of
the background data, and the level of each constituent in each
compliance well is compared to the upper tolerance or prediction limit.
(4) A control chart approach that gives control limits for each
constituent.
(5) Another statistical test method that meets the performance
standards of paragraph (h) of this section. The owner or operator must
place a justification for this alternative in the operating record and
notify the State Director of the use of this alternative test. The
justification must demonstrate that the alternative method meets the
performance standards of paragraph (h) of this section.
(h) Any statistical method chosen under paragraph (g) of this
section shall comply with the following performance standards, as
appropriate:
(1) The statistical method used to evaluate ground-water monitoring
data shall be appropriate for the distribution of chemical parameters
or hazardous constituents. If the distribution of the chemical
parameters or hazardous constituents is shown by the owner or operator
to be inappropriate for a normal theory test, then the data should be
transformed or a distribution-free theory test should be used. If the
distributions for the constituents differ, more than one statistical
method may be needed.
(2) If an individual well comparison procedure is used to compare
an individual compliance well constituent concentration with background
constituent concentrations or a ground-water protection standard, the
test shall be done at a Type I error level no less than 0.01 for each
testing period. If a multiple comparisons procedure is used, the Type I
experiment wise error rate for each testing period shall be no less
than 0.05; however, the Type I error of no less than 0.01 for
individual well comparisons must be maintained. This performance
standard does not apply to tolerance intervals, prediction intervals,
or control charts.
(3) If a control chart approach is used to evaluate ground-water
monitoring data, the specific type of control chart and its associated
parameter values shall be protective of human health and the
environment. The parameters shall be determined after considering the
number of samples in the background data base, the data distribution,
and the range of the concentration values for each constituent of
concern.
(4) If a tolerance interval or a predictional interval is used to
evaluate ground-water monitoring data, the levels of confidence and,
for tolerance intervals, the percentage of the population that the
interval must contain, shall be protective of human health and the
environment. These parameters shall be determined after considering the
number of samples in the background data base, the data distribution,
and the range of the concentration values for each constituent of
concern.
(5) The statistical method shall account for data below the limit
of detection with one or more statistical procedures that are
protective of human health and the environment. Any practical
quantitation limit (pql) that is used in the statistical method shall
be the lowest concentration level that can be reliably achieved within
specified limits of precision and accuracy during routine laboratory
operating conditions that are available to the facility.
(6) If necessary, the statistical method shall include procedures
to control or correct for seasonal and spatial variability as well as
temporal correlation in the data.
(i) The owner or operator must determine whether or not there is a
statistically significant increase over background values for each
parameter or constituent required in the particular ground-water
monitoring program that applies to the unit, as determined under
Secs. 257.24(a) or 257.25(a).
(1) In determining whether a statistically significant increase has
occurred, the owner or operator must compare the ground-water quality
of each parameter or constituent at each monitoring well designated
pursuant to Sec. 257.22(a)(2) to the background value of that
constituent, according to the statistical procedures and performance
standards specified under paragraphs (g) and (h) of this section.
(2) Within a reasonable period of time after completing sampling
and analysis, the owner or operator must determine whether there has
been a statistically significant increase over background at each
monitoring well.
[[Page 34274]]
Sec. 257.24 Detection monitoring program.
(a) Detection monitoring is required at facilities identified in
Sec. 257.5(a) at all ground-water monitoring wells defined under
Secs. 257.22 (a)(1) and (a)(2). At a minimum, a detection monitoring
program must include the monitoring for the constituents listed in
appendix I of 40 CFR Part 258.
(1) The Director of an approved State may delete any of the
appendix I (Appendix I of 40 CFR Part 258) monitoring parameters for a
unit if it can be shown that the removed constituents are not
reasonably expected to be contained in or derived from the waste
contained in the unit.
(2) The Director of an approved State may establish an alternative
list of indicator parameters for a unit, in lieu of some or all of the
constituents in appendix I to 40 CFR Part 258, if the alternative
parameters provide a reliable indication of releases from the unit to
the ground water. In determining alternative parameters, the Director
shall consider the following factors:
(i) The types, quantities, and concentrations of constituents in
waste managed at the unit;
(ii) The mobility, stability, and persistence of waste constituents
or their reaction products in the unsaturated zone beneath the unit;
(iii) The detectability of indicator parameters, waste
constituents, and reaction products in the ground water; and
(iv) The concentration or values and coefficients of variation of
monitoring parameters or constituents in the groundwater background.
(b) The monitoring frequency for all constituents listed in
appendix I to 40 CFR Part 258, or in the alternative list approved in
accordance with paragraph (a)(2) of this section, shall be at least
semiannual during the active life of the unit plus 30 years. A minimum
of four independent samples from each well (background and
downgradient) must be collected and analyzed for the appendix I
(Appendix I of 40 CFR, Part 258) constituents, or the alternative list
approved in accordance with paragraph (a)(2) of this section, during
the first semiannual sampling event. At least one sample from each well
(background and downgradient) must be collected and analyzed during
subsequent semiannual sampling events. The Director of an approved
State may specify an appropriate alternative frequency for repeated
sampling and analysis for appendix I (Appendix I of 40 CFR Part 258)
constituents, or the alternative list approved in accordance with
paragraph (a)(2) of this section, during the active life plus 30 years.
The alternative frequency during the active life shall be no less than
annual. The alternative frequency shall be based on consideration of
the following factors:
(1) Lithology of the aquifer and unsaturated zone;
(2) Hydraulic conductivity of the aquifer and unsaturated zone;
(3) Ground-water flow rates;
(4) Minimum distance between upgradient edge of the unit and
downgradient monitoring well screen (minimum distance of travel); and
(5) Resource value of the aquifer.
(c) If the owner or operator determines, pursuant to
Sec. 257.23(g), that there is a statistically significant increase over
background for one or more of the constituents listed in appendix I to
40 CFR Part 258, or in the alternative list approved in accordance with
paragraph (a)(2) of this section, at any monitoring well at the
boundary specified under Sec. 257.22(a)(2), the owner or operator:
(1) Must, within 14 days of this finding, place a notice in the
operating record indicating which constituents have shown statistically
significant changes from background levels, and notify the State
Director that this notice was placed in the operating record; and
(2) Must establish an assessment monitoring program meeting the
requirements of Sec. 257.25 within 90 days except as provided for in
paragraph (c)(3) of this section.
(3) The owner/operator may demonstrate that a source other than the
unit caused the contamination or that the statistically significant
increase resulted from error in sampling, analysis, statistical
evaluation, or natural variation in ground-water quality. A report
documenting this demonstration must be certified by a qualified ground-
water scientist or approved by the Director of an approved State and be
placed in the operating record. If a successful demonstration is made
and documented, the owner or operator may continue detection monitoring
as specified in this section. If, after 90 days, a successful
demonstration is not made, the owner or operator must initiate an
assessment monitoring program as required in Sec. 257.25.
Sec. 257.25 Assessment monitoring program.
(a) Assessment monitoring is required whenever a statistically
significant increase over background has been detected for one or more
of the constituents listed in appendix I of 40 CFR Part 258 or in the
alternative list approved in accordance with Sec. 257.24(a)(2).
(b) Within 90 days of triggering an assessment monitoring program,
and annually thereafter, the owner or operator must sample and analyze
the ground water for all constituents identified in appendix II of 40
CFR Part 258. A minimum of one sample from each downgradient well must
be collected and analyzed during each sampling event. For any
constituent detected in the downgradient wells as the result of the
complete appendix II (Appendix II of 40 CFR Part 258) analysis, a
minimum of four independent samples from each well (background and
downgradient) must be collected and analyzed to establish background
for the new constituents. The Director of an approved State may specify
an appropriate subset of wells to be sampled and analyzed for appendix
II (Appendix II of 40 CFR Part 258) constituents during assessment
monitoring. The Director of an approved State may delete any of the
appendix II (Appendix II of 40 CFR Part 258) monitoring parameters for
a unit if it can be shown that the removed constituents are not
reasonably expected to be in or derived from the waste contained in the
unit.
(c) The Director of an approved State may specify an appropriate
alternate frequency for repeated sampling and analysis for the full set
of appendix II (Appendix II of 40 CFR part 258) constituents, or the
alternative list approved in accordance with paragraph (b) of this
section, during the active life plus 30 years considering the following
factors:
(1) Lithology of the aquifer and unsaturated zone;
(2) Hydraulic conductivity of the aquifer and unsaturated zone;
(3) Ground-water flow rates;
(4) Minimum distance between upgradient edge of the unit and
downgradient monitoring well screen (minimum distance of travel);
(5) Resource value of the aquifer; and
(6) Nature (fate and transport) of any constituents detected in
response to this section.
(d) After obtaining the results from the initial or subsequent
sampling events required in paragraph (b) of this section, the owner or
operator must:
(1) Within 14 days, place a notice in the operating record
identifying the appendix II (appendix II of 40 CFR part 258)
constituents that have been detected and notify the State Director that
this notice has been placed in the operating record;
(2) Within 90 days, and on at least a semiannual basis thereafter,
resample all wells specified by Sec. 257.22(a) to this section, conduct
analyses for all
[[Page 34275]]
constituents in appendix I (Appendix I of 40 CFR part 258) to this part
or in the alternative list approved in accordance with
Sec. 257.24(a)(2), and for those constituents in appendix II to 40 CFR
part 258 that are detected in response to paragraph (b) of this
section, and record their concentrations in the facility operating
record. At least one sample from each well (background and
downgradient) must be collected and analyzed during these sampling
events. The Director of an approved State may specify an alternative
monitoring frequency during the active life plus 30 years for the
constituents referred to in this paragraph. The alternative frequency
for appendix I (Appendix I of 40 CFR part 258) constituents, or the
alternative list approved in accordance with Sec. 257.24(a)(2), during
the active life shall be no less than annual. The alternative frequency
shall be based on consideration of the factors specified in paragraph
(c) of this section;
(3) Establish background concentrations for any constituents
detected pursuant to paragraphs (b) or (d)(2) of this section; and
(4) Establish ground-water protection standards for all
constituents detected pursuant to paragraph (b) or (d) of this section.
The ground-water protection standards shall be established in
accordance with paragraphs (h) or (i) of this section.
(e) If the concentrations of all appendix II (Appendix II of 40 CFR
part 258) constituents are shown to be at or below background values,
using the statistical procedures in Sec. 257.23(g), for two consecutive
sampling events, the owner or operator must notify the State Director
of this finding and may return to detection monitoring.
(f) If the concentrations of any appendix II (Appendix II of part
258) constituents are above background values, but all concentrations
are below the ground-water protection standard established under
paragraphs (h) or (i) of this section, using the statistical procedures
in Sec. 257.23(g), the owner or operator must continue assessment
monitoring in accordance with this section.
(g) If one or more appendix II (Appendix II of CFR part 258)
constituents are detected at statistically significant levels above the
ground-water protection standard established under paragraphs (h) or
(i) of this section in any sampling event, the owner or operator must,
within 14 days of this finding, place a notice in the operating record
identifying the appendix II (Appendix II of 40 CFR part 258)
constituents that have exceeded the ground-water protection standard
and notify the State Director and all appropriate local government
officials that the notice has been placed in the operating record. The
owner or operator also:
(1)(i) Must characterize the nature and extent of the release by
installing additional monitoring wells as necessary;
(ii) Must install at least one additional monitoring well at the
facility boundary in the direction of contaminant migration and sample
this well in accordance with paragraph (d)(2) of this section;
(iii) Must notify all persons who own the land or reside on the
land that directly overlies any part of the plume of contamination if
contaminants have migrated off-site if indicated by sampling of wells
in accordance paragraph (g)(1) of this section; and
(iv) Must initiate an assessment of corrective measures as required
by Sec. 257.26 within 90 days; or
(2) May demonstrate that a source other than the non-municipal non-
hazardous waste disposal unit caused the contamination, or that the
statistically significant increase resulted from error in sampling,
analysis, statistical evaluation, or natural variation in ground-water
quality. A report documenting this demonstration must be certified by a
qualified ground-water scientist or approved by the Director of an
approved State and placed in the operating record. If a successful
demonstration is made the owner or operator must continue monitoring in
accordance with the assessment monitoring program pursuant to this
Sec. 257.25, and may return to detection monitoring if the appendix II
(Appendix II of 40 CFR part 258) constituents are at or below
background as specified in paragraph (e) of this section. Until a
successful demonstration is made, the owner or operator must comply
with Sec. 257.25(g) including initiating an assessment of corrective
measures.
(h) The owner or operator must establish a ground-water protection
standard for each appendix II (Appendix II of 40 CFR part 258)
constituent detected in the ground-water. The ground-water protection
standard shall be:
(1) For constituents for which a maximum contaminant level (MCL)
has been promulgated under section 1412 of the Safe Drinking Water Act
(codified) under 40 CFR part 141, the MCL for that constituent;
(2) For constituents for which MCLs have not been promulgated, the
background concentration for the constituent established from wells in
accordance with Sec. 257.22(a)(1); or
(3) For constituents for which the background level is higher than
the MCL identified under subparagraph (h)(1) of this section or health
based levels identified under paragraph (i)(1) of this section, the
background concentration.
(i) The Director of an approved State may establish an alternative
ground-water protection standard for constituents for which MCLs have
not been established. These ground-water protection standards shall be
appropriate health based levels that satisfy the following criteria:
(1) The level is derived in a manner consistent with Agency
guidelines for assessing the health risks of environmental pollutants
(51 FR 33992, 34006, 34014, 34028, September 24, 1986);
(2) The level is based on scientifically valid studies conducted in
accordance with the Toxic Substances Control Act Good Laboratory
Practice Standards (40 CFR part 792) or equivalent;
(3) For carcinogens, the level represents a concentration
associated with an excess lifetime cancer risk level (due to continuous
lifetime exposure) within the 1 x 10-4 to 1 x 10-6 range; and
(4) For systemic toxicants, the level represents a concentration to
which the human population (including sensitive subgroups) could be
exposed to on a daily basis that is likely to be without appreciable
risk of deleterious effects during a lifetime. For purposes of this
subpart, systemic toxicants include toxic chemicals that cause effects
other than cancer or mutation.
(j) In establishing ground-water protection standards under
paragraph (i) of this section, the Director of an approved State may
consider the following:
(1) Multiple contaminants in the ground water;
(2) Exposure threats to sensitive environmental receptors; and
(3) Other site-specific exposure or potential exposure to ground
water.
Sec. 257.26 Assessment of corrective measures.
(a) Within 90 days of finding that any of the constituents listed
in appendix II (Appendix II of 40 CFR Part 258) have been detected at a
statistically significant level exceeding the ground-water protection
standards defined under Sec. 257.25 (h) or (i), the owner or operator
must initiate an assessment of corrective measures. Such an assessment
must be completed within a reasonable period of time.
(b) The owner or operator must continue to monitor in accordance
with
[[Page 34276]]
the assessment monitoring program as specified in Sec. 257.25.
(c) The assessment shall include an analysis of the effectiveness
of potential corrective measures in meeting all of the requirements and
objectives of the remedy as described under Sec. 257.27, addressing at
least the following:
(1) The performance, reliability, ease of implementation, and
potential impacts of appropriate potential remedies, including safety
impacts, cross-media impacts, and control of exposure to any residual
contamination;
(2) The time required to begin and complete the remedy;
(3) The costs of remedy implementation; and
(4) The institutional requirements such as State or local permit
requirements or other environmental or public health requirements that
may substantially affect implementation of the remedy(s).
(d) The owner or operator must discuss the results of the
corrective measures assessment, prior to the selection of remedy, in a
public meeting with interested and affected parties.
Sec. 257.27 Selection of remedy.
(a) Based on the results of the corrective measures assessment
conducted under Sec. 257.26, the owner or operator must select a remedy
that, at a minimum, meets the standards listed in paragraph (b) of this
section. The owner or operator must notify the State Director, within
14 days of selecting a remedy, that a report describing the selected
remedy has been placed in the operating record and how it meets the
standards in paragraph (b) of this section.
(b) Remedies must:
(1) Be protective of human health and the environment;
(2) Attain the ground-water protection standard as specified
pursuant to Secs. 257.25 (h) or (i);
(3) Control the source(s) of releases so as to reduce or eliminate,
to the maximum extent practicable, further releases of appendix II
(Appendix II of 40 CFR part 258) constituents into the environment that
may pose a threat to human health or the environment; and
(4) Comply with standards for management of wastes as specified in
Sec. 257.28(d).
(c) In selecting a remedy that meets the standards of
Sec. 257.27(b), the owner or operator shall consider the following
evaluation factors:
(1) The long- and short-term effectiveness and protectiveness of
the potential remedy(s), along with the degree of certainty that the
remedy will prove successful based on consideration of the following:
(i) Magnitude of reduction of existing risks;
(ii) Magnitude of residual risks in terms of likelihood of further
releases due to waste remaining following implementation of a remedy;
(iii) The type and degree of long-term management required,
including monitoring, operation, and maintenance;
(iv) Short-term risks that might be posed to the community,
workers, or the environment during implementation of such a remedy,
including potential threats to human health and the environment
associated with excavation, transportation, and re-disposal or
containment;
(v) Time until full protection is achieved;
(vi) Potential for exposure of humans and environmental receptors
to remaining wastes, considering the potential threat to human health
and the environment associated with excavation, transportation, re-
disposal, or containment;
(vii) Long-term reliability of the engineering and institutional
controls; and
(viii) Potential need for replacement of the remedy.
(2) The effectiveness of the remedy in controlling the source to
reduce further releases based on consideration of the following
factors:
(i) The extent to which containment practices will reduce further
releases;
(ii) The extent to which treatment technologies may be used.
(3) The ease or difficulty of implementing a potential remedy(s)
based on consideration of the following types of factors:
(i) Degree of difficulty associated with constructing the
technology;
(ii) Expected operational reliability of the technologies;
(iii) Need to coordinate with and obtain necessary approvals and
permits from other agencies;
(iv) Availability of necessary equipment and specialists; and
(v) Available capacity and location of needed treatment, storage,
and disposal services.
(4) Practicable capability of the owner or operator, including a
consideration of the technical and economic capability.
(5) The degree to which community concerns are addressed by a
potential remedy(s).
(d) The owner or operator shall specify as part of the selected
remedy a schedule(s) for initiating and completing remedial activities.
Such a schedule must require the initiation of remedial activities
within a reasonable period of time taking into consideration the
factors set forth in paragraphs (d)(1) through (d)(8) of this section.
The owner or operator must consider the following factors in
determining the schedule of remedial activities:
(1) Extent and nature of contamination;
(2) Practical capabilities of remedial technologies in achieving
compliance with ground-water protection standards established under
Secs. 257.25 (g) or (h) and other objectives of the remedy;
(3) Availability of treatment or disposal capacity for wastes
managed during implementation of the remedy;
(4) Desirability of utilizing technologies that are not currently
available, but which may offer significant advantages over already
available technologies in terms of effectiveness, reliability, safety,
or ability to achieve remedial objectives;
(5) Potential risks to human health and the environment from
exposure to contamination prior to completion of the remedy;
(6) Resource value of the aquifer including:
(i) Current and future uses;
(ii) Proximity and withdrawal rate of users;
(iii) Ground-water quantity and quality;
(iv) The potential damage to wildlife, crops, vegetation, and
physical structures caused by exposure to waste constituent;
(v) The hydrogeologic characteristic of the unit and surrounding
land;
(vi) Ground-water removal and treatment costs; and
(vii) The cost and availability of alternative water supplies.
(7) Practicable capability of the owner or operator.
(8) Other relevant factors.
(e) The Director of an approved State may determine that
remediation of a release of an appendix II (Appendix II of 40 CFR part
258) constituent from the unit is not necessary if the owner or
operator demonstrates to the Director of the approved state that:
(1) The ground-water is additionally contaminated by substances
that have originated from a source other than the unit and those
substances are present in concentrations such that cleanup of the
release from the unit would provide no significant reduction in risk to
actual or potential receptors; or
(2) The constituent(s) is present in ground water that:
(i) Is not currently or reasonably expected to be a source of
drinking water; and
(ii) Is not hydraulically connected with waters to which the
hazardous constituents are migrating or are likely
[[Page 34277]]
to migrate in a concentration(s) that would exceed the ground-water
protection standards established under Sec. 257.25 (h) or (i); or
(3) Remediation of the release(s) is technically impracticable; or
(4) Remediation results in unacceptable cross-media impacts.
(f) A determination by the Director of an approved State pursuant
to paragraph (e) of this section shall not affect the authority of the
State to require the owner or operator to undertake source control
measures or other measures that may be necessary to eliminate or
minimize further releases to the ground-water, to prevent exposure to
the ground-water, or to remediate the ground-water to concentrations
that are technically practicable and significantly reduce threats to
human health or the environment.
Sec. 257.28 Implementation of the corrective action program.
(a) Based on the schedule established under Sec. 257.27(d) for
initiation and completion of remedial activities the owner/operator
must:
(1) Establish and implement a corrective action ground-water
monitoring program that:
(i) At a minimum, meets the requirements of an assessment
monitoring program under Sec. 257.25;
(ii) Indicates the effectiveness of the corrective action remedy;
and
(iii) Demonstrates compliance with ground-water protection standard
pursuant to paragraph (e) of this section.
(2) Implement the corrective action remedy selected under
Sec. 257.27; and
(3) Take any interim measures necessary to ensure the protection of
human health and the environment. Interim measures should, to the
greatest extent practicable, be consistent with the objectives of and
contribute to the performance of any remedy that may be required
pursuant to Sec. 257.27. The following factors must be considered by an
owner or operator in determining whether interim measures are
necessary:
(i) Time required to develop and implement a final remedy;
(ii) Actual or potential exposure of nearby populations or
environmental receptors to hazardous constituents;
(iii) Actual or potential contamination of drinking water supplies
or sensitive ecosystems;
(iv) Further degradation of the ground-water that may occur if
remedial action is not initiated expeditiously;
(v) Weather conditions that may cause hazardous constituents to
migrate or be released;
(vi) Risks of fire or explosion, or potential for exposure to
hazardous constituents as a result of an accident or failure of a
container or handling system; and
(vii) Other situations that may pose threats to human health and
the environment.
(b) An owner or operator may determine, based on information
developed after implementation of the remedy has begun or other
information, that compliance with requirements of Sec. 257.27(b) are
not being achieved through the remedy selected. In such cases, the
owner or operator must implement other methods or techniques that could
practicably achieve compliance with the requirements, unless the owner
or operator makes the determination under Sec. 257.28(c).
(c) If the owner or operator determines that compliance with
requirements under Sec. 257.27(b) cannot be practically achieved with
any currently available methods, the owner or operator must:
(1) Obtain certification of a qualified ground-water scientist or
approval by the Director of an approved State that compliance with
requirements under Sec. 257.27(b) cannot be practically achieved with
any currently available methods;
(2) Implement alternate measures to control exposure of humans or
the environment to residual contamination, as necessary to protect
human health and the environment; and
(3) Implement alternate measures for control of the sources of
contamination, or for removal or decontamination of equipment, units,
devices, or structures that are:
(i) Technically practicable; and
(ii) Consistent with the overall objective of the remedy.
(4) Notify the State Director within 14 days that a report
justifying the alternative measures prior to implementing the
alternative measures has been placed in the operating record.
(d) All solid wastes that are managed pursuant to a remedy required
under Sec. 257.27, or an interim measure required under
Sec. 257.28(a)(3), shall be managed in a manner:
(1) That is protective of human health and the environment; and
(2) That complies with applicable RCRA requirements.
(e) Remedies selected pursuant to Sec. 257.27 shall be considered
complete when:
(1) The owner or operator complies with the ground-water protection
standards established under Secs. 257.25 (h) or (i) at all points
within the plume of contamination that lie beyond the ground-water
monitoring well system established under Sec. 257.22(a).
(2) Compliance with the ground-water protection standards
established under Secs. 257.25 (h) or (i) has been achieved by
demonstrating that concentrations of appendix II (Appendix II of Part
258) constituents have not exceeded the ground-water protection
standard(s) for a period of three consecutive years using the
statistical procedures and performance standards in Sec. 257.23 (g) and
(h). The Director of an approved State may specify an alternative
length of time during which the owner or operator must demonstrate that
concentrations of appendix II (Appendix II of 40 CFR part 258)
constituents have not exceeded the ground-water protection standard(s)
taking into consideration:
(i) Extent and concentration of the release(s);
(ii) Behavior characteristics of the hazardous constituents in the
ground-water;
(iii) Accuracy of monitoring or modeling techniques, including any
seasonal, meteorological, or other environmental variabilities that may
affect the accuracy; and
(iv) Characteristics of the ground-water.
(3) All actions required to complete the remedy have been
satisfied.
(f) Upon completion of the remedy, the owner or operator must
notify the State Director within 14 days that a certification that the
remedy has been completed in compliance with the requirements of
Sec. 257.28(e) has been placed in the operating record. The
certification must be signed by the owner or operator and by a
qualified ground-water scientist or approved by the Director of an
approved State.
Recordkeeping Requirements
Sec. 257.30 Recordkeeping requirements.
(a) The owner/operator of a non-municipal non-hazardous waste
disposal unit must record and retain near the facility in an operating
record or in an alternative location approved by the Director of an
approved State the following information as it becomes available:
(1) Any location restriction demonstration required under
Secs. 257.7 through 257.12; and
(2) Any demonstration, certification, finding, monitoring, testing,
or analytical data required in Secs. 257.21 through 257.28.
(b) The owner/operator must notify the State Director when the
documents from paragraph (a) of this section have been placed or added
to the operating record, and all information contained in the operating
record must be furnished
[[Page 34278]]
upon request to the State Director or be made available at all
reasonable times for inspection by the State Director.
(c) The Director of an approved State can set alternative schedules
for recordkeeping and notification requirements as specified in
paragraphs (a) and (b) of this section, except for the notification
requirements in Sec. 257.25(g)(1)(iii).
PART 261--IDENTIFICATION AND LISTING OF HAZARDOUS WASTES
5. The authority citation for Part 261 continues to read as
follows:
Authority: 42 U.S.C. 6905, 6912(a), 6921, 6922, and 6938.
Subpart A--General
6. Section 261.5 is amended by revising paragraphs (f)(3) and
(g)(3) to read as follows:
Sec. 261.5 Special requirements for hazardous waste generated by
conditionally exempt small quantity generators.
* * * * *
(f) * * *
(3) A conditionally exempt small quantity generator may either
treat or dispose of his acute hazardous waste in an on-site facility or
ensure delivery to an off-site treatment, storage, or disposal
facility, either of which, if located in the U.S., is:
(i) Permitted under part 270 of this chapter;
(ii) In interim status under parts 270 and 265 of this chapter;
(iii) Authorized to manage hazardous waste by a State with a
hazardous waste management program approved under part 271 of this
chapter;
(iv) Permitted, licensed, or registered by a State to manage
municipal solid waste and, if managed in a municipal solid waste
landfill is subject to Part 258 of this chapter;
(v) Permitted, licensed, or registered by a State to manage non-
municipal non-hazardous waste and, if managed in a non-municipal non-
hazardous waste disposal unit after January 1, 1998, is subject to the
requirements in Secs. 257.5 through 257.30 of this chapter; or
(vi) A facility which:
(A) Beneficially uses or reuses, or legitimately recycles or
reclaims its waste; or
(B) Treats its waste prior to beneficial use or reuse, or
legitimate recycling or reclamation; or
(vii) For universal waste managed under part 273 of this chapter, a
universal waste handler or destination facility subject to the
requirements of part 273 of this chapter.
(g) * * *
(3) A conditionally exempt small quantity generator may either
treat or dispose of his hazardous waste in an on-site facility or
ensure delivery to an off-site treatment, storage or disposal facility,
either of which, if located in the U.S., is:
(i) Permitted under part 270 of this chapter;
(ii) In interim status under parts 270 and 265 of this chapter;
(iii) Authorized to manage hazardous waste by a State with a
hazardous waste management program approved under part 271 of this
chapter;
(iv) Permitted, licensed, or registered by a State to manage
municipal solid waste and, if managed in a municipal solid waste
landfill is subject to Part 258 of this chapter;
(v) Permitted, licensed, or registered by a State to manage non-
municipal non-hazardous waste and, if managed in a non-municipal non-
hazardous waste disposal unit after January 1, 1998, is subject to the
requirements in Secs. 257.5 through 257.30 of this chapter; or
(vi) A facility which:
(A) Beneficially uses or reuses, or legitimately recycles or
reclaims its waste; or
(B) Treats its waste prior to beneficial use or reuse, or
legitimate recycling or reclamation; or
(vii) For universal waste managed under part 273 of this chapter, a
universal waste handler or destination facility subject to the
requirements of part 273 of this chapter.
* * * * *
PART 271--REQUIREMENTS FOR AUTHORIZATION OF STATE HAZARDOUS WASTE
PROGRAMS
7. The authority citation for part 271 continues to read as
follows:
Authority: 42 U.S.C. 6905, 6912(a), and 6926.
8. In Sec. 271.1, paragraph (j), Table 1 is amended by adding the
following entry in chronological order by publication date:
Sec. 271.1 Purpose and scope.
* * * * *
(j) * * *
Table 1.--Regulations Implementing the Hazardous and Solid Waste Amendments of 1984
----------------------------------------------------------------------------------------------------------------
Promulgation date Title of regulation Federal Register reference Effective date
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
July 1, 1996......... Revisions to Criteria 61 FR 34278................... January 1, 1998.
applicable to solid
waste facilities that
may accept CESQG
hazardous wastes,
excluding MSWLFs.
----------------------------------------------------------------------------------------------------------------
[FR Doc. 96-16585 Filed 6-26-96; 11:51 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-16576 National Emission Standards for Hazardous Air Pollutants: Off- Site Waste and Recovery Operations
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 34140-34200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16576]
[[Page 34139]]
_______________________________________________________________________
Part III
Environmental Protection Agency
_______________________________________________________________________
40 CFR Part 63
National Emission Standards for Hazardous Air Pollutants: Off-Site
Waste and Recovery Operations; Final Rule
Federal Register / Vol. 61, No. 127 / Monday, July 1, 1996 / Rules
and Regulations
[[Page 34140]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 63
[AD-FRL-5516-7]
RIN 2060-AE05
National Emission Standards for Hazardous Air Pollutants: Off-
Site Waste and Recovery Operations
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This action promulgates National Emission Standards for
Hazardous Air Pollutants (NESHAP) under the authority of Section 112 of
the Clean Air Act for off-site waste and recovery operations that emit
hazardous air pollutants (HAP). The NESHAP applies to specific types of
facilities that are determined to be major sources of HAP emissions and
receive certain wastes, used oil, and used solvents from off-site
locations for storage, treatment, recovery, or disposal at the
facility. The rule requires use of maximum achievable control
technology (MACT) to reduce HAP emissions from tanks, surface
impoundments, containers, oil-water separators, individual drain
systems and other material conveyance systems, process vents, and
equipment leaks.
The final rule is estimated to reduce HAP emissions from the source
category by approximately 82 percent or 43,000 megagrams per year
(47,000 tons per year). In addition, application of MACT required by
this rule will achieve similar levels of reduction in volatile organic
compounds (VOC) emissions from the source category. The human health
effects associated with exposure to the HAP emissions can range from
mild to severe and may include reduction of lung function, respiratory
irritation, and neurotoxic effects. Similarly, emissions of VOC are
associated with a variety of adverse health and welfare impacts.
The HAP and VOC emissions reductions achieved by implementing this
rule in combination with similar rules will achieve the primary Clean
Air Act goal to ``enhance the quality of the Nation's air resources so
as to promote the public health and welfare and productive capacity of
its population.'' The intent of this final rule is to protect public
health by requiring the maximum degree of reduction of HAP emissions
from new and existing sources, taking into consideration the cost of
achieving such emission reduction; any non air quality, health, and
environmental impacts; and energy requirements.
EFFECTIVE DATE: July 1, 1996. See the Supplementary Information section
concerning judicial review.
ADDRESSES: Docket. The docket for this rulemaking containing the
information considered by the EPA in development of the final rule is
Docket No. A-92-16. This docket is available for public inspection
between 8:00 a.m. and 4:00 p.m., Monday through Friday except for
Federal holidays, at the following address: U.S. Environmental
Protection Agency, Air and Radiation Docket and Information Center (MC-
6102), 401 M Street SW, Washington, D.C. 20460; telephone: (202) 260-
7548. The docket is located at the above address in Room M-1500,
Waterside Mall (ground floor). A reasonable fee may be charged for
copying.
Basis and Support Document. A basis and support document, titled
``National Emission Standards for Hazardous Air Pollutants, Off-Site
Waste and Recovery Operations--Basis and Support for Final Standards,''
has been prepared summarizing the significant public comments made on
the proposed rule and the Administrator's response to those comments.
This document is available in the docket for this rulemaking, and also
is available for downloading from the Technology Transfer Network (see
below) under the Clean Air Act Amendments, Recently Signed Rules.
Technology Transfer Network. The Technology Transfer Network is one
of the EPA's electronic bulletin boards. The Technology Transfer
Network provides information and technology exchange in various areas
of air pollution control. The service is free except for the cost of a
phone call. Dial (919) 541-5472 for up to a 14,400 bps modem. If more
information on the Technology Transfer Network is needed call the HELP
line at (919) 541-5384.
FOR FURTHER INFORMATION CONTACT: For information concerning
applicability and rule determinations, contact the appropriate regional
representative:
Region I: Greg Rosco, Air Programs Compliance Branch Chief, U.S. EPA,
Region I, ASO, JFK Federal Building, Boston, MA 02203, (617) 565-3221
Region II: Kenneth Eng, Air Compliance Branch Chief, U.S. EPA, Region
II, 290 Broadway, New York, NY 10007-1866, (212) 637-4000
Region III: Bernard Turlinski, Air Enforcement Branch Chief, U.S. EPA,
Region III, 3AT10, 841 Chestnut Building, Philadelphia, PA 19107, (215)
597-3989
Region IV: Jewell A. Harper, Air Enforcement Branch, U.S. EPA, Region
IV, 345 Courtland Street, N.E., Atlanta, GA 30365, (404) 347-2904
Region V: George T. Czerniak, Jr., Air Enforcement Branch Chief, U.S.
EPA, Region V, 5AE-26, 77 West Jackson Street, Chicago, IL 60604, (312)
353-2088
Region VI: John R. Hepola, Air Enforcement Branch Chief, U.S. EPA,
Region VI, 1445 Ross Avenue, Suite 1200, Dallas, TX 75202-2733, (214)
655-7220
Region VII: Royan Teeter, Air Planning and Development Branch, U.S.
EPA, Region VII, 726 Minnesota Avenue, Kansas City, KS 66101, (913)
551-7609
Region VIII: Douglas M. Skie, Air and Technical Operations Branch
Chief, U.S. EPA, Region VIII, 999 18th Street, Suite 500, Denver, CO
80202-2466, (303) 312-6432
Region IX: Colleen W. McKaughan, Air Compliance Branch Chief, U.S. EPA,
Region IX, 75 Hawthorne Street, San Francisco, CA, (415) 744-1198
Region X: Chris Hall, Air and Radiation Branch, U.S. EPA, Region X,
OAQ-107, 1200 Sixth Avenue, Seattle, WA 98101, (206) 553-1949
For information concerning the analyses performed in developing
this rule, contact Ms. Michele Aston, Waste and Chemical Processes
Group, Emission Standards Division (MD-13), U.S. Environmental
Protection Agency, Research Triangle Park, North Carolina, 27711,
telephone number (919) 541-2363.
SUPPLEMENTARY INFORMATION:
Regulated Entities
Entities potentially regulated by this action include the following
types of facilities if the facility receives off-site material, as
defined in the rule, and the facility is determined to be a major
source of HAP emissions as defined in 40 CFR 63.2.
[[Page 34141]]
----------------------------------------------------------------------------------------------------------------
Category Examples of regulated entities
----------------------------------------------------------------------------------------------------------------
Industry............................... Businesses that operate any of the following: hazardous waste
treatment, storage, and disposal facilities (TSDF); RCRA exempt
hazardous wastewater treatment facilities; nonhazardous wastewater
treatment facilities other than publicly-owned treatment works; used
solvent recovery plants; RCRA exempt hazardous waste recycling
operations; used oil re-refineries.
Federal Government..................... Federal agency facilities that operate any of the waste management or
recovery operations that meet the description of the entities listed
under the ``Industry'' category in this table.
----------------------------------------------------------------------------------------------------------------
This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that the EPA is now
aware could potentially be regulated by this action. Other types of
entities not listed in the table could also be regulated. To determine
whether your facility is regulated by the action, you should carefully
examine the applicability criteria in Sec. 63.680 of the rule. If you
have questions regarding the applicability of this action to a
particular entity, consult the person listed in the preceding FOR
FURTHER INFORMATION CONTACT section.
Judicial Review
The NESHAP for off-site waste and recovery operations was proposed
in the Federal Register on October 13, 1994 (59 FR 51913). This Federal
Register action announces the EPA's final decisions on the rule. Under
section 307(b)(1) of the Act, judicial review of the NESHAP is
available only by the petition for review in the U.S. Court of Appeals
for the District of Columbia Circuit within 60 days of today's
publication of this final rule. Under section 307(b)(2) of the Act, the
requirements that are the subject of today's notice may not be
challenged later in civil or criminal proceedings brought by the EPA to
enforce these requirements.
The following outline is provided to aid in reading this preamble
to the final rule.
I. Background
A. Section 112 Statutory Requirements
B. Listing of Source Category
C. Public Participation in Rule Development
D. Relationship of Rule to Other EPA Regulatory Actions
II. Basis and Purpose
A. Purpose of Regulation
B. Source Category Description
C. Definition of Affected Sources
D. MACT Floor Determination
E. Format of Standards
F. Unit-Specific Subparts
G. Alternative Test Validation Method
III. Summary of Impacts
IV. Summary of Responses to Major Comments
V. Summary of Changes Since Proposal
VI. Administrative Requirements
A. Docket
B. Paperwork Reduction Act
C. Executive Order 12866
D. Regulatory Flexibility Act
E. Unfunded Mandates
F. Review
VII. Statutory Authority
I. Background
A. Section 112 Statutory Requirements
Section 112 of the Clean Air Act (Act) regulates stationary sources
of hazardous air pollutants (HAP). This section of the Act was
comprehensively amended under Title III of the 1990 Amendments to the
Clean Air Act (1990 Amendments). In the 1990 Amendments, Congress
listed 189 chemicals, compounds, or groups of chemicals as HAP. The EPA
is directed by the 1990 Amendments to regulate the emission of these
HAP from stationary sources by establishing national emission standards
(i.e., National Emission Standards for Hazardous Air Pollutants or
NESHAP).
Each NESHAP for a specific source category is technology-based and
is developed based on application of Maximum Achievable Control
Technology (MACT). Section 112(d)(2) of the 1990 Amendments defines
MACT as ``* * * the maximum degree of reduction in emissions of the HAP
* * * that the Administrator, taking into consideration the cost of
achieving such emission reduction, and any nonair quality health and
environmental impacts and energy requirements, determines is achievable
for new or existing sources in the category or subcategory to which
such emission standard applies * * *.''
B. Listing of Source Category
Section 112(c) of the 1990 Amendments required the EPA to develop
and publish a list of source categories that emit HAP for which NESHAP
will be developed. This list is required under Section 112 to include
all known categories and subcategories of ``major sources.'' The term
``major source'' is defined by the Act to mean ``any stationary source
or group of stationary sources located within a contiguous area and
under common control that emits or has the potential to emit,
considering controls, in the aggregate 10 tons per year (ton/yr) or
more of any HAP or 25 ton/yr or more of any combination of HAP.''
The EPA published its initial list of HAP emission source
categories in the Federal Register on July 16, 1992 (57 FR 31576). On
this list, the EPA included one source category which the Agency
intended to represent those waste management and recovery operations
that would not be subject to air standards under other listed NESHAP
source categories. This source category was titled on the initial list
as ``solid waste treatment, storage, and disposal facilities.'' After
publication of the initial source category list, the EPA decided that
it was appropriate to change the title of the NESHAP source category to
better reflect the types of operations for which the EPA intended to
establish air standards under a NESHAP for the source category.
Therefore at proposal, the EPA changed the title of the source category
subject to ``off-site waste and recovery operations'' (see 59 FR 51918,
October 13, 1994).
For the purpose of developing the rules for this source category,
the term ``off-site'' is used in the context that the source category
represents those waste management and recovery operations which receive
material delivered, transferred, or otherwise moved to the plant or
facility where the operation is located from a separate site. In other
words, the material placed in the waste management or recovery
operation is not produced or generated at the same site where the
operation is located.
C. Summary of Public Participation in Rule Development
The EPA published an advance notice of proposed rulemaking (ANPR)
in the Federal Register on December 20, 1993 (58 FR 66336) to inform
owners and operators of the potentially affected waste management and
recovery operations and the general public of the planned scope of this
NESHAP rulemaking. In the ANPR, the EPA requested information that
would aid the Agency in the development of the rule. A 30-day comment
period, from December 20, 1993 to January 19, 1994 was provided for
interested parties to submit comments on the ANPR. The comments
received by the EPA were
[[Page 34142]]
considered in developing the proposed rule.
The EPA proposed the Off-Site Waste and Recovery Operations NESHAP
on October 13, 1994 (refer to 59 FR 51913). A proposed regulatory text
for the rule and the background information document (BID) (EPA-453/R-
94-070a) that presented information used in the development of the
proposed rule was made available to the public for review and comment.
A 90-day comment period from October 13, 1994 to January 11, 1995 (an
initial 60 days plus a 30-day extension) was provided to accept written
comments from the public on the proposed rule. The opportunity for a
public hearing was provided to allow interested persons to present oral
comments to the EPA on the rulemaking. However, the EPA did not receive
a request for a public hearing, so a public hearing was not held.
A total of 89 comment letters regarding the proposed Off-Site Waste
and Recovery Operations NESHAP were received by the EPA. A copy of each
comment letter is available for public inspection in the docket for the
rulemaking (Docket No. A-92-16; see the ADDRESSES section of this
notice for information on inspecting the docket). The EPA received 70
letters containing specific comments on the proposed Off-Site Waste and
Recovery Operations NESHAP. The other 19 letters were regarding
extension of the public comment period and requests for copies of the
regulatory text. The EPA has had extensive follow-up discussions with
various commenters regarding specific issues initially raised in their
written comments that were submitted to the Agency during the comment
period. Copies of correspondence and other information exchanged
between the EPA and the commenters during the post-comment period are
available for public inspection in the docket for the rulemaking.
All of the comments received by the EPA were reviewed and carefully
considered by the Agency. Changes to the rule were made when the EPA
determined it to be appropriate. A summary of the EPA's responses to
selected major comments on the proposed rule is presented in Section IV
of this notice. Additional responses to comments are presented in the
basis and support document described in the ADDRESSES section of this
notice.
D. Relationship of Rule to Other EPA Regulatory Actions
1. Clean Air Act
Owners and operators of sites at which are located waste management
and recovery operations that are subject to Off-Site Waste and Recovery
Operations NESHAP may also be subject to another NESHAP because of
other operations conducted at the site. For example, a waste management
or recovery operation receiving materials from off-site may be located
at a synthetic organic chemical manufacturing plant that is subject to
40 CFR 63 subparts F, G, and H--National Emission Standards for Organic
Hazardous Air Pollutants from the Synthetic Organic Chemical
Manufacturing Industry (referred to hereafter in this notice as the
``HON'') or at a petroleum refinery that is subject to 40 CFR 63
subpart CC--National Emission Standards for Organic Hazardous Air
Pollutants from Petroleum Refineries. At plants subject to both the
Off-Site Waste and Recovery Operations NESHAP and another NESHAP, the
Off-Site Waste and Recovery Operations NESHAP applies only to those
specific waste management or recovery operations listed in the rule
that receive off-site material. The Off-Site Waste and Recovery
Operations NESHAP does not apply to other units or equipment components
at the site that are not part of the waste management and recovery
operations specified in the rule.
Some NESHAP already regulate air emissions from the off-site
management of certain wastes containing HAP. To avoid duplication of
requirements in these cases, the Off-Site Waste and Recovery Operations
NESHAP does not apply to waste management units that either receive
waste from units complying with all applicable regulations under the
HON, or receive waste from units complying with all applicable
requirements specified by Sec. 61.342(b) under 40 CFR 61 subpart FF--
National Emission Standards for Benzene Waste Operations for a plant at
which the total annual benzene quantity is greater than or equal to 10
Mg/yr.
2. Resource Conservation and Recovery Act
The EPA establishes rules for the management of solid wastes under
authority of the Resource Conservation and Recovery Act (RCRA). Under
authority of subtitle C of RCRA, the EPA has established rules in 40
CFR parts 260 through 271 regulating the management of solid wastes
determined to be hazardous waste. Municipal solid wastes and other
types of nonhazardous solid wastes are regulated by rules established
under authority of subtitle D of RCRA in 40 CFR Parts 257 and 258.
The Clean Air Act requires that the requirements of rules developed
under the Act be consistent, but avoid duplication, with requirements
of rules developed under RCRA. The final Off-Site Waste and Recovery
Operations NESHAP includes several provisions to ensure that this
directive of the Act is met. First, certain types of wastes regulated
under RCRA are excluded outright from the definition of ``off-site
material'' used to determine the applicability of the Off-Site Waste
and Recovery Operation NESHAP. These wastes include household waste as
defined in 40 CFR 258.2; waste that is generated by remedial activities
required under the RCRA corrective action authorities (RCRA section
3004(u), 3004(v), or 3008(h)), CERCLA authorities, or similar Federal
or State authorities; and radioactive mixed waste.
The EPA also is fully aware that at some sites managing hazardous
wastes not generated onsite, the owner and operator of a hazardous
waste treatment, storage, and disposal facility (TSDF) could be subject
to both the Off-Site Waste and Recovery Operations NESHAP and RCRA air
rules under subparts AA, BB, and CC of 40 CFR parts 264 and 265. At a
particular TSDF, some waste management units may be required to use air
emission controls under one or the other, but not both, the Off-Site
Waste and Recovery Operations NESHAP and the RCRA rules. However, some
other waste management units could be subject to using air emission
controls to comply with both sets of rules. It is unnecessary for
owners and operators of those waste management units subject to air
standards under both sets of rules to perform duplicative testing and
monitoring, keep duplicate sets of records, or perform other
duplicative actions. The EPA has decided that the best way to eliminate
any regulatory overlap is to amend the RCRA rules to exempt units that
are using air emission controls in accordance with the requirements of
Off-Site Waste and Recovery Operations NESHAP or any other applicable
NESHAP. The EPA therefore plans to amend the RCRA rules this summer and
expects that these revisions will be finalized prior to the effective
dates of both rules.
3. Pollution Prevention Act
The Pollution Prevention Act of 1990 (42 U.S.C. 13101 et seq., Pub.
L. 101-508, November 5, 1990) establishes the national policy of the
United States for pollution prevention. This act declares that: (1)
Pollution should be prevented or reduced whenever feasible; (2)
pollution that cannot be prevented or reduced should be recycled or
reused in
[[Page 34143]]
an environmentally-safe manner wherever feasible; (3) pollution that
cannot be recycled or reused should be treated; and (4) disposal or
release into the atmosphere should be chosen only as a last resort.
Opportunities for applying pollution prevention to the Off-Site
Waste and Recovery Operations NESHAP are basically limited to treatment
to remove HAP (e.g., treatment of waste prior to its disposal). The
off-site waste and recovery operations source category consists only of
operations used to manage certain materials that have already been
generated at other locations such as a manufacturing plant. Thus, there
are no pollution prevention practices such as modifying the
manufacturing process to reduce the quantity of HAP contained in
materials or to recycle the materials back to the process which can be
implemented once the material arrives at a site at which waste
management and recovery operations subject to the NESHAP are located.
The EPA has incorporated the pollution prevention policy into the
NESHAP by requiring off-site materials be treated to remove or destroy
HAP prior to management in units open directly to the environment.
Thus, to the extent possible, pollution prevention has been considered
in the development of this rulemaking. The Off-Site Waste and Recovery
Operations NESHAP is consistent with the pollution prevention policy.
II. Basis and Purpose
A. Purpose of Regulation
The Clean Air Act was created in part ``to protect and enhance the
quality of the Nation's air resources so as to promote the public
health and welfare and the productive capacity of its population'' [Act
section 101(b)(1)]. Title III of the 1990 Amendments establishes a
control technology-based program to reduce stationary source emissions
of HAP. The goal of section 112(d) of the 1990 Amendments is to apply
such control technology to reduce emissions and thereby reduce the
hazard of the HAP emitted from stationary sources.
This final rule is technology-based (i.e., based on application of
MACT to off-site waste and recovery operations). The Clean Air Act
strategy avoids the dependence on a risk-based approach which would be
limited by incomplete information on what HAP are emitted, what level
of emissions is occurring, what health and safety benchmarks are
available to assess risk, what health effects may be caused by certain
pollutants and how best to model these effects, among other things.
Because of these issues a quantitative risk assessment of the potential
effects from the HAP emitted from off-site waste and recovery
operations is not included in this rulemaking.
The EPA does recognize that the degree of adverse effects to health
can range from mild to severe. The extent and degree to which the
health effects may be experienced is dependent upon: (1) The ambient
concentrations observed in the area; (2) duration of exposures; and (3)
characteristics of exposed individuals (e.g., genetics, age,
preexisting health conditions, and lifestyle) which vary significantly
with the population. Some of these factors are also influenced by
source-specific characteristics (e.g., emission rates and local
meteorological conditions) as well as pollutant specific
characteristics such as toxicity.
On a nationwide basis, the off-site waste and recovery operations
at the facilities regulated by this rule emit significant quantities of
organic HAP. Implementation of Off-Site Waste and Recovery Operations
NESHAP will result in substantial reductions of these organic HAP
emissions to the atmosphere. The final Off-Site Waste and Recovery
Operations NESHAP will require control of material streams containing 1
or more of 98 specified compounds listed in Table 1 of the rule. This
table is subset of the 189 HAP compounds listed in the Clean Air Act.
Following is a summary of the potential health and environmental
effects associated with exposures, at some level, to the emitted
pollutants that would be reduced by this NESHAP.
The range of potential human health effects associated with
exposure to organic HAP include cancer, aplastic anemia, pulmonary
(lung) structural changes, dyspnea (difficulty in breathing), upper
respiratory tract irritation with cough, conjunctivitis, and neurotoxic
effects (e.g., visual blurring, tremors, delirium, unconsciousness,
coma, convulsions). The EPA estimates that implementation of the Off-
Site Waste and Recovery Operations NESHAP will reduce nationwide
organic HAP emissions by approximately 43,000 megagrams per year (Mg/
yr). Thus, this rule has the potential for providing both cancer and
noncancer related health benefits.
By requiring facilities to reduce organic HAP emitted from off-site
waste and recovery operations, today's rule will also reduce emissions
of volatile organic compounds (VOC). Many VOC react photochemically
with nitrogen oxides in the atmosphere to form tropospheric ozone. A
number of factors affect the degree to which VOC emission reductions
will reduce ambient ozone concentrations.
Human laboratory and community studies have shown that exposure to
tropospheric ozone levels that exceed the National Ambient Air Quality
Standards (NAAQS) can result in various adverse health impacts such as
alterations in lung capacity; eye, nose, and throat irritation; and
aggravation of existing respiratory disease. Animal studies have shown
increased susceptibility to respiratory infection and lung structure
changes.
Among the welfare impacts from exposure to tropospheric ozone
levels that exceed the ozone NAAQS are damage to selected commercial
timber species and economic losses for commercially valuable crops such
as soybeans and cotton. Studies have shown that exposure to ozone can
disrupt carbohydrate production and distribution in plants. The
reduction in carbohydrate production and allocation can lead to reduced
root growth, reduced biomass or yield, reduced plant vigor (which can
cause increased susceptibility to attack from insects and disease and
damage from cold) and diminished ability to successfully compete with
more tolerant species. These effects have been observed in native
vegetation in natural ecosystems as well as for selected number of
commercial trees and agricultural crops that have been studied.
Although the final Off-Site Waste and Recovery Operations NESHAP
does not specifically require control of VOC emissions, the organic
emission control technologies upon which the final rule is based also
significantly reduce VOC emissions from the source category. The EPA
conservatively estimates that implementation of the Off-Site Waste and
Recovery Operations NESHAP will reduce nationwide VOC emissions from
the source category by 52,000 Mg/yr. Therefore, it is anticipated that
additional health and welfare benefits will be associated with this
reduction in VOC emissions.
B. Source Category Description
The final Off-Site Waste and Recovery Operations NESHAP only
applies to certain waste management and recovery operations at those
sites determined to ``major sources'' as defined in section 112(a)(1)
of the 1990 Amendments. This means those plants or facilities where the
stationary sources located within a contiguous area and under common
control emit or have the potential to emit, considering controls, in
total 10 ton/yr or more of any single HAP or 25 ton/yr or more of any
combination of
[[Page 34144]]
HAP. Waste management and recovery operations receiving materials from
off-site that are located at plants or facilities which are area
sources are not being regulated at this time. These area sources could
be considered at a future date by the EPA for regulation as part of the
area source strategy authorized under section 112(k) of the Act.
At proposal, the EPA identified the types of waste management and
recovery operations the Agency was considering for inclusion in the
off-site waste and recovery operations source category. In response to
public comments on the proposed rule and considering decisions made by
the Agency since proposal regarding other related rulemakings, the EPA
has reconsidered the types of waste management and recovery operations
to be regulated under the Off-Site Waste and Recovery Operations
NESHAP. The EPA reviewed information used for the source category
impact analysis at proposal and evaluated new information provided to
the Agency since proposal by commenters. As a result of this review,
the EPA decided that the final Off-Site Waste and Recovery Operations
NESHAP should not apply to owners and operators of certain operations
originally considered to be in the scope of the rulemaking. The
rationale for including or excluding specific waste management or
recovery operations in the final rule applicability is presented below.
Facilities where operations are conducted to treat, store, and
dispose of wastes determined to be hazardous wastes under RCRA may be
subject to organic air emission standards under 40 CFR parts 264 and
265. At these facilities, referred to under the RCRA rules as a
hazardous waste treatment, storage, and disposal facility (TSDF), a
RCRA hazardous waste may be generated at the same site where a TSDF is
located, or may be generated at one site and then transported to a TSDF
at a separate location. At TSDF where RCRA hazardous waste is received
from off-site, certain types of waste management units such as
wastewater treatment tanks and hazardous waste recycling units can be
exempted from the air standards specified in 40 CFR parts 264 and 265.
Many (but not all) TSDF are expected by the EPA to be located at sites
that are major sources of HAP emissions. Therefore, the EPA decided
that the final Off-Site Waste and Recovery Operations NESHAP be
applicable to hazardous waste TSDF as well as to sites where waste or
recovery operations managing hazardous waste are performed and the
entire operation is exempted under RCRA from the air standards in
subparts AA, BB, and CC under 40 CFR parts 264 and 265.
Wastewater treatment facilities are operated by public entities and
private companies throughout the United States for the treatment of
wastewaters other than those that are RCRA hazardous wastewaters.
Publicly owned treatment works (POTW) are not included in the off-site
waste operations source category because POTW are listed as a separate
NESHAP source category. A review of nationwide survey data by the EPA
indicates that privately-owned wastewater treatment plants are operated
at some locations in the United States for which the predominate
function performed at the site is to treat wastewaters received from
off-site. Although a wastewater may not be a RCRA hazardous waste, this
wastewater can still contain significant quantities of HAP. The EPA
concluded this group of wastewater treatment plants would not be
subject to other NESHAP and would likely include some individual
facilities that are major sources of HAP emissions.
Used oils from motor vehicles and other sources can contain HAP.
While the management of used oils which are recycled is regulated by
separate rules promulgated by the EPA under section 3014 of RCRA, these
RCRA rules do not specifically establish air standards for used oil
management operations. A major portion of the used oil is processed for
sale as fuel for burning in boilers, furnaces, and space heaters. The
remainder of the recycled used oil is sent to facilities categorized as
``used oil re-refiners.'' At these facilities the used oil is processed
into base lube oil stocks and other products. The EPA determined that
some used oil re-refining facilities are likely to be major sources of
HAP emissions. Consequently, the EPA decided that the final Off-Site
Waste and Recovery Operations NESHAP apply to operations that reprocess
or re-refine used oil and are subject to regulation under 40 CFR 279
subpart F-Standards for Used Oil Processors and Refiners.
Another recovery operation analogous to used oil re-refining
operations is solvent recovery operations. Organic solvents are used in
many types of businesses to clean oils, grease, dirt, or other foreign
matter from mechanical parts and like items. These used organic
solvents are often collected and reprocessed by a company for re-sale
as a product or for use by another company as a process feedstock. The
EPA expects that some solvent recovery operations could be major
sources of HAP emissions. Therefore, the EPA decided that the final
Off-Site Waste and Recovery Operations NESHAP be applicable to
operations that reprocess or re-refine used solvents except in
situations where the operation is not part of a chemical, petroleum, or
other manufacturing process that is required to use air emission
controls by another subpart of 40 CFR part 63.
Many landfill facilities operated in the United States are used for
disposal of waste received from off-site. Municipal solid waste (MSW)
landfills are not included in the off-site waste and recovery
operations source category because these facilities are listed as a
separate NESHAP source category. However, other landfill facilities
operate in the United States which are not MSW landfills and accept
only nonhazardous wastes. It is the EPA's understanding that landfills
used for disposal of construction/demolition debris do not accept
wastes containing significant amounts of organic HAP. One commeter
submitted to the EPA additional information regarding operations, waste
characterizations, and HAP emission estimates from industrial waste
landfills. The potential for some industrial waste landfills to be a
major source is possible due to special circumstances (e.g., accepting
predominately soils contaminated with organics). However, under current
operating practices, the EPA concluded that it is unlikely that any of
the existing industrial waste landfills nationwide is a major source of
HAP emissions. Therefore, the EPA decided that the final Off-Site Waste
and Recovery Operations NESHAP not be applicable to any landfill
facilities.
Some wastes generated during oil and gas exploration and production
(E&P) are subsequently transferred to operations at other locations for
centralized treatment or disposal. At proposal, the EPA identified
these centralized treatment and disposal operations as waste management
operations that would be subject to the Off-Site Waste and Recovery
Operations NESHAP. Additional information was received by the EPA from
commenters on the proposed rule regarding the nature of E&P operations
as presently practiced in oil and gas production fields. Upon further
consideration, the EPA decided it is not necessary to include E&P waste
operations under the final Off-Site Waste and Recovery Operations
NESHAP. Instead, the EPA is planning to address these sources under the
Oil and Gas Production NESHAP currently being developed by the Agency.
[[Page 34145]]
C. Definition of Affected Source
For the purpose of implementing NESHAP under 40 CFR Part 63,
``affected source'' is defined to mean the stationary source, or
portion of a stationary source that is regulated by a relevant standard
or other requirement established pursuant to section 112 of the Act.
Each relevant standard is to designate the ``affected source'' for the
purposes of that standard. Within a source category, the EPA decides
which HAP emission sources (i.e., emission points or groupings of
emission points) are most appropriate for establishing separate
emission standards in the context of the Clean Air Act statutory
requirements and the industry operating practices for the particular
source category.
At proposal, the EPA considered different options for defining
``affected source'' for the Off-Site Waste and Recovery Operations
NESHAP ranging from using a broad definition (e.g., the entire plant or
facility site) to narrow definitions (e.g., individual emission points)
(59 FR 51923). The EPA proposed using the narrowest definition of
affected source for the Off-Site Waste and Recovery Operations NESHAP
by defining the affected sources to be each of the individual emission
point types identified for the rule (e.g., each individual tank). The
EPA received comments that its proposed designation of affected source
for the Off-Site Waste and Recovery Operations NESHAP was too
restrictive and would complicate an owner's or operator's determination
of when reconstruction of a source has occurred triggering the
requirement to comply with the standards for new sources. Upon
consideration of these comments, the EPA decided that using a broader
definition is a more appropriate approach for defining the affected
sources for the Off-Site Waste and Recovery Operations NESHAP.
Designating the affected source for the Off-Site Waste and Recovery
Operations NESHAP as the entire plant site was rejected by the EPA.
This approach would allow the MACT floor to be established by the
plant-wide emission reduction indicative of the level that is achieved
by the best performing 12 percent of the existing sources. Application
of a single MACT floor to all of the emission points located at the
plant site and selected for control under the Off-Site Waste and
Recovery Operations NESHAP would be difficult, if not technically
infeasible, for several reasons. First, the EPA's data base for the
off-site waste and recovery operations NESHAP lacks sufficient data
regarding the type of information required to implement this approach
for the source category. Also, the mechanism by which organic HAP are
emitted to the atmosphere and the types of controls relevant for
reducing these air emissions is not the same for all of the emission
point types identified for off-site waste and recovery operation source
category. For example, covers frequently are installed on tanks to
control air emissions while work practice programs are used to control
air emissions from equipment leaks. Furthermore, not all waste
management and recovery operations at a particular plant site may be
subject to this rulemaking because they are not used to manage off-site
material, as defined in the rule.
A second approach is to designate several different affected
sources by grouping the similar emission points for each waste
management and recovery operation used at the plant site to manage off-
site materials. Under this approach, each affected source consists of
the group of similar emission point types for the entire sequence of
units or equipment components in which a particular off-site material
is managed at the site. An example of such a group of emission points
is the collection of tanks, containers, surface impoundments, and
similar units that are used at a site to manage a waste from the point
where the waste is received at the site to the point where the material
enters an on-site disposal unit not regulated under this rule (e.g.,
waste incinerator, landfill unit). An individual MACT floor is
established for the entire group of emission points comprising each
designated affected source.
This second approach offers several advantages for implementing the
Off-Site Waste and Recovery Operations NESHAP. Designating the affected
source to be a group of similar emission point types ensures that air
emission controls of equivalent performance are applied at the same
time to all of the units used to manage a particular off-site material
stream. In contrast, had the EPA maintained the proposed designation
for the affected sources (i.e., each individual emission point),
situations could have occurred where an owner or operator was required
to use controls on a new tank (or other newly installed unit)
downstream of existing tanks managing the same off-site material but
not required to use air emission controls under the rule. This would be
an inefficient application of air emission controls since a significant
portion of the HAP contained in the off-site material likely would have
escaped to the atmosphere before the material entered the controlled
unit. The approach also provides a logical grouping of equipment by
which an owner or operator readily can determine when reconstruction of
the affected source triggers the air emission control requirements
under the rule for new sources. Therefore, for the final off-site waste
and recovery operations NESHAP, the EPA decided to designate the
affected sources by three distinct groups of the emission point types
for the waste management and recovery operation subject to using air
emission controls under the rule.
The first group of similar emission points designated to be an
affected source for the Off-Site Waste and Recovery Operations NESHAP
is the group of tanks, containers, surface impoundments, oil-water and
organic-water separators, individual drain systems and other stationary
material conveyance systems used to manage off-site material in each of
the waste management and recovery operations specified in the rule that
are located at the plant site. The units regulated under this affected
source designation are collectively referred to hereafter in this
notice as ``off-site material management units.''
The second the group of similar emission points designated to be an
affected source for the Off-Site Waste and Recovery Operations NESHAP
is process vents on units used to manage off-site material in each of
the waste management and recovery operations specified in the rule that
are located at the plant site. As defined for the rule, a process vent
is an open-ended pipe, stack, or duct used for passage of gases,
vapors, or fumes to the atmosphere and this passage is caused by
mechanical means (such as compressors or vacuum-producing systems) or
by process-related means (such as volatilization produced by heating).
A stack or duct used to exhaust combustion products from an enclosed
combustion unit (e.g., boiler, furnace, heater, incinerator) is not a
process vent for this rulemaking.
The third group of similar emission points designated to be an
affected source for the Off-Site Waste and Recovery Operations NESHAP
is the group of equipment components prone to emitting HAP as a result
of equipment leaks. This group of equipment consists of pumps,
compressors, agitators, pressure relief devices, sampling connection
systems, open-ended valves and lines, valves, connectors, and
instrumentation systems that contain or contact off-site material in
each of the waste management and recovery operations specified in the
rule that are located at the plant site.
[[Page 34146]]
D. MACT Floor Determination
Specific statutory directives set out in section 112 of the 1990
Amendments require the EPA to establish standards under a NESHAP to
reflect application of maximum achievable control technology (MACT). A
statutory minimum or baseline level of HAP emission control that the
EPA can select to be MACT for a particular source category is defined
under section 112(d)(3) of the 1990 Amendments, and is referred to as
the ``MACT floor.'' For new sources, the MACT floor is the level of HAP
emission control that is achieved in practice by the best controlled
similar source. The statute allows standards under a NESHAP for
existing sources to be less stringent than standards for new sources.
The determination of MACT floor for existing sources is dependent on
the nationwide number of existing sources within the source category.
The off-site waste and recovery operations source category contains
more than 30 existing sources nationwide. For a source category with 30
or more existing sources, the MACT floor is the average emission
limitation achieved by the best performing 12 percent of the existing
sources.
Once the MACT floors are determined for new and existing sources in
a source category, the EPA must establish standards under a NESHAP that
are no less stringent than the applicable MACT floors. The
Administrator may promulgate standards that are more stringent than the
MACT floor when such standards are determined by the EPA to be
achievable taking into consideration the cost of implementing the
standards as well as any non-air quality health and environmental
impacts and energy requirements.
1. MACT Floor for Existing Sources
a. Off-site Material Management Units. As discussed in Section II.C
of this notice, the EPA has revised the affected source designation for
the off-site material management units at a plant site subject to the
Off-Site Waste and Recovery Operations NESHAP. For the final rule, the
designated affected source is the group of off-site material management
units (e.g., tanks, surface impoundments, containers, oil-water and
organic-water separators, individual drain systems and other stationary
transfer systems) in each of the waste management and recovery
operations specified in the rule that are located at the plant site.
Because the MACT floor determination for these off-site material
management units used at proposal was based on the application of the
floor to individual units rather than the group of units, the EPA
reconsidered the MACT floor determination following revision of the
affected source designation for the rule.
The EPA reviewed site-specific information in the source category
data base regarding existing air emission control practices for off-
site material management units. In addition, the EPA considered the air
emission controls that off-site material management units could be
required to use by new air rules promulgated since the Off-Site Waste
and Recovery Operations NESHAP was proposed (e.g., air rules for
hazardous waste tanks, surface impoundments, and containers in subpart
CC under 40 CFR parts 264 and 265).
Based on the EPA's review of the air emission control information
in the data base for the off-site waste and recovery operations source
category, the Agency concluded that most groups of off-site material
management units (significantly more than 12 percent) manage off-site
material, at a minimum, in covered units. A portion of these off-site
material management units use more effective air emission controls such
as venting the covered unit to a control device. However, based on the
information available to Agency, the EPA cannot definitively determine
whether the higher level of air emission control achieved by that
portion of units using controls in addition to covers is representative
of the average of the top 12 percent of all existing off-site material
management units. Thus, the EPA decided to establish the MACT floor
control technology for the existing off-site material managements as
use of a cover.
For other source categories, the EPA has established whether a
particular unit warrants the use of air emission controls under rules
for the source category on the basis of a characteristic parameter for
the materials placed in the unit (e.g., vapor pressure or organic
concentration). The EPA believes that using this approach provides an
effective and enforceable means for identifying the units that warrant
air emission controls while excluding those units for which
installation of controls is unnecessary because the units have no or
little potential for HAP emissions. Consequently, to complete the
definition of the MACT floor for this affected source, an applicability
cutoff provision (referred to hereafter in this notice as an ``action
level'') is needed to identify which off-site material management units
use the selected air emission controls.
Establishing an action level required first selecting an
appropriate format for the action level that allows the value to be
relatively simple to be determined by an owner or operator and
expeditiously checked by EPA or State enforcement personnel. For the
proposed rule, the EPA evaluated several possible action level formats
and decided that an action level based on the volatile organic HAP
concentration (VOHAP) of the off-site materials is appropriate for
identifying those units which emit HAP and warrant the application of
air emission controls.
The data available to the EPA at this time for the off-site waste
and recovery operations source category are insufficient to perform a
rigorous statistical analysis for the purpose of establishing the
minimum VOHAP concentration value for off-site material management
units currently using air emission controls. From a qualitative
perspective, application of air emission controls under the Off-Site
Waste and Recovery Operations NESHAP is not needed when a material
managed in an uncontrolled unit has little or no potential for HAP
emissions. In general, these off-site materials can be characterized as
materials having low VOHAP concentrations.
The EPA considered a range of possible values to establish the
VOHAP concentration limit for the Off-Site Waste and Recovery
Operations NESHAP. The EPA proposed a VOHAP concentration value of 100
ppmw to be used as the action level for the rule. However, in proposing
this value, the EPA acknowledged that some off-site material management
units subject to the Off-Site Waste and Recovery Operations NESHAP
could be subject to other NESHAP and NSPS with differing action levels.
The EPA therefore requested comment on establishing the VOHAP
concentration action level for the rule at 100 ppmw, as well as
information that could be used to support alternative action levels
such as 500 ppmw (59 FR 51924). The EPA received comments stating that
the 100 ppmw VOHAP concentration action level proposed by the EPA for
the Off-site Waste and Recovery Operations NESHAP is inappropriate and
inconsistent with other applicable NSPS and NESHAP and recommending
that the EPA select a higher action level for the rule.
The EPA considered the comments received regarding the proposed
action level, other revisions to the final Off-Site Waste and Recovery
Operations NESHAP, and changes that the EPA anticipates making for
other waste and wastewater related rules. The EPA
[[Page 34147]]
concluded that a reexamination of the MACT floor action level
determination was appropriate. Based on consideration of the
information available to the Agency regarding HAP emissions from waste
management and recovery operations receiving off-site material, the EPA
has concluded that a VOHAP concentration value of 500 ppmw best
represents the MACT floor for existing off-site material management
units using covers.
Having established the MACT floor for existing off-site material
management units, the EPA consider control options that are more
stringent than the MACT floor based on the air emission control
requirements under existing EPA rules for HAP emission sources similar
to off-site material management units (e.g., air standards for tanks
under the HON, air standards for tanks, surface impoundments, and
containers at hazardous waste TSDF under 40 CFR parts 264 and 265).
These existing rules establish requirements for application of controls
more effective than covers on certain categories of tanks, containers,
and other units based on air emission potential related characteristics
such as the capacity of the unit and the vapor pressure of the material
managed in the unit. In the development of these other rules, the EPA
determined for these particular units that the more effective controls
are appropriate for control of the pollutants emitted from the units
and that implementing these controls is cost-effective. Therefore, for
the Off-Site Waste and Recovery Operations NESHAP the EPA concluded
that it is reasonable to establish standards for certain off-site waste
management units that are more stringent than the MACT floor when such
standards are determined by the EPA to be appropriate and consistent
with the control requirements for similar HAP emission sources under
other existing EPA rules.
b. Process Vents. The MACT floor for affected sources consisting of
process vents is the same MACT floor used at proposal with one revision
to the action level. As discussed in the proposal notice (59 FR 51925),
this MACT floor is based on adapting, to the extent applicable and
relevant to the Off-Site Waste and Recovery Operations NESHAP, the air
emission standards for process vents on hazardous waste management
units and recycling units under 40 CFR 264 subpart AA and 40 CFR 265
subpart AA. The action level identifying application of air emission
controls on process vents has been revised to be consistent with the
500 ppmw action level selected for MACT floor for off-site material
management units. The control technology selected for the floor is
connecting the process vents to appropriate control devices such that
an organic HAP emission control efficiency of 95 percent or more is
achieved.
c. Equipment Leaks. The same MACT floor selected at proposal is
used for affected sources consisting of the group of equipment
components consisting of pumps, compressors, agitators, pressure relief
devices, sampling connection systems, open-ended valves and lines,
valves, connectors, and instrumentation systems that contain or contact
off-site material in each of the waste management and recovery
operations specified in the rule that are located at the plant site.
The MACT floor requires control of HAP emissions from equipment leaks
by implementing leak detection and repair (LDAR) work practices and
equipment modifications for those equipment components containing or
contacting off-site material having a total organic HAP concentrations
equal to or greater than 10 percent. As discussed in the proposal
notice (59 FR 51925), the EPA selected this MACT floor based on the
existing equipment leak air standards applicable to waste management
operations to treat hazardous waste under 40 CFR 264 subpart BB and 40
CFR 265 subpart BB. The requirements of the MACT floor selected for the
Off-Site Waste and Recovery Operations NESHAP are also consistent with
existing NSPS equipment leak standards (e.g., 40 CFR 60 subparts VV,
GG, and KK) and for certain NESHAP equipment leak standards (e.g., 40
CFR 61 subpart V).
2. MACT Floor for New Sources
At proposal, the EPA concluded that the MACT floor determined for
existing sources also represents the HAP emission control that is
achieved in practice by the best controlled similar sources in the off-
site waste and recovery operation source category with the exception of
new tanks. The MACT floor for new tanks was established based on the
level of emission control that is required for new tanks under the HON
(i.e., 40 CFR 63 subpart G). The EPA still believes these are
appropriate decisions for establishing the MACT floor for new sources
under the revised affected source designations selected for the final
Off-Site Waste and Recovery Operations NESHAP.
E. Format of Standards
Section 112 of the Act requires promulgation of an emission
standard whenever it is feasible; section 112(h) states that ``if it is
not feasible in the judgment of the Administrator to prescribe or
enforce an emission standard for control of a hazardous air pollutant
or pollutants, the Administrator may, in lieu thereof, promulgate a
design, equipment, work practice, or operational standard, or
combination thereof * * *'' The term ``not feasible'' is applicable if
the emission cannot be captured and vented through a vent or stack
designed for that purpose, or if the application of a measurement
methodology is not practicable because of technical or economic
limitations. Alternative formats were considered for the three types of
affected sources defined for the Off-Site Waste and Recovery Operations
NESHAP.
For off-site material management units, the EPA concluded that a
numerical emission standard would not be feasible because it would be
difficult to capture and measure emissions from these units for the
purpose of evaluating compliance. Therefore, the format of the rule for
these affected sources includes a combination of design, equipment,
work practice, and operational standards. For process vents, the EPA
considered two alternative numerical emission limitation formats. These
emission limitation formats are a mass percent reduction of HAP from
process vents and a mass limitation of HAP emission from process vents.
The percent reduction format was chosen for the Off-Site Waste and
Recovery Operations NESHAP because it is the best representation of
control technology performance, and provides flexibility to owners and
operators. This format is based on the HAP removal efficiency of
conventional air pollution control devices and any control technology
that can achieve the reduction efficiency can be applied to any
configuration of process vents to comply with the standards. For
equipment leak sources (i.e., pumps, valves, etc.), numerical emission
standards are not feasible and the final standards for equipment leaks
are in the format of work practice and equipment specifications.
F. Unit-Specific Subparts
The regulatory text that EPA proposed for the Off-Site Waste and
Recovery Operations NESHAP included all of the requirements for the
rule in a single subpart to be added to 40 CFR part 63. The EPA decided
to promulgate the final requirements for the Off-Site Waste and
Recovery Operations NESHAP as a series of six new subparts added to 40
CFR part 63. These subparts are Subpart DD--National Emission Standards
for Off-Site Waste and Recovery
[[Page 34148]]
Operations, Subpart OO--National Emission Standards for Tanks--Level 1,
Subpart PP--National Emission Standards for Containers, Subpart QQ--
National Emission Standards for Surface Impoundments, Subpart RR--
National Emission Standards for Individual Drain Systems, and Subpart
VV--National Emission Standards for Oil-Water Separators and Organic-
Water Separators.
The air emission control requirements promulgated in Subparts OO,
PP, QQ, and RR are derived from and incorporate public comments on the
air emission control requirements originally proposed in Subpart DD for
tanks, surface impoundments, containers, and individual drain systems.
In addition, an individual subpart (Subpart VV) has been added to the
final rule specifying air emission control requirements for oil-water
separators and organic-water separators (referred to collectively
hereafter as ``separators''). At proposal, the EPA assumed that if a
separator was subject to using air emission controls under the Off-Site
Waste and Recovery Operations NESHAP it would be considered a type of
tank. As such, this separator would have been required to meet the air
emission control requirements specific in the rule for tanks. In actual
practice, application of these controls to a separator in strict
accordance with the requirements specified in the proposed rule may not
be practical given special design and operating characteristics for
separators. Therefore, the EPA concluded that it is appropriate to add
an individual subpart specifically for separators that will provide a
level of air emission control comparable to the control level
established for tanks yet address the special design and operating
features of separators.
The EPA decided to promulgate the air emission control requirements
for selected types of units in individual subparts for ease of
reference, administrative convenience, and as a step towards assuring
consistency of the air emission control requirements applied to similar
types of units under different rules. The EPA believes adopting the
format of codifying the air emission control requirements for specific
unit types in individual subparts will provide significant advantages
to both regulated industries and to the Agency.
By today's notice, the air emission control requirements
promulgated in Subparts OO, PP, QQ, RR, and VV presently are applicable
only to units in waste management and recovery operations regulated
under Subpart DD. For application of the unit-specific subparts to new
rules for other source categories, the EPA is planning to reference
these unit-specific subparts to specify the air emission control
requirements for the units subject to using controls under the rule.
The applicability, action level, designation of which units are
required to use controls, treatment requirements, and any other
requirements specific to the source category will be in the regulatory
text under the source-specific subpart (i.e., the same format that is
being promulgated today for the Off-Site Waste and Recovery Operations
NESHAP) Also, the EPA may, in the future, amend existing NSPS, NESHAP,
or other rules to reference the appropriate unit-specific subparts,
whether as a replacement for the air emission control requirements in
the existing rule or as an alternative means of compliance. In these
rulemaking cases, the EPA will first propose the Agency's intention of
applying the requirements of Subparts OO, PP, QQ, RR, and VV, as
applicable, to other rules. The public will have the opportunity to
comment on the appropriateness and application of using these unit-
specific subparts for the particular sources regulated by the new or
amended rule.
A major advantage for using the unit-specific subpart format for
NESHAP and other air rules is for those situations when more than one
rule applies to a particular source (e.g., a tank) and each of these
rules requires use of air emission controls on that source (e.g., a
fixed roof). By establishing unit-specific subparts, all of the rules
will reference a common set of design, operating, testing, inspection,
monitoring, repair, recordkeeping, and reporting requirements for air
emission controls. This eliminates the potential for duplicative or
conflicting air emission control requirements being placed on the unit
by the different rules, and assures consistency of the air emission
control requirements applied to the same types of units.
In the future, the EPA may decided it is appropriate to amend the
air emission control requirements for different types of units to
reflect improvements in control technologies or to add other control
alternatives. When this occurs, using a unit-specific subpart format
will simplify the amendment process and ensure that all source-specific
subparts are amended in a consistent and timely manner. To incorporate
the desired changes in the air emission control requirements, the EPA
will need to amend only one subpart instead of amending each of the
individual source category specific subparts. The identical amended
regulatory language will automatically apply to all of the source
category specific subparts that reference the amended unit-specific
subpart. The amendments will become effective for all of the source
category specific subparts at the same time.
G. Alternative Test Method Validation Procedure
As part of today's action, the EPA is promulgating a new validation
procedure titled ``Alternative Validation Procedure for EPA Waste
Methods'' that can be used as an alternative to Method 301 in Appendix
A under 40 CFR part 63 for the validation of a test method established
by the EPA Office of Water (OW) or the EPA Office of Solid Waste (OSW)
when this test method is used for air emission standards. The
alternative method is less rigorous than Method 301. A proposed version
of the alternative validation procedure was made available for public
review and comment on August 14, 1996 (60 FR 41870) as part of the
information placed in the public docket and being considered by the
Agency in revising air standards in the RCRA rules. Comments on the
information were accepted by the EPA through October 13, 1995. No
significant comments were received by the EPA regarding the proposed
alternative validation procedure.
For the Off-Site Waste and Recovery Operations NESHAP, the EPA
decided it is appropriate to allow organic concentration data test that
are validated in accordance with the alternative validation method to
be used as direct measurement data. Today's action promulgates
``Alternative Validation Procedure for EPA Waste and Wastewater
Methods'' as Appendix D in 40 CFR part 63. This final version of
Appendix D is the same as the proposed version. As promulgated, the
alternative validation procedure is to be applied exclusively to those
EPA methods developed by OW and OSW when the method is being applied to
EPA air emission standards. If an owner or operator wants to use a test
method not issued by either of these two EPA offices as an alternative
to the test methods specifically listed in the rule, this test method
must be validated according to the procedures in Sections 5.1 and 5.3
of Test Method 301.
III. Summary of Impacts
The EPA estimates that implementation of the Off-Site Waste and
Recovery Operations NESHAP will reduce HAP emissions from the source
category on a nationwide basis by approximately 82 percent, from 52,000
Mg/yr to 9,000 Mg/yr.
[[Page 34149]]
The EPA also estimated the reduction in VOC emissions from the
source category. The Off-Site Waste and Recovery Operations NESHAP is
estimated to reduce nationwide VOC emissions by approximately 52,000
Mg/yr. This value was calculated using the estimated nationwide HAP
emission value times a value of approximately 1.2 to represent the
ratio of VOC-to-HAP constituents in the off-site material regulated
under the rule. The value for this ratio was derived from information
in the data base for the off-site waste and recovery operations source
category. This derived value is lower than VOC-to-HAP ratios indicated
for other HAP emission sources. Thus, the procedure used to estimate
nationwide VOC emissions for the source category is considered by the
EPA to be conservative and may understate the actual quantity of VOC
emission reduction that will occur from implementing the Off-Site Waste
and Recovery Operations NESHAP.
The EPA prepared estimates of the cost to owners and operators of
implementing the requirements of the final Off-Site Waste and Recovery
Operations NESHAP at plant sites the EPA expects are likely to be
subject to the rule. The total nationwide capital investment cost to
purchase and install the air emission controls that are required by the
rule is estimated by the EPA to be approximately $42 million. The total
nationwide annual cost of the Off-Site Waste and Recovery Operations
NESHAP is estimated to be approximately $18 million per year. This
corresponds to an average cost of approximately $420 per megagram of
HAP controlled.
Price increases in affected markets are projected at less than 0.01
percent of baseline price, and decreases in production are projected at
less than 0.1 percent. No businesses or facilities are projected by the
EPA to close as a result of implementing the requirements of the final
rule. For more information regarding the economic analysis, consult the
Economic Impact Analysis of National Emissions Standards for Hazardous
Air Pollutants: Off-Site Waste and Recovery Operations available in the
docket (Docket No. A-92-16).
IV. Summary of Responses to Major Comments
A summary of responses to selected major comments received on the
proposed rule is presented below. Additional discussion of the EPA's
responses to public comments is presented in the Basis and Support
Document (see ADDRESSES section of this preamble).
A. Rule Applicability
Comment: Many commenters stated that the proposed applicability of
the Off-Site Waste and Recovery Operations NESHAP would be too broad
and should be narrower. Major reasons presented by individual
commenters include: (1) the rule's applicability was expanded by the
EPA beyond the scope of the initial source category listing without
providing adequate notice to the public; (2) including operations
managing ``recoverable materials'' received from off-site in the rule's
applicability discourages recycling, provides a disincentive to
pollution prevention, and is inconsistent with the Pollution Prevention
Act; and (3) range of facility types subject to the rule is too broad
because many of these facility types have significantly different HAP
emission sources.
Response: The EPA proposed that the Off-Site Waste and Recovery
Operations NESHAP be applicable to owners and operators of facilities
that are ``major sources'' (as defined in 40 CFR 63.2) and at which
operations are conducted to manage, convey, or handle ``wastes'' or
``recoverable materials'' received from off-site and containing
specific organic HAP constituents (as specified in Table 1 of the
rule). Under the proposed rule, waste management and recovery
operations listed by the EPA as separate NESHAP source categories were
specifically exempted from the requirements of the rule.
The EPA has not expanded the applicability of the Off-Site Waste
and Recovery Operations NESHAP beyond the scope of the initial source
category listing without providing adequate notice to the public. The
EPA published an advance notice of proposed rulemaking (ANPR) in the
Federal Register on December 20, 1993 (58 FR 66336) announcing the
EPA's intent to develop a NESHAP for the off-site waste and recovery
operations source category. In the ANPR, the EPA provided a general
description of the types of facilities the EPA planned to regulate
under this rulemaking (see 58 FR 66337). The EPA further provided a
definition of ``waste'' that the Agency intended to be used for this
rulemaking which included materials managed prior to being recycled.
Thus, the Agency clearly expressed its intent in the ANPR to include
recovery operations in the scope of this rulemaking.
As described in Section II.D.3 of this notice, the Pollution
Prevention Act of 1990 (42 U.S.C. 13101 et seq., Pub. L. 101-508,
November 5, 1990) establishes the national policy of the United States
for pollution prevention. The EPA believes that applying the Off-Site
Waste and Recovery Operations NESHAP to units managing materials that
are collected and transported to a facility for subsequent reprocessing
or recycling is fully consistent with the Pollution Prevention Act. The
final rule neither discourages recycling nor provides a disincentive to
pollution prevention. The final rule does not prohibit or discourage an
owner or operator from continuing to use the recovery operation; the
rule only requires that the owner or operator control the organic HAP
emitted to the atmosphere from the operation. This is consistent with
the Pollution Prevention Act's declaration that operations to recycle
or reuse materials be performed in an environmentally-safe manner.
In proposed regulatory text, the EPA split the definition of
``waste'' the Agency stated in the ANPR, into two separate terms;
``waste'' being defined as materials managed prior to being discarded
or discharged, and ``recoverable materials'' being defined as materials
managed prior to being recycled, reprocessed, or reused. Based on the
comments received by the EPA, it appears that commenters interpreted
the proposed regulatory text using these terms to extend the
applicability of the rule to certain types of recycling and recovery
operations that the Agency never intended to be subject to this
rulemaking. To clarify the EPA's intent, the general term ``recoverable
material'' is not used in the final rule. Instead, the EPA has added to
the final rule the new terms ``used oil'' and ``used solvent'' to
define the specific types of recycled or reprocessed materials subject
to the rule. In each case where the final Off-Site Waste and Recovery
Operations NESHAP is applicable to a used oil or used solvent recovery
operation, the EPA has included this operation because the Agency has
concluded that the operation when uncontrolled can be a significant
source of HAP emissions and the operation will not be regulated by
another NESHAP.
The EPA disagrees that the applicability of the Off-Site Waste and
Recovery Operations NESHAP is too broad because many of the types of
waste management and recovery operations included in the source
category have significantly different HAP emission sources. In the
Federal Register notice for the proposed rule, the EPA provided
examples of specific types of facilities included in the off-site waste
and recovery operations source category (see 59 FR 51920). At all of
[[Page 34150]]
these facilities, similar types of units are used to manage wastes or
the other materials subject to the r
FR Doc. 96-16576 National Emission Standards for Hazardous Air Pollutants: Off- Site Waste and Recovery Operations
ule (e.g., tanks, containers,
surface impoundments). Organic HAP are emitted from each type of unit
by the same emission mechanisms regardless of the type of facility at
which the unit is located. Common organic HAP control technologies are
applicable to the units used at all of the off-site waste and recovery
operations facility types. There are no significant differences in the
organic HAP emissions or the control technologies applicable to
controlling these emissions from the off-site waste and recovery
operations facility types subject to this rulemaking.
Many commenters mistakenly interpreted the regulatory language of
the proposed rule to extend the applicability of the Off-Site Waste and
Recovery Operations NESHAP to facilities that the Agency never intended
to be subject to this rulemaking. In response to the different
interpretation of the proposed rule's applicability by commenters
versus the Agency's intent for this rulemaking, the EPA reviewed the
proposed regulatory text for the rule. The EPA decided to revise the
format to be inclusive by specifically identifying those waste
management and recovery operations that are subject to the Off-Site
Waste and Recovery Operations NESHAP. Owners and operators of waste and
recovery operations not explicitly included in the set of conditions
specified for the final Off-Site Waste and Recovery NESHAP are not
subject to the rule.
B. Data Base Used for Rule Development
Comment: Commenters stated that the data base used by the EPA to
develop the Off-Site Waste and Recovery Operations NESHAP is not
representative of all of the waste management recovery operations that
would be potentially subject to the rule; and the information in the
data base is not representative of current waste management and
recovery operation practices.
Response: In the development of the Off-Site Waste and Recovery
Operations NESHAP, the EPA used the best information available to the
Agency. Earlier in the development of the rule, the EPA recognized that
more up-to-date data and additional information would be beneficial for
evaluating the different types of waste management and recovery
operations included in the source category and for estimating the
impacts associated with this rulemaking. The EPA made several requests
for information from the public to supplement the Agency's information
regarding the off-site waste and recovery operations source category.
Prior to proposal of the Off-Site Waste and Recovery NESHAP, the
EPA announced in the ANPR the data bases the Agency was using for the
impact analyses and requested information from the public (see 58 FR
66338 and 66339). The EPA specifically requested more information on
off-site material characteristics (types, quantities, organic
composition), operating practices, and waste and recovery operation
emission points and air emission data. No additional information
regarding these topics was received by the EPA.
At proposal, the EPA requested additional information to improve
the Agency's understanding and profile of the waste management and
recovery operations intended to be addressed by this rulemaking (see 59
FR 51921). Additional information was provided to the EPA by commenters
regarding the following topics: (1) industrial waste landfill
operations, waste characterizations, and HAP emissions; (2) general
practices for waste management and recovery operations commonly used at
chemical manufacturing plants and petroleum refineries; and (3) general
waste management practices used at oil exploration and production
leases. In addition, the EPA obtained additional information regarding
used solvent collection and management practices for businesses that
reprocess used solvent for sale to other users.
The data base used for the impact analysis for the rulemaking was
compiled by collecting information related to off-site waste and
recovery operations from nationwide surveys of hazardous waste TSDF,
wastewater treatment facilities, and used oil management facilities
that the EPA conducted for other rulemakings. The EPA is fully aware
that off-site waste and recovery operations have changed since the
surveys were conducted. These changes are the result of multiple
factors including reductions in the quantities of certain wastes sent
to waste management facilities as waste minimization programs have been
implemented by generators; changes in waste disposal practices to
comply with RCRA land disposal restrictions and other rules; and
changes in ownership arrangements of waste management and recovery
operations located within large petrochemical and other manufacturing
complexes. In recognition of these changes, the EPA adjusted the data
base to reflect these changes to the extent possible using other
information available to the Agency.
The EPA reviewed the data base used to develop the Off-Site Waste
and Recovery Operations NESHAP with respect to the Agency's decisions
regarding the rule revisions made to the applicability of the final
rule. The EPA believes that the data base contains sufficient
information regarding the types of the waste management and recovery
operations that are subject to the final Off-Site Waste and Recovery
Operations NESHAP to support the Agency's decisions for this
rulemaking.
C. Land Disposal Unit Requirements
Comment: Commenters disagreed with the proposed requirement to
treat wastes prior to being placed in land disposal units because they
state that the requirement is inconsistent with the RCRA land disposal
restrictions and any solid waste land disposal restrictions should be
promulgated by the EPA's Office of Solid Waste.
Response: The EPA proposed that, prior to being placed in land
disposal units, owners and operators treat those off-site materials
having a VOHAP concentration equal to or greater than the action level.
Based on the EPA's decisions regarding applicability of the rule to
landfills and considering the existing requirements under RCRA land
disposal restrictions, the EPA concluded that the proposed requirement
is not needed for the Off-Site Waste and Recovery Operations NESHAP.
The final rule places no restrictions on the disposal of wastes in land
disposal units nor places any other air emission control requirements
on these units.
D. Off-Site Material Determination Test Methods
Comment: Commenters stated that proposed requirements for
determining the average VOHAP concentration of a off-site material use
inappropriate test methods and are excessive, impractical, and too
costly to implement at many facilities potentially subject to the rule.
Response: Under the Off-Site Waste and Recovery Operations NESHAP,
air emission controls are not required for those off-site material
management units located in the affected source when the unit manages
off-site material having a VOHAP concentration less than the action
level. As part of the procedure for determining the VOHAP concentration
of the off-site material, the EPA proposed that an owner or operator
could use either: (1) Direct measurement using Method 305 of samples of
the material collected in accordance with the procedures specified in
the rule; or (2) the owner's or operator's knowledge of the VOHAP
concentration in material
[[Page 34151]]
based on information, as specified in the rule.
For the final Off-Site Waste and Recovery Operations NESHAP, the
EPA decided to add other appropriate test methods that an owner or
operator can choose to use for direct measurement of the VOHAP
concentration of an off-site material. In addition, the EPA has made
certain other changes to facilitate the use of organic concentration
data obtained using other alternative test methods not specifically
listed in the rule. The EPA believes that the changes incorporated into
waste determination requirements in conjunction with changes to the
applicability and action level for the final Off-Site Waste and
Recovery Operations NESHAP provide a range of options for determining
the VOHAP concentration of an off-site material such that every owner
and operator of facilities subject to the final rule has available
practical and inexpensive waste determination alternatives.
The EPA developed Method 305 to provide a relative measure of the
potential for specific volatile organic compounds to be emitted from
waste materials. In developing Method 305, the EPA solicited public
comments on a proposed version of the method and addressed these
comments in the final version of the method (59 FR 19402). Method 305
has been validated and the EPA considers Method 305 to be an
appropriate method for determining the VOHAP concentration of off-site
materials subject to the Off-Site Waste and Recovery Operations NESHAP.
Method 305 uses the same waste sample collection procedures and
sample recovery conditions established by Method 25D (40 CFR part 60,
Appendix A). When using Method 25D, the waste sample is analyzed to
determine the total concentration, by weight, of all organics recovered
from the waste sample. When using Method 305, the waste sample is
analyzed to determine the purged concentration, by weight, of only
those specific hazardous air pollutants in the waste sample which are
listed in Table 1 in the rule (i.e., the VOHAP concentration). Any
hazardous air pollutant or organic constituent that may be contained in
the sample but is not listed in Table 1 in the rule is not counted in
the VOHAP concentration determination. For the off-site materials
typically managed in the operations subject to the Off-Site Waste and
Recovery Operations NESHAP, the EPA concluded that using Method 25D is
a reasonable alternative to using Method 305 for the purpose of this
rulemaking. Therefore, the final Off-Site Waste and Recovery Operations
NESHAP includes use of Method 25D as one of the test methods an owner
or operator may choose among for direct measurement of the VOHAP
concentration of an off-site material.
Other test methods have been developed by the EPA for use in
rulemakings under the Clean Water Act that measure the concentration of
organic pollutants in municipal and industrial wastewaters (see
Appendix A to 40 CFR part 136). Commenters suggested that certain of
these test methods are applicable to EPA air rulemakings affecting
wastewater management units. After extensive review, the EPA decided
that as alternatives to using Method 305 or Method 25D for direct
measurement of VOHAP concentration in an off-site material for the Off-
Site Waste and Recovery Operations NESHAP it is appropriate to add
Methods 624, 1624, and 1625 (all contained in 40 CFR 136, Appendix A)
when used under certain specified conditions. Because these methods
measure the total concentration of the HAP constituents listed in Table
1 of the rule, owners and operators may choose to ``correct'' these
measured values to equate to the values that would be measured using
Method 305. This is accomplished by multiplying the total concentration
measured values times the appropriate ``f m factor'' presented in
Table 1 of the rule to obtain the Method 305 VOHAP concentration.
Sufficient recovery study results are available for Methods 1624
and 1625 to correct for possible bias, and therefore, these methods are
considered adequate by the EPA to characterize the concentration of a
off-site material sample. In addition, Method 624 is appropriate
provided the initial calibration of the analytical system is performed
with the target compounds to be measured. However, none of these
methods specifies a sample collection and handling procedure that is
considered by the EPA adequate to minimize the volatilization of
organics from the sample prior to analysis. Therefore, to ensure that
an adequately representative sample of an off-site material is analyzed
by the method, an owner or operator that chooses to use either Method
624, 1624, or 1625 for the Off-Site waste and Recovery Operations
NESHAP is required to develop and follow a written sampling plan. This
plan describes a step-by-step procedure for collecting representative
samples of the off-site materials such that material integrity is
maintained and minimal loss of organics from the sample occurs
throughout the collection and analysis process. An example of an
acceptable sampling plan is one that incorporates sample collection and
sample handing procedures similar to those specified in Method 25D. The
sampling plan is to be maintained on-site in the facility records.
The EPA proposed use of knowledge-of-the-waste, allowing a facility
owner or operator to use test data obtained using a test method other
than Method 305 provided that the method was validated in accordance
with Method 301 (40 CFR part 63, Appendix A). Under this application of
Method 301, the owner or operator would be validating the alternative
test method results as compared to test results obtained using Method
305. Since proposal, the EPA decided to allow organic concentration
data test that are validated in accordance specifically with Sections
5.1 and 5.3 of Method 301 to be used as direct measurement data. This
makes validation of the alternative test method a self-check of the
method being validated. Also, if appropriate, owners and operators may
choose to ``correct'' values measured by the alternative test method to
equate to the values that would be measured using Method 305 by
multiplying the measured values times the appropriate ``f m
factor'' presented for each hazardous air pollutant listed in Table 1
of the rule.
Finally, as discussed in Section II.G of this notice, the EPA is
promulgating today a less rigorous validation procedure, ``Alternative
Validation Procedure for EPA Waste Methods,'' in Appendix to 40 CFR
part 63 as an alternative to Method 301 for the validation of a test
method established by the EPA Office of Water (OW) or the EPA Office of
Solid Waste (OSW) when this test method is used for air emission
standards. The EPA decided it is appropriate to allow organic
concentration data test that are validated in accordance with this
method to be used as direct measurement data.
E. Container Air Emission Controls
Comment: Commenters stated that proposed air emission control
requirements for containers are commercially unavailable or impractical
to implement. Also, commenters stated that the requirements should be
consistent with the container air emission control requirements under
the RCRA rules.
Response: Since proposal, the EPA has obtained more information on
the practices and equipment currently used to manage waste and used
solvents in containers. Based on consideration of this information, the
EPA decided to
[[Page 34152]]
revise the air emission control requirements for containers to better
reflect the container organic HAP emission potential, the various
container types, and the common container management practices used for
off-site waste and recovery operations. The EPA believes that these
revised requirements are technically feasible and practical to
implement on all types of containers that the Agency expects to be
subject to the rule. These revisions are described in detail in Section
V.G of this notice.
The EPA is addressing consistency between the air emission control
requirements for containers (as well as the other affected units) in
the Off-Site Waste and Recovery Operations NESHAP and the RCRA rules by
amending the RCRA rules to include an exemption for those affected
units using organic emission controls in accordance with the
requirements of the Off-Site Waste and Recovery Operations NESHAP or
any other applicable NESHAP.
F. Recordkeeping and Reporting
Comment: Commenters stated that the recordkeeping and reporting
requirements proposed for the Off-Site Waste and Recovery Operations
NESHAP would be excessive and inconsistent with other NSPS, NESHAP, and
RCRA rules that also may be applicable to a unit subject to the rule.
Response: Under section 114(a) of the Act, the EPA may require any
owner or operator of a source subject to a NESHAP to establish and
maintain records as well as prepare and submit notifications and
reports to the EPA or authorized State. Review by EPA and State
officials of appropriate information that is maintained in facility
records and is submitted in facility prepared reports provides one
means for checking the compliance status of the facility with the
NESHAP technical requirements. However, the EPA also recognizes that
excessive and duplicative recordkeeping and reporting requirements can
create a burden to facility owners and operators complying with a
NESHAP as well as to the EPA and State officials responsible for
assuring compliance with the NESHAP. Thus, it is the EPA's intention to
limit the amount of recordkeeping and reporting required for a
particular NESHAP to reasonable requirements which will provide the
appropriate information needed by EPA and State officials to enforce
the rule.
For the Off-Site Waste and Recovery Operations NESHAP, the EPA
proposed adopting the recordkeeping and reporting requirements as
specified in the Part 63 General Provisions. The EPA reviewed the
recordkeeping and reporting needed for the final rule considering the
revisions made to the rule applicability and technical requirements.
Based on this review, the EPA decided that certain changes to simplify
the recordkeeping and reporting requirements for the final Off-Site
Waste and Recovery Operations NESHAP can be made without compromising
the enforceability of the rule.
VI. Summary of Changes Since Proposal
Changes have been incorporated into the final Off-Site Waste and
Recovery Operations NESHAP in response to comments on the proposed
rule. Also, the EPA has made many changes to the specific air emission
control requirements to clarify the EPA's intent in the application and
implementation of these requirements and to make these requirements
consistent and up-to-date with EPA decisions made for other related
NESHAP and RCRA rules. The substantive changes to the Off-Site Waste
and Recovery Operations NESHAP since proposal are summarized below.
A. Applicability
Several major changes have been made to the applicability of the
final Off-Site Waste and Recovery Operations NESHAP to address comments
on the proposed rule and to clarify the specific waste management and
recovery operations that the EPA intends to be subject to the Off-Site
Waste and Recovery Operations NESHAP. These changes include: (1)
Deleting the proposed term ``recoverable material'' and defining new
terms ``off-site material'', ``used oil'', and ``used solvent'' to
explicitly specify the types of materials that the EPA is regulating
under this rule; (2) adding a list of the specific wastes and other
materials which can be received at a plant site but not considered by
the EPA to be off-site materials for the purpose of implementing the
rule; and (3) using an inclusive format to limit the rule applicability
to six specific types of waste management and recovery operations. A
detailed description of each of these changes is presented in the
following paragraphs.
The Off-Site Waste and Recovery Operations NESHAP is applicable to
owners and operators of a plant site that meet both of the following
conditions: (1) The plant site is a major source of HAP emissions as
defined in the General Provisions to 40 CFR part 63; and (2) at the
plant site, the owner or operator manages ``off-site material,'' as
defined in the rule, in one or more of the specific waste management or
recovery operations listed in the rule. If either one (or both) of the
conditions do not apply to a plant site, then the owner and operator of
the plant site is not subject to the Off-Site Waste and Recovery
Operations NESHAP, and no action is required by the owner or operator
in regards to this rule.
For the purpose of implementing the Off-Site Waste and Recovery
Operations NESHAP, a ``plant site'' is all contiguous or adjoining
property that is under common control including properties that are
separated only by a road or other public right-of-way. Common control
includes properties that are owned, leased, or operated by the same
entity, parent entity, subsidiary, or any combination thereof. A unit
or group of units within a contiguous property that are not under
common control (e.g., a wastewater treatment unit or solvent recovery
unit located at the site but is sold to a different company) is a
different plant site.
The first applicability condition for the Off-Site Waste and
Recovery Operations NESHAP is determined by whether or not the plant
site is a major source of HAP emissions as defined in 40 CFR 63.2. In
general, this would be a plant site that emits or has the potential to
emit considering controls, in total, 10 tons per year or more of any
one HAP or 25 tons per year or more of any combination of HAP. If the
plant site is not a major source, then the owner and operator of the
plant site is not subject to the Off-Site Waste and Recovery Operations
NESHAP regardless of the types of materials received from off-site.
The second applicability condition involves the combined
requirement that ``off-site material'' must be received at the plant
site and this material must be managed in one of the six types of waste
management or recovery operations specified in the rule. The first part
of the applicability condition involves determining whether an ``off-
site material'' as defined in the rule is received at the plant site.
The second part of the applicability condition involves determining
whether one or more of the following types of waste management or
recovery operations is located at the plant site: (1) a hazardous waste
treatment, storage, and disposal facility (TSDF) regulated under 40 CFR
part 264 or 265 that manages waste received from off-site; (2) a
wastewater treatment facility that manages wastewater received from
off-site and this facility is exempted from regulation
[[Page 34153]]
as a TSDF under 40 CFR 264.1(g)(6) or 40 CFR 265.1(c)(10); (3) a
wastewater treatment facility other than a POTW that manages
wastewaters received from off-site and operation of this facility is
the predominant function performed at the plant site; (4) a facility
that recycles off-site material and this facility is exempted from
regulation as a TSDF under 40 CFR 264.1(g)(2) or 40 CFR 265.1(c)(6);
(5) a facility in which used solvents received from off-site are
reprocessed or recovered; and (6) a facility in which used oil received
from off-site is reprocessed or re-refined and this facility is
regulated under 40 CFR Part 279, subpart F--Standards for Used Oil
Processors and Refiners.
For the purpose of implementing the rule, ``off-site material'' is
defined to be a material for which all three of the following criteria
apply: (1) The material is a ``waste'', ``used oil'', or ``used
solvent'' as defined in the rule; (2) this material is delivered,
transferred, or otherwise moved to the plant site from another
location; and (3) this material contains one or more of the specific
HAP constituents listed in Table 1 in the rule. If the material
received at the plant site does not meet any one of these criteria,
then the material is not an ``off-site material'' under the rule.
The term ``waste'' used for the final rule is the same definition
proposed for the rule. Waste types that EPA does not intend to be
regulated under this rulemaking are specifically listed in the final
rule. For the purpose of the implementing the Off-Site Waste and
Recovery Operations NESHAP, none of the following wastes are ``off-site
materials'': household waste as defined in 40 CFR 258.2; radioactive
mixed waste managed in accordance with all applicable regulations under
Atomic Energy Act and Nuclear Waste Policy Act authorities; waste that
is generated by remedial activities required under the RCRA corrective
action authorities (RCRA sections 3004(u), 3004(v), or 3008(h)), CERCLA
authorities, or similar Federal or State authorities; waste containing
HAP that is generated by residential households (e.g., old paint, home
garden pesticides) and subsequently is collected as a community service
by government agencies, businesses, or other organizations for the
purpose of promoting the proper disposal of this waste; waste that is
generated by or transferred from units complying with all applicable
regulations under 40 CFR Part 63, subparts F and G--National Emission
Standards for Organic Hazardous Air Pollutants from the Synthetic
Organic Chemical Manufacturing Industry; waste containing benzene that
is generated by or transferred from units complying with all applicable
requirements specified by Sec. 61.342(b) under 40 CFR Part 61, subpart
FF--National Emission Standards for Benzene Waste Operations for a
facility at which the total annual benzene quantity from facility waste
is equal to or greater than 10 Mg/yr; and ship ballast water that is
pumped from a ship to an onshore wastewater treatment facility.
``Used oil'' means any oil refined from crude oil or any synthetic
oil that has been used and as a result of such use is contaminated by
physical or chemical impurities. This definition is consistent with the
definition used by the EPA for the RCRA used oil management standards
under 40 CFR Part 279, subpart F.
``Used solvent'' means a solvent composed of mixtures of one or
more aliphatic hydrocarbons or aromatic hydrocarbons that has been used
and as a result of such use is contaminated by physical or chemical
impurities.
Based on the applicability conditions for the final Off-Site Waste
and Recovery Operations NESHAP, an owner or operator is not subject to
the rule and no action is required by the rule for the following cases.
If a plant site is not a major source of HAP emissions, then the owner
and operator of the plant site are not subject to the Off Site Waste
and Recovery Operations NESHAP regardless of whether the site receives
off-site material. If at a plant site is located one or more of the
specific waste management or recovery operations listed in the rule but
off-site material received at the plant site is not managed in these
operations, then the owner and operator of the plant site are not
subject to the Off-Site Waste and Recovery Operations NESHAP. In a case
when a plant site receives off-site material and is a major source of
HAP emissions but there is not one of the waste management or recovery
operations listed in the rule located at the site, then owner and
operator of the plant site are not subject to the Off-Site Waste and
Recovery Operations NESHAP.
At a plant site subject to the Off-Site Waste and Recovery
Operations NESHAP, the rule only applies to the affected sources used
to manage off-site material in the waste management and recovery
operations specified in the rule that are located at the plant site.
Units and equipment used to manage off-site material at the plant site
but are not part of one of the waste management or recovery operations
specified in the rule are not affected sources under the rule.
The first affected source for the Off-Site Waste and Recovery
Operations NESHAP is the group of tanks, surface impoundments,
separators, transfer systems, and containers used to manage off-site
material in each of the waste management and recovery operations
specified in the rule that are located at the plant site. The second
affected source for the rule is the group of process vents on units in
each of the waste management and recovery operations specified in the
rule that are located at the plant site.
The third affected source for the rule is the group of equipment
components consisting of pumps, compressors, agitators, pressure relief
devices, sampling connection systems, open-ended valves and lines,
valves, connectors, and instrumentation systems that contain or contact
off-site material in each of the waste management and recovery
operations specified in the rule that are located at the plant site.
The compliance date for existing sources subject to the Off-Site
Waste and Recovery Operations NESHAP (i.e., affected sources that
commenced construction or reconstruction before October 13, 1994) to
meet the air emission control requirements of the rule is beginning 3
years after today's date. If management of off-site material in the
source is discontinued by this date, then source would no longer
subject to the rule. On the other hand, if an existing waste management
operation or recovery operation does not presently receive off-site
material but begins receiving off-site materials for the first time 3
years after today's date (and meets the other applicability conditions
in the rule), then the source is a new source subject to the rule. In
this case, the owner or operator of the source must achieve compliance
with the provisions of the rule upon the first date that the waste
management operation or recovery operation begins to manage the off-
site material.
Finally, the list of the specific HAP constituents for the Off-Site
Waste and Recovery Operations NESHAP (Table 1 in Subpart DD) was
revised by the EPA for the final rule. The EPA decided to delete eight
chemicals from the proposed list because of the low potential for these
chemicals to be emitted from the waste management and recovery
operations subject to the rule. The criterion used to characterize and
evaluate emission potential was based on a chemical constituent's
Henry's law constant. The following chemical compounds were deleted
from the proposed list: acrylic acid, aniline, o-cresol,
dibutylphthalate, 1,1-
[[Page 34154]]
dimethylhydrazine, formaldehyde, methyl hydrazine, and n-
nitrosodimethylamine.
B. General Standards
Several major changes have been made to the general standards for
the final rule. First, the average VOHAP concentration action level for
off-site material required to be managed in the units using air
emission controls under the rule has been changed to 500 ppmw (as
determined at the point-of-delivery). Units managing off-site materials
determined by the owner or operator to have average VOHAP
concentrations that remain less than 500 ppmw are not required to use
air emission controls under the rule. The second change is land
disposal units have been deleted as an affected source and the final
rule places no restrictions on the disposal of wastes in land disposal
units.
A third change is the addition of an exemption to the general
standards in the final Off-Site Waste and Recovery Operations NESHAP
that relates to the treatment of the off-site material. This exemption
provides that an off-site material management unit is exempted from the
air emission control requirements if the off-site material placed in
the unit is a hazardous waste that meets the numerical concentration
limits, applicable to the hazardous waste, as specified in 40 CFR part
268--Land Disposal Restrictions under both of the following tables: (1)
Table ``Treatment Standards for Hazardous Waste'' in 40 CFR 268.40, and
(2) Table UTS--``Universal Treatment Standards'' in 40 CFR 268.48.
C. Treatment Standards
The final Off-Site Waste and Recovery Operations NESHAP provides
owners or operators with a selection of alternative provisions for
determining when a treated off-site material is no longer required to
be managed in units meeting the air emission control requirements of
the rule. The proposed treatment alternatives have been revised where
appropriate to reflect the new action level of 500 ppmw and additional
alternatives have been added to the rule to provide greater flexibility
to the owner or operator in the treatment of off-site materials.
D. Tank Standards
The tank standards have been revised to address comments on the
proposed requirements, to be consistent with tank standards established
for related NESHAP source categories, and to reduce the inspection,
monitoring, recordkeeping, and reporting requirements. In general, the
final Off-Site Waste and Recovery Operations NESHAP establishes two
levels of air emission control for tanks managing off-site materials
having a maximum HAP vapor pressure less than 76.6 kPa. The control
level applicable to a tank required to use controls is determined by
the tank design capacity and the maximum organic HAP vapor pressure of
the off-site material in the tank. Different capacity and vapor
pressure limits have been established for tanks determined to be part
of an existing affected source and those determined to be part of a new
affected source. Tanks used for waste stabilization processes are
required to use Tank Level 2 air emission controls. The designation of
which tanks are required to use controls and the required control level
for the tank are specified in 40 CFR part 63, subpart DD--National
Emission Standards for Hazardous Air Pollutants from Off-Site Waste and
Recovery Operations. The specific air emission control requirements for
Tank Level 1 controls are specified in 40 CFR part 63, subpart OO--
National Emission Standards for Tanks-Level 1. The specific air
emission control requirements for Tank Level 2 controls remain in 40
CFR part 63, subpart DD.
The tank capacity limits for existing tanks in which the maximum
HAP vapor pressure of the off-site material in the tank is less than
76.6 kPa have been corrected to be consistent with the EPA's original
intent to be compatible with other RCRA and NESHAP air emission
standards already promulgated by the Agency which potentially could be
applicable to the same tank. The proposed rule was incorrectly drafted
to exclude existing tanks having a design capacity less than 75 m\3\
(approximately 20,000 gallons) from using any air emission controls.
The EPA never intended to exclude this group of tanks from this
rulemaking. Under the final rule, when applicable, use of Tank Level 1
air emission controls is required for an existing tank having a design
capacity less than 75 m\3\.
For a tank required to use Level 1 controls, the final rule
specifies that the off-site material be managed in a tank using a
fixed-roof. For the Level 2 controls, the final rule requires that off-
site material be managed in one of the following: (1) a fixed roof tank
equipped with an internal floating roof; (2) a tank equipped with an
external floating roof; (3) a tank vented through a closed-vent system
to a control device; (4) a pressure tank; or (5) a tank located inside
an enclosure that is vented through a closed-vent system to an enclosed
combustion control device.
E. Oil-Water Separator and Organic-Water Standards
Under the final Off-Site Waste and Recovery Operations NESHAP,
individual air emission control requirements have been established for
oil-water separator or organic-waster separators. For each separator
required to use controls under the rule, the owner or operator is
required to control air emissions from the separator by installing and
operating on each section of the unit either a floating roof or a
fixed-roof that is vented through a closed-vent system to a control
device. The designation of which separators are required to use
controls is specified in 40 CFR part 63, subpart DD--National Emission
Standards for Hazardous Air Pollutants from Off-Site Waste and Recovery
Operations. The specific air emission control requirements are
specified in 40 CFR part 63, subpart VV--National Emission Standards
for Oil-Water and Organic-Water Separators.
F. Surface Impoundment Standards
Revisions have been made to the surface impoundment standards so
that, where relevant and appropriate, the inspection, monitoring,
recordkeeping, and reporting requirements for surface impoundments are
consistent with the requirements established for tanks and separators.
The designation of which surface impoundments are required to use
controls is specified in 40 CFR 63 subpart DD--National Emission
Standards for Hazardous Air Pollutants from Off-Site Waste and Recovery
Operations. The specific air emission control requirements are
specified in 40 CFR part 63, subpart QQ--National Emission Standards
for Surface Impoundments.
G. Container Standards
The container standards have been significantly revised to address
comments on the proposed requirements, to make this rule compatible
with the existing U.S. Department of Transportation (DOT) regulations
for transporting hazardous materials, and to reduce the inspection,
monitoring, recordkeeping, and reporting requirements. The designation
of which containers are required to use controls and the required
control level for the container are specified in 40 CFR 63 subpart DD--
National Emission Standards for Hazardous Air Pollutants from Off-Site
Waste and Recovery Operations. The specific air emission control
requirements for each control level are specified in 40 CFR Part 63
[[Page 34155]]
subpart PP--National Emission Standards for Containers.
The revised container standards for the Off-Site Waste and Recovery
Operations NESHAP establish three levels of air emission control. The
control level applicable to a container is determined by the container
design capacity, the total organic content of the material in the
container, and use of the container. For example, containers with a
design capacity less than or equal to 0.1 m3 (approximately 26
gallons) are not subject to any requirements under the rule.
Under the final rule, Level 1 controls are required for the
following container categories (except when the container remains
uncovered for waste stabilization processes): (1) containers having a
design capacity greater than 0.1 m3 and less than or equal to 0.46
m3 (approximately 119 gallons); and (2) containers with a design
capacity greater than 0.46 m3 and used to manage off-site
materials that do not meet the definition of ``light material.'' Level
2 controls are required for containers with a design capacity greater
than 0.46 m3 and used to handle ``light materials'' (i.e., off-
site materials where the vapor pressure of one or more of the
components in the material is greater than 0.3 kilopascals [kPa] at 20
deg.C, and the total concentration of the pure components having a
vapor pressure greater than 0.3 kPa at 20 deg.C is equal to or greater
than 20 percent by weight), except when the container remains uncovered
for waste stabilization processes. Level 3 controls are required for
containers having a design capacity greater than 0.1 m3 that must
remain uncovered for waste stabilization processes.
For the containers required to use Level 1 controls, the final rule
requires that the off-site material be managed either: (1) in a
container that meets the relevant DOT regulations on packaging
hazardous materials for transportation under 49 CFR parts 173, 178,
179, and 180; or (2) a covered container that meets the requirements
specified in the final rule. No additional requirements are specified
by the final rule for containers complying with the applicable DOT
regulations. In the case when an owner or operator elects to comply
with the covered container requirements (i.e., non-DOT containers), the
container must be equipped with a tight-fitting cover that has no
visible gaps, spaces, holes, or other openings. The rule does require a
visual inspection when the cover is applied and, thereafter, annually
if the container remains in on-site storage for a period longer than 1
year. No testing for detectable organic emissions using Method 21 is
required. No recordkeeping and reporting are required under the final
rule for containers using Level 1 controls.
For the containers required to use Level 2 controls, the final rule
requires that the off-site material be managed in one of the following:
(1) a container that meets the relevant DOT regulations on packaging
hazardous materials for transportation under 49 CFR parts 173, 178,
179, and 180; or (2) a container that has been demonstrated within the
preceding 12 months to operate with no detectable organic emissions by
using Method 21; or (3) a container that has been demonstrated within
the preceding 12 months to be vapor-tight by using Method 27. No
additional requirements are specified by the final rule for containers
complying with the applicable DOT regulations. Specific design,
operating, inspection and monitoring, repair, recordkeeping, and
reporting requirements for containers tested using either Method 21 or
27 are specified in the rule.
For the containers required to use Level 3 controls, the final rule
requires that an open container be placed in an enclosure vented
through a closed-vent system to a control device or a covered container
be vented directly to a control device. If an enclosure is used, the
enclosure is to be designed in accordance with the criteria for a
permanent total enclosure as specified in 40 CFR 52.741, Appendix B,
Procedure T--Criteria for and Verification of a Permanent or Temporary
Total Enclosure.
Requirements for loading off-site material into a container have
been revised since proposal. Under the final rule there are no
requirements for loading off-site material into containers using Level
1 controls. For containers using Level 2 controls, the loading
requirements have been revised to allow flexibility to use any
appropriate loading method that will minimize exposure of the off-site
material to the atmosphere and thereby reduce organic air emissions, to
the extent practical considering the physical properties of the off-
site material and good engineering and safety practices. Examples of
container loading procedures that the EPA considers to meet these
requirements include, but are not limited to, using a submerged-fill
pipe or other submerged-fill method to load liquids into the container;
or using a vapor-balancing or a vapor-recovery system to collect and
control the vapors displaced from the container during filling
operations.
The inspection, monitoring, recordkeeping, and reporting
requirements for containers have been significantly simplified from
those proposed. Owners and operators of containers using either
Container Level 1 or Container Level 2 controls in accordance with the
provisions of the rule are required to visually inspect the container
and its cover and closure devices to check for defects at the time the
owner or operator first accepts possession of the container at the
facility site with the exception of those containers emptied within 24
hours of being received. Also, in the case when a container used for
managing regulated-material remains at the facility site for a period
of 1 year or more, the container and its cover and closure devices are
to be visually inspected to check for defects at least once every 12
months.
There are no requirements for periodic Method 21 leak monitoring of
containers. There are no recordkeeping nor reporting requirements under
this final rulemaking for containers using either Container Level 1 or
Container Level 2 controls.
H. Transfer System Standards
The major change to the transfer system standards is the addition
of specific requirements for individual drain systems to the final
rule. The designation of which individual drain systems are required to
use controls is specified in 40 CFR 63 subpart DD--National Emission
Standards for Hazardous Air Pollutants from Off-Site Waste and Recovery
Operations. The specific air emission control requirements are
specified in 40 CFR 63 subpart RR--National Emission Standards for
Individual Drain systems. Other revisions have been made, where
relevant and appropriate, so that the requirements for transfer systems
other than an individual drain system are consistent with the
requirements established for the other types of off-site material
management units.
I. Process Vent Standards
In response to comments, several changes have been made to the air
emission control requirements for process vents under the Off-Site
Waste and Recovery Operations NESHAP. The term ``enclosed treatment
unit'' proposed for the rule has been deleted from the final rule and
replaced with a definition for the term ``process vent.'' The EPA
decided to use this new term to clarify the process vents that must use
air emission controls under the rule. The final rule has also been
revised to require an average emission reduction of
[[Page 34156]]
at least 95 percent by weight in total HAP emissions from the
combination of all affected process vents at the plant site (i.e., all
process vents that are a part of the affected sources subject to the
Off-Site Waste and Recovery Operations NESHAP).
J. Equipment Leak Air Standards
The EPA has not included in the final Off-Site Waste and Recovery
Operations NESHAP a definition for ``ancillary equipment'' as was
originally proposed. Instead, the specific equipment types subject to
equipment leak standards under the Off-Site Waste and Recovery
Operations NESHAP are listed directly in the applicability section of
the rule (Sec. 63.690). These equipment types are consistent with other
NESHAP equipment leak standards.
K. Control Device and Closed-Vent System Standards
Revisions to the control device and closed-vent system standards
consist of incorporating changes to the closed-vent system and control
device requirements so that these requirements are consistent and up-
to-date with the general decisions the EPA has made regarding NESHAP
inspection, monitoring, maintenance, repair, malfunctions,
recordkeeping, and reporting requirements for organic emission control
devices. Also, to improve the readability and user understanding of the
requirements, the format used to present the standards has been
revised. In the final rule, all of the requirements for a particular
type of control device (e.g., vapor incinerator, carbon adsorber, or
condenser) are grouped together.
L. Test Methods and Procedures
For the final Off-Site Waste and Recovery Operations NESHAP, the
EPA decided to allow an owner or operator to use any one of several
existing EPA test methods for direct measurement of the VOHAP
concentration of an off-site material. In addition, the EPA has made
certain other changes to the rule to facilitate the use of organic
concentration data obtained using other alternative test methods not
specifically listed in the rule.
The final rule allows an owner or operator to directly measure the
volatile organic concentration using any one of the following methods:
Method 305 in 40 CFR part 63, Appendix A; Method 25D in 40 CFR part 60,
Appendix A; or Method 624, Method 1624, or Method 1625 in 40 CFR part
136, Appendix A (when used in accordance with the procedure specified
in the rule). In addition, an owner or operator may use any other
alternative method that has been validated in accordance with the
procedures specified in Sections 5.1 and 5.3 of Method 301 or specified
in the Appendix D--Alternative Validation Procedure for EPA Waste
Methods promulgated by this action in 40 CFR part 63.
M. Recordkeeping and Reporting Requirements
The EPA has changed the recordkeeping and reporting requirements
for the final Off-Site Waste and Recovery Operations NESHAP to reflect
the revisions to the rule applicability and technical requirements and
reduce the burden of these requirements on owners and operators.
VII. Administrative Requirements
A. Docket
The docket is an organized and complete file of information
considered by the EPA in the development of a rulemaking. The docket
pertaining to the Off-Site Waste and Recovery Operations NESHAP is
Docket No. A-92-16. This docket contains a copy of the regulatory text
of the proposed rule, the BID, and copies of all BID references and
other information related to the development of the proposed and final
rule. The public may review all materials in this docket at the EPA's
Air and Radiation Docket and Information Center (see the ADDRESSES
section at the beginning of this notice).
B. Paperwork Reduction Act
The information collection requirements for this NESHAP have been
submitted for approval to the Office of Management and Budget (OMB)
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An
Information Collection Request (ICR) document has been prepared by the
EPA (ICR No. 1717.02), and a copy may be obtained from Sandy Farmer,
OPPE Regulatory Information Division (2137), U.S. Environmental
Protection Agency, 401 M Street, S.W.; Washington, DC 20460, or by
calling (202) 260-2740.
The public recordkeeping and reporting burden for this collection
of information is estimated to average approximately 830 hours per
respondent for each of the first 3 years following promulgation of the
rule. These estimates include time for reviewing instructions,
searching existing data sources, gathering and maintaining the data
needed, and completing and reviewing the collection of information.
Send comments regarding the recordkeeping and reporting burden
estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to Chief, Information
Policy Branch (2137), U.S. Environmental Protection Agency, 401 M
Street, S.W.; Washington, DC 20460; and to the Office of Information
and Regulatory Affairs, Office of Management and Budget, Washington, DC
20503, marked ``Attention: Desk Officer for EPA.''
C. Executive Order 12866
Under Executive Order 12866 (58 FR 5173, October 4, 1993), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to OMB review and the requirements of the
Executive Order. The Order defines ``significant regulatory action'' as
one that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
(2) create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of the Executive Order 12866, it has been
determined that this action will be treated as a ``significant
regulatory action'' within the meaning of the Executive Order. As such,
this action was submitted to the Office of Management and Budget (OMB)
for review. Changes made in response to OMB suggestions or
recommendations are documented in the docket pertaining to the Off-Site
Waste and Recovery Operations NESHAP rulemaking (Docket No. A-92-16).
D. Regulatory Flexibility Act
Section 605 of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601
et seq.), the EPA Regulatory Flexibility guidelines (April, 1992), and
the Small Business Regulatory Fairness Act of 1996 requires Federal
agencies to give special consideration to the impacts of regulations on
small entities, which are small businesses, small organizations, and
small governments. The major purpose of the Regulatory Flexibility Act,
the EPA guidelines, and the Small Business Fairness Act is to keep
paperwork and regulatory requirements
[[Page 34157]]
from being out of proportion to the scale of the entities being
regulated, without compromising the objectives of, in this case, the
Clean Air Act.
A small business with establishments in Standard Industrial
Classification 4953, Refuse Systems, is defined by the Small Business
Administration as one receiving less than $6 million per year, averaged
over the most recent three fiscal years. A small organization is a not-
for-profit enterprise that is independently owned and operated and is
not dominant in the waste disposal industry. A small government is one
that serves a population of less than 50,000 people. The EPA may use
other definitions, but elects to use these. The EPA believes that small
organizations and small governments have at most a very minor
involvement with the types of waste management and recovery operations
subject to this rule, and therefore would not be significantly affected
by the Off-Site Waste and Recovery Operations NESHAP. Hence, the EPA
has concentrated its attention on small businesses.
The Regulatory Flexibility Act specifies that Federal agencies must
prepare an initial regulatory flexibility analysis if a proposed
regulatory action would have ``a significant economic impact on a
substantial number of small entities.'' The data bases available to the
EPA reflect the state of the hazardous waste TSDF industry in 1986, and
provide limited basis for updating the economic factors. Furthermore,
the EPA does not have reliable projections of construction of new
facilities with the types of waste management and recovery operations
that will be subject to the rule. The EPA, based on its initial
Regulatory Flexibility analysis, therefore assumed that the rule may
have a significant impact on a substantial number of small businesses,
and conducted a final regulatory flexibility analysis. This analysis is
part of the economic impact analysis (titled Economic Impact Analysis
of National Emission Standards for Hazardous Air Pollutants: Off-Site
Waste and Recovery Operations) prepared for the rulemaking and
available in the docket (Docket No. A-92-16).
Even though many facilities at which are located waste management
and recovery operations receiving off-site materials are expected to be
area sources and would not be subject to this NESHAP, the EPA assumed
for the regulatory flexibility analysis that all facilities listed in
the source category data base are collocated at major sources. Also,
the analysis did not exclude those facilities that are major sources
but would not be subject to the air emission control requirements under
the Off-Site Waste and Recovery Operations NESHAP because the facility
qualifies for the rule exemption for a facility at which the total
annual organic HAP mass content of all off-site material is less than 1
Mg/yr.
From the source category data base, the EPA identified for the
analysis 110 small businesses that own 112 facilities subject to the
Off-Site Waste and Recovery Operations NESHAP. As a result of
exemptions allowed by the final rule, none of these small businesses
would incur costs beyond costs for recordkeeping and reporting. All of
these small businesses would meet at least one of the exemption
criteria in the rule and, therefore, would not need to use the air
emission controls required by the rule. The small costs for
recordkeeping and reporting are required to document compliance with
the rule exemptions. For a median small business, the same costs come
to less than 0.1 percent of salescompared with about 0.01 percent for
the median large business. Since there are no capital costs to small
businesses, none of the small businesses would exceed the capital cost
retained earning breakpoints (the maximum amount of new capital a
business can raise without issuing new stock and without changing its
existing capital structure). By way of comparison, 30 percent of large
businesses would have capital costs of compliance exceeding their
breakpoints. None of these large businesses are expected to receive
significant economic impacts.
Finally, the EPA evaluated the possibility that the final rule
might cause a small business to close. Based on this review, no small
businesses are expected to close as a result of having to comply with
the requirements of the final rule.
Pursuant to section 605(b) of the Regulatory Flexibility Act, the
Administrator certifies that this rule will not have a significant
economic impact on a substantial number of small entities.
E. Unfunded Mandates
Under section 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, the 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, the 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 the EPA to establish a
plan for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
The 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. Therefore, the requirements of the
Unfunded Mandates Act do not apply to this action.
F. Review
The off-site waste and recovery operations NESHAP will be reviewed
8 years from today's date of promulgation. This review will include an
assessment of such factors as evaluation of the residual health risks,
any duplication with other air programs, the existence of alternative
methods, enforceability, improvements in air emission control
technology and health data, and the recordkeeping and reporting
requirements.
VII. Statutory Authority
The statutory authority for this proposal is provided by section
101, 112, 114, 116, and 301 of the Clean Air Act, as amended; 42.
U.S.C., 7401, 7412, 7414, 7416, and 7601.
List of Subjects in 40 CFR Part 63
Environmental protection, Air pollution control, Containers,
Equipment leaks, Hazardous air pollutants, Individual drain systems,
NESHAP, Off-site waste and recovery operations, Oil-water separators,
Process vents, Tanks, Surface impoundments, Used oil, Used solvents,
Waste.
Dated: May 28, 1996.
Carol M. Browner,
The Administrator.
For the reasons set out in the preamble, title 40, chapter I, part
63 of the Code of Federal Regulations are amended as follows:
PART 63--NATIONAL EMISSION STANDARDS FOR HAZARDOUS AIR POLLUTANTS
FOR SOURCE CATEGORIES
1-3. The authority citation for part 63 continues to read as
follows:
Authority: 42 U.S.C. 7401, et seq.
4. Part 63 is amended by adding subpart DD consisting of
Secs. 63.680 through 63.698 to read as follows:
[[Page 34158]]
Subpart DD--National Emission Standards for Hazardous Air Pollutants
from Off-Site Waste and Recovery Operations
Sec.
63.680 Applicability and designation of affected sources.
63.681 Definitions.
63.682 [Reserved]
63.683 Standards: General.
63.684 Standards: Off-site material treatment.
63.685 Standards: Tanks.
63.686 Standards: Oil-water and organic-water separators.
63.687 Standards: Surface impoundments.
63.688 Standards: Containers.
63.689 Standards: Transfer systems..
63.690 Standards: Process vents.
63.691 Standards: Equipment leaks.
63.692 [Reserved]
63.693 Standards: Closed-vent systems and control devices.
63.694 Testing methods and procedures.
63.695 Inspection and monitoring requirements.
63.696 Recordkeeping requirements.
63.697 Reporting requirements.
63.698 Delegation of Authority.
Table 1 to Subpart DD--List of Hazardous Air Pollutants (HAP) for
Subpart DD.
Table 2 to Subpart DD--Applciability of paragraphs in 40 CFR Subpart
A, General Provisions, to Subpart DD.
Table 3 to Subpart DD--Tank Control Levels for Tanks at Existing
Affected Sources as Required by 40 CFR 63.685(b)(1).
Table 4 to Subpart DD--Tank Control Levels for Tanks at New Affected
Sources as Required by 40 CFR 63.685(b)(2).
Subpart DD--National Emission Standards for Hazardous Air
Pollutants from Off-Site Waste and Recovery Operations
Sec. 63.680 Applicability and designation of affected sources.
(a) The provisions of this subpart apply to the owner and operator
of a plant site for which both of the conditions specified in
paragraphs (a)(1) and (a)(2) of this section are applicable. If either
one of these conditions does not apply to the plant site, then the
owner and operator of the plant site are not subject to the provisions
of this subpart.
(1) The plant site is a major source of hazardous air pollutant
(HAP) emissions as defined in 40 CFR 63.2.
(2) At the plant site is located one or more of operations that
receives off-site materials as specified in paragraph (b) of this
section and the operations is one of the following waste management
operations or recovery operations as specified in paragraphs (a)(2)(i)
through (a)(2)(vi) of this section.
(i) A waste management operation that receives off-site material
and the operation is regulated as a hazardous waste treatment, storage,
and disposal facility (TSDF) under either 40 CFR part 264 or part 265.
(ii) A waste management operation that treats wastewater which is
an off-site material and the operation is exempted from regulation as a
hazardous waste treatment, storage, and disposal facility under 40 CFR
264.1(g)(6) or 40 CFR 265.1(c)(10).
(iii) A waste management operation that treats wastewater which is
an off-site material and the operation meets both of the following
conditions:
(A) The operation is subject to regulation under either section 402
or 307(b) of the Clean Water Act but is not owned by a ``state'' or
``municipality'' as defined by section 502(3) and 502(4), respectively,
of the Clean Water Act; and
(B) The treatment of wastewater received from off-site is the
predominant activity performed at the plant site.
(iv) A recovery operation that recycles or reprocesses hazardous
waste which is an off-site material and the operation is exempted from
regulation as a hazardous waste treatment, disposal, and storage
facility under 40 CFR 264.1(g)(2) or 40 CFR 265.1(c)(6).
(v) A recovery operation that recycles or reprocesses used solvent
which is an off-site material and the operation is not part of a
chemical, petroleum, or other manufacturing process that is required to
use air emission controls by another subpart of 40 CFR part 63.
(vi) A recovery operation that re-refines or reprocesses used oil
which is an off-site material and the operation is regulated under 40
CFR 279 subpart F--Standards for Used Oil Processors and Refiners.
(b) For the purpose of implementing this subpart, an off-site
material is a material that meets all of the criteria specified in
paragraph (b)(1) of this section but is not one of the materials
specified in paragraph (b)(2) of this section.
(1) An off-site material is a material that meets all of the
criteria specified in paragraphs (b)(1)(i) through (b)(1)(iii) of this
section. If any one of these criteria do not apply to the material,
then the material is not an off-site material subject to this subpart.
(i) The material is a waste, used oil, or used solvent as defined
in Sec. 63.681 of this subpart;
(ii) The material is not produced or generated within the plant
site, but the material is delivered, transferred, or otherwise moved to
the plant site from a location outside the boundaries of the plant
site; and
(iii) The material contains one or more of the hazardous air
pollutants (HAP) listed in Table 1 of this subpart based on the
composition of the material at the point-of-delivery, as defined in
Sec. 63.681 of this subpart.
(2) For the purpose of implementing this subpart, the following
materials are not off-site materials:
(i) Household waste as defined in 40 CFR 258.2.
(ii) Radioactive mixed waste managed in accordance with all
applicable regulations under Atomic Energy Act and Nuclear Waste Policy
Act authorities.
(iii) Waste that is generated as a result of implementing remedial
activities required under the Resource Conservation and Recovery Act
(RCRA) corrective action authorities (RCRA sections 3004(u), 3004(v),
or 3008(h)), Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) authorities, or similar Federal or State
authorities.
(iv) Waste containing HAP that is generated by residential
households (e.g., old paint, home garden pesticides) and subsequently
is collected as a community service by government agencies, businesses,
or other organizations for the purpose of promoting the proper disposal
of this waste.
(v) Waste that is generated by or transferred from units complying
with all applicable regulations under 40 CFR 63 subparts F and G--
National Emission Standards for Organic Hazardous Air Pollutants from
the Synthetic Organic Chemical Manufacturing Industry.
(vi) Waste that is generated by or transferred from units complying
with all applicable requirements specified by Sec. 61.342(b) under 40
CFR 61 subpart FF--National Emission Standards for Benzene Waste
Operations for a facility at which the total annual benzene quantity
from the facility waste is equal to or greater than 10 megagrams per
year.
(vii) Ship ballast water pumped from a ship to an onshore
wastewater treatment facility.
(c) For the purpose of implementing this subpart, the affected
sources at a plant site subject to this subpart are as follows:
(1) Off-site material management units. The affected source is the
group of tanks, containers, oil-water or organic-water separators,
surface impoundments, and transfer systems used to manage off-site
material in each of the waste management operations and recovery
operations specified in paragraphs (a)(2)(i) through (a)(2)(vi) of this
section that is located at the plant site.
[[Page 34159]]
(2) Process vents. The affected source is the group of process
vents on units used to manage off-site material in each of the waste
management operations and recovery operations specified in paragraphs
(a)(2)(i) through (a)(2)(vi) of this section that is located at the
plant site.
(3) Equipment leaks. The affected source is the group of equipment
specified in Sec. 63.683(b)(2)(i) through (b)(2)(iii) of this subpart
that is used to handle off-site material in each of the waste
management operations and recovery operations specified in paragraphs
(a)(2)(i) through (a)(2)(vi) of this section that is located at the
plant site.
(d) Owners and operators of plant sites at which are located
affected sources subject to this subpart are exempted from the
requirements of Secs. 63.682 through 63.699 of this subpart in
situations when the total annual quantity of the HAP that is contained
in the off-site material received at the plant site is less than 1
megagram per year. This total annual HAP quantity for the off-site
material shall be based on the total quantity of the HAP listed in
Table 1 of this subpart as determined at the point-of-delivery for each
off-site material stream. Documentation shall be prepared by the owner
or operator and maintained at the plant site to support the initial
determination of the total annual HAP quantity for the off-site
material. The owner or operator shall perform a new determination when
the extent of changes to the quantity or composition of the off-site
material received at the plant site could cause the total annual HAP
quantity in the off-site material to the exceed limit of 1 megagram per
year.
(e) Compliance dates.
(1) Existing sources. The owner or operator of an affected source
that commenced construction or reconstruction before October 13, 1994,
shall achieve compliance with the provisions of the subpart no later
than July 1, 1999 unless an extension has been granted by the
Administrator as provided in 40 CFR 63.6(i).
(2) New sources. The owner or operator of an affected source for
which construction or reconstruction commences on or after October 13,
1994, shall achieve compliance with the provisions of this subpart by
July 1, 1996 or upon initial startup of operations, whichever date is
later as provided in 40 CFR 63.6(b). For the purpose of implementing
this subpart, a waste management operation or recovery operation that
commenced construction or reconstruction before October 13, 1994, and
receives off-site material for the first time after July 1, 1999 is a
new source, and the owner or operator of this affected source shall
achieve compliance with the provisions of this subpart upon the first
date that the waste management operation or recovery operation begins
to manage the off-site material.
(f) The provisions of 40 CFR part 63, subpart A--General Provisions
that apply and those that do not apply to this subpart are specified in
Table 2 of this subpart.
Sec. 63.681 Definitions.
All terms used in this subpart shall have the meaning given to them
in this section, 40 CFR 63.2 of this part, and the Act.
Boiler means an enclosed combustion device that extracts useful
energy in the form of steam and is not an incinerator or a process
heater.
Closed-vent system means a system that is not open to the
atmosphere and is composed of hard-piping, ductwork, connections, and,
if necessary, fans, blowers, or other flow-inducing devices that
conveys gas or vapor from an emission point to a control device.
Closure device means a cap, hatch, lid, plug, seal, valve, or other
type of fitting that prevents or reduces air pollutant emissions to the
atmosphere by blocking an opening in a cover when the device is secured
in the closed position. Closure devices include devices that are
detachable from the cover (e.g., a sampling port cap), manually
operated (e.g., a hinged access lid or hatch), or automatically
operated (e.g., a spring-loaded pressure relief valve).
Container means a portable unit used to hold material. Examples of
containers include but are not limited to drums, dumpsters, roll-off
boxes, bulk cargo containers commonly known as ``portable tanks'' or
``totes'', cargo tank trucks, and tank rail cars.
Continuous record means documentation of data values measured at
least once every 15 minutes and recorded at the frequency specified in
this subpart.
Continuous recorder means a data recording device that either
records an instantaneous data value at least once every 15 minutes or
records 15-minutes or more frequent block averages.
Continuous seal means a seal that forms a continuous closure that
completely covers the space between the edge of the floating roof and
the wall of a tank. A continuous seal may be a vapor-mounted seal,
liquid-mounted seal, or metallic shoe seal. A continuous seal may be
constructed of fastened segments so as to form a continuous seal.
Control device means equipment used for recovering or oxidizing
organic vapors. Examples of such equipment include but are not limited
to carbon adsorbers, condensers, vapor incinerators, flares, boilers,
and process heaters.
Cover means a device that prevents or reduces air pollutant
emissions to the atmosphere by forming a continuous barrier over the
off-site material managed in a unit. A cover may have openings (such as
access hatches, sampling ports, gauge wells) that are necessary for
operation, inspection, maintenance, and repair of the unit on which the
cover is used. A cover may be a separate piece of equipment which can
be detached and removed from the unit or a cover may be formed by
structural features permanently integrated into the design of the unit.
Emission point means an individual tank, surface impoundment,
container, oil-water or organic-water separator, transfer system,
process vent, or enclosure.
Enclosure means a structure that surrounds a tank or container,
captures organic vapors emitted from the tank or container, and vents
the captured vapor through a closed vent system to a control device.
External floating roof means a pontoon-type or double-deck type
cover that rests on the liquid surface in a tank with no fixed roof.
Fixed roof means a cover that is mounted on a unit in a stationary
position and does not move with fluctuations in the level of the liquid
managed in the unit.
Flame zone means the portion of the combustion chamber in a boiler
or process heater occupied by the flame envelope.
Floating roof means a cover consisting of a double deck, pontoon
single deck, or internal floating cover which rests upon and is
supported by the liquid being contained, and is equipped with a
continuous seal.
HAP means hazardous air pollutants.
Hard-piping means pipe or tubing that is manufactured and properly
installed in accordance with relevant standards and good engineering
practices.
Hazardous waste means a waste that is determined to be hazardous
under the Resource Conservation and Recovery Act (PL 94-580) (RCRA), as
implemented by 40 CFR parts 260 and 261.
Individual drain system means a stationary system used to convey
wastewater streams or residuals to a waste management unit or to
discharge
[[Page 34160]]
or disposal. The term includes hard-piping, all drains and junction
boxes, together with their associated sewer lines and other junction
boxes (e.g., manholes, sumps, and lift stations) conveying wastewater
streams or residuals. For the purpose of this subpart, an individual
drain system is not a drain and collection system that is designed and
operated for the sole purpose of collecting rainfall runoff (e.g.,
stormwater sewer system) and is segregated from all other individual
drain systems.
Internal floating roof means a cover that rests or floats on the
liquid surface (but not necessarily in complete contact with it inside
a tank that has a fixed roof).
Light-material service means the container is used to manage an
off-site material for which both of the following conditions apply: the
vapor pressure of one or more of the organic constituents in the off-
site material is greater than 0.3 kilopascals (kPa) at 20 deg.C; and
the total concentration of
FR Doc. 96-16576 National Emission Standards for Hazardous Air Pollutants: Off- Site Waste and Recovery Operations
the pure organic constituents having a vapor
pressure greater than 0.3 kPa at 20 deg.C is equal to or greater than
20 percent by weight.
Liquid-mounted seal means a foam- or liquid-filled continuous seal
mounted in contact with the liquid in a unit.
Maximum HAP vapor pressure means the sum of the individual HAP
equilibrium partial pressure exerted by an off-site material at the
temperature equal to either: the local maximum monthly average
temperature as reported by the National Weather Service when the off-
site material is stored or treated at ambient temperature; or the
highest calendar-month average temperature of the off-site material
when the off-site material is stored at temperatures above the ambient
temperature or when the off-site material is stored or treated at
temperatures below the ambient temperature. For the purpose of this
subpart, maximum HAP vapor pressure is determined using the procedures
specified in Sec. 63.694(j) of this subpart.
Metallic shoe seal means a continuous seal that is constructed of
metal sheets which are held vertically against the wall of the tank by
springs, weighted levers, or other mechanisms and is connected to the
floating roof by braces or other means. A flexible coated fabric
(envelope) spans the annular space between the metal sheet and the
floating roof.
No detectable organic emissions means no escape of organics to the
atmosphere as determined using the procedure specified in
Sec. 63.694(k) of this subpart.
Off-site material means a material that meets all of the criteria
specified in paragraph Sec. 63.680(b)(1) of this subpart but is not one
of the materials specified in Sec. 63.680(b)(2) of this subpart.
Off-site material management unit means a tank, container, surface
impoundment, oil-water separator, organic-water separator, or transfer
system used to manage off-site material.
Off-site material stream means an off-site material produced or
generated by a particular process or source such that the composition
and form of the material comprising the stream remain consistent. An
off-site material stream may be delivered, transferred, or otherwise
moved to the plant site in a continuous flow of material (e.g.,
wastewater flowing through a pipeline) or in a series of discrete
batches of material (e.g., a truckload of drums all containing the same
off-site material or multiple bulk truck loads of an off-site material
produced by the same process).
Oil-water separator means a separator as defined for this subpart
that is used to separate oil from water.
Operating parameter value means a minimum or maximum value
established for a control device or treatment process parameter which,
if achieved by itself or in combination with one or more other
operating parameter values, determines that an owner or operator has
complied with an applicable emission limitation or standard.
Organic-water separator means a separator as defined for this
subpart that is used to separate organics from water.
Plant site means all contiguous or adjoining property that is under
common control including properties that are separated only by a road
or other public right-of-way. Common control includes properties that
are owned, leased, or operated by the same entity, parent entity,
subsidiary, or any combination thereof. A unit or group of units within
a contiguous property that are not under common control (e.g., a
wastewater treatment unit or solvent recovery unit located at the site
but is sold to a different company) is a different plant site.
Point-of-delivery means the point at the boundary or within the
plant site where the owner or operator first accepts custody, takes
possession, or assumes responsibility for the management of an off-site
material stream managed in a waste management operation or recovery
operation specified in Sec. 63.680 (a)(2)(i) through (a)(2)(vi) of this
subpart. The characteristics of an off-site material stream are
determined prior to combining the off-site material stream with other
off-site material streams or with any other materials.
Point-of-treatment means a point where the off-site material to be
treated in accordance with Sec. 63.683(b)(1)(ii) of this subpart exits
the treatment process. The characteristics shall be determined before
this material is conveyed, handled, or otherwise managed in such a
manner that the material has the potential to volatilize to the
atmosphere.
Process heater means an enclosed combustion device that transfers
heat released by burning fuel directly to process streams or to heat
transfer liquids other than water.
Process vent means any open-ended pipe, stack, or duct that allows
the passage of gases, vapors, or fumes to the atmosphere and this
passage is caused by mechanical means (such as compressors or vacuum-
producing systems) or by process-related means (such as volatilization
produced by heating). For the purpose of this subpart, a process vent
is not a stack or duct used to exhaust combustion products from a
boiler, furnace, process heater, incinerator, or other combustion
device.
Recovery operation means the collection of off-site material
management units, process vents, and equipment components used at a
plant site to manage an off-site material stream from the point-of-
delivery through the point where the material has been recycled,
reprocessed, or re-refined to obtain the intended product or to remove
the physical and chemical impurities of concern.
Safety device means a closure device such as a pressure relief
valve, frangible disc, fusible plug, or any other type of device which
functions exclusively to prevent physical damage or permanent
deformation to a unit or its air emission control equipment by venting
gases or vapors directly to the atmosphere during unsafe conditions
resulting from an unplanned, accidental, or emergency event. For the
purpose of this subpart, a safety device is not used for routine
venting of gases or vapors from the vapor headspace underneath a cover
such as during filling of the unit or to adjust the pressure in this
vapor headspace in response to normal daily diurnal ambient temperature
fluctuations. A safety device is designed to remain in a closed
position during normal operations and open only when the internal
pressure, or another relevant parameter, exceeds the device threshold
setting applicable to the air emission control equipment as determined
by the owner or operator based on manufacturer recommendations,
applicable
[[Page 34161]]
regulations, fire protection and prevention codes, standard engineering
codes and practices, or other requirements for the safe handling of
flammable, combustible, explosive, reactive, or hazardous materials.
Separator means a waste management unit, generally a tank, used to
separate oil or organics from water. A separator consists of not only
the separation unit but also the forebay and other separator basins,
skimmers, weirs, grit chambers, sludge hoppers, and bar screens that
are located directly after the individual drain system and prior to any
additional treatment units such as an air flotation unit clarifier or
biological treatment unit. Examples of a separator include, but are not
limited to, an API separator, parallel-plate interceptor, and
corrugated-plate interceptor with the associated ancillary equipment.
Single-seal system means a floating roof having one continuous
seal. This seal may be vapor-mounted, liquid-mounted, or a metallic
shoe seal.
Surface impoundment means a unit that is a natural topographical
depression, man-made excavation, or diked area formed primarily of
earthen materials (although it may be lined with man-made materials),
which is designed to hold an accumulation of liquids. Examples of
surface impoundments include holding, storage, settling, and aeration
pits, ponds, and lagoons.
Tank means a stationary unit that is constructed primarily of
nonearthen materials (such as wood, concrete, steel, fiberglass, or
plastic) which provide structural support and is designed to hold an
accumulation of liquids or other materials.
Transfer system means a stationary system for which the predominant
function is to convey liquids or solid materials from one point to
another point within a waste management operation or recovery
operation. For the purpose of this subpart, the conveyance of material
using a container (as defined for this subpart) or a self-propelled
vehicle (e.g., a front-end loader) is not a transfer system. Examples
of a transfer system include but are not limited to a pipeline, an
individual drain system, a gravity-operated conveyor (such as a chute),
and a mechanically-powered conveyor (such as a belt or screw conveyor).
Temperature monitoring device means a piece of equipment used to
monitor temperature and having an accuracy of 1 percent of
the temperature being monitored expressed in degrees Celsius ( deg.C)
or 1.2 degrees deg.C, whichever value is greater.
Treatment process means a process in which an off-site material
stream is physically, chemically, thermally, or biologically treated to
destroy, degrade, or remove hazardous air pollutants contained in the
off-site material. A treatment process can be composed of a single unit
(e.g., a steam stripper) or a series of units (e.g., a wastewater
treatment system). A treatment process can be used to treat one or more
off-site material streams at the same time.
Used oil means any oil refined from crude oil or any synthetic oil
that has been used and as a result of such use is contaminated by
physical or chemical impurities. This definition is the same definition
of ``used oil'' in 40 CFR 279.1.
Used solvent means a solvent composed of a mixture of aliphatic
hydrocarbons or a mixture of one and two ring aromatic hydrocarbons
that has been used and as a result of such use is contaminated by
physical or chemical impurities.
Vapor-mounted seal means a continuous seal that is mounted such
that there is a vapor space between the liquid in the unit and the
bottom of the seal.
Volatile organic hazardous air pollutant concentration or VOHAP
concentration means the fraction by weight of the HAP listed in Table 1
of this subpart that are contained in an off-site material. For the
purpose of this subpart, VOHAP concentration is determined in
accordance with the test methods and procedures specified in
Sec. 63.694 (b) and (c) of this subpart.
Waste means a material generated from industrial, commercial,
mining, or agricultural operations or from community activities that is
discarded, discharged, or is being accumulated, stored, or physically,
chemically, thermally, or biologically treated prior to being discarded
or discharged.
Waste management operation means the collection of off-site
material management units, process vents, and equipment components used
at a plant site to manage an off-site material stream from the point-
of-delivery to the point where the waste exits or is discharged from
the plant site or the waste is placed for on-site disposal in a unit
not subject to this subpart (e.g., a waste incinerator, a land disposal
unit).
Waste stabilization process means any physical or chemical process
used to either reduce the mobility of hazardous constituents in a waste
or eliminate free liquids as determined by Test Method 9095--Paint
Filter Liquids Test in ``Test Methods for Evaluating Solid Waste,
Physical/Chemical Methods,'' EPA Publication No. SW-846, Third Edition,
September 1986, as amended by Update I, November 15, 1992. A waste
stabilization process includes mixing the waste with binders or other
materials, and curing the resulting waste and binder mixture. Other
synonymous terms used to refer to this process are ``waste fixation''
or ``waste solidification.'' A waste stabilization process does not
include the adding of absorbent materials to the surface of a waste,
without mixing, agitation, or subsequent curing, to absorb free liquid.
Sec. 63.682 [Reserved]
Sec. 63.683 Standards: General.
(a) This section applies to owners and operators of affected
sources as defined in Sec. 63.680(c) of this subpart.
(b) The owner or operator shall control the air emissions from each
affected source in accordance with the following requirements:
(1) For each off-site material management unit that is part of an
affected source, the owner or operator shall perform one of the
following except when the unit is exempted under provisions of
paragraph (c) of this section:
(i) Install and operate air emission controls on the off-site
material management unit in accordance with the standards specified in
Secs. 63.685 through 63.689 of this subpart, as applicable to the unit;
(ii) Treat the off-site material to remove or destroy the HAP in
accordance with the treatment standards specified in Sec. 63.684 of
this subpart before placing the material in the off-site material
management unit; or
(iii) Determine that the average VOHAP concentration of each off-
site material stream managed in the off-site material unit remains at a
level less than 500 parts per million by weight (ppmw) based on the HAP
content of the off-site material stream at the point-of-delivery. The
owner or operator shall perform an initial determination of the average
VOHAP concentration of each off-site material stream using the
procedures specified in Sec. 63.694(b) of this subpart before the first
time any portion of the off-site material stream is placed in the unit.
Thereafter, the owner or operator shall review and update, as
necessary, this determination at least once every 12 months following
the date of the initial determination for the off-site material stream.
(2) For each process vent that is part of an affected source, the
owner or operator shall control the HAP emitted from the process vent
by implementing one of the following control measures.
(i) Install and operate air emission controls on the process vent
in accordance with the standards specified in Sec. 63.690 of this
subpart.
[[Page 34162]]
(ii) Determine that the average VOHAP concentration of each off-
site material stream managed in the unit on which the process vent is
used remains at a level less than 500 parts per million by weight
(ppmw) based on the HAP content of the off-site material stream at the
point-of-delivery. The owner or operator shall perform an initial
determination of the average VOHAP concentration of each off-site
material stream using the procedures specified in Sec. 63.694(b) of
this subpart before the first time any portion of the off-site material
stream is placed in the unit. Thereafter, the owner or operator shall
review and update, as necessary, this determination at least once every
12 months following the date of the initial determination for the off-
site material stream.
(3) For each equipment component that is part of an affected source
and meets all of the criteria specified in paragraphs (b)(3)(i) through
(b)(3)(iii) of this section, the owner or operator shall control the
HAP emitted from equipment leaks by implementing control measures in
accordance with the standards specified in Sec. 63.691 of this subpart.
(i) The equipment component contains or contacts off-site material
having a total HAP concentration equal to or greater than 10 percent by
weight;
(ii) The equipment piece is a pump, compressor, agitator, pressure
relief device, sampling connection system, open-ended valve or line,
valve, connector, or instrumentation system; and
(iii) The equipment piece is intended to operate 300 hours or more
during a 12-month period.
(c) Exempted off-site material management units. An off-site
material management unit is exempted from the requirements specified in
paragraph (b) of this section when the unit meets any one of the
exemptions provided in paragraphs (c)(1) through (c)(5) of this
section.
(1) An off-site material management unit is exempted from the
requirements specified in paragraph (b) of this section if the unit is
also subject to another subpart under 40 CFR part 61 or 40 CFR part 63,
and the owner or operator is controlling the HAP listed in Table 1 of
this subpart that are emitted from the unit in compliance with the
provisions specified in the other applicable subpart.
(2) One or more off-site material management units located at a
plant site can be exempted from the requirements specified in paragraph
(b) of this section at the discretion of the owner or operator provided
that the total annual quantity of HAP contained in the off-site
material placed in the off-site material management units selected by
the owner or operator to be exempted under this provision is less than
1 megagram per year. This total annual HAP quantity for the off-site
material shall be based on the total quantity of the HAP listed in
Table 1 of this subpart as determined at the point where the off-site
material is placed in each exempted unit. For the off-site material
management unit selected by the owner or operator to be exempted from
the under this provision, the owner or operator shall meet the
following requirements:
(i) Documentation shall be prepared by the owner or operator and
maintained at the plant site to support the initial determination of
the total annual HAP quantity of the off-site material. This
documentation shall include identification of each off-site material
management unit selected by the owner or operator to be exempted under
paragraph (c)(2) of this section and the basis for determining the HAP
content of the off-site material. The owner or operator shall perform a
new determination when the extent of changes to the quantity or
composition of the off-site material placed in the exempted units could
cause the total annual HAP content in the off-site material to exceed 1
megagram per year.
(ii) Each of the off-site material management units exempted under
paragraph (c)(2) of this section shall be permanently marked in such a
manner that it can be readily identified as an exempted unit from the
other off-site material management units located at the plant site.
(3) A tank or surface impoundment is exempted from the requirements
specified in paragraph (b) of this section if the unit is used for a
biological treatment process that destroys or degrades the HAP
contained in the material entering the unit, such that either of the
following conditions is met:
(i) The HAP reduction efficiency (R) for the process is equal to or
greater than 95 percent, and the HAP biodegradation efficiency
(Rbio) for the process is equal to or greater than 95 percent. The
HAP reduction efficiency (R) shall be determined using the procedure
specified in Sec. 63.694(g) of this subpart. The HAP biodegradation
efficiency (Rbio) shall be determined in accordance with the
requirements of Sec. 63.694(h) of this subpart.
(ii) The total actual HAP mass removal rate (MRbio) as
determined in accordance with the requirements of Sec. 63.694(i) of
this subpart for the off-site material treated by the process is equal
to or greater than the required HAP mass removal rate (RMR) as
determined in accordance with the requirements of Sec. 63.694(e) of
this subpart.
(4) An off-site material management unit is exempted from the
requirements specified in paragraph (b) of this section if the off-site
material placed in the unit is a hazardous waste that meets the
numerical concentration limits, applicable to the hazardous waste, as
specified in 40 CFR part 268--Land Disposal Restrictions under both of
the following tables:
(i) Table ``Treatment Standards for Hazardous Waste'' in 40 CFR
268.40; and
(ii) Table UTS--``Universal Treatment Standards'' in 40 CFR 268.48.
(5) A tank used for bulk feed of off-site material to a waste
incinerator is exempted from the requirements specified in paragraph
(b) of this section if all of the following conditions are met:
(i) The tank is located inside an enclosure vented to a control
device that is designed and operated in accordance with all applicable
requirements specified under 40 CFR part 61, subpart FF--National
Emission Standards for Benzene Waste Operations for a facility at which
the total annual benzene quantity from the facility waste is equal to
or greater than 10 megagrams per year;
(ii) The enclosure and control device serving the tank were
installed and began operation prior to July 1, 1996; and
(iii) The enclosure is designed and operated in accordance with the
criteria for a permanent total enclosure as specified in ``Procedure
T--Criteria for and Verification of a Permanent or Temporary Total
Enclosure'' under 40 CFR 52.741, Appendix B. The enclosure may have
permanent or temporary openings to allow worker access; passage of
material into or out of the enclosure by conveyor, vehicles, or other
mechanical means; entry of permanent mechanical or electrical
equipment; or to direct airflow into the enclosure. The owner or
operator shall perform the verification procedure for the enclosure as
specified in Section 5.0 to ``Procedure T--Criteria for and
Verification of a Permanent or Temporary Total Enclosure'' annually.
Sec. 63.684 Standards: Off-Site Material Treatment.
(a) The provisions of this section apply to the treatment of off-
site material to control air emissions for which Sec. 63.683(b)(1)(ii)
of this subpart references the requirements of this section for such
treatment.
[[Page 34163]]
(b) The owner or operator shall remove or destroy the HAP contained
in off-site material streams to be managed in the off-site material
management unit in accordance with Sec. 63.683(b)(1)(ii) of this
subpart using a treatment process that continuously achieves, under
normal operations, one of the following performance levels for the
range of off-site material stream compositions and quantities expected
to be treated:
(1) VOHAP concentration. The treatment process shall reduce the
VOHAP concentration of the off-site material using a means, other than
by dilution, to achieve one of the following performance levels, as
applicable:
(i) In the case when every off-site material stream entering the
treatment process has an average VOHAP concentration equal to or
greater than 500 ppmw at the point-of-delivery, then the VOHAP
concentration of the off-site material shall be reduced to a level that
is less than 500 ppmw at the point-of-treatment.
(ii) In the case when the off-site material streams entering the
treatment process include off-site material streams having average
VOHAP concentrations less than 500 ppmw at the point-of-delivery, then
the VOHAP concentration of the off-site material shall be reduced to a
level at the point-of-treatment that is either:
(A) Less than the VOHAP concentration limit (CR) established
for the treatment process using the procedure specified in
Sec. 63.694(d) of this subpart; or
(B) Less than the lowest VOHAP concentration determined for each of
the off-site material streams entering the treatment process as
determined by the VOHAP concentration of the off-site material at the
point-of-delivery.
(2) HAP mass removal. The treatment process shall achieve a
performance level such that the total quantity of HAP actually removed
from the off-site material stream (MR) is equal to or greater than the
required mass removal (RMR) established for the off-site material
stream using the procedure specified in Sec. 63.694(e) of this subpart.
The MR for the off-site material streams shall be determined using the
procedures specified in Sec. 63.694(f) of this subpart.
(3) HAP reduction efficiency. The treatment process shall achieve a
performance level such that the total quantity of HAP in the off-site
material stream is reduced to one of the following performance levels,
as applicable:
(i) In the case when the owner or operator determines that off-site
material stream entering the treatment process has an average VOHAP
concentration less than 10,000 ppmw at the point-of-delivery, then the
treatment process shall achieve a performance level such that the total
quantity of HAP in the off-site material stream is reduced by 95
percent or more. The HAP reduction efficiency (R) for the treatment
process shall be determined using the procedure specified in
Sec. 63.694(g) of this subpart. The average VOHAP concentration of the
off-site material stream at the point-of-delivery shall be determined
using the procedure specified in Sec. 63.694(b) of this subpart.
(ii) In the case when the off-site material stream entering the
treatment process has an average VOHAP concentration equal to or
greater than 10,000 ppmw at the point-of-delivery, then the treatment
process shall achieve a performance level such that the total quantity
of HAP in the off-site material stream is reduced by 95 percent or
more, and the average VOHAP concentration of the off-site material at
the point-of-treatment is less than 100 parts per million by weight
(ppmw). The HAP reduction efficiency (R) for the treatment process
shall be determined using the procedure specified in Sec. 63.694(g) of
this subpart. The average VOHAP concentration of the off-site material
stream at the point-of-treatment shall be determined using the
procedure specified in Sec. 63.694(c) of this subpart.
(4) Biological degradation. The treatment process shall achieve
either of the following performance levels:
(i) The HAP reduction efficiency (R) for the treatment process is
equal to or greater than 95 percent, and the HAP biodegradation
efficiency (Rbio) for the treatment process is equal to or greater
than 95 percent. The HAP reduction efficiency (R) shall be determined
using the procedure specified in Sec. 63.694(g) of this subpart. The
HAP biodegradation efficiency (Rbio) shall be determined in
accordance with the requirements of Sec. 63.694(h) of this subpart.
(ii) The total quantity of HAP actually removed from the off-site
material stream by biological degradation (MRbio) shall be equal
to or greater than the required mass removal (RMR) established for the
off-site material stream using the procedure specified in
Sec. 63.694(e) of this subpart. The MRbio of the off-site material
stream shall be determined using the procedures specified in
Sec. 63.694(i) of this subpart.
(5) Incineration. The HAP contained in the off-site material stream
shall be destroyed using one of the following combustion devices:
(i) An incinerator for which the owner or operator has either:
(A) Been issued a final permit under 40 CFR part 270, and the
incinerator is designed and operated in accordance with the
requirements of 40 CFR 264 subpart O--Incinerators, or
(B) Has certified compliance with the interim status requirements
of 40 CFR 265 subpart O--Incinerators.
(ii) A boiler or industrial furnace for which the owner or operator
has either:
(A) Been issued a final permit under 40 CFR part 270, and the
combustion unit is designed and operated in accordance with the
requirements of 40 CFR part 266 subpart H--Hazardous Waste Burned in
Boilers and Industrial Furnaces, or
(B) Has certified compliance with the interim status requirements
of 40 CFR part 266 subpart H Hazardous Waste Burned in Boilers and
Industrial Furnaces.
(c) For a treatment process that removes the HAP from the off-site
material by a means other than thermal destruction or biological
degradation to achieve one of the performances levels specified in
paragraph (b)(1), (b)(2), or (b)(3) of this section, the owner or
operator shall manage the HAP removed from the off-site material in
such a manner to minimize release of these HAP to the atmosphere, to
the extent practical. Examples of HAP emission control measures that
meet the requirements of this paragraph include managing the HAP
removed from the off-site material in units that use air emission
controls in accordance with the standards specified in Secs. 63.685
through 63.689 of this subpart, as applicable to the unit.
(d) When the owner or operator treats the off-site material to meet
one of the performance levels specified in paragraphs (b)(1) through
(b)(4) of this section, the owner or operator shall demonstrate that
the treatment process achieves the selected performance level for the
range of expected off-site material stream compositions expected to be
treated. An initial demonstration shall be performed as soon as
possible but no later than 30 days after first time an owner or
operator begins using the treatment process to manage off-site material
streams in accordance with the requirements of Sec. 63.683(b)(1)(ii) of
this subpart. Thereafter, the owner or operator shall review and
update, as necessary, this demonstration at least once every 12 months
following the date of the initial demonstration.
(e) When the owner or operator treats the off-site material to meet
one of the performance levels specified in paragraphs (b)(1) through
(b)(4) of this section, the owner or operator shall ensure that the
treatment process is
[[Page 34164]]
achieving the applicable performance requirements by continuously
monitoring the operation of the process when it is used to treat off-
site material:
(1) A continuous monitoring system shall be installed and operated
for each treatment that measures operating parameters appropriate for
the treatment process technology. This system shall include a
continuous recorder that records the measured values of the selected
operating parameters. The monitoring equipment shall be installed,
calibrated, and maintained in accordance with the equipment
manufacturer's specifications. The continuous recorder shall be a data
recording device that records either an instantaneous data value at
least once every 15 minutes or an average value for intervals of 15
minutes or less.
(2) For each monitored operating parameter, the owner or operator
shall establish a minimum operating parameter value or a maximum
operating parameter value, as appropriate, to define the range of
conditions at which the treatment process must be operated to
continuously achieve the applicable performance requirements of this
section.
(3) When the treatment process is operating to treat off-site
material, the owner or operator shall inspect the data recorded by the
continuous monitoring system on a routine basis and operate the
treatment process such that the actual value of each monitored
operating parameter is greater than the minimum operating parameter
value or less than the maximum operating parameter value, as
appropriate, established for the treatment process.
(f) The owner or operator shall maintain records for each treatment
process in accordance with the requirements of Sec. 63.696 of this
subpart.
(g) The owner or operator shall prepare and submit reports for each
treatment process in accordance with the requirements of Sec. 63.697 of
this subpart.
(h) The Administrator may at any time conduct or request that the
owner or operator conduct testing necessary to demonstrate that a
treatment process is achieving the applicable performance requirements
of this section. The testing shall be conducted in accordance with the
applicable requirements of this section. The Administrator may elect to
have an authorized representative observe testing conducted by the
owner or operator.
Sec. 63.685 Standards: Tanks.
(a) The provisions of this section apply to the control of air
emissions from tanks for which Sec. 63.683(b)(1)(i) of this subpart
references the use of this section for such air emission control.
(b) The owner or operator shall control air emissions from each
tank subject to this section in accordance with the following
applicable requirements:
(1) For a tank that is part of an existing affected source but the
tank is not used to manage off-site material having a maximum organic
vapor pressure that is equal to or greater than 76.6 kPa nor is the
tank used for a waste stabilization process as defined in Sec. 63.681
of this subpart, the owner or operator shall determine whether the tank
is required to use either Tank Level 1 controls or Tank Level 2
controls as specified for the tank by Table 3 of this subpart based on
the off-site material maximum HAP vapor pressure and the tank's design
capacity. The owner or operator shall control air emissions from a tank
required by Table 3 to use Tank Level 1 controls in accordance with the
requirements of paragraph (c) of this section. The owner or operator
shall control air emissions from a tank required by Table 3 to use Tank
Level 2 controls in accordance with the requirements of paragraph (d)
of this section.
(2) For a tank that is part of a new affected source but the tank
is not used to manage off-site material having a maximum organic vapor
pressure that is equal to or greater than 76.6 kPa nor is the tank used
for a waste stabilization process as defined in Sec. 63.681 of this
subpart, the owner or operator shall determine whether the tank is
required to use either Tank Level 1 controls or Tank Level 2 controls
as specified for the tank by Table 4 of this subpart based on the off-
site material maximum HAP vapor pressure and the tank's design
capacity. The owner or operator shall control air emissions from a tank
required by Table 4 to use Tank Level 1 controls in accordance with the
requirements of paragraph (c) of this section. The owner or operator
shall control air emissions from a tank required by Table 4 to use Tank
Level 2 controls in accordance with the requirements of paragraph (d)
of this section.
(3) For a tank that is used for a waste stabilization process, the
owner or operator shall control air emissions from the tank by using
Tank Level 2 controls in accordance with the requirements of paragraph
(d) of this section.
(4) For a tank that manages off-site material having a maximum
organic vapor pressure that is equal to or greater than the 76.6 kPa,
the owner or operator shall control air emissions from the tank by
venting the tank through a closed-vent system to a control device in
accordance with the requirements of paragraph (g) of this section.
(c) Owners and operators controlling air emissions from a tank
using Tank Level 1 controls shall meet the following requirements:
(1) The owner or operator shall determine the maximum HAP vapor
pressure for an off-site material to be managed in the tank using Tank
Level 1 controls before the first time the off-site material is placed
in the tank. The maximum HAP vapor pressure shall be determined using
the procedures specified in Sec. 63.694(j) of this subpart. Thereafter,
the owner or operator shall perform a new determination whenever
changes to the off-site material managed in the tank could potentially
cause the maximum HAP vapor pressure to increase to a level that is
equal to or greater than the maximum HAP vapor pressure limit for the
tank design capacity category specified in Table 3 or Table 4 of this
subpart, as applicable to the tank.
(2) The owner or operator shall control air emissions from the tank
using a fixed-roof in accordance with the provisions specified in 40
CFR 63 subpart OO--National Emission Standards for Tanks--Level 1.
(d) Owners and operators controlling air emissions from a tank
using Tank Level 2 controls shall use one of the following tanks:
(1) A fixed-roof tank equipped with an internal floating roof in
accordance with the requirements specified in paragraph (e) of this
section;
(2) A tank equipped with an external floating roof in accordance
with the requirements specified in paragraph (f) of this section;
(3) A tank vented through a closed-vent system to a control device
in accordance with the requirements specified in paragraph (g) of this
section;
(4) A pressure tank designed and operated in accordance with the
requirements specified in paragraph (h) of this section; or
(5) A tank located inside an enclosure that is vented through a
closed-vent system to an enclosed combustion control device in
accordance with the requirements specified in paragraph (i) of this
section.
(e) The owner or operator who elects to control air emissions from
a tank using a fixed-roof with an internal floating roof shall meet the
requirements specified in paragraphs (e)(1) through (e)(3) of this
section.
(1) The tank shall be equipped with a fixed roof and an internal
floating roof
[[Page 34165]]
in accordance with the following requirements:
(i) The internal floating roof shall be designed to float on the
liquid surface except when the floating roof must be supported by the
leg supports.
(ii) The internal floating roof shall be equipped with a continuous
seal between the wall of the tank and the floating roof edge that meets
either of the following requirements:
(A) A single continuous seal that is either a liquid-mounted seal
or a metallic shoe seal, as defined in Sec. 63.681 of this subpart; or
(B) Two continuous seals mounted one above the other. The lower
seal may be a vapor-mounted seal.
(iii) The internal floating roof shall meet the following
specifications:
(A) Each opening in a noncontact internal floating roof except for
automatic bleeder vents (vacuum breaker vents) and the rim space vents
is to provide a projection below the liquid surface.
(B) Each opening in the internal floating roof shall be equipped
with a gasketed cover or a gasketed lid except for leg sleeves,
automatic bleeder vents, rim space vents, column wells, ladder wells,
sample wells, and stub drains.
(C) Each penetration of the internal floating roof for the purpose
of sampling shall have a slit fabric cover that covers at least 90
percent of the opening.
(D) Each automatic bleeder vent and rim space vent shall be
gasketed.
(E) Each penetration of the internal floating roof that allows for
passage of a ladder shall have a gasketed sliding cover.
(F) Each penetration of the internal floating roof that allows for
passage of a column supporting the fixed roof shall have a flexible
fabric sleeve seal or a gasketed sliding cover.
(2) The owner or operator shall operate the tank in accordance with
the following requirements:
(i) When the floating roof is resting on the leg supports, the
process of filling, emptying, or refilling shall be continuous and
shall be accomplished as soon as practical.
(ii) Automatic bleeder vents are to be set closed at all times when
the roof is floating, except when the roof is being floated off or is
being landed on the leg supports.
(iii) Prior to filling the tank, each cover, access hatch, gauge
float well or lid on any opening in the internal floating roof shall be
bolted or fastened closed (i.e., no visible gaps). Rim spaces vents are
to be set to open only when the internal floating roof is not floating
or when the pressure beneath the rim exceeds the manufacturer's
recommended setting.
(3) The owner or operator shall inspect the internal floating roof
in accordance with the procedures specified in Sec. 63.695(b) of this
subpart.
(f) The owner or operator who elects to control tank emissions by
using an external floating roof shall meet the requirements specified
in paragraphs (f)(1) through (f)(3) of this section.
(1) The owner or operator shall design the external floating roof
in accordance with the following requirements:
(i) The external floating roof shall be designed to float on the
liquid surface except when the floating roof must be supported by the
leg supports.
(ii) The floating roof shall be equipped with two continuous seals,
one above the other, between the wall of the tank and the roof edge.
The lower seal is referred to as the primary seal, and the upper seal
is referred to as the secondary seal.
(A) The primary seal shall be a liquid-mounted seal or a metallic
shoe seal, as defined in Sec. 63.681 of this subpart. The total area of
the gaps between the tank wall and the primary seal shall not exceed
212 square centimeters (cm\2\) per meter of tank diameter, and the
width of any portion of these gaps shall not exceed 3.8 centimeters
(cm). If a metallic shoe seal is used for the primary seal, the
metallic shoe seal shall be designed so that one end extends into the
liquid in the tank and the other end extends a vertical distance of at
least 61 centimeters above the liquid surface.
(B) The secondary seal shall be mounted above the primary seal and
cover the annular space between the floating roof and the wall of the
tank. The total area of the gaps between the tank wall and the
secondary seal shall not exceed 21.2 square centimeters (cm\2\) per
meter of tank diameter, and the width of any portion of these gaps
shall not exceed 1.3 centimeters (cm).
(iii) The external floating roof shall be meet the following
specifications:
(A) Except for automatic bleeder vents (vacuum breaker vents) and
rim space vents, each opening in a noncontact external floating roof
shall provide a projection below the liquid surface.
(B) Except for automatic bleeder vents, rim space vents, roof
drains, and leg sleeves, each opening in the roof shall be equipped
with a gasketed cover, seal, or lid.
(C) Each access hatch and each gauge float wells shall be equipped
with covers designed to be bolted or fastened when the cover is secured
in the closed position.
(D) Each automatic bleeder vent and each rim space vents shall be
equipped with a gasket.
(E) Each roof drain that empties into the liquid managed in the
tank shall be equipped with a slotted membrane fabric cover that covers
at least 90 percent of the area of the opening.
(F) Each unslotted and slotted guide pole well shall be equipped
with a gasketed sliding cover or a flexible fabric sleeve seal.
(G) Each unslotted guide pole shall be equipped with a gasketed cap
on the end of the pole.
(H) Each slotted guide pole shall be equipped with a gasketed float
or other device which closes off the surface from the atmosphere.
(I) Each gauge hatch and each sample well shall be equipped with a
gasketed cover.
(2) The owner or operator shall operate the tank in accordance with
the following requirements:
(i) When the floating roof is resting on the leg supports, the
process of filling, emptying, or refilling shall be continuous and
shall be accomplished as soon as practical.
(ii) Except for automatic bleeder vents, rim space vents, roof
drains, and leg sleeves, each opening in the roof shall be secured and
maintained in a closed position at all times except when the closure
device must be open for access.
(iii) Covers on each access hatch and each gauge float well shall
be bolted or fastened when secured in the closed position.
(iv) Automatic bleeder vents shall be set closed at all times when
the roof is floating, except when the roof is being floated off or is
being landed on the leg supports.
(v) Rim space vents shall be set to open only at those times that
the roof is being floated off the roof leg supports or when the
pressure beneath the rim seal exceeds the manufacturer's recommended
setting.
(vi) The cap on the end of each unslotted guide pole shall be
secured in the closed position at all times except when measuring the
level or collecting samples of the liquid in the tank.
(vii) The cover on each gauge hatch or sample well shall be secured
in the closed position at all times except when the hatch or well must
be opened for access.
(viii) Both the primary seal and the secondary seal shall
completely cover the annular space between the external floating roof
and the wall of the tank in a continuous fashion except during
inspections.
[[Page 34166]]
(3) The owner or operator shall inspect the external floating roof
in accordance with the procedures specified in Sec. 63.695(b) of this
subpart.
(g) The owner or operator who controls tank air emissions by
venting to a control device shall meet the requirements specified in
paragraphs (g)(1) through (g)(3) of this section.
(1) The tank shall be covered by a fixed roof and vented directly
through a closed-vent system to a control device in accordance with the
following requirements:
(i) The fixed roof and its closure devices shall be designed to
form a continuous barrier over the entire surface area of the liquid in
the tank.
(ii) Each opening in the fixed roof not vented to the control
device shall be equipped with a closure device. If the pressure in the
vapor headspace underneath the fixed roof is less than atmospheric
pressure when the control device is operating, the closure devices
shall be designed to operate such that when the closure device is
secured in the closed position there are no visible cracks, holes,
gaps, or other open spaces in the closure device or between the
perimeter of the cover opening and the closure device. If the pressure
in the vapor headspace underneath the fixed roof is equal to or greater
than atmospheric pressure when the control device is operating, the
closure device shall be designed to operate with no detectable organic
emissions.
(iii) The fixed roof and its closure devices shall be made of
suitable materials that will minimize exposure of the off-site material
to the atmosphere, to the extent practical, and will maintain the
integrity of the equipment throughout its intended service life.
Factors to be considered when selecting the materials for and designing
the fixed roof and closure devices shall include: organic vapor
permeability, the effects of any contact with the liquid and its vapor
managed in the tank; the effects of outdoor exposure to wind, moisture,
and sunlight; and the operating practices used for the tank on which
the fixed roof is installed.
(iv) The closed-vent system and control device shall be designed
and operated in accordance with the requirements of Sec. 63.693 of this
subpart.
(2) Whenever an off-site material is in the tank, the fixed roof
shall be installed with each closure device secured in the closed
position and the vapor headspace underneath the fixed roof vented to
the control device except as follows:
(i) Venting to the control device is not required, and opening of
closure devices or removal of the fixed roof is allowed at the
following times:
(A) To provide access to the tank for performing routine
inspection, maintenance, or other activities needed for normal
operations. Examples of such activities include those times when a
worker needs to open a port to sample liquid in the tank, or when a
worker needs to open a hatch to maintain or repair equipment. Following
completion of the activity, the owner or operator shall promptly secure
the closure device in the closed position or reinstall the cover, as
applicable, to the tank.
(B) To remove accumulated sludge or other residues from the bottom
of separator.
(ii) Opening of a safety device, as defined in Sec. 63.681 of this
subpart, is allowed at any time conditions require it to do so to avoid
an unsafe condition.
(3) The owner or operator shall inspect and monitor the air
emission control equipment in accordance with the procedures specified
in Sec. 63.695 of this subpart.
(h) The owner or operator who elects to control tank air emissions
by using a pressure tank shall meet the following requirements.
(1) The tank shall be designed not to vent to the atmosphere as a
result of compression of the vapor headspace in the tank during filling
of the tank to its design capacity.
(2) All tank openings shall equipped with closure devices designed
to operate with no detectable organic emissions as determined using the
procedure specified in Sec. 63.694(k) of this subpart.
(3) Whenever an off-site material is in the tank, the tank shall be
operated as a closed system that does not vent to the atmosphere except
in the event that opening of a safety device, as defined in Sec. 63.681
of this subpart, is required to avoid an unsafe condition.
(i) The owner or operator who elects to control air emissions by
using an enclosure vented through a closed-vent system to an enclosed
combustion control device shall meet the requirements specified in
paragraphs (i)(1) through (i)(4) of this section.
(1) The tank shall be located inside an enclosure. The enclosure
shall be designed and operated in accordance with the criteria for a
permanent total enclosure as specified in ``Procedure T--Criteria for
and Verification of a Permanent or Temporary Total Enclosure'' under 40
CFR 52.741, Appendix B. The enclosure may have permanent or temporary
openings to allow worker access; passage of material into or out of the
enclosure by conveyor, vehicles, or other mechanical means; entry of
permanent mechanical or electrical equipment; or to direct airflow into
the enclosure. The owner or operator shall perform the verification
procedure for the enclosure as specified in Section 5.0 to ``Procedure
T--Criteria for and Verification of a Permanent or Temporary Total
Enclosure'' initially when the enclosure is first installed and,
thereafter, annually.
(2) The enclosure shall be vented through a closed-vent system to
an enclosed combustion control device that is designed and operated in
accordance with the standards for either a vapor incinerator, boiler,
or process heater specified in Sec. 63.693 of this subpart.
Sec. 63.686 Standards: Oil-water and organic-water separators.
(a) The provisions of this section apply to the control of air
emissions from oil-water separators and organic-water separators for
which Sec. 63.683(b)(1)(i) of this subpart references the use of this
section for such air emission control.
(b) The owner or operator shall control air emissions from the
separator subject to this section by installing and operating one of
the following:
(1) A floating roof in accordance with all applicable provisions
specified in 40 CFR 63 subpart VV--National Emission Standards for Oil-
Water Separators and Organic-Water Separators. For portions of the
separator where it is infeasible to install and operate a floating
roof, such as over a weir mechanism, the owner or operator shall comply
with the requirements specified in paragraph (b)(2) of this section.
(2) A fixed-roof that is vented through a closed-vent system to a
control device in accordance with all applicable provisions specified
in 40 CFR 63 subpart VV--National Emission Standards for Oil-Water
Separators and Organic-Water Separators.
Sec. 63.687 Standards: Surface impoundments.
(a) The provisions of this section apply to the control of air
emissions from surface impoundments for which Sec. 63.683(b)(1)(i) of
this subpart references the use of this section for such air emission
control.
(b) The owner or operator shall control air emissions from each
surface impoundment subject to this section by installing and operating
one of the following, as relevant to the surface impoundment design and
operation:
(1) A floating membrane cover in accordance with the applicable
provisions specified in 40 CFR 63 subpart QQ--National Emission
Standards for Surface Impoundments; or
(2) A cover that is vented through a closed-vent system to a
control device in accordance with all applicable
[[Page 34167]]
provisions specified in 40 CFR 63 subpart QQ--National Emission
Standards for Surface Impoundments.
Sec. 63.688 Standards: Containers.
(a) The provisions of this section apply to the control of air
emissions from containers for which Sec. 63.683(b)(1)(i) of this
subpart references the use of this section for such air emission
control.
(b) The owner or operator shall control air emissions from each
container subject to this section in accordance with the following
requirements, as applicable to the container, except when the special
provisions for waste stabilization processes specified in paragraph (c)
of this section apply to the container.
(1) For a container having a design capacity greater than 0.1
m3 and less than or equal to 0.46 m3, the owner or operator
shall control air emissions from the container in accordance with the
standards for Container Level 1 controls as specified in 40 CFR 63
subpart PP--National Emission Standards for Containers.
(2) For a container having a design capacity greater than 0.46
m3 and the container is not in light-material service as defined
in Sec. 63.681 of this subpart, the owner or operator shall control air
emissions from the container in accordance with the standards for
Container Level 1 controls as specified in 40 CFR 63 subpart PP--
National Emission Standards for Containers.
(3) For a container having a design capacity greater than 0.46
m3 and the container is in light-material service as defined in
Sec. 63.681 of this subpart, the owner or operator shall control air
emissions from the container in accordance with the standards for
Container Level 2 controls as specified in 40 CFR 63 subpart PP--
National Emission Standards for Containers.
(c) When a container subject to this subpart and having a design
capacity greater than 0.1 m3 is used for treatment of an off-site
material by a waste stabilization process as defined in Sec. 63.681 of
this subpart, the owner or operator shall control air emissions from
the container at those times during the process when the off-site
material in container is exposed to the atmosphere in accordance with
the standards for Container Level 3 controls as specified in 40 CFR 63
subpart PP--National Emission Standards for Containers.
Sec. 63.689 Standards: Transfer systems.
(a) The provisions of this section apply to the control of air
emissions from transfer systems for which Sec. 63.683(b)(1)(i) of this
subpart references the use of this section for such air emission
control.
(b) For each transfer system that is subject to this section and is
an individual drain system, the owner or operator shall control air
emissions from in accordance with the standards specified in 40 CFR 63
subpart RR--National Emission Standards for Individual Drain Systems.
(c) For each transfer system that is subject to this section but is
not an individual drain system, the owner or operator shall control air
emissions by installing and operating one of the following:
(1) A transfer system that uses covers in accordance with the
requirements specified in paragraph (d) of this section.
(2) A transfer system that consists of continuous hard-piping. All
joints or seams between the pipe sections shall be permanently or semi-
permanently sealed (e.g., a welded joint between two sections of metal
pipe or a bolted and gasketed flange).
(3) A transfer system that is enclosed and vented through a closed
vent system to a control device in accordance with the following
requirements:
(i) The transfer system is designed and operated such that an
internal pressure in the vapor headspace in the system is maintained at
a level less than atmospheric pressure when the control device is
operating, and
(ii) The closed vent system and control device are designed and
operated in accordance with the requirements of Sec. 63.693 of this
subpart.
(d) Owners and operators controlling air emissions from a transfer
system using covers in accordance with the provisions of paragraph
(c)(1) of this section shall meet the following requirements:
(1) The cover and its closure devices shall be designed to form a
continuous barrier over the entire surface area of the off-site
material as it is conveyed by the transfer system except for the
openings at the inlet and outlet to the transfer system through which
the off-site material passes. The inlet and outlet openings used for
passage of the off-site material through the transfer system shall be
the minimum size required for practical operation of the transfer
system.
(2) The cover shall be installed in a manner such that there are no
visible cracks, holes, gaps, or other open spaces between cover section
joints or between the interface of the cover edge and its mounting.
(3) Except for the inlet and outlet openings to the transfer system
through which the off-site material passes, each opening in the cover
shall be equipped with a closure device designed to operate such that
when the closure device is secured in the closed position there are no
visible cracks, holes, gaps, or other open spaces in the closure device
or between the perimeter of the opening and the closure device.
(4) The cover and its closure devices shall be made of suitable
materials that will minimize exposure of the off-site material to the
atmosphere, to the extent practical, and will maintain the integrity of
the equipment throughout its intended service life. Factors to be
considered when selecting the materials for and designing the cover and
closure devices shall include: organic vapor permeability; the effects
of any contact with the material or its vapors conveyed in the transfer
system; the effects of outdoor exposure to wind, moisture, and
sunlight; and the operating practices used for the transfer system on
which the cover is installed.
(5) Whenever an off-site material is in the transfer system, the
cover shall be installed with each closure device secured in the closed
position except as follows:
(i) Opening of closure devices or removal of the cover is allowed
to provide access to the transfer system for performing routine
inspection, maintenance, repair, or other activities needed for normal
operations. Examples of such activities include those times when a
worker needs to open a hatch or remove the cover to repair conveyance
equipment mounted under the cover or to clear a blockage of material
inside the system. Following completion of the activity, the owner or
operator shall promptly secure the closure device in the closed
position or reinstall the cover, as applicable.
(ii) Opening of a safety device, as defined in Sec. 63.681 of this
subpart, is allowed at any time conditions require it to do so to avoid
an unsafe condition.
(6) The owner or operator shall inspect the air emission control
equipment in accordance with the requirements specified in Sec. 63.695
of this subpart.
Sec. 63.690 Standards: Process vents.
(a) The provisions of this section apply to the control of air
emissions from process vents for which Sec. 63.683(b)(2)(i) of this
subpart references the use of this section for such air emission
control.
(b) The owner or operator shall control HAP emitted from the
process vent within the affected source by connecting each process vent
through a closed-vent system to a control device that is designed and
operated in
[[Page 34168]]
accordance with the standards specified in Sec. 63.693 of this subpart
with the following exceptions.
(1) Each individual control device used to comply with the
requirements of this section is not required to meet the level of
performance, as applicable to the particular control technology used,
specified in Secs. 63.693 (d)(1), (e)(1), (f)(1)(i), and (g)(1)(i) of
this subpart provided that these control devices are designed and
operated to achieve a total reduction of 95 weight percent or more in
the quantity of HAP, listed in Table 1 of this subpart, that is emitted
from all process vents within the affected source.
(2) For the purpose of complying with this section, a device for
which the predominate function is the recovery or capture of solvents
or other organics for use, reuse, or sale (e.g., a primary condenser or
a solvent recovery unit) is not a control device.
Sec. 63.691 Standards: Equipment leaks.
(a) The provisions of this section apply to the control of air
emissions from equipment leaks for which Sec. 63.683(b)(3) of this
subpart references the use of this section for such air emission
control.
(b) The owner or operator shall control the HAP emitted from
equipment leaks in accordance with the applicable provisions of either:
(1) Section 61.242 through Sec. 61.247 in 40 CFR Part 61 subpart
V--National Emission Standards for Equipment Leaks; or
(2) Section 63.162 through Sec. 63.182 in 40 CFR Part 63 subpart
H--National Emission Standards for Organic Hazardous Air Pollutants
from Equipment Leaks.
Sec. 63.692 [Reserved]
Sec. 63.693 Standards: Closed-vent systems and control devices.
(a) The provisions of this section apply to closed-vent systems and
control devices used to control air emissions for which another
standard references the use of this section for such air emission
control.
(b) For each closed-vent system and control device used to comply
with this section, the owner or operator shall meet the following
requirements:
(1) The closed-vent system shall be designed and operated in
accordance with the requirements specified in paragraph (c) of this
section.
(2) The control device shall remove, recover, or destroy HAP at a
level of performance that achieves the requirements applicable to the
particular control device technology as specified in paragraphs (d)
through (h) of this section. The owner or operator shall demonstrate
that the control device achieves the applicable performance
requirements by either conducting a performance test or preparing a
design analysis for the control device in accordance with the
requirements specified in this section.
(3) Whenever gases or vapors containing HAP are vented through a
closed-vent system connected to a control device used to comply with
this section, the control device shall be operating except at the
following times:
(i) The control device may be bypassed for the purpose of
performing planned routine maintenance of the closed vent system or
control device in situations when the routine maintenance cannot be
performed during periods that the emission point vented to the control
device is shutdown. On an annual basis, the total time that the closed-
vent system or control device is bypassed to perform routine
maintenance shall not exceed 240 hours per each 12 month period.
(ii) The control device may be bypassed for the purpose of
correcting a malfunction of the closed vent system or control device.
The owner or operator shall perform the adjustments or repairs
necessary to correct the malfunction as soon as practicable after the
malfunction is detected.
(4) The owner or operator shall ensure that the control device is
achieving the performance requirements specified in paragraph (b)(2) of
this section by continuously monitoring the operation of the control
device as follows:
(i) A continuous monitoring system shall be installed and operated
for each control device that measures operating parameters appropriate
for the control device technology as specified in paragraphs (d)
through (h) of this section. This system shall include a continuous
recorder that records the measured values of the selected operating
parameters. The monitoring equipment shall be installed, calibrated,
and maintained in accordance with the equipment manufacturer's
specifications. The continuous recorder shall be a data recording
device that records either an instantaneous data value at least once
every 15 minutes or an average value for intervals of 15-minutes or
less.
(ii) For each monitored operating parameter, the owner or operator
shall establish a minimum operating parameter value or a maximum
operating parameter value, as appropriate, to define the range of
conditions at which the control device must be operated to continuously
achieve the applicable performance requirements of this section. Each
minimum or maximum operating parameter value shall be established as
follows:
(A) If the owner or operator conducts a performance test to
demonstrate control device performance, then the minimum or maximum
operating parameter value shall be established based on values measured
during the performance test and supplemented, as necessary, by control
device design analysis and manufacturer recommendations.
(B) If the owner or operator uses a control device design analysis
to demonstrate control device performance, then the minimum or maximum
operating parameter value shall be established based on the control
device design analysis and the control device manufacturer's
recommendations.
(C) When the control device is required to be operating in
accordance with the provisions of paragraph (b)(3) of this section, the
owner or operator shall inspect the data recorded by the continuous
monitoring system on a routine basis and operate the control device
such that the actual value of each monitored operating parameter is
greater than the minimum operating parameter value or less than the
maximum operating parameter value, as appropriate, established for the
control device.
(5) The owner or operator shall inspect and monitor the closed-vent
system in accordance with the requirements of Sec. 63.695(c) of this
subpart.
(6) The owner or operator shall maintain records for each closed-
vent system and control device in accordance with the requirements of
Sec. 63.696 of this subpart.
(7) The owner or operator shall prepare and submit reports for each
closed-vent system and control device in accordance with the
requirements of Sec. 63.697 of this subpart.
(8) The Administrator may at any time conduct or request that the
owner or operator conduct a performance test to demonstrate that a
closed-vent system and control device achieves the applicable
performance requirements of this section. The performance test shall be
conducted in accordance with the requirements of Sec. 63.694(l) of this
subpart. The Administrator may elect to have an authorized
representative observe a performance test conducted by the owner or
operator. Should the results of this performance test not agree with
the determination of control device performance based on a design
analysis, then the results of the performance test
[[Page 34169]]
shall be used to establish compliance with this section.
(c) Closed-vent system requirements.
(1) The vent stream required to be controlled shall be conveyed to
the control device by either of the following closed-vent systems:
(i) A closed-vent system that is designed to operate with no
detectable organic emissions using the procedure specified in
Sec. 63.694(k) of this subpart; or
(ii) A closed-vent system that is designed to operate at a pressure
below atmospheric pressure. The system shall be equipped with at least
one pressure gage or other pressure measurement device that can be read
from a readily accessible location to verify that negative pressure is
being maintained in the closed-vent system when the control device is
operating.
(2) In situations when the closed-vent system includes bypass
devices that could be used to divert the gas or vapor stream to the
atmosphere before entering the control device, each bypass device shall
be equipped with either a flow indicator as specified in paragraph
(c)(2)(i) or a seal or locking device as specified in paragraph
(c)(2)(ii) of this section. For the purpose of complying with this
paragraph, low leg drains, high point bleeds, analyzer vents, open-
ended valves or lines, spring-loaded pressure relief valves, and other
fittings used for safety purposes are not considered to be bypass
devices.
(i) If a flow indicator is used to comply with paragraph (c)(2) of
this section, the indicator shall be installed at the inlet to the
bypass line used to divert gases and vapors from the closed-vent system
to the atmosphere at a point upstream of the control device inlet. For
this paragraph, a flow indicator means a device which indicates either
the presence of gas or vapor flow in the bypass line.
(ii) If a seal or locking device is used to comply with paragraph
(c)(2) of this section, the device shall be placed on the mechanism by
which the bypass device position is controlled (e.g., valve handle,
damper lever) when the bypass device is in the closed position such
that the bypass device cannot be opened without breaking the seal or
removing the lock. Examples of such devices include, but are not
limited to, a car-seal or a lock-and-key configuration valve. The owner
or operator shall visually inspect the seal or closure mechanism at
least once every month to verify that the bypass mechanism is
maintained in the closed position.
(d) Carbon adsorption control device requirements.
(1) The carbon adsorption system shall be designed and operated to
achieve one of the following performance specifications:
(i) Recover 95 percent or more, on a weight-basis, of the total
organic compounds (TOC), less methane and ethane, contained in the vent
stream entering the carbon adsorption system; or
(ii) Recover 95 percent or more, on a weight-basis, of the total
HAP listed in Table 1 of this subpart contained in the vent stream
entering the carbon adsorption system.
(2) The owner or operator shall demonstrate that the carbon
adsorption system achieves the performance requirements of paragraph
(d)(1) of this section by one of the following methods:
(i) Conduct a performance test in accordance with the requirements
of Sec. 63.694(l) of this subpart.
(ii) Prepare a design analysis. This analysis shall address the
vent stream characteristics and control device operating parameters for
the applicable carbon adsorption system type as follows:
(A) For a regenerable carbon adsorption system, the design analysis
shall address the vent stream composition, constituent concentrations,
flow rate, relative humidity, and temperature and shall establish the
design exhaust vent stream organic compound concentration, adsorption
cycle time, number and capacity of carbon beds, type and working
capacity of activated carbon used for carbon beds, design total
regeneration steam flow over the period of each complete carbon bed
regeneration cycle, design carbon bed temperature after regeneration,
design carbon bed regeneration time, and design service life of the
carbon.
(B) For a nonregenerable carbon adsorption system (e.g., a carbon
canister), the design analysis shall address the vent stream
composition, constituent concentrations, flow rate, relative humidity,
and temperature and shall establish the design exhaust vent stream
organic compound concentration, carbon bed capacity, activated carbon
type and working capacity, and design carbon replacement interval based
on the total carbon working capacity of the control device and emission
point operating schedule.
(3) To meet the monitoring requirements of paragraph (b)(4) of this
section, the owner or operator shall use one of the following
continuous monitoring systems:
(i) For a regenerative-type carbon adsorption system, an
integrating regeneration stream flow monitoring device equipped with a
continuous recorder and a carbon bed temperature monitoring device for
each adsorber vessel equipped with a continuous recorder. The
integrating regeneration stream flow monitoring device shall have an
accuracy of 10 percent and measure the total regeneration
stream mass flow during the carbon bed regeneration cycle. The
temperature monitoring device shall measure the carbon bed temperature
after regeneration and within 15 minutes of completing the cooling
cycle and the duration of the carbon bed steaming cycle.
(ii) A continuous monitoring system that measures the concentration
level of organic compounds in the exhaust vent stream from the control
device using an organic monitoring device equipped with a continuous
recorder.
(iii) A continuous monitoring system that measures other
alternative operating parameters upon approval of the Administrator as
specified in 40 CFR 63.8 (f)(1) through (f)(5) of this part.
(4) The owner or operator shall manage the carbon used for the
carbon adsorption system, as follows:
(i) Following the initial startup of the control device, all carbon
in the control device shall be replaced with fresh carbon on a regular,
predetermined time interval that is no longer than the carbon service
life established for the carbon adsorption system.
(ii) The spent carbon removed from the carbon adsorption system
shall be managed in one of the following ways:
(A) Regenerated or reactivated in a thermal treatment unit that is
designed and operated in accordance with the requirements of 40 CFR 264
subpart X and is permitted under 40 CFR part 270 of this chapter, or
certified to be in compliance with the interim status requirements of
40 CFR 265 subpart P of this chapter.
(B) Burned in a hazardous waste incinerator that is designed and
operated in accordance with the requirements of 40 CFR 264 subpart O
and is permitted under 40 CFR part 270 of this chapter, or certified to
be in compliance with the interim status requirements of 40 CFR part
265 subpart O.
(C) Burned in a boiler or industrial furnace that is designed and
operated in accordance with the requirements of 40 CFR 266 subpart H
and is permitted under 40 CFR part 270 of this chapter, or certified to
be in compliance with the interim status requirements of 40 CFR part
266 subpart H of this chapter.
(e) Condenser control device requirements.
[[Page 34170]]
(1) The condenser shall be designed and operated to achieve one of
the following performance specifications:
(i) Recover 95 percent or more, on a weight-basis, of the total
organic compounds (TOC), less methane and ethane, contained in the vent
stream entering the condenser; or
(ii) Recover 95 percent or more, on a weight-basis, of the total
HAP, listed in Table 1 of this subpart, contained in the vent stream
entering the condenser.
(2) The owner or operator shall demonstrate that the condenser
achieves the performa
FR Doc. 96-16576 National Emission Standards for Hazardous Air Pollutants: Off- Site Waste and Recovery Operations
nce requirements of paragraph (e)(1) of this
section by one of the following methods:
(i) Conduct performance tests in accordance with the requirements
of Sec. 63.694(l) of this subpart.
(ii) Prepare a design analysis. This design analysis shall address
the vent stream composition, constituent concentrations, flow rate,
relative humidity, and temperature and shall establish the design
outlet organic compound concentration level, design average temperature
of the condenser exhaust vent stream, and the design average
temperatures of the coolant fluid at the condenser inlet and outlet.
(3) To meet the continuous monitoring requirements of paragraph
(b)(3)(ii) of this section, the owner or operator shall use one of the
following continuous monitoring systems:
(i) A temperature monitoring device equipped with a continuous
recorder. The temperature sensor shall be installed at a location in
the exhaust vent stream from the condenser.
(ii) A continuous monitoring system that measures the concentration
level of organic compounds in the exhaust vent stream from the control
device using an organic monitoring device equipped with a continuous
recorder.
(iii) A continuous monitoring system that measures other
alternative operating parameters upon approval of the Administrator as
specified in 40 CFR 63.8 (f)(1) through (f)(5) of this part.
(f) Vapor incinerator control device requirements.
(1) The vapor incinerator shall be designed and operated to achieve
one of the following performance specifications:
(i) Destroy the total organic compounds (TOC), less methane and
ethane, contained in the vent stream entering the vapor incinerator
either:
(A) By 95 percent or more, on a weight-basis, or
(B) To achieve a total incinerator outlet concentration for the
TOC, less methane and ethane, of less than or equal to 20 parts per
million by volume (ppmv) on a dry basis corrected to 3 percent oxygen.
(ii) Destroy the HAP listed in Table 1 of this subpart contained in
the vent stream entering the vapor incinerator either:
(A) By 95 percent or more, on a total HAP weight-basis, or
(B) To achieve a total incinerator outlet concentration for the
HAP, listed in table 1 of this subpart, of less than or equal to 20
parts per million by volume (ppmv) on a dry basis corrected to 3
percent oxygen.
(iii) Maintain the conditions in the vapor incinerator combustion
chamber at a residence time of 0.5 seconds or longer and at a
temperature of 760 deg.C or higher.
(2) The owner or operator shall demonstrate that the vapor
incinerator achieves the performance requirements of paragraph (f)(1)
of this section by one of the following methods:
(i) Conduct performance tests in accordance with the requirements
of Sec. 63.694(l) of this subpart; or
(ii) Prepare a design analysis. The design analysis shall include
analysis of the vent stream characteristics and control device
operating parameters for the applicable vapor incinerator type as
follows:
(A) For a thermal vapor incinerator, the design analysis shall
address the vent stream composition, constituent concentrations, and
flow rate and shall establish the design minimum and average
temperatures in the combustion chamber and the combustion chamber
residence time.
(B) For a catalytic vapor incinerator, the design analysis shall
address the vent stream composition, constituent concentrations, and
flow rate and shall establish the design minimum and average
temperatures across the catalyst bed inlet and outlet, and the design
service life of the catalyst.
(3) To meet the monitoring requirements of paragraph (b)(4) of this
section, the owner or operator shall use one of the following
continuous monitoring systems, as applicable:
(i) For a thermal vapor incinerator, a temperature monitoring
device equipped with a continuous recorder. The temperature sensor
shall be installed at a location in the combustion chamber downstream
of the combustion zone.
(ii) For a catalytic vapor incinerator, a temperature monitoring
device capable of monitoring temperature at two locations equipped with
a continuous recorder. One temperature sensor shall be installed in the
vent stream at the nearest feasible point to the catalyst bed inlet and
a second temperature sensor shall be installed in the vent stream at
the nearest feasible point to the catalyst bed outlet.
(iii) For either type of vapor incinerator, a continuous monitoring
system that measures the concentration level of organic compounds in
the exhaust vent stream from the control device using an organic
monitoring device equipped with a continuous recorder.
(iv) For either type of vapor incinerator, a continuous monitoring
system that measures alternative operating parameters other than those
specified in paragraphs (f)(3)(i) or (f)(3)(ii) of this section upon
approval of the Administrator as specified in 40 CFR 63.8 (f)(1)
through (f)(5) of this part.
(g) Boilers and process heaters control device requirements.
(1) The boiler or process heater shall be designed and operated to
achieve one of the following performance specifications:
(i) Destroy the total organic compounds (TOC), less methane and
ethane, contained in the vent stream introduced into the flame zone of
the boiler or process heater either:
(A) By 95 percent or more, on a weight-basis, or
(B) To achieve in the exhausted combustion gases a total
concentration for the TOC, less methane and ethane, of less than or
equal to 20 parts per million by volume (ppmv) on a dry basis corrected
to 3 percent oxygen.
(ii) Destroy the HAP listed in Table 1 of this subpart contained in
the vent stream entering the vapor incinerator either:
(A) By 95 percent or more, on a total HAP weight-basis, or
(B) To achieve in the exhausted combustion gases a total
concentration for the HAP, listed in table 1 of the subpart, of less
than or equal to 20 parts per million by volume (ppmv) on a dry basis
corrected to 3 percent oxygen.
(iii) Introduce the vent stream into the flame zone of the boiler
or process heater and maintain the conditions in the combustion chamber
at a residence time of 0.5 seconds or longer and at a temperature of
760 deg.C or higher.
(iv) Introduce the vent stream with the fuel that provides the
predominate heat input to the boiler or process heater (i.e., the
primary fuel); or
(v) Introduce the vent stream to a boiler or process heater for
which the owner or operator either has been issued a final permit under
40 CFR part 270 and complies with the requirements of 40 CFR part 266
subpart H of this chapter; or has certified compliance with the interim
status requirements of
[[Page 34171]]
40 CFR part 266 subpart H of this chapter.
(2) The owner or operator shall demonstrate that the boiler or
process heater achieves the performance requirements of paragraph
(g)(1)(i), (g)(1)(ii), or (g)(1)(iii) of this section using one of the
following methods:
(i) Conduct performance tests in accordance with the requirements
of Sec. 63.694(l) of this subpart.
(ii) Prepare a design analysis. The design analysis shall address
the vent stream composition, constituent concentrations, and flow rate;
shall establish the design minimum and average flame zone temperatures
and combustion zone residence time; and shall describe the method and
location where the vent stream is introduced into the flame zone.
(3) The owner or operator shall demonstrate that the boiler or
process heater achieves the performance requirements of paragraph
(g)(1)(iv) or (g)(1)(v) of this section by keeping records that
document that the boiler or process heater is designed and operated in
accordance with the applicable requirements of this section.
(4) To meet the monitoring requirements of paragraph (b)(4) of this
section, the owner or operator shall use any of the following
continuous monitoring systems:
(i) A temperature monitoring device equipped with a continuous
recorder. The temperature sensor shall be installed at a location in
the combustion chamber downstream of the flame zone.
(ii) A continuous monitoring system that measures the concentration
level of organic compounds in the exhaust vent stream from the control
device using an organic monitoring device equipped with a continuous
recorder.
(iii) A continuous monitoring system that measures alternative
operating parameters other than those specified in paragraphs (g)(3)(i)
or (g)(3)(ii) of this section upon approval of the Administrator as
specified in 40 CFR 63.8 (f)(1) through (f)(5) of this part.
(h) Flare control device requirements. The flare shall be designed
and operated in accordance with the requirements of 40 CFR 63.11(b). To
meet the monitoring requirements of paragraph (b)(4) of this section,
the owner or operator shall use a heat sensing monitoring device
equipped with a continuous recorder that indicates the continuous
ignition of the pilot flame.
Sec. 63.694 Testing methods and procedures.
(a) This section specifies the testing methods and procedures
required for this subpart to perform the following:
(1) To determine the average VOHAP concentration for off-site
material streams at the point-of-delivery for compliance with standards
specified Sec. 63.683 of this subpart, the testing methods and
procedures are specified in paragraph (b) of this section.
(2) To determine the average VOHAP concentration for treated off-
site material streams at the point-of-treatment for compliance with
standards specified Sec. 63.684 of this subpart, the testing methods
and procedures are specified in paragraph (c) of this section.
(3) To determine the treatment process VOHAP concentration limit
(CR) for compliance with standards specified Sec. 63.684 of this
subpart, the testing methods and procedures are specified in paragraph
(d) of this section.
(4) To determine treatment process required HAP removal rate (RMR)
for compliance with standards specified Sec. 63.684 of this subpart,
the testing methods and procedures are specified in paragraph (e) of
this section.
(5) To determine treatment process actual HAP removal rate (MR) for
compliance with standards specified Sec. 63.684 of this subpart, the
testing methods and procedures are specified in paragraph (f) of this
section.
(6) To determine treatment process required HAP reduction
efficiency (R) for compliance with standards specified in Sec. 63.684
of this subpart, the testing methods and procedures are specified in
paragraph (g) of this section.
(7) To determine treatment process required HAP biodegradation
efficiency (Rbio) for compliance with standards specified in
Sec. 63.684 of this subpart, the testing methods and procedures are
specified in paragraph (h) of this section.
(8) To determine treatment process required actual HAP mass removal
rate (MRbio) for compliance with standards specified inSec. 63.684
of this subpart, the testing methods and procedures are specified in
paragraph (i) of this section.
(9) To determine maximum organic HAP vapor pressure of off-site
materials in tanks for compliance with the standards specified in
Sec. 63.685 of this subpart, the testing methods and procedures are
specified in paragraph (j) of this section.
(10) To determine no detectable organic emissions, the testing
methods and procedures are specified in paragraph (k) of this section.
(11) To determine closed-vent system and control device performance
for compliance with the standards specified in Sec. 63.693 of this
subpart, the testing methods and procedures are specified in paragraph
(l) of this section.
(b) Testing methods and procedures to determine average VOHAP
concentration of an off-site material stream at the point-of-delivery.
(1) The average VOHAP concentration of an off-site material at the
point-of-delivery shall be determined using either direct measurement
as specified in paragraph (b)(2) of this section or by knowledge as
specified in paragraph (b)(3) of this section.
(2) Direct measurement to determine VOHAP concentration.
(i) Sampling. Samples of the off-site material stream shall be
collected from the container, pipeline, or other device used to deliver
the off-site material stream to the plant site in a manner such that
volatilization of organics contained in the sample is minimized and an
adequately representative sample is collected and maintained for
analysis by the selected method.
(A) The averaging period to be used for determining the average
VOHAP concentration for the off-site material stream on a mass-weighted
average basis shall be designated and recorded. The averaging period
can represent any time interval that the owner or operator determines
is appropriate for the off-site material stream but shall not exceed 1
year.
(B) A sufficient number of samples, but no less than four samples,
shall be collected to represent the complete range of HAP compositions
and HAP quantities that occur in the off-site material stream during
the entire averaging period due to normal variations in the operating
conditions for the source or process generating the off-site material
stream. Examples of such normal variations are seasonal variations in
off-site material quantity or fluctuations in ambient temperature.
(C) All samples shall be collected and handled in accordance with
written procedures prepared by the owner or operator and documented in
a site sampling plan. This plan shall describe the procedure by which
representative samples of the off-site material stream are collected
such that a minimum loss of organics occurs throughout the sample
collection and handling process and by which sample integrity is
maintained. A copy of the written sampling plan shall be maintained on-
site in the plant site operating records. An example of an acceptable
sampling plan includes a plan incorporating sample collection and
handling procedures in accordance with the requirements specified in
``Test Methods for Evaluating Solid Waste, Physical/Chemical Methods,''
EPA Publication No. SW-846 or Method 25D in 40 CFR part 60, appendix A.
[[Page 34172]]
(ii) Analysis. Each collected sample shall be prepared and analyzed
in accordance with one of the following methods:
(A) Method 25D in 40 CFR part 60, appendix A.
(B) Method 305 in 40 CFR part 63, appendix A.
(C) Method 624 in 40 CFR part 136, appendix A.
(D) Method 1624 in 40 CFR part 136, appendix A.
(E) Method 1625 in 40 CFR part 136, appendix A.
(F) Any other analysis method that has been validated in accordance
with the procedures specified in Section 5.1 and Section 5.3 of Method
301 in 40 CFR part 63, appendix A.
(iii) Calculations. The average VOHAP concentration (C) on a mass-
weighted basis shall be calculated by using the results for all samples
analyzed in accordance with paragraph (b)(2)(ii) of this section and
the following equation:
[GRAPHIC] [TIFF OMITTED] TR01JY96.037
where:
C=Average VOHAP concentration of the off-site material at the point-of-
delivery on a mass-weighted basis, ppmw.
i=Individual sample ``i'' of the off-site material.
n=Total number of samples of the off-site material collected (at least
4) for the averaging period (not to exceed 1 year).
Qi=Mass quantity of off-site material stream represented by
Ci, kg/hr.
QT=Total mass quantity of off-site material during the averaging
period, kg/hr.
Ci=Measured VOHAP concentration of sample ``i'' as determined in
accordance with the requirements of Sec. 63.693(b)(2)(ii), ppmw.
(3) Knowledge of the off-site material to determine VOHAP
concentration.
(i) Documentation shall be prepared that presents the information
used as the basis for the owner's or operator's knowledge of the off-
site material stream's average VOHAP concentration. Examples of
information that may be used as the basis for knowledge include:
material balances for the source or process generating the off-site
material stream; species-specific chemical test data for the off-site
material stream from previous testing that are still applicable to the
current off-site material stream; previous test data for other
locations managing the same type of off-site material stream; or other
knowledge based on information included in manifests, shipping papers,
or waste certification notices.
(ii) If test data are used as the basis for knowledge, then the
owner or operator shall document the test method, sampling protocol,
and the means by which sampling variability and analytical variability
are accounted for in the determination of the average VOHAP
concentration. For example, an owner or operator may use HAP
concentration test data for the off-site material stream that are
validated in accordance with Method 301 in 40 CFR part 63, appendix A
of this part as the basis for knowledge of the off-site material.
(iii) An owner or operator using species-specific chemical
concentration test data as the basis for knowledge of the off-site
material may adjust the test data to the corresponding average VOHAP
concentration value which would be obtained had the off-site material
samples been analyzed using Method 305. To adjust these data, the
measured concentration for each individual HAP chemical species
contained in the off-site material is multiplied by the appropriate
species-specific adjustment factor (fm305) listed in Table 1 of
this subpart.
(iv) In the event that the Administrator and the owner or operator
disagree on a determination of the average VOHAP concentration for an
off-site material stream using knowledge, then the results from a
determination of VOHAP concentration using direct measurement as
specified in paragraph (b)(2) of this section shall be used to
establish compliance with the applicable requirements of this subpart.
The Administrator may perform or request that the owner or operator
perform this determination using direct measurement.
(c) Determination of average VOHAP concentration of an off-site
material stream at the point-of-treatment.
(1) Sampling. Samples of the off-site material stream shall be
collected at the point-of-treatment in a manner such that
volatilization of organics contained in the sample is minimized and an
adequately representative sample is collected and maintained for
analysis by the selected method.
(i) The averaging period to be used for determining the average
VOHAP concentration for the off-site material stream on a mass-weighted
average basis shall be designated and recorded. The averaging period
can represent any time interval that the owner or operator determines
is appropriate for the off-site material stream but shall not exceed 1
year.
(ii) A sufficient number of samples, but no less than four samples,
shall be collected to represent the complete range of HAP compositions
and HAP quantities that occur in the off-site material stream during
the entire averaging period due to normal variations in the operating
conditions for the treatment process. Examples of such normal
variations are seasonal variations in off-site material quantity or
fluctuations in ambient temperature.
(iii) All samples shall be collected and handled in accordance with
written procedures prepared by the owner or operator and documented in
a site sampling plan. This plan shall describe the procedure by which
representative samples of the off-site material stream such that a
minimum loss of organics occurs throughout the sample collection and
handling process and by which sample integrity is maintained. A copy of
the written sampling plan shall be maintained on-site in the plant site
operating records. An example of an acceptable sampling plan includes a
plan incorporating sample collection and handling procedures in
accordance with the requirements specified in ``Test Methods for
Evaluating Solid Waste, Physical/Chemical Methods,'' EPA Publication
No. SW-846 or Method 25D in 40 CFR part 60, appendix A.
(2) Analysis. Each collected sample shall be prepared and analyzed
in accordance with the one of the following methods:
(i) Method 25D in 40 CFR part 60, appendix A.
(ii) Method 305 in 40 CFR part 63, appendix A.
(iii) Method 624 in 40 CFR part 136, appendix A.
(iv) Method 1624 in 40 CFR part 136, appendix A.
(v) Method 1625 in 40 CFR part 136, appendix A.
(3) Calculations. The average VOHAP concentration (C) on a mass-
weighted basis shall be calculated by using the results for all samples
analyzed in accordance with paragraph (c)(2) of this section and the
following equation:
[GRAPHIC] [TIFF OMITTED] TR01JY96.038
Where:
C=Average VOHAP concentration of the off-site material on a mass-
weighted basis, ppmw.
i=Individual sample ``i'' of the off-site material.
n=Total number of samples of the off-site material collected (at least
4) for the averaging period (not to exceed 1 year).
[[Page 34173]]
Qi=Mass quantity of off-site material stream represented by
Ci, kg/hr.
QT=Total mass quantity of off-site material during the averaging
period, kg/hr.
Ci=Measured VOHAP concentration of sample ``i'' as determined in
accordance with the requirements of Sec. 63.693(c)(2), ppmw.
(d) Determination of treatment process VOHAP concentration limit
(CR).
(1) All of the off-site material streams entering the treatment
process shall be identified.
(2) The average VOHAP concentration of each off-site material
stream at the point-of-delivery shall be determined using the
procedures specified in paragraph (b) of this section.
(3) The VOHAP concentration limit (CR) shall be calculated by
using the results determined for each individual off-site material
stream and the following equation:
[GRAPHIC] [TIFF OMITTED] TR01JY96.039
where:
CR=VOHAP concentration limit, ppmw.
x=Individual off-site material stream ``x'' that has a VOHAP
concentration less than 500 ppmw at the point-of-delivery.
y=Individual off-site material stream ``y'' that has a VOHAP
concentration equal to or greater than 500 ppmw at the point-of-
delivery.
m=Total number of ``x'' off-site material streams treated by process.
n=Total number of ``y'' off-site material streams treated by process.
Qx=Total mass quantity of off-site material stream ``x'', kg/yr.
Qy=Total mass quantity of off-site material stream ``y'', kg/yr.
Cx=VOHAP concentration of off-site material stream ``x'' at the
point-of-delivery, ppmw.
(e) Determination of required HAP mass removal rate (RMR).
(1) All of the off-site material streams entering the treatment
process shall be identified.
(2) The average VOHAP concentration of each off-site material
stream at the point-of-delivery shall be determined in accordance with
the requirements of paragraph (b) of this section.
(3) For each individual off-site material stream that has an
average VOHAP concentration equal to or greater than 500 ppmw at the
point-of-delivery, the average volumetric flow rate and the density of
the off-site material stream at the point-of-delivery shall be
determined.
(4) The required HAP mass removal rate (RMR) shall be calculated by
using the average VOHAP concentration, average volumetric flow rate,
and density determined for each off-site material stream and the
following equation:
[GRAPHIC] [TIFF OMITTED] TR01JY96.040
where:
RMR=Required HAP mass removal rate, kg/hr.
y=Individual off-site material stream ``y'' that has a VOHAP
concentration equal to or greater than 500 ppmw at the point-of-
delivery as determined in accordance with the requirements of
Sec. 63.693(b).
n=Total number of ``y'' off-site material streams treated by process.
Vy=Average volumetric flow rate of off-site material stream ``y''
at the point-of-delivery, m3/hr.
ky=Density of off-site material stream ``y'', kg/m3
Cy=Average VOHAP concentration of off-site material stream ``y''
at the point-of-delivery as determined in accordance with the
requirements of Sec. 63.693(b), ppmw.
(f) Determination of actual HAP mass removal rate (MR).
(1) The actual HAP mass removal rate (MR) shall be determined based
on results for a minimum of three consecutive runs. The sampling time
for each run shall be 1 hour.
(2) The off-site material HAP mass flow entering the process
(Eb) and the off-site material HAP mass flow exiting the process
(Ea) shall be determined in accordance with the requirements of
paragraph (g)(4) of this section.
(3) The actual mass removal rate shall be calculated by using the
mass flow rates determined in accordance with the requirements of
paragraph (f)(2) of this section and the following equation:
MR = Eb-Ea
where:
MR=Actual HAP mass removal rate, kg/hr.
Eb=Off-site material HAP mass flow entering process as determined
in accordance with the requirements of paragraph (f)(2) of this
section, kg/hr.
Ea=Off-site material HAP mass flow exiting process as determined
in accordance with the requirements of paragraph (f)(2) of this
section, kg/hr.
(g) Determination of treatment process HAP reduction efficiency
(R).
(1) The HAP reduction efficiency (R) for a treatment process shall
be determined based on results for a minimum of three consecutive runs.
(2) All off-site material streams entering the treatment process
and all off-site material streams exiting the treatment process shall
be identified. The owner or operator shall prepare a sampling plan for
measuring these streams that accurately reflects the retention time of
the off-site material in the process.
(3) For each run, information shall be determined for each off-site
material stream identified in paragraph (g)(2) of this section using
the following procedures:
(i) The mass quantity of each off-site material stream entering the
process (Qb) and the mass quantity of each off-
[[Page 34174]]
site material stream exiting the process (Qa) shall be determined.
(ii) The average VOHAP concentration at the point-of-delivery of
each off-site material stream entering the process (Cb) during the
run shall be determined in accordance with the requirements of
paragraph (b) of this section. The VOHAP concentration of the off-site
material stream at the point-of-treatment (Ca) during the run
shall be determined in accordance with the applicable requirements of
paragraph (c) of this section.
(4) The off-site material HAP mass flow entering the process
(Eb) and the off-site material HAP mass flow exiting the process
(Ea) shall be calculated by using the results determined in
accordance with paragraph (g)(3) of this section and the following
equations:
[GRAPHIC] [TIFF OMITTED] TR01JY96.041
[GRAPHIC] [TIFF OMITTED] TR01JY96.042
where:
Eb=Off-site material HAP mass flow entering process, kg/hr.
Ea=Off-site material HAP mass flow exiting process, kg/hr.
m=Total number of runs (at least 3)
j=Individual run ``j''
QV=Mass quantity of off-site material entering process during run
``j'', kg/hr.
Qaj=Average mass quantity of off-site material exiting process
during run ``j'', kg/hr.
Caj=Average VOHAP concentration of off-site material exiting
process during run ``j'' as determined in accordance with the
requirements of Sec. 63.693(b), ppmw.
CV=Average VOHAP concentration of off-site material entering
process during run ``j'' as determined in accordance with the
requirements of Sec. 63.693(b), ppmw.
(5) The HAP reduction efficiency (R) shall be calculated by using
the results determined in accordance with paragraph (g)(4) of this
section and the following equation:
[GRAPHIC] [TIFF OMITTED] TR01JY96.043
where:
R=HAP reduction efficiency, percent.
Eb=Off-site material HAP mass flow entering process as determined
in accordance with the requirements of paragraph (d)(4) of this
section, kg/hr.
Ea=Off-site material HAP mass flow exiting process as determined
in accordance with the requirements of paragraph (d)(4) of this
section, kg/hr.
(h) Determination of HAP biodegradation efficiency (Rbio).
(1) The fraction of HAP biodegraded (Fbio) shall be determined
using the procedure specified in 40 CFR part 63, appendix C of this
part.
(2) The HAP biodegradation efficiency (Rbio) shall be
calculated by using the following equation:
Rbio=Fbio x 100
where:
Rbio = HAP biodegradation efficiency, percent.
Fbio = Fraction of HAP biodegraded as determined in accordance
with the requirements of paragraph (h)(1) of this section.
(i) Determination of actual HAP mass removal rate (MRbio).
(1) The actual HAP mass removal rate (MRbio) shall be
determined based on results for a minimum of three consecutive runs.
The sampling time for each run shall be 1 hour.
(2) The off-site material HAP mass flow entering the process
(Eb) shall be determined in accordance with the requirements of
paragraph (g)(4) of this section.
(3) The fraction of HAP biodegraded (Fbio) shall be determined
using the procedure specified in 40 CFR part 63, appendix C of this
part.
(4) The actual mass removal rate shall be calculated by using the
HAP mass flow rates and fraction of HAP biodegraded determined in
accordance with the requirements of paragraphs (i)(2) and (i)(3),
respectively, of this section and the following equation:
MRbio=Eb x Fbio
where:
MRbio=Actual HAP mass removal rate, kg/hr.
Eb=Off-site material HAP mass flow entering process, kg/hr.
Fbio=Fraction of HAP biodegraded.
(j) Determination of maximum HAP vapor pressure for off-site
material in a tank.
(1) The maximum HAP vapor pressure of the off-site material
composition managed in a tank shall be determined using either direct
measurement as specified in paragraph (j)(2) of this section or by
knowledge of the off-site material as specified by paragraph (j)(3) of
this section.
(2) Direct measurement to determine the maximum HAP vapor pressure
of an off-site material.
(i) Sampling. A sufficient number of samples shall be collected to
be representative of the off-site material contained in the tank. All
samples shall be collected and handled in accordance with written
procedures prepared by the owner or operator and documented in a site
sampling plan. This plan shall describe the procedure by which
representative samples of the off-site material is collected such that
a minimum loss of organics occurs throughout the sample collection and
handling process and by which sample integrity is maintained. A copy of
the written sampling plan shall be
[[Page 34175]]
maintained on-site in the plant site operating records. An example of
an acceptable sampling plan includes a plan incorporating sample
collection and handling procedures in accordance with the requirements
specified in ``Test Methods for Evaluating Solid Waste, Physical/
Chemical Methods,'' EPA Publication No. SW-846 or Method 25D in 40 CFR
part 60, appendix A.
(ii) Analysis. Any one of the following methods may be used to
analyze the samples and compute the maximum HAP vapor pressure of the
off-site material:
(A) Method 25E in 40 CFR part 60 appendix A;
(B) Methods described in American Petroleum Institute Bulletin
2517, ``Evaporation Loss from External Floating Roof Tanks,'';
(C) Methods obtained from standard reference texts;
(D) ASTM Method 2879-83; or
(E) Any other method approved by the Administrator.
(3) Use of knowledge to determine the maximum HAP vapor pressure of
the off-site material. Documentation shall be prepared and recorded
that presents the information used as the basis for the owner's or
operator's knowledge that the maximum HAP vapor pressure of the off-
site material is less than the maximum vapor pressure limit listed in
Table 3 or Table 4 of this subpart for the applicable tank design
capacity category. Examples of information that may be used include:
the off-site material is generated by a process for which at other
locations it previously has been determined by direct measurement that
the off-site material maximum HAP vapor pressure is less than the
maximum vapor pressure limit for the appropriate tank design capacity
category.
(k) Procedure for determining no detectable organic emissions for
the purpose of complying with this subpart.
(1) The test shall be conducted in accordance with the procedures
specified in Method 21 of 40 CFR part 60, appendix A. Each potential
leak interface (i.e., a location where organic vapor leakage could
occur) on the cover and associated closure devices shall be checked.
Potential leak interfaces that are associated with covers and closure
devices include, but are not limited to: the interface of the cover and
its foundation mounting; the periphery of any opening on the cover and
its associated closure device; and the sealing seat interface on a
spring-loaded pressure-relief valve.
(2) The test shall be performed when the unit contains a material
having an organic HAP concentration representative of the range of
concentrations for the off-site materials expected to be managed in the
unit. During the test, the cover and closure devices shall be secured
in the closed position.
(3) The detection instrument shall meet the performance criteria of
Method 21 of 40 CFR part 60, appendix A, except the instrument response
factor criteria in section 3.1.2(a) of Method 21 shall be for the
average composition of the organic constituents in the off-site
material placed in the unit, not for each individual organic
constituent.
(4) The detection instrument shall be calibrated before use on each
day of its use by the procedures specified in Method 21 of 40 CFR part
60, appendix A.
(5) Calibration gases shall be as follows:
(i) Zero air (less than 10 ppmv hydrocarbon in air); and
(ii) A mixture of methane in air at a concentration of
approximately, but less than 10,000 ppmv.
(6) The background level shall be determined according to the
procedures in Method 21 of 40 CFR part 60 appendix A.
(7) Each potential leak interface shall be checked by traversing
the instrument probe around the potential leak interface as close to
the interface as possible, as described in Method 21. In the case when
the configuration of the cover or closure device prevents a complete
traverse of the interface, all accessible portions of the interface
shall be sampled. In the case when the configuration of the closure
device prevents any sampling at the interface and the device is
equipped with an enclosed extension or horn (e.g., some pressure relief
devices), the instrument probe inlet shall be placed at approximately
the center of the exhaust area to the atmosphere.
(8) The arithmetic difference between the maximum organic
concentration indicated by the instrument and the background level
shall be compared with the value of 500 ppmv. If the difference is less
than 500 ppmv, then the potential leak interface is determined to
operate with no detectable organic emissions.
(l) Control device performance test procedures.
(1) Method 1 or 1A of 40 CFR part 60, appendix A, as appropriate,
shall be used for selection of the sampling sites at the inlet and
outlet of the control device.
(i) To determine compliance with a control device percent reduction
requirement, sampling sites shall be located at the inlet of the
control device as specified in paragraphs (l)(1)(i)(A) and (l)(1)(i)(B)
of this section, and at the outlet of the control device.
(A) The control device inlet sampling site shall be located after
the final product recovery device.
(B) If a vent stream is introduced with the combustion air or as a
auxiliary fuel into a boiler or process heater, the location of the
inlet sampling sites shall be selected to ensure that the measurement
of total HAP concentration or TOC concentration, as applicable,
includes all vent streams and primary and secondary fuels introduced
into the boiler or process heater.
(ii) To determine compliance with an enclosed combustion device
concentration limit, the sampling site shall be located at the outlet
of the device.
(2) The gas volumetric flow rate shall be determined using Method
2, 2A, 2C, or 2D of 40 CFR part 60, appendix A, as appropriate.
(3) To determine compliance with the control device percent
reduction requirement, the owner or operator shall use Method 18 of 40
CFR part 60, appendix A of this chapter; alternatively, any other
method or data that has been validated according to the applicable
procedures in Method 301 in 40 CFR part 63, appendix A of this part may
be used. The following procedures shall be used to calculate percent
reduction efficiency:
(i) The minimum sampling time for each run shall be 1 hour in which
either an integrated sample or a minimum of four grab samples shall be
taken. If grab sampling is used, then the samples shall be taken at
approximately equal intervals in time such as 15 minute intervals
during the run.
(ii) The mass rate of either TOC (minus methane and ethane) or
total HAP (Ei and Eo ,respectively) shall be computed.
(A) The following equations shall be used:
[[Page 34176]]
[GRAPHIC] [TIFF OMITTED] TR01JY96.044
where:
Cij, Coj=Concentration of sample component j of the gas
stream at the inlet and outlet of the control device, respectively, dry
basis, parts per million by volume.
Ei, Eo=Mass rate of TOC (minus methane and ethane) or total
HAP at the inlet and outlet of the control device, respectively, dry
basis, kilogram per hour.
Mij, Moj=Molecular weight of sample component j of the gas
stream at the inlet and outlet of the control device, respectively,
gram/gram-mole.
Qi, Qo=Flow rate of gas stream at the inlet and outlet of the
control device, respectively, dry standard cubic meter per minute.
K2=Constant, 2.494 x 10-\6\ (parts per million) -\1\
(gram-mole per standard cubic meter) (kilogram/gram) (minute/hour),
where standard temperature (gram-mole per standard cubic meter) is 20
deg.C.
(B) When the TOC mass rate is calculated, all organic compounds
(minus methane and ethane) measured by Method 18 of 40 CFR part 60,
appendix A shall be summed using the equation in paragraph
(l)(3)(ii)(A) of this section.
(C) When the total HAP mass rate is calculated, only the HAP
constituents shall be summed using the equation in paragraph
(l)(3)(ii)(A) of this section.
(iii) The percent reduction in TOC (minus methane and ethane) or
total HAP shall be calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR01JY96.045
where:
Rcd=Control efficiency of control device, percent.
Ei=Mass rate of TOC (minus methane and ethane) or total HAP at the
inlet to the control device as calculated under paragraph (l)(3)(ii) of
this section, kilograms TOC per hour or kilograms HAP per hour.
Eo=Mass rate of TOC (minus methane and ethane) or total HAP at the
outlet of the control device, as calculated under paragraph (l)(3)(ii)
of this section, kilograms TOC per hour or kilograms HAP per hour.
(iv) If the vent stream entering a boiler or process heater is
introduced with the combustion air or as a secondary fuel, the weight-
percent reduction of total HAP or TOC (minus methane and ethane) across
the device shall be determined by comparing the TOC (minus methane and
ethane) or total HAP in all combusted vent streams and primary and
secondary fuels with the TOC (minus methane and ethane) or total HAP
exiting the device, respectively.
(4) To determine compliance with the enclosed combustion device
total HAP concentration limit of this subpart, the owner or operator
shall use Method 18 of 40 CFR part 60, appendix A to measure either TOC
(minus methane and ethane) or total HAP. Alternatively, any other
method or data that has been validated according to Method 301 in
appendix A of this part, may be used. The following procedures shall be
used to calculate parts per million by volume concentration, corrected
to 3 percent oxygen:
(i) The minimum sampling time for each run shall be 1 hour in which
either an integrated sample or a minimum of four grab samples shall be
taken. If grab sampling is used, then the samples shall be taken at
approximately equal intervals in time, such as 15 minute intervals
during the run.
(ii) The TOC concentration or total HAP concentration shall be
calculated according to paragraph (m)(4)(ii)(A) or (m)(4)(ii)(B) of
this section.
(A) The TOC concentration (CTOC) is the sum of the
concentrations of the individual components and shall be computed for
each run using the following equation:
[GRAPHIC] [TIFF OMITTED] TR01JY96.046
where:
CTOC=Concentration of total organic compounds minus methane and
ethane, dry basis, parts per million by volume.
Cji=Concentration of sample components j of sample i, dry basis,
parts per million by volume.
n=Number of components in the sample.
x=Number of samples in the sample run.
(B) The total HAP concentration (CHAP) shall be computed
according to the equation in paragraph (l)(4)(ii)(A) of this section
except that only HAP constituents shall be summed.
(iii) The measured TOC concentration or total HAP concentration
shall be corrected to 3 percent oxygen as follows:
(A) The emission rate correction factor or excess air, integrated
sampling and analysis procedures of Method 3B of 40 CFR part 60,
appendix A shall be used to determine the oxygen concentration
(%O2dry). The samples shall be collected during the same time that
the samples are collected for determining TOC concentration or total
HAP concentration.
(B) The concentration corrected to 3 percent oxygen (Cc) shall
be computed using the following equation:
[GRAPHIC] [TIFF OMITTED] TR01JY96.047
where:
Cc=TOC concentration or total HAP concentration corrected to 3
percent oxygen, dry basis, parts per million by volume.
Cm=Measured TOC concentration or total HAP concentration, dry
basis, parts per million by volume.
%O2dry=Concentration of oxygen, dry basis, percent by volume.
Sec. 63.695 Inspection and monitoring requirements.
(a) This section specifies the inspection and monitoring procedures
required to perform the following:
(1) To inspect tank fixed-roofs and floating roofs for compliance
with the Tank level 2 controls standards specified in Sec. 63.685 of
this subpart, the inspection procedures are specified in paragraph (b)
of this section.
(2) To inspect and monitor closed-vent systems for compliance with
the standards specified in Sec. 63.693 of this subpart, the inspection
and monitoring procedure are specified in paragraph (c) of this
section.
(3) To inspect and monitor transfer system covers for compliance
with the
[[Page 34177]]
standards specified in Sec. 63.689(c)(1) of this subpart, the
inspection and monitoring procedure are specified in paragraph (d) of
this section.
(b) Tank Level 2 fixed roof and floating roof inspection
requirements.
(1) Owners and operators that use a tank equipped with an internal
floating roof in accordance with the provisions of Sec. 63.685(e) of
this subpart shall meet the following inspection requirements:
(i) The floating roof and its closure devices shall be visually
inspected by the owner or operator to check for defects that could
result in air emissions. Defects include, but are not limited to, the
internal floating roof is not floating on the surface of the liquid
inside the tank; liquid has accumulated on top of the internal floating
roof; any portion of the roof seals have detached from the roof rim;
holes, tears, or other openings are visible in the seal fabric; the
gaskets no longer close off the waste surfaces from the atmosphere; or
the slotted membrane has more than 10 percent open area.
(ii) The owner or operator shall inspect the internal floating roof
components as follows except as provided for in paragraph (b)(1)(iii)
of this section:
(A) Visually inspect the internal floating roof components through
openings on the fixed-roof (e.g., manholes and roof hatches) at least
once every 12 months after initial fill, and
(B) Visually inspect the internal floating roof, primary seal,
secondary seal (if one is in service), gaskets, slotted membranes, and
sleeve seals (if any) each time the tank is emptied and degassed and at
least every 10 years. Prior to each inspection, the owner or operator
shall notify the Administrator in accordance with the reporting
requirements specified in Sec. 63.697 of this subpart.
(iii) As an alternative to performing the inspections specified in
paragraph (b)(1)(ii) of this section for an internal floating roof
equipped with two continuous seals mounted one above the other, the
owner or operator may visually inspect the internal floating roof,
primary and secondary seals, gaskets, slotted membranes, and sleeve
seals (if any) each time the tank is emptied and degassed and at least
every 5 years. Prior to each inspection, the owner or operator shall
notify the Administrator in accordance with the reporting requirements
specified in Sec. 63.697 of this subpart.
(iv) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (b)(4) of this section.
(v) The owner or operator shall maintain a record of the inspection
in accordance with the requirements specified in Sec. 63.696 of this
subpart.
(2) Owners and operators that use a tank equipped with an external
floating roof in accordance with the provisions of Sec. 63.685(f) of
this subpart shall meet the following requirements:
(i) The owner or operator shall measure the external floating roof
seal gaps in accordance with the following requirements:
(A) The owner or operator shall perform measurements of gaps
between the tank wall and the primary seal within 60 days after initial
operation of the tank following installation of the floating roof and,
thereafter, at least once every 5 years. Prior to each inspection, the
owner or operator shall notify the Administrator in accordance with the
reporting requirements specified in Sec. 63.697 of this subpart.
(B) The owner or operator shall perform measurements of gaps
between the tank wall and the secondary seal within 60 days after
initial operation of the separator following installation of the
floating roof and, thereafter, at least once every year. Prior to each
inspection, the owner or operator shall notify the Administrator in
accordance with the reporting requirements specified in Sec. 63.697 of
this subpart.
(C) If a tank ceases to hold off-site material for a period of 1
year or more, subsequent introduction of off-site material into the
tank shall be considered an initial operation for the purposes of
paragraphs (b)(2)(i)(A) and (b)(2)(i)(B) of this section.
(D) The owner shall determine the total surface area of gaps in the
primary seal and in the secondary seal individually using the following
procedure.
(1) The seal gap measurements shall be performed at one or more
floating roof levels when the roof is floating off the roof supports.
(2) Seal gaps, if any, shall be measured around the entire
perimeter of the floating roof in each place where a 0.32-centimeter
(cm) diameter uniform probe passes freely (without forcing or binding
against the seal) between the seal and the wall of the tank and measure
the circumferential distance of each such location.
(3) For a seal gap measured under paragraph (b)(2) of this section,
the gap surface area shall be determined by using probes of various
widths to measure accurately the actual distance from the tank wall to
the seal and multiplying each such width by its respective
circumferential distance.
(4) The total gap area shall be calculated by adding the gap
surface areas determined for each identified gap location for the
primary seal and the secondary seal individually, and then dividing the
sum for each seal type by the nominal perimeter of the tank. These
total gap areas for the primary seal and secondary seal are then are
compared to the respective standards for the seal type as specified in
Sec. 63.685(f)(1) of this subpart.
(E) In the event that the seal gap measurements do not conform to
the specifications in Sec. 63.685(f)(1) of this subpart, the owner or
operator shall repair the defect in accordance with the requirements of
paragraph (b)(4) of this section.
(F) The owner or operator shall maintain a record of the inspection
in accordance with the requirements specified in Sec. 63.696 of this
subpart.
(ii) The owner or operator shall visually inspect the external
floating roof in accordance with the following requirements:
(A) The floating roof and its closure devices shall be visually
inspected by the owner or operator to check for defects that could
result in air emissions. Defects include, but are not limited to:
holes, tears, or other openings in the rim seal or seal fabric of the
floating roof; a rim seal detached from the floating roof; all or a
portion of the floating roof deck being submerged below the surface of
the liquid in the tank; broken, cracked, or otherwise damaged seals or
gaskets on closure devices; and broken or missing hatches, access
covers, caps, or other closure devices.
(B) The owner or operator shall perform the inspections following
installation of the external floating roof and, thereafter, at least
once every year.
(C) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (b)(4) of this section.
(D) The owner or operator shall maintain a record of the inspection
in accordance with the requirements specified in Sec. 63.696(d) of this
subpart.
(3) Owners and operators that use a tank equipped with a fixed roof
in accordance with the provisions of Sec. 63.685(g) of this subpart
shall meet the following requirements:
(i) The fixed roof and its closure devices shall be visually
inspected by the owner or operator to check for defects that could
result in air emissions. Defects include, but are not limited to,
visible cracks, holes, or gaps in the roof sections or between the roof
and the separator wall; broken, cracked,
[[Page 34178]]
or otherwise damaged seals or gaskets on closure devices; and broken or
missing hatches, access covers, caps, or other closure devices.
(ii) The owner or operator shall perform the inspections following
installation of the fixed roof and, thereafter, at least once every
year.
(iii) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (b)(4) of this section.
(iv) The owner or operator shall maintain a record of the
inspection in accordance with the requirements specified in
Sec. 63.696(e) of this subpart.
(4) The owner or operator shall repair each defect detected during
an inspection performed in accordance with the requirements of
paragraph (b)(1), (b)(2), or (b)(3) of this section in the following
manner:
(i) The owner or operator shall within 45 calendar days of
detecting the defect either repair the defect or empty the tank and
remove it from service. If within this 45-day period the defect cannot
be repaired or the tank cannot be removed from service without
disrupting operations at the plant site, the owner or operator is
allowed two 30-day extensions. In cases when an owner or operator
elects to use a 30-day extension, the owner or operator shall prepare
and maintain documentation describing the defect, explaining why
alternative storage capacity is not available, and specify a schedule
of actions that will ensure that the control equipment will be repaired
or the tank emptied as soon as possible.
(ii) When a defect is detected during an inspection of a tank that
has been emptied and degassed, the owner or operator shall repair the
defect before refilling the tank.
(c) Owners and operators that use a closed vent system in
accordance with the provisions of Sec. 63.693 of this subpart shall
meet the following inspection and monitoring requirements:
(1) Each closed-vent system that is used to comply with
Sec. 63.693(c)(1)(i) of this subpart shall be inspected and monitored
in accordance with the following requirements:
(i) At initial startup, the owner or operator shall monitor the
closed-vent system components and connections using the procedures
specified in Sec. 63.693(k) of this subpart to demonstrate that the
closed-vent system operates with no organic detectable emissions.
(ii) After initial startup, the owner or operator shall inspect and
monitor the closed-vent system as follows:
(A) Closed-vent system joints, seams, or other connections that are
permanently or semi-permanently sealed (e.g., a welded joint between
two sections of hard piping or a bolted and gasketed ducting flange)
shall be visually inspected at least once per year to check for defects
that could result in air emissions. The owner or operator shall monitor
a component or connection using the procedures specified in
Sec. 63.693(k) of this subpart to demonstrate that it operates with no
detectable organic emissions following any time the component is
repaired or replaced (e.g., a section of damaged hard piping is
replaced with new hard piping) or the connection is unsealed (e.g., a
flange is unbolted).
(B) Closed-vent system components or connections other than those
specified in paragraph (c)(1)(ii)(A) of this section, shall be
monitored at least once per year using the procedures specified in
Sec. 63.693(k) of this subpart to demonstrate that components or
connections operate with no detectable organic emissions.
(iii) In the event that a defect or leak is detected, the owner or
operator shall repair the defect or leak in accordance with the
requirements of paragraph (3) of this section.
(iv) The owner or operator shall maintain a record of the
inspection and monitoring in accordance with the requirements specified
in Sec. 63.696 of this subpart.
(2) Each closed-vent system that is used to comply with
Sec. 63.693(c)(1)(ii) of this subpart shall be inspected and monitored
in accordance with the following requirements:
(i) The closed-vent system shall be visually inspected by the owner
or operator to check for defects that could result in air emissions.
Defects include, but are not limited to, visible cracks, holes, or gaps
in ductwok or piping; loose connections; or broken or missing caps or
other closure devices.
(ii) The owner or operator shall perform the inspections following
installation of the closed-vent system and, thereafter, at least once
every year.
(iii) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (3) of this section.
(iv) The owner or operator shall maintain a record of the
inspection in accordance with the requirements specified in Sec. 63.696
of this subpart.
(3) The owner or operator shall repair all detected defects as
follows:
(i) The owner or operator shall make first efforts at repair of the
defect no later than 5 calendar days after detection and repair shall
be completed as soon as possible but no later than 45 calendar days
after detection.
(ii) The owner or operator shall maintain a record of the defect
repair in accordance with the requirements specified in Sec. 63.696 of
this subpart.
(d) Owners and operators that use a transfer system equipped with a
cover in accordance with the provisions of Sec. 63.689(c)(1) of this
subpart shall meet the following inspection requirements:
(1) The cover and its closure devices shall be visually inspected
by the owner or operator to check for defects that could result in air
emissions. Defects include, but are not limited to, visible cracks,
holes, or gaps in the cover sections or between the cover and its
mounting; broken, cracked, or otherwise damaged seals or gaskets on
closure devices; and broken or missing hatches, access covers, caps, or
other closure devices.
(2) The owner or operator shall perform the inspections following
installation of the cover and, thereafter, at least once every year.
(3) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (5) of this section.
(4) The owner or operator shall maintain a record of the inspection
in accordance with the requirements specified in Sec. 63.696 of this
subpart.
(5) The owner or operator shall repair all detected defects as
follows:
(i) The owner or operator shall make first efforts at repair of the
defect no later than 5 calendar days after detection and repair shall
be completed as soon as possible but no later than 45 calendar days
after detection except as provided in paragraph (c)(5)(ii) of this
section.
(ii) The owner or operator shall maintain a record of the defect
repair in accordance with the requirements specified in Sec. 63.696 of
this subpart.
Sec. 63.696 Recordkeeping requirements.
(a) The owner or operator subject to this subpart shall comply with
the recordkeeping requirements in Sec. 63.10 under 40 CFR 63 subpart
A--General Provisions that are applicable to this subpart as specified
in Table 2 of this subpart.
(b) The owner or operator of a control device subject to this
subpart shall maintain the records in accordance with the requirements
of 40 CFR 63.10 of this part.
(c) [Reserved]
(d) Each owner or operator using an internal floating roof to
comply with the tank control requirements specified in
[[Page 34179]]
Sec. 63.685(e) of this subpart or using an external floating roof to
comply with the tank control requirements specified in Sec. 63.685(f)
of this subpart shall prepare and maintain the following records:
(1) Documentation describing the floating roof design and the
dimensions of the tank.
(2) A record for each inspection required by Sec. 63.695(b) of this
subpart, as applicable to the tank, that includes the following
information: a tank identification number (or other unique
identification description as selected by the owner or operator) and
the date of inspection.
(3) The owner or operator shall record for each defect detected
during inspections required by Sec. 63.695(b) of this subpart the
following information: the location of the defect, a description of the
defect, the date of detection, and corrective action taken to repair
the defect. In the event that repair of the defect is delayed in
accordance with the provisions of Sec. 63.695(b)(4) of this section,
the owner or operator shall also record the reason for the delay and
the date that completion of repair of the defect is expected.
(4) Owners and operators that use a tank equipped with an external
floating roof in accordance with the provisions of Sec. 63.685(f) of
this subpart shall prepare and maintain records for each seal gap
inspection required by Sec. 63.695(b) describing the results of the
seal gap measurements. The records shall include the date of that the
measurements are performed, the raw data obtained for the measurements,
and the calculations of the total gap surface area. In the event that
the seal gap measurements do not conform to the specifications in
Sec. 63.695(b) of this subpart, the records shall include a description
of the repairs that were made, the date the repairs were made, and the
date the separator was emptied, if necessary.
(e) Each owner or operator using a fixed roof to comply with the
tank control requirements specified in Sec. 63.685(g) of this subpart
shall prepare and maintain the following records:
(1) A record for each inspection required by Sec. 63.695(b) of this
subpart, as applicable to the tank, that includes the following
information: a tank identification number (or other unique
identification description as selected by the owner or operator) and
the date of inspection.
(2) The owner or operator shall record for each defect detected
during inspections required by Sec. 63.695(b) of this subpart the
following information: the location of the defect, a description of the
defect, the date of detection, and corrective action taken to repair
the defect. In the event that repair of the defect is delayed in
accordance with the provisions of Sec. 63.695(b)(4) of this section,
the owner or operator shall also record the reason for the delay and
the date that completion of repair of the defect is expected.
(f) Each owner or operator using an enclosure to comply with the
tank control requirements specified in Sec. 63.685(i) of this subpart
shall prepare and maintain records for the most recent set of
calculations and measurements performed by the owner or operator to
verify that the enclosure meets the criteria of a permanent total
enclosure as specified in ``Procedure T--Criteria for and Verification
of a Permanent or Temporary Total Enclosure'' under 40 CFR 52.741,
Appendix B.
(g) An owner or operator shall record, on a semiannual basis, the
information specified in paragraphs (g)(1) and (g)(2) of this section
for those planned routine maintenance operations that would require the
control device not to meet the requirements of Sec. 63.693(d) through
(h) of this subpart, as applicable.
(1) A description of the planned routine maintenance that is
anticipated to be performed for the control device during the next 6
months. This description shall include the type of maintenance
necessary, planned frequency of maintenance, and lengths of maintenance
periods.
(2) A description of the planned routine maintenance that was
performed for the control device during the previous 6 months. This
description shall include the type of maintenance performed and the
total number of hours during these 6 months that the control device did
not meet the requirement of Sec. 63.693 (d) through (h) of this
subpart, as applicable, due to planned routine maintenance.
(h) An owner or operator shall record the information specified in
paragraphs (h)(1) through (h)(3) of this section for those unexpected
control device system malfunctions that would require the control
device not to meet the requirements of Sec. 63.693 (d) through (h) of
this subpart, as applicable.
(1) The occurrence and duration of each malfunction of the control
device system.
(2) The duration of each period during a malfunction when gases,
vapors, or fumes are vented from the waste management unit through the
closed-vent system to the control device while the control device is
not properly functioning.
(3) Actions taken during periods of malfunction to restore a
malfunctioning control device to its normal or usual manner of
operation.
Sec. 63.697 Reporting requirements.
(a) The owner or operator subject to this subpart shall comply with
the notification requirements in Sec. 63.9 and the reporting
requirements in Sec. 63.10 under 40 CFR 63 subpart A--General
Provisions that are applicable to this subpart as specified in Table 2
of this subpart.
(b) The owner or operator of a control device used to meet the
requirements of Sec. 63.693 of this subpart shall submit the following
reports to the Administrator:
(1) A Notification of Performance Tests specified in Sec. 63.7 and
Sec. 63.9(g) of this part,
(2) Performance test reports specified in Sec. 63.10(d)(2) of this
part
(3) Startup, shutdown, and malfunction reports specified in
Sec. 63.10(d)(5) of this part,
(i) If actions taken by an owner or operator during a startup,
shutdown, or malfunction of an affected source (including actions taken
to correct a malfunction) are not completely consistent with the
procedures specified in the source's startup, shutdown, and malfunction
plan specified in Sec. 63.6(e)(3) of this part, the owner or operator
shall state such information in the report. The startup, shutdown, or
malfunction report shall consist of a letter, containing the name,
title, and signature of the responsible official who is certifying its
accuracy, that shall be submitted to the Administrator, and
(ii) Separate startup, shutdown, or malfunction reports are not
required if the information is included in the report specified in
paragraph (b)(6) of this section.
(4) A summary report specified in Sec. 63.10(e)(3) of this part
shall be submitted on a semi-annual basis (i.e., once every 6-month
period).
(c) Each owner or operator using an internal floating roof or
external floating roof to comply with the Tank Level 2 control
requirements specified in Sec. 63.685(d) of this subpart shall notify
the Administrator in advance of each inspection required under
Sec. 63.695(b) of this subpart to provide the Administrator with the
opportunity to have an observer present during the inspection. The
owner or operator shall notify the Administrator of the date and
location of the inspection as follows:
(1) Prior to each inspection to measure external floating roof seal
gaps as required under Sec. 63.695(b) of this subpart, written
notification shall be prepared and sent by the owner or operator so
that it is received by the Administrator at least 30 calendar days
[[Page 34180]]
before the date the measurements are scheduled to be performed.
(2) Prior to each visual inspection of an internal floating roof or
external floating roof in a tank that has been emptied and degassed,
written notification shall be prepared and sent by the owner or
operator so that it is received by the Administrator at least 30
calendar days before refilling the tank except when an inspection is
not planned as provided for in paragraph (c)(3) of this section.
(3) When a visual inspection is not planned and the owner or
operator could not have known about the inspection 30 calendar days
before refilling the tank, the owner or operator shall notify the
Administrator as soon as possible, but no later than 7 calendar days
before refilling of the tank. This notification may be made by
telephone and immediately followed by a written explanation for why the
inspection is unplanned. Alternatively, written notification, including
the explanation for the unplanned inspection, may be sent so that it is
received by the Administrator at least 7 calendar days before refilling
the tank.
Sec. 63.698 Delegation of Authority.
(a) In delegating implementation and enforcement authority to a
State under section 112(d) of the Act, the authority listed in
paragraph (b) of this section shall be retained by the Administrator
and not transferred to a State.
(b) Authority will not be delegated to States for Sec. 63.694 of
this subpart.
Table 1 to Subpart DD.--List of Hazardous Air Pollutants (HAP) for
Subpart DD
------------------------------------------------------------------------
CAS No.a Chemical name fm 305
------------------------------------------------------------------------
75070................ Acetaldehyde....................... 1.000
75058................ Acetonitrile....................... 0.989
98862................ Acetophenone....................... 0.314
107028............... Acrolein........................... 1.000
107131............... Acrylonitrile...................... 0.999
107051............... Allyl chloride..................... 1.000
71432................ Benzene (includes benzene in 1.000
gasoline).
98077................ Benzotrichloride (isomers and 0.958
mixture).
100447............... Benzyl chloride.................... 1.000
92524................ Biphenyl........................... 0.864
542881............... Bis(chloromethyl)etherb............ 0.999
75252................ Bromoform.......................... 0.998
106990............... 1,3-Butadiene...................... 1.000
75150................ Carbon disulfide................... 1.000
56235................ Carbon tetrachloride............... 1.000
43581................ Carbonyl sulfide................... 1.000
133904............... Chloramben......................... 0.633
108907............... Chlorobenzene...................... 1.000
67663................ Chloroform......................... 1.000
107302............... Chloromethyl methyl ether b........ 1.000
126998............... Chloroprene........................ 1.000
98828................ Cumene............................. 1.000
94757................ 2,4-D, salts and esters............ 0.167
334883............... Diazomethane c..................... 0.999
132649............... Dibenzofurans...................... 0.967
96128................ 1,2-Dibromo-3-chloropropane........ 1.000
106467............... 1,4-Dichlorobenzene(p)............. 1.000
107062............... Dichloroethane (Ethylene 1.000
dichloride).
111444............... Dichloroethyl ether (Bis(2- 0.757
chloroethyl ether).
542756............... 1,3-Dichloropropene................ 1.000
79447................ Dimethyl carbamoyl chloridec....... 0.150
57147................ 1,1-Dimethyl hydrazine............. 0.383
64675................ Diethyl sulfate.................... 0.0025
77781................ Dimethyl sulfate................... 0.086
121697............... N,N-Dimethylaniline................ 0.0008
51285................ 2,4-Dinitrophenol.................. 0.0077
121142............... 2,4-Dinitrotoluene................. 0.0848
123911............... 1,4-Dioxane (1,4-Diethyleneoxide).. 0.869
106898............... Epichlorohydrin (1-Chloro-2,3- 0.939
epoxypropane).
106887............... 1,2-Epoxybutane.................... 1.000
140885............... Ethyl acrylate..................... 1.000
100414............... Ethyl benzene...................... 1.000
75003................ Ethyl chloride (Chloroethane)...... 1.000
106934............... Ethylene dibromide (Dibromoethane). 0.999
107062............... Ethylene dichloride (1,2- 1.000
Dichloroethane).
151564............... Ethylene imine (Aziridine)......... 0.867
75218................ Ethylene oxide..................... 1.000
75343................ Ethylidene dichloride (1,1- 1.000
Dichloroethane).
Glycol ethers d.................... (e)
118741............... Hexachlorobenzene.................. 0.97
87683................ Hexachlorobutadiene................ 0.88
67721................ Hexachloroethane................... 0.499
110543............... Hexane............................. 1.000
78591................ Isophorone......................... 0.506
58899................ Lindane (all isomers).............. 1.000
67561................ Methanol........................... 0.855
[[Page 34181]]
74839................ Methyl bromide (Bromomethane)...... 1.000
74873................ Methyl chloride (Choromethane)..... 1.000
71556................ Methyl chloroform (1,1,1- 1.000
Trichloroethane).
78933................ Methyl ethyl ketone (2-Butanone)... 0.990
74884................ Methyl iodide (Iodomethane)........ 1.000
108101............... Methyl isobutyl ketone (Hexone).... 0.979
624839............... Methyl isocyanate.................. 1.000
80626................ Methyl methacrylate................ 0.999
1634044.............. Methyl tert butyl ether............ 1.000
75092................ Methylene chloride 1.000
(Dichloromethane).
91203................ Naphthalene........................ 0.994
98953................ Nitrobenzene....................... 0.394
79469................ 2-Nitropropane..................... 0.989
82688................ Pentachloronitrobenzene 0.839
(Quintobenzene).
87865................ Pentachlorophenol.................. 0.0898
75445................ Phosgenec.......................... 1.000
123386............... Propionaldehyde.................... 0.999
78875................ Propylene dichloride (1,2- 1.000
Dichloropropane).
75569................ Propylene oxide.................... 1.000
75558................ 1,2-Propylenimine (2-Methyl 0.945
aziridine).
100425............... Styrene............................ 1.000
96093................ Styrene oxide...................... 0.830
79345................ 1,1,2,2-Tetrachloroethane.......... 0.999
127184............... Tetrachloroethylene 1.000
(Perchloroethylene).
108883............... Toluene............................ 1.000
95534................ o-Toluidine........................ 0.152
120821............... 1,2,4-Trichlorobenzene............. 1.000
71556................ 1,1,1-Trichloroethane (Methyl
FR Doc. 96-16576 National Emission Standards for Hazardous Air Pollutants: Off- Site Waste and Recovery Operations
1.000
chlorform).
79005................ 1,1,2-Trichloroethane (Vinyl 1.000
trichloride).
79016................ Trichloroethylene.................. 1.000
95954................ 2,4,5-Trichlorophenol.............. 0.108
88062................ 2,4,6-Trichlorophenol.............. 0.132
121448............... Triethylamine...................... 1.000
540841............... 2,2,4-Trimethylpentane............. 1.000
108054............... Vinyl acetate...................... 1.000
593602............... Vinyl bromide...................... 1.000
75014................ Vinyl chloride..................... 1.000
75354................ Vinylidene chloride (1,1- 1.000
Dichloroethylene).
1330207.............. Xylenes (isomers and mixture)...... 1.000
95476................ o-Xylenes.......................... 1.000
108383............... m-Xylenes.......................... 1.000
106423............... p-Xylenes.......................... 1.000
------------------------------------------------------------------------
Notes:
fm 305=Method 305 fraction measure factor
a. CAS numbers refer to the Chemical Abstracts Services registry number
assigned to specific compounds, isomers, or mixtures of compounds.
b. Denotes a HAP that hydrolyzes quickly in water, but the hydrolysis
products are also HAP chemicals.
c. Denotes a HAP that may react violently with water, exercise caustic
is an expected analyte.
d. Denotes a HAP that hydrolyzes slowly in water.
e. Several glycol ethers meet the criteria used to select HAP for the
purposes of this subpart. The fm 305 factors for some of the more
common glycol ethers are listed below:
Ethylene glycol dimethyl ether (fm 305=0.861)
Ethylene glycol monoethyl ether acetate (fm 305=0.0887)
Ethylene glycol monomethyl ether acetate (fm 305=0.0926)
Diethylene glycol diethyl ether (fm 305=0.216)
Table 2 to Subpart DD.--Applicability of Paragraphs in 40 CFR 63 Subpart
A, General Provisions, to Subpart DD
------------------------------------------------------------------------
Applies to
Subpart A reference subpart DD Comment
------------------------------------------------------------------------
63.1(a)(1).................... Yes.
63.1(a)(2).................... Yes.
63.1(a)(3).................... Yes.
63.1(a)(4).................... No............... Subpart DD (this
table) specifies
applicability of
each paragraph in
subpart A to subpart
DD.
63.1(a)(5)-63.1(a)(9)......... No.
63.1(a)(10)................... Yes.
63.1(a)(11)................... Yes.
63.1(a)(12)................... Yes.
63.1(a)(13)................... Yes.
[[Page 34182]]
63.1(a)(14)................... Yes.
63.1(b)(1).................... No............... Subpart DD specifies
its own
applicability.
63.1(b)(2).................... Yes.
63.1(b)(3).................... No.
63.1(c)(1).................... No............... Subpart DD explicitly
specifies
requirements that
apply.
63.1(c)(2).................... No............... Area sources are not
subject to subpart
DD.
63.1(c)(3).................... No.
63.1(c)(4).................... Yes.
63.1(c)(5).................... Yes.............. Except that sources
are not required to
submit notifications
overridden by this
table.
63.1(d)....................... No.
63.1(e)....................... No.
63.2.......................... Yes.............. Sec. 63.681 of
subpart DD specifies
that if the same
term is defined in
subparts A and DD,
it shall have the
meaning given in
subpart DD.
63.3.......................... Yes.
63.4(a)(1)-63.4(a)(3)......... Yes.
63.4(a)(4).................... No............... Reserved.
63.4(a)(5).................... Yes.
63.4(b)....................... Yes.
63.4(c)....................... Yes.
63.5(a)(1).................... Yes.............. Except replace term
``source'' and
``stationary
source'' in Sec.
63.5(a)(1) of
subpart A with
``affected source.''
63.5(a)(2).................... Yes.
63.5(b)(1).................... Yes.
63.5(b)(2).................... No............... Reserved.
63.5(b)(3).................... Yes.
63.5(b)(4).................... Yes.............. Except the cross-
reference to Sec.
63.9(b) is changed
to Sec. 63.9(b)(4)
and (5). Subpart DD
overrides Sec.
63.9(b)(2) and
(b)(3).
63.5(b)(5).................... Yes.
63.5(b)(6).................... Yes.
63.5(c)....................... No............... Reserved.
63.5(d)(1)(i)................. Yes.
63.5(d)(1)(ii)................ Yes.
63.5(d)(1)(iii)............... Yes.
63.5(d)(2).................... No.
63.5(d)(3).................... Yes.
63.5(d)(4).................... Yes.
63.5(e)....................... Yes.
63.5(f)(1).................... Yes.
63.5(f)(2).................... Yes.
63.6(a)....................... Yes.
63.6(b)(1).................... No............... Subpart DD specifies
compliance dates for
sources subject to
subpart DD.
63.6(b)(2).................... No.
63.6(b)(3).................... Yes.
63.6(b)(4).................... No............... May apply when
standards are
proposed under
section 112(f) of
the Clean Air Act.
63.6(b)(5).................... No............... Sec. 63.697 of
subpart DD includes
notification
requirements.
63.6(b)(6).................... No.
63.6(b)(7).................... No.
63.6(c)(1).................... No............... Sec. 63.680 of
subpart DD specifies
the compliance date.
63.6(c)(2)-63.6(c)(4)......... No.
63.6(c)(5).................... Yes.
63.6(d)....................... No.
63.6(e)....................... Yes.
63.6(f)(1).................... Yes.
63.6(f)(2)(i)................. Yes.
63.6(f)(2)(ii)................ Yes.............. Subpart DD specifies
the use of
monitoring data in
determining
compliance with
subpart DD.
63.6(f)(2)(iii) (A), (B), and Yes.
(C).
63.6(f)(2)(iii) (D)........... No.
63.6(f)(2)(iv)................ Yes.
63.6(f)(2)(v)................. Yes.
63.6(f)(3).................... Yes.
63.6(g)....................... Yes.
63.6(h)....................... No............... Subpart DD does not
require opacity and
visible emission
standards.
63.6(i)....................... Yes.............. Except for Sec.
63.6(i)(15), which
is reserved.
63.6(j)....................... Yes.
63.7(a)(1).................... No............... Subpart DD specifies
required testing and
compliance
demonstration
procedures.
63.7(a)(2).................... Yes.
63.7(a)(3).................... Yes.
63.7(b)....................... No.
63.7(c)....................... No.
[[Page 34183]]
63.7(d)....................... Yes.
63.7(e)(1).................... Yes.
63.7(e)(2).................... Yes.
63.7(e)(3).................... No............... Subpart DD specifies
test methods and
procedures.
63.7(e)(4).................... Yes.
63.7(f)....................... No............... Subpart DD specifies
applicable methods
and provides
alternatives.
63.7(g)....................... Yes.
63.7(h)(1).................... Yes.
63.7(h)(2).................... Yes.
63.7(h)(3).................... Yes.
63.7(h)(4).................... No.
63.7(h)(5).................... Yes.
63.8(a)....................... No.
63.8(b)(1).................... Yes.
63.8(b)(2).................... No............... Subpart DD specifies
locations to conduct
monitoring.
63.8(b)(3).................... Yes.
63.8(c)(1)(i)................. Yes.
63.8(c)(1)(ii)................ Yes.
63.8(c)(1)(iii)............... Yes.
63.8(c)(2).................... Yes.
63.8(c)(3).................... Yes.
63.8(c)(4).................... No............... Subpart DD specifies
monitoring frequency
63.8(c)(5)-63.8(c)(8)......... No.
63.8(d)....................... No.
63.8(e)....................... No.
63.8(f)(1).................... Yes.
63.8(f)(2).................... Yes.
63.8(f)(3).................... Yes.
63.8(f)(4)(i)................. Yes.
63.8(f)(4)(ii)................ Yes.
63.8(f)(4)(iii)............... No.
63.8(f)(5)(i)................. Yes.
63.8(f)(5)(ii)................ No.
63.8(f)(5)(iii)............... Yes.
63.8(f)(6).................... Yes.
63.8(g)....................... Yes.
63.9(a)....................... Yes.
63.9(b)(1)(i)................. Yes.
63.9(b)(1)(ii)................ No.
63.9(b)(2).................... Yes.
63.9(b)(3).................... No.
63.9(b)(4).................... Yes.
63.9(b)(5).................... Yes.
63.9(c)....................... Yes.
63.9(d)....................... Yes.
63.9(e)....................... No.
63.9(f)....................... No.
63.9(g)....................... No.
63.9(h)....................... Yes.
63.9(i)....................... Yes.
63.9(j)....................... No.
63.10(a)...................... Yes.
63.10(b)(1)................... Yes.
63.10(b)(2)(i)................ Yes.
63.10(b)(2)(ii)............... Yes.
63.10(b)(2)(iii).............. No.
63.10(b)(2)(iv)............... Yes.
63.10(b)(2)(v)................ Yes.
63.10(b)(2) (vi)-(ix)......... No.
63.10(b)(2)(x)................ Yes.
63.10(b)(2) (xii)-(xiv)....... No.
63.10(b)(3)................... No.
63.10(c)...................... No.
63.10(d)(1)................... No.
63.10(d)(2)................... Yes.
63.10(d)(3)................... No.
63.10(d)(4)................... Yes.
63.10(d)(5)(i)................ Yes.
63.10(d)(5)(ii)............... Yes.
63.10(e)...................... No.
[[Page 34184]]
63.10(f)...................... Yes.
63.11-63.15................... Yes.
------------------------------------------------------------------------
Note: Wherever subpart A specifies ``postmark'' dates, submittals may be
sent by methods other than the U.S. Mail (e.g., by fax or courier).
Submittals shall be sent by the specified dates, but a postmark is not
required.
Table 3 to Subpart DD.--Tank Control Levels for Tanks at Existing
Affected Sources as Required by 40 CFR 63.685(b)(1)
------------------------------------------------------------------------
Maximum HAP vapor
Tank design capacity (cubic pressure of off-site Tank control
meters) material managed in level
tank (kilopascals)
------------------------------------------------------------------------
Design capacity less than 75 m3 Maximum HAP vapor Level 1.
pressure less than
76.6 kPa.
Design capacity equal to or Maximum HAP vapor Level 1.
greater than 75 m3 and less pressure less than
than 151 m3. 27.6 kPa.
Maximum HAP vapor Level 2.
pressure equal to or
greater than 27.6 kPa.
Design capacity equal to or Maximum HAP vapor Level 1.
greater than 151 m3. pressures less than
5.2 kPa.
Maximum HAP vapor Level 2.
pressure equal to or
greater than 5.2 kPa.
------------------------------------------------------------------------
Table 4 to Subpart DD.--Tank Control Levels for Tanks at New Affected
Sources as Required by 40 CFR 63.685(b)(2)
------------------------------------------------------------------------
Maximum HAP vapor
Tank design capacity (cubic pressure of off-site Tank control
meters) material managed in level
tank (kilopascals)
------------------------------------------------------------------------
Design capacity less than 38 m3 Maximum HAP vapor Level 1.
pressure less than
76.6 kPa.
Design capacity equal to or Maximum HAP vapor Level 1.
greater than 38 m3 and less pressure less than
than 151 m3. 13.1 kPa.
Maximum HAP vapor Level 2.
pressure equal to or
greater than 13.1 kPa.
Design capacity equal to or Maximum HAP vapor Level 1.
greater than 151 m3. pressure less than
0.7 kPa.
Maximum HAP vapor Level 2.
pressure equal to or
greater than 0.7 kPa.
------------------------------------------------------------------------
5. Part 63 is amended by adding subpart OO consisting of
Secs. 63.900 through 63.907 to read as follows:
Subpart OO--National Emission Standards for Tanks--Level 1
Sec.
63.900 Applicability.
63.901 Definitions.
63.902 Standards--Tank fixed roof.
63.903 [Reserved]
63.904 [Reserved]
63.905 Test methods and procedures.
63.906 Inspection and monitoring requirements.
63.907 Recordkeeping requirements.
Subpart OO--National Emission Standards for Tanks--Level 1
Sec. 63.900 Applicability.
The provisions of this subpart apply to the control of air
emissions from tanks for which another subpart of 40 CFR parts 60, 61,
or 63 references the use of this subpart for such air emission control.
These air emission standards for tanks are placed here for
administrative convenience and only apply to those owners and operators
of facilities subject to the other subparts that reference this
subpart. The provisions of 40 CFR part 63, subpart A--General
Provisions do not apply to this subpart except as noted in the subpart
that references this subpart.
Sec. 63.901 Definitions.
All terms used in this subpart shall have the meaning given to them
in the Act and in this section. If a term is defined in both this
section and in another subpart that references the use of this subpart,
then the definition in this subpart shall take precedence when
implementing this subpart.
Closure device means a cap, hatch, lid, plug, seal, valve, or other
type of fitting that, when the device is secured in the closed
position, prevents or reduces air emissions to the atmosphere by
blocking an opening in a fixed roof. Closure devices include devices
that are detachable from the cover (e.g., a sampling port cap),
manually operated (e.g., a hinged access lid or hatch), or
automatically operated (e.g., a spring-loaded pressure relief valve).
Fixed roof means a cover that is mounted on a tank in a stationary
position and does not move with fluctuations in the level of the liquid
managed in the tank.
No detectable organic emissions means no escape of organics to the
atmosphere as determined using the procedure specified in
Sec. 63.905(a) of this subpart.
Regulated-material means the material (e.g. waste, wastewater, off-
site material) required to be managed in tanks using air emission
controls in accordance with the standards specified in this subpart.
Safety device means a closure device such as a pressure relief
valve, frangible disc, fusible plug, or any other type of device which
functions exclusively to prevent physical damage or permanent
deformation to the tank air emission control equipment by venting gases
or vapors directly to the atmosphere during unsafe conditions resulting
from an unplanned, accidental, or emergency event. For the purpose of
this subpart, a safety device is not used for routine venting of gases
or vapors from the vapor headspace underneath the tank cover. A safety
device is designed to remain in a closed position during normal
operations and open only when
[[Page 34185]]
the internal pressure, or another relevant parameter, exceeds the
device threshold setting applicable to the air emission control
equipment as determined by the owner or operator based on manufacturer
recommendations, applicable regulations, fire protection and prevention
codes, standard engineering codes and practices, or other requirements
for the safe handling of flammable, ignitable, explosive, reactive, or
hazardous materials.
Tank means a stationary unit that is constructed primarily of
nonearthen materials (such as wood, concrete, steel, fiberglass, or
plastic) which provide structural support and is designed to hold an
accumulation of liquids or other materials.
Sec. 63.902 Standards--Tank fixed roof.
(a) This section applies to owners and operators subject to this
subpart and controlling air emissions from a tank using a fixed roof.
(b) The tank shall be equipped with a fixed roof designed to meet
the following specifications:
(1) The fixed roof and its closure devices shall be designed to
form a continuous barrier over the entire surface area of the liquid in
the tank. The fixed roof may be a separate cover installed on the tank
(e.g., a removable cover mounted on an open-top tank) or may be an
integral part of the tank structural design (e.g., a horizontal
cylindrical tank equipped with a hatch).
(2) The fixed roof shall be installed in a manner such that there
are no visible cracks, holes, gaps, or other open spaces between roof
section joints or between the interface of the roof edge and the tank
wall.
(3) Each opening in the fixed roof shall be either:
(i) equipped with a closure device designed to operate such that
when the closure device is secured in the closed position there are no
visible cracks, holes, gaps, or other open spaces in the closure device
or between the perimeter of the opening and the closure device; or
(ii) connected by a closed-vent system that is vented to a control
device. The control device shall remove or destroy organics in the vent
stream, and shall be operating whenever regulated material is managed
in the tank.
(4) The fixed roof and its closure devices shall be made of
suitable materials that will minimize exposure of the regulated-
material to the atmosphere, to the extent practical, and will maintain
the integrity of the equipment throughout its intended service life.
Factors to be considered when selecting the materials for and designing
the fixed roof and closure devices shall include: organic vapor
permeability, the effects of any contact with the liquid or its vapors
managed in the tank; the effects of outdoor exposure to wind, moisture,
and sunlight; and the operating practices used for the tank on which
the fixed roof is installed.
(c) Whenever a regulated-material is in the tank, the fixed roof
shall be installed with each closure device secured in the closed
position except as follows:
(1) Opening of closure devices or removal of the fixed roof is
allowed at the following times:
(i) To provide access to the tank for performing routine
inspection, maintenance, or other activities needed for normal
operations. Examples of such activities include those times when a
worker needs to open a port to sample the liquid in the tank, or when a
worker needs to open a hatch to maintain or repair equipment. Following
completion of the activity, the owner or operator shall promptly secure
the closure device in the closed position or reinstall the cover, as
applicable, to the tank.
(ii) To remove accumulated sludge or other residues from the bottom
of tank.
(2) Opening of a spring-loaded pressure-vacuum relief valve,
conservation vent, or similar type of pressure relief device which
vents to the atmosphere is allowed during normal operations for the
purpose of maintaining the tank internal pressure in accordance with
the tank design specifications. The device shall be designed to operate
with no detectable organic emissions when the device is secured in the
closed position. The settings at which the device opens shall be
established such that the device remains in the closed position
whenever the tank internal pressure is within the internal pressure
operating range determined by the owner or operator based on the tank
manufacturer recommendations, applicable regulations, fire protection
and prevention codes, standard engineering codes and practices, or
other requirements for the safe handling of flammable, combustible,
explosive, reactive, or hazardous materials. Examples of normal
operating conditions that may require these devices to open are during
those times when the container internal pressure exceeds the internal
pressure operating range for the tank as a result of loading operations
or diurnal ambient temperature fluctuations.
(3) Opening of a safety device, as defined in Sec. 63.901 of this
subpart, is allowed at any time conditions require it to do so to avoid
an unsafe condition.
(d) The owner or operator shall inspect the air emission control
equipment in accordance with the requirements specified in
Sec. 63.906(a) of this subpart.
Sec. 63.903 [Reserved]
Sec. 63.904 [Reserved]
Sec. 63.905 Test methods and procedures.
(a) Procedure for determining no detectable organic emissions for
the purpose of complying with this subpart.
(1) The test shall be conducted in accordance with the procedures
specified in Method 21 of 40 CFR part 60, appendix A. Each potential
leak interface (i.e., a location where organic vapor leakage could
occur) on the cover and associated closure devices shall be checked.
Potential leak interfaces that are associated with covers and closure
devices include, but are not limited to: the interface of the cover and
its foundation mounting; the periphery of any opening on the cover and
its associated closure device; and the sealing seat interface on a
spring-loaded pressure-relief valve.
(2) The test shall be performed when the tank contains a material
having an organic HAP concentration representative of the range of
concentrations for the regulated-materials expected to be managed in
the tank. During the test, the cover and closure devices shall be
secured in the closed position.
(3) The detection instrument shall meet the performance criteria of
Method 21 of 40 CFR part 60, appendix A, except the instrument response
factor criteria in section 3.1.2(a) of Method 21 shall be for the
average composition of the organic constituents in the regulated-
material placed in the tank, not for each individual organic
constituent.
(4) The detection instrument shall be calibrated before use on each
day of its use by the procedures specified in Method 21 of 40 CFR part
60, appendix A.
(5) Calibration gases shall be as follows:
(i) Zero air (less than 10 ppmv hydrocarbon in air); and
(ii) A mixture of methane in air at a concentration less than
10,000 ppmv.
(6) The background level shall be determined according to the
procedures in Method 21 of 40 CFR part 60 appendix A.
(7) Each potential leak interface shall be checked by traversing
the instrument probe around the potential leak interface as close to
the interface as
[[Page 34186]]
possible, as described in Method 21. In the case when the configuration
of the cover or closure device prevents a complete traverse of the
interface, all accessible portions of the interface shall be sampled.
In the case when the configuration of the closure device prevents any
sampling at the interface and the device is equipped with an enclosed
extension or horn (e.g., some pressure relief devices), the instrument
probe inlet shall be placed at approximately the center of the exhaust
area to the atmosphere.
(8) The arithmetic difference between the maximum organic
concentration indicated by the instrument and the background level
shall be compared with the value of 500 ppmv. If the difference is less
than 500 ppmv, then the potential leak interface is determined to
operate with no detectable organic emissions.
Sec. 63.906 Inspection and monitoring requirements.
(a) Owners and operators that use a tank equipped with a fixed roof
in accordance with the provisions of Sec. 63.902 of this subpart shall
meet the following requirements:
(1) The fixed roof and its closure devices shall be visually
inspected by the owner or operator to check for defects that could
result in air emissions. Defects include, but are not limited to,
visible cracks, holes, or gaps in the roof sections or between the roof
and the tank wall; broken, cracked, or otherwise damaged seals or
gaskets on closure devices; and broken or missing hatches, access
covers, caps, or other closure devices.
(2) The owner or operator shall perform the inspections following
installation of the fixed roof and, thereafter, at least once every
year.
(3) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (b) of this section.
(4) The owner or operator shall maintain a record of the inspection
in accordance with the requirements specified in Sec. 63.907 (a) of
this subpart.
(b) The owner or operator shall repair all detected defects as
follows:
(1) The owner or operator shall make first efforts at repair of the
defect no later than 5 calendar days after detection and repair shall
be completed as soon as possible but no later than 45 calendar days
after detection except as provided in paragraph (b)(2) of this section.
(2) Repair of a defect may be delayed beyond 45 calendar days if
the owner or operator determines that repair of the defect requires
emptying or temporary removal from service of the tank and no
alternative tank capacity is available at the site to accept the
regulated-material normally managed in the tank. In this case, the
owner or operator shall repair the defect the next time the process or
unit that is generating the regulated-material managed in the tank
stops operation. Repair of the defect shall be completed before the
process or unit resumes operation.
(c) The owner or operator shall maintain a record of the defect
repair in accordance with the requirements specified in Sec. 63.907(b)
of this subpart.
Sec. 63.907 Recordkeeping requirements.
(a) Each owner or operator shall prepare and maintain a record for
each tank that includes the following information:
(1) A tank identification number (or other unique identification
description as selected by the owner or operator).
(2) A description of the tank dimensions and the tank design
capacity.
(3) The date that each inspection required by Sec. 63.906 of this
subpart is performed.
(b) The owner or operator shall record the following information
for each defect detected during inspections required by Sec. 63.906 of
this subpart: the location of the defect, a description of the defect,
the date of detection, and corrective action taken to repair the
defect. In the event that repair of the defect is delayed in accordance
with the provisions of Sec. 63.907(b)(2) of this section, the owner or
operator shall also record the reason for the delay and the date that
completion of repair of the defect is expected.
6. Part 63 is amended by adding subpart PP consisting of
Secs. 63.920 through 63.928 to read as follows:
Subpart PP--National Emission Standards for Containers
Sec.
63.920 Applicability.
63.921 Definitions.
63.922 Standards--Container Level 1 controls.
63.923 Standards--Container Level 2 controls.
63.924 Standards--Container Level 3 controls.
63.925 Test methods and procedures.
63.926 Inspection and monitoring requirements.
63.927 Recordkeeping requirements.
63.928 Reporting requirements.
Subpart PP--National Emission Standards for Containers
Sec. 63.920 Applicability.
The provisions of this subpart apply to the control of air
emissions from containers for which another subpart of 40 CFR parts 60,
61, or 63 references the use of this subpart for such air emission
control. These air emission standards for containers are placed here
for administrative convenience and only apply to those owners and
operators of facilities subject to the other subparts that reference
this subpart. The provisions of 40 CFR Part 63, subpart A--General
Provisions do not apply to this subpart except as noted in the subpart
that references this subpart.
Sec. 63.921 Definitions.
All terms used in this subpart shall have the meaning given to them
in the Act and in this section. If a term is defined in both this
section and in another subpart that references the use of this subpart,
then the definition in this subpart shall take precedence when
implementing this subpart.
Container means a portable unit in which a material can be stored,
transported, treated, disposed of, or otherwise handled. Examples of
containers include but are not limited to drums, dumpsters, roll-off
boxes, bulk cargo containers commonly known as ``portable tanks'' or
``totes,'' cargo tank trucks, and tank railcars.
Closure device means a cover, cap, hatch, lid, plug, seal, valve,
or other type of fitting that prevents or reduces air emissions to the
atmosphere by blocking an opening in a container or its cover when the
device is secured in the closed position. Closure devices include
devices that are detachable from the container (e.g., a drum head, a
threaded plug), manually operated (e.g., a hinged dumpster lid, a truck
tank hatch), or automatically operated (e.g., a spring loaded pressure
relief valve).
Empty container means a container for which either of the following
conditions exists, as applicable: the regulated-material is a hazardous
waste and the container meets the conditions for an empty container
specified in 40 CFR 261.7(b); or all regulated-material has been
removed from the container except for any regulated-material that
remains on the interior surfaces of the container as clingage or in
pools on the container bottom due to irregularities in the container.
No detectable organic emissions means no escape of organics to the
atmosphere as determined using the procedure specified in
Sec. 63.925(a) of this subpart.
[[Page 34187]]
Regulated-material means the material (e.g. waste, wastewater, off-
site material) required to be managed in containers using air emission
controls in accordance with the standards specified in this subpart.
Safety device means a closure device such as a pressure relief
valve, frangible disc, fusible plug, or any other type of device which
functions exclusively to prevent physical damage or permanent
deformation to a container or its air emission control equipment by
venting gases or vapors directly to the atmosphere during unsafe
conditions resulting from an unplanned, accidental, or emergency event.
For the purpose of this subpart, a safety device is not used for
routine venting of gases or vapors from the container such as during
filling of the container or to adjust the internal pressure of the
container in response to normal daily diurnal ambient temperature
fluctuations. A safety device is designed to remain in a closed
position during normal operations and open only when the internal
pressure, or another relevant parameter, exceeds the device threshold
setting applicable to the container and its air emission control
equipment as determined by the owner or operator based on manufacturer
recommendations, applicable regulations, fire protection and prevention
codes, standard engineering codes and practices, or other requirements
for the safe handling of flammable, ignitable, explosive, reactive, or
hazardous materials.
Sec. 63.922 Standards--Container Level 1 controls.
(a) This section applies to owners and operators subject to this
subpart and required to control air emissions from containers using
Container Level 1 controls.
(b) A container using Container Level 1 controls is one of the
following:
(1) A container that meets the applicable U.S. Department of
Transportation (DOT) regulations on packaging hazardous materials for
transportation as specified in paragraph (f) of this section.
(2) A container equipped with a cover and closure devices that form
a continuous barrier over the container openings such that when the
cover and closure devices are secured in the closed position there are
no visible holes, gaps, or other open spaces into the interior of the
container. The cover may be a separate cover installed on the container
(e.g., a lid on a drum, a suitably secured tarp on a roll-off box) or
may be an integral part of the container structural design (e.g., a
bulk cargo container equipped with a screw-type cap).
(3) An open-top container in which an organic vapor-suppressing
barrier is placed on or over the regulated-material in the container
such that no regulated-material is exposed to the atmosphere. One
example of such a barrier is application of a suitable organic-vapor
suppressing foam.
(c) A container used to meet the requirements of either paragraph
(b)(2) or (b)(3) of this section shall be equipped with covers and
closure devices, as applicable to the container, that are composed of
suitable materials to minimize exposure of the regulated-material to
the atmosphere and to maintain the equipment integrity for as long as
it is in service. Factors to be considered when selecting the materials
for and designing the cover and closure devices shall include: organic
vapor permeability, the effects of contact with the material or its
vapor managed in the container; the effects of outdoor exposure to
wind, moisture, and sunlight; and the operating practices used for
container on which the cover is installed.
(d) Whenever a regulated-material is in a container using Container
Level 1 controls, the owner or operator shall install all covers and
closure devices for the container, and secure and maintain each closure
device in the closed position except as follows:
(1) Opening of a closure device or cover is allowed for the purpose
of adding material to the container as follows:
(i) In the case when the container is filled to the intended final
level in one continuous operation, the owner or operator shall promptly
secure the closure devices in the closed position and install the
covers, as applicable to the container, upon conclusion of the filling
operation.
(ii) In the case when discrete quantities or batches of material
intermittently are added to the container over a period of time, the
owner or operator shall promptly secure the closure devices in the
closed position and install covers, as applicable to the container,
upon either: the container being filled to the intended final level;
the completion of a batch loading after which no additional material
will be added to the container within 15 minutes; the person performing
the loading operation leaves the immediate vicinity of the container;
or the shutdown of the process generating the material being added to
the container, whichever condition occurs first.
(2) Opening of a closure device or cover is allowed for the purpose
of removing material from the container as follows:
(i) For the purpose of meeting the requirements of this section, an
empty container as defined in Sec. 63.921 of this subpart may be open
to the atmosphere at any time (e.g., covers and closure devices are not
required to be secured in the closed position on an empty container).
(ii) In the case when discrete quantities or batches of material
are removed from the container but the container does not meet the
conditions to be an empty container as defined in Sec. 63.921 of this
subpart, the owner or operator shall promptly secure the closure
devices in the closed position and install covers, as applicable to the
container, upon the completion of a batch removal after which no
additional material will be removed from the container within 15
minutes, or the person performing the unloading operation leaves the
immediate vicinity of the container, whichever condition occurs first.
(3) Opening of a closure device or cover is allowed when access
inside the container is needed to perform routine activities other than
transfer of regulated-material. Examples of such activities include
those times when a worker needs to open a port to measure the depth of
or sample the material in the container, or when a worker needs to open
a manhole hatch to access equipment inside the container. Following
completion of the activity, the owner or operator shall promptly secure
the closure device in the closed position or reinstall the cover, as
applicable to the container.
(4) Opening of a spring-loaded pressure-vacuum relief valve,
conservation vent, or similar type of pressure relief device which
vents to the atmosphere is allowed during normal operations for the
purpose of maintaining the container internal pressure in accordance
with the container design specifications. The device shall be designed
to operate with no detectable organic emissions when the device is
secured in the closed position. The settings at which the device opens
shall be established such that the device remains in the closed
position whenever the container internal pressure is within the
internal pressure operating range determined by the owner or operator
based on container manufacturer recommendations, applicable
regulations, fire protection and prevention codes, standard engineering
codes and practices, or other requirements for the safe handling of
flammable, ignitable, explosive,
[[Page 34188]]
reactive, or hazardous materials. Examples of normal operating
conditions that may require these devices to open are during those
times when the container internal pressure exceeds the internal
pressure operating range for the container as a result of loading
operations or diurnal ambient temperature fluctuations.
(5) Opening of a safety device, as defined in Sec. 63.921 of this
subpart, is allowed at any time conditions require it to do so to avoid
an unsafe condition.
(e) The owner or operator shall inspect containers using Container
Level 1 controls in accordance with the procedures specified in
Sec. 63.926(a) of this subpart.
(f) For the purpose of compliance with paragraph (b)(1) of this
section, containers shall be used that meet the applicable U.S. DOT
regulations on packaging hazardous materials for transportation as
follows:
(1) The container meets the applicable requirements specified in 49
CFR part 178--Specifications for Packagings or 49 CFR part 179--
Specifications for Tank Cars.
(2) Regulated-material is managed in the container in accordance
with the applicable requirements specified in 49 CFR part 107 subpart
B--Exemptions; 49 CFR part 172--Hazardous Materials Table, Special
Provisions, Hazardous Materials Communications, Emergency Response
Information, and Training Requirements; 49 CFR part 173--Shippers--
General Requirements for Shipments and Packaging; and 49 CFR part 180--
Continuing Qualification and Maintenance of Packagings.
(3) For the purpose of complying with this subpart, no exceptions
to the 49 CFR part 178 or part 179 regulations are allowed except as
provided for in paragraph (f)(4) of this section.
(4) For a lab pack that is managed in accordance with the
requirements of 49 CFR part 178 for the purpose of complying with this
subpart, an owner or operator may comply with the exceptions for those
packagings specified in 49 CFR 173.12(b).
Sec. 63.923 Standards--Container Level 2 controls.
(a) This section applies to owners and operators subject to this
subpart and required to control air emissions from containers using
Container Level 2 controls.
(b) A container using Container Level 2 controls is one of the
following:
(1) A container that meets the applicable U.S. Department of
Transportation (DOT) regulations on packaging hazardous materials for
transportation as specified in paragraph (f) of this section.
(2) A container that has been demonstrated to operate with no
detectable organic emissions as defined in Sec. 63.921 of this subpart.
(3) A container that has been demonstrated within the preceding 12
months to be vapor-tight by using Method 27 in Appendix A of 40 CFR
part 60 in accordance with the procedure specified in Sec. 63.925(b) of
this subpart.
(c) Transfer of regulated-material in to or out of a container
using Container Level 2 controls shall be conducted in such a manner as
to minimize exposure of the regulated-material to the atmosphere, to
the extent practical, considering the physical properties of the
regulated-material and good engineering and safety practices for
handling flammable, ignitable, explosive, or other hazardous materials.
Examples of container loading procedures that meet the requirements of
this paragraph include using any one of the following: a submerged-fill
pipe or other submerged-fill method to load liquids into the container;
a vapor-balancing system or a vapor-recovery system to collect and
control the vapors displaced from the container during filling
operations; or a fitted opening in the top of a container through which
the regulated-material is filled, with subsequent purging of the
transfer line before removing it from the container opening.
(d) Whenever a regulated-material is in a container using Container
Level 2 controls, the owner or operator shall install all covers and
closure devices for the container, and secure and maintain each closure
device in the closed position except as follows:
(1) Opening of a closure device or cover is allowed for the purpose
of adding material to the container as follows:
(i) In the case when the container is filled to the intended final
level in one continuous operation, the owner or operator shall promptly
secure the closure devices in the closed position and install the
covers, as applicable to the container, upon conclusion of the filling
operation.
(ii) In the case when discrete quantities or batches of material
intermittently are added to the container over a period of time, the
owner or operator shall promptly secure the closure devices in the
closed position and install covers, as applicable to the container,
upon either the container being filled to the intended final level, the
completion of a batch loading after which no additional material will
be added to the container within 15 minutes, the person performing the
loading operation leaves the immediate vicinity of the container, or
the shutdown of the process generating the material being added to the
container, whichever condition occurs first.
(2) Opening of a closure device or cover is allowed for the purpose
of removing material from the container as follows:
(i) For the purpose of meeting the requirements of this section, an
empty container as defined in Sec. 63.921 of this subpart may be open
to the atmosphere at any time (e.g., covers and closure devices are not
required to be secured in the closed position on an empty container).
(ii) In the case when discrete quantities or batches of material
are removed from the container but the container does not meet the
conditions to be an empty container as defined in Sec. 63.921 of this
subpart, the owner or operator shall promptly secure the closure
devices in the closed position and install covers, as applicable to the
container, upon the completion of a batch removal after which no
additional material will be removed from the container within 15
minutes or the person performing the unloading operation leaves the
immediate vicinity of the container, whichever condition occurs first.
(3) Opening of a closure device or cover is allowed when access
inside the container is needed to perform routine activities other than
transfer of regulated-material. Examples of such activities include
those times when a worker needs to open a port to measure the depth of
or sample the material in the container, or when a worker needs to open
a manhole hatch to access equipment inside the container. Following
completion of the activity, the owner or operator shall promptly secure
the closure device in the closed position or reinstall the cover, as
applicable to the container.
(4) Opening of a spring-loaded pressure-vacuum relief valve,
conservation vent, or similar type of pressure relief device which
vents to the atmosphere is allowed during normal operations for the
purpose of maintaining the container internal pressure in accordance
with the container design specifications. The device shall be designed
to operate with no detectable organic emissions when the device is
secured in the closed position. The settings at which the device opens
shall be established such that the device remains in the closed
position whenever the container internal pressure is within the
internal
[[Page 34189]]
pressure operating range determined by the owner or operator based on
container manufacturer recommendations, applicable regulations, fire
protection and prevention codes, standard engineering codes and
practices, or other requirements for the safe handling of flammable,
combustible, explosive, reactive, or hazardous materials. Examples of
normal operating conditions that may require these devices to open are
during those times when the container internal pressure exceeds the
internal pressure operating range for the container as a result of
loading operations or diurnal ambient temperature fluctuations.
(5) Opening of a safety device, as defined in Sec. 63.921 of this
subpart, is allowed at any time conditions require it to do so to avoid
an unsafe condition.
(e) The owner or operator shall inspect containers using Container
Level 2 controls in accordance with the procedures specified in
Sec. 63.926(a) of this subpart.
(f) For the purpose of compliance with paragraph (b)(1) of this
section, containers shall be used that meet the applicable U.S. DOT
regulations on packaging hazardous materials for transportation as
follows:
(1) The container meets the applicable requirements specified in 49
CFR part 178--Specifications for Packagings or 49 CFR part 179--
Specifications for Tank Cars.
(2) Regulated-material is managed in the container in accordance
with the applicable requirements specified in 49 CFR part 107 subpart
B--Exemptions; 49 CFR part 172--Hazardous Materials Table, Special
Provisions, Hazardous Materials Communications, Emergency Response
Information, and Training Requirements; 49 CFR part 173--Shippers--
General Requirements for Shipments and Packaging; and 49 CFR part 180--
Continuing Qualification and Maintenance of Packagings.
(3) For the purpose of complying with this subpart, no exceptions
to the 49 CFR part 178 or part 179 regulations are allowed except as
provided for in paragraph (f)(4) of this section.
(4) For a lab pack that is managed in accordance with the
requirements of 49 CFR part 178 for the purpose of complying with this
subpart, an owner or operator may comply with the exceptions for those
packagings specified in 49 CFR 173.12(b).
Sec. 63.924 Standards--Container Level 3 controls.
(a) This section applies to owners and operators subject to this
subpart and required to control air emissions from containers using
Container Level 3 controls.
(b) A container using Container Level 3 controls is one of the
following:
(1) A container that is vented directly through a closed-vent
system to a control device in accordance with the requirements of
paragraphs (c)(2) of this section.
(2) A container that is vented inside an enclosure which is
exhausted through a closed-vent system to a control device in
accordance with the requirements of paragraphs (c)(1) and (c)(2) of
this section.
(c) The owner or operator shall meet the following requirements as
applicable to the type of air emission control equipment selected by
the owner or operator:
(1) The enclosure shall be designed and operated in accordance with
the criteria for a permanent total enclosure as specified in
``Procedure T--Criteria for and Verification of a Permanent or
Temporary Total Enclosure'' under 40 CFR 52.741, Appendix B. The
enclosure may have permanent or temporary openings to allow worker
access; passage of containers through the enclosure by conveyor or
other mechanical means; entry of permanent mechanical or electrical
equipment; or to direct airflow into the enclosure. The owner or
operator shall perform the verification procedure for the enclosure as
specified in Section 5.0 to ``Procedure T--Criteria for and
Verification of a Permanent or Temporary Total Enclosure'' initially
when the enclosure is first installed and, thereafter, annually.
(2) The closed-vent system and control device shall be designed and
operated in accordance with the requirements of 40 CFR 63.692.
(d) Safety devices, as defined in Sec. 63.921 of this subpart, may
be installed and operated as necessary on any container, enclosure,
closed-vent system, or control device used to comply with this section.
Sec. 63.925 Test methods and procedures.
(a) Procedure for determining no detectable organic emissions for
the purpose of complying with of this subpart.
(1) The test shall be conducted in accordance with the procedures
specified in Method 21 of 40 CFR part 60, appendix A. Each potential
leak interface (i.e., a location where organic vapor leakage could
occur) on the container, its cover, and associated closure devices, as
applicable to the container, shall be checked. Potential leak
interfaces that are associated with containers include, but are not
limited to: the interface of the cover rim and the container wall; the
periphery of any opening on the container or container cover and its
associated closure device; and the sealing seat interface on a spring-
loaded pressure-relief valve.
(2) The test shall be performed when the container filled with a
material having an organic HAP concentration representative of the
range of concentrations for the regulated-materials expected to be
managed in this type of container. During the test, the container cover
and closure devices shall be secured in the closed position.
(3) The detection instrument shall meet the performance criteria of
Method 21 of 40 CFR part 60, appendix A, except the instrument response
factor criteria in section 3.1.2(a) of Method 21 shall be for the
average composition of the organic constituents in the material placed
in the container, not for each individual organic constituent.
(4) The detection instrument shall be calibrated before use on each
day of its use by the procedures specified in Method 21 of 40 CFR part
60, appendix A.
(5) Calibration gases shall be as follows:
(i) Zero air (less than 10 ppmv hydrocarbon in air); and
(ii) A mixture of methane in air at a concentration of
approximately, but less than 10,000 ppmv.
(6) The background level shall be determined according to the
procedures in Method 21 of 40 CFR part 60 appendix A.
(7) Each potential leak interface shall be checked by traversing
the instrument probe around the potential leak interface as close to
the interface as possible, as described in Method 21. In the case when
the configuration of the cover or closure device prevents a complete
traverse of the interface, all accessible portions of the interface
shall be sampled. In the case when the configuration of the closure
device prevents any sampling at the interface and the device is
equipped with an enclosed extension or horn (e.g., some pressure relief
devices), the instrument probe inlet shall be placed at approximately
the center of the exhaust area to the atmosphere.
(8) The arithmetic difference between the maximum organic
concentration indicated by the instrument and the background level
shall be compared with the value of 500 ppmv. If the difference is less
than 500 ppmv, then the potential leak interface is determined to
operate with no detectable organic emissions.
[[Page 34190]]
(b) Procedure for determining a container to be vapor-tight for the
purpose of complying with this subpart.
(1) The test shall be performed in accordance with Method 27 of 40
CFR part 60, appendix A of this chapter.
(2) A pressure measurement device shall be used that has a
precision of 2.5 mm water and that is capable of measuring
above the pressure at which the container is to be tested for vapor
tightness.
(3) If the test results determined by Method 27 indicate that the
container sustains a pressure change less than or equal to 750 Pascals
within 5 minutes after it is pressurized to a minimum of 4,500 Pascals,
then the container is determined to be vapor-tight.
Sec. 63.926 Inspection and monitoring requirements.
(a) Owners and operators of containers using either Container Level
1 or Container Level 2 controls in accordance with the provisions of
Secs. 63.922 and 63.923 of this subpart, respectively, shall inspect
the container and its cover and closure devices as follows:
(1) In the case when a regulated-material already is in the
container at the time the owner or operator first accepts possession of
the container at the facility site and the container is not emptied
(i.e., does not meet the conditions for an empty container) within 24
hours after the container arrives at the facility site, the container
and its cover and closure devices shall be visually inspected by the
owner or operator to check for visible cracks, holes, gaps, or other
open spaces into the interior of the container when the cover and
closure devices are secured in the closed position. If a defect is
detected, the owner or operator shall repair the defect in accordance
with the requirements of paragraph (a)(3) of this section.
(2) In the case when a container used for managing regulated-
material remains at the facility site for a period of 1 year or more,
the container and its cover and closure devices shall be visually
inspected by the owner or operator initially and thereafter, at least
once every 12 months, to check for visible cracks, holes, gaps, or
other open spaces into the interior of the container when the cover and
closure devices are secured in the closed position. If a defect is
detected, the owner or operator shall repair the defect in accordance
with the requirements of paragraph (a)(3) of this section.
(3) When a defect is detected for the container, cover, or closure
devices, the owner or operator shall make first efforts at repair of
the defect no later than 24 hours after detection and repair shall be
completed as soon as possible but no later than 5 calendar days after
detection. If repair of a defect cannot be completed within 5 calendar
days, then the regulated-material shall be removed from the container
and the container shall not be used to manage regulated-material until
the defect is repaired.
(b) Owners and operators using Container Level 3 controls in
accordance with the provisions of Sec. 63.924 of this subpart shall
inspect and monitor the closed-vent systems and control devices in
accordance with the requirements of Sec. 63.693 in 40 CFR Part 63,
subpart DD--National Emission Standards for Hazardous Air Pollutants
from Off-Site Waste and Recovery Operations.
Sec. 63.927 Recordkeeping requirements.
(a) Owners and operators that use Container Level 3 controls in
accordance with the provisions of Sec. 63.924 of this subpart shall
prepare and maintain the following records:
(1) Records for the most recent set of calculations and
measurements performed by the owner or operator to verify that the
enclosure meets the criteria of a permanent total enclosure as
specified in ``Procedure T--Criteria for and Verification of a
Permanent or Temporary Total Enclosure'' under 40 CFR 52.741, Appendix
B.
(2) Records required for the closed-vent system and control device
in accordance with the requirements of Sec. 63.693 in 40 CFR Part 63,
subpart DD--National Emission Standards for Hazardous Air Pollutants
from Off-Site Waste and Recovery Operations.
Sec. 63.928 Reporting requirements.
(a) For owners and operators that use Container Level 3 controls in
accordance with the provisions of Sec. 63.924 of this subpart, the
owner or operator shall prepare and submit to the Administrator the
reports required for closed-vent systems and control devices in
accordance with the requirements of Sec. 63.693 in 40 CFR Part 63,
subpart DD--National Emission Standards for Hazardous Air Pollutant
Standards from Off-Site Waste and Recovery Operations.
7. Part 63 is amended by adding subpart QQ consisting of
Secs. 63.940 through 63.948 to read as follows:
Subpart QQ--National Emission Standards for Surface Impoundments
Sec.
63.940 Applicability.
63.941 Definitions.
63.942 Standards--Surface impoundment floating membrane cover.
63.943 Standards--Surface impoundment cover vented to control
device.
63.944 [Reserved]
63.945 Test methods and procedures.
63.946 Inspection and monitoring requirements.
63.947 Recordkeeping requirements.
63.948 Reporting requirements.
Subpart QQ--National Emission Standards for Surface Impoundments
Sec. 63.940 Applicability.
The provisions of this subpart apply to the control of air
emissions from surface impoundments for which another subpart of 40 CFR
parts 60, 61, or 63 references the use of this subpart for such air
emission control. These air emission standards for surface impoundments
are placed here for administrative convenience and only apply to those
owners and operators of facilities subject to the other subparts that
reference this subpart. The provisions of 40 CFR part 63, subpart AA--
General Provisions do not apply to this subpart except as noted in the
subpart that references this subpart.
Sec. 63.941 Definitions.
All terms used in this subpart shall have the meaning given to them
in the Act and in this section. If a term is defined in both this
section and in another subpart that references the use of this subpart,
then the definition in this subpart shall take precedence when
implementing this subpart.
Closure device means a cap, hatch, lid, plug, seal, valve, or other
type of fitting that prevents or reduces air emissions to the
atmosphere by blocking an opening in a surface impoundment cover when
the device is secured in the closed position. Closure devices include
devices that are detachable from the cover (e.g., a sampling port cap),
manually operated (e.g., a hinged access lid or hatch), or
automatically operated (e.g., a spring loaded pressure relief valve).
Cover means an air-supported structure, rigid roof, or other device
that prevents or reduces air pollutant emissions to the atmosphere by
forming a continuous barrier over the material managed in a surface
impoundment. A cover may have openings (such as access hatches) that
are necessary for operation, inspection, maintenance, and repair of
equipment in the surface impoundment on which the cover is used.
No detectable organic emissions means no escape of organics to the
atmosphere as determined using the procedure specified in
Sec. 63.944(a) of this subpart.
[[Page 34191]]
Regulated-material means the material (e.g. waste, wastewater, off-
site material) required to be managed in containers using air emission
controls in accordance with the standards specified in this subpart.
Safety device means a closure device such as a pressure relief
valve, frangible disc, fusible plug, or any other type of device which
functions exclusively to prevent physical damage or permanent
deformation to the surface impoundment air emission control equipment
by venting gases or vapors directly to the atmosphere during unsafe
conditions resulting from an unplanned, accidental, or emergency event.
For the purpose of this subpart, a safety device is not used for
routine venting of gases or vapors from the vapor headspace underneath
the surface impoundment cover such as during filling of the surface
impoundment or to adjust the pressure in this vapor headspace in
response to normal daily diurnal ambient temperature fluctuations. A
safety device is designed to remain in a closed position during normal
operations and open only when the internal pressure, or another
relevant parameter, exceeds the device threshold setting applicable to
the air emission control equipment as determined by the owner or
operator based on manufacturer recommendations, applicable regulations,
fire protection and prevention codes, standard engineering codes and
practices, or other requirements for the safe handling of flammable,
ignitible, explosive, reactive, or hazardous materials.
Surface impoundment means a unit that is a natural topographical
depression, man-made excavation, or diked area formed primarily of
earthen materials (although it may be lined with man-made materials),
which is designed to hold an accumulation of liquids. Examples of
surface impoundments include holding, storage, settling, and aeration
pits, ponds, and lagoons.
Sec. 63.942 Standards--Surface impoundment floating membrane cover.
(a) This section applies to owners and operators subject to this
subpart and controlling air emissions from a surface impoundment using
a floating membrane cover.
(b) The surface impoundment shall be equipped with a floating
membrane cover designed to meet the following specifications:
(1) The floating membrane cover shall be designed to float on the
liquid surface during normal operations, and form a continuous barrier
over the entire surface area of the liquid.
(2) The cover shall be fabricated from a synthetic membrane
material that is either:
(i) High density polyethylene (HDPE) with a thickness no less than
2.5 millimeters (mm); or
(ii) A material or a composite of different materials determined to
have both organic permeability properties that are equivalent to those
of the material listed in paragraph (b)(2)(i) of this section; and
chemical and physical properties that maintain the material integrity
for the intended service life of the material.
(3) The cover shall be installed in a manner such that there are no
visible cracks, holes, gaps, or other open spaces between cover section
seams or between the interface of the cover edge and its foundation
mountings.
(4) Except as provided for in paragraph (b)(5) of this section,
each opening in the floating membrane cover shall be equipped with a
closure device designed to operate such that when the closure device is
secured in the closed position there are no visible cracks, holes,
gaps, or other open spaces in the closure device or between the
perimeter of the cover opening and the closure device.
(5) The floating membrane cover may be equipped with one or more
emergency cover drains for removal of stormwater. Each emergency cover
drain shall be equipped with a slotted membrane fabric cover that
covers at least 90 percent of the area of the opening or a flexible
fabric sleeve seal.
(6) The closure devices shall be made of suitable materials that
will minimize exposure of the regulated-material to the atmosphere, to
the extent practical, and will maintain the integrity of the equipment
throughout its intended service life. Factors to be considered when
selecting the materials for and designing the cover and closure devices
shall include: organic vapor permeability; the effects of any contact
with the liquid and its vapor managed in the surface impoundment; the
effects of outdoor exposure to wind, moisture, and sunlight; and the
operating practices used for the surface impoundment on which the
floating membrane cover is installed.
(c) Whenever a regulated-material is in the surface impoundment,
the floating membrane cover shall float on the liquid and each closure
device shall be secured in the closed position except as follows:
(1) Opening of closure devices or removal of the cover is allowed
at the following times:
(i) To provide access to the surface impoundment for performing
routine inspection, maintenance, or other activities needed for normal
operations. Examples of
FR Doc. 96-16576 National Emission Standards for Hazardous Air Pollutants: Off- Site Waste and Recovery Operations
such activities include those times when a
worker needs to open a port to sample the liquid in the surface
impoundment, or when a worker needs to open a hatch to maintain or
repair equipment. Following completion of the activity, the owner or
operator shall promptly replace the cover and secure the closure device
in the closed position, as applicable.
(ii) To remove accumulated sludge or other residues from the bottom
of surface impoundment.
(2) Opening of a spring-loaded pressure-vacuum relief valve,
conservation vent, or similar type of pressure relief device which
vents to the atmosphere is allowed during normal operations for the
purpose of maintaining the pressure in the vapor headspace underneath
the cover in accordance with the cover design specifications. The
device shall be designed to operate with no detectable organic
emissions as defined in Sec. 63.941 of this subpart when the device is
secured in the closed position. The settings at which the device opens
shall be established such that the device remains in the closed
position whenever the cover vapor headspace pressure is within the
pressure operating range determined by the owner or operator based on
the cover manufacturer recommendations, applicable regulations, fire
protection and prevention codes, standard engineering codes and
practices, or other requirements for the safe handling of flammable,
ignitible, explosive, reactive, or hazardous materials.
(3) Opening of a safety device, as defined in Sec. 63.941 of this
subpart, is allowed at any time conditions require it to do so to avoid
an unsafe condition.
(d) The owner or operator shall inspect the floating membrane cover
in accordance with the procedures specified in Sec. 63.946(a) of this
subpart.
Sec. 63.943 Standards--Surface impoundment vented to control device.
(a) This section applies to owners and operators subject to this
subpart and controlling air emissions from a surface impoundment using
a cover and venting the vapor headspace underneath the cover through a
closed-vent system to a control device.
(b) The surface impoundment shall be covered by a cover and vented
directly through a closed-vent system to a control device in accordance
with the following requirements:
(1) The cover and its closure devices shall be designed to form a
continuous
[[Page 34192]]
barrier over the entire surface area of the liquid in the surface
impoundment.
(2) Each opening in the cover not vented to the control device
shall be equipped with a closure device. If the pressure in the vapor
headspace underneath the cover is less than atmospheric pressure when
the control device is operating, the closure devices shall be designed
to operate such that when the closure device is secured in the closed
position there are no visible cracks, holes, gaps, or other open spaces
in the closure device or between the perimeter of the cover opening and
the closure device. If the pressure in the vapor headspace underneath
the cover is equal to or greater than atmospheric pressure when the
control device is operating, the closure device shall be designed to
operate with no detectable organic emissions using the procedure
specified in Sec. 63.945(a) of this subpart.
(3) The cover and its closure devices shall be made of suitable
materials that will minimize exposure of the regulated-material to the
atmosphere, to the extent practical, and will maintain the integrity of
the equipment throughout its intended service life. Factors to be
considered when selecting the materials for and designing the cover and
closure devices shall include: organic vapor permeability; the effects
of any contact with the liquid or its vapors managed in the surface
impoundment; the effects of outdoor exposure to wind, moisture, and
sunlight; and the operating practices used for the surface impoundment
on which the cover is installed.
(4) The closed-vent system and control device shall be designed and
operated in accordance with the requirements of Sec. 63.693 in 40 CFR
part 63, subpart DD--National Emission Standards for Hazardous Air
Pollutant Standards from Off-Site Waste and Recovery Operations.
(c) Whenever a regulated-material is in the surface impoundment,
the cover shall be installed with each closure device secured in the
closed position and the vapor headspace underneath the cover vented to
the control device except as follows:
(1) Venting to the control device is not required, and opening of
closure devices or removal of the cover is allowed at the following
times:
(i) To provide access to the surface impoundment for performing
routine inspection, maintenance, or other activities needed for normal
operations. Examples of such activities include those times when a
worker needs to open a port to sample liquid in the surface
impoundment, or when a worker needs to open a hatch to maintain or
repair equipment. Following completion of the activity, the owner or
operator shall promptly secure the closure device in the closed
position or reinstall the cover, as applicable, to the surface
impoundment.
(ii) To remove accumulated sludge or other residues from the bottom
of surface impoundment.
(2) Opening of a safety device, as defined in Sec. 63.941 of this
subpart, is allowed at any time conditions require it to do so to avoid
an unsafe condition.
(d) The owner or operator shall inspect and monitor the air
emission control equipment in accordance with the procedures specified
in Sec. 63.946(b) of this subpart.
Sec. 63.944 [Reserved]
Sec. 63.945 Test methods and procedures.
(a) Procedure for determining no detectable organic emissions for
the purpose of complying with this subpart.
(1) The test shall be conducted in accordance with the procedures
specified in Method 21 of 40 CFR part 60, appendix A. Each potential
leak interface (i.e., a location where organic vapor leakage could
occur) on the cover and associated closure devices shall be checked.
Potential leak interfaces that are associated with covers and closure
devices include, but are not limited to: the interface of the cover and
its foundation mounting; the periphery of any opening on the cover and
its associated closure device; and the sealing seat interface on a
spring-loaded pressure-relief valve.
(2) The test shall be performed when the surface impoundment
contains a material having an organic HAP concentration representative
of the range of concentrations for the regulated-materials expected to
be managed in the surface impoundment. During the test, the cover and
closure devices shall be secured in the closed position.
(3) The detection instrument shall meet the performance criteria of
Method 21 of 40 CFR part 60, appendix A, except the instrument response
factor criteria in section 3.1.2(a) of Method 21 shall be for the
average composition of the organic constituents in the regulated-
material placed in the surface impoundment, not for each individual
organic constituent.
(4) The detection instrument shall be calibrated before use on each
day of its use by the procedures specified in Method 21 of 40 CFR part
60, appendix A.
(5) Calibration gases shall be as follows:
(i) Zero air (less than 10 ppmv hydrocarbon in air); and
(ii) A mixture of methane in air at a concentration of
approximately, but less than 10,000 ppmv.
(6) The background level shall be determined according to the
procedures in Method 21 of 40 CFR part 60, appendix A.
(7) Each potential leak interface shall be checked by traversing
the instrument probe around the potential leak interface as close to
the interface as possible, as described in Method 21. In the case when
the configuration of the cover or closure device prevents a complete
traverse of the interface, all accessible portions of the interface
shall be sampled. In the case when the configuration of the closure
device prevents any sampling at the interface and the device is
equipped with an enclosed extension or horn (e.g., some pressure relief
devices), the instrument probe inlet shall be placed at approximately
the center of the exhaust area to the atmosphere.
(8) The arithmetic difference between the maximum organic
concentration indicated by the instrument and the background level
shall be compared with the value of 500 ppmv. If the difference is less
than 500 ppmv, then the potential leak interface is determined to
operate with no detectable organic emissions.
Sec. 63.946 Inspection and monitoring requirements.
(a) Owners and operators that use a surface impoundment equipped
with a floating membrane cover in accordance with the provisions of
Sec. 63.942 of this subpart shall meet the following requirements:
(1) The floating membrane cover and its closure devices shall be
visually inspected by the owner or operator to check for defects that
could result in air emissions. Defects include, but are not limited to,
visible cracks, holes, or gaps in the cover section seams or between
the interface of the cover edge and its foundation mountings; broken,
cracked, or otherwise damaged seals or gaskets on closure devices; and
broken or missing hatches, access covers, caps, or other closure
devices.
(2) The owner or operator shall perform the inspections following
installation of the floating membrane cover and, thereafter, at least
once every year.
(3) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (c) of this section.
(4) The owner or operator shall maintain a record of the inspection
in accordance with the requirements
[[Page 34193]]
specified in Sec. 63.947(a)(2) of this subpart.
(b) Owners and operators that use a surface impoundment equipped
with a cover and vented through a closed-vent system to a control
device in accordance with the provisions of Sec. 63.943 of this subpart
shall inspect the air emission control equipment as follows:
(1) The owner or operator shall visually inspect the cover in
accordance with the following requirements:
(i) The cover and its closure devices shall be visually inspected
by the owner or operator to check for defects that could result in air
emissions. Defects include, but are not limited to, visible cracks,
holes, or gaps in the roof sections or between the interface of the
roof edge and its foundation mountings; broken, cracked, or otherwise
damaged seals or gaskets on closure devices; and broken or missing
hatches, access covers, caps, or other closure devices.
(ii) The owner or operator shall perform the inspections following
installation of the cover and, thereafter, at least once every year.
(iii) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (c) of this section.
(iv) The owner or operator shall maintain a record of the
inspection in accordance with the requirements specified in
Sec. 63.947(a)(2) of this subpart.
(2) The owner or operator shall inspect and monitor the closed-vent
system and the control device in accordance with the requirements
specified in Sec. 63.693 in 40 CFR part 63 subpart DD--National
Emission Standards for Hazardous Air Pollutant Standards from Off-Site
Waste and Recovery Operations.
(c) The owner or operator shall repair all detected defects as
follows:
(1) The owner or operator shall make first efforts at repair of the
defect no later than 5 calendar days after detection and repair shall
be completed as soon as possible but no later than 45 calendar days
after detection except as provided in paragraph (c)(2) of this section.
(2) Repair of a defect may be delayed beyond 45 calendar days if
the owner or operator determines that repair of the defect requires
emptying or temporary removal from service of the surface impoundment
and no alternative surface impoundment or tank capacity is available at
the site to accept the regulated-material normally managed in the
surface impoundment. In this case, the owner or operator shall repair
the defect at the next time the process or unit that is generating the
regulated-material managed in the surface impoundment stops operation.
Repair of the defect shall be completed before the process or unit
resumes operation.
(3) The owner or operator shall maintain a record of the defect
repair in accordance with the requirements specified in Sec. 63.947 of
this subpart.
Sec. 63.947 Recordkeeping requirements.
(a) Each owner or operator shall prepare and maintain the following
records:
(1) Documentation describing the floating membrane cover or cover
design, as applicable to the surface impoundment.
(2) A record for each inspection required by Sec. 63.946 of this
subpart that includes the following information: a surface impoundment
identification number (or other unique identification description as
selected by the owner or operator) and the date of inspection.
(3) The owner or operator shall record for each defect detected
during inspections required by Sec. 63.946 of this subpart the
following information: the location of the defect, a description of the
defect, the date of detection, and corrective action taken to repair
the defect. In the event that repair of the defect is delayed in
accordance with the provisions of Sec. 63.946(c)(2) of this section,
the owner or operator shall also record the reason for the delay and
the date that completion of repair of the defect is expected.
(b) Owners and operators that use a surface impoundment equipped
with a fixed-roof and vented through a closed-vent system to a control
device in accordance with the provisions of Sec. 63.943 of this subpart
shall prepare and maintain the records required for the closed-vent
system and control device in accordance with the requirements of
Sec. 63.693 in 40 CFR part 63, subpart DD--National Emission Standards
for Hazardous Air Pollutant Standards from Off-Site Waste and Recovery
Operations.
Sec. 63.948 Reporting requirements.
Owners and operators that use a surface impoundment equipped with a
fixed-roof and vented through a closed-vent system to a control device
in accordance with the provisions of Sec. 63.943 of this subpart shall
prepare and submit to the Administrator the reports required for
closed-vent systems and control devices in accordance with the
requirements of Sec. 63.693 in 40 CFR part 63, subpart DD--National
Emission Standards for Hazardous Air Pollutant Standards from Off-Site
Waste and Recovery Operations.
8. Part 63 is amended by adding subpart RR consisting of
Secs. 63.960 through 63.966 to read as follows:
Subpart RR--National Emission Standards for Individual Drain Systems
Sec.
63.960 Applicability.
63.961 Definitions.
63.962 Standards.
63.963 [Reserved]
63.964 Inspection and monitoring requirements.
63.965 Recordkeeping requirements.
63.966 Reporting requirements.
Subpart RR--National Emission Standards for Individual Drain
Systems
Sec. 63.960 Applicability.
(a) The provisions of this subpart apply to the control of air
emissions from individual drain systems for which another subpart of 40
CFR parts 60, 61, or 63 references the use of this subpart for such air
emission control. These air emission standards for individual drain
systems are placed here for administrative convenience and only apply
to those owners and operators of facilities subject to the other
subparts that reference this subpart. The provisions of 40 CFR part 63,
subpart A--General Provisions do not apply to this subpart except as
noted in the subpart that references this subpart.
Sec. 63.961 Definitions.
All terms used in this subpart shall have the meaning given to them
in the Act and in this section. If a term is defined in both this
section and in another subpart that references the use of this subpart,
then the definition in this subpart shall take precedence when
implementing this subpart.
Closure device means a cap, cover, hatch, lid, plug, seal, valve,
or other type of fitting that, when the device is secured in the closed
position, prevents or reduces air emissions to the atmosphere by
blocking an opening to the individual drain system. Closure devices
include devices that are detachable (e.g., a plug or manhole cover),
manually operated (e.g., a hinged access lid or hatch), or
automatically operated (e.g., a spring-loaded pressure relief valve).
Hard-piping means pipe or tubing that is manufactured and properly
installed in accordance with relevant standards (e.g., ANSI B31-3) and
good engineering practices.
Individual drain system means a stationary system used to convey
wastewater streams or residuals to a waste management unit or to
discharge or disposal. The term includes hard-piping, all drains and
junction boxes, together with their associated sewer
[[Page 34194]]
lines and other junction boxes (e.g., manholes, sumps, and lift
stations) conveying wastewater streams or residuals. For the purpose of
this subpart, an individual drain system is not a drain and collection
system that is designed and operated for the sole purpose of collecting
rainfall runoff (e.g., stormwater sewer system) and is segregated from
all other individual drain systems.
Junction box means a sump, manhole, or access point to a sewer line
or a lift station.
Sewer line means a lateral, trunk line, branch line, or other
conduit used to convey wastewater to a downstream waste management
unit. Sewer lines include pipes, grates, and trenches.
Waste management unit means the equipment, structure, or device
used to convey, store, treat, or dispose of wastewater streams or
residuals. Examples of waste management units include: wastewater
tanks, surface impoundments, individual drain systems, and biological
wastewater treatment units. Examples of equipment that may be waste
management units include containers, air flotation units, oil-water
separators or organic-water separators, or organic removal devices such
as decanters, strippers, or thin-film evaporation units.
Water seal means a seal pot, p-leg trap, or other type of trap
filled with water (e.g., flooded sewers that maintain liquid levels
adequate to prevent air flow through the system) that creates a liquid
barrier between the sewer line and the atmosphere. The liquid level of
the seal must be maintained in the vertical leg of a drain in order to
be considered a water seal.
Sec. 63.962 Standards.
(a) The owner or operator subject to this subpart shall control air
emissions from the individual drain system using one or a combination
of the following:
(1) Covers, water seals, and other air emission control equipment
as specified in paragraph (b) of this section.
(2) Hard-piping.
(3) Venting of the individual drain system through a closed vent
system to a control device in accordance with the following
requirements:
(i) The individual drain system is designed and operated such that
an internal pressure in the vapor headspace in the system is maintained
at a level less than atmospheric pressure when the control device is
operating, and
(ii) The closed vent system and control device are designed and
operated in accordance with the requirements of Sec. 63.693 in 40 CFR
part 63, subpart DD--National Emission Standards for Hazardous Air
Pollutant Standards from Off-Site Waste and Recovery Operations.
(b) Owners and operators controlling air emissions from an
individual drain system in accordance with paragraph (a)(1) of this
section shall meet the following requirements:
(1) The individual drain system shall be designed to segregate the
organic vapors from wastewater managed in the controlled individual
drain system from entering any other individual drain system that is
not controlled for air emissions in accordance with the standards
specified in this subpart.
(2) Drain control requirements. Each drain shall be equipped with
either a water seal or a closure device in accordance with the
following requirements:
(i) When a water seal is used, the water seal shall be designed
such that either:
(A) The outlet to the pipe discharging the wastewater extends below
the liquid surface in the water seal of the drain; or
(B) A flexible shield or other device is installed which restricts
wind motion across the open space between the outlet of the pipe
discharging the wastewater and the drain.
(ii) When a closure device is used (e.g., securing a cap or plug on
a drain that is not receiving wastewater), the closure device shall be
designed to operate such that when the closure device is secured in the
closed position there are no visible cracks, holes, gaps, or other open
spaces in the closure device or between the perimeter of the drain
opening and the closure device.
(3) Junction box control requirements. Each junction box shall be
equipped with controls as follows:
(i) The junction box shall be equipped with a closure device (e.g.,
manhole cover, access hatch) that is designed to operate such that when
the closure device is secured in the closed position there are no
visible cracks, holes, gaps, or other open spaces in the closure device
or between the perimeter of the junction box opening and the closure
device.
(ii) If the junction box is vented, the junction box shall be
vented in accordance with the following requirements:
(A) The junction box shall be vented through a closed vent system
to a control device except as provided for in paragraph (b)(3)(ii)(B)
of this section. The closed vent system and control device shall be
designed and operated in accordance in accordance with the standards
specified in Sec. 63.693 in 40 CFR part 63, subpart DD--National
Emission Standards for Hazardous Air Pollutant Standards from Off-Site
Waste and Recovery Operations.
(B) As an alternative to paragraph (b)(3)(ii)(A) of this section,
the owner or operator may vent the junction box directly to the
atmosphere when all of the following conditions are met:
(1) The junction box is filled and emptied by gravity flow (i.e.,
there is no pump) or is operated with no more than slight fluctuations
in the liquid level. Large changes in the size of the junction box
vapor headspace created by using a pump to repeatedly empty and then
refill the junction box do not meet this condition.
(2) The vent pipe installed on the junction box shall be at least
90 centimeters in length and no greater than 10.2 centimeter in
diameter.
(3) Water seals are installed at the liquid entrance(s) to or exit
from the junction box to restrict ventilation in the individual drain
system and between components in the individual drain system. The owner
or operator shall demonstrate (e.g., by visual inspection or smoke
test) upon request by the Administrator that the junction box water
seal is properly designed and restricts ventilation.
(4) Sewer line control requirements. Each sewer line shall not be
open to the atmosphere and shall be covered or closed in a manner such
that there are no visible cracks, holes, gaps, or other open spaces in
the sewer line joints, seals, or other emission interfaces.
(5) Operating requirements. The owner or operator shall operate the
air emission controls required by paragraphs (b)(2) through (b)(4) of
this section in accordance with the following requirements:
(i) Each closure device shall be maintained in a closed position
whenever wastewater is in the individual drain system except when it is
necessary to remove or open the closure device for sampling or removing
material in the individual drain system, or for equipment inspection,
maintenance, or repair.
(ii) Each drain equipped with a water seal and open to the
atmosphere shall be operated to ensure that the liquid in the water
seal is maintained at the appropriate level. Examples of acceptable
means for complying with this provision include but are not limited to
using a flow-monitoring device indicating positive flow from a main to
a branch water line supplying a trap; continuously dripping water into
the trap using a hose; or regular visual observations.
(iii) Each closed-vent system and the control device used to comply
with paragraph (b)(3)(ii)(A) of this section
[[Page 34195]]
shall be operated in accordance with the standards specified in 40 CFR
63.693.
Sec. 63.963 [Reserved].
Sec. 63.964 Inspection and monitoring requirements.
(a) The owner or operator shall inspect the individual drain system
in accordance with the following requirements:
(1) The individual drain system shall be visually inspected by the
owner or operator as follows to check for defects that could result in
air emissions to the atmosphere.
(i) The owner or operator shall visually inspect each drain as
follows:
(A) In the case when the drain is using a water seal to control air
emissions, the owner or operator shall verify appropriate liquid levels
are being maintained and identify any other defects that could reduce
water seal control effectiveness.
(B) In the case when the drain is using a closure device to control
air emissions, the owner or operator shall visually inspect each drain
to verify that the closure device is in place and there are no defects.
Defects include, but are not limited to, visible cracks, holes, or gaps
in the closure devices; broken, cracked, or otherwise damaged seals or
gaskets on closure devices; and broken or missing plugs, caps, or other
closure devices.
(ii) The owner or operator shall visually inspect each junction box
to verify that closure devices are in place and there are no defects.
Defects include, but are not limited to, visible cracks, holes, or gaps
in the closure devices; broken, cracked, or otherwise damaged seals or
gaskets on closure devices; and broken or missing hatches, access
covers, caps, or other closure devices.
(iii) The owner or operator shall visually inspect the unburied
portion of each sewer line to verify that all closure devices are in
place and there are no defects. Defects include, but are not limited
to, visible cracks, holes, gaps, or other open spaces in the sewer line
joints, seals, or other emission interfaces.
(iv) The owner or operator shall perform the inspections initially
at the time of installation of the water seals and closure devices for
the individual drain system and, thereafter, at least once every year.
(v) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (b) of this section.
(vi) The owner or operator shall maintain a record of the
inspection in accordance with the requirements specified in
Sec. 63.965(a) of this subpart.
(2) The owner or operator shall inspect and monitor the closed-vent
system and the control device in accordance with the requirements
specified in Sec. 63.693 in 40 CFR 63 subpart DD--National Emission
Standards for Hazardous Air Pollutants from Off-Site Waste and Recovery
Operations.
(b) The owner or operator shall repair all detected defects as
follows:
(1) The owner or operator shall make first efforts at repair of the
defect no later than 5 calendar days after detection and repair shall
be completed as soon as possible but no later than 15 calendar days
after detection except as provided in paragraph (b)(2) of this section.
(2) Repair of a defect may be delayed beyond 15 calendar days if
the owner or operator determines that repair of the defect requires
emptying or temporary removal from service of the individual drain
system and no alternative capacity is available at the facility site to
accept the wastewater normally managed in the individual drain system.
In this case, the owner or operator shall repair the defect at the next
time the process or unit that is generating the wastewater managed in
the individual drain system stops operation. Repair of the defect shall
be completed before the process or unit resumes operation.
(3) The owner or operator shall maintain a record of the defect
repair in accordance with the requirements specified in
Sec. 63.965(a)(3) of this subpart.
Sec. 63.965 Recordkeeping requirements.
(a) Each owner or operator complying with Sec. 63.962(a)(1) of this
subpart shall prepare and maintain the following records:
(1) A written site-specific individual drain system inspection plan
that includes a drawing or schematic of the individual drain system and
identifies each drain, junction box, and sewer line location.
(2) A record of the date that each inspection required by
Sec. 63.964(a) of this subpart is performed.
(3) When applicable, a record for each defect detected during
inspections required by Sec. 63.964(a) of this subpart that includes
the following information: the location of the defect, a description of
the defect, the date of detection, the corrective action taken to
repair the defect, and the date that the corrective action was
completed. In the event that repair of the defect is delayed in
accordance with the provisions of Sec. 63.964(b)(2) of this section,
the owner or operator shall also record the reason for the delay and
the date that completion of repair of the defect is expected.
(b) Owners and operators that use a closed-vent system and a
control device in accordance with the provisions of Sec. 63.962(a)(3)
or Sec. 63.692(b)(3)(ii)(A) of this subpart shall prepare and maintain
the records required for the closed-vent system and control device in
accordance with the requirements of Sec. 63.693 in 40 CFR part 63,
subpart DD--National Emission Standards for Hazardous Air Pollutants
from Off-Site Waste and Recovery Operations.
Sec. 63.966 Reporting requirements.
Owners and operators that use a closed-vent system and a control
device in accordance with the provisions of Sec. 63.962(a)(3) or
Sec. 63.962(b)(3)(ii)(A) of this subpart shall prepare and submit to
the Administrator the reports required for closed-vent systems and
control devices in accordance with the requirements of Sec. 63.693 in
40 CFR part 63, subpart DD--National Emission Standards for Hazardous
Air Pollutants from Off-Site Waste and Recovery Operations.
9. Part 63 is amended by adding subpart VV consisting of
Secs. 63.1040 through 63.1049 to read as follows:
Subpart VV--National Emission Standards for Oil-Water Separators and
Organic-Water Separators
Sec.
63.1040 Applicability.
63.1041 Definitions.
63.1042 Standards--Separator fixed roof.
63.1043 Standards--Separator floating roof.
63.1044 Standards--Separator vented to control device.
63.1045 [Reserved]
63.1046 Test methods and procedures.
63.1047 Inspection and monitoring requirements.
63.1048 Recordkeeping requirements.
63.1049 Reporting requirements.
Subpart VV--National Emission Standards for Oil-Water Separators
and Organic-Water Separators
63.1040 Applicability.
The provisions of this subpart apply to the control of air
emissions from oil-water separators and organic-water separators for
which another subpart of 40 CFR parts 60, 61, or 63 references the use
of this subpart for such air emission control. These air emission
standards for oil-water separators and organic-water separators are
placed here for administrative convenience and only apply to those
owners and operators of facilities subject to the other subparts that
reference this subpart. The provisions of 40 CFR part 63, subpart
[[Page 34196]]
A--General Provisions do not apply to this subpart except as noted in
the subpart that references this subpart.
Sec. 63.1041 Definitions.
All terms used in this subpart shall have the meaning given to them
in the Act and in this section. If a term is defined in both this
section and in another subpart that references the use of this subpart,
then the definition in this subpart shall take precedence when
implementing this subpart.
Closure device means a cap, hatch, lid, plug, seal, valve, or other
type of fitting that, when the device is secured in the closed
position, prevents or reduces air emissions to the atmosphere by
blocking an opening in a fixed roof or floating roof. Closure devices
include devices that are detachable from the cover (e.g., a sampling
port cap), manually operated (e.g., a hinged access lid or hatch), or
automatically operated (e.g., a spring-loaded pressure relief valve).
Continuous seal means a seal that forms a continuous closure that
completely covers the space between the edge of the floating roof and
the wall of a separator. A continuous seal may be constructed of
fastened segments so as to form a continuous seal.
Fixed roof means a cover that is mounted on a separator in a
stationary position and does not move with fluctuations in the level of
the liquid managed in the separator.
Floating roof means a pontoon-type or double-deck type cover that
rests upon and is supported by the liquid managed in a separator.
Liquid-mounted seal means a foam- or liquid-filled continuous seal
that is mounted between the wall of the separator and the floating
roof, and the seal is in contact with the liquid in a separator.
Oil-water separator means a separator as defined for this subpart
that is used to separate oil from water.
Organic-water separator means a separator as defined for this
subpart that is used to separate organics from water.
Metallic shoe seal means a continuous seal that is constructed of
metal sheets which are held vertically against the wall of the
separator by springs, weighted levers, or other mechanisms and is
connected to the floating roof by braces or other means. A flexible
coated fabric (envelope) spans the annular space between the metal
sheet and the floating roof.
No detectable organic emissions means no escape of organics to the
atmosphere as determined using the procedure specified in
Sec. 63.1046(a) of this subpart.
Regulated-material means the material (e.g. waste, wastewater, off-
site material) required to be managed in separators using air emission
controls in accordance with the standards specified in this subpart.
Safety device means a closure device such as a pressure relief
valve, frangible disc, fusible plug, or any other type of device which
functions exclusively to prevent physical damage or permanent
deformation to the separator air emission control equipment by venting
gases or vapors directly to the atmosphere during unsafe conditions
resulting from an unplanned, accidental, or emergency event. For the
purpose of this subpart, a safety device is not used for routine
venting of gases or vapors from the vapor headspace underneath the
separator cover. A safety device is designed to remain in a closed
position during normal operations and open only when the internal
pressure, or another relevant parameter, exceeds the device threshold
setting applicable to the air emission control equipment as determined
by the owner or operator based on manufacturer recommendations,
applicable regulations, fire protection and prevention codes, standard
engineering codes and practices, or other requirements for the safe
handling of flammable, ignitable, explosive, reactive, or hazardous
materials.
Separator means a waste management unit, generally a tank, that is
used to separate oil or organics from water. A separator consists of
not only the separation unit but also the forebay and other separator
basins, skimmers, weirs, grit chambers, sludge hoppers, and bar screens
that are located directly after the individual drain system and prior
to any additional treatment units such as an air flotation unit
clarifier or biological treatment unit. Examples of a separator include
an API separator, parallel-plate interceptor, and corrugated-plate
interceptor with the associated ancillary equipment.
Sec. 63.1042 Standards--Separator fixed roof.
(a) This section applies to owners and operators subject to this
subpart and controlling air emissions from an oil-water separator or
organic-water separator using a fixed roof.
(b) The separator shall be equipped with a fixed roof designed to
meet the following specifications:
(1) The fixed roof and its closure devices shall be designed to
form a continuous barrier over the entire surface area of the liquid in
the separator.
(2) The fixed roof shall be installed in a manner such that there
are no visible cracks, holes, gaps, or other open spaces between roof
section joints or between the interface of the roof edge and the
separator wall.
(3) Each opening in the fixed roof shall be equipped with a closure
device designed to operate such that when the closure device is secured
in the closed position there are no visible cracks, holes, gaps, or
other open spaces in the closure device or between the perimeter of the
opening and the closure device.
(4) The fixed roof and its closure devices shall be made of
suitable materials that will minimize exposure of the regulated-
material to the atmosphere, to the extent practical, and will maintain
the integrity of the equipment throughout its intended service life.
Factors to be considered when selecting the materials for and designing
the fixed roof and closure devices shall include: organic vapor
permeability; the effects of any contact with the liquid and its vapors
managed in the separator; the effects of outdoor exposure to wind,
moisture, and sunlight; and the operating practices used for the
separator on which the fixed roof is installed.
(c) Whenever a regulated-material is in the separator, the fixed
roof shall be installed with each closure device secured in the closed
position except as follows:
(1) Opening of closure devices or removal of the fixed roof is
allowed at the following times:
(i) To provide access to the separator for performing routine
inspection, maintenance, or other activities needed for normal
operations. Examples of such activities include those times when a
worker needs to open a port to sample the liquid in the separator, or
when a worker needs to open a hatch to maintain or repair equipment.
Following completion of the activity, the owner or operator shall
promptly secure the closure device in the closed position or reinstall
the cover, as applicable, to the separator.
(ii) To remove accumulated sludge or other residues from the bottom
of separator.
(2) Opening of a spring-loaded pressure-vacuum relief valve,
conservation vent, or similar type of pressure relief device which
vents to the atmosphere is allowed during normal operations for the
purpose of maintaining the pressure in vapor headspace underneath the
fixed roof in accordance with the separator design specifications. The
device shall be designed to operate with no detectable organic
emissions, as determined using the procedure specified in
Sec. 63.1046(a) of this subpart, when the device is
[[Page 34197]]
secured in the closed position. The settings at which the device opens
shall be established such that the device remains in the closed
position whenever the pressure in the vapor headspace underneath the
fixed roof is within the pressure operating range determined by the
owner or operator based on the cover manufacturer recommendations,
applicable regulations, fire protection and prevention codes, standard
engineering codes and practices, or other requirements for the safe
handling of flammable, ignitable, explosive, reactive, or hazardous
materials.
(3) Opening of a safety device, as defined in Sec. 63.1041 of this
subpart, is allowed at any time conditions require it to do so to avoid
an unsafe condition.
(d) The owner or operator shall inspect the fixed roof and any
closure devices in accordance with the requirements specified in
Sec. 63.1047(a) of this subpart.
Sec. 63.1043 Standards--Separator floating roof.
(a) This section applies to owners and operators subject to this
subpart and controlling air emissions from an oil-water separator or
organic-water separator using a floating roof.
(b) The separator shall be equipped with a floating roof designed
to meet the following specifications:
(1) The floating roof shall be designed to float on the liquid
surface during normal operations.
(2) The floating roof shall be equipped with two continuous seals,
one above the other, between the wall of the separator and the roof
edge. The lower seal is referred to as the primary seal, and the upper
seal is referred to as the secondary seal.
(i) The primary seal shall be a liquid-mounted seal or a metallic
shoe seal, as defined in Sec. 63.1041 of this subpart. The total area
of the gaps between the separator wall and the primary seal shall not
exceed 67 square centimeters (cm2) per meter of separator wall
perimeter, and the width of any portion of these gaps shall not exceed
3.8 centimeters (cm).
(ii) The secondary seal shall be mounted above the primary seal and
cover the annular space between the floating roof and the wall of the
separator. The total area of the gaps between the separator wall and
the secondary seal shall not exceed 6.7 square centimeters (cm2)
per meter of separator wall perimeter, and the width of any portion of
these gaps shall not exceed 1.3 centimeters (cm).
(3) Except as provided for in paragraph (b)(4) of this section,
each opening in the floating roof shall be equipped with a closure
device designed to operate such that when the closure device is secured
in the closed position there are no visible cracks, holes, gaps, or
other open spaces in the closure device or between the perimeter of the
cover opening and the closure device.
(4) The floating roof may be equipped with one or more emergency
roof drains for removal of stormwater. Each emergency roof drain shall
be equipped with a slotted membrane fabric cover that covers at least
90 percent of the area of the opening or a flexible fabric sleeve seal.
(c) Whenever a regulated-material is in the separator, the floating
roof shall float on the liquid (i.e., off the roof supports) and each
closure device shall be secured in the closed position except as
follows:
(1) Opening of closure devices is allowed at the following times:
(i) To provide access to the separator for performing routine
inspection, maintenance, or other activities needed for normal
operations. Examples of such activities include those times when a
worker needs to open a port to sample the liquid in the separator, or
when a worker needs to open a hatch to maintain or repair equipment.
Following completion of the activity, the owner or operator shall
promptly secure the closure device in the closed position.
(ii) To remove accumulated sludge or other residues from the bottom
of separator.
(2) Opening of a safety device, as defined in Sec. 63.1041 of this
subpart, is allowed at any time conditions require it to do so to avoid
an unsafe condition.
(d) The owner or operator shall inspect the floating roof in
accordance with the procedures specified in Sec. 63.1047(b) of this
subpart.
Sec. 63.1044 Standards--Separator vented to control device.
(a) This section applies to owners and operators controlling air
emissions from an oil-water or organic-water separator using a fixed
roof and venting the vapor headspace underneath the fixed roof through
a closed-vent system to a control device.
(b) The separator shall be covered by a fixed roof and vented
directly through a closed-vent system to a control device in accordance
with the following requirements:
(1) The fixed roof and its closure devices shall be designed to
form a continuous barrier over the entire surface area of the liquid in
the separator.
(2) Each opening in the fixed roof not vented to the control device
shall be equipped with a closure device. If the pressure in the vapor
headspace underneath the fixed roof is less than atmospheric pressure
when the control device is operating, the closure devices shall be
designed to operate such that when the closure device is secured in the
closed position there are no visible cracks, holes, gaps, or other open
spaces in the closure device or between the perimeter of the cover
opening and the closure device. If the pressure in the vapor headspace
underneath the fixed roof is equal to or greater than atmospheric
pressure when the control device is operating, the closure device shall
be designed to operate with no detectable organic emissions, as
determined using the procedure specified in Sec. 63.1046(a) of this
subpart.
(3) The fixed roof and its closure devices shall be made of
suitable materials that will minimize exposure of the regulated-
material to the atmosphere, to the extent practical, and will maintain
the integrity of the equipment throughout its intended service life.
Factors to be considered when selecting the materials for and designing
the fixed roof and closure devices shall include: organic vapor
permeability; the effects of any contact with the liquid or its vapors
managed in the separator; the effects of outdoor exposure to wind,
moisture, and sunlight; and the operating practices used for the
separator on which the fixed roof is installed.
(4) The closed-vent system and control device shall be designed and
operated in accordance with the requirements of Sec. 63.693 in 40 CFR
part 63, subpart DD--National Emission Standards for Hazardous Air
Pollutants from Off-Site Waste and Recovery Operations.
(c) Whenever a regulated-material is in the separator, the fixed
roof shall be installed with each closure device secured in the closed
position and the vapor headspace underneath the fixed roof vented to
the control device except as follows:
(1) Venting to the control device is not required, and opening of
closure devices or removal of the fixed roof is allowed at the
following times:
(i) To provide access to the separator for performing routine
inspection, maintenance, or other activities needed for normal
operations. Examples of such activities include those times when a
worker needs to open a port to sample liquid in the separator, or when
a worker needs to open a hatch to maintain or repair equipment.
Following completion of the activity,
[[Page 34198]]
the owner or operator shall promptly secure the closure device in the
closed position or reinstall the cover, as applicable, to the
separator.
(ii) To remove accumulated sludge or other residues from the bottom
of separator.
(2) Opening of a safety device, as defined in Sec. 63.1041 of this
subpart, is allowed at any time conditions require it to do so to avoid
an unsafe condition.
(d) The owner or operator shall inspect and monitor the air
emission control equipment in accordance with the procedures specified
in Sec. 63.1047(c) of this subpart.
Sec. 63.1045 [Reserved]
Sec. 63.1046 Test methods and procedures.
(a) Procedure for determining no detectable organic emissions for
the purpose of complying with this subpart.
(1) The test shall be conducted in accordance with the procedures
specified in Method 21 of 40 CFR part 60, appendix A. Each potential
leak interface (i.e., a location where organic vapor leakage could
occur) on the cover and associated closure devices shall be checked.
Potential leak interfaces that are associated with covers and closure
devices include, but are not limited to: the interface of the cover and
its foundation mounting; the periphery of any opening on the cover and
its associated closure device; and the sealing seat interface on a
spring-loaded pressure-relief valve.
(2) The test shall be performed when the separator contains a
material having an organic HAP concentration representative of the
range of concentrations for the regulated-materials expected to be
managed in the separator. During the test, the cover and closure
devices shall be secured in the closed position.
(3) The detection instrument shall meet the performance criteria of
Method 21 of 40 CFR part 60, appendix A, except the instrument response
factor criteria in section 3.1.2(a) of Method 21 shall be for the
average composition of the organic constituents in the regulated-
material placed in the separator, not for each individual organic
constituent.
(4) The detection instrument shall be calibrated before use on each
day of its use by the procedures specified in Method 21 of 40 CFR part
60, appendix A.
(5) Calibration gases shall be as follows:
(i) Zero air (less than 10 ppmv hydrocarbon in air); and
(ii) A mixture of methane in air at a concentration of
approximately, but less than, 10,000 ppmv.
(6) The background level shall be determined according to the
procedures in Method 21 of 40 CFR part 60 appendix A.
(7) Each potential leak interface shall be checked by traversing
the instrument probe around the potential leak interface as close to
the interface as possible, as described in Method 21. In the case when
the configuration of the cover or closure device prevents a complete
traverse of the interface, all accessible portions of the interface
shall be sampled. In the case when the configuration of the closure
device prevents any sampling at the interface and the device is
equipped with an enclosed extension or horn (e.g., some pressure relief
devices), the instrument probe inlet shall be placed at approximately
the center of the exhaust area to the atmosphere.
(8) The arithmetic difference between the maximum organic
concentration indicated by the instrument and the background level
shall be compared with the value of 500 ppmv. If the difference is less
than 500 ppmv, then the potential leak interface is determined to
operate with no detectable organic emissions.
(b) Procedure for performing floating roof seal gap measurements
for the purpose of complying with this subpart.
(1) The owner or operator shall determine the total surface area of
gaps in the primary seal and in the secondary seal individually.
(2) The seal gap measurements shall be performed at one or more
floating roof levels when the roof is floating off the roof supports.
(3) Seal gaps, if any, shall be measured around the entire
perimeter of the floating roof in each place where a 0.32-centimeter
(cm) diameter uniform probe passes freely (without forcing or binding
against the seal) between the seal and the wall of the separator and
measure the circumferential distance of each such location.
(4) For a seal gap measured under paragraph (b)(2) of this section,
the gap surface area shall be determined by using probes of various
widths to measure accurately the actual distance from the separator
wall to the seal and multiplying each such width by its respective
circumferential distance.
(5) The total gap area shall be calculated by adding the gap
surface areas determined for each identified gap location for the
primary seal and the secondary seal individually, and then dividing the
sum for each seal type by the nominal perimeter of the separator basin.
These total gap areas for the primary seal and secondary seal then are
compared to the respective standards for the seal type as specified in
Sec. 63.1043(b)(2) of this subpart.
Sec. 63.1047 Inspection and monitoring requirements.
(a) Owners and operators that use a separator equipped with a fixed
roof in accordance with the provisions of Sec. 63.1042 of this subpart
shall meet the following requirements:
(1) The fixed roof and its closure devices shall be visually
inspected by the owner or operator to check for defects that could
result in air emissions to the atmosphere. Defects include, but are not
limited to, visible cracks, holes, or gaps in the roof sections or
between the roof and the separator wall; broken, cracked, or otherwise
damaged seals or gaskets on closure devices; and broken or missing
hatches, access covers, caps, or other closure devices.
(2) The owner or operator shall perform the inspections following
installation of the fixed roof and, thereafter, at least once every
year.
(3) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (d) of this section.
(4) The owner or operator shall maintain a record of the inspection
in accordance with the requirements specified in Sec. 63.1048(a)(2) of
this subpart.
(b) Owners and operators that use a separator equipped with a
floating roof in accordance with the provisions of Sec. 63.1043 of this
subpart shall meet the following requirements:
(1) The owner or operator shall measure the floating roof seal gaps
using the procedure specified in Sec. 63.1046(b) of this subpart in
accordance with the following requirements:
(i) The owner or operator shall perform measurements of gaps
between the separator wall and the primary seal within 60 days after
initial operation of the separator following installation of the
floating roof and, thereafter, at least once every 5 years.
(ii) The owner or operator shall perform measurements of gaps
between the separator wall and the secondary seal within 60 days after
initial operation of the separator following installation of the
floating roof and, thereafter, at least once every year.
(iii) If a separator ceases to hold regulated-material for a period
of 1 year or more, subsequent introduction of regulated-material into
the separator shall be considered an initial operation for the purpose
of complying with paragraphs (b)(1)(i) and (b)(1)(ii) of this section.
[[Page 34199]]
(iv) In the event that the seal gap measurements do not conform to
the specifications in Sec. 63.1043(b)(2) of this subpart, the owner or
operator shall repair the defect in accordance with the requirements of
paragraph (d) of this section.
(v) The owner or operator shall maintain a record of the inspection
in accordance with the requirements specified in Sec. 63.1048 (a)(2)
and (b) of this subpart.
(2) The owner or operator shall visually inspect the floating roof
in accordance with the following requirements:
(i) The floating roof and its closure devices shall be visually
inspected by the owner or operator to check for defects that could
result in air emissions to the atmosphere. Defects include, but are not
limited to: holes, tears, or other openings in the rim seal or seal
fabric of the floating roof; a rim seal detached from the floating
roof; all or a portion of the floating roof deck being submerged below
the surface of the liquid in the separator; broken, cracked, or
otherwise damaged seals or gaskets on closure devices; and broken or
missing hatches, access covers, caps, or other closure devices.
(ii) The owner or operator shall perform the inspections following
installation of the floating roof and, thereafter, at least once every
year.
(iii) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (d) of this section.
(iv) The owner or operator shall maintain a record of the
inspection in accordance with the requirements specified in
Sec. 63.1048(a)(2) of this subpart.
(c) Owners and operators that use a separator equipped with a fixed
roof and vented through a closed-vent system to a control device in
accordance with the provisions of Sec. 63.1044 of this subpart shall
inspect the air emission control equipment as follows:
(1) The owner or operator shall visually inspect the fixed roof in
accordance with the following requirements:
(i) The fixed roof and its closure devices shall be visually
inspected by the owner or operator to check for defects that could
result in air emissions. Defects include, but are not limited to,
visible cracks, holes, or gaps in the roof sections or between the roof
and the separator wall; broken, cracked, or otherwise damaged seals or
gaskets on closure devices; and broken or missing hatches, access
covers, caps, or other closure devices.
(ii) The owner or operator shall perform the inspections following
installation of the fixed roof and, thereafter, at least once every
year.
(iii) In the event that a defect is detected, the owner or operator
shall repair the defect in accordance with the requirements of
paragraph (d) of this section.
(iv) The owner or operator shall maintain a record of the
inspection in accordance with the requirements specified in
Sec. 63.1048(a)(2) of this subpart.
(2) The owner or operator shall inspect and monitor the closed-vent
system and the control device in accordance with the requirements
specified in Sec. 63.693 in 40 CFR 63 subpart DD--National Emission
Standards for Hazardous Air Pollutants from Off-Site Waste and Recovery
Operations.
(d) The owner or operator shall repair all detected defects as
follows:
(1) The owner or operator shall make first efforts at repair of the
defect no later than 5 calendar days after detection and repair shall
be completed as soon as possible but no later than 45 calendar days
after detection except as provided in paragraph (d)(2) of this section.
(2) Repair of a defect may be delayed beyond 45 calendar days if
the owner or operator determines that repair of the defect requires
emptying or temporary removal from service of the separator and no
alternative treatment capacity is available at the facility site to
accept the regulated-material normally treated in the separator. In
this case, the owner or operator shall repair the defect at the next
time the process or unit that is generating the regulated-material
managed in the separator stops operation. Repair of the defect shall be
completed before the process or unit resumes operation.
(3) The owner or operator shall maintain a record of the defect
repair in accordance with the requirements specified in
Sec. 63.1048(a)(3) of this subpart.
Sec. 63.1048 Recordkeeping requirements.
(a) Each owner or operator shall prepare and maintain the following
records:
(1) Documentation describing the design of each floating roof and
fixed roof installed on a separator, as applicable to the separator.
When a floating roof is used, the documentation shall include the
dimensions of the separator bay or section in which the floating roof
is installed.
(2) A record for each inspection required by Sec. 63.1047 of this
subpart that includes the following information: a separator
identification number (or other unique identification description as
selected by the owner or operator) and the date of inspection.
(3) The owner or operator shall record for each defect detected
during inspections required by Sec. 63.1047 of this subpart the
following information: the location of the defect, a description of the
defect, the date of detection, and corrective action taken to repair
the defect. In the event that repair of the defect is delayed in
accordance with the provisions of Sec. 63.1047(d)(2) of this section,
the owner or operator shall also record the reason for the delay and
the date that completion of repair of the defect is expected.
(b) Owners and operators that use a separator equipped with a
floating roof in accordance with the provisions of Sec. 63.1043 of this
subpart shall prepare and maintain records for each inspection required
by Sec. 63.1047(b)(1) describing the results of the seal gap
measurements. The records shall include the date of the measurements
performed, the raw data obtained for the measurements, and the
calculations of the total gap surface area. In the event that the seal
gap measurements do not conform to the specifications in
Sec. 63.1043(b)(2) of this subpart, the records shall include a
description of the repairs that were made, the date the repairs were
made, and the date the separator was emptied, if necessary.
(c) Owners and operators that use a separator equipped with a
fixed-roof and vented through a closed-vent system to a control device
in accordance with the provisions of Sec. 63.1044 of this subpart shall
prepare and maintain the records required for the closed-vent system
and control device in accordance with the requirements of Sec. 63.693
in 40 CFR 63 subpart DD--National Emission Standards for Hazardous Air
Pollutants from Off-Site Waste and Recovery Operations.
Sec. 63.1049 Reporting requirements.
(a) Owners and operators that use a separator equipped with a
floating roof in accordance with the provisions of Sec. 63.1043 of this
subpart shall notify the Administrator at least 30 calendar days prior
to each seal gap measurement inspection performed to comply with the
requirements in Sec. 63.1047(b)(1) of this subpart.
(b) Owners and operators that use a separator equipped with a
fixed-roof and vented through a closed-vent system to a control device
in accordance with the provisions of Sec. 63.1044 of this subpart shall
prepare and submit to the Administrator the reports required for
[[Page 34200]]
closed-vent systems and control devices in accordance with the
requirements of Sec. 63.693 in 40 CFR 63 subpart DD--National Emission
Standards for Hazardous Air Pollutants from Off-Site Waste and Recovery
Operations.
10. Part 63 is amended by adding appendix D to read as follows:
Appendix D to Part 63--Alternative Validation Procedure for EPA Waste
and Wastewater Methods
1. Applicability
This procedure is to be applied exclusively to Environmental
Protection Agency methods developed by the Office of Water and the
Office of Solid Waste. Alternative methods developed by any other
group or agency shall be validated according to the procedures in
Sections 5.1 and 5.3 of Test Method 301, 40 CFR Part 63, Appendix A.
For the purposes of this appendix, ``waste'' means waste and
wastewater.
2. Procedure
This procedure shall be applied once for each waste matrix.
Waste matrix in the context of this procedure refers to the target
compound mixture in the waste as well as the formulation of the
medium in which the target compounds are suspended. The owner or
operator shall prepare a sampling plan. Wastewater samples shall be
collected using sampling procedures which minimize loss of organic
compounds during sample collection and analysis and maintain sample
integrity. The sample plan shall include procedures for determining
recovery efficiency of the relevant compounds regulated in the
applicable subpart. An example of an acceptable sampling plan would
be one that incorporates similar sampling and sample handling
requirements to those of Method 25D of 40 CFR part 60, appendix A.
2.1. Sampling and Analysis
2.1.1. For each waste matrix, collect twice the number of
samples required by the applicable regulation. Designate and label
half the sample vials the ``spiked'' sample set, and the other half
the ``unspiked'' sample set. Immediately before or immediately after
sampling (immediately after in the context of this procedure means
after placing the sample into the sample vial, but before the sample
is capped, cooled, and shipped to the laboratory for analysis),
inject, either individually or as a solution, all the target
compounds into each spiked sample.
2.1.2. The mass of each spiked compound shall be 40 to 60
percent of the mass expected to be present in the waste matrix. If
the concentration of the target compounds in the waste are not
known, the mass of each spiked compound shall be 40 to 60 percent of
the limit allowed in the applicable regulation. Analyze both sets of
samples (spiked and unspiked) with the chosen method.
3. Calculations
For each pair of spiked and unspiked samples, determine the
fraction of spiked compound recovered (R) using the following
equations.
where:
mr = mass spiked compound measured (g).
ms = total mass of compound measured in spiked sample
(g).
mu = total mass of compound measured in unspiked sample
(g).
where:
S = theoretical mass of compound spiked into spiked sample
(g).
3.1. Method Evaluation
In order for the chosen method to be acceptable for a compound,
0.70R1.30 (R in this case is an average value
of all the spiked and unspiked sample set R values). If the average
R value does not meet this criterion for a target compound, the
chosen method is not acceptable for that compound, and therefore
another method shall be evaluated for acceptance (by repeating the
procedures outlined above with another method).
3.2. Records and Reports
Report the average R value in the test report and correct all
reported measurements made with the method with the calculated R
value for that compound by using the following equation:
[GRAPHIC] [TIFF OMITTED] TR01JY96.048
3.3. Optional Correction Step
If the applicable regulation allows for correction of the mass
of the compound in the waste by a published fm value, multiply
the reported result calculated above with the appropriate fm
value for that compound.
[FR Doc. 96-16576 Filed 6-28-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 34002-34137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16398]
[[Page 34001]]
_______________________________________________________________________
Part II
Pension Benefit Guaranty Corporation
_______________________________________________________________________
29 CFR Chapters XXVI and XL
Reorganization, Renumbering and Reinvention of Regulations; Final Rule
Federal Register / Vol. 61, No. 127 / Monday, July 1, 1996 / Rules
and Regulations
[[Page 34002]]
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Chs. XXVI and XL
RIN 1212-AA75
Reorganization, Renumbering, and Reinvention of Regulations
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
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SUMMARY: In accordance with the President's Regulatory Reinvention
Initiative, the Pension Benefit Guaranty Corporation is reorganizing,
renumbering, and reinventing its regulations. The amendments will
clarify and simplify the PBGC's regulations and make them easier to
use.
EFFECTIVE DATE: July 1, 1996.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, or Marc L. Jordan, Attorney, Office of the General Counsel,
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington,
DC 20005-4026, 202-326-4024 (202-326-4179 for TTY and TDD).
SUPPLEMENTARY INFORMATION: The PBGC is renumbering and reorganizing its
regulations to make it easier for practitioners and the public to
research and use the rules under Title IV of the Employee Retirement
Income Security Act of 1974. Under the new approach, the regulations
will be numbered to track the statutory sections they implement.
On July 8, 1994 (at 59 FR 35067), the PBGC published a notice in
the Federal Register inviting public comment on a proposal to
reorganize and renumber its regulations to track Title IV. No comments
were received.
On March 4, 1995, the President issued his Regulatory Reinvention
Initiative, directing Federal agencies to eliminate or revise those
regulations that are outdated or otherwise in need of reform. The PBGC
is reorganizing, renumbering, and reinventing its regulations. The
reinvention is limited to nonsubstantive corrections and clarifications
and deletion of material that is unnecessary or that has been
substantially superseded (or is no longer applicable).
For example, the reinvented regulations omit existing provisions
dealing with the allocation of residual assets (part 2618, subpart C)
because these provisions were largely superseded by changes in section
4044(d) of ERISA made by the Pension Protection Act of 1987. Similarly,
the provision regarding interest rate assumptions for paying lump sums
(existing Sec. 2619.26(b)(2)) has been eliminated because of changes in
section 417(e)(3) of the Internal Revenue Code and section 205(g)(3) of
ERISA made by the Retirement Equity Act of 1984, the Tax Reform Act of
1986, and the Retirement Protection Act of 1994.
To clarify the rules on missing participants in terminating plans,
nonsubstantive language changes have been made in the missing
participants regulation (existing part 2629, new part 4050), related
sections in the termination regulations (existing parts 2616 and 2617,
new part 4041), and in the definition of ``distribution date'' in new
Sec. 4001.2.
The new regulation on premium rates (part 4006, which contains
portions of existing part 2610) omits the variable-rate premium cap
reduction rules (which have expired) and the cap rules themselves
(repealed by the Retirement Protection Act of 1994). The rule reflects
new provisions in the Retirement Protection Act of 1994 dealing with
regulated public utility plans.
In some cases, provisions that may have been partially superseded
by statutory changes have been retained pending revision--for example,
the regulation on allocation of assets in terminating single-employer
plans (renumbered part 4044). A note at the beginning of part 4044 and
reminders within the part alert readers that some regulatory material
republished in part 4044 must be read in the light of these other
changes in the law.
The PBGC welcomes public comment on this rule to correct any
editorial errors--e.g., in cross-references--that may have been
overlooked due to the magnitude of the revision project.
Under this final rule, the PBGC's regulations will be moved from
chapter XXVI to chapter XL of title 29 of the CFR. Sections will be
numbered in the 4000's. Part 4000 consists of finding aids--tables
correlating provisions of old chapter XXVI and new chapter XL. Part
4001 contains definitions of terms used throughout the PBGC's
regulations. A table of contents showing the rest of the new structure,
along with the full text of the revised regulations, is set forth
below.
Rulemaking Requirements and E.O. 12866
The PBGC has determined that this action is not a ``significant
regulatory action'' under the criteria set forth in Executive Order
12866.
The PBGC has determined that the notice and comment requirements of
the Administrative Procedure Act (5 U.S.C. 553(b)) do not apply to this
final rule. The PBGC previously notified the public of the primary
changes made by this rule and provided an opportunity for public
comment. None of the amendments in this rule (including those that
clarify the regulations or remove or replace provisions made obsolete
by the passage of time or by subsequent statutory or regulatory
changes) affects applicable substantive legal requirements. Therefore,
the PBGC has, for good cause, found that further notice and public
procedure thereon are unnecessary.
For the same reasons, the PBGC finds pursuant to section 553(d)(3)
of the Administrative Procedure Act (5 U.S.C. 553(d)(3)) that there is
good cause to make this rule effective less than 30 days from the date
of its publication.
The PBGC also certifies that the amendments in this regulation will
not have a significant economic impact on a substantial number of small
entities. Accordingly, as provided in section 605(b) of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), sections 603 and 604 of the
Regulatory Flexibility Act do not apply. None of the amendments in this
rule affects applicable substantive legal requirements.
Issued in Washington, DC, on the 24th day of June 1996.
Robert B. Reich,
Chairman, Board of Directors, Pension Benefit Guaranty Corporation.
Issued on the date set forth above pursuant to a resolution of
the Board of Directors authorizing its Chairman to issue this final
rule.
James J. Keightley,
Secretary, Board of Directors Pension Benefit Guaranty Corporation.
List of Subjects in 29 CFR Chapters XXVI and XL
Parts 2601 and 4002
Authority delegations (Government agencies), Organization and
functions (Government agencies).
Part 2602
Conflict of interests, Government employees, Penalties, Political
activities (Government employees), Production and disclosure of
information, Testimony.
Parts 2603 and 4901
Freedom of Information.
Parts 2604 and 4906
Administrative practice and procedure, Conflict of interests,
Penalties.
Parts 2606 and 4003
Administrative practice and procedure, Organization and functions
[[Page 34003]]
(Government agencies), Pension insurance, Pensions.
Parts 2607 and 4902
Privacy.
Parts 2608 and 4907
Blind, Civil rights, Deaf, Disabled, Discrimination against
handicapped, Equal employment opportunity, Federal buildings and
facilities, Handicapped, Nondiscrimination, Physically handicapped.
Parts 2609 and 4903
Administrative practice and procedure, Claims, Organization and
functions (Government agencies).
Part 2610 and 4007
Penalties, Pension insurance, Pensions, Reporting and recordkeeping
requirements.
Parts 2611, 2615, 2616, 2617, 2623, 2642, 2674, 4022, 4041, 4041A,
4065, 4211, and 4245
Pension insurance, Pensions, Reporting and recordkeeping
requirements.
Parts 2612 and 4068
Business and industry, Pension insurance, Pensions, Small
businesses.
Parts 2613, 2618, 2619, 2620, 2621, 2640, 2670, 4006, 4022, 4022B,
4044, and 4061
Pension insurance, Pensions.
Parts 2622, 2643, 4062, 4063, 4064, and 4204
Business and industry, Pension insurance, Pensions, Reporting and
recordkeeping requirements, Small businesses.
Parts 2641 and 4221
Business and industry, Pensions, Small businesses.
Parts 2644, 2645, 2647, 2649, 2676, 2677, 4203, 4206, 4207, and 4220
Pensions.
Parts 2627, 2628, 2629, 2646, 2648, 2672, 2675, 4001, 4010, 4050, 4208,
4219, 4231, 4261, and 4281
Pensions, Reporting and recordkeeping requirements.
Part 2673
Pension insurance.
Part 4000
Administrative practice and procedure, Authority delegations
(Government agencies), Blind, Business and industry, Civil rights,
Claims, Conflict of interests, Deaf, Disabled, Discrimination against
handicapped, Equal employment opportunity, Federal buildings and
facilities, Freedom of Information, Government employees, Handicapped,
Nondiscrimination, Organization and functions (Government agencies),
Penalties, Pension insurance, Pensions, Physically handicapped,
Political activities (Government employees), Privacy, Production and
disclosure of information, Reporting and recordkeeping requirements,
Small businesses, Testimony.
Part 4001
Business and industry, Organization and functions (Government
agencies), Pension insurance, Pensions, Small businesses.
Part 4903
Conflict of interests, Government employees, Penalties, Political
activities (Government employees).
Part 4904
Government employees, Penalties, Production and disclosure of
information, Testimony.
For the reasons set forth above, the PBGC is amending subtitle B of
title 29 of the Code of Federal Regulations as follows:
CHAPTER XXVI--[REMOVED]
1. Chapter XXVI is removed.
2. Chapter XL is added to read as follows:
CHAPTER XL--PENSION BENEFIT GUARANTY CORPORATION
SUBCHAPTER A--GENERAL
Part 4000--Finding Aids
Sec.
4000.1 Distribution table.
4000.2 Derivation table.
Authority: 29 U.S.C. 1302(b)(3).
Part 4001--Terminology
Sec.
4001.1 Purpose and scope.
4001.2 Definitions.
4001.3 Trades or businesses under common control; controlled
groups.
Authority: 29 U.S.C. 1301(a), 1301(b)(1), 1302(b)(3).
Part 4002--Bylaws of the Pension Benefit Guaranty Corporation
Sec.
4002.1 Name.
4002.2 Offices.
4002.3 Board of Directors.
4002.4 Chairman.
4002.5 Quorum.
4002.6 Meetings.
4002.7 Place of meetings; use of conference call communications
equipment.
4002.8 Alternate voting procedure.
4002.9 Amendments.
Authority: 29 U.S.C. 1302(f).
Part 4003--Rules for Administrative Review of Agency Decisions
Subpart A--General Provisions
Sec.
4003.1 Purpose and scope.
4003.2 Definitions.
4003.3 PBGC assistance in obtaining information.
4003.4 Extension of time.
4003.5 Non-timely request for review.
4003.6 Representation.
4003.7 Exhaustion of administrative remedies.
4003.8 Request for confidential treatment.
4003.9 Filing of documents.
4003.10 Computation of time.
Subpart B--Initial Determinations
4003.21 Form and contents of initial determinations.
4003.22 Effective date of determinations.
Subpart C--Reconsideration of Initial Determinations
4003.31 Who may request reconsideration.
4003.32 When to request reconsideration.
4003.33 Where to submit request for reconsideration.
4003.34 Form and contents of request for reconsideration.
4003.35 Final decision on request for reconsideration.
Subpart D--Administrative Appeals
4003.51 Who may appeal or participate in appeals.
4003.52 When to file.
4003.53 Where to file.
4003.54 Contents of appeal.
4003.55 Opportunity to appear and to present witnesses.
4003.56 Consolidation of appeals.
4003.57 Appeals affecting third parties.
4003.58 Powers of the Appeals Board.
4003.59 Decision by the Appeals Board.
4003.60 Referral of appeal to the Executive Director.
Authority: 29 U.S.C. 1302(b)(3).
SUBCHAPTER B--PREMIUMS
Part 4006--Premium Rates
Sec.
4006.1 Purpose and scope.
4006.2 Definitions.
4006.3 Premium rate.
4006.4 Determination of unfunded vested benefits.
4006.5 Exemptions and special rules.
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
Part 4007--Payment of Premiums
Sec.
4007.1 Purpose and scope.
4007.2 Definitions.
4007.3 Filing requirement and forms.
4007.4 Filing address.
4007.5 Date of filing.
4007.6 Computation of time.
4007.7 Late payment interest charges.
4007.8 Late payment penalty charges.
4007.9 Coverage for guaranteed basic benefits.
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4007.10 Recordkeeping requirements; PBGC audits.
4007.11 Due dates.
4007.12 Liability for single-employer premiums.
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
SUBCHAPTER C--CERTAIN REPORTING AND DISCLOSURE REQUIREMENTS
Part 4010--Annual Financial and Actuarial Information Reporting
Sec.
4010.1 Purpose and scope.
4010.2 Definitions.
4010.3 Filing requirement.
4010.4 Filers.
4010.5 Information year.
4010.6 Information to be filed.
4010.7 Identifying information.
4010.8 Plan actuarial information.
4010.9 Financial information.
4010.10 Due date and filing with the PBGC.
4010.11 Waivers and extensions.
4010.12 Confidentiality of information submitted.
4010.13 Penalties.
4010.14 OMB control number.
Authority: 29 U.S.C. 1302(b)(3); 29 U.S.C. 1310.
Part 4011--Disclosure to Participants
Sec.
4011.1 Purpose and scope.
4011.2 Definitions.
4011.3 Notice requirement.
4011.4 Small plan rules.
4011.5 Exemption for new and newly-covered plans.
4011.6 Mergers, consolidations, and spinoffs.
4011.7 Persons entitled to receive notice.
4011.8 Time of notice.
4011.9 Manner of issuance of notice.
4011.10 Form of notice.
4011.11 OMB control number.
Appendix A to part 4011--Model participant notice.
Appendix B to part 4011--Table of maximum guaranteed benefits.
Authority: 29 U.S.C. 1302(b)(3), 1311.
SUBCHAPTER D--COVERAGE AND BENEFITS
Part 4022--Benefits Payable in Terminated Single-Employer Plans
Subpart A--General Provisions; Guaranteed Benefits
Sec.
4022.1 Purpose and scope.
4022.2 Definitions.
4022.3 Guaranteed benefits.
4022.4 Entitlement to a benefit.
4022.5 Determination of nonforfeitable benefits.
4022.6 Annuity payable for total disability.
4022.7 Benefits payable in a single installment.
Subpart B--Limitations on Guaranteed Benefits
4022.21 Limitations; in general.
4022.22 Maximum guaranteeable benefit.
4022.23 Computation of maximum guaranteeable benefit.
4022.24 Benefit increases.
4022.25 Five-year phase-in of benefit guarantee for participants
other than substantial owners.
4022.26 Phase-in of benefit guarantee for participants who are
substantial owners.
4022.27 Effect of tax disqualification.
Subpart C--Calculation and Payment of Unfunded Nonguaranteed Benefits
[Reserved]
Subpart D--Benefit Reductions in Terminating Plans
4022.61 Limitations on benefit payments by plan administrator.
4022.62 Estimated guaranteed benefit.
4022.63 Estimated title IV benefit.
Subpart E--PBGC Recoupment and Reimbursement of Benefit Overpayments
and Underpayments
4022.81 General rules.
4022.82 Method of recoupment.
4022.83 PBGC reimbursement of benefit underpayments.
Appendix to Part 4022--Maximum Guaranteeable Monthly Benefit
Authority: 29 U.S.C. 1302(b)(3), 1322, 1322b, 1341(c)(3)(D),
1344.
Part 4022B--Aggregate Limits on Guaranteed Benefits
Sec.
4022B.1 Aggregate payments limitation.
Authority: 29 U.S.C. 1302(b)(3).
SUBCHAPTER E--PLAN TERMINATIONS
Part 4041--Termination of Single-Employer Plans
Subpart A--General Provisions
Sec.
4041.1 Purpose and scope.
4041.2 Definitions.
4041.3 Requirements for a standard or a distress termination.
4041.4 Administration of plan during pendency of termination
proceedings.
4041.5 Challenges to plan termination under collective bargaining
agreement.
4041.6 Annuity requirements.
4041.7 Facilitating plan sufficiency in a standard termination.
4041.8 Disaster relief--distress termination.
4041.9 Filing with the PBGC.
4041.10 Computation of time.
4041.11 Maintenance of plan records.
4041.12 Information collection.
Subpart B--Standard Terminations
4041.21 Notice of intent to terminate.
4041.22 Issuance of notices of plan benefits.
4041.23 Form and contents of notices of plan benefits.
4041.24 Standard termination notice.
4041.25 PBGC action upon filing of standard termination notice.
4041.26 Notice of noncompliance.
4041.27 Closeout of plan.
Subpart C--Distress Terminations
4041.41 Notice of intent to terminate.
4041.42 PBGC review of notice of intent to terminate.
4041.43 Distress termination notice.
4041.44 PBGC determination of compliance with requirements for
distress termination.
4041.45 PBGC determination of plan sufficiency/insufficiency.
4041.46 Notices of benefit distribution.
4041.47 Verification of plan sufficiency prior to closeout.
4041.48 Closeout of plan.
Appendix to Part 4041--Agreement for Commitment to Make Plan
Sufficient for Benefit Liabilities
Authority: 29 U.S.C. 1302(b)(3), 1341, 1344.
Part 4041A--Termination of Multiemployer Plans
Subpart A--General Provisions
Sec.
4041A.1 Purpose and scope.
4041A.2 Definitions.
4041A.3 Submission of documents.
Subpart B--Notice of Termination
4041A.11 Requirement of notice.
4041A.12 Contents of notice.
Subpart C--Plan Sponsor Duties
4041A.21 General rule.
4041A.22 Payment of benefits.
4041A.23 Imposition and collection of withdrawal liability.
4041A.24 Annual plan valuations and monitoring.
4041A.25 Periodic determinations of plan solvency.
4041A.26 Financial assistance.
4041A.27 PBGC approval to pay benefits not otherwise permitted.
Subpart D--Closeout of Sufficient Plans
4041A.41 General rule.
4041A.42 Method of distribution.
4041A.43 Benefit forms.
4041A.44 Cessation of withdrawal liability.
Authority: 29 U.S.C. 1302(b)(3), 1341a, 1441.
Part 4043--Reportable Events and Certain Other Notification
Requirements
Subpart A--Reportable Events; In General
Sec.
4043.1 Purpose and scope.
4043.2 Definitions.
4043.3 Requirement of notice.
4043.4 Reporting of reportable events on annual report.
4043.5 Obligation of contributing sponsor.
4043.6 Date of filing.
4043.7 Computation of time.
4043.11 Tax disqualification.
4043.12 Title I non-compliance.
4043.13 Amendment decreasing benefits payable.
4043.14 Active participant reduction.
4043.15 Termination or partial termination.
4043.16 Failure to meet minimum funding standards and granting of
funding waiver.
4043.17 Inability to pay benefits when due.
4043.18 Distribution to a substantial owner.
4043.19 Plan merger, consolidation or transfer.
[[Page 34005]]
4043.20 Alternative compliance with reporting and disclosure
requirements of Title I.
4043.21 Bankruptcy, insolvency, or similar settlements.
4043.22 Liquidation or dissolution.
4043.23 Transactions involving a change in contributing sponsor or
controlled group.
Subpart B--Section 302(f); Notice of Failure to Make Required
Contributions
4043.31 PBGC Form 200, notice of failure to make required
contributions.
Authority: 29 U.S.C. 1302(b)(3), 1343, 1365.
Part 4044--Allocation of Assets in Single-Employer Plans
Subpart A--Allocation of Assets
General Provisions
Sec.
4044.1 Purpose and scope of subpart A.
4044.2 Definitions.
4044.3 General rule.
4044.4 Violations.
Allocation of Assets to Benefit Categories
4044.10 Manner of allocation.
4044.11 Priority category 1 benefits.
4044.12 Priority category 2 benefits.
4044.13 Priority category 3 benefits.
4044.14 Priority category 4 benefits.
4044.15 Priority category 5 benefits.
4044.16 Priority category 6 benefits.
4044.17 Subclasses.
Allocation of Residual Assets
4044.30 [Reserved.]
Subpart B--Valuation of Benefits and Assets
4044.41 General valuation rules.
Trusteed Plans
4044.51 Benefits to be valued.
4044.52 Valuation of benefits.
4044.53 Mortality assumptions--in general.
4044.54 Mortality assumptions--lump sums.
Expected Retirement Age
4044.55 XRA when a participant must retire to receive a benefit.
4044.56 XRA when a participant need not retire to receive a
benefit.
4044.57 Special rule for facility closing.
Non-Trusteed Plans
4044.71 Valuation of annuity benefits.
4044.72 Form of annuity to be valued.
4044.73 Lump sums and other alternative forms of distribution in
lieu of annuities.
4044.74 Withdrawal of employee contributions.
4044.75 Other lump sum benefits.
Appendix A to Part 4044--Mortality Rate Tables
Appendix B to Part 4044--Interest Rates Used to Value Annuities and
Lump Sums
Appendix C to Part 4044--Loading Assumptions
Appendix D to Part 4044--Tables Used To Determine Expected
Retirement Age
Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
Part 4047--Restoration of Terminating and Terminated Plans
Sec.
4047.1 Purpose and scope.
4047.2 Definitions.
4047.3 Funding of restored plan.
4047.4 Payment of premiums.
4047.5 Repayment of PBGC payments of guaranteed benefits.
Authority: 29 U.S.C. 1302(b)(3), 1347.
Part 4050--Missing Participants
Sec.
4050.1 Purpose and scope.
4050.2 Definitions.
4050.3 Method of distribution for missing participants.
4050.4 Diligent search.
4050.5 Designated benefit.
4050.6 Payment and required documentation.
4050.7 Benefits of missing participants--in general.
4050.8 Automatic lump sum.
4050.9 Annuity or elective lump sum--living missing participant.
4050.10 Annuity or elective lump sum--beneficiary of deceased
missing participant.
4050.11 Limitations.
4050.12 Special rules.
4050.13 OMB control number.
SUBCHAPTER F--LIABILITY
Part 4061--Amounts Payable by the Pension Benefit Guaranty Corporation
Sec.
4061.1 Cross-references.
Authority: 29 U.S.C. 1302(b)(3).
Part 4062--Liability for Termination of Single-Employer Plans
Sec.
4062.1 Purpose and scope.
4062.2 Definitions.
4062.3 Amount and payment of section 4062(b) liability.
4062.4 Determinations of net worth and collective net worth.
4062.5 Net worth record date.
4062.6 Net worth notification and information.
4062.7 Calculating interest on liability and refunds of
overpayments.
4062.8 Arrangements for satisfying liability.
4062.9 Notification of and demand for liability.
4062.10 Filing of documents.
4062.11 Computation of time.
Part 4063--Withdrawal Liability; Plans Under Multiple Controlled Groups
Sec.
4063.1 Cross-references.
Authority: 29 U.S.C. 1302(b)(3).
Part 4064--Liability on Termination of Single-Employer Plans Under
Multiple Controlled Groups
Sec.
4064.1 Cross-references.
Authority: 29 U.S.C. 1302(b)(3).
SUBCHAPTER G--ANNUAL REPORTING REQUIREMENTS
Part 4065--Annual Report
Sec.
4065.1 Purpose and scope.
4065.2 Definitions.
4065.3 Filing requirement.
Authority: 29 U.S.C. 1302, 1365.
SUBCHAPTER H--ENFORCEMENT PROVISIONS
Part 4067--Recovery of Liability for Plan Terminations
Sec.
4067.1 Cross-reference.
Authority: 29 U.S.C. 1302, 1367.
Part 4068--Lien for Liability
Sec.
4068.1 Purpose; cross-references.
4068.2 Definitions.
4068.3 Notification of and demand for liability.
4068.4 Lien.
Authority: 29 U.S.C. 1302(b)(3), 1368.
SUBCHAPTER I--WITHDRAWAL LIABILITY FOR MULTIEMPLOYER PLANS
Part 4203--Extension of Special Withdrawal Liability Rules
Sec.
4203.1 Purpose and scope.
4203.2 Plan adoption of special withdrawal rules.
4203.3 Requests for PBGC approval of plan amendments.
4203.4 PBGC action on requests.
4203.5 OMB control number.
Authority: 29 U.S.C. 1302(b)(3), 1383(f), 1388(e)(3).
Part 4204--Variances for Sale of Assets
Subpart A--General
Sec.
4204.1 Purpose and scope.
4204.2 Definitions.
Subpart B--Variance of the Statutory Requirements
4204.11 Variance of the bond/escrow and sale-contract requirements.
4204.12 De minimis transactions.
4204.13 Net income and net tangible assets tests.
Subpart C--Procedures for Individual and Class Variances or Exemptions
4204.21 Requests to PBGC for variances and exemptions.
4204.22 PBGC action on requests.
Authority: 29 U.S.C. 1302(b)(3), 1384(c).
Part 4206--Adjustment of Liability for a Withdrawal Subsequent to a
Partial Withdrawal
Sec.
4206.1 Purpose and scope.
4206.2 Definitions.
4206.3 Credit against liability for a subsequent withdrawal.
4206.4 Amount of credit in plans using the presumptive method.
4206.5 Amount of credit in plans using the modified presumptive
method.
[[Page 34006]]
4206.6 Amount of credit in plans using the rolling-5 method.
4206.7 Amount of credit in plans using the direct attribution
method.
4206.8 Reduction of credit for abatement or other reduction of
prior partial withdrawal liability.
4206.9 Amount of credit in plans using alternative allocation
methods.
4206.10 Special rule for 70-percent decline partial withdrawals.
Authority: 29 U.S.C. 1302(b)(3), 1386(b).
Part 4207--Reduction or Waiver of Complete Withdrawal Liability
Sec.
4207.1 Purpose and scope.
4207.2 Definitions.
4207.3 Abatement.
4207.4 Withdrawal liability payments during pendency of abatement
determination.
4207.5 Requirements for abatement.
4207.6 Partial withdrawals after reentry.
4207.7 Liability for subsequent complete withdrawals and related
adjustments for allocating unfunded vested benefits.
4207.8 Liability for subsequent partial withdrawals.
4207.9 Special rules.
4207.10 Plan rules for abatement.
Authority: 29 U.S.C. 1302(b)(3), 1387.
Part 4208--Reduction or Waiver of Partial Withdrawal Liability
Sec.
4208.1 Purpose and scope.
4208.2 Definitions.
4208.3 Abatement.
4208.4 Conditions for abatement.
4208.5 Withdrawal liability payments during pendency of abatement
determination.
4208.6 Computation of reduced annual partial withdrawal liability
payment.
4208.7 Adjustment of withdrawal liability for subsequent
withdrawals.
4208.8 Multiple partial withdrawals in one plan year.
4208.9 Plan adoption of additional abatement conditions.
Authority: 29 U.S.C. 1302(b)(3), 1388 (c) and (e).
Part 4211--Allocating Unfunded Vested Benefits
Subpart A--General
Sec.
4211.1 Purpose and scope.
4211.2 Definitions.
4211.3 Special rules for construction industry and IRC section
404(c) plans.
Subpart B--Changes Not Subject to PBGC Approval
4211.11 Changes not subject to PBGC approval.
4211.12 Modifications to the presumptive, modified presumptive and
rolling-5 methods.
4211.13 Modifications to the direct attribution method.
Subpart C--Changes Subject to PBGC Approval
4211.21 Changes subject to PBGC approval.
4211.22 Requests for PBGC approval.
4211.23 Approval of alternative method.
4211.24 Special rule for certain alternative methods previously
approved.
Subpart D--Allocation Methods for Merged Multiemployer Plans
4211.31 Allocation of unfunded vested benefits following the merger
of plans.
4211.32 Presumptive method for withdrawals after the initial plan
year.
4211.33 Modified presumptive method for withdrawals after the
initial plan year.
4211.34 Rolling-5 method for withdrawals after the initial plan
year.
4211.35 Direct attribution method for withdrawals after the initial
plan year.
4211.36 Modifications to the determination of initial liabilities,
the amortization of initial liabilities, and the allocation
fraction.
4211.37 Allocating unfunded vested benefits for withdrawals before
the end of the initial plan year.
Authority: 29 U.S.C. 1302(b)(3), 1391 (c)(1), (c)(2)(D),
(c)(5)(A), (c)(5)(B), (c)(5) (D), and (f).
Part 4219--Notice, Collection, and Redetermination of Withdrawal
Liability
Subpart A--General
Sec.
4219.1 Purpose and scope.
4219.2 Definitions.
Subpart B--Redetermination of Withdrawal Liability Upon Mass Withdrawal
4219.11 Withdrawal liability upon mass withdrawal.
4219.12 Employers liable upon mass withdrawal.
4219.13 Amount of liability for de minimis amounts.
4219.14 Amount of liability for 20-year-limitation amounts.
4219.15 Determination of reallocation liability.
4219.16 Imposition of liability.
4219.17 Filings with PBGC.
4219.18 Withdrawal in a plan year in which substantially all
employers withdraw.
4219.19 Information collection.
Subpart C--Overdue, Defaulted, and Overpaid Withdrawal Liability
Sec.
4219.31 Overdue and defaulted withdrawal liability; overpayment.
4219.32 Interest on overdue, defaulted and overpaid withdrawal
liability.
4219.34 Plan rules concerning overdue and defaulted withdrawal
liability.
Authority: 29 U.S.C. 1302(b)(3), 1389 (c) and (d), 1399
(c)(1)(D) and (c)(6).
Part 4220--Procedures for PBGC Approval of Plan Amendments
Sec.
4220.1 Purpose and scope.
4220.2 Requests for PBGC approval.
4220.3 PBGC action on requests.
Authority: 29 U.S.C. 1302(b)(3), 1400.
Part 4221--Arbitration of Disputes in Multiemployer Plans
Sec.
4221.1 Purpose and scope.
4221.2 Definitions.
4221.3 Initiation of arbitration.
4221.4 Appointment of the arbitrator.
4221.5 Powers and duties of the arbitrator.
4221.6 Hearing.
4221.7 Reopening of proceedings.
4221.8 Award.
4221.9 Reconsideration of award.
4221.10 Costs.
4221.11 Waiver of rules.
4221.12 Calculation of periods of time.
4221.13 Filing or service of documents.
4221.14 PBGC-approved arbitration procedures.
Authority: 29 U.S.C. 1302(b)(3), 1401.
SUBCHAPTER J--INSOLVENCY, REORGANIZATION, TERMINATION, AND OTHER RULES
APPLICABLE TO MULTIEMPLOYER PLANS
Part 4231--Mergers and Transfers Between Multiemployer Plans
Sec.
4231.1 Purpose and scope.
4231.2 Definitions.
4231.3 Requirements for mergers and transfers.
4231.4 Preservation of accrued benefits.
4231.5 Valuation requirement.
4231.6 Plan solvency tests.
4231.7 De minimis mergers and transfers.
4231.8 Notice of merger or transfer.
4231.9 Request for compliance determination.
4231.10 Actuarial calculations and assumptions.
Authority: 29 U.S.C. 1302(b)(3), 1411.
Part 4245--Notice of Insolvency
Sec.
4245.1 Purpose and scope.
4245.2 Definitions.
4245.3 Notice of insolvency.
4245.4 Contents of notice of insolvency.
4245.5 Notice of insolvency benefit level.
4245.6 Contents of notice of insolvency benefit level.
4245.7 PBGC address.
Authority: 29 U.S.C. 1302(b)(3), 1426(e).
Part 4261--Financial Assistance to Multiemployer Plans
Sec.
4261.1 Cross-reference.
Authority: 29 U.S.C. 1302(b)(3).
Part 4281--Duties of Plan Sponsor Following Mass Withdrawal
Subpart A--General
Sec.
4281.1 Purpose and scope.
4281.2 Definitions.
4281.3 Submission of documents.
4281.4 Collection of information.
Subpart B--Valuation of Plan Benefits and Plan Assets
4281.11 Valuation dates.
4281.12 Benefits to be valued.
4281.13 Benefit valuation methods--in general.
[[Page 34007]]
4281.14 Mortality assumptions--in general.
4281.15 Mortality assumptions--lump sums under trusteed plans.
4281.16 Benefit valuation methods--plans closing out.
4281.17 Asset valuation methods--in general.
4281.18 Outstanding claims for withdrawal liability.
Subpart C--Benefit Reductions
4281.31 Plan amendment.
4281.32 Notices of benefit reductions.
4281.33 Restoration of benefits.
Subpart D--Benefit Suspensions
4281.41 Benefit suspensions.
4281.42 Retroactive payments.
4281.43 Notices of insolvency and annual updates.
4281.44 Contents of notices of insolvency and annual updates.
4281.45 Notices of insolvency benefit level.
4281.46 Contents of notices of insolvency benefit level.
4281.47 Application for financial assistance.
Appendix A to Part 4281--Interest Rates Used to Value Lump Sums and
Annuities
Appendix B to Part 4281--Loading Assumptions
Authority: 29 U.S.C. 1302(b)(3), 1341a, 1399(c)(1)(D), and 1441.
SUBCHAPTER K--INTERNAL AND ADMINISTRATIVE RULES AND PROCEDURES
Part 4901--Examination and Copying of Pension Benefit Guaranty
Corporation Records
Subpart A--General
Sec.
4901.1 Purpose and scope.
4901.2 Definitions.
4901.3 Disclosure facilities.
4901.4 Information maintained in public reference room.
4901.5 Disclosure of other information.
Subpart B--Procedure for Formal Requests
4901.11 Submittal of requests for access to records.
4901.12 Description of information requested.
4901.13 Receipt by agency of request.
4901.14 Action on request.
4901.15 Appeals from denial of requests.
4901.16 Extensions of time.
4901.17 Exhaustion of administrative remedies.
Subpart C--Restrictions on Disclosure
4901.21 Restrictions in general.
4901.22 Partial disclosure.
4901.23 Records of concern to more than one agency.
4901.24 Special rules for trade secrets and confidential commercial
or financial information submitted to the PBGC.
Subpart D--Fees
4901.31 Charges for services.
4901.32 Fee schedule.
4901.33 Payment of fees.
4901.34 Waiver or reduction of charges.
Authority: 5 U.S.C. 552; 29 U.S.C. 1302(b)(3); E.O. 12600, 52 FR
23781.
Part 4902--Disclosure and Amendment of Records Under the Privacy Act
Sec.
4902.1 Purpose and scope.
4902.2 Definitions.
4902.3 Procedures for determining existence of and requesting
access to records.
4902.4 Disclosure of record to an individual.
4902.5 Procedures for requesting amendment of a record.
4902.6 Action on request for amendment of a record.
4902.7 Appeal of a denial of a request for amendment of a record.
4902.8 Fees.
4902.9 Specific exemptions.
Authority: 5 U.S.C. 552a; 29 U.S.C. 1302(b)(3).
Part 4903--Debt Collection
Subpart A--General
Sec.
4903.1 Purpose and scope.
4903.2 General.
4903.3 Definitions.
Subpart B--Administrative Offset
4903.21 Application of Federal Claims Collection Standards.
4903.22 Administrative offset procedures.
4903.23 PBGC requests for offset to other agencies.
4903.24 Requests for offset from other agencies.
Subpart C--Tax Refund Offset
4903.31 Eligibility of debt for tax refund offset.
4903.32 Tax refund offset procedures.
4903.33 Referral of debt for tax refund offset.
Subpart D--Salary Offset [Reserved]
Authority: 29 U.S.C. 1302(b); 31 U.S.C. 3701, 3711(f), 3720A; 4
CFR part 102; 26 CFR 301.6402-6.
Part 4904--Ethical Conduct of Employees
Sec.
4904.1 Ethical conduct; standards and requirements.
Authority: 29 U.S.C. 1302(b)(3).
Part 4905--Appearances in Certain Proceedings
Sec.
4905.1 Purpose and scope.
4905.2 Definitions.
4905.3 General.
4905.4 Appearances by PBGC employees.
4905.5 Requests for authenticated copies of PBGC records.
4905.6 Penalty.
Authority: 29 U.S.C. 1302(b).
Part 4906--[Reserved]
Part 4907--Enforcement of Nondiscrimination on the Basis of Handicap in
Programs or Activities Conducted by the Pension Benefit Guaranty
Corporation
Sec.
4907.101 Purpose.
4907.102 Application.
4907.103 Definitions.
4907.110 Self-evaluation.
4907.111 Notice.
4907.130 General prohibitions against discrimination.
4907.140 Employment.
4907.149 Program accessibility: Discrimination prohibited.
4907.150 Program accessibility: Existing facilities.
4907.151 Program accessibility: New construction and alterations.
4907.160 Communications.
4907.170 Compliance procedures.
Authority: 29 U.S.C. 794, 1302(b)(3).
PART 4000--FINDING AIDS
Sec.
4000.1 Distribution table.
4000.2 Derivation table.
Authority: 29 U.S.C. 1302(b)(3).
Sec. 4000.1 Distribution table.
The following table shows where in chapter XL of 29 CFR to find
regulations previously codified in chapter XXVI.
------------------------------------------------------------------------
Ch. XL Part(s)/Subpart(s)
Ch. XXVI Part Subpart(s)/Section(s) Subpart(s)/Section(s)
------------------------------------------------------------------------
Subchapter A--Internal and Administrative Rules
------------------------------------------------------------------------
2601................................... 4002
2602:
Subpart A.......................... 4904
Subpart B.......................... 4905
2603................................... 4901
2604................................... Repealed
2606................................... 4003
2607................................... 4902
2608................................... 4907
[[Page 34008]]
2609................................... 4903
------------------------------------------------------------------------
Subchapter B--Rules Applicable to Single-Employer and Multiemployer
Plans
------------------------------------------------------------------------
2610................................... 4006 & 4007
Secs. 2610.1, 2610.21, 2610.31.... Secs. 4006.1 & 4007.1
Secs. 2610.2...................... Secs. 4006.2 & 4007.2
Secs. 2610.3-2610.9 & 2610.11..... 4007
Sec. 2610.10...................... 4006.5(e)
Secs. 2610.22-2610.24 & 2610.33... 4006
Secs. 2610.25, 2610.26 & 2610.34.. 4007
2611................................... 4065
2612................................... 4001, Subpart B
2613................................... 4022, Subpart A
------------------------------------------------------------------------
Subchapter C--Single-Employer Plans
------------------------------------------------------------------------
2615................................... 4043
2616................................... 4041
Subpart A.......................... Subpart A
Subpart B.......................... Subpart C
2617................................... 4041
Subpart A.......................... Subpart A
Subpart B.......................... Subpart B
2618................................... 4044, Subpart A
2619................................... 4044, Subpart B
2620................................... 4044, Subpart B
2621 (except Sec. 2621.23(b))......... 4022, Subpart B
2621.23(b)............................. 4022B
2622 (except 2622.9)................... 4062
Sec. 2622.9....................... 4068
2623................................... 4022, Subparts D & E
2625................................... 4047
2627................................... 4011
2628................................... 4010
2629................................... 4050
------------------------------------------------------------------------
Subchapter F--Withdrawal Liability in Multiemployer Plans
------------------------------------------------------------------------
2640:
Sec. 2640.2....................... Sec. 4001.2
Sec. 2640.3....................... Sec. 4221.2
Sec. 2640.4....................... Sec. 4211.2
Sec. 2640.5....................... Sec. 4204.2
Sec. 2640.6....................... Sec. 4207.2, 4208.2
Sec. 2640.7....................... Sec. 4219.2
Sec. 2640.8....................... Sec. 4206.2
2641................................... 4221
2642................................... 4211
2643................................... 4204
2644................................... 4219, Subpart C
2645................................... 4203
2646................................... 4208
2647................................... 4207
2648................................... 4219, Subpart B
2649................................... 4206
------------------------------------------------------------------------
Subchapter H--Other Rules Applicable to Multiemployer Plans
------------------------------------------------------------------------
2670:
Sec. 2670.2....................... Sec. 4001.2
Sec. 2670.3....................... Sec. 4231.2
Sec. 2670.4....................... Secs. 4041A.2, 4245.2, &
4281.2
2672................................... 4231
2673................................... 4041A, Subpart B, & 4041A.3(a)
2674................................... 4245
2675................................... 4041A, Subparts C & D, & 4281,
Subparts C & D
2676................................... 4281, Subpart B
2677................................... 4220
------------------------------------------------------------------------
Sec. 4000.2 Derivation table.
The following table shows where in previous chapter XXVI of 29 CFR
to find regulations now codified in chapter XL.
[[Page 34009]]
------------------------------------------------------------------------
Ch. XXVI Part(s) Subpart/
Ch. XL Part Subpart/Section(s) Section(s)
------------------------------------------------------------------------
Subchapter A--General
------------------------------------------------------------------------
4000................................... [tables]
4001:
Subpart A.......................... [various statutory and
regulatory definitions]
Subpart B.......................... 2612
4002................................... 2601
4003................................... 2606
------------------------------------------------------------------------
Subchapter B--Premiums
------------------------------------------------------------------------
4006................................... 2610
4007................................... 2610
------------------------------------------------------------------------
Subchapter C--Certain Reporting and Disclosure Requirements
------------------------------------------------------------------------
4010................................... 2628
4011................................... 2627
------------------------------------------------------------------------
Subchapter D--Coverage and Benefits
------------------------------------------------------------------------
4022:
Subpart A.......................... 2613
Subpart B.......................... 2621 (except Sec. 2621.23(b))
Subparts D & E..................... 2623
4022B.................................. Sec. 2621.23(b)
------------------------------------------------------------------------
Subchapter E--Plan Terminations
------------------------------------------------------------------------
4041:
Subpart A.......................... Secs. 2616 & 2617, Subparts A
Subpart B.......................... 2617, Subpart B
Subpart C.......................... 2616, Subpart B
4041A:
Subpart A.......................... Secs. 2670.4, 2673.1, 2673.4,
2675.1 & 2675.2
Subpart B.......................... Secs. 2673.2 & .3
Subparts C & D..................... 2675, Subparts B & E
4043................................... 2615
4044................................... 2618, 2619 & 2620
4047................................... 2625
4050................................... 2629
------------------------------------------------------------------------
Subchapter F--Liability
------------------------------------------------------------------------
4061................................... [cross-references]
4062................................... 2622 (except Sec. 2622.9)
4063................................... [cross-references]
4064................................... [cross-references]
------------------------------------------------------------------------
Subchapter G--Annual Reporting Requirements
------------------------------------------------------------------------
4065................................... 2611
------------------------------------------------------------------------
Subchapter H--Enforcement Provisions
------------------------------------------------------------------------
4067................................... [cross-reference]
4068................................... 2622.9
Subchapter I--Withdrawal Liability in Multiemployer Plans
------------------------------------------------------------------------
4203................................... 2645
4204................................... 2643 & Sec. 2640.5
4206................................... 2649 & Sec. 2640.8
4207................................... 2647 & 2640.6
4208................................... 2646 & 2640.6
4211................................... 2642 & 2640.4
4219:
Subpart A.......................... Sec. 2640.7
Subpart B.......................... 2648
Subpart C.......................... 2644
4220................................... 2677
4221................................... 2641 & Sec. 2640.3
------------------------------------------------------------------------
Subchapter J--Insolvency, Reorganization, Termination, and Other Rules
Applicable to Multiemployer Plans
------------------------------------------------------------------------
4231................................... 2672 & Sec. 2670.3
[[Page 34010]]
4245................................... 2674 & 2670.4
4261................................... [cross-reference]
4281:
Subpart A.......................... 2675, Subpart A, & 2670.4
Subpart B.......................... 2676
Subpart C.......................... 2675, Subpart C
Subpart D.......................... 2675, Subpart D
------------------------------------------------------------------------
Subchapter K--Internal Administrative Rules and Procedures
------------------------------------------------------------------------
4901................................... 2603
4902................................... 2607
4903................................... 2609
4904................................... 2602, Subpart A
4905................................... 2602, Subpart B
4907................................... 2608
------------------------------------------------------------------------
PART 4001--TERMINOLOGY
Sec.
4001.1 Purpose and scope.
4001.2 Definitions.
4001.3 Trades or businesses under common control; controlled
groups.
Authority: 29 U.S.C. 1301, 1302(b)(3).
Sec. 4001.1 Purpose and scope.
This part contains definitions of certain terms used in this
chapter and the regulations under which the PBGC makes various
controlled group determinations.
Sec. 4001.2 Definitions.
For purposes of this chapter (unless otherwise indicated or
required by the context):
Affected party means, with respect to a plan--
(1) Each participant in the plan;
(2) Each beneficiary of a deceased participant;
(3) Each alternate payee under an applicable qualified domestic
relations order, as defined in section 206(d)(3) of ERISA;
(4) Each employee organization that currently represents any group
of participants;
(5) For any group of participants not currently represented by an
employee organization, the employee organization, if any, that last
represented such group of participants within the 5-year period
preceding issuance of the notice of intent to terminate; and
(6) the PBGC. If an affected party has designated, in writing, a
person to receive a notice on behalf of the affected party, any
reference to the affected party (in connection with the notice) shall
be construed to refer to such person.
Annuity means a series of periodic payments to a participant or
surviving beneficiary for a fixed or contingent period.
Basic-type benefit means a benefit that is guaranteed under the
provisions of part 4022, subpart A, of this chapter, or would be
guaranteed if the guarantee limits in part 4022, subpart B, of this
chapter did not apply.
Benefit liabilities means the benefits of participants and their
beneficiaries under the plan (within the meaning of section 401(a)(2)
of the Code).
Code means the Internal Revenue Code of 1986, as amended.
Complete withdrawal means a complete withdrawal as described in
section 4203 of ERISA.
Contributing sponsor means a person who is a contributing sponsor
as defined in section 4001(a)(13) of ERISA.
Controlled group means, in connection with any person, a group
consisting of such person and all other persons under common control
with such person, determined under section 4001.3 of this part. For
purposes of determining the persons liable for contributions under
section 412(c)(11)(B) of the Code or section 302(c)(11)(B) of ERISA, or
for premiums under section 4007(e)(2) of ERISA, a controlled group also
includes any group treated as a single employer under section 414 (m)
or (o) of the Code.
Corporation means the Pension Benefit Guaranty Corporation, except
where the context demonstrates that a different meaning is intended.
Defined benefit plan means a plan described in section 3(35) of
ERISA.
Distress termination means the voluntary termination of a single-
employer plan in accordance with section 4041(c) of ERISA and part
4041, subpart C, of this chapter.
Distribution date means:
(1) Except as provided in paragraph (2)--
(i) For benefits provided through the purchase of irrevocable
commitments, the date on which the obligation to provide the benefits
passes from the plan to the insurer; and
(ii) For benefits provided other than through the purchase of
irrevocable commitments, the date on which the benefits are delivered
to the participant or beneficiary (or to another plan or benefit
arrangement or other recipient authorized by the participant or
beneficiary in accordance with applicable law and regulations)
personally or by deposit with a mail or courier service (as evidenced
by a postmark or written receipt); or
(2) Other than for purposes of determining the interest rate to be
used in calculating the value of a benefit to be paid as a lump sum to
a late-discovered participant, the deemed distribution date (as defined
in Sec. 4050.2) in the case of a designated benefit paid to the PBGC, a
benefit provided after the deemed distribution date to a late-
discovered participant, or an irrevocable commitment purchased from an
insurer after the deemed distribution date for a recently-missing
participant in accordance with part 4050 of this chapter (dealing with
missing participants).
Employer means all trades or businesses (whether or not
incorporated) that are under common
[[Page 34011]]
control, within the meaning of Sec. 4001.3 of this chapter.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
Fair market value means the price at which property would change
hands between a willing buyer and a willing seller, neither being under
any compulsion to buy or sell and both having reasonable knowledge of
relevant facts.
FOIA means the Freedom of Information Act, as amended (5 U.S.C.
552).
Funding standard account means an account established and
maintained under section 302(b) of ERISA or section 412(b) of the Code.
Guaranteed benefit means a benefit under a single-employer plan
that is guaranteed by the PBGC under section 4022(a) of ERISA and part
4022 of this chapter, or a benefit under a multiemployer plan that is
guaranteed by the PBGC under section 4022A of ERISA.
Insurer means a company authorized to do business as an insurance
carrier under the laws of a State or the District of Columbia.
Irrevocable commitment means an obligation by an insurer to pay
benefits to a named participant or surviving beneficiary, if the
obligation cannot be cancelled under the terms of the insurance
contract (except for fraud or mistake) without the consent of the
participant or beneficiary and is legally enforceable by the
participant or beneficiary.
IRS means the Internal Revenue Service.
Mandatory employee contributions means amounts contributed to the
plan by a participant that are required as a condition of employment,
as a condition of participation in such plan, or as a condition of
obtaining benefits under the plan attributable to employer
contributions.
Mass withdrawal means the withdrawal of every employer from the
plan, or the withdrawal of substantially all employers pursuant to an
agreement or arrangement to withdraw.
Multiemployer Act means the Multiemployer Pension Plan Amendments
Act of 1980.
Multiemployer plan means a plan that is described in section
4001(a)(3) of ERISA and that is covered by title IV of ERISA.
Multiple employer plan means a single-employer plan maintained by
two or more contributing sponsors that are not members of the same
controlled group, under which all plan assets are available to pay
benefits to all plan participants and beneficiaries.
Nonbasic-type benefit means any benefit provided by a plan other
than a basic-type benefit.
Nonforfeitable benefit means a benefit described in section
4001(a)(8) of ERISA. Benefits that become nonforfeitable solely as a
result of the termination of a plan will be considered forfeitable.
Normal retirement age means the age specified in the plan as the
normal retirement age. This age shall not exceed the later of age 65 or
the age attained after 5 years of participation in the plan. If no
normal retirement age is specified in the plan, it is age 65.
Notice of intent to terminate means the notice of a proposed
termination of a single-employer plan, as required by section
4041(a)(2) of ERISA and Sec. 4041.21 (in a standard termination) or
Sec. 4041.41 (in a distress termination) of this chapter.
PBGC means the Pension Benefit Guaranty Corporation.
Person means a person defined in section 3(9) of ERISA.
Plan means a defined benefit plan within the meaning of section
3(35) of ERISA that is covered by title IV of ERISA.
Plan administrator means an administrator, as defined in section
3(16)(A) of ERISA.
Plan sponsor means, with respect to a multiemployer plan, the
person described in section 4001(a)(10) of ERISA.
Plan year means the calendar, policy, or fiscal year on which the
records of the plan are kept.
Proposed termination date means the date specified as such by the
plan administrator of a single-employer plan in a notice of intent to
terminate or, if later, in the standard or distress termination notice,
in accordance with section 4041 of ERISA and part 4041 of this chapter.
Single-employer plan means any defined benefit plan (as defined in
section 3(35) of ERISA) that is not a multiemployer plan (as defined in
section 4001(a)(3) of ERISA) and that is covered by title IV of ERISA.
Standard termination means the voluntary termination, in accordance
with section 4041(b) of ERISA and part 4041, subpart B, of this
chapter, of a single-employer plan that is able to provide for all of
its benefit liabilities when plan assets are distributed.
Substantial owner means a substantial owner as defined in section
4022(b)(5)(A) of ERISA.
Sufficient for benefit liabilities means that there is no amount of
unfunded benefit liabilities, as defined in section 4001(a)(18) of
ERISA.
Sufficient for guaranteed benefits means that there is no amount of
unfunded guaranteed benefits, as defined in section 4001(a)(17) of
ERISA.
Termination date means the date established pursuant to section
4048(a) of ERISA.
Title IV benefit means the guaranteed benefit plus any additional
benefits to which plan assets are allocated pursuant to section 4044 of
ERISA and part 4044 of this chapter.
Voluntary employee contributions means amounts contributed by an
employee to a plan, pursuant to the provisions of the plan, that are
not mandatory employee contributions.
Sec. 4001.3 Trades or businesses under common control; controlled
groups.
For purposes of title IV of ERISA:
(a)(1) The PBGC will determine that trades and businesses (whether
or not incorporated) are under common control if they are ``two or more
trades or businesses under common control'', as defined in regulations
prescribed under section 414(c) of the Code.
(2) The PBGC will determine that all employees of trades or
businesses (whether or not incorporated) which are under common control
shall be treated as employed by a single employer, and all such trades
and businesses shall be treated as a single employer.
(3) An individual who owns the entire interest in an unincorporated
trade or business is treated as his own employer, and a partnership is
treated as the employer of each partner who is an employee within the
meaning of section 401(c)(1) of the Code.
(b) In the case of a single-employer plan:
(1) In connection with any person, a controlled group consists of
that person and all other persons under common control with such
person.
(2) Persons are under common control if they are members of a
``controlled group of corporations'', as defined in regulations
prescribed under section 414(b) of the Code, or if they are ``two or
more trades or businesses under common control'', as defined in
regulations prescribed under section 414(c) of the Code.
PART 4002--BYLAWS OF THE PENSION BENEFIT GUARANTY CORPORATION
Sec.
4002.1 Name.
4002.2 Offices.
4002.3 Board of Directors.
4002.4 Chairman.
4002.5 Quorum.
[[Page 34012]]
4002.6 Meetings.
4002.7 Place of meetings; use of conference call communications
equipment.
4002.8 Alternate voting procedure.
4002.9 Amendments.
Authority: 29 U.S.C. 1302(f).
Sec. 4002.1 Name.
The name of the Corporation is the Pension Benefit Guaranty
Corporation.
Sec. 4002.2 Offices.
The principal office of the Corporation shall be in the
Metropolitan area of the City of Washington, District of Columbia. The
Corporation may have additional offices at such other places as the
Board of Directors may deem necessary or desirable to the conduct of
its business.
Sec. 4002.3 Board of Directors.
(a) The Board of Directors shall establish the policies of the
Corporation and shall perform the other functions assigned to the Board
of Directors in title IV of the Employee Retirement Income Security Act
of 1974. The Board of Directors of the Corporation shall be composed of
the Secretary of Labor, the Secretary of the Treasury, and the
Secretary of Commerce. Members of the Board shall serve without
compensation, but shall be reimbursed by the Corporation for travel,
subsistence, and other necessary expenses incurred in the performance
of their duties as members of the Board. A person at the time of a
meeting of the Board of Directors who is serving as Secretary of Labor,
Secretary of the Treasury or Secretary of Commerce in an acting
capacity, shall serve as a member of the Board of Directors with the
same authority and effect as the designated Secretary.
(b) The following powers are expressly reserved to the Board of
Directors and shall not be delegated:
(1) Approval of all final substantive regulations prior to
publication in the Federal Register, except for amendments to the
regulations on Allocation of Assets in Single-employer Plans and Duties
of Plan Sponsor Following Mass Withdrawal (parts 4044 and 4281 of this
chapter) establishing new interest rates and factors, which may be
approved by the Executive Director of the PBGC.
(2) Approval of all reports or recommendations to the Congress that
are required by statute;
(3) Establishment from time to time of the Corporation's budget and
debt ceiling up to the statutory limit;
(4) Determination from time to time of limits on advances to the
revolving funds administered by the Corporation pursuant to section
4005(a) of ERISA;
(5) Final decision on any policy matter that would materially
affect the rights of a substantial number of employers or covered
participants and beneficiaries.
(c) Final non-substantive regulations and all proposed regulations
shall be approved by the Executive Director prior to publication in the
Federal Register; provided that all proposed substantive regulations
shall first be circulated for review to the Board of Directors or their
designees, and may thereafter be issued by the Executive Director after
responding to any comments made within 21 days after circulation of the
proposed regulation, or, if no comments are received, after expiration
of the 21-day period.
Sec. 4002.4 Chairman.
The Secretary of Labor shall be the Chairman of the Board of
Directors and he shall be the administrator of the Corporation with
responsibility for its management, including overall supervision of the
Corporation's personnel, organization, and budget practices, and shall
exercise such incidental powers as may be necessary to carry out his
administrative responsibilities. The Chairman may delegate his
administrative responsibilities.
Sec. 4002.5 Quorum.
A majority of the Directors shall constitute a quorum for the
transaction of business. Any act of a majority of the Directors present
at any meeting at which there is a quorum shall be the act of the
Board, except as may otherwise be provided in these bylaws.
Sec. 4002.6 Meetings.
Regular meetings of the Board of Directors shall be held at such
times as the Chairman shall select. Special meetings of the Board of
Directors shall be called by the Chairman on the request of any other
Director. Reasonable notice of any meetings shall be given to each
Director. The General Counsel of the Corporation shall serve as
Secretary to the Board of Directors and keep its minutes. As soon as
practicable after each meeting, a draft of the minutes of such meeting
shall be distributed to each member of the Board for correction or
approval.
Sec. 4002.7 Place of meetings; use of conference call communications
equipment.
Meetings of the Board of Directors shall be held at the principal
office of the Corporation unless otherwise determined by the Board of
Directors or the Chairman. Any Director may participate in a meeting of
the Board of Directors through the use of conference call telephone or
similar communications equipment, by means of which all persons
participating in the meeting can simultaneously speak to and hear each
other. Any Director so participating in a meeting shall be deemed
present for all purposes. Actions taken by the Board of Directors at
meetings conducted through the use of such equipment, including the
votes of each member, shall be recorded in the usual manner in the
minutes of the meetings of the Board of Directors. A resolution of the
Board of Directors signed by each of its three members shall have the
same force and effect as if agreed at a duly called meeting and shall
be recorded in the minutes of the Board of Directors.
Sec. 4002.8 Alternate voting procedure.
(a) A Director shall be deemed to have participated in a meeting of
the Board of Directors for all purposes if,
(1) That Director was represented at that meeting by an individual
who was designated to act on his behalf, and
(2) That Director ratified in writing the actions taken by his
designee at that meeting within a reasonable period of time after such
meeting.
(b) For purposes of this section, a Director, including an
individual serving as Acting Secretary, shall designate a
representative at a level not below that of Assistant Secretary within
his Department. Such designation shall be in writing and shall be
effective until withdrawn or until a date specified therein.
(c) For purposes of this section, a Director's approval of the
minutes of a meeting of the Board of Directors shall constitute
ratification of the actions of his designee at such meeting.
Sec. 4002.9 Amendments.
These bylaws may be amended or new bylaws adopted by unanimous vote
of the Board.
PART 4003--RULES FOR ADMINISTRATIVE REVIEW OF AGENCY DECISIONS
Subpart A--General Provisions
Sec.
4003.1 Purpose and scope.
4003.2 Definitions.
4003.3 PBGC assistance in obtaining information.
4003.4 Extension of time.
4003.5 Non-timely request for review.
4003.6 Representation.
4003.7 Exhaustion of administrative remedies.
4003.8 Request for confidential treatment.
4003.9 Filing of documents.
4003.10 Computation of time.
[[Page 34013]]
Subpart B--Initial Determinations
4003.21 Form and contents of initial determinations.
4003.22 Effective date of determinations.
Subpart C--Reconsideration of Initial Determinations
4003.31 Who may request reconsideration.
4003.32 When to request reconsideration.
4003.33 Where to submit request for reconsideration.
4003.34 Form and contents of request for reconsideration.
4003.35 Final decision on request for reconsideration.
Subpart D--Administrative Appeals
4003.51 Who may appeal or participate in appeals.
4003.52 When to file.
4003.53 Where to file.
4003.54 Contents of appeal.
4003.55 Opportunity to appear and to present witnesses.
4003.56 Consolidation of appeals.
4003.57 Appeals affecting third parties.
4003.58 Powers of the Appeals Board.
4003.59 Decision by the Appeals Board.
4003.60 Referral of appeal to the Executive Director.
Authority: 29 U.S.C. 1302(b)(3).
Subpart A--General Provisions
Sec. 4003.1 Purpose and scope.
(a) Purpose. This part sets forth the rules governing the issuance
of all initial determinations by the PBGC on cases pending before it
involving the matters set forth in paragraph (b) of this section and
the procedures for requesting and obtaining administrative review by
the PBGC of those determinations. Subpart A contains general
provisions. Subpart B sets forth rules governing the issuance of all
initial determinations of the PBGC on matters covered by this part.
Subpart C establishes procedures governing the reconsideration by the
PBGC of initial determinations relating to the matters set forth in
paragraphs (b)(1) through (b)(4). Subpart D establishes procedures
governing administrative appeals from initial determinations relating
to the matters set forth in paragraphs (b)(5) through (b)(10).
(b) Scope. This part applies to the following determinations made
by the PBGC in cases pending before it and to the review of those
determinations:
(1) Determinations that a plan is covered under section 4021 of
ERISA;
(2) Determinations with respect to premiums, interest and late
payment penalties pursuant to section 4007 of ERISA;
(3) Determinations with respect to voluntary terminations under
section 4041 of ERISA, including--
(i) A determination that a notice requirement or a certification
requirement under section 4041 of ERISA has not been met,
(ii) A determination that the requirements for demonstrating
distress under section 4041(c)(2)(B) of ERISA have not been met, and
(iii) A determination with respect to the sufficiency of plan
assets for benefit liabilities or for guaranteed benefits;
(4) Determinations with respect to allocation of assets under
section 4044 of ERISA, including distribution of excess assets under
section 4044(d);
(5) Determinations that a plan is not covered under section 4021 of
ERISA;
(6) Determinations under section 4022 (a) or (c) or section
4022A(a) of ERISA with respect to benefit entitlement of participants
and beneficiaries under covered plans and determinations that a
domestic relations order is or is not a qualified domestic relations
order under section 206(d)(3) of ERISA and section 414(p) of the Code;
(7) Determinations under section 4022 (b) or (c), section 4022A (b)
through (e), or section 4022B of ERISA of the amount of benefits
payable to participants and beneficiaries under covered plans;
(8) Determinations of the amount of money subject to recapture
pursuant to section 4045 of ERISA;
(9) Determinations of the amount of liability under section
4062(b)(1), section 4063, or section 4064 of ERISA;
(10) Determinations--
(i) That the amount of a participant's or beneficiary's benefit
under section 4050(a)(3) of ERISA has been correctly computed based on
the designated benefit paid to the PBGC under section 4050(b)(2) of
ERISA, or
(ii) That the designated benefit is correct, but only to the extent
that the benefit to be paid does not exceed the participant's or
beneficiary's guaranteed benefit.
(c) Matters not covered by this part. Nothing in this part limits--
(1) The authority of the PBGC to review, either upon request or on
its own initiative, a determination to which this part does not apply
when, in its discretion, the PBGC determines that it would be
appropriate to do so, or
(2) The procedure that the PBGC may utilize in reviewing any
determination to which this part does not apply.
Sec. 4003.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
Code, contributing sponsor, controlled group, ERISA, multiemployer
plan, PBGC, person, plan administrator, and single-employer plan.
In addition, for purposes of this part:
Aggrieved person means any participant, beneficiary, plan
administrator, contributing sponsor of a single-employer plan or member
of such a contributing sponsor's controlled group, plan sponsor of a
multiemployer plan, or employer that is adversely affected by an
initial determination of the PBGC with respect to a pension plan in
which such person has an interest. The term ``beneficiary'' includes an
alternate payee (within the meaning of section 206(d)(3)(K) of ERISA)
under a qualified domestic relations order (within the meaning of
section 206(d)(3)(B) of ERISA).
Appeals Board means a board consisting of three PBGC officials. The
Executive Director shall appoint a senior PBGC official to serve as
Chairperson and three or more other PBGC officials to serve as regular
Appeals Board members. The Chairperson shall designate the three
officials who will constitute the Appeals Board with respect to a case,
provided that a person may not serve on the Appeals Board with respect
to a case in which he or she made a decision regarding the merits of
the determination being appealed. The Chairperson need not serve on the
Appeals Board with respect to all cases.
Appellant means any person filing an appeal under subpart D of this
part.
Director means the Director of any department of the PBGC and
includes the Executive Director of the PBGC, Deputy Executive
Directors, and the General Counsel.
Sec. 4003.3 PBGC assistance in obtaining information.
A person who lacks information or documents necessary to file a
request for review pursuant to subpart C or D of this part, or
necessary to a decision whether to seek review, or necessary to
participate in an appeal pursuant to Sec. 4003.57 of this part or
necessary to a decision whether to participate, may request the PBGC's
assistance in obtaining information or documents in the possession of a
party other than the PBGC. The request shall state or describe the
missing information or documents, the reason why the person needs the
information or documents, and the reason why the person needs the
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
assistance of the PBGC in obtaining the information or documents. The
request may also include a request for an extension of time to file
pursuant to Sec. 4003.4 of this part.
Sec. 4003.4 Extension of time.
(a) General rule. When a document is required under this part to be
filed within a prescribed period of time, an extension of time to file
will be granted only upon good cause shown and only
[[Page 34014]]
when the request for an extension is made before the expiration of the
time prescribed. The request for an extension shall be in writing and
state why additional time is needed and the amount of additional time
requested. The filing of a request for an extension shall stop the
running of the prescribed period of time. When a request for an
extension is granted, the PBGC shall notify the person requesting the
extension, in writing, of the amount of additional time granted. When a
request for an extension is denied, the PBGC shall so notify the
requestor in writing, and the prescribed period of time shall resume
running from the date of denial.
(b) Disaster relief. When the President of the United States
declares that, under the Disaster Relief Act of 1974, as amended (42
U.S.C. 5121, 5122(2), 5141(b)), a major disaster exists, the Executive
Director of the PBGC (or his or her designee) may, by issuing one or
more notices of disaster relief, extend the due date for filing a
request for reconsideration under Sec. 4003.32 or an appeal under
Sec. 4003.52 by up to 180 days.
(1) The due date extension or extensions shall be available only to
an aggrieved person who is residing in, or whose principal place of
business is within, a designated disaster area, or with respect to whom
the office of the service provider, bank, insurance company, or other
person maintaining the information necessary to file the request for
reconsideration or appeal is within a designated disaster area; and
(2) The request for reconsideration or appeal shall identify the
filing as one for which the due date extension is available.
Sec. 4003.5 Non-timely request for review.
The PBGC will process a request for review of an initial
determination that was not filed within the prescribed period of time
for requesting review (see Secs. 4003.32 and 4003.52) if--
(a) The person requesting review demonstrates in his or her request
that he or she did not file a timely request for review because he or
she neither knew nor, with due diligence, could have known of the
initial determination; and
(b) The request for review is filed within 30 days after the date
the aggrieved person, exercising due diligence at all relevant times,
first learned of the initial determination where the requested review
is reconsideration, or within 45 days after the date the aggrieved
person, exercising due diligence at all relevant times, first learned
of the initial determination where the request for review is an appeal.
Sec. 4003.6 Representation.
A person may file any document or make any appearance that is
required or permitted by this part on his or her own behalf or he or
she may designate a representative. When the representative is not an
attorney-at-law, a notarized power of attorney, signed by the person
making the designation, which authorizes the representation and
specifies the scope of representation shall be filed with the PBGC in
accordance with Sec. 4003.9(b) of this part.
Sec. 4003.7 Exhaustion of administrative remedies.
Except as provided in Sec. 4003.22(b), a person aggrieved by an
initial determination of the PBGC covered by this part, other than a
determination subject to reconsideration that is issued by a Department
Director, has not exhausted his or her administrative remedies until he
or she has filed a request for reconsideration under subpart C of this
part or an appeal under subpart D of this part, whichever is
applicable, and a decision granting or denying the relief requested has
been issued.
Sec. 4003.8 Request for confidential treatment.
If any person filing a document with the PBGC believes that some or
all of the information contained in the document is exempt from the
mandatory public disclosure requirements of the Freedom of Information
Act, 5 U.S.C. 552, he or she shall specify the information with respect
to which confidentiality is claimed and the grounds therefor.
Sec. 4003.9 Filing of documents.
(a) Date of filing. Any document required or permitted to be filed
under this part is considered filed on the date of the United States
postmark stamped on the cover in which the document is mailed, provided
that--
(1) The postmark was made by the United States Postal Service; and
(2) The document was mailed postage prepaid, properly packaged and
addressed to the PBGC.
If the conditions stated in both paragraphs (a)(1) and (a)(2) of
this section are not met, the document is considered filed on the date
it is received by the PBGC. Documents received after regular business
hours are considered filed on the next regular business day.
(b) Where to file. Any document required or permitted to be filed
under this part in connection with a request for reconsideration shall
be submitted to the Director of the department within the PBGC that
issued the initial determination. Any document required or permitted to
be filed under this part in connection with an appeal shall be
submitted to the Appeals Board, Pension Benefit Guaranty Corporation,
1200 K Street NW., Washington, DC 20005-4026.
Sec. 4003.10 Computation of time.
In computing any period of time prescribed or allowed by this part,
the day of the act, event, or default from which the designated period
of time begins to run is not counted. The last day of the period so
computed shall be included, unless it is a Saturday, Sunday, or Federal
holiday, in which event the period runs until the end of the next day
which is not a Saturday, Sunday, or a Federal holiday.
Subpart B--Initial Determinations
Sec. 4003.21 Form and contents of initial determinations.
All determinations to which this subpart applies shall be in
writing, shall state the reason for the determination, and, except when
effective on the date of issuance as provided in Sec. 4003.22(b), shall
contain notice of the right to request review of the determination
pursuant to subpart C or subpart D of this part, as applicable, and a
brief description of the procedures for requesting review.
Sec. 4003.22 Effective date of determinations.
(a) General Rule. Except as provided in paragraph (b) of this
section, an initial determination covered by this subpart will not
become effective until the prescribed period of time for filing a
request for reconsideration under subpart C of this part or an appeal
under subpart D of this part, whichever is applicable, has elapsed. The
filing of a request for review under subpart C or D of this part shall
automatically stay the effectiveness of a determination until a
decision on the request for review has been issued by the PBGC.
(b) Exception. The PBGC may, in its discretion, order that the
initial determination in a case is effective on the date it is issued.
When the PBGC makes such an order, the initial determination shall
state that the determination is effective on the date of issuance and
that there is no obligation to exhaust administrative remedies with
respect to that determination by seeking review of it by the PBGC.
[[Page 34015]]
Subpart C--Reconsideration of Initial Determinations
Sec. 4003.31 Who may request reconsideration.
Any person aggrieved by an initial determination of the PBGC to
which this subpart applies may request reconsideration of the
determination.
Sec. 4003.32 When to request reconsideration.
Except as provided in Secs. 4003.4 and 4003.5, a request for
reconsideration must be filed within 30 days after the date of the
initial determination of which reconsideration is sought or, when
administrative review includes a procedure in Sec. 4903.33 of this
chapter, by a date 60 days (or more) thereafter that is specified in
the PBGC's notice of the right to request review.
Sec. 4003.33 Where to submit request for reconsideration.
A request for reconsideration shall be submitted to the Director of
the department within the PBGC that issued the initial determination,
except that a request for reconsideration of a determination described
in Sec. 4003.1(b)(3)(ii) shall be submitted to the Executive Director.
Sec. 4003.34 Form and contents of request for reconsideration.
A request for reconsideration shall--
(a) Be in writing;
(b) Be clearly designated as a request for reconsideration;
(c) Contain a statement of the grounds for reconsideration and the
relief sought; and
(d) Reference all pertinent information already in the possession
of the PBGC and include any additional information believed to be
relevant.
Sec. 4003.35 Final decision on request for reconsideration.
(a) Except as provided in paragraphs (a)(1) or (a)(2), final
decisions on requests for reconsideration will be issued by the same
department of the PBGC that issued the initial determination, by an
official whose level of authority in that department is higher than
that of the person who issued the initial determination.
(1) When an initial determination is issued by a Department
Director, the Department Director (or an official designated by the
Department Director) will issue the final decision on request for
reconsideration of a determination other than one described in
Sec. 4003.1(b)(3)(ii).
(2) The Executive Director (or an official designated by the
Executive Director) will issue the final decision on a request for
reconsideration of a determination described in Sec. 4003.1(b)(3)(ii).
(b) The final decision on a request for reconsideration shall be in
writing, specify the relief granted, if any, state the reason(s) for
the decision, and state that the person has exhausted his or her
administrative remedies.
Subpart D--Administrative Appeals
Sec. 4003.51 Who may appeal or participate in appeals.
Any person aggrieved by an initial determination to which this
subpart applies may file an appeal. Any person who may be aggrieved by
a decision under this subpart granting the relief requested in whole or
in part may participate in the appeal in the manner provided in
Sec. 4003.57.
Sec. 4003.52 When to file.
Except as provided in Secs. 4003.4 and 4003.5, an appeal under this
subpart must be filed within 45 days after the date of the initial
determination being appealed or, when administrative review includes a
procedure in Sec. 4903.33 of this chapter, by a date 60 days (or more)
thereafter that is specified in the PBGC's notice of the right to
request review.
Sec. 4003.53 Where to file.
An appeal or a request for an extension of time to appeal shall be
submitted to the Appeals Board, Pension Benefit Guaranty Corporation,
1200 K Street NW., Washington, DC 20005-4026.
Sec. 4003.54 Contents of appeal.
(a) An appeal shall--
(1) Be in writing;
(2) Be clearly designated as an appeal;
(3) Contain a statement of the grounds upon which it is brought and
the relief sought;
(4) Reference all pertinent information already in the possession
of the PBGC and include any additional information believed to be
relevant;
(5) State whether the appellant desires to appear in person or
through a representative before the Appeals Board; and
(6) State whether the appellant desires to present witnesses to
testify before the Appeals Board, and if so, state why the presence of
witnesses will further the decision-making process.
(b) In any case where the appellant believes that another person
may be aggrieved if the PBGC grants the relief sought, the appeal shall
also include the name(s) and address(es) (if known) of such other
person(s).
Sec. 4003.55 Opportunity to appear and to present witnesses.
(a) At the discretion of the Appeals Board, any appearance
permitted under this subpart may be before a hearing officer designated
by the Appeals Board.
(b) An opportunity to appear before the Appeals Board (or a hearing
officer) and an opportunity to present witnesses will be permitted at
the discretion of the Appeals Board. In general, an opportunity to
appear will be permitted if the Appeals Board determines that there is
a dispute as to a material fact; an opportunity to present witnesses
will be permitted when the Appeals Board determines that witnesses will
contribute to the resolution of a factual dispute.
(c) Appearances permitted under this section will take place at the
main offices of the PBGC, 1200 K Street NW., Washington, DC 20005-4026,
unless the Appeals Board, in its discretion, designates a different
location, either on its own initiative or at the request of the
appellant or a third party participating in the appeal.
Sec. 4003.56 Consolidation of appeals.
(a) When consolidation may be required. Whenever multiple appeals
are filed that arise out of the same or similar facts and seek the same
or similar relief, the Appeals Board may, in its discretion, order the
consolidation of all or some of the appeals.
(b) Representation of parties. Whenever the Appeals Board orders
the consolidation of appeals, the appellants may designate one (or
more) of their number to represent all of them for all purposes
relating to their appeals.
(c) Decision by Appeals Board. The decision of the Appeals Board in
a consolidated appeal shall be binding on all appellants whose appeals
were subject to the consolidation.
Sec. 4003.57 Appeals affecting third parties.
(a) Before the Appeals Board issues a decision granting, in whole
or in part, the relief requested in an appeal, it shall make a
reasonable effort to notify third persons who will be aggrieved by the
decision of the following:
(1) The pendency of the appeal;
(2) The grounds upon which the appeal is based;
(3) The grounds upon which the Appeals Board is considering
reversing the initial determination;
(4) The right to submit written comments on the appeal;
(5) The right to request an opportunity to appear in person or
through a representative before the Appeals Board and to present
witnesses; and
(6) That no further opportunity to present information to the PBGC
with
[[Page 34016]]
respect to the determination under appeal will be provided.
(b) Written comments and a request to appear before the Appeals
Board must be filed within 45 days after the date of the notice from
the Appeals Board.
(c) If more than one third party is involved, their participation
in the appeal may be consolidated pursuant to the provisions of
Sec. 4003.56.
Sec. 4003.58 Powers of the Appeals Board.
In addition to the powers specifically described in this part, the
Appeals Board may request the submission of any information or the
appearance of any person it considers necessary to resolve a matter
before it and to enter any order it considers necessary for or
appropriate to the disposition of any matter before it.
Sec. 4003.59 Decision by the Appeals Board.
(a) In reaching its decision, the Appeals Board shall consider
those portions of the file relating to the initial determination, all
material submitted by the appellant and any third parties in connection
with the appeal, and any additional information submitted by PBGC
staff.
(b) The decision of the Appeals Board constitutes the final agency
action by the PBGC with respect to the determination which was the
subject of the appeal and is binding on all parties who participated in
the appeal and who were notified pursuant to Sec. 4003.57 of their
right to participate in the appeal.
(c) The decision of the Appeals Board shall be in writing, specify
the relief granted, if any, state the bases for the decision, including
a brief statement of the facts or legal conclusions supporting the
decision, and state that the appellant has exhausted his or her
administrative remedies.
Sec. 4003.60 Referral of appeal to the Executive Director.
The Appeals Board may, in its discretion, refer any appeal to the
Executive Director of the PBGC for decision. In such a case, the
Executive Director shall have all the powers vested in the Appeals
Board by this subpart and the decision of the Executive Director shall
meet the requirements of and have the effect of a decision issued under
Sec. 4003.59 of this part.
PART 4006--PREMIUM RATES
Sec.
4006.1 Purpose and scope.
4006.2 Definitions.
4006.3 Premium rate.
4006.4 Determination of unfunded vested benefits.
4006.5 Exemptions and special rules.
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
Sec. 4006.1 Purpose and scope.
This part, which applies to all plans covered by title IV of ERISA,
provides rules for computing the premiums imposed by sections 4006 and
4007 of ERISA. (See part 4007 of this chapter for rules for the payment
of premiums, including due dates and late payment charges.)
Sec. 4006.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
Code, contributing sponsor, ERISA, fair market value, insurer,
irrevocable commitment, multiemployer plan, notice of intent to
terminate, PBGC, plan administrator, plan, plan year, and single-
employer plan.
In addition, for purposes of this part:
New plan means a plan that became effective within the premium
payment year and includes a plan resulting from a consolidation or
spinoff. A plan that meets this definition is considered to be a new
plan even if the plan constitutes a successor plan within the meaning
of section 4021(a) of ERISA.
Newly-covered plan means a plan that is not a new plan and that was
not covered by title IV of ERISA immediately prior to the premium
payment year.
Participant means any individual who is included in one of the
categories below:
(a) Active. (1) Any individual who is currently in employment
covered by the plan and who is earning or retaining credited service
under the plan. This category includes any individual who is considered
covered under the plan for purposes of meeting the minimum coverage
requirements, but because of offset or other provisions (including
integration with Social Security benefits), the individual does not
have any accrued benefits.
(2) Any non-vested individual who is not currently in employment
covered by the plan but who is earning or retaining credited service
under the plan. This category does not include a non-vested former
employee who has incurred a break in service the greater of one year or
the break in service period specified in the plan.
(b) Inactive--(1) Inactive receiving benefits. Any individual who
is retired or separated from employment covered by the plan and who is
receiving benefits under the plan. This category does not include an
individual to whom an insurer has made an irrevocable commitment to pay
all the benefits to which the individual is entitled under the plan.
(2) Inactive entitled to future benefits. Any individual who is
retired or separated from employment covered by the plan and who is
entitled to begin receiving benefits under the plan in the future. This
category does not include an individual to whom an insurer has made an
irrevocable commitment to pay all the benefits to which the individual
is entitled under the plan.
(c) Deceased. Any deceased individual who has one or more
beneficiaries who are receiving or entitled to receive benefits under
the plan. This category does not include an individual if an insurer
has made an irrevocable commitment to pay all the benefits to which the
beneficiaries of that individual are entitled under the plan.
Premium payment year means the plan year for which the premium is
being paid.
Short plan year means a plan year that is less than twelve full
months.
Sec. 4006.3 Premium rate.
Subject to the provisions of Sec. 4006.5 (dealing with exemptions
and special rules), the premium paid for basic benefits guaranteed
under section 4022(a) of ERISA shall equal the flat-rate premium under
paragraph (a) of this section plus, in the case of a single-employer
plan, the variable-rate premium under paragraph (b) of this section.
(a) Flat-rate premium. The flat-rate premium is equal to the number
of participants in the plan on the last day of the plan year preceding
the premium payment year, multiplied by--
(1) $19 for a single-employer plan, or
(2) $2.60 for a multiemployer plan.
(b) Variable-rate premium. The variable-rate premium is $9 for each
$1,000 of a single-employer plan's unfunded vested benefits, as
determined under Sec. 4006.4.
Sec. 4006.4 Determination of unfunded vested benefits.
(a) General rule. Except as permitted by paragraph (c) of this
section or as provided in the exemptions and special rules under
Sec. 4006.5, the amount of a plan's unfunded vested benefits (as
defined in paragraph (b) of this section) shall be determined as of the
last day of the plan year preceding the premium payment year, based on
the plan provisions and the plan's population as of that date. The
determination shall be made in accordance with paragraph (a)(1) or
(a)(2), and shall be certified to in accordance with paragraph (a)(4).
(1) The unfunded vested benefits shall be determined using the
actuarial assumptions and methods described in
[[Page 34017]]
paragraph (a)(3) for the plan year preceding the premium payment year
(or, in the case of a new or newly-covered plan, for the premium
payment year), except to the extent that other actuarial assumptions or
methods are specifically prescribed by this section or are necessary to
reflect the occurrence of a significant event described in paragraph
(d) of this section between the date of the funding valuation and the
last day of the plan year preceding the premium payment year. (If the
plan does a valuation as of the last day of the plan year preceding the
premium payment year, no separate adjustment for significant events is
needed.)
(2) Under this rule, the determination of the unfunded vested
benefits may be based on a plan valuation done as of the first day of
the premium payment year, provided that--
(i) The actuarial assumptions and methods used are those described
in paragraph (a)(3) for the premium payment year, except to the extent
that other actuarial assumptions or methods are specifically prescribed
by this section or are required to make the adjustment described in
paragraph (a)(2)(ii) of this section; and
(ii) If an enrolled actuary determines that there is a material
difference between the values determined under the valuation and the
values that would have been determined as of the last day of the
preceding plan year, the valuation results are adjusted to reflect
appropriately the values as of the last day of the preceding plan year.
(This adjustment need not be made if the unadjusted valuation would
result in greater unfunded vested benefits.)
(3) For purposes of paragraphs (a)(1) and (a)(2), the actuarial
assumptions and methods for a plan year are those used by the plan for
purposes of determining the additional funding requirement under
section 302(d) of ERISA and section 412(1) of the Code (or, in the case
of a plan that is not required to determine such additional funding
requirement, any assumptions and methods that would be permitted for
such purpose if the plan were so required).
(4) In the case of any plan that determines the amount of its
unfunded vested benefits under the general rule described in this
paragraph, an enrolled actuary must certify, in accordance with the
PBGC annual Premium Payment Package provided for in Sec. 4007.3 of this
part, that the determination was made in a manner consistent with
generally accepted actuarial principles and practices.
(b) Unfunded vested benefits. The amount of a plan's unfunded
vested benefits under this section shall be the excess of the plan's
vested benefits amount (determined under paragraph (b)(1) of this
section) over the value of the plan's assets (determined under
paragraph (b)(2) of this section).
(1) Vested benefits amount. A plan's vested benefits amount under
this section shall be the plan's current liability (within the meaning
of section 302(d)(7) of ERISA and section 412(1)(7) of the Code)
determined by taking into account only vested benefits and by using an
interest rate equal to the applicable percentage of the annual yield
for 30-year Treasury constant maturities, as reported in Federal
Reserve Statistical Release G.13 and H.15, for the calendar month
preceding the calendar month in which the premium payment year begins.
If the interest rate (or rates) used by the plan to determine current
liability was (or were all) not greater than the required interest
rate, the vested benefits need not be revalued if an enrolled actuary
certifies that the interest rate (or interest rates) used was (or were
all) not greater than the required interest rate. For purposes of this
paragraph (b)(1) (subject to the provisions of Sec. 4006.5(g), dealing
with plans of regulated public utilities), the applicable percentage
is--
(i) For a premium payment year that begins before July 1997, 80
percent;
(ii) For a premium payment year that begins after June 1997 and
before the first premium payment year to which the first tables
prescribed under section 302(d)(7)(C)(ii)(II) of ERISA and section
412(1)(7)(C)(ii)(II) of the Code apply, 85 percent; and
(iii) For the first premium payment year to which the first tables
prescribed under section 302(d)(7)(C)(ii)(II) of ERISA and section
412(1)(7)(C)(ii)(II) of the Code apply and any subsequent plan year,
100 percent.
(2) Value of assets. (i) Actuarial value. For a premium payment
year that is described in paragraph (b)(1)(i) or (b)(1)(ii) of this
section, the value of the plan's assets shall be their actuarial value
determined in accordance with section 302(c)(2) of ERISA and section
412(c)(2) of the Code.
(ii) Fair market value. For a premium payment year that is
described in paragraph (b)(1)(iii) of this section, the value of the
plan's assets shall be their fair market value.
(iii) Use of credit balance. The value of the plan's assets shall
not be reduced by a credit balance in the funding standard account.
(iv) Contributions. Contributions owed for any plan year preceding
the premium payment year shall be included for plans with 500 or more
participants and may be included for any other plan. Contributions may
be included only to the extent such contributions have been paid into
the plan on or before the earlier of the due date for payment of the
variable-rate portion of the premium under Sec. 4007.11 or the date
that portion is paid. Contributions included that are paid after the
last day of the plan year preceding the premium payment year shall be
discounted at the plan asset valuation rate (on a simple or compound
basis in accordance with the plan's discounting rules) to such last day
to reflect the date(s) of payment. Contributions for the premium
payment year may not be included for any plan.
(c) Alternative method for calculating unfunded vested benefits. In
lieu of determining the amount of the plan's unfunded vested benefits
pursuant to paragraph (a) of this section, a plan administrator may
calculate the amount of a plan's unfunded vested benefits under this
paragraph (c) using the plan's Form 5500, Schedule B, for the plan year
preceding the premium payment year. Pursuant to this paragraph (c),
unfunded vested benefits shall be determined, in accordance with the
Premium Payment Package, from values for the plan's vested benefits and
assets that are required to be reported on the plan's Schedule B. The
value of the vested benefits shall be adjusted in accordance with
paragraph (c)(1) of this section to reflect accruals during the plan
year preceding the premium payment year and with paragraph (c)(2) of
this section to reflect the interest rate prescribed in paragraph
(b)(1) of this section, and the value of the assets shall be adjusted
in accordance with paragraph (c)(4) of this section. (If the plan
administrator certifies that the interest rate (or rates) used to
determine the vested benefit values taken from the Schedule B was (or
were all) not greater than the interest rate prescribed in paragraph
(b)(1) of this section, the interest rate adjustment prescribed in
paragraph (c)(2) of this section is not required.) The resulting
unfunded vested benefits amount shall be adjusted in accordance with
paragraph (c)(5) of this section to reflect the passage of time from
the date of the Schedule B data to the last day of the plan year
preceding the premium payment year.
(1) Vested benefits adjustment for accruals. The total value of the
plan's current liability as of the first day of the plan year preceding
the premium payment year for vested benefits of active and terminated
vested participants not in pay status, computed in accordance with
section 302(d)(7) of ERISA and section 412(l)(7) of the Code,
[[Page 34018]]
shall be adjusted to reflect the increase in vested benefits
attributable to accruals during the plan year preceding the premium
payment year by multiplying that value by 1.07.
(2) Vested benefits interest rate adjustment. The value of vested
benefits as entered on the Schedule B shall be adjusted in accordance
with the following formula (except as provided in paragraph (c)(3) of
this section) to reflect the interest rate prescribed in paragraph
(b)(1) of this section:
VBadj=VBPAY x .94(RIR-BIR)+VBNON-PAY
x .94(RIR-BIR) x ((100+BIA)/(100+RIR))(ARA-50);
where--
(i) VBadj is the adjusted vested benefits amount (as of the
first day of the plan year preceding the premium payment year) under
the alternative calculation method;
(ii) VBPAY is the plan's current liability as of the first day
of the plan year preceding the premium payment year for vested benefits
of participants and beneficiaries in pay status, computed in accordance
with section 302(d)(7) of ERISA and section 412(l)(7) of the Code;
(iii) VBNON-PAY is the total of the plan's current liability
as of the first day of the plan year preceding the premium payment year
for vested benefits of active and terminated vested participants not in
pay status, computed in accordance with section 302(d)(7) of ERISA and
section 412(l)(7) of the Code, multiplied by 1.07 in accordance with
paragraph (c)(1) of this section;
(iv) RIR is the required interest rate prescribed in paragraph
(b)(1) of this section;
(v) BIR is the post-retirement current liability interest rate used
to determine the pay-status current liability figure referred to in
paragraph (c)(2)(ii) of this section;
(vi) BIA is the pre-retirement current liability interest rate used
to determine the pre-pay-status current liability figures referred to
in paragraph (c)(2)(iii) of this section; and
(vii) ARA is the plan's assumed weighted average retirement age.
(3) Optional use of substitution factors in interest rate
adjustment formula. In lieu of the term, .94 (RIR-BIR), in the
formula prescribed by paragraph (c)(2) of this section, a plan
administrator may use the optional substitution factor provided in the
Premium Payment Package.
(4) Adjusted value of plan assets. The value of plan assets shall
be the actuarial value of plan assets as of the first day of the plan
year preceding the premium payment year, determined in accordance with
section 302(c)(2) of ERISA and section 412(c)(2) of the Code without
reduction for any credit balance in the plan's funding standard
account, unless that amount was determined as of a date other than the
first day of the plan year preceding the premium payment year or the
premium payment year is described in Sec. 4006.4(b)(1)(iii). In either
of those events, the value of plan assets shall be the current value of
assets (as reported on Form 5500) as of that first day or (if Form
5500-EZ is filed) as of the last day of the plan year preceding the
Schedule B year. The value of assets from the Schedule B shall be
adjusted in accordance with paragraph (b)(2) of this section, except
that the amount of all contributions that are included in the value of
assets and that were made after the first day of the plan year
preceding the premium payment year shall be discounted to such first
day at the interest rate prescribed in paragraph (b)(1) of this section
for the premium payment year, compounded annually except that simple
interest may be used for any partial years.
(5) Adjustment for passage of time. The amount of the plan's
unfunded vested benefits shall be adjusted to reflect the passage of
time between the date of the Schedule B data (the first day of the plan
year preceding the premium payment year) and the last day of the plan
year preceding the premium payment year in accordance with the
following formula:
UVBadj=(VBadj-Aadj) x (1+RIR/100)Y;
where--
(i) UVBadj is the amount of the plan's adjusted unfunded
vested benefits;
(ii) VBadj is the value of the adjusted vested benefits
calculated in accordance with paragraphs (c)(1) and (c)(2) of this
section;
(iii) Aadj is the adjusted asset amount calculated in
accordance with paragraph (c)(3) of this section; (iv) RIR is the
required interest rate prescribed in paragraph (b)(1) of this section;
and
(v) Y is deemed to be equal to 1 (unless the plan year preceding
the premium payment year is a short plan year, in which case Y is the
number of years between the first day and the last day of the short
plan year, expressed as a decimal fraction of 1.0 with two digits to
the right of the decimal point).
(d) Restrictions on alternative calculation method for large plans.
(1) The alternative calculation method described in paragraph (c)
of this section may be used for a plan with 500 or more participants as
of the last day of the plan year preceding the premium payment year
only if--
(i) No significant event, as described in paragraph (d)(2) of this
section, has occurred between the first day and the last day of the
plan year preceding the premium payment year, and an enrolled actuary
so certifies in accordance with the Premium Payment Package; or
(ii) An enrolled actuary makes an appropriate adjustment to the
value of unfunded vested benefits to reflect the occurrence of
significant events that have occurred between those dates and certifies
to that fact in accordance with the Premium Payment Package.
(2) The significant events described in this paragraph are--
(i) An increase in the plan's actuarial costs (consisting of the
plan's normal cost under section 302(b)(2)(A) of ERISA and section
412(b)(2)(A) of the Code, amortization charges under section
302(b)(2)(B) of ERISA and section 412(b)(2)(B) of the Code, and
amortization credits under section 302(b)(3)(B) of ERISA and section
412(b)(3)(B) of the Code) attributable to a plan amendment, unless the
cost increase attributable to the amendment is less than 5 percent of
the actuarial costs determined without regard to the amendment;
(ii) The extension of coverage under the plan to a new group of
employees resulting in an increase of 5 percent or more in the plan's
liability for accrued benefits;
(iii) A plan merger, consolidation or spinoff that is not de
minimis pursuant to the regulations under section 414(l) of the Code;
(iv) The shutdown of any facility, plant, store, etc., that creates
immediate eligibility for benefits that would not otherwise be
immediately payable for participants separating from service;
(v) The offer by the plan for a temporary period to permit
participants to retire at benefit levels greater than that to which
they would otherwise be entitled;
(vi) A cost-of-living increase for retirees resulting in an
increase of 5 percent or more in the plan's liability for accrued
benefits; and
(vii) Any other event or trend that results in a material increase
in the value of unfunded vested benefits.
Sec. 4006.5 Exemptions and special rules.
(a) Variable-rate premium exemptions. A plan described in any of
paragraphs (a)(1)-(a)(5) of this section is not required to determine
its unfunded vested benefits under Sec. 4006.4 and does not owe a
variable-rate premium under Sec. 4006.3(b).
(1) Certain fully funded plans. A plan is described in this
paragraph if the plan had fewer than 500 participants on the
[[Page 34019]]
last day of the plan year preceding the premium payment year, and an
enrolled actuary certifies in accordance with the Premium Payment
Package that, as of that date, the plan had no unfunded vested benefits
(valued at the interest rate prescribed in Sec. 4006.4(b)(1)).
(2) Plans without vested benefit liabilities. A plan is described
in this paragraph if it did not have any participants with vested
benefits as of the last day of the plan year preceding the premium
payment year, and the plan administrator so certifies in accordance
with the Premium Payment Package.
(3) Section 412(i) plans. A plan is described in this paragraph if
the plan was a plan described in section 412(i) of the Code and the
regulations thereunder at all times during the plan year preceding the
premium payment year and the plan administrator so certifies, in
accordance with the Premium Payment Package. If the plan is a new plan
or a newly-covered plan, the certification under this paragraph shall
be made as of the due date for the premium under Sec. 4007.11(c) and
shall certify to the plan's status at all times during the premium
payment year through such due date.
(4) Plans terminating in standard terminations. The exemption for a
plan described in this paragraph is conditioned upon the plan's making
a final distribution of assets in a standard termination. If a plan is
ultimately unable to do so, the exemption is revoked and all variable-
rate amounts not paid pursuant to this exemption are due retroactive to
the applicable due date(s). A plan is described in this paragraph if--
(i) The plan administrator has issued notices of intent to
terminate the plan in a standard termination in accordance with section
4041(a)(2) of ERISA; and
(ii) The proposed termination date set forth in the notice of
intent to terminate is on or before the last day of the plan year
preceding the premium payment year.
(5) Plans at full funding limit. A plan is described in this
paragraph if, on or before the earlier of the due date for payment of
the variable-rate portion of the premium under Sec. 4007.11 or the date
that portion is paid, the plan's contributing sponsor or contributing
sponsors made contributions to the plan for the plan year preceding the
premium payment year in an amount not less than the full funding
limitation for such preceding plan year under section 302(c)(7) of
ERISA and section 412(c)(7) of the Code (determined in accordance with
paragraphs (a)(5)(i) and (a)(5)(ii) of this section). In order for a
plan to qualify for this exemption, an enrolled actuary must certify
that the plan has met the requirements of this paragraph.
(i) Determination of full funding limitation. The determination of
whether contributions for the preceding plan year were in an amount not
less than the full funding limitation under section 302(c)(7) of ERISA
and section 412(c)(7) of the Code for such preceding plan year shall be
based on the methods of computing the full funding limitation,
including actuarial assumptions and funding methods, used by the plan
(provided such assumptions and methods met all requirements, including
the requirements for reasonableness, under section 302 of ERISA and
section 412 of the Code) with respect to such preceding plan year. Plan
assets shall not be reduced by the amount of any credit balance in the
plan's funding standard account.
(ii) Rounding of de minimis amounts. Any contribution that is
rounded down to no less than the next lower multiple of one hundred
dollars (in the case of full funding limitations up to one hundred
thousand dollars) or to no less than the next lower multiple of one
thousand dollars (in the case of full funding limitations above one
hundred thousand dollars) shall be deemed for purposes of this
paragraph to be in an amount equal to the full funding limitation.
(b) Special rule for determining vested benefits for certain large
plans. With respect to a plan that had 500 or more participants on the
last day of the plan year preceding the premium payment year, if an
enrolled actuary determines pursuant to Sec. 4006.4(a) that the
actuarial value of plan assets equals or exceeds the value of all
benefits accrued under the plan (valued at the interest rate prescribed
in Sec. 4006.4(b)(1)), the enrolled actuary need not determine the
value of the plan's vested benefits, and may instead report in the
Premium Payment Package the value of the accrued benefits.
(c) Special rule for determining unfunded vested benefits for plans
terminating in distress or involuntary terminations. A plan described
in this paragraph may determine its unfunded vested benefits by using
the special alternative calculation method set forth in this paragraph.
A plan is described in this paragraph if it has issued notices of
intent to terminate in a distress termination in accordance with
section 4041(a)(2) of ERISA with a proposed termination date on or
before the last day of the plan year preceding the premium payment
year, or if the PBGC has instituted proceedings to terminate the plan
in accordance with section 4042 of ERISA and has sought a termination
date on or before the last day of the plan year preceding the premium
payment year. Pursuant to this paragraph, a plan shall determine its
unfunded vested benefits in accordance with the alternative calculation
method in Sec. 4006.4(c), except that--
(1) The calculation shall be based on the Form 5500, Schedule B,
for the plan year which includes (in the case of a distress
termination) the proposed termination date or (in the case of an
involuntary termination) the termination date sought by the PBGC, or,
if no Schedule B is filed for that plan year, on the Schedule B for the
immediately preceding plan year;
(2) All references in Sec. 4006.4(c) and Sec. 4006.4(d) to the
first day of the plan year preceding the premium payment year shall be
deemed to refer to the first day of the plan year for which the
Schedule B was filed;
(3) The value of the sum of the plan's current liability as of the
first day of the plan year preceding the premium payment year for
vested benefits of active and terminated vested participants not in pay
status, computed in accordance with section 302(d)(7) of ERISA and
section 412(l)(7) of the Code, shall be adjusted (in lieu of the
adjustment required by Sec. 4006.4(c)(1)) by multiplying that value by
the sum of 1 plus the product of .07 and the number of years (rounded
to the nearest hundredth of a year) between the date of the Schedule B
data and (in the case of a distress termination) the proposed
termination date or (in the case of an involuntary termination) the
termination date sought by the PBGC; and
(4) The exponent, ``Y,'' in the time adjustment formula of
Sec. 4006.4(c)(5) shall be deemed to equal the number of years (rounded
to the nearest hundredth of a year) between the date of the Schedule B
data and the last day of the plan year preceding the premium payment
year.
(d) Special determination date rule for new and newly-covered
plans. In the case of a new plan or a newly-covered plan, all
references in Secs. 4006.3, 4006.4, and paragraphs (a) and (b) of this
section to the last day of the plan year preceding the premium payment
year shall be deemed to refer to the first day of the premium payment
year or, if later, the date on which the plan became effective for
benefit accruals for future service, and for purposes of determining
the plan's premium, the number of plan participants, and (for a single-
employer plan) the amount of the plan's unfunded vested benefits and
the applicability of any exemption or special rule under
[[Page 34020]]
paragraph (a) or (b) of this section, shall be determined as of such
first day or later date.
(e) Special determination date rule for certain mergers and
spinoffs. (1) With respect to a plan described in paragraph (e)(2) of
this section, all references in Secs. 4006.3, 4006.4, and this section,
as applicable, to the last day of the plan year preceding the premium
payment year shall be deemed to refer to the first day of the premium
payment year.
(2) A plan is described in this paragraph (e)(2) if--
(i) The plan engages in a merger or spinoff that is not de minimis
pursuant to the regulations under section 414(l) of the Code (in the
case of single-employer plans) or pursuant to part 4231 of this chapter
(in the case of multiemployer plans), as applicable;
(ii) The merger or spinoff is effective on the first day of the
plan's premium payment year; and
(iii) The plan is the transferee plan in the case of a merger or
the transferor plan in the case of a spinoff.
(f) Special refund rule for certain short plan years. A plan
described in this paragraph (f) is entitled to a refund for a short
plan year. The amount of the refund will be determined by prorating the
premium for the short plan year by the number of months (treating a
part of a month as a month) in the short plan year. A plan is described
in this paragraph if--
(1) The plan is a new or newly-covered plan that becomes effective
for premium purposes on a date other than the first day of its first
plan year;
(2) The plan adopts an amendment changing its plan year, resulting
in a short plan year;
(3) The plan's assets are distributed pursuant to the plan's
termination, in which case the short plan year for purposes of
computing the amount of the refund under this paragraph shall be deemed
to end on the asset distribution date or, if later (in the case of a
single-employer plan), the date 30 days prior to the date the PBGC
receives the plan's post-distribution certification; or
(4) The plan is a single-employer plan and a trustee of the plan is
appointed pursuant to section 4042 of ERISA, in which case the short
plan year for purposes of computing the amount of the refund under this
paragraph shall be deemed to end on the date of appointment.
(g) Special rules for plans of regulated public utilities. (1) This
paragraph (g) applies to a premium payment year beginning before 1998
of a plan maintained by one or more contributing sponsors at least one
of which is a regulated public utility. For this purpose, a regulated
public utility is one that, as of the beginning of the premium payment
year, is described in section 7701(a)(33)(A)(i) of the Code and has not
begun to collect from utility customers rates that reflect the costs
incurred or projected to be incurred for additional premiums under
section 4006(a)(3)(E) of ERISA pursuant to final and nonappealable
determinations by all public utility commissions (or other authorities
having jurisdiction over the rates and terms of service by the
regulated public utility) that the costs are just and reasonable and
recoverable from customers of the regulated public utility.
(2) Limitation on variable-rate premium and required interest rate.
If every contributing sponsor of a plan described in paragraph (a) of
this section is a regulated public utility, then, notwithstanding the
provisions of Secs. 4006.3(b) and 4006.4(b)(1),--
(i) The variable-rate premium shall not be greater than $53
multiplied by the number of participants in the plan on the last day of
the plan year preceding the premium payment year; and
(ii) If the premium payment year begins after June 1997,
Sec. 4006.4(b)(1) shall be applied as if the applicable percentage
referred to therein were 80 percent.
(3) Proportional application of limitation rules. If a plan is
described in paragraph (g)(1) of this section but also has a
contributing sponsor that is not a regulated public utility and
participants who are not regulated public utility participants
(determined under any reasonable method consistently applied among
participants and from year to year), the limitations in paragraph
(g)(2) of this section shall be applied in proportion to the number of
regulated public utility participants in accordance with the Premium
Payment Package.
(4) Special variable-rate premium rule for certain small regulated
public utility plans paying maximum variable-rate premium. A plan whose
variable-rate premium is subject to the limitation described in
paragraph (g)(2)(i) of this section is not required to determine its
unfunded vested benefits under Sec. 4006.4 if--
(i) The number of participants required to be taken into account in
computing the plan's premium for the premium payment year is fewer than
500; and
(ii) The plan pays a variable-rate premium equal to $53 multiplied
by the number of participants in the plan on the last day of the plan
year preceding the premium payment year.
(5) Effect of omitted or inadequate information. The variable-rate
premium of a plan described in paragraph (g)(2) of this section may be
deemed to be $53 multiplied by the number of participants in the plan
on the last day of the plan year preceding the premium payment year
if--
(i) Any item or items necessary to establish the correct variable-
rate premium for the plan are omitted from the plan's premium filing;
or
(ii) In connection with an audit, the plan's records fail, in the
PBGC's judgment, to establish that the plan's unfunded vested benefits
were of the amount reported by the plan for the premium payment year.
PART 4007--PAYMENT OF PREMIUMS
Sec.
4007.1 Purpose and scope.
4007.2 Definitions.
4007.3 Filing requirement and forms.
4007.4 Filing address.
4007.5 Date of filing.
4007.6 Computation of time.
4007.7 Late payment interest charges.
4007.8 Late payment penalty charges.
4007.9 Coverage for guaranteed basic benefits.
4007.10 Recordkeeping requirements; PBGC audits.
4007.11 Due dates.
4007.12 Liability for single-employer premiums.
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
Sec. 4007.1 Purpose and scope.
This part, which applies to all plans that are covered by title IV
of ERISA, provides procedures for paying the premiums imposed by
sections 4006 and 4007 of ERISA. (See part 4006 of this chapter for
premium rates and computational rules.)
Sec. 4007.2 Definitions.
(a) The following terms are defined in Sec. 4001.2 of this chapter:
Code, contributing sponsor, ERISA, insurer, IRS, multiemployer plan,
notice of intent to terminate, PBGC, plan, plan administrator, plan
year, and single-employer plan.
(b) For purposes of this part, the following terms are defined in
Sec. 4006.2 of this chapter: new plan, newly covered plan, participant,
premium payment year, and short plan year.
Sec. 4007.3 Filing requirement and forms.
The estimation, declaration, reconciliation and payment of premiums
shall be made using the forms prescribed by and in accordance with the
instructions in the PBGC annual Premium Payment Package. The plan
administrator of each covered plan shall
[[Page 34021]]
file the prescribed form or forms, and any premium payments due, no
later than the applicable due date specified in Sec. 4007.11.
Sec. 4007.4 Filing address.
Plan administrators shall file all forms required to be filed under
this part and all payments for premiums, interest, and penalties
required to be made under this part at the address specified in the
Premium Payment Package.
Sec. 4007.5 Date of filing.
(a) Any form required to be filed under this part and any payment
required to be made under this part shall be deemed to have been filed
or made on the date on which it is mailed.
(b) A form or payment shall be presumed to have been mailed on the
date on which it is postmarked by the United States Postal Service, or
three days prior to the date on which it is received by the PBGC if it
does not contain a legible United States Postal Service postmark.
Sec. 4007.6 Computation of time.
In computing any period of time prescribed by this part, the day of
the act, event, or default from which the designated period of time
begins to run is not counted. The last day of the period so computed
shall be included, unless it is a Saturday, Sunday, or federal holiday,
in which event the period runs until the end of the next day that is
not a Saturday, Sunday, or federal holiday. For purposes of computing
late payment interest charges under Sec. 4007.7 and late payment
penalty charges under Sec. 4007.8, a Saturday, Sunday or federal
holiday referred to in the previous sentence shall be included.
Sec. 4007.7 Late payment interest charges.
(a) If any premium payment due under this part is not paid by the
due date prescribed for such payment by Sec. 4007.11, an interest
charge will accrue on the unpaid amount at the rate imposed under
section 6601(a) of the Code for the period from the date payment is due
to the date payment is made. Late payment interest charges are
compounded daily.
(b) When PBGC issues a bill for premium payments necessary to
reconcile the premiums paid with the actual premium due, interest will
be accrued on the unpaid premium until the date of the bill if paid no
later than 30 days after the date of such bill. If the bill is not paid
within the 30-day period following the date of such bill, interest will
continue to accrue throughout such 30-day period and thereafter, until
the date paid.
(c) PBGC bills for interest assessed under this section will be
deemed paid when due if paid no later than 30 days after the date of
such bills. Otherwise, interest will accrue in accordance with
paragraph (a) of this section on the amount of the bill from the date
of the bill until the date of payment.
Sec. 4007.8 Late payment penalty charges.
(a) Penalty charge. If any premium payment due under this part is
not paid by the due date prescribed for such payment by Sec. 4007.11,
the PBGC will, unless a waiver is granted pursuant to paragraph (b) of
this section, assess a late payment charge (not to exceed 100% of the
unpaid premium) equal to the greater of--
(i) 5% per month (or fraction thereof) of the unpaid premiums; or
(ii) $25.
(b) Waiver of penalty charge. The late payment penalty charge will
be waived, in whole or in part--
(1) With respect to any premium payment made within 60 days after
the due date prescribed for such payment in Sec. 4007.11, if, before
such due date, the PBGC grants a waiver upon a showing of substantial
hardship arising from the timely payment of the premium and a showing
that the premium will be paid within such 60-day period;
(2) If the PBGC grants a waiver based on any other demonstration of
good cause;
(3) If the PBGC, on its own motion, waives the application of
paragraph (a) of this section;
(4) With respect to any premium payment (excluding any variable-
rate premium under Sec. 4006.3(b)), if a plan that is required to make
a reconciliation filing described in Sec. 4007.11(b)(2)(iii)--
(i) Paid at least 90 percent of the flat-rate premium due for the
premium payment year by the due date specified in
Sec. 4007.11(b)(2)(i); or
(ii) Paid by the due date specified in Sec. 4007.11(b)(2)(i) an
amount equal to the premium that would be due for the premium payment
year, computed using the flat per capita premium rate for the premium
payment year and the participant count upon which the prior year's
premium was based; and
(iii) Pays 100 percent of the flat-rate premium due for the premium
payment year under Sec. 4006.3 on or before the due date for the
reconciliation filing under Sec. 4007.11(b)(2)(iii); or
(5) With respect to any PBGC bills for the premium payment
necessary to reconcile the premium paid with the actual premium due, if
such bills are paid no later than 30 days after the date of such bills.
Sec. 4007.9 Coverage for guaranteed basic benefits.
(a) The failure by a plan administrator to pay the premiums due
under this part will not result in that plan's loss of coverage for
basic benefits guaranteed under sections 4022(a) or 4022A(a) of ERISA.
(b) The payment of the premiums imposed by this part will not
result in coverage for basic benefits guaranteed under sections 4022(a)
or 4022A(a) of ERISA for plans not covered under title IV of ERISA.
Sec. 4007.10 Recordkeeping requirements; PBGC audits.
(a) Retention of records to support premium payments. All plan
records, including calculations and other data prepared by an enrolled
actuary or, for a plan described in section 412(i) of the Code, by the
insurer from which the insurance contracts are purchased, that are
necessary to support or to validate premium payments under this part
shall be retained by the plan administrator for a period of six years
after the premium due date. Records that must be retained pursuant to
this paragraph include, but are not limited to, records that establish
the number of plan participants and that reconcile the calculation of
the plan's unfunded vested benefits with the actuarial valuation upon
which the calculation was based. Records retained pursuant to this
paragraph shall be made available to the PBGC upon request for
inspection and photocopying.
(b) PBGC audit. Premium payments under this part are subject to
audit by the PBGC. If, upon audit, the PBGC determines that a premium
due under this part was underpaid, the late payment interest charges
under Sec. 4007.7 and the late payment penalty charges under
Sec. 4007.8 shall apply to the unpaid balance from the premium due date
to the date of payment. In determining the premium due, if, in the
judgment of the PBGC, the plan's records fail to establish the number
of plan participants with respect to whom premiums were required for
any premium payment year, the PBGC may rely on data it obtains from
other sources (including the IRS and the Department of Labor) for
presumptively establishing the number of plan participants for premium
computation purposes.
Sec. 4007.11 Due dates.
(a) In general. The premium filing due date for small plans is
prescribed in paragraph (a)(1) of this section and the premium filing
due dates for large plans are prescribed in paragraph (a)(2) of this
section.
[[Page 34022]]
(1) Plans with fewer than 500 participants. If the plan has fewer
than 500 participants, as determined under paragraph (b) of this
section, the due date is the fifteenth day of the eighth full calendar
month following the month in which the plan year began.
(2) Plans with 500 or more participants. If the plan has 500 or
more participants, as determined under paragraph (b) of this section--
(i) The due date for the flat-rate premium required by
Sec. 4006.3(a) is the last day of the second full calendar month
following the close of the plan year preceding the premium payment
year; and
(ii) The due date for the variable-rate premium required by
Sec. 4006.3(b) for single-employer plans is the fifteenth day of the
eighth full calendar month following the month in which the premium
payment year begins.
(iii) If the number of plan participants on the last day of the
plan year preceding the premium payment year is not known by the date
specified in paragraph (a)(2)(i) of this section, a reconciliation
filing (on the form prescribed by this part) and any required premium
payment or request for refund shall be made by the date specified in
paragraph (a)(2)(ii) of this section.
(3) Plans that change plan years. For any plan that changes its
plan year, the premium form or forms and payment or payments for the
short plan year shall be filed by the applicable due date or dates
specified in paragraphs (a)(1), (a)(2), or (c) of this section. For the
plan year that follows a short plan year, the due date or dates for the
premium forms and payments shall be, with respect to each such due
date, the later of--
(i) The applicable due date or dates specified in paragraph (a)(1)
or (a)(2) of this section; or
(ii) 30 days after the date on which the amendment changing the
plan year was adopted.
(b) Participant count rule for purposes of determining filing due
dates. For purposes of determining under paragraph (a) of this section
whether a plan has fewer than 500 participants, or 500 or more
participants, the plan administrator shall use--
(1) For a single-employer plan, the number of participants for whom
premiums were payable for the plan year preceding the premium payment
year, or
(2) For a multiemployer plan,--
(i) If the premium payment year is the plan's second plan year, the
first day of the first plan year; or
(ii) If the premium payment year is the plan's third or a
subsequent plan year, the last day of the second preceding plan year.
(c) Due dates for new and newly covered plans. Notwithstanding
paragraph (a) of this section, the premium form and all premium
payments due for the first plan year of coverage of any new plan or
newly covered plan shall be filed on or before the latest of--
(1) The fifteenth day of the eighth full calendar month following
the month in which the plan year began or, if later, in which the plan
became effective for benefit accruals for future service;
(2) 90 days after the date of the plan's adoption; or
(3) 90 days after the date on which the plan became covered by
title IV of ERISA.
(d) Continuing obligation to file. The obligation to file the form
or forms prescribed by this part and to pay any premiums due continues
through the plan year in which all plan assets are distributed pursuant
to a plan's termination or in which a trustee is appointed under
section 4042 of ERISA, whichever occurs earlier. The entire premium
computed under this part is due, irrespective of whether the plan is
entitled to a refund for a short plan year pursuant to Sec. 4006.5(f).
(e) Improper filings. Any form not filed in accordance with this
part, not filed in accordance with the instructions in the Premium
Payment Package, not accompanied by the required premium payment, or
otherwise incomplete, may, in the discretion of the PBGC, be returned
with any payment accompanying the form to the plan administrator, and
such payment shall be treated as not having been made.
Sec. 4007.12 Liability for single-employer premiums.
(a) The designation under this part of the plan administrator as
the person required to file the applicable forms and to submit the
premium payment for a single-employer plan is a procedural requirement
only and does not alter the liability for premium payments imposed by
section 4007 of ERISA. Pursuant to section 4007(e) of ERISA, both the
plan administrator and the contributing sponsor of a single-employer
plan are liable for premium payments, and, if the contributing sponsor
is a member of a controlled group, each member of the controlled group
is jointly and severally liable for the required premiums. Any entity
that is liable for required premiums is also liable for any interest
and penalties assessed with respect to such premiums.
(b) For any plan year in which a plan administrator issues
(pursuant to section 4041(a)(2) of ERISA) notices of intent to
terminate in a distress termination under section 4041(c) of ERISA or
the PBGC initiates a termination proceeding under section 4042 of
ERISA, and for each plan year thereafter, the obligation to pay the
premiums (and any interest or penalties thereon) imposed by ERISA and
this part for a single-employer plan shall be an obligation solely of
the contributing sponsor and the members of its controlled group, if
any.
(Approved by the Office of Management and Budget under control
number 1212-0009)
PART 4010--ANNUAL FINANCIAL AND ACTUARIAL INFORMATION REPORTING
Sec.
4010.1 Purpose and scope.
4010.2 Definitions.
4010.3 Filing requirement.
4010.4 Filers.
4010.5 Information year.
4010.6 Information to be filed.
4010.7 Identifying information.
4010.8 Plan actuarial information.
4010.9 Financial information.
4010.10 Due date and filing with the PBGC.
4010.11 Waivers and extensions.
4010.12 Confidentiality of information submitted.
4010.13 Penalties.
4010.14 OMB control number.
Authority: 29 U.S.C. 1302(b)(3); 29 U.S.C. 1310.
Sec. 4010.1 Purpose and scope.
This part prescribes the requirements for annual filings with the
PBGC under section 4010 of ERISA. This part applies to filers for any
information year ending on or after December 31, 1995.
Sec. 4010.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
benefit liabilities, Code, contributing sponsor, controlled group,
ERISA, fair market value, IRS, PBGC, person, plan, and plan year.
In addition, for purposes of this part:
Exempt entity means a person who does not have to file information
and about whom information does not have to be filed, as described in
Sec. 4010.4(d) of this part.
Exempt plan means a plan about which actuarial information does not
have to be filed, as described in Sec. 4010.8(c) of this part.
Fair market value of the plan's assets means the fair market value
of the plan's assets at the end of the plan year ending within the
filer's information year (determined without regard to any
contributions receivable).
[[Page 34023]]
Filer means a person who is required to file reports, as described
in Sec. 4010.4 of this part.
Fiscal year means, with respect to a person, the person's annual
accounting period or, if the person has not adopted a closing date, the
calendar year.
Information year means the year determined under Sec. 4010.5 of
this part.
Sec. 4010.3 Filing requirement.
(a) In general. Except as provided in Sec. 4010.8(c) (relating to
exempt plans) and except where waivers have been granted under
Sec. 4010.11 of this part, each filer shall submit to the PBGC
annually, on or before the due date specified in Sec. 4010.10, all
information specified in Sec. 4010.6(a) with respect to all members of
a controlled group and all plans maintained by members of a controlled
group.
(b) Single controlled group submission. Any filer or other person
may submit the information specified in Sec. 4010.6(a) on behalf of one
or more members of a filer's controlled group. If a person other than a
filer submits the information, the submission must also include a
written power of attorney signed by a filer authorizing the person to
act on behalf of one or more filers.
Sec. 4010.4 Filers.
(a) General. A contributing sponsor of a plan and each member of
the contributing sponsor's controlled group is a filer with respect to
an information year (unless exempted under paragraph (d) of this
section) if--
(1) the aggregate unfunded vested benefits of all plans (including
any exempt plans) maintained by the members of the contributing
sponsor's controlled group exceed $50 million (disregarding those plans
with no unfunded vested benefits);
(2) any member of a controlled group fails to make a required
installment or other required payment to a plan and, as a result, the
conditions for imposition of a lien described in section 302(f)(1) (A)
and (B) of ERISA or section 412(n)(1) (A) and (B) of the Code have been
met during the information year, and the required installment or other
required payment is not made within ten days after its due date; or
(3) any plan maintained by a member of a controlled group has been
granted one or more minimum funding waivers under section 303 of ERISA
or section 412(d) of the Code totaling in excess of $1 million that, as
of the end of the plan year ending within the information year, are
still outstanding (determined in accordance with paragraph (c) of this
section).
(b) Unfunded vested benefits--(1) General. Except as provided in
paragraph (b)(2) of this section, for purposes of the $50 million test
in paragraph (a)(1) of this section, the value of a plan's unfunded
vested benefits is determined at the end of the plan year ending within
the filer's information year in accordance with section
4006(a)(3)(E)(iii) of ERISA and Sec. 4006.4 of this chapter (without
reference to the exemptions and special rules under Sec. 4006.5).
(2) Optional assumptions. Prior to the first information year in
which the mortality assumptions prescribed under section
302(d)(7)(C)(ii)(II) of ERISA apply to all of the plans maintained by a
controlled group, the value of unfunded vested benefits for a plan may
be determined by substituting for the respective assumptions used under
paragraph (b)(1) of this section (but not using the alternative
calculation method under Sec. 4006.4(c) of this chapter) all of the
following assumptions:
(i) an interest rate equal to 100% of the annual yield for 30-year
Treasury constant maturities (as reported in Federal Reserve
Statistical Release G.13 and H.15) for the last full calendar month in
the plan year;
(ii) the fair market value of the plan's assets; and
(iii) the mortality tables described in section 302(d)(7)(C)(ii)(I)
of ERISA or section 412(l)(7)(C)(ii)(I) of the Code; provided that for
any plan year ending on or after the effective date of an amendment
changing the mortality assumptions used to value benefits to be paid as
annuities in trusteed plans under part 4044 of this chapter, those
amended mortality assumptions shall be used.
(c) Outstanding waiver. Before the end of the statutory
amortization period, a minimum funding waiver for a plan is considered
outstanding unless--
(1) a credit balance exists in the funding standard account
(described in section 302(b) of ERISA and section 412(b) of the Code)
that is no less than the outstanding balance of all waivers for the
plan;
(2) a waiver condition or contractual obligation requires that a
credit balance as described in paragraph (c)(1) continue to be
maintained as of the end of each plan year during the remainder of the
statutory amortization period for the waiver; and
(3) no portion of any credit balance described in paragraph (c)(1)
is used to make any required installment under section 302(e) of ERISA
or section 412(m) of the Code for any plan year during the remainder of
the statutory amortization period.
(d) Exempt entities. A person is an exempt entity if the person--
(1) is not a contributing sponsor of a plan (other than an exempt
plan);
(2) has revenue for its fiscal year ending within the controlled
group's nformation year that is five percent or less of the controlled
group's revenue for the fiscal year(s) ending within the information
year;
(3) has annual operating income for the fiscal year ending within
the controlled group's information year that is no more than the
greater of--
(i) five percent of the controlled group's annual operating income
for the fiscal year(s) ending within the information year, or
(ii) $5 million; and
(4) has net assets at the end of the fiscal year ending within the
controlled group's information year that is no more than the greater
of--
(i) five percent of the controlled group's net assets at the end of
the fiscal year(s) ending within the information year, or
(ii) $5 million.
Sec. 4010.5 Information year.
(a) Determinations based on information year. An information year
is used under this part to determine which persons are filers
(Sec. 4010.4), what information a filer must submit (Secs. 4010.6-
4010.9), whether a plan is an exempt plan (Sec. 4010.8(c)), and the due
date for submitting the information (Sec. 4010.10(a)).
(b) General. Except as provided in paragraph (c) of this section, a
person's information year shall be the fiscal year of the person. A
filer is not required to change its fiscal year or the plan year of a
plan, to report financial information for any accounting period other
than an existing fiscal year, or to report actuarial information for
any plan year other than an existing plan year.
(c) Controlled group members with different fiscal years-- (1) Use
of calendar year. If members of a controlled group (disregarding any
exempt entity) report financial information on the basis of different
fiscal years, the information year shall be the calendar year.
(2) Example. Filers A and B are members of the same controlled
group. Filer A has a July 1 fiscal year, and filer B has an October 1
fiscal year. The information year is the calendar year. Filer A's
financial information with respect to its fiscal year ending June 30,
1996, and filer B's financial information with respect to its fiscal
year ending September 30, 1996, must be submitted to the PBGC following
the end of the 1996 calendar year (the calendar year in
[[Page 34024]]
which those fiscal years end). If filer B were an exempt entity, the
information year would be filer A's July 1 fiscal year.
Sec. 4010.6 Information to be filed.
(a) General. A filer must submit the information specified in
Sec. 4010.7 (identifying information), Sec. 4010.8 (plan actuarial
information) and Sec. 4010.9 (financial information) of this part with
respect to each member of the filer's controlled group and each plan
maintained by any member of the controlled group.
(b) Additional information. By written notification, the PBGC may
require any filer to submit additional actuarial or financial
information that is necessary to determine plan assets and liabilities
for any period through the end of the filer's information year, or the
financial status of a filer for any period through the end of the
filer's information year. The i
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
nformation must be submitted within ten
days after the date of the written notification or by a different time
specified therein.
(c) Previous submissions. If any required information has been
previously submitted to the PBGC, a filer may incorporate this
information into the required submission by referring to the previous
submission.
Sec. 4010.7 Identifying information.
(a) Filers. Each filer is required to provide the following
identifying information with respect to each member of the controlled
group (excluding exempt entities)--
(1) the name, address, and telephone number of each member of the
controlled group and the legal relationships of each (for example,
parent, subsidiary); and
(2) the nine-digit Employer Identification Number (EIN) assigned by
the IRS to each member (or if there is no EIN for a member, an
explanation).
(b) Plans. Each filer is required to provide the following
identifying information with respect to each plan (including exempt
plans) maintained by any member of the controlled group (including
exempt entities)--
(1) the name of each plan;
(2) the EIN and the three-digit Plan Number (PN) assigned by the
contributing sponsor to each plan (or if there is no EIN or PN for a
plan, an explanation); and
(3) if the EIN or PN of a plan has changed since the beginning of
the filer's information year, the previous EIN or PN and an
explanation.
Sec. 4010.8 Plan actuarial information.
(a) Required information. For each plan (other than an exempt plan)
maintained by any member of the filer's controlled group, each filer is
required to provide the following actuarial information--
(1) the fair market value of the plan's assets;
(2) the value of the plan's benefit liabilities (determined in
accordance with paragraph (d) of this section) at the end of the plan
year ending within the filer's information year;
(3) a copy of the actuarial valuation report for the plan year
ending within the filer's information year that contains or is
supplemented by the following information--
(i) each amortization base and related amortization charge or
credit to the funding standard account (as defined in section 302 (b)
of ERISA or section 412 (b) of the Code) for that plan year (excluding
the amount considered contributed to the plan as described in section
302(b)(3)(A) of ERISA or section 412(b)(3)(A) of the Code),
(ii) the itemized development of the additional funding charge
payable for that plan year pursuant to section 412(l) of the Code,
(iii) the minimum funding contribution and the maximum deductible
contribution for that plan year,
(iv) the actuarial assumptions and methods used for that plan year
for purposes of section 302(b) and (d) of ERISA or section 412(b) and
(l) of the Code (and any change in those assumptions and methods since
the previous valuation and justifications for any change), and
(v) a summary of the principal eligibility and benefit provisions
on which the valuation of the plan was based (and any changes to those
provisions since the previous valuation), along with descriptions of
any benefits not included in the valuation, any significant events that
occurred during that plan year, and the plan's early retirement
factors; and
(4) a written certification by an enrolled actuary that, to the
best of his or her knowledge and belief, the actuarial information
submitted is true, correct, and complete and conforms to all applicable
laws and regulations, provided that this certification may be qualified
in writing, but only to the extent the qualification(s) are permitted
under 26 CFR Sec. 301.6059-1(d).
(b) Alternative compliance for plan actuarial information. If any
of the information specified in paragraph (a)(3) of this section is not
available by the date specified in Sec. 4010.10(a), a filer may satisfy
the requirement to provide such information by--
(1) including a statement, with the material that is submitted to
the PBGC, that the filer will file the unavailable information by the
alternative due date specified in Sec. 4010.10(b) of this part, and
(2) filing such information (along with a certification by an
enrolled actuary under paragraph (a)(4) of this section) with the PBGC
by that alternative due date.
(c) Exempt plan. The actuarial information specified in this
section is not required with respect to a plan that, as of the end of
the plan year ending within the filer's information year, has fewer
than 500 participants or has benefit liabilities (determined in
accordance with paragraph (d) of this section) equal to or less than
the fair market value of the plan's assets, provided that the plan--
(1) has received, on or within ten days after their due dates, all
required installments or other payments required to be made during the
information year under section 302 of ERISA or section 412 of the Code;
and
(2) has no minimum funding waivers outstanding (as described in
Sec. 4010.4(c) of this part) as of the end of the plan year ending
within the information year.
(d) Value of benefit liabilities. The value of a plan's benefit
liabilities at the end of a plan year shall be determined using the
plan census data described in paragraph (d)(1) of this section and the
actuarial assumptions and methods described in paragraph (d)(2) or,
where applicable, (d)(3) of this section.
(1) Census data.
(i) Census data period. Plan census data shall be determined (for
all plans for any information year) either as of the end of the plan
year or as of the beginning of the next plan year.
(ii) Projected census data. If actual plan census data is not
available, a plan may use a projection of plan census data from a date
within the plan year. The projection must be consistent with
projections used to measure pension obligations of the plan for
financial statement purposes and must give a result appropriate for the
end of the plan year for these obligations. For example, adjustments to
the projection process will be required where there has been a
significant event (such as a plan amendment or a plant shutdown) that
has not been reflected in the projection data.
(2) Actuarial assumptions and methods. The value of benefit
liabilities shall be determined using the assumptions and methods
applicable to the valuation of benefits to be paid as annuities in
trusteed plans terminating at the end of the plan year (as prescribed
[[Page 34025]]
in Secs. 4044.51 through 4044.57 of this chapter).
(3) Special actuarial assumptions for exempt plan determination.
Solely for purposes of determining whether a plan is an exempt plan,
the value of benefit liabilities may be determined by substituting for
the retirement age assumptions in paragraph (d)(2) the retirement age
assumptions used by the plan for that plan year for purposes of section
302(d) of ERISA or section 412(l) of the Code.
Sec. 4010.9 Financial information.
(a) General. Except as provided in this section, each filer is
required to provide the following financial information for each
controlled group member (other than an exempt entity)--
(1) audited financial statements for the fiscal year ending within
the information year (including balance sheets, income statements, cash
flow statements, and notes to the financial statements);
(2) if audited financial statements are not available by the date
specified in Sec. 4010.10(a), unaudited financial statements for the
fiscal year ending within the information year; or
(3) if neither audited nor unaudited financial statements are
available by the date specified in Sec. 4010.10(a), copies of federal
tax returns for the tax year ending within the information year.
(b) Consolidated financial statements. If the financial information
of a controlled group member is combined with the information of other
group members in consolidated financial statements, a filer may provide
the following financial information in lieu of the information required
in paragraph (a) of this section--
(1) the audited consolidated financial statements for the filer's
information year or, if the audited consolidated financial statements
are not available by the date specified in Sec. 4010.10(a), unaudited
consolidated financial statements for the fiscal year ending within the
information year; and
(2) for each controlled group member included in the consolidated
financial statements that is a contributing sponsor of a plan (other
than an exempt plan), the contributing sponsor's revenues and operating
income for the information year, and net assets at the end of the
information year.
(c) Subsequent submissions. If unaudited financial statements are
submitted as provided in paragraph (a)(2) or (b)(1) of this section,
audited financial statements must thereafter be filed within 15 days
after they are prepared. If federal tax returns are submitted as
provided in paragraph (a)(3) of this section, audited and unaudited
financial statements must thereafter be filed within 15 days after they
are prepared.
(d) Submission of public information. If any of the financial
information required by paragraphs (a) through (c) of this section is
publicly available, the filer, in lieu of submitting such information
to the PBGC, may include a statement with the other information that is
submitted to the PBGC indicating when such financial information was
made available to the public and where the PBGC may obtain it. For
example, if the controlled group member has filed audited financial
statements with the Securities and Exchange Commission, it need not
file the financial statements with PBGC but instead can identify the
SEC filing as part of its submission under this part.
(e) Inclusion of information about non-filers and exempt entities.
Consolidated financial statements provided pursuant to paragraph (b)(1)
of this section may include financial information of persons who are
not controlled group members (e.g., joint ventures) or are exempt
entities.
Sec. 4010.10 Due date and filing with the PBGC.
(a) Due date. Except as permitted under paragraph (b) of this
section, a filer shall file the information required under this part
with the PBGC on or before the 105th day after the close of the filer's
information year.
(b) Alternative due date. A filer that includes the statement
specified in Sec. 4010.8(b)(1) with its submission to the PBGC by the
date specified in paragraph (a) of this section must submit the
actuarial information specified in Sec. 4010.8(b)(2) within 15 days
after the deadline for filing the plan's annual report (Form 5500
series) for the plan year ending within the filer's information year
(see Sec. 2520.104a-5(a)(2) of this title).
(c) How to file. Requests and information may be delivered by mail,
by delivery service, by hand, or by any other method acceptable to the
PBGC, to: Corporate Finance and Negotiations Department, Pension
Benefit Guaranty Corporation, 1200 K Street, N.W., Washington, DC
20005-4026.
(d) Date when information filed. Information filed under this part
is considered filed--
(1) on the date of the United States postmark stamped on the cover
in which the information is mailed, if--
(i) the postmark was made by the United States Postal Service; and
(ii) the document was mailed postage prepaid, properly addressed to
the PBGC; or
(2) if the conditions stated in paragraph (d)(1) of this section
are not met, on the date it is received by the PBGC. Information
received on a weekend or Federal holiday or after 5:00 p.m. on a
weekday is considered filed on the next regular business day.
(e) Computation of time. In computing any period of time under this
part, the day of the act or event from which the designated period of
time begins to run shall not be included. The last day of the period so
computed shall be included, unless it is a weekend or Federal holiday,
in which event the period runs until the end of the next day that is
not a weekend or Federal holiday.
Sec. 4010.11 Waivers and extensions.
The PBGC may waive the requirement to submit information with
respect to one or more filers or plans or may extend the applicable due
date or dates specified in Sec. 4010.10 of this part. The PBGC will
exercise this discretion in appropriate cases where it finds convincing
evidence supporting a waiver or extension; any waiver or extension may
be subject to conditions. A request for a waiver or extension must be
filed in writing with the PBGC at the address provided in
Sec. 4010.10(c) no later than 15 days before the applicable date
specified in Sec. 4010.10 of this part, and must state the facts and
circumstances on which the request is based.
Sec. 4010.12 Confidentiality of information submitted.
In accordance with Sec. 4901.21(a)(3) of this chapter and section
4010(c) of ERISA, any information or documentary material that is not
publicly available and is submitted to the PBGC pursuant to this part
shall not be made public, except as may be relevant to any
administrative or judicial action or proceeding or for disclosures to
either body of Congress or to any duly authorized committee or
subcommittee of the Congress.
Sec. 4010.13 Penalties.
If all of the information required under this part is not provided
within the specified time limit, the PBGC may assess a separate penalty
under section 4071 of ERISA against the filer and each member of the
filer's controlled group (other than an exempt entity) of up to $1,000
a day for each day that the failure continues. The PBGC may also pursue
other equitable or legal remedies available to it under the law.
[[Page 34026]]
Sec. 4010.14 OMB control number.
The collection of information requirements contained in this part
have been approved by the Office of Management and Budget under OMB
Control Number 1212-0049.
PART 4011--DISCLOSURE TO PARTICIPANTS
Sec.
4011.1 Purpose and scope.
4011.2 Definitions.
4011.3 Notice requirement.
4011.4 Small plan rules.
4011.5 Exemption for new and newly-covered plans.
4011.6 Mergers, consolidations, and spinoffs.
4011.7 Persons entitled to receive notice.
4011.8 Time of notice.
4011.9 Manner of issuance of notice.
4011.10 Form of notice.
4011.11 OMB control number.
Appendix A to Part 4011--Model Participant Notice. Appendix B to Part
4011--Table of maximum Guaranteed Benefits.
Authority: 29 U.S.C. 1302(b)(3), 1311.
Sec. 4011.1 Purpose and scope.
This part prescribes rules and procedures for complying with the
requirements of section 4011 of ERISA. This part applies for any plan
year beginning on or after January 1, 1995, with respect to any single-
employer plan that is covered by section 4021 of ERISA.
Sec. 4011.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
contributing sponsor, employer, ERISA, normal retirement age, PBGC,
person, plan, plan administrator, plan year, and single-employer plan.
In addition, for purposes of this part:
Participant has the meaning in Sec. 4041.2 of this chapter.
Participant Notice means the notice required pursuant to section
4011 of ERISA and this part.
Sec. 4011.3 Notice requirement.
(a) General. Except as otherwise provided in this part, the plan
administrator of a plan must provide a Participant Notice for a plan
year if a variable rate premium is payable for the plan under section
4006(a)(3)(E) of ERISA and part 4006 of this chapter for that plan
year, unless, for that plan year or for the prior plan year, the plan
meets the Deficit Reduction Contribution (``DRC'') Exception Test in
paragraph (b) of this section. The DRC Exception Test may be applied
using the Small Plan DRC Exception Test rules in Sec. 4011.4(b), where
applicable.
(b) DRC Exception Test--(1) Basic rule. A plan meets the DRC
Exception Test for a plan year if it is exempt from the requirements of
section 302(d) of ERISA for that plan year by reason of section
302(d)(9), without regard to the small plan exemption in section
302(d)(6)(A).
(2) 1994 plan year. A plan satisfies the DRC Exception Test for the
1994 plan year if, for any two of the plan years beginning in 1992,
1993, and 1994 (whether or not consecutive), the plan satisfies any
requirement of section 302(d)(9)(D)(i) of ERISA.
(c) Penalties for non-compliance. If a plan administrator fails to
provide a Participant Notice within the specified time limit or omits
material information from a Participant Notice, the PBGC may assess a
penalty under section 4071 of ERISA of up to $1,000 a day for each day
that the failure continues.
Sec. 4011.4 Small plan rules.
(a) 1995 plan year exemption. A plan that is exempt from the
requirements of section 302(d) of ERISA for the 1994 or 1995 plan year
by reason of section 302(d)(6)(A) is exempt from the Participant Notice
requirement for the 1995 plan year.
(b) Small Plan DRC Exception Test. In determining whether the
Participant Notice requirement applies for a plan year beginning after
1995, the plan administrator of a plan that is exempt from the
requirements of section 302(d) of ERISA by reason of section
302(d)(6)(A) for the plan year being tested may use any one or more of
the following rules in determining whether the plan meets the DRC
Exception Test for that plan year:
(1) Use of Schedule B data. For any plan year for which the plan is
exempt from the requirements of section 302(d) of ERISA by reason of
section 302(d)(6)(A), provided both of the following adjustments are
made--
(i) The market value of the plan's assets as of the beginning of
the plan year (as required to be reported on Form 5500, Schedule B) may
be substituted for the actuarial value of the plan's assets as of the
valuation date; and
(ii) The plan's current liability for all participants' total
benefits as of the beginning of the plan year (as required to be
reported on Form 5500, Schedule B) may be substituted for the plan's
current liability as of the valuation date.
(2) Pre-1995 plan year 90 percent test. A plan that is exempt from
the requirements of section 302(d) of ERISA for a pre-1995 plan year by
reason of section 302(d)(6)(A) satisfies the requirements of section
302(d)(9)(D)(i) for that pre-1995 plan year if the ratio of its assets
to its current liability for that plan year is at least 90 percent. For
this purpose, the plan's assets are valued without subtracting any
credit balance under section 302(b) of ERISA, and its current liability
is determined using the highest interest rate allowable for the plan
year under section 302(d)(7)(C).
(3) Interest rate adjustment. If the interest rate used to
calculate current liability for a plan year is less than the highest
rate allowable for the plan year under section 302(d)(7)(C) of ERISA,
the current liability may be reduced by one percent for each tenth of a
percentage point by which the highest rate exceeds the rate so used.
Sec. 4011.5 Exemption for new and newly-covered plans.
A plan (other than a plan resulting from a consolidation or
spinoff) is exempt from the Participant Notice requirement for the
first plan year for which the plan must pay premiums under parts 4006
and 4007 of this chapter.
Sec. 4011.6 Mergers, consolidations, and spinoffs.
In the case of a plan involved in a merger, consolidation, or
spinoff transaction that becomes effective during a plan year, the plan
administrator shall apply the requirements of section 4011 of ERISA and
of this part for that plan year in a reasonable manner to ensure that
the Participant Notice serves its statutory purpose.
Sec. 4011.7 Persons entitled to receive notice.
The plan administrator must provide the Participant Notice to each
person who is a participant, a beneficiary of a deceased participant,
an alternate payee under an applicable qualified domestic relations
order (as defined in section 206(d)(3) of ERISA), or an employee
organization that represents any group of participants for purposes of
collective bargaining. To determine who is a person that must receive
the Participant Notice for a plan year, the plan administrator may
select any date during the period beginning with the last day of the
previous plan year and ending with the day on which the Participant
Notice for the plan year is due, provided that a change in the date
from one plan year to the next does not exclude a substantial number of
participants and beneficiaries.
Sec. 4011.8 Time of notice.
The plan administrator must issue the Participant Notice for a plan
year no later than two months after the deadline (including extensions)
for filing the annual report for the previous plan year (see
Sec. 2520.104a-5(a)(2) of this title).
[[Page 34027]]
The plan administrator may change the date of issuance from one plan
year to the next, provided that the effect of any change is not to
avoid disclosing a minimum funding waiver under Sec. 4011.10(b)(5) or a
missed contribution under Sec. 4011.10(b)(6). When the President of the
United States declares that, under the Disaster Relief Act of 1974, as
amended (42 U.S.C. 5121, 5122(2), 5141(b)), a major disaster exists,
the PBGC may extend the due date for providing the Participant Notice
by up to 180 days.
Sec. 4011.9 Manner of issuance of notice.
The Participant Notice shall be issued by using measures reasonably
calculated to ensure actual receipt by the persons entitled to receive
it. It may be issued together with another document, such as the
summary annual report required under section 104(b)(3) of ERISA for the
prior plan year, but must be in a separate document.
Sec. 4011.10 Form of notice.
(a) General. The Participant Notice (and any additional information
under paragraph (d) of this section) shall be readable and written in a
manner calculated to be understood by the average plan participant and
not to mislead recipients. The Model Participant Notice in Appendix A
to this part (when properly completed) is an example of a Participant
Notice meeting the requirements of this section.
(b) Content. The Participant Notice for a plan year shall include--
(1) Identifying information (the name of the plan and the
contributing sponsor, the employer identification number of the
contributing sponsor, the plan number, the date (at least the month and
year) on which the Participant Notice is issued, and the name, title,
address and telephone number of the person(s) who can provide
information about the plan's funding);
(2) A statement to the effect that the Participant Notice is
required by law;
(3) The Notice Funding Percentage for the plan year, determined in
accordance with paragraph (c) of this section, and the date as of which
the Notice Funding Percentage is determined;
(4) A statement to the effect that--
(i) To pay pension benefits, the employer is required to contribute
money to the plan over a period of years;
(ii) A plan's funding percentage does not take into consideration
the financial strength of the employer; and
(iii) The employer, by law, must pay for all pension benefits, but
benefits may be at risk if the employer faces a severe financial crisis
or is in bankruptcy;
(5) If, for any of the five plan years immediately preceding the
plan year, the plan has been granted a minimum funding waiver under
section 303 of ERISA that has not (as of the end of the prior plan
year) been fully repaid, a statement identifying each such plan year
and an explanation of a minimum funding waiver;
(6) For any payment subject to the requirements of this paragraph,
a statement identifying the due date for the payment and noting that
the payment has or has not been made and (if made) the date of the
payment. Once participants have been notified (under this part or Title
I of ERISA) of a missed contribution that is subject to the
requirements of this paragraph, the delinquency need not be reported in
a Participant Notice for a subsequent plan year if the missed
contribution has been paid in full by the time the subsequent
Participant Notice is issued. The payments subject to the requirements
of this paragraph are--
(i) Any minimum funding payment necessary to satisfy the minimum
funding standard under section 302(a) of ERISA for any plan year
beginning on or after January 1, 1994, if not paid by the earlier of
the due date for that payment (the latest date allowed under section
302(c)(10)) or the date of issuance of the Participant Notice; and
(ii) An installment or other payment required by section 302 of
ERISA for a plan year beginning on or after January 1, 1995, that was
not paid by the 60th day after the due date for that payment;
(7) A statement to the effect that if a plan terminates before all
pension benefits are fully funded, the PBGC pays most persons all
pension benefits, but some persons may lose certain benefits that are
not guaranteed;
(8) A summary of plan benefits guaranteed by the PBGC, with an
explanation of the limitations on such guarantee; and
(9) A statement that further information about the PBGC's guarantee
may be obtained by requesting a free copy of the booklet ``Your
Guaranteed Pension'' from Consumer Information Center, Dept. YGP,
Pueblo, Colorado 81009. The Participant Notice may include a statement
that the booklet may be obtained through electronic access via the
World Wide Web from the PBGC Homepage at http://www.pbgc.gov/ygp.htm.
(c) Notice Funding Percentage--
(1) General Rule. The Notice Funding Percentage that must be
included in the Participant Notice for a plan year is the ``funded
current liability percentage'' (as that term is defined in section
302(d)(9)(C) of ERISA) for that plan year or the prior plan year.
(2) Small plans. A plan that is exempt from the requirements of
section 302(d) of ERISA for a plan year by reason of section
302(d)(6)(A) may determine its funded current liability percentage for
that plan year using the Small Plan DRC Exception Test rules in
Sec. 4011.4(b).
(d) Additional information. The plan administrator may include with
the Participant Notice any information not described in paragraph (b)
of this section only if it is in a separate document.
(e) Foreign languages. In the case of a plan that (as of the date
selected under Sec. 4011.7) covers the numbers or percentages specified
in Sec. 2520.104b-10(e) of this title of participants literate only in
the same non-English language, the plan administrator shall provide
those participants either--
(1) An English-language Participant Notice that prominently
displays a legend, in their common non-English language, offering them
assistance in that language, and clearly setting forth any procedures
participants must follow to obtain such assistance, or
(2) A Participant Notice in that language.
Sec. 4011.11 OMB control number.
The collections of information contained in this part have been
approved by the Office of Management and Budget under OMB control
number 1212-0050.
Appendix A to Part 4011--Model Participant Notice
The following is an example of a Participant Notice that
satisfies the requirements of Sec. 4011.10 when the required
information is filled in (subject to Secs. 4011.10(d)-(e), where
applicable).
Notice to Participants of [Plan Name]
The law requires that you receive information on the funding
level of your defined benefit pension plan and the benefits
guaranteed by the Pension Benefit Guaranty Corporation (PBGC), a
federal insurance agency. YOUR PLAN'S FUNDING
As of [DATE], your plan had [INSERT NOTICE FUNDING PERCENTAGE
(DETERMINED IN ACCORDANCE WITH Sec. 4011.10(c))] percent of the
money needed to pay benefits promised to employees and retirees.
To pay pension benefits, your employer is required to contribute
money to the pension plan over a period of years. A plan's funding
percentage does not take into consideration the financial strength
of the employer. Your employer, by law, must pay for all pension
benefits, but your benefits may be at risk if your employer faces a
severe financial crisis or is in bankruptcy.
[[Page 34028]]
[INCLUDE THE FOLLOWING PARAGRAPH ONLY IF, FOR ANY OF THE
PREVIOUS FIVE PLAN YEARS, THE PLAN HAS BEEN GRANTED AND HAS NOT
FULLY REPAID A FUNDING WAIVER.]
Your plan received a funding waiver for [LIST ANY OF THE FIVE
PREVIOUS PLAN YEARS FOR WHICH A FUNDING WAIVER WAS GRANTED AND HAS
NOT BEEN FULLY REPAID]. If a company is experiencing temporary
financial hardship, the Internal Revenue Service may grant a funding
waiver that permits the company to delay contributions that fund the
pension plan.
[INCLUDE THE FOLLOWING WITH RESPECT TO ANY UNPAID OR LATE
PAYMENT THAT MUST BE DISCLOSED UNDER Sec. 4011.10(b)(6):]
Your plan was required to receive a payment from the employer on
[LIST APPLICABLE DUE DATE(S)]. That payment [has not been made] [was
made on [LIST APPLICABLE PAYMENT DATE(S)]].
PBGC GUARANTEES
When a pension plan ends without enough money to pay all
benefits, the PBGC steps in to pay pension benefits. The PBGC pays
most people all pension benefits, but some people may lose certain
benefits that are not guaranteed.
The PBGC pays pension benefits up to certain maximum limits.
The maximum guaranteed benefit is [INSERT FROM TABLE IN
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year
for a 65-year-old person in a plan that terminates in [INSERT
APPLICABLE YEAR].
The maximum benefit may be reduced for an individual
who is younger than age 65. For example, it is [INSERT FROM TABLE IN
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year
for an individual who starts receiving benefits at age 55. [IN LIEU
OF AGE 55, YOU MAY ADD OR SUBSTITUTE ANY AGE(S) RELEVANT UNDER THE
PLAN. FOR EXAMPLE, YOU MAY ADD OR SUBSTITUTE THE MAXIMUM BENEFIT FOR
AGES 62 OR 60 FROM THE TABLE IN APPENDIX B. IF THE PLAN PROVIDES FOR
NORMAL RETIREMENT BEFORE AGE 65, YOU MUST INCLUDE THE NORMAL
RETIREMENT AGE.]
[IF THE PLAN DOES NOT PROVIDE FOR COMMENCEMENT OF BENEFITS BEFORE
AGE 65, YOU MAY OMIT THIS PARAGRAPH.]
The maximum benefit will also be reduced when a benefit
is provided for a survivor.
The PBGC does not guarantee certain types of benefits.
[INCLUDE THE FOLLOWING GUARANTEE LIMITS THAT APPLY TO THE
BENEFITS AVAILABLE UNDER YOUR PLAN.]
The PBGC does not guarantee benefits for which you do
not have a vested right when a plan ends, usually because you have
not worked enough years for the company.
The PBGC does not guarantee benefits for which you have
not met all age, service, or other requirements at the time the plan
ends.
Benefit increases and new benefits that have been in
place for less than a year are not guaranteed. Those that have been
in place for less than 5 years are only partly guaranteed.
Early retirement payments that are greater than
payments at normal retirement age may not be guaranteed. For
example, a supplemental benefit that stops when you become eligible
for Social Security may not be guaranteed.
Benefits other than pension benefits, such as health
insurance, life insurance, death benefits, vacation pay, or
severance pay, are not guaranteed.
The PBGC does not pay lump sums exceeding $3,500.
WHERE TO GET MORE INFORMATION
Your plan, [EIN-PN], is sponsored by [CONTRIBUTING SPONSOR(S)].
If you would like more information about the funding of your plan,
contact [INSERT NAME, TITLE, BUSINESS ADDRESS AND PHONE NUMBER OF
INDIVIDUAL OR ENTITY].
For more information about the PBGC and the benefits it
guarantees, you may request a free copy of ``Your Guaranteed
Pension'' by writing to Consumer Information Center, Dept. YGP,
Pueblo, Colorado 81009.
[THE FOLLOWING SENTENCE MAY BE INCLUDED:] ``Your Guaranteed
Pension'' is also available from the PBGC Homepage on the World Wide
Web at http://www.pbgc.gov/ygp.htm.
Issued: [INSERT AT LEAST MONTH AND YEAR]
Appendix B to Part 4011--Table of Maximum Guaranteed Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below
is the amount (monthly or annual) listed below:
-------------------------------------------------------------------------------------------------------
If a plan terminates in-- Age 65 Age 62 Age 60 Age 55
-------------------------------------------------------------------------------------------------------
Monthly Annual Monthly Annual Monthly Annual Monthly Annual
--------------------------------------------------------------------------------------------------------------------------------------------------------
1995............................................ $2,573.86 $30,886.32 $2,033.35 $24,400.20 $1,673.01 $20,076.12 $1,158.24 $13,898.88
1996............................................ $2,642.05 $31,704.60 $2,087.22 $25,046.64 $1,717.33 $20,607.96 $1,188.92 $14,267.04
--------------------------------------------------------------------------------------------------------------------------------------------------------
The maximum guaranteed benefit for an individual starting to
receive benefits at ages other than those listed above can be
determined by applying the PBGC's regulation on computation of
maximum guaranteeable benefits (29 CFR 4022.22).
PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
Subpart A--General Provisions; Guaranteed Benefits
Sec.
4022.1 Purpose and scope.
4022.2 Definitions.
4022.3 Guaranteed benefits.
4022.4 Entitlement to a benefit.
4022.5 Determination of nonforfeitable benefits.
4022.6 Annuity payable for total disability.
4022.7 Benefits payable in a single installment.
Subpart B--Limitations on Guaranteed Benefits
4022.21 Limitations; in general.
4022.22 Maximum guaranteeable benefit.
4022.23 Computation of maximum guaranteeable benefits.
4022.24 Benefit increases.
4022.25 Five-year phase-in of benefit guarantee for participants
other than substantial owners.
4022.26 Phase-in of benefit guarantee for participants who are
substantial owners.
4022.27 Effect of tax disqualification.
Subpart C--Calculation and Payment of Unfunded Nonguaranteed Benefits
[Reserved]
Subpart D--Benefit Reductions in Terminating Plans
4022.61 Limitations on benefit payments by plan administrator.
4022.62 Estimated guaranteed benefit.
4022.63 Estimated title IV benefit.
Subpart E--PBGC Recoupment and Reimbursement of Benefit Overpayments
and Underpayments
4022.81 General rules.
4022.82 Method of recoupment.
4022.83 PBGC reimbursement of benefit underpayments.
Appendix A to Part 4022--Maximum Guaranteeable Monthly Benefit
Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.
Subpart A--General Provisions; Guaranteed Benefits
Sec. 4022.1 Purpose and scope.
The purpose of this part is to prescribe rules governing the
calculation and payment of benefits payable in terminated single-
employer plans under section 4022 of ERISA. Subpart A, which applies to
each plan
[[Page 34029]]
providing benefits guaranteed under title IV of ERISA, contains
definitions applicable to all subparts, and describes basic-type
benefits that are guaranteed by the PBGC subject to the limitations set
forth in Subpart B. Subpart C is reserved for rules relating to the
calculation and payment of unfunded nonguaranteed benefits under
section 4022(c) of ERISA. Subpart D prescribes procedures that minimize
the overpayment of benefits by plan administrators after initiating
distress terminations of single-employer plans that are not expected to
be sufficient for guaranteed benefits. Subpart E sets forth the method
of recoupment of benefit payments in excess of the amounts permitted
under sections 4022, 4022B, and 4044 of ERISA from participants and
beneficiaries in PBGC-trusteed plans, and provides for reimbursement of
benefit underpayments. (The provisions of this part have not been
amended to take account of changes made in section 4022 of ERISA by
sections 766 and 777 of the Retirement Protection Act of 1994.)
Sec. 4022.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
annuity, Code, employer, ERISA, guaranteed benefit, mandatory employee
contributions, nonforfeitable benefit, normal retirement age, notice of
intent to terminate, PBGC, person, plan, plan administrator, plan year,
proposed termination date, substantial owner, and title IV benefit.
In addition, for purposes of this part (unless otherwise required
by the context):
Accumulated mandatory employee contributions means mandatory
employee contributions plus interest credited on those contributions
under the plan, or, if greater, interest required by section 204(c) of
ERISA.
Benefit in pay status means that one or more benefit payments have
been made or would have been made except for administrative delay.
Benefit increase means any benefit arising from the adoption of a
new plan or an increase in the value of benefits payable arising from
an amendment to an existing plan. Such increases include, but are not
limited to, a scheduled increase in benefits under a plan or plan
amendment, such as a cost-of-living increase, and any change in plan
provisions which advances a participant's or beneficiary's entitlement
to a benefit, such as liberalized participation requirements or vesting
schedules, reductions in the normal or early retirement age under a
plan, and changes in the form of benefit payments. In the case of a
plan under which the amount of benefits depends on the participant's
salary and the participant receives a salary increase the resulting
increase in benefits to which the participant becomes entitled will
not, for the purpose of this part, be treated as a benefit increase.
Similarly, in the case of a plan under which the amount of benefits
depends on the participant's age or service, and the participant
becomes entitled to increased benefits solely because of advancement in
age or service, the increased benefits to which the participant becomes
entitled will not, for the purpose of this part, be treated as a
benefit increase.
Covered employment means employment with respect to which benefits
accrue under a plan.
Pension benefit means a benefit payable as an annuity, or one or
more payments related thereto, to a participant who permanently leaves
or has permanently left covered employment, or to a surviving
beneficiary, which payments by themselves or in combination with Social
Security, Railroad Retirement, or workmen's compensation benefits
provide a substantially level income to the recipient.
Straight life annuity means a series of level periodic payments
payable for the life of the recipient, but does not include any
combined annuity form, including an annuity payable for a term certain
and life.
Sec. 4022.3 Guaranteed benefits.
Except as otherwise provided in this part, the PBGC will guarantee
the amount, as of the termination date, of a benefit provided under a
plan to the extent that the benefit does not exceed the limitations in
ERISA and in subpart B, if--
(a) The benefit is a nonforfeitable benefit;
(b) The benefit qualifies as a pension benefit as defined in
Sec. 4022.2; and
(c) The participant is entitled to the benefit under Sec. 4022.4.
Sec. 4022.4 Entitlement to a benefit.
(a) A participant or his surviving beneficiary is entitled to a
benefit if under the provisions of a plan:
(1) The benefit was in pay status on the date of the termination of
the plan.
(2) A benefit payable at normal retirement age is an optional form
of payment to the benefit otherwise payable at such age and the
participant elected the benefit before the termination date of the
plan.
(3) Except for a benefit described in paragraph (a)(2) of this
section, before the termination date the participant had satisfied the
conditions of the plan necessary to establish the right to receive the
benefit prior to such date other than application for the benefit,
satisfaction of a waiting period described in the plan, or retirement;
or
(4) Absent an election by the participant, the benefit would be
payable upon retirement.
(5) In the case of a benefit that returns all or a portion of a
participant's accumulated mandatory employee contributions upon death,
the participant (or beneficiary) had satisfied the conditions of the
plan necessary to establish the right to the benefit other than death
or designation of a beneficiary.
(b) If none of the conditions set forth in paragraph (a) of this
section is met, the PBGC will determine whether the participant is
entitled to a benefit on the basis of the provisions of the plan and
the circumstances of the case.
Sec. 4022.5 Determination of nonforfeitable benefits.
(a) A guaranteed benefit payable to a surviving beneficiary is not
considered to be forfeitable solely because the plan provides that the
benefit will cease upon the remarriage of such beneficiary or his
attaining a specified age. However, the PBGC will observe the
provisions of the plan relating to the effect of such remarriage or
attainment of such specified age on the surviving beneficiary's
eligibility to continue to receive benefit payments.
(b) Any other provision in a plan that the right to a benefit in
pay status will cease or be suspended upon the occurrence of any
specified condition does not automatically make that benefit
forfeitable. In each such case the PBGC will determine whether the
benefit is forfeitable.
(c) A benefit guaranteed under Sec. 4022.6 shall not be considered
forfeitable solely because the plan provides that upon recovery of the
participant the benefit will cease.
Sec. 4022.6 Annuity payable for total disability.
(a) Except as provided in paragraph (b) of this section, an annuity
which is payable (or would be payable after a waiting period described
in the plan, whether or not the participant is in receipt of other
benefits during such waiting period), under the terms of a plan on
account of the total and permanent disability of a participant which is
expected to last for the life of the participant and which began before
the termination date is considered to be a pension benefit.
(b) In any case in which the PBGC determines that the standards for
[[Page 34030]]
determining such total and permanent disability under a plan were
unreasonable, or were modified in anticipation of termination of the
plan, the disability benefits payable to a participant under such
standard shall not be guaranteed unless the participant meets the
standards of the Social Security Act and the regulations promulgated
thereunder for determining total disability.
(c) For the purpose of this section, a participant may be required,
upon the request of the PBGC, to submit to an examination or to submit
proof of continued total and permanent disability. If the PBGC finds
that a participant is no longer so disabled, it may suspend, modify, or
discontinue the payment of the disability benefit.
Sec. 4022.7 Benefits payable in a single installment.
(a) Alternative benefit. If a benefit that is guaranteed under this
part is payable in a single installment or substantially so under the
terms of the plan, or an option elected under the plan by the
participant, the benefit will not be guaranteed or paid as such, but
the PBGC will guarantee the alternative benefit, if any, in the plan
which provides for the payment of equal periodic installments for the
life of the recipient. If the plan provides more than one such annuity,
the recipient may within 30 days after notification of the proposed
termination of the plan elect to receive one of those annuities. If the
plan does not provide such an annuity, the PBGC will guarantee an
actuarially equivalent life annuity.
(b)(1) Payment in single installments. Notwithstanding paragraph
(a) of this section, in any case in which the value of a guaranteed
benefit payable by the PBGC is $3,500 or less, the total value of the
guaranteed benefit may be paid in a single payment. For purposes of
determining the value of the guaranteed benefit, subtract from the
value of the guaranteed benefit, any amounts that are returned under
paragraph (b)(2) of this section, but only to the extent such amounts
do not exceed the value of the portion of an individual's benefit
derived from mandatory employee contributions that is guaranteed.
(2) Return of employee contributions--
(i) General. Notwithstanding any other provision of this part, the
PBGC may pay in a single installment (or a series of installments)
instead of as an annuity, the value of the portion of an individual's
basic-type benefit derived from mandatory employee contributions, if:
(A) The individual elects payment in a single installment (or a
series of installments) before the sixty-first (61st) day after the
date he or she receives notice that such an election is available; and
(B) Payment in a single installment (or a series of installments)
is consistent with the plan's provisions. For purposes of this part,
the portion of an individual's basic-type benefit derived from
mandatory employee contributions is determined under Sec. 4044.12
(priority category 2 benefits) of this chapter, and the value of that
portion is computed under the applicable rules contained in part 4044,
subpart B, of this chapter.
(ii) Set-off for distributions after termination. The amount to be
returned under paragraph (b)(2)(i) of this section is reduced by the
set-off amount. The set-off amount is the amount by which distributions
made to the individual after the termination date exceed the amount
that would have been distributed, exclusive of mandatory employee
contributions, if the individual had withdrawn the mandatory employee
contributions on the termination date.
Example: Participant A is receiving a benefit of $600 per month
when the plan terminates, $200 of which is derived from mandatory
employee contributions. If the participant had withdrawn his
contributions on the termination date, his benefit would have been
reduced to $400 per month. The participant receives two monthly
payments after the termination date. The set-off amount is $400. (The
$600 actual payment minus the $400 the participant would have received
if he had withdrawn his contributions multiplied by the two months for
which he received the extra payment.)
(c) Death benefits--
(1) General. Notwithstanding paragraph (a) of this section, a
benefit that would otherwise be guaranteed under the provisions of this
subpart, except for the fact that it is payable solely in a single
installment (or substantially so) upon the death of a participant,
shall be paid by the PBGC as an annuity that has the same value as the
single installment. The PBGC will in each case determine the amount and
duration of the annuity based on all the facts and circumstances.
(2) Exception. Upon the death of a participant the PBGC may pay in
a single installment (or a series of installments) that portion of the
participant's accumulated mandatory employee contributions that is
payable under the plan in a single installment (or a series of
installments) upon the participant's death.
Subpart B--Limitations on Guaranteed Benefits
Sec. 4022.21 Limitations; in general.
(a)(1) Subject to paragraphs (b), (c) and (d) of this section, the
PBGC will not guarantee that part of an installment payment that
exceeds the dollar amount payable as a straight life annuity commencing
at normal retirement age, or thereafter, to which a participant would
have been entitled under the provisions of the plan in effect on the
termination date, on the basis of his credited service to such date. If
the plan does not provide a straight life annuity either as its normal
form of retirement benefit or as an option to the normal form, the PBGC
will for purposes of this paragraph convert the plan's normal form
benefit to a straight life annuity of equal actuarial value as
determined by the PBGC.
(2) The limitation of paragraph (a)(1) of this section shall not
apply to:
(i) A survivor's benefit payable as an annuity on account of the
death of a participant that occurred before the plan terminates and
before the participant retired;
(ii) A disability pension described in section 4022.6 of this part;
or
(iii) A benefit payable in non-level installments that in
combination with Social Security, Railroad Retirement, or workman's
compensation benefits yields a substantially level income if the
projected income from the plan benefit over the expected life of the
recipient does not exceed the value of the straight life annuity
described in paragraph (a)(1) of this section.
(b) The PBGC will not guarantee the payment of that part of any
benefit that exceeds the limitations in section 4022(b) of ERISA and
this subpart B.
(c)(1) Except as provided in paragraph (c)(2) of this section, the
PBGC does not guarantee a benefit payable in a single installment (or
substantially so) upon the death of a participant or his surviving
beneficiary unless that benefit is substantially derived from a
reduction in the pension benefit payable to the participant or
surviving beneficiary.
(2) Paragraphs (a) and (c)(1) of this section do not apply to that
portion of accumulated mandatory employee contributions payable under a
plan upon the death of a participant, and such a benefit is a pension
benefit for purposes of this part.
(d) The PBGC will not guarantee a benefit payable to other than
natural persons, or a trust or estate for the benefit of one or more
natural persons.
[[Page 34031]]
Sec. 4022.22 Maximum guaranteeable benefit.
Subject to section 4022B of ERISA and part 4022B of this chapter,
benefits payable with respect to a participant under a plan shall be
guaranteed only to the extent that such benefits do not exceed the
actuarial value of a benefit in the form of a life annuity payable in
monthly installments, commencing at age 65 equal to the lesser of the
amounts computed in paragraphs (a) and (b) of this section.
(a) One-twelfth of the participant's average annual gross income
from his employer during either his highest-paid five consecutive
calendar years in which he was an active participant under the plan, or
if he was not an active participant throughout the entire such period,
the lesser number of calendar years within that period in which he was
an active participant under the plan.
(1) As used in this paragraph, ``gross income'' means ``earned
income'' as defined in section 911(b) of the Code, determined without
regard to any community property laws.
(2) For the purposes of this paragraph, if the plan is one to which
more than one employer contributes, and during any calendar year the
participant received gross income from more than one such contributing
employer, then the amounts so received shall be aggregated in
determining the participant's gross income for the calendar year.
(b) $750 multiplied by the fraction x/$13,200 where ``x'' is the
Social Security contribution and benefit base determined under section
230 of the Social Security Act in effect at the termination date of the
plan.
Sec. 4022.23 Computation of maximum guaranteeable benefits.
(a) General. Where a benefit is payable in any manner other than as
a monthly benefit payable for life commencing at age 65, the maximum
guaranteeable monthly amount of such benefit shall be computed by
applying the applicable factor or factors set forth in paragraphs (c)-
(e) of this section to the monthly amount computed under Sec. 4022.22.
In the case of a step-down life annuity, the maximum guaranteeable
monthly amount of such benefit shall be computed in accordance with
paragraph (f) of this section.
(b) Application of adjustment factors to monthly amount computed
under Sec. 4022.22. (1) Each percentage increase or decrease computed
under paragraphs (c), (d), and (e) of this section shall be added to or
subtracted from a base of 1.00, and the resulting amounts shall be
multiplied.
(2) The monthly amount computed under Sec. 4022.22 shall be
multiplied by the product computed pursuant to paragraph (b)(1) of this
section in order to determine the participant's and/or beneficiary's
maximum benefit guaranteeable.
(c) Annuitant's age factor. If a participant or the beneficiary of
a deceased participant is entitled to and chooses to receive his
benefit at an age younger than 65, the monthly amount computed under
Sec. 4022.22 shall be reduced by the following amounts for each month
up to the number of whole months below age 65 that corresponds to the
later of the participant's age at the termination date or his age at
the time he begins to receive the benefit: For each of the 60 months
immediately preceding the 65th birthday, the reduction shall be \7/12\
of 1%; For each of the 60 months immediately preceding the 60th
birthday, the reduction shall be \4/12\ of 1%; For each of the 120
months immediately preceding the 55th birthday, the reduction shall be
\2/12\ of 1%; and For each succeeding 120 months period, the monthly
percentage reduction shall be \1/2\ of that used for the preceding 120
month period.
(d) Factor for benefit payable in a form other than as a life
annuity. When a benefit is in a form other than a life annuity payable
in monthly installments, the monthly amount computed under Sec. 4022.22
shall be adjusted by the appropriate factors on a case-by-case basis by
PBGC. This paragraph sets forth the adjustment factors to be used for
several common benefit forms payable in monthly installments.
(1) Period certain and continuous annuity. A period certain and
continuous annuity means an annuity which is payable in periodic
installments for the participant's life, but for not less than a
specified period of time whether or not the participant dies during
that period. The monthly amount of a period certain and continuous
annuity computed under Sec. 4022.22 shall be reduced by the following
amounts for each month of the period certain subsequent to the
termination date:
For each month up to 60 months deduct \1/24\ of 1%;
For each month beyond 60 months deduct \1/12\ of 1%.
(i) A cash refund annuity means an annuity under which if the
participant dies prior to the time when he has received pension
payments equal to a fixed sum specified in the plan, then the balance
is paid as a lump-sum death benefit. A cash refund annuity shall be
treated as a benefit payable for a period certain and continuous. The
period of certainty shall be computed by dividing the amount of the
lump-sum refund by the monthly amount to which the participant is
entitled under the terms of the plan.
(ii) An installment refund annuity means an annuity under which if
the participant dies prior to the time he has received pension payments
equal to a fixed sum specified in the plan, then the balance is paid as
a death benefit in periodic installments equal in amount to the
participant's periodic benefit. An installment refund annuity shall be
treated as a benefit payable for a period certain and continuous. The
period of certainty shall be computed by dividing the amount of the
remaining refund by the monthly amount to which the participant is
entitled under the terms of the plan.
(2) Joint and survivor annuity (contingent basis). A joint and
survivor annuity (contingent basis) means an annuity which is payable
in periodic installments to a participant for his life and upon his
death is payable to his beneficiary for the beneficiary's life in the
same or in a reduced amount. The monthly amount of a joint and survivor
annuity (contingent basis) computed under Sec. 4022.22 shall be reduced
by an amount equal to 10% plus \2/10\ of 1% for each percentage point
in excess of 50% of the participant's benefit that will continue to be
paid to the beneficiary. If the benefit payable to the beneficiary is
less than 50 percent of the participant's benefit, PBGC shall provide
the adjustment factors to be used.
(3) Joint and survivor annuity (joint basis). A joint and survivor
annuity (joint basis) means an annuity which is payable in periodic
installments to a participant and upon his death or the death of his
beneficiary is payable to the survivor for the survivor's life in the
same or in a reduced amount. The monthly amount of a joint and survivor
annuity (joint basis) computed under Sec. 4022.22 shall be reduced by
an amount equal to \4/10\ of 1% for each percentage point in excess of
50% of the participant's original benefit that will continue to be paid
to the survivor. If the benefit payable to the survivor is less than 50
percent of the participant's original benefit, PBGC shall provide the
adjustment factors to be used.
(e) When a benefit is payable in a form described in paragraph (d)
(2) or (3) of this section, and the beneficiary's age is different from
the participant's age, by 15 years or less, the monthly amount computed
under Sec. 4022.22 shall be adjusted by the following amounts: If the
beneficiary is younger than the
[[Page 34032]]
participant, deduct 1% for each year of the age difference; If the
beneficiary is older than the participant, add \1/2\ of 1% for each
year of the age difference. In computing the difference in ages, years
over 65 years of age shall not be counted. If the difference in age
between the beneficiary and the participant is greater than 15 years,
PBGC shall provide the adjustment factors to be used.
(f) Step-down life annuity. A step-down life annuity means an
annuity payable in a certain amount for the life of the participant
plus a temporary additional amount payable until the participant
attains an age specified in the plan.
(1) The temporary additional amount payable under a step-down life
annuity shall be converted to a life annuity payable in monthly
installments by multiplying the appropriate factor based on the
participant's age and the number of remaining years of the temporary
additional benefit by the amount of the temporary additional benefit.
The factors to be used are set forth in the table below. The amount of
the monthly benefit so calculated shall be added to the level amount of
the monthly benefit payable for life to determine the level-life
annuity that is equivalent to the step-down life annuity.
Factors for Converting Temporary Additional Benefit Under Step-Down Life Annuity
----------------------------------------------------------------------------------------------------------------
Age of participant \1\ at the Number of years temporary additional benefit is payable under the plan as of
later of the date the temporary the date of plan termination \2\
additional benefit commences or -------------------------------------------------------------------------------
the date of plan termination 1 2 3 4 5 6 7 8 9 10
----------------------------------------------------------------------------------------------------------------
45.............................. 0.060 0.117 0.170 0.220 0.268 0.315 0.355 0.395 0.435 0.475
46.............................. .061 .119 .173 .224 .273 .321 .362 .403 .444 .485
47.............................. .062 .121 .176 .228 .278 .327 .369 .411 .453 .495
48.............................. .063 .123 .179 .232 .283 .333 .376 .419 .462 .505
49.............................. .064 .125 .182 .236 .288 .339 .383 .427 .471 .515
50.............................. .065 .127 .185 .240 .293 .345 .390 .435 .480 .525
51.............................. .066 .129 .188 .244 .298 .351 .397 .443 .489 .535
52.............................. .068 .133 .194 .252 .308 .363 .411 .459 .507 .555
53.............................. .067 .131 .191 .248 .303 .357 .404 .451 .498 .545
54.............................. .069 .135 .197 .256 .313 .369 .418 .467 .516 .565
55.............................. .070 .137 .200 .260 .318 .375 .425 .475 .525 .575
56.............................. .072 .141 .206 .268 .328 .387 .439 .491 .543 ......
57.............................. .074 .145 .212 .276 .338 .399 .453 .507 ...... ......
58.............................. .076 .149 .218 .284 .348 .411 .467 ...... ...... ......
59.............................. .078 153 .224 .292 .358 .423 ...... ...... ...... ......
60.............................. .080 .157 .230 .300 .368 ...... ...... ...... ...... ......
61.............................. .082 .161 .236 .308 ...... ...... ...... ...... ...... ......
62.............................. .084 .165 .242 ...... ...... ...... ...... ...... ...... ......
63.............................. .086 .169 ...... ...... ...... ...... ...... ...... ...... ......
64.............................. .088 ...... ...... ...... ...... ...... ...... ...... ...... ......
----------------------------------------------------------------------------------------------------------------
\1\ Age of participant is his age at his last birthday.
\2\ If the benefit is payable for less than 1 yr, the appropriate factor is obtained by multiplying the factor
for 1 yr by a fraction, the numerator of which is the number of months the benefit is payable, and the
denominator of which is 12. If the benefit is payable for 1 or more whole years, plus an additional number of
months less than 12, the appropriate factor is obtained by linear interpolation between the factor for the
number of whole years the benefit is payable and the factor for the next year.
(2) If a participant is entitled to and chooses to receive a step-
down life annuity at an age younger than 65, the monthly amount
computed under Sec. 4022.22 shall be adjusted by applying the factors
set forth in paragraph (c) of this section in the manner described in
paragraph (b) of this section.
(3) If the level-life monthly benefit calculated pursuant to
paragraph (f)(1) of this section exceeds the monthly amount calculated
pursuant to paragraph (f)(2) of this section, then the monthly maximum
benefit guaranteeable shall be a step-down life annuity under which the
monthly amount of the temporary additional benefit and the amount of
the monthly benefit payable for life, respectively, shall bear the same
ratio to the monthly amount of the temporary additional benefit and the
monthly benefit payable for life provided under the plan, respectively,
as the monthly benefit calculated pursuant to paragraph (f)(2) of this
section bears to the monthly benefit calculated pursuant to paragraph
(f)(1) of this section.
Sec. 4022.24 Benefit increases.
(a) Scope. This section applies:
(1) To all benefit increases, as defined in Sec. 4022.2, payable
with respect to a participant other than a substantial owner, which
have been in effect for less than five years preceding the termination
date; and
(2) To all benefit increases payable with respect to a substantial
owner, which have been in effect for less than 30 years preceding the
termination date.
(b) General rule. Benefit increases described in paragraph (a) of
this section shall be guaranteed only to the extent provided in
Sec. 4022.25 with respect to a participant other than a substantial
owner and in Sec. 4022.26 with respect to a participant who is a
substantial owner.
(c) Computation of guaranteeable benefit increases. Except as
provided in paragraph (d) of this section pertaining to multiple
benefit increases, the amount of a guaranteeable benefit increase shall
be the amount, if any, by which the monthly benefit calculated pursuant
to paragraph (c)(1) of this section (the monthly benefit provided under
the terms of the plan as of the termination date, as limited by
Sec. 4022.22) exceeds the monthly benefit calculated pursuant to
paragraph (c)(4) of this section (the monthly benefit which would have
been payable on the termination date if the benefit provided subsequent
to the increase were equivalent, as of the date of the increase, to the
benefit provided prior to the increase).
(1) Determine the amount of the monthly benefit payable on the
termination date (or, in the case of a deferred benefit, the monthly
benefit which will become payable thereafter)
[[Page 34033]]
under the terms of the plan subsequent to the increase, using service
credited to the participant as of the termination date, that is
guaranteeable pursuant to Sec. 4022.22;
(2) Determine, as of the date of the benefit increase, in
accordance with the provisions of Sec. 4022.23, the factors which would
be used to calculate the monthly maximum benefit guaranteeable (i)
under the terms of the plan prior to the increase and (ii) under the
terms of the plan subsequent to the increase. However, when the benefit
referred to in paragraph (c)(2)(ii) of this section is a joint and
survivor benefit deferred as of the termination date and there is no
beneficiary on that date, the factors computed in paragraph (c)(2)(ii)
of this section shall be determined as if the benefit were payable only
to the participant. Each set of factors determined under this paragraph
shall be stated in the manner set forth in Sec. 4022.23(b)(1);
(3) Multiply the monthly benefit which would have been payable (or,
in the case of a deferred benefit, would have become payable) under the
terms of the plan prior to the increase based on service credited to
the participant as of the termination date by a fraction, the numerator
of which is the product of the factors computed pursuant to paragraph
(c)(2)(ii) of this section and the denominator of which is the product
of the factors computed pursuant to paragraph (c)(2)(i) of this
section.
(4) Calculate the amount of the monthly benefit which would be
payable on the termination date if the monthly benefit computed in
paragraph (c)(3) of this section had been payable commencing on the
date of the benefit increase (or, in the case of a deferred benefit,
would have become payable thereafter.) In the case of a benefit which
does not become payable until subsequent to the termination date, the
amount of the monthly benefit determined pursuant to this paragraph is
the same as the amount of the monthly benefit calculated pursuant to
paragraph (c)(3) of this section.
(d) Multiple benefit increases. (1) Where there has been more than
one benefit increase described in paragraph (a) of this section, the
amounts of guaranteeable benefit increases shall be calculated
beginning with the earliest increase, and each such amount (except for
the amount resulting from the final benefit increase) shall be
multiplied by a fraction, the numerator of which is the product of the
factors, stated in the manner set forth in Sec. 4022.23(b)(1), used to
calculate the monthly maximum guaranteeable benefit under Sec. 4022.22
and the denominator of which is the product of the factors used in the
calculation under paragraph (c)(2)(i) of this section.
(2) Each benefit increase shall be treated separately for the
purposes of Sec. 4022.25, except as otherwise provided in paragraph (d)
of that section, and for the purposes of Sec. 4022.26, as appropriate.
(e) For the purposes of this subpart, a benefit increase is deemed
to be in effect commencing on the later of its adoption date or its
effective date.
Sec. 4022.25 Five-year phase-in of benefit guarantee for participants
other than substantial owners.
(a) Scope. This section applies to the guarantee of benefit
increases which have been in effect for less than five years with
respect to participants other than substantial owners.
(b) Phase-in formula. The amount of a benefit increase computed
pursuant to Sec. 4022.24 shall be guaranteed to the extent provided in
the following formula: the number of years the benefit increase has
been in effect, not to exceed five, multiplied by the greater of (1) 20
percent of the amount computed pursuant to Sec. 4022.24; or (2) $20 per
month.
(c) Computation of years. In computing the number of years a
benefit increase has been in effect, each complete 12-month period
prior to the termination date during which such benefit increase was in
effect shall constitute one year.
(d) Multiple benefit increases. In applying the formula contained
in paragraph (b) of this section, multiple benefit increases within any
12-month period prior to the termination date and calculated from that
date shall be aggregated and treated as one benefit increase.
(e) Notwithstanding the provisions of paragraph (b) of this
section, a benefit increase described in paragraph (a) of this section
shall be guaranteed only if PBGC determines that the plan was
terminated for a reasonable business purpose and not for the purpose of
obtaining the payment of benefits by PBGC.
Sec. 4022.26 Phase-in of benefit guarantee for participants who are
substantial owners.
(a) Scope. This section shall apply to the guarantee of all
benefits described in subpart A with respect to participants who are
substantial owners at the termination date or who were substantial
owners at any time within the 5-year period preceding that date.
(b) Phase-in formula when there have been no benefit increases.
Benefits provided by a plan under which there has been no benefit
increase, other than the adoption of the plan, shall be guaranteed to
the extent provided in the following formula: The monthly amount
computed under Sec. 4022.22 multiplied by a fraction not to exceed 1,
the numerator of which is the number of full years prior to the
termination date that the substantial owner was an active participant
under the plan, and the denominator of which is 30. Active
participation under a plan commences at the later of the date on which
the plan is adopted or becomes effective.
(c) Phase-in formula when there have been benefit increases. If
there has been a benefit increase under the plan, other than the
adoption of the plan, benefits provided by each such increase shall be
guaranteed to the extent provided in the following formula: The amount
of the guaranteeable benefit increase computed under Sec. 4022.24
multiplied by a fraction not to exceed 1, the numerator of which is the
number of full years prior to the termination date that the benefit
increase was in effect and during which the substantial owner was an
active participant under the plan, and the denominator of which is 30.
However, in no event shall the total benefits guaranteed under all such
benefit increases exceed the benefits which are guaranteed under
paragraph (b) of this section with respect to a plan described therein.
(d) For the purpose of computing the benefits guaranteed under this
section, in the case of a substantial owner who becomes an active
participant under a plan after a benefit increase (other than the
adoption of the plan) has been put into effect, the plan as it exists
at the time he commences his participation shall be deemed to be the
original plan with respect to him.
Sec. 4022.27 Effect of tax disqualification.
(a) General rule. Except as provided in paragraph (b) of this
section, benefits accrued under a plan after the date on which the
Secretary of the Treasury or his delegate issues a notice that any
trust which is part of the plan no longer meets the requirements of
section 401(a) of the Code or that the plan no longer meets the
requirements of section 404(a) of the Code or after the date of
adoption of a plan amendment that causes the issuance of such a notice
shall not be guaranteed under this part.
(b) Exceptions. The restriction on the guarantee of benefits set
forth in paragraph (a) of this section shall not apply if:
(1) The Secretary of the Treasury or his delegate issues a notice
stating that the original notice referred to in
[[Page 34034]]
paragraph (a) of this section was erroneous;
(2) The Secretary of the Treasury or his delegate finds that,
subsequent to the issuance of the notice referred to in paragraph (a)
of this section, appropriate action has been taken with respect to the
trust or plan to cause it to meet the requirements of sections 401(a)
or 404(a)(2) of the Code, respectively, and issues a subsequent notice
stating that the trust or plan meets such requirements; or
(3) The plan amendment is revoked retroactively to its original
effective date.
Subpart C--Calculation and Payment of Unfunded Nonguaranteed
Benefits [Reserved]
Subpart D--Benefit Reductions in Terminating Plans
Sec. 4022.61 Limitations on benefit payments by plan administrator.
(a) General. When section 4041.4 of this chapter requires a plan
administrat
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
or to reduce benefits, the plan administrator shall limit
benefit payments in accordance with this section.
(b) Accrued benefit at normal retirement. Except to the extent
permitted by paragraph (d) of this section, a plan administrator may
not pay that portion of a monthly benefit payable with respect to any
participant that exceeds the participant's accrued benefit payable at
normal retirement age under the plan. For the purpose of applying this
limitation, post-retirement benefit increases, such as cost-of-living
adjustments, are not considered to increase a participant's benefit
beyond his or her accrued benefit payable at normal retirement age.
(c) Maximum guaranteeable benefit. Except to the extent permitted
by paragraph (d) of this section, a plan administrator may not pay that
portion of a monthly benefit payable with respect to any participant,
as limited by paragraph (b) of this section, that exceeds the maximum
guaranteeable benefit under section 4022(b)(3)(B) of ERISA and
Sec. 4022.22(b) of this part, adjusted for age and benefit form, for
the year of the proposed termination date.
(d) Estimated benefit payments. A plan administrator shall pay the
monthly benefit payable with respect to each participant as determined
under Sec. 4022.62 or Sec. 4022.63, whichever produces the higher
benefit.
(e) PBGC authority to modify procedures. In order to avoid abuse of
the plan termination insurance system, inequitable treatment of
participants and beneficiaries, or the imposition of unreasonable
burdens on terminating plans, the PBGC may authorize or direct the use
of alternative procedures for determining benefit reductions.
(f) Examples. This section is illustrated by the following
examples:
Example 1--Facts. On October 10, 1992, a plan administrator
files with the PBGC a notice of intent to terminate in a distress
termination that includes December 31, 1992, as the proposed
termination date. A participant who is in pay status on December 31,
1992, has been receiving his accrued benefit of $2,500 per month
under the plan. The benefit is in the form of a joint and survivor
annuity (contingent basis) that will pay 50 percent of the
participant's benefit amount (i.e., $1,250 per month) to his
surviving spouse following the death of the participant. On December
31, 1992, the participant is age 66, and his wife is age 56.
Benefit reductions. Paragraph (b) of this section requires the
plan administrator to cease paying benefits in excess of the accrued
benefit payable at normal retirement age. Because the participant is
receiving only his accrued benefit, no reduction is required under
paragraph (b).
Paragraph (c) of this section requires the plan administrator to
cease paying benefits in excess of the maximum guaranteeable
benefit, adjusted for age and benefit form in accordance with the
provisions of subpart B. The maximum guaranteeable benefit for plans
terminating in 1992, the year of the proposed termination date, is
$2,352.27 per month, payable in the form of a single life annuity at
age 65. Because the participant is older than age 65, no adjustment
is required under Sec. 4022.23(c) based on the annuitant's age
factor. The benefit form is a joint and survivor annuity (contingent
basis), as defined in Sec. 4022.23(d)(2). The required benefit
reduction for this benefit form under Sec. 4022.23(d) is 10 percent.
The corresponding adjustment factor is 0.90 (1.00-0.10). The benefit
reduction factor to adjust for the age difference between the
participant and the beneficiary is computed under Sec. 4022.23(e).
In computing the difference in ages, years over 65 years of age are
not taken into account. Therefore, the age difference is 9 years
(65-56). The required percentage reduction when the beneficiary is 9
years younger than the participant is 9 percent. The corresponding
adjustment factor is 0.91 (1.00-0.09).
The maximum guaranteeable benefit adjusted for age and benefit
form is $1,926.51 ($2,352.27 x 0.90 x 0.91) per month. Therefore,
the plan administrator must reduce the participant's benefit payment
from $2,500 to $1,926.51. If the participant dies after December 31,
1992, the plan administrator will pay his spouse $963.26
(0.50 x $1,926.51) per month.
Example 2--Facts. The benefit of a participant who retired under
a plan at age 60 is a reduced single life annuity of $400 per month
plus a temporary supplement of $400 per month payable until age 62
(i.e., a step-down benefit). The participant's accrued benefit under
the plan is $450 per month, payable from the plan's normal
retirement age. On the proposed termination date, June 30, 1992, the
participant is 61 years old.
The maximum guaranteeable benefit adjusted for age under
Sec. 4022.23(c) of this chapter is $1,693.63 ($2,352.27 x 0.72)
per month. Since the benefit is payable as a single life annuity, no
adjustment is required under Sec. 4022.23(d) for benefit form.
Benefit reductions. The plan benefit of $800 per month payable
until age 62 exceeds the participant's accrued benefit at normal
requirement age of $450 per month. Paragraph (b) of this section
requires that, except to the extent permitted by paragraph (d), the
plan benefit must be reduced to $450 per month. Since the levelized
benefit of $404.10 ((0.082 x 50) + $400) per month, determined
under Sec. 4022.23(f), is less than the adjusted maximum
guaranteeable benefit of $1,693.63 per month, no further reduction
in the $450 per month benefit payment is required under paragraph
(c) of this section. The plan administrator next would determine the
amount of the participant's estimated benefit under paragraph (d).
Example 3--Facts. A retired participant is receiving a reduced
early retirement benefit of $1,100 per month plus a temporary
supplement of $700 per month payable until age 62. The benefit is in
the form of a single life annuity. On the proposed termination date,
November 30, 1992, the participant is 56 years old.
The participant's accrued benefit at normal retirement age under
the plan is $1,200 per month. The maximum guaranteeable benefit
adjusted for age is $1,152.61 ($2,352.27 x 0.49) per month. A form
adjustment is not required.
Benefit reductions. The plan benefit of $1,800 per month payable
from age 56 to age 62 exceeds the participant's accrued benefit at
normal retirement age of $1,200 per month. Therefore, under
paragraph (b) of this section, the plan administrator must reduce
the temporary supplement to $100 per month.
For the purpose of determining whether the reduced benefit,
i.e., a level-life annuity of $1,100 per month and a temporary
annuity supplement of $100 per month to age 62, exceeds the maximum
guaranteeable benefit adjusted for age, the temporary annuity
supplement of $100 per month is converted to a level-life annuity
equivalent in accordance with Sec. 4022.23(f) of this chapter. The
level-life annuity equivalent is $38.70 ($100 x 0.387). This,
added to the life annuity of $1,100 per month, equals $1,138.70.
Since the maximum guaranteeable benefit of $1,152.61 per month
exceeds $1,138.70 per month, no further reduction is required under
paragraph (c) of this section.
The plan administrator next would determine the participant's
estimated benefit under paragraph (d). Assume that the estimated
benefit under paragraph (d) is $780 per month until age 62 and $715
per month thereafter. The plan administrator would pay the
participant $780 per month, reduced to $715 per month at age 62,
subject to the final benefit determination made under title IV.
Example 4--Facts. A retired participant is receiving a reduced
early retirement benefit of $2,650 per month plus a temporary
supplement of $800 per month payable until
[[Page 34035]]
age 62. The benefit is in the form of a joint and survivor annuity
(contingent basis) that will pay 50 percent of the participant's
benefit amount to his surviving spouse following the death of the
participant. On the proposed termination date, December 20, 1992,
the participant and his spouse are each 56 years old.
The participant's accrued benefit at normal retirement age under
the plan is $3,000 per month. The maximum guaranteeable benefit
adjusted for age and the joint and survivor annuity (contingent
basis) annuity form is $1,037.35 per month. An adjustment for age
difference is not required because the participant and his spouse
are the same age.
Benefit reductions. The plan benefit of $3,450 per month payable
from age 56 to age 62 exceeds the participant's accrued benefit at
normal retirement age, which is $3,000 per month. Therefore, under
paragraph (b) of this section, the plan administrator must reduce
the participant's benefit so that it does not exceed $3,000 per
month.
The level-life equivalent of the participant's reduced benefit,
determined using the Sec. 4022.23(f) adjustment factor, is $2,785.45
(($350 x 0.387) + $2,650) per month. Since this benefit exceeds
the participant's maximum guaranteeable benefit of $1,037.35 per
month, the plan administrator must reduce the participant's benefit
payment so that it does not exceed the maximum guaranteeable
benefit.
The ratio of (i) the participant's maximum guaranteeable benefit
to (ii) the level-life equivalent of the participant's reduced
benefit (computed under the ``accrued for normal retirement age''
limitation) is used in converting the level-life maximum
guaranteeable benefit to the step-down benefit form. The level-life
equivalent of the reduced benefit computed under the ``accrued for
normal retirement age'' limitation is 37.24 percent ($1,037.35/
$2,785.45). Thus, the plan administrator must reduce the
participant's level-life benefit of $2,650 per month to $986.86
($2,650 x 0.3724) and must further reduce the reduced temporary
benefit of $350 per month to $130.34 ($350 x 0.3724). Under
paragraph (c) of this section, therefore, the participant's maximum
guaranteeable benefit is $1,117.20 ($986.86 + $130.34) per month to
age 62 and $986.86 per month thereafter, subject to any adjustment
under paragraph (d) of this section.
Assume that the estimated benefit under paragraph (d) is
$1,005.48 per month to age 62 and $888.17 per month thereafter. The
plan administrator would reduce the participant's benefit from
$3,450 per month to $1,005.48 per month and pay this amount until
age 62, at which time the benefit payment would be reduced to
$888.17 per month, subject to the final benefit determination made
under title IV.
Sec. 4022.62 Estimated guaranteed benefit.
(a) General. The estimated guaranteed benefit payable with respect
to each participant who is not a substantial owner is computed under
paragraph (c) of this section. The estimated guaranteed benefit payable
with respect to each participant who is a substantial owner is computed
under paragraph (d) of this section.
(b) Rules for determining benefits. For the purposes of determining
entitlement to a benefit and the amount of the estimated benefit under
this section, the following rules apply:
(1) Participants in pay status on the proposed termination date.
For benefits payable with respect to a participant who is in pay status
on or before the proposed termination date, the plan administrator
shall use the participant's age and benefit payable under the plan as
of the proposed termination date.
(2) Participants who enter pay status after the proposed
termination date. For benefits payable with respect to a participant
who enters pay status after the proposed termination date, the plan
administrator shall use the participant's age as of the benefit
commencement date and his or her service and compensation as of the
proposed termination date.
(3) Participants with new benefits or benefit improvements. For the
purpose of determining the estimated guaranteed benefit under paragraph
(c) of this section, only new benefits and benefit improvements that
affect the benefit of the participant or beneficiary for whom the
determination is made are taken into account.
(4) Limitations on estimated guaranteed benefits. For the purpose
of determining the estimated guaranteed benefit under paragraph (c) or
(d) of this section, the benefit determined under paragraph (b)(1) or
(b)(2) of this section is subject to the limitations set forth in
Sec. 4022.61 (b) and (c).
(c) Estimated guaranteed benefit payable with respect to a
participant who is not a substantial owner. For benefits payable with
respect to a participant who is not a substantial owner, the estimated
guaranteed benefit is determined under paragraph (c)(1) of this
section, if no portion of the benefit is subject to the phase-in of
plan termination insurance guarantees set forth in section 4022(b)(1)
of ERISA. In any other case, the estimated guaranteed benefit is
determined under paragraph (c)(2). ``Benefit subject to phase-in''
means a benefit that is subject to the phase-in of plan termination
insurance guarantees set forth in section 4022(b)(1) of ERISA,
determined without regard to section 4022(b)(7) of ERISA.
(1) Participants with no benefits subject to phase-in. In the case
of a participant or beneficiary with no benefit improvement (as defined
in paragraph (c)(2)(ii)) or new benefit (as defined in paragraph
(c)(2)(i)) in the five years preceding the proposed termination date,
the estimated guaranteed benefit is the benefit to which he or she is
entitled under the rules in paragraph (b) of this section.
(2) Participants with benefits subject to phase-in. In the case of
a participant or beneficiary with a benefit improvement or new benefit
in the five years preceding the proposed termination date, the
estimated guaranteed benefit is the benefit to which he or she is
entitled under the rules in paragraph (b) of this section, multiplied
by the multiplier determined according to paragraphs (i), (ii), and
(iii), but not less than the benefit to which he or she would have been
entitled if the benefit improvement or new benefit had not been
adopted.
(i) From column (a) of Table I, select the line that applies
according to the number of full years before the proposed termination
date since the plan was last amended to provide for a new benefit (or
the number of full years since the plan was established, if it has
never been amended to provide for a new benefit). ``New benefit'' means
a change in the terms of the plan that results in (a) a participant's
or a beneficiary's eligibility for a benefit that was not previously
available or to which he or she was not entitled (excluding a benefit
that is actuarially equivalent to the normal retirement benefit to
which the participant was previously entitled) or (b) an increase of
more than twenty percent in the benefit to which a participant is
entitled upon entering pay status before his or her normal retirement
age under the plan. ``New benefits'' result from liberalized
participation or vesting requirements, reductions in the age or service
requirements for receiving unreduced benefits, additions of actuarially
subsidized benefits, and increases in actuarial subsidies. The
establishment of a plan creates a new benefit as of the effective date
of the plan. A change in the amount of a benefit is not deemed to be a
``new benefit'' if it results solely from a benefit improvement. ``New
benefit'' and ``benefit improvement'' are mutually exclusive terms.
(ii) If there was no benefit improvement under the plan during the
one-year period ending on the proposed termination date, use the
multiplier set forth in column (b) of Table I on the line selected from
column (a). ``Benefit improvement'' means a change in the terms of the
plan that results in (a) an increase in the benefit to which a
participant is entitled at his or her normal retirement age under the
plan or (b) an increase in the benefit to which a participant or
beneficiary in pay status is entitled.
[[Page 34036]]
(iii) If there was any benefit improvement during the one-year
period ending on the proposed termination date, use the multiplier set
forth in column (c) of Table I on the line selected from column (a).
Table I.--Applicable Multiplier If--
No benefit Benefit
improvement improvement
Full years since last new benefit during last during last
year year
(a) (b) (c)
------------------------------------------------------------------------
Five or more.................................. .90 .80
Four.......................................... .80 .70
Three......................................... .65 .55
Two........................................... .50 .45
Fewer than two................................ .35 .30
Note: The foregoing method of estimating guaranteed benefits is based
upon the PBGC's experience with a wide range of plans and may not
provide accurate estimates in certain circumstances. In accordance
with Sec. 4022.61(e), a plan administrator may use a different method
of estimation if he or she demonstrates to the PBGC that his proposed
method will be more equitable to participants and beneficiaries. The
PBGC may require the use of a different method in certain cases.
(d) Estimated guaranteed benefit payable with respect to a
substantial owner. For benefits payable with respect to each
participant who is a substantial owner and who commenced participation
under the plan fewer than five full years before the proposed
termination date, the estimated guaranteed benefit is determined under
paragraph (d)(1). With respect to any other substantial owner, the
estimated guaranteed benefit is determined under paragraph (d)(2).
(1) Fewer than five years of participation. The estimated
guaranteed benefit under this paragraph is the benefit to which the
substantial owner is entitled, as determined under paragraph (b) of
this section, multiplied by a fraction, not to exceed one, the
numerator of which is the number of full years prior to the proposed
termination date that the substantial owner was an active participant
under the plan and the denominator of which is thirty.
(2) Five or more years of participation. The estimated guaranteed
benefit under this paragraph is the lesser of--
(i) the estimated guaranteed benefit calculated under paragraph
(d)(1) of this section; or
(ii) the benefit to which the substantial owner would have been
entitled as of the proposed termination date (or benefit commencement
date in the case of a substantial owner whose benefit commences after
the proposed termination date) under the terms of the plan in effect
when he or she first began participation, as limited by Sec. 4022.61
(b) and (c), multiplied by a fraction, not to exceed one, the numerator
of which is two times the number of full years of his or her active
participation under the plan prior to the proposed termination date and
the denominator of which is thirty.
(e) Examples. This section is illustrated by the following
examples:
Example 1--Facts. A participant who is not a substantial owner
retired on December 31, 1991, at age 60 and began receiving a
benefit of $600 per month. On January 1, 1989, the plan had been
amended to allow participants to retire with unreduced benefits at
age 60. Previously, a participant who retired before age 65 was
subject to a reduction of \1/15\ for each year by which his or her
actual retirement age preceded age 65. On January 1, 1992, the
plan's benefit formula was amended to increase benefits for
participants who retired before January 1, 1992. As a result, the
participant's benefit was increased to $750 per month. There have
been no other pertinent amendments. The proposed termination date is
December 15, 1992.
Estimated guaranteed benefit. No reduction is required under
Sec. 4022.61 (b) or (c) because the participant's benefit does not
exceed either the participant's accrued benefit at normal retirement
age or the maximum guaranteeable benefit. (Post-retirement benefit
increases are not considered as increasing accrued benefits payable
at normal retirement age.)
The amendment as of January 1, 1989, resulted in a ``new
benefit'' because the reduction in the age at which the participant
could receive unreduced benefits increased the participant's benefit
entitlement at actual retirement age by \5/15\, which is more than a
20 percent increase. The amendment of January 1, 1992, which
increased the participant's benefit to $750 per month, is a
``benefit improvement'' because it is an increase in the amount of
benefit for persons in pay status. (No percentage test applies in
determining whether such an increase is a benefit improvement.)
The multiplier for computing the amount of the estimated
guaranteed benefit is taken from the third row of Table I (because
the last new benefit had been in effect for 3 full years as of the
proposed termination date) and column (c) (because there was a
benefit improvement within the 1-year period preceding the proposed
termination date). This multiplier is 0.55. Therefore, the amount of
the participant's estimated guaranteed benefit is $412.50
(0.55 x $750) per month.
Example 2--Facts. A participant who is not a substantial owner
terminated employment on December 31, 1990. On January 1, 1992, she
reached age 65 and began receiving a benefit or $250 per month. She
had completed 3 years of service at her termination of employment
and was fully vested in her accrued benefit. The plan's vesting
schedule had been amended on July 1, 1988. Under the schedule in
effect before the amendment, a participant with 5 years of service
was 100 percent vested. There have been no other pertinent
amendments. The proposed termination date is December 31, 1992.
Estimated guaranteed benefit. No reduction is required under
Sec. 4022.61 (b) or (c) because the participant's benefit does not
exceed either her accrued benefit at normal retirement age or the
maximum guaranteeable benefit. The plan's change of vesting schedule
created a new benefit for the participant. Because the amendment was
in effect for 4 full years before the proposed termination date, the
second row of Table I is used to determine the applicable multiplier
for estimating the amount of the participant's guaranteed benefit.
Because the participant did not receive any benefit improvement
during the 12-month period ending on the proposed termination date,
column (b) of the table is used. Therefore, the multiplier is 0.80,
and the amount of the participant's estimated guaranteed benefit is
$200 (0.80 x $250) per month.
Example 3--Facts. A participant who is a substantial owner
retired prior to the proposed termination date after 5\1/2\ years of
active participation in the plan. The benefit under the terms of the
plan when he first began active participation was $800 per month. On
the proposed termination date of April 30, 1992, he was entitled to
receive a benefit of $2000 per month. No reduction of this benefit
is required under Sec. 4022.61 (b) or (c).
Estimated guaranteed benefit. Paragraph (d)(2) of this section
is used to compute the amount of the estimated guaranteed benefit of
substantial owners with 5 or more years of active participation
prior to the proposed termination date. Consequently, the amount of
this participant's estimated guaranteed benefit is the lesser of--
(i) the amount calculated as if he had been an active
participant in the plan for fewer than 5 full years on the proposed
termination date, or $333.33 ($2000 x \5/30\) per month, or
(ii) the amount to which he would have been entitled as of the
proposed termination date under the terms of the plan when he first
began participation, as limited by Sec. 4022.61 (b) and (c),
multiplied by 2 times the number of years of active participation
and divided by 30, or $266.67 ($800 x 2 x \5/30\) per month.
Therefore, the amount of the participant's estimated guaranteed
benefit is $266.67 per month.
Sec. 4022.63 Estimated title IV benefit.
(a) General. If the conditions specified in paragraph (b) exist,
the plan administrator shall determine each participant's estimated
title IV benefit. The estimated title IV benefit payable with respect
to each participant who is not a substantial owner is computed under
paragraph (c) of this section. The estimated title IV benefit payable
with respect to each participant who is a substantial owner is computed
under paragraph (d) of this section.
(b) Conditions for use of this section. The conditions set forth in
this
[[Page 34037]]
paragraph must be satisfied in order to make use of the procedures set
forth in this section. If the specified conditions exist, estimated
title IV benefits must be determined in accordance with these
procedures (or in accordance with alternative procedures authorized by
the PBGC under Sec. 4022.61(f)) for each participant and beneficiary
whose benefit under the plan exceeds the limitations contained in
Sec. 4022.61(b) or (c) or who is a substantial owner or the beneficiary
of a substantial owner. If the specified conditions do not exist, title
IV benefits may be estimated by the plan administrator in accordance
with procedures authorized by the PBGC, but no such estimate is
required. The conditions are as follows:
(1) An actuarial valuation of the plan has been performed for a
plan year beginning not more than eighteen months before the proposed
termination date. If the interest rate used to value plan liabilities
in this valuation exceeded the applicable valuation interest rates and
factors under appendix B to part 4044 of this chapter in effect on the
proposed termination date, the value of benefits in pay status and the
value of vested benefits not in pay status on the valuation date must
be converted to the PBGC's valuation rates and factors.
(2) The plan has been in effect for at least five full years before
the proposed termination date, and the most recent actuarial valuation
demonstrates that the value of plan assets, reduced by employee
contributions remaining in the plan and interest credited thereon under
the terms of the plan, exceeds the present value, adjusted as required
under paragraph (b)(1), of all plan benefits in pay status on the
valuation date.
(c) Estimated title IV benefit payable with respect to a
participant who is not a substantial owner. For benefits payable with
respect to a participant who is not a substantial owner, the estimated
title IV benefit is the estimated priority category 3 benefit computed
under this paragraph. Priority category 3 benefits are payable with
respect to participants who were, or could have been, in pay status
three full years prior to the proposed termination date. The estimated
priority category 3 benefit is computed by multiplying the benefit
payable with respect to the participant under Sec. 4022.62 (b)(1) and
(b)(2) by a fraction, not to exceed one--
(1) The numerator of which is the benefit that would be payable
with respect to the participant at normal retirement age under the
provisions of the plan in effect on the date five full years before the
proposed termination date, based on the participant's age, service, and
compensation as of the earlier of the participant's benefit
commencement date or the proposed termination date, and
(2) The denominator of which is the benefit that would be payable
with respect to the participant at normal retirement age under the
provisions of the plan in effect on the proposed termination date,
based on the participant's age, service, and compensation as of the
earlier of the participant's benefit commencement date or the proposed
termination date.
(d) Estimated title IV benefit payable with respect to a
substantial owner. For benefits payable with respect to a participant
who is a substantial owner, the estimated title IV benefit is the
higher of the benefit computed under paragraph (c) of this section or
the benefit computed under this paragraph.
(1) The plan administrator shall first calculate the estimated
guaranteed benefit payable with respect to the substantial owner as if
he or she were not a substantial owner, using the method set forth in
Sec. 4022.62(c).
(2) The benefit computed under paragraph (d)(1) shall be multiplied
by the priority category 4 funding ratio. The category 4 funding ratio
is the ratio of x to y, not to exceed one, where--
(i) in a plan with priority category 3 benefits, x equals plan
assets minus employee contributions remaining in the plan on the
valuation date, with interest credited thereon under the terms of the
plan, and the present value of benefits in pay status, and y equals the
present value of all vested benefits not in pay status minus such
employee contributions and interest; or
(ii) in a plan with no priority category 3 benefits, x equals plan
assets minus employee contributions remaining in the plan on the
valuation date, with interest credited thereon under the terms of the
plan, and y equals the present value of all vested benefits minus such
employee contributions and interest.
(e) Examples. This section is illustrated by the following
examples:
Example 1--Facts. A participant who is not a substantial owner
was eligible to retire 3\1/2\ years before the proposed termination
date. The participant retired 2 years before the proposed
termination date with 20 years of service. Her final 5 years'
average salary was $45,000, and she was entitled to an unreduced
early retirement benefit of $1,500 per month payable as a single
life annuity. This retirement benefit does not exceed the limitation
in Sec. 4022.61 (b) or (c).
On the participant's benefit commencement date, the plan
provided for a normal retirement benefit of 2 percent of the final 5
years' salary times the number of years of service. Five years
before the proposed termination date, the percentage was 1\1/2\
percent. The amendments improving benefits were put into effect 3\1/
2\ years prior to the proposed termination date. There were no other
amendments during the 5-year period.
The participant's estimated guaranteed benefit computed under
Sec. 4022.62(c) is $1,500 per month times 0.90 (the factor from
column (b) of Table I in Sec. 4022.62(c)(2)), or $1,350 per month.
It is assumed that the plan meets the conditions set forth in
paragraph (b) of this section, and the plan administrator is
therefore required to estimate the title IV benefit.
Estimated title IV benefit. For a participant who is not a
substantial owner, the amount of the estimated title IV benefit is
the estimated priority category 3 benefit computed under paragraph
(c) of this section. This amount is computed by multiplying the
participant's benefit under the plan as of the later of the proposed
termination date or the benefit commencement date by the ratio of
(i) the normal retirement benefit under the provisions of the plan
in effect 5 years before the proposed termination date and (ii) the
normal retirement benefit under the plan provisions in effect on the
proposed termination date.
Thus, the numerator of the ratio is the benefit that would be
payable to the participant under the normal retirement provisions of
the plan 5 years before the proposed termination date, based on her
age, service, and compensation on her benefit commencement date. The
denominator of the ratio is the benefit that would be payable to the
participant under the normal retirement provisions of the plan in
effect on the proposed termination date, based on her age, service,
and compensation as of the earlier of her benefit commencement date
or the proposed termination date. Since the only different factor in
the numerator and denominator is the salary percentage, the amount
of the estimated title IV benefit is $1,125 (0.015/0.020 x $1,500)
per month. This amount is less than the estimated guaranteed benefit
of $1,350 per month. Therefore, in accordance with Sec. 4022.61(d),
the benefit payable to the participant is $1,350 per month.
Example 2--Facts. A participant who is a substantial owner
retires at the plan's normal retirement age, having completed 5
years of active participation in the plan, on October 31, 1992,
which is the proposed termination date. Under provisions of the plan
in effect 5 years prior to the proposed termination date, the
participant is entitled to a single life annuity of $500 per month.
Under the most recent plan amendments, which were put into effect
1\1/2\ years prior to the proposed termination date, the participant
is entitled to a single life annuity of $1,000 per month. The
participant's estimated guaranteed benefit computed under
Sec. 4022.62(d)(2) is $166.67 per month.
It is assumed that all of the conditions in paragraph (b) of
this section have been met. Plan assets equal $2 million. The
present value of all benefits in pay status is $1.5 million based on
applicable PBGC interest rates. There are no employee contributions
[[Page 34038]]
and the present value of all vested benefits that are not in pay
status is $0.75 million based on applicable PBGC interest rates.
Estimated title IV benefit. Paragraph (d) of this section
provides that the amount of the estimated title IV benefit payable
with respect to a participant who is a substantial owner is the
higher of the estimated priority category 3 benefit computed under
paragraph (c) of this section or the estimated priority category 4
benefit computed under paragraph (d) of this section.
Under paragraph (c), the participant's estimated priority
category 3 benefit is $500 ($1,000 x $500/$1000) per month.
Under paragraph (d), the participant's estimated priority
category 4 benefit is the estimated guaranteed benefit computed
under Sec. 4022.62(c) (i.e., as if the participant were not a
substantial owner) multiplied by the priority category 4 funding
ratio. Since the plan has priority category 3 benefits, the ratio is
determined under paragraph (d)(2)(i). The numerator of the ratio is
plan assets minus the present value of benefits in pay status. The
denominator of the ratio is the present value of all vested benefits
that are not in pay status. The participant's estimated guaranteed
benefit under Sec. 4022.62(c) is $1,000 per month times 0.90 (the
factor from column (b) of Table I in Sec. 4022.62(c)(2)), or $900
per month. Multiplying $900 by the category 4 funding ratio of \2/3\
(($2 million--$1.5 million)/$0.75 million) produces an estimated
category 4 benefit of $600 per month.
Because the estimated category 4 benefit so computed is greater
than the estimated category 3 benefit so computed, the estimated
category 4 benefit is the estimated title IV benefit. Because the
estimated category 4 benefit so computed is greater than the
estimated guaranteed benefit of $166.67 per month, in accordance
with Sec. 4022.61(d), the benefit payable to the participant is the
estimated category 4 benefit of $600 per month.
Subpart E--PBGC Recoupment and Reimbursement of Benefit
Overpayments and Underpayments
Sec. 4022.81 General rules.
(a) Recoupment of benefit overpayments. If at any time the PBGC
determines that net benefits paid with respect to any participant in a
PBGC-trusteed plan exceed the total amount to which the participant or
his or her beneficiary is entitled up to that time under title IV of
ERISA, and the participant or beneficiary is entitled to receive future
benefit payments, the PBGC shall recoup the overpayment in accordance
with paragraph (c) of this section and Sec. 4022.82. Notwithstanding
the previous sentence, the PBGC may, in its discretion, recover
overpayments by methods other than recouping in accordance with the
rules in this subpart. The PBGC will not normally exercise this right
unless net benefits paid after the termination date exceed those to
which a participant or beneficiary is entitled under the terms of the
plan before any reductions under subpart D.
(b) Reimbursement of benefit underpayments. If at any time the PBGC
determines that net benefits paid with respect to a participant in a
PBGC-trusteed plan are less than the amount to which the participant or
his or her beneficiary is entitled up to that time under title IV of
ERISA, the PBGC shall reimburse the participant or beneficiary for the
net underpayment in accordance with paragraphs (c) and (d) of this
section and Sec. 4022.83.
(c) Payments subject to recoupment or reimbursement. The PBGC shall
recoup net overpayments and reimburse net underpayments made on or
after the latest of the proposed termination date, the termination
date, or, if no notice of intent to terminate was issued, the date on
which proceedings to terminate the plan are instituted pursuant to
section 4042 of ERISA.
(d) Interest. The PBGC will compute interest on overpayments and
underpayments using the interest rate established for valuing immediate
annuities as set forth in part 4044, appendix B, of this chapter
according to the following rules:
(1) Overpayments before recoupment begins. Except as provided in
paragraph (d)(2), no interest is charged on overpayments from the date
of the payment to the date on which recoupment begins.
(2) Receipt of both overpayments and underpayments. If both benefit
overpayments and benefit underpayments are made with respect to a
participant, the PBGC will determine the amount of the net overpayment
or underpayment by charging or crediting interest on each payment from
the first day of the month after the date of payment to the first day
of the month in which recoupment begins. If the net overpayment thus
computed is greater than the sum of the actual overpayments (unadjusted
for interest to the date on which recoupment begins), computations
under Sec. 4022.82 will be based upon the sum of the actual
overpayments.
Sec. 4022.82 Method of recoupment.
(a) Future benefit reductions. Unless a participant or beneficiary
elects otherwise under paragraph (b) of this section, the PBGC shall
recoup overpayments of benefits in accordance with this paragraph. The
benefit reduction under this paragraph shall be an amount equal to the
fraction determined under paragraphs (a)(1) and (a)(2) of this section,
multiplied by each future benefit payment to which the participant or
beneficiary is entitled.
(1) Computation. The PBGC shall determine the fractional multiplier
by dividing the amount of the benefit overpayment by the present value
of the benefit payable with respect to the participant under title IV
of ERISA. The PBGC shall determine the present value of the benefit to
which a participant or beneficiary is entitled under title IV of ERISA
as of the termination date, using the PBGC interest rates and factors
in effect on that date. The PBGC may, however, utilize a different date
of determination if warranted by the facts and circumstances of a
particular case.
(2) Limitation on benefit reduction. Except as provided in
paragraph (a)(1) of this section, the PBGC shall reduce benefits with
respect to a participant or beneficiary by no more than the greater of
(i) ten percent per month or (ii) the amount of benefit per month in
excess of the maximum guaranteeable benefit payable under section
4022(b)(3)(B) of ERISA, determined without adjustment for age and
benefit form.
(3) PBGC notice to participant or beneficiary. Before effecting a
benefit reduction pursuant to this paragraph, the PBGC shall notify the
participant or beneficiary in writing of the amount of the benefit
overpayment and of the amount of the reduced benefit computed under
this section. The notice will advise the participant or beneficiary of
the repayment option set forth in paragraph (b) of this section and
inform him or her that the PBGC will proceed to recover the benefit
overpayment in accordance with this paragraph unless an election to
repay in a lump sum is made in accordance with paragraph (b).
(b) Lump sum repayment. A participant or beneficiary who has
received a net benefit overpayment may elect to repay the excess in a
single payment on or before a date agreed to by the participant or
beneficiary and the PBGC. If the full payment is not made by the agreed
upon date or a date is not agreed upon, the PBGC may proceed to recover
the overpayment in accordance with paragraph (a) of this section.
Sec. 4022.83 PBGC reimbursement of benefit underpayments.
When the PBGC determines that there has been a net benefit
underpayment made with respect to a participant, it shall pay the
participant or beneficiary the amount of the net underpayment,
determined in accordance with Sec. 4022.81(d), in a single payment.
[[Page 34039]]
Appendix to Part 4022--Maximum Guaranteeable Monthly Benefit
The following table lists by year the maximum guaranteeable
monthly benefit payable in the form of a life annuity commencing at
age 65 as described by Sec. 4022.22(b) to a participant in a plan
that terminated in that year:
------------------------------------------------------------------------
Maximum
guaranteeable
Year monthly
benefit
------------------------------------------------------------------------
1974.................................................... $750.00
1975.................................................... 801.14
1976.................................................... 869.32
1977.................................................... 937.50
1978.................................................... 1,005.68
1979.................................................... 1,073.86
1980.................................................... 1,159.09
1981.................................................... 1,261.36
1982.................................................... 1,380.68
1983.................................................... 1,517.05
1984.................................................... 1,602.27
1985.................................................... 1,687.50
1986.................................................... 1,789.77
1987.................................................... 1,857.95
1988.................................................... 1,909.09
1989.................................................... 2,028.41
1990.................................................... 2,164.77
1991.................................................... 2,250.00
1992.................................................... 2,352.27
1993.................................................... 2,437.50
1994.................................................... 2,556.82
1995.................................................... 2,573.86
1996.................................................... 2,642.05
------------------------------------------------------------------------
PART 4022B--AGGREGATE LIMITS ON GUARANTEED BENEFITS
Sec. 4022B.1 Aggregate payments limitation.
If a person is entitled to benefits under two or more plans or with
respect to two or more participants, or if more than one person is
entitled to benefits payable with respect to one participant, the
aggregate benefits payable by PBGC from its funds shall be limited to
the extent set forth in Sec. 4022.22 computed without regard to the
provisions of Sec. 4022.22(a). The limitation contained in Sec. 4022.22
shall be applied separately to each plan at the date of its
termination, and the amounts payable by PBGC under each plan shall be
aggregated up to the limitation contained in this section.
PART 4041--TERMINATION OF SINGLE-EMPLOYER PLANS
Subpart A--General Provisions
Sec.
4041.1 Purpose and scope.
4041.2 Definitions.
4041.3 Requirements for a standard termination or a distress
termination.
4041.4 Administration of plan during pendency of termination
proceedings.
4041.5 Challenges to plan termination under collective bargaining
agreement.
4041.6 Annuity requirements.
4041.7 Facilitating plan sufficiency in a standard termination.
4041.8 Disaster relief.
4041.9 Filing with the PBGC.
4041.10 Computation of time.
4041.11 Maintenance of plan records.
4041.12 Information collection.
Subpart B--Standard Termination Process
4041.21 Notice of intent to terminate.
4041.22 Issuance of notices of plan benefits.
4041.23 Form and contents of notices of plan benefits.
4041.24 Standard termination notice.
4041.25 PBGC action upon filing of standard termination notice.
4041.26 Notice of noncompliance.
4041.27 Closeout of plan.
Subpart C--Distress Termination Process
4041.41 Notice of intent to terminate.
4041.42 PBGC review of notice of intent to terminate.
4041.43 Distress termination notice.
4041.44 PBGC determination of compliance with requirements for
distress termination.
4041.45 PBGC determination of plan sufficiency/insufficiency.
4041.46 Notices of benefit distribution.
4041.47 Verification of plan sufficiency prior to closeout.
4041.48 Closeout of plan.
Appendix to Part 4041--Agreement for Commitment to Make Plan Sufficient
for Benefit Liabilities
Authority: 29 U.S.C. 1302(b)(3), 1341, 1344, 1350.
Subpart A--General Provisions
Sec. 4041.1 Purpose and scope.
This part sets forth the rules and procedures for terminating a
single-employer pension plan in a standard termination or in a distress
termination under ERISA. Subpart A contains various general rules that
apply to both standard terminations and distress terminations. Subpart
B sets forth the specific steps that a plan administrator must follow
in order to terminate a plan in a standard termination. Subpart C sets
forth the specific steps that a plan administrator must follow in order
to terminate a plan in a distress termination. This part applies to the
termination of any single-employer plan covered under section 4021(a)
of ERISA and not excluded by section 4021(b). This part does not
reflect the amendments to sections 4041(b)(2)(C)(i) (relating to the
PBGC's authority not to nullify a termination if nullification would be
inconsistent with the interests of participants and beneficiaries) or
4041(c)(2)(B)(i)(I) (relating to the liquidation criteria for a
distress termination) that were contained in the Retirement Protection
Act of 1994 (Pub. L. 103-465, section 778 (a) and (b)).
Sec. 4041.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
affected party, annuity, benefit liabilities, Code, contributing
sponsor, controlled group, distress termination, distribution date,
employer, ERISA, guaranteed benefit, insurer, irrevocable commitment,
IRS, mandatory employee contributions, normal retirement age, notice of
intent to terminate, PBGC, person, plan, plan administrator, plan year,
single-employer plan, standard termination, termination date, and title
IV benefit.
In addition, for purposes of this part:
Distress termination notice means the notice filed with the PBGC
pursuant to section 4041(c)(2)(A) of ERISA and Sec. 4041.43. PBGC Form
601 (including Schedule EA-D) is the distress termination notice.
Distribution notice means the notice issued to the plan
administrator by the PBGC pursuant to Sec. 4041.45(c) of this part upon
the PBGC's determination that the plan has sufficient assets to pay at
least guaranteed benefits.
Existing collective bargaining agreement means a collective
bargaining agreement that--
(1) By its terms, either has not expired or is extended beyond its
stated expiration date because neither of the collective bargaining
parties took the required action to terminate it, and
(2) Has not been made inoperative by a judicial ruling. When a
collective bargaining agreement no longer meets these conditions, it
ceases to be an ``existing collective bargaining agreement,'' whether
or not any or all of its terms may continue to apply by operation of
law.
Majority owner means, with respect to a contributing sponsor of a
single-employer plan, an individual who owns, directly or indirectly,
50 percent or more of--
(1) An unincorporated trade or business,
(2) The capital interest or the profits interest in a partnership,
or
(3) Either the voting stock of a corporation or the value of all of
the stock of a corporation. For this purpose, the constructive
ownership rules of section 414 (b) and (c) of the Code shall apply.
Notice of benefit distribution means the notice to each participant
and beneficiary required by Sec. 4041.46 of this part describing the
benefit to be distributed to him or her.
Notice of noncompliance means a notice issued to a plan
administrator by the PBGC pursuant to section 4041(b)(2)(C) of ERISA
and Sec. 4041.26 of this part advising the plan administrator that the
requirements for a standard
[[Page 34040]]
termination have not been satisfied and that the plan is an ongoing
plan.
Notice of plan benefits means the notice to each participant and
beneficiary required by section 4041(b)(2)(B) of ERISA and
Secs. 4041.22 and 4041.23 of this part describing his or her plan
benefits.
Participant means--
(1) Any individual who is currently in employment covered by the
plan and who is earning or retaining credited service under the plan,
including any individual who is considered covered under the plan for
purposes of meeting the minimum participation requirements but who,
because of offset or similar provisions, does not have any accrued
benefits;
(2) Any nonvested individual who is not currently in employment
covered by the plan but who is earning or retaining credited service
under the plan; and
(3) Any individual who is retired or separated from employment
covered by the plan and who is receiving benefits under the plan or is
entitled to begin receiving benefits under the plan in the future,
excluding any such individual to whom an insurer has made an
irrevocable commitment to pay all the benefits to which the individual
is entitled under the plan.
Plan benefits means the benefits to which a participant is, or may
become, entitled under the plan's provisions in effect as of the
termination date, based on the participant's accrued benefit under the
plan as of that date. Each participant's ``plan benefits'' equals that
participant's ``benefit liabilities,'' and the sum of all ``plan
benefits'' equals the plan's ``benefit liabilities.''
Proposed distribution date means the date chosen by the plan
administrator as the tentative date for the distribution of plan assets
pursuant to a standard termination. A proposed distribution date may
not be earlier than the 61st day, nor later than the 240th day,
following the day on which the plan administrator files a standard
termination notice with the PBGC.
Proposed termination date means the date specified as such by the
plan administrator in the notice of intent to terminate or, if later,
in the standard termination notice or the distress termination notice.
A proposed termination date specified in the notice of intent to
terminate may not be earlier than the 60th day, nor later than the 90th
day, after the issuance of the notice of intent to terminate. A
proposed termination date becomes the 'termination date' if a plan
terminates in a standard termination. A proposed termination date
specified in the distress termination notice may not be earlier than
the proposed termination date specified in the notice of intent to
terminate, or (except with PBGC approval) later than the 90th day after
the issuance of the notice of intent to terminate.
Residual assets means the plan assets remaining after all benefit
liabilities and other liabilities of the plan have been satisfied.
Standard termination notice means the notice filed with the PBGC
pursuant to section 4041(b)(2)(A) of ERISA and Sec. 4041.24 of this
part advising the PBGC of a proposed standard termination. PBGC Form
500 (including Schedule EA-S) is the standard termination notice.
Sec. 4041.3 Requirements for a standard termination or a distress
termination.
(a) Exclusive means of voluntary plan termination. A plan may be
voluntarily terminated by the plan administrator only if all of the
requirements for a standard termination set forth in paragraph (b) of
this section are satisfied or all of the requirements for a distress
termination set forth in paragraph (c) of this section are satisfied.
(b) Requirements for a standard termination. A plan may be
terminated in a standard termination only if--
(1) The plan administrator issues a notice of intent to terminate
to each affected party in accordance with Sec. 4041.21 at least 60 days
and not more than 90 days before the proposed termination date;
(2) The plan administrator files a standard termination notice with
the PBGC in accordance with Sec. 4041.24 no later than 120 days after
the proposed termination date or, if applicable, no later than the due
date established in an extension notice issued under Sec. 4041.8;
(3) The plan administrator issues notices of plan benefits to plan
participants and beneficiaries in accordance with Secs. 4041.22 and
4041.23 no later than the date that the standard termination notice is
filed with the PBGC;
(4) The PBGC does not issue a notice of noncompliance to the plan
administrator pursuant to Sec. 4041.26; and
(5) The plan administrator distributes plan assets in accordance
with Sec. 4041.27(c) within the 180-day (or extended) distribution
period under Sec. 4041.27(a), (e), and (f) (or, where applicable,
within the time prescribed in part 4050 of this chapter), in
satisfaction of all benefit liabilities under the plan.
(c) Requirements for a distress termination. A plan may be
terminated in a distress termination only if--
(1) The plan administrator issues a notice of intent to terminate
to each affected party in accordance with Sec. 4041.41 at least 60 days
and not more than 90 days before the proposed termination date;
(2) The plan administrator files a distress termination notice with
the PBGC in accordance with Sec. 4041.43 no later than 120 days after
the proposed termination date or, if applicable, no later than the due
date established in an extension notice issued under Sec. 4041.8; and
(3) The PBGC determines that each contributing sponsor and each
member of its controlled group satisfy one of the distress criteria set
forth in paragraph (e) of this section.
(d) Effect of failure to satisfy requirements. (1) If the plan
administrator does not satisfy all of the requirements of paragraph (b)
of this section for a standard termination or, except as provided in
paragraph (d)(2)(i) of this section, all of the requirements of
paragraph (c) of this section for a distress termination, any action
taken to effect the plan termination shall be null and void, and the
plan shall be an ongoing plan. A plan administrator who still desires
to terminate the plan shall initiate the termination process again,
starting with the issuance of a new notice of intent to terminate.
(2)(i) The PBGC may, upon its own motion, waive any requirement
with respect to notices to be filed with the PBGC under paragraph
(c)(1) or (c)(2) of this section if the PBGC believes that it will be
less costly or administratively burdensome to the PBGC to do so. The
PBGC will not entertain requests for waivers under this paragraph.
(ii) Notwithstanding any other provision of this part, the PBGC
retains the authority in any case to initiate a plan termination in
accordance with the provisions of section 4042 of ERISA.
(e) Distress criteria. In a distress termination, each contributing
sponsor and each member of its controlled group shall satisfy at least
one (but not necessarily the same one) of the following criteria in
order for a distress termination to occur:
(1) Liquidation. This criterion is met if, as of the proposed
termination date--
(i) A person has filed or had filed against it a petition seeking
liquidation in a case under title 11, United States Code, or under a
similar federal law or law of a State or political subdivision of a
State, or a case described in paragraph (e)(2) of this section has been
converted to such a case; and
(ii) The case has not been dismissed.
(2) Reorganization. This criterion is met if--
[[Page 34041]]
(i) As of the proposed termination date, a person has filed or had
filed against it a petition seeking reorganization in a case under
title 11, United States Code, or under a similar law of a state or a
political subdivision of a state, or a case described in paragraph
(e)(1) of this section has been converted to such a case;
(ii) As of the proposed termination date, the case has not been
dismissed;
(iii) The person notifies the PBGC of any request to the bankruptcy
court (or other appropriate court in a case under such similar law of a
state or a political subdivision of a state) for approval of the plan
termination by concurrently filing with the PBGC a copy of the motion
requesting court approval, including any documents submitted in support
of the request; and
(iv) The bankruptcy court or other appropriate court determines
that, unless the plan is terminated, such person will be unable to pay
all its debts pursuant to a plan of reorganization and will be unable
to continue in business outside the reorganization process and approves
the plan termination.
(3) Inability to continue in business. This criterion is met if a
person demonstrates to the satisfaction of the PBGC that, unless a
distress termination occurs, the person will be unable to pay its debts
when due and to continue in business.
(4) Unreasonably burdensome pension costs. This criterion is met if
a person demonstrates to the satisfaction of the PBGC that the person's
costs of providing pension coverage have become unreasonably burdensome
solely as a result of declining covered employment under all single-
employer plans for which that person is a contributing sponsor.
(f) Non-duplicative efforts. (1) If a person requests approval of
the plan termination by a court, as described in paragraph (e)(2) of
this section, the PBGC--
(i) Will normally enter an appearance to request that the court
make specific findings as to whether the contributing sponsor or
controlled group member meets the distress test in paragraph (e)(3) of
this section, or state that it is unable to make such findings;
(ii) Will provide the court with any information it has that may be
germane to the court's ruling;
(iii) Will, if the person has requested, or later requests, a
determination by the PBGC under paragraph (e)(3) of this section, defer
action on the request until the court makes its determination; and
(iv) Will be bound by a final and non-appealable order of the
court.
(2) If a person requests a determination by the PBGC under
paragraph (e)(3) of this section, the PBGC determines that the distress
criterion is not met, and the person thereafter requests approval of
the plan termination by a court, as described in paragraph (e)(2) of
this section, the PBGC will advise the court of its determination and
make its administrative record available to the court.
(g) Non-recognition of certain actions. If the PBGC finds that a
person undertook any action or failed to act for the principal purpose
of satisfying any of the distress criteria contained in paragraph (e)
of this section, rather than for a reasonable business purpose, the
PBGC shall disregard such act or failure to act in determining whether
the person has satisfied any of those criteria.
Sec. 4041.4 Administration of plan during pendency of termination
proceedings.
(a) General rule. Except to the extent specifically prohibited by
this section, during the pendency of termination proceedings the plan
administrator shall continue to carry out the normal operations of the
plan, such as putting participants into pay status, collecting
contributions due the plan, investing plan assets, and, during the
pendency of a standard termination, making loans to participants, in
accordance with plan provisions and applicable law and regulations.
(b) Prohibitions after issuance of notice of intent to terminate in
a standard termination. Except as provided in paragraph (d) of this
section, during the period beginning on the first day the plan
administrator issues a notice of intent to terminate and ending on the
last day of the PBGC's 60-day (or extended) review period, as described
in Sec. 4041.25(a), the plan administrator shall not--
(1) Distribute plan assets pursuant to or in furtherance of the
termination of the plan;
(2) Pay benefits attributable to employer contributions, other than
death benefits, in any form other than as an annuity; or
(3) Purchase irrevocable commitments to provide benefits from an
insurer.
(c) Prohibitions after issuing notice of intent to terminate in a
distress termination. The plan administrator shall not make loans to
plan participants beginning on the first day he or she issues a notice
of intent to terminate, and from that date until a distribution is
permitted pursuant to Sec. 4041.48, the plan administrator shall not--
(1) Distribute plan assets pursuant to, or (except as required by
this part) take any other actions to implement, the termination of the
plan;
(2) Pay benefits attributable to employer contributions, other than
death benefits, in any form other than as an annuity; or
(3) Purchase irrevocable commitments to provide benefits from an
insurer.
(d) Exceptions in a standard termination. During the period set
forth in paragraph (b) of this section, the plan administrator may pay
benefits attributable to employer contributions either through the
purchase of irrevocable commitments from an insurer or in a form other
than an annuity if--
(1) The participant has separated from active employment;
(2) The distribution is consistent with prior plan practice; and
(3) The distribution is not reasonably expected to jeopardize the
plan's sufficiency for benefit liabilities.
(e) Effect of notice of noncompliance in a standard termination. If
the PBGC issues a notice of noncompliance pursuant to Sec. 4041.26, the
prohibitions described in paragraphs (b)(2) and (b)(3) of this section
shall cease to apply--
(1) Upon expiration of the period during which reconsideration may
be requested under Sec. 4041.26(c) or, if earlier, at the time the plan
administrator decides not to request reconsideration; or
(2) If reconsideration is requested, upon PBGC issuance of its
decision on reconsideration.
(f) Limitation on benefit payments on or after proposed termination
date in a distress termination. Beginning on the proposed termination
date, the plan administrator shall reduce benefits to the level
determined under part 4022, subpart D, of this chapter.
(g) Failure to qualify for distress termination. In any case where
the PBGC determines, pursuant to Sec. 4041.42(c) or Sec. 4041.44(c)(1),
that the requirements for a distress termination are not satisfied--
(1) The prohibitions in paragraph (c) of this section, other than
those in paragraph (c)(1), shall cease to apply--
(i) Upon expiration of the period during which reconsideration may
be requested under Secs. 4041.42(e) and 4041.44(d) or, if earlier, at
the time the plan administrator decides not to request reconsideration;
or
(ii) If reconsideration is requested, upon PBGC issuance of its
decision on reconsideration.
(2) Any benefits that were not paid pursuant to paragraph (f) of
this section shall be due and payable as of the
[[Page 34042]]
effective date of the PBGC's determination, together with interest from
the date (or dates) on which the unpaid amounts were originally due
until the date on which they are paid in full at the rate or rates
prescribed under Sec. 4022.81(d) of this chapter.
(h) Effect of subsequent insufficiency. If the plan administrator
makes a finding of subsequent insufficiency for guaranteed benefits
pursuant to Sec. 4041.47(b), or the PBGC notifies the plan
administrator that it has made a finding of subsequent insufficiency
for guaranteed benefits pursuant to Sec. 4041.47(d), the prohibitions
in paragraph (c) of this section shall apply in accordance with
Sec. 4041.47(e).
Sec. 4041.5 Challenges to plan termination under collective bargaining
agreement.
(a) Suspension upon formal challenge to termination. (1)(i) If the
PBGC is advised, before the 60-day (or extended) period specified in
Sec. 4041.25 ends (in a standard termination) or before issuance of a
notice of inability to determine sufficiency or a distribution notice
pursuant to Sec. 4041.45(b) or (c) (in a distress termination), that a
formal challenge to the termination (as described in paragraph (b) of
this section) has been initiated, the PBGC shall suspend the
termination proceeding and shall so advise the plan administrator in
writing.
(ii) If the PBGC is advised of a challenge described in paragraph
(a)(1)(i) of this section after the 60-day (or extended) period
specified in Sec. 4041.25 ends (in a standard termination) or after
issuance of a notice of inability to determine sufficiency or a
distribution notice pursuant to Sec. 4041.45(b) or (c) (in a distress
termination) but before the termination procedure is concluded pursuant
to this part, the PBGC may suspend the termination proceeding and, if
it does, shall so advise the plan administrator in writing.
(2) The rules in paragraphs (a)(3) or (a)(4) (as appropriate) shall
apply during a period of suspension beginning on the date of the PBGC's
written notification to the plan administrator and ending with the
final resolution of the challenge to the termination:
(3) In a standard termination--
(i) The running of all time periods specified in ERISA or this part
relevant to the termination shall be suspended; and
(ii) The plan administrator shall comply with the prohibitions in
Sec. 4041.4.
(4) In a distress termination--
(i) The suspension shall stay the issuance by the PBGC of any
notice of inability to determine sufficiency or distribution notice or,
if any such notice was previously issued, shall stay its effectiveness;
(ii) The plan administrator shall comply with the prohibitions in
Sec. 4041.4; and
(iii) The plan administrator shall file a distress termination
notice with the PBGC in the manner and within the time specified in
Sec. 4041.43.
(b) Formal challenge to termination. For purposes of this section,
a formal challenge to a plan termination is initiated when any of the
following actions is taken, asserting that the termination would
violate the terms and conditions of an existing collective bargaining
agreement:
(1) The commencement of any procedure specified in the collective
bargaining agreement for resolving disputes under the agreement; or
(2) The commencement of any action before an arbitrator,
administrative agency or board, or court under applicable labor-
management relations law.
(c) Resolution of challenge. Immediately upon the final resolution
(as described in paragraph (d) of this section) of the formal challenge
to the termination, the plan administrator shall notify the PBGC in
writing of the outcome of the challenge, and shall provide the PBGC
with a copy of the award or order, if any. If the validity of the
proposed termination has been upheld, the plan administrator also shall
advise the PBGC whether the plan administrator wishes to continue the
proposed termination.
(1) Challenge sustained. If the arbitrator, agency, board, or court
has determined (or the parties have agreed) that the proposed
termination violates an existing collective bargaining agreement, the
PBGC shall dismiss the termination proceeding, all actions taken to
effect the plan termination shall be null and void, and the plan shall
be an ongoing plan. In this event, in a distress termination,
Sec. 4041.4(g) shall apply as of the date of the dismissal by the PBGC.
(2) Termination sustained. If the arbitrator, agency, board, or
court has determined (or the parties have agreed) that the proposed
termination does not violate an existing collective bargaining
agreement and the plan administrator wishes to proceed with the
termination, the PBGC shall reactivate the termination proceeding by
sending a written notice thereof to the plan administrator, and the
following rules shall apply:
(i) The termination proceeding shall continue from the point where
it was suspended;
(ii) All actions taken to effect the termination before the
suspension shall be effective;
(iii) Any time periods that were suspended shall resume running
from the date of the PBGC's notice of the reactivation of the
proceeding;
(iv) Any time periods that had fewer than 15 days remaining shall
be extended to the 15th day after the date of the PBGC's notice, or
such later date as the PBGC may specify, and
(v) In a distress termination, the PBGC shall proceed to issue a
notice of inability to determine sufficiency or a distribution notice
(or reactivate any such notice stayed under paragraph (a)(3) of this
section), either with or without first requesting updated information
from the plan administrator pursuant to Sec. 4041.43(c).
(d) Final resolution of challenge. For purposes of this section, a
formal challenge to a proposed termination is finally resolved when--
(1) The parties involved in the challenge enter into a settlement
that resolves the challenge;
(2) A final award, administrative decision, or court order is
issued that is not subject to review or appeal; or
(3) A final award, administrative decision, or court order is
issued that is not appealed, or review or enforcement of which is not
sought, within the time for filing an appeal or requesting review or
enforcement.
(e) Involuntary termination by the PBGC. Notwithstanding any other
provision of this section, the PBGC retains the authority in any case
to initiate a plan termination in accordance with the provisions of
section 4042 of ERISA.
Sec. 4041.6 Annuity requirements.
(a) General rule. Except as provided in paragraphs (b) and (d) of
this section (or, where applicable, in part 4050 of this chapter), when
a plan is closed out under Sec. 4041.27 (in a standard termination) or
Sec. 4041.48 (in a distress termination), any benefit that is payable
as an annuity under the provisions of the plan must be provided in
annuity form through the purchase from an insurer of a single premium,
nonparticipating, nonsurrenderable annuity contract that constitutes an
irrevocable commitment by the insurer to provide the benefits
purchased.
(b) Exceptions to annuity requirement. A benefit that is payable as
an annuity under the provisions of a plan need not be provided in
annuity form if the plan provides for an alternative form of
[[Page 34043]]
distribution and either paragraph (b)(1) or (b)(2) of this section
applies:
(1) The participant is not in pay status as of the distribution
date, and the present value of the participant's total benefit under
the plan, including amounts previously distributed to the participant,
is $3,500 or less, determined in accordance with sections 411(a)(11)
and 417(e)(3) of the Code and the regulations thereunder. The present
value of such benefits shall be determined using the interest rate or
rates as of--
(i) The date set forth in the plan for such purpose, provided that
the plan provision is in accord with section 417(e)(3) of the Code and
the regulations thereunder (substituting ``distribution date'' for
``annuity starting date'' wherever used in the plan); or
(ii) If the plan does not provide for such a date, the distribution
date.
(2) The participant elected the alternative form of distribution in
writing, with the written consent of his or her spouse, in accordance
with the requirements of sections 401(a)(11), 411(a)(11), and 417 of
the Code and the regulations thereunder.
(c) Optional benefit forms. Except as permitted by sections
401(a)(11), 411(d)(6), and 417 of the Code and the regulations
thereunder, an annuity contract purchased to satisfy the annuity
requirement shall preserve all applicable benefit options provided
under the plan as of the termination date.
(d) Participating annuities. (1) General rule. Notwithstanding the
requirement of paragraph (a) of this section that an annuity contract
be nonparticipating, a participating annuity contract may be purchased
to satisfy the annuity requirement if the plan can provide for all
benefit liabilities and--
(i) All benefit liabilities will be guaranteed under the annuity
contract as the unconditional, irrevocable, and noncancellable
obligation of the insurer;
(ii) In no event, including unfavorable investment or actuarial
experience, can the amounts payable to participants under the annuity
contract decrease except to correct mistakes; and
(iii) As provided in paragraph (d)(2) of this section, no amount of
residual assets to which participants are entitled will be used to pay
for the participation feature.
(2) Plans with residual assets. If all or a portion of the residual
assets
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
of a plan will be distributed to participants--
(i) The additional premium for the participation feature must be
paid from the contributing sponsor's share, if any, of the residual
assets or from assets of the contributing sponsor; and
(ii) If the plan provided for mandatory employee contributions, the
amount of residual assets must be determined using the price of the
annuities for all benefit liabilities without the participation
feature.
Sec. 4041.7 Facilitating plan sufficiency in a standard termination.
(a) Commitment to make plan sufficient--(1) General rule. At any
time before a standard termination notice is filed with the PBGC, in
order to enable the plan to terminate in that standard termination, a
contributing sponsor or a member of a controlled group of a
contributing sponsor may make a commitment to contribute any additional
sums necessary to make the plan sufficient for all benefit liabilities.
Any such commitment shall be treated as a plan asset for all purposes
under this part. A sample commitment is included in the appendix to
this part.
(2) Requirements for valid commitment. A commitment to make a plan
sufficient for all benefit liabilities shall be valid for purposes of
this part only if the commitment--
(i) Is made to the plan;
(ii) Is in writing, signed by the contributing sponsor and/or
controlled group member(s); and
(iii) If the contributing sponsor or controlled group member is the
subject of a bankruptcy liquidation or reorganization proceeding, as
described in Sec. 4041.3(e)(1) or (e)(2) of this part, is approved by
the court before which the liquidation or reorganization proceeding is
pending or is unconditionally guaranteed, by a person not in
bankruptcy, to be met at or before the time distribution of assets is
required in the standard termination.
(b) Alternative treatment of majority owner's benefit--(1) General
rule. In order to facilitate the termination of the plan and
distribution of assets in a standard termination, a majority owner may
agree to forego receipt of all or part of his or her benefit until the
benefit liabilities of all other plan participants have been satisfied.
(2) Requirements for valid agreement. Any agreement by a majority
owner to an alternative treatment of his or her benefit is valid only
if--
(i) The agreement is in writing;
(ii) In any case in which the total value of the benefit
(determined in accordance with Sec. 4041.6(b) of this part) is greater
than $3,500, the spouse, if any, of the majority owner consents, in
writing, to the alternative treatment of the benefit; and
(iii) The agreement is not inconsistent with a qualified domestic
relations order (as defined in section 206(d)(3) of ERISA).
Sec. 4041.8 Disaster relief.
(a) Notwithstanding any other provision in this part, when the
President of the United States declares that, under the Disaster Relief
Act of 1974, as amended (42 U.S.C. 5121, 5122(2), 5141(b)), a major
disaster exists, the Executive Director of the PBGC (or his or her
designee) may, by issuing one or more notices of disaster relief,
extend by up to 180 days the due date for--
(1) Filing the standard termination notice under Sec. 4041.24;
(2) Completing the distribution of plan assets in a standard
termination under Sec. 4041.27;
(3) Filing the distress termination notice pursuant to
Sec. 4041.43;
(4) Issuing the notices of benefit distribution in a distress
termination pursuant to Sec. 4041.46(a)(1); or
(5) Completing the distribution of plan assets in a distress
termination pursuant to Sec. 4041.48.
(b) The due date extension or extensions described in paragraph (a)
of this section shall apply only to plan terminations with respect to
which the principal place of business of the contributing sponsor or
the plan administrator, or the office of the service provider, bank,
insurance company, or other person maintaining the information
necessary to file the standard or distress termination notice, issue
notices of plan benefits or benefit distribution, or complete the
distribution of plan assets (as applicable), is within a designated
disaster area.
(c) The standard or distress termination notice or the post-
distribution certification shall identify the termination as being
qualified for the due date extension.
Sec. 4041.9 Filing with the PBGC.
(a) Date of filing. Any document required or permitted to be filed
with the PBGC under this part shall be deemed filed on the date that it
is received at the PBGC, providing it is received no later than 4:00
p.m. on a day other than Saturday, Sunday, or a Federal holiday.
Documents received after 4:00 p.m. or on Saturday, Sunday, or a Federal
holiday shall be deemed filed on the next regular business day.
(b) How to file. Except as may otherwise be provided in applicable
forms and instructions, any document to be filed under this part may be
delivered by mail or by hand to: Reports
[[Page 34044]]
Processing, Insurance Operations Department, Pension Benefit Guaranty
Corporation, 1200 K Street NW., Washington, DC 20005-4026
Sec. 4041.10 Computation of time.
In computing any period of time prescribed or allowed by this part,
the day of the act or event from which the designated period of time
begins to run is not counted. The last day of the period so computed
shall be included, unless it is a Saturday, Sunday, or Federal holiday,
in which event the period runs until the end of the next day that is
not a Saturday, Sunday, or Federal holiday. Notwithstanding the
preceding sentence, a proposed termination date may be any day,
including a Saturday, Sunday, or Federal holiday.
Sec. 4041.11 Maintenance of plan records.
Either the contributing sponsor or the plan administrator of a plan
terminating in a standard termination or a plan terminating in a
distress termination that closes out in accordance with Sec. 4041.48
pursuant to a distribution notice issued under Sec. 4041.45(c) shall
maintain and preserve all records used to compute benefits with respect
to each individual who is a plan participant or a beneficiary of a
deceased participant as of the termination date in accordance with the
following rules:
(a) The records to be maintained and preserved are those used to
compute the benefit for purposes of distribution to each individual in
accordance with Sec. 4041.27(c) (in a standard termination) or
Sec. 4041.48 (in a distress termination) and include, but are not
limited to, the plan documents and all underlying data, including
worksheets prepared by or at the direction of the enrolled actuary,
used in determining the amount, form, and value of benefits.
(b) All records subject to this section shall be preserved for six
years after the date the post-distribution certification required under
Sec. 4041.27(h) (in a standard termination) or Sec. 4041.48(b) (in a
distress termination) is filed with the PBGC.
(c) The contributing sponsor or plan administrator, as appropriate,
shall make records subject to this section available to the PBGC upon
request for inspection and photocopying, and shall submit such records
to the PBGC within 30 days after receipt of the PBGC's written request
therefor (or such other period as may be specified in such written
request).
Sec. 4041.12 Information collection.
The information collection requirements contained in this part have
been approved by the Office of Management and Budget under control
number 1212-0036.
Subpart B--Standard Termination Process
Sec. 4041.21 Notice of intent to terminate.
(a) General rule. At least 60 days and no more than 90 days before
the proposed termination date, the plan administrator shall issue to
each person who is (as of the proposed termination date) an affected
party (other than the PBGC) a written notice of intent to terminate
containing all of the information specified in paragraph (d) of this
section. Failure to comply with the requirements of this section shall
nullify the proposed termination.
(b) Discovery of other affected parties. Notwithstanding the
provisions of paragraph (a) of this section, if the plan administrator
discovers additional affected parties after the expiration of the time
period specified in paragraph (a) of this section, the failure to issue
the notice of intent to terminate to such parties within the specified
time period will not cause the notice to be untimely under paragraph
(a) of this section if the plan administrator could not reasonably have
been expected to know of the additional affected parties and if he or
she promptly issues the notice to each additional affected party.
(c) Issuance--(1) Method. The plan administrator shall issue the
notice of intent to terminate to each affected party (other than the
PBGC) individually either by hand delivery or by first-class mail or
courier service directed to the affected party's last known address.
(2) When issued. The notice of intent to terminate is deemed issued
to each affected party on the date on which it is handed to the
affected party or deposited with a mail or courier service (as
evidenced by a postmark or written receipt).
(d) Contents of notice. The plan administrator shall include in the
notice of intent to terminate all of the following information:
(1) The name of the plan and of the contributing sponsor;
(2) The employer identification number (``EIN'') of the
contributing sponsor and the plan number (``PN''); if there is no EIN
or PN, the notice shall so state;
(3) The name, address, and telephone number of the person who may
be contacted by an affected party with questions concerning the plan's
termination;
(4) A statement that the plan administrator expects to terminate
the plan in a standard termination on a proposed termination date that
is either--
(i) A specific date set forth in the notice, or
(ii) A date to be determined that is dependent on the occurrence of
some future event;
(5) If the proposed termination date is dependent on the occurrence
of a future event, the nature of the event (such as the merger of the
contributing sponsor with another entity), generally when the event is
expected to occur, and when the termination will occur in relation to
the other event;
(6) A statement that benefit and service accruals will continue
until the termination date or, if applicable, that benefit accruals
were or will be frozen as of a specific date in accordance with section
204(h) of ERISA;
(7) A statement that, in order to terminate in a standard
termination, plan assets must be sufficient to provide all benefit
liabilities under the plan with respect to each participant and each
beneficiary of a deceased participant;
(8) A statement that, after plan assets have been distributed to
provide all benefit liabilities with respect to a participant or a
beneficiary of a deceased participant, either by the purchase of an
irrevocable commitment or commitments from an insurer to provide
benefits or by an alternative form of distribution provided for under
the plan, the PBGC's guarantee with respect to that participant's or
beneficiary's benefit ends;
(9) If distribution of benefits under the plan may be wholly or
partially by the purchase of irrevocable commitments from an insurer--
(i) The name and address of the insurer or insurers from whom, or
(if not then known) the insurers from among whom, the plan
administrator intends to purchase the irrevocable commitments; or
(ii) If the plan administrator has not identified an insurer or
insurers at the time the notice of intent to terminate is issued, a
statement that--
(A) Irrevocable commitments may be purchased from an insurer to
provide some or all of the benefits under the plan,
(B) The insurer or insurers have not yet been identified, and
(C) Affected parties (other than the PBGC) will be notified at a
later date (but no later than 45 days before the distribution date) of
the name and address of the insurer or insurers from whom, or (if not
then known) the insurers from among whom, the plan administrator
intends to purchase the irrevocable commitments;
[[Page 34045]]
(10) A statement that if the termination does not occur, the plan
administrator will notify the affected parties (other than the PBGC) in
writing of that fact;
(11) A statement that each affected party, other than the PBGC or
any employee organization, will receive a written notification of the
benefits that the person will receive; and
(12) For retirees only, a statement that their monthly (or other
periodic) benefit amounts will not be affected by the plan's
termination.
(e) Supplemental notice requirements. (1) The plan administrator
shall issue a supplemental notice (or notices) of intent to terminate
to each affected party (other than the PBGC) in accordance with the
rules in paragraph (e)(2) of this section if--
(i) The plan administrator has not yet identified an insurer or
insurers at the time the notice of intent to terminate is issued; or
(ii) The plan administrator notifies affected parties (other than
the PBGC) of the insurer or insurers from whom (or from among whom) he
or she intends to purchase the irrevocable commitments, either in the
notice of intent to terminate or in a later notice, but subsequently
decides to select a different insurer.
(2) The plan administrator shall issue each supplemental notice in
the manner provided in paragraph (c) of this section no later than 45
days before the distribution date and shall include the name and
address of the insurer or insurers from whom, or (if not then known)
the insurers from among whom, the plan administrator intends to
purchase the irrevocable commitments.
(3) Any supplemental notice or notices meeting the requirements of
paragraph (e)(2) of this section shall be deemed a part of the notice
of intent to terminate.
(f) Spin-off/termination transactions. In the case of a spin-off/
termination transaction, the plan administrator shall provide all
participants in the original plan who are covered by the ongoing plan
(as of the proposed termination date) with a notice describing the
transaction no later than the date on which the plan administrator
completes the issuance of notices of intent to terminate under this
section. A spin-off/termination is a transaction in which a single
defined benefit plan is split into two or more plans, in conjunction
with the termination of one or more of the plans, resulting in a
reversion of residual assets to the employer.
Sec. 4041.22 Issuance of notices of plan benefits.
(a) General rule. No later than the date on which the plan
administrator files the standard termination notice with the PBGC, as
required by Sec. 4041.24, the plan administrator shall issue to each
person described in paragraph (b) of this section a notice of that
individual's plan benefits. The notice shall be in the form and contain
the information specified in Sec. 4041.23. Failure to comply with the
requirements of this section shall nullify the proposed termination.
(b) Persons entitled to notice. The plan administrator shall issue
a notice of plan benefits to each person (other than the PBGC or any
employee organization) who is an affected party as of the proposed
termination date (and, in the case of a spin-off/termination
transaction as described in Sec. 4043.21(f), each person who is, as of
the proposed termination date, a participant in the original plan who
is covered by the ongoing plan).
(c) Discovery of other affected parties. Notwithstanding the
provisions of paragraph (a) of this section, if the plan administrator
discovers additional persons entitled to a notice of plan benefits
after the expiration of the time period specified in paragraph (a) of
this section, the failure to issue a notice of plan benefits to such
persons within the specified time period will not cause such notices to
be untimely under paragraph (a) of this section if the plan
administrator could not reasonably have been expected to know of the
additional persons and if he or she promptly issues, to each such
additional person, a notice of plan benefits in the form and containing
the information specified in Sec. 4041.23.
(d) Issuance--(1) Method. The plan administrator shall issue a
notice of plan benefits individually to each person described in
paragraph (b) of this section, either by hand-delivery or by first-
class mail or courier service directed to the person's last known
address.
(2) When issued. A notice of plan benefits is deemed issued to each
person on the date it is handed to the person or deposited with a mail
or courier service (as evidenced by a postmark or written receipt).
Sec. 4041.23 Form and contents of notices of plan benefits.
(a) Form of notices. The plan administrator shall provide notices
of plan benefits written in plain, non-technical English that is likely
to be understood by the average participant or beneficiary. If
technical terms must be used, their meaning shall be explained in non-
technical language.
(b) Foreign languages. The plan administrator of a plan described
in this paragraph shall comply with paragraph (a) of this section and
also shall include in the notices a statement, prominently displayed,
in the foreign language (or languages) common to the non-English
speaking plan participants advising them of how they may obtain
assistance in understanding the notice. The assistance need not involve
written materials, but shall be adequate to reasonably ensure that the
participants and beneficiaries understand the information contained in
their notices and shall be provided through media and at times and
places that are reasonably accessible to the participants and
beneficiaries. A plan is described in this paragraph if, as of the
proposed termination date, the plan either--
(1) Covers fewer than 100 participants and at least 25 percent of
those participants speak only the same non-English language or
(2) Covers 100 or more participants and at least the lesser of 500
or 10 percent of those participants speak the same non-English
language.
(c) Contents of notice. In addition to the information described in
paragraph (d), (e), or (f) of this section, as applicable, the plan
administrator shall include in each notice of plan benefits the
following information:
(1) The name of the plan, the employer identification number
(``EIN'') of the contributing sponsor, and the plan number (``PN''); if
there is no EIN or PN, the notice shall so state;
(2) The name, address, and telephone number of the person who may
be contacted to answer questions concerning a participant's or
beneficiary's benefit;
(3) The proposed termination date and, if applicable, a statement
that this date is later than the proposed termination date given in the
notice of intent to terminate; and
(4) If the amount of the plan benefits set forth in a notice is an
estimate, a statement that the amount is an estimate and that benefits
paid may be greater than or less than the estimate.
(d) Benefits of persons in pay status. The plan administrator shall
include in the notice of plan benefits for a participant or beneficiary
in pay status as of the proposed termination date the following
information:
(1) The amount and form of the participant's plan benefits payable
as of the proposed termination date;
(2) The amount and form of benefit, if any, payable to a
beneficiary upon the
[[Page 34046]]
participant's death and the name of the beneficiary;
(3) The amount and date of any increase or decrease in the benefit
scheduled to occur after the proposed termination date (or that has
already occurred) and an explanation of the increase or decrease,
including, where applicable, a reference to the pertinent plan
provision; and
(4) For benefits of participants or beneficiaries in pay status for
one year or less as of the proposed termination date, the specific
personal data used to calculate the plan benefits described in
paragraphs (d)(1) and (d)(2) of this section, e.g., participant's age
at retirement, spouse's age, participant's length of service, and
including, for Social Security offset benefits, the participant's
actual or, if unknown, estimated Social Security benefit and, for an
estimated benefit, the assumptions used for the participant's earnings
history.
(e) Benefits of participants not in pay status but form and
starting date known. The plan administrator shall include in the notice
of plan benefits for a participant who is not in pay status as of the
proposed termination date, but who has, as of that date, elected to
retire and has elected a form and starting date, or with respect to
whom the plan administrator has determined a lump sum distribution will
be made, the following information:
(1) The amount and form of the participant's plan benefits payable
as of the projected benefit starting date, and what that date is;
(2) The amount and form of benefit, if any, payable to a
beneficiary upon the participant's death and the name of the
beneficiary;
(3) The amount and date of any increase or decrease in the benefit
scheduled to occur after the proposed termination date (or that has
already occurred) and an explanation of the increase or decrease,
including, where applicable, a reference to the pertinent plan
provision; and
(4) If the age at which, or form in which, the plan benefits will
be paid differs from the age or form in which the participant's accrued
benefit at normal retirement age is stated in the plan, the age or form
stated in the plan and the age or form adjustment factors, including,
in the case of a lump sum benefit, the interest rate used to convert to
the lump sum benefit described in paragraph (e)(1) of this section and
a reference to the pertinent plan provision;
(5) The specific personal data, as described in paragraph (d)(4) of
this section, used to calculate the plan benefits (other than a lump
sum benefit) described in paragraphs (e)(1) and (e)(2) of this section
and, with respect to a benefit payable as a lump sum, the personal data
used to calculate the underlying annuity; and
(6) If the plan benefits will be paid in a lump sum, an explanation
of how the interest rate is used to calculate the lump sum; a statement
that the higher the interest rate used, the smaller the lump sum
amount; and, if applicable, a statement that the lump sum amount given
is an estimate because the applicable interest rate may change before
the distribution date.
(f) Benefits of all other participants not in pay status. The plan
administrator shall include in the notice of plan benefits for any
participant not described in paragraph (d) or (e) of this section, the
following information:
(1) The amount and form of the participant's plan benefits payable
at normal retirement age in any form permitted under the plan;
(2) The availability of any alternative benefit forms, including
those payable to a beneficiary upon the participant's death either
before or after retirement, and, for any benefits to which the
participant is or may become entitled that would be payable before
normal retirement age, the earliest benefit commencement date, the
amount payable on and after such date, and whether the benefit would be
subject to future reduction;
(3) The specific personal data, as described in paragraph (d)(4) of
this section, used to calculate the plan benefits described in
paragraph (f)(1) of this section and, with respect to a benefit that
may be paid in a lump sum, the personal data used to calculate the
underlying annuity; and
(4) If the plan benefits may be paid in a lump sum, an explanation
of when a lump sum may be paid without a participant's consent; an
explanation of how the interest rate is used to calculate the lump sum;
and a statement that the higher the interest rate used, the smaller the
lump sum amount.
Sec. 4041.24 Standard termination notice.
(a) Form. The plan administrator shall file with the PBGC a PBGC
Form 500, Standard Termination Notice, Single-Employer Plan
Termination, with Schedule EA-S, Standard Termination Certification of
Sufficiency, that has been completed in accordance with the
instructions thereto. Except as provided in Sec. 4041.8, the plan
administrator shall file the standard termination notice on or before
the 120th day after the proposed termination date.
(b) Supplemental notice requirement. If any of the benefits of the
terminating plan may be provided in annuity form through the purchase
of irrevocable commitments from an insurer and either of the conditions
in paragraph (b)(1) of this section is met, the plan administrator
shall file a supplemental notice (or notices) with the PBGC in
accordance with the provisions in paragraph (b)(2) of this section.
(1) The plan administrator shall file with the PBGC a supplemental
notice (or notices) if--
(i) The insurer or insurers from whom the plan administrator
intends to purchase irrevocable commitments is not identified in the
standard termination notice filed with the PBGC, or
(ii) The plan administrator has notified the PBGC of the insurer or
insurers from whom he or she intends to purchase irrevocable
commitments, either in the standard termination notice or in a later
notice pursuant to paragraph (b)(2) of this section, and subsequently
decides to select a different insurer.
(2) The supplemental notice (or notices) may be filed at any time
after the filing of the standard termination notice, but no later than
45 days before the distribution date, and shall--
(i) Be in writing addressed to: Reports Processing, Insurance
Operations Department, Pension Benefit Guaranty Corporation, 1200 K
Street NW., Washington, DC 20005-4026.
(ii) Give information identifying the contributing sponsor and the
plan by name, address, employer identification and plan numbers (``EIN/
PN''), and PBGC case number (if applicable); and
(iii) Give the name and address of the insurer or insurers from
whom, or (if not then known) the insurers from among whom, the plan
administrator intends to purchase the irrevocable commitments.
Sec. 4041.25 PBGC action upon filing of standard termination notice.
(a) Review period upon filing of standard termination notice--(1)
General rule. After a complete standard termination notice has been
filed in accordance with Sec. 4041.9, the PBGC has 60 days to review
the notice, determine whether to issue a notice of noncompliance
pursuant to Sec. 4041.26, and issue any such notice. The 60-day review
period begins on the day following the filing of a complete standard
termination notice and includes the 60th day. If the PBGC does not
issue a notice of noncompliance by the last day of this 60-day period,
the plan administrator shall proceed to
[[Page 34047]]
close out the plan in accordance with Sec. 4041.27.
(2) Extension of review period. The 60-day review period may be
extended according to the following rules:
(i) The PBGC and the plan administrator may agree in writing,
before the expiration of the 60-day review period, to extend the period
for up to an additional 60 days;
(ii) More than one such extension may be made; and
(iii) Any extension may be made upon whatever terms and conditions
are agreed to by the PBGC and the plan administrator.
(3) Suspension of review period. The 60-day review period shall be
suspended in accordance with paragraph (d) of this section if the PBGC
requests supplemental information.
(b) Acknowledgment of complete standard termination notice. The
PBGC shall notify the plan administrator in writing of the date on
which a complete standard termination notice was filed, so that the
plan administrator may determine when the 60-day review period will
expire.
(c) Return of incomplete standard termination notice. The PBGC
shall return an incomplete standard termination notice and advise the
plan administrator in writing of the missing item(s) of information and
that the complete standard termination notice must be filed no later
than the 120th day after the proposed termination date or the 20th day
after the date of the PBGC notice, whichever is later.
(d) Authority to request supplemental information. Whenever the
PBGC has reason to believe that any of the requirements of
Secs. 4041.21 through 4041.24 of this part were not complied with, or
in any proposed termination that will result in a reversion of residual
assets to the contributing sponsor, the PBGC may require the submission
of information supplementing that furnished pursuant to Sec. 4041.24. A
request for additional information under this paragraph shall be in
writing and shall suspend the running of the 60-day (or extended)
review period described in paragraph (a) of this section. That period
shall begin running again on the day following the filing of the
required information. If a plan administrator or contributing sponsor
fails to submit information required under this paragraph within the
period specified in the PBGC's request, the PBGC may issue a notice of
noncompliance in accordance with Sec. 4041.26 or take other appropriate
action to enforce the requirements of Title IV of ERISA.
(e) Authority to suspend or nullify proposed termination.
Notwithstanding any other provision of this part, the PBGC may, by
written notice to the plan administrator, suspend or nullify a proposed
termination after expiration of the 60-day (or extended) review period
in any case in which it determines that such action is necessary to
carry out the purposes of Title IV of ERISA.
Sec. 4041.26 Notice of noncompliance.
(a) General. (1) The PBGC shall issue to the plan administrator a
written notice of noncompliance, within the period prescribed by
Sec. 4041.25, whenever it makes one of the following determinations:
(i) A determination that the plan administrator failed to issue the
notice of intent to terminate in accordance with Sec. 4041.21.
(ii) A determination that the plan administrator failed to issue
notices of plan benefits in accordance with Secs. 4041.22 and 4041.23.
(iii) A determination that the standard termination notice, or any
supplemental notice, was not filed in accordance with Sec. 4041.24.
(iv) A determination that, as of the proposed distribution date,
plan assets will not be sufficient to satisfy all benefit liabilities
under the plan.
(2) The PBGC shall base any determination described in paragraph
(a)(1) of this section on the information contained in the standard
termination notice, including any supplemental submission under
Sec. 4041.25(d) and any supplemental notice under Sec. 4041.24(b), or
on information provided by any affected party or otherwise obtained by
the PBGC.
(b) Effect of notice of noncompliance. A notice of noncompliance
ends the standard termination proceeding, nullifies all actions taken
to terminate the plan, and renders the plan an ongoing plan. The notice
of noncompliance is effective upon the expiration of the period within
which the plan administrator may request reconsideration pursuant to
paragraph (c) of this section but, once a notice is issued, the plan
administrator shall take no further action to terminate the plan
(except by initiation of a new termination) unless and until the notice
is revoked pursuant to a decision by the PBGC on reconsideration.
(c) Reconsideration of notice of noncompliance. A plan
administrator may request reconsideration of a notice of noncompliance
in accordance with the rules prescribed in part 4003, subpart C, of
this chapter. Any request for reconsideration automatically stays the
effectiveness of the notice of noncompliance until the PBGC issues its
decision on reconsideration.
(d) Notice to affected parties--(1) General rule. Upon a decision
by the PBGC on reconsideration affirming the issuance of a notice of
noncompliance (or, if earlier, upon the plan administrator's decision
not to request reconsideration), the plan administrator shall notify
the affected parties (other than the PBGC), and any persons who were
provided notice under Sec. 4041.21(f)), in writing that the plan is not
going to terminate or, if applicable, that the termination was invalid
but that a new notice of intent to terminate is being issued.
(2) Method of issuance. The notices shall be delivered by first-
class mail or by hand to each person described in paragraph (d)(1) who
is an employee organization or a participant or beneficiary who is then
in pay status. The notices to other participants and beneficiaries
shall be provided in any manner reasonably calculated to reach those
participants and beneficiaries. Reasonable methods of notification
include, but are not limited to, posting the notice at participants'
worksites or publishing the notice in an employee organization
newsletter or newspaper of general circulation in the area or areas
where participants and beneficiaries reside.
Sec. 4041.27 Closeout of plan.
(a) General rules--(1) Distribution. Except as provided in
paragraphs (b), (e), and (f) of this section and Sec. 4041.8 of this
part, if the PBGC does not issue a notice of noncompliance within the
period specified in Sec. 4041.25 or, if a notice of noncompliance is
issued and later revoked after reconsideration under Sec. 4041.26(c),
the plan administrator shall complete the distribution of plan assets
in accordance with paragraph (c) of this section within 180 days after
the expiration of the review period specified in Sec. 4041.25 (or, if
applicable, the date on which the PBGC revokes the notice of
noncompliance) or, if applicable, within the time prescribed in part
4050 of this chapter.
(2) Post-distribution requirements. The plan administrator shall
file with the PBGC a post-distribution certification in accordance with
paragraph (h) of this section and, if any of the plan's benefit
liabilities payable to a participant or beneficiary have been
distributed through the purchase of irrevocable commitments, the plan
administrator also shall provide such participant or beneficiary with a
notice, contract, or certificate in accordance with paragraph (g) of
this section.
(b) Assets insufficient to satisfy benefit liabilities. Before
distributing
[[Page 34048]]
plan assets to close out the plan, the plan administrator shall
determine that plan assets are, in fact, sufficient to satisfy all
benefit liabilities. In determining if plan assets are sufficient, the
plan administrator shall subtract all liabilities (other than the
future benefit liabilities that will be provided when assets are
distributed), e.g., benefit payments due before the distribution date;
PBGC premiums for all plan years through and including the plan year in
which assets are distributed; expenses, fees, and other administrative
costs. If plan assets are not sufficient to satisfy all benefit
liabilities, the plan administrator shall not make any distribution of
assets to effect the plan's termination. In the event of an
insufficiency, the plan administrator shall promptly notify the PBGC.
(c) Method of distribution. The plan administrator shall distribute
plan assets in accordance with Sec. 4041.6 by purchasing irrevocable
commitments from an insurer in satisfaction of all benefit liabilities
that must be provided in annuity form, and by otherwise providing all
benefit liabilities that need not be provided in annuity form. The plan
administrator shall comply with part 4050 of this chapter (dealing with
missing participants), if applicable.
(d) Failure to distribute within 180-day period. Except as provided
in paragraphs (e) and (f) of this section, failure to distribute assets
in accordance with paragraph (c) of this section within the 180-day
distribution period set forth in paragraph (a)(1) of this section,
because of an insufficiency of plan assets as described in paragraph
(b) of this section or for any other reason, shall nullify the
termination. All actions taken to effect the plan's termination shall
be null and void, and the plan shall be an ongoing plan. In this event,
the plan administrator shall notify affected parties (other than the
PBGC) in writing, in accordance with Sec. 4041.26(d), that the plan is
not going to terminate or, if applicable, that the termination was
invalid but that a new notice of intent to terminate is being issued.
(e) Automatic extension of time for distribution. (1) Requirements
for automatic extension. The plan administrator shall be entitled to an
automatic extension of the 180-day period in which to complete the
distribution of plan assets if the plan administrator--
(i) Submits to the IRS a complete request for a determination with
respect to the plan's tax-qualification status upon termination
(``determination letter'') on or before the date that the plan
administrator files the standard termination notice with the PBGC;
(ii) Does not receive a determination letter at least 60 days
before the expiration of the 180-day period; and
(iii) On or before the expiration of the 180-day period, notifies
the PBGC in writing that an extension of the distribution deadline is
required and certifies that the conditions in this paragraph have been
met.
(2) Extension period. If the requirements in paragraph (e)(1) of
this section are met, the time within which the plan administrator
shall complete the distribution of plan assets is automatically
extended until the 60th day after receipt of a favorable determination
letter from the IRS.
(f) Discretionary extension of time for distribution. If the plan
administrator will be unable to complete the distribution of plan
assets within the 180-day (or extended) period for any reason other
than an insufficiency described in paragraph (b) of this section, the
plan administrator may request, and the PBGC shall grant or deny, in
its discretion, an extension of time within which to complete the
distribution according to the following rules:
(1) The plan administrator shall file a written request for a
discretionary extension with the PBGC at least 30 days before the
expiration of the 180-day (or extended) distribution period, explain
the reason(s) for the request, and provide a date certain by which the
distribution will be made if the extension is granted.
(2) The PBGC will not grant a discretionary extension based on
failure to meet the requirements for an automatic extension under
paragraph (e) of this section or failure to locate all participants or
beneficiaries.
(3) The PBGC will grant a discretionary extension, in whole or in
part, only if it is satisfied that the delay in making the distribution
is not due to the action or inaction of the plan administrator or the
contributing sponsor and that the distribution can in fact be completed
by the date requested.
(g) Notice of annuity contract. In the case of the distribution of
benefit liabilities through the purchase of irrevocable commitments--
(1) Either the plan administrator or the insurer shall, as soon as
practicable, provide each participant and beneficiary with a copy of
the annuity contract or certificate showing the insurer's name and
address and clearly reflecting the insurer's obligation to provide the
participant's or beneficiary's benefit; (2) If such a contract or
certificate is not available on or before the date on which the post-
distribution certificate is required to be filed pursuant to paragraph
(h) of this section, the plan administrator shall, no later than such
date, provide each participant and beneficiary with a written notice
stating--
(i) That the obligation for providing the participant's or
beneficiary's plan benefits has transferred to the insurer;
(ii) The name and address of the insurer;
(iii) The name, address, and telephone number of the person
designated by the insurer to answer questions concerning the annuity;
and
(iv) That the participant or beneficiary will receive from the plan
administrator or insurer a copy of the annuity contract or a
certificate showing the insurer's name and address and clearly
reflecting the insurer's obligation to provide the participant's or
beneficiary's benefit; and
(3) The plan administrator shall certify to the PBGC, as part of
the post-distribution certification required under paragraph (h) of
this section, that the requirements in paragraph (g)(1) or (g)(2) of
this section have been satisfied.
(h) Post-distribution certification. Within 30 days after the last
distribution date, the plan administrator shall file with the PBGC a
PBGC Form 501, Post-Distribution Certification for Standard
Termination, that has been completed in accordance with the
instructions thereto. This requirement shall be considered satisfied
if, in accordance with Sec. 4050.6(a)(2) and (a)(3) of this chapter,
the plan administrator files a preliminary post-distribution
certification within 30 days after the last distribution date and, in
addition, timely files an amended post-distribution certification that
otherwise satisfies all applicable requirements.
Subpart C--Distress Termination Process
Sec. 4041.41 Notice of intent to terminate.
(a) General rules. (1) At least 60 days and no more than 90 days
before the proposed termination date, the plan administrator shall
issue to each person who is (as of the proposed termination date) an
affected party a written notice of intent to terminate.
(2) The plan administrator shall issue the notice of intent to
terminate to all affected parties other than the PBGC at or before the
time he or she files the notice with the PBGC.
(3) The notice to affected parties other than the PBGC shall
contain all of the information specified in paragraph (d) of this
section.
[[Page 34049]]
(4) The notice to the PBGC shall be filed on PBGC Form 600,
Distress Termination, Notice of Intent to Terminate, completed in
accordance with the instructions thereto.
(b) Discovery of other affected parties. Notwithstanding the
provisions of paragraphs (a)(1) and (a)(2) of this section, if the plan
administrator discovers additional affected parties after the
expiration of the time period specified in paragraphs (a)(1) or (a)(2)
of this section, the failure to issue the notice of intent to terminate
to such parties within the specified time periods will not cause the
notice to be untimely under paragraph (a) of this section if the plan
administrator could not reasonably have been expected to know of the
additional affected parties and if he or she promptly issues the notice
to each additional affected party.
(c) Issuance--(1) Method. The plan administrator shall issue the
notice of intent to terminate individually to each affected party. The
notice to the PBGC shall be filed in accordance with Sec. 4041.9. The
notice to each of the other affected parties shall be either hand
delivered or delivered by first-class mail or courier service directed
to the affected party's last known address.
(2) When issued. The notice of intent to terminate is deemed issued
to the PBGC on the date on which it is filed and to any other affected
party on the date on which it is handed to the affected party or
deposited with a mail or courier service (as evidenced by a postmark or
written receipt).
(d) Contents of notice to affected parties other than the PBGC. The
plan administrator shall include in the notice of intent to terminate
to each affected party other than the PBGC all of the following
information:
(1) The name of the plan and of the contributing sponsor;
(2) The employer identification number (``EIN'') of the
contributing sponsor and the plan number (``PN''); if there is no EIN
or PN, the notice shall so state;
(3) The name, address, and telephone number of the person who may
be contacted by an affected party with questions concerning the plan's
termination;
(4) A statement that the plan administrator expects to terminate
the plan in a distress termination on a specified proposed termination
date.
(5) A statement that benefit and service accruals will continue
until the termination date or, if applicable, that benefit accruals
were or will be frozen as of a specific date in accordance with section
204(h) of ERISA;
(6) A statement of whether plan assets are sufficient to pay all
guaranteed benefits or all benefit liabilities;
(7) A brief description of what benefits are guaranteed by the PBGC
(e.g., if only a portion of the benefits are guaranteed because of the
phase-in rule, this should be explained), and a statement that
participants and beneficiaries also may receive a portion of the
benefits to which each is entitled under the terms of the plan in
excess of guaranteed benefits; and
(8) A statement, if applicable, that benefits may be subject to
reduction because of the limitations on the amounts guaranteed by the
PBGC or because plan assets are insufficient to pay for full benefits
(pursuant to part 4022, subparts B and D, of this chapter) and that
payments in excess of the amount guaranteed by the PBGC may be recouped
by the PBGC (pursuant to part 4022, subpart E, of this chapter).
(e) Spin-off/termination transactions. In the case of a spin-off/
termination transaction (as described in Sec. 4041.21(f)), the plan
administrator shall provide all participants and beneficiaries in the
original plan who are also participants or beneficiaries in the ongoing
plan (as of the proposed termination date) with a notice describing the
transaction no later than the date on which the plan administrator
completes the issuance of notices of intent to terminate under this
section.
Sec. 4041.42 PBGC review of notice of intent to terminate.
(a) General. When a notice of intent to terminate is filed with it,
the PBGC--
(1) Shall determine whether the notice was issued in compliance
with Sec. 4041.41; and
(2) Shall advise the plan administrator of its determination, in
accordance with paragraph (b) or (c) of this section, no later than the
proposed termination date specified in the notice.
(b) Tentative finding of compliance. If the PBGC determines that
the issuance of the notice of intent to terminate appears to be in
compliance with Sec. 4041.41, it shall notify the plan administrator in
writing that--
(1) The PBGC has made a tentative determination of compliance;
(2) The distress termination proceeding may continue; and
(3) After reviewing the distress termination notice filed pursuant
to Sec. 4041.43, the PBGC will make final, or reverse, this tentative
determination.
(c) Finding of noncompliance. If the PBGC determines that the
issuance of the notice of intent to terminate was not in compliance
with Sec. 4041.41 (except for requirements that the PBGC elects to
waive under Sec. 4041.3(d)(2)(i) with respect to the notice filed with
the PBGC), the PBGC shall notify the plan administrator in writing--
(1) That the PBGC has determined that the notice of intent to
terminate was not properly issued; and
(2) That the proposed distress termination is null and void and the
plan is an ongoing plan.
(d) Information on need to institute section 4042 proceedings. The
PBGC may require the plan administrator to submit, within 20 days after
the plan administrator's receipt of the PBGC's written request (or such
other period as may be specified in such written request), any
information that the PBGC determines it needs in order to decide
whether to institute termination or trusteeship proceedings pursuant to
section 4042 of ERISA, whenever--
(1) A notice of intent to terminate indicates that benefits
currently in pay status (or that should be in pay status) are not being
paid or that this is likely to occur within the 180-day period
following the issuance of the notice of intent to terminate;
(2) The PBGC issues a determination under paragraph (c) of this
section; or
(3) The PBGC has any reason to believe that it may be necessary or
appropriate to institute proceedings under section 4042 of ERISA.
(e) Reconsideration of finding of noncompliance. A plan
administrator may request reconsideration of the PBGC's determination
of noncompliance under paragraph (c) of this section in accordance with
the rules prescribed in part 4003, subpart C, of this chapter. Any
request for reconsideration automatically stays the effectiveness of
the determination until the PBGC issues its decision on
reconsideration, but does not stay the time period within which
information must be submitted to the PBGC in response to a request
under paragraph (d) of this section.
(f) Notice to affected parties. Upon a decision by the PBGC
affirming a finding of noncompliance or upon the expiration of the
period within which the plan administrator may request reconsideration
of a finding of noncompliance (or, if earlier, upon the plan
administrator's decision not to request reconsideration), the plan
administrator shall notify the affected parties (and any persons who
were provided notice under Sec. 4041.41(e)) in writing that the plan is
not going to terminate or, if applicable, that the termination is
invalid but that a new notice of intent to terminate is being issued.
The notice required by this
[[Page 34050]]
paragraph shall be provided in the manner described in
Sec. 4041.26(d)(2).
Sec. 4041.43 Distress termination notice.
(a) General rule. The plan administrator shall file with the PBGC a
PBGC Form 601, Distress Termination Notice, Single-Employer Plan
Termination, with Schedule EA-D, Distress Termination Enrolled Actuary
Certification, that has been completed in accordance with the
instructions thereto, on or before the 120th day after the proposed
termination date or, if applicable, no later than the due date
established in an extension notice issued under Sec. 4041.8.
(b) Participant and benefit information. (1) Plan insufficient for
guaranteed benefits. Unless the enrolled actuary certifies, in the
Schedule EA-D filed in accordance with paragraph (a) of this section,
that the plan is sufficient either for guaranteed benefits or for
benefit liabilities, the plan administrator shall file with the PBGC
the participant and benefit information described in PBGC Form 601 and
the instructions thereto by the later of--
(i) 120 days after the proposed termination date, or
(ii) 30 days after receipt of the PBGC's determination, pursuant to
Sec. 4041.44(b), that the requirements for a distress termination have
been satisfied.
(2) Plan sufficient for guaranteed benefits or benefit liabilities.
If the enrolled actuary certifies that the plan is sufficient either
for guaranteed benefits or for benefit liabilities, the plan
administrator need not submit the participant and benefit information
described in PBGC Form 601 and the instructions thereto unless
requested to do so pursuant to paragraph (c) of this section.
(3) Effect of failure to provide information. The PBGC may void the
distress termination if the plan administrator fails to provide
complete participant and benefit information in accordance with this
section.
(c) Additional information. The PBGC may in any case require the
submission of any additional information that it needs to make the
determinations that it is required to make under this part or to pay
benefits pursuant to section 4061 or 4022(c) of ERISA. The plan
administrator shall submit any information requested under this
paragraph within 30 days after receiving the PBGC's written request (or
such other period as may be specified in such written request).
(d) Due date extension. Notwithstanding the provisions of
paragraphs (a), (b), and (c) of this section, the due date for filing
PBGC Form 601 or other information required under this section may be
extended by a notice issued under Sec. 4041.8.
Sec. 4041.44 PBGC determination of compliance with requirements for
distress termination.
(a) General. Based on the information contained in and submitted
with the PBGC Form 600 and the PBGC Form 601, with Schedule EA-D, and
on any information submitted by an affected party or otherwise obtained
by the PBGC, the PBGC shall determine whether the requirements for a
distress termination set forth in Sec. 4041.3(c) have been met and
shall notify the plan administrator in writing of its determination, in
accordance with paragraph (b) or (c) of this section.
(b) Qualifying termination. If the PBGC determines that all of the
requirements of Sec. 4041.3(c) have been satisfied, it shall so advise
the plan administrator and shall also advise the plan administrator of
whether participant and benefit information must be submitted in
accordance with Sec. 4041.43(b).
(c) Non-qualifying termination. (1) Except as provided in paragraph
(c)(2) of this section, if the PBGC determines that any of the
requirements of Sec. 4041.3(c) has not been met, it shall notify the
plan administrator of its determination, the basis therefor, and the
effect thereof (as provided in Sec. 4041.3(d)).
(2) If the only basis for the PBGC's determination described in
paragraph (c)(1) of this section is that the distress termination
notice is incomplete, the PBGC shall advise the plan administrator of
the missing item(s) of information and that the information must be
filed with the PBGC no later than the 120th day after the proposed
termination date or the 30th day after the date of the PBGC's notice of
its determination, whichever is later, or, if applicable, no later than
the due date established in an extension notice issued under
Sec. 4041.8.
(d) Reconsideration of determination of non-qualification. A plan
administrator may request reconsideration of the PBGC's determination
under paragraph (c)(1) of this section in accordance with the rules
prescribed in part 4003, subpart C, of this chapter. The filing of a
request for reconsideration automatically stays the effectiveness of
the determination until the PBGC issues its decision on
reconsideration.
(e) Notice to affected parties. Upon a decision by the PBGC
affirming a determination of non-qualification or upon the expiration
of the period within which the plan administrator may request
reconsideration of a determination of non-qualification (or, if
earlier, upon the plan administrator's decision not to request
reconsideration), the plan administrator shall notify the affected
parties (and any persons who were provided notice under
Sec. 4041.41(e)) in writing that the plan is not going to terminate or,
if applicable, that the termination is invalid but that a new notice of
intent to terminate is being issued. The notice required by this
paragraph shall be provided in the manner described in
Sec. 4041.26(d)(2).
Sec. 4041.45 PBGC determination of plan sufficiency/insufficiency.
(a) General. Upon receipt of participant and benefit information
filed pursuant to Sec. 4041.43 (b)(1) or (c), the PBGC shall determine
the degree to which the plan is sufficient and notify the plan
administrator in writing of its determination in accordance with
paragraph (b) or (c) of this section.
(b) Insufficiency for guaranteed benefits. If the PBGC finds that
it is unable to determine that a plan is sufficient for guaranteed
benefits, it shall issue a ``notice of inability to determine
sufficiency'' notifying the plan administrator of this finding and
advising the plan administrator that--
(1) The plan administrator shall continue to administer the plan
under the restrictions imposed by Sec. 4041.4; and
(2) The termination shall be completed under section 4042 of ERISA.
(c) Sufficiency for guaranteed benefits or benefit liabilities. If
the PBGC determines that a plan is sufficient for guaranteed benefits
but not for benefit liabilities or is sufficient for benefit
liabilities, the PBGC shall issue to the plan administrator a
distribution notice advising the plan administrator--
(1) To issue notices of benefit distribution in accordance with
Sec. 4041.46;
(2) To close out the plan in accordance with Sec. 4041.48;
(3) To file a timely post-distribution certification with the PBGC
in accordance with Sec. 4041.48(b); and
(4) That either the plan administrator or the contributing sponsor
must preserve and maintain plan records in accordance with
Sec. 4041.11.
Sec. 4041.46 Notices of benefit distribution.
(a) General rules. When a distribution notice is issued by the PBGC
pursuant to Sec. 4041.45(c), the plan administrator shall--
(1) No later than 60 days after receiving the distribution notice
or, if applicable, no later than the due date
[[Page 34051]]
established in an extension notice issued under Sec. 4041.8, issue a
notice of benefit distribution in accordance with the rules described
in paragraphs (c) and (d) of this section to each person (other than
any employee organization or the PBGC) who is an affected party as of
the termination date (and, in the case of a spin-off/termination
transaction as described in Sec. 4041.21(f), each person who is, as of
the termination date, a participant in the original plan and covered by
the ongoing plan); and
(2) No later than 15 days after the date on which the plan
administrator completes the issuance of the notices of benefit
distribution, file with the PBGC a certification that the notices were
so issued in accordance with the requirements of this section.
(b) Discovery of other affected parties. Notwithstanding the
provisions of paragraph (a) of this section, if the plan administrator
discovers additional persons entitled to a notice of benefit
distribution after the expiration of the time period specified in
paragraph (a)(1) of this section, the failure to issue the notices of
benefit distribution to such persons within the specified time period
will not cause such notices to be untimely under paragraph (a) of this
section if the plan administrator could not reasonably have been
expected to know of the additional persons and if he or she promptly
issues, to each such additional person, a notice of benefit
distribution in the form and containing the information specified in
paragraph (d) of this section.
(c) Issuance--(1) Method. The plan administrator shall issue a
notice of benefit distribution individually to each person, either by
hand-delivery or by first-class mail or courier service directed to the
person's last known address.
(2) When issued. A notice of benefit distribution is deemed issued
to each person on the date it is handed to the person or deposited with
a mail or courier service (as evidenced by a postmark or written
receipt).
(d) Form and content of notices. The plan administrator shall
provide notices of benefit distribution in the form described in
Sec. 4041.23 (a) and (b) of this part and shall include in each--
(1) The information described in Sec. 4041.23(c) of this part;
(2) The information described in Sec. 4041.23 (d), (e), or (f) of
this part, as applicable (replacing the term ``plan benefits'' with
``Title IV benefits'' and ``proposed termination date'' with
``termination date''.
(3) A statement that, after plan assets have been distributed to
provide all of the Title IV benefits payable with respect to a
participant or a beneficiary of a deceased participant, either by the
purchase of an irrevocable commitment or commitments from an insurer to
provide benefits or by an alternative form of distribution provided for
under the plan, the PBGC's guarantee with respect to that participant's
or beneficiary's benefit ends; and
(4) If distribution of benefits under the plan may be wholly or
partially by the purchase of irrevocable commitments from an insurer--
(i) The name and address of the insurer or insurers from whom, or
(if not then known) the insurers from among whom, the plan
administrator intends to purchase the irrevocable commitments; or
(ii) If the plan administrator has not identified an insurer or
insurers at the time the notice of distribution is issued, a statement
that the affected party to whom the notice is directed will be notified
at a later date (but no later than 45 days before the distribution
date) of the name and address of the insurer or insurers from whom, or
(if not then known) the insurers from among whom, irrevocable
commitments may be purchased.
(e) Supplemental notice requirements. (1) The plan administrator
shall issue a supplemental notice (or notices) of distribution to each
person in accordance with the rules in paragraph (e)(2) of this section
if--
(i) The plan administrator has not yet identified an insurer or
insurers at the time the notice of distribution is issued; or
(ii) The plan administrator included in the notice of distribution
the name or names of the insurer or insurers from whom (or from among
whom) he or she intends to purchase the irrevocable commitments, but
subsequently decides to select a different insurer.
(2) The plan administrator shall issue each supplemental notice in
the manner provided in paragraph (c) of this section no later than 45
days before the distribution date and shall include the name and
address of the insurer or insurers from whom, or (if not then known)
the insurers from among whom, the plan administrator intends to
purchase the irrevocable commitments.
Sec. 4041.47 Verification of plan sufficiency prior to closeout.
(a) General rule. Before distributing plan assets pursuant to a
closeout under Sec. 4041.48, the plan administrator shall verify
whether the plan's assets are still sufficient to provide for benefits
at the level determined by the PBGC, i.e., guaranteed benefits or
benefit liabilities. If the plan administrator finds that the plan is
no longer able to provide for benefits at the level determined by the
PBGC, then paragraph (b) or (c) of this section, as appropriate, shall
apply.
(b) Subsequent insufficiency for guaranteed benefits. When a plan
administrator finds that a plan is no longer sufficient for guaranteed
benefits, the plan administrator shall promptly notify the PBGC in
writing of that fact and shall take no further action to implement the
plan termination, pending the PBGC's determination and notice pursuant
to paragraph (b)(1) or (b)(2) of this section.
(1) PBGC concurrence with finding. If the PBGC concurs with the
plan administrator's finding, the distribution notice shall be void,
and the PBGC shall--
(i) Issue the plan administrator a notice of inability to determine
sufficiency in accordance with Sec. 4041.45(b); and
(ii) Require the plan administrator to submit a new valuation,
certified to by an enrolled actuary, of the benefit liabilities and
guaranteed benefits under the plan, valued in accordance with
Secs. 4044.41 through 4044.57 of this chapter as of the date of the
plan administrator's notice to the PBGC.
(2) PBGC non-concurrence with finding. If the PBGC does not concur
with the plan administrator's finding, it shall so notify the plan
administrator in writing, and the distribution notice shall remain in
effect.
(c) Subsequent insufficiency for benefit liabilities. When a plan
administrator finds that a plan is sufficient for guaranteed benefits
but is no longer sufficient for benefit liabilities, the plan
administrator shall immediately notify the PBGC in writing of this
fact, but shall continue with the distribution of assets in accordance
with Sec. 4041.48.
(d) Finding by PBGC of subsequent insufficiency. In any case in
which the PBGC finds on its own initiative that a subsequent
insufficiency for guaranteed benefits has occurred, paragraph (b)(1) of
this section shall apply, except that the guaranteed benefits shall be
revalued as of the date of the PBGC's finding.
(e) Restrictions upon finding of subsequent insufficiency. When the
plan administrator makes the finding described in paragraph (b) of this
section or receives notice that the PBGC has made the finding described
in paragraph (d) of this section, the plan administrator shall (except
to the extent the PBGC otherwise directs) be subject to the
prohibitions in Sec. 4041.4(c).
[[Page 34052]]
Sec. 4041.48 Closeout of plan.
(a) General rules--(1) Distribution. If a plan administrator
receives a distribution notice from the PBGC pursuant to
Sec. 4041.45(c) and neither the plan administrator nor the PBGC makes
the finding described in Sec. 4041.47 (b) or (d), the plan
administrator shall distribute plan assets in accordance with
Secs. 4041.6 and 4041.27(c) of this part no earlier than the 61st day
and (except as provided in Sec. 4041.8 or 4041.27 (e) or (f)) no later
than the 180th day following the day on which the plan administrator
completes the issuance of the notices of benefit distribution pursuant
to Sec. 4041.46(a), or, where applicable, within the time prescribed in
part 4050 of this chapter. For purposes of applying
Sec. 4041.27(e)(1)(i), the phrase ``the date that the plan
administrator files the standard termination notice with the PBGC''
shall be replaced by ``the date that the plan administrator completes
issuance of the notices of benefit distribution.''
(2) Notice of annuity contract. If any of the plan's benefit
liabilities payable to a participant or beneficiary have been
distributed through the purchase of irrevocable commitments, the plan
administrator shall provide such participant or beneficiary with a
notice, contract, or certificate in accordance with Sec. 4041.27(g).
(b) Post-distribution certification. Within 30 days after the last
distribution date, the plan administrator shall file with the PBGC a
PBGC Form 602, Post-Distribution Certification for Distress
Termination, that has been completed in accordance with the
instructions thereto. This requirement shall be considered satisfied
if, in accordance with Sec. 4050.6 (a)(2) and (a)(3) of this chapter,
the plan administrator files a preliminary post-distribution
certification within 30 days after the last distribution date and, in
addition, timely files an amended post-distribution certification that
otherwise satisfies all applicable requirements.
Appendix to Part 4041--Agreement for Commitment To Make Plan Sufficient
for Benefit Liabilities
This agreement, by and between [name of company] XXXXXXXXXX (the
``Company'') and [name of plan] XXXXXXXXXX (the ``Plan'') shall be
effective as of the last date executed.
Whereas, the Plan is an employee pension benefit plan as
described in section 3(2)(A) of the Employee Retirement Income
Security Act of 1974 (``ERISA''), 29 U.S.C. 1001-1461; and
Whereas the Company is [describe entity, e.g., corporation,
partnership] XXXXXXXXXX; and
Whereas, the Company is a contributing sponsor of the Plan, or a
member of the contributing sponsor's controlled group, as described
in section 4001(a) (13) and (14) of ERISA, 29 U.S.C. 1301(2) (13)
and (14); and
Whereas, the Plan is covered by the termination insurance
provisions of Title IV of ERISA, 29 U.S.C. 1301-1461; and
Whereas, the Plan administrator has issued or intends to issue
to each affected party a notice of intent to terminate the Plan,
pursuant to section 4041(a)(2) of ERISA, 29 U.S.C. 1341(a)(2); and
Whereas, the Company wishes the Plan to be sufficient for
benefit liabilities, as described in section 4001(a)(16) of ERISA,
29 U.S.C. 1301(a)(16); and
Whereas, the parties understand that if the Plan is not able to
satisfy all its obligations for benefit liabilities, it will not be
able to terminate in a standard termination under section 4041(b) of
ERISA, 29 U.S.C. 1341(b); and
Whereas, the Company is not a debtor in a bankruptcy or other
insolvency proceeding.
[Alternative Paragraph]
Whereas, the Company is a debtor in a bankruptcy or other
insolvency proceeding and the court before which the proceeding is
pending approves this commitment.
Whereas, the Company is a debtor in a bankruptcy or other
insolvency proceeding and this commitment is unconditionally
guaranteed, by an entity or person not in bankruptcy, to be met at
or before the time distribution is required in this standard
termination.
Now Therefore, the parties hereto agree as follows:
1. The Company promises to pay to the Plan, on or before the
date prescribed for distribution of Plan assets by the plan
administrator, the amount necessary, if any, to ensure that, on the
date the plan administrator distributes the assets of the Plan, the
Plan is able to provide all benefit liabilities.
2. For the sole purpose of determining whether the Plan is
sufficient to provide all benefit liabilities, an amount equal to
the amount described in paragraph 1 shall be deemed a Plan asset
available for allocation among the participants and beneficiaries of
the Plan, in accordance with section 4044 of ERISA, 29 U.S.C. 1344.
3. This Agreement shall in no way relieve the Company of its
obligations to pay contributions under the Plan.
Date:
By:
Company:
By:
Plan:
PART 4041A--TERMINATION OF MULTIEMPLOYER PLANS
Subpart A--General Provisions
Sec.
4041A.1 Purpose and scope.
4041A.2 Definitions.
4041A.3 Submission of documents.
Subpart B--Notice of Termination
4041A.11 Requirement of notice.
4041A.12 Contents of notice.
Subpart C--Plan Sponsor Duties
4041A.21 General rule.
4041A.22 Payment of benefits.
4041A.23 Imposition and collection of withdrawal liability.
4041A.24 Annual plan valuations and monitoring.
4041A.25 Periodic determinations of plan solvency.
4041A.26 Financial assistance.
4041A.27 PBGC approval to pay benefits not otherwise permitted.
Subpart D--Closeout of Sufficient Plans
4041A.41 General rule.
4041A.42 Method of distribution.
4041A.43 Benefit forms.
4041A.44 Cessation of withdrawal liability.
Authority: 29 U.S.C. 1302(b)(3), 1341a, 1441.
Subpart A--General Provisions
Sec. 4041A.1 Purpose and scope.
The purpose of this part is to establish rules for notifying the
PBGC of the termination of a multiemployer plan and rules for the
administration of multiemployer plans that have terminated by mass
withdrawal. Subpart B prescribes the contents of and procedures for
filing a Notice of Termination for a multiemployer plan. Subpart C
prescribes basic duties of plan sponsors of mass-withdrawal-terminated
plans. (Other duties are prescribed in part 4281 of this chapter.)
Subpart D contains procedures for closing out sufficient plans. This
part applies to terminated multiemployer plans covered by title IV of
ERISA but, in the case of subparts C and D, only to plans terminated by
mass withdrawal under section 4041A(a)(2) of ERISA (including plans
created by partition pursuant to section 4233 of ERISA).
Sec. 4041A.2 Definitions.
The following terms are defined in Sec. 4001.l of this chapter:
annuity, ERISA, insurer, IRS, mass withdrawal, multiemployer plan,
nonforfeitable benefit, PBGC, plan, and plan year.
In addition, for purposes of this part:
Available resources means, for a plan year, available resources as
described in section 4245(b)(3) of ERISA.
Benefits subject to reduction means those benefits accrued under
plan amendments (or plans) adopted after March 26, 1980, or under
collective bargaining agreements entered into after March 26, 1980,
that are not eligible for the PBGC's guarantee under section 4022A(b)
of ERISA.
Financial assistance means financial assistance from the PBGC under
section 4261 of ERISA.
Insolvency benefit level means the greater of the resource benefit
level or the benefit level guaranteed by the
[[Page 34053]]
PBGC for each participant and beneficiary in pay status.
Insolvency year means insolvency year as described in section
4245(b)(4) of ERISA.
Insolvent means that a plan is unable to pay benefits when due
during the plan year. A plan terminated by mass withdrawal is not
insolvent unless it has been amended to eliminate all benefits that are
subject to reduction under section 4281(c) of ERISA, or, in the absence
of an amendment, no benefits under the plan are subject to reduction
under section 4281(c) of ERISA.
Nonguaranteed benefits means those benefits that are eligible for
the PBGC's guarantee under section 4022A(b) of ERISA, but exceed the
guarantee limits under section 4022A(c).
Resource benefit level means resource benefit level as described in
section 4245(b)(2) of ERISA.
Sec. 4041A.3 Submission of documents.
(a) Filing date. Any notice, document, or information required to
be filed with the PBGC under this part shall be deemed filed on the
date of the postmark stamped on the cover in which the notice,
document, or information is mailed, provided that the postmark was made
by the United States Postal Service and the document was mailed postage
prepaid, properly packaged and addressed to the PBGC. If these
conditions are not met, the document is considered filed on the date it
is received by the PBGC. Documents received after regular business
hours are considered filed on the next regular business day.
(b) Address. Any notice, document, or information required to be
filed with the PBGC under this part shall be sent by mail or submitted
by hand during normal working hours to Reports Processing, Insurance
Operations Department, Pension Benefit Guaranty Corporation, 1200 K
Street NW., Washington, DC 20005-4026.
Subpart B--Notice of Termination
Sec. 4041A.11 Requirement of notice.
(a) General. A Notice of Termination shall be filed with the PBGC
by a multiemployer plan when the plan has terminated as described in
section 4041A(a) of ERISA.
(b) Who shall file. The plan sponsor or a duly authorized
representative acting on behalf of the plan sponsor shall sign and file
the Notice.
(c) When to file. (1) For a termination pursuant t
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
o a plan
amendment, the Notice shall be filed with the PBGC within thirty days
after the amendment is adopted or effective, whichever is later.
(2) For a termination that results from a mass withdrawal, the
Notice shall be filed with the PBGC within thirty days after the last
employer withdrew from the plan or thirty days after the first day of
the first plan year for which no employer contributions were required
under the plan, whichever is earlier.
(Approved by the Office of Management and Budget under control
number 1212-0020)
Sec. 4041A.12 Contents of notice.
(a) Information to be contained in notice. Except to the extent
provided in paragraph (d), each Notice shall contain:
(1) The name of the plan;
(2) The name, address and telephone number of the plan sponsor and
of the plan sponsor's duly authorized representative, if any;
(3) The name, address, and telephone number of the person that will
administer the plan after the date of termination, if other than the
plan sponsor;
(4) A copy of the plan's most recent Form 5500 (Annual Report
Form), including schedules; and
(5) The date of termination of the plan.
(b) Information to be contained in a notice involving a mass
withdrawal. In addition to the information contained in paragraph (a)
and except as provided in paragraph (d), the following information
shall be contained in a Notice filed by a plan that has terminated by
mass withdrawal:
(1) A copy of the plan document in effect 5 years prior to the date
of termination and copies of any amendments adopted after that date.
(2) A copy (or copies) of the trust agreement (or agreements), if
any, authorizing the plan sponsor to control and manage the operation
and administration of the plan.
(3) A copy of the most recent actuarial statement and opinion (if
any) relating to the plan.
(4) A statement of any material change in the assets or liabilities
of the plan occurring after either the date of the actuarial statement
referred to in item (5) or the date of the plan's Form 5500 submitted
as part of the Notice.
(5) Complete copies of any letters of determination issued by the
IRS relating to the establishment of the plan, any letters of
determination relating to the disqualification of the plan and any
subsequent requalification, and any letters of determination relating
to the termination of the plan.
(6) A statement whether the plan assets will be sufficient to pay
all benefits in pay status during the 12-month period following the
date of termination.
(7) If plan assets on hand are sufficient to satisfy all
nonforfeitable benefits under the plan, and if the plan sponsor intends
to distribute such assets, a brief description of the proposed method
of distributing the plan assets.
(8) If plan assets on hand are not sufficient to satisfy all
nonforfeitable benefits under the plan, the name and address of any
employer who contributed to the plan within 3 plan years prior to the
date of termination.
(c) Certification. As part of the Notice, the plan sponsor or duly
authorized representatives shall certify that all information and
documents submitted pursuant to this section are true and correct to
the best of the plan sponsor's or representative's knowledge and
belief.
(d) Avoiding duplication. Information described in paragraphs (a)
and (b) of this section need not be supplied if it duplicates
information contained in Form 5500, or a schedule thereof, that a plan
submits as part of the Notice.
(e) Additional information. In addition to the information
described in paragraphs (a) and (b) of this section, the PBGC may
require the submission of any other information which the PBGC
determines is necessary for review of a Notice of Termination.
Subpart C--Plan Sponsor Duties
Sec. 4041A.21 General rule.
The plan sponsor of a multiemployer plan that terminates by mass
withdrawal shall continue to administer the plan in accordance with
applicable statutory provisions, regulations, and plan provisions until
a trustee is appointed under section 4042 of ERISA or until plan assets
are distributed in accordance with subpart D of this part. In addition,
the plan sponsor shall be responsible for the specific duties described
in this subpart.
Sec. 4041A.22 Payment of benefits.
(a) Except as provided in paragraph (b), the plan sponsor shall pay
any benefit attributable to employer contributions, other than a death
benefit, only in the form of an annuity.
(b) The plan sponsor may pay a benefit in a form other than an
annuity if--
(1) The plan distributes plan assets in accordance with subpart D
of this part;
(2) The PBGC approves the payment of the benefit in an alternative
form pursuant to Sec. 4041A.27; or
(3) The value of the entire nonforfeitable benefit does not exceed
$1,750.
(c) Except to the extent provided in the next sentence, the plan
sponsor
[[Page 34054]]
shall not pay benefits in excess of the amount that is nonforfeitable
under the plan as of the date of termination, unless authorized to do
so by the PBGC pursuant to Sec. 4041A.27. Subject to the restriction
stated in paragraph (d) of this section, however, the plan sponsor may
pay a qualified preretirement survivor annuity with respect to a
participant who died after the date of termination.
(d) The payment of benefits subject to reduction shall be
discontinued to the extent provided in Sec. 4281.31 if the plan sponsor
determines, in accordance with Sec. 4041A.24, that the plan's assets
are insufficient to provide all nonforfeitable benefits.
(e) The plan sponsor shall, to the extent provided in Sec. 4281.41,
suspend the payment of nonguaranteed benefits if the plan sponsor
determines, in accordance with Sec. 4041A.25, that the plan is
insolvent.
(f) The plan sponsor shall, to the extent required by Sec. 4281.42,
make retroactive payments of suspended benefits if it determines under
that section that the level of the plan's available resources requires
such payments.
Sec. 4041A.23 Imposition and collection of withdrawal liability.
Until plan assets are distributed in accordance with subpart D of
this part, or until the end of the plan year as of which the PBGC
determines that plan assets (exclusive of claims for withdrawal
liability) are sufficient to satisfy all nonforfeitable benefits under
the plan, the plan sponsor shall be responsible for determining,
imposing and collecting withdrawal liability (including the liability
arising as a result of the mass withdrawal), in accordance with part
4219, subpart C, of this chapter and sections 4201 through 4225 of
ERISA.
Sec. 4041A.24 Annual plan valuations and monitoring.
(a) Annual valuation. Not later than 150 days after the end of the
plan year, the plan sponsor shall determine or cause to be determined
in writing the value of nonforfeitable benefits under the plan and the
value of the plan's assets, in accordance with part 4281, subpart B.
This valuation shall be done as of the end of the plan year in which
the plan terminates and each plan year thereafter (exclusive of a plan
year for which the plan receives financial assistance from the PBGC
under section 4261 of ERISA) up to but not including the plan year in
which the plan is closed out in accordance with subpart D of this part.
(b) Plan monitoring. Upon receipt of the annual valuation described
in paragraph (a) of this section, the plan sponsor shall determine
whether the value of nonforfeitable benefits exceeds the value of the
plan's assets, including claims for withdrawal liability owed to the
plan. When benefits do exceed assets, the plan sponsor shall--
(1) If the plan provides benefits subject to reduction, amend the
plan to reduce those benefits in accordance with the procedures in part
4281, subpart C, of this chapter to the extent necessary to ensure that
the plan's assets are sufficient to discharge when due all of the
plan's obligations with respect to nonforfeitable benefits; or
(2) If the plan provides no benefits subject to reduction, make
periodic determinations of plan solvency in accordance with
Sec. 4041A.25.
(c) Notices of benefit reductions. The plan sponsor of a plan that
has been amended to reduce benefits shall provide participants and
beneficiaries and the PBGC notice of the benefit reduction in
accordance with Sec. 4281.32.
Sec. 4041A.25 Periodic determinations of plan solvency.
(a) Annual insolvency determination. The plan sponsor of a plan
that has been amended to eliminate all benefits that are subject to
reduction under section 4281(c) of ERISA shall determine in writing
whether the plan is expected to be insolvent for the first plan year
beginning after the effective date of the amendment and for each plan
year thereafter. In the event that a plan adopts more than one
amendment reducing benefits under section 4281(c) of ERISA, the initial
determination shall be made for the first plan year beginning after the
effective date of the amendment that effects the elimination of all
such benefits, and a determination shall be made for each plan year
thereafter. The plan sponsor of a plan under which no benefits are
subject to reduction under section 4281(c) of ERISA as of the date the
plan terminated shall determine in writing whether the plan is expected
to be insolvent. The initial determination shall be made for the second
plan year beginning after the first plan year for which it is
determined under section 4281(b) of ERISA that the value of
nonforfeitable benefits under the plan exceeds the value of the plan's
assets. The plan sponsor shall also make a solvency determination for
each plan year thereafter. A determination required under this
paragraph shall be made no later than six months before the beginning
of the plan year to which it applies.
(b) Other determination of insolvency. Whether or not a prior
determination of plan solvency has been made under paragraph (a) of
this section (or under section 4245 of ERISA), a plan sponsor that has
reason to believe, taking into account the plan's recent and
anticipated financial experience, that the plan is or may be insolvent
for the current or next plan year shall determine in writing whether
the plan is expected to be insolvent for that plan year.
(c) Benefit suspensions. If the plan sponsor determines that the
plan is, or is expected to be, insolvent for a plan year, it shall
suspend benefits in accordance with Sec. 4281.41.
(d) Insolvency notices. If the plan sponsor determines that the
plan is, or is expected to be, insolvent for a plan year, it shall
issue notices of insolvency or annual updates and notices of insolvency
benefit level of the PBGC and to plan participants and beneficiaries in
accordance with part 4281, subpart D.
Sec. 4041A.26 Financial assistance.
A plan sponsor that determines a resource benefit level under
section 4245(b)(2) of ERISA that is below the level of guaranteed
benefits or that determines that the plan will be unable to pay
guaranteed benefits for any month during an insolvency year shall apply
for financial assistance from the PBGC in accordance with Sec. 4281.47.
Sec. 4041A.27 PBGC approval to pay benefits not otherwise permitted.
Upon written application by the plan sponsor, the PBGC may
authorize the plan to pay benefits other than nonforfeitable benefits
or to pay benefits valued at more than $1,750 in a form other than an
annuity. The PBGC will approve such payments if it determines that the
plan sponsor has demonstrated that the payments are not adverse to the
interests of the plan's participants and beneficiaries generally and do
not unreasonably increase the PBGC's risk of loss with respect to the
plan.
Subpart D--Closeout of Sufficient Plans
Sec. 4041A.41 General rule.
If a plan's assets, excluding any claim of the plan for unpaid
withdrawal liability, are sufficient to satisfy all obligations for
nonforfeitable benefits provided under the plan, the plan sponsor may
close out the plan in accordance with this subpart by distributing plan
assets in full satisfaction of all nonforfeitable benefits under the
plan.
[[Page 34055]]
Sec. 4041A.42 Method of distribution.
The plan sponsor shall distribute plan assets by purchasing from an
insurer contracts to provide all benefits required by Sec. 4041A.43 to
be provided in annuity form and by paying in a lump sum (or other
alternative elected by the participant) all other benefits.
Sec. 4041A.43 Benefit forms.
(a) General rule. Except as provided in paragraph (b) of this
section, the sponsor of a plan that is closed out shall provide for the
payment of any benefit attributable to employer contributions only in
the form of an annuity.
(b) Exceptions. The plan sponsor may pay a benefit attributable to
employer contributions in a form other than an annuity if:
(1) The present value of the participant's entire nonforfeitable
benefit, determined using the interest assumption under Secs. 4044.41
through 4044.57, does not exceed $3,500.
(2) The payment is for death benefits provided under the plan.
(3) The participant elects an alternative form of distribution
under paragraph (c) of this section.
(c) Alternative forms of distribution. The plan sponsor may allow
participants to elect alternative forms of distribution in accordance
with this paragraph. When a form of distribution is offered as an
alternative to the normal form, the plan sponsor shall notify each
participant, in writing, of the form and estimated amount of the
participant's normal form of distribution. The notification shall also
describe any risks attendant to the alternative form. Participants'
elections of alternative forms shall be in writing.
Sec. 4041A.44 Cessation of withdrawal liability.
The obligation of an employer to make payments of initial
withdrawal liability and mass withdrawal liability shall cease on the
date on which the plan's assets are distributed in full satisfaction of
all nonforfeitable benefits provided by the plan.
PART 4043--REPORTABLE EVENTS AND CERTAIN OTHER NOTIFICATION
REQUIREMENTS
Subpart A--Reportable Events; In General
Sec.
4043.1 Purpose and scope.
4043.2 Definitions.
4043.3 Requirement of notice.
4043.4 Reporting events on annual report.
4043.5 Obligation of contributing sponsor.
4043.6 Date of filing.
4043.7 Computation of time.
4043.11 Tax disqualification.
4043.12 Title I non-compliance.
4043.13 Amendment decreasing benefits payable.
4043.14 Active participant reduction.
4043.15 Termination or partial termination.
4043.16 Failure to meet minimum funding standards and granting of
funding waiver.
4043.17 Inability to pay benefits when due.
4043.18 Distribution to a substantial owner.
4043.19 Plan merger, consolidation or transfer.
4043.20 Alternative compliance with reporting and disclosure
requirements of Title I.
4043.21 Bankruptcy, insolvency, or similar settlements.
4043.22 Liquidation or dissolution.
4043.23 Transaction involving a change in contributing sponsor or
controlled group.
Subpart B--Section 302(f); Notice of Failure to Make Required
Contributions
4043.31 PBGC Form 200, notice of failure to make required
contributions; supplementary information.
Authority: 29 U.S.C. 1082(f), 1302(b)(3), 1343, 1365.
Subpart A--Reportable Events; In General
Sec. 4043.1 Purpose and scope.
(a) Subpart A of this part contains definitions applicable to this
part and prescribes specific requirements for notification of the
reportable events in section 4043 of ERISA, including the reportable
events specified in section 4043 (c)(1) through (c)(8) and other events
that the PBGC has determined, under section 4043(c)(13) (formerly
section 4043(b)(9)), may be indicative of a need to terminate the plan.
It also implements the PBGC's authority to waive the requirement that
plan administrators notify the PBGC with respect to certain reportable
events and with respect to certain plans. (The PBGC has waived the
requirements of section 4043 with respect to multiemployer plans.)
However, it does not include rules based on the amendments made to
section 4043 by the Retirement Protection Act of 1994 (Pub. L. 103-465,
section 771). Subpart B contains rules for notifying the PBGC of a
failure to make certain required contributions under section 302(f)(4)
of ERISA or section 412(n)(4) of the Code.
(b) This subpart applies with respect to any single-employer plan
which is covered by section 4021 of ERISA and for which either no
notice of intent to terminate has been issued or, if such a notice has
been issued, until the proposed termination date specified under
section 4041 (b) or (c) of ERISA and part 4041 of this chapter;
provided, that, if a termination proceeding is suspended pursuant to
Sec. 4041.5 of this chapter, this subpart continues to apply unless and
until the PBGC reactivates the termination proceeding. The collection
of information requirements contained in this subpart have been
approved by the Office of Management and Budget under control number
1212-0013.
Sec. 4043.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
Code, contributing sponsor, controlled group, ERISA, fair market value,
insurer, irrevocable commitment, IRS, multiemployer plan,
nonforfeitable benefit, notice of intent to terminate, PBGC, person,
plan, plan administrator, plan year, proposed termination date, and
single-employer plan.
In addition, for purposes of this part, the following definitions
apply:
Distribution means a direct or indirect benefit payment made in any
form by a plan to a participant, including but not limited to, a
monthly annuity payment, a lump-sum payment or a direct transfer of a
plan asset other than cash. A cash payment made by an insurer pursuant
to an irrevocable commitment shall not be considered a distribution.
Nonforfeitable benefits which are not funded means nonforfeitable
benefits, as provided in Sec. 4022.5 of this chapter, in excess of plan
assets.
Parent means the parent of a parent-subsidiary controlled group of
corporations or group of trades or businesses under common control
(within the meaning of subsection (b) or (c) of section 414 of the Code
and the regulations thereunder). Where there is more than one parent in
a parent-subsidiary group, the term parent (for purposes of subpart B)
refers to the parent at the highest level in the chain of corporations
and/or other organizations comprising the group.
Participant has the same meaning as in Sec. 4007.2 of this chapter.
Retirement benefit means a benefit payable upon late, normal,
early, or disability retirement, other than a welfare benefit described
in section 3(1) of ERISA, to a participant who leaves or has left
covered employment.
Sec. 4043.3 Requirement of notice.
(a) Obligation to file. Except where the requirement is expressly
waived by this subpart, the plan administrator, or a duly authorized
representative, shall file with the PBGC a notice of all reportable
events described in this subpart no later than 30 days after the plan
administrator knows or has reason to know a reportable event has
occurred. When a notice is submitted by a plan administrator's duly
authorized representative, other than an attorney at
[[Page 34056]]
law, it shall be accompanied by a notarized power of attorney, signed
by the plan administrator, which authorizes the representative to sign
and submit a notice and, if desired, also authorizes the representative
to act on behalf of the plan administrator in connection with the
notice.
(b) Contents of notice. The plan administrator shall include the
information listed in this paragraph, and when applicable, the
information specified in paragraph (c) of this section, in a notice
required to be submitted under this section. The plan administrator
shall submit the most recent information available. The plan
administrator shall identify the response to each numbered item in this
paragraph by item number. If any requested information is included in
an IRS form or submission attached to the notice, instead, the
information may be incorporated by reference to the number, date, and
page(s) of the IRS form or submission where it appears. Any required
documentation previously filed with the PBGC need not be refiled, but
may be incorporated by reference to the previous submission. The plan
administrator shall include the following information in a notice:
(1) The name of the plan;
(2) The name, address, and telephone number of the contributing
sponsor(s);
(3) The name, address, and telephone number of the plan
administrator. If the plan administrator is a corporate body, the name
of an individual that should be contacted;
(4) The nine-digit Employer Identification Number (EIN) assigned by
the IRS to the contributing sponsor and the three-digit Plan Number
(PN) assigned by the contributing sponsor to the plan, and, if
different, also state the EIN-PN last filed with the PBGC. If an EIN-PN
has not been assigned, so indicate;
(5) A brief statement of the pertinent facts relating to the
reportable event;
(6) A copy of the plan document currently in effect, i.e., a copy
of the last restatement of the plan and all subsequent amendments;
(7) A copy of the most recent actuarial statement and opinion (if
any) relating to the plan;
(8) A statement of any material change in the assets or liabilities
of the plan occurring after the date of the most recent actuarial
statement and opinion relating to the plan; and
(9) A copy of the most recent determination letter issued by the
IRS (if any) relating to the plan.
(c) Additional information. With respect to the following
reportable events, the information specified below must be submitted in
addition to that listed in paragraph (b) of this section:
(1) For an event described in Sec. 4043.14(a) (relating to an
active participant reduction): The number of participants and the
number of active participants as of the beginning of the immediately
preceding and the current plan year and as of the date of the event;
the number of active participants with fully vested rights, the number
of such participants with partially vested rights, and the number of
such participants without vested rights, as of the date of the event
or, if this information is not available as of this date, as of the
beginning of the current plan year; the number of retired participants
receiving benefits as of the date of the event or, if this information
is not available as of this date, as of the beginning of the current
plan year; the number of former employees with vested rights and the
number of deceased participants whose beneficiaries are receiving or
entitled to receive benefits as of the date of the event or, if this
information is not available as of this date, the beginning of the
current plan year. (For those plans determining the number of active
participants as of the end of a plan year, instead of at the beginning
of a plan year, in accordance with Sec. 4043.14(c), the information
required by this paragraph as of the beginning of a plan year shall be
provided as of the end of the previous plan year.)
(2) For an event described in Sec. 4043.16(a) (relating to a
minimum funding violation):
A statement of the current funding standard account, or its
alternative, showing the balance at the beginning of the plan year and
the charges and credits to the account for the plan year that are
required under section 302 of ERISA and section 412 of the Code; in the
case of a plan maintained by one contributing sponsor or by two or more
contributing sponsors that are members of the same controlled group, a
copy of the most recent audited (or if not available, unaudited)
financial statements, and the most recent interim financial statements,
of the contributing sponsor (individually or where financial statements
are only available on a consolidated basis with other members of the
same controlled group, on a consolidated basis), including balance
sheets, income statements, statements of changes in financial position
and annual reports.
(3) For an event described in Sec. 4043.17(a) (relating to an
inability to pay benefits when due):
The reason(s) why the plan is unable to pay benefits, including a
statement of how long this inability is likely to continue; the amount
of the benefits due during the current payment period and the amount of
assets available to pay those benefits; the normal date of benefit
payment; the amount and date of the last benefit payment.
(4) For an event described in Sec. 4043.18(a) (relating to a
distribution to a substantial owner):
The amount and form of the distribution; a statement of whether an
indemnity agreement has been entered into between the participant
receiving the distribution and the plan trustee concerning lump-sum
distributions to the 25 highest paid employees of the benefits subject
to the early termination restrictions of Treas. Reg. Sec. 1.401-4(c).
(5) For an event described in Sec. 4043.21(a) (relating to a
bankruptcy, insolvency, or similar settlement):
A copy of all papers filed in the relevant proceedings, including
but not limited to, petitions and supporting schedules; the last date
for filing claims, if known; the name, address and telephone number of
any trustee or receiver of the contributing sponsor.
(6) For an event described in Sec. 4043.23(a) (relating to a
transaction involving a change in the same controlled group as a
contributing sponsor):
The name, address, and telephone number of the new contributing
sponsor or of the person no longer under common control with the
contributing sponsor, as applicable; a copy of the most recent audited
(or if not available, unaudited) financial statements, and the most
recent interim financial statements, of the contributing sponsor before
and after the transaction and of the person no longer under common
control with the contributing sponsor (individually or where financial
statements are only available on a consolidated basis with other
members of the same controlled group, on a consolidated basis),
including balance sheets, income statements, statements of changes in
financial position and annual reports.
(d) Requests for additional information. The PBGC may, in any case,
require the submission of additional information.
(e) How and where to file. A notice and information required to be
filed with the PBGC by this subpart may be sent by mail or submitted by
hand during normal working hours to: Reports Processing, Insurance
Operations Department, Pension Benefit Guaranty Corporation, 1200 K
Street NW., Washington, DC 20005-4026.
(f) Optional consolidated filing. A plan administrator may file a
single notice with respect to the occurrence of
[[Page 34057]]
more than one reportable event, or two or more plan administrators may
file a single notice with respect to one or more reportable events
when--
(1) More than one event for which a notice is required by this
section has occurred and the plan administrator is able to give the
PBGC simultaneous timely notification of the events; or
(2) An event described in Secs. 4043.21(a), 4043.22(a), or
4043.23(a) has occurred, and all plan administrators who are required
to file a notice pursuant to this section sign the same notice.
(g) Effect of failure to file. Failure to file a notice required by
this section or failure to include all information required in the
notice constitutes a violation of title IV of ERISA.
Sec. 4043.4 Reporting of reportable events on annual report.
The requirement that the plan administrator report the occurrence
of a reportable event described in this subpart in the annual report
filed pursuant to part 4065 of this chapter is waived pursuant to the
provisions of section 4065 of ERISA.
Sec. 4043.5 Obligation of contributing sponsor.
Whenever a contributing sponsor under a plan covered by section
4021 of ERISA, knows or has reason to know that a reportable event has
occurred, it shall notify the plan administrator immediately.
Sec. 4043.6 Date of filing.
(a) Any notice or document required to be filed under this subpart
is considered filed on the date of the United States postmark stamped
on the cover in which the document is mailed, if--
(1) The postmark was made by the United States Postal Service; and
(2) The document was mailed postage prepaid, properly packaged and
addressed to the PBGC. If the conditions stated in both paragraphs
(a)(1) and (a)(2) are not met, the notice or document is considered
filed on the date it is received by the PBGC. Notices or documents
received after regular business hours are considered filed on the next
regular business day.
Sec. 4043.7 Computation of time.
In computing any period of time prescribed or allowed by the rules
of this subpart, the day of the act or event from which the designated
period of time begins to run shall not be included. The last day of the
period so computed shall be included, unless it is a Saturday, Sunday,
or Federal holiday, in which event the period runs until the end of the
next day that is not a Saturday, Sunday, or Federal holiday.
Sec. 4043.11 Tax disqualification.
(a) Reportable event. A reportable event occurs when the Secretary
of the Treasury issues a notice that a plan has ceased to be a plan
described in section 4021(a)(2) of ERISA.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section.
Sec. 4043.12 Title I non-compliance.
(a) Reportable event. A reportable event occurs when the Secretary
of Labor determines that a plan is not in compliance with title I of
ERISA.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section.
Sec. 4043.13 Amendment decreasing benefits payable.
(a) Reportable event. A reportable event occurs when an amendment
to a plan is adopted under which the retirement benefit payable from
employer contributions with respect to any participant may be
decreased.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section.
Sec. 4043.14 Active participant reduction.
(a) Reportable event. A reportable event occurs when the number of
active participants under a plan is less than 80 percent of the number
of active participants at the beginning of the plan year, or is less
than 75 percent of the number of active plan participants at the
beginning of the previous plan year.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section, if
the conditions in paragraph (b)(1), (b)(2), or (b)(3) of this section
exist.
(1) The plan has less than 100 participants as of the beginning of
either the current or the previous plan year.
(2) With respect to a plan maintained by one contributing sponsor
or by two or more contributing sponsors that are members of the same
controlled group, as of the date of the event, the total number of
active participants covered by all the plans covered by this part that
are maintained by a contributing sponsor and all members of the same
controlled group, if any, either is not less than 80 percent of the
total number of active participants in all such plans determined as of
the beginning of each such plan's current plan year, or is not less
than 75 percent of the total number of active participants in all such
plans determined as of the beginning of each such plan's previous plan
year.
(3) The present value of unfunded vested benefits under the plan
(as reported on the most recently filed IRS/DOL/PBGC Form 5500 or Form
5500-C/R) is less than $250,000.
(c) Determination of the number of active participants. (1) The
number of active participants as of the beginning of a plan year may be
determined as of the end of the previous plan year.
(2) For purposes of this section and information submitted pursuant
to Sec. 4043.3(c)(1), with respect to a plan maintained by one
contributing sponsor or by two or more contributing sponsors that are
members of the same controlled group, include as ``active'' only a
participant who--
(i) Is receiving compensation for work performed;
(ii) Is on paid or unpaid leave granted for a reason other than a
layoff;
(iii) Is laid off from work for a period of time that has lasted
less than 30 days; or
(iv) Is absent from work due to a recurring reduction in employment
that occurs at least annually.
Sec. 4043.15 Termination or partial termination.
(a) Reportable event. A reportable event occurs when the Secretary
of the Treasury determines that there has been a termination or partial
termination of a plan within the meaning of section 411(d)(3) of the
Code.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the events described in this section.
Sec. 4043.16 Failure to meet minimum funding standards and granting
of funding waiver.
(a) Reportable event. A reportable event occurs when a plan fails
to meet the minimum funding standards or is granted a minimum funding
waiver under section 412 of the Code or section 302 of ERISA.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section,
unless a plan fails to meet minimum funding standards or is granted a
minimum funding waiver and the present value of unfunded vested
benefits under the plan (as reported on the most recently filed IRS/
DOL/PBGC Form 5500 or Form 5500-C/R) equals or exceeds $250,000. In
addition, the 30-day notice requirement contained in Sec. 4043.3(a) is
waived for the event described in this section if, with respect to the
same failure, Form 200 has been
[[Page 34058]]
completed and submitted (including all required documentation and other
information) in accordance with subpart B of this part.
Sec. 4043.17 Inability to pay benefits when due.
(a) Reportable event. A reportable event occurs when a plan is
unable to pay benefits when due. Except as provided in paragraph (c) of
this section, a plan is unable to pay benefits when due if the plan
does not pay any participant, who is then entitled to benefit payments,
the full promised benefits to which he or she is entitled in the form
prescribed under the terms of the plan.
(b) Waiver. The 30-day notice requirement in Sec. 4043.3(a) is not
waived for the event described in this section.
(c) Administrative delays. A plan shall not be treated as being
unable to pay benefits when due if its failure to pay benefits is
caused solely by: (1) The need to verify any participant's eligibility
for benefits; (2) the inability to locate any participant; or (3) any
other administrative delay if such delay lasts less than the shorter of
two months or two full benefit payment periods.
Sec. 4043.18 Distribution to a substantial owner.
(a) Reportable event. A reportable event occurs when there is a
distribution or distributions under the plan to a participant who is a
substantial owner if--
(1) The total of all distributions to the substantial owner within
a 24-month period has a value of $10,000 or more;
(2) The distribution or distributions were not made by reason of
the death of the participant; and
(3) Immediately after the distribution or the last distribution in
a series, the plan has nonforfeitable benefits which are not funded.
(b) Waiver. The 30-day notice requirement contained in Sec. 4043.3
is waived for the event described in this section, unless--
(1) A plan makes a distribution or distributions within a 12-month
period to a substantial owner having a total value of $10,000 or more;
and
(2) The amount of the distribution or distributions exceeds the
amount of the maximum guaranteeable benefit for the substantial owner,
determined under Sec. 4022.27 of this chapter, for the year in which
the distribution or the last distribution in a series was made.
(c) Valuation of distribution. The value of a distribution
described in paragraph (a) or (b) of this section is determined in
accordance with the provisions of this paragraph.
(1) The value of a distribution, other than an irrevocable
commitment, equals the sum of the cash amounts actually received by the
participant and the fair market value of any assets distributed in a
form other than cash, determined as of the distribution date.
(2) The value of an irrevocable commitment is the purchase price of
the irrevocable commitment, or the value, determined in accordance with
reasonable actuarial assumptions, of the benefits payable pursuant to
that irrevocable commitment. For this purpose, reasonable actuarial
assumptions are the actuarial assumptions used by the PBGC under
subpart B of part 4044 of this chapter, or the actuarial assumptions
used by the plan for purposes of section 302 of ERISA and section 412
of the Code.
(d) Date of substantial owner distribution. The date of
distribution to a substantial owner of an irrevocable commitment is the
date on which the obligation to provide benefits passes from the plan
to the insurer. The date of distribution to a substantial owner of a
cash distribution shall be the date it is received by the participant.
The date of all other distributions to a substantial owner shall be the
date when the plan relinquishes control over the assets transferred
directly or indirectly to the participant.
(e) Determination date. The determination of whether a participant
is a substantial owner, or has been in the preceding 60 months, is made
on the date when there has been a distribution or distributions with a
total value of $10,000 or more.
(f) Valuation of assets and benefits. For purposes of paragraph
(a)(3) of this section, in determining whether a plan has
nonforfeitable benefits which are not funded--
(1) Assets are valued at fair market value; and
(2) Benefits are valued in accordance with reasonable actuarial
assumptions. For this purpose, reasonable actuarial assumptions are the
actuarial assumptions used by the PBGC under subpart B of part 4044 of
this chapter, or the actuarial assumptions used by the plan for
purposes of section 302 of ERISA and section 412 of the Code.
Sec. 4043.19 Plan merger, consolidation or transfer.
(a) Reportable event. A reportable event occurs when a plan merges,
consolidates, or transfers its assets or liabilities under section 208
of ERISA or section 414(1) of the Code.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the events described in this section.
Sec. 4043.20 Alternative compliance with reporting and disclosure
requirements of Title I.
(a) Reportable event. A reportable event occurs when an alternative
method of compliance (not of general applicability) is prescribed for a
plan by the Secretary of Labor under section 110 of ERISA.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section.
Sec. 4043.21 Bankruptcy, insolvency, or similar settlements.
(a) Reportable event. A reportable event occurs with respect to a
plan maintained by one contributing sponsor or by two or more
contributing sponsors that are members of the same controlled group
when a contributing sponsor--
(1) Commences a bankruptcy case (under Title 11, U.S.C.), or has a
bankruptcy case commenced against it;
(2) Commences or has commenced against it, any other type of
insolvency proceeding (including, but not limited to the appointment of
a receiver);
(3) Commences, or has commenced against it, a proceeding to effect
a composition, extension or settlement with creditors;
(4) Executes a general assignment for the benefit of creditors; or
(5) Undertakes to effect any other non-judicial composition,
extension or settlement with substantially all its creditors.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is not waived for the event described in this section.
Sec. 4043.22 Liquidation or dissolution.
(a) Reportable event. Except as provided in paragraph (c) of this
section, a reportable event occurs with respect to a plan maintained by
one contributing sponsor or by two or more contributing sponsors that
are members of the same controlled group when a contributing sponsor--
(1) Is involved in any transaction to implement its complete
liquidation; or
(2) Institutes or has instituted against it a proceeding to be
dissolved, or is dissolved, whichever occurs first.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is not waived for the event described in this section.
(c) Reorganizations described in section 4069(b). This section does
not cover any of the reoganizations described in section 4069(b) of
ERISA.
[[Page 34059]]
Sec. 4043.23 Transaction involving a change in contributing sponsor
or controlled group.
(a) Reportable event. Except as provided in paragraph (c) of this
section, a reportable event occurs with respect to a plan maintained by
one contributing sponsor or by two or more contributing sponsors that
are members of the same controlled group with nonforfeitable benefits
which are not funded of $1 million or more when--
(1) As a result of a transaction involving a transfer of assets of
or an ownership interest in a contributing sponsor--
(i) There is or will be a new contributing sponsor that is not a
member of the controlled group of the previous contributing sponsor;
(ii) The contributing sponsor leaves or will leave the controlled
group; or
(iii) The contributing sponsor becomes or will become a member of a
different controlled group, except where the new controlled group is or
will be the same, but for the addition of another person, as the
contributing sponsor's controlled group before the transaction; or
(2) As a result of a transaction involving a transfer by a
contributing sponsor of assets of or an ownership interest in another
person, the contributing sponsor and that person are or will be no
longer part of the same controlled group.
(b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is not waived for the event described in this section.
(c) Certain reorganizations. This section does not apply to--
(1) A reorganization involving a mere change in identity, form or
place of organization, however effected;
(2) A reorganization involving a liquidation into a parent
corporation; and
(3) A reorganization involving a merger, consolidation, or division
solely between (or among) members of the same controlled group as the
contributing sponsor.
(d) Definition of transaction. For purposes of this section, the
term transaction includes, but is not limited to, a legally binding
agreement, whether or not written, to transfer, and a change in
ownership that occurs as a matter of law or through the exercise or
lapse of pre-existing rights.
(e) Valuation of assets and benefits. For purposes of paragraph (a)
of this section, in determining whether a plan has nonforfeitable
benefits which are not funded of $1 million or more--
(1) Assets are valued at fair market value; and
(2) Benefits are valued in accordance with reasonable actuarial
assumptions. For this purpose, reasonable actuarial assumptions are the
actuarial assumptions used by the PBGC under subpart B of part 4044 of
this chapter, or the actuarial assumptions used by the plan for
purposes of section 302 of ERISA and section 412 of the Code.
Subpart B--Section 302(f); Notice of Failure To Make Required
Contributions
Sec. 4043.31 PBGC Form 200, notice of failure to make required
contributions; supplementary information.
(a) General rules. To comply with the notification requirement in
section 302(f)(4) of ERISA and section 412(n)(4) of the Code, a
contributing sponsor of a single-employer plan that is covered under
section 4021 of ERISA and, if that contributing sponsor is a member of
a parent-subsidiary controlled group, the parent must complete and
submit a properly certified Form 200 that includes all required
documentation and other information, as described in the related filing
instructions, in accordance with this section. Notice of failure to
make required contributions is required whenever the unpaid balance of
a required installment or any other payment required under section 302
of ERISA and section 412 of the Code (including interest), when added
to the aggregate unpaid balance of all preceding such installments or
other payments for which payment was not made when due (including
interest), exceeds $1 million.
(1) Form 200 must be filed with the PBGC no later than 10 days
after the due date for any required payment for which payment was not
made when due.
(i) The 10-day period for filing Form 200 is computed in accordance
with Sec. 4043.7 of this chapter.
(ii) The filing date for Form 200 is the date on which it is
received by the PBGC office specified in the instructions if it is
received no later than 4 p.m. on a weekday other than a Federal
holiday. If it is received after 4 p.m. or on a weekend or Federal
holiday, the Form 200 is deemed to be filed on the next regular
business day.
(2) If a contributing sponsor or the parent completes and submits
Form 200 in accordance with this section, the PBGC will deem the other
person to have so filed and it will consider the notification
requirement in section 302(f)(4) of ERISA and section 412(n)(4) of the
Code to be satisfied by all members of a controlled group of which the
person who has filed Form 200 is a member.
(b) Supplementary information. If, upon review of a Form 200, the
PBGC concludes that it needs additional information in order to make
decisions regarding enforcement of a lien imposed by section 302(f) of
ERISA and section 412(n) of the Code, the PBGC, by written
notification, may require any contributing sponsor or member of a
controlled group of which a contributing sponsor is a member to
supplement the Form 200. Such additional information must be filed with
the PBGC office specified within 7 days after the date of the written
notification, as determined in accordance with Secs. 4043.6 and 4043.7
of this chapter, or by a different time specified therein.
PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS
Subpart A--Allocation of Assets
General Provisions
Sec.
4044.1 Purpose and scope.
4044.2 Definitions.
4044.3 General rule.
4044.4 Violations.
Allocation of Assets to Benefit Categories
4044.10 Manner of allocation.
4044.11 Priority category 1 benefits.
4044.12 Priority category 2 benefits.
4044.13 Priority category 3 benefits.
4044.14 Priority category 4 benefits.
4044.15 Priority category 5 benefits.
4044.16 Priority category 6 benefits.
4044.17 Subclasses.
Allocation of Residual Assets
4044.30 [Reserved.]
Subpart B--Valuation of Benefits and Assets
General Provisions
4044.41 General valuation rules.
Trusteed Plans
4044.51 Benefits to be valued.
4044.52 Valuation of benefits.
4044.53 Mortality assumptions--in general.
4044.54 Mortality assumptions--lump sums.
Expected Retirement Age
4044.55 XRA when a participant must retire to receive a benefit.
4044.56 XRA when a participant need not retire to receive a
benefit.
4044.57 Special rule for facility closing.
Non-Trusteed Plans
4044.71 Valuation of annuity benefits.
4044.72 Form of annuity to be valued.
4044.73 Lump sums and other alternative forms of distribution in
lieu of annuities.
4044.74 Withdrawal of employee contributions.
4044.75 Other lump sum benefits.
[[Page 34060]]
Appendix A to Part 4044--Mortality Rate Tables
Appendix B to Part 4044--Interest Rates Used to Value
Annuities and Lump Sums
Appendix C to Part 4044--Loading Assumptions
Appendix D to Part 4044--Tables Used To Determine Expected Retirement
Age
Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
Note: Certain provisions of part 4044 have been superseded by
legislative changes. For example, there are references to provisions
formerly codified in 29 CFR part 2617, subpart C (and to the Notice
of Sufficiency provided for thereunder) that no longer exist because
of changes in the PBGC's plan termination regulations in response to
the Single-Employer Pension Plan Amendments Act of 1986 and the
Pension Protection Act of 1987. The PBGC intends to amend part 4044
at a later date to conform it to current statutory provisions.
Subpart A--Allocation of Assets
General Provisions
Sec. 4044.1 Purpose and scope.
This part implements section 4044 of ERISA, which contains rules
for allocating a plan's assets when the plan terminates. These rules
have been in effect since September 2, 1974, the date of enactment of
ERISA. This part applies to any single-employer plan covered by title
IV of ERISA that submits a notice of intent to terminate, or for which
PBGC commences an action to terminate the plan under section 4042 of
ERISA.
(a) Subpart A. Sections 4044.1 through 4044.4 set forth general
rules for applying Secs. 4044.10 through 4044.17. Sections 4044.10
through 4044.17 interpret the rules and describe procedures for
allocating plan assets to priority categories 1 through 6.
(b) Subpart B. The purpose of subpart B is to establish the method
of determining the value of benefits and assets under terminating
single-employer pension plans covered by title IV of ERISA. This
valuation is needed for both plans trusteed under title IV and plans
which are not trusteed. For the former, the valuation is needed to
allocate plan assets in accordance with subpart A of this part and to
determine the amount of any plan asset insufficiency. For the latter,
the valuation is needed to allocate assets in accordance with subpart A
and to distribute the assets in accordance with subpart B of part 4041
of this chapter.
(1) Section 4044.41 sets forth the general provisions of subpart B
and applies to all terminating single-employer plans. Sections 4044.51
through 4044.57 prescribe the benefit valuation rules for plans that
receive or that expect to receive a Notice of Inability to Determine
Sufficiency from PBGC and are placed into trusteeship by PBGC,
including (in Secs. 4044.55 through 4044.57) the rules and procedures a
plan administrator shall follow to determine the expected retirement
age (XRA) for a plan participant entitled to early retirement benefits
for whom the annuity starting date is not known as of the valuation
date. This applies to all trusteed plans which have such early
retirement benefits. The plan administrator shall determine an XRA
under Sec. 4044.55, Sec. 4044.56 or Sec. 4044.57, as appropriate, for
each active participant or participant with a deferred vested benefit
who is entitled to an early retirement benefit and who as of the
valuation date has not selected an annuity starting date. [See Note at
beginning of part 4044.]
(2) Sections 4044.71 through 4044.75 prescribe the benefit
valuation rules for calculating the value of a benefit to be paid a
participant or beneficiary under a terminating pension plan that is
distributing assets where the plan has received a Notice of Sufficiency
issued by PBGC pursuant to part 2617 of this chapter and has not been
placed into trusteeship by PBGC. [See Note at beginning of part 4044.]
Sec. 4044.2 Definitions.
(a) The following terms are defined in Sec. 4001.2 of this chapter:
annuity, basic-type benefit, Code, distribution date, ERISA, fair
market value, guaranteed benefit, insurer, IRS, irrevocable commitment,
mandatory employee contributions, nonbasic-type benefit, nonforfeitable
benefit, normal retirement age, notice of intent to terminate, PBGC,
person, plan, plan administrator, single-employer plan, substantial
owner, termination date, and voluntary employee contributions.
(b) For purposes of this part:
Deferred annuity means an annuity under which the specified date or
age at which payments are to begin occurs after the valuation date.
Earliest retirement age at valuation date means the later of (a) a
participant's age on his or her birthday nearest to the valuation date,
or (b) the earliest age at which the participant can retire under the
terms of the plan.
Early retirement benefit means an annuity benefit payable under the
terms of the plan, under which the participant is entitled to begin
receiving payments before his or her normal retirement age and which is
not payable on account of the disability of the participant. It may be
reduced according to the terms of the plan.
Expected retirement age (XRA) means the age, determined in
accordance with Secs. 4044.55 through 4044.57, at which a participant
is expected to begin receiving benefits when the participant has not
elected, before the allocation date, an annuity starting date. This is
the age to which a participant's benefit payment is assumed to be
deferred for valuation purposes. An XRA is equal to or greater than the
participant's earliest retirement age at valuation date but less than
his or her normal retirement age.
Non-trusteed plan means a single-employer plan which receives a
Notice of Sufficiency from PBGC and is able to close out by purchasing
annuities in the private sector in accordance with part 2617 of this
chapter. [See Note at beginning of part 4044.]
Notice of Sufficiency means a notice issued by the PBGC that it
has determined that plan assets are sufficient to discharge when due
all obligations of the plan with respect to benefits in priority
categories 1 through 4 after plan assets have been allocated to
benefits in accordance with section 4044 of ERISA and this subpart.
[See Note at beginning of part 4044.]
Priority category means one of the categories contained in sections
4044 (a)(1) through (a)(6) of ERISA that establish the order in which
plan assets are to be allocated.
Trusteed plan means a single-employer plan which has been placed
into trusteeship by PBGC.
Unreduced retirement age (URA) means the earlier of the normal
retirement age specified in the plan or the age at which an unreduced
benefit is first payable.
Valuation date means (1) for non-trusteed plans, the date of
distribution and (2) for trusteed plans, the date of termination.
(c) For purposes of subpart B of this part (unless otherwise
required by the context):
Age means the participant's age at his or her nearest birthday and
is determined by rounding the individual's exact age to the nearest
whole year. Half years are rounded to the next highest year. This is
also known as the ``insurance age.''
(d) For purposes of Secs. 4044.55 through 4044.57:
Monthly benefit means the guaranteed benefit payable by PBGC.
(e) For purposes of Secs. 4044.71 through 4044.75:
Lump sum payable in lieu of an annuity means a benefit that is
payable in a single installment and is derived from an annuity payable
under the plan.
[[Page 34061]]
Other lump sum benefit means a benefit in priority category 5 or 6,
determined under subpart A of this part, that is payable in a single
installment (or substantially so) under the terms of the plan, and that
is not derived from an annuity payable under the plan. The benefit may
be a severance pay benefit, a death benefit or other single installment
benefit.
Qualifying bid means a bid obtained from an insurer in accordance
with Sec. 2617.14(b) of this chapter. [See Note at beginning of part
4044.]
Sec. 4044.3 General rule.
(a) Asset allocation. Upon the termination of a single-employer
plan, the plan administrator shall allocate the plan assets available
to pay for benefits under the plan in the manner prescribed by this
subpart. Plan assets available to pay for benefits include all plan
assets (valued according to Sec. 4044.41(b)) remaining after the
subtraction of all liabilities, other than liabilities for future
benefit payments, paid or payable from plan assets under the provisions
of the plan. Liabilities include expenses, fees and other
administrative costs, and benefit payments due before the allocation
date. Except as provided in Sec. 4044.4(b), an irrevocable commitment
by an insurer to pay a benefit, which commitment is in effect on the
date of the asset allocation, is not considered a plan asset, and a
benefit payable under such a commitment is excluded from the allocation
process.
(b) Allocation date. For plans that close out pursuant to a Notice
of Sufficiency under the provisions of subpart C of part 2617 of this
chapter, assets shall be allocated as of the date plan assets are to be
distributed. For other plans, assets shall be allocated as of the
termination date. [See Note at beginning of part 4044.]
Sec. 4044.4 Violations.
(a) General. A plan administrator violates ERISA if plan assets are
allocated or distributed upon plan termination in a manner other than
that prescribed in section 4044 of ERISA and this subpart, except as
may be required to prevent disqualification of the plan under the Code
and regulations thereunder.
(b) Distributions in anticipation of termination. A distribution,
transfer, or allocation of assets to a participant or to an insurance
company for the benefit of a participant, made in anticipation of plan
termination, is considered to be an allocation of plan assets upon
termination, and is covered by paragraph (a) of this section. In
determining whether a distribution, transfer, or allocation of assets
has been made in anticipation of plan termination PBGC will consider
all of the facts and circumstances including--
(1) Any change in funding or operation procedures;
(2) Past practice with regard to employee requests for forms of
distribution;
(3) Whether the distribution is consistent with plan provisions;
and
(4) Whether an annuity contract that provides for a cutback based
on the guarantee limits in subpart B of part 4022 of this chapter could
have been purchased from an insurance company.
Allocation of Assets to Benefit Categories
Sec. 4044.10 Manner of allocation.
(a) General. The plan administrator shall allocate plan assets
available to pay for benefits under the plan using the rules and
procedures set forth in paragraphs (b) through (f) of this section, or
any other procedure that results in each participant (or beneficiary)
receiving the same benefits he or she would receive if the procedures
in paragraphs (b) through (f) were followed.
(b) Assigning benefits. The basic-type and nonbasic-type benefits
payable with respect to each participant in a terminated plan shall be
assigned to one or more priority categories in accordance with
Secs. 4044.11 through 4044.16. Benefits derived from voluntary employee
contributions, which are assigned only to priority category 1, are
treated, under section 204(c)(4) of ERISA and section 411(d)(5) of the
Code, as benefits under a separate plan. The amount of a benefit
payable with respect to each participant shall be determined as of the
termination date.
(c) Valuing benefits. The value of a participant's benefit or
benefits assigned to each priority category shall be determined, as of
the allocation date, in accordance with the provisions of subpart B of
this part. The value of each participant's basic-type benefit or
benefits in a priority category shall be reduced by the value of the
participant's benefit of the same type that is assigned to a higher
priority category. Except as provided in the next two sentences, the
same procedure shall be followed for nonbasic-type benefits. The value
of a participant's nonbasic-type benefits in priority categories 3, 5,
and 6 shall not be reduced by the value of the participant's nonbasic-
type benefit assigned to priority category 2. Benefits in priority
category 1 shall neither be included in nor subtracted from lower
priority categories. In no event shall a benefit assigned to a priority
category be valued at less than zero.
(d) Allocating assets to priority categories. Plan assets available
to pay for benefits under the plan shall be allocated to each priority
category in succession, beginning with priority category 1. If the plan
has sufficient assets to pay for all benefits in a priority category,
the remaining assets shall then be allocated to the next lower priority
category. This process shall be repeated until all benefits in priority
categories 1 through 6 have been provided or until all available plan
assets have been allocated.
(e) Allocating assets within priority categories. Except for
priority category 5, if the plan assets available for allocation to any
priority category are insufficient to pay for all benefits in that
priority category, those assets shall be distributed among the
participants according to the ratio that the value of each
participant's benefit or benefits in that priority category bears to
the total value of all benefits in that priority category. If the plan
assets available for allocation to priority category 5 are insufficient
to pay for all benefits in that category, the assets shall be
allocated, first, to the value of each participant's nonforfeitable
benefits that would be assigned to priority category 5 under
Sec. 4044.15 after reduction for the value of benefits assigned to
higher priority categories, based only on the provisions of the plan in
effect at the beginning of the 5-year period immediately preceding the
termination date. If assets available for allocation to priority
category 5 are sufficient to fully satisfy the value of those benefits,
assets shall then be allocated to the value of the benefit increase
under the oldest amendment during the 5-year period immediately
preceding the termination date, reduced by the value of benefits
assigned to higher priority categories (including higher subcategories
in priority category 5). This allocation procedure shall be repeated
for each succeeding plan amendment within the 5-year period until all
plan assets available for allocation have been exhausted. If an
amendment decreased benefits, amounts previously allocated with respect
to each participant in excess of the value of the reduced benefit shall
be reduced accordingly. In the subcategory in which assets are
exhausted, the assets shall be distributed among the participants
according to the ratio that the value of each participant's benefit or
benefits in that subcategory bears to the total value of all benefits
in that subcategory.
(f) Applying assets to basic-type or nonbasic-type benefits within
priority
[[Page 34062]]
categories. The assets allocated to a participant's benefit or benefits
within each priority category shall first be applied to pay for the
participant's basic-type benefit or benefits assigned to that priority
category. Any assets allocated on behalf of that participant remaining
after satisfying the participant's basic-type benefit or benefits in
that priority category shall then be applied to pay for the
participant's nonbasic-type benefit or benefits assigned to that
priority category. If the assets allocable to a participant's basic-
type benefit or benefits in all priority categories are insufficient to
pay for all of the participant's guaranteed benefits, the assets
allocated to that participant's benefit in priority category 4 shall be
applied, first, to the guaranteed portion of the participant's benefit
in priority category 4. The remaining assets allocated to that
participant's benefit in priority category 4, if any, shall be applied
to the nonguaranteed portion of the participant's benefit.
(g) Allocation to established subclasses. Notwithstanding
paragraphs (e) and (f) of this section, the assets of a plan that has
established subclasses within any priority category may be allocated to
the plan's subclasses in accordance with the rules set forth in
Sec. 4044.17.
Sec. 4044.11 Priority category 1 benefits.
(a) Definition. The benefits in priority category 1 are
participants' accrued benefits derived from voluntary employee
contributions.
(b) Assigning benefits. Absent an election described in the next
sentence, the benefit assigned to priority category 1 with respect to
each participant is the balance of the separate account maintained for
the participant's voluntary contributions. If a participant has elected
to receive an annuity in lieu of his or her account balance, the
benefit assigned to priority category 1 with respect to that
participant is the present value of that annuity.
Sec. 4044.12 Priority category 2 benefits.
(a) Definition. The benefits in priority category 2 are
participants' accrued benefits derived from mandatory employee
contributions, whether to be paid as an annuity benefit with a pre-
retirement death benefit that returns mandatory employee contributions
or, if a participant so elects under the terms of the plan and subpart
A of part 4022 of this chapter, as a lump sum benefit. Benefits are
primarily basic-type benefits although nonbasic-type benefits may also
be included as follows:
(1) Basic-type benefits. The basic-type benefit in priority
category 2 with respect to each participant is the sum of the values of
the annuity benefit and the pre-retirement death benefit determined
under the provisions of paragraph (c)(1) of this section.
(2) Nonbasic-type benefits. If a participant elects to receive a
lump sum benefit and if the value of the lump sum benefit exceeds the
value of the basic-type benefit in priority category 2 determined with
respect to the participant, the excess is a nonbasic-type benefit.
There is no nonbasic-type benefit in priority category 2 for a
participant who does not elect to receive a lump sum benefit.
(b) Conversion of mandatory employee contributions to an annuity
benefit. Subject to the limitation set forth in paragraph (b)(3) of
this section, a participant's accumulated mandatory employee
contributions shall be converted to an annuity form of benefit payable
at the normal retirement age or, if the plan provides for early
retirement, at the expected retirement age. The conversion shall be
made using the interest rates and factors specified in paragraph (b)(2)
of this section. The form of the annuity benefit (e.g., straight life
annuity, joint and survivor annuity, cash refund annuity, etc.) is the
form that the participant or beneficiary is entitled to on the
termination date. If the participant does not have a nonforfeitable
right to a benefit, other than the return of his or her mandatory
contributions in a lump sum, the annuity form of benefit is the form
the participant would be entitled to if the participant had a
nonforfeitable right to an annuity benefit under the plan on the
termination date.
(1) Accumulated mandatory employee contributions. Subject to any
addition for the cost of ancillary benefits plus interest, as provided
in the following sentence, the amount of the accumulated mandatory
employee contributions for each participant is the participant's total
nonforfeitable mandatory employee contributions remaining in the plan
on the termination date plus interest, if any, under the plan
provisions. Mandatory employee contributions, if any, used after the
effective date of the minimum vesting standards in section 203 of ERISA
and section 411 of the Code for costs or to provide ancillary benefits
such as life insurance or health insurance, plus interest under the
plan provisions, shall be added to the contributions that remain in the
plan to determine the accumulated mandatory employee contributions.
(2) Interest rates and conversion factors. The interest rates and
conversion factors used in the administration of the plan shall be used
to convert a participant's accumulated mandatory contributions to the
annuity form of benefit. In the absence of plan rules and factors, the
interest rates and conversion factors established by the IRS for
allocation of accrued benefits between employer and employee
contributions under the provisions of section 204(c) of ERISA and
section 411(c) of the Code shall be used.
(3) Minimum accrued benefit. The annuity benefit derived from
mandatory employee contributions may not be less than the minimum
accrued benefit under the provisions of section 204(c) of ERISA and
section 411(c) of the Code.
(c) Assigning benefits. If a participant or beneficiary elects to
receive a lump sum benefit, his or her benefit shall be determined
under paragraph (c)(2) of this section. Otherwise, the benefits with
respect to a participant shall be determined under paragraph (c)(1) of
this section.
(1) Annuity benefit and pre-retirement death benefit. The annuity
benefit and the pre-retirement death benefit assigned to priority
category 2 with respect to a participant are determined as follows:
(i) The annuity benefit is the benefit computed under paragraph (b)
of this section.
(ii) Except for adjustments necessary to meet the minimum lump sum
requirements as hereafter provided, the pre-retirement death benefit is
the benefit under the plan that returns all or a portion of the
participant's mandatory employee contributions upon the death of the
participant before retirement. A benefit that became payable in a
single installment (or substantially so) because the participant died
before the termination date is a liability of the plan within the
meaning of Sec. 4044.3(a) and should not be assigned to priority
category 2. A benefit payable upon a participant's death that is
included in the annuity form of the benefit derived from mandatory
employee contributions (e.g., the survivor's portion of a joint and
survivor annuity or the cash refund portion of a cash refund annuity)
is assigned to priority category 2 as part of the annuity benefit under
paragraph (c)(1)(i) of this section and is not assigned as a death
benefit. The pre-retirement death benefit may not be less than the
minimum lump sum required upon withdrawal of mandatory employee
contributions by the IRS under section 204(c) of ERISA and section
411(c) of the Code.
[[Page 34063]]
(2) Lump sum benefit. Except for adjustments necessary to meet the
minimum lump sum requirements as hereafter provided, if a participant
elects to receive a lump sum benefit under the provisions of the plan,
the amount of the benefit that is assigned to priority category 2 with
respect to the participant is--
(i) The combined value of the annuity benefit and the pre-
retirement death benefit determined according to paragraph (c)(1)
(which constitutes the basic-type benefit) plus
(ii) The amount, if any, of the participant's accumulated mandatory
employee contributions that exceeds the combined value of the annuity
benefit and the pre-retirement death benefit (which constitutes the
nonbasic-type benefit), but not more than
(iii) The amount of the participant's accumulated mandatory
contributions.
(3) For purposes of paragraph (c)(2) of this section, accumulated
mandatory contributions means the contributions with interest, if any,
payable under plan provisions to the participant or beneficiary on
termination of the plan or, in the absence of such provisions, the
amount that is payable if the participant withdrew his or her
contributions on the termination date. The lump sum benefit may not be
less than the minimum lump required by the IRS under section 204(c) of
ERISA and section 411(c) of the Code upon withdrawal of mandatory
employee contributions.
Sec. 4044.13 Priority category 3 benefits.
(a) Definition. The benefits in priority category 3 are those
annuity benefits that were in pay status before the beginning of the 3-
year period ending on the termination date, and those annuity benefits
that could have been in pay status for participants who were eligible
to receive annuity benefits before the beginning of the 3-year period
ending on the termination date. Benefit increases that became effective
before the beginning of the 5-year period ending on the termination
date, including automatic benefit increases after that date to the
extent provided in paragraph (b)(5) of this section, shall be included
in determining the priority category 3 benefit. Benefits are primarily
basic-type benefits, although nonbasic-type benefits will be included
if any portion of a participant's priority category 3 benefit is not
guaranteeable under the provisions of subpart A of part 4022 of this
chapter.
(b) Assigning benefits. The annuity benefit that is assigned to
priority category 3 with respect to each participant is the lowest
annuity that was paid or payable under the rules in paragraphs (b)(2)
through (b)(6) of this section.
(1) Eligibility of participants and beneficiaries. A participant or
beneficiary is eligible for a priority category 3 benefit if either of
the following applies:
(i) The participant's (or beneficiary's) benefit was in pay status
before the beginning of the 3-year period ending on the termination
date.
(ii) The participant was eligible for an annuity and his or her
benefit could have been in pay status before the beginning of the 3-
year period ending on the termination date. Whether a participant was
eligible to receive an annuity before the beginning of the 3-year
period shall be determined using the plan provisions in effect on the
day before the beginning of the 3-year period.
(iii) If a participant described in either of the preceding two
paragraphs died during the 3-year period ending on the date of the plan
termination and his or her beneficiary is entitled to an annuity, the
beneficiary is eligible for a priority category 3 benefit.
(2) Plan provis
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
ions governing determination of benefit. In
determining the amount of the priority category 3 annuity with respect
to a participant, the plan administrator shall use the participant's
age, service, actual or expected retirement age, and other relevant
facts as of the following dates:
(i) Except as provided in the next sentence, for a participant or
beneficiary whose benefit was in pay status before the beginning of the
3-year period ending on the termination date, the priority category 3
benefit shall be determined according to plan provisions in effect on
the date the benefit commenced. Benefit increases that became effective
before the beginning of the 5-year period ending on the date of plan
termination, including automatic benefit increases after that date to
the extent provided in paragraph (b)(5) of this section, shall be
included in determining the priority category 3 benefit. The form of
annuity elected by a retiree is considered the normal form of annuity
for that participant.
(ii) For a participant who was eligible to receive an annuity
before the beginning of the 3-year period ending on the termination
date but whose benefit was not in pay status, the priority category 3
benefit and the normal form of annuity shall be determined according to
plan provisions in effect on the day before the beginning of the 3-year
period ending on the termination date as if the benefit had commenced
at that time.
(3) General benefit limitations. The general benefit limitation is
determined as follows:
(i) If a participant's benefit was in pay status before the
beginning of the 3-year period, the benefit assigned to priority
category 3 with respect to that participant is limited to the lesser of
the lowest annuity benefit in pay status during the 3-year period
ending on the termination date and the lowest annuity benefit payable
under the plan provisions at any time during the 5-year period ending
on the termination date.
(ii) Unless a benefit was in pay status before the beginning of the
3-year period ending on the termination date, the benefit assigned to
priority category 3 with respect to a participant is limited to the
lowest annuity benefit payable under the plan provisions, including any
reduction for early retirement, at any time during the 5-year period
ending on the termination date. If the annuity form of benefit under a
formula that appears to produce the lowest benefit differs from the
normal annuity form for the participant under paragraph (b)(2)(ii) of
this section, the benefits shall be compared after the differing form
is converted to the normal annuity form, using plan factors. In the
absence of plan factors, the factors in subpart B of part 4022 of this
chapter shall be used.
(iii) For purposes of this paragraph, if a terminating plan has
been in effect less than five years on the termination date, computed
in accordance with paragraph (b)(6) of this section, the lowest annuity
benefit under the plan during the 5-year period ending on the
termination date is zero. If the plan is a successor to a previously
established defined benefit plan within the meaning of section 4021(a)
of ERISA, the time it has been in effect will include the time the
predecessor plan was in effect.
(4) Determination of beneficiary's benefit. If a beneficiary is
eligible for a priority category 3 benefit because of the death of a
participant during the 3-year period ending on the termination date,
the benefit assigned to priority category 3 for the beneficiary shall
be determined as if the participant had died the day before the 3-year
period began.
(5) Automatic benefit increases. If plan provisions adopted and
effective before the beginning of the 5-year period ending on the
termination date provided for automatic increases in the benefit
formula for both active participants and those in pay status or for
participants in pay status only, the lowest annuity benefit payable
during the 5-year period ending on the termination date determined
under paragraph (b)(3) of this section includes the automatic
[[Page 34064]]
increases scheduled during the fourth and fifth years preceding
termination, subject to the restriction that benefit increases for
active participants in excess of the increases for retirees shall not
be taken into account.
(6) Computation of time periods. For purposes of this section, a
plan or amendment is ``in effect'' on the later of the date on which it
is adopted or the date it becomes effective.
Sec. 4044.14 Priority category 4 benefits.
The benefits assigned to priority category 4 with respect to each
participant are the participant's basic-type benefits that do not
exceed the guarantee limits set forth in subpart B of part 4022 of this
chapter, except as provided in the next sentence. The benefit assigned
to priority category 4 with respect to a participant is not limited by
the aggregate benefits limitations set forth in Sec. 4022B.1 of this
chapter for individuals who are participants in more than one plan or
by the phase-in limitation applicable to substantial owners set forth
in Sec. 4022.26.
Sec. 4044.15 Priority category 5 benefits.
The benefits assigned to priority category 5 with respect to each
participant are all of the participant's nonforfeitable benefits under
the plan.
Sec. 4044.16 Priority category 6 benefits.
The benefits assigned to priority category 6 with respect to each
participant are all of the participant's benefits under the plan,
whether forfeitable or nonforfeitable.
Sec. 4044.17 Subclasses.
(a) General rule. A plan may establish one or more subclasses
within any priority category, other than priority categories 1 and 2,
which subclasses will govern the allocation of assets within that
priority category. The subclasses may be based only on a participant's
longer service, older age, or disability, or any combination thereof.
(b) Limitation. Except as provided in paragraph (c) of this
section, whenever the allocation within a priority category on the
basis of the subclasses established by the plan increases or decreases
the cumulative amount of assets that otherwise would be allocated to
guaranteed benefits, the assets so shifted shall be reallocated to
other participants' benefits within the priority category in accordance
with the subclasses.
(c) Exception for subclasses in effect on September 2, 1974. A plan
administrator may allocate assets to subclasses within any priority
category, other than priority categories 1 and 2, without regard to the
limitation in paragraph (b) of this section if, on September 2, 1974,
the plan provided for allocation of plan assets upon termination of the
plan based on a participant's longer service, older age, or disability,
or any combination thereof, and--
(1) Such provisions are still in effect; or
(2) The plan, if subsequently amended to modify or remove those
subclasses, is re-amended to re-establish the same subclasses on or
before July 28, 1981.
(d) Discrimination under Code. Notwithstanding the provisions of
paragraphs (a) through (c) of this section, allocation of assets to
subclasses established under this section is permitted only to the
extent that the allocation does not result in discrimination prohibited
under the Code and regulations thereunder.
Allocation of Residual Assets
Sec. 4044.30 [Reserved.]
Subpart B--Valuation of Benefits and Assets
General Provisions
Sec. 4044.41 General valuation rules.
(a) Valuation of benefits--(1) Trusteed plans. The plan
administrator of a plan that has been or will be placed into
trusteeship by the PBGC shall value plan benefits in accordance with
Secs. 4044.51 through 4044.57.
(2) Non-trusteed plans. The plan administrator of a non-trusteed
plan shall value plan benefits in accordance with Sec. 4044.71 through
4044.75. If a plan with respect to which PBGC has issued a Notice of
Sufficiency is unable to satisfy all benefits assigned to priority
categories 1 through 4 on the distribution date, the PBGC will place it
into trusteeship and the plan administrator shall re-value the benefits
in accordance with Secs. 4044.51 through 4044.57. [See Note at
beginning of part 4044.]
(b) Valuation of assets. Plan assets shall be valued at their fair
market value, based on the method of valuation that most accurately
reflects such fair market value.
Trusteed Plans
Sec. 4044.51 Benefits to be valued.
(a) Form of benefit. The plan administrator shall determine the
form of each benefit to be valued in accordance with the following
rules:
(1) If a benefit is in pay status as of the valuation date, the
plan administrator shall value the form of the benefit being paid.
(2) If a benefit is not in pay status as of the valuation date but
a valid election with respect to the form of benefit has been made on
or before the valuation date, the plan administrator shall value the
form of benefit so elected.
(3) If a benefit is not in pay status as of the valuation date and
no valid election with respect to the form of benefit has been made on
or before the valuation date, the plan administrator shall value the
form of benefit that, under the terms of the plan, is payable in the
absence of a valid election.
(b) Timing of benefit. The plan administrator shall value benefits
whose starting date is subject to election using the assumption
specified in paragraph (b)(1) or (b)(2) of this section.
(1) Where election made. If a valid election of the starting date
of a benefit has been made on or before the valuation date, the plan
administrator shall assume that the starting date of the benefit is the
starting date so elected.
(2) Where no election made. If no valid election of the starting
date of a benefit has been made on or before the valuation date, the
plan administrator shall assume that the starting date of the benefit
is the later of--
(i) The expected retirement age, as determined under Secs. 4044.55
through 4044.57, of the participant with respect to whom the benefit is
payable, or
(ii) The valuation date.
Sec. 4044.52 Valuation of benefits.
(a) General rule. Except as otherwise provided in paragraph (b) of
this section (regarding the valuation of benefits payable as lump
sums), the plan administrator shall value annuity benefits as of the
valuation date by--
(1) Using the mortality assumptions prescribed by Sec. 4044.53 and
the interest assumptions prescribed by Table I of appendix B to this
part;
(2) Using interpolation methods, where necessary, at least as
accurate as linear interpolation;
(3) Using valuation formulas that accord with generally accepted
actuarial principles and practices;
(4) Taking mortality into account during the deferral period of a
deferred joint and survivor benefit only with respect to the
participant (or other principal annuitant), if upon the death of the
beneficiary the participant may elect an actuarially increased single
life annuity or if a new beneficiary may succeed to the survivor
portion of the benefit; and
(5) Adjusting the values to reflect the loading for expenses in
accordance with appendix C to this part.
[[Page 34065]]
(b) Benefits payable as lump sums. For valuing benefits payable as
lump sums (including the return of accumulated employee contributions
upon death), and for determining whether the lump sum value of a
benefit exceeds $3,500, the plan administrator shall value benefits in
the same manner as benefits to be paid as annuities except that--
(1) The mortality assumptions prescribed in Sec. 4044.54 and the
interest assumptions set forth in Table II of appendix B to this part
shall apply,
(2) There shall be no adjustment to reflect the loading for
expenses, and
(3) Beneficiary mortality during the deferral period shall be
disregarded as provided in paragraph (a)(4) of this section without
regard to whether the participant may elect an actuarially increased
single life annuity upon the death of the beneficiary or whether a new
beneficiary may succeed to the survivor portion of the benefit.
Sec. 4044.53 Mortality assumptions--in general.
(a) General rule. Subject to paragraph (b) of this section
(regarding certain death benefits), the plan administrator shall use
the mortality factors prescribed in paragraphs (c), (d), and (e) of
this section to value benefits under Sec. 4044.52(a).
(b) Certain death benefits. If an annuity for one person is in pay
status on the valuation date, and if the payment of a death benefit
after the valuation date to another person, who need not be
identifiable on the valuation date, depends in whole or in part on the
death of the pay status annuitant, then the plan administrator shall
value the death benefit using--
(1) the mortality rates that are applicable to the annuity in pay
status under this section to represent the mortality of the pay status
annuitant; and
(2) the mortality rates applicable to annuities not in pay status
and to deferred benefits other than annuities, under paragraph (c) of
this section, to represent the mortality of the death beneficiary.
(c) Mortality rates for healthy lives. The mortality rates
applicable to annuities in pay status on the valuation date that are
not being received as disability benefits, to annuities not in pay
status on the valuation date, and to deferred benefits other than
annuities, are--
(1) For male participants, the rates in Table 1 of appendix A to
this part, and
(2) For female participants, the rates in Table 1 of appendix A to
this part, set back 6 years.
(d) Mortality rates for disabled lives (other than Social Security
disability). The mortality rates applicable to annuities in pay status
on the valuation date that are being received as disability benefits
and for which neither eligibility for, nor receipt of, Social Security
disability benefits is a prerequisite, are--
(1) For male participants, the rates in Table 1 of appendix A to
this part, set forward 3 years, and
(2) For female participants, the rates in Table 1 of appendix A to
this part, set back 3 years.
(e) Mortality rates for disabled lives (Social Security
disability). The mortality rates applicable to annuities in pay status
on the valuation date that are being received as disability benefits
and for which either eligibility for, or receipt of, Social Security
disability benefits is a prerequisite, are the rates in Tables 2-M and
2-F of appendix A to this part.
Sec. 4044.54 Mortality assumptions--lump sums.
For determining whether the value of a benefit is $3,500 or less
under Sec. 4022.7(b)(1) of this chapter and for calculating the amount
of a lump sum benefit, the PBGC will use the mortality rates in Table 3
of appendix A to this part.
Expected Retirement Age
Sec. 4044.55 XRA when a participant must retire to receive a benefit.
(a) Applicability. Except as provided in Sec. 4044.57, the plan
administrator shall determine the XRA under this section when plan
provisions or established plan practice require a participant to retire
from his or her job to begin receiving an early retirement benefit.
(b) Data needed. The plan administrator shall determine for each
participant who is entitled to an early retirement benefit--
(1) The amount of the participant's monthly benefit payable at
unreduced retirement age in the normal form payable under the terms of
the plan or in the form validly elected by the participant before the
termination date;
(2) The calendar year in which the participant reaches unreduced
retirement age (``URA'');
(3) The participant's URA; and
(4) The participant's earliest retirement age at the valuation
date.
(c) Procedure. (1) The plan administrator shall determine whether a
participant is in the high, medium or low retirement rate category
using the applicable Selection of Retirement Rate Category Table in
appendix D, based on the participant's benefit determined under
paragraph (b)(1) of this section and the year in which the participant
reaches URA.
(2) Based on the retirement rate category determined under
paragraph (c)(1), the plan administrator shall determine the XRA from
Table II-A, II-B or II-C, as appropriate, by using the participant's
URA and earliest retirement age at valuation date.
Sec. 4044.56 XRA when a participant need not retire to receive a
benefit.
(a) Applicability. Except as provided in Sec. 4044.57, the plan
administrator shall determine the XRA under this section when plan
provisions or established plan practice do not require a participant to
retire from his or her job to begin receiving his or her early
retirement benefit.
(b) Data needed. The plan administrator shall determine for each
participant--
(1) The participant's URA; and
(2) The participant's earliest retirement age at valuation date.
(c) Procedure. Participants in this case are always assigned to the
high retirement rate category and therefore the plan administrator
shall use Table II-C of appendix D to determine the XRA. The plan
administrator shall determine the XRA from Table II-C by using the
participant's URA and earliest retirement age at termination date.
Sec. 4044.57 Special rule for facility closing.
(a) Applicability. The plan administrator shall determine the XRA
under this section, rather than Sec. 4044.55 or Sec. 4044.56, when both
the conditions set forth in paragraphs (a)(1) and (a)(2) of this
section exist.
(1) The facility at which the participant is or was employed
permanently closed within one year before the valuation date, or is in
the process of being permanently closed on the valuation date.
(2) The participant left employment at the facility less than one
year before the valuation date or was still employed at the facility on
the valuation date.
(b) XRA. The XRA is equal to the earliest retirement age at
valuation date.
Non-Trusteed Plans
Sec. 4044.71 Valuation of annuity benefits.
The value of a benefit which is to be paid as an annuity is the
cost of purchasing the annuity on the date of distribution from an
insurer under the qualifying bid.
Sec. 4044.72 Form of annuity to be valued.
(a) When both the participant and beneficiary are alive on the date
of distribution, the form of annuity to be valued is--
[[Page 34066]]
(1) For a participant or beneficiary already receiving a monthly
benefit, that form which is being received, or
(2) For a participant or beneficiary not receiving a monthly
benefit, the normal annuity form payable under the plan or the optional
form for which the participant has made a valid election pursuant to
Sec. 2617.4(c) of this chapter. [See Note at beginning of part 4044.]
(b) When the participant dies after the date of plan termination
but before the date of distribution, the form of annuity to be valued
is determined under paragraph (b)(1) or (b)(2) of this section:
(1) For a participant who was entitled to a deferred annuity--
(i) If the form was a single or joint life annuity, no benefit
shall be valued; or
(ii) If the participant had made a valid election of a lump sum
benefit before he or she died, the form to be valued is the lump sum.
(2) For a participant who was eligible for immediate retirement,
and for a participant who was in pay status at the date of
termination--
(i) If the form was a single life annuity, no benefit shall be
valued;
(ii) If the form was an annuity for a period certain and life
thereafter, the form to be valued is an annuity for the certain period;
(iii) If the form was a joint and survivor annuity, the form to be
valued is a single life annuity payable to the beneficiary, unless the
beneficiary has also died, in which case no benefit shall be valued;
(iv) If the form was an annuity for a period certain and joint and
survivor thereafter, the form to be valued is an annuity for the
certain period and the life of the beneficiary thereafter, unless the
beneficiary has also died, in which case the form to be valued is an
annuity for the certain period;
(v) If the form was a cash refund annuity, the form to be valued is
the remaining lump sum death benefit; or
(vi) If the participant had elected a lump sum benefit before he or
she died, the form to be valued is the lump sum.
(c) When the participant is still living and the named beneficiary
or spouse dies after the date of termination but before the date of
distribution, the form of annuity to be valued is determined under
paragraph (c)(1) or (c)(2) of this section:
(1) For a participant entitled to a deferred annuity--
(i) If the form was a joint and survivor annuity, the form to be
valued is a single life annuity payable to the participant; or
(ii) If the form was an annuity for a period certain and joint and
survivor thereafter, the form to be valued is an annuity for the
certain period and the life of the participant thereafter.
(2) For a participant eligible for immediate retirement and for a
participant in pay status at the date of termination--
(i) If the form was a joint and survivor annuity, the form to be
valued is a single life annuity payable to the participant; or
(ii) If the form was an annuity for a period certain and joint
survivor thereafter annuity, the form to be valued is an annuity for
the certain period and for the life of the participant thereafter.
Sec. 4044.73 Lump sums and other alternative forms of distribution in
lieu of annuities.
(a) Valuation. (1) The value of the lump sum or other alternative
form of distribution is the present value of the normal form of benefit
provided by the plan payable at normal retirement age, determined as of
the date of distribution using reasonable actuarial assumptions as to
interest and mortality.
(2) If the participant dies before the date of distribution, but
had elected a lump sum benefit, the present value shall be determined
as if the participant were alive on the date of distribution.
(b) Actuarial assumptions. The plan administrator shall specify the
actuarial assumptions used to determine the value calculated under
paragraph (a) of this section when the plan administrator submits the
benefit valuation data to the PBGC pursuant to Sec. 2617.12 of part
2617 of this chapter. The same actuarial assumptions shall be used for
all such calculations. The PBGC reserves the right to review the
actuarial assumptions used and to re-value the benefits determined by
the plan administrator if the actuarial assumptions are found to be
unreasonable.
[See Note at beginning of part 4044.]
Sec. 4044.74 Withdrawal of employee contributions.
(a) If a participant has not started to receive monthly benefit
payments on the date of distribution, the value of the lump sum which
returns mandatory employee contributions is equal to the total amount
of contributions made by the participant, plus interest that is payable
to the participant under the terms of the plan, plus interest on that
total amount from the date of termination to the date of distribution.
The rate of interest credited on employee contributions up to the date
of termination shall be the greater of the interest rate provided under
the terms of the plan or the interest rate required under section
204(c) of ERISA or section 411(c) of the IRC.
(b) If a participant has started to receive monthly benefit
payments on the date of distribution, part of which are attributable to
his or her contributions, the value of the lump sum which returns
employee contributions is equal to the excess of the amount described
in paragraph (b)(1) of this section over the amount computed in
paragraph (b)(2) of this section.
(1) The amount of accumulated mandatory employee contributions
remaining in the plan as of the date of termination plus interest from
the date of termination to the date of distribution.
(2) The excess of benefit payments made from the plan between date
of plan termination and the date of distribution, over the amount of
payments that would have been made if the employee contributions had
been paid as a lump sum on the date of plan termination, with interest
accumulated on the excess from the date of payment to the date of
distribution.
(c) Interest assumptions. The interest rate used under this section
to credit interest between the date of termination to the date of
distribution shall be a reasonable rate and shall be the same for both
paragraphs (a) and (b).
Sec. 4044.75 Other lump sum benefits.
The value of a lump sum benefit which is not covered under
Sec. 4044.73 or Sec. 4044.74 is equal to--
(a) The value under the qualifying bid, if an insurer provides the
benefit; or
(b) The present value of the benefit as of the date of
distribution, determined using reasonable actuarial assumptions, if the
benefit is to be distributed other than by the purchase of the benefit
from an insurer. The PBGC reserves the right to review the actuarial
assumptions as to reasonableness and re-value the benefit if the
actuarial assumptions are unreasonable.
[See Note at beginning of part 4044.]
Appendix A to Part 4044--Mortality Rate Tables
The tables in this appendix set forth for each age x the
probability qX that an individual aged x will not survive to
attain age x+1.
Table 1.--Mortality Table for Healthy Male Participants
------------------------------------------------------------------------
Age x qx
------------------------------------------------------------------------
5............................................................ 0.000342
6............................................................ 0.000318
7............................................................ 0.000302
8............................................................ 0.000294
9............................................................ 0.000292
[[Page 34067]]
10........................................................... 0.000293
11........................................................... 0.000298
12........................................................... 0.000304
13........................................................... 0.000310
14........................................................... 0.000317
15........................................................... 0.000325
16........................................................... 0.000333
17........................................................... 0.000343
18........................................................... 0.000353
19........................................................... 0.000365
20........................................................... 0.000377
21........................................................... 0.000392
22........................................................... 0.000408
23........................................................... 0.000424
24........................................................... 0.000444
25........................................................... 0.000464
26........................................................... 0.000488
27........................................................... 0.000513
28........................................................... 0.000542
29........................................................... 0.000572
30........................................................... 0.000607
31........................................................... 0.000645
32........................................................... 0.000687
33........................................................... 0.000734
34........................................................... 0.000785
35........................................................... 0.000860
36........................................................... 0.000907
37........................................................... 0.000966
38........................................................... 0.001039
39........................................................... 0.001128
40........................................................... 0.001238
41........................................................... 0.001370
42........................................................... 0.001527
43........................................................... 0.001715
44........................................................... 0.001932
45........................................................... 0.002183
46........................................................... 0.002471
47........................................................... 0.002790
48........................................................... 0.003138
49........................................................... 0.003513
50........................................................... 0.003909
51........................................................... 0.004324
52........................................................... 0.004755
53........................................................... 0.005200
54........................................................... 0.005660
55........................................................... 0.006131
56........................................................... 0.006618
57........................................................... 0.007139
58........................................................... 0.007719
59........................................................... 0.008384
60........................................................... 0.009158
61........................................................... 0.010064
62........................................................... 0.011133
63........................................................... 0.012391
64........................................................... 0.013868
65........................................................... 0.015592
66........................................................... 0.017579
67........................................................... 0.019804
68........................................................... 0.022229
69........................................................... 0.024817
70........................................................... 0.027530
71........................................................... 0.030354
72........................................................... 0.033370
73........................................................... 0.036680
74........................................................... 0.040388
75........................................................... 0.044597
76........................................................... 0.049388
77........................................................... 0.054758
78........................................................... 0.060678
79........................................................... 0.067125
80........................................................... 0.074070
81........................................................... 0.081484
82........................................................... 0.089320
83........................................................... 0.097525
84........................................................... 0.106047
85........................................................... 0.114836
86........................................................... 0.124170
87........................................................... 0.133870
88........................................................... 0.144073
89........................................................... 0.154859
90........................................................... 0.166307
91........................................................... 0.178214
92........................................................... 0.190460
93........................................................... 0.203007
94........................................................... 0.217904
95........................................................... 0.234086
96........................................................... 0.248436
97........................................................... 0.263954
98........................................................... 0.280803
99........................................................... 0.299154
100.......................................................... 0.319185
101.......................................................... 0.341086
102.......................................................... 0.365052
103.......................................................... 0.393102
104.......................................................... 0.427255
105.......................................................... 0.469531
106.......................................................... 0.521945
107.......................................................... 0.586518
108.......................................................... 0.665268
109.......................................................... 0.760215
110.......................................................... 1.000000
------------------------------------------------------------------------
Table 2-M.--Mortality Table for Disabled Male Participants Receiving
Social Security Disability Benefit Payments
------------------------------------------------------------------------
Age x T2x
------------------------------------------------------------------------
5....................................................... 0.000000
6....................................................... 0.000000
7....................................................... 0.000000
8....................................................... 0.000000
9....................................................... 0.000000
10...................................................... 0.000000
11...................................................... 0.000000
12...................................................... 0.000000
13...................................................... 0.000000
14...................................................... 0.000000
15...................................................... 0.000000
16...................................................... 0.000000
17...................................................... 0.000000
18...................................................... 0.000000
19...................................................... 0.000000
20...................................................... 0.048300
21...................................................... 0.048300
22...................................................... 0.048300
23...................................................... 0.048300
24...................................................... 0.048300
25...................................................... 0.048300
26...................................................... 0.046100
27...................................................... 0.043600
28...................................................... 0.041100
29...................................................... 0.038600
30...................................................... 0.036200
31...................................................... 0.033900
32...................................................... 0.032000
33...................................................... 0.032000
34...................................................... 0.028800
35...................................................... 0.027800
36...................................................... 0.027200
37...................................................... 0.027100
38...................................................... 0.027300
39...................................................... 0.027600
40...................................................... 0.028200
41...................................................... 0.028800
42...................................................... 0.029700
43...................................................... 0.030500
44...................................................... 0.031400
45...................................................... 0.032200
46...................................................... 0.033000
47...................................................... 0.034000
48...................................................... 0.035300
49...................................................... 0.036700
50...................................................... 0.038300
51...................................................... 0.040100
52...................................................... 0.042000
53...................................................... 0.043900
54...................................................... 0.046000
55...................................................... 0.048200
56...................................................... 0.050600
57...................................................... 0.053100
58...................................................... 0.055500
59...................................................... 0.058100
60...................................................... 0.060300
61...................................................... 0.062400
62...................................................... 0.064300
63...................................................... 0.065700
64...................................................... 0.066800
65...................................................... 0.069225
66...................................................... 0.071813
67...................................................... 0.074526
68...................................................... 0.077350
69...................................................... 0.080366
70...................................................... 0.083676
71...................................................... 0.087384
72...................................................... 0.091593
73...................................................... 0.096384
74...................................................... 0.101754
75...................................................... 0.107674
76...................................................... 0.114121
77...................................................... 0.121066
78...................................................... 0.128480
79...................................................... 0.136316
80...................................................... 0.144521
81...................................................... 0.153043
82...................................................... 0.161832
83...................................................... 0.171166
84...................................................... 0.180866
85...................................................... 0.191069
86...................................................... 0.201855
87...................................................... 0.213303
88...................................................... 0.225210
89...................................................... 0.237456
90...................................................... 0.250003
91...................................................... 0.264900
92...................................................... 0.281082
93...................................................... 0.295432
94...................................................... 0.310950
95...................................................... 0.327799
96...................................................... 0.346150
97...................................................... 0.366181
98...................................................... 0.388082
99...................................................... 0.412048
100..................................................... 0.440098
101..................................................... 0.474251
[[Page 34068]]
102..................................................... 0.516527
103..................................................... 0.568941
104..................................................... 0.633514
105..................................................... 0.712264
106..................................................... 0.807211
107..................................................... 1.000000
------------------------------------------------------------------------
Table 2-F.--Mortality Table for Disabled Female Participants Receiving
Social Security Disability Benefit Payments
------------------------------------------------------------------------
Age x qx
------------------------------------------------------------------------
5............................................................ 0.000000
6............................................................ 0.000000
7............................................................ 0.000000
8............................................................ 0.000000
9............................................................ 0.000000
10........................................................... 0.000000
11........................................................... 0.000000
12........................................................... 0.000000
13........................................................... 0.000000
14........................................................... 0.000000
15........................................................... 0.000000
16........................................................... 0.000000
17........................................................... 0.000000
18........................................................... 0.000000
19........................................................... 0.000000
20........................................................... 0.026300
21........................................................... 0.026300
22........................................................... 0.026300
23........................................................... 0.026300
24........................................................... 0.026300
25........................................................... 0.026300
26........................................................... 0.025700
27........................................................... 0.025300
28........................................................... 0.024700
29........................................................... 0.024200
30........................................................... 0.023700
31........................................................... 0.023200
32........................................................... 0.022700
33........................................................... 0.022200
34........................................................... 0.021800
35........................................................... 0.021400
36........................................................... 0.021200
37........................................................... 0.021000
38........................................................... 0.020800
39........................................................... 0.020800
40........................................................... 0.020900
41........................................................... 0.021000
42........................................................... 0.021300
43........................................................... 0.021600
44........................................................... 0.021900
45........................................................... 0.022400
46........................................................... 0.022900
47........................................................... 0.023500
48........................................................... 0.024200
49........................................................... 0.024900
50........................................................... 0.025700
51........................................................... 0.026400
52........................................................... 0.027200
53........................................................... 0.028100
54........................................................... 0.028800
55........................................................... 0.029500
56........................................................... 0.030100
57........................................................... 0.030700
58........................................................... 0.031500
59........................................................... 0.032300
60........................................................... 0.033100
61........................................................... 0.033900
62........................................................... 0.034700
63........................................................... 0.035500
64........................................................... 0.036200
65........................................................... 0.037269
66........................................................... 0.038527
67........................................................... 0.040004
68........................................................... 0.041728
69........................................................... 0.043715
70........................................................... 0.045940
71........................................................... 0.048365
72........................................................... 0.050953
73........................................................... 0.053666
74........................................................... 0.056490
75........................................................... 0.059506
76........................................................... 0.062816
77........................................................... 0.066524
78........................................................... 0.070733
79........................................................... 0.057524
80........................................................... 0.080894
81........................................................... 0.086814
82........................................................... 0.093261
83........................................................... 0.100206
84........................................................... 0.107620
85........................................................... 0.115456
86........................................................... 0.123661
87........................................................... 0.132183
88........................................................... 0.140972
89........................................................... 0.150306
90........................................................... 0.160006
91........................................................... 0.170209
92........................................................... 0.180995
93........................................................... 0.192443
94........................................................... 0.204350
95........................................................... 0.216596
96........................................................... 0.229143
97........................................................... 0.244040
98........................................................... 0.260222
99........................................................... 0.274572
100.......................................................... 0.290090
101.......................................................... 0.306939
102.......................................................... 0.325290
103.......................................................... 0.345321
104.......................................................... 0.367222
105.......................................................... 0.391188
106.......................................................... 0.419238
107.......................................................... 0.453391
108.......................................................... 0.495667
109.......................................................... 0.548081
110.......................................................... 0.612654
111.......................................................... 0.691404
112.......................................................... 0.786351
113.......................................................... 1.000000
------------------------------------------------------------------------
Table 3.--Lump Sum Mortality Table
------------------------------------------------------------------------
Age qx
------------------------------------------------------------------------
12........................................................... 0.000000
13........................................................... 0.000000
14........................................................... 0.000000
15........................................................... 0.000000
16........................................................... 0.001437
17........................................................... 0.001414
18........................................................... 0.001385
19........................................................... 0.001351
20........................................................... 0.001311
21........................................................... 0.001267
22........................................................... 0.001219
23........................................................... 0.001167
24........................................................... 0.001149
25........................................................... 0.001129
26........................................................... 0.001107
27........................................................... 0.001083
28........................................................... 0.001058
29........................................................... 0.001083
30........................................................... 0.001111
31........................................................... 0.001141
32........................................................... 0.001173
33........................................................... 0.001208
34........................................................... 0.001297
35........................................................... 0.001398
36........................................................... 0.001513
37........................................................... 0.001643
38........................................................... 0.001792
39........................................................... 0.001948
40........................................................... 0.002125
41........................................................... 0.002327
42........................................................... 0.002556
43........................................................... 0.002818
44........................................................... 0.003095
45........................................................... 0.003410
46........................................................... 0.003769
47........................................................... 0.004180
48........................................................... 0.004635
49........................................................... 0.005103
50........................................................... 0.005616
51........................................................... 0.006196
52........................................................... 0.006853
53........................................................... 0.007543
54........................................................... 0.008278
55........................................................... 0.009033
56........................................................... 0.009875
57........................................................... 0.010814
58........................................................... 0.011863
59........................................................... 0.012952
60........................................................... 0.014162
61........................................................... 0.015509
62........................................................... 0.017010
63........................................................... 0.018685
64........................................................... 0.020517
65........................................................... 0.022562
66........................................................... 0.024847
67........................................................... 0.027232
68........................................................... 0.029634
69........................................................... 0.032073
70........................................................... 0.034743
71........................................................... 0.037667
72........................................................... 0.040871
73........................................................... 0.044504
74........................................................... 0.048504
75........................................................... 0.052913
76........................................................... 0.057775
77........................................................... 0.063142
78........................................................... 0.068628
79........................................................... 0.074648
80........................................................... 0.081256
81........................................................... 0.088518
82........................................................... 0.096218
83........................................................... 0.104310
84........................................................... 0.112816
85........................................................... 0.122079
86........................................................... 0.132174
[[Page 34069]]
87........................................................... 0.143179
88........................................................... 0.155147
89........................................................... 0.168208
90........................................................... 0.182461
91........................................................... 0.198030
92........................................................... 0.215035
93........................................................... 0.232983
94........................................................... 0.252545
95........................................................... 0.273878
96........................................................... 0.297152
97........................................................... 0.322553
98........................................................... 0.349505
99........................................................... 0.378865
100.......................................................... 0.410875
101.......................................................... 0.445768
102.......................................................... 0.483830
103.......................................................... 0.524301
104.......................................................... 0.568365
105.......................................................... 0.616382
106.......................................................... 0.668696
107.......................................................... 0.725745
108.......................................................... 0.786495
109.......................................................... 0.852659
110.......................................................... 0.924666
111.......................................................... 1.000000
------------------------------------------------------------------------
Appendix B to Part 4044--Interest Rates Used To Value Annuities and
Lump Sums
Table I.--[Annuity Valuations]
[This table sets forth, for each indicated calendar month, the interest rates (denoted by i1, i2, . . ., and
referred to generally as it) assumed to be in effect between specified anniversaries of a valuation date that
occurs within that calendar month; those anniversaries are specified in the columns adjacent to the rates. The
last listed rate is assumed to be in effect after the last listed anniversary date.]
----------------------------------------------------------------------------------------------------------------
The values of i1 are:
For valuation dates occurring in the month-- -----------------------------------------------
i1 for t= i1 for t= i1 for t=
----------------------------------------------------------------------------------------------------------------
November 1993................................................... .0560 1-25 .0525 >25 N/A N/A
December 1993................................................... .0560 1-25 .0525 >25 N/A N/A
January 1994.................................................... .0590 1-25 .0525 >25 N/A N/A
February 1994................................................... .0590 1-25 .0525 >25 N/A N/A
March 1994...................................................... .0580 1-25 .0525 >25 N/A N/A
April 1994...................................................... .0620 1-25 .0525 >25 N/A N/A
May 1994........................................................ .0650 1-25 .0525 >25 N/A N/A
June 1994....................................................... .0670 1-25 .0525 >25 N/A N/A
July 1994....................................................... .0690 1-25 0.525 >25 N/A N/A
August 1994..................................................... .0700 1-25 .0525 >25 N/A N/A
September 1994.................................................. .0690 1-25 .0525 >25 N/A N/A
October 1994.................................................... .0700 1-25 .0525 >25 N/A N/A
November 1994................................................... .0730 1-25 .0525 >25 N/A N/A
December 1994................................................... .0750 1-25 .0525 >25 N/A N/A
January 1995.................................................... .0750 1-20 .0575 >20 N/A N/A
February 1995................................................... .0730 1-20 .0575 >20 N/A N/A
March 1995...................................................... .0730 1-20 .0575 >20 N/A N/A
April 1995...................................................... .0710 1-20 .0575 >20 N/A N/A
May 1995........................................................ .0690 1-20 .0575 >20 N/A N/A
June 1995....................................................... .0680 1-20 .0575 >20 N/A N/A
July 1995....................................................... .0630 1-20 .0575 >20 N/A N/A
August 1995..................................................... .0620 1-20 .0575 >20 N/A N/A
September 1995.................................................. .0640 1-20 .0575 >20 N/A N/A
October 1995.................................................... .0630 1-20 .0575 >20 N/A N/A
November 1995................................................... .0620 1-20 .0575 >20 N/A N/A
December 1995................................................... .0600 1-20 .0575 >20 N/A N/A
January 1996.................................................... .0560 1-20 .0475 >20 N/A N/A
February 1996................................................... .0540 1-20 .0475 >20 N/A N/A
March 1996...................................................... .0550 1-20 .0475 >20 N/A N/A
April 1996...................................................... .0580 1-20 .0475 >20 N/A N/A
May 1996........................................................ .0600 1-20 .0475 >20 N/A N/A
June 1996....................................................... .0620 1-20 .0475 >20 N/A N/A
July 1996....................................................... .0620 1-20 .0475 >20 N/A N/A
----------------------------------------------------------------------------------------------------------------
[[Page 34070]]
Table II.--[Lump Sum Valuations]
[In using this table: (1) For benefits for which the participant or beneficiary is entitled to be in pay status
on the valuation date, the immediate annuity rate shall apply; (2) For benefits for which the deferral period is
y years (where y is an interger and o < y n1), interest rate i1 shall apply from the valuation date for a
period of y years; thereafter the immediate annuity rate shall apply; (3) For benefits for which the deferral
period is y years (where y is an integer and n1 < y n1 + n2); interest rate i2 shall apply from the valuation
date for a period of y-n1 years, interest rate i1 shall apply for the following n1 years; thereafter the
immediate annuity rate shall apply; (4) For benefits for which the deferral period is y years (where y is an
integer and y > n1 + n2), interest rate i3 shall apply from the valuation date for a period of y-n1-n2 years;
interest rate i2 shall apply for the following n2 years; interest rate i1 shall apply for the following n1
years; thereafter the immediate annuity rate shall apply.]
----------------------------------------------------------------------------------------------------------------
For plans with a Deferred annuities (percent)
valuation date Immediate ---------------------------------------
Rate set ---------------------- annuity
On or rate i1 i2 i3 n1 n2
after Before (percent)
----------------------------------------------------------------------------------------------------------------
1.................................... 11-1-93 12-1-93 4.25 4.00 4.00 4.00 7 8
2.................................... 12-1-93 1-1-94 4.25 4.00 4.00 4.00 7 8
3.................................... 1-1-94 2-1-94 4.50 4.00 4.00 4.00 7 8
4.................................... 2-1-94 3-1-94 4.50 4.00 4.00 4.00 7 8
5.................................... 3-1-94 4-1-94 4.50 4.00 4.00 4.00 7 8
6.................................... 4-1-94 5-1-94 4.75 4.00 4.00 4.00 7 8
7.................................... 5-1-94 6-1-94 5.25 4.50 4.00 4.00 7 8
8.................................... 6-1-94 7-1-94 5.25 4.50 4.00 4.00 7 8
9.................................... 7-1-94 8-1-94 5.50 4.75 4.00 4.00 7 8
10................................... 8-1-94 9-1-94 5.75 5.00 4.00 4.00 7 8
11................................... 9-1-94 10-1-94 5.50 4.75 4.00 4.00 7 8
12................................... 10-1-94 11-1-94 5.50 4.75 4.00 4.00 7 8
13................................... 11-1-94 12-1-94 6.00 5.25 4.00 4.00 7 8
14................................... 12-1-94 1-1-95 6.25 5.50 4.25 4.00 7 8
15................................... 1-1-95 2-1-95 6.00 5.25 4.00 4.00 7 8
16................................... 2-1-95 3-1-95 6.00 5.25 4.00 4.00 7 8
17................................... 3-1-95 4-1-95 6.00 5.25 4.00 4.00 7 8
18................................... 4-1-95 5-1-95 5.75 5.00 4.00 4.00 7 8
19................................... 5-1-95 6-1-95 5.50 4.75 4.00 4.00 7 8
20................................... 6-1-95 7-1-95 5.50 4.75 4.00 4.00 7 8
21................................... 7-1-95 8-1-95 4.75 4.00 4.00 4.00 7 8
22................................... 8-1-95 9-1-95 4.75 4.00 4.00 4.00 7 8
23................................... 9-1-95 10-1-95 5.00 4.25 4.00 4.00 7 8
24................................... 10-1-95 11-1-95 4.75 4.00 4.00 4.00 7 8
25................................... 11-1-95 12-1-95 4.75 4.00 4.00 4.00 7 8
26................................... 12-1-95 1-1-96 4.50 4.00 4.00 4.00 7 8
27................................... 1-1-96 2-1-96 4.50 4.00 4.00 4.00 7 8
28................................... 2-1-96 3-1-96 4.25 4.00 4.00 4.00 7 8
29................................... 3-1-96 4-1-96 4.25 4.00 4.00 4.00 7 8
30................................... 4-1-96 5-1-96 4.75 4.00 4.00 4.00 7 8
31................................... 5-1-96 6-1-96 5.00 4.25 4.00 4.00 7 8
32................................... 6-1-96 7-1-96 5.00 4.25 4.00 4.00 7 8
33................................... 7-1-96 8-1-96 5.00 4.25 4.00 4.00 7 8
----------------------------------------------------------------------------------------------------------------
Appendix C to Part 4044--Loading Assumptions
----------------------------------------------------------------------------------------------------------------
If the total value of the plan's benefit liabilities (as defined in 29 U.S.C.
Sec. 1301(a)(16)), exclusive of the loading charge, is--
------------------------------------------------------------------------------ The loading charge equals--
greater than but less than or equal to
----------------------------------------------------------------------------------------------------------------
$0............................................. $200,000 5% of the total value of the
plan's benefits, plus $200 for
each plan participant.
$200,000....................................... ............................ $10,000, plus a percentage of the
excess of the total value over
$200,000, plus $200 for each
plan participant; the percentage
is equal to 1%+[(P%-7.50%)/10],
where P% is the initial rate,
expressed as a percentage, set
forth in Table I of appendix B
for the valuation of annuities.
----------------------------------------------------------------------------------------------------------------
[[Page 34071]]
Appendix D to Part 4044--Tables Used To Determine Expected
Retirement Age
Table I-96.--Selection of Retirement Rate Category
[For Plans with valuation dates after December 31, 1995, and before January 1, 1997]
----------------------------------------------------------------------------------------------------------------
Participant's retirement rate category is--
---------------------------------------------------
Medium \2\ if monthly High \3\ if
Low \1\ if benefit at NRA is monthly
Participant reaches NRA in year-- monthly -------------------------- benefit at
benefit at NRA is
NRA is less From To greater
than-- than--
----------------------------------------------------------------------------------------------------------------
1997........................................................ 400 400 1,684 1,684
1998........................................................ 413 413 1,738 1,738
1999........................................................ 426 426 1,794 1,794
2000........................................................ 440 440 1,850 1,850
2001........................................................ 453 453 1,907 1,907
2002........................................................ 467 467 1,966 1,966
2003........................................................ 482 482 2,027 2,027
2004........................................................ 497 497 2,090 2,090
2005........................................................ 512 512 2,155 2,155
2006 or later............................................... 528 528 2,221 2,221
----------------------------------------------------------------------------------------------------------------
\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.
Table II-A.--Expected Retirement Ages for Individuals in the Low Category
----------------------------------------------------------------------------------------------------------------
Normal retirement age
Participant's earliest retirement ----------------------------------------------------------------------------
age at valuation date. 60 61 62 63 64 65 66 67 68 69 70
-------------------------------------------------------------------------------------------------------
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
---------
42................................. 53 53 53 54 54 54 54 54 54 54 54
43................................. 53 54 54 54 55 55 55 55 55 55 55
44................................. 54 54 55 55 55 55 55 56 56 56 56
45................................. 54 55 55 56 56 56 56 56 56 56 56
46................................. 55 55 56 56 56 57 57 57 57 57 57
47................................. 56 56 56 57 57 57 57 57 57 57 57
48................................. 56 57 57 57 58 58 58 58 58 58 58
49................................. 56 57 58 58 58 58 59 59 59 59 59
50................................. 57 57 58 58 59 59 59 59 59 59 59
51................................. 57 58 58 59 59 60 60 60 60 60 60
52................................. 58 58 59 59 60 60 60 60 60 60 60
53................................. 58 59 59 60 60 61 61 61 61 61 61
54................................. 58 59 60 60 61 61 61 61 61 61 61
55................................. 59 59 60 61 61 61 62 62 62 62 62
56................................. 59 60 60 61 61 62 62 62 62 62 62
57................................. 59 60 61 61 62 62 62 62 62 62 62
58................................. 59 60 61 61 62 62 63 63 63 63 63
59................................. 59 60 61 62 62 63 63 63 63 63 63
60................................. 60 60 61 62 62 63 63 63 63 63 63
61................................. ..... 61 61 62 63 63 63 63 64 64 64
62................................. ..... ..... 62 62 63 63 63 64 64 64 64
63................................. ..... ..... ..... 63 63 64 64 64 65 65 65
64................................. ..... ..... ..... ..... 64 64 65 65 65 65 65
65................................. ..... ..... ..... ..... ..... 65 65 65 65 65 65
66................................. ..... ..... ..... ..... ..... ..... 66 66 66 66 66
67................................. ..... ..... ..... ..... ..... ..... ..... 67 67 67 67
68................................. ..... ..... ..... ..... ..... ..... ..... ..... 68 68 68
69................................. ..... ..... ..... ..... ..... ..... ..... ..... ..... 69 69
70................................. ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... 70
----------------------------------------------------------------------------------------------------------------
Table II-B.--Expected Retirement Ages for Individuals in the Medium Category
----------------------------------------------------------------------------------------------------------------
Normal retirement age
Participant's earliest retirement ----------------------------------------------------------------------------
age at valuation date 60 61 62 63 64 65 66 67 68 69 70
----------------------------------------------------------------------------------------------------------------
42................................. 49 49 49 49 49 49 49 49 49 49 49
43................................. 50 50 50 50 50 50 50 50 50 50 50
44................................. 50 51 51 51 51 51 51 51 51 51 51
45................................. 51 51 52 52 52 52 52 52 52 52 52
46................................. 52 52 52 53 53 53 53 53 53 53 53
[[Page 34072]]
47................................. 53 53 53 53 53 54 54 54 54 54 54
48................................. 54 54 54 54 54 54 54 54 54 54 54
49................................. 54 55 55 55 55 55 55 55 55 55 55
50................................. 55 55 56 56 56 56 56 56 56 56 56
51................................. 56 56 56 57 57 57 57 57 57 57 57
52................................. 56 57 57 57 57 58 58 58 58 58 58
53................................. 57 57 58 58 58 58 58 58 58 58 58
54................................. 57 58 58 59 59 59 59 59 59 59 59
55................................. 58 58 59 59 59 60 60 60 60 60 60
56................................. 58 59 59 60 60 60 60 60 60 60 60
57................................. 59 59 60 60 61 61 61 61 61 61 61
58................................. 59 60 60 61 61 61 61 61 61 61 61
59................................. 59 60 61 61 62 62 62 62 62 62 62
60................................. 60 60 61 62 62 62 62 62 62 62 62
61................................. ..... 61 61 62 62 63 63 63 63 63 63
62................................. ..... ..... 62 62 62 63 63 63 63 63 63
63................................. ..... ..... ..... 63 63 64 64 64 64 64 64
64................................. ..... ..... ..... ..... 64 64 64 64 64 64 64
65................................. ..... ..... ..... ..... ..... 65 65 65 65 65 65
66................................. ..... ..... ..... ..... ..... ..... 66 66 66 66 66
67................................. ..... ..... ..... ..... ..... ..... ..... 67 67 67 67
68................................. ..... ..... ..... ..... ..... ..... ..... ..... 68 68 68
69................................. ..... ..... ..... ..... ..... ..... ..... ..... ..... 69 69
70................................. ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... 70
----------------------------------------------------------------------------------------------------------------
Table II-C.--Expected Retirement Ages for Individuals in the High Category
----------------------------------------------------------------------------------------------------------------
Normal retirement age
Participant's earliest retirement ----------------------------------------------------------------------------
age at valuation date. 60 61 62 63 64 65 66 67 68 69 70
----------------------------------------------------------------------------------------------------------------
42................................. 46 46 46 46 46 47 47 47 47 47 47
43................................. 47 47 47 47 47 47 47 47 47 47 47
44................................. 48 48 48 48 48 48 48 48 48 48 48
45................................. 49 49 49 49 49 49 49 49 49 49 49
46................................. 50 50 50 50 50 50 50 50 50 50 50
47................................. 51 51 51 51 51 51 51 51 51 51 51
48................................. 52 52 52 52 52 52 52 52 52 52 52
49................................. 53 53 53 53 53 53 53 53 53 53 53
50................................. 54 54 54 54 54 54 54 54 54 54 54
51................................. 54 55 55 55 55 55 55 55 55 55 55
52................................. 55 55 56 56 56 56 56 56 56 56 56
53................................. 56 56 56 57 57 57 57 57 57 57 57
54................................. 57 57 57 57 57 58 58 58 58 58 58
55................................. 57 58 58 58 58 58 58 58 58 58 58
56................................. 58 58 59 59 59 59 59 59 59 59 59
57................................. 58 59 59 60 60 60 60 60 60 60 60
58................................. 59 59 60 60 60 60 61 61 61 61 61
59................................. 59 60 60 61 61 61 61 61 61 61 61
60................................. 60 60 61 61 61 62 62 62 62 62 62
61................................. ..... 61 61 62 62 62 62 62 62 62 62
62................................. ..... ..... 62 62 62 62 62 62 62 62 62
63................................. ..... ..... ..... 63 63 63 64 64 64 64 64
64................................. ..... ..... ..... ..... 64 64 64 64 64 64 64
65................................. ..... ..... ..... ..... ..... 65 65 65 65 65 65
66................................. ..... ..... ..... ..... ..... ..... 66 66 66 66 66
67................................. ..... ..... ..... ..... ..... ..... ..... 67 67 67 67
68................................. ..... ..... ..... ..... ..... ..... ..... ..... 68 68 68
69................................. ..... ..... ..... ..... ..... ..... ..... ..... ..... 69 69
70................................. ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... 70
----------------------------------------------------------------------------------------------------------------
[[Page 34073]]
PART 4047--RESTORATION OF TERMINATING AND TERMINATED PLANS
Sec.
4047.1 Purpose and scope.
4047.2 Definitions.
4047.3 Funding of restored plan.
4047.4 Payment of premiums.
4047.5 Repayment of PBGC payments of guaranteed benefits.
Authority: 29 U.S.C. 1302(b)(3), 1347.
Sec. 4047.1 Purpose and scope.
Section 4047 of ERISA gives the PBGC broad authority to take any
necessary actions in furtherance of a plan restoration order issued
pursuant to section 4047. This part (along with Treasury regulation 26
CFR 1.412(c)(1)-3) describes certain legal obligations that arise
incidental to a plan restoration under section 4047. This part also
establishes procedures with respect to these obligations that are
intended to facilitate the orderly transition of a restored plan from
terminated (or terminating) status to ongoing status, and to help
ensure that the restored plan will continue to be ongoing consistent
with the best interests of the plan's participants and beneficiaries
and the single-employer insurance program. This part applies to
terminated and terminating single-employer plans (except for plans
terminated and terminating under ERISA section 4041(b)) with respect to
which the PBGC has issued or is issuing a plan restoration order
pursuant to ERISA section 4047.
Sec. 4047.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
controlled group, ERISA, IRS, PBGC, plan, plan administrator, plan
year, and single-employer plan.
Sec. 4047.3 Funding of restored plan.
(a) General. Whenever the PBGC issues or has issued a plan
restoration order under ERISA section 4047, it shall issue to the plan
sponsor a restoration payment schedule order in accordance with the
rules of this section. PBGC, through its Executive Director, shall also
issue a certification to its Board of Directors and the IRS, as
described in paragraph (c) of this section. If more than one plan is or
has been restored, the PBGC shall issue a separate restoration payment
schedule order and separate certification with respect to each restored
plan.
(b) Restoration payment schedule order. A restoration payment
schedule order shall set forth a schedule of payments sufficient to
amortize the initial restoration amortization base described in
paragraph (b) of 26 CFR 1.412(c)(1)-3 over a period extending no more
than 30 years after the initial post-restoration valuation date, as
defined in paragraph (a)(1) of 26 CFR 1.412(c)(1)-3. The restoration
payment schedule shall be consistent with the requirements of 26 CFR
1.412(c)(1)-3 and may require payments at intervals of less than one
year, as determined by the PBGC. The PBGC may, in its discretion, amend
the restoration payment schedule at any time, consistent with the
requirements of 26 CFR 1.412(c)(1)-3.
(c) Certification. The Executive Director's certification to the
Board of Directors and the IRS pursuant to paragraph (a) of this
section shall state that the PBGC has reviewed the funding of the plan,
the financial condition of the plan sponsor and its controlled group
members, the payments required under the restoration payment schedule
(taking into account the availability of deferrals as permitted under
paragraph (c)(4) of 26 CFR 1.412(c)(1)-3) and any other factor that the
PBGC deems relevant, and, based on that review, determines that it is
in the best interests of the plan's participants and beneficiaries and
the single-employer insurance program that the restored plan not be
reterminated.
(d) Periodic PBGC review. As long as a restoration payment schedule
order issued under this section is in effect, the PBGC shall review
annually the funding status of the plan with respect to which the order
applies. As part of this review, the PBGC, through its Executive
Director, shall issue a certification in the form described in
paragraph (c) of this section. As a result of its funding review, PBGC
may amend the restoration payment schedule, consistent with the
requirements of paragraph (c)(2) of 26 CFR 1.412(c)(1)-3.
Sec. 4047.4 Payment of premiums.
(a) General. Upon restoration of a plan pursuant to ERISA section
4047, the obligation to pay PBGC premiums pursuant to ERISA section
4007 is reinstated as of the date on which the plan was trusteed under
section 4042 of ERISA. Except as otherwise specifically provided in
paragraphs (b) and (c) of this section, the amount of the outstanding
premiums owed shall be computed and paid by the plan administrator in
accordance with part 4006 of this chapter (Premium Rates) and the forms
and instructions issued pursuant thereto, as in effect for the plan
years for which premiums are owed.
(b) Notification of premiums owed. Whenever the PBGC issues or has
issued a plan restoration order, it shall send a written notice to the
plan administrator of the restored plan advising the plan administrator
of the plan year(s) for which premiums are owed. PBGC will include with
the notice the necessary premium payment forms and instructions. The
notice shall prescribe the payment due dates for the outstanding
premiums.
(c) Methods for determining variable rate portion of the premium.
In general, the variable rate portion of the outstanding premiums shall
be determined in accordance with the premium regulation and forms, as
provided in paragraph (a) of this section, except that for any plan
year following a plan year for which Form 5500, Schedule B was not
filed because the plan was terminated, the alternative calculation
method in Sec. 4006.4(c) of this chapter may not be used.
Sec. 4047.5 Repayment of PBGC payments of guaranteed benefits.
(a) General. Upon restoration of a plan pursuant to ERISA section
4047, amounts paid by the PBGC from its single-employer insurance fund
(the fund established pursuant to ERISA section 4005(a)) to pay
guaranteed benefits and related expenses under the plan while it was
terminated are a debt of the restored plan. The terms and conditions
for payment of this debt shall be determined by the PBGC.
(b) Repayment terms. The PBGC shall prescribe reasonable terms and
conditions for payment of the debt described in paragraph (a) of this
section, including the number, amount and commencement date of the
payments. In establishing the terms, PBGC will consider the cash needs
of the plan, the timing and amount of contributions owed to the plan,
the liquidity of plan assets, the interests of the single-employer
insurance program, and any other factors PBGC deems relevant. PBGC may,
in its discretion, revise any of the payment terms and conditions, upon
written notice to the plan administrator in accordance with paragraph
(c) of this section.
(c) Notification to plan administrator. Whenever the PBGC issues or
has issued a plan restoration order, it shall send a written notice to
the plan administrator of the restored plan advising the plan
administrator of the amount owed the PBGC pursuant to paragraph (a) of
this section. The notice shall also include the terms and conditions
for payment of this debt, as established under paragraph (b) of this
section.
[[Page 34074]]
PART 4050--MISSING PARTICIPANTS
Sec.
4050.1 Purpose and scope.
4050.2 Definitions.
4050.3 Method of distribution for missing participants.
4050.4 Diligent search.
4050.5 Designated benefit.
4050.6 Payment and required documentation.
4050.7 Benefits of missing participants--in general.
4050.8 Automatic lump sum.
4050.9 Annuity or elective lump sum--living missing participant.
4050.10 Annuity or elective lump sum--beneficiary of deceased
missing participant.
4050.11 Limitations.
4050.12 Special rules.
4050.13 OMB control number.
Appendix A to Part 4050--Examples of Designated Benefit Determinations
for Missing Participants Under Sec. 4050.5
Appendix B to Part 4050--Examples of Benefit Payments for Missing
participants Under Secs. 4050.8 Through 4050.10
Sec. 4050.1 Purpose and scope.
This part prescribes rules for distributing benefits under a
terminating single-employer plan for any individual whom the plan
administrator has not located when distributing benefits under
Sec. 4041.27(c) of this chapter. This part applies to a plan if the
plan's deemed distribution date (or the date of a payment made in
accordance with Sec. 4050.12) is in a plan year beginning on or after
January 1, 1996.
Sec. 4050.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
annuity, benefit liabilities, Code, ERISA, insurer, irrevocable
commitment, mandatory employee contributions, normal retirement age,
PBGC, person, plan, plan administrator, plan year and title IV benefit.
In addition, for purposes of this part:
Deemed distribution date means the last day of the period in which
distribution may be made (determined without regard to the provisions
of this part) under Sec. 4041.27(a) or Sec. 4041.48(a) of this chapter
(whichever applies) or such earlier date as may be selected by the plan
administrator of a terminating plan that is on or after the date when
all benefit distributions have been made under the plan except for
distributions to--
(1) Late-discovered participants,
(2) Missing participants (including recently-missing participants)
whose designated benefits are paid to the PBGC, and
(3) Recently-missing participants whose benefits are distributed by
purchasing an irrevocable commitment from an insurer.
Designated benefit means the amount payable to the PBGC for a
missing participant pursuant to Sec. 4050.5.
Designated benefit interest rate means the rate of interest
applicable to underpayments of guaranteed benefits by the PBGC under
Sec. 4022.81(d) of this chapter.
Guaranteed benefit form means, with respect to a benefit, the form
in which the PBGC would pay a guaranteed benefit to a participant or
beneficiary in the PBGC's program for trusteed plans under subparts A
and B of part 4022 of this chapter (treating the deemed distribution
date as the termination date for this purpose).
Late-discovered participant means a participant or beneficiary
entitled to a distribution under a terminating plan whom the plan
administrator locates before the plan administrator pays the
individual's designated benefit to the PBGC (or distributes the
individual's benefit by purchasing an irrevocable commitment from an
insurer) and not more than 90 days before the deemed distribution date.
Missing participant means a participant or beneficiary entitled to
a distribution under a terminating plan whom the plan administrator has
not located as of the date when the plan administrator pays the
individual's designated benefit to the PBGC (or distributes the
individual's benefit by purchasing an irrevocable commitment from an
insurer). In the absence of proof of death, individuals not located are
presumed living.
Missing participant annuity assumptions means the interest rate
assumptions and actuarial methods (using the interest rates for annuity
valuations in Table I of appendix B to part 4044 of this chapter) for
valuing a benefit to be paid by the PBGC as an annuity under subpart B
of part 4044, applied--
(1) As if the deemed distribution date were the termination date;
(2) Using unisex mortality rates that are a fixed blend of 50
percent of the male mortality rates and 50 percent of the female
mortality rates from the 1983 Group Annuity Mortality Table as
prescribed in Rev. Rul. 95-6, 1995-1 C.B. 80 (Cumulative Bulletins are
available from the Superintendent of Documents, Government Printing
Office, Washington, DC 20402);
(3) Without using the expected retirement age assumptions in
Secs. 4044.55 through 4044.57 of this chapter;
(4) Without making the adjustment for expenses provided for in
Sec. 4044.52(a)(5) of this chapter; and
(5) By adding $300, as an adjustment (loading) for expenses, for
each missing participant whose designated benefit without such
adjustment would be greater than $3,500.
Missing participant forms and instructions means PBGC Forms 501 and
602, Schedule MP thereto, and related forms, and their instructions.
Missing participant lump sum assumptions means the interest rate
assumptions and actuarial methods (using the interest rates for lump
sum valuations in Table II of appendix B to part 4044 of this chapter)
for valuing a benefit to be paid by the PBGC as a lump sum under
subpart B of part 4044 of this chapter, applied--
(1) As if the deemed distribution date were the termination date;
(2) Using mortality assumptions from Table 3 of appendix A to part
4044 of this chapter; and
(3) Without using the expected retirement age assumptions in
Secs. 4044.55 through 4044.57 of this chapter.
Pay status means, with respect to a benefit under a plan, that the
plan administrator has made or (except for administrative delay or a
waiting period) would have made one or more benefit payments.
Post-distribution certification means the post-distribution
certification required by Sec. 4041.27(h) or Sec. 4041.48(b) of this
chapter.
Recently-missing participant means a participant or beneficiary
whom the plan administrator discovers to be a missing participant on or
after the 90th day before the deemed distribution date.
Unloaded designated benefit means the designated benefit reduced by
$300; except that the reduction shall not apply in the case of a
designated benefit determined using the missing participant annuity
assumptions without adding the $300 load described in paragraph (5) of
the definition of ``missing participant annuity assumptions.''
Sec. 4050.3 Method of distribution for missing participants.
The plan administrator of a terminating plan shall distribute
benefits for each missing participant by--
(a) purchasing from an insurer an irrevocable commitment that
satisfies the requirements of Sec. 4041.27(c) or Sec. 4041.48(a)(1) of
this chapter (whichever is applicable); or
(b) paying the PBGC a designated benefit in accordance with
Secs. 4050.4
[[Page 34075]]
through 4050.6 (subject to the special rules in Sec. 4050.12).
Sec. 4050.4 Diligent search.
(a) Search required. A diligent search shall be made for each
missing participant whose designated benefit (or voluntary employee
contributions under Sec. 4050.12(d)(2)) is paid to the PBGC. The search
shall be made before the payment is made.
(b) Diligence. A search is a diligent search only if the search--
(1) Begins not more than 6 months before notices of intent to
terminate are issued and is carried on in such a manner that if the
individual is found, distribution to the individual can reasonably be
expected to be made on or before the deemed distribution date (or, in
the case of a recently-missing participant, on or before the 90th day
after the deemed distribution date);
(2) Includes inquiry of any plan beneficiaries (including alternate
payees) of the missing participant whose names and addresses are known
to the plan administrator; and
(3) Includes use of a commercial locator service to search for the
missing participant (without charge to the missing participant or
reduction of the missing participant's plan benefit).
Sec. 4050.5 Designated benefit.
(a) Amount of designated benefit. The amount of the designated
benefit shall be the amount determined under paragraph (a)(1), (a)(2),
(a)(3), or (a)(4) of this section (whichever is applicable) or, if
less, the maximum amount that could be provided under the plan to the
missing participant in the form of a single sum in accordance with
section 415 of the Code.
(1) Mandatory lump sum. The designated benefit of a missing
participant required under a plan to receive a mandatory lump sum as of
the deemed distribution date shall be the lump sum payment that the
plan administrator would have distributed to the missing participant as
of the deemed distribution date.
(2) De minimis lump sum. The designated benefit of a missing
participant not described in paragraph (a)(1) of this section whose
benefit is not in pay status as of the deemed distribution date and
whose benefit has a de minimis actuarial present value ($3,500 or less)
as of the deemed distribution date under the missing participant lump
sum assumptions shall be such value.
(3) No lump sum. The designated benefit of a missing participant
not described in paragraph (a)(1) or (a)(2) of this section who, as of
the deemed distribution date, cannot elect an immediate lump sum under
the plan shall be the actuarial present value of the missing
participant's benefit as of the deemed distribution date under the
missing participant annuity assumptions.
(4) Elective lump sum. The designated benefit of a missing
participant not described in paragraph (a)(1), (a)(2), or (a)(3) of
this section shall be the greater of the amounts determined under the
methodologies of paragraph (a)(1) or (a)(3) of this section.
(b) Assumptions. When the plan administrator uses the missing
participant annuity assumptions or the missing participant lump sum
assumptions for purposes of determining the designated benefit under
paragraph (a) of this section, the plan administrator shall value the
most valuable benefit, as determined under paragraph (b)(1) of this
section, using the assumptions described in paragraph (b)(2) or (b)(3)
of this section (whichever is applicable).
(1) Most valuable benefit. For a missing participant whose benefit
is in pay status as of the deemed distribution date, the most valuable
benefit is the pay status benefit. For a missing participant whose
benefit is not in pay status as of the deemed distribution date, the
most valuable benefit is the benefit payable at the age on or after the
deemed distribution date (beginning with the participant's earliest
early retirement age and ending with the participant's normal
retirement age) for which the present value as of the deemed
distribution date is the greatest. The present value as of the deemed
distribution date with respect to any age is determined by multiplying:
(i) the monthly (or other periodic) benefit payable under the plan;
by
(ii) the present value (determined as of the deemed distribution
date using the missing participant annuity assumptions) of a $1 monthly
(or other periodic) annuity beginning at the applicable age.
(2) Participant. A missing participant who is a participant, and
whose benefit is not in pay status as of the deemed distribution date,
is assumed to be married to a spouse the same age, and the form of
benefit that must be valued is the qualified joint and survivor annuity
benefit that would be payable under the plan. If the participant's
benefit is in pay status as of the deemed distribution date, the form
and beneficiary of the participant's benefit are the form of benefit
and beneficiary of the pay status benefit.
(3) Beneficiary. A missing participant who is a beneficiary, and
whose benefit is not in pay status as of the deemed distribution date,
is assumed not to be married, and the form of benefit that must be
valued is the survivor benefit that would be payable under the plan. If
the beneficiary's benefit is in pay status as of the deemed
distribution date, the form and beneficiary of the beneficiary's
benefit are the form of benefit and beneficiary of the pay status
benefit.
(4) Examples. See Appendix A to this part for examples illustrating
the provisions of this section.
(c) Missed payments. In determining the designated benefit, the
plan administrator shall include the value of any payments that were
due before the deemed distribution date but that were not made.
(d) Payment of designated benefits. Payment of designated benefits
shall be made in accordance with Sec. 4050.6 and shall be deemed made
on the deemed distribution date.
Sec. 4050.6 Payment and required documentation.
(a) Time of payment and filing--(1) General rule. The plan
administrator shall pay designated benefits, and file the information
and certifications (of the plan administrator and the plan's enrolled
actuary) specified in the missing participant forms and instructions,
by the time the post-distribution certification is due (determined in
accordance with Sec. 4041.9 of this chapter). Except as otherwise
provided in the missing participant forms and instructions, the plan
administrator shall submit the designated benefits, information, and
certifications with the post-distribution certification.
(2) Recently-missing participants. For a recently-missing
participant, the plan administrator shall either purchase an
irrevocable commitment from an insurer not later than 90 days after the
deemed distribution date or pay a designated benefit to the PBGC by the
time the amended post-distribution certification is due under paragraph
(a)(2)(ii) of this section. Except as otherwise provided in the missing
participant forms and instructions--
(i) Payment. The plan administrator shall submit the designated
benefit with the amended post-distribution certification described in
paragraph (a)(2)(ii) of this section; and
(ii) Filing. If (in the case of a recently-missing participant for
whom a designated benefit is to be paid to the PBGC) a diligent search
has not been completed or (in the case of any other recently-missing
participant) an irrevocable commitment has not been
[[Page 34076]]
purchased when the plan administrator submits the filing described in
paragraph (a)(1) of this section, the plan administrator shall so
indicate in that filing and submit an amended filing (including an
amended post-distribution certification) within 120 days after the
deemed distribution date (subject to extension under Sec. 4050.12(h))
in accordance with the missing participant forms and instructions.
(3) Late-discovered participants. When it is impracticable for the
plan administrator to include complete and accurate final information
on a late-discovered participant in a timely post-distribution
certification, the plan administrator shall submit an amended post-
distribution certification within 120 days after the deemed
distribution date (subject to extension under Sec. 4050.12(h)) in
accordance with the missing participant forms and instructions.
(b) Interest on late payments. If the plan administrator does not
pay a designated benefit by the time specified in paragraph (a) of this
section, the plan administrator shall pay interest as assessed by the
PBGC for the period beginning on the deemed distribution date and
ending on the date when the payment is received by the PBGC. Interest
will be assessed at the rate provided for late premium payments in
Sec. 4007.7 of this chapter. Interest assessed under this paragraph
shall be deemed paid in full if payment of the amount assessed is
received by the PBGC within 30 days after the date of a PBGC bill for
such amount.
(c) Supplemental information. Within 30 days after the date of a
written request from the PBGC, a plan administrator required to provide
the information and certifications described in paragraph (a) of this
section shall file supplemental information, as requested, for the
purpose of verifying designated benefits, determining benefits to be
paid by the PBGC under this part, and substantiating diligent searches.
(1) Information mailed. Supplemental information filed under this
paragraph (c) is considered filed on the date of the United States
postmark stamped on the cover in which the information is mailed, if--
(i) The postmark was made by the United States Postal Service; and
(ii) The information was mailed postage prepaid, properly addressed
to the PBGC.
(2) Information delivered. When the plan administrator sends or
transmits the information to the PBGC by means other than the United
States Postal Service, the information is considered filed on the date
it is received by the PBGC. Information received on a weekend or
Federal holiday or after 5:00 p.m. on a weekday is considered filed on
the next regular business day.
Sec. 4050.7 Benefits of missing participants--in general.
(a) If annuity purchased. If a plan administrator distributes a
missing participant's benefit by purchasing an irrevocable commitment
from an insurer, and the missing participant (or his or her beneficiary
or estate) later contacts the PBGC, the PBGC will inform the person of
the identity of the insurer and the relevant policy number.
(b) If designated benefit paid. If the PBGC locates or is contacted
by a missing participant (or his or her beneficiary or estate) for whom
a plan administrator paid a designated benefit to the PBGC, the PBGC
will pay benefits in accordance with Secs. 4050.8 through 4050.10
(subject to the limitations and special rules in Secs. 4050.11 and
4050.12).
(c) Examples. See Appendix B to this part for examples illustrating
the provisions of Secs. 4050.8 through 4050.10.
Sec. 4050.8 Automatic lump sum.
This section applies to a missing participant whose designated
benefit was determined under Sec. 4050.5(a)(1) (mandatory lump sum) or
Sec. 4050.5(a)(2) (de minimis lump sum).
(a) General rule--(1) Benefit paid. The PBGC will pay a single sum
benefit equal to the designated benefit plus interest at the designated
benefit interest rate from the deemed distribution date to the date on
which the PBGC pays the benefit.
(2) Payee. Payment shall be made--
(i) To the missing participant, if located;
(ii) If the missing participant died before the deemed distribution
date, and if the plan so provides, to the missing participant's
beneficiary or estate; or
(iii) If the missing participant dies on or after the deemed
distribution date, to the missing participant's estate.
(b) De minimis annuity alternative. If the guaranteed benefit form
for a missing participant whose designated benefit was determined under
Sec. 4050.5(a)(2) (de minimis lump sum) (or the guaranteed benefit form
for a beneficiary of such a missing participant) would provide for the
election of an annuity, the missing participant (or the beneficiary)
may elect to receive an annuity. If such an election is made--
(1) The PBGC will pay the benefit in the elected guaranteed benefit
form, beginning on the annuity starting date elected by the missing
participant (or the beneficiary), which shall not be before the later
of the date of the election or the earliest date on which the missing
participant (or the beneficiary) could have begun receiving benefits
under the plan; and
(2) The benefit paid will be actuarially equivalent to the
designated benefit, i.e., each monthly (or other periodic) benefit
payment will equal the designated benefit divided by the present value
(determined as of the deemed distribution date under the missing
participant lump sum assumptions) of a $1 monthly (or other periodic)
annuity beginning on the annuity starting date.
Sec. 4050.9 Annuity or elective lump sum--living missing participant.
This section applies to a missing participant whose designated
benefit was determined under Sec. 4050.5(a)(3) (no lump sum) or
Sec. 4050.5(a)(4) (elective lump sum) and who is living on the date as
of which the PBGC begins paying benefits.
(a) Missing participant whose benefit was not in pay status as of
the deemed distribution date. The PBGC will pay the benefit of a
missing participant whose benefit was not in pay status as of the
deemed distribution date as follows.
(1) Time and form of benefit. The PBGC will pay the missing
participant's benefit in the guaranteed benefit form, beginning on the
annuity starting date elected by the missing participant (which shall
not be before the later of the date of the election or the earliest
date on which the missing participant could have begun receiving
benefits under the plan).
(2) Amount of benefit. The PBGC will pay a benefit that is
actuarially equivalent to the unloaded designated benefit, i.e., each
monthly (or other periodic) benefit payment will equal the unloaded
designated benefit divided by the present value (determined as of the
deemed distribution date under the missing participant annuity
assumptions) of a $1 monthly (or other periodic) annuity beginning on
the annuity starting date.
(b) Missing participant whose benefit was in pay status as of the
deemed distribution date. The PBGC will pay the benefit of a missing
participant whose benefit was in pay status as of the deemed
distribution date as follows.
(1) Time and form of benefit. The PBGC will pay the benefit in the
form that was in pay status, beginning when the missing participant is
located.
(2) Amount of benefit. The PBGC will pay the monthly (or other
periodic) amount of the pay status benefit, plus a lump sum equal to
the payments the missing participant would have
[[Page 34077]]
received under the plan, plus interest on the missed payments (at the
plan rate up to the deemed distribution date and thereafter at the
designated benefit interest rate) to the date as of which the PBGC pays
the lump sum.
(c) Payment of lump sum. If a missing participant whose designated
benefit was determined under Sec. 4050.5(a)(4) (elective lump sum) so
elects, the PBGC will pay his or her benefit in the form of a single
sum. This election is not effective unless the missing participant's
spouse consents (if such consent would be required under section 205 of
ERISA). The single sum equals the designated benefit plus interest (at
the designated benefit interest rate) from the deemed distribution date
to the date as of which the PBGC pays the benefit.
Sec. 4050.10 Annuity or elective lump sum--beneficiary of deceased
missing participant.
This section applies to a beneficiary of a deceased missing
participant whose designated benefit was determined under
Sec. 4050.5(a)(3) (no lump sum) or Sec. 4050.5(a)(4) (elective lump
sum) and whose benefit is not payable under Sec. 4050.9.
(a) If deceased missing participant's benefit was not in pay status
as of the deemed distribution date. The PBGC will pay a benefit with
respect to a deceased missing participant whose benefit was not in pay
status as of the deemed distribution date as follows.
(1) General rule.--(i) Beneficiary. The PBGC will pay a benefit to
the surviving spouse of a missing participant who was a participant
(unless the surviving spouse has properly waived a benefit in
accordance with section 205 of ERISA).
(ii) Form and amount of benefit. The PBGC will pay the survivor
benefit in the form of a single life annuity. Each monthly (or other
periodic) benefit payment will equal 50% of the quotient that results
when the unloaded designated benefit is divided by the present value
(determined as of the deemed distribution date under the missing
participant annuity assumptions, and assuming that the missing
participant survived to the deemed distribution date) of a $1 monthly
(or other periodic) joint and 50 percent survivor annuity beginning on
the annuity starting date, under which reduced payments (at the 50
percent level) are made only after the death of the missing participant
during the life of the spouse (and not after the death of the spouse
during the missing participant's life).
(iii) Time of benefit. The PBGC will pay the survivor benefit
beginning at the time elected by the surviving spouse (which shall not
be before the later of the date of the election or the earliest date on
which the surviving spouse could have begun receiving benefits under
the plan).
(2) If missing participant died before deemed distribution date.
Notwithstanding the provisions of paragraph (a)(1) of this section, if
a beneficiary of a missing participant who died before the deemed
distribution date establishes to the PBGC's satisfaction that he or she
is the proper beneficiary or would have received benefits under the
plan in a form, at a time, or in an amount different from the benefit
paid under paragraph (a)(1)(ii) or (a)(1)(iii) of this section, the
PBGC will make payments in accordance with the facts so established,
but only in the guaranteed benefit form.
(3) Elective lump sum. Notwithstanding the provisions of paragraphs
(a)(1) and (a)(2) of this section, if the beneficiary of a missing
participant whose designated benefit was determined under
Sec. 4050.5(a)(4) (elective lump sum) so elects, the PBGC will pay his
or her benefit in the form of a single sum. The single sum will be
equal to the actuarial present value (determined as of the deemed
distribution date under the missing participant annuity assumptions) of
the death benefit payable on the annuity starting date, plus interest
(at the designated benefit interest rate) from the deemed distribution
date to the date as of which the PBGC pays the benefit.
(b) If deceased missing participant's benefit was in pay status as
of the deemed distribution date. The PBGC will pay a benefit with
respect to a deceased missing participant whose benefit was in pay
status as of the deemed distribution date as follows.
(1) Beneficiary. The PBGC will pay a benefit to the beneficiary (if
any) of the benefit that was in pay status as of the deemed
distribution date.
(2) Form and amount of benefit. The PBGC will pay a monthly (or
other periodic) amount equal to the monthly (or other periodic) amount,
if any, that the beneficiary would have received under the form of
payment in effect, plus a lump sum payment equal to the payments the
beneficiary would have received under the plan subsequent to the
missing participant's death and prior to the date as of which the
benefit is paid under paragraph (b)(4) of this section, plus interest
on the missed payments (at the plan rate up to the deemed distribution
date and thereafter at the designated benefit interest rate) to the
date as of which the benefit is paid under paragraph (b)(4) of this
section.
(3) Lump sum payment to estate. The PBGC will make a lump sum
payment to the missing participant's estate equal to the payments that
the missing participant would have received under the plan for the
period prior to the missing participant's death, plus interest on the
missed payments (at the plan rate up to the deemed distribution date
and thereafter at the designated benefit interest rate) to the date
when the lump sum is paid. Notwithstanding the preceding sentence, if a
beneficiary of a missing participant other than the estate establishes
to the PBGC's satisfaction that the beneficiary is entitled to the lump
sum payment, the PBGC will pay the lump sum to such beneficiary.
(4) Time of benefit. The PBGC will pay the survivor benefit
beginning when the beneficiary is located.
(5) Spouse deceased. If the PBGC locates the estate of the deceased
missing participant's spouse under circumstances where a benefit would
have been paid under this paragraph (b) if the spouse had been located
while alive, the PBGC shall pay to the spouse's estate a lump sum
payment computed in the same manner as provided for in paragraph (b)(2)
of this section based on the period from the missing participant's
death to the death of the spouse.
Sec. 4050.11 Limitations.
(a) Exclusive benefit. The benefits provided for under this part
shall be the only benefits payable by the PBGC to missing participants
or to beneficiaries based on the benefits of deceased missing
participants.
(b) Limitation on benefit value. The total actuarial present value
of all benefits paid with respect to a missing participant under
Secs. 4050.8 through 4050.10, determined as of the deemed distribution
date, shall not exceed the missing participant's designated benefit.
(c) Guaranteed benefit. If a missing participant or his or her
beneficiary establishes to the PBGC's satisfaction that the benefit
under Secs. 4050.8 through 4050.10 (based on the designated benefit
actually paid to the PBGC) is less than the minimum benefit in this
paragraph (c), the PBGC shall instead pay the minimum benefit. The
minimum benefit shall be the lesser of:
(1) The benefit as determined under the PBGC's rules for paying
guaranteed benefits in trusteed plans under subparts A and B of part
4022 of this chapter (treating the deemed distribution date as the
termination date for this purpose); or
[[Page 34078]]
(2) The benefit based on the designated benefit that should have
been paid under Sec. 4050.5.
(d) Limitation on annuity starting date. A missing participant (or
his or her survivor) may not elect an annuity starting date after the
later of--
(1) the required beginning date under section 401(a)(9) of the
Code; or
(2) the date when the missing participant (or the survivor) is
notified of his or her right to a benefit.
Sec. 4050.12 Special rules.
(a) Late-discovered participants. The plan administrator of a plan
that terminates with one or more late-discovered participants shall
(after issuing notices to each such participant in accordance with
Secs. 4041.21 and 4041.41 or 4041.46 of this chapter (whichever
apply)), distribute each such late-discovered participant's benefit
within the period (determined without regard to the provisions of this
part) described in Sec. 4041.27(a) or Sec. 4041.48(a) of this chapter
(whichever applies) if practicable or (if not) as soon thereafter as
practicable, but not more than 90 days after the deemed distribution
date (subject to extension under Sec. 4050.12(h)).
(b) Missing participants located quickly. Notwithstanding the
provisions of Secs. 4050.8 through 4050.10, if the PBGC or the plan
administrator locates a missing participant within 30 days after the
PBGC receives the missing participant's designated benefit, the PBGC
may in its discretion return the missing participant's designated
benefit to the plan administrator, and the plan administrator shall
treat the missing participant like a late-discovered participant.
(c) Qualified domestic relations orders. Plan administrators and
the PBGC shall take the provisions of qualified domestic relations
orders (QDROs) under section 206(d)(3) of ERISA or section 414(p) of
the Code into account in determining designated benefits and benefit
payments by the PBGC, including treating an alternate payee under an
applicable QDRO as a missing participant or as a beneficiary of a
missing participant, as appropriate, in accordance with the terms of
the QDRO. For purposes of calculating the amount of the designated
benefit of an alternate payee, the plan administrator shall use the
assumptions for a missing participant who is a beneficiary under
Sec. 4050.5(b).
(d) Employee contributions--(1) Mandatory employee contributions.
Notwithstanding the provisions of Sec. 4050.5, if a missing participant
made mandatory contributions (within the meaning of section 4044(a)(2)
of ERISA), the missing participant's designated benefit shall not be
less than the sum of the missing participant's mandatory contributions
and interest to the deemed distribution date at the plan's rate or the
rate under section 204(c) of ERISA (whichever produces the greater
amount).
(2) Voluntary employee contributions.
(i) Applicability. This paragraph (d)(2) applies to any employee
contributions that were not mandatory (within the meaning of section
4044(a)(2) of ERISA) to which a missing participant is entitled in
connection with the termination of a defined benefit plan.
(ii) Payment to PBGC. A plan administrator, in accordance with the
missing participant forms and instructions, shall pay the employee
contributions described in paragraph (d)(2)(i) of this section
(together with any earnings thereon) to the PBGC, and shall file
Schedule MP with the PBGC, by the time the designated benefit is due
under Sec. 4050.6. Any such amount shall be in addition to the
designated benefit and shall be separately identified.
(iii) Payment by PBGC. In addition to any other amounts paid by the
PBGC under Secs. 4050.8 through 4050.10, the PBGC shall pay any amount
paid to it under paragraph (d)(2)(ii) of this section, with interest at
the designated benefit interest rate from the date of receipt by the
PBGC to the date of payment by the PBGC, in the same manner as
described in Sec. 4050.8 (automatic lump sums), except that if the
missing participant died before the deemed distribution date and there
is no beneficiary, payment shall be made to the missing participant's
estate.
(e) Residual assets. The PBGC shall determine, in a manner
consistent with the purposes of this part and section 4050 of ERISA,
how the provisions of this part shall apply to any distribution, to
participants and beneficiaries who cannot be located, of residual
assets remaining after the satisfaction of benefit liabilities in
connection with the termination of a defined benefit plan. Unless the
PBGC otherwise determines, the deadline for payment of residual assets
for a missing participant and for submission to the PBGC of a Schedule
MP (or an amended Schedule MP) is the 30th day after the date on which
all residual assets have been distributed to all participants and
beneficiaries other than missing participants for whom payment of
residual assets is made to the PBGC.
(f) Sufficient distress terminations. In the case of a plan
undergoing a distress termination (under section 4041(c) of ERISA) that
is sufficient for at least all guaranteed benefits and that distributes
its assets in the manner described in section 4041(b)(3) of ERISA, the
benefit assumed to be payable by the plan for purposes of determining
the amount of the designated benefit under Sec. 4050.5 shall be limited
to the Title IV benefit plus any benefit to which funds under section
4022(c) of ERISA have been allocated.
(g) Similar rules for later payments. If the PBGC determines that
one or more persons should receive benefits (which may be in addition
to benefits already provided) in order for a plan termination to be
valid (e.g., upon audit of the termination), and one or more of such
individuals cannot be located, the PBGC shall determine, in a manner
consistent with the purposes of this part and section 4050 of ERISA,
how the provisions of this part shall apply to such benefits.
(h) Discretionary extensions. The PBGC may in its sole discretion
extend the 120-day amended filing periods in Sec. 4050.6(a)(2)(ii) and
(3) and the 90-day distribution periods in Sec. 4050.6(a)(2) and in
paragraph (a) of this section--
(1) Where a recently-missing participant becomes a late-discovered
participant,
(2) Where the PBGC returns the designated benefit of a missing
participant who is located quickly to the plan administrator under
Sec. 4050.12(b), or
(3) In other unusual circumstances.
(i) Payments beginning after age 70\1/2\. If the PBGC begins paying
an annuity under Sec. 4050.9(a) or 4050.10(a) to a participant or a
participant's spouse after the January 1 following the date when the
participant attained or would have attained age 70\1/2\, the PBGC shall
pay to the participant or the spouse (or their respective estates) or
both, as appropriate, the lump sum equivalent of the past annuity
payments the participant and spouse would have received if the PBGC had
begun making payments on such January 1. The PBGC shall also pay lump
sum equivalents under this paragraph (i) if the PBGC locates the estate
of the participant or spouse after both are deceased. (Nothing in this
paragraph (i) shall increase the total value of the benefits payable
with respect to a missing participant.)
Sec. 4050.13 OMB control number.
The collection of information requirements contained in this part
have been approved by the Office of Management under OMB Control Number
1212-0036.
[[Page 34079]]
Appendix A to part 4050--Examples of Designated Benefit Determinations
for Missing Participants under Sec. 4050.5
The calculation of the designated benefit under Sec. 4050.5 is
illustrated by the following examples.
Example 1. Plan A provides that any participant whose benefit
has a value at distribution of $1,750 or less will be paid a lump
sum, and that no other lump sums will be paid. P, Q, and R are
missing participants.
(1) As of the deemed distribution date, the value of P's benefit
is $1,700 under plan A's assumptions. Under Sec. 4050.5(a)(1), the
plan administrator pays the PBGC $1,700 as P's designated benefit.
(2) As of the deemed distribution date, the value of Q's benefit
is $3,700 under plan A's assumptions and $3,200 under the missing
participant lump sum assumptions. Under Sec. 4050.5(a)(2), the plan
administrator pays the PBGC $3,200 as Q's designated benefit.
(3) As of the deemed distribution date, the value of R's benefit
is $3,400 under plan A's assumptions, $3,600 under the missing
participant lump sum assumptions, and $3,450 under the missing
participant annuity assumptions. Under Sec. 4050.5(a)(3), the plan
administrator pays the PBGC $3,450 as R's designated benefit.
Example 2. Plan B provides for a normal retirement age of 65 and
permits early commencement of benefits at any age between 60 and 65,
with benefits reduced by 5 percent for each year before age 65 that
the benefit begins. The qualified joint and 50 percent survivor
annuity payable under the terms of the plan requires in all cases a
16 percent reduction in the benefit otherwise payable. The plan does
not provide for elective lump sums.
(1) M is a missing participant who separated from service under
plan B with a deferred vested benefit. M is age 50 at the deemed
distribution date, and has a normal retirement benefit of $1,000 per
month payable at age 65 in the form of a single life annuity. M's
benefit as of the deemed distribution date has a value greater than
$3,500 using either plan assumptions or the missing participant lump
sum assumptions. Accordingly, M's designated benefit is to be
determined under Sec. 4050.5(a)(3).
(2) For purposes of determining M's designated benefit, M is
assumed to be married to a spouse who is also age 50 on the deemed
distribution date. M's monthly benefit in the form of the qualified
joint and survivor annuity under the plan varies from $840 at age 65
(the normal retirement age) ($1,000 x (1 - .16)) to $630 at age 60
(the earliest retirement age) ($1,000 x (1 - 5 x (.05)) x (1 -
.16)).
(3) Under Sec. 4050.5(a)(3), M's benefit is to be valued using
the missing participant annuity assumptions. The select and ultimate
interest rates on Plan B's deemed distribution date are 7.50 percent
for the first 20 years and 5.75 percent thereafter. Using these
rates and the blended mortality table described in paragraph (2) of
the definition of ``missing participant annuity assumptions'' in
Sec. 4050.2, the plan administrator determines that the benefit
commencing at age 60 is the most valuable benefit (i.e., the benefit
at age 60 is more valuable than the benefit at ages 61, 62, 63, 64
or 65). The present value as of the deemed distribution date of each
dollar of annual benefit (payable monthly as a joint and 50 percent
survivor annuity) is $5.4307 if the benefit begins at age 60.
(Because a new spouse may succeed to the survivor benefit, the
mortality of the spouse during the deferral period is ignored.)
Thus, without adjustment (loading) for expenses, the value of the
benefit beginning at age 60 is $41,056 (12 x $630 x 5.4307). The
designated benefit is equal to this value plus an expense adjustment
of $300, or a total of $41,356.
Appendix B to Part 4050--Examples of Benefit Payments for Missing
Participants Under Secs. 4050.8 Through 4050.10
The provisions of Secs. 4050.8 through 4050.10 are illustrated
by the following examples.
Example 1. Participant M from Plan B (see Example 2 in Appendix
A of this part) is located. M's spouse is ten years younger than M.
M elects to receive benefits in the form of a joint and 50 percent
survivor annuity commencing at age 62.
(1) M's designated benefit was $41,356. The unloaded designated
benefit was $41,056. As of Plan B's deemed distribution date (and
using the missing participant annuity assumptions), the present
value per dollar of monthly benefit (payable monthly as a joint and
50 percent survivor annuity commencing at age 62 and reflecting the
actual age of M's spouse) is $4.7405. Thus, the monthly benefit to M
at age 62 is $722 ($41,056 / (4.7405 x 12)). M's spouse will
receive $361 (50 percent of $722) per month for life after the death
of M.
(2) If M had instead been found to have died on or after the
deemed distribution date, and M's spouse wanted benefits to commence
when M would have attained age 62, the same calculation would be
performed to arrive at a monthly benefit of $361 to M's spouse.
Example 2. Participant P is a missing participant from Plan C, a
plan that allows elective lump sums upon plan termination. Plan C's
administrator pays a designated benefit of $10,000 to the PBGC on
behalf of P, who was age 30 on the deemed distribution date.
(1) P's spouse, S, is located and has a death certificate
showing that P died on or after the deemed distribution date with S
as spouse. S is the same age as P, and would like survivor benefits
to commence immediately, at age 55 (as permitted by the plan). S's
benefit is the survivor's share of the joint and 50 percent survivor
annuity which is actuarially equivalent, as of the deemed
distribution date, to $9,700 (the unloaded designated benefit).
(2) The select and ultimate interest rates on Plan C's deemed
distribution date were 7.50 percent for the first 20 years and 5.75
percent thereafter. Using these rates and the blended mortality
table described in paragraph (2) of the definition of ``missing
participant annuity assumptions'' in Sec. 4050.2, the present value
as of the deemed distribution date of each dollar of annual benefit
(payable monthly as a joint and 50 percent survivor annuity) is
$2.4048 if the benefit begins when S and P would have been age 55.
Thus, the monthly benefit to S commencing at age 55 is $168 (50
percent of $9,700 / (2.4048 x 12)). Since P could have elected a
lump sum upon plan termination, S may elect a lump sum. S's lump sum
is the present value as of the deemed distribution date (using the
missing participant annuity assumptions) of the monthly benefit of
$168, accumulated with interest at the designated benefit interest
rate to the date paid.
PART 4061--AMOUNTS PAYABLE BY THE PENSION BENEFIT GUARANTY
CORPORATION
Sec. 4061.1 Cross-references.
See part 4022 of this chapter regarding benefits payable under
terminated single-employer plans and Sec. 4281.47 of this chapter
regarding financial assistance to pay benefits under insolvent
multiemployer plans.
PART 4062--LIABILITY FOR TERMINATION OF SINGLE-EMPLOYER PLANS
Sec.
4062.1 Purpose and scope.
4062.2 Definitions.
4062.3 Amount and payment of section 4062(b) liability.
4062.4 Determinations of net worth and collective net worth.
4062.5 Net worth record date.
4062.6 Net worth notification and information.
4062.7 Calculating interest on liability and refunds of
overpayments.
4062.8 Arrangements for satisfying liability.
4062.9 Filing of documents.
4062.10 Computation of time.
Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367, 1368.
Sec. 4062.1 Purpose and scope.
The purpose of this part is to set forth rules for determination
and payment of the liability incurred, under section 4062(b) of ERISA,
upon termination of any single-employer plan and, to the extent
appropriate, determination of the liability incurred with respect to
multiple employer plans under sections 4063 and 4064 of ERISA. The
provisions of this part regarding the amount of liability to the PBGC
that is incurred upon termination of a single-employer plan apply with
respect to a plan for which a notice of intent to terminate under
section 4041(c) of ERISA is issued or proceedings to terminate under
section 4042 of ERISA are instituted after December 17, 1987. Those
provisions also apply, to the extent described in paragraph (a) of this
section, to the amount of liability for withdrawal from a multiple
employer plan after that date.
[[Page 34080]]
Sec. 4062.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
benefit liabilities, Code, contributing sponsor, controlled group,
ERISA, fair market value, guaranteed benefit, multiple employer plan,
notice of intent to terminate, PBGC, person, plan, plan administrator,
proposed termination date, single-employer plan, and termination date.
In addition, for purposes of this part, the term collective net
worth of persons subject to liability in connection with a plan
termination means the sum of the individual net worths of all persons
that have individual net worths which are greater than zero and that
(as of the termination date) are contributing sponsors of the
terminated plan or members of their controlled groups, as determined in
accordance with section 4062(d)(1) of ERISA and Sec. 4062.4 of this
part.
Sec. 4062.3 Amount and payment of section 4062(b) liability.
(a) Amount of liability.--(1) General rule. Except as provided in
paragraph (a)(2) of this section, the amount of section 4062(b)
liability is the total amount (as of the termination date) of the
unfunded benefit liabilities (within the meaning of section 4001(a)(18)
of ERISA) to all participants and beneficiaries under the plan,
together with interest calculated from the termination date in
accordance with Sec. 4062.7.
(2) Special rule in case of subsequent finding of inability to pay
guaranteed benefits. In any distress termination proceeding under
section 4041(c) of ERISA and part 4041 of this chapter in which (as
described in section 4041(c)(3)(C)(ii) of ERISA), after a determination
that the plan is sufficient for benefit liabilities or for guaranteed
benefits, the plan administrator finds that the plan is or will be
insufficient for guaranteed benefits and the PBGC concurs with that
finding, or the PBGC makes such a finding on its own initiative,
actuarial present values shall be determined as of the date of the
notice to, or the finding by, the PBGC of insufficiency for guaranteed
benefits.
(b) Payment of liability. Section 4062(b) liability is due and
payable as of the termination date, in cash or securities acceptable to
the PBGC, except that, as provided in Sec. 4062.8(c), the PBGC shall
prescribe commercially reasonable terms for payment of so much of such
liability as exceeds 30 percent of the collective net worth of persons
subject to liability in connection with a plan termination. The PBGC
may make alternative arrangements, as provided in Sec. 4062.8(b).
Sec. 4062.4 Determinations of net worth and collective net worth.
(a) General rules. When a contributing sponsor, or member(s) of a
contributing sponsor's controlled group, notifies and submits
information to the PBGC in accordance with Sec. 4062.6, the PBGC shall
determine the net worth, as of the net worth record date, of that
contributing sponsor and any members of its controlled group based on
the factors set forth in paragraph (c) of this section and shall
include the value of any assets that it determines, pursuant to
paragraph (d) of this section, have been improperly transferred. In
making such determinations, the PBGC will consider information
submitted pursuant to Sec. 4062.6. The PBGC shall then determine the
collective net worth of persons subject to liability in connection with
a plan termination.
(b) Partnerships and sole proprietorships. In the case of a person
that is a partnership or a sole proprietorship, net worth does not
include the personal assets and liabilities of the partners or sole
proprietor, except for the assets included pursuant to paragraph (d) of
this section. As used in this paragraph, ``personal assets'' are those
assets which do not produce income for the business being valued or are
not used in the business.
(c) Factors for determining net worth. A person's net worth is
equal to its fair market value and fair market value shall be
determined on the basis of the factors set forth below, to the extent
relevant; different factors may be considered with respect to different
portions of the person's operations.
(1) A bona fide sale of, agreement to sell, or offer to purchase or
sell the business of the person made on or about the net worth record
date.
(2) A bona fide sale of, agreement to sell, or offer to purchase or
sell stock or a partnership interest in the person, made on or about
the net worth record date.
(3) If stock in the person is publicly traded, the price of such
stock on or about the net worth record date.
(4) The price/earnings ratios and prices of stocks of similar
trades or businesses on or about the net worth record date.
(5) The person's economic outlook, as reflected by its earnings and
dividend projections, current financial condition, and business
history.
(6) The economic outlook for the person's industry and the market
it serves.
(7) The appraised value, including the liquidating value, of the
person's tangible and intangible assets.
(8) The value of the equity assumed in a plan of reorganization of
a person in a case under title 11, United States Code, or any similar
law of a state or political subdivision thereof.
(9) Any other factor relevant in determining the person's net
worth.
(d) Improper transfers. A person's net worth shall include the
value of any assets transferred by the person which the PBGC determines
were improperly transferred for the purpose, as inferred from all the
facts and circumstances, and with the effect of avoiding liability
under this part. Assets ``improperly transferred'' include but are not
limited to assets sold, leased or otherwise transferred for less than
adequate consideration and assets distributed as gifts, capital
distributions and stock redemptions inconsistent with past practices of
the employer. The word ``transfer'' includes but is not limited to
sales, assignments, pledges, leases, gifts and dividends.
Sec. 4062.5 Net worth record date.
(a) General. Unless the PBGC establishes an earlier net worth
record date pursuant to paragraph (b) of this section, the net worth
record date, for all purposes under this part, is the plan's
termination date.
(b) Establishment of an earlier net worth record date. At any time
during a termination proceeding, the PBGC, in order to prevent undue
loss to or abuse of the plan termination insurance system, may
establish as the net worth record date an earlier date during the 120-
day period ending with the termination date.
(c) Notification. Whenever the PBGC establishes an earlier net
worth record date, it shall immediately give liable person(s) written
notification of that fact. The written notice may also include a
request for additional information, as provided in Sec. 4062.6(a)(3).
Sec. 4062.6 Net worth notification and information.
(a) General. (1) A contributing sponsor or member of the
contributing sponsor's controlled group that believes section 4062(b)
liability exceeds 30 percent of the collective net worth of persons
subject to liability in connection with a plan termination shall--
(i) So notify the PBGC by the 90th day after the notice of intent
to terminate is filed with the PBGC or, if no notice of intent to
terminate is filed with the PBGC and the PBGC institutes
[[Page 34081]]
proceedings under section 4042 of ERISA, within 30 days after the
establishment of the plan's termination date in such proceedings; and
(ii) Submit to the PBGC the information specified in paragraph (b)
of this section with respect to the contributing sponsor and each
member of the contributing sponsor's controlled group (if any)--
(A) By the 120th day after the proposed termination date, or
(B) If no notice of intent to terminate is filed with the PBGC and
the PBGC institutes proceedings under section 4042 of ERISA, within 120
days after the establishment of the plan's termination date in such
proceedings.
(2) If a contributing sponsor or a member of its controlled group
complies with the requirements of paragraph (a)(1) of this section, the
PBGC will consider the requirements to be satisfied by all members of
that controlled group.
(3) The PBGC may require any person subject to liability--
(i) To submit the information specified in paragraph (b) of this
section within a shorter period whenever the PBGC believes that its
ability to obtain information or payment of liability is in jeopardy,
and
(ii) To submit additional information within 30 days, or a
different specified time, after the PBGC's written notification that it
needs such information to make net worth determinations.
(4) If a provision of paragraph (b) of this section or a PBGC
notice specifies information previously submitted to the PBGC, a person
may respond by identifying the previous submission in which the
response was provided.
(b) Net worth information. The following information specifications
apply, individually, with respect to each person subject to liability:
(1) An estimate, made in accordance with Sec. 4062.4, of the
person's net worth on the net worth record date and a statement, with
supporting evidence, of the basis for the estimate.
(2) A copy of the person's audited (or if not available, unaudited)
financial statements for the 5 full fiscal years plus any partial
fiscal year preceding the net worth record date. The statements must
include balance sheets, income statements, and statements of changes in
financial position and must be accompanied by the annual reports, if
available.
(3) A statement of all sales and copies of all offers or agreements
to buy or sell at least 25 percent of the person's assets or at least 5
percent of the person's stock or partnership interest, made on or about
the net worth record date.
(4) A statement of the person's current financial condition and
business history.
(5) A statement of the person's business plans, including projected
earnings and, if available, dividend projections.
(6) Any appraisal of the person's fixed and intangible assets made
on or about the net worth record date.
(7) A copy of any plan of reorganization, whether or not confirmed,
with respect to a case under title 11, United States Code, or
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
any
similar law of a state or political subdivision thereof, involving the
person and occurring within 5 calendar years prior to or any time after
the net worth record date.
(c) Incomplete submission. If a contributing sponsor and/or members
of the contributing sponsor's controlled group do not submit all of the
information required pursuant to paragraph (a) of this section (other
than the estimate described in paragraph (b)(1) of this section) with
respect to each person subject to liability, the PBGC may base
determinations of net worth and the collective net worth of persons
subject to liability in connection with a plan termination on any such
information that such person(s) did submit, as well as any other
pertinent information that the PBGC may have. In general, the PBGC will
view information as of a date further removed from the net worth record
date as having less probative value than information as of a date
nearer to the net worth record date.
Sec. 4062.7 Calculating interest on liability and refunds of
overpayments.
(a) Interest. Whether or not the PBGC has granted deferred payment
terms pursuant to Sec. 4062.8, the amount of liability under this part
includes interest, from the termination date, on any unpaid portion of
the liability. Such interest accrues at the rate set forth in paragraph
(c) of this section until the liability is paid in full and is
compounded daily. When liability under this part is paid in more than
one payment, the PBGC will apply each payment to the satisfaction of
accrued interest and then to the reduction of principal.
(b) Refunds. If a contributing sponsor or member(s) of a
contributing sponsor's controlled group pays the PBGC an amount that
exceeds the full amount of liability under this part, the PBGC shall
refund the excess amount, with interest at the rate set forth in
paragraph (c) of this section. Interest on an overpayment accrues from
the later of the date of the overpayment or 10 days prior to the
termination date until the date of the refund and is compounded daily.
(c) Interest rate. The interest rate on liability under this part
and refunds thereof is the annual rate prescribed in section 6601(a) of
the Code, and will change whenever the interest rate under section
6601(a) of the Code changes.
Sec. 4062.8 Arrangements for satisfying liability.
(a) General. The PBGC will defer payment, or agree to other
arrangements for the satisfaction, of any portion of liability to the
PBGC only when--
(1) As provided in paragraph (b) of this section, the PBGC
determines that such action is necessary to avoid the imposition of a
severe hardship and that there is a reasonable possibility that the
terms so prescribed will be met and the entire liability paid; or
(2) As provided in paragraph (c) of this section, the PBGC
determines that section 4062(b) liability exceeds 30 percent of the
collective net worth of persons subject to liability in connection with
a plan termination.
(b) Upon request. If the PBGC determines that such action is
necessary to avoid the imposition of a severe hardship on persons that
are or may become liable under section 4062, 4063, or 4064 of ERISA and
that there is a reasonable possibility that persons so liable will be
able to meet the terms prescribed and pay the entire liability, the
PBGC, in its discretion and when so requested in accordance with
paragraph (b)(2) of this section, may grant deferred payment or other
terms for the satisfaction of such liability.
(1) In determining what, if any, terms to grant, the PBGC shall
examine the following factors:
(i) The ratio of the liability to the net worth of the person
making the request and (if different) to the collective net worth of
persons subject to liability in connection with a plan termination.
(ii) The overall financial condition of persons that are or may
become liable, including, with respect to each such person--
(A) The amounts and terms of existing debts;
(B) The amount and availability of liquid assets;
(C) Current and past cash flow; and
(D) Projected cash flow, including a projection of the impact on
operations that would be caused by the immediate full payment of the
liability.
(iii) The availability of credit from private sector sources to the
person making the request and to other liable persons.
(2) A contributing sponsor or member of a contributing sponsor's
controlled
[[Page 34082]]
group may request deferred payment or other terms for the satisfaction
of any portion of the liability under section 4062, 4063, or 4064 of
ERISA at any time by filing a written request. The request must include
the information specified in Sec. 4062.6(b), except that--
(i) If the request is filed one year or more after the net worth
record date, references to ``the net worth record date'' in
Sec. 4062.6(b) shall be replaced by ``the most recent annual
anniversary of the net worth record date''; and
(ii) Information that already has been submitted to the PBGC need
not be submitted again.
(c) Liability exceeding 30 percent of collective net worth. If the
PBGC determines that section 4062(b) liability exceeds 30 percent of
the collective net worth of persons subject to the liability, the PBGC
will, after making a reasonable effort to reach agreement with such
persons, prescribe commercially reasonable terms for payment of so much
of the liability as exceeds 30 percent of the collective net worth of
such persons. The terms prescribed by the PBGC for payment of that
portion of the liability (including interest) will provide for deferral
of 50 percent of any amount otherwise payable for any year if a person
subject to such liability demonstrates to the satisfaction of the PBGC
that no person subject to such liability has any individual pre-tax
profits (within the meaning of section 4062(d)(2) of ERISA) for such
person's last full fiscal year ending during that year.
(d) Interest. Interest on unpaid liability is calculated in
accordance with Sec. 4062.7(a).
(e) Security during period of deferred payment. As a condition to
the granting of deferred payment terms, PBGC may, in its discretion,
require that the liable person(s) provide PBGC with such security for
its obligations as the PBGC deems adequate.
Sec. 4062.9 Filing of documents.
(a) Date of filing. Any document (including information) required
or permitted to be filed under this part is considered filed on the
date of the United States postmark stamped on the cover in which the
document is mailed, provided that--
(1) The postmark was made by the United States Postal Service; and
(2) The document was mailed postage prepaid, properly packaged and
addressed to the PBGC. If the conditions stated in both paragraphs
(a)(1) and (a)(2) of this section are not met, the document is
considered filed on the date it is received by the PBGC. Documents
received after regular business hours are considered filed on the next
regular business day.
(b) Where to file. Payments of liability shall be clearly
designated as such and include the name of the plan. Such payments
shall be sent to the address specified in the notification or demand
for liability issued by the PBGC under Sec. 4068.3 or, if not so
specified, to the address provided, upon request, by the Investment
Management Division, Pension Benefit Guaranty Corporation, 1200 K
Street, NW., Washington, DC 20005-4026. Any document (including
information) required or permitted to be filed under this part, except
for documents relating to appeals, shall be submitted to the Insurance
Operations Department, Pension Benefit Guaranty Corporation, at the
above address. Any document submitted pursuant to part 4003 in
connection with an appeal of an initial determination shall be
submitted to the Appeals Board, Pension Benefit Guaranty Corporation,
at the above address.
Sec. 4062.10 Computation of time.
In computing any period of time prescribed or allowed by this
subpart, the day of the act, event, or default from which the
designated period of time begins to run is not counted. The last day of
the period so computed shall be included, unless it is a Saturday,
Sunday, or Federal holiday, in which event the period runs until the
end of the next day which is not a Saturday, Sunday, or a Federal
holiday. For the purpose of computing interest accrued, a Saturday,
Sunday or Federal holiday referred to in the previous sentence shall be
included.
(Approved by the Office of Management and Budget under control
number 1212-0017.)
PART 4063--WITHDRAWAL LIABILITY; PLANS UNDER MULTIPLE CONTROLLED
GROUPS
Authority: 29 U.S.C. 1302(b)(3).
Sec. 4063.1 Cross-references.
(a) Part 4062, subpart A, of this chapter sets forth rules for
determination and payment of the liability incurred, under section
4062(b) of ERISA, upon termination of any single-employer plan and, to
the extent appropriate, determination of the liability incurred with
respect to multiple employer plans under sections 4063 and 4064 of
ERISA.
(b) Part 4068 of this chapter includes rules regarding the PBGC's
lien under section 4068 of ERISA with respect to liability arising
under section 4062, 4063, or 4064.
PART 4064--LIABILITY ON TERMINATION OF SINGLE-EMPLOYER PLANS UNDER
MULTIPLE CONTROLLED GROUPS
Authority: 29 U.S.C. 1302(b)(3).
Sec. 4064.1 Cross-references.
(a) Part 4062, subpart A, of this chapter sets forth rules for
determination and payment of the liability incurred under section
4062(b) of ERISA, upon termination of any single-employer plan and, to
the extent appropriate, determination of the liability incurred with
respect to multiple employer plans under sections 4063 and 4064 of
ERISA.
(b) Part 4068 of this chapter includes rules regarding the PBGC's
lien under section 4068 of ERISA with respect to liability arising
under section 4062, 4063, or 4064.
PART 4065--ANNUAL REPORT
Sec.
4065.1 Purpose and scope.
4065.2 Definitions.
4065.3 Filing requirement.
Authority: 29 U.S.C. 1302, 1365.
Sec. 4065.1 Purpose and scope.
The purpose of this part is to specify the form and content of the
Annual Report required by section 4065 of ERISA. This part applies to
all plans covered by title IV of ERISA.
Sec. 4065.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
ERISA, IRS, PBGC, and plan.
Sec. 4065.3 Filing requirement.
Plan administrators shall file the Annual Report on IRS/DOL/PBGC
Forms 5500, 5500-C, 5500-K or 5500-R, as appropriate, in accordance
with the instructions therein. (Approved by the Office of Management
and Budget under control number 1212-0026.)
PART 4067--RECOVERY OF LIABILITY FOR PLAN TERMINATIONS
Sec. 4067.1 Cross-reference.
Section 4062.8 of this chapter contains rules on deferred payment
and other arrangements for satisfaction of liability to the PBGC after
termination of single-employer plans.
PART 4068--LIEN FOR LIABILITY
Sec.
4068.1 Purpose; cross-references.
4068.2 Definitions.
4068.3 Notification of and demand for liability.
4068.4 Lien.
[[Page 34083]]
Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367-1368.
Sec. 4068.1 Purpose; cross-references.
This part contains rules regarding the PBGC's lien under section
4068 of ERISA with respect to liability arising under section 4062,
4063, or 4064 of ERISA.
Sec. 4068.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
ERISA, PBGC, person, plan, and termination date.
Collective net worth of persons subject to liability in connection
with a plan termination has the meaning in Sec. 4062.2.
Sec. 4068.3 Notification of and demand for liability.
(a) Notification of liability. Except as provided in paragraph (c)
of this section, when the PBGC has determined the amount of the
liability under part 4062 and whether or not the liability has already
been paid, the PBGC shall notify liable person(s) in writing of the
amount of the liability. If the full liability has not yet been paid,
the notification will include a request for payment of the full
liability and will indicate that, as provided in Sec. 4062.8, the PBGC
will prescribe commercially reasonable terms for payment of so much of
the liability as it determines exceeds 30 percent of the collective net
worth of persons subject to liability in connection with a plan
termination. In all cases, the notification will include a statement of
the right to appeal the assessment of liability pursuant to part 4003.
(b) Demand for liability. Except as provided in paragraph (c) of
this section, if person(s) liable to the PBGC fail to pay the full
liability and no appeal is filed or an appeal is filed and the decision
on appeal finds liability, the PBGC will issue a demand letter for the
liability--
(1) If no appeal is filed, upon the expiration of time to file an
appeal under part 4003; or
(2) If an appeal is filed, upon issuance of a decision on the
appeal finding that there is liability under this part.
The demand letter will indicate that, as provided in Sec. 4062.8,
the PBGC will prescribe commercially reasonable terms for payment of so
much of the liability as it determines exceeds 30 percent of the
collective net worth of such persons.
(c) Special rule. Notwithstanding paragraphs (a) and (b) of this
section, the PBGC may, in any case in which it believes that its
ability to assert or obtain payment of liability is in jeopardy, issue
a demand letter for the liability under this part immediately upon
determining the liability, without first issuing a notification of
liability pursuant to paragraph (a) of this section. When the PBGC
issues a demand letter under this paragraph, there is no right to an
appeal pursuant to part 4003 of this chapter.
Sec. 4068.4 Lien.
If any person liable to the PBGC under section 4062, 4063, or 4064
of ERISA fails or refuses to pay the full amount of such liability
within the time specified in the demand letter issued under
Sec. 4068.3, the PBGC shall have a lien in the amount of the liability,
including interest, arising as of the plan's termination date, upon all
property and rights to property, whether real or personal, belonging to
that person, except that such lien may not be in an amount in excess of
30 percent of the collective net worth of all persons described in
section 4062(a) of ERISA and part 4062 of this chapter.
PART 4203--EXTENSION OF SPECIAL WITHDRAWAL LIABILITY RULES
Sec.
4203.1 Purpose and scope.
4203.2 Definitions.
4203.3 Plan adoption of special withdrawal rules.
4203.4 Requests for PBGC approval of plan amendments.
4203.5 PBGC action on requests.
4203.6 OMB control number.
Authority: 29 U.S.C. 1302(b)(3).
Sec. 4203.1 Purpose and scope.
(a) Purpose. The purpose of this part is to prescribe procedures
whereby a multiemployer plan may, pursuant to sections 4203(f) and
4208(e)(3) of ERISA, request the PBGC to approve a plan amendment which
establishes special complete or partial withdrawal liability rules.
(b) Scope. This part applies to a multiemployer pension plan
covered by Title IV of ERISA.
Sec. 4203.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
complete withdrawal, employer, ERISA, multiemployer plan, PBGC, person,
plan, plan sponsor, and plan year.
Sec. 4203.3 Plan adoption of special withdrawal rules.
(a) General rule. A plan may, subject to the approval of the PBGC,
establish by plan amendment special complete or partial withdrawal
liability rules. A complete withdrawal liability rule adopted pursuant
to this part shall be similar to the rules for the construction and
entertainment industries described in section 4203 (b) and (c) of
ERISA. A partial withdrawal liability rule adopted pursuant to this
part shall be consistent with the complete withdrawal rule adopted by
the plan. A plan amendment adopted under this part may not be put into
effect until it is approved by the PBGC.
(b) Discretionary provisions of the plan amendment. A plan
amendment adopted pursuant to this part may--
(1) Cover an entire industry or industries, or be limited to a
segment of an industry; and
(2) Apply to cessations of the obligation to contribute that
occurred prior to the adoption of the amendment.
Sec. 4203.4 Requests for PBGC approval of plan amendments.
(a) Filing of request. A plan shall apply to the PBGC for approval
of a plan amendment which establishes special complete or partial
withdrawal liability rules. The request for approval shall be filed
after the amendment is adopted. PBGC approval shall also be required
for any subsequent modification of the plan amendment, other than a
repeal of the amendment which results in employers being subject to the
general statutory rules on withdrawal.
(b) Who may request. The plan sponsor, or a duly authorized
representative acting on behalf of the plan sponsor, shall sign and
submit the request.
(c) Where to file. The request shall be delivered by mail or
submitted by hand to Reports Processing, Insurance Operations
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW.,
Washington, DC 20005-4026.
(d) Information. Each request shall contain the following
information:
(1) The name and address of the plan for which the plan amendment
is being submitted, and the telephone number of the plan sponsor or its
authorized representative.
(2) A copy of the executed amendment, including the proposed
effective date.
(3) A statement certifying that notice of the adoption of the
amendment and the request for approval filed under this part has been
given to all employers who have an obligation to contribute under the
plan and to all employee organizations representing employees covered
under the plan.
(4) A statement indicating how the withdrawal rules in the plan
amendment would operate in the event of a sale of assets by a
contributing employer or the cessation of the obligation to contribute
or the cessation of covered operations by all employers.
(5) A copy of the plan's most recent actuarial valuation.
[[Page 34084]]
(6) For each of the previous five plan years, information on the
number of plan participants by category (active, retired and separate
vested) and a complete financial statement. This requirement may be
satisfied by the submission for each of those years of Form 5500,
including schedule B, or similar reports required under prior law.
(7) A detailed description of the industry to which the plan
amendment will apply, including information sufficient to demonstrate
the effect of withdrawals on the plan's contribution base, and
information establishing industry characteristics which would indicate
that withdrawals in the industry do not typically have an adverse
effect on the plan's contribution base. Such industry characteristics
include the mobility of employees, the intermittent nature of
employment, the project-by-project nature of the work, extreme
fluctuations in the level of an employer's covered work under the plan,
the existence of a consistent pattern of entry and withdrawal by
employers, and the local nature of the work performed.
(e) Supplemental information. In addition to the information
described in paragraph (d) of this section, a plan may submit any other
information it believes is pertinent to its request. The PBGC may
require the plan sponsor to submit any other information the PBGC
determines it needs to review a request under this part.
Sec. 4203.5 PBGC action on requests.
(a) General. The PBGC shall approve a plan amendment providing for
the application of special complete or partial withdrawal liability
rules upon a determination by the PBGC that the plan amendment--
(1) Will apply only to an industry that has characteristics that
would make use of the special withdrawal rules appropriate; and
(2) Will not pose a significant risk to the insurance system.
(b) Notice of pendency of request. As soon as practicable after
receiving a request for approval of a plan amendment containing all the
information required under Sec. 4203.4, the PBGC shall publish a notice
of the pendency of the request in the Federal Register. The notice
shall contain a summary of the request and invite interested persons to
submit written comments to the PBGC concerning the request. The notice
will normally provide for a comment period of 45 days.
(c) PBGC decision on request. After the close of the comment
period, PBGC shall issue its decision in writing on the request for
approval of a plan amendment. Notice of the decision shall be published
in the Federal Register.
Sec. 4203.6 OMB control number.
The collections of information contained in this part have been
approved by the Office of Management and Budget under OMB control
number 1212-0050.
PART 4204--VARIANCES FOR SALE OF ASSETS
Subpart A--General
Sec.
4204.1 Purpose and scope.
4204.2 Definitions.
Subpart B--Variance of the Statutory Requirements
4204.11 Variance of the bond/escrow and sale-contract requirements.
4204.12 De minimis transactions.
4204.13 Net income and net tangible assets tests.
Subpart C--Procedures for Individual and Class Variances or Exemptions
4204.21 Requests to PBGC for variances and exemptions.
4204.22 PBGC action on requests.
Authority: 29 U.S.C. 1302(b)(3), 1384(c).
Subpart A--General
Sec. 4204.1 Purpose and scope.
(a) Purpose. Under section 4204 of ERISA, an employer that ceases
covered operations under a multiemployer plan, or ceases to have an
obligation to contribute for such operations, because of a bona fide,
arm's-length sale of assets to an unrelated purchaser does not incur
withdrawal liability if certain conditions are met. One condition is
that the sale contract provide that the seller will be secondarily
liable if the purchaser withdraws from the plan within five years and
does not pay its withdrawal liability. Another condition is that the
purchaser furnish a bond or place funds in escrow, for a period of five
plan years, in a prescribed amount. Section 4204 also authorizes the
PBGC to provide for variances or exemptions from these requirements.
Subpart B of this part provides variances and exemptions from the
requirements for certain sales of assets. Subpart C of this part
establishes procedures under which a purchaser or seller may, when the
conditions set forth in subpart B are not satisfied or when the parties
decline to provide certain financial information to the plan, request
the PBGC to grant individual or class variances or exemptions from the
requirements.
(b) Scope. In general, this part applies to any sale of assets
described in section 4204(a)(1) of ERISA. However, this part does not
apply to a sale of assets involving operations for which the seller is
obligated to contribute to a plan described in section 404(c) of the
Code, or a continuation of such a plan, unless the plan is amended to
provide that section 4204 applies.
Sec. 4204.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
Code, employer, ERISA, IRS, multiemployer plan, PBGC, person, plan,
plan administrator, plan sponsor, and plan year.
In addition, for purposes of this part:
Date of determination means the date on which a seller ceases
covered operations or ceases to have an obligation to contribute for
such operations as a result of a sale of assets within the meaning of
section 4204(a) of ERISA.
Net income after taxes means revenue minus expenses after taxes
(excluding extraordinary and non-recurring income or expenses), as
presented in an audited financial statement or, in the absence of such
statement, in an unaudited financial statement, each prepared in
conformance with generally accepted accounting principles.
Net tangible assets means tangible assets (assets other than
licenses, patents copyrights, trade names, trademarks, goodwill,
experimental or organizational expenses, unamortized debt discounts and
expenses and all other assets which, under generally accepted
accounting principles, are deemed intangible) less liabilities (other
than pension liabilities). Encumbered assets shall be excluded from net
tangible assets only to the extent of the amount of the encumbrance.
Purchaser means a purchaser described in section 4204(a)(1) of
ERISA.
Seller means a seller described in section 4204(a)(1) of ERISA.
Subpart B--Variance of the Statutory Requirements
Sec. 4204.11 Variance of the bond/escrow and sale-contract
requirements.
(a) General rule. A purchaser's bond or escrow under section
4204(a)(1)(B) of ERISA and the sale-contract provision under section
4204(a)(1)(C) are not required if the parties to the sale inform the
plan in writing of their intention that the sale be covered by section
4204 of ERISA and demonstrate to the satisfaction of the plan that at
least one of the criteria contained in Sec. 4204.12 or Sec. 4204.13(a)
is satisfied.
(b) Requests after posting of bond or establishment of escrow. A
request for a
[[Page 34085]]
variance may be filed at any time. If, after a purchaser has posted a
bond or placed money in escrow pursuant to section 4204(a)(1)(B) of
ERISA, the purchaser demonstrates to the satisfaction of the plan that
the criterion in either Sec. 4204.13 (a)(1) or (a)(2) is satisfied,
then the bond shall be cancelled or the amount in escrow shall be
refunded. For purposes of considering a request after the bond or
escrow is in place, the words ``the year preceding the date of the
variance request'' shall be substituted for ``the date of
determination'' for the first mention of that term in both Sec. 4204.13
(a)(1) and (a)(2). In addition, in determining the purchaser's average
net income after taxes under Sec. 4204.13(a)(1), for any year included
in the average for which the net income figure does not reflect the
interest expense incurred with respect to the sale, the purchaser's net
income shall be reduced by the amount of interest paid with respect to
the sale in the fiscal year following the date of determination.
(c) Information required. A request for a variance shall contain
financial or other information that is sufficient to establish that one
of the criteria in Sec. 4204.12 or Sec. 4204.13(a) is satisfied. A
request on the basis of either Sec. 4204.13 (a)(1) or (a)(2) shall also
include a copy of the purchaser's audited (if available) or (if not)
unaudited financial statements for the specified time period.
(d) Limited exemption during pendency of request. Provided that all
of the information required to be submitted is submitted before the
first day of the first plan year beginning after the sale, a plan may
not, pending its decision on the variance, require a purchaser to post
a bond or place an amount in escrow pursuant to section 4204(a)(1)(B).
In the event a bond or escrow is not in place pursuant to the preceding
sentence, and the plan determines that the request does not qualify for
a variance, the purchaser shall comply with section 4204(a)(1)(B)
within 30 days after the date on which it receives notice of the plan's
decision.
(Approved by the Office of Management and Budget under control
number 1212--0021)
Sec. 4204.12 De minimis transactions.
The criterion under this section is that the amount of the bond or
escrow does not exceed the lesser of $250,000 or two percent of the
average total annual contributions made by all employers to the plan,
for the purposes of section 412(b)(3)(A) of the Code, for the three
most recent plan years ending before the date of determination. For
this purpose, ``contributions made'' shall have the same meaning as the
term has under Sec. 4211.12(a) of this chapter.
Sec. 4204.13 Net income and net tangible assets tests.
(a) General. The criteria under this section are that either--
(1) Net income test. The purchaser's average net income after taxes
for its three most recent fiscal years ending before the date of
determination (as defined in Sec. 4204.12), reduced by any interest
expense incurred with respect to the sale which is payable in the
fiscal year following the date of determination, equals or exceeds 150
percent of the amount of the bond or escrow required under ERISA
section 4204(a)(1)(B); or
(2) Net tangible assets test. The purchaser's net tangible assets
at the end of the fiscal year preceding the date of determination (as
defined in Sec. 4204.12), equal or exceed--
(i) If the purchaser was not obligated to contribute to the plan
before the sale, the amount of unfunded vested benefits allocable to
the seller under section 4211 (with respect to the purchased
operations), as of the date of determination, or
(ii) If the purchaser was obligated to contribute to the plan
before the sale, the sum of the amount of unfunded vested benefits
allocable to the purchaser and to the seller under ERISA section 4211
(with respect to the purchased operations), each as of the date of
determination.
(b) Special rule when more than one plan is covered by request. For
the purposes of paragraphs (a)(1) and (a)(2), if the transaction
involves the assumption by the purchaser of the seller's obligation to
contribute to more than one multiemployer plan, then the total amount
of the bond or escrow or of the unfunded vested benefits, as
applicable, for all of the plans with respect to which the purchaser
has not posted a bond or escrow shall be used to determine whether the
applicable test is met.
(c) Non-applicability of tests in event of purchaser's insolvency.
A purchaser will not qualify for a variance under this subpart pursuant
to paragraph (a)(1) or (a)(2) of this section if, as of the earlier of
the date of the plan's decision on the variance request or the first
day of the first plan year beginning after the date of determination,
the purchaser is the subject of a petition under title 11, United
States Code, or of a proceeding under similar provisions of state
insolvency laws.
Subpart C--Procedures for Individual and Class Variances or
Exemptions
Sec. 4204.21 Requests to PBGC for variances and exemptions.
(a) General. If a transaction covered by this part does not satisfy
the conditions set forth in subpart B of this part, or if the parties
decline to provide to the plan privileged or confidential financial
information within the meaning of section 552(b)(4) of the Freedom of
Information Act (5 U.S.C. 552), the purchaser or seller may request
from the PBGC an exemption or variance from the requirements of section
4204(a)(1) (B) and (C) of ERISA.
(b) Who may request. A purchaser or a seller may file a request for
a variance or exemption. The request may be submitted by one or more
duly authorized representatives acting on behalf of the party or
parties. When a contributing employer withdraws from a plan as a result
of related sales of assets involving several purchasers, or withdraws
from more than one plan as a result of a single sale, the application
may request a class variance or exemption for all the transactions.
(c) Where to file. The request shall be delivered by mail or
submitted by hand to Reports Processing, Insurance Operations
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW.,
Washington, DC 20005-4026.
(d) Information. Each request shall contain the following
information:
(1) The name and address of the plan or plans for which the
variance or exemption is being requested, and the telephone number of
the plan administrator of each plan.
(2) For each plan described in paragraph (d)(1) of this section,
the nine-digit Employer Identification Number (EIN) assigned by the IRS
to the plan sponsor and the three-digit Plan Identification Number (PN)
assigned by the plan sponsor to the plan, and, if different, also the
EIN and PN last filed with the PBGC. If an EIN or PN has not been
assigned, that should be indicated.
(3) The name, address and telephone number of the seller and of its
duly authorized representative, if any.
(4) The name, address and telephone number of the purchaser and of
its duly authorized representative, if any.
(5) A full description of each transaction for which the request is
being made, including effective date.
(6) A statement explaining why the requested variance or exemption
would not significantly increase the risk of financial loss to the
plan, including evidence, financial or otherwise, that supports that
conclusion.
[[Page 34086]]
(7) When the request for a variance or exemption is filed by the
seller alone, a statement signed by the purchaser indicating its
intention that section 4204 of ERISA apply to the sale of assets.
(8) A statement indicating the amount of the purchaser's bond or
escrow required under section 4204(a)(1)(B) of ERISA.
(9) The estimated amount of withdrawal liability that the seller
would otherwise incur as a result of the sale if section 4204 did not
apply to the sale.
(10) A certification that a complete copy of the request has been
sent to each plan described in paragraph (d)(1) of this section and
each collective bargaining representative of the seller's employees by
certified mail, return receipt requested.
(e) Additional information. In addition to the information
described in paragraph (d) of this section, the PBGC may require the
purchaser, the seller, or the plan to submit any other information the
PBGC determines it needs to review the request.
(f) Disclosure of information. Any party submitting information
pursuant to this section may include a statement of whether any of the
information is of a nature that its disclosure may not be required
under the Freedom of Information Act, 5 U.S.C. 552. The statement
should specify the information that may not be subject to disclosure
and the grounds therefor.
(Approved by the Office of Management and Budget under control
number 1212-0021)
Sec. 4204.22 PBGC action on requests.
(a) General. The PBGC shall approve a request for a variance or
exemption if PBGC determines that approval of the request is warranted,
in that it--
(1) Would more effectively or equitably carry out the purposes of
title IV of ERISA; and
(2) Would not significantly increase the risk of financial loss to
the plan.
(b) Notice of pendency of request. As soon as practicable after
receiving a variance or exemption request containing all the
information specified in Sec. 4204.21, the PBGC shall publish a notice
of the pendency of the request in the Federal Register. The notice
shall provide that any interested person may, within the period of time
specified therein, submit written comments to the PBGC concerning the
request. The notice will usually provide for a comment period of 45
days.
(c) PBGC decision on request. The PBGC shall issue a decision on a
variance or exemption request as soon as practicable after the close of
the comment period described in paragraph (b) of this section. PBGC's
decision shall be in writing, and if the PBGC disapproves the request,
the decision shall state the reasons therefor. Notice of the decision
shall be published in the Federal Register.
PART 4206--ADJUSTMENT OF LIABILITY FOR A WITHDRAWAL SUBSEQUENT TO A
PARTIAL WITHDRAWAL
Sec.
4206.1 Purpose and scope.
4206.2 Definitions.
4206.3 Credit against liability for a subsequent withdrawal.
4206.4 Amount of credit in plans using the presumptive method.
4206.5 Amount of credit in plans using the modified presumptive
method.
4206.6 Amount of credit in plans using the rolling-5 method.
4206.7 Amount of credit in plans using the direct attribution
method.
4206.8 Reduction of credit for abatement or other reduction of
prior partial withdrawal liability.
4206.9 Amount of credit in plans using alternative allocation
methods.
4206.10 Special rule for 70-percent decline partial withdrawals.
Authority: 29 U.S.C. 1302(b)(3) and 1386(b).
Sec. 4206.1 Purpose and scope.
(a) Purpose. The purpose of this part is to prescribe rules,
pursuant to section 4206(b) of ERISA, for adjusting the partial or
complete withdrawal liability of an employer that previously partially
withdrew from the same multiemployer plan. Section 4206(b)(1) provides
that when an employer that has partially withdrawn from a plan
subsequently incurs liability for another partial or a complete
withdrawal from that plan, the employer's liability for the subsequent
withdrawal is to be reduced by the amount of its liability for the
prior partial withdrawal (less any waiver or reduction of that prior
liability). Section 4206(b)(2) requires the PBGC to prescribe
regulations adjusting the amount of this credit to ensure that the
liability for the subsequent withdrawal properly reflects the
employer's share of liability with respect to the plan. The purpose of
the credit is to protect a withdrawing employer from being charged
twice for the same unfunded vested benefits of the plan. The reduction
in the credit protects the other employers in the plan from becoming
responsible for unfunded vested benefits properly allocable to the
withdrawing employer. In the interests of simplicity, the rules in this
part provide for, generally, a one-step calculation of the adjusted
credit under section 4206(b)(2) against the subsequent liability,
rather than for separate calculations first of the credit under section
4206(b)(1) and then of the reduction in the credit under paragraph
(b)(2) of that section. In cases where the withdrawal liability for the
prior partial withdrawal was reduced by an abatement or other reduction
of that liability, the adjusted credit is further reduced in accordance
with Sec. 4206.8 of this part.
(b) Scope. This part applies to multiemployer plans covered under
Title IV of ERISA, and to employers that have partially withdrawn from
such plans after September 25, 1980 and subsequently completely or
partially withdraw from the same plan.
Sec. 4206.2 Definitions.
The following are defined in Sec. 4001.2 of this chapter: Code,
employer, ERISA, multiemployer plan, PBGC, plan, and plan year.
In addition, for purposes of this part:
Complete withdrawal means a complete withdrawal as described in
section 4203 of ERISA.
Partial withdrawal means a partial withdrawal as described in
section 4205 of ERISA.
Sec. 4206.3 Credit against liability for a subsequent withdrawal.
Whenever an employer that was assessed withdrawal liability for a
partial withdrawal from a plan partially or completely withdraws from
that plan in a subsequent plan year, it shall receive a credit against
the new withdrawal liability in an amount greater than or equal to
zero, determined in accordance with this part. If the credit determined
under Secs. 4206.4 through 4206.9 is less than zero, the amount of the
credit shall equal zero.
Sec. 4206.4 Amount of credit in plans using the presumptive method.
(a) General. In a plan that uses the presumptive allocation method
described in section 4211(b) of ERISA, the credit shall equal the sum
of the unamortized old liabilities determined under paragraph (b) of
this section, multiplied by the fractions described or determined under
paragraph (c) of this section. When an employer's prior partial
withdrawal liability has been reduced or waived, this credit shall be
adjusted in accordance with Sec. 4206.8.
(b) Unamortized old liabilities. The amounts determined under this
paragraph are the employer's proportional shares, if any, of the
unamortized amounts as of the end of the plan year preceding the
withdrawal for which the credit is being calculated, of--
[[Page 34087]]
(1) The plan's unfunded vested benefits as of the end of the last
plan year ending before September 26, 1980;
(2) The annual changes in the plan's unfunded vested benefits for
plan years ending after September 25, 1980, and before the year of the
prior partial withdrawal; and
(3) The reallocated unfunded vested benefits (if any), as
determined under section 4211(b)(4) of ERISA, for plan years ending
before the year of the prior partial withdrawal.
(c) Employer's allocable share of old liabilities. The sum of the
amounts determined under paragraph (b) are multiplied by the two
fractions described in this paragraph in order to determine the amount
of the old liabilities that was previously assessed against the
employer.
(1) The first fraction is the fraction determined under section
4206(a)(2) of ERISA for the prior partial withdrawal.
(2) The second fraction is a fraction, the numerator of which is
the amount of the liability assessed against the employer for the prior
partial withdrawal, and the denominator of which is the product of--
(i) The amount of unfunded vested benefits allocable to the
employer as if it had completely withdrawn as of the date of the prior
partial withdrawal (determined without regard to any adjustments),
multiplied by--
(ii) The fraction determined under section 4206(a)(2) of ERISA for
the prior partial withdrawal.
Sec. 4206.5 Amount of credit in plans using the modified presumptive
method.
(a) General. In a plan that uses the modified presumptive method
described in section 4211(c)(2) of ERISA, the credit shall equal the
sum of the unamortized old liabilities determined under paragraph (b)
of this section, multiplied by the fractions described or determined
under paragraph (c) of this section. When an employer's prior partial
withdrawal liability has been reduced or waived, this credit shall be
adjusted in accordance with Sec. 4206.8.
(b) Unamortized old liabilities. The amounts described in this
paragraph shall be determined as of the end of the plan year preceding
the withdrawal for which the credit is being calculated, and are the
employer's proportional shares, if any, of--
(1) The plan's unfunded vested benefits as of the end of the last
plan year ending before September 26, 1980, reduced as if those
obligations were being fully amortized in level annual installments
over 15 years beginning with the first plan year ending on or after
such date; and
(2) The aggregate post-1980 change amount determined under section
4211(c)(2)(C) of ERISA as if the employer had completely withdrawn in
the year of the prior partial withdrawal, reduced as if those
obligations were being fully amortized in level annual installments
over the 5-year period beginning with the plan year in which the prior
partial withdrawal occurred.
(c) Employer's allocable share of old liabilities. The sum of the
amounts determined under paragraph (b) are multiplied by the two
fractions described in this paragraph in order to determine the amount
of old liabilities that was previously assessed against the employer.
(1) The first fraction is the fraction determined under section
4206(a)(2) of ERISA for the prior partial withdrawal.
(2) The second fraction is a fraction, the numerator of which is
the amount of the liability assessed against the employer for the prior
partial withdrawal, and the denominator of which is the product of--
(i) The amount of unfunded vested benefits allocable to the
employer as if it had completely withdrawn as of the date of the prior
partial withdrawal (determined without regard to any adjustments),
multiplied by--
(ii) The fraction determined under section 4206(a)(2) of ERISA for
the prior partial withdrawal.
Sec. 4206.6 Amount of credit in plans using the rolling-5 method.
In a plan that uses the rolling-5 allocation method described in
section 4211(c)(3) of ERISA, the credit shall equal the amount of the
liability assessed for the prior partial withdrawal, reduced as if that
amount was being fully amortized in level annual installments over the
5-year period beginning with the plan year in which the prior partial
withdrawal occurred. When an employer's prior partial withdrawal
liability has been reduced or waived, this credit shall be adjusted in
accordance with Sec. 4206.8.
Sec. 4206.7 Amount of credit in plans using the direct attribution
method.
In a plan that uses the direct attribution allocation method
described in section 4211(c)(4) of ERISA, the credit shall equal the
amount of the liability assessed for the prior partial withdrawal,
reduced as if that amount was being fully amortized in level annual
installments beginning with the plan year in which the prior partial
withdrawal occurred, over the greater of 10 years or the amortization
period for the resulting base when the combined charge base and the
combined credit base are offset under section 412(b)(4) of the Code.
When an employer's prior partial withdrawal liability has been reduced
or waived, this credit shall be adjusted in accordance with
Sec. 4206.8.
Sec. 4206.8 Reduction of credit for abatement or other reduction of
prior partial withdrawal liability.
(a) General. If an employer's withdrawal liability for a prior
partial withdrawal has been reduced or waived, the credit determined
pursuant to Secs. 4206.4 through 4206.7 shall be adjusted in accordance
with this section.
(b) Computation. The adjusted credit is calculated by multiplying
the credit determined under the preceding sections of this part by a
fraction--
(1) the numerator of which is the excess of the total partial
withdrawal liability of the employer for all partial withdrawals in
prior years (excluding those partial withdrawals for which the credit
is zero) over the present value of each abatement or other reduction of
that prior withdrawal liability calculated as of the date on which that
prior partial withdrawal liability was determined; and
(2) the denominator of which is the total partial withdrawal
liability of the employer for all partial withdrawals in prior years
(excluding those partial withdrawals for which the credit is zero).
Sec. 4206.9 Amount of credit in plans using alternative allocation
methods.
A plan that has adopted an alternative method of allocating
unfunded vested benefits pursuant to section 4211(c)(5) of ERISA and
part 4211 of this chapter shall adopt, by plan amendment, a method of
calculating the credit provided by Sec. 4206.3 that is consistent with
the rules in Secs. 4206.4 through 4206.8 for plans using the statutory
allocation method most similar to the plan's alternative allocation
method.
Sec. 4206.10 Special rule for 70-percent decline partial withdrawals.
For the purposes of applying the rules in Secs. 4206.4 through
4206.9 in any case in which either the prior or subsequent partial
withdrawal resulted from a 70-percent contribution decline (or a 35-
percent decline in the case of certain retail food industry plans), the
first year of the 3-year testing period shall be deemed to be the plan
year in which the partial withdrawal occurred.
[[Page 34088]]
PART 4207--REDUCTION OR WAIVER OF COMPLETE WITHDRAWAL LIABILITY
Sec.
4207.1 Purpose and scope.
4207.2 Definitions.
4207.3 Abatement.
4207.4 Withdrawal liability payments during pendency of abatement
determination.
4207.5 Requirements for abatement.
4207.6 Partial withdrawals after reentry.
4207.7 Liability for subsequent complete withdrawals and related
adjustments for allocating unfunded vested benefits.
4207.8 Liability for subsequent partial withdrawals.
4207.9 Special rules.
4207.10 Plan rules for abatement.
Authority: 29 U.S.C. 1302(b)(3), 1387.
Sec. 4207.1 Purpose and scope.
(a) Purpose. The purpose of this part is to prescribe rules,
pursuant to section 4207(a) of ERISA, for reducing or waiving the
withdrawal liability of certain employers that have completely
withdrawn from a multiemployer plan and subsequently resume covered
operations under the plan. This part prescribes rules pursuant to which
the plan must waive the employer's obligation to make future liability
payments with respect to its complete withdrawal and must calculate the
amount of the employer's liability for a partial or complete withdrawal
from the plan after its reentry into the plan. This part also provides
procedures, pursuant to section 4207(b) of ERISA, for plan sponsors of
multiemployer plans to apply to PBGC for approval of plan amendments
that provide for the reduction or waiver of complete withdrawal
liability under conditions other than those specified in section
4207(a) of ERISA and this part.
(b) Scope. This part applies to multiemployer plans covered under
title IV of ERISA, and to employers that have completely withdrawn from
such plans after September 25, 1980, and that have not, as of the date
of their reentry into the plan, fully satisfied their obligation to pay
withdrawal liability arising from the complete withdrawal.
Sec. 4207.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
employer, ERISA, IRS, Multiemployer Act, multiemployer plan,
nonforfeitable benefit, PBGC, plan, and plan year .
In addition, for purposes of this part:
Complete withdrawal means a complete withdrawal as described in
section 4203 of ERISA.
Eligible employer means the employer, as defined in section 4001(b)
of ERISA, as it existed on the date of its initial partial or complete
withdrawal, as applicable. An eligible employer shall continue to be an
eligible employer notwithstanding the occurrence of any of the
following events:
(1) A restoration involving a mere change in identity, form or
place of organization, however effected;
(2) A reorganization involving a liquidation into a parent
corporation;
(3) A merger, consolidation or division solely between (or among)
trades or businesses (whether or not incorporated) of the employer; or
(4) An acquisition by or of, or a merger or combination with
another trade or business.
Partial withdrawal means a partial withdrawal as described in
section 4205 of ERISA.
Period of withdrawal means the plan year in which the employer
completely withdrew from the plan, the plan year in which the employer
reentered the plan and all intervening plan years.
Sec. 4207.3 Abatement.
(a) General. Whenever an eligible employer that has completely
withdrawn from a multiemployer plan reenters the plan, it may apply to
the plan for abatement of its complete withdrawal liability.
Applications shall be filed by the date of the first scheduled
withdrawal liability payment falling due after the employer resumes
covered operations or, if later, the fifteenth calendar day after the
employer resumes covered operations. Applications shall identify the
eligible employer, the withdrawn employer, if different, the date of
withdrawal, and the date of resumption of covered operations. Upon
receiving an application for abatement, the plan sponsor shall
determine, in accordance with paragraph (b) of this section, whether
the employer satisfies the requirements for abatement of its complete
withdrawal liability under Sec. 4207.5, Sec. 4207.9, or a plan
amendment which has been approved by PBGC pursuant to Sec. 4207.10. If
the plan sponsor determines that the employer satisfies the
requirements for abatement of its complete withdrawal liability, the
provisions of paragraph (c) of this section shall apply. If the plan
sponsor determines that the employer does not satisfy the requirements
for abatement of its complete withdrawal liability, the provisions of
paragraphs (d) and (e) of this section shall apply.
(b) Determination of abatement. As soon as practicable after an
eligible employer that completely withdrew from a multiemployer plan
applies for abatement, the plan sponsor shall determine whether the
employer satisfies the requirements for abatement of its complete
withdrawal liability under this part and shall notify the employer in
writing of its determination and of the consequences of its
determination, as described in paragraphs (c) or (d) and (e) of this
section, as appropriate. If a bond or escrow has been provided to the
plan under Sec. 4207.4, the plan sponsor shall send a copy of the
notice to the bonding or escrow agent.
(c) Effects of abatement. If the plan sponsor determines that the
employer satisfies the requirements for abatement of its complete
withdrawal liability under this part, then--
(1) The employer shall have no obligation to make future withdrawal
liability payments to the plan with respect to its complete withdrawal;
(2) The employer's liability for a subsequent withdrawal shall be
determined in accordance with Sec. 4207.7 or Sec. 4207.8, as
applicable;
(3) Any bonds furnished under Sec. 4207.4 shall be cancelled and
any amounts held in escrow under Sec. 4207.4 shall be refunded to the
employer; and
(4) Any withdrawal liability payments due after the reentry and
made by the employer to the plan shall be refunded by the plan without
interest.
(d) Effects of non-abatement. If the plan sponsor determines that
the employer does not satisfy the requirements for abatement of its
complete withdrawal liability under this part, then--
(1) The bond or escrow furnished under Sec. 4207.4 shall be paid to
the plan within 30 days after the date of the plan sponsor's notice
under paragraph (b) of this section;
(2) The employer shall pay to the plan within 30 days after the
date of the plan sponsor's notice under paragraph (b) of this section,
the amount of its withdrawal liability payment or payments, with
respect to which the bond or escrow was furnished, in excess of the
bond or escrow;
(3) The employer shall resume making its withdrawal liability
payments as they are due to the plan; and
(4) The employer shall be treated as a new employer for purposes of
any future application of the withdrawal liability rules in sections
4201-4225 of title IV of ERISA with respect to its participation in the
plan after its reentry into the plan, except that in plans using the
``direct attribution'' method (section 4211(c)(4) of ERISA), the
nonforfeitable benefits attributable to service with the employer shall
include nonforfeitable benefits attributable to service prior to
[[Page 34089]]
reentry that were not nonforfeitable at that time.
(e) Collection of payments due and review of non-abatement
determination. The rules in part 4219, subpart C, of this chapter
(relating to overdue, defaulted, and overpaid withdrawal liability)
shall apply with respect to all payments required to be made under
paragraphs (d)(2) and (d)(3) of this section. For this purpose, a
payment required to be made under paragraph (d)(2) shall be treated as
a withdrawal liability payment due on the 30th day after the date of
the plan sponsor's notice under paragraph (b) of this section.
(1) Review of non-abatement determination. A plan sponsor's
determination that the employer does not satisfy the requirements for
abatement under this part shall be subject to plan review under section
4219(b)(2) of ERISA and to arbitration under section 4221 of ERISA,
within the times prescribed by those sections. For this purpose, the
plan sponsor's notice under paragraph (b) of this section shall be
treated as a demand under section 4219(b)(1) of ERISA.
(2) Determination of abatement. If the plan sponsor or an
arbitrator determines that the employer satisfies the requirements for
abatement of its complete withdrawal liability under this part, the
plan sponsor shall immediately refund the following payments (plus
interest, except as indicated below, determined in accordance with
Sec. 4219.31(d) of this chapter as if the payments were overpayments of
withdrawal liability) to the employer in a lump sum:
(i) The amount of the employer's withdrawal liability payment or
payments, without interest, due after its reentry and made by the
employer.
(ii) The bond or escrow paid to the plan under paragraph (d)(1) of
this section.
(iii) The amount of the employer's withdrawal liability payment or
payments in excess of the bond or escrow, paid to the plan under
paragraph (d)(2) of this section.
(iv) Any withdrawal liability payment made by the employer to the
plan pursuant to paragraph (d)(3) of this section after the plan
sponsor's notice under paragraph (b) of this section.
Sec. 4207.4 Withdrawal liability payments during pendency of abatement
determination.
(a) General rule. An eligible employer that completely withdraws
from a multiemployer plan and subsequently reenters the plan may, in
lieu of making withdrawal liability payments due after its reentry,
provide a bond to, or establish an escrow account for, the plan that
satisfies the requirements of paragraph (b) of this section or any plan
rules adopted under paragraph (d) of this section, pending a
determination by the plan sponsor under Sec. 4207.3(b) of whether the
employer satisfies the requirements for abatement of its complete
withdrawal liability. An employer that applies for abatement and
neither provides a bond/escrow nor pays its withdrawal liability
payments remains eligible for abatement.
(b) Bond/escrow. The bond or escrow allowed by this section shall
be in an amount equal to 70 percent of the withdrawal liability
payments that would otherwise be due. The bond or escrow relating to
each payment shall be furnished before the due date of that payment. A
single bond or escrow may be provided for more than one payment due
during the pendency of the plan sponsor's determination. The bond or
escrow agreement shall provide that if the plan sponsor determines that
the employer does not satisfy the requirements for abatement of its
complete withdrawal liability under this part, the bond or escrow shall
be paid to the plan upon notice from the plan sponsor to the bonding or
escrow agent. A bond provided under this paragraph shall be issued by a
corporate surety company that is an acceptable surety for purposes of
section 412 of ERISA.
(c) Notice of bond/escrow. Concurrently with posting a bond or
establishing an escrow account under paragraph (b) of this section, the
employer shall notify the plan sponsor. The notice shall include a
statement of the amount of the bond or escrow, the scheduled payment or
payments with respect to which the bond or escrow is being furnished,
and the name and address of the bonding or escrow agent.
(d) Plan amendments concerning bond/escrow. A plan may, by
amendment, adopt rules decreasing the amount specified in paragraph (b)
of a bond or escrow allowed under this section. A plan amendment
adopted under this paragraph may be applied only to the extent that it
is consistent with the purposes of ERISA.
Sec. 4207.5 Requirements for abatement.
(a) General rule. Except as provided in Sec. 4207.9 (d) and (e)
(pertaining to acquisitions, mergers and other combinations), an
eligible employer that completely withdraws from a multiemployer plan
and subsequently reenters the plan shall have its liability for that
withdrawal abated in accordance with Sec. 4207.3(c) if the employer
resumes covered operations under the plan, and the number of
contribution base units with respect to which the employer has an
obligation to contribute under the plan for the measurement period (as
defined in paragraph (b) of this section) after it resumes covered
operations exceeds 30 percent of the number of contribution base units
with respect to which the employer had an obligation to contribute
under the plan for the base year (as defined in paragraph (c) of this
section).
(b) Measurement period. If the employer resumes covered operations
under the plan at least six full months prior to the end of a plan year
and would satisfy the test in paragraph (a) based on its contribution
base units for that plan year, then the measurement period shall be the
period from the date it resumes covered operations until the end of
that plan year. If the employer would not satisfy this test, or if the
employer resumes covered operations under the plan less than six full
months prior to the end of the plan year, the measurement period shall
be the first twelve months after it resumes covered operations.
(c) Base year. For purposes of paragraph (a) of this section, the
employer's number of contribution base units for the base year is the
average number of contribution base units for the two plan years in
which its contribution base units were the highest, within the five
plan years immediately preceding the year of its complete withdrawal.
Sec. 4207.6 Partial withdrawals after reentry.
(a) General rule. For purposes of determining whether there is a
partial withdrawal of an eligible employer whose liability is abated
under this part upon the employer's reentry into the plan or at any
time thereafter, the plan sponsor shall apply the rules in section 4205
of ERISA, as modified by the rules in this section, and section 108 of
the Multiemployer Act. A partial withdrawal of an employer whose
liability is abated under this part may occur under these rules upon
the employer's reentry into the plan. However, a plan sponsor may not
demand payment of withdrawal liability for a partial withdrawal
occurring upon the employer's reentry before the plan sponsor has
determined that the employer's liability for its complete withdrawal is
abated under this part and has so notified the employer in accordance
with Sec. 4207.3(b).
(b) Partial withdrawal--70-percent contribution decline. The plan
sponsor shall determine whether there is a partial withdrawal described
in section 4205(a)(1) of ERISA (relating to a 70-
[[Page 34090]]
percent contribution decline) in accordance with the rules in section
4205 of ERISA and section 108 of the Multiemployer Act, as modified by
the rules in this paragraph, and shall determine the amount of an
employer's liability for that partial withdrawal in accordance with the
rules in Sec. 4207.8(b).
(1) Definition of ``3-year testing period.'' For purposes of
section 4205(b)(1) of ERISA, the term ``3-year testing period'' means
the period consisting of the plan year for which the determination is
made and the two immediately preceding plan years, excluding any plan
year during the period of withdrawal.
(2) Contribution base units for high base year. For purposes of
section 4205(b)(1) of ERISA and except as provided in section 108(d)(3)
of the Multiemployer Act, in determining the number of contribution
base units for the high base year, if the five plan years immediately
preceding the beginning of the 3-year testing period include a plan
year during the period of withdrawal, the number of contribution base
units for each such year of withdrawal shall be deemed to be the
greater of--
(i) The employer's contribution base units for that plan year; or
(ii) The average of the employer's contribution base units for the
three plan years preceding the plan year in which the employer
completely withdrew from the plan.
(c) Partial withdrawal--partial cessation of contribution
obligation. The plan sponsor shall determine whether there is a partial
withdrawal described in section 4205(a)(2) of ERISA (relating to a
partial cessation of the employer's contribution obligation) in
accordance with the rules in section 4205 of ERISA, as modified by the
rules in this paragraph, and section 108 of the Multiemployer Act. In
making this determination, the sponsor shall exclude all plan years
during the period of withdrawal. A partial withdrawal under this
paragraph can occur no earlier than the plan year of reentry. If the
sponsor determines that there was a partial withdrawal, it shall
determine the amount of an employer's liability for that partial
withdrawal in accordance with the rules in Sec. 4207.8(c).
Sec. 4207.7 Liability for subsequent complete withdrawals and related
adjustments for allocating unfunded vested benefits.
(a) General. When an eligible employer that has had its liability
for a complete withdrawal abated under this part completely withdraws
from the plan, the employer's liability for that subsequent withdrawal
shall be determined in accordance with the rules in sections 4201-4225
of title IV, as modified by the rules in this section, and section 108
of the Multiemployer Act. In the case of a combination described in
Sec. 4207.9(d), the modifications described in this section shall be
applied only with respect to that portion of the eligible employer that
had previously withdrawn from the plan. In the case of a combination
described in Sec. 4207.9(e), the modifications shall be applied
separately with respect to each previously withdrawn employer that
comprises the eligible employer. In addition, when a plan has abated
the liability of a reentered employer, if the plan uses either the
``presumptive'' or the ``direct attribution'' method (section 4211(b)
or (c)(4), respectively) for allocating unfunded vested benefits, the
plan shall modify those allocation methods as described in this section
in allocating unfunded vested benefits to any employer that withdraws
from the plan after the reentry.
(b) Allocation of unfunded vested benefits for subsequent
withdrawal in plans using ``presumptive'' method. In a plan using the
``presumptive'' allocation method under section 4211(b) of ERISA, the
amount of unfunded vested benefits allocable to a reentered employer
for a subsequent withdrawal shall equal the sum of--
(1) The unamortized amount of the employer's allocable shares of
the amounts described in section 4211(b)(1), for the plan years
preceding the initial withdrawal, determined as if the employer had not
previously withdrawn;
(2) The sum of the unamortized annual credits attributable to the
year of the initial withdrawal and each succeeding year ending prior to
reentry; and
(3) The unamortized amount of the employer's allocable shares of
the amounts described in section 4211(b)(1) (A) and (C) for plan years
ending after its reentry. For purposes of paragraph (b)(2), the annual
credit for a plan year is the amount by which the employer's withdrawal
liability payments for the year exceed the greater of the employer's
imputed contributions or actual contributions for the year. The
employer's imputed contributions for a year shall equal the average
annual required contributions of the employer for the three plan years
preceding the initial withdrawal. The amount of the credit for a plan
year is reduced by 5 percent of the original amount for each succeeding
plan year ending prior to the year of the subsequent withdrawal.
(c) Allocation of unfunded vested benefits for subsequent
withdrawal in plans using ``modified presumptive'' or ``rolling-5''
method. In a plan using either the ``modified presumptive'' allocation
method under section 4211(c)(2) of ERISA or the ``rolling-5'' method
under section 4211(c)(3), the amount of unfunded vested benefits
allocable to a reentered employer for a subsequent withdrawal shall
equal the sum of--
(1) The amount determined under section 4211 (c)(2) or (c)(3) of
ERISA, as appropriate, as if the date of reentry were the employer's
initial date of participation in the plan; and
(2) The outstanding balance, as of the date of reentry, of the
unfunded vested benefits allocated to the employer for its previous
withdrawal (as defined in paragraph (c)(2)(i) of this section) reduced
as if that amount were being fully amortized in level annual
installments, at the plan's funding rate as of the date of reentry,
over the period described in paragraph (c)(2)(ii), beginning with the
first plan year after reentry.
(i) The outstanding balance of the unfunded vested benefits
allocated to an employer for its previous withdrawal is the excess of
the amount determined under section 4211 (c)(2) or (c)(3) of ERISA as
of the end of the plan year in which the employer initially withdrew,
accumulated with interest at the plan's funding rate for that year,
from that year to the date of reentry, over the withdrawal liability
payments made by the employer, accumulated with interest from the date
of payment to the date of reentry at the plan's funding rate for the
year of entry.
(ii) The period referred to in paragraph (c)(2) for plans using the
modified presumptive method is the greater of five years, or the number
of full plan years remaining on the amortization schedule under section
4211(c)(2)(B)(i) of ERISA. For plans using the rolling-5 method, the
period is five years.
(d) Adjustments applicable to all employers in plans using
``presumptive'' method. In a plan using the ``presumptive'' allocation
method under section 4211(b) of ERISA, when the plan has abated the
withdrawal liability of a reentered employer pursuant to this part, the
following adjustments to the allocation method shall be made in
computing the unfunded vested benefits allocable to any employer that
withdraws from the plan in a plan year beginning after the reentry:
(1) The sum of the unamortized amounts of the annual credits of a
reentered employer shall be treated as a reallocated amount under
section
[[Page 34091]]
4211(b)(4) of ERISA in the plan year in which the employer reenters.
(2) In the event that the 5-year period used to compute the
denominator of the fraction described in section 4211 (b)(2)(E) and
(b)(4)(D) of ERISA includes a year during the period of withdrawal of a
reentered employer, the contributions for a year during the period of
withdrawal shall be adjusted to include any actual or imputed
contributions of the employer, as determined under paragraph (b) of
this section.
(e) Adjustments applicable to all employers in plans using ``direct
attribution'' method. In a plan using the ``direct attribution'' method
under section 4211(c)(4) of ERISA, when the plan has abated the
withdrawal liability of a reentered employer pursuant to this part, the
following adjustments to the allocation method shall be made in
computing the unfunded vested benefits allocable to any employer that
withdraws from the plan in a plan year beginning after the reentry:
(1) The nonforfeitable benefits attributable to service with a
reentered employer prior to its initial withdrawal shall be treated as
benefits that are attributable to service with that employer.
(2) For purposes of section 4211(c)(4)(D) (ii) and (iii) of ERISA,
withdrawal liability payments made by a reentered employer shall be
treated as contributions made by the reentered employer.
(f) Plans using alternative allocation methods under section
4211(c)(5). A plan that has adopted an alternative method of allocating
unfunded vested benefits pursuant to section 4211(c)(5) of ERISA and
part 4211 of this chapter shall adopt by plan amendment a method of
determining a reentered employer's allocable share of the plan's
unfunded vested benefits upon its subsequent withdrawal. The method
shall treat the reentered employer and other withdrawing employers in a
manner consistent with the treatment under the paragraph(s) of this
section applicable to plans using the statutory allocation method most
similar to the plan's alternative allocation method.
(g) Adjustments to amount of annual withdrawal liability payments
for subsequent withdrawal. For purposes of section 4219(c)(1)(C) (i)(I)
and (ii)(I) of ERISA, in determining the amount of the annual
withdrawal liability payments for a subsequent complete withdrawal, if
the period of ten consecutive plan years ending before the plan year in
which the withdrawal occurs includes a plan year during the period of
withdrawal, the employer's number of contribution base units, used in
section 4219(c)(1)(C)(i)(I), or the required employer contributions,
used in section 4219(c)(1)(C)(ii)(I), for each such plan year during
the period of withdrawal shall be deemed to be the greater of--
(1) The employer's contribution base units or the required employer
contributions, as applicable, for that year; or
(2) The average of the employer's contribution base units or of the
required employer contributions, as applicable, for those plan years
not during the period of withdrawal, within the ten consecutive plan
years ending before the plan year in which the employer's subsequent
complete withdrawal occurred.
Sec. 4207.8 Liability for subsequent partial withdrawals.
(a) General. When an eligible employer that has had its liability
for a complete withdrawal abated under this part partially withdraws
from the plan, the employer's liability for that subsequent partial
withdrawal shall be determined in accordance with the rules in sections
4201-4225 of ERISA, as modified by the rules in Sec. 4207.7 (b) through
(g) of this part and the rules in this section, and section 108 of the
Multiemployer Act.
(b) Liability for a 70-percent contribution decline. The amount of
an employer's liability under section 4206(a) (relating to the
calculation of liability for a partial withdrawal), section 4208
(relating to the reduction of liability for a partial withdrawal) and
section 4219(c)(1) (relating to the schedule of partial withdrawal
liability payments) of ERISA, for a subsequent partial withdrawal
described in section 4205(a)(1) of ERISA (relating to a 70-percent
contribution decline) shall be modified in accordance with the rules in
this paragraph.
(1) Definition of ``3-year testing period.'' For purposes of
sections 4206(a) and 4219(c)(1) of ERISA, and paragraphs (b)(2)-(b)(4)
of this section, the term ``3-year testing period'' means the period
consisting of the plan year for which the determination is made and the
two immediately preceding plan years, excluding any plan year during
the period of withdrawal.
(2) Determination date of section 4211 allocable share. For
purposes of section 4206(a)(1)(B) of ERISA, the amount determined under
section 4211 shall be determined as if the employer had withdrawn from
the plan in a complete withdrawal on the last day of the first plan
year in the 3-year testin
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
g period or the last day of the plan year in
which the employer reentered the plan, whichever is later.
(3) Calculation of fractional share of section 4211 amount. For
purposes of sections 4206(a)(2)(B)(ii) and 4219(c)(1)(E)(ii) of ERISA,
if the five plan years immediately preceding the beginning of the 3-
year testing period include a plan year during the period of
withdrawal, then, in determining the denominator of the fraction
described in section 4206(a)(2), the employer's contribution base units
for each such year of withdrawal shall be deemed to be the greater of--
(i) The employer's contribution base units for that plan year; or
(ii) The average of the employer's contribution base units for the
three plan years preceding the plan year in which the employer
completely withdrew from the plan.
(4) Contribution base units for high base year. If the five plan
years immediately preceding the beginning of the 3-year testing period
include a plan year during the period of withdrawal, then for purposes
of section 4208 (a) and (b)(1) of ERISA, the number of contribution
base units for the high base year shall be the number of contribution
base units determined under paragraph (b)(3) of this section.
(c) Liability for partial cessation of contribution obligation. The
amount of an employer's liability under section 4206(a) (relating to
the calculation of liability for a partial withdrawal) and section
4219(c)(1) (relating to the amount of the annual partial withdrawal
liability payments) of ERISA, for a subsequent partial withdrawal
described in section 4205(a)(2) of ERISA (relating to a partial
cessation of the contribution obligation) shall be modified in
accordance with the rules in this paragraph. For purposes of sections
4206(a)(2)(B)(i) and 4219(c)(1)(E)(ii) of ERISA, if the five plan years
immediately preceding the plan year in which the partial withdrawal
occurs include a plan year during the period of withdrawal, the
denominator of the fraction described in section 4206(a)(2) shall be
determined in accordance with the rule set forth in paragraph (b)(3) of
this section.
Sec. 4207.9 Special rules.
(a) Employer that has withdrawn and reentered the plan before the
effective date of this part. This part shall apply, in accordance with
the rules in this paragraph, with respect to an eligible employer that
completely withdraws from a multiemployer plan after September 25,
1980, and is performing covered work under the plan on the effective
date of this part. Upon the
[[Page 34092]]
application of an employer described in the preceding sentence, the
plan sponsor of a multiemployer plan shall determine whether the
employer satisfies the requirements for abatement of its complete
withdrawal liability under this part. Pending the plan sponsor's
determination, the employer may provide the plan with a bond or escrow
that satisfies the requirements of Sec. 4207.4, in lieu of making its
withdrawal liability payments due after its application for an
abatement determination. The plan sponsor shall notify the employer in
writing of its determination and the consequences of its determination
as described in Sec. 4207.3 (c) or (d) and (e), as applicable. If the
plan sponsor determines that the employer qualifies for abatement, only
withdrawal liability payments made prior to the employer's reentry
shall be retained by the plan; payments made by the employer after its
reentry shall be refunded to the employer, with interest on those made
prior to the application for abatement, in accordance with
Sec. 4207.3(e)(2). If a bond or escrow has been provided to the plan in
accordance with Sec. 4207.4, the plan sponsor shall send a copy of the
notice to the bonding or escrow agent. Sections 4207.6 through 4207.8
shall apply with respect to the employer's subsequent complete
withdrawal occurring on or after the effective date of this part, or
partial withdrawal occurring either before or after that date. This
paragraph shall not negate reasonable actions taken by plans prior to
the effective date of this part under plan rules implementing section
4207(a) of ERISA that were validly adopted pursuant to section 405 of
the Multiemployer Act.
(b) Employer with multiple complete withdrawals that has reentered
the plan before effective date of this part. If an employer described
in paragraph (a) of this section has completely withdrawn from a
multiemployer plan on two or more occasions before the effective date
of this part, the rules in paragraph (a) of this section shall be
applied as modified by this paragraph.
(1) The plan sponsor shall determine whether the employer satisfies
the requirements for abatement under Sec. 4207.5 based on the most
recent complete withdrawal.
(2) If the employer satisfies the requirements for abatement, the
employer's liability with respect to all previous complete withdrawals
shall be abated.
(3) If the liability is abated, Secs. 4207.6 and 4207.7 shall be
applied as if the employer's earliest complete withdrawal were its
initial complete withdrawal.
(c) Employer with multiple complete withdrawals that has not
reentered the plan as of the effective date of this part. If an
eligible employer has completely withdrawn from a multiemployer plan on
two or more occasions between September 26, 1980 and the effective date
of this part and is not performing covered work under the plan on the
effective date of this regulation, the rules in this part shall apply,
subject to the modifications specified in paragraphs (b)(1)-(b)(3) of
this section, upon the employer's reentry into the plan.
(d) Combination of withdrawn employer with contributing employer.
If a withdrawn employer merges or otherwise combines with an employer
that has an obligation to contribute to the plan from which the first
employer withdrew, the combined entity is the eligible employer, and
the rules of Sec. 4207.5 shall be applied--
(1) By subtracting from the measurement period contribution base
units the contribution base units for which the non-withdrawn portion
of the employer was obligated to contribute in the last plan year
ending prior to the combination;
(2) By determining the base year contribution base units solely by
reference to the contribution base units of the withdrawn portion of
the employer; and
(3) By using the date of the combination, rather than the date of
resumption of covered operations, to begin the measurement period.
(e) Combination of two or more withdrawn employers. If two or more
withdrawn employers merge or otherwise combine, the combined entity is
the eligible employer, and the rules of Sec. 4207.5 shall be applied by
combining the number of contribution base units with respect to which
each portion of the employer had an obligation to contribute under the
plan for its base year. However, the combined number of contribution
base units shall not include contribution base units of a withdrawn
portion of the employer that had fully paid its withdrawal liability as
of the date of the resumption of covered operations.
Sec. 4207.10 Plan rules for abatement.
(a) General rule. Subject to the approval of the PBGC, a plan may,
by amendment, adopt rules for the reduction or waiver of complete
withdrawal liability under conditions other than those specified in
Secs. 4207.5 and 4207.9 (c) and (d), provided that such conditions
relate to events occurring or factors existing subsequent to a complete
withdrawal year. The request for PBGC approval shall be filed after the
amendment is adopted. A plan amendment under this section may not be
put into effect until it is approved by the PBGC. However, an amendment
that is approved by the PBGC may apply retroactively to the date of the
adoption of the amendment. PBGC approval shall also be required for any
subsequent modification of the amendment, other than repeal of the
amendment. Sections 4207.6, 4207.7, and 4207.8 shall apply to all
subsequent partial withdrawals after a reduction or waiver of complete
withdrawal liability under a plan amendment approved by the PBGC
pursuant to this section.
(b) Who may request. The plan sponsor, or a duly authorized
representative acting on behalf of the plan sponsor, shall sign and
submit the request.
(c) Where to file. The request shall be addressed to Reports
Processing, Insurance Operations Department, Pension Benefit Guaranty
Corporation, 1200 K Street, NW., Washington, DC 20005-4026.
(d) Information. Each request shall contain the following
information:
(1) The name and address of the plan for which the plan amendment
is being submitted and the telephone number of the plan sponsor or its
duly authorized representative.
(2) The nine-digit Employer Identification Number (EIN) assigned to
the plan sponsor by the IRS and the three-digit Plan Identification
Number (PN) assigned to the plan by the plan sponsor, and, if
different, the EIN and PN last filed with the PBGC. If no EIN or PN has
been assigned, that should be indicated.
(3) A copy of the executed amendment, including--
(i) The date on which the amendment was adopted;
(ii) The proposed effective date; and
(iii) The full text of the rules on the reduction or waiver of
complete withdrawal liability.
(4) A copy of the most recent actuarial valuation report of the
plan.
(5) A statement certifying that notice of the adoption of the
amendment and of the request for approval filed under this section has
been given to all employers that have an obligation to contribute under
the plan and to all employee organizations representing employees
covered under the plan.
(e) Supplemental information. In addition to the information
described in paragraph (d) of this section, a plan may submit any other
information that it believes it pertinent to its request. The PBGC may
require the plan sponsor to submit any other information that the
[[Page 34093]]
PBGC determines it needs to review a request under this section.
(f) Criteria for PBGC approval. The PBGC shall approve a plan
amendment authorized by paragraph (a) of this section if it determines
that the rules therein are consistent with the purposes of ERISA. An
abatement rule is not consistent with the purposes of ERISA if--
(1) Implementation of the rule would be adverse to the interest of
plan participants and beneficiaries; or
(2) The rule would increase the PBGC's risk of loss with respect to
the plan.
(Approved by the Office of Management and Budget under control
number 1212-0044)
PART 4208--REDUCTION OR WAIVER OF PARTIAL WITHDRAWAL LIABILITY
Sec.
4208.1 Purpose and scope.
4208.2 Definitions.
4208.3 Abatement.
4208.4 Conditions for abatement.
4208.5 Withdrawal liability payments during pendency of abatement
determination.
4208.6 Computation of reduced annual partial withdrawal liability
payment.
4208.7 Adjustment of withdrawal liability for subsequent
withdrawals.
4208.8 Multiple partial withdrawals in one plan year.
4208.9 Plan adoption of additional abatement conditions.
Authority: 29 U.S.C. 1302(b)(3), 1388 (c) and (e).
Sec. 4208.1 Purpose and scope.
(a) Purpose. The purpose of this part is to establish rules for
reducing or waiving the liability of certain employers that have
partially withdrawn from a multiemployer pension plan.
(b) Scope. This part applies to multiemployer pension plans covered
under title IV of ERISA and to employers that have partially withdrawn
from such plans after September 25, 1980, and that have not, as of the
date on which they satisfy the conditions for reducing or eliminating
their partial withdrawal liability, fully satisfied their obligation to
pay that partial withdrawal liability. This rule shall not negate
reasonable actions taken by plans prior to the effective date of this
part under plan rules implementing section 4208 of ERISA that were
validly adopted pursuant to section 405 of the Multiemployer Act.
Sec. 4208.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
employer, ERISA, IRS, Multiemployer Act, multiemployer plan, PBGC,
plan, and plan year.
In addition, for purposes of this part:
Complete withdrawal means a complete withdrawal as described in
section 4203 of ERISA.
Eligible employer means the employer, as defined in section 4001(b)
of ERISA, as it existed on the date of its initial partial or complete
withdrawal, as applicable. An eligible employer shall continue to be an
eligible employer notwithstanding the occurrence of any of the
following events:
(1) A restoration involving a mere change in identity, form or
place of organization, however effected;
(2) A reorganization involving a liquidation into a parent
corporation;
(3) A merger, consolidation or division solely between (or among)
trades or businesses (whether or not incorporated) of the employer; or
(4) An acquisition by or of, or a merger or combination with
another trade or business.
Partial withdrawal means a partial withdrawal as described in
section 4205 of ERISA.
Partial withdrawal year means the third year of the 3-year testing
period in the case of a partial withdrawal caused by a 70-percent
contribution decline, or the year of the partial cessation in the case
of a partial withdrawal caused by a partial cessation of the employer's
contribution obligation.
Sec. 4208.3 Abatement.
(a) General. Whenever an eligible employer that has partially
withdrawn from a multiemployer plan satisfies the requirements in
Sec. 4208.4 for the reduction or waiver of its partial withdrawal
liability, it may apply to the plan for abatement of its partial
withdrawal liability. Applications shall identify the eligible
employer, the withdrawn employer (if different), the date of
withdrawal, and the basis for reduction or waiver of its withdrawal
liability. Upon receiving a complete application for abatement, the
plan sponsor shall determine, in accordance with paragraph (b) of this
section, whether the employer satisfies the requirements for abatement
of its partial withdrawal liability under Sec. 4208.4. If the plan
sponsor determines that the employer satisfies the requirements for
abatement of its partial withdrawal liability, the provisions of
paragraph (c) of this section shall apply. If the plan sponsor
determines that the employer does not satisfy the requirements for
abatement of its partial withdrawal liability, the provisions of
paragraphs (d) and (e) of this section shall apply.
(b) Determination of abatement. Within 60 days after an eligible
employer that partially withdrew from a multiemployer plan applies for
abatement in accordance with paragraph (a) of this section, the plan
sponsor shall determine whether the employer satisfies the requirements
for abatement of its partial withdrawal liability under Sec. 4208.4 and
shall notify the employer in writing of its determination and of the
consequences of its determination, as described in paragraphs (c) or
(d) and (e) of this section, as appropriate. If a bond or escrow has
been provided to the plan under Sec. 4208.5 of this part, the plan
sponsor shall send a copy of the notice to the bonding or escrow agent.
(c) Effects of abatement. If the plan sponsor determines that the
employer satisfies the requirements for abatement of its partial
withdrawal liability under Sec. 4208.4, then--
(1) The employer's partial withdrawal liability shall be eliminated
or its annual partial withdrawal liability payments shall be reduced in
accordance with Sec. 4208.6, as applicable;
(2) The employer's liability for a subsequent withdrawal shall be
determined in accordance with Sec. 4208.7;
(3) Any bonds furnished under Sec. 4208.5 shall be canceled and any
amounts held in escrow under Sec. 4208.5 shall be refunded to the
employer; and
(4) Any withdrawal liability payments originally due and paid after
the end of the plan year in which the conditions for abatement were
satisfied, in excess of the amount due under this part after that date
shall be credited to the remaining withdrawal liability payments, if
any, owed by the employer, beginning with the first payment due after
the revised payment schedule is issued pursuant to this paragraph. If
the credited amount is greater than the outstanding amount of the
employer's partial withdrawal liability, the amount remaining after
satisfaction of the liability shall be refunded to the employer.
Interest on the credited amount at the rate prescribed in part 4219,
subpart C, of this chapter (relating to overdue, defaulted, and
overpaid withdrawal liability) shall be added if the plan sponsor does
not issue a revised payment schedule reflecting the credit or make the
required refund within 60 days after receipt by the plan sponsor of a
complete abatement application. Interest shall accrue from the 61st
day.
(d) Effects of non-abatement. If the plan sponsor determines that
the employer does not satisfy the requirements for abatement of its
partial withdrawal liability under Sec. 4208.4, then the employer shall
take or cause to
[[Page 34094]]
be taken the actions set forth in paragraphs (d)(1)-(d)(3) of this
section. The rules in part 4219, subpart C, shall apply with respect to
all payments required to be made under paragraphs (d)(2) and (d)(3).
For this purpose, a payment required under paragraph (d)(2) shall be
treated as a withdrawal liability payment due on the 30th day after the
date of the plan sponsor's notice under paragraph (b) of this section.
(1) Any bond or escrow furnished under Sec. 4208.5 shall be paid to
the plan within 30 days after the date of the plan sponsor's notice
under paragraph (b) of this section.
(2) The employer shall pay to the plan within 30 days after the
date of the plan sponsor's notice under paragraph (b) of this section,
the amount of its withdrawal liability payment or payments, with
respect to which the bond or escrow was furnished, in excess of the
bond or escrow.
(3) The employer shall resume or continue making its partial
withdrawal liability payments as they are due to the plan.
(e) Review of non-abatement determination. A plan sponsor's
determinations that the employer does not satisfy the requirements for
abatement under Sec. 4208.4 and of the amount of reduction determined
under Sec. 4208.6 shall be subject to plan review under section
4219(b)(2) of ERISA and to arbitration under section 4221 of ERISA and
part 4221 of this chapter, within the times prescribed by those
provisions. For this purpose, the plan sponsor's notice under paragraph
(b) of this section shall be treated as a demand under section
4219(b)(1) of ERISA. If the plan sponsor upon review or an arbitrator
determines that the employer satisfies the requirements for abatement
of its partial withdrawal liability under Sec. 4208.4, the plan sponsor
shall immediately refund the amounts described in paragraph (e)(1) of
this section if the liability is waived, or credit and refund the
amounts described in paragraph (e)(2) if the annual payment is reduced.
(1) Refund for waived liability. If the employer's partial
withdrawal liability is waived, the plan sponsor shall refund to the
employer the payments made pursuant to paragraphs (d)(1)-(d)(3) of this
section (plus interest determined in accordance with Sec. 4219.31(d) of
this chapter as if the payments were overpayments of withdrawal
liability).
(2) Credit for reduced annual payment. If the employer's annual
partial withdrawal liability payment is reduced, the plan sponsor shall
credit the payments made pursuant to paragraphs (d)(1)-(d)(3) of this
section (plus interest determined in accordance with Sec. 4219.31(d) of
this chapter as if the payments were overpayments of withdrawal
liability) to future withdrawal liability payments owed by the
employer, beginning with the first payment that is due after the
determination, and refund any credit (including interest) remaining
after satisfaction of the outstanding amount of the employer's partial
withdrawal liability.
Sec. 4208.4 Conditions for abatement.
(a) Waiver of liability for a 70-percent contribution decline. An
employer that has incurred a partial withdrawal under section
4205(a)(1) of ERISA shall have no obligation to make payments with
respect to that partial withdrawal (other than delinquent payments) for
plan years beginning after the second consecutive plan year in which
the conditions of either paragraph (a)(1) or (a)(2) are satisfied for
each of the two years:
(1) The number of contribution base units with respect to which the
employer has an obligation to contribute under the plan for each year
is not less than 90 percent of the total number of contribution base
units with respect to which the employer had an obligation to
contribute to the plan for the high base year (as defined in paragraph
(d) of this section).
(2) The conditions of this paragraph are satisfied if--
(i) The number of contribution base units with respect to which the
employer has an obligation to contribute for each year exceeds 30
percent of the total number of contribution base units with respect to
which the employer had an obligation to contribute to the plan for the
high base year (as defined in paragraph (d) of this section); and
(ii) The total number of contribution base units with respect to
which all employers under the plan have obligations to contribute in
each of the two years is not less than 90 percent of the total number
of contribution base units for which all employers had obligations to
contribute in the partial withdrawal year.
(b) Waiver of liability for a partial cessation of the employer's
contribution obligation. Except as provided in Sec. 4208.8, an employer
that has incurred partial withdrawal liability under section 4205(a)(2)
of ERISA shall have no obligation to make payments with respect to that
partial withdrawal (other than delinquent payments) for plan years
beginning after the second consecutive plan year in which the employer
satisfies the conditions under either paragraph (b)(1) or (b)(2) of
this section.
(1) Partial restoration of withdrawn work. The employer satisfies
the conditions under this paragraph if, for each of two consecutive
plan years--
(i) The employer makes contributions for the same facility or under
the same collective bargaining agreement that gave rise to the partial
withdrawal;
(ii) The employer's contribution base units for that facility or
under that agreement exceed 30 percent of the contribution base units
with respect to which the employer had an obligation to contribute for
that facility or under that agreement for the high base year (as
defined in paragraph (d) of this section); and
(iii) The total number of contribution base units with respect to
which the employer has an obligation to contribute to the plan equals
at least 90 percent of the total number of contribution base units with
respect to which the employer had an obligation to contribute under the
plan for the high base year (as defined in paragraph (d) of this
section).
(2) Substantial restoration of withdrawn work. The employer
satisfies the conditions under this paragraph if, for each of two
consecutive plan years--
(i) The employer makes contributions for the same facility or under
the same collective bargaining agreement that gave rise to the partial
withdrawal;
(ii) The employer's contribution base units for that facility or
under that agreement are not less than 90 percent of the contribution
base units with respect to which the employer had an obligation to
contribute for that facility or under that agreement for the high base
year (as defined in paragraph (d) of this section); and
(iii) The total number of contribution base units with respect to
which the employer has an obligation to contribute to the plan equals
or exceeds the sum of--
(A) The number of contribution base units with respect to which the
employer had an obligation to contribute in the year prior to the
partial withdrawal year, determined without regard to the contribution
base units for the facility or under the agreement that gave rise to
the partial withdrawal; and
(B) 90 percent of the contribution base units with respect to which
the employer had an obligation to contribute for that facility or under
that agreement in either the year prior to the partial withdrawal year
or the high base year (as defined in paragraph (d) of this section),
whichever is less.
(c) Reduction in annual partial withdrawal liability payment--
[[Page 34095]]
(1) Partial withdrawals under section 4205(a)(1). An employer shall
be entitled to a reduction of its annual partial withdrawal liability
payment for a plan year if the number of contribution base units with
respect to which the employer had an obligation to contribute during
the plan year exceeds the greater of--
(i) 110 percent (or such lower number as the plan may, by
amendment, adopt) of the number of contribution base units with respect
to which the employer had an obligation to contribute in the partial
withdrawal year; or
(ii) The total number of contribution base units with respect to
which the employer had an obligation to contribute to the plan for the
plan year following the partial withdrawal year.
(2) Partial withdrawals under section 4205(a)(2). An employer that
resumes the obligation to contribute with respect to a facility or
collective bargaining agreement that gave rise to a partial withdrawal,
but does not qualify to have that liability waived under paragraph (b)
of this section, shall have its annual partial withdrawal liability
payment reduced for any plan year in which the total number of
contribution base units with respect to which the employer has an
obligation to contribute equals or exceeds the sum of--
(i) The number of contribution base units for the reentered
facility or agreement during that year; and
(ii) The total number of contribution base units with respect to
which the employer had an obligation to contribute to the plan for the
year following the partial withdrawal year.
(d) High base year. For purposes of paragraphs (a) and (b)(1)(iii)
of this section, the high base year contributions are the average of
the total contribution base units for the two plan years for which the
employer's total contribution base units were highest within the five
plan years immediately preceding the beginning of the 3-year testing
period defined in section 4205(b)(1)(B)(i) of ERISA, with respect to
paragraph (a) of this section, or the partial withdrawal year, with
respect to paragraph (b)(1)(iii) of this section. For purposes of
paragraphs (b)(1)(ii) and (b)(2) of this section, the high base year
contributions are the average number of contribution base units for the
facility or under the agreement for the two plan years for which the
employer's contribution base units for that facility or under that
agreement were highest within the five plan years immediately preceding
the partial withdrawal.
Sec. 4208.5 Withdrawal liability payments during pendency of
abatement determination.
(a) Bond/Escrow. An employer that has satisfied the requirements of
Sec. 4208.4(a)(1) without regard to ``90 percent of'' or Sec. 4208.4(b)
for one year with respect to all partial withdrawals it incurred in a
plan year may, in lieu of making scheduled withdrawal liability
payments in the second year for those withdrawals, provide a bond to,
or establish an escrow account for, the plan that satisfies the
requirements of paragraph (b) of this section or any plan rules adopted
under paragraph (d) of this section, pending a determination by the
plan sponsor of whether the employer satisfies the requirements of
Sec. 4208.4 (a)(1) or (b) for the second consecutive plan year. An
employer that applies for abatement and neither provides a bond/escrow
nor makes its withdrawal liability payments remains eligible for
abatement.
(b) Amount of bond/escrow. The bond or escrow allowed by this
section shall be in an amount equal to 50 percent of the withdrawal
liability payments that would otherwise be due. The bond or escrow
relating to each payment shall be furnished before the due date of that
payment. A single bond or escrow may be provided for more than one
payment due during the pendency of the plan sponsor's determination.
The bond or escrow agreement shall provide that if the plan sponsor
determines that the employer does not satisfy the requirements for
abatement of its partial withdrawal liability under Sec. 4208.4 (a)(1)
or (b), the bond or escrow shall be paid to the plan upon notice from
the plan sponsor to the bonding or escrow agent. A bond provided under
this paragraph shall be issued by a corporate surety company that is an
acceptable surety for purposes of section 412 of ERISA.
(c) Notice of bond/escrow. Concurrently with posting a bond or
establishing an escrow account under this section, the employer shall
notify the plan sponsor. The notice shall include a statement of the
amount of the bond or escrow, the scheduled payment or payments with
respect to which the bond or escrow is being furnished, and the name
and address of the bonding or escrow agent.
(d) Plan amendments concerning bond/escrow. A plan may, by
amendment, adopt rules decreasing the amount of the bond or escrow
specified in paragraph (b) of this section. A plan amendment adopted
under this paragraph may be applied only to the extent that it is
consistent with the purposes of ERISA. An amendment satisfies this
requirement only if it does not create an unreasonable risk of loss to
the plan.
(e) Plan sponsor determination. Within 60 days after the end of the
plan year in which the bond/escrow is furnished, the plan sponsor shall
determine whether the employer satisfied the requirements of
Sec. 4208.4 (a)(1) or (b) for the second consecutive plan year. The
plan sponsor shall notify the employer and the bonding or escrow agent
in writing of its determination and of the consequences of its
determination, as described in Sec. 4208.3 (c) or (d) and (e), as
appropriate.
Sec. 4208.6 Computation of reduced annual partial withdrawal
liability payment.
(a) Amount of reduced payment. An employer that satisfies the
requirements of Sec. 4208.4 (c)(1) or (c)(2) shall have its annual
partial withdrawal liability payment for that plan year reduced in
accordance with paragraph (a)(1) or (a)(2) of this section,
respectively.
(1) The reduced annual payment amount for an employer that
satisfies Sec. 4208.4(c)(1) shall be determined by substituting the
number of contribution base units in the plan year in which the
requirements are satisfied for the number of contribution base units in
the year following the partial withdrawal year in the numerator of the
fraction described in section 4206(a)(2)(A) of ERISA.
(2) The reduced annual payment for an employer that satisfies
Sec. 4208.4(c)(2) shall be determined by adding the contribution base
units for which the employer is obligated to contribute with respect to
the reentered facility or agreement in the year in which the
requirements are satisfied to the numerator of the fraction described
in section 4206(a)(2)(A) of ERISA.
(b) Credit for reduction. The plan sponsor shall credit the account
of an employer that satisfies the requirements of Sec. 4208.4(c)(1) or
(c)(2) with the amount of annual withdrawal liability that it paid in
excess of the amount described in paragraph (a)(1) or (a)(2) of this
section, as appropriate. The credit shall be applied, a revised payment
schedule issued, refund made and interest added, all in accordance with
Sec. 4208.3(c)(4).
Sec. 4208.7 Adjustment of withdrawal liability for subsequent
withdrawals.
The liability of an employer for a partial or complete withdrawal
from a plan subsequent to a partial withdrawal from that plan in a
prior plan year shall be reduced in accordance with part 4206 of this
chapter.
[[Page 34096]]
Sec. 4208.8 Multiple partial withdrawals in one plan year.
(a) General rule. If an employer partially withdraws from the same
multiemployer plan on two or more occasions during the same plan year,
the rules of Sec. 4208.4 shall be applied as modified by this section.
(b) Partial withdrawals under section 4205 (a)(1) and (a)(2) in the
same plan year. If an employer partially withdraws from the same
multiemployer plan as a result of a 70-percent contribution decline and
a partial cessation of the employer's contribution obligation in the
same plan year, the employer shall not be eligible for abatement under
Sec. 4208.4 (b) or (c)(2) or under paragraph (c) of this section. The
employer may qualify for abatement under Sec. 4208.4(a) and (c)(1) and
under any rules adopted by the plan pursuant to Sec. 4208.9.
(c) Multiple partial cessations of the employer's contribution
obligation. If an employer permanently ceases to have an obligation to
contribute for more than one facility, under more than one collective
bargaining agreement, or for one or more facilities and under one or
more collective bargaining agreements, resulting in multiple partial
withdrawals under section 4205(b)(2)(A) in the same plan year, the
abatement rules in Sec. 4208.4(b) shall be applied as modified by this
paragraph. If an employer resumes work at all such facilities and under
all such collective bargaining agreements, the determination of whether
the employer qualifies for elimination of its liability under
Sec. 4208.4(b) shall be made by substituting the test set forth in
paragraph (c)(1) of this section for that prescribed by Sec. 4208.4
(b)(1)(ii) or (b)(2)(ii), as applicable. If the employer resumes work
at or under fewer than all the facilities or collective bargaining
agreements described in this paragraph, the employer cannot qualify for
elimination of its liability under Sec. 4208.4(b). However, the
employer may qualify for a reduction in its partial withdrawal
liability pursuant to paragraph (c)(2) of this section.
(1) Resumption of work at all facilities and under all bargaining
agreements. The test under this paragraph is satisfied if for each of
the two consecutive plan years referred to in Sec. 4208.4(b), the
employer's total contribution base units for the facilities and under
the collective bargaining agreements with respect to which the employer
incurred the multiple partial withdrawals exceed 30 percent of the
total number of contribution base units with respect to which the
employer had an obligation to contribute for those facilities and under
those agreements for the base year (as defined in paragraph (d) of this
section).
(2) Resumption at fewer than all facilities or under fewer than all
bargaining agreements. If the employer satisfies the conditions in
Sec. 4208.4 (b)(1)(i) and (b)(1)(iii) and paragraph (c)(2)(i) of this
section, or the conditions in Sec. 4208.4 (b)(2)(i) and (b)(2)(iii) and
paragraph (c)(2)(ii) of this section, as applicable, the employer's
withdrawal liability shall be partially waived as set forth in
paragraph (c)(2)(iii) of this section.
(i) With respect to a resumption of work under Sec. 4208.4(b)(1),
the condition under this paragraph is satisfied if, for the two
consecutive plan years referred to in Sec. 4208.4(b)(1), the employer's
contribution base units for any reentered facility or agreement exceed
30 percent of the number of contribution base units with respect to
which the employer had an obligation to contribute for that facility or
under that agreement for the base year (as defined in paragraph (d) of
this section).
(ii) With respect to a resumption of work under Sec. 4208.4(b)(2),
the condition under this paragraph is satisfied if, for the two
consecutive plan years referred to in Sec. 4208.4(b)(2), the employer's
contribution base units for any reentered facility or agreement exceed
90 percent of the number of contribution base units with respect to
which the employer had an obligation to contribute for that facility or
under that agreement for the base year (as defined in paragraph (d) of
this section).
(iii) The employer's reduced withdrawal liability and, if any, the
reduced annual payments of the liability shall be determined by adding
the average number of contribution base units that the employer is
required to contribute for those two consecutive years for that
facility(ies) or agreement(s) to the numerator of the fraction
described in section 4206(a)(2)(A) of ERISA. The amount of any
remaining partial withdrawal liability shall be paid over the schedule
originally established starting with the first payment due after the
revised payment schedule is issued under Sec. 4208.3(c)(4).
(d) Base Year. For purposes of this section, the base year
contribution base units for a reentered facility(ies) or under a
reentered agreement(s) are the average number of contribution base
units for the facility(ies) or under the agreement(s) for the two plan
years for which the employer's contribution base units for that
facility(ies) or under that agreement(s) were highest within the five
plan years immediately preceding the partial withdrawal.
Sec. 4208.9 Plan adoption of additional abatement conditions.
(a) General rule. A plan may by amendment, subject to the approval
of the PBGC, adopt rules for the reduction or waiver of partial
withdrawal liability under conditions other than those specified in
Sec. 4208.4, provided that such conditions relate to events occurring
or factors existing subsequent to a partial withdrawal year. The
request for PBGC approval shall be filed after the amendment is
adopted. PBGC approval shall also be required for any subsequent
modification of the amendment, other than repeal of the amendment. A
plan amendment under this section may not be put into effect until it
is approved by the PBGC. An amendment that is approved by the PBGC may
apply retroactively.
(b) Who may request. The plan sponsor, or a duly authorized
representative acting on behalf of the plan sponsor, shall sign and
submit the request.
(c) Where to file. The request shall be addressed to Reports
Processing, Insurance Operations Department, Pension Benefit Guaranty
Corporation, 1200 K Street NW., Washington, DC 20005-4026.
(d) Information. Each request shall contain the following
information:
(1) The name and address of the plan for which the plan amendment
is being submitted and the telephone number of the plan sponsor or its
duly authorized representative.
(2) The nine-digit Employer Identification Number (EIN) assigned to
the plan sponsor by the IRS and the three-digit Plan Identification
Number (PIN) assigned to the plan by the plan sponsor, and, if
different, also the EIN-PIN last filed with the PBGC. If an EIN-PIN has
not been assigned, that should be indicated.
(3) A copy of the executed amendment, including--
(i) the date on which the amendment was adopted;
(ii) the proposed effective date;
(iii) the full text of the rules on the reduction or waiver of
partial withdrawal liability; and
(iv) the full text of the rules adjusting the reduction in the
employer's liability for a subsequent partial or complete withdrawal,
as required by section 4206(b)(1) of ERISA.
(4) A copy of the most recent actuarial valuation report of the
plan.
(5) A statement certifying that notice of the adoption of the
amendment and of the request for approval filed under this section has
been given to all employers that have an obligation to contribute under
the plan and to all
[[Page 34097]]
employee organizations representing employees covered under the plan.
(e) Supplemental information. In addition to the information
described in paragraph (d) of this section, a plan may submit any other
information that it believes is pertinent to its request. The PBGC may
require the plan sponsor to submit any other information that the PBGC
determines that it needs to review a request under this section.
(f) Criteria for PBGC approval. The PBGC shall approve a plan
amendment authorized by paragraph (a) of this section if it determines
that the rules therein are consistent with the purposes of ERISA. An
abatement amendment is not consistent with the purposes of ERISA unless
the PBGC determines that--
(1) The amendment is not adverse to the interests of plan
participants and beneficiaries in the aggregate; and
(2) The amendment would not significantly increase the PBGC's risk
of loss with respect to the plan.
(Approved by the Office of Management and Budget under control no.
1212-0039)
PART 4211--ALLOCATING UNFUNDED VESTED BENEFITS TO WITHDRAWING
EMPLOYERS
Subpart A--General
Sec.
4211.1 Purpose and scope.
4211.2 Definitions.
4211.3 Special rules for construction industry and IRC section
404(c) plans.
Subpart B--Changes Not Subject to PBGC Approval
4211.11 Changes not subject to PBGC approval.
4211.12 Modifications to the presumptive, modified presumptive and
rolling-5 methods.
4211.13 Modifications to the direct attribution method.
Subpart C--Changes Subject to PBGC Approval
4211.21 Changes subject to PBGC approval.
4211.22 Requests for PBGC approval.
4211.23 Approval of alternative method.
4211.24 Special rule for certain alternative methods previously
approved.
Subpart D--Allocation Methods for Merged Multiemployer Plans
4211.31 Allocation of unfunded vested benefits following the merger
of plans.
4211.32 Presumptive method for withdrawals after the initial plan
year.
4211.33 Modified presumptive method for withdrawals after the
initial plan year.
4211.34 Rolling-5 method for withdrawals after the initial plan
year.
4211.35 Direct attribution method for withdrawals after the initial
plan year.
4211.36 Modifications to the determination of initial liabilities,
the amortization of initial liabilities, and the allocation
fraction.
4211.37 Allocating unfunded vested benefits for withdrawals before
the end of the initial plan year.
Authority: 29 U.S.C. 1302(b)(3); 1391(c)(1), (c)(2)(D),
(c)(5)(A), (c)(5)(B), (c)(5)(D), and (f).
Subpart A--General
Sec. 4211.1 Purpose and scope.
(a) Purpose. Section 4211 of ERISA provides four methods for
allocating unfunded vested benefits to employers that withdraw from a
multiemployer plan: the presumptive method (section 4211(b)); the
modified presumptive method (section 4211(c)(2)); the rolling-5 method
(section 4211(c)(3)); and the direct attribution method (section
4211(c)(4)). With the minor exceptions covered in Sec. 4211.3, a plan
determines the amount of unfunded vested benefits allocable to a
withdrawing employer in accordance with the presumptive method, unless
the plan is amended to adopt an alternative allocative method.
Generally, the PBGC must approve the adoption of an alternative
allocation method. On September 25, 1984, 49 FR 37686, the PBGC granted
a class approval of all plan amendments adopting one of the statutory
alternative allocation methods. Subpart C sets forth the criteria and
procedures for PBGC approval of nonstatutory alternative allocation
methods. Section 4211(c)(5) of ERISA also permits certain modifications
to the statutory allocation methods. The PBGC is to prescribe these
modifications in a regulation, and plans may adopt them without PBGC
approval. Subpart B contains the permissible modifications to the
statutory methods. Plans may adopt other modifications subject to PBGC
approval under subpart C. Finally, under section 4211(f) of ERISA, the
PBGC is required to prescribe rules governing the application of the
statutory allocation methods or modified methods by plans following
merger of multiemployer plans. Subpart D sets forth alternative
allocative methods to be used by merged plans. In addition, such plans
may adopt any of the allocation methods or modifications described
under subparts B and C in accordance with the rules under subparts B
and C.
(b) Scope. This part applies to all multiemployer plans covered by
title IV of ERISA.
Sec. 4211.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
Code, employer, IRS, multiemployer plan, nonforfeitable benefit, PBGC,
plan, and plan year.
In addition, for purposes of this part:
Initial plan year means a merged plan's first complete plan year
that begins after the establishment of the merged plan.
Initial plan year unfunded vested benefits means the unfunded
vested benefits as of the close of the initial plan year, less the
value as of the end of the initial plan year of all outstanding claims
for withdrawal liability that can reasonably be expected to be
collected from employers that had withdrawn as of the end of the
initial plan year.
Merged plan means a plan that is the result of the merger of two or
more multiemployer plans.
Merger means the combining of two or more multiemployer plans into
one multiemployer plan.
Prior plan means the plan in which an employer participated
immediately before that plan became a part of the merged plan.
Unfunded vested benefits means an amount by which the value of
nonforfeitable benefits under the plan exceeds the value of the assets
of the plan.
Withdrawing employer means the employer for whom withdrawal
liability is being calculated under section 4201 of ERISA.
Withdrawn employer means an employer who, prior to the withdrawing
employer, has discontinued contributions to the plan or covered
operations under the plan and whose obligation to contribute has not
been assumed by a successor employer within the meaning of section 4204
of ERISA. A temporary suspension of contributions, including a
suspension described in section 4218(2) of ERISA, is not considered a
discontinuance of contributions.
Sec. 4211.3 Special rules for construction industry and IRC section
404(c) plans.
(a) Construction plans. Except as provided in Secs. 4211.11(b) and
4211.21(b), a plan that primarily covers employees in the building and
construction industry shall use the presumptive method for allocating
unfunded vested benefits.
(b) Section 404(c) plans. A plan described in section 404(c) of the
Code or a continuation of such a plan shall allocate unfunded vested
benefits under the rolling-5 method unless the plan, by amendment,
adopts an alternative method or modification.
[[Page 34098]]
Subpart B--Changes Not Subject to PBGC Approval
Sec. 4211.11 Changes not subject to PBGC approval.
(a) General rule. A plan, other than a plan that primarily covers
employees in the building and construction industry, may adopt, by
amendment, any of the statutory allocation methods and any of the
modifications set forth in Secs. 4211.12 and 4211.13, without the
approval of the PBGC.
(b) Building and construction industry plans. A plan that primarily
covers employees in the building and construction industry may adopt,
by amendment, any of the modifications to the presumptive rule set
forth in Sec. 4211.12 without the approval of the PBGC.
Sec. 4211.12 Modifications to the presumptive, modified presumptive
and rolling-5 methods.
(a) ``Contributions made'' and ``total amount contributed''. Each
of the allocation fractions used in the presumptive, modified
presumptive and rolling-5 methods is based on contributions that
certain employers have made to the plan for a five-year period. For
purposes of these methods, and except as provided in paragraph (b) of
this section, ``the sum of all contributions made'' or ``total amount
contributed'' by employers for a plan year means the amounts (other
than withdrawal liability payments) considered contributed to the plan
for the plan year for purposes of section 412(b)(3)(A) of the Code. For
plan years before section 412 applies to the plan, ``the sum of all
contributions made'' or ``total amount contributed'' means the amount
reported to the IRS or the Department of Labor as total contributions
for the plan year; for example, for plan years in which the plan filed
the Form 5500, the amount reported as total contributions on that form.
Employee contributions, if any, shall be excluded from the totals.
(b) Changing the period for counting contributions. A plan sponsor
may amend a plan to modify the denominators in the presumptive,
modified presumptive and rolling-5 methods in accordance with one of
the alternatives described in this paragraph. Except as provided in
paragraph (b)(4) of this section, any amendment adopted under this
paragraph shall be applied consistently to all plan years.
Contributions counted for one plan year may be not counted for any
other plan year. If a contribution is counted as part of the ``total
amount contributed'' for any plan year used to determine a denominator,
that contribution may not also be counted as a contribution owed with
respect to an earlier year used to determine the same denominator,
regardless of when the plan collected that contribution.
(1) A plan sponsor may amend a plan to provide that ``the sum of
all contributions made'' or ``total amount contributed'' for a plan
year means the amount of contributions that the plan actually received
during the plan year, without regard to whether the contributions are
treated as made for that plan year under section 412(b)(3)(A) of the
Code.
(2) A plan sponsor may amend a plan to provide that ``the sum of
all contributions made'' or ``total amount contributed'' for a plan
year means the amount of contributions actually received during the
plan year, increased by the amount of contributions received during a
specified period of time after the close of the plan year not to exceed
the period described in section 412(c)(10) of the Code and regulations
thereunder.
(3) A plan sponsor may amend a plan to provide that ``the sum of
all contributions made'' or ``total amount contributed'' for a plan
year means the amount of contributions actually received during the
plan year, increased by the amount of contributions accrued during the
plan year and received during a specified period of time after the
close of the plan year not to exceed the period described in section
412(c)(10) of the Code and regulations thereunder.
(4) A plan sponsor may amend a plan to provide that--
(i) For plan years ending before September 26, 1980, ``the sum of
all contributions made'' or ``total amount contributed'' means the
amount of total contributions reported on Form 5500 and, for years
before the plan was required to file Form 5500, the amount of total
contributions reported on any predecessor reporting form required by
the Department of Labor or the IRS; and
(ii) For subsequent plan years, ``the sum of all contributions
made'' or ``total amount contributed'' means the amount described in
paragraph (a) of this section, or the amount described in paragraph
(b)(1), (b)(2) or (b)(3) of this section.
(c) Excluding contributions of significant withdrawn employers.
Contributions of certain withdrawn employers are excluded from the
denominator in each of the fractions used to determine a withdrawing
employer's share of unfunded vested benefits under the presumptive,
modified presumptive and rolling-5 methods. Except as provided in
paragraph (c)(1) of this section, contributions of all employers that
permanently cease to have an obligation to contribute to the plan or
permanently cease covered operations before the end of the period of
plan years used to determine the fractions for allocating unfunded
vested benefits under each of those methods (and contributions of all
employers that withdrew before September 26, 1980) are excluded from
the denominators of the fractions.
(1) The plan sponsor of a plan using the presumptive, modified
presumptive or rolling-5 method may amend the plan to provide that only
the contributions of significant withdrawn employers shall be excluded
from the denominators of the fractions used in those methods.
(2) For purposes of this paragraph (c), ``significant withdrawn
employer'' means--
(i) An employer to which the plan has sent a notice of withdrawal
liability under section 4219 of ERISA; or
(ii) A withdrawn employer that in any plan year used to determine
the denominator of a fraction contributed at least $250,000 or, if
less, 1% of all contributions made by employers for that year.
(3) If a group of employers withdraw in a concerted withdrawal, the
plan shall treat the group as a single employer in determining whether
the members are significant withdrawn employers under paragraph (c)(2)
of this section. A ``concerted withdrawal'' means a cessation of
contributions to the plan during a single plan year--
(i) By an employer association;
(ii) By all or substantially all of the employers covered by a
single collective bargaining agreement; or
(iii) By all or substantially all of the employers covered by
agreements with a single labor organization.
Sec. 4211.13 Modifications to the direct attribution method.
(a) Error in direct attribution method. The unfunded vested
benefits allocated to a withdrawing employer under the direct
attribution method are the sum of the employer's attributable
liability, determined under section 4211(c)(4) (A)(i) and (B) of ERISA,
and the employer's share of the plan's unattributable liability,
determined under section 4211(c)(4)(E) and allocated to the employer
under section 4211(c)(4)(F). Plan sponsors should allocate
unattributable liabilities on the basis of the employer's share of the
attributable liabilities. However, section 4211(c)(4)(F) of ERISA,
which describes the allocation of unattributable liabilities, contains
a typographical
[[Page 34099]]
error. Therefore, plans adopting the direct attribution method shall
modify the phrase ``as the amount determined under subparagraph (C) for
the employer bears to the sum of the amounts determined under
subparagraph (C) for all employers under the plan'' in section
4211(c)(4)(F) by substituting ``subparagraph (B)'' for ``subparagraph
(C)'' in both places it appears.
(b) Allocating unattributable liability based on contributions in
period before withdrawal. A plan that is amended to adopt the direct
attribution method may provide that instead of allocating the
unattributable liability in accordance with section 4211(c)(4)(F) of
ERISA, the employer's share of the plan's unattributable liability
shall be determined by multiplying the plan's unattributable liability
determined under section 4211(c)(4)(E) by a fraction--
(1) The numerator of which is the total amount of contributions
required to be made by the withdrawing employer over a period of
consecutive plan years (not fewer than five) ending before the
withdrawal; and
(2) The denominator of which is the total amount contributed under
the plan by all employers for the same period of years used in
paragraph (b)(1) of this section, decreased by any amount contributed
by an employer that withdrew from the plan during those plan years.
Subpart C--Changes Subject to PBGC Approval
Sec. 4211.21 Changes subject to PBGC approval.
(a) General rule. Subject to the approval of the PBGC pursuant to
this subpart, a plan, other than a plan that primarily covers employees
in the building and construction industry, may adopt, by amendment, any
allocation method or modification to an allocation method that is not
permitted under subpart B of this part.
(b) Building and construction industry plans. Subject to the
approval of the PBGC pursuant to this subpart, a plan that primarily
covers employees in the building and construction industry may adopt,
by amendment, any allocation method or modification to an allocation
method that is not permitted under Sec. 4211.12 if the method or
modification is applicable only to its employers that are not
construction industry employers within the meaning of section
4203(b)(1)(A) of ERISA.
(c) Substantial overallocation not allowed. No plan may adopt an
allocation method or modification to an allocation method that results
in a systematic and substantial overallocation of the plan's unfunded
vested benefits.
(d) Use of method prior to approval. A plan may implement an
alternative allocation method or modification to an allocation method
that requires PBGC approval before that approval is given. However, the
plan sponsor shall assess liability in accordance with this paragraph.
(1) Demand for payment. Until the PBGC approves the allocation
method or modification, a plan may not demand withdrawal liability
under section 4219 of ERISA in an amount that exceeds the lesser of the
amount calculated under the amendment or the amount calculated under
the allocation method that the plan would be required to use if the
PBGC did not approve the amendment. The plan must inform each
withdrawing employer of both amounts and explain that the higher amount
may become payable depending on the PBGC's decision on the amendment.
(2) Adjustment of liability. When necessary because of the PBGC
decision on the amendment, the plan shall adjust the amount demanded
from each employer under paragraph (c)(1) of this section and the
employer's withdrawal liability payment schedule. The length of the
payment schedule shall be increased, as necessary. The plan shall
notify each affected employer of the adjusted liability and payment
schedule and shall collect the adjusted amount in accordance with the
adjusted schedule.
Sec. 4211.22 Requests for PBGC approval.
(a) General. A plan shall submit a request for approval of an
alternative allocation method or modification to an allocation method
to the PBGC in accordance with the requirements of this section as soon
as practicable after the adoption of the amendment.
(b) Who shall submit. The plan sponsor, or a duly authorized
representative acting on behalf of the plan sponsor, shall sign the
request.
(c) Where to submit. The plan shall submit the request by first
class mail or courier service to Reports Processing, Insurance
Operations Department, Pension Benefit Guaranty Corporation, 1200 K
Street, NW., Washington, DC 20005-4026, or by hand to the above
address.
(d) Content. Each request shall contain the following information:
(1) The name, address and telephone number of the plan sponsor, and
of the duly authorized representative, if any, of the plan sponsor.
(2) The name of the plan.
(3) The nine-digit Employer Identification Number (EIN) that the
Internal Revenue Service assigned to the plan sponsor and the three-
digit Plan Identification Number (PIN) that the plan sponsor assigned
to the plan, and, if different, also the EIN-PIN that the plan last
filed with the PBGC. If the plan has no EIN-PIN, the request shall so
indicate.
(4) The date the amendment was adopted.
(5) A copy of the amendment, setting forth the full text of the
alternative allocation method or modification.
(6) The allocation method that the plan currently uses and a copy
of the plan amendment (if any) that adopted the method.
(7) A statement certifying that notice of the adoption of the
amendment has been given to all employers that have an obligation to
contribute under the plan and to all employee organizations that
represent employees covered by the plan.
(e) Additional information. In addition to the information listed
in paragraph (d) of this section, the PBGC may require the plan sponsor
to submit any other information that the PBGC determines is necessary
for the review of an alternative allocation method or modification to
an allocation method.
(Approved by the Office of Management and Budget under control
number 1212-0035)
Sec. 4211.23 Approval of alternative method.
(a) General. The PBGC shall approve an alternative allocation
method or modification to an allocation method if the PBGC determines
that adoption of the method or modification would not significantly
increase the risk of loss to plan participants and beneficiaries or to
the PBGC.
(b) Criteria. An alternative allocation method or modification to
an allocation method satisfies the requirements of paragraph (a) of
this section if it meets the following three conditions:
(1) The method or modification allocates a plan's unfunded vested
benefits, both for the adoption year and for the five subsequent plan
years, to the same extent as any of the statutory allocation methods,
or any modification to a statutory allocation method permitted under
subpart B.
(2) The method or modification allocates unfunded vested benefits
to each employer on the basis of either the employer's share of
contributions to the plan or the unfunded vested benefits attributable
to each employer. The method or modification may take into account
differences in contribution rates paid by different employers and
[[Page 34100]]
differences in benefits of different employers' employees.
(3) The method or modification fully reallocates among employers
that have not withdrawn from the plan all unfunded vested benefits that
the plan sponsor has determined cannot be collected from withdrawn
employers, or that are not assessed against withdrawn employers because
of sections 4209, 4219(c)(1)(B) or 4225 of ERISA.
(c) PBGC action on request. The PBGC's decision on a request for
approval shall be in writing. If the PBGC disapproves the request, the
decision shall state the reasons for the disapproval and shall include
a statement of the sponsor's right to request a reconsideration of the
decision pursuant to part 4003 of this chapter.
Sec. 4211.24 Special rule for certain alternative methods previously
approved.
A plan may not apply to any employer withdrawing on or after
November 25, 1987, an allocation method approved by the PBGC before
that date that allocates to the employer the greater of the amounts of
unfunded vested benefits determined under two different allocation
rules. Until a plan that has been using such a method is amended to
adopt a valid allocation method, its allocation method shall be deemed
to be the statutory allocation method that would apply if it had never
been amended.
Subpart D--Allocation Methods for Merged Multiemployer Plans
Sec. 4211.31 Allocation of unfunded vested benefits following the
merger of plans.
(a) General Rule. Except as provided in paragraphs (b) through (d)
of this section, when two or more multiemployer plans merge, the merged
plan shall adopt one of the statutory allocation methods, in accordance
with subpart B of this part, or one of the allocation methods
prescribed in Secs. 4211.32 through 4211.35, and the method adopted
shall apply to all employer withdrawals occurring after the initial
plan year. Alternatively, a merged plan may adopt its own allocation
method in accordance with subpart C of this part. If a merged plan
fails to adopt an allocation method pursuant to this subpart or subpart
B or C, it shall use the presumptive allocation method prescribed in
Sec. 4211.32. In addition, a merged plan may adopt any of the
modifications prescribed in Sec. 4211.36 or in subpart B of this part.
(b) Construction plans. Except as provided in the next sentence, a
merged plan that primarily covers employees in the building and
construction industry shall use the presumptive allocation method
prescribed in Sec. 4211.32. However, the plan may, with respect to
employers that are not construction industry employers within the
meaning of section 4203(b)(1)(A) of ERISA, adopt, by amendment, one of
the alternative methods prescribed in Secs. 4211.33 through 4211.35 or
any other allocation method. Any such amendment shall be adopted in
accordance with subpart C of this part. A construction plan may,
without the PBGC's approval, adopt by amendment any of the
modifications set forth in Sec. 4211.36 or any of the modifications to
the statutory presumptive method set forth in Sec. 4211.12.
(c) Section 404(c) plans. A merged plan that is a continuation of a
plan described in section 404(c) of the Code shall use the rolling-5
allocation method prescribed in Sec. 4211.34, unless the plan, by
amendment, adopts an alternative method. The plan may adopt one of the
statutory allocation methods or one of the allocation methods set forth
in Secs. 4211.32 through 4211.35 without PBGC approval; adoption of any
other allocation method is subject to PBGC approval under subpart B of
this plan. The plan may, without the PBGC's approval, adopt by
amendment any of the modifications set forth in Sec. 4211.36 or in
subpart B of this part.
(d) Withdrawals before the end of the initial plan year. For
employer withdrawals after the effective date of a merger and prior to
the end of the initial plan year, the amount of unfunded vested
benefits allocable to a withdrawing employer shall be determined in
accordance with Sec. 4211.37.
Sec. 4211.32 Presumptive method for withdrawals after the initial plan
year.
(a) General rule. Under this section, the amount of unfunded vested
benefits allocable to an employer that withdraws from a merged plan
after the initial plan year is the sum (but not less than zero) of--
(1) The employer's proportional share, if any, of the unamortized
amount of the plan's initial plan year unfunded vested benefits, as
determined under paragraph (b) of this section;
(2) The employer's proportional share of the unamortized amount of
the change in the plan's unfunded vested benefits for plan years ending
after the initial plan year, as determined under paragraph (c) of this
section; and
(3) The employer's proportional share of the unamortized amounts of
the reallocated unfunded vested benefits (if any) as determined under
paragraph (d) of this section.
(b) Share of initial plan year unfunded vested benefits. An
employer's proportional share, if any, of the unamortized amount of the
plan's initial plan year unfunded vested benefits is the sum of the
employer's share of its prior plan's liabilities (determined under
paragraph (b)(1) of this section) and the employer's share of the
adjusted initial plan year unfunded vested benefits (determined under
paragraph (b)(2) of this section), with such sum reduced by five
percent of the original amount for each plan year subsequent to the
initial year.
(1) Share of prior plan liabilities. An employer's share of its
prior plan's liabilities is the amount of unfunded vested benefits that
would have been allocable to the employer if it had withdrawn on the
first day of the initial plan year, determined as if each plan had
remained a separate plan.
(2) Share of adjusted initial plan year unfunded vested benefits.
An employer's share of the adjusted initial plan year unfunded vested
benefits equals the plan's initial plan year unfunded vested benefits,
less the amount that would be determined under paragraph (b)(1) of this
section for each employer that had not withdrawn as of the end of the
initial plan year, multiplied by a fraction--
(i) The numerator of which is the amount determined under paragraph
(b)(1) of this section; and
(ii) The denominator of which is the sum of the amounts that would
be determined under paragraph (b)(1) of this section for each employer
that had not withdrawn as of the end of the initial plan year.
(c) Share of annual changes. An employer's proportional share of
the unamortized amount of the change in the plan's unfunded vested for
the plan years ending after the end of the initial plan year is the sum
of the employer's proportional shares (determined under paragraph
(c)(2) of this section) of the unamortized amount of the change in
unfunded vested benefits (determined under paragraph (c)(1) of this
section) for each plan year in which the employer has an obligation to
contribute under the plan ending after the initial plan year and before
the plan year in which the employer withdraws.
(1) Change in plan's unfunded vested benefits. The change in a
plan's unfunded vested benefits for a plan year is the amount by which
the unfunded vested benefits at the end of a plan year, less the value
as of the end of such year of all outstanding claims for withdrawal
liability that can reasonably be expected
[[Page 34101]]
to be collected from employers that had withdrawn as of the end of the
initial plan year, exceed the sum of the unamortized amount of the
initial plan year unfunded vested benefits (determined under paragraph
(c)(1)(i) of this section) and the unamortized amounts of the change in
unfunded vested benefits for each plan year ending after the initial
plan year and preceding the plan year for which the change is
determined (determined under paragraph (c)(1)(ii) of this section).
(i) Unamortized amount of initial plan year unfunded vested
benefits. The unamortized amount of the initial plan year unfunded
vested benefits is the amount of those benefits reduced by five percent
of the original amount for each succeeding plan year.
(ii) Unamortized amount of the change. The unamortized amount of
the change in a plan's unfunded vested benefits with respect to a plan
year is the change in unfunded vested benefits for the plan year,
reduced by five percent of such change for each succeeding plan year.
(2) Employer's proportional share. An employer's proportional share
of the amount determined under paragraph (c)(1) of this section is
computed by multiplying that amount by a fraction--
(i) The numerator of which is the total amount required to be
contributed under the plan (or under the employer's prior plan) by the
employer for the plan year in which the change arose and the four
preceding full plan years; and
(ii) The denominator of which is the total amount contributed under
the plan (or under employer's prior plan) for the plan year in which
the change arose and the four preceding full plan years by all
employers that had an obligation to contribute under the plan for the
plan year in which such change arose, reduced by any amount contributed
by an employer that withdrew from the plan in the year in which the
change arose.
(d) Share of reallocated amounts. An employer's proportional share
of the unamortized amounts of the reallocated unfunded vested benefits,
if any, is the sum of the employer's proportional shares (determined
under paragraph (d)(2) of this section) of the unamortized amount of
the reallocated unfunded vested benefits (determined under paragraph
(d)(1) of this section) for each plan year ending before the plan year
in which the employer withdrew from the plan.
(1) Unamortized amount of reallocated unfunded vested benefits. The
unamortized amount of the reallocated unfunded vested benefits with
respect to a plan year is the sum of the amounts described in
paragraphs (d)(1)(i), (d)(1)(ii), and (d)(1)(iii) of this section for
the plan year, reduced by five percent of such sum for each succeeding
plan year.
(i) Uncollectible amounts. Amounts included as reallocable under
this paragraph are those that the plan sponsor determines in that plan
year to be uncollectible for reasons arising out of cases or
proceedings under Title 11, United States Code, or similar proceedings,
with respect to an employer that withdrew after the close of the
initial plan year.
(ii) Relief amounts. Amounts included as reallocable under this
paragraph are those that the plan sponsor determines in that plan year
will not be assessed as a result of the operation of sections 4209,
4219(c)(1)(B), or 4225 of ERISA with respect to an employer that
withdrew after the close of the initial plan year.
(iii) Other amounts. Amounts included as reallocable under this
paragraph are those that the plan sponsor determines in that plan year
to be uncollectible or unassessable for other reasons under standards
not inconsistent with regulations prescribed by the PBGC.
(2) Employer's proportional share. An employer's proportional share
of the amount of the reallocated unfunded vested benefits with respect
to a plan year is computed by multiplying the unamortized amount of the
reallocated unfunded vested benefits (as of the end of the year
preceding the plan year in which the employer withdraws) by the
allocation fraction described in paragraph (c)(2) of this section for
the same plan year.
Sec. 4211.33 Modified presumptive method for withdrawals after the
initial plan year.
(a) General rule. Under this section, the amount of unfunded vested
benefits allocable to an employer that withdraws from a merged plan
after the initial plan year is the sum of the employer's proportional
share, if any, of the unamortized amount of the plan's initial plan
year unfunded vested benefits (determined under paragraph (b) of this
section) and the employer's proportional share of the unamortized
amount of the unfunded vested benefits arising after the initial plan
year (determined under paragraph (c) of this section).
(b) Share of initial plan year unfunded vested benefits. An
employer's proportional share, if any, of the unamortized amount of the
plan's initial plan year unfunded vested benefits is the sum of the
employer's share of its prior plan's liabilities, as determined under
Sec. 4211.32(b)(1), and the employer's share of the adjusted initial
plan year unfunded vested benefits, as determined under
Sec. 4211.32(b)(2), with such sum reduced as if it were being fully
amortized in level annual installments over fifteen years beginning
with the first plan year after the initial plan year.
(c) Share of unfunded vested benefits arising after the initial
plan year. An employer's proportional share of the amount of the plan's
unfunded vested benefits arising after the initial plan year is the
employer's proportional share (determined under paragraph (c)(2) of
this section) of the plan's unfunded vested benefits as of the end of
the
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
plan year preceding the plan year in which the employer withdraws,
reduced by the amount of the plan's unfunded vested benefits as of the
close of the initial plan year (determined under paragraph (c)(1) of
this section).
(1) Amount of unfunded vested benefits. The plan's unfunded vested
benefits as of the end of the plan year preceding the plan year in
which the employer withdraws shall be reduced by the sum of--
(i) The value as of that date of all outstanding claims for
withdrawal liability that can reasonably be expected to be collected,
with respect to employers that withdrew before that plan year; and
(ii) The sum of the amounts that would be allocable under paragraph
(b) of this section to all employers that have an obligation to
contribute in the plan year preceding the plan year in which the
employer withdraws and that also had an obligation to contribute in the
first plan year ending after the initial plan year.
(2) Employer's proportional share. An employer's proportional share
of the amount determined under paragraph (c)(1) of this section is
computed by multiplying that amount by a fraction--
(i) The numerator of which is the total amount required to be
contributed under the plan (or under the employer's prior plan) by the
employer for the last five full plan years ending before the date on
which the employer withdraws; and
(ii) The denominator of which is the total amount contributed under
the plan (or under each employer's prior plan) by all employers for the
last five full plan years ending before the date on which the employer
withdraws, increased by the amount of any employer contributions owed
with respect to earlier periods that were collected in those plan
years, and decreased by any amount contributed by an employer that
[[Page 34102]]
withdrew from the plan (or prior plan) during those plan years.
Sec. 4211.34 Rolling-5 method for withdrawals after the initial plan
year.
(a) General rule. Under this section, the amount of unfunded vested
benefits allocable to an employer that withdraws from a merged plan
after the initial plan year is the sum of the employer's proportional
share, if any, of the unamortized amount of the plan's initial plan
year unfunded vested benefits (determined under paragraph (b) of this
section) and the employer's proportional share of the unamortized
amount of the unfunded vested benefits arising after the initial plan
year (determined under paragraph (c) of this section).
(b) Share of initial plan year unfunded vested benefits. An
employer's proportional share, if any, of the unamortized amount of the
plan's initial plan year unfunded vested benefits is the sum of the
employer's share of its prior plan's liabilities, as determined under
Sec. 4211.32(b)(1), and the employer's share of the adjusted initial
plan year unfunded vested benefits, as determined under
Sec. 4211.32(b)(2), with such sum reduced as if it were being fully
amortized in level annual installments over five years beginning with
the first plan year after the initial plan year.
(c) Share of unfunded vested benefits arising after the initial
plan year. An employer's proportional share of the amount of the plan's
unfunded vested benefits arising after the initial plan year is the
employer's proportional share determined under Sec. 4211.33(c).
Sec. 4211.35 Direct attribution method for withdrawals after the
initial plan year.
The allocation method under this section is the allocation method
described in section 4211(c)(4) of ERISA.
Sec. 4211.36 Modifications to the determination of initial
liabilities, the amortization of initial liabilities, and the
allocation fraction.
(a) General rule. A plan using any of the allocation methods
described in Secs. 4211.32 through 4211.34 may, by plan amendment and
without PBGC approval, adopt any of the modifications described in this
section.
(b) Restarting initial liabilities. A plan may be amended to
allocate the initial plan year unfunded vested benefits under
Sec. 4211.32(b), Sec. 4211.33(b), or Sec. 4211.34(b) without separately
allocating to employers the liabilities attributable to their
participation under their prior plans. An amendment under this
paragraph must include an allocation fraction under paragraph (d) of
this section for determining the employer's proportional share of the
total unfunded benefits as of the close of the initial plan year.
(c) Amortizing initial liabilities. A plan may by amendment modify
the amortization of initial liabilities in either of the following
ways:
(1) If two or more plans that use the presumptive allocation method
of section 4211(b) of ERISA merge, the merged plan may adjust the
amortization of initial liabilities under Sec. 4211.32(b) to amortize
those unfunded vested benefits over the remaining length of the prior
plans' amortization schedules.
(2) A plan that has adopted the allocation method under
Sec. 4211.33 or Sec. 4211.34 may adjust the amortization of initial
liabilities under Sec. 4211.33(b) or Sec. 4211.34(b) to amortize those
unfunded vested benefits in level annual installments over any period
of at least five and not more than fifteen years.
(d) Changing the allocation fraction. A plan may by amendment
replace the allocation fraction under Sec. 4211.32(b), Sec. 4211.33(b),
or Sec. 4211.34(b) with any of the following contribution-based
fractions--
(1) A fraction, the numerator of which is the total amount required
to be contributed under the merged and prior plans by the withdrawing
employer in the 60-month period ending on the last day of the initial
plan year, and the denominator of which is the sum for that period of
the contributions made by all employers that had not withdrawn as of
the end of the initial plan year;
(2) A fraction, the numerator of which is the total amount required
to be contributed by the withdrawing employer for the initial plan year
and the four preceding full plan years of its prior plan, and the
denominator of which is the sum of all contributions made over that
period by employers that had not withdrawn as of the end of the initial
plan year; or
(3) A fraction, the numerator of which is the total amount required
to be contributed to the plan by the withdrawing employer since the
effective date of the merger, and the denominator of which is the sum
of all contributions made over that period by employers that had not
withdrawn as of the end of the initial plan year.
Sec. 4211.37 Allocating unfunded vested benefits for withdrawals
before the end of the initial plan year.
If an employer withdraws after the effective date of a merger and
before the end of the initial plan year, the amount of unfunded vested
benefits allocable to the employer shall be determined as if each plan
had remained a separate plan. In making this determination, the plan
sponsor shall use the allocation method of the withdrawing employer's
prior plan and shall compute the employer's allocable share of the
plan's unfunded vested benefits as if the day before the effective date
of the merger were the end of the last plan year prior to the
withdrawal.
PART 4219--NOTICE, COLLECTION, AND REDETERMINATION OF WITHDRAWAL
LIABILITY
Subpart A--General
Sec.
4219.1 Purpose and scope.
4219.2 Definitions.
Subpart B--Redetermination of Withdrawal Liability Upon Mass Withdrawal
4219.11 Withdrawal liability upon mass withdrawal.
4219.12 Employers liable upon mass withdrawal.
4219.13 Amount of liability for de minimis amounts.
4219.14 Amount of liability for 20-year-limitation amounts.
4219.15 Determination of reallocation liability.
4219.16 Imposition of liability.
4219.17 Filings with PBGC.
4219.18 Withdrawal in a plan year in which substantially all
employers withdraw.
4219.19 Information collection.
Subpart C--Overdue, Defaulted, and Overpaid Withdrawal Liability
4219.31 Overdue and defaulted withdrawal liability; overpayment.
4219.32 Interest on overdue, defaulted and overpaid withdrawal
liability.
4219.33 Plan rules concerning overdue and defaulted withdrawal
liability.
Authority: 29 U.S.C. 1302(b)(3) and 1399(c)(6).
Subpart A--General
Sec. 4219.1 Purpose and scope.
(a) Subpart A. Subpart A of this part describes the purpose and
scope of the provisions in this part and defined terms used in this
part.
(b) Subpart B.
(1) Purpose. When a multiemployer plan terminates by the withdrawal
of every employer from the plan, or when substantially all employers
withdraw from a multiemployer plan pursuant to an agreement or
arrangement to withdraw from the plan, section 4219(c)(1)(D)(i) of
ERISA requires that the liability of such withdrawing employers be
determined (or redetermined) without regard to the 20-year limitation
on annual payments established in section 4219(c)(1)(B) of ERISA. In
addition, section 4219(c)(1)(D)(ii) requires that, upon the
[[Page 34103]]
occurrence of a withdrawal described above, the total unfunded vested
benefits of the plan be fully allocated among such withdrawing
employers in a manner that is not inconsistent with PBGC regulations.
Section 4209(c) of ERISA provides that the de minimis reduction
established in sections 4209 (a) and (b) of ERISA shall not apply to an
employer that withdraws in a plan year in which substantially all
employers withdraw from the plan, or to an employer that withdraws
pursuant to an agreement to withdraw during a period of one or more
plan years during which substantially all employers withdraw pursuant
to an agreement or arrangement to withdraw. The purpose of subpart B of
this part is to prescribe rules, pursuant to sections 4219(c)(1)(D) and
4209(c) of ERISA, for redetermining an employer's withdrawal liability
and fully allocating the unfunded vested benefits of a multiemployer
plan in either of two mass-withdrawal situations: the termination of a
plan by the withdrawal of every employer and the withdrawal of
substantially all employers pursuant to an agreement or arrangement to
withdraw. Subpart B also prescribes rules for redetermining the
liability of an employer without regard to section 4209 (a) or (b) when
the employer withdraws in a plan year in which substantially all
employers withdraw, regardless of the occurrence of a mass withdrawal.
(See part 4281 regarding the valuation of unfunded vested benefits to
be fully allocated under subpart B, and parts 4041A and 4281 regarding
the powers and duties of the plan sponsor of a plan terminated by mass
withdrawal.)
(2) Scope. Subpart B applies to multiemployer plans covered by
title IV of ERISA, with respect to which there is a termination by the
withdrawal of every employer (including a plan created by a partition
pursuant to section 4233 of ERISA) or a withdrawal of substantially all
employers in the plan pursuant to an agreement or arrangement to
withdraw from the plan, and to employers that withdraw from such
multiemployer plans. The obligations of a plan sponsor of a mass-
withdrawal-terminated plan under subpart B shall cease to apply when
the plan assets are distributed in full satisfaction of all
nonforfeitable benefits under the plan. Subpart B also applies, to the
extent appropriate, to multiemployer plans with respect to which there
is a withdrawal of substantially all employers in a single plan year
and to employers that withdraw from such plans in that plan year.
(c) Subpart C. Subpart C establishes the interest rate to be
charged on overdue, defaulted and overpaid withdrawal liability under
section 4219(c)(6) of ERISA, and authorizes multiemployer plans to
adopt alternative rules concerning assessment of interest and related
matters. Subpart C applies to multiemployer plans covered under title
IV of ERISA, and to employers that have withdrawn from such plans after
April 28, 1980 (May 2, 1979, for certain employers in the seagoing
industry).
Sec. 4219.2 Definitions.
(a) The following terms are defined in section 4001.2 of this
chapter: employer, ERISA, IRS, mass withdrawal, multiemployer plan,
nonforfeitable benefit, PBGC, plan, and plan year.
(b) For purposes of this part:
Initial withdrawal liability means the amount of withdrawal
liability determined in accordance with sections 4201 through 4225 of
title IV without regard to the occurrence of a mass withdrawal.
Mass withdrawal liability means the sum of an employer's liability
for de minimis amounts, liability for 20-year-limitation amounts, and
reallocation liability.
Mass withdrawal valuation date means--
(1) In the case of a termination by mass withdrawal, the last day
of the plan year in which the plan terminates; or
(2) in the case of a withdrawal of substantially all employers
pursuant to an agreement or arrangement to withdraw, the last day of
the plan year as of which substantially all employers have withdrawn.
Reallocation liability means the amount of unfunded vested benefits
allocated to an employer in the event of a mass withdrawal.
Reallocation record date means a date selected by the plan sponsor,
which shall be not earlier than the date of the plan's actuarial report
for the year of the mass withdrawal and not later than one year after
the mass withdrawal valuation date.
Redetermination liability means the sum of an employer's liability
for de minimis amounts and the employer's liability for 20-year-
limitation amounts.
Unfunded vested benefits means the amount by which the present
value of a plan's vested benefits exceeds the value of plan assets
(including claims of the plan for unpaid initial withdrawal liability
and redetermination liability), determined in accordance with section
4281 of ERISA and part 4281, subpart B.
(c) For purposes of subpart B--
Withdrawal means a complete withdrawal as defined in section 4203
of ERISA.
Subpart B--Redetermination of Withdrawal Liability Upon Mass
Withdrawal
Sec. 4219.11 Withdrawal liability upon mass withdrawal.
(a) Initial withdrawal liability. The plan sponsor of a
multiemployer plan that experiences a mass withdrawal shall determine
initial withdrawal liability pursuant to section 4201 of ERISA of every
employer that has completely or partially withdrawn from the plan and
for whom the liability has not previously been determined and, in
accordance with section 4202 of ERISA, notify each employer of the
amount of the initial withdrawal liability and collect the amount of
the initial withdrawal liability from each employer.
(b) Mass withdrawal liability. The plan sponsor of a multiemployer
plan that experiences a mass withdrawal shall also--
(1) Notify withdrawing employers, in accordance with
Sec. 4219.16(a), that a mass withdrawal has occurred;
(2) Within 150 days after the mass withdrawal valuation date,
determine the liability of withdrawn employers for de minimis amounts
and for 20-year-limitation amounts in accordance with Secs. 4219.13 and
4219.14;
(3) Within one year after the reallocation record date, determine
the reallocation liability of withdrawn employers in accordance with
Sec. 4219.15;
(4) Notify each withdrawing employer of the amount of mass
withdrawal liability determined pursuant to this subpart and the
schedule for payment of such liability, and demand payment of and
collect that liability, in accordance with Sec. 4219.16; and
(5) Notify the PBGC of the occurrence of a mass withdrawal and
certify, in accordance with Sec. 4219.17, that determinations of mass
withdrawal liability have been completed.
(c) Extensions of time. The plan sponsor of a multiemployer plan
that experiences a mass withdrawal may apply to the PBGC for an
extension of the deadlines contained in paragraph (b) of this section.
The PBGC shall approve such a request only if it finds that failure to
grant the extension will create an unreasonable risk of loss to plan
participants or the PBGC.
Sec. 4219.12 Employers liable upon mass withdrawal.
(a) Liability for de minimis amounts. An employer shall be liable
for de
[[Page 34104]]
minimis amounts to the extent provided in section 4219(c)(1)(D) of
ERISA if the employer's initial withdrawal liability was reduced
pursuant to section 4209 (a) or (b) of ERISA.
(b) Liability for 20-year-limitation amounts. An employer shall be
liable for 20-year-limitation amounts to the extent provided in section
4219(c)(1)(D) of ERISA.
(c) Liability for reallocation liability. An employer shall be
liable for reallocation liability if the employer withdrew pursuant to
an agreement or arrangement to withdraw from a multiemployer plan from
which substantially all employers withdrew pursuant to an agreement or
arrangement to withdraw, or if the employer withdrew after the
beginning of the second full plan year preceding the termination date
from a plan that terminated by the withdrawal of every employer, and,
as of the reallocation record date--
(1) The employer has not been completely liquidated or dissolved;
(2) The employer is not the subject of a case or proceeding under
title 11, United States Code, or any case or proceeding under similar
provisions of state insolvency laws, except that a plan sponsor may
determine that such an employer is liable for reallocation liability if
the plan sponsor determines that the employer is reasonably expected to
be able to pay its initial withdrawal liability and its redetermination
liability in full and on time to the plan; and
(3) The plan sponsor has not determined that the employer's initial
withdrawal liability or its redetermination liability is limited by
section 4225 of ERISA.
(d) General exclusion. In the event that a plan experiences
successive mass withdrawals, an employer that has been determined to be
liable under this subpart for any component of mass withdrawal
liability shall not be liable as a result of the same withdrawal for
that component of mass withdrawal liability with respect to a
subsequent mass withdrawal.
(e) Free-look rule. An employer that is not liable for initial
withdrawal liability pursuant to a plan amendment adopting section
4210(a) of ERISA shall not be liable for de minimis amounts or for 20-
year-limitation amounts, but shall be liable for reallocation liability
in accordance with paragraph (c) of this section.
(f) Payment of initial withdrawal liability. An employer's payment
of its total initial withdrawal liability, whether by prepayment or
otherwise, for a withdrawal which is later determined to be part of a
mass withdrawal shall not exclude the employer from or otherwise limit
the employer's mass withdrawal liability under this subpart.
(g) Agreement presumed. Withdrawal by an employer during a period
of three consecutive plan years within which substantially all
employers withdraw from a plan shall be presumed to be a withdrawal
pursuant to an agreement or arrangement to withdraw unless the employer
proves otherwise by a preponderance of the evidence.
Sec. 4219.13 Amount of liability for de minimis amounts.
An employer that is liable for de minimis amounts shall be liable
to the plan for the amount by which the employer's allocable share of
unfunded vested benefits for the purpose of determining its initial
withdrawal liability was reduced pursuant to section 4209 (a) or (b) of
ERISA. Any liability for de minimis amounts determined under this
section shall be limited by section 4225 of ERISA to the extent that
section would have been limiting had the employer's initial withdrawal
liability been determined without regard to the de minimis reduction.
Sec. 4219.14 Amount of liability for 20-year-limitation amounts.
An employer that is liable for 20-year-limitation amounts shall be
liable to the plan for an amount equal to the present value of all
initial withdrawal liability payments for which the employer was not
liable pursuant to section 4219(c)(1)(B) of ERISA. The present value of
such payments shall be determined as of the end of the plan year
preceding the plan year in which the employer withdrew, using the
assumptions that were used to determine the employer's payment schedule
for initial withdrawal liability pursuant to section 4219(c)(1)(A)(ii)
of ERISA. Any liability for 20-year-limitation amounts determined under
this section shall be limited by section 4225 of ERISA to the extent
that section would have been limiting had the employer's initial
withdrawal liability been determined without regard to the 20-year
limitation.
Sec. 4219.15 Determination of reallocation liability.
(a) General rule. In accordance with the rules in this section, the
plan sponsor shall determine the amount of unfunded vested benefits to
be reallocated and shall fully allocate those unfunded vested benefits
among all employers liable for reallocation liability.
(b) Amount of unfunded vested benefits to be reallocated. For
purposes of this section, the amount of a plan's unfunded vested
benefits to be reallocated shall be the amount of the plan's unfunded
vested benefits, determined as of the mass withdrawal valuation date,
adjusted to exclude from plan assets the value of the plan's claims for
unpaid initial withdrawal liability and unpaid redetermination
liability that are deemed to be uncollectible under Sec. 4219.12(c)(1)
or (c)(2).
(c) Amount of reallocation liability. An employer's reallocation
liability shall be equal to the sum of the employer's initial allocable
share of the plan's unfunded vested benefits, as determined under
paragraph (c)(1) of this section, plus any unassessable amounts
allocated to the employer under paragraph (c)(2), limited by section
4225 of ERISA to the extent that section would have been limiting had
the employer's reallocation liability been included in the employer's
initial withdrawal liability. If a plan is determined to have no
unfunded vested benefits to be reallocated, the reallocation liability
of each liable employer shall be zero.
(1) Initial allocable share. Except as otherwise provided in rules
adopted by the plan pursuant to paragraph (d) of this section, and in
accordance with paragraph (c)(3) of this section, an employer's initial
allocable share shall be equal to the product of the plan's unfunded
vested benefits to be reallocated, multiplied by a fraction--
(i) The numerator of which is the sum of the employer's initial
withdrawal liability and the employer's redetermination liability, if
any; and
(ii) The denominator of which is the sum of all initial withdrawal
liabilities and all the redetermination liabilities of all employers
liable for reallocation liability.
(2) Allocation of unassessable amounts. If after computing each
employer's initial allocable share of unfunded vested benefits, the
plan sponsor knows that any portion of an employer's initial allocable
share is unassessable as withdrawal liability because of the
limitations in section 4225 of ERISA, the plan sponsor shall allocate
any such unassessable amounts among all other liable employers. This
allocation shall be done by prorating the unassessable amounts on the
basis of each such employer's initial allocable share. No employer
shall be liable for unfunded vested benefits allocated under paragraph
(c)(1) or this paragraph to another employer that are determined to be
unassessable or uncollectible
[[Page 34105]]
subsequent to the plan sponsor's demand for payment of reallocation
liability.
(3) Special rule for certain employers with no or reduced initial
withdrawal liability. If an employer has no initial withdrawal
liability because of the application of the free-look rule in section
4210 of ERISA, then, in computing the fraction prescribed in paragraph
(c)(1), the plan sponsor shall use the employer's allocable share of
unfunded vested benefits, determined under section 4211 of ERISA at the
time of the employer's withdrawal and adjusted in accordance with
section 4225 of ERISA, if applicable. If an employer's initial
withdrawal liability was reduced pursuant to section 4209(a) or (b) of
ERISA and the employer is not liable for de minimis amounts pursuant to
Sec. 4219.13, then, in computing the fraction prescribed in paragraph
(c)(1) of this section, the plan sponsor shall use the employer's
allocable share of unfunded vested benefits, determined under section
4211 of ERISA at the time of the employer's withdrawal and adjusted in
accordance with section 4225 of ERISA, if applicable.
(d) Plan rules. Plans may adopt rules for calculating an employer's
initial allocable share of the plan's unfunded vested benefits in a
manner other than that prescribed in paragraph (c)(1) of this section,
provided that those rules allocate the plan's unfunded vested benefits
to substantially the same extent the prescribed rules would. Plan rules
adopted under this paragraph shall operate and be applied uniformly
with respect to each employer. If such rules would increase the
reallocation liability of any employer, they may be effective with
respect to that employer earlier than three full plan years after their
adoption only if the employer consents to the application of the rules
to itself. The plan sponsor shall give a written notice to each
contributing employer and each employee organization that represents
employees covered by the plan of the adoption of plan rules under this
paragraph.
Sec. 4219.16 Imposition of liability.
(a) Notice of mass withdrawal. Within 30 days after the mass
withdrawal valuation date, the plan sponsor shall give written notice
of the occurrence of a mass withdrawal to each employer that the plan
sponsor reasonably expects may be a liable employer under Sec. 4219.12.
The notice shall include--
(1) The mass withdrawal valuation date;
(2) A description of the consequences of a mass withdrawal under
this subpart; and
(3) A statement that each employer obligated to make initial
withdrawal liability payments shall continue to make those payments in
accordance with its schedule. Failure of the plan sponsor to notify an
employer of a mass withdrawal as required by this paragraph shall not
cancel the employer's mass withdrawal liability or waive the plan's
claim for such liability.
(b) Notice of redetermination liability. Within 30 days after the
date as of which the plan sponsor is required under Sec. 4219.11(b)(2)
to have determined the redetermination liability of employers, the plan
sponsor shall issue a notice of redetermination liability in writing to
each employer liable under Sec. 4219.12 for de minimis amounts or 20-
year-limitation amounts, or both. The notice shall include--
(1) The amount of the employer's liability, if any, for de minimis
amounts determined pursuant to Sec. 4219.13;
(2) The amount of the employer's liability, if any, for 20-year-
limitation amounts determined pursuant to Sec. 4219.14;
(3) The schedule for payment of the liability determined under
paragraph (f) of this section;
(4) A demand for payment of the liability in accordance with the
schedule; and
(5) A statement of when the plan sponsor expects to issue notices
of reallocation liability to liable employers.
(c) Notice of reallocation liability. Within 30 days after the date
as of which the plan sponsor is required under Sec. 4219.11(b)(3) to
have determined the reallocation liability of employers, the plan
sponsor shall issue a notice of reallocation liability in writing to
each employer liable for reallocation liability. The notice shall
include--
(1) The amount of the employer's reallocation liability determined
pursuant to Sec. 4219.15;
(2) The schedule for payment of the liability determined under
paragraph (f) of this section; and
(3) A demand for payment of the liability in accordance with the
schedule.
(d) Notice to employers not liable. The plan sponsor shall notify
in writing any employer that receives a notice of mass withdrawal under
paragraph (a) of this section and subsequently is determined not to be
liable for mass withdrawal liability or any component thereof. The
notice shall specify the liability from which the employer is excluded
and shall be provided to the employer not later than the date by which
liable employers are to be provided notices of reallocation liability
pursuant to paragraph (c) of this section. If the employer is not
liable for mass withdrawal liability, the notice shall also include a
statement, if applicable, that the employer is obligated to continue to
make initial withdrawal liability payments in accordance with its
existing schedule for payment of such liability.
(e) Combined notices. A plan sponsor may combine a notice of
redetermination liability with the notice of and demand for payment of
initial withdrawal liability. If a mass withdrawal and a withdrawal
described in Sec. 4219.18 occur concurrently, a plan sponsor may
combine--
(1) A notice of mass withdrawal with a notice of withdrawal issued
pursuant to Sec. 4219.18(d); and
(2) A notice of redetermination liability with a notice of
liability issued pursuant to Sec. 4219.18(e).
(f) Payment schedules. The plan sponsor shall establish payment
schedules for payment of an employer's mass withdrawal liability in
accordance with the rules in section 4219(c) of ERISA, as modified by
this paragraph. For an employer that owes initial withdrawal liability
as of the mass withdrawal valuation date, the plan sponsor shall
establish new payment schedules for each element of mass withdrawal
liability by amending the initial withdrawal liability payment schedule
in accordance with the paragraph (f)(1) of this section. For all other
employers, the payment schedules shall be established in accordance
with paragraph (f)(2).
(1) Employers owing initial withdrawal liability as of mass
withdrawal valuation date. For an employer that owes initial withdrawal
liability as of the mass withdrawal valuation date, the plan sponsor
shall amend the existing schedule of payments in order to amortize the
new amounts of liability being assessed, i.e., redetermination
liability and reallocation liability. With respect to redetermination
liability, the plan sponsor shall add that liability to the total
initial withdrawal liability and determine a new payment schedule, in
accordance with section 4219(c)(1) of ERISA, using the interest
assumptions that were used to determine the original payment schedule.
For reallocation liability, the plan sponsor shall add that liability
to the present value, as of the date following the mass withdrawal
valuation date, of the unpaid portion of the amended payment schedule
described in the preceding sentence and determine a new payment
schedule of level annual payments, calculated as if the first payment
were made on the day
[[Page 34106]]
following the mass withdrawal valuation date using the interest
assumptions used for determining the amount of unfunded vested benefits
to be reallocated.
(2) Other employers. For an employer that had no initial withdrawal
liability, or had fully paid its liability prior to the mass withdrawal
valuation date, the plan sponsor shall determine the payment schedule
for redetermination liability, in accordance with section 4219(c)(1) of
ERISA, in the same manner and using the same interest assumptions as
were used or would have been used in determining the payment schedule
for the employer's initial withdrawal liability. With respect to
reallocation liability, the plan sponsor shall follow the rules
prescribed in paragraph (f)(1) of this section.
(g) Review of mass withdrawal liability determinations.
Determinations of mass withdrawal liability made pursuant to this
subpart shall be subject to plan review under section 4219(b)(2) of
ERISA and to arbitration under section 4221 of ERISA within the times
prescribed by those sections. Matters that relate solely to the amount
of, and schedule of payments for, an employer's initial withdrawal
liability are not matters relating to the employer's liability under
this subpart and are not subject to review pursuant to this paragraph.
(h) Cessation of withdrawal liability obligations. If the plan
sponsor of a terminated plan distributes plan assets in full
satisfaction of all nonforfeitable benefits under the plan, the plan
sponsor's obligation to impose and collect liability, and each
employer's obligation to pay liability, in accordance with this subpart
ceases on the date of such distribution.
(i) Determination that a mass withdrawal has not occurred. If a
plan sponsor determines, after imposing mass withdrawal liability
pursuant to this subpart, that a mass withdrawal has not occurred, the
plan sponsor shall refund to employers all payments of mass withdrawal
liability with interest, except that a plan sponsor shall not refund
payments of liability for de minimis amounts to an employer that
remains liable for such amounts under Sec. 4219.18. Interest shall be
credited at the interest rate prescribed in subpart C and shall accrue
from the date the payment was received by the plan until the date of
the refund.
Sec. 4219.17 Filings with PBGC.
(a) Filing requirements. The plan sponsor shall file with PBGC a
notice that a mass withdrawal has occurred and separate certifications
that determinations of redetermination liability and reallocation
liability have been made and notices provided to employers in
accordance with this subpart.
(b) Who shall file. The plan sponsor or a duly authorized
representative acting on behalf of the plan sponsor shall sign and file
the notice and the certifications.
(c) When to file. A notice of mass withdrawal for a plan from which
substantially all employers withdraw pursuant to an agreement or
arrangement to withdraw shall be filed with the PBGC no later than 30
days after the mass withdrawal valuation date. A notice of mass
withdrawal termination shall be filed within the time prescribed for
the filing of that notice in part 4041A, subparts A and B, of this
chapter. Certifications of liability determinations shall be filed with
the PBGC no later than 30 days after the date on which the plan sponsor
is required to have provided employers with notices pursuant to
Sec. 4219.16.
(d) Where to file. The notice and certifications may be sent by
mail or submitted by hand during normal working hours to Reports
Processing, Insurance Operations Department, Pension Benefit Guaranty
Corporation, 1200 K Street NW., Washington, DC 20005-4026.
(e) Filing date. For purposes of paragraph (c)--
(1) The notice is considered filed on the date of the postmark
stamped on the cover in which the notice is mailed if--
(i) The postmark was made by the United States Postal Service; and
(ii) The notice was mailed postage prepaid, properly packaged and
addressed to the PBGC.
(2) If both conditions described in paragraph (e)(1) are not met,
the notice is considered filed on the date it is received by the PBGC,
except that notices received after regular business hours are
considered filed on the next regular business day.
(f) Contents of notice of mass withdrawal. If a plan terminates by
the withdrawal of every employer, a notice of termination filed in
accordance with part 4041A, subparts A and B, of this chapter shall
satisfy the requirements for a notice of mass withdrawal under this
subpart. If substantially all employers withdraw from a plan pursuant
to an agreement or arrangement to withdraw, the notice of mass
withdrawal shall contain the following information:
(1) The name of the plan.
(2) The name, address and telephone number of the plan sponsor and
of the duly authorized representative, if any, of the plan sponsor.
(3) The nine-digit Employer Identification Number (EIN) assigned by
the IRS to the plan sponsor and the three-digit Plan Identification
Number (PIN) assigned by the plan sponsor to the plan, and, if
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN
has been assigned, the notice shall so indicate.
(4) The mass withdrawal valuation date.
(5) A description of the facts on which the plan sponsor has based
its determination that a mass withdrawal has occurred, including the
number of contributing employers withdrawn and the number remaining in
the plan, and a description of the effect of the mass withdrawal on the
plan's contribution base.
(g) Contents of certifications. Each certification shall contain
the following information:
(1) The name of the plan.
(2) The name, address and telephone number of the plan sponsor and
of the duly authorized representative, if any, of the plan sponsor.
(3) The nine-digit Employer Identification Number (EIN) assigned by
the IRS to the plan sponsor and the three-digit Plan Identification
Number (PIN) last assigned by the plan sponsor to the plan, and, if
different, the EIN or PIN filed with the PBGC. If no EIN or PIN has
been assigned, the notice shall so indicate.
(4) Identification of the liability determination to which the
certification relates.
(5) A certification, signed by the plan sponsor or a duly
authorized representative, that the determinations have been made and
the notices given in accordance with this subpart.
(6) For reallocation liability certifications--
(i) A certification, signed by the plan's actuary, that the
determination of unfunded vested benefits has been done in accordance
with part 4281, subpart B; and
(ii) A copy of plan rules, if any, adopted pursuant to
Sec. 4219.15(d).
(h) Additional information. In addition to the information
described in paragraph (g) of this section, the PBGC may require the
plan sponsor to submit any other information the PBGC determines it
needs in order to monitor compliance with this subpart.
Sec. 4219.18 Withdrawal in a plan year in which substantially all
employers withdraw.
(a) General rule. An employer that withdraws in a plan year in
which substantially all employers withdraw
[[Page 34107]]
from the plan shall be liable to the plan for de minimis amounts if the
employer's initial withdrawal liability was reduced pursuant to section
4209(a) or (b) of ERISA.
(b) Amount of liability. An employer's liability for de minimis
amounts under this section shall be determined pursuant to
Sec. 4219.13.
(c) Plan sponsor's obligations. The plan sponsor of a plan that
experiences a withdrawal described in paragraph (a) shall--
(1) Determine and collect initial withdrawal liability of every
employer that has completely or partially withdrawn, in accordance with
sections 4201 and 4202 of ERISA;
(2) Notify each employer that is or may be liable under this
section, in accordance with paragraph (d) of this section;
(3) Within 90 days after the end of the plan year in which the
withdrawal occurred, determine, in accordance with paragraph (b) of
this section, the liability of each withdrawing employer that is liable
under this section;
(4) Notify each liable employer, in accordance with paragraph (e)
of this section, of the amount of its liability under this section,
demand payment of and collect that liability; and
(5) Certify to the PBGC that determinations of liability have been
completed, in accordance with paragraph (g) of this section.
(d) Notice of withdrawal. Within 30 days after the end of a plan
year in which a plan experiences a withdrawal described in paragraph
(a), the plan sponsor shall notify in writing each employer that is or
may be liable under this section. The notice shall specify the plan
year in which substantially all employers have withdrawn, describe the
consequences of such withdrawal under this section, and state that an
employer obligated to make initial withdrawal liability payments shall
continue to make those payments in accordance with its schedule.
(e) Notice of liability. Within 30 days after the determination of
liability, the plan sponsor shall issue a notice of liability in
writing to each liable employer. The notice shall include--
(1) The amount of the employer's liability for de minimis amounts;
(2) A schedule for payment of the liability, determined under
Sec. 4219.16(f); and
(3) A demand for payment of the liability in accordance with the
schedule.
(f) Review of liability determinations. Determinations of liability
made pursuant to this section shall be subject to plan review under
section 4219(b)(2) of ERISA and to arbitration under section 4221 of
ERISA, subject to the limitations contained in Sec. 4219.16(g).
(g) Notice to the PBGC. No later than 30 days after the notices of
liability under this section are required to be provided to liable
employers, the plan sponsor shall file with the PBGC a notice. The
notice shall include the items described in Sec. 4219.17 (g)(1) through
(g)(3), as well as the information listed below. In addition, the PBGC
may require the plan sponsor to submit any further information that the
PBGC determines it needs in order to monitor compliance with this
section.
(1) The plan year in which the withdrawal occurred.
(2) A description of the effect of the withdrawal, including the
number of contributing employers that withdrew in the plan year in
which substantially all employers withdrew, the number of employers
remaining in the plan, and a description of the effect of the
withdrawal on the plan's contribution base.
(3) A certification, signed by the plan sponsor or duly authorized
representative, that determinations have been made and notices given in
accordance with this section.
Sec. 4219.19 Information collection.
The information collection requirements contained in Secs. 4219.16,
4219.17, and 4219.18 have been approved by the Office of Management and
Budget under control number 1212-0034.
Subpart C--Overdue, Defaulted, and Overpaid Withdrawal Liability
Sec. 4219.31 Overdue and defaulted withdrawal liability; overpayment.
(a) Overdue withdrawal liability payment. Except as otherwise
provided in rules adopted by the plan in accordance with Sec. 4219.33,
a withdrawal liability payment is overdue if it is not paid on the date
set forth in the schedule of payments established by the plan sponsor.
(b) Default.
(1) Except as provided in paragraph (c)(1), ``default'' means--
(i) The failure of an employer to pay any overdue withdrawal
liability payment within 60 days after the employer receives written
notification from the plan sponsor that the payment is overdue; and
(ii) Any other event described in rules adopted by the plan which
indicates a substantial likelihood that an employer will be unable to
pay its withdrawal liability.
(2) In the event of a default, a plan sponsor may require immediate
payment of all or a portion of the outstanding amount of an employer's
withdrawal liability, plus interest. In the event that the plan sponsor
accelerates only a portion of the outstanding amount of an employer's
withdrawal liability, the plan sponsor shall establish a new schedule
of payments for the remaining amount of the employer's withdrawal
liability.
(c) Plan review or arbitration of liability determination. The
following rules shall apply with respect to the obligation to make
withdrawal liability payments during the period for plan review and
arbitration and with respect to the failure to make such payments:
(1) A default as a result of failure to make any payments shall not
occur until the 61st day after the last of--
(i) Expiration of the period described in section 4219(b)(2)(A) of
ERISA;
(ii) If the employer requests review under section 4219(b)(2)(A) of
ERISA of the plan's withdrawal liability determination or the schedule
of payments established by the plan, expiration of the period described
in section 4221(a)(1) of ERISA for initiation of arbitration; or
(iii) If arbitration is timely initiated either by the plan, the
employer or both, issuance of the arbitrator's decision.
(2) Any amounts due before the expiration of the period described
in paragraph (c)(1) shall be paid in accordance with the schedule
established by the plan sponsor. If a payment is not made when due
under the schedule, the payment is overdue and interest shall accrue in
accordance with the rules and at the same rate set forth in
Sec. 4219.32.
(d) Overpayments. If the plan sponsor or an arbitrator determines
that payments made in accordance with the schedule of payments
established by the plan sponsor have resulted in an overpayment of
withdrawal liability, the plan sponsor shall refund the overpayment,
with interest, in a lump sum. The plan sponsor shall credit interest on
the overpayment from the date of the overpayment to the date on which
the overpayment is refunded to the employer at the same rate as the
rate for overdue withdrawal liability payments, as established under
Sec. 4219.32 or by the plan pursuant to Sec. 4219.33.
Sec. 4219.32 Interest on overdue, defaulted and overpaid withdrawal
liability.
(a) Interest assessed. The plan sponsor of a multiemployer plan--
(1) Shall assess interest on overdue withdrawal liability payments
from the due date, as defined in paragraph (d) of
[[Page 34108]]
this section, until the date paid, as defined in paragraph (e); and
(2) In the event of a default, may assess interest on any
accelerated portion of the outstanding withdrawal liability from the
due date, as defined in paragraph (d) of this section, until the date
paid, as defined in paragraph (e).
(b) Interest rate. Except as otherwise provided in rules adopted by
the plan pursuant to Sec. 4219.33, interest under this section shall be
charged or credited for each calendar quarter at an annual rate equal
to the average quoted prime rate on short-term commercial loans for the
fifteenth day (or next business day if the fifteenth day is not a
business day) of the month preceding the beginning of each calendar
quarter, as reported by the Board of Governors of the Federal Reserve
System in Statistical Release H.15 (``Selected Interest Rates'').
(c) Calculation of interest. The interest rate under paragraph (b)
of this section is the nominal rate for any calendar quarter or portion
thereof. The amount of interest due the plan for overdue or defaulted
withdrawal liability, or due the employer for overpayment, is equal to
the overdue, defaulted, or overpaid amount multiplied by:
(1) For each full calendar quarter in the period from the due date
(or date of overpayment) to the date paid (or date of refund), one-
fourth of the annual rate in effect for that quarter;
(2) For each full calendar month in a partial quarter in that
period, one-twelfth of the annual rate in effect for that quarter; and
(3) For each day in a partial month in that period, one-three-
hundred-sixtieth of the annual rate in effect for that month.
(d) Due date. Except as otherwise provided in rules adopted by the
plan, the due date from which interest accrues shall be, for an overdue
withdrawal liability payment and for an amount of withdrawal liability
in default, the date of the missed payment that gave rise to the
delinquency or the default.
(e) Date paid. Any payment of withdrawal liability shall be deemed
to have been paid on the date on which it is received.
Sec. 4219.33 Plan rules concerning overdue and defaulted withdrawal
liability.
Plans may adopt rules relating to overdue and defaulted withdrawal
liability, provided that those rules are consistent with ERISA. These
rules may include, but are not limited to, rules for determining the
rate of interest to be charged on overdue, defaulted and overpaid
withdrawal liability (provided that the rate reflects prevailing market
rates for comparable obligations); rules providing reasonable grace
periods during which late payments may be made without interest;
additional definitions of default which indicate a substantial
likelihood that an employer will be unable to pay its withdrawal
liability; and rules pertaining to acceleration of the outstanding
balance on default. Plan rules adopted under this section shall be
reasonable. Plan rules shall operate and be applied uniformly with
respect to each employer, except that the rules may take into account
the creditworthiness of an employer. Rules which take into account the
creditworthiness of an employer shall state with particularity the
categories of creditworthiness the plan will use, the specific
differences in treatment accorded employers in different categories,
and the standards and procedures for assigning an employer to a
category.
PART 4220--PROCEDURES FOR PBGC APPROVAL OF PLAN AMENDMENTS
Sec.
4220.1 Purpose and scope.
4220.2 Definitions.
4220.3 Requests for PBGC approval.
4220.4 PBGC action on requests.
Authority: 29 U.S.C. 1302(b)(3), 1400.
Sec. 4220.1 Purpose and scope.
(a) General. This part establishes procedures under which a plan
sponsor shall request the PBGC to approve a plan amendment under
section 4220 of ERISA. This part applies to all multiemployer plans
covered by title IV of ERISA that adopt amendments pursuant to the
authorization of sections 4201-4219 of ERISA (except for amendments
adopted pursuant to section 4211(c)(5)). (The covered amendments are
set forth in paragraph (b) of this section.) The subsequent
modification of a plan amendment adopted by authorization of those
sections is also covered by this part. This part does not, however,
cover a plan amendment that merely repeals a previously adopted
amendment, returning the plan to the statutorily prescribed rule.
(b) Covered amendments. Amendments made pursuant to the following
sections of ERISA are covered by this part:
(1) Section 4203 (b)(1)(B)(ii).
(2) Section 4203(c)(4).
(3) Section 4205(c)(1).
(4) Section 4205(d).
(5) Section 4209(b).
(6) Section 4210(b)(2).
(7) Section 4211(c)(1).
(8) Section 4211(c)(4)(D).
(9) Section 4211(d)(1).
(10) Section 4211(d)(2).
(11) Section 4219(c)(1)(C)(ii)(I).
(12) Section 4219(c)(1)(C)(iii).
(c) Exception. Submission of a request for approval under this part
is not required for a plan amendment for which the PBGC has published a
notice in the Federal Register granting class approval.
Sec. 4220.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
employer, ERISA, IRS, multiemployer plan, PBGC, plan, and plan sponsor.
Sec. 4220.3 Requests for PBGC approval.
(a) Filing of request. A request for approval of an amendment filed
with the PBGC in accordance with this section shall constitute notice
to the PBGC for purposes of the 90-day period specified in section 4220
of ERISA. A request is deemed filed on the date on which a request
containing all information required by paragraph (d) of this section is
received by the PBGC.
(b) Who may request. The plan sponsor, or a duly authorized
representative acting on behalf of a plan sponsor, shall sign and
submit the request.
(c) Where to file. The request shall be delivered by hand or by
mail to Reports Processing, Insurance Operations Department, Pension
Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-
4026.
(d) Information. Each request filed shall contain the following
information:
(1) The name of the plan for which the amendment is being
submitted, and the name, address and the telephone number of the plan
sponsor or its duly authorized representative.
(2) The nine-digit Employer Identification Number (EIN) assigned by
the IRS to the plan sponsor and the three-digit Plan Identification
Number (PIN) assigned by the plan sponsor to the plan, and, if
different, the EIN or PIN last filed with PBGC. If no EIN or PIN has
been assigned, that fact must be indicated.
(3) A copy of the amendment as adopted, including its proposed
effective date.
(4) A copy of the most recent actuarial valuation of the plan.
(5) A statement containing a certification that notice of the
adoption of the amendment has been given to all employers who have an
obligation to contribute under the plan and to all employee
organizations representing employees covered by the plan.
[[Page 34109]]
(6) Any other information that the plan sponsor believes to be
pertinent to its request.
(e) Supplemental information. The PBGC may require a plan sponsor
to submit any other information that the PBGC determines to be
necessary to review a request under this part. The PBGC may suspend the
running of the 90-day period pursuant to Sec. 4220.4(c), pending the
submission of the supplemental information.
(Approved by the Office of Management and Budget under control
number 1212-0031)
Sec. 4220.4 PBGC action on requests.
(a) General. Upon receipt of a complete request, the PBGC shall
notify the plan sponsor in writing of the date of commencement of the
90-day period specified in section 4220 of ERISA. Except as provided in
paragraph (c) of this section, the PBGC shall approve or disapprove a
plan amendment submitted to it under this part within 90 days after
receipt of a complete request for approval. If the PBGC fails to act
within the 90-day period, or within that period notifies the plan
sponsor that it will not disapprove the amendment, the amendment may be
made effective without the approval of the PBGC.
(b) Decision on request. The PBGC's decision on a request for
approval shall be in writing. If the PBGC disapproves the plan
amendment, the decision shall state the reasons for the disapproval. An
approval by the PBGC constitutes its finding only with respect to the
issue of risk as set forth in section 4220(c) of ERISA, and not with
respect to whether the amendment is otherwise properly adopted in
accordance with the terms of ERISA and the plan in question.
(c) Suspension of the 90-day period. The PBGC may suspend the
running of the 90-day period referred to in paragraph (a) of this
section if it determines that additional information is required under
Sec. 4220.3(e). When it does so, PBGC's request for additional
information will advise the plan sponsor that the running of 90-day
period has been suspended. The 90-day period will resume running on the
date on which the additional information is received by the PBGC, and
the PBGC will notify the plan sponsor of that date upon receipt of the
information.
PART 4221--ARBITRATION OF DISPUTES IN MULTIEMPLOYER PLANS
Sec.
4221.1 Purpose and scope.
4221.2 Definitions.
4221.3 Initiation of arbitration.
4221.4 Appointment of the arbitrator.
4221.5 Powers and duties of the arbitrator.
4221.6 Hearing.
4221.7 Reopening of proceedings.
4221.8 Award.
4221.9 Reconsideration of award.
4221.10 Costs.
4221.11 Waiver of rules.
4221.12 Calculation of periods of time.
4221.13 Filing or service of documents.
4221.14 PBGC-approved arbitration procedures.
Authority: 29 U.S.C. 1302(b)(3), 1401.
Sec. 4221.1 Purpose and scope.
(a) Purpose. The purpose of this part is to establish procedures
for the arbitration, pursuant to section 4221 of ERISA, of withdrawal
liability disputes arising under sections 4201 through 4219 and 4225 of
ERISA.
(b) Scope. This part applies to arbitration proceedings initiated
pursuant to section 4221 of ERISA and this part on or after September
26, 1985. On and after the effective date, any plan rules governing
arbitration procedures (other than a plan rule adopting a PBGC-approved
arbitration procedure in accordance with Sec. 4221.14) are effective
only to the extent that they are consistent with this part and adopted
by the arbitrator in a particular proceeding.
Sec. 4221.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
ERISA, IRS, multiemployer plan, PBGC, plan, and plan sponsor.
In addition, for purposes of this part:
Arbitrator means an individual or panel of individuals selected
according to this part to decide a dispute concerning withdrawal
liability.
Employer means an individual, partnership, corporation or other
entity against which a plan sponsor has made a demand for payment of
withdrawal liability pursuant to section 4219(b)(1) of ERISA.
Party or parties means the employer and the plan sponsor involved
in a withdrawal liability dispute.
Withdrawal liability dispute means a dispute described in
Sec. 4221.1(a) of this chapter.
Sec. 4221.3 Initiation of arbitration.
(a) Time limits--in general. Arbitration of a withdrawal liability
dispute may be initiated within the time limits described in section
4221(a)(1) of ERISA.
(b) Waiver or extension of time limits. Arbitration shall be
initiated in accordance with this section, notwithstanding any
inconsistent provision of any agreement entered into by the parties
before the date on which the employer received notice of the plan's
assessment of withdrawal liability. The parties may, however, agree at
any time to waive or extend the time limits for initiating arbitration.
(c) Establishment of timeliness of initiation. A party that
unilaterally initiates arbitration is responsible for establishing that
the notice of initiation of arbitration was timely received by the
other party. If arbitration is initiated by agreement of the parties,
the date on which the agreement to arbitrate was executed establishes
whether the arbitration was timely initiated.
(d) Contents of agreement or notice. If the employer initiates
arbitration, it shall include in the notice of initiation a statement
that it disputes the plan sponsor's determination of its withdrawal
liability and is initiating arbitration. A copy of the demand for
withdrawal liability and any request for reconsideration, and the
response thereto, shall be attached to the notice. If a party other
than an employer initiates arbitration, it shall include in the notice
a statement that it is initiating arbitration and a brief description
of the questions on which arbitration is sought. If arbitration is
initiated by agreement, the agreement shall include a brief description
of the questions submitted to arbitration. In no case is compliance
with formal rules of pleading required.
(e) Effect of deficient agreement or notice. If a party fails to
object promptly in writing to deficiencies in an initiation agreement
or a notice of initiation of arbitration, it waives its right to
object.
Sec. 4221.4 Appointment of the arbitrator.
(a) Appointment of and acceptance by arbitrator. The parties shall
select the arbitrator within 45 days after the arbitration is
initiated, or within such other period as is mutually agreed after the
initiation of arbitration, and shall mail to the designated arbitrator
a notice of his or her appointment. The notice of appointment shall
include a copy of the notice or agreement initiating arbitration, a
statement that the arbitration is to be conducted in accordance with
this part, and a request for a written acceptance by the arbitrator.
The arbitrator's appointment becomes effective upon his or her written
acceptance, stating his or her availability to serve and making any
disclosures required by paragraph (b) of this section. If the
arbitrator does not accept in writing within 15 days after the notice
of appointment is mailed or delivered to him or her, he or she is
deemed to have declined to act, and the parties shall select a new
arbitrator in accordance with paragraph (d) of this section.
[[Page 34110]]
(b) Disclosure by arbitrator and disqualification. Upon accepting
the appointment, the arbitrator shall disclose to the parties any
circumstances likely to affect his or her impartiality, including any
bias or any financial or personal interest in the result of the
arbitration and any past or present relationship with the parties or
their counsel. If any party determines that the arbitrator should be
disqualified because of the information disclosed, that party shall
notify all other parties and the arbitrator no later than 10 days after
the arbitrator makes the disclosure required by this paragraph (but in
no event later than the commencement of the hearing under Sec. 4221.6).
The arbitrator shall then withdraw, and the parties shall select
another arbitrator in accordance with paragraph (d) of this section.
(c) Challenge and withdrawal. After the arbitrator has been
selected, a party may request that he or she withdraw from the
proceedings at any point before a final award is rendered on the ground
that he or she is unable to render an award impartially. The request
for withdrawal shall be served on all other parties and the arbitrator
by hand or by certified or registered mail and shall include a
statement of the circumstances that, in the requesting party's view,
affect the arbitrator's impartiality and a statement that the
requesting party has brought these circumstances to the attention of
the arbitrator and the other parties at the earliest practicable point
in the proceedings. If the arbitrator determines that the circumstances
adduced are likely to affect his or her impartiality and have been
presented in a timely fashion, he or she shall withdraw from the
proceedings and notify the parties of the reasons for his or her
withdrawal. The parties shall then select a new arbitrator in
accordance with paragraph (d) of this section.
(d) Filling vacancies. If the designated arbitrator declines his or
her appointment or, after accepting his or her appointment, is
disqualified, resigns, dies, withdraws, or is unable to perform his or
her duties at any time before a final award is rendered, the parties
shall select another arbitrator to fill the vacancy. The selection
shall be made, in accordance with the procedure used in the initial
selection, within 20 days after the parties receive notice of the
vacancy. The matter shall then be reheard by the newly chosen
arbitrator, who may, in his or her discretion, rely on all or any
portion of the record already established.
(e) Failure to select arbitrator. If the parties fail to select an
arbitrator within the time prescribed by this section, either party or
both may seek the designation and appointment of an arbitrator in a
United States district court pursuant to the provisions of title 9 of
the United States Code.
Sec. 4221.5 Powers and duties of the arbitrator.
(a) Arbitration hearing. Except as otherwise provided in this part,
the arbitrator shall conduct the arbitration hearing under Sec. 4221.6
in the same manner, and shall possess the same powers, as an arbitrator
conducting a proceeding under title 9 of the United States Code.
(1) Application of the law. In reaching his or her decision, the
arbitrator shall follow applicable law, as embodied in statutes,
regulations, court decisions, interpretations of the agencies charged
with the enforcement of ERISA, and other pertinent authorities.
(2) Prehearing discovery. The arbitrator may allow any party to
conduct prehearing discovery by interrogatories, depositions, requests
for the production of documents, or other means, upon a showing that
the discovery sought is likely to lead to the production of relevant
evidence and will not be disproportionately burdensome to the other
parties. The arbitrator may impose appropriate sanctions if he or she
determines that a party has failed to respond to discovery in good
faith or has conducted discovery proceedings in bad faith or for the
purpose of harassment. The arbitrator may, at the request of any party
or on his or her own motion, require parties to give advance notice of
expert or other witnesses that they intend to introduce.
(3) Admissibility of evidence. The arbitrator determines the
relevance and materiality of the evidence offered during the course of
the hearing and is the judge of the admissibility of evidence offered.
Conformity to legal rules of evidence is not necessary. To the extent
reasonably practicable, all evidence shall be taken in the presence of
the arbitrator and the parties. The arbitrator may, however, consider
affidavits, transcripts of depositions, and similar documents.
(4) Production of documents or other evidence. The arbitrator may
subpoena witnesses or documents upon his or her own initiative or upon
request by any party after determining that the evidence is likely to
be relevant to the dispute.
(b) Prehearing conference. If it appears that a prehearing
conference will expedite the proceedings, the arbitrator may, at any
time before the commencement of the arbitration hearing under
Sec. 4221.6, direct the parties to appear at a conference to consider
settlement of the case, clarification of issues and stipulation of
facts not in dispute, admission of documents to avoid unnecessary
proof, limitations on the number of expert or other witnesses, and any
other matters that could expedite the disposition of the proceedings.
(c) Proceeding without hearing. The arbitrator may render an award
without a hearing if the parties agree and file with the arbitrator
such evidence as the arbitrator deems necessary to enable him or her to
render an award under Sec. 4221.8.
Sec. 4221.6 Hearing.
(a) Time and place of hearing established. Unless the parties agree
to proceed without a hearing as provided in Sec. 4221.5(c), the parties
and the arbitrator shall, no later than 15 days after the written
acceptance by the arbitrator is mailed to the parties, establish a date
and place for the hearing. If agreement is not reached within the 15-
day period, the arbitrator shall, within 10 additional days, choose a
location and set a hearing date. The date set for the hearing may be no
later than 50 days after the mailing date of the arbitrator's written
acceptance.
(b) Notice. After the time and place for the hearing have been
established, the arbitrator shall serve a written notice of the hearing
on the parties by hand or by certified or registered mail.
(c) Appearances. The parties may appear in person or by counsel or
other representatives. Any party that, after being duly notified and
without good cause shown, fails to appear in person or by
representative at a hearing or conference, or fails to file documents
in a timely manner, is deemed to have waived all rights with respect
thereto and is subject to whatever orders or determinations the
arbitrator may make.
(d) Record and transcript of hearing. Upon the request of either
party, the arbitrator shall arrange for a record of the arbitration
hearing to be made by stenographic means or by tape recording. The cost
of making the record and the costs of transcription and copying are
costs of the arbitration proceedings payable as provided in
Sec. 4221.10(b) except that, if only one party requests that a
transcript of the record be made, that party shall pay the cost of the
transcript.
(e) Order of hearing. The arbitrator shall conduct the hearing in
accordance with the following rules:
(1) Opening. The arbitrator shall open the hearing and place in the
record the
[[Page 34111]]
notice of initiation of arbitration or the initiation agreement. The
arbitrator may ask for statements clarifying the issues involved.
(2) Presentation of claim and response. The arbitrator shall
establish the procedure for presentation of claim and response in such
a manner as to afford full and equal opportunity to all parties for the
presentation of their cases.
(3) Witnesses. All witnesses shall testify under oath or
affirmation and are subject to cross-examination by opposing parties.
If testimony of an expert witness is offered by a party without prior
notice to the other party, the arbitrator shall grant the other party a
reasonable time to prepare for cross-examination and to produce expert
witnesses on its own behalf. The arbitrator may on his or her own
initiative call expert witnesses on any issue raised in the
arbitration. The cost of any expert called by the arbitrator is a cost
of the proceedings payable as provided in Sec. 4221.10(b).
(f) Continuance of hearing. The arbitrator may, for good cause
shown, grant a continuance for a reasonable period. When granting a
continuance, the arbitrator shall set a date for resumption of the
hearing.
(g) Filing of briefs. Each party may file a written statement of
facts and argument supporting the party's position. The parties' briefs
are due no later than 30 days after the close of the hearing. Within 15
days thereafter, each party may file a reply brief concerning matters
contained in the opposing brief. The arbitrator may establish a
briefing schedule and may reduce or extend these time limits. Each
party shall deliver copies of all of its briefs to the arbitrator and
to all opposing parties.
Sec. 4221.7 Reopening of proceedings.
(a) Grounds for reopening. At any time before a final award is
rendered, the proceedings may be reopened, on the motion of the
arbitrator or at the request of any party, for the purpose of taking
further evidence or rehearing or rearguing any matter, if the
arbitrator determines that--
(1) The reopening is likely to result in new information that will
have a material effect on the outcome of the arbitration;
(2) Good cause exists for the failure of the party that requested
reopening to present such information at the hearing; and
(3) The delay caused by the reopening will not be unfairly
injurious to any party.
(b) Comments on and notice of reopening. The arbitrator shall allow
all affected parties the opportunity to comment on any motion or
request to reopen the proceedings. If he or she determines that the
proceedings should be reopened, he or she shall give all parties
written notice of the reasons for reopening and of the schedule of the
reopened proceedings.
Sec. 4221.8 Award.
(a) Form. The arbitrator shall render a written award that--
(1) States the basis for the award, including such findings of fact
and conclusions of law (which need not be explicitly designated as
such) as are necessary to resolve the dispute;
(2) Adjusts (or provides a method for adjusting) the amount or
schedule of payments to be made after the award to reflect overpayments
or underpayments made before the award was rendered or requires the
plan sponsor to refund overpayments in accordance with Sec. 4219.31(d);
and
(3) Provides for an allocation of costs in accordance with
Sec. 4221.10.
(b) Time of award. Except as provided in paragraphs (c), (d), and
(e) of this section, the arbitrator shall render the award no later
than 30 days after the proceedings close. The award is rendered when
filed or served on the parties as provided in Sec. 4221.13. The award
is final when the period for seeking modification or reconsideration in
accordance with Sec. 4221.9(a) has expired or the arbitrator has
rendered a revised award in accordance with Sec. 4221.9(c).
(c) Reopened proceedings. If the proceedings are reopened in
accordance with Sec. 4221.7 after the close of the hearing, the
arbitrator shall render the award no later than 30 days after the date
on which the reopened proceedings are closed.
(d) Absence of hearing. If the parties have chosen to proceed
without a hearing, the arbitrator shall render the award no later than
30 days after the date on which final statements and proofs are filed
with him or her.
(e) Agreement for extension of time. Notwithstanding paragraphs
(b), (c), and (d), the parties may agree to an extension of time for
the arbitrator's award in light of the particular facts and
circumstances of their dispute.
(f) Close of proceedings. For purposes of paragraphs (b) and (c) of
this section, the proceedings are closed on the date on which the last
brief or reply brief is due or, if no briefs are to be filed, on the
date on which the hearing or rehearing closes.
(g) Publication of award. After a final award has been rendered,
the plan sponsor shall make copies available upon request to the PBGC
and to all companies that contribute to the plan. The plan sponsor may
impose reasonable charges for copying and postage.
Sec. 4221.9 Reconsideration of award.
(a) Motion for reconsideration and objections. A party may seek
modification or reconsideration of the arbitrator's award by filing a
written motion with the arbitrator and all opposing parties within 20
days after the award is rendered. Opposing parties may file objections
to modification or reconsideration within 10 days after the motion is
filed. The filing of a written motion for modification or
reconsideration suspends the 30-day period under section 4221(b)(2) of
ERISA for requesting court review of the award. The 30-day statutory
period again begins to run when the arbitrator denies the motion
pursuant to paragraph (c) of this section or renders a revised award.
(b) Grounds for modification or reconsideration. The arbitrator may
grant a motion for modification or reconsideration of the award only
if--
(1) There is a numerical error or a mistake in the description of
any person, thing, or property referred to in the award; or
(2) The arbitrator has rendered an award upon a matter not
submitted to the arbitrator and the matter affects the merits of the
decision; or
(3) The award is imperfect in a matter of form not affecting the
merits of the dispute.
(c) Decision of arbitrator. The arbitrator shall grant or deny the
motion for modification or reconsideration, and may render an opinion
to support his or her decision within 20 days after the motion is filed
with the arbitrator, or within 30 days after the motion is filed if an
objection is also filed.
Sec. 4221.10 Costs.
The costs of arbitration under this part shall be borne by the
parties as follows:
(a) Witnesses. Each party to the dispute shall bear the costs of
its own witnesses.
(b) Other costs of arbitration. Except as provided in
Sec. 4221.6(d) with r
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
espect to a transcript of the hearing, the parties
shall bear the other costs of the arbitration proceedings equally
unless the arbitrator determines otherwise. The parties may, however,
agree to a different allocation of costs if their agreement is entered
into after the employer has received notice of the plan's assessment of
withdrawal liability.
[[Page 34112]]
(c) Attorneys' fees. The arbitrator may require a party that
initiates or contests an arbitration in bad faith or engages in
dilatory, harassing, or other improper conduct during the course of the
arbitration to pay reasonable attorneys' fees of other parties.
Sec. 4221.11 Waiver of rules.
Any party that fails to object in writing in a timely manner to any
deviation from any provision of this part is deemed to have waived the
right to interpose that objection thereafter.
Sec. 4221.12 Calculation of periods of time.
For purposes of calculating any period of time under this part, the
period begins to run on the day following the day that a communication
is received or an act is completed. If the last day of the period is a
Federal, State, or local holiday or a non-business day for one of the
parties or the arbitrator, the period runs until the end of the first
business day that follows. Holidays or non-business days occurring
during the running of the period of time are included in calculating
the period.
Sec. 4221.13 Filing or service of documents.
(a) By mail. A document that is to be filed or served under this
part is considered filed or served on--
(1) The date of the receipt provided to the sender by the United
States Postal Service, if the document was sent by certified or
registered mail, postage prepaid, properly packaged, and properly
addressed; or
(2) The date of the United States Postal Service postmark stamped
on the cover in which the document is mailed, if paragraph (a)(1) is
not applicable, a legible postmark was made, and the document was sent
postage prepaid, properly packaged, and properly addressed.
(b) By means other than mail. A document required to be delivered
under this part that is not mailed in accordance with paragraph (a) of
this section is considered filed or served on the date on which it is
received.
Sec. 4221.14 PBGC-approved arbitration procedures.
(a) Use of PBGC-approved arbitration procedures. In lieu of the
procedures prescribed by this part, an arbitration may be conducted in
accordance with an alternative arbitration procedure approved by the
PBGC in accordance with paragraph (c) of this section. A plan may by
plan amendment require the use of a PBGC-approved procedure for all
arbitrations of withdrawal liability disputes, or the parties may agree
to the use of a PBGC-approved procedure in a particular case.
(b) Scope of alternative procedures. If an arbitration is conducted
in accordance with a PBGC-approved arbitration procedure, the
alternative procedure shall govern all aspects of the arbitration, with
the following exceptions:
(1) The time limits for the initiation of arbitration may not
differ from those provided for by Sec. 4221.3.
(2) The arbitrator shall be selected after the initiation of the
arbitration.
(3) The arbitrator shall give the parties opportunity for
prehearing discovery substantially equivalent to that provided by
Sec. 4221.5(a)(2).
(4) The award shall be made available to the public to at least the
extent provided by Sec. 4221.8(g).
(5) The costs of arbitration shall be allocated in accordance with
Sec. 4221.10.
(c) Procedure for approval of alternative procedures. The PBGC may
approve arbitration procedures on its own initiative by publishing an
appropriate notice in the Federal Register. The sponsor of an
arbitration procedure may request PBGC approval of its procedures by
submitting an application to the PBGC. The application shall be
submitted to Reports Processing, Insurance Operations Department,
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington,
DC 20005-4026, and shall include:
(1) A copy of the procedures for which approval is sought;
(2) A description of the history, structure and membership of the
organization that sponsors the procedures; and
(3) A discussion of the reasons why, in the sponsoring
organization's opinion, the procedures satisfy the criteria for
approval set forth in this section.
(d) Criteria for approval of alternative procedures. The PBGC shall
approve an application if it determines that the proposed procedures
will be substantially fair to all parties involved in the arbitration
of a withdrawal liability dispute and that the sponsoring organization
is neutral and able to carry out its role under the procedures. The
PBGC may request comments on the application by publishing an
appropriate notice in the Federal Register. Notice of the PBGC's
decision on the application shall be published in the Federal Register.
Unless the notice of approval specifies otherwise, approval will remain
effective until revoked by the PBGC through a Federal Register notice.
PART 4231--MERGERS AND TRANSFERS BETWEEN MULTIEMPLOYER PLANS
Sec.
4231.1 Purpose and scope.
4231.2 Definitions.
4231.3 Requirements for mergers and transfers.
4231.4 Preservation of accrued benefits.
4231.5 Valuation requirement.
4231.6 Plan solvency tests.
4231.7 De minimis mergers and transfers.
4231.8 Notice of merger or transfer.
4231.9 Request for compliance determination.
4231.10 Actuarial calculations and assumptions.
Authority: 29 U.S.C. 1302(b)(3), 1411.
Sec. 4231.1 Purpose and scope.
(a) Purpose. The purpose of this part is to prescribe notice
requirements under section 4231 of ERISA for mergers and transfers of
assets or liabilities among multiemployer pension plans. This part also
interprets the other requirements of section 4231 and prescribes
special rules for de minimis mergers and transfers.
(b) Scope. This part applies to mergers and transfers among
multiemployer plans where all of the plans immediately before and
immediately after the transaction are multiemployer plans covered by
title IV of ERISA.
Sec. 4231.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
ERISA, fair market value, IRS, multiemployer plan, PBGC, plan, and plan
year.
In addition, for purposes of this part:
Actuarial valuation means a valuation of assets and liabilities
performed by an enrolled actuary using the actuarial assumptions used
for purposes of determining the charges and credits to the funding
standard account under section 302 of ERISA and section 412 of the
Code.
Certified change of collective bargaining representative means a
change of collective bargaining representative certified under the
Labor-Management Relations Act of 1947, as amended, or the Railway
Labor Act, as amended.
Fair market value of assets has the same meaning as the term has
for minimum funding purposes under section 302 of ERISA and section 412
of the Code.
Merger means the combining of two or more plans into a single plan.
For example, a consolidation of two plans into a new plan is a merger.
Significant transfer means the transfer of assets that equal or
exceed 15% of the assets of the transferor plan before the transfer or
the transfer of unfunded
[[Page 34113]]
accrued benefits that equal or exceed 15% of the assets of the
transferee plan (including a plan that did not exist prior to the
transfer) before the transfer.
Transfer and transfer of assets or liabilities mean a diminution of
assets or liabilities with respect to one plan and the acquisition of
these assets or the assumption of these liabilities by another plan or
plans (including a plan that did not exist prior to the transfer).
However, the shifting of assets or liabilities pursuant to a written
reciprocity agreement between two multiemployer plans in which one plan
assumes liabilities of another plan is not a transfer of assets or
liabilities. In addition, the shifting of assets between several
funding media used for a single plan (such as between trusts, between
annuity contracts, or between trusts and annuity contracts) is not a
transfer of assets or liabilities.
Sec. 4231.3 Requirements for mergers and transfers.
(a) General requirements. A plan sponsor may not cause a
multiemployer plan to merge with one or more multiemployer plans or
transfer assets or liabilities to or from another multiemployer plan
unless the merger or transfer satisfies all of the following
requirements:
(1) No participant's or beneficiary's accrued benefit may be lower
immediately after the effective date of the merger or transfer than the
benefit immediately before the merger or transfer.
(2) Actuarial valuations of the plans involved in the merger or
transfer shall have been performed in accordance with Sec. 4231.5.
(3) For each plan involved in the transaction, an enrolled actuary
shall-
(i) Determine that the plan meets the applicable plan solvency
requirement set forth in Sec. 4231.6; or
(ii) Otherwise demonstrate that benefits under the plan are not
reasonably expected to be subject to suspension under section 4245 of
ERISA.
(4) The plan sponsor shall notify the PBGC of the merger or
transfer in accordance with Sec. 4231.8.
(b) Compliance determination. If a plan sponsor requests a
determination that a merger or transfer that may otherwise be
prohibited by section 406(a) or (b)(2) of ERISA satisfies the
requirements of section 4231 of ERISA, the plan sponsor shall submit
the information described in Sec. 4231.9 in addition to the information
required by Sec. 4231.8. PBGC may request additional information if
necessary to determine whether a merger or transfer complies with the
requirements of section 4231 and this part. Plan sponsors are not
required to request a compliance determination. Under section 4231(c)
of ERISA, if the PBGC determines that the merger or transfer complies
with section 4231 of ERISA and this part, the merger or transfer will
not constitute a violation of the prohibited transaction provisions of
section 406(a) and (b)(2) of ERISA.
(c) Certified change in bargaining representative. Transfers of
assets and liabilities pursuant to a certified change in bargaining
representative are governed by section 4235 of ERISA. Plan sponsors
involved in such transfers are not required to comply with this part.
However, under section 4235(f)(1) of ERISA, the plan sponsors of the
plans involved in the transfer may agree to a transfer that complies
with sections 4231 and 4234 of ERISA. Plan sponsors that elect to
comply with sections 4231 and 4234 must comply with the rules in this
part.
(Approved by the Office of Management and Budget under control
number 1212-0022)
Sec. 4231.4 Preservation of accrued benefits.
Section 4231(b)(2) of ERISA and Sec. 4231.3(a)(1) require that no
participant's or beneficiary's accrued benefit may be lower immediately
after the effective date of the merger or transfer than the benefit
immediately before the merger or transfer. A plan that assumes an
obligation to pay benefits for a group of participants satisfies this
requirement only if the plan contains a provision preserving all
accrued benefits. The determination of what is an accrued benefit shall
be made in accordance with section 411 of the Code and the regulations
thereunder.
Sec. 4231.5 Valuation requirement.
(a) Mergers and non-significant transfers. A merger or a transfer
that is not significant (``non-significant transfer'') satisfies
section 4231(b)(4) of ERISA and Sec. 4231.3(a)(2) (requiring an
actuarial valuation) if an actuarial valuation has been performed for
each plan involved in the merger or transfer, based on the assets and
liabilities of the plan as of a date not more than three years before
the date on which the notice of the merger or transfer is filed.
(b) Significant transfers. A significant transfer satisfies section
4231(b)(4) of ERISA and Sec. 4231.3(a)(2) if an actuarial valuation has
been performed for each plan involved in the transfer, based on the
assets and liabilities of the plan as of a date not earlier than the
first day of the last plan year ending before the proposed effective
date of the transfer. The valuation shall separately identify assets,
contributions and liabilities being transferred, and shall be based on
the actuarial assumptions and methods that are expected to be used for
the first plan year beginning after the transfer.
Sec. 4231.6 Plan solvency tests.
(a) Significant transfers. A significant transfer satisfies the
plan solvency requirement of section 4231(b)(3) of ERISA and
Sec. 4231.3(a)(3)(i) if all of the following requirements are met by
each plan involved in the transfer:
(1) Expected contributions shall equal or exceed the estimated
amount necessary to satisfy the minimum funding requirement of section
412(a) of the Code (including reorganization funding, if applicable)
for the five plan years beginning on or after the proposed effective
date of the transfer.
(2) The fair market value of plan assets immediately after the
transfer shall equal or exceed the total amount of expected benefit
payments during the first five plan years beginning on or after the
proposed effective date of the transfer.
(3) Expected contributions for the first plan year beginning on or
after the proposed effective date of the transfer shall equal or exceed
expected benefit payments for that plan year.
(4) Contributions for the amortization period shall equal or exceed
unfunded accrued benefits plus expected normal costs.
(i) Notwithstanding paragraph (c)(4) of this section, ``unfunded
accrued benefits'' means the excess of the present value of accrued
benefits over the fair market value of the assets, determined on the
basis of the actuarial valuation required under Sec. 4231.5(b).
(ii) ``Amortization period'' means either 25 plan years or the
amortization period for the resulting base when the combined charge
base and the combined credit base are offset under section 412(b)(4) of
the Code. The actuary may select either period.
(b) Mergers and non-significant transfers. A merger or non-
significant transfer satisfies the plan solvency requirement of section
4231(b)(3) of ERISA and Sec. 4231.3(a)(3)(i) if, for the merged plan or
for each plan that continues after the transfer--
(1) The fair market value of plan assets immediately after the
merger or transfer equals or exceeds five times the benefit payments in
the last plan year ending before the proposed effective date of the
merger or transfer; or
(2) In each of the first five plan years beginning after the
proposed effective date of the merger or transfer, expected plan assets
plus expected contributions and investment earnings equal or
[[Page 34114]]
exceed expected expenses and benefit payments for the plan year.
(c) Rules for determinations. In determining whether a transaction
satisfies the plan solvency requirements set forth in this section, the
following rules apply:
(1) Expected contributions after a merger or transfer shall be
determined by assuming that contributions will equal contributions
received in or accrued for the last full plan year ending before the
date on which the notice of merger or transfer is filed with the PBGC.
Contributions shall be adjusted, however, to reflect any change in the
rate of employer contributions that has been negotiated (whether or not
in effect), or a trend of changing contribution base units over the
preceding five plan years or other period of time that can be
demonstrated to be more appropriate.
(2) Expected normal costs shall be determined under the funding
method and assumptions used by the plan actuary for purposes of
determining the minimum funding requirement under section 412 of the
Code (which requires that such assumptions be reasonable in the
aggregate). If the plan is using an aggregate funding method, normal
costs shall be determined under the entry age normal method.
(3) Expected benefit payments shall be determined by assuming that
current benefits remain in effect and that all scheduled increases in
benefits occur.
(4) The fair market value of plan assets immediately after the
merger or transfer shall be based on the most recent data available to
the plan sponsor immediately before the date on which the notice is
filed.
(5) Expected investment earnings shall be determined using the same
interest assumption used for determining the minimum funding
requirement under section 412 of the Code.
(6) Expected expenses shall be determined using expenses in the
last plan year ending before the notice is filed, adjusted to reflect
any anticipated changes.
(7) Expected plan assets for a plan year shall be determined by
adjusting the most current data on fair market value of plan assets to
reflect expected contributions, investment earnings, benefit payments
and expenses for each plan year between the date of the most current
data and the beginning of the plan year for which expected assets are
being determined.
Sec. 4231.7 De minimis mergers and transfers.
(a) Special plan solvency rule. In order to determine whether a de
minimis merger or transfer satisfies the plan solvency requirement in
Sec. 4231.6(b), the plan assets, expected contributions and expected
benefits may be determined without regard to any de minimis mergers or
transfers that have occurred since the last valuation performed to
establish charges and credits to the minimum funding standard account
under section 412(b) of the Code.
(b) De minimis merger defined. A merger is de minimis if the
present value of accrued benefits (whether or not vested) of one plan
is less than 3 percent of the fair market value of the other plan's
assets.
(c) De minimis transfer defined. A transfer of assets or
liabilities is de minimis if--
(1) The fair market value of the assets transferred, if any, is
less than 3 percent of the fair market value of all the assets of the
transferor plan; and
(2) The present value of the accrued benefits transferred (whether
or not vested) is less than 3 percent of the fair market value of all
the assets of the transferee plan.
(d) Value of assets and benefits. For purposes of paragraphs (b)
and (c) of this section, the value of plan assets and accrued benefits
may be determined as of any date prior to the proposed effective date
of the merger or transfer, but not earlier than the date of the most
recent valuation performed for purposes of section 412(b) of the Code.
(e) Aggregation required. In determining whether a merger or
transfer is de minimis, the assets and accrued benefits transferred in
previous de minimis mergers and transfers within the same plan year
shall be aggregated as described in paragraphs (e)(1) and (e)(2) of
this section. For the purposes of those paragraphs, the value of plan
assets may be determined as of the date during the plan year on which
the total value of the plan's assets is the highest.
(1) A merger is not de minimis if the total present value of
accrued benefits merged into a plan, when aggregated with all prior de
minimis mergers of and transfers to that plan effective within the same
plan year, equals or exceeds 3 percent of the value of the plan's
assets.
(2) A transfer is not de minimis if, when aggregated with all
previous mergers and transfers effective within the same plan year--
(i) The value of all assets transferred from the plan equals or
exceeds 3 percent of the value of the plan's assets; or
(ii) The present value of all accrued benefits transferred to the
plan equals or exceeds 3 percent of the plan's assets.
Sec. 4231.8 Notice of merger or transfer.
(a) When to file. Except as provided in paragraph (f) of this
section, a notice of a proposed merger or transfer shall be filed not
less than 120 days before the effective date of the transaction. For
purposes of this part, the effective date of a merger or transfer is
the earlier of--
(1) The date on which one plan assumes liability for benefits
accrued under another plan involved in the transaction; or
(2) The date on which one plan transfers assets to another plan
involved in the transaction.
(b) Who shall file. The plan sponsors of all plans involved in a
merger or transfer, or the duly authorized representative(s) acting on
behalf of the plan sponsors, shall jointly file the notice required by
this section.
(c) Where to file. The notice shall be delivered by mail or
submitted by hand to Reports Processing, Insurance Operations
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW.,
Washington, DC 20005-4026.
(d) Filing date. For purposes of paragraph (a) of this section, the
notice is not considered filed until all of the information required by
paragraph (e) of this section has been submitted. Except as provided in
the next sentence, the notice is considered filed on the date it is
received by the PBGC, unless it is received after regular business
hours, in which event it is considered filed on the next regular
business day. The notice is considered filed on the date of the
postmark stamped on the cover in which the notice is mailed if--
(1) The postmark was made by the United States Postal Service; and
(2) The notice was mailed postage prepaid, properly packaged and
addressed to the PBGC.
(e) Information required. Each notice shall contain the following
information:
(1) For each plan involved in the merger or transfer--
(i) The name of the plan;
(ii) The name, address and telephone number of the plan sponsor and
of the plan sponsor's duly authorized representative, if any; and
(iii) The nine-digit employer Identification Number (EIN) assigned
by the IRS to the plan sponsor and the three-digit Plan Identification
Number (PIN) assigned by the plan sponsor to the plan, and, if
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN
has been assigned, the notice shall so indicate.
[[Page 34115]]
(2) The kind of transaction being reported (merger, significant
transfer or non-significant transfer).
(3) The proposed effective date of the merger or transfer.
(4) A copy of the plan provision stating that no participant's or
beneficiary's accrued benefit will be lower immediately after the
merger or transfer than the benefit immediately before the transaction.
(5) One of the following statements, certified by an enrolled
actuary:
(i) A statement that the merger or transfer is de minimis as
defined in Sec. 4231.7. A notice of a de minimis merger or transfer is
not required to include the information described in paragraph (e)(6)
or (e)(7) of this section.
(ii) A statement that the merger or transfer satisfies the
applicable plan solvency test set forth in Sec. 4231.6, indicating
which is the applicable test.
(iii) A statement of the basis on which the actuary has determined
that benefits under the plan are not reasonably expected to be subject
to suspension under section 4245 of ERISA, including the supporting
data or calculations, assumptions and methods.
(6) For mergers or transfers (other than de minimis mergers or
transfers), a copy of the most recent actuarial valuation report that
satisfies the requirements of Sec. 4231.5.
(7) For a significant transfer, the following information used in
making the plan solvency determination under Sec. 4231.6(a):
(i) The present value of the accrued benefits and fair market value
of plan assets under the valuation required by Sec. 4231.5(b),
allocable to each plan after the transfer.
(ii) The fair market value of assets in each plan after the
transfer (determined in accordance with Sec. 4231.6(c)(4)).
(iii) The expected benefit payments for each plan in the first plan
year beginning on or after the proposed effective date of the transfer
(determined in accordance with Sec. 4231.6(c)(3)).
(iv) The contribution rates in effect for each plan for the first
plan year beginning on or after the proposed effective date of the
transfer.
(v) The expected contributions for each plan in the first plan year
beginning on or after the proposed effective date of the transfer
(determined in accordance with Sec. 4231.6(c)(1)).
(f) Waiver of notice. PBGC may waive the notice requirements of
this section and section 4231(b)(1) of ERISA if the plan sponsor
demonstrates to the satisfaction of the PBGC that failure to complete
the merger or transfer in less than 120 days after filing the notice
will cause harm to participants or beneficiaries of the plans involved
in the transaction.
(Approved by the Office of Management and Budget under control
number 1212-0022)
Sec. 4231.9 Request for compliance determination.
(a) General. A request for a determination that a merger or
transfer complies with the requirements of section 4231 of ERISA may be
filed by the plan sponsor or sponsors of one or more plans involved in
a merger or transfer. The request shall contain the information
described in paragraph (b) or (c) of this section, as applicable.
(1) The place of filing. The request shall be delivered to the
address set forth in Sec. 4231.8(c).
(2) Single request permitted for all de minimis transactions.
Because the plan solvency test for de minimis mergers and transfers is
based on the most recent valuation (without adjustment for intervening
de minimis transactions), a plan sponsor may submit a single request
for a compliance determination covering all de minimis mergers or
transfers that occur between one plan valuation and the next. However,
the plan sponsor must still notify PBGC of each de minimis merger or
transfer separately, in accordance with Sec. 4231.8. The single request
for a compliance determination may be filed concurrently with any one
of the notices of a de minimis merger or transfer.
(b) Contents of request: merger or transfer that is not de minimis.
A request for a compliance determination concerning a merger or
transfer that is not de minimus shall contain--
(1) A copy of the merger or transfer agreement;
(2) A summary of the required calculations, including a complete
description of assumptions and methods, on which the enrolled actuary
based the certification that the merger or transfer satisfied a plan
solvency test described in Sec. 4231.6; and
(3) For a significant transfer, copies of all actuarial valuations
performed within the 5 years preceding the proposed effective date of
the transfer.
(c) Contents of request: De minimus merger or transfer. A request
for a compliance determination concerning a de minimis merger or
transfer shall contain one of the following statements, certified by an
enrolled actuary:
(1) A statement that the merger or transfer satisfies one of the
plan solvency tests set forth in Sec. 4231.6(b), indicating which test
is satisfied.
(2) A statement of the basis on which the actuary has determined
that benefits under the plan are not reasonably expected to be subject
to suspension under section 4245 of ERISA, including supporting data or
calculations, assumptions and methods.
(Approved by the Office of Management and Budget under control
number 1212-0022)
Sec. 4231.10 Actuarial calculations and assumptions.
(a) Most recent valuation. All calculations required by this part
shall be based on the most recent actuarial valuation as of the date of
filing the notice, updated to show any material changes.
(b) Assumptions. All calculations required by this part shall be
based on methods and assumptions that are reasonable in the aggregate,
based on generally accepted actuarial principles.
(c) Updated calculations. If the actual date of the merger or
transfer is more than one year after the date the notice is filed with
the PBGC, PBGC may require the plans involved to provide updated
calculations and representations based on the actual effective date of
the transaction.
(Approved by the Office of Management and Budget under control
number 1212-0022)
PART 4245--NOTICE OF INSOLVENCY
Sec.
4245.1 Purpose and scope.
4245.2 Definitions.
4245.3 Notice of insolvency.
4245.4 Contents of notice of insolvency.
4245.5 Notice of insolvency benefit level.
4245.6 Contents of notice of insolvency benefit level.
4245.7 PBGC address.
Authority: 29 U.S.C. 1302(b)(3), 1426(e).
Sec. 4245.1 Purpose and scope.
(a) Purpose. The purpose of this part is to prescribe notice
requirements pertaining to insolvent multiemployer plans that are in
reorganization.
(b) Scope. This part applies to multiemployer plans in
reorganization covered by title IV of ERISA, other than plans that have
terminated by mass withdrawal under section 4041A(a)(2) of ERISA.
Sec. 4245.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
employer, ERISA, IRS, multiemployer plan, nonforfeitable benefit, PBGC,
person, plan, and plan year.
In addition, for purposes of this part:
Actuarial valuation means a report submitted to the plan in
connection with a valuation of plan assets and liabilities, which, in
the case of a plan covered by subparts C and D of part 4281, shall be
performed in accordance with subpart B of part 4281.
[[Page 34116]]
Available resources means, for a plan year, available resources as
described in section 4245(b)(3) of ERISA.
Benefits subject to reduction means those benefits accrued under
plan amendments (or plans) adopted after March 26, 1980, or under
collective bargaining agreements entered into after March 26, 1980,
that are not eligible for the PBGC's guarantee under section 4022A(b)
of ERISA.
Financial assistance means financial assistance from the PBGC under
section 4261 of ERISA.
Insolvency benefit level means the greater of the resource benefit
level or the benefit level guaranteed by the PBGC for each participant
and beneficiary in pay status.
Insolvency year means insolvency year as described in section
4245(b)(4) of ERISA.
Insolvent means that a plan is unable to pay benefits when due
during the plan year. A plan terminated by mass withdrawal is not
insolvent unless it has been amended to eliminate all benefits that are
subject to reduction under section 4281(c) of ERISA, or, in the absence
of an amendment, no benefits under the plan are subject to reduction
under section 4281(c) of ERISA.
Reasonably expected to enter pay status means, with respect to plan
participants and beneficiaries, persons (other than those in pay
status) who, according to plan records, are disabled, have applied for
benefits, or have reached or will reach during the applicable period
the normal retirement age under the plan, and any others whom it is
reasonable for the plan sponsor to expect to enter pay status during
the applicable period.
Reorganization means reorganization under section 4241(a) of ERISA.
Resource benefit level means resource benefit level as described in
section 4245(b)(2) of ERISA.
Sec. 4245.3 Notice of insolvency.
(a) Requirement of notice. A plan sponsor of a multiemployer plan
in reorganization that determines under section 4245 (b)(1), (d)(1) or
(d)(2) of ERISA that the plan's available resources are or may be
insufficient to pay benefits when due for a plan year shall so notify
the PBGC and the interested parties, as defined in paragraph (d) of
this section. A single notice may cover more than one plan year. The
notices shall be delivered in the manner and within the time prescribed
in this section and shall contain the information described in
Sec. 4245.4.
(b) When delivered. A plan sponsor shall mail or otherwise deliver
the notices of insolvency no later than 30 days after it determines
that the plan is or may become insolvent, as described in paragraph (a)
of this section. However, the notice to participants and beneficiaries
in pay status may be delivered concurrently with the first benefit
payment made more than 30 days after the determination of insolvency.
(c) Methods of delivery. The notice of insolvency shall be
delivered by mail or by hand to the PBGC and the interested parties
described in paragraph (d) of this section, other than participants and
beneficiaries who are not in pay status when the notice is required to
be delivered. The notice to participants and beneficiaries who are not
in pay status shall be provided in any manner reasonably calculated to
reach those participants and beneficiaries. Reasonable methods of
notification include, but are not limited to, posting the notice at
participants' worksites or publishing the notice in a union newsletter
or in a newspaper of general circulation in the area or areas where
participants reside. Notice to a participant shall be deemed notice to
that participant's beneficiary or beneficiaries.
(d) Interested parties. For purposes of this part, the term
``interested parties'' means--
(1) Employers required to contribute to the plan;
(2) Employee organizations that, for collective bargaining
purposes, represent plan participants employed by such employers; and
(3) Plan participants and beneficiaries.
Sec. 4245.4 Contents of notice of insolvency.
(a) Notice to the PBGC. A notice of insolvency required to be filed
with the PBGC pursuant to Sec. 4245.3 shall contain the information set
forth below:
(1) The name of the plan.
(2) The name, address and telephone number of the plan sponsor and
of the plan sponsor's duly authorized representative, if any.
(3) The nine-digit Employer Identification Number (EIN) assigned by
the IRS to the plan sponsor and the three-digit Plan Identification
Number (PIN) assigned by the plan sponsor to the plan, and, if
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN
has been assigned, the notice shall so indicate.
(4) The IRS key district that has jurisdiction over determination
letters with respect to the plan.
(5) The case number assigned to the plan by the PBGC. If the plan
has no case number, the notice shall state whether the plan has
previously filed a notice of insolvency with the PBGC and, if so, the
date on which the notice was filed.
(6) The plan year or years for which the plan sponsor has
determined that the plan is or may become insolvent.
(7) A copy of the plan document, including the last restatement of
the plan and all subsequent amendments in effect, or to become
effective, during the insolvency year or years. However, if a copy of
the plan document was submitted to the PBGC with a previous notice of
insolvency or notice of insolvency benefit level, only subsequent plan
amendments need be submitted, and the notice shall state when the copy
of the plan document was filed.
(8) A copy of the most recent actuarial valuation for the plan and
a copy of the most recent Schedule B (Form 5500) filed for the plan, if
the Schedule B contains more recent information than the actuarial
valuation. If the actuarial valuation or Schedule B was previously
submitted to the PBGC, it may be omitted, and the notice shall state
the date on which the document was filed and that the information is
still accurate and complete.
(9) The estimated amount of annual benefit payments under the plan
(determined without regard to the insolvency) for each insolvency year.
(10) The estimated amount of the plan's available resources for
each insolvency year.
(11) A certification, signed by the plan sponsor (or a duly
authorized representative), that notices of insolvency have been given
to all interested parties in accordance with the requirements of this
part.
(b) Notices to interested parties. A notice of insolvency required
under Sec. 4245.3 to be given to an interested party, as defined in
Sec. 4245.3(d), shall contain the information set forth below:
(1) The name of the plan.
(2) The plan year or years for which the plan sponsor has
determined that the plan is or may become insolvent.
(3) The estimated amount of annual benefit payment under the plan
(determined without regard to the insolvency) for each insolvency year.
(4) The estimated amount of the plan's available resources for each
insolvency year.
(5) A statement that, during the insolvency year, benefits above
the amount that can be paid from available resources or the level
guaranteed by the PBGC, whichever is greater, will be suspended, with a
brief explanation of which benefits are guaranteed by the PBGC. The
following statement may be
[[Page 34117]]
included as an explanation of PBGC-guaranteed benefits:
Should the plan become insolvent, each participant's benefit
guaranteed by the Pension Benefit Guaranty Corporation (PBGC) is
determined as follows. Each participant's nonforfeitable monthly
benefit payable under the plan at retirement is computed. This benefit
is then divided by the participant's years of credited service under
the plan. Of the resulting figure (the accrual rate), the first $5 is
guaranteed at 100%. Any additional amount (up to $15) is either 75% or
65% guaranteed, depending on the past funding practices of the plan.
Any remaining amount that exceeds $20 is not guaranteed. The PBGC
guarantees the payment of a monthly benefit equal to this adjusted
accrual rate times years of credited service. The PBGC does not
guarantee benefits or benefit increases that have been in effect for
fewer than 60 months before the plan becomes insolvent or is amended to
reduce accrued benefits.
(6) The name, address, and telephone number of the plan
administrator or other person designated by the plan sponsor to answer
inquiries concerning benefits during the plan's insolvency.
Sec. 4245.5 Notice of insolvency benefit level.
(a) Requirement of notice. Except as provided in paragraph (b) of
this section, for each insolvency year the plan sponsor shall notify
the PBGC and the interested parties, as defined in Sec. 4245.3(d), of
the level of benefits expected to be paid during the year (the
``insolvency benefit level''). These notices shall be delivered in the
manner and within the time prescribed in this section and shall contain
the information described in Sec. 4245.6.
(b) Waiver of notice to certain interested parties. The notice of
insolvency benefit level required under this section need not be given
to interested parties, other than participants and beneficiaries who
are in pay status or are reasonably expected to enter pay status during
the insolvency year, for an insolvency year immediately following the
plan year in which a notice of insolvency was required to be delivered
pursuant to Sec. 4245.3, provided that the notice of insolvency was in
fact delivered.
(c) When delivered. The plan sponsor shall mail or otherwise
deliver the required notices of insolvency benefit level no later than
60 days before the beginning of the insolvency year, except that if the
determination of insolvency is made fewer than 120 days before the
beginning of the insolvency year, the notices shall be delivered within
60 days after the date of the plan sponsor's determination.
(d) Methods of delivery. The notice of insolvency benefit level
shall be delivered by mail or by hand to the PBGC and to the interested
parties described in Sec. 4245.3(d), other than participants and
beneficiaries who are neither in pay status nor reasonably expected to
enter pay status during the insolvency year for which the notice is
given. The notice to participants and beneficiaries not in pay status,
nor reasonably expected to enter pay status during the insolvency year,
shall be provided in any manner reasonably calculated to reach those
participants and beneficiaries. Reasonable methods of notification
include, but are not limited to, posting the notice at participants'
worksites or publishing the notice in a union newsletter or in a
newspaper of general circulation in the area or areas where
participants reside. Notice to a participant shall be deemed notice to
that participant's beneficiary or beneficiaries.
Sec. 4245.6 Contents of notice of insolvency benefit level.
(a) Notice to the PBGC. A notice of insolvency benefit level
required to be filed with the PBGC pursuant to Sec. 4245.5(a) shall
contain the information set forth below, except as provided in the next
sentence. The information required in paragraphs (a)(7) to (a)(10) need
be submitted only if it is different from the information submitted to
the PBGC with the notice of insolvency filed for that insolvency year
(see Sec. 4245.4 (a)(7) to (a)(10)) or the notice of insolvency benefit
level filed for a prior year. When any information is omitted under
this exception, the notice shall so state and indicate when the notice
of insolvency or prior notice of insolvency benefit level was filed.
(1) The name of the plan.
(2) The name, address and telephone number of the plan sponsor and
of the plan sponsor's authorized representative, if any.
(3) The nine-digit Employer Identification Number (EIN) assigned by
the IRS to the plan sponsor and the three-digit Plan Identification
Number (PIN) assigned by the plan sponsor to the plan, and, if
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN
has been assigned, the notice shall so indicate.
(4) The IRS key district that has jurisdiction over determination
letters with respect to the plan.
(5) The case number assigned to the plan by the PBGC.
(6) The plan year for which the notice is filed.
(7) A copy of the plan document, including any amendments, in
effect during the insolvency year.
(8) A copy of the most recent actuarial valuation for the plan and
a copy of the most recent Schedule B (Form 5500) filed for the plan, if
the Schedule B contains more recent information than the actuarial
valuation.
(9) The estimated amount of annual benefit payments under the plan
(determined without regard to the insolvency) for the insolvency year.
(10) The estimated amount of the plan's available resources for the
insolvency year.
(11) The estimated amount of the annual benefit payments guaranteed
by the PBGC for the insolvency year.
(12) The amount of financial assistance, if any, requested from the
PBGC.
(13) A certification, signed by the plan sponsor (or a duly
authorized representative), that notices of insolvency benefit level
have been given to all interested parties in accordance with the
requirements of this part.
When financial assistance is requested, the PBGC may require the
plan sponsor to submit additional information necessary to process the
request.
(b) Notices to interested parties other than participants in or
entering pay status. A notice of insolvency benefit level required by
Sec. 4245.5(a) to be delivered to interested parties, as defined in
Sec. 4245.3(d), other than a notice to a participant or beneficiary who
is in pay status or is reasonably expected to enter pay status during
the insolvency year, shall include the information set forth below:
(1) The name of the plan.
(2) The plan year for which the notice is issued.
(3) The estimated amount of annual benefit payments under the plan
(determined without regard to the insolvency) for the insolvency year.
(4) The estimated amount of the plan's available resources for the
insolvency year.
(5) The amount of financial assistance, if any, requested from the
PBGC.
(c) Notices to participants and beneficiaries in or entering pay
status. A notice of insolvency benefit level required by Sec. 4245.5(a)
to be delivered to participants and beneficiaries who are in pay status
or are reasonably expected to enter pay status during the insolvency
year for which the notice is given, shall include the following
information:
(1) The name of the plan.
(2) The plan year for which the notice is issued.
[[Page 34118]]
(3) A statement of the monthly benefit expected to be paid to the
participant or beneficiary during the insolvency year.
(4) A statement that in subsequent plan years, depending on the
plan's available resources, this benefit level may be increased or
decreased but will not fall below the level guaranteed by the PBGC, and
that the participant or beneficiary will be notified in advance of the
new benefit level if it is less than his full nonforfeitable benefit
under the plan.
(5) The name, address, and telephone number of the plan
administrator or other person designated by the plan sponsor to answer
inquiries concerning benefits during the plan's insolvency.
Sec. 4245.7 PBGC address.
All notices required to be filed with the PBGC under this part
shall be addressed to Reports Processing, Insurance Operations
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW.,
Washington, DC 20005-4026.
(Approved by the Office of Management and Budget under control
number 1212-0033)
PART 4261--FINANCIAL ASSISTANCE TO MULTIEMPLOYER PLANS
Sec. 4261.1 Cross-reference.
See Sec. 4281.47 for procedures for applying to the PBGC for
financial assistance under section 4261 of ERISA.
PART 4281--DUTIES OF PLAN SPONSOR FOLLOWING MASS WITHDRAWAL
Subpart A--General
Sec.
4281.1 Purpose and scope.
4281.2 Definitions.
4281.3 Submission of documents.
4281.4 Collection of information.
Subpart B--Valuation of Plan Benefits and Plan Assets
4281.11 Valuation dates.
4281.12 Benefits to be valued.
4281.13 Benefit valuation methods--in general.
4281.14 Mortality assumptions--in general.
4281.15 Mortality assumptions--lump sums under trusteed plans.
4281.16 Benefit valuation methods--plans closing out.
4281.17 Asset valuation methods--in general.
4281.18 Outstanding claims for withdrawal liability.
Subpart C--Benefit Reductions
4281.31 Plan amendment.
4281.32 Notices of benefit reductions.
4281.33 Restoration of benefits.
Subpart D--Benefit Suspensions
4281.41 Benefit suspensions.
4281.42 Retroactive payments.
4281.43 Notices of insolvency and annual updates.
4281.44 Contents of notices of insolvency and annual updates.
4281.45 Notices of insolvency benefit level.
4281.46 Contents of notices of insolvency benefit level.
4281.47 Application for financial assistance.
Authority: 29 U.S.C. 1302(b)(3), 1341a, 1399(c)(1)(D), and 1441.
Subpart A--General Provisions
Sec. 4281.1 Purpose and scope.
(a) General.
(1) Purpose. When a multiemployer plan terminates by mass
withdrawal under section 4041A(a)(2) of ERISA, the plan's assets and
benefits must be valued annually under section 4281(b) of ERISA, and
plan benefits may have to be reduced or suspended to the extent
provided in section 4281 (c) or (d). This part implements the
provisions of section 4281 and provides rules for applying for
financial assistance from the PBGC under section 4261 of ERISA. The
plan valuation rules in this part also apply to the determination of
reallocation liability under section 4219(c)(1)(D) of ERISA and subpart
B of part 4219 of this chapter for multiemployer plans that undergo
mass withdrawal (with or without termination).
(2) Scope. This part applies to multiemployer plans covered by
Title IV of ERISA that have terminated by mass withdrawal under section
4041A(a)(2) of ERISA (including plans created by partition pursuant to
section 4233 of ERISA). Subpart B of this part also applies to covered
multiemployer plans that have undergone mass withdrawal without
terminating.
(b) Subpart B. Subpart B establishes rules for determining the
value of multiemployer plan benefits and assets, including outstanding
claims for withdrawal liability, for plans required to perform annual
valuations under section 4281(b) of ERISA or allocate unfunded vested
benefits under section 4219(c)(1)(D) of ERISA.
(c) Subpart C. Subpart C sets forth procedures under which the plan
sponsor of a terminated plan shall amend the plan to reduce benefits
subject to reduction in accordance with section 4281(c) of ERISA and
Sec. 4041A.24(b) of this chapter. Subpart C applies to a plan for which
the annual valuation required by Sec. 4041A.24(a) indicates that the
value of nonforfeitable benefits under the plan exceeds the value of
the plan's assets (including claims for withdrawal liability) if, at
the end of the plan year for which that valuation was done, the plan
provided any benefits subject to reduction. Benefit reductions required
to be made under subpart C shall not apply to accrued benefits under
plans or plan amendments adopted on or before March 26, 1980, or under
collective bargaining agreements entered into on or before March 26,
1980.
(d) Subpart D. Subpart D sets forth the procedures under which the
plan sponsor of an insolvent plan must suspend benefit payments and
issue insolvency notices in accordance with section 4281(d) of ERISA
and Sec. 4041A.25 (c) and (d) of this chapter. Subpart D applies to a
plan that has been amended under section 4281(c) of ERISA and subpart C
of this part to eliminate all benefits subject to reduction and to a
plan that provided no benefits subject to reduction as of the date on
which the plan terminated.
Sec. 4281.2 Definitions.
The following terms are defined in section 4001.2 of this chapter:
annuity, employer, ERISA, fair market value, IRS, insurer, irrevocable
commitment, mass withdrawal, multiemployer plan, nonforfeitable
benefit, normal retirement age, PBGC, person, plan, plan administrator,
and plan year.
In addition, for purposes of this part:
Available resources means, for a plan year, available resources as
described in section 4245(b)(3) of ERISA.
Benefits subject to reduction means those benefits accrued under
plan amendments (or plans) adopted after March 26, 1980, or under
collective bargaining agreements entered into after March 26, 1980,
that are not eligible for the PBGC's guarantee under section 4022A(b)
of ERISA.
Financial assistance means financial assistance from the PBGC under
section 4261 of ERISA.
Insolvency benefit level means the greater of the resource benefit
level or the benefit level guaranteed by the PBGC for each participant
and beneficiary in pay status.
Insolvency year means insolvency year as described in section
4245(b)(4) of ERISA.
Insolvent means that a plan is unable to pay benefits when due
during the plan year. A plan terminated by mass withdrawal is not
insolvent unless it has been amended to eliminate all benefits that are
subject to reduction under section 4281(c), or, in the absence of an
amendment, no benefits under the plan are subject to reduction under
section 4281(c) of ERISA.
Pro rata means that the required benefit reduction or payment shall
be allocated among affected participants in the same proportion that
each such
[[Page 34119]]
participant's nonforfeitable benefits under the plan bear to all
nonforfeitable benefits of those participants under the plan.
Reasonably expected to enter pay status means, with respect to plan
participants and beneficiaries, persons (other than those in pay
status) who, according to plan records, are disabled, have applied for
benefits, or have reached or will reach during the applicable period
the normal retirement age under the plan, and any others whom it is
reasonable for the plan sponsor to expect to enter pay status during
the applicable period.
Resource benefit level means resource benefit level as described in
section 4245(b)(2) of ERISA.
Valuation date means the last day of the plan year in which the
plan terminates and the last day of each plan year thereafter.
Sec. 4281.3 Submission of documents.
(a) Filing date. Any notice, document or information required to be
filed with the PBGC under this part shall be considered filed on the
date of the United States postmark stamped on the cover in which the
document or information is mailed, provided that the postmark was made
by the United States Postal Service and the document was mailed postage
prepaid, properly packaged and addressed to the PBGC. If these
conditions are not met, the document shall be considered filed on the
date on which it was received by the PBGC.
(b) Address. All notices, documents and information required to be
filed with the PBGC under this part shall be addressed to Reports
Processing, Insurance Operations Department, Pension Benefit Guaranty
Corporation, 1200 K Street NW., Washington, DC 20005-4026.
Sec. 4281.4 Collection of information.
The collection of information requirements contained in this part
have been approved by the Office of Management and Budget under control
number 1212-0032.
Subpart B--Valuation of Plan Benefits and Plan Assets
Sec. 4281.11 Valuation dates.
(a) Annual valuations of mass-withdrawal-terminated plans. The
valuation dates for the annual valuation required under section 4281(b)
of ERISA shall be the last day of the plan year in which the plan
terminates and the last day of each plan year thereafter.
(b) Valuations related to mass withdrawal reallocation liability.
The valuation date for determining the value of unfunded vested
benefits (for purposes of allocation) under section 4219(c)(1)(D) of
ERISA shall be--
(1) If the plan terminates by mass withdrawal, the last day of the
plan year in which the plan terminates; or
(2) If substantially all the employers withdraw from the plan
pursuant to an agreement or arrangement to withdraw from the plan, the
last day of the plan year as of which substantially all employers have
withdrawn from the plan pursuant to the agreement or arrangement.
Sec. 4281.12 Benefits to be valued.
(a) Form of benefit. The plan sponsor shall determine the form of
each benefit to be valued, without regard to the form of benefit valued
in any prior year, in accordance with the following rules:
(1) If a benefit is in pay status as of the valuation date, the
plan sponsor shall value the form of benefit being paid.
(2) If a benefit is not in pay status as of the valuation date but
a valid election with respect to the form of benefit has been made on
or before the valuation date, the plan sponsor shall value the form of
benefit so elected.
(3) If a benefit is not in pay status as of the valuation date and
no valid election with respect to the form of benefit has been made on
or before the valuation date, the plan sponsor shall value the form of
benefit that, under the terms of the plan or applicable law, is payable
in the absence of a valid election.
(b) Timing of benefit. The plan sponsor shall value benefits whose
starting date is subject to election--
(1) By assuming that the starting date of each benefit is the
earliest date, not preceding the valuation date, that could be elected;
or
(2) By using any other assumption that the plan sponsor
demonstrates to the satisfaction of the PBGC is more reasonable under
the circumstances.
Sec. 4281.13 Benefit valuation methods--in general.
(a) General rule. Except as otherwise provided in paragraph (b) of
this section (regarding the valuation of benefits payable as lump sums
under trusteed plans) and Sec. 4281.16 (regarding plans that are
closing out), the plan sponsor shall value benefits as of the valuation
date by--
(1) Using the interest assumptions described in Table I of appendix
B to part 4044 of this chapter;
(2) Using the mortality assumptions described in Sec. 4281.14;
(3) Using interpolation methods, where necessary, at least as
accurate as linear interpolation;
(4) Applying valuation formulas that accord with generally accepted
actuarial principles and practices; and
(5) Adjusting the values to reflect the loading for expenses in
accordance with appendix C to part 4044 of this chapter (substituting
the term ``benefits'' for the term ``benefit liabilities (as defined in
29 U.S.C. Sec. 1301(a)(16))'').
(b) Benefits payable as lump sums under trusteed plans. If the PBGC
is trustee of a multiemployer plan, for determining whether the value
of a benefit is $3,500 or less under Sec. 4022.7(b)(1) and for
calculating the amount of a lump sum benefit, the PBGC shall value
benefits to be paid as lump sums in the same manner as benefits to be
paid as annuities except that the interest assumptions prescribed by
Table II of appendix B to part 4044 of this chapter and the mortality
assumptions prescribed by Sec. 4281.15 shall apply, and there shall be
no adjustment to reflect the loading for expenses.
Sec. 4281.14 Mortality assumptions--in general.
(a) General rule. Except as otherwise provided in Sec. 4281.15
(regarding the valuation of benefits payable as lump sums under
trusteed plans), and subject to paragraph (b) of this section
(regarding certain death benefits), the plan administrator shall use
the mortality factors prescribed in paragraphs (c), (d), and (e) of
this section to value benefits under Sec. 4281.13.
(b) Certain death benefits. If an annuity for one person is in pay
status on the valuation date, and if the payment of a death benefit
after the valuation date to another person, who need not be
identifiable on the valuation date, depends in whole or in part on the
death of the pay status annuitant, then the plan administrator shall
value the death benefit using--
(1) the mortality rates that are applicable to the annuity in pay
status under this section to represent the mortality of the pay status
annuitant; and
(2) the mortality rates applicable to annuities not in pay status
and to deferred benefits other than annuities, under paragraph (c) of
this section, to represent the mortality of the death beneficiary.
(c) Mortality rates for healthy lives. The mortality rates
applicable to annuities in pay status on the valuation date that are
not being received as disability benefits, to annuities not in
[[Page 34120]]
pay status on the valuation date, and to deferred benefits other than
annuities, are,--
(1) For male participants, the rates in Table 1 of appendix A to
part 4044 of this chapter, and
(2) For female participants, the rates in Table 1 of appendix A to
part 4044 of this chapter, set back 6 years.
(d) Mortality rates for disabled lives (other than Social Security
disability). The mortality rates applicable to annuities in pay status
on the valuation date that are being received as disability benefits
and for which neither eligibility for, nor receipt of, Social Security
disability benefits is a prerequisite, are,--
(1) For male participants, the rates in Table 1 of appendix A to
part 4044 of this chapter, set forward 3 years, and
(2) For female participants, the rates in Table 1 of appendix A to
part 4044 of this chapter, set back 3 years.
(e) Mortality rates for disabled lives (Social Security
disability). The mortality rates applicable to annuities in pay status
on the valuation date that are being received as disability benefits
and for which either eligibility for, or receipt of, Social Security
disability benefits is a prerequisite, are the rates in Tables 2-M and
2-F of appendix A to part 4044 of this chapter.
Sec. 4281.15 Mortality assumptions--lump sums under trusteed plans.
(a) General rule. If the PBGC is trustee of a multiemployer plan,
for determining whether the value of a benefit is $3,500 or less under
Sec. 4022.7(b)(1) and for calculating the amount of a lump sum benefit,
the PBGC will use the mortality rates in Table 3 of appendix A to part
4044 of this chapter.
Sec. 4281.16 Benefit valuation methods--plans closing out.
(a) Applicability. For purposes of the annual valuation required by
section 4281(b) of ERISA, the plan sponsor shall value the plan's
benefits in accordance with paragraph (b) of this section if,--
(1) Plans closed out before valuation. Before the time when the
valuation is performed, the plan has satisfied in full all liabilities
for payment of nonforfeitable benefits, in a manner consistent with the
terms of the plan and applicable law, by the purchase of one or more
nonparticipating irrevocable commitments from one or more insurers,
with respect to all benefits payable as annuities, and by the payment
of single-sum cash distributions, with respect to benefits not payable
as annuities; or
(2) Plans to be closed out after valuation. As of the time when the
valuation is performed, the plan sponsor reasonably expects that the
plan will close out before the next annual valuation date and the plan
sponsor has a currently exercisable bid or bids to provide the
irrevocable commitment(s) described in paragraph (a)(1) of this section
and the total cost of the irrevocable commitment(s) under the bid, plus
the total amount of the single-sum cash distributions described in
paragraph (a)(1), does not exceed the value of the plan's assets,
exclusive of outstanding claims for withdrawal liability, as determined
under this subpart.
(b) Valuation rule. The present value of nonforfeitable benefits
under this section is the total amount of single-sum cash distributions
made or to be made plus the cost of the irrevocable commitment(s)
purchased or to be purchased in order to satisfy in full all
liabilities of the plan for nonforfeitable benefits.
Sec. 4281.17 Asset valuation methods--in general.
(a) General rule. The plan sponsor shall value plan assets as of
the valuation date, using the valuation methods prescribed by this
section and Sec. 4281.18 (regarding outstanding claims for withdrawal
liability), and deducting administrative liabilities in accordance with
paragraph (c) of this section.
(b) Assets other than withdrawal liability claims. The plan sponsor
shall value any plan asset (other than an outstanding claim for
withdrawal liability) by such method or methods as the plan sponsor
reasonably believes most accurately determine fair market value.
(c) Adjustment for administrative liabilities. In determining the
total value of plan assets, the plan sponsor shall subtract all plan
liabilities, other than liabilities to pay benefits. For this purpose,
any obligation to repay financial assistance received from the PBGC
under section 4261 of ERISA is a plan liability other than a liability
to pay benefits. The obligation to repay financial assistance shall be
valued by determining the value of the scheduled payments in the same
manner as prescribed in Sec. 4281.18(a) for valuing claims for
withdrawal liability.
Sec. 4281.18 Outstanding claims for withdrawal liability.
(a) Value of claim. The plan sponsor shall value an outstanding
claim for withdrawal liability owed by an employer described in
paragraph (b) of this section in accordance with paragraphs (a)(1) and
(a)(2) of this section:
(1) If the schedule of withdrawal liability payments provides for
one or more series of equal payments, the plan sponsor shall value each
series of payments as an annuity certain in accordance with the
provisions of Sec. 4281.13.
(2) If the schedule of withdrawal liability payments provides for
one or more payments that are not part of a series of equal payments as
described in paragraph (a)(1) of this section, the plan sponsor shall
value each such unequal payment as a lump-sum payment in accordance
with the provisions of Sec. 4281.13.
(b) Employers neither liquidated nor in insolvency proceedings. The
plan sponsor shall value an outstanding claim for withdrawal liability
under paragraph (a) of this section if, as of the valuation date--
(1) The employer has not been completely liquidated or dissolved;
and
(2) The employer is not the subject of any case or proceeding under
title 11, United States Code, or any case or proceeding under similar
provisions of state insolvency laws; except that the claim for
withdrawal liability of an employer that is the subject of a proceeding
described in this paragraph (b)(2) shall be valued under paragraph (a)
of this section if the plan sponsor determines that the employer is
reasonably expected to be able to pay its withdrawal liability in full
and on time.
(c) Claims against other employers. The plan sponsor shall value at
zero any outstanding claim for withdrawal liability owed by an employer
that does not meet the conditions set forth in paragraph (b) of this
section.
Subpart C--Benefit Reductions
Sec. 4281.31 Plan amendment.
The plan sponsor of a plan described in Sec. 4281.31 shall amend
the plan to eliminate those benefits subject to reduction in excess of
the value of benefits that can be provided by plan assets. Such
reductions shall be effected by a pro rata reduction of all benefits
subject to reduction or by elimination or pro rata reduction of any
category of benefit. Benefit reductions required by this section shall
apply only prospectively. An amendment required under this section
shall take effect no later than six months after the end of the plan
year for which it is determined that the value of nonforfeitable
benefits exceeds the value of the plan's assets.
Sec. 4281.32 Notices of benefit reductions.
(a) Requirement of notices. A plan sponsor of a multiemployer plan
under which a plan amendment reducing
[[Page 34121]]
benefits is adopted pursuant to section 4281(c) of ERISA shall so
notify the PBGC and plan participants and beneficiaries whose benefits
are reduced by the amendment. The notices shall be delivered in the
manner and within the time prescribed, and shall contain the
information described, in this section. The notice required in this
section shall be filed in lieu of the notice described in section
4244A(b)(2) of ERISA.
(b) When delivered. The plan sponsor shall mail or otherwise
deliver the notices of benefit reduction no later than the earlier of--
(1) 45 days after the amendment reducing benefits is adopted; or
(2) The date of the first reduced benefit payment.
(c) Method of delivery. The notices of benefit reductions shall be
delivered by mail or by hand to the PBGC and to plan participants and
beneficiaries who are in pay status when the notice is required to be
delivered or who are reasonably expected to enter pay status before the
end of the plan year after the plan year in which the amendment is
adopted. The notice to other participants and beneficiaries whose
benefit is reduced by the amendment shall be provided in any manner
reasonably calculated to reach those participants and beneficiaries.
Reasonable methods of notification include, but are not limited to,
posting the notice at participants' worksites or publishing the notice
in a union newsletter or newspaper of general circulation in the area
or areas where participants reside. Notice to a participant shall be
deemed notice to the participant's beneficiary or beneficiaries.
(d) Contents of notice to the PBGC. A notice of benefit reduction
required to be filed with the PBGC pursuant to paragraph (a) of this
section shall contain the following information:
(1) The name of the plan.
(2) The name, address, and telephone number of the plan sponsor and
of the plan sponsor's duly authorized representative, if any.
(3) The nine-digit Employer Identification Number (EIN) assigned by
the IRS to the plan sponsor and the three-digit Plan Number (PN)
assigned by the plan sponsor to the plan, and, if different, the EIN or
PN last filed with the PBGC. If no EIN or PN has been assigned, the
notice shall so state.
(4) The case number assigned by the PBGC to the filing of the
plan's notice of termination pursuant to part 4041A, subpart B, of this
chapter.
(5) A statement that a plan amendment reducing benefits has been
adopted, listing the date of adoption and the effective date of the
amendment.
(6) A certification, signed by the plan sponsor or its duly
authorized representative, that notice of the benefit reductions has
been given to all participants and beneficiaries whose benefits are
reduced by the plan amendment, in accordance with the requirements of
this section.
(e) Contents of notice to participants and beneficiaries. A notice
of benefit reductions required under paragraph (a) of this section to
be given to plan participants and beneficiaries whose benefits are
reduced by the amendment shall contain the following information:
(1) The name of the plan.
(2) A statement that a plan amendment reducing benefits has been
adopted, listing the date of adoption and the effective date of the
amendment.
(3) A summary of the amendment, including a description of the
effect of the amendment on the benefits to which it applies.
(4) The name, address, and telephone number of the plan
administrator or other person designated by the plan sponsor to answer
inquiries concerning benefits.
Sec. 4281.33 Restoration of benefits.
(a) General. The plan sponsor of a plan that has been amended to
reduce benefits under this subpart shall amend the plan to restore
those benefits before adopting any amendment increasing benefits under
the plan. A plan is not required to make retroactive benefit payments
with respect to any benefit that was reduced and subsequently restored
in accordance with this section.
(b) Notice to the PBGC. The plan sponsor shall notify the PBGC in
writing of any restoration under this section. The notice shall include
the information specified in Sec. 4281.32 (d)(1) through (d)(4); a
statement that a plan amendment restoring benefits has been adopted,
the date of adoption, and the effective date of the amendment; and a
certification, signed by the plan sponsor or its duly authorized
representative, that the amendment has been adopted in accordance with
this section.
Subpart D--Benefit Suspensions
Sec. 4281.41 Benefit suspensions.
If the plan sponsor determines that the plan is or is expected to
be insolvent for a plan year, the plan sponsor shall suspend benefits
to the extent necessary to reduce the benefits to the greater of the
resource benefit level or the level of guaranteed benefits.
Sec. 4281.42 Retroactive payments.
(a) Erroneous resource benefit level. If, by the end of a year in
which benefits were suspended under Sec. 4281.41, the plan sponsor
determines in writing that the plan's available resources in that year
could have supported benefit payments above the resource benefit level
determined for that year, the plan sponsor may distribute the excess
resources to each affected participant and beneficiary who received
benefit payments that year on a pro rata basis. The amount distributed
to each participant under this paragraph may not exceed the amount
that, when added to benefit payments already made, brings the total
benefit for the plan year up to the total benefit provided under the
plan.
(b) Benefits paid below resource benefit level. If, by the end of a
plan year in which benefits were suspended under Sec. 4281.41, any
benefit has not been paid at the resource benefit level, amounts up to
the resource benefit level that were unpaid shall be distributed to
each affected participant and beneficiary on a pro rata basis to the
extent possible, taking into account the plan's total available
resources in that year.
Sec. 4281.43 Notices of insolvency and annual updates.
(a) Requirement of notices of insolvency. A plan sponsor that
determines that the plan is, or is expected to be, insolvent for a plan
year shall issue notices of insolvency to the PBGC and to plan
participants and beneficiaries. Once notices of insolvency have been
issued to the PBGC and to plan participants and beneficiaries, no
notice of insolvency needs to be issued for subsequent insolvency
years. Notices shall be delivered in the manner and within the time
prescribed in this section and shall contain the information described
in Sec. 4281.44.
(b) Requirement of annual updates. A plan sponsor that has issued
notices of insolvency to the PBGC and to plan participants and
beneficiaries shall thereafter issue annual updates to the PBGC and
participants and beneficiaries for each plan year beginning after the
plan year for which the notice of insolvency was issued. However, the
plan sponsor need not issue an annual update to plan participants and
beneficiaries who are issued notices of insolvency benefit level in
accordance with Sec. 4281.45 for the same insolvency year. A plan
sponsor that, after issuing annual updates for a plan year, determines
under Sec. 4041A.25(b) that the plan is or may be insolvent for that
plan
[[Page 34122]]
year need not issue revised annual updates. Annual updates shall be
delivered in the manner and within the time prescribed in this section
and shall contain the information described in Sec. 4281.44.
(c) Notices of insolvency--when delivered. Except as provided in
the next sentence, the plan sponsor shall mail or otherwise deliver the
notices of insolvency no later than 30 days after the plan sponsor
determines that the plan is or may be insolvent. However, the notice to
plan participants and beneficiaries in pay status may be delivered
concurrently with the first benefit payment made after the
determination of insolvency.
(d) Annual updates--when delivered. Except as provided in the next
sentence, the plan sponsor shall mail or otherwise deliver annual
updates no later than 60 days before the beginning of the plan year for
which the annual update is issued. A plan sponsor that determines under
Sec. 4041A.25(b) that the plan is or may be insolvent for a plan year
and that has not at that time issued annual updates for that year,
shall mail or otherwise deliver the annual updates by the later of 60
days before the beginning of the plan year or 30 days after the date of
the plan sponsor's determination under Sec. 4041A.25(b).
(e) Notices of insolvency--method of delivery. The notices of
insolvency shall be delivered by mail or by hand to the PBGC and to
plan participants and beneficiaries in pay status when
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
the notice is
required to be delivered. Notice to participants and beneficiaries not
in pay status shall be provided in any manner reasonably calculated to
reach those participants and beneficiaries. Reasonable methods of
notification include, but are not limited to, posting the notice at
participants' worksites or publishing the notice in a union newsletter
or newspaper of general circulation in the area or areas where
participants reside. Notice to a participant shall be deemed notice to
that participant's beneficiary or beneficiaries.
(f) Annual updates--method of delivery. Each annual update shall be
delivered by mail or by hand to the PBGC. Each annual update to plan
participants and beneficiaries shall be provided in any manner
reasonably calculated to reach participants and beneficiaries.
Reasonable methods of notification include, but are not limited to,
posting the notice at participants' worksites and publishing the notice
in a union newsletter of general circulation in the area or areas where
participants reside. Notice to a participant shall be deemed notice to
that participant's beneficiary or beneficiaries.
Sec. 4281.44 Contents of notices of insolvency and annual updates.
(a) Notice of insolvency to the PBGC. A notice of insolvency
required under Sec. 4281.43(a) to be filed with the PBGC shall contain
the following information:
(1) The name of the plan.
(2) The name, address, and telephone number of the plan sponsor and
of the plan sponsor's duly authorized representative, if any.
(3) The nine-digit Employer Identification Number (EIN) assigned by
the IRS to the plan sponsor and the three-digit Plan Number (PN)
assigned by the plan sponsor to the plan, and, if different, the EIN or
PN last filed with the PBGC. If no EIN or PN has been assigned, the
notice shall so state.
(4) The IRS Key District that has jurisdiction over determination
letters with respect to the plan.
(5) The case number assigned by the PBGC to the filing of the
plan's notice of termination pursuant to part 4041A, subparts A and B,
of this chapter.
(6) The plan year for which the plan sponsor has determined that
the plan is or may be insolvent.
(7) A copy of the plan document currently in effect, i.e., a copy
of the last restatement of the plan and all subsequent amendments.
However, if a copy of the plan document was submitted to the PBGC with
a previous filing, only subsequent plan amendments need be submitted,
and the notice shall state when the copy of the plan document was
filed.
(8) A copy of the most recent actuarial valuation for the plan
(i.e., the most recent report submitted to the plan in connection with
a valuation of plan assets and liabilities, which shall be performed in
accordance with subpart B of this part). If the actuarial valuation was
previously submitted to the PBGC, it may be omitted, and the notice
shall state the date on which the document was filed and that the
information is still accurate and complete.
(9) The estimated amount of annual benefit payments under the plan
(determined without regard to the insolvency) for the insolvency year.
(10) The estimated amount of the plan's available resources for the
insolvency year.
(11) The estimated amount of the annual benefits guaranteed by the
PBGC for the insolvency year.
(12) A statement indicating whether the notice of insolvency is the
result of an insolvency determination under Sec. 4041A.25 (a) or (b).
(13) A certification, signed by the plan sponsor or its duly
authorized representative, that notices of insolvency have been given
to all plan participants and beneficiaries in accordance with this
part.
(b) Notice of insolvency to participants and beneficiaries. A
notice of insolvency required under Sec. 4281.43(a) to be issued to
plan participants and beneficiaries shall contain the following
information:
(1) The name of the plan.
(2) A statement of the plan year for which the plan sponsor has
determined that the plan is or may be insolvent.
(3) A statement that benefits above the amount that can be paid
from available resources or the level guaranteed by the PBGC, whichever
is greater, will be suspended during the insolvency year, with a brief
explanation of which benefits are guaranteed by the PBGC.
(4) The name, address, and telephone number of the plan
administrator or other person designated by the plan sponsor to answer
inquiries concerning benefits.
(c) Annual update to the PBGC. Each annual update required by
Sec. 4281.43(b) to be filed with the PBGC shall contain the following
information:
(1) The case number assigned by the PBGC to the filing of the
plan's notice of termination pursuant to part 4041A, subparts A and B,
of this chapter.
(2) A copy of the annual update to plan participants and
beneficiaries, as described in paragraph (d) of this section, for the
plan year.
(3) A statement indicating whether the annual update is the result
of an insolvency determination under Sec. 4041A.25(a) or (b).
(4) A certification, signed by the plan sponsor or a duly
authorized representative, that the annual update has been given to all
plan participants and beneficiaries in accordance with this part.
(d) Annual updates to participants and beneficiaries. Each annual
update required by Sec. 4281.43(b) to be issued to plan participants
and beneficiaries shall contain the following information:
(1) The name of the plan.
(2) The date the notice of insolvency was issued and the insolvency
year identified in the notice.
(3) The plan year to which the annual update pertains and the plan
sponsor's determination whether the plan may be insolvent in that year.
(4) If the plan may be insolvent for the plan year, a statement
that benefits above the amount that can be paid from available
resources or the level guaranteed by the PBGC, whichever is greater,
will be suspended during the insolvency year, with a brief
[[Page 34123]]
explanation of which benefits are guaranteed by the PBGC.
(5) If the plan will not be insolvent for the plan year, a
statement that full nonforfeitable benefits under the plan will be
paid.
(6) The name, address, and telephone number of the plan
administrator or other person designated by the plan sponsor to answer
inquiries concerning benefits.
Sec. 4281.45 Notices of insolvency benefit level.
(a) Requirement of notices. For each insolvency year, the plan
sponsor shall issue a notice of insolvency benefit level to the PBGC
and to plan participants and beneficiaries in pay status or reasonably
expected to enter pay status during the insolvency year. The notices
shall be delivered in the manner and within the time prescribed in this
section and shall contain the information described in Sec. 4281.46.
(b) When delivered. The plan sponsor shall mail or otherwise
deliver the notices of insolvency benefit level no later than 60 days
before the beginning of the insolvency year. A plan sponsor that
determines under Sec. 4041A.25(b) that the plan is or may be insolvent
for a plan year shall mail or otherwise deliver the notices of
insolvency benefit level by the later of 60 days before the beginning
of the insolvency year or 60 days after the date of the plan sponsor's
determination under Sec. 4041A.25(b).
(c) Method of delivery. The notices of insolvency benefit level
shall be delivered by mail or by hand to the PBGC and to plan
participants and beneficiaries in pay status or reasonably expected to
enter pay status during the insolvency year.
Sec. 4281.46 Contents of notices of insolvency benefit level.
(a) Notice to the PBGC. A notice of insolvency benefit level
required by Sec. 4281.45(a) to be filed with the PBGC shall contain the
information specified in Sec. 4281.44(a)(1) through (a)(5) and (a)(7)
through (a)(11) and:
(1) The insolvency year for which the notice is being filed.
(2) The amount of financial assistance, if any, requested from the
PBGC. (When financial assistance is requested, the plan sponsor shall
submit an application in accordance with Sec. 4281.47.)
(3) A statement indicating whether the notice of insolvency benefit
level is the result of an insolvency determination under
Sec. 4041A.25(a) or (b).
(4) A certification, signed by the plan sponsor or its duly
authorized representative, that a notice of insolvency benefit level
has been sent to all plan participants and beneficiaries in pay status
or reasonably expected to enter pay status during the insolvency year,
in accordance with this part.
(b) Notice to participants in or entering pay status. A notice of
insolvency benefit level required by Sec. 4281.45(a) to be delivered to
plan participants and beneficiaries in pay status or reasonably
expected to enter pay status during the insolvency year for which the
notice is given, shall contain the following information:
(1) The name of the plan.
(2) The insolvency year for which the notice is being sent.
(3) The monthly benefit that the participant or beneficiary may
expect to receive during the insolvency year.
(4) A statement that in subsequent plan years, depending on the
plan's available resources, this benefit level may be increased or
decreased but not below the level guaranteed by the PBGC, and that the
participant or beneficiary will be notified in advance of the new
benefit level if it is less than the participant's full nonforfeitable
benefit under the plan.
(5) The amount of the participant's or beneficiary's monthly
nonforfeitable benefit under the plan.
(6) The amount of the participant's or beneficiary's monthly
benefit that is guaranteed by the PBGC.
(7) The name, address, and telephone number of the plan
administrator or other person designated by the plan sponsor to answer
inquiries concerning benefits.
Sec. 4281.47 Application for financial assistance.
(a) General. If the plan sponsor determines that the plan's
resource benefit level for an insolvency year is below the level of
benefits guaranteed by PBGC or that the plan will be unable to pay
guaranteed benefits when due for any month during the year, the plan
sponsor shall apply to the PBGC for financial assistance pursuant to
section 4261 of ERISA. The application shall be filed within the time
prescribed in paragraph (b) of this section. When the resource benefit
level is below the guarantee level, the application shall contain the
information set forth in paragraph (c) of this section. When the plan
is unable to pay guaranteed benefits for any month, the application
shall contain the information set forth in paragraph (d) of this
section.
(b) When to apply. When the plan sponsor determines a resource
benefit level that is less than guaranteed benefits, it shall apply for
financial assistance at the same time that it submits its notice of
insolvency benefit level pursuant to Sec. 4281.45. When the plan
sponsor determines an inability to pay guaranteed benefits for any
month, it shall apply for financial assistance within 15 days after
making that determination.
(c) Contents of application--resource benefit level below level of
guaranteed benefits. A plan sponsor applying for financial assistance
because the plan's resource benefit level is below the level of
guaranteed benefits shall file an application that includes the
information specified in Sec. 4281.44 (a)(1) through (a)(5) and:
(1) The insolvency year for which the application is being filed.
(2) A participant data schedule showing each participant and
beneficiary in pay status or reasonably expected to enter pay status
during the year for which financial assistance is requested, listing
for each--
(i) Name;
(ii) Sex;
(iii) Date of birth;
(iv) Credited service;
(v) Vested accrued monthly benefit;
(vi) Monthly benefit guaranteed by PBGC;
(vii) Benefit commencement date; and
(viii) Type of benefit.
(d) Contents of application--unable to pay guaranteed benefits for
any month. A plan sponsor applying for financial assistance because the
plan is unable to pay guaranteed benefits for any month shall file an
application that includes the data described in Sec. 4281.44 (a)(1)
through (a)(5), the month for which financial assistance is requested,
and the plan's available resources and guaranteed benefits payable in
that month. The participant data schedule described in paragraph (c)(2)
of this section shall be submitted upon the request of the PBGC.
(e) Additional information. The PBGC may request any additional
information that it needs to calculate or verify the amount of
financial assistance necessary as part of the conditions of granting
financial assistance pursuant to section 4261 of ERISA.
PART 4901--EXAMINATION AND COPYING OF PENSION BENEFIT GUARANTY
CORPORATION RECORDS
Subpart A--General
Sec.
4901.1 Purpose and scope.
4901.2 Definitions.
4901.3 Disclosure facilities.
4901.4 Information maintained in public reference room.
4901.5 Disclosure of other information.
[[Page 34124]]
Subpart B--Procedure for Formal Requests
4901.11 Submittal of requests for access to records.
4901.12 Description of information requested.
4901.13 Receipt by agency of request.
4901.14 Action on request.
4901.15 Appeals from denial of requests.
4901.16 Extensions of time.
4901.17 Exhaustion of administrative remedies.
Subpart C--Restrictions on Disclosure
4901.21 Restrictions in general.
4901.22 Partial disclosure.
4901.23 Records of concern to more than one agency.
4901.24 Special rules for trade secrets and confidential commercial
or financial information submitted to the PBGC.
Subpart D--Fees
4901.31 Charges for services.
4901.32 Fee schedule.
4901.33 Payment of fees.
4901.34 Waiver or reduction of charges.
Authority: 5 U.S.C. 552; 29 U.S.C. 1302(b)(3); E.O. 12600, 52 FR
23781.
Subpart A--General
Sec. 4901.1 Purpose and scope.
This part contains the general rules of the PBGC implementing the
Freedom of Information Act. This part sets forth generally the
categories of records accessible to the public, the types of records
subject to prohibitions or restrictions on disclosure, and the
procedure whereby members of the public may obtain access to and
inspect and copy information from records in the custody of the PBGC.
Sec. 4901.2 Definitions.
In addition to terminology in part 4001 of this chapter, as used in
this part--
Agency, person, party, rule, rulemaking, order, and adjudication
have the meanings attributed to these terms by the definitions in 5
U.S.C. 551, except where the context demonstrates that a different
meaning is intended, and except that for purposes of the Freedom of
Information Act the term agency as defined in 5 U.S.C. 551 includes any
executive department, military department, Government corporation,
Government controlled corporation, or other establishment in the
executive branch of the Government (including the Executive Office of
the President) or any independent regulatory agency.
Disclosure officer means the designated official in the
Communications and Public Affairs Department, PBGC.
FOIA means the Freedom of Information Act, as amended (5 U.S.C.
552).
Working day means any weekday excepting Federal holidays.
Sec. 4901.3 Disclosure facilities.
(a) Public reference room. The PBGC will maintain a public
reference room in its offices located at 1200 K Street NW., Washington,
DC 20005-4026, wherein persons may inspect and copy all records made
available for such purposes under this part.
(b) No withdrawal of records. No person may remove any record made
available for inspection or copying under this part from the place
where it is made available except with the written consent of the
General Counsel of the PBGC.
Sec. 4901.4 Information maintained in public reference room.
The PBGC shall make available in its public reference room for
inspection and copying without formal request--
(a) Information published in the Federal Register. Copies of
Federal Register documents published by the PBGC, and copies of Federal
Register indexes;
(b) Information in PBGC publications. Copies of informational
material, such as press releases, pamphlets, and other material
ordinarily made available to the public without cost as part of a
public information program;
(c) Rulemaking proceedings. All papers and documents made a part of
the official record in administrative proceedings conducted by the PBGC
in connection with the issuance, amendment, or revocation of rules and
regulations or determinations having general applicability or legal
effect with respect to members of the public or a class thereof (with a
register being kept to identify the persons who inspect the records and
the times at which they do so);
(d) Except to the extent that deletion of identifying details is
required to prevent a clearly unwarranted invasion of personal privacy
(in which case the justification for the deletion shall be fully
explained in writing)--
(1) Adjudication proceedings. Final opinions, orders, and (except
to the extent that an exemption provided by FOIA must be asserted in
the public interest to prevent a clearly unwarranted invasion of
personal privacy or violation of law or to ensure the proper discharge
of the functions of the PBGC) other papers and documents made a part of
the official record in adjudication proceedings conducted by the PBGC,
(2) Policy statements and interpretations. Statements of policy and
interpretations affecting a member of the public which have been
adopted by the PBGC and which have not been published in the Federal
Register, and
(3) Staff manuals and instructions. Administrative staff manuals
and instructions to staff issued by the PBGC that affect any member of
the public, and
(e) Indexes to certain records. Current indexes (updated at least
quarterly) identifying materials described in paragraph (a)(2) of FOIA
and paragraph (d) of this section.
Sec. 4901.5 Disclosure of other information.
(a) In general. Upon the request of any person submitted in
accordance with subpart B of this part, the disclosure officer shall
make any document (or portion thereof) from the records of the PBGC in
the custody of any official of the PBGC available for inspection and
copying unless exempt from disclosure under the provisions of
subsection (b) of FOIA and subpart C of this part. The subpart B
procedures must be used for records that are not made available in the
PBGC's public reference room under Sec. 4901.4 and may be used for
records that are available in the public reference room. Records that
could be produced only by manipulation of existing information (such as
computer analyses of existing data), thus creating information not
previously in being, are not records of the PBGC and are not required
to be furnished under FOIA.
(b) Discretionary disclosure. Notwithstanding the applicability of
an exemption under subsection (b) of FOIA and subpart C of this part
(other than an exemption under paragraph (b)(1) or (b)(3) of FOIA and
Sec. 4901.21 (a)(2) and (a)(3)), the disclosure officer may (subject to
18 U.S.C. 1905 and Sec. 4901.21(a)(1)) make any document (or portion
thereof) from the records of the PBGC available for inspection and
copying if the disclosure officer determines that disclosure furthers
the public interest and does not impede the discharge of any of the
functions of the PBGC.
Subpart B--Procedure for Formal Requests
Sec. 4901.11 Submittal of requests for access to records.
A request to inspect or copy any record subject to this subpart
shall be submitted in writing to the Disclosure Officer, Communications
and Public Affairs Department, Pension Benefit Guaranty Corporation,
1200 K Street NW., Washington, DC 20005-4026. To expedite processing,
the words ``FOIA request'' should appear clearly on the request and its
envelope.
[[Page 34125]]
Sec. 4901.12 Description of information requested.
(a) In general. Each request should reasonably describe the record
or records sought in sufficient detail to permit identification and
location with a reasonable amount of effort. So far as practicable, the
request should specify the subject matter of the record, the place
where and date or approximate date when made, the person or office that
made it, and any other pertinent identifying details.
(b) Deficient descriptions. If the description is insufficient to
enable a professional employee familiar with the subject area of the
request to locate the record with a reasonable amount of effort, the
disclosure officer will notify the requester and, to the extent
possible, indicate the additional information required. Every
reasonable effort shall be made to assist a requester in the
identification and location of the record or records sought. Records
will not be withheld merely because it is difficult to find them.
(c) Requests for categories of records. Requests calling for all
records falling within a reasonably specific category will be regarded
as reasonably described within the meaning of this section and
paragraph (a)(3) of FOIA if the PBGC is reasonably able to determine
which records come within the request and to search for and collect
them without unduly interfering with PBGC operations. If PBGC
operations would be unduly disrupted, the disclosure officer shall
promptly notify the requester and provide an opportunity to confer in
an attempt to reduce the request to manageable proportions.
Sec. 4901.13 Receipt by agency of request.
The disclosure officer shall note the date and time of receipt on
each request for access to records. A request shall be deemed received
and the period within which action on the request shall be taken, as
set forth in Sec. 4901.14 of this part, shall begin on the next
business day following such date, except that a request shall be deemed
received only if and when the PBGC receives--
(a) A sufficient description under Sec. 4901.12;
(b) Payment or assurance of payment if required under
Sec. 4901.33(b); and
(c) The requester's consent to pay substantial search, review, and/
or duplication charges under subpart D of this part if the PBGC
determines that such charges may be substantial and so notifies the
requester. Consent may be in the form of a statement that costs under
subpart D will be acceptable either in any amount or up to a specified
amount. To avoid possible delay, a requester may include such a
statement in a request.
Sec. 4901.14 Action on request.
(a) Time for action. Promptly and in any event within 10 working
days after receipt of a disclosure request (subject to extension under
Sec. 4901.16), the disclosure officer shall take action with respect to
each requested item (or portion of an item) under either paragraph (b),
(c), or (d) of this section.
(b) Request granted. If the disclosure officer determines that the
request should be granted, the requester shall be so advised and the
records shall be promptly made available to the requester.
(c) Request denied. If the disclosure officer determines that the
request should be denied, the requester shall be so advised in writing
with a brief statement of the reasons for the denial, including a
reference to the specific exemption(s) authorizing the denial and an
explanation of how each such exemption applies to the matter withheld.
The denial shall also include the name and title or position of the
person(s) responsible for the denial and outline the appeal procedure
available.
(d) Records not promptly located. As to records that are not
located in time to make an informed determination, the disclosure
officer may deny the request and so advise the requester in writing
with an explanation of the circumstances. The denial shall also include
the name and title or position of the person(s) responsible for the
denial, outline the appeal procedure available, and advise the
requester that the search or examination will be continued and that the
denial may be withdrawn, modified, or confirmed when processing of the
request is completed.
Sec. 4901.15 Appeals from denial of requests.
(a) Submittal of appeals. If a disclosure request is denied in
whole or in part by the disclosure officer, the requester may file a
written appeal within 30 days from the date of the denial or, if later
(in the case of a partial denial), 30 days from the date the requester
receives the disclosed material. The appeal shall state the grounds for
appeal and any supporting statements or arguments, and shall be
addressed to the General Counsel, Pension Benefit Guaranty Corporation,
1200 K Street NW., Washington, DC 20005-4026. To expedite processing,
the words ``FOIA appeal'' should appear clearly on the appeal and its
envelope.
(b) Receipt and consideration of appeal. The General Counsel shall
note the date and time of receipt on each appeal and notify the
requester thereof. Promptly and in any event within 20 working days
after receipt of an appeal (subject to extension under Sec. 4901.16),
the General Counsel shall issue a decision on the appeal.
(1) The General Counsel may determine de novo whether the denial of
disclosure was in accordance with FOIA and this part.
(2) If the denial appealed from was under Sec. 4901.14(d), the
General Counsel shall consider any supplementary determination by the
disclosure officer in deciding the appeal.
(3) Unless otherwise ordered by the court, the General Counsel may
act on an appeal notwithstanding the pendency of an action for judicial
relief in the same matter and, if no appeal has been filed, may treat
such an action as the filing of an appeal.
(c) Decision on appeal. As to each item (or portion of an item)
whose nondisclosure is appealed, the General Counsel shall either--
(1) Grant the appeal and so advise the requester in writing, in
which case the records with respect to which the appeal is granted
shall be promptly made available to the requester; or
(2) Deny the appeal and so advise the requester in writing with a
brief statement of the reasons for the denial, including a reference to
the specific exemption(s) authorizing the denial, an explanation of how
each such exemption applies to the matter withheld, and notice of the
provisions for judicial review in paragraph (a)(4) of FOIA. The General
Counsel's decision shall be the final action of the PBGC with respect
to the request.
(d) Records of appeals. Copies of both grants and denials of
appeals shall be collected in one file available in the PBGC's public
reference room under Sec. 4901.4(d)(1) and indexed under
Sec. 4901.4(e).
Sec. 4901.16 Extensions of time.
In unusual circumstances (as described in subparagraph (a)(6)(B) of
FOIA), the time to respond to a disclosure request under
Sec. 4901.14(a) or an appeal under Sec. 4901.15(b) may be extended as
reasonably necessary to process the request or appeal. The disclosure
officer (with the prior approval of the General Counsel) or the General
Counsel, as appropriate, shall notify the requester in writing within
the original time period of the reasons for the extension and the date
when a response is expected to be sent. The maximum extension for
responding to a disclosure request shall be 10 working days, and the
maximum extension for responding to an appeal shall be 10
[[Page 34126]]
working days minus the amount of any extension on the request to which
the appeal relates.
Sec. 4901.17 Exhaustion of administrative remedies.
If the disclosure officer fails to make a determination to grant or
deny access to requested records, or the General Counsel does not make
a decision on appeal from a denial of access to PBGC records, within
the time prescribed (including any extension) for making such
determination or decision, the requester's administrative remedies
shall be deemed exhausted and the requester may apply for judicial
relief under FOIA. However, since a court may allow the PBGC additional
time to act as provided in FOIA, processing of the request or appeal
shall continue and the requester shall be so advised.
Subpart C--Restrictions on Disclosure
Sec. 4901.21 Restrictions in general.
(a) Records not disclosable. Records shall not be disclosed to the
extent prohibited by--
(1) 18 U.S.C. 1905, dealing in general with commercial and
financial information;
(2) Paragraph (b)(1) of FOIA, dealing in general with matters of
national defense and foreign policy; or
(3) Paragraph (b)(3) of FOIA, dealing in general with matters
specifically exempted from disclosure by statute, including information
or documentary material submitted to the PBGC pursuant to sections 4010
and 4043 of ERISA.
(b) Records disclosure of which may be refused. Records need not
(but may, as provided in Sec. 4901.5(b)) be disclosed to the extent
provided by--
(1) Paragraph (b)(2) of FOIA, dealing in general with internal
agency personnel rules and practices;
(2) Paragraph (b)(4) of FOIA, dealing in general with trade secrets
and commercial and financial information;
(3) Paragraph (b)(5) of FOIA, dealing in general with inter-agency
and intra-agency memoranda and letters;
(4) Paragraph (b)(6) of FOIA, dealing in general with personnel,
medical, and similar files;
(5) Paragraph (b)(7) of FOIA, dealing in general with records or
information compiled for law enforcement purposes;
(6) Paragraph (b)(8) of FOIA, dealing in general with reports on
financial institutions; or
(7) Paragraph (b)(9) of FOIA, dealing in general with information
about wells.
Sec. 4901.22 Partial disclosure.
If an otherwise disclosable record contains some material that is
protected from disclosure, the record shall not for that reason be
withheld from disclosure if deletion of the protected material is
feasible. This principle shall be applied in particular to identifying
details the disclosure of which would constitute an unwarranted
invasion of personal privacy.
Sec. 4901.23 Record of concern to more than one agency.
If the release of a record in the custody of the PBGC would be of
concern not only to the PBGC but also to another Federal agency, the
record will be made available by the PBGC only if its interest in the
record is the primary interest and only after coordination with the
other interested agency. If the interest of the PBGC in the record is
not primary, the request will be transferred promptly to the agency
having the primary interest, and the requester will be so notified.
Sec. 4901.24 Special rules for trade secrets and confidential
commercial or financial information submitted to the PBGC.
(a) Application. To the extent permitted by law, this section
applies to a request for disclosure of a record that contains
information that has been designated by the submitter in good faith in
accordance with paragraph (b) of this section or a record that the PBGC
has reason to believe contains such information, unless--
(1) Access to the information is denied;
(2) The information has been published or officially made available
to the public;
(3) Disclosure of the information is required by law other than
FOIA; or
(4) The designation under paragraph (b) of this section appears
obviously frivolous, except that in such a case the PBGC will notify
the submitter in writing of a determination to disclose the information
within a reasonable time before the disclosure date (which shall be
specified in the notice).
(b) Designation by submitter. To designate information as being
subject to this section, the submitter shall, at the time of submission
or by a reasonable time thereafter, assert that information being
submitted is confidential business information and designate, with
appropriate markings, the portion(s) of the submission to which the
assertion applies. Any designation under this paragraph shall expire 10
years after the date of submission unless a longer designation period
is requested and reasonable justification is provided therefor.
(c) Notification to submitter of disclosure request. When
disclosure of information subject to this section may be made, the
disclosure officer or (where disclosure may be made in response to an
appeal) the General Counsel shall promptly notify the submitter,
describing (or providing a copy of) the information that may be
disclosed, and afford the submitter a reasonable period of time to
object in writing to the requested disclosure. (The notification to the
submitter may be oral or written; if oral, it will be confirmed in
writing.) When a submitter is notified under this paragraph, the
requester shall be notified that the submitter is being afforded an
opportunity to object to disclosure.
(d) Objection of submitter. A submitter's statement objecting to
disclosure should specify all grounds relied upon for opposing
disclosure of any portion(s) of the information under subsection (b) of
FOIA and, with respect to the exemption in paragraph (b)(4) of FOIA,
demonstrate why the information is a trade secret or is commercial or
financial information that is privileged or confidential. Facts
asserted should be certified or otherwise supported. (Information
provided pursuant to this paragraph may itself be subject to disclosure
under FOIA.) Any timely objection of a submitter under this paragraph
shall be carefully considered in determining whether to grant a
disclosure request or appeal.
(e) Notification to submitter of decision to disclose. If the
disclosure officer or (where disclosure is in response to an appeal)
the General Counsel decides to disclose information subject to this
section despite the submitter's objections, the disclosure officer (or
General Counsel) shall give the submitter written notice, explaining
briefly why the information is to be disclosed despite those
objections, describing the information to be disclosed, and specifying
the date when the information will be disclosed to the requester. The
notification shall, to the extent permitted by law, be provided a
reasonable number of days before the disclosure date so specified, and
a copy shall be provided to the requester.
(f) Notification to submitter of action to compel disclosure. The
disclosure officer or the General Counsel shall promptly notify the
submitter if a requester brings suit seeking to compel disclosure.
Subpart D--Fees
Sec. 4901.31 Charges for services.
(a) Generally. Pursuant to the provisions of FOIA, as amended,
charges will be assessed to cover the direct costs of searching for,
reviewing,
[[Page 34127]]
and/or duplicating records requested under FOIA from the PBGC, except
where the charges are limited or waived under paragraph (b) or (d) of
this section, according to the fee schedule in Sec. 4901.32 of this
part. No charge will be assessed if the costs of routine collection and
processing of the fee would be equal to or greater than the fee itself.
(1) ``Direct costs'' means those expenditures which the PBGC
actually incurs in searching for and duplicating (and in the case of
commercial requesters, reviewing) documents to respond to a request
under FOIA and this part. Direct costs include, for example, the salary
of the employee performing work (i.e., the basic rate of pay plus
benefits) or an established average pay for a homogeneous class of
personnel (e.g., all administrative/clerical or all professional/
executive), and the cost of operating duplicating machinery. Not
included in direct costs are overhead expenses such as costs of space,
and heating or lighting the facility in which the records are stored.
(2) ``Search'' means all time spent looking for material that is
responsive to a request under FOIA and this part, including page-by-
page or line-by-line identification of materials within a document, if
required, and may be done manually or by computer using existing
programming. ``Search'' should be distinguished from ``review'' which
is defined in paragraph (a)(3) of this section.
(3) ``Review'' means the process of examining documents located in
response to a request under FOIA and this part to determine whether any
portion of any document located is permitted or required to be
withheld. It also includes processing any documents for disclosure,
e.g., doing all that is necessary to excise them and otherwise prepare
them for release. Review does not include time spent resolving general
legal or policy issues regarding the application of exemptions.
(4) ``Duplication'' means the process of making a copy of a
document necessary to respond to a request under FOIA and this part, in
a form that is reasonably usable by the requester. Copies can take the
form of paper copy, microform, audio-visual materials, or machine
readable documentation (e.g., magnetic tape or disk), among others.
(b) Categories of requesters. Requesters who seek access to records
under FOIA and this part are divided into four categories: commercial
use requesters, educational and noncommercial scientific institutions,
representatives of the news media, and all other requesters. The PBGC
will determine the category of a requester and charge fees according to
the following rules.
(1) Commercial use requesters. When records are requested for
commercial use, the PBGC will assess charges, as provided in this
subpart, for the full direct costs of searching for, reviewing for
release, and duplicating the records sought. Fees for search and review
may be charged even if the record searched for is not found or if,
after it is found, it is determined that the request to inspect it may
be denied under the provisions of subsection (b) of FOIA and this part.
(i) ``Commercial use'' request means a request from or on behalf of
one who seeks information for a use or purpose that furthers the
commercial, trade, or profit interests of the requester or the person
on whose behalf the request is made.
(ii) In determining whether a request properly belongs in this
category, the PBGC will look to the use to which a requester will put
the documents requested. Moreover, where the PBGC has reasonable cause
to doubt the use to which a requester will put the records sought, or
where that use is not clear from the request itself, the PBGC will
require the requester to provide clarification before assigning the
request to this category.
(2) Educational and noncommercial scientific institution
requesters. When records are requested by an educational or
noncommercial scientific institution, the PBGC will assess charges, as
provided in this subpart, for the full direct cost of duplication only,
excluding charges for the first 100 pages.
(i) ``Educational institution'' means a preschool, a public or
private elementary or secondary school, an institution of graduate
higher education, an institution of undergraduate higher education, an
institution of professional education, and an institution of vocational
education, which operates a program or programs of scholarly research.
(ii) ``Noncommercial scientific institution'' means an institution
that is not operated on a ``commercial'' basis as that term is defined
in paragraph (b)(1)(i) of this section, and which is operated solely
for the purpose of conducting scientific research the results of which
are not intended to promote any particular product or industry.
(iii) To be eligible for inclusion in this category, requesters
must show that the request is being made as authorized by and under the
auspices of a qualifying institution and that the records are not
sought for a commercial use, but are sought in furtherance of scholarly
(if the request is from an educational institution) or scientific (if
the request is from a noncommercial scientific institution) research.
(3) Requesters who are representatives of the news media. When
records are requested by representatives of the news media, the PBGC
will assess charges, as provided in this subpart, for the full direct
cost of duplication only, excluding charges for the first 100 pages.
(i) ``Representative of the news media'' means any person actively
gathering news for an entity that is organized and operated to publish
or broadcast news to the public. The term ``news'' means information
that is about current events or that would be of current interest to
the public. Examples of news media entities include television or radio
stations broadcasting to the public at large, and publishers of
periodicals (but only in those instances when they can qualify as
disseminators of ``news'') who make their products available for
purchase or subscription by the general public. These examples are not
intended to be all-inclusive. ``Freelance'' journalists may be regarded
as working for a news organization if they can demonstrate a solid
basis for expecting publication through that organization, even though
not actually employed by it.
(ii) To be eligible for inclusion in this category, the request
must not be made for a commercial use. A request for records supporting
the news dissemination function of the requester who is a
representative of the news media shall not be considered to be a
request that is for a commercial use.
(4) All other requesters. When records are requested by requesters
who do not fit into any of the categories in paragraphs (b)(1) through
(b)(3) of this section, the PBGC will assess charges, as provided in
this subpart, for the full direct cost of searching for and duplicating
the records sought, with the exceptions that there will be no charge
for the first 100 pages of duplication and the first two hours of
manual search time (or its cost equivalent in computer search time).
Notwithstanding the preceding sentence, there will be no charge for
search time in the event of requests under the Privacy Act of 1974 from
subjects of records filed in the PBGC's systems of records for the
disclosure of records about themselves. Search fees, where applicable,
may be charged even if the record searched for is not found.
(c) Aggregation of requests. If the PBGC reasonably believes that a
[[Page 34128]]
requester or group of requesters is attempting to break a request down
into a series of requests for the purpose of evading the assessment of
fees, the PBGC will aggregate any such requests and charge accordingly.
In no case will the PBGC aggregate multiple requests on unrelated
subjects from one requester.
(d) Waiver or reduction of charges. Circumstances under which
searching, review, and duplication facilities or services may be made
available to the requester without charge or at a reduced charge are
set forth in Sec. 4901.34 of this part.
Sec. 4901.32 Fee schedule.
(a) Charges for searching and review of records. Charges applicable
under this subpart to the search for and review of records will be made
according to the following fee schedule:
(1) Search and review time. (i) Ordinary search and review by
custodial or clerical personnel, $1.75 for each one-quarter hour or
fraction thereof of employee worktime required to locate or obtain the
records to be searched and to make the necessary review; and (ii)
search or review requiring services of professional or supervisory
personnel to locate or review requested records, $4.00 for each one-
quarter hour or fraction thereof of professional or supervisory
personnel worktime.
(2) Additional search costs. If the search for a requested record
requires transportation of the searcher to the location of the records
or transportation of the records to the searcher, at a cost in excess
of $5.00, actual transportation costs will be added to the search time
cost.
(3) Search in computerized records. Charges for information that is
available in whole or in part in computerized form will include the
cost of operating the central processing unit (CPU) for that portion of
operating time that is directly attributable to searching for records
responsive to the request, personnel salaries apportionable to the
search, and tape or printout production or an established agency-wide
average rate for CPU operating costs and operator/programmer salaries
involved in FOIA searches. Charges will be computed at the rates
prescribed in paragraphs (a) and (b) of this section.
(b) Charges for duplication of records. Charges applicable under
this subpart for obtaining requested copies of records made available
for inspection will be made according to the following fee schedule and
subject to the following conditions.
(1) Standard copying fee. $0.15 for each page of record copies
furnished. This standard fee is also applicable to the furnishing of
copies of available computer printouts as stated in paragraph (a)(3) of
this section.
(2) Voluminous material. If the volume of page copy desired by the
requester is such that the reproduction charge at the standard page
rate would be in excess of $50, the person desiring reproduction may
request a special rate quotation from the PBGC.
(3) Limit of service. Not more than 10 copies of any document will
be furnished.
(4) Manual copying by requester. No charge will be made for manual
copying by the requesting party of any document made available for
inspection under the provisions of this part. The PBGC shall provide
facilities for such copying without charge at reasonable times during
normal working hours.
(5) Indexes. Pursuant to paragraph (a)(2) of FOIA copies of indexes
or supplements thereto which are maintained as therein provided but
which have not been published will be provided on request at a cost not
to exceed the direct cost of duplication.
(c) Other charges. The scheduled fees, set forth in paragraphs (a)
and (b) of this section, for furnishing records made available for
inspection and duplication represent the direct costs of furnishing the
copies at the place of duplication. Upon request, single copies of the
records will be mailed, postage prepaid, free of charge. Actual costs
of transmitting records by special methods such as registered,
certified, or special delivery mail or messenger, and of special
handling or packaging, if required, will be charged in addition to the
scheduled fees.
Sec. 4901.33 Payment of fees.
(a) Medium of payment. Payment of the applicable fees as provided
in this subsection shall be made in cash, by U.S. postal money order,
or by check payable to the PBGC. Postage stamps will not be accepted in
lieu of cash, checks, or money orders as payment for fees specified in
the schedule. Cash should not be sent by mail.
(b) Advance payment or assurance of payment. Payment or assurance
of payment before work is begun or continued on a request may be
required under the following rules.
(1) Where the PBGC estimates or determines that charges allowable
under the rules in this subpart are likely to exceed $250, the PBGC may
require advance payment of the entire fee or assurance of payment, as
follows:
(i) Where the requester has a history of prompt payment of fees
under this part, the PBGC will notify the requester of the likely cost
and obtain satisfactory assurance of full payment; or
(ii) Where the requester has no history of payment for requests
made pursuant to FOIA and this part, the PBGC may require the requester
to make an advance payment of an amount up to the full estimated
charges.
(2) Where the requester has previously failed to pay a fee charged
in a timely fashion (i.e., within 30 days of the date of the billing),
the PBGC may require the requester to pay the full amount owed plus any
applicable interest as provided in paragraph (c) of this section (or
demonstrate that he has, in fact, paid the fee) and to make an advance
payment of the full amount of the estimated fee.
(c) Late payment interest charges. The PBGC may assess late payment
interest charges on any amounts unpaid by the 31st day after the date a
bill is mailed to a requester. Interest will be assessed at the rate
prescribed in 31 U.S.C. 3717 and will accrue from the date the bill is
mailed.
Sec. 4901.34 Waiver or reduction of charges.
(a) The disclosure officer may waive or reduce fees otherwise
applicable under this subpart when disclosure of the information is in
the public interest because it is likely to contribute significantly to
public understanding of the operations or activities of the government
and is not primarily in the commercial interest of the requester. A fee
waiver request shall set forth full and complete information upon which
the request for waiver is based.
(b) The disclosure officer may reduce or waive fees applicable
under this subpart when the requester has demonstrated his inability to
pay such fees.
PART 4902--DISCLOSURE AND AMENDMENT OF RECORDS PERTAINING TO
INDIVIDUALS UNDER THE PRIVACY ACT
Sec.
4902.1 Purpose and scope.
4902.2 Definitions.
4902.3 Procedures for determining existence of and requesting
access to records.
4902.4 Disclosure of record to an individual.
4902.5 Procedures for requesting amendment of a record.
4902.6 Action on request for amendment of a record.
4902.7 Appeal of a denial of a request for amendment of a record.
4902.8 Fees.
4902.9 Specific exemptions.
Authority: 5 U.S.C. 552a.
[[Page 34129]]
Sec. 4902.1 Purpose and scope.
This part establishes procedures whereby an individual can
determine whether the PBGC maintains any system of records that
contains a record pertaining to the individual, procedures to effect
access to an individual's record upon his or her request, and
procedures for making requests to amend records, for making the initial
determinations on such requests, and for appealing denials of such
requests. This part also prescribes the fees for making copies of an
individual's record. Finally, this part sets forth those systems of
records that are exempted from certain disclosure and other provisions
of the Privacy Act (5 U.S.C. 552a).
Sec. 4902.2 Definitions.
In addition to terminology in part 4001 of this chapter, as used in
this part:
Disclosure officer means the designated official in the
Communications and Public Affairs Department, PBGC.
Record means any item, collection, or grouping of information about
an individual that is maintained by an agency, including, but not
limited to, his or her education, financial transactions, medical
history, and criminal or employment history and that contains his or
her name, or the identifying number, symbol, or other identifying
particular assigned to the individual, such as a finger or voice print
or a photograph.
System of records means a group of any records under the control of
any agency from which information is retrieved by the name of the
individual or by some identifying number, symbol, or other identifying
particular assigned to the individual.
Working day means any weekday excepting Federal holidays.
Sec. 4902.3 Procedures for determining existence of and requesting
access to records.
(a) Any individual may submit a written request, either by mail to
the Disclosure Officer, Communications and Public Affairs Department,
Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC
20005-4026, or in person between the hours of 9 a.m. and 4 p.m. on any
working day in Suite 240 at the above address, for the purpose of--
(1) Learning whether a system of records maintained by the PBGC
contains any record pertaining to the requester, or
(2) Obtaining access to such a record.
(b) Each request submitted pursuant to paragraph (a) of this
section shall include the name of the system of records to which the
request pertains and the requester's full name, home address and date
of birth, and shall clearly state on the envelope and on the request
``Privacy Act Request.'' If this information is insufficient to enable
the PBGC to identify the record in question, the disclosure officer
shall request such further identifying data as the disclosure officer
deems necessary to locate the record.
(c) Unless the request is only for notification of the existence of
a record and such notification is required under the Freedom of
Information Act (5 U.S.C. 552), the requester shall be required to
provide verification of his or her identity to the PBGC as set forth in
paragraph (c) (1) or (2) of this section, as appropriate.
(1) If the request is made by mail, the requester shall submit a
notarized statement establishing his or her identity.
(2) If the request is made in person, the requester shall show
identification satisfactory to the disclosure officer, such as a
driver's license, employee identification, annuitant identification or
Medicare card.
(d) The disclosure officer shall respond to the request in writing
within 10 working days after receipt of the request or of such
additional information as may be required under paragraph (b) of this
section. If a request for access to a record is granted, the response
shall state when the record will be made available.
Sec. 4902.4 Disclosure of record to an individual.
(a) When the disclosure officer grants a request for access to
records under Sec. 4902.3, such records shall be made available when
the requester is advised of the determination or as promptly thereafter
as possible. At the requester's option, the record will be made
available for the requester's inspection and copying at the
Communications and Public Affairs Department, Pension Benefit Guaranty
Corporation, 1200 K Street NW., Washington, DC 20005-4026, between the
hours of 9 a.m. and 4 p.m. on any working day, or a copy of the record
will be mailed to the requester.
(b) If the requester desires to be accompanied by another
individual during the inspection and/or copying of the record, the
requester shall, either when the record is made available or at any
earlier time, submit to the disclosure officer a signed statement
identifying such other individual and authorizing such other individual
to be present during the inspection and/or copying of the record.
Sec. 4902.5 Procedures for requesting amendment of a record.
(a) Any individual about whom the PBGC maintains a record contained
in a system of records may request that the record be amended. Such a
request shall be submitted in the same manner described in
Sec. 4902.3(a).
(b) Each request submitted under paragraph (a) of this section
shall include the information described in Sec. 4902.3(b) and a
statement specifying the changes to be made in the record and the
justification therefor. The disclosure officer may request further
identifying data as described in Sec. 4902.3(b).
(c) An individual who desires assistance in the preparation of a
request for amendment of a record shall submit such request for
assistance in writing to the Deputy General Counsel, Pension Benefit
Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026. The
Deputy General Counsel shall respond to such request as promptly as
possible.
Sec. 4902.6 Action on request for amendment of a record.
(a) Within 20 working days after receipt by the PBGC of a request
for amendment of a record under Sec. 4902.5, unless for good cause
shown the Executive Director of the PBGC extends such 20-day period,
the disclosure officer shall notify the requester in writing whether
and to what extent the request shall be granted. To the extent that the
request is granted, the disclosure officer shall cause the requested
amendment to be made promptly.
(b) When a request for amendment of a record is denied in whole or
in part, the denial shall include a statement of the reasons therefor,
the procedures for appealing such denial, and a notice that the
requester has a right to assistance in preparing an appeal of the
denial.
(c) An individual who desires assistance in preparing an appeal of
a denial under this section shall submit a request in writing to the
Deputy General Counsel, Pension Benefit Guaranty Corporation, 1200 K
Street NW., Washington, DC 20005-4026. The Deputy General Counsel shall
respond to the request as promptly as possible, but in no event more
than 30 days after receipt.
Sec. 4902.7 Appeal of a denial of a request for amendment of a record.
(a) An appeal from a denial of a request for amendment of a record
under Sec. 4902.6 shall be submitted, within 45 days of receipt of the
denial, to the General Counsel, Pension Benefit
[[Page 34130]]
Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026,
unless the record subject to such request is one maintained by the
Office of the General Counsel, in which event the appeal shall be
submitted to the Deputy Executive Director at the same address. The
appeal shall state in detail the basis on which it is made and both the
envelope and the appeal shall clearly state ``Privacy Act Request''.
(b) Within 30 working days after the receipt of the appeal, unless
for good cause shown the Executive Director of the PBGC extends such
30-day period, the General Counsel or, where appropriate, the Deputy
Executive Director, shall issue a decision in writing granting or
denying the appeal in whole or in part. To the extent that the appeal
is granted, the General Counsel or, where appropriate, the Deputy
Executive Director, shall cause the requested amendment to be made
promptly. To the extent that the appeal is denied, the decision shall
include the reasons for the denial and a notice of the requester's
right to submit a brief statement setting forth reasons for disputing
the denial of appeal, to seek judicial review of the denial pursuant to
5 U.S.C. 552a(g)(1)(A), and to obtain further information concerning
the provisions for judicial review under that section.
(c) An individual whose appeal has been denied in whole or in part
may submit a brief summary statement setting forth reasons for
disputing such denial. Such statement shall be submitted within 30 days
of receipt of the denial of the appeal to the Disclosure Officer. Any
such statement shall be made available by the PBGC to anyone to whom
the record is subsequently furnished and may also be accompanied, at
the discretion of the PBGC, by a brief statement summarizing the PBGC's
reasons for refusing to amend the record. The PBGC shall also provide
copies of the individual's statement of dispute to all prior recipients
of the record with respect to whom an accounting of the disclosure of
the record was maintained pursuant to 5 U.S.C. 552a(c)(1).
(d) To request further information concerning the provisions for
judicial review, an individual shall submit such request in writing to
the Deputy General Counsel, who shall respond to such request as
promptly as possible.
Sec. 4902.8 Fees.
When an individual requests a copy of his or her record under
Sec. 4902.4, charges for the copying shall be made according to the
following fee schedule:
(a) Standard copying fee. There shall be a charge of $0.15 per page
of record copies furnished. Where the copying fee is less than $1.50,
it shall not be assessed.
(b) Voluminous material. If the volume of page copy desired by the
requester is such that the reproduction charge at the standard page
rate would be in excess of $50, the individual desiring reproduction
may request a special rate quotation from the PBGC.
(c) Manual copying by requester. No charge will be made for manual
copying by the requester of any document made available for inspection
under Sec. 4902.4. The PBGC shall provide facilities for such copying
without charge between the hours of 9 a.m. and 4 p.m. on any working
day.
Sec. 4902.9 Specific exemptions.
(a) Under the authority granted by 5 U.S.C. 552a(k)(5), the PBGC
hereby exempts the system of records entitled ``Personnel Security
Investigation Records--PBGC'' from the provisions of 5 U.S.C.
Secs. 552a (c)(3), (d), (e)(1), (e)(4) (G), (H), and (I), and (f), to
the extent that the disclosure of such material would reveal the
identity of a source who furnished information to PBGC under an express
promise of confidentiality or, before September 27, 1975, under an
implied promise of confidentiality.
(b) The reasons for asserting this exemption are to insure the
gaining of information essential to determining suitability and fitness
for PBGC employment, access to information, and security clearances, to
insure that full and candid disclosures are obtained in making such
determinations, to prevent subjects of such determinations from
thwarting the completion of such determinations, and to avoid revealing
the identities of persons who furnish information to the PBGC in
confidence.
PART 4903--DEBT COLLECTION
Subpart A--General
Sec.
4903.1 Purpose and scope.
4903.2 General.
4903.3 Definitions.
Subpart B--Administrative Offset
4903.21 Application of Federal Claims Collection Standards.
4903.22 Administrative offset procedures.
4903.23 PBGC requests for offset by other agencies.
4903.24 Requests for offset from other agencies.
Subpart C--Tax Refund Offset
4903.31 Eligibility of debt for tax refund offset.
4903.32 Tax refund offset procedures.
4903.33 Referral of debt for tax refund offset.
Subpart D--Salary Offset [Reserved]
Authority: 29 U.S.C. 1302(b); 31 U.S.C. 3701, 3711(f), 3720A; 4
CFR part 102; 26 CFR 301.6402--6.
Subpart A--General
Sec. 4903.1 Purpose and scope.
(a) Subpart A. Subpart A of this part contains definitions and
general provisions applicable to debt collection generally.
(b) Subpart B. Subpart B of this part prescribes procedures for
debt collection by administrative offset, as authorized by the Federal
Claims Collection Act (31 U.S.C. 3716), and consistent with applicable
provisions of the Federal Claims Collection Standards. These procedures
apply when the PBGC determines that collection by administrative offset
of a claim that is liquidated or certain in amount is feasible and not
otherwise prohibited or when another agency seeks administrative offset
against a payment to be made by the PBGC.
(c) Subpart C. Subpart C of this part prescribes procedures for
debt collection by tax refund offset, as authorized by section 3720A of
subchapter II, chapter 37 of title 31 of the United States Code (31
U.S.C. 3720A) and in accordance with applicable IRS regulations (26 CFR
301-6402.6), including a related procedure for disclosure to a consumer
reporting agency. These procedures apply to determinations that a debt
of at least $25 is past-due and legally enforceable, to referrals by
the PBGC of past-due, legally enforceable debts to the IRS for offset,
and to any subsequent corrections of information contained in such
referrals.
Sec. 4903.2 General.
(a) Certain PBGC efforts to obtain payment of debts arising out of
activities under ERISA are authorized by and subject to requirements
prescribed under other federal statutes. When, and to the extent, such
requirements apply to collection of a debt by the PBGC, PBGC activities
will be consistent with such requirements, as well as with any other
applicable requirements (see, e.g., parts 4003, 4007, and 4062 of this
chapter).
(b)(1) The Executive Director of the PBGC has delegated to the
Director of the Financial Operations Department primary responsibility
for PBGC debt collection activities. This delegation includes
responsibility for procedures implementing requirements prescribed
under federal statutes other than ERISA,
[[Page 34131]]
and for coordinating the activities of other PBGC departments with
functional responsibilities for different types of claims.
(2) PBGC departments are responsible for ascertaining indebtedness
and other aspects of agency collection activities within their areas of
functional responsibility.
Sec. 4903.3 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
IRS, PBGC, and person. In addition, for purposes of this part:
Administrative offset has the meaning set forth in 31 U.S.C.
3701(a)(1).
Agency means an executive or legislative agency (within the meaning
of 31 U.S.C. 3701(a)(4)).
Claim and debt, as defined in the Federal Claims Collection
Standards (4 CFR 101.2(a)), are used synonymously and interchangeably
to refer to an amount of money or property which has been determined by
an appropriate agency official to be owed to the United States from any
person, organization, or entity, except another Federal agency.
Consumer reporting agency has the meaning set forth in 31 U.S.C.
3701(a)(3).
Federal Claims Collection Act means the Federal Claims Collection
Act of 1966, as amended (31 U.S.C. 3701 et seq.).
Federal Claims Collection Standards means 4 CFR parts 101 through
105, which are regulations issued jointly by the Comptroller General of
the United States and the Attorney General of the United States that
implement the Federal Claims Collection Act.
Repayment agreement means a written agreement by a debtor to repay
a debt to the PBGC.
Tax refund offset means the reduction by the IRS of a tax
overpayment payable to a taxpayer by the amount of past-due, legally
enforceable debt owed by that taxpayer to a federal agency that has
entered into an agreement with the IRS with regard to its participation
in the tax refund offset program, pursuant to IRS regulations (26 CFR
301.6402-6).
Subpart B--Administrative Offset
Sec. 4903.21 Application of Federal Claims Collection Standards.
The PBGC will determine the feasibility of collection by
administrative offset, whether to accept a repayment agreement in lieu
of offset, and how to apply amounts collected by administrative offset
on multiple debts as provided in the Federal Claims Collection
Standards (4 CFR 102.3).
(a) Feasibility. The PBGC will determine whether collection by
administrative offset is feasible on a case-by-case basis in the
exercise of sound discretion. In making such determinations, the PBGC
will consider:
(1) Whether administrative offset can be accomplished, both
practically and legally;
(2) Whether administrative offset is best suited to further and
protect all governmental interests;
(3) In appropriate circumstances, the debtor's financial condition;
and
(4) Whether offset would tend to interfere substantially with or
defeat the purposes of the program authorizing the payments against
which offset is contemplated.
(b) Repayment agreements. The PBGC will exercise its discretion in
determining whether to accept a repayment agreement in lieu of offset,
balancing the Government's interest in collecting the debt against
fairness to the debtor. If the debt is delinquent (within the meaning
of 4 CFR 101.2(b)) and the debtor has not disputed its existence or
amount, the PBGC will accept a repayment agreement in lieu of offset
only if the debtor is able to establish that offset would result in
undue financial hardship or would be against equity and good
conscience.
(c) Multiple debts. When the PBGC collects multiple debts by
administrative offset, it will apply the recovered amounts to those
debts in accordance with the best interests of the United States, as
determined by the facts and circumstances of the particular case,
paying special attention to applicable statutes of limitations.
Sec. 4903.22 Administrative offset procedures.
(a) General. Except as otherwise required by law or as provided in
paragraph (e) of this section, the PBGC will not effect administrative
offset against a payment to be made to a debtor prior to the completion
of the procedures specified in paragraphs (b) and (c) of this section.
However, the PBGC will not duplicate any notice or other procedural
protection it previously provided in connection with the same debt
under some other statutory or regulatory authority, such as part 4003
of this chapter.
(b) Notice. The PBGC will provide written notice informing the
debtor of the following:
(1) The nature and amount of the debt, and the PBGC's intention to
collect by offset;
(2) That the debtor may inspect and copy PBGC records pertaining to
the debt in accordance with part 4901 or part 4902 of this chapter, as
applicable (access under the Freedom of Information Act (5 U.S.C. 552)
or the Privacy Act (5 U.S.C. 552a), respectively);
(3) How and from whom the debtor may obtain administrative review
of a determination of indebtedness;
(4) The facts and circumstances that the PBGC will consider in
determining whether to accept a repayment agreement in lieu of offset;
and
(5) If the PBGC has not previously demanded payment of the debt,
the date by which payment must be made to avoid further collection
action.
(c) Administrative review. (1) A debtor may obtain review within
the PBGC of a determination of indebtedness by submitting a written
request for review, designated as such, to the PBGC official specified
in the notice of indebtedness. Unless another regulation in this
chapter specifies a different period of time, such a request must be
submitted within 30 days after the date of a PBGC notice under
paragraph (b) of this section.
(2) A request for review must:
(i) State the ground(s) on which the debtor disputes the debt; and
(ii) Reference all pertinent information already in the possession
of the PBGC and include any additional information believed to be
relevant.
(3) The PBGC will review a determination of indebtedness, when
requested to do so in a timely manner. The PBGC will issue a written
decision, based on the written record, and will notify the debtor of
its decision.
(i) The review will be conducted by an official of at least the
same level of authority as the person who made the determination of
indebtedness.
(ii) The notice of the PBGC's decision on review will include a
brief statement of the reason(s) why the determination of indebtedness
has or has not been changed.
(4) Upon receipt of a request for administrative review, the PBGC
may, in its discretion, temporarily suspend transactions in any of the
debtor's accounts maintained by the PBGC. If the PBGC resolves the
dispute in the debtor's favor, it will lift the suspension immediately.
(d) Repayment agreement in lieu of offset. (1) The PBGC will not
consider entering a repayment agreement in lieu of offset unless a
debtor submits a copy of the debtor's most recent audited (or if not
available, unaudited) financial statement (with balance sheets, income
statements, and statements of changes in financial position), to the
extent such documents have been prepared, and other information
regarding the debtor's financial condition (e.g., the types of
information on assets, liabilities,
[[Page 34132]]
earnings, and other factors specified in paragraphs (b)(3) through
(b)(7) of Sec. 4062.6 of this chapter).
(2) The PBGC may require appropriate security as a condition of
accepting a repayment agreement in lieu of offset.
(e) Exception. (1) The PBGC may effect administrative offset
against a payment to be made to the debtor prior to completing the
procedures specified in paragraphs (b) and (c) of this section if:
(i) Failure to take the offset would substantially prejudice the
government's ability to collect the debt; and
(ii) The time before the payment is to be made does not reasonably
permit the completion of those procedures.
(2) The PBGC has determined that a case in which it applies the
special rule in Sec. 4068.3(c) of this chapter meets the criteria in
paragraph (e)(1) of this section.
(3) If the PBGC effects administrative offset against a payment to
be made to a debtor prior to completing the procedures specified in
paragraphs (b) and (c) of this section, the PBGC--
(i) Will promptly complete those procedures; and
(ii) Will promptly refund any amounts recovered by offset but later
found not to be owed to the Government.
Sec. 4903.23 PBGC requests for offset by other agencies.
(a) General. The PBGC may request that funds payable to its debtor
by another agency be administratively offset to collect a debt owed to
the PBGC by the debtor. A PBGC request for administrative offset
against amounts due and payable from the Civil Service Retirement and
Disability Fund will be made in accordance with 5 CFR part 831, subpart
R (Agency Requests to OPM for Recovery of a Debt from the Civil Service
Retirement and Disability Fund).
(b) Certification. In requesting administrative offset, the
Director of the Financial Operations Department (or a department
official designated by the Director) will certify in writing to the
agency holding funds of the debtor--
(1) That the debtor owes the debt (including the amount) and that
the PBGC has fully complied with the provisions of 4 CFR 102.3; and
(2) In a request for administrative offset against amounts due and
payable from the Civil Service Retirement and Disability Fund, that the
PBGC has complied with applicable statutes and the regulations and
procedures of the Office of Personnel Management.
Sec. 4903.24 Requests for offset from other agencies.
(a) General. As provided in the Federal Claims Collections
Standards (4 CFR 102.3(d)), the PBGC generally will comply with
requests from other agencies to initiate administrative offset to
collect debts owed to the United States unless the requesting agency
has not complied with the applicable provisions of the Federal Claims
Collection Standards or the offset would be otherwise contrary to law.
(b) Submission of requests. (1) Any agency may request that funds
payable to its debtor by the PBGC be administratively offset to collect
a debt owed to such agency by the debtor by submitting the
certification described in paragraph (c) of this section.
(2) All such requests should be directed to the Director, Financial
Operations Department, Pension Benefit Guaranty Corporation, 1200 K
FR Doc. 96-16398 Reorganization, Renumbering, and Reinvention of Regulations
Street, NW., Washington, DC 20005-4026.
(c) Certification required. The PBGC will not initiate
administrative offset in response to a request from another agency
until it receives written certification from the requesting agency,
signed by an appropriate agency official, that the debtor owes the debt
(including the amount) and that the requesting agency has fully
complied with the provisions of 4 CFR 102.3 (with a citation to the
agency's own administrative offset regulations).
Subpart C--Tax Refund Offset
Sec. 4903.31 Eligibility of debt for tax refund offset.
The PBGC will determine whether a debt is eligible for tax refund
offset in accordance with IRS regulations (26 CFR 301.6402-6 (c) and
(d)). The PBGC may refer a past-due, legally enforceable debt to the
IRS for offset if:
(a) The debt is a judgment debt, or the PBGC's right of action
accrued not more than 10 years earlier (unless the debt is specifically
exempt from this requirement);
(b) The PBGC cannot currently collect the debt by salary offset
(pursuant to 5 U.S.C. 5514(a)(1));
(c) The debt is ineligible for administrative offset (by reason of
31 U.S.C. 3716(c)(2)), or the PBGC cannot currently collect the debt by
administrative offset (under 31 U.S.C. 3716 and subpart B of this part)
against amounts payable by the debtor to the PBGC;
(d) The PBGC has notified, or attempted to notify, the debtor of
its intent to refer the debt, given the debtor an opportunity to
present evidence that all or part of the debt is not past-due or not
legally enforceable, considered any evidence presented by the debtor in
accordance with Sec. 4903.32, and determined that the debt is past-due
and legally enforceable;
(e) If the debt is a consumer debt and exceeds $100, the PBGC has
disclosed the debt to a consumer reporting agency (as authorized by 31
U.S.C. 3711(f) and provided in Sec. 4903.32), unless a consumer
reporting agency would be prohibited from reporting information
concerning the debt (by reason of 15 U.S.C. 1681c); and
(f) The debt is at least $25.
Sec. 4903.32 Tax refund offset procedures.
(a) General. Before referring a debt for tax refund offset, the
PBGC will complete the procedures specified in paragraph (b) and, if
applicable, paragraph (c) of this section. The PBGC may satisfy these
requirements in conjunction with any other procedures that apply to the
same debt, such as those prescribed in Sec. 4903.22 or part 4003 of
this chapter.
(b) Notice, opportunity to present evidence, and determination of
indebtedness.
(1) The PBGC will notify, or make a reasonable attempt to notify, a
person owing a debt (a ``debtor'') that a debt is past-due and if not
repaid within 60 days, the PBGC will refer the debt to the IRS for
offset against any overpayment of tax. For this purpose, compliance
with IRS procedures (26 CFR 301.6402-6(d)(1)) constitutes a reasonable
attempt to notify a debtor.
(2) A debtor will have at least 60 days to present evidence, for
consideration by the PBGC, that all or part of a debt is not past-due
or not legally enforceable.
(3) If evidence that all or part of a debt is not past-due or not
legally enforceable is considered by an agent or person other than a
PBGC employee acting on behalf of the PBGC, a debtor will have at least
30 days from the date of the determination on the debt to request
review by the Director of the Financial Operations Department (or a
department official designated by the Director).
(4) The PBGC will notify a debtor of its determination as to
whether all or part of a debt is past-due and legally enforceable.
(c) Consumer reporting agency disclosure.
(1)(i) If a consumer debt exceeds $100, the Director of the
Financial Operations Department (or a department official designated by
the Director), after verifying the validity and overdue status of the
debt and that section 605 of the Consumer Credit Protection Act (15
U.S.C. 1681c) does not prohibit a
[[Page 34133]]
consumer reporting agency from reporting information concerning the
debt because it is obsolete, will send the individual who owes the debt
a written notice--
(A) That the debt is past-due;
(B) That the PBGC intends to disclose to a consumer reporting
agency that the individual is responsible for the debt and the specific
information to be disclosed; and
(C) How the individual may obtain an explanation of the debt,
dispute the information in PBGC's records, and obtain administrative
review of the debt.
(ii) If the PBGC does not have a current address for an individual,
the Director of the Financial Operations Department (or a department
official designated by the Director) will take reasonable action to
locate the individual.
(2) The Director of the Financial Operations Department (or a
department official designated by the Director) will disclose the debt
if, within 60 days (or, at his or her discretion, more than 60 days)
after sending the notice described in paragraph (c)(1) of this section,
the individual has not repaid the debt, or agreed to repay the debt
under a written agreement, or requested administrative review of the
debt.
Sec. 4903.33 Referral of debt for tax refund offset.
The Director of the Financial Operations Department (or a
department official designated by the Director) will refer debts to the
IRS for refund offset, and will correct referrals, in accordance with
IRS regulations (26 CFR 301.6402-6(e) and (f)).
Subpart D--Salary Offset [Reserved]
PART 4904--ETHICAL CONDUCT OF EMPLOYEES
Sec.
4904.1 Outside employment and other activity.
Authority: 29 U.S.C. 1302(b); E.O. 11222, 30 FR 6469; 5 CFR
735.104.
Sec. 4904.1 Outside employment and other activity.
(a)-(c) [Reserved].
(d) An employee who is engaged in or is planning to engage in
outside employment, business, professional or other such activities for
pay shall obtain clearance:
(1) When such activities raise a question of conflict with this
subpart or any applicable laws, orders, regulations or standards, or
(2) When applicable laws, orders or regulations require clearance
of such activities.
(e) A request for clearance shall be in writing and shall include a
statement of the nature of and the amount of time to be devoted to the
activity. The heads of offices shall receive and review requests for
clearance submitted by members of their staff. The Executive Director
or his designee shall receive and review requests for clearance
submitted by the heads of offices and special Government employees. The
employee reviewing the request for clearance may require the employee
making the request to furnish such other information as may be
appropriate in considering the request and shall consult with the
Corporation's Ethics Counselor where appropriate. The request may be
granted only if such activity would be consistent with applicable laws,
orders and regulations. If the request for clearance is not granted,
the employee making the request shall not commence or continue in the
activity unless the Executive Director or his designee, upon written
request of the employee, determines that such activity would be
consistent with applicable laws, orders and regulations.
PART 4905--APPEARANCES IN CERTAIN PROCEEDINGS
Sec.
4905.1 Purpose and scope.
4905.2 Definitions.
4905.3 General.
4905.4 Appearances by PBGC employees.
4905.5 Requests for authenticated copies of PBGC records.
4905.6 Penalty.
Authority: 29 U.S.C. 1302(b); E.O. 11222, 30 FR 6469; 5 CFR
735.104.
Sec. 4905.1 Purpose and scope.
(a) Purpose. This part sets forth the rules and procedures to be
followed when a PBGC employee or former employee is requested or served
with compulsory process to appear as a witness or produce documents in
a proceeding in which the PBGC is not a party, if such appearance
arises out of, or is related to, his or her employment with the PBGC.
It provides a centralized decisionmaking mechanism for responding to
such requests and compulsory process.
(b) Scope. (1) This part applies when, in a judicial,
administrative, legislative, or other proceeding, a PBGC employee or
former employee is requested or served with compulsory process to
provide testimony concerning information acquired in the course of
performing official duties or because of official status and/or to
produce material acquired in the course of performing official duties
or contained in PBGC files.
(2) This part does not apply to:
(i) Proceedings in which the PBGC is a party;
(ii) Congressional requests or subpoenas for testimony or
documents; or
(iii) Appearances by PBGC employees in proceedings that do not
arise out of, or relate to, their employment with PBGC (e.g., outside
activities that are engaged in consistent with applicable standards of
ethical conduct).
Sec. 4905.2 Definitions.
For purposes of this part:
Appearance means testimony or production of documents or other
material, including an affidavit, deposition, interrogatory,
declaration, or other required written submission.
Compulsory Process means any subpoena, order, or other demand of a
court or other authority (e.g., an administrative agency or a state or
local legislative body) for the appearance of a PBGC employee or former
employee.
Employee means any officer or employee of the PBGC, including a
special government employee.
Proceeding means any proceeding before any federal, state, or local
court; federal, state, or local agency; state or local legislature; or
other authority responsible for administering regulatory requirements
or adjudicating disputes or controversies, including arbitration,
mediation, and other similar proceedings.
Special government employee means an employee of the PBGC who is
retained, designated, appointed or employed to perform, with or without
compensation, for not to exceed one hundred and thirty days during any
three hundred and sixty-five consecutive days, temporary duties either
on a full-time or intermittent basis (18 U.S.C. 202).
Sec. 4905.3 General.
No PBGC employee or former employee may appear in any proceeding to
which this part applies to testify and/or produce documents or other
material unless authorized under this part.
Sec. 4905.4 Appearances by PBGC employees.
(a) Whenever a PBGC employee or former employee is requested or
served with compulsory process to appear in a proceeding to which this
part applies, he or she will promptly notify the General Counsel.
(b) The General Counsel or his or her designee will authorize an
appearance by a PBGC employee or former employee if, and to the extent,
he or she determines that such appearance is in the interest of the
PBGC.
[[Page 34134]]
(1) In determining whether an appearance is in the interest of the
PBGC, the General Counsel or his or her designee will consider relevant
factors, including:
(i) What, if any, objective of the PBGC (and, where relevant, any
federal agency, if the United States is a party) would be promoted by
the appearance;
(ii) Whether the appearance would unnecessarily interfere with the
employee's official duties;
(iii) Whether the appearance would result in the appearance of
improperly favoring one litigant over another; and
(iv) Whether the appearance is appropriate under applicable
substantive and procedural rules.
(2) If the General Counsel or his or her designee concludes that
compulsory process is essentially a request for PBGC record
information, it will be treated as a request under the Freedom of
Information Act, as amended, in accordance with part 4901 of this
chapter, except to the extent that the Privacy Act of 1974, as amended,
and part 4902 of this chapter govern disclosure of a record maintained
on an individual.
(c) If, in response to compulsory process in a proceeding to which
this part applies, the General Counsel or his or her designee has not
authorized an appearance by the return date, the employee or former
employee shall appear at the stated time and place (unless advised by
the General Counsel or his or her designee that process either was not
validly issued or served or has been withdrawn), accompanied by a PBGC
attorney, produce a copy of this part of the regulations, and
respectfully decline to provide any testimony or produce any documents
or other material. When the demand is under consideration, the employee
shall respectfully request that the court or other authority stay the
demand pending the employee's receipt of instructions from the General
Counsel.
Sec. 4905.5 Requests for authenticated copies of PBGC records.
The PBGC will grant requests for authenticated copies of PBGC
records, for purposes of admissibility under 28 U.S.C. 1733 and Rule 44
of the Federal Rules of Civil Procedure, for records that are to be
disclosed pursuant to this part or part 4901 of this chapter.
Appropriate fees will be charged for providing authenticated copies of
PBGC records, in accordance with part 4901, subpart D, of this chapter.
Sec. 4905.6 Penalty.
A PBGC employee who testifies or produces documents or other
material in violation of a provision of this part of the regulations
shall be subject to disciplinary action.
PART 4907--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF
HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE PENSION BENEFIT
GUARANTY CORPORATION
Sec.
4907.101 Purpose.
4907.102 Application.
4907.103 Definitions.
4907.104-4907.109 [Reserved]
4907.110 Self-evaluation.
4907.111 Notice.
4907.112-4907.129 [Reserved]
4907.130 General prohibitions against discrimination.
4907.131-4907.139 [Reserved]
4907.140 Employment.
4907.141-4907.148 [Reserved]
4907.149 Program accessibility: Discrimination prohibited.
4907.150 Program accessibility: Existing facilities.
4907.151 Program accessibility: New construction and alterations.
4907.152-4907.159 [Reserved]
4907.160 Communications.
4907.161-4907.169 [Reserved]
4907.170 Compliance procedures.
4907.171-4907.999 [Reserved]
Authority: 29 U.S.C. 794, 1302(b)(3).
Sec. 4907.101 Purpose.
This part effectuates section 119 of the Rehabilitation,
Comprehensive Services, and Developmental Disabilities Amendments of
1978, which amended section 504 of the Rehabilitation Act of 1973 to
prohibit discrimination on the basis of handicap in programs or
activities conducted by Executive agencies or the United States Postal
Service.
Sec. 4907.102 Application.
This part applies to all programs or activities conducted by the
agency.
Sec. 4907.103 Definitions.
For purposes of this part, the term--
Assistant Attorney General means the Assistant Attorney General,
Civil Rights Division, United States Department of Justice.
Auxiliary aids means services or devices that enable persons with
impaired sensory, manual, or speaking skills to have an equal
opportunity to participate in, and enjoy the benefits of, programs or
activities conducted by the agency. For example, auxiliary aids useful
for persons with impaired vision include readers, brailled materials,
audio recordings, telecommunications devices and other similar services
and devices. Auxiliary aids useful for persons with impaired hearing
include telephone handset amplifiers, telephones compatible with
hearing aids, telecommunication devices for deaf persons (TDD's),
interpreters, notetakers, written materials, and other similar services
and devices.
Complete complaint means a written statement that contains the
complainant's name and address and describes the agency's alleged
discriminatory action in sufficient detail to inform the agency of the
nature and date of the alleged violation of section 504. It shall be
signed by the complainant or by someone authorized to do so on his or
her behalf. Complaints filed on behalf of classes or third parties
shall describe or identify (by name, if possible) the alleged victims
of discrimination.
Facility means all or any portion of buildings, structures,
equipment, roads, walks, parking lots, rolling stock or other
conveyances, or other real or personal property.
Handicapped person means any person who has a physical or mental
impairment that substantially limits one or more major life activities,
has a record of such an impairment, or is regarded as having such an
impairment.
As used in this definition, the phrase:
(1) Physical or mental impairment includes--
(i) Any physiological disorder or condition, cosmetic
disfigurement, or anatomical loss affecting one or more of the
following body systems: Neurological; musculoskeletal; special sense
organs; respiratory, including speech organs; cardiovascular;
reproductive; digestive; genitourinary; hemic and lymphatic; skin; and
endocrine; or
(ii) Any mental or psychological disorder, such as mental
retardation, organic brain syndrome, emotional or mental illness, and
specific learning disabilities. The term ``physical or mental
impairment'' includes, but is not limited to, such diseases and
conditions as orthopedic, visual, speech, and hearing impairments,
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis,
cancer, heart disease, diabetes, mental retardation, emotional illness,
and drug addiction and alcoholism.
(2) Major life activities includes functions such as caring for
one's self, performing manual tasks, walking, seeing, hearing,
speaking, breathing, learning, and working.
(3) Has a record of such an impairment means has a history of, or
has been misclassified as having, a mental or physical impairment that
substantially limits one or more major life activities.
[[Page 34135]]
(4) Is regarded as having an impairment means--
(i) Has a physical or mental impairment that does not substantially
limit major life activities but is treated by the agency as
constituting such a limitation;
(ii) Has a physical or mental impairment that substantially limits
major life activities only as a result of the attitudes of others
toward such impairment; or
(iii) Has none of the impairments defined in subparagraph (1) of
this definition but is treated by the agency as having such an
impairment.
Historic preservation programs means programs conducted by the
agency that have preservation of historic properties as a primary
purpose.
Historic properties means those properties that are listed or
eligible for listing in the National Register of Historic Places or
properties designated as historic under a statute of the appropriate
State or local government body.
Qualified handicapped person means--
(1) With respect to preschool, elementary, or secondary education
services provided by the agency, a handicapped person who is a member
of a class of persons otherwise entitled by statute, regulation, or
agency policy to receive education services from the agency.
(2) With respect to any other agency program or activity under
which a person is required to perform services or to achieve a level of
accomplishment, a handicapped person who meets the essential
eligibility requirements and who can achieve the purpose of the program
or activity without modifications in the program or activity that the
agency can demonstrate would result in a fundamental alteration in its
nature;
(3) With respect to any other program or activity, a handicapped
person who meets the essential eligibility requirements for
participation in, or receipt of benefits from, that program or
activity; and
(4) Qualified handicapped person is defined for purposes of
employment in 29 CFR 1613.702(f), which is made applicable to this part
by Sec. 4907.140.
Section 504 means section 504 of the Rehabilitation Act of 1973
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617),
and the Rehabilitation, Comprehensive Services, and Developmental
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955). As
used in this part, section 504 applies only to programs or activities
conducted by Executive agencies and not to federally assisted programs.
Substantial impairment means a significant loss of the integrity of
finished materials, design quality, or special character resulting from
a permanent alteration.
Secs. 4907.104-4907.109 [Reserved]
Sec. 4907.110 Self-evaluation.
(a) The agency shall, by August 24, 1987, evaluate its current
policies and practices, and the effects thereof, that do not or may not
meet the requirements of this part, and, to the extent modification of
any such policies and practices is required, the agency shall proceed
to make the necessary modifications.
(b) The agency shall provide an opportunity to interested persons,
including handicapped persons or organizations representing handicapped
persons, to participate in the self-evaluation process by submitting
comments (both oral and written).
(c) The agency shall, until three years following the completion of
the self-evaluation, maintain on file and make available for public
inspection:
(1) a description of areas examined and any problems identified,
and
(2) a description of any modifications made.
Sec. 4907.111 Notice.
The agency shall make available to employees, applicants,
participants, beneficiaries, and other interested persons such
information regarding the provisions of this part and its applicability
to the programs or activities conducted by the agency, and make such
information available to them in such manner as the head of the agency
finds necessary to apprise such persons of the protections against
discrimination assured them by section 504 and this regulation.
Secs. 4907.112-4907.129 [Reserved]
Sec. 4907.130 General prohibitions against discrimination.
(a) No qualified handicapped person shall, on the basis of
handicap, be excluded from participation in, be denied the benefits of,
or otherwise be subjected to discrimination under any program or
activity conducted by the agency.
(b)(1) The agency, in providing any aid, benefit, or service, may
not, directly or through contractual, licensing, or other arrangements,
on the basis of handicap--
(i) Deny a qualified handicapped person the opportunity to
participate in or benefit from the aid, benefit, or service;
(ii) Afford a qualified handicapped person an opportunity to
participate in or benefit from the aid, benefit, or service that is not
equal to that afforded others;
(iii) Provide a qualified handicapped person with an aid, benefit,
or service that is not as effective in affording equal opportunity to
obtain the same result, to gain the same benefit, or to reach the same
level of achievement as that provided to others;
(iv) Provide different or separate aid, benefits, or services to
handicapped persons or to any class of handicapped persons than is
provided to others unless such action is necessary to provide qualified
handicapped persons with aid, benefits, or services that are as
effective as those provided to others;
(v) Deny a qualified handicapped person the opportunity to
participate as a member of planning or advisory boards; or
(vi) Otherwise limit a qualified handicapped person in the
enjoyment of any right, privilege, advantage, or opportunity enjoyed by
others receiving the aid, benefit, or service.
(2) The agency may not deny a qualified handicapped person the
opportunity to participate in programs or activities that are not
separate or different, despite the existence of permissibly separate or
different programs or activities.
(3) The agency may not, directly or through contractual or other
arrangements, utilize criteria or methods of administration the purpose
or effect of which would--
(i) Subject qualified handicapped persons to discrimination on the
basis of handicap; or
(ii) Defeat or substantially impair accomplishment of the
objectives of a program or activity with respect to handicapped
persons.
(4) The agency may not, in determining the site or location of a
facility, make selections the purpose or effect of which would--
(i) Exclude handicapped persons from, deny them the benefits of, or
otherwise subject them to discrimination under any program or activity
conducted by the agency; or
(ii) Defeat or substantially impair the accomplishment of the
objectives of a program or activity with respect to handicapped
persons.
(5) The agency, in the selection of procurement contractors, may
not use criteria that subject qualified handicapped persons to
discrimination on the basis of handicap.
[[Page 34136]]
(6) The agency may not administer a licensing or certification
program in a manner that subjects qualified handicapped persons to
discrimination on the basis of handicap, nor may the agency establish
requirements for the programs or activities of licensees or certified
entities that subject qualified handicapped persons to discrimination
on the basis of handicap. However, the programs or activities of
entities that are licensed or certified by the agency are not,
themselves, covered by this part.
(c) The exclusion of nonhandicapped persons from the benefits of a
program limited by Federal statute or Executive Order to handicapped
persons or the exclusion of a specific class of handicapped persons
from a program limited by Federal statute or Executive Order to a
different class of handicapped persons is not prohibited by this part.
(d) The agency shall administer programs and activities in the most
integrated setting appropriate to the needs of qualified handicapped
persons.
Secs. 4907.131-4907.139 [Reserved]
Sec. 4907.140 Employment.
No qualified handicapped person shall, on the basis of handicap, be
subjected to discrimination in employment under any program or activity
conducted by the agency. The definitions, requirements, and procedures
of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791), as
established by the Equal Employment Opportunity Commission in 29 CFR
part 1613, shall apply to employment in federally-conducted programs or
activities.
Secs. 4907.141-4907.148 [Reserved]
Sec. 4907.149 Program accessibility: Discrimination prohibited.
Except as otherwise provided in Sec. 4907.150, no qualified
handicapped person shall, because the agency's facilities are
inaccessible to or unusable by handicapped persons, be denied the
benefits of, be excluded from participation in, or otherwise be
subjected to discrimination under any program or activity conducted by
the agency.
Sec. 4907.150 Program accessibility: Existing facilities.
(a) General. The agency shall operate each program or activity so
that the program or activity, when viewed in its entirety, is readily
accessible to and usable by handicapped persons. This paragraph does
not--
(1) Necessarily require the agency to make each of its existing
facilities accessible to and usable by handicapped persons;
(2) In the case of historic preservation programs, require the
agency to take any action that would result in a substantial impairment
of significant historic features of an historic property; or
(3) Require the agency to take any action that it can demonstrate
would result in a fundamental alteration in the nature of a program or
activity or in undue financial and administrative burdens. In those
circumstances where agency personnel believe that the proposed action
would fundamentally alter the program or activity or would result in
undue financial and administrative burdens, the agency has the burden
of proving that compliance with Sec. 4907.150(a) would result in such
alteration or burdens. The decision that compliance would result in
such alteration or burdens must be made by the agency head or his or
her designee after considering all agency resources available for use
in the funding and operation of the conducted program or activity, and
must be accompanied by a written statement of the reasons for reaching
that conclusion. If an action would result in such an alteration or
such burdens, the agency shall take any other action that would not
result in such an alteration or such burdens but would nevertheless
ensure that handicapped persons receive the benefits and services of
the program or activity.
(b) Methods--
(1) General. The agency may comply with the requirements of this
section through such means as redesign of equipment, reassignment of
services to accessible buildings, assignment of aides to beneficiaries,
home visits, delivery of services at alternate accessible sites,
alteration of existing facilities and construction of new facilities,
use of accessible rolling stock, or any other methods that result in
making its programs or activities readily accessible to and usable by
handicapped persons. The agency is not required to make structural
changes in existing facilities where other methods are effective in
achieving compliance with this section. The agency, in making
alterations to existing buildings, shall meet accessibility
requirements to the extent compelled by the Architectural Barriers Act
of 1968, as amended (42 U.S.C. 4151-4157), and any regulations
implementing it. In choosing among available methods for meeting the
requirements of this section, the agency shall give priority to those
methods that offer programs and activities to qualified handicapped
persons in the most integrated setting appropriate.
(2) Historic preservation programs. In meeting the requirements of
Sec. 4907.150(a) in historic preservation programs, the agency shall
give priority to methods that provide physical access to handicapped
persons. In cases where a physical alteration to an historic property
is not required because of Sec. 4907.150 (a)(2) or (a)(3), alternative
methods of achieving program accessibility include--
(i) Using audio-visual materials and devices to depict those
portions of an historic property that cannot otherwise be made
accessible;
(ii) Assigning persons to guide handicapped persons into or through
portions of historic properties that cannot otherwise be made
accessible; or
(iii) Adopting other innovative methods.
(c) Time period for compliance. The agency shall comply with the
obligations established under this section by October 21, 1986, except
that where structural changes in facilities are undertaken, such
changes shall be made by August 22, 1989, but in any event as
expeditiously as possible.
(d) Transition plan. In the event that structural changes to
facilities will be undertaken to achieve program accessibility, the
agency shall develop, by February 23, 1987 a transition plan setting
forth the steps necessary to complete such changes. The agency shall
provide an opportunity to interested persons, including handicapped
persons or organizations representing handicapped persons, to
participate in the development of the transition plan by submitting
comments (both oral and written). A copy of the transition plan shall
be made available for public inspection. The plan shall, at a minimum--
(1) Identify physical obstacles in the agency's facilities that
limit the accessibility of its programs or activities to handicapped
persons;
(2) Describe in detail the methods that will be used to make the
facilities accessible;
(3) Specify the schedule for taking the steps necessary to achieve
compliance with this section and, if the time period of the transition
plan is longer than one year, identify steps that will be taken during
each year of the transition period; and
(4) Indicate the official responsible for implementation of the
plan.
Sec. 4907.151 Program accessibility: New construction and
alterations.
Each building or part of a building that is constructed or altered
by, on behalf of, or for the use of the agency shall be designed,
constructed, or
[[Page 34137]]
altered so as to be readily accessible to and usable by handicapped
persons. The definitions, requirements, and standards of the
Architectural Barriers Act (42 U.S.C. 4151-4157), as established in 41
CFR 101-19.600 to 101-19.607, apply to buildings covered by this
section.
Secs. 4907.152-4907.159 [Reserved]
Sec. 4907.160 Communications.
(a) The agency shall take appropriate steps to ensure effective
communication with applicants, participants, personnel of other Federal
entities, and members of the public.
(1) The agency shall furnish appropriate auxiliary aids where
necessary to afford a handicapped person an equal opportunity to
participate in, and enjoy the benefits of, a program or activity
conducted by the agency.
(i) In determining what type of auxiliary aid is necessary, the
agency shall give primary consideration to the requests of the
handicapped person.
(ii) The agency need not provide individually prescribed devices,
readers for personal use or study, or other devices of a personal
nature.
(2) Where the agency communicates with applicants and beneficiaries
by telephone, telecommunication devices for deaf person (TDD's) or
equally effective telecommunication systems shall be used.
(b) The agency shall ensure that interested persons, including
persons with impaired vision or hearing, can obtain information as to
the existence and location of accessible services, activities, and
facilities.
(c) The agency shall provide signage at a primary entrance to each
of its inaccessible facilities, directing users to a location at which
they can obtain information about accessible facilities. The
international symbol for accessibility shall be used at each primary
entrance of an accessible facility.
(d) This section does not require the agency to take any action
that it can demonstrate would result in a fundamental alteration in the
nature of a program or activity or in undue financial and
administrative burdens. In those circumstances where agency personnel
believe that the proposed action would fundamentally alter the program
or activity or would result in undue financial and administrative
burdens, the agency has the burden of proving that compliance with
Sec. 4907.160 would result in such alteration or burdens. The decision
that compliance would result in such alteration or burdens must be made
by the agency head or his or her designee after considering all agency
resources available for use in the funding and operation of the
conducted program or activity, and must be accompanied by a written
statement of the reasons for reaching that conclusion. If an action
required to comply with this section would result in such an alteration
or such burdens, the agency shall take any other action that would not
result in such an alteration or such burdens but would nevertheless
ensure that, to the maximum extent possible, handicapped persons
receive the benefits and services of the program or activity.
Secs. 4907.161-4907.169 [Reserved]
Sec. 4907.170 Compliance procedures.
(a) Except as provided in paragraph (b) of this section, this
section applies to all allegations of discrimination on the basis of
handicap in programs or activities conducted by the agency.
(b) The agency shall process complaints alleging violations of
section 504 with respect to employment according to the procedures
established by the Equal Employment Opportunity Commission in 29 CFR
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29
U.S.C. 791).
(c) The Equal Opportunity Manager shall be responsible for
coordinating implementation of this section. Complaints may be sent to
Equal Opportunity Manager, Human Resources Department, Pension Benefit
Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026.
(d) The agency shall accept and investigate all complete complaints
for which it has jurisdiction. All complete complaints must be filed
within 180 days of the alleged act of discrimination. The agency may
extend this time period for good cause.
(e) If the agency receives a complaint over which it does not have
jurisdiction, it shall promptly notify the complainant and shall make
reasonable efforts to refer the complaint to the appropriate government
entity.
(f) The agency shall notify the Architectural and Transportation
Barriers Compliance Board upon receipt of any complaint alleging that a
building or facility that is subject to the Architectural Barriers Act
of 1968, as amended (42 U.S.C. 4151-4157), or section 502 of the
Rehabilitation Act of 1973, as amended (29 U.S.C. 792), is not readily
accessible to and usable by handicapped persons.
(g) Within 180 days of the receipt of a complete complaint for
which it has jurisdiction, the agency shall notify the complainant of
the results of the investigation in a letter containing--
(1) Findings of fact and conclusions of law;
(2) A description of a remedy for each violation found; and
(3) A notice of the right to appeal.
(h) Appeals of the findings of fact and conclusions of law or
remedies must be filed by the complainant within 90 days of receipt
from the agency of the letter required by Sec. 4907.170(g). The agency
may extend this time for good cause.
(i) Timely appeals shall be accepted and processed by the head of
the agency.
(j) The head of the agency shall notify the complainant of the
results of the appeal within 60 days of the receipt of the request. If
the head of the agency determines that additional information is needed
from the complainant, he or she shall have 60 days from the date of
receipt of the additional information to make his or her determination
on the appeal.
(k) The time limits cited in paragraphs (g) and (j) of this section
may be extended with the permission of the Assistant Attorney General.
(l) The agency may delegate its authority for conducting complaint
investigations to other Federal agencies, except that the authority for
making the final determination may not be delegated to another agency.
Secs. 4907.171-4907.999 [Reserved]
[FR Doc. 96-16398 Filed 6-28-96; 8:45 am]
BILLING CODE 7708-01-P
Complete official Federal Register PDF
FR Doc. 96-16257 Federal Operating Permits Program
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 34202-34249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16257]
[[Page 34201]]
_______________________________________________________________________
Part IV
Environmental Protection Agency
_______________________________________________________________________
40 CFR Parts 9, 55 and 71
Federal Operating Permits Program; Final Rule
Federal Register / Vol. 61, No. 127 / Monday, July 1, 1996 / Rules
and Regulations
[[Page 34202]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 9, 55 and 71
[FRL-5526-7]
RIN 2060-AD68
Federal Operating Permits Program
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This action promulgates regulations setting forth the
procedures and terms under which the Administrator will administer
programs for issuing operating permits to covered stationary sources,
pursuant to title V of the Clean Air Act as amended in 1990 (Act).
Although the primary responsibility for issuing operating permits to
such sources rests with State, local, and Tribal air agencies, EPA will
remedy gaps in air quality protection by administering a Federal
operating permits program in areas lacking an EPA-approved or
adequately administered operating permits program. Federally issued
permits will clarify which requirements apply to sources and will
enhance understanding of and compliance with air quality regulations.
EFFECTIVE DATE: July 31, 1996.
FOR FURTHER INFORMATION CONTACT: Candace Carraway (telephone 919-541-
3189) or Kirt Cox (telephone 919-541-5399), U. S. Environmental
Protection Agency, Office of Air Quality Planning and Standards,
Information Transfer and Program Integration Division, Mail Drop 12,
Research Triangle Park, North Carolina 27711.
SUPPLEMENTARY INFORMATION:
Docket
Supporting information used in developing the promulgated rules is
contained in Docket No. A-93-51. Supporting information used in
developing 40 CFR part 70 is contained in Dockets No. A-90-33 and No.
A-93-50. These dockets are available for public inspection and copying
between 8:30 a.m. and 3:30 p.m. Monday through Friday at EPA's Air
Docket, Room M-1500, Waterside Mall, 401 M Street SW, Washington, D.C.
20460. A reasonable fee may be charged for copying.
Background Information Document
A background information document (BID) for the promulgated rule
may be obtained from the docket. Please refer to ``Federal Operating
Permits Program - Response to Comments.'' The BID contains a summary of
the public comments made on the proposed Federal Operating Permits
Program rule and EPA responses to the comments.
Regulated Entities
Entities potentially regulated by this action are major sources,
affected sources under title IV of the Act (acid rain sources), solid
waste incineration units required to obtain a permit under section 129
of the Act, and those areas sources subject to a standard under section
111 or 112 of the Act which have not been exempted or deferred from
title V permitting requirements. Regulated categories and entities
include:
------------------------------------------------------------------------
Category Examples of regulated entities
------------------------------------------------------------------------
Industry.......................... Major sources under title I or
section 112 of the Act; affected
sources under title IV of the Act
(acid rain sources); solid waste
incineration units required to
obtain a permit under section 129
of the Act; area sources subject to
new source performance standards or
national emission standards for
hazardous air pollutants that are
not exempted or deferred from
permitting requirements under title
V.
------------------------------------------------------------------------
This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
could potentially be regulated by this action. Other types of entities
not listed in the table could also be regulated. To determine whether
your facility is regulated by this action, you should carefully examine
the applicability criteria in section 71.3(a) of the rule. If you have
questions regarding the applicability of this action to a particular
entity, consult the person listed in the preceding FOR FURTHER
INFORMATION CONTACT section or the EPA Regional Office that is
administering the part 71 permit program for the State or area in which
the relevant source or facility is located.
Outline. The information presented in this preamble is organized as
follows:
I. Background
II. Summary of Promulgated Rule
III. Significant Changes to the Proposed Rule
IV. Administrative Requirements
A. Docket
B. Executive Order 12286
C. Regulatory Flexibility Act
D. Paperwork Reduction Act
E. Unfunded Mandates Reform Act
I. Background
A. Background of EPA's Development of the Proposed Part 71 Rule
Title V of the Act requires that if a permits program meeting the
requirements of title V has not been approved for any State by November
15, 1995, EPA must promulgate, administer, and enforce a Federal title
V program for that State (42 U.S.C. section 7661a(d)(3)). Thus, from
the date of enactment of the 1990 Amendments to the Act, EPA was
subject to a 5-year deadline to establish a Federal program for States
that do not obtain EPA approval of their State programs within that
time. The Act had also placed EPA under a 1-year deadline to promulgate
regulations establishing the minimum elements of approvable State
permit programs (42 U.S.C. section 7661a(b)). The EPA promulgated its
regulations establishing these criteria, codified at 40 CFR part 70
(the part 70 rule), on July 21, 1992 (57 FR 32250). States were then to
submit their title V programs for EPA review by November 15, 1993, and
EPA was to approve or disapprove those submitted programs within 1 year
of receiving them (42 U.S.C. section 7661a(d)(1)). Thus, under the
temporal scheme of title V, EPA was to approve or disapprove timely
submitted State title V programs by November 15, 1994, exactly 1 year
before EPA's duty to establish a Federal program for unapproved States
would ripen.
Almost immediately upon promulgation of part 70, numerous industry,
State and local government, and environmentalist petitioners challenged
EPA's final rule in litigation in the Court of Appeals. See Clean Air
Implementation Project v. EPA, No. 92-1303 (D.C. Cir.). Petitioners
identified dozens of issues to which they objected in the part 70 rule,
and EPA decided to conduct broad-based settlement discussions with all
petitioners concerning these issues. These discussions occurred for
over a year following the commencement of the litigation, and resulted
in EPA, with the consultation of all of the litigants, developing
proposed revisions to many provisions in the part 70 rule. These
provisions mainly concerned the flexibility provisions of part 70,
which governed when permits would need to be revised to reflect changes
in operation at sources, and the procedures by which permits would be
revised. On August 29, 1994, EPA published proposed substantial
revisions to part 70 reflecting the outcome of these discussions (59 FR
44460) (hereafter ``August 1994 proposed revisions to part 70''). That
proposal reflected EPA's
[[Page 34203]]
most current thinking at the time concerning the proper implementation
of title V, and departed in numerous respects from positions taken in
the existing promulgated part 70 rule.
When EPA began developing part 71 in the fall of 1993, settlement
discussions concerning part 70 were still ongoing and were yielding
what appeared to be fruitful results. The Agency believed at the time
that any needed revisions to part 70 would be finalized well in advance
of the deadline for establishing any necessary Federal programs, and so
decided to develop part 71 based on contemplated proposed revisions to
part 70, as EPA wished to model part 71 on its long-term implementation
goals for title V, rather than on provisions of a part 70 rule that EPA
did not believe would remain as promulgated in the current rule.
When EPA published its proposed revisions to part 70 in August
1994, the Agency still believed that the revisions would be finalized
in time for EPA to base its part 71 Federal program rule on the revised
part 70. Consequently, when EPA published its proposed part 71
regulations on April 27, 1995, the proposal was based on the August
1994 proposed revisions to part 70 (60 FR 20804; hereafter, ``part 71
proposal''). The part 71 proposal thus contained provisions concerning
critical definitions under title V, the scope of applicability of the
program to sources, requirements governing applications and permit
content, and, most significantly, operational flexibility and permit
revisions that departed from the current part 70 rule's corresponding
provisions. In the proposal notice, the Agency specifically solicited
comment on whether the Agency had appropriately based part 71 upon the
relevant provision of the existing part 70 rule and the recently
proposed revision to part 70. See 60 FR at 20805.
At the time of proposal of part 71, the Agency was aware of many
adverse comments on the August 1994 proposed revisions to part 70, and
EPA had engaged in discussions with stakeholders to obtain
recommendations for publishing a supplemental proposal to revise the
flexibility provisions of part 70. See 60 FR at 20805, 20817. The part
71 proposal notice indicated that the Agency believed it might not be
possible to promulgate final permit revision procedures for part 71, in
light of the ongoing discussions to develop part 70 permit revision
procedures in time to meet the statutory deadline for establishing
Federal programs in States lacking approved part 70 programs. As a
result, the notice suggested that EPA may have to finalize the part 71
rule in two phases, the first without any provisions for revising
permits, which would be addressed in a later supplemental proposal. Id.
Indeed, EPA's supplemental proposal for both parts 70 and 71, published
on August 31, 1995, described how part 71's future permit revision
procedures would be modelled upon the part 70 procedures for permit
revisions proposed in that notice (60 FR 45530; hereafter, ``August
1995 supplemental proposal'').
B. The Need for Part 71 To Facilitate Transition
In the part 71 proposal notice, EPA stressed the need for
implementation of part 71 to facilitate a smooth transition to State
implementation of title V through approved part 70 programs. See 60 FR
at 20805, 20816. The EPA continues to believe that Congress envisioned
that States would have primary responsibility for implementing title V,
just as they do for implementing much of the rest of the Act. See, for
example, section 101(a)(3) of the Act, in which Congress found that air
pollution prevention and air pollution control at its source is the
primary responsibility of States and local governments (42 U.S.C.
section 7401(a)(3)). Note also that under title V of the Act, Congress
gave States the initial opportunity to develop and administer title V
programs, while directing EPA to function as a backstop if States are
unable to adopt provisions under State law to take on title V
responsibilities, rather than directing EPA to establish the Federal
program first and then allowing States to apply to take over title V
administration, as under prior permitting programs such as the
prevention of significant deterioration (PSD) and the national
pollutant discharge elimination system (NPDES) under the Clean Water
Act.
The EPA believes that granting States primary responsibility to
implement title V makes good policy sense. States are far better
positioned than EPA to administer permitting programs covering their
resident sources for several reasons. First, States are more familiar
with the operational characteristics of resident sources, and with the
applicable requirements to which they are subject. In having had the
lead on developing State implementation plans (SIP's) and implementing
other provisions of the Act that apply to these sources, States have
developed substantial expertise in, among other things, running air
permit programs that govern new construction and changes in emissions
of air pollutants such as the new source review (NSR) and PSD programs.
States have developed enforcement programs based on this structure, and
are able to coordinate their permitting programs with the goals and
needs of their overall air pollution control programs. Finally,
compared to EPA Regional offices, States are simply closer to their
sources, have greater resources, and are better able to respond to the
regulated community and its needs for expeditious permit processing.
In light of this, EPA has repeatedly stated its belief that
federally-implemented part 71 programs would be of short duration,
lasting only until the few remaining States that have not developed
approvable part 70 programs are able to submit title V programs that
meet the requirements of the Act. Rather than viewing part 71 only as a
means of exerting leverage in States that have not yet adopted adequate
part 70 programs, EPA has also viewed part 71 as an opportunity to aid
States in taking up responsibility to implement title V. To this end,
EPA has attempted to structure the rule so that States in which part 71
programs are established will be able to use the program as an aid to
adopting and implementing their own part 70 programs. For example,
today's rule provides that States can take delegation of administration
of the Federal program in their States. If a State that for whatever
reason has not been successful in developing its own statutes and
regulations to implement title V is nevertheless capable of running a
Federal program, EPA sees no reason not to offer the State the
opportunity to more efficiently run the permit program than EPA
believes the Agency could. The EPA also believes that the experience of
running the Federal program may assist States in overcoming any
remaining hurdles that have so far prevented them from adopting
adequate title V programs under State law.
C. Basing Part 71 on the Part 70 Program
In the part 71 proposal notice, EPA stated its view that it is
appropriate to model part 71 procedures on those required by part 70,
in order to promote national consistency between title V programs that
are administered throughout the country. See 60 FR at 20816. Such
national consistency would ensure that sources are not faced with
substantially different programs simply because EPA, as opposed to
State agencies, is the relevant title V permitting authority, would
promote uniformity in affected State and public participation, and
would provide a level playing field for sources. Basing part 71 on part
70 would also encourage States
[[Page 34204]]
that are still developing their title V programs to take delegation of
the part 71 program, as it would be more consistent with the programs
they are preparing to implement under State law. States taking
delegation would in turn ensure smoother transition to State
administration of part 70 programs, as sources would have already
become familiar with the State as the title V permitting authority and
would not need to restart their permit application process anew when
the State program receives EPA approval.
Since at the time the part 71 proposal was being developed it
appeared to EPA that part 70 would soon be revised in many significant
respects, EPA chose to base the proposal upon the recent proposed
revisions to part 70, rather than on the existing promulgated rule.
This was due in part to the fact that the August 1994 proposed
revisions to part 70 addressed a number of basic issues under title V
that necessarily would govern how those issues are addressed in part 71
(such as the definition of major source and the necessary provisions to
implement section 502(b)(10) of the Act), and in part to the Agency's
wish to provide in the Federal rule many of the benefits of the August
1994 proposed revisions to part 70. As noted above, however, EPA
specifically asked commenters to address whether EPA had
inappropriately either followed or departed from the approaches taken
in both the current part 70 rule and its proposed revisions.
Echoing their comments on the August 1994 proposed revisions to
part 70, industry commenters unanimously argued that the permit
revisions procedures contained in the part 71 proposal were too complex
and confusing and would hinder sources' abilities to make rapid changes
in response to market needs. In addition, most industry commenters
presented three general arguments in response to EPA's proposal to
establish a uniform national part 71 rule based on the August 1994
proposed revisions to part 70. The first type of argument was that EPA
should not promulgate a uniform national part 71 rule at all, but
rather should develop part 71 programs case-by-case, taking into
account the specific characteristics of the State's existing air
program, and basing the State's part 71 program as much as possible on
the State's part 70 program that it has developed to date and that EPA
had not found to be inadequate. According to this argument, the best
way to facilitate transition from Federal to State implementation of
title V is to make sure the Federal and State programs are virtually
identical in each relevant State, even if that means the Federal
programs would differ from State to State. It would follow that EPA
should approve whatever adequate elements a State had adopted for its
title V program, and then only fill the remaining gaps with Federal
provisions as necessary. This argument also held that section 502 of
the Act actually requires a case-by-case approach to developing part 71
programs for States, and that the Act does not authorize EPA to
promulgate a nationally uniform rule.
While EPA agrees that in theory the smoothest transition from
Federal to State implementation might occur where the Federal program
is identical to the State's, the Agency does not agree that it is
inappropriate to promulgate a nationally uniform rule for part 71. At
the outset, EPA disagrees with the assertion that the Agency lacks
legal authority to establish a nationally uniform rule for part 71.
While section 502(d)(3) of the Act does require EPA to promulgate,
administer and enforce a title V program ``for'' any State that does
not obtain part 70 approval, 42 U.S.C. section 7661a(d)(3), that
language does not compel a separate State-by-State approach to
establishing a Federal title V program; nor does it compel a Federal
program that is based on the State's existing but as yet unapproved
State program. Indeed, EPA would be hard-pressed to base a Federal
program on a State program where no State program has ever been adopted
or submitted for EPA evaluation. Even if a State had adopted and
submitted a program, EPA stresses that the Agency can only evaluate the
adequacy of State programs through notice and comment rulemaking, which
might not occur before a Federal program is due. The EPA believes
Congress must have recognized the possibility that EPA would be called
upon to establish a Federal program even where a State has never
adopted any State program of its own or where a program had not been
submitted in time for EPA to find it adequate; in such situations, it
would be impossible for EPA to base the Federal program on the State's.
The EPA also believes that the resource burden of establishing and
implementing different case-by-case programs for States would overwhelm
EPA Regional offices and establishing a generic template for part 71 is
a far more efficient use of Agency resources to get the Federal program
up and running. The EPA has consequently concluded that a nationally
uniform regulation is necessary for purposes of carrying out the
Agency's functions under title V. Section 301(a)(1) of the Act
authorizes EPA to prescribe such regulations as are necessary to carry
out the Administrator's functions under the Act (42 U.S.C. section
7601(a)(1)). Thus, EPA believes it has ample statutory authority to
establish the most efficient and nationally consistent part 71
regulation possible. Finally, EPA notes that EPA's other permitting
programs under its environmental statutes, such as the NPDES program
and the PSD program, are governed by nationally uniform regulations,
implementation of which have been very successful. The EPA sees no
reason to depart from this established approach for purposes of running
Federal title V programs, especially since Congress clearly did
anticipate that EPA would first address title V through establishing
regulations that would govern the minimum elements of title V programs
to be administered by any air pollution control agency. See section
502(b) of the Act, 42 U.S.C. section 7661a(b).
The second type of industry argument in response to basing the part
71 proposal on the proposed revisions to part 70 stressed that EPA
should delay promulgation of any part 71 rule until the revisions to
part 70 are finalized. This argument pointed out that promulgating part
71 based on the August 1994 proposed revisions to part 70 would result
in the part 71 rule being based on an approach that the Agency itself
had begun to revise in developing the supplemental proposed revisions
to part 70 (which were eventually published just 4 months after the
date of the part 71 proposal). The argument noted that since EPA is
envisioning substantial changes to the part 70 rule, the part 71 rule
should not finalize title V issues that will remain in transition until
the part 70 rule is finally revised. This argument also specifically
responded adversely to EPA's statement in the proposal that it may be
necessary to split finalization of part 71 into two phases in which the
operational flexibility and permit revision procedures would remain
reserved until a second phase. In the view of these commenters, such
provisions are critical components of any part 71 rule that is adopted,
and it would not be appropriate to leave them out of part 71 for any
unspecified time. This argument also stated that finalizing part 71 now
based upon the proposed revisions to part 70 would actually impede
transition to approved State part 70 programs, since the Federal
program, and the approved State program based on the current part 70
that replaces it, would take very different approaches to such
fundamental issues as applicability of the program, operational
flexibility
[[Page 34205]]
and permit revision procedures. Finally, this argument offered a theory
that title V actually does not require EPA to adopt part 71 programs
for States until May 15, 1997; under this theory, a commenter argued
that the Act actually gives States until May 15, 1995, rather than
November 15, 1993, to submit initial title V programs, since States
have 18 months following the first ``due date'' to submit any remedies
to deficient programs and avoid sanctions that would fall after that
18-month period. The commenter would interpret the date on which the
18-month period expires as the date referred to in section 502(d)(3)
and argues that EPA is not required to promulgate a Federal program
until 2 years after the expiration of the 18-month period.
First, EPA is not persuaded by the commenter's argument that part
71 programs are not due until May 15, 1997. Section 502(d)(1) of the
Act clearly provides that States are to submit their title V programs
``[n]ot later than 3 years after the date of enactment of the Clean Air
Act Amendments of 1990,'' 42 U.S.C. section 7661a(d)(1), which occurred
on November 15, 1990. Moreover, section 502(d)(3) clearly refers to
``the date required for submission of such a program under paragraph
(1) (of section 502),'' 42 U.S.C. section 7661a(d)(3), as the trigger
for the 2-year period after which EPA must establish Federal programs.
There is no reference to any 18-month grace-period in section
502(d)(3), and EPA disputes the assertion that the date on which a
sanctions clock expires under section 502(d)(2) can be viewed as the
``real'' deadline for submission of State programs in the face of the
plain language of section 502(d)(1) and section 502(d)(3)'s reference
to the deadline in section 502(d)(1). Thus, while EPA is sympathetic to
concerns that finalizing part 71 in advance of the Agency finally
revising part 70 could result in the Agency promulgating provisions
that are essentially moving targets in the Federal rule, EPA does not
believe it has the authority to delay issuance of part 71 beyond the
deadline prescribed by Congress. Moreover, as a policy matter, EPA
believes it is necessary to put part 71 in place to aid States that to
date have unsuccessfully struggled to develop approvable title V
programs, as it is a potential vehicle for State administration of
title V (through delegation of part 71) even where obstacles remain
that block certain States from obtaining part 70 approval. The EPA does
not believe that the environmental benefits of title V should be
delayed simply due to the fact that some States have not been
successful at developing title V programs. Moreover, EPA does not feel
it would be appropriate to attempt to justify delaying promulgation and
implementation of the Federal program because of the continuing
difficulties in revising the part 70 rule. However, EPA is persuaded by
commenters that the part 71 rule should not contain gaps to be filled
in at a second stage for provisions for operational flexibility and
permit revisions, and is sympathetic to concerns that basing these
provisions on the August 1994 proposed revisions to part 70 might even
interfere with transition to State programs approved under the current
part 70 rule. These latter points are discussed in more detail below.
The third general type of industry argument in response to basing
part 71 on the August 1994 proposal was that if EPA must establish a
Federal program now, it should do so based on the existing part 70
rule, and revise the program later when part 70 is revised. This
argument recognized that EPA may simply be unable in certain cases to
base a State-specific part 71 program on an existing State program, but
stressed the fact that any program that the State is still struggling
to adopt would be based on the existing part 70 rule, rather than on
the proposed revisions thereto. The argument pointed out the fact that
under the August 1994 proposed revisions to part 70, EPA planned to
allow States several years following final promulgation before States
would be expected to implement new part 70 programs based on the
revised rule. Thus, commenters observed, States would likely be
developing and implementing part 70 programs based on the July 1992
rule for considerable time. In light of this, it would actually
interfere with smooth transition from Federal to State implementation
to base part 71 on the future part 70 rule, especially in light of the
fact that at this point how part 70 will be ultimately revised is only
speculative; rather, transition could be facilitated only where the
Federal rule resembles the model that the State rule is expected to
follow. States might be less inclined to take delegation of a Federal
rule that does not resemble existing part 70 and the State analogues
that are being developed, and thus sources would be more likely to be
faced with different permitting authorities under part 71 and part 70
programs. Moreover, the relevant guidance that EPA had issued to date
to aid implementation of the current rule, such as the Agency's ``White
Paper for Streamlined Development of Part 70 Permit Applications''
(herein referred to as the ``first white paper'') and the March 5, 1996
guidance document entitled ``White Paper Number 2 for Improved
Implementation of the Part 70 Operating Permits Program, could be less
valuable as an aid in implementing a Federal rule that is not based on
the current part 70, and both sources and part 71 permitting
authorities could be forced to start somewhat from scratch in
implementing the program.
The EPA agrees that the most appropriate course of action is to
promulgate, on an interim basis, part 71 based on the current part 70
rule. In reaching this conclusion, EPA was persuaded by concerns about
impeding transition to part 70 approval under the current rule and by
industry concerns about issuing a rule containing gaps regarding
operational flexibility and permit revisions. Moreover, as many issues
in part 70 are still outstanding following the August 1994 and August
1995 proposals, and as many of those issues concern key definitions and
procedures under title V, it would be premature for EPA to finalize
part 71 based upon the proposed revisions to part 70 until it makes
final decisions on these issues in part 70. Thus, the only way EPA can
fulfill its mandate to step in as the title V permitting authority for
States that have not obtained part 70 approval at this time, and to do
so by establishing a complete part 71 program that provides the
flexibility needed by industry and mandated by title V, is to
promulgate the rule based upon the current part 70 regulation. The EPA
stresses, however, that by finalizing this interim approach in part 71,
the Agency does not preclude itself from revising part 71 in the future
as based on appropriate aspects of either the August 1994, April 1995,
or August 1995 proposals for parts 70 and 71. In fact, EPA intends to
issue a second round of final rulemaking for part 71 (hereafter ``phase
II rulemaking) in the future once the Agency has resolved with relevant
stakeholders the outstanding issues and is prepared to promulgate final
revisions to part 70. As a general matter, EPA stresses that the most
current reflection of the Agency's intended policy regarding many of
these provisions is the August 31, 1995 supplemental proposal.
Consequently, while the provisions adopted today in part 71 that relate
to outstanding issues under the definitions, applicability, permit
application, permit content, permit revisions and reopenings, and
affected State and EPA review sections are consistent with the
corresponding
[[Page 34206]]
provisions in the existing part 70 rule, rather than with provisions in
the proposals mentioned above, it should be expected that EPA will
issue a second final rulemaking, without a second round of proposal, to
conform part 71 to the revised part 70 rule when the Agency is prepared
to issue it.
The EPA believes that this approach is a logical outgrowth of the
part 71 proposal issued in April 1995. While that proposal only
contained regulatory provisions based on the August 1994 proposed
revisions to part 70, EPA explicitly solicited comment on whether the
proposal was in any way inappropriately inconsistent with the current
part 70 rule. Clearly, the commenters noted such inconsistencies, and
the proposal facilitated meaningful comment on what approach the Agency
should take in promulgating part 71 vis-a-vis the outstanding issues in
the part 70 revision process. As discussed above, the proposal enabled
industry commenters to fall into three basic categories in response to
the proposal--in fact, many commenters advanced more than one of the
basic types of arguments in their comments, realizing that the
different arguments might have different force depending upon the
extent to which States had actually developed and submitted their own
programs. The approach adopted today was urged by numerous industry
commenters as the most reasonable in light of the need to issue a part
71 program now, as opposed to leaving gaps to be filled in later at a
second stage of final rulemaking. In addition, today's rule is
consistent with the existing part 70 rule under which States continue
to submit programs, and under which EPA continues to approve those
programs. Thus, EPA does not believe that a second round of proposed
rulemaking is necessary before finalizing part 71 to conform to the
Agency's currently effective regulation implementing title V, part 70.
In the following sections of this notice, the specific provisions
that are being finalized based upon current part 70 rather than upon
the provisions of the part 71 proposal are identified and further
discussed. For each of them, the general governing principle is that
while the Agency has proposed to revise part 70 to modify many of the
provisions corresponding to the part 71 provisions adopted today, EPA
is not yet prepared to adopt final positions on those issues and so, in
the interests of promoting smooth transition from Federal to State
implementation of title V, is choosing to issue, on an interim basis, a
part 71 rule that matches as closely as possible the existing part 70
rule. The EPA's finalization of those provisions today in no way
reflects the Agency's ultimate decision to renounce any of the
positions articulated in the proposed revisions to part 70 or the
corresponding proposals for part 71.
II. Summary of Promulgated Rule
A. Applicability
The Federal operating permits program requires all part 71 sources
to submit permit applications to the permitting authority no later than
within 1 year of the effective date of the program. The operating
permit program applies to the following sources:
1. Major sources, defined as follows:
a. Air toxics sources, as defined in section 112 of the Act, with
the potential to emit 10 tons per year (tpy), or more, of any hazardous
air pollutant (HAP) listed pursuant to 112(b); 25 tpy, or more, of any
combination of HAP listed pursuant to 112(b); or a lesser quantity of a
given pollutant, if the Administrator so specifies (501(2)(A)).
b. Sources of air pollutants, as defined in section 302, with the
potential to emit 100 tpy, or more, of any pollutant (501(2)(B)).
c. Sources subject to the nonattainment area provisions of title I,
part D, with the potential to emit, depending on the nonattainment area
designation 10 or more tpy of volatile organic compound (VOC) or oxides
of nitrogen, 50 or more tpy of carbon monoxide, and seventy or more tpy
of particulate matter (501(2)(B)).
2. Any other sources subject to a standard under section 111 or
112.
3. Sources subject to the acid rain program (501(1)).
4. Any source subject to the PSD program or the NSR program under
title I, part C or D.
5. Any other stationary source in a category EPA designates, in
whole or in part, by regulation, after notice and comment.
For purposes of determining applicability, a source's total
emissions of a pollutant are found by summing the potential emissions
of that pollutant from all emissions units under common control at the
same plant site. If a source is a major source, even if only due to the
total emissions from one pollutant, then a source must submit (with few
exceptions) a permit application that includes all emissions of all
regulated air pollutants from all emissions units located at the plant.
Part 71 follows the approach of part 70 in deferring nonmajor
sources from permitting requirements. The permitting requirements for
nonmajor sources subject to a standard under section 111 or 112 of the
Act prior to July 21, 1992 are deferred for 5 years from the effective
date of the first approved part 70 program that deferred nonmajor
sources. The EPA may determine on a case-by-case basis permitting
requirements for nonmajor sources when they become subject to new
section 111 or 112 standards. Sources subject to the new source
performance standard for new residential wood heaters or the national
emission standards for hazardous air pollutants for asbestos as it
applies to demolition and renovation activities are permanently exempt
from permitting requirements.
B. Program Implementation
The EPA will administer a part 71 program for those portions of a
State that lack EPA approval for its operating permits program or for a
State that fails to adequately administer and enforce an approved
program. However, the requirement that EPA establish a Federal program
for States lacking a fully approved program is suspended if a State
program is granted interim approval. The EPA will also administer part
71 programs in Tribal areas. Should a part 71 program become effective
prior to the issuance of part 70 permits to all sources (under an
approved part 70 program), EPA will require part 71 permit applications
from sources that have not received part 70 permits. Applications shall
be due within a year of the effective date of the part 71 program. The
EPA will take final action on at least one-third of the applications
annually.
Section 71.4 also establishes procedures that would be used for
issuing permits to certain sources located on the Outer Continental
Shelf (OCS) and after EPA objects to a proposed or issued State permit.
The EPA may also delegate the responsibility for administering the
part 71 program to the State or eligible Tribe if the requirements of
section 71.10 have been met. However, delegation will not constitute
approval of a State or Tribal operating permits program under part 70.
The EPA will suspend the issuance of part 71 permits upon
publication of notice of approval of a State or Tribal operating
permits program under part 70. The EPA or the delegate agency will
continue to administer and enforce part 71 permits until they are
replaced by permits issued under the approved part 70 program.
The EPA will publish a notice in the Federal Register informing the
public of the effective dates or delegation of any part 71 programs for
States, Tribal areas,
[[Page 34207]]
and OCS sources. Where practicable, EPA will also publish notice in a
newspaper of general circulation within the area subject to the part 71
program and will notify the affected government.
C. Permit Applications
Each source meeting the applicability criteria of this part is
required to submit timely and complete information on standard
application forms provided by the permitting authority. Streamlined
forms for electronic formats may be provided.
An initial part 71 permit application is required within 12 months
of the later of:
1. The effective date of this part in a State, Tribal area, or OCS
area where a source is located, unless the source has an existing part
70 permit;
2. The expiration of any deferral for a nonmajor source;
3. The date a source commences operation; or
4. The date a source meets any of the applicability criteria of
section 71.3.
Sources with part 70 permits in force at the time part 71 becomes
effective in the area where they are located would not have to apply
for a part 71 permit until their part 70 permit expires. Prior to its
expiration, the part 70 permit may be modified by EPA.
Sources would be notified of the requirement to submit an
application at least 180 days prior to when the application is due.
The permitting authority will perform a completeness determination
within 60 days of receipt of an application, or the application will be
deemed complete by default. A complete application would contain all
the information needed to begin processing the permit application,
including, at a minimum, a completed standard application form (or
forms) and a compliance plan.
The compliance plan describes how the source plans to maintain or
to achieve compliance with all applicable air quality requirements
under the Act. This plan must include a schedule of compliance and a
schedule for the source to submit progress reports to the permitting
authority. Each source must submit a compliance certification report in
which it certifies its status with respect to each requirement, and the
method used to determine the status.
Each operating permit application, report, or compliance
certification submitted pursuant to part 71 must include a
certification signed by a responsible official attesting to the truth,
accuracy, and completeness of the information submitted.
Applicants may be required to update information in the application
after the filing date and prior to the release of the draft permit.
D. Permit Content
Part 71 permits must meet all applicable requirements of the Act
and, among other things, must contain:
1. A 5-year term for acid rain sources, up to a 12-year term for
certain municipal waste combustors, and up to a 5-year term for all
other sources.
2. Limits and conditions to assure compliance with all applicable
requirements under the Act.
3. A schedule of compliance, where applicable.
4. Inspection, entry, monitoring, compliance certification,
recordkeeping, and reporting requirements to assure compliance with the
permit terms and conditions.
5. A provision describing permit reopening conditions.
6. Provisions under which the permit can be revised, terminated,
modified, or reissued for cause.
7. Provisions ensuring operational flexibility so that certain
changes can be made within a permitted facility without a permit
revision.
8. A provision that nothing in the permit or compliance plan
affects allowances under the acid rain program.
All terms and conditions in a part 71 permit, including any
provisions designed to limit a source's potential to emit, are
enforceable by the Administrator and citizens under the Act.
Like part 70, part 71 would allow sources to apply for a permit
shield, i.e., a provision in the permit that states that if the source
complies with terms and conditions of the permit, the source shall be
deemed in compliance with any applicable requirements reflected in the
permit as of the date of permit issuance.
E. Permit Issuance and Review
Regulations concerning the processes for permit issuance, review,
renewal, revision, and reopening are found in sections 71.7 and 71.11.
Briefly, these include:
1. Action on Applications for Permit Issuance and Permit Renewal
Section 71.7(a) describes the conditions that must be satisfied
before EPA or a delegate agency may issue a permit. These include
receipt of a complete application, compliance with public participation
requirements, and notification of affected States, Indian Tribes, and
EPA (if the program has been delegated). Except during the initial
phase-in of the program, the permitting authority is required to act on
permit applications within 18 months after receiving a complete
application.
The timely submittal of a complete application and any additional
required information creates a ``shield'' against enforcement for
failure to have a part 70 or part 71 permit. Permits being renewed are
subject to the same procedural requirements that apply to initial
permit issuance, as provided in section 71.7(c). The administrative
procedures for permit issuance are contained in section 71.11 and are
generally based on analogous provisions governing other EPA permitting
programs at 40 CFR part 124.
2. Permit Revisions
Sections 71.7 (d) and (e) outline the mechanisms for permit
modification and administrative amendments that are needed to revise
part 71 permits to accommodate changes that would otherwise violate
terms and conditions of the permit.
Administrative amendments can be accomplished by the permitting
authority without public or EPA review. These permit revisions include
correction of typographical errors, changes in address or source
ownership, as well as incorporation of requirements established under
State preconstruction review that meet certain procedural and
compliance requirements.
If a change is not prohibited or addressed by the permit, the
permittee may make the change after submitting a notice, and the permit
is revised at renewal.
The regulations establish minor and significant permit modification
procedures for changes that go beyond the activities allowed in the
original permit or that increase the total emissions allowed under the
permit.
Minor permit modifications reflect increases in permitted emissions
that do not amount to modifications under any requirement of title I
and that do not meet certain other requirements. Minor permit
modification procedures require a source to provide advance notice of
the proposed change, but allow a change to take effect prior to the
conclusion of the revision procedures.
A source that makes a change before the minor permit modification
has been issued does so at its own risk. It is not protected from
underlying applicable requirements by any shield. It is only afforded a
temporary exemption from the formal requirement that it operate in
accordance with the permit terms that it seeks to change in its
modification application. Should the proposed permit modification be
rejected, the source would be subject to enforcement
[[Page 34208]]
proceedings for any violation of these requirements.
Significant permit modifications are inherently more complex, and
will require additional time to accomplish. Permitting authorities will
initiate their review of the proposed changes after receipt of an
application.
Sources subject to requirements of the acid rain program must hold
allowances to cover their emissions of sulfur dioxide (SO2).
Allowance transactions registered by the Administrator will be
incorporated into the source's permit as a matter of law, without
following either the permit modification or amendment procedures
described above.
3. Reopening for Cause
The permitting authority may terminate, modify, or revoke and
reissue a permit for cause. Reopening and reissuing procedures follow
the same procedures as apply to initial issuance. Advance notice is
required before permit reopenings may be initiated.
Section 71.7(f) requires that permits issued to major sources with
3 or more years remaining in the permit's term be reopened to
incorporate applicable requirements which are promulgated after the
issuance of the permit. Revisions must be made as expeditiously as
practicable, but no later than 18 months after the promulgation of such
additional requirements.
4. Permit Notification to EPA and Affected States
Consistent with 40 CFR section 70.8(b), EPA or the delegate agency
would be required to provide notice of draft permits to all affected
States and to certain Indian Tribes.
Affected States are those whose air quality may be affected and
that are contiguous to the State in which the source is located, or
that are within 50 miles of the source. The permitting authority must
give affected States an opportunity to submit written recommendations
for the permit and notify any affected State in writing of any refusal
to accept all of its recommendations.
Although Indian Tribes are not considered affected States unless
they establish their compliance with criteria for being treated in the
same manner as States pursuant to section 301(d) of the Act, the Agency
believes federally recognized Tribes should be given notice of draft
permits that may be issued to sources that could affect Tribal air
quality. The regulation requires that the permitting authority send
such notices.
The Act authorizes EPA to object to any permit that would not be in
compliance with the applicable requirements of the Act. In the case of
a delegated program, the permitting authority may not issue a part 71
permit if the Administrator has objected to its issuance in writing
within 45 days of receipt of the proposed permit.
5. Administrative and Judicial Review
After the close of the public comment period on a draft permit, the
permitting authority will issue a final permit decision. Within 30 days
of the final permit decision, anyone who filed comments on the draft
permit or participated in the public hearing may petition the
Environmental Appeals Board (EAB) to review any condition of the
permit. In general, the objections in the petition must have been
raised during the public participation period on the permit. The
petition will stay the effectiveness of the specific terms of the
permit which are the subject of the request for review, pending
conclusion of the appeal proceedings.
The EAB will issue an order either granting or denying the petition
for review. To the extent review is denied, the conditions of the final
permit decision become final agency action and are subject to judicial
review in the United States Court of Appeals under section 307(b) of
the Act. The decision of the EAB to issue or deny the permit is also
subject to judicial review.
Interested persons (including permitees) are authorized to petition
the Administrator to reopen an already issued permit for cause.
Petitions would be required to be in writing and to contain facts or
reasons supporting the request.
F. Permit Fees
Section 71.9 establishes the Federal operating permits program fee
requirements for owners or operators of part 71 sources. The fees must
be sufficient to cover the permits program costs, including the
following:
1. Reviewing and acting on any permit, permit revision, or permit
renewal, and processing permit reopenings.
2. Administering the permit program.
3. Implementing and enforcing the terms of any part 71 permit.
4. Monitoring, modeling, manipulating, and tracking emissions.
5. Providing support to small business stationary sources.
Consistent with the two-phased approach to part 71 promulgation
described in this notice, EPA is today implementing a two-phased
approach to part 71 fee requirements. Phase I fee collection will be
sufficient to cover Phase I costs. Since Phase II fee collection is
associated with permit revision procedures, a fee amount for Phase II
cannot be finalized in today's rule. The Phase II fee will add the
costs for the permit revision procedures that are finalized in that
rulemaking.
The dollar per ton fee will vary depending on the implementation
mechanism EPA uses to administer a part 71 program. A program that is
administered completely by EPA would charge $32 per ton per year (ton/
yr). Permit fees for a program for which EPA relies on contractor
assistance to the greatest extent possible would be approximately $57
per ton/yr. Program costs (and fees) would vary among part 71 programs
depending on the hourly rate paid to the contractor for its work on the
particular State's part 71 program. The costs of a program that is
staffed in part by EPA employees and in part by contractors or by the
delegate agency would vary in accordance with the percentage of
personnel time allocated to non-EPA staff and the hourly rate paid to
the contractor for its work on the State's part 71 program.
The EPA may suspend collection of part 71 fees for part 71 programs
which are fully delegated to States and for which EPA incurs no
administrative costs.
The EPA may promulgate a separate fee schedule for a particular
part 71 program if the Administrator determines that the fee schedule
in the rule does not adequately reflect the cost of administering the
program.
Sources are required to submit fee calculation worksheets and fees
at the same time as their initial permit applications are due and
thereafter on an annual basis.
Part 71 program costs and permit fees will be reviewed by the
Administrator at least every 2 years, and changes will be made to the
fee schedule as necessary to reflect permit program costs.
G. Federal Oversight of Delegated Programs
Section 71.10 establishes the procedures EPA would follow when
delegating the authority to administer a part 71 program to a State,
eligible Indian Tribe, or other air pollution control agency. The EPA
will delegate authority to run the program where possible in order to
take advantage of existing expertise of the delegate agency or where it
seems probable that the delegate agency's submitted part 70 program
will be approved within a short time by EPA, provided in both cases
that the delegate agency has the authority to administer the program
that would be delegated.
[[Page 34209]]
A delegate agency must submit a formal request for delegation and
other documentation that shows the agency or eligible Tribe has
adequate legal authority and capacity to administer and enforce the
part 71 program. If the request for delegation is accepted, EPA and the
delegate agency will enter into an agreement that sets forth the terms
and conditions of the delegation.
As part of its oversight of delegated programs, EPA would review
copies of applications, compliance plans, proposed permits and final
permits that the delegate agency would be required to send to EPA. The
EPA would have 45 days in which to review proposed permits. If EPA
objects to the issuance of a permit within that time, the delegate
agency would be required to revise and resubmit the proposed permit to
EPA.
Delegation of a part 71 program would not relieve a State of its
obligation to submit an approvable part 70 program, nor from any
sanctions that the Administrator may apply for the State's failure to
have an approved part 70 program.
H. Enforcement
The Federal enforcement authority available under section 113 of
the Act for violations of title V and the regulations thereunder
provides broader enforcement authority than States are required to have
under the part 70 regulations. Examples of the Federal enforcement
authorities available under the Act include, but are not limited to,
the authority to: (1) restrain or enjoin immediately any person by
order or by suit in court from engaging in any activity in violation of
the Act that is presenting an imminent and substantial endangerment to
the public health or welfare, or the environment; (2) seek injunctive
relief in court to enjoin any violation of the Act; (3) issue
administrative orders that assess civil administrative penalties; (4)
assess and recover civil penalties; and (5) assess criminal fines.
III. Significant Changes to the Proposed Regulations
A. Section 71.2--Definitions
The Agency has adopted definitions in today's rulemaking that are
consistent with and are mainly modelled on corresponding definitions in
the current part 70 rule, rather than on the part 71 proposal.
Consequently, many of the definitions adopted today differ from those
contained in the part 71 proposal which were largely based upon the
August 1994 proposed revisions to corresponding definitions in part 70
which the Agency is not yet prepared to finalize.
Several definitions found in the proposed section 71.2 have been
revised to conform more closely to the definitions used in the current
part 70 rule. These include ``affected State,'' ``applicable
requirements,'' ``final permit,'' ``major source,'' ``permit
revision,'' ``permitting authority,'' and ``responsible official,''
each of which is discussed briefly below. Similarly, EPA adopted
definitions for ``permit modification'' and ``section 502(b)(10)
change'' from the current part 70 rule, because these terms are
integral parts of today's rulemaking, which is based on the existing
part 70 regulations. Also, several definitions in the part 71 proposal
describe terms and concepts that the Agency has concluded are either
not necessary or are not ready to be finalized in today's rulemaking.
The terms for which EPA has not adopted a definition include
``insignificant activity or emissions,'' ``major new source review,''
``minor new source review,'' ``potential to emit,'' ``title I
modification,'' and ``Tribal area.'' To the extent these proposed terms
were based on the August 1994 proposed revisions to part 70, EPA will
finally address them in the Phase II rulemaking.
In addition, the Agency has retained several definitions found in
the part 71 proposal that are not found in the current part 70 rule,
but are needed for part 71. These include definitions for ``delegate
agency,'' ``part 71 permit,'' ``part 71 program,'' and ``part 71
source.'' The Agency has also adopted definitions for ``eligible Indian
Tribe,'' ``Federal Indian reservation,'' and ``Indian Tribe,'' which
were added to clarify which Tribes would be eligible to receive
delegation of the part 71 program and to be considered ``affected
States.''
The part 71 proposal and the August 1995 supplemental proposal
reflect the Agency's position on what definitions would be appropriate
in conjunction with the permit revision procedures, operational
flexibility provisions, and other provisions that have been proposed
for finalization in the Phase II rulemaking. Subsequent to reviewing
all of the comments on both of these proposals, EPA may finalize
definitions that differ from those adopted today.
1. Affected States
a. Indian Tribes. The EPA received numerous comments from Indian
Tribes suggesting that federally recognized Indian Tribes should be
considered to be ``affected States'' if their air quality may be
affected or the Tribal area is contiguous to the State in which the
permittee is located or is within 50 miles of the permittee. They
contended that Tribes should not have to meet any type of eligibility
criteria in order to be considered an ``affected State.'' Contrary to
the view of these commenters, the EPA interprets section 301(d)(2) of
the Act as authorizing the Agency to treat Indian Tribes in the same
manner as a State for purposes of being an ``affected State'' only when
EPA has determined that the Indian Tribe has demonstrated that it has
met the eligibility criteria of section 301(d)(2) of the Act. The
second paragraph of the proposed definition of ``affected State'' was
inconsistent with this interpretation in that it would have treated
Tribes in the same manner as States if the permitting action concerned
a source located in a Tribal area, regardless of the Tribe's
eligibility status. Therefore, EPA has amended this paragraph to
include the same eligibility requirement as the first paragraph. That
is, that the Indian Tribe must have demonstrated that it has met the
eligibility criteria of section 301(d)(2). However, in the interest of
furthering government-to-government relationships with Tribes, EPA has
adopted a provision in section 71.8 that requires the part 71
permitting authority to provide notice of draft permits to any
federally recognized Indian Tribe whose air quality may be affected by
the permitting actions and whose reservation or Tribal area is
contiguous to the jurisdiction in which the part 71 permit is proposed
or is within 50 miles of the permitted source. (See discussion at
section III.G. of this notice.)
b. Local agencies. The proposed definition of ``affected State'' in
the part 71 proposal added language not found in the current part 70
definition of ``affected State'' to the effect that, when a part 71
permit, permit modification, or permit renewal is proposed for a source
located within the jurisdiction of a local agency, that agency would be
considered an affected State. Today's rulemaking retains this approach
because it pertains to a situation which is unique to part 71, i.e.,
when EPA administers a part 71 program in an area where the local
agency would normally be the permitting authority of record under an
approved part 70 program. The proposal also differed from today's
rulemaking in that under the proposal, local agencies would not
otherwise be considered affected States. Since the approach taken to
such jurisdictions is an issue for both parts 70 and 71, it will be
addressed in the Phase II rulemaking. In the interim, the proposed
language has been deleted to comport with the current part 70
definition.
[[Page 34210]]
2. Applicable Requirements
The part 71 proposal expanded the part 70 definition of
``applicable requirement'' to include the provision that any
requirement enforceable by the Administrator and by citizens under the
Act which limits emissions for the purpose of creating offset credits
or avoiding any applicability requirement is itself an applicable
requirement. This addition, while helpful for understanding what
constitutes an applicable requirement, was based on the August 1994
proposed revisions to part 70, which EPA is not yet prepared to finally
promulgate. As such, EPA believes it is not appropriate to finalize
this change for purposes of part 71 at this time, but intends to
address this issue in the Phase II rulemaking. It was therefore deleted
to comport with the current part 70 definition.
The definition of ``applicable requirement'' in the part 71
proposal also differed from the definition in the current part 70 rule
in that it limited the title VI requirements that would have to be
included in a title V permit. This proposed language, while consistent
with the August 1994 proposed revisions to part 70, which, again, EPA
is not yet prepared to finalize, was removed so that the definition
would conform to the definition in the current part 70 regulation.
3. Final Permit
The proposal contained a proposed definition of ``final action or
final permit action.'' The final rule changes this term to ``final
permit'' in order to better harmonize the definition with the term
``final permit'' in the current part 70 regulation promulgated at
section 70.2.
4. Major Source
The proposed part 71 rule contained a definition of ``major
source'' that was based on the proposed change to the term contained in
the August 1994 proposed revisions to part 70. Since publication of the
part 71 proposal, EPA has also proposed additional changes to the term
in the August 1995 supplemental proposal for parts 70 and 71. The EPA
is currently in the process of reviewing, evaluating and developing
positions in response to comments on this very important term and other
issues raised in the August 1995 proposal. Consequently, EPA is not yet
prepared to promulgate part 71 in general, or the major source
definition in particular, as based on the August 1994, April 1995 or
August 1995 proposals. The only exception to this approach is in regard
to source categories for which fugitive emissions are to be counted in
determining whether a source is a major source under section 302 of the
Act.
Consistent with PSD and nonattainment NSR, current part 70 requires
the counting of fugitive emissions from source categories which have
been listed pursuant to section 302(j) in major source applicability
determinations. See the definition of ``major source'' at 40 CFR
section 70.2. The one difference, however, between the list of source
categories under PSD and nonattainment NSR and current part 70 is in
regard to the 27th category of sources that are required to count
fugitive emissions. In parts 51 and 52, the 27th category is stated as
follows:
Any other stationary source category which, as of August 7,
1980, is being regulated under section 111 or 112 of the Act.
In current part 70, the 27th category reads as follows:
All other stationary source categories regulated by a standard
promulgated under section 111 or 112 of the Act, but only with
respect to those air pollutants that have been regulated for that
category;
As can be seen from the above, one of the principal differences
between these two paragraphs is the date of August 7, 1980, which is
specified in the PSD and nonattainment NSR regulations, but is absent
from the current part 70 regulation. The result of this difference is
that part 70 literally requires sources to count fugitives even where
those sources are not required to do so in determining whether they are
major for purposes of PSD or nonattainment NSR. As stated in the
preamble to the August 1994 part 70 proposal, EPA acknowledges that it
did not follow the procedural steps necessary under section 302(j) to
expand the scope of sources in this category for which fugitives must
be counted in part 70 major source determinations. See memorandum of
June 2, 1995, entitled ``EPA Reconsideration of Application of
Collocation Rules to Unlisted Sources of Fugitive Emissions for
Purposes of Title V Permitting,'' from Lydia Wegman, Deputy Director,
Office of Air Quality Planning and Standards, to Regional Air
Directors. Instead of perpetuating this problem by following this
aspect of current part 70, and even though the Agency is not yet ready
to finalize the approach taken in the August 1995 supplemental proposal
for parts 70 and 71, EPA believes that an appropriate interim solution
is to finalize this category similar to how it was proposed in the
April 1995 part 71 proposal and consistent with the provisions in the
PSD and nonattainment NSR regulations. As a result, the 27th category
will read as follows:
Any other stationary source category which, as of August 7,
1980, is being regulated under section 111 or 112 of the Act.
Use of the above language best ensures that, until EPA is prepared to
finalize part 70's proposed revisions, there will be no discrepancy
between the treatment of fugitive emissions under PSD and nonattainment
NSR and the corresponding provision in this phase I part 71 rule. This
language further ensures that sources which are considered major
sources under PSD and nonattainment NSR are also major sources under
part 71. This consistency is compelled by section 501(2) which requires
any stationary source to be considered major under title V if it is a
major source under section 112 or a major stationary source under
section 302 or part D of title I.
It is important to remember that EPA has proposed additional
modifications to the list of source categories, including this 27th
category, in the August 1995 proposal for parts 70 and 71. However, as
EPA is currently in the process of reviewing and evaluating comments
regarding these revisions, EPA cannot at this time finalize any of
these proposed modifications.
The EPA stresses that the definition of major source in today's
rulemaking does not constitute a decision to reject other proposed
changes to the term contained in the recent proposals. Rather, EPA
expects the Phase II part 71 rulemaking to make whatever changes to the
term are necessary in order to maintain harmonization with part 70, if
the part 70 definition of major source is ultimately revised as the
Agency intends. In the meantime, however, in order to avoid delay in
fulfilling the Agency's responsibilities under title V, and in order to
avoid repeating a procedural mistake that occurred in the development
of the first part 70 rule, EPA has concluded, in response to the
commenters, that at this point it is most reasonable to promulgate a
definition that is consistent with the major source definition
contained in the current part 70 rule, except for the 27th category of
sources listed pursuant to section 302(j). As EPA has already told
States that they may receive interim approval of their State programs
even if they do not literally match with current part 70's 27th
category, due to EPA's concession that the Agency did not take the
procedural steps necessary in part 70 to constitute a section 302(j)
rulemaking, EPA believes it is reasonable to take this limited
departure from part 70. The EPA will respond to specific comments on
[[Page 34211]]
the major source definition as proposed in April 1995 and August 1995
in the context of finalizing the Phase II part 71 rule.
5. Permit Modification and Permit Revision
For the purposes of this rulemaking, EPA adopted the definition of
permit modification in the current part 70 regulation and revised the
definition of ``permit revision'' to be consistent with the current
part 70 definition.
6. Permitting Authority
The final rule changes the proposed definition of ``permitting
authority'' to more closely match the definition of the term currently
promulgated at section 70.2.
7. Potential to Emit
Today's rule does not include a final regulatory definition of the
term ``potential to emit.'' The part 71 proposal contained a proposed
definition of potential to emit that was based on the August 1994
proposed revisions to part 70. The current part 70 definition of the
term provides that physical or operational limits on a source's
capacity to emit an air pollutant shall be considered part of the
source's design if the limitation is enforceable by the Administrator.
Under the proposed definition, the phrase ``and by citizens under the
Act'' would have been added. The EPA is still in the process of
evaluating comments on the proposed revisions to part 70 with respect
to this issue, and is not yet prepared to adopt the revision to the
definition into a final rule. Consequently, it is premature to adopt
this change into the final part 71 rule at this time.
In addition, EPA also received substantial adverse comment on the
proposed requirement that limitations on potential to emit be
enforceable by the Administrator (i.e., ``federally enforceable'').
Industry commenters noted that EPA's policy on Federal enforceability
was the subject of several pending lawsuits against the Agency in the
Court of Appeals. These commenters have long held that emissions
limitations enforceable under State law should not have to be federally
enforceable in order to be considered part of a source's physical or
operational design and a valid limit on potential to emit. These
commenters also urged EPA to codify the Agency's January 25, 1995,
memorandum in which EPA stated it would not require certain sources
that otherwise have the potential to emit an air pollutant in major
amounts to obtain permits under state part 70 programs. See, memorandum
of January 25, 1995, entitled ``Options for Limiting the Potential to
Emit (PTE) of a Stationary Source Under Section 112 and Title V of the
Clean Air Act (Act),'' from John Seitz, Director, Office of Air Quality
Planning and Standards, to Regional Air Division Directors (hereafter
``January 25, 1995 memorandum from John Seitz'').
Since the close of the comment period, the U.S. Court of Appeals
for the District of Columbia Circuit has ruled on two occasions that
EPA in two separate regulations had failed to explain why the Agency
had adopted a restrictive interpretation of ``potential to emit.'' See
National Mining Association v. EPA, 59 F.3d 1351 (D.C. Cir. July 21,
1995), and Chemical Manufacturers Association v. EPA, No. 89-1514 (D.C.
Cir. Sept. 15, 1995). In response to these rulings, EPA has begun a
rulemaking effort that would consistently apply to all of its
regulations and programs that base applicability on sources' potential
to emit. This rulemaking will address potential to emit not only in the
regulations that were the subject of the two court rulings (EPA's
``General Provisions'' regulations under section 112 of the Act
promulgated at 40 CFR part 63, and the NSR and PSD regulations at parts
51 and 52), but also to parts 70 and 71.
In the meantime, however, the Agency believes it would not be
appropriate to delay issuance of the part 71 regulation (and
implementation of the Federal operating permit program in States that
have not yet obtained part 70 approval) due to the pendency of the
Agency's general potential to emit rulemaking. At the same time, EPA
does not believe it would be appropriate to merely recodify the part 70
definition of potential to emit in this Phase I part 71 rule, in light
of the recent court decisions concerning the section 112 and NSR and
PSD regulations. Consequently, for this interim part 71 rule, EPA is
not adopting a regulatory definition of potential to emit for purposes
of part 71. This definition will be added to part 71 at a later time,
when the Agency completes its general rulemaking to define potential to
emit for its various stationary source programs under the Act.
Nevertheless, the absence of a regulatory definition of potential
to emit in today's rule should not prevent sources from being able to
determine whether they are subject to the part 71 program because they
are major sources. The EPA stresses that the term ``major source'' is
already defined as a statutory matter in title V at section 501(2) of
the Act to mean a major source as defined in section 112 and a major
stationary source as defined in section 302 or part D of title I of the
Act. Moreover, the definition of major source adopted today also tracks
these statutory provisions, and, as discussed in the recent memorandum
entitled ``Interim Policy on Federal Enforceability Requirement for
Limitations on Potential to Emit,'' from John Seitz, Director, Office
of Air Quality Planning and Standards (hereafter January 22, 1996
memorandum from John Seitz), most current regulatory requirements and
policies regarding potential to emit, including the interim policy
discussed in the January 25, 1995 Seitz memorandum, remain in effect
while EPA conducts expedited rulemaking to address these issues in
detail. Consequently, in determining whether a source is major, the
part 71 permitting authority and source operator should look to the
regulatory definition of major source adopted in today's rule and the
statutory definitions in section 112, section 302, and part D of title
I (as those provisions are implemented by applicable regul
FR Doc. 96-16257 Federal Operating Permits Program
ations
thereunder) as controlling for purposes of this Phase I part 71 rule.
In National Mining Association v. EPA, 59 F.3d 1351 (D.C. Cir. July
21, 1995), the Court dealt with the potential to emit definition under
the hazardous air pollutant programs promulgated pursuant to section
112. In this decision, the Court agreed with EPA that only
``effective'' State-issued controls should be cognizable in limiting
potential to emit. In addition, the Court did not question the validity
of current federally enforceable mechanisms in limiting potential to
emit. However, the Court found that EPA had not adequately explained
why only federally enforceable measures should be considered in
assessing the effectiveness of State-issued controls. Accordingly, the
Court remanded the section 112 General Provisions regulation to EPA for
further proceedings. Thus, EPA must either provide a better explanation
as to why Federal enforceability promotes the effectiveness of State
controls, or remove the exclusive Federal enforceability requirement.
The Court did not vacate the section 112 regulations, and they remain
in effect pending completion of EPA rulemaking proceedings in response
to the Court's remand.
The EPA reiterates that independent from the decision in National
Mining, current EPA policy already recognizes State-enforceable
potential to emit limits under section 112 and title V in many
circumstances under the
[[Page 34212]]
transition policy discussed in the January 25, 1995 John Seitz
memorandum, as recently revised by the January 22, 1996 John Seitz
memorandum. In recognition of the absence in some States of suitable
federally enforceable mechanisms to limit potential to emit applicable
to sources that might otherwise be subject to section 112 major source
requirements or to title V, EPA's policy provides for the consideration
of State-enforceable limits as a gap-filling measure during a
transition period that extends until January 1997. Under this policy,
restrictions contained in State permits issued to sources that actually
emit more than 50 percent, but less than 100 percent, of a relevant
major source threshold are treated by EPA as acceptable limits on
potential to emit, provided that the permit and the restriction in
particular are enforceable as a practical matter. In addition, sources
with consistently low levels of actual emissions relative to major
source thresholds can avoid section 112 major source requirements even
absent any permit or other enforceable limit on potential to emit.
Specifically, the policy provides that sources which maintain their
emissions at levels that do not exceed 50 percent of any applicable
major source threshold are not treated as major sources and do not need
a permit to limit potential to emit, so long as they maintain adequate
records to demonstrate that the 50 percent level is not exceeded.
Under today's Phase I part 71 rule, sources that are not treated as
major under this policy would also not be treated as major for purposes
of part 71. However, if a source would be treated as major under the
applicable regulations implementing section 112 and this policy, the
source would be required to obtain a part 71 permit. The EPA notes that
this policy is to end in January 1997. In conjunction with the general
rulemaking on potential to emit, EPA will consider whether it is
appropriate to extend the transition period beyond January 1997.
In Chemical Manufacturers Association v. EPA, No. 89-1514 (D.C.
Cir. Sept. 15, 1995), the Court addressed the potential to emit
definition in the PSD and NSR programs. Specifically, this case
challenged the June 1989 rulemaking in which EPA reaffirmed the
requirement for Federal enforceability of potential to emit limits
taken to avoid major source permitting requirements in these programs.
In a briefly worded judgment, the Court, in light of National Mining,
remanded the PSD and NSR regulations to EPA. In addition, in contrast
to its disposition of the section 112 regulations in National Mining,
the Court in Chemical Manufacturers vacated the federal enforceability
requirement of the potential to emit definitions in the PSD and NSR
regulations.
The EPA interprets the Court's decision to vacate the PSD/NSR
Federal enforceability requirement as causing an immediate change in
how EPA regulations should be read, although EPA expects that the
effect of this change will be limited. Specifically, regarding
provisions of the definitions of potential to emit and related
definitions requiring that physical or operational changes or
limitations be ``federally enforceable'' to be taken into account in
determining PSD/NSR applicability, the term ``federally enforceable''
should now be read to mean ``federally enforceable or legally and
practically enforceable by a State or local air pollution control
agency.''
However, the effects of the vacatur will be limited during the
period prior to completion of new EPA rulemaking on this issue. Thus,
during this interim period, Federal enforceability is still required to
create ``synthetic minor'' new and modified sources in most
circumstances pending completion of EPA rulemaking. This is because EPA
interprets the order vacating certain provisions of the PSD/NSR
regulations as not affecting the provisions of any current State or
Federal implementation plan (SIP or FIP), or of any permit issued under
any current SIP or FIP. Thus, previously issued federally enforceable
permits issued under such programs remain in effect.
Moreover, new or modified sources that seek to lawfully avoid
compliance with the major source requirements of PSD or nonattainment
NSR by limiting potential to emit to achieve synthetic minor status
must still obtain a general or ``minor'' NSR preconstruction permit
under section 110(a)(2)(C) of the Act and 40 CFR section 52.23. (This
requirement was not at issue in the Chemical Manufacturers case, and is
unaffected by the Court's ruling.) Every SIP contains a minor NSR
program that applies generally to new or modified sources of air
pollutants, and permits issued under such programs are, like all other
SIP measures, federally enforceable. In sum, the precise impact of the
vacatur on PSD/NSR applicability in any State, and hence the
applicability of part 71 under the section 302 and part D of title I
prongs of the definition of major source adopted in part 71, can be
definitively established only by reviewing the provisions of the
particular SIP or FIP to which the source is subject.
8. Regulated Air Pollutant
In the August 1995 supplemental proposal, EPA proposed a less
inclusive definition than is currently promulgated in part 70 or was
proposed for part 71 in the April 1995 notice. However, for purposes of
today's rulemaking, EPA is retaining the definition in the part 71
proposal, which is consistent with the current part 70 definition. The
EPA intends to take final action on the term as proposed in the
supplemental proposal in the Phase II rulemaking.
9. Responsible Official
Although EPA has proposed, in the August 1994 proposed revisions to
part 70, to clarify that the criteria for selecting the designated
representative is the same at an affected source as at other sources,
the Agency has adopted a definition of this term for purposes of
today's rulemaking that is consistent with the definition in current
part 70. The EPA will take final action in Phase II consistent with the
Agency's final resolution of this issue in response to comments on the
August 1994 notice.
10. Section 502(b)(10) Changes
The part 71 proposal, in omitting the definition of ``section
502(b)(10) changes'' from section 71.2, followed the approach used in
the August 1994 proposed revisions to part 70. The Agency's reasons for
the omission are articulated in that proposal at 59 FR 44467-8. As
indicated in the August 1995 supplemental proposal, this is still the
Agency position. However, EPA will not adopt a final position on
proposed revisions regarding operational flexibility for part 70 or 71
until the Phase II rulemaking. For purposes of today's rulemaking, EPA
has adopted a definition of the section 502(b)(10) changes that
comports with the current part 70 regulation, in order to better
harmonize the Phase I part 71 rule and the current part 70 regulation.
11. Title I Modification
The part 71 proposal, based on the August 1994 proposed revision to
part 70, contained a proposed definition of the phrase ``Title I
modification or modification under any provision of title I of the
Act.'' Subsequently, EPA issued a revised proposed definition in the
August 1995 supplemental proposal for parts 70 and 71. The EPA is in
the process of reviewing and developing a position in response to the
comments on the several proposals with respect to this issue, and is
not yet prepared to define the term in a final rule. The EPA will add a
definition in the Phase II rulemaking that is consistent with how
[[Page 34213]]
EPA ultimately defines the term under part 70.
A detailed discussion of the history of this definition is
contained in the preamble to the August 1995 part 70 proposal (60 FR
45545). At issue is whether the phrase ``modifications under any
provision of title I'' as used in section 502(b)(10) of the Act
includes not only modifications subject to major NSR requirements of
parts C and D of title I but also modifications subject to minor NSR
programs established by the States pursuant to section 110(a)(2)(C).
In August 1994, EPA proposed to interpret the title I modification
language of part 70 to include minor as well as major NSR modifications
(55 FR 44527). The EPA received many comments from industry and States
contesting this interpretation. The commenters argued that EPA had
defined title I modification in the preamble to the May 1991 proposed
part 70 rule to exclude minor NSR (56 FR 21746-47 and footnote 6) and
did not redefine it in the final July 1992 rule. As a result, they
argued that they were relying on the current rule to be interpreted
consistent with the proposed rule preamble and that EPA could not
change its interpretation without undertaking further rulemaking.
Based in part on the arguments raised by commenters, EPA revised
its proposed interpretation of the definition of title I modification
in the August 1995 supplemental notice to exclude modifications subject
to minor NSR. In addition, EPA proposed regulatory language defining
title I modification which excluded the reference to section 110(a)(2)
of the Act.
While EPA is not yet prepared to adopt a final definition for the
term, in implementing the Phase I part 71 program EPA will treat the
issue consistently with the approach the Agency has advised States to
take under the current part 70 regulation. Consequently, it will not
consider title I modifications to include changes subject to State
minor NSR programs.
B. Section 71.3--Sources Subject to Permitting Requirements
The final rule promulgates provisions regarding applicability of
the program at section 71.3. These provisions are based on their
counterparts in the currently promulgated part 70 rule at section 70.3.
Consequently, in several aspects, they differ from section 71.3 as
proposed, which was based on the August 1994 proposed revisions to
section 70.3 which the Agency is not yet prepared to finalize.
Paragraph (a)(1) of the part 71 proposal contained an exemption
from title V for major sources that would be subject to title V only if
they have the potential to accidentally release pollutants listed
pursuant to section 112(r)(3) in major amounts. This exemption has been
deleted, even though it garnered reviewer support, consistent with the
decision to match the part 70 requirements except where unique
circumstances make a change necessary. If EPA ultimately revises part
70 to add the deleted language, the Agency would intend to revise part
71 consistently.
Proposed section 71.3(a)(4) which was modelled upon the August 1994
proposed revisions to part 70 and would have stated that any source
subject to title I parts C or D would be required to obtain a permit
was also deleted from the final regulation to comport with the part 70
regulation. The purpose of this provision was to ensure that all
sources subject to preconstruction permitting as major sources under
parts C or D of the Act are also subject to title V permitting. Again,
if part 70 is ultimately revised to add this provision, EPA would
intend to revise part 71 to add it as well.
Similarly, paragraph (b)(2) has been changed to conform with
section 70.3(b)(2), which addresses applicability for sources subject
to section 111 or 112 standards promulgated after July 21, 1992.
Proposed section 71.3(b)(2) differed from both existing section
70.3(b)(2) and the August 1994 proposed revisions thereto. If section
70.3(b)(2) is ultimately revised, EPA would expect to revise section
71.3(b)(2) to harmonize it with part 70.
Paragraphs (c) and (d) of this section, found in the proposal at
sections 71.6(a)(1)(iv) and 71.5(f)(3)(i), respectively, were moved to
this section for compatibility with the current part 70 provisions at
sections 70.3 (c) and (d).
C. Section 71.4--Program Implementation
The major issues raised by commenters on proposed section 71.4
related to the need to base part 71 on finalized (as opposed to
proposed) provisions of part 70, how the part 71 program should be
customized to fit the unique needs of the State or area for which the
program is administered, and jurisdictional issues with respect to
programs on Tribal lands. The Agency's approach to the first issue is
discussed at length in section II of this document. This section
addresses the second and third issues in addition to several minor
changes to the proposed rule that were adopted today.
1. National Template Approach
With respect to the second issue, EPA received divergent comments.
For example, commenters suggested that a national template should be
flexible, that a national template should be used only to fill in the
gaps of deficient State programs, and that there should be no national
template because title V does not authorize EPA to develop such a rule.
The Agency carefully considered the statutory framework for the
program and interprets title V as authorizing a national template
approach. For a further discussion of this issue, see section II of
this document. The EPA chose a national template approach because EPA
believes the national template is flexible enough to be an effective
program in nearly all areas, and individual rulemakings for each area
that has a part 71 program would be needlessly burdensome on the
Agency. Since the national template will serve the needs of most areas,
it is more efficient to promulgate the program once while allowing for
separate rulemakings, as needed, in some areas. The EPA recognizes the
desirability of providing a flexible approach to administering the
program, as the commenters have suggested, when the national template
does not adequately fit the unique State or Tribal situation. Such
flexibility is already contained in section 71.4. When EPA determines
that the national template rule is not appropriate for a State, EPA may
adopt, through a separate rulemaking, appropriate portions of a State
or Tribal program in combination with provisions of part 71 in order to
craft a suitable part 71 program, as provided in section 71.4(f).
Furthermore, section 71.9(c)(7) provides that when the national fee
structure would not reflect the cost of administering a part 71
program, the Administrator shall through a separate rulemaking set an
appropriate fee. Finally, as provided in section 71.5 and as discussed
in section III.D of this document, EPA has designed part 71 to provide
significant flexibility to accommodate the localized air quality
issues. For example, EPA will use State application forms whenever
possible and will try to match the list of trivial activities which may
be left off application forms to the lists established in the State
operating permit program.
2. Part 71 Programs in Tribal Areas
The EPA is deferring promulgation of regulations that would
describe how the Agency would determine the boundaries of a part 71
program for a
[[Page 34214]]
Tribal area. The EPA has published a proposed rule, pursuant to section
301(d)(2) of the Act, specifying the provisions of the Act for which
EPA believes it is appropriate to treat Indian Tribes in the same
manner as States and outlining the Agency's position on the authority
of Indian Tribes to administer air programs under the Act. See 59 FR
43956 (Aug. 25, 1994)(``Indian Tribes: Air Quality Planning and
Management,'' hereafter ``proposed Tribal rule''). As indicated in the
part 71 proposal, EPA intends to follow the approach of the Tribal rule
with respect to issues of jurisdiction and resolution of jurisdictional
disputes. The EPA agrees that it would be more practical to defer
addressing jurisdictional issues until the promulgation of the Tribal
rule. The Agency will finalize an approach to jurisdiction as well as a
definition of Tribal area in the Phase II rulemaking or in conjunction
with finalizing the Tribal rule. In the interim, the Agency will not be
able to implement part 71 programs in Tribal areas unless it completes
a rulemaking that establishes the boundaries of the part 71 program in
the Tribal area. Rulemakings for the Tribal rule and Phase II will be
completed well in advance of the November 1997 deadline for EPA to
implement part 71 programs on Tribal lands. Therefore, EPA does not
expect that the deferral of jurisdictional issues will delay
implementation of the part 71 program. Although part 71 contains no
definition of ``Tribal area,'' EPA will provide (and will require
delegate agencies to provide) notice of proposed permitting actions
pursuant to section 71.8(d) even prior to the Phase II rulemaking. In
the interim, federally recognized Indian Tribes will receive notice
with respect to permitting actions related to sources whose emissions
may affect Tribal air quality and that are located in contiguous
jurisdictions or are within 50 miles of the exterior boundaries of the
reservation.
3. Expiration of Part 71 Permits
The Agency received comments suggesting that part 71 permits should
be rescinded automatically, without the Agency taking any action, when
they are replaced by a part 70 permit. The EPA agrees that no separate
agency action should be required when a part 71 permit is replaced by a
part 70 permit issued under the approved part 70 program because unless
the rescission happens simultaneously with the issuance of the part 70
permit, a source could be subject to a part 70 and a part 71 permit
which may contain different requirements. Accordingly, EPA has deleted
proposed section 71.4(l)(3) which provided that the Administrator would
rescind part 71 permits when they were replaced with part 70 permits.
Further, the EPA has adopted section 71.6(a)(11) which provides that
part 71 permits shall contain a provision to ensure that a part 71
permit will expire when the source is issued a part 70 permit.
4. Suspension of Issuance of Part 71 Permits
The EPA revised the first paragraph of proposed section 71.4(l) to
clarify, consistent with EPA's original intent, that EPA may suspend
issuance of part 71 permits whenever the Agency has granted full or
interim approval to a State part 70 program. Section 502(e), which
addresses suspension of the issuance of part 71 permits, provides that
the triggering event for suspension is publication of notice of
approval. Thus, there is no statutory requirement that a State program
must ``fully'' meet the requirements of part 70 or be fully approvable
in order for EPA to suspend permit issuance. The Agency believes it is
appropriate to suspend issuance of part 71 permits when a State program
substantially meets the requirements of part 70 and has received
interim approval because it would be confusing and burdensome to have
two title V permit programs operating simultaneously in the same
jurisdiction. Therefore, EPA has deleted the word ``fully'' from the
first paragraph of proposed section 71.4(l).
5. Delegation Agreements
The final rule makes a minor change to proposed section 71.4(j) in
parallel with a change to proposed section 71.10(b) to reflect the fact
that under the final rule, EPA will not publish its delegation
agreement with a delegate agency. Therefore, section 71.4(j) provides
that the roles of the delegate agency and EPA in administering the part
71 program will be defined in a delegation agreement, not in a Federal
Register notice. The EPA will follow the procedures for delegation
agreements established for the PSD program under which EPA does not
publish its delegation agreements. Delegation agreements reflect the
understanding of EPA and the delegate agency as to their respective
responsibilities and are not subject to any notice requirement. This
approach allows EPA and the delegate agency to modify their agreement
as circumstances change, without the burden of publishing a Federal
Register notice.
6. Early Reductions Permits
The Agency retained in section 71.4(i)(3) the requirement that the
permitting authority take action on complete permit applications
containing an early reduction demonstration within 12 months of receipt
of the complete application. Although the current part 70 regulation
sets a 9 month deadline for State action, EPA Regional offices are
allowed 12 months to take action on the permit applications submitted
under the interim permitting rule for early reduction sources that EPA
adopted prior to the approval of any State part 70 programs. See 40 CFR
section 71.26(a)(2). The Agency believes that this time frame is
reasonable given the effort required to process the permits and the
need for sources qualifying for a compliance extension under the Early
Reductions Rule to obtain a permit prior to certain deadlines set by
the rule.
D. Section 71.5--Permit Applications
The part 71 proposal addressed permit applications at proposed
section 71.5 (a) through (i). This proposed section was based upon a
combination of corresponding provisions in the existing part 70 rule
and in the August 1994 proposed revisions to part 70, and was presented
in a slightly different structure from the part 70 rule. In light of
EPA's decision to promulgate part 71 on an interim basis, more
consistently with the existing part 70 rule, the provisions based upon
the August 1994 proposal are not being adopted today. Moreover, in
order to facilitate transition from implementing part 71 to part 70
programs, the final rule is being adopted in a structure that is more
consistent with that of the current part 70 rule.
1. Timely Application
Under section 71.5(b)(1) of the proposal all initial permit
applications would have to be submitted within 12 months or an earlier
date after the source becomes subject to part 71. The proposal would
have required that the permitting authority provide notice of the
earlier date to the source and that this notice would be given at least
120 days in advance of the application submittal date.
Several commenters argued that the 120 days (4 months) minimum
notice would not give sources sufficient time to prepare an
application. They also argued that 4 months was insufficient time for
sources to submit their applications early for purposes of addressing
deficiencies and ensuring they receive the application shield.
In response to these comments, EPA has lengthened the notice period
from 4
[[Page 34215]]
months to 6 months. Section 503(c) of the Act requires the submittal of
all applications within 12 months of the effective date of a permit
program or such earlier date as the permitting authority may establish
and that one-third of these applicants be issued permits in this first
year. In order to issue one-third of the permits in the first year, EPA
must receive at least one-third of the applications prior to 12 months
after the effective date of the program.
The EPA considered and rejected commenters' suggestions for 8 to 12
months' advance notice because they would interfere with EPA's
requirement to issue one-third of the permits in the first year. The
EPA believes that the 6 month alternative will allow EPA enough time to
process and issue permits. The EPA believes that 6 months is sufficient
time for sources to prepare applications for several reasons that had
not been announced at time of proposal. First, on July 10, 1995, EPA
issued the first white paper that examines options for simplifying part
70 permit applications and sets minimum expectations concerning how
much information must be included in order for the application to be
found complete. In today's notice EPA announces its intention to
implement both of the white papers for part 71 program purposes.
Second, EPA has revised the rule to clarify that part 71 permit
application forms may be developed by the delegate agency or the EPA
allowing a part 71 application form to be based on a State form
developed for part 70 purposes, as long as the form meets the minimum
requirements of part 71 (discussed in more detail below). Third,
because the final rule more closely follows the part 70 program upon
which most State operating programs are based, sources will be familiar
with most part 71 permit application requirements.
In addition, proposed sections 71.5(b) (2) and (3) have been
deleted because they referred to off-permit changes and a four-track
permit revision system which the Agency is not finalizing today.
2. Complete Applications
The final rule adopts the language from the current part 70 rule
concerning complete applications. However, EPA believes that several
clarifications will help applicants understand the flexibility
available for submitting simplified permit applications that can be
found complete. The terms ``simplified permit application'' or
``streamlined permit application'' refer to applications that require
less information.
In the part 71 proposal, EPA proposed to adopt language from the
August 29, 1994 part 70 revision notice (59 FR 44518) that would have
clarified that an application would be found complete if it contained
information ``sufficient to begin processing the application.'' As
stated previously, today's rulemaking is based on provisions of current
part 70; therefore, this language does not appear in today's
rulemaking. However, EPA believes, as stated more fully in the first
white paper, that considerable flexibility already exists in the part
70 rule to find simplified permit applications complete. Since the
white papers will be implemented for part 71 purposes, this flexibility
also exists in the part 71 permit program.
Furthermore, the proposed revisions to part 70 (August 29, 1994)
and the part 71 proposal discussed several additional options currently
available to States for developing simplified permit applications and
finding them complete, and did not propose any rule changes necessary
to implement these options. These options were: (1) a two-step
application completeness determination process for simplified
applications and (2) simplified application content requirements for
applicable requirements with future compliance dates. After the
publication of these proposal notices, the first white paper included
these two flexibility options, as well as many additional options, and
reaffirmed EPA's interpretation that implementation of these options
does not depend on making changes to the part 70 rule or State part 70
programs.
The EPA believes this approach will provide flexibility for sources
to prepare simplified permit applications and for permitting
authorities to find them complete. This approach will also promote
consistency between the part 71 and part 70 programs, which in turn,
will provide for a smoother transition between the programs. Guidance
on the implementation of the white papers and other flexibility options
for completeness determinations for a part 71 program implemented in a
particular State may be provided by the EPA or delegate agency soon
after the program takes effect.
Additionally, proposed section 71.5(d), concerning the treatment of
business confidential information, has been revised in the final rule.
The language of the proposal discussed the responsibilities of
permitting authorities to process requests for confidential treatment
and included a general reference to 40 CFR part 2. Considering the
structure of these regulations and this section's position in these
regulations, the Agency believes that the promulgated language
clarifies the procedures that applicants must follow to request
confidential treatment for business information in applications,
provides a more precise cross-reference to those procedures, and does
not add any new requirements regarding the treatment of confidential
information not intended by the proposal.
Note also that certain technical changes are being made to part
71's completeness provisions as a result of the final rule's greater
harmonization with the existing part 70 rule. First, the completeness
criteria are being promulgated at section 71.5(a)(2) while the proposal
addressed completeness at section 71.5(c). In addition, the final rule
references section 71.5(c) as the provision setting out required
information in permit applications, while the proposal referenced
proposed section 71.5(f). Moreover, the final rule cites section
71.5(d) as the provision concerning certification by a responsible
official, while the proposal cited proposed section 71.5(i). Finally,
the citation in the proposal to section 71.7(a)(3) has been changed in
the final rule to section 71.7(c)(4) as a result of the changes to
section 71.7.
3. Standard Application Form and Required Application
Proposed section 71.5(f) would have required part 71 sources to
submit ``applications provided by the permitting authority, or if
provided by the permitting authority, an electronic reporting method''
and did not include any preamble discussion of the interpretation of
this phase. One commenter on the proposal encouraged EPA to use
existing State forms in States where EPA assumes part 71 authority.
Final section 71.5(c) has been revised to more closely follow the
corresponding language of section 70.5(c). The EPA agrees with the
commenter and will provide forms developed by delegate agencies
(States), or the EPA, including electronic application methods, for
purposes of applying for part 71 permits. This approach to application
development is possible because ``permitting authority'' is defined in
section 71.2 as including the EPA or the delegate agency. This approach
to providing part 71 forms will lead to less disruption and a smoother
transition for sources preparing initial part 71 applications because,
in many cases, sources will be familiar with the State form on which
the part 71 form is based. For example, sources may already be
collecting information and drafting an operating permit using the State
form in expectation of part 70 program approval by EPA. In addition,
commenters asked
[[Page 34216]]
that EPA clarify and simplify the requirements for emissions-related
information in part 71 applications consistent with EPA's guidance in
the first white paper. In response to these comments, EPA intends to
implement the white paper guidance with respect to the collection and
reporting of emission-related information and EPA believes that no
changes to part 71 are necessary to do so.
Numerous technical changes have been made to the final rule
regarding information to be required in permit applications to better
match the current part 70 rule. In the proposal, information
requirements were addressed at proposed sections 71.5(f) through (i),
while the final rule follows part 70 by covering these requirements in
sections 71.5(c) and (d). New citations to other provisions of part 71
are also due to the final rule's harmonization with part 70.
4. Insignificant Activities and Emission Levels
Extensive comments were received on the proposed insignificant
activity and emission levels provisions of proposed section 71.5(g).
Commenters argued, in part, that activities subject to applicable
requirements should be eligible for the exemption for insignificant
activities and emission levels, that the requirement that applications
not exclude information needed to determine whether a source is subject
to the requirement to obtain a part 71 permit would be too restrictive,
that the list of insignificant activities in the final rule should be
expanded, that the list of trivial activities in the first white paper
should be codified in part 71, that the exemption for mobile sources as
insignificant activities should be removed, that the single emissions
unit emissions thresholds for insignificant emissions should be raised,
and that the aggregate source-wide emission thresholds for
insignificant emissions should be deleted.
a. Eligibility for Insignificant Treatment and Information Required
in Applications. Section 71.5(c) of the final rule addresses, in part,
information that must not be omitted from permit applications. These
requirements have special relevance for applicants when determining
what information must be included in applications for emission units
that are eligible for insignificant treatment. To be consistent with
current part 70, final section 71.5(c) deletes certain proposed
provisions that do not follow the corresponding language of section
70.5(c) and that were based upon the proposed revisions to part 70
published in August 1994. Accordingly, deleted from final section
71.5(c) is the proposed language that would have not allowed the
application to omit information needed to: (1) Determine whether a
source is major, and (2) determine whether a source is subject to the
requirement to obtain a part 71 permit. Notwithstanding these
deletions, EPA continues to believe that the definition of major source
at section 71.2 controls the determination of which units are counted
for major source applicability purposes and that emissions of units
that qualify for insignificant treatment in the application are not
exempt from these determinations. Consistent with the Agency's approach
in implementing the current part 70 rule, the EPA is reversing its
interpretation, first expressed in the proposed preamble, that would
have excluded the eligibility of activities for treatment as
insignificant when such activities are subject to applicable
requirements. The EPA believes that no change to the final rule is
necessary to implement this new interpretation.
Industry commenters were particularly concerned that EPA's
interpretation that proposed section 71.5(g) would not allow activities
with applicable requirements to be eligible for insignificant treatment
would render the insignificant activity and emissions level provisions
meaningless because few sources would be eligible for streamlined
treatment in the application.
The EPA now believes that it was overly broad in stating that
emission units were precluded from eligibility as ``insignificant'' if
such units would be subject to applicable requirements. As discussed
below, EPA believes there are circumstances in which an emission unit
or activity can be treated as ``insignificant'' under a Federal
operating permits program, even if it is subject to an applicable
requirement. However, a title V application must still contain
information needed to determine the applicability of or to impose any
applicable requirement or any required fee and a permit must still meet
the requirements of section 71.6 for all emission units subject to
applicable requirements, including those eligible for insignificant
treatment.
Both sections 71.5(c) and 71.5(c)(3)(i) require sufficient
information to verify the requirements applicable to the source and to
collect appropriate permit fees.
This means that some of the information required by sections
71.5(c) (3) through (9) may be needed in the permit application for
insignificant activities in order for the permitting authority to draft
an adequate operating permit. As an example, where an insignificant
activity is not in compliance with an applicable requirement at the
time of permit issuance, the permit application would need to contain a
compliance plan, including a compliance schedule, for achieving
compliance with the applicable requirement. As another example, if a
source has some insignificant activities within a category that are
subject to an applicable requirement and some within that same category
that are not subject to that applicable requirement because the
applicability criteria for the applicable requirement are different
from the applicability criteria for insignificant activities, the
permit application would generally be required to include sufficient
information on the insignificant activity for the permitting authority
to determine which units are subject to the applicable requirement and
to include that applicable requirement in the permit for the subject
insignificant activity. The EPA believes that a part 71 permit
application may simply list the applicable requirements that apply to
insignificant activities generally, rather than requiring the permit
application to explicitly identify which insignificant activities are
subject to which applicable requirements. The permitting authority
would then issue a permit imposing the applicable requirements in the
permit, but not specifically identifying which insignificant activities
are subject to those applicable requirements. (For a more detailed
discussion, see the first white paper and the proposed interim approval
and proposed notice of correction for the State of Washington's part 70
program, 60 FR 50166 (September 28, 1995).)
b. Insignificant Activity Lists. Section 70.5(c), in part, allows
States to develop lists of insignificant activities and emission levels
that need not be included in applications and requires activities (or
equipment) exempted due to size or production rate to be listed in the
application. State part 70 program submittals were approved by EPA that
implement this provision in a variety of ways. The structure of the
proposed regulations was based on the structure of these State
implementing regulations, and included a short list of insignificant
activities and provisions setting insignificant emissions levels. The
proposed list of insignificant activities, section 71.5(g)(1), included
a list of specific source categories, activities, or equipment that
could be left off the application. The proposed insignificant
[[Page 34217]]
emissions provisions, section 71.5(g)(ii), allowed sources the
flexibility to treat additional source categories, equipment, or
activities as insignificant, provided certain eligibility criteria were
met, including not exceeding certain emissions levels, and provided
that the activities were listed in the application. The EPA believed
that the proposed insignificant emissions approach was flexible enough
that extensive lists of insignificant activities would not be needed in
the final rule. The EPA reasoned that no list of insignificant
activities would ever be so inclusive as to list every type of activity
potentially eligible for insignificant treatment at industrial sources,
and therefore, additions to the list would require resource-intensive
notice and comment rulemaking on an ongoing basis. The proposal asked
for comment on its approach and asked whether the proposed approach
would be compatible with approaches developed by States.
Numerous industry commenters argued, in general, that the proposed
part 71 list was not extensive enough to provide meaningful relief for
industry from the administrative burdens associated with submitting
detailed information for emission units or activities that pose little
or no environmental risk and that the part 71 list was not as extensive
as lists developed by States for their part 70 programs.
The EPA is finalizing the proposed list of insignificant activities
with one revision. The EPA believes that the commenters' concerns that
there be more opportunities for streamlining the information required
by part 71 permit applications is best addressed by implementing the
white papers for part 71 purposes, and that no changes to the final
rule are necessary to implement this approach. The EPA believes that
the white papers provide for application streamlining that is
comparable and, in many ways, superior to approaches based on omitting
certain emission unit or activities from the application only when
eligibility for insignificant treatment is established in a rule. In
general, the white papers allow sources to provide little or no
detailed source-specific information for emissions units or activities
where the information is not reasonably available and to the extent the
information is not needed to resolve disputed questions of major source
status, applicability of requirements, compliance with applicable
requirements, or needed to calculate fees.
For example, section B.3. Insignificant Activities of the first
white paper allows trivial activities to be completely omitted from
applications. The white paper defines trivial activities as activities
without specific applicable requirements (although they may have
``generic'' applicable requirements, explained below) and with
extremely small emissions and included a list of trivial activities in
Appendix A. Many of the trivial activities identified in the first
white paper are common to State lists of insignificant activities.
Under part 71, sources may rely on this list, and EPA or the delegate
agency may add to it without the need for Federal rulemaking. This
allows EPA to expand the list of trivial activities for a part 71
program in a specific location, consistent with trivial activity lists
established in the State operating permit program, thus tailoring the
program for a specific program implemented in a State.
Also providing considerable streamlining is section B.4 Generic
Grouping of Emission Units and Activities of the first white paper
which allows emissions units or activities with ``generic'' applicable
requirements to be omitted from the application, independent of
eligibility for insignificant treatment. Under this section, sources
may provide little or no detailed source-specific information, even for
units with ``generic'' requirements, provided that the ``generic''
requirements are described in the application such that their scope and
manner of enforcement are clear. ``Generic'' requirements are certain
broadly applicable requirements that apply and are enforced in the same
manner for all subject units or activities and that are often found in
the SIP. Examples of such requirements include requirements that apply
identically to all emissions units at a facility (e.g., source-wide
opacity limits), general housekeeping requirements, and requirements
that apply identical emissions limits to small units (e.g., certain
process weight requirements). Where the applicable requirement is
amenable to this approach, part 71 permitting authorities may follow
this approach regardless of whether subject activities have been listed
as trivial or insignificant. A lengthy list of the types of
requirements suitable for this treatment is not possible here because,
among other reasons, the examples of which EPA is aware are SIP
requirements, and so vary from State to State. The EPA or delegate
agency will decide which SIP requirements can be treated in this
generic fashion for specific locations where part 71 programs are
implemented.
The EPA has determined that the insignificant activity exemption
for air-conditioning units used for human comfort at final section
71.5(c)(11)(i)(B) should be changed to clarify that substances other
than class I or II substances may be regulated under title VI of the
Act. This change is necessary because effective November 15, 1995,
title VI requires recycling or recovery of substitute refrigerants
regardless of whether or not they are ozone depleting substances (Class
I and Class II substances) unless EPA makes a refrigerant-specific
decision that the substitute will not harm human health or the
environment and can, therefore, be vented.
c. Insignificant Emissions Levels. In response to comments, EPA has
revised proposed section 71.5(g)(2)(i), which is section
71.5(c)(11)(ii)(A) of the final rule, to increase the insignificant
emissions threshold for regulated air pollutants other than (HAP) from
a single emissions unit from 1 tpy to 2 tpy and to delete the 1,000
pounds (lb) per year threshold in extreme ozone nonattainment areas.
The EPA believes this decision is appropriate since, as commenters
pointed out, EPA has previously stated in part 70 approval notices that
insignificant emissions thresholds set at 2 tpy would be approvable in
most locations. The EPA believes that due to the similarity between
part 70 and part 71 programs it can logically conclude that this level
is also appropriate for a part 71 program, regardless of where it is
located. This level will provide a measure of additional flexibility
for sources to exempt insignificant activities, thus simplifying the
application, with little additional risk that significant emission
units will be excluded from the application. As further discussed
below, there are several safeguards available in the final rule that
should ensure that significant units are not excluded from applications
due to their eligibility for insignificant treatment. In addition, EPA
is deleting the proposed 1,000 lb per year threshold for extreme ozone
nonattainment areas. This will simplify the rule by setting the same
tpy emission thresholds for attainment and nonattainment pollutants,
while requiring the thresholds in relative terms to be no more than 20
percent of the major source threshold for nitrogen oxides and VOC and 2
percent of the major source threshold for the remaining criteria
pollutants. Two tpy is considered trivial by EPA for all pollutants
other than HAP in relation to major source thresholds in all attainment
or
[[Page 34218]]
nonattainment areas and will not prevent the EPA from collecting
information of a consequential or significant nature. In addition,
these levels are more commonly found in State part 70 programs and
therefore should help to ease the transition from part 71 to part 70
operating permit programs.
In response to comments, EPA has decided to delete the aggregate
source-wide emissions criteria for insignificant emissions of regulated
air pollutants (sections 71.5(c)(11)(ii) (A) and (B) of the final
rule). The EPA proposed these aggregate source-wide emissions criteria
as an additional means to ensure that emissions that might otherwise
trigger the applicability of applicable requirements or major source
status would not be excluded from applications. However, EPA now
believes that the proposed aggregate emissions thresholds would have
significantly limited the value of the insignificant emissions
provisions for most medium to large sources. This deletion should not
impede the permitting authority's ability to write permits which assure
compliance with applicable requirements and the requirements of part
71. The EPA also believes that the utility of aggregate plant-wide
thresholds is negligible because of various other safeguards already
provided in the rule; in particular, section 71.5(c)(11) requires
applications to not exclude information needed to determine the
applicability of, or to impose, any applicable requirement. In
addition, the requirement of section 71.5(c)(11)(ii) that units or
activities with insignificant emissions be listed in the application
provides an opportunity for the permitting authority to review the
source's decision to treat emissions as insignificant, while the
single-unit emissions thresholds of sections 71.5(c)(11)(ii) (A) and
(B) limit the size of emissions to levels that would normally ensure
that the units are not covered by extensive control requirements.
5. Compliance Certification
The part 71 proposal would have required sources to submit
certifications that they were in compliance with all applicable
requirements. Commenters requested further clarification of the
certification requirements and argued that it was not clear exactly
what efforts a source was required to make to determine its compliance
status prior to certifying that it was in compliance with all
applicable requirements, and that it was unclear whether or not a
source was obliged to reconsider past applicability determinations
prior to making such a certification. The EPA does not believe that any
revisions to the rule are necessary to address the commenters' points.
This is true because the white papers for part 70 address these issues
and sources may follow that guidance for purposes of completing part 71
permit applications.
E. Section 71.6--Permit Content
Today's permit content provisions more closely track the provisions
contained in current 70.4 and 70.6 than did those in the proposal.
Thus, the order of the paragraphs in section 71.6 is more similar to
the permit content section of current part 70 than to the part 71
proposal. For example, the provisions dealing with the permitting
authority's duty to address emissions units in the permit has been
moved from section 71.6(a)(iv) to section 71.3(c), consistent with
current part 70. In addition, using current part 70 as the template for
permit content means that the provisions for ``off-permit'' contained
in today's rulemaking mirror those found at section 70.4(b), while the
off-permit provisions of the proposed rule tracked those contained in
the August 1994 proposed revisions to part 70. Similarly, today's
rulemaking adopts the requirements for emissions trading and
operational flexibility that are found in current part 70.
In addition, EPA retains a provision related to the prompt
reporting of deviations from permit conditions from the part 71
proposal. Current part 70 requires States to define ``prompt'' in their
own programs, and today's rulemaking defines the term for the part 71
program and closes this gap in the proposed rule. Today's rulemaking
also establishes a part 71 permit expiration date.
The EPA reiterates that today's rulemaking finalizes provisions for
permit content on an interim basis in order to better facilitate smooth
transition from implementation of part 71 to approved State programs
established pursuant to the current part 70 rule. With respect to
permit content provisions, the April 1995 and August 1995 proposals
contain provisions which reflect the Agency's current best thinking,
and subsequent to reviewing all of the comments on both proposals, EPA
may finalize provisions for permit content that differ from those
adopted today consistent with the approaches EPA eventually takes in
promulgating final revisions to part 70.
1. Off-permit Operations
Under today's rulemaking, sources are allowed to make changes at a
facility that are not addressed or prohibited by the permit terms,
provided they meet the requirements of section 71.6(a)(12). The
provision adopted today is patterned on 70.4(b) (14) and (15), the
analogous provisions in current part 70. Like part 70, part 71 requires
that the source provide the permitting authority with contemporaneous
written notification for these types of changes, that these changes be
incorporated into the permit at renewal, and that the source keep
certain records of these changes. Consistent with current part 70,
section 71.6(a)(12) limits off-permit changes to those that do not
constitute title I modifications, are not subject to any requirements
under title IV of the Act, and meet all applicable requirements of the
Act. In applying this provision, the Agency will use the interpretation
of the term ``title I modification'' that States are allowed to use
under the current part 70 rule. EPA expects that allows a significant
number of minor NSR changes, to the extent that they are not prohibited
by the title V permit, to qualify for off-permit treatment.
Like part 70, part 71 does not allow off-permit changes to alter
the permitted facility's obligation to comply with the compliance
provisions of its title V permit and does not grant the permit shield
to off-permit changes. For a more thorough discussion of the concept of
off-permit changes, see the rationale for part 70's off-permit
provision found at 57 FR 32269.
The part 71 proposal contained a modified off-permit provision at
proposed section 71.6(q) that was designed in light of the four-track
permit revision procedures contained in the proposal and modeled on the
off-permit provision contained in the August 1994 proposed revisions to
part 70. Proposed section 71.6(q) would have allowed certain changes to
remain off-permit but would have required the source to submit an
application to revise its permit to reflect that change within 6 months
of commencing operation of that change. In the August 1995 supplemental
proposal to parts 70 and 71, the Agency indicated that off-permit
provisions may be unnecessary if the streamlined permit revisions
procedures for parts 70 and 71 are adopted as proposed therein. After
reviewing comments on both proposals, EPA will decide whether to retain
an off-permit provision in the Phase II rulemaking, consistent with the
approach EPA takes in finalizing permit revisions procedures. Off-
permit treatment is available in the interim, consistent with that
provided by current part 70, but EPA does not believe that many permits
[[Page 34219]]
will be issued prior to the Phase II rulemaking and that the off-permit
provision therefore will not be greatly utilized.
2. Operational Flexibility
Under the rule adopted today, sources will enjoy the same
operational flexibility as is provided to part 70 sources under current
part 70. Section 502(b)(10) of the Act requires that the minimum
elements of an approvable permit program include provisions to allow
changes within a permitted facility without requiring a permit
revision. In the current part 70 rule at section 70.4(b)(12) (i)-(iii),
and the rule adopted today, there are three different methods for
implementing this mandate. Accordingly, section 71.6(a)(13)(i) provides
for sources to make certain changes within a permitted facility that
contravene specific permit terms without requiring a permit revision,
as long as the source does not exceed the emissions allowable under the
permit and the change is not a title I modification. Under the
interpretation of the term ``title I modification'' that EPA is
allowing States to take under the current part 70 rule, section
502(b)(10) changes may include changes subject to minor NSR, provided
the change does not exceed the emissions allowable under the permit.
Section 71.6(a)(13)(ii) also allows emissions trading at the facility
to meet limits in the applicable implementation plan when the plan
provides for such trading on 7-days notice in cases where trading is
not already provided for in the permit. Additionally, section
71.6(a)(13)(iii) allows emissions trading for the purpose of complying
with a federally-enforceable emissions cap that is established in the
permit independent of otherwise applicable requirements. For a thorough
discussion of the flexibility allowed under the analogous part 70
provisions, see 57 FR 32266.
The part 71 proposal contained an approach to operational
flexibility that was modeled on the August 1994 proposed revisions to
part 70, not current part 70. The August 1995 supplemental proposal
suggested further refinements to the concept. After reviewing comments
on both proposals, EPA may adopt an approach to operational flexibility
that is different from the one found in today's rulemaking, consistent
with the approach EPA takes in finally revising part 70. While the
approach adopted today differs significantly from that of the proposal,
the Agency is adopting it on an interim basis in order to better
facilitate transition to the State part 70 programs that are similarly
based on the provisions governing operational flexibility under the
current part 70 rule.
3. Affirmative Defense
In order to remain consistent with current part 70, EPA is adopting
a provision from the part 71 proposal that would allow sources to
assert an affirmative defense to an enforcement action based on
noncompliance with certain requirements due to an emergency. Such a
defense would be independent of any emergency or upset provision
contained in an applicable requirement. See section 71.6(g). This
provision is consistent with that found in the current part 70 rule at
section 70.6(g).
As a result of concerns identified in legal challenges to part 70,
the Agency, in the August 1995 supplemental proposal, solicited comment
on the need for, scope and terms of an emergency affirmative defense
provision. The Agency is reviewing those comments, but has not yet made
a decision on whether or not to modify or remove this additional
affirmative defense provision from part 70. The Agency will make part
71 consistent with the decision reached for part 70 in the part 71
Phase II promulgation. In the interim, sources may rely on the
affirmative defense offered by section 71.6(g).
4. Definition of Prompt Reporting
The proposal contained provisions concerning prompt reporting of
deviations from permitting requirements at proposed sections 71.6(f)
(3) and (4). The final rule at section 71.6(a)(3)(iii) requires that
each permit contain provisions for prompt notification of deviations.
Two commenters requested that the prompt reporting deadlines in
part 71 be adjusted to reflect other environmental regulation timelines
or to reflect State program guidelines that have been approved by the
Agency for part 70 programs. The Agency disagrees with the request.
Section 503(b)(2) of the Act requires permittees to promptly report any
deviations from permit requirements to the permitting authority. Since
individual permitting authorities are responsible for having programs
to attain and/or maintain air quality within their geographical
boundaries, they are obligated under the operating permits program to
determine, among other things, what constitutes a prompt notification.
Included as factors in determining prompt notification would be
elements such as pollutant concentration, deviation duration, and
authority response time. Because sources and pollutants of concern vary
among permitting authorities, States have adopted differing prompt
reporting schedules. The Agency has reviewed its obligation to protect
air quality on a national level, and has determined that its prompt
reporting deadline is appropriate for this obligation. Therefore the
deadlines contained in part 71 remain unchanged from the proposal.
Two commenters requested that part 71 clarify prompt reporting
requirements for deviations other than those associated with hazardous,
toxic, or regulated air pollutants, as described in sections
71.6(a)(3)(iii)(B)(1) and (2). The Agency believes that the requirement
contained in section 71.6(a)(3)(iii)(A), in which sources are to report
all instances of deviations from permit requirements at least every 6
months, provides the basis for prompt reporting of all other
deviations. However, the Agency is willing to clarify this reporting
requirement and has modified section 71.6(a)(3)(iii)(B) by adding a
statement that directs sources to submit all other deviation reports in
accordance with the timeframe given in section 71.6(a)(3)(iii)(A).
5. Inclusion of Federally Enforceable Applicable Requirements in
Permits
Two commenters requested that EPA include in part 71 the analogue
to section 70.6(b)(2), a provision that requires the permitting
authority to identify in the permit any applicable requirements that
are not federally enforceable. The EPA disagrees with this request
because part 71 permits will not include any non-federally enforceable
applicable requirements; therefore, a requirement for the Agency to
identify such terms as non-federally enforceable would be moot, and a
part 71 analogue to section 70.6(b)(2) is not needed. Part 71 differs
from part 70 in this respect. However, section 71.6(b) is consistent
with the first paragraph of section 70.6(b), which provides that part
70 permit terms and conditions are to otherwise be federally
enforceable.
6. General Permits
The proposal contained provisions at proposed section 71.6(l)
addressing general permits, which were based on the proposed revisions
to the general permits provisions in the August 1994 notice. Under part
70, the EPA afforded other permitting authorities the choice of
utilizing general permits, and the Agency intended to provide this
flexibility to itself. The Agency believes that general permits offer
cost-effective means of issuing permits for certain
[[Page 34220]]
source categories. The Agency has not yet decided on the proper
approach concerning opportunities for public review and judicial review
associated with general permits, and in the interim, has decided to
remain consistent with the current part 70 rule. Therefore, under
today's notice, EPA's authorization to allow a source to operate
pursuant to a general permit may proceed without public notice and does
not constitute final permit action for judicial review purposes.
Today's part 71 general permit provisions are found at section 71.6(d)
and are patterned after the analogous provisions at current section
70.6(d). In the Phase II rulemaking, EPA intends to revise the part 71
general permit provisions if necessary to remain consistent with the
approach the Agency ultimately takes in the final revisions to part 70.
7. Permit Expiration
The proposed rule contained a provision for rescinding part 71
permits at proposed section 71.4(l)(3). Under today's rulemaking at
section 71.6(a)(11), part 71 permits would contain a provision that
automatically cancels the part 71 permit upon expiration of the initial
permit term or upon issuance of a part 70 permit, without the need for
separate action to rescind the permit. The Agency believes that a clear
expiration date is necessary in order to avoid potential confusion over
which title V permit terms and conditions are valid. The majority of
permitting authorities are moving towards final approval of part 70
programs. In those few instances where a particular permitting
authority may not have final part 70 program acceptance by the deadline
for implementation of part 71, the Agency expects that final program
approval will occur well before the 5-year part 71 permit term (12
years for certain municipal waste combustors) has expired. Once the
part 70 program is approved, sources and permitting authorities may
desire to begin implementation as soon as possible. The Agency has no
desire to be a stumbling block in those efforts, nor does the Agency
wish to promote confusion over which permit (part 71 or 70) would be in
effect at a particular time.
One of the purposes of title V was to provide sources with
certainty as to their applicable requirements. Part 71 and part 70
permits will be similar, but not necessarily congruent, e.g., part 71
permits would contain only federally-enforceable requirements,
insignificant activities could differ, and reporting provisions would
differ. In order to prevent the potential confusion stemming from an
unexpired part 71 permit remaining in effect concurrent with a part 70
permit, the Agency has decided to preclude the event from occurring. No
such comparable provisions are needed in part 70 because that program
provides just one title V permit per source. Consequently, section
71.6(a)(11) provides that a part 71 permit automatically expires upon
the earlier of the expiration of its term or the issuance of a part 70
permit to the source.
F. Section 71.7--Permit Review, Issuance, Renewal, Reopenings, and
Revisions
As discussed above, EPA is, on an interim basis, promulgating final
regulations regarding permit issuance, renewal, reopenings, and
revisions for part 71 that are based upon the existing provisions
governing State title V programs at 40 CFR, section 70.7. Consequently,
the provisions adopted today differ from those contained in the part 71
proposal, which were based upon the August 1994 proposed revisions to
part 70. The EPA is still in the process of adopting revisions to part
70, and thus is not able at this time to base part 71's provisions on
the expected future changes to part 70. As a result, EPA has concluded,
in response to comments, that the most reasonable approach is to model
part 71's permit issuance, renewal, reopenings, and revisions
procedures on the corresponding provisions in the existing part 70
rule. These changes from the proposal, in addition to other changes in
response to comments, are identified below.
1. Permitting Authority's Action on Permit Application
First, the organization of the paragraphs has been changed from the
proposal to be consistent with 40 CFR section 70.7(a). In addition, in
section 71.7(a)(1), the word ``modification'' is now used in place of
the word ``revisions,'' which was used in the proposal. This is a
technical change to the rule to make it conform with the language used
in corresponding provisions in the current part 70 rule. Also, section
71.7(a)(1)(ii) has been changed to track section 70.7(a)(1)(ii) by
explicitly providing that changes subject to minor permit modification
procedures need not comply with the public participation requirements
of sections 71.7 and 71.11. This change from the proposal is a result
of the Agency's adoption in today's rule of permit revision procedures
modelled on those contained in the existing part 70 rule. Moreover,
section 71.7(a)(1)(iv) has been adopted without the language providing
that, in some cases, the terms of the permit need not provide for
compliance with all applicable requirements that are in force as of the
date of permit issuance. Again, this change is necessary to make
section 71.7(a)(1)(iv) consistent with the corresponding provision at
section 70.7(a)(1)(iv), which does not contain the proposal's language.
That language was first proposed in the August 1994 proposed revisions
to part 70, and the Agency is not yet prepared to adopt it into a final
title V rule. Likewise, section 71.7(a)(1)(v) is being promulgated
without references to the administrative amendment and de minimis
permit revision procedures contained in the proposal in order to better
match the current part 70 provisions at section 70.7(a)(1)(v).
Section 71.7(a)(2) is being adopted without the language in the
proposal which would have required permitting authorities to take final
action within 12 months after receipt of a complete application for
early reductions permits under section 112(i)(5) of the Act because
regulatory language addressing this requirement was moved to section
71.4(i)(3). Furthermore, this provision is being adopted without the
language in the proposal that would have allowed permitting authorities
to delay final action where an applicant fails to provide additional
information in a timely manner as requested by the permitting
authority, as section 70.7(a)(2) currently does not provide such
authority.
A new section 71.7(a)(3) is being promulgated to require the
permitting authority to ensure that priority is given to taking action
on applications for construction or modification under title I of the
Act. This change is made to make part 71 consistent with the
corresponding provision in current part 70 at section 70.7(a)(3).
Section 71.7(a)(4) (section 71.7(a)(3) in the proposal) deletes the
references in the proposal to the proposed regulatory provisions
addressing administrative amendments, de minimis permit revisions, and
minor permit revisions, and tracks current section 70.7(a)(4) by
providing that permitting authorities need not make completeness
determinations for applications for minor permit modifications. This
change is a result of EPA's basing section 71.7 on the current section
70.7. In addition, sections 71.7(a) (5) and (6) (sections 71.7(a) (4)
and (5) in the proposal) are renumbered in order to track existing
sections 70.7(a) (5) and (6).
[[Page 34221]]
The proposal contained a provision at proposed section 71.7(a)(6)
addressing how draft and final permits may be issued with respect to
applicable requirements that are approved or promulgated by EPA during
the permit process. This provision was proposed in the August 1994
proposed revisions to part 70 and is not contained in the current part
70 rule. For the reasons stated above, EPA is not yet prepared to adopt
it into part 71, and so is deleting the proposed provision from today's
final rule.
2. Requirement To Apply for a Permit
One commenter suggested revising 71.7(b) regarding the application
shield to say that the permitting authority must set a reasonable
deadline for the submission of additional information, and commented
that EPA should not be able to request information that is ``needed to
process the application'' but only that which is ``reasonable and
necessary to issue the permit''. The Agency disagrees that the
regulation should set a specific deadline for the submission of
additional information because the determination of what is a
reasonable time will vary depending on the information requested. Also,
EPA disagrees that there is a distinction between information needed to
process the application and information that is reasonable and
necessary to issue the permit.
One commenter suggested revising section 71.7(b) to allow sources
to operate subsequent to submission of a complete, but late,
application or application for renewal. The Agency believes that
extending an application shield to sources that fail to submit timely
applications is inconsistent with the Act. The proposal for part 70
contained a provision that would have provided a grace period of up to
three months to submit applications after the required submittal date.
The EPA deleted this provision from the final part 70 rule because
extending the application shield to sources that did not submit a
timely application would have been inconsistent with section 503(c) of
the Act. The Agency is promulgating section 71.7(b) to closely track
the corresponding provision at current section 70.7(b). Consequently,
the references in proposed section 71.7(b) to the proposed provisions
addressing administrative amendments, de minimis permit revisions, and
minor permit revisions have been deleted and replaced by references to
provisions addressing section 502(b)(10) changes and minor permit
modifications. In addition, the proposal's reference to section
71.7(a)(3) has been replaced with a reference to section 71.7(a)(4),
due to the restructuring of section 71.7(a).
3. Permit Renewal and Expiration
Section 71.7(c) is being promulgated to more closely match the
corresponding provision under current section 70.7(c) than did the
proposal. The references in proposed section 71.7(c)(2) to proposed
sections 71.5(b) and 71.5(c) have been replaced by a reference to
section 71.5(a)(1)(iii), due to the restructuring of section 71.5.
Moreover, section 71.7(c)(2) (section 71.7(c)(3) in the proposal) is
being promulgated without the language that would have provided that,
where the permitting authority fails to act on a timely renewal
application before the end of the term of title V permit, the permit
shall remain in effect until the permitting authority does take final
action. Instead that language (which is based upon the existing section
70.4(b)(10) of the current part 70 rule) is being promulgated at
section 71.7(c)(3).
4. Permit Revisions
Commenters remarked that the Federal title V permit program as
proposed in April 1995 would establish a new, added layer of permitting
which would add unacceptably to the amount of time needed before a
source could implement process changes. They suggested that even though
the April 1995 permit revision tracks attempt to build on existing
preconstruction programs, they still pose substantial new requirements
(e.g., new criteria for adequate prior review in NSR). These commenters
opined that if EPA believes that insufficient public review is afforded
by existing programs, the Agency should address those shortcomings, not
start a new process. Another commenter suggested that clerical changes
should be handled through notification of the change by an amendment
letter to the permitting authority that would then be attached to the
permit without any EPA review until permit renewal. The commenter
further suggested that all minor source changes which do not violate
any permit term and do not render the source newly subject to an
applicable requirement should be allowed to follow this amendment
procedure. Other commenters opined that the April 1995 proposed four
track permit revision procedures were fundamentally flawed and must be
replaced with simpler procedures. One commenter suggested that EPA
Regions, not just delegated States, should be authorized to conduct
``merged processing'' to add NSR or section 112(g) terms to title V
permits, if such processing is retained in the final rule. Some
suggested that EPA promote consistency between part 70 and part 71
permit programs to reduce confusion for sources that have to make a
transition between different regulatory programs.
In light of these and other comments, EPA proposed in August 1995 a
revised permit revision process, developed with extensive stakeholder
inpu
FR Doc. 96-16257 Federal Operating Permits Program
t, which proposes several ways of streamlining permit revisions,
particularly for those changes subject to prior State review (e.g., NSR
changes). In the interim, as discussed earlier in this preamble, rather
than adopting the four-track permit revision system that the Agency
proposed for part 71 on April 25, 1995, the EPA has decided to adopt,
for the first phase of part 71, the permit revision system in the
current (July 1992) part 70 rule. Current part 70 provides three ways
to revise a permit: the administrative amendment process, the minor
permit modification process and the significant permit modification
process. The specific regulatory changes to proposed part 71 taken to
adopt these procedures are described below.
One commenter requested that EPA not follow the approach to ``title
I Modification'' in the August 1994 proposed revisions to part 70 in
defining the term for part 71. In implementing the current part 70
permit revision procedures during the interim period, EPA would apply
the interpretation of ``title I modifications'' that States are allowed
to apply under the current part 70 rule. Under this interpretation,
minor NSR actions may be incorporated into the title V permit using the
minor permit modification procedures of current part 70, or
alternatively, may be made as off-permit changes if they are eligible.
a. Rationale for Providing Interim Permit Revision Procedures. The
proposal indicated that due to the ongoing discussions with
stakeholders regarding permit revision procedures under title V, EPA
was considering finalizing part 71 in the interim without provisions
for permit revision procedures. Several commenters suggested that EPA
not finalize any portion of part 71 until permit revision procedures
are finalized because they will influence how sources design their
initial permit applications. The commenters argued that sources will
need the ability to obtain expeditious revisions to permits, and that
there is thus a need for provisions governing modifications. As
discussed previously, EPA has decided to include the permit revision
procedures of current part 70 in
[[Page 34222]]
this interim part 71 rule, while reserving the right to adopt
procedures based upon future changes to part 70, when part 70 revisions
are promulgated and Phase II of this rule is completed.
The EPA agrees with commenters that including current part 70
revision procedures is most appropriate for several reasons. First, EPA
believes that it is premature to adopt the procedures proposed in April
1995 for part 71, or in August 1995 for part 70, because both of these
proposals involve outstanding issues. Although the August 1995 proposal
contains the latest thinking on streamlined permit revision procedures,
it would be inappropriate to rush to promulgate a proposed system
before the Agency has taken time to consider comments on the August
1995 proposal and arrive at a final position. In the meantime, the
Agency has at its disposal the permit procedures of the current part 70
rule under which the Agency continues to approve State programs.
Second, industry commenters note that a clear understanding of
permit revision procedures is important as sources prepare their part
71 permit applications. The revision procedures of part 70 are more
clearly understood than any proposed procedures, having been
promulgated by EPA and adopted by many State programs. Third, adopting
the existing part 70 permit revision procedures insures a smooth
transition from a Federal operating permits program to a State program
due to the similarity between the two programs.
Finally, the Agency does not believe that many permit revisions
will occur during Phase I of this program. The timing of permit
issuance under part 71 is such that the Agency believes that few part
71 permits will be issued and fewer will need to be revised before
States receive part 70 approval or before Phase II of part 71 is
promulgated. Permit revision procedures in Phase I of the part 71 rule
become more essential the longer part 71 programs are in place without
a Phase II rule, which is possible if the Phase II rulemaking is
delayed.
b. Description of Permit Revision Procedures. The part 71 proposal
addressed permit revisions at proposed sections 71.7(d)-(h) using
proposed provisions from the August 1994 part 70 notice. Proposed
section 71.7(d) would have defined when a permit revision is necessary;
proposed section 71.7(e) would have addressed administrative
amendments; proposed sections 71.7 (f) and (g) would have addressed de
minimis permit revisions and minor permit revisions, respectively; and
proposed section 71.7(h) would have covered significant permit
revisions. All of these provisions have been deleted in today's rule,
and replaced with new provisions at sections 71.7 (d) and (e) that
track the corresponding provisions in the current part 70 rule
governing administrative amendments, minor permit modifications, and
significant permit modifications. The EPA directs interested persons to
the preamble to the final part 70 rule, 57 FR 32250 (July 21, 1992) for
a detailed description of these permit revision procedures.
Under section 71.7(d), changes eligible to be processed as
administrative amendments include administrative changes such as
correction of typographical errors, changes in mailing address,
ownership of the source (or part of the source) unless restricted by
title IV, contact persons, and changes in individuals who have assigned
responsibilities, (including the responsibility to sign permit
applications). Administrative permit amendments can be handled by
direct correspondence from the permitting authority to the facility
after the appropriate information related to the changes has been
supplied by the facility. As under current part 70, administrative
amendments could also be used to address ``enhanced NSR'' changes, to
which the permitting authority could also extend the permit shield.
Sections 71.7(e) (1) and (2), which address minor permit modification
procedures, are designed for small changes at a facility which will not
involve complicated regulatory determinations. A source may make a
change immediately upon filing an application for a minor permit
modification, prior to the time the permitting authority, affected
States, and EPA (in the case of a program delegated pursuant to section
71.10) review the application. Eligible changes could be processed
individually or in groups, but the permit shield may not extend to
these changes. Section 71.7(e)(3) covers significant modifications. In
this track, the public, the permitting authority, affected States, and
EPA (in the case of a program delegated pursuant to section 71.10) will
review the modification in the same manner as review during permit
issuance. The permit shield may extend to changes processed under this
track.
5. Permit Reopenings
The proposal addressed permit reopenings at proposed 71.7 (i) and
(j). These provisions were modeled on the existing provisions at
section 70.7 (f) and (g), as proposed to be revised in the August 1994
notice. One of the features of that approach was a specific provision
for reopening permits to incorporate new maximum achievable control
technology (MACT) standards promulgated under section 112 of the Act.
As part 70 has not yet been finally revised to adopt this approach, it
is premature at this time to adopt it for part 71. Consequently, in
order to more closely track the current part 70 rule and promote
consistency with State programs developed and approved under the
current rule, the part 71 provisions for permit reopenings adopted
today at sections 71.7 (f) and (g) are modeled on the existing
provisions at sections 70.7 (f) and (g), and do not include the
proposed provisions concerning reopening permits to incorporate new
MACT standards.
G. Section 71.8--Affected State Review
The provisions of section 71.8 differ from provisions proposed in
the part 71 proposal in several respects. First, because today's
rulemaking adopts permit revision procedures based on the current part
70 rule, rather than those that were proposed in April, the cross
references to section 71.7 were changed and the reference to de minimis
permit revisions has been deleted. In addition, the final rule
specifically provides, consistent with part 70, that timing of notice
to affected States of major permit modifications is not tied to the
timing of notice to the public.
Second, section 71.8(b) is being adopted to more consistently
follow section 70.8(b)(2) in providing that where EPA delegates
administration of a part 71 program, the permitting authority shall
transmit notice of refusal to accept recommendations of an affected
State as part of the permitting authority's submittal of the proposed
permit to EPA.
Third, as discussed in section III.B of this document, a new
paragraph (d) has been added to section 71.8 that requires that part 71
permitting authorities provide notice of certain permitting actions to
federally recognized Indian Tribes. While this is a departure from what
part 70 currently requires of State permitting authorities, EPA agrees
with commenters who suggested that federally recognized Indian Tribes
should not be required to establish compliance with any eligibility
criteria in order to be entitled to notice of Federal permitting
decisions that may affect Tribal air quality. One commenter suggested
that applying for treatment in the same manner as a State was a time
consuming and burdensome process for Indian Tribes and urged the
elimination of that requirement for Tribes to receive notice of
permitting actions. Consistent
[[Page 34223]]
with the Agency's policy of maintaining government-to-government
relationships with Indian Tribes, EPA (and delegate agencies) will
notify federally recognized Indian Tribes of draft permits that may be
issued to sources that could affect Tribal air quality, including all
draft permits issued by EPA for the Tribal area and all draft permits
for sources that are within 50 miles of the reservation boundary or the
Tribal area. Accordingly, the Agency has added a new paragraph that
provides that the part 71 permitting authority shall send notices of
draft permits to federally recognized Indian Tribes whose air quality
may be affected by the permitting action. The EPA is imposing upon
itself this responsibility in order to further its government-to-
government relationship with Tribes.
H. Section 71.9--Permit Fees
1. Two-Phase Promulgation of Fee Requirements
Consistent with the two-phased approach to part 71 promulgation
described in this notice, EPA is today adopting a two-phased approach
to part 71 fee requirements. Upon Phase I promulgation, collection of
fees should be sufficient to cover the anticipated program costs of
Phase I. On the other hand, because the cost of Phase II is tied to
procedures which will not be finalized until the Phase II rulemaking
(i.e., revised and streamlined permit revision procedures), a fee
amount for Phase II cannot be finalized in today's rule. Thus, the
Phase I fee covers all program costs except those associated with
permit revisions which are excluded because the Phase II rulemaking
will finalize streamlined permit revision procedures that will
ultimately differ substantially from those contained in today's rule.
Instead, the Phase II rulemaking will add to the fee the costs for the
new permit revision procedures when they are finalized. More
information on the determination of specific activities and costs
associated with each phase is contained in the document entitled
``Federal Operating Permits Program Costs and Fee Analysis (Revised),''
which is contained in the docket for this rulemaking.
The two-phased approach to fee requirements will not impact the
ultimate fee amount owed by a source. For the majority of sources, EPA
expects that the part 71 application and associated fee submittal will
occur after the Phase II rulemaking. For these sources, the fee will be
paid all at once. Sources that submit their applications prior to the
Phase II rulemaking will pay a Phase I fee in full at the time of
application. The balance of the fee necessary to cover the costs of the
Phase II provisions will be collected once the Phase II rule is
promulgated. The specific timing and amount of the Phase II fee
collection will be discussed in the Phase II rulemaking.
The EPA fully expects that the Phase II rulemaking finalizing
permit revision procedures will be completed before any part 71 permits
are issued and that no program costs will be incurred in the interim
period as a result of permit revisions. However, EPA recognizes that in
the unlikely event that a part 71 permit is both issued and revised
(under the interim revision procedures in today's rule) fees will not
have yet been collected to cover the cost of the revision and that if
the Phase II fee is finalized based on a streamlined permit revision
process, there may be a shortfall in revenue. However, the alternative
would be to finalize today a Phase I fee based on the interim revision
procedures that potentially overcharges sources and would necessitate,
if and when the permit revision procedures are streamlined as expected,
a refund. The EPA wishes to avoid this unnecessary and burdensome
process.
2. Fee Amount
The part 71 proposal proposed a base fee amount of $45 per ton/year
which was based on a fee analysis which projected EPA's direct and
indirect costs for implementing the part 71 program nationwide and
dividing that by the total emissions subject to the fee. A detailed
discussion of this methodology is found in ``Federal Operating Permits
Program Costs and Fee Analysis,'' which is contained in the docket for
this rulemaking. Using the same basic methodology as the original fee
analysis, EPA has calculated the costs of Phase I and has set the base
Phase I fee amount at $32 per ton/year to cover these costs. The
determination of this amount is contained in the report entitled,
``Federal Operating Permits Program Costs and Fee Analysis (Revised)''
(hereafter ``Revised Fee Analysis''), which is contained in the docket
for this rulemaking. As proposed, the fee will be adjusted based on the
level of contractor support needed for those programs where it is
necessary for EPA to use contractors.
One commenter suggested that the $3 per ton surcharge to cover EPA
oversight of contractor and delegated programs should be eliminated,
noting that EPA does not charge oversight fees for State part 70
programs. The EPA agrees and believes that such a surcharge would be
inconsistent with the approach taken in part 70. A full evaluation of
the April 1995 comments was made after the development of the August
1995 proposal, in which EPA proposed to eliminate the surcharge. This
evaluation of comments confirmed the direction EPA took in the August
1995 proposal. Therefore, today's action both responds to the April
comments and is consistent with the August 1995 proposal. Accordingly,
EPA is today deleting the surcharge provisions from sections 71.9(c)(2)
and (3). The EPA will continue to consider any comments received on the
supplemental proposal, and, if necessary, will take any additional
action on the surcharge in the Phase II rulemaking.
For reasons similar to those described in the preceding paragraphs
on the surcharge, the EPA is deleting ``preparing generally applicable
guidance regarding the permit program or its implementation or
enforcement'' from the list of activities in section 71.9(b) whose
costs are subject to fees. The EPA believes that this category
partially duplicates the fourth category under section 71.9(b), general
administrative costs. To the extent that it is not duplicative, it
refers to guidance that is issued before an individual part 71 program
is in place. The EPA does not require that States charge fees for these
activities for part 70 programs, and the Agency does not believe that
such costs should be included in part 71 fees. This change does not
result in a change in the fee structure because costs of activities
which occur before the effective date of the part 71 program were not
included in the original fee analysis. This change simply adjusts the
list of activities in section 71.9(b) to more accurately reflect the
activities whose costs were included in the fee analysis. Consistent
with the deletion of the surcharge, the EPA is taking this action based
on comments received on the part 71 proposal. If adverse public comment
is received regarding this change as proposed in the August 1995
supplemental proposal, the EPA will take additional action as necessary
in the Phase II rulemaking.
3. Fees for Delegated Programs
As discussed in the part 71 proposal, EPA intends to allow
delegation of part 71 programs to States in many cases. Originally, EPA
envisioned funding these delegated part 71 programs with revenue
generated from part 71 fees. However, EPA is aware that many delegate
agencies have the authority under State or local law to collect fees
adequate to fund delegated part 71 programs. In some cases, these
agencies could continue to collect fees even
[[Page 34224]]
though EPA would be collecting part 71 fees. Several commenters pointed
out that this would result in the undesirable situation of paying fees
to two permitting authorities. On the other hand, one commenter noted
that if a delegate agency, in deference to part 71, rescinds its
authority to collect fees, funding for the Small Business Assistance
Program (SBAP) in that State could be adversely affected.
The EPA believes that the best way to address both of these
situations is to suspend collection of part 71 fees for part 71
programs which are fully delegated to States and for which the State
has adequate authority under State law to fund fully-delegated part 71
activities with fees collected from part 71 sources. This ensures that
State revenue is available to administer the program, including the
SBAP, while addressing the commenters' concerns about double fees.
However, EPA cannot suspend fee collection for partially delegated part
71 programs, since in those situations EPA will still incur substantial
administrative costs. Suspension of EPA fee collection does not
constitute approval of the State's fee structure for part 70 purposes.
Rule language codifying this approach has been added to section
71.9(c)(2).
The suspension of part 71 fees for delegated programs was proposed
in the August 1995 supplemental proposal. While the timing of today's
promulgation has not allowed thorough evaluation of comments on that
proposal, the EPA agrees with the concerns about duplicate fees and the
SBAP which were raised in reference to the part 71 proposal. A full
evaluation of these comments was made after the development of the
August 1995 proposal on this issue. This evaluation confirmed the
direction EPA had taken in the August 1995 proposal. Therefore, today's
action both responds to the April comments and is consistent with the
August proposal. Furthermore, today's action is consistent with EPA's
position that its fees be based on program costs, because EPA will not
incur any program costs after it fully delegates a part 71 program. The
EPA will still evaluate all comments received on the August 1995
proposal and will take any necessary additional regulatory action on
the suspension of part 71 fees for delegated programs in the Phase II
rulemaking.
For part 71 programs that are delegated but for which EPA does not
waive fee collection, EPA's policy will be to continue to collect part
71 fees itself. The proposed fee amount for part 71 programs was based
on the assumption that certain activities would be more costly for EPA
to implement than for States due to increased travel, unfamiliarity
with individual sources, etc. However, commenters pointed out that when
a program is delegated, this assumption is not applicable. The EPA
agrees with this comment, and is today promulgating language
establishing a lower part 71 fee for delegated programs which omits the
increased cost assumption made for EPA-administered part 71 programs.
Where EPA continues to collect part 71 fees for a fully-delegated
program, the Phase I part 71 fee amount will be $24 per ton/year. The
determination of this amount is contained in the Revised Fee Analysis.
Furthermore, for partially delegated programs, the part 71 fee that EPA
collects will be lower than the fee for an EPA-administered program
because the fee will be adjusted to account for the proportion of
effort performed by the delegate agency at a lower cost. For these
programs, the Administrator will determine the fee according to the
formula in section 71.9(c)(4).
4. Timing of Fee Payment
The part 71 proposal provided that sources submitting their
initial fee calculation worksheets must pay one-third of the initial
fee upon submittal, and must pay the balance of the fee within 4
months. However, EPA believes that two changes discussed in today's
preamble make this installment approach to fee payment infeasible.
First, EPA is promulgating a later due date for permit applications,
which would mean that under the proposed installment approach, receipt
of two-thirds of the fee revenues would be delayed until the end of the
first year of the program, which would not provide adequate funding for
initial program activities. Second, EPA is promulgating a two-phased
approach to fee collection. The EPA believes that it would be
unnecessarily complicated and potentially confusing to provide for
installment payment of the fee for one or both phases. For these
reasons, EPA is promulgating language at section 71.9(e)(1) which
clarifies that payment of the full fee amount for the first year is due
upon submittal of the initial fee calculation worksheet.
In addition, because today's rule changes the due date for permit
applications, a change must also be made to the deadlines for the
initial part 71 fee calculation worksheets in the event that EPA
withdraws approval of a part 70 program. The proposal contained a
schedule for submission of the fee calculation worksheet based on SIC
code. The due dates ranged from 4 to 7 months after the effective date
of the part 71 program. Changes to section 71.9(f)(1) adjust the fee
calculation worksheet due dates to range from 6 to 9 months after the
part 71 effective date, depending on SIC code.
5. Computation of Emissions Subject to Fees
A commenter pointed out that the rule language in proposed section
71.9(c)(5)(ii) inadvertently limits the 4000 ton cap on emissions
subject to fees solely to programs administered by EPA, not delegated
or contractor-administered programs. Accordingly, the EPA has amended
this paragraph to clarify that the 4000 ton cap applies to all types of
part 71 programs.
6. Penalties
The part 71 proposal contained a penalty charge of 50 percent of
the fee amount if the fee is not paid within 30 days of the due date.
In addition, the proposal assessed a penalty of 50 percent on
underpayments with the 50 percent penalty assessed on the amount by
which the source underpaid the fee owed. The proposal also provided
relief from the penalty for certain underpayments where the source is
making an initial fee calculation based on estimated rather than actual
emissions. The proposal provided that where the underpayment results
from an underestimate of future emissions and where the underpayment
does not exceed 20 percent of the fee amount (i.e., where the source
pays more than 80 percent of the fee owed), no penalty would be
assessed.
Some industry commenters were concerned that establishing a penalty
for underpayment for a source that underpays by as little as 20 percent
would be too harsh in light of the uncertainty in making emissions
estimates. Although title V requires a penalty to be assessed for
failure to pay any fee lawfully imposed by the Administrator, the EPA
agrees that there is a degree of uncertainty in estimating emissions,
particularly for HAP sources, which are often smaller, and for which
emission factors are not well-defined.
Upon consideration of comments and evaluation of the relative
uncertainty of emission estimates for HAP listed pursuant to section
112(b) of the Act, the EPA is today promulgating in section 71.9(l)(4)
an underpayment penalty which differs slightly from the proposal. For
sources who base their initial fee calculation worksheet on estimated
rather than actual emissions, the EPA will, for HAP emissions, apply
the penalty to an underpayment of 50 percent or more. The penalty will
still apply to an underpayment of 20 percent
[[Page 34225]]
or more for non-HAP emissions. If a source is subject to fees for both
HAP and non-HAP emissions, the underpayment which would trigger a
penalty will be prorated based on what portion of the source's
emissions are HAP versus non-HAP. Thus, to determine whether an
underpayment would incur a penalty, such a source's HAP emissions would
be multiplied by the 50 percent rate, and its non-HAP emissions would
be multiplied by the 20 percent rate. The sum of these emissions rates
determines the level of underpayment which, if exceeded, would incur
the underpayment penalty. The EPA believes that this approach offers
significant relief to sources faced with difficulty in accurately
estimating their emissions, while still ensuring that adequate fee
revenues can be collected in a fair and timely manner.
7. Certification Requirement
The EPA believes that the correct interpretation of the part 71
certification requirement at section 71.5(d) is that it applies to all
fee calculation documents. However, for clarity, EPA is today adding a
requirement to sections 71.9(e) and (h) which requires certification of
the fee calculation worksheets by a responsible official. The added
language in section 71.9 is simply a cross reference to the language in
section 71.5(d).
I. Section 71.10--Delegation of Part 71 Program
1. Delegation of Authority Agreement
With respect to the content of Delegation of Authority Agreements,
EPA wishes to clarify that the adequacy of State permit fees must be
addressed when EPA waives collection of part 71 permit fees. As
described in section III.F.3 of this preamble, when EPA has determined
that a delegate agency has raised adequate fee revenue from sources
subject to title V to administer a fully-delegated part 71 program
absent any financial assistance from EPA, then EPA will waive
collection of part 71 fees. In such a case, the Delegation of Authority
Agreement would specify that the delegate agency has sufficient revenue
and will collect sufficient revenue from sources subject to title V to
administer all of its duties as outlined in the Agreement. The EPA will
not waive fees when the part 71 program is partially delegated or when
the delegate agency lacks sufficient revenue to fund the delegated part
71 program.
2. Appeal of Permits
The Agency has revised proposed section 71.10(i), which addresses
the petition process for permits issued by delegate agencies. In lieu
of restating which persons and parties may submit petitions to the
Environmental Appeal Board pursuant to section 71.11(l)(1), section
71.10(i) provides that the appeals of permits under delegated program
shall follow the procedures of section 71.11(l)(1).
3. Transmission of Information to EPA, Prohibition of Default Issuance,
and EPA Objections
The final rule also makes certain changes to the proposed
provisions addressing transmission of information to the Administrator,
the prohibition of default issuance of permits, and EPA objections to
proposed permits at sections 71.10(d), (f) and (g). Essentially, these
changes are being made today in order to better harmonize the final
rule with corresponding provisions in the currently promulgated part 70
rule at 70.8(a), (c) and (e). Regarding transmission of information to
EPA, the reference in proposed section 71.10(d)(1) to proposed section
71.7(a)(1)(v) has been rewritten, and proposed paragraphs (2) and (3)
have been merged into it in order to more closely track part 70. New
paragraph (2) has been adopted in order to achieve consistency with
section 70.8(a)(2).
The provision on prohibition of default issuance has been changed
to follow the existing provision at section 70.8(e). In proposed
section 71.10(f)(2), EPA had provided that the prohibition would not
apply to permit revisions processed through the proposed de minimis
permit revision track, following the August 1994 proposed revisions to
part 70. As that track is not being adopted in this Phase I rule, the
exception has been deleted.
Finally, section 71.10(g) on EPA objections has been changed from
the proposal in order to follow the test established under the current
part 70 rule for when EPA would object to proposed permits, and to
follow the promulgated part 70 language providing for what shall happen
when a permitting authority refuses to respond adequately to an EPA
objection. This change includes deletion of the proposed reference to
proposed section 71.7(a)(6), which is not being adopted as proposed in
this final rule.
J. Section 71.11--Administrative Record, Public Participation, and
Administrative Review
The Agency has chosen to establish part 71-specific rules in
today's promulgated section 71.11 for administrative procedures in
order to clarify for the public and the regulated community those
requirements associated specifically with Federal operating permits
under title V of the Act. Today's promulgated section 71.11 is based
closely on the provisions of 40 CFR part 124. Part 124 covers a number
of EPA permitting programs, and the process of identifying the separate
and distinct requirements associated with those individual programs can
be complex. The Agency feels that it is advantageous in this case to
describe the administrative procedures for today's promulgated part 71
within the rule itself, since that will avoid potential confusion as to
which provisions of part 124 apply to the part 71 program, and since
interested parties will not be required to refer to separate
regulations in discerning applicable administrative procedures.
Certain aspects of section 71.11 that would correspond to proposed
streamlined part 71 permit revision processes discussed in the preamble
to the supplemental part 70 and 71 proposed rules published on August
31, 1995 (60 FR 45529), are not addressed in today's notice because the
Agency is not yet prepared to conduct final rulemaking for those
processes. In the meantime, EPA is promulgating permit revision
processes based on the current part 70 rule in response to numerous
comments on the proposed part 71.
To accommodate basing part 71's permit revision procedures on the
existing part 70 rule, today's notice makes certain changes to the
regulatory language of section 71.11 as proposed on April 27, 1995 (60
FR 20804) in order to apply administrative procedures to the permit
revision tracks as appropriate. Changes to the regulatory language that
make reference to permit revision procedures were made in the first
paragraph of section 71.11 and in section 71.11(l)(1). These sections
make reference to specific types of permit revisions which in this
promulgated rule are those permit revision procedures found in 40 CFR
part 70, rather than the four-track permit revision procedures in the
April 27, 1995 proposed part 71. Section 71.11(l)(1) describes the 30-
day period within which a person may request review of a final permit
decision. For significant modifications, the 30-day period begins with
the service of notice of the permitting authority's action. This is
unchanged from the proposal. For minor permit modifications and
administrative amendments, the 30-day period begins on the date the
minor permit modification or administrative amendment is effective.
Section 71.11(d)(3)(i)(D) has been modified in response to comments
[[Page 34226]]
received which noted that under the proposal a requirement to notify
any unit of local government having jurisdiction over the area where a
source is located would result in notices to components of government
which have no relationship to air quality and its impacts. Promulgated
section 71.11(d)(3)(i)(D) stipulates that the local emergency planning
committee (not ``any'' unit of local government) and State agencies
having authority under State law with respect to the operation of the
source are among the entities to receive a copy of notices of
activities described in section 71.11(d)(1)(i).
Additional changes to the regulatory language of section 71.11
relate to treatment of a final permit decision as enforceable and
effective where review by the EAB has been requested. In proposed
sections 71.11(i)(2) and 71.11(l)(6), the Agency proposed that a final
permit decision would become effective immediately upon issuance of
that decision unless a later effective date were specified in the
decision. It was pointed out by several commenters that, in other EPA
permitting programs, such as the Resource Conservation and Recovery Act
and PSD programs, an appeal request stays the effectiveness of a final
permit decision. See 40 CFR section 124.15(b)(2). The EPA agrees that
it would be unfair to force permittees to comply with permit terms
during the time that they are subject to appeal, and that the proposal
was inappropriately inconsistent with part 124 on this point. Thus,
sections 71.11(i)(2) and 71.11(l)(6) have been promulgated to conform
to the longstanding Agency approach reflected in 40 CFR section 124.15,
so that permittees are not unfairly required to comply with permit
terms pending their review by the EAB. Under the final rule, those
specific permit terms and conditions that are the subject of an appeal
to EAB would be stayed, while the rest of the permit would become
effective as otherwise provided in section 71.11(i)(2). Moreover,
section 71.11 (i)(2) itself has been changed so that it better tracks
part 124, which makes final permit issuance decisions immediately
effective only where no comments requested a change in the draft
permit; otherwise, permits are effective than sooner than 30 days after
the issuance decision or following the conclusion of appeal
proceedings, as applicable.
In response to comments which expressed concern that applicants
should be able to appeal a final permit decision even in the absence of
having commented on a draft permit, the Agency believes that applicants
can appeal if the final permit differs from the draft permit, even if
the applicant did not submit comments on the draft permit. The Agency
does not believe it would be appropriate to allow applicants to appeal
where the final permit is identical to the draft permit, and the
applicant had not commented on the draft permit. It is a far more
efficient use of resources to resolve permitting issues in the
administrative issuance process, rather than to allow applicants to
raise issues on draft permits for the first time on appeal. To further
clarify the ability of the applicant to appeal a final permit, the
following language has been added to section 71.11(l)(1): ``or other
new grounds that were not reasonably foreseeable during the public
comment period on the draft permit''.
Section 71.11(l)(6) has been added, incorporating language from 40
CFR part 124. Part 124 establishes general procedures clarifying the
rules to which appellants are subject in all permit programs under part
124, and therefore EPA believes it is appropriate to extend these
provisions to part 71 as well. This section outlines procedures for
motions for reconsideration of appeals of final orders. It stipulates a
10 day deadline for motions, and notes that motions are to be directed
to the EAB, unless the case had been referred to the Administrator by
the Board, and in which the Administrator had issued the final order.
The effective date of the final order is not stayed unless specifically
so ordered by the Board.
One commenter suggested that the proposal's requirement of a right
to appeal every permit decision would be overly burdensome, commenting
that even de minimis revisions would be subject to appeal. The EPA
notes that final part 71 permitting actions are final actions for
purposes of judicial review under section 307(b)(1) of the Act.
Consequently, EPA does not have the discretion to eliminate the
opportunity for judicial review of final part 71 permitting actions.
Moreover, EPA disagrees that requiring administrative appeal to the EAB
as a prerequisite to judicial review is either redundant or jeopardizes
a source's ability to rely on its permit. Requiring administrative
exhaustion of remedies is longstanding practice in EPA permit programs,
and EPA notes that States with approved part 70 programs generally
require administrative appeal as a prerequisite to challenging permits
in State court. Also, in requiring administrative exhaustion,
litigation in Federal court over permit actions will often be avoided,
thus conserving both public and private resources. Finally, since
pending administrative appeal sources will be able to rely on the
application shield, they will not be placed in any greater ``jeopardy''
than if they had directly appealed the final permit to Federal court.
Changes have been made to section 71.11(n) to replace the term
``Administrator'' with ``permitting authority,'' to allow for those
circumstances where a State has been delegated a part 71 program by
EPA.
IV. Administrative Requirements
A. Docket
The docket for this regulatory action is A-93-51. All the documents
referenced in this preamble fall into one of two categories. They are
either reference materials that are considered to be generally
available to the public, or they are memoranda and reports prepared
specifically for this rulemaking. Both types of documents can be found
in Docket No. A-93-51.
B. Executive Order 12866
Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to the Office of Management and Budget (OMB)
review and the requirements of the Executive Order. The Order defines
``significant'' regulatory action as one that is likely to lead to a
rule that may:
(1) Have an annual effect on the economy of $100 million or more,
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local or Tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan program or the rights and obligation of recipients
thereof;
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of Executive Order 12866, it has been
determined that this rule is a ``significant'' regulatory action. As
such, this action was submitted to OMB for review. Changes made in
response to OMB suggestions or recommendations will be documented in
the public record.
The EPA has estimated the annualized cost of the part 71 program
based on the number of sources that would be subject to part 71
permitting requirements in the 8 States where EPA
[[Page 34227]]
believes the program will be implemented. A survey of those States
showed that the number of part 71 sources in those States (many of
which are not heavily industrialized) is much smaller than EPA's
original estimates. The EPA had previously assumed that part 71 sources
in 8 States would comprise 16 percent of all title V sources. However,
in the States where EPA is likely to administer a part 71 program, the
part 71 source population comprises slightly less than 6 percent of all
title V sources. The estimated annualized cost of implementing the part
71 program is $19.8 million to the Federal government and $18.1 million
to respondents, for a total of $37.9 million which reflects industry's
total expected costs of complying with the program. Since any costs
incurred by the Agency in administering a program would be recaptured
through fees imposed on sources, the true cost to the Federal
government is zero. The requirements for the costs result from section
502(d) of title V which mandates that EPA develop a Federal operating
permits program. The draft regulatory impact analysis (RIA) was made
available for public comment as part of the April 27, 1995 proposal.
The primary difference between the current RIA and the prior draft is
that the RIA now assesses impacts based on the streamlined permit
revision procedures that were proposed for part 70 and 71 in August of
1995, in lieu of the more cumbersome 4-track permit revision procedure
that was contained in the part 71 proposal. The proposed program is
designed to improve air quality by: indirectly improving the quality of
State-administered operating permits programs; encouraging the adoption
of lower cost control strategies based on economic incentive
approaches; improving the effectiveness of enforcement and oversight of
source compliance; facilitating the implementation of other titles of
the Act, such as title I; and improving the quality of emissions data
and other source-related data.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601) requires EPA to
consider potential impacts of proposed regulations on small entities.
If a preliminary analysis indicates that a proposed regulation would
have a significant adverse economic impact on a substantial number of
small entities, then a regulatory flexibility analysis must be
prepared.
The original part 70 rule and the recently proposed revisions to
part 70 were determined to not have a significant adverse impact on
small entities. See 57 FR 32250, 32294 (July 21, 1992), and 60 FR
45530, 45563 (Aug. 31, 1995). Similarly, a regulatory flexibility
screening analysis of the part 71 rule revealed that the rule would not
have a significant adverse impact on a substantial number of small
entities, since few small entities would be subject to part 71
permitting requirements as a result of the rule's deferral of the
requirement to obtain a permit for nonmajor sources.
Consequently, I hereby certify that the part 71 regulations will
not have a significant adverse effect on a substantial number of small
entities.
D. Paperwork Reduction Act
The OMB has approved the information collection requirements
contained in this rule under the provisions of the Paperwork Reduction
Act, 44 U.S.C. 3501 et. seq. and has assigned OMB control number 2060-
0336.
The information is planned to be collected to enable EPA to carry
out its obligations under the Act to determine which sources are
subject to the Federal Operating Permits Program and what requirements
should be included in permits for sources subject to the program.
Responses to the collection of information will be mandatory under
section 71.5(a) which requires owners or operators of sources subject
to the program to submit a timely and complete permit application and
under sections 71.6 (a) and (c) which require that permits include
requirements related to recordkeeping and reporting. As provided in 42
U.S.C. 7661b(e), sources may assert a business confidentiality claim
for the information collected under section 114(c) of the Act.
The annual average burden on sources for the collection of
information is approximately 678,000 hours per year, or 329 hours per
source. The annual cost for the collection of information to
respondents is $18.1 million per year. The EPA has estimated the
annualized costs based on the number of sources that would be subject
to part 71 permitting requirements in the 8 States where EPA believes
the program will be implemented, most of which have fewer than average
number of part 71 sources per State. There is no burden for State and
local agencies. The annual cost to the Federal government is $19.8
million (assuming part 71 programs are delegated), which is recovered
from sources through permit fees. Thus, the total annual cost to
sources would be $37.9 million. Burden means the total time, effort, or
financial resources expended by persons to generate, maintain, retain,
or disclose or provide information to or for a Federal agency. This
includes the time needed to review instructions; develop, acquire,
install, and utilize technology and systems for the purposes of
collecting, validating, and verifying information, processing and
maintaining information, and disclosing and providing information;
adjust the existing ways to comply with any previously applicable
instructions and requirements; train personnel to be able to respond to
a collection of information; search data sources; complete and review
the collection of information; and transmit or otherwise disclose the
information.
An Agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15. The EPA
is amending the table in 40 CFR part 9 of currently approved
information collection request (ICR) control numbers issued by OMB for
various regulations to list the information requirements contained in
this final rule.
Send comments on the Agency's need for this information, the
accuracy of the provided burden estimates, and any suggested methods
for minimizing respondent burden, including through the use of
automated collection techniques, to the Director, Regulatory
Information Division, Office of Policy, Planning, and Evaluation, U.S.
Environmental Protection Agency (2136), 401 M Street, S.W., Washington,
DC 20460, and to the Office of Information and Regulatory Affairs,
Office of Management and Budget, 725 17th St., N.W., Washington, DC
20503, marked ``Attention: Desk Officer for EPA.'' Include the ICR
number in any correspondence.
E. Unfunded Mandates Reform Act
As noted in the ICR document, today's action imposes no costs on
State, local and Tribal governments. This is because the EPA incurs all
costs in cases where it implements a part 71 program. A State, local,
or Tribal government will incur costs where it elects to take
delegation of a part 71 program. As noted in the ICR document, EPA
expects that, of the estimated eight part 71 programs, States will take
delegation of all eight programs. However, the costs of running these
delegated programs do not represent costs imposed by today's action.
This is because the costs of running a delegated part 71 program are
essentially the same
[[Page 34228]]
as those of running an approved part 70 program. Furthermore, taking
delegation is optional on the part of States. Regardless of whether a
State, local, or Tribal agency chooses to take delegation of a part 71
program, the costs to these agencies imposed by this rule over and
above the costs of existing part 70 requirements are zero.
Regarding the private sector, the EPA estimates that the total cost
of complying with the part 71 program would be $37.9 million per year,
assuming that the part 71 program is in effect in 8 States. The
estimated costs of collection of information would be $18.1 million per
year, and $19.8 million would be collected in fees.
For these reasons, EPA believes that the total direct costs to
industry under today's action would not exceed $100 million in any 1
year. Therefore, the Agency concludes that it is not required by
Section 202 of the Unfunded Mandates Reform Act of 1995 to provide a
written statement to accompany this regulatory action because
promulgation of the rule would not result in the expenditure by State,
local, and Tribal governments, in the aggregate or by the private
sector, of $100,000,000 or more in any 1 year.
F. Submission to Congress and the General Accounting Office
Under section 801(a)(1)(A) of the Administrative Procedure Act
(APA), as amended by the Small Business Regulatory Enforcement Fairness
Act of 1996, EPA submitted a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the General Accounting
Office prior to publication of the rule in today's Federal Register.
This rule is not a ``major rule'' as defined by section 804(2) of the
APA as amended.
List of Subjects
40 CFR Part 9
Reporting and Recordkeeping Requirements
40 CFR Part 55
Environmental Protection Air pollution control, Outer continental
shelf, Operating permits.
40 CFR Part 71
Air pollution control, Prevention of significant deterioration, New
source review, Fugitive emissions, Particulate matter, Volatile organic
compounds, Nitrogen dioxide, Carbon monoxide, Hydrocarbons, Lead,
Operating permits, Indian Tribes, Air pollution control--Tribal
authority.
Dated: June 19, 1996.
Carol M. Browner,
Administrator.
For the reasons set out in the preamble, title 40, chapter I of the
Code of Federal Regulations is amended as set forth below.
PART 9--[AMENDED]
1. In Part 9:
a. The authority citation for part 9 continues to read as follows:
Authority: 7 U.S.C. 135 et seq., 136-136y; 15 U.S.C. 2001, 2003,
2005, 2006, 2601-2671; 21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33
U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318, 1321, 1326, 1330,
1342, 1344, 1345 (d) and (e), 1361; E.O. 11735, 38 FR 21243, 3 CFR,
1971-1975 Comp. p. 973; 42 U.S.C. 241, 242b, 243, 246, 300f, 300g,
300g-1, 300g-2, 300g-3, 300g-4, 300g-5, 300g-6, 300j-1, 300j-2,
300j-3, 300j-4, 300j-9, 1857 et seq., 6901-6992k, 7401-7671q, 7542,
9601-9657, 11023, 11048.
b. Section 9.1 is amended by adding the new entries to the table
under the indicated heading in numerical order to read as follows:
Sec. 9.1 OMB approvals under the Paperwork Reduction Act.
* * * * *
------------------------------------------------------------------------
OMB control
40 CFR Citation No.
------------------------------------------------------------------------
* * * * *
Federal Operating Permit Programs
71.5....................................................... 2060-0336
71.6(a),(c),(d),(g)........................................ 2060-0336
71.7....................................................... 2060-0336
71.9(e)-(j)................................................ 2060-0336
* * * * *
------------------------------------------------------------------------
PART 55--[AMENDED]
2. The authority citation for part 55 continues to read as follows:
Authority: Section 328 of the Clean Air Act (Act) (42 U.S.C.
7401, et seq.) as amended by Public Law 101-549.
3. Section 55.6 is amended by adding paragraph (c)(3) to read as
follows:
Sec. 55.6 Permit requirements.
* * * * *
(c) * * *
(3) If the COA does not have an operating permits program approved
pursuant to 40 CFR part 70 or if EPA has determined that the COA is not
adequately implementing an approved program, the applicable
requirements of 40 CFR part 71, the Federal operating permits program,
shall apply to the OCS sources. The applicable requirements of 40 CFR
part 71 will be implemented and enforced by the Administrator. The
Administrator may delegate the authority to implement and enforce all
or part of a Federal operating permits program to a State pursuant to
Sec. 55.11 of this part.
* * * * *
4. Section 55.10 is amended by revising paragraph (a)(1) and by
adding paragraph (b) to read as follows:
Sec. 55.10 Fees.
(a) * * *
(1) The EPA will calculate and collect operating permit fees from
OCS sources in accordance with the requirements of 40 CFR part 71.
* * * * *
(b) The OCS sources located beyond 25 miles of States' seaward
boundaries. The EPA will calculate and collect operating permit fees
from OCS sources in accordance with the requirements of 40 CFR part 71.
5. Section 55.13 is amended by adding paragraph (f) to read as
follows:
Sec. 55.13 Federal requirements that apply to OCS sources.
* * * * *
(f) 40 CFR part 71 shall apply to OCS sources:
(1) Located within 25 miles of States' seaward boundaries if the
requirements of 40 CFR part 71 are in effect in the COA.
(2) Located beyond 25 miles of States' seaward boundaries.
(3) When an operating permits program approved pursuant to 40 CFR
part 70 is in effect in the COA and a Federal operating permit is
issued to satisfy an EPA objection pursuant to 40 CFR 71.4(e).
* * * * *
PART 71--[AMENDED]
6. The authority citation for part 71 continues to read as follows:
Authority: 42 U.S.C. 7401 et seq.
7. Subpart A of part 71 consisting of Secs. 71.1 through 71.12 is
added to read as follows:
Subpart A--Operating Permits
Sec.
71.1 Program overview.
71.2 Definitions.
71.3 Sources subject to permitting requirements.
71.4 Program implementation.
71.5 Permit applications.
71.6 Permit content.
71.7 Permit issuance, renewal, reopenings, and revisions.
71.8 Affected State review.
71.9 Permit fees.
71.10 Delegation of part 71 program.
[[Page 34229]]
71.11 Administrative record, public participation, and
administrative review.
71.12 Prohibited acts.
Subpart A--Operating Permits
Sec. 71.1 Program overview.
(a) This part sets forth the comprehensive Federal air quality
operating permits permitting program consistent with the requirements
of title V of the Act (42 U.S.C. 7401 et seq.) and defines the
requirements and the corresponding standards and procedures by which
the Administrator will issue operating permits. This permitting program
is designed to promote timely and efficient implementation of goals and
requirements of the Act.
(b) All sources subject to the operating permit requirements of
title V and this part shall have a permit to operate that assures
compliance by the source with all applicable requirements.
(c) The requirements of this part, including provisions regarding
schedules for submission and approval or disapproval of permit
applications, shall apply to the permitting of affected sources under
the acid rain program, except as provided herein or as modified by
title IV of the Act and 40 CFR parts 72 through 78.
(d) Issuance of permits under this part may be coordinated with
issuance of permits under the Resource Conservation and Recovery Act
(42 U.S.C. 6901 et seq.) and under the Clean Water Act (33 U.S.C. 1251
et seq.), whether issued by the State, the U.S. Environmental
Protection Agency (EPA), or the U.S. Army Corps of Engineers.
(e) Nothing in this part shall prevent a State from administering
an operating permits program and establishing more stringent
requirements not inconsistent with the Act.
Sec. 71.2 Definitions.
The following definitions apply to part 71. Except as specifically
provided in this section, terms used in this part retain the meaning
accorded them under the applicable requirements of the Act.
Act means the Clean Air Act, as amended, 42 U.S.C. 7401 et seq.
Affected source shall have the meaning given to it in 40 CFR 72.2.
Affected States are:
(1) All States and Tribal areas whose air quality may be affected
and that are contiguous to the State or Tribal area in which the
permit, permit modification or permit renewal is being proposed; or
that are within 50 miles of the permitted source. A Tribe and any
associated Tribal area shall be treated as a State under this paragraph
(1) only if EPA has determined that the Tribe is an eligible Tribe.
(2) The State or Tribal area in which a part 71 permit, permit
modification, or permit renewal is being proposed. A Tribe and any
associated Tribal area shall be treated as a State under this paragraph
(2) only if EPA has determined that the Tribe is an eligible Tribe.
(3) Those areas within the jurisdiction of the air pollution
control agency for the area in which a part 71 permit, permit
modification, or permit renewal is being proposed.
Affected unit shall have the meaning given to it in 40 CFR 72.2.
Applicable requirement means all of the following as they apply to
emissions units in a part 71 source (including requirements that have
been promulgated or approved by EPA through rulemaking at the time of
issuance but have future compliance dates):
(1) Any standard or other requirement provided for in the
applicable implementation plan approved or promulgated by EPA through
rulemaking under title I of the Act that implements the relevant
requirements of the Act, including any revisions to that plan
promulgated in part 52 of this chapter;
(2) Any term or condition of any preconstruction permits issued
pursuant to regulations approved or promulgated through rulemaking
under title I, including parts C or D, of the Act;
(3) Any standard or other requirement under section 111 of the Act,
including section 111(d);
(4) Any standard or other requirement under section 112 of the Act,
including any requirement concerning accident prevention under section
112(r)(7) of the Act;
(5) Any standard or other requirement of the acid rain program
under title IV of the Act or 40 CFR parts 72 through 78;
(6) Any requirements established pursuant to section 114(a)(3) or
504(b) of the Act;
(7) Any standard or other requirement governing solid waste
incineration, under section 129 of the Act;
(8) Any standard or other requirement for consumer and commercial
products, under section 183(e) of the Act;
(9) Any standard or other requirement for tank vessels, under
section 183(f) of the Act;
(10) Any standard or other requirement of the program to control
air pollution from outer continental shelf sources, under section 328
of the Act;
(11) Any standard or other requirement of the regulations
promulgated at 40 CFR part 82 to protect stratospheric ozone under
title VI of the Act, unless the Administrator has determined that such
requirements need not be contained in a title V permit; and
(12) Any national ambient air quality standard or increment or
visibility requirement under part C of title I of the Act, but only as
it would apply to temporary sources permitted pursuant to section
504(e) of the Act.
Delegate agency means the State air pollution control agency, local
agency, other State agency, Tribal agency, or other agency authorized
by the Administrator pursuant to Sec. 71.10 to carry out all or part of
a permit program under part 71.
Designated representative shall have the meaning given to it in
section 402(26) of the Act and 40 CFR 72.2.
Draft permit means the version of a permit for which the permitting
authority offers public participation under Sec. 71.7 or Sec. 71.11 and
affected State review under Sec. 71.8.
Eligible Indian Tribe or eligible Tribe means a Tribe that has been
determined by EPA to meet the criteria for being treated in the same
manner as a State, pursuant to the regulations implementing section
301(d)(2) of the Act.
Emissions allowable under the permit means a federally enforceable
permit term or condition determined at issuance to be required by an
applicable requirement that establishes an emissions limit (including a
work practice standard) or a federally enforceable emissions cap that
the source has assumed to avoid an applicable requirement to which the
source would otherwise be subject.
Emissions unit means any part or activity of a stationary source
that emits or has the potential to emit any regulated air pollutant or
any pollutant listed under section 112(b) of the Act. This term is not
meant to alter or affect the definition of the term ``unit'' for
purposes of title IV of the Act.
EPA or the Administrator means the Administrator of the U.S.
Environmental Protection Agency (EPA) or his or her designee.
Federal Indian reservation, Indian reservation or reservation means
all land within the limits of any Indian reservation under the
jurisdiction of the United States Government, notwithstanding the
issuance of any patent, and including rights-of-way running through the
reservation.
Final permit means the version of a part 71 permit issued by the
permitting
[[Page 34230]]
authority that has completed all review procedures required by
Secs. 71.7, 71.8, and 71.11.
Fugitive emissions are those emissions which could not reasonably
pass through a stack, chimney, vent, or other functionally-equivalent
opening.
General permit means a part 71 permit that meets the requirements
of Sec. 71.6(d).
Indian Tribe or Tribe means any Indian Tribe, band, nation, or
other organized group or community, including any Alaskan 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.
Major source means any stationary source (or any group of
stationary sources that are located on one or more contiguous or
adjacent properties, and are under common control of the same person
(or persons under common control)), belonging to a single major
industrial grouping and that are described in paragraph (1), (2), or
(3) of this definition. For the purposes of defining ``major source,''
a stationary source or group of stationary sources shall be considered
part of a single industrial grouping if all of the pollutant emitting
activities at such source or group of sources on contiguous or adjacent
properties belong to the same Major Group (i.e., all have the same two-
digit code) as described in the Standard Industrial Classification
Manual, 1987.
(1) A major source under section 112 of the Act, which is defined
as:
(i) For pollutants other than radionuclides, any stationary source
or group of stationary sources located within a contiguous area and
under common control that emits or has the potential to emit, in the
aggregate, 10 tpy or more of any hazardous air pollutant which has been
listed pursuant to section 112(b) of the Act, 25 tpy or more of any
combination of such hazardous air pollutants, or such lesser quantity
as the Administrator may establish by rule. Notwithstanding the
preceding sentence, emissions from any oil or gas exploration or
production well (with its associated equipment) and emissions from any
pipeline compressor or pump station shall not be aggregated with
emissions from other similar units, whether or not such units are in a
contiguous area or under common control, to determine whether such
units or stations are major sources; or
(ii) For radionuclides, ``major source'' shall have the meaning
specified by the Administrator by rule.
(2) A major stationary source of air pollutants or any group of
stationary sources as defined in section 302 of the Act, that directly
emits, or has the potential to emit, 100 tpy or more of any air
pollutant (including any major source of fugitive emissions of any such
pollutant, as determined by rule by the Administrator). The fugitive
emissions of a stationary source shall not be considered in determining
whether it is a major stationary source for the purposes of section
302(j) of the Act, unless the source belongs to one of the following
categories of stationary source:
(i) Coal cleaning plants (with thermal dryers);
(ii) Kraft pulp mills;
(iii) Portland cement plants;
(iv) Primary zinc smelters;
(v) Iron and steel mills;
(vi) Primary aluminum ore reduction plants;
(vii) Primary copper smelters;
(viii) Municipal incinerators capable of charging more than 250
tons of refuse per day;
(ix) Hydrofluoric, sulfuric, or nitric acid plants;
(x) Petroleum refineries;
(xi) Lime plants;
(xii) Phosphate rock processing plants;
(xiii) Coke oven batteries;
(xiv) Sulfur recovery plants;
(xv) Carbon black plants (furnace process);
(xvi) Primary lead smelters;
(xvii) Fuel conversion plants;
(xviii) Sintering plants;
(xix) Secondary metal production plants;
(xx) Chemical process plants;
(xxi) Fossil-fuel boilers (or combination thereof) totaling more
than 250 million British thermal units per hour heat input;
(xxii) Petroleum storage and transfer units with a total storage
capacity exceeding 300,000 barrels;
(xxiii) Taconite ore processing plants;
(xxiv) Glass fiber processing plants;
(xxv) Charcoal production plants;
(xxvi) Fossil-fuel-fired steam electric plants of more than 250
million British thermal units per hour heat input; or
(xxvii) Any other stationary source category which, as of August 7,
1980, is being regulated under section 111 or 112 of the Act.
(3) A major stationary source as defined in part D of title I of
the Act, including:
(i) For ozone nonattainment areas, sources with the potential to
emit 100 tpy or more of volatile organic compounds or oxides of
nitrogen in areas classified as ``marginal'' or ``moderate,'' 50 tpy or
more in areas classified as ``serious''; 25 tpy or more in areas
classified as ``severe,'' and 10 tpy or more in areas classified as
``extreme''; except that the references in this paragraph (3)(i) to
100, 50, 25, and 10 tpy of nitrogen oxides shall not apply with respect
to any source for which the Administrator has made a finding, under
section 182(f) (1) or (2) of the Act, that requirements under section
182(f) of the Act do not apply;
(ii) For ozone transport regions established pursuant to section
184 of the Act, sources with the potential to emit 50 tpy or more of
volatile organic compounds;
(iii) For carbon monoxide nonattainment areas:
(A) That are classified as ``serious,'' and
(B) in which stationary sources contribute significantly to carbon
monoxide levels as determined under rules issued by the Administrator,
sources with the potential to emit 50 tpy or more of carbon monoxide;
and
(iv) For particulate matter (PM-10) nonattainment areas classified
as ``serious,'' sources with the potential to emit 70 tpy or more of
PM-10.
Part 70 permit means any permit or group of permits covering a part
70 source that has been issued, renewed, amended or revised pursuant to
40 CFR part 70.
Part 70 program or State program means a program approved by the
Administrator under 40 CFR part 70.
Part 70 source means any source subject to the permitting
requirements of 40 CFR part 70, as provided in Secs. 70.3(a) and
70.3(b).
Part 71 permit, or permit (unless the context suggests otherwise)
means any permit or group of permits covering a part 71 source that has
been issued, renewed, amended or revised pursuant to this part.
Part 71 program means a Federal operating permits program under
this part.
Part 71 source means any source subject to the permitting
requirements of this part, as provided in Secs. 71.3(a) and 71.3(b).
Permit modification means a revision to a part 71 permit that meets
the requirements of Sec. 71.7(e).
Permit program costs means all reasonable (direct and indirect)
costs required to administer an operating permits program, as set forth
in Sec. 71.9(b).
Permit revision means any permit modification or administrative
permit amendment.
Permitting authority means one of the following:
(1) The Administrator, in the case of EPA-implemented programs;
[[Page 34231]]
(2) A delegate agency authorized by the Administrator to carry out
a Federal permit program under this part; or
(3) The State air pollution control agency, local agency, other
State agency, Indian Tribe, or other agency authorized by the
Administrator to carry out a permit program under 40 CFR part 70.
Proposed permit means the version of a permit that the delegate
agency proposes to issue and forwards to the Administrator for review
in compliance with Sec. 71.10(d).
Regulated air pollutant means the following:
(1) Nitrogen oxides or any volatile organic compounds;
(2) Any pollutant for which a national ambient air quality standard
has been promulgated;
(3) Any pollutant that is subject to any standard promulgated under
section 111 of the Act;
(4) Any Class I or II substance subject to a standard promulgated
under or established by title VI of the Act; or
(5) Any pollutant subject to a standard promulgated under section
112 of the Act or other requirements established under section 112 of
the Act, including sections 112 (g), (j), and (r) of the Act, including
the following:
(i) Any pollutant subject to requirements under section 112(j) of
the Act. If the Administrator fails to promulgate a standard by the
date established pursuant to section 112(e) of the Act, any pollutant
for which a subject source would be major shall be considered to be
regulated on the date 18 months after the applicable date established
pursuant to section 112(e) of the Act; and
(ii) Any pollutant for which the requirements of section 112(g)(2)
of the Act have been met, but only with respect to the individual
source subject to section 112(g)(2) requirements.
Regulated pollutant (for fee calculation), which is used only for
purposes of Sec. 71.9(c), means any regulated air pollutant except the
following:
(1) Carbon monoxide;
(2) Any pollutant that is a regulated air pollutant solely because
it is a Class I or II substance subject to a standard promulgated under
or established by title VI of the Act; or
(3) Any pollutant that is a regulated air pollutant solely because
it is subject to a standard or regulation under section 112(r) of the
Act.
Renewal means the process by which a permit is reissued at the end
of its term.
Responsible official means one of the following:
(1) For a corporation: a president, secretary, treasurer, or vice-
president of the corporation in charge of a principal business
function, or any other person who performs similar policy or decision-
making functions for the corporation, or a duly authorized
representative of such person if the representative is responsible for
the overall operation of one or more manufacturing, production, or
operating facilities applying for or subject to a permit and either:
(i) the facilities employ more than 250 persons or have gross
annual sales or expenditures exceeding $25 million (in second quarter
1980 dollars); or
(ii) the delegation of authority to such representative is approved
in advance by the permitting authority;
(2) For a partnership or sole proprietorship: a general partner or
the proprietor, respectively;
(3) For a municipality, State, Federal, or other public agency:
Either a principal executive officer or ranking elected official. For
the purposes of this part, a principal executive officer of a Federal
agency includes the chief executive officer having responsibility for
the overall operations of a principal geographic unit of the agency
(e.g., a Regional Administrator of EPA); or
(4) For affected sources:
(i) The designated representative insofar as actions, standards,
requirements, or prohibitions under title IV of the Act or 40 CFR parts
72 through 78 are concerned; and
(ii) The designated representative for any other purposes under
part 71.
Section 502(b)(10) changes are changes that contravene an express
permit term. Such changes do not include changes that would violate
applicable requirements or contravene federally enforceable permit
terms and conditions that are monitoring (including test methods),
recordkeeping, reporting, or compliance certification requirements.
State means any non-Federal permitting authority, including any
local agency, interstate association, or statewide program. The term
``State'' also includes the District of Columbia, the Commonwealth of
Puerto Rico, the Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Marianas Islands. Where such meaning is
clear from the context, ``State'' shall have its conventional meaning.
For purposes of the acid rain program, the term ``State'' shall be
limited to authorities within the 48 contiguous States and the District
of Columbia as provided in section 402(14) of the Act.
Stationary source means any building, structure, facility, or
installation that emits or may emit any regulated air pollutant or any
pollutant listed under section 112(b) of the Act.
Sec. 71.3 Sources Subject to Permitting Requirements.
(a) Part 71 sources. The following sources are subject to the
permitting requirements under this part:
(1) Any major source;
(2) Any source, including an area source, subject to a standard,
limitation, or other requirement under section 111 of the Act;
(3) Any source, including an area source, subject to a standard or
other requirement under section 112 of the Act, except that a source is
not required to obtain a permit solely because it is subject to
regulations or requirements under section 112(r) of the Act;
(4) Any affected source; and
(5) Any source in a source category designated by the Administrator
pursuant to this section.
(b) Source category exemptions. (1) All sources listed in paragraph
(a) of this section that are not major sources, affected sources, or
solid waste incineration units required
FR Doc. 96-16257 Federal Operating Permits Program
to obtain a permit pursuant to
section 129(e) of the Act are exempted from the obligation to obtain a
part 71 permit until such time as the Administrator completes a
rulemaking to determine how the program should be structured for
nonmajor sources and the appropriateness of any permanent exemptions in
addition to those provided for in paragraph (b)(4) of this section.
(2) In the case of nonmajor sources subject to a standard or other
requirement under either section 111 or 112 of the Act after July 21,
1992 publication, the Administrator will determine whether to exempt
any or all such applicable sources from the requirement to obtain a
part 70 or part 71 permit at the time that the new standard is
promulgated.
(3) Any source listed in paragraph (a) of this section exempt from
the requirement to obtain a permit under this section may opt to apply
for a permit under a part 71 program.
(4) The following source categories are exempted from the
obligation to obtain a part 71 permit:
(i) All sources and source categories that would be required to
obtain a permit solely because they are subject to 40 CFR part 60,
Subpart AAA---Standards of Performance for New Residential Wood
Heaters; and
(ii) All sources and source categories that would be required to
obtain a permit solely because they are subject to 40 CFR part 61,
Subpart M--National Emission Standard for Hazardous Air
[[Page 34232]]
Pollutants for Asbestos, Sec. 61.145, Standard for Demolition and
Renovation.
(c) Emissions units and part 71 sources. (1) For major sources, the
permitting authority shall include in the permit all applicable
requirements for all relevant emissions units in the major source.
(2) For any nonmajor source subject to the part 71 program under
paragraphs (a) or (b) of this section, the permitting authority shall
include in the permit all applicable requirements applicable to
emissions units that cause the source to be subject to the part 71
program.
(d) Fugitive emissions. Fugitive emissions from a part 71 source
shall be included in the permit application and the part 71 permit in
the same manner as stack emissions, regardless of whether the source
category in question is included in the list of sources contained in
the definition of major source.
Sec. 71.4 Program implementation.
(a) Part 71 programs for States. The Administrator will administer
and enforce a full or partial operating permits program for a State
(excluding Tribal areas) in the following situations:
(1) A program for a State meeting the requirements of part 70 of
this chapter has not been granted full approval under Sec. 70.4 of this
chapter by the Administrator by July 31, 1996, and the State's part 70
program has not been granted interim approval under Sec. 70.4(d) of
this chapter for a period extending beyond July 31, 1996. The effective
date of such a part 71 program is July 31, 1996.
(2) An operating permits program for a State which was granted
interim approval under Sec. 70.4(d) of this chapter has not been
granted full approval by the Administrator by the expiration of the
interim approval period or July 31, 1996, whichever is later. Such a
part 71 program shall be effective upon expiration of the interim
approval or July 31, 1996 whichever is later.
(3) Any partial part 71 program will be effective only in those
portions of a State that are not covered by a partial part 70 program
that has been granted full or interim approval by the Administrator
pursuant to Sec. 70.4(c) of this chapter.
(b) Part 71 programs for Tribal areas. The Administrator may
administer and enforce an operating permits program for a Tribal area,
as defined in Sec. 71.2, or by a rulemaking, when an operating permits
program for the area which meets the requirements of part 70 of this
chapter has not been granted full or interim approval by the
Administrator by July 31, 1996.
(1) [Reserved]
(2) The effective date of a part 71 program for a Tribal area shall
be November 15, 1997.
(3) Notwithstanding paragraph (b)(2) of this section, the
Administrator, in consultation with the governing body of the Tribal
area, may adopt an earlier effective date.
(4) Notwithstanding paragraph (i)(2) of this section, within 2
years of the effective date of the part 71 program for the Tribal area,
the Administrator shall take final action on permit applications from
part 71 sources that are submitted within the first full year after the
effective date of the part 71 program.
(c) Part 71 programs imposed due to inadequate implementation. (1)
The Administrator will administer and enforce an operating permits
program for a permitting authority if the Administrator has notified
the permitting authority, in accordance with Sec. 70.10(b)(1) of this
chapter, of the Administrator's determination that a permitting
authority is not adequately administering or enforcing its approved
operating permits program, or any portion thereof, and the permitting
authority fails to do either of the following:
(i) Correct the deficiencies within 18 months after the
Administrator issues the notice; or
(ii) Take significant action to assure adequate administration and
enforcement of the program within 90 days of the Administrator's
notice.
(2) The effective date of a part 71 program promulgated in
accordance with this paragraph (c) shall be:
(i) Two years after the Administrator's notice if the permitting
authority has not corrected the deficiency within 18 months after the
date of the Administrator's notice; or
(ii) Such earlier time as the Administrator determines appropriate
if the permitting authority fails, within 90 days of the
Administrator's notice, to take significant action to assure adequate
administration and enforcement of the program.
(d) Part 71 programs for OCS sources. (1) Using the procedures of
this part, the Administrator will issue permits to any source which is
an outer continental shelf (OCS) source, as defined under Sec. 55.2 of
this chapter, is subject to the requirements of part 55 of this chapter
and section 328(a) of the Act, is subject to the requirement to obtain
a permit under title V of the Act, and is either:
(i) Located beyond 25 miles of States' seaward boundaries; or
(ii) Located within 25 miles of States' seaward boundaries and a
part 71 program is being administered and enforced by the Administrator
for the corresponding onshore area, as defined in Sec. 55.2 of this
chapter, for that source.
(2) The requirements of Sec. 71.4(d)(1)(i) shall apply on July 31,
1996.
(3) The requirements of Sec. 71.4(d)(1)(ii) apply upon the
effective date of a part 71 program for the corresponding onshore area.
(e) Part 71 program for permits issued to satisfy an EPA objection.
Using the procedures of this part and 40 CFR 70.8 (c) or (d), or 40 CFR
70.7(g)(4) or (5) (i) and (ii), as appropriate, the Administrator will
deny, terminate, revise, revoke or reissue a permit which has been
proposed or issued by a permitting authority or will issue a part 71
permit when:
(1) A permitting authority with an approved part 70 operating
permits program fails to respond to a timely objection to the issuance
of a permit made by the Administrator pursuant to section 505(b) of the
Act and Sec. 70.8(c) and (d) of this chapter.
(2) The Administrator, under Sec. 70.7(g) of this chapter, finds
that cause exists to reopen a permit and the permitting authority fails
to either:
(i) Submit to the Administrator a proposed determination of
termination, modification, or revocation and reissuance, as
appropriate; or
(ii) Resolve any objection EPA makes to the permit which the
permitting authority proposes to issue in response to EPA's finding of
cause to reopen, and to terminate, revise, or revoke and reissue the
permit in accordance with that objection.
(3) The requirements of this paragraph (e) shall apply on July 31,
1996.
(f) Use of selected provisions of this part. The Administrator may
utilize any or all of the provisions of this part to administer the
permitting process for individual sources or take action on individual
permits, or may adopt through rulemaking portions of a State or Tribal
program in combination with provisions of this part to administer a
Federal program for the State or Tribal area in substitution of or
addition to the Federal program otherwise required by this part.
(g) Public notice of part 71 programs. In taking action to
administer and enforce an operating permits program under this part,
the Administrator will publish a notice in the Federal Register
informing the public of such action and the effective date of any part
71 program as set forth in Sec. 71.4 (a), (b), (c), or (d)(1)(ii). The
publication of this part in the Federal Register on July 1, 1996
[[Page 34233]]
serves as the notice for the part 71 permit programs described in
Sec. 71.4(d)(1) (i) and (e). The EPA will also publish a notice in the
Federal Register of any delegation of a portion of the part 71 program
to a State, eligible Tribe, or local agency pursuant to the provisions
of Sec. 71.10. In addition to notices published in the Federal Register
under this paragraph (g), the Administrator will, to the extent
practicable, publish notice in a newspaper of general circulation
within the area subject to the part 71 program effectiveness or
delegation, and will send a letter to the Tribal governing body for an
Indian Tribe or the Governor (or his or her designee) of the affected
area to provide notice of such effectiveness or delegation.
(h) Effect of limited deficiencies in State or Tribal programs. The
Administrator may administer and enforce a part 71 program in a State
or Tribal area even if only limited deficiencies exist either in the
initial program submittal for a State or eligible Tribe under part 70
of this chapter or in an existing State or Tribal program that has been
approved under part 70 of this chapter.
(i) Transition plan for initial permit issuance. If a full or
partial part 71 program becomes effective in a State or Tribal area
prior to the issuance of part 70 permits to all part 70 sources under
an existing program that has been approved under part 70 of this
chapter, the Administrator shall take final action on initial permit
applications for all part 71 sources in accordance with the following
transition plan.
(1) All part 71 sources that have not received part 70 permits
shall submit permit applications under this part within 1 year after
the effective date of the part 71 program.
(2) Final action shall be taken on at least one-third of such
applications annually over a period not to exceed 3 years after such
effective date.
(3) Any complete permit application containing an early reduction
demonstration under section 112(i)(5) of the Act shall be acted on
within 12 months of receipt of the complete application.
(4) Submittal of permit applications and the permitting of affected
sources shall occur in accordance with the deadlines in title IV of the
Act and 40 CFR parts 72 through 78.
(j) Delegation of part 71 programs. The Administrator may
promulgate a part 71 program in a State or Tribal area and delegate
part of the responsibility for administering the part 71 program to the
State or eligible Tribe in accordance with the provisions of
Sec. 71.10; however, delegation of a part of a program will not
constitute any type of approval of a State or Tribal operating permits
program under part 70 of this chapter. Where only selected portions of
a part 71 program are administered by the Administrator and the State
or eligible Tribe is delegated the remaining portions of the program,
the Delegation Agreement referred to in Sec. 71.10 will define the
respective roles of the State or eligible Tribe and the Administrator
in administering and enforcing the part 71 operating permits program.
(k) EPA administration and enforcement of part 70 permits. When the
Administrator administers and enforces a part 71 program after a
determination and notice under Sec. 70.10(b)(1) of this chapter that a
State or Tribe is not adequately administering and enforcing an
operating permits program approved under part 70 of this chapter, the
Administrator will administer and enforce permits issued under the part
70 program until part 71 permits are issued using the procedures of
part 71. Until such time as part 70 permits are replaced by part 71
permits, the Administrator will revise, reopen, revise, terminate, or
revoke and reissue part 70 permits using the procedures of part 71 and
will assess and collect fees in accordance with the provisions of
Sec. 71.9.
(l) Transition to approved part 70 program. The Administrator will
suspend the issuance of part 71 permits promptly upon publication of
notice of approval of a State or Tribal operating permits program that
meets the requirements of part 70 of this chapter. The Administrator
may retain jurisdiction over the part 71 permits for which the
administrative or judicial review process is not complete and will
address this issue in the notice of State program approval. After
approval of a State or Tribal program and the suspension of issuance of
part 71 permits by the Administrator:
(1) The Administrator, or the permitting authority acting as the
Administrator's delegated agent, will continue to administer and
enforce part 71 permits until they are replaced by permits issued under
the approved part 70 program. Until such time as part 71 permits are
replaced by part 70 permits, the Administrator will revise, reopen,
revise, terminate, or revoke and reissue part 71 permits using the
procedures of the part 71 program. However, if the Administrator has
delegated authority to administer part 71 permits to a delegate agency,
the delegate agency will revise, reopen, terminate, or revoke and
reissue part 71 permits using the procedures of the approved part 70
program. If a part 71 permit expires prior to the issuance of a part 70
permit, all terms and conditions of the part 71 permit, including any
permit shield that may be granted pursuant to Sec. 71.6(f), shall
remain in effect until the part 70 permit is issued or denied, provided
that a timely and complete application for a permit renewal was
submitted to the permitting authority in accordance with the
requirements of the approved part 70 program.
(2) A State or local agency or Indian Tribe with an approved part
70 operating permits program may issue part 70 permits for all sources
with part 71 permits in accordance with a permit issuance schedule
approved as part of the approved part 70 program or may issue part 70
permits to such sources at the expiration of the part 71 permits.
(m) Exemption for certain territories. Upon petition by the
Governor of Guam, American Samoa, the Virgin Islands, or the
Commonwealth of the Northern Marianas Islands, the Administrator may
exempt any source or class of sources in such territory from the
requirement to have a part 71 permit under this chapter. Such an
exemption does not exempt such source or class of sources from any
requirement of section 112 of the Act, including the requirements of
section 112 (g) or (j).
(1) Such exemption may be granted if the Administrator finds that
compliance with part 71 is not feasible or is unreasonable due to
unique geographical, meteorological, or economic factors of such
territory, or such other local factors as the Administrator deems
significant. Any such petition shall be considered in accordance with
section 307(d) of the Act, and any exemption granted under this
paragraph (m) shall be considered final action by the Administrator for
the purposes of section 307(b) of the Act.
(2) The Administrator shall promptly notify the Committees on
Energy and Commerce and on Interior and Insular Affairs of the House of
Representatives and the Committees on Environment and Public Works and
on Energy and Natural Resources of the Senate upon receipt of any
petition under this paragraph (m) and of the approval or rejection of
such petition and the basis for such action.
(n) Retention of records. The records for each draft, proposed, and
final permit application, renewal, or modification shall be kept by the
Administrator for a period of 5 years.
Sec. 71.5 Permit applications.
(a) Duty to apply. For each part 71 source, the owner or operator
shall submit a timely and complete permit
[[Page 34234]]
application in accordance with this section.
(1) Timely application. (i) A timely application for a source which
does not have an existing operating permit issued by a State under the
State's approved part 70 program and is applying for a part 71 permit
for the first time is one that is submitted within 12 months after the
source becomes subject to the permit program or on or before such
earlier date as the permitting authority may establish. Sources
required to submit applications earlier than 12 months after the source
becomes subject to the permit program will be notified of the earlier
submittal date at least 6 months in advance of the date.
(ii) Part 71 sources required to meet the requirements under
section 112(g) of the Act, or to have a permit under the
preconstruction review program approved into the applicable
implementation plan under part C or D of title I of the Act, shall file
a complete application to obtain the part 71 permit or permit revision
within 12 months after commencing operation or on or before such
earlier date as the permitting authority may establish. Sources
required to submit applications earlier than 12 months after the source
becomes subject to the permit program will be notified of the earlier
submittal date at least 6 months in advance of the date. Where an
existing part 70 or 71 permit would prohibit such construction or
change in operation, the source must obtain a permit revision before
commencing operation.
(iii) For purposes of permit renewal, a timely application is one
that is submitted at least 6 months but not more that 18 months prior
to expiration of the part 70 or 71 permit.
(iv) Applications for initial phase II acid rain permits shall be
submitted to the permitting authority by January 1, 1996 for sulfur
dioxide, and by January 1, 1998 for nitrogen oxides.
(2) Complete application. To be deemed complete, an application
must provide all information required pursuant to paragraph (c) of this
section, except that applications for permit revision need supply such
information only if it is related to the proposed change. To be found
complete, an initial or renewal application must remit payment of fees
owed under the fee schedule established pursuant to Sec. 71.9(b).
Information required under paragraph (c) of this section must be
sufficient to evaluate the subject source and its application and to
determine all applicable requirements. A responsible official must
certify the submitted information consistent with paragraph (d) of this
section. Unless the permitting authority determines that an application
is not complete within 60 days of receipt of the application, such
application shall be deemed to be complete, except as otherwise
provided in Sec. 71.7(a)(4). If, while processing an application that
has been determined or deemed to be complete, the permitting authority
determines that additional information is necessary to evaluate or take
final action on that application, it may request such information in
writing and set a reasonable deadline for a response. The source's
ability to operate without a permit, as set forth in Sec. 71.7(b),
shall be in effect from the date the application is determined or
deemed to be complete until the final permit is issued, provided that
the applicant submits any requested additional information by the
deadline specified by the permitting authority.
(3) Confidential information. An applicant may assert a business
confidentiality claim for information requested by the permitting
authority using procedures found at part 2, subpart B of this chapter.
(b) Duty to supplement or correct application. Any applicant who
fails to submit any relevant facts or who has submitted incorrect
information in a permit application shall, upon becoming aware of such
failure or incorrect submittal, promptly submit such supplementary
facts or corrected information. In addition, an applicant shall provide
additional information as necessary to address any requirements that
become applicable to the source after the date it filed a complete
application but prior to release of a draft permit.
(c) Standard application form and required information. The
permitting authority shall provide sources a standard application form
or forms. The permitting authority may use discretion in developing
application forms that best meet program needs and administrative
efficiency. The forms and attachments chosen, however, shall include
the elements specified below. An application may not omit information
needed to determine the applicability of, or to impose, any applicable
requirement, or to evaluate the fee amount required under the schedule
established pursuant to Sec. 71.9.
(1) Identifying information, including company name and address (or
plant name and address if different from the company name), owner's
name and agent, and telephone number and names of plant site manager/
contact.
(2) A description of the source's processes and products (by
Standard Industrial Classification Code) including any associated with
each alternate scenario identified by the source.
(3) The following emissions-related information:
(i) All emissions of pollutants for which the source is major, and
all emissions of regulated air pollutants. A permit application shall
describe all emissions of regulated air pollutants emitted from any
emissions unit, except where such units are exempted under this
paragraph (c). The permitting authority shall require additional
information related to the emissions of air pollutants sufficient to
verify which requirements are applicable to the source, and other
information necessary to collect any permit fees owed under the fee
schedule established pursuant to Sec. 71.9(b).
(ii) Identification and description of all points of emissions
described in paragraph (c)(3)(i) of this section in sufficient detail
to establish the basis for fees and applicability of requirements of
the Act.
(iii) Emissions rates in tpy and in such terms as are necessary to
establish compliance consistent with the applicable standard reference
test method.
(iv) The following information to the extent it is needed to
determine or regulate emissions: fuels, fuel use, raw materials,
production rates, and operating schedules.
(v) Identification and description of air pollution control
equipment and compliance monitoring devices or activities.
(vi) Limitations on source operation affecting emissions or any
work practice standards, where applicable, for all regulated pollutants
at the part 71 source.
(vii) Other information required by any applicable requirement
(including information related to stack height limitations developed
pursuant to section 123 of the Act).
(viii) Calculations on which the information in paragraphs (c)(3)
(i) through (vii) of this section is based.
(4) The following air pollution control requirements:
(i) Citation and description of all applicable requirements; and
(ii) Description of or reference to any applicable test method for
determining compliance with each applicable requirement.
(5) Other specific information that may be necessary to implement
and enforce other applicable requirements of the Act or of this part or
to determine the applicability of such requirements.
(6) An explanation of any proposed exemptions from otherwise
applicable requirements.
[[Page 34235]]
(7) Additional information as determined to be necessary by the
permitting authority to define alternative operating scenarios
identified by the source pursuant to Sec. 71.6(a)(9) or to define
permit terms and conditions implementing Sec. 71.6(a)(10) or
Sec. 71.6(a)(13).
(8) A compliance plan for all part 71 sources that contains all the
following:
(i) A description of the compliance status of the source with
respect to all applicable requirements.
(ii) A description as follows:
(A) For applicable requirements with which the source is in
compliance, a statement that the source will continue to comply with
such requirements.
(B) For applicable requirements that will become effective during
the permit term, a statement that the source will meet such
requirements on a timely basis.
(C) For requirements for which the source is not in compliance at
the time of permit issuance, a narrative description of how the source
will achieve compliance with such requirements.
(iii) A compliance schedule as follows:
(A) For applicable requirements with which the source is in
compliance, a statement that the source will continue to comply with
such requirements.
(B) For applicable requirements that will become effective during
the permit term, a statement that the source will meet such
requirements on a timely basis. A statement that the source will meet
in a timely manner applicable requirements that become effective during
the permit term shall satisfy this provision, unless a more detailed
schedule is expressly required by the applicable requirement.
(C) A schedule of compliance for sources that are not in compliance
with all applicable requirements at the time of permit issuance. Such a
schedule shall include a schedule of remedial measures, including an
enforceable sequence of actions with milestones, leading to compliance
with any applicable requirements for which the source will be in
noncompliance at the time of permit issuance. This compliance schedule
shall resemble and be at least as stringent as that contained in any
judicial consent decree or administrative order to which the source is
subject. Any such schedule of compliance shall be supplemental to, and
shall not sanction noncompliance with, the applicable requirements on
which it is based.
(iv) A schedule for submission of certified progress reports no
less frequently than every 6 months for sources required to have a
schedule of compliance to remedy a violation.
(v) The compliance plan content requirements specified in this
paragraph shall apply and be included in the acid rain portion of a
compliance plan for an affected source, except as specifically
superseded by regulations promulgated under parts 72 through 78 of this
chapter with regard to the schedule and method(s) the source will use
to achieve compliance with the acid rain emissions limitations.
(9) Requirements for compliance certification, including the
following:
(i) A certification of compliance with all applicable requirements
by a responsible official consistent with paragraph (d) of this section
and section 114(a)(3) of the Act;
(ii) A statement of methods used for determining compliance,
including a description of monitoring, recordkeeping, and reporting
requirements and test methods;
(iii) A schedule for submission of compliance certifications during
the permit term, to be submitted no less frequently than annually, or
more frequently if specified by the underlying applicable requirement
or by the permitting authority; and
(iv) A statement indicating the source's compliance status with any
applicable enhanced monitoring and compliance certification
requirements of the Act.
(10) The use of nationally-standardized forms for acid rain
portions of permit applications and compliance plans, as required by
regulations promulgated under parts 72 through 78 of this chapter.
(11) Insignificant activities and emissions levels. The following
types of insignificant activities and emissions levels need not be
included in permit applications. However, for insignificant activities
which are exempted because of size or production rate, a list of such
insignificant activities must be included in the application. An
application may not omit information needed to determine the
applicability of, or to impose, any applicable requirement, or to
calculate the fee amount required under the schedule established
pursuant to Sec. 71.9 of this part.
(i) Insignificant activities:
(A) Mobile sources;
(B) Air-conditioning units used for human comfort that are not
subject to applicable requirements under title VI of the Act and do not
exhaust air pollutants into the ambient air from any manufacturing or
other industrial process;
(C) Ventilating units used for human comfort that do not exhaust
air pollutants into the ambient air from any manufacturing or other
industrial process;
(D) Heating units used for human comfort that do not provide heat
for any manufacturing or other industrial process;
(E) Noncommercial food preparation;
(F) Consumer use of office equipment and products;
(G) Janitorial services and consumer use of janitorial products;
and
(H) Internal combustion engines used for landscaping purposes.
(ii) Insignificant emissions levels. Emissions meeting the criteria
in paragraph (c)(11)(ii)(A) or (c)(11)(ii)(B) of this section need not
be included in the application, but must be listed with sufficient
detail to identify the emission unit and indicate that the exemption
applies. Similar emission units, including similar capacities or sizes,
may be listed under a single description, provided the number of
emission units is included in the description. No additional
information is required at time of application, but the permitting
authority may request additional information during application
processing.
(A) Emission criteria for regulated air pollutants, excluding
hazardous air pollutants (HAP). Potential to emit of regulated air
pollutants, excluding HAP, for any single emissions unit shall not
exceed 2 tpy.
(B) Emission criteria for HAP. Potential to emit of any HAP from
any single emissions unit shall not exceed 1,000 lb per year or the de
minimis level established under section 112(g) of the Act, whichever is
less.
(d) Any application form, report, or compliance certification
submitted pursuant to these regulations shall contain certification by
a responsible official of truth, accuracy, and completeness. This
certification and any other certification required under this part
shall state that, based on information and belief formed after
reasonable inquiry, the statements and information in the document are
true, accurate, and complete.
Sec. 71.6 Permit content.
(a) Standard permit requirements. Each permit issued under this
part shall include the following elements:
(1) Emission limitations and standards, including those operational
requirements and limitations that assure compliance with all applicable
requirements at the time of permit issuance.
(i) The permit shall specify and reference the origin of and
authority for each term or condition, and identify any
[[Page 34236]]
difference in form as compared to the applicable requirement upon which
the term or condition is based.
(ii) The permit shall state that, where an applicable requirement
of the Act is more stringent than an applicable requirement of 40 CFR
parts 72 through 78, both provisions shall be incorporated into the
permit and shall be enforceable by the Administrator.
(iii) If an applicable implementation plan allows a determination
of an alternative emission limit at a part 71 source, equivalent to
that contained in the plan, to be made in the permit issuance, renewal,
or significant modification process, and the permitting authority
elects to use such process, any permit containing such equivalency
determination shall contain provisions to ensure that any resulting
emissions limit has been demonstrated to be quantifiable, accountable,
enforceable, and based on replicable procedures.
(2) Permit duration. The permitting authority shall issue permits
for a fixed term of 5 years in the case of affected sources, and for a
term not to exceed 5 years in the case of all other sources.
Notwithstanding this requirement, the permitting authority shall issue
permits for solid waste incineration units combusting municipal waste
subject to standards under section 129(e) of the Act for a period not
to exceed 12 years and shall review such permits at least every 5
years.
(3) Monitoring and related recordkeeping and reporting
requirements. (i) Each permit shall contain the following requirements
with respect to monitoring:
(A) All emissions monitoring and analysis procedures or test
methods required under the applicable requirements, including any
procedures and methods promulgated pursuant to sections 114(a)(3) or
504(b) of the Act;
(B) Where the applicable requirement does not require periodic
testing or instrumental or noninstrumental monitoring (which may
consist of recordkeeping designed to serve as monitoring), periodic
monitoring sufficient to yield reliable data from the relevant time
period that are representative of the source's compliance with the
permit, as reported pursuant to paragraph (a)(3)(iii) of this section.
Such monitoring requirements shall assure use of terms, test methods,
units, averaging periods, and other statistical conventions consistent
with the applicable requirement. Recordkeeping provisions may be
sufficient to meet the requirements of this paragraph (a)(3)(i)(B); and
(C) As necessary, requirements concerning the use, maintenance,
and, where appropriate, installation of monitoring equipment or
methods.
(ii) With respect to recordkeeping, the permit shall incorporate
all applicable recordkeeping requirements and require, where
applicable, the following:
(A) Records of required monitoring information that include the
following:
(1) The date, place as defined in the permit, and time of sampling
or measurements;
(2) The date(s) analyses were performed;
(3) The company or entity that performed the analyses;
(4) The analytical techniques or methods used;
(5) The results of such analyses; and
(6) The operating conditions as existing at the time of sampling or
measurement;
(B) Retention of records of all required monitoring data and
support information for a period of at least 5 years from the date of
the monitoring sample, measurement, report, or application. Support
information includes all calibration and maintenance records and all
original strip-chart recordings for continuous monitoring
instrumentation, and copies of all reports required by the permit.
(iii) With respect to reporting, the permit shall incorporate all
applicable reporting requirements and require the following:
(A) Submittal of reports of any required monitoring at least every
6 months. All instances of deviations from permit requirements must be
clearly identified in such reports. All required reports must be
certified by a responsible official consistent with Sec. 71.5(d).
(B) Prompt reporting of deviations from permit requirements,
including those attributable to upset conditions as defined in the
permit, the probable cause of such deviations, and any corrective
actions or preventive measures taken. Where the underlying applicable
requirement contains a definition of prompt or otherwise specifies a
time frame for reporting deviations, that definition or time frame
shall govern. Where the underlying applicable requirement fails to
address the time frame for reporting deviations, reports of deviations
shall be submitted to the permitting authority based on the following
schedule:
(1) For emissions of a hazardous air pollutant or a toxic air
pollutant (as identified in an applicable regulation) that continue for
more than an hour in excess of permit requirements, the report must be
made with 24 hours of the occurrence.
(2) For emissions of any regulated air pollutant, excluding those
listed in paragraph (a)(3)(iii)(B)(1) of this section, that continue
for more than two hours in excess of permit requirements, the report
must be made within 48 hours.
(3) For all other deviations from permit requirements, the report
shall be contained in the report submitted in accordance with the
timeframe given in paragraph (a)(3)(iii)(A).
(4) A permit may contain a more stringent reporting requirement
than required by paragraphs (a)(3)(iii)(B)(1), (2), or (3).
If any of the above conditions are met, the source must notify the
permitting authority by telephone or facsimile based on the timetable
listed in paragraphs (a)(3)(iii)(B) (1) through (4) of this section. A
written notice, certified consistent with Sec. 71.5(d), must be
submitted within 10 working days of the occurrence. All deviations
reported under paragraph (a)(3)(iii)(A) of this section must also be
identified in the 6 month report required under paragraph
(a)(3)(iii)(A) of this section.
(C) For purposes of paragraph (a)(3)(iii)(B) of this section,
deviation means any condition determined by observation, by data from
any monitoring protocol, or by any other monitoring which is required
by the permit that can be used to determine compliance, that identifies
that an emission unit subject to a part 71 permit term or condition has
failed to meet an applicable emission limitation or standard or that a
work practice was not complied with or completed. For a condition
lasting more than 24 hours which constitutes a deviation, each 24 hour
period is considered a separate deviation. Included in the meaning of
deviation are any of the following:
(1) A condition where emissions exceed an emission limitation or
standard;
(2) A condition where process or control device parameter values
demonstrate that an emission limitation or standard has not been met;
(3) Any other condition in which observations or data collected
demonstrates noncompliance with an emission limitation or standard or
any work practice or operating condition required by the permit.
(4) A permit condition prohibiting emissions exceeding any
allowances that the source lawfully holds under 40 CFR parts 72 through
78.
(i) No permit revision shall be required for increases in emissions
that are authorized by allowances acquired pursuant to the acid rain
program,
[[Page 34237]]
provided that such increases do not require a permit revision under any
other applicable requirement.
(ii) No limit shall be placed on the number of allowances held by
the source. The source may not, however, use allowances as a defense to
noncompliance with any other applicable requirement.
(iii) Any such allowance shall be accounted for according to the
procedures established in regulations 40 CFR parts 72 through 78.
(5) A severability clause to ensure the continued validity of the
various permit requirements in the event of a challenge to any portions
of the permit.
(6) Provisions stating the following:
(i) The permittee must comply with all conditions of the part 71
permit. Any permit noncompliance constitutes a violation of the Act and
is grounds for enforcement action; for permit termination, revocation
and reissuance, or modification; or for denial of a permit renewal
application.
(ii) Need to halt or reduce activity not a defense. It shall not be
a defense for a permittee in an enforcement action that it would have
been necessary to halt or reduce the permitted activity in order to
maintain compliance with the conditions of this permit.
(iii) The permit may be modified, revoked, reopened, and reissued,
or terminated for cause. The filing of a request by the permittee for a
permit modification, revocation and reissuance, or termination, or of a
notification of planned changes or anticipated noncompliance does not
stay any permit condition.
(iv) The permit does not convey any property rights of any sort, or
any exclusive privilege.
(v) The permittee shall furnish to the permitting authority, within
a reasonable time, any information that the permitting authority may
request in writing to determine whether cause exists for modifying,
revoking and reissuing, or terminating the permit or to determine
compliance with the permit. Upon request, the permittee shall also
furnish to the permitting authority copies of records required to be
kept by the permit or, in the case of a program delegated pursuant to
Sec. 71.10, for information claimed to be confidential, the permittee
may furnish such records directly to the Administrator along with a
claim of confidentiality.
(7) A provision to ensure that a part 71 source pays fees to the
Administrator consistent with the fee schedule approved pursuant to
Sec. 71.9.
(8) Emissions trading. A provision stating that no permit revision
shall be required, under any approved economic incentives, marketable
permits, emissions trading and other similar programs or processes for
changes that are provided for in the permit.
(9) Terms and conditions for reasonably anticipated operating
scenarios identified by the source in its application as approved by
the permitting authority. Such terms and conditions:
(i) Shall require the source, contemporaneously with making a
change from one operating scenario to another, to record in a log at
the permitted facility a record of the scenario under which it is
operating;
(ii) May extend the permit shield described in paragraph (f) of
this section to all terms and conditions under each such operating
scenario; and
(iii) Must ensure that the terms and conditions of each such
alternative scenario meet all applicable requirements and the
requirements of this part.
(10) Terms and conditions, if the permit applicant requests them,
for the trading of emissions increases and decreases in the permitted
facility, to the extent that the applicable requirements provide for
trading such increases and decreases without a case-by-case approval of
each emissions trade. Such terms and conditions:
(i) Shall include all terms required under paragraphs (a) and (c)
of this section to determine compliance;
(ii) May extend the permit shield described in paragraph (f) of
this section to all terms and conditions that allow such increases and
decreases in emissions; and
(iii) Must meet all applicable requirements and requirements of
this part.
(11) Permit expiration. A provision to ensure that a part 71 permit
expires upon the earlier occurrence of the following events:
(i) twelve years elapses from the date of issuance to a solid waste
incineration unit combusting municipal waste subject to standards under
section 112(e) of the Act; or
(ii) five years elapses from the date of issuance; or
(iii) the source is issued a part 70 permit.
(12) Off Permit Changes. A provision allowing changes that are not
addressed or prohibited by the permit, other than those subject to the
requirements of 40 CFR parts 72 through 78 or those that are
modifications under any provision of title I of the Act to be made
without a permit revision, provided that the following requirements are
met:
(i) Each such change shall meet all applicable requirements and
shall not violate any existing permit term or condition;
(ii) Sources must provide contemporaneous written notice to the
permitting authority (and EPA, in the case of a program delegated
pursuant to Sec. 71.10) of each such change, except for changes that
qualify as insignificant under Sec. 71.5(c)(11). Such written notice
shall describe each such change, including the date, any change in
emissions, pollutants emitted, and any applicable requirement that
would apply as a result of the change;
(iii) The change shall not qualify for the shield under
Sec. 71.6(f);
(iv) The permittee shall keep a record describing changes made at
the source that result in emissions of a regulated air pollutant
subject to an applicable requirement, but not otherwise regulated under
the permit, and the emissions resulting from those changes.
(13) Operational flexibility. Provisions consistent with paragraphs
(a)(3)(i) through (iii) of this section to allow changes within a
permitted facility without requiring a permit revision, if the changes
are not modifications under any provision of title I of the Act and the
changes do not exceed the emissions allowable under the permit (whether
expressed therein as a rate of emissions or in terms of total
emissions): Provided, that the facility provides the Administrator (in
the case of a program delegated pursuant to Sec. 71.10) and the
permitting authority with written notification as required below in
advance of the proposed changes, which shall be a minimum of 7 days.
(i) The permit shall allow the permitted source to make section
502(b)(10) changes without requiring a permit revision, if the changes
are not modifications under any provision of title I of the Act and the
changes do not exceed the emissions allowable under the permit (whether
expressed therein as a rate of emissions or in terms of total
emissions).
(A) For each such change, the written notification required above
shall include a brief description of the change within the permitted
facility, the date on which the change will occur, any change in
emissions, and any permit term or condition that is no longer
applicable as a result of the change.
(B) The permit shield described in Sec. 71.6(f) shall not apply to
any change made pursuant to this paragraph (a)(13)(i).
(ii) The permit may provide for the permitted source to trade
increases and decreases in emissions in the permitted facility, where
the applicable
[[Page 34238]]
implementation plan provides for such emissions trades without
requiring a permit revision and based on the 7-day notice prescribed in
this paragraph (a)(13)(ii) of this section. This provision is available
in those cases where the permit does not already provide for such
emissions trading.
(A) Under this paragraph (a)(13)(ii), the written notification
required above shall include such information as may be required by the
provision in the applicable implementation plan authorizing the
emissions trade, including at a minimum, when the proposed change will
occur, a description of each such change, any change in emissions, the
permit requirements with which the source will comply using the
emissions trading provisions of the applicable implementation plan, and
the pollutants emitted subject to the emissions trade. The notice shall
also refer to the provisions with which the source will comply in the
applicable implementation plan and that provide for the emissions
trade.
(B) The permit shield described in Sec. 71.6(f) shall not extend to
any change made under this paragraph (a)(13)(ii). Compliance with the
permit requirements that the source will meet using the emissions trade
shall be determined according to requirements of the applicable
implementation plan authorizing the emissions trade.
(iii) The permit shall require the permitting authority, if a
permit applicant requests it, to issue permits that contain terms and
conditions, including all terms required under Sec. 71.6 (a) and (c) to
determine compliance, allowing for the trading of emissions increases
and decreases in the permitted facility solely for the purpose of
complying with a federally-enforceable emissions cap that is
established in the permit independent of otherwise applicable
requirements. The permit applicant shall include in its application
proposed replicable procedures and permit terms that ensure the
emissions trades are quantifiable and enforceable. The permitting
authority shall not be required to include in the emissions trading
provisions any emissions units for which emissions are not quantifiable
or for which there are no replicable procedures to enforce the
emissions trades. The permit shall also require compliance with all
applicable requirements.
(A) Under this paragraph (a)(13)(iii), the written notification
required above shall state when the change will occur and shall
describe the changes in emissions that will result and how these
increases and decreases in emissions will comply with the terms and
conditions of the permit.
(B) The permit shield described in Sec. 71.6(f) may extend to terms
and conditions that allow such increases and decreases in emissions.
(b) Federally-enforceable requirements. All terms and conditions in
a part 71 permit, including any provisions designed to limit a source's
potential to emit, are enforceable by the Administrator and citizens
under the Act.
(c) Compliance requirements. All part 71 permits shall contain the
following elements with respect to compliance:
(1) Consistent with paragraph (a)(3) of this section, compliance
certification, testing, monitoring, reporting, and recordkeeping
requirements sufficient to assure compliance with the terms and
conditions of the permit. Any document (including reports) required by
a part 71 permit shall contain a certification by a responsible
official that meets the requirements of Sec. 71.5(d).
(2) Inspection and entry requirements that require that, upon
presentation of credentials and other documents as may be required by
law, the permittee shall allow the permitting authority or an
authorized representative to perform the following:
(i) Enter upon the permittee's premises where a part 71 source is
located or emissions-related activity is conducted, or where records
must be kept under the conditions of the permit;
(ii) Have access to and copy, at reasonable times, any records that
must be kept under the conditions of the permit;
(iii) Inspect at reasonable times any facilities, equipment
(including monitoring and air pollution control equipment), practices,
or operations regulated or required under the permit; and
(iv) As authorized by the Act, sample or monitor at reasonable
times substances or parameters for the purpose of assuring compliance
with the permit or applicable requirements.
(3) A schedule of compliance consistent with Sec. 71.5(c)(8).
(4) Progress reports consistent with an applicable schedule of
compliance and Sec. 71.5(c)(8) to be submitted at least semiannually,
or at a more frequent period if specified in the applicable requirement
or by the permitting authority. Such progress reports shall contain the
following:
(i) Dates for achieving the activities, milestones, or compliance
required in the schedule of compliance, and dates when such activities,
milestones or compliance were achieved; and
(ii) An explanation of why any dates in the schedule of compliance
were not or will not be met, and any preventive or corrective measures
adopted.
(5) Requirements for compliance certification with terms and
conditions contained in the permit, including emission limitations,
standards, or work practices. Permits shall include each of the
following:
(i) The frequency (not less than annually or such more frequent
periods as specified in the applicable requirement or by the permitting
authority) of submissions of compliance certifications;
(ii) In accordance with Sec. 71.6(a)(3), a means for monitoring the
compliance of the source with its emissions limitations, standards, and
work practices;
(iii) A requirement that the compliance certification include the
following:
(A) The identification of each term or condition of the permit that
is the basis of the certification;
(B) The compliance status;
(C) Whether compliance was continuous or intermittent;
(D) The method(s) used for determining the compliance status of the
source, currently and over the reporting period consistent with
paragraph (a)(3) of this section; and
(E) Such other facts as the permitting authority may require to
determine the compliance status of the source;
(iv) A requirement that all compliance certifications be submitted
to the Administrator as well as to the permitting authority; and
(v) Such additional requirements as may be specified pursuant to
sections 114(a)(3) and 504(b) of the Act.
(6) Such other provisions as the permitting authority may require.
(d) General permits. (1) The permitting authority may, after notice
and opportunity for public participation provided under Sec. 71.11,
issue a general permit covering numerous similar sources. Any general
permit shall comply with all requirements applicable to other part 71
permits and shall identify criteria by which sources may qualify for
the general permit. To sources that qualify, the permitting authority
shall grant the conditions and terms of the general permit.
Notwithstanding the shield provisions of paragraph (f) of this section,
the source shall be subject to enforcement action for operation without
a part 71 permit if the source is later determined not to qualify for
the conditions and terms of the general permit. General permits shall
not be authorized for affected sources under the acid rain
[[Page 34239]]
program unless otherwise provided in 40 CFR parts 72 through 78.
(2) Part 71 sources that would qualify for a general permit must
apply to the permitting authority for coverage under the terms of the
general permit or must apply for a part 71 permit consistent with
Sec. 71.5. The permitting authority may, in the general permit, provide
for applications which deviate from the requirements of Sec. 71.5,
provided that such applications meet the requirements of title V of the
Act, and include all information necessary to determine qualification
for, and to assure compliance with, the general permit. Without
repeating the public participation procedures required under
Sec. 71.11, the permitting authority may grant a source's request for
authorization to operate under a general permit, but such a grant shall
not be a final permit action for purposes of judicial review.
(e) Temporary sources. The permitting authority may issue a single
permit authorizing emissions from similar operations by the same source
owner or operator at multiple temporary locations. The operation must
be temporary and involve at least one change of location during the
term of the permit. No affected source shall be permitted as a
temporary source. Permits for temporary sources shall include the
following:
(1) Conditions that will assure compliance with all applicable
requirements at all authorized locations;
(2) Requirements that the owner or operator notify the permitting
authority at least 10 days in advance of each change in location; and
(3) Conditions that assure compliance with all other provisions of
this section.
(f) Permit shield. (1) Except as provided in this part, the
permitting authority may expressly include in a part 71 permit a
provision stating that compliance with the conditions of the permit
shall be deemed compliance with any applicable requirements as of the
date of permit issuance, provided that:
(i) Such applicable requirements are included and are specifically
identified in the permit; or
(ii) The permitting authority, in acting on the permit application
or revision, determines in writing that other requirements specifically
identified are not applicable to the source, and the permit includes
the determination or a concise summary thereof.
(2) A part 71 permit that does not expressly state that a permit
shield exists shall be presumed not to provide such a shield.
(3) Nothing in this paragraph or in any part 71 permit shall alter
or affect the following:
(i) The provisions of section 303 of the Act (emergency orders),
including the authority of the Administrator under that section;
(ii) The liability of an owner or operator of a source for any
violation of applicable requirements prior to or at the time of permit
issuance;
(iii) The applicable requirements of the acid rain program,
consistent with section 408(a) of the Act; or
(iv) The ability of EPA to obtain information from a source
pursuant to section 114 of the Act.
(g) Emergency provision. (1) Definition. An ``emergency'' means any
situation arising from sudden and reasonably unforeseeable events
beyond the control of the source, including acts of God, which
situation requires immediate corrective action to restore normal
operation, and that causes the source to exceed a technology-based
emission limitation under the permit, due to unavoidable increases in
emissions attributable to the emergency. An emergency shall not include
noncompliance to the extent caused by improperly designed equipment,
lack of preventative maintenance, careless or improper operation, or
operator error.
(2) Effect of an emergency. An emergency constitutes an affirmative
defense to an action brought for noncompliance with such technology-
based emission limitations if the conditions of paragraph (g)(3) of
this section are met.
(3) The affirmative defense of emergency shall be demonstrated
through properly signed, contemporaneous operating logs, or other
relevant evidence that:
(i) An emergency occurred and that the permittee can identify the
cause(s) of the emergency;
(ii) The permitted facility was at the time being properly
operated;
(iii) During the period of the emergency the permittee took all
reasonable steps to minimize levels of emissions that exceeded the
emission standards, or other requirements in the permit; and
(iv) The permittee submitted notice of the emergency to the
permitting authority within 2 working days of the time when emission
limitations were exceeded due to the emergency. This notice fulfills
the requirement of paragraph (a)(3)(iii)(B) of this section. This
notice must contain a description of the emergency, any steps taken to
mitigate emissions, and corrective actions taken.
(4) In any enforcement proceeding, the permittee seeking to
establish the occurrence of an emergency has the burden of proof.
(5) This provision is in addition to any emergency or upset
provision contained in any applicable requirement.
Sec. 71.7 Permit issuance, renewal, reopenings, and revisions.
(a) Action on application. (1) A permit, permit modification, or
renewal may be issued only if all of the following conditions have been
met:
(i) The permitting authority has received a complete application
for a permit, permit modification, or permit renewal, except that a
complete application need not be received before issuance of a general
permit under Sec. 71.6(d);
(ii) Except for modifications qualifying for minor permit
modification procedures under paragraphs (e) (1) and (2) of this
section, the permitting authority has complied with the requirements
for public participation under this section or Sec. 71.11, as
applicable;
(iii) The permitting authority has complied with the requirements
for notifying and responding to affected States under Sec. 71.8(a);
(iv) The conditions of the permit provide for compliance with all
applicable requirements and the requirements of this part; and
(v) In the case of a program delegated pursuant to Sec. 71.10, the
Administrator has received a copy of the proposed permit and any
notices required under Sec. 71.10(d) and has not objected to issuance
of the permit under Sec. 71.10(g) within the time period specified
therein.
(2) Except as provided under the initial transition plan provided
for under Sec. 71.4(i) or under 40 CFR part 72 or title V of the Act
for the permitting of affected sources under the acid rain program, the
permitting authority shall take final action on each permit application
(including a request for permit modification or renewal) within 18
months after receiving a complete application.
(3) The permitting authority shall ensure that priority is given to
taking action on applications for construction or modification under
title I, parts C and D of the Act.
(4) The permitting authority shall promptly provide notice to the
applicant of whether the application is complete. Unless the permitting
authority requests additional information or otherwise notifies the
applicant of incompleteness within 60 days of receipt of an
application, the
[[Page 34240]]
application shall be deemed complete. For modifications processed
through minor permit modification procedures, such as those in
paragraphs (e) (1) and (2) of this section, the permitting authority
need not make a completeness determination.
(5) The permitting authority shall provide a statement that sets
forth the legal and factual basis for the draft permit conditions
(including references to the applicable statutory or regulatory
provisions). The permitting authority shall send this statement to any
person who requests it, and to EPA, in the case of a program delegated
pursuant to Sec. 71.10.
(6) The submittal of a complete application shall not affect the
requirement that any source have a preconstruction permit under title I
of the Act.
(b) Requirement for a permit. Except as provided in the following
sentence, Sec. 71.6(a)(13), and paragraphs (e)(1)(v) and e(2)(v) of
this section, no part 71 source may operate after the time that it is
required to submit a timely and complete application under this part,
except in compliance with a permit issued under this part. If a part 71
source submits a timely and complete application for permit issuance
(including for renewal), the source's failure to have a part 71 permit
is not a violation of this part until the permitting authority takes
final action on the permit application, except as noted in this
section. This protection shall cease to apply if, subsequent to the
completeness determination made pursuant to paragraph (a)(4) of this
section, and as required by Sec. 71.5(c), the applicant fails to submit
by the deadline specified in writing by the permitting authority any
additional information identified as being needed to process the
application.
(c) Permit renewal and expiration. (1) (i) Permits being renewed
are subject to the same procedural requirements, including those for
public participation, affected State review, and EPA review (in the
case of a program delegated pursuant to Sec. 71.10) that apply to
initial permit issuance.
(ii) Permit expiration terminates the source's right to operate
unless a timely and complete renewal application has been submitted
consistent with paragraph (b) of this section and Sec. 71.5(a)(1)(iii).
(2) In the case of a program delegated pursuant to Sec. 71.10, if
the permitting authority fails to act in a timely way on permit
renewal, EPA may invoke its authority under section 505(e) of the Act
to terminate or revoke and reissue the permit.
(3) If a timely and complete application for a permit renewal is
submitted, consistent with Sec. 71.5(a)(2), but the permitting
authority has failed to issue or deny the renewal permit before the end
of the term of the previous part 70 or 71 permit, then the permit shall
not expire until the renewal permit has been issued or denied and any
permit shield that may be granted pursuant to Sec. 71.6(f) may extend
beyond the original permit term until renewal; or all the terms and
conditions of the permit including any permit shield that may be
granted pursuant to Sec. 71.6(f) shall remain in effect until the
renewal permit has been issued or denied.
(d) Administrative permit amendments. (1) An ``administrative
permit amendment'' is a permit revision that:
(i) Corrects typographical errors;
(ii) Identifies a change in the name, address, or phone number of
any person identified in the permit, or provides a similar minor
administrative change at the source;
(iii) Requires more frequent monitoring or reporting by the
permittee;
(iv) Allows for a change in ownership or operational control of a
source where the permitting authority determines that no other change
in the permit is necessary, provided that a written agreement
containing a specific date for transfer of permit responsibility,
coverage, and liability between the current and new permittee has been
submitted to the permitting authority;
(v) Incorporates into the part 71 permit the requirements from
preconstruction review permits authorized under an EPA-approved
program, provided that such a program meets procedural requirements
substantially equivalent to the requirements of Secs. 71.7 and 71.8
(and Sec. 71.10 in the case of a delegated program) that would be
applicable to the change if it were subject to review as a permit
modification, and compliance requirements substantially equivalent to
those contained in Sec. 71.6; or
(vi) Incorporates any other type of change which the Administrator
has determined to be similar to those in paragraphs (d)(1)(i) through
(iv) of this section.
(2) Administrative permit amendments for purposes of the acid rain
portion of the permit shall be governed by 40 CFR part 72.
(3) Administrative permit amendment procedures. An administrative
permit amendment may be made by the permitting authority consistent
with the following:
(i) The permitting authority shall take no more than 60 days from
receipt of a request for an administrative permit amendment to take
final action on such request, and may incorporate such changes without
providing notice to the public or affected States provided that it
designates any such permit revisions as having been made pursuant to
this paragraph.
(ii) The permitting authority shall submit a copy of the revised
permit to the Administrator in the case of a program delegated pursuant
to Sec. 71.10.
(iii) The source may implement the changes addressed in the request
for an administrative amendment immediately upon submittal of the
request.
(4) The permitting authority may, upon taking final action granting
a request for an administrative permit amendment, allow coverage by the
permit shield in Sec. 71.6(f) for administrative permit amendments made
pursuant to paragraph (d)(1)(v) of this section which meet the relevant
requirements of Secs. 71.6, 71.7, and 71.8 for significant permit
modifications.
(e) Permit modifications. A permit modification is any revision to
a part 71 permit that cannot be accomplished under the provisions for
administrative permit amendments under paragraph (d) of this section. A
permit modification for purposes of the acid rain portion of the permit
shall be governed by 40 CFR part 72.
(1) Minor permit modification procedures.
(i) Criteria.
(A) Minor permit modification procedures may be used only for those
permit modifications that:
(1) Do not violate any applicable requirement;
(2) Do not involve significant changes to existing monitoring,
reporting, or recordkeeping requirements in the permit;
(3) Do not require or change a case-by-case determination of an
emission limitation or other standard, or a source-specific
determination for temporary sources of ambient impacts, or a visibility
or increment analysis;
(4) Do not seek to establish or change a permit term or condition
for which there is no corresponding underlying applicable requirement
and that the source has assumed to avoid an applicable requirement to
which the source would otherwise be subject. Such terms and conditions
include:
(i) A federally enforceable emissions cap assumed to avoid
classification as a modification under any provision of title I; and
(ii) An alternative emissions limit approved pursuant to
regulations
[[Page 34241]]
promulgated under section 112(i)(5) of the Act;
(5) Are not modifications under any provision of title I of the
Act; and
(6) Are not required to be processed as a significant modification.
(B) Notwithstanding paragraphs (e)(1)(i)(A) and (e)(2)(i) of this
section, minor permit modification procedures may be used for permit
modifications involving the use of economic incentives, marketable
permits, emissions trading, and other similar approaches, to the extent
that such minor permit modification procedures are explicitly provided
for in an applicable implementation plan or in applicable requirements
promulgated by EPA.
(ii) Application. An application requesting the use of minor permit
modification procedures shall meet the requirements of Sec. 71.5(c) and
shall include the following:
(A) A description of the change, the emissions resulting from the
change, and any new applicable requirements that will apply if the
change occurs;
(B) The source's suggested draft permit;
(C) Certification by a responsible official, consistent with
Sec. 71.5(d), that the proposed modification meets the criteria for use
of minor permit modification procedures and a request that such
procedures be used; and
(D) Completed forms for the permitting authority to use to notify
affected States (and the Administrator in the case of a program
delegated pursuant to Sec. 71.10) as required under Secs. 71.8 and
71.10(d).
(iii) EPA and affected State notification. Within 5 working days of
receipt of a complete permit modification application, the permitting
authority shall meet its obligation under Sec. 71.8(a) to notify
affected States (and its obligation under Sec. 71.10(d) to notify the
Administrator in the case of a program delegated pursuant to
Sec. 71.10) of the requested permit modification. In the case of a
program delegated pursuant to Sec. 71.10, the permitting authority
promptly shall send any notice required under Sec. 71.8(b) to the
Administrator.
(iv) Timetable for issuance. In the case of a program delegated
pursuant to Sec. 71.10, the permitting authority may not issue a final
permit modification until after EPA's 45-day review period or until EPA
has notified the permitting authority that EPA will not object to
issuance of the permit modification, whichever is first, although the
permitting authority can approve the permit modification prior to that
time. Within 90 days of the permitting authority's receipt of an
application under minor permit modification procedures (or 15 days
after the end of the Administrator's 45-day review period under
Sec. 71.10(g) in the case of a program delegated pursuant to
Sec. 71.10, whichever is later), the permitting authority shall:
(A) Issue the permit modification as proposed;
(B) Deny the permit modification application;
(C) Determine that the requested modification does not meet the
minor permit modification criteria and should be reviewed under the
significant modification procedures; or
(D) Revise the draft permit modification (and, in the case of a
program delegated pursuant to Sec. 71.10, transmit to the Administrator
the new proposed permit modification as required by Sec. 71.10(d)).
(v) Source's ability to make change. The source may make the change
proposed in its minor permit modification application immediately after
it files such application. After the source makes the change allowed by
the preceding sentence, and until the permitting authority takes any of
the actions specified in paragraphs (e)(1)(iv) (A) through (C) of this
section, the source must comply with both the applicable requirements
governing the change and the proposed permit terms and conditions.
During this time period, the source need not comply with the existing
permit terms and conditions it seeks to modify. However, if the source
fails to comply with its proposed permit terms and conditions during
this time period, the existing permit terms and conditions it seeks to
modify may be enforced against it.
(vi) Permit shield. The permit shield under Sec. 71.6(f) may not
extend to minor permit modifications.
(2) Group processing of minor permit modifications. Consistent with
this paragraph, the permitting authority may modify the procedure
outlined in paragraph (e)(1) of this section to process groups of a
source's applications for certain modifications eligible for minor
permit modification processing.
(i) Criteria. Group processing of modifications may be used only
for those permit modifications:
(A) That meet the criteria for minor permit modification procedures
under paragraph (e)(1)(i)(A) of this section; and
(B) That collectively are below the threshold level of 10 percent
of the emissions allowed by the permit for the emissions unit for which
the change is requested, 20 percent of the applicable definition of
major source in Sec. 71.2, or 5 tpy, whichever is least.
(ii) Application. An application requesting the use of group
processing procedures shall meet the requirements of Sec. 71.5(c) and
shall include the following:
(A) A description of the change, the emissions resulting from the
change, and any new applicable requirements that will apply if the
change occurs.
(B) The source's suggested draft permit.
(C) Certification by a responsible official, consistent with
Sec. 71.5(d), that the proposed modification meets the criteria for use
of group processing procedures and a request that such procedures be
used.
(D) A list of the source's other pending applications awaiting
group processing, and a determination of whether the requested
modification, aggregated with these other applications, equals or
exceeds the threshold set under paragraph (e)(2)(i)(B) of this section.
(E) Certification, consistent with Sec. 71.5(d), that, in the case
of a program delegated pursuant to Sec. 71.10, the source has notified
EPA of the proposed modification. Such notification need only contain a
brief description of the requested modification.
(F) Completed forms for the permitting authority to use to notify
affected States as required under Sec. 71.8 (and the Administrator as
required under Sec. 71.10(d) in the case of a program delegated
pursuant to Sec. 71.10).
(iii) EPA and affected State notification. On a quarterl
FR Doc. 96-16257 Federal Operating Permits Program
y basis or
within 5 business days of receipt of an application demonstrating that
the aggregate of a source's pending applications equals or exceeds the
threshold level set under paragraph (e)(2)(i)(B) of this section,
whichever is earlier, the permitting authority promptly shall meet its
obligation under Sec. 71.8(a) to notify affected States (and its
obligation under Sec. 71.10(d) to notify EPA in the case of a program
delegated pursuant to Sec. 71.10) of the requested permit modification.
The permitting authority shall send any notice required under
Sec. 71.8(b) to the Administrator in the case of a program delegated
pursuant to Sec. 71.10.
(iv) Timetable for issuance. The provisions of paragraph (e)(1)(iv)
of this section shall apply to modifications eligible for group
processing, except that the permitting authority shall take one of the
actions specified in paragraphs (e)(1)(iv) (A) through (D) of this
section within 180 days of receipt of the application (or, in the case
of a program delegated pursuant to Sec. 71.10, 15 days
[[Page 34242]]
after the end of the Administrator's 45-day review period under
Sec. 71.10(g), whichever is later).
(v) Source's ability to make change. The provisions of paragraph
(e)(1)(v) of this section shall apply to modifications eligible for
group processing.
(vi) Permit shield. The provisions of paragraph (e)(1)(vi) of this
section shall also apply to modifications eligible for group
processing.
(3) Significant modification procedures.
(i) Criteria. Significant modification procedures shall be used for
applications requesting permit modifications that do not qualify as
minor permit modifications or as administrative amendments. Every
significant change in existing monitoring permit terms or conditions
and every relaxation of reporting or recordkeeping permit terms or
conditions shall be considered significant. Nothing herein shall be
construed to preclude the permittee from making changes consistent with
this part that would render existing permit compliance terms and
conditions irrelevant.
(ii) Significant permit modifications shall meet all requirements
of this part, including those for applications, public participation,
review by affected States, and review by EPA (in the case of a program
delegated pursuant to Sec. 71.10), as they apply to permit issuance and
permit renewal. The permitting authority shall design and implement
this review process to complete review on the majority of significant
permit modifications within 9 months after receipt of a complete
application.
(f) Reopening for cause. (1) Each issued permit shall include
provisions specifying the conditions under which the permit will be
reopened prior to the expiration of the permit. A permit shall be
reopened and revised under any of the following circumstances:
(i) Additional applicable requirements under the Act become
applicable to a major part 71 source with a remaining permit term of 3
or more years. Such a reopening shall be completed not later than 18
months after promulgation of the applicable requirement. No such
reopening is required if the effective date of the requirement is later
than the date on which the permit is due to expire, unless the original
permit or any of its terms and conditions have been extended pursuant
to paragraph (c)(3) of this section.
(ii) Additional requirements (including excess emissions
requirements) become applicable to an affected source under the acid
rain program. Upon approval by the Administrator, excess emissions
offset plans shall be deemed to be incorporated into the permit.
(iii) The permitting authority (or EPA, in the case of a program
delegated pursuant to Sec. 71.10) determines that the permit contains a
material mistake or that inaccurate statements were made in
establishing the emissions standards or other terms or conditions of
the permit.
(iv) The permitting authority (or EPA, in the case of a program
delegated pursuant to Sec. 71.10) determines that the permit must be
revised or revoked to assure compliance with the applicable
requirements.
(2) Proceedings to reopen and issue a permit shall follow the same
procedures as apply to initial permit issuance and shall affect only
those parts of the permit for which cause to reopen exists, and shall
be made as expeditiously as practicable.
(3) Reopenings under paragraph (f)(1) of this section shall not be
initiated before a notice of such intent is provided to the part 71
source by the permitting authority at least 30 days in advance of the
date that the permit is to be reopened, except that the permitting
authority may provide a shorter time period in the case of an
emergency.
(g) Reopenings for cause by EPA for delegated programs. (1) In the
case of a program delegated pursuant to Sec. 71.10, if the
Administrator finds that cause exists to terminate, modify, or revoke
and reissue a permit pursuant to paragraph (f) of this section, the
Administrator will notify the permitting authority and the permittee of
such finding in writing.
(2) The permitting authority shall, within 90 days after receipt of
such notification, forward to EPA a proposed determination of
termination, modification, or revocation and reissuance, as
appropriate. The Administrator may extend this 90-day period for an
additional 90 days if he or she finds that a new or revised permit
application is necessary or that the permitting authority must require
the permittee to submit additional information.
(3) The Administrator will review the proposed determination from
the permitting authority within 90 days of receipt.
(4) The permitting authority shall have 90 days from receipt of an
EPA objection to resolve any objection that EPA makes and to terminate,
modify, or revoke and reissue the permit in accordance with the
Administrator's objection.
(5) If the permitting authority fails to submit a proposed
determination pursuant to paragraph (g)(2) of this section or fails to
resolve any objection pursuant to paragraph (g)(4) of this section, the
Administrator will terminate, modify, or revoke and reissue the permit
after taking the following actions:
(i) Providing at least 30 days' notice to the permittee in writing
of the reasons for any such action. This notice may be given during the
procedures in paragraphs (g) (1) through (4) of this section.
(ii) Providing the permittee an opportunity for comment on the
Administrator's proposed action and an opportunity for a hearing.
Sec. 71.8 Affected State review.
(a) Notice of draft permits. When a part 71 operating permits
program becomes effective in a State or Tribal area, the permitting
authority shall provide notice of each draft permit to any affected
State, as defined in Sec. 71.2, on or before the time that the
permitting authority provides this notice to the public pursuant to
Sec. 71.7 or Sec. 71.11(d) except to the extent Sec. 71.7(e)(1) or (2)
requires the timing of the notice to be different.
(b) Notice of refusal to accept recommendations. Prior to issuance
of the final permit, the permitting authority shall notify any affected
State in writing of any refusal by the permitting authority to accept
all recommendations for the proposed permit that the affected State
submitted during the public or affected State review period. The notice
shall include the permitting authority's reasons for not accepting any
such recommendation. The permitting authority is not required to accept
recommendations that are not based on applicable requirements or the
requirements of this part. In the case of a program delegated pursuant
to Sec. 71.10, the permitting authority shall include such notice as
part of the submittal of the proposed permit to the Administrator (or
as soon as possible after the submittal for minor permit modification
procedures allowed under Sec. 71.7(e)(1) or (2)).
(c) Waiver of notice requirements. The Administrator may waive the
requirements of paragraph (a) of this section for any category of
sources (including any class, type, or size within such category) other
than major sources by regulation for a category of sources nationwide.
(d) Notice provided to Indian Tribes. The permitting authority
shall provide notice of each draft permit to any federally recognized
Indian Tribe whose air quality may be affected by the permitting action
and whose reservation
[[Page 34243]]
or Tribal area is contiguous to the jurisdiction in which the part 71
permit is proposed or is within 50 miles of the permitted source.
Sec. 71.9 Permit fees
(a) Fee requirement. The owners or operators of part 71 sources
shall pay annual fees, or the equivalent over some other period, that
are sufficient to cover the permit program costs, in accordance with
the procedures described in this section.
(b) Permit program costs. These costs include, but are not limited
to, the costs of the following activities as they relate to a part 71
program:
(1) Reviewing and acting on any application for a permit, permit
revision, or permit renewal, including the development of an applicable
requirement as part of the processing of a permit, or permit revision
or renewal;
(2) Processing permit reopenings;
(3) General administrative costs of the permit program, including
transition planning, interagency coordination, contract management,
training, informational services and outreach activities, assessing and
collecting fees, the tracking of permit applications, compliance
certifications, and related data entry;
(4) Implementing and enforcing the terms of any part 71 permit (not
including any court costs or other costs associated with an enforcement
action), including adequate resources to determine which sources are
subject to the program;
(5) Emissions and ambient monitoring, modeling, analyses,
demonstrations, preparation of inventories, and tracking emissions,
provided these activities are needed in order to issue and implement
part 71 permits; and
(6) Providing direct and indirect support to small business
stationary sources in determining applicable requirements and in
receiving permits under this part (to the extent that these services
are not provided by a State Small Business Stationary Source Technical
and Environmental Compliance Assistance Program).
(c) Establishment of fee schedule. (1) For part 71 programs that
are administered by EPA, each part 71 source shall pay an annual fee in
the amount of $32 per ton (as adjusted pursuant to the criteria set
forth in paragraph (n)(1) of this section) times the total tons of the
actual emissions of each regulated pollutant (for fee calculation)
emitted from the source, including fugitive emissions.
(2) For part 71 programs that are fully delegated pursuant to
Sec. 71.10:
(i) Where the EPA has not suspended its part 71 fee collection
pursuant to paragraph (c)(2)(ii) of this section, the annual fee for
each part 71 source shall be $24 per ton (as adjusted pursuant to the
criteria set forth in paragraph (n)(1) of this section) times the total
tons of the actual emissions of each regulated pollutant (for fee
calculation) emitted from the source, including fugitive emissions.
(ii) Where the delegate State collects fees from part 71 sources
under State law which are sufficient to fund the delegated part 71
program, the EPA may suspend its collection of part 71 fees. The
specific terms and conditions regarding the suspension of fee
collection will be addressed in the applicable delegation agreement
pursuant to Sec. 71.10.
(3) For part 71 programs that are administered by EPA with
contractor assistance, the per ton fee shall vary depending on the
extent of contractor involvement and the cost to EPA of contractor
assistance. The EPA shall establish a per ton fee that is based on the
contractor costs for the specific part 71 program that is being
administered, using the following formula:
Cost per ton=(E x 32)+[(1-E) x $C]
Where E represents EPA's proportion of total effort (expressed as a
percentage of total effort) needed to administer the part 71 program,
1-E represents the contractor's effort, and C represents the contractor
assistance cost on a per ton basis. C shall be computed by using the
following formula:
C=[B+T+N] divided by 12,300,000
Where B represents the base cost (contractor costs), where T represents
travel costs, and where N represents nonpersonnel data management and
tracking costs.
(4) For programs that are delegated in part, the fee shall be
computed using the following formula:
Cost per ton=(E x 32)+(D x 24)+[(1-E-D) x $C]
Where E and D represent, respectively, the EPA and delegate agency
proportions of total effort (expressed as a percentage of total effort)
needed to administer the part 71 program, 1-E-D represents the
contractor's effort, and C represents the contractor assistance cost on
a per ton basis. C shall be computed using the formula for contractor
assistance cost found in paragraph (c)(3) of this section and shall be
zero if contractor assistance is not utilized.
(5) The following emissions shall be excluded from the calculation
of fees under paragraph (c)(1) through (c)(4) of this section:
(i) The amount of a part 71 source's actual emissions of each
regulated pollutant (for fee calculation) that the source emits in
excess of four thousand (4,000) tpy;
(ii) A part 71 source's actual emissions of any regulated pollutant
(for fee calculation) already included in the fee calculation; and
(iii) The insignificant quantities of actual emissions not required
to be listed or calculated in a permit application pursuant to
Sec. 71.5(c)(11).
(6) ``Actual emissions'' means the actual rate of emissions in tpy
of any regulated pollutant (for fee calculation) emitted from a part 71
source over the preceding calendar year. Actual emissions shall be
calculated using each emissions unit's actual operating hours,
production rates, in-place control equipment, and types of materials
processed, stored, or combusted during the preceding calendar year.
(7) Notwithstanding the provisions of paragraph (c) (1) through (4)
of this section, if the Administrator determines that the fee
structures provided in paragraphs (c)(1) through (4) of this section do
not reflect the costs of administering a part 71 program, then the
Administrator shall by rule set a fee which adequately reflects permit
program costs for that program.
(d) Prohibition on fees with respect to emissions from affected
units. Notwithstanding any other provision of this section, during the
years 1995 through 1999 inclusive, no fee for purposes of title V shall
be required to be paid with respect to emissions from any affected unit
under section 404 of the Act.
(e) Submission of initial fee calculation work sheets and fees. (1)
Each part 71 source shall complete and submit an initial fee
calculation work sheet as provided in paragraphs (e)(2), (f), and (g)
of this section and shall complete and submit fee calculation work
sheets thereafter as provided in paragraph (h) of this section.
Calculations of actual or estimated emissions and calculation of the
fees owed by a source shall be computed by the source on fee
calculation work sheets provided by EPA. Fee payment of the full amount
must accompany each initial fee calculation work sheet.
(2) The fee calculation work sheet shall require the source to
submit a report of its actual emissions for the preceding calendar year
and to compute fees owed based on those emissions. For sources that
have been issued part 70 or part 71 permits, actual emissions shall be
computed using compliance methods required by the most recent permit.
If actual emissions cannot be determined
[[Page 34244]]
using the compliance methods in the permit, the actual emissions should
be determined using federally recognized procedures. If a source
commenced operation during the preceding calendar year, the source
shall estimate its actual emissions for the current calendar year. In
such a case, fees for the source shall be based on the total emissions
estimated.
(3) The initial fee calculation worksheet shall be certified by a
responsible official consistent with Sec. 71.5(d).
(f) Deadlines for submission. (1) When EPA withdraws approval of a
part 70 program and implements a part 71 program, part 71 sources shall
submit initial fee calculation work sheets and fees in accordance with
the following schedule:
(i) Sources having SIC codes between 0100 and 2499 inclusive shall
complete and submit fee calculation work sheets and fees within 6
months of the effective date of the part 71 program;
(ii) Sources having SIC codes between 2500 and 2999 inclusive shall
complete and submit fee calculation work sheets and fees within 7
months of the effective date of the part 71 program;
(iii) Sources having SIC codes between 3000 and 3999 inclusive
shall complete and submit fee calculation work sheets and fees within 8
months of the effective date of the part 71 program;
(iv) Sources having SIC codes higher than 3999 shall complete and
submit fee calculation work sheets and fees within 9 months of the
effective date of the part 71 program.
(2) Sources that are required under either paragraph (f)(1) or (g)
of this section to submit fee calculation work sheets and fees between
January 1 and March 31 may estimate their emissions for the preceding
calendar year in lieu of submitting actual emissions data. If the
source's initial fee calculation work sheet was based on estimated
emissions for the source's preceding calendar year, then the source
shall reconcile the fees owed when it submits its annual emissions
report, as provided in paragraph (h)(3) of this section.
(3) When EPA implements a part 71 program that does not replace an
approved part 70 program, part 71 sources shall submit initial fee
calculation work sheets and initial fees when submitting their permit
applications in accordance with the requirements of Sec. 71.5(a)(1).
(4) Notwithstanding the above, sources that become subject to the
part 71 program after the program's effective date shall submit an
initial fee calculation work sheet and initial fees when submitting
their permit applications in accordance with the requirements of
Sec. 71.5(a)(1).
(g) Fees for sources that are issued part 71 permits following an
EPA objection pursuant to Sec. 71.4(e). Fees for such sources shall be
determined as provided in paragraph (c)(1) of this section. However,
initial fee calculation work sheets for such sources and full payment
of the initial fee shall be due three months after the date on which
the source's part 71 permit is issued.
(h) Annual emissions reports--(1) Deadlines for submission. Each
part 71 source shall submit an annual report of its actual emissions
for the preceding calendar year, a fee calculation work sheet (based on
the report), and full payment of the annual fee each year on the
anniversary date of its initial fee calculation work sheet, except that
sources that were required to submit initial fee calculation work
sheets between January 1 and March 31 inclusive shall submit subsequent
annual emissions reports and fee calculation work sheets by April 1.
(2) Annual emissions reports and fee calculation worksheets shall
be certified by a responsible official consistent with Sec. 71.5(d).
(3) For sources that have been issued part 70 or part 71 permits,
actual emissions shall be computed using methods required by the most
current permit for determining compliance.
(4) If the source's initial fee calculation work sheet was based on
estimated emissions for the source's current or preceding calendar
year, then the source shall reconcile the fees owed when it submits its
annual emissions report. The source shall compare the estimated
emissions from the initial work sheet and the actual emissions from the
report and shall enter such information on the fee calculation work
sheet that accompanies the annual report. The source shall recompute
the initial fee accordingly and shall remit any underpayment with the
report and work sheet. The EPA shall credit any overpayment to the
source's account.
(i) Recordkeeping requirements. Part 71 sources shall retain, in
accordance with the provisions of Sec. 71.6(a)(3)(ii), all work sheets
and other materials used to determine fee payments. Records shall be
retained for 5 years following the year in which the emissions data is
submitted.
(j) Fee assessment errors. (1) If EPA determines than a source has
completed the fee calculation work sheet incorrectly, the permitting
authority shall bill the applicant for the corrected fee or credit
overpayments to the source's account.
(2) Each source notified by the permitting authority of additional
amounts due shall remit full payment within 30 days of receipt of an
invoice from the permitting authority.
(3) An owner or operator of a part 71 source who thinks that the
assessed fee is in error shall provide a written explanation of the
alleged error to the permitting authority along with the assessed fee.
The permitting authority shall, within 90 days of receipt of the
correspondence, review the data to determine whether the assessed fee
was in error. If an error was made, the overpayment shall be credited
to the account of the part 71 source.
(k) Remittance procedure. (1) Each remittance under this section
shall be in United States currency and shall be paid by money order,
bank draft, certified check, corporate check, or electronic funds
transfer payable to the order of the U.S. Environmental Protection
Agency.
(2) Each remittance shall be sent to the Environmental Protection
Agency to the address designated on the fee calculation work sheet or
the invoice.
(l) Penalty and interest assessment. (1) The permitting authority
shall assess interest on payments which are received later than the
date due. The interest rate shall be the sum of the Federal short-term
rate determined by the Secretary of the Treasury in accordance with
section 6621(a)(2) of the Internal Revenue Code of 1986, plus 3
percentage points.
(2) The permitting authority shall assess a penalty charge of 50
percent of the fee amount if the fee is not paid within 30 days of the
payment due date.
(3) If a source underpays the fee owed, except as provided in
paragraph (l)(4) of this section, the permitting authority shall assess
a penalty charge of 50 percent on the amount by which the fee was
underpaid. Interest shall also be assessed, computed under paragraph
(l)(1) of this section, on the amount by which the fee was underpaid.
(4) If a source bases its initial fee calculation on estimated
emissions from the source's current or preceding calendar year, as
provided under paragraph (h)(4) of this section, and underpays its fee
based on an underestimation of these emissions, the permitting
authority shall assess a penalty charge of 50 percent on certain of
these underpayments, according to the following provisions:
(i) The penalty charge shall be assessed whenever a source's
underpayment exceeds the underpayment penalty cutoff established in
paragraph (l)(4)(iii) of this section. The penalty amount shall be 50
[[Page 34245]]
percent of the portion of the underpayment which is in excess of the
underpayment penalty cutoff.
(ii) Where a source is subject to a penalty for underpayment
pursuant to paragraph (l)(4)(i) of this section, interest as computed
under paragraph (l)(1) of this section shall be assessed on that
portion of the underpayment which is in excess of the underpayment
penalty cutoff established in paragraph (l)(4)(iii) of this section.
(iii) The underpayment penalty cutoff for a source shall be the sum
of the following:
(A) 50 percent of the portion of the initial fee amount which was
calculated from estimated emissions of HAP listed pursuant to 112(b) of
the Act, and
(B) 20 percent of the portion of initial fee amount which was
calculated from estimated emissions of the remainder of the regulated
air pollutants (for fee calculation).
(m) Failure to remit fees. The permitting authority shall not issue
a final permit or permit revision until all fees, interest and
penalties assessed against a source under this section are paid. The
initial application of a source shall not be found complete unless the
source has paid all fees owed.
(n) Adjustments of fee schedules.
(1) The fee schedules provided in paragraphs (c) (1) through (4) of
this section shall remain in effect until December 31, 1996.
Thereafter, the fee schedules shall be changed annually by the
percentage, if any, of any annual increase in the Consumer Price Index.
(2) Part 71 permit program costs and fees will be reviewed by the
Administrator at least every 2 years, and changes will be made to the
fee schedule as necessary to reflect permit program costs.
(3) When changes to a fee schedule are made based on periodic
reviews by the Administrator, the changes will be published in the
Federal Register.
(o) Use of revenue. All fees, penalties, and interest collected
under this part shall be deposited in a special fund in the U.S.
Treasury, which thereafter shall be available for appropriation, to
remain available until expended, subject to appropriation, to carry out
the activities required by this part.
Sec. 71.10 Delegation of part 71 program.
(a) Delegation of part 71 program. The Administrator may delegate,
in whole or in part, with or without signature authority, the authority
to administer a part 71 operating permits program to a State, eligible
Tribe, local, or other non-State agency in accordance with the
provisions of this section. In order to be delegated authority to
administer a part 71 program, the delegate agency must submit a legal
opinion from the Attorney General from the State, or the attorney for
the State, local, interstate, or eligible Tribal agency that has
independent legal counsel, stating that the laws of the State,
locality, interstate compact or Indian Tribe provide adequate authority
to carry out all aspects of the delegated program. A Delegation of
Authority Agreement (Agreement) shall set forth the terms and
conditions of the delegation, shall specify the provisions that the
delegate agency shall be authorized to implement, and shall be entered
into by the Administrator and the delegate agency. The Agreement shall
become effective upon the date that both the Administrator and the
delegate agency have signed the Agreement. Once delegation becomes
effective, the delegate agency will be responsible, to the extent
specified in the Agreement, for administering the part 71 program for
the area subject to the Agreement.
(b) Publication of Notice of Delegation of Authority Agreement. The
Administrator shall publish a notice in the Federal Register informing
the public of any delegation of a portion of the part 71 program to a
State, eligible Tribe, or local agency.
(c) Revision or revocation of Delegation of Authority Agreement. An
Agreement may be modified, amended, or revoked, in part or in whole, by
the Administrator after consultation with the delegate agency.
(d) Transmission of information to the Administrator.
(1) When a part 71 program has been delegated in accordance with
the provisions of this section, the delegate agency shall provide to
the Administrator a copy of each permit application (including any
application for permit modification), each proposed permit, and each
final part 71 permit. The applicant may be required by the delegate
agency to provide a copy of the permit application (including the
compliance plan) directly to the Administrator. Upon agreement with the
Administrator, the delegate agency may submit to the Administrator a
permit application summary form and any relevant portion of the permit
application and compliance plan, in place of the complete permit
application and compliance plan. To the extent practicable, the
preceding information shall be provided in computer-readable format
compatible with EPA's national database management system.
(2) The Administrator may waive the requirements of paragraph
(d)(1) of this section for any category of sources (including any
class, type, or size within such category) other than major sources by
regulation for a category of sources nationwide.
(e) Retention of records. The records for each draft, proposed, and
final permit, and application for permit renewal or modification shall
be kept for a period of 5 years by the delegate agency. The delegate
agency shall also submit to the Administrator such information as the
Administrator may reasonably require to ascertain whether the delegate
agency is implementing, administering, and enforcing the delegated part
71 program in compliance with the requirements of the Act and of this
part.
(f) Prohibition of default issuance. (1) For the purposes of
Federal law and title V of the Act, when a part 71 program has been
delegated in accordance with the provisions of this section, no part 71
permit (including a permit renewal or modification) will be issued
until affected States have had an opportunity to review the draft
permit as required pursuant to Sec. 71.8(a) and EPA has had an
opportunity to review the proposed permit.
(2) To receive delegation of signature authority, the legal opinion
submitted by the delegate agency pursuant to paragraph (a) of this
section shall certify that no applicable provision of State, local or
Tribal law requires that a part 71 permit or renewal be issued after a
certain time if the delegate agency has failed to take action on the
application (or includes any other similar provision providing for
default issuance of a permit), unless EPA has waived such review for
EPA and affected States.
(g) EPA objection. (1) The Administrator will object to the
issuance of any proposed permit determined by the Administrator not to
be in compliance with applicable requirements or requirements under
this part. No permit for which an application must be transmitted to
the Administrator under paragraph (d)(1) of this section shall be
issued if the Administrator objects to its issuance in writing within
45 days of receipt of the proposed permit and all necessary supporting
information. When a part 71 program has been delegated in accordance
with the provisions of this section, failure of the delegate agency to
do any of the following shall constitute grounds for an objection by
the Administrator:
(i) Comply with paragraph (d) of this section;
(ii) Submit any information necessary to review adequately the
proposed permit;
[[Page 34246]]
(iii) Process the permit under the procedures required by
Secs. 71.7 and 71.11; or
(iv) Comply with the requirements of Sec. 71.8(a).
(2) Any EPA objection under paragraph (g)(1) of this section shall
include a statement of the Administrator's reason(s) for objection and
a description of the terms and conditions that the permit must include
to respond to the objection. The Administrator will provide the permit
applicant a copy of the objection.
(3) If the delegate agency fails, within 90 days after the date of
an objection under paragraph (g)(1) of this section, to revise and
submit to the Administrator the proposed permit in response to the
objection, the Administrator shall issue or deny the permit in
accordance with the requirements of this part.
(h) Public petitions. In the case of a delegated program, any
interested person may petition the Administrator to reopen a permit for
cause as provided in Sec. 71.11(n).
(i) Appeal of permits. When a part 71 program has been delegated
with signature authority in accordance with the provisions of this
section, any person or affected State that submitted recommendations or
comments on the draft permit, or that participated in the public
hearing process may petition the Environmental Appeals Board in
accordance with Sec. 71.11(l)(1).
(j) Nondelegable conditions. (1) The Administrator's authority to
object to the issuance of a part 71 permit cannot be delegated to an
agency not within EPA.
(2) The Administrator's authority to act upon petitions submitted
pursuant to paragraph (h) of this section cannot be delegated to an
agency not within EPA.
Sec. 71.11 Administrative record, public participation, and
administrative review.
The provisions of this section shall apply to all permit
proceedings. Notwithstanding the preceding sentence, paragraphs (a)
through (h) and paragraph (j) of this section shall not apply to permit
revisions qualifying as minor permit modifications or administrative
amendments, except that public notice of the granting of appeals of
such actions under paragraph (l)(3) of this section shall be provided
pursuant to paragraph (d)(1)(i)(E) of this section, and except that
affected States shall be provided notice of minor permit modifications
under Sec. 71.8 as pursuant to paragraph (d)(3)(i)(B) of this section.
(a) Draft permits. (1) The permitting authority shall promptly
provide notice to the applicant of whether the application is complete
pursuant to Sec. 71.7(a)(3).
(2) Once an application for an initial permit, permit revision, or
permit renewal is complete, the permitting authority shall decide
whether to prepare a draft permit or to deny the application.
(3) If the permitting authority initially decides to deny the
permit application, it shall issue a notice of intent to deny. A notice
of intent to deny the permit application is a type of draft permit and
follows the same procedures as any draft permit prepared under this
section. If the permitting authority's final decision is that the
initial decision to deny the permit application was incorrect, it shall
withdraw the notice of intent to deny and proceed to prepare a draft
permit under paragraph (a)(4) of this section.
(4) If the permitting authority decides to prepare a draft permit,
it shall prepare a draft permit that contains the permit conditions
required under Sec. 71.6.
(5) All draft permits prepared under this section shall be publicly
noticed and made available for public comment.
(b) Statement of basis. The permitting authority shall prepare a
statement of basis for every draft permit subject to this section. The
statement of basis shall briefly describe the derivation of the
conditions of the draft permit and the reasons for them or, in the case
of notices of intent to deny or terminate, reasons supporting the
initial decision. The statement of basis shall be sent to the applicant
and, on request, to any other person.
(c) Administrative record for draft permits.
(1) The provisions of a draft permit shall be based on the
administrative record defined in this section.
(2) For preparing a draft permit, the administrative record shall
consist of:
(i) The application and any supporting data furnished by the
applicant;
(ii) The draft permit or notice of intent to deny the application
or to terminate the permit;
(iii) The statement of basis;
(iv) All documents cited in the statement of basis; and
(v) Other documents contained in the supporting file for the draft
permit.
(3) Material readily available at the permitting authority or
published material that is generally available, and that is included in
the administrative record under paragraphs (b) and (c) of this section
need not be physically included with the rest of the record as long as
it is specifically referred to in the statement of basis.
(d) Public notice of permit actions and public comment period.
(1) Scope.
(i) The permitting authority shall give public notice that the
following actions have occurred:
(A) A permit application has been initially denied under paragraph
(a) of this section;
(B) A draft permit has been prepared under paragraph (a) of this
section;
(C) A hearing has been scheduled under paragraph (f) of this
section; and
(D) A public comment period has been reopened under paragraph (h)
of this section;
(E) An appeal has been granted under paragraph (l)(3) of this
section.
(ii) No public notice is required when a request for permit
revision, revocation and reissuance, or termination has been denied
under paragraph (a)(2) of this section. Written notice of that denial
shall be given to the requester and to the permittee.
(iii) Public notices may describe more than one permit or permit
action.
(2) Timing. (i) Public notice of the preparation of a draft permit,
(including a notice of intent to deny a permit application), shall
allow at least 30 days for public comment.
(ii) Public notice of a public hearing shall be given at least 30
days before the hearing. Public notice of the hearing may be given at
the same time as public notice of the draft permit and the two notices
may be combined.
(iii) The permitting authority shall provide such notice and
opportunity for participation to affected States on or before the time
that the permitting authority provides this notice to the public.
(3) Methods. Public notice of activities described in paragraph
(d)(1)(i) of this section shall be given by the following methods:
(i) By mailing a copy of a notice to the following persons (any
person otherwise entitled to receive notice under paragraph (d) of this
section may waive his or her rights to receive notice for any permit):
(A) The applicant;
(B) Affected States;
(C) Air pollution control agencies of affected States, Tribal and
local air pollution control agencies which have jurisdiction over the
area in which the source is located, the chief executives of the city
and county where the source is located, any comprehensive regional land
use planning agency and any State or Federal Land Manager whose lands
may be affected by emissions from the source;
(D) The local emergency planning committee having jurisdiction over
the
[[Page 34247]]
area where the source is located, and State agencies having authority
under State law with respect to the operation of such source;
(E) Persons on a mailing list developed by:
(1) Including those who request in writing to be on the list;
(2) Soliciting persons for ``area lists'' from participants in past
permit proceedings in that area; and
(3) Notifying the public of the opportunity to be put on the
mailing list through periodic publication in the public press and,
where deemed appropriate by the permitting authority, in such
publications as regional and State funded newsletters, environmental
bulletins, or State law journals. The permitting authority may update
the mailing list from time to time by requesting written indication of
continued interest from those listed. The permitting authority may
delete from the list the name of any person who fails to respond to
such a request.
(ii) By publication of a notice in a daily or weekly newspaper of
general circulation within the area affected by the source.
(iii) By any other method reasonably calculated to give actual
notice of the action in question to the persons potentially affected by
it, including press releases or any other forum or medium to elicit
public participation.
(4) Contents--(i) All public notices. All public notices issued
under this subpart shall contain the following minimum information:
(A) The name and address of the permitting authority processing the
permit;
(B) The name and address of the permittee or permit applicant and,
if different, of the facility regulated by the permit, except in the
case of draft general permits;
(C) The activity or activities involved in the permit action;
(D) The emissions change involved in any permit revision;
(E) The name, address, and telephone number of a person whom
interested persons may contact for instructions on how to obtain
additional information, such as a copy of the draft permit, the
statement of basis, the application, relevant supporting materials, and
other materials available to the permitting authority that are relevant
to the permitting decision.
(F) A brief description of the comment procedures required by
paragraph (e) of this section, a statement of procedures to request a
hearing (unless a hearing has already been scheduled) and other
procedures by which the public may participate in the final permit
decision;
(G) The location of the administrative record, the times at which
the record will be open for public inspection, and a statement that all
data submitted by the applicant are available as part of the
administrative record; and
(H) Any additional information considered necessary or proper.
(ii) Public notices for hearings. Public notice of a hearing may be
combined with other notices required under paragraph (d)(1) of this
section. Any public notice of a hearing under paragraph (f) of this
section shall contain the following information:
(A) The information described in paragraph (d)(4)(i) of this
section;
(B) Reference to the date of previous public notices relating to
the permit;
(C) The date, time, and place of the hearing; and
(D) A brief description of the nature and purpose of the hearing,
including the applicable rules and the comment procedures.
(5) All persons identified in paragraphs (d)(3)(i) (A), (B), (C),
(D), and (E) of this section shall be mailed a copy of the public
hearing notice described in paragraph (d)(4)(ii) of this section.
(e) Public comments and requests for public hearings. During the
public comment period provided under paragraph (a) of this section, any
interested person may submit written comments on the draft permit and
may request a public hearing, if no hearing has already been scheduled.
A request for a public hearing shall be in writing and shall state the
nature of the issues proposed to be raised at the hearing. All comments
shall be considered in making the final decision and shall be answered
as provided in paragraph (j) of this section. The permitting authority
will keep a record of the commenters and of the issues raised during
the public participation process, and such records shall be available
to the public.
(f) Public hearings. (1) The permitting authority shall hold a
hearing whenever it finds, on the basis of requests, a significant
degree of public interest in a draft permit.
(2) The permitting authority may also hold a public hearing at its
discretion, whenever, for instance, such a hearing might clarify one or
more issues involved in the permit decision.
(3) Public notice of the hearing shall be given as specified in
paragraph (d) of this section.
(4) Whenever a public hearing is held, the permitting authority
shall designate a Presiding Officer for the hearing who shall be
responsible for its scheduling and orderly conduct.
(5) Any person may submit oral or written statements and data
concerning the draft permit. Reasonable limits may be set upon the time
allowed for oral statements, and the submission of statements in
writing may be required. The public comment period under paragraph (d)
of this section shall be automatically extended to the close of any
public hearing under this section. The hearing officer may also extend
the comment period by so stating at the hearing.
(6) A tape recording or written transcript of the hearing shall be
made available to the public.
(g) Obligation to raise issues and provide information during the
public comment period. All persons, including applicants, who believe
any condition of a draft permit is inappropriate or that the permitting
authority's initial decision to deny an application, terminate a
permit, or prepare a draft permit is inappropriate, must raise all
reasonably ascertainable issues and submit all reasonably ascertainable
arguments supporting their position by the close of the public comment
period (including any public hearing). Any supporting materials that
are submitted shall be included in full and may not be incorporated by
reference, unless they are already part of the administrative record in
the same proceeding, or consist of State or Federal statutes and
regulations, EPA documents of general applicability, or other generally
available reference materials. In the case of a program delegated
pursuant to Sec. 71.10, if requested by the Administrator, the
permitting authority shall make supporting materials not already
included in the administrative record available to EPA. The permitting
authority may direct commenters to provide such materials directly to
EPA. A comment period longer than 30 days may be necessary to give
commenters a reasonable opportunity to comply with the requirements of
this section. Additional time shall be granted to the extent that a
commenter who requests additional time demonstrates the need for such
time.
(h) Reopening of the public comment period. (1) The permitting
authority may order the public comment period reopened if the
procedures of paragraph (h) of this section could expedite the decision
making process. When the public comment period is reopened under
paragraph (h) of this section, all persons, including applicants, who
believe any condition of a draft permit is inappropriate or that the
permitting authority's initial decision to deny an application,
terminate a permit, or prepare a draft permit is inappropriate, must
submit all reasonably available factual grounds supporting their
[[Page 34248]]
position, including all supporting material, by a date not less than 30
days after public notice under paragraph (h)(2) of this section, set by
the permitting authority. Thereafter, any person may file a written
response to the material filed by any other person, by a date, not less
than 20 days after the date set for filing of the material, set by the
permitting authority.
(2) Public notice of any comment period under this paragraph (h)
shall identify the issues to which the requirements of paragraphs
(h)(1) through (4) of this section shall apply.
(3) On its own motion or on the request of any person, the
permitting authority may direct that the requirements of paragraph
(h)(1) of this section shall apply during the initial comment period
where it reasonably appears that issuance of the permit will be
contested and that applying the requirements of paragraph (h)(1) of
this section will substantially expedite the decision making process.
The notice of the draft permit shall state whenever this has been done.
(4) A comment period of longer than 30 days may be necessary in
complicated proceedings to give commenters a reasonable opportunity to
comply with the requirements of this section. Commenters may request
longer comment periods and they may be granted to the extent the
permitting authority finds it necessary.
(5) If any data, information, or arguments submitted during the
public comment period appear to raise substantial new questions
concerning a permit, the permitting authority may take one or more of
the following actions:
(i) Prepare a new draft permit, appropriately modified;
(ii) Prepare a revised statement of basis, and reopen the comment
period; or
(iii) Reopen or extend the comment period to give interested
persons an opportunity to comment on the information or arguments
submitted.
(6) Comments filed during the reopened comment period shall be
limited to the substantial new questions that caused the reopening. The
public notice shall define the scope of the reopening.
(7) Public notice of any of the above actions shall be issued under
paragraph (d) of this section.
(i) Issuance and effective date of permit. (1) After the close of
the public comment period on a draft permit, the permitting authority
shall issue a final permit decision. The permitting authority shall
notify the applicant and each person who has submitted written comments
or requested notice of the final permit decision. This notice shall
include reference to the procedures for appealing a decision on a
permit. For the purposes of this section, a final permit decision means
a final decision to issue, deny, revise, revoke and reissue, renew, or
terminate a permit.
(2) A final permit decision shall become effective 30 days after
the service of notice of the decision, unless:
(i) A later effective date is specified in the decision;
(ii) Review is requested under paragraph (l) of this section (in
which case the specific terms and conditions of the permit which are
the subject of the request for review shall be stayed); or
(iii) No comments requested a change in the draft permit, in which
case the permit shall become effective immediately upon issuance.
(j) Response to comments. (1) At the time that any final permit
decision is issued, the permitting authority shall issue a response to
comments. This response shall:
(i) Specify which provisions, if any, of the draft permit have been
changed in the final permit decision, and the reasons for the change;
and
(ii) Briefly describe and respond to all significant comments on
the draft permit raised during the public comment period, or during any
hearing.
(2) Any documents cited in the response to comments shall be
included in the administrative record for the final permit decision as
defined in paragraph (k) of this section. If new points are raised or
new material supplied during the public comment period, the permitting
authority may document its response to those matters by adding new
materials to the administrative record.
(3) The response to comments shall be available to the public.
(4) The permitting authority will notify in writing any affected
State of any refusal to accept recommendations for the permit that the
State submitted during the public or affected State review period.
(k) Administrative record for final permits. (1) The permitting
authority shall base final permit decisions on the administrative
record defined in paragraph (k)(2) of this section.
(2) The administrative record for any final permit shall consist
of:
(i) All comments received during any public comment period,
including any extension or reopening;
(ii) The tape or transcript of any hearing(s) held;
(iii) Any written material submitted at such a hearing;
(iv) The response to comments and any new materials placed in the
record;
(v) Other documents contained in the supporting file for the
permit;
(vi) The final permit;
(vii) The application and any supporting data furnished by the
applicant;
(viii) The draft permit or notice of intent to deny the application
or to terminate the permit;
(ix) The statement of basis for the draft permit;
(x) All documents cited in the statement of basis;
(xi) Other documents contained in the supporting file for the draft
permit.
(3) The additional documents required under paragraph (k)(2) of
this section should be added to the record as soon as possible after
their receipt or publication by the permitting authority. The record
shall be complete on the date the final permit is issued.
(4) Material readily available at the permitting authority, or
published materials which are generally available and which are
included in the administrative record under the standards of paragraph
(j) of this section need not be physically included in the same file as
the rest of the record as long as it is specifically referred to in the
statement of basis or in the response to comments.
(l) Appeal of permits. (1) Within 30 days after a final permit
decision has been issued, any person who filed comments on the draft
permit or participated in the public hearing may petition the
Environmental Appeals Board to review any condition of the permit
decision. Any person who failed to file comments or failed to
participate in the public hearing on the draft permit may petition for
administrative review only to the extent of the changes from the draft
to the final permit decision or other new grounds that were not
reasonably foreseeable during the public comment period on the draft
permit. The 30-day period within which a person may request review
under this section begins with the service of notice of the permitting
authority's action unless a later date is specified in that notice,
except that the 30-day period within which a person may request review
of a minor permit modification or administrative amendment begins upon
the effective date of such action to revise the permit. The petition
shall include a statement of the reasons supporting that review,
including a demonstration that any issues raised were raised during the
public comment period (including any public hearing) to the extent
required by these regulations unless the petitioner demonstrates that
it was impracticable to raise such objections within such period or
unless
[[Page 34249]]
the grounds for such objection arose after such period, and, when
appropriate, a showing that the condition in question is based on:
(i) A finding of fact or conclusion of law which is clearly
erroneous; or
(ii) An exercise of discretion or an important policy consideration
which the Environmental Appeals Board should, in its discretion,
review.
(2) The Board may also decide on its initiative to review any
condition of any permit issued under this part. The Board must act
under paragraph (l) of this section within 30 days of the service date
of notice of the permitting authority's action.
(3) Within a reasonable time following the filing of the petition
for review, the Board shall issue an order either granting or denying
the petition for review. To the extent review is denied, the conditions
of the final permit decision become final agency action. Public notice
of any grant of review by the Board under paragraph (l)(1) or (2) of
this section shall be given as provided in paragraph (d) of this
section. Public notice shall set forth a briefing schedule for the
appeal and shall state that any interested person may file an amicus
brief. Notice of denial of review shall be sent only to the permit
applicant and to the person(s) requesting review.
(4) A petition to the Board under paragraph (l)(1) of this section
is, under 42 U.S.C. 307(b), a prerequisite to seeking judicial review
of the final agency action.
(5) For purposes of judicial review, final agency action occurs
when a final permit is issued or denied by the permitting authority and
agency review procedures are exhausted. A final permit decision shall
be issued by the permitting authority:
(i) When the Board issues notice to the parties that review has
been denied;
(ii) When the Board issues a decision on the merits of the appeal
and the decision does not include a remand of the proceedings; or
(iii) Upon the completion of remand proceedings if the proceedings
are remanded, unless the Board's remand order specifically provides
that appeal of the remand decision will be required to exhaust
administrative remedies.
(6) Motions to reconsider a final order shall be filed within ten
(10) days after service of the final order. Every such motion must set
forth the matters claimed to have been erroneously decided and the
nature of the alleged errors. Motions for reconsideration under this
provision shall be directed to, and decided by, the Board. Motions for
reconsideration directed to the Administrator, rather than to the
Board, will not be considered, except in cases that the Board has
referred to the Administrator and in which the Administrator has issued
the final order. A motion for reconsideration shall not stay the
effective date of the final order unless specifically so ordered by the
Board.
(m) Computation of time. (1) Any time period scheduled to begin on
the occurrence of an act or event shall begin on the day after the act
or event.
(2) Any time period scheduled to begin before the occurrence of an
act or event shall be computed so that the period ends on the day
before the act or event, except as otherwise provided.
(3) If the final day of any time period falls on a weekend or legal
holiday, the time period shall be extended to the next working day.
(4) Whenever a party or interested person has the right or is
required to act within a prescribed period after the service of notice
or other paper upon him or her by mail, 3 days shall be added to the
prescribed time.
(n) Public petitions to the Permitting Authority.
(1) Any interested person (including the permittee) may petition
the permitting authority to reopen a permit for cause, and the
permitting authority may commence a permit reopening on its own
initiative. However, the permitting authority shall not revise, revoke
and reissue, or terminate a permit except for the reasons specified in
Sec. 71.7(f)(1) or Sec. 71.6(a)(6)(i). All requests shall be in writing
and shall contain facts or reasons supporting the request.
(2) If the permitting authority decides the request is not
justified, it shall send the requester a brief written response giving
a reason for the decision. Denials of requests for revision, revocation
and reissuance, or termination are not subject to public notice,
comment, or hearings. Denials by the permitting authority may be
informally appealed to the Environmental Appeals Board by a letter
briefly setting forth the relevant facts. The Board may direct the
permitting authority to begin revision, revocation and reissuance, or
termination proceedings under paragraph (n)(3) of this section. The
appeal shall be considered denied if the Board takes no action within
60 days after receiving it. This informal appeal is, under 42 U.S.C.
307, a prerequisite to seeking judicial review of EPA action in denying
a request for revision, revocation and reissuance, or termination.
(3) If the permitting authority decides the request is justified
and that cause exists to revise, revoke and reissue or terminate a
permit, it shall initiate proceedings to reopen the permit pursuant to
Sec. 71.7(f) or Sec. 71.7(g).
Sec. 71.12 Prohibited acts.
Violations of any applicable requirement; any permit term or
condition; any fee or filing requirement; any duty to allow or carry
out inspection, entry, or monitoring activities; or any regulation or
order issued by the permitting authority pursuant to this part are
violations of the Act and are subject to full Federal enforcement
authorities available under the Act.
[FR Doc. 96-16257 Filed 6-28-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-15298 Signal and Train Control; Miscellaneous Amendments
[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33870-33873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15298]
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[[Page 33871]]
DEPARTMENT OF TRANSPORTATION
Federal Railroad Administration
49 CFR Parts 233, 235 and 236
[FRA Docket No. RSSI-1 ; Notice No. 1]
RIN 2130--AB06; 2130--AB05
Signal and Train Control; Miscellaneous Amendments
AGENCY: Federal Railroad Administration (FRA), Department of
Transportation (DOT).
ACTION: Interim final rule.
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SUMMARY: In accord with President Clinton's Regulatory Reinvention
Initiative, FRA is amending FRA's signal system reporting requirements
to reduce signal system reporting burdens on the rail industry. FRA is
also amending its regulations governing applications for approval of
discontinuance or material modification of a signal system and is
consolidating certain pneumatic valve cleaning and testing intervals to
eliminate overlapping and unnecessary test schedules.
DATES: This interim final rule is effective August 30, 1996. Written
comments concerning this rule must be filed no later than July 31,
1996.
FOR FURTHER INFORMATION CONTACT: William Goodman, Staff Director,
Signal and Train Control, Office of Safety, FRA, 400 Seventh Street,
S.W., Washington, D.C. 20590 (telephone 202-366-2231), or Mark Tessler,
Office of Chief Counsel, FRA, 400 Seventh Street, S.W., Washington,
D.C. 20590 (telephone 202-366-0628).
SUPPLEMENTARY INFORMATION:
Background
On September 30, 1993, President Clinton issued Executive Order No.
12866, ``Regulatory Planning and Review''. This Executive Order was
based on the recognition that government must govern in a focused,
tailored, and sensible way. In order to reaffirm and implement the
principles of Executive Order No. 12866, President Clinton, in March of
1995, announced a Regulatory Reinvention Initiative in which federal
agencies were directed to conduct a review of agency regulations with a
view toward eliminating or revising those outdated or otherwise in need
of reform. This proceeding is part of that effort.
FRA has not provided prior notice and request for public comment
prior to making the amendments contained in this rule. FRA has
concluded that such notice and comment are impracticable, unnecessary
and contrary to the public interest under 5 U.S.C 553 since FRA is
making only minor changes in reporting requirements, administrative
procedures, and is clarifying contradictory regulatory provisions.
However, FRA is soliciting comments on this rule and will consider
those comments in determining whether there is a need to take further
action to improve these regulations. For this reason, FRA has issued
this as an interim final rule so that it can take effect while any
comments are being considered. If comments persuade FRA that amendments
are necessary, it will address them in a subsequent notice. As noted
above, comments must be submitted no later than July 31, 1996.
Section-by-Section Analysis
49 CFR Part 233.9 ``Signal System Reporting Requirements''
The Signal Systems Annual Report has historically been used to
monitor changes in the types of signal systems installed on the nation'
s railroads. Based on its regulatory review, FRA has concluded that the
signal system information base can be maintained while at the same time
the reporting burden imposed on railroads can be reduced. FRA has
concluded that the information provided by this report does not need to
be updated annually. Using the information base already in existence,
FRA can monitor incremental changes in railroad signal systems through
reports of agency field personnel. Additionally, because railroads must
file an application with FRA to discontinue or materially modify a
signal system under 49 CFR Part 235, FRA will be well informed
regarding incremental changes in signal systems. FRA is amending this
section to provide for filing of signal system reports every five years
rather than on an annual basis, as is required presently. This more
realistic time frame will reduce the reporting burden to the industry
while maintaining an adequate information base. FRA is also revising
the information to be reported in order to reflect technological
changes in the industry and in accord with information needs of FRA.
FRA will submit the report form to the Office of Management and Budget
(OMB) for approval. The new reporting requirements contained in this
section are not mandatory until approval has been obtained from OMB.
Section 233.9 is thus being revised to require that not later than
April 1, 1997 and every 5 years thereafter, each carrier shall file
with FRA a Signal System Five-year Report on a form to be provided by
FRA and in accordance with instructions provided on the report.
49 CFR Part 235.7 ``Changes not Requiring Filing of Application''
Section 235.7 currently specifies those modifications to signal
systems that can be made by a railroad without the necessity of filing
an application for FRA approval. Those listed modifications are of a
type that increase either the safety of a signal system or which do not
affect the existing level of safety. FRA is adding a provision which
permits the installation, removal or relocation of intermediate or
automatic signals in conjunction with the elimination of signal system
pole lines when replaced with electronic track circuits. Improving a
signal system with electronic track circuits provides a railroad with
the benefit of a signal system not adversely affected by ice, snow
storms, and floods. Installation of electronic track circuits and the
elimination of open pole lines often results in the extension and
equalization of block limits and relieves the railroads from
maintaining and replacing many poles and cross arms and eliminates
signal problems created by wire crosses and grounds on the open wire
signal circuits. Section 235.7(c)(24) provides that it is not necessary
to file an application for approval for the installation, relocation,
or removal of signals, interlocked switches, derails, movable-point
frogs, or electric locks in an existing system directly associated with
the installation of new track; the elimination of existing track other
than a second main track; the extension or shortening of a passing
siding; elimination of second main track in certain stated
circumstances or a line relocation. FRA is adding to this list
conversion of pole line circuits to electronic (coded) track circuits
provided that the railroad gives notice and a profile plan of the
change to the FRA regional office having jurisdiction over that
territory at least 60 days in advance of the change. In addition, the
railroad must provide at the same time a copy of the notice and profile
plan to representatives of employees responsible for maintenance,
inspection and testing of the signal system under 49 CFR Part 236. The
signal system modification will be deemed acceptable, unless within 60
days, the Regional Adminstrator stays action by written notice to the
railroad and refers the issue to the Railroad Safety Board for
decision. The proposed change will enable railroads to better manage
the timing and budgeting for signal system upgrades while at the same
time
[[Page 33872]]
maintaining protection and safety of train movements.
49 CFR 236.590 ``Pneumatic Apparatus''
This section presently requires that automatic train stop
(``ATS''), automatic train control (``ATC''), or automatic cab signal
(``ACS'') pneumatic apparatus be inspected and cleaned at least once
every 736 days. This section also requires that the pneumatic apparatus
be stenciled, tagged or otherwise marked to indicate the last cleaning
date. Locomotive safety standard regulations at 49 CFR 229.29 require
that valves, valve portions, MU locomotive brake cylinders and electric
pneumatic master controllers in the air brake system be cleaned,
repaired, and tested at least once every 736 days. The section also
requires that the date and place of the cleaning, repairing and testing
be recorded on a specified form. A record of the parts of the air brake
system that are cleaned, repaired, and tested are required to be kept
in the railroad' s files or in the cab of the locomotive.
FRA intends that the inspection and cleaning time interval
requirements for pneumatic apparatus (ATS, ATC, and ACS) be governed by
the air brake testing intervals established in 229.29. In that way,
railroads will not be faced with conflicting testing schedules.
Maintenance schedules will be simplified and locomotive down-time will
be reduced as a result. Although both section 229.29 and 236.590
require a 736-day test interval, due to existing waivers, the testing
and cleaning intervals for air brake systems and pneumatic systems on
many locomotives do not coincide. In 1985, FRA granted a waiver of
compliance with Sec. 229.29 (see 50 FR 3910, January 29, 1985) to allow
locomotives equipped with 26L airbrake equipment to operate for periods
not to exceed three years before receiving the detailed inspections
required by Sec. 229.29. Under the terms of this waiver, which extended
an earlier test waiver (see 46 FR 33401, June 29, 1981), ``train
control pneumatic valves (suppression and timing valves)'' were
included within the waiver. Thus railroads have been able to perform
periodic testing and maintenance of air brake and train control
pneumatic valves on locomotive 26L brake equipment at the same time. It
has come to our attention that many railroads were not aware of the
extent of the waiver issued in 1985 and thus may not have been taking
advantage of the scheduling advantages this waiver provided. By
conforming the requirements of Sec. 236.590 to those of Sec. 229.29,
any changes in inspection and testing intervals or recordkeeping
requirements made to air brake systems will automatically apply to
pneumatic train control valves on similar types of locomotives. Since
pneumatic train control valves utilize the same air supply system, a
decision as to safe testing intervals for one component would apply to
the other component as well. In addition to the above changes, FRA is
providing ``out of service'' credit that is applied to air brake
systems under Sec. 229.33 to train control systems under Sec. 236.590.
This will further conform the two sets of testing and maintenance
requirements.
FRA is thus amending Sec. 236.590 to provide that automatic train
stop, train control, or cab signal pneumatic apparatus shall be
inspected, cleaned, and the results of such inspection recorded as
provided by Sec. 229.29(a). When a locomotive with automatic train
stop, train control, or cab signal pneumatic apparatus receives out-of-
use credit pursuant to Sec. 229.33, the automatic train stop, train
control, or cab signal apparatus shall be tested in accordance with
Sec. 236.588 prior to the locomotive being placed in service.
E.O. 12866 and DOT Regulatory Policies and Procedures
These amendments have been evaluated in accordance with existing
policies and procedures and because they are primarily technically
oriented and generally reduce the regulatory burden on railroads, FRA
has concluded that the revisions do not constitute significant rule
under either Executive Order 12866 or DOT's regulatory policies and
procedures.
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.)
requires a review of rules to assess their impact on small entities.
FRA certifies that this rule will not have a significant impact on a
substantial number of small entities. There are no substantial economic
impacts for small units of government, businesses, or other
organizations.
Paperwork Reduction Act
These amendments reduce information collection requirements and
therefore reduce reporting burdens imposed on railroads.
Environmental Impact
FRA has evaluated these regulations in accordance with its
procedure for ensuring full consideration of the potential
environmental impacts of FRA actions, as required by the National
Environmental Policy Act and related directives. FRA has determined
that the revision of Parts 233, 235 and 236 of Title 49 of the CFR does
not constitute a major FRA action requiring an environmental
assessment.
Federalism Implications
This action has been analyzed in accordance with the principles and
criteria contained in Executive Order 12612, ``Federalism,'' and it has
been determined that these amendments do not have federalism
implications to warrant the preparation of a Federalism Assessment.
List of Subjects
49 CFR Part 233
Railroad safety, Reporting and recordkeeping requirements.
49 CFR Part 235
Railroad safety, Administrative practice and procedure.
49 CFR Part 236
Railroad safety.
The Rule
In consideration of the foregoing, FRA amends Parts 233, 235, and
236 of Title 49 of the Code of Federal Regulations as set forth below:
PART 233--[AMENDED]
1. The authority citation for Part 233 continues to read as
follows:
Authority: 49 App. U.S.C. 26, as amended; 49 App. U.S.C.
1655(e), as amended; 45 U.S.C. 431, 437, and 438, as amended; Pub.
L. 100-342; and 49 CFR 1.49 (f), (g), and (m).
2. Section 233.9 is revised to read as follows:
Sec. 233.9 Reports.
Not later than April 1, 1997 and every 5 years thereafter, each
carrier shall file with FRA a signal system status report ``Signal
System Five-year Report'' on a form to be provided by FRA in accordance
with instructions and definitions provided on the report.
PART 235--[AMENDED]
3. The authority citation for Part 235 continues to read as
follows:
Authority: 49 App. U.S.C. 26, as amended; 49 App. U.S.C.
1655(e), as amended; 45 U.S.C. 431, 437, and 438, as amended; Pub.
L. 100-342; and 49 CFR 1.49 (f), (g), and (m).
4. Paragraph (c)(24) of Sec. 235.7 is amended by a adding at the
end thereof a new paragraph (c)(24) (vi) to read as follows:
Sec. 235.7 Changes not requiring filing of application.
* * * * *
[[Page 33873]]
(c) * * *
(24) * * *
(vi) The conversion of pole line circuits to electronic (coded)
track circuits provided that the railroad gives notice and a profile
plan of the change to the FRA regional office having jurisdiction over
that territory at least 60 days in advance of the change. The railroad
must also at the same time provide a copy of the notice and profile
plan to representatives of employees responsible for maintenance,
inspection and testing of the signal system under 49 CFR Part 236. The
signal system modification will be deemed acceptable, unless within 60
days, the Regional Adminstrator stays action by written notice to the
railroad and refers the issue to the Railroad Safety Board for
decision.
PART 236--[AMENDED]
5. The authority citation for Part 236 continues to read as
follows:
Authority: 49 App. U.S.C. 26, as amended; 49 App. U.S.C.
1655(e), as amended; 45 U.S.C. 431, 437, and 438, as amended; Pub.
L. 100-342; and 49 CFR 1.49 (f), (g), and (m).
6. Section 236.590 is revised to read as follows:
Sec. 236.590 Pneumatic apparatus
Automatic train stop, train control, or cab signal pneumatic
apparatus shall be inspected, cleaned, and the results of such
inspection recorded as provided by Sec. 229.29(a). When a locomotive
with automatic train stop, train control, or cab signal pneumatic
apparatus receives out-of-use credit pursuant to Sec. 229.33, the
automatic train stop, train control, or cab signal apparatus shall be
tested in accordance with Sec. 236.588 prior to the locomotive being
placed in service.
Issued in Washington, D.C. on May 30, 1996.
Donald M. Itzkoff,
Deputy Administrator.
[FR Doc. 96-15298 Filed 6-28-96; 8:45 am]
BILLING CODE 4910-06-P
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